EX-99.1 2 ex-99_pressrelease.htm PRESS RELEASE OF EARNINGS ex-99_pressrelease.htm
 
 
NEWS RELEASE
FOR IMMEDIATE RELEASE


RUBY TUESDAY REPORTS FOURTH QUARTER AND ANNUAL FISCAL 2013 RESULTS

MARYVILLE, TN – July 24, 2013 – Ruby Tuesday, Inc. (NYSE: RT) today reported financial results for the fiscal fourth quarter and year ended June 4, 2013.

Results for the fourth quarter of 2013 include:
 
·  
Same-restaurant sales decreased 3.1% at Company-owned Ruby Tuesday restaurants and decreased 5.1% at domestic Ruby Tuesday franchise restaurants
·  
Net loss from continuing operations of $27.0 million, or net income from continuing operations excluding special items of $7.0 million (see Non-GAAP reconciliation).  This compares to the prior-year net loss from continuing operations of $6.7 million, or net income from continuing operations excluding special items of $12.1 million.  Included in the special items for the fourth quarter are non-cash pre-tax charges of $9.0 million related to the full impairment of the Lime Fresh goodwill, non-cash pre-tax charges of $5.0 million related to the partial impairment of the Lime Fresh trademark, and $20.1 million related to a valuation allowance on the Company’s deferred tax assets, including tax credits and net operating loss carry forwards, and other items.  See Non-GAAP reconciliation and Other Items discussion for additional detail.
·  
Diluted loss per share from continuing operations of $0.44, or diluted earnings per share from continuing operations excluding special items of $0.12, compared to diluted loss per share from continuing operations of $0.10 for the prior year, or diluted earnings per share from continuing operations excluding special items of $0.19


Results for the 2013 fiscal year include:
 
·  
Total revenue decreased 4.6% from the prior year, primarily due to the 53rd week in the prior year, a same-restaurant sales decrease of 1.0% at Company-owned Ruby Tuesday restaurants, and eight fewer Ruby Tuesday restaurants year over year
·  
Same-restaurant sales decreased 2.1% at domestic franchise Ruby Tuesday restaurants
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 2 -
 
·  
Net loss from continuing operations of $23.4 million, or net income from continuing operations excluding special items of $13.9 million (see Non-GAAP reconciliation).  This compares to the prior-year net income from continuing operations of $3.5 million, or net income from continuing operations excluding special items of $29.3 million.
·  
Diluted loss per share from continuing operations of $0.38, or diluted earnings per share from continuing operations excluding special items of $0.23, compared to diluted earnings per share from continuing operations of $0.06 for the prior year, or diluted earnings per share from continuing operations excluding special items of $0.46
·  
Total capital expenditures were $37.1 million
·  
Exited non-core concepts including Marlin & Ray’s, Truffles Grill, and Wok Hay in order to focus on the repositioning efforts and traffic-building initiatives for the core Ruby Tuesday brand
·  
Opened nine Lime Fresh restaurants and closed six Company-owned Ruby Tuesday restaurants
·  
Revised strategic approach to the growth and execution of our Lime Fresh concept, leading to the closure of four of our initial internally-developed Lime Fresh restaurants, two of which closed during the fourth quarter, which weren’t meeting expectations and were dilutive to the concept’s performance
·  
Closed sale leaseback transactions on 24 restaurants during the year which generated $54.4 million of gross proceeds, including six transactions representing $13.6 million of gross proceeds in the fourth quarter.  We have closed three additional sale leaseback transactions subsequent to the end of the year, generating an incremental $5.9 million of gross proceeds.  We have no plans at this time to pursue additional sale leaseback transactions.
·  
Repurchased 4.1 million shares of common stock for $30.1 million, with no repurchases in the fourth quarter
·  
Repurchased $15.0 million of high yield bonds at a slight discount to par, inclusive of $3.5 million of high yield bond repurchases in the fourth quarter.  Subsequent to the end of the year, we paid off $9.1 million of mortgage debt.
·  
Maintained a strong cash position at the end of the fourth quarter of $52.9 million, compared to $48.2 million of cash on hand at the end of the prior year
 
