SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended March 30, 2003
orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number: 333-62615
______________________________ROMACORP, INC.
(Exact name of registrant as specified in its charter)



|Delaware(State or other jurisdiction of
incorporation or organization)             | 13-4010466(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------------------- | ----------------------------------------------
|9304 Forest Lane, Suite 200 
Dallas, Texas(Address of principal executive offices) | 75243(Zip Code)                               

Registrant's telephone number, including area code:(214) 343-7800

______________________________

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

______________________________

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

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

As of June 23, 2003, 100 shares of Common Stock, $.01 par value, were outstanding and held by Roma Restaurant Holdings, Inc.



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ROMACORP, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended March 30, 2003



|PART I   |          |                                                           
|-------- | -------- | ----------------------------------------------------------
|         | ITEM 1.  | BUSINESS                                                  
|         | ITEM 2.  | PROPERTIES                                                
|         | ITEM 3.  | LEGAL PROCEEDINGS                                         
|         | ITEM 4.  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS       
|PART II  |          |                                                           
|         | ITEM 5.  | MARKET FOR REGISTRANT'S COMMON EQUITY AND                 
|         |          | RELATED STOCKHOLDER MATTERS                               
|         | ITEM 6.  | SELECTED FINANCIAL DATA                                   
|         | ITEM 7.  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL         
|         |          | CONDITION AND RESULTS OF OPERATIONS                       
|         | ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|         | ITEM 8.  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA               
|         | ITEM 9.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON          
|         |          | ACCOUNTING AND FINANCIAL DISCLOSURE                       
|PART III |          |                                                           
|         | ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT        
|         | ITEM 11. | EXECUTIVE COMPENSATION                                    
|         | ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND       
|         |          | MANAGEMENT                                                
|         | ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS            
|         | ITEM 14. | CONTROLS AND PROCEDURES                                   
|PART IV  |          |                                                           
|         | ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON    
|         |          | FORM 8-K                                                  



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PART I



ITEM 1.      BUSINESS

Romacorp, Inc. (the "Company" or "Romacorp") is the operator and franchisor of the largest national casual dining chain specializing in ribs, with 257 restaurants located in 28 states in the United States and in 27 foreign countries and territories. Founded in Miami in 1972, the restaurants operated by Romacorp are primarily located in Florida, Texas and California. Both the Tony Roma's name and its "Famous for Ribs" and "Tony Roma's A Place for Ribs" slogans are well-recognized throughout the world. The restaurants offer a full and varied menu, including ribs, chicken, steaks, seafood, salads and other menu items in a casual atmosphere that is suitable for the entire family. Since the inception of Tony Roma's, its ribs have won numerous consumer and industry awards. In addition to award-winning ribs, the menu features a signature deep fried onion ring loaf. As of March 30, 2003, Romacorp operated 55 Company restaurants in 14 states and, through its subsidiaries, franchised 102 restaurants in 20 states and 100 restaurants in international locations.

The Tony Roma's concept is designed to serve a demographically and geographically diverse customer base, with high quality food at moderate prices. Entrees typically range in price from $4.99 to $12.99 for lunch and $4.99 to $19.99 for dinner. Dessert selections range in price from $1.99 to $4.99. Tony Roma's restaurants are generally located in free-standing buildings with approximately 200 seats and separate bar areas. The restaurants have a fun, comfortable atmosphere with distinctive and varied decor and provide consumers with high quality, friendly service. The Tony Roma's concept is appropriate for a wide variety of casual dining occasions, including family dinners and business lunches.

To assure consistent product quality and to obtain optimum pricing, purchases of food and restaurant equipment for the Tony Roma's restaurants are made through a centralized purchasing function in its support center in Dallas, Texas. Romacorp negotiates directly with meat processors for its rib inventory and then ships the product to its restaurants via commercial distributors. Produce and dairy products are obtained locally. Food and equipment pricing information is also generally available to the Tony Roma's franchisee community.

Romacorp is generally not dependent upon any one supplier for availability of its products; its food and other products are generally available from a number of acceptable sources. Romacorp has a policy of maintaining alternate suppliers for most of its baseline products. Romacorp does not manufacture any products or act as a middleman.

Romacorp utilizes local advertising for individual restaurants and broadcast advertising where market penetration is efficient, as well as public relations activities aimed at individual restaurants and entire markets. Romacorp's advertising campaigns emphasize freshness, quality food, good service and value. During the fiscal year ended March 30, 2003 ("fiscal 2003"), the Company's expenditures for advertising were 3.6% of Company-owned restaurant revenues.

The Company (then Romacorp) was acquired in June 1993 by NPC International, Inc. ("NPC"). On April 24, 1998, a recapitalization agreement (the "Recapitalization"), effective June 28, 1998, was executed pursuant to which the former Romacorp, Inc. was renamed Roma Restaurant Holdings, Inc. ("Holdings") and the assets, liabilities and operations of Holdings were contributed to its newly-created, wholly-owned subsidiary, Romacorp, Inc. ("Romacorp"). In the Recapitalization, which was executed by Holdings, NPC and Sentinel Capital Partners, L.P. ("Sentinel"), Holdings redeemed stock held by NPC and NPC forgave and contributed to the capital of the Company a payable to NPC in the amount of $33,731,000. After the Recapitalization, NPC held 20% and Sentinel, through certain affiliates, held 80% of the equity of Holdings. In conjunction with this transaction, $75,000,000 of 12% Senior Notes due July 1, 2006 (the "Senior Notes") were issued by the Company. The Company paid Holdings a dividend of $75,351,000, consisting primarily of the proceeds from the 12% Senior Notes, which was used by Holdings, along with Sentinel's equity contribution, to effect the Recapitalization. This transaction was accounted for as a leveraged recapitalization with the assets and liabilities of the Company retaining their historical value.

Recent Developments



On May 29, 2003, the Company closed its restaurant in Fort Worth, Texas pursuant to an agreement with the landlord pursuant to which the Company received $500,000 for substantially all assets at the location and was released from all future obligations related to the lease.

On June 23, 2003, the Company announced that Mr. David Head was appointed president and chief executive officer, replacing Mr. Frank Steed who will remain with the Company as a member of the Board of Directors and as President of Roma Franchise Corporation and Roma Systems, Inc. (wholly owned subsidiaries of the Company).

Franchised Restaurants

Although the first Tony Roma's opened in 1972, the first franchised restaurant did not open until 1981. Beginning in 1984, franchising became a key element of Tony Roma's growth strategy and at March 30, 2003, the Company had 54 franchisees operating 202 restaurants worldwide. The largest franchise holder operates a chain of 23 Tony Roma's restaurants. Although there are some franchisees that operate a single restaurant, the Company seeks to attract multi-unit franchisees who can develop entire territories. All potential franchisees must meet certain operational and financial criteria.

Upon signing a development agreement with the Company that grants exclusive development rights to specific geographic areas, new domestic and international franchisees pay a development fee calculated by multiplying the number of restaurants in the development agreement by $20,000.

In addition to the development fee, new domestic franchisees pay an initial franchise fee of either $15,000 or $30,000 and a continuing royalty of 4% of gross sales. New international franchisees pay an initial franchisee fee of $30,000 and a continuing royalty of 4% of gross sales while the majority of the existing international franchisees pay a continuing royalty of 3% of gross sales. In addition, domestic franchisees are required to contribute 0.5% of gross sales to a joint marketing account and may be required to participate in local market advertising cooperatives. International franchisees are required to contribute 0.25% of sales to the joint marketing account.

Domestic franchisees that pay a franchise fee of $30,000 are provided new restaurant pre-opening and opening assistance at the Company's expense, while domestic franchisees paying a $15,000 fee and international franchisees reimburse the Company for these services when incurred. Restaurant pre-opening and opening assistance includes an on-site training team to assist in recruitment, training, organization, inventory planning and quality control.

In return for the domestic franchisee's initial fee and royalties, the Company provides a variety of services, including: (1) site selection criteria and review/advice on construction cost and administration; (2) centralized and system-wide purchasing opportunities; (3) restaurant management training programs, advertising and marketing programs; and (4) various administrative and training programs developed by the Company. International franchisees receive a modified version of these services.

Competition

The restaurant industry is highly competitive with respect to price, value, service, location and food quality. Tony Roma's has developed brand identity within the casual dining segment and is the largest national chain to focus on ribs. On a local and regional basis, Romacorp competes with smaller chains that also specialize in ribs, and with larger concepts that include ribs as a menu item.

Employees

As of March 30, 2003, Romacorp employed approximately 3,010 persons, including full-time and part-time personnel, of whom approximately 2,951 were restaurant employees and 59 were restaurant supervision and support center employees. A majority of the accounting and information technology services are provided by employees of NPC under a Transitional Financial and Accounting Services Agreement (the "Transition Services Agreement") that has been in effect since the completion of the Recapitalization. Company restaurants employ an average of approximately 60 full-time or part-time employees. None of Romacorp's employees are covered by collective bargaining agreements, and Romacorp has never experienced a major work stoppage, strike, or labor dispute. Romacorp considers its employee relations to be good.

The location of Romacorp-owned and franchised restaurants as of March 30, 2003 is as follows:



|State          | Romacorp-Owned |  |  | Franchised
|-------------- | -------------- |  |  | ----------
|Alabama        | 3              |  |  | 0         
|Alaska         | 0              |  |  | 1         
|Arizona        | 0              |  |  | 6         
|Arkansas       | 1              |  |  | 0         
|California     | 4              |  |  | 33        
|Colorado       | 0              |  |  | 4         
|Florida        | 19             |  |  | 2         
|Georgia        | 1              |  |  | 1         
|Hawaii         | 0              |  |  | 4         
|Indiana        | 0              |  |  | 1         
|Kentucky       | 0              |  |  | 2         
|Louisiana      | 1              |  |  | 0         
|Maryland       | 2              |  |  | 0         
|Michigan       | 0              |  |  | 1         
|Minnesota      | 0              |  |  | 1         
|Missouri       | 1              |  |  | 0         
|Nebraska       | 0              |  |  | 1         
|Nevada         | 4              |  |  | 4         
|North Carolina | 2              |  |  | 0         
|Ohio           | 0              |  |  | 4         
|Oklahoma       | 2              |  |  | 0         
|Oregon         | 0              |  |  | 4         
|South Carolina | 1              |  |  | 2         
|Tennessee      | 1              |  |  | 0         
|Texas          | 13             |  |  | 7         
|Utah           | 0              |  |  | 7         
|Washington     | 0              |  |  | 13        
|Wisconsin      | 0              |  |  | 4         
|Total U.S.     | 55             |  |  | 102       



|Foreign Country/Territory |  |  |  | Franchised
|------------------------- |  |  |  | ----------
|Aruba                     |  |  |  | 1         
|Australia                 |  |  |  | 1         
|Brazil                    |  |  |  | 1         
|Canada                    |  |  |  | 21        
|China                     |  |  |  | 2         
|Costa Rica                |  |  |  | 1         
|Dominican Republic        |  |  |  | 1         
|Ecuador                   |  |  |  | 2         
|El Salvador               |  |  |  | 2         
|Germany                   |  |  |  | 2         
|Guam                      |  |  |  | 1         
|Honduras                  |  |  |  | 1         
|Hong Kong                 |  |  |  | 2         
|Indonesia                 |  |  |  | 2         
|Japan                     |  |  |  | 7         
|Korea                     |  |  |  | 6         
|Mexico                    |  |  |  | 14        
|Peru                      |  |  |  | 2         
|Philippines               |  |  |  | 1         
|Puerto Rico               |  |  |  | 2         
|Saipan                    |  |  |  | 1         
|Singapore                 |  |  |  | 2         
|Spain                     |  |  |  | 14        
|Taiwan                    |  |  |  | 1         
|Thailand                  |  |  |  | 1         
|Trinidad                  |  |  |  | 1         
|Venezuela                 |  |  |  | 8         
|Total International       |  |  |  | 100       

Trade Names, Trademarks and Service Marks

The trade name "Tony Roma's" and all other trademarks, service marks, symbols, slogans, emblems, logos, and designs used in the Tony Roma's restaurant system are of material importance to its business. The domestic trademarks are owned by Roma Dining LP, an affiliate of Romacorp, and international trademarks and franchise rights are owned by Roma Systems, Inc., a wholly owned subsidiary of Romacorp. Another subsidiary, Roma Franchise Corporation, through a trademark license with Roma Dining LP, offers and services franchises in the United States and Roma Systems, Inc. offers services and franchises internationally. The use of these trademarks and franchise rights are licensed to franchisees under franchise agreements for use with respect to the operation and promotion of their Tony Roma's restaurants.

Seasonality

Tony Roma's restaurant sales are traditionally higher from January to March due to an increase in vacation and part-time residence activity in warm weather climates and resort locations where a significant number of the Company's restaurants are located.

Government Regulation

All of Romacorp's operations are subject to various federal, state and local laws that affect its business, including laws and regulations relating to health, sanitation, alcoholic beverage control and safety standards. To date, federal and state environmental regulations have not had a material effect on Romacorp's operations, but more stringent and varied requirements of local governmental bodies with respect to zoning, building codes, land use and environmental factors have in the past increased, and can be expected in the future to increase, the cost of, and the time required for, opening new restaurants. Difficulties or failures in obtaining required licenses or approvals could delay or prohibit the opening of new restaurants. In some instances, Romacorp may have to obtain zoning variances and land use permits for its new restaurants. Romacorp believes it is operating in compliance with all material laws and regulations governing its operations.

Romacorp is also subject to the Fair Labor Standards Act, which governs such matters as minimum wages, overtime and other working conditions. A substantial majority of Romacorp's food service personnel are paid at rates related to the minimum wage and other employment laws and regulations. Accordingly, increases in the minimum wage result in higher labor costs.

In recent years many states have enacted laws regulating franchise operations. Much of this legislation requires detailed disclosure in the offer and sale of franchises and the registration of the franchisor with state administrative agencies. Romacorp is also subject to Federal Trade Commission regulations relating to disclosure requirements in the sale of franchises. Additionally, certain states have enacted, and others may enact, legislation governing the termination and non-renewal of franchises and other aspects of the franchise relationship that are intended to protect franchisees. These matters may result in some modifications in Romacorp's franchising activities and some delays or failures in enforcing certain of its rights and remedies under license and lease agreements. The laws that apply to franchise operations and relationships are developing rapidly and Romacorp is unable to predict the effect on its intended operations of additional requirements or restrictions that may be enacted or promulgated or of court decisions that may be adverse to franchisors.

