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Ruby Tuesday, Inc. Reports Fourth Quarter Diluted Earnings Per Share of $0.40

07/06/2005

MARYVILLE, Tenn., Jul 06, 2005 (BUSINESS WIRE) -- Ruby Tuesday, Inc. (NYSE: RI) today reported net income of $26.0 million, or $0.40 per diluted share, for the company's fourth quarter ended May 31, 2005. This compares to net income of $30.8 million, or $0.46 per diluted share, for the fourth quarter of the prior year. For the year, the Company reported diluted earnings per share of $1.56 compared to $1.64 for fiscal 2004.

For the quarter, same-store sales at Company-owned Ruby Tuesday restaurants decreased 8.9%. The Company estimates fourth quarter same-store sales were negatively impacted by 4.5-5.0% as a result of overlapping coupon redemptions from the prior year as the Company transitions to a media based advertising strategy. Same-store sales at domestic franchise Ruby Tuesday restaurants decreased 11.1% during the quarter. For the year, same-store sales decreased 7.1% at Company-owned Ruby Tuesday restaurants and 5.0% at domestic franchise Ruby Tuesday restaurants.

For the Company's fiscal 2006 June period, same-store sales at Company-owned Ruby Tuesday restaurants decreased 4.7%, while same-store sales at domestic franchise Ruby Tuesday restaurants decreased 7.5%.

Other highlights for the quarter include:

-- Total operating revenue increased 7.2% over the same period of the prior year.

-- There were 20 new Ruby Tuesday restaurants opened during the quarter and two were closed at or near lease expiration.

-- The Company acquired 9 Ruby Tuesday restaurants from a former domestic franchisee.

-- Franchisees opened 10 new Ruby Tuesday restaurants during the quarter and none were closed.

-- The Company released a new menu in mid-May highlighting 30 World Famous Burgers, over 20 Awesome Appetizers and an enhanced salad bar. In addition, the focus on burgers has been supported with media advertising.

-- Total management turnover remained low for the quarter at 27%.

-- The Company repurchased 752,500 shares of its common stock.

Sandy Beall, Chairman and CEO commented, "Despite fourth quarter same-store sales being lower than we had hoped, we started seeing some momentum in June where same-store sales at Company-owned Ruby Tuesday restaurants were down 4.7%, and we are more optimistic about the first quarter than we were six to nine months ago. Our latest menu, which was released in mid-May, has continued the trend of being rated higher by our customers. Operations have continued to remain solid, and we believe the roll-out of our kitchen display system during the summer months will only further enhance our operational execution. In addition, our media advertising efforts, which now includes national cable covering all domestic markets as well as local spot network for most Company markets, continues providing a positive impact. We believe we are now seeing some of the benefits of our focus on our menu, operations and advertising. Furthermore, based on the results thus far from our advertising, we have greatly increased our media budget heading into fiscal 2006. While we still have one more quarter of our heavy, prior couponing efforts to overlap, we are pleased with the results we are seeing. Overall, we continue strengthening our brand and our company by investing in operations, menu differentiation and marketing - all of which are critical for long-term growth and success."

Declaration of Dividend

The Company's Board of Directors declared a semi-annual cash dividend of $0.0225 per share, payable on August 8, 2005 to shareholders of record as of the close of business on July 25, 2005.

Fiscal 2006 Guidance

For the first quarter of fiscal 2006, the Company anticipates diluted earnings per share of approximately $0.33 based on negative same-store sales of approximately 4.0% at Company-owned Ruby Tuesday restaurants. The Company's estimate for first quarter diluted earnings per share is lower than previously anticipated as a result of the Company's media plans now including national cable affecting the entire system. This is partially offset by the Company now anticipating negative same-store sales of approximately 4.0% versus the previous expectation of negative 4.0-6.5%. Same-store sales at Company-owned restaurants were down 4.7% for the first five weeks of the first quarter. Same-store sales at domestic franchise Ruby Tuesday restaurants were down 7.5% during the same five-week period. The Company reminds investors that it will be overlapping its heaviest quarter of couponing efforts during the first quarter of fiscal 2006.

