##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



---



FORM 10-Q



(Mark One)  [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act Of 1934  For the quarterly period ended March 31, 2003


or



[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act Of 1934  For the transition period from  to


Commission File Number: 1-15935



OUTBACK STEAKHOUSE, INC.  (Exact name of registrant as specified in its charter)




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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 59-3061413                       
|                                                               |  |                                  
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer
Identification No.)

|                                                           |  |           
|---------------------------------------------------------- |  | ----------
|2202 North West Shore Boulevard, 5th Floor, Tampa, Florida |  | 33607     
|                                                           |  |           
|(Address of principal executive offices)                   |  | (Zip Code)



(813) 282-1225   (Registrants telephone number, including area code)


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. X Yes   
 No.

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

As of May 13, 2003, there were approximately 75,531,913 shares of Common Stock,
$.01 par value, outstanding.

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TABLE OF CONTENTS



|                              |                                                                                               |                                            |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I: FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME         
|                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II: OTHER INFORMATION   
|                              | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|SIGNATURES                   
|CERTIFICATIONS               
|EX-99.1  CERTIFICATION OF CEO
|EX-99.2  CERTIFICATION OF CFO



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##### Table of Contents



OUTBACK STEAKHOUSE, INC.




PART I: FINANCIAL INFORMATION




Item 1. FINANCIAL STATEMENTS




OUTBACK STEAKHOUSE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |        |           |  
|------------------------------------------------------------- | ---------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ----------- | --------- | ------------ | --------- | ------ | --------- | -
|                                                              |                                                            |                                                                                                                                                                                   |           | March 31,   |           | December 31,
|                                                              |                                                            |                                                                                                                                                                                   |           | 2003        |           | 2002        
|                                                              |                                                            |                                                                                                                                                                                   |           | (unaudited) |           |             
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |             
|ASSETS                                                        |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                             
|                                                             
|                                                             
|                                                             
|CURRENT ASSETS                                                |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | Cash and cash equivalents                                                                                                                                                         |           | $           | 155,749   |              |           | $      | 187,578   |  
|                                                              |                                                            | Short term investments                                                                                                                                                            |           |             | 20,809    |              |           |        | 20,576    |  
|                                                              |                                                            | Inventories                                                                                                                                                                       |           |             | 48,515    |              |           |        | 34,637    |  
|                                                              |                                                            | Deferred income tax asset                                                                                                                                                         |           |             | 14,565    |              |           |        | 12,105    |  
|                                                              |                                                            | Other current assets                                                                                                                                                              |           |             | 33,079    |              |           |        | 31,386    |  
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | Total current assets                                                                                                                                                              |           |             | 272,717   |              |           |        | 286,282   |  
|                                                             
|                                                             
|                                                             
|                                                             
|PROPERTY, FIXTURES AND EQUIPMENT, NET                         |                                                            |                                                                                                                                                                                   | 934,693   |             |           |              | 915,022   |       
|                                                             
|                                                             
|                                                             
|                                                             
|INVESTMENTS IN AND ADVANCES TO
UNCONSOLIDATED AFFILIATES, NET |                                                            |                                                                                                                                                                                   | 35,203    |             |           |              | 38,667    |       
|                                                             
|                                                             
|                                                             
|                                                             
|GOODWILL                                                      |                                                            |                                                                                                                                                                                   | 89,516    |             |           |              | 85,842    |       
|                                                             
|                                                             
|                                                             
|                                                             
|INTANGIBLE ASSETS, NET                                        |                                                            |                                                                                                                                                                                   | 18,341    |             |           |              | 17,710    |       
|                                                             
|                                                             
|                                                             
|                                                             
|OTHER ASSETS                                                  |                                                            |                                                                                                                                                                                   | 53,031    |             |           |              | 58,157    |       
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | $                                                                                                                                                                                 | 1,403,501 |             |           | $            | 1,401,680 |       
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|LIABILITIES AND STOCKHOLDERS EQUITY                          |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                             
|                                                             
|                                                             
|                                                             
|CURRENT LIABILITIES                                           |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | Accounts payable                                                                                                                                                                  |           | $           | 52,487    |              |           | $      | 54,519    |  
|                                                              |                                                            | Sales taxes payable                                                                                                                                                               |           |             | 19,099    |              |           |        | 16,205    |  
|                                                              |                                                            | Accrued expenses                                                                                                                                                                  |           |             | 68,395    |              |           |        | 66,360    |  
|                                                              |                                                            | Unearned revenue                                                                                                                                                                  |           |             | 27,053    |              |           |        | 68,926    |  
|                                                              |                                                            | Income taxes payable                                                                                                                                                              |           |             | 28,528    |              |           |        | 15,647    |  
|                                                              |                                                            | Current portion of long-term debt                                                                                                                                                 |           |             | 18,065    |              |           |        | 17,464    |  
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | Total current liabilities                                                                                                                                                         |           |             | 213,627   |              |           |        | 239,121   |  
|                                                             
|                                                             
|                                                             
|                                                             
|DEFERRED INCOME TAX LIABILITY                                 |                                                            |                                                                                                                                                                                   | 48,280    |             |           |              | 47,470    |       
|                                                             
|                                                             
|                                                             
|                                                             
|LONG-TERM DEBT                                                |                                                            |                                                                                                                                                                                   | 14,515    |             |           |              | 14,436    |       
|                                                             
|                                                             
|                                                             
|                                                             
|OTHER LONG-TERM LIABILITIES                                   |                                                            |                                                                                                                                                                                   | 6,189     |             |           |              | 6,189     |       
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | Total liabilities                                                                                                                                                                 |           |             | 282,611   |              |           |        | 307,216   |  
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              | COMMITMENTS AND CONTINGENCIES                              |                                                                                                                                                                                   |           |             |           |              |           |        |          
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              | INTEREST OF MINORITY PARTNERS IN
CONSOLIDATED PARTNERSHIPS |                                                                                                                                                                                   |           | 46,429      |           |              |           | 41,488 |          
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|STOCKHOLDERS EQUITY                                          |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                            | Common stock, $0.01 par value, 200,000 shares authorized;
78,750 and 78,750 shares issued; 75,497 and 75,880
outstanding as of March 31, 2003 and December 31, 2002, respectively |           |             | 788       |              |           |        | 788       |  
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                            | Additional paid-in capital                                                                                                                                                        |           |             | 237,528   |              |           |        | 236,226   |  
|                                                              |                                                            | Retained earnings                                                                                                                                                                 |           |             | 936,181   |              |           |        | 902,910   |  
|                                                              |                                                            | Accumulated other comprehensive loss                                                                                                                                              |           |             | (328      | )            |           |        |          |  
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            |                                                                                                                                                                                   | 1,174,169 |             |           |              | 1,139,924 |       
|                                                             
|                                                             
|                                                             
|                                                             
|                                                              |                                                            | Less treasury stock, 3,253 shares and 2,870 shares at March 31,
2003 and December 31, 2002, respectively, at cost                                                                 |           |             | (99,708   | )            |           |        | (86,948   | )
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | Total stockholders equity                                                                                                                                                        |           |             | 1,074,461 |              |           |        | 1,052,976 |  
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       
|                                                              |                                                            | $                                                                                                                                                                                 | 1,403,501 |             |           | $            | 1,401,680 |       
|                                                              |                                                            |                                                                                                                                                                                   |           |             |           |              |           |       

See notes to unaudited consolidated financial statements.

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OUTBACK STEAKHOUSE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data, unaudited)

|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |       |         |         | 
|------------------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------------------------------- | ------------------------ | ---- | ------------------ | ------- | ------- | ----- | ------- | ------- | 
|                                                                          |                                                                      |                                                     |                          |      | Three Months Ended
|                                                                          |                                                                      |                                                     |                          |      | March 31,         
|                                                                          |                                                                      |                                                     |                          |      |                   
|                                                                          |                                                                      |                                                     |                          |      | 2003               |         | 2002   
|                                                                          |                                                                      |                                                     |                          |      |                    |         |        
|REVENUES                                                                  |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Restaurant sales                                                          |                                                                      | $                                                   | 646,672                  |      |                    | $       | 574,555 |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Other revenues                                                            |                                                                      |                                                     | 5,006                    |      |                    |         | 4,434   |      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                          |                                                                      | TOTAL REVENUES                                      |                          |      | 651,678            |         |         |       | 578,989 |        
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|COSTS AND EXPENSES:                                                       |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                      | Cost of sales                                       |                          |      | 232,831            |         |         |       | 214,808 |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                      | Labor & other related                               |                          |      | 158,950            |         |         |       | 138,302 |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                      | Other restaurant operating                          |                          |      | 135,004            |         |         |       | 114,049 |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                      | Depreciation & amortization                         |                          |      | 20,574             |         |         |       | 17,938  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                      | General & administrative                            |                          |      | 22,496             |         |         |       | 21,129  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                      | Income from operations of unconsolidated affiliates |                          |      | (1,306             | )       |         |       | (1,552  | )      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                          |                                                                      |                                                     | Total costs and expenses |      |                    | 568,549 |         |       |         | 504,674 | 
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|INCOME FROM OPERATIONS                                                    |                                                                      |                                                     | 83,129                   |      |                    |         | 74,315  |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|OTHER INCOME (EXPENSE), NET                                               |                                                                      |                                                     | (943                     | )    |                    |         | (317    | )    
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|INTEREST INCOME                                                           |                                                                      |                                                     | 542                      |      |                    |         | 535     |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|INTEREST EXPENSE                                                          |                                                                      |                                                     | (353                     | )    |                    |         | (299    | )    
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|INCOME BEFORE ELIMINATION OF MINORITY PARTNERS INTEREST
AND INCOME TAXES |                                                                      |                                                     | 82,375                   |      |                    |         | 74,234  |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|ELIMINATION OF MINORITY PARTNERS INTEREST                                |                                                                      |                                                     | 12,827                   |      |                    |         | 10,368  |      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|INCOME BEFORE PROVISION FOR INCOME TAXES                                  |                                                                      |                                                     | 69,548                   |      |                    |         | 63,866  |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|PROVISION FOR INCOME TAXES                                                |                                                                      |                                                     | 24,481                   |      |                    |         | 22,481  |      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE       |                                                                      |                                                     | 45,067                   |      |                    |         | 41,385  |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE (NET OF TAXES)      |                                                                      |                                                     |                         |      |                    |         | (4,422  | )    
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|NET INCOME                                                                |                                                                      | $                                                   | 45,067                   |      |                    | $       | 36,963  |      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|BASIC EARNINGS PER COMMON SHARE                                           |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Income before cumulative effect of a change in accounting principle  |                                                     | $                        | 0.59 |                    |         | $       | 0.54  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cumulative effect of a change in accounting principle (net of taxes) |                                                     |                          |     |                    |         |         | (0.06 | )      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                          | Net income                                                           |                                                     | $                        | 0.59 |                    |         | $       | 0.48  |        
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|BASIC WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                |                                                                      |                                                     | 75,755                   |      |                    |         | 77,078  |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|DILUTED EARNINGS PER COMMON SHARE                                         |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Income before cumulative effect of a change in accounting principle  |                                                     | $                        | 0.58 |                    |         | $       | 0.52  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cumulative effect of a change in accounting principle (net of taxes) |                                                     |                          |     |                    |         |         | (0.06 | )      
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|                                                                          | Net income                                                           |                                                     | $                        | 0.58 |                    |         | $       | 0.46  |        
|                                                                          |                                                                      |                                                     |                          |      |                    |         |         |      
|DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING              |                                                                      |                                                     | 78,215                   |      |                    |         | 80,039  |      

See notes to unaudited consolidated financial statements.

