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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



(Mark
One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the Quarterly Period Ended September 28, 2003.



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the Transition Period from
 to
.



Commission file number 0-25721.



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BUCA, Inc.

(Exact name of registrant as specified in its Charter)



|Minnesota                                                      |  | 41-1802364                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



1300 Nicollet Mall

Minneapolis, Minnesota 55403

(Address of principal executive offices) (Zip Code)



(612) 288-2382

(Registrants telephone number, including area code)



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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 whether the registrant is an accelerated filer (as defined in Rule 12b-2). Yes x No ̈



Indicate the number of shares
outstanding of each of the registrants classes of common equity, as of the latest practicable date: Common stock, $.01 par value, 16,775,788 shares outstanding as of November 3, 2003.



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##### Table of Contents

INDEX



BUCA, INC. AND SUBSIDIARIES



|                              | 
|----------------------------- | 
|PART I. FINANCIAL INFORMATION | 
|                              | 
|Item 1.                       | 
|                              | 
|                              | 
|                              | 
|                              | 
|                              | 
|                              | 
|                              | 
|                              | 
|                              | 
|Item 2.                       | 
|                              | 
|Item 3.                       | 
|                              | 
|Item 4.                       | 
|                              | 
|PART II. OTHER INFORMATION    | 
|                              | 
|Item 1.                       | 
|                              | 
|Item 2.                       | 
|                              | 
|Item 3.                       | 
|                              | 
|Item 4.                       | 
|                              | 
|Item 5.                       | 
|                              | 
|Item 6.                       | 
|                              | 
|SIGNATURES                    | 
|                              | 
|EXHIBITS                      | 



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##### Table of Contents

PART 1.  FINANCIAL INFORMATION



|Item 1. |  | Financial Statements
|------- |  | --------------------



BUCA, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited, in thousands, except share data)



|                                                                                                                           |  | September 28,2003 |         |   | December 29,2002 |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | -
|ASSETS                                                                                                                     |  |                   |         |   |                  |  
|CURRENT ASSETS:                                                                                                            |  |                   |         |   |                  |  
|Cash and cash equivalents                                                                                                  |  | $                 | 2,002   |   |                  | $
|Accounts receivable                                                                                                        |  |                   | 3,120   |   |                  |  
|Inventories                                                                                                                |  |                   | 7,009   |   |                  |  
|Prepaid expenses and other                                                                                                 |  |                   | 2,830   |   |                  |  
|                                                                                                                           |  |                   |         |   |                  |  
|Total current assets                                                                                                       |  |                   | 14,961  |   |                  |  
|                                                                                                                           |  |                  
|PROPERTY AND EQUIPMENT, net                                                                                                |  |                   | 192,640 |   |                  |  
|OTHER ASSETS                                                                                                               |  |                   | 8,641   |   |                  |  
|GOODWILL                                                                                                                   |  |                   | 11,759  |   |                  |  
|                                                                                                                           |  |                   |         |   |                  |  
|                                                                                                                           |  | $                 | 228,001 |   |                  | $
|                                                                                                                           |  |                   |         |   |                  |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                       |  |                   |         |   |                  |  
|CURRENT LIABILITIES:                                                                                                       |  |                   |         |   |                  |  
|Accounts payable                                                                                                           |  | $                 | 12,947  |   |                  | $
|Accrued expenses and other                                                                                                 |  |                   | 10,228  |   |                  |  
|Line of credit                                                                                                             |  |                   | 19,000  |   |                  |  
|Current maturities of long-term debt and capital leases                                                                    |  |                   | 5,085   |   |                  |  
|                                                                                                                           |  |                   |         |   |                  |  
|Total current liabilities                                                                                                  |  |                   | 47,260  |   |                  |  
|                                                                                                                           |  |                  
|LONG-TERM DEBT and CAPITAL LEASES, less current maturities                                                                 |  |                   | 18,326  |   |                  |  
|OTHER LIABILITIES                                                                                                          |  |                   | 5,618   |   |                  |  
|                                                                                                                           |  |                  
|SHAREHOLDERS EQUITY:                                                                                                      |  |                   |         |   |                  |  
|Undesignated stock, 5,000,000 shares authorized, none issued or outstanding                                                |  |                   |         |   |                  |  
|Common stock, $.01 par value; 30,000,000 authorized; 16,765,063 and 16,615,919 shares issued and outstanding,
respectively |  |                   | 168     |   |                  |  
|Additional paid-in capital                                                                                                 |  |                   | 150,708 |   |                  |  
|Retained earnings                                                                                                          |  |                   | 7,118   |   |                  |  
|                                                                                                                           |  |                   |         |   |                  |  
|                                                                                                                           |  |                   | 157,994 |   |                  |  
|Notes receivable from shareholders                                                                                         |  |                   | (1,197  | ) |                  |  
|                                                                                                                           |  |                   |         |   |                  |  
|                                                                                                                           |  |                   | 156,797 |   |                  |  
|                                                                                                                           |  |                   |         |   |                  |  
|                                                                                                                           |  | $                 | 228,001 |   |                  | $
|                                                                                                                           |  |                   |         |   |                  |  



See notes to
consolidated financial statements.



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BUCA, Inc. and Subsidiaries

Consolidated Statements of Operations

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



|                                            |  | Thirteen Weeks Ended |            |   | Thirty-Nine Weeks Ended |  
|------------------------------------------- |  | -------------------- | ---------- | - | ----------------------- | -
|                                            |  | September 28,2003    |            |   | September 29,2002       |  
|Restaurant sales                            |  | $                    | 62,110     |   |                         | $
|Restaurant costs:                           |  |                      |            |   |                         |  
|Product                                     |  |                      | 15,398     |   |                         |  
|Labor                                       |  |                      | 21,666     |   |                         |  
|Direct and occupancy                        |  |                      | 18,443     |   |                         |  
|Depreciation and amortization               |  |                      | 4,319      |   |                         |  
|                                            |  |                      |            |   |                         |  
|Total restaurant costs                      |  |                      | 59,826     |   |                         |  
|General and administrative expenses         |  |                      | 4,252      |   |                         |  
|Pre-opening costs                           |  |                      | 570        |   |                         |  
|                                            |  |                      |            |   |                         |  
|Operating (loss) income                     |  |                      | (2,538     | ) |                         |  
|Interest income                             |  |                      | 30         |   |                         |  
|Interest expense                            |  |                      | (567       | ) |                         |  
|                                            |  |                      |            |   |                         |  
|(Loss) income before income taxes           |  |                      | (3,075     | ) |                         |  
|Benefit (provision) for income taxes        |  |                      | 984        |   |                         |  
|                                            |  |                      |            |   |                         |  
|Net (loss) income                           |  | $                    | (2,091     | ) |                         | $
|                                            |  |                      |            |   |                         |  
|                                            |  |                      |            |  
|Basic:                                      |  |                      |            |   |                         |  
|Net (loss) income per common share          |  | $                    | (0.12      | ) |                         | $
|                                            |  |                      |            |   |                         |  
|Weighted average shares outstanding         |  |                      | 16,760,163 |   |                         |  
|                                            |  |                      |            |   |                         |  
|                                            |  |                      |            |  
|Diluted:                                    |  |                      |            |   |                         |  
|Net (loss) income per common share          |  | $                    | (0.12      | ) |                         | $
|                                            |  |                      |            |   |                         |  
|Weighted average shares assumed outstanding |  |                      | 16,760,163 |   |                         |  
|                                            |  |                      |            |   |                         |  



