SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

ýx Quarterly Report ~~Voluntarily~~ Filed Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

For the Quarterly Period Ended ~~September~~ June 28, ~~2005~~2006

Commission File Number 333-62775

BERTUCCI’S CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		06-1311266
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
(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

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 o No ýx

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 ýx

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 ýx

3,~~012~~015,982 shares of the registrant’s Common Stock ~~were~~ were outstanding on ~~January 10~~August 11, 2006.

BERTUCCI’S CORPORATION FORM 10-Q TABLE OF CONTENTS

FORM 10-Q

PART I:	FINANCIAL INFORMATION

Item 1.	Financial Statements:

1)	Condensed Consolidated Balance Sheets as of June 28, 2006 (Unaudited) and December 28, 2005 (Unaudited)

2)	Condensed Consolidated Statements of Operations for the 13 and 26 Weeks Ended June 28, 2006 (Unaudited) and June 29, 2005 (Unaudited)

3)	Condensed Consolidated Statements of Cash Flow for the 26 Weeks Ended June 28, 2006 (Unaudited) and June 29, 2005 (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

TABLE OF CONTENTS

PART I:	FINANCIAL INFORMATION
Item 1.	Financial Statements:
1)	Condensed Consolidated Balance Sheets as of September 28, 2005 (Unaudited) and December 29, 2004 (Unaudited)
2)	Condensed Consolidated Statements of Operations For the 13 and 39 Weeks Ended September 28, 2005 (Unaudited) and September 29, 2004 (As Restated) (Unaudited)
3)	Condensed Consolidated Statements of Cash Flow for the 39 Weeks Ended September 28, 2005 (Unaudited) and September 29, 2004 (As Restated) (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 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)

	September 28,			December 29,
	June 28, 2006			December 28, 2005
	2005			2004
ASSETS
Current Assets:
Cash and cash equivalents	$	1323,~~771~~090		$	1221,~~291~~382
Restricted cash	2,~~180~~186			2,~~403~~187
Accounts receivable	~~696~~900			~~1,334~~771
Inventories	1,~~438~~493			1,~~388~~534
Prepaid expenses and other current assets	~~367~~578			~~534~~897
Total current assets	1828,~~452~~247			1726,~~950~~771
Property and Equipment, at cost:
Land	259			259
Buildings	697			697
Capital leases - land and buildings	5,764			5,764
Leasehold improvements	6869,~~524~~077			6668,~~632~~433
Furniture and equipment	4649,~~523~~230			4446,~~537~~787
	121,767			117,889
	125,027			121,940
Less - accumulated depreciation and amortization	(6573,~~746~~245		)	(5767,~~101~~509		)
	56,021			60,788
Net property and equipment	51,782			54,431
Construction work in process	—			1,567
Net property and equipment	56,021			62,355
Goodwill	26,127			26,127
Deferred finance costs, net	21,~~340~~817			2,~~862~~165
Liquor licenses, net	2,~~372~~330			2,~~414~~358
Other assets	~~639~~809			~~513~~693
TOTAL ASSETS	$	~~105~~111,~~951~~112		$	112,~~221~~545
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Promissory notes - current portion	$	4143		$	4042
Capital lease obligations - current portion	83117			74107
Accounts payable	68,~~887~~434			78,~~819~~603
Accrued expenses	1316,~~918~~881			1619,~~457~~129
Total current liabilities	2025,~~929~~475			2427,~~390~~881
Promissory notes, net of current portion	~~739~~717			~~781~~738
Capital lease obligations, net of current portion	65,~~028~~933			65,~~102~~982
Senior Notes	85,310			85,310
Deferred gain on sale leaseback transaction	1,~~920~~837			21,~~002~~892
Other long-term liabilities	87,~~478~~715			8,~~368~~045
Total liabilities	~~123~~126,~~404~~987			~~126~~129,~~953~~848
Commitments and Contingencies
Stockholders’ Deficit:
Common stock, $.01 par value
Authorized - 8,000,000 shares
Issued - 3,764,995 and 3,667,495 shares, respectively; Outstanding 3,012,982 and 2,915,482 shares, respectively	38			37
Issued - 3,767,995 and 3,764,995 shares , respectively;
Less treasury shares, 752,013 at cost	(8,480		)	(8,480		)
Outstanding - 3,015,982 and 3,012,982 shares, respectively	38			38
Additional paid-in capital	29,617			29,046
Less treasury shares - 752,013 at cost	(8,480		)	(8,480		)
Accumulated deficit	(38,628		)	(35,335		)
Additional paid-in capital	29,739			29,617
Total stockholders’ deficit	(17,453		)	(14,732		)
Accumulated deficit	(37,172		)	(38,478		)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	105,951		$	112,221
Total stockholders’ deficit	(15,875		)	(17,303		)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	111,112		$	112,545

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

BERTUCCI’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

	Thirteen weeks ended						~~Thirty~~Twenty-~~nine~~six weeks ended
	September 28,			September 29,			September 28,			September 29,
	June 28, 2006			June 29, 2005			June 28, 2006			June 29, 2005
	2005			2004			2005			2004
Net sales	$	55,031		$	52,580		$	107,715		$	102,532
				(As Restated - See Note 3)						(As Restated - See Note 3)
Net sales	$	49,654		$	49,260		$	152,185		$	150,440
Cost of sales and expenses:
Cost of sales	1112,~~316~~490			12,~~256~~322			3524,~~498~~432			3624,~~695~~182
Operating expenses	3032,~~051~~896			2931,~~509~~391			9164,~~895~~201			9261,~~605~~845
General and administrative expenses	3,~~740~~748			23,~~655~~283			107,~~521~~301			96,~~226~~782
Asset impairment charge	—			—907			~~907~~—			~~3,894~~907
Depreciation, amortization, deferred rent and pre-opening expenses	2,~~601~~766			3,~~244~~029			85,~~773~~487			96,~~518~~172
Total cost of sales and expenses	4751,~~708~~900			4750,~~664~~932			~~147~~101,~~594~~421			~~151~~99,~~938~~888
Income (loss) from operations	1,946			1,596			4,591			(1,498		)
Income from operations	3,131			1,648			6,294			2,644
Interest expense, net	(2,~~613~~488		)	(2,~~664~~621		)	(74,~~884~~988		)	(75,~~963~~271		)
Loss before income taxes	(667		)	(1,068		)	(3,293		)	(9,461		)
Income (loss) before income taxes	643			(973		)	1,306			(2,627		)
Income taxes	—			—			—			—
Net loss	$	(667	)	$	(1,068	)	$	(3,293	)	$	(9,461	)
Net income (loss)	$	643		$	(973	)	$	1,306		$	(2,627	)
Basic and diluted loss per share	$	(0.23	)	$	(0.36	)	$	(1.12	)	$	(3.21	)
Basic net income (loss) per share	$	0.21		$	(0.33	)	$	0.43		$	(0.89	)
Weighted-average shares outstanding - basic and diluted	2,953,864			2,944,377			2,942,372			2,949,279
Diluted net income (loss) per share	$	0.21		$	(0.33	)	$	0.43		$	(0.89	)
Weighted average shares outstanding:
Basic	3,015,817			2,947,691			3,014,400			2,936,626
Diluted	3,057,108			2,947,691			3,055,920			2,936,626

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

BERTUCCI’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)

(Unaudited)

	Thirty-nine Weeks Ended
	Twenty-six weeks Ended
	September 28, 2005			September 29, 2004
	June 28, 2006			June 29, 2005
				(As Restated - See Note 3)
Cash flows from operating activities
Net loss	$	(3,293	)	$	(9,461	)
Net income (loss)	$	1,306		$	(2,627	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and deferred rent	95,~~109~~835			96,~~572~~335
Asset impairment charge	~~907~~—			~~3,894~~907
Stock compensation expense	~~172~~83			—146
Changes in operating assets and liabilities
Inventories	~~(50~~41		)	(~~227~~77		)
Prepaid expenses, receivables and other	~~847~~188			~~(45~~546		)
Other accrued expenses	(2,~~598~~372		)	(~~3,045~~728		)
Accounts payable	(~~932~~169		)	(~~167~~475		)
Tenant allowance received	208			356
Other operating assets and liabilities	(116		)	(59		)
Other operating assets and liabilities	(127		)	41
Total adjustments	3,490			6,595
Total adjustments	7,536			10,379
Net cash provided by operating activities	4,796			3,968
Net cash provided by operating activities	4,243			918
Cash flows from investing activities
Additions to property and equipment	(3,~~280~~069		)	(61,~~381~~892		)
Decrease (increase) in restricted cash	223			(791		)
Decrease in restricted cash	1			214
Net cash used in investing activities	(3,~~057~~068		)	(71,~~172~~678		)
Cash flows from financing activities
Purchase of treasury shares	—			(142		)
Sale of common stock	39			—
Sale of common stock	400			10
Payment on promissory note	(20		)	(19		)
Payment on promissory note	(41		)	(40		)
Principal payments under capital lease obligations	(39		)	(42		)
Principal payments under capital lease obligations	(65		)	(33		)
Net cash used in financing activities	(20		)	(61		)
Net cash provided by (used in) financing activities	294			(205		)
Net increase in cash and cash equivalents	1,708			2,229
Net increase (decrease) in cash and cash equivalents	1,480			(6,459		)
Cash and cash equivalents, beginning of year	21,382			12,291
Cash and cash equivalents, beginning of year	12,291			12,647
Cash and cash equivalents, end of period	$	23,090		$	14,520
Cash and cash equivalents, end of period	$	13,771		$	6,188
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	95,~~880~~043		$	95,~~863~~052
Cash paid for income taxes	$	50177		$	~~380~~84

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

BERTUCCI’S CORPORATION Notes To Condensed Consolidated Financial Statements June 28, 2006 (Unaudited)

Notes To Condensed Consolidated Financial Statements

September 28, 2005

(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~~ interim condensed consolidated financial statements have been prepared in ~~accordance~~ 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 for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is suggested that 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/A for the year ended December 2928, ~~2004~~2005, which was filed with the Securities and Exchange Commission on(the ~~January~~“SEC”) on March 1928, 2006 (the “~~2004~~2005 Annual Report ~~Amendment~~”). The operating results for the thirteen ~~thirty~~and twenty-~~nine~~six weeks ended ~~September~~ June 28, ~~2005~~ 2006 may not be indicative of the results expected for any succeeding interim period or for the entire year ending ~~December~~January 283, ~~2005~~2007.

