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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

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



For the quarterly period ended June 26, 2005



OR



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



For the transition period from  to



Commission File Number 000-51485



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Ruths Chris Steak House, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 72-1060618                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|500 International Parkway, Heathrow, FL  |  | 32746     
|(Address of principal executive offices) |  | (Zip code)



(407) 333-7440

Registrants telephone number, including area code



3321 Hessmer Avenue, Metairie, Louisiana 70002

Former name, former address and former fiscal year, if changed since last report.



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



Indicate by check mark whether the registrant
is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes ̈No ̈



The number of shares outstanding of the registrants common stock as of October 13, 2005, was 23,015,790.



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##### Table of Contents

TABLE OF CONTENTS



|                                                                                              |  |                                                                                                                             |  |    
|--------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ---
|                                                                                              |  | Page                                                                                                                       
|Part I - Financial Information                                                                |  |                                                                                                                            
|                                                                                              | 
|Item 1. Financial Statements:                                                                 |  |                                                                                                                            
|                                                                                              |  |                                                                                                                            
|                                                                                              |  | Condensed Consolidated Balance Sheets as of June 26, 2005 and December 26, 2004                                             |  | 1  
|                                                                                              |  |                                                                                                                            
|                                                                                              |  | Condensed Consolidated Income Statements for the Thirteen and Twenty-six Week Periods ended June 26, 2005 and June 27, 2004 |  | 2  
|                                                                                              |  |                                                                                                                            
|                                                                                              |  | Condensed Consolidated Statements of Cash Flows for the Twenty-six Week Periods ended June 26, 2005 and June 27, 2004       |  | 3  
|                                                                                              |  |                                                                                                                            
|                                                                                              |  | Notes to Condensed Consolidated Financial Statements                                                                        |  | 4-8
|                                                                                              | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 8-13                                                                                                                       
|                                                                                              | 
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |  | 13-14                                                                                                                      
|                                                                                              | 
|Item 4. Controls and Procedures                                                               |  | 14                                                                                                                         
|                                                                                              | 
|Part II - Other Information                                                                   |  |                                                                                                                            
|                                                                                              | 
|Item 1. Legal Proceedings                                                                     |  | 15                                                                                                                         
|                                                                                              | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 15                                                                                                                         
|                                                                                              | 
|Item 3. Defaults Upon Senior Securities                                                       |  | 15                                                                                                                         
|                                                                                              | 
|Item 4. Submission of Matters to a Vote of Securities Holders                                 |  | 15                                                                                                                         
|                                                                                              | 
|Item 5. Other Information                                                                     |  | 15                                                                                                                         
|                                                                                              | 
|Item 6. Exhibits                                                                              |  | 15                                                                                                                         
|                                                                                              | 
|Signatures                                                                                    |  | 16                                                                                                                         



CAUTIONARY STATEMENT FOR PURPOSES
OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995



This Quarterly Report on Form 10-Q contains forward-looking statements that reflect, when made, the Companys expectations or beliefs
concerning future events that involve risks and uncertainties. Forward-looking statements frequently are identified by the words believe, anticipate, expect, estimate, intend,
project, will be, will continue, will likely result, or other similar words and phrases. Actual results could differ materially from those projected, implied or anticipated by the Companys
forward-looking statements. Some of the factors that could cause actual results to differ include: the impact of adverse weather conditions, including the impact of Hurricane Katrina on the Companys operations; changes in economic conditions
and trends generally; changes in consumer preferences or discretionary spending; the effect of competition in the restaurant industry; the Companys ability to achieve market acceptance, particularly in new markets; the Companys ability
to achieve and manage its planned expansion; the Companys ability to execute its business strategy effectively; health concerns about beef or other food products; reductions in the availability of, or increases in the cost of, USDA Prime grade
beef and other food items; labor shortages or increases in labor costs; the impact of federal, state or local government regulations relating to Company employees, the sale or preparation of food, the sale of alcoholic beverages and the



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opening of new restaurants; harmful actions taken by the Companys franchisees; the Companys ability to
protect its name and logo and other proprietary information; the impact of litigation; and the loss of key management personnel. For a discussion of these and other risks and uncertainties that could cause actual results to differ from those
contained in the forward-looking statements, see Risk Factors in the Companys registration statement on Form S-1 (File No. 333-124285) filed by the Company under the Securities Act of 1933, as such Registration Statement
became effective on August 8, 2005, as well as the Companys other filings with the Securities and Exchange Commission, all of which are available on the SECs website at www.sec.gov. All forward-looking statements are qualified in their
entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof.



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PART 1  FINANCIAL INFORMATION



ITEM 1  FINANCIAL STATEMENTS



RUTHS CHRIS STEAK HOUSE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(dollar amounts in thousands, except share and per share data)



|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | -------- | - | ------------ | - | -------- | -
|                                                                                                                                                                                                                                                   |  | December 26,2004 |          |   | June 26,2005 |  
|                                                                                                                                                                                                                                                   |  |                  |          |   | (unaudited)  |  
|Assets                                                                                                                                                                                                                                             |  |                  |          |   |              |   |          |  
|Current assets:                                                                                                                                                                                                                                    |  |                  |          |   |              |   |          |  
|Cash and cash equivalents                                                                                                                                                                                                                          |  | $                | 3,906    |   |              | $ | 2,717    |  
|Accounts receivable, less allowance for doubtful accounts 2004 - $275; 2005 - $331 (unaudited)                                                                                                                                                     |  |                  | 5,030    |   |              |   | 5,199    |  
|Inventory                                                                                                                                                                                                                                          |  |                  | 3,665    |   |              |   | 3,455    |  
|Prepaid expenses and other                                                                                                                                                                                                                         |  |                  | 2,179    |   |              |   | 1,689    |  
|Deferred income taxes                                                                                                                                                                                                                              |  |                  | 771      |   |              |   | 761      |  
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Total current assets                                                                                                                                                                                                                               |  |                  | 15,551   |   |              |   | 13,821   |  
|                                                                                                                                                                                                                                                   |  |                 
|Property and equipment, net                                                                                                                                                                                                                        |  |                  | 52,739   |   |              |   | 54,001   |  
|Goodwill                                                                                                                                                                                                                                           |  |                  | 30,533   |   |              |   | 30,533   |  
|Deferred income taxes                                                                                                                                                                                                                              |  |                  | 9,278    |   |              |   | 9,107    |  
|Assets held for sale                                                                                                                                                                                                                               |  |                  | 2,100    |   |              |   |         |  
|Other assets                                                                                                                                                                                                                                       |  |                  | 3,281    |   |              |   | 3,217    |  
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Total assets                                                                                                                                                                                                                                       |  | $                | 113,482  |   |              | $ | 110,679  |  
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Liabilities and Shareholders Deficit                                                                                                                                                                                                              |  |                  |          |   |              |   |          |  
|Current liabilities:                                                                                                                                                                                                                               |  |                  |          |   |              |   |          |  
|Current maturities of long-term debt                                                                                                                                                                                                               |  | $                |         |   |              | $ |         |  
|Accounts payable and accrued expenses                                                                                                                                                                                                              |  |                  | 18,577   |   |              |   | 19,794   |  
|Deferred revenue                                                                                                                                                                                                                                   |  |                  | 14,692   |   |              |   | 12,552   |  
|Other current liabilities                                                                                                                                                                                                                          |  |                  | 452      |   |              |   | 758      |  
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Total current liabilities                                                                                                                                                                                                                          |  |                  | 33,721   |   |              |   | 33,104   |  
|                                                                                                                                                                                                                                                   |  |                 
|Long-term debt                                                                                                                                                                                                                                     |  |                  | 80,931   |   |              |   | 101,000  |  
|Mandatorily redeemable senior preferred stock (liquidation preference of $11,548 at June 26, 2005 (unaudited) and $39,986 at
December 26, 2004)                                                                                                    |  |                  | 39,857   |   |              |   | 11,444   |  
|Deferred rent                                                                                                                                                                                                                                      |  |                  | 9,767    |   |              |   | 9,935    |  
|Other liabilities                                                                                                                                                                                                                                  |  |                  | 719      |   |              |   | 1,259    |  
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Total liabilities                                                                                                                                                                                                                                  |  |                  | 164,995  |   |              |   | 156,742  |  
|                                                                                                                                                                                                                                                   |  |                 
|Commitments and contingencies (Note 6)                                                                                                                                                                                                             |  |                  |          |   |              |   |          |  
|Shareholders deficit:                                                                                                                                                                                                                             |  |                  |          |   |              |   |          |  
|                                                                                                                                                                                                                                                   |  |                 
|Junior preferred stock, par value $.01 per share; authorized 92,000 shares, 75,381 shares issued and outstanding at June 26, 2005
(unaudited) and 72,537 shares at December 26, 2004, aggregate liquidation preference of $75,381 at June 26, 2005 |  |                  | 72,537   |   |              |   | 75,381   |  
|Class A common stock, par value $.01 per share; 100,000,000 shares authorized, 11,543,889 shares issued and outstanding at June 26,
2005 (unaudited), 11,543,889 shares issued and outstanding at December 26, 2004                                |  |                  | 115      |   |              |   | 115      |  
|Class B common stock, par value $.01 per share; authorized 1,000,000 shares, no shares issued and outstanding                                                                                                                                      |  |                  |         |   |              |   |         |  
|Additional paid-in capital                                                                                                                                                                                                                         |  |                  | 5,548    |   |              |   | 5,671    |  
|Accumulated deficit                                                                                                                                                                                                                                |  |                  | (129,713 | ) |              |   | (127,230 | )
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Total shareholders deficit                                                                                                                                                                                                                        |  |                  | (51,513  | ) |              |   | (46,063  | )
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  
|Total liabilities and shareholders deficit                                                                                                                                                                                                        |  | $                | 113,482  |   |              | $ | 110,679  |  
|                                                                                                                                                                                                                                                   |  |                  |          |   |              |   |          |  