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OUTBACK STEAKHOUSE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |         |         |  
|----------------------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------- | ---------------------------- | ------- | ---- | ------- | ------- | ------- | -
|                                                                              |                                                                      |                                                                                   |         | Three Months Ended March 31,
|                                                                              |                                                                      |                                                                                   |         |                             
|                                                                              |                                                                      |                                                                                   |         | 2003                         |         | 2002
|                                                                              |                                                                      |                                                                                   |         |                              |         |     
|Cash flows from operating activities:                                         |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Net income                                                                    |                                                                      | $                                                                                 | 45,067  |                              |         | $    | 36,963  |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Adjustments to reconcile net income to cash provided by operating activities: |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Depreciation                                                         |                                                                                   |         | 19,953                       |         |      |         | 17,336  |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Amortization                                                         |                                                                                   |         | 621                          |         |      |         | 602     |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Cumulative effect of a change in accounting principle (net of taxes) |                                                                                   |         |                             |         |      |         | 4,422   |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Minority partners interest in consolidated partnerships income     |                                                                                   |         | 12,827                       |         |      |         | 10,368  |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Income
from operations of unconsolidated affiliates                  |                                                                                   |         | (1,306                       | )       |      |         | (1,552  | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Loss on disposal of property, fixtures and equipment                 |                                                                                   |         | 759                          |         |      |         |        |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Change
in assets and liabilities, net of effects of acquisitions:    |                                                                                   |         |                              |         |      |         |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | (Increase) decrease in inventories                                                |         |                              | (13,878 | )    |         |         | 2,674   |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | (Increase) decrease in other current assets                                       |         |                              | (1,693  | )    |         |         | 11,005  |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | (Increase)
decrease in other assets and intangible assets, net                    |         |                              | (1,695  | )    |         |         | 2,493   |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | Increase (decrease) in accounts payable, sales taxes payable
and accrued expenses |         |                              | 2,897   |      |         |         | (5,216  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | Decrease in unearned revenue                                                      |         |                              | (41,873 | )    |         |         | (36,338 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | Increase in income taxes payable                                                  |         |                              | 14,183  |      |         |         | 15,502  |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              |                                                                      | (Decrease) increase in deferred income taxes                                      |         |                              | (1,650  | )    |         |         | 699     |  
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                              |                                                                      | Net cash provided by operating activities                                         |         |                              | 34,212  |      |         |         | 58,958  |  
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|Cash flows used in investing activities:                                      |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Purchase of investment securities                                    |                                                                                   |         | (233                         | )       |      |         | (93     | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Capital expenditures                                                 |                                                                                   |         | (38,488                      | )       |      |         | (45,891 | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Payments from unconsolidated affiliates                              |                                                                                   |         | 7,034                        |         |      |         | 260     |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Distributions to unconsolidated affiliates                           |                                                                                   |         | (1,940                       | )       |      |         | (1,731  | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Investments in and advances to unconsolidated affiliates             |                                                                                   |         | (652                         | )       |      |         | (4,292  | )      
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                              |                                                                      | Net cash used in investing activities                                             |         |                              | (34,279 | )    |         |         | (51,747 | )
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|Cash flows from financing activities:                                         |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Proceeds from issuance of long-term debt                             |                                                                                   |         | 871                          |         |      |         | 232     |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Proceeds from minority partners contributions                       |                                                                                   |         | 6,350                        |         |      |         | 2,732   |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Distributions to minority partners                                   |                                                                                   |         | (14,236                      | )       |      |         | (12,209 | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Repayments of long-term debt                                         |                                                                                   |         | (191                         | )       |      |         |        |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Dividends paid                                                       |                                                                                   |         | (9,109                       | )       |      |         |        |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Payments for purchase of treasury stock                              |                                                                                   |         | (20,283                      | )       |      |         | (21,253 | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Proceeds from reissuance of treasury stock                           |                                                                                   |         | 4,836                        |         |      |         | 12,714  |        
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                              |                                                                      | Net cash used in financing activities                                             |         |                              | (31,762 | )    |         |         | (17,784 | )
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|Net decrease in cash and cash equivalents                                     |                                                                      |                                                                                   | (31,829 | )                            |         |      | (10,573 | )      
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Cash and cash equivalents at beginning of period                              |                                                                      |                                                                                   | 187,578 |                              |         |      | 115,928 |        
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|Cash and cash equivalents at end of period                                    |                                                                      | $                                                                                 | 155,749 |                              |         | $    | 105,355 |        
|                                                                              |                                                                      |                                                                                   |         |                              |         |      |         |        
|Supplemental disclosures of cash flow information:                            |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Cash paid for interest                                               |                                                                                   | $       | 403                          |         |      | $       | 93      |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Cash paid for income taxes                                           |                                                                                   | $       | 8,748                        |         |      | $       | 280     |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Non-Cash investing activities:                                                |                                                                      |                                                                                   |         |                              |         |      |         |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|                                                                              | Assets
received for note (see Note 10)                               |                                                                                   | $       | 5,569                        |         |      | $       |        |        

See notes to unaudited consolidated financial statements.

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been
prepared by Outback Steakhouse, Inc. (the Company) pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
Company, all adjustments (consisting only of normal recurring entries)
necessary for the fair presentation of the Companys results of operations,
financial position and cash flows for the periods presented have been included.

Certain amounts shown in the 2002 consolidated financial statements have
been reclassified to conform to the 2003 presentation. These reclassifications
did not have an effect on total assets, total liabilities, stockholders equity
or net income.

The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year.

The December 31, 2002 consolidated balance sheet has been derived from the
audited consolidated financial statements but does not include all of the
disclosures required by generally accepted accounting principles. These
financial statements should be read in conjunction with the financial
statements and financial notes thereto included in the Companys 2002 Annual
Report on Form 10-K.

2. Other Current Assets

Other current assets consisted of the following (in thousands):

|                                         |  |             |        |              |  |   |        | 
|---------------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                         |  | March 31,   |        | December 31,
|                                         |  | 2003        |        | 2002        
|                                         |  | (unaudited) |        |              |  |  
|                                         |  |             |        |             
|Deposits (including income tax deposits) |  | $           | 4,916  |              |  | $ | 4,911  | 
|                                        
|                                        
|                                        
|                                        
|Accounts receivable                      |  |             | 7,277  |              |  |   | 8,614  | 
|                                        
|                                        
|                                        
|                                        
|Accounts receivable franchisees          |  |             | 2,511  |              |  |   | 2,920  | 
|                                        
|                                        
|                                        
|                                        
|Prepaid expenses                         |  |             | 17,320 |              |  |   | 14,255 | 
|                                        
|                                        
|                                        
|                                        
|Other current assets                     |  |             | 1,055  |              |  |   | 686    | 
|                                         |  |             |        |              |  |   |        | 
|                                         |  | $           | 33,079 |              |  | $ | 31,386 | 
|                                         |  |             |        |              |  |   |        | 

3. Property, Fixtures and Equipment, Net

Property, fixtures and equipment consisted of the following (in
thousands):

|                                  |  |             |          |              |  |   |          |  
|--------------------------------- |  | ----------- | -------- | ------------ |  | - | -------- | -
|                                  |  | March 31,   |          | December 31,
|                                  |  | 2003        |          | 2002        
|                                  |  | (unaudited) |          |              |  |  
|                                  |  |             |          |             
|Land                              |  | $           | 166,190  |              |  | $ | 166,600  |  
|                                 
|                                 
|                                 
|                                 
|Buildings & building improvements |  |             | 468,243  |              |  |   | 454,682  |  
|                                 
|                                 
|                                 
|                                 
|Furniture & fixtures              |  |             | 124,542  |              |  |   | 119,450  |  
|                                 
|                                 
|                                 
|                                 
|Equipment                         |  |             | 305,565  |              |  |   | 295,718  |  
|                                 
|                                 
|                                 
|                                 
|Leasehold improvements            |  |             | 207,317  |              |  |   | 201,975  |  
|                                 
|                                 
|                                 
|                                 
|Construction in progress          |  |             | 34,215   |              |  |   | 30,992   |  
|                                 
|                                 
|                                 
|                                 
|Accumulated depreciation          |  |             | (371,379 | )            |  |   | (354,395 | )
|                                  |  |             |          |              |  |   |          |  
|                                  |  | $           | 934,693  |              |  | $ | 915,022  |  
|                                  |  |             |          |              |  |   |          |  

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

4. Goodwill and Intangible Assets, Net

Intangible assets consisted of the following (in thousands):

|                                                              |  |                  |          |             |  |              |        |   |  |   |        |  
|------------------------------------------------------------- |  | ---------------- | -------- | ----------- |  | ------------ | ------ | - |  | - | ------ | -
|                                                              |  | Weighted average |          | March 31,   |  | December 31,
|                                                              |  | amortization     |          | 2003        |  | 2002        
|                                                              |  | period           |          | (unaudited) |  |             
|                                                              |  |                  |          |             |  |              |        |  
|Non-compete/non-disclosure and related contractual agreements |  |                  | 5 years  |             |  | $            | 16,255 |   |  | $ | 15,513 |  
|                                                             
|                                                             
|                                                             
|                                                             
|Accumulated amortization                                      |  |                  |          |             |  |              | (7,277 | ) |  |   | (6,657 | )
|                                                             
|                                                             
|                                                             
|                                                             
|Liquor licenses                                               |  |                  | 20 years |             |  |              | 12,531 |   |  |   | 11,878 |  
|                                                             
|                                                             
|                                                             
|                                                             
|Accumulated amortization                                      |  |                  |          |             |  |              | (3,168 | ) |  |   | (3,024 | )
|                                                              |  |                  |          |             |  |              |        |   |  |   |        |  
|                                                              |  |                  | 12 years |             |  | $            | 18,341 |   |  | $ | 17,710 |  
|                                                              |  |                  |          |             |  |              |        |   |  |   |        |  

Aggregate amortization expense on the intangible assets subject to
amortization was approximately $621,000 for the three months ended March 31,
2003 and is estimated to be approximately $2,500,000 to $3,000,000 for each of
the years ending December 31, 2003 through 2007.