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

2. Restaurant ~~Recent~~Closing ~~Accounting Pronouncements~~Reserves

InRestaurant ~~June 2005,~~closing ~~the~~reserves ~~Emerging~~were ~~Issues~~established ~~Task~~as ~~Force of~~part of the ~~Financial~~acquisition ~~Accounting~~of ~~Standards~~Bertucci’s, Inc. ~~Board~~in ~~(“FASB”)~~July 1998. ~~reached~~These areserves were ~~consensus~~related onto ~~Issue~~estimated ~~No. 05-6, Determining~~future ~~the~~lease ~~Amortization~~commitments ~~Period~~and ~~for~~exit ~~Leasehold Improvements~~costs ~~(“EITF~~to ~~05-6”).~~ close 18 ~~The~~Bertucci’s ~~guidance~~locations. ~~requires~~In ~~that~~2001, ~~leasehold~~the ~~improvements~~Company ~~acquired~~accrued inan aadditional ~~business~~$4.2 million ~~combination~~related ~~or purchased subsequent~~ to ~~the~~selected ~~inception~~locations (all of awhich ~~lease~~had bebeen ~~amortized over~~closed), ~~the~~consisting ~~lesser~~ of estimated ~~the~~lease ~~useful~~commitments ~~life~~and ofcertain ~~the~~exit ~~assets~~costs. orIt awas ~~term~~originally ~~that includes~~expected ~~renewals~~the ~~that~~Company ~~are~~would ~~reasonably~~be ~~assured~~able atto ~~the~~exit ~~date~~these oflocations, sublease the ~~business~~locations ~~combination~~ or ~~purchase. The~~otherwise ~~guidance~~be isreleased ~~effective~~from ~~for periods~~the ~~beginning~~related ~~after~~leases. ~~June 29~~However, ~~2005.~~ ~~The~~due ~~adoption~~to ofmarket conditions, ~~EITF~~the ~~05-6~~Company ishas ~~not~~been ~~expected~~unable to ~~have~~sublease, aexit, ~~material~~or ~~effect~~otherwise onbe ~~the~~released ~~Company’s~~from ~~consolidated~~certain ~~financial position or results~~ of ~~operations~~these leases.

~~In May 2005, the FASB issued Statement of~~The ~~Financial~~closed ~~Accounting~~restaurant ~~Standards~~reserve ~~(“SFAS”)~~was ~~No. 154,~~calculated ~~Accounting Changes~~net ~~and Error Corrections–A Replacement~~ of ~~APB~~sublease ~~Opinion~~income ~~No. 20~~at ~~and FASB~~nine ~~Statement~~locations ~~No. 3 (“SFAS~~partially ~~No. 154”). SFAS~~or ~~No. 154~~fully ~~applies~~subleased toas ~~all voluntary changes in accounting principle and requires retrospective application to prior periods’ financial statements~~ of ~~changes~~June ~~in accounting principle~~28, ~~unless it is impracticable~~2006. ~~SFAS~~ ~~No. 154 requires~~The ~~that~~Company ~~a change in depreciation, amortization, or depletion method for~~remains ~~long-lived,~~primarily ~~non-financial~~liable ~~assets be accounted~~ for asthe aremaining ~~change~~lease ofobligations ~~estimate affected~~should ~~by a change in accounting principle. SFAS No. 154 also carries forward without change~~ the ~~guidance in~~sublessee ~~Accounting Principals Board (“APB”) Opinion No~~default. 20 ~~with~~Total ~~respect~~sublease ~~to accounting~~income ~~for~~excluded ~~changes~~from ~~in accounting estimates, changes in~~ the ~~reporting~~reserve ~~unit and correction of an error in previously issued financial statements. The Company~~ is ~~required~~approximately ~~to adopt SFAS No~~$5. ~~154~~4 million for ~~accounting~~subleases ~~changes~~expiring ~~and~~at ~~corrections~~various ofdates ~~errors~~through ~~made in fiscal years beginning after December 15, 2005~~2017. ~~The adoption of SFAS No. 154 is not expected to have a material effect on the Company’s consolidated financial position or results of operations.~~

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment (“SFAS No. 123R”). This Statement is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. The Statement requires entities to recognize stock compensation expense for awards of equity instruments to employees based on the grant-date fair value of those awards (with limited exceptions). SFAS No. 123R is effective for the first annual reporting period that begins after December 15, 2005. The Company is evaluating the two methods of adoption allowed by SFAS No. 123R; the modified-prospective transition method and the modified-retrospective transition method.

3. Activity within the ~~Restatement~~reserve ofwas ~~Financial~~as ~~Statements~~follows (in thousands):

Initial Restatement

	Twenty-six weeks ended
	June 28, 2006			June 29, 2005
Balance, beginning of the year	$	372		$	659
Payments charged against reserve	(103		)	(225		)
Balance, end of period	$	269		$	434

Current portion (included in accrued expenses)	$	209		$	252
Noncurrent portion	60			182
	$	269		$	434

~~In the first quarter of 2005 the Company initiated a review of its lease accounting, including leased liquor licenses, and leasehold depreciation practices~~3. ~~As a result, the Company corrected its accounting for leases and~~Net ~~restated~~Income ~~its financial statements for all periods prior to December 29, 2004 and certain financial information to correct errors in lease accounting policies~~ (~~the “Initial Restatement”~~Loss). ~~The~~per Company had historically accounted for tenant improvement allowances as reductions to the related leasehold improvement asset on the consolidated balance sheets and capital expenditures in investing activities on the consolidated statements of cash flows. Also, the Company had historically recognized rent on a straight-line basis over a lease term commencing with the initial occupancy date, or Company-operated retail store opening date. In addition, the depreciable lives of certain leasehold improvements and other long-lived assets on those properties were not aligned with the non-cancelable lease term.Share

~~Following a~~Basic ~~review~~net ofincome ~~its~~(loss) ~~lease~~per ~~accounting~~share ~~treatment~~is ~~and~~computed ~~relevant accounting literature,~~by ~~the~~dividing ~~Company~~net ~~determined~~income ~~it should:~~ (aloss) ~~report tenant~~ ~~improvement~~by ~~allowances~~the asweighted ~~deferred~~average ~~liabilities~~number inof ~~the~~common ~~consolidated~~shares ~~balance~~outstanding ~~sheets~~for ~~and initiate~~ the ~~amortization~~reporting ofperiod. ~~those~~Diluted ~~liabilities~~net atincome ~~the relevant initial occupancy date;~~ (bloss) ~~classify the~~ ~~change~~per inshare reflects the ~~deferred~~potential ~~liability~~dilution ~~related~~that tocould ~~the~~occur ~~tenant~~if ~~allowances~~options into ~~the~~issue common ~~operating~~stock ~~activities~~were onexercised ~~the~~or ~~Condensed~~converted ~~Consolidated~~into ~~Statements~~common ofstock. ~~Cash~~Net ~~Flows;~~dilutive ~~(c) conform~~shares added to the ~~depreciable~~weighted ~~lives~~average ~~for~~number ~~buildings~~of oncommon ~~leased~~shares ~~land~~outstanding ~~and~~for ~~other~~the ~~leasehold~~thirteen ~~improvements~~and totwenty-six ~~the~~weeks ~~shorter~~ended ofJune ~~the~~28, ~~economic~~2006 ~~life~~for ofthis ~~the~~calculation ~~asset~~were or41,291 ~~the~~and ~~lease term~~41,520, ~~used~~respectively. These ~~for~~were ~~determining~~determined using the ~~capital~~treasury ~~versus~~stock ~~operating~~method ~~lease~~for ~~classification and calculating straight~~in-~~line~~the-money ~~rent;~~stock ~~and~~options ~~(d) include~~as ~~option~~of ~~periods~~June ~~in the~~28, ~~depreciable~~2006. ~~lives~~For ~~assigned~~the toperiods ~~leased~~ended ~~buildings~~June ~~and~~28, ~~leasehold~~2006 ~~improvements~~ and in ~~the~~June ~~calculation~~29, of2005, ~~straight-line~~options representing ~~rent~~881,109 ~~expense~~and ~~only~~534,179 inshares ~~instances~~of incommon ~~which~~stock, ~~the~~respectively, were ~~exercise~~excluded offrom the ~~option~~calculation ~~period~~of ~~can~~diluted benet ~~reasonably~~income ~~assured~~(loss) ~~and~~per ~~failure~~share tobecause ~~exercise~~of ~~such~~their ~~options~~anti-dilutive ~~would result in an economic penalty~~effect.

~~The restatement for leaseholds also resulted in restatements of amounts~~4. ~~previously~~Income ~~reported for asset impairments.~~Taxes

The ~~Initial~~Company ~~Restatement~~recognizes ~~did~~deferred ~~not~~tax assets and liabilities for the expected future tax consequences of events that have ~~any~~been included ~~impact~~in onthe financial statements or tax returns. Additionally, the Company’s is required to consider both negative and positive evidence in determining if a valuation allowance is required on a quarterly basis. Management previously recorded ~~reported~~a ~~net~~full ~~sales~~valuation orallowance ~~compliance~~for ~~with~~its ~~any~~deferred ~~covenant~~tax ~~under~~assets. For the thirteen and twenty-six weeks ended June 28, 2006, the Company recorded tax provisions of approximately $80,000 and $98,000, respectively, which were offset by the release of like amounts from its ~~debt~~valuation allowance. FICA Tip ~~instruments~~Credits of approximately $375,000 and $750,000 favorably impact the effective income tax rates for the thirteen and twenty-six weeks ended June 28, 2006, respectively.

~~Current~~The ~~Restatement~~Company continues to maintain a valuation allowance for its deferred tax assets as the Company has experienced a history of losses. Management continues to evaluate the need for a valuation allowance on an on-going basis.

