Ruths Hospitality (RUTH) DEFA14A Additional proxy soliciting materials

SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the registrant  x                            Filed by a party other than the registrant  ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨ Definitive Proxy Statement

¨ Definitive Additional Materials

x Soliciting Material under Rule 14a-12

RUTH’S HOSPITALITY GROUP, INC.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box.):

x No fee required

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated, and state how it was determined.):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

¨ Fee paid previously with preliminary materials:

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2), and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration number or the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule, or registration statement no.:

(3) Filing party:

(4) Date filed:

This filing consists of a presentation prepared by Ruth’s Hospitality Group, Inc. (the “Company”) to explain certain aspects of the proposed financing transactions announced on December 22, 2009.

Additional Information

The Company has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (the “SEC”) (File No. 333-160231) and intends to file a prospectus supplement with respect to the proposed rights offering. Before you invest, you should read the prospectus and, when filed, the prospectus supplement and other documents the Company has filed with the SEC for more complete information about the Company and the rights offering.

In connection with the proposed financing transactions announced on December 22, 2009, the Company intends to file a definitive proxy statement with the SEC and to mail the definitive proxy statement to the Company’s shareholders. The Company and its directors and officers may be deemed to be participants in the solicitation of proxies from the Company’s shareholders in connection with the financing transactions. Information about the Company’s directors and executive officers and their ownership of its securities will be set forth in the definitive proxy statements to be filed by the Company with the SEC.

Stockholders and investors should read the definitive proxy statement and the prospectus supplement carefully before making any voting or other investment decision because these documents will contain important information.

January 2010

Issuer Free Writing Prospectus

Filed Pursuant to Rule 433

Registration Statement No. 333-160231

Disclaimer

This

presentation

contains

“forward-looking

statements”

that

reflect,

when

made,

the

expectations

of

Ruth’s

Hospitality

Group, Inc. ("Ruth's" or the “Company”) or beliefs concerning future events that involve risks and uncertainties. Forward-

looking

statements

frequently

are

identified

by

the

words

“believe,”

“anticipate,”

“expect,”

“estimate,”

“intend,”

“project,”

“will

be,”

“will continue,”

“will likely result”

or other similar words and phrases. Similarly, statements herein that describe the

Company’s objectives, plans or goals 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 risk factors identified in the reports the Company files with the Securities and Exchange

Commission (the “SEC”), including its Annual Report on Form 10-K for the fiscal year ended December 28, 2008 and

subsequently

filed

Quarterly

Reports

on

Form

10-Q,

all

of

which

are

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 presentation after the date hereof.

The Company has filed a registration statement (including a prospectus) with the SEC (File No. 333-160231) and intends to

file

a

prospectus

supplement

with

respect

to

its

proposed

common

stock

rights

offering.

Before

you

invest,

you

should

read

the prospectus and, when filed, the prospectus supplement and other documents the Company has filed with the SEC for

more complete information about the Company and the rights offering.

In connection with the Company’s proposed private placement transaction, the Company has filed a preliminary proxy

statement with the SEC and intends to file a definitive proxy statement and to mail the definitive proxy statement to the

Company’s shareholders. The Company and its directors and officers may be deemed to be participants in the solicitation of

proxies from the Company’s shareholders in connection with the private placement transaction. Information about the

Company’s directors and executive officers and their ownership of its securities will be set forth in the definitive proxy

statement to be filed by the Company with the SEC.

When available, you may obtain the foregoing documents, including the prospectus supplement and the preliminary and

definitive

proxy

statements,

for

free

by

visiting

the

SEC’s

website

at

www.sec.gov.

In

addition,

copies

of

the

prospectus

and

prospectus supplement for the rights offering may be obtained, when available, from the information agent to be identified in

the prospectus supplement. Investors should read the definitive proxy statement and the prospectus and prospectus

supplement carefully before making any voting or investment decision because these documents will contain important

information.

