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

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~“accelerated~~“large accelerated filer,” ~~“large accelerated~~“accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange ~~Act (check one):~~Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

The number of shares outstanding of the registrant’s common stock as of ~~October~~July 31, ~~2017~~2020 was ~~31,278,209,~~34,923,439, which includes ~~1,184,629~~673,007 shares of unvested restricted stock.

	September 24,				December 25,			June 28,		December 29,
	2017				2016			2020		2019
Assets
Current assets:
Cash and cash equivalents	$	4,862			$	3,788		$	96,127	$	5,567
Accounts receivable, less allowance for doubtful accounts 2017 - $236; 2016 - $729		9,789				20,790
Accounts receivable, less allowance for doubtful accounts 2020 - $346; 2019 - $241									11,441		23,769
Inventory		7,247				7,396			7,754		9,623
Prepaid expenses and other		2,232				2,446			4,155		3,052
Total current assets		24,130				34,420			119,477		42,011
Property and equipment, net of accumulated depreciation 2017 - $143,034; 2016 - $132,817		103,518				103,041
Property and equipment, net of accumulated depreciation 2020 - $173,614; 2019 - $173,845									134,890		142,962
Operating lease right of use assets									202,150		206,358
Goodwill		24,293				24,293			45,549		45,549
Franchise rights, net of accumulated amortization 2017 - $218; 2016 - $218		32,200				32,200
Other intangibles, net of accumulated amortization 2017 - $1,238; 2016 - $1,179		2,836				2,895
Franchise rights, net of accumulated amortization 2020 - $5,411; 2019 - $4,401									45,607		49,916
Other intangibles, net of accumulated amortization 2020 - $1,504; 2019 - $1,439									4,179		4,449
Deferred income taxes		5,452				9,924			8,085		4,929
Income tax receivable									5,891		—
Other assets		643				699			1,201		702
Total assets	$	193,072		��	$	207,472		$	567,029	$	496,876
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	7,642			$	7,064		$	6,648		13,598
Accrued payroll		11,709				14,902			11,334		17,303
Accrued expenses		6,545				11,672			10,919		10,574
Deferred revenue		27,483				38,155			48,226		52,856
Current operating lease liabilities									15,384		14,313
Other current liabilities		4,962				7,622			1,658		4,237
Total current liabilities		58,341				79,415			94,169		112,881
Long-term debt		30,000				25,000			135,200		64,000
Deferred rent		22,230				21,737
Operating lease liabilities									227,592		223,292
Unearned franchise fees									2,371		2,489
Other liabilities		2,132				2,311			69		69
Total liabilities		112,703				128,463			459,401		402,731
Commitments and contingencies (Note 11)		—				—
Commitments and contingencies (Note 12)									—		—

Shareholders' equity:
Common stock, par value $.01 per share; 100,000,000 shares authorized, 30,093,180 shares issued and outstanding at September 24, 2017, 30,549,283 shares issued and outstanding at December 25, 2016		301				305
Common stock, par value $.01 per share; 100,000,000 shares authorized, 34,143,931 shares issued and outstanding at June 28, 2020, 28,418,691 shares issued and outstanding at December 29, 2019									341		284
Additional paid-in capital		84,643				95,266			79,732		40,462
Accumulated deficit		(4,575	)			(16,562	)
Treasury stock, at cost; 71,950 shares at September 24, 2017 and December 25, 2016		—				—
Retained earnings									27,555		53,399
Treasury stock, at cost; 71,950 shares at June 28, 2020 and December 29, 2019									—		—
Total shareholders' equity		80,369				79,009			107,628		94,145
Total liabilities and shareholders' equity	$	193,072			$	207,472		$	567,029	$	496,876

													13 Weeks Ended						26 Weeks Ended
	13 Weeks Ended						39 Weeks Ended						June 28,			June 30,			June 28,			June 30,
	September 24,			September 25,			September 24,			September 25,			2020			2019			2020			2019
	2017			2016			2017			2016
Revenues:
Restaurant sales	$	79,442		$	78,760		$	273,042		$	261,941		$	26,978		$	104,017		$	130,018		$	217,003
Franchise income		4,218			3,928			12,865			12,463			956			4,421			4,582			8,979
Other operating income		1,507			1,086			4,813			3,914			483			1,805			2,353			4,002
Total revenues		85,167			83,774			290,720			278,318			28,417			110,243			136,953			229,984

Costs and expenses:
Food and beverage costs		25,319			23,723			82,012			78,022			8,030			29,023			38,657			60,871
Restaurant operating expenses		42,595			40,549			133,046			127,026			26,273			51,156			81,827			104,759
Marketing and advertising		3,197			2,546			9,056			7,134			1,487			4,121			4,925			7,751
General and administrative costs		7,096			7,346			23,267			22,068			7,066			8,929			15,095			17,681
Depreciation and amortization expenses		3,852			3,435			11,089			9,907			5,522			5,124			11,345			10,092
Pre-opening costs		121			574			1,473			1,665			304			244			781			341
Gain on lease modifications														(488	)		—			(488	)		—
Loss on impairment														4,283			—			12,980			—
Total costs and expenses		82,180			78,173			259,943			245,822			52,477			98,597			165,122			201,495
Operating income		2,987			5,601			30,777			32,496

Operating income (loss)														(24,060	)		11,646			(28,169	)		28,489

Other income (expense):
Interest expense, net		(197	)		(333	)		(521	)		(799	)		(1,291	)		(417	)		(1,919	)		(822	)
Other		(6	)		(92	)		33			60			3			13			36			15

Income from continuing operations before income tax expense		2,784			5,176			30,289			31,757
Income tax expense		1,017			1,668			9,632			10,410
Income from continuing operations		1,767			3,508			20,657			21,347
Income (loss) from discontinued operations, net of income taxes		(71	)		75			(101	)		(94	)
Net income	$	1,696		$	3,583		$	20,556		$	21,253
Basic earnings (loss) per common share:
Continuing operations	$	0.06		$	0.11		$	0.68		$	0.67
Discontinued operations		—			—			(0.01	)		—
Basic earnings per share	$	0.06		$	0.11		$	0.67		$	0.67
Diluted earnings (loss) per common share:
Continuing operations	$	0.06		$	0.11		$	0.67		$	0.66
Discontinued operations		(0.01	)		—			(0.01	)		—
Diluted earnings per share	$	0.05		$	0.11		$	0.66		$	0.66
Shares used in computing net income (loss) per common share:
Income (loss) before income taxes														(25,348	)		11,242			(30,052	)		27,682
Income tax expense (benefit)														(7,750	)		1,933			(8,636	)		4,462
Net income (loss)													$	(17,598	)	$	9,309		$	(21,416	)	$	23,220

Basic earnings (loss) per common share													$	(0.59	)	$	0.32		$	(0.74	)	$	0.79

Diluted earnings (loss) per common share													$	(0.59	)	$	0.31		$	(0.74	)	$	0.78

Shares used in computing earnings (loss) per common share:
Basic		30,348,180			31,305,952			30,490,554			32,023,814			29,951,332			29,252,651			29,119,296			29,264,076
Diluted		30,877,192			31,737,036			31,040,640			32,437,142			29,951,332			29,726,102			29,119,296			29,768,702

Cash dividends declared per common share	$	0.09		$	0.07		$	0.27		$	0.21		$	—		$	0.13		$	0.15		$	0.26

Additional

Common Stock

Paid-in

Accumulated

Treasury Stock

Shareholders'

Shares

Value

Capital

Deficit

Shares

Value

Equity

Balance at December 25, 2016

30,549

$
305

$
95,266

$
(16,562
)

72

$
—

$
79,009

Net income

—

—

—

20,556

—

—

20,556

Cash dividends

—

—

—

(8,568
)

—

—

(8,568
)
Repurchase of common stock

(719
)

(7
)

(14,536
)

—

—

—

(14,543
)
Shares issued under stock compensation plan net
   of shares withheld for tax effects

263

3

(1,167
)

—

—

—

(1,164
)
Stock-based compensation

—

—

5,080

—

—

—

5,080

Balance at September 24, 2017

30,093

$
301

$
84,643

$
(4,575
)

72

$
—

$
80,369

Balance at December 27, 2015

33,146

$
331

$
135,403

$
(37,832
)

72

$
—

$
97,902

Net income

—

—

—

21,253

—

—

21,253

Cash dividends

—

—

—

(6,969
)

—

—

(6,969
)
Repurchase of common stock

(2,477
)

(25
)

(39,948
)

—

—

—

(39,973
)
Shares issued under stock compensation plan net
   of shares withheld for tax effects

213

3

(1,430
)

—

—

—

(1,427
)
Excess tax benefit from stock based
   compensation

—

—

395

—

—

—

395

Stock-based compensation

—

—

4,259

—

—

—

4,259

Balance at September 25, 2016

30,882

$
309

$
98,679

$
(23,548
)

72

$
—

$
75,440

							Additional
	Common Stock						Paid-in			Retained			Treasury Stock				Shareholders'
	Shares			Value			Capital			Earnings			Shares		Value		Equity
Balance at December 29, 2019		28,419		$	284		$	40,462		$	53,399			72	$	—	$	94,145
Net loss		—			—			—			(3,818	)		—		—		(3,818	)
Cash dividends, $0.15 per common share		—			—			—			(4,428	)		—		—		(4,428	)
Repurchase of common stock		(902	)		(9	)		(13,217	)		—			—		—		(13,226	)
Shares issued under stock compensation plan net of shares withheld for tax effects		100			1			(659	)		—			—		—		(658	)
Stock-based compensation		—			—			2,065			—			—		—		2,065
Balance at March 29, 2020		27,617		$	276		$	28,652		$	45,153			72	$	—	$	74,081
Net loss		—			—			—			(17,598	)		—		—		(17,598	)
Stock issuance		6,455			65			49,517			—			—		—		49,582
Shares issued under stock compensation plan net of shares withheld for tax effects		72			1			(395	)		—			—		—		(394	)
Stock-based compensation		—			—			1,958			—			—		—		1,958
Balance at June 28, 2020		34,144		$	341		$	79,732		$	27,555			72	$	—	$	107,628

Balance at December 30, 2018		29,269		$	293		$	61,819		$	28,020			72	$	—	$	90,132
Net income		—			—			—			13,911			—		—		13,911
Cash dividends, $0.13 per common share		—			—			—			(3,967	)		—		—		(3,967	)
Repurchase of common stock		(26	)		—			(568	)		—			—		—		(568	)
Shares issued under stock compensation plan net of shares withheld for tax effects		133			1			(1,632	)		—			—		—		(1,631	)
Stock-based compensation		—			—			2,033			—			—		—		2,033
Cumulative effect of a change in accounting principle		—			—			—			(1,261	)		—		—		(1,261	)
Balance at March 31, 2019		29,376		$	294		$	61,652		$	36,703			72	$	—	$	98,649
Net income		—			—			—			9,309			—		—		9,309
Cash dividends, $0.13 per common share		—			—			—			(3,931	)		—		—		(3,931	)
Repurchase of common stock		(250	)		(3	)		(6,569	)		—			—		—		(6,572	)
Shares issued under stock compensation plan net of shares withheld for tax effects		102			1			(1,446	)		—			—		—		(1,445	)
Stock-based compensation		—			—			2,101			—			—		—		2,101
Balance at June 30, 2019		29,228		$	292		$	55,738		$	42,081			72	$	—	$	98,111

	39 Weeks Ended						26 Weeks Ended
	September 24,			September 25,			June 28,			June 30,
	2017			2016			2020			2019
Cash flows from operating activities:
Net income	$	20,556		$	21,253
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(21,416	)	$	23,220
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		11,089			9,907			11,345			10,092
Deferred income taxes		4,472			6,065			(3,156	)		124
Non-cash interest expense		97			315			83			41
Debt issuance costs written-off		16			—
Gain on the disposal of property and equipment, net		—			(128	)
Loss on impairment								12,980			—
Stock-based compensation expense		5,080			4,259			4,023			4,134
Changes in operating assets and liabilities:
Accounts receivable		11,002			9,793			14,807			4,712
Inventories		149			341			1,513			752
Prepaid expenses and other		217			(2,012	)		(1,104	)		(571	)
Other receivable								(5,891	)		—
Other assets		356			198			—			(10	)
Accounts payable and accrued expenses		(6,064	)		(10,731	)		(12,443	)		(12,444	)
Deferred revenue		(10,671	)		(11,736	)		(4,629	)		(8,262	)
Deferred rent		493			978
Operating lease liabilities and assets								1,003			2,407
Other liabilities		(1,702	)		623			153			(1,040	)
Net cash provided by operating activities		35,090			29,125
Net cash (used in) provided by operating activities								(2,732	)		23,155
Cash flows from investing activities:
Acquisition of property and equipment		(14,326	)		(19,094	)		(8,202	)		(10,955	)
Proceeds from sale of property and equipment		—			802
Net cash used in investing activities		(14,326	)		(18,292	)		(8,202	)		(10,955	)
Cash flows from financing activities:
Principal borrowings on long-term debt		26,000			47,000			85,000			14,000
Principal repayments on long-term debt		(21,000	)		(9,000	)		(13,800	)		(10,000	)
Principal borrowings from the CARES Act loan								20,000			—
Principal repayments on the CARES Act loan								(20,000	)		—
Net proceeds from sale of common stock								49,582			—
Repurchase of common stock		(14,543	)		(39,973	)		(13,226	)		(7,140	)
Cash dividend payments		(8,568	)		(6,969	)		(4,428	)		(7,898	)
Tax payments from the vesting of restricted stock and option exercises		(2,079	)		(1,503	)		(1,052	)		(3,076	)
Excess tax benefits from stock compensation		—			395
Proceeds from the exercise of stock options		913			76
Deferred financing costs		(413	)		—			(582	)		—
Net cash used in financing activities		(19,690	)		(9,974	)
Net increase in cash and cash equivalents		1,074			859
Net cash provided by (used in) financing activities								101,494			(14,114	)
Net increase (decrease) in cash and cash equivalents								90,560			(1,914	)
Cash and cash equivalents at beginning of period		3,788			3,095			5,567			5,062
Cash and cash equivalents at end of period	$	4,862		$	3,954		$	96,127		$	3,148
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	405		$	461		$	1,764		$	829
Income taxes	$	6,539		$	2,223		$	71		$	6,158
Noncash investing and financing activities:
Accrued acquisition of property and equipment	$	1,023		$	389		$	357		$	3,544

The accompanying unaudited condensed consolidated financial statements of Ruth’s Hospitality Group, Inc. and its subsidiaries (collectively, the Company) as of ~~September 24, 2017~~June 28, 2020 and December ~~25, 2016~~29, 2019 and for the thirteen and ~~thirty-nine~~twenty-six week periods ended ~~September 24, 2017~~June 28, 2020 and ~~September 25, 2016~~June 30, 2019 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). The condensed consolidated financial statements include the financial statements of Ruth’s Hospitality Group, Inc. and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

Ruth’s Hospitality Group, Inc. is a restaurant company focused on the upscale dining segment. Ruth’s Hospitality Group, Inc. operates Company-owned Ruth’s Chris Steak House restaurants and sells franchise rights to Ruth’s Chris Steak House franchisees giving the franchisees the exclusive right to operate similar restaurants in a particular area designated in the franchise agreement. As of ~~September 24, 2017,~~June 28, 2020, there were 153 Ruth’s Chris Steak House restaurants, including 7078 Company-owned restaurants, ~~two~~3 restaurants operating under contractual agreements and 8172 franchisee-owned restaurants, including 21 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, ~~Panama,~~ Singapore ~~Taiwan~~ and ~~the United Arab Emirates.~~Taiwan. All Company-owned restaurants are located in the United States. ~~New~~During the second fiscal quarter of 2020 five Company-owned restaurants were permanently closed and one franchisee-owned restaurant was permanently closed.

On July 29, 2019, the Company completed the acquisition of substantially all of the assets of three franchisee-owned Ruth’s Chris Steak House restaurants ~~opened~~located in ~~Waltham, MA~~Philadelphia, PA, King of Prussia, PA and Garden City, NY (the “MBR Franchise Acquisition”) for a cash purchase price of $18.6 million. The acquisition was funded with debt through the Company’s senior credit facility. The results of operations, financial position and cash flows of the MBR Franchise Acquisition are included in ~~January 2017 and Cleveland, OH in March 2017 and a new frachisee-owned Ruth’s Chris Steak House restaurant opened in Chengdu, China in September 2017. A new restaurant operated by~~ the Company under a contractual agreement also opened in Tulsa, OK in January 2017. A franchisee-owned Ruth’s Chris Steak House restaurant was closed permanently in San Juan, Puerto Rico in September 2017Company’s consolidated financial statements as ~~a result~~ of ~~severe damage from Hurricane Maria.~~the date of the acquisition. For additional information, see Note 7.

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. The interim results of operations for the periods ended ~~September 24, 2017~~June 28, 2020 and ~~September 25, 2016~~June 30, 2019 are not necessarily indicative of the results that may be achieved for the full year. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the SEC’s rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~25, 2016.~~29, 2019.

