##### Table of Contents

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)



| | x | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| | - | ------------------------------------------------------------------------------------

| |  | For the Fiscal Year Ended December 31, 2006
| |  | -------------------------------------------

or



| |  ̈ | 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 0-25721

BUCA, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Minnesota                                                      |  | 41-1802364                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. employer identification no.)

1300 Nicollet Mall, Suite 5003

Minneapolis, Minnesota 55403

(Address of principal executive offices) (Zip code)

(612) 225-3400

(Registrants telephone number, including area code)

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



|                                       |  |                                          
|-------------------------------------- |  | -----------------------------------------
|Title of Each Class                    |  | Name of Each Exchange On Which Registered
|Common Stock, par value $.01 per share |  | Nasdaq National Market System            

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.  Yes ̈No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.  Yes ̈No  x

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



|                         |  |                      |  |                       
|------------------------ |  | -------------------- |  | ----------------------
|Large Accelerated Filer ̈ |  | Accelerated Filer  x |  | Non-Accelerated Filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).  Yes ̈No  x

The aggregate market value of the common stock held by non-affiliates of the registrant as of June 25, 2006 (the last business day of the
registrants most recently completed second fiscal quarter) was $69,284,780 based on the closing sale price for BUCA, Inc.s common stock as reported on the Nasdaq Stock Market on that date. Shares of common stock held by each executive
officer and director of the registrant have been excluded from this computation in that such persons may be deemed to be affiliates. These numbers are provided only for the purpose of this report on Form 10-K and do not represent an admission by
either the registrant or any such person as to the status of such person.

As of March 8, 2007 the registrant had 20,910,433 shares of
common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants definitive proxy statement for the annual meeting of shareholders to be held on May 2, 2007 are corporated by
reference in Part III.



---



---

##### Table of Contents

FORWARD-LOOKING STATEMENTS

The information presented in this Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts, but
rather are based on our current expectations, estimates and projections, and our beliefs and assumptions. We intend words such as anticipates, expects, intends, plans, believes,
seeks, estimates, working toward, will and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks,
uncertainties and other factors, some of which are beyond our control and are difficult to predict. These factors could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These risks and
uncertainties are described in the risk factors and elsewhere in this Annual Report on Form 10-K. We caution you not to place undue reliance on these forward-looking statements, which reflect our managements view only as of the date of this
Annual Report on Form 10-K. We are not obligated to update these statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect the occurrence of
unanticipated events.



2



---

##### Table of Contents

PART I

Item 1.    Business

Overview

BUCA, Inc. currently owns and operates 92 full service restaurants under the name Buca di Beppo. The majority of our revenues are generated from the sale
of food and beverages. Our restaurants offer high quality, family-style Italian cuisine served in small and large family-style portions meant for sharing in a fun and energetic atmosphere that reflects the decor and ambiance of post-World War II
Italian/American restaurants.

We design each of our restaurants to be a fun, lively destination. Each Buca di Beppo restaurant is unique,
which reinforces our image as a collection of neighborhood restaurants. Our food, decor and large servings all promote a fun, celebratory and socially interactive dining experience that emulates a traditional Italian/American meal. Our objective is
to become the favorite Italian restaurant concept in each of the markets in which we operate.

Our Menu

We believe that the authenticity, quality and consistency of our food are the most important components of our long-term success. In contrast to the
levity of our decor and ambiance, we take menu development and food preparation very seriously. Our Buca di Beppo menu is based on authentic Italian family recipes handed down from generation to generation. Most recipes come from the southern region
of Calabria, but we also offer northern Italian favorites. We make occasional trips to Italy and Sicily to find new recipes for our menus that are then extensively tested and refined before introduction in our restaurants.

Some of our restaurants most popular menu items include Fresh Mozzarella Caprese, Apple Gorgonzola Salad, Margherita Pizza, Fresh Salmon with
Pesto, Penne Arrabbiata, Chicken Canneloni, Fettuccine Supremo, Chicken with Lemon, Garlic Mashed Potatoes, Tiramisu and our Spaghetti and Meatballs. Our food is generally meant to be shared and served on family style platters for passing around the
table. Dishes are currently available in two portion sizes: Buca Small serves two or more and Buca Large serves four or more. In family-style serving, items are shared by the entire table, which encourages guests to interact and enjoy the meal
together.

We also offer Daily Specials centered on our popular Italian cooking. We believe that our Daily Specials play a vital role in
keeping the menu fresh and allow us to test prospective menu items. Our foods, often seasoned with garlic and served with vine-ripened tomatoes, communicate the pure, powerful flavors of the Italian kitchen.

During fiscal 2004, in an effort to increase our guest counts by attracting smaller parties and allowing our guests to try a wider variety of our menu
items, we introduced smaller portion sizes for a majority of entrees on our menu. This concept, which we call Buca Small, has been implemented at all of our Buca di Beppo restaurants and accounted for about 40.3% of our total food sales in fiscal
2006.

During fiscal 2006, we added our lunch menu to an additional 67 restaurants, the majority of those being added in the fiscal fourth
quarter, bringing the total number of restaurants serving lunch during fiscal 2006 to 76, or 82% of the system. Our lunch menu is served only at lunch but is in addition to our traditional family-style dinner menu which is available at all times.
Lunch portions at Buca di Beppo are intended for single person dining and include resized favorites from the dinner menu as well as a variety of sandwiches, all competitively priced for the lunch daypart. We believe that the expansion of the lunch
menu not only provides for incremental sales both in the restaurant and for take-out, but also represents an opportunity to build brand awareness through increased dining exposure.

In 2007, we began testing single portions, which we call Buca Mio in selected restaurants.



3



---

##### Table of Contents

All of our menu items can be enjoyed either in the restaurant or as take-out. In fiscal 2006, take-out
sales represented approximately 9.4% of our total sales. We believe that take-out represents a continued opportunity to build our sales. However, we expect that as our take-out sales increase, our alcohol sales will likely decrease as a percentage
of total sales as off-site sales of alcohol and liquor are generally not allowed at our restaurants.

We also offer all-inclusive
(excluding alcoholic beverages) pre-fixed menus for large banquets and events with prices ranging from $21.95 to $35.95 per person.

Our
menu pricing is consistent within a market, but may differ slightly market-to-market. The average check per Buca di Beppo guest in fiscal 2006 was approximately $19.93 (including beverages). In fiscal 2006, alcoholic beverages, primarily table wine,
accounted for approximately 18.1% of restaurant sales at our Buca di Beppo restaurants.

Operations

Our ability to effectively manage restaurants in diverse geographic areas will continue to be critical to our success. We currently have eight Divisional
Vice Presidents (DVPs) who report directly to our Senior Vice President of Operations. Each of these DVPs is expected to effectively manage up to 13 restaurants and supervise and assist each restaurant manager, or Paisano Partner, within
his or her territory with the goal of achieving targeted profitability through the successful implementation and operation of our Buca di Beppo concept. We team a Divisional Culinary Supervisor with each of our DVPs with the goal of improving the
quality and consistency of our menu throughout the system. The typical Buca di Beppo restaurant management team consists of a Paisano Partner, a Chef Partner, an Assistant General Manager and a Sous Chef.

A majority of the managers and chefs at Buca di Beppo restaurants participate in the Paisano/Chef Partner Programs. Under the Paisano/Chef Partner
Programs, the restaurant management team is paid based on the results and profits of its restaurant on a monthly, quarterly and annual basis. The Paisano Partners and Chef Partners also receive stock options and Paisano Partners are required to
purchase either $10,000 or $20,000 of our common stock while Chef Partners are required to purchase $5,000 of our common stock at the time of employment in their position.

The majority of our restaurants are open seven days a week for lunch and dinner, typically opening at 11 a.m. and closing at 10 p.m. on weekdays and
11 p.m. on weekends. Our dinner-only restaurants typically open at 4 p.m. during the week and at 11 a.m. on the weekends.

Recruiting and Training

We actively recruit, hire, and promote qualified individuals who demonstrate a commitment to guest
service. Whenever possible, we strive to promote from within. Our competitive compensation plan for restaurant management features a base salary and benefits package. We also offer a management bonus plan that rewards restaurant management teams for
achieving financial objectives.

All new restaurant employees receive extensive training to enable them to excel in their respective
positions. Those programs include on-the-job training and, for certain positions, classroom instruction. We have developed tools to allow employees to be assessed at pre-determined stages within the training period.

Each new member of the restaurant management team participates in a ten-week training program that includes kitchen training. In addition, we offer BUCA
University (BUCA U), a one-week training opportunity at our corporate training center in the Paisano Support Center in Minneapolis. The BUCA U program includes interactive classroom instruction led by members of the corporate management
team, hands-on training in one of our restaurants, dinner at the original restaurant in downtown Minneapolis and a quality-review session in one of our restaurants.



4



---

##### Table of Contents

Additional training tools are available, including comprehensive employee training manuals featuring our
procedures, standards, controls and food line management systems. Most training materials for restaurant personnel are available in both English and Spanish.

Marketing

We historically have spent between 3.0% and 3.5% of our total sales on marketing. In
fiscal 2006, we spent approximately 3.0% of our total sales on marketing. We use a majority of these funds on newspaper advertisements, internet marketing and targeted direct mail. We employ an advertising agency and several specialized marketing
groups for our marketing program. One important marketing initiative during fiscal 2006 was the growth of our eClub, an Internet-based marketing program that is designed to increase customer loyalty and drive repeat business. As of the end of fiscal
2006, we had approximately 725,000 members in the Buca di Beppo eClub. We promote our central reservation system and the use of our toll-free reservation number, 1-866-EAT-BUCA, to enhance use of reservations. We also encourage our Paisano Partners
to involve themselves in the community to maximize the return on local advertising, public and community relations.

Our marketing strategy
is based upon accomplishing several key marketing objectives. Our primary goals are to improve overall brand awareness, gain acceptance from new users, improve average frequency of visit and enhance the image of Buca di Beppo as a premier Italian
dining destination. Buca di Beppo is a multi-market chain operating in 39 markets. In order to increase awareness and brand acceptance, we employ a range of national and local media, including USA Today(national edition), major market
newspapers, neighborhood papers, targeted direct mail, eClub and other local marketing support such as radio and public relations programs. Our messages focus heavily on the quality of our food, which was perceived to be near the top of our industry
according to an April 2005 study completed by an independent research firm retained and paid for by us.

Purchasing

We strive to obtain high quality menu ingredients and other supplies and services for our operations from reliable sources at competitive prices. To this
end, we continually research and evaluate various ingredients and products in an effort to maintain quality and to be responsive to changing market conditions. Our food and beverage department and the centralized purchasing staff specify the
products to be used at our restaurants, select the suppliers, provide these suppliers with detailed ingredient specifications and monitor supplier performance. Additionally, our purchasing staff actively sources secondary suppliers for certain
critical products. To maximize purchasing efficiencies, maintain optimal inventory levels and to provide for the freshest ingredients for our menu items, each restaurants management team determines the quantity of food and supplies required.
To obtain the required high quality and consistent raw ingredients at acceptable prices, each restaurant orders a majority of its items from our national food distributor, primarily on terms negotiated directly with manufacturers and importers by
our centralized purchasing staff.

We are using Distribution Market Advantage (DMA) as our primary food distributor. DMA is a
cooperative of multiple, independently owned distributors located across the United States. We believe that all essential food and beverage products are available from other qualified suppliers at competitive prices should an alternative source be
required.

New Restaurant Site Selection and Development

From fiscal 2000 to 2003, we pursued a rapid expansion strategy, opening 17 Buca di Beppo restaurants in each of fiscal 2000 and 2001, and 14 in each of
fiscal 2002 and 2003. In January 2002, we purchased the assets of nine Vinny Ts of Boston restaurants. In fiscal 2004, we slowed our development, opening three restaurants and closing two, and have since focused on the development and
implementation of appropriate strategies to improve our comparable restaurant sales trends. In fiscal 2005, we opened one Buca di Beppo restaurant and closed three. In fiscal 2006 we did not open any new restaurants, and divested the Vinny Ts
of Boston restaurants. We expect to resume new restaurant openings and are working toward opening one new restaurant in



5



---

##### Table of Contents

fiscal 2007 and three to five new restaurants in 2008. We also intend to explore the option of franchising and selling development rights to our restaurants
in certain select markets beginning in fiscal 2007.

We anticipate over the next several years that the majority of our new restaurants
will be in existing markets. Opening restaurants in existing markets enables us to increase our operational, marketing and recruiting efficiencies.

Our site selection process is critical to our success. We devote substantial effort to evaluating each existing market and potential site for suitable demographic, financial and physical characteristics. To assist in that effort, we have
engaged a consultant to develop a formal demographic model in fiscal 2007, which will be used to analyze existing location performance and predict future site expectations. Our current site criteria allows the flexibility to be located in both urban
and suburban locations, including regional shopping malls, in-line shopping centers, retail and entertainment centers and freestanding buildings in both commercial and residential neighborhoods.

Our current restaurant complement is composed of conversions and multiple prototypes, ranging in square footage from approximately 4,400 to 11,800. In
fiscal 2004, our new Buca di Beppo leased restaurants required, on average, a total cash investment of approximately $2.5 to $3.0 million. In fiscal 2006, we engaged an architectural firm to update our current prototype to help reduce both initial
investment and on-going maintenance costs through value engineering, energy management systems and an updated kitchen design to better accommodate our menu changes over the years. This prototype design is expected to be completed in fiscal 2007.

Our leases are typically ten years in length with four five-year option periods. In the past, we have purchased land as we found suitable
locations. In the future, we may refinance any purchases of land or buildings through sale-leaseback transactions. We cannot predict whether this financing will be available when needed or on terms acceptable to us.

Information Technology

We utilize a
centralized data and support center, which houses all the corporate networking and application systems to collect information, maintain technical controls and support our restaurants. Financial controls are maintained through a centralized
accounting system, which includes a sophisticated restaurant-level theoretical food cost program and a labor scheduling and tracking program. All of our restaurants are connected via a high-speed network to provide integrated data and voice
capabilities. Each restaurant has its own internal network that links the point of sale system, the restaurant accounting system and voice communications. A call center located at our Paisano Support Center takes telephone and Internet reservations
for all of our Buca di Beppo restaurants. Together, these systems provide an integrated management system which is used to monitor restaurant sales, product and labor costs, and other restaurant trends on a daily, weekly and monthly basis. This
information is then made available to management for analysis and comparison to budget and to historical information.

Employees

As of December 31, 2006, we had approximately 6,170 employees, which included 141 administrative and executive personnel and 392
restaurant management personnel; the remainder being hourly restaurant personnel.

None of our employees is covered by collective
bargaining agreements and we have never experienced an organized work stoppage or strike. We believe that our working conditions and compensation packages are competitive, and we strive to create a working environment which reflects our principles
and values of justice, hospitality and excellence.



6



---

##### Table of Contents

Intellectual Property

We have registered with the United States Patent and Trademark Office the service marks BUCA, BEPPO, BUCA DI BEPPO,
BUCA DI BEPPO (stylized), BUCA DI BEPPO & design, BUCA TO GO, Mama BUCA I design, Mama BUCA II design and Pouring Chianti Bottle design. In addition, we have trademark registrations for BUCA
and BUCA DI BEPPO in the following countries: Benelux, Denmark, Finland, Germany, Iceland, Ireland, Norway, Sweden and the United Kingdom. We believe that our trademarks, service marks, trade dress and other proprietary rights have
significant value and are important to the marketing of our restaurant concepts. We have in the past protected our proprietary rights and expect to continue to vigorously protect those rights in the future. We cannot predict, however, whether steps
taken by us to protect our proprietary rights will be adequate to prevent misappropriation and/or infringement of these rights or the use by others of restaurant features based upon, or otherwise similar to, our overall concepts. It may be difficult
for us to prevent others from copying discrete elements of our concepts and any litigation to enforce our rights will likely be costly. In addition, other local restaurant operations may claim that our name is confusingly similar to their names and
may try to prevent us from using our marks in those locales.

Our History

The Buca di Beppo concept was created in Minneapolis in 1993 by BUCA Ventures, Inc. On December 31, 1994, Parasole Restaurant Holdings, Inc., a
diversified restaurant company operating in the Minneapolis/St. Paul metropolitan area, acquired BUCA Ventures, Inc. On September 30, 1996, we were spun-off from Parasole. In 1999, we had our initial public offering of stock and became a public
company. In January 2002, we purchased the assets of the nine Vinny Ts of Boston restaurants, formerly known as Vinny Testas Italian-American Restaurant. We sold the Vinny Ts of Boston restaurants in September 2006.

Competition

The restaurant industry
is intensely competitive. We compete on the basis of taste, quality, price of food offered, guest service, location, ambiance and overall dining experience. We have many well-established competitors, both nationally and locally owned Italian and
non-Italian concepts, with substantially greater financial resources and a longer history of operations than we do. Their resources and market presence may provide advantages in marketing, purchasing and negotiating leases. We compete with other
restaurant and retail establishments for sites and finding management personnel. Changes in consumer tastes, economic conditions, demographic trends and the location and number of, and type of food served by, competing restaurants could adversely
affect our business, as could the unavailability of experienced management and hourly employees.

Government Regulations

Our restaurants are subject to regulation by federal agencies and to licensing and regulation by state and local health, sanitation, building, zoning,
safety, fire and other departments relating to the development and operation of restaurants. These regulations include matters relating to environmental, building, construction and zoning requirements and the preparation and sale of food and
alcoholic beverages. Our facilities are licensed and subject to regulation under state and local fire, health and safety codes.

Each of
our restaurants is required to obtain a license to sell alcoholic beverages on the premises from a state authority and, in certain locations, county and/or municipal authorities. Typically, licenses must be renewed annually and may be revoked or
suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of each of our restaurants, including: minimum age of patrons and employees; hours of operation; advertising; wholesale
purchasing; inventory control and handling; and storage and dispensing of alcoholic beverages. The failure to receive or retain a liquor license in a particular location could adversely affect that restaurant and our ability to obtain such a license
elsewhere.



7



---

##### Table of Contents

We are subject to dram-shop statutes in the states in which our restaurants are located.
These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. We carry liquor liability coverage as part of our
existing comprehensive general liability insurance, which we believe is consistent with coverage carried by other entities in the restaurant industry. Although we are covered by insurance, a judgment against us under a dram-shop statute in excess of
our liability coverage could have a material adverse effect on us.

Our operations are also subject to federal and state laws governing
such matters as wages, working conditions, citizenship requirements and overtime. Some states have set minimum wage requirements higher than the federal level. Significant numbers of hourly personnel at our restaurants are paid at rates related to
the federal minimum wage and, accordingly, increases in the minimum wage will increase labor costs. We are also subject to the Americans With Disability Act of 1990 (ADA), which, among other things, may require certain renovations to our restaurants
to meet federally mandated requirements. The cost of any such renovations is not expected to materially affect us.

Available
Information

Our Internet website is: http://www.bucainc.com. We have made available, free of charge, through our Internet website, our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. The
information contained on our website is not a part of this annual report.

Item 1A.    Risk Factors

We May Be Unable to Return to Profitability or Raise Additional Capital

We recorded net losses of $38.1 million in fiscal 2004, $32.1 million in fiscal 2005 and $3.6 million in fiscal 2006 and an accumulated deficit of $103.5 million as of December 31, 2006. We may not achieve
revenue growth, generate positive cash flows or return to profitability in the future. We have entered into long-term leases for many of our restaurants, which limits our ability to either close individual restaurant locations (without significant
continuing liabilities) or improve their operating cash flow. Our current credit facility also limits our ability to build new restaurants, which has contributed to our decision to slow down our future development plans and develop a revised plan to
improve our core business through improving our comparable restaurant sales and margins. Failure to achieve these objectives may limit our future growth, cause our stock price to decline and make it difficult to raise additional capital.

Restrictive Covenants in Our Credit Facility Could Have a Material Adverse Affect on Our Business

Our credit facility contains restrictive covenants and requirements that we comply with certain financial ratios. These covenants limit our ability to
take various actions without the consent of our lender, including the incurrence of additional debt, the guaranteeing of certain indebtedness and engaging in various types of transactions, including mergers and sales of assets, paying dividends and
making distributions or other restricted payments, including investments. These covenants could have an adverse effect on our business by limiting our ability to take advantage of business opportunities.

In addition, failure to maintain the covenants required by our credit facility could result in acceleration of our indebtedness under the credit
facility. Our inability in the future to comply with the covenant requirements under the credit facility and to obtain a waiver of such violations could impair our liquidity and limit our ability to operate. See Item 7. Managements
Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources and Note 10 of the Consolidated Financial Statements for discussion of our credit facility, covenant requirements and effects on our
business.



8



---

##### Table of Contents

We May be Unable to Fund Our Significant Future Capital Needs and We May Need Additional Funding Sooner Than
Anticipated

We will need substantial capital to finance our operations and expansion plans, including funds for capital expenditures,
pre-opening costs and potential initial operating losses related to new restaurant openings. We may not be able to obtain additional financing on acceptable terms. If adequate funds are not available, we will have to curtail projected growth, which
could materially adversely affect our business, financial condition, operating results or cash flows. Moreover, if we issue additional equity securities, the holdings of existing shareholders may be diluted.

Although we expect that borrowings under our credit facility, combined with other resources, will be sufficient to fund our capital requirements at least
through fiscal 2007, this may not be the case. Our credit facility limits our capital expenditures in future years, including a maximum of $13 million in fiscal 2007, subject to the satisfaction of certain bank covenants. We may be required to seek
additional capital earlier than anticipated if:



| |  |  | future actual cash flows from operations fail to meet our expectations;
| | - |  | -----------------------------------------------------------------------



| |  |  | costs and capital expenditures for new restaurant development exceed anticipated amounts;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | landlord contributions, loans and other incentives are lower than expected;
| | - |  | ---------------------------------------------------------------------------



| |  |  | the costs of the SEC investigation and other related litigation exceed anticipated amounts;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | we were to acquire an additional concept or company or pursue other strategic ventures;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | we are required to reduce prices to respond to competitive pressures; or
| | - |  | ------------------------------------------------------------------------



| |  |  | we are unable to achieve the required bank covenants.
| | - |  | -----------------------------------------------------

See Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources for a discussion of our historical and anticipated capital needs.

We May Be Unable to Maintain Favorable Comparable Restaurant Sales Results

Improvements in comparable restaurant sales are a key measure of financial health for our overall company as well as for our individual restaurants. We experienced a decline in comparable restaurant sales in each year
from fiscal 2001 through fiscal 2004 for our Buca di Beppo restaurants. Although we experienced an increase in comparable restaurant sales for Buca di Beppo in fiscal 2005 and fiscal 2006, we may not see improvements in comparable restaurant sales
in the future. If we are unable to achieve and maintain positive comparable restaurant sales, we may continue to experience operating losses or negative cash flows and we may close those restaurants, which could result in significant exit costs,
including lease termination costs. See Note 4 to our Consolidated Financial Statements for a discussion of the lease termination costs that we incurred in fiscal 2005 and 2006.

Our Business Could Be Materially Adversely Affected if We Are Unable to Expand in a Timely and Profitable Manner

During fiscal 2005, we opened one new restaurant and closed a total of three. During fiscal 2006, we did not open any new restaurants and, in the first quarter of fiscal 2007, we closed one restaurant. This reflects a
reduction in our expansion activities relative to our history. We intend to resume openings and are working toward opening one new restaurant in fiscal 2007 and three to five new restaurants in fiscal 2008. To grow successfully through new
restaurant additions, we must open new Buca di Beppo restaurants on a timely and profitable basis. We have experienced delays in restaurant openings from time to time and may experience delays in the future. Delays or failures in opening new
restaurants could materially adversely affect our business, financial condition, operating results or cash flows. Our ability to expand successfully will depend on a number of factors, some of which are not entirely within our control, including
the:



| |  |  | identification and availability of suitable restaurant sites;
| | - |  | -------------------------------------------------------------



| |  |  | competition for restaurant sites;
| | - |  | ---------------------------------



9



---

##### Table of Contents

| |  |  | negotiation of favorable leases;
| | - |  | --------------------------------



| |  |  | timely development in certain cases of commercial, residential, street or highway construction near our restaurants;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | management of construction and development costs of new restaurants;
| | - |  | --------------------------------------------------------------------



| |  |  | securing of required governmental approvals, permits and licenses;
| | - |  | ------------------------------------------------------------------



| |  |  | recruitment of qualified operating personnel, particularly Paisano Partners and Chef Partners;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | competition in new markets;
| | - |  | ---------------------------



| |  |  | limitations under our credit facility; and
| | - |  | ------------------------------------------



| |  |  | general economic conditions.
| | - |  | ----------------------------

In addition, we may
enter new markets in which we have no operating experience. These new markets may have different demographic characteristics, competitive conditions, consumer tastes and discretionary spending patterns than our existing markets, which may cause our
new restaurants to be less successful in these new markets than in our existing markets.

Insurers Could Deny or Rescind Coverage for the Securities
Litigation Filed Against Us which Could Result in a Significant Uninsured Loss

A civil action has been filed against us asserting
claims under the Securities Exchange Act of 1934, and seeking compensatory damages in an unspecified amount, plus an award of attorneys fees and costs of litigation. We are not able to predict the ultimate outcome of this litigation, and the
total costs cannot be reasonably estimated at this time, however, the plaintiffs are likely to seek damages in an amount that would be significant and material to us. While we have had and continue to maintain directors and officers
insurance and have submitted the suit to our insurers for coverage, our insurers have reserved their rights with respect to coverage. If our insurers were to attempt to deny or rescind coverage and were ultimately successful, we could face
significant legal expenses in defending the action and we would have to pay any judgment to, or settlement with, the plaintiffs from our own resources. In addition, any judgment could be in excess of our policy limits, requiring us to pay the
remainder directly ourselves. Such denial, rescission or judgment in excess of the policy limits would likely have a material adverse effect on our financial condition, results of operation and cash flows.

An Unfavorable Finding in the Ongoing SEC Investigation Could Have a Material Adverse Effect on Us

As previously disclosed, we are the subject of an ongoing SEC investigation. We have cooperated with this investigation both before and after issuance of
the formal order of investigation in February 2005. We understand that the order of investigation relates to our internal controls and compliance with rules governing filings and reports, including public disclosures, required to be filed with the
SEC, and the 2002 purchase of an old farmhouse in Italy known as Villa Sermenino. We are cooperating and assisting with the SECs investigation in order to bring the inquiry to a conclusion as promptly as possible. We are unable to
predict the ultimate focus or outcome of the investigation, or when it will be completed. Any unfavorable finding from the SEC as a result of the investigation could have a material adverse effect on our reputation, business, results of operations,
financial position and cash flows. See Item 3. Legal Proceedings for a discussion of the SECs investigation.

Further Instances of
Breakdowns in Our Internal Controls over Financial Reporting Could Have an Adverse Effect on Us

We maintain a system of internal
controls over financial reporting that is reviewed and monitored by our management and our audit committee and tested by an independent internal audit consulting firm. As of the end of fiscal 2005 and fiscal 2004, our management identified certain
material weaknesses in our system of internal controls.



10



---

##### Table of Contents

While significant changes in executive personnel were made during fiscal 2004 and fiscal 2005, our
company has suffered in the past from an inappropriate tone set by former senior executives and a lack of a demonstrable commitment by former senior executives to set high standards of ethics, integrity, accounting and corporate governance. Our
board of directors and current management believe that these inappropriate attitudes and deeds of former senior executives led to an environment where strong systems of internal controls and disclosure controls and procedures were not supported.

We have taken remedial measures to correct such control deficiencies. We have devoted significant resources to document, test, monitor and
improve our internal controls and will continue to do so; however, we cannot be certain that these measures will ensure that our controls are adequate in the future or that the controls will be effective in preventing fraud or material misstatement.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results and fraud may be easier to perpetrate on us. Any failures in the effectiveness of our internal controls could have a
material adverse effect on our operating results or cause us to fail to meet reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information which could have a negative effect on
our stock price.

Competition May Adversely Affect Our Operations and Financial Results

The restaurant business is highly competitive with respect to price, service, restaurant location and food quality, and is often affected by changes in
consumer tastes, economic conditions, population and traffic patterns. We compete within each market with locally owned restaurants as well as national and regional restaurant chains, some of which operate more restaurants and have greater financial
resources and longer operating histories than we do. There is active competition for management personnel and for attractive commercial real estate sites suitable for restaurants. If we are unable to effectively compete within the restaurant
industry, our operations and financial results could be adversely affected. See Item 1. BusinessCompetition for a discussion of the competition we face.

