SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 5, 2000 (November 20, 2000)
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Date of report (Date of earliest event reported)
RUBY TUESDAY, INC.
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(Exact name of registrant as specified in its charter)
GEORGIA 1-12454 63-0475239
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
150 West Church Avenue, Maryville, Tennessee 37801
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(Address of principal executive offices) (Zip Code)
(865) 379-5700
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
<PAGE>
Item 2 Acquisition or Disposition of Assets.
On November 20, 2000, the Registrant completed the sale of all of its
American Cafe (including L&N Seafood) and Tia's Tex-Mex restaurants to Specialty
Restaurant Group, LLC ("SRG"), a limited liability company owned by the former
President and Partner of the Registrant's American Cafe and Tia's Tex-Mex
concepts and certain members of his management team. The 69 restaurants sold to
SRG had revenues of $108.2 million for the Registrant's fiscal year ended June
4, 2000 and $27.6 million for the thirteen weeks ended September 3, 2000. The
sale of these restaurants was effected pursuant to an Agreement and Plan of
Merger dated as of October 4, 2000 (as amended by First Amendment to Agreement
and Plan of Merger dated November 20, 2000, the "Merger Agreement") among the
Registrant, Tia's, LLC and SRG.
The purchase price for these restaurants was determined in an
arms-length transaction between the Registrant and SRG. The consideration
received by the Registrant pursuant to the Merger Agreement consisted of (i)
$30.0 million in cash, (ii) a promissory note payable by SRG to the Registrant
(the "Note") in the principal amount of $28.8 million, (iii) an option to
acquire 33% of SRG's membership interests during the five-year period following
November 20, 2000 at an exercise price of $600,000 if exercised in the first
year, $700,000 if exercised in the second year, $770,000 if exercised in the
third year, $847,000 if exercised in the fourth year and $932,000 if exercised
in the fifth year of the option term, and (iv) a nonsolicitation agreement for
the period during which the Note is outstanding and two years after the Note is
paid in full. The Note has a term of 10 years, the first three of which are
interest only, bears interest at a rate of 10% per annum, and is secured by a
pledge of all of the outstanding membership interests of SRG.
The Merger Agreement and related documents are filed as exhibits to
this Report and are incorporated by reference herein.
<PAGE>
Item 7 Financial Statements and Exhibits.
b. Unaudited Pro Forma Condensed Consolidated Financial Information
The following pro forma condensed consolidated balance sheet as of September 3,
2000, and the pro forma condensed consolidated statements of income for the
three month period then ended and the year ended June 4, 2000 give effect to the
sale of certain assets as set forth in Item 2 of this Form 8-K. The adjustments
related to the pro forma condensed consolidated balance sheet assume the
transaction was consummated at September 3, 2000, while the adjustments to the
pro forma condensed consolidated statements of income assume the transaction was
consummated at the beginning of the periods presented. The sale occurred on
November 20, 2000.
These pro forma statements are not necessarily indicative of the results that
actually would have occurred if the sale had been in effect as of and for the
periods presented or what may be achieved in the future.
<PAGE>
Ruby Tuesday, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
Condensed Consolidated Statement of Income
For the Thirteen Weeks Ended September 3, 2000
(In Thousands Except Per-Share Data)
<TABLE>
<S> <C> <C> <C> <C>
Pro Forma See Pro Forma
Historical Adjustments Note Consolidated
------------ ------------ ---- --------------
Revenues:
Restaurant sales and
operating revenues $202,223 $(27,635) (1a) $174,588
Franchise revenues 2,787 - 2,787
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205,010 (27,635) 177,375
Operating costs and expenses:
Cost of merchandise 54,777 (7,381) (1a) 47,396
Payroll and related costs 65,123 (9,904) (1a) 55,219
Other restaurant operating costs 40,428 (6,422) (1a) 34,006
Depreciation and amortization 9,691 (1,822) (1a) 7,869
Selling, general and administrative 15,277 (1,650) (1a) 13,627
Interest expense (income), net (362) (1,148) (1b) (1,510)
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184,934 (28,327) 156,607
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Income before income taxes 20,076 692 20,768
Provision for income taxes 7,187 288 (1c) 7,475
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Net income $ 12,889 $ 404 $ 13,293
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Earnings per share:
Basic $ 0.21 $ 0.21
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Diluted $ 0.20 $ 0.21
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Weighted average shares:
Basic 61,907 61,907
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Diluted 64,258 64,258
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</TABLE>
<PAGE>
Ruby Tuesday, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
Condensed Consolidated Statement of Income
For the Year Ended June 4, 2000
(In Thousands Except Per-Share Data)
<TABLE>
<S> <C> <C> <C> <C>
Pro Forma See Pro Forma
Historical Adjustments Note Consolidated
------------ ------------ ---- --------------
Revenues:
Restaurant sales and
operating revenues $789,240 $(108,186) (1a) $681,054
Franchise revenues 8,255 - 8,255
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797,495 (108,186) 689,309
Operating costs and expenses:
Cost of merchandise 214,136 (28,669) (1a) 185,467