1

Positions Ruth’s as one of the best capitalized upscale steakhouse

chains

Provides

management

with

flexibility

to

operate

the

business

for

long-

term success

Provides approximately $50 million of available bank revolver capacity

at attractive rates and a 5-year term

Increases capital expenditure baskets to enable the Company to take

advantage of opportunistic growth opportunities

Brings in a successful, experienced restaurant investor, Bruckmann,

Rosser, Sherrill & Co. (“BRS”), whose representative will serve on the

board

Allows

current

shareholders

participating

in

the

rights

offering

to

limit

their dilution and allows all shareholders, if the transaction closes, to

benefit from the Company’s improved financial position

Rationale for Raising Additional Equity

2

Transaction Details

Sale to BRS in a private placement of Series A 10% Convertible Preferred Stock for an

aggregate purchase price of $25.0 million (the “Private Placement”)

–

Private Placement is conditioned upon:

Completing

a

Common

Stock

rights

offering

raising

at

least

$25.0

million

in

gross

proceeds (the “Rights Offering”)

Obtaining shareholder consent for the Private Placement

–

Private Placement conversion price will be set at a 15.0% premium to the Rights

Offering,

with

a

minimum

conversion

price

of

$2.90

per

share

and

a

maximum

conversion price of $3.25 per share

Conversion price subject to customary anti-dilution adjustments

–

BRS will be entitled to designate or nominate one board member so long as they own

at

least

5.0%

of

total

voting

power

of

the

common

stock

on

an

as

converted

basis

Company

will

conduct

the

Rights

Offering,

with

gross

proceeds

of

up

to

$35.0

million

in

cash assuming full participation

–

The Rights will be transferable and will allow for over-subscription in certain

circumstances

Net proceeds of the Private Placement and the Rights Offering will be used to repay debt

outstanding under the Company’s revolving credit facility

A bank amendment providing covenant relief and extending the maturity of the

Company’s credit agreement will become effective upon meeting certain conditions,

including obtaining at least $42.5 million in net proceeds from the Private Placement and

the Rights Offering

3

The Company has structured a portion of the equity raise in the

form of a Rights Offering in order to allow existing shareholders to

participate in its recapitalization and to minimize their ownership

dilution

Illustrative Ownership Analysis

(1)  Assumes

that

all

of

the

Rights

that

are

exercised

are

exercised

by

existing

shareholders,

all

of

whom

exercise

their

Rights

in

full.

4

Illustrative Assumptions

Current Common Shares Outstanding (in millions)

24.163

Current Stock Price (1/8/2010)

$2.77

Convertible Preferred Stock

$25.0

Implied Conversion Price of Convertible Preferred Stock Investment

$3.19

Common Shares Issuable upon Conversion of the Convertible Preferred Stock (in millions)

7.848

Illustrative Ownership Analysis

Minimum Rights Offering Proceeds ($ in millions)

$25.0

Ownership and Participation

Participating Shareholders and Exercised Rights Percentage

71.4%

Non-participating Shareholders and Non-exercised Rights Percentage

28.6%

Post Transaction Ownership (As Converted Basis)

Participating Holders

(1)

64.1%

Ownership Dilution from Convertible Preferred Stock Issuance

(7.4%)

Sources of Funds

Uses of Funds

BRS Investment

25.0

$            

Revolver Paydown

45.5

$            

Min. Rights Offering Proceeds

25.0

Estimated Fees & Expenses

4.5

Total Sources of Funds

50.0

$            

Total Uses of Funds

50.0

$            

Debt Capitalization as of FYE 2009

Actual

Leverage

Ratio

(1)

Pro Forma

(2)

Leverage

Ratio

(1)

Revolving Credit Facility

125.5

$          

3.24x

80.0

$            

2.07x

Total Debt

125.5

$          

80.0

$            

Source: Company filings.

(1)

LTM 9/27/2009 Bank EBITDA of $38.7 million was used for the calculation of the actual and pro forma leverage ratio at FYE 2009, and was calculated in

accordance

with

the

terms

of

the

Company's

existing

credit

agreement.

The

debt

balance

used

in

the

calculation

of

the

actual

and

pro

forma

leverage

ratio at FYE 2009 was the actual and pro forma debt balance at FYE 2009, and was calculated in accordance with the Company's existing credit

agreement, as amended by the proposed bank amendment. For a reconciliation of Bank EBITDA, a non-GAAP financial measure, to net income, see

Appendix B.

(2)

The

pro

forma

debt

balance

gives

effect

to

the

application

of

the

net

proceeds

from

the

Private

Placement

and

Rights

Offering

to

repay

indebtedness

under the credit facility assuming that the transactions had been completed at FYE 2009.

