10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

For the Quarterly Period Ended April 4, 2007

Commission File Number  333-62775

BERTUCCI’S CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	06-1311266
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
155 Otis Street, Northborough, Massachusetts	01532-2414
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:(508) 351-2500

Indicate by check mark 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 the filing requirements for the past 90 days.

Yes   x     No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o Accelerated filer  o Non-accelerated filer  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes  x    No  o

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

Yes  o    No  x

3,008,317 shares of the registrant’s Common Stock were outstanding on May 18, 2007.

BERTUCCI’S CORPORATION
FORM 10-Q
TABLE OF CONTENTS

PART I:	FINANCIAL INFORMATION
Item 1.	Financial Statements:
1)	Condensed Consolidated Balance Sheets as of April 4, 2007 (Unaudited) and January 3, 2007 (Unaudited)
2)	Condensed Consolidated Statements of Operations for the 13 Weeks Ended April 4, 2007 (Unaudited) and March 29, 2006 (Unaudited)
3)	Condensed Consolidated Statements of Cash Flow for the 13 Weeks Ended April 4, 2007 (Unaudited) and March 29, 2006 (Unaudited)
4)	Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosure About Market Risk
Item 4.	Controls and Procedures
PART II:	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits
SIGNATURES
EXHIBITS

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BERTUCCI’S CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
(Unaudited)

	April 4, 2007			January 3, 2007
ASSETS
Current Assets:
Cash and cash equivalents	$	19,934		$	28,446
Restricted cash	2,151			2,185
Accounts receivable	1,184			1,143
Inventories	1,723			1,698
Prepaid expenses and other current assets	3,116			2,618
Total current assets	28,108			36,090
Property and Equipment, at cost:
Land	259			259
Buildings	697			697
Capital leases - land and buildings	5,764			5,764
Leasehold improvements	79,378			77,554
Furniture and equipment	54,169			52,000
	140,267			136,274
Less - accumulated depreciation and amortization	(82,364		)	(79,033		)
	57,903			57,241
Construction work in process	224			999
Net property and equipment	58,127			58,240
Goodwill	26,127			26,127
Deferred finance costs, net	1,295			1,469
Liquor licenses, net	2,287			2,301
Other assets	1,195			970
TOTAL ASSETS	$	117,139		$	125,197
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Promissory notes - current portion	$	46		$	43
Capital lease obligations - current portion	137			126
Accounts payable	10,923			12,033
Accrued expenses	15,583			22,078
Total current liabilities	26,689			34,280
Promissory notes, net of current portion	4,333			4,356
Capital lease obligations, net of current portion	5,834			5,871
Senior Notes	85,310			85,310
Deferred gain on sale leaseback transaction	1,755			1,782
Other long-term liabilities	8,194			8,399
Total liabilities	132,115			139,998
Commitments and Contingencies
Stockholders’ Deficit:
Common stock, $.01 par value
Authorized - 8,000,000 shares
Issued - 3,767,995 shares; Outstanding - 3,008,317 shares	38			38
Less treasury shares - 759,678 at cost	(8,603		)	(8,603		)
Additional paid-in capital	29,805			29,781
Accumulated deficit	(36,216		)	(36,017		)
Total stockholders’ deficit	(14,976		)	(14,801		)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	117,139		$	125,197

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

1

BERTUCCI’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Thirteen weeks ended
	April 4, 2007			March 29, 2006
Net sales	$	60,189		$	52,684
Cost of sales and expenses:
Cost of sales	13,902			11,942
Operating expenses	36,701			31,305
General and administrative expenses	3,700			3,553
Depreciation, amortization, deferred rent and pre-opening expenses	3,426			2,721
Closed restaurant charge	127			—
Asset impairment charge	55			—
Total cost of sales and expenses	57,911			49,521
Income from operations	2,278			3,163
Interest expense, net	(2,477		)	(2,500		)
(Loss) income before income tax provision	(199		)	663
Income tax provision	—			—
Net (loss) income	$	(199	)	$	663
Basic net (loss) income per share	$	(0.07	)	$	0.22
Diluted net (loss) income per share	$	(0.07	)	$	0.22
Weighted average shares outstanding:
Basic	3,008,317			3,012,982
Diluted	3,008,317			3,034,435

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

2

BERTUCCI’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)
(Unaudited)

