BUCA (BUCA) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

Bob Kleiber

BUCA, Inc.

612-225-3276

BUCA Reports Results for 4th Quarter & Full Year of 2004,

1st Quarter of 2005;

Completes Restatement of Prior Period Financial Statements;

Comparable Restaurant Sales Increase 5.6% in 1st Quarter of 2005;

Company Files Lawsuit Against Former Executives

Minneapolis - July 25, 2005 – BUCA, Inc. (NASDAQ: BUCAE) today reported financial results for the full year and fourth quarter of fiscal 2004 and for the first quarter of fiscal 2005.

As a result of its previously announced review of accounting policies related to leases and other matters as well as its recent internal investigation, the Company has restated its results for fiscal 2000 through 2003 and for the first three quarters of fiscal year 2004. The effects of the restatements are set forth in more detail in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2004 and in its Form 10-Q for the first quarter of fiscal 2005 ended March 27, 2005.

Total sales for fiscal 2004 increased 3.5% to $258.4 million from a restated $249.6 million in fiscal 2003. Overall, comparable restaurant sales for fiscal 2004 declined by approximately 1.5%, with comparable restaurant sales for Buca di Beppo decreasing by 1.4% and comparable restaurant sales at Vinny T’s of Boston decreasing by 2.0% from fiscal 2003 levels. The Company reported a net loss for fiscal 2004 of $37.6 million, or $1.92 per share, which included a loss on impairment of long-lived

assets of $10.7 million, a loss on impairment of goodwill of $11.6 million, lease termination charges of $1.9 million and a loss from early extinguishment of debt of $1.7 million. For fiscal 2003, the Company had a restated net loss of $23.5 million, or $1.41 per share, which included a loss on impairment of long-lived assets of $17.8 million.

For the fourth quarter of fiscal 2004, total sales rose 5.6% to $69.2 million from a restated $65.5 million in the same period in fiscal 2003. Overall, comparable restaurant sales in the fourth quarter of fiscal 2004 increased by approximately 2.3% as compared to the same period in fiscal 2003. Comparable restaurant sales at Buca di Beppo increased by approximately 2.5% and comparable restaurant sales at Vinny T’s of Boston increased by approximately 0.4% as compared to the same period in fiscal 2003. For the fourth quarter of fiscal 2004, the Company had a net loss of $18.1 million, or $0.90 per share, compared with a restated net loss of $21.5 million, or $1.28 per share, in the fourth quarter of fiscal 2003.

Total sales for the first quarter of fiscal 2005 were $70.5 million as compared to a restated $64.7 million in the first quarter of fiscal 2004. Comparable restaurant sales increased by approximately 5.6% as compared to the same period in fiscal 2004, reflecting a 6.5% increase at Buca di Beppo restaurants and a 2.0% decrease at Vinny T’s of Boston. The Company reported a net loss of $1.6 million, or $0.08 per share for the first quarter of fiscal 2005, which included a charge of $0.4 million for impairment of long-lived assets and $0.1 million for the termination of a lease on one restaurant site. For the first quarter of fiscal 2004, the Company reported a restated net loss of $1.4 million, or $0.08 per share, including a loss on early extinguishment of debt of $0.5 million.

The Company also identified certain material weaknesses in its system of internal control over financial reporting as more fully disclosed in its Annual Report on Form 10-K for the fiscal year ended December 26, 2004. The Company is taking remedial measures to correct these control deficiencies. In addition, the Company has devoted significant resources to document, test, monitor, and improve these controls and will continue to do so.

The Company also announced that it has filed a civil action against two of its former officers, Greg Gadel and John Motschenbacher. Gadel was the Company’s Chief Financial Officer until his resignation in February 2005 and Motschenbacher was an officer of the Company since 1999, and served as the Company’s Senior Vice President and Chief Information Officer from February 2004 until his termination in March 2005.

In March 2005, the Company announced that it had terminated the employment of Motschenbacher and another executive. Acting through its audit committee and with the assistance of independent counsel, the Company then commenced an internal investigation of matters relating to the termination of these two executive officers.