Cautionary Factors That May Affect Future Results, Financial Condition or Business

In order to take advantage of the safe harbor provisions for forward-looking statements adopted by the Private Securities Litigation Reform Act of 1995, Romacorp is hereby identifying important risks, uncertainties and other factors that could affect Romacorp's actual results of operations, financial condition or business and could cause Romacorp's actual results of operations, financial condition or business to differ materially (1) from its historical results of operations, financial condition or business or (2) the results of operation, financial condition or business contemplated by forward-looking statements made in this Annual Report or elsewhere orally or in writing by, or on behalf of, Romacorp. Except for the historical information contained in this Annual Report, the statements made in this Annual Report are forward-looking statements that involve such risks, uncertainties and other factors that could cause, or contribute to, such differences including, but not limited to, those described below.

Commodities Costs, Labor Shortages, Costs and Other Risks.  Romacorp's dependence on frequent deliveries of fresh produce and groceries subjects it to the risk that shortages or interruptions in supply, caused by adverse weather or other conditions, could adversely affect the availability, quality and costs of ingredients used in Romacorp's restaurants. Specifically, certain ingredients such as baby-back ribs, spare ribs and chicken constitute a large percentage of the total cost of Romacorp's food products. Unforeseeable increases in the cost of these specific ingredients could significantly increase Romacorp's cost of sales and correspondingly decrease Romacorp's operating income. In addition, unfavorable trends or developments concerning factors such as inflation, increased food, labor and employee benefit costs (including increases in hourly wage and minimum unemployment tax rates), regional weather conditions, interest rates, the outbreak of diseases affecting livestock, such as Mad Cow Disease and Foot and Mouth Disease, and the availability of experienced management and hourly employees may also adversely affect the food service industry in general and Romacorp's results of operations and financial condition in particular.

Training and Retention of Skilled Management and Other Restaurant Personnel.  Romacorp's success depends substantially upon its ability to recruit, train and retain skilled management and other restaurant personnel. There can be no assurance that labor shortages, economic conditions or other factors will not adversely affect the ability of Romacorp to satisfy its requirements in this area.

Ability to Locate and Secure Acceptable Restaurant Sites.  The success of restaurants is significantly influenced by location. There can be no assurance that current locations will continue to be attractive or that additional locations can be located and secured as demographic patterns change. It is possible that the current locations or economic conditions where restaurants are located could decline in the future, resulting in potentially reduced sales in those locations. There is also no assurance that new sites will produce the same results as past sites.

Competition.  Romacorp's future performance will be subject to a number of factors that affect the restaurant industry generally, including competition. The restaurant business is highly competitive and the competition can be expected to increase. Price, restaurant location, food quality, quality and speed of service and attractiveness of facilities are important aspects of competition as are the effectiveness of marketing and advertising programs. The competitive environment is also often affected by factors beyond Romacorp's or a particular restaurant's control. Romacorp's restaurants compete with a wide variety of restaurants ranging from national and regional restaurant chains, some of which have substantially greater financial resources than Romacorp, to locally owned restaurants. There is also active competition for advantageous commercial real estate sites suitable for restaurants.

Consumer Demand and Market Acceptance.  Food service businesses are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends. The performance of individual restaurants may be adversely affected by factors such as traffic patterns, demographic considerations and the type, number and location of competing restaurants. Multi-unit food service chains such as Romacorp's can also be materially and adversely affected by publicity resulting from food quality, illness, injury and other health concerns or operating issues stemming from the activities of one restaurant or a limited number of restaurants, including restaurants operated by the franchisor or another franchisee.

Ability to Refinance Debt. The Company has substantial debt obligations that mature on July 1, 2006. In consideration of the sales decline and recurring losses experienced in recent years, the ability of the Company to refinance this debt with similar publicly traded debt is considered remote. Therefore, the Company has engaged Houlihan Lokey Howard & Zukin to assess the potential for refinancing the debt and to provide other restructuring alternatives. There can be no assurance that these refinancing or restructuring efforts will be successful.

Unforeseeable Events and Conditions.Unforeseeable events and conditions, many of which are outside the control of Romacorp, can affect consumer patterns in the restaurant industry. These events include, among others, weather patterns, severe storms and power outages and natural disasters. Specific examples include, but are not limited to, Romacorp's concentration of Tony Roma's operations and franchisees in Florida, California and Texas, all of which are areas that have historically suffered from severe weather and natural disasters. There can be no assurance that Romacorp's operations will not be adversely affected by such events in the future.

Effect of Terrorist Attacks.  The September 11, 2001 terrorist attacks on the World Trade Center in New York City and the Pentagon have negatively affected the United States economy, in particular the travel and hospitality industry. Like most consumer businesses, the Company's business is affected by general economic, and public safety conditions that affect consumer confidence and spending. Sales for most of the Company's restaurants were adversely affected as a result of the September 11 attacks. Additional terrorist attacks or related events could adversely impact all consumer businesses, including the Company's. It is not possible at this time to predict the longer-term effects on our operations of the attacks, or the impact of future actions that may be taken in response to the attacks.



ITEM 2.      PROPERTIES

Romacorp selects all Company-operated restaurant sites, and has the right to approve all franchised restaurant locations. Sites are selected using a screening model to analyze locations with an emphasis on projected financial return, demographics (such as population density, age and income distribution), analysis of restaurant competition in the area, and an analysis of the site characteristics, including accessibility, traffic counts, and visibility.

As of March 30, 2003, Romacorp owned and operated 55 restaurants, including 11 properties classified as held for sale, that are owned and leased as follows:



|                                              | Held for Sale |  | Other |  | Total
|--------------------------------------------- | ------------- |  | ----- |  | -----
|Land and building leased                      | 6             |  | 24    |  | 30   
|Land and building owned                       | 4             |  | 11    |  | 15   
|Building owned by the Company and land leased | 1             |  | 9     |  | 10   
|                                              | 11            |  | 44    |  | 55   

In addition to these properties, as of March 30, 2003, Romacorp also held leases on three former Tony Roma's restaurant locations that were closed during a prior year and are available for sublease.

Some of Romacorp's leases contain percentage rent clauses, typically 5% to 6% of gross sales, against which the minimum rent is applied, and most are net leases under which Romacorp pays taxes, maintenance, insurance, repairs and utility costs.

Romacorp's Support Center is located in approximately 16,750 square feet of leased office space in Dallas, Texas. The lease expires June 30, 2006.



ITEM 3.      LEGAL PROCEEDINGS

Romacorp and its subsidiaries are engaged in ordinary and routine litigation incidental to its business, but management does not anticipate that any amounts that Romacorp may be required to pay by reason of such litigation, net of insurance reimbursements, will have a materially adverse effect on Romacorp's financial position.



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

There were no matters submitted to a vote of Holdings, Romacorp's sole security holder, during the fourth quarter of the fiscal year ended March 30, 2003.



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PART II



ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER

There is no established public trading market for Romacorp's common stock.



ITEM 6.      SELECTED FINANCIAL DATA

The following table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the audited consolidated financial statements and the related notes of Romacorp included elsewhere in this report.



|                                            |   | Fiscal Year Ended     
|------------------------------------------- | - | ----------------------
|                                            |   | March 30,
2003        
|                                            |   | (Dollars in thousands)
|Income Statement Data:                      |   |                       
|Revenues                                    |   |                       
|Restaurant sales                            | $ | 107,614               
|Franchise fees and royalties                |   | 11,679                
|Total revenues                              | $ | 119,293               
|Depreciation and amortization               | $ | 5,172                 
|Asset impairment and other loss provisions  |   | 5,327                 
|Gain on early retirement of debt            |   | 788                   
|Operating income (loss)                     |   | (52)                  
|Net interest expense                        |   | 8,233                 
|Income tax expense (benefit)                |   | 7,177                 
|Income (loss) before cumulative effect of   |   |                       
|a change in accounting principle            |   | (14,112)              
|Cumulative effect of a change in accounting |   |                       
|principle, net of tax                       |   | --                    
|Net income (loss)                           |   | (14,112)              
|Other Financial Data:                       |   |                       
|Cash flows provided by (used in):           |   |                       
|Operating activities                        | $ | 1,226                 
|Investing activities                        |   | 195                   
|Financing activities                        |   | 3,793                 
|Balance Sheet Data:                         |   |                       
|Facilities and equipment, net               | $ | 28,898                
|Total assets                                |   | 59,460                
|Total borrowings (1)                        |   | 76,170                
|Stockholder's deficit (2)                   |   | (30,577)              
|Other Data:                                 |   |                       
|Adjusted EBITDA (3)                         | $ | 10,681                

__________________________

|(1) | Includes current portion of long-term borrowings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | See "Item I - Business" for a description of the Recapitalization, which was effective June 28, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | As used herein, "Adjusted EBITDA" represents net income before the cumulative effect of a change in accounting principle plus:  (1) net interest;   (2) income and franchise taxes;   (3) depreciation and amortization, including amortization of start-up costs;  (4) restaurant pre-opening expenses;  (5) loss provisions;  (6) gains and losses on asset sales;  (7)
gain on early retirement of debt; and (8) impairments of long-lived assets. Romacorp has included information concerning Adjusted EBITDA in this Annual Report because it believes that such information is used by certain investors as one measure of an issuer's historical ability to service debt. Adjusted EBITDA is not a measure determined in accordance with generally accepted accounting principles and should not be considered as an alternative to, or more meaningful than, earnings from operations or other traditional indications of an issuer's operating performance. Adjusted EBITDA as presented may not be comparable to EBITDA or other similarly titled measures defined and presented by other companies.

The computation of Adjusted EBITDA is as follows:



|                                            |   | Fiscal Year Ended     
|------------------------------------------- | - | ----------------------
|                                            |   | March 30,
2003        
|                                            |   | (Dollars in thousands)
|Net income (loss)                           | $ | (14,112)              
|Less excluded items:                        |   |                       
|Cumulative effect of a change in accounting |   |                       
|principle, net of tax                       |   | --                    
|Income tax expense (benefit)                |   | 7,177                 
|Net interest expense                        |   | 8,233                 
|Depreciation and amortization               |   | 5,172                 
|Restaurant pre-opening expense              |   | --                    
|Asset impairments                           |   | 5,327                 
|Loss provisions                             |   | --                    
|Franchise tax expense                       |   | 51                    
|Gain on sale of assets                      |   | (379)                 
|Gain on early retirement of debt            |   | (788)                 
|Adjusted EBITDA                             | $ | 10,681                



ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                     RESULTS OF OPERATIONS

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and related footnotes. Management bases its estimates and assumptions on historical experience, observance of industry trends and various other sources of information and factors. Actual results could differ from these estimates. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially could result in materially different results under different assumptions and conditions. The Company believes the following critical accounting policies require management's most difficult, subjective and complex judgments.

Franchise Fees and Royalties
- The franchise agreements for Tony Roma's restaurants provide for an initial fee and continuing royalty payments based upon gross sales, in return for operational support, product development, marketing programs and various administrative services. Royalty revenue is recognized on the accrual basis, although initial fees are not recognized until the franchisee's restaurant is opened. Fees for granting exclusive development rights to specific geographic areas are recognized when the right has been granted and cash received is non-refundable. The Company also receives royalties from third parties licensed to use the Company's trademarks in various retail venues.

Long-lived Assets
- The Company applies the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" in accounting for its long-lived assets, which requires the write-down of certain intangibles and tangible property associated with under-performing sites. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and resolves significant implementation issues that had evolved since the issuance of SFAS No. 121. SFAS No. 144 also provides more restrictive criteria to classify an asset (group) as "held for sale." The Company reviews the impairment of long-lived assets related to restaurant sites on a periodic basis and when events occur or circumstances indicate that the asset value of a restaurant is not recoverable, the Company evaluates that restaurant for impairment based on estimated future nondiscounted cash flows attributable to that restaurant. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values. In addition, the Company evaluates the criteria associated with assets held for sale and, when appropriate, writes down these assets to estimated fair value and reclasses the assets to property held for sale on the balance sheet. The Company's estimates of fair values are based on the best information available and require the use of estimates, judgements and projections as considered necessary. The effect of applying SFAS No. 144 for the fiscal year ending March 30, 2003 and SFAS No. 121 for the fiscal years ending March 24, 2002 and March 25, 2001, resulted in a reduction of facilities and equipment of $5,327,000, $4,822,000, and $2,303,000, respectively.

Goodwill- Effective March 26, 2001, the Company adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets," which was issued by the FASB in July 2001. SFAS No. 142 requires that an intangible asset that is acquired shall be initially recognized and measured based on its fair value. SFAS No. 142 also provides that goodwill should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. The Company did not record a charge related to the impairment test that is required with the adoption of this new
standard. Substantially all the goodwill was allocated, based on an analysis of
the current operations and associated fair values of the reporting units, to the
Company's franchise operations and its value is supported in full by the current and future royalties generated by franchisee utilization of the Tony Roma's trademarks.

Income taxes - Deferred Income Tax- The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes," which requires that deferred tax assets and liabilities be recognized for the effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company reviews the recoverability of any deferred tax assets reflected in the balance sheet and provides any necessary allowances as required. Any adjustments to the deferred tax asset would be charged to income in the period such determination was made.

Results of Operations

The following table sets forth Romacorp's historical consolidated revenues for fiscal 2003, 2002 and 2001:



|                             | Fiscal Year
|---------------------------- | -----------
|                             |            
|Revenues                     |            
|Restaurant sales             | $          
|Franchise fees and royalties |            
|Total revenues               | $          

The following table sets forth certain consolidated historical financial data for Romacorp expressed as a percentage of restaurant sales for fiscal 2003, 2002 and 2001:



|                                                | Fiscal Year
|----------------------------------------------- | -----------
|                                                | 2003       
|Restaurant sales                                | 100.0%     
|Cost of sales                                   | 32.1%      
|Direct labor                                    | 34.2%      
|Other (1)                                       | 29.5%      
|Total restaurant expenses                       | 95.8%      
|Income from Company-owned restaurant operations | 4.2%       

___________________________

(1)  Other operating expenses include rent, depreciation and amortization, advertising, utilities, supplies, paper cost
       and insurance among other costs directly associated with operation of restaurant facilities.