	Thirteen Weeks Ended
	April 4, 2007			March 29, 2006
Cash flows from operating activities
Net (loss) income	$	(199	)	$	663
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation, amortization and deferred rent	3,374			2,894
Closed restaurant charge	127			—
Asset impairment charge	55			—
Stock compensation expense	24			52
Changes in operating assets and liabilities
Inventories	(25		)	79
Prepaid expenses, receivables and other	(539		)	(415		)
Other accrued expenses	(6,709		)	(4,549		)
Accounts payable	(1,110		)	(1,180		)
Other operating assets and liabilities	(225		)	(109		)
Total adjustments	(5,028		)	(3,228		)
Net cash used in operating activities	(5,227		)	(2,565		)
Cash flows from investing activities
Additions to property and equipment	(3,273		)	(1,054		)
Decrease in restricted cash	34			12
Net cash used in investing activities	(3,239		)	(1,042		)
Cash flows from financing activities
Payment on promissory note	(20		)	(20		)
Principal payments under capital lease obligations	(26		)	(15		)
Net cash used in financing activities	(46		)	(35		)
Net decrease in cash and cash equivalents	(8,512		)	(3,642		)
Cash and cash equivalents, beginning of year	28,446			21,382
Cash and cash equivalents, end of period	$	19,934		$	17,740
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	4,817		$	4,818
Cash paid for income taxes	$	409		$	—

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

3

BERTUCCI’S CORPORATION
Notes To Condensed Consolidated Financial Statements

April 4, 2007
(Unaudited)

1. Basis of Presentation

The unaudited condensed consolidated financial statements (the “Unaudited Financial Statements”) presented herein have been prepared by Bertucci’s Corporation and include all of its subsidiaries (collectively, the “Company”) after elimination of inter-company accounts and transactions, without audit, and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods presented. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is suggested the Unaudited Financial Statements be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2007, which was filed with the SEC on April 3, 2007 (the “2006 Annual Report”). The operating results for the thirteen weeks ended April 4, 2007 may not be indicative of the results expected for any succeeding interim period or for the entire year ending January 2, 2008.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions affecting 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.

2. Restaurant Closing Reserves

Restaurant closing reserves were established as part of the acquisition of Bertucci’s, Inc. in July 1998. These reserves were related to estimated future lease commitments and exit costs to close 18 Bertucci’s locations.  It was originally expected the Company would be able to exit these locations, sublease the locations or otherwise be released from the related leases. However, due to market conditions, the Company has been unable to sublease, exit, or otherwise be released from certain of these leases.

In the first quarter of fiscal 2007, the Company closed three restaurants not meeting sales and profit expectations.  Net Sales from these locations totaled $3.5 million in fiscal 2006. One location was closed in conjunction with a lease termination agreement while the other two locations have continuing lease obligations totaling $2.4 million through 2013. The Company anticipates being able to sublease the properties or negotiate lease termination agreements, but estimates it will incur rental costs net of sublease income, as well as legal, brokerage and other fees of approximately $646,000.  These amounts were offset by the deferred rent liability previously recorded for the three locations of $519,000 and a fee received in conjunction with the lease termination agreement.  The resulting charge of $127,000 was recorded in the first quarter of 2007.

The closed restaurant reserve was calculated net of sublease income at eleven locations partially or fully subleased as of April 4, 2007. The Company remains primarily liable for the remaining lease obligations should the sublessee default. Total sublease income excluded from the reserve is approximately $6.9 million for subleases expiring at various dates through 2017.

4

Activity within the reserve was as follows (in thousands):

	Thirteen weeks ended
	April 4, 2007			March 29, 2006
Balance, beginning of the year	$	286		$	372
Amounts added to reserve	646			—
Payments charged and receipts credited against reserve	(27		)	(20		)
Balance, end of period	$	905		$	352
Current portion (included in accrued expenses)	$	646		$	266
Noncurrent portion	259			86
	$	905		$	352

3. Net (Loss) Income per Share

Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding for the reporting period. Diluted net (loss) income per share reflects the potential dilution that could occur if options to issue common stock were exercised or converted into common stock. Dilutive shares added to the weighted average number of common shares outstanding for the thirteen weeks ended March 29, 2006 for this calculation were 21,453. Dilutive shares were determined using the treasury stock method for in-the-money stock options as of the dates presented. For the thirteen weeks ended April 4, 2007 and March 29, 2006, options representing 969,323 and 874,037 shares of common stock, respectively, were excluded from the calculation of diluted net (loss) income per share because of their anti-dilutive effect.

4. Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events included in the financial statements or tax returns. Additionally, the Company is required to consider both negative and positive evidence in determining if a valuation allowance is required on a quarterly basis. Management previously recorded a full valuation allowance for its deferred tax assets.

The Company did not record a tax benefit for the future benefits created in the thirteen weeks ended April 4, 2007 as the Company continues to maintain a valuation allowance for its deferred tax assets due to its history of losses. Management continues to evaluate the need for a valuation allowance on an on-going basis.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes”. FIN 48 clarifies the accounting for uncertainty in tax positions and requires the impact of tax positions be recorded in the financial statements if it is more likely than not such position will be sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 did not have a material effect on the Company’s consolidated financial position or results of operations.

