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Ruby Tuesday, Inc. Reports Second Quarter EPS Growth of 17%

01/09/2003

MARYVILLE, Tenn., Jan. 9 /PRNewswire-FirstCall/ -- Ruby Tuesday, Inc. (NYSE: RI) today reported results for its second quarter ended December 3, 2002. For the quarter, earnings per share increased 17.4% to $0.27 from $0.23 a year ago, while net income increased 16.6%. The Company's Board of Directors declared a semi-annual cash dividend of $0.0225 per share, payable on February 7, 2003, to shareholders of record at the close of business on January 24, 2003.

Sandy Beall, the Company's Chairman and CEO, commented, "Our quarter, with 17% earnings per share growth, was solid but not great due to slightly negative same-store sales. Same-store sales decreased 0.7% for the second quarter, with our Company-owned freestanding restaurants declining 0.1% and our mall restaurants, which were negatively affected due to there being one less week between Thanksgiving and Christmas, declining 1.6% in same-store sales. During the quarter, we spent less than $600,000 on our marketing programs, which was over 35% less than we spent on these programs in the same quarter last year. Although I am not happy with our same-store sales performance, I am pleased with our overall earnings results in very challenging economic times."

Beall continued, "It has been a difficult operating environment, but Ruby Tuesday is rising to the challenge with increased operational intensity and marketing programs to achieve positive same-store sales. We realize we must have consistent, positive same-store sales to generate long-term financial returns and constantly increase shareholder value. To that end, I am pleased that same-store sales have turned positive in our December period despite some inclement weather and being compared to strong same-store sales during the same period last year."

Outlook for Fiscal 2003

Same-store sales at Company-owned Ruby Tuesday restaurants increased 0.8% for the Company's five week December period ended January 7, 2003, consisting of a 2.4% increase at freestanding restaurants and a 1.3% decrease at mall restaurants. The 0.8% same-store sales increase is on top of being up 3.9% in same-store sales during the same period of the prior year and after starting the first week of the December period down 3.6% in same-store sales as a result of inclement weather in the Northeast. Given uncertain economic times, and to be conservative, the Company estimates that if fiscal 2003 third quarter same-store sales are approximately flat, third quarter diluted earnings per share will be $0.38-$0.39. If same-store sales were also approximately flat for the fourth quarter, the Company would estimate annual fiscal 2003 earnings per share growth to be 15-16% (excluding the non- recurring charge recorded in fiscal 2002 to fully reserve the Specialty Restaurant Group, LLC note receivable and including approximately $5.5 million in additional depreciation resulting from refinancing the Company's bank- financed operating lease obligations during the current fiscal year). Beall commented, "We are hopeful that same-store sales are greater than approximately flat for the balance of the year and, in that case, we would expect earnings per share to exceed the above amounts. However, should sales remain flattish, 15-16% earnings per share growth would be a very solid year as it equates to 20-21% earnings per share growth if you exclude the negative impact on this year's earnings growth rate resulting from the additional depreciation due to refinancing the bank-financed operating leases."

    Second Quarter Highlights:

    * Earnings per share increased 17.4% to $0.27 from $0.23.
    * Net income increased 16.6% to $17,585,000 from $15,082,000.
    * Pre-tax profit margins increased 100 basis points to 12.8% from 11.8%.
    * System-wide Ruby Tuesday revenue increased 9.1% to $297,761,000 from
      $272,810,000.
    * Company-owned same-store sales decreased 0.7% and domestic franchise
      same-store sales decreased 1.2%.  System-wide same-store sales decreased
      0.8%.
    * Average unit sales volumes increased 1.5% at Company-owned Ruby Tuesday
      restaurants.
    * Sixteen Company-owned Ruby Tuesday restaurants were opened and none were
      closed.
    * Three franchise units were opened and none were closed.
    * The Company exercised its right to acquire an additional 49% interest in
      three of its franchise partners.  The Company now has a 50% interest in
      nine franchise partners collectively operating 91 franchised Ruby
      Tuesday restaurants.
    * The Company did not repurchase any shares of its common stock during the
      quarter.  5.3 million shares remain authorized for repurchase under the
      Company's ongoing share repurchase program.