See
accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

RUTHS CHRIS STEAK HOUSE, INC. AND SUBSIDIARIES

Condensed Consolidated Income Statements

(dollar amounts in thousands, except share and per share data)



|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|-------------------------------------------------------------------------------- |  | --------------- | ---------- | - | --------------- | - | ---------- | ------------- |  | - | ------------- | - |  | - | ---------- | -
|                                                                                 |  | 13 Weeks Ending |            |   | 26 Weeks Ending |  
|                                                                                 |  | June 27, 2004   |            |   | June 26, 2005   |   |            | June 27, 2004 |  |   | June 26, 2005 |  
|Revenues:                                                                        |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Restaurant sales                                                                 |  | $               | 45,043     |   |                 | $ | 49,888     |               |  | $ | 92,391        |   |  | $ | 103,777    |  
|Franchise income                                                                 |  |                 | 2,291      |   |                 |   | 2,634      |               |  |   | 4,772         |   |  |   | 5,281      |  
|Other operating income                                                           |  |                 | 139        |   |                 |   | 146        |               |  |   | 217           |   |  |   | 263        |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Total revenues                                                                   |  |                 | 47,473     |   |                 |   | 52,668     |               |  |   | 97,380        |   |  |   | 109,321    |  
|                                                                                 |  |                 |            |  
|Costs and expenses:                                                              |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Food and beverage costs                                                          |  |                 | 15,634     |   |                 |   | 15,663     |               |  |   | 32,370        |   |  |   | 32,160     |  
|Restaurant operating expenses                                                    |  |                 | 20,585     |   |                 |   | 23,049     |               |  |   | 41,282        |   |  |   | 46,362     |  
|Marketing and advertising                                                        |  |                 | 1,874      |   |                 |   | 2,315      |               |  |   | 3,546         |   |  |   | 4,668      |  
|General and administrative costs                                                 |  |                 | 2,981      |   |                 |   | 3,593      |               |  |   | 5,132         |   |  |   | 6,722      |  
|Depreciation and amortization expenses                                           |  |                 | 1,614      |   |                 |   | 1,600      |               |  |   | 3,258         |   |  |   | 3,217      |  
|Pre-opening costs                                                                |  |                 | 31         |   |                 |   | 131        |               |  |   | 31            |   |  |   | 240        |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Operating income                                                                 |  |                 | 4,754      |   |                 |   | 6,317      |               |  |   | 11,761        |   |  |   | 15,952     |  
|                                                                                 |  |                 |            |  
|Other income (expense):                                                          |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Interest expense, net                                                            |  |                 | (2,857     | ) |                 |   | (1,634     | )             |  |   | (5,810        | ) |  |   | (5,767     | )
|Accrued dividends and accretion on mandatorily redeemable senior preferred stock |  |                 | (1,194     | ) |                 |   | (399       | )             |  |   | (2,388        | ) |  |   | (1,587     | )
|Other                                                                            |  |                 | 69         |   |                 |   | 42         |               |  |   | 139           |   |  |   | 80         |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Income from continuing operations before income tax expense                      |  |                 | 772        |   |                 |   | 4,326      |               |  |   | 3,702         |   |  |   | 8,678      |  
|                                                                                 |  |                 |            |  
|Income tax expense                                                               |  |                 | 80         |   |                 |   | 1,015      |               |  |   | 383           |   |  |   | 2,566      |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Income from continuing operations                                                |  |                 | 692        |   |                 |   | 3,311      |               |  |   | 3,319         |   |  |   | 6,112      |  
|                                                                                 |  |                 |            |  
|Discontinued operations:                                                         |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Loss from operations of discontinued restaurants, net of income tax benefit      |  |                 | 235        |   |                 |   | 230        |               |  |   | 404           |   |  |   | 739        |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Net income                                                                       |  | $               | 457        |   |                 | $ | 3,081      |               |  | $ | 2,915         |   |  | $ | 5,373      |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Less dividends earned on junior preferred stock and warrant expense              |  |                 | 1,317      |   |                 |   | 1,468      |               |  |   | 2,634         |   |  |   | 2,891      |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Net income (loss) available to common shareholders                               |  | $               | (860       | ) |                 | $ | 1,613      |               |  | $ | 281           |   |  | $ | 2,482      |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Basic earnings (loss) per share:                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Continuing operations                                                            |  | $               | (0.05      | ) |                 | $ | 0.14       |               |  | $ | 0.06          |   |  | $ | 0.25       |  
|Discontinued operations                                                          |  |                 | (0.02      | ) |                 |   | (0.02      | )             |  |   | (0.03         | ) |  |   | (0.06      | )
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Basic earnings (loss) per share                                                  |  | $               | (0.07      | ) |                 | $ | 0.12       |               |  | $ | 0.03          |   |  | $ | 0.19       |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Diluted earnings (loss) per share:                                               |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Continuing operations                                                            |  | $               | (0.05      | ) |                 | $ | 0.13       |               |  | $ | 0.06          |   |  | $ | 0.23       |  
|Discontinued operations                                                          |  |                 | (0.02      | ) |                 |   | (0.02      | )             |  |   | (0.03         | ) |  |   | (0.05      | )
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Diluted earnings (loss) per share                                                |  | $               | (0.07      | ) |                 | $ | 0.11       |               |  | $ | 0.03          |   |  | $ | 0.18       |  
|                                                                                 |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Shares used in computing net income (loss) per common share:                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Basic                                                                            |  |                 | 11,746,868 |   |                 |   | 13,037,746 |               |  |   | 11,746,868    |   |  |   | 13,037,746 |  
|Diluted                                                                          |  |                 | 11,746,868 |   |                 |   | 14,217,516 |               |  |   | 11,746,868    |   |  |   | 14,217,516 |  



