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# SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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# FORM 10-Q

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

# For the Quarterly Period Ended September 28, 2003

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# Commission file number 0-19924

# RARE Hospitality International, Inc.(Exact name of registrant as specified in its charter)

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# Internal Revenue Service - Employer Identification No. 58-1498312

# 8215 Roswell Rd; Bldg. 600; Atlanta, GA 30350
(770) 399-9595(Registrant's telephone number, including area code)

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Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

# XX   Yes      No

Indicate by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

# XX   Yes      No

As of November 7, 2003, there were 33,661,034 shares of common stock of the Registrant outstanding.

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# RARE Hospitality International, Inc. and Subsidiaries

# Index

`Part I - Financial Information                                                        Page
                                                                                      ----
     Item 1. Consolidated Financial Statements:

                    Consolidated Balance Sheets as of
                    September 28, 2003 and December 29, 2002                            1

                    Consolidated Statements of Earnings
                    for the quarters and nine months ended
                    September 28, 2003 and September 29, 2002                           2

                    Consolidated Statement of Shareholders' Equity
                    for the nine months ended September 28, 2003                        3

                    Condensed Consolidated Statements of Cash Flows
                    for the nine months ended September 28, 2003
                    and September 29, 2002                                              4

                    Notes to the Consolidated Financial Statements                     5-8

     Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of Operations                         9-12

     Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                                          12-13

     Item 4. Controls and Procedures                                                   13


Part II - Other Information

     Item 1. Legal Proceedings                                                         13

     Item 2. Changes in Securities and Use of Proceeds                                 13

     Item 3. Defaults Upon Senior Securities   14

     Item 4. Submission of Matters to a Vote of Securities
                 Holders                                                               14

     Item 5. Other Information                                                         14

     Item 6. Exhibits and Reports on Form 8-K  14

     Signatures                                                                        15`

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# Part I. Financial Information
Item 1. Financial Statements

# RARE Hospitality International, Inc. and Subsidiaries
                                          Consolidated Balance Sheets
                                     (In thousands, except share amounts)
                                                  (Unaudited)

`September 28,              December 29,
Assets                                                        2003                      2002
------                                                        ----                      ----
Current assets:
    Cash and cash equivalents                                $ 11,077                 $ 13,732
    Short-term investments                                     21,020                   17,735
    Accounts receivable                                         7,406                    6,576
    Inventories                                                15,732                   14,309
    Prepaid expenses                                            4,438                    3,477
    Refundable income taxes                                     5,719                    4,124
    Deferred income taxes                                       4,064                    4,484
                                                             --------                 --------
        Total current assets                                   69,456                   64,437

Property & equipment, less accumulated
  depreciation                                                335,537                  299,773
Goodwill, net                                                  19,187                   19,187
Other                                                           4,826                    3,510
                                                             --------                 --------
        Total assets                                         $429,006                 $386,907
                                                             ========                 ========
Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                         $ 16,377                 $ 17,727
    Accrued expenses                                           43,731                   44,015
    Current installments of obligations under
        capital leases                                            110                       78
                                                             --------                 --------
        Total current liabilities                              60,218                   61,820

Deferred tax liability                                          4,811                    1,138
Obligations under capital leases, net
  of current installments                                      24,741                   22,406
                                                             --------                 --------
        Total liabilities                                      89,770                   85,364

Minority interest                                               1,388                    1,411

Shareholders' equity:
    Preferred stock                                                 -                        -
    Common stock                                              201,457                  191,174
    Unearned compensation-restricted stock                     (1,386)                  (1,124)
    Retained earnings                                         142,766                  112,446
    Treasury stock at cost; 292,500 and 142,500
     shares in 2003 and 2002, respectively                    (4,989)                  (2,364)
                                                             --------                 --------
        Total shareholders' equity                            337,848                  300,132
        Total liabilities and shareholders'                  ________                 ________
         equity                                              $429,006                 $386,907
                                                             ========                 ========`

See accompanying notes to consolidated financial statements

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# RARE Hospitality International, Inc. and Subsidiaries
                                      Consolidated Statements of Earnings
                               (In thousands, except per share data)
                                         (Unaudited)