In connection with the preparation of this Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2005, the Company discovered errors in its detailed property and equipment records adjusted during the Initial Restatement. Management then conducted an investigation into the extent and magnitude of these errors, which involved the calculation of depreciation expense on multiple property records and the related impact on income taxes for the fiscal years 1998 through 2004, inclusive, and the first two fiscal quarters of 2005 (the “Relevant Period”), to determine if a restatement of its financial statements was necessary. Based upon this investigation, in January 2006 the Company determined additional aggregate depreciation expense of approximately $3.5 ~~million was required for the Relevant Period and income tax expense was not properly adjusted in the Initial Restatement~~. ~~Based upon this investigation, in January 2006~~ the Company determined an additional aggregate depreciation expense of approximately $3.5 million was required for the Relevant Period and a restatement of its financial statements, including those contained in its: (1) Annual Report on Form 10Stock-KBased for the fiscal year ended December 29, 2004, which was filed with the SEC on April 13, 2005 (the “Original 2004 10-K”); (2) Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2005, which was filed with the SEC on May 13, 2005 (the “Original 2005 First Quarter 10-Q”); and (3) Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2005, which was filed with the SEC on August 12, 2005 (the “Original 2005 Second Quarter 10-Q”), and together with the Original 2004 10-K and the Original 2005 First Quarter 10-Q, (the “Subject Filings”), was necessary (the “Current Restatement”). Accordingly, the Company determined it should amend the Subject Filings to reflect the proper recording of depreciation and income tax expense and its impact on the consolidated Balance Sheets, Statements of Operations, Stockholders’ Deficit, and Cash Flows for the periods reported therein.Compensation

~~The~~Effective December 29, 2005, the Company ~~also~~adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share Based Payment (“SFAS No. 123R”), using a modified prospective application, and as such prior periods have not been restated. ~~its~~Under ~~Statements~~this method, compensation expense is recorded on a straight-line basis for all unvested options over the related vesting period beginning in the period of ~~Cash~~adoption. As a result of the adoption ~~Flows~~of SFAS No. 123R, the Company now recognizes stock-based compensation costs rateably over the requisite service period. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the Staff’s interpretation of SFAS No. 123R. This interpretation provides the Staff’s views regarding interactions between SFAS No. 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. The interpretive guidance is intended to ~~present~~assist companies in applying the ~~change~~provisions of SFAS No. 123R and investors and users of the financial statements in ~~restricted~~analyzing ~~cash~~the information asprovided. anThe ~~investing~~Company ~~activity~~follows the guidance prescribed in SAB No. 107 ~~These~~in connection with the adoption of SFAS No. 123R. The impact ~~amounts~~of ~~had~~the ~~previously~~adoption ~~been~~of ~~reported~~SFAS asNo. 123R and SAB No. 107 resulted in a compensation ~~financing~~charge ~~activity~~for the thirteen and twenty-six weeks ended June 28, 2006 of $19,000 and $72,000, respectively. This charge is included in General and Administrative expenses in the Condensed Consolidated Statements of Operations for the periods indicated.

The Company ~~Current~~currently ~~Restatement~~grants ~~did~~stock ~~not~~options ~~have~~under ~~any~~its ~~impact~~Amended onand Restated 1997 Equity Incentive Plan (“Equity Incentive Plan”), which provides for the issuance ~~Company’s~~of ~~previously~~nonqualified ~~reported~~stock ~~net~~options ~~sales~~and ~~during~~allows the ~~Relevant~~Company ~~Period.~~to ~~The~~provide equity ~~following~~incentives isto aour ~~summary~~key ofemployees and directors. On September 27, 2005, the Company’s ~~impact~~Board of Directors approved the ~~Current~~amendment ~~Restatement~~and onrestatement ~~the~~of ~~Company’s~~the ~~condensed~~Equity ~~consolidated~~Incentive ~~statements~~Plan which increased the number of ~~operations~~shares ~~and~~of ~~cash~~Common ~~flow~~Stock available for issuance under the ~~thirteen and~~Equity ~~thirty-nine~~Incentive ~~weeks~~Plan ~~ended~~from ~~September 29~~750,000 ~~2004~~to 1,100,000. ~~(in~~The ~~thousands,~~Board ~~except~~of ~~per~~Directors administers the Equity Incentive Plan and ~~share~~may modify ~~data):~~or amend it in any respect.

~~For~~Stock options are: (1) issued at or above the fair value of the underlying stock ~~periods~~on ~~ended~~the ~~September~~date of the grant; (2) 29are exercisable either (a) cumulatively at the rate of 25% on or after each of the second, third, ~~2004~~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 that unvested options vest immediately and in full upon a transaction that constitutes a “change of control” of the Company.

	Thirteen Weeks Ended
	As Previously Reported			As Originally Restated			As Restated
Operating expenses	$	29,521		$	29,509		$	29,509
Deferred rent, depreciation, amortization and pre-opening expenses	3,111			3,379			3,244
Income (loss) from operations	1,717			1,461			1,596
Interest expense, net	(2,654		)	(2,664		)	(2,664		)
Net loss	(937		)	(1,203		)	(1,068		)
Basic and diluted loss per share	(0.32		)	(0.41		)	(0.36		)

The grant date fair value is calculated using the Black-Scholes option valuation model. The fair value of options granted during the thirteen and twenty-six weeks ended June 28, 2006 and June 29, 2005, respectively, were calculated using the following estimated weighted average assumptions:

	Thirty-nine Weeks Ended
	Thirteen weeks ended						Twenty-six weeks ended
	As Previously Reported			As Originally Restated			As Restated
	June 28, 2006			June 29, 2005			June 28, 2006			June 29, 2005
Operating expenses	$	92,640		$	92,605		$	92,605
Options granted	29,000			20,000			58,000			162,750
Deferred rent, depreciation, amortization and pre-opening expenses	9,456			9,949			9,518
Weighted-average exercise price	$	17.51		$	17.51		$	17.51		$	17.51
Asset impairment charge	3,338			3,894			3,894
Weighted-average grant date fair value	$	4.67		—			$	3.88		—
Income (loss) from operations	(915		)	(1,929		)	(1,498		)
Assumptions:
Interest expense, net	(7,934		)	(7,963		)	(7,963		)
Risk free interest rate	4.88		%	3.77		%	4.64		%	3.88		%
Net loss	(8,849		)	(9,892		)	(9,461		)
Expected life (in years)	5			5			5			5
Basic and diluted loss per share	(3.00		)	(3.35		)	(3.21		)
Expected volatility	20		%	0		%	20		%	0		%
Cash flows from operating activities	555			918			918
Expected dividend yield	0		%	0		%	0		%	0		%
Cash flows used in investing activities	(6,025		)	(6,381		)	(7,172		)
Cash flows used in financing activities	(989		)	(996		)	(205		)

4Expected volatility — The Company is responsible for estimating volatility and has used 0.0% volatility historically to estimate the grant-date fair value of stock options as its common stock is not publicly traded. Effective December 29, ~~Liquor~~2005, ~~Licenses~~management considered the guidance in SFAS No. 123R and now estimates expected volatility at 20%.

~~Transferable~~Expected ~~liquor licenses purchased are accounted~~life ~~for~~— ~~at the lower of cost or fair market value and are not amortized. Annual renewal fees are expensed as incurred.~~ The ~~carrying~~Company ~~value~~uses ~~of transferable~~the ~~liquor~~full ~~licenses~~vesting ~~was~~period ~~$2.0~~to ~~million~~estimate atthe ~~each~~expected ~~of September 28,~~life ~~2005~~assumption ~~and~~for ~~December 29,~~the ~~2004. Non~~Black-~~transferable~~Scholes ~~liquor licenses are amortized on a straight~~grant-~~line~~date ~~basis over the contractual life of the license~~valuation. ~~Accumulated~~ ~~amortization~~The atCompany ~~September 28, 2005 and December 29,~~believes ~~2004~~this ~~for~~is ~~non-transferable~~currently ~~liquor~~the ~~licenses~~best ~~was~~estimate ~~$182,000~~of ~~and $140,000, respectively. Amortization expense for~~ the ~~thirty-nine weeks ended September 28, 2005 was $42,000 and is~~ expected tolife beof ~~$56,000~~a ~~per~~new ~~year through fiscal 2010~~option.

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

~~Restaurant~~Expected ~~closing~~dividend ~~reserves~~yield ~~were~~— ~~established~~The asCompany ~~part~~has not ofpaid ~~the~~any ~~acquisition~~dividends ~~of Bertucci’s, Inc.~~ in ~~July 1998. These reserves~~the ~~were~~last ~~related~~five toyears ~~estimated future lease commitments~~ and ~~exit~~currently ~~costs~~intends to ~~close~~ 18retain ~~Bertucci’s locations. In 2001, the Company accrued an additional~~any ~~$4.2~~earnings ~~million related~~ to ~~selected~~finance ~~locations~~future ~~(all~~growth ofand, ~~which had been closed)~~therefore, ~~consisting~~ ofdoes ~~estimated~~not ~~lease~~anticipate ~~commitments and certain exit costs. It was~~paying ~~originally~~any ~~expected~~cash ~~the~~dividends ~~Company~~on ~~would~~its becommon ~~able~~stock toin ~~exit these locations, sublease~~ the ~~locations~~foreseeable ~~or otherwise be released from the related leases~~future. ~~However, due to market conditions, the Company has been unable to sublease or exit certain of these leases.~~

~~The~~Prior ~~closed~~to ~~restaurant~~December 29, ~~reserve~~2005, ~~was~~in ~~calculated~~accordance with ~~net~~SFAS No. 123, Accounting for Stock-Based Compensation (which has been replaced by SFAS No. 123R and supersedes Accounting Principles Board Opinion No. 25 (“APB Opinion No. 25”)), the Company accounted for stock-based compensation under the intrinsic value method with disclosure of ~~sublease~~the effects of fair value accounting on net income atand ~~ten~~earnings ~~locations~~per ~~partially~~share oron a pro forma basis. The Company’s stock-based compensation plan is described more fully ~~subleased~~in asNote 9 of ~~September 28,~~ Notes to Consolidated Financial Statements in the 2005 Annual Report. The Company had accounted for this plan under the recognition and measurement

~~The~~principles ~~Company~~of ~~remains~~APB ~~primarily~~Opinion ~~liable~~No. 25 ~~for~~and ~~the~~related interpretations. In 2005, stock based employee ~~remaining~~compensation ~~lease~~expense ~~obligations~~resulted ~~should~~from the ~~sublessee~~granting ~~default~~of shares of the Company’s common stock to key employees and independent directors. ~~Total~~ All shares and options ~~sublease~~granted ~~income~~had ~~excluded~~an ~~from~~exercise price equal to, or in excess of, the ~~reserve~~fair isvalue ~~approximately~~of $6the underlying common stock on the date of grant.2 ~~million~~The following table illustrates the effect on net loss and loss per share for the thirteen and twenty-six weeks ~~subleases~~ended ~~expiring~~June at29, ~~various~~2005, ~~dates~~respectively, ~~through~~if ~~2017. There~~the ~~have~~Company ~~been~~had noapplied the fair value ~~defaults~~recognition byprovisions ~~sublessees~~of toSFAS ~~date~~No. 123 (in thousands, except per share data):

