SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year end December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-12454
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
RUBY TUESDAY, INC. SALARY DEFERRAL PLAN
B. Name of issuer of the securities held pursuant to the Plan
and address of its principal executive office:
RUBY TUESDAY, INC.
150 West Church Avenue
Maryville, Tennessee 37801
Exhibit index appears at page 2. This report contains a total of 17
pages.
EXHIBIT INDEX
Exhibit Page
Number Description Number
13 Annual Report to Security-Holders 5
23 Consent of Independent Auditors 17
SIGNATURES
Ruby Tuesday, Inc. Salary Deferral Plan. Pursuant to the requirements of
the Securities Exchange Act of 1934, the Compensation Committee of the
Ruby Tuesday, Inc. Salary Deferral Plan have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly
authorized.
Ruby Tuesday, Inc.
Salary Deferral Plan
(Name of Plan)
Date June 28, 1999 /s/ Dolph Von Arx
Dolph Von Arx
Director; Chairman, Compensation
Committee
Ruby Tuesday, Inc. Salary Deferral Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1998 and 1997
Contents
Report of Independent Auditors.................................5
Audited Financial Statements
Statements of Net Assets Available for Benefits................6
Statement of Changes in Net Assets Available for Benefits..... 7
Notes to Financial Statements..................................8
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes....14
Line 27b - Schedule of Loans or Fixed Obligations.............15
Line 27d - Schedule of Reportable Transactions................16
Report of Independent Auditors
Employee Benefits Committee of
Ruby Tuesday, Inc.
We have audited the accompanying statements of net assets available for
benefits of Ruby Tuesday, Inc. Salary Deferral Plan as of December 31,
1998 and 1997, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1998. These
financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits
of the Plan as of December 31, 1998 and 1997, and the changes in net
assets available for benefits for the year ended December 31, 1998 in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
of Assets Held for Investment Purposes and Loans or Fixed Income
Obligations as of December 31, 1998, and Reportable Transactions for the
year then ended, are presented for purposes of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have
been subjected to the auditing procedures applied in audits of the basic
financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as
a whole.
/s/ Ernst & Young LLP
Ernst & Young LLP
Birmingham, Alabama
June 23, 1999
Ruby Tuesday, Inc. Salary Deferral Plan
Statements of Net Assets Available for Benefits
December 31
1998 1997
Assets
Investments, at fair value:
Company stock funds $5,014,372 $2,849,988
Mutual funds 7,196,438 7,015,137
Money market fund and cash 1,086,294 489,994
Loans to participants 287,896 134,648
13,585,000 10,489,767
Guaranteed investment contracts
with insurance companies,
at contract value 531,614 747,449
Total investments 14,116,614 11,237,216
Contributions receivable:
Participants 124,971 132,306
Employer 23,455 23,417
Total contributions receivable 148,426 155,723
Net assets available for benefits $14,265,040 $11,392,939
See accompanying notes.
Ruby Tuesday, Inc. Salary Deferral Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1998
Net investment income:
Net appreciation in fair value
of investments $2,122,181
Dividends on Ruby Tuesday
Inc. common stock 20,942
Dividends and interest 346,037
2,489,160
Administrative expenses (41,086)
2,448,074
Contributions:
Participants 1,532,219
Employer 247,715
1,779,934
Distributions to participants (1,355,907)
Net additions 2,872,101
Net assets available for benefits
at beginning of year 11,392,939
Net assets available for benefits
at end of year $14,265,040
See accompanying notes.
Ruby Tuesday, Inc. Salary Deferral Plan
Notes to Financial Statements
December 31, 1998
1. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of Ruby Tuesday, Inc. Salary Deferral Plan ("the
Plan") are presented on the accrual basis of accounting.
Investment Valuation
Investments in common trust funds are stated at fair value based on
quoted redemption values on the last business day of the plan year. Ruby
Tuesday, Inc. common stock is traded on the New York Stock Exchange and
is valued at the closing sales price on the last business day of the plan
year.
