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Ruby Tuesday, Inc. Reports First Quarter Diluted Earnings Per Share Growth of 19%

10/04/2004

MARYVILLE, Tenn.--(BUSINESS WIRE)--Oct. 4, 2004--Ruby Tuesday, Inc. (NYSE:RI) today reported results for its first quarter of fiscal year 2005. For the quarter, diluted earnings per share increased 18.9% to $0.44, while net income increased 19.3% to $29.3 million. Pre-tax profit margin increased 170 basis points to 17.0%. As previously announced, same-store sales at Company-owned Ruby Tuesday restaurants decreased 2.7% while same-store sales at domestic franchise Ruby Tuesday restaurants increased 3.9% during the quarter.

Highlights for the first quarter, compared with the same period of the prior year, are shown below:

                                              1Q fiscal     1Q fiscal
                                                   2005          2004
Diluted earnings per share                        $0.44         $0.37
Company-owned same-store sales change             (2.7%)        (0.1%)
Company-owned average unit volume change          (2.6%)          1.4%
Total operating revenue                    $267,523,000  $249,852,000
Pre-tax margins                                    17.0%         15.3%

Sandy Beall, the Company's Chairman and CEO commented, "Despite a tougher sales environment, profits for the quarter were solid. We remain focused on factors and initiatives that impact what we term the four "P's" of a successful business - People, Product, Place and Price. Our teams, facilities, and menu (in terms of both offerings and price) are in great shape. Also, we recently rolled out a new gift card program and started our media advertising campaign over the last few weeks. So, although the sales environment is soft, our standards and operational performance are solid and our profitability should be the best it can be given the environment."

Fiscal 2005 Guidance

For fiscal 2005, the Company's goal for diluted earnings per share growth is 12.0-14.0%. This is based on same-store sales of negative 2.0-3.0% at Company-owned Ruby Tuesday restaurants. Same-store sales at Company-owned restaurants were down approximately 9.0% for the month of September. During the same month, the Company has had eight days with at least ten and up to thirty-three stores closed due to the impact of the recent hurricanes. In addition, in conjunction with the Company's shift towards the utilization of media advertising, the Company has no plans for promotional/couponing efforts for the second quarter despite having over $6 million in coupon redemptions in the same quarter of the prior year. Thus, the Company is modeling negative 4.0-6.0% same-store sales growth for Company-owned restaurants for the second quarter, and, based on this, the Company estimates diluted earnings per share for the second quarter of fiscal 2005 could be flat compared with the second quarter in the prior year.

The Company anticipates 55-60 Company-owned restaurant openings during fiscal 2005, and anticipates its franchisees (including both domestic and international) will open 35-40 Ruby Tuesday restaurants during the same period. Additionally, the Company anticipates continuing its purchase of Company common stock under the existing share repurchase program, where 2.9 million shares remain authorized for repurchase.

    Additional First Quarter Highlights:

    --  Diluted earnings per share increased 18.9% to $0.44 from
        $0.37.

    --  Net income increased 19.3% to $29,254,000 from $24,513,000.

    --  Sales at franchise (including franchise partnership and
        traditional franchise) Ruby Tuesday restaurants totaled
        $123,837,000 for the first quarter. These sales are the basis
        for determining royalty fees included in franchise income on
        the Company's income statement.

    --  Eight Company-owned Ruby Tuesday restaurants were opened and
        one was closed due to lease expiration.

    --  Three franchise restaurants were opened and two were closed
        due to lease expirations.

    --  The Company repurchased 870,000 shares of its common stock.

    Additional Highlights:

    --  On September 1, 2004, the Company purchased the remaining
        equity interests of two franchise partnerships in which the
        Company previously had partial equity ownership for $34.2
        million, in cash and assumed debt, collectively. These
        businesses together operated 34 Ruby Tuesday restaurants in
        Florida and New York as of August 31, 2004 and had combined
        sales of $18.1 million for the first quarter of fiscal 2005.

Ruby Tuesday, Inc. has Company-owned, and/or franchise Ruby Tuesday brand restaurants in 42 states, the District of Columbia, Puerto Rico, and 12 foreign countries. As of August 31, 2004, the Company owned and operated 491 Ruby Tuesday restaurants, while domestic and international franchisees operated 217 and 36 (including Hawaii) locations, respectively. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).