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

	Thirteen Weeks Ended			Twenty-six Weeks Ended
	June 29, 2005			June 29, 2005

Net loss, as reported	$	(973	)	$	(2,627	)
Add: Stock-based employee compensation income (expense) included in reported net loss	2			146
Adjust: Net stock-based employee compensation income (expense) determined under fair value based method for all awards	65			(126		)
Pro forma net loss	$	(906	)	$	(2,607	)
Basic and diluted loss per share:
As reported	$	(0.33	)	$	(0.89	)
Pro forma	$	(0.31	)	$	(0.89	)

	Thirty-nine weeks ended
	September 28,			September 29,
	2005			2004
Balance, beginning of the year	$	659		$	1,449
Payments charged against reserve	(255		)	(469		)
Balance, end of period	$	404		$	980
Current portion (included in accrued expenses)	$	288		$	615
Noncurrent portion	116			365
	$	404		$	980

A summary of the activity under the Company’s stock option plans as of June 28, 2006 and changes during the twenty-six week period then ended, is presented below:

6. Loss per Share

	Options Outstanding		Weighted-Average Remaining Contractual Life in Years	Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at December 28, 2005	970,929			$	16.77
Granted	58,000			$	17.51
Cancelled	(32,856	)		$	16.26
Options outstanding at June 28, 2006	996,073		7.4	$	16.83	$	621,219

Options fully vested and exercisable at June 28, 2006	266,573		3.0	$	14.96	$	621,219

~~Basic~~As ~~loss~~of ~~per~~June ~~share~~28, is2006 ~~computed by dividing net~~there ~~loss~~was by$297,000 ~~the weighted-average number~~ of ~~shares~~unrecognized ofcompensation ~~common~~cost ~~stock~~related ~~outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could occur if options or other contracts~~ to ~~issue~~unvested ~~common~~ stock ~~were exercised or converted into common stock~~options. ~~For~~That ~~the~~cost ~~periods~~is ~~ended~~expected ~~September 28, 2005~~to ~~and~~be ~~September 29,~~recognized ~~2004~~over ~~options~~a ~~representing~~weighted ~~963,929~~average ~~and 554,021~~period ~~shares~~ of ~~common~~2.1 ~~stock, respectively, were excluded from the calculation of diluted loss per share because of their anti-dilutive effect~~years.

76. ~~Income~~Asset ~~Taxes~~Impairment Charge

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been 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 and continues to record an allowance quarterly for the tax benefits associated with the current period’s losses.

8. Stock-Based Compensation

In accordance with SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), the Company has elected to account for stock-based compensation under the intrinsic value method with disclosure of the effects of fair value accounting on net loss and loss per share on a pro forma basis. The Company’s stock-based compensation plan is described more fully in Note 10 of Notes to Consolidated Financial Statements in the 2004 Annual Report Amendment and in the Company’s Form 8-K filed with the SEC on October 3, 2005. The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost related to stock options is reflected in net loss, as all options granted had an exercise price equal to, or in excess of, the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 (in thousands, except per share data):

	Thirteen weeks ended									Twenty-six weeks ended
	June 29,						June 30,			June 29,			June 30,
	2005						2004			2005			2004
Net loss, as reported	$				(667	)	$	(1,068	)	$	(3,293	)	$	(9,461	)
Add: Stock-based employee compensation expense included in reported net loss	26						—			172			—
Adjust: Net stock-based employee compensation income (expense) determined under fair value based method for all awards	(3					)	61			(130		)	(95		)
Pro forma net loss	$			(644		)	$	(1,007	)	$	(3,251	)	$	(9,556	)
Basic and diluted loss per share
As reported	$		(0.23			)	$	(0.36	)	$	(1.12	)	$	(3.21	)
Pro forma	$	(0.22				)	$	(0.34	)	$	(1.10	)	$	(3.24	)

During the first three quarters of 2005, the Company awarded bonuses to two senior employees and certain officers and independent members of the Board of Directors consisting of an aggregate of 37,500 shares of Common Stock with an average fair value of $4.59 per share. Accordingly, the grant of such shares resulted in a $172,000 compensation charge to the Company.

During the third quarter of 2005, the Company’s Board of Directors approved the adoption of the Bertucci’s Corporation Amended and Restated 1997 Equity Incentive Plan (the “Plan”) to increase the number of shares that are available for issuance under the Plan from 750,000 to 1,100,000.

The net stock-based employee compensation expense determined under the fair value based method for the current periods includes income resulting from the forfeitures of non-vested options.

9. 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 second quarter of ~~2005~~2006, the Company assessed certain non-performing restaurants for recoverability and determined an no impairment ~~of fixed assets~~ existed ~~at four restaurant locations~~. ~~The Company~~During ~~estimated~~ the ~~fair~~second ~~value~~quarter of ~~these~~2005, ~~assets based on~~ the ~~net present value~~ ofCompany ~~the~~assessed ~~expected~~certain ~~cash~~non-performing ~~flows of the four~~ restaurants~~. The~~ ~~carrying~~for ~~amount of~~recoverability ~~the assets exceeded the fair value of the assets by approximately $0.9~~and ~~million. The~~determined ~~Company recorded~~ an impairment ~~charge during the quarter to reflect the write down~~ of ~~the~~fixed ~~affected~~ assets toexisted ~~fair~~at ~~value.~~four restaurant

locations. The Company estimated the fair value of these assets based on the net present value of the expected cash flows of the four restaurants. The carrying amount of the assets exceeded the fair value of the assets by approximately $0.9 million. The Company recorded an impairment charge during the quarter to reflect the write down of the affected assets to fair value.

7. Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, effective for fiscal years beginning after December 15, 2006 (“FIN 48”). FIN 48 requires a two-step approach for recognizing and measuring tax benefits and employs a “more likely than not” threshold for recognition. FIN 48 also requires enterprises to make explicit disclosures about uncertainties in their income tax positions, including a detailed rollforward of tax benefits taken not qualifying for financial statement recognition. The Company is evaluating whether the adoption of FIN 48 will have a material effect on its consolidated financial position or 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. The Company believes these contracts qualify for the “normal purchases” exception as defined by SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Therefore, the contracts are not required to be marked to market through the Condensed Consolidated Statement of Operations. The purchase commitments below represent an estimate of the minimum usage per year multiplied by the contracted rates (dollars in thousands):

Year

2006	$	706
2007	1,468
2008	1,468
2009	1,345
	$	4,986

9. Gift Cards

A liability is recorded in the period in which a gift card is issued and proceeds are received. As gift cards are redeemed, this liability is reduced and revenue is recognized. Gift card breakage income (“breakage”) is recognized when the likelihood of the redemption of the card becomes remote. In the second quarter of 2006, $175,000 of breakage, was recorded as a reduction of Operating expenses.

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~~ in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding ~~the~~our ~~Company’s~~ future financial position, business strategy, budgets, projected costs, ~~and~~ plans, and objectives of management for future operations, are forward-looking statements. In ~~addition,~~These ~~forward-looking~~ statements ~~generally~~involve ~~can~~known beand ~~identified~~unknown byrisks, ~~the~~uncertainties ~~use~~and ofother ~~forward-looking~~factors ~~terminology~~which ~~such as “~~may,” cause ~~“will,”~~our ~~“expect,” “intend,” “estimate,” “anticipate”~~ or ~~“believe” or~~ the ~~negative thereof or~~ ~~variations~~foodservice ~~thereon~~industry’s or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to have been correct, it can give no assurance that such expectations will prove to be correct. Factors that could cause actual results ~~to materially differ include~~, ~~without~~performance ~~limitation:~~or ~~(a) the~~achievements ~~Company’s high degree of leverage which could, among other things, reduce the Company’s ability~~ to ~~obtain~~ ~~financing for operations and expansion, place the Company at a~~be ~~competitive~~materially ~~disadvantage~~different ~~and~~from ~~limit~~any ~~the~~expected ~~Company’s flexibility to adjust to changing market conditions; (b) the challenges of managing geographic expansion; (c) changes in food costs~~results, ~~supplies~~performance ~~and~~or ~~key supplier relationships; and (d) the possible adverse impact of government regulation on the Company~~achievements. ~~Other factors that could adversely affect the~~ ~~Company’s business and prospects are described in its filings with the SEC. Investors are cautioned not to place undue reliance on these forward~~Forward-looking statements include, ~~which~~but ~~speak~~are ~~only~~not aslimited ~~of the date hereof. The Company undertakes 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.~~regarding:

~~The~~· Our ~~following~~highly ~~discussion~~competitive ~~should~~business be read in conjunction with the condensed consolidated financial statements of Bertucci’s Corporation (the “Company”), and the notes thereto included herein, as well as the Original 2004 10-K, as amended by the 2004 Annual Report Amendment.environment;

10· 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 service our debt and other obligations;

· Our ability to meet ongoing financial covenants contained in our debt instruments; 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 December 28, 2005 which was filed with the SEC on March 28, 2006 (the “2005 Annual Report”), as well as those discussed elsewhere herein.

Unless the context indicates otherwise, references herein to “we”, “us”, “our,” “Bertucci’s” 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 2005 Annual Report.

General

~~Bertucci’s~~We ~~Corporation,~~own ~~a Delaware corporation (the “Company”), is the owner~~ and ~~operator~~operate of a chain of full-service casual dining, Italian-style restaurants under the names Bertucci’s Brick Oven Pizzeria® and Bertucci’s Brick Oven Ristorante®. As of ~~September~~ June 28, ~~2005~~2006, ~~the Company~~we operated 92 restaurants located primarily in the northeastern United States.