The proposed Private Placement and Rights Offering consist of a minimum $50.0

million equity raise, with net proceeds used to pay down a portion of the

outstanding borrowings under the Company’s revolving credit facility

–

The equity raise will consist of a $25.0 million private investment by BRS and a

minimum $25.0 million Rights Offering

Pro Forma Transaction

In 2009, the Company reduced its outstanding debt by approximately $35.0

million

($ in millions)

5

Current Management Team Accomplishments

Hired new Chief Operating Officers (Kevin Toomy

and Sam Tancredi)

Launched brand positioning study

Implemented initiatives to drive traffic and top-line sales

Generated labor and operating expense savings

Generated G&A expense reductions through re-aligning corporate

support and restructuring field supervision

Established focus on generation of cash flow and reduction of balance

sheet leverage

–

Completed sale-leaseback transaction of 5 Company-owned

restaurants

–

Sold corporate headquarters building

–

Eliminated new Company-owned restaurant development

6

Company Overview

7

Ruth’s Hospitality Group Highlights

Iconic Upscale

Steakhouse

Brand

Broad

Demographic

Appeal

Strong

Restaurant Base

with Solid Unit

Economics

Highly

Experienced and

Committed

Management

Team

Premier Upscale-

casual Seafood

Concept

Stable Franchise

Base Generating

Consistent

Revenue Stream

8

Ruth’s Chris history

–

44+ years in business as segment leader

–

64 Company-owned and 66 franchisee-owned restaurants in 30 states

–

2008 / 2009 Recognition

Best

Restaurant

to

Seal

the

Deal

-

Orlando

Magazine

Best Steakhouse Runner-up, Best Place Special Occasion -

Sacramento Magazine

Best

Overall,

Best

Steakhouse

-

Seminole

Magazine

Best

Food, Best Overall -

Open Table Diner Choice,

Phoenix/Scottsdale

Best Steakhouse -

VisitDetroit.com

92 Locations Awarded the Wine Spectator Award of Excellence

Best of the Best -

Luxury Institute Survey

Ruth’s Chris Steak House Segment Overview

9

Largest Upscale Steakhouse

Restaurant Locations versus Competitors

Average Check Per Customer versus Competitors

$

70

97

81

73 –

74

79

70 –

75

60

79

105

Source: Company filings, Wall Street research and Company presentations. Ruth’s Chris data as of year-end 2009.

10

130

Ruth’s Chris Steak House Footprint

HI

Company-owned Ruth’s Chris Steak House Locations

Franchisee-owned Ruth’s Chris Steak House Locations

International Locations:

Aruba

Calgary, Canada

Edmonton, Canada

Mississauga, Canada

Toronto, Canada

Hong Kong

Queensway, Hong Kong

Tokyo, Japan

Cabo San Lucas, Mexico

Cancun, Mexico

San Juan, Puerto Rico

Kaohsiung, Taiwan

Taichung, Taiwan

Taipei, Taiwan

Dubai, UAE

11

Broad Appeal of Concept

Purpose of Visit

Appeals to Men and Women

Appeals to Wide Age Demographic

Source: Based on an independent survey conducted in 2007.

12

Attractive Sales Mix

Ruth’s Chris Steak

House’s higher

margin wine and

alcoholic beverage

sales have

remained stable

since 2008,

generating

approximately 25%

of revenues

Ruth’s Chris Steak House’s signature steaks, diverse accompaniments

and extensive wine and liquor offerings drive guest appeal and generate

an attractive sales mix

Source: Company data for LTM 9/27/2009.

13

Strong Franchise Positioning

Strength of franchise system

–

27 franchisees operating 51 domestic and 15 international locations in

21 states and 8 countries

–

All franchisees are current on their royalty payments as of FYE 2009

–

Recent growth

7 new franchised restaurants in 2008 and 6 new franchised

restaurants in 2009

International

market

expansion

–

Aruba

2008,

Dubai

2009,

San

Juan

2009

–

Business model with both Company-owned and franchisee-owned

restaurants is unique in the upscale steakhouse segment

Provides

approximately

$10

–

$12

million

in

aggregate

annual

royalty

fees

Allows system growth without additional Company capital

14

Profile of Franchise System

First franchise opened in 1976 in Baton Rouge, LA

Unlevered

franchise

system

provides

stability

and

enables

future

growth

Allows for development in secondary and tertiary markets

Recurring, high margin revenue stream

Franchise

Breakdown

Franchisees

Units Owned

by

Franchisees

% of

Franchised

Units

Average

Tenure

Single Unit

15

15

22.7%

14 years

2 –

3 Units

6

14

21.2%

14 years

4 –

8 Units

6

37

56.1%

17 years

Total

27

66

100.0%

Note:  Data as of year-end 2009.