The following table sets forth Romacorp's system-wide number of restaurants and restaurant sales for fiscal 2003, 2002 and 2001:



|                                                    | Fiscal Year
|--------------------------------------------------- | -----------
|                                                    |            
|Restaurants open (at end of fiscal year):           |            
|Romacorp-operated                                   |            
|Franchise                                           |            
|Total                                               |            
|                                                    |            
|System-wide restaurant sales (Dollars in millions): |            
|Romacorp-operated restaurant sales                  | $          
|Joint venture restaurant sales                      |            
|Franchise restaurant sales                          |            
|Total                                               | $          

Fiscal 2003 Compared to Fiscal 2002

Restaurant sales.Restaurant sales for the 53 weeks ended March 30, 2003 decreased $10.3 million, or 8.7%, to $107.6 million from $117.9 million for the 52 weeks ended March 24, 2002. This decrease was due primarily to a decrease in sales at restaurants opened for more than 18 months of 5.1% and sales lost of $6.7 million due to the full year or partial year effect of five restaurant closures in fiscal 2002 and one closure during fiscal 2003 partially offset by sales of $2.1 million during the extra week in fiscal 2003.

Franchise fees and royalties.Franchise fees and royalties for fiscal 2003 decreased $77,000 to $11.7 million due primarily to a decrease in franchise fees of $292,000 partially offset by an increase in royalty income of $215,000. The increase in royalty income is due primarily to franchisee sales generated during the extra week of fiscal 2003 as the royalty increase associated with the net increase of 6 franchised restaurants was offset by a 3.5% sales decrease at comparable franchised restaurants.

Cost of sales.   Cost of sales decreased to 32.1% of restaurant sales in fiscal 2003 compared with 33.1% in fiscal 2002 due primarily to lower rib prices in fiscal 2003.

Direct labor.   Direct labor costs, which include restaurant employees' salaries, wages, benefits, bonuses and related taxes, increased to 34.2% of restaurant sales in fiscal 2003 compared with 33.2% in fiscal 2002 due to increased costs for management wages and group insurance expense.

Other.Other operating expenses increased to 29.5% of restaurant sales in fiscal 2003 compared with 28.8% in fiscal 2002 due primarily to increases in paper costs, advertising and repair and maintenance expenditures.

General and administrative expenses.General and administrative expenses increased $312,000 in fiscal 2003 due primarily to an increase of $303,000 in the Company's expense associated with reserving for uncollectable royalties. The effect of a number of successful corporate overhead cost reduction initiatives were offset by increases in the number of field supervisory staff and the expenses associated with the exchange offer that was announced on May 14, 2002 and expired on June 18, 2002, pursuant to which the Company unsuccessfully solicited consent for the exchange of new 12% Senior Secured Notes for up to all of the Senior Notes of the Company.

Impairment of long-lived assets.Impairment charges of approximately $5.3 million were recognized in fiscal 2003. Of this amount, $2.3 million was related to twelve under-performing Company-operated restaurants and the further impairment of a property closed during a prior year. The remaining impairment of $3.0 million was related to the 11 properties that were classified as held for sale and written down to their estimated fair market value. See Note 6 of the Notes to Consolidated Financial Statements.

Interest expense.   Interest expense decreased $180,000 to $8.2 million in fiscal 2003 compared with $8.4 million in fiscal 2002.  The decrease is due primarily to lower interest rates and a reduction in the weighted-average balance outstanding under the revolving credit facilities. See Note 10 of the Notes to Consolidated Financial Statements.

Gain on early retirement of debt.  During the fourth quarter of fiscal 2003, the Company repurchased Senior Notes with a face value of $2.0 million at a discount resulting in a gain of $788,000.

Miscellaneous.Miscellaneous income increased $217,000 to $562,000 in fiscal 2003 compared with $345,000 in fiscal 2002 due primarily to an increase in the net gain on asset dispositions of $182,000 during fiscal 2003.

Tax provision.   Romacorp's tax expense for fiscal 2003 of $7.2 million consisted primarily of deferred tax expense of $6.8 million due to a valuation allowance recorded for 100 percent of the Company's deferred tax assets. The Company had also recorded a valuation allowance in fiscal 2002 in recognition that all deferred tax assets might not be realizable resulting in an effective tax rate of 24.6% in that year. See Note 8 of the Notes to Consolidated Financial Statements for a further discussion of the effective tax rate.

Fiscal 2002 Compared to Fiscal 2001

Restaurant sales.Restaurant sales for the 52 weeks ended March 24, 2002 decreased $7.1 million, or 5.7%, to $117.9 million from $125.0 million for the 52 weeks ended March 25, 2001. This decrease was due primarily to a decrease in sales at restaurants opened for more than 18 months of 5.7% and sales lost of $2.9 million due to the full year or partial year effect of three restaurant closures, offset by incremental sales of $4.6 million generated by four restaurants that opened during fiscal 2001 and the partial year effect of assuming full ownership of one restaurant that was previously accounted for as a joint venture.

Franchise fees and royalties.Franchise fees and royalties for fiscal 2002 increased $356,000 to $11.8 million due primarily to an increase in royalty income resulting from a net increase of 17 franchised restaurants during the year offset by a 5.6% sales decrease at comparable franchised restaurants.

Cost of sales.   Cost of sales decreased to 33.1% of restaurant sales in fiscal 2002 compared with 33.8% in fiscal 2001 due primarily to a price increase of approximately 2.0% at the beginning of fiscal 2002. During the first half of fiscal 2002, Romacorp continued to experience higher rib and beef costs that resulted from the outbreak of the Mad Cow and Foot and Mouth diseases in Europe in fiscal 2001 that resulted in import restrictions in the United States.

Direct labor.   Direct labor costs, which include restaurant employees' salaries, wages, benefits, bonuses and related taxes, increased to 33.2% of restaurant sales in fiscal 2002 compared with 32.2% in fiscal 2001 due to increased costs for hourly employee wages, group insurance expense and workers' compensation expense. The increase in hourly wages was due in part to the trial of a lunch strategy that guaranteed a meal in 15 minutes or the meal was free.

Other.Other operating expenses increased to 28.8% of restaurant sales in fiscal 2002 compared with 27.5% in fiscal 2001 due primarily to increases in rent expenses and utility costs. The increase in rent expense was primarily due to the full year effect of fiscal 2001 property activity including four new restaurants that opened as leased properties, the completion of two sale leaseback transactions and the conversion of a joint venture property to Company-operated as a leased restaurant.

General and administrative expenses.General and administrative expenses decreased $2.6 million in fiscal 2002 due to reductions in the number of field supervisory staff, lower pre-opening expenses and lower amortization expense. The decrease in pre-opening expense occurred as Romacorp opened no new restaurants in fiscal 2002 compared with four new restaurants that opened in fiscal 2001. Effective March 26, 2001, Romacorp adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets," which provides that goodwill should not be amortized, but shall be tested for impairment annually. Romacorp did not record a charge related to the impairment test that is required with the adoption of this new standard. The adoption of SFAS No. 142 resulted in a decrease in amortization expense of $734,000 as compared with the prior year.

Impairment of long-lived assets.Impairment charges of approximately $4.8 million were recognized in fiscal 2002 related to five Company-operated restaurants which were closed and an additional four under-performing Company-operated restaurants. The amount also includes the further impairment of approximately $263,000 related to a restaurant closed during a prior year. See Note 6 of the Notes to Consolidated Financial Statements.

Other loss provisions. Romacorp recorded loss provisions related to the estimated continued occupancy costs of the five restaurants that were closed during fiscal 2002 of approximately $1.7 million and recorded a reduction of the closed store reserve of approximately $390,000 related to a reserve established in a prior year that was no longer required. See Note 6 of the Notes to Consolidated Financial Statements.

Interest expense.  Interest expense decreased $706,000 to $8.4 million in fiscal 2002 compared with $9.1 million in fiscal 2001. The decrease is due to a reduction in the balance outstanding under the prior revolving credit facility and the impact of lower interest rates. See Note 10 of the Notes to Consolidated Financial Statements.

Miscellaneous.Miscellaneous income increased $214,000 to $345,000 in fiscal 2002 compared with $131,000 in fiscal 2001 due to the net gain on asset dispositions of $137,000 during fiscal 2002 and the reduction in costs associated with the joint venture activities that were terminated during fiscal 2001.

Tax provision.   Romacorp's income tax benefit for fiscal 2002 and fiscal 2001 resulted in effective tax rates of 24.6% and 35.1%, respectively. See Note 8 of the Notes to Consolidated Financial Statements for a further discussion of the effective tax rate.

Liquidity and Capital Resources

Romacorp has a working capital surplus of $1.9 million as the Company has maximized its borrowing capacity under the Revolving Credit Facility and has cash and cash equivalents on hand of $6.8 million as of March 30, 2003. The working capital surplus also includes property held for sale of $4.7 million. The working capital surplus of
$1.9 million compares with a working capital deficit of $4.6 million as of March 24, 2002, due primarily to the increase in cash and cash equivalents and property held for sale.

As of March 30, 2003, Romacorp's long-term debt consisted of a note payable under the Revolving Credit Facility, which is secured by substantially all of the assets of Romacorp. On December 31, 2002, Romacorp executed a loan agreement and promissory note with GE Capital Franchise Finance creating the Revolving Credit Facility to replace a prior facility.

The Revolving Credit Facility provides for borrowings in an aggregate principal amount up to $25.0 million and includes annual reductions in the maximum borrowing capacity ranging from $1.75 million in the first year up to $3.25 million in later years. To the extent Romacorp has not utilized $5 million of the borrowing capacity to repurchase Senior Notes by December 31, 2003, the maximum borrowing capacity of the Revolving Credit Facility will be reduced on that date by the difference between $5 million and the amount borrowed pursuant to the Revolving Credit Facility to repurchase Senior Notes. The maximum borrowing capacity is also limited by funded debt covenants that require Romacorp to maintain a Funded Debt to Adjusted EBITDA ratio of 3.5:1.0 excluding the Senior Notes and 7.5:1.0 including the Senior Notes.

The Revolving Credit Facility will expire in December 2012 and bears interest at the one-month LIBOR plus 4.5%. The interest rate is subject to maintaining certain financial covenants and is paid monthly. Romacorp was in compliance with all restrictive covenants at March 30, 2003.

During fiscal 2001 and fiscal 2000, Romacorp completed $3.7 million and $5.9 of sale-leaseback transactions, respectively. The transactions during fiscal 2001 and fiscal 2000 resulted in deferred gains of $193,000 and $717,000, respectively. These deferred gains are being recognized over the 15-year initial term of the new leases. Romacorp does not anticipate the execution of any additional sale-leaseback transactions in the near future.

Net cash provided by operating activities was $1.2 million in fiscal 2003, a decrease from $2.2 million in fiscal 2002 due primarily to an increase in the net loss and a decrease in accounts payable partially offset by a reduction of ribs held in storage and an increase in other accrued liabilities. Net cash provided by operating activities was $2.2 million in fiscal 2002, a decrease from $3.6 million in fiscal 2001 due to an increase in the net loss, the increase in ribs held in storage as inventory for future use and a reduction in accrued liabilities, primarily related to reductions in insurance reserves.

Romacorp's investing activities provided $195,000 during fiscal 2003. Proceeds from the sale of assets of $2.5 million in fiscal 2003 were used to fund capital expenditures of $2.3 million. Romacorp utilized $710,000 to fund investing activities during fiscal 2002. Capital expenditures were $1.9 million during fiscal 2002 and were funded through cash flow from operations and $1.2 million of net proceeds from the sale of assets. Romacorp utilized $1.5 million to fund investing activities during fiscal 2001. Capital expenditures were $6.7 million during fiscal 2001 and were funded primarily through cash flow from operations and $5.2 million of net proceeds from the sale of assets. Romacorp opened four new restaurants during fiscal 2001. Approximately $5.3 million of the capital expenditures were for the construction of new restaurants.

As of March 30, 2003, the balance of the Revolving Credit Facility was $21.2 million, an increase of $5.8 million compared with the balance outstanding under the prior credit facility as of March 24, 2002. Cash and cash equivalents as of March 30, 2003 were $6.8 million compared with $977,000 as of March 24, 2002. Financing activities for fiscal 2003 included the utilization of $1.2 million of funds available under the Revolving Credit Facility to repurchase $2.0 million of Senior Notes. The Company has additional borrowing capacity of $3.8 million under the Revolving Credit Facility for the sole purpose of repurchasing Senior Notes until December 31, 2003. Excluding the amount specified for Senior Note purchases, the Company has borrowed the maximum amount available under the Revolving Credit Facility. Financing activities during fiscal 2001 included the repurchase of Senior Notes with a face value of $12.0 million utilizing $9.6 million of a prior credit facility.

Romacorp believes cash flow generated from operations and working capital are principal indicators of its liquidity condition. Romacorp's principal sources of liquidity on both a long-term and short-term basis are cash flow generated from operations and the Revolving Credit Facility.

Romacorp's ability to generate cash flow from operations sufficient to make scheduled payments on its debt as they become due will depend on Romacorp's future performance and ability to successfully implement its business and growth strategies. Romacorp's performance will be affected by prevailing economic conditions and financial, business and other factors. Many of these factors are beyond Romacorp's control. If Romacorp's future cash flows and capital resources are insufficient to meet Romacorp's debt and commitments, Romacorp may be forced to reduce or delay activities and capital expenditures or restructure or refinance Romacorp's debt. In the event that Romacorp is unable to do so, Romacorp may be left without sufficient liquidity and may not be able to meet its debt service requirements. In such case, an event of default would occur under the Revolving Credit Facility and could result in all of our indebtedness becoming immediately due and payable.

The Company's Senior Notes mature on July 1, 2006. If no additional Senior Notes are purchased on the open market, the current outstanding balance of $55.0 million will become due at that time. The Company believes the opportunity to refinance the current obligation with similar publicly traded unsecured debt instruments is remote. Therefore, the Company has engaged Houlihan Lokey Howard & Zukin to assess the potential for refinancing the debt and to provide other restructuring alternatives.