In July 1998, the Company completed its 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 “Acquisition”). The Company financed the Acquisition primarily through the issuance of $100 million of 10 ¾ % senior notes due 2008 (the “Senior Notes”). The Senior Notes are still outstanding as to $85.3 million in principal.11

~~Management~~In July 1998, we completed our acquisition of Bertucci’s ~~Discussion~~Restaurant ~~and~~Corp.’s ~~Analysis~~parent ofentity, ~~Financial~~Bertucci’s, Inc., for a ~~Condition~~purchase ~~and~~price, ~~Results~~net of ~~Operations~~cash ~~gives~~received, ~~effect~~of toapproximately $89.4 million (the ~~restatement~~“Acquisition”). We offinanced the ~~Consolidated~~ ~~Financial~~Acquisition ~~Statements~~primarily ~~discussed~~through inthe ~~Note~~issuance 3of $100 million of 10 ¾ % senior notes due 2008 (the “Senior Notes”). toThe ~~the~~Senior Notes are still ~~Condensed~~outstanding ~~Consolidated~~as ~~Financial~~to ~~Statements~~$85.3 million in principal.

Results of Operations

The following table sets forth the percentage relationship to net sales, unless otherwise indicated, of certain items included in ~~the~~our ~~Company’s~~ 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				~~Thirty~~Twenty-~~nine~~six weeks ended
	September 28,		September 29,		September 28,		September 29,
	June 28, 2006		June 29, 2005		June 28, 2006		June 29, 2005
	2005		2004		2005		2004
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales and expenses:
Cost of sales	22.87	%	2423.94	%	2322.37	%	2423.46	%
Operating expenses	6059.58	%	59.98	%	6059.46	%	6160.63	%
General and administrative expenses	76.58	%	56.42	%	6.98	%	6.16	%
Asset impairment charge	—		—1.7	%	~~0.6~~—	%	20.69	%
Depreciation, amortization, deferred rent, and pre-opening expenses	5.20	%	65.68	%	5.81	%	6.30	%
Total cost of sales and expenses	9694.03	%	96.89	%	9794.02	%	~~101~~97.04	%
Income (loss) from operations	4.0	%	3.2	%	3.0	%	(1.0	)%
Income from operations	5.7	%	3.1	%	5.8	%	2.6	%
Interest expense, net	(54.35	)%	(5.40	)%	(54.26	)%	(5.31	)%
Loss before income taxes	(1.3	)%	(2.2	)%	(2.2	)%	(6.3	)%
Income (loss) before income taxes	1.2	%	(1.9	)%	1.2	%	(2.5	)%
Income taxes	—		—		—		—
Net loss	(1.3	)%	(2.2	)%	(2.2	)%	(6.3	)%
Net income (loss)	1.2	%	(1.9	)%	1.2	%	(2.5	)%
Restaurant Operating Data:
Increase in comparable restaurant sales (a)	(1.3	)%	1.0	%	(1.2	)%	2.9	%
Increase (decrease) in comparable restaurant sales (a)	4.9	%	(0.7	)%	5.1	%	(1.1	)%
Number of restaurants:
Restaurants open, beginning of period	92		9092		9192		8991
Restaurants opened	—		1—		1—		21
Total restaurants open, end of period	92		9192		92		9192

(a) ~~The~~ We ~~Company~~define ~~defines~~ comparable restaurant sales as net sales from restaurants ~~that have been~~ open for at least one full fiscal year at the beginning of the fiscal year.

Thirteen Weeks Ended ~~September~~ June 28, ~~2005~~ 2006 Compared to Thirteen Weeks Ended ~~September~~ June 29, ~~2004~~2005

Net Sales. Total net sales increased by approximately $~~400~~2.4 million,~~000,~~ or 04.86%, to $4955.70 million during the ~~third~~second quarter of ~~2005~~ 2006 from $4952.3 6 million during the ~~third~~second quarter of ~~2004~~2005. The increase was primarily due to ~~25.6 incremental restaurant weeks from three restaurants opened since January 2004 offset by~~ a 1 4.39% ~~decrease~~increase in the 8991 comparable restaurants’ sales. Comparable ~~Bertucci’s restaurant~~ dine-in guest ~~counts~~ ~~decreased~~counts increased 1.64% for the ~~third~~second quarter of ~~2005~~2006 as compared to the ~~third quarter~~second quarter of ~~2004~~2005. ~~Bertucci’s~~ Comparable ~~comparable restaurant~~ dine-in sales ~~decreased~~increased 24.3% and comparable carry-out and delivery sales increased 27.83% for the quarter as compared to the second ~~third~~ quarter of ~~2004~~2005. We believe comparable restaurant sales increases have been a result of increased guest visits combined with a shift in menu mix to dinner entrees versus pizza, and an approximate 1.7% menu price increase in January 2006. For the 8991 comparable restaurants, average weekly sales were approximately $4146,~~700~~100 for the ~~third~~second quarter of ~~2005~~ 2006 compared to approximately $4243,~~200~~900 per week for the ~~third~~second quarter of ~~2004~~2005.

11Cost of Sales. Cost of sales increased by approximately $168,000, or 1.6%, to $12.5 million during the second quarter of 2006 from $12.3 million during the second quarter of 2005. Expressed as a percentage of net sales, overall cost of sales decreased to 22.7% during the second quarter of 2006 from 23.4% during the second quarter of 2005. The percentage decrease can be attributed to decreases in certain ingredient costs, the benefit from the menu price increases, and better food cost controls; all partially offset by a menu mix shift away from pizzas to dinner entrees.

Cost of Sales. Cost of sales decreased by approximately $1 million, or 8.1%, to $11.3 million during the third quarter of 2005 from $12.3 million during the third quarter 2004. Expressed as a percentage of net sales, overall cost of sales decreased to 22.8% during the third quarter of 2005 from 24.9% during the third quarter of 2004. Of this 2.1% decrease, approximately 0.4% is attributed to a menu mix shift generally to lower priced, lower cost items, approximately 1.3% was due to decreases in certain ingredient costs, and approximately 0.4% from improved restaurant cost controls.

Operating Expenses. Operating expenses increased by approximately $600,000, or 2.0%, to $30.1 million during the third quarter of 2005 from $29.5 million during the third quarter of 2004. Expressed as a percentage of net sales, operating expenses increased to 60.5% in the third quarter of 2005 from 59.9% during the third quarter of 2004. The increase is primarily due to the timing of marketing expenditures ($1 million) and increased utility costs ($500,000) partially offset by reduced employee benefit costs and other insurance ($900,000).

General and Administrative Expenses. General and administrative expenses increased by approximately $1.0 million, or 37.0%, to $3.7 million during the third quarter of 2005 from $2.7 million during the third quarter of 2004. Expressed as a percentage of net sales, general and administrative expenses increased to 7.5% in the third quarter of 2005 from 5.4% in the third quarter of 2004. The dollar increase over the prior year period is primarily attributable to bonus expense accruals as year-to-date cash flow results are currently exceeding targeted levels under the Company’s bonus plan as well as prior year accrual reductions of $266,000.

Depreciation, Amortization, Deferred Rent and Pre-opening Expenses. Depreciation, amortization, deferred rent and pre-opening expenses decreased by approximately $600,000, or 18.8%, to $2.6 million during the third quarter of 2005 from $3.2 million during the third quarter of 2004. The decrease is primarily due to pre-opening expenses of a restaurant opening in the third quarter of 2004 versus no opening in the third quarter of 2005. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-opening expenses decreased to 5.2% in the third quarter of 2005 from 6.6% during the third quarter of 2004.

Interest Expense, net. Net interest expense of $2.6 million was essentially flat as compared to the third quarter of 2004.

Income Taxes. The Company has an historical trend of recurring pre-tax losses. The Company previously recorded a full valuation allowance for its net deferred tax asset. The Company also provided a full valuation allowance relating to the tax benefits generated since 2003 (primarily from its operating losses). As of December 29, 2004, the Company had net operating losses and tax credit carry forwards totaling $7.8 million.

Thirty-Nine Weeks Ended September 28, 2005 Compared to Thirty-Nine Weeks Ended September 29, 2004

Net Sales. Total net sales increased by approximately $1.8 million, or 1.2%, to $152.2 million during the first three quarters of 2005 from $150.4 million during the first three quarters of 2004. The increase was primarily due to 83.6 incremental restaurant weeks from three restaurants opened since January 2004 offset by a 1.2% decrease in the 89 comparable restaurants’ sales. Comparable Bertucci’s restaurant dine-in guest counts decreased 1.2% for the first three quarters of 2005 as compared to the first three quarters of 2004. Bertucci’s comparable restaurant dine-in sales decreased 1.9% and comparable carry-out and delivery sales increased 1.7% for the first three quarters of 2005 as compared to the first three quarters of 2004. For the 89 comparable restaurants, average weekly sales were approximately $42,600 for the first three quarters of 2005 compared to approximately $43,000 per week for the first three quarters of 2004.

Cost of Sales. Cost of sales decreased by approximately $1.2 million, or 3.3%, to $35.5 million during the first three quarters of 2005 from $36.7 million during the first three quarters 2004. Expressed as a percentage of net sales, overall cost of sales decreased to 23.3% during the first three quarters of 2005 from 24.4% during the first three quarters of 2004. Of this 1.1% decrease, approximately 0.3% is attributed to a menu mix shift generally to lower priced, lower cost items, approximately 0.5% was due to decreases in certain ingredient costs, and approximately 0.3% from improved restaurant cost controls.

Operating Expenses. Operating expenses decreased by $700,000, or 0.8%, to $91.9 million during the first three quarters of 2005 from $92.6 million during the first three quarters of 2004. Expressed as a percentage of net sales, operating expenses decreased to 60.4% in the first three quarters of 2005 from 61.6% during the first three quarters of 2004. The dollar decrease was primarily due to lower marketing expenditures ($1.8 million less than the prior year), partially offset by increased utility costs and the operation of three non-comparable restaurants. The Company expects marketing expenditures for all of 2005 will be approximately $1.0 million less than in 2004.