The change in the carrying amount of goodwill for the three months ended March
31, 2003 is as follows:

|                                                                                  |  |   |        | 
|--------------------------------------------------------------------------------- |  | - | ------ | 
|December 31, 2002                                                                 |  | $ | 85,842 | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Acquisitions (see Note 9 of Notes to Unaudited Consolidated Financial Statements) |  |   | 3,674  | 
|                                                                                  |  |   |        | 
|March 31, 2003                                                                    |  | $ | 89,516 | 
|                                                                                  |  |   |        | 

5. Other Assets

Other assets consisted of the following (in thousands):

|                                                                             |  |             |        |              |  |   |        | 
|---------------------------------------------------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                                                             |  | March 31,   |        | December 31,
|                                                                             |  | 2003        |        | 2002        
|                                                                             |  | (unaudited) |        |              |  |  
|                                                                             |  |             |        |             
|Other assets                                                                 |  | $           | 38,281 |              |  | $ | 43,157 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Deferred license fee, net of valuation provision of
approximately $1,250,000 |  |             | 14,750 |              |  |   | 15,000 | 
|                                                                             |  |             |        |              |  |   |        | 
|                                                                             |  | $           | 53,031 |              |  | $ | 58,157 | 
|                                                                             |  |             |        |              |  |   |        | 

During January 2001, the Company entered into a ten-year licensing
agreement with an entity owned by minority interest owners of certain
non-restaurant operations. The licensing agreement transferred the right and
license to use certain assets of these non-restaurant operations. License fees
payable over the term of the agreement total approximately $22,000,000.

In July 2002, the Company agreed to defer certain scheduled payments of
approximately $1,500,000 for one year. Subsequently, during the third quarter
of 2002, the licensee made a $325,000 payment towards this deferred amount.
During the fourth quarter of 2002, the Company agreed to revise the remaining
payment schedule.

During 2002, the licensee made additional payments towards amounts due
under the licensing agreement. Accordingly, based upon meeting certain
criteria pursuant to the applicable accounting provisions, the Company reduced
the net book value of the assets subject to the licensing agreement with the
deferred gain associated with the transaction. No gain has been recognized on
the transaction and the remaining deferred gain of approximately $2,189,000, as
of March 31, 2003, associated with future licensing fees under the licensing
agreement will not be recognized until such time as the amounts due under the
licensing agreement are realized. (See Note 8 of Notes to Unaudited
Consolidated Financial Statements.)

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

5. Other Assets (continued)

Other Assets also includes approximately $10,059,000 in loans to the
Companys operating partner in the Outback/Flemings, LLC (the LLC) for the
partners share of capital to build new restaurants required beyond the initial
capital contributed by the Company pursuant to the partnership agreement. The
Company expects to continue to make advances to its operating partner for the
construction of new restaurants. The carrying value of the loan is exceeded by
the value of the partners interest in the partnership. The Company has a 50%
ownership interest in the LLC, and is subject to a purchase or sale option
after the twentieth restaurant is opened, which may require the Company to
purchase an additional 40% in the LLC at a market value as determined by the
terms of the partnership agreement.

6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

|                                       |  |             |        |              |  |   |        | 
|-------------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                       |  | March 31,   |        | December 31,
|                                       |  | 2003        |        | 2002        
|                                       |  | (unaudited) |        |              |  |  
|                                       |  |             |        |             
|Accrued payroll and other compensation |  | $           | 20,666 |              |  | $ | 22,110 | 
|                                      
|                                      
|                                      
|                                      
|Accrued insurance                      |  |             | 16,398 |              |  |   | 17,002 | 
|                                      
|                                      
|                                      
|                                      
|Accrued property taxes                 |  |             | 7,390  |              |  |   | 8,361  | 
|                                      
|                                      
|                                      
|                                      
|Accrued advertising                    |  |             | 11,115 |              |  |   | 4,989  | 
|                                      
|                                      
|                                      
|                                      
|Other accrued expenses                 |  |             | 12,826 |              |  |   | 13,898 | 
|                                       |  |             |        |              |  |   |        | 
|                                       |  | $           | 68,395 |              |  | $ | 66,360 | 
|                                       |  |             |        |              |  |   |        | 

During the year ended December 31, 2002, the Company recorded a provision
for impaired assets and restaurant closings of approximately $5,281,000.
Provision accruals of approximately $50,000 and $300,000 were included in
other accrued expenses as of March 31, 2003 and December 31, 2002,
respectively.

7. Long-term Debt

Long-term debt consisted of the following (in thousands):

|                                                                                                                                            |  |             |        |              |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------ | ------------ |  | - | ------ | 
|                                                                                                                                            |  | March 31,   |        | December 31,
|                                                                                                                                            |  | 2003        |        | 2002        
|                                                                                                                                            |  | (unaudited) |        |             
|                                                                                                                                            |  |             |        |             
|Revolving line of credit, interest at 1.88% and 2.39% at
March 31, 2003 and December 31, 2002, respectively                                 |  | $           | 10,000 |              |  | $ | 10,000 | 
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|Other notes payable, uncollateralized, interest rates ranging
from 2.54% to 6.65% at March 31, 2003 and 3.07% to 6.75% at
December 31, 2002 |  |             | 22,580 |              |  |   | 21,900 | 
|                                                                                                                                            |  |             |        |              |  |   |        | 
|                                                                                                                                            |  |             | 32,580 |              |  |   | 31,900 | 
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|Less current portion                                                                                                                        |  |             | 18,065 |              |  |   | 17,464 | 
|                                                                                                                                            |  |             |        |              |  |   |        | 
|Long-term debt                                                                                                                              |  | $           | 14,515 |              |  | $ | 14,436 | 
|                                                                                                                                            |  |             |        |              |  |   |        | 

LONG-TERM DEBT

The Company has an uncollateralized revolving line of credit which permits
borrowing of up to a maximum of $125,000,000 at 57.5 basis points over the 30,
60, 90 or 180 day London Interbank Offered Rate (LIBOR) (1.23% to 1.34% at
March 31, 2003 and 1.37% to 1.44% at December 31, 2002). At March 31, 2003 and
December 31, 2002 the unused portion of the revolving line of credit was
$115,000,000. The credit agreement requires payment of a credit facility fee of
17.5 basis points on the total facility and matures in December 2004.

The Company has a $15,000,000 uncollateralized line of credit bearing
interest at rates ranging from 57.5 to 95.0 basis points over LIBOR.
Approximately $7,102,000 and $4,042,000 of the line of credit was committed for
the issuance of letters of credit at March 31, 2003 and December 31, 2002,
respectively, as required by insurance companies that underwrite the Companys
workers compensation insurance. The remaining $7,898,000 at March 31, 2003 is
available to the Company.

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

7. Long-term Debt (continued)

The Company has notes payable with banks bearing interest at rates ranging
from 6.00% to 6.30% to support the Companys Korean operations. As of March 31,
2003 and December 31, 2002, the outstanding balance was approximately
$16,761,000 and $16,353,000, respectively. The notes are denominated and
payable in Korean won and mature at dates ranging from April 2003 to March
2004.

DEBT GUARANTEES

The Company is the guarantor of two uncollateralized lines of credit that
permit borrowing of up to $20,000,000 for its franchisee operating Outback
Steakhouses in Japan. The lines of credit are denominated and payable in
Japanese yen and renew every six months, with outstanding balances maturing at
dates ranging from April through September 2003. At March 31, 2003 and December
31, 2002 the borrowings totaled approximately $19,741,000 and $16,953,000,
respectively. Subsequent to March 31, 2003, the Company obtained a controlling
interest in the Japanese franchise operations. As a result, the Company became
directly liable for borrowings outstanding upon closing of the transaction.
(See Note 13 of Notes to Unaudited Consolidated Financial Statements.)

The Company is the guarantor of an uncollateralized line of credit that
permits borrowing of up to $35,000,000, maturing in December 2004, for one of
its franchisees. At March 31, 2003 and December 31, 2002, the outstanding
balance was approximately $28,439,000 and $28,496,000, respectively.

The Company is the guarantor of an uncollateralized line of credit that
permits borrowing of up to a maximum of $24,500,000, maturing in December 2004,
for its joint venture partner in the development of Roys restaurants. At March
31, 2003 and December 31, 2002, the outstanding balance was approximately
$20,439,000 and $19,939,000, respectively.

The Company is the guarantor of bank loans made to certain franchisees
operating Outback Steakhouse restaurants. At March 31, 2003 and December 31,
2002, the outstanding balance on these loans was approximately $157,000 and
$195,000, respectively.

The Company is the guarantor of up to approximately $9,445,000 of a
$68,000,000 note for an unconsolidated affiliate in which the Company has a
22.22% equity interest and for which the Company operates catering and
concession facilities. This note matures beginning December 2003 with final
maturity December 2022. At March 31, 2003 and December 31, 2002, the
outstanding balance on the note was approximately $68,000,000.

The Companys contractual debt obligations and debt guarantees as of March
31, 2003 are summarized in the table below (in thousands):

|                                         |  |       |        |         |  |         |        |           |  |   |        | 
|---------------------------------------- |  | ----- | ------ | ------- |  | ------- | ------ | --------- |  | - | ------ | 
|                                         |  |       |        |         |  | Current |        | Long-term
|                                         |  | Total |        | Portion |  | Portion
|                                         |  |       |        |         |  |        
|Debt                                     |  | $     | 32,580 |         |  | $       | 18,065 |           |  | $ | 14,515 | 
|                                        
|Debt guarantees                          |  | $     | 89,103 |         |  | $       | 20,359 |           |  | $ | 68,744 | 
|                                        
|                                        
|                                        
|                                        
|Amount outstanding under debt guarantees |  | $     | 78,221 |         |  | $       | 20,100 |           |  | $ | 58,121 | 

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

8. Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

|                         |  |             |       |              |  |   |       | 
|------------------------ |  | ----------- | ----- | ------------ |  | - | ----- | 
|                         |  | March 31,   |       | December 31,
|                         |  | 2003        |       | 2002        
|                         |  | (unaudited) |       |              |  |  
|                         |  |             |       |             
|Accrued insurance        |  | $           | 4,000 |              |  | $ | 4,000 | 
|                        
|                        
|                        
|                        
|Other deferred liability |  |             | 2,189 |              |  |   | 2,189 | 
|                         |  |             |       |              |  |   |       | 
|                         |  | $           | 6,189 |              |  | $ | 6,189 | 
|                         |  |             |       |              |  |   |       | 

In January 2001, the Company entered into a ten-year licensing agreement
with an entity owned by minority interest owners of certain non-restaurant
operations. The licensing agreement transferred the right and license to use
certain assets of these non-restaurant operations. The Company has deferred
recognition of any gain associated with the transaction until such time as the
amounts due under the licensing agreement are realized. (See Note 5 of Notes
to Unaudited Consolidated Financial Statements.)

