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Ruby Tuesday, Inc. Reports: First Quarter Earnings Per Share Up 25%; Financing Set for Sale of American Cafe and Tia's Tex-Mex Restaurants

10/05/2000

MARYVILLE, Tenn., Oct. 5 /PRNewswire/ -- Ruby Tuesday, Inc. (NYSE: RI), one of America's leading companies in the fast-growing casual dining segment, today reported first quarter earnings per share of $0.20, up 25% from $0.16 a year ago. This marks the tenth consecutive quarter and the sixteenth out of eighteen quarters of earnings per share growth in excess of 20%. Net income of $12.9 million was also up 25% from $10.3 million a year ago. Pre-tax margin of 9.8% was 150 basis points higher than the prior year. Company-owned Ruby Tuesday(R) restaurants average unit volumes increased 4.5% and same-store sales increased 2.1% for the quarter. Additionally, the Company announced the signing of a definitive agreement with Specialty Restaurant Group, LLC, ("SRG") led by James CarMichael, for SRG's purchase of the Company's American Cafe(R) and Tia's(R) Tex-Mex restaurants and that SRG has signed a commitment letter with a third party lender to provide financing for this transaction.

EXECUTION ON CORE STRATEGIES RESULTS IN ANOTHER QUARTER

OF EXCEPTIONAL PERFORMANCE AND RESULTS

"We are extremely excited about the positive trend our Company continues to demonstrate", said Sandy Beall, Chairman and CEO. "After completing a record year in fiscal 2000, our teams remain focused and maintain the tenacity needed to continue delivering outstanding results. Average unit volumes continue increasing due, in large part, to the strong performance of our new restaurants which are opening at and maintaining higher volumes. Our same- store sales grew throughout the quarter. After starting off soft in June, same-store sales grew to 3.2% in August, which put us up 2.1% for the quarter, in addition to the 3.6% increase in the same quarter of the prior year. This positive trend has continued into our second quarter and we anticipate same- store sales for our September period, which ends this weekend, will be over 5.0%."

"Our business is all about people; our teams, our guests and our shareholders", continued Beall. "Generating exceptional results begins with taking care of our teams who will in turn take care of our guests, resulting in increased value for our shareholders. We strive to develop the strongest culture in the business and to out execute our competition. We focus on quality staffing, controlling team turnover and increasing employee satisfaction."

"We realize that once the right teams are in place, it's the customers that drive our business. Our commitment to consistently delivering "WOW" food and "WOW" service to each and every guest has contributed to our ability to maintain high customer satisfaction scores and develop a strong national brand in the casual dining industry."

"We continue generating strong returns for our shareholders as we continue meeting, and generally exceeding, our high performance goals. Our business model is very solid and allows us to maximize growth while minimizing risk. Our long-term plans center around goals we believe will create the most long- term shareholder value and we eagerly take on the challenge our five year goals present."

DIVESTITURE OF AMERICAN CAFE AND TIA'S TEX-MEX RESTAURANTS UPDATE

Ruby Tuesday, Inc. has signed a definitive agreement with SRG, led by James CarMichael, providing for the sale of all of the Company's American Cafe and Tia's Tex-Mex restaurants. Mr. CarMichael is the current President and Partner of the American Cafe and Tia's Tex-Mex concepts. The transaction, expected to close by the end of the Company's second quarter, is valued at approximately $60 million. SRG has entered into an arrangement with a third party lender to provide for $30 million of financing relating to the transaction, with the remaining estimated $30 million to be financed by the Company. After the closing of the transaction, the restaurants will be operated under their current brand names and the current team members will remain in place. "I am extremely excited about this opportunity", Mr. CarMichael said. "The two concepts are financially sound and have great team members." Mr. Beall noted, "since first announcing the planned sale, James has been able to focus solely on these concepts and has done an excellent job improving operations at both. American Cafe and Tia's completed the first quarter with positive same-store sales and the teams continue getting stronger. The sale will permit the newly created entity, SRG, to take full advantage of the growth opportunity available to these two concepts while allowing the Company to focus completely on its Ruby Tuesday brand which has a tremendous amount of growth opportunity available."

OUTLOOK FOR THE REMAINDER OF FISCAL 2001

Based on current business trends, the Company is comfortable with its previously stated goal of 20-25% earnings per share growth for fiscal 2001 (excluding the $0.15 per share charge recorded in fiscal 2000 in conjunction with the planned sale of American Cafe and Tia's). The Company believes the second quarter same-store sales growth to be in the range of 2.5-3.0% and is comfortable with the current consensus analyst estimate of second quarter earnings per share of $0.16. The Company currently projects 2.0% same-store sales growth for its third and fourth quarters of fiscal 2001 as it will be overlapping same-store sales growth of 4.0% and 4.8%, respectively, in the third and fourth quarters of the prior year.