 
 
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 3 - 
  
JJ Buettgen, President and CEO, commented, "Fiscal 2013 was a transitional year for Ruby Tuesday as we made a number of strategic decisions and investments which will strengthen our Company longer-term.  We exited our non-core concepts; significantly improved the strength of our senior management team by adding a new VP of Culinary and Beverage, a new SVP of Finance, a new SVP/Chief Development Officer, and most recently a new President Ruby Tuesday concept/Chief Operations Officer; and made significant progress on our strategy and plans to transform Ruby Tuesday into a more broadly appealing, vibrant, and energetic brand.  While we are disappointed with our financial results for the fourth quarter and the year, we are confident and excited about our future and the changes we are making to the Ruby Tuesday brand.  Our brand transformation initiatives include significant enhancements to our menu, service, atmosphere, and marketing.  Although we are in the initial stages of our brand transformation efforts, we made meaningful progress during the quarter and as we execute on these plans, we are confident that over time we will realize improvements in our guest counts, same-restaurant sales, and profitability.

Entering fiscal 2014, we are focused on the following key initiatives which we believe will strengthen our brand, enable the Company to more effectively compete in the current operating environment, and position the Company for long-term success:
 
·  
Launching innovative new food platforms and menu items that are broadly appealing, appropriate for a wide range of dining occasions, attractively priced, and reinforce our new positioning
·  
Leveraging the experience and talent of our operations teams to guarantee a high level of execution in launching our new products and introducing service and atmosphere changes that bring our new positioning to life in all of our restaurants
·  
Launching compelling marketing and advertising campaigns that more effectively communicate our new positioning, showcase our new, more innovative and approachable menu offerings, and change consumer perceptions of the Ruby Tuesday brand
·  
Maintaining a strong balance sheet, prudently allocating capital, and utilizing excess cash for continued debt reductions and opportunistic share repurchases.”


 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 4 - 

Fiscal Year 2014 Outlook

During fiscal 2014 we will be implementing a number of strategic initiatives to reposition our brand including improving our menu offerings and marketing.  As a result of these initiatives, combined with the current challenging casual dining environment, we have decided not to provide earnings guidance for fiscal 2014.  There are, however, certain items which we would like to highlight for fiscal 2014, including the following:
 
·  
Same-Restaurant Sales – We anticipate same-restaurant sales to be down high single digits in the first quarter and positive in the back half of the year, with sequential improvement in each quarter as we roll out our new menu offerings and supporting marketing campaign late in the first quarter
·  
Tax Credits – We do not anticipate recognizing a benefit from tax credits generated during fiscal 2014.  The historical income tax benefit of these tax credits has been $2.2 - $2.4 million per quarter.
·  
Capital Expenditures – Estimated to be $40 - $44 million for the year, inclusive of approximately $6 million in capital related to expense savings initiatives
·  
Excess Real Estate – We expect to generate $10-$15 million of cash proceeds from the disposition of excess real estate
·  
Free Cash Flow – We expect a year-over-year improvement in our free cash flow


Other Items

Goodwill & Related Asset Impairments
As we acquired Lime Fresh during the fourth quarter of fiscal 2012, in accordance with generally accepted accounting principles, we tested Lime Fresh goodwill for impairment during the fourth quarter of fiscal 2013.  Our testing resulted in a non-cash pre-tax impairment charge of $9.0 million, which fully impaired the Lime Fresh goodwill.  We also performed impairment testing for Lime Fresh property and equipment and other intangible assets in accordance with generally accepted accounting principles, which resulted in non-cash pre-tax impairment charges of $5.0 million related to the Lime Fresh trademark and $3.6 million related to the property and
 
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 5 - 
 
equipment of four underperforming Lime Fresh restaurants which were opened between May and November 2012.

