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Ruby Tuesday, Inc. Reports Third Quarter Results

04/06/2004
- DILUTED EARNINGS PER SHARE INCREASED 23% - COMPANY-OWNED RUBY TUESDAY SAME-STORE SALES INCREASED 4.1% - DOMESTIC FRANCHISE SAME-STORE SALES INCREASED 6.8%

MARYVILLE, Tenn., April 6 /PRNewswire-FirstCall/ -- Ruby Tuesday, Inc. today reported results for its third quarter of fiscal 2004, which ended March 2, 2004. For the quarter, diluted earnings per share increased 23.1% to $0.48, while net income increased 27.6% to $32.4 million. Total operating revenues increased 16.4% to $271.0 million, and pre-tax profit margin increased 190 basis points to 18.6%. Same-store sales at Company-owned Ruby Tuesday restaurants increased 4.1%, while same-store sales at domestic franchise restaurants (including restaurants owned by businesses in which the Company holds an equity interest as well as restaurants owned by traditional franchisees) increased 6.8% during the quarter.

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

                                          3Q fiscal 2004    3Q fiscal 2003
     Diluted earnings per share                 $0.48            $0.39
     Company-owned same-store sales change       4.1%            (0.4%)
     Company-owned average unit
      volume increase                            4.8%            (0.8%)
     Total operating revenues            $270,965,000     $232,856,000
     Pre-tax margins                            18.6%            16.7%

"To-go" sales accounted for 6.0% of the Company's sales at its Company- owned freestanding restaurants during the Company's February period. The "curb-side to-go(SM)" program has been in place at both Company-owned and franchise restaurants since the Company's second fiscal quarter of this year.

Phase one of the "Ruby Tuesday Smart Eating(SM)" initiative rolled out in November, 2003 and has been very well received by the Company's guests based on research performed. As previously announced, phase two of Smart Eating, which is scheduled to be rolled out in late April, will include nutritional information, such as calories, fat grams, net carbohydrate grams and fiber grams for all menu items. The Company is taking an industry-leading role in this area and plans to leverage this leadership position going forward.

Sandy Beall, the Company's Chairman and Chief Executive Officer, commented, "We are excited about our recent performance and very excited about our plans going forward. We have received increasingly positive feedback on our Smart Eating menu -- both phase one, which rolled out in the fall, as well as phase two, which has been in test since late February. In addition to focusing on setting ourselves apart from the competition in terms of service, standards, people and facilities, we believe that by providing unparalleled nutritional information, our Smart Eating initiative creates a tremendous opportunity for the Ruby Tuesday brand. It is clear Americans want to know more about what they are eating, and we are going to provide that information so they can make more informed choices. We believe providing information on items such as calories, fat, carbohydrates, and fiber in a clear and concise manner on our menus will be another step towards distinguishing Ruby Tuesday from our competition. Our customers have told us they want this information, and we intend to provide it to them."

Fiscal 2004 Guidance

For the fourth quarter of fiscal 2004, the Company's goal for diluted earnings per share growth is 17-18%, based on the Company's projected same- store sales growth of 2.4% at Company-owned Ruby Tuesday restaurants. The Company's goal for fiscal 2004 diluted earnings per share growth is approximately 20%, based on same-store sales growth of approximately 2.5% at Company-owned Ruby Tuesday restaurants for the year.

Fiscal 2005 Guidance

For fiscal 2005, the Company's goal for diluted earnings per share growth is 15.0-18.0%. This is based on the same-store sales growth of 2.0-3.0% at Company-owned and domestic franchise Ruby Tuesday restaurants. The Company anticipates 50-55 Company-owned restaurant openings during fiscal 2005, and anticipates its franchisees will open approximately 40 Ruby Tuesday restaurants during the same period. Additionally, the Company anticipates reinstating share repurchases as a means of returning excess capital to its shareholders. Five million shares remain authorized for share repurchase under the existing Board approved program.

Additional Third Quarter Highlights:

  • Diluted earnings per share increased 23.1% to $0.48 from $0.39.
  • Net income increased 27.6% to $32,405,000 from $25,392,000.
  • Sales at franchise (including 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 $122,735,000 and $100,202,000 for the third quarter of fiscal 2004 and fiscal 2003, respectively.
  • Nine Company-owned Ruby Tuesday restaurants were opened and one was closed due to normal lease expiration.
  • Ten franchise restaurants were opened and two were closed (one due to lease expiration).

Year-to-Date Highlights:

  • Diluted earnings per share increased 21.6% to $1.18 from $0.97.
  • Net income increased 25.0% to $78,960,000 from $63,166,000.
  • Sales at franchise (including 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 $329,687,000 and $285,536,000 for the third quarter year-to-date of fiscal 2004 and fiscal 2003, respectively.
  • The Company exercised its right to acquire an additional 49% interest in four of the franchisees during the year. As of March 2, 2004, the Company held a 50% interest in thirteen franchisees collectively operating 134 Ruby Tuesday restaurants.

Ruby Tuesday, Inc. has Company-owned, and/or franchise Ruby Tuesday brand restaurants in 39 states, the District of Columbia, Puerto Rico, Hawaii and 13 foreign countries. As of March 2, 2004, the Company owned and operated 474 Ruby Tuesday restaurants, while domestic and international franchisees operated 210 and 34 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

The call will be archived on both sites through the close of business on April 14, 2004.