The Company operates on a 52- or 53-week fiscal year ending on the last Sunday in December. The fiscal quarters ended ~~September 24, 2017~~June 28, 2020 and ~~September 25, 2016~~June 30, 2019 each contained thirteen weeks and are referred to herein as the ~~third~~second quarter of fiscal year ~~2017~~2020 and the ~~third~~second quarter of fiscal year ~~2016,~~2019, respectively. Fiscal years 2020 and 2019 are both 52-week years.

In March 2020 the World Health Organization declared the novel coronavirus (“COVID-19”) a pandemic and the United States declared it a National Public Health Emergency, which has resulted in a significant reduction in revenue at the Company’s restaurants due to mandatory restaurant closures, capacity limitations, social distancing guidelines or other restrictions mandated by governments across the world, including federal, state and local governments in the United States. As a result of these developments, the Company is experiencing a significant negative impact on its revenues, results of operations and cash flows.

In response to the business disruption caused by the COVID-19 outbreak, the Company has taken the following actions, which management expects will enable it to meet its obligations over the next twelve months.

Operating Initiatives. Due to the government mandates regarding limiting or prohibiting in-restaurant dining due to COVID-19, the Company is leveraging its Ruth’s Anywhere program to enhance revenue in restaurants that have open dining rooms or in markets where take-out and delivery sales are sufficient to cover the costs of management staffing those locations. As of June 28, 2020, the dining rooms in 59 of the Company-owned and -managed restaurants were open, the Company was operating take-out and delivery in 12 Company-owned restaurants and 10 Company-owned restaurants were temporarily closed. Many of the franchisee-owned locations are experiencing similar disruptions to their business, and as a result, the Company waived franchise royalty requirements until their dining rooms were re-opened. As of June 28, 2020, the dining rooms in 64 of the franchisee-owned restaurants were open, two franchisee-owned restaurants were operating take-out and delivery and six franchisee-owned restaurants were temporarily closed.

Over the last several weeks, while some states have begun to re-tighten their dining room restrictions, the Company’s sales performance has continued to improve. As of July 28, 2020, the Company’s restaurants are operating in several different modes. As

of July 31, 2020, 88% (71 of 81) of Company-owned and managed restaurants are open and 10 remain closed. Of the 71 Company-owned restaurants that are open, 52 are operating with open dining rooms that have capacity restrictions, 15 are operating with outdoor seating only, and four are operating with only take-out and delivery.

Where the Company is re-opening restaurants, it is doing so with the safety and wellbeing of its guests and team members as the top priority. As such, the Company has taken several steps to ensure it complies with relevant requirements at state, city or local levels, which are changing on a regular basis. These steps include:

The Company has also taken measures to ensure its guests feel comfortable during their dining experience. For example,

These precautions and measures may change from time to time as local conditions and health mandates change and it is also possible that as local conditions and/or applicable health mandates change, the Company may be required to re-close restaurants or otherwise limit its operations.

Capital and Expense Reductions. The Company has suspended all new restaurant construction and non-essential capital expenditures. The Company has also made significant reductions in ongoing operating expenses, including curtailing operations in restaurants where take-out and delivery is not viable and furloughing a significant number of team members in the field and in the Company’s Home Office. In addition, the Company also implemented reductions of home office and field expenses.The Company took measures to reduce payments to its landlords and vendors during the second quarter of fiscal year ~~2017~~2020 and is still in discussions with its landlords and vendors to reduce or defer its payments. We are unable to predict the outcome of these discussions and the extent to which the Company will be able to negotiate to reduce or defer payments. With payments being delayed, landlords or vendors may terminate our leases and contracts or could take other actions that restrict the Company’s ability to access or reopen its stores in a ~~53-week year. Fiscal~~timely manner.

Dividends and Share Buybacks. The Company suspended the quarterly cash dividend, and there are no plans for share buybacks in the foreseeable future.

Balance Sheet. In March 2020, the Company entered into a second amendment to its Credit Agreement, which increased the Company’s borrowing capacity to $150.0 million and relaxed the leverage covenant restrictions to 4.0 times Bank Adjusted EBITDA through the first quarter of 2021. The Company borrowed the remaining available amount under the Revolving Credit Facility as a precautionary measure in order to increase the Company’s cash position and preserve financial flexibility. On May 7, 2020, the Company entered into a third amendment to its Credit Agreement which waived financial covenants until the first quarter of 2021, further relaxed the leverage covenant restrictions during the first and second quarters of 2021 and added a monthly liquidity covenant. On May 18, 2020, the Company entered into a fourth amendment to its Credit Agreement which limits the amount by which the monthly liquidity covenant escalates due to net cash proceeds received from an equity offering. See Note 5 for further information on recent Credit Agreement amendments. During May 2020, the Company issued 6,454,838 shares of common stock for net proceeds of $49.6 million to further improve its liquidity. The Company used $9.8 million of the proceeds from the issuance of its common stock to repay debt.

This is an unprecedented event in the Company’s history and it is uncertain how the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or closure requirements, when additional dining rooms will re-open at Company-owned restaurants, what level of customer demand the Company will experience once the dining rooms are permitted to re-open, and whether there will be additional restaurant closures from state and local governments restricting restaurant operations. The Company’s operating results, financial position and liquidity over the next twelve months will depend upon a series of factors, including the duration of restaurant shutdowns; the speed with which, and the extent to which, customers return to its restaurants once the dining

rooms re-open; the Company’s success in obtaining rent and other payment concessions from landlords and vendors; and the Company’s ability to meet its Credit Agreement obligations. Further, the Company’s Credit Agreement is scheduled to mature in February 2022. If the Company is not successful in extending or refinancing its Credit Agreement by February 2021, it may face a risk of a going concern qualification in early 2021 with respect to its audit for fiscal year ~~2016~~2020, which would be an event of default under its Credit Agreement. If the Company’s business performance does not improve to a point where it can comply with its leverage ratio, fixed charge coverage ratio and capital expenditure covenants in 2021, the Company may need to seek an amendment to, or refinance, its Credit Agreement. If the Company is ~~a 52-week year.~~able to successfully amend, extend or refinance its Credit Agreement, it may also be required to agree to additional covenants in connection with any future amendment, extension or refinancing of its Credit Agreement.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reporting of revenue and expenses during the periods to prepare these condensed consolidated financial statements in conformity with ~~U.S. generally accepted accounting principles.~~GAAP. Significant items subject to such estimates and assumptions include the carrying amounts of property and equipment, goodwill, franchise rights, operating lease right of use assets and obligations related to gift cards, income taxes, operating lease liabilities, incentive compensation, workers’ compensation and medical insurance. Actual results could differ from those estimates.

In ~~May 2014,~~June 2016 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, (ASU 2014-09), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers, and will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard is effective for interim and annual periods in fiscal years beginning after December 15, 2017, which will require the Company to adopt these provisions in the first quarter of fiscal year 2018. The standard permits the use of either the retrospective or cumulative effect transition method and is expected to impact the Company’s recognition of revenue related to franchise development and site specific fees. The Company currently recognizes franchise development and site specific fees when new franchisee-owned restaurants open. Under ASU 2014-09, development and site specific fees will be recognized over the life of the applicable franchise agreements. The Company expects that the new standard will have a material effect on the consolidated financial statements. The Company now expects that the most significant change relates to an increase of approximately $3 million to $4 million to the deferred revenue liability on the consolidated balance sheet for previously recognized franchise development and site specific fees that will be recognized over the life of the applicable franchise agreements under the new standard. In addition, ASU 2014-09 is expected to impact the classification of advertising contributions from franchisees. The

Company currently records advertising contributions from franchisees as a liability against which specified advertising and marketing costs are charged. Under the new standard, advertising contributions from franchisees will be classified as franchise income on the consolidated statements of income. The Company recognized advertising contributions from franchisees totaling $1.3 million and $1.4 million during fiscal years 2016 and 2015, respectively, as a reduction to marketing and advertising expense on the consolidated statements of income. The Company is evaluating other potential effects that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method.

~~In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).~~2016-13, Financial Instruments – Credit Losses. This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertaintyimmediate recognition of cash flows arising from leases. This update is effective for annual and interim periods beginning after December 15, 2018, which will require the Company to adopt these provisions in the first quartermanagement’s estimates of fiscal year 2019 using a modified retrospective approach. The Company’s restaurants operate under facility lease agreements that provide for material future lease payments. The restaurant facility leases comprise the majority of the Company’s material lease agreements.current expected credit losses. The Company ~~is currently evaluating the effect of the~~adopted this new standard on its ongoing financial reporting, but expects that the adoption of ASU 2016-02 will have a material effect on its consolidated financial statements. The Company expects that the most significant changes relate to 1) the recognition of new right–of–use assets and lease liabilities on the consolidated balance sheet for restaurant facility operating leases; and 2) the derecognition of existing lease liabilities on the consolidated balance sheet related to scheduled rent increases.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230). This update was issued to standardize how certain transactions are classified on the statement of cash flows. This update is effective for fiscal years beginning after December ~~15, 2017. Early adoption is permitted.~~30, 2019. The adoption of ASU ~~2016-15 is~~2016-13 did not ~~expected to~~ have a significant impact ofon the Company’s ~~ongoing~~ financial reporting.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740). This update addresses the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. In addition, interpretations of this guidance have developed in practice over the years for transfers of certain intangible and tangible assets. The amendments in the update will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. This update is effective for annual and interim periods beginning after December 15, 2017, which will require us to adopt these provisions in the first quarter of fiscal year 2018 using a modified retrospective approach. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In January 2017 the FASB issued ASU 2017-04, Intangibles – Goodwill and Other: Simplifying the Impairment Test for ~~Goodwill Impairment (Topic 350).~~Goodwill. This update ~~eliminates~~eliminated the ~~current two-step approach used to test~~calculation of implied goodwill ~~for impairment and requires an entity to apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its~~ fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 (upon the first goodwill impairment test performed during that fiscal year). Early adoption is permitted for interim or annual goodwill impairment tests after January 1, 2017.value. The Company ~~does not expect the~~adopted this new standard on December 30, 2019. The adoption of ASU 2017-04 did not have a significant impact on the Company’s financial reporting.

In August 2018 the FASB issued ASU 2018-13, Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This update primarily amended the disclosures required surrounding Level 3 fair value measurements. The Company adopted this new standard on December 30, 2019. The adoption of ASU 2018-13 did not have a significant impact on the Company’s financial reporting.

In August 2018 the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). This update aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this new standard on December 30, 2019. The adoption of ASU 2018-15 did not have a significant impact on the Company’s financial reporting.

In August 2018 the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. This update clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. The Company adopted this new standard on December 30, 2019. The adoption of ASU 2018-19 did not have a significant impact on the Company’s financial reporting.

In December 2019 the FASB issued ASU 2019-12, Income Taxes (Topic 740). This update modifies Topic 740 to simplify the accounting for income taxes. This update is effective for the Company in the first quarter of fiscal year 2021. The adoption of ASU 2019-12 is not expected to have a ~~material~~significant impact on ~~our consolidated~~the Company’s ongoing financial ~~statements.~~reporting.

The carrying amounts of cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to their short duration. Borrowings classified as long-term debt as of June 28, 2020 and December 29, 2019 have variable interest rates that reflect currently available terms and conditions for similar debt. The carrying amount of this debt is a reasonable estimate of its fair value (Level 2).

During the second fiscal quarter of fiscal year 2020, primarily due to the impacts of the COVID-19 pandemic and certain permanent restaurant closures, the Company determined that triggering events had occurred requiring an impairment evaluation of long-lived and

inventory assets. The Company recorded a $3.9 million impairment loss related to long-lived assets at 5 restaurants and a $356 thousand impairment related to inventory at six restaurants during the second quarter of fiscal year 2020. Additionally, during the first quarter of fiscal year 2020, the Company recorded a $5.6 million impairment loss related to long-lived assets at 7 restaurants and a $3.1 million impairment loss related to territory rights. The impairments of long-lived assets and territory rights were measured based on the amount by which the carrying amount of the assets exceeded fair value. Fair value was estimated based on both the market and income approaches utilizing market participant assumptions reflecting all available information as of the balance sheet date. The impairment losses are included in the loss on impairment caption in the accompanying condensed consolidated statement of operations.

The Company’s non-financial assets measured at fair value on a non-recurring basis as of June 28, 2020 were as follows (in thousands):

As of December ~~28, 2014,~~29, 2019, the Company had 0 assets or liabilities measured on a recurring or nonrecurring basis subject to the disclosure requirements of “Fair Value Measurements and Disclosures,” FASB ASC Topic 820.

The Company leases restaurant facilities and equipment. The Company determines whether an arrangement is or contains a lease at contract inception. The Company’s leases are all classified as operating leases, which are included as ROU assets and operating lease liabilities in the Company’s condensed consolidated balance sheet. Operating lease liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. ROU assets are measured based on the operating lease liabilities adjusted for lease incentives, initial indirect costs and impairments of operating lease assets. Minimum lease payments include only the fixed lease components of the agreements, as well as any variable rate payments that depend on an index, which are measured initially using the index at the lease commencement dates. To determine the present value of future minimum lease payments, the Company estimates incremental borrowing rates based on the information available at the lease commencement dates, or the transition date at adoption. The Company estimates its incremental borrowing rates by determining the synthetic credit rating of the Company using quantitative and qualitative analysis and then adjusting the synthetic credit rating to a collateralized credit rating. A spread curve is then developed using the U.S. corporate bond yield curve of the same credit rating and the U.S. Treasury curve to determine the rate for different terms. The expected lease terms include options to extend when it is reasonably certain the Company will exercise the options up to a total term of 20 years. For financial reporting purposes, minimum rent payments are expensed on a straight-line basis over the lives of the leases. Additionally, incentives received from landlords used to fund leasehold improvements reduce the ROU assets related to those leases and are amortized as reductions to rent expense over the lives of the leases. Variable lease payments that do not depend on a rate or index, payments associated with non-lease components and short-term rentals (leases with terms less than 12 months) are expensed as incurred.

On April 10, 2020, the FASB issued a staff Q&A (the “Staff Q&A”) to provide guidance on its remarks at the April 8, 2020 Board meeting about accounting for rent concessions resulting from the COVID-19 pandemic. The Staff Q&A affirms the discussion at the April 8, 2020 meeting by allowing entities to forgo performing the lease-by-lease legal analysis to determine whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to lease concessions as long as the concessions are related to COVID-19 and the changes to the lease do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. In addition, the Staff Q&A affirms that entities may make an election to account for eligible concessions, regardless of their form, either by (1) applying the modification framework for these concessions in accordance with Topic 842 or (2) accounting for the concessions as if they were made under the enforceable rights included in the original agreement.

Due to the impacts of the COVID-19 pandemic, the Company initiated negotiations with its landlords to modify its restaurant lease agreements. The negotiations could result in lease amendments that provide permanent or temporary reductions in rent payments, alternative rent structures, a change to the length of lease terms or lease terminations. During the second quarter of fiscal year 2020, the Company amended 14 leases and terminated 3 leases. Where applicable, the Company has elected to account for eligible lease concessions as if they were made under the enforceable rights included in the original agreement pursuant to the Staff Q&A.

As of June 28, 2020, all of the Company-owned Ruth’s Chris Steak House restaurants operated ~~eighteen Mitchell’s Fish Markets~~in leased premises, with the exception of the restaurant in Ft. Lauderdale, FL, which is an owned property, and ~~three Mitchell’s/Cameron’s Steakhouse~~the restaurants ~~(collectively,~~in Anaheim, CA, Lake Mary, FL, Princeton, NJ and South Barrington, IL, which operate on leased land. The leases generally provide for minimum annual rental payments with scheduled minimum rent payment increases during the ~~Mitchell’s Restaurants).~~terms of the leases. Certain leases also provide for rent deferral during the initial term, lease incentives in the form of tenant allowances to fund leasehold improvements, and/or contingent rent provisions based on the sales at the underlying restaurants. Most of the Company’s restaurant leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for 5 years or more. The Company’s lease agreements do not contain any material

residual value guarantees or material restrictive covenants. The weighted average term and discount rate for operating leases is 13.6 years and 5.1%, respectively.

As of June 28, 2020, maturities of lease liabilities are summarized as follows (in thousands):

Supplemental cash flow information related to leases was as follows (in thousands):

Additionally, as of June 28, 2020 the Company has exited two executed leases for new Ruth’s Chris Steak House Restaurant locations during the quarter. NaN executed leases remain for new Ruth’s Chris Steak House Restaurant locations with undiscounted fixed payments over the initial term of $27.0 million. These leases are expected to have an economic lease term of 20 years. These leases will commence when the landlords make the property available to the Company for the new restaurant construction. The Company will assess the reasonably certain lease term at the lease commencement date.

In ~~November 2014,~~ the Company and Landry’s, Inc. and Mitchell’s Entertainment, Inc., an affiliate of Landry’s Inc. (together with Landry’s Inc., Landry’s), entered into an asset purchase agreement (the Agreement). Pursuant tofollowing tables, the ~~Agreement, the Company agreed to sell the Mitchell’s Restaurants and related assets to Landry’s~~Company’s revenue is disaggregated by major component for ~~$10 million. The sale of the Mitchell’s Restaurants closed~~each category on January 21, 2015. The assets sold consisted primarily of leasehold interests, leasehold improvements, restaurant equipment and furnishings, inventory, and related intangible assets, including brand names and trademarks associated with the 21 Mitchell’s Restaurants. The results of operations have been classified as discontinued operations in the consolidated statements of income ~~for all periods presented. No amounts for shared general~~(in thousands).