    Year-to-date Highlights:

    * Earnings per share increased 18.4% to $0.58 from $0.49.
    * Net income increased 18.3% to $37,774,000 from $31,923,000.
    * Pre-tax profit margins increased 100 basis points to 13.3% from 12.3%.
    * System-wide Ruby Tuesday revenue increased 10.9% to $612,101,000 from
      $552,149,000.
    * Company-owned same-store sales increased 0.2% and domestic franchise
      same-store sales decreased 0.9%.  System-wide same-store sales decreased
      0.1%.
    * Twenty-nine Company-owned Ruby Tuesday restaurants were opened and five
      were closed.
    * Nine franchise units were opened and two were closed.
    * The Company exercised its right to acquire an additional 49% interest in
      four of its franchise partners.
    * The Company repurchased 548,000 shares of its common stock.


Ruby Tuesday, Inc. has Company-owned and/or franchised Ruby Tuesday restaurants located in 37 states, the District of Columbia, Puerto Rico and 9 foreign countries. As of December 3, 2002, the Company owned and operated 421 Ruby Tuesday restaurants. Franchise operations included 187 domestic units and 19 international units. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RI).

    For more information, contact:

    Price Cooper
    Phone:  865-379-5700

The Company will host a conference call which will be a live web-cast this afternoon at 2:30 Eastern Time. The call will be available live at the following websites:

http://www.companyboardroom.com

http://www.rubytuesday.com

The call will be archived on both sites through the close of business on January 16, 2003.

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 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; and general economic conditions.
RUBY TUESDAY, INC.

    Financial Results For the Second Quarter of Fiscal Year 2003
    (unaudited)
    (Amounts in thousands except per share amounts)

                                    13 Weeks          13 Weeks
                                      Ended             Ended
                                     Dec. 3, Percent   Dec. 4, Percent Percent
                                      2002   of Sales   2001   of Sales Change


    System-Wide Ruby Tuesday Sales:
    Company-owned Ruby Tuesday
     revenue                          $208,054         $195,729
    Franchised revenue                  89,707           77,081
        Total system-wide sales       $297,761         $272,810           9.1

    Revenues:
       Company restaurant revenues    $208,054   98.4  $195,729   98.4    6.3
       Franchise income                  3,449    1.6     3,256    1.6
          Total operating revenues     211,503  100.0   198,985  100.0    6.3

    Operating Costs and Expenses:
     (as a percent of Company restaurant
      revenues)
       Cost of merchandise              55,448   26.7    52,511   26.8
       Payroll and related costs        70,825   34.0    65,040   33.2
       Other restaurant operating costs 35,474   17.1    39,562   20.2
       Depreciation and amortization    11,604    5.6     8,491    4.3
       (as a percent of Total operating
        revenues)
       Selling, general and
        administrative                  10,497    5.0    11,249    5.7
      Equity in (earnings)/loss
        of unconsolidated franchises      (311)  (0.1)      207    0.1
    Total operating costs and expenses 183,537          177,060

    Earnings before Interest, Taxes
     and Cumulative effect of change in
     accounting principle               27,966   13.2    21,925   11.0   27.6

     Interest expense (income), net        997    0.5    (1,460)  (0.7)

     Provision for income taxes          9,384    4.4     8,303    4.2

    Income before cumulative effect
     of change in accounting principle  17,585    8.3    15,082    7.6

    Cumulative effect of change in
     accounting principle, net              --    0.0        --    0.0

    Net Income                         $17,585    8.3   $15,082    7.6   16.6

    Earnings Per Share:

    Before cumulative effect of
     change in accounting principle:
      Basic                              $0.27            $0.23          17.4
      Diluted                            $0.27            $0.23          17.4

    After cumulative effect of change
     in accounting principle:
    Basic                                $0.27            $0.23          17.4
    Diluted                              $0.27            $0.23          17.4

    Shares:
    Basic                               63,870           63,652
    Diluted                             64,899           65,360



    RUBY TUESDAY, INC.