9. Foreign Currency Translation
and Comprehensive Income

For all significant
non-U.S. operations, the functional currency is the local currency.
Assets and liabilities of those operations are translated into U.S.
dollars using the exchange rates in effect at the balance sheet date.
Results of operations are translated using the average exchange rates
for the reporting period. Translation gains and losses are reported
as a separate component of accumulated other comprehensive income
(loss) in stockholders equity.

Comprehensive income
includes net income and foreign currency translation adjustments.
Total comprehensive income for the quarter ended March 31, 2003
was approximately $44,739,000, which included the effect of loss from
translation adjustments of approximately $328,000.

10. Business Combinations

In January 2003, the Company was conveyed two restaurants from Flemings
Prime Steakhouse II (FPSH II), the operator of three unaffiliated Flemings
Prime Steakhouses, which the Company had previously agreed to purchase. The
estimated fair market value of the assets received was deemed to satisfy
outstanding principal and accrued interest on amounts owed by FPSH II to the
Company of approximately $5,569,000. As a result of this transaction, the
Company recorded goodwill of approximately $3,674,000.

11. Recently Issued Financial Accounting Standards

Business Combinations and Goodwill and Other Intangible Assets

On June 30, 2001, the Financial Accounting Standards Board (FASB)
finalized SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 141 requires all business combinations
initiated after June 30, 2001, to be accounted for using the purchase method of
accounting. With the adoption of SFAS No. 142 effective January 1, 2002,
goodwill is no longer subject to amortization. Rather, goodwill will be subject
to at least an annual assessment for impairment by applying a fair-value-based
test. Under the new rules, an acquired intangible asset should be separately
recognized if the benefit of the intangible asset is obtained through
contractual or other legal rights, or if the intangible asset can be sold,
transferred, licensed, rented, or exchanged regardless of the acquirers intent
to do so. These intangible assets will be required to be amortized over their
useful lives. Generally, the Company performs its annual assessment for
impairment during the third quarter of its fiscal year unless facts and
circumstances require differently.

In connection with the adoption of SFAS No. 142, the Company completed the
transitional impairment testing of goodwill during the six months ended June
30, 2002. The adoption was made effective as of the beginning of 2002. The
transitional impairment testing resulted in an initial goodwill impairment
charge of approximately $4,422,000, net of taxes of approximately $2,199,000
during 2002. In accordance with SFAS No. 142, the initial impairment charge
was recorded as a cumulative effect of a change in accounting principle in the
Companys Consolidated Statements of Income for the six month period ended June
30, 2002.

Accounting for Asset Retirement Obligations

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires entities to record the fair
value of a liability for an asset retirement obligation in the period in which
it is incurred. Statement No. 143 is effective for fiscal years beginning
after June 15, 2002, with earlier application encouraged. The Company does not
expect the implementation of SFAS No. 143 to have a material impact on its
financial statements.

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

11. Recently Issued Financial Accounting Standards (continued)

Accounting for the Impairment or Disposal of Long-Lived Assets

In August 2001, SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, was issued, replacing SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
and portions of APB Opinion 30, Reporting the Results of Operations. SFAS No.
144 provides a single accounting model for long-lived assets to be disposed of
and changes the criteria that would have to be met to classify an asset as
held-for-sale. SFAS No. 144 retains the requirement of APB Opinion 30 to report
discontinued operations separately from continuing operations and extends that
reporting to a component of an entity that either has been disposed of or is
classified as held for sale. SFAS No. 144 is effective January 1, 2002 and was
adopted by the Company as of that date. The adoption of SFAS No. 144 did not
have a material impact on the Companys financial condition or results of
operations in the three months ended March 31, 2003.

Accounting for Exit or Disposal Activities

In June 2002, the FASB issued SFAS No. 146, Accounting
for Exit or Disposal Activities. SFAS No. 146 addresses significant issues
regarding the recognition, measurement and reporting of costs that are
associated with exit and disposal activities, including restructuring
activities that are currently accounted for pursuant to the guidance that the
Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).The scope of SFAS No. 146 also includes (1) costs related to
terminating a contract that is not a capital lease and (2) termination benefits
that employees who are involuntarily terminated receive under the terms of a
one-time benefit arrangement that is not an ongoing benefit arrangement or an
individual deferred-compensation contract. The Company has adopted SFAS No. 146
effective January 1, 2003. The adoption did not have a material impact on the
Companys financial condition or results of operations in the three months
ended March 31, 2003.

Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others

In November 2002, the FASB issued Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect of Indebtedness of Others. FIN 45 requires that upon the issuance of
a guarantee, the guarantor must recognize the liability for the fair value of
the obligation it assumes under the guarantee. FIN 45 provides that initial
recognition and measurement should be applied on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year end. The disclosure requirements are effective for
financial statements of both interim and annual periods that end after December
15, 2002. The Company has complied with the disclosure requirements and is in
the process of determining the impact, if any, of adopting the provisions for
initial recognition and measurement for guarantees issued or modified after
December 31, 2002. The Company did not have any modifications of outstanding
guarantees in the three months ended March 31, 2003.

Accounting for Stock-Based Compensation  Transition and Disclosure

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure, an amendment of SFAS No.
123. This standard amends SFAS 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for companies that
voluntarily change to the fair value based method of accounting for stock-based
employee compensation. It also requires prominent disclosure about the effects
on reported net income of the companys accounting policy decisions with
respect to stock-based employee compensation in both annual and interim
financial statements. The transition provisions and annual disclosure
requirements are effective for all fiscal years ending after December 15, 2002,
while the interim period disclosure requirements are effective for all interim
periods beginning after December 15, 2002. (See Note 12 of Notes to Unaudited
Consolidated Financial Statements.)

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OUTBACK STEAKHOUSE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

11. Recently Issued Financial Accounting Standards (continued)

Consolidation of Variable Interest Entities

In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities. This interpretation of
Accounting Research Bulletin 51, Consolidated Financial Statements, addresses
consolidation by business enterprises of variable interest entities which
posses certain characteristics. The interpretation requires that if a business
enterprise has a controlling financial interest in a variable interest entity,
the assets, liabilities, and results of the activities of the variable interest
entity must be included in the consolidated financial statements with those of
the business enterprise.

This interpretation applies immediately to variable interest entities
created after January 31, 2003 and to variable interest entities in which an
enterprise obtains an interest after that date. There were no variable interest
entities created or in which the company obtained an interest in the three
months ended March 31, 2003. FIN 46 applies to preexisting variable interest
entities no later than the beginning of the first interim reporting period
beginning after June 15, 2003. The Company currently invests in joint ventures
that operate certain of its restaurants, which may be considered variable
interest entities. The Companys exposure to loss as a result of involvement
with these entities is believed to be low, and adoption of FIN 46 is not
expected to materially affect the Companys financial statements.

12. Stock-Based Compensation

The Company accounts for stock-based compensation under the intrinsic
value method of accounting for stock-based compensation and has disclosed pro
forma net income and earnings per share amounts using the fair value based
method prescribed by Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation. (See Recently Issued
Financial Accounting Standards in Note 11 of Notes to Unaudited Consolidated Financial Statements.)

|                                                                                                                     |                       |   |                              |      |      |   |        |      | 
|-------------------------------------------------------------------------------------------------------------------- | --------------------- | - | ---------------------------- | ---- | ---- | - | ------ | ---- | 
|                                                                                                                     |                       |   | Three months ended March 31,
|                                                                                                                     |                       |   |                             
|                                                                                                                     |                       |   | 2003                         |      | 2002
|                                                                                                                     |                       |   |                              |      |     
|Net income, as reported                                                                                              |                       | $ | 45,067                       |      |      | $ | 36,963 |     
|Total stock-based employee compensation expense determined
under fair value based method, net of related tax effects |                       |   | (3,244                       | )    |      |   | (3,327 | )   
|                                                                                                                     |                       |   |                              |      |      |   |        |     
|Pro forma net income                                                                                                 |                       | $ | 41,823                       |      |      | $ | 33,636 |     
|                                                                                                                     |                       |   |                              |      |      |   |        |     
|Earnings per common share:                                                                                           |                       |   |                              |      |      |   |        |     
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                    
|                                                                                                                     | Basic  as reported   |   | $                            | 0.59 |      |   | $      | 0.48 | 
|                                                                                                                     |                       |   |                              |      |      |   |        |     
|                                                                                                                     | Basic  pro forma     |   | $                            | 0.55 |      |   | $      | 0.44 | 
|                                                                                                                     |                       |   |                              |      |      |   |        |     
|                                                                                                                     | Diluted  as reported |   | $                            | 0.58 |      |   | $      | 0.46 | 
|                                                                                                                     |                       |   |                              |      |      |   |        |     
|                                                                                                                     | Diluted  pro forma   |   | $                            | 0.53 |      |   | $      | 0.42 | 
|                                                                                                                     |                       |   |                              |      |      |   |        |     

13. Subsequent Event

On April 23, 2003, the Company announced that its Board of Directors
declared a quarterly dividend of $0.12 per share of the Companys Common Stock.
The dividend is payable June 6, 2003 to shareholders of record as of May 23,
2003.

