Ruby Tuesday Inc. (RT, Financial) filed Quarterly Report for the period ended 2009-09-01.
Ruby Tuesday operates casual dining concepts comprised of Ruby Tuesday Mozzarella's & Tia's. Ruby Tuesdays are casual full-service restaurants with whimsical artifacts classic brass & Tiffany lamps which create a comfortable nostalgic look & feel. Mozzarella's is a full-service restaurant with a menu that features a variety of pastas & thin-crust pizzas along with made-from-scratch soups entree salads & sandwiches. Tia's is a full-service casual dining restaurant. Ruby Tuesday Inc. has a market cap of $508.09 million; its shares were traded at around $8.5 with a P/E ratio of 14.89 and P/S ratio of 0.41. Ruby Tuesday Inc. had an annual average earning growth of 6.6% over the past 10 years.
Cost of merchandise increased $2.7 million (3.1%) to $90.3 million for the 13 weeks ended September 1, 2009, over the corresponding period of the prior year. As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 27.3% to 30.2% for the 13 weeks ended September 1, 2009. Excluding the $4.0 million decrease from the elimination of 54 restaurants closed in fiscal 2009, cost of merchandise increased $6.7 million.
Closures and impairments decreased $1.3 million to $0.6 million for the 13-week period ended September 1, 2009, as compared to the corresponding period of the prior year. The decrease for the 13-week period is due primarily to a reduction in restaurant impairment charges ($1.0 million) coupled with higher gains during the current quarter on the sale of surplus properties ($0.7 million) offset by higher closed restaurant lease reserve expense ($0.3 million) compared with the same period of the prior year. See Note G to our Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the first quarters of fiscal 2010 and 2009.
Cash provided by operating activities for the first 13 weeks of fiscal 2010 decreased 17.5% to $31.7 million due to changes in operating assets and liabilities, which collectively produced $18.1 million less cash flow during the first quarter of fiscal 2010 compared with the same period of the prior year primarily as a result of a reduction in the source of cash from income taxes of $13.1 million. Also contributing to the decrease were reductions in non-cash charges for depreciation expense of $3.8 million and (gain)/loss on impairments of $1.8 million. Partially offsetting these were increases in net income of $5.9 million, deferred taxes of $8.9 million, and share-based compensation of $1.6 million.
Following the May 21, 2008 amendment to the Credit Facility, through a series of scheduled quarterly and other required reductions, our original $500.0 million capacity has been reduced, as of September 1, 2009, to $428.0 million. We expect the capacity of the Credit Facility will be reduced by $24.0 to $25.0 million during the remainder of fiscal 2010.
At September 1, 2009, the Private Placement consisted of $73.9 million in notes with an interest rate of 8.19% (the Series A Notes) and $53.3 million in notes with an interest rate of 8.92% (the Series B Notes). The Series A Notes and Series B Notes mature on April 1, 2010 and April 1, 2013, respectively. During the 13 weeks ended September 1, 2009, we offered, and our noteholders accepted, principal prepayments of $3.3 million and $2.4 million on the Series A and B Notes, respectively. We estimate that we will offer prepayments totaling $9.8 million during the next twelve months. Accordingly, we have classified $9.8 million as current as of September 1, 2009. This amount includes four quarterly offers of $2.0 million each and additional amounts to be determined based upon excess cash flows and sales of surplus properties.
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Ruby Tuesday operates casual dining concepts comprised of Ruby Tuesday Mozzarella's & Tia's. Ruby Tuesdays are casual full-service restaurants with whimsical artifacts classic brass & Tiffany lamps which create a comfortable nostalgic look & feel. Mozzarella's is a full-service restaurant with a menu that features a variety of pastas & thin-crust pizzas along with made-from-scratch soups entree salads & sandwiches. Tia's is a full-service casual dining restaurant. Ruby Tuesday Inc. has a market cap of $508.09 million; its shares were traded at around $8.5 with a P/E ratio of 14.89 and P/S ratio of 0.41. Ruby Tuesday Inc. had an annual average earning growth of 6.6% over the past 10 years.
Highlight of Business Operations:
We generated $27.9 million of free cash flow in the first quarter of fiscal 2010, all of which was dedicated to the reduction of debt. We anticipate total capital spending in fiscal 2010 to be $18.0 to $20.0 million. We also estimate we will generate $60.0 million to $65.0 million of free cash flow during the remainder of fiscal 2010, a substantial portion of which will be dedicated to the reduction of debt. Similarly, we intend to use free cash flow generated in the next couple of years following fiscal 2010 to reduce debt. Our objective is to reduce debt as quickly as possible to strengthen our balance sheet and reduce the financial risk related to our leverage. As another means of reducing our bank debt and strengthening our balance sheet, on July 28, 2009, we closed an underwritten public offering of 11.5 million shares of Ruby Tuesday, Inc. common stock. The $73.1 million net proceeds raised in the equity offering was also used to reduce our outstanding debt. See further discussion in the Financing Activities section of this Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A).Cost of merchandise increased $2.7 million (3.1%) to $90.3 million for the 13 weeks ended September 1, 2009, over the corresponding period of the prior year. As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 27.3% to 30.2% for the 13 weeks ended September 1, 2009. Excluding the $4.0 million decrease from the elimination of 54 restaurants closed in fiscal 2009, cost of merchandise increased $6.7 million.
Closures and impairments decreased $1.3 million to $0.6 million for the 13-week period ended September 1, 2009, as compared to the corresponding period of the prior year. The decrease for the 13-week period is due primarily to a reduction in restaurant impairment charges ($1.0 million) coupled with higher gains during the current quarter on the sale of surplus properties ($0.7 million) offset by higher closed restaurant lease reserve expense ($0.3 million) compared with the same period of the prior year. See Note G to our Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the first quarters of fiscal 2010 and 2009.
Cash provided by operating activities for the first 13 weeks of fiscal 2010 decreased 17.5% to $31.7 million due to changes in operating assets and liabilities, which collectively produced $18.1 million less cash flow during the first quarter of fiscal 2010 compared with the same period of the prior year primarily as a result of a reduction in the source of cash from income taxes of $13.1 million. Also contributing to the decrease were reductions in non-cash charges for depreciation expense of $3.8 million and (gain)/loss on impairments of $1.8 million. Partially offsetting these were increases in net income of $5.9 million, deferred taxes of $8.9 million, and share-based compensation of $1.6 million.
Following the May 21, 2008 amendment to the Credit Facility, through a series of scheduled quarterly and other required reductions, our original $500.0 million capacity has been reduced, as of September 1, 2009, to $428.0 million. We expect the capacity of the Credit Facility will be reduced by $24.0 to $25.0 million during the remainder of fiscal 2010.
At September 1, 2009, the Private Placement consisted of $73.9 million in notes with an interest rate of 8.19% (the Series A Notes) and $53.3 million in notes with an interest rate of 8.92% (the Series B Notes). The Series A Notes and Series B Notes mature on April 1, 2010 and April 1, 2013, respectively. During the 13 weeks ended September 1, 2009, we offered, and our noteholders accepted, principal prepayments of $3.3 million and $2.4 million on the Series A and B Notes, respectively. We estimate that we will offer prepayments totaling $9.8 million during the next twelve months. Accordingly, we have classified $9.8 million as current as of September 1, 2009. This amount includes four quarterly offers of $2.0 million each and additional amounts to be determined based upon excess cash flows and sales of surplus properties.
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