Complaints, Litigation, Governmental Investigations and the Related Adverse Publicity May Materially Adversely Affect Us

We are from time to time the subject of complaints or litigation from guests alleging illness, injury or other food quality, health or operational concerns. These claims may divert our financial and management
resources that would otherwise be used to benefit the future performance of our operations.

Three virtually identical civil actions were
commenced against our company and three former officers in the United States District Court for the District of Minnesota between August 7, 2005 and September 7, 2005. The three actions have been consolidated. The four lead plaintiffs
filed and served a Consolidated Amended Complaint (the Complaint) on January 11, 2006. The Complaint was brought on behalf of a class consisting of all persons who purchased our common stock in the market during the time period from
February 6, 2001 through March 11, 2005 (the class period). We filed a motion to dismiss the Complaint, which was granted on October 16, 2006. On December 18, 2006, the lead plaintiffs filed a Second Amended
Consolidated Complaint (Second Complaint). The Second Complaint alleges that in press releases and SEC filings issued during the class period, defendants made materially false and misleading statements about our companys income,
revenues, and internal controls, which allegedly had the result of artificially inflating the market price for our stock. The lead plaintiffs assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and seek compensatory
damages in an unspecified amount, plus an award of attorneys fees and costs of litigation. We have responded to the Second Complaint and have moved to dismiss it. We are not able to predict the ultimate outcome of this litigation, but it may
be costly and disruptive. The total costs cannot be reasonably estimated at this time. Federal securities litigation can result in substantial costs and divert our managements attention and resources, which may have a material adverse effect
on our business and results of operations, including cash flows.



11



---

##### Table of Contents

See also An Unfavorable Finding in the Ongoing SEC Investigation Could Have a Material
Adverse Effect on Us above for a description of an on-going SEC investigation.

Multi-unit restaurant businesses can also be
adversely affected by publicity resulting from poor food quality, food-borne illness or other health concerns or operating issues stemming from one or a limited number of restaurants. In particular, since we depend on the Buca di Beppo brand for all
of our revenues, unfavorable publicity relating to one or more Buca di Beppo restaurants could have a material adverse effect on our business, results of operations and financial condition.

Additional Instances of Food Borne Illnesses, Avian Flu, Mad Cow Disease or Other Similar Matters Could Have a Material Adverse Effect on Us

In 2006, several nationally known restaurants experienced outbreaks of food poisoning believed to be caused by E.coli contained in the
produce they used. In addition, E. coli was also reported in fresh spinach which resulted in us removing several items, including a popular salad, from our menu until we can confirm the safety of the fresh spinach we purchase. In 2004 and 2005,
Asian and European countries experienced outbreaks of avian flu. Incidents of mad cow disease have occurred in Canadian and U.S. cattle herds. These problems, other food-borne illnesses (such as, hepatitis A, trichinosis or salmonella)
and injuries caused by food tampering have in the past, and could in the future, adversely affect the price and availability of affected ingredients and cause changes in consumer preference. As a result, our sales could decline.

Instances of food-borne illnesses, real or perceived, whether at our restaurants or those of our competitors, could also result in negative publicity
about us or the restaurant industry, which could adversely affect sales. If we react to negative publicity by changing our menu or other key aspects of the dining experience we offer, we may lose customers who do not accept those changes, and may
not be able to attract enough new customers to produce the revenue needed to make our restaurants profitable. If our guests become ill from food-borne illnesses, we could be forced to temporarily close some restaurants. A decrease in guest traffic
as a result of health concerns or negative publicity, or as a result of a change in our menu or dining experience or a temporary closure of any of our restaurants, could materially harm our business.

Fluctuations in Our Operating Results May Result in Decreases in Our Stock Price

Our operating results will fluctuate significantly because of several factors, including increases or decreases in comparable restaurant sales, the timing of new restaurant openings and related expenses, profitability
of new restaurants, timing of unexpected charges, general economic conditions, seasonality of restaurant sales, consumer confidence in the economy, changes in consumer preferences, impairment of restaurant assets, changes in interest rates,
competitive factors and weather conditions. As a result, our operating results may fall below the expectations of public market analysts and investors. In that event, the price of our common stock would likely decrease. See Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations for a discussion of our historical operating results.

Inflation Could Materially Adversely Affect Our Operating Results

The majority of our operating expenses have increased due
to inflation. Because we are in a competitive industry, we may be limited in the amount of menu prices we can increase. If we are unable to offset increases in operating expenses due to inflation, it could materially adversely affect our business,
financial condition, operating results or cash flows.

Increased Food Costs Could Materially Adversely Affect Our Operating Results

Our operating results depend in part on our ability to anticipate and react to changes in food costs. Our agreement with DMA runs to April 2011. Any
increase in distribution prices or failure to perform by DMA could



12



---

##### Table of Contents

cause our food costs to increase. In addition, various factors beyond our control, including adverse weather conditions, fluctuations in foreign currency and
governmental regulation, may affect our food costs. We cannot predict whether we will be able to anticipate and react to changing food costs by adjusting our purchasing practices and menu prices, and a failure to do so could materially adversely
affect our business, financial condition, operating results or cash flows.

Changes in Consumer Preferences or Discretionary Consumer Spending Could
Negatively Impact Our Results

Our restaurants feature Italian cuisine served primarily in small and large family-style portions. Our
continued success depends, in part, upon the popularity of this type of Italian cuisine and this style of informal dining. Shifts in consumer preferences away from our cuisine or dining style could materially adversely affect our future
profitability. Also, our success depends to a significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Our business may also be affected by
changes in consumer tastes and the impact on consumer eating habits of new information regarding diet, nutrition and health. Adverse changes in these factors could reduce guest traffic or impose practical limits on pricing, either of which could
materially adversely affect our business, financial condition, operating results or cash flows.

Our Restaurant Operations are Influenced by Weather
Conditions

Weather, which is unpredictable, can adversely impact our sales. Harsh weather conditions that keep customers from dining
out result in lost opportunities for our restaurants. A heavy snowstorm or hurricane can restrict travel in an entire metropolitan area, resulting in a reduction in sales. For these reasons, a quarter-to-quarter comparison may not be a good
indication of our performance or how we may perform in the future.

Our Operations Depend on Governmental Licenses and Complying with Government
Regulations

Each of our restaurants is subject to licensing and regulation by alcoholic beverage control, health, sanitation, safety
and fire agencies in the state, county and/or municipality in which the restaurant is located. We may experience difficulties or failures in obtaining the required licenses or approvals. If we fail to hold all necessary licenses, we may be forced to
delay or cancel new restaurant openings and close or reduce operations at existing locations.

We also are subject to federal and state
environmental regulations and adverse changes in these regulations could have a material negative effect on our operations. For example, more stringent and varied requirements of local and state governmental bodies with respect to zoning, land use
and environmental factors could delay or prevent development of new restaurants in particular locations.

We are subject to the Fair Labor
Standards Act, which governs such matters as minimum wages, overtime and other working conditions, along with the ADA, various family leave mandates and a variety of other laws enacted, or rules and regulations promulgated, by federal, state and
local governmental authorities that govern these and other employment matters. A material increase in the minimum wage and other statutory benefits could adversely affect our operating results.

In addition, the ADA prohibits discrimination on the basis of disability in public accommodations and employment. Although our restaurants are designed
to be accessible to the disabled, we could be required to reconfigure our restaurants to provide service to, or make reasonable accommodations for, disabled persons. Such modifications could be costly.



13



---

##### Table of Contents

We May Face Liability Under Dram Shop Statutes

Our sale of alcoholic beverages subjects us to dram shop statutes in most states. These statutes allow an injured person to recover damages
from an establishment that served alcoholic beverages to an intoxicated person. If we receive a judgment substantially in excess of our insurance coverage, or if we fail to maintain our insurance coverage, our business, financial condition,
operating results or cash flows could be materially and adversely affected. See Item 1. BusinessGovernment Regulation for a discussion of the regulations with which we must comply.

We Could Face Potential Labor Shortages and Increases in Labor Costs

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees, including restaurant managers, kitchen staff and wait staff. Qualified individuals needed to
fill these positions are in short supply in certain areas, and the inability to recruit and retain such individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants, which could have a
material adverse effect on our business, financial condition, operating results or cash flows. Competition for qualified employees could require us to pay higher wages to attract sufficient employees, which could result in higher labor costs. In
addition, we have a substantial number of hourly employees who are paid the federal or state minimum wage and who rely on tips for a significant portion of their income. Government-mandated increases in minimum wages, overtime pay, paid leaves of
absence, or health benefits, or increased tax reporting and tax payment requirements for employees who receive gratuities, or a reduction in the number of states that allow tips to be credited toward minimum wage requirements, could increase our
labor costs and reduce our operating margins.

Increased Energy Costs and Power Outages May Adversely Affect Our Operating Results

Our success depends in part on our ability to absorb increases in utility costs. Utility costs have been increasing across the country and various regions
of the United States in which we operate multiple restaurants, particularly California, have experienced significant and temporary increases in utility prices. We have in the past closed restaurants on a temporary basis due to the inability to
receive electrical power. If these increases should recur or continue, it may adversely affect our operating results. Additionally, our contract with our primary food distributor, DMA, allows for some fluctuation in distribution fees based on the
price of diesel fuel. A significant increase in the price of diesel fuel may result in increased expenses.

We May Suffer from Uninsured Losses that
Could Have a Material Adverse Effect on Our Business

We have comprehensive insurance, including general liability, fire, extended
coverage and employee practices liability coverage. However, there are certain types of losses that may be uninsurable or that we believe are not economically insurable, such as earthquakes, hurricanes and other natural disasters, and terrorist
attacks. In view of the location of many of our existing and planned restaurants in California and Florida and other earthquake and hurricane prone areas of the United States, our operations are susceptible to damage and disruption caused by
earthquakes and hurricanes. In the event of an earthquake, hurricane or other natural disaster affecting one or more geographic areas of our operations, we could suffer a loss of the capital invested in, as well as anticipated earnings from, the
damaged or destroyed properties.

The terrorist attacks on the United States had a significant impact on the portion of our business that
is celebratory in nature and adversely affected our restaurant sales and profitability. The threats of additional terrorists attacks and continuing uncertainty created by the war on terrorism, could cause a potential downturn in the economy
and a decrease in consumer spending. These factors could have a material adverse effect on our financial condition, results of operations and cash flows.

Item 1B.    Unresolved Staff Comments

None.



14



---

##### Table of Contents

Item 2.    Properties

We lease the land and building at 53 of our Buca di Beppo restaurant locations. Of our remaining restaurant locations, we lease the land and own the
building at 37 restaurant locations and own the land and building at two locations. Current restaurant leases have expiration dates ranging from 2007 to 2029, excluding options to renew for additional periods of time. Generally, our leases provide
for minimum annual rent, and many leases require additional percentage rent based on sales volume in excess of minimum levels at the particular location. Most of the leases require us to pay the costs of insurance, taxes and a portion of the
lessors operating costs.

We currently own and operate 92 Buca di Beppo restaurants located in 39 markets in 25 states and the
District of Columbia.



|                                |  |                                  
|------------------------------- |  | ---------------------------------
|Market                          |  | Number ofBuca di BeppoRestaurants
|Phoenix, Arizona                |  | 4                                
|Los Angeles, California         |  | 12                               
|Sacramento, California          |  | 2                                
|San Diego, California           |  | 3                                
|San Francisco, California       |  | 4                                
|Denver, Colorado                |  | 3                                
|Colorado Springs, Colorado      |  | 1                                
|Daytona Beach, Florida          |  | 1                                
|Jacksonville, Florida           |  | 1                                
|Miami, Florida                  |  | 4                                
|Orlando, Florida                |  | 2                                
|Naples, Florida                 |  | 1                                
|Tampa Bay, Florida              |  | 2                                
|Atlanta, Georgia                |  | 1                                
|Honolulu, Hawaii                |  | 1                                
|Chicago, Illinois               |  | 4                                
|Indianapolis, Indiana           |  | 3                                
|Kansas City, Missouri           |  | 1                                
|Louisville, Kentucky            |  | 1                                
|Detroit, Michigan               |  | 3                                
|Minneapolis/St. Paul, Minnesota |  | 5                                
|Las Vegas, Nevada               |  | 2                                
|Cherry Hill, New Jersey         |  | 1                                
|Albuquerque, New Mexico         |  | 1                                
|Albany, New York                |  | 1                                
|Charlotte, North Carolina       |  | 1                                
|Cincinnati, Ohio                |  | 1                                
|Cleveland, Ohio                 |  | 3                                
|Columbus, Ohio                  |  | 2                                
|Philadelphia, Pennsylvania      |  | 5                                
|Pittsburgh, Pennsylvania        |  | 2                                
|Nashville, Tennessee            |  | 1                                
|Austin, Texas                   |  | 1                                
|Dallas, Texas                   |  | 3                                
|Houston, Texas                  |  | 2                                
|Salt Lake City, Utah            |  | 2                                
|Seattle, Washington             |  | 2                                
|Milwaukee, Wisconsin            |  | 1                                
|Washington, D.C./Maryland       |  | 2                                
|                                |  |                                  
|                                |  | 92                               
|                                |  |                                  

We lease and maintain our executive offices at 1300 Nicollet Mall, Suite 5003, Minneapolis,
Minnesota, 55403. Subject to normal expansion, we believe that our facilities are adequate to meet our present and reasonably foreseeable needs.



15



---

##### Table of Contents

Item 3.    Legal Proceedings

From time to time, we are a defendant in litigation arising in the ordinary course of our business, including claims resulting from slip and
fall accidents, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. To date, none of
this litigation, some of which is covered by insurance, has had a material effect on us.

Three virtually identical civil actions were
commenced against our company and three former officers in the United States District Court for the District of Minnesota between August 7, 2005 and September 7, 2005. The three actions have been consolidated. The four lead plaintiffs
filed and served a Consolidated Amended Complaint (the Complaint) on January 11, 2006. The Complaint was brought on behalf of a class consisting of all persons who purchased our common stock in the market during the time period from
February 6, 2001 through March 11, 2005 (the class period). We filed a motion to dismiss the Complaint, which was granted on October 16, 2006. On December 18, 2006, the lead plaintiffs filed a Second Amended
Consolidated Complaint (Second Complaint). The Second Complaint alleges that in press releases and SEC filings issued during the class period, defendants made materially false and misleading statements about our companys income,
revenues, and internal controls, which allegedly had the result of artificially inflating the market price for our stock. The lead plaintiffs assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and seek compensatory
damages in an unspecified amount, plus an award of attorneys fees and costs of litigation. On February 26, 2007, we filed a motion to dismiss the Second Complaint, which is scheduled for hearing on June 22, 2007. We are not able to
predict the ultimate outcome of this litigation, but it may be costly and disruptive. The total costs cannot be reasonably estimated at this time. Federal securities litigation can result in substantial costs and divert our managements
attention and resources, which may have a material adverse effect on our business and results of operations, including cash flows.

In
February 2005, we announced that the SEC had informed us that it has issued a formal order of investigation to determine whether there have been violations of the federal securities laws. We understand that the order of investigation relates to our
internal controls and compliance with rules governing filings and reports, including public disclosures, required to be filed with the SEC, and the 2002 purchase of an old farmhouse in Italy known as Villa Sermenino. We believe that the
SEC largely has completed its investigation of the Company, with which we cooperated and assisted, and we expect to reach a resolution of this matter with the SEC.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

Item X.    Executive Officers of the Registrant

Set forth below is certain information concerning our executive officers:



|                  |  |     |  |                                                  
|----------------- |  | --- |  | -------------------------------------------------
|Name              |  | Age |  | Position with the Company                        
|Wallace B. Doolin |  | 60  |  | Chairman of the Board and Chief Executive Officer
|John T. Bettin    |  | 51  |  | President                                        
|*Modesto Alcala   |  | 44  |  | Chief Operating Officer                          
|Richard G. Erstad |  | 42  |  | General Counsel and Secretary                    
|Stephen B. Hickey |  | 62  |  | Chief Marketing Officer                          
|Kaye R. OLeary   |  | 47  |  | Chief Financial Officer                          
|Cynthia C. Rodahl |  | 52  |  | Chief Family Resource Officer                    

---

|* | Ceased employment with the Company on January 2, 2007.
|- | ------------------------------------------------------



16



---

##### Table of Contents

Wallace B. Doolin joined BUCA, Inc. in November 2004 as our Chairman of the Board, President and
Chief Executive Officer. Mr. Doolin has more than 35 years of restaurant industry experience. From 2002 to 2004, Mr. Doolin served as Chief Executive Officer of La Madeleine Bakery and Bistro, a 64-restaurant chain, which he helped
reengineer and reposition the brand and prepare for its next stage of growth. Prior to joining La Madeleine, Mr. Doolin served as Chief Executive Officer and President of Carlson Restaurants Worldwide (CRW) and TGI Fridays
(Fridays) from 1994 to 2002 and as Senior Vice President and Executive Vice President of CRW and Fridays from 1989 to 1993. During his more than 13 years with CRW and Fridays, he oversaw Fridays growth from 135
U.S. restaurants to more than 700 units in 57 countries. He also was responsible for the acquisition of Pick Up Stix, which brought CRWs restaurant total to 770. From 1984 to 1986, Mr. Doolin served as President of Applebees. From
1972 to 1989, he held senior leadership positions at W.R. Graces Restaurant Division, Flakey Jakes, Inc., and Steak and Ale Restaurants. Mr. Doolin has received the IFMA Silver Plate and NRN Golden Chain awards. He is a board member
emeritus of the National Restaurant Association and past chairman of its Education Foundation and a member of the board of Caribou Coffee Company. He also is chairman of the ALIMA Fund, a fund for international children through Share Our Strength, a
leading childrens anti-hunger organization.

John T. Bettin joined BUCA, Inc. in September 2006 as our President.
Mr. Bettin began his career at Houlihans, part of Gilbert/Robinson, where he progressed from Corporate Executive Chef and Director of Culinary to Vice President of Operations to Senior Vice President of Concept Development. In 1994, he
became Executive Vice President of Operations for Capital Restaurant Concepts and, from 1998 to 2005, was President of Mortons of Chicago, a restaurant company. While at Mortons he led and directed operations, purchasing, marketing,
finance, information services, human resources and training. In 2005, Mr. Bettin joined Potbelly Sandwich Works, a restaurant company, as its Chief Operations Officer and Senior Vice President.

Modesto Alcala joined BUCA, Inc. in February 2005 as our Chief Operating Officer and served in that position until January 2007. Mr. Alcala
has more than 20 years of multi-unit restaurant experience. From 2004 to 2005, Mr. Alcala served as President and Chief Operating Officer for Copelands Famous New Orleans Restaurants and Bistros where he led operations for this
full-service casual dining restaurant group. From 2001 to 2004, he was Vice President of Operations for Barnes & Noble, Inc., a bookstore with 600 cafes nationwide. From 1999 to 2001, Mr. Alcala also held management positions with
Carlson Restaurants Worldwide, an operator of high volume upscale full-service concepts including Timpano Italian Chop House, Samba Room, and Mignon Steak House.

Richard G. Erstad joined BUCA, Inc. in April 2005 as our General Counsel and Secretary. Mr. Erstad had previously been an attorney with the corporate group of Faegre & Benson LLP, a law firm, from
1996 to 2005, where his practice focused on securities law and mergers and acquisitions, including representing BUCA, Inc. on a variety of matters. He is a member of the Minnesota Bar.

Stephen B. Hickey joined BUCA, Inc. in January 2004 as our Chief Marketing Officer. Mr. Hickey brings over 36 years of marketing and
consulting experience to BUCA, Inc. Mr. Hickey has held senior marketing executive positions with several major quick-service and full-service restaurant chains. He launched his restaurant career at McDonalds in 1975, where he served in
several capacities including Staff Director of National Marketing. From 1982 to 1994, he held Vice President of Marketing positions with Hardees Food Systems, Applebees, Wendys, International, Inc. and TGI Fridays. From 2000
to 2003, Mr. Hickey served as Senior Vice President of Marketing for Creative Consumer Concepts, a kids and family marketing company serving the restaurant industry.

Kaye R. OLeary joined BUCA, Inc. in March 2005 as our Chief Financial Officer. From 2001 to 2005, Ms. OLeary was Vice President of Finance for Navitaire, Inc., a wholly owned subsidiary of
Accenture Inc., which provides outsourced technology solutions to the airline industry. From 2000 to 2001, Ms. OLeary was Vice President and Chief Financial Officer for Onelink, Inc., a provider of Internet-based business intelligence
services to the telecommunications industry. From 1995 to 2000, Ms. OLeary also served as Vice President, Corporate Business Planning for Carlson Companies, Inc.



17



---

##### Table of Contents

Cynthia C. Rodahl joined BUCA, Inc. in March 2005 as our Chief Family Resource Officer.
Ms. Rodahl brings more than 23 years of corporate human resources experience to BUCA, Inc. From 2004 to 2005, Ms. Rodahl was Vice President of Human Resources and Safety for Transport Corporation of America, a trucking company. From 1999
to 2004, she served as Vice President of Human Resources for Carlson Marketing Group and Carlson Wagonlit Travel, a travel agency. Prior to that, she held a variety of senior human resources positions, including serving as Vice President of Human
Resources, during her 18-year career at the Pillsbury Company.



18



---

##### Table of Contents

PART II

Item 5.    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Our common stock trades on the Nasdaq National Market System under the symbol BUCA. As of March 8,
2007, there were approximately 710 record holders of our common stock. The following table sets forth for the quarters indicated the high and low sales prices of our common stock, as reported by the Nasdaq Stock Market.



|                    |  |      |      |     |   |     
|------------------- |  | ---- | ---- | --- | - | ----
|Period              |  | High |      | Low
|2005 First Quarter  |  | $    | 7.17 |     | $ | 6.24
|2005 Second Quarter |  |      | 6.46 |     |   | 4.20
|2005 Third Quarter  |  |      | 6.86 |     |   | 5.01
|2005 Fourth Quarter |  |      | 6.19 |     |   | 5.06
|2006 First Quarter  |  |      | 5.99 |     |   | 5.05
|2006 Second Quarter |  |      | 6.54 |     |   | 4.73
|2006 Third Quarter  |  |      | 5.55 |     |   | 5.01
|2006 Fourth Quarter |  |      | 5.43 |     |   | 4.28

We have never declared or paid cash dividends on our common stock. We currently intend to retain
all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on our common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our board of
directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our board. In addition, our current credit facility prohibits us from paying any cash dividends
for as long as any loan, unpaid reimbursement obligation or letter of credit is outstanding under the credit facility or any of our lenders has any obligation to make any loans or to issue, extend or renew any letter of credit under the credit
facility.

Our Paisano Partner program requires our Paisano Partners to purchase either $10,000 or $20,000 of our common stock at fair
market value. We have also added a Chef Partner program in 2006 allowing chefs who wish to become Chef Partners to purchase $5,000 of our common stock at fair market value. We provide the Paisano and Chef Partners the option to finance the purchase
of the common stock with a full recourse loan payable over five years at a fixed interest rate of 8%. We have the option, but not the obligation, to repurchase all of the shares purchased and paid for by a Partner under the program at the purchase
price of the shares paid by the Partner either (1) upon the initial bankruptcy proceedings by or against the Partner within five years after the purchase date of the equity interest or (2) if the Partners employment with us is
terminated for any reason within five years after the purchase date of the equity interest. The following table represents the repurchase of Paisano Partner and Chef Partner equity shares issued in accordance with this program during the fourth
quarter of fiscal 2006.

Issuer Purchases of Equity Securities



|                                         |  |                                               |  |                                          |      |                                                                                             |   |                                                                                                                         |   |          
|---------------------------------------- |  | --------------------------------------------- |  | ---------------------------------------- | ---- | ------------------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------------------------------- | - | ---------
|Period                                   |  | (a) Total Numberof Shares (orUnits) Purchased |  | (b) Average PricePaid per Share (orUnit) |      | (c) Total Numberof Shares (or Units)Purchased as Part ofPublicly AnnouncedPlans or Programs |   | (d) Maximum Number(or Approximate DollarValue) of Shares (orUnits) that May Yet
BePurchased Under thePlans or Programs*
|Four-week period ended October 22, 2006  |  | 8,270                                         |  | $                                        | 6.04 |                                                                                             |  |                                                                                                                         | $ | 1,169,913
|Four-week period ended November 19, 2006 |  |                                              |  |                                          |     |                                                                                             |  |                                                                                                                         | $ | 1,329,888
|Six-week period ended December 31, 2006  |  | 4,970                                         |  |                                          | 5.63 |                                                                                             |  |                                                                                                                         | $ | 1,734,721
|                                         |  |                                               |  |                                          |      |                                                                                             |   |                                                                                                                         |   |          
|Total                                    |  | 13,240                                        |  | $                                        | 5.89 |                                                                                             |  |                                                                                                                         |   |          
|                                         |  |                                               |  |                                          |      |                                                                                             |   |                                                                                                                         |   |          

---

|* | The dollar figure indicates the total amount of shares that we have the option, but not the obligation, to purchase under the Paisano Partner and Chef Partner programs.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



---

##### Table of Contents

Performance Graph

The graph below compares the cumulative total shareholder return(1), assuming the reinvestment of all dividends on our common stock for the period beginning December 30, 2001, and ending on December 31,
2006.