The following table provides information about receivables and ~~administrative costs or interest expense were allocated to discontinued operations. Substantially all direct cash flows related to operating these restaurants were eliminated at~~deferred revenue liabilities from contracts with customers (in thousands).

Significant changes in the ~~closing date of the sale. The Company’s continuing involvement was limited to transition services up to four months with minimal impact on cash flows.~~

~~Under the terms of the Agreement, Landry’s assumed the Mitchell’s Restaurants’ facility lease obligations~~deferred revenue balance and the ~~Company reimbursed Landry’s for gift cards that were sold prior to the closing date and used at the Mitchell’s Restaurants~~unearned franchise fees balance during the ~~eighteen months following the closing date. In the Agreement, the Company and Landry’s made customary representations and warranties and~~

~~agreed to customary covenants relating to the sale~~first twenty-six weeks of ~~the Mitchell’s Restaurants. The Company and Landry’s have agreed to indemnify each other for losses arising from certain breaches of the Agreement and for certain other liabilities.~~

The Company guaranteed Landry’s lease obligations aggregating $33.8 million under nine of the Mitchell’s Restaurants’ leases. The Company did not record a financial accounting liability for the lease guarantees, because the likelihood of Landry’s defaulting on the lease agreements was deemed to be remote. Landry’s also indemnified the Companyfiscal year 2020 are presented in the ~~event~~following table (in thousands).

Significant changes in the deferred revenue balance and the unearned franchise fees balance during the first twenty-six weeks of ~~a default under any of the leases.~~

The Company accounts for its closed restaurants in accordance with the provisions of FASB ASC Topic 360-10, “Property, Plant and Equipment.” As of December 29, 2014, the Company adopted ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which changed the criteria for reporting discontinued operations and requires additional disclosures about discontinued operations. ASU 2014-08 requires that an entity report as a discontinued operation only a disposal that represents a strategic shift in operations that has a major effect on its operations and financial results. Therefore, individual restaurants which are closed after December 28, 2014 will not be classified as discontinued operations. Prior to the Company’s adoption of ASU 2014-08, when a restaurant was closed or the restaurant was either held for sale or abandoned, the restaurant’s operations were eliminated from the ongoing operations. Accordingly, the operations of such restaurants, net of applicable income taxes,fiscal year 2019 are presented as discontinued operations and prior period operations of such restaurants, net of applicable income taxes, were reclassified. For the thirteen and thirty-nine week periods ended September 24, 2017 and September 25, 2016, all restaurant sales, direct costs and expenses and income taxes attributable to restaurants classified as discontinued operations have been aggregated to a single caption entitled results from discontinued operations, net of income taxes in the ~~condensed consolidated statements of income for all periods presented. Results from discontinued operations, net of income taxes is comprised of the~~ following table (in thousands):.

13 Weeks Ended

39 Weeks Ended

September 24,

September 25,

September 24,

September 25,

2017

2016

2017

2016

Revenues

Mitchell's Restaurants

$
—

$
—

$
—

$
—

Other Restaurants

—

—

—

—

Total revenues

—

—

—

—

Costs and expenses

Recurring costs and expenses

Mitchell's Restaurants

131

(448
)

220

(408
)
Other Restaurants

(17
)

325

(57
)

562

Total costs and expenses

114

(123
)

163

154

(Loss) income before income taxes

(114
)

123

(163
)

(154
)

Income tax (benefit) expense

(43
)

48

(62
)

(60
)

(Loss) income from discontinued operations, net of income taxes

$
(71
)

$
75

$
(101
)

$
(94
)

	Deferred			Unearned
	Revenue			Franchise Fees
Balance at December 30, 2018	$	48,370		$	2,680
Decreases in the beginning balance from gift card redemptions		(19,832	)		—
Increases due to proceeds received, excluding amounts recognized during the period		11,181			—
Decreases due to recognition of franchise development and opening fees		—			(133	)
Increases due to proceeds received for franchise development and opening fees		—			250
Other		389			—
Balance at June 30, 2019	$	40,108		$	2,797

Cash flows from discontinued operations are combined with the cash flows from continuing operations within each of the categories on our condensed consolidated statements of cash flows. We do not anticipate that the sale of the Mitchell’s Restaurants or any of our closed restaurants reported as discontinued operations will have a material impact on the Company’s cash flow during fiscal year 2017.

As of ~~September 24, 2017,~~June 28, 2020, the Company had ~~$30.0~~$135.2 million of outstanding indebtedness under its senior credit facility with approximately ~~$55.4 million~~$208 thousand of borrowings available, net of outstanding letters of credit of approximately $4.6 million. As of ~~September 24, 2017,~~June 28, 2020, the weighted average interest rate on the Company’s outstanding debt was ~~2.7%~~3.9% and the weighted average interest rate on ~~our~~its outstanding letters of credit was ~~1.6%~~2.9%. In addition, the fee on the Company’s unused senior credit facility was ~~0.2%~~0.4%. ~~As of September 24, 2017, the Company was in compliance with all the covenants under its senior credit facility.~~

On February 2, 2017, the Company entered into a credit agreement with Wells Fargo Bank, National Association as administrative agent, and certain other lenders (the ~~Credit Agreement)~~“Credit Agreement”). The Credit Agreement provides for a revolving credit facility of $90.0 million with a $5.0 million subfacility for letters of credit and a $5.0 million subfacility for swingline loans. ~~Subject to the satisfaction of certain conditions and lender consent, the revolving credit facility may be increased up to a maximum of $150.0 million.~~ The Credit Agreement has a maturity date of February 2, 2022. At the Company’s option, revolving loans may bear interest at (i) LIBOR, plus an applicable margin or (ii) the highest of (a) the rate publicly announced by Wells Fargo as its prime rate, (b) the average published federal funds rate in effect on such day plus 0.50% and (c) one month LIBOR plus 1.00%, plus an applicable margin. The applicable margin is based on the Company’s actual leverage ratio (“Consolidated Leverage Ratio”), ranging (a) from 1.50% to 2.25% above the applicable LIBOR rate or (b) at the Company’s option, from 0.50% to 1.25% above the applicable base rate.

On September 18, 2019, the Company entered into the First Amendment to Credit Agreement (the “First Amendment”) which amended its Credit Agreement, dated as of February 2, 2017. The First Amendment, among other changes, increased the amount of the revolving credit facility to $120.0 million. The amounts of the letters of credit subfacility and swingline subfacility remain unchanged at $5.0 million each.

On March 27, 2020, the Company, entered into the “Second Amendment” which amended its Credit Agreement, as amended by the First Amendment, with certain direct and indirect subsidiaries of the Company as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders and other agents party thereto. The Second Amendment, among other changes, increased the amount of the revolving credit facility to $150.0 million and relaxed the Consolidated Leverage Ratio restrictions to 4.0 times Bank Adjusted EBITDA through the first quarter of 2021. The amounts of the letters of credit subfacility and swingline subfacility under the Second Amendment remain unchanged at $5.0 million each.

The Second Amendment prohibits the Company from paying any dividends or repurchasing any shares of its common stock if the Company cannot demonstrate that its Consolidated Leverage Ratio is less than 2.50 to 1.00 (both before and after giving effect to the proposed repurchase or dividend), as determined commencing with the second fiscal quarter of 2020. The Second Amendment also prohibits the Company from making any capital expenditures other than maintenance capital expenditures if the Company cannot demonstrate that its Consolidated Leverage Ratio is less than 2.50 to 1.00 (both before and after giving effect to the proposed capital expenditure), as determined commencing with the second fiscal quarter 2020.

by the Second Amendment also contains events of default customary for credit facilities of this type (with customary grace periods, as applicable), including nonpayment of principal or interest when due; material incorrectness of representations and warranties when made; breach of covenants; bankruptcy and insolvency; unsatisfied ERISA obligations; unstayed material judgment beyond specified periods; default under other material indebtedness; and certain changes of control of the Company. If any event of default occurs and is not cured within the applicable grace period, or waived, the outstanding loans may be accelerated by lenders holding a majority of the commitments under the ~~Credit Agreement~~Second Amendment and the lenders’ commitments may be terminated. The obligations under the ~~Credit Agreement~~Second Amendment are guaranteed by certain of the Company’s subsidiaries ~~(the Guarantors),~~ and are secured by a lien on substantially all of the Company’s personal property assets other than any equity interest in current and future subsidiaries of the Company.

On May 7, 2020, the Company entered into a Third Amendment to Credit Agreement (the “Third Amendment”) which amends its existing Credit Agreement, dated as of February 2, 2017 as amended by the First Amendment thereto, dated as of September 18, 2019 and the Second Amendment thereto dated as of March 27, 2020 with certain direct and indirect subsidiaries of the Company as guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders and other agents party thereto.

The Third Amendment provides relief from the financial covenants to maintain a specified quarterly minimum adjusted Fixed Charge Coverage Ratio and maximum Consolidated Leverage Ratio.

Under the Credit Agreement, the Company had to maintain a Fixed Charge Coverage Ratio of at least 1.25 to 1.00. The Third Amendment waives the requirement to maintain any Fixed Charge Coverage Ratio for the remainder of fiscal year 2020 but, commencing with the fiscal quarter ending March 28, 2021, requires that the Company maintain a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00 on an annualized basis, which will exclude the impact of fiscal year 2020.

The Credit Agreement required the Company to maintain a Consolidated Leverage Ratio of not more than 2.75 to 1.00. The Third Amendment waives any Consolidated Leverage Ratio requirement for the remainder of fiscal year 2020 but, commencing with the fiscal quarter ending March 28, 2021, requires a Consolidated Leverage Ratio based on annualized calculations, which will exclude the impact of fiscal year 2020, not to exceed the following thresholds for the periods indicated:

The Third Amendment requires that the Company meet minimum cash holding requirements (“Minimum Scheduled Cash”) through December 2020 in an amount equal to (a) 50% of the net cash proceeds of any equity issuances by the Company or any of its subsidiaries effected between May 1, 2020 and December 31, 2020 (excluding certain amounts required to be used to make prepayments on loans outstanding under the Amended Credit Agreement) plus (b) the following amount for each month set forth below¹:

¹For each of October 2020 and November 2020, to the extent that any net cash proceeds of any equity issuances by the Company or any of its subsidiaries are included in the calculation of Minimum Scheduled Cash for such month, the amounts for such month in the chart above will be deemed to be $12,000,000 and $10,000,000, respectively.

Interest rates on loans under the Credit Agreement as amended by the Third Amendment are 2.75% and 1.75% above the LIBOR Rate and Base Rate, respectively, and the fee for the daily unused availability under the revolving credit facility is 0.40% until the Calculation Date for the fiscal quarter ending March 28, 2021. Thereafter, interest rate margins and the fee for the unused commitment will be calculated based on the Consolidated Leverage Ratio in accordance with the Credit Agreement. The term “Calculation Date” means the date five (5) ~~Shareholders’ Equity~~business days after the day on which the Company provides a compliance certificate required for its most recently ended fiscal quarter.

~~Subsequent to~~Until the Company can demonstrate compliance with both the minimum Fixed Coverage Charge Ratio and the maximum Consolidated Leverage Ratio following the end of the ~~third~~fiscal quarter ending March 28, 2021, the Third Amendment requires that the Company use 50% of the net cash proceeds of any equity issuances over $30.0 million (other than the exercise price on stock options issued as part of employee compensation) to make mandatory principal prepayments of loans outstanding under the Credit Agreement (with a permanent reduction to the revolving credit commitment under the Credit Agreement in an amount corresponding to the amount of such prepayment), and/or cash collateralize the letter of credit obligations outstanding under the Credit Agreement.

The Third Amendment limits acquisitions by the Company until it can demonstrate compliance with the minimum Fixed Coverage Charge Ratio following the end of the fiscal quarter ending March 28, 2021.

On May 18, 2020, the Company, entered into a Fourth Amendment to Credit Agreement (the “Fourth Amendment”) which amends its existing Credit Agreement, dated as of February 2, 2017, as amended by the First Amendment thereto, dated as of September 18, 2019, the Second Amendment thereto, dated as of March 27, 2020 and the Third Amendment thereto, dated as of May 7, 2020 (the “Existing Credit Agreement” and the Existing Credit Agreement as amended by the Fourth Amendment, the “Amended Credit Agreement”) with certain direct and indirect subsidiaries of the Company as guarantors (the “Guarantors”), Wells Fargo Bank, National Association, as administrative agent, and the lenders (the “Lenders”) and other agents party thereto. Like the Existing Credit Agreement, the Amended Credit Agreement provides for a $150.0 million revolving credit facility with a $5.0 million subfacility of letters of credit and a $5.0 million subfacility for swingline loans.

The Fourth Amendment reduces the amount of net cash proceeds from equity issuances that the Company must retain in order to meet certain liquidity requirements.

As further described herein, the Amended Credit Agreement requires the Company and the Guarantors to hold an amount equal to 50% of the net cash proceeds from equity issuances up to $30 million in aggregate and to use 50% of the net cash proceeds from equity issuances (other than the exercise price on stock options issued as part of employee compensation) in excess of $30 million in aggregate to pay down amounts outstanding under the Amended Credit Agreement and reduce the lender’s commitment under the Amended Credit Agreement.

The Fourth Amendment requires the Company to meet minimum cash holding requirements (“Minimum Scheduled Cash”) through December 2020 in an amount equal to (a) the amount for each month set forth in the table below in the column headed “Cash Requirement Without Equity Issuances”plus (b) 50% of the net cash proceeds of any equity issuances by the Company or any of its subsidiaries effected between May 1, 2020 and December 31, 2020 (excluding certain amounts required to be used to make prepayments on loans outstanding under the Amended Credit Agreement) up to an aggregate amount of $15 million:

¹For each of October 2020 and November 2020, to the extent that any net cash proceeds of any equity issuances by the Company or any of its subsidiaries are included in the calculation of Minimum Scheduled Cash for such month, the amounts for such month in the column headed “Cash Requirement Without Equity Issuances” will be deemed to be $12,000,000 and $10,000,000, respectively.

Until the Company can demonstrate compliance with both its minimum fixed coverage charge ratio and the maximum leverage ratio following the end of the fiscal quarter ending March 28, 2021, the Amended Credit Agreement requires that the Company and the Guarantors use 50% of the net cash proceeds of any equity issuances (other than the exercise price on stock options issued as part of employee compensation) in excess of $30 million in the aggregate (together with any other equity issuances made during such) to make mandatory principal prepayments of loans outstanding under the Amended Credit Agreement (with a permanent reduction to the revolving credit commitment under the Amended Credit Agreement in an amount corresponding to the amount of such prepayment), and/or cash collateralize the letter of credit obligations outstanding under the Amended Credit Agreement.

During the second quarter of fiscal year ~~2017~~2020 the Company received and repaid $20.0 million in loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

In October 2019, the Company’s Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to $60 million of outstanding common stock from time to time. The new share repurchase program replaces the previous share repurchase program announced in ~~April 2016,~~October 2017, which has been terminated. ~~The Company spent $48.0 million to repurchase 2.8 million shares of its common stock, at an average price of $17.05 per share, under its previous share repurchase program.~~ During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017, 719,442~~2020, 902,000 shares were repurchased at an aggregate cost of ~~$14.5~~$13.2 million, or an average cost of ~~$20.21~~$14.66 per share. ~~Share repurchases were accounted~~As of June 28, 2020, $41.6 million remained available for future purchases under the ~~cost method and all repurchased~~share repurchase program.

In May 2020, the Company issued 6,454,838 shares ~~were retired and cancelled. The excess~~ of ~~the purchase~~common stock at a price ~~over the par value~~ of ~~the shares was recorded as a reduction~~$7.75 per share, which resulted in ~~additional paid-in-capital.~~aggregate proceeds of $49.6 million, net of expenses.

The Company’s Board of Directors declared the following dividends during the periods presented (amounts in thousands, except per share amounts):

~~Subsequent~~As a result of the impacts to our business arising from the COVID-19 pandemic, the Company has suspended its share repurchase program and dividend payments. The recent amendments to the ~~end~~Company’s Revolving Credit Facility currently prohibit the payment of ~~the third quarter of fiscal year 2017, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.09 per common~~dividends and ~~restricted~~ share or approximately $2.8 million in the aggregate based on the number of shares currently outstanding, payable on November 22, 2017 to stockholders of record as of the close of business on November 9, 2017.

repurchases until our leverage ratio is less than 2.5 times Bank Adjusted EBITDA. Outstanding unvested restricted stock is not included in common stock outstanding amounts. Restricted stock awards outstanding as of ~~September 24, 2017~~June 28, 2020 aggregated ~~1,184,629~~800,095 shares. Restricted stock units outstanding as of June 28, 2020 aggregated 54,550 shares.

On July 29, 2019 the Company completed the acquisition of substantially all of the assets of the MBR Franchise Acquisition restaurants for a cash purchase price of $18.6 million. The acquisition was funded with borrowings under the Company’s senior credit facility.