See notes to
consolidated financial statements.



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BUCA, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited, in thousands)



|                                                  |  | Thirty-Nine Weeks Ended |        
|------------------------------------------------- |  | ----------------------- | -------
|                                                  |  | September 28,2003       |        
|CASH FLOWS FROM OPERATING ACTIVITIES:             |  |                         |        
|Net (loss) income                                 |  | $                       | (566   
|Depreciation and amortization                     |  |                         | 12,198 
|Tax benefit on option exercises                   |  |                         | 12     
|Change in assets and liabilities:                 |  |                         |        
|Accounts receivable                               |  |                         | (447   
|Inventories                                       |  |                         | (791   
|Prepaid expenses and other                        |  |                         | 247    
|Accounts payable                                  |  |                         | (510   
|Accrued expenses and other                        |  |                         | (3,474 
|Other                                             |  |                         | (50    
|                                                  |  |                         |        
|Net cash provided by operating activities         |  |                         | 6,619  
|                                                  |  |                        
|CASH FLOWS FROM INVESTING ACTIVITIES:             |  |                         |        
|Purchase of property and equipment                |  |                         | (24,524
|Sale of property and equipment                    |  |                         | 3,325  
|Decrease (increase) in other assets               |  |                         | 231    
|Purchase of restaurants                           |  |                         |        
|                                                  |  |                         |        
|Net cash used in investing activities             |  |                         | (20,968
|                                                  |  |                        
|CASH FLOWS FROM FINANCING ACTIVITIES:             |  |                         |        
|Proceeds from line of credit borrowings           |  |                         | 38,500 
|Principal payments on line of credit borrowings   |  |                         | (23,500
|Proceeds from issuance of debt and capital leases |  |                         | 106    
|Principal payments on debt and capital leases     |  |                         | (2,584 
|Financing costs                                   |  |                         | (168   
|Collection on notes receivable from shareholders  |  |                         | 121    
|Net proceeds from issuance of common stock        |  |                         | 468    
|                                                  |  |                         |        
|Net cash provided by financing activities         |  |                         | 12,943 
|                                                  |  |                         |        
|                                                  |  |                        
|NET CHANGE IN CASH AND CASH EQUIVALENTS           |  |                         | (1,406 
|                                                  |  |                        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  |  |                         | 3,408  
|                                                  |  |                         |        
|                                                  |  |                        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD        |  | $                       | 2,002  
|                                                  |  |                         |        



See notes to
consolidated financial statements.



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BUCA, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)



|1. | NATURE OF BUSINESS AND BASIS OF PRESENTATION
|-- | --------------------------------------------



BUCA, Inc. and Subsidiaries (we, us, or our) develop, own and operate Southern Italian restaurants under the names Buca di Beppo and Vinny Ts of
Boston. At September 28, 2003, we had 104 restaurants located in 30 states and the District of Columbia.



The accompanying financial statements have been prepared by us without audit and reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the interim periods. The statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (generally accepted accounting principles) and with the regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures, normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such SEC rules and regulations. Operating results for the thirteen and thirty-nine weeks ended September 28, 2003 are not necessarily indicative of
the results that may be expected for the year ending December 28, 2003.



The balance sheet at December 29, 2002 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principles for complete financial
statements. For further information, refer to the financial statements and notes for the fiscal year ended December 29, 2002 included in our Annual Report on Form 10-K.



|2. | IMPAIRMENT OF ASSETS
|-- | --------------------



We review our long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value amount of an asset or group of
assets may not be recoverable. We consider a history of consistent and significant operating losses to be a primary indicator of potential asset impairment. Assets are grouped and evaluated for impairment at the lowest level for which there are
identifiable cash flows, primarily the individual restaurants. A restaurant is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the restaurant is less than its carrying amount. If a restaurant is
determined to be impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Fair value is an estimate based on the best information available, including prices for similar assets or the
results of valuation techniques such as undiscounted estimated future cash flows as if the decision to continue to use the impaired restaurant was a new investment decision.



We received documentation from the Kansas Department of Transportation that significant road construction can be expected
near our Buca di Beppo restaurant in Lenexa, Kansas. The road construction may have a significant impact upon our ability to generate cash flow from operations for this restaurant. Currently, we believe that this restaurant will generate sufficient
future cash flows to support the value of its assets. However, we will continue to evaluate this location as more information becomes available, based upon the length of the road construction as well as the magnitude of the financial impact on this
restaurant caused by the road construction. At September 28, 2003, the net book value of fixed assets at this location was $1,636,000.



|3. | OTHER ASSETS
|-- | ------------



Other assets consisted of the following as of September 28, 2003 and December 29, 2002 (in thousands):



|                                 |  | September 28, 2003 |       |   | December 29, 2002 |  
|-------------------------------- |  | ------------------ | ----- | - | ----------------- | -
|Liquor licenses                  |  | $                  | 2,221 |   |                   | $
|Loan and lease acquisition costs |  |                    | 2,301 |   |                   |  
|KEYSOP investment account        |  |                    | 1,734 |   |                   |  
|Unvested KEYSOP obligations      |  |                    | 841   |   |                   |  
|Escrow deposits                  |  |                    | 500   |   |                   |  
|Trademarks                       |  |                    | 930   |   |                   |  
|Other                            |  |                    | 773   |   |                   |  
|                                 |  |                    |       |   |                   |  
|                                 |  |                    | 9,300 |   |                   |  
|Accumulated amortization         |  |                    | (659  | ) |                   |  
|                                 |  |                    |       |   |                   |  
|                                 |  | $                  | 8,641 |   |                   | $
|                                 |  |                    |       |   |                   |  