LOGO



|                                             |  |                  |        |                  |   |                  |  |                  |        |                  |   |                  |  |   |        |  |   |       
|-------------------------------------------- |  | ---------------- | ------ | ---------------- | - | ---------------- |  | ---------------- | ------ | ---------------- | - | ---------------- |  | - | ------ |  | - | ------
|                                             |  | December 30,2001 |        | December 29,2002 |   | December 28,2003 |  | December 26,2004 |        | December 25,2005 |   | December 31,2006
|Nasdaq Stock Index                           |  | $                | 100.00 |                  | $ | 68.49            |  | $                | 99.99  |                  | $ | 109.59           |  | $ | 114.96 |  | $ | 124.11
|Standard & Poors Small Cap Restaurant Index |  |                  | 100.00 |                  |   | 93.25            |  |                  | 124.58 |                  |   | 151.70           |  |   | 160.28 |  |   | 174.76
|BUCA, Inc.                                   |  |                  | 100.00 |                  |   | 50.90            |  |                  | 42.76  |                  |   | 47.56            |  |   | 33.72  |  |   | 30.83 

---

|(1) | Assumes that $100 was invested on December 30, 2001, in our common stock at an offering price of $15.60 and at the closing sales price for each index, and that all dividends
were reinvested. We have not declared dividends on our common stock. You should not consider shareholder returns over the indicated period to be indicative of future shareholder returns.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



20



---

##### Table of Contents

Item 6.    Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL DATA

(in thousands, except share, per share and operating data)

The following selected consolidated statements of operations
and balance sheet data for the five fiscal years ended December 31, 2006 are derived from our Consolidated Financial Statements. This selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements
and their notes, Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations and other financial information included elsewhere in this Annual Report on Form 10-K. In addition, based on the sale of
the Vinny Ts of Boston brand and associated restaurants in September 2006 and the closure of three Buca di Beppo restaurants in the fourth quarter of fiscal 2005, we have reflected the assets and liabilities of Vinny Ts of Boston as
held for sale and the associated financial results of Vinny Ts of Boston and the three closed restaurants have been excluded from income from continuing operations and classified as discontinued operations. See
discussion in Note 2 of the Consolidated Financial Statements for more information on this treatment.



|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|---------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ---------------- | - |  | ---------------- | ------- | - |  | - | ------- | -
|                                                                             |  | Fiscal Year Ended |        
|                                                                             |  | December 31,2006  |         |   | December 25,2005 |   |         | December 26,2004 |  |   | December 28,2003 |   |  | December 29,2002 |        
|Restaurant sales                                                             |  | $                 | 253,813 |   |                  | $ | 238,959 |                  |  | $ | 223,458          |   |  | $                | 216,345 |   |  | $ | 199,978 |  
|Restaurant costs:                                                            |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Product                                                                      |  |                   | 63,307  |   |                  |   | 60,717  |                  |  |   | 56,446           |   |  |                  | 53,721  |   |  |   | 49,577  |  
|Labor                                                                        |  |                   | 83,771  |   |                  |   | 78,761  |                  |  |   | 74,036           |   |  |                  | 69,662  |   |  |   | 61,015  |  
|Direct and occupancy                                                         |  |                   | 74,884  |   |                  |   | 71,855  |                  |  |   | 66,413           |   |  |                  | 59,410  |   |  |   | 48,801  |  
|Depreciation and amortization                                                |  |                   | 12,783  |   |                  |   | 13,205  |                  |  |   | 13,632           |   |  |                  | 14,612  |   |  |   | 12,761  |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Total restaurant costs                                                       |  |                   | 234,745 |   |                  |   | 224,538 |                  |  |   | 210,527          |   |  |                  | 197,405 |   |  |   | 172,154 |  
|General and administrative expenses                                          |  |                   | 20,635  |   |                  |   | 26,904  |                  |  |   | 21,264           |   |  |                  | 19,032  |   |  |   | 17,065  |  
|Pre-opening costs                                                            |  |                   |        |   |                  |   | 243     |                  |  |   | 1,324            |   |  |                  | 2,790   |   |  |   | 3,440   |  
|Loss on impairment and sale of long-lived assets (1)                         |  |                   | 282     |   |                  |   | 9,822   |                  |  |   | 7,773            |   |  |                  | 16,077  |   |  |   | 382     |  
|Lease termination charges                                                    |  |                   |        |   |                  |   | 434     |                  |  |   | 1,939            |   |  |                  |        |   |  |   |        |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Operating (loss) income                                                      |  |                   | (1,849  | ) |                  |   | (22,982 | )                |  |   | (19,369          | ) |  |                  | (18,959 | ) |  |   | 6,937   |  
|Interest income                                                              |  |                   | 221     |   |                  |   | 48      |                  |  |   | 71               |   |  |                  | 95      |   |  |   | 188     |  
|Interest expense                                                             |  |                   | (2,933  | ) |                  |   | (3,429  | )                |  |   | (2,193           | ) |  |                  | (2,349  | ) |  |   | (1,341  | )
|Loss on early extinguishment of debt                                         |  |                   |        |   |                  |   | (675    | )                |  |   | (1,677           | ) |  |                  |        |   |  |   | (394    | )
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|(Loss) income before income taxes                                            |  |                   | (4,561  | ) |                  |   | (27,038 | )                |  |   | (23,168          | ) |  |                  | (21,213 | ) |  |   | 5,390   |  
|Income taxes                                                                 |  |                   |        |   |                  |   |        |                  |  |   |                 |   |  |                  | (2,121  | ) |  |   | (1,951  | )
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net (loss) income from continuing operations                                 |  |                   | (4,561  | ) |                  |   | (27,038 | )                |  |   | (23,168          | ) |  |                  | (23,334 | ) |  |   | 3,439   |  
|Net income (loss) from discontinued operations, net of tax                   |  |                   | 953     |   |                  |   | (4,700  | )                |  |   | (14,975          | ) |  |                  | (1,339  | ) |  |   | 1,018   |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net (loss) income before cumulative effect of change in accounting principle |  |                   | (3,608  | ) |                  |   | (31,738 | )                |  |   | (38,143          | ) |  |                  | (24,673 | ) |  |   | 4,457   |  
|Cumulative effect of change in accounting principle                          |  |                   |        |   |                  |   | (363    | )                |  |   |                 |   |  |                  |        |   |  |   |        |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net (loss) income                                                            |  | $                 | (3,608  | ) |                  | $ | (32,101 | )                |  | $ | (38,143          | ) |  | $                | (24,673 | ) |  | $ | 4,457   |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net (loss) income from continuing operations per sharebasic                 |  | $                 | (0.23   | ) |                  | $ | (1.33   | )                |  | $ | (1.19            | ) |  | $                | (1.39   | ) |  | $ | 0.21    |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net income (loss) from discontinued operations per sharebasic               |  | $                 | 0.05    |   |                  | $ | (0.23   | )                |  | $ | (0.76            | ) |  | $                | (0.08   | ) |  | $ | 0.06    |  
|                                                                             |  |                   |         |   |                  |   |         |                  |  |   |                  |   |  |                  |         |   |  |   |         |  



21



---

##### Table of Contents

|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|--------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---------------- | - | ---------- | ---------------- |  | - | ---------------- | - |  | ---------------- | ---------- | - |  | - | ----------
|                                                                      |  | Fiscal Year Ended
|                                                                      |  | December 31,2006  |            |   | December 25,2005 |   |            | December 26,2004 |  |   | December 28,2003 |   |  | December 29,2002
|Cumulative effect of accounting change per sharebasic                |  | $                 |           |   |                  | $ | (0.02      | )                |  | $ |                 |   |  | $                |           |   |  | $ |          
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Net (loss) income per sharebasic                                     |  | $                 | (0.18      | ) |                  | $ | (1.58      | )                |  | $ | (1.95            | ) |  | $                | (1.47      | ) |  | $ | 0.27      
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Weighted average common shares outstandingbasic                      |  |                   | 20,494,007 |   |                  |   | 20,312,389 |                  |  |   | 19,608,465       |   |  |                  | 16,738,032 |   |  |   | 16,498,204
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Net (loss) income from continuing operations per sharediluted        |  | $                 | (0.23      | ) |                  | $ | (1.33      | )                |  | $ | (1.19            | ) |  | $                | (1.39      | ) |  | $ | 0.20      
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Net (loss) income from discontinued operations per sharediluted      |  | $                 | 0.05       |   |                  | $ | (0.23      | )                |  | $ | (0.76            | ) |  | $                | (0.08      | ) |  | $ | 0.06      
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Cumulative effect of change in accounting principle per sharediluted |  | $                 |           |   |                  | $ | (0.02      | )                |  | $ |                 |   |  | $                |           |   |  | $ |          
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Net (loss) income per sharediluted                                   |  | $                 | (0.18      | ) |                  | $ | (1.58      | )                |  | $ | (1.95            | ) |  | $                | (1.47      | ) |  | $ | 0.26      
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           
|Weighted average common shares outstandingdiluted                    |  |                   | 20,494,007 |   |                  |   | 20,312,389 |                  |  |   | 19,608,465       |   |  |                  | 16,738,032 |   |  |   | 16,879,655
|                                                                      |  |                   |            |   |                  |   |            |                  |  |   |                  |   |  |                  |            |   |  |   |           



|                                                 |  |                   |        |   |                  |   |        |                  |  |   |                  |   |  |                  |        |   |  |   |        |  
|------------------------------------------------ |  | ----------------- | ------ | - | ---------------- | - | ------ | ---------------- |  | - | ---------------- | - |  | ---------------- | ------ | - |  | - | ------ | -
|                                                 |  | Fiscal Year Ended |       
|                                                 |  | December 31,2006  |        |   | December 25,2005 |   |        | December 26,2004 |  |   | December 28,2003 |   |  | December 29,2002 |       
|Comparable restaurant sales increase (decrease): |  |                   |        |   |                  |   |        |                  |  |   |                  |   |  |                  |        |   |  |   |        |  
|Buca di Beppo (2)(3)                             |  |                   | 3.8    | % |                  |   | 5.1    | %                |  |   | -1.4             | % |  |                  | -6.8   | % |  |   | -2.5   | %
|Average weekly restaurant sales:                 |  |                   |        |   |                  |   |        |                  |  |   |                  |   |  |                  |        |   |  |   |        |  
|Buca di Beppo (2)                                |  | $                 | 51,208 |   |                  | $ | 48,899 |                  |  | $ | 45,597           |   |  | $                | 46,972 |   |  | $ | 50,778 |  
|Restaurants open at end of period:               |  |                   |        |   |                  |   |        |                  |  |   |                  |   |  |                  |        |   |  |   |        |  
|Buca di Beppo                                    |  |                   | 93     |   |                  |   | 93     |                  |  |   | 95               |   |  |                  | 95     |   |  |   | 82     |  



|                                                         |  |                  |         |                  |   |                  |  |                  |         |                  |   |         |  |   |        
|-------------------------------------------------------- |  | ---------------- | ------- | ---------------- | - | ---------------- |  | ---------------- | ------- | ---------------- | - | ------- |  | - | -------
|                                                         |  | As of           
|                                                         |  | December 31,2006 |         | December 25,2005 |   | December 26,2004 |  | December 28,2003 |         | December 29,2002
|Consolidated Balance Sheet Data                          |  |                  |         |                  |   |                  |  |                  |         |                  |   |         |  |   |        
|Cash and cash equivalents                                |  | $                | 1,567   |                  | $ | 1,421            |  | $                | 2,046   |                  | $ | 1,998   |  | $ | 2,100  
|Total assets                                             |  | $                | 137,403 |                  | $ | 150,866          |  | $                | 181,141 |                  | $ | 207,256 |  | $ | 216,759
|Total debt and capital leases, including current portion |  | $                | 16,471  |                  | $ | 18,724           |  | $                | 22,851  |                  | $ | 39,003  |  | $ | 29,710 
|Shareholders equity                                     |  | $                | 67,020  |                  | $ | 69,040           |  | $                | 100,405 |                  | $ | 120,717 |  | $ | 144,223

---

|(1) | Losses on impairment of long-lived assets primarily include asset impairment charges taken for both open and unopened restaurants. The asset impairment of fixed and other long-term
assets for certain open restaurants was taken because the sum of expected undiscounted cash flows of such restaurants did not support the net book value of the related restaurant assets. The write-off of capitalized development costs for certain
unopened restaurants was taken because of a reduction in our development plans. Loss on sale of long-lived assets related to the loss recognized as a result of the sale and simultaneous leaseback of eight restaurant locations during fiscal 2005.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Comparable restaurant sales and average weekly sales for 2006 are calculated using 52 weeks instead of 53 weeks.
|--- | ----------------------------------------------------------------------------------------------------------------

|(3) | The calculation of comparable restaurant sales includes restaurants open for a full 18 months.
|--- | ----------------------------------------------------------------------------------------------



22



---

##### Table of Contents

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

Overview

As of
December 31, 2006, we owned and operated 93 Buca di Beppo restaurants. Our Buca di Beppo restaurants are full service restaurants that offer high quality, Italian cuisine served family-style in small and large family-sized portions in a fun and
energetic atmosphere that parodies the decor and ambiance of post-War Italian/American restaurants.

In fiscal 2005, we opened one new Buca
di Beppo restaurant and closed three. During fiscal 2006, we did not open any new restaurants. We sold the Vinny Ts of Boston brand and associated restaurants in September 2006. We are currently focused on the development and implementation of
appropriate strategies to improve our operations and improve comparable restaurant sales.

In 2005, our board of directors approved the
engagement of an investment banker to represent us in the planned sale of the Vinny Ts of Boston restaurants. Vinny Ts of Boston was accounted for as assets held for sale as of December 25, 2005 and has been included in
discontinued operations in accordance with Statement of Financial Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. See Note 2 to our Consolidated Financial Statements for more information on
assets held for sale and discontinued operations. Except where otherwise indicated, the following discussion relates to continuing operations only.

Financial results related to the three restaurants we closed in 2005 have been classified as discontinued operations in our Consolidated Financial Statements. See Note 2 to our Consolidated Financial Statements for more information on
discontinued operations. We will continue to review all of our restaurant locations for potential impairment and potential closure. The lease on our Chicago Clark Street restaurant expired in February 2007 and we made the decision to not exercise
our option to renew the lease. This restaurant was closed in February 2007. We intend to resume new restaurant openings and are working toward opening one new restaurant in fiscal 2007 and three to five new restaurants in fiscal 2008. We also intend
to explore the option of franchising and selling development rights to our restaurants in certain select markets beginning in fiscal 2007.

During fiscal 2006, we implemented a price increase of approximately 3.0% on food items at our Buca di Beppo restaurants. The primary reason for this price increase was to offset rising operational costs, particularly in product and
occupancy expenses. Also during fiscal 2006, we added our lunch menu to an additional 67 restaurants; the majority of those being added in the fiscal fourth quarter, bringing the total number of restaurants serving lunch during fiscal 2006 to 76 or
82% of the system.



23



---

##### Table of Contents

Results of Operations

Our consolidated operating results for the 53-week period ended December 31, 2006 and the 52-week periods ended December 25, 2005 and December 26, 2004 expressed as a percentage of restaurant sales were
approximately as follows:



|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|------------------------------------------------------------------- |  | ----------------- | ------- | -- | ---------------- | - | ------- | ---------------- |  | - | ------- | --
|                                                                    |  | Fiscal Year Ended |        
|                                                                    |  | December 31,2006  |         |    | December 25,2005 |   |         | December 26,2004 | 
|Restaurant sales (in thousands)                                     |  | $                 | 253,813 |    |                  | $ | 238,959 |                  |  | $ | 223,458 |   
|Restaurant costs:                                                   |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Product                                                             |  |                   | 25.0    | %  |                  |   | 25.4    | %                |  |   | 25.3    | % 
|Labor                                                               |  |                   | 33.0    | %  |                  |   | 33.0    | %                |  |   | 33.1    | % 
|Direct and occupancy                                                |  |                   | 29.5    | %  |                  |   | 30.1    | %                |  |   | 29.7    | % 
|Depreciation and amortization                                       |  |                   | 5.0     | %  |                  |   | 5.5     | %                |  |   | 6.1     | % 
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Total restaurant costs                                              |  |                   | 92.5    | %  |                  |   | 94.0    | %                |  |   | 94.2    | % 
|General and administrative expenses                                 |  |                   | 8.1     | %  |                  |   | 11.3    | %                |  |   | 9.5     | % 
|Pre-opening costs                                                   |  |                   | 0.0     | %  |                  |   | 0.1     | %                |  |   | 0.6     | % 
|Loss on impairment and sale of long-lived assets                    |  |                   | 0.1     | %  |                  |   | 4.1     | %                |  |   | 3.5     | % 
|Lease termination charges                                           |  |                   | 0.0     | %  |                  |   | 0.2     | %                |  |   | 0.9     | % 
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Operating loss                                                      |  |                   | (0.7    | )% |                  |   | (9.6    | )%               |  |   | (8.7    | )%
|Interest income                                                     |  |                   | 0.1     | %  |                  |   | 0.0     | %                |  |   | 0.0     | % 
|Interest expense                                                    |  |                   | 1.2     | %  |                  |   | 1.4     | %                |  |   | 1.0     | % 
|Loss on early extinguishment of debt                                |  |                   | 0.0     | %  |                  |   | 0.3     | %                |  |   | 0.7     | % 
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Loss before income taxes                                            |  |                   | (1.8    | )% |                  |   | (11.3   | )%               |  |   | (10.4   | )%
|Income taxes                                                        |  |                   | 0.0     | %  |                  |   | 0.0     | %                |  |   | 0.0     | % 
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Net loss from continuing operations                                 |  |                   | (1.8    | )% |                  |   | (11.3   | )%               |  |   | (10.4   | )%
|Net income (loss) from discontinued operations                      |  |                   | 0.4     | %  |                  |   | (2.0    | )%               |  |   | (6.7    | )%
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Net loss before cumulative effect of change in accounting principle |  |                   | (1.4    | )% |                  |   | (13.3   | )%               |  |   | (17.1   | )%
|Cumulative effect of change in accounting principle                 |  |                   | 0.0     | %  |                  |   | (0.2    | )%               |  |   | 0.0     | % 
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   
|Net loss                                                            |  |                   | (1.4    | )% |                  |   | (13.4   | )%               |  |   | (17.1   | )%
|                                                                    |  |                   |         |    |                  |   |         |                  |  |   |         |   

53 Week Fiscal Year Ended December 31, 2006 Compared to 52 Week Fiscal Year Ended December 25, 2005

Restaurant sales.    Our restaurant sales are
primarily comprised of food and beverage sales. Restaurant sales increased by approximately $14.8 million, or 6.2%, to $253.8 million in fiscal 2006 from $239.0 million in fiscal 2005. Fiscal 2006 consisted of 53 weeks as compared to 52 weeks for
fiscal 2005. Sales for the 53rdweek of fiscal 2006 were approximately $6.1 million. Our calculation of comparable
restaurant sales includes restaurants open for 18 full months and the calculation for fiscal 2006 excludes the results for the 53rdweek. Comparable restaurant sales increased by approximately 3.8% for Buca di Beppo in fiscal 2006. Our Buca di Beppo average weekly sales from continuing operations increased to $51,208 in fiscal 2006, up approximately 4.7% from
fiscal 2005 levels. The increase in restaurant sales was primarily due to the sales in the 53rdweek. Also
contributing to the increase in restaurant sales, as well as the increase in comparable restaurant sales were lunch sales at the additional restaurants serving lunch, an approximate 1.9% increase in guest counts, and price increases of approximately
1.5% during each of the first and fourth quarters of 2006. Coupons and other discounts are accounted for as a direct reduction in restaurant sales. Fiscal 2006 restaurant sales reflect total discounts of approximately $12.0 million; fiscal 2005
restaurant sales reflected total discounts of approximately $12.4 million.



24



---

##### Table of Contents

Product.    Product costs increased by approximately $2.6 million, or 4.3%, to
$63.3 million in fiscal 2006 from $60.7 million in fiscal 2005. The increase was primarily due to increased sales volume and increased prices for produce, bakery items and tomatoes. Product costs decreased as a percentage of restaurant sales to
approximately 25.0% in fiscal 2006 from 25.4% in fiscal 2005. This decrease as a percentage of sales was primarily the result of decreased bar costs. Bar costs decreased as a percentage of sales primarily due to a reduction in the wine pour during
fiscal 2005. Also contributing to the decrease as a percentage of sales were the implementation of standardized pricing for beer and spirits during fiscal 2006 which resulted in a net price increase and an approximate 2.4% price increase on wine in
fiscal 2006. We expect product costs to remain flat or decrease as a percentage of sales in fiscal 2007 as compared to fiscal 2006.

Labor.    Labor costs include direct hourly and management wages,
bonuses, taxes and benefits for restaurant employees. Labor costs increased by approximately $5.0 million, or 6.4%, to $83.8 million in fiscal 2006 from $78.8 million in fiscal 2005. Labor costs increased as a result of the 53rdweek in fiscal 2006, and increased hourly labor needed to support additional restaurants serving lunch and higher guest
counts. Labor costs remained flat at 33.0% of sales in fiscal 2006 compared to fiscal 2005. We expect labor costs to increase as a percentage of sales in fiscal 2007 as compared to fiscal 2006 due to increases in the minimum wage.

Direct and occupancy.Direct and occupancy expenses include supplies, marketing, rent, utilities, real estate taxes,
repairs and maintenance, workers compensation, general liability insurance expense, rental expenses and other related restaurant costs. Direct and occupancy expenses increased by approximately $3.0 million, or 4.2%, to $74.9 million in fiscal 2006
from $71.9 million in fiscal 2005. The majority of the increase in direct and occupancy costs was a result of increases in the cost of utilities and increases in rent. Also contributing to the increase in costs were increases in the cost of kitchen
supplies, menu supplies and china. Direct and occupancy expenses decreased as a percentage of sales to approximately 29.5% in fiscal 2006 as compared to 30.1% in fiscal 2005. Direct and occupancy costs are primarily fixed in nature. The decrease in
direct and occupancy costs as a percentage of sales was primarily due to increased sales volume combined with decreases in expenses for workers compensation and general liability insurance expense. We anticipate direct and occupancy costs to remain
flat or decrease slightly as a percentage of sales in fiscal 2007 as compared with fiscal 2006 due to expected sales growth largely offsetting any increases in insurance or utilities.

Depreciation and amortization.    Depreciation and amortization includes depreciation on property and equipment for our
restaurants and the Paisano Support Center. Depreciation and amortization decreased by approximately $0.4 million, or 3.0%, to $12.8 million in fiscal 2006 from $13.2 million in fiscal 2005. Depreciation and amortization decreased as a result of
previously recognized restaurant impairments. Depreciation and amortization decreased as a percentage of sales to approximately 5.0% in fiscal 2006 as compared to 5.5% in fiscal 2005. This decrease as a percentage of sales was primarily related to
increased sales volume and the impairment of the restaurant assets of six restaurants in late fiscal 2005. We expect depreciation and amortization to decrease as a percentage of sales in fiscal 2007 from fiscal 2006 driven by increased sales.

General and administrative.    General and
administrative expenses are comprised of management and staff salaries, employee benefits, travel, information systems and training and market research expenses associated with the Paisano Support Center. General and administrative expenses
decreased by approximately $6.3 million, or 23.4%, to $20.6 million in fiscal 2006 from $26.9 million in fiscal 2005. General and administrative expenses decreased as a percentage of sales to approximately 8.1% as compared to 11.3% in fiscal 2005.
The decrease in general and administrative expense in dollars and as a percentage of sales was primarily the result of increased sales volumes, as well as the receipt of approximately $2.7 million in insurance-related settlements and reduced legal
and consulting fees. Decreased audit and Sarbanes-Oxley compliance consulting fees also contributed to the decrease. Those decreases were slightly offset by increases in labor incurred during the 53rdweek, increased medical expenses, approximately $0.4 million additional expense related to a settled class action lawsuit and increases related to
shared-based compensation expense. As described in Note 17 to our Condensed Consolidated Financial Statements, our fiscal 2006 included approximately $1.0 million of share-based compensation expense as a result of the adoption of SFAS
No. 123(R). In accordance with the modified prospective transition method,



25



---

##### Table of Contents

we have not adjusted the financial results for our prior periods to include a comparable expense. We expect general and administrative expenses to increase
from fiscal 2006 to fiscal 2007 primarily because we do not expect to receive additional insurance-related settlements.

Loss on
impairment and sale of long-lived assets.    Loss on impairment of long-lived assets primarily relates to fixed asset impairment charges on both open and unopened restaurants. Loss on impairment of long-lived assets was $0.3
million in fiscal 2006 compared to $9.8 million in fiscal 2005, a $9.5 million decrease. In fiscal 2005, we recorded a $6.5 million loss in the third quarter on the impairment of long-lived assets related to six open restaurants in various markets.
In fiscal 2006, we continued to write-off asset additions in restaurants that have been fully impaired. Loss on sale of long-lived assets in fiscal 2005 related to the $2.9 million loss recognized as a result of the sale and simultaneous leaseback
of eight restaurant locations. The remaining $0.4 million loss on impairment of long-lived assets in fiscal 2005 primarily related to capitalized lease development costs for a proposed restaurant that did not open due to a reduction in our
development plans.

Interest expense.    Interest expense includes the financing cost on our credit facilities
and capital leases. Interest expense decreased by approximately $0.5 million, or 14.7%, to $2.9 million in fiscal 2006 from $3.4 million in fiscal 2005 primarily due to the pay-off of the term loan B and reduced borrowings. Approximately $1.5
million of the fiscal 2006 balance was related to our credit facility and approximately $1.4 million was related to interest payments on the leaseback of eight restaurant locations in 2005.

Income taxes.    We recorded no provision for income taxes in fiscal 2006 and fiscal 2005. In fiscal 2006, we continued to
record a full tax valuation allowance because we concluded that we remained in a position that would not allow realization of the asset. We will continue to record a tax valuation allowance until it becomes more likely than not that we will be able
to recover the value of our deferred tax assets.

Discontinued operations.    In 2005, our board of
directors approved the engagement of an investment banker to represent us in the planned sale of the Vinny Ts of Boston restaurants. In November 2005, we also closed three Buca di Beppo restaurants. In September 2006, we sold the Vinny
Ts of Boston brand associated restaurants. Vinny Ts of Boston along with the three closed Buca di Beppo restaurants have been accounted for as discontinued operations under SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets. We recorded $1.0 million of net income in fiscal 2006 compared to a net loss of $4.7 million in fiscal 2005 for discontinuing operations. Our 2005 net loss from discontinued operations included $3.9 million in charges
related to SFAS 144 impairments of restaurant assets. Approximately $1.2 million of the fiscal 2006 balance was related to Vinny Ts of Boston producing net income and $0.2 million of net loss was related to the three closed Buca di Beppo
restaurants.

Net loss.    Net loss decreased to $3.6 million in fiscal 2006 from $32.1 million in fiscal 2005.
As a percentage of sales, net loss for fiscal 2006 was 1.4 % compared to 13.4% in fiscal 2005. The decrease in net loss in absolute dollars and as a percentage of sales was primarily a result of increases in sales, reductions in general and
administrative expenses and a reduction in asset impairment charges.

52 Week Fiscal Year Ended December 25, 2005 Compared to 52 Week Fiscal Year
Ended December 26, 2004

Restaurant sales.    Restaurant sales increased by approximately $15.5 million,
or 6.9%, to $239.0 million in fiscal 2005 from $223.5 million in fiscal 2004. The increase in restaurant sales was primarily the result of the approximately 5.1% increase in comparable restaurant sales for Buca di Beppo in fiscal 2005. Also
contributing to the increase in restaurant sales was the opening of one new Buca di Beppo restaurant during January 2005. Our Buca di Beppo average weekly sales increased to $48,899 in fiscal 2005, or approximately 7.2% from fiscal 2004. Both the
increases in comparable restaurant sales and average weekly sales were due primarily to a 3.2% increase in guest counts. Fiscal 2005 restaurant sales reflect total discounts of approximately $12.4 million.



26



---

##### Table of Contents

Product.    Product costs increased by approximately $4.3 million, or 7.6%, to
$60.7 million in fiscal 2005 from $56.4 million in fiscal 2004. The increase was primarily due to increased sales volume and increased prices for poultry, produce and seafood. Product costs increased as a percentage of restaurant sales to
approximately 25.4% in fiscal 2005 from 25.3% in fiscal 2004. This increase as a percentage of sales was primarily the result of increased prices for poultry, produce and seafood as well as spending on spirits during fiscal 2005.

Labor.    Labor costs increased by approximately $4.8 million, or 6.5%, to $78.8 million in fiscal 2005 from $74.0 million in
fiscal 2004. Labor costs increased as a result of additional hourly labor needed to support higher guest counts. Labor costs decreased as a percentage of sales to approximately 33.0% as compared to 33.1% in fiscal 2004. The decrease as a percentage
of sales in fiscal 2005 was primarily the result of the decrease in restaurant management payroll. Our hourly labor increased 0.1% as a result of additional training to support the addition of lunch over the holiday season and to support our
curbside to go initiatives. The increase in hourly labor was offset by a decrease in management payroll by 0.1%. Payroll taxes and medical insurance decreased 0.4%.

Direct and occupancy.    Direct and occupancy expenses increased by approximately $5.5 million, or 8.3%, to $71.9 million in fiscal 2005 from $66.4 million in fiscal 2004. The majority of
the increase in direct and occupancy costs was a result of increased utility costs. Increased costs of to-go supplies and an increase in rent also contributed to the increase. Direct and occupancy expenses increased as a percentage of sales to
approximately 30.1% in fiscal 2005 as compared to 29.7% in fiscal 2004. The increase in direct and occupancy costs, which are primarily fixed in nature, as a percentage of sales was directly related to utilities expense and increased accruals for
to-go supplies, taxes and marketing expenses.

Depreciation and amortization.    Depreciation and amortization
decreased by approximately $0.4 million, or 3.0%, to $13.2 million in fiscal 2005 from $13.6 million in fiscal 2004. Depreciation and amortization decreased as a result of restaurant impairments. Depreciation and amortization decreased as a
percentage of sales to approximately 5.5% in fiscal 2005 as compared to 6.1% in fiscal 2004. This decrease was primarily related to a $6.8 million write-down of the restaurant assets of six Buca di Beppo restaurants in fiscal 2004.

General and administrative.    General and administrative expenses increased by approximately $5.6 million, or 26.3%, to $26.9
million in fiscal 2005 from $21.3 million in fiscal 2004. General and administrative expenses increased as a percentage of sales to approximately 11.3% as compared to 9.5% in fiscal 2004. The majority of the increase in general and administrative
costs as a percentage of sales were a result of increased labor, while accounting and consulting fees primarily related to staffing changes, our internal investigation and increased spending on remediation of our processes, systems and policies also
contributed to the increase.

Pre-opening costs.    Pre-opening costs decreased approximately $1.1 million, or
84.6%, to $0.2 million in fiscal 2005 from $1.3 million in fiscal 2004. Pre-opening costs decreased as a percentage of sales to approximately 0.1% in fiscal 2005 as compared to 0.6% in fiscal 2004. The decrease in pre-opening costs in dollars and as
a percentage of sales was primarily due to a decrease in the number of new restaurants opened in fiscal 2005.

Loss on impairment and
sale of long-lived assets.    Loss on impairment of long-lived assets was $9.8 million in fiscal 2005. We recorded a $6.5 million loss in the third quarter of 2005 on the impairment of long-lived assets related to six open
restaurants in various markets. Loss on sale of long-lived assets in fiscal 2005 related to the $2.9 million loss recognized as a result of the sale and simultaneous leaseback of eight restaurant locations during September 2005. The remaining $0.4
million loss on impairment of long-lived assets in fiscal 2005 was primarily related to capitalized lease development costs for a proposed restaurant that did not open due to a reduction in our development plans. Loss on impairment of long-lived
assets was $7.8 million in fiscal 2004. This charge reflected the impairment of six restaurants in operation and the write-off of capitalized development costs for restaurants we did not expect to open due to a reduction in our development plans.