Subsequent to March 31, 2003, the Company obtained a controlling interest
in its franchise operating restaurants in Japan. As part of this realignment,
the Company contributed approximately $2,488,000 in capital and became directly
liable for approximately $19,741,000 of debt that the Company previously
guaranteed for the franchise.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Results of Operations (unaudited)

The following tables set forth, for the periods indicated, (i) the
percentages that the items in the Companys Unaudited Consolidated Statements
of Income bear to total revenues, or restaurant sales as indicated, and (ii)
selected operating data:

|                                                                          |                                                     |  |                          |      |                    |      |       |      |   |      | 
|------------------------------------------------------------------------- | --------------------------------------------------- |  | ------------------------ | ---- | ------------------ | ---- | ----- | ---- | - | ---- | 
|                                                                          |                                                     |  |                          |      | Three Months Ended
|                                                                          |                                                     |  |                          |      | March 31,         
|                                                                          |                                                     |  |                          |      |                   
|                                                                          |                                                     |  |                          |      | 2003               |      | 2002 
|                                                                          |                                                     |  |                          |      |                    |      |      
|REVENUES                                                                  |                                                     |  |                          |      |                    |      |       |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Restaurant sales                                                          |                                                     |  | 99.2                     | %    |                    |      | 99.2  | %   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Other revenues                                                            |                                                     |  | 0.8                      |      |                    |      | 0.8   |     
|                                                                          |                                                     |  |                          |      |                    |      |       |     
|TOTAL REVENUES                                                            |                                                     |  | 100.0                    |      |                    |      | 100.0 |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|COSTS AND EXPENSES:                                                       |                                                     |  |                          |      |                    |      |       |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cost of sales (1)                                   |  |                          | 36.0 |                    |      |       | 37.4 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Labor & other related (1)                           |  |                          | 24.6 |                    |      |       | 24.1 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Other restaurant operating (1)                      |  |                          | 20.9 |                    |      |       | 19.8 |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Depreciation & amortization                         |  |                          | 3.2  |                    |      |       | 3.1  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | General & administrative                            |  |                          | 3.5  |                    |      |       | 3.6  |  
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Income from operations of unconsolidated affiliates |  |                          | (0.2 | )                  |      |       | (0.3 | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                     |  | Total costs and expenses |      |                    | 87.2 |       |      |   | 87.2 | 
|                                                                          |                                                     |  |                          |      |                    |      |       |     
|INCOME FROM OPERATIONS                                                    |                                                     |  | 12.8                     |      |                    |      | 12.8  |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|OTHER INCOME (EXPENSE), NET                                               |                                                     |  | (0.1                     | )    |                    |      | (0.1  | )   
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|INTEREST INCOME                                                           |                                                     |  | 0.1                      |      |                    |      | 0.1   |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|INTEREST EXPENSE                                                          |                                                     |  | (0.1                     | )    |                    |      | (0.1  | )   
|                                                                          |                                                     |  |                          |      |                    |      |       |     
|INCOME BEFORE ELIMINATION OF MINORITY
PARTNERS INTEREST AND INCOME TAXES |                                                     |  | 12.7                     |      |                    |      | 12.8  |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|ELIMINATION OF MINORITY PARTNERS INTEREST                                |                                                     |  | 2.0                      |      |                    |      | 1.8   |     
|                                                                          |                                                     |  |                          |      |                    |      |       |     
|INCOME BEFORE PROVISION FOR INCOME TAXES                                  |                                                     |  | 10.7                     |      |                    |      | 11.0  |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|PROVISION FOR INCOME TAXES                                                |                                                     |  | 3.8                      |      |                    |      | 3.9   |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE       |                                                     |  | 6.9                      |      |                    |      | 7.1   |     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE (NET OF TAXES)      |                                                     |  |                         |      |                    |      | (0.8  | )   
|                                                                          |                                                     |  |                          |      |                    |      |       |     
|NET INCOME                                                                |                                                     |  | 6.9                      | %    |                    |      | 6.3   | %   
|                                                                          |                                                     |  |                          |      |                    |      |       |     



|(1) |  | As a percentage of restaurant sales.
|--- |  | ------------------------------------

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations (unaudited) (continued)

|                                 |                                                        |   |                    |     |      |   |     |     | 
|-------------------------------- | ------------------------------------------------------ | - | ------------------ | --- | ---- | - | --- | --- | 
|                                 |                                                        |   | Three Months Ended
|                                 |                                                        |   | March 31,         
|                                 |                                                        |   |                   
|                                 |                                                        |   | 2003               |     | 2002
|                                 |                                                        |   |                    |     |     
|System-wide sales (in millions): |                                                        |   |                    |     |      |   |     |    
|                                
|                                
|                                
|                                
|Outback Steakhouse restaurants   |                                                        |   |                    |     |      |   |     |    
|                                
|                                
|                                
|                                
|                                 | Company owned                                          |   | $                  | 526 |      |   | $   | 486 | 
|                                
|                                
|                                
|                                
|                                 | Domestic franchised and development joint venture      |   |                    | 96  |      |   |     | 93  | 
|                                
|                                
|                                
|                                
|                                 | International franchised and development joint venture |   |                    | 24  |      |   |     | 23  | 
|                                 |                                                        |   |                    |     |      |   |     |    
|                                 | Total                                                  |   |                    | 646 |      |   |     | 602 | 
|                                 |                                                        |   |                    |     |      |   |     |    
|Carrabbas Italian Grills        |                                                        |   |                    |     |      |   |     |    
|                                
|                                
|                                
|                                
|                                 | Company owned                                          |   |                    | 76  |      |   |     | 62  | 
|                                
|                                
|                                
|                                
|                                 | Development joint venture                              |   |                    | 22  |      |   |     | 22  | 
|                                 |                                                        |   |                    |     |      |   |     |    
|                                 | Total                                                  |   |                    | 98  |      |   |     | 84  | 
|                                 |                                                        |   |                    |     |      |   |     |    
|Other restaurants                |                                                        |   |                    |     |      |   |     |    
|                                
|                                
|                                
|                                
|                                 | Company owned                                          |   |                    | 45  |      |   |     | 27  | 
|                                
|                                
|                                
|                                
|                                 | Franchised and development joint venture               |   |                    | 4   |      |   |     | 3   | 
|                                 |                                                        |   |                    |     |      |   |     |    
|                                 | Total                                                  |   |                    | 49  |      |   |     | 30  | 
|                                 |                                                        |   |                    |     |      |   |     |    
|System-wide total                |                                                        | $ | 793                |     |      | $ | 716 |    
|                                 |                                                        |   |                    |     |      |   |     |    

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations (unaudited) (continued)

|                                              |  |                                                        |     |           |     |      |     |  |     | 
|--------------------------------------------- |  | ------------------------------------------------------ | --- | --------- | --- | ---- | --- |  | --- | 
|                                              |  |                                                        |     | March 31,
|                                              |  |                                                        |     |          
|                                              |  |                                                        |     | 2003      |     | 2002
|                                              |  |                                                        |     |           |     |     
|Number of restaurants (at end of the period): |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|Outback Steakhouses                           |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 622 |      |     |  | 581 | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Domestic franchised and development joint venture      |     |           | 118 |      |     |  | 116 | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | International franchised and development joint venture |     |           | 55  |      |     |  | 49  | 
|                                              |  |                                                        |     |           |     |      |     | 
|                                              |  | Total                                                  |     |           | 795 |      |     |  | 746 | 
|                                              |  |                                                        |     |           |     |      |     | 
|Carrabbas Italian Grills                     |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 98  |      |     |  | 77  | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Development joint venture                              |     |           | 29  |      |     |  | 28  | 
|                                              |  |                                                        |     |           |     |      |     | 
|                                              |  | Total                                                  |     |           | 127 |      |     |  | 105 | 
|                                              |  |                                                        |     |           |     |      |     | 
|Flemings Prime Steakhouse and Wine Bars      |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 18  |      |     |  | 13  | 
|                                              |  |                                                        |     |           |     |      |     | 
|Roys                                         |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 15  |      |     |  | 12  | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Franchised and development joint venture               |     |           | 2   |      |     |  | 2   | 
|                                              |  |                                                        |     |           |     |      |     | 
|                                              |  | Total                                                  |     |           | 17  |      |     |  | 14  | 
|                                              |  |                                                        |     |           |     |      |     | 
|Lee Roy Selmons                              |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 1   |      |     |  | 1   | 
|                                              |  |                                                        |     |           |     |      |     | 
|Bonefish Grills                               |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 15  |      |     |  | 4   | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Franchised and development joint venture               |     |           | 4   |      |     |  | 1   | 
|                                              |  |                                                        |     |           |     |      |     | 
|                                              |  | Total                                                  |     |           | 19  |      |     |  | 5   | 
|                                              |  |                                                        |     |           |     |      |     | 
|Cheeseburger in Paradise                      |  |                                                        |     |           |     |      |     | 
|                                             
|                                             
|                                             
|                                             
|                                              |  | Company owned                                          |     |           | 1   |      |     |  |    | 
|                                              |  |                                                        |     |           |     |      |     | 
|System-wide total                             |  |                                                        | 978 |           |     |      | 884 | 
|                                              |  |                                                        |     |           |     |      |     | 

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three months ended March 31, 2003 and 2002 (unaudited)

Revenues. Restaurant sales increased by 12.6% to $646,672,000 during the
first three months of 2003 compared with $574,555,000 in the same period in
2002. The increase in restaurant sales was primarily attributable to the
opening of new restaurants after March 31, 2002. The following table includes
additional activities that influenced the changes in restaurant sales at
domestic Company owned restaurants for the three months ended March 31, 2003
and 2002:

|                                                                                            |                                                   |                           |   |                    |      |      |   |        |      |   
|------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------- | - | ------------------ | ---- | ---- | - | ------ | ---- | --
|                                                                                            |                                                   |                           |   | Three Months Ended
|                                                                                            |                                                   |                           |   | March 31,         
|                                                                                            |                                                   |                           |   |                   
|                                                                                            |                                                   |                           |   | 2003               |      | 2002
|                                                                                            |                                                   |                           |   |                    |      |     
|Average unit volumes (weekly) for restaurants opened for one year or more (in thousands):   |                                                   |                           |   |                    |      |      |   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Outback Steakhouses                               |                           | $ | 66,967             |      |      | $ | 66,998 |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Carrabbas Italian Grills                         |                           | $ | 62,791             |      |      | $ | 63,698 |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Average unit volumes (weekly) for restaurants opened for less than one year (in thousands): |                                                   |                           |   |                    |      |      |   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Outback Steakhouses                               |                           | $ | 66,336             |      |      | $ | 58,247 |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Carrabbas Italian Grills                         |                           | $ | 59,538             |      |      | $ | 66,492 |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Operating weeks                                                                             |                                                   |                           |   |                    |      |      |   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Outback Steakhouses                               |                           |   | 7,425              |      |      |   | 7,035  |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Carrabbas Italian Grills                         |                           |   | 1,222              |      |      |   | 968    |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Menu price increases (1)                                                                    |                                                   |                           |   |                    |      |      |   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Outback Steakhouses                               |                           |   | 2.1                | %    |      |   | 2.2    | %   
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Carrabbas Italian Grills                         |                           |   | 1.3                | %    |      |   | 1.4    | %   
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Year to year percentage change:                                                             |                                                   |                           |   |                    |      |      |   |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Same-store sales (stores open 18 months or more): |                           |   |                    |      |      |   |        |     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                   | Outback Steakhouses       |   |                    | 1.1  | %    |   |        | (1.2 | %)
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                   | Carrabbas Italian Grills |   |                    | (0.3 | %)   |   |        | 3.1  | % 



|(1) |  | Reflects nominal amounts of menu price changes, prior to any change in
product mix because of price increases, and may not reflect amounts effectively
paid by the customer.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other revenues, consisting primarily of initial franchise fees and
royalties, increased by $572,000 to $5,006,000 during the first three months of
2003 compared with $4,434,000 in the same period in 2002. The increase was
attributable to higher initial franchise fees and higher royalties from
additional stores opened and operated as franchises during the first three
months of 2003 compared with the same period in 2002. The increase was
partially offset by the Companys decision to allow international franchisees
in certain markets, including Costa Rica, the Dominican Republic, Indonesia,
Mexico, Malaysia, Singapore, Thailand, the United Kingdom and Venezuela to
spend the royalties due to the Company on additional advertising to increase
brand awareness and penetration in new markets.