Contractual Obligations

Romacorp is obligated under future commitments as part of its normal business
operations. The future commitments are for long-term debt, operating lease payments and product purchases, summarized as follows:



|                  | Fiscal Year(s)        
|----------------- | ----------------------
|                  | 2004                  
|                  | (Dollars in thousands)
|Lease payments    | $                     
|Product purchases |                       
|Long-term debt    |                       
|                  | $                     

Rib Pricing

Baby-back ribs represent approximately 25% of Romacorp's cost of sales. Because ribs are a by-product of pork processing, their price is influenced largely by the demand for boneless pork. Historically, the cost of baby-back ribs has been volatile. Significant changes in the prices of ribs could significantly increase Romacorp's cost of sales and adversely effect the business, results of operations and financial condition of the Company. Romacorp has historically maintained an inventory of ribs in storage to minimize the risk of these price fluctuations and potential shortages. The Company realized a significant increase in the price of ribs during fiscal 2001. This increase was due in part to increased demand for baby-back ribs by our competitors and by the retail sector.  In addition, during fiscal 2001, import restrictions of Danish and other European pork products were imposed due to concerns regarding Foot and Mouth Disease that was detected in Europe. Although Romacorp utilizes only North American products, certain of our competitors normally import the majority of their baby-back ribs from Denmark. The inability of our competitors to secure product from Denmark applied further upward pressure to the baby-back rib market that continued into fiscal 2002. The ban on European pork products was lifted by the United States Government in May 2001 and rib prices normalized. Romacorp's relationships with its rib suppliers are strong and the risk of not being able to obtain adequate supplies of ribs is believed to be minimal.

Effects of Inflation

Inflationary factors such as increases in food and labor costs directly affect the Company's operations. Because many of the Company's restaurant employees are paid on an hourly basis, changes in rates related to federal and state minimum wage and tip credit laws will effect the Company's labor costs. The Company cannot always effect immediate price increases to offset higher costs and no assurance can be given that the Company will be able to do so in the future.

Forward-Looking Comments

The statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other statements that are not historical facts contained in this Annual Report are forward-looking statements that involve estimates, risks and uncertainties, including but not limited to: consumer demand and market acceptance risk; the level of and the effectiveness of marketing campaigns by the Company; training and retention of skilled management and other restaurant personnel; the Company's ability to locate and secure acceptable restaurant sites; the effect of economic conditions, including interest rate fluctuations; the impact of competing restaurants and concepts; new product introductions, product mix and pricing; the cost of commodities and other food products; labor shortages and costs and other risks detailed in this Annual Report.

Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation No. 46 "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46"). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The Company does not expect FIN 46 to have a material impact on the Company's financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation--Transition and Disclosure, an amendment of FASB Statement No. 123." The provisions of this statement were effective for interim and annual financial statements for fiscal years ending after December 15, 2002. SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition to SFAS No. 123's fair value method of accounting for stock-based employee compensation. Also, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company does not expect SFAS No. 148 to have a material impact on the Company's financial position or results of operations.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others" ("FIN 45").  FIN 45 addresses the disclosure required by a guarantor in its financial statements about its obligations under guarantees. It also clarifies the requirements related to the recognition of a liability by a guarantor at the inception of a guarantee for the obligations the guarantor has undertaken in issuing that guarantee. Certain of the disclosure requirements of
FIN 45 were effective after December 15, 2002 and the provisions for the initial recognition and measurement of a liability associated with a guarantee is effective beginning after December 31, 2002, prospectively.
FIN 45 will effect the Company to the extent it provides any guarantees for its franchisees in the future.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", was issued in June 2002. SFAS No. 146 replaces current accounting literature and requires the recognition of costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. The provisions of the Statement are effective for exit or disposal activities that are initiated after December 31, 2002. This new standard will effect the timing of when the Company recognizes the cost for restaurant closings. At the present time, the Company cannot determine the impact that the adoption of this statement will have on subsequent consolidated financial statements.

In April 2002, the FASB issued SFAS No.145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 rescinds SFAS No. 4 and 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items. The provisions of SFAS No. 145 are effective for fiscal years beginning after May 15, 2002 and earlier adoption was encouraged. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented shall be reclassified. The Company reflected the adoption of SFAS No. 145 in its consolidated financial statements for the year ending March, 30, 2003. Accordingly, the $1,868,000 gain from the early extinguishment of debt for the year ending March 25, 2001 has been reclassified and included in other income (expense).



ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Romacorp is exposed to market risk from changes in interest rates on debt and changes in commodity prices, particularly baby-back rib prices.

Romacorp's exposure to interest rate risk relates to the Revolving Credit Facility that is benchmarked to United States and European short-term interest rates. Romacorp does not use derivative financial instruments to manage overall borrowing costs or reduce exposure to adverse fluctuations in interest rates. The impact on Romacorp's results of operations of a one point interest rate change on the outstanding balance of the variable rate debt as of March 30, 2003 would be immaterial.

Baby-back ribs represent approximately 25% of Romacorp's cost of sales. Because ribs are a by-product of pork processing, their price is influenced largely by the demand for boneless pork. Historically, the cost of baby-back ribs has been volatile. Significant changes in the prices of ribs could significantly increase Romacorp's cost of sales and adversely affect the business, results of operations and financial condition of the Company. Romacorp actively manages its rib costs through supply commitments in advance of a specific need. However, the arrangements are terminable at will at the option of either party without prior notice. Therefore, there can be no assurance that any of the supply commitments will not be terminated in the future. As a result, Romacorp is subject to the risk of substantial and sudden price increases, shortages or interruptions in supply of such items, which could have a material adverse effect on the business, financial condition and results of operations of Romacorp.

Romacorp purchases certain other commodities used in food preparation. These commodities are generally purchased based upon market prices established with vendors. These purchase arrangements may contain contractual features that limit the price paid by establishing certain price floors or caps. Romacorp does not use financial instruments to hedge commodity prices because these purchase arrangements help control the ultimate cost paid and any commodity price aberrations are generally short term in nature.

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



ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The
consolidated financial statements are included under Item 15 of this Annual Report.



ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                     AND FINANCIAL DISCLOSURE

Romacorp had no disagreements on accounting or financial matters with its independent accountants to report under this Item 9.



PART III



ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the names and ages of the directors and executive officers of Romacorp. Executive officers serve at the pleasure of the Board of Directors.



|Name               |  | Age |  | Position                                                                 
|------------------ |  | --- |  | -------------------------------------------------------------------------
|David S. Lobel     |  | 50  |  | Chairman of the Board of Directors                                       
|Eric D. Bommer     |  | 34  |  | Director                                                                 
|Philip Friedman    |  | 56  |  | Director                                                                 
|John F. McCormack  |  | 44  |  | Director                                                                 
|David W. Head      |  | 46  |  | President, Chief Executive Officer and Director                          
|Frank H. Steed     |  | 56  |  | President, Roma Franchise Corporation and Roma
Systems, Inc. and Director
|Marc A. Buehler    |  | 33  |  | Vice President, Marketing                                                
|Kenneth Myres      |  | 51  |  | Vice President, Franchise Development                                    
|Richard A. Peabody |  | 42  |  | Vice President, Finance and Chief Financial Officer                      
|David G. Short     |  | 64  |  | Vice President, Legal, Secretary and General Counsel                     

David S. Lobel

Eric D. Bommer serves as a director of Romacorp and Holdings. Mr. Bommer joined Sentinel in March 1997 and serves as a Partner of the firm. Prior to joining Sentinel, he was an associate at Gefinor Acquisition Partners, L.P., a private equity investment partnership, from June 1995 to March 1997. From 1993 to 1995, he worked in the Investment Banking Division of CS First Boston. From 1992 to 1993, Mr. Bommer worked at LaSalle Partners. Mr. Bommer serves on the boards of various private companies.

Philip Friedman serves as a director of Romacorp and Holdings. Mr. Friedman is President of McAlister's Corporation, operator and franchisor of the McAlister's Deli restaurant chain. From June 1996 to January 1998, Mr. Friedman was President of Panda Management Company, Inc., a developer and operator of 300 quick-service Chinese restaurants. In addition, from June 1986 to the present, Mr. Friedman has been president of P. Friedman and Associates, Inc., a restaurant consulting firm. Mr. Friedman
also serves as a director of Eateries, Inc.

John F. McCormack serves as a director of Romacorp and Holdings. Mr. McCormack co-founded Sentinel in 1995 and presently serves as Senior Partner. From 1990 to 1995, Mr. McCormack served as Vice President at First Century. From 1983 to 1990, Mr. McCormack was employed by Coopers & Lybrand, most recently as a Manager. Mr. McCormack serves on the boards of various private companies.

David W. Head was appointed President and Chief Executive Officer on June 23, 2003 and serves as a director of Romacorp and Holdings. Mr. Head served as President and Chief Executive Officer of Shells Seafood, Inc. from April 2001 to June 2003. From December 1998 to April 2001, Mr. Head was President, Chief Operating Officer and Member of LeCarnassier LLC, D/B/A Red Robin Gourmet Burgers and Spirits; from August 1998 to April 1999, Mr. Head was President and Chief Operating Officer of Red River Bar and Grill; from November 1997 to July 1998, Mr. Head was President, Chief Executive Officer and Director of Houlihan's Restaurant Group.

Frank H. Steed was appointed President of Roma Franchise Corporation and Roma Systems, Inc. in October 2000. He served as President and Chief Executive Officer of Romacorp from October 2000 to June 2003. Mr. Steed has served as a director of Romacorp and Holdings since October 2000. Mr. Steed served as Senior Vice President of Franchise Development for Metromedia Restaurant Group (MRG®) ("MRG") from November 1994 to October 2000. Mr. Steed joined MRG as President of Bonanza Steakhouse in March 1993 and held other senior management positions with MRG including Vice Chairman of Metromedia Family Steakhouses, a division of MRG. From June 1970 to March 1993, Mr. Steed held various top management positions with Carlson Companies, Inc., serving as Executive Vice President of Operations and Franchise Development for
T.G.I. Friday's and President and Chief Executive Officer of Country Hospitality Corporation.

Marc A. Buehler was appointed Vice President of Marketing on July 15, 2002. From March 1999 until July 2002, Mr. Buehler was Vice President of Marketing for Eateries, Inc where he led all strategic marketing efforts of the company's three concepts, Garfield's Restaurant and Pub, Garcia's of Scottsdale and Pepperoni Grill. From 1996 to 1999, Mr. Buehler was a Franchise Marketing Manager for Applebee's International. From 1992 to 1996, Mr. Buehler was employed by ESPN as an account executive.

Kenneth Myres has been Vice President, Franchise Development for Romacorp since May 21, 2001. From February 2000 until May 2001, Mr. Myres was Vice President of Franchise Operations & Development for Fired Up, Inc. in Austin, TX. From 1984 until February 2000, Mr. Myres held various executive franchise positions with MRG from April 1985 to April 1997; Wall Street Deli from April 1997 to September 1998; Pizza World Supreme from September 1998 to July 1999; and Blockbuster Entertainment, Inc. from July 1999 to February 2000.

Richard A. Peabody has been Vice President, Finance and Chief Financial Officer since January 2000 and served as Acting President from June 2000 to October 2000. Mr. Peabody served as Senior Vice President and Chief Financial Officer of Checkers Drive-in Restaurants, Inc. ("Checkers") and Rally's Hamburgers, Inc. from April 1999 to December 1999 and as Vice President and Chief Financial Officer of Checkers from January 1998 to April 1999. From December 1996 to December 1997, Mr. Peabody was Chief Administrative Officer of Taco Bueno Restaurants, Inc. For more than eight years prior to his employment with Taco Bueno Restaurants, Inc., Mr. Peabody held various positions with Black-eyed Pea Management Corp.

David G. Short has been Vice President-Legal, General Counsel and Secretary since September 1990. From 1986 to 1990, Mr. Short was Vice President, Legal and General Counsel of
T.G.I. Friday's, Inc. Mr. Short also served as Vice President of NPC and certain of its affiliates until the Recapitalization.





ITEM 11.       EXECUTIVE COMPENSATION

The following summarizes, for each of the three fiscal years ended March 30, 2003, March 24, 2002, and March 25, 2001, the compensation awarded to, earned by, or paid to each of the persons who qualified as a "named executive officer" under item 402(b) of Regulation S-K.



|                                   |  | Summary Compensation Table | 
|---------------------------------- |  | -------------------------- | 
|                                   |  | Annual Compensation        | 
|Name and Principal Position        |  | Fiscal
Year                | 
|Frank H. Steed   (3)               |  | 2003                       | 
|President of Roma Franchise        |  | 2002                       | 
|Corporation and Roma Systems, Inc. |  | 2001                       | 
|                                   |  |                            | 
|David G. Short                     |  | 2003                       | 
|Vice President, Legal,             |  | 2002                       | 
|Secretary and General Counsel      |  | 2001                       | 
|                                   |  |                            | 
|Richard A. Peabody                 |  | 2003                       | 
|Vice President, Finance            |  | 2002                       | 
|and Chief Financial Officer        |  | 2001                       | 
|                                   |  |                            | 
|Marc A. Buehler (5)                |  | 2003                       | 
|Vice President, Operations         |  |                            | 
|                                   |  |                            | 
|Kenneth Myres (7)                  |  | 2003                       | 
|Vice President, Franchise          |  | 2002                       | 
|Development                        |  |                            | 

_______________

|(1) | Includes car allowance and insurance.                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The options listed were granted pursuant to a non-qualified stock option plan of Holdings. Holdings holds 100% of the outstanding shares of Romacorp.
|(3) | Mr. Steed joined Romacorp in October 2000.                                                                                                           
|(4) | Includes relocation expense of $49,334.                                                                                                              
|(5) | Mr. Buehler joined Romacorp in July 2002.                                                                                                            
|(6) | Includes relocation expense of $31,587.                                                                                                              
|(7) | Mr. Myres joined Romacorp in May 2001.                                                                                                               

Employment Agreements

In October 2000, the Company entered into an employment agreement with Mr. Steed. The agreement provides for: (1) a five year employment term with an initial base compensation of $300,000 per year and a bonus based upon achievement of Company performance objectives, of up to 50% of base compensation; (2) a bonus of $100,000 to be paid upon the one year anniversary of employment; (3) severance benefits and noncompetition, nonsolicitation and confidentiality agreements in certain situations; (4) the grant of certain stock options in Holdings; and (5) other terms and conditions of Mr. Steed's employment.