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Amortization expense related to other assets was $333,000 for the thirty-nine weeks ended September 28,
2003 and $281,000 for the thirty-nine weeks ended September 29, 2002. The estimated amortization expense is approximately $430,000 for each of fiscal 2004, 2005, 2006, $359,000 for fiscal 2007 and $3,000 for fiscal 2008, based upon our current other
asset balances.



|4. | CREDIT FACILITY
|-- | ---------------



On November 4, 2003, we amended our credit agreement. Under this amendment, which waived covenant defaults, we paid a fee of approximately $100,000. The
agreement also increased the interest rate of the credit facility to the lower of our lenders reference rate plus 0.75% to 2.25% or Eurodollar rate plus 2.25% to 3.75% (3.35% to 4.85% as of November 3, 2003). The credit agreement as amended contains
covenants that place restrictions on sales of properties, transactions with affiliates, creation of additional debt, limitations on capital expenditures, maintenance of certain financial ratios, eliminates future sale-leaseback transactions and
includes other customary covenants. Borrowings under the credit amendment also continue to be collateralized by substantially all of our assets.



|5. | NET (LOSS) INCOME PER SHARE
|-- | ---------------------------



Net (loss) income per share is computed in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings per Share.
Basic (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding. Diluted income per share assumes the exercise of stock options using the treasury stock method, if dilutive. Diluted
net loss per share for the thirteen and thirty-nine week periods ended September 28, 2003 equals basic net loss per share because the effect of stock options to the weighted average shares assumed outstanding would be anti-dilutive. The following
table sets forth the calculation of basic and diluted net (loss) income per common share (in thousands, except share and per share data):



|                                                      |  | Thirteen Weeks Ended |            | Thirty-Nine Weeks Ended
|----------------------------------------------------- |  | -------------------- | ---------- | -----------------------
|                                                      |  | September 28,2003    |            |                        
|Numerator:                                            |  |                      |            |                        
|Basic and diluted net (loss) income                   |  | $                    | (2,091     | )                      
|                                                      |  |                      |            |                        
|Denominator:                                          |  |                      |            |                        
|Weighted average shares outstanding  basic           |  |                      | 16,760,163 |                        
|Stock options                                         |  |                      |            |                        
|                                                      |  |                      |            |                        
|Weighted average shares assumed outstanding  diluted |  |                      | 16,760,163 |                        
|                                                      |  |                      |            |                        
|Basic net (loss) income per common share              |  | $                    | (0.12      | )                      
|                                                      |  |                      |            |                        
|Diluted net (loss) income per common share            |  | $                    | (0.12      | )                      
|                                                      |  |                      |            |                        



|6. | STOCK-BASED COMPENSATION
|-- | ------------------------



We have chosen to continue to account for stock-based compensation using the intrinsic value based method prescribed by Accounting Principles Board Option
No. 25 and related interpretations. No compensation cost has been recognized for options issued to employees under the plans when the exercise price of the options



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granted is at least equal to the fair value of the common stock on the date of grant. Had compensation costs for our Employee Stock Purchase Plan, 1996 Stock
Incentive Plan and 2000 Stock Incentive Plan been determined using a fair value based method as described in SFAS No. 123, Accounting for Stock-Based Compensation, our net loss would have been increased and our net income would have been
decreased to the following pro-forma amounts (in thousands, except for per share data):



|                                                                                                                                         |  | Thirteen Weeks Ended |        |   | Thirty-Nine Weeks Ended |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | - | ----------------------- | -
|                                                                                                                                         |  | September 28,2003    |        |   | September 29,2002       |  
|Net (loss) income                                                                                                                        |  |                      |        |   |                         |  
|As reported                                                                                                                              |  | $                    | (2,091 | ) |                         | $
|Plus: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effects                       |  |                      |        |   |                         |  
|Less: Total stock-based employee compensation awards determined under fair value based method for all awards, net of related tax
effects |  |                      | (685   | ) |                         |  
|                                                                                                                                         |  |                      |        |   |                         |  
|Pro forma                                                                                                                                |  | $                    | (2,776 | ) |                         | $
|                                                                                                                                         |  |                      |        |   |                         |  
|Net (loss) income per common share, basic:                                                                                               |  |                      |        |   |                         |  
|As reported                                                                                                                              |  | $                    | (0.12  | ) |                         | $
|                                                                                                                                         |  |                      |        |   |                         |  
|Pro forma                                                                                                                                |  | $                    | (0.17  | ) |                         | $
|                                                                                                                                         |  |                      |        |   |                         |  
|Net (loss) income per common share, diluted:                                                                                             |  |                      |        |   |                         |  
|As reported                                                                                                                              |  | $                    | (0.12  | ) |                         | $
|                                                                                                                                         |  |                      |        |   |                         |  
|Pro forma                                                                                                                                |  | $                    | (0.17  | ) |                         | $
|                                                                                                                                         |  |                      |        |   |                         |  



|7. | RECENT ACCOUNTING PRONOUNCEMENTS
|-- | --------------------------------



In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, which is generally
effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of
a derivative as discussed in SFAS No. 133, clarifies when a derivative contains a financing component, amends the definition of an underlying to conform it to the language used in FASB Interpretation No. 45, Guarantor Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and amends certain other existing pronouncements. We do not have any derivative financial instruments. We do not anticipate that the adoption
of SFAS No. 149 will have an impact on our consolidated balance sheets or statements of operations, shareholders equity and cash flows.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.
This Statement requires that certain instruments that were previously classified as equity on a companys statement of financial position now be classified as liabilities. The Statement is effective for financial instruments entered into or
modified after May 31, 2003, and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. We currently have no instruments impacted by the adoption of this Statement and
therefore the adoption did not have an effect on our consolidated financial position, results of operations or cash flows.



|8. | SUPPLEMENTAL CASH FLOW INFORMATION
|-- | ----------------------------------



The following is supplemental cash flow information for the thirty-nine week periods ended (in thousands):



|                                                            |  | September 28, 2003 |       | September 29, 2002
|----------------------------------------------------------- |  | ------------------ | ----- | ------------------
|Cash paid during period for:                                |  |                    |       |                   
|Interest                                                    |  | $                  | 1,709 |                   
|Income taxes                                                |  |                    | 231   |                   
|Non-cash investing and financing activities:                |  |                    |       |                   
|Shareholder receivable from issuance of common stock        |  |                    | 540   |                   
|Shareholder receivable reduction due to retirement of stock |  |                    | 340   |                   



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|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- |  | -------------------------------------------------------------------------------------



General



At September 28, 2003, we owned and operated 94 Buca di Beppo and ten Vinny Ts of Boston restaurants. Our Buca di Beppo restaurants are full
service, primarily dinner only restaurants that offer high quality, immigrant Southern Italian cuisine served family-style in large portions in a fun and energetic atmosphere that parodies the decor and ambiance of post-War Italian/American
restaurants. Our Vinny Ts of Boston restaurants serve individual and family-style portions for both lunch and dinner. The Vinny Ts of Boston restaurants are based upon re-creations of the neighborhood Italian eateries prominent in the
neighborhoods of lower Manhattan, Brooklyn, north-end Boston and South Philadelphia in the 1940s.