`Quarter Ended                Nine Months Ended
                                                          -------------                -----------------
Revenues:                                            Sept. 28,      Sept. 29,       Sept. 28,      Sept. 29,
                                                       2003           2002            2003           2002
   Restaurant sales:                                   ----           ----            ----           ----
     LongHorn Steakhouse                              $119,590      $100,343         $359,910       $309,287
     The Capital Grille                                 23,591        19,798           71,698         63,373
     Bugaboo Creek Steak House                          20,913        17,762           61,397         52,088
     Specialty concepts                                  2,062         1,955            5,731          5,621
                                                      --------      --------         --------       --------
        Total restaurant sales                         166,156       139,858          498,736        430,369
  Franchise revenues                                        91            84              280            257
                                                      --------      --------         --------       --------
        Total revenues                                 166,247       139,942          499,016        430,626
Costs and expenses:                                   ________      ________         ________       ________
   Cost of restaurant sales                             60,289        50,355          179,447        155,948
   Operating expenses - restaurants                     75,669        63,765          219,886        189,695
   Depreciation and amortization
     - restaurants                                       6,728         5,934           19,445         17,535
   Pre-opening expense                                   1,514           996            4,239          2,735
   General and administrative expenses                  10,185         8,771           30,080         25,456
                                                      --------      --------         --------       --------
        Total costs and expenses                       154,385       129,821          453,097        391,369
                                                      --------      --------         --------       --------
     Operating income                                   11,862        10,121           45,919         39,257
Interest expense, net                                      283           528              742          1,398
Minority interest                                           54            87              254            387
                                                      --------      --------         --------       --------
   Earnings before income taxes                         11,525         9,506           44,923         37,472
Income tax expense                                       3,746         3,090           14,603         12,180
                                                      --------      --------         --------       --------
        Net earnings                                   $ 7,779       $ 6,416          $30,320        $25,292
                                                      ========      ========         ========       ========
Basic earnings per common share                        $  0.23       $  0.20          $  0.92        $  0.78
                                                      ========      ========         ========       ========
Diluted earnings per common share                      $  0.22       $  0.19          $  0.87        $  0.74
                                                      ========      ========         ========       ========
Weighted average common shares outstanding:
   Basic                                                33,271        32,730           33,078         32,522
                                                      ========      ========         ========       ========
   Diluted                                              35,277        34,386           34,753         34,266
                                                      ========      ========         ========       ========`

See accompanying notes to consolidated financial statements

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# RARE Hospitality International, Inc. and Subsidiaries
                                Consolidated Statement of Shareholders' Equity
                                      For the nine months ended September 28, 2003
                                           (In thousands, unaudited)

`Total
                                  Common Stock     Restricted    Retained   Treasury Shareholders'
                                Shares     Amount     Stock      Earnings     Stock     Equity
                                ------     ------     -----      --------     -----     ------
Balance, December 29, 2002      33,099   $191,174   $(1,124)   $112,446   $  (2,364)   $300,132

Comprehensive income:

Net earnings                        --         --        --      30,320          --      30,320
                                                                                       --------
    Total comprehensive income                                                           30,320

Amortization of restricted
  stock                             --         --       498          --          --         498
Purchase of common stock
  for treasury                      --         --        --          --      (2,625)     (2,625)
Issuance of shares pursuant
  to restricted stock award         41        760      (760)         --          --          --
Issuance of shares pursuant
  to exercise of stock
  options                          756      5,735        --          --          --       5,735
Tax benefit of stock options
  exercised                         --      3,788        --          --          --       3,788
                                ------   --------   -------    --------     -------    --------
Balance, September 28, 2003     33,896   $201,457   $(1,386)   $142,766     $(4,989)   $337,848
                                ======   ========   =======    ========     =======    ========`

See accompanying notes to consolidated financial statements

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# RARE Hospitality International, Inc. and Subsidiaries
                                Condensed Consolidated Statements of Cash Flows
                                           (In thousands, unaudited)