In January 2000, the Company entered into a letter of agreement with Richard A. Peabody that provides he is entitled to a severance payment of up to 12 months of his base salary in the event his position is eliminated due to a change of control of the Company. The payments will cease at such time as Mr. Peabody obtains employment elsewhere with a comparable salary and responsibilities to his current position.

Option Grants in Last Fiscal Year

The following tables set forth information regarding options of Holdings granted to the named executive officers during fiscal 2003.

|                |  | Individual Grants                       |  | Potential                              
|--------------- |  | --------------------------------------- |  | ---------------------------------------
|                |  | Number of
Securities
Underlying
Options |  | % of
Total
Options
Granted to
Employees
|Name            |  | Granted                                 |  | in Fiscal Year                         
|Marc A. Buehler |  | 3.3                                     |  | 100%                                   

_________________

|(1) | Calculated over a ten-year period, representing the terms of the options. These are assumed rates of appreciation and are not intended to forecast future appreciation of Holdings common stock.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

Set forth below is information with respect to options exercised by the named executive officers during fiscal 2003 and the number and value of unexercised stock options held by such named executive officers at the end of the fiscal year.

|                   |  |                                 |  |                    |  | Number of
Unexercised Options
at FY-End (#) |  | Value of Unexercised
In-the-Money Options
at FY-End ($) (1)
|------------------ |  | ------------------------------- |  | ------------------ |  | ------------------------------------------- |  | -----------------------------------------------------------
|Name               |  | Shares Acquired
on Exercise (#) |  | Value
Realized ($) |  | Exercisable/Unexercisable                   |  | Exercisable/Unexercisable                                  
|Frank H. Steed     |  | -0-                             |  | -0-                |  | 5.69/17.84                                  |  | -0-/-0-                                                    
|David G. Short     |  | -0-                             |  | -0-                |  | 2.1/1.2                                     |  | -0-/-0-                                                    
|Richard A. Peabody |  | -0-                             |  | -0-                |  | 1.1/2.2                                     |  | -0-/-0-                                                    
|Marc A. Buehler    |  | -0-                             |  | -0-                |  | 0/3.3                                       |  | -0-/-0-                                                    
|Kenneth Myres      |  | -0-                             |  | -0-                |  | .4/1.8                                      |  | -0-/-0-                                                    

_________________________

(1)   The common stock of Holdings is not traded on a public market. This value of unexercised options is based on
        internal estimates.

Compensation of Directors

Romacorp reimburses directors for out-of-pocket expenses incurred by them in connection with services provided in such capacity. Mr. Friedman receives a quarterly payment of $3,500. In addition, on May 12, 1999, Mr. Friedman was awarded a stock option grant to purchase .88 shares of Holdings common stock at $12,500 per share, which option vests 25% a year over four years.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is or has been an officer or employee of Romacorp or any of its subsidiaries or had any relationship requiring disclosure pursuant to Item 404 of Regulation S-K. In fiscal 2003, no executive officer of Romacorp served as a director of another entity, one of whose executive officers served on the Compensation Committee or on Romacorp's Board of Directors. Romacorp's Board of Directors, including members of the Compensation Committee, also comprise the Board of Directors for Holdings, which owns 100% of the outstanding common stock of Romacorp.

Romacorp reimbursed Sentinel for all out-of-pocket expenses incurred in connection with the Recapitalization. In addition, pursuant to a management agreement, Sentinel may receive a management fee equal to $500,000 per year, and is reimbursed for certain out-of-pocket expenses incurred in connection with Sentinel's services provided to Romacorp.

Report of the Compensation and Benefits Committee

The Compensation Committee, comprised of the undersigned non-employee director of Romacorp, has the responsibility for determining compensation plans for all executive officers. Any recommendations are submitted to the full Board of Directors for approval.

The Compensation Committee has adopted a policy that Romacorp's executive compensation plan should have three principal components:

|-- | Competitive base salaries. In order to attract and retain high-quality management, Romacorp should offer appropriate salaries commensurate with the skills and experience of the individual. The Compensation Committee considers recommendations by the Chief Executive Officer in determining other executive base salaries, as well as information on industry practice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | A short-term bonus plan. To encourage and reward near-term improvements in Romacorp's performance, the Compensation Committee determined to offer an annual bonus plan based on the Company achieving the financial targets that result from the annual planning process. Adjusted EBITDA has been established as the primary measurement criteria for determining if the financial goals are achieved. "Adjusted EBITDA" represents net income before the cumulative effect of a change in accounting principle and extraordinary item plus: (1) net interest; (2) income and franchise taxes; (3) depreciation and amortization including amortization of start-up costs;(4) pre-opening expenses; (5) loss provisions;   (6) gains and losses on asset sales; and  (7) impairments of long-lived assets.  Romacorp has included information concerning Adjusted EBITDA in this Annual Report because it believes that such information is used by certain investors as one measure of an issuer's historical ability to service debt. The Compensation Committee believes Adjusted EBITDA is an important measure in determining the value of a privately-held company. Provision also has been made for discretionary bonuses in certain situations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | A long-term incentive plan. The Compensation Committee determined to establish a long-term incentive plan to accomplish the following objectives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

-     reward sustained performance;
                   -     balance short-term and long-term focus;
                   -     attract and retain qualified management;
                   -     build executive equity ownership;
                   -     align executive and ownership interest; and
                   -     minimize adverse financial statement impact of awards.

To these ends, the Compensation Committee determined that stock option awards to purchase common stock of Holdings are effective in accomplishing the desired objectives.

Effective October 23, 2000, Frank H. Steed became the President and Chief Executive Officer of Romacorp. In addition, Mr. Steed was elected as a Director of Romacorp in October 2000. Mr. Steed is able to participate in the same executive compensation plans available to Romacorp's other senior executives. Pursuant to the terms of his employment agreement, Mr. Steed's salary is $300,000 per year.  This salary was voluntarily reduced to $278,000 by Mr. Steed on July 1, 2002. Mr. Steed also received a bonus of $100,000 upon completing one year of employment with Romacorp. In determining Mr. Steed's compensation, the Compensation Committee applied the policies described above and considered other factors as well, such as Mr. Steed's previous work experience and position of responsibility and authority. The Compensation Committee also determined to grant Mr. Steed options to purchase 23.53 shares of common stock of Holdings. In June 2003, Mr. David W. Head was appointed President and Chief Executive Officer of Romacorp, with Mr. Steed remaining a Director of Romacorp and the President of Roma Franchise Corporation and Roma Systems, Inc.

The executive short-term bonus plan for fiscal 2003 was based upon an Adjusted EBITDA target which, when met, would pay a pre-determined bonus to each executive officer. This target was not achieved and no bonuses were paid pursuant to the short-term bonus plan in fiscal 2003.

The Compensation Committee also recommends awards under Holdings non-qualified stock option plan. During fiscal 2003, stock option grants totaling 3.3 shares were made to one named executive officer. During the year, options to purchase 3.3 shares lapsed. Each of these grants reflect an exercise price of $12,500 per share, which was determined to be the fair market value at the date of original reservation of shares as required by the stock option plan.

Federal income tax legislation has limited the deductibility of certain compensation paid to the Chief Executive Officer and covered employees to the extent the compensation exceeds $1.0 million. Performance-based compensation and certain other compensation, as defined, is not subject to the deduction limitation of this regulation. It is not currently anticipated that any covered employee would earn annual compensation in excess of the $1.0 million limit under existing or proposed compensation plans. Romacorp continually reviews its compensation plans to minimize or avoid potential adverse effects of this legislation. The Compensation Committee will consider recommending such steps as may be required to qualify annual and long-term incentive compensation for deductibility if that appears appropriate at some time in the future.



Member of the Compensation and Benefits CommitteeDavid S. Lobel, Chairman











ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as to the number of shares of common stock of Romacorp beneficially owned by the sole shareholder.



|Name                               |  | Number
of shares |  | Percent 
of class
|---------------------------------- |  | ---------------- |  | -----------------
|Roma Restaurant Holdings, Inc. (1) |  | 100              |  | 100%             

___________________

|(1) |  | As of March 30, 2003, the outstanding stock of Holdings was owned 22.2% by Sentinel Capital Partners, L.P., 37.0% by Sentinel Capital Partners II, L.P., 19.8% by NPC International, Inc. and 20.8% by unrelated third parties. Mr. Steed and Mr. Short each own approximately 0.3 shares of Holdings common stock, collectively 0.2% of the outstanding stock. The address of Sentinel Capital Partners, L.P. and Sentinel Capital Partners II, L.P. is 777 Third Avenue, 32nd Floor, New York, New York 10017 and the address of NPC International, Inc. is 14400 College Blvd., Lenexa, Kansas 66762.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transitional Financial and Accounting Services Agreement

In June 1998, Romacorp entered into the Transition Services Agreement whereby NPC continued to provide administrative services to Romacorp. Services provided included accounting services, payroll services and use of NPC's proprietary restaurant technology system software (the "POS System"). As part of the Transition Services Agreement, Romacorp was granted a perpetual license to use the POS System. Effective June 24, 2002, Romacorp amended the contract whereby services will continue through March 2004. Either Romacorp or NPC may terminate the Transition Services Agreement upon one year's prior written notice. Pursuant to the Transition Services Agreement, Romacorp paid NPC $889,000, $910,000, and $870,000 during the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001, respectively.

Payment of Certain Fees and Expenses

Romacorp reimbursed Sentinel for all out-of-pocket expenses incurred in connection with the Recapitalization. In addition, pursuant to a management agreement, Sentinel may receive a management fee equal to $500,000 per year and will be reimbursed for certain out-of-pocket expenses. The Company paid Sentinel $482,000, $513,000, and $472,000 during the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001, respectively.



ITEM 14.      CONTROLS AND PROCEDURES

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in the Company's reports under the Securities Exchange Act of 1934, such as this Form 10-K is reported in accordance with the Securities and Exchange Commission's rules. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure.

Within the 90 days prior to the date of this report, the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be in the Company's periodic SEC filings. There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Certifications of the Chief Executive Officer and Chief Financial Officer regarding, among other items, disclosure controls and procedures are included immediately after the signature section of this Form 10-K.



PART IV



ITEM 15.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The following documents are filed as part of this report:

|(1) |  | Financial Statements:                                                                                                                                                                                                                                                                                    
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                                                                          
|    |  | The response to this portion of Item 15 is submitted as a separate section of this report. See Index to Financial Statements at page F-1.                                                                                                                                                                
|    |  |                                                                                                                                                                                                                                                                                                          
|(2) |  | Financial Statement Schedules:                                                                                                                                                                                                                                                                           
|    |  |                                                                                                                                                                                                                                                                                                          
|    |  | The
consolidated financial statement schedule of Romacorp, Inc. filed as part of
this report is listed in the Index to Consolidated Financial Statements and
Consolidated Financial Statement Schedule.                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                          
|(3) |  | Exhibits:                                                                                                                                                                                                                                                                                                
|    |  |                                                                                                                                                                                                                                                                                                          
|    |  | The exhibits listed on the accompanying index to exhibits at page 28 are filed as part of this Annual Report.                                                                                                                                                                                            
|    |  |                                                                                                                                                                                                                                                                                                          
|(4) |  | Reports on Form 8-K:                                                                                                                                                                                                                                                                                     
|    |  |                                                                                                                                                                                                                                                                                                          
|    |  | The following report on Form 8-K was filed during the quarter covered by this report:                                                                                                                                                                                                                    
|    |  | Romacorp filed a report on Form 8-K with the SEC dated January 6, 2003, reporting under Item 5 that on December 31, 2002, Romacorp, Inc. announced that it has entered into a new $25.0 million credit agreement with GE Capital Franchise Finance to replace the previous agreement with another lender.





---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Dallas, the State of Texas, on June 30, 2003.



|By: | /s/David W. Head                              
|--- | ----------------------------------------------
|    | Name: David W. Head                           
|    | Title:   President and Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|Signature             |  | Title                                               | Date         
|--------------------- |  | --------------------------------------------------- | -------------
|/s/David S. Lobel     |  | Chairman of the Board of Directors                  | June 30, 2003
|David S. Lobel        |  |                                                     |              
|/s/Richard A. Peabody |  | Vice President, Finance and Chief Financial Officer | June 30, 2003
|Richard A. Peabody    |  | (principal financial and accounting officer)        |              
|/s/Eric D. Bommer     |  | Director                                            | June 30, 2003
|Eric D. Bommer        |  |                                                     |              
|/s/Philip Friedman    |  | Director                                            | June 30, 2003
|Philip Friedman       |  |                                                     |              
|/s/John F. McCormack  |  | Director                                            | June 30, 2003
|John F. McCormack     |  |                                                     |              
|/s/Frank H. Steed     |  | Director                                            | June 30, 2003
|Frank H. Steed        |  |                                                     |              





---



CERTIFICATION



I, David W. Head, certify that:

|1. | I have reviewed this annual report on Form 10-K of Romacorp, Inc.;                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | a)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | b)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | c)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | a)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | b)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|6. | The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Date:  June 30, 2003 |  | /s/ David W. Head                    
|-------------------- |  | -------------------------------------
|                     |  | President and Chief Executive Officer









---

CERTIFICATION



I, Richard A. Peabody, certify that:

|1. | I have reviewed this annual report on Form 10-K of Romacorp, Inc.;                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | a)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | b)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | c)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | a)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|   | b)                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                       
|6. | The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|Date:  June 30, 2003 |  | /s/ Richard A. Peabody                    
|-------------------- |  | ------------------------------------------
|                     |  | Vice President and Chief Financial Officer