Since 1996, we have pursued a rapid but disciplined expansion strategy, opening two restaurants in 1996, five in 1997, eight in 1998, 15 in 1999, 17 in
each of 2000 and 2001, and 14 in 2002. In January 2002, we acquired the assets of nine Vinny Ts of Boston restaurants. We intend to open 13 new Buca di Beppo restaurants and one new Vinny Ts of Boston restaurant in fiscal 2003. Through
October 2003, we have opened 12 new Buca di Beppo restaurants and one Vinny Ts of Boston restaurant. Our remaining location in Wellington Green, Florida is expected to open in November. In fiscal 2004, we expect to open up to five new
restaurants.



We implemented a price increase of approximately
1.5% at our Buca di Beppo restaurants on the first day of fiscal 2003 and a price increase of approximately 2.5% at our Vinny Ts of Boston restaurants at the beginning of March 2003.



Our restaurant sales are comprised of the sale of food, beverage and retail
items. Our calculation of comparable restaurant sales includes restaurants open for 18 full calendar months. Product costs include the costs of food and beverages. Labor costs include direct hourly and management wages, bonuses, taxes and benefits
for restaurant employees. Direct and occupancy costs include restaurant supplies, marketing costs, rent, utilities, real estate taxes, repairs and maintenance and other related costs. Depreciation and amortization principally includes depreciation
on capital expenditures for restaurants. General and administrative expenses are composed of expenses associated with all corporate and administrative functions that support existing operations, management and staff salaries, employee benefits,
travel, information systems and training and market research. Pre-opening costs consist of direct costs related to hiring and training the initial restaurant workforce and certain other direct costs associated with opening new restaurants. Interest
income includes the interest income on invested assets. Interest expense includes the cost of interest expense on debt. The provision for income taxes represents our estimate of total income taxes to be paid to the federal and state governments
based upon our pre-tax income for the period.



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Results of Operations



Our operating results for the thirteen and thirty-nine week periods ended September 28, 2003 and September 29, 2002 expressed as a percentage of
restaurant sales were as follows:



|                                     |  | Thirteen Weeks Ended |        |    | Thirty-Nine Weeks Ended |  
|------------------------------------ |  | -------------------- | ------ | -- | ----------------------- | -
|                                     |  | September 28,2003    |        |    | September 29,2002       |  
|Restaurant sales (in thousands)      |  | $                    | 62,110 |    |                         | $
|Restaurant costs:                    |  |                      |        |    |                         |  
|Product                              |  |                      | 24.8   | %  |                         |  
|Labor                                |  |                      | 34.9   | %  |                         |  
|Direct and occupancy                 |  |                      | 29.7   | %  |                         |  
|Depreciation and amortization        |  |                      | 7.0    | %  |                         |  
|                                     |  |                      |        |    |                         |  
|Total restaurant costs               |  |                      | 96.3   | %  |                         |  
|General and administrative expenses  |  |                      | 6.8    | %  |                         |  
|Pre-opening costs                    |  |                      | 0.9    | %  |                         |  
|                                     |  |                      |        |    |                         |  
|Operating (loss) income              |  |                      | (4.1   | )% |                         |  
|Interest income                      |  |                      | 0.0    | %  |                         |  
|Interest expense                     |  |                      | (0.9   | )% |                         |  
|                                     |  |                      |        |    |                         |  
|(Loss) income before income taxes    |  |                      | (5.0   | )% |                         |  
|Benefit (provision) for income taxes |  |                      | 1.6    | %  |                         |  
|                                     |  |                      |        |    |                         |  
|Net (loss) income                    |  |                      | (3.4   | )% |                         |  
|                                     |  |                      |        |    |                         |  



Thirteen Weeks Ended September 28,
2003 Compared to the Thirteen Weeks Ended September 29, 2002



Restaurant Sales. Restaurant sales increased by $2.6 million, or 4.4%, to $62.1 million in the third quarter of fiscal 2003 from $59.5 million in the third quarter of fiscal 2002. The increase was the result of sales from new Buca di
Beppo and Vinny Ts of Boston restaurants. Buca di Beppos comparable restaurant sales decreased 9.2% in the third quarter of fiscal 2003. Vinny Ts of Bostons comparable restaurant sales decreased 8.9% in the third quarter of
fiscal 2003. Consolidated average weekly sales declined 9.5% to $45,600 in the third quarter of fiscal 2003 from $51,400 in the third quarter of fiscal 2002. The decreases in comparable restaurant sales and average weekly sales were primarily the
result of a decrease in guest counts. We expect Buca di Beppo and Vinny Ts comparable restaurant sales to remain negative for the fourth quarter of fiscal 2003.



Product. Product costs increased by $893,000 to $15.4 million in the third quarter of fiscal 2003 from $14.5 million
in the third quarter of fiscal 2002. Product costs as a percentage of restaurant sales increased to 24.8% in the third quarter of fiscal 2003 from 24.4% in the third quarter of fiscal 2002. The increase in product costs as a percentage of sales was
primarily due to increases in meat and dairy costs. While we expect product costs as a percentage of sales to improve in the fourth quarter of fiscal 2003 from the third quarter of fiscal 2003, we expect product costs as a percentage of sales in the
fourth quarter of fiscal 2003 to be slightly higher than the product cost percentage in the comparable fourth quarter of fiscal 2002.



Labor. Labor costs increased by $2.1 million to $21.7 million in the third quarter of fiscal 2003 from $19.6 million in the third quarter of fiscal
2002. Labor costs increased as a percentage of restaurant sales to 34.9% in the third quarter of fiscal 2003 from 33.0% in the third quarter of fiscal 2002. The decline in average weekly sales at Buca di Beppo and Vinny Ts of Boston caused
hourly labor as a percentage of sales to increase by 100 basis points, management compensation as a percentage of sales to increase by 20 basis points, and payroll taxes and benefits as a percentage of sales to increase by 70 basis points, each as
compared to the third quarter of fiscal 2002. We expect labor costs in the fourth quarter of fiscal 2003 to increase as a percentage of sales from the fourth quarter of fiscal 2002 due to the expected decline in average weekly sales from the
comparable prior year period.