The ~~carrying amounts~~assets and liabilities of ~~cash~~the MBR Franchise Acquisition restaurants were recorded at their respective fair values as of the date of the acquisition. The results of operations, financial position and cash ~~equivalents, receivables, prepaid expenses, accounts payable and accrued expenses and other current liabilities~~flows of the MBR Franchise Acquisition restaurants are ~~reasonable estimates of their fair values due to their short duration. Borrowings classified as long-term debt~~included in the Company’s consolidated financial statements as of ~~September 24, 2017~~the date of the acquisition.

As of ~~September 24, 2017~~the franchise and ~~December 25, 2016, the Company had no assets or liabilities measured~~territory rights was based on a ~~recurring or nonrecurring basis subject~~multi-period excess earnings approach and involved projected after-royalty future earnings discounted using a market discount rate, from which a contributory asset charge for net working capital, property and equipment and assembled workforce was subtracted. The reacquired franchise rights will be amortized over a weighted average term of 6.2 years, which reflects the remaining terms of the related franchise agreements, not including renewal options. The reacquired territory rights, which were valued at $3.3 million on the

acquisition date, were impaired during the fiscal quarter ended March 29, 2020. Property and equipment will be depreciated over a period of two to ~~the disclosure requirements of “Fair Value Measurements and Disclosures,” FASB ASC Topic 820.~~twenty years.

The Company has ~~two~~2 reportable segments – the Company-owned steakhouse segment and the franchise operations segment. The Company does not rely on any major customers as a source of revenue. The Company-owned Ruth’s Chris Steak House restaurants, all of which are located in North America, operate within the full-service dining industry, providing similar products to similar customers. Revenues are derived principally from food and beverage sales. As of ~~September 24, 2017,~~June 28, 2020, (i) the Company-owned steakhouse restaurant segment included 7078 Ruth’s Chris Steak House restaurants and ~~two~~3 Ruth’s Chris Steak House restaurants operating under contractual agreements and (ii) the franchise operations segment included 8172 franchisee-owned Ruth’s Chris Steak House restaurants. Segment profits for the Company-owned steakhouse restaurant segments equal segment revenues less segment expenses. Segment revenues for the Company-owned steakhouse restaurants include restaurant sales, management agreement income and other restaurant income. Gift card breakage revenue is not allocated to operating segments. Not all operating expenses are allocated to operating segments. Segment expenses for the Company-owned steakhouse segment include food and beverage costs and restaurant operating expenses. No other operating costs are allocated to the Company-owned steakhouse segment for the purpose of determining segment profits because such costs are not directly related to the operation of individual restaurants. The accounting policies applicable to each segment are consistent with the policies used to prepare the consolidated financial statements. The profit of the franchise operations segment equals franchise income, which consists of franchise royalty fees and franchise opening fees. No costs are allocated to the franchise operations segment.

Segment information related to the Company’s two reportable business segments follows (in thousands):

13 Weeks Ended

39 Weeks Ended

September 24,

September 25,

September 24,

September 25,

2017

2016

2017

2016

Revenues:

Company-owned steakhouse restaurants

$
80,390

$
79,360

$
275,732

$
263,907

Franchise operations

4,218

3,928

12,865

12,463

Unallocated other revenue and revenue discounts

559

486

2,123

1,948

Total revenues

$
85,167

$
83,774

$
290,720

$
278,318

Segment profits:

Company-owned steakhouse restaurants

$
12,476

$
15,088

$
60,674

$
58,859

Franchise operations

4,218

3,928

12,865

12,463

Total segment profit

16,694

19,016

73,539

71,322

Unallocated operating income

559

486

2,123

1,948

Marketing and advertising expenses

(3,197
)

(2,546
)

(9,056
)

(7,134
)
General and administrative costs

(7,096
)

(7,346
)

(23,267
)

(22,068
)
Depreciation and amortization expenses

(3,852
)

(3,435
)

(11,089
)

(9,907
)
Pre-opening costs

(121
)

(574
)

(1,473
)

(1,665
)
Interest expense, net

(197
)

(333
)

(521
)

(799
)
Other income

(6
)

(92
)

33

60

Income from continuing operations before income tax
expense

$
2,784

$
5,176

$
30,289

$
31,757

Capital expenditures:

Company-owned steakhouse restaurants

$
3,600

$
5,238

$
13,592

$
18,351

Corporate assets

77

387

734

743

Total capital expenditures

$
3,677

$
5,625

$
14,326

$
19,094

September 24,

December 25,

2017

2016

Total assets:

Company-owned steakhouse restaurants

$
179,030

$
185,820

Franchise operations

2,383

2,707

Corporate assets - unallocated

6,207

9,021

Deferred income taxes - unallocated

5,452

9,924

Total assets

$
193,072

$
207,472

	13 Weeks Ended						26 Weeks Ended
	June 28,			June 30,			June 28,			June 30,
	2020			2019			2020			2019
Revenues:
Company-owned steakhouse restaurants	$	26,522		$	105,079		$	131,432		$	219,263
Franchise operations		956			4,421			4,582			8,979
Unallocated other revenue and revenue discounts		939			743			939			1,742
Total revenues	$	28,417		$	110,243		$	136,953		$	229,984

Segment profits:
Company-owned steakhouse restaurants	$	(7,781	)	$	24,900		$	10,948		$	53,633
Franchise operations		956			4,421			4,582			8,979
Total segment profit		(6,825	)		29,321			15,530			62,612

Unallocated operating income		939			743			939			1,742
Marketing and advertising expenses		(1,487	)		(4,121	)		(4,925	)		(7,751	)
General and administrative costs		(7,066	)		(8,929	)		(15,095	)		(17,681	)
Depreciation and amortization expenses		(5,522	)		(5,124	)		(11,345	)		(10,092	)
Pre-opening costs		(304	)		(244	)		(781	)		(341	)
Gain on lease modifications		488			—			488			—
Loss on impairment		(4,283	)		—			(12,980	)		—
Interest expense, net		(1,291	)		(417	)		(1,919	)		(822	)
Other income		3			13			36			15
Income (loss) before income tax expense	$	(25,348	)	$	11,242		$	(30,052	)	$	27,682

Capital expenditures:
Company-owned steakhouse restaurants	$	4,185		$	4,594		$	7,952		$	9,690
Corporate assets		89			501			250			1,265
Total capital expenditures	$	4,274		$	5,095		$	8,202		$	10,955

As of December 26, 2016 (the first day of fiscal year 2017), the Company adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718), which affects all entities that issue share-based compensation to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. Therefore, for the thirty-nine weeks of fiscal year 2017, the recognition of excess tax benefits and deficiencies were recognized as income tax benefits or expense on the consolidated statement of income and as an operating activity on the statement of cash flows. Prior toOn May 15, 2018, the Company’s ~~adoption of ASU 2016-09, these tax benefits and deficiencies were recognized as additional paid-in capital on the balance sheet and as~~stockholders approved a ~~financing activity on the statement of cash flows.~~

~~Under~~new 2018 Omnibus Incentive Plan (2018 Plan) which replaced the Amended and Restated 2005 Equity Incentive Plan ~~at September 24, 2017,~~(2005 Plan), which expired on May 30, 2018. The 2018 Plan authorizes 2.5 million shares reserved for future grants. Awards that were previously awarded under the 2005 Plan that are forfeited or cancelled in the future will be made available for grant or issuance under the 2018 Plan. The 1,649,394 shares that were authorized but unissued under the 2005 Plan as of May 15, 2018 were cancelled. As of June 28, 2020, there were ~~19,250~~0 shares of common stock issuable upon exercise of currently outstanding options, ~~1,184,629~~and 275,254 currently outstanding unvested restricted stock awards under the 2005 Plan. As of June 28, 2020, there were 524,841 currently outstanding unvested restricted stock awards and ~~1,806,516~~54,550 restricted stock units under the 2018 Plan. As of June 28, 2020, the 2018 Plan has 2,219,972 shares available for future grants. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017,~~2020, the Company issued ~~251,512~~208,249 restricted stock awards and units to directors, officers and other employees of the Company. Of the ~~251,512~~208,249 restricted stock awards and units issued during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017, 38,220~~2020, 50,419 shares will vest in fiscal year ~~2018, 135,073~~2021, 99,040 shares will vest in fiscal year ~~2019, 48,219~~2022, 50,426 shares will vest in fiscal year ~~2020, 10,000~~2023 and 8,364 shares will vest in ~~2021, 10,000 will vest in 2022 and 10,000 will vest in 2023.~~

fiscal year 2025. Total stock compensation expense recognized during the first ~~thirty-nine~~twenty-six weeks of fiscal years ~~2017~~2020 and ~~2016~~2019 was ~~$5.1~~$4.0 million and ~~$4.3~~$4.1 million, respectively. On July 9, 2020, the Company entered into a Retirement, Transition and Release of Claims Agreement with Michael O’Donnell, the Company’s Executive Chairman. As a result, all unvested restricted stock awards granted to Mr. O’Donnell during his tenure (100,601 shares) will become vested during the third quarter of fiscal year 2020. The Company will recognize $1.3 million of additional stock compensation expense during its third quarter of fiscal year 2020 related to the vesting of Mr. O’Donnell’s 100,601 restricted stock awards.

On March 27, 2020, the CARES Act was enacted. Intended to provide economic relief to those impacted by the coronavirus (COVID-19) pandemic, the CARES Act includes provisions, among others, addressing the carryback of net operating losses (NOLs), temporary modifications to the interest expense deduction limits, and technical amendments for qualified improvement property. Additionally, the CARES Act provides for refundable employee retention tax credits and the deferral of the employer-paid portion of social security taxes. The Company intends to take advantage of the ability to carryback to prior years federal NOLs generated in certain years, as well as certain employment tax incentives contained in the Act.

Income tax expense (benefit) differs from amounts computed by applying the federal statutory income tax rate to income from continuing operations before income taxes as follows:

The ~~Company utilizes~~Employment-related tax credits line in the effective tax rate schedule above is comprised primarily of federal FICA tip ~~credit~~credits which the Company utilizes to reduce its periodic federal income tax expense. A restaurant company employer may claim a credit against ~~the company’s~~its federal income taxes for FICA taxes paid on certain ~~tip~~ wages (the FICA tip credit). The credit against income tax liability is for the full amount of eligible FICA taxes. Employers cannot deduct from taxable income the amount of FICA taxes taken into account in determining the credit.

~~The Company files consolidated and separate income tax returns~~Reflected in the ~~United States~~Other line in the effective tax rate schedule above for the quarter ended June 28, 2020 is a tax benefit of $2.9 million related to the carryback of federal ~~jurisdiction~~NOLs under the CARES Act, and ~~many~~a tax expense of $2.2 million related to changes in valuation allowances against deferred tax assets for certain state ~~jurisdictions, respectively. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations for years before 2012.~~NOL carryforwards.

The following table sets forth the computation of earnings per share (amounts in thousands, except share and per share amounts):

13 Weeks Ended

39 Weeks Ended

September 24,

September 25,

September 24,

September 25,

2017

2016

2017

2016

Income from continuing operations

$
1,767

$
3,508

$
20,657

$
21,347

Income (loss) from discontinued operations, net of income taxes

(71
)

75

(101
)

(94
)
Net income

$
1,696

$
3,583

$
20,556

$
21,253

Shares:

Weighted average number of common shares
outstanding - basic

30,348,180

31,305,952

30,490,554

32,023,814

Weighted average number of common shares
outstanding - diluted

30,877,192

31,737,036

31,040,640

32,437,142

Basic earnings (loss) per common share:

Continuing operations

$
0.06

$
0.11

$
0.68

$
0.67

Discontinued operations

—

—

(0.01
)

—

Basic earnings per common share

$
0.06

$
0.11

$
0.67

$
0.67

Diluted earnings (loss) per common share:

Continuing operations

$
0.06

$
0.11

$
0.67

$
0.66

Discontinued operations

(0.01
)

—

(0.01
)

—

Diluted earnings per common share

$
0.05

$
0.11

$
0.66

$
0.66

	13 Weeks Ended					26 Weeks Ended
	June 28,			June 30,		June 28,			June 30,
	2020			2019		2020			2019
Net income (loss)	$	(17,598	)	$	9,309	$	(21,416	)	$	23,220
Shares:
Weighted average number of common shares outstanding - basic		29,951,332			29,252,651		29,119,296			29,264,076
Weighted average number of common shares outstanding - diluted		29,951,332			29,726,102		29,119,296			29,768,702

Basic earnings (loss) per common share	$	(0.59	)	$	0.32	$	(0.74	)	$	0.79

Diluted earnings (loss) per common share	$	(0.59	)	$	0.31	$	(0.74	)	$	0.78

Diluted earnings per share for the ~~third quarters~~second quarter of fiscal year ~~2017~~2020 and ~~2016~~2019 excludes ~~stock options and~~ restricted shares of 0832,781 and ~~31,845, respectively,~~18,671 which were outstanding during the period but were ~~anti-dilutive. The weighted average~~anti-dilutive and had no exercise ~~prices of the anti-dilutive stock options for the third quarters of fiscal years 2017 and 2016 were $0 per share and $19.14 per share. Dilutive~~

price. Diluted earnings per share for the first ~~thirty-nine~~twenty-six weeks of fiscal ~~years 2017~~year 2020 and ~~2016~~2019 excludes ~~stock options and~~ restricted shares of ~~857~~429,196 and ~~24,981, respectively,~~23,195 which were outstanding during the period but were ~~anti-dilutive. The weighted average~~anti-dilutive and had no exercise ~~prices of the anti-dilutive stock options for the first thirty-nine weeks of fiscal years 2017 and 2016 were $21.60 per share and $19.04 per share, respectively.~~price.

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

The legislation and regulations related to tax and unclaimed property matters are complex and subject to varying interpretations by both government authorities and taxpayers. The Company remits a variety of taxes and fees to various governmental authorities, including excise taxes, property taxes, sales and use taxes, and payroll taxes. The taxes and fees remitted by the Company are subject to review and audit by the applicable governmental authorities which could assert claims for additional assessments. Although management believes that the tax positions are reasonable and consequently there are no accrued liabilities for claims which may be asserted, various taxing authorities may challenge certain of the positions taken by the Company which may result in additional liability for taxes and interest. These tax positions are reviewed periodically based on the availability of new information, the lapsing of applicable statutes of limitations, the conclusion of tax audits, the identification of new tax contingencies, or the rendering of relevant court decisions. An unfavorable resolution of assessments by a governmental authority could negatively impact the Company’s results of operations and cash flows in future periods.

The Company is subject to unclaimed or abandoned property (escheat) laws which require the Company to turn over to certain state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. The Company is subject to audit by individual U.S. states with regard to its escheatment practices.

On February 26, 2018, a former restaurant hourly employee filed a class action lawsuit in the Superior Court of the State of California for the County of Riverside, alleging that the Company violated the California Labor Code and California Business and Professions Code, by failing to pay minimum wages, pay overtime wages, permit required meal and rest breaks and provide accurate wage statements, among other claims. This lawsuit seeks unspecified penalties under the California’s Private Attorney’s General Act in addition to other monetary payments (Quiroz Guerrero v. Ruth’s Hospitality Group, Inc., et al.; Case No RIC1804127). Although the ultimate outcome of this matter, including any possible loss, cannot be predicted or reasonably estimated at this time, we intend to vigorously defend this matter.

The Company currently buys a majority of its beef from ~~two~~2 suppliers. Although there are a limited number of beef suppliers, management believes that other suppliers could provide similar product on comparable terms. A change in suppliers, however, could cause supply shortages and a possible loss of sales, which would affect operating results adversely.

The COVID-19 outbreak has affected and will continue to adversely affect our revenue, operating costs and liquidity, and we cannot predict how long the outbreak will last or what other government responses may occur.

~~On November 2, 2017~~The COVID-19 outbreak has also adversely affected our ability to open new restaurants. Due to the Company entered into an asset purchase agreement with Desert Island Restaurants, L.L.C., Honolulu Steak House, LLC, Maui Steak House LLC, Wailea Steak House LLC, Beachwalk Steak House LLC, Lava Coast Steak House, LLCuncertainty in the economy and ~~Kauai Steak House, LLC (collectively, the “Sellers”)~~ to ~~acquire the six franchised Ruth’s Chris Steak House~~preserve liquidity, we have paused all construction of new restaurants and major remodel projects at existing restaurants. These changes may materially adversely affect our ability to grow our business, particularly if these construction pauses are in ~~Hawaii~~place for a ~~cash purchase price~~significant amount of ~~$35 million, subject~~time.

As a result of the COVID-19 outbreak, we may be unable to ~~certain adjustments.~~secure additional liquidity. The ~~transaction has~~COVID-19 outbreak is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 outbreak lasts. The equity markets in the United States have been ~~approved by our Board of Directors and is subject~~extremely volatile due to the ~~satisfaction~~COVID-19 outbreak, and the Company’s stock price has fluctuated significantly. Continued volatility in the equity markets and our stock price could negatively impact our ability to raise capital.

Our restaurant operations could be further disrupted if large numbers of ~~customary closing conditions~~our employees are diagnosed with COVID-19. If a significant percentage of our workforce is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted, potentially materially adversely affecting our liquidity, financial condition or results of operations. Team members might seek and find other employment during the COVID-19 business interruption, which could materially adversely affect our ability to properly staff and reopen our restaurants with experienced team members when the business interruptions caused by COVID-19 abate or end.

