SECURITIES AND EXCHANGE COMMISSION

Form 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 29, 2004
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from           to

Commission File Number 0-10943

Ryan’s Restaurant Group, Inc.

South Carolina		57-0657895
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
405 Lancaster Avenue Greer, South Carolina		29650
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

None		None
(Title of class)		(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

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

     The aggregate market value of the voting stock held by non-affiliates (shareholders holding less than 20% of the outstanding common stock, excluding directors and officers), computed by reference to the average high and low prices of such stock, as of June 30, 2004, was $662,507,000.

     The number of shares outstanding of the registrant’s Common Stock, $1.00 Par Value, was 41,916,000 at February 2, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

Incorporated Document		Location in Form 10-K
Portions of Proxy Statement dated March 2, 2005		Part III

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PART I

Item 1.	Business

General

      Ryan’s Restaurant Group, Inc., the registrant (together with its subsidiaries, referred to hereafter as the “Company”), is a South Carolina corporation that owns and operates restaurants located principally in the southern and midwestern United States. At December 29, 2004, the Company owned and operated 294 Ryan’s brand and 47 Fire Mountain brand restaurants. A Fire Mountain restaurant offers a selection of foods similar to a Ryan’s restaurant with display cooking and also features updated interior furnishings, an upscale food presentation and a lodge-look exterior. Therefore, in total, at December 29, 2004, the Company owned and operated 341 restaurants. In addition, at December 29, 2004, seven Ryan’s restaurants were owned and operated by an unrelated third party under a franchise agreement with the Company. The Company, headquartered in Greer, South Carolina, was organized in 1977, opened its first restaurant in 1978 and completed its initial public offering in 1982. It has no revenues or assets outside the U.S.

      The Company maintains an Internet website at www.ryans.com. This website offers free access to the Company’s press releases and filings with the Securities and Exchange Commission, including its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after these reports are filed with or furnished to the SEC.

      The following table indicates the number of Company-owned restaurants opened each year, net of closings, and the total number of Company-owned restaurants open at each year-end during the 5-year period ended December 29, 2004:

		Restaurant				Total Open
Year		Openings, Net				at Year-End
2000			12				301
2001			12				313
2002			11				324
2003			10				334
2004			7				341

Restaurant Operations

      General. The Company’s restaurants are family-oriented restaurants serving a wide variety of foods from centrally located scatter bars known collectively as the Mega Bar® buffet, as well as grilled entrees such as charbroiled steaks, hamburgers, chicken and seafood. The Mega Bar® includes fresh and pre-made salads, soups, cheeses, a variety of hot meats and vegetables, and hot yeast rolls prepared and baked daily on site. All entree purchases include a trip to a bakery bar. Bakery bars feature hot and fresh-from-the-oven cookies, brownies and other bakery products as well as various dessert selections, such as ice cream, frozen yogurt, fresh fruit, cakes, cobblers and several dessert toppings. All restaurants also offer a variety of non-alcoholic beverages. All restaurants have their Mega Bar® in a scatter bar format. This format breaks the Mega Bar® into island bars for easier customer access and more food variety.

      The Company’s current restaurant design features a display-style cooking area that is in the dining room and very visible and easily accessible to customers. A variety of meats and vegetables are grilled daily and available to customers as part of the buffet price. Customers go to the grill and can get hot, cooked-to-order steak, chicken, seafood or other grilled items placed directly from the grill onto their plate. This format was first implemented during 2000, and at the end of 2004, 186 of the Company’s restaurants operated with the display cooking format. In 2005, all new restaurants will open with display cooking, and current plans call for the conversion of 20 to 25 Ryan’s restaurants to the display cooking format.

      The Company’s restaurants are generally open seven days a week with typical hours of operation being 11:00 a.m. to 9:30 p.m. Sunday through Thursday and 11:00 a.m. to 10:30 p.m. Friday and Saturday. The average customer count per restaurant during 2004 was approximately 6,000 per week, and the average meal

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      Each Company-owned restaurant is located in a free-standing masonry building that is typically about 10,000 square feet. The interior of most restaurants generally contains two or three dining rooms with seating for approximately 400 customers in total, an area where customers both order and pay for their meals and a kitchen area. The focal points of the main dining room are the Mega Bar® and a bakery bar. In restaurants with display cooking, the display-style grill is prominently visible from where customers enter the restaurant. Parking lots at the restaurants vary in size, with available parking ranging from 125 to 200 cars.

      Restaurant Management and Supervision. The Company emphasizes standardized operating and control systems together with comprehensive recruiting and training programs in order to maintain food and service quality. In each restaurant, the management team typically consists of a general manager or operating partner (under the Operating Partner Program described below), a manager, an assistant manager and an associate manager. Management personnel begin employment at the manager trainee level and complete a formal four-week training program at the Company’s management training center in Greer, South Carolina prior to being placed in associate manager positions. All restaurant managers continue their training through various training manuals and classes developed by the Company.

      Each restaurant management team reports to a district manager or district partner (under the District Partner Program described below). Individuals in these positions normally oversee the operations of four to nine restaurants and report to one of nine regional directors who may be at the Vice President level and, in every case, report to the Vice President-Operations. Communication and support from all corporate office departments are designed to assist all restaurant supervisory personnel (collectively referred to hereafter as “Restaurant Supervision”) in responding promptly to local concerns.

      All restaurant managers and Restaurant Supervision participate in various incentive bonus programs. These individuals all participate in a bonus program that compares certain non-financial and financial measurements to pre-defined standards set by senior management (all measurements are collectively referred to hereafter as “Operations Standards”). General managers and managers are paid additional monthly bonuses based on the sales volumes of their individual restaurants with deductions for excess spending in key expense items. District managers are paid additional quarterly bonuses based principally on same-store sales, profitability and certain qualitative factors. Regional director bonuses are also paid quarterly and are based on the Operations Standards and certain qualitative factors.

      In 1997, the Company initiated an Operating Partner Program in order to provide general managers with an additional career path and an opportunity to share in the profitability of their stores. After being selected and upon a $10,000 investment in the Company’s common stock, a general manager is promoted to Operating Partner and then receives monthly cash bonuses based on both the operating profit and profit improvement of the restaurant and also receives a deferred cash bonus at the end of a five-year contract period. The investment in the Company’s stock is made by each participant either by purchase in the open market or by the exercise of previously granted stock options with payment either from personal funds or through a loan program arranged by the Company with a commercial bank. An Operating Partner who completes his or her five years as an Operating Partner is eligible for promotion to Senior Operating Partner. Upon acceptance into the program, a new Senior Operating Partner receives a salary increase, continues on the Operating Partner bonus program and starts a new five-year deferred cash bonus period. At December 29, 2004, there were 108 Operating Partners and 38 Senior Operating Partners in place, collectively representing 146 or 43% of the Company’s restaurants at that date. The Company’s long-term goal is to have Operating Partners or Senior Operating Partners at approximately two-thirds of its restaurants.

      In 1999, the Company initiated a District Partner Program in order to reward top-performing district managers who were ready to assume additional responsibilities. After being selected and upon a $15,000 investment in the Company’s common stock (similar to the Operating Partner Program), a district manager is promoted to District Partner and then receives monthly cash bonuses based on both the operating profit and profit improvement of the restaurants under his or her supervision. At December 29, 2004, there were 22 District Partners supervising 156 restaurants. The Company’s goal is to have an additional five to seven District Partners in place at the end of 2005.

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      Advertising. The Company does not rely extensively on advertising, spending less than one percent of restaurant sales during each of the years 2004, 2003 and 2002 on advertising. The Company’s advertising efforts consisted principally of targeted meal discounts utilizing coupons, billboard advertising, newspaper ads and a store-level local marketing program. Local marketing focuses on building customer relationships through community involvement and may include activities such as sponsoring a youth sports team, providing a meeting place for organizations or providing food for a special community event. The emphasis is on building relationships at the restaurant level that lead to word-of-mouth advertising and, in turn, to increased restaurant sales.

      In 2005, current plans are to continue to emphasize targeted couponing, billboard advertising, newspaper ads and the local marketing program. The Company reviews its overall marketing plans annually and may or may not utilize television or radio advertising in the future depending on various factors such as historical sales results from advertising, current and planned restaurant programs, current advertising cost levels and market penetration.

Expansion of Company-Owned Restaurants

      General. At December 29, 2004, the Company owned and operated 341 restaurants of which 294 were Ryan’s brand and 47 were Fire Mountain brand restaurants. During 2005, the Company plans to open 17 to 21 new Company-owned Fire Mountain restaurants, including four to six potential relocations. Target sites for these new restaurants are within or contiguous to the Company’s current 23-state operating area. Management defines a relocation as a restaurant opened within six months after closing another restaurant in the same market area. A relocation represents a redeployment of assets within a market. The following table summarizes the Company’s openings, closings, conversions (same site) and relocations during 2004, 2003 and 2002:

			2004				2003				2002
Ryan’s brand:
	Beginning of year			312				322				312
	New restaurants			—				9				13
	Conversion to Fire Mountain			(12	)			(16	)			(1	)
	Relocations — opened			1				2				7
	Relocations — closed			(5	)			(3	)			(7	)
	Closings			(2	)			(2	)			(2	)
	End of year			294				312				322
Fire Mountain brand:
	Beginning of year			22				2				1
	New restaurants			10				3				—
	Conversion from Ryan’s			12				16				1
	Relocations — opened			3				1				—
	Relocations — closed			—				—				—
	Closings			—				—				—
	End of year			47				22				2
Total restaurants:
	Beginning of year			334				324				313
	New restaurants			10				12				13
	Conversion to Fire Mountain — opened			12				16				1
	Conversion from Ryan’s — closed			(12	)			(16	)			(1	)
	Relocations — opened			4				3				7
	Relocations — closed			(5	)			(3	)			(7	)
	Closings			(2	)			(2	)			(2	)
	End of year			341				334				324

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      Site Selection. The Company employs a real estate manager and uses both in-house real estate representatives and local brokers to locate potential new sites and to perform all preliminary site investigative work. Final approval is made by the Company’s executive management. Important factors in site selection include population, demographics, proximity to both business and residential areas, traffic count and site accessibility. Another factor in site selection for a Company-owned restaurant is its proximity to other Company-owned restaurants because this proximity improves the efficiency of the Company’s restaurant supervision, potential media advertising programs and distribution network.

      Construction. The Company presently acts as the general contractor for the construction of all of its restaurants. The Company’s in-house architectural staff draws up the detailed construction plans that are used by subcontractors selected by a Company project manager to perform the actual construction work. In addition to selecting and scheduling subcontractors, a Company project manager also procures materials, if necessary, and provides general oversight of the construction project. A Company construction superintendent is on site during the construction of each restaurant and closely supervises the progress and workmanship of the project. New restaurants are generally completed approximately four to five months from the commencement of construction. The average cost of a new Ryan’s or Fire Mountain restaurant (land, building and equipment) constructed in 2004 was approximately $3.1 million.

      Restaurant Opening. When a new restaurant is opened, all restaurant management positions are staffed with personnel who have had prior management experience in another of the Company’s restaurants. Prior to opening, all staff personnel at the new location undergo one week of intensive training conducted by a new store opening team.

Franchising

      While the Company has granted Ryan’s franchises in the past, management has not actively pursued new franchisees in recent years in order to concentrate on the operation and development of Company-owned restaurants. Future consideration may be given to new franchisees proposing to operate in regions significantly outside of the Company’s existing or contemplated operating areas.

      The following table indicates the number of franchised restaurants closed each year, net of openings, and the total number of franchised restaurants open at each year-end during the 5-year period ended December 29, 2004:

		Net
		Restaurants				Total Open
Year		Closed				at Year-End
2000			—				23
2001			—				23
2002			(1	)			22
2003			(4	)			18
2004			(11	)			7

      At December 29, 2004, the Company’s sole franchise agreement was with Family Steak Houses of Florida, Inc. (“FSH”) which, at that date, operated seven Ryan’s restaurants in central and northern Florida. FSH pays the Company a royalty rate equal to 4% of sales, as defined in the agreement. The franchise agreement with FSH was amended on December 17, 2003 so that over the following 18 months, FSH would either sell, close or convert to a non-affiliated brand its current Ryan’s restaurants, and the existing franchise relationship will be terminated by no later than June 30, 2005. The Company will continue to receive royalty fees on those restaurants operating under the Ryan’s brand through the termination date of the franchise agreement.