See
accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

RUTHS CHRIS STEAK HOUSE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(dollar amounts in thousands)



|                                                                                  |  |                 |         |   |              |   |         |  
|--------------------------------------------------------------------------------- |  | --------------- | ------- | - | ------------ | - | ------- | -
|                                                                                  |  | 26 Weeks Ending |        
|                                                                                  |  | June 27,2004    |         |   | June 26,2005 |  
|Cash flows from operating activities:                                             |  |                 |         |   |              |   |         |  
|Net income                                                                        |  | $               | 2,915   |   |              | $ | 5,373   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                 |         |   |              |   |         |  
|Depreciation and amortization                                                     |  |                 | 3,258   |   |              |   | 3,217   |  
|Deferred income taxes                                                             |  |                 | (163    | ) |              |   | 187     |  
|Non-cash interest expense                                                         |  |                 | 1,009   |   |              |   | 1,946   |  
|Non-cash compensation expense                                                     |  |                 |        |   |              |   | 77      |  
|Loss (gain) on sale or disposition of assets                                      |  |                 | (2      | ) |              |   | 80      |  
|Accrued dividends and accretion on mandatorily redeemable senior preferred stock  |  |                 | 2,388   |   |              |   | 1,587   |  
|Changes in operating assets and liabilities:                                      |  |                 |         |   |              |   |         |  
|Accounts receivable                                                               |  |                 | (174    | ) |              |   | (165    | )
|Inventory                                                                         |  |                 | (61     | ) |              |   | 211     |  
|Prepaid expenses and other                                                        |  |                 | (116    | ) |              |   | 488     |  
|Other assets                                                                      |  |                 | (40     | ) |              |   | (1,022  | )
|Accounts payable and accrued expenses                                             |  |                 | (919    | ) |              |   | 2,123   |  
|Deferred revenue                                                                  |  |                 | (1,784  | ) |              |   | (2,140  | )
|Deferred rent                                                                     |  |                 | (220    | ) |              |   | 832     |  
|Other liabilities                                                                 |  |                 | (1,558  | ) |              |   | (730    | )
|                                                                                  |  |                 |         |   |              |   |         |  
|Net cash provided by operating activities                                         |  |                 | 4,533   |   |              |   | 12,064  |  
|                                                                                  |  |                 |         |   |              |   |         |  
|Cash flows from investing activities:                                             |  |                 |         |   |              |   |         |  
|Acquisition of property and equipment                                             |  |                 | (1,104  | ) |              |   | (4,559  | )
|Proceeds on sale or disposition of fixed assets                                   |  |                 |        |   |              |   | 2,100   |  
|Decrease (increase) in notes receivable                                           |  |                 | 6       |   |              |   | (3      | )
|                                                                                  |  |                 |         |   |              |   |         |  
|Net cash used in investing activities                                             |  |                 | (1,098  | ) |              |   | (2,462  | )
|                                                                                  |  |                 |         |   |              |   |         |  
|Cash flows from financing activities:                                             |  |                 |         |   |              |   |         |  
|Principal repayments on long-term debt                                            |  |                 | (72,483 | ) |              |   | (94,000 | )
|Proceeds from long-term financing                                                 |  |                 | 66,200  |   |              |   | 114,000 |  
|Redemption of senior preferred stock                                              |  |                 |        |   |              |   | (30,000 | )
|Deferred financing costs                                                          |  |                 | (2,041  | ) |              |   | (791    | )
|                                                                                  |  |                 |         |   |              |   |         |  
|Net cash used in financing activities                                             |  |                 | (8,324  | ) |              |   | (10,791 | )
|                                                                                  |  |                 |         |   |              |   |         |  
|Net decrease in cash and cash equivalents                                         |  |                 | (4,889  | ) |              |   | (1,189  | )
|Cash and cash equivalents at beginning of period                                  |  |                 | 5,130   |   |              |   | 3,906   |  
|                                                                                  |  |                 |         |   |              |   |         |  
|Cash and cash equivalents at end of period                                        |  | $               | 241     |   |              | $ | 2,717   |  
|                                                                                  |  |                 |         |   |              |   |         |  
|Supplemental disclosures of cash flow information:                                |  |                 |         |   |              |   |         |  
|Cash paid during the year for:                                                    |  |                 |         |   |              |   |         |  
|Interest                                                                          |  | $               | 5,504   |   |              | $ | 4,217   |  
|Income taxes                                                                      |  |                 | 910     |   |              |   | 2,009   |  



See
accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

RUTHS CHRIS STEAK HOUSE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(in thousands, except share and per share data)



(1) Basis of Presentation



The accompanying unaudited condensed consolidated financial statements of Ruths Chris Steak House, Inc. and subsidiaries (the Company) as of
June 26, 2005 and December 26, 2004 and for the quarters and six months ended June 26, 2005 and June 27, 2004 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission.
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the
reporting of revenue and expenses during the period to prepare these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles. Significant items subject to such estimates and assumptions include
the carrying amount of property and equipment, goodwill, and obligations related to workers compensation, general liability and property insurance. Actual results could differ from those estimates.



The information furnished herein reflects all adjustments (consisting of normal recurring
accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. The interim results of operations for the fiscal quarters ended June 26, 2005 and June 27,
2004, respectively, are not necessarily indicative of the results that may be achieved for the full year. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes
thereto contained in the registration statement on Form S-1 (File No. 333-124285) filed by the Company under the Securities Act of 1933, as such registration became effective on August 8, 2005, and all of the Companys other filings
with the SEC from August 8, 2005 through the current date pursuant to the Securities and Exchange Act of 1934.



The Company operates on a 52 or 53 week fiscal year ending on the last Sunday in December. The fiscal quarters ended June 26, 2005 and June 27, 2004 each
contained 13 weeks and are referred to herein as the second quarter of fiscal 2005 and the second quarter of fiscal 2004, respectively. When combined, the first and second quarters of each fiscal year are referred to as the first twenty-six weeks of
fiscal 2005 and the first twenty-six weeks of fiscal 2004, respectively.



(2) Stock-Based Employee Compensation



The Company applies the
intrinsic-value-based method of accounting prescribed by the Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, (APB No. 25) and related interpretations including Financial
Accounting Standards Board (FASB) Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, to account for its fixed-plan stock options. Under this method,
compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS No. 123) and SFAS
No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by existing
accounting standards, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123, as amended. The following table illustrates the
effect on net income adjusted for pro forma provision for income taxes if the fair-value-based method had been applied to all outstanding and unvested awards in each period.



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|                                          |  |                 |     |                 |              |   |               |  |   |              |   |  |   |       |  
|----------------------------------------- |  | --------------- | --- | --------------- | ------------ | - | ------------- |  | - | ------------ | - |  | - | ----- | -
|                                          |  | 13 Weeks Ending |     | 26 Weeks Ending |             
|                                          |  | June 27,2004    |     |                 | June 26,2005 |   | June 27, 2004 |  |   | June 26,2005 |  
|Net Income, as reported                   |  | $               | 457 |                 |              | $ | 3,081         |  | $ | 2,915        |   |  | $ | 5,373 |  
|Stock-based employee compensation expense |  |                 | (3  | )               |              |   |              |  |   | (6           | ) |  |   | (1    | )
|                                          |  |                 |     |                 |              |   |               |  |   |              |   |  |   |       |  
|Proforma net income                       |  | $               | 454 |                 |              | $ | 3,081         |  | $ | 2,909        |   |  | $ | 5,372 |  
|                                          |  |                 |     |                 |              |   |               |  |   |              |   |  |   |       |  



(3) Recent Accounting
Pronouncements



In December of 2004, the FASB issued SFAS No. 123R,
Share-Based Payment, which replaces the requirements under SFAS No. 123 and APB No. 25. The statement sets accounting requirements for share-based compensation to employees, including employee stock purchase plans,
and requires all share-based payments, including employee stock options, to be recognized in the financial statements based on their fair value. It carries forward prior guidance on accounting for awards to non-employees. The accounting for employee
stock ownership plan transactions will continue to be accounted for in accordance with Statement of Position (SOP) 93-6, while awards to most non-employee directors will be accounted for as employee awards. This Statement is effective for public
companies that do not file as small business issuers as of the beginning of their first annual period beginning after June 15, 2005 (effective December 26, 2005 for the Company). The Company has not yet determined the effect the new
Statement will have on the consolidated financial statements as it has not completed its analysis; however, the Company expects the adoption of this Statement to result in a reduction of net income that may be material.