Our suppliers could be adversely impacted by the COVID-19 outbreak. If our suppliers’ employees are unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, we could face shortages of food items or other supplies at our restaurants, and our operations and sales could be adversely impacted by such supply interruptions. We did not pay or delayed rent payments to our landlords during the second quarter of fiscal year 2020. We have had discussions with our landlords to reduce or defer our rent payments. We are unable to predict the outcome of these discussions and the extent to which we will be able to negotiate to reduce or defer rent. With some rent payments being delayed, landlords may terminate our leases or could take other actions that restrict our ability to access or reopen our stores in a timely manner.

Additional government regulations or legislation as a result of COVID-19 in addition to decisions we have made and may make in the future relating to the compensation of and benefit offerings for our restaurant team members could also have an adverse effect on our business. We cannot predict the types of additional government regulations or legislation that may be ~~terminated by the Company or the Sellers if closing has not occurred on or before 120 days following the date~~passed relating to employee compensation as a result of the COVID-19 outbreak.

The Company could experience other potential impacts as a result of the COVID-19 pandemic that are not completely known at this time, including, but not limited to, charges from potential adjustments to the carrying amount of goodwill, indefinite-lived intangibles and long-lived asset ~~purchase agreement.~~impairment charges. Our actual results may differ materially from the Company’s current estimates as the scope of the COVID-19 pandemic evolves, depending largely though not exclusively on the duration of the disruption to its business.

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

This Quarterly Report on Form 10-Q contains “forward-looking statements” that reflect, when made, the Company’s expectations or beliefs concerning future events that involve risks and uncertainties. Forward-looking statements frequently are identified by the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “targeting,” “will be,” “will continue,” “will likely result,” or other similar words and phrases. Similarly, statements herein that describe the Company’s objectives, plans or goals, including with respect to new restaurant openings and acquisitions, capital expenditures, strategy, financial outlook, ~~capital expenditures, liquidity~~cash-burn rate, our effective tax rate, and ~~capital resources,~~ the impact of healthcare inflation and ~~minimum wage legislation, the expected timing of the closing of the Hawaii franchisee acquisition and the expected benefits of the Hawaii franchisee acquisition~~recent accounting pronouncements, also are forward-looking statements. Actual results could differ materially from those projected, implied or anticipated by the Company’s forward-looking statements. Some of the factors that could cause actual results to differ include: the negative impact the COVID-19 pandemic has had and will continue to have on our business, financial condition and results of operations; reductions in the availability of, or increases in the cost of, USDA Prime grade beef, fish and other food items; changes in economic conditions and general trends; the loss of key management personnel; the effect of market volatility on the Company’s stock price; health concerns about beef or other food products; the effect of competition in the restaurant industry; changes in consumer preferences or discretionary spending; labor shortages or increases in labor costs; the impact of federal, state or local government regulations relating to income taxes, unclaimed property, Company employees, the sale or preparation of food, the sale of alcoholic beverages and the opening of new restaurants; political conditions, civil unrest or other developments and risks in the markets where the Company’s restaurants are located; harmful actions taken by the Company’s franchisees; the inability to successfully integrate franchisee acquisitions into the Company’s business operations; economic,

regulatory and other limitations on the Company’s ability to pursue new restaurant openings and other organic growth opportunities; a material failure, interruption or security breach of the Company’s information technology network; ~~repeal or reduction of the federal FICA tip credit;~~ the Company’s indemnification obligations in connection with its sale of the Mitchell’s Restaurants; the Company’s ability to protect

its name and logo and other proprietary information; an impairment in the financial statement carrying value of our goodwill, other intangible assets or property; gains or losses on lease modifications; the impact of litigation; the restrictions imposed by the Company’s credit agreement; ~~and~~ changes in, or the suspension or discontinuation of, the Company’s quarterly cash dividend payments or share repurchase program; ~~the failure or~~and the inability ofto secure additional financing on terms acceptable to the parties to satisfy the closing conditions for the Hawaii franchisee acquisition; unanticipated transaction costs for the Hawaii franchisee acquisition; unexpected delays in closing the Hawaii franchisee acquisition; and the Company’s inability to successfully integrate the Hawaii franchisee restaurants into its operations.Company. For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in Part II, Item1A of this Form 10-Q and the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~25, 2016,~~29, 2019, which is available on the SEC’s website at www.sec.gov. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof. You should not assume that material events subsequent to the date of this Quarterly Report on Form 10-Q have not occurred.

In March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a National Public Health Emergency which has resulted in a significant reduction in revenue at our restaurants due to mandatory restaurant closures, capacity limitations, social distancing guidelines or other containment methods to slow the transmission of the virus that have been mandated by jurisdictions across the world, including federal, state and local governments throughout the United States. As a result of these developments, we are experiencing a significant negative impact on our revenues, results of operations and cash flows.

Due to the government mandates regarding limited or no in-restaurant dining due to COVID-19, some of our restaurant dining rooms are closed. As previously reported, Company operated restaurants were closed in all domestic U.S. locations in April, and the Company transitioned its services to take-out and delivery operations where feasible (56 locations). During May and June, the Company was able to re-open its dining rooms in 59 locations. Over the last several weeks, many states have begun to re-tighten their dining room restrictions. As of July 28, 2020, the Company’s restaurants are operating in several different modes. Currently, 88% (71 of 81) of the Company-owned or managed restaurants are open and 10 remain closed. Of the 71 Company-owned restaurants that are open, 52 are operating with open dining rooms that have capacity restrictions, 15 are operating with outdoor seating only, and four are operating with only take-out and delivery. Many of our franchise locations experienced similar disruptions to their business, and as a result, we waived franchise royalty requirements until their dining rooms re-opened.This is an unprecedented event in our Company’s history and we cannot predict how the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or closure requirements, when our dining rooms will reopen, whether our dining rooms will be required to re-close and what level of customer demand we will experience once our dining rooms are permitted to re-open.

In response to the business disruption caused by the COVID-19 outbreak, we have taken the following actions.

As of July 28, 2020, we had approximately $96.1 million of cash on hand, $135.2 million of borrowings under the Revolving Credit Facility and $4.6 million of outstanding letters of credit.

Unless the context otherwise indicates, all references in this report to the “Company,” “Ruth’s,” “we,” “us,” “our” or similar words are to Ruth’s Hospitality Group, Inc. and its subsidiaries. ~~Ruth’s Hospitality Group, Inc. is a Delaware corporation formerly known as Ruth’s Chris Steak House, Inc., and was founded in 1965.~~

Ruth’s Hospitality Group, Inc. is a restaurant company focused on the upscale dining segment. Ruth’s Hospitality Group, Inc. operates Company-owned Ruth’s Chris Steak House restaurants and sells franchise rights to Ruth’s Chris Steak House franchisees giving the franchisees the exclusive right to operate similar restaurants in a particular area designated in the franchise agreement. As of ~~September 24, 2017,~~June 28, 2020, there were 153 Ruth’s Chris Steak House restaurants, including 7078 Company-owned restaurants, ~~two~~three restaurants operating under contractual agreements and 8172 franchisee-owned restaurants. During the second fiscal quarter of 2020, five Company-owned restaurants and one franchisee-owned restaurant were closed.

On July 29, 2019, the Company completed the acquisition of substantially all of the assets of three franchisee-owned Ruth’s Chris Steak House restaurants located in Philadelphia, PA, King of Prussia, PA and Garden City, NY (the “MBR Franchise Acquisition”) for a cash purchase price of $18.6 million. The acquisition was funded with debt through the Company’s senior credit facility. The results of operations, financial position and cash flows of the MBR Franchise Acquisition are included in the Company’s consolidated financial statements as of the date of the acquisition. For additional information, see Note 7.

The Ruth’s Chris menu features a broad selection of USDA Prime- and other high quality steaks and other premium offerings served in Ruth’s Chris’ signature ~~fashion—“sizzling”~~fashion – “sizzling” and topped with ~~butter—~~butter – complemented by other traditional menu items inspired by our New Orleans heritage. The Ruth’s Chris restaurants reflect over 50 years committed to the core values instilled by our founder, Ruth Fertel, of caring for our guests by delivering the highest quality food, beverages and service in a warm and inviting atmosphere.

All Company-owned Ruth’s Chris Steak House restaurants are located in the United States. The franchisee-owned Ruth’s Chris Steak House restaurants include 21 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, ~~Panama,~~ Singapore ~~Taiwan~~ and the United Arab Emirates. New Company-owned Ruth’s Chris Steak House restaurants opened in Waltham, MA in January 2017 and Cleveland, OH in March 2017 and a new frachisee-owned Ruth’s Chris Steak House restaurant opened in Chengdu, China in September 2017. A new Ruth’s Chris Steak House restaurant operating under a contractual agreement also opened in Tulsa, OK in January 2017. A franchisee-owned Ruth’s Chris Steak House restaurant was closed in San Juan, Puerto Rico in September 2017.Taiwan.

Our business is subject to seasonal fluctuations. Historically, our first and fourth quarters have tended to be the strongest revenue quarters due largely to the year-end holiday season and the popularity of dining out during the fall and winter months.Consequently, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year and comparable restaurant sales for any particular period may decrease.

Our Annual Report on Form 10-K for the fiscal year ended December ~~25, 2016~~29, 2019 provides additional information about our business, operations and financial condition.

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

	13 Weeks Ended						39 Weeks Ended						13 Weeks Ended						26 Weeks Ended
	September 24,			September 25,			September 24,			September 25,			June 28,			June 30,			June 28,			June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Revenues:
Restaurant sales		93.2	%		94.0	%		93.9	%		94.1	%		94.9	%		94.4	%		94.9	%		94.4	%
Franchise income		5.0	%		4.7	%		4.4	%		4.5	%		3.4	%		4.0	%		3.3	%		3.9	%
Other operating income		1.8	%		1.3	%		1.7	%		1.4	%		1.7	%		1.6	%		1.8	%		1.7	%
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Costs and expenses:
Food and beverage costs (percentage of restaurant sales)		31.9	%		30.1	%		30.0	%		29.8	%		29.8	%		27.9	%		29.7	%		28.1	%
Restaurant operating expenses (percentage of restaurant sales)		53.6	%		51.5	%		48.7	%		48.5	%		97.4	%		49.2	%		62.9	%		48.3	%
Marketing and advertising		3.8	%		3.0	%		3.1	%		2.6	%		5.2	%		3.7	%		3.6	%		3.4	%
General and administrative costs		8.3	%		8.8	%		8.0	%		7.9	%		24.9	%		8.1	%		11.0	%		7.7	%
Depreciation and amortization expenses		4.5	%		4.1	%		3.8	%		3.6	%		19.4	%		4.6	%		8.3	%		4.4	%
Pre-opening costs		0.1	%		0.7	%		0.5	%		0.6	%		1.1	%		0.2	%		0.6	%		0.1	%
Gain on lease modifications														(1.7	%)		—			(0.4	%)		—
Loss on impairment														15.1	%		—			9.5	%		—
Total costs and expenses		96.5	%		93.3	%		89.4	%		88.3	%		184.7	%		89.4	%		120.6	%		87.6	%
Operating income		3.5	%		6.7	%		10.6	%		11.7	%
Operating income (loss)														(84.7	%)		10.6	%		(20.6	%)		12.4	%

Other income (expense):
Interest expense, net		(0.2	%)		(0.4	%)		(0.2	%)		(0.3	%)		(4.5	%)		(0.4	%)		(1.4	%)		(0.4	%)
Other		-			(0.1	%)		-			-			0.0	%		0.0	%		0.0	%		0.0	%
Income from continuing operations before income tax expense		3.3	%		6.2	%		10.4	%		11.4	%
Income tax expense		1.2	%		2.0	%		3.3	%		3.7	%
Income from continuing operations		2.1	%		4.2	%		7.1	%		7.7	%
Loss from discontinued operations, net of income taxes		(0.1	%)		0.1	%		-			-
Net income		2.0	%		4.3	%		7.1	%		7.7	%
Income before income taxes														(89.2	%)		10.2	%		(22.0	%)		12.0	%
Income tax expense (benefit)														(27.3	%)		1.8	%		(6.3	%)		1.9	%
Net income (loss)														(61.9	%)		8.4	%		(15.7	%)		10.1	%

~~Third~~Second Quarter Ended ~~September 24, 2017~~June 28, 2020 (13 Weeks) Compared to ~~Third~~Second Quarter Ended ~~September 25, 2016~~June 30, 2019 (13 Weeks)

Overview. Operating income (loss) decreased by ~~$2.6~~$35.7 million ~~or 46.7%,~~ to ~~$3.0~~a loss of $24.1 million for the ~~third~~second quarter of fiscal year ~~2017~~2020 from the ~~third~~second quarter of fiscal year ~~2016.~~2019. Operating ~~income~~loss for the ~~third~~second quarter of fiscal year ~~2017~~2020 was ~~favorably~~unfavorably impacted by a ~~$682~~$77.0 million decrease in restaurant sales, a $4.3 million loss on impairment, a $3.5 million decrease in franchise income, a $1.3 million decrease in other operating income and a $398 thousand increase in ~~restaurant sales~~depreciation and amortization, which was partially offset by a ~~$2.0~~$24.9 million ~~increase~~decrease in ~~restaurant~~ operating expenses, ~~and~~ a ~~$1.6~~$21.0 million ~~increase~~decrease in food and beverage ~~costs. Income from continuing operations~~costs, a $2.6 million decrease in marketing and advertising expenses, a $1.9 million decrease in general and administrative expenses and a $488 thousand gain on lease terminations. Net income decreased from the ~~third~~second quarter of fiscal year ~~2016~~2019 by ~~$1.7~~$26.9 million to ~~$1.8~~a loss of $17.6 million. ~~Net income for the third quarter of fiscal year 2017 decreased from the third quarter of fiscal year 2016 by $1.9 million to $1.7 million.~~

Segment Profits. Segment profitability information is presented in Note 78 to the condensed consolidated financial statements. Not all operating expenses are allocated to operating segments. The Ruth’s Chris Steak House Company-owned restaurants, which are all located in the United States, are managed as an operating segment. The Ruth’s Chris concept operates within the full-service dining industry, providing similar products to similar customers. The franchise operations are reported as a separate operating segment. Segment ~~profits~~profit (loss) for the ~~third~~second quarter of fiscal year ~~2017~~2020 for the Company-owned steakhouse restaurant segment decreased by ~~$2.6~~$32.7 million to ~~$12.5~~a $7.8 million loss from the ~~third~~second quarter of fiscal year ~~2016.~~2019. The decrease was driven primarily by a ~~$1.0~~$78.6 million ~~increase~~decrease in ~~restaurant sales~~revenues offset by a ~~$2.0~~$24.9 million ~~increase~~dollar decrease in restaurant operating expenses and a ~~$1.6~~$21.0 million ~~increase~~decrease in food and beverage costs. Franchise income ~~increased $290 thousand~~decreased $3.5 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 compared to the ~~third~~second quarter of fiscal year ~~2016 primarily due to franchise opening fees of $200 thousand.~~2019.

Restaurant Sales. Restaurant sales ~~increased~~decreased by ~~$682 thousand,~~$77.0 million, or ~~0.9%~~74.1%, to ~~$79.4~~$27.0 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 from the ~~third~~second quarter of fiscal year 2016. The increase was attributable to a $1.9 million increase in restaurant sales at new restaurants offset by a decrease in Company-owned comparable restaurant sales of $1.2 million. Excluding discontinued operations, total

~~operating weeks during the third quarter of fiscal year 2017 increased to 910 from 877 in the third quarter of fiscal year 2016.~~ 2019. Company-owned comparable restaurant sales decreased ~~1.6%, driven~~ by 74.1% which consisted of a 68.6% decrease in traffic and an average check decrease of ~~0.1%~~17.4%. At the end of the second quarter 71 Company-owned Ruth’s Chris

Steak House restaurants were in operation which included 59 restaurants offering limited capacity dining room service and ~~a traffic decrease of 1.5%. During the third quarter of 2017 Hurricanes Harvey~~12 restaurants offering take-out and ~~Irma negatively impacted Company-owned comparable restaurant sales by approximately 150-200 basis points, driven by 64 lost operating days.~~ delivery service only.

Franchise Income. Franchise income ~~increased $290 thousand~~ in the ~~third~~second quarter of fiscal year ~~2017~~2020 decreased $3.5 million compared to the ~~third~~second quarter of fiscal year ~~2016.~~2019. The ~~increase~~reduction in franchise income was ~~primarily~~ due to ~~an increase in~~decreased franchise ~~opening fees~~operations and the forgiveness of ~~$200 thousand.~~the royalties due to dining room closures caused by the COVID-19 pandemic.

Other Operating Income. Other operating income ~~increased $421 thousand~~decreased $1.3 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 compared to the ~~third~~second quarter of fiscal year ~~2016.~~2019. The ~~increase~~decrease in other operating income was primarily due to ~~an increase~~a $529 thousand decrease in breakage income resulting from a reduction in gift card redemptions and a decrease in other operating income generated at the restaurant level of ~~$371~~$416 thousand. In addition, a $376 thousand decrease in income from restaurants operating under contractual agreements, ~~including~~which were similarly impacted by the ~~new location in Tulsa, OK.~~COVID-19 pandemic compared to the second quarter of fiscal year 2019.

