Ruby Tuesday, Inc. Reports First Quarter Fiscal 2009 Results; Reduces Debt $40 Million

MARYVILLE, Tenn.--(BUSINESS WIRE)-- Ruby Tuesday, Inc. (NYSE: RT) today reported diluted earnings per share of $0.01 on net income of $285 thousand for the Company's first quarter of fiscal 2009, which ended September 2, 2008. This compares to diluted earnings per share of $0.21 on net income of $11.1 million for the first quarter of the prior year.

Quarterly Highlights

Same-restaurant sales for the first quarter decreased 10.8% and 7.9% at Company-owned and domestic franchise Ruby Tuesday restaurants, respectively, compared to a decline of 4.8% and 2.9%, respectively, in the first quarter of the prior year.

Sandy Beall, Founder and CEO, commented on the results, saying, "The first quarter continued to be challenging for us, the industry, and the consumer. With the weaker economy, housing crisis, and high energy prices, consumers are thinking differently and spending less as reflected in our and the industry's sales, especially in the South for us where we have the majority of our restaurants.

"In the face of these challenges, our excess cash flow was good. The real positive in this environment is our ability to generate excess cash. We reduced debt $40 million in the quarter and anticipate reducing debt a total of $80-90 million for the year. We also were able to continue to increase our guest satisfaction scores and manage our controllable costs relatively well. We implemented a new menu design during the quarter that has more personality than earlier ones, offers greater value to the guest, and has enabled us to essentially maintain our check (up approximately 1%) compared with last year. Price value is the key in this environment and we plan on promoting our price and value more aggressively in the coming months. With all of our recent initiatives in place, we believe we are well positioned and all of our resources are focused on attracting guests and strengthening our balance sheet by paying down debt."


First quarter fiscal 2009 same-restaurant sales:

June July August First Quarter
------ ------ ------ -------------
Company-Owned -8.9% -12.9% -11.1% -10.8%
Domestic Franchise - 8.3% - 8.8% - 6.3% - 7.9%

Other highlights for the 13-week first quarter:

-- Total revenue decreased 6.6% from the same period of the prior
year.

-- The Company opened two new Ruby Tuesday restaurants while
eight were closed during the quarter.

-- Domestic and international franchisees opened four new Ruby
Tuesday restaurants during the quarter and two were closed.

-- Sales at domestic and international franchise Ruby Tuesday
restaurants (which is the basis for determining royalty fees
included in franchise income on the Company's income
statement) totaled $99,666,000 and $113,371,000 for the first
quarter of fiscal 2009 and 2008, respectively.

-- Total capital expenditures were $6.2 million for the quarter.

Fiscal Year 2009 Guidance

-- Restaurant locations - We plan on opening two Company-owned
restaurants during the remainder of fiscal 2009. At this time,
we expect to close an additional 10 Company-owned restaurants
due to lease expirations. Our domestic and international
franchisees plan on opening 15-18 restaurants during the
balance of the fiscal year.

-- Same-restaurant sales are expected to decline at a rate in the
mid-single digits for the year, improving sequentially
throughout the year.

-- Restaurant operating margins for the year are anticipated to
be down reflecting higher labor and other operating costs.
Food cost is expected to be down marginally.

-- Other expenses - Depreciation is projected in the $79-$81
million range and selling, general, and administrative
expenses are targeted to be down 10-15% from a year earlier.

-- Balance sheet - We continue to evaluate alternatives to
strengthen our balance sheet and enhance our financial
flexibility. Our most important focus, however, is
strengthening our balance sheet by paying down debt from our
strong internal cash flow, as we did in the first quarter.

-- Earnings per share for the year are projected to be in the
$0.30-0.35 range.

-- Capital expenditures for the year are expected to be in the
$23-25 million range.

-- Operating free cash flow is estimated to be in the $80-90
million range.


In closing, Mr. Beall said, "These are difficult times for all. We have made great investments in our brand and our operations teams have executed very well in bringing those investments to life, resulting in the best food, service, team members, and 5-star facilities ever. We are proactively and aggressively running our business to attract guests in to see the new Ruby Tuesday. We believe managing our business for the long term with a sense of urgency to stabilize same-restaurant sales and continuing our focus on paying down debt is the right course of action."

A FRESH NEW RUBY TUESDAY

Ruby Tuesday, Inc. has Company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, Puerto Rico, Guam, and 14 foreign countries. As of September 2, 2008, the Company-owned and operated 715 Ruby Tuesday restaurants, while domestic and international franchisees (including Hawaii) operated 171 and 55 restaurants, respectively. Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RT).