Sources and Availability of Raw Materials

      The Company has a centralized purchasing program which is designed to provide uniform product quality in all restaurants as well as reduced food, beverage and supply costs. The Company’s management establishes

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Working Capital Requirements

      Working capital requirements for continuing operations are not significant. The Company’s restaurant sales are primarily derived from cash sales, and inventories are purchased on credit and rapidly converted to cash. Therefore, the Company does not maintain significant receivables or inventories.

Trademarks and Service Marks

      The Company has registered various trademarks and service marks, including “Ryan’s®”, “Ryan’s Family Steak House®”, “Mega Bar®”, “Fire Mountain®”, and “Sensible Choices®”, and their related designs with the United States Patent and Trademark Office. All trademarks and service marks have stated expiration dates ranging from September 2007 to June 2012. However, they are renewable for an unlimited number of additional 10-year terms at the option of the Company.

Competition

      The food service business is highly competitive and is often impacted by changes in the taste and eating habits of the public, economic and political conditions affecting spending habits, population and traffic patterns. The principal bases of competition in the industry are the quality and price of the food products offered. Location, speed of service and attractiveness of facilities are also important factors. The Company’s restaurants compete with many units operated or franchised by national, regional and local restaurant companies that offer steak or buffet-style meals. Although the Company believes that its price/value to its customers places it in an excellent competitive position, during the last few years many operators have upgraded their restaurants to more closely match the Ryan’s or Fire Mountain formats, particularly the Mega Bar® and, most recently, display cooking. The Company also competes with many specialty food outlets and other food vendors.

Seasonality

      The Company’s operations are subject to some seasonal fluctuations. Average sales per restaurant have historically run approximately 5% less than the company-wide annual per-restaurant average during the first and fourth quarters and approximately 5% more than the company-wide annual average during the second and third quarters.

Research

      The Company maintains ongoing research programs relating to the development of new products and evaluation of marketing activities designed to measure positioning and consumer perceptions of the brands. The Company’s management staff includes a culinary development manager, whose responsibilities include enhancing and updating the Mega Bar® and grill selections. While research and development activities are

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Customers

      No material part of the Company’s business is dependent upon a single customer or a specific group of customers.

Regulation

      The Company is subject to licensing and regulation by health, sanitation, safety and fire agencies in the states and/or municipalities in which its restaurants are located. The Company’s restaurants are constructed to meet local and state building code requirements and are operated in material compliance with state and local regulations relating to the preparation and service of food. Generally the Company has not encountered significant obstacles to opening new restaurants as a result of difficulties or failures in obtaining the required licenses or approvals. However, more stringent or varied requirements of local and state governmental bodies could delay or prevent development of new restaurants in particular locations.

      The Company is subject to the Fair Labor Standards Act, which regulates matters such as minimum wage requirements, overtime and other working conditions, along with the Americans with Disabilities Act and various family leave mandates. A significant number of the Company’s restaurant team members are paid at the Federal minimum wage or, if higher, the applicable state minimum wage and, accordingly, legislated changes to the minimum wage rates affect the Company’s payroll costs. There has been legislation introduced to increase the minimum wage in the U.S. Congress and in the legislatures of approximately one-half of the states in which the Company operates. It is impossible to predict which increases will be implemented. If such increases were implemented, the Company expects that payroll costs, as a percent of sales, would increase. However, the Company is generally able to increase menu prices in order to cover most of the dollar impact of legislated payroll rate increases.

Environmental Matters

      While the Company is not aware of any federal, state or local environmental regulations that will materially affect its operations, earnings or competitive position or result in material capital expenditures, it cannot predict the impact of possible future legislation or regulation on its operations or the discovery of currently unknown conditions at any of its properties.

Employees

      At February 2, 2005, the Company employed approximately 24,000 persons, of whom approximately 23,700 were restaurant personnel. The Company strives to maintain low turnover by offering all full-time employees (defined as working at least 30 hours per week) a competitive benefit package, which includes several health insurance plans, life insurance, vacation pay and a defined contribution retirement plan. All part-time employees are eligible to participate in certain health insurance plans and also receive vacation pay.

      None of the Company’s employees are represented by a union. The Company has experienced no work stoppages attributable to labor disputes and considers its employee relations to be good.

Information as to Classes of Similar Products or Services

      The Company operates in only one industry segment. All significant revenues and pre-tax earnings relate to retail sales of food and beverages to the general public through either Company-operated or franchised restaurants. At December 29, 2004, the Company had no operations outside the continental United States.

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Item 2.	Properties

      The Company owns substantially all of its restaurant properties, each of which is a free-standing masonry building of approximately 8,000 to 12,500 square feet, with seating for approximately 300 to 500 persons and parking for approximately 125 to 200 cars on sites of approximately 75,000 to 130,000 square feet. At December 29, 2004, all restaurant sites, except 19 properties under ground leases and one restaurant under an operating lease for the building and its underlying land, were owned by the Company.

      A listing of the number of the Company’s restaurant locations by state as of December 29, 2004 appears in the next paragraph. A detailed listing of restaurant locations may be obtained without charge by writing to the Company’s Corporate Secretary at its corporate office.

      As of December 29, 2004, the Company owned and operated 341 restaurants in 23 states as follows:

Alabama		21
Arkansas		9
Florida		4
Georgia		41
Illinois		11
Indiana		17
Iowa		4
Kansas		3
Kentucky		13
Louisiana		22
Maryland		1
Michigan		7
Mississippi		12
Missouri		19
North Carolina		25
Ohio		20
Oklahoma		6
Pennsylvania		5
South Carolina		34
Tennessee		27
Texas		23
Virginia		11
West Virginia		6

      The Company’s corporate offices consist of three office buildings (30,000, 16,000 and 2,000 square feet) and a 10,000 square foot warehouse facility, all of which are located in Greer, South Carolina. The office buildings (land and building) are owned by the Company. The warehouse facility is leased with an initial term ending in July 2005 and renewal terms extending through July 2007.

      From time to time, the Company offers for sale excess land that was acquired in connection with its restaurant properties. Also, at December 29, 2004, 10 closed restaurant properties were offered for sale. The Company believes that the eventual disposition or non-disposition of all such properties will not materially affect its business or financial condition, taken as a whole.

Item 3.	Legal Proceedings

      In November 2002, a lawsuit was filed in the United States District Court, Middle District of Tennessee, Nashville Division, on behalf of three plaintiffs alleging various wage and hour violations by the Company of the Fair Labor Standards Act of 1938. The plaintiffs’ attorneys are seeking collective-action status on this complaint. In October 2003, the presiding judge denied the Company’s request to enforce the arbitration agreements signed by the plaintiffs and also ordered the Company to turn over certain employee addresses to the plaintiffs’ attorneys. The Company has appealed this decision. As part of the appeal process, the presiding judge stayed the order regarding employee addresses. Due to the evolving nature of this case, the potential financial impact to the Company’s financial results cannot be estimated at this time. Accordingly, no accrual for a loss contingency has been made in the accompanying consolidated financial statements.

      In addition, from time to time, the Company is involved in various legal claims and litigation arising in the normal course of business. Based on currently known legal actions, management believes that, as a result of its legal defenses and insurance arrangements, none of these other actions should have a material adverse effect on the Company’s business or financial condition, taken as a whole.

Item 4.	Submission of Matters to a Vote of Security Holders

      None.

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PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

      The information regarding the quarterly market prices of the Company’s common stock for each quarterly period in the 2004 and 2003 fiscal years is set forth below. The common stock is listed on The Nasdaq Stock Market under the symbol RYAN. The Company has never paid cash dividends on its common stock and does not expect to pay such dividends in the foreseeable future. At February 2, 2005, the Company’s common stock was held by approximately 4,000 stockholders of record. The closing price quotation of the Company’s common stock on February 2, 2005 was $14.16 per share. The following table lists the high and low prices of the Company’s common stock for each quarter during 2004 and 2003:

			First				Second				Third				Fourth
			Quarter				Quarter				Quarter				Quarter
2004:
	High		$	17.60				18.82				16.69				15.76
	Low			14.96				15.44				13.55				13.39
2003:
	High			12.06				13.99				14.56				15.98
	Low			9.85				10.51				12.48				12.54

      The Company is party to long-term credit agreements (see Item 7A) that prohibit the payment of cash dividends but permit the payment of dividends solely in the Company’s common stock.

      The following table provides information on the number of securities to be issued upon the exercise of outstanding options, warrants and rights and the number of securities remaining available for future issuance.

Equity Compensation Plan Information at Last Fiscal Year-End

(c)

Number of

(a)

Securities

Number of

Remaining Available

Securities To Be

(b)

for Future Issuance

Issued upon

Weighted-Average

under Equity

Exercise of

Exercise Price of

Compensation Plans

Outstanding

Outstanding Options,

(Excluding

Options, Warrants

Warrants and Rights

Securities Reflected

Plan Category

and Rights (#)

($/Sh)

in Column(a))(#)

Equity compensation plans approved by security holders

3,085,000

9.73

3,276,000

Equity compensation plans not approved by security holders

—

—

—

Total

3,085,000

9.73

3,276,000

      The Company did not repurchase any equity securities during the fourth quarter of 2004.

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Item 6.	Selected Financial Data

      The following table summarizes the Company’s selected historical consolidated financial information for each of the last five years. The selected financial information under the captions “Consolidated Statements of Earnings Data” and “Selected Other Consolidated Data” has been derived from the Company’s audited consolidated financial statements and internal records. This table should be read in conjunction with the Company’s other financial information, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements included elsewhere in this document.

				2004				2003				2002				2001				2000(a)
				(In thousands, except earnings per share, ratios and
				number of Company-owned restaurants)
Consolidated Statements of Earnings Data
Restaurant sales				$	827,015				805,009				773,817				745,163				704,624
Cost of sales:
	Food and beverage				288,083				283,535				275,674				270,155				263,799
	Payroll and benefits				267,698				256,574				242,191				226,950				212,108
	Depreciation				34,194				32,503				30,226				30,238				27,668
	Other restaurant expenses				117,229				112,872				104,337				101,406				90,051
		Total cost of sales			707,204				685,484				652,428				628,749				593,626
General and administrative expenses					41,416				38,600				37,263				38,447				34,855
Interest expense					10,640				10,216				9,302				11,687				13,905
Royalties from franchised restaurants					(1,161	)			(1,503	)			(1,663	)			(1,281	)			(1,171	)
Other income, net					(2,602	)			(2,709	)			(2,486	)			(2,824	)			(2,413	)
		Earnings before income taxes			71,518				74,921				78,973				70,385				65,822
Income taxes					24,592				25,098				28,588				25,339				23,839
		Net earnings		$	46,926				49,823				50,385				45,046				41,983
Earnings per share(b):
	Basic			$	1.12				1.18				1.15				0.98				0.85
	Diluted				1.09				1.14				1.11				0.95				0.85
Weighted-average shares(b):
	Basic				41,803				42,210				43,680				45,881				49,196
	Diluted				43,235				43,754				45,518				47,519				49,643
Selected Other Consolidated Data
Working capital deficit				$	(45,394	)			(24,328	)			(24,684	)			(23,532	)			(31,263	)
Current ratio					0.3/1				0.5/1				0.5/1				0.6/1				0.3/1
Cash provided by operations				$	90,392				94,512				82,431				84,944				79,509
Property and equipment additions					76,333				76,853				74,125				51,982				58,369
Total assets					684,346				651,689				613,079				583,129				556,061
Long-term debt (including current portion)					183,000				196,000				202,000				178,000				192,000
Repurchases of common stock					18,208				18,464				51,950				22,322				43,758
Shareholders’ equity					395,606				356,940				320,481				316,754				282,429
Company-owned restaurants open at end of year					341				334				324				313				301

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(a)	Indicates a 53-week period
(b)	All amounts have been restated to reflect the 3-for-2 stock split in May 2002.