In May, 2005, the FASB issued Statement of Financial Accounting Standards No. 154
Accounting Changes and Error Corrections: a replacement of APB Opinion No. 20 and FASB Statement No. 3. Statement 154 requires retrospective application for voluntary changes in accounting principle unless it is impracticable
to do so. The requirements are effective for accounting changes made in fiscal years beginning after December 12, 2005. The Company has assessed the impact of Statement 154, and does not expect it to have an impact on its financial position,
results of operations or cash flows.



(4) Notes Payable and Long-term Debt



Long-term debt consists of the
following:



|                              |  |                   |        |               |   |        
|----------------------------- |  | ----------------- | ------ | ------------- | - | -------
|                              |  | December 26, 2004 |        | June 26, 2005
|                              |  |                   |        | (unaudited)  
|New Senior Credit Facilities: |  |                   |        |               |   |        
|Term loan facility            |  | $                 |       |               | $ | 101,000
|Revolving credit facility     |  |                   |       |               |   |       
|2004 Senior Credit Facility:  |  |                   |        |               |   |        
|Term loan facility            |  |                   | 20,000 |               |   |       
|Revolving credit facility     |  |                   | 41,000 |               |   |       
|Senior subordinated notes     |  |                   | 19,931 |               |   |       
|                              |  |                   |        |               |   |        
|                              |  |                   | 80,931 |               |   | 101,000
|                              |  |                  
|Less current maturities       |  |                   |       |               |   |       
|                              |  |                   |        |               |   |        
|Total Long-Term Debt          |  | $                 | 80,931 |               | $ | 101,000
|                              |  |                   |        |               |   |        



On March 11, 2005, the Company
entered into a financing agreement with a syndicate of commercial banks and other institutional lenders. The financing consisted of a $105.0 million term loan facility and a $15.0 million revolving credit facility. At June 26, 2005, the
interest rates on the term loan facility and revolving credit facility were 6.25%. The term loan interest and fees are payable monthly and the principal is payable in quarterly payments ranging from $829 to $2,579 commencing June 30, 2005, with
the remaining unpaid balance due on March 11, 2011. The revolving credit facility interest and fees are payable monthly and all outstanding amounts are due upon maturity at March 11, 2010.



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##### Table of Contents

As of June 26, 2005, there were $101.0 million of borrowings outstanding under the term loan facility and no
borrowings outstanding under the revolving credit facility. The Company had approximately $13.7 million of borrowings available under its revolving credit facility, net of outstanding letters of credit of approximately $1.3 million. The Company is
required to maintain certain financial covenants and is also subject to restrictive covenants under its borrowings. The Company was in compliance with all such covenants at June 26, 2005. The Companys obligations under these credit
facilities are guaranteed by each of its existing and future subsidiaries and are secured by substantially all of its assets and the capital stock of its subsidiaries.



(5) Earnings per share



Basic earnings per common share were computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding
during the applicable period. Basic and diluted earnings per common share were determined on the assumption that all outstanding warrants were exercised as of the beginning of each period. For the quarter and 26 weeks ended June 27, 2004,
options to purchase 1,133,925 shares of the Companys common stock at a weighted average price of $0.48 per share were not included in the calculation of weighted average shares for diluted earnings per share because their effects were
anti-dilutive.



The following table sets forth
the computation of basic and diluted earnings per share:



|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|---------------------------------------------------- |  | --------------- | ---------- | - | --------------- | - | ---------- | ------------- |  | - | ------------- | - |  | - | ---------- | -
|                                                     |  | 13 Weeks Ending |            |   | 26 Weeks Ending |  
|                                                     |  | June 27, 2004   |            |   | June 26, 2005   |   |            | June 27, 2004 |  |   | June 26, 2005 |  
|Income (loss) available to common stockholders       |  | $               | (860       | ) |                 | $ | 1,613      |               |  | $ | 281           |   |  | $ | 2,482      |  
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Shares:                                              |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Weighted average number of common shares outstanding |  |                 | 11,746,868 |   |                 |   | 13,037,746 |               |  |   | 11,746,868    |   |  |   | 13,037,746 |  
|Dilutive stock options                               |  |                 |           |   |                 |   | 1,179,770  |               |  |   |              |   |  |   | 1,179,770  |  
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Weighted average number of common shares outstanding |  |                 | 11,746,868 |   |                 |   | 14,217,516 |               |  |   | 11,746,868    |   |  |   | 14,217,516 |  
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Basic earnings (loss) per share:                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Continuing operations                                |  | $               | (0.05      | ) |                 | $ | 0.14       |               |  | $ | 0.06          |   |  | $ | 0.25       |  
|Discontinued operations                              |  |                 | (0.02      | ) |                 |   | (0.02      | )             |  |   | (0.03         | ) |  |   | (0.06      | )
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Basic earnings per share                             |  | $               | (0.07      | ) |                 | $ | 0.12       |               |  | $ | 0.03          |   |  | $ | 0.19       |  
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Diluted earnings (loss) per share:                   |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Continuing operations                                |  | $               | (0.05      | ) |                 | $ | 0.13       |               |  | $ | 0.06          |   |  | $ | 0.23       |  
|Discontinued operations                              |  |                 | (0.02      | ) |                 |   | (0.02      | )             |  |   | (0.03         | ) |  |   | (0.05      | )
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  
|Diluted earnings per share                           |  | $               | (0.07      | ) |                 | $ | 0.11       |               |  | $ | 0.03          |   |  | $ | 0.18       |  
|                                                     |  |                 |            |   |                 |   |            |               |  |   |               |   |  |   |            |  



On August 1,
2005, the Company completed a 20.75281-for-1 stock split of the Companys common stock (See Note 8). Accordingly, basic and diluted shares for all periods presented have also been calculated based on the weighted average shares outstanding, as
adjusted for the stock split.



(6) Commitments and Contingencies



The Company has guaranteed the operating lease for the franchisee-owned
restaurant in Detroit, Michigan. The operating lease requires annual minimum lease payments of $0.1 million through August 2005, the expiration of the initial term and through renewal terms, which option may be exercised by the franchisee.



The Company is subject to other various claims, possible legal actions, and
other matters arising in the normal course of business. Management does not expect disposition of these other matters to have a material adverse effect on the financial position, results of operations or liquidity of the Company.



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(7) Discontinued Operations



On December 24, 2004, the Company closed its Manhattan-UN operation, one of its two Ruths Chris Steak House locations in
Manhattan, New York. Prior to and including 2004, the Company experienced operating losses at its Manhattan-UN restaurant location, which leased the property in which it operated. The Company has continuing direct cash outflows associated with the
fixed portion of rent at the closed restaurant in the amount of approximately $45 per month until the lease expiration in fiscal year 2016 or until the property is subleased, if earlier.



In October of 2004, the Company announced its plan to close its Ruths Chris Steak House location in Sugar Land, Texas, where it owned
the property in which it operated. The Company recorded a pre-tax charge of $80 as a result of loss due to impairment in order to reduce the assets related to this location to net realizable value. Subsequent to year end, the Company sold this
property for $2.1 million.



The Company accounts for its closed restaurants in
accordance with the provisions of SFAS No. 144. Therefore, when a restaurant is closed, and the restaurant is either held for sale or abandoned, the restaurants operations are eliminated from the ongoing operations. Accordingly, the
operations of such restaurants, net of applicable income taxes, are presented as discontinued operations and prior period operations of such restaurants, net of applicable income taxes, are reclassified.