Food and Beverage Costs. Food and beverage costs ~~increased $1.6~~decreased $21.0 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 compared to the ~~third~~second quarter of fiscal year ~~2016.~~2019 to $8.0 million. As a percentage of restaurant sales, food and beverage costs increased to ~~31.9%~~29.8% in the ~~third~~second quarter of fiscal year ~~2017~~2020 from ~~30.1%~~27.9% in the ~~third~~second quarter of fiscal year ~~2016. The~~2019 primarily driven by a 5.5% increase in ~~food and beverage costs as a percentage of restaurant sales was primarily due to a 10.9% increase in~~total beef costs.

Restaurant Operating Expenses. Restaurant operating expenses ~~increased $2.0~~decreased $24.9 million, or ~~5.0%~~48.6%, to ~~$42.6~~$26.3 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 from the ~~third~~second quarter of fiscal year ~~2016.~~2019. Restaurant operating expenses, as a percentage of restaurant sales, increased to ~~53.6%~~97.4% in the ~~third~~second quarter of fiscal year ~~2017~~2020 from ~~51.5%~~49.2% in the ~~third~~second quarter of fiscal year ~~2016.~~2019. The increase in restaurant operating expenses as a percentage of restaurant sales was primarily due to ~~storm related inefficiencies~~sales deleveraging as a result of limited restaurant operations caused by COVID-19.

Marketing and Advertising. Marketing and advertising expenses decreased $2.6 million to $1.5 million, in the ~~resulting sales deleveraging. The third~~second quarter of fiscal year ~~2017 had a $1.2 million increase in labor related costs and a $335 thousand benefit in~~2020 from the ~~third~~second quarter of fiscal year ~~2016 related to the settlement of disputed rent costs.~~

~~Marketing and Advertising.~~ ~~Marketing and advertising expenses increased $651 thousand to $3.2 million in the third quarter of fiscal year 2017 from the third quarter of fiscal year 2016.~~2019. The ~~increase~~decrease in marketing and advertising expenses in the ~~third~~second quarter of fiscal year ~~2017~~2020 was ~~primarily~~ attributable to a ~~planned increase~~reduction in ~~advertising spending.~~spending in response to the COVID-19 pandemic in an effort to align promotional spend with the anticipated level of operations.

General and Administrative Costs. General and administrative costs decreased ~~$250 thousand~~$1.9 million to $7.1 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 from the ~~third~~second quarter of fiscal year ~~2016.~~2019. The decrease in general and administrative costs was primarily attributable to a $1.7 million decrease in ~~performance-based compensation.~~wage related expenses. As a percentage of revenue, general and administrative costs increased from 8.1% in the second quarter of fiscal year 2019 to 24.9% in the second quarter of fiscal year 2020 primarily due to revenue deleveraging as a result of limited restaurant operations caused by COVID-19.

Depreciation and Amortization Expenses. Depreciation and amortization expense increased ~~$417~~$398 thousand to ~~$3.9~~$5.5 million in the ~~third~~second quarter of fiscal year ~~2017~~2020 from the ~~third~~second quarter of fiscal year ~~2016~~2019 primarily due to depreciation on new restaurant and remodel assets placed in service within the last twelve months.

Pre-opening Costs. Pre-opening costs were ~~$121~~$304 thousand in the ~~third~~second quarter of fiscal year ~~2017~~2020 primarily due to the recognition of rent expense at four unopened Ruth’s Chris Steak House restaurants that the Company has taken possession of and were originally planned to open during fiscal years 2020 and 2021. Pre-opening costs were $244 thousand in the second quarter of 2019 primarily due to the opening of the Ruth’s Chris Steak House restaurants in Washington D.C., Somerville, MA and Columbus, OH.

Gain on Lease Modifications. During the second quarter of fiscal year 2020, the Company recorded a $488 thousand gain on lease modifications primarily related to the conversion of a lease with a fixed payment stream to a variable payments stream at a Ruth’s Chris Steak House ~~Restaurant in Denver, CO. Pre-opening costs were $574~~restaurant of $663 thousand. This was partially offset by $146 thousand in costs incurred related to the ~~third~~termination of existing leases.

Loss on Impairment. During the second quarter of fiscal year ~~2016 primarily due~~2020 the Company recorded a $4.3 million impairment loss consisting of a $3.9 million impairment of long-lived assets and a $356 thousand impairment of inventory as described further in Note 2 to the ~~planned openings of two Ruth’s Chris Steak House Restaurants, including El Paso, TX, which opened~~condensed consolidated financial statements.

Interest Expense. Interest expense increased $874 thousand to $1.3 million in the ~~third~~second quarter of fiscal year ~~2016.~~

~~Interest Expense.~~ ~~Interest expense decreased $136 thousand~~2020 compared to ~~$197~~$417 thousand in the ~~third~~second quarter of fiscal year ~~2017 from~~2019. The increase relates to higher average debt balances and an increase in the ~~third~~interest rate during the second quarter of fiscal year ~~2016 primarily due~~2020 compared to ~~$78 thousand in lower amortization of capitalized debt costs during~~ the ~~third~~second quarter of fiscal year ~~2017 compared to the third quarter of 2016.~~2019.

Other Income and Expense. During the ~~third~~second quarter of fiscal year ~~2017,~~2020, we recognized other ~~expense~~income of $6$3 thousand. During the ~~third~~second quarter of fiscal year ~~2016~~2019, we recognized other ~~expense~~income of ~~$92~~$13 thousand.

Income Tax Expense (Benefit). During the ~~third~~second quarter of fiscal year ~~2017,~~2020, we recognized an income tax benefit of $7.8 million. During the second quarter of fiscal year 2019, we recognized income tax expense of ~~$1.0 million. During the third quarter of fiscal year 2016, we recognized income tax expense of $1.7~~$1.9 million. The effective tax rate, including the impact of discrete items, increased to ~~36.5%~~a 30.6% benefit for the ~~third~~second quarter of fiscal year ~~2017~~2020 compared to ~~32.2%~~a 17.2% expense for the ~~third~~second quarter of fiscal year ~~2016. The effective tax rate increased in the third quarter of fiscal year 2017~~2019 primarily due to the generation of a ~~discrete state income tax reserve recognized in the quarter.~~pretax loss. Fiscal year ~~2017~~2020 discrete items and other unexpected changes impacting the annual tax expense may cause the effective tax rate for fiscal year ~~2017~~2020 to differ from the effective tax rate for the ~~third quarter 2017.~~

~~Income from Continuing Operations. Income from continuing operations of $1.8 million in the third~~second quarter of fiscal year ~~2017 decreased by $1.7~~2020.

Net Loss. Net loss was $17.6 million ~~compared to~~in the ~~third~~second quarter of fiscal year ~~2016 due~~2020 which reflected a decrease of $26.9 million compared to net income of $9.3 million in the ~~factors noted above.~~

~~Income or Loss from Discontinued Operations, net of income taxes.~~ ~~Loss from discontinued operations, net of income taxes, for the third~~second quarter of fiscal year ~~2017 was $71 thousand compared to income of $75 thousand during the third quarter of fiscal year 2016.~~

The loss in the third quarter of fiscal year 2017 was primarily due to Mitchell’s Restaurants. The income in the third quarter of 2016 was primarily attributable to a $466 thousand benefit from the extinguishment of a liability related to Mitchell’s Restaurant gift cards, partially offset by occupancy costs of $335 thousand from a closed Ruth’s Chris Steak House restaurant.

~~Net Income.~~ ~~Net income was $1.7 million in the third quarter of fiscal year 2017 and decreased by $1.9 million compared to $3.6 million in the third quarter of fiscal year 2016.~~2019. The decrease was ~~largely~~ attributable to the factors noted above.

~~Thirty-nine~~Twenty-six Weeks Ended ~~September 24, 2017~~June 28, 2020 Compared to ~~Thirty-nine~~Twenty-six Weeks Ended ~~September 25, 2016~~June 30, 2019

Overview. Operating income (loss) decreased by ~~$1.7~~$56.7 million ~~or 5.3%,~~ to ~~$30.8~~a loss of $28.2 million for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. Operating income for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 was ~~favorably~~unfavorably impacted by a ~~$11.1~~$87.0 million ~~increase~~decrease in restaurant sales, ~~an increase~~a $13.0 million loss on impairment, a $4.4 million decrease in franchise income, a $1.6 million decrease in other operating income ~~of $899 thousand~~ and ana $1.3 million increase in ~~franchise income of $402 thousand~~depreciation and amortization, which was partially offset by a ~~$6.0~~$22.9 million ~~increase~~decrease in ~~restaurant~~ operating expenses, a ~~$4.0~~$22.2 million ~~increase~~decrease in food and beverage costs, a ~~$1.9~~$2.8 million ~~increase~~decrease in marketing and advertising expenses, a ~~$1.2~~$2.6 million ~~increase~~decrease in general and administrative ~~costs~~expenses and a ~~$1.2 million increase in depreciation and amortization. Income from continuing operations~~$488 thousand gain on lease terminations. Net income decreased from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016~~2019 by ~~$690 thousand~~$44.6 million to ~~$20.7~~a loss of $21.4 million. ~~Net income for the first thirty-nine weeks of fiscal year 2017 decreased from the first thirty-nine weeks of fiscal year 2016 by $697 thousand to $20.6 million.~~

Segment Profits. Segment profitability information is presented in Note 78 to the condensed consolidated financial statements. Not all operating expenses are allocated to operating segments. The Ruth’s Chris Steak House Company-owned restaurants, which are all located in the United States, are managed as an operating segment. The Ruth’s Chris concept operates within the full-service dining industry, providing similar products to similar customers. The franchise operations are reported as a separate operating segment. Segment profits for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 for the Company-owned steakhouse restaurant segment ~~increased~~decreased by ~~$1.8~~$42.7 million to ~~$60.7~~a $10.9 million profit from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. The ~~increase~~decrease was driven primarily by a ~~$11.8~~$87.8 million ~~increase~~decrease in ~~restaurant sales partially~~revenues offset by a ~~$6.0~~$22.9 million ~~increase~~dollar decrease in restaurant operating expenses and a ~~$4.0~~$22.2 million ~~increase~~decrease in food and beverage costs. Franchise income ~~increased $402 thousand~~decreased $4.4 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016 primarily due to royalties from a 4.5% increase in franchise restaurant sales.~~2019.

Restaurant Sales. Restaurant sales ~~increased~~decreased by ~~$11.1~~$87.0 million, or ~~4.2%~~40.1%, to ~~$273.0~~$130.0 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016. The increase was attributable to a $1.8 million increase in~~2019. Company-owned comparable restaurant sales decreased by 42.6% which consisted of a 40.3% decrease in traffic and ~~a $9.3 million increase~~an average check decrease of 3.8%.

Franchise Income. Franchise income in ~~restaurant sales at new restaurants. Excluding discontinued operations, total operating weeks during~~ the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017 increased~~2020 decreased $4.4 million compared to ~~2,715 from 2,605 in~~ the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016. Company-owned comparable restaurant sales increased 0.7%, driven~~2019. The reduction in franchise income was due to decreased franchise operations and the forgiveness of the royalties due to dining room closures caused by ~~an average check increase of 1.1% and a traffic decrease of 0.4%~~the COVID-19 pandemic.

~~Franchise Income. Franchise~~Other operating income ~~increased $402 thousand~~decreased $1.6 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. The ~~increase was primarily due to an increase in royalties from a 4.5% increase in franchise restaurant sales.~~

~~Other Operating Income. Other operating income increased $899 thousand in the first thirty-nine weeks of fiscal year 2017 compared to the first thirty-nine weeks of fiscal year 2016. The increase~~decrease in other operating income was primarily due to ~~an increase~~a $590 thousand decrease in breakage income resulting from a reduction in gift card redemptions and a decrease in other operating income generated at the restaurant level of ~~$687~~$507 thousand. In addition, a $553 thousand decrease in income from restaurants ~~operated~~operating under contractual agreements, ~~including~~which were similarly impacted by the ~~new location in Tulsa, OK and increased gift card breakage revenue~~COVID-19 pandemic compared to the first twenty-six weeks of ~~$175 thousand.~~ fiscal year 2019.

Food and Beverage Costs. Food and beverage costs ~~increased $4.0~~decreased $22.2 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019 to $38.7 million. As a percentage of restaurant sales, food and beverage costs increased to ~~30.0%~~29.7% in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from ~~29.8%~~28.1% in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016. The~~2019 primarily driven by a 3.6% increase in ~~food and beverage costs as a percentage of restaurant sales was primarily due to an increase in~~total beef costs.

Restaurant Operating Expenses. Restaurant operating expenses ~~increased $6.0~~decreased $22.9 million, or ~~4.7%~~21.9%, to ~~$133.0~~$81.8 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. Restaurant operating expenses, as a percentage of restaurant sales, increased to ~~48.7%~~62.9% in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from ~~48.5%~~48.3% in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. The increase in restaurant operating expenses as a percentage of restaurant sales was primarily due to ~~an increase in labor related expenses.~~ sales deleveraging as a result of limited restaurant operations caused by COVID-19.

Marketing and Advertising. Marketing and advertising expenses ~~increased $1.9~~decreased $2.8 million to ~~$9.1~~$4.9 million, in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. The ~~increase~~decrease in marketing and advertising expenses in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 was ~~primarily~~ attributable to a ~~planned increase~~reduction in ~~advertising spending.~~spending during the second quarter in response to the COVID-19 pandemic in an effort to align promotional spend with the anticipated level of operations.

General and Administrative Costs. General and administrative costs ~~increased $1.2~~decreased $2.6 million to ~~$23.3~~$15.1 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019. The ~~increase~~decrease in general and administrative costs was primarily attributable to ~~an increase of $2.0~~a $2.5 million decrease in ~~compensation expense~~wage related expenses and a $434 thousand decrease in travel. These decreases were partially offset by severance costs of $330 thousand in the first twenty-six weeks of fiscal year 2020. As a ~~decrease~~percentage of revenue general and administrative costs increased from 7.7% in ~~professional fees~~the first twenty-six weeks of ~~$997 thousand.~~fiscal year 2019 to 11.0% in the first twenty six weeks of fiscal year 2020 primarily due to revenue deleveraging as a result of limited restaurant operations caused by COVID-19.

Depreciation and Amortization Expenses. Depreciation and amortization expense increased ~~$1.2~~$1.3 million to ~~$11.1~~$11.3 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016~~2019 primarily due to depreciation on new restaurant and remodel assets placed in service within the last twelve months.

Pre-opening Costs. Pre-opening costs were ~~$1.5 million~~$781 thousand in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 primarily due to the recognition of rent expense at four Ruth’s Chris Steak House restaurants that the Company has taken possession of and were originally planned to open during the fiscal years 2020 and 2021 and the recent opening of the Ruth’s Chris Steak House restaurant in Washington D.C. Pre-opening costs were $341 thousand in the second quarter of 2019 primarily due to the planned openings of ~~two~~the Ruth’s Chris Steak House restaurants in ~~Waltham,~~Washington D.C., Somerville, MA and ~~Cleveland,~~Columbus, OH ~~which opened in~~and the opening of the Reno, NV Ruth’s Chris Steak House restaurant.

Gain on Lease Modifications. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020, the Company recorded a $488 thousand gain on lease modification primarily related to the conversion of a lease with a fixed payment stream to a variable payments stream at a Ruth’s Chris Steak House restaurant of $663 thousand. This was partially offset by $146 thousand in costs incurred related to the termination of existing leases.

Loss on Impairment. During the first twenty-six weeks of fiscal year 2020, the Company recorded a $13.0 million impairment loss consisting of a $9.5 million impairment of long-lived assets, a $3.1 million impairment of territory rights and a $356 thousand impairment of inventory as described further in Note 2 to the ~~anticipated opening of our second Denver, CO opening planned for the fourth quarter of 2017. Pre-opening costs were $1.7~~condensed consolidated financial statements.

Interest Expense. Interest expense increased $1.1 million to $1.9 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016 primarily due~~2020 compared to ~~the anticipated openings of four new Company-owned restaurants, including Albuquerque, NM, which opened in May 2016 and El Paso, TX which opened in August 2016.~~

~~Interest Expense.~~ ~~Interest expense decreased $278 thousand to $521~~$822 thousand in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017 from~~2019. The increase relates to higher average debt balances and an increase in the interest rate during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016 primarily due~~2020 compared to ~~lower amortization of capitalized debt costs during~~ the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017.~~2019.

Other Income and Expense. ~~Other income remained relatively unchanged for~~ During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017, compared to~~2020, we recognized other income of $36 thousand. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016.~~2019 we recognized other income of $15 thousand.