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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

      The Company’s principal business is the ownership and operation of family dining restaurants with grill/buffet formats under the “Ryan’s” and “Fire Mountain” brand names. At December 29, 2004, the Company operated 341 restaurants (294 Ryan’s brand and 47 Fire Mountain brand) in 23 states. The principal product for both brands is a self-service buffet, which features hand-carved and other meats, vegetables, pizza, soups, fresh and prepared salads, fruit, bakery products and soft-serve ice cream and yogurt. About one-half of the Ryan’s restaurants and all of the Fire Mountain restaurants also have the display cooking format, which involves a glass-enclosed grill and cooking area that extends into the dining room. At restaurants with the display cooking format, a variety of meats, such as steak, chicken and seafood, are grilled daily and available to customers as part of the buffet price. Plated, grilled entrée selections are also available at the Ryan’s restaurants without the display cooking format. Both brands are characterized by their friendly and attentive service and affordable prices.

      The Company’s revenues are derived principally from food and beverage sales at its restaurants. Sales are generally transacted in cash, checks or credit/debit cards. The latter item is essentially as liquid as cash as it is generally available for use by the Company within two days. Sales made on accounts receivable are not significant. Inventories are purchased on credit and are rapidly converted to cash. Therefore, the Company does not maintain significant receivables or inventories, and other working capital requirements for operations are not significant.

      Material opportunities for the Company focus on growing its restaurant base in a profitable manner and increasing sales at its existing restaurants. Management considers its store-level managers to be key factors in achieving both of these objectives and believes that controlled growth in the number of its restaurants at a rate of approximately 4% per year is optimal for training and maintaining strong store-level management teams. The Company also strengthens these teams by striving to keep the teams intact at each restaurant and by continuous training programs. Unit-level sales are also impacted by hourly staff training and local marketing programs. In addition, sales at existing Ryan’s restaurants have been favorably impacted by conversion to the display cooking format under the Fire Mountain name.

      Restaurant sales can be impacted by changes in personal income levels, changes in consumers’ preference for family dining and food safety concerns by consumers. In 2004, the average ticket, or sale, per customer at Ryan’s and Fire Mountain combined was $7.95. The Company’s restaurants are especially popular with families and senior citizens, and management strives to attract and retain these customer groups by serving good food at affordable prices. Management believes that this pricing policy helps the Company’s restaurants remain a favorable dining choice even when its customers undergo economic hardships.

      Management also recognizes the increase in restaurant choices for consumers and the growing popularity of casual-dining restaurants over the past ten years. The Ryan’s brand, which was started in 1978, has undergone many format changes over the years. About one-half of the Ryan’s restaurants have a traditional family steakhouse format, which is characterized by customers carrying their drinks and silverware to their tables and á la carte entrée selections that are available in addition to the buffet described above. The display cooking format is not available at these restaurants. The format in the other Ryan’s restaurants has been modified to feature display cooking, and drinks and silverware are brought to the tables by servers. The only menu selection available to customers is the buffet. The Fire Mountain brand incorporates the changes made to the modified Ryan’s and also features updated interior furnishings, an upscale food presentation and a lodge-look exterior. By providing more complete table service and surroundings that are more visually interesting, management believes that the Fire Mountain brand gives consumers an affordable alternative to other casual-dining concepts. Growth plans for the Ryan’s and Fire Mountain brands are described below in “Liquidity and Capital Resources”.

      Also, food safety concerns by consumers can affect sales. Accordingly, food safety is a top priority for the Company. Food vendors are held to the highest standards, and all store managers are certified and periodically

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      Sales and profit growth can be impacted if the Company cannot recruit and retain store managers. To meet this challenge, the Company pays competitive salaries and bonuses and, through its store growth, offers excellent opportunities for future promotions. In addition, many managers are on a rotating four-day weekly work schedule, and manager transfers are made only for special circumstances. The Company also offers an Operating Partner Program for qualified managers, who, upon invitation and then joining the plan, can stay in their respective restaurants for a five-year period. Operating Partners receive cash bonuses based on both the operating profit and profit improvement of their respective restaurants and also receive a deferred cash bonus at the end of the five-year period. An Operating Partner who completes his or her five years as an Operating Partner is eligible for promotion to Senior Operating Partner. Upon acceptance into the program, a new Senior Operating Partner receives a salary increase and starts a new five-year deferred cash bonus cycle. At December 29, 2004, there were 108 Operating Partners and 38 Senior Operating Partners in place, collectively representing 146 or 43% of the Company’s restaurants at that date. The Company’s long-term goal is to have Operating Partners or Senior Operating Partners at approximately two-thirds of its restaurants.

      Principal risks to the Company’s sales and profit growth plans include unsuitable locations for new or existing restaurants, significant increases in product costs and ineffective controls over restaurant operating costs. Sites for new restaurants are evaluated using both demographic software and on-site visits. Consumer income, population density, traffic patterns and retail proximity are important factors used in site selection. Also, executive management visits and approves all sites prior to purchase. Existing sites are also periodically reviewed for long-term suitability, and restaurants may be relocated to new sites within the same market area if changing retail conditions have made an existing site unsuitable for long-term growth prospects. During 2004, the Company relocated four restaurants, resulting in average sales increases at the new sites in excess of 50% over the prior year. Significant increases in product costs may also adversely affect store-level profits. Fortunately, due to the wide variety of products offered at the restaurants, there are typically decreases in the cost of other products to offset many cost increases. Subject to competitive factors, menu price increases can be implemented to maintain profit levels. However, this step is normally taken as a last measure by the Company in order to maintain affordable pricing for its customers. Finally, the Company maintains strong cost controls supplemented by an incentive bonus system that rewards managers for good sales and cost containment performance. Food and payroll costs are measured weekly, and store-level profits provide the basis for certain bonus payments for store managers, particularly those managers in the Operating Partner Program, as well as for their supervisory personnel.

Critical Accounting Policies

      Critical accounting policies are defined as those that have a significant impact on the Company’s financial statements and involve difficult or subjective estimates of future events by management. Management’s estimates could differ significantly from actual results, leading to possible significant adjustments to future financial results. The following policies are considered by management to involve estimates that most critically impact reported financial results.

	Asset Lives

      Property and equipment are recorded at cost, less accumulated depreciation. Buildings and land improvements are depreciated over estimated useful lives ranging from 25 to 39 years, and equipment is depreciated over estimated useful lives ranging from 3 to 20 years. Depreciation expense for financial statement purposes is calculated using the straight-line method. Management is responsible for estimating the initial useful lives and any revisions thereafter and bases its estimates principally on historical usage patterns of the assets. Such revisions to the useful lives have not significantly impacted the Company’s results of operations in recent years. Material differences in the amount of reported depreciation could result if different assumptions were used.

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	Impairment of Long-Lived Assets

      Long-lived assets, which consist principally of restaurant properties, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management reviews restaurants for possible impairment if the restaurant has had cash flows of $50,000 or less in the aggregate over the previous 12 months or if it has been selected for relocation and the new site is under construction. For restaurants that will continue to be operated, the carrying amount is compared to the undiscounted future cash flows, including proceeds from future disposal, over the remaining useful life of the restaurant. The estimate of future cash flows is based on management’s review of historical and current sales and cost trends of both the subject and similar restaurants. The estimate of proceeds from future disposal is based on management’s knowledge of current and planned development near the restaurant site and on current market transactions. Each of these estimates is based on assumptions, such as with respect to future sales and costs, that may differ materially from actual results. If the carrying amount exceeds the sum of the estimated undiscounted future cash flows, the carrying value is reduced to the restaurant’s current fair value. If the decision has been made to close and sell a restaurant, the carrying value of that restaurant is reduced through accelerated depreciation to its current fair value less costs to sell and is no longer depreciated. Total impairment costs, including related accelerated depreciation charges, amounted to $1,042,000 in 2004, $936,000 in 2003 and $1,480,000 in 2002.

	Self-Insurance Liabilities

      The Company self-insures a significant portion of expected losses from its workers’ compensation, general liability and team member medical programs. See note 6 in the accompanying consolidated financial statements for the aggregate amount of these liabilities. For workers’ compensation and general liability claims, the portion of any individual claim that exceeds $250,000 is covered by insurance purchased by the Company. Accrued liabilities are recorded for the estimated, undiscounted future net payments, or ultimate costs, to settle both reported claims and claims that have been incurred but not reported. On a quarterly basis, management reviews claim values as estimated by a third-party claims administrator (“TPA”) and then adjusts these values for estimated future increases in order to record ultimate costs. Both current and prior years’ claims are reviewed because estimated claim values are frequently adjusted by the TPA as new information, such as updated medical reports or settlements, is received. Management reviews the relationship between historical claim estimates and payment history, overall number of accidents and historical claims experience in order to make an ultimate value estimate. For team member medical claims, the portion of any individual claim that exceeds $300,000 is covered by insurance purchased by the Company. Accruals are based on management’s review of historical claim experience. Unexpected changes in any of these factors could result in costs that are materially different than initially reported.

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Net Earnings

      The following table presents items in the consolidated statements of earnings as a percentage of restaurant sales and the percentage change of the dollar amounts between years:

				Percentage of Restaurant Sales												Percentage Change
				2004				2003				2002				2004/2003				2003/2002
Restaurant sales					100.0	%			100.0				100.0				2.7	%			4.0
Cost of sales:
	Food and beverage				34.8				35.2				35.6				1.6				2.9
	Payroll and benefits				32.4				32.0				31.3				4.3				5.9
	Depreciation				4.1				4.0				3.9				5.2				7.5
	Other restaurant expenses				14.2				14.0				13.5				3.9				8.2
		Total cost of sales			85.5				85.2				84.3				3.2				5.1
General and administrative expenses					5.0				4.7				4.8				7.3				3.6
Interest expense					1.3				1.3				1.2				4.2				9.8
Royalties from franchised restaurants					(0.1	)			(0.2	)			(0.2	)			(22.8	)			(9.6	)
Other income, net					(0.3	)			(0.3	)			(0.3	)			(3.9	)			9.0
		Earnings before income taxes			8.6				9.3				10.2				(4.5	)			(5.1	)
Income taxes					3.0				3.1				3.7				(2.0	)			(12.2	)
		Net earnings			5.6	%			6.2				6.5				(5.8	)%			(1.1	)

2004 Compared to 2003

      Total restaurant sales increased by $22.0 million, or 2.7%, to $827.0 million in 2004 from $805.0 million in 2003. The sales increase resulted from incremental sales, amounting to approximately $26.1 million, from new restaurants opened in 2004 and 2003, partially offset by a 0.7% decrease in same-store sales. In computing same-store sales, the Company averages weekly sales for those units operating for at least 18 months. All converted or relocated stores are included in the same-store sales calculation, provided that their underlying stores were operating for at least 18 months. Same-store sales and related factors in 2004 compared to 2003 and 2003 compared to 2002 were as follows:

Same-store		2004				2003
Sales			(0.7)%				0.1%
Customer count			(4.3)%				(2.7)%
Menu factor			3.6%				2.8%

      Same-store sales weakened during 2004 as the year progressed, declining from up 4.8% during the first quarter to down 4.4% during the fourth quarter. Same-store customer counts also decreased during 2004, with a 1.1% increase during the first quarter and a 7.6% decrease during the fourth quarter. The menu factor principally represents year-over-year menu price increases.

      Management attributes the weak sales trends during 2004 to declining consumer confidence levels. High energy costs and uncertain economic conditions impacted restaurant sales throughout the last half of the year. Customers experienced increased gasoline and home energy costs, resulting in more careful spending and fewer restaurant visits. In addition, harsh weather conditions, particularly hurricanes in August and September and severe winter weather in December, adversely affected 2004 sales results.

      During 2004, the Company opened 10 new and relocated four restaurants. All new restaurants in 2004 were opened with the display cooking format and lodge-look exterior and achieved first-year annualized sales volumes that averaged $3.0 million per restaurant. Seven restaurants were closed during 2004, five of which were for relocation. Management defines a relocation as a restaurant opened within 6 months after the closing

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      Total cost of sales increased 3.2% to $707.2 million in 2004 from $685.5 million in 2003. Such costs, as a percentage of sales, were 85.5% for 2004 and 85.2% for 2003. These costs are presented in a tabular format in the “Net Earnings” section above and discussed more fully in the following paragraph.

      Food and beverage costs decreased to 34.8% of sales in 2004 from 35.2% of sales in 2003 resulting principally from lower seafood and produce prices, partially offset by higher beef costs. Menu price increases and an increased store-level focus on cost control by managers also contributed to lower food costs as a percent of sales. Payroll and benefits increased to 32.4% of sales in 2004 from 32.0% of sales in 2003 due to higher store management salaries and medical insurance expense. All other restaurant costs, including depreciation, increased to 18.3% of sales in 2004 compared to 18.0% of sales in 2003 due mainly to higher utility costs.