15

Mitchell’s Fish Market

16

Why Mitchell’s Fish Market

Expansion into the seafood segment was a logical move for Ruth’s

–

For health and other reasons, fish consumption has increased in the

U.S., notably among higher-income households

–

National chains are increasingly taking market share away from

independent operators: the segment is consolidating

Core competencies are very similar to Ruth’s Chris:

–

Corporate culture

–

High quality menu

–

Commitment to service

–

Attractive unit level economics

17

Mitchell’s Fish Market Segment Overview

Mitchell’s Fish Market

–

Acquired by Ruth’s Hospitality Group in February 2008

–

Celebrated 10 year anniversary in 2008

–

19 restaurants in 9 states

2009 Recognition

Best Seafood

Best Seafood

Columbus Alive

City Beat Cincinnati

Best Seafood

Best Seafood / Best Fish Market

Metro Times

Hour Detroit Magazine

Best Food

Best Seafood Selection

Stamford Plus Magazine

Tampa Bay Magazine

18

Mitchell’s Fish Market Summary

Upscale-casual seafood restaurant

19 locations in 9 states

Menu offers over 80 dishes with

creative presentations and a focus on

always fresh

A specialized fish preparation room

ensures

all

fish

is

maintained

at

36

o

F

until it is cooked

Average lunch check of approximately

$22.00, and average dinner check of

approximately $38.00

(1)

Recent menu changes, Fresh Bar

program and branding campaign have

improved same store sales and unit

volumes

Restaurant Highlights

Proven success in multiple markets

Seafood consumption tends to be higher

on the coasts, which are a relatively

untapped market for the Mitchell’s

concept

Seafood consumption as a whole has

been increasing; focus on freshest

possible seafood is a competitive

advantage

Popular concept appeals to developers,

providing access to prime locations

Economies of scale as restaurant base

increases

Potential for franchising

Growth Opportunities

(1)

Mitchell’s Fish Market average lunch and dinner checks per the Company’s 2008 10-K.

19

Mitchell’s Fish Market Atmosphere

20

Significant Expansion Opportunity

Restaurant Locations versus Competitors

Average Check Per Customer versus Competitors

$

19

24 –

25

37 –

38

37

34

Source:

Company

filings,

Wall

Street

research

and

Company

presentations.

Mitchell’s

Fish

Market

data

as

of

year-end

2009.

21

Mitchell’s Fish Market Footprint

Company-owned Mitchell’s Fish Market Locations

22

Mitchell’s Fish Market Business Update

Installed new leadership at the time of the

acquisition

Completed integration  

Implementing new marketing initiatives

–

Fixed price menu offerings

–

Marketing spend of 2.5-3.5% of sales

Pursuing franchising opportunities

(1)Sales summary reflects year over year comparisons.

(2)Comparable Company Index is based on an equal weighted average of the same store sales of Bonefish Grill and McCormick & Schmick’s

per their public SEC filings.

Sales Summary

(1)

Q3 09

Q4 09

Mitchell’s Fish Market

-10.1%

-2.6%

Comparable

Company

Index

(2)

-12.3%

N/A

23

Financial Overview

24

Financial Performance Overview

Despite pressure on the top-line, the Company has successfully increased

its Adjusted EBITDA margin during the periods shown below

The Company has also exceeded its goals of generating free cash flow

and paying down debt

Revenue

and Adjusted EBITDA Margin Comparison

Free Cash Flow

(2)

and Debt Comparison

FCF

$5.1

$20.8

($3.7)

$12.0

Debt

$160.3

$148.5

$166.9

$148.5

(1)

For a reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, see Appendix B. Adjusted EBITDA has not been adjusted for

severance

payments,

hurricane

and

relocation

costs

and

other

costs,

cash

write-offs

of

the

Manhattan

UN

Facility

and

Mitchell's

Fish

Market

pro

forma

EBITDA prior to acquisition.

(2)

Free

Cash

Flow

represents

net

cash

provided

from

operating

activities

minus

acquisition

of

property

and

equipment.

Data

is

as

of

period

end.

See

Appendix C for a reconciliation of Free Cash Flow to cash flows from operating activities.