The Company will host a conference call, which will be a live web-cast, this afternoon at 5:00 p.m. 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, availability of debt financing on terms attractive to the Company, payment of dividends, stock repurchases, and restaurant and franchise acquisitions and re-franchises. The Company cautions the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause our 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 restaurant market; weather conditions in the regions in which Company-owned and franchised restaurants are operated; guests' acceptance of the Company's development prototypes and remodeled restaurants; laws and regulations affecting labor and employee benefit costs, including further potential increases in federally mandated minimum wage; costs and availability of food and beverage inventory; the Company's ability to attract qualified managers, franchisees and team members; changes in the availability and cost of capital; impact of adoption of new accounting standards; impact of food-borne illnesses resulting from an outbreak at either Ruby Tuesday or other restaurant concepts; 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 First Quarter of Fiscal Year 2009
(Amounts in thousands except per share amounts)

13 Weeks 13 Weeks
Ended Ended
Sept. 2, Percent Sept. 4, Percent Percent
2008 of Revenue 2007 of Revenue Change
-------------------- ------------------- -------

Revenue:
Restaurant sales and
operating revenue $321,216 99.1 $342,994 98.9
Franchise revenue 2,785 0.9 3,803 1.1
--------- --------
Total revenue 324,001 100.0 346,797 100.0 (6.6)

Operating Costs and
Expenses:
(as a percent of
Restaurant sales
and operating
revenue)
Cost of
merchandise 87,631 27.3 92,693 27.0
Payroll and
related costs 109,798 34.2 109,941 32.1
Other restaurant
operating costs 70,494 21.9 66,887 19.5
Depreciation and
amortization 20,129 6.3 23,593 6.9
(as a percent of
Total revenue)
Loss from
Specialty
Restaurant Group,
LLC bankruptcy 26 0.0 164 0.0
Selling, general
and
administrative,
net 26,260 8.1 29,753 8.6
Equity in
(earnings) losses
of unconsolidated
franchises (499) (0.2) 846 0.2
--------- --------
Total operating costs
and expenses 313,839 323,877
--------- --------

Earnings before
Interest and Taxes 10,162 3.1 22,920 6.6 (55.7)

Interest expense,
net 9,800 3.0 7,099 2.0
--------- --------

Pre-tax Profit 362 0.1 15,821 4.6 (97.7)

Provision for income
taxes 77 0.0 4,731 1.4
--------- --------

Net Income $ 285 0.1 $ 11,090 3.2 (97.4)
========= ========



Earnings Per Share:
Basic $ 0.01 $ 0.21 (95.2)
========= ========
Diluted $ 0.01 $ 0.21 (95.2)
========= ========

Shares:
Basic 51,381 52,146
========= ========
Diluted 51,439 52,429
========= ========

RUBY TUESDAY, INC.

Financial Results For the First Quarter of Fiscal Year 2009
(Amounts in thousands)

Sept. 2, June 3,
CONDENSED BALANCE SHEETS 2008 2008
------------------------------------------------ ---------- ----------
Assets
Cash and Short-Term Investments $8,759 $16,032
Accounts and Notes Receivable 8,193 10,515
Inventories 21,163 21,323
Income Tax Receivable 3,533 7,708
Deferred Income Taxes 4,962 4,525
Assets Held for Disposal 26,012 24,268
Prepaid Rent and Other Expenses 21,128 20,538
---------- ----------

Total Current Assets 93,750 104,909

Property and Equipment, Net 1,069,479 1,088,356
Goodwill, Net 18,927 18,927
Notes Receivable, Net 1,779 1,884
Other Assets 55,823 57,861
---------- ----------

Total Assets $1,239,758 $1,271,937
========== ==========

Liabilities
Current Portion of Long Term Debt, including
Capital Leases $19,456 $17,301
Other Current Liabilities 106,600 97,852
Long-Term Debt, including Capital Leases 545,756 588,142
Deferred Income Taxes 28,408 27,422
Deferred Escalating Minimum Rents 43,153 42,450
Other Deferred Liabilities 62,052 67,252
---------- ----------

Total Liabilities 805,425 840,419

Shareholders' Equity 434,333 431,518
---------- ----------

Total Liabilities and Shareholders' Equity $1,239,758 $1,271,937
========== ==========


Source: Ruby Tuesday, Inc.

###

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