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Direct and Occupancy. Direct and occupancy costs increased by $3.0 million to $18.4 million in the
third quarter of fiscal 2003 from $15.4 million in the third quarter of fiscal 2002. Direct and occupancy costs increased as a percentage of restaurant sales to 29.7% in the third quarter of fiscal 2003 from 25.8% in the third quarter of fiscal
2002. This increase in direct and occupancy costs, which are primarily fixed in nature, as a percentage of sales was primarily related to declining average weekly restaurant sales and increases in common area maintenance and utility costs. We
anticipate direct and occupancy costs in the fourth quarter of fiscal 2003 to increase as a percentage of sales over the fourth quarter of fiscal 2002 due to the expected decline in average weekly sales and increased marketing expenses from the
comparable prior year period.



Depreciation and
Amortization. Depreciation and amortization expenses increased by $829,000 to $4.3 million in the third quarter of fiscal 2003 from $3.5 million in the third quarter of fiscal 2002. This increase was primarily the result of depreciation
recognized on capital expenditures for new restaurants.



General and Administrative. General and administrative expenses increased by $364,000 to $4.3 million in the third quarter of fiscal 2003 from $3.9 million in the third quarter of fiscal 2002. General and administrative expenses as a
percentage of restaurant sales increased to 6.8% in the third quarter of fiscal 2003 from 6.5% in the third quarter of fiscal 2002. The increase in general and administrative expenses as a percentage of sales was primarily due to the decline in
average weekly sales. We anticipate general and administrative expenses in the fourth quarter of fiscal 2003 to decrease as a percentage of sales as compared to the fourth quarter of fiscal 2002, but increase slightly as a percentage of sales from
the third quarter of fiscal 2003.



Pre-opening Costs.
Pre-opening costs decreased $11,000 to $570,000 in the third quarter of fiscal 2003 from $581,000 in the third quarter of fiscal 2002. Pre-opening costs decreased as a percentage of sales to 0.9% in the third quarter of fiscal 2003 from 1.0% in the
third quarter of fiscal 2002. We opened three restaurants in the third quarter of fiscal 2003 compared to four restaurants in the third quarter of fiscal 2002. Our average pre-opening cost per restaurant in fiscal 2003 has declined from our average
pre-opening cost per restaurant in fiscal 2002. We expect pre-opening costs in the fourth quarter of fiscal 2003 to decline slightly as a percentage of sales from the fourth quarter of fiscal 2002.



Interest Income. Interest income decreased by $10,000 to $30,000 in
the third quarter of fiscal 2003 from $40,000 in the third quarter of fiscal 2002. We expect interest income in the fourth quarter of fiscal year 2003 to decline slightly from the fourth quarter of fiscal 2002.



Interest Expense. Interest expense increased $368,000 to $567,000 in
the third quarter of fiscal 2003 from $199,000 in the third quarter of fiscal 2002. The increase in interest expense primarily resulted from increased borrowings on our credit facility in the third quarter of fiscal 2003 compared to the third
quarter of fiscal 2002. We expect interest expense to increase in the fourth quarter of fiscal 2003 from the fourth quarter of fiscal 2002 because of anticipated higher borrowings and interest rates on our credit facility than the prior year
comparable period. See Liquidity and Capital Resources for a discussion of amendments to our credit agreement and the related increase in interest rates.



Provision for Income Taxes. The provision for income taxes in the third quarter of fiscal 2003 represents our
estimate of our income tax rate for fiscal 2003. Our effective tax rate has decreased due to the impact of our FICA tip credit and other credits, which are fixed in nature, on our declining taxable (loss) income. The effect of these credits will
significantly reduce our effective income tax rate as a percentage of pre-tax (loss) income.



Thirty-Nine Weeks Ended September 28, 2003 Compared to the Thirty-Nine Weeks Ended September 29, 2002



Restaurant Sales. Restaurant sales increased by $12.7 million, or 7.2%, to $189.4 million in the first three quarters of fiscal 2003 from $176.7
million in the first three quarters of fiscal 2002. The increase was the result of sales from new Buca di Beppo and Vinny Ts of Boston restaurants. Buca di Beppo restaurants comparable restaurant sales decreased 6.9% in the first three
quarters of fiscal 2003. Vinny Ts of Bostons comparable restaurant sales decreased 8.9% in the first three quarters of fiscal 2003. Consolidated average weekly sales declined 7.7% to $49,400 for the first three quarters of fiscal 2003
from $53,500 for the first three quarters of fiscal 2002. The decreases in comparable restaurant sales and average weekly sales were primarily the result of a decrease in guest counts.



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Product. Product costs increased by $2.9 million to $46.3 million in the first three quarters of
fiscal 2003 from $43.4 million in the first three quarters of fiscal 2002. Product costs as a percentage of restaurant sales decreased to 24.4% in the first three quarters of fiscal 2003 from 24.6% in the first three quarters of fiscal 2002. This
decrease as a percentage of sales resulted primarily from the price increases taken at both Buca di Beppo and Vinny Ts of Boston in the first quarter, a reduction in produce costs and stronger purchasing contracts for a number of key products.



Labor. Labor costs increased by $6.6 million to $64.2
million in the first three quarters of fiscal 2003 from $57.6 million in the first three quarters of fiscal 2002. Labor costs increased as a percentage of restaurant sales to 33.9% in first three quarters of fiscal 2003 from 32.6% in the first three
quarters of fiscal 2002. The decline in average weekly sales caused hourly labor as a percentage of sales to increase by 50 basis points, management compensation as a percentage of sales to increase by 20 basis points and payroll taxes and benefits
as a percentage of sales to increase by 60 basis points, each as compared to the comparable fiscal 2002 period.



Direct and Occupancy. Direct and occupancy costs increased by $8.6 million to $50.9 million in the first three quarters of fiscal 2003 from $42.3
million in the first three quarters of fiscal 2002. Direct and occupancy costs increased as a percentage of restaurant sales to 26.9% in the first three quarters of fiscal 2003 from 23.9% in the first three quarters of fiscal 2002. This increase in
direct and occupancy costs, which are primarily fixed in nature, as a percentage of sales was directly related to declining average weekly restaurant sales and increases in common area maintenance and utility costs.