Lease termination charges.    Lease termination charges were approximately $0.4 million in fiscal 2005
as compared to $1.9 million in fiscal 2004. The fiscal 2005 charge was related to settlement of lease obligation on a



27



---

##### Table of Contents

restaurant previously closed in Jenkintown, Pennsylvania. The fair value of these charges was estimated in accordance with the accounting standards as
documented in SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. To do this, we estimated the present value of the future minimum lease obligations, net of sublease income.

Interest expense.    Interest expense increased by approximately $1.2 million, or 54.5%, to $3.4 million in fiscal 2005 from
$2.2 million in fiscal 2004. Approximately $0.8 million of the fiscal 2005 increase was due to higher interest rates on our credit facility in fiscal 2005. Approximately $0.4 million was due to interest payments on the leaseback of eight restaurant
locations in September 2005.

Early extinguishment of debt.    Expenses related to the early extinguishment of
debt totaled approximately $0.7 million in fiscal 2005 as compared to $1.7 million in fiscal 2004. The $0.7 million charge in fiscal 2005 arose from the full repayment of our term loan B with the proceeds of the sale-leaseback transaction.

Income taxes.    We recorded no provision for income taxes in fiscal 2005 and fiscal 2004. In fiscal 2005, we
continued to record a full tax valuation allowance because we concluded that we remained in a position that would not allow realization of the asset.

Discontinued operations.    Vinny Ts of Boston fiscal 2005 operating loss of $3.5 million included a $3.9 million loss on the impairment of long-lived assets of three restaurants
recorded in September of 2005. The $1.2 million fiscal 2005 operating loss for the three Buca di Beppo restaurants includes a $0.5 million charge for lease termination charges as calculated under SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The fiscal 2004 operating loss for Vinny Ts of Boston included charges for a $11.6 million impairment of goodwill and a $1.6 million impairment of long-lived assets.

Cumulative effect of accounting change.    We adopted Financial Accounting Standards Board (FASB) Interpretation No. 47
(FIN 47), Accounting for Conditional Asset Retirement Obligationsan Interpretation of FASB Statement No. 143, as of December 25, 2005. In accordance with FIN 47, liabilities for legal obligations stemming from the eventual
retirement of tangible long-lived assets were recorded at fair value as of December 25, 2005, with a corresponding increase to the carrying values of the related long-lived assets. The accounting for the initial adoption of FIN 47 resulted in a
charge of approximately $363,000 related to the cumulative effect of the accretion of the asset retirement obligation and the depreciation of the related long-lived asset.

Net loss.    Net loss decreased to $32.1 million in fiscal 2005 from $38.1 million in fiscal 2004. As a percentage of sales,
net loss for fiscal 2005 was 13.4 % compared to 17.1% in fiscal 2004. The decrease in net loss in absolute dollars and as a percentage of sales was primarily a result of increases in sales, and decreases in pre-opening costs, lease termination
charges and losses on early extinguishment of debt.

Liquidity and Capital Resources

As of December 31, 2006, we held cash of approximately $1.6 million, an increase of approximately $0.2 million from the fiscal
2005 year-end balance of approximately $1.4 million.

Net cash provided by operating activities was approximately $2.8 million in fiscal
2006, $3.0 million in fiscal 2005, and $10.5 million in fiscal 2004. Our net cash provided by operating activities is primarily generated by our restaurant operations. In fiscal 2006, cash provided by operating activities decreased by $0.2 million
primarily driven by operating margin improvements more than offset by net working capital cash uses related to shorter payment terms on restaurant product purchases through DMA, deposits on account with DMA, credit card receivable timing at year-end
and lawsuit settlement awards. The 2006 activity included break-even cash flow from discontinued operations.

Net cash used in investing
activities was $0.8 million in fiscal 2006, $0.8 million in fiscal 2005 and $9.8 million in fiscal 2004. The cash was used primarily for building new restaurants in 2004 and 2005 and



28



---

##### Table of Contents

maintaining existing restaurant assets in all three years. Fiscal 2006 also included cash used to fund the purchase and implementation of an accounting
system, partially offset by the net cash proceeds from the sale of Vinny Ts of Boston. The 2006 activity included investing cash uses of less than $50,000 related to discontinued operations.

We use cash for property and equipment primarily to fund the development and construction of new restaurants and secondarily to fund capitalized property
improvement for our existing restaurants. Capital expenditures were $3.5 million in fiscal 2006, $1.7 million in fiscal 2005, and $11.7 million in fiscal 2004. During fiscal 2006, we did not open any new restaurants. During fiscal 2005, we opened
one new Buca di Beppo restaurant and closed three Buca di Beppo restaurants. In fiscal 2004, we opened two Buca di Beppo restaurants and one Vinny Ts of Boston restaurant and closed two Buca di Beppo restaurants. In fiscal 2004, our new Buca
di Beppo or Vinny Ts of Boston leased restaurants required, on average, a total cash investment of approximately $2.5 to $3.0 million. We are currently evaluating new prototypes and we anticipate that total cash investment per Buca di Beppo
restaurant, including pre-opening costs, will be, on average, approximately $2.5 to $3.0 million.

Net cash used in financing activities
was $1.8 million in fiscal 2006 and $2.8 million in fiscal 2005; $0.6 million was provided from financing activities in fiscal 2004. The net proceeds of $2.6 million from the sale of Vinny Ts of Boston in September 2006 was used to retire the
term loan A facility with Wells Fargo Foothill; the balance was applied to our revolving credit facility. Our primary financing activity in 2005 was related to $17.5 million of proceeds from the sale and simultaneous leaseback of eight restaurants
offset by payments of $18.3 million on our long term debt. We used those proceeds to fully pay down our term loan B facility with Ableco and partially pay down our term loan A facility with Wells Fargo Foothill in 2005.

Financing activities in fiscal 2004 consisted of borrowings on our line of credit, payments of our term loan and a private placement of equity. In 2004,
we completed the sale of 3.3 million shares in a private placement of our stock at a price of $5.50 per share for total gross proceeds of $18.2 million. After deducting equity transaction costs of approximately $0.8 million, we received net
proceeds from the equity sale of approximately $17.4 million, $8.5 million of which was used to prepay our term loan facility and $7.5 million of which was used to pay down our line of credit borrowings and the remaining proceeds were used for
general corporate purposes.

In 2004, we entered into a new credit agreement with Wells Fargo Foothill, Inc. and Ableco Finance LLC, as
lenders, and with Wells Fargo Foothill, Inc., as the arranger and administrative agent for the lenders. The credit agreement, originally provided for (a) a revolving credit facility in an aggregate amount equal to the lesser of a borrowing base
determined in accordance with the terms of the credit agreement and $20 million (including a letter of credit sub-facility of up to an aggregate of $5.0 million); (b) a term loan A facility of up to an aggregate of $5 million; and (c) a
term loan B facility of up to an aggregate of $15 million. The credit agreement expires on November 15, 2009. We are also required under the loan documents to pay certain of our lenders an annual fee, an unused line of credit fee and a
prepayment fee in the event of early termination of the agreement.

The credit agreement includes various affirmative and negative
covenants, including certain financial covenants such as minimum EBITDA as defined in the agreement, minimum fixed charge coverage ratio and maximum limits on capital expenditures and the acquisition or construction of new restaurants in any fiscal
year. Payments under the credit agreement may be accelerated upon the occurrence of an event of default, as defined in the credit agreement that is not otherwise waived or cured. As of March 27, 2005, we were in default of the financial
covenants regarding minimum EBITDA and fixed charge coverage ratio. As a result, an amendment and waiver was negotiated and received in April 2005. In exchange for the amendment and waiver, we paid our new lenders fees totaling $0.4 million and the
interest rate on the term loan B portion of the credit facility was increased. Based upon the fiscal 2005 Consolidated Financial Statements, as of December 25, 2005, we were in default of the financial covenants regarding minimum EBITDA and
fixed charge coverage ratio. As a result, an amendment and waiver was negotiated and received in March 2006. In exchange for the amendment and waiver, we paid our lender a fee of $0.1 million.



29



---

##### Table of Contents

In September 2005, we completed the sale and simultaneous leaseback of eight restaurant locations with
affiliates of CRIC Capital at a sale price of $17.5 million (the Sale Leaseback Transaction). The net proceeds of the Sale Leaseback Transaction were used to prepay, in its entirety, the outstanding term loan B facility with Ableco and
to prepay a portion of the outstanding term loan A facility with Wells Fargo Foothill. A premium equal to four percent of the outstanding principal amount of the term loan B was paid in connection with the prepayment of the term loan B facility.
Concurrently with the closing of the Sale Leaseback Transaction, we entered into an agreement (the Amendment and Consent) with the lenders. Pursuant to the Amendment and Consent, the lenders consented to the Sale Leaseback Transaction
(subject to the prepayment of the term loan B facility and term loan A facility as provided above), agreed to amend the minimum EBITDA coverage required for relevant testing periods in fiscal year 2007, and agreed to amend the credit agreement in
certain other respects. In consideration the Amendment and Consent, we agreed to increase the interest rate on each of the remaining term loan A facility and the revolving credit facility by 2.25% per annum.

On September 24, 2006, we completed the sale of Vinny Ts of Boston restaurants to Bertuccis Corporation. The sale price was $6.8
million; of which, $3.0 million was paid in cash at closing ($2.6 million net of banker fees and other expenses) and $3.8 million was paid through a promissory note issued at closing. The promissory note matures on June 15, 2008 or earlier upon
the occurrence of certain other events, including a change in control of Bertuccis or the repayment or refinancing of Bertuccis outstanding senior notes. The proceeds of the sale, net of investment banker fees and other
transaction-related expenses, were used to retire the term loan A and reduce our outstanding indebtedness on the revolving credit facility.

On March 8, 2007, we executed an amendment to our credit agreement with Wells Fargo Foothill. Pursuant to the amendment, the lenders agreed to expand our maximum revolver amount to $25 million and agreed to amend the credit agreement
in certain other respects. In exchange for the amendment, we paid our lender a fee of $50,000.

The interest rate on the revolving credit
facility is Wells Fargos reference rate plus a margin. The specific margin is corresponds to a range (0.5 to 2.0 percentage points) as determined by our leverage ratio. We also have the option of utilizing a LIBOR rate plus a specific margin
as determined by our leverage ratio. Our interest rate on the revolving credit facility was the Wells Fargo reference rate plus 2.50 percentage points which was 10.75% on December 31, 2006 and 9.75% on December 25, 2005. Under the credit
facility, our annual capital expenditures are limited to $13 million and the agreement includes covenants that place restrictions on sales or properties, transactions with affiliates, creation of additional debt, limitations on our ability to sign
leases for new restaurants, maintenance of certain financial covenants and other customary covenants. We expect to be in compliance with the financial covenants of the credit facility, as recently amended, for the next twelve months.

Amounts borrowed under the credit facility are secured by substantially all of our tangible and intangible assets. As of March 8, 2007, we had
outstanding borrowings of approximately $1.8 million under our revolving credit facility and our availability under the revolving credit facility was approximately $10.9 million.

Our capital requirements, including development costs related to the opening of additional restaurants, have been significant. We reduced our development
plans beginning in fiscal 2005 while we implemented strategies designed to improve our comparable restaurant sales and our cash flow from operations. We may need substantial capital to finance our expansion plans, which require funds for capital
expenditures, pre-opening costs and initial operating losses related to new restaurant openings. In addition, we have incurred and expect to incur significant costs related to the on-going litigation and related matters. The adequacy of available
funds and our future capital requirements will depend on many factors, including the pace of expansion, the costs and capital expenditures for new restaurant development and the nature of contributions, loans and other arrangements negotiated with
landlords. Although we can make no assurance, we believe that our available cash, cash flows from operations, and our available borrowings will be sufficient to fund our capital requirements through at least the next twelve months. To fund future
operations, we may need to raise additional capital through public or private equity or debt financing to continue our growth. In addition, we have and may continue to consider acquiring the operations of other companies. The sale of additional
equity or debt securities could result in additional dilution to our shareholders. We cannot predict whether additional capital will be available on favorable terms, if at all.



30



---

##### Table of Contents

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations

The following table provides aggregate information about our contractual payment obligations and the periods in which payments are due (in thousands):



|                                |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |        
|------------------------------- |  | ---------------------- | ------- | --------------- | - | --------- |  | --------- | ------ | ---------------- | - | ------ |  | - | -------
|                                |  | Payments due by Period
|Contractual Obligations         |  | Total                  |         | Less than 1year |   | 1-3 years |  | 3-5 years |        | More than5 years
|Long-Term Debt Obligations      |  | $                      | 726     |                 | $ | 79        |  | $         | 185    |                  | $ | 223    |  | $ | 239    
|Capital Lease Obligations       |  |                        | 15,744  |                 |   | 113       |  |           | 480    |                  |   | 747    |  |   | 14,404 
|Operating Lease Obligations (1) |  |                        | 259,059 |                 |   | 15,684    |  |           | 31,692 |                  |   | 32,408 |  |   | 179,275
|Purchase Obligations (2)        |  |                        | 11,497  |                 |   | 10,637    |  |           |       |                  |   |       |  |   | 860    
|Interest Expense (3)            |  |                        | 325     |                 |   | 77        |  |           | 127    |                  |   | 83     |  |   | 38     
|                                |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |        
|Total                           |  | $                      | 287,351 |                 | $ | 26,590    |  | $         | 32,484 |                  | $ | 33,461 |  | $ | 194,816
|                                |  |                        |         |                 |   |           |  |           |        |                  |   |        |  |   |        

---

|(1) | Represents aggregate minimum lease payments. Most of our leases also require contingent rent in addition to the minimum base rent based on a percentage of sales ranging from 2.5% to
7.0% and require expenses incidental to the use of the property which has been excluded from this table. This amount also excludes any asset retirement obligations (see Note 1 to our Consolidated Financial Statements).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In determining purchase obligations for this table we used our interpretation of the definition set forth in the SEC Final Rule, Disclosure in Managements Discussion and
Analysis about Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, which states, a purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the
registrant and that specifies all significant terms, including: fixed minimum quantities to be purchased; fixed, minimum or variable/price provisions, and the approximate timing of the transaction.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes interest on asset-based notes.
|--- | ---------------------------------------

As credit
guarantees to insurers, we are contingently liable under standby letters of credit issued under our credit facility. As of December 31, 2006, we had $3.8 million of standby letters of credit related to the self-insurance liabilities. All
standby letters of credit are renewable annually.

See Note 12 to our Consolidated Financial Statements for descriptions of our employment
agreements with our current named executive officers.

For further discussion regarding our contractual obligations described above, see
Notes 10, 11, 12, and 15 to our Consolidated Financial Statements.

Application of Critical Accounting Policies and Estimates

Our Consolidated Financial Statements include accounts of BUCA, Inc. and all of our wholly owned subsidiaries. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect amounts reported in the Consolidated Financial Statements and accompanying notes.
Note 1 to our Consolidated Financial Statements describes our significant accounting policies and methods used in the preparation of the Consolidated Financial Statements.

Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and operating results, and require
our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in
materially



31



---

##### Table of Contents

different amounts being reported under different conditions or using different assumptions. We consider the following policies to be most critical in
understanding the judgments that are involved in preparing our Consolidated Financial Statements.

Property and Equipment

Land, buildings, leasehold improvements, tenant improvements and equipment are recorded at original cost less accumulated depreciation
and amortization. These assets are depreciated on a straight-line basis over the lesser of their estimated useful lives or associated lease term, ranging from three to 25 years. Land is not depreciated because we believe that it retains its
historical value. Our estimate of the useful life of equipment (three to seven years) and buildings (25 years) is based upon the historical life of similar assets in our industry. Leasehold improvements are generally depreciated over the term of the
lease, including certain option periods, because we believe a majority of these assets will exist as long as we are tenants of the various properties. The estimated useful lives and fair market value of these assets as well as our determination of
what constitutes a capitalized cost versus a repair and maintenance expense involves judgments by management. These judgments may produce materially different amounts of depreciation and amortization expense if different assumptions were used. As
discussed below, these judgments may also impact the need and amount to recognize as an impairment charge on the carrying amount of these assets.

Leases

In accordance with SFAS No. 13, Accounting for Leases,and subsequent amendments, each lease is
evaluated at inception to determine whether the lease will be accounted for as an operating or capital lease. Minimum base rent for our operating leases, which generally have escalating rentals over the term of the lease, is recorded on a
straight-line basis over the entire lease term, including cancelable option periods where failure to exercise such options would result in economic penalty, not to exceed 25 years. The initial rent term includes the build-out, or rent
holiday period, for our leases, where no rent payments are typically due under the terms of the lease. Contingent rent expense, which is based on a percentage of revenue, is also recorded to the extent it exceeds minimum base rent per the lease
agreement.

We account for construction allowances by recording a receivable when its collectibility is considered certain, depreciating
the leasehold improvements over the lesser of their useful lives or the full term of the lease, including renewal options and build-out periods, amortizing the construction allowance as a credit to rent expense over the full term of the lease,
including renewal options and build-out periods, and relieving the receivable once the cash is obtained from the landlord for the construction allowance.

We disburse cash for leasehold improvements and furnishings, fixtures and equipment to build out and equip our leased premises. We may also expend cash for structural components of the building that we make to leased
premises that generally are reimbursed to us by our landlords as construction contributions pursuant to agreed-upon terms in our leases. Landlord construction contributions usually take the form of up-front cash, full or partial credits against
minimum or percentage rents otherwise payable by us, or a combination thereof. Depending on the specifics of the leased space, the lease agreement and in accordance with Emerging Issues Task Force (EITF) 97-10, The Effect of Lessee Involvement in
Asset Construction, during the construction period the amounts paid for structural components are recorded as either prepaid rent or construction-in-progress and the landlord construction contributions are recorded as either an offset to prepaid
rent or as a deemed landlord financing liability.

Impairment of Long-Lived Assets

We review our long-lived assets, such as fixed assets and intangible assets, for impairment whenever events or changes in circumstances indicate the
carrying value of an asset or group of assets may not be recoverable, but at least quarterly. We consider a history of consistent and significant operating losses to be a primary indicator of potential asset impairment. Assets are grouped and
evaluated for impairment at the lowest level for which there are identifiable cash flows, primarily the individual restaurants. A restaurant is deemed to be impaired if a



32



---

##### Table of Contents

forecast of its future operating cash flows directly related to the restaurant is less than its carrying amount. If a restaurant is determined to be
impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Fair value is an estimate based on the best information available including prices for similar assets or the results of valuation
techniques such as discounted estimated future cash flows, as if the decision to continue to use the impaired restaurant was a new investment decision. Judgments and estimates made related to long-lived assets are affected by factors such as
economic conditions, changes in historical resale values and changes in operating performance. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the future, we
may be required to record impairment charges for these assets.

Self-Insurance

We are self-insured for a significant portion of our current medical, dental, workers compensation and general liability insurance programs. In
estimating our self-insurance reserves, we utilize estimates of future losses, based upon our historical loss trends and historical industry data and actuarial estimates of settlement costs for incurred claims. These reserves are monitored and
adjusted when warranted by changing circumstances. Should an additional change in claims occur compared to our current estimates, our reserves could be either increased or decreased based upon that data. Any increases or decreases in insurance
reserves would be offset by a corresponding increase or decrease in insurance expense.

Income Taxes

We estimate certain components of our provision for income taxes. The estimates include effective state and local income tax rates, the tax rate in which
deferred taxes are recognized, and the likelihood that we will be able to utilize our deferred tax assets. Our estimates are based on the best available information at the time that we prepare the provision. All tax returns are subject to audit by
federal and state governments, usually years after the tax returns are filed, and could be subject to different interpretations of the tax laws. The ultimate amount of income taxes that we pay may be higher or lower than our estimates.

We record a tax valuation allowance when it is more likely than not that we will not be able to recover the value of our deferred tax assets. We have
recorded a full valuation allowance against the benefit from income taxes due to continued uncertainty regarding whether we will be able to recover our deferred tax assets due to our recent operating losses.

Estimated Liability for Closing Restaurants

We make decisions to close restaurants based on prospects for estimated future profitability. We evaluate each restaurants performance every quarter. When restaurants continue to perform poorly, we consider the demographics of the
location, as well as the likelihood of being able to improve an unprofitable restaurant. If we determine that the restaurant will not, within a reasonable period of time, operate at break-even cash flow or be profitable, we may close the restaurant.

The estimated liability for closing restaurants on properties vacated is generally based on the term of the lease and the lease
termination fee we expect to pay, as well as estimated maintenance costs until the lease has been abated. The amount of the estimated liability established is generally the present value of these estimated future payments upon exiting the property.
The interest rate used to calculate the present value of these liabilities is based on our incremental borrowing rate at the time the liability is established.

A significant assumption used in determining the amount of the estimated liability for closing restaurants is the amount of the estimated liability for future lease payments on vacant restaurants, which we determine
based on our assessment of our ability to successfully negotiate early terminations of our lease agreements with our landlords or sublease the property. Additionally, we estimate the cost to maintain leased and owned vacant properties until the
lease has been abated. If the costs to maintain properties increase, or it takes longer than



33



---

##### Table of Contents

anticipated to sell properties or sublease or terminate leases, we may need to record additional estimated liabilities. If the leases on the vacant
restaurants are not terminated or subleased on the terms we used to estimate the liabilities, we may be required to record losses in future periods. Conversely, if the leases on the vacant restaurants are terminated or subleased on more favorable
terms than we used to estimate the liabilities, we reverse previously established estimated liabilities, resulting in an increase in operating income.

Loss Contingencies

We maintain accrued liabilities and reserves relating to the resolution of
certain contingent obligations. Significant contingencies include those related to litigation. We account for contingent obligations in accordance with SFAS No. 5, Accounting for Contingencies, as interpreted by FASB Interpretation
No. 14 which requires that we assess each contingency to determine estimates of the degree of probability and range of possible settlement. Contingencies which are deemed to be probable and where the amount of such settlement is reasonably
estimable are accrued in our financial statements. If only a range of loss can be determined, we accrue to the best estimate within that range; if none of the estimates within that range is better than another, we accrue to the low end of the range.

The assessment of loss contingencies is a highly subjective process that requires judgments about future events. Contingencies are
reviewed at least quarterly to determine the adequacy of the accruals and related financial statement disclosure. The ultimate settlement of loss contingencies may differ significantly from amounts we have accrued in our financial statements.

Share-Based Compensation

Prior to
fiscal 2006, we accounted for our share-based employee compensation plans under the measurement and recognition provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation. We generally recorded no employee compensation expense for options granted prior to fiscal 2006, as options granted generally had exercise prices
equal to the fair market value of our common stock on the date of grant. We also recorded no compensation expense in connection with our Employee Stock Purchase Plan (ESPP) as the purchase price of the stock was not less than 85% of the lower of the
fair market value of our common stock at the beginning of each offering period or at the end of each offering period. We had recognized compensation expense related to non-vested (restricted) stock issued to employees in fiscal 2005. In accordance
with SFAS No. 123, we disclosed our net income and earnings per share as if we had applied the fair value-based method in measuring compensation expense for our share-based incentive awards.

Effective as of fiscal 2006, we adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment,using the modified
prospective transition method. Under that transition method, compensation expense that we recognize beginning in fiscal 2006 includes expense associated with the fair value of all awards granted on and after December 26, 2005 (the beginning of
our 2006 fiscal year), expense for the unvested portion of previously granted awards outstanding on December 26, 2005, and compensation for the discount eligible employees receive as part of the ESPP. Results for prior periods have not been
adjusted.

We estimate the fair value of options granted using the Black-Scholes option valuation model and the assumptions shown in Note
17 to the accompanying condensed consolidated financial statements. We estimate the volatility of our common stock at the date of grant based on our historical volatility rate, consistent with SFAS No. 123(R) and Securities and Exchange
Commission Staff Accounting Bulletin No. 107 (SAB 107). Our decision to use historical volatility was based upon the lack of actively traded options on our common stock. We estimate the expected term consistent with the simplified method
identified in SAB 107 for share-based awards granted during fiscal 2006. The simplified method calculates the expected term as the average of the vesting and contractual terms of the award. The risk-free interest rate assumption is based on observed
interest rates appropriate for the term of our employee options. We use historical data to estimate pre-vesting option forfeitures



34



---

##### Table of Contents

and record share-based compensation expense only for those awards that are expected to vest. For options granted, we amortize the fair value on a
straight-line basis. All options are amortized over the requisite service periods of the awards, which are generally the vesting periods. If factors change we may decide to use different assumptions under the Black-Scholes option valuation model in
the future, which could materially affect our net income and earnings per share.

Recent Accounting Pronouncements

See Note 1 to our Consolidated Financial Statements for a discussion of new accounting standards.

Inflation

The primary inflationary factors affecting
our operations are food and labor costs. A large number of our restaurant personnel are paid at rates based on the applicable minimum wage and increases in the minimum wage directly affect our labor costs. To date, inflation has not had a material
impact on our operating results.

Item 7A.    Quantitative and Qualitative Disclosure About Market Risk

We are exposed to market risk from changes in interest rates on borrowings under our credit agreement. The credit agreement provides for a revolving
credit facility in an aggregate amount equal to the lesser of a borrowing base determined in accordance with the terms of the credit agreement and $25 million (including a letter of credit sub-facility of up to an aggregate of $5.0 million). The
interest rate on the revolving credit facility is Wells Fargos reference rate plus a margin. The specific margin corresponds to a range (0.5 to 2.0 percentage points) as determined by our leverage ratio. We also have the option of utilizing a
LIBOR rate plus a specific margin as determined by our leverage ratio. As of March 8, 2007, we had approximately $1.8 million outstanding in debt borrowings under our credit facility. Thus, a 1% change in interest rates would cause annual
interest expense to increase by $18,000.

We have no derivative financial instruments or derivative commodity instruments.

Many of the food products purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production
problems, delivery difficulties and other factors that are outside our control. To control this risk in part, we have fixed price purchase commitments for food and supplies from vendors who supply our national food distributor. In addition, we
believe that substantially all of our food and supplies are available from several sources, which helps to control food commodity risks. We believe we have the ability to increase menu prices, or vary the menu items offered, if needed, in response
to a food product price increase. To compensate for a hypothetical price increase of 10% for food and beverages, we would need to increase menu prices by an average of 2.5%, which is only slightly more than our average price increases of
approximately 3% in fiscal 2006, 0.5% in fiscal 2005 and 1% in fiscal 2004. Accordingly, we believe that a hypothetical 10% increase in food product costs would not have a material effect on our operating results.

Item 8.    Financial Statements and Supplementary Data

The Consolidated Financial Statements of BUCA, Inc. are included in this report, beginning at page F-1.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.



35



---

##### Table of Contents

Item 9A.    Controls and Procedures

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of our disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, our principal executive officer and principal financial officer concluded that
our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
SEC rules and forms, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial
officers, as appropriate to allow timely decisions regarding required disclosures.

Managements Annual Report on Internal Control Over Financial
Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an assessment of the effectiveness of our internal
control over financial reporting based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework. Based on this assessment, our management concluded that
our internal control over financial reporting was effective as of December 31, 2006.

Our management has discussed these matters with
our audit committee. Grant Thornton LLP has issued an attestation report on our managements assessment of internal control over financial reporting, which appears below.

Changes in Internal Control Over Financial Reporting

In the fourth quarter of fiscal 2006, we
implemented a new financial reporting software system. This change to our internal controls over financial reporting has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Board
of Directors and Shareholders

BUCA, Inc. and Subsidiaries

We have audited managements assessment, included in the accompanying Managements Annual Report on Internal Control Over Financial Reporting, that BUCA, Inc. (the Company) maintained effective
internal control over financial reporting as of December 31, 2006, based on criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on
managements assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating managements



36



---

##### Table of Contents

assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, managements assessment
that the Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal ControlIntegrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of BUCA, Inc. as of December 31, 2006 and the related consolidated statements of
operations, shareholders equity and cash flows for the year ended December 31, 2006 and our report dated March 13, 2007 expressed an unqualified opinion on those financial statements.

/s/ Grant Thornton LLP

Minneapolis, Minnesota

March 13, 2007

Item 9B.    Other
Information

None.