($ in millions)

25

Q3 2009 and Q3 2009 YTD Review

Food and Beverage Cost Improvement

–

Primarily driven by favorable beef costs

Restaurant Operating Expense Improvement

–

Execution of operations initiatives

Reduced Capital Expenditures

–

Spent $0.5 million in Q3 2009, $3.3 million through Q3 2009 YTD

Stable Leverage Ratio

(1)

–

At 3.92x at end of Q3 2009

Maximum leverage ratio under the credit agreement was 4.80x as of

that date

EPS

–

($0.04) in Q3 2009 versus ($0.02) in Q3 2008

–

$0.22

(2)

in Q3 2009 YTD versus $0.29 in Q3 2008 YTD

(1)

Leverage

ratio

is

defined

as

outstanding

borrowings

under

the

Company’s

revolving

credit

facility

and

outstanding

letters

of

credit

at

period

end

divided

by

LTM

Bank

EBITDA (calculated in accordance with the terms of the credit agreement). Excluding the $3.2 million of outstanding letters of credit (as permitted under the terms of the

proposed amendment to the credit agreement), the leverage ratio would have been 3.84x at 9/27/2009. For a reconciliation of LTM Bank EBITDA to net income, see

Appendix B.

(2)

Q3 2009 YTD EPS included a one-time expense related to a loss on the disposal of property and equipment of $1.0 million due to the sale of the Company’s former

home office land and building in Metairie, Louisiana, which represented a decrease in earnings of approximately $0.03 per share.

26

Performance on Key Company Initiatives

Cost Savings Initiatives

–

Introduced staggered scheduling, changed menu and preparation

process, achieved concessions on pricing, eliminated services and

implemented internal programs for utilities

–

Eliminated approximately 60 corporate positions by re-aligning

corporate support and restructuring field supervision

–

Established a new approval system for all capital and travel

expenditures

–

Reduced G&A expense by approximately $6.9 million during the first

nine months of 2009 (versus prior year)

Focus on Cash Flow Generation and Balance Sheet Leverage Reduction

Menu and Marketing Strategy

–

No 2009 Company development; total capital expenditures expected

to be $5.0 to 6.0 million for 2009, down from $32.0 million in 2008

–

Opened 6 new franchise locations during 2009

–

Paid down approximately $35 million in debt in 2009

Includes $9.7 million debt paydown from net proceeds of recent

sale of corporate headquarters building

–

Capital expenditure

reduction:

–

New franchise location

openings:

–

Debt reduction:

–

Introduced a Value menu, a Bistro menu, early week promotions and

a private dining satellite program

–

Labor and operating

expense savings:

–

G&A expense

reductions:

–

Initiatives to drive traffic

and top-line sales:

27

Ruth’s Chris Steak House SSS Comparison

Comparable Sales

FY 2008

Q1 09

Q2 09

Q3 09

Q4 09

Ruth’s Chris SSS

-10.2%

-18.6%

-24.3%

-23.9%

-11.2%

Knapp Track

(1)

SSS

-9.6%

-19.0%

-22.9%

-20.6%

-9.7%

Ruth’s SSS vs.

Knapp Track

(1)

SSS

-0.6%

0.4%

-1.4%

-3.3%

-1.5%

(1)

Upscale steak segment index, which includes Ruth’s Chris, Flemings, Smith & Wollensky, Sullivan’s, Del Frisco, Capital Grille, Three Forks, Cool River

and Silver Fox.

Ruth’s Chris Steak House Company-owned Comparable Restaurant

Sales

Traffic

Comparison

FY 2008

Q1 09

Q2 09

Q3 09

Q4 09

Ruth’s Traffic vs.

Knapp Track

(1)

Traffic

+0.7%

+2.6%

+0.7%

-5.4%

-4.5%

Ruth’s Chris Steak House Company-owned Comparable

Restaurant Traffic

28

Continued interest in franchise ownership remains strong

–

6 new openings in 2009:

Greenville, SC

Dubai, UAE

St. Louis, MO

Durham, NC

Kennesaw, GA

San Juan, Puerto Rico –

signed a two unit franchise development agreement

(the first restaurant opened in San Juan on November 23, 2009)

–

Salt Lake City –

new franchisee agreement signed

Stable Revenue Stream from Franchise System

Franchise Royalties and Restaurant Count

($ in millions)

29

(1)

For a reconciliation of Adjusted EBITDA and Bank EBITDA to net income, see Appendix B.

(2)

Bank EBITDA is Adjusted EBITDA, a non-GAAP financial measure, further adjusted to exclude severance payments, hurricane and relocation costs and

other

costs,

cash

write-offs

of

the

Manhattan

UN

Facility

and

Mitchell's

Fish

Market

pro

forma

EBITDA

prior

to

acquisition,

each

of

which

are

excluded

pursuant to the terms of the Company’s credit agreement. For a reconciliation of Bank EBITDA to net income, see Appendix B.

(3)

Excluding

letters

of

credit

in

the

amount

of

$3.2

million

at

the

end

of

Q3

2008

and

Q3

2009,

the

leverage

ratio

would

have

been

3.25x

and

3.84x

at

the

end of Q3 2008 and Q3 2009, respectively.