Discontinued operations consist of the following:



|                                                                            |  |                 |       |   |                 |   |      |              |  |   |              |   |  |   |      |  
|--------------------------------------------------------------------------- |  | --------------- | ----- | - | --------------- | - | ---- | ------------ |  | - | ------------ | - |  | - | ---- | -
|                                                                            |  | 13 Weeks Ending |       |   | 26 Weeks Ending |  
|                                                                            |  | June 27,2004    |       |   | June 26,2005    |   |      | June 27,2004 |  |   | June 26,2005 |  
|Revenues                                                                    |  | $               | 1,513 |   |                 | $ |     |              |  | $ | 3,143        |   |  | $ |     |  
|Loss before income tax                                                      |  |                 | (465  | ) |                 |   | (279 | )            |  |   | (819         | ) |  |   | (985 | )
|Loss from operations of discontinued restaurants, net of income tax benefit |  |                 | (235  | ) |                 |   | (230 | )            |  |   | (404         | ) |  |   | (739 | )



(8) Subsequent Events



In August, 2005, the Company and selling shareholders completed an
initial public offering of 9,375,000 and 5,575,000 shares of common stock, respectively, at $18.00 per share. In connection therewith, the Company completed a 20.75281-for-1 stock split, an increase in the number of authorized shares of the
Companys common stock and the authorization of 10,000,000 shares of a new class of preferred stock, with a par value of $0.01 per share. No shares of this new class of preferred stock are outstanding. Accordingly, all references to numbers of
shares in the consolidated financial statements and accompanying notes have been adjusted to reflect the stock split and change in the number of authorized shares on a retroactive basis.



The Company received net proceeds of approximately $154.3 million from the sale of shares of its common stock in the offering after
deducting estimated underwriting discounts and commissions and estimated offering expenses payable by it. The Company used the net proceeds of the offering as follows: (1) approximately $11.7 million was used to redeem all of its outstanding
mandatorily redeemable Series A senior cumulative preferred stock (Senior Preferred Stock), (2) approximately $76.2 million to redeem or repurchase all of its outstanding Series B junior cumulative preferred stock (Junior
Preferred Stock) and (3) approximately $66.4 million was used to repay a portion of the outstanding indebtedness under its senior credit facilities.



In late August 2005, the Companys headquarters in Metairie, Louisiana was damaged by Hurricane Katrina. In September 2005, the Company determined that it would
not be able to reoccupy its Metairie headquarters within a reasonable time, and relocated its headquarters to Orlando, Florida.



The Company also closed its two New Orleans-area restaurants, which suffered wind and flood damage. The Company has not established a timeline for the reopening of these
restaurants. Prior to Hurricane Katrina, the Company had planned to open a new restaurant located at the Biloxi, Mississippi Hard Rock Hotel & Casino in



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##### Table of Contents

September 2005. This property also suffered damage, and its September 1, 2005 opening date was delayed until 2006.
The Company will incur certain unanticipated one-time expenses in connection with this move and other hurricane related items.



On September 27, 2005, the Company entered into a new credit agreement (the Credit Agreement) with certain lenders party thereto, Wells Fargo Bank,
National Association, as administrative agent, Bank of America, N.A., as documentation agent, and JPMorgan Chase Bank, National Association and Wells Fargo Bank, National Association as co-lead arrangers and Wachovia Bank, N.A. The Company used the
$38.5 million funded at closing under the Credit Agreement to prepay and retire borrowings under its previous credit facility and to pay related fees and expenses.



At September 27, 2005, interest rates on the revolving credit facility, were 5.54%. The Credit Agreement requires the Company to
maintain certain financial covenants and the Company is also subject to certain restrictive covenants. The Companys obligations under the Credit Agreement are guaranteed by each of its existing and future subsidiaries and are secured by
substantially all of its assets and the capital stock of its subsidiaries.



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Overview



The Company believes that it is the largest upscale steakhouse company in the United States, based on total company- and franchisee-owned restaurants.



The Companys restaurants offer USDA Prime grade steaks that are aged and prepared to exacting company standards and cooked in
1800-degree broilers. The Companys restaurants also offer several non-beef entrée selections and a broad selection of appetizers. They also complement their food offerings with an award-winning wine list.



As of June 26, 2005, there were 88 Ruths Chris restaurants, of which 39 were
company-owned and 49 were franchisee-owned, including ten international franchisee-owned restaurants in Mexico, Hong Kong, Taiwan and Canada.



The Companys registration statement on Form S-1 (File No. 333-124285), filed by the Company under the Securities Act of 1933, as such registration statement became
effective on August 8, 2005, provides additional information about the Companys business, operations and financial condition.



Positioned for Growth



In recent years, the Company slowed its development of new restaurants and focused its efforts on ensuring that it was adhering to its core culture as inspired by Ruth Fertel. The Company in the past 18 months
improved its financial performance through a variety of operating initiatives and it believes it is now well positioned to open new restaurants. The Company currently expects to open five to six company-owned restaurants in each of the next several
years. In addition, the Company expects new and existing franchisees to open four Ruths Chris restaurants in 2005, three of which have already been opened, and approximately five to six Ruths Chris restaurants in each of the next several
years.



Results of Operations



The table below sets forth certain operating data expressed as a percentage of total
revenues for the periods indicated. The Companys historical results are not necessarily indicative of the operating results that may be expected in the future.



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##### Table of Contents

|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   
|-------------------------------------------------------------------------------- |  | -------------------- | -- |  | ---------------------- | -- |  | ------------ | -- |  | ------------- | --
|                                                                                 |  | Thirteen Weeks Ended |    |  | Twenty-Six Weeks Ended |   
|                                                                                 |  | June 27,2004         |    |  | June 26, 2005          |    |  | June 27,2004 |    |  | June 26, 2005 |   
|Revenues:                                                                        |  |                      |    |  |                        |    |  |              |    |  |               |   
|Restaurant sales                                                                 |  | 94.9                 | %  |  | 94.7                   | %  |  | 94.9         | %  |  | 94.9          | % 
|Franchise income                                                                 |  | 4.8                  | %  |  | 5.0                    | %  |  | 4.9          | %  |  | 4.8           | % 
|Other operating income                                                           |  | 0.3                  | %  |  | 0.3                    | %  |  | 0.2          | %  |  | 0.3           | % 
|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   
|Total revenues                                                                   |  | 100.0                | %  |  | 100.0                  | %  |  | 100.0        | %  |  | 100.0         | % 
|                                                                                 |  |                      |    | 
|Costs and expenses:                                                              |  |                      |    |  |                        |    |  |              |    |  |               |   
|Food and beverage costs (as a percentage of restaurant sales)                    |  | 34.7                 | %  |  | 31.4                   | %  |  | 35.0         | %  |  | 31.0          | % 
|Restaurant operating expenses (as a percentage of restaurant sales)              |  | 45.7                 | %  |  | 46.2                   | %  |  | 44.7         | %  |  | 44.7          | % 
|Marketing and advertising                                                        |  | 3.9                  | %  |  | 4.4                    | %  |  | 3.6          | %  |  | 4.3           | % 
|General and administrative costs                                                 |  | 6.3                  | %  |  | 6.8                    | %  |  | 5.3          | %  |  | 6.1           | % 
|Depreciation and amortization expenses                                           |  | 3.4                  | %  |  | 3.0                    | %  |  | 3.3          | %  |  | 2.9           | % 
|Pre-opening costs                                                                |  | 0.1                  | %  |  | 0.2                    | %  |  | 0.0          | %  |  | 0.2           | % 
|Operating income                                                                 |  | 10.0                 | %  |  | 12.0                   | %  |  | 12.1         | %  |  | 14.6          | % 
|                                                                                 |  |                      |    | 
|Other income (expense):                                                          |  |                      |    |  |                        |    |  |              |    |  |               |   
|Interest expense, net                                                            |  | (6.0                 | )% |  | (3.1                   | )% |  | (6.0         | )% |  | (5.3          | )%
|Accrued dividends and accretion on mandatorily redeemable senior preferred stock |  | (2.5                 | )% |  | (0.8                   | )% |  | (2.5         | )% |  | (1.5          | )%
|Other                                                                            |  | 0.1                  | %  |  | 0.1                    | %  |  | 0.1          | %  |  | 0.1           | % 
|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   
|Income from continuing operations before income tax expense                      |  | 1.6                  | %  |  | 8.2                    | %  |  | 3.8          | %  |  | 7.9           | % 
|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   
|Income tax expense                                                               |  | 0.1                  | %  |  | 1.9                    | %  |  | 0.4          | %  |  | 2.3           | % 
|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   
|Income from continuing operations                                                |  | 1.5                  | %  |  | 6.3                    | %  |  | 3.4          | %  |  | 5.6           | % 
|                                                                                 |  |                      |    | 
|Discontinued operations, net of income tax benefit                               |  | 0.5                  | %  |  | 0.4                    | %  |  | 0.4          | %  |  | 0.7           | % 
|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   
|Net income                                                                       |  | 1.0                  | %  |  | 5.9                    | %  |  | 3.0          | %  |  | 4.9           | % 
|                                                                                 |  |                      |    |  |                        |    |  |              |    |  |               |   