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; impact of adoption of new accounting standards; and general economic conditions.

    RUBY TUESDAY, INC.

    Financial Results For the Third Quarter of Fiscal Year 2004
    (Amounts in thousands except per share amounts)

                                     13 Weeks         13 Weeks
                                      Ended   Percent  Ended    Percent
                                      March 2,  of     March 4,   of   Percent
                                       2004    Sales    2003     Sales  Change

    Revenues:
       Restaurant sales and operating
        revenues                      $266,438   98.3  $228,834   98.3
       Franchise revenues                4,527    1.7     4,022    1.7
          Total operating revenues     270,965  100.0   232,856  100.0  16.4

    Operating Costs and Expenses:
       (as a percent of Company
        restaurant revenues)
           Cost of merchandise          67,419   25.3    60,846   26.6
           Payroll and related costs    81,909   30.7    73,991   32.3
           Other restaurant operating
            costs                       43,666   16.4    36,900   16.1
           Depreciation and
            amortization                13,907    5.2    11,744    5.1
       (as a percent of Total
        operating revenues)
           Selling, general and
            administrative, net         15,594    5.8    11,000    4.7
           Equity in (earnings) of
            unconsolidated franchises   (2,610)  (1.0)   (1,534)  (0.7)
    Total operating costs and
     expenses                          219,885          192,947

    Earnings before Interest and
     Taxes                              51,080   18.9    39,909   17.1  28.0

       Interest expense, net               773    0.3       964    0.4

    Pre-tax Profit                      50,307   18.6    38,945   16.7

       Provision for income taxes       17,902    6.6    13,553    5.8

    Net Income                         $32,405   12.0   $25,392   10.9  27.6

    Earnings Per Share:
    Basic                                $0.49            $0.40         22.5
    Diluted                              $0.48            $0.39         23.1

    Shares:
    Basic                               65,914           64,056
    Diluted                             67,614           65,050


    RUBY TUESDAY, INC.

    Financial Results For the Third Quarter of Fiscal Year 2004
    (Amounts in thousands except per share amounts)

                                     39 Weeks         39 Weeks
                                      Ended   Percent  Ended    Percent
                                      March 2,  of     March 4,   of   Percent
                                       2004    Sales    2003     Sales  Change

    Revenues:
       Restaurant sales and operating
        revenues                      $753,178   98.3  $655,601   98.3
       Franchise revenues               12,643    1.7    11,270    1.7
          Total operating revenues     765,821  100.0   666,871  100.0   14.8

    Operating Costs and Expenses:
       (as a percent of Company
        restaurant revenues)
           Cost of merchandise         193,015   25.6   175,159   26.7
           Payroll and related costs   237,487   31.5   219,255   33.4
           Other restaurant operating
            costs                      126,488   16.8   110,825   16.9
           Depreciation and
            amortization                40,109    5.3    33,347    5.1
       (as a percent of Total
        operating revenues)
           Selling, general and
            administrative, net         46,710    6.1    32,361    4.9
           Equity in (earnings) of
            unconsolidated franchises   (3,879)  (0.5)   (2,410)  (0.4)
    Total operating costs and
     expenses                          639,930          568,537

    Earnings before Interest and
     Taxes                             125,891   16.4    98,334   14.7   28.0

       Interest expense, net             3,288    0.4     1,455    0.2

    Pre-tax Profit                     122,603   16.0    96,879   14.5

       Provision for income taxes       43,643    5.7    33,713    5.1

    Net Income                         $78,960   10.3   $63,166    9.5   25.0

    Earnings Per Share:
    Basic                                $1.21            $0.99          22.2
    Diluted                              $1.18            $0.97          21.6

    Shares:
    Basic                               65,322           63,915
    Diluted                             66,889           65,017


    RUBY TUESDAY, INC.

    Financial Results For the Third Quarter
    of Fiscal Year 2004
    (Amounts in thousands)

                                                March 2,         June 3,
    CONDENSED BALANCE SHEETS                      2004             2003
    Assets
       Cash and Short-Term Investments          $18,430           $8,662
       Accounts and Notes Receivable             17,486 *         10,509
       Inventories                               13,445           12,200
       Deferred Income Taxes                      3,062            2,609
       Income Tax Receivable                      5,396            2,485
       Prepaid Rent                               2,142            2,136
       Assets Held for Disposal                   2,674            5,217
       Other Current Assets                       5,834            6,099

         Total Current Assets                    68,469           49,917

       Property and Equipment, Net              731,275          660,897
       Goodwill, Net                              7,845            7,845
       Notes Receivable, Net                     35,587           39,827
       Other Assets                              59,963           46,035

         Total Assets                          $903,139         $804,521

    Liabilities
       Current Liabilities                      $90,520          $81,321
       Long-Term Debt                           165,916          207,064
       Deferred Income Taxes                     43,468           32,081
       Other Deferred Liabilities                76,984           69,527

         Total Liabilities                      376,888          389,993

    Shareholders' Equity                        526,251          414,528

         Total Liabilities and
           Shareholders' Equity                $903,139         $804,521

    *  Includes $6,090 of stock option exercises yet to be settled by the
       broker as of March 2, 2004.
       All settlements were received within one week of the end of the
       quarter.