Guaranteed investment contracts are stated at the contract value as
determined by the insurance companies. Contract value represents
contributions made under the contracts, plus interest at the contract
rates, less funds used to pay benefits and the insurance companies'
administrative expenses.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that
affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
2. Description of the Plan
The following description of the Plan is to provide general information
only. Participants should refer to the Plan Agreement for further
information regarding the provisions of the Plan.
General
The Plan was established to provide additional incentive and retirement
security for eligible employees of Ruby Tuesday, Inc. and its
subsidiaries ("the Company" or "Plan Sponsor").
The general administration of the Plan is the responsibility of the
Employee Benefits Committee ("the Committee") which consists of at least
two persons and not more than seven persons appointed by the Board of
Directors. Costs of administering the Plan are paid by the Company to
the extent not paid by the Trust.
Ruby Tuesday, Inc. Salary Deferral Plan
Notes to Financial Statements (continued)
2. Description of Plan (continued)
Contributions
To participate in the Plan, the employee must have completed one year of
service in which they worked at least 1,000 hours and have attained the
age of 21. Participants may contribute amounts ranging from 2% to 10% of
their compensation and specify the various investment alternatives to
which the Plan's assets will be directed. Participants contributing a
pre-tax contribution of at least 2% may elect to make after-tax
contributions not in excess of 10% of annual earnings.
The Company matches 20% of contributions by participants with 3 to 9
years of service, 30% for participants with 10 to 19 years, and 40% for
participants with 20 or more years of service. Matching contributions are
invested entirely in Company common stock.
Vesting and Payment of Benefits
Participants, or their beneficiaries, have a 100% vested interest in the
value of their respective contributions and employer matching accounts.
On termination of service, death, or retirement, the participant or his
beneficiary shall receive a single lump sum payment in cash.
Participant Loans
The minimum loan amount is $500 and the maximum amount is limited to the
lesser of 50% of the participant's vested account balance or $50,000.
The interest rate charged is fixed at the time of the loan at the prime
rate plus 1%.
Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts.
Ruby Tuesday, Inc. Salary Deferral Plan
Notes to Financial Statements (continued)
3. Investments
The Plan's investments are held in a trust fund administered by
Prudential Investments ("the trustee"), except for the guaranteed
investment contracts with insurance companies (see Note 6) and the
investments in mutual funds which are held by the funds themselves.
The fair values of individual investments that represent 5% or more of
the Plan's net assets at December 31, 1998 and 1997 are as follows:
1998 1997
Investments at fair value as determined
by quoted market prices:
Company stock fund:
Ruby Tuesday, Inc. common stock $ 5,014,372 $ 2,849,988
Mutual Funds:
Putnam Diversified Income Trust
Fund 2,199,459 2,768,562
Prudential Equity Fund 3,664,128 3,807,195
Prudential MoneyMart Assets 1,086,294 489,994
The Plan's exposure to accounting loss with respect to these financial
instruments is limited to the carrying values stated in the Statements of
Net Assets Available for Benefits.
4. Income Tax Status
The Internal Revenue Service has ruled that the Plan qualifies under
Sections 401(a) and (k) of the Internal Revenue Code (IRC) and,
therefore, the Trust is not subject to tax under present income tax law.
The Plan is required to operate in conformity with the IRC to maintain
its qualification. The plan administrator is not aware of any course of
action or series of events that have occurred that might adversely affect
the Plan's qualified status.
5. Transactions with Parties-In-Interest
The Company Stock Fund invests primarily in Company stock. At December
31, 1998 and 1997, this fund held 235,970 and 110,679 shares of this
stock, respectively, with market values of $5,014,372 or $21.25 per share
and $2,849,988 or $25.75 per share, respectively.