Income Tax Expense (Benefit). During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017,~~2020, we recognized an income tax benefit of $8.6 million. During the first twenty-six weeks of fiscal year 2019, we recognized income tax expense of ~~$9.6 million. During the first thirty-nine weeks of fiscal year 2016, we recognized income tax expense of $10.4~~$4.5 million. The effective tax rate, including the impact of discrete items, ~~decreased~~increased to ~~31.8%~~a 28.7% benefit for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 compared to ~~32.8%~~16.1% for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016. The effective tax rate decreased in the first thirty-nine weeks of fiscal year 2017~~2019 primarily due to ~~lower state income taxes recognized in~~ the ~~first thirty-nine weeks.~~generation of a pretax loss. Fiscal year ~~2017~~2020 discrete items and other unexpected changes impacting the annual tax expense may cause the effective tax rate for fiscal year ~~2017~~2020 to differ from the effective tax rate for the first ~~thirty-nine~~twenty-six weeks of ~~2017.~~fiscal year 2020.

~~Income from Continuing Operations. Income from continuing operations of $20.7~~Net Loss. Net loss was $21.4 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017 decreased by $690 thousand~~2020 which reflected a decrease of $44.6 million compared to net income of $23.2 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016 due to the factors noted above.~~

~~Loss from Discontinued Operations, net of income taxes.~~ Loss from discontinued operations, net of income taxes, for the first thirty-nine weeks of fiscal year 2017 was $101 thousand compared to a loss of $94 thousand during the first thirty-nine weeks of fiscal year 2016. The loss in the first thirty-nine weeks of fiscal year 2017 was primarily attributable to Mitchell’s Restaurants. The loss in the first thirty-nine weeks of 2016 was primarily attributable to occupancy costs of $581 thousand from a closed Ruth’s Chris Steak House restaurant, partially offset by a benefit of $466 thousand from the extinguishment of a liability related to Mitchell’s Restaurant gift cards.

~~Net Income.~~ ~~Net income was $20.6 million in the first thirty-nine weeks of fiscal year 2017 and decreased by $697 thousand compared to $21.3 million in the first thirty-nine weeks of fiscal year 2016.~~2019. The decrease was ~~largely~~ attributable to the factors noted above.

~~Our~~During the first twenty-six weeks of fiscal year 2020 our principal sources of cash ~~during~~flow were provided by borrowings from our senior credit facility and our sale of common stock. During the first ~~thirty-nine~~twenty-six weeks of ~~2017 were net cash provided by operating activities and borrowings under~~fiscal year 2020 our ~~prior and current senior credit facilities. Our~~ principal uses of cash ~~during~~flow were repayment of long-term debt, the ~~first thirty-nine weeks~~repurchase of ~~2017 were for~~common stock, capital expenditures, ~~principal repayments~~results of operations and dividend payments.

In order to improve our liquidity position, we have fully drawn the $140 million capacity of our Revolving Credit Facility. We also sold shares of common stock resulting in a $49.6 net million cash inflow. Additionally, we are proactively taking steps to increase available cash including, but not limited to, targeted reductions in discretionary operating expenses and capital expenditures, suspending dividends and utilizing funds available under our ~~senior credit facility, stock repurchases and dividend payments. Cash flows from discontinued operations are combined with~~existing Revolving Credit Facility.

During the ~~cash flows from continuing operations within each of the categories on our statement of cash flows.~~

~~Subsequent to the end of the third~~fourth quarter of fiscal year ~~2017~~2019 our Board of Directors approved a new share repurchase program authorizing us to repurchase up to $60 million of outstanding common stock from time to time. The new share repurchase program replaces the previous share repurchase program announced in April 2016, which has been retired. We spent $48.0 million to repurchase 2.8 million shares of its common stock, at an average price of $17.02 per share, under its previous share repurchase program. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017,~~2020 and prior to the World Health Organization’s declaration of the COVID-19 pandemic we repurchased ~~719,442~~902,000 shares at an aggregate cost of ~~$14.5~~$13.2 million or an average cost of ~~$20.21~~$14.66 per share. All repurchased shares were retired and cancelled.

~~During~~We did not pay a dividend during the second quarter of fiscal year ~~2013, we commenced paying quarterly cash dividends to holders of common and restricted stock. We paid~~2020. As a quarterly cash dividend of $0.09 per share, or $2.9 million in the aggregate during the first and second quarter of fiscal year 2017 and $2.8 million in the third quarter of fiscal year 2017. On November 3, 2017, we announced that our Board of Directors declared a quarterly cash dividend of $0.09 per share, or $2.8 million in the aggregate, to be paid on November 22, 2017 to common and restricted stockholders of record asresult of the ~~close of~~impacts to our business ~~on November 9, 2017. Future dividends will be subject to~~arising from the ~~approval of our Board of Directors.~~

~~We believe that our borrowing ability under our new senior credit facility coupled with our anticipated cash flow from operations should provide us with adequate liquidity for the next 12 months.~~COVID-19 pandemic, share purchases and dividend payments have been indefinitely suspended.

As of ~~September 24, 2017,~~June 28, 2020, we had ~~$30.0~~$135.2 million of outstanding indebtedness under our senior credit facility with approximately ~~$55.4 million~~$208 thousand of ~~borrowings available,~~availability, net of outstanding letters of credit of approximately $4.6 million. As of ~~September 24, 2017,~~June 28, 2020, the weighted average interest rate on our outstanding debt was ~~2.7%~~3.9% and the weighted average interest rate on our outstanding letters of credit was ~~1.6%~~2.9%. In addition, the fee on the unused portion of our senior credit facility was ~~0.2%~~0.4%.

On February 2, 2017, wethe Company entered into a credit agreement with Wells Fargo Bank, National Association as administrative agent, and certain other lenders (the Credit Agreement) ~~governing a new senior credit facility that replaced the prior credit facility.~~. The Credit Agreement provides for a revolving credit facility of $90.0 million with a $5.0 million subfacility for letters of credit and a $5.0 million subfacility for swingline loans. ~~Subject to the satisfaction of certain conditions and lender consent, the revolving credit facility may be increased up to a maximum of $150.0 million.~~ The Credit Agreement has a maturity date of February 2, 2022. At ~~our~~the Company’s option, revolving loans may bear interest at (i) LIBOR, plus an applicable margin or (ii) the highest of (a) the rate publicly announced by Wells Fargo as its prime rate, (b) the average published federal funds rate in effect on such day plus 0.50% and (c) one month LIBOR plus 1.00%, plus an applicable margin. The applicable margin is based on ~~our~~the Company’s actual leverage ratio (“Consolidated Leverage Ratio”), ranging (a) from 1.50% to 2.25% above the applicable LIBOR rate or (b) at ~~our~~the Company’s option, from 0.50% to 1.25% above the applicable base rate.

The Credit Agreement, as amended by the Second Amendment contains customary representations and affirmative and negative covenants (including limitations on indebtedness and liens) as well as financial covenants requiring a minimum fixed coverage charge ratio (“Fixed Charge Coverage Ratio”) and limiting ~~our consolidated leverage ratio. As of September 24, 2017, we were in compliance with all of~~ the ~~covenants in the Credit Agreement.~~Company’s Consolidated Leverage Ratio. The Credit Agreement, as amended by the Second Amendment also contains events of default customary for credit facilities of this type (with customary grace periods, as applicable), including nonpayment of principal or interest when due; material incorrectness of representations and warranties when made; breach of covenants; bankruptcy and insolvency; unsatisfied ERISA obligations; unstayed material judgment beyond specified periods; default under other material indebtedness; and certain changes of control of the Company. If any event of default occurs and is not cured within the applicable grace period, or waived, the outstanding loans may be accelerated by lenders holding a majority of the commitments under the ~~Credit Agreement~~Second Amendment and the lenders’ commitments may be terminated. The obligations under the ~~Credit Agreement~~Second Amendment are guaranteed by certain of ~~our~~the Company’s subsidiaries ~~(the Guarantors),~~ and are secured by a lien on substantially all of ~~our~~the Company’s personal property assets other than any equity interest in current and future subsidiaries of the Company.

The Third Amendment provides relief from the financial covenants to maintain a specified quarterly minimum adjusted Fixed Charge Coverage Ratio and maximum Consolidated Leverage Ratio.

Under the Credit Agreement, ~~restricted junior payments,~~the Company had to maintain a Fixed Charge Coverage Ratio of at least 1.25 to 1.00. The Third Amendment waives the requirement to maintain any Fixed Charge Coverage Ratio for the remainder of fiscal year 2020 but, commencing with the fiscal quarter ending March 28, 2021, requires that the Company maintain a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00 on an annualized basis, which ~~include~~will exclude the impact of fiscal year 2020.

The Third Amendment requires that the Company meet minimum cash ~~dividend payments, repurchases~~holding requirements (“Minimum Scheduled Cash”) through December 2020 in an amount equal to (a) 50% of ~~our~~the net cash proceeds of any equity ~~securities~~issuances by the Company or any of its subsidiaries effected between May 1, 2020 and ~~payments~~December 31, 2020 (excluding certain amounts required to be used to make prepayments on loans outstanding under the Amended Credit Agreement) plus (b) the following amount for each month set forth below¹:

Interest rates on loans under the Credit Agreement as amended by the Third Amendment are 2.75% and 1.75% above the LIBOR Rate and Base Rate, respectively, and the fee for the daily unused availability under the revolving credit facility is 0.40% until the Calculation Date for the fiscal quarter ending March 28, 2021. Thereafter, interest rate margins and the fee for the unused commitment will be calculated based on the Consolidated Leverage Ratio in accordance with the Credit Agreement. The term “Calculation Date” means the date five (5) business days after the day on which the Company provides a compliance certificate required for its most recently ended fiscal quarter.

Until the Company can demonstrate compliance with both the minimum Fixed Coverage Charge Ratio and the maximum Consolidated Leverage Ratio following the end of the fiscal quarter ending March 28, 2021, the Third Amendment requires that the Company use 50% of the net cash proceeds of any equity issuances over $30.0 million (other than the exercise price on stock options issued as part of employee compensation) to make mandatory principal prepayments of ~~subordinated indebtedness, made subsequent~~loans outstanding under the Credit Agreement (with a permanent reduction to the revolving credit commitment under the Credit Agreement in an amount corresponding to the amount of such prepayment), and/or cash collateralize the letter of credit obligations outstanding under the Credit Agreement.

The Third Amendment limits acquisitions by the Company until it can demonstrate compliance with the minimum Fixed Coverage Charge Ratio following the end of the fiscal quarter ending March 28, 2021.

The Fourth Amendment changes the amount of net cash proceeds from equity issuances that the Company must retain in order to meet certain liquidity requirements.

¹For each of October 2020 and November 2020, to the extent that any net cash proceeds of any equity issuances by the Company or any of its subsidiaries are ~~limited~~included in the calculation of Minimum Scheduled Cash for such month, the amounts for such month in the column headed “Cash Requirement Without Equity Issuances” will be deemed to ~~$100.0 million if our consolidated~~be $12,000,000 and $10,000,000, respectively.

Until the Company can demonstrate compliance with both its minimum fixed coverage charge ratio and the maximum leverage ratio ~~is greater than or equal to 2.00:1.00, and are not limited in amount if our consolidated leverage ratio is less than 2.00:1.00. As~~following the end of the ~~date~~fiscal quarter ending March 28, 2021, the Amended Credit Agreement requires that the Company and the Guarantors use 50% of ~~this Quarterly Report~~the net cash proceeds of any equity issuances (other than the exercise price on ~~Form 10-Q, $23.1~~stock options issued as part of employee compensation) in excess of $30 million in ~~junior restricted payments have been~~the aggregate (together with any other equity issuances made ~~since February 2, 2017.~~during such) to make mandatory principal prepayments of loans outstanding under the Amended Credit Agreement (with a permanent reduction to the revolving credit commitment under the Amended Credit Agreement in an amount corresponding to the amount of such prepayment), and/or cash collateralize the letter of credit obligations outstanding under the Amended Credit Agreement.

The following table presents a summary of our net cash provided by (used in) operating, investing and financing activities (in thousands):

Operating Activities. Operating activities used cash ~~inflows pertain primarily to restaurant sales~~during the first twenty-six weeks of fiscal year 2020 and ~~franchise income.~~provided cash during the first twenty-six weeks of 2019. Operating cash outflows pertain primarily to expenditures for food and beverages, restaurant operating expenses, marketing and advertising, general and administrative costs and income taxes. ~~Operating activities provided~~During the first twenty-six weeks of fiscal year 2020, the Company had $44.6 million less in net income compared to the first twenty-six weeks of fiscal year 2019 due largely to the impact of COVID-19 and also had increases in deferred taxes and tax related receivables of $9.0 million. This reduction in cash flow ~~during~~was partially offset by the Company having a $13.0 non-cash impairment, the collecting an additional $10.1 in accounts receivable and $3.6 million fewer redemptions of gift cards in the first ~~thirty-nine~~twenty-six weeks of ~~both fiscal years 2017 and 2016 primarily because operating revenues exceeded cash-based expenses.~~2020 than in the first twenty-six weeks of 2019.

Investing Activities. Cash used in investing activities aggregated ~~$14.3~~$8.2 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 compared with ~~$18.3~~$11.0 million cash used in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016. Investing cash outflows during the first thirty-nine weeks of both fiscal years 2017 and 2016 pertained primarily to capital expenditure projects.~~2019. Cash used in investing projects during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017~~2020 primarily pertained to ~~$6.7~~$5.1 million for new restaurants that opened during 2019 and 2020 or were originally anticipated to open in 2020 or 2021 and $2.5 million for restaurant remodel and capital replacement projects. Cash used in investing activities during the first twenty-six weeks of fiscal year 2019 primarily pertained to $7.3 million for restaurant remodel and capital replacement projects and ~~$6.8~~$2.4 million for new ~~restaurants. Cash used in investing~~restaurants anticipated to open that year.

Financing Activities. Financing activities provided cash during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016 primarily pertained to $8.6 million for restaurant remodel projects~~2020 and ~~$9.5 million for new restaurants.~~

~~Financing Activities. Financing activities~~ used cash during the first ~~thirty-nine weeks of both fiscal years 2017 and 2016. During the first thirty-nine~~twenty-six weeks of fiscal year ~~2017,~~2019. During the first twenty-six weeks of fiscal year 2020, we: increased debt by $71.2 million; sold common stock for $49.6 million, used ~~$14.5~~$13.2 million to repurchase common stock; paid dividends of ~~$8.6~~$4.4 million; ~~increased the debt outstanding under our senior credit facility by $5.0 million; and~~ paid ~~$2.1~~$1.1 million in employee taxes in connection with the vesting of restricted ~~stock~~stock; and ~~the exercise of stock options.~~paid $582 thousand in deferred financing costs. We paid the ~~$2.1~~$1.1 million in taxes in connection with the vesting of restricted stock ~~and the exercise of stock options~~ because some recipients elected to satisfy their individual tax withholding obligations by having us withhold a number of vested shares of restricted ~~stock and/or a number of shares otherwise issuable pursuant to stock options.~~stock. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2016,~~2019, we: paid dividends of $7.9 million; used ~~$40.0~~$7.1 million to repurchase common stock; ~~increased the debt outstanding under our senior credit facility by $38.0 million;~~ paid ~~dividends of $7.0 million; and paid $1.5~~$3.1 million in ~~employee~~ taxes ~~related to~~in connection with the vesting of restricted stock ~~based compensation.~~and exercise of stock options and increased debt by $4.0 million.

As of ~~September 24, 2017,~~June 28, 2020, we did not have any off-balance sheet arrangements.

The preparation of our financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the periods presented. Our Annual Report on Form 10-K for the fiscal year ended December ~~25, 2016~~29, 2019 includes a summary of the critical accounting policies and estimates that we believe are the most important to aid in the understanding our financial results. There have been no material changes to these critical accounting policies and estimates that impacted our reported amounts of assets, liabilities, revenues or expenses during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2017.~~2020.

The Company is exposed to market risk from fluctuations in interest rates. For fixed rate debt, interest rate changes affect the fair market value of such debt but do not impact earnings or cash flows. Conversely, for variable rate debt, including borrowings under the Company’s senior credit facility, interest rate changes generally do not affect the fair market value of such debt, but do impact future earnings and cash flows, assuming other factors are held constant. At ~~September 24, 2017,~~June 28, 2020, the Company had ~~$30.0~~$135.2 million in variable rate

debt outstanding. The Company currently does not use financial instruments to hedge its risk to market fluctuations in interest rates.Holding other variables constant (such as debt levels), a hypothetical immediate one percentage point change in interest rates would be expected to have an impact on pre-tax earnings and cash flows for fiscal year ~~2017~~2020 of approximately ~~$300 thousand.~~$1.4 million.

The Company believes that fluctuations in foreign exchange rates do not present a material risk to its operations due to the relatively small amount of franchise income it receives from outside the U.S. During the first ~~thirty-nine~~twenty-six weeks of fiscal years ~~2017~~2020 and ~~2016,~~2019, franchise income attributable to international locations was approximately ~~$2.1~~$830 thousand and $1.4 million, ~~in each year.~~respectively, which is less than 1% of total annual revenue.

The Company is exposed to market price fluctuations in beef and other food product prices, which in the past have been volatile and have impacted the Company’s food and beverage costs. As the Company typically sets its menu prices in advance of its beef and other food product purchases, the Company cannot quickly react to changing costs of beef and other food items. To the extent that the Company is unable to pass the increased costs on to its guests through price increases, the Company’s results of operations would be adversely affected. ~~As of September 24, 2017, the Company has entered into negotiated set pricing for approximately 25% of its beef~~

~~requirements for the remainder of fiscal year 2017.~~ The market for USDA Prime grade beef is particularly volatile. If prices increase, or the supply of beef is reduced, operating margin could be materially adversely affected. Holding other variables constant, a hypothetical 10% fluctuation in beef prices would have an approximate impact on pre-tax earnings ~~ranging from $0.5 million to $1.0~~of approximately $1.5 million for ~~the remainder of~~ fiscal year ~~2017.~~2020.