      General and administrative expenses increased to 5.0% of sales in 2004 from 4.7% of sales in 2003 due principally to the leveraging effect that the lower 2004 average unit sales levels had on this mainly fixed-cost category.

      Interest expense amounted to $10.6 million in 2004 (1.3% of sales) compared to $10.2 million in 2003 (1.3% of sales). The Company’s weighted average interest rate was 6.2% and 5.5% for 2004 and 2003, respectively. Interest expense in 2004 was impacted by a $14.9 million decrease in average outstanding debt during 2004. The Company did not have any share repurchase transactions after May 2004, and excess cash was used to repay loans under the Company’s revolving credit facility (see “Liquidity and Capital Resources”).

      Royalties from franchised restaurants decreased to $1.2 million in 2004 from $1.5 million in 2003 due principally to Family Steak Houses of Florida, Inc. (“FSH”), the Company’s sole franchisee, operating fewer stores in the current year. In December 2003, the Company and FSH amended their franchise agreement so that over the following 18 months, FSH would either sell, close or convert to a non-affiliated brand its current Ryan’s restaurants, and the existing franchise relationship would be terminated by no later than June 30, 2005. FSH operated seven Ryan’s restaurants at December 29, 2004. Management plans to open Company-owned restaurants in FSH’s former territory, starting in 2005.

      Based upon the above changes to revenues and expenses, earnings before income taxes decreased to $71.5 million in 2004 from $74.9 million in 2003.

      The effective income tax rate for 2004 increased to 34.4% compared to 33.5% in 2003 due principally to higher state income tax expense, partially offset by higher federal employment-related tax credits. State income tax expense in 2004 increased as a result of certain judicial and administrative rulings that adversely affected the Company’s current and past state tax positions.

      Net earnings decreased to $46.9 million in 2004 (5.6% of sales) from $49.8 million in 2003 (6.2% of sales). Diluted weighted-average shares decreased by 1.2% to 43,235,000 in 2004 compared to 43,754,000 in 2003 due to the Company’s stock repurchase program. Accordingly, diluted earnings per share (“DEPS”) decreased by 4.4% to $1.09 in 2004 from $1.14 in 2003.

2003 Compared to 2002

      Total restaurant sales increased by $31.2 million, or 4.0%, to $805.0 million in 2003 from $773.8 million in 2002. Incremental sales from restaurants opened in 2003 and 2002 amounted to approximately $38.3 million and were partially offset by an estimated $7.1 million loss in sales associated with the temporary closing of 27 stores for conversion to the display cooking format with a lodge-look exterior. Each such store was closed

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Same-store		2003				2002
Sales			0.1%				(0.7)%
Customer count			(2.7)%				(4.6)%
Menu factor			2.8%				3.9%

      Same-store sales during 2003 improved as the year progressed, ranging from down 4.2% during the first quarter to up 4.0% during the fourth quarter. Same-store customer counts also improved during 2003, with a 7.2% decline during the first quarter and a 0.8% increase during the fourth quarter. Management attributes this sales trend principally to an improving retail environment, the Company’s lodge-look conversions and the implementation of a store-level marketing program. The menu factor principally represents year-over-year menu price increases.

      During 2003, the Company opened 12 new and relocated three restaurants. Accordingly, at the end of 2003 and 2002, the Company owned and operated 334 and 324 restaurants, respectively.

      Total cost of sales increased 5.1% to $685.5 million in 2003 from $652.4 million in 2002. Such costs, as a percentage of sales, were 85.2% for 2003 and 84.3% for 2002. These costs are presented in a tabular format in the “Net Earnings” section above and discussed more fully in the following paragraph.

      Food and beverage costs decreased to 35.2% of sales in 2003 from 35.6% of sales in 2002 resulting from menu price increases, an increased store-level focus on cost control and lower seafood, poultry and pork prices, partially offset by higher beef costs. Payroll and benefits increased to 32.0% of sales in 2003 from 31.3% of sales in 2002 due to higher store management pay and payroll tax expense, partially offset by well-controlled hourly labor costs. All other restaurant costs, including depreciation, increased to 18.0% of sales in 2003 compared to 17.4% of sales in 2002 due to higher natural gas, depreciation, store opening and local store advertising costs.

      General and administrative expenses decreased to 4.7% of sales in 2003 from 4.8% of sales in 2002 due principally to the phase-out of the hidden shopper bonus program during 2002.

      Interest expense amounted to $10.2 million in 2003 (1.3% of sales) compared to $9.3 million in 2002 (1.2% of sales). The Company’s weighted average interest rate was 5.5% for both 2003 and 2002. Average debt levels increased by $8.1 million in 2003 as higher cash balances were maintained during much of the year due to the timing of payments related to the Company’s revolving credit facility.

      Royalties from franchised restaurants decreased to $1.5 million in 2003 from $1.7 million in 2002 due principally to FSH operating fewer stores in the current year.

      Based upon the above changes to revenues and expenses, earnings before income taxes decreased to $74.9 million in 2003 from $79.0 million in 2002.

      The effective income tax rate for 2003 decreased to 33.5% compared to 36.2% in 2002 due to higher federal and state tax credits and lower state income tax expense.

      Net earnings decreased to $49.8 million in 2003 (6.2% of sales) from $50.4 million in 2002 (6.5% of sales). Diluted weighted-average shares decreased by 3.9% to 43,754,000 in 2003 compared to 45,518,000 in 2002 due to the Company’s stock repurchase program. Accordingly, DEPS increased by 2.7% to $1.14 in 2003 from $1.11 in 2002.

Liquidity and Capital Resources

      The Company’s principal source of liquidity is from its restaurants sales, which, as noted above, are primarily derived from cash, checks or credit/debit cards. Principal uses of cash are operating expenses, which have been discussed in the preceding sections, capital expenditures and share repurchases.

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      A comparison of the Company’s sources and uses of funds for 2004 and 2003 follow (in millions):

		2004				2003				Change
Net cash provided by operating activities		$	90.4				94.5				(4.1	)
Net cash used in investing activities			(66.5	)			(67.6	)			1.1
Net cash used in financing activities			(25.2	)			(20.9	)			(4.3	)
Net increase (decrease) in cash and cash equivalents		$	(1.3	)			6.0				(7.3	)

      Net cash provided by operating activities decreased due to lower net earnings in 2004 combined with large increases in self-insurance and accrued compensation liabilities in 2003 that did not reoccur in 2004. These increases generated available cash in 2003. At December 29, 2004, the Company’s working capital amounted to a $45.4 million deficit compared to a $24.3 million deficit at December 31, 2003. The $21.1 million change in working capital resulted primarily from the first payment on the 9.02% senior notes, amounting to $18.8 million, becoming current in 2004. The Company does not anticipate any adverse effect from the current working capital deficit due to the significant and steady level of cash flow provided by operations.

      Net cash used in investing activities decreased by $1.1 million. Total capital expenditures decreased to $76.3 million in 2004 from $76.8 million in 2003 due to lower new store expenditures for buildings and equipment being almost entirely offset by higher land purchases. Proceeds from the sale of property and equipment increased by $0.6 million in 2004. These sales typically involve closed restaurant properties and excess land and occur on an irregular basis during any given year.

      During 2005, the Company plans to build and open 17 to 21 new restaurants, including four to six potential relocations, with an average unit cost (including land) of approximately $3.3 million. These restaurants will open with display cooking and a lodge-look exterior and will operate with the Fire Mountain brand name. Management also intends to remodel approximately 20 to 25 Ryan’s brand restaurants with these same features at an estimated total cost of $18 million. Each remodeled restaurant will operate as either a Ryan’s or a Fire Mountain based on the conditions of its particular market. Important factors for the branding decision include the historical sales and profit performance of the existing Ryan’s restaurant, the market’s competitive environment and management’s opinion of the market’s disposition towards the Ryan’s brand name. Total 2005 capital expenditures are estimated at $94 million. The Company is currently concentrating its efforts on Company-owned restaurants and is not actively pursuing any additional franchised locations, either domestically or internationally.

      Net cash used in financing activities increased by $4.3 million due principally to a $7.0 million increase in the repayment of the revolving credit facility, partially offset by a $2.9 million increase in proceeds from stock options exercised. Cash used for repurchases of common stock decreased $0.3 million from the prior year.

      The Company began its stock repurchase program in March 1996 and is currently authorized to repurchase up to an aggregate 55 million shares of its common stock through January 2008. At December 29, 2004, approximately 44.2 million shares, or 55% of total shares outstanding at the beginning of the repurchase program, had been purchased at an average cost of $7.53 per share, amounting to $332.8 million in total. Repurchases may be made from time to time on the open market or in privately negotiated transactions in accordance with applicable securities regulations, depending on market conditions, share price and other factors. The Company’s current credit agreements generally limit share repurchases to 50% of net earnings. Additional repurchases are allowed based on capital expenditure levels. Even though the Company has not repurchased any shares since May 2004, management intends to actively proceed with the repurchase program through 2005, subject to the continued availability of capital, the aforementioned limitations imposed by the credit agreements, applicable securities regulations and the other factors described in “Forward-Looking Information”.

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      The Company’s contractual obligations at December 29, 2004 were as follows:

		Payments Due by Period (in millions)
						Less than												More Than
Contractual Obligations		Total				1 Year				1-3 Years				3-5 Years				5 Years
Due in fiscal year							2005				2006-2007				2008-2009				After 2009
Long-term debt (including current portion)		$	183.0				18.8				51.8				55.3				57.1
Operating leases			10.6				1.2				2.3				1.7				5.4
Construction obligations			10.1				10.1				—				—				—
Total		$	203.7				30.1				54.1				57.0				62.5

The Company’s long-term debt and operating leases are described in footnotes 3 and 5, respectively, of the accompanying consolidated financial statements. Construction obligations represent commitments for store construction ($9.4 million) and land purchases ($0.7 million). The Company has also entered into various contracts for food and other restaurant supply purchases that set pricing and product specifications, but do not specify any minimum purchase quantities.

      At December 29, 2004, the Company’s debt consisted of $75 million of 9.02% senior notes, $100 million of 4.65% senior notes and a $150 million revolving credit facility of which $8 million was outstanding. During December 2004, the Company refinanced its revolving credit facility, increasing the maximum borrowing level from $100 million to $150 million. The loan agreements contain minimum net worth requirements and maximum leverage ratios as well as restrictions on future stock repurchases, dividends, capital expenditures, investments and sales of assets.

      After allowances for letters of credit and other items, there was approximately $129 million in funds available under the revolving credit facility at December 29, 2004. During 2005, management estimates that cash generated from operations will approximate the Company’s capital expenditure requirements. Additional cash is expected to be generated from the proceeds from property sales and from the exercise of stock options. Additional debt may be incurred in order to meet the Company’s share repurchase objectives. However, based on current projections and target debt levels, management estimates that no more than $15 million of additional borrowings during 2005 will be required.

      The Company’s ability to draw on these funds may be limited by restrictions in the agreements governing both sets of senior notes and the revolving credit facility. Management believes that, based on current plans, these restrictions will not impair the Company’s operations during 2005.

      Management believes that its current capital structure is sufficient to meet its 2005 requirements. The Company has entered into interest rate hedging transactions in the past, and although no such agreements are currently outstanding, management intends to continue monitoring the interest rate environment and may enter into such transactions in the future if deemed advantageous.

Legal Contingencies

      In November 2002, a lawsuit was filed in the United States District Court, Middle District of Tennessee, Nashville Division, on behalf of three plaintiffs alleging various wage and hour violations by the Company of the Fair Labor Standards Act of 1938. The plaintiffs’ attorneys are seeking collective-action status on this complaint. In October 2003, the presiding judge denied the Company’s request to enforce the arbitration agreements signed by the plaintiffs and also ordered the Company to turn over certain employee addresses to the plaintiffs’ attorneys. The Company has appealed this decision. As part of the appeal process, the presiding judge stayed the order regarding the employee addresses. Due to the evolving nature of this case, the potential impact to the Company’s financial results cannot be estimated at this time. Accordingly, no accrual for a loss contingency has been made in the accompanying consolidated financial statements.