`Nine Months Ended
                                                                                 -----------------
                                                                        Sept. 28,               Sept, 29,
                                                                          2003                    2002
                                                                          ----                    ----
Cash Flows from operating activities:
  Net earnings                                                          $ 30,320                 $ 25,292
  Adjustments to reconcile net earnings to
    net cash provided by operating activities:
      Depreciation and amortization                                       20,647                   18,825
      Changes in working capital accounts                                (10,152)                  (6,421)
      Minority interest                                                      254                      387
      Deferred tax expense                                                 4,093                      954
      Issuance of common stock to employee
        retirement plans                                                      --                      219
                                                                        --------                 --------
  Net cash provided by operating activities                               45,162                   39,256
                                                                        --------                 --------
Cash flows from investing activities:
  Purchase of property and equipment                                     (53,446)                 (36,201)
  Purchase of short-term investments                                      (3,285)                 (15,000)
                                                                        --------                 --------
  Net cash used by investing activities                                  (56,731)                 (51,201)
                                                                        --------                 --------
Cash flows from financing activities:
  Proceeds from credit facilities                                             --                    5,000
  Distributions to minority partners                                        (277)                    (346)
  Increase (decrease) in bank overdraft included in
    accounts payable                                                       6,148                     (735)
  Principal payments on capital leases                                       (67)                     (58)
  Purchase of common stock for treasury                                   (2,625)                      --
  Proceeds from exercise of stock options                                  5,735                    4,460
                                                                        --------                 --------
  Net cash provided by financing activities                                8,914                    8,321
                                                                        --------                 --------
Net decrease in cash and cash equivalents                                 (2,655)                  (3,624)
Cash and cash equivalents, beginning of period                            13,732                   25,979
                                                                        --------                 --------
Cash and cash equivalents, end of period                                $ 11,077                 $ 22,355
Supplemental disclosure                                                 ========                 ========
  Cash paid for income taxes                                            $  8,719                 $  4,442
                                                                        ========                 ========
  Cash paid for interest                                                $    184                 $    923
                                                                        ========                 ========
  Assets acquired under capital lease                                   $  2,434                 $     --
                                                                        ========                 ========`

See accompanying notes to consolidated financial statements

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# RARE Hospitality International, Inc.
                                  Notes to Consolidated Financial Statements
                                                  (Unaudited)

1.    Basis of Presentation

The consolidated financial
statements of RARE Hospitality International, Inc. and subsidiaries (the
Company) as of September 28, 2003 and December 29, 2002 and for the
quarters and nine months ended September 28, 2003 and September 29, 2002 have
been prepared by the Company, pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments), which
are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote disclosures
normally presented in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to such
rules and regulations. These financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained in the
Companys Annual Report on Form 10-K for the year ended December 29, 2002.

The Company operates on a
52- or 53-week fiscal year ending on the last Sunday in each calendar year. Each
of the four fiscal quarters is typically made up of 13 weeks. The fiscal
quarters and year-to-date periods ended September 28, 2003 and September 29,
2002 each contained 13 weeks and 39 weeks, respectively.

2.      New Accounting Pronouncements

In April 2002, the FASB
issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections (SFAS
145). SFAS Nos. 4 and 64 required gains and losses from extinguishment of
debt to be classified as extraordinary items. SFAS 145 rescinds this requirement
and stipulates that gains or losses on extinguishment of debt would have to meet
the criteria of APB Opinion No. 30 to be classified as an extraordinary item. In
addition, any extraordinary gains or losses on extinguishment of debt in prior
periods presented would require reclassification. The Company adopted SFAS 145
as of the beginning of fiscal 2003. The initial adoption of SFAS 145 did not
have an impact on the Companys consolidated results of operations or
financial position.

In June 2002, the FASB
issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities (SFAS 146). This Statement requires that a
liability for a cost associated with an exit or disposal activity be recognized
only when the liability is incurred and measured at fair value. SFAS 146 is
effective for exit or disposal activities that are initiated after December 31,
2002. The initial adoption of this statement did not have an impact on the
Companys consolidated results of operations or financial position.

In November 2002, the FASB
issued Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to
Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission
of FASB Interpretation No. 34. This Interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees issued. Interpretation No. 45
also clarifies that a guarantor is required to recognize, at inception of a
guarantee, a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for financial statements of interim or
annual periods ending after December 15, 2002. The Company adopted the
provisions of Interpretation No. 45 as of the beginning of fiscal 2003. The
Company does not have any guarantees that would require additional disclosure as
required by Interpretation No. 45.