~~General and Administrative~~Operating Expenses. ~~General~~ ~~and~~Operating ~~administrative~~ expenses increased by approximately $1.3 5 million, or 14 4.18%, to $1032.59 million during the ~~first~~second ~~three~~quarter ~~quarters~~ of ~~2005~~2006 from $931.24 million during the ~~first~~second ~~three~~quarter ~~quarters~~ of ~~2004~~2005. Expressed as a percentage of net sales, ~~general~~operating ~~and administrative~~ expenses ~~increased~~were toflat ~~6.9%~~ in the ~~first~~second ~~three~~quarter ~~quarters~~ of ~~2005~~2006 ~~from~~as ~~6.1%~~compared to in the ~~first~~second ~~three~~quarter ~~quarters~~ of ~~2004~~ 2005. The dollar increase ~~over~~can ~~the~~be ~~prior~~attributed ~~year period is primarily attributable~~ to: (a) ~~bonus~~general ~~expense~~restaurant ~~accruals~~operating asexpenses ~~year-to-date~~($860,000) ~~cash~~due ~~flow~~to ~~results~~the ~~are~~increased ~~currently~~sales ~~exceeding~~volume, ~~targeted~~(b) increased ~~levels~~advertising ~~under~~expense ($720,000) the ~~Company’s~~majority ~~bonus plan while the~~of ~~prior~~which ~~year~~is ~~did~~a ~~not~~timing ~~($1.2~~issue, ~~million~~(c); ~~and~~higher utility costs (b$250,000) ~~stock~~ ~~compensation~~primarily ~~expense~~because ~~relating~~of toincreased ~~the~~electric ~~award~~rates, ofand ~~37,500~~(d) ~~shares~~increased ofoccupancy ~~common~~costs ~~stock~~($175,000) due to ~~key~~scheduled ~~members~~rent ~~of management~~increases; ~~and~~all ~~independent~~partially ~~members~~offset ofby ~~the~~decreased ~~Board~~worker’s compensation ofand ~~Directors~~group health insurance expenses (~~approximately~~ $~~262~~380,000) ~~including~~and ~~associated~~gift ~~payroll~~card breakage ~~taxes~~income ($175,000).

~~Asset~~General and ~~Impairment~~Administrative ~~Charge~~Expenses. ~~During~~ ~~the~~General ~~second~~and ~~quarter of~~administrative ~~2005,~~expenses ~~the~~increased ~~Company~~approximately ~~assessed~~$400,000 ~~certain~~to ~~non-performing~~$3.7 ~~restaurants~~million ~~for recoverability~~during ~~and~~the ~~determined~~second quarter ~~an impairment~~ of ~~fixed~~2006 ~~assets~~compared ~~existed~~to atapproximately ~~four restaurant locations~~$3. ~~The~~3 ~~Company~~million ~~estimated~~in the ~~fair~~second ~~value~~quarter of ~~these~~ ~~assets~~2005. ~~based~~The onincrease ~~the~~is ~~net~~primarily ~~present~~due ~~value~~to ofincreased ~~the~~corporate ~~expected~~salaries ~~cash~~and ~~flows of the four~~related ~~restaurants. The~~benefits, ~~carrying~~including ~~amount~~bonus ofplan ~~the~~accruals. ~~assets~~Expressed ~~exceeded~~as ~~the~~a ~~fair~~percentage ~~value~~ of net ~~the~~sales, ~~assets~~general byand ~~approximately~~administrative ~~$0.9~~expenses ~~million. The~~increased ~~Company~~to ~~recorded~~6.8% ~~an impairment~~in ~~charge during~~ the second quarter toof ~~reflect~~2006 ~~the~~from ~~write~~6.2% ~~down~~in of the ~~affected assets~~second toquarter ~~fair~~of ~~value~~2005.

~~Depreciation, Amortization,~~Asset ~~Deferred~~Impairment ~~Rent and Pre-opening Expenses~~Charge. ~~Depreciation,~~ As ~~amortization,~~discussed ~~deferred~~in ~~rent~~Note ~~and~~6 ~~pre-opening expenses~~of ~~decreased~~Notes ~~by approximately $700,000, or 7.4%,~~ to ~~$8.8 million during~~ ~~the~~Condensed ~~first~~Consolidated ~~three~~Financial ~~quarters~~Statements, ~~of 2005 from $9.5 million during~~ the ~~first~~Company ~~three~~assessed certain ~~quarters~~non-performing ofrestaurants ~~2004. The~~for ~~decrease~~recoverability isbut ~~primarily~~determined ~~due~~no ~~to reduced deferred rent~~impairment existed as of the ~~majority~~end of ~~restaurant leases are past~~ the ~~half-way~~second ~~point~~quarter of ~~their primary~~2006. ~~terms~~An ~~and~~impairment ~~includable~~charge ~~renewal periods. Additionally, pre-opening~~of ~~expenses~~approximately ~~were~~ $~~280~~907,000 ~~less~~was ~~than~~recorded in ~~2004 due to one restaurant opening in 2005 versus three in 2004. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-opening expenses decreased to 5.8% in~~ the ~~first~~ ~~three~~second ~~quarters~~quarter of 2005 ~~from 6~~.~~3% during the first three quarters of 2004.~~

~~Interest Expense~~Depreciation, Amortization, ~~net~~Deferred Rent and Pre-opening Expenses. ~~Net~~ Depreciation, ~~interest~~amortization, ~~expense~~deferred rent and pre-opening expenses decreased by approximately $~~100~~200,000, ~~or 1.3%,~~ to $72.98 million during the ~~first~~second ~~three quarters~~quarter of ~~2005~~2006 from $83.0 million during the ~~first~~second ~~three~~quarter ~~quarters~~of 2005. The decrease is primarily due to decreased deferred rent as many leases with step rent provisions now require cash payments in excess of ~~2004~~the calculated pro-rata rent expense. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-opening expenses decreased to 5.0% in the second quarter of 2006 from 5.8% during the second quarter of 2005.

~~Income~~Interest Expense, ~~Taxes~~net. ~~The~~ Net ~~Company~~interest ~~has~~expense andecreased ~~historical trend~~by ofapproximately ~~recurring~~$100,000 ~~pre-tax~~to ~~losses~~$2. ~~The~~5 ~~Company previously~~million ~~recorded~~during athe ~~full~~second ~~valuation~~quarter ~~allowance~~of ~~for~~2006 ~~its net deferred tax~~from ~~asset~~$2. ~~The~~6 ~~Company~~million ~~also~~during ~~provided a full valuation allowance relating to~~ the ~~tax~~second ~~benefits~~quarter ~~generated~~of ~~since~~2005. ~~2003 (primarily~~Increased ~~from~~overnight ~~its operating losses).~~ investment Asfunds ofand ~~December 29,~~higher ~~2004,~~interest ~~the~~rates ~~Company~~available ~~had~~thereon ~~net~~have ~~operating~~resulted ~~losses~~in ~~and~~increased ~~tax~~interest ~~credit~~income ~~carry~~thereby ~~forwards~~reducing ~~totaling~~net ~~$7.8~~interest ~~million~~expense.

~~Liquidity~~Income Taxes. We have an historical trend of recurring pre-tax losses. We previously recorded a full valuation allowance for our net deferred tax asset and ~~Capital~~have ~~Resources~~also provided a full valuation allowance relating to the tax benefits generated since 2003 (primarily from operating losses). We recorded a tax provision of approximately $80,000 in the second quarter of 2006 which was offset by the release of a like amount from our valuation allowance. FICA Tip Credits of approximately $375,000 favorably impact the effective income tax rate for the thirteen weeks ended June 28, 2006.

~~The Company has historically met its capital~~Twenty ~~expenditures~~Six-Weeks ~~and~~Ended ~~working~~June ~~capital needs through a combination of operating cash flow and bank and mortgage borrowings~~28, ~~the~~2006 ~~sale~~Compared ofto ~~the~~Twenty-Six ~~Senior~~Weeks ~~Notes,~~Ended ~~the sale of Common Stock, and, in fiscal 2003, two sale leaseback transactions.~~June ~~Future~~29, ~~capital and working capital needs are expected to be funded from net cash flows provided by operating cash flow and cash on hand.~~2005

Net Sales. ~~cash~~Total ~~flows~~net ~~provided~~sales increased by ~~operating activities were~~ approximately $45.2 million, or 5.1%, to $107.7 million ~~for~~during the first ~~three~~two quarters of ~~2005,~~2006 ~~approximately~~from $3102.25 million ~~more~~during ~~than~~the first two quarters of 2005. The increase was primarily due to a 5.1% increase in the ~~approximate~~91 $comparable restaurants’ sales plus five incremental restaurant weeks from one restaurant opened since January 2005. Comparable dine-in guest counts increased 1.02% ~~million~~for ~~provided~~the ~~during~~first two quarters of 2006 as compared to the first two quarters of ~~three~~2005. Comparable dine-in sales increased 4.7% and comparable carry-out and delivery sales increased 6.3% for the first two quarters as compared to the first two quarters of ~~2004~~2005. As We believe comparable restaurant sales increases have been a result of ~~September~~increased guest visits combined with a shift in menu mix to dinner entrees versus pizza, and an approximate 1.7% menu price increase in January 282006. For the 91 comparable restaurants, ~~2005~~average weekly sales were approximately $45,100 for the ~~Company~~first ~~had~~two quarters of 2006 compared to ~~cash~~approximately ~~and~~$43,900 ~~cash~~per ~~equivalents~~week for the first two quarters of ~~$13~~2005.~~8 million.~~

~~The~~Cost ~~Company’s capital additions were approximately~~of $3Sales.3 Cost ~~million~~of ~~during~~sales ~~the~~increased ~~first~~by ~~three~~approximately ~~quarters~~$250,000, or of0.8%, ~~2005 compared~~ to ~~approximately~~ $624.4 million ~~for~~during the ~~comparable~~first ~~prior~~two ~~year~~quarters ~~period. The capital expenditures were primarily comprised~~ of ~~$419,000~~2006 ~~for~~from ~~a new restaurant which~~$24.2 ~~opened~~million induring the first ~~quarter~~two quarters of 2005 ~~and $2~~.~~9 million for remodeling and~~ ~~maintenance~~Expressed ~~capital. The~~as ~~Company~~a ~~anticipates~~percentage ~~capital expenditures for the remainder~~ of ~~2005~~net ~~will be approximately $1.7 million.~~sales,

As of September 28, 2005, the Company had $92.2 million in consolidated indebtedness, $85.3 million pursuant to the Senior Notes, $6.1 million of capital lease obligations, and $0.8 million of promissory notes. The Senior Notes contain no financial covenants and the Company, as of the filing of this report on Form 10-Q, is in compliance with all non-financial covenants related to the Senior Notes. The Senior Notes bear interest at the rate of 10 ¾% per annum, payable semi-annually on January 15 and July 15. The Senior Notes are due in full on July 15, 2008.

Through July 15, 2006, the Company may, at its option, redeem any or all of the Senior Notes at face value, plus a declining premium, which is 1.79% through July 15, 2006. After July 15, 2006, the Senior Notes may be redeemed at face value. Additionally, under certain circumstances, including a change of control or following certain asset sales, the holders of the Senior Notes may require the Company to repurchase the Senior Notes, at a redemption price of 101% of face value.