For the balance of the year, the Company's goal for same-store sales growth at Company-owned Ruby Tuesday restaurants is positive 3.0-5.0%. In addition, the Company anticipates a return to positive diluted earnings per share growth. Currently, the Company is projecting approximately 5-10% diluted earnings per share growth for the second quarter as the Company will be overlapping a one-time gain on the sale of its 50% interest in a franchise partnership and the reversal of bonus accruals recorded during the second quarter of fiscal 2005. For the third and fourth quarters of fiscal 2006, the Company is projecting 12.5-15.0% diluted earnings per share growth per quarter. The Company notes that fourth quarter diluted earnings per share could be slightly higher than the 12.5-15.0% range as fiscal 2006 will be a 53-week year for the Company, so its fourth quarter will include 14 weeks as compared to 13 weeks in the fourth quarter of fiscal 2005. The diluted earnings per share growth ranges for the second through fourth quarters are based on the Company achieving its goal of positive 3.0-5.0% same-store sales growth at Company-owned Ruby Tuesday restaurants and include significantly increased advertising efforts for fiscal 2006. The Company's plans for fiscal 2006 include approximately 60 Company-owned openings and 30-40 franchise openings.

Year-to-Date Highlights:

-- Sales at franchise partnership and traditional franchise Ruby Tuesday restaurants (which is the basis for determining royalty fees included in franchise income on the Company's income statement) totaled $422,505,000 and $453,982,000 for fiscal 2005 and fiscal 2004, respectively.

-- Fifty-seven new Company-owned Ruby Tuesday restaurants were opened and six were closed at or near lease expiration. In addition, forty-four Ruby Tuesday restaurants were acquired from franchisees during the year.

-- Twenty-seven franchise restaurants were opened and nine were closed, five of which were domestically franchised and were closed due to lease expirations and three of which were internationally franchised.

-- The Company repurchased 2.5 million shares of its common stock during fiscal 2005. 6.3 million shares remain authorized for repurchase.

Ruby Tuesday, Inc. has Company-owned, and/or franchise Ruby Tuesday brand restaurants in 42 states, the District of Columbia, Puerto Rico, and 13 foreign countries. As of May 31, 2005, the Company owned and operated 579 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 188 and 38 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 one or more of the following: future financial performance and unit growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayment of debt, payment of dividends, stock repurchase, and restaurant acquisitions. The Company cautions that a number of important factors and uncertainties 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: changes in promotional, couponing and advertising strategies; guests' acceptance of changes in menu items; changes in our guests' disposable income; 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; guests' acceptance of our development prototypes; 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; effects of actual or threatened terrorist attacks in the United States; and general economic conditions.

RUBY TUESDAY, INC.

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

                       13 Weeks            13 Weeks
                         Ended               Ended
                        May 31,  Percent    June 1,   Percent  Percent
                         2005    of Sales    2004     of Sales  Change
                        ----------------- -------------------- -------
                                          (as restated)
                                               (a)
Revenue:
 Restaurant sales and
  operating revenue     $291,421    98.7     $270,164    98.0
 Franchise revenue         3,969     1.3        5,374     2.0
                        ---------            ---------
   Total operating
    revenue              295,390   100.0      275,538   100.0     7.2

Operating Costs and
 Expenses:
 (as a percent of
  Restaurant sales and
  operating revenue)
   Cost of merchandise    76,137    26.1       70,018    25.9
   Payroll and related
    costs                 91,458    31.4       82,926    30.7
   Other restaurant
    operating costs       50,851    17.4       44,387    16.4
   Depreciation and
    amortization          17,434     6.0       15,375     5.7
 (as a percent of
   Total operating
   revenue)
   Selling, general and
    administrative, net   20,081     6.8       16,582     6.0
   Equity in (earnings)
    of unconsolidated
    franchises              (348)   (0.1)      (2,034)   (0.7)
                        ---------            ---------
Total operating costs
 and expenses            255,613              227,254
                        ---------            ---------