      In addition, from time to time, the Company is involved in various legal claims and litigation arising in the normal course of business. Based on currently known legal actions, management believes that, as a result

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New Accounting Pronouncements

      In December 2003, the Financial Accounting Standards Board (“FASB”) revised Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities,” which was originally issued in January 2003, to provide guidance regarding issues arising from the implementation of FIN 46. This interpretation addresses the consolidation by business enterprises of variable interest entities, as defined in the interpretation, and sets forth additional disclosure regarding such interests. For entities acquired or created before February 1, 2003, this interpretation was effective by no later than the end of the first interim or reporting period ending after March 15, 2004, except for those variable interest entities that are considered to be special purpose entities, for which the effective date was by no later than the end of the first interim or annual reporting period ending after December 15, 2003. For all entities that were acquired subsequent to January 31, 2003, this interpretation was effective as of the first interim or annual period ending after December 31, 2003. The adoption of FIN 46 has not affected the Company’s consolidated financial statements.

      In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment,” (“SFAS 123R”), which amends SFAS No. 123 and SFAS No. 95. SFAS 123R requires all companies to measure compensation cost for all share-based payments, including employee stock options, at fair value, and will be effective for interim or annual periods beginning after June 15, 2005. The Company is currently evaluating the effect that this accounting change will have on its financial position and results of operations. See Note 1 to the accompanying consolidated financial statements for the pro forma effect on reported net earnings as if SFAS No. 123 had been in effect for the three years ended December 29, 2004.

Impact of Inflation

      The Company’s operating costs that may be affected by inflation consist principally of food, payroll and utility costs. A significant number of the Company’s restaurant team members are paid at the Federal minimum wage or, if higher, the applicable state minimum wage and, accordingly, legislated changes to the minimum wage rates affect the Company’s payroll costs. There has been legislation introduced to increase the minimum wage in the U.S. Congress and in the legislatures of approximately one-half of the states in which the Company operates. It is impossible to predict which increases will be implemented. If such increases were implemented, the Company expects that payroll costs, as a percent of sales, would increase. However, the Company is generally able to increase menu prices in order to cover most of the dollar impact of legislated payroll rate increases.

      The Company considers its current price structure to be very competitive. This factor, among others, is considered by the Company when passing cost increases on to its customers. Sales prices were increased by 3.6% in 2004 and 2.8% in 2003.

Forward-Looking Information

      In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions that the statements in this annual report and elsewhere that are forward-looking involve risks and uncertainties that may impact the Company’s actual results of operations. All statements other than statements of historical fact that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as Company plans or strategies, deadlines for completing projects, expected financial results, expected regulatory environment and other such matters, are forward-looking statements. The words “estimates”, “plans”, “anticipates”, “expects”, “intends”, “believes” and similar expressions are intended to identify forward-looking statements. All forward-looking information reflects the Company’s best judgment based on current information. However, there can be no assurance that other factors will not affect the accuracy of such information. While it is not possible to identify all relevant factors, the following could cause actual results to differ materially from expectations: general economic conditions, including consumer confidence levels; competition; developments affecting the public’s perception

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Item 7A.	Quantitative and Qualitative Disclosure About Market Risk

      The Company’s exposure to market risk relates primarily to changes in interest rates. At December 29, 2004, approximately 96% of the Company’s outstanding debt was fixed-rate, consisting of $75 million of 9.02% senior notes due in 2008 with principal payments commencing in 2005 and $100 million of 4.65% senior notes due in 2013 with principal payments beginning in 2007. The Company’s variable-rate debt consists of loans outstanding under a $150 million revolving credit facility with several banks due in 2009, bearing interest at various floating interest rates plus a variable spread currently set at 1.000%. All loans are secured by the stock of the Company’s wholly-owned subsidiaries.

      The Company is exposed to interest rate risk on the variable-rate debt, which, as noted above, consists of loans outstanding under the revolving credit facility (see “Liquidity and Capital Resources”). At December 29, 2004, there were $8 million in outstanding loans under this facility. Interest rates for the facility generally change in response to the London Interbank Offered Rate (“LIBOR”). Management estimates that a one-percent change in interest rates throughout the year ended December 29, 2004 would have impacted interest expense by approximately $131,000 and net earnings by $86,000.

      While the Company has entered into derivative financial instrument agreements in the past, there were no such agreements outstanding during the year ended December 29, 2004. The Company has never entered into financial instrument agreements for trading or speculative purposes.

      The following table presents information regarding the Company’s long-term debt based on total outstanding debt balances as of December 29, 2004. The contractually required principal repayments and their related average interest rates by maturity date are presented in the table. For the variable-rate debt, the average interest rate is based on the two-month LIBOR at December 29, 2004 plus the current applicable margin of 1.000%. The applicable margin is subject to increase up to a maximum of 1.250% or decrease to a minimum of 0.625% in future years depending upon changes to the Company’s ratio of funded debt to EBITDA. The fair value of the variable-rate debt approximates its carrying amount at December 29, 2004 due to the variable-rate provisions of the related debt instruments. During 2004, the variable-rate debt had an average interest rate of 2.8%. The fair value of the fixed-rate debt is based on borrowing rates available to the Company for notes with similar terms and average maturities at December 29, 2004.

				As of December 29, 2004 Expected Maturity Dates
																								There-								Fair
Liabilities (dollars in millions)				2005				2006				2007				2008				2009				after				Total				Value
Long-term debt:
	Variable rate				—				—				—				—			$	8.0				—				8.0				8.0
		Average interest rate			3.5	%			3.5	%			3.5	%			3.5	%			3.5	%			—				3.5	%
	Fixed rate — 2000 senior notes			$	18.8				18.8				18.7				18.7				—				—				75.0				83.4
		Average interest rate			9.0	%			9.0	%			9.0	%			9.0	%			—				—				9.0	%
	Fixed rate — 2003 senior notes				—				—			$	14.3				14.3				14.3				57.1				100.0				99.6
		Average interest rate			4.7	%			4.7	%			4.7	%			4.7	%			4.7	%			4.7	%			4.7	%

19

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Item 8.	Financial Statements and Supplementary Data

Ryan’s Restaurant Group, Inc. and Subsidiaries
Index to Consolidated Financial Statements
Consolidated Statements of Earnings for the Years Ended December 29, 2004, December 31, 2003 and January 1, 2003			21
Consolidated Balance Sheets as of December 29, 2004 and December 31, 2003			22
Consolidated Statements of Cash Flows for the Years Ended December 29, 2004, December 31, 2003 and January 1, 2003			23
Notes to Consolidated Financial Statements			24
Report of Independent Registered Public Accounting Firm			34

20

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RYAN’S RESTAURANT GROUP, INC. AND SUBSIDIARIES

				Year Ended
				December 29,				December 31,				January 1,
				2004				2003				2003
				(In thousands, except earnings per share)
Restaurant sales				$	827,015				805,009				773,817
Cost of sales:
	Food and beverage				288,083				283,535				275,674
	Payroll and benefits				267,698				256,574				242,191
	Depreciation				34,194				32,503				30,226
	Other restaurant expenses				117,229				112,872				104,337
		Total cost of sales			707,204				685,484				652,428
General and administrative expenses					41,416				38,600				37,263
Interest expense					10,640				10,216				9,302
Royalties from franchised restaurants					(1,161	)			(1,503	)			(1,663	)
Other income, net					(2,602	)			(2,709	)			(2,486	)
		Earnings before income taxes			71,518				74,921				78,973
Income taxes					24,592				25,098				28,588
		Net earnings		$	46,926				49,823				50,385
Earnings per share:
	Basic			$	1.12				1.18				1.15
	Diluted				1.09				1.14				1.11
Weighted-average shares:
	Basic				41,803				42,210				43,680
	Diluted				43,235				43,754				45,518

See accompanying notes to consolidated financial statements.

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RYAN’S RESTAURANT GROUP, INC. AND SUBSIDIARIES

				December 29,				December 31,
				2004				2003
				(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents			$	7,354				8,617
	Receivables				4,639				4,293
	Inventories				5,611				5,648
	Prepaid expenses				1,016				1,758
	Deferred income taxes				5,110				5,150
		Total current assets			23,730				25,466
Property and equipment:
	Land and improvements				162,082				154,528
	Buildings				480,781				449,561
	Equipment				271,431				252,611
	Construction in progress				31,531				25,789
					945,825				882,489
	Less accumulated depreciation				295,852				264,339
		Net property and equipment			649,973				618,150
Other assets					10,643				8,073
		Total assets		$	684,346				651,689
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	5,963				6,580
	Current portion of long-term debt				18,750				—
	Income taxes payable				1,842				1,288
	Accrued liabilities				42,569				41,926
		Total current liabilities			69,124				49,794
Long-term debt					164,250				196,000
Deferred income taxes					47,674				42,824
Other long-term liabilities					7,692				6,131
		Total liabilities			288,740				294,749
Shareholders’ equity:
	Common stock of $1.00 par value; authorized 100,000,000 shares; issued 41,890,000 in 2004 and 41,843,000 in 2003				41,890				41,843
	Additional paid-in capital				3,878				1,412
	Retained earnings				349,838				313,685
		Total shareholders’ equity			395,606				356,940
Commitments and contingencies
		Total liabilities and shareholders’ equity		$	684,346				651,689

See accompanying notes to consolidated financial statements.

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RYAN’S RESTAURANT GROUP, INC. AND SUBSIDIARIES

					Year Ended
					December 29,				December 31,				January 1,
					2004				2003				2003
					(In thousands)
Cash flows from operating activities:
	Net earnings				$	46,926				49,823				50,385
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization				35,968				34,445				31,644
		Gain on sale of property and equipment				(1,097	)			(150	)			(28	)
		Tax benefit from exercise of stock options				3,337				1,412				1,784
		Deferred income taxes				4,890				2,975				8,328
		Decrease (increase) in:
			Receivables			(346	)			717				(204	)
			Inventories			37				(529	)			(28	)
			Prepaid expenses			742				(492	)			(450	)
			Income taxes receivable			—				2,739				(2,739	)
			Other assets			(2,206	)			(1,130	)			(528	)
		Increase (decrease) in:
			Accounts payable			(617	)			(2,090	)			(2,532	)
			Income taxes payable			554				1,288				(3,238	)
			Accrued liabilities			643				4,447				(698	)
			Other long-term liabilities			1,561				1,057				735
Net cash provided by operating activities						90,392				94,512				82,431
Cash flows from investing activities:
	Proceeds from sale of property and equipment					9,877				9,240				5,467
	Capital expenditures					(76,333	)			(76,853	)			(74,125	)
Net cash used in investing activities						(66,456	)			(67,613	)			(68,658	)
Cash flows from financing activities:
	Proceeds from issuance of senior notes					—				100,000				—
	Net proceeds from (repayment of) revolving credit facility					(13,000	)			(106,000	)			24,000
	Debt issuance costs					(602	)			(160	)			—
	Proceeds from stock options exercised					6,611				3,688				3,508
	Repurchases of common stock					(18,208	)			(18,464	)			(51,950	)
Net cash used in financing activities						(25,199	)			(20,936	)			(24,442	)
Net increase (decrease) in cash and cash equivalents						(1,263	)			5,963				(10,669	)
Cash and cash equivalents — beginning of period						8,617				2,654				13,323
Cash and cash equivalents — end of period					$	7,354				8,617				2,654
Supplemental disclosure
Cash paid during the year for:
	Interest, net of amount capitalized				$	10,760				9,914				8,794
	Income taxes					16,488				17,262				24,784

See accompanying notes to consolidated financial statements.

23

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RYAN’S RESTAURANT GROUP, INC. AND SUBSIDIARIES

Note 1.     Description of Business and Summary of Significant Accounting Policies

      Ryan’s Restaurant Group, Inc. (formerly Ryan’s Family Steak Houses, Inc.) operates a chain of 341 Company-owned restaurants (as of December 29, 2004) located principally in the southern and midwestern United States and receives franchise royalties from an unrelated third-party franchisee that operates 7 restaurants (as of December 29, 2004) in Florida. The Company was organized in 1977, opened its first restaurant in 1978 and completed its initial public offering in 1982.

