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Ruby Tuesday, Inc. Reports Second Quarter Diluted Earnings Per Share of $0.28

01/05/2006
Declares Semi-Annual Dividend; and Updates Its Five Year Goals, Including an Increase in Share Repurchase Authorization and Plans to Increase Future Dividends

MARYVILLE, Tenn., Jan 05, 2006 (BUSINESS WIRE) -- Ruby Tuesday, Inc. (NYSE: RI) today reported net income of $17.4 million, or $0.28 per diluted share, for the Company's second quarter of fiscal 2006 ended November 29, 2005. This compares to net income of $19.7 million, or $0.30 per diluted share, for the second quarter of the prior year. Also, the Company's Board of Directors declared a semi-annual cash dividend of $0.0225 per share, payable on February 3, 2006 to shareholders of record at the close of business on January 20, 2006.

Same-restaurant sales at Company-owned Ruby Tuesday restaurants increased 1.9% for the quarter with same-restaurant sales at the Company's freestanding restaurants, which represent approximately 80% of the Company-owned system, increasing 2.6%. Same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 0.2% during the quarter.

For the five-week period ended January 3, 2006, same-restaurant sales at Company-owned Ruby Tuesday restaurants increased approximately 4.0% with same-restaurant sales at the Company's freestanding restaurants increasing approximately 4.5%. During the same period, same-restaurant sales at domestic franchise Ruby Tuesday restaurants also increased approximately 4.0%.

Second quarter and December fiscal 2006 monthly period same-restaurant
  sales:

                                                 Second
                   September  October  November  Quarter     December

Company-owned           0.4%     2.2%      3.3%     1.9%  approx. 4.0%

Domestic Franchise     -2.4%    -1.1%      3.2%    -0.2%  approx. 4.0%

Other highlights for the second quarter include:

-- Total revenue increased 14.3% over the same period of the prior year.

-- Average restaurant volumes at Company-owned Ruby Tuesday restaurants increased 2.2% during the quarter.

-- The Company opened 19 new Ruby Tuesday restaurants during the quarter, while none were closed.

-- Franchisees opened nine new Ruby Tuesday restaurants during the quarter, while two were closed due to lease expirations.

-- Sales at franchise Ruby Tuesday restaurants (which is the basis for determining royalty fees included in franchise income on the Company's income statement) totaled $103,454,000 and $94,817,000 for the second quarter of fiscal 2006 and 2005, respectively.

-- Capital expenditures were $45.6 million for the quarter.

-- Total annualized management turnover (including management trainees) was 22% for the quarter.

-- The Company repurchased 4,081,800 shares of its common stock during the second quarter at an average price of $21.84 per share.

-- The Company had 59.4 million shares of common stock outstanding at the end of the quarter.

Year-to-Date Highlights

-- Thirty-five Company-owned Ruby Tuesday restaurants were opened and five were closed at or near lease expiration.

-- Eighteen franchise restaurants were opened and four were closed due to lease expirations.

-- Sales at franchise Ruby Tuesday restaurants (which is the basis for determining royalty fees included in franchise income on the Company's income statement) totaled $213,488,000 and $218,655,000 for second quarter year-to-date of fiscal 2006 and fiscal 2005, respectively. The Company reminds investors that 44 restaurants were acquired by the Company from franchisees subsequent to the first quarter of the prior year.

-- The Company repurchased 4.5 million shares (approximately 7%) of its common stock through the end of the second quarter of fiscal 2006.

Subsequent to the end of the second quarter, the Company repurchased an additional 1.4 million shares at an average price of $25.42.

Sandy Beall, Chairman and CEO commented, "We are certainly glad to get back in the positive same-restaurant sales category. And, more importantly, we are pleased to have seen positive traffic trends in both October and November, which continued into our December period. We have been through a year-long period of investing in our operations, menu, marketing and overall brand and are optimistic about our future same-restaurant sales and earnings. In addition, we remain grateful to our teams for their continued commitment to the Ruby Tuesday brand."