The Company files numerous consolidated and separate income tax returns in the United States Federal jurisdiction and in many state jurisdictions. With few exceptions, the Company is no longer subject to US Federal and state and local income tax examinations for years before 2003.

5. Stock-Based Compensation

The Company grants stock options under its Amended and Restated 1997 Equity Incentive Plan (“Equity Incentive Plan”), which provides for the issuance of nonqualified stock options and allows the Company to provide equity incentives to its key employees and directors. In September 2005 the Company’s Board of Directors approved an amendment to the Equity Incentive Plan which increased the number of shares of Common Stock available for issuance under the Equity Incentive Plan from 750,000 to 1,100,000. The Board of Directors administers the Equity Incentive Plan and may modify or amend it in any respect.

5

Stock options are: (1) issued at or above the fair value of the underlying stock on the date of the grant; (2) are exercisable either (a) cumulatively at the rate of 25% on or after each of the second, third, fourth and fifth anniversaries of the date of grant or (b) only upon the fifth anniversary of the date of grant; and (c) typically expire 90 days following the tenth anniversary of the date of the grant. In addition, such options generally provide unvested options vest immediately and in full upon a transaction constituting a “change of control” of the Company.

The grant date fair value is calculated using the Black-Scholes option valuation model. The fair value of options granted during the thirteen weeks ended April 4, 2007 and March 29, 2006, were calculated using the following estimated weighted average assumptions:

	Thirteen weeks ended
	April 4, 2007			March 29, 2006
Options granted	1,000			29,000
Weighted-average exercise price	$	23.84		$	17.51
Weighted-average grant date fair value	$	4.16		$	3.08
Assumptions:
Risk free interest rate	4.65		%	4.40		%
Expected life (in years)	5			5
Expected volatility	20		%	20		%
Expected dividend yield	0		%	0		%

Expected volatility — The Company is responsible for estimating volatility and has used 0% volatility historically to estimate the grant-date fair value of stock options as its common stock is not publicly traded. Effective December 29, 2005, management considered the guidance in SFAS No. 123R and now estimates expected volatility at 20%.

Expected life — The Company uses the full vesting period to estimate the expected life assumption for the Black-Scholes grant-date valuation. The Company believes this is currently the best estimate of the expected life of a new option.

Risk-free interest rate — The market yield on U.S. Treasury securities at a 5-year constant maturity, quoted on investment basis, is used as the risk-free interest rate.

Expected dividend yield — The Company has not paid any dividends in the last five years and currently intends to retain any earnings to finance future growth and, therefore, does not anticipate paying any cash dividends on its common stock in the foreseeable future.

A summary of the activity under the Company’s Equity Incentive Plan as of April 4, 2007 and changes during the thirteen week period then ended, is presented below:

	Options		Weighted-Average Remaining Contractual Life in Years	Weighted Average Exercise Price		Aggregate Intrinsic Value (thousands)
Outstanding at January 3, 2007	969,323			$	16.82
Granted	1,000			$	23.84
Cancelled	(1,000	)		$	17.51
Outstanding at April 4, 2007	969,323		6.8	$	16.83	$	6,838
Fully vested and exercisable at April 4, 2007	297,948		3.1	$	15.24	$	2,692

As of April 4, 2007 there was $385,000 of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 2.1 years.

6

6.  Asset Impairment Charge

The Company’s long-lived assets consist primarily of goodwill, other intangible assets, and leasehold improvements related to its restaurant operations. SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, requires management to test the recoverability of long-lived assets (excluding goodwill) by comparing estimated undiscounted future operating cash flows expected to be generated from these assets to the carrying amounts of the assets whenever events or changes in circumstances indicate the carrying value may not be recoverable.  If cash flows are not sufficient to recover the carrying amount of the assets, impairment has occurred and the assets are written down to fair value.  Significant estimates and assumptions regarding future sales, cost trends, productivity and market maturity are required to be made by management in order to test for impairment under this standard.

During the first quarter of 2007, the Company assessed all restaurants for recoverability and determined an impairment existed at two previously impaired restaurant locations due to $55,000 of maintenance capital expended at these locations. The Company recorded an impairment charge in that amount to reflect the write down of the affected assets to fair value.

7.  Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. The Company has not yet adopted this pronouncement and is currently evaluating the expected impact the adoption of SFAS No. 157 will have on its consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. If the fair value option is elected, unrealized gains and losses will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company has not yet adopted this pronouncement and is currently evaluating the impact the adoption of SFAS No. 159 may have on its consolidated financial position and results of operations.