Depreciation and Amortization. Depreciation and amortization expenses
increased by $2.4 million to $12.2 million in the first three quarters of fiscal 2003 from $9.8 million in the first three quarters of fiscal 2002. This increase was primarily the result of depreciation recognized on capital expenditures for new
restaurants.



General and Administrative. General and
administrative expenses increased by $2.3 million to $13.2 million in the first three quarters of fiscal 2003 from $10.9 million in the first three quarters of fiscal 2002. General and administrative expenses as a percentage of restaurant sales
increased to 7.0% in the first three quarters of fiscal 2003 from 6.2% in the first three quarters of fiscal 2002. The increase in general and administrative expenses as a percentage of sales was primarily due to increases in personnel, particularly
in operations and food and beverage, and legal costs related to the settlement of several claims.



Pre-opening Costs. Pre-opening costs decreased by $160,000 to $2.1 million in the first three quarters of fiscal 2003 from $2.3 million in the
first three quarters of fiscal 2002. Pre-opening costs decreased as a percentage of sales to 1.1% in the first three quarters of fiscal 2003 from 1.3% in the first three quarters of fiscal 2002. The decrease in pre-opening costs as a percentage of
sales was due to managements efforts to reduce these costs on a per restaurant basis and due to increased sales on a larger base of restaurants.



Interest Income. Interest income decreased by $48,000 to $89,000 in the first three quarters of fiscal 2003 from $137,000 in the first three
quarters of fiscal 2002. The decrease in interest income resulted from less invested assets during the first three quarters of fiscal 2003 than during the first three quarters of fiscal 2002.



Interest Expense. Interest expense increased $711,000 to $1.5 million
in the first three quarters of fiscal 2003 from $788,000 in the first three quarters of fiscal 2002. The increase in interest expense primarily resulted from approximately $18 million more in average borrowings on our credit facility in the first
three quarters of fiscal 2003 compared to the first three quarters of fiscal 2002.



Provision for Income Taxes. The provision for income taxes in the first half of fiscal 2003 represents our estimate of our income tax rate for fiscal 2003. The decline in our effective tax rate from the prior
year is due to the impact of our FICA tip credit and other credits, which are fixed in nature, on our declining taxable (loss) income.



Liquidity and Capital Resources



Net cash provided by operating activities was $6.6 million in the first three quarters of fiscal 2003 as compared to $12.0 million in the first three
quarters of fiscal 2002. We expect to generate cash from operating activities in future periods.



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We use cash primarily to fund the development and construction of new restaurants. In January 2002, we
purchased nine Vinny Ts of Boston restaurants for approximately $21 million. We opened 12 new Buca di Beppo restaurants and one new Vinny Ts of Boston restaurant in the first three quarters of fiscal 2003 as compared to 14 new Buca di
Beppo restaurants in the first three quarters of fiscal 2002. Capital expenditures were $24.5 million in the first three quarters of fiscal 2003 compared to $30.1 million in the first three quarters of fiscal 2002. The decrease in capital
expenditures was primarily related to the development of one less restaurant and a decrease of approximately $2.7 million in land purchases during the first three quarters of fiscal 2003 as compared to the first three quarters of fiscal 2002.



During the second quarter of fiscal 2003, we completed a $3.3
million sale-leaseback transaction of our land and building at one restaurant. The funds are used for the growth of new restaurants and general corporate purposes. The net book value of the land and building at the time of sale was $1.2 million,
thus creating a deferred gain on the sale-leaseback transaction of approximately $2.1 million. This deferred gain will be recognized over the remainder of the 20-year initial operating lease term.



We expect to open 14 new restaurants in 2003, 13 of which have opened through
the end of the third quarter. The remaining Buca di Beppo restaurant in Wellington Green, Florida is expected to open in November 2003. In fiscal 2004, we expect to open up to five new restaurants. Each new Buca di Beppo and Vinny Ts of Boston
restaurant is expected to require, on average, a total cash investment of between $1.0 million and $1.5 million for our remodeled restaurants and between $1.5 to $2.0 million for restaurants based upon our prototype designs. The incremental $500,000
for our prototype-designed restaurant represents the estimated costs to construct the building. Additionally, we expect to incur pre-opening costs of approximately $185,000 per restaurant.



Net cash provided by financing activities was $12.9 million for the first
three quarters of fiscal 2003 compared with $30.1 million for the first three quarters of fiscal 2002. Financing activities in the first three quarters of fiscal 2003 consisted primarily of a net $15 million in line of credit borrowings. In the
first three quarters of fiscal 2002, we completed a $20 million term facility to fund the acquisition of Vinny Ts of Boston and borrowed $10 million on our line of credit. The proceeds from financing activities in the first three quarters of
fiscal 2003 were used primarily to fund the development of new restaurants and general corporate purposes.



On October 11, 2002, we closed on a credit facility comprised of a $25 million term loan and a $25 million line of credit facility with the option to
borrow an additional $10 million under the line of credit provided we are not in default under the terms of the loan agreement at the time. The credit facility expires on December 31, 2007. We are required to repay $5 million annually in principal
toward the term loan during fiscal 2003 through 2007. Principal payments are to be made on a quarterly basis. The credit facility bore interest at the lower of our lenders reference rate plus 0.75% to 1.50% or Eurodollar rate plus 2.25% to
3.00%, dependent upon our meeting certain financial ratios. We are required to make quarterly payments of 0.50% on all unused line of credit funds.



On November 4, 2003, we amended our credit agreement. Under this amendment, which waived covenant defaults, we paid a fee of approximately $100,000. The
agreement also increased the interest rates to the lower of our lenders reference rate plus 0.75% to 2.25% or Eurodollar rate plus 2.25% to 3.75% (3.35% to 4.85% as of November 3, 2003). The credit agreement as amended contains covenants that place
restrictions on sales of properties, transactions with affiliates, creation of additional debt, limitations on capital expenditures, maintenance of certain financial ratios, eliminates future sale-leaseback transactions and includes other customary
covenants. Borrowings under the credit amendment also continue to be collateralized by substantially all of our assets.