Second Quarter of Fiscal 2005 (13
Weeks) Compared to Second Quarter of Fiscal 2004 (13 Weeks)



Restaurant
Sales. Restaurant sales increased $4.9 million, or 10.9%, to $49.9 million in the second quarter of fiscal 2005 from $45.0 million in the second quarter of fiscal 2004. The increase in restaurant sales was due primarily to a $4.6 million
increase in sales from restaurants open throughout both periods, representing comparable company-owned restaurant sales growth of 10.3%, together with $0.3 million attributable to one restaurant acquired in April 2004. Approximately one-fourth of
this increase in comparable company-owned restaurant sales was attributable to increased entrée volume, with the remainder caused by increased per entrée spending driven by a shift in meal period and mix.



Franchise Income. Franchise income increased $0.3 million, or 13.0%, to $2.6 million
in the second quarter of fiscal 2005 from $2.3 million in the second quarter of fiscal 2004. The increase in franchise income was due to a $3.3 million increase in franchisee-owned restaurant sales from the franchisee-owned restaurants open
throughout both periods, representing a comparable franchisee-owned restaurant sales growth of 7.4%, an $0.8 million increase from two relocated franchise restaurants, and an additional $1.1 million from the opening of two new franchisee-owned
restaurants. This increase was partially offset by the Companys acquisition of one franchisee-owned restaurant and the closing by the same franchisee of another franchisee-owned restaurant in April 2004.



Food and Beverage Costs. Food and beverage costs increased $0.1 million, or 0.6%, to
$15.7 million in the second quarter of fiscal 2005 from $15.6 million in the second quarter of fiscal 2004. As a percentage of restaurant sales, food and beverage costs decreased to 31.4% in the second quarter of fiscal 2005 from 34.7% in the second
quarter of fiscal 2004. This decrease in food and beverage costs as a percentage of restaurant sales was primarily due to lower meat costs.



Restaurant Operating Expenses. Restaurant operating expenses increased $2.4 million, or 11.7%, to $23.0 million in the second quarter of fiscal 2005 from $20.6
million in the second quarter of fiscal 2004. The increase was primarily due to higher restaurant sales in the second quarter of fiscal 2005, increased benefit costs due to higher employee participation rates and a non-recurring $0.3 million charge
to enhance each restaurants small-wares inventory. As a result, restaurant operating expenses as a percentage of restaurant sales increased to 46.2% in the second quarter of fiscal 2005 from 45.7% in the second quarter of fiscal 2004.
Excluding the non-recurring charge to enhance the restaurants small-wares inventory, restaurant operating expenses as a percentage of restaurant sales decreased to 45.6% in the second quarter of fiscal 2005 from 45.7% in the second quarter of
fiscal 2004.



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##### Table of Contents

Marketing and Advertising. Marketing and advertising expenses increased $0.4 million, or 21.1%, to $2.3 million in
the second quarter of fiscal 2005 from $1.9 million in the second quarter of fiscal 2004. Marketing and advertising expenses as a percentage of total revenues increased to 4.4% in the second quarter of fiscal 2005 from 3.9% in the second quarter of
fiscal 2004. This increase was due primarily to increased national cable television advertising and expenses relating to the redesign of the Companys internet site.



General and Administrative. General and administrative costs increased $0.6 million, or 20.0%, to $3.6 million in the second quarter
of fiscal 2005 from $3.0 million in the second quarter of fiscal 2004. General and administrative costs as a percentage of total revenues increased to 6.8% in the second quarter of fiscal 2005 from 6.3% in the second quarter of fiscal 2004. This
increase was primarily due to the recruitment and hiring of a new President and Chief Executive Officer as well as several other key management personnel in the areas of human resources, construction, franchise relations and marketing in the latter
part of fiscal 2004.



Depreciation and Amortization. Depreciation and
amortization expense remained constant in the second quarter of fiscal 2005 from the second quarter of fiscal 2004 at $1.6 million. This stability was due primarily to the fact that levels of new investment in furniture and equipment were similar to
levels of previously purchased furniture and equipment becoming fully depreciated, as well as the fact that the Company did not open any restaurants during fiscal 2004.



Interest Expense, net. Interest expense, net of interest income, decreased $1.3 million, or 44.8%, to $1.6 million in the second
quarter of fiscal 2005 from $2.9 million in the second quarter of fiscal 2004. This decrease was primarily due to the refinancing of the Companys credit facility in March 2005, as a result of which its aggregate interest rates decreased from
7.57% to 6.25%. In addition, total debt was decreased by approximately $10 million from June of 2004 to June of 2005.



Accrued Dividends and Accretion on Mandatorily Redeemable Senior Preferred Stock. Accrued dividends and accretion on mandatorily redeemable senior preferred stock
decreased $0.8 million, or 66.7%, to $0.4 million in the second quarter of fiscal 2005 from $1.2 million in the second quarter of fiscal 2004. This decrease was primarily due to the redemption of $30.0 million of Senior Preferred Stock.



A portion of the proceeds from the Companys initial public offering completed in
August 2005, were used to redeem all of its outstanding Senior Preferred Stock.



Income Tax Expense. Income tax expense increased by $0.9 million to $1.0 million in the second quarter of fiscal 2005 from $0.1 million in the second quarter of fiscal 2004 due to an increase in income before income tax and an
increase in the estimated annual effective tax rate.



Income from Continuing
Operations. Income from continuing operations increased $2.6 million to $3.3 million in the second quarter of fiscal 2005 from $0.7 million in the second quarter of fiscal 2004.



Discontinued Operations, net of Income Tax Benefit. In the fourth quarter of fiscal 2004, the Company closed company-owned
restaurants in Sugar Land, Texas and Manhattan (UN), New York. The operations and related expenses of these locations are presented as discontinued operations. Discontinued operations remained constant in the second quarter of fiscal 2005 from the
second quarter of fiscal 2004 at $0.2 million.



First Twenty-Six Weeks of
Fiscal 2005 (26 Weeks) Compared to First Twenty-Six Weeks of Fiscal 2004 (26 Weeks)



Restaurant Sales. Restaurant sales increased $11.4 million, or 12.3%, to $103.8 million in the first twenty-six weeks of fiscal 2005 from $92.4 million in the first twenty-six weeks of fiscal 2004. The increase
in restaurant sales was due primarily to a $10.2 million increase in sales from restaurants open throughout both periods, representing comparable company-owned restaurant sales growth of 11.1%, together with $1.2 million attributable to one
restaurant acquired in April 2004. Approximately forty percent of this increase in comparable company-owned restaurant sales was attributable to increased entrée volume driven by improvements in table utilization and management and additional
marketing, with the remainder caused by increased per entrée spending, particularly caused by increased wine and beverage spending.



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Franchise Income. Franchise income increased $0.5 million, or 10.4%, to $5.3 million in the first twenty-six weeks
of fiscal 2005 from $4.8 million in the first twenty-six weeks of fiscal 2004. The increase in franchise income was due to a $5.2 million increase in franchisee-owned restaurant sales from those franchisee-owned restaurants open throughout both
periods, representing a comparable franchisee-owned restaurant sales growth of 5.6%, $1.4 million increase from two relocated franchise restaurants, as well as $1.1 million from the opening of two new franchisee-owned restaurants. This increase was
partially offset by the Companys acquisition of one franchisee-owned restaurant and the closing by the same franchisee of another franchisee-owned restaurant in April 2004.