Fiscal Year Q3 2009 and Q3 2009 YTD Review

($ in millions)

30

Ruth's Hospitality Group's Year-to-Date Performance Comparison

Actual

Actual

Prior

Q3 2009

Q3 2009 YTD

Q3 2008 YTD

B(W)

Revenues

Total Restaurant Revenues

$75.6

$253.8

$291.8

($38.1)

Franchise and Other Revenues

2.2

9.5

12.4

(2.9)

Total Revenues

$77.8

$263.2

$304.2

($41.0)

Food and Beverage Costs

21.5

72.5

91.9

19.4

Restaurant Operating Expenses

43.4

139.3

147.1

7.8

Marketing

1.8

8.2

10.9

2.7

G&A

5.4

16.7

23.6

7.0

Depreciation

4.1

12.4

12.3

(0.1)

Pre-opening

0.0

0.0

2.5

2.4

Loss on Impairment

0.0

0.3

0.0

(0.3)

Restructuring Expenses

0.4

0.4

0.0

(0.4)

Loss on Disposal of Property and Equipment

0.1

1.0

0.1

(0.9)

Operating Income

$1.0

$12.4

$15.8

($3.4)

Adjusted EBITDA

(1)

$6.2

$29.2

$31.9

($2.7)

LTM Bank EBITDA

(1) (2)

$38.7

$38.7

$51.4

($12.7)

Debt

$151.7

$151.7

$170.1

$18.4

Debt / LTM Bank EBITDA

(1) (2) (3)

3.92x

3.92x

3.31x

(0.61x)

Financial Guidance

FY 2009 guidance provided to the Street (as of October 30, 2009)

–

Comparable sales of high negative double digits

–

Cost

of

sales

of

28.5%

–

29.5%

–

Marketing

spend

of

3.0%

–

3.3%

of

sales

–

G&A

expense

of

$22.5

–

$24.0

million

–

Tax

rate

of

17%

–

20%

–

Capital

expenditures

of

$5

–

$6

million

for

maintenance

and

remodels

Reported comparable store sales of -11.2% for Q4 2009 (vs. Q4 2008)

31

Appendix A

32

Rights Offering Size:

Maximum gross proceeds of $35.0 million

Subscription Price:

TBD

Current Shares Outstanding:

24,162,893 shares (including 484,000 shares of unvested restricted stock)

Securities Offered:

Each

Transferable

Subscription

Right

will

represent

the

right

to

purchase

a

number of shares of Common Stock to be determined subject to

adjustments to eliminate fractional shares

Basic Subscription Privilege:

Each Right will give shareholders of record the opportunity to purchase a

number of shares of the Company’s Common Stock to be determined at the

Subscription Price

Over-Subscription Privilege:

If a shareholder exercises its basic subscription privilege in full, it will also

have an over-subscription privilege in certain circumstances

Transferability:

The

Rights

will

be

transferable

and

are

expected

to

be

listed

on

NASDAQ

Key Closing Conditions:

Raising at least $25.0 million in gross proceeds in the Rights Offering and

obtaining shareholder approval for the Private Placement

Use of Proceeds:

Net

proceeds

from

the

Rights

Offering

will

be

used

to

reduce

the

Company’s

outstanding indebtedness under its revolving credit facility, which will reduce

its

future

interest

expense,

increase

its

operating

flexibility,

provide

covenant

relief and extend the maturity of the indebtedness under its credit agreement

until

the

earlier

of

the

fifth

anniversary

of

the

effective

date

of

the

credit

agreement amendment or February 15, 2015

Key Terms of Rights Offering

33

Key Terms of Private Placement

Aggregate face amount of $25.0 million of Series A 10.0% Convertible Preferred Stock

–

Dividends payable quarterly in cash or, at the Company’s option, by PIK

Conversion price will be set at a 15.0% premium to the Rights Offering subscription price, with a

minimum conversion price of $2.90 per share and a maximum conversion price of $3.25 per

share

–

Conversion price subject to customary anti-dilution adjustments in the future

Optional Company redemption right after 5 years

Company conversion right after 2 years if the stock price is equal to or greater than 225% of the

then

applicable

conversion

price

for

a

period

of

20

trading

days

over

any

30

consecutive

days

Mandatory redemption obligation after 7 years or upon a change of control event

BRS will be entitled to designate or nominate one board member so long as they own at least