8.  Utility Purchase Commitments

The Company has executed contracts to provide electricity to thirty-nine restaurants at a fixed rate per kilowatt through 2009. In addition, the Company executed contracts to provide natural gas to eighty-two restaurants at a fixed price per therm through May 2007. The Company believes certain of these contracts qualify for the “normal purchases” exception as defined by SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Therefore, the applicable contracts are not required to be marked to market through the Condensed Consolidated Statement of Operations. Certain contracts do not qualify for the “normal purchase” exception, and are not considered hedges.  These contracts have been recorded on the balance sheet at fair value with adjustments to fair value being recognized in earnings when they occur. The Company has recorded an unrealized loss of $20,000 on the balance sheet as of April 4, 2007. The remaining purchase commitments below represent an estimate of the minimum usage per year multiplied by the contracted rates (dollars in thousands):

Year
2007	$	1,101
2008	1,468
2009	1,345
	$	3,914

7

9.  Acquisition

In September, 2006, the Company executed a Stock Purchase Agreement with BUCA, Inc. (“BUCA”) and BUCA Restaurants 3, Inc. (“BUCA 3”) the entity which owns and operates Vinny T’s of Boston restaurants (the “Vinny T’s Acquisition”). BUCA 3 has since been renamed Vinny T’s Restaurant Corp. (“Vinny T’s Corp.”). As a result of the Vinny T’s Acquisition, Vinny T’s Corp. is now a wholly-owned subsidiary of the Company and continues to own and operate 11 Vinny T’s of Boston restaurants in four states. The Company believes the acquisition of the 11 restaurants will increase revenues and income from operations while providing an acceptable return on the investment. The Company paid BUCA an aggregate purchase price of $6.6 million, of which $3.0 million was paid in cash and $3.6 million was paid through the issuance of a Promissory Note (the “Promissory Note”). The Promissory Note contains no covenants and bears interest at the rate of 9% per annum. Interest is payable on September 25, 2007 and July 15, 2008.

The Vinny T’s Acquisition was accounted for by the Company under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Accordingly, the results of the Vinny T’s of Boston operations have been included in the Company’s consolidated statements of operations from September 28, 2006.

The cash paid at closing was funded by available cash on hand. The purchase price has been allocated based on the Company’s estimate of the fair value of the assets acquired and liabilities assumed at the date of acquisition in the table below. Included in the purchase price are direct acquisition costs of $645,000. The preliminary purchase price allocation for assets acquired and liabilities assumed is subject to adjustment upon finalization of the valuation of property and equipment by the Company (dollars in thousands).

Assets acquired:
Receivables	$	283
Inventory	278
Prepaid Expenses	144
Property	9,186
Other noncurrent assets	65
Less liabilities assumed:
Accounts payable	(995		)
Accrued expenses	(1,657		)
Net purchase price	$	7,304

The Company has also acquired approximately $5.8 million of future income tax benefits statutorily available to the Company through the Vinny T’s Acquisition. Because of the history of tax losses of the Company and BUCA 3, the Company concluded a valuation allowance for the amount of the net future tax benefits was appropriate.

The following unaudited pro forma financial information presents the results of operations for the thirteen weeks ended March 29, 2006, as though the Vinny T’s Acquisition occurred at the beginning of the period presented. The pro forma financial information is not intended to be indicative of the operating results that actually would have occurred if the Vinny T’s Acquisition had been consummated at the beginning of the period presented, nor is the information intended to be indicative of future operating results. The pro forma financial information reflects adjustments for (1) additional general and administrative expenses for direct field supervision; (2) additional depreciation to more closely reflect allocated values of the Vinny T’s Acquisition; and (3) additional interest expense on the Promissory Note (dollars in thousands, except per share amounts).

	2006
Net sales	$	60,215
Net loss	$	(430	)
Basic and diluted loss per share	$	(.14	)

8

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

Forward-Looking Statements

All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, without limitation, statements set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding Bertucci’s future financial position, business strategy, budgets, projected costs, plans, and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our or the foodservice industry’s actual results, performance or achievements to be materially different from any expected results, performance or achievements. Forward-looking statements include, but are not limited to, statements regarding:

·Our highly competitive business environment;

·Exposure to food prices;

·Risks associated with the foodservice industry such as changes in consumer tastes and adverse publicity resulting from food quality, illness, injury or other health concerns;

·Our ability to retain and attract new employees;

·Government regulations;

·Our high geographic concentration in the Northeast and Mid-Atlantic states;

·The attendant weather patterns in locations in which we operate;

·The number of expected restaurant openings, including the appropriate conditions needed to meet new opening targets;

·Our ability to integrate acquired businesses into the Company;

·Our ability to service our debt and other obligations; and

·Matters relating to litigation.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate” or “believe” or the negative thereof or variations thereon or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from any expected results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements will prove to be correct, we can give no assurance such expectations will prove to be correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Factors causing or contributing to such differences include those discussed in the risk factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended January 3, 2007 which was filed with the SEC on April 3, 2007 (the “2006 Annual Report”), as well as those discussed elsewhere herein.