37



---

##### Table of Contents

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

Incorporated by reference into
this Annual Report on Form 10-K is the information appearing under the headings Election of DirectorsBoard Committees and Additional InformationSection 16(a) Beneficial Ownership Reporting Compliance in our Proxy
Statement for the annual meeting of shareholders to be held on May 2, 2007. Information relating to our executive officers is provided in Part I of this Annual Report on Form 10-K under the heading Item X. Executive Officers of the
Registrant.

Our board of directors has determined that at least one member of our Audit Committee, Fritzi P. Woods, is an
audit committee financial expert, as that term is defined under Section 407 of the Sarbanes-Oxley Act of 2002 and the rules promulgated by the SEC in furtherance of Section 407. Ms. Woods is independent, as that term is
defined under the National Association of Securities Dealers listing standards.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics applicable to all of our directors and employees, including our principal
executive officer, principal financial officer, principal accounting officer and other employees performing similar functions. A copy of this code of business conduct and ethics is available on our website at www.bucainc.com.

We intend to disclose any waiver of our code of business conduct and ethics for our directors or executive officers in future Form 8-K filings within
four business days following the date of such waiver. We also intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of our code of business conduct and ethics by posting
such information on our website at the address specified above.

Item 11.    Executive Compensation

Incorporated by reference into this Annual Report on Form 10-K is the information appearing under the headings Election of DirectorsExecutive
Compensation, Election of DirectorsDirector Compensation, Election of DirectorsCompensation Committee Interlocks and Insider Participation and Election of DirectorsCompensation Committee
Report in our Proxy Statement for the annual meeting of shareholders to be held on May 2, 2007.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Incorporated by reference into this Annual Report on Form 10-K is the information appearing under the headings Election of DirectorsStock Ownership of Directors, Officers and Principal Shareholders and Adoption of
Amendments to BUCA, Inc. Employee Stock Purchase PlanEquity Compensation Plan Information in our Proxy Statement for the annual meeting of shareholders to be held on May 2, 2007.

Item 13.    Certain Relationships, Related Transactions and Director Independence

Incorporated by reference into this Annual Report on Form 10-K is the information appearing under the heading Election of DirectorsCertain
Transactions and Election of DirectorsCorporate Governance in our Proxy Statement for the annual meeting of shareholders to be held on May 2, 2007.



38



---

##### Table of Contents

Item 14.    Principal Accountant Fees and Services

Incorporated by reference into this Annual Report on Form 10-K is the information appearing under the headings Ratification of Appointment of
Independent Registered Public Accounting FirmIndependent Auditors Fees and Ratification of Appointment of Independent Registered Public Accounting FirmAuditor Independence in our proxy statement for the annual
meeting of shareholders to be held on May 2, 2007.



39



---

##### Table of Contents

PART IV

Item 15.    Exhibits and Financial Statement Schedules



|(a) | Documents filed as part of this Annual Report on Form 10-K:
|--- | -----------------------------------------------------------



| | 1. | Consolidated Financial Statements:
| | -- | ----------------------------------



|                                                                                                                                      |  |     
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                      |  | Page
|Reports of Independent Registered Public Accounting Firms                                                                             |  | F-2 
|Consolidated Balance Sheets as of December 31, 2006 and December 25, 2005                                                             |  | F-4 
|Consolidated Statements of Operations for the fiscal years ended December 31, 2006, December 25, 2005 and December 26, 2004           |  | F-5 
|Consolidated Statements of Shareholders Equity for the fiscal years ended December 31, 2006, December 25, 2005 and December 26, 2004 |  | F-6 
|Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2006, December 25, 2005 and December 26, 2004           |  | F-7 
|Notes to Consolidated Financial Statements                                                                                            |  | F-8 



| | 2. | Financial Statement Schedules:
| | -- | ------------------------------

None.



|(b) | Exhibits:
|--- | ---------



|        |  |                                                                                                                                                                                             
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                 
|        | 
|3.1     |  | Amended and Restated Articles of Incorporation of the Registrant. (1)                                                                                                                       
|        | 
|3.2     |  | Amended and Restated By-Laws of the Registrant. (2)                                                                                                                                         
|        | 
|3.3     |  | Articles of Amendment of Amended and Restated Articles of Incorporation of the Registrant. (3)                                                                                              
|        | 
|4.1     |  | Specimen of Common Stock certificate. (4)                                                                                                                                                   
|        | 
|10.1    |  | 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended. *(5)                                                                                                          
|        | 
|10.2    |  | Form of Non-Qualified Stock Option Agreement for the 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended. *(6)                                                     
|        | 
|10.3    |  | Form of Non-Qualified Stock Option Agreement for the 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended (for non-employee directors). *(7)                        
|        | 
|10.4    |  | 2000 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies. *(8)                                                                                                                      
|        | 
|10.5    |  | Stock Option Plan for Non-Employee Directors. *(9)                                                                                                                                          
|        | 
|10.6    |  | Non-Statutory Stock Option Agreement between the Registrant and 1204 Harmon Partnership for the purchase of 24,000 shares of common stock of the Registrant, dated as of June 1, 1998.
(10).
|        | 
|10.7    |  | BUCA, Inc. Employee Stock Purchase Plan. *(11)                                                                                                                                              
|        | 
|10.8    |  | BUCA, Inc. Amended Employee Stock Purchase Plan. *(12)                                                                                                                                      
|        | 
|10.9    |  | 2006 Omnibus Stock Plan of BUCA, Inc. *(13)                                                                                                                                                 
|        | 
|10.10   |  | Form of Restricted Stock Agreement for the 2006 Omnibus Stock Plan of the Registrant. *(14)                                                                                                 



40



---

##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                         
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.11 |  | Employment Agreement, dated as of October 14, 2004 between the Registrant and Wallace B. Doolin. *(15)                                                                                                                                                                                                  
|      | 
|10.12 |  | Employment Agreement, dated as of February 10, 2005 between the Registrant and Modesto Alcala. *(16)                                                                                                                                                                                                    
|      | 
|10.13 |  | Employment Agreement, dated as of February 24, 2005, by and between the Registrant and Kaye R. OLeary. *(17)                                                                                                                                                                                           
|      | 
|10.14 |  | Employment Agreement, dated as of March 30, 2005, by and between the Registrant and Richard G. Erstad. *(18)                                                                                                                                                                                            
|      | 
|10.15 |  | Employment Agreement, dated as of February 21, 2005, by and between the Registrant and Cynthia C. Rodahl. *(19)                                                                                                                                                                                         
|      | 
|10.16 |  | Employment Agreement, dated as of September 6, 2006, by and between the Registrant and John T. Bettin. *(20)                                                                                                                                                                                            
|      | 
|10.17 |  | Amendment to Employment Agreement, dated as of December 4, 2006, by and between the Registrant and Modesto Alcala. *(21)                                                                                                                                                                                
|      | 
|10.18 |  | Second Amended and Restated Employment Agreement, dated as of December 5, 2006 between the Registrant and Steven B. Hickey. *(22)                                                                                                                                                                       
|      | 
|10.19 |  | Credit Agreement, dated as of November 15, 2004, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories thereto, and Wells Fargo
Foothill, Inc., as the Arranger and the Administrative Agent. (23)                                    
|      | 
|10.20 |  | Amendment Number One to Credit Agreement and Waiver, dated as of April 15, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (24)    
|      | 
|10.21 |  | Amendment Number Two to Credit Agreement and Consent, dated as of September 9, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (25)
|      | 
|10.22 |  | Amendment Number Three to Credit Agreement, dated as of November 4, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (26)           
|      | 
|10.23 |  | Amendment Number Four to Credit Agreement, dated as of November 30, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (27)           
|      | 
|10.24 |  | Amendment Number Five to Credit Agreement, dated as of March 22, 2006, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (28)              
|      | 
|10.25 |  | Amendment Number Six to Credit Agreement, dated as of August 11, 2006, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
hereto, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent. (29)                   



41



---

##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                        
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.26 |  | Amendment Number Seven to Credit Agreement, dated as of October 1, 2006, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
hereto, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent. (30)
|      | 
|10.27 |  | Amendment Number Eight to Credit Agreement, dated as of March 8, 2007, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
hereto, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent.       
|      | 
|10.28 |  | Stock Purchase Agreement, dated as of September 25, 2006, by and among the Registrant, BUCA Restaurants 3, Inc., Bertuccis Corporation and Vinny Ts Acquisition Corporation.
(31)                                                                                                    
|      | 
|10.29 |  | Promissory Note, dated as of September 25, 2006, from Vinny Ts Acquisition Corporation payable to the Registrant. (32)                                                                                                                                                                
|      | 
|10.30 |  | Guaranty, dated as of September 25, 2006, issued by Bertuccis Corporation to the Registrant. (33)                                                                                                                                                                                     
|      | 
|21.1  |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                        
|      | 
|23.1  |  | Consent of Independent Registered Public Accounting Firm Grant Thornton LLP.                                                                                                                                                                                                           
|      | 
|23.2  |  | Consent of Independent Registered Public Accounting Firm Deloitte & Touche LLP.                                                                                                                                                                                                        
|      | 
|31.1  |  | Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                
|      | 
|31.2  |  | Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                
|      | 
|32.1  |  | Certification by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                        

---

|* | Management contract, compensation plan or arrangement.
|- | ------------------------------------------------------

|(1) | Incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to Exhibit 3.5 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to Exhibit 4.3 to the Registrants Registration Statement on Form S-3 (Registration No. 113737), filed with the Commission on March 19,
2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to Exhibit 99 to the Registrants Registration Statement on Form S-8 (Registration No. 333-113738), filed with the Commission on March 19,
2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on October 18, 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to Exhibit 10.3 to the Registrants Annual Report on Form 10-K for the period ended December 25, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to Exhibit 99.1 to the Registrants Registration Statement on Form S-8 (Registration No. 333-48156), filed with the Commission on
October 18, 2000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to Exhibit 10.2 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on
February 18, 1999.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to Exhibit 10.15 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on
February 18, 1999.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference to Exhibit 99.3 to the Registrants Registration Statement on Form S-8 (Registration No. 333-78295), filed with the Commission on May 12,
1999.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



42



---

##### Table of Contents

|(12) | Incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the period ended June 25, 2006.
|---- | -------------------------------------------------------------------------------------------------------------------------------

|(13) | Incorporated by reference to Exhibit A to the Registrants Definitive Proxy Statement filed with the Commission on April 21, 2006.
|---- | ----------------------------------------------------------------------------------------------------------------------------------

|(14) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on October 31, 2006.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

|(15) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on October 18, 2004.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

|(16) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on February 11, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(17) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on March 1, 2005.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|(18) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on April 5, 2005.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|(19) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on May 18, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(20) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 7, 2006.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(21) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on December 8, 2006.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

|(22) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on December 16, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(23) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on November 18, 2004.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(24) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on April 21, 2005.
|---- | --------------------------------------------------------------------------------------------------------------------------------------

|(25) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 15, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(26) | Incorporated by reference to Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the period ended September 25, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(27) | Incorporated by reference to Exhibit 10.19 to the Registrants Annual Report on Form 10-K for the period ended December 25, 2005.
|---- | ---------------------------------------------------------------------------------------------------------------------------------

|(28) | Incorporated by reference to Exhibit 10.20 to the Registrants Annual Report on Form 10-K for the period ended December 25, 2005.
|---- | ---------------------------------------------------------------------------------------------------------------------------------

|(29) | Incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the period ended September 24, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(30) | Incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the period ended September 24, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(31) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 28, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(32) | Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on September 28, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(33) | Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on September 28, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------



43



---

##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on
March 14, 2007.



BUCA, INC.By:

/S/    WALLACE B.
DOOLINWallace B. Doolin Chairman and Chief Executive Officer


POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Wallace B. Doolin and Kaye R. OLeary, and each of them, his or her true and
lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to the Annual Report on 10-K
for the fiscal year ended December 31, 2006 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 14, 2007.



/S/    WALLACE B.
DOOLINWallace B. Doolin Chairman and Chief Executive Officer (Principal Executive Officer)






/S/    KAYE R.
OLEARYKaye R. OLeary Chief Financial Officer (Principal Financial Officer)




/S/    DENNIS J.
GOETZDennis J. Goetz Chief Accounting Officer (Principal Accounting Officer)




/S/    PAUL J.
ZEPFPaul J. Zepf, Director




/S/    SIDNEY J.
FELTENSTEINSidney J. Feltenstein, Director




/S/    JOHN P.
WHALEYJohn P. Whaley, Director




/S/    JAMES T.
STAMASJames T. Stamas, Director




/S/    FRITZI P.
WOODSFritzi P. Woods, Director




44



---

##### Table of Contents

BUCA, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                      |  |     
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                      |  | Page
|Reports of Independent Registered Public Accounting Firms                                                                             |  | F-2 
|Consolidated Balance Sheets as of December 31, 2006 and December 25, 2005                                                             |  | F-4 
|Consolidated Statements of Operations for the fiscal years ended December 31, 2006, December 25, 2005 and December 26, 2004           |  | F-5 
|Consolidated Statements of Shareholders Equity for the fiscal years ended December 31, 2006, December 25, 2005 and December 26, 2004 |  | F-6 
|Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2006, December 25, 2005 and December 26, 2004           |  | F-7 
|Notes to Consolidated Financial Statements                                                                                            |  | F-8 



F-1



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

BUCA, Inc. and Subsidiaries

We have audited the
accompanying consolidated balance sheet of BUCA, Inc. (the Company) as of December 31, 2006, and the related consolidated statements of operations, shareholders equity and cash flows for the year ended December 31, 2006.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of the Company as of December 31, 2006, and the results of their operations and their cash flows for the year ended December 31, 2006, in conformity with accounting principles generally accepted in the
United States of America.

As discussed in Note 1 to the consolidated financial statements, effective January 1, 2006, the Company
changed its method of accounting for share-based payments to adopt Statement of Financial Accounting Standards No. 123(R), Share-Based Payment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Companys internal control over financial reporting as of
December 31, 2006, based on criteria established in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 13, 2007 expressed an
unqualified opinion on managements assessment of the effectiveness of the Companys internal control over financial reporting and an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

/s/ Grant Thornton LLP

Minneapolis, Minnesota

March 13, 2007



F-2



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

BUCA, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of BUCA, Inc. and subsidiaries (the Company) as of
December 25, 2005, and the related consolidated statements of operations, shareholders equity, and cash flows for each of the two fiscal years in the period ended December 25, 2005. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BUCA, Inc. and subsidiaries as of December 25, 2005, and the results of their operations
and their cash flows for each of the two fiscal years in the period ended December 25, 2005 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the Consolidated Financial Statements, the Company adopted Financial Accounting Standards Board Interpretation No. 47,
Accounting for Conditional Asset Retirement Obligations an Interpretation of FASB Statement No. 143, effective December 25, 2005.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

March 24, 2006



F-3



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)



|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | -------- | - | ---------------- | - | ------- | -
|                                                                                                                                            |  | December 31,2006 |          |   | December 25,2005 |  
|ASSETS                                                                                                                                      |  |                  |          |   |                  |   |         |  
|CURRENT ASSETS:                                                                                                                             |  |                  |          |   |                  |   |         |  
|Cash                                                                                                                                        |  | $                | 1,567    |   |                  | $ | 1,421   |  
|Accounts receivable                                                                                                                         |  |                  | 4,864    |   |                  |   | 3,660   |  
|Inventories                                                                                                                                 |  |                  | 6,279    |   |                  |   | 6,382   |  
|Prepaid expenses and other                                                                                                                  |  |                  | 4,468    |   |                  |   | 2,658   |  
|Current assets of discontinued operations and assets held for sale                                                                          |  |                  |         |   |                  |   | 1,246   |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|Total current assets                                                                                                                        |  |                  | 17,178   |   |                  |   | 15,367  |  
|PROPERTY AND EQUIPMENT, net                                                                                                                 |  |                  | 112,189  |   |                  |   | 121,816 |  
|NOTE RECEIVABLE                                                                                                                             |  |                  | 3,567    |   |                  |   |        |  
|OTHER ASSETS                                                                                                                                |  |                  | 4,469    |   |                  |   | 4,428   |  
|LONG-TERM ASSETS OF DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE                                                                        |  |                  |         |   |                  |   | 9,255   |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|                                                                                                                                            |  | $                | 137,403  |   |                  | $ | 150,866 |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                        |  |                  |          |   |                  |   |         |  
|CURRENT LIABILITIES:                                                                                                                        |  |                  |          |   |                  |   |         |  
|Accounts payable                                                                                                                            |  | $                | 10,755   |   |                  | $ | 12,191  |  
|Unredeemed gift card liabilities                                                                                                            |  |                  | 4,031    |   |                  |   | 2,921   |  
|Accrued payroll and benefits                                                                                                                |  |                  | 8,806    |   |                  |   | 8,363   |  
|Accrued sales, property and income tax                                                                                                      |  |                  | 3,678    |   |                  |   | 3,424   |  
|Other accrued expenses                                                                                                                      |  |                  | 3,495    |   |                  |   | 7,232   |  
|Current maturities of long-term debt and capital leases                                                                                     |  |                  | 193      |   |                  |   | 1,309   |  
|Current liabilities of discontinued operations and assets held for sale                                                                     |  |                  | 257      |   |                  |   | 4,145   |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|Total current liabilities                                                                                                                   |  |                  | 31,215   |   |                  |   | 39,585  |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|LONG-TERM DEBT AND CAPITAL LEASES, less current maturities                                                                                  |  |                  | 16,278   |   |                  |   | 17,415  |  
|DEFERRED RENT                                                                                                                               |  |                  | 18,853   |   |                  |   | 19,062  |  
|OTHER LIABILITIES                                                                                                                           |  |                  | 4,037    |   |                  |   | 3,904   |  
|LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE                                                                   |  |                  |         |   |                  |   | 1,860   |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|Total liabilities                                                                                                                           |  |                  | 70,383   |   |                  |   | 81,826  |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|COMMITMENTS AND CONTINGENCIES (Note 12)                                                                                                     |  |                  |          |   |                  |   |         |  
|                                                                                                                                            |  |                 
|SHAREHOLDERS EQUITY:                                                                                                                       |  |                  |          |   |                  |   |         |  
|Undesignated stock, 5,000,000 shares authorized, none issued or outstanding                                                                 |  |                  |         |   |                  |   |        |  
|Common stock, $.01 par value per share, 30,000,000 shares authorized; 20,926,556 and 20,470,075 shares issued and outstanding,
respectively |  |                  | 209      |   |                  |   | 205     |  
|Additional paid-in capital                                                                                                                  |  |                  | 171,430  |   |                  |   | 170,686 |  
|Accumulated deficit                                                                                                                         |  |                  | (103,503 | ) |                  |   | (99,895 | )
|Unearned compensation                                                                                                                       |  |                  |         |   |                  |   | (1,151  | )
|Notes receivable from employee shareholders                                                                                                 |  |                  | (1,116   | ) |                  |   | (805    | )
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|Total shareholders equity                                                                                                                  |  |                  | 67,020   |   |                  |   | 69,040  |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  
|                                                                                                                                            |  | $                | 137,403  |   |                  | $ | 150,866 |  
|                                                                                                                                            |  |                  |          |   |                  |   |         |  



See notes to Consolidated
Financial Statements.



F-4



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share data)



|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|-------------------------------------------------------------------------- |  | ---------------- | ---------- | - | ---------------- | - | ---------- | ---------------- |  | - | ---------- | -
|                                                                           |  | December 31,2006 |            |   | December 25,2005 |   |            | December 26,2004 | 
|Restaurant sales                                                           |  | $                | 253,813    |   |                  | $ | 238,959    |                  |  | $ | 223,458    |  
|Restaurant costs:                                                          |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Product                                                                    |  |                  | 63,307     |   |                  |   | 60,717     |                  |  |   | 56,446     |  
|Labor                                                                      |  |                  | 83,771     |   |                  |   | 78,761     |                  |  |   | 74,036     |  
|Direct and occupancy                                                       |  |                  | 74,884     |   |                  |   | 71,855     |                  |  |   | 66,413     |  
|Depreciation and amortization                                              |  |                  | 12,783     |   |                  |   | 13,205     |                  |  |   | 13,632     |  
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Total restaurant costs                                                     |  |                  | 234,745    |   |                  |   | 224,538    |                  |  |   | 210,527    |  
|General and administrative expenses                                        |  |                  | 20,635     |   |                  |   | 26,904     |                  |  |   | 21,264     |  
|Pre-opening costs                                                          |  |                  |           |   |                  |   | 243        |                  |  |   | 1,324      |  
|Loss on impairment and sale of long-lived assets                           |  |                  | 282        |   |                  |   | 9,822      |                  |  |   | 7,773      |  
|Lease termination charges                                                  |  |                  |           |   |                  |   | 434        |                  |  |   | 1,939      |  
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Operating loss                                                             |  |                  | (1,849     | ) |                  |   | (22,982    | )                |  |   | (19,369    | )
|Interest income                                                            |  |                  | 221        |   |                  |   | 48         |                  |  |   | 71         |  
|Interest expense                                                           |  |                  | (2,933     | ) |                  |   | (3,429     | )                |  |   | (2,193     | )
|Loss on early extinguishment of debt                                       |  |                  |           |   |                  |   | (675       | )                |  |   | (1,677     | )
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Loss before income taxes                                                   |  |                  | (4,561     | ) |                  |   | (27,038    | )                |  |   | (23,168    | )
|Income taxes                                                               |  |                  |           |   |                  |   |           |                  |  |   |           |  
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Net loss from continuing operations                                        |  |                  | (4,561     | ) |                  |   | (27,038    | )                |  |   | (23,168    | )
|Net income (loss) from discontinued operations                             |  |                  | 953        |   |                  |   | (4,700     | )                |  |   | (14,975    | )
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Net loss before cumulative effect of change in accounting principle        |  |                  | (3,608     | ) |                  |   | (31,738    | )                |  |   | (38,143    | )
|Cumulative effect of change in accounting principle                        |  |                  |           |   |                  |   | (363       | )                |  |   |           |  
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Net loss                                                                   |  | $                | (3,608     | ) |                  | $ | (32,101    | )                |  | $ | (38,143    | )
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Net loss from continuing operations per sharebasic and diluted            |  | $                | (0.23      | ) |                  | $ | (1.33      | )                |  | $ | (1.19      | )
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Net income (loss) from discontinued operations per sharebasic and diluted |  | $                | 0.05       |   |                  | $ | (0.23      | )                |  | $ | (0.76      | )
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Cumulative effect of change in accounting principlebasic and diluted      |  | $                |           |   |                  | $ | (0.02      | )                |  | $ |           |  
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Net loss per sharebasic and diluted                                       |  | $                | (0.18      | ) |                  | $ | (1.58      | )                |  | $ | (1.95      | )
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  
|Weighted average common shares outstandingbasic and diluted               |  |                  | 20,494,007 |   |                  |   | 20,312,389 |                  |  |   | 19,608,465 |  
|                                                                           |  |                  |            |   |                  |   |            |                  |  |   |            |  

See notes to Consolidated Financial Statements.



F-5



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Consolidated Statements of Shareholders Equity

For the Fiscal Years Ended December 31, 2006, December 25, 2005 and December 26, 2004

(in thousands)



|                                                       |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |                                 |   |  |                          |          |   |  |   |        |   |  |   |         |  
|------------------------------------------------------ |  | ------------ | - |  | ------------------------ | --- | - | --------------------- | - | ------- | ------------------- |  | - | ------------------------------- | - |  | ------------------------ | -------- | - |  | - | ------ | - |  | - | ------- | -
|                                                       |  | Common Stock |   |  | Additionalpaid-incapital |     |   | Unearnedcompen-sation |   |         | Accum-ulateddeficit |  |   | Notesreceivablefromshareholders |   |  | Totalshareholdersequity |         
|                                                       |  | Shares       |   |  | Amount                   |     |   |                       |   |         |                    
|Balance at December 28, 2003                           |  | 16,805       |   |  | $                        | 168 |   |                       | $ | 151,538 |                     |  | $ |                                |   |  | $                        | (29,651  | ) |  | $ | (1,338 | ) |  | $ | 120,717 |  
|Exercise of common stock options                       |  | 8            |   |  |                          |    |   |                       |   | 51      |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 51      |  
|Issuance of common stock                               |  | 3,382        |   |  |                          | 34  |   |                       |   | 17,575  |                     |  |   |                                |   |  |                          |         |   |  |   | (420   | ) |  |   | 17,189  |  
|Repurchase of common stock from shareholders           |  | (64          | ) |  |                          | (1  | ) |                       |   | (331    | )                   |  |   |                                |   |  |                          |         |   |  |   | 480    |   |  |   | 148     |  
|Collections on notes receivable from shareholders      |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |                                |   |  |                          |         |   |  |   | 163    |   |  |   | 163     |  
|Common stock issued under employee stock purchase plan |  | 51           |   |  |                          | 1   |   |                       |   | 230     |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 231     |  
|Stock option expense                                   |  |             |   |  |                          |    |   |                       |   | 49      |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 49      |  
|Net loss                                               |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |                                |   |  |                          | (38,143  | ) |  |   |       |   |  |   | (38,143 | )
|                                                       |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |                                 |   |  |                          |          |   |  |   |        |   |  |   |         |  
|Balance at December 26, 2004                           |  | 20,182       |   |  |                          | 202 |   |                       |   | 169,112 |                     |  |   |                                |   |  |                          | (67,794  | ) |  |   | (1,115 | ) |  |   | 100,405 |  
|Exercise of common stock options                       |  | 11           |   |  |                          |    |   |                       |   | 62      |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 62      |  
|Issuance of common stock                               |  | 38           |   |  |                          |    |   |                       |   | 178     |                     |  |   |                                |   |  |                          |         |   |  |   | (178   | ) |  |   |        |  
|Repurchase of common stock from shareholders           |  | (48          | ) |  |                          |    |   |                       |   | (264    | )                   |  |   |                                |   |  |                          |         |   |  |   | 350    |   |  |   | 86      |  
|Collections on notes receivable from shareholders      |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |                                |   |  |                          |         |   |  |   | 138    |   |  |   | 138     |  
|Common stock issued under employee stock purchase plan |  | 43           |   |  |                          |    |   |                       |   | 205     |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 205     |  
|Issuance of restricted stock                           |  | 244          |   |  |                          | 3   |   |                       |   | 1,334   |                     |  |   | (1,337                          | ) |  |                          |         |   |  |   |       |   |  |   |        |  
|Amortization of restricted stock                       |  |             |   |  |                          |    |   |                       |   |        |                     |  |   | 186                             |   |  |                          |         |   |  |   |       |   |  |   | 186     |  
|Stock option expense                                   |  |             |   |  |                          |    |   |                       |   | 59      |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 59      |  
|Net loss                                               |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |                                |   |  |                          | (32,101  | ) |  |   |       |   |  |   | (32,101 | )
|                                                       |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |                                 |   |  |                          |          |   |  |   |        |   |  |   |         |  
|Balance at December 25, 2005                           |  | 20,470       |   |  |                          | 205 |   |                       |   | 170,686 |                     |  |   | (1,151                          | ) |  |                          | (99,895  | ) |  |   | (805   | ) |  |   | 69,040  |  
|Exercise of common stock options                       |  | 7            |   |  |                          |    |   |                       |   | 30      |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 30      |  
|Issuance of common stock                               |  | 169          |   |  |                          | 1   |   |                       |   | 886     |                     |  |   |                                |   |  |                          |         |   |  |   | (846   | ) |  |   | 41      |  
|Repurchase of common stock from shareholders           |  | (55          | ) |  |                          |    |   |                       |   | (265    | )                   |  |   |                                |   |  |                          |         |   |  |   | 254    |   |  |   | (11     | )
|Collections on notes receivable from shareholders      |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |                                |   |  |                          |         |   |  |   | 281    |   |  |   | 281     |  
|Common stock issued under employee stock purchase plan |  | 46           |   |  |                          |    |   |                       |   | 237     |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 237     |  
|Reclassification due to adoption of SFAS 123(R)        |  |             |   |  |                          |    |   |                       |   | (1,151  | )                   |  |   | 1,151                           |   |  |                          |         |   |  |   |       |   |  |   |        |  
|Issuance of restricted stock                           |  | 290          |   |  |                          | 3   |   |                       |   | (3      | )                   |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   |        |  
|Share-based compensation                               |  |             |   |  |                          |    |   |                       |   | 1,010   |                     |  |   |                                |   |  |                          |         |   |  |   |       |   |  |   | 1,010   |  
|Net loss                                               |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |                                |   |  |                          | (3,608   | ) |  |   |       |   |  |   | (3,608  | )
|                                                       |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |                                 |   |  |                          |          |   |  |   |        |   |  |   |         |  
|Balance at December 31, 2006                           |  | 20,927       |   |  | $                        | 209 |   |                       | $ | 171,430 |                     |  | $ |                                |   |  | $                        | (103,503 | ) |  | $ | (1,116 | ) |  | $ | 67,020  |  
|                                                       |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |                                 |   |  |                          |          |   |  |   |        |   |  |   |         |  

See notes to Consolidated Financial Statements.