Costs and expenses. Cost of sales as a percentage of restaurant sales
decreased by 1.4% to 36.0% in the first three months of 2003 compared with
37.4% in the same period in 2002. The decrease was attributable to commodity
cost decreases for beef, ribs, shrimp and certain dairy products, partially
offset by higher fresh fish costs. The decrease was also attributable to an
increase in the proportion of consolidated sales and cost of sales associated
with the Companys non-Outback Steakhouse restaurants which operate at lower
cost of goods sold levels than Outback Steakhouse.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three months ended March 31, 2003 and 2002 (unaudited) (continued)

Labor and other related expenses increased as a percentage of restaurant
sales by 0.5% to 24.6% in the first three months of 2003 compared with 24.1% in
the same period in 2002. The increase resulted from lower average unit volumes
at Carrabbas Italian Grills, higher hourly wage rates, and higher employee
health insurance costs.

Other restaurant operating expenses include all other unit-level operating
costs, the major components of which are operating supplies, rent, repairs and
maintenance, advertising expenses, utilities, pre-opening costs and other
occupancy costs. A substantial portion of these expenses are fixed or
indirectly variable. These costs increased by 1.1% of restaurant sales to 20.9%
in the first quarter of 2003, compared with 19.8% in the same period in 2002.
The increase was attributable to increased advertising expense, higher natural
gas, preopening, and supply costs and to lower average unit volumes at
Carrabbas Italian Grills. The increase was also attributable to an increase in
the proportion of new format restaurants and international Outback Steakhouses
in operation which have higher average restaurant operating expenses as a
percentage of restaurant sales than domestic Outback Steakhouses and Carrabbas
Italian Grills.

Depreciation and amortization costs increased as a percentage of total
revenues by 0.1% to 3.2% in the first quarter of 2003 compared with 3.1% in the
same period in 2002. The increase resulted primarily from additional
depreciation related to new unit development and to higher depreciation costs
for the new restaurant formats which have higher average construction costs
than an Outback Steakhouse. Lower average unit volumes at Carrabbas Italian
Grills also contributed to depreciation costs increasing as a percentage of
restaurant sales.

General and administrative costs increased by $1,367,000 to $22,496,000 in
the first quarter of 2003 compared with $21,129,000 during the same period in
2002. This increase resulted from an increase in overall administrative costs
associated with operating additional domestic and international Outback
Steakhouses, Carrabbas Italian Grills, Flemings Prime Steakhouses, Roys and
Bonefish Grills, as well as costs associated with the development of new
restaurant formats.

Income from operations of unconsolidated affiliates represents the
Companys portion of the income from restaurants operated as development joint
ventures. Income from the development joint ventures was $1,306,000 during the
first quarter of 2003 compared with income of $1,552,000 during the same period
in 2002. This decrease was attributable to lower average unit volumes at
Carrabbas Italian Grills operated as development joint ventures.

Income from operations. As a result of the increase in revenues, the
changes in the relationship between revenues and expenses discussed above and
the opening of new restaurants, income from operations increased by $8,814,000
to $83,129,000 in the first quarter of 2003 compared with $74,315,000 in the
same period in 2002.

Other income (expense), net. Other income (expense) includes the net of
revenues and expenses from non-restaurant operations. Net other expense was
$943,000 during the first quarter of 2003 compared with net other expense of
$317,000 in the same period in 2002. The increase in net other expenses in 2003
is primarily the result of a gain of approximately $500,000 from the sale of a
non-operating asset during 2002, which did not recur in 2003.

Interest income. Interest income was $542,000 during the first quarter of
2003 compared with interest income of $535,000 in the same period in 2002.
Interest income remained relatively unchanged due to higher short-term
investment balances offset by lower interest rates during the first quarter of
2003 compared with the same period in 2002.

Interest expense. Interest expense was $353,000 during the first quarter
of 2003 compared with interest expense of $299,000 in the same period in 2002.
The increase in interest expense is due to higher average debt balances on
borrowings used to support Outback Steakhouses international operations during
the first quarter of 2003 compared with the first quarter of 2002.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Three months ended March 31, 2003 and 2002 (unaudited) (continued)

Elimination of minority partners interest. The allocation of minority
partners income included in this line item represents the portion of income
from operations included in consolidated operating results attributable to the
ownership interests of restaurant managers and area operating partners in
Company owned restaurants and the ownership interests in certain other
restaurants in which the Company has a controlling interest. As a percentage of
revenues, these allocations were 2.0% and 1.8% during the quarters ended March
31, 2003 and 2002, respectively. The increase in the ratio is the result of an
increase in overall restaurant operating margins and improvement in the
performance of new format restaurants which have a higher percentage of
minority interest than the Companys older formats.

Provision for income taxes. The provision for income taxes in the first
quarter of both 2003 and 2002 reflected the expected income taxes due at
federal statutory rates and state income tax rates, net of the federal benefit.
The effective income tax rate was 35.2% during the first quarter of 2003 and
2002. Approximately 50% of the Companys international restaurants in which the
Company has a direct investment are owned through a Cayman Island corporation.

Cumulative effect of a change in accounting principle. The cumulative
effect of a change in accounting principle represents the effect of the
adoption of the transitional impairment provisions of SFAS No. 142, Goodwill
and Other Intangible Assets. The adoption was made effective as of the
beginning of 2002. The cumulative effect of the change in accounting principle
in the first quarter of 2002 was approximately $4,422,000, net of taxes of
approximately $2,199,000. Basic and diluted earnings per share were both
reduced by $0.06 due to the impact of the change in accounting principle.

Net income and earnings per share. Net income for the first quarter of
2003 was $45,067,000 compared with $36,963,000 in the same period in 2002.
Basic earnings per share increased to $0.59 during the first quarter of 2003
compared with $0.48 for the same period in 2002. Diluted earnings per share
increased to $0.58 during the first quarter of 2003 compared with $0.46 for the
same period in 2002.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (unaudited)

The following table presents a summary of the Companys cash flows from
operating, investing and financing activities for the periods indicated (in
thousands):

|                                                     |  |              |          |           |  |                    |         |   |  |   |         |  
|---------------------------------------------------- |  | ------------ | -------- | --------- |  | ------------------ | ------- | - |  | - | ------- | -
|                                                     |  |              |          |           |  | Three Months Ended
|                                                     |  | Year Ended   |          |          
|                                                     |  | December 31, |          | March 31, |  | March 31,         
|                                                     |  | 2002         |          | 2003      |  | 2002              
|                                                     |  |              |          |           |  |                   
|Net cash provided by operating activities            |  | $            | 338,060  |           |  | $                  | 34,212  |   |  | $ | 58,958  |  
|                                                    
|                                                    
|                                                    
|                                                    
|Net cash used in investing activities                |  |              | (168,066 | )         |  |                    | (34,279 | ) |  |   | (51,747 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Net cash used in financing activities                |  |              | (98,344  | )         |  |                    | (31,762 | ) |  |   | (17,784 | )
|                                                     |  |              |          |           |  |                    |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents |  | $            | 71,650   |           |  | $                  | (31,829 | ) |  | $ | (10,573 | )
|                                                     |  |              |          |           |  |                    |         |   |  |   |         |  

The Company requires capital principally for the development of new
restaurants, remodeling of older restaurants and investment in technology. The
Company also requires capital to pay dividends to common stockholders (refer to
additional discussion in the Dividend section of Managements Discussion and
Analysis of Financial Condition and Results of Operation). Capital expenditures
totaled approximately $181,798,000 for year ended December 31, 2002 and
approximately $38,488,000 and $45,891,000 during the first three months of 2003
and 2002, respectively. The Company either leases its restaurants under
operating leases for periods ranging from five to thirty years (including
renewal periods) or purchases free standing restaurants where it is cost
effective.

If there was a decrease in demand for the Companys products and services
as a result of increased competition, changing consumer tastes, changes in
local, regional and national economic conditions or changes in the level of
consumer acceptance of the Companys restaurant brands, the Companys total
revenues could decline significantly. The following table sets forth
approximate amounts by which cash generated by operating activities may decline
in the event of a decrease in revenues of 5%, 10% and 15% as compared with
Total Revenues for the period ended December 31, 2002 (in thousands):

|                                                   |  |    |          |     |  |     |          |   |  |   |          |  
|-------------------------------------------------- |  | -- | -------- | --- |  | --- | -------- | - |  | - | -------- | -
|                                                   |  | 5% |          | 10% |  | 15%
|                                                   |  |    |          |     |  |    
|Decrease in total revenues                         |  | $  | (118,105 | )   |  | $   | (236,211 | ) |  | $ | (354,316 | )
|                                                  
|                                                  
|                                                  
|                                                  
|Decrease in net income                             |  | $  | (23,104  | )   |  | $   | (46,208  | ) |  | $ | (69,312  | )
|                                                  
|                                                  
|                                                  
|                                                  
|Decrease in cash generated by operating activities |  | $  | (28,787  | )   |  | $   | (57,573  | ) |  | $ | (86,360  | )

The estimates above are based on the assumption that income before
minority partners interest and provision for income taxes decreases
approximately $0.35 for every $1.00 decrease in total revenues. This decrease
is partially offset by the minority partners share of the decrease, which is
approximately 13.8%. Imputed income taxes are included at the current rate of
approximately 35%. These numbers are estimates only and do not consider other
measures the Company could implement were such decreases in revenue to occur.

During 2001, the Company entered into an agreement with the founders of
Bonefish Grill (Bonefish) to develop and operate Bonefish restaurants. Under
the terms of the Bonefish agreement, the Company purchased the Bonefish
restaurant operating system for approximately $1,500,000. In addition, the
interest in the three existing Bonefish Grills was contributed to a partnership
formed between the Bonefish founders and the Company, and, in exchange, the
Company committed to the first $7,500,000 of future construction costs in the
development of new restaurants of which approximately $7,086,000 has been
expended as of March 31, 2003.

The Company has formed joint ventures to develop Outback Steakhouses in
Brazil and the Philippines. The Company is also developing Company owned
restaurants internationally in Puerto Rico, Korea, Hong Kong and Japan.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (unaudited) (continued)

In connection with the realignment of the Companys international operations,
the Company expects to merge the interests of its franchisee operating
restaurants in Japan into a new Japanese corporation which will be majority
owned by the Company and which will have responsibility for the future
development of Outback Steakhouse restaurants in Japan. As part of the
realignment, the Company expects to become directly liable for the debt which
it now guarantees, which totaled approximately $19,741,000, with a potential
maximum of $20,000,000, as of March 31, 2003, referred to above and in Note 7
of Notes to Unaudited Consolidated Financial Statements. As part of this
transaction, the Company also expects to invest approximately $2,500,000 in
equity in addition to the assumption of the bank debt. Subsequent to March 31,
2003, the Company completed the merger described above (see Note 13 of Notes to
Unaudited Consolidated Financial Statements).