Deferred Income Taxes Valuation Allowance
The Company reported tax expense from continuing operations in the fourth quarter of $12.1 million, which includes a non-cash charge of $20.1 million related to increases in the valuation allowance on the Company’s deferred tax assets, most significantly the employment tax credits and state net operating losses.  As a result of goodwill and other impairment charges over the last two years, the Company now has a three-year cumulative pre-tax loss, which is a strong negative factor for consideration when evaluating the realization of deferred tax assets.  In accordance with generally accepted accounting principles, even though the Company has expectations for future earnings, the recent three-year cumulative pre-tax losses are given more weight in the assessment of positive and negative evidence, which resulted in the establishment of the valuation allowance and incremental income tax expense.  The Company could be required to increase the valuation allowance further in fiscal 2014.  Given the nature of our deferred tax assets and the long carry-forward period associated with the employment tax credits, the Company expects to eventually recover its deferred tax assets, which are currently valued at $26.1 million, when it generates sufficient levels of pre-tax income in the future.

Discontinued Operations
Due to the fact that the Marlin & Ray’s, Truffles Grill, and Wok Hay concepts met the accounting definition of discontinued operations in the third quarter of fiscal year 2013, their current and historical results are presented separately within our Statements of Operations and Comprehensive (Loss)/Income.

Reporting Reclassifications to Prior-Year Financial Statements
As previously disclosed in the first three quarters of fiscal 2013, we made several reporting reclassifications to our prior-year Statements of Operations and Comprehensive (Loss)/Income for the 14 week period ended June 5, 2012 to better align our financial statement presentation with our peer group.  These reclassifications, which had no effect on pre-tax or net loss, were primarily in two key areas:  1) Amortization of deferred debt issuance costs and revolving credit facility commitment fees of $2.2 million were reclassified from other restaurant operating costs
 
 
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 6 - 
 
 
 
to interest expense, net; and  2)  Corporate and field executive fringe benefits and payroll taxes of $1.9 million were reclassified primarily from payroll and related costs to selling, general, and administrative, net, where the corresponding salary expenses are reported.  In the current year quarter, these amounts were $0.7 million and $4.0 million, respectively.
 
 
 
 
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 7 - 
 
Non-GAAP Reconciliation

The Company believes excluding special items from its financial results provides investors with a clearer understanding of the Company’s operating performance and comparison to prior-period results.
 
                 
Reconciliation of Net Income from Continuing Operations Excluding Special Items
                
(Amounts in thousands except per share amounts)
                
(Unaudited)
                
   
13 Weeks
  
14 Weeks
  
52 Weeks
  
53 Weeks
   
Ended
  
Ended
  
Ended
  
Ended
   
June 4,
  
June 5,
  
June 4,
  
June 5,
   
 2013
  
 2012
  
 2013
  
 2012
                 
Net Income from Continuing Operations
 
 $ (27,020)
  
 $   (6,734)
  
 $  (23,434)
  
 $    3,526 
Deferred Tax Valuation Allowance
  
     20,062 
  
             - 
   
      20,062 
  
             - 
Goodwill & Other Intangible Impairment Costs (net of tax) (1)
  
      8,284 
  
     10,345 
   
       8,284 
  
     10,345 
Closure and Impairment (net of tax) (2,3)
  
      3,539 
  
      2,303 
  
       5,603 
  
      9,568 
Pension Settlement (net of tax)
  
      1,462 
  
             - 
  
       1,462 
  
             - 
CEO Transition (net of tax)
  
         683 
  
             - 
  
       1,611 
  
             - 
Debt Prepay Penalties & Deferred Financing Fee Write-Offs (net of tax)
  
             - 
  
      2,915 
  
              - 
  
      2,915 
Retirement and Severance Costs (net of tax)
  
             - 
  
      2,685 
  
          307 
  
      2,685 
Lime Fresh Deferred Development Fee Write-Offs (net of tax)
  