      Consolidation. The consolidated financial statements include the financial statements of Ryan’s Restaurant Group, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

      Fiscal Year. The Company’s fiscal year ends on the Wednesday nearest December 31, resulting in years of either 52 or 53 weeks. Each of the years ended December 29, 2004, December 31, 2003 and January 1, 2003 consists of 52 weeks.

      Restaurant Sales. Restaurant sales include food and beverage sales and are net of applicable state and local sales taxes. Restaurant sales are recognized upon delivery of services. Proceeds from the sale of gift certificates are deferred and recognized as revenue as they are redeemed.

      Franchise Royalties. Franchise royalties, which are based on a percentage of monthly sales, are recognized as income on the accrual basis. In the event that the franchisee experiences payment difficulties or, in management’s opinion, may be susceptible to such difficulties, franchise royalties may be recognized as income on the cash basis.

      Other Income. Other income consists principally of cash receipts from vending machines located in the Company’s restaurants, management’s estimate of abandoned gift certificates, the net gain on sale of assets not subject to impairment and sales tax filing discounts.

      Cash and Cash Equivalents. Cash and cash equivalents include cash and short-term investments with initial maturities of three months or less that are stated at cost which approximates market value.

      Inventories. Inventories consist of menu ingredients and restaurant supplies and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method.

      Property and Equipment. Property and equipment are stated at cost. Depreciation is calculated principally on the straight-line method over the following estimated useful lives: buildings and land improvements — 25 to 39 years and equipment — 3 to 20 years. Buildings and land improvements on leased property are amortized straight-line over the shorter of the expected lease term or estimated useful life of the asset. The expected lease term is consistent with the lease term assumed in the accounting for the underlying leases and includes the initial term and any renewal options that are reasonably assured of being exercised.

      The Company’s long-lived assets, which consist principally of restaurant properties, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered to be impaired, an impairment loss is recognized equal to the amount by which the carrying amount of the asset exceeds its fair value. Assets to be sold are reported at the lower of carrying amount or fair value less costs to sell.

      Other Assets. Other assets consist principally of long-term receivables, cash surrender values of life insurance policies, unamortized debt issuance costs and a long-term prepayment of land rent.

      Derivative Financial Instruments. The Company has used derivative financial instruments in the past to reduce its exposure to interest rate fluctuations. The Company does not enter into financial instrument agreements for trading or speculative purposes. There were no derivative financial instrument agreements outstanding during the periods presented.

      Self-Insurance Liabilities. The Company self-insures a significant portion of expected losses under its workers’ compensation, general liability and team member medical programs. Accrued liabilities have been

24

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recorded based on the Company’s estimates of the ultimate costs to settle reported claims and claims that have been incurred but not reported.

      Income Taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

      Stock Options. As allowed by Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” the Company accounts for its stock option plans in accordance with the intrinsic value provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. No compensation cost has been recognized for stock-based compensation in consolidated net earnings for the periods presented, as all options granted under the Company’s stock option plans had exercise prices equal to the market value of the underlying common stock on the date of grant. Had the Company determined compensation cost based on the fair value recognition provisions of SFAS No. 123, the Company’s net earnings and earnings per share would have been reduced to the pro forma amounts indicated in the following table:

				2004				2003				2002
				(In thousands, except earnings per
				share)
Net earnings, as reported				$	46,926				49,823				50,385
Less total stock-based compensation expense determined under fair value based method, net of related tax effects					(1,095	)			(1,486	)			(1,472	)
Pro forma net earnings				$	45,831				48,337				48,913
Earnings per share:
	Basic:
		As reported		$	1.12				1.18				1.15
		Pro forma			1.10				1.15				1.12
	Diluted:
		As reported			1.09				1.14				1.11
		Pro forma			1.06				1.10				1.07

      In December 2004, the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment,” (“SFAS 123R”), which amends SFAS No. 123 and SFAS No. 95. SFAS 123R requires all companies to measure compensation cost for all share-based payments, including employee stock options, at fair value, and will be effective for interim or annual periods beginning after June 15, 2005. The Company is currently evaluating the effect that this accounting change will have on its financial position and results of operations.

      Earnings Per Share. Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS includes common stock equivalents which arise from the hypothetical exercise of outstanding stock options using the treasury stock method.

      Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

25

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Reclassifications. Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the 2004 presentation. These reclassifications did not affect either the prior years’ net earnings or shareholders’ equity.

Note 2.     Income Taxes

      Income tax expense for the years ended December 29, 2004, December 31, 2003 and January 1, 2003, consists of:

			2004				2003				2002
			(In thousands)
Current:
	U.S. Federal		$	17,663				20,853				18,069
	State and local			2,039				1,270				2,191
Total current				19,702				22,123				20,260
Deferred:
	U.S. Federal			4,282				3,909				7,673
	State and local			608				(934	)			655
Total deferred				4,890				2,975				8,328
Total income taxes			$	24,592				25,098				28,588

      Income taxes differ from the amounts computed by applying the U.S. Federal statutory corporate rate of 35 percent to earnings before income taxes as follows:

			2004				2003				2002
			(In thousands)
Tax at Federal statutory rate			$	25,031				26,222				27,641
Increase (decrease) in taxes due to:
	State income taxes, net of Federal income tax benefit			1,721				218				1,850
	Federal tax credits			(2,682	)			(2,413	)			(1,697	)
	Other			522				1,071				794
Total income taxes			$	24,592				25,098				28,588

      The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 29, 2004 and December 31, 2003 are presented in the following table:

			2004				2003
			(In thousands)
Deferred tax assets:
	Self-insurance liabilities		$	4,509				4,550
	Deferred compensation			2,458				2,214
	Other			601				599
Total gross deferred tax assets				7,568				7,363
	Less valuation allowance			—				—
Net deferred tax assets				7,568				7,363
Deferred tax liabilities:
	Building and equipment			(50,132	)			(45,037	)
Total gross deferred tax liabilities				(50,132	)			(45,037	)
Net deferred taxes			$	(42,564	)			(37,674	)

26

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company did not establish a valuation allowance for deferred tax assets as of December 29, 2004 or December 31, 2003. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment and, accordingly, believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the benefits of these deductible differences at December 29, 2004.

Note 3.     Long-Term Debt

      Long-term debt at December 29, 2004 and December 31, 2003 consists of the following:

		2004				2003
		(In thousands)
Revolving credit facility with banks due December 2009, with weighted average interest of 3.43% at December 29, 2004; secured by the common stock of the Company’s wholly-owned subsidiaries		$	8,000				21,000
Senior notes payable bearing interest at 9.02%; payable in annual installments of $18,750,000 commencing January 2005, final installment due January 2008; secured by the common stock of the Company’s wholly-owned subsidiaries			75,000				75,000
Senior notes payable bearing interest at 4.65%; payable in annual installments of $14,285,714 commencing July 2007, final installment due July 2013; secured by the common stock of the Company’s wholly-owned subsidiaries			100,000				100,000
			183,000				196,000
Less current installments			18,750				—
Total long-term debt		$	164,250				196,000

      The revolving credit facility provides $150 million of total credit with $129 million available at December 29, 2004. It was implemented in December 2004, replacing a $100 million facility that would have expired in January 2005, and bears interest at various floating interest rates plus a variable spread that ranges from 0.625% to 1.250%. Interest is paid at least quarterly and is generally based on the London Interbank Offered Rate. Unused fees ranging from 0.125% to 0.225% of the average unused portion of the facility are paid quarterly. The variable spread and the unused fee rate were 1.000% and 0.175%, respectively, at December 29, 2004. Both percentages are based on the ratio of funded debt to EBITDA and are subject to adjustment quarterly. The revolving credit facility also includes a $25 million subfacility for letters of credit of which approximately $12 million was outstanding at December 29, 2004. The Company uses letters of credit principally for self-insurance purposes.

      Interest payments related to the senior notes are made semiannually for the 9.02% notes and quarterly for the 4.65% notes. Both of the senior note agreements allow the Company to make either partial or total prepayments of principal, subject to a specified “make-whole” premium.

      The loan agreements contain minimum net worth requirements and maximum leverage ratios as well as restrictions on future stock repurchases, dividends, capital expenditures, investments and sales of assets. As of December 29, 2004, the Company was in compliance with all covenants under the loan agreements and exceeded the most restrictive minimum net worth requirement by $60.9 million.

27

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The aggregate amount of installments due on long-term debt for each of the following years subsequent to December 29, 2004 are as follows: $18.8 million in 2005; $18.8 million in 2006; $33.0 million in 2007; $33.0 million in 2008; $22.3 million in 2009 and thereafter, $57.1 million.

      The fair value of the revolving credit facility approximates its carrying amount as of December 29, 2004 and December 31, 2003 due to its variable interest rate provisions. Based on the borrowing rates available to the Company for notes with similar terms and average maturities, the fair and book values of the 9.02% and the 4.65% senior notes at December 29, 2004 follow:

		Fair				Book
		Value				Value
		(In thousands)
9.02% senior notes		$	83,400				75,000
4.65% senior notes			99,600				100,000

Note 4.     Interest Cost

      The Company capitalizes interest cost as a component of the cost of new restaurant construction. A summary of interest cost incurred follows:

		2004				2003				2002
		(In thousands)
Interest cost capitalized		$	1,630				1,676				2,031
Interest cost charged to income			10,640				10,216				9,302
Total interest cost incurred		$	12,270				11,892				11,333

Note 5.     Leases

      The Company leases 19 restaurant sites under noncancelable operating leases with initial terms that expire over the next 1 to 20 years. The Company is also a party to one noncancelable operating lease for a restaurant building and its underlying land with an initial term that expires in 17 years. These leases contain renewal options for periods ranging from 10 to 30 years and require the Company to pay all executory costs such as property taxes, utilities and insurance. Rental payments are based on contractual amounts as set forth in the lease agreements and do not include any contingent rentals. The Company also leases dishwashing equipment at certain restaurants under agreements with five-year terms that are cancelable by the Company after the first 12 months. Total rental expense for operating leases amounted to $2,712,000 in 2004, $2,455,000 in 2003 and $2,488,000 in 2002. Future lease payments under the noncancelable operating leases as of December 29, 2004 are as follows:

			(In thousands)
Year End:
	2005		$	1,237
	2006			1,198
	2007			1,068
	2008			848
	2009			790
	Later years, through 2025			5,436
	Future lease payments		$	10,577

28

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 6.     Accrued Liabilities

      Accrued liabilities consist of the following:

		2004				2003
		(In thousands)
Self-insurance liabilities		$	13,466				12,932
Accrued compensation			10,677				10,938
Accrued taxes (other than income)			8,106				7,936
Accrued interest			3,760				3,879
Outstanding gift certificates			3,288				3,134
Accrued team member benefits			1,532				1,028
Accrued utility costs			301				734
Other accrued expenses			1,439				1,345
Total accrued liabilities		$	42,569				41,926

Note 7.     Shareholders’ Equity

      The components of shareholders’ equity are as follows:

			$1 Par Value				Additional				Retained
			Common Stock				Paid-in Capital				Earnings
			(In thousands)
Balances at January 2, 2002			$	45,816				5,042				265,896
	Net earnings			—				—				50,385
	Issuance of common stock under Stock Option Plans			645				2,863				—
	Tax benefit from exercise of nonqualified stock options			—				1,784				—
	Repurchases of common stock			(3,716	)			(7,623	)			(40,611	)
Balances at January 1, 2003				42,745				2,066				275,670
	Net earnings			—				—				49,823
	Issuance of common stock under Stock Option Plans			614				3,074				—
	Tax benefit from exercise of nonqualified stock options			—				1,412				—
	Repurchases of common stock			(1,516	)			(5,140	)			(11,808	)
Balances at December 31, 2003				41,843				1,412				313,685
	Net earnings			—				—				46,926
	Issuance of common stock under Stock Option Plans			1,079				5,532				—
	Tax benefit from exercise of nonqualified stock options			—				3,337				—
	Repurchases of common stock			(1,032	)			(6,403	)			(10,773	)
Balances at December 29, 2004			$	41,890				3,878				349,838

      The Company’s Board of Directors has authorized the repurchase of up to 55 million shares of the Company’s common stock through January 2008. At December 29, 2004, approximately 44.2 million shares had been purchased at an aggregate cost of $332.8 million since the beginning of the program in March 1996.

29

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Future repurchase transactions will be made from time to time on the open market or in privately negotiated transactions in accordance with applicable securities regulations, depending on market conditions, share price and other factors.