LONG-TERM DEBT

At March 31, 2003, the Company had two uncollateralized lines of credit
totaling $140,000,000. Approximately $7,102,000 is committed for the issuance
of letters of credit required by insurance companies that underwrite the
Companys workers compensation insurance.

As of March 31, 2003, the Company had borrowed $10,000,000 on the line of
credit to finance the development of new restaurants.

The Company expects that its capital requirements through the end of 2003
will be met by cash flows from operations and, to the extent needed, advances
on its line of credit. The revolving line of credit contains certain
restrictions and conditions that require the Company to maintain net worth of
$585,066,000 as of March 31, 2003, a fixed charge coverage ratio of 3.5 to 1.0,
and a maximum total debt to EBITDA ratio of 2.0 to 1.0. At March 31, 2003, the
Company was in compliance with all of the above debt covenants. (See Note 7 of
Notes to Unaudited Consolidated Financial Statements.)

The Company has notes payable with banks bearing interest at rates ranging
from 6.00% to 6.30% to support the Companys Korean operations. As of March 31,
2003, the outstanding balance was approximately $16,761,000. The notes are
denominated and payable in Korean won and mature at dates ranging from April
2003 to March 2004.

DEBT GUARANTEES

As of the end of the quarter, the Company is the guarantor of two
uncollateralized lines of credit that permit borrowing of up to $20,000,000 for
its franchisee operating Outback Steakhouses in Japan. At March 31, 2003 the
borrowings totaled approximately $19,741,000. (See Note 13 of Notes to
Unaudited Consolidated Financial Statements.)

The Company is the guarantor of an uncollateralized line of credit that
permits borrowing of up to $35,000,000 for its franchisee operating Outback
Steakhouses in California. At March 31, 2003, the balance on the line of credit
was approximately $28,439,000.

The Company is the guarantor of an uncollateralized line of credit that
permits borrowing of up to a maximum of $24,500,000 for its joint venture
partner in the development of Roys restaurants. At March 31, 2003, the
outstanding balance was approximately $20,439,000.

The Company is the guarantor of bank loans made to certain franchisees
operating Outback Steakhouses. At March 31, 2003, the outstanding balance on
the loans was approximately $157,000.

The Company is the guarantor of up to approximately $9,445,000 of a
$68,000,000 note for an unconsolidated affiliate in which the Company has a
22.22% equity interest and for which the Company operates catering and
concession facilities. At March 31, 2003, the outstanding balance on the note
was approximately $68,000,000. The Companys investment is included in the line
item entitled Investments In and Advances to Unconsolidated Affiliates. This
affiliate has not yet reached its operating break-even point. Accordingly, the
Company has made two additional working capital contributions, $667,000 in
December 2001 and $444,000 in July 2002, in addition to its original
investment. The Company anticipates that it may need to make additional
contributions for its pro rata portion of future losses, if any.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (unaudited) (continued)

The Company is not aware of any non-compliance with the underlying terms
of the borrowing agreements for which it provides a guarantee that would result
in the Company having to perform in accordance with the terms of the guarantee.

DEBT AND DEBT GUARANTEE SUMMARY

The Companys contractual debt obligations, debt guarantees and
commitments, excluding lease commitments, as of March 31, 2003 are summarized
in the table below (in thousands):

|                                         |  |       |        |         |  |         |        |           |  |   |        | 
|---------------------------------------- |  | ----- | ------ | ------- |  | ------- | ------ | --------- |  | - | ------ | 
|                                         |  |       |        |         |  | Current |        | Long-term
|                                         |  | Total |        | Portion |  | Portion
|                                         |  |       |        |         |  |        
|Debt                                     |  | $     | 32,580 |         |  | $       | 18,065 |           |  | $ | 14,515 | 
|                                        
|                                        
|                                        
|                                        
|Debt guarantees                          |  | $     | 89,103 |         |  | $       | 20,359 |           |  | $ | 68,744 | 
|                                        
|                                        
|                                        
|                                        
|Amount outstanding under debt guarantees |  | $     | 78,221 |         |  | $       | 20,100 |           |  | $ | 58,121 | 
|                                        
|                                        
|                                        
|                                        
|Commitments                              |  | $     | 414    |         |  | $       | 414    |           |  | $ |       | 

SHARE REPURCHASE

On July 26, 2000, the Companys Board of Directors authorized the
repurchase of up to 4,000,000 shares of the Companys Common Stock, with the
timing, price, quantity and manner of the purchases to be made at the
discretion of management, depending upon market conditions. In addition, the
Board of Directors also authorized the repurchase of shares on a regular basis
to offset shares issued as a result of stock option exercises. During the
period from the authorization date through March 31, 2003, approximately
3,249,000 shares of the Companys Common Stock have been issued as the result
of stock option exercises. The Company will fund the repurchase program with
available cash and bank credit facilities. As of March 31, 2003, under these
authorizations the Company has repurchased approximately 6,520,000 shares of
its Common Stock for approximately $181,797,000.

DIVIDEND

On January 22 and April 23, 2003, the Companys Board of Directors
declared a quarterly dividend of $0.12 for each share of the Companys Common
Stock. The January dividend was paid March 7, 2003 to shareholders of record as
of February 21, 2003. The April dividend is payable June 6, 2003 to
shareholders of record as of May 23, 2003. At the current dividend rate, the
annual dividend payment is expected to be between $35,000,000 and $40,000,000
depending on the shares outstanding during the respective quarters. The Company
intends to pay the dividend with cash flow from operations.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Companys discussion and analysis of its financial condition and
results of operations are based upon the Companys Unaudited Consolidated
Financial Statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires the Company to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities during
the reporting period (see Note 1 of Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K). The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The Companys significant
accounting policies are described in Note 1 of Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K. The Company considers
the following policies to be the most critical in understanding the judgments
that are involved in preparing its financial statements.

Property, Fixtures and Equipment

Property, fixtures and equipment are recorded at cost. The Company
expenses repair and maintenance costs incurred to maintain the appearance and
functionality of the restaurant that do not extend the useful life of any
restaurant asset or are less than $1,000. Depreciation is computed on the
straight-line basis over the following estimated useful lives:

|                                    |  |                  |  | 
|----------------------------------- |  | ---------------- |  | 
|Buildings and building improvements |  | 20 to 31.5 years
|                                   
|                                   
|                                   
|                                   
|Furniture and fixtures              |  | 7 years         
|                                   
|                                   
|                                   
|                                   
|Equipment                           |  | 2 to 15 years   
|                                   
|                                   
|                                   
|                                   
|Leasehold improvements              |  | 5 to 20 years   

The Companys accounting policies regarding property, fixtures and
equipment include certain management judgments and projections regarding the
estimated useful lives of these assets and what constitutes increasing the
value and useful life of existing assets. These estimates, judgments and
projections may produce materially different amounts of depreciation expense
than would be reported if different assumptions were used.

Impairment of Long-Lived Assets

The Company assesses the potential impairment of identifiable intangibles,
long-lived assets and goodwill whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Recoverability of
assets is measured by comparing the carrying value of the asset to the future
cash flows expected to be generated by the asset. In evaluating long-lived
restaurant assets for impairment, the Company considers a number of factors
such as:

a) Restaurant sales trends;

b) Local competition;

c) Changing demographic profiles;

d) Local economic conditions;

e) New laws and government regulations that adversely affect sales
and profits; and/or

f) The ability to recruit and train skilled restaurant employees.

If the aforementioned factors indicate that the Company should review the
carrying value of the restaurants long-lived assets, the Company performs an
impairment analysis. Identifiable cash flows that are largely independent of
other assets and liabilities typically exist for land and buildings, and for
combined fixtures, equipment and improvements for each restaurant. If the
total future cash flows are less than the carrying amount of the asset, the
carrying amount is written down to the estimated fair value, and a loss
resulting from value impairment is recognized by a charge to earnings.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES (continued)

Judgments and estimates made by the Company related to the expected useful
lives of long-lived assets are affected by factors such as changes in economic
conditions and changes in operating performance. As the Company assesses the
ongoing expected cash flows and carrying amounts of its long-lived assets,
these factors could cause the Company to realize a material impairment charge.

Insurance Reserves

The Company self-insures a significant portion of expected losses under
its workers compensation, general liability, health and property insurance
programs. The Company purchases insurance for individual claims that exceed the
amounts listed in the following table:

|                     |  |   |           | 
|-------------------- |  | - | --------- | 
|Workers Compensation |  | $ | 1,000,000 | 
|                    
|                    
|                    
|                    
|General Liability    |  | $ | 1,000,000 | 
|                    
|                    
|                    
|                    
|Health               |  | $ | 230,000   | 
|                    
|                    
|                    
|                    
|Property damage      |  | $ | 5,000,000 | 

The Company records a liability for all unresolved claims and for an
estimate of incurred but not reported claims at the anticipated cost to the
Company based on estimates provided by a third party administrator and
insurance company. The Companys accounting policies regarding insurance
reserves include certain actuarial assumptions and management judgments
regarding economic conditions, the frequency and severity of claims and claim
development history and settlement practices. Unanticipated changes in these
factors may produce materially different amounts of expense that would be
reported under these programs.

Revenue Recognition

The Company records revenues for normal recurring sales upon the
performance of services. Revenues from the sales of franchises are recognized
as income when the Company has substantially performed all of its material
obligations under the franchise agreement. Continuing royalties, which are a
percentage of net sales of franchised restaurants, are accrued as income when
earned. These revenues are included in the line Other revenues in the
Unaudited Consolidated Statements of Income.

Unearned revenues primarily represent the Companys liability for gift
certificates which have been sold but not yet redeemed and are recorded at the
anticipated redemption value. When the gift certificates are redeemed, the
Company recognizes restaurant sales and reduces the related deferred liability.

Principles of Consolidation

The consolidated financial statements include the accounts and operations
of the Company and affiliated partnerships in which the Company is a general
partner and owns a controlling interest. All material balances and transactions
have been eliminated. The unconsolidated affiliates are accounted for using the
equity method.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OUTLOOK

The following discussion of the Companys future operating results and
expansion strategy and other statements in this report that are not historical
statements constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
represent the Companys expectations or beliefs concerning future events and
may be identified by words such as believes, anticipates, expects,
plans, should, estimates and similar expressions. The Companys
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those stated or implied in the
forward-looking statement. We have endeavored to identify the most significant
factors that could cause actual results to differ materially from those stated
or implied in forward-looking statements in the section entitled Cautionary
Statement below. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.