F-6



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)



|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  
|--------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------- | -
|                                                                            |  | Fiscal Year Ended |        
|                                                                            |  | December 31,2006  |         |   | December 25,2005 |   |         | December 26,2004 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Net loss                                                                    |  | $                 | (3,608  | ) |                  | $ | (32,101 | )                |  | $ | (38,143 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Depreciation and amortization                                               |  |                   | 12,783  |   |                  |   | 14,291  |                  |  |   | 14,830  |  
|Share-based compensation                                                    |  |                   | 1,010   |   |                  |   | 186     |                  |  |   |        |  
|Loss on impairment and sale of long-lived assets                            |  |                   | 685     |   |                  |   | 13,833  |                  |  |   | 10,737  |  
|Gain on sale of Vinny Ts of Boston                                         |  |                   | (256    | ) |                  |   |        |                  |  |   |        |  
|Loss on impairment of goodwill                                              |  |                   |        |   |                  |   |        |                  |  |   | 11,591  |  
|Deferred rent                                                               |  |                   | (83     | ) |                  |   | (595    | )                |  |   | 1,229   |  
|Amortization of loan acquisition costs                                      |  |                   | 424     |   |                  |   | 418     |                  |  |   | 361     |  
|Loss on early extinguishment of debt                                        |  |                   |        |   |                  |   | 675     |                  |  |   | 1,677   |  
|Tenant allowance proceeds                                                   |  |                   |        |   |                  |   | 331     |                  |  |   | 1,319   |  
|Other non cash gains (losses)                                               |  |                   | 14      |   |                  |   | 366     |                  |  |   | (164    | )
|Change in assets and liabilities:                                           |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Accounts receivable                                                         |  |                   | (1,060  | ) |                  |   | (1,209  | )                |  |   | 741     |  
|Inventories                                                                 |  |                   | 149     |   |                  |   | 167     |                  |  |   | 246     |  
|Prepaid expenses and other                                                  |  |                   | (2,136  | ) |                  |   | 2,130   |                  |  |   | (1,287  | )
|Accounts payable                                                            |  |                   | (1,636  | ) |                  |   | 1,449   |                  |  |   | (1,811  | )
|Accrued expenses                                                            |  |                   | (3,382  | ) |                  |   | 2,934   |                  |  |   | 8,824   |  
|Other                                                                       |  |                   | (94     | ) |                  |   | 141     |                  |  |   | 335     |  
|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Net cash provided by operating activities                                   |  |                   | 2,810   |   |                  |   | 3,016   |                  |  |   | 10,485  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Purchase of property and equipment                                          |  |                   | (3,480  | ) |                  |   | (1,740  | )                |  |   | (11,727 | )
|Proceeds from sale of Vinny Ts of Boston                                   |  |                   | 2,634   |   |                  |   |        |                  |  |   |        |  
|Proceeds from sale of property and equipment                                |  |                   | 7       |   |                  |   | 349     |                  |  |   |        |  
|Proceeds from sale of other assets                                          |  |                   |        |   |                  |   | 573     |                  |  |   | 1,891   |  
|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Net cash used in investing activities                                       |  |                   | (839    | ) |                  |   | (818    | )                |  |   | (9,836  | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Proceeds from line of credit borrowings                                     |  |                   | 21,346  |   |                  |   | 9,665   |                  |  |   | 38,486  |  
|Payments for line of credit borrowings                                      |  |                   | (21,346 | ) |                  |   | (11,651 | )                |  |   | (53,500 | )
|Proceeds from issuance of long term debt                                    |  |                   |        |   |                  |   |        |                  |  |   | 11,625  |  
|Principal payments on long-term debt                                        |  |                   | (2,281  | ) |                  |   | (18,343 | )                |  |   | (12,814 | )
|Proceeds from sale-leaseback                                                |  |                   |        |   |                  |   | 17,500  |                  |  |   |        |  
|Financing costs                                                             |  |                   | (100    | ) |                  |   | (400    | )                |  |   | (1,981  | )
|Repurchase of common stock                                                  |  |                   | (33     | ) |                  |   |        |                  |  |   |        |  
|Collection on notes receivable from shareholders                            |  |                   | 281     |   |                  |   | 138     |                  |  |   | 163     |  
|Net proceeds from issuance of common stock                                  |  |                   | 308     |   |                  |   | 268     |                  |  |   | 17,420  |  
|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Net cash used in financing activities                                       |  |                   | (1,825  | ) |                  |   | (2,823  | )                |  |   | (601    | )
|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Net change in cash                                                          |  |                   | 146     |   |                  |   | (625    | )                |  |   | 48      |  
|Cash at the beginning of period                                             |  |                   | 1,421   |   |                  |   | 2,046   |                  |  |   | 1,998   |  
|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  
|Cash at the end of period                                                   |  | $                 | 1,567   |   |                  | $ | 1,421   |                  |  | $ | 2,046   |  
|                                                                            |  |                   |         |   |                  |   |         |                  |  |   |         |  

See notes to Consolidated Financial Statements.



F-7



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Fiscal Years Ended
December 31, 2006,

December 25, 2005, and December 26, 2004



|1.    SUMMARY | OF SIGNIFICANT ACCOUNTING POLICIES
|------------- | ----------------------------------

Basis of
Presentation

BUCA, Inc. and Subsidiaries (BUCA, we, our, or us) develop, own and
operate Italian restaurants under the name Buca di Beppo. At December 31, 2006, our 93 Buca di Beppo restaurants were located in 24 states and the District of Columbia.

As described in Note 2, Discontinued Operations and Assets Held for Sale, we have reclassified Vinny Ts of Boston and three Buca di Beppo
closed restaurants financial results as discontinued operations for all periods presented. These Notes to Consolidated Financial Statements, except where otherwise indicated, relate to continuing operations only.

Fiscal Periods

We utilize a 52 or 53
week fiscal year ending on the last Sunday of December for financial reporting purposes. The fiscal year ended December 31, 2006 is a 53 week year. The fiscal years ended December 25, 2005 and December 26, 2004 consisted of 52 weeks.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of BUCA, Inc. and its Subsidiaries. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions for the reporting period and as of the financial statement date. These estimates and
assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. Actual results could differ from those estimates.

Fair Value of Financial Instruments

At December 31, 2006 and December 25, 2005, the fair values of cash, accounts receivable, and accounts payable approximate their carrying value due to the short-term nature of the instruments. The fair value of debt approximates
its carrying value based upon current rates available to us.

Accounts Receivable

Our accounts receivable consist primarily of amounts due from credit card processors and commercial customers we have extended credit to in the ordinary
course of business.

Inventories

Inventories, which consist of food, beverage and restaurant supplies, are stated at the lower of cost or market. Cost is determined by the first-in, first-out method of valuation.



F-8



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



Property and Equipment

Land, buildings, leasehold improvements, tenant improvements and equipment are recorded at original cost less accumulated depreciation and amortization.
These assets are depreciated on a straight-line basis over the lesser of their estimated useful lives or associated lease term, ranging from three to 25 years. Land is not depreciated because we believe that it retains its historical value. Our
estimate of the useful life of equipment and buildings is based upon the historical life of similar assets in our industry. Depreciation periods are as follows:



|                                  |  |                                                            
|--------------------------------- |  | -----------------------------------------------------------
|Land improvements                 |  | Shorter of 25 years or length of remaining lease term      
|Buildings                         |  | Shorter of 25 years or length of remaining lease term      
|Leasehold improvements            |  | Shorter of useful life of the asset or remaining lease term
|Furniture, fixtures and equipment |  | 3 to 7 years                                               
|Computers and peripherals         |  | 3 years                                                    

The estimated useful lives and fair market value of these assets as well as our determination of
what constitutes a capitalized cost versus a repair and maintenance expense involves judgments by management. These judgments may produce materially different amounts of depreciation and amortization expense if different assumptions were used.

Impairment of Long-Lived Assets

We review our long-lived assets, such as fixed assets and intangible assets, for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be
recoverable, but at least quarterly. We consider a history of consistent and significant operating losses to be a primary indicator of potential asset impairment. Assets are grouped and evaluated for impairment at the lowest level for which there
are identifiable cash flows, primarily the individual restaurants. A restaurant is deemed to be impaired if a forecast of its future operating cash flows directly related to the restaurant is less than its carrying amount. If a restaurant is
determined to be impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Fair value is an estimate based on the best information available including prices for similar assets or the results
of valuation techniques such as discounted estimated future cash flows, as if the decision to continue to use the impaired restaurant was a new investment decision. Judgments and estimates made related to long-lived assets are affected by factors
such as economic conditions, changes in historical resale values and changes in operating performance. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the
future, we may be required to record impairment charges for these assets.

Revenue Recognition

Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Direct mail coupons and other in-restaurant promotions are
recognized at the point of sale as a direct reduction of revenue. Revenues from our gift cards (also known as stored value cards) are recognized upon redemption in our restaurants. Until the redemption of gift cards occurs, outstanding balances on
such cards are recorded as unredeemed gift card liabilities on our accompanying consolidated balance sheets. In addition, we recognize gift card breakage into income once customer redemption is considered remote.

Leases

In accordance with Statement
of Financial Accounting Standards (SFAS) No. 13, Accounting for Leases,and subsequent amendments, each lease is evaluated at inception to determine whether the lease will be accounted for as an operating or capital lease. Minimum base
rent for our operating leases, which generally have



F-9



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



escalating rentals over the term of the lease, is recorded on a straight-line basis over the entire lease term, including cancelable option periods where
failure to exercise such options would result in economic penalty, not to exceed 25 years. The initial rent term includes the build-out, or rent holiday period, for our leases, where no rent payments are typically due under the terms of
the lease. Contingent rent expense, which is based on a percentage of revenue, is also recorded to the extent it exceeds minimum base rent per the lease agreement.

We account for construction allowances by recording a receivable when its collectibility is considered certain, depreciating the leasehold improvements over the lesser of their useful lives or the full term of the
lease, including renewal options and build-out periods, amortizing the construction allowance as a credit to rent expense over the full term of the lease, including renewal options and build-out periods, and relieving the receivable once the cash is
obtained from the landlord for the construction allowance.

We disburse cash for leasehold improvements and furnishings, fixtures and
equipment to build out and equip our leased premises. We may also expend cash for structural components of the building that we make to leased premises that generally are reimbursed to us by our landlords as construction contributions pursuant to
agreed-upon terms in our leases. Landlord construction contributions usually take the form of up-front cash, full or partial credits against minimum or percentage rents otherwise payable by us, or a combination thereof. Depending on the specifics of
the leased space, the lease agreement and in accordance with EITF 97-10, The Effect of Lessee Involvement in Asset Construction, during the construction period, the amounts paid for structural components are recorded as either prepaid rent or
construction-in-progress and the landlord construction contributions are recorded as either an offset to prepaid rent or as a deemed landlord financing liability.

Pre-opening Costs

Pre-opening costs, consisting primarily of manager salaries and relocation
expenses, employee payroll and related training costs incurred prior to the opening of the restaurant, are expensed as incurred.

Self-Insurance

We are self-insured for a significant portion of our current medical, dental, workers compensation and
general liability insurance programs. In estimating our self-insurance reserves, we utilize estimates of future losses, based upon our historical loss trends and historical industry data and actuarial estimates of settlement costs for incurred
claims. These reserves are monitored and adjusted when warranted by changing circumstances. Should an additional change in claims occur compared to our current estimates, our reserves could be either increased or decreased based upon that data. Any
increases or decreases in insurance reserves would be offset by a corresponding increase or decrease in insurance expense.

Estimated
Liability for Closing Restaurants

We make decisions to close restaurants based on prospects for estimated future profitability. We
evaluate each restaurants performance every quarter. When restaurants continue to perform poorly, we consider the demographics of the location, as well as the likelihood of being able to improve an unprofitable restaurant. If we determine that
the restaurant will not, within a reasonable period of time, operate at break-even cash flow or be profitable, we may close the restaurant.

The estimated liability for closing restaurants on properties vacated is generally based on the term of the lease and the lease termination fee we expect to pay, as well as estimated maintenance costs until the lease has been abated. The
amount of the estimated liability established is generally the present value of these estimated



F-10



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



future payments upon exiting the property. The interest rate used to calculate the present value of these liabilities is based on our incremental borrowing
rate at the time the liability is established.

A significant assumption used in determining the amount of the estimated liability for
closing restaurants is the amount of the estimated liability for future lease payments on vacant restaurants, which we determine based on our assessment of our ability to successfully negotiate early terminations of our lease agreements with our
landlords or sublease the property. Additionally, we estimate the cost to maintain leased and owned vacant properties until the lease has been abated. If the costs to maintain properties increase, or it takes longer than anticipated to sell
properties or sublease or terminate leases, we may need to record additional estimated liabilities. If the leases on the vacant restaurants are not terminated or subleased on the terms we used to estimate the liabilities, we may be required to
record losses in future periods. Conversely, if the leases on the vacant restaurants are terminated or subleased on more favorable terms than we used to estimate the liabilities, we reverse previously established estimated liabilities, resulting in
an increase in operating income.

Loss Contingencies

We maintain accrued liabilities and reserves relating to the resolution of certain contingent obligations. Significant contingencies include those related to litigation. We account for contingent obligations in
accordance with SFAS No. 5, Accounting for Contingencies, as interpreted by Financial Accounting Standards Board (FASB) Interpretation No. 14 which requires that we assess each contingency to determine estimates of the degree of
probability and range of possible settlement. Contingencies which are deemed to be probable and where the amount of such settlement is reasonably estimable are accrued in our financial statements. If only a range of loss can be determined, we accrue
to the best estimate within that range; if none of the estimates within that range is better than another, we accrue to the low end of the range. The assessment of loss contingencies is a highly subjective process that requires judgments about
future events.

Contingencies are reviewed at least quarterly to determine the adequacy of the accruals and related financial statement
disclosure. The ultimate settlement of loss contingencies may differ significantly from amounts we have accrued in our financial statements.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were approximately $7.8 million, $7.5
million, and $6.9 million for fiscal years 2006, 2005, and 2004, respectively.

Income Taxes

Deferred income taxes are recognized for the tax consequences of differences between the tax basis of assets and liabilities and their financial reporting
amounts at each reporting date based on enacted tax laws and applicable statutory tax rates. A valuation allowance was recorded at December 31, 2006 and December 25, 2005 against net deferred tax assets to reduce net deferred tax assets to
zero as it was deemed more likely than not that they would not be realized in the future.

We have capital loss carry forwards of $5.8
million, that will begin to expire in 2012, federal general business credits of approximately $3.8 million that will begin to expire in 2018 and net operating loss carry forwards of $15.2 million that will begin to expire in 2023, if not used. We
also have net state operating loss carry forwards of approximately $2.3 million, which, if not used, will begin to expire in 2014.

Our
accounting for income taxes in 2007 may be affected by the adoption of FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, which we are required to adopt on January 1, 2007. The



F-11



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



new standard defines the threshold for recognizing the benefits of tax return positions in the financial statements as more-likely-than-not to be
sustained by the taxing authority. As such, the new standard requires us to reassess all of our uncertain tax return positions in accordance with this new accounting principle. Further details regarding the impact of the adoption of FIN No. 48
can be found under Recent Accounting Pronouncements.

Share-Based Compensation

Prior to fiscal 2006, we accounted for our share-based employee compensation plans under the measurement and recognition provisions of Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations, as permitted by Financial Accounting Standards Board SFAS No. 123, Accounting for Stock-Based Compensation. We
generally recorded no employee compensation expense for options granted prior to fiscal 2006, as options granted generally had exercise prices equal to the fair market value of our common stock on the date of grant. We also recorded no compensation
expense in connection with our Employee Stock Purchase Plan (ESPP) as the purchase price of the stock was not less than 85% of the lower of the fair market value of our common stock at the beginning of each offering period or at the end of each
offering period. We had recognized compensation expense related to non-vested (restricted) stock issued to employees in fiscal 2005. In accordance with SFAS No. 123, we disclosed our net income and earnings per share as if we had applied the
fair value-based method in measuring compensation expense for our share-based incentive awards.

Effective as of fiscal 2006, we adopted
the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment,using the modified prospective transition method. Under that transition method, compensation expense that we recognized beginning in fiscal 2006 includes
expense associated with the fair value of all awards granted on and after December 26, 2005 (the beginning of our 2006 fiscal year), expense for the unvested portion of previously granted awards outstanding on December 26, 2005, and
compensation for the discount eligible employees receive as part of the ESPP. Results for prior periods have not been adjusted.

We
estimate the fair value of options granted using the Black-Scholes option valuation model and the assumptions shown in Note 17 to the accompanying condensed consolidated financial statements. We estimate the volatility of our common stock at the
date of grant based on our historical volatility rate, consistent with SFAS No. 123(R) and Securities and Exchange Commission Staff Accounting Bulletin No. 107 (SAB 107). Our decision to use historical volatility was based upon the lack of
actively traded options on our common stock. We estimate the expected term consistent with the simplified method identified in SAB 107 for share-based awards granted during fiscal 2006. The simplified method calculates the expected term as the
average of the vesting and contractual terms of the award. The risk-free interest rate assumption is based on observed interest rates appropriate for the term of our employee options. We use historical data to estimate pre-vesting option forfeitures
and record share-based compensation expense only for those awards that are expected to vest. For options granted, we amortize the fair value on a straight-line basis. All options are amortized over the requisite service periods of the awards, which
are generally the vesting periods. If factors change we may decide to use different assumptions under the Black-Scholes option valuation model in the future, which could materially affect our net income and earnings per share.

Asset Retirement Obligation

In March
2005, the FASB issued FASB Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligationsan Interpretation of FASB Statement No. 143. We adopted FIN 47 as of December 25, 2005. This Interpretation
clarifies that the term conditional asset retirement obligation, as used in SFAS 143, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event
that may or may not be within the control of the entity. Therefore, the



F-12



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



timing and/or method of settlement may be conditional on a future event. Accordingly, an entity is required to recognize a liability for the fair value of a
conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurredgenerally upon acquisition,
construction, or development and/or through the normal operation of the asset. Uncertainty about the timing and/or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when
sufficient information exists.

In accordance with FIN 47, liabilities for legal obligations stemming from the eventual retirement of
tangible long-lived assets (leasehold improvements) were recorded at fair value as of December 25, 2005, with a corresponding increase to the carrying values of the related long-lived assets. This liability will be increased over time by
applying the interest method of accretion to the liability and the capitalized costs will be depreciated over the useful life of the related long-live assets. The adoption, as described below, impacted the income statement due to the cumulative
affect of depreciation and accretion from the restaurant opening dates to December 25, 2005. The primary long-lived assets impacted by this adoption are restaurant leasehold improvements.

The accounting for the initial adoption of FIN 47 resulted in a charge of approximately $363,000 reported as cumulative effect of change in
accounting principle in our Consolidated Statement of Operations for the fiscal year ended December 25, 2005.



|                                              |  |   |     |  
|--------------------------------------------- |  | - | --- | -
|Asset retirement obligation December 25, 2005 |  | $ | 644 |  
|Vinny Ts of Boston sale                      |  |   | (95 | )
|Accretion expense                             |  |   | 57  |  
|                                              |  |   |     |  
|Asset retirement obligation December 31, 2006 |  | $ | 606 |  
|                                              |  |   |     |  

Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instrumentsan amendment of FASB Statements
No. 133 and 140. This statement is intended to simplify accounting for certain hybrid financial instruments by permitting fair value re-measurement for such hybrid financial instruments. We are required to adopt SFAS 155 for all financial
instruments acquired or issued after the beginning of our first fiscal year that begins after September 15, 2006. The adoption of this statement did not have any effect on our financial statements.

In March 2006, the Emerging Issues Task Force (EITF) issued EITF Issue 06-03, How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation). A consensus was reached that entities may adopt a policy of presenting sales taxes in the income statement on either a gross or net basis. If taxes
are significant, an entity should disclose its policy of presenting taxes and the amounts of taxes. The guidance is effective for periods beginning after December 15, 2006. We present revenues net of sales taxes. This issue will not impact the
method for presenting these sales taxes in our consolidated financial statements.

In July 2006, the FASB issued FASB Interpretation
No. 48 (FIN 48), Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. FIN 48 prescribes a comprehensive financial statement model of how a company should recognize, measure, present, and
disclose uncertain tax positions that the company has taken or expects to take in its income tax returns. FIN 48 requires that only income tax benefits that meet the more likely than not recognition threshold be recognized or continue to
be recognized on the effective date. Initial derecognition amounts would be reported as a cumulative effect of a change in accounting principle. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are assessing the impact
of the new guidance on all of our open tax positions and it is not expected to have a material impact on earnings.



F-13



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



In September 2006, the SEC issued SAB No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements, which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of
a materiality assessment. SAB No. 108 is effective for fiscal years ending after November 15, 2006. The adoption of this statement did not have any effect on our financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having
previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. SFAS No. 157 is effective for fiscal years beginning
after December 15, 2007. We are currently evaluating the impact, if any, the adoption of SFAS No. 157 will have on our financial statements.

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans: an amendment of FASB Statements No. 87, 88, 106, and 132(R),which requires an employer to recognize the over-funded or under-funded status of defined benefit and other postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in
the year in which the changes occur through an adjustment to comprehensive income. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited
exceptions. SFAS No. 158 is effective for fiscal years beginning after December 15, 2006. We do not expect that adoption of this statement will have a significant effect on our financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities
to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. We are currently evaluating the impact, if any, the adoption of SFAS No. 159 will have on our financial statements.

2.    DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

In 2005, our board of directors approved the engagement
of an investment banker to represent us in the planned sale of the Vinny Ts of Boston restaurants. Also in 2005, we closed three Buca di Beppo restaurants. The Vinny Ts of Boston brand and associated assets and the three individual
restaurants, as aggregated, meet the definition of a component of an entity. Operations and cash flows can be clearly distinguished and measured at the restaurant level and, when aggregated with the Vinny Ts of Boston events noted
above, the financial results of the three closed restaurants were determined to be material to our Consolidated Financial Statements. At December 25, 2005, Vinny Ts of Boston was accounted for as an asset held for sale and,
along with the three closed restaurants, was included in discontinued operations in the Consolidated Statements of Operations and assets held for sale in the Consolidated Balance Sheets in accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.

We completed the sale of the Vinny Ts of Boston restaurants to Bertuccis
Corporation on September 25, 2006 (first day of our fiscal fourth quarter). Based on the sale proceeds, less anticipated costs to sell, we analyzed the carrying values of the Vinny Ts of Boston long-lived assets and intangibles and
recorded an impairment in accordance with SFAS No. 144 of approximately $0.4 million as of September 24, 2006. The sale price was $6.8 million; of which $3.0 million was paid in cash at the closing ($2.6 million net of banker fees and
other expenses) and $3.8 million was paid through a promissory note issued at closing. The promissory note matures



F-14



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



on June 15, 2008 or earlier upon the occurrence of certain other events, including a change in control of Bertuccis or the repayment or
refinancing of Bertuccis outstanding senior notes. The sale resulted in a $0.3 million gain that was recorded as of December 31, 2006.

Assets and liabilities classified as held for sale (Vinny Ts of Boston) and discontinued operations (three Buca di Beppo closed restaurants) consisted of (in thousands):



|                        |  |                   |     |                   |   |      
|----------------------- |  | ----------------- | --- | ----------------- | - | -----
|                        |  | December 31, 2006 |     | December 25, 2005
|Current assets          |  | $                 |    |                   | $ | 1,246
|Property and equipment  |  |                   |    |                   |   | 8,942
|Other assets            |  |                   |    |                   |   | 313  
|Long-term assets        |  |                   |    |                   |   | 9,255
|Current liabilities (1) |  |                   | 257 |                   |   | 4,145
|Long-term liabilities   |  |                   |    |                   |   | 1,860

Discontinued operations financial results consisted of (in thousands):



|                                               |  |             |        |             |   |        |             |  |   |         |  
|---------------------------------------------- |  | ----------- | ------ | ----------- | - | ------ | ----------- |  | - | ------- | -
|                                               |  | Fiscal 2006 |        | Fiscal 2005 |   |        | Fiscal 2004 | 
|Restaurant sales                               |  | $           | 22,950 |             | $ | 35,556 |             |  | $ | 34,950  |  
|Restaurant costs                               |  |             | 21,819 |             |   | 35,820 |             |  |   | 35,026  |  
|Loss on impairment of long-lived assets (2)    |  |             | 147    |             |   | 3,935  |             |  |   | 2,964   |  
|Loss on impairment of goodwill                 |  |             |       |             |   |       |             |  |   | 11,591  |  
|Lease termination costs and other              |  |             | 31     |             |   | 501    |             |  |   | 344     |  
|                                               |  |             |        |             |   |        |             |  |   |         |  
|Net income/(loss) from discontinued operations |  | $           | 953    |             | $ | (4,700 | )           |  | $ | (14,975 | )
|                                               |  |             |        |             |   |        |             |  |   |         |  

---

|(1) | We closed three Buca di Beppo restaurants in November 2005. We reached agreement with the landlord of one of the restaurants to terminate the lease and recorded estimated
liabilities for the remaining two restaurants to cover future lease termination costs. The fair value of these liabilities were estimated in accordance with the requirements of SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities.This required us to either negotiate a settlement with the landlord or estimate the present value of the future minimum lease obligations offset by the estimated sublease rentals that could be reasonably obtained for the
properties. We expect to pay these amounts in 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                     |  |   |      |  
|------------------------------------ |  | - | ---- | -
|Accrued exit costs December 25, 2005 |  | $ | 400  |  
|Expenses accrued                     |  |   | 130  |  
|Payments                             |  |   | (273 | )
|                                     |  |   |      |  
|Balance at December 31, 2006         |  | $ | 257  |  
|                                     |  |   |      |  



|(2) | In fiscal 2006 we recorded a $0.1 million loss on the impairment of long-lived assets (net of the gain on sale) related to Vinny Ts of Boston restaurants. In fiscal 2005 we
recorded an approximate $3.9 million loss on the impairment of long-lived assets primarily related to the write-down of three Vinny Ts of Boston restaurants. Fiscal 2004 reflected a $3.0 million loss on impairment primarily attributed to the
write-down of long-lived assets of one Vinny Ts of Boston restaurant and the West Des Moines Buca di Beppo restaurant.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3.    LOSS ON IMPAIRMENT AND SALE OF LONG-LIVED ASSETS

In fiscal 2006, we recorded approximately $0.3 million
loss on the impairment of long-lived assets primarily related to asset additions in restaurants that have been fully impaired in accordance with SFAS 144. In fiscal 2005 we recorded approximately $9.8 million loss on the impairment and sale of
long-lived assets primarily related to a $6.5 million write-down of six Buca di Beppo restaurants in operation, a $2.9 million loss on a sale-



F-15



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



leaseback transaction and a $0.4 million loss on capitalized lease development costs for one restaurant not expected to open due to a reduction in our
development plans.

We recorded a loss on the impairment of long-lived assets of approximately $7.8 million in fiscal 2004 primarily
attributed to the write-down of six restaurants in operation and the write-off of capitalized development costs for restaurants that we did not expect to open because of a reduction in our development plans.