From time to time, the Company enters into purchase price agreements for other lower-volume food products, including seafood. In the past, certain types of seafood have experienced fluctuations in availability. Seafood is also subject to fluctuations in price based on availability, which is often seasonal. If certain types of seafood are unavailable, or if the Company’s costs increase, the Company’s results of operations could be adversely affected.

The Company is exposed to market price fluctuations related to the cost of providing healthcare to its employees. Claim trends are predicted to outpace inflation throughout the ~~upcoming~~ year. Pharmacy costs are also rising in excess of general and medical cost inflation. If prices increase, or the Company experiences significantly more claims, operating margin could be materially adversely affected.Holding other variables constant, a hypothetical 10% fluctuation in healthcare costs would have an approximate impact on pre-tax earnings of approximately ~~$250~~$800 thousand for ~~the remainder of 2017.~~fiscal year 2020.

The Company believes that general inflation, excluding increases in food, employee wages and employee health plan costs, has not had a material impact on its results of operations in recent years. Additionally, increases in statutory minimum wage rates may increase our operating costs. Recently, governmental entities acted to increase minimum wage rates in states where Company-owned restaurants are located. The increased minimum wage rates are expected to increase employee compensation and related taxes by approximately ~~$1.2 million~~$700 thousand in fiscal year ~~2017~~2020 compared to fiscal year ~~2016.~~2019. Also, the U.S. government may consider legislation to increase the federal minimum wage rate, which, if enacted, would further increase employee compensation and related taxes.

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of ~~September 24, 2017.~~June 28, 2020. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of ~~September 24, 2017~~June 28, 2020 to ensure that information required to be disclosed in reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed by the Company is accumulated and communicated to the Company’s management to allow timely decisions regarding the required disclosure.

During the fiscal quarter ended ~~September 24, 2017,~~June 28, 2020 there was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that in the Company’s judgment has materially affected, or is reasonably likely to

materially affect, the Company’s internal control over financial reporting. We have transitioned some of our employees, primarily home office support functions to a remote work environment in an effort to mitigate the spread of COVID-19. This has not had a significant impact on the Company’s internal controls over financial reporting and we are prepared to operate in this manner for the foreseeable future, if necessary.

~~From time to time, the Company is involved in various disputes and litigation matters that arise~~See Note 12 in the ~~ordinary course~~notes to the condensed consolidated financial statements included in Item 1. “Financial Statements” for a summary of ~~business. While litigation is subject to uncertainties and the outcome of litigated matters is not predictable with assurance, the Company is not aware of any~~ legal ~~proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition or results of operations.~~proceedings.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the ~~risk~~ factors ~~included~~discussed in ~~the Company’s~~Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December ~~25, 2016.~~29, 2019, which could materially affect our business, financial condition or future results. The ~~impact~~COVID-19 pandemic has heightened, and in some cases manifested, certain of ~~circumstances~~the risks we normally face in operating our business, including those disclosed in the 2019 10-K, and ~~events~~the risk factor disclosure in the 2019 10-K is qualified by the information relating to COVID-19 that is described in ~~such~~this Quarterly Report on Form 10-Q, including the new risk factor set forth below. There have been no other material changes from the risk factors previously disclosed in the 2019 10-K.

The COVID-19 outbreak has disrupted and is expected to continue to disrupt our business, which has and could ~~result in significant adverse effects on~~continue to materially affect our operations, financial ~~position,~~condition and results of operations for an extended period of time.

The government responses related to COVID-19 across the world and ~~cash flows.~~our Company’s responses to the outbreak have all disrupted and will continue to disrupt our business. In the United States, containment efforts to slow the transmission of the virus that have been mandated by federal, state and local government, including encouraging individuals to practice social distancing, restricting gathering in groups, and, in some areas, completely restricting individuals from non-essential movements outside of their homes. In response to the COVID-19 outbreak and these changing conditions, we closed the dining rooms in all of our restaurants during the month of April and transitioned its services to take-out and delivery operations in 69% of its restaurants (56 of 81 Company-owned and managed restaurants). By the end of June the Company was able to re-open 88% (71 of 81) of its restaurants, which included opening dining rooms in 59 capacity restricted locations. Over the past several weeks, while some states have begun to re-tighten their dining room restrictions, if the COVID-19 pandemic were to reaccelerate, we may be forced to re-close our dining rooms, which would cause us to lose revenue and incur additional expenses. Until very recently, we have been operating exclusively on a take-out and delivery model in restaurants where it is permitted by local regulations and economically viable. We have closed certain restaurants, modified work hours for our team members and identified and implemented cost savings measures throughout our operations. The COVID-19 outbreak and these responses have affected and will continue to adversely affect our revenue and operating costs and we cannot predict how long the outbreak will last or what other government responses may occur.

22The COVID-19 outbreak has also adversely affected our ability to open new restaurants. Due to the uncertainty in the economy and to preserve liquidity, we have paused all construction of new restaurants and major remodel projects at existing restaurants. These changes may materially and adversely affect our ability to grow our business, particularly if these construction pauses are in place for a significant amount of time.

As a result of the COVID-19 outbreak, we may be unable to secure additional liquidity. In order to improve our liquidity position, we have fully drawn the $140 million capacity of our Revolving Credit Facility. If we fail to comply with our financial covenants, including a minimum liquidity covenant through the end of 2020, and are unable to remedy or obtain a waiver or amendment, an event of default would result. The COVID-19 outbreak is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 outbreak lasts. The equity markets in the United States have been extremely volatile due to the COVID-19 outbreak and the Company’s stock price has fluctuated significantly. Continued volatility in the equity markets and our stock price could negatively impact our ability to raise capital.

Our operations could be further disrupted if large numbers of our employees or members of our senior management team are diagnosed with COVID-19. If a significant percentage of our workforce is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted, potentially materially adversely affecting our liquidity, financial condition or results of operations. Team members might seek and find other employment during the COVID-19 business interruption, which could materially adversely affect our ability to properly staff and reopen our restaurants with experienced team members when the business interruptions caused by COVID-19 abate or end.

Our suppliers could be adversely impacted by the COVID-19 outbreak. If our suppliers’ employees are unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, we could face shortages of food items or other supplies at our restaurants and our operations and sales could be adversely impacted by such supply interruptions. We did not pay rent to many of our landlords during the second quarter of fiscal year 2020. We have begun discussions with our landlords to reduce or modify our rent payments. We are unable to predict the outcome of these discussions and the extent to which we will be able to negotiate to reduce or modify rent obligations. With rent payments being delayed, landlords may terminate our leases or could take other actions that restrict our ability to access or reopen our stores in a timely manner. We have legal proceedings underway with three landlords. We intend to pursue these matters vigorously but there can be no assurance that we will prevail in litigation.

We have transitioned some of our employees, primarily home office support functions, to a remote work environment in an effort to mitigate the spread of COVID-19. We are prepared to operate in this manner for the foreseeable future, if necessary. While we have business continuity procedures in place to guide our response to a crisis, our attention may be diverted away from normal operations and our resources may be constrained. In April, we received a cyber threat from an anonymous source. We engaged a third party to assess the threat and confirmed that our IT systems were secure. We continue to monitor data security carefully but there can be no assurance that we would detect a cyber incident or prevent cyberattacks from penetrating our systems.

Additional government regulations or legislation as a result of COVID-19 in addition to decisions we have made and may make in the future relating to the compensation of and benefit offerings for our restaurant team members could also have an adverse effect on our business. We cannot predict the types of additional government regulations or legislation that may be passed relating to employee compensation as a result of the COVID-19 outbreak.

We could experience other potential impacts as a result of the COVID-19 pandemic that are not completely known at this time, including, but not limited to, charges from potential adjustments to the carrying amount of goodwill, indefinite-lived intangibles and long-lived asset impairment charges. Our actual results may differ materially from the Company’s current estimates as the scope of the COVID-19 pandemic evolves, depending largely though not exclusively on the duration of the disruption to our business.

Stock repurchase activity during the ~~fiscal~~second quarter ended ~~September 24, 2017~~June 28, 2020 was as follows:

~~Subsequent to~~On November 1, 2019, the ~~end of the third quarter of fiscal year 2017 the Company’s~~Company announced that its Board of Directors approved a new share repurchase program ~~under which the Company is authorized~~authorizing us to repurchase up to $60 million of outstanding common stock from time to time in the open market, through negotiated transactions or otherwise (including, without limitation, the use of Rule 10b5-1 plans), depending on share price, market conditions and other factors. The new share repurchase program ~~replaces~~replaced the Company’s previous share repurchase program announced in ~~April 2016,~~November 2017, which has been ~~retired.~~ terminated. We did not repurchase shares during the second quarter of fiscal year 2020. The ~~previous share repurchase program had permitted the repurchase of up to $60 million of outstanding common stock, of which approximately $12.0 million remained unused upon its retirement. The~~new share repurchase program does not obligate the Company to repurchase any dollar amount or number of its shares, and the program has no termination date. The Company intends to conduct any open market share repurchase activities in compliance with the safe harbor provisions of Rule 10b-18 of the Exchange Act. During the fiscal quarter ended September 24, 2017, 319,442 shares were repurchased via open market transactions at an aggregate cash cost of $6.1 million. During the fiscal quarter ended September 25, 2016, 553,341 shares were repurchased via open market transactions at an aggregate cash cost of $8.3 million. The Company’s ability to make future stock purchases under the program is currently limited by our Credit Agreement. Under our Credit Agreement, we are limited to $100.0 million of restricted junior ~~stock~~ payments, which include cash dividends, repurchases of common stock and prepayments of subordinated indebtedness, if our consolidated leverage ratio is greater than or equal to 2.00:1.00. As of ~~September 24, 2017, $23.1~~June 28, 2020, $126.4 million of such payments had been made.As a result of the impacts to our business arising from the COVID-19 pandemic, share purchases and dividend payments have been indefinitely suspended.

~~None.~~Effective as of August 3, 2020, the Compensation Committee of the Board of Directors approved the restoration of (1) the base salaries of the Company’s Chief Executive Officer and other named executive officers and (2) the cash retainer fees of non-employee members of the Board, in each case to the amounts that were in effect prior to the temporary reductions implemented in response to COVID-19 and disclosed in the Form 8-K dated March 30, 2020. These actions were taken in light of the number of restaurants that are now reopened, the performance of those restaurants, the steps taken to manage liquidity and expenses and the substantial increase in responsibility of the executive team during this time.

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.

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

1030 W. Canton Avenue, Suite 100, Winter Park, FL	32789
(Address of principal executive offices)	(Zip code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	RUTH	Nasdaq

Large accelerated filer	☐☒	Accelerated ~~filer~~Filer	☒☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

		Emerging growth company	☐


		Page
Part I — Financial Information		3

Item 1	Financial Statements:	3

	Condensed Consolidated Balance Sheets as of ~~September 24, 2017~~June 28, 2020 and December ~~25, 2016~~29, 2019	3

	Condensed Consolidated Statements of ~~Income~~Operations for the Thirteen and ~~Thirty-nine~~Twenty-six Week Periods ended ~~September 24, 2017~~June 28, 2020 and ~~September 25, 2016~~June 30, 2019	4

	Condensed Consolidated Statements of Shareholders’ Equity for the ~~Thirty-nine~~Thirteen and Twenty-six Week Periods ended ~~September 24, 2017~~June 28, 2020 and ~~September 25, 2016~~June 30, 2019	5

	Condensed Consolidated Statements of Cash Flows for the ~~Thirty-nine~~Twenty-six Week Periods ended ~~September 24, 2017~~June 28, 2020 and ~~September 25, 2016~~June 30, 2019	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1420

Item 3	Quantitative and Qualitative Disclosures about Market Risk	2130

Item 4	Controls and Procedures	2231

Part II — Other Information		2232

Item 1	Legal Proceedings	2232

Item 1A	Risk Factors	2232

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	2333

Item 3	Defaults Upon Senior Securities	2333

Item 4	Mine Safety Disclosures	2334

Item 5	Other Information	2334

Item 6	Exhibits	2334

Signatures		2535

		Fair Value as of June 28, 2020				Significant Other Observable Inputs (Level 3)				Total Losses on Impairment
Long-lived assets		$	—			$	—			$	3,927

	Operating Leases
2020, excluding first twenty-six weeks ended June 28, 2020	$	14,239
2021		28,581
2022		27,959
2023		25,112
2024		24,966
Thereafter		228,441
Total future minimum rental commitments		349,298
Imputed interest		(106,322	)
	$	242,976

	26 Weeks Ended		26 Weeks Ended
	June 28, 2020		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13,393	$	13,054
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	13,309	$	33,658

13 Weeks Ended June 28, 2020:	Domestic		International		Total Revenue
Restaurant sales	$	26,978	$	—	$	26,978
Franchise income		695		261		956
Other operating income		483		—		483
Total revenue	$	28,156	$	261	$	28,417


13 Weeks Ended June 30, 2019:	Domestic		International		Total Revenue
Restaurant sales	$	104,017	$	—	$	104,017
Franchise income		3,718		703		4,421
Other operating income		1,805		—		1,805
Total revenue	$	109,540	$	703	$	110,243

26 Weeks Ended June 28, 2020:	Domestic		International		Total Revenue
Restaurant sales	$	130,018	$	—	$	130,018
Franchise income		3,752		830		4,582
Other operating income		2,353		—		2,353
Total revenue	$	136,123	$	830	$	136,953


26 Weeks Ended June 30, 2019:	Domestic		International		Total Revenue
Restaurant sales	$	217,003	$	—	$	217,003
Franchise income		7,537		1,442		8,979
Other operating income		4,002		—		4,002
Total revenue	$	228,542	$	1,442	$	229,984


Period	Maximum Ratio
The last day of the first Fiscal Quarter of the 2021 Fiscal Year	5.00 to 1.00
The last day of the second Fiscal Quarter of the 2021 Fiscal Year	4.50 to 1.00
The last day of the third Fiscal Quarter of the 2021 Fiscal Year	4.00 to 1.00
The last day of the fourth Fiscal Quarter of the 2021 Fiscal Year and thereafter	3.00 to 1.00


May 2020	$34,000,000
June 2020	$29,000,000
July 2020	$21,000,000
August 2020	$19,000,000
September 2020	$15,000,000
October 2020¹	$13,000,000
November 2020¹	$13,000,000
December 2020	$14,000,000


MINIMUM SCHEDULED CASH
Month	Cash Requirement Without Equity Issuances	Cash Requirement Assuming Equity Issuances of at Least $30 Million
May 2020	$34 Million	$49 Million
June 2020	$29 Million	$44 Million
July 2020	$21 Million	$36 Million
August 2020	$19 Million	$34 Million
September 2020	$15 Million	$30 Million
October 2020¹	$13 Million	$27 Million
November 2020¹	$13 Million	$25 Million
December 2020	$14 Million	$29 Million

Declaration Date	Dividend per Share		Record Date	Total Amount		Payment Date
Fiscal Year 2017
February 17, 2017	$	0.09	February 23, 2017	$	2,862	March 9, 2017
May 5, 2017	$	0.09	May 18, 2017	$	2,862	June 1, 2017
July 28, 2017	$	0.09	August 10, 2017	$	2,844	August 24, 2017

Fiscal Year 2016
February 12, 2016	$	0.07	February 25, 2016	$	2,350	March 10, 2016
April 28, 2016	$	0.07	May 12, 2016	$	2,338	May 26, 2016
July 29, 2016	$	0.07	August 11, 2016	$	2,282	August 25, 2016

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Maximum Dollar Value that May Yet be Purchased under the Program – Amounts in thousands

June 26, 2017 to July 30, 2017	—		—		—		$	18,158
July 31, 2017 to August 27, 2017		6,845	$	19.52		6,845	$	18,025
August 28, 2017 to September 24, 2017		312,597	$	19.12		312,597	$	12,047
Totals for the fiscal quarter		319,442	$	19.13		319,442	$	12,047


10.1		Fourth Amendment, dated as of May 18, 2020, to Credit Agreement, dated as of February 2, 2017, by and among the Company, the Guarantors, the Lenders and Wells Fargo Bank, National Association, as administrative agent and Wells Fargo Securities, LLC as sole lead arranger and sole bookrunner (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 20, 2020).

10.2		Retirement, Transition, and Release of Claims Agreement, between the Company and Michael P. O’Donnell (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 9, 2020).

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance ~~Document.~~Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibit 101).


	RUTH’S HOSPITALITY GROUP, INC.

	By:	/S/ M~~ICHAEL~~ ~~P. O’DONNELL~~CHERYL J. HENRY
		~~Michael P. O’Donnell~~Cheryl J. Henry
		~~Chairman of the Board~~President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/S/ ARNE G. HAAK
		Arne G. Haak
		Executive Vice President and Chief Financial Officer ~~of Ruth’s Hospitality Group, Inc.~~ (Principal Financial Officer)