Our capital requirements, including development costs related to the opening of additional restaurants, have been and will continue to be significant. We
expect our capital expenditures in fiscal 2003 to be approximately $27 million. We will need substantial capital to finance our expansion plans, which require funds for capital expenditures, pre-opening costs and initial operating losses related to
new restaurant openings. The adequacy of available funds and our future capital requirements will depend on many factors, including the pace of expansion, capital expenditures for new restaurant development and the nature of contributions, loans and
other arrangements negotiated with landlords. Although we can make no assurance, we believe that current assets, cash flow from operations and other available borrowings will be sufficient to fund our capital requirements through fiscal 2004. To
fund future operations, we may need to raise additional capital through public or private equity or debt financing to



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continue our growth. In addition, we may from time to time consider acquiring the operations of other restaurants. We may obtain additional equity or debt
financing to fund such acquisitions. The sale of additional equity or debt securities could result in additional dilution to our shareholders. We cannot predict whether additional capital will be available on favorable terms, if at all.



Critical Accounting Policies



Our consolidated financial statements include accounts of BUCA, Inc and all
of our wholly owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in certain circumstances that
affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, we have used our best estimates and judgments of certain amounts included in the financial statements, giving
due consideration to materiality. We do not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the
exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.



Impairment of Long-Lived Assets



We review our long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value amount of an asset or group of
assets may not be recoverable. We consider a history of consistent and significant operating losses to be a primary indicator of potential asset impairment. Assets are grouped and evaluated for impairment at the lowest level for which there are
identifiable cash flows, primarily the individual restaurants. A restaurant is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the restaurant is less than its carrying amount. If a restaurant is
determined to be impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Fair value is an estimate based on the best information available, including prices for similar assets or the
results of valuation techniques such as undiscounted estimated future cash flows as if the decision to continue to use the impaired restaurant was a new investment decision.



We received documentation from the Kansas Department of Transportation that significant road construction can be expected
near our Buca di Beppo restaurant in Lenexa, Kansas. The road construction may have a significant impact upon our ability to generate cash flow from operations for this restaurant. Currently, we believe that this restaurant will generate sufficient
future cash flows to support the value of its assets. However, we will continue to evaluate this location as more information becomes available, based upon the length of the road construction as well as the magnitude of the financial impact on this
restaurant caused by the road construction. At September 28, 2003, the net book value of fixed assets at this location was $1,636,000.



Impairment of Goodwill



We assess the recoverability of goodwill that is related to our purchase of Vinny Ts of Boston at year-end and whenever events or changes in
circumstance indicate the carrying value may not be recoverable. We test impairment at the concept level for this goodwill based upon the historical cash flow and other relevant facts and circumstances as the primary basis for our estimates of
future cash flows. A concept is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the concept is less than its carrying amount of fixed assets and goodwill. If a restaurant is determined to be
impaired, the loss is measured as the amount by which the carrying amount of the concept exceeds its fair value. Fair value is an estimate based on the best information available, including prices for similar assets or the results of valuation
techniques such as undiscounted estimated future cash flows as if the decision to continue to use the impaired restaurant was a new investment decision.



Self-Insurance



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



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Purchase Accounting



We account for our acquisitions under the purchase method of accounting and accordingly, the acquired assets and liabilities assumed are recorded at their
respective fair values. The recorded values of assets and liabilities are based on third-party estimates and valuations when available. The remaining values are based on managements judgments and estimates. Our financial position and results
from operations may be affected by changes in estimates and judgments.



Provision of Income Taxes



We estimate certain
components of our provision for income taxes. The estimates include effective state and local income tax rates, allowable tax credits for items such as FICA taxes paid on reported tip income and the work opportunity tax credit, and the tax rate in
which deferred taxes are recognized. Our estimates are based on the best available information at the time that we prepare the provision. All tax returns are subject to audit by federal and state governments, usually years after the tax returns are
filed, and could be subject to different interpretations of the tax laws. The ultimate amount of income taxes that we pay may be higher or lower than our estimates.



Recent Accounting Pronouncements



In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, which is generally
effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of
a derivative as discussed in SFAS No. 133, clarifies when a derivative contains a financing component, amends the definition of an underlying to conform it to the language used in FASB Interpretation No. 45, Guarantor Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and amends certain other existing pronouncements. We do not have any derivative financial instruments. We do not anticipate that the adoption
of SFAS No. 149 will have an impact on our consolidated balance sheets or statements of operations, shareholders equity and cash flows.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.
This Statement requires that certain instruments that were previously classified as equity on a companys statement of financial position now be classified as liabilities. The Statement is effective for financial instruments entered into or
modified after May 31, 2003, and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. We currently have no instruments impacted by the adoption of this Statement and
therefore the adoption did not have an effect on our consolidated financial position, results of operations or cash flows.



Inflation



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



Disclosure Regarding Forward-Looking Statements



This Form 10-Q for the third quarter ended September 28, 2003 contains forward-looking statements within the meaning of the
safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the beliefs of our management as well as on assumptions made by and information currently available to us at the time the
statements were made. When used in this Form 10-Q, the words anticipate, believe, estimate, expect, intend and similar expressions, as they relate to us, are intended to identify the
forward-looking statements. Although we believe that these statements are reasonable, you should be aware that actual results could differ materially from those projected by the forward-looking statements. Because actual results may differ, readers
are cautioned not to place undue reliance on forward-looking statements.