In December 2002, the FASB
issued SFAS No. 148, Accounting for Stock-Based Compensation-Transition
and Disclosure (SFAS 148). SFAS 148 amends SFAS 123,
Accounting for Stock-Based Compensation, and provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. SFAS 148 also amends the
disclosure requirements of SFAS 123 to require more prominent and frequent
disclosures in financial statements about the effects of stock-based
compensation. The Company adopted the disclosure provisions of SFAS 148 as of
the beginning of fiscal 2003.

In January 2003, the FASB
issued Interpretation No. 46, Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51. This Interpretation addresses the
consolidation by business enterprises of variable interest entities as defined
in the Interpretation. Effective for the Companys fourth quarter 2003, the
Interpretation applies to variable interests in variable interest entities
created or obtained after January 31, 2003. The Company does not have any
interests that would change the current consolidated reporting entity or require
additional disclosures required by Interpretation No. 46.

In April 2003, the FASB
issued SFAS No. 149, Amendment to Statement 133 on Derivative Instruments
and Hedging Activities. SFAS No. 149 amends and clarifies the financial
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities
under SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. This statement is effective for hedging relationships
designated and contracts entered into or modified after June 30, 2003, except
for the provisions that relate to SFAS No. 133 implementation issues, which will
continue to be applied in accordance with their respective dates. The adoption
of SFAS No. 149 in the third quarter of 2003 did not impact the Companys
consolidated results of operations or financial position.

3.       Shareholders' Equity and Stock Based Compensation

On July 23, 2003, the
Companys Board of Directors approved a 3-for-2 stock split, which was
distributed in the form of a 50% stock dividend to shareholders of record as of
the close of business on August 12, 2003. The new stock certificates were issued
on September 2, 2003. The financial statements and related footnotes included
herein have been adjusted to reflect the stock split and operating results have
been retroactively restated to give effect for the stock split for all periods
presented.

During the first quarter of
2003, the Company purchased 150,000 shares of its common stock for a total
purchase price of approximately $2,625,000 (average price of $17.50 per share).
On July 23, 2003, the Companys Board of Directors authorized the Company
to purchase up to an additional $25.0 million of its common stock from
time-to-time through May 2005.

The Company has stock
option plans that provide for the granting of incentive and non-qualified stock
options to employees, officers, and directors. Under the plans, options are
granted at an exercise price equal to the fair market value of the underlying
common stock on the date of grant. The Company applies APB Opinion No. 25 and
related interpretations in accounting for its stock option plans as permitted
under SFAS 123 and SFAS 148. Accordingly, no compensation cost has been
recognized for the Companys stock option plans. Had the compensation cost
for the Companys stock option plans been determined based on the fair
value at the grant dates for awards under those plans consistent with the fair
value methodology of SFAS 123, the Companys net income and earnings per
share would have been as follows:

`Quarter Ended             Nine months ended
                                                             -------------             -----------------
                                                         Sept 28,      Sept 29,       Sept 28,     Sept 29,
                                                           2003          2002           2003         2002
                                                           ----          ----           ----         ----
Net earnings, as reported                                  $7,779         $6,416       $30,320      $25,292
Stock-based compensation expense
  determined under fair value
  method for all awards, net of tax                         1,134            868         2,928        2,364
                                                           ------         ------       -------      -------
Proforma net earnings                                      $6,645         $5,548       $27,392      $22,928
                                                           ======         ======       =======      =======
Earnings per share:

Basic - as reported                                      $   0.23       $   0.20      $   0.92     $   0.78
                                                           ======         ======       =======      =======
Basic - proforma                                         $   0.20       $   0.17      $   0.83     $   0.71
                                                           ======         ======       =======      =======
Diluted - as reported                                    $   0.22       $   0.19      $   0.87     $   0.74
                                                           ======         ======       =======      =======
Diluted - proforma                                       $   0.19       $   0.16      $   0.79     $   0.67
                                                           ======         ======       =======      =======`

4.  Long-Term Debt

At September 28, 2003, no
borrowings were outstanding under the Companys $100.0 million revolving
credit agreement, and the Company was in compliance with all of its compliance
provisions.