             - 
  
         632 
  
              - 
  
         632 
Franchise Partnership Net Acquisition Gain (net of tax)
  
             - 
  
             - 
  
              - 
  
        (323)
Net Income from Continuing Operations Excluding Special Items
 
 $    7,010 
  
 $  12,146 
  
 $   13,895 
  
 $  29,348 
                 
Diluted Earnings Per Share from Continuing Operations
 
 $    (0.44)
  
 $    (0.10)
  
 $     (0.38)
  
 $     0.06 
Deferred Tax Valuation Allowance
  
        0.33 
  
           - 
  
         0.33 
  
           - 
Goodwill & Other Intangible Impairment Costs (net of tax) (1)
  
        0.14 
  
        0.16 
  
         0.14 
  
        0.16 
Closure and Impairment (net of tax) (2,3)
 
        0.06 
  
        0.04 
  
         0.09 
  
        0.15 
Pension Settlement (net of tax)
  
        0.02 
  
           - 
  
         0.02 
  
           - 
CEO Transition (net of tax)
  
        0.01 
  
           - 
  
         0.03 
  
           - 
Debt Prepay Penalties & Deferred Financing Fee Write-Offs (net of tax)
  
           - 
  
        0.04 
  
            - 
  
        0.04 
Retirement and Severance Costs (net of tax)
  
           - 
  
        0.04 
  
         0.00 
  
        0.04 
Lime Fresh Deferred Development Fee Write-Offs (net of tax)
  
           - 
  
        0.01 
  
            - 
  
        0.01 
Franchise Partnership Net Acquisition Gain (net of tax)
  
           - 
  
           - 
  
            - 
  
       (0.00)
Diluted Earnings Per Share Excluding Special Items
 
 $     0.12 
  
 $     0.19 
  
 $      0.23 
  
 $     0.46 
 
(1)  Q4 FY13 relates to Lime Fresh goodwill and trademark impairment while Q4 FY12 relates to Ruby Tuesday goodwill impairment 
(2)  Q4 FY13 includes impairments, lease reserves, and other closing-related costs resulting from the two Q4 FY13 Lime Fresh 
   closures and the Q4 FY13 Lime Fresh asset impairments, as well as lease reserve and other closing cost adjustments related to 
   the 21 Q4 FY12 Ruby Tuesday closures and the two Q3FY13 Lime Fresh closures
(3)  Q4 FY12 includes lease reserve and other closing cost adjustments related to the closure of 23 underperforming
   restaurants, 21 of which actually closed and two of which (Wok Hay) are classified in discontinued operations 
 
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 8 - 
 
ABOUT RUBY TUESDAY

Ruby Tuesday, Inc. has 783 Company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, 11 foreign countries, and Guam, in addition to 24 Company-owned and/or franchise Lime Fresh brand restaurants in six states, the District of Columbia, and one foreign country.  As of June 4, 2013, we owned and operated 706 Ruby Tuesday restaurants and franchised 77 Ruby Tuesday restaurants, comprised of 33 domestic and 44 international restaurants.  We also owned and operated 18 Lime Fresh restaurants and franchised six Lime Fresh restaurants, comprised of five domestic and one international restaurant.  Our Company-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets. 

Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol:  RT).
For more information, contact:
Greg Ashley, VP Finance and Treasurer
Phone:  865-379-5700

The Company will host a conference call, which will be a live web-cast, this afternoon at 4:30 p.m. Eastern Time.   The call will be available live at the following websites:

http://www.rubytuesday.com
http://www.earnings.com


Special Note Regarding Forward-Looking Information

This press release contains various forward-looking statements, which represent our 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 repayments of debt, availability of financing on terms attractive to the Company, payment of dividends, stock and bond repurchases, restaurant acquisitions, and changes in senior management and in the Board of Directors.  We caution 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 (such statements include, but are not limited to, statements relating to cost savings that we estimate may result from any programs we implement, our estimates of future capital spending and free cash flow, our targets for annual growth in same-restaurant sales and average annual sales per restaurant, and the benefits of our television marketing), including, without limitation, the following: general economic conditions; changes in promotional, couponing and advertising strategies; changes in our guests’ disposable income; consumer spending trends and habits; increased competition in the restaurant market; laws and regulations affecting labor and employee benefit costs, including further potential
 