4.    LEASE TERMINATION COSTS

During
fiscal 2004, our board of directors and management reached a decision to close two restaurants and cancel the development of a number of restaurant sites. In accordance with the requirements of SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, we established lease termination liabilities of approximately $1.9 million based our estimate of the fair value of these obligations. This required us to either negotiate a settlement with the landlord or
estimate the present value of the future minimum lease obligations offset by the estimated sublease rentals that could be reasonably obtained for the properties. In fiscal 2005 we incurred approximately $0.4 million of additional expense to settle
our lease obligations. No additional amounts were incurred or paid during fiscal 2006.



|                                     |  |   |      |  
|------------------------------------ |  | - | ---- | -
|Accrued exit costs December 26, 2004 |  | $ | 564  |  
|Expenses accrued                     |  |   | 434  |  
|Payments                             |  |   | (998 | )
|                                     |  |   |      |  
|Accrued exit costs December 25, 2005 |  | $ |     |  
|                                     |  |   |      |  

5.    INVENTORIES

Inventories consisted of (in thousands):



|                  |  |                   |       |                   |   |      
|----------------- |  | ----------------- | ----- | ----------------- | - | -----
|                  |  | December 31, 2006 |       | December 25, 2005
|Food              |  | $                 | 1,197 |                   | $ | 1,301
|Beverage          |  |                   | 1,126 |                   |   | 1,114
|Supplies          |  |                   | 3,956 |                   |   | 3,967
|                  |  |                   |       |                   |   |      
|Total inventories |  | $                 | 6,279 |                   | $ | 6,382
|                  |  |                   |       |                   |   |      

6.    PROPERTY AND EQUIPMENT

Property and equipment consisted of (in thousands):



|                                          |  |                   |         |   |                   |   |         |  
|----------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                          |  | December 31, 2006 |         |   | December 25, 2005 |  
|Buildings and leasehold improvements      |  | $                 | 120,148 |   |                   | $ | 120,053 |  
|Furniture, fixtures and equipment         |  |                   | 65,067  |   |                   |   | 63,536  |  
|Land                                      |  |                   | 2,596   |   |                   |   | 2,596   |  
|                                          |  |                   |         |   |                   |   |         |  
|                                          |  |                   | 187,811 |   |                   |   | 186,185 |  
|Accumulated depreciation and amortization |  |                   | (75,622 | ) |                   |   | (64,369 | )
|                                          |  |                   |         |   |                   |   |         |  
|Property and equipment, net               |  | $                 | 112,189 |   |                   | $ | 121,816 |  
|                                          |  |                   |         |   |                   |   |         |  

The property and equipment balances include gross capitalized lease assets of $15.7 million for
fiscal 2006 and 2005. The accumulated amortization balances for fiscal 2006 and 2005 include amortization of capitalized lease assets of $1.0 million and $0.2 million respectively.



F-16



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



We capitalize interest during the construction period prior to the opening of a new restaurant or
during the implementation of capitalized software. We capitalized approximately $30,000, $58,000 and $129,000 in fiscal 2006, 2005 and 2004, respectively, of interest expense related to restaurant property and equipment and software implementations.
The capitalized interest is depreciated over the life of the related assets.

Repair and maintenance expenses for fiscal 2006, 2005 and
2004 were approximately $8.7 million, $8.0 million and $7.4 million, respectively.

7.    OTHER ASSETS

Other assets, net of accumulated amortization, consisted of (in thousands):



|                       |  |                   |       |                   |   |      
|---------------------- |  | ----------------- | ----- | ----------------- | - | -----
|                       |  | December 31, 2006 |       | December 25, 2005
|Liquor licenses        |  | $                 | 1,811 |                   | $ | 1,799
|Loan acquisition costs |  |                   | 1,157 |                   |   | 1,481
|Escrow deposits        |  |                   | 877   |                   |   | 524  
|Trademarks             |  |                   | 624   |                   |   | 624  
|                       |  |                   |       |                   |   |      
|Total other assets     |  | $                 | 4,469 |                   | $ | 4,428
|                       |  |                   |       |                   |   |      

Accumulated amortization for loan acquisition costs was approximately $0.9 million at
December 31, 2006 and $0.5 million at December 25, 2005.

Liquor licenses and trademarks are non-amortizing intangible assets
with indefinite lives.

8.    OTHER ACCRUED EXPENSES

Accrued expenses consisted of (in thousands):



|                                                    |  |                   |       |                   |   |      
|--------------------------------------------------- |  | ----------------- | ----- | ----------------- | - | -----
|                                                    |  | December 31, 2006 |       | December 25, 2005
|Accrued legal settlements                           |  | $                 | 102   |                   | $ | 2,385
|Accrued utilities                                   |  |                   | 888   |                   |   | 834  
|Accrued common area maintenance and percentage rent |  |                   | 210   |                   |   | 271  
|Accrued credit card fees                            |  |                   | 360   |                   |   | 393  
|Accrued interest                                    |  |                   | 62    |                   |   | 128  
|Other accrued expenses                              |  |                   | 1,873 |                   |   | 3,221
|                                                    |  |                   |       |                   |   |      
|Total other accrued expenses                        |  | $                 | 3,495 |                   | $ | 7,232
|                                                    |  |                   |       |                   |   |      

9.    OTHER LIABILITIES

Other liabilities consisted of (in thousands):



|                                                    |  |                   |       |                   |   |      
|--------------------------------------------------- |  | ----------------- | ----- | ----------------- | - | -----
|                                                    |  | December 31, 2006 |       | December 25, 2005
|Deferred gain on sale and leaseback of property (1) |  | $                 | 2,531 |                   | $ | 2,670
|Long-term gift card liability                       |  |                   | 866   |                   |   | 590  
|Asset retirement obligation                         |  |                   | 606   |                   |   | 644  
|Other                                               |  |                   | 34    |                   |   |     
|                                                    |  |                   |       |                   |   |      
|Total other liabilities                             |  | $                 | 4,037 |                   | $ | 3,904
|                                                    |  |                   |       |                   |   |      

---

|(1) | In 2005, we recorded a deferred gain of $0.6 million on the sale and leaseback of a restaurant. In 2003, we recorded a $2.0 million deferred gain on the sale and leaseback of a
restaurant. These deferred gains are being recognized over the remainder of the 20-year initial operating lease term.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-17



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



10.    CREDIT FACILITY

In 2004, we entered into a credit agreement with Wells Fargo Foothill, Inc. and Ableco Finance LLC, as lenders, and with Wells Fargo Foothill, Inc., as
the arranger and administrative agent for the lenders. The credit agreement originally provided for (a) a revolving credit facility in an aggregate amount equal to the lesser of a borrowing base determined in accordance with the terms of the
credit agreement and $20 million (including a letter of credit sub-facility of up to an aggregate of $5.0 million); (b) a term loan A facility of up to an aggregate of $5 million; and (c) a term loan B facility of up to an aggregate of $15
million. The credit agreement expires on November 15, 2009.

We are also required under the loan documents to pay certain of our
lenders an annual fee, an unused line of credit fee and a prepayment fee in the event of early termination of the agreement.

The credit
agreement includes various affirmative and negative covenants, including certain financial covenants such as minimum EBITDA as defined in the agreement, minimum fixed charge coverage ratio and maximum limits on capital expenditures and the
acquisition or construction of new restaurants in any fiscal year. Payments under the credit agreement may be accelerated upon the occurrence of an event of default, as defined in the credit agreement that is not otherwise waived or cured. As of
March 27, 2005, we were in default of the financial covenants regarding minimum EBITDA and fixed charge coverage ratio. As a result, an amendment and waiver was negotiated and received in April 2005. In exchange for the amendment and waiver, we
paid our lenders fees totaling $0.4 million and the interest rate on the term loan B portion of the credit facility was increased. Based upon the fiscal 2005 Consolidated Financial Statements, as of December 25, 2005, we were in default of the
financial covenants regarding minimum EBITDA and fixed charge coverage ratio. As a result, an amendment and waiver was negotiated and received in March 2006. In exchange for the amendment and waiver, we paid our lender a fee of $0.1 million.

On September 9, 2005, we completed the sale and simultaneous leaseback of eight restaurant locations with affiliates of CRIC Capital
at a sale price of $17.5 million (the Sale Leaseback Transaction). The net proceeds of the Sale Leaseback Transaction were used to prepay, in its entirety, the outstanding term loan B facility with Ableco and to prepay a portion of the
outstanding term loan A facility with Wells Fargo Foothill. A premium equal to four percent of the outstanding principal amount of the term loan B was paid in connection with the prepayment of the term loan B facility. Concurrently with the closing
of the Sale Leaseback Transaction, we entered into an agreement (the Amendment and Consent) with the lenders. Pursuant to the Amendment and Consent, the lenders consented to the Sale Leaseback Transaction, agreed to amend the minimum
EBITDA coverage required for relevant testing periods in fiscal 2007, and agreed to amend the credit agreement in certain other respects. In consideration of the Amendment and Consent, we agreed to increase the interest rate on each of the remaining
term loan A facility and the revolving credit facility by 2.25% per annum.

On September 25, 2006, we completed the sale of Vinny
Ts of Boston restaurants to Bertuccis at a sale price of $6.8 million; of which $3.0 million was paid in cash at the closing and $3.8 million was paid through a promissory note issued at closing. The net proceeds from the sale of Vinny
Ts of Boston were used to prepay, in its entirety, the outstanding term loan A facility with Wells Fargo Foothill and pay down a portion of our outstanding indebtedness under the Wells Fargo Foothill revolving credit facility.

On March 8, 2007, we executed an amendment to our credit agreement with Wells Fargo Foothill. Pursuant to the amendment, the lenders agreed to
expand our maximum revolver amount to $25 million and agreed to amend the credit agreement in certain other respects. In exchange for the amendment, we paid our lender a fee of $50,000.



F-18



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



The interest rate on the revolving credit facility is Wells Fargos reference rate plus a
margin. The specific margin corresponds to a range (0.5 to 2.0 percentage points) as determined by our leverage ratio. We also have the option of utilizing a LIBOR rate plus a specific margin as determined by our leverage ratio. Our interest rate on
the revolving credit facility was the Wells Fargo reference rate plus 2.50 percentage points which was 10.75% on December 31, 2006 and 9.75% on December 25, 2005. Under the credit facility, our annual capital expenditures are limited to
$13 million and the agreement includes covenants that place restrictions on sales of properties, transactions with affiliates, incurring additional debt, our ability to sign leases for new restaurants and require maintenance of certain financial
covenants and other customary covenants.

Amounts borrowed under the credit facility are secured by substantially all of our tangible and
intangible assets. As of March 8, 2007, we had outstanding borrowings of approximately $1.8 million under our revolving credit facility and our availability under the revolving credit facility was approximately $10.9 million.

11.    LONG-TERM DEBT AND CAPITALIZED LEASES

Long-term debt and capital leases consisted of the following (in thousands):



|                                                                                                                                        |  |                   |        |                   |   |       
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                                                                                                                                        |  | December 31, 2006 |        | December 25, 2005
|Credit facilityterm loan A (Note 10)                                                                                                   |  | $                 |       |                   | $ | 2,188 
|Note payable in monthly installments, including interest at 12.0%, maturing September 2014, collateralized by leasehold
improvements    |  |                   | 358    |                   |   | 387   
|Note payable in semi-annual installments, including interest at 10. 0%, maturing October 2011, collateralized by leasehold
improvements |  |                   | 172    |                   |   | 196   
|Note payable in monthly installments, including interest at 10.0%, maturing March 2014, collateralized by leasehold
improvements        |  |                   | 197    |                   |   | 221   
|Capitalized leases payable in monthly installments, through September 2025                                                              |  |                   | 15,744 |                   |   | 15,732
|                                                                                                                                        |  |                   |        |                   |   |       
|Total                                                                                                                                   |  |                   | 16,471 |                   |   | 18,724
|Current maturities                                                                                                                      |  |                   | 193    |                   |   | 1,309 
|                                                                                                                                        |  |                   |        |                   |   |       
|Total long-term maturities                                                                                                              |  | $                 | 16,278 |                   | $ | 17,415
|                                                                                                                                        |  |                   |        |                   |   |       

The future maturities of long-term debt principal payments, including capital leases, are as
follows (in thousands):



|           |  |   |       
|---------- |  | - | ------
|2007       |  | $ | 193   
|2008       |  |   | 287   
|2009       |  |   | 378   
|2010       |  |   | 455   
|2011       |  |   | 514   
|Thereafter |  |   | 14,644
|           |  |   |       
|           |  | $ | 16,471
|           |  |   |       

In fiscal 2005, we recognized an early extinguishment of debt charge of $0.7 million which
included the expensing of deferred financing costs associated with the extinguished debt.



F-19



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



12.    COMMITMENTS AND CONTINGENCIES

LeasesWe are obligated under various operating leases for restaurant and storage space and equipment. Generally, the base lease terms are
between five and 25 years. Certain of the leases require the payment of contingent rentals based on a percentage of annual sales in excess of stipulated minimums. The leases also require us to pay our pro rata share of real estate taxes, operating
expenses, and common area costs. In addition, we have received lease incentives in connection with certain leases. We are recognizing the benefits related to the lease incentives on a straight-line basis over the applicable lease term.

Straight-line minimum and contingent rent expense for all operating leases was as follows (in thousands):



|                           |  |             |        |             |   |             |  |   |       
|-------------------------- |  | ----------- | ------ | ----------- | - | ----------- |  | - | ------
|                           |  | Fiscal 2006 |        | Fiscal 2005 |   | Fiscal 2004
|Straight-line minimum rent |  | $           | 15,463 |             | $ | 14,923      |  | $ | 14,692
|Contingent rent            |  |             | 177    |             |   | 170         |  |   | 154   
|                           |  |             |        |             |   |             |  |   |       
|Total rent expense         |  | $           | 15,640 |             | $ | 15,093      |  | $ | 14,846
|                           |  |             |        |             |   |             |  |   |       

Approximate future minimum lease obligations, excluding percentage (contingent) rents, at
December 31, 2006 are as follows (in thousands):



|                                |  |   |        
|------------------------------- |  | - | -------
|2007                            |  | $ | 15,684 
|2008                            |  |   | 15,763 
|2009                            |  |   | 15,929 
|2010                            |  |   | 16,130 
|2011                            |  |   | 16,278 
|Thereafter                      |  |   | 179,275
|                                |  |   |        
|Total future minimum base rents |  | $ | 259,059
|                                |  |   |        

Letters of CreditAs credit guarantees to insurers, we are contingently liable under
standby letters of credit issued under our credit facility. As of December 31, 2006, we had $3.8 million of standby letters of credit related to our self-insurance liabilities. All standby letters of credit are renewable annually.

LitigationThree virtually identical civil actions were commenced against our company and three former officers in the United States
District Court for the District of Minnesota between August 7, 2005 and September 7, 2005. The three actions have been consolidated. The four lead plaintiffs filed and served a Consolidated Amended Complaint (the Complaint) on
January 11, 2006. The Complaint was brought on behalf of a class consisting of all persons who purchased our common stock in the market during the time period from February 6, 2001 through March 11, 2005 (the class
period). We filed a motion to dismiss the Complaint, which was granted on October 16, 2006. On December 18, 2006, the lead plaintiffs filed a Second Amended Consolidated Complaint (Second Complaint). The Second Complaint
alleges that in press releases and SEC filings issued during the class period, defendants made materially false and misleading statements about our companys income, revenues, and internal controls, which allegedly had the result of
artificially inflating the market price for our stock. The lead plaintiffs assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and seek compensatory damages in an unspecified amount, plus an award of attorneys
fees and costs of litigation. On February 26, 2007, we filed a motion to dismiss the Second Complaint, which is scheduled for hearing on June 22, 2007. We are not able to predict the ultimate outcome of this litigation, but it may be
costly and disruptive. The total costs cannot be reasonably estimated at this time. Federal securities litigation can result in substantial costs and divert our managements attention and resources, which may have a material adverse effect on
our business and results of operations, including cash flows.



F-20



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



In February 2005, we announced that the SEC had informed us that it has issued a formal order of
investigation to determine whether there have been violations of the federal securities laws. We understand that the order of investigation relates to our internal controls and compliance with rules governing filings and reports, including public
disclosures, required to be filed with the SEC, and the 2002 purchase of an old farmhouse in Italy known as Villa Sermenino. We believe the SEC largely has completed its investigation of the Company, with which we cooperated and assisted
and we expect to reach a resolution of this matter with the SEC.

We are subject to certain legal actions arising in the normal course of
business, none of which is expected to have a material adverse effect on our results of operations, financial condition or cash flows.

Employment AgreementsWe entered into an employment agreement with our Chairman and Chief Executive Officer on October 14, 2004. The agreement provides for paying certain salary, fringe benefits and bonus (amounts subject
to satisfaction of certain criteria determined by the compensation committee of the board of directors). The agreement also contains certain confidentiality, non-compete and termination payment provisions, including severance payments. The agreement
expires on December 31, 2007 with renewal provisions.

We entered into an employment agreement with our President on September 6,
2006. The agreement provides for paying certain salary, fringe benefits and bonus (amounts subject to satisfaction of certain criteria determined by the compensation committee of the board of directors). The agreement also contains certain
confidentiality, non-compete and termination payment provisions, including severance payments. The agreement expires on September 30, 2009 with renewal provisions.

We entered into an employment agreement with our Chief Financial Officer on February 24, 2005. The agreement provides for paying certain salary, fringe benefits and bonus (amounts subject to satisfaction of
certain criteria determined by the compensation committee of the board of directors). The agreement also contains certain confidentiality, non-compete and termination payment provisions, including severance payments. The agreement will remain in
effect until terminated pursuant to the terms of the agreement.

We entered into an employment agreement with our Chief Family Resource
Officer on February 21, 2005. The agreement provides for paying certain salary, fringe benefits and bonus (amounts subject to satisfaction of certain criteria determined by the compensation committee of the board of directors). The agreement
also contains certain confidentiality, non-compete and termination payment provisions, including severance payments. The agreement will remain in effect until terminated pursuant to the terms of the agreement.

We entered into an employment agreement with our General Counsel and Secretary on March 30, 2005. The agreement provides for paying certain salary,
fringe benefits and bonus (amounts subject to satisfaction of certain criteria determined by the compensation committee of the board of directors). The agreement also contains certain confidentiality, non-compete and termination payment provisions,
including severance payments. The agreement will remain in effect until terminated pursuant to the terms of the agreement.

We entered into
employment agreements with our Chief Marketing Officer on January 5, 2004, as amended and restated on December 14, 2005 and December 4, 2006. The agreement provides for paying certain salary, fringe benefits and bonus (amounts subject
to satisfaction of certain criteria determined by the compensation committee of the board of directors). The agreement also contains certain confidentiality, non-compete and termination payment provisions, including severance payments. The agreement
expires on July 31, 2008.



F-21



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



13.    INCOME TAXES

The provision for income taxes consisted of the following (in thousands):



|                           |  |         |   |             |   |             |   |             |   |   |  
|-------------------------- |  | ------- | - | ----------- | - | ----------- | - | ----------- | - | - | -
|                           |  |         |   | Fiscal 2006 |   | Fiscal 2005 |   | Fiscal 2004
|Current:                   |  | Federal |   | $           |  |             | $ |            |   | $ | 
|                           |  | State   |   |             |  |             |   |            |   |   | 
|Deferred:                  |  | Federal |   |             |  |             |   |            |   |   | 
|                           |  | State   |   |             |  |             |   |            |   |   | 
|                           |  |         |   |             |   |             |   |             |   |   |  
|Provision for income taxes |  | $       |  |             | $ |            |   | $           | 
|                           |  |         |   |             |   |             |   |             |   |   |  

The following is a reconciliation between the U. S. federal statutory rate and the effective tax
rate:



|                                           |  |             |   |  |             |   |  |             |  
|------------------------------------------ |  | ----------- | - |  | ----------- | - |  | ----------- | -
|                                           |  | Fiscal 2006 |   |  | Fiscal 2005 |   |  | Fiscal 2004 |  
|Federal statutory rate                     |  | 34.0        | % |  | 34.0        | % |  | 34.0        | %
|State income taxes, net of federal benefit |  | 3.3         |   |  | 3.3         |   |  | 3.8         |  
|Permanent differences                      |  | (2.2        | ) |  |            |   |  |            |  
|Valuation allowance                        |  | (20.8       | ) |  | (38.0       | ) |  | (37.1       | )
|Change in state rate of deferreds          |  | 1.7         |   |  |            |   |  |            |  
|Other                                      |  | (16.0       | ) |  | 0.7         |   |  | (0.7        | )
|                                           |  |             |   |  |             |   |  |             |  
|Effective tax rate                         |  | 0           | % |  | 0           | % |  | 0           | %
|                                           |  |             |   |  |             |   |  |             |  

The income tax effects of temporary differences that give rise to significant deferred tax assets
and liabilities are as follows (in thousands):



|                                                  |  |                   |         |   |                   |   |         |  
|------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                  |  | December 31, 2006 |         |   | December 25, 2005 |  
|Assets:                                           |  |                   |         |   |                   |   |         |  
|Net operating loss carry forwards and tax credits |  | $                 | 26,854  |   |                   | $ | 20,296  |  
|Property and equipment                            |  |                   | 7,276   |   |                   |   | 9,161   |  
|Goodwill                                          |  |                   |        |   |                   |   | 3,266   |  
|Deferred rent                                     |  |                   | 4,123   |   |                   |   | 4,318   |  
|Insurance reserves                                |  |                   | 962     |   |                   |   | 999     |  
|Litigation reserve                                |  |                   | 38      |   |                   |   | 910     |  
|Other                                             |  |                   | 1,138   |   |                   |   | 672     |  
|Valuation allowance                               |  |                   | (38,915 | ) |                   |   | (37,983 | )
|                                                  |  |                   |         |   |                   |   |         |  
|                                                  |  |                   | 1,476   |   |                   |   | 1,639   |  
|                                                  |  |                   |         |   |                   |   |         |  
|Liabilities:                                      |  |                   |         |   |                   |   |         |  
|Inventory                                         |  |                   | 1,476   |   |                   |   | 1,639   |  
|                                                  |  |                   |         |   |                   |   |         |  
|                                                  |  |                   | 1,476   |   |                   |   | 1,639   |  
|                                                  |  |                   |         |   |                   |   |         |  
|Net deferred tax asset:                           |  | $                 |        |   |                   | $ |        |  
|                                                  |  |                   |         |   |                   |   |         |  



F-22



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



14.    NET LOSS FROM CONTINUING OPERATIONS PER SHARE

Net loss from continuing operations per share is computed in accordance with SFAS No. 128, Earnings per Share. Basic loss per share is
computed by dividing net loss by the weighted average number of common shares outstanding. The following table sets forth the calculation of basic and diluted net loss from continuing operations per common share (in thousands, except share and per
share data):



|                                                                       |  |             |            |   |             |   |            |             |  |   |            |  
|---------------------------------------------------------------------- |  | ----------- | ---------- | - | ----------- | - | ---------- | ----------- |  | - | ---------- | -
|                                                                       |  | Fiscal 2006 |            |   | Fiscal 2005 |   |            | Fiscal 2004 | 
|Numerator:                                                             |  |             |            |   |             |   |            |             |  |   |            |  
|Basic and diluted net loss from continuing operations                  |  | $           | (4,561     | ) |             | $ | (27,038    | )           |  | $ | (23,168    | )
|Denominator:                                                           |  |             |            |   |             |   |            |             |  |   |            |  
|Weighted average common shares outstandingbasic                       |  |             | 20,494,007 |   |             |   | 20,312,389 |             |  |   | 19,608,465 |  
|Effect of dilutive securities:                                         |  |             |            |   |             |   |            |             |  |   |            |  
|Stock options                                                          |  |             |           |   |             |   |           |             |  |   |           |  
|Weighted average common shares outstandingbasic and diluted           |  |             | 20,494,007 |   |             |   | 20,312,389 |             |  |   | 19,608,465 |  
|Basic and diluted net loss from continuing operations per common share |  | $           | (0.23      | ) |             | $ | (1.33      | )           |  | $ | (1.19      | )

Diluted loss from continuing operations per common share excludes 1.3 million stock options
at a weighted average price of $7.15 in fiscal 2006, 1.6 million stock options at a weighted average price of $7.39 in fiscal 2005 and 2.0 million stock options at a weighted average price of $12.02 in fiscal 2004 due to their
anti-dilutive effect.

15.    EMPLOYEE BENEFIT PLANS

Our employees with one year of service, age 21 or older, who worked at least 1,000 hours in the prior year, are eligible to participate in our 401(k) Plan. Under the provisions of the plan, we may, at our discretion,
make contributions to the 401(k) Plan. Participants are 100% vested in their own contributions. We made no contributions to the plan during fiscal 2006, 2005 or 2004.

Our employee stock purchase plan enables eligible employees to purchase our common stock at 85% of
its fair market value on either the first or last day of the purchasing month. Eligible employees are required to have worked with us for at least one year and to have averaged 20 hours per week during the prior year. Shares were issued as
follows:



|                 |  |      |        |      |   |        |  |   |       
|---------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                 |  | 2006 |        | 2005 |   | 2004  
|Shares purchased |  |      | 45,797 |      |   | 42,680 |  |   | 50,746
|Share high       |  | $    | 4.81   |      | $ | 5.92   |  | $ | 5.82  
|Share low        |  | $    | 3.83   |      | $ | 3.77   |  | $ | 3.60  

From 2002 through 2005, we maintained a Key Employee Stock Ownership Plan (KEYSOP) which allowed
certain employees the option to purchase mutual fund investments on a tax advantaged basis. In October 2004, the board of directors took certain actions to terminate the KEYSOP plan and in early 2005, we suspended any further participation in the
plan. As of December 16, 2005, assets valued at approximately $516,000 were held in trust to satisfy obligations to participants under the plan. On December 16, 2005, we received the agreement of all remaining KEYSOP participants to the
termination of the trust and of their remaining interests (both vested and unvested) in the KEYSOP. In exchange for this termination, we paid to all participants approximately



F-23



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



$204,000. All amounts remaining in the trust after its liquidation and the payment of termination amounts to participants were remitted to the Company and
included in income in 2005.

In 2004, we established a Phantom Stock Plan as a performance incentive program for key restaurant management
personnel. The plan gives such managers the right to receive a cash payment equal to the value of a specified number of shares provided such manager remained our employee until at least December 31, 2005. After that date, but not later than
December 31, 2007, each such manager can request a payment from the company that is equal to the number of shares times the weighted average of the closing prices of our stock during the full calendar month preceding the month in which such
payment is requested. We retain the right to offset any amounts due to us from the manager, prior to issuing any payment under the plan. As of December 31, 2006, there were a total of 46 managers enrolled in the program, each of whom had been
granted between 250-2500 units (or share equivalents) under the plan, representing a total of 34,000 units or share equivalents. We recognized the expense of this plan over 17 months. The amount accrued as of December 31, 2006 was $164,000
related to this plan.

In July 2005, the compensation committee of our board of directors granted to certain of our executives an aggregate
of 244,000 shares of restricted stock under the 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended. All such shares of restricted common stock vest and the related restrictions expire on July 21, 2008. However, each
executives restricted shares will vest immediately upon the earliest to occur of the executives death or disability or a Fundamental Change (as defined in the related agreement) of the company. If the executives employment is
terminated for any reason (other than death, disability or a Fundamental Change) prior to vesting, the restricted shares will be forfeited. We are accounting for these restricted stock grants in accordance with SFAS 123(R).

In October 2006, the compensation committee of our board of directors granted to certain of our executives an aggregate of 230,150 shares of restricted
stock under the 2006 Omibus Stock Plan, as amended. All such shares of restricted common stock vest and the related restrictions expire on July 26, 2009. However, each executives restricted shares will vest immediately upon the earliest
to occur of the executives death or disability or a Fundamental Change (as defined in the related agreement) of the company. If the executives employment is terminated for any reason (other than death, disability, position elimination or
a Fundamental Change) prior to vesting, the restricted shares will be forfeited. We are accounting for these restricted stock grants in accordance with SFAS 123(R).

16.    RELATED-PARTY AND CERTAIN TRANSACTIONS

Wine Vendor Real Estate
InvestmentWe had a vendor relationship with a vintner in Italy from whom we purchased $0.5 million of wine during fiscal 2005 and $1.2 million of wine during fiscal 2004. We also purchased land and property for development in Sermenino,
Italy through this vendor as our agent. The land and property were intended to be used as a training facility. As of December 26, 2004, we had invested a total of approximately $0.6 million in the development of the property. In February 2005,
we sold the property to the wine vendor for approximately $0.3 million. We no longer purchase wine from this vendor.

17.    STOCK-BASED COMPENSATION

We have stock-based compensation plans under which we issue stock options,
non-vested share awards (restricted stock) and discounted purchase rights. Our 2006 Omnibus Stock Plan (the 2006 Plan) allows our board of directors to grant options to purchase shares of our stock to eligible employees for both incentive and
non-statutory stock options. Options granted under the 2006 Plan vest as determined by the board of directors (generally five years) and are exercisable for a term not to exceed ten years. The 2006 Plan was approved by our shareholders in June 2006,
at which time we ceased granting any future awards under our prior stock option plans. A total of 2,100,000 shares are reserved under the 2006 Plan.



F-24



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



We previously issued stock options and granted restricted stock under our 1996 Incentive Stock Option
Plan and our 2000 Stock Incentive Plan. Our board of directors no longer makes any additional grants under these plans.