5.  Income Taxes

Income tax expense for the
third quarter and first nine months of 2003 has been provided based on an
estimated 32.5% effective tax rate expected to be applicable for the full 2003
fiscal year. The effective income tax rate differs from applying the statutory
federal income tax rate of 35% to pre-tax earnings primarily due to employee
FICA tip tax credits (a reduction in income tax expense) and work opportunity
tax credits partially offset by state income taxes.

6.    Earnings Per Share

Basic earnings per common
share equals net earnings divided by the weighted average number of common
shares outstanding and does not include the dilutive effect of stock options or
restricted stock. Diluted earnings per common share equals net earnings divided
by the weighted average number of common shares outstanding, after giving effect
to dilutive stock options and restricted stock. A reconciliation between basic
and diluted weighted average shares outstanding and the related earnings per
share calculation is presented below (in thousands, except per share amounts):

`Quarter Ended              Nine months ended
                                                             -------------              -----------------
                                                         Sept 28,       Sept 29,       Sept 28,     Sept 29,
                                                           2003           2002           2003         2002
                                                           ----           ----           ----         ----
Basic weighted average shares outstanding                  33,271         32,730        33,078       32,522
Dilutive effect of stock options                            1,812          1,520         1,493        1,603
Dilutive effect of restricted stock                           194            136           182          141
                                                         --------       --------      --------     --------
Diluted weighted average shares outstanding                35,277         34,386        34,753       34,266
                                                         --------       --------      --------     --------
Net earnings                                             $  7,779       $  6,416      $ 30,320     $ 25,292
                                                         --------       --------      --------     --------
Basic earnings per common share                          $   0.23       $   0.20      $   0.92     $   0.78
                                                         --------       --------      --------     --------
Diluted earnings per common share                        $   0.22       $   0.19      $   0.87     $   0.74
                                                         --------       --------      --------     --------`

7.  Derivative Instruments and Comprehensive Income

In 2002 and prior years,
the Company used an interest rate swap agreement to effectively fix the interest
rate on variable rate borrowings under the Companys $100.0 million
revolving credit facility. This interest rate swap agreement was classified as a
hedge of a cash flow exposure and, accordingly, the initial fair value and
subsequent changes therein were reported as a component of other comprehensive
loss and subsequently reclassified into earnings when the forecasted cash flows
affect earnings. Concurrent with the November 2002 amendment and extension of
the Companys $100.0 million revolving credit facility, all amounts
outstanding under the credit facility were repaid and the interest rate swap
agreement was terminated.

For the quarter and nine
months ended September 28, 2003, there was no difference between the
Companys net earnings and comprehensive income. A reconciliation of net
earnings and total comprehensive income for the fiscal 2002 periods is as
follows (in thousands):

`Quarter            Nine Months
                                                                   Ended                Ended
                                                                  Sept 29,             Sept 29,
                                                                   2002                 2002
                                                                   ----                 ----
Net earnings                                                     $  6,416             $ 25,292
Change in unrealized loss from interest
  rate swap                                                          (210)                (355)
                                                                 --------             --------
Total comprehensive income                                       $  6,206             $ 24,937
                                                                 ========             ========`

# Item 2.     Management's Discussion and Analysis of
                 Financial Condition and Results of Operations

Results of Operations

Revenues

The Company currently
derives all of its revenues from restaurant sales and franchise revenues. Total
revenues increased 18.8% and 15.9% for the quarter and nine months ended
September 28, 2003, respectively, as compared to the same periods of the prior
fiscal year.

Same store sales
comparisons for each of the Companys restaurant concepts for the quarter
ended September 28, 2003, consist of sales at restaurants opened prior to
December 31, 2001.

# LongHorn Steakhouse:

Sales in the LongHorn
Steakhouse restaurants for the quarter and nine months ended September 28, 2003
increased 19.2% and 16.4%, respectively, as compared to the same periods of the
prior year. The increases reflect i) a 10.7% and 9.6% increase in restaurant
operating weeks in the quarter and nine months ended September 28, 2003,
respectively, as compared to the same periods of the prior fiscal year,
resulting from an increase in the restaurant base from 166 LongHorn Steakhouse
restaurants at the end of the third quarter of 2002 to 183 at the end of the
third quarter of 2003 and ii) an increase in average weekly sales. Average
weekly sales for all LongHorn Steakhouse restaurants in the third quarter of
2003 were approximately $50,900, a 7.7% increase over the comparable period in
2002. Same store sales for the comparable LongHorn Steakhouse restaurants
increased 5.2% in the third quarter of 2003, as compared to the same period in
2002, due to approximately equal increases in both customer counts and average
check.