In the Outlook portion of Managements Discussion and Analysis of
Financial Condition and Results of Operations in its Annual Report to the
Securities and Exchange Commission on Form 10-K for the year ended December 31,
2002, the Company provided information on the outlook for its businesses in
2003 and factors that may affect the Companys financial results for that year.

The remaining paragraphs in this Outlook section update the information
provided in the Form referenced above and the Company recommends that this
section be read in conjunction with that Outlook section.

Future Operating Results

As of the date of this report substantial uncertainty exists as to the
strength of consumer spending as a result of the economic downturn. The
Companys revenue growth expectations summarized in the following paragraph
assume that current spending trends do not worsen in the remaining quarters of
2003. The Companys revenues and financial results in the remainder of 2003
could vary significantly depending upon consumer and business spending trends.

During the three month period ended March 31, 2003, compared with the same
period a year ago, average unit volumes for Outback increased by approximately
1.2% and average unit volumes for Carrabbas Italian Grills (Carrabbas)
decreased by approximately 3.6%. Average unit volumes for Carrabbas Italian
Grills were below those anticipated in the Companys comments in Form 10-K
referenced above. As a result of the decline in average unit volumes for
Carrabbas Italian Grills, the Company is now anticipating gains of only zero
to one percent for the remainder of 2003 for Carrabbas Italian Grills. To the
extent negative sales trends continue, the Companys revenues and operating
results for the full year may fall short of its original objectives.

During the quarter ended March 31, 2003, the Company benefited from lower
than expected commodity costs for potatoes and certain produce items. As a
result of lower commodity costs, the Company now expects cost of goods sold as
a percentage of restaurant sales for the full year to be 20 to 30 basis points
lower than originally expected, for a total of approximately 70 basis points.

Because of higher health insurance costs, lower average unit volumes at
Carrabbas Italian Grill and higher wage rates for kitchen employees, the
Company now expects labor costs as a percentage of restaurant sales for the
full year to be 10 to 20 basis points higher than originally planned, for a
total of 30 to 40 basis points.

Because higher than anticipated advertising, natural gas, supply costs
associated with the take-out business, and lower average unit volumes at
Carrabbas Italian Grills, the Company is now planning for restaurant operating
expenses as a percentage of sales for the remainder of the year to be 10 to 20
basis points higher than originally expected, for a total of 50 to 60 basis
points.

The Company is now planning for the remainder of 2003 for all other
expense ratio variances to be comparable to those experienced in and reported
for the first quarter of 2003.

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OUTLOOK (continued)

Expansion Strategy.

The Companys goal is to add new restaurants to the system during the
remainder of 2003. The following table presents a summary of the expected
restaurant openings during the full year 2003:

|                                         |               |  |          |   | 
|---------------------------------------- | ------------- |  | -------- | - | 
|                                         |               |  | 2003    
|                                         |               |  |         
|Outback Steakhouses  Domestic           |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 26 to 28
|                                        
|                                        
|                                        
|                                        
|                                         | Franchised    |  | 1 to 2  
|                                        
|                                        
|                                        
|                                        
|Outback Steakhouses  International      |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 10 to 12
|                                        
|                                        
|                                        
|                                        
|                                         | Franchised    |  | 4 to 5  
|                                        
|                                        
|                                        
|                                        
|Carrabbas Italian Grills                |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 24 to 26
|                                        
|                                        
|                                        
|                                        
|Flemings Prime Steakhouse and Wine Bars |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 6 to 8  
|                                        
|                                        
|                                        
|                                        
|Roys                                    |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 1 to 2  
|                                        
|                                        
|                                        
|                                        
|Lee Roy Selmons                         |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  |          | 1 | 
|                                        
|                                        
|                                        
|                                        
|Bonefish Grills                          |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 15 to 18
|                                        
|                                        
|                                        
|                                        
|                                         | Franchised    |  | 1 to 2  
|                                        
|                                        
|                                        
|                                        
|Cheeseburger in Paradise                 |               |  |          |  
|                                        
|                                        
|                                        
|                                        
|                                         | Company owned |  | 1 to 2  

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OUTBACK STEAKHOUSE, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement

As noted above, the Companys actual results could differ materially from
those stated or implied in the forward-looking statements included in the
discussion of future operating results and expansion strategy and elsewhere in
this report as a result, among other things, of the following:



|(i)   |  | The restaurant industry is a highly competitive industry with many
well-established competitors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  |  | The Companys results can be impacted by changes in consumer tastes and
the level of consumer acceptance of the Companys restaurant concepts;
local, regional and national economic conditions, which could be adversely
affected by further weakening in consumer spending; the seasonality of the
Companys business; demographic trends; traffic patterns; consumer
perception of food safety; employee availability; the cost of advertising
and media; government actions and policies; inflation; and increases in
various costs;                                                                                                                                                                                                                      
|     
|(iii) |  | The Companys ability to expand is dependent upon various factors such
as the availability of attractive sites for new restaurants, ability to
obtain appropriate real estate sites at acceptable prices, ability to
obtain all required governmental permits including zoning approvals and
liquor licenses on a timely basis, impact of government moratoriums or
approval processes, which could result in significant delays, ability to
obtain all necessary contractors and subcontractors, union activities such
as picketing and hand billing that could delay construction, the ability
to generate or borrow funds, the ability to negotiate suitable lease
terms, and the ability to recruit and train skilled management and
restaurant employees;
|     
|(iv)  |  | Price and availability of commodities, including but not limited to such
items as beef, chicken, shrimp, pork, seafood, dairy, potatoes, onions and
energy costs are subject to fluctuation and could increase or decrease
more than the Company expects; and/or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     
|(v)   |  | Weather and acts of God could result in construction delays and also
adversely affect the results of one or more stores for an indeterminate
amount of time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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OUTBACK STEAKHOUSE, INC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates on
debt, changes in foreign currency exchange rates and changes in commodity
prices.

The Companys exposure to interest rate risk relates to its outstanding
bank debt. Borrowings under the Companys revolving lines of credit of
$140,000,000 bear interest at rates ranging from 57.5 to 95 basis points over
the 30, 60, 90 or 180 London Interbank Offered Rate. At March 31, 2003 and
December 31, 2001, the Company had $10,000,000 outstanding on its lines of
credit. The Company has notes payable bearing interest at rates ranging from
6.00% to 6.30% to support the Companys Korean operations. As of March 31,
2003, the outstanding Korean debt balance was approximately $16,761,000. As of
the end of the quarter, the Company is the guarantor of two uncollateralized
lines of credit that permit borrowing of up to $20,000,000 for its franchisee
operating Outback Steakhouses in Japan. At March 31, 2003, the borrowings
totaled approximately $19,741,000. Subsequent to March 31, 2003, the Company
became directly liable for the outstanding amounts under these lines of credit
(see Note 13 of Notes to Unaudited Consolidated Financial Statements).

The Companys exposure to foreign currency exchange risk relates primarily
to its direct investment in restaurants in Korea, Hong Kong, the Philippines
and Brazil and to its royalties from international franchisees in 21 countries.
The Company does not use financial instruments to hedge foreign currency
exchange rate changes.

Many food products purchased by the Company and its franchisees are
affected by commodity pricing and are, therefore, subject to unpredictable
price volatility. These commodities are generally purchased based upon market
prices established with vendors. The purchase arrangement may contain
contractual features that limit the price paid by establishing certain price
floors and caps. The Company does not use financial instruments to hedge
commodity prices because these purchase arrangements help control the ultimate
cost paid. Extreme changes in commodity prices and/or long-term changes could
affect the Company adversely. However, any changes in commodity prices would
affect the Companys competitors at about the same time as the Company. The
Company expects that in most cases increased commodity prices could be passed
through to its consumers via increases in menu prices. From time to time,
competitive circumstances could limit menu price flexibility, and in those
cases margins would be negatively impacted by increased commodity prices.

This market risk discussion contains forward-looking statements. Actual
results may differ materially from the discussion based upon general market
conditions and changes in domestic and global financial markets.

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OUTBACK STEAKHOUSE, INC.
CONTROLS AND PROCEDURES

Item 4. CONTROLS AND PROCEDURES

The Company has established and maintains disclosure controls and
procedures that are designed to ensure that material information relating to
the Company and its subsidiaries required to be disclosed by the Company in the
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized, and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms, and that such
information is accumulated and communicated to the Companys management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure. Within the
90 days prior to the date of this quarterly report, the Company carried out an
evaluation, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures. Based on that evaluation of these
disclosure controls and procedures, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures were effective as of the date of such evaluation.

The Chief Executive Officer and Chief Financial Officer have also
concluded that there were no significant changes in the Companys internal
controls or in other factors that could significantly affect the internal
controls subsequent to the date that the Company completed its evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

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OUTBACK STEAKHOUSE, INC.
PART II: OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to legal proceedings, claims and liabilities, such
as liquor liability, sexual harassment and slip and fall cases etc., which
arise in the ordinary course of business and are generally covered by
insurance. In the opinion of management, the amount of the ultimate liability
with respect to those actions will not have a materially adverse impact on the
Companys financial position or result of operations and cash flows.




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



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

|     |  |                                                                                                                                                       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1 |  | Certification of Principal Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 20021
|    
|    
|    
|    
|99.2 |  | Certification of Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 20021



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

The Company filed a report on Form 8-K with the Securities and Exchange
Commission dated March 4, 2003 announcing a 10b5-1 plan entered into by
Timothy Gannon.



---

| |  | 1 Pursuant to SEC Release No. 34-4751, these Exhibits are deemed to accompany
this report and are not filed as part of the report.
| |  | ------------------------------------------------------------------------------------------------------------------------------------

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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 of the
undersigned thereunto duly authorized.

|                   |  |  |  |                                                                                                                                           
|------------------ |  |  |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Date: May 15, 2003 |  |  |  | OUTBACK STEAKHOUSE, INC.
(Registrant)                                                                                                     
|                  
|                   |  |  |  | By:  /s/ Robert S. MerrittRobert S. Merritt
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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CERTIFICATIONS

I, Chris T. Sullivan, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Outback
Steakhouse, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;

4.     The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |                                                                    
|------------------ |  | -------------------------------------------------------------------
|                   |  | /s/ Chris T. SullivanChris T. Sullivan, Principal Executive Officer
|                  
|Date: May 15, 2003 |  |                                                                    

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CERTIFICATIONS

I, Robert S. Merritt, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Outback
Steakhouse, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;

4.     The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |                                                                    
|------------------ |  | -------------------------------------------------------------------
|                   |  | /s/ Robert S. MerrittRobert S. Merritt, Principal Financial Officer
|                  
|Date: May 15, 2003 |  |                                                                    

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