~~The~~overall ~~Company~~cost isof ~~operating~~sales ~~without~~decreased ato ~~line~~22.7% ofduring ~~credit~~the ~~and~~first istwo ~~funding~~quarters ~~all~~of 2006 from 23.6% during the first two quarters of ~~its~~2005. The ~~capital~~percentage ~~expenditures~~decrease can be attributed to decreases in certain ingredient costs, ~~debt~~the ~~reductions~~benefit from the menu price increase, and ~~operating~~better food cost controls; ~~needs~~all ~~out~~partially ofoffset ~~cash~~by ~~flows~~a ~~from~~menu ~~operations~~mix ~~and~~shift ~~cash~~away onfrom ~~hand~~pizzas to dinner entrees.

~~The~~Operating Expenses. ~~Company~~Operating ~~has~~expenses aincreased by approximately $2.4 million, or 3.09%, to $64.2 million ~~(maximum)~~during ~~letter~~the first two quarters of 2006 from ~~credit~~$61.8 ~~facility~~million ~~(which~~during ~~was~~the ~~renewed~~first intwo ~~December~~ quarters of 2005). Expressed as ~~collateral~~a ~~with~~percentage ~~third~~of ~~party~~net ~~administrators~~sales, ~~for~~operating ~~self~~expenses ~~insurance~~decreased ~~reserves~~to 59. As6% ofin ~~September 28,~~the first two quarters ~~2005~~of ~~and~~2006 from 60.3% during the ~~filing~~first two quarters of ~~this~~2005. ~~report~~The ondollar ~~Form 10-Q,~~increase can ~~this~~be ~~facility~~attributed ~~was collateralized~~to: ~~with~~(a) general restaurant operating expenses ($21.2 8 million) ofdue ~~cash~~to ~~restricted~~the ~~from~~increased ~~general~~sales ~~use.~~volume, (b) increased advertising ~~Letters~~expense of($240,000), ~~credit~~(c) ~~totaling~~higher utility costs ($~~2.2~~590,000) ~~million~~because ~~were~~of ~~outstanding~~increased electric onand ~~September 28~~gas rates, and (d) increased occupancy costs ($400,000) due to ~~2005~~scheduled rent increases; all partially offset by decreased worker’s compensation and ashealth ofinsurance ~~the~~expenses ~~filing~~($540,000) ofand ~~this~~gift ~~report~~card onbreakage income ~~Form 10-Q~~($175,000).

~~The Company believes the cash flow generated from~~General ~~its operations~~ and ~~cash~~Administrative onExpenses. ~~hand~~General ~~should~~and beadministrative expenses ~~sufficient~~increased toapproximately ~~fund its debt service requirements~~$500,000 ~~lease~~to ~~obligations,~~$7.3 ~~expected~~million ~~capital~~during ~~expenditures~~the ~~and~~first ~~other~~two ~~operating~~quarters ~~expenses~~of ~~for~~2006 ~~the~~compared ~~next~~to ~~twelve months~~$6.8 ~~Until~~million in the ~~2008~~first ~~maturity~~two quarters of ~~its~~2005. ~~Senior~~The ~~Notes,~~increase ~~the~~is ~~Company~~primarily ~~expects~~due to beincreased ~~able~~corporate tosalaries ~~service~~and ~~its debt~~related benefits, ~~but~~including ~~the~~bonus ~~lack~~plan accruals. Expressed as a percentage of ~~short~~net ~~term~~sales, ~~borrowing~~general ~~availability~~and ~~may~~administrative expenses ~~impede~~increased ~~growth~~to 6.8% ~~The~~in ~~Company~~the ~~is evaluating~~first ~~various~~two ~~refinancing~~quarters ~~alternatives~~of ~~for~~2006 ~~its~~from ~~Senior~~6.6% ~~Notes~~in ~~prior~~the first totwo ~~their maturity~~quarters inof ~~2008~~2005.

~~The~~Asset Impairment ~~Company’s~~Charge. As ~~future~~discussed ~~operating performance~~in ~~and~~Note ~~ability~~6 of Notes to Condensed ~~service~~Consolidated orFinancial ~~refinance~~Statements, the ~~Senior~~Company ~~Notes~~assessed ~~will be~~certain ~~subject~~non-performing torestaurants ~~future~~for ~~economic~~recoverability ~~conditions~~but ~~and~~determined tono ~~financial, business and other~~impairment ~~factors,~~existed ~~many~~as of ~~which~~the ~~are~~end ~~beyond~~of the ~~Company’s~~second ~~control~~quarter of 2006. ~~Significant liquidity~~ ~~demands~~An ~~will~~impairment ~~arise~~charge ~~from~~of approximately ~~debt~~$907,000 ~~service~~was onrecorded in the ~~Senior~~second ~~Notes~~quarter of 2005.

~~There~~Depreciation, Amortization, ~~have~~Deferred ~~been~~Rent noand ~~material~~Pre-opening ~~changes~~Expenses. Depreciation, amortization, deferred rent and pre-opening expenses decreased by approximately $700,000 to $5.5 million during the first two quarters of 2006 from $6.2 million during the ~~Company’s~~first ~~contractual~~two ~~obligations~~quarters of 2005. The decrease can be attributed to: (a) lower preopening expense ($200,000) because of one less restaurant opening in 2006, (b) depreciation expense ($300,000) because prior impairment charges have reduced the cost basis of certain assets and ~~commitments~~the associated ~~from~~depreciation ~~those~~expense ~~disclosed~~and equipment acquired in the Acquisition have become fully depreciated, and (c) decreased deferred rent ($200,000) as many leases with step rent provisions now require cash payments in excess of the ~~Original~~calculated ~~2004~~pro-rata 10rent expense. Expressed as a percentage of net sales, depreciation, amortization, deferred rent and pre-Kopening expenses decreased to 5.1% in the first two quarters of 2006 from 6.0% during the first two quarters of 2005.

~~Impact~~Interest Expense, net. Net interest expense decreased by approximately $300,000 to $5.0 million during the first two quarters of ~~Inflation~~2006 from $5.3 million during the first two quarters of 2005. Increased overnight investment funds and higher interest rates available thereon have resulted in increased interest income thereby reducing net interest expense.

~~Inflationary~~Income Taxes. ~~factors~~We ~~such~~have asan ~~increases~~historical intrend ~~labor,~~of recurring pre-tax ~~food~~losses. orWe ~~other~~previously ~~operating~~recorded ~~costs~~a ~~could~~full ~~adversely~~valuation ~~affect~~allowance ~~the~~for ~~Company’s operations. The~~our ~~Company~~net ~~does~~deferred tax ~~not~~asset ~~believe~~and ~~inflation~~have ~~has~~also ~~had~~provided a ~~material impact~~full onvaluation ~~its~~allowance ~~financial~~relating ~~position~~to orthe ~~results~~tax benefits ofgenerated ~~operations~~since ~~for~~2003 ~~the~~(primarily ~~periods discussed~~from ~~above~~operating losses). ~~Management~~We ~~believes~~recorded ~~through~~a ~~the~~tax ~~proper~~provision ~~leveraging~~ of ~~purchasing~~ ~~size~~approximately $98,000 ~~labor~~for ~~scheduling,~~the ~~and~~twenty-six ~~restaurant~~weeks ~~development~~ended ~~analysis~~June 28, ~~inflation~~ ~~will~~2006, ~~not~~which ~~have~~was aoffset ~~material~~by ~~adverse~~the release ~~effect~~of ona ~~operations~~like ~~during~~amount ~~the foreseeable~~from ~~future~~our valuation allowance. ~~There~~FICA ~~can~~Tip beCredits noof ~~assurance~~approximately ~~inflation~~$750,000 favorably ~~will~~impact ~~not materially~~the ~~adversely~~effective ~~affect~~income tax rate for the ~~Company~~twenty-six weeks ended June 28, 2006.

~~Seasonality~~Liquidity and Capital Resources

~~The~~We ~~Company’s~~have ~~quarterly~~historically ~~results~~met ofour ~~operations~~capital ~~have fluctuated~~expenditures and working ~~are~~capital ~~expected~~needs tothrough ~~continue~~a tocombination ~~fluctuate~~of ~~depending~~operating oncash aflow ~~variety~~and ofbank ~~factors~~borrowings, ~~including~~ the ~~timing~~sale of ~~new~~the ~~restaurant~~Senior ~~openings~~Notes, ~~and~~the ~~related pre-opening~~sale ~~and~~of ~~other~~Common ~~startup expenses~~Stock, ~~net sales contributed by new restaurants~~and, ~~increases or decreases~~ in fiscal ~~comparable restaurant sales~~2003, ~~competition and~~two ~~overall~~sale ~~economic~~leaseback ~~conditions~~transactions. ~~The~~ We ~~Company’s~~expect ~~business~~our isfuture ~~also subject~~capital ~~to seasonal influences of consumer spending, dining out patterns~~ and ~~weather. As~~ isworking ~~the~~capital ~~case~~needs ~~with~~will ~~many~~be ~~restaurant~~funded ~~companies,~~from ~~the Company typically experiences lower~~ net ~~sales~~cash ~~and~~flows ~~net~~provided ~~income during the first and~~by ~~fourth~~operating ~~quarters. Because~~cash offlow ~~these fluctuations in net sales~~ and ~~net~~cash ~~loss, the~~on ~~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~~hand.

~~Critical~~Net ~~Accounting~~cash ~~Policies~~flows provided by operating activities were $4.8 million for the first two quarters of 2006, approximately $800,000 more than the first two quarters of 2005. As of June 28, 2006, we had cash and cash ~~Estimates~~equivalents of $23.1 million.

The discussion and analysis of the Company’s financial condition and results of operations are based upon its 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 the Company 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, self-insurance, and closed restaurant reserves. 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 the Company’s business, see the “Forward-Looking Statements” above and other factors included in the Company’s other filings with the SEC.

The Company’s critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements. The Company believes its critical accounting policies relate to the impairment of long-lived assets, income tax valuation allowances, self-insurance and closed restaurant reserves. For a more detailed discussion of the Company’s 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 the 2004 Annual Report Amendment. There

~~have~~Our capital additions were $3.1 million during the ~~been~~first notwo ~~material~~quarters ~~changes~~of 2006 as compared to $1.9 million for the ~~Company’s~~comparable ~~critical~~prior year ~~accounting~~period. ~~policies~~The ~~and~~capital expenditures were primarily comprised of remodeling ~~estimates~~and ~~from~~maintenance ~~those~~capital. ~~disclosed~~We inanticipate capital expenditures for the ~~2004~~remainder of ~~Annual~~2006 ~~Report~~will ~~Amendment~~be approximately $3.8 million, including capital related to the opening of a restaurant.