# The Capital Grille:

Sales in The Capital Grille
restaurants for the quarter and nine months ended September 28, 2003, increased
19.2% and 13.1%, respectively, as compared to the same periods of the prior
fiscal year. The increases reflect i) a 6.7% and 3.6% increase in restaurant
operating weeks for the quarter and nine months ended September 28, 2003, as
compared to the same periods of the prior fiscal year, resulting from the
opening of one The Capital Grille restaurant during the second quarter of 2003
and ii) an increase in average weekly sales. Average weekly sales for all The
Capital Grille restaurants in the third quarter of 2003 were approximately
$113,400, a 11.7% increase from the comparable period in 2002. Same store sales
for the comparable The Capital Grille restaurants increased 13.5% in the third
quarter of 2003, primarily due to an increase in customer counts.

# Bugaboo Creek Steak House:

Sales in the Bugaboo Creek
Steak House restaurants increased for the quarter and nine months ended
September 28, 2003, by 17.7% and 17.9%, respectively, as compared to the same
periods of the prior fiscal year. The increases reflect i) a 16.2% and 15.5%
increase in restaurant weeks in the quarter and nine months ended September 28,
2003, respectively, as compared to the same periods of the prior fiscal year,
resulting from an increase in the restaurant base from 20 Bugaboo Creek Steak
House restaurants at the end of the third quarter of 2002 to 24 restaurants at
the end of the third quarter of 2003 and ii) an increase in average weekly
sales. Average weekly sales for all Bugaboo Creek Steak House restaurants in the
third quarter of 2003 were approximately $69,200, a 1.4% increase from the
comparable period for 2002. Same store sales for the comparable Bugaboo Creek
Steak House restaurants in the third quarter of 2003 increased 2.7%, as compared
to the same period in 2002, due primarily to an increase in average check and,
to a lesser extent, to an increase in customer counts.

# Franchise Revenue:

Franchise revenues
increased to $91,000 for the third quarter of 2003, from $84,000 for the same
period in 2002 due to sales increases at the three franchised LongHorn
Steakhouse restaurants in Puerto Rico.

# Costs and Expenses

Cost of restaurant sales as
a percentage of restaurant sales increased to 36.3% for the third quarter of
2003, from 36.0% for the third quarter of 2002, and decreased to 36.0% for the
first nine months of 2003 as compared to 36.2% during the same period of 2002.
Going into the third quarter of 2003, the Company had fixed price contracts in
place on 90% of its planned beef usage. During the third quarter, contracts on
the remaining 10% of planned beef purchases were put in place. These new
contracts for beef purchases were at higher prices than the Company was paying,
which negatively impacted cost of restaurant sales for the third quarter of
2003. The Company is currently under fixed price contracts with respect to all
of its anticipated beef product needs and these contracts are in effect for the
remainder of 2003. Additionally, the higher than expected average weekly sales
rate required the Company to purchase additional quantities of beef at higher
market prices and, to a lesser extent, the blackout in the northeast and
Hurricane Isabel also negatively impacted cost of sales for the third quarter of
2003.

Restaurant operating
expense as a percentage of restaurant sales decreased slightly to 45.5% for the
third quarter of 2003, from 45.6% for the third quarter of 2002, and remained
flat at 44.1% for the first nine months of 2003 and 2002. The fluctuations in
restaurant operating expenses as a percentage of restaurant sales for the 2003
periods as compared to the prior year are primarily due to the favorable
leveraging effect of increases in average weekly sales offset by higher
operating expenses, particularly advertising costs.

Restaurant depreciation as
a percentage of restaurant sales decreased to 4.0% and 3.9% for the third
quarter and first nine months of 2003 as compared to 4.2% and 4.1%,
respectively, for the same periods of the prior fiscal year due to the favorable
leveraging effect of higher average weekly sales.