Unless the context indicates otherwise, references herein to “we”, “us”, “our,” “Bertucci’s,” “Vinny T’s of Boston” or the “Company” refer to Bertucci’s Corporation, its predecessors and its consolidated subsidiaries.

The following discussion should be read in conjunction with our condensed consolidated financial statements, and the notes thereto included herein, as well as our 2006 Annual Report.

9

General

We own and operate two chains of full-service casual dining, Italian-style restaurants under the names (1) Bertucci’s Brick Oven Pizzeria® and Bertucci’s Brick Oven Ristorante® and (2) Vinny T’s of Boston®. As of April 4, 2007, we operated 90 Bertucci’s restaurants and 11 Vinny T’s of Boston restaurants located primarily in the northeastern United States.

In July 1998, we completed our acquisition of Bertucci’s Restaurant Corp.’s parent entity, Bertucci’s, Inc., for a purchase price, net of cash received, of approximately $89.4 million (the “Bertucci’s Acquisition”). We financed the Bertucci’s Acquisition primarily through the issuance of $100 million of 10¾% senior notes due 2008 (the “Senior Notes”). The Senior Notes are still outstanding as to $85.3 million in principal.

In September, 2006, we executed a Stock Purchase Agreement with BUCA, Inc. and BUCA Restaurants 3, Inc. (“BUCA 3”), the entity which owns and operates Vinny T’s of Boston restaurants (the “Vinny T’s Acquisition”). BUCA 3 has since been renamed Vinny T’s Restaurant Corp. (“Vinny T’s Corp.”). As a result of the Vinny T’s Acquisition, Vinny T’s Corp. is now a wholly-owned subsidiary of ours and continues to own and operate 11 Vinny T’s of Boston restaurants in four states. We believe the acquisition of the 11 restaurants will increase revenues and income from operations while providing an acceptable return on our investment. We paid BUCA an aggregate purchase price of $6.6 million, of which $3.0 million was paid in cash and $3.6 million was paid through the issuance of a Promissory Note (the “Promissory Note”). The Promissory Note contains no covenants and bears interest at the rate of 9% per annum. Interest is payable on September 25, 2007 and July 15, 2008.

Results of Operations

The following table sets forth the percentage relationship to net sales, unless otherwise indicated, of certain items included in our condensed consolidated statements of operations, as well as certain operating data, for the periods indicated:

STATEMENTS OF OPERATIONS DATA
(Percentage of Net Sales)

	Thirteen weeks ended
	April 4, 2007		March 29, 2006
Net sales	100.0	%	100.0	%
Cost of sales and expenses:
Cost of sales	23.1	%	22.7	%
Operating expenses	61.1	%	59.4	%
General and administrative expenses	6.1	%	6.7	%
Depreciation, amortization, deferred rent, and pre-opening expenses	5.7	%	5.2	%
Closed restaurant charge	0.2	%	0.0	%
Asset impairment charge	0.1	%	0.0	%
Total cost of sales and expenses	96.3	%	94.0	%
Income from operations	3.7	%	6.0	%
Interest expense, net	(4.1	%)	(4.7	%)
(Loss) income before income tax provision	(0.4	%)	1.3	%
Income tax provision	0.0	%	0.0	%
Net (loss) income	(0.4	%)	1.3	%
Restaurant Operating Data:
Increase in comparable restaurant sales (a)	1.8	%	5.2	%
Number of restaurants:
Restaurants open, beginning of period	103		92
Restaurant opened	1		—
Restaurants closed	(3	)	—
Total restaurants open, end of period	101		92

(a)We define comparable restaurant sales as net sales from restaurants open and owned for at least one full fiscal year at the beginning of the fiscal year.

10

Thirteen Weeks Ended April 4, 2007 Compared to Thirteen Weeks Ended March 29, 2006