The complaint alleges that Gadel and Motschenbacher caused the Company to enter into unfavorable transactions with companies in which Gadel and Motschenbacher had undisclosed, material financial interests, causing the Company to overpay for goods and services; solicited and received undisclosed kickbacks from a vendor; and sought and received improper reimbursement from the Company for business expenses that were, in fact, personal in nature, such as family vacations.

Wallace B. Doolin, the Company’s chairman, CEO and president, said, “The investigations and restatements have required a significant amount of management time and attention, but despite the distractions, the fundamentals of the business continue to show strength. We are particularly encouraged by the continued comparable restaurant guest count and sales improvement and by our ability to make significant progress in moving the business forward despite the distractions of recent months.

“We are focused on continuing to improve our guest count and comparable restaurant sales, reviewing opportunities to improve our margins and creating a sustainable, long-term strategic plan for the Company. This will be a multi-year plan to restore growth and profitability to BUCA, Inc.”

Doolin continued, “I am pleased to report that we have made good progress in achieving the top objective of this multi-year turnaround — higher comparable restaurant sales driven by improved guest counts. From the fourth quarter of fiscal 2004 through the first quarter of fiscal 2005, we have improved our comparable restaurant sales and increased the frequency of our guest visits.

“We have also seen encouraging progress on a number of other fronts:

• The acceptance of our BUCA Small menu continues to be strong; in just a year, it has grown to account for about 35% of our total food sales, a remarkable achievement for any new menu offering.

• Our marketing efforts to improve the frequency of guest visits and to increase the number of new guest visits have been effective.

• According to the reports of the secret shoppers we retain, our Paisano Partners have recommitted their family members to delivering hospitality and quality product in our points of difference training and execution program.

• We have recruited a first-class executive management team, including Chief Operating Officer Modesto Alcala, Chief Financial Officer Kaye O’Leary, Chief Family Resources Officer Cindy Rodahl, and General Counsel Rich Erstad while retaining our seasoned and valued Chief Marketing Officer Steve Hickey.

• We have restructured the field organization to provide additional support to our Paisanos. This includes establishing the framework of divisional culinary chefs working with our multi-unit operators to ensure continuous improvement on food quality and execution, the core of our business.

• We are striving to address the corporate governance issues as responsible stewards for the Company’s shareholders, while seeking to inspire our Paisanos and field staff to make lasting business improvements by delivering one great restaurant experience at a time.”

BUCA, Inc., owns and operates 107 highly acclaimed Southern Italian restaurants under the names Buca di Beppo and Vinny T’s of Boston in 30 states and the District of Columbia.

BUCA, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share data)

	December 26, 2004			December 28, 2003 (restated)
ASSETS
Current assets:
Cash and cash equivalents	$	4,314		$	3,014
Accounts receivable		2,796			3,537
Inventories		7,379			7,625
Prepaid expenses and other		4,486			3,199
Total current assets		18,975			17,375
Property, equipment and leasehold improvements, net		157,921			171,220
Other assets		6,349			7,936
Goodwill		—			11,591
	$	183,245		$	208,122
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,840		$	14,399
Accrued gift cards and certificates		4,747			2,768
Accrued payroll and benefits		7,542			6,377
Accrued sales, property and income tax		3,590			1,148
Other accrued expenses		6,167			2,374
Line of credit borrowing		1,986			17,000
Current maturities of long-term debt and capitalized leases		1,368			5,115
Total current liabilities		39,240			49,181
Long-Term Debt And Capital Leases, less current maturities		19,579			17,021
Deferred Rent		18,236			16,257
Other Liabilities		3,113			2,830
Total liabilities		80,168			85,289
Shareholders’ equity:
Undesignated stock, 5,000,000 shares authorized, none issued or outstanding
Common stock, $.01 par value per share, 30,000,000 authorized; 20,165,975 and 16,804,921 shares issued and outstanding, respectively		202			168
Additional paid-in capital		169,112			151,538
Accumulated deficit		(65,122	)		(27,535	)
		104,192			124,171
Notes receivable from employee shareholders		(1,115	)		(1,338	)
Total shareholders’ equity		103,077			122,833
	$	183,245		$	208,122

