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Ruby Tuesday Reports Fourth Quarter And Annual Fiscal 2013 Results

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
  • 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

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.

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