Net Sales. Total net sales increased by $7.5 million, or 14.2% to $60.2 million during the first quarter of 2007 from $52.7 million during the first quarter of 2006. The increase was primarily due to $6.4 million in sales generated by the 11 Vinny T’s of Boston restaurants acquired in the Vinny T’s Acquisition, a 1.8% increase in the 89 comparable Bertucci’s restaurants ($922,000), seven incremental restaurant weeks from one restaurant opened in February 2007 ($574,000), partially offset by 11 less restaurant weeks due to three restaurant closings in the first quarter of 2007 ($352,000). The Bertucci’s comparable dine-in guest counts decreased 1.6% for the first quarter of 2007 as compared to the first quarter of 2006. Bertucci’s comparable dine-in sales increased 2.0% and comparable carry-out and delivery sales increased 1.1% for the quarter as compared to the first quarter of 2006. We believe the Bertucci’s comparable restaurant sales increases have been a result of increased guest spending as a result of a shift in menu mix to dinner entrees versus pizza, and an approximate 1.4% menu price increase in January 2007. For the 89 comparable Bertucci’s restaurants, average weekly sales were approximately $45,500 for the first quarter of 2007 compared to approximately $44,700 per week for the first quarter of 2006. Average weekly sales for the Vinny T’s of Boston restaurants were approximately $44,500 for the first quarter of 2007.

Cost of Sales.  Cost of sales increased by $2.0 million or 16.4% to $13.9 million during the first quarter of 2007 from $11.9 million during the first quarter of 2006. Expressed as a percentage of net sales, overall cost of sales increased to 23.1% during the first quarter of 2007 from 22.7% during the first quarter of 2006. The percentage incease can be attributed to the addition of the Vinny T’s restaurants and a menu mix shift away from pizzas to dinner entrees, partially offset by the benefit from a Bertucci’s menu price increase, and better food cost controls. Cost of sales in Vinny T’s of Boston restaurants was 26.3% of sales for the first quarter of fiscal 2007 as compared to 22.6% for the Bertucci’s restaurants.

Operating Expenses. Operating expenses increased by approximately $5.4 million or 17.3%, to $36.7 million during the first quarter of 2007 from $31.3 million during the first quarter of 2006. Expressed as a percentage of net sales, operating expenses increased to 61.1% in the first quarter of 2007 from 59.4% during the first quarter of 2006. The dollar increase can be attributed to (a) the Vinny T’s Acqusition ($4.7 million; the current run rate for operating expenses at the Vinny T’s of Boston restaurants is 73.2%.), (b) increased payroll and related benefits ($480,000), and (c) increased advertising ($279,000).

General and Administrative Expenses. General and administrative expenses increased approximately $100,000 to $3.7 million during the first quarter of 2007 compared to $3.6 million in the first quarter of 2006. Expressed as a percentage of net sales, general and administrative expenses decreased to 6.1% in the first quarter of 2007 from 6.7% in the first quarter of 2006, reflecting the leveraging of the increased sales due to the Vinny T’s Acquisition.

Depreciation, Amortization, Deferred Rent and Pre-opening Expenses. Depreciation, amortization, deferred rent and pre-opening expenses increased by approximately $700,000 to $3.4 million during the first quarter of 2007 from $2.7 million during the first quarter of 2006. The dollar increase is due to the Vinny T Acquisition ($400,000) and the addition of one new restaurant in the first quarter of 2007. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-opening expenses increased to 5.7% in the first quarter of 2007 from 5.2% during the first quarter of 2006.

Closed Restaurants Charge:  As discussed in Note 2 of Notes to Condensed Consolidated Financial Statements, the Company recorded a charge of approximately $127,000 to provide for net lease exit obligations at three restaurants closed during the quarter.

Asset Impairment Charge.  As discussed in Note 6 of Notes to Condensed Consolidated Financial Statements, we assessed all restaurants for recoverability as of the end of the first quarter of 2007. As a result of our evaluation, we determined an impairment of fixed assets existed at two restaurant locations. We estimated the fair value of these assets based on the net present value of the expected cash flows from the restaurants and determined the carrying amount of the assets exceeded their fair value by approximately $55,000. We recorded an impairment charge in that amount to reflect the write down of the affected assets to fair value.

Interest Expense, net.  Net interest expense was essentially flat at $2.5 million during the first quarters of both 2007 and 2006. Increased overnight investment funds and higher interest rates available thereon have resulted in increased interest income ($275,000 in the first quarter of 2007 versus $198,000 in the first quarter of 2006). This increase in interest income was offset by an increase in interest expense due to the Vinny T’s Acquisition Promissory Note.

11

Income Taxes. We have an historical trend of recurring pre-tax losses. We previously recorded a full valuation allowance for our net deferred tax assets and have also provided a full valuation allowance relating to the tax benefits generated since 2003 (primarily from operating losses). We did not record a tax benefit for the future benefits created in the thirteen weeks ended April 4, 2007 as we continue to maintain a valuation allowance for the deferred tax assets due to our history of losses.

Liquidity and Capital Resources

We have historically met our capital expenditures and working capital needs through a combination of operating cash flow and bank borrowings, the sale of the Senior Notes, the sale of Common Stock, and, in fiscal 2003, two sale leaseback transactions. We expect our future capital and working capital needs will be funded from net cash flows provided by operating cash flow and cash on hand.