---

EXHIBITS INDEX

ExhibitNumberDescription

|2.1    |   | Recapitalization Agreement dated April 24, 1998 by and among Romacorp, NPC
International, Inc., NPC Restaurant Holdings, Inc. and Sentinel Capital Partners, L.P. (1)                                                                                                                                                                                                                                                                                                                                                                  
|------ | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.2    |   | Assignment Agreement dated July 1, 1998 by and among Sentinel, Sentinel Capital Partners II, L.P. ("Sentinel II"), Omega Partners, L.P. ("Omega"), Provident Financial Group, Inc. ("Provident"), Travelers Casualty and Surety Company ("Travelers I"), The Travelers Insurance Company ("Travelers II"), The Travelers Life and Annuity Company ("Travelers III") and the Phoenix 
Insurance Company ("Phoenix"), and together with Sentinel II, Omega, Provident, Travelers I, Travelers II, and Travelers III, the "Assignees") (1)
|3.1    |   | Certificate of Incorporation of Romacorp (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.2    |   | By-laws of Romacorp (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.1   |   | Indenture dated as of July 1, 1998, by and among Romacorp, the Guarantors named therein 
and United States Trust Company of New York (1)                                                                                                                                                                                                                                                                                                                                                                                               
|10.2   |   | Purchase Agreement dated as of June 26, 1998 among Romacorp, Salomon Brothers, 
Inc. and Schroder & Co. Inc. (1)                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.3   |   | Registration Rights Agreement dated as of July 1, 1998 among Romacorp, the Guarantors 
named therein, Salomon Brothers, Inc. and Schroder & Co. Inc. (1)                                                                                                                                                                                                                                                                                                                                                                               
|10.4   |   | Stockholders Agreement dated as of July 1, 1998 by and among Romacorp, the Assignees
and Holdings (1)                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.5   |   | Registration Rights Agreement dated July 1, 1998 by and among Romacorp, NPC Restaurant
Holdings, Inc., Sentinel Capital Partners L.P., Sentinel Capital Partners II, L.P., Omega
Partners, L.P., Provident Financial Group, Inc., Travelers Casualty and Surety Company, 
Travelers Insurance Company, The Travelers Life and Casualty and The Phoenix Insurance 
Company (1)                                                                                                                                                          
|10.6   |   | Transitional Financial and Accounting Services Agreement dated as of July 1, 1998 by
and among NPC Management, Inc. and Romacorp (1)                                                                                                                                                                                                                                                                                                                                                                                                   
|10.7   |   | Management Services Agreement dated as of July 1, 1998 by and among Romacorp and Sentinel (1)                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.9   | a | Amended and Restated Accounting and Management Information Services Agreement dated
January 20, 1999 (2)                                                                                                                                                                                                                                                                                                                                                                                                                               
|*10.13 |   | Letter of employment and agreement dated as of January 3, 2000 by and among Romacorp 
and Richard A. Peabody (3) .                                                                                                                                                                                                                                                                                                                                                                                                                     
|*10.16 |   | Management Agreement dated as of October 5, 2000 by and among Romacorp and Frank H. 
Steed (4)                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.20  |   | Loan Agreement dated December 31, 2002 by and between Romacorp, Inc. and GE Capital Franchise Finance Corporation (5)                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.21  |   | Promissory Note dated December 31, 2002 from Romacorp, Inc. to GE Capital Franchise Finance Corporation (5)                                                                                                                                                                                                                                                                                                                                                                                                                            
|21.1   |   | Subsidiaries of the Issuer (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|99.1   |   | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act (6)                                                                                                                                                                                                                                                                                                                                                                                                                                         
|99.2   |   | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act (6)                                                                                                                                                                                                                                                                                                                                                                                                                                         

________________________

|(1) |  | Filed as an exhibit to the Company's Form S-4, (Registration No. 333-62615) filed on August 31, 1998 and incorporated herein by reference.   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended March 28, 1999 and incorporated herein by reference.  
|(3) |  | Filed as an exhibit to the Company's Form 10-K Annual Report for the fiscal year ended March 26, 2000 and incorporated herein by reference.  
|(4) |  | Filed as an exhibit to the Company's Form 10-Q Quarterly Report for the quarter ended December 24, 2000 and incorporated herein by reference.
|(5) |  | Filed as an exhibit to the Company's Form 8-K Current Report filed on January 6, 2003 and incorporated herein by reference.                  
|(6) |  | Filed herewith.                                                                                                                              
|(*) |  | Management contract or compensation plan or arrangement.                                                                                     



---



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE



Consolidated Financial StatementsReport of Independent Auditors
F-2Consolidated Balance Sheets - AssetsAs of March 30, 2003 and March 24, 2002
F-3Consolidated Balance Sheets - Liabilities and Stockholder's DeficitAs of March 30, 2003 and March 24, 2002
F-4Consolidated Statements of OperationsFor the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001
F-5Consolidated Statements of Changes in Stockholder's DeficitFor the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001
F-6Consolidated Statements of Cash FlowsFor the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001
F-7Notes to Consolidated Financial Statements
F-8Financial Statement ScheduleSchedule II - Consolidated Valuation and Qualifying Accounts for each of the three yearsended March 30, 2003, March 24, 2002 and March 25, 2001
F-20


 



REPORT OF INDEPENDENT AUDITORS





The Board of Directors
Romacorp, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Romacorp, Inc. and Subsidiaries (the Company) as of March 30, 2003 and March 24, 2002, and the related consolidated statements of operations, changes in stockholder's deficit, and cash flows for each of the three fiscal years in the period ended March 30, 2003. Our
audits also included the financial statement schedule listed in the Index to Consolidated Financial Statements and Consolidated Financial Statement Schedule. These financial statements and the schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the 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, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Romacorp, Inc. and Subsidiaries at March 30, 2003 and March 24, 2002, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended March 30, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, in the fiscal year ended March 24, 2002, the Company changed its method of accounting for goodwill as a result of the adoption of Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets. Also as discussed in Note 3, in the fiscal year ended March 30, 2003, the Company adopted the provisions of SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.



/s/Ernst & Young LLP



Kansas City, Missouri
May 6, 2003



---



ROMACORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
ASSETS





|                                                                           | March 30,
2003 |        | March 24,
2002
|-------------------------------------------------------------------------- | -------------- | ------ | --------------
|Current Assets:                                                            |                |        |               
|Cash and cash equivalents:                                                 |                |        |               
|Restricted                                                                 | $              | 622    |               
|Unrestricted                                                               |                | 6,191  |               
|Accounts receivable, net                                                   |                | 1,495  |               
|Inventories of food and supplies                                           |                | 2,081  |               
|Deferred income tax asset                                                  |                | --     |               
|Prepaid expenses                                                           |                | 996    |               
|Property held for sale                                                     |                | 4,682  |               
|Income taxes receivable                                                    |                | 192    |               
|Other current assets                                                       |                | 31     |               
|Total current assets                                                       |                | 16,290 |               
|                                                                           |                |        |               
|                                                                           |                |        |               
|Facilities and equipment, net                                              |                | 28,898 |               
|Goodwill                                                                   |                | 12,325 |               
|Deferred income tax asset                                                  |                | --     |               
|Other assets                                                               |                | 194    |               
|Debt issuance costs, net of accumulated amortization of $1,427 and $1,299, |                |        |               
|respectively                                                               |                | 1,753  |               
|Total assets                                                               | $              | 59,460 |               





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



---



ROMACORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDER'S DEFICIT





|                                                                         | March 30,
2003 |          | March 24,
2002
|------------------------------------------------------------------------ | -------------- | -------- | --------------
|Current Liabilities:                                                     |                |          |               
|Accounts payable                                                         | $              | 2,385    |               
|Accrued interest                                                         |                | 1,748    |               
|Current portion of store closure reserve                                 |                | 502      |               
|Other accrued liabilities                                                |                | 8,038    |               
|Current maturities of long-term debt                                     |                | 1,750    |               
|Total current liabilities                                                |                | 14,423   |               
|                                                                         |                |          |               
|Senior notes                                                             |                | 55,000   |               
|Long-term debt, less current maturities                                  |                | 19,420   |               
|Store closure reserve                                                    |                | 476      |               
|Deferred gain on sale of assets                                          |                | 718      |               
|Total liabilities                                                        |                | 90,037   |               
|                                                                         |                |          |               
|Stockholder's Deficit:                                                   |                |          |               
|Common stock, $.01 par value; 2,000 shares authorized; 100 shares issued |                |          |               
|and outstanding                                                          |                | --       |               
|Additional paid-in capital                                               |                | 66,469   |               
|Retained deficit:                                                        |                |          |               
|Dividends to Holdings                                                    |                | (75,368) |               
|Other                                                                    |                | (21,678) |               
|Total                                                                    |                | (97,046) |               
|Total stockholder's deficit                                              |                | (30,577) |               
|Total liabilities and stockholder's deficit                              | $              | 59,460   |               





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

---



ROMACORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)



|                                      | For the Fiscal Year Ended
|------------------------------------- | -------------------------
|                                      | March 30,
2003           
|Restaurant sales                      | $                        
|Franchise fees and royalties          |                          
|Total revenues                        |                          
|                                      |                          
|Cost of sales                         |                          
|Direct labor                          |                          
|Other                                 |                          
|General and administrative expenses   |                          
|Impairment of long-lived assets       |                          
|Other loss provisions                 |                          
|Total operating expenses              |                          
|                                      |                          
|Operating income (loss)               |                          
|Other income (expense):               |                          
|Interest expense                      |                          
|Gain on early retirement of debt      |                          
|Miscellaneous                         |                          
|Loss before income taxes              |                          
|Provision (benefit) for income taxes: |                          
|Current                               |                          
|Deferred                              |                          
|                                      |                          
|Net loss                              | $                        







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

---



ROMACORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT
(Dollars in Thousands)



|                          |              |  |         |    |         | Additional |        | Retained
Deficit |   |          | 
|------------------------- | ------------ |  | ------- | -- | ------- | ---------- | ------ | ---------------- | - | -------- | 
|                          | Common Stock |  | Paid-In |    |         |            |       
|                          | Shares       |  | Amount  |    | Capital |            |        | Total           
|Balance at March 26, 2000 | 100          |  | $       | -- |         | $          | 66,469 |                  | $ | (75,407) | 
|Net loss                  | --           |  |         | -- |         |            | --     |                  |   | (2,034)  | 
|Balance at March 25, 2001 | 100          |  |         | -- |         |            | 66,469 |                  |   | (77,441) | 
|Net loss                  | --           |  |         | -- |         |            | --     |                  |   | (5,493)  | 
|Balance at March 24, 2002 | 100          |  |         | -- |         |            | 66,469 |                  |   | (82,934) | 
|Net loss                  | --           |  |         | -- |         |            | --     |                  |   | (14,112) | 
|Balance at March 30, 2003 | 100          |  | $       | -- |         | $          | 66,469 |                  | $ | (97,046) | 
|                          |              |  |         |    |         |            |        |                  |   |          | 





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

---



ROMACORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)



|                                                                                       | For the Fiscal Year Ended
|-------------------------------------------------------------------------------------- | -------------------------
|                                                                                       | March 30,
2003           
|Operating Activities:                                                                  |                          
|Net loss                                                                               | $                        
|Adjustments to reconcile net loss to net cash flows
 provided by operating activities: |                          
|Depreciation and amortization                                                          |                          
|Amortization of debt issuance costs                                                    |                          
|Deferred income taxes                                                                  |                          
|Impairment of long-lived assets                                                        |                          
|Loss provisions                                                                        |                          
|Provision for doubtful accounts                                                        |                          
|Amortization of deferred gain on sale of assets                                        |                          
|Gain on disposal of assets                                                             |                          
|Gain on repurchase of debt                                                             |                          
|Change in assets and liabilities:                                                      |                          
|Restricted cash                                                                        |                          
|Accounts receivable, net                                                               |                          
|Inventories of food and supplies                                                       |                          
|Other current assets                                                                   |                          
|Accounts payable                                                                       |                          
|Accrued interest                                                                       |                          
|Other accrued liabilities                                                              |                          
|Income taxes                                                                           |                          
|Other                                                                                  |                          
|Net cash flows provided by operating activities                                        |                          
|Investing Activities:                                                                  |                          
|Capital expenditures                                                                   |                          
|Proceeds from sale of assets                                                           |                          
|Changes in other assets, net                                                           |                          
|Net cash flows provided by (used in) investing activities                              |                          
|Financing Activities:                                                                  |                          
|Payments on Senior Notes                                                               |                          
|Net borrowings under line-of-credit agreement                                          |                          
|Debt issuance costs                                                                    |                          
|Net cash flows provided by (used in) financing activities                              |                          
|Net Increase in Cash and Cash Equivalents                                              |                          
|Cash and Cash Equivalents At Beginning of Year                                         |                          
|Cash and Cash Equivalents At End of Year                                               | $                        
|                                                                                       |                          
|Supplemental cash flow information:                                                    |                          
|Cash paid for interest                                                                 | $                        
|Cash paid for income taxes                                                             | $                        





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



---



ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1.      Organization, Operation and Basis of Presentation

The consolidated financial statements include the accounts of Romacorp, Inc. and subsidiaries (the "Company") and include the Company's operation of its owned restaurants and franchise revenue from franchisees' use of trademarks and other proprietary information in the operation of Tony Roma's restaurants. The Company maintains its corporate office in Dallas, Texas, and through its subsidiaries provides menu development, training, marketing and other administrative services related to the operation of the Tony Roma's concept. All intercompany transactions between Romacorp, Inc. and its subsidiaries have been eliminated.

Note 2.      Recapitalization

The Company (then Romacorp) was acquired in June 1993 by NPC International, Inc. ("NPC"). On April 24, 1998, a recapitalization agreement (the "Recapitalization"), effective June 28, 1998, was executed pursuant to which the former Romacorp, Inc. was renamed Roma Restaurant Holdings, Inc. ("Holdings") and the assets, liabilities and operations of Holdings were contributed to its newly-created, wholly-owned subsidiary, Romacorp, Inc. ("Romacorp"). In the Recapitalization, which was executed by Holdings, NPC and Sentinel Capital Partners, L.P., Holdings redeemed stock held by NPC and NPC forgave and contributed to the capital of the Company a payable to NPC in the amount of $33,731,000. After the Recapitalization, NPC held 20% and Sentinel through certain affiliates ("Sentinel") held 80% of the equity of Holdings. In conjunction with this transaction, $75,000,000 of 12% Senior Notes due July 1, 2006 (the "Senior Notes") were issued by the Company. The Company paid Holdings a dividend of $75,351,000, consisting primarily of the proceeds from the 12% Senior Notes, which was used by Holdings, along with Sentinel's equity contribution, to effect the Recapitalization. This transaction was accounted for as a leveraged recapitalization with the assets and liabilities of Romacorp, Inc. retaining their historical value.