5.0% of total voting power of the common stock on an as converted basis

The Private Placement will vote on an as converted basis and will be granted certain registration

and information rights

Proceeds to be used to repay outstanding indebtedness under the Company’s revolving credit

facility

Private Placement issuance conditioned upon:

–

The Rights Offering raising at least $25.0 million in gross proceeds

–

Obtaining shareholder consent for the Private Placement

The Company and BRS have various termination rights; closing is conditioned upon certain

ownership and dilution thresholds after giving effect to the transactions

34

Existing Credit Agreement Terms

Proposed Amended Terms

Facility:

$175MM reducing Revolver ($5MM every 6 months commencing 12/31/09)

$130MM Revolving Credit Facility

Maturity:

February 2013

February 2015 or 5 Year Anniversary

Pricing:

Leverage Covenant:

No covenants for one year. First covenant measurement date FYE2010

Incurrence test for revolver at 3.75x during FY2010

Covenants as follows (tested quarterly):  

FYE2010 –

3.80x

FY2011 –

3.75x

FY2012

Q1

&

Q2

–

3.60x

FY2012

Q3

&

Q4

–

3.40x

FY2013 –

3.10x

FY2014 –

2.75x

Fixed Charge Covenant:

1.40x for Q1 09-Q4 2009

1.45x for Q1 10-Q2 2010

1.50x thereafter

No covenants for one year. First covenant measurement date FYE2010

Covenants as follows:

FY2010

through

FY2014

-

1.35x

Minimum EBITDA Covenant:

YTD adjusted EBITDA test through Q3 2009 at the following levels: $8.25MM in

Q1 2009, $17.0MM YTD Q2 2009, $24.0MM YTD Q3 2009

Thereafter,

TTM

EBITDA

test

of

$33.5MM

in

Q4

2009,

$34.0mm

in

Q1

2010,

$35.0MM in Q2 2010, $35.5MM in Q3 2010 & Q4 2010

No minimum EBITDA covenant

CapEx

Limit

$12.0MM for FY2009

$10.0MM for FY2010 and thereafter

Additional

growth

CapEx

available

subject

to

passing

an

incurrence

test

for

two

consecutive quarters for FY2010 and annually through maturity:

–

Leverage

<

3.35x

-

$5.0MM

–

Leverage

<

3.25x

-

$10.0MM

$12.0MM for FY2009

$12.5MM for FY2010 and thereafter

Additional

growth

CapEx

available

subject

to

passing

an

incurrence

test

for

two

consecutive

quarters

for

FY2010

and

annually

through

maturity:

–

Leverage

<

3.25x

-

$7.5MM

–

Leverage

<

3.00x

-

$12.5MM

–

Leverage

<

2.50x

-

$17.5MM

Additional Baskets

None

No stock buy-back basket for FY2010; for FY2011-maturity: $25.0MM aggregate

for stock buy-backs subject to pro-forma incurrence test of 3.0x leverage ratio and

minimum $15MM Revolver availability

No

acquisitions

in

FY2010,

thereafter

acquisitions

governed

by

CapEx

test

Closing Condition

At least $42.5MM in net proceeds in the Private Placement and the Rights

Offering

Key Terms of Credit Agreement Amendment

Leverage

LIBOR

Margin (bps)

Base Rate

Margin (bps)

Commitment

Fee (bps)

>= 4.00x

500

375

50

>=3.50x<4.00x

425

300

50

>=3.00x<3.55x

375

250

37.5

<3.00x

325

200

37.5

Leverage

LIBOR

Margin (bps)

Base Rate

Margin (bps)

Commitment

Fee (bps)

>= 4.00x

425

300

50

>=3.25x<4.00x

350

225

50

>=2.50x<3.25x

300

175

37.5

<2.50x

250

125

37.5

Q1

Q2

Q3

Q4

2008

3.75x

2009

4.75x

4.80x

4.80x

4.50x

2010

4.25x

3.85x

3.50x

3.50x

3.5x thereafter through maturity

35

Appendix B

EBITDA Reconciliation

36

Ruth's Hospitality Group EBITDA Reconciliation

FY 2008

Q3 2008

YTD

Q3 2009

YTD

Q3 2009

LTM

Net income (loss)

($53.9)

$6.8

$5.1

($55.5)

Interest expense

10.3

6.9

6.1

9.5

Provisions for taxes

(27.5)

2.4

1.2

(28.7)

Depreciation expense

17.0

12.5

12.4

16.9

Non-cash write-offs or impairment of restaurant assets

88.5

0.1

1.9

90.2

Ongoing non-cash GAAP costs (stock-based compensation, bank fees and other)