Net cash flows used in operating activities were $5.2 million for the first quarter of 2007, approximately $2.6 million more than the first quarter of 2006, primarily due to reduced income from operations and net working capital needs in the Vinny T’s of Boston restaurants. As of April 4, 2007, we had cash and cash equivalents of $19.9 million.

Our capital expenditures were $3.3 million during the first quarter of 2007 as compared to $1.0 million for the comparable prior year period. The capital expenditures were primarily comprised of remodeling and maintenance capital as well as capital related to the opening of a Bertucci’s restaurant in the first quarter of 2007. We anticipate capital expenditures for the remainder of 2007 will be approximately $14.7 million, primarily for four new Bertucci’s restaurants.

As of April 4, 2007, we had $95.9 million in consolidated indebtedness which consisted of $85.3 million pursuant to the Senior Notes, $6.0 million of capital lease obligations, and $4.6 million of promissory notes. The Senior Notes contain no financial covenants and we are in compliance with all non-financial covenants as of May 18, 2007. The Senior Notes bear interest at the rate of 10¾%, payable semi-annually on January 15 and July 15 and are due in full on July 15, 2008.

We may, at our option, redeem any or all of the Senior Notes at face value. Additionally, under certain circumstances, including a change of control, the holders of the Senior Notes may require us to repurchase the Senior Notes, at a redemption price of 101% of the unpaid principal amount thereof, plus accrued and unpaid interest. In the event of certain asset dispositions resulting in excess proceeds equal to or greater than $5.0 million, the holders of the Senior Notes have the right to compel us to purchase on a pro rata basis Senior Notes up to a maximum principal amount equal to such excess proceeds at a purchase price equal to 100% of the unpaid principal amount thereof, plus accrued and unpaid interest.

The Promissory Note issued in connection with the Vinny T’s Acquisition is due in full on July 15, 2008 or earlier upon the occurrence of certain other events, including if we have a change in control (as defined in the Promissory Note), the consummation of an initial public offering by us or the redemption, repurchase, refinancing or payment of our Senior Notes.

We are operating without a line of credit and are funding all of our capital expenditures, debt reductions and operating needs out of cash flows from operations and cash on hand.

We have established a $4.0 million (maximum) letter of credit (expiring in December 2007) as collateral with third party administrators for self insurance reserves. As of April 4, 2007, this facility was collateralized with $2.2 million of cash restricted from general use. Letters of Credit totaling $2.2 million were outstanding on April 4, 2007.

Our future operating performance and ability to service or refinance the Senior Notes will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. Significant liquidity demands will arise from our repayment obligation under our Senior Notes when they mature on July 15, 2008.

12

We executed additional future contractual obligations or recorded additions to reserves subsequent to January 3, 2007 as follows:

	Payments Due by Fiscal Year
	(Dollars in Thousands)
	Total		2007		2008-2009		2010-2011		After 2011
Contractual Obligations:
Operating leases	$	8,153	$	115	$	2,404	$	2,686	$	2,948
Capital expenditures	4,100		4,100		—		—		—
Closed restaurants reserve, net of sublease income	646		439		76		76		55
Total Contractual Obligations	$	12,899	$	4,654	$	2,480	$	2,762	$	3,003

Impact of Inflation

Inflationary factors such as increases in labor, food or other operating costs could adversely affect our operations. We do not believe inflation has had a material impact on our financial position or results of operations for the periods discussed above. We believe through the proper leveraging of purchasing size, labor scheduling, and restaurant development, inflation will not have a material adverse effect on our operations during the foreseeable future. There can be no assurance, however, inflation will not materially adversely affect us.

Seasonality

Our quarterly results of operations have fluctuated and are expected to continue to fluctuate depending on a variety of factors, including the timing of new restaurant openings and related pre-opening and other startup expenses, net sales contributed by new restaurants, increases or decreases in comparable restaurant sales, competition and overall economic conditions. Our business is also subject to seasonal influences of consumer spending, dining out patterns and weather. As is the case with many restaurant companies, we typically experience lower net sales and net income from operations during the first and fourth quarters. Because of these fluctuations, the results of operations of any quarter are not necessarily indicative of the results that may be achieved for a full year or any future quarter.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, estimates are evaluated, including those related to the impairment of long-lived assets, income tax valuation allowances, self-insurance, closed restaurants reserves, and gift card breakage. Estimates are based on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a discussion of how these and other factors may affect our business, see the “Forward-Looking Statements” and other factors included in the 2006 Annual Report and other filings with the SEC.

Our critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements. We believe our critical accounting policies relate to the impairment of long-lived assets, income tax valuation allowances, self-insurance, closed restaurants reserves, and gift cards. For a more detailed discussion of our critical accounting policies and estimates, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” contained in our 2006 Annual Report.