      On January 24, 2005, the Board of Directors authorized a Shareholder Rights Agreement (the “Agreement”) and declared a dividend of one Common Stock Purchase Right (a “Right”) for each outstanding share of common stock to shareholders of record on February 28, 2005. Such Rights only become exercisable (i) ten calendar days after a public announcement that a person or group, except for certain exempt persons specified in the Agreement, (an “Acquiring Person”) has acquired beneficial ownership of 20% or more of the Company’s common stock; or (ii) ten business days after a person or group commences or publicly announces its intention to commence a tender or exchange offer for an amount of the Company’s common stock that would result in the ownership by such person or group of 20% or more of the common stock. The Agreement was entered into on February 18, 2005 and replaces the Company’s prior rights agreement, which expired on February 10, 2005.

      Each Right may initially be exercised to acquire a one-half share of the Company’s common stock at an exercise price of $11.00, subject to adjustment. Thereafter, upon the occurrence of certain events specified in the Agreement (for example, if the Company is the surviving corporation of a merger with an Acquiring Person), the Rights entitle holders other than the Acquiring Person to acquire upon exercise common stock having a market value of twice the exercise price of the Rights. Alternatively, upon the occurrence of certain other events specified in the Agreement (for example, if the Company is acquired in a merger or other business combination transaction in which the Company is not the surviving corporation), the Rights would entitle holders other than the Acquiring Person to acquire upon exercise common stock of the acquiring company having a market value of twice the exercise price of the Rights.

      The Rights may be redeemed by the Company at a redemption price of $.001 per Right at any time prior to the tenth business day following public announcement that a 20% position has been acquired and before the final expiration date of the Rights. In addition, the Rights may be redeemed by shareholders following the proposal of a “qualified offer”. After the redemption period has expired, the Company’s right of redemption may be reinstalled under certain circumstances outlined in the Agreement. The Rights will expire on February 18, 2008. The Company is submitting the Agreement for ratification by its shareholders at its 2005 annual meeting of shareholders; if the shareholders do not ratify it, the Rights will expire after the meeting.

Note 8.     Team Member Retirement Plans

      The Company maintains a defined contribution retirement plan, which covers all team members who have at least one year of service and have attained 21 years of age. Participating team members may contribute from 1% to 15% of their compensation to the plan with the first 6% of compensation matched in cash by the Company at a 40% rate. The Company’s match for participants with 20 or more years of service increases to 100%. All plan assets are invested in a nationally recognized family of mutual funds. Retirement plan expense, including administrative costs, amounted to $1,748,000 in 2004, $1,597,000 in 2003 and $1,585,000 in 2002.

      Officers, certain key executives and certain corporate and restaurant-level managers may also participate in one of two nonqualified deferred compensation plans maintained by the Company. These plans provide benefits to the participants or their designated beneficiaries at specified future dates or upon the termination of employment or death. Subject to plan limitations, participants can defer a substantial portion of their compensation and receive a matching contribution comparable to the Company’s defined contribution retirement plan. Participant deferrals and any related Company contributions are credited to the participants’ deferred compensation accounts. Participants can select from a variety of investment options, and investment earnings are credited to their accounts. The Company informally funds its liability to the participants through the use of Company-owned life insurance contracts. The Company has the right to amend or terminate the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

plans. The amount of expense related to the deferred compensation plans was $331,000 in 2004, $315,000 in 2003 and $404,000 in 2002. Outstanding balances under the plans amounted to $4,351,000 at December 29, 2004 and $3,614,000 at December 31, 2003 and are included in other long-term liabilities in the accompanying balance sheets.

Note 9.	Stock Option Plan

      In 2002, the Company’s shareholders approved a stock option plan (“Plan”) pursuant to which the Company’s Board of Directors may grant options to officers and other team members. The Plan authorized grants of options to purchase up to 3,600,000 shares of authorized but unissued common stock. Under the terms of the Plan, which expires in 2012, a committee of non-employee directors has the authority to determine the eligibility, tax treatment, term, vesting period and exercise price. The Plan provides for a maximum ten-year life for 900,000 of the option shares and a maximum seven-year life for the remaining 2,700,000 option shares. Officer grants have vesting periods that generally do not exceed six months. Options granted to other team members typically vest pro-rata over four years. In addition, the Plan states that the exercise price of an option cannot be less than the fair market value, based on the closing market price, of the Company’s common stock on the day of the grant. The Plan also provides for option grants to non-employee Board members at a fixed amount of 5,000 shares per director granted annually on October 31 with an exercise price equal to that day’s closing market price. Options granted to Board members have vesting periods that generally do not exceed six months. At December 29, 2004, there were 2,754,000 shares available for grant under the Plan and another 522,000 shares available for grant under a predecessor plan. Options granted under the predecessor plan have terms generally similar to the current Plan, except that all options under the predecessor plan have a maximum ten-year life.

      Stock options were granted only to non-employee Board members during 2004. In February 2005, options for approximately 333,000 shares were granted to officers and other team members.

      A summary of the status of the Company’s current and predecessor stock option plans as of December 29, 2004, December 31, 2003 and January 1, 2003 and changes during the years ended on those dates is presented below:

		2004								2003								2002
						Weighted-Average								Weighted-Average								Weighted-Average
		Shares				Exercise Price				Shares				Exercise Price				Shares				Exercise Price
		(Shares in thousands)
Outstanding at beginning of year			4,414			$	9.01				4,592			$	8.10				4,728			$	7.41
Granted			25				13.99				731				12.72				773				10.68
Exercised			(1,079	)			7.50				(614	)			6.85				(645	)			5.95
Forfeited			(275	)			7.32				(295	)			8.31				(264	)			8.43
Outstanding at end of year			3,085				9.73				4,414				9.01				4,592				8.10
Exercisable at year-end			2,360								2,851								2,792

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table summarizes information about stock options outstanding at December 29, 2004:

		Options Outstanding												Options Exercisable
						Weighted-Average
Range of Exercise		Number Outstanding				Remaining								Number Exercisable				Weighted-Average
Prices		at 12/29/04				Contractual Life				Exercise Price				at 12/29/04				Exercise Price
		(Shares in thousands)
$4 to $6			628				4.4	years		$	5.09				628			$	5.09
$6 to $10			483				4.5				7.15				482				7.14
$10 to $13			1,883				6.6				11.73				1,186				11.65
$13 to $18			91				8.3				14.28				64				14.31
$4 to $18			3,085				5.9				9.73				2,360				9.06

      The per share weighted-average fair values of stock options issued during 2004, 2003 and 2002 were $5.08, $3.41 and $3.82, respectively. The fair value of each option grant was estimated using the Black-Scholes option-pricing model based on the following weighted-average assumptions:

		2004				2003				2002
Risk-free interest rate			3.8	%			3.3	%			3.3	%
Expected life (years)			7.4				5.1				5.2
Expected volatility			.24				.22				.34
Expected dividend yield			0	%			0	%			0	%

Note 10.	Earnings Per Share

      Basic and diluted earnings per share (“EPS”) are calculated as follows:

						2004				2003				2002
						(In thousands, except earnings per share)
Net earnings			a			$	46,926				49,823				50,385
Weighted-average common shares			b				41,803				42,210				43,680
Dilutive stock options							1,432				1,544				1,838
Adjusted weighted-average common shares			c				43,235				43,754				45,518
Basic EPS			a/b			$	1.12				1.18				1.15
Diluted EPS			a/c				1.09				1.14				1.11

      In order to prevent antidilution, outstanding stock options to purchase 3,000 shares of common stock in 2004 and 2003 and 1.1 million shares in 2002 were not included in the computation of diluted EPS.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 11.     Quarterly Consolidated Financial Data (Unaudited)

      Quarterly consolidated financial results for 2004 and 2003 are summarized as follows:

				Quarter
				First				Second				Third				Fourth				Total Year
				(In thousands, except earnings per share)
2004:
	Restaurant sales			$	211,657				216,546				205,331				193,481				827,015
	Net earnings				15,360				14,170				9,226				8,170				46,926
	Earnings per share:
		Basic		$	0.37				0.34				0.22				0.20				1.12
		Diluted			0.35				0.33				0.22				0.19				1.09
2003:
	Restaurant sales			$	193,192				208,504				205,686				197,627				805,009
	Net earnings				12,098				14,329				10,997				12,399				49,823
	Earnings per share:
		Basic		$	0.28				0.34				0.26				0.30				1.18
		Diluted			0.28				0.33				0.25				0.28				1.14

Note 12.     Disclosures About the Fair Value of Financial Instruments

      The Company’s significant financial instruments are cash and cash equivalents, receivables, notes payable, accounts payable, accrued liabilities and long-term debt. Except for long-term debt, the fair values of these financial instruments approximate their carrying values due to their short maturities. The fair value of the long-term debt is discussed in Note 3.

Note 13.     Legal Contingencies

      In November 2002, a lawsuit was filed in the United States District Court, Middle District of Tennessee, Nashville Division, on behalf of three plaintiffs alleging various wage and hour violations by the Company of the Fair Labor Standards Act of 1938. The plaintiffs’ attorneys are seeking collective-action status on this complaint. In October 2003, the presiding judge denied the Company’s request to enforce the arbitration agreements signed by the plaintiffs and also ordered the Company to turn over certain employee addresses to the plaintiffs’ attorneys. The Company has appealed this decision. As part of the appeal process, the presiding judge stayed the order regarding the employee addresses. Due to the evolving nature of this case, the potential impact to the Company’s financial results cannot be estimated at this time. Accordingly, no accrual for a loss contingency has been made in the accompanying consolidated financial statements.

      In addition, from time to time, the Company is involved in various legal claims and litigation arising in the normal course of business. Based on currently known legal actions, management believes that, as a result of its legal defenses and insurance arrangements, none of these other actions should have a material adverse effect on the Company’s business or financial condition, taken as a whole.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

      We have audited the accompanying consolidated balance sheets of Ryan’s Restaurant Group, Inc. and subsidiaries (the Company) as of December 29, 2004 and December 31, 2003, and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 29, 2004. We also have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company’s internal control over financial reporting was effective as of December 29, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on these consolidated financial statements, an opinion on management’s assessment, and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with the authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ryan’s Restaurant Group, Inc. and subsidiaries as of December 29, 2004 and December 31, 2003, and the results of its operations and its cash flows for each of the years in the three-year period ended December 29, 2004, in conformity with U.S. generally accepted accounting principles. Also, in

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Greenville, South Carolina

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Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None.

Item 9A.	Controls and Procedures

	Evaluation of Disclosure Controls and Procedures

      Management has established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

      Based on their evaluation as of December 29, 2004, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective at December 29, 2004 to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Management’s Report on Internal Control Over Financial Reporting

      Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of management, including the Company’s principal executive officer and principal financial officer, an evaluation of the effectiveness of internal control over financial reporting was conducted based on the framework in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation under the COSO framework, management has concluded that internal control over financial reporting was effective as of December 29, 2004. Management’s assessment of the effectiveness of internal control over financial reporting as of December 29, 2004 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Limitations on the Effectiveness of Controls

      The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations which may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

      During the fourth quarter of 2004, the Company did not make any changes in internal control over financial reporting that have materially affected, or are reasonably likely to affect, those controls.

PART III

Item 10.	Directors and Executive Officers of the Registrant

      The information required under this item is incorporated by reference to the Ryan’s Restaurant Group, Inc. Proxy Statement for the Annual Meeting of Shareholders to be held April 11, 2005 under the headings “Election of Directors”, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

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Item 11.	Executive Compensation

      The information required under this item is incorporated by reference to the Ryan’s Restaurant Group, Inc. Proxy Statement for the Annual Meeting of Shareholders to be held April 11, 2005 under the headings “Election of Directors — Compensation of Directors”, “Executive Compensation and Other Information”, “Report of the Compensation Committee” and “Performance Graph.”

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

      The information required under this item is incorporated by reference to the Ryan’s Restaurant Group, Inc. Proxy Statement for the Annual Meeting of Shareholders to be held April 11, 2005 under the headings “Election of Directors”, “Certain Beneficial Owners of Common Stock” and “Executive Officers.”