The Company will host a conference call which will be a live web-cast tomorrow morning at 8:30 Eastern Time. The call will be available live at the following websites:

    http://www.fulldisclosure.com
    http://www.rubytuesday.com

    Special Note Regarding Forward-Looking Information

This press release contains various "forward-looking statements" which represent the Company's expectations or beliefs concerning future events, including the following (relating to both Company-owned and franchised operation): future financial performance and unit growth, future capital expenditures, future borrowings and repayment of debt, and payment of dividends. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements, including, without limitation, the following: consumer spending trends and habits; mall-traffic trends; increased competition in the casual dining restaurant market; weather conditions in the regions in which Company-owned and franchised restaurants are operated; consumers' acceptance of the Company's development prototypes; the impact that any widespread illness or general health concerns may have on our business and/or the economy in the areas in which the Company operates; laws and regulations affecting labor and employee benefit costs; costs and availability of food and beverage inventory; the Company's ability to attract qualified managers, franchisees and team members; changes in the availability of capital; impact of adoption of new accounting standards; and general economic conditions.

Ruby Tuesday, Inc.

Financial Results For the First Quarter of Fiscal Year 2005
(Amounts in thousands except per share amounts)

                       13 Weeks           13 Weeks
                         Ended    Percent   Ended      Percent
                       August 31,   of    September 2,   of    Percent
                         2004      Sales     2003       Sales  Change
                       ---------- ------- ------------ ------- -------

Revenue:
  Restaurant sales and
   operating revenue    $262,854    98.3     $245,774    98.4
  Franchise revenue        4,669     1.7        4,078     1.6
                       ----------         ------------
      Total operating
       revenue           267,523   100.0      249,852   100.0     7.1

Operating Costs and Expenses:
 (as a percent of Company
  restaurant revenue)
   Cost of merchandise    67,335    25.6       63,341    25.8
   Payroll and related
    costs                 80,103    30.5       77,688    31.6
   Other restaurant
    operating costs       46,229    17.6       41,454    16.9
   Depreciation and
    amortization          14,632     5.6       12,887     5.2
 (as a percent of Total
  operating revenue)
    Selling, general and
     administrative, net  14,828     5.5       16,080     6.4
    Equity in (earnings)
     of unconsolidated
     franchises           (1,764)   (0.7)      (1,071)   (0.4)
                       ----------         ------------
Total operating costs
 and expenses            221,363              210,379
                       ----------         ------------

Earnings before
 Interest and Taxes       46,160    17.3       39,473    15.8    16.9

   Interest expense,
    net                      592     0.2        1,350     0.5
                       ----------         ------------

Pre-tax Profit            45,568    17.0       38,123    15.3

   Provision for
    income taxes          16,314     6.1       13,610     5.4
                       ----------         ------------

Net Income               $29,254    10.9      $24,513     9.8    19.3
                       ==========         ============


Earnings Per Share:
Basic                      $0.45                $0.38            18.4
                       ==========         ============
Diluted                    $0.44                $0.37            18.9
                       ==========         ============

Shares:
Basic                     65,244               64,809
                       ==========         ============
Diluted                   66,526               66,170
                       ==========         ============



RUBY TUESDAY, INC.

Financial Results For the First Quarter
of Fiscal Year 2005
(Amounts in thousands)

                                               August 31,    June 1,
CONDENSED BALANCE SHEETS                          2004        2004
------------------------                       -----------  ----------
Assets
   Cash and Short-Term Investments                 $6,902     $19,485
   Accounts and Notes Receivable                   10,223       9,978
   Inventories                                     14,104      13,647
   Deferred Income Taxes                            1,592       1,975
   Income Tax Receivable                                0       2,941
   Prepaid Rent                                     2,171       2,173
   Assets Held for Disposal                         3,943       3,030
   Other Current Assets                             8,218       6,450
                                               -----------  ----------

     Total Current Assets                          47,153      59,679

   Property and Equipment, Net                    770,708     753,319
   Goodwill, Net                                    7,845       7,845
   Notes Receivable, Net                           32,494      33,366
   Other Assets                                    65,872      64,324
                                               -----------  ----------

     Total Assets                                $924,072    $918,533
                                               ===========  ==========

Liabilities
   Current Liabilities                            $92,983     $90,542
   Long-Term Debt                                 164,883     168,087
   Deferred Income Taxes                           51,275      51,310
   Other Deferred Liabilities                      82,524      81,810
                                               -----------  ----------

     Total Liabilities                            391,665     391,749

Shareholders' Equity                              532,407     526,784
                                               -----------  ----------

     Total Liabilities and
       Shareholders' Equity                      $924,072    $918,533
                                               ===========  ==========

    CONTACT: Ruby Tuesday, Inc., Maryville
             Price Cooper, 865-379-5700
             www.rubytuesday.com

    SOURCE: Ruby Tuesday, Inc.