13

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

In order to limit any possible exposure to market risk from changes in the price of natural gas used in the operations of our restaurants, we have contracted for minimum purchase quantities at fixed prices in selected restaurants through May 2007. Based upon sensitivity analysis as of April 4, 2007, a 20% change in the price of natural gas would cause the fair value of these contracts to increase/decrease by less than $5,000. We do not have operations outside of the United States of America which expose us to foreign currency risk and substantially all of our outstanding debt has fixed interest rates.

Item 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.  We maintain disclosure controls and procedures designed to ensure information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and such information is accumulated and communicated to management, including our Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognized controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

During the first quarter of fiscal 2007, we performed an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our CEO and CFO concluded our disclosure controls and procedures were effective as of April 4, 2007.

Changes in Internal Control over Financial Reporting.  There were no significant changes to our internal control over financial reporting occurring during our last fiscal quarter materially affecting, or reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

On or about April 11, 2007, a purported class action lawsuit captioned Gerald D. Wells, Jr. v. Bertucci’s Corp., et al., Case No. 2:07-cv-01458, was filed against us in the United States District Court for the Eastern District of Pennsylvania (the “Lawsuit”). The complaint alleges willful violation of the federal Fair and Accurate Credit Transaction Act (“FACTA”) based upon certain of our retail stores’ alleged electronic printing of receipts that were not in compliance with the applicable information truncation provisions of FACTA. The complaint seeks statutory damages of not less than $100 and not more than $1,000 for each violation, as well as unspecified punitive damages, attorneys’ fees and equitable relief preventing us from further engaging in violations of FACTA. The complaint does not allege that any class member has suffered actual damages. Similar complaints have recently been filed against a number of other retailers. Notwithstanding the Lawsuit, we believe that we are currently in full compliance with FACTA’s information truncation requirements. We intend to vigorously defend against the claims asserted. However, the results of any litigation are inherently uncertain and we cannot assure that we will be able to successfully defend against such claims. We are currently unable to assess the extent of damages and/or other relief, if any, that could be awarded to the plaintiff class if it were to prevail.

Item 1A.   RISK FACTORS

None

14

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

None

Item 3.   DEFAULTS UPON SENIOR SECURITIES

None

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

None

Item 5.   OTHER INFORMATION

Under our Pay for Performance Plan for Executive Officers (the “PFP”), our Named Executive Officers are eligible to receive annual non-equity incentive cash bonuses. The amount of these bonuses, if any, are measured by: (1) our financial performance for the year in question (measured by a target that is closely related to EBITDA (the “EBITDA Target”)); and (2) a matrix of percentages (the “Percentage Matrix”) which determines what percentage of a Named Executive Officer’s base salary will be awarded as a cash bonus. Our Named Executive Officers (in addition to other members of management), recommend the yearly EBITDA Target to our Board of Directors which must approve such target. The Chairman of our Board of Directors, Benjamin R. Jacobson (the “Chairman”), and the Compensation Committee determine the Percentage Matrix for the applicable year.

On December 12, 2006, our Board of Directors, upon the recommendation of management, approved the PFP for fiscal 2007 and the Chairman and the Compensation Committee established the Percentage Matrix for the fiscal 2007 PFP. Under the fiscal 2007 PFP, our Named Executive Officers, Stephen V. Clark and David G. Lloyd, are eligible to receive cash awards ranging from 25% to 100% of their base salaries, depending on achievement of a minimum of 95% of the EBITDA Target to a maximum of 110% of the EBITDA Target. The awards under the fiscal 2007 PFP, if any, will be paid in 2008 once our fiscal 2007 results are finalized.

Item 6.   EXHIBITS

Exhibits

31.1	Certification of Stephen V. Clark pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*).
31.2	Certification of David G. Lloyd pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*).

(*) Included with this report.

15

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.

	BERTUCCI’S CORPORATION
	(Registrant)
Date: May 18, 2007	By:	/s/ Stephen V. Clark
		Chief Executive Officer and Director
Date: May 18, 2007	By:	/s/ David G. Lloyd
		President, Chief Financial Officer and Director

16

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Stephen V. Clark, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Bertucci’s Corporation;

2.Based on my knowledge, this 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 report;

3.Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted] for the Registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.[omitted]

c.evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 18, 2007	By:	/s/ Stephen V. Clark
		Stephen V. Clark
		Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, David G. Lloyd, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Bertucci’s Corporation;

2.Based on my knowledge, this 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 report;

3.Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted] for the Registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.[omitted]

c.evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: May 18, 2007	By:	/s/ David G. Lloyd
		David G. Lloyd
		President, Chief Financial Officer and Director