            FIRST QUARTER HIGHLIGHTS: EARNINGS PER SHARE UP 25.0%

    * Earnings per share increased 25.0% to $0.20 from $0.16. The Company has
      successfully grown earnings per share at or in excess of 20% in each of
      the last ten quarters as well as for the last four years.
    * Net income increased 25.1% to $12,889,000 from $10,300,000.
    * Pre-tax profit margin increased 150 basis points to 9.8% from 8.3%.
    * Average unit volumes increased 4.5% and same-store sales increased 2.1%
      for Company-owned Ruby Tuesday restaurants in addition to being up 3.6%
      in the same quarter of the prior year.  System-wide same-store sales for
      Company-owned and domestic franchise partner Ruby Tuesday restaurants
      increased 1.5%.
    * System-wide sales increased 14.9% to $268,075,000 from $233,230,000.
    * Revenue increased 5.0% to $205,010,000 from $195,285,000 despite selling
      42 units to franchise partners during the third and fourth quarters of
      the prior fiscal year.
    * Company-owned unit openings totaled 12 Ruby Tuesday restaurants and two
      Tia's Tex-Mex Restaurants.
    * Company-owned unit closings included two Ruby Tuesday restaurants.
    * Six franchise units were opened and one was closed.

As of September 3, 2000, the Company owned and operated 414 restaurants, including 346 Ruby Tuesday, 41 American Cafe, and 27 Tia's Tex-Mex Restaurants, located in 37 states. Franchised operations included 141 domestic units and 10 international units. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).

    For more information, contact:           Phone:    865-379-5700
    Russell Mothershed                       Price Cooper
    Sr. Vice President and                   Director, Investor
    Chief Financial Officer                  Relations and Planning

    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: future financial performance and unit growth (both Company-owned and franchised), 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 concepts; 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 and franchisees; changes in the availability of capital; and general economic conditions.

    RUBY TUESDAY, INC.

    Financial Results For the First Quarter of Fiscal Year 2001 (unaudited)
    (Amounts in thousands except per share amounts)



                          13 Weeks                13 Weeks
                            Ended                   Ended
                        September 3,  Percent    September 5,  Percent Percent
                            2000     of Sales        1999     of Sales  Change

    System-Wide Sales:
    Company-owned
     revenue           $  202,223               $  193,589
    Franchised revenue     65,852                   39,641
     Total system-wide
      sales            $  268,075               $  233,230                14.9

    Revenues:
     Ruby Tuesday      $  174,613      85.2     $  167,646     85.8
     Other concepts        27,610      13.5         25,943     13.3
      Company restaurant
       revenues           202,223      98.6        193,589     99.1        4.5
     Franchise income       2,787       1.4          1,696      0.9
      Total operating
       revenues           205,010     100.0        195,285    100.0        5.0

Operating Costs and Expenses: (as a percent of Company

    restaurant revenues)
     Cost of merchandise   54,777      27.1         52,992     27.4
     Payroll and related
      costs                65,123      32.2         61,616     31.8
     Other                 40,428      20.0         40,385     20.9
     Depreciation and
      amortization          9,691       4.8         10,361      5.4
     (as a percent of Total
      operating revenues)
       Selling, general and
        administrative     15,277       7.5         13,350      6.8
    Total operating costs
     and expenses         185,296                  178,704

    Earnings before Interest
     and Taxes (EBIT)      19,714       9.6         16,581      8.5       18.9

     Interest expense
      (net)                  (362)     (0.2)           420      0.2

     Provision for income
      taxes                 7,187       3.5          5,861      3.0

    Net Income         $   12,889       6.3      $  10,300      5.3       25.1

    Earnings Per Share:
    Basic              $     0.21                $    0.16                31.3
    Diluted            $     0.20                $    0.16                25.0

    Shares:
    Basic                  61,907                   63,962
    Diluted                64,258                   66,280



    RUBY TUESDAY, INC.

Financial Results For the First Quarter of Fiscal Year 2001 (unaudited) (Amounts in thousands except per share amounts)

                                            September 3,      June 4,
    CONDENSED BALANCE SHEETS                  2000             2000
    Assets

    Cash and Short-Term Investments       $   11,871        $  10,154
    Accounts and Notes Receivable              8,161            6,880
    Inventories                                9,488            9,378
    Prepaid Income Taxes                         263              312
    Assets Held for Disposal                  63,729           59,057
    Other Current Assets                       8,242            8,674

     Total Current Assets                    101,754           94,455

    Property and Equipment, Net              286,729          281,865
    Costs in Excess of Net Assets
     Acquired                                  8,133            8,229
    Notes Receivable, Net                     22,966           23,126
    Deferred Income Taxes                      3,243            5,355
    Other Assets                              27,590           26,182

     Total Assets                           $450,415         $439,212


    Liabilities

    Current Liabilities                      $83,025         $151,796
    Long-Term Debt                            68,601              636
    Other Deferred Liabilities                58,689           56,956

     Total Liabilities                       210,315          209,388

    Shareholders' Equity                     240,100          229,824

     Total Liabilities and Shareholders'
      Equity                                $450,415         $439,212

SOURCE Ruby Tuesday, Inc.
Web site: http: //www.ruby-tuesday.com
CONTACT: Russell Mothershed, Sr. Vice President and Chief Financial Officer, or Price Cooper, Director, Investor Relations and Planning, of Ruby Tuesday, Inc., 865-379-5700