Item 13.	Certain Relationships and Related Transactions

      The information required under this item is incorporated by reference to the Ryan’s Restaurant Group, Inc. Proxy Statement for the Annual Meeting of Shareholders to be held April 11, 2005 under the headings “Election of Directors” and “Executive Compensation and Other Information — Deferred Compensation — Salary Continuation Agreement.”

Item 14.	Principal Accountant Fees & Services

      The information required under this item is incorporated by reference to the Ryan’s Restaurant Group, Inc. Proxy Statement for the Annual Meeting of Shareholders to be held April 11, 2005 under the headings “Ratification of Appointment of Independent Registered Public Accounting Firm — Fees Paid to Independent Registered Public Accounting Firm.”

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PART IV

Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a) 1-2 The Company’s consolidated financial statements are listed in the accompanying “Index to Consolidated Financial Statements” on page 20.

      (a) 3 Exhibits (numbered in accordance with Item 601 of Regulation S-K):

Exhibit #				Description
	3.1			Articles of Incorporation of the Company, as amended through April 24, 1986: Incorporated by reference to Exhibit 4(a) to the Registration Statement of the Company filed with the SEC on Form S-3 (Commission file no. 33-7245) (the “Form S-3”).
	3.1.1			Articles of Amendment to the Articles of Incorporation, dated April 22, 1987: Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K for the period ended January 1, 1992 (Commission file no. 0-10943) (the “1991 10-K”).
	3.1.2			Articles of Amendment to the Articles of Incorporation, dated May 25, 1989: Incorporated by reference to Exhibit 4.3 to the Registration Statement of the Company filed with the SEC on Form S-8 (Commission file no. 33-53834).
	3.1.3†			Articles of Amendment to the Articles of Incorporation, dated May 14, 2004.
	3.2			Bylaws of the Company: Incorporated by reference to Exhibit 4(b) to the Form S-3.
	3.2.1			Amendment to By-Laws of the Company, dated October 25, 1990: Incorporated by reference to Exhibit 3.3 to the 1991 10-K.
	3.2.2			Amendment to By-Laws of the Company, dated January 28, 1999: Incorporated by reference to Exhibit 3.2.2 to the Annual Report on Form 10-K for the period ended December 29, 1999 (Commission file no. 0-10943) (the “1999 10-K”).
	4.1			Specimen of Company common stock certificate: Incorporated by reference to Exhibit 4.1 to the 1991 10-K.
	4.2			See Exhibits 3.1, 3.1.1, 3.1.2, 3.1.3, 3.2, 3.2.1 and 3.2.2.
	4.3			See Exhibits 10.21, 10.22, 10.23, 10.23.1, 10.23.2, 10.24 and 10.24.1.
	*10.1			Ryan’s Family Steak Houses, Inc. 1987 Stock Option Plan: Incorporated by reference to Exhibit 4 to the Registration Statement of the Company filed with the SEC on Form S-8 (Commission file no. 33-15924).
	*10.2			Ryan’s Family Steak Houses, Inc. 1991 Stock Option Plan: Incorporated by reference to Exhibit 4.4 to the Registration Statement of the Company filed with the SEC on Form S-8 (Commission file no. 33-53834).
	*10.3			Ryan’s Family Steak Houses, Inc. 1998 Stock Option Plan: Incorporated by reference to Exhibit 99.1 to the Registration Statement of the Company filed with the SEC on Form S-8 (Commission file no. 333-67165).
	*10.4			Ryan’s Family Steak Houses, Inc. 2002 Stock Option Plan, as approved at the Special Meeting of Shareholders held on July 22, 2002: Incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K for the period ended January  1, 2003 (Commission file no. 0-10943) (the “2002 10-K”).
	*10.5			Ryan’s Employee Retirement Savings Plan, dated March 1, 1992: Incorporated by reference to Exhibit 10.4 to the 1991 10-K.
	*10.6			Salary Continuation Agreement, dated April 22, 1987, between the Company and Alvin A. McCall, Jr.; as amended on October 26, 1989: Incorporated by reference to Exhibit 10.5 to the 1991 10-K.
	*10.7			Deferred Compensation — Salary Continuation Agreement, dated April 22, 1987, between the Company and Charles D. Way: Incorporated by reference to Exhibit 10.6 to the 1991 10-K.
	*10.8			Split Dollar Agreement by and between the Company and Charles D. Way dated September 1, 1993: Incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K for the period ended December 29, 1993 (Commission file no. 0-10943) (the “1993 10-K”).

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Exhibit #				Description
	*10.9			Split Dollar Agreement by and between the Company and G. Edwin McCranie dated November 12, 1993: Incorporated by reference to Exhibit 10.9 to the 1993 10-K.
	*10.10			Split Dollar Agreement by and between the Company and James R. Hart dated August  8, 1993: Incorporated by reference to Exhibit 10.11 to the 1993 10-K.
	*10.11			Split Dollar Agreement by and between the Company and Fred T. Grant, Jr. dated November 12, 1993: Incorporated by reference to Exhibit 10.12 to the 1993 10-K.
	*10.12			Split Dollar Agreement by and between the Company and Alan E. Shaw dated November 12, 1993: Incorporated by reference to Exhibit 10.13 to the 1993 10-K.
	*10.13			Split Dollar Agreement by and between the Company and Morgan A. Graham dated November 12, 1993: Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the period ended December 31, 1997 (Commission file no. 0-10943) (the “1997 10-K”).
	*10.14			Split Dollar Agreement by and between the Company and Janet J. Gleitz dated November 12, 1993: Incorporated by reference to Exhibit 10.16 to the 1997 10-K.
	*10.15			Split Dollar Agreement by and between the Company and Ilene T. Turbow dated November 12, 1995: Incorporated by reference to Exhibit 10.17 to the 1997 10-K.
	*10.16			Deferred Compensation Plan by and between the Company and Morgan A. Graham dated November 1, 1997: Incorporated by reference to Exhibit 10.18 to the 1997 10-K.
	*10.17			Deferred Compensation Plan by and between the Company and Janet J. Gleitz dated November 1, 1997: Incorporated by reference to Exhibit 10.19 to the 1997 10-K.
	*10.18			Deferred Compensation Plan by and between the Company and Ilene T. Turbow dated November 1, 1997: Incorporated by reference to Exhibit 10.20 to the 1997 10-K.
	*10.19			Executive Bonus Plan, commencing in fiscal year 1998: Incorporated by reference to Exhibit 10.23 to the 1997 10-K.
	10.20			Franchise Agreement between Ryan’s Family Steak Houses, Inc. (later assigned to Ryan’s Properties, Inc.) and Family Steak Houses of Florida, Inc. dated September 16, 1987: Incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K for the period ended January 2, 2002 (Commission file no. 0-10943) (the “2001 10-K”).
	10.20.1			Amendment dated as of May 29, 1992 to the Franchise Agreement referred to at Exhibit 10.21: Incorporated by reference to Exhibit 10.21.1 to the 2001 10-K.
	10.20.2			Agreement dated July 11, 1994 and amended on October 17, 1994 to the Franchise Agreement referred to at Exhibit 10.21: Incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the period ended December 28, 1994 (Commission file no. 0-10943).
	10.20.3			Amendment dated as of October 3, 1996 to the Franchise Agreement referred to at Exhibit 10.21: Incorporated by reference to Exhibit 10.22.1 to the 1999 10-K.
	10.20.4			Amendment dated as of August 31, 1999 to the Franchise Agreement referred to at Exhibit 10.21: Incorporated by reference to Exhibit 10.22.2 to the 1999 10-K.
	10.20.5			Amendment dated as of January 30, 2002 to the Franchise Agreement referred to at Exhibit 10.21: Incorporated by reference to Exhibit 10.21.5 to the 2001 10-K.
	10.20.6			Amendment dated as of December 17, 2003 to the Franchise Agreement referred to at Exhibit 10.21: Incorporated by reference to Exhibit 10.21.6 to the Annual Report on Form 10-K for the period ended December 31, 2003.
	10.21			Ryan’s Restaurant Group, Inc. and American Stock Transfer & Trust Company, as Rights Agent, Shareholder Rights Agreement dated as of February 18, 2005: Incorporated by reference to Exhibit 4.1 to the Registration Statement of the Company filed on Form 8-A/A on February 22, 2005 (Commission file no. 0-10943).
	10.22			Credit Agreement dated as of December 20, 2004 among Ryan’s Restaurant Group, Inc. (the “Parent”) and Fire Mountain Restaurants, Inc. (together with the Parent, the “Borrowers”), the domestic subsidiaries of the Parent, as Guarantors, Bank of America, N.A., as Administrative Agent, and certain other banks signatory thereto: Incorporated by reference to Exhibit 10.1 to the Form  8-K filed on December 22, 2004 (Commission file no. 0-10943).

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Exhibit #				Description
	10.23			Note Purchase Agreement between Ryan’s Family Steak Houses, Inc. and various lenders for $75,000,000 of 9.02% Senior Notes due January 28, 2008: Incorporated by reference to Exhibit 10.25 to the 1999 10-K.
	10.23.1			First Amendment dated as of July 25, 2003 to the Note Purchase Agreement referred to at Exhibit 10.24: Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the period ended July 2, 2003 (Commission file no. 0-10943) (the “July 2003 10-Q”).
	10.23.2†			Second Amendment dated as of December 20, 2004 to the Note Purchase Agreement referred to at Exhibit 10.24.
	10.24			Note Purchase Agreement between Ryan’s Family Steak Houses, Inc. and various lenders for $100,000,000 of 4.65% Senior Notes due July 25, 2013: Incorporated by reference to Exhibit 10.3 to the July 2003 10-Q.
	10.24.1†			First Amendment dated as of December 20, 2004 to the Note Purchase Agreement referred to at Exhibit 10.25.
	*10.25			Form of Split-Dollar Life Insurance Agreement by and between the Company and each of Messrs. Way, McCranie, Graham, Grant, Hart and Shaw and Ms. Gleitz and Ms. Turbow: Incorporated by reference to Exhibit 10.26 to the 1999 10-K.
	*10.26			Deferred Compensation Plan, effective as of August 1, 1999: Incorporated by reference to Exhibit 10.27 to the 1999 10-K.
	*10.27			Form of Employment, Noncompetition and Severance Agreement by and between the Company and each of Messrs. Way, McCranie, Grant, Graham, and Hart and Ms. Gleitz and Ms. Turbow: Incorporated by reference to Exhibit 10.28 to the Annual Report on Form 10-K for the period ended January 3, 2001 (Commission file no. 0-10943).
	21.1†			Subsidiaries of the Company.
	23.1†			Consent of Independent Registered Public Accounting Firm.
	31.1†			Section 302 Certification of Chief Executive Officer
	31.2†			Section 302 Certification of Chief Financial Officer
	32.1†			Section 906 Certification of Chief Executive Officer
	32.2†			Section 906 Certification of Chief Financial Officer

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*	This is a management contract or compensatory plan or arrangement.

†	Filed with this Form 10-K.

      (b) The response to this portion of Item 15 is submitted as a separate section of this report.

      (c) The response to this portion of Item 15 is submitted as a separate section of this report.

      (d) The response to this portion of Item 15 is submitted as a separate section of this report.

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SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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.

	RYAN’S RESTAURANT GROUP, INC.

	By:	/s/ FRED T. GRANT, JR.

	Fred T. Grant, Jr.
	Senior Vice President — Finance, Treasurer and Assistant Secretary
	(Principal Financial and Accounting Officer)

March 4, 2005

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature				Title		Date
/s/ CHARLES D. WAY Charles D. Way				Chairman and Chief Executive Officer		March 4, 2005
/s/ G. EDWIN MCCRANIE G. Edwin McCranie				Director, President and Chief Operating Officer		March 4, 2005
/s/ BARRY L. EDWARDS Barry L. Edwards				Director		March 4, 2005
/s/ BRIAN S. MACKENZIE Brian S. MacKenzie				Director		March 4, 2005
/s/ HAROLD K. ROBERTS, JR. Harold K. Roberts, Jr.				Director		March 4, 2005
/s/ JAMES M. SHOEMAKER, JR. James M. Shoemaker, Jr.				Director		March 4, 2005
/s/ VIVIAN A. WONG Vivian A. Wong				Director		March 4, 2005
/s/ FRED T. GRANT, JR. Fred T. Grant, Jr.				Senior Vice President — Finance, Treasurer and Assistant Secretary (Principal Financial and Accounting Officer)		March 4, 2005

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