Ruby Tuesday, Inc. Reports Fourth Quarter and Annual Fiscal 2009 Results

Ruby Tuesday, Inc. today reported diluted earnings per share of $0.28 on net income of $14.4 million for the Company's fourth quarter of fiscal 2009, which ended on June 2, 2009. This compares to diluted earnings per share of $0.27 on net income of $13.9 million for the fourth quarter of the prior year.

Same-restaurant sales for the fourth quarter decreased 3.2% and 6.9% at Company-owned and domestic franchise Ruby Tuesday restaurants, respectively. Guest traffic at Company-owned same-restaurants was positive in the quarter.

For the fiscal year ended June 2, 2009, the Company reported a diluted loss per share of $0.35 on a net loss of $17.9 million as compared to earnings per share of $0.51 on net income of $26.4 million for fiscal 2008. The fiscal 2009 loss includes after-tax charges for restaurant closures and impairments and the impairment of goodwill that totaled $0.92 per share or $47.2 million.

Sandy Beall, Founder and CEO, commented on the fiscal year results, saying, 'Fiscal 2009 was the most challenging year in our Company's 37 year history. I am proud of the way our team members met those challenges and were able to stabilize our trends and begin to improve our performance relative to that of others in our industry. Our key accomplishments for the year were to:

• Slow the rate of decline in same-restaurant sales to 3.2% in the fourth quarter, from 6.8% in the third quarter and 10.8% in the first half;

• Achieve positive guest traffic in the fourth quarter;

• Improve our sales and guest traffic performance relative to our peers as measured by Knapp Track;

• Reduce our cost structure by a projected $45-50 million annualized, more than offsetting our investments in value through our menu upgrades and marketing initiatives, as well as inflationary and other cost increases;

• Maintain positive free cash flow and pay down of $112 million of debt during the year;

• Maintain quality restaurant operations as indicated by continued high guest satisfaction scores and very low team turnover.

'Although pleased with our recent sales trends, we are far from satisfied. Looking to our current fiscal year, our corporate strategies are to maintain a continued focus on and execution of our 2009 strategies and carry the momentum generated by our cost-savings and marketing initiatives in the second half of fiscal 2009 through the new fiscal year. The following are our key priorities: get customers in seats, increasing restaurant traffic and sales; maximize cash flow and use that cash flow to reduce debt; further strengthen our brand through quality - serving high-quality food, providing gracious hospitality, and offering compelling value. While the environment remains uncertain, we are confident in our strategies, our team, and its ability to execute our operating standards.'

Other highlights for the 13-week fourth quarter:

• Total revenue decreased 7.1% from the same period of the prior year primarily because of the decline in same-restaurant sales and a net decrease of 49 restaurants from the same quarter of the prior year largely reflecting the closure of 43 restaurants in the third quarter of fiscal 2009.

• The Company acquired one Ruby Tuesday restaurant from a franchisee in Texas and did not open or close any restaurants during the quarter.

• Domestic and international franchisees opened four new Ruby Tuesday restaurants during the quarter and closed five including the one acquired by the Company.

• Sales at domestic and international franchise Ruby Tuesday restaurants (which is the basis for determining royalty fees included in franchise revenue on the Company's statement of operations) totaled $96,592,117 and $100,167,000 for the fourth quarter of fiscal 2009 and 2008, respectively.

• Total capital expenditures were $3.0 million for the quarter.

• Debt was reduced by $32 million.

• The Company had 52.8 million shares of common stock outstanding at the end of the quarter.

Fiscal Year 2009 Highlights

• Total revenue decreased 8.2% from the prior year.

• Same-restaurant sales for the fiscal year decreased 7.9% and 6.6% at Company-owned and domestic franchise Ruby Tuesday restaurants, respectively.

• The Company opened four new Ruby Tuesday restaurants, acquired one restaurant from a franchisee and closed 54 restaurants, one of which was converted to a Wok Hay.

• Domestic and international franchisees opened 19 new Ruby Tuesday restaurants and closed 14 including the one acquired by the Company.

• Sales at domestic and international franchise Ruby Tuesday restaurants (which is the basis for determining royalty fees included in franchise revenue on the Company's statement of operations) totaled $383,738,403 and $411,968,000 for fiscal 2009 and 2008, respectively.

• Total capital expenditures were $17.2 million for fiscal year 2009.

• Debt was reduced by $112 million.

Fiscal Year 2010 Guidance

• New restaurant development -- We do not plan to open any Company-owned restaurants in fiscal 2010 and expect to close approximately 14 as part of our previously announced plan to close 30 restaurants over time when their leases expire. We project our franchisees will open 6 restaurants, 5 of which will be international.

• Same-restaurant sales -- We estimate same-restaurant sales for the year will be in the range of down 2.5-3.5%.

• Restaurant operating margins are anticipated to be down reflecting the impact of our marketing strategy of compelling value and its impact on food costs and some loss of leverage from the anticipated decline in same-restaurant sales. The actual cost of our food products is expected to remain favorable compared with the prior year.

• Other expenses. Depreciation is projected in the $62-65 million range and selling, general, and administrative expenses are targeted to be down in the low to mid teens from a year earlier. Interest expense is projected to be $23-25 million and the tax rate is estimated to be 10-20%. Fully diluted shares outstanding are estimated to be approximately 52 million for the year.

• Diluted earnings per share for the year are projected to be in the $0.50-0.65 range.

• Capital expenditures are estimated to be $17-20 million.

In closing, Mr. Beall said, 'Despite the difficult environment, our restaurant operations remained strong throughout the year reflecting our commitment to our core operating strategies of Uncompromising Freshness and Quality, Gracious Hospitality, Fresh New Look, and Compelling Value. Our Guest Satisfaction Index scores continue to reflect solid ratings and our entire team is dedicated to maintaining and improving them in fiscal 2010.

'We remain highly focused on the priorities I mentioned earlier - getting people in seats, maximizing cash flow and reducing debt to strengthen our balance sheet, and further strengthen our brand through the consistent application of our brand strategies. It will be through the intense focus on and consistent application of these priorities and strategies that we will further rebuild shareholder value.'

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