BUCA, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share data)

	December 26, 2004			December 28, 2003 (restated)
Restaurant sales	$	258,408		$	249,625
Restaurant costs:
Product		65,879			62,595
Labor		86,440			81,332
Direct and occupancy		77,835			69,666
Depreciation and amortization		14,843			16,003
Total restaurant costs		244,997			229,596
General and administrative expenses		21,264			18,997
Pre-opening costs		1,651			3,022
Loss on impairment of long-lived assets		10,737			17,753
Loss on impairment of goodwill		11,591			—
Lease termination charges		1,939			—
Operating (loss) income		(33,771	)		(19,743	)
Interest income		71			95
Interest expense		(2,210	)		(2,362	)
Loss on early extinguishment of debt		(1,677	)		—
(Loss) income before income taxes		(37,587	)		(22,010	)
Provision for income taxes		—			(1,539	)
Net (loss) income	$	(37,587	)	$	(23,549	)
Net (loss) income per common share—basic:
Net (loss) income per common share	$	(1.92	)	$	(1.41	)
Weighted average common shares outstanding		19,608,465			16,738,032
Net (loss) income per common share—diluted:
Net (loss) income per common share	$	(1.92	)	$	(1.41	)
Weighted average common shares outstanding		19,608,465			16,738,032

BUCA, Inc. and Subsidiaries

Consolidated Balance Sheets

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

	March 27, 2005			December 26, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	5,614		$	4,314
Accounts receivable		3,882			2,796
Inventories		7,050			7,339
Prepaid expenses and other		2,583			4,546
Total current assets		19,129			18,995
Property, equipment and leasehold improvements, net		153,619			157,860
Other assets:
Other assets		6,188			6,390
	$	178,936		$	183,245
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,242		$	13,840
Accrued gift cards and certificates		2,204			4,747
Accrued payroll and benefits		7,430			7,542
Accrued sales, property and income tax		3,035			3,590
Other accrued expenses		4,801			6,167
Line of credit borrowings		4,900			1,986
Current maturities of long-term debt and capitalized leases		1,368			1,368
Total current liabilities		36,980			39,240
Long-term liabilities:
Long-term debt and capital leases, less current maturities		19,221			19,579
Deferred rent		18,168			18,236
Other liabilities, net		3,088			3,113
Total liabilities		77,457			80,168
Shareholders’ equity:
Undesignated stock, 5,000,000 shares authorized, none issued or outstanding, common stock, $.01 par value per share, 30,000,000 authorized; 20,211,913 and 16,804,921 shares issued and outstanding, respectively		202			202
Additional paid-in capital		169,075			169,112
Accumulated deficit		(66,747	)		(65,122	)
		102,530			104,192
Notes receivable from employee shareholders		(1,051	)		(1,115	)
Total shareholders’ equity		101,479			103,077
	$	178,936		$	183,245

BUCA, Inc. and Subsidiaries

Consolidated Statements of Operations

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

	Thirteen Weeks Ended
	March 27, 2005			March 28, 2004 (restated)
Restaurant sales	$	70,453		$	64,689
Restaurant costs:
Product		18,158			16,482
Labor		23,254			21,588
Direct and occupancy		19,741			18,452
Depreciation and amortization		3,776			3,725
Total restaurant costs		64,929			60,247
General and administrative expenses		5,473			4,526
Pre-opening costs		244			177
Loss on impairment of long-lived assets		440			—
Lease termination costs		74			—
Operating loss		(707	)		(261	)
Interest income		24			25
Interest expense		(942	)		(605	)
Loss on early extinguishment of debt		—			(524	)
Other expense		—
Loss before income taxes		(1,625	)		(1,365	)
Benefit from (provision for) income taxes		—			—
Net loss applicable to common stock	$	(1,625	)	$	(1,365	)
Net loss per share applicable to common stock - basic	$	(0.08	)	$	(0.08	)
Weighted average common shares outstanding - basic		20,180,235			17,940,135
Net loss per share applicable to common stock - diluted	$	(0.08	)	$	(0.08	)
Weighted average common shares outstanding - diluted		20,180,235			17,940,135