Earnings before
 Interest and Taxes       39,777    13.5       48,284    17.5   (17.6)

  Interest expense, net    1,222     0.4          438     0.2
                        ---------            ---------

Pre-tax Profit            38,555    13.1       47,846    17.4

  Provision for income
   taxes                  12,598     4.3       17,017     6.2
                        ---------            ---------

Net Income              $ 25,957     8.8     $ 30,829    11.2   (15.8)
                        =========            =========



Earnings Per Share:
Basic                   $   0.41             $   0.47           (12.8)
                        =========            =========
Diluted                 $   0.40             $   0.46           (13.0)
                        =========            =========

Shares:
Basic                     64,137               66,073
                        =========            =========
Diluted                   64,870               67,635
                        =========            =========


                         52 Weeks           52 Weeks
                          Ended              Ended
                          May 31, Percent    June 1,  Percent  Percent
                           2005   of Sales    2004    of Sales  Change
                        ------------------ ------------------- -------
                                           (as restated)
                                                (a)
Revenue:
 Restaurant sales and
  operating revenue     $ 1,094,491   98.6  $1,023,342   98.3
 Franchise revenue           15,803    1.4      18,017    1.7
                        -----------         ----------
   Total operating
    revenue               1,110,294  100.0   1,041,359  100.0     6.6

Operating Costs and
 Expenses:
(as a percent of
 Restaurant sales and
 operating revenue)
   Cost of merchandise      284,424   26.0     263,033   25.7
   Payroll and related
    costs                   340,895   31.1     320,413   31.3
   Other restaurant
    operating costs         189,181   17.3     168,471   16.5
   Depreciation and
    amortization             66,746    6.1      57,791    5.6
  (as a percent of Total
   operating revenue)
   Selling, general and
    administrative, net      72,489    6.5      63,292    6.1
   Equity in (earnings)
    of unconsolidated
    franchises               (2,729)  (0.2)     (5,913)  (0.6)
                        -----------         ----------
Total operating costs
 and expenses               951,006            867,087
                        -----------         ----------

Earnings before Interest
 and Taxes                  159,288   14.3     174,272   16.7    (8.6)

  Interest expense, net       4,342    0.4       3,726    0.4
                        -----------         ----------

Pre-tax Profit              154,946   14.0     170,546   16.4

  Provision for income
   taxes                     52,648    4.7      60,699    5.8
                        -----------         ----------

Net Income              $   102,298    9.2  $  109,847   10.5    (6.9)
                        ===========         ==========



Earnings Per Share:
Basic                   $      1.59         $     1.68           (5.4)
                        ===========         ==========
Diluted                 $      1.56         $     1.64           (4.9)
                        ===========         ==========

Shares:
Basic                        64,538             65,510
                        ===========         ==========
Diluted                      65,524             67,076
                        ===========         ==========

(a) - Amounts reflect the impact of the restatement of our financial
      statements as disclosed in our 10-K/A dated April 26,2005.
RUBY TUESDAY, INC.

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

                                          May 31,       June 1,
CONDENSED BALANCE SHEETS                   2005          2004
------------------------               ------------- ---------------
Assets                                               (as restated)(a)
   Cash and Short-Term Investments          $19,787        $19,485
   Accounts and Notes Receivable              7,627         10,089
   Inventories                               16,988         13,647
   Deferred Income Taxes                      2,490          3,599
   Income Tax Receivable                          0          2,941
   Prepaid Rent                               3,759          2,173
   Assets Held for Disposal                   5,342          3,030
   Other Current Assets                       6,421          6,450
                                         -----------    -----------

     Total Current Assets                    62,414         61,414

   Property and Equipment, Net              901,142        766,823
   Goodwill, Net                             17,017          7,845
   Notes Receivable, Net                     24,589         33,366
   Other Assets                              69,993         66,987
                                         -----------    -----------

     Total Assets                        $1,075,155       $936,435
                                         ===========    ===========