Note 3.      Summary of Significant Accounting Policies

Fiscal Year
- The Company operates on a 52 or 53 week fiscal year ending on the last Sunday in March. The fiscal year ended March 30, 2003 contained 53 weeks. The fiscal years ended March 24, 2002 and March 25, 2001 each contained 52 weeks.

Cash Equivalents
- For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. Restricted cash consists of cash on deposit with a financial institution as collateral for the Company's surety bonds and to support the Company's obligations for potential insurance claims. For each period presented, substantially all cash was in the form of depository accounts.

Inventories
- Inventories of food and supplies are valued at the lower of cost (first-in, first-out method) or market.

Facilities and Equipment- Facilities and equipment are recorded at cost. Depreciation is charged on the straight-line basis for buildings, furniture and equipment over the estimated useful life of the asset. Leasehold improvements are amortized on the straight-line method over the life of the lease or the life of the improvements, whichever is shorter. Interest is capitalized with the construction of new restaurants as part of the asset to which it relates. Interest capitalized during fiscal years ended March 30, 2003, March 24, 2002, and March 25, 2001 was $1,000, $10,000 and $66,000, respectively.



---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Long-lived Assets
- The Company applies the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", in accounting for its long-lived assets, which requires the write-down of certain intangibles and tangible property associated with under-performing sites. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", and resolves significant implementation issues that had evolved since the issuance of SFAS No. 121. SFAS No. 144 also provides more restrictive criteria to classify an asset (group) as "held for sale." The Company reviews the impairment of long-lived assets related to restaurant sites on a periodic basis and when events occur or circumstances indicate that the asset value of a restaurant is not recoverable, the Company evaluates that restaurant for impairment based on estimated future nondiscounted cash flows attributable to that restaurant. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values. In addition, the Company evaluates the criteria associated with assets held for sale and, when appropriate, writes down these assets to estimated fair value and reclasses the assets to property held for sale on the balance sheet. The Company's estimates of fair values are based on the best information available and require the use of estimates, judgements and projections as considered necessary. The effect of applying SFAS No. 144 for the fiscal year ending March 30, 2003 and SFAS No. 121 for the fiscal years ending March 24, 2002 and March 25, 2001, resulted in a reduction of facilities and equipment of $5,327,000, $4,822,000, and $2,303,000, respectively.

Goodwill- Effective March 26, 2001, the Company adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 requires that an intangible asset that is acquired shall be initially recognized and measured based on its fair value. SFAS No. 142 also provides that goodwill should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. The Company did not record a charge as a result of the impairment test required with the adoption of this new
standard.Substantially all the
goodwill was allocated, based on an analysis of the current operations and
associated fair values of the reporting units, to the Company's franchise
operations and its value wassupported in full by the current and future royalties generated by franchisee utilization of the Tony Roma's trademarks. The Company performed an annual impairment review at March 30, 2003 and no impairment charge was required. The following table adjusts net loss for prior years to exclude amortization, net of related tax, on goodwill.



|                      | Fiscal Year           
|--------------------- | ----------------------
|                      |                       
|                      | (Dollars in thousands)
|Reported net loss     | $                     
|Goodwill amortization |                       
|Adjusted net loss     | $                     

Franchise Fees and Royalties

Fair Value of Financial Instruments
- See Note 9 for a discussion of the fair value of the Company's Senior Notes. As of March 30, 2003 and March 24, 2002, the fair value of the Company's remaining financial instruments, including cash equivalents, approximates their carrying value.

Income Taxes
- The Company's results prior to June 28, 1998, were included in the consolidated federal income tax return of NPC International, Inc. As a result of the Recapitalization (see Note 2), the Company began filing its own federal income tax return subsequent to June 28, 1998. The provisions for income taxes, reflected in the accompanying statements, were calculated for the Company on a separate return basis in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes."



---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Insurance Reserves
- The Company is self-insured for certain risks and is covered by insurance policies for other risks. The Company maintains reserves for their policy deductibles and other program expenses using case basis evaluations and other analyses. The reserves include estimates of future trends in claim severity and frequency, and other factors, which could vary as claims are ultimately settled. Reserve estimates are continually reviewed and adjustments are reflected in current operations. Changes in deductible amounts could impact both the establishment of future reserves and/or the rate of premiums incurred.

Advertising Costs
- Advertising costs are expensed as incurred. The Company incurred approximately $3,900,000, $4,000,000 and $4,600,000 of such costs during the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001, respectively.

Recent Accounting Pronouncements
- In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46 "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46"). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The Company does not expect FIN 46 to have a material impact on the Company's financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123." The provisions of this statement were effective for interim and annual financial statements for fiscal years ending after December 15, 2002. SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition to SFAS No. 123's fair value method of accounting for stock-based employee compensation. Also, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company does not expect SFAS No. 148 to have a material impact on the Company's financial position or results of operations.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others" ("FIN 45").  FIN 45 addresses the disclosure required by a guarantor in its financial statements about its obligations under guarantees. It also clarifies the requirements related to the recognition of a liability by a guarantor at the inception of a guarantee for the obligations the guarantor has undertaken in issuing that guarantee. Certain of the disclosure requirements of
FIN 45 were effective after December 15, 2002 and the provisions for the initial recognition and measurement of a liability associated with a guarantee is effective beginning after December 31, 2002, prospectively.
FIN 45 will effect the Company to the extent it provides any guarantees for its franchisees in the future.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," was issued in June 2002. SFAS No. 146 replaces current accounting literature and requires the recognition of costs associated with exit or disposal activities when they are incurred rather than at the date of commitment to an exit or disposal plan. The provisions of the Statement are effective for exit or disposal activities that are initiated after December 31, 2002. This new standard will effect the timing of when the Company recognizes the cost for restaurant closings. At the present time, the Company cannot determine the impact that the adoption of this statement will have on subsequent consolidated financial statements.

In April 2002, FASB issued SFAS No.145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 rescinds SFAS No. 4 and 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items The provisions of SFAS No. 145 are effective for fiscal years beginning after May 15, 2002 and earlier adoption was encouraged. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented shall be reclassified. The Company reflected the adoption of SFAS No. 145 in its consolidated financial statements for the year ending March, 30, 2003. Accordingly, the $1,868,000 gain from the early extinguishment of debt for the year ending March 25, 2001 has been reclassified and included in other income (expense).

---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Use of Estimates-The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications
-Certain reclassifications have been made to prior years' financial statements to conform to classifications used in the current year. These reclassifications had no effect on the results of operations or stockholder's deficit as previously reported.

Note 4.      Accounts Receivable

Accounts receivable consists of the following:



|                                | March 30,
2003         |       | March 24,
2002
|------------------------------- | ---------------------- | ----- | --------------
|                                | (Dollars in thousands)
|Franchise receivables           | $                      | 1,953 |               
|Other receivables               |                        | 291   |               
|                                |                        | 2,244 |               
|Allowance for doubtful accounts |                        | (749) |               
|Net receivables                 | $                      | 1,495 |               

Franchise receivables represent royalties due from the Company's franchisees and other amounts due related to services provided and fees assessed in accordance with the franchise agreement and are recorded at estimated fair value. Other receivables may include amounts due for the sale of raw materials, principally ribs, which the Company has sold from its supply to distributors and franchisees. Other receivables also include "banquet" sales to significant individual customers and other miscellaneous items. The Company periodically assesses the collectibility of accounts receivable based on delinquency status, franchisee financial condition, historical loss condition and existing economic conditions.

The Company generally does not require collateral on the accounts, but has the right to terminate the franchise agreement in the event the royalties become uncollectible.

Note 5.      Facilities and Equipment

Facilities and equipment consists of the following:



|                                               | Estimated   |  | March 30,
2003 |                        | March 24,
2002
|---------------------------------------------- | ----------- |  | -------------- | ---------------------- | --------------
|                                               | Useful Life |  |               
|                                               |             |  |                | (Dollars in thousands)
|Land                                           |             |  | $              | 7,252                  |               
|Buildings                                      | 15-30 years |  |                | 21,641                 |               
|Leasehold improvements                         | 5-20 years  |  |                | 9,312                  |               
|Furniture and equipment                        | 3-10 years  |  |                | 16,947                 |               
|Construction in progress                       |             |  |                | 759                    |               
|                                               |             |  |                | 55,911                 |               
|Less accumulated depreciation and amortization |             |  |                | (27,013)               |               
|                                               |             |  | $              | 28,898                 |               



---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 6.     Impairment of Long-Lived Assets and Other Loss Provisions

Certain charges in the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001 have been referred to as impairment of long-lived assets. These items represent estimates of the impact of management decisions, which have been made at various points in time in response to the Company's sales and profit performance, and the then-current revenue and profit strategies.

During the fiscal year ended March 30, 2003, impairment charges of $5,327,000 were recognized.Of this amount, $2,287,000 was related to twelve under-performing Company-operated restaurants and the further impairment of a property closed during a prior year. The remaining impairment of $3,040,000 was related to the 11 properties that were classified as held for sale and written down to their estimated fair market value less selling costs and are expected to be sold to a franchisee during the first quarter of fiscal year 2004.

During the fiscal year ended March 28, 2002, impairment charges of $4,822,000 were recognized relating to four under-performing Company-operated restaurants and the closing of five Company-operated restaurants. The amount also included the further impairment of $263,000 related to a restaurant closed during a prior year. The Company recorded loss provisions related to the estimated continued occupancy costs of these closed restaurants of $1,683,000 and recorded a reduction of the closed store reserve of $390,000 related to a reserve established in a prior year that was no longer required. The five restaurants closed generated sales of $6,136,000 and $7,580,000 during the fiscal years ended March 24, 2002 and March 25, 2001, respectively. These same restaurants generated pre-tax losses of $689,000 and $612,000 during the fiscal years ended March 24, 2002 and March 25, 2001, respectively.

During the fiscal year ended March 25, 2001, impairment charges of $2,303,000 were recognized relating to the planned closure of two Company-operated restaurants and two under-performing Company-operated restaurants.

The following table summarizes the components of the provision for restaurant closures and other loss provisions, as well as the year end balances of certain related reserves.

(Dollars in thousands)Description

Balance at
Beginning
of Year

Additions
Charged
to Expense

Cash
Outlays

Other
Changes

Balance
at End
of YearYear Ended March 30, 2003

$
1,605

$
--

$
(627)

$
--

$
978Year ended March 24, 2002


444


1,293


(132)


--


1,605Year ended March 25, 2001


491


--


(47)


--


444




The ending balance each year in the store closure reserve represents estimates for the ongoing costs of each location that has been closed. These costs include rent, property taxes, maintenance, utilities and estimated costs to sublease the property.



---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Note 7.      Accrued Liabilities

Other accrued liabilities consists of the following:



|                                    | March 30,
2003         |       | March 24,
2002
|----------------------------------- | ---------------------- | ----- | --------------
|                                    | (Dollars in thousands)
|Compensation and related taxes      | $                      | 2,469 |               
|Insurance claims and administration |                        | 841   |               
|Taxes other than income and payroll |                        | 1,295 |               
|Gift certificates                   |                        | 1,102 |               
|Other                               |                        | 2,331 |               
|Total other accrued liabilities     | $                      | 8,038 |               

Note 8.      Income Taxes

The provision (benefit) for income taxes consists of the following:



|                               | For the Fiscal Year Ended
|------------------------------ | -------------------------
|                               |                          
|                               |                          
|Current:                       |                          
|Federal                        | $                        
|State                          |                          
|Foreign                        |                          
|                               |                          
|                               |                          
|Deferred:                      |                          
|Federal                        |                          
|State                          |                          
|Foreign                        |                          
|                               |                          
|Income tax provision (benefit) | $                        

The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to loss before income taxes are as follows:



|                               | For the Fiscal Year Ended
|------------------------------ | -------------------------
|                               | March 30,
2003           
|                               |                          
|Tax computed at statutory rate | $                        
|Foreign tax expense            |                          
|Goodwill amortization          |                          
|Tax credits                    |                          
|State taxes                    |                          
|Permanent items                |                          
|Change in valuation allowance  |                          
|Provision for income taxes     | $                        



---



ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for federal and state income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:



|                                              | March 30,
2003 |                        | March 24,
2002
|--------------------------------------------- | -------------- | ---------------------- | --------------
|Deferred tax assets:                          |                | (Dollars in thousands)
|Insurance reserves                            | $              | 92                     |               
|Store closure reserves                        |                | 333                    |               
|Accrued vacation                              |                | 204                    |               
|Depreciation and asset impairment adjustments |                | 6,290                  |               
|Allowance for doubtful accounts               |                | 255                    |               
|Deferred gain                                 |                | 244                    |               
|General business, foreign and alternative     |                |                        |               
|minimum tax credit carryforwards              |                | 2,631                  |               
|Net operating loss carryforwards              |                | 900                    |               
|Other, net                                    |                | 357                    |               
|Valuation allowance                           |                | (11,306)               |               
|Total deferred tax assets                     |                | --                     |               
|                                              |                |                        |               
|Deferred tax liabilities                      |                | --                     |               
|                                              |                |                        |               
|Total net deferred tax assets                 |                | --                     |               
|Current                                       |                | --                     |               
|Non-current                                   | $              | --                     |               

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers a number of factors including projected future taxable income and tax planning strategies, in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods that the deferred tax assets are
expected to be deductible, a valuation allowance has been provided for 100 percent of the deferred tax assets since management can not determine that it is more likely than not that the deferred tax assets will be realized. When realization of the deferred tax assets are deemed more likely than not to occur, the benefit related to the deductible temporary differences will be recognized as a reduction of income tax expense.

As of March 30, 2003, the Company had federal general business credits of approximately $1,900,000 and federal net operating loss carryforwards of approximately $2,600,000 which, if not used by 2022, will expire.