| |  | The actual number of restaurants opened during any period could be higher or lower than the projected amount based upon the timing and success of locating suitable sites,
negotiating acceptable leases, managing construction and recruiting qualified operating personnel.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | Our comparable restaurant sales percentage and average weekly sales could fluctuate as a result of general economic conditions, consumer confidence in the economy, changes in
consumer preferences, competitive factors, weather conditions, or changes in our historical sales growth pattern.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Product costs could be adversely affected by increased distribution prices by SYSCO Corporation, our principal food supplier, or a failure to perform by SYSCO, as well as the
availability of food and supplies from other sources, adverse weather conditions, governmental regulation, inflation and general economic conditions.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Labor costs could increase due to increases in the minimum wage as well as competition for qualified employees and the need to pay higher wages to attract a sufficient number of
employees.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Direct and occupancy costs could be adversely affected by an inability to negotiate favorable lease terms, increasing insurance, property taxes, common area maintenance and utility
costs, or general economic conditions.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | General and administrative expenses could increase due to competition for qualified employees and the need to pay higher wages to attract sufficient employees as well as general
economic conditions.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our ability to generate interest income could be adversely affected by the rate of return on our investments and the amount we are able to invest.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest expense could be adversely affected by our need for additional borrowings on our credit facilities and an increase in interest rates.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | Pre-opening expenses could increase due to additional restaurant openings, acceleration or delays in new restaurant openings or increased expenses in opening new restaurants.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The actual federal and state income taxes paid could be higher or lower than projected based upon the amount of pre-tax income, changes in income taxes, or other conditions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our ability to generate cash from operating activities could be adversely affected by increases in expenses as well as decreases in our average check and guest counts.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our actual cash investment for building each restaurant based upon our prototype designs could be higher or lower based upon the success of locating suitable sites, the restaurant
location and construction costs.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The covenants and restrictions under our current line of credit and term loan facility could have a significant impact on us based upon our ability to meet and maintain the
covenants, our capital requirements, our financial performance, our business plan and general economic conditions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The borrowing availability under our current credit facility could be higher or lower due to increases or decreases in our financial performance, ability to maintain debt covenants,
and other debt-related issues.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our capital requirements through fiscal 2004 could be higher or lower due to increases or decreases in the amount of new restaurants we build or acquire and general economic
conditions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Additional factors that could cause actual results to differ include: risks associated with terrorism and our countries war on terrorism, risks associated with actual or alleged
food-born illness, risks associated with future growth; inability to achieve and manage planned expansion; fluctuations in operating results; the need for additional capital; risks associated with discretionary consumer spending; inability to
compete with larger, more established competitors; potential labor shortages; our dependence on governmental licenses; weather and natural disasters; the impact of road construction near our restaurant in Lenexa, Kansas, on that restaurants
sales and cash flows; and legal actions arising in the normal course of business, including complaints or litigation from guests.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our restaurants feature Southern Italian cuisine served both in individual and family-style portions. Our continued success depends, in part, upon the
popularity of this type of Italian cuisine and this style of informal dining. Shifts in consumer preferences away from our cuisine or dining style could materially adversely affect our future profitability. Also, our success depends to a significant
extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Adverse changes in these factors could reduce guest traffic or impose practical limits on
pricing, either of which could materially adversely affect our business, financial condition, operating results or cash flows.



Certain of these risk factors are more fully discussed in our Annual Report on Form 10-K for the period ended December 29, 2002. We caution you, however,
that the list of factors above may not be exhaustive and that those or other factors, many of which are outside of our control, could have a material adverse effect on us and our results of operations. All forward-looking statements attributable to
persons acting on our behalf or us are expressly qualified in their entirety by the cautionary statements set forth here. We assume no obligation to publicly release



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the results of any revision or updates to these forward-looking statements to reflect future events or unanticipated occurrences.



|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk
|------- |  | ----------------------------------------------------------



We are exposed to market risk from changes in interest rates on borrowings under our revolving line of credit and term debt facility that bears interest
at the lower of the lending banks reference rate plus 0.75% to 2.25% or Eurodollar rate plus 2.25% to 3.75%. At September 28, 2003, we had $41.5 million in debt borrowings under our credit facility. Thus, a 1% change in interest rates would
cause annual interest expense to increase by $415,000.



We have
no derivative financial instruments or derivative commodity instruments in our cash and cash equivalents and marketable securities. We invest our cash and cash equivalents and marketable securities in investment grade, highly liquid investments,
consisting of money market instruments, bank certificates of deposit, overnight investments in commercial paper, and short term government and corporate bonds.



Many of the food products purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather,
production problems, delivery difficulties and other factors that are outside our control. To control this risk in part, we have fixed price purchase commitments with terms of one year or less for food and supplies from vendors who supply our
national food distributor. In addition, we believe that substantially all of our food and supplies are available from several sources, which helps to control food commodity risks. We believe we have the ability to increase menu prices, or vary the
menu items offered, if needed in response to a food product price increases. To compensate for a hypothetical price increase of 10% for food and supplies, we would need to increase menu prices by an average of 2.5%, which is consistent with our
average price increase of approximately 2% in fiscal 2003 and 1% in each of fiscal 2002 and fiscal 2001. Accordingly, we believe that a hypothetical 10% increase in food product costs would not have a material effect on our operating results.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, the
principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. There was no change in our internal control over financial reporting during our most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



PART II. OTHER INFORMATION



|Item 1. |  | Legal Proceedings
|------- |  | -----------------



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



|Item 2. |  | Changes in Securities and Use of Proceeds
|------- |  | -----------------------------------------



None



|Item 3. |  | Defaults upon Senior Securities
|------- |  | -------------------------------



None



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



None



|Item 5. |  | Other Information
|------- |  | -----------------



None



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



|(a) | Exhibits
|--- | --------



|Exhibit No. |  | Description                                                                                                                                                                                                                                            |  | Method of Filing         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------
|            |  |                                                                                                                                                                                                                                                       
|3.1         |  | Amended and Restated Articles of Incorporation of the Registrant(1)                                                                                                                                                                                    |  | Incorporated By Reference
|            |  |                                                                                                                                                                                                                                                       
|3.2         |  | Amended and Restated Bylaws of the Registrant(2)                                                                                                                                                                                                       |  | Incorporated By Reference
|            |  |                                                                                                                                                                                                                                                       
|4.1         |  | Specimen of Common Stock Certificate(3)                                                                                                                                                                                                                |  | Incorporated By Reference
|            |  |                                                                                                                                                                                                                                                       
|10.1        |  | First amendment to the Revolving Credit and Term Loan Agreement dated as of November 4, 2003 by and among the Registrant, the Guarantors named therein, Fleet National Bank, as
Administrative Agent for the lenders, and other lenders named therein. |  | Filed Electronically     
|            |  |                                                                                                                                                                                                                                                       
|31.1        |  | Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                 |  | Filed Electronically     
|            |  |                                                                                                                                                                                                                                                       
|31.2        |  | Certification by Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                  |  | Filed Electronically     
|            |  |                                                                                                                                                                                                                                                       
|32.1        |  | Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                          |  | Filed Electronically     

---



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

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

|(3) | Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Registrants Registration Statement on Form S-1 (Registration No. 333-72593), filed with the
Commission on March 24, 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Reports on Form 8-K
|--- | -------------------



We filed with the Securities and Exchange Commission a Current Report on Form 8-K on July 24, 2003, furnishing under Item 7. Financial Statements
and Exhibits and Item 12. Results of Operations and Financial Condition a copy of the press release dated July 24, 2003.



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##### Table of Contents

SIGNATURES



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



|                        |  |  |  | BUCA, Inc. (Registrant)
|----------------------- |  |  |  | -----------------------
|                        |  |  | 
|Date: November 12, 2003 |  |  |  | by:                    
|                        |  |  |  |                        
|                        |  |  |  |                        



|                        |  |  | 
|----------------------- |  |  | 
|Date: November 12, 2003 |  |  | 
|                        |  |  | 
|                        |  |  | 



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