Pre-opening expense for the
third quarter of 2003 was $1,514,000, an increase of $518,000 from the same
period of the prior year. This increase was due primarily to the seven LongHorn
Steakhouse restaurants and one Bugaboo Creek Steak House restaurant opened
during the third quarter of 2003 as compared to only four LongHorn Steakhouse
restaurants opened in the same period of the prior year. The increase in
pre-opening expense for the first nine months of 2003 as compared to the same
period of the prior year was primarily due to the accelerated restaurant opening
schedule in the second and third quarters of 2003.

General and administrative
expenses, as a percentage of total revenues, decreased to 6.1% for the third
quarter of 2003 from 6.3% for the same period in 2002, and increased to 6.0% for
the first nine months of 2003 from 5.9% for the same period of 2002. These
fluctuations were principally due to the full period impact of new hires made in
2002 and full bonus accruals in the 2003 periods as compared to only partial
bonus accruals in the 2002 periods, offset by greater leverage of fixed and
semi-fixed general and administrative expenses resulting from higher average
weekly sales volumes.

As a result of the
relationships between revenues and expenses discussed above, the Companys
operating income increased to $11.9 million for the third quarter of 2003 and
increased to $45.9 million for the first nine months of 2003 as compared to
$10.1 million and $39.3 million, respectively, for the same periods of the prior
year.

Interest expense, net
decreased to $283,000 in the third quarter of 2003, and to $742,000 for the
first nine months of 2003, from $528,000 and $1,398,000 during the same periods
of the prior year, due to lower debt levels resulting from the November 2002
repayment of the $10.0 million then outstanding under the Companys
revolving credit facility during the 2002 period. The Company had no amount
outstanding under the revolving credit facility during 2003.

Minority interest expense
decreased to $54,000 for the third quarter and $254,000 for the first nine
months of 2003, from $87,000 and $387,000 for the same periods of the prior
year, primarily due to the Companys acquisition of two joint venture
restaurants from two joint venture partners in 2002.

Income tax expense for the
third quarter and first nine months of 2003 was 32.5% of earnings before income
taxes, which reflects the effective tax rate expected to be applicable for the
full 2003 fiscal year. This rate in 2003 is the same as the rate in the same
periods of the prior year, which reflected the effective income tax rate then
expected for the full 2002 fiscal year. The Companys effective income tax
rate differs from applying the statutory federal income tax rate of 35% to
pre-tax income, primarily due to employee FICA tip tax credits and work
opportunity tax credits partially offset by state income taxes.

Net earnings increased to
$7.8 million for the third quarter of 2003 from net earnings of $6.4 million for
the third quarter of 2002 and increased to $30.3 million for the nine months
ended September 28, 2003 from $25.3 million for the nine months ended September
29, 2002, reflecting the net effect of the items discussed above.

# Liquidity and Capital Resources:

The Company requires
capital primarily for the development of new restaurants, selected acquisitions
and the remodeling of existing restaurants. During the first nine months of
2003, the Companys principal sources of working capital were cash provided
by operating activities ($45.2 million) and proceeds from the exercise of
employee stock options ($5.7 million). For the first nine months of 2003, the
principal uses of working capital were capital expenditures ($53.4 million) for
new and improved facilities, the purchase of short-term investments ($3.3
million) and the purchase of common stock for treasury ($2.6 million). As of
September 28, 2003, the Company had no borrowings outstanding under the
Companys $100.0 million revolving credit facility.

The Company intends to open
an aggregate 21 Company-owned LongHorn Steakhouse restaurants, three Bugaboo
Creek Steak House restaurants and two The Capital Grille restaurants in fiscal
year 2003. The Company estimates that its capital expenditures for fiscal year
2003 will be approximately $75-80 million. During the first nine months of 2003,
the Company opened 17 LongHorn Steakhouse restaurants, one The Capital Grille
restaurant and two Bugaboo Creek Steak House restaurants. As of November 10,
2003, the Company has opened three additional LongHorn Steakhouse restaurants,
one additional The Capital Grille restaurant and one additional Bugaboo Creek
Steak House restaurant in the fourth quarter 2003. Management believes that
available cash, cash provided by operations, and available borrowings under the
Companys $100.0 million revolving credit facility will provide sufficient
funds to finance the Companys expansion plans through the year 2006.