Liabilities
   Current Liabilities                     $100,244        $94,719
   Long-Term Debt, including Capital
    Leases                                  247,222        168,087
   Deferred Income Taxes                     50,394         46,184
   Deferred Escalating Minimum Rents         37,471         38,725
   Other Deferred Liabilities                76,601         72,189
                                         -----------    -----------

     Total Liabilities                      511,932        419,904

Shareholders' Equity                        563,223        516,531
                                         -----------    -----------

     Total Liabilities and
       Shareholders' Equity              $1,075,155       $936,435
                                         ===========    ===========

(a) - Amounts reflect the impact of the restatement of our financial
    statements, as disclosed in our 10-K/A dated April 26, 2005.
RUBY TUESDAY, INC.

Quarterly Financial Results For Fiscal Year 2005
(Amounts in thousands except per share amounts)

Note:  The purpose of the quarterly amounts presented below is to
provide the readers of the Company's press release with comparative
quarterly income statement information for the Company's fiscal 2005.
The amounts for the 13 weeks ended August 31 and November 30, 2004
reflect the impact of the restatement of our financial statements as
disclosed in the respective 10-Q/A's for the quarters then ended and
filed with the Securities and Exchange Commission on May 4, 2005.



                    13 Weeks  13 Weeks  13 Weeks  13 Weeks   52 Weeks
                      Ended     Ended    Ended     Ended      Ended
                    Aug. 31,  Nov. 30,  March 1,   May 31,    May 31,
                      2004      2004      2005      2005       2005
                    --------  --------  --------  --------  ----------
Revenue:
 Restaurant sales
  and operating
  revenue           $262,854  $254,664  $285,552  $291,421 $1,094,491
 Franchise revenue     4,669     3,554     3,611     3,969     15,803
                    --------  --------  --------  -------- ----------
   Total operating
    revenue          267,523   258,218   289,163   295,390  1,110,294

Operating Costs and
 Expenses:
 (as a percent of
  Restaurant sales
  and operating
  revenue)
   Cost of
    merchandise       67,335    66,708    74,244    76,137    284,424
   Payroll and
    related costs     80,103    81,089    88,245    91,458    340,895
   Other restaurant
    operating costs   45,576    44,225    48,529    50,851    189,181
   Depreciation and
    amortization      15,562    16,844    16,906    17,434     66,746
 (as a percent of
  Total operating
  revenue)
   Selling, general
    and
    administrative,
    net               14,828    17,701    19,879    20,081     72,489
   Equity in
    (earnings)/loss
    of
    unconsolidated
    franchises        (1,764)      219      (836)     (348)    (2,729)
                    --------  --------  --------  -------- ----------
Total operating
 costs and expenses  221,640   226,786   246,967   255,613    951,006
                    --------  --------  --------  -------- ----------

Earnings before
 Interest and Taxes   45,883    31,432    42,196    39,777    159,288

 Interest expense,
  net                    592     1,167     1,361     1,222      4,342
                    --------  --------  --------  -------- ----------

Pre-tax Profit        45,291    30,265    40,835    38,555    154,946

 Provision for
  income taxes        16,204    10,551    13,295    12,598     52,648
                    --------  --------  --------  -------- ----------

Net Income          $ 29,087  $ 19,714  $ 27,540  $ 25,957 $  102,298
                    ========  ========  ========  ======== ==========



Earnings Per Share:
Basic               $   0.45  $   0.30  $   0.43  $   0.41 $     1.59
                    ========  ========  ========  ======== ==========
Diluted             $   0.44  $   0.30  $   0.42  $   0.40 $     1.56
                    ========  ========  ========  ======== ==========

Shares:
Basic                 65,244    64,603    64,168    64,137     64,538
                    ========  ========  ========  ======== ==========
Diluted               66,526    65,636    65,063    64,870     65,524
                    ========  ========  ========  ======== ==========

SOURCE: Ruby Tuesday, Inc.

Ruby Tuesday Inc., Maryville
Price Cooper, 865-379-5700