Our employee stock
purchase plan (ESPP) permits eligible employees to purchase stock at 85% of the fair market value on either the first or last day of the purchase period.

It is our policy to issue new shares when options are exercised, upon granting restricted stock and to fulfill employee purchases through the ESPP.

Prior to fiscal year 2006, we applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations in accounting for these plans. No stock-based compensation expense was recognized in our condensed Consolidated Statement of Operations prior to fiscal 2006 for stock option awards, as the exercise price was equal to the market price
of our stock on the date of grant. In addition, we did not recognize any stock-based compensation expense for our ESPP as it is intended to be a plan that qualifies under Section 423 of the Internal Revenue Code of 1986, as amended. Finally, we
recognized stock-based compensation expense for restricted share awards.

We adopted the fair value recognition provisions of Statement of
Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based Payment (123(R)) as of the beginning of our fiscal year 2006, requiring us to recognize expense related to the fair value of our stock-based compensation
awards. We elected the modified prospective transition method as permitted by SFAS No. 123(R). Under this transition method, stock-based compensation expense for fiscal 2006 includes: (a) compensation expense for all stock-based
compensation awards granted prior to, but not yet vested as of December 25, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation;
(b) compensation expense for all stock-based awards granted subsequent to December 25, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R); and (c) compensation expense for the
discount eligible employees receive as part of the ESPP. We recognized compensation expense for stock options and restricted stock awards on a straight-line basis over the requisite service period of the award. Total share-based compensation
included in general and administrative expense in our Consolidated Statement of Operations for fiscal 2006 was $1.0 million. In accordance with the modified prospective transition method of SFAS No. 123(R), financial results for prior periods
have not been adjusted.

The following table illustrates the effect on net loss and earnings per share if we had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee compensation for the fiscal years 2005 and 2004.



|                                                                                         |  |                   |         |   |                  |   |         |  
|---------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                         |  | Fiscal Year Ended |        
|                                                                                         |  | December 25,2005  |         |   | December 26,2004 |  
|Net loss, as reported                                                                    |  | $                 | (32,101 | ) |                  |   | (38,143 | )
|Plus: Stock-based employee compensation expense included in reported net loss            |  |                   | 59      |   |                  |   | 49      |  
|Less: Stock-based compensation expense determined under fair value method for all awards |  |                   | (812    | ) |                  |   | (2,007  | )
|                                                                                         |  |                   |         |   |                  |   |         |  
|Pro forma net loss                                                                       |  | $                 | (32,854 | ) |                  | $ | (40,101 | )
|                                                                                         |  |                   |         |   |                  |   |         |  
|Net loss per common share, basic and diluted:                                            |  |                   |         |   |                  |   |         |  
|As reported                                                                              |  | $                 | (1.58   | ) |                  |   | (1.95   | )
|Pro forma                                                                                |  | $                 | (1.62   | ) |                  |   | (2.05   | )



F-25



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



For purposes of this pro forma disclosure, the value of the stock-based compensation was amortized to
expense on a straight-line basis over the period it is vested or earned. Forfeitures were estimated based on historical experience.

A
summary of the status of our stock options is presented in the table and narrative below:



|                               |  |           |   |  |                               |       |             |   |                                  |  |                         |  |   |       
|------------------------------ |  | --------- | - |  | ----------------------------- | ----- | ----------- | - | -------------------------------- |  | ----------------------- |  | - | ------
|                               |  | Shares    |   |  | WeightedAverageExercise Price |       | Price Range |   | OptionsAvailable ForFuture Grant |  | AggregateIntrinsicValue
|Outstanding, December 28, 2003 |  | 2,518,692 |   |  | $                             | 9.63  |             | $ | 4.50-21.75                       |  | 218,616                 |  |   |       
|Granted                        |  | 995,000   |   |  |                               | 5.13  |             |   | 3.99-7.27                        |  |                         |  |   |       
|Exercised                      |  | (13,000   | ) |  |                               | 6.38  |             |   | 5.62-6.81                        |  |                         |  | $ | 10,070
|Terminated                     |  | (982,438  | ) |  |                               | 10.30 |             |   | 4.50-17.00                       |  |                         |  |   |       
|                               |  |           |   |  |                               |       |             |   |                                  |  |                         |  |   |       
|Outstanding, December 26, 2004 |  | 2,518,254 |   |  |                               | 7.70  |             |   | 3.99-21.75                       |  | 205,178                 |  |   |       
|Granted                        |  | 242,500   |   |  |                               | 5.93  |             |   | 4.43-7.04                        |  |                         |  |   |       
|Exercised                      |  | (11,467   | ) |  |                               | 6.25  |             |   | 5.63-6.75                        |  |                         |  | $ | 4,549 
|Terminated                     |  | (597,792  | ) |  |                               | 8.80  |             |   | 5.63-12.94                       |  |                         |  |   |       
|                               |  |           |   |  |                               |       |             |   |                                  |  |                         |  |   |       
|Outstanding, December 25, 2005 |  | 2,151,495 |   |  |                               | 6.64  |             |   | 3.99-21.75                       |  | 231,443                 |  |   |       
|Granted                        |  | 390,224   |   |  |                               | 5.45  |             |   | 4.85-6.54                        |  |                         |  |   |       
|Exercised                      |  | (6,767    | ) |  |                               | 4.49  |             |   | 4.44-4.70                        |  |                         |  | $ | 5,323 
|Terminated                     |  | (345,018  | ) |  |                               | 8.10  |             |   | 4.31-15.88                       |  |                         |  |   |       
|                               |  |           |   |  |                               |       |             |   |                                  |  |                         |  |   |       
|Outstanding, December 31, 2006 |  | 2,189,934 |   |  | $                             | 6.22  |             | $ | 3.99-21.75                       |  | 1,708,244               |  |   |       
|                               |  |           |   |  |                               |       |             |   |                                  |  |                         |  |   |       
|Exercisable, December 31, 2006 |  | 1,603,101 |   |  | $                             | 6.42  |             | $ | 3.99-21.75                       |  |                         |  |   |       
|                               |  |           |   |  |                               |       |             |   |                                  |  |                         |  |   |       

Information regarding options outstanding and exercisable at December 31, 2006 is as follows:



|                         |  |                 |  |                                                 |  |                              |       |                         |   |                 |  |                              |  |                         |       |  |   |        
|------------------------ |  | --------------- |  | ----------------------------------------------- |  | ---------------------------- | ----- | ----------------------- | - | --------------- |  | ---------------------------- |  | ----------------------- | ----- |  | - | -------
|                         |  | Outstanding     |  | Exercisable                                    
|Range of Exercise Prices |  | Number ofShares |  | WeightedAverageRemainingContractualLife (Years) |  | WeightedAverageExercisePrice |       | AggregateIntrinsicValue |   | Number ofShares |  | WeightedAverageExercisePrice |  | AggregateIntrinsicValue
|$  3.99    5.13         |  | 509,000         |  | 7.85                                            |  | $                            | 4.44  |                         | $ | 193,750         |  | 472,800                      |  | $                       | 4.42  |  | $ | 187,188
|5.14    9.24            |  | 1,452,600       |  | 7.57                                            |  |                              | 5.94  |                         |   |                |  | 901,967                      |  |                         | 6.04  |  |   |       
|9.25  13.35             |  | 209,334         |  | 3.64                                            |  |                              | 11.69 |                         |   |                |  | 209,334                      |  |                         | 11.69 |  |   |       
|13.36  17.46            |  | 18,000          |  | 4.22                                            |  |                              | 15.35 |                         |   |                |  | 18,000                       |  |                         | 15.35 |  |   |       
|17.47  21.75            |  | 1,000           |  | 4.50                                            |  |                              | 21.75 |                         |   |                |  | 1,000                        |  |                         | 21.75 |  |   |       
|                         |  |                 |  |                                                 |  |                              |       |                         |   |                 |  |                              |  |                         |       |  |   |        
|$  3.99  21.75          |  | 2,189,934       |  | 7.23                                            |  | $                            | 6.22  |                         | $ | 193,750         |  | 1,603,101                    |  | $                       | 6.42  |  | $ | 187,188
|                         |  |                 |  |                                                 |  |                              |       |                         |   |                 |  |                              |  |                         |       |  |   |        



F-26



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



The fair value of each option is estimated on the date of grant using the Black-Scholes
option-pricing model and the assumptions noted in the following table. Forfeitures estimates are based on historical company experience and qualitative judgments regarding the employee population.



|                                       |  |                    |           |   |      |   |           |      |  |   |           |  
|-------------------------------------- |  | ------------------ | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                       |  | Fiscal Years Ended |          
|Assumptions                            |  | 2006               |           |   | 2005 |   |           | 2004 | 
|Expected volatility (1)                |  |                    | 55.5      | % |      |   | 58.5      | %    |  |   | 60.2      | %
|Expected dividends                     |  |                    | None      |   |      |   | None      |      |  |   | None      |  
|Risk-free interest rate (2)            |  |                    | 4.6       | % |      |   | 4.2       | %    |  |   | 3.9       | %
|Expected term (in years) (3)           |  |                    | 5.0 - 7.5 |   |      |   | 5.0 - 7.8 |      |  |   | 5.0 - 7.0 |  
|Weighted average grant date fair value |  | $                  | 3.22      |   |      | $ | 3.70      |      |  | $ | 2.68      |  

---

|(1) | Expected stock price volatility is based on historical market price data.
|--- | -------------------------------------------------------------------------

|(2) | Based on the U.S. Treasury interest rates whose term is consistent with the expected life of our stock options.
|--- | ---------------------------------------------------------------------------------------------------------------

|(3) | We estimate the expected term of stock options consistent with the simplified method identified in Staff Accounting Bulletin No. 107 which considers the average of the vesting
term and the contractual term to be the expected term.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The weighted-average remaining contractual term for options
outstanding on December 31, 2006 was approximately 7.23 years. Net cash proceeds from the exercise of stock options were approximately $30,000 for fiscal 2006. The total fair value of shares vested during fiscal years 2006, 2005 and 2004 was
approximately $0.6 million, $0.5 million and $6.1 million, respectively.

The fair value of restricted share awards is determined based on
the closing market price of our stock on the date of grant. Upon adoption of SFAS 123(R), we reclassified unearned compensation within shareholders equity to additional paid-in-capital. A summary of the status of our restricted share awards as
of December 31, 2006 is as follows:



|                               |  |         |   |  |                                      |     
|------------------------------ |  | ------- | - |  | ------------------------------------ | ----
|Restricted Share Awards        |  | Shares  |   |  | Weighted-AverageGrant-DateFair Value
|Outstanding, December 26, 2004 |  |        |   |  | $                                    |    
|Granted                        |  | 264,500 |   |  |                                      | 5.48
|Vested                         |  |        |   |  |                                      |    
|Forfeited or expired           |  | 20,500  |   |  |                                      | 5.48
|                               |  |         |   |  |                                      |     
|Outstanding, December 25, 2005 |  | 244,000 |   |  |                                      | 5.48
|                               |  |         |   |  |                                      |     
|Granted                        |  | 309,359 |   |  |                                      | 5.42
|Vested                         |  |        |   |  |                                      |     
|Forfeited or expired           |  | (19,600 | ) |  |                                      | 5.52
|                               |  |         |   |  |                                      |     
|Outstanding, December 31, 2006 |  | 533,759 |   |  | $                                    | 5.44
|                               |  |         |   |  |                                      |     

As of December 31, 2006, there was approximately $3.1 million of total unrecognized
compensation cost related to share-based compensation arrangements granted under all equity compensation plans. Total unrecognized compensation expense will be adjusted for future changes in estimated forfeitures. We expect to recognize that cost
over a weighted-average period of 3.0 years.



F-27



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



Paisano Partner ProgramUnder our Paisano Partner and Chef Partner programs, the
restaurant management team is paid based on the results and profits of its restaurant on a monthly, quarterly and annual basis. Paisano Partners and Chef Partners also receives stock options and Paisano Partners required to purchase either $10,000
or $20,000 of our common stock at fair market value while Chef Partners are required to purchase $5,000 of our common stock at fair market value at the time of employment in the position. The Partner programs strive to motivate our restaurant
general managers, whom we refer to as Paisano Partners, and kitchen managers, whom we refer to as Chef Partners, to act as partners in the overall success of the company. We have the option, but not the obligation, to repurchase all of the shares
purchased and paid for by a Partner under the program at the purchase price of the shares paid by the Partner either (1) upon the initiation of bankruptcy proceedings by or against the Partner within five years after the purchase date of the
equity interest or (2) if the Partners employment with us is terminated for any reason within five years after the purchase date of the equity interest. We record the equity issuance as an increase to shareholders equity. If a
Partner chooses to fund the purchase of the equity investment through a loan from us, we record a note receivable from shareholders. Because the loan is made against an equity issuance of our stock, we record the remaining principal due on the loan
as a reduction to shareholders equity. When a Partner makes a loan payment, we record interest income on, and a reduction in the principal balance of, the loan in accordance with the amortization schedule for the loan. All loans to Partners
are made at an 8% fixed interest rate and are primarily collected through automatic payroll deductions. In the case of termination of employment of a Partner within five years after the purchase date of the equity interest, we either
(1) continue to collect payments on the loan in accordance with its terms or (2) exercise our option to buy-out the Paisano Partners entire equity interest purchased under the Partner program at the purchase price of the equity
interest paid by the Partner and reduce our note receivable due from employee shareholders accordingly. The notes receivable balances related to stock purchases by Paisano Partners and Chef Partners were approximately $1,116,000 and $805,000 as of
December 31, 2006 and December 25, 2005, respectively. At December 31, 2006 and December 25, 2005, respectively, 271,155 and 236,274 shares of common stock were issued under the Paisano Partner program and as of December 31,
2006 79,277 shares were issued under the Chef Partner program.

Private Placement of Common StockIn 2004, we completed the
sale of 3.3 million shares in a private placement of our stock at a price of $5.50 per share for total gross proceeds of $18.2 million. After deducting equity transaction costs of approximately $0.8 million, we received net proceeds from the
equity sale of approximately $17.4 million, $8.5 million of which was used to prepay our term loan facility and $7.5 million of which was used to pay down our line of credit borrowings and the remaining proceeds were used for general corporate
purposes.

18.    SUPPLEMENTAL CASH FLOW INFORMATION

The following is supplemental cash flow information for the fiscal year ended (in thousands):



|                                                                   |  |                   |       |                   |   |                   |  |   |      
|------------------------------------------------------------------ |  | ----------------- | ----- | ----------------- | - | ----------------- |  | - | -----
|                                                                   |  | December 31, 2006 |       | December 25, 2005 |   | December 26, 2004
|Cash paid for:                                                     |  |                   |       |                   |   |                   |  |   |      
|Interest (net of amounts capitalized)                              |  | $                 | 2,575 |                   | $ | 3,029             |  | $ | 1,624
|Non-cash investing and financing activities:                       |  |                   |       |                   |   |                   |  |   |      
|Property acquired by capital lease                                 |  |                   |      |                   |   | 15,695            |  |   |     
|Shareholder receivable from issuance of stock                      |  |                   | 846   |                   |   | 178               |  |   | 420  
|Shareholder receivable reduction due to repurchase of common stock |  |                   | 254   |                   |   | 350               |  |   | 480  



F-28



---

##### Table of Contents

BUCA, Inc. and Subsidiaries

Notes To Consolidated Financial Statements(Continued)



19.    SELECTED QUARTERLY FINANCIAL DATAUnaudited

The following tables contains unaudited quarterly financial data from continuing operations (in thousands, except per share data and weighted average
shares) for fiscal 2006 and 2005:



|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           
|------------------------------------------------------------------------ |  | ------------- | ---------- | -------------- | - | ---------- | ------------- |  | - | -------------- | - |  | - | ----------
|                                                                         |  | Fiscal 2006  
|                                                                         |  | First Quarter |            | Second Quarter |   |            | Third Quarter |  |   | Fourth Quarter
|Restaurant sales                                                         |  | $             | 64,842     |                | $ | 61,019     |               |  | $ | 56,421         |   |  | $ | 71,531    
|Operating income (loss)                                                  |  |               | 1,877      |                |   | (774       | )             |  |   | (4,218         | ) |  |   | 1,266     
|Net income (loss) from continuing operations                             |  |               | 1,143      |                |   | (1,467     | )             |  |   | (4,950         | ) |  |   | 713       
|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           
|Net income (loss)                                                        |  | $             | 1,270      |                | $ | (718       | )             |  | $ | (5,103         | ) |  | $ | 943       
|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           
|Net income (loss) from continuing operations per sharebasic and diluted |  |               | 0.05       |                |   | (0.07      | )             |  |   | (0.24          | ) |  |   | 0.04      
|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           
|Net income (loss) per sharebasic and diluted                            |  |               | 0.06       |                |   | (0.03      | )             |  |   | (0.25          | ) |  |   | 0.05      
|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           
|Weighted average common shares outstandingbasic                         |  |               | 20,503,773 |                |   | 20,525,656 |               |  |   | 20,534,848     |   |  |   | 20,474,325
|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           
|Weighted average common shares outstandingdiluted                       |  |               | 20,621,312 |                |   | 20,525,656 |               |  |   | 20,534,848     |   |  |   | 20,693,862
|                                                                         |  |               |            |                |   |            |               |  |   |                |   |  |   |           



|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  
|----------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | -------------- | - | ---------- | ------------- |  | - | -------------- | - |  | - | ---------- | -
|                                                                                                |  | Fiscal 2005   |           
|                                                                                                |  | First Quarter |            |   | Second Quarter |   |            | Third Quarter |  |   | Fourth Quarter |  
|Restaurant sales                                                                                |  | $             | 61,385     |   |                | $ | 59,653     |               |  | $ | 54,977         |   |  | $ | 62,944     |  
|Operating loss                                                                                  |  |               | (647       | ) |                |   | (3,099     | )             |  |   | (15,217        | ) |  |   | (4,019     | )
|Net loss from continuing operations (1)                                                         |  |               | (1,079     | ) |                |   | (4,080     | )             |  |   | (16,638        | ) |  |   | (5,241     | )
|Net loss before cumulative effect of change in accounting principle                             |  |               | (926       | ) |                |   | (3,804     | )             |  |   | (20,948        | ) |  |   | (6,060     | )
|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  
|Net loss                                                                                        |  | $             | (926       | ) |                | $ | (3,804     | )             |  | $ | (20,948        | ) |  | $ | (6,423     | )
|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  
|Net loss from continuing operations per sharebasic and diluted                                 |  |               | (0.05      | ) |                |   | (0.20      | )             |  |   | (0.82          | ) |  |   | (0.26      | )
|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  
|Net loss before cumulative effect of change in accounting principle per sharebasic and diluted |  |               | (0.05      | ) |                |   | (0.19      | )             |  |   | (1.04          | ) |  |   | (0.30      | )
|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  
|Net loss per sharebasic and diluted                                                            |  |               | (0.05      | ) |                |   | (0.19      | )             |  |   | (1.04          | ) |  |   | (0.32      | )
|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  
|Weighted average common shares outstandingbasic and diluted                                    |  |               | 20,180,235 |   |                |   | 20,203,204 |               |  |   | 20,223,749     |   |  |   | 20,312,389 |  
|                                                                                                |  |               |            |   |                |   |            |               |  |   |                |   |  |   |            |  

---

|(1) | Operating results for the third quarter of fiscal 2005 included charges of $9.8 million for losses on the impairment and sale of long-lived assets and $0.7 million for loan
termination costs.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-29



---

##### Table of Contents

Exhibit Index



|        |  |                                                                                                                                                                                                                                                                                                      |  |                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                          |  | Method of Filing         
|3.1     |  | Amended and Restated Articles of Incorporation of the Registrant. (1)                                                                                                                                                                                                                                |  | Incorporated by Reference
|3.2     |  | Amended and Restated By-Laws of the Registrant. (2)                                                                                                                                                                                                                                                  |  | Incorporated by Reference
|3.3     |  | Articles of Amendment of Amended and Restated Articles of Incorporation of the Registrant. (3)                                                                                                                                                                                                       |  | Incorporated by Reference
|4.1     |  | Specimen of Common Stock certificate. (4)                                                                                                                                                                                                                                                            |  | Incorporated by Reference
|10.1    |  | 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended. *(5)                                                                                                                                                                                                                   |  | Incorporated by Reference
|10.2    |  | Form of Non-Qualified Stock Option Agreement for the 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended. *(6)                                                                                                                                                              |  | Incorporated by Reference
|10.3    |  | Form of Non-Qualified Stock Option Agreement for the 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies, as amended (for non-employee directors). *(7)                                                                                                                                 |  | Incorporated by Reference
|10.4    |  | 2000 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies. *(8)                                                                                                                                                                                                                               |  | Incorporated by Reference
|10.5    |  | Stock Option Plan for Non-Employee Directors. *(9).                                                                                                                                                                                                                                                  |  | Incorporated by Reference
|10.6    |  | Non-Statutory Stock Option Agreement between the Registrant and 1204 Harmon Partnership for the purchase of 24,000 shares of common stock of the Registrant, dated as of June 1, 1998.
(10)                                                                                                          |  | Incorporated by Reference
|10.7    |  | BUCA, Inc. Employee Stock Purchase Plan. *(11)                                                                                                                                                                                                                                                       |  | Incorporated by Reference
|10.8    |  | BUCA, Inc. Amended Employee Stock Purchase Plan. *(12)                                                                                                                                                                                                                                               |  | Incorporated by Reference
|10.9    |  | 2006 Omnibus Stock Plan of BUCA, Inc. *(13)                                                                                                                                                                                                                                                          |  | Incorporated by Reference
|10.10   |  | Form of Restricted Stock Agreement for the 2006 Omnibus Stock Plan of the Registrant. *(14)                                                                                                                                                                                                          |  | Incorporated by Reference
|10.11   |  | Employment Agreement, dated as of October 14, 2004 between the Registrant and Wallace B. Doolin. *(15)                                                                                                                                                                                               |  | Incorporated by Reference
|10.12   |  | Employment Agreement, dated as of February 10, 2005 between the Registrant and Modesto Alcala. *(16)                                                                                                                                                                                                 |  | Incorporated by Reference
|10.13   |  | Employment Agreement, dated as of February 24, 2005, by and between the Registrant and Kaye R. OLeary. *(17)                                                                                                                                                                                        |  | Incorporated by Reference
|10.14   |  | Employment Agreement, dated as of March 30, 2005, by and between the Registrant and Richard G. Erstad. *(18)                                                                                                                                                                                         |  | Incorporated by Reference
|10.15   |  | Employment Agreement, dated as of February 21, 2005, by and between the Registrant and Cynthia C. Rodahl. *(19)                                                                                                                                                                                      |  | Incorporated by Reference
|10.16   |  | Employment Agreement, dated as of September 6, 2006, by and between the Registrant and John T. Bettin. *(20)                                                                                                                                                                                         |  | Incorporated by Reference
|10.17   |  | Amendment to Employment Agreement, dated as of December 4, 2006, by and between the Registrant and Modesto Alcala. *(21)                                                                                                                                                                             |  | Incorporated by Reference
|10.18   |  | Second Amended and Restated Employment Agreement, dated as of December 5, 2006 between the Registrant and Steven B. Hickey. *(22)                                                                                                                                                                    |  | Incorporated by Reference
|10.19   |  | Credit Agreement, dated as of November 15, 2004, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories thereto, and Wells
Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (23)                                 |  | Incorporated by Reference
|10.20   |  | Amendment Number One to Credit Agreement and Waiver, dated as of April 15, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (24) |  | Incorporated by Reference



---

##### Table of Contents

|        |  |                                                                                                                                                                                                                                                                                                          |  |                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                              |  | Method of Filing         
|10.21   |  | Amendment Number Two to Credit Agreement and Consent, dated as of September 9, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that
are signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (25) |  | Incorporated by Reference
|10.22   |  | Amendment Number Three to Credit Agreement, dated as of November 4, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (26)            |  | Incorporated by Reference
|10.23   |  | Amendment Number Four to Credit Agreement, dated as of November 30, 2005, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (27)            |  | Incorporated by Reference
|10.24   |  | Amendment Number Five to Credit Agreement, dated as of March 22, 2006, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
thereto, and Wells Fargo Foothill, Inc., as the Arranger and the Administrative Agent. (28)               |  | Incorporated by Reference
|10.25   |  | Amendment Number Six to Credit Agreement, dated as of August 11, 2006, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
hereto, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent. (29)                    |  | Incorporated by Reference
|10.26   |  | Amendment Number Seven to Credit Agreement, dated as of October 1, 2006, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are
signatories hereto, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent. (30)                  |  | Incorporated by Reference
|10.27   |  | Amendment Number Eight to Credit Agreement, dated as of March 8, 2007, by and among the Registrant and each of its Subsidiaries that are signatories thereto, the Lenders that are signatories
hereto, and Wells Fargo Foothill, Inc., as the Arranger and Administrative Agent.                         |  | Filed Electronically     
|10.28   |  | Stock Purchase Agreement, dated as of September 25, 2006, by and among the Registrant, BUCA Restaurants 3, Inc., Bertuccis Corporation and Vinny Ts Acquisition Corporation
(31)                                                                                                                       |  | Incorporated by Reference
|10.29   |  | Promissory Note, dated as of September 25, 2006, from Vinny Ts Acquisition Corporation payable to the Registrant. (32)                                                                                                                                                                                  |  | Incorporated by Reference
|10.30   |  | Guaranty, dated as of September 25, 2006, issued by Bertuccis Corporation to the Registrant. (33)                                                                                                                                                                                                       |  | Incorporated by Reference
|21.1    |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                           |  | Filed Electronically     
|23.1    |  | Consent of Independent Registered Public Accounting Firm Grant Thornton LLP                                                                                                                                                                                                                              |  | Filed Electronically     
|23.2    |  | Consent of Independent Registered Public Accounting Firm Deloitte & Touche LLP                                                                                                                                                                                                                           |  | Filed Electronically     
|31.1    |  | Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                   |  | Filed Electronically     
|31.2    |  | Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                   |  | Filed Electronically     
|32.1    |  | Certification by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                           |  | Filed Electronically     

---

|* | Management contract, compensation plan or arrangement.
|- | ------------------------------------------------------

|(1) | Incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on
March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to Exhibit 3.5 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on
March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

##### Table of Contents

|(3) | Incorporated by reference to Exhibit 4.3 to the Registrants Registration Statement on Form S-3 (Registration No. 113737), filed with the Commission on March 19, 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on
March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to Exhibit 99 to the Registrants Registration Statement on Form S-8 (Registration No. 333-113738), filed with the Commission on March 19, 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on October 18, 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to Exhibit 10.3 to the Registrants Annual Report on Form 10-K for the period ended December 25, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to Exhibit 99.1 to the Registrants Registration Statement on Form S-8 (Registration No. 333-48156), filed with the Commission on October 18, 2000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to Exhibit 10.2 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on February 18, 1999.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to Exhibit 10.15 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the Commission on February 18, 1999.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference to Exhibit 99.3 to the Registrants Registration Statement on Form S-8 (Registration No. 333-78295), filed with the Commission on May 12, 1999.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the period ended June 25, 2006.
|---- | -------------------------------------------------------------------------------------------------------------------------------

|(13) | Incorporated by reference to Exhibit A to the Registrants Definitive Proxy Statement filed with the Commission on April 21, 2006.
|---- | ----------------------------------------------------------------------------------------------------------------------------------

|(14) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on October 31, 2006.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

|(15) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on October 18, 2004.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

|(16) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on February 11, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(17) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on March 1, 2005.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|(18) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on April 5, 2005.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|(19) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on May 18, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(20) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 7, 2006.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(21) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on December 8, 2006.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------

|(22) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on December 16, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(23) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on November 18, 2004.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|(24) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on April 21, 2005.
|---- | --------------------------------------------------------------------------------------------------------------------------------------

|(25) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 15, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(26) | Incorporated by reference to Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the period ended September 25, 2005.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(27) | Incorporated by reference to Exhibit 10.19 to the Registrants Annual Report on Form 10-K for the period ended December 25, 2005.
|---- | ---------------------------------------------------------------------------------------------------------------------------------

|(28) | Incorporated by reference to Exhibit 10.20 to the Registrants Annual Report on Form 10-K for the period ended December 25, 2005.
|---- | ---------------------------------------------------------------------------------------------------------------------------------

|(29) | Incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the period ended September 24, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------



---

##### Table of Contents

|(30) | Incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the period ended September 24, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------

|(31) | Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on September 28, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(32) | Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on September 28, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(33) | Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on September 28, 2006.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------