Food and Beverage Costs. Food and beverage costs decreased $0.2 million, or 0.6%, to $32.2 million in the first twenty-six weeks of
fiscal 2005 from $32.4 million in the first twenty-six weeks of fiscal 2004. As a percentage of restaurant sales, food and beverage costs decreased to 31.0% in the first twenty-six weeks of fiscal 2005 from 35.0% in the first twenty-six weeks of
fiscal 2004. This decrease in food and beverage costs as a percentage of restaurant sales was primarily due to lower meat costs.



Restaurant Operating Expenses. Restaurant operating expenses increased $5.1 million, or 12.3%, to $46.4 million in the first twenty-six weeks of fiscal 2005 from
$41.3 million in the first twenty-six weeks of fiscal 2004. The increase was primarily due to higher restaurant sales in the first twenty-six weeks of fiscal 2005, increased benefit costs due to higher employee participation rates and a
non-recurring charge to enhance each restaurants small-wares inventory. As a result, restaurant operating expenses as a percentage of restaurant sales remained constant for the first twenty-six weeks of fiscal 2005 and the first twenty-six
weeks of fiscal 2004 at 44.7%. Excluding the non-recurring charge to enhance the restaurants small-wares inventory restaurant operating expenses as a percentage of restaurant sales decreased to 44.4% in the first twenty-six weeks of fiscal
2005 from 44.7% in the first twenty-six weeks of fiscal 2004.



Marketing and
Advertising. Marketing and advertising expenses increased $1.2 million, or 34.3%, to $4.7 million in the first twenty-six weeks of fiscal 2005 from $3.5 million in the first twenty-six weeks of fiscal 2004. Marketing and advertising expenses as
a percentage of total revenues increased to 4.3% in the first twenty-six weeks of fiscal 2005 from 3.6% in the first twenty-six weeks of fiscal 2004. This increase was due primarily to increased national cable television advertising and expenses
relating to the redesign of the Companys internet site.



General and
Administrative. General and administrative costs increased $1.6 million, or 31.4%, to $6.7 million in the first twenty-six weeks of fiscal 2005 from $5.1 million in the first twenty-six weeks of fiscal 2004. General and administrative costs as a
percentage of total revenues increased to 6.1% in the first twenty-six weeks of fiscal 2005 from 5.3% in the first twenty-six weeks of fiscal 2004. This increase was primarily due to the recruitment and hiring of a new President and Chief Executive
Officer as well as several other key management personnel in the areas of human resources, construction, franchise relations and marketing in the latter part of fiscal 2004.



Depreciation and Amortization. Depreciation and amortization expense decreased $0.1 million to $3.2 million in the first twenty-six
weeks of fiscal 2005 from $3.3 million in the first twenty-six weeks of fiscal 2004. This stability was due primarily to the fact that levels of new investment in furniture and equipment were similar to levels of previously purchased furniture and
equipment becoming fully depreciated, as well as the fact that the Company did not open any new restaurants during fiscal 2004.



Interest Expense, net. Interest expense, net of interest income, remained constant at $5.8 million in the first twenty-six weeks fiscal 2005 and in the first
twenty-six weeks of fiscal 2004. This was primarily due to the write-off of remaining debt issuance costs of $1.7 million associated with the refinancing of the Companys credit facility in March 2005, which was offset by a lower weighted
average interest rate and lower average borrowings in the first quarter of fiscal 2005 as compared to the first quarter of fiscal 2004.



Accrued Dividends and Accretion on Mandatorily Redeemable Senior Preferred Stock. Accrued dividends and accretion on mandatorily redeemable senior preferred stock
decreased $0.8 million, or 33.3%, to $1.6 million in the first twenty-six weeks of fiscal 2005 from $2.4 million in the first twenty-six weeks of fiscal 2004. This decrease was primarily due to the redemption of $30.0 million of Senior Preferred
Stock.



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Income Tax Expense. Income tax expense increased by $2.2 million to $2.6 million in the first twenty-six weeks of
fiscal 2005 from $0.4 million in the first twenty-six weeks of fiscal 2004 due to an increase in income before income tax and an increase in the estimated annual effective tax rate.



Income from Continuing Operations. Income from continuing operations increased $2.8 million to $6.1 million in the first twenty-six
weeks of fiscal 2005 from $3.3 million in the first twenty-six weeks of fiscal 2004.



Discontinued Operations, net of Income Tax Benefit. In the fourth quarter of fiscal 2004, the Company closed company-owned restaurants in Sugar Land, Texas and Manhattan (UN), New York. The operations and related expenses of these
locations are presented as discontinued operations. Discontinued operations increased $0.3 million to $0.7 million in the first twenty-six weeks of fiscal 2005 from $0.4 million in the first twenty-six weeks of fiscal 2004.



Liquidity and Capital Resources



The following table presents a summary of the Companys net cash provided by (used in)
operating, investing and financing activities:



|                                          |  |                        |        |   |               |   |         |  
|----------------------------------------- |  | ---------------------- | ------ | - | ------------- | - | ------- | -
|                                          |  | Twenty-Six Weeks Ended |       
|                                          |  | June 27, 2004          |        |   | June 26, 2005 |  
|Net cash provided by operating activities |  | $                      | 4,533  |   |               | $ | 12,064  |  
|Net cash used investing activities        |  | $                      | (1,098 | ) |               | $ | (2,462  | )
|Net cash used in financing activities     |  | $                      | (8,324 | ) |               | $ | (10,791 | )
|                                          |  |                        |        |   |               |   |         |  
|Net decrease in cash                      |  | $                      | (4,889 | ) |               | $ | (1,189  | )



The Companys principal sources
of cash during the twenty-six week period ended June 26, 2005 were cash generated from operations and borrowings under the Companys credit facilities. Principal uses of cash during the twenty-six week period ended June 26, 2005
included capital expenditures, the redemption of preferred stock and debt service. The Company expects that its principal uses of cash in the future will be to finance capital expenditures and to service debt.



The Companys operations have not required significant working capital and, like many
restaurant companies, it has been able to operate with negative working capital. Restaurant sales are primarily for cash or by credit card, and restaurant operations do not require significant inventories or receivables. In addition, the Company
receives trade credit for the purchase of food, beverage and supplies, thereby reducing the need for incremental working capital to support growth.



Net cash provided by operating activities was $12.1 million in the twenty-six week period ended June 26, 2005, compared to $4.5 million in the twenty-six week period
ended June 27, 2004. The increase in net cash provided by operating activities was primarily due to higher net income and changes in the components of working capital.



Net cash used in investing activities was $2.5 in the twenty-six week period ended June 26, 2005, compared to $1.1 million in the
twenty-six week period ended June 27, 2004. The increase was the result of increased capital expenditures related to major remodels and capital expenditures of existing restaurants as well as expenditures associated with new restaurant
construction partially offset by proceeds from the sale or disposition of fixed assets.



Net cash used in financing activities was $10.8 in the twenty-six week period ended June 26, 2005, compared to $8.3 million in the twenty-six week period ended June 27, 2004. During the first quarter of fiscal 2005, the Company
entered into a new senior credit facility that allowed us to redeem $30.0 million of Senior Preferred Stock, redeem the remaining senior subordinated notes and refinance existing debt.



Capital expenditures totaled $4.6 million in the twenty-six week period ended June 26, 2005, compared to $1.1 million in the twenty-six
week period ended June 27, 2004. The increase was primarily due to expenditures to remodel and upgrade existing locations as well as expenditures associated with new restaurant construction.



The Company anticipates capital expenditures in the future will increase to the extent it
opens additional company-owned restaurants and opportunistically acquires franchise-owned restaurants and related rights. The Company currently expects to open five to six company-owned restaurants per year in each of the next several years. The
Company believes that its net investment in future openings will range between $1.5 million and $4.0 million



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depending upon underlying individual restaurant economics and its ability to use our resources to obtain its
fully-capitalized return-on-investment targets. These capital expenditures will primarily be funded by cash flows from operations and, if necessary, by the use of the Companys revolving credit facility, depending upon timing of expenditures.