    Financial Results For the Second Quarter of Fiscal Year 2003
    (unaudited)
    (Amounts in thousands except per share amounts)

                                   26 Weeks         26 Weeks
                                    Ended             Ended
                                   Dec. 3,  Percent   Dec. 4,  Percent Percent
                                    2002   of Sales    2001   of Sales  Change

    System-Wide Ruby Tuesday Sales:
    Company-owned Ruby Tuesday
     revenue                        $426,767         $395,421
    Franchised revenue               185,334          156,728
        Total system-wide sales     $612,101         $552,149            10.9

    Revenues:
       Company restaurant revenues  $426,767   98.3  $395,421   98.4      7.9
       Franchise income                7,248    1.7     6,548    1.6
          Total operating revenues   434,015  100.0   401,969  100.0      8.0

    Operating Costs and Expenses:
     (as a percent of Company restaurant
      revenues)
       Cost of merchandise           114,313   26.8   105,880   26.8
       Payroll and related costs     145,264   34.0   129,777   32.8
       Other restaurant operating
        costs                         73,925   17.3    79,889   20.2
       Depreciation and amortization  21,603    5.1    16,575    4.2
      (as a percent of Total operating
        revenues)
       Selling, general and
        administrative                21,361    4.9    22,857    5.7
       Equity in (earnings)/loss of
        unconsolidated franchises       (876)  (0.2)      248    0.1
    Total operating costs and
     expenses                        375,590          355,226

    Earnings before Interest, Taxes
     and Cumulative effect of change
     in accounting principle          58,425   13.5    46,743   11.6     25.0

     Interest expense (income), net      491    0.1    (2,843)  (0.7)

     Provision for income taxes       20,160    4.6    17,605    4.4

    Income before cumulative effect
     of change in accounting
     principle                        37,774    8.7    31,981    8.0

    Cumulative effect of change in
     accounting principle, net            --    0.0        58    0.0

    Net Income                       $37,774    8.7   $31,923    7.9     18.3

    Earnings Per Share:

    Before cumulative effect of
     change in accounting principle:
    Basic                              $0.59            $0.50            18.0
    Diluted                            $0.58            $0.49            18.4

    After cumulative effect of
     change in accounting principle:
    Basic                              $0.59            $0.50            18.0
    Diluted                            $0.58            $0.49            18.4

    Shares:
    Basic                             63,844           63,449
    Diluted                           65,000           65,273


    RUBY TUESDAY, INC.

    Financial Results For the Second Quarter
    of Fiscal Year 2003 (unaudited)
    (Amounts in thousands except per share amounts)

                                                 December 3,      June 4,
    CONDENSED BALANCE SHEETS                        2002            2002
    Assets
       Cash and Short-Term Investments             $6,414         $32,699
       Accounts and Notes Receivable               14,090          15,671
       Inventories                                 12,782          10,276
       Deferred Income Taxes                        2,864           4,248
       Income Tax Receivable                       11,523          15,050
       Assets Held for Disposal                     6,313           3,242
       Other Current Assets                         6,911           7,690

         Total Current Assets                      60,897          88,876

       Property and Equipment, Net                611,349         351,921
       Goodwill, Net                                7,845           7,845
       Notes Receivable, Net                       36,290          35,655
       Other Assets                                40,610          36,030

         Total Assets                            $756,991        $520,327

    Liabilities
       Current Liabilities                       $154,087         $93,283
       Long-Term Debt                             149,035           7,626
       Deferred Income Taxes                       30,257          24,255
       Other Deferred Liabilities                  60,102          60,757

         Total Liabilities                        393,481         185,921

    Shareholders' Equity                          363,510         334,406

         Total Liabilities and
           Shareholders' Equity                  $756,991        $520,327



SOURCE Ruby Tuesday, Inc.