3.7

3.2

2.6

3.1

Adjusted EBITDA

$38.2

$31.9

$29.2

$35.4

Severance payments, hurricane and relocation costs and other

3.0

0.9

0.1

2.1

Cash write-offs of the Manhattan UN Facility

1.1

0.1

0.1

1.1

Mitchell's Fish Market pro forma EBITDA prior to acquisition

1.9

1.9

0.0

0.0

Bank EBITDA

(1)

$44.2

$34.9

$29.4

$38.7

Ruth's Hospitality Group EBITDA Reconciliation

(1)

Calculated pursuant to the terms of the Company’s existing credit agreement.

($ in millions)

37

Ruth's Hospitality Group EBITDA Reconciliation

Adjusted EBITDA is a supplemental measure of the Company's performance that is not required by, or presented in

accordance with, generally accepted accounting principles (“GAAP”). Adjusted EBITDA is not a measurement of the

Company's financial performance under GAAP and should not be considered as an alternative to revenue, net income

(loss) or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from

operating activities as a measure of its liquidity. Adjusted EBITDA is defined as net income (loss), plus interest expense

net of interest income, income tax provision (benefit), depreciation and amortization, and adjusted for non-cash write-offs

or impairment of restaurant asset charges, stock based compensation and non-cash bank fees. Management believes

that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to

provide additional information to investors about one of the principal internal measures of performance used by them.

Management uses the Adjusted EBITDA measure to evaluate the Company's performance and to facilitate a comparison

of operating performance on a consistent basis from period to period. The Adjusted EBITDA measure has limitations as

an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the results as reported under

GAAP. This measure may not be comparable to similarly titled measures reported by other companies.

Adjusted EBITDA per the Company's credit agreement, which we refer to as Bank EBITDA, is a supplemental measure of

the Company's performance that is not required by, or presented in accordance with, GAAP. Bank EBITDA is not a

measurement of the Company's financial performance under GAAP and should not be considered as an alternative to

revenue, net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to

cash flow from operating activities as a measure of its liquidity. Bank EBITDA is defined as Adjusted EBITDA, further

adjusted for severance payments, hurricane and relocation costs and other costs, cash write-offs of the Company's

Manhattan UN Facility and Mitchell's Fish Market pro forma EBITDA prior to acquisition. Bank EBITDA is used by the

Company's creditors in assessing debt covenant compliance and management believes its inclusion is appropriate to

provide additional information to investors about certain covenants required pursuant to the Company's indebtedness.

The Bank EBITDA measure has limitations as an analytical tool, and should not be considered in isolation, or as a

substitute for analysis of the results as reported under GAAP. This measure may not be comparable to similarly titled

measures reported by other companies.

38

Appendix C

FCF Reconciliation

39

Ruth's Hospitality Group FCF Reconciliation

($ in millions)

Source: Per Company filings.

40

Ruth's Hospitality Group FCF Reconciliation

FY 2008

Q3 2008

YTD

Q3 2009

YTD

Q3 2009

LTM

Cash

flows

from

operating

activities:

Net income

($53.9)

$6.8

$5.1

($55.5)

Depreciation and amortization

17.0

12.5

12.4

16.9

Deferred income taxes

(29.5)

(0.9)

(0.2)

(28.8)

Non-

cash interest expense

0.3

0.2

0.9

1.0

Loss on sale or disposition of assets

0.5

0.1

1.0

1.4

Loss on impairment

81.3

0.0

0.3

81.6

Amortization of below market lease

0.2

0.0

0.1

0.3

Restructuring

8.9

0.0

0.4

9.3

Non-

cash compensation expense

2.6

2.5

1.6

1.7

Changes

in

operating

assets

and

liabilities:

Accounts receivables

(1.5)

(2.5)

5.2

6.2

Inventories

1.1

0.9

1.8

2.0

Prepaid expenses and other

(0.6)

(0.7)

0.3

0.4

Other assets

0.3

0.2

0.1

0.1

Accounts payable and accrued expenses

3.3

9.0

(4.3)

(10.0)

Deferred revenue

1.7

(7.7)

(8.6)

0.8

Deferred rent

4.8

4.9

0.4

0.3

Other liabilities

0.7

(0.0)

(1.4)

(0.6)

Net cash provided from operating activities

$37.1

$25.2

$15.3

$27.2

Acquisition of property and equipment

32.0

28.9

3.3

6.4

Free Cash Flow

$5.1

($3.7)

$12.0

$20.8