Note 9.      Senior Notes

In conjunction with the Recapitalization on June 28, 1998, the Company issued the Senior Notes. Interest on the Senior Notes accrues from the date of issuance and is payable in arrears on January 1 and July 1 of each year, commencing January 1, 1999. As of March 30, 2003 and March 24, 2002, the principal amount of Senior Notes outstanding was $55.0 and $57.0 million, respectively. The Senior Notes are general unsecured obligations of the Company but are guaranteed by the subsidiaries of the Company. See Note 12 for summarized financial information of the Company and its subsidiaries. The debt outstanding under the Company's Revolving Credit Facility has a first priority lien on substantially all of the assets of the Company. See Note 10 for a discussion of the Revolving Credit Facility.



---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

During April 2000, the Company repurchased $12.0 million face value of its Senior Notes on the open market at an average price of $800 per $1,000 principal amount. During March 2003, the Company repurchased $2.0 million face value of its Senior Notes at an average price of $585 per $1,000 principal amount. The repurchases of the Senior Notes in April 2000 and March 2003 resulted in gains, net of the write-off of associated debt issuance costs, of $1,868,000 and $788,000, respectively.

As of March 30, 2003, the fair value of the remaining Senior Notes is estimated to be in the range of $31.6 million to $38.5 million based on the quoted market rates for the debt. As of March 24, 2002, the fair value of the Senior Notes was estimated to be in the range of $39.9 million to $43.0 million.

The Company is amortizing debt issuance costs associated with the Senior Notes. As of March 30, 2003, and March 24, 2002, unamortized debt issuance costs of $987,000 and $1,345,000, respectively, were reflected as an asset of the Company. Amortization expense of $304,000 per year will be recorded as interest expense until the Senior Notes mature on July 1, 2006.

Note 10.      Long-term Debt

As of March 30, 2003, Romacorp's long-term debt of $21,170,000 consisted of a note payable under the Revolving Credit Facility, which is secured by substantially all of the assets of Romacorp. On December 31, 2002, Romacorp executed a loan agreement and promissory note with GE Capital Franchise Finance creating the Revolving Credit Facility to replace a prior facility. No debt remains outstanding under the prior facility as of March 30, 2003.

The Revolving Credit Facility provides for borrowings in an aggregate principal amount up to $25.0 million and includes annual reductions in the maximum borrowing capacity ranging from $1.75 million in the first year up to $3.25 million in later years. To the extent Romacorp has not utilized $5 million of the borrowing capacity to repurchase Senior Notes by December 31, 2003, the maximum borrowing capacity of the Revolving Credit Facility will be reduced on that date by the difference between $5 million and the amount borrowed pursuant to the Revolving Credit Facility to repurchase Senior Notes. The maximum borrowing capacity is also limited by funded debt covenants that require Romacorp to maintain a Funded Debt to Adjusted EBITDA ratio of 3.5:1.0 excluding the Senior Notes and 7.5:1.0 including the Senior Notes. Romacorp was in compliance with all restrictive covenants at March 30, 2003.

The Revolving Credit Facility will expire in December 2012 and bears interest at the one-month LIBOR plus 4.5% (5.84% at March 30, 2003). The interest rate is subject to maintaining certain financial covenants and is paid monthly.

Maturities of long-term debt for each of the five succeeding years are as follows:



|Fiscal Year | (Dollars in thousands)
|----------- | ----------------------
|2004        |                       
|2005        |                       
|2006        |                       
|2007        |                       
|2008        |                       
|Thereafter  |                       
|            |                       

Note 11.      Commitments

The Company leases certain restaurant equipment and buildings under operating leases. Rent expense for the fiscal years ended March 30, 2003, March 24, 2002, and March 25, 2001 was $6,312,000, $6,755,000 and $6,188,000, respectively. Included in these amounts were additional rentals of approximately $643,000, $713,000 and $791,000 for the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001, respectively, which are based upon a percentage of sales in excess of a base amount as specified in the lease. The majority of the Company's leases contain renewal options for 5 to 10 years. Renewal of the remaining leases is dependent on mutually acceptable negotiations.



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ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



At March 30, 2003, minimum rental commitments under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows:



|Fiscal Year | (Dollars in thousands)
|----------- | ----------------------
|2004        |                       
|2005        |                       
|2006        |                       
|2007        |                       
|2008        |                       
|Thereafter  |                       
|            |                       

During the fiscal year ended March 25, 2001, the Company completed $3.7 million of sale-leaseback
transactions. The transactions resulted in deferred gains of $193,000. As of March 30, 2003, cumulative unrecognized deferred gains from sale-leaseback transactions of $718,000 were reflected as a liability of the Company. These deferred gains are being recognized over the 15-year initial term of the new leases.



Note 12.      Summarized Financial Information

Summarized financial information for Romacorp Inc. and its wholly-owned subsidiaries is as follows (Dollars in thousands):

Condensed Consolidating Balance Sheet
March 30, 2003

|                                       | Romacorp |          | Subsidiaries |   | Eliminations |  | Consolidated
|-------------------------------------- | -------- | -------- | ------------ | - | ------------ |  | ------------
|Assets                                 |          |          |              |   |              |  |             
|Current assets                         | $        | 13,826   |              | $ | 2,464        |  | $           
|Due from affiliates                    |          | --       |              |   | 49,747       |  |             
|Facilities and equipment, net          |          | 25,494   |              |   | 3,404        |  |             
|Investment in subsidiaries             |          | 61,561   |              |   | --           |  |             
|Goodwill                               |          | 882      |              |   | 11,443       |  |             
|Other assets                           |          | 1,931    |              |   | 16           |  |             
|Total assets                           | $        | 103,694  |              | $ | 67,074       |  | $           
|                                       |          |          |              |   |              |  |             
|Liabilities and Equity (Deficit)       |          |          |              |   |              |  |             
|Current liabilities                    | $        | 8,910    |              | $ | 5,513        |  | $           
|Due to affiliates                      |          | 49,747   |              |   | --           |  |             
|Senior notes                           |          | 55,000   |              |   | --           |  |             
|Long-term debt                         |          | 19,420   |              |   | --           |  |             
|Other long-term liabilities            |          | 1,194    |              |   | --           |  |             
|Total liabilities                      |          | 134,271  |              |   | 5,513        |  |             
|                                       |          |          |              |   |              |  |             
|Equity (deficit)                       |          | (30,577) |              |   | 61,561       |  |             
|                                       |          |          |              |   |              |  |             
|Total liabilities and equity (deficit) | $        | 103,694  |              | $ | 67,074       |  | $           



---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Condensed Consolidating Balance Sheet
March 24, 2002

|                                       | Romacorp |          | Subsidiaries |   | Eliminations |  | Consolidated
|-------------------------------------- | -------- | -------- | ------------ | - | ------------ |  | ------------
|Assets                                 |          |          |              |   |              |  |             
|Current assets                         | $        | 5,485    |              | $ | 3,271        |  | $           
|Due from affiliates                    |          | --       |              |   | 34,093       |  |             
|Facilities and equipment, net          |          | 38,998   |              |   | 3,878        |  |             
|Investment in subsidiaries             |          | 52,453   |              |   | --           |  |             
|Goodwill                               |          | 882      |              |   | 11,443       |  |             
|Other assets                           |          | 1,652    |              |   | 5,541        |  |             
|Total assets                           | $        | 99,470   |              | $ | 58,226       |  | $           
|                                       |          |          |              |   |              |  |             
|Liabilities and Equity (Deficit)       |          |          |              |   |              |  |             
|Current liabilities                    | $        | 7,594    |              | $ | 5,773        |  | $           
|Due to affiliates                      |          | 34,093   |              |   | --           |  |             
|Senior notes                           |          | 57,000   |              |   | --           |  |             
|Long-term debt                         |          | 15,404   |              |   | --           |  |             
|Other long-term liabilities            |          | 1,844    |              |   | --           |  |             
|Total liabilities                      |          | 115,935  |              |   | 5,773        |  |             
|                                       |          |          |              |   |              |  |             
|Equity (deficit)                       |          | (16,465) |              |   | 52,453       |  |             
|                                       |          |          |              |   |              |  |             
|Total liabilities and equity (deficit) | $        | 99,470   |              | $ | 58,226       |  | $           



Condensed Consolidating Statement of Operations
For the Fiscal Year Ended March 30, 2003



|                                     | Romacorp |          | Subsidiaries |   | Eliminations |  | Consolidated
|------------------------------------ | -------- | -------- | ------------ | - | ------------ |  | ------------
|                                     |          |          |              |   |              |  |             
|Total revenues                       | $        | 101,697  |              | $ | 21,901       |  | $           
|Total operating expenses             |          | 107,489  |              |   | 16,161       |  |             
|Operating income (loss)              |          | (5,792)  |              |   | 5,740        |  |             
|Other income (expense)               |          | (14,334) |              |   | 7,451        |  |             
|Income from subsidiaries             |          | 13,191   |              |   | --           |  |             
|Income (loss) before income taxes    |          | (6,935)  |              |   | 13,191       |  |             
|Provision (benefit) for income taxes |          | 7,177    |              |   | 4,083        |  |             
|Net income (loss)                    | $        | (14,112) |              | $ | 9,108        |  | $           







---

ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



Condensed Consolidating Statement of Operations
For the Fiscal Year Ended March 24, 2002



|                                     | Romacorp |          | Subsidiaries |   | Eliminations |  | Consolidated
|------------------------------------ | -------- | -------- | ------------ | - | ------------ |  | ------------
|                                     |          |          |              |   |              |  |             
|Total revenues                       | $        | 111,489  |              | $ | 22,874       |  | $           
|Total operating expenses             |          | 123,315  |              |   | 10,268       |  |             
|Operating income (loss)              |          | (11,826) |              |   | 12,606       |  |             
|Other income (expense)               |          | (10,279) |              |   | 2,211        |  |             
|Income from subsidiaries             |          | 14,817   |              |   | --           |  |             
|Income (loss) before income taxes    |          | (7,288)  |              |   | 14,817       |  |             
|Provision (benefit) for income taxes |          | (1,795)  |              |   | 5,183        |  |             
|Net income (loss)                    | $        | (5,493)  |              | $ | 9,634        |  | $           



Condensed Consolidating Statement of Operations
For the Fiscal Year Ended March 25, 2001



|                                     | Romacorp |         | Subsidiaries |   | Eliminations |  | Consolidated
|------------------------------------ | -------- | ------- | ------------ | - | ------------ |  | ------------
|                                     |          |         |              |   |              |  |             
|Total revenues                       | $        | 119,626 |              | $ | 21,751       |  | $           
|Total operating expenses             |          | 126,712 |              |   | 10,679       |  |             
|Operating income (loss)              |          | (7,086) |              |   | 11,072       |  |             
|Other income (expense)               |          | (9,690) |              |   | 2,570        |  |             
|Income from subsidiaries             |          | 13,317  |              |   | --           |  |             
|Income (loss) before income taxes    |          | (3,459) |              |   | 13,642       |  |             
|Provision (benefit) for income taxes |          | (1,211) |              |   | 4,772        |  |             
|Net income (loss)                    | $        | (2,248) |              | $ | 8,870        |  | $           



Note 13.      Related Party Transactions

In June 1998, the Company entered into a Transitional Financial and Accounting Services Agreement (the "Transition Services Agreement") whereby NPC continued to provide administrative services to the Company. Services provided included accounting services, payroll services and use of NPC's proprietary restaurant technology system software (the "POS System"). As part of the Transition Services Agreement, the Company was granted a perpetual license to use the POS System. Effective June 24, 2002, the Company amended the contract whereby services will continue through March 2004. Either the Company or NPC may terminate the Transition Services Agreement upon one year's prior written notice. Pursuant to the Transition Services Agreement, the Company paid NPC $889,000, $910,000, and $870,000 during the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001, respectively.



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ROMACORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED



The Company reimbursed Sentinel for all out-of-pocket expenses incurred in connection with the Recapitalization. In addition, pursuant to a management agreement, Sentinel may receive a management fee equal to $500,000 per year and will be reimbursed for certain out-of-pocket expenses. The Company paid Sentinel $482,000, $513,000, and $472,000 during the fiscal years ended March 30, 2003, March 24, 2002 and March 25, 2001, respectively.

Note 14.      Summary of Quarterly Results (Unaudited) (Dollars in thousands)



|                            | First
Quarter |        | Second
Quarter |   | Third
Quarter |  | Fourth
Quarter
|--------------------------- | ------------- | ------ | -------------- | - | ------------- |  | --------------
|Year Ended March 30, 2003   |               |        |                |   |               |  |               
|Revenues                    | $             | 30,646 |                | $ | 28,430        |  | $             
|Operating income (loss) (a) |               | 1,200  |                |   | 1,039         |  |               
|Net loss (b)                |               | (478)  |                |   | (651)         |  |               
|                            |               |        |                |   |               |  |               
|                            |               |        |                |   |               |  |               
|Year Ended March 24, 2002   |               |        |                |   |               |  |               
|Revenues                    | $             | 33,947 |                | $ | 31,988        |  | $             
|Operating income (loss) (c) |               | 1,711  |                |   | 1,307         |  |               
|Net loss                    |               | (1)    |                |   | (634)         |  |               



|(a) | The fourth quarter includes charges to earnings of $5,327 related to a provision for asset impairment.                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The fourth quarter includes a gain on early retirement of debt of $788 and a charge to earnings of $9,983 related to the provision of a valuation allowance for 100% of the deferred tax assets.
|(c) | The fourth quarter includes charges to earnings of $4,822 related to a provision for asset impairment and $1,293 related to loss provisions associated with closing five restaurants.           



---

SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

Fiscal Years Ended March 30, 2003, March 24, 2002 and March 25, 2001

(Dollars in Thousands)



|                                |   | Additions (Deductions)   
|------------------------------- | - | -------------------------
|                                |   | Balance
Beginning
of Year
|                                |   |                          
|Fiscal Year 2003                |   |                          
|Allowance for doubtful accounts | $ | 334                      
|Valuation allowance
- deferred  |   |                          
|income tax assets               |   | 1,323                    
|                                |   |                          
|Fiscal Year 2002                |   |                          
|Allowance for doubtful accounts |   | 214                      
|Valuation allowance - deferred  |   |                          
|income tax assets               |   | 527                      
|                                |   |                          
|Fiscal Year 2001                |   |                          
|Allowance for doubtful accounts |   | 114                      
|Valuation allowance - deferred  |   |                          
|income tax assets               |   | --                       



(1) Accounts written off, net of recoveries.