Ruby Tuesday, Inc. Salary Deferral Plan
Notes to Financial Statements (continued)
6. Guaranteed Investment Contracts with Insurance Companies
The Plan has guaranteed investment contracts with two insurance
companies, New York Life and Transamerica Occidental Life. Deposits made
under these contracts earn interest at guaranteed rates between 7.08% and
7.70%. Each contract contains provisions for investment loss (surrender)
charges which the Plan would have to pay in the event of early withdrawal
prior to contract maturity date. The contract values of the individual
investments which comprise the total of the guaranteed investment
contracts at December 31, 1998 and 1997 are as follows:
1998 1997
New York Life Insurance Company,
guaranteed investment contract $320,003 $404,526
Transamerica Occidental Life,
guaranteed investment contract 211,611 201,373
Protective Life Insurance Company,
guaranteed investment contract - 141,550
Totals $531,614 $747,449
The average yield on the contracts for the years ended December 31, 1998
and 1997 was 6.71% and 6.84%, respectively.
The fair value of the contracts determined using the sum of the present
values of each of the contracts' projected cash flows, discounted at the
December 31, 1998 rates based on current yields of similar investments
with comparable durations, approximates the contract value of the
contracts at December 31, 1998.
7. Year 2000 Issue (unaudited)
The Plan Sponsor has determined that it will be necessary to take certain
steps in order to ensure that the Plan's information systems are prepared
to handle year 2000 dates. The Plan Sponsor is taking a two phase
approach. The first phase addresses internal systems that must be
modified or replaced to function properly. Both internal and external
resources are being utilized to replace or modify existing software
applications. The Plan Sponsor anticipates substantially completing this
phase of the project by the end of 1999. Costs associated with modifying
software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that
they will be year 2000 compliant by the end of 1999. If modification of
data
Ruby Tuesday, Inc. Salary Deferral Plan
Notes to Financial Statements (continued)
7. Year 2000 Issue (unaudited) (continued)
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the year 2000 problem could have a
material impact on the operations of the Plan. Plan management has not
developed a contingency plan, because they are confident that all systems
will be year 2000 ready.
<TABLE>
Ruby Tuesday, Inc. Salary Deferral Plan
Notes to Financial Statements (continued)
8. Investment Programs
Changes in net assets available for benefits for the year ended December 31, 1998 were allocated to separate
investment programs as follows:
<CAPTION>
Guaranteed Aim High
Investment Yield and Franklin Small
Contracts Putnam Capital Growth Ruby
Prudential with Diversified Aim Prudential & Prudential Templeton Tuesday, Participant
MoneyMart Insurance Income Balanced Stock Index Equity Growth Inc. Stock Loan
Assets Companies Funds Fund Fund Funds Fund Fund Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits at
December 31, 1997 $501,274 $747,449 $2,796,729 $12,243 $70,963 $3,883,975 $332,443 $2,913,215 $134,648 $11,392,939
Dividends on common stock:
Ruby Tuesday, Inc. - - - - - - - 20,942 - 20,942
Dividends and interest 33,234 44,785 187,233 2,660 2,862 51,411 17,401 6,451 - 346,037
Administrative expenses (12,325) (619) (3,097) (134) (1,153) (14,718) (653) (8,388) - (41,086)
Net appreciation
(depreciation) in fair
value of investments - - (252,971) 8,076 45,099 271,517 (28,873) 2,079,333 - 2,122,181
Contributions:
Participants 149,194 - 206,383 36,099 117,767 231,564 409,284 381,929 - 1,532,219
Employer - - - - - - - 247,715 - 247,715
Distributions to
participants (95,801) (45,472) (179,105) (500) (9,434) (465,238) (61,156) (453,310) (45,891) (1,355,907)
Interfund transfers 519,868 (214,529) (476,356) 91,976 62,700 (88,329) 22,676 (117,145) 199,139 -
Net assets available for
benefits at
December 31, 1998 1,095,444 $531,614 $2,278,816 $150,420 $288,804 $3,870,182 $691,122 $5,070,742 $287,896 $14,265,040
There were 1,035 active participants in the Plan at December 31, 1998.