Fiscal 2006 Guidance

For the five-week period ended January 3, 2006, same-restaurant sales at Company-owned Ruby Tuesday restaurants increased approximately 4.0% with same-restaurant sales at the Company's freestanding restaurants increasing approximately 4.5%. During the same period, same-restaurant sales at domestic franchise Ruby Tuesday restaurants also increased approximately 4.0%. For the third and fourth quarters of fiscal 2006, the Company is projecting approximately 10% and 20.0-22.5% diluted earnings per share growth, respectively, based on same-restaurant sales growth of 3.0-4.0% at Company-owned Ruby Tuesday restaurants. The Company reminds investors that fiscal 2006 is a 53 week year and, as such, its fourth quarter will contain 14 weeks as opposed to 13 weeks in the prior year. The Company is experiencing higher utility costs than anticipated three months ago and is continuing to invest in driving traffic and thus sales, specifically in the area of food cost and quality as was done during its second quarter.

The Company's plans for fiscal 2006 include 55-60 Company-owned openings and 35-40 franchise openings. The Company projects capital expenditures for fiscal 2006 will be $175-$180 million.

Updated Five Year Goals

Upon review and approval by its Board of Directors, the Company announced three key strategies and related goals to support its over-riding five year goal of consistent diluted earnings per share growth of 12.5-15.0% per year.

-- First - Get more from existing assets with a goal of increasing same-restaurant sales 3-4% per year through an intense focus on quality operations, brand differentiation and marketing.

-- Second - Invest wisely and prudently in new restaurant growth with a goal of increasing system-wide revenue 10-12% per year by opening approximately 50 plus Company-owned restaurants per year and having approximately 40 franchisee restaurant openings per year.

-- Third - Maintain the right capital structure to create value for the shareholders with a goal of utilizing prudent leverage for share repurchases, which, when combined with revenue growth and margin expansion, should result in consistent 12.5-15.0% diluted earnings per share growth. As part of returning a portion of the Company's estimated $60-$120 million per year in future free cash-flow and excess capital to shareholders, the Company's Board of Directors authorized an additional 6.7 million shares for repurchase under the Company's on-going share repurchase program and approved a plan under which it anticipates increasing the Company's next scheduled semi-annual dividend to an amount that, on an annual basis, would approximate a 2.0% yield for shareholders based on the current market value of the Company's stock.

Beall commented, "We feel very good about the direction of our brand and believe we have solid plans and strategies in place to support our over-riding goal of consistently growing diluted earnings per share in the 12.5-15.0% range plus paying a dividend. We think we have turned the corner and have good plans to get more out of existing assets and drive same-restaurant sales in the 3-4% range. Our new restaurants are performing well with sales in the $2.25-2.4 million range and we have over 800 additional restaurant sites identified in the eastern part of the United States alone. We know that we have to execute everyday and that is what we are focused on."

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 November 29, 2005, the Company owned and operated 609 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 196 and 44 restaurants, 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.rubytuesday.com

http://www.fulldisclosure.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 restaurant growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayment of debt, payment of dividends, stock repurchase, and restaurant and franchise acquisitions. The Company cautions the reader 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 the Company's 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 future terrorist attacks in the United States; significant fluctuations in energy prices; and general economic conditions.

RUBY TUESDAY, INC.

Financial Results For the Second Quarter of Fiscal Year 2006
(Amounts in thousands except per share amounts)


                          13 Weeks           13 Weeks
                           Ended              Ended
                          Nov. 29, Percent   Nov. 30, Percent  Percent
                            2005   of Sales    2004   of Sales  Change
                          ------------------ ----------------- -------

Revenue:
 Restaurant sales and
  operating revenue        $291,631    98.8  $254,664    98.6
 Franchise revenue            3,431     1.2     3,554     1.4
                           --------          --------
   Total revenue            295,062   100.0   258,218   100.0    14.3

Operating Costs and
 Expenses:
 (as a percent of
  Restaurant sales and
  operating revenue)
   Cost of merchandise       78,776    27.0    66,708    26.2
   Payroll and related
    costs                    92,965    31.9    81,089    31.8
   Other restaurant
    operating costs          53,405    18.3    44,225    17.4
   Depreciation and
    amortization             17,234     5.9    16,844     6.6
 (as a percent of Total
  revenue)
Selling, general and
 administrative, net         23,505     8.0    17,701     6.9
Equity in losses
 (earnings) of
 unconsolidated franchises      788     0.3       219     0.1
                           --------          --------
Total operating costs and
 expenses                   266,673           226,786
                           --------          --------

Earnings before Interest
 and Taxes                   28,389     9.6    31,432    12.2    (9.7)