Since substantially all
sales in the Companys restaurants are for cash, and accounts payable are
generally due in seven to 30 days, the Company operates with little or negative
working capital.

# Forward-Looking Statements

Statements contained in
this Report concerning future results, performance or expectations are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. All forward-looking statements in this Report
are made based upon managements current expectations or beliefs, as well
as assumptions made by, and information currently available to, the Company on
the date of this Report. All forward-looking statements involve risks and
uncertainties that could cause actual results, performance or developments to
differ materially from those expressed or implied by those forward-looking
statements, such as: the Companys ability to open the anticipated number
of new restaurants on time and within budget; the Companys ability to
continue to increase same-store sales at anticipated rates; a recession or other
negative effect on business dining patterns, or some other negative effect on
the economy in general; the effect upon dining patterns and the economy in
general, of war, insurrection and/or terrorist attacks on United States soil;
unexpected increases in cost of sales or other expenses; and the impact of any
negative publicity or public attitudes related to the consumption of beef. Other
risks and uncertainties include fluctuations in quarterly operating results,
seasonality, guest trends, competition and risks associated with the development
and management of new restaurant sites. More information about factors that
potentially may affect the Companys results, performance or development is
included in the Companys other filings with the Securities and Exchange
Commission, including its annual report on Form 10-K for the year ended December
29, 2002, its quarterly reports on Form 10-Q for the quarter ended March 30,
2003 and June 29, 2003, and the Companys press releases and other
communications.

# Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company may be exposed
to market risk from changes in interest rates on debt.

As of September 28, 2003,
the Company had no borrowings outstanding under its $100.0 million revolving
credit facility. Amounts outstanding under such credit facility bear interest at
LIBOR plus a margin of 1.25% to 2.0% (depending on the Companys leverage
ratio), or the administrative agents prime rate of interest plus a margin
of 0% to 0.75% (depending on the Companys leverage ratio) at the
Companys option. Accordingly, the Company may be exposed to the impact of
interest rate fluctuations. To achieve the Companys objective of managing
its exposure to interest rate changes, the Company may from time to time use
interest rate swaps.

# Investment Portfolio

The Company invests
portions of its excess cash, if any, in highly liquid investments. At September
28, 2003, the Company had $9.0 million invested in high-grade overnight
repurchase agreements, and $21.0 million in short-term investments in the form
of Federal, state and municipal bonds. As of September 28, 2003, the Company has
classified all short-term investments as trading securities.

# Item 4.  Controls and Procedures

In accordance with the
Securities Exchange Act Rules 13a-15 and 15d-15, the Companys management,
under the supervision of the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness of the design and
operation of the Companys disclosure controls and procedures as of the end
of the period covered by this report. Based on that evaluation, the Company
concluded that the design and operation of its disclosure controls and
procedures were effective. There have been no significant changes in internal
controls over financial reporting or in other factors that could significantly
affect internal controls over financial reporting subsequent to the date of such
evaluation.

# Part II - Other Information

Item 1. Legal Proceedings

None

# Item 2.  Changes in Securities and Use of Proceeds

None

# Item 3. Defaults Upon Senior Securities

None

# Item 4. Submission of Matters to a Vote of Securities Holders

None

# Item 5. Other Information

None

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

| | (a) | Exhibits Filed.

    31.1  Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the
Exchange Act. 
    31.2 Certification of Principal Financial Officer pursuant to Rule
13a-14(a) of the Exchange Act. 
    32.1 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 2002.(1)
    32.2 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 2002.(1)

    (1)    These exhibits are deemed to accompany this report and are not "filed" as part of the report.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Reports filed on Form 8-K.
                 None
| | --- | ------------------------------------------------

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# Signatures

Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

`/s/ Philip J. Hickey, Jr.
                      --------------------------
                      Philip J. Hickey, Jr.
                      Chairman of the Board and
                      Chief Executive Officer
                      (Principal Executive Officer)

                      /s/ W. Douglas Benn
                      ------------------------
                      W. Douglas Benn
                      Executive Vice President, Finance
                      and Chief Financial Officer
                      (Principal Financial and
                      Accounting Officer)


Date:   November 11, 2003`

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