As of June 28, 2006, we had $92.1 million in consolidated indebtedness which consisted of $85.3 million pursuant to the Senior Notes, $6.0 million of capital lease obligations, and $0.8 million of promissory notes. The Senior Notes contain no financial covenants and we are in compliance with all non-financial covenants as of August 10, 2006. The Senior Notes bear interest at the rate of 10 ¾% per annum, 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 or following certain asset sales, the holders of the Senior Notes may require us to repurchase the Senior Notes, at a redemption price of 101% of face value.

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 facility (expiring in December 2006) as collateral with third party administrators for self insurance reserves. Letters of credit totaling $2.2 million were outstanding on June 28, 2006, collateralized by $2.2 million of cash restricted from general use.

We believe the cash flow generated from our operations and cash on hand should be sufficient to fund our debt service requirements, lease obligations, expected capital expenditures and other operating expenses through 2006. Beyond 2006 and up to the 2008 maturity of our Senior Notes, we expect to be able to service our debt, but the lack of short term borrowing availability may impede growth. We are evaluating various refinancing alternatives for our Senior Notes upon their maturity in 2008.

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 debt service on our Senior Notes.

As of December 28, 2005 we had future contractual obligations as follows:

	Payments Due by Fiscal Year
	(Dollars in Thousands)
Contractual Obligations:	Total		2006		2007 - 2008		2009 - 2010		After 2010
Operating Leases	$	96,954	$	15,269	$	25,859	$	19,825	$	36,001
Capital Leases	12,749		693		1,419		1,416		9,221
Senior Notes	103,652		9,171		94,481		—		—
Promissory Notes	802		97		228		276		201
Closed restaurants reserve, net of sublease income	372		270		102		—		—
Total Contractual Obligations	$	214,529	$	25,500	$	122,089	$	21,517	$	45,423

We executed contractual obligations subsequent to December 28, 2005 as follows:

	(Dollars in Thousands)
Contractual Obligations:	Total		2006		2007 - 2008		2009 - 2010		After 2010

Operating Leases	$	10,579	$	321	$	3,633	$	3,880	$	2,745
Utility purchase commitments (1)	4,986		706		2,935		1,345		—
	$	15,565	$	1,027	$	6,568	$	5,225	$	2,745

(1) We have executed contracts to provide electricity to thirty-nine restaurants at a fixed rate per kilowatt through 2009. The Company believes these contracts qualify for the “normal purchases” exception as defined by SFAS Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. Therefore, the contracts are not required to be marked to market through the Condensed Consolidated Statement of Operations. The purchase commitments represent an estimate of the minimum usage per year multiplied by the contracted rates.

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, and closed restaurants reserve. 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 2005 Annual Report and other filings with the Securities and Exchange Commission.

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 and closed restaurants reserves. 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 2005 Annual Report. There have been no material changes to our critical accounting policies and estimates from those disclosed in our 2005 Annual Report, except as noted below.

Gift cards

We record a liability in the period in which a gift card is issued and proceeds are received. As gift cards are redeemed, this liability is reduced and revenue is recognized. We recognize gift card breakage income (“breakage”) when the likelihood of the redemption of the card becomes remote. In the second quarter of 2006, we recognized $175,000 of breakage, recorded as a reduction of Operating expenses.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

~~The~~We ~~Company~~have ~~has~~ no exposure to ~~specific~~ specific risks related to derivatives or other “hedging” types of financial instruments. In addition, ~~the~~we ~~Company does~~do not have operations outside of the United States of America which would expose it us to foreign currency risk and ~~substantially all of the Company’s outstanding~~our outstanding debt has fixed interest rates.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. ~~The~~ ~~Company~~We ~~maintains~~maintain disclosure controls and procedures designed to ensure ~~that~~ information required to be disclosed in ~~the Company’s~~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 Securities and Exchange Commission (the “SEC”), and ~~that~~ such information is accumulated and communicated to management, including ~~the~~our ~~Company’s~~ Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating ~~the~~our disclosure controls and procedures, ~~management~~we recognized ~~that~~ controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of ~~achieving~~ achieving the desired control objectives, as ~~the~~ours ~~Company’s~~ are designed to do, and ~~management~~we necessarily were ~~was~~ required to apply ~~its~~our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

InDuring ~~connection with~~ the second ~~preparation~~quarter of ~~the Company’s Quarterly Report on Form 10-Q for the~~ fiscal ~~quarter~~ ~~ended September 28~~2006, ~~2005,~~we ~~the Company~~ performed an evaluation under the supervision and with the participation of ~~the~~our ~~Company’s~~ management, including ~~the~~our CEO and CFO, of the effectiveness of the design and operation of ~~the~~ ~~Company’s~~our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). In ~~performing~~Based ~~this~~ on that evaluation, ~~management~~our ~~became~~CEO ~~aware~~and ofCFO ~~errors~~concluded inour ~~its~~disclosure controls ~~detailed property~~ and ~~equipment~~ ~~records. These~~procedures ~~errors~~were ~~involved the~~effective ~~calculation~~as of ~~depreciation~~June ~~expense~~28, ~~on multiple property records and the related impact on income taxes during the Relevant Period~~2006.

~~Subsequent~~Changes toin ~~the~~Internal ~~discovery of~~Control ~~these errors, management conducted an investigation concerning the extent and magnitude of these~~over ~~errors~~Financial Reporting. AsThere ~~a result of this inquiry, on January 12, 2006 the Audit Committee and management concluded that: (1) the Company’s depreciation and income tax expense accounting practices~~ were ~~not~~no ~~appropriate as~~significant ofchanges ~~September 28, 2005; (2) aggregate additional depreciation expense of approximately $3.5 million needed~~ to ~~be recorded in its financial~~our ~~statements~~internal ~~for~~control ~~the~~over ~~Relevant Period, and income tax expense was not properly adjusted in the Initial Restatement, and therefore, its~~ financial ~~statements~~reporting ~~relating~~occurring toduring ~~the~~our ~~Relevant Period~~last ~~were required to be restated; and (3) the Company needed to amend~~fiscal ~~the~~quarter ~~Subject~~materially ~~Filings and restate the financial statements contained therein and reflect the proper recording of depreciation and income tax expense for the periods reported therein (collectively~~affecting, ~~the~~or ~~“Subject~~reasonably ~~Financial~~likely ~~Statements”). See Note 3 of Notes~~ to ~~Condensed~~materially ~~Consolidated Financial Statements. Based on the determination the Company’s depreciation and income tax expense accounting practices were not appropriate as of September 28~~affect, ~~2005, the Company’s CEO~~our ~~and~~internal ~~CFO~~control ~~concluded~~over ~~that~~financial ~~the Company’s disclosure controls and procedures were not effective as of that date~~reporting.

Internal Control Over Financial Reporting. Based on the definition of “material weakness” in the Public Company Accounting Oversight Board’s Auditing Standard No. 2, (An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements), restatement of the Subject Financial Statements is a strong indicator of the existence of a “material weakness” in the design or operation of internal control over financial reporting. Based on the evaluation of the Company’s controls and procedures, management concluded a material weakness existed in the Company’s internal control over financial reporting as it related to its depreciation expense accounting practices, and disclosed this to the Audit Committee and to the Company’s independent registered public accountants.

Remediation Steps to Address Material Weakness. To remediate the material weakness in the Company’s internal control over financial reporting, the Company has re-performed all of the necessary calculations and added sufficient review and approval procedures to assure management the material weakness has been corrected.

Change in Internal Control Over Financial Reporting. There were no significant changes in the Company’s internal control over financial reporting that occurred during the Company’s third fiscal quarter of 2005 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company did, however, make changes to its internal control over financial reporting in the first fiscal quarter of 2006, by making the changes to its depreciation and income tax expense accounting practices set forth above.

PART II: OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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

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

During the third quarter of 2005, the Company issued 5,250 shares of Common Stock to an officer and a senior employee as a bonus. The Company recorded a compensation charge of $25,905 in connection with the grant of these shares. Each grantee acknowledged in writing the transfer of their shares is subject to the provisions of a Stockholders’ Agreement, which is summarized in “Security Ownership of Certain Beneficial Owners and Management - Shareholders Agreement” in the Original 2004 10-K (“Stockholders’ Agreement”). If the grants of such shares are characterized as sales under Section 5 of the Securities Act of 1933, as amended (the “Act”), then the Company believes the grants were exempt from registration under the Act pursuant to the exemption provided by Section 4(2) of the Act. No commissions were paid to any underwriter in connection with the issuance of these shares.

The grants were issued as follows:

On July 21, 2005, the Company issued 3,000 shares of Common Stock to an officer.

On August 18, 2005, the Company issued 2,250 shares of Common Stock to a senior employee.

In addition, on September 27, 2005 the Company sold 30,000 shares of Common Stock to each of Stephen V. Clark, a director and Chief Executive Officer of the Company, and David G. Lloyd, a director and President of the Company, for a purchase price of $6.66 per share. The price per share was the Company’s estimate of fair value at the time of the sale, and was approved by the Company’s Board of Directors. Each of Messrs. Clark and Lloyd acknowledged in writing the transfer of their shares is subject to the provisions of the Stockholders’ Agreement. These sales were exempt from registration under the Act pursuant to the exemption provided by Section 4(2) of the Act. No commissions were paid to any underwriter in connection with the sale of these shares.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

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

None

Item 5. OTHER INFORMATION

None

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.

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: January 19, 2006	By:	/s/ Stephen V. Clark
		Chief Executive Officer and Director
Date: January 19, 2006	By:	/s/ David G. Lloyd
		Chief Financial Officer and Director

PART II: OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are involved in various legal proceedings from time to time incidental to the conduct of our business. In our opinion, any ultimate liability arising out of such proceedings will not have a material adverse effect on our financial condition or our results of operations.

Item 1A. RISK FACTORS

None

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

None

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.

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: August 11, 2006	By:	/s/ Stephen V. Clark
		Chief Executive Officer and Director

Date: August 11, 2006	By:	/s/ David G. Lloyd
		President, Chief Financial Officer and Director

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