 Interest expense, net        2,633     0.9     1,167     0.5
                           --------          --------

Pre-tax Profit               25,756     8.7    30,265    11.7

 Provision for income taxes   8,320     2.8    10,551     4.1
                           --------          --------

Net Income                 $ 17,436     5.9  $ 19,714     7.6   (11.6)
                           =========         =========



Earnings Per Share:
Basic                      $   0.28          $   0.30            (6.7)
                           =========         =========
Diluted                    $   0.28          $   0.30            (6.7)
                           =========         =========

Shares:
Basic                        61,578            64,603
                           =========         =========
Diluted                      62,076            65,636
                           =========         =========



                          26 Weeks          26 Weeks
                           Ended              Ended
                          Nov. 29, Percent   Nov. 30, Percent  Percent
                            2005   of Sales    2004   of Sales  Change
                          ------------------ ----------------- -------


Revenue:
 Restaurant sales and
  operating revenue        $595,974    98.8  $517,518    98.4
 Franchise revenue            7,311     1.2     8,223     1.6
                           --------          --------
   Total revenue            603,285   100.0   525,741   100.0    14.7

Operating Costs and
 Expenses:
 (as a percent of
  Restaurant sales and
  operating revenue)
   Cost of merchandise      160,419    26.9   134,043    25.9
   Payroll and related
    costs                   188,694    31.7   161,192    31.1
   Other restaurant
    operating costs         106,630    17.9    89,801    17.4
   Depreciation and
    amortization             34,408     5.8    32,406     6.3
 (as a percent of Total
  revenue)
Selling, general and
 administrative, net         49,464     8.2    32,529     6.2
Equity in losses
 (earnings) of
 unconsolidated franchises      724     0.1    (1,545)   (0.3)
                           --------          --------
Total operating costs and
 expenses                   540,339           448,426
                           --------          --------

Earnings before Interest
 and Taxes                   62,946    10.4    77,315    14.7   (18.6)

 Interest expense, net        4,546     0.8     1,759     0.3
                           --------          --------

Pre-tax Profit               58,400     9.7    75,556    14.4

 Provision for income taxes  19,321     3.2    26,755     5.1
                           --------          --------

Net Income                 $ 39,079     6.5  $ 48,801     9.3   (19.9)
                           =========         =========



Earnings Per Share:
Basic                      $   0.62          $   0.75           (17.3)
                           =========         =========
Diluted                    $   0.62          $   0.74           (16.2)
                           =========         =========

Shares:
Basic                        62,554            64,923
                           =========         =========
Diluted                      63,183            66,081
                           =========         =========



RUBY TUESDAY, INC.

Financial Results For the Second Quarter
of Fiscal Year 2006
(Amounts in thousands)

                                              Nov. 29,        May 31,
CONDENSED BALANCE SHEETS                        2005           2005
------------------------------------        -----------    -----------
Assets
   Cash and Short-Term Investments              $8,249        $19,787
   Accounts and Notes Receivable                12,502          7,627
   Inventories                                  18,903         16,988
   Deferred Income Taxes                         1,549          2,490
   Income Tax Receivable                           512              0
   Prepaid Rent                                  3,858          3,759
   Assets Held for Disposal                      5,256          5,342
   Other Current Assets                          8,450          6,421
                                            -----------    -----------

     Total Current Assets                       59,279         62,414

   Property and Equipment, Net                 952,392        901,142
   Goodwill, Net                                17,017         17,017
   Notes Receivable, Net                        22,766         24,589
   Other Assets                                 70,750         68,905
                                            -----------    -----------

     Total Assets                           $1,122,204     $1,074,067
                                            ===========    ===========

Liabilities
   Current Liabilities                         $98,681        $99,813
   Long-Term Debt, including Capital
    Leases                                     357,578        247,222
   Deferred Income Taxes                        47,702         50,825
   Deferred Escalating Minimum Rents            37,803         37,471
   Other Deferred Liabilities                   75,484         75,513
                                            -----------    -----------

     Total Liabilities                         617,248        510,844

Shareholders' Equity                           504,956        563,223
                                            -----------    -----------

     Total Liabilities and
       Shareholders' Equity                 $1,122,204     $1,074,067
                                            ===========    ===========

SOURCE: Ruby Tuesday, Inc.

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