 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 9 - 
 
 
increases in state and federally mandated minimum wages, and healthcare reform; guests’ acceptance of changes in menu items; guests’ acceptance of our development prototypes and remodeled restaurants; our ability to successfully integrate acquired companies; mall-traffic trends; changes in the availability and cost of capital; weather conditions in the regions in which Company-owned and franchised restaurants are operated; costs and availability of food and beverage inventory; our ability to attract and retain qualified managers, franchisees and team members; 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; and significant fluctuations in energy prices.

 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 10 - 
 
RUBY TUESDAY, INC.
                              
                               
Financial Results For the Fourth Quarter of Fiscal Year 2013
                    
(Amounts in thousands except per share amounts)
                      
(Unaudited)
                              
                               
 
CONDENSED STATEMENTS OF OPERATIONS
                              
   13 Weeks      14 Weeks          52 Weeks      53 Weeks      
 
Ended
    
Ended
        
Ended
    
Ended
      
 
June 4,
Percent
June 5,
Percent
Percent
June 4,
Percent
June 5,
Percent
Percent
 
 2013
of Revenue
 2012
of Revenue
Change
 2013
of Revenue
 2012
of Revenue
Change
Revenue:
 
              
 
            
Restaurant sales and operating revenue
 $       314,527
99.5 
  
 $      356,260
99.5 
      
 $   1,245,226
99.5 
  
 $   1,306,025
99.6 
    
Franchise revenue
1,577
0.5 
  
1,634
0.5 
       
6,261
0.5 
  
5,738
0.4 
    
Total revenue
316,104
100.0 
  
357,894
100.0 
  
(11.7)
  
1,251,487
100.0 
  
1,311,763
100.0 
  
(4.6)
                               
Operating Costs and Expenses:
                              
(as a percent of Restaurant sales and operating revenue)
                      
Cost of merchandise
87,007
27.7 
  
96,495
27.1 
  
 
  
341,512
27.4 
  
375,573
28.8 
  
 
Payroll and related costs
106,392
33.8 
  
118,180
33.2 
       
419,679
33.7 
  
440,753
33.7 
    
Other restaurant operating costs
65,566
20.8 
  
69,219
19.4 
      
259,014
20.8 
  
262,573
20.1 
    
Depreciation
14,819
4.7 
  
15,900
4.5 
  
 
  
59,122
4.7 
  
64,144
4.9 
  
 
(as a percent of Total revenue)
                              
Selling, general and administrative, net
26,959
8.5 
  
42,913
12.0 
      
138,782
11.1 
  
120,364
9.2 
    
Closures and impairments, net
9,582
3.0 
  
4,203
1.2 
      
14,656
1.2 
  
16,751
1.3 
    
Goodwill and trademark impairments
14,058
4.4 
  
16,919
4.7 
      
14,058
1.1 
  
16,919
1.3 
    
Total operating costs and expenses
          324,383
    
          363,829
        
       1,246,823
    
        1,297,077
      
                               
Earnings From Operations
      (8,279)
(2.6)
 
      (5,935)
(1.7)
  
(39.5)
  
       4,664
0.4 
 
      14,686
1.1 
  
(68.2)
                               
Interest expense, net
6,555
2.1 
  
10,017
2.8 
      
27,117
2.2 
  
23,312
1.8 
    
                               
Loss/(Gain) on extinguishment of debt
                     52
0.0 
  
                       -
0.0 
      
                 (519)
0.0 
  
                       -
0.0 
    
 
                              
Pre-tax loss from continuing operations
            (14,886)
(4.7)
  