</TABLE>
Ruby Tuesday, Inc. Salary Deferral Plan
Plan Number 001
Employer Identification Number 63-0475239
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
Identity of Issue,
Borrower, Lessor or Description of Current
Similar Party Investment Cost Value
Company Stock Funds:
Ruby Tuesday, Inc. Common Stock $2,879,323 $5,014,372
Mutual Funds:
Aim High Yield Fund 73,186 64,621
Putnam Diversified Income Fund 2,364,200 2,199,459
Aim Balanced Fund 140,309 148,117
Prudential Stock Index Z Fund 235,553 275,794
Prudential Equity Fund 3,642,264 3,664,128
Franklin Small Capital Growth Fund 184,355 186,669
Templeton Growth Fund 769,545 657,650
Total Mutual Funds 7,409,412 7,196,438
Money Market Fund:
Prudential MoneyMart Assets 1,086,294 1,086,294
Guaranteed Investment
Contracts with Insurance
Companies:
New York Life Guaranteed investment 320,003 320,003
Insurance Company contract
Transamerica Guaranteed investment 211,611 211,611
Occidental Life contract
Total Guaranteed
Investment Contracts 531,614 531,614
Participant Loans Prime + 1% - 287,896
$11,906,643 $14,116,614
<TABLE>
Ruby Tuesday, Inc. Salary Deferral Plan
Plan Number 001
Employer Identification Number 63-0475239
Line 27b - Schedule of Loans or Fixed Income Obligations
December 31, 1998
<CAPTION>
Identity and Original Amount Received During Unpaid Detailed description of loan
Address of Amount of Reporting Year Balance at End including dates of making and Amount Overdue
Obligor Loan Principal Interest of Year maturity and interest rate ____ Principal Interest
<S> <C> <C> <C> <C> <S> <C> <C>
Hills, Rhonda $ 764 $ - $ - $ 764 Issued 7/98, 60 months, 9.5% $ 749 $ 15
349 E Ravenwood Ave.
Youngstown, OH 44507
Locke, Charles 1,000 - - 1,000 Issued 11/98, 24 months, 9.5% 991 9
43D Allen Dr.
Saratoga Springs, NY 12866
Turk, Michelle 1,394 51 30 1,343 Issued 7/98, 60 months, 9.5% 1,328 15
102 Meredith St.
Enterprise, AL 36330
Vanhorn, Jeff 5,000 4,752 248 248 Issued 12/97, 12 months, 9.5% 247 1
40 Whirlaway Blvd.
Gansevoort, NY 12831
</TABLE>
<TABLE>
Ruby Tuesday, Inc. Salary Deferral Plan
Plan Number 001
Employer Identification Number 63-0475239
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
<CAPTION> Current Value
of Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Asset Price Price Asset Date or (Loss)
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets:
<S> <S> <C> <C> <C> <C> <C>
Prudential Investments MoneyMart Assets mutual fund $791,833 $ - $791,833 $791,833 $ -
MoneyMart Assets mutual fund - 195,533 195,533 195,533 -
Prudential Equity mutual fund 509,500 - 509,500 509,500 -
Prudential Equity mutual fund - 656,711 615,728 656,711 40,983
Putnam Diversified Income
Trust mutual fund 488,332 - 488,332 488,332 -
Putnam Diversified Income
Trust mutual fund - 813,129 857,346 813,129 (44,217)
Templeton Growth Fund A 582,307 - 582,307 582,307 -
Templeton Growth Fund A - 123,482 135,926 123,482 (12,444)
Ruby Tuesday Co Stock 844,267 - 844,267 844,267 -
Ruby Tuesday Co Stock - 759,216 569,799 759,216 189,417
There were no Category (i), (ii), or (iv) transactions for the year ended December 31, 1998.
Note: Lease rental and expense incurred with transaction are not applicable.
</TABLE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-20585 and Form S-8 No. 333-03153) pertaining
to the Salary Deferral Plan of Ruby Tuesday, Inc. and in the related
Prospectus of our report dated June 23, 1999, with respect to the
financial statements and supplemental schedules of the Ruby Tuesday Inc.
Salary Deferral Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1998.
/s/ Ernst & Young LLP
Ernst & Young LLP
Birmingham, Alabama
June 23, 1999