On March 11, 2005, the Company entered into a financing agreement with a
syndicate of commercial banks and other institutional lenders. The financing consisted of a $105.0 million term loan facility and a $15.0 million revolving credit facility. At June 26, 2005, the interest rates on the term loan facility and
revolving credit facility were 6.25%. The term loan interest and fees are payable monthly and the principal is payable in quarterly payments ranging from $829 to $2,579 commencing June 30, 2005, with the remaining unpaid balance due on
March 11, 2011. The revolving credit facility interest and fees are payable monthly and all outstanding amounts are due upon maturity at March 11, 2010.



As of June 26, 2005, there were $101.0 million of borrowings outstanding under the Companys term loan facility and no borrowings
outstanding under its revolving credit facility. The Company had approximately $13.7 million of borrowings available under its revolving credit facility, net of outstanding letters of credit of approximately $1.3 million. Commitments under the
Companys revolving credit facility terminate on March 11, 2010.



The
Company is required to maintain certain financial covenants and is also subject to restrictive covenants under its borrowings. The Company believes that cash flow from operating activities and borrowings under its Credit Agreement will be sufficient
to fund currently anticipated working capital, planned capital spending and debt service requirements for the foreseeable future, including at least the next twelve months.



Off-Balance Sheet Arrangements



The Company has guaranteed the operating lease for the franchisee-owned restaurant in Detroit, Michigan. The operating lease requires annual minimum lease payments of
$0.1 million through August 2005, the expiration of the initial term and through renewal terms, which option may be exercised by the franchisee.



Critical Accounting Policies and Estimates



The preparation of the Companys financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses during the periods presented. The Companys registration statement on Form S-1 (File No. 333-124285) filed by the Company under the Securities Act of 1933, as such Registration Statement became effective
on August 8, 2005, includes a summary of the critical accounting policies the Company believes are the most important to aid in understanding its financial results. There have been no material changes to these critical accounting policies that
impacted the Companys reported amounts of assets, liabilities, revenues or expenses during the twenty-six week period ended June 26, 2005.



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Interest Rate Risk



The Company is
exposed to market risk from fluctuations in interest rates. For fixed rate debt, interest rate changes affect the fair market value of such debt but do not impact earnings or cash flows. Conversely for variable rate debt, including borrowings under
the Companys new senior credit facilities, interest rate changes generally do not affect the fair market value of such debt, but do impact future earnings and cash flows, assuming other factors are held constant. At June 26, 2005, the
Company had $101.0 million of variable rate debt. Holding other variables constant (such as foreign exchange rates and debt levels), a hypothetical immediate one percentage point change in interest rates would be expected to have an impact on
pre-tax earnings and cash flows for fiscal 2005 of approximately $1.0 million.



Foreign Currency Risk



In accordance with the Companys
franchise agreements relating to the Companys international locations, it receives royalties from those franchisees in U.S. dollars, and therefore it believes that fluctuations in foreign exchange rates do not present a material risk to its
operations.



Commodity Price Risk



The Company is exposed to market price fluctuations in beef and other food products. Given
the historical volatility of beef and other food product prices, this exposure can impact its food and beverage costs. Because the Companys restaurants typically set menu prices in advance of beef and other food product purchases, the Company
cannot quickly take into account changing costs of beef and other food items. To the extent that it is unable to pass the increased costs on to its guests through price increases, the Companys results of operations would be adversely affected.
The Company currently does not use financial instruments to hedge its risk to market price fluctuations in beef or other food products.



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Effects of Inflation



Components of the Companys operations subject to inflation include food, beverage, lease and labor costs. The Companys leases require it to pay taxes,
maintenance, repairs, insurance and utilities, all of which are subject to inflationary increases. The Company believes inflation has not had a material impact on its results of operations in recent years.



ITEM 4. CONTROLS AND PROCEDURES



(a)
Evaluation of disclosure controls and procedures.



The Companys chief
executive officer and chief financial officer, after evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934), have concluded that, as of
the end of the fiscal quarter covered by this report on Form 10-Q, the Companys disclosure controls and procedures were adequate and designed to ensure that material information relating to the Company and its consolidated subsidiaries would
be made known to them by others within those entities.



(b) Changes in internal
control over financial reporting.



There was no change in the Companys
internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during the fiscal quarter covered by this report on Form 10-Q that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial reporting.



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PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



From time to
time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of business. While litigation is subject to uncertainties and the outcome of litigated matters is not predictable with assurance, the Company
is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition or results of operations.



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



In August 2005, the Company registered 14,950,000 shares of its common stock pursuant to its registration statement on Form S-1 (File No. 333-124285) in an initial public offering. The effective date of the
registration statement was August 8, 2005. On that date, the Company sold 9,375,000 shares of its common stock at an offering price of $18.00 per share, for aggregate public offering proceeds to the Company of approximately $168.8 million.
Certain selling stockholders also sold 3,625,000 shares of the Companys common stock at an offering price of $18.00 per share, for aggregate proceeds of approximately $65.3 million. The initial public offering, which closed on August 12,
2005, was managed by Banc of America Securities LLC, Wachovia Capital Markets, LLC, Goldman, Sachs & Co., RBC Capital Markets Corporation, CIBC World Markets Corp., SG Cowen & Co., LLC and Piper Jaffray & Co. The
remaining 1,950,000 million shares registered were sold by a selling stockholder to the underwriters pursuant to their overallotment option, which was exercised on August 10, 2005, for aggregate proceeds of $35.1 million. The Company did not
receive any proceeds from the sale of its common stock by the selling stockholders.



The initial public offering resulted in net proceeds to the Company of approximately $154.3 million (net of underwriting discounts of approximately $11.8 million and related fees and expenses of approximately $2.6 million).
No fees or expenses were paid, directly or indirectly, to any director, officer, ten-percent stockholder or affiliate of the Company. The Company used the net proceeds of this offering as follows: (1) approximately $11.7 million to redeem all
of its outstanding Senior Preferred Stock, all of which was held by Wachovia Investors, Inc., an affiliate of Wachovia Capital Markets, LLC, (2) approximately $76.2 million to redeem or repurchase all of its outstanding Junior Preferred Stock,
from which affiliates of Madison Dearborn Partners, LLC (who, through certain affiliates, holds more than 10% of our common stock) received approximately $67.3 million and (3) approximately $66.4 million to repay a portion of the outstanding
indebtedness under its senior credit facilities. Except as set forth above with respect to the redemption of Junior Preferred Stock, none of the net proceeds from the initial public offering were used to pay, directly or indirectly, any director,
officer, ten-percent stockholder or affiliate of the Company.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



None.



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



On May 13, 2005, the Companys shareholders acted by written consent to approve the merger of the Company with and into a wholly owned Delaware subsidiary, RC Merger Sub, Inc., with the surviving corporation
being named Ruths Chris Steak House, Inc. In connection therewith, the Companys stockholders also approved an Agreement and Plan of Merger between the Company and RC Merger Sub, Inc. Approximately 85% of the issued and
outstanding shares of stock of the Company entitled to vote thereon voted in favor of the foregoing.



ITEM 5. OTHER INFORMATION



None.



ITEM 6. EXHIBITS



|     |  |                                                                                            
|---- |  | -------------------------------------------------------------------------------------------
|31.1 |  | Rule 13a - 14(a) Certifications of Ruths Chris Steak House, Inc.s Chief Executive Officer
|     | 
|31.2 |  | Rule 13a - 14(a) Certifications of Ruths Chris Steak House, Inc.s Chief Financial Officer
|     | 
|32.1 |  | Section 1350 Certifications of Ruths Chris Steak House, Inc.s Chief Executive Officer    
|     | 
|32.2 |  | Section 1350 Certifications of Ruths Chris Steak House, Inc.s Chief Financial Officer    





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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.



RUTHS CHRIS STEAK HOUSE, INC.By

/s/ Thomas J. Pennison, Jr.Thomas J. Pennison, Jr.,Senior Vice President, Chief Financial Officer and Secretary(Principal Financial and Accounting Officerand Authorized Officer)




October 14, 2005



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