            (15,952)
(4.5)
  
6.7 
  
           (21,934)
(1.8)
  
             (8,626)
(0.7)
  
(154.3)
Provision/(Benefit) for income taxes from continuing operations
12,134
3.8 
  
(9,218)
(2.6)
      
1,500 
(0.1)
  
(12,152)
(0.9)
    
Net (loss)/income from continuing operations
    (27,020)
(8.5)
  
      (6,734)
(1.9)
  
(301.2)
  
     (23,434)
(1.9)
  
        3,526
0.3 
  
(764.6)
                               
(Loss)/Income from discontinued operations, net of tax
(2,120)
(0.7)
  
918
0.3 
      
(15,979)
(1.3)
  
(3,714)
(0.3)
    
                               
Net Loss
 $      (29,140)
(9.2)
  
 $        (5,816)
(1.6)
  
(401.0)
  
 $      (39,413)
(3.1)
  
 $           (188)
0.0 
  
NM
                               
Basic Loss Per Share:
                              
(Loss)/Income from continuing operations
 $          (0.44)
    
 $          (0.10)
    
(340.0)
  
 $          (0.38)
    
   $           0.06 
    
(733.3)
(Loss)/Income from discontinued operations
                (0.05)
    
                   0.01 
        
               (0.27)
    
                (0.06)
      
Basic Net Loss Per Share
 $          (0.49)
    
 $          (0.09)
        
 $          (0.65)
    
 $                  -
      
                               
Diluted Loss Per Share:
                              
(Loss)/Income from continuing operations
 $          (0.44)
    
 $          (0.10)
    
(340.0)
  
 $          (0.38)
    
 $           0.06 
     
(733.3)
(Loss)/Income from discontinued operations
                (0.05)
    
                   0.01 
        
               (0.27)
    
                (0.06)
      
Diluted Net Loss Per Share
 $          (0.49)
    
 $          (0.09)
        
 $          (0.65)
    
 $                  -
      
                               
Shares:
                              
Basic
59,564
    
62,666
        
61,040
    
62,916
      
Diluted
59,564
    
62,666
        
61,040
    
63,508
      
                               
NM - Not Meaningful
                              

 
 
 
Ruby Tuesday, Inc.
News Release
July 24, 2013
Page           - 11 - 
 
RUBY TUESDAY, INC.
      
       
Financial Results For the Fourth Quarter
      
of Fiscal Year 2013
      
(Amounts in thousands)
      
(Unaudited)
      
 
June 4,
  
June 5,
CONDENSED BALANCE SHEETS
2013
  
2012
Assets
      
   Cash and Cash Equivalents
$52,907
  
$48,184
   Accounts Receivable
4,834
  
4,700
   Inventories
30,872
  
29,030
   Income Tax Receivable
                   1,900
  
                  837
   Deferred Income Taxes
7,296
  
27,134
   Prepaid Rent and Other Expenses
14,180
  
13,670
   Assets Held for Sale
9,175
  
4,713
       
     Total Current Assets
121,164
  
128,268
       
   Property and Equipment, Net
859,830
  
966,605
   Goodwill
    
7,989
   Other Assets
62,189
  
70,675
       
     Total Assets
$1,043,183
  
$1,173,537
       
Liabilities
      
   Current Portion of Long Term Debt, including
      
      Capital Leases
$8,487
  
$12,454
   Other Current Liabilities
97,145
  
119,770
       
     Total Current Liabilities
105,632
  
132,224
       
   Long-Term Debt, including Capital Leases
290,515
  
314,209
   Deferred Income Taxes
5,753
  
37,567
   Deferred Escalating Minimum Rents
46,892
  
45,259
   Other Deferred Liabilities
77,556
  
68,054
       
     Total Liabilities
526,348
  
597,313
       
Shareholders' Equity
516,835
  
576,224
       
     Total Liabilities and
      
     Shareholders' Equity
$1,043,183
  
$1,173,537