Payroll and related costs 251,463 (37,760) (1a) 213,703
Other restaurant operating costs 159,398 (28,017) (1a) 131,381
Loss on sale of American Cafe
and Tia's Tex-Mex restaurants 10,003 (10,003) (1a) -
Depreciation and amortization 41,855 (7,020) (1a) 34,835
Selling, general and administrative 56,454 (7,272) (1a) 49,182
Interest expense (income), net 1,415 (4,592) (1b) (3,177)
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734,724 (123,333) 611,391
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Income before income taxes 62,771 15,147 77,918
Provision for income taxes 26,231 1,952 (1c) 28,183
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Net income $ 36,540 $ 13,195 $ 49,735
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Earnings per share:
Basic $ 0.58 $ 0.79
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Diluted $ 0.57 $ 0.77
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Weighted average shares:
Basic 62,532 62,532
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Diluted 64,576 64,576
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</TABLE>
<PAGE>
Ruby Tuesday, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
Condensed Consolidated Balance Sheet
September 3, 2000
(In thousands except per-share data)
<TABLE>
<S> <C> <C> <C> <C>
Pro Forma See Pro Forma
Historical Adjustments Note Consolidated
------------ ------------- ---- --------------
Assets
Current Assets:
Other current assets $ 38,025 $ (1,740) (2a) $ 36,285
Assets held for disposal 63,729 (55,767) (2b) 7,962
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Total current assets 101,754 (57,507) 44,247
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Property and equipment - at cost 460,846 - 460,846
Less accumulated depreciation
and amortization (174,117) - (174,117)
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286,729 - 286,729
Notes receivable, net 22,966 28,753 (2c) 51,719
Other assets 38,966 - 38,966
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Total assets $450,415 $(28,754) $421,661
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Liabilities & shareholders' equity
Total current liabilities $ 83,025 $ 3,991 (2d) $ 87,016
Long-term debt 68,601 (29,699) (2e) 38,902
Other deferred liabilities 58,689 (3,046) (2f) 55,643
Shareholders' equity:
Common stock, $0.01 par value;
authorized 100,000 shares;
issued 62,068 @9/3/00 621 - 621
Capital in excess of par value 10,863 - 10,863
Retained earnings 229,225 - 229,225
Accumulated other comprehensive
income (609) - (609)
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Total liabilities &
shareholders' equity $450,415 $(28,754) $421,661
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</TABLE>
<PAGE>
Ruby Tuesday, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(Amounts in Thousands)
Note 1 - The pro forma adjustments to the accompanying historical consolidated
statements of income for the fiscal year ended June 4, 2000 and the thirteen
weeks ended September 3, 2000 are described below:
(a) To record the reduction in revenues and expenses which would not
have been incurred by Ruby Tuesday, Inc. ("RTI") had SRG purchased
certain assets and operations of the American Cafe and Tia's
Tex-Mex concepts as of the beginning of the periods presented.
Costs historically allocated to the American Cafe and Tia's Tex-Mex
concepts for selling, general and administrative expenses have been
reduced to reflect a charge (to be computed initially as 1.0% of
sales) for support services which SRG will pay to RTI.
(b) To record the reduction in interest expense to be realized by using
net cash proceeds of $29,699 to pay down the RTI revolving credit
facility ($429 and $1,717 for the three months ended September 3,
2000 and for the year ended June 4, 2000, respectively) and the
increase in interest income to be generated by the $28,753 SRG note
receivable ($719 and $2,875 for the three months ended September 3,
2000 and for the year ended June 4, 2000, respectively).
(c) To record the changes in income tax expense associated with the
replacement of American Cafe and Tia's Tex-Mex operating profits
and changes in selling, general and administrative expenses with
additional net interest income. Fiscal year 2000's pro forma
condensed consolidated statement of income also removes the income
tax effect of the $10,003 estimated loss on sale of American Cafe
and Tia's Tex-Mex restaurants which had been booked in fourth
quarter.
Note 2 - The pro forma adjustments to the accompanying historical condensed
consolidated balance sheet at September 3, 2000 are described below:
(a) To record the distribution of current assets, primarily inventory, to
SRG.
(b) To record the distribution of property and equipment ($54,099) to SRG
and the write-off of the Tia's Tex-Mex goodwill ($1,668).
(c) To record the note receivable due from SRG in conjunction with the
sale. This note, which will require no principal payments for three
years, will bear interest at a rate of 10.0%.
(d) To record the addition of accruals for the completion of construction
commitments that would have existed at September 3, 2000 ($2,716) as
well as legal fees and other costs associated with the sale ($1,275).
(e) To record the reduction in RTI debt which will occur upon completion of
the sale.
(f) To record the reduction in escalating minimum rent liability
associated with the American Cafe and Tia's Tex-Mex units sold to SRG.
<PAGE>
c. Exhibits
Exhibit
Number Description
99.1 Agreement and Plan of Merger dated as of October 4, 2000 by and among
the Registrant, Tia's, LLC and Specialty Restaurant Group, LLC. (1)
99.2 First Amendment dated November 20, 2000, to Agreement and Plan of
Merger, by and among Registrant, Tia's, LLC, and Specialty Restaurant
Group, LLC; Master Agreement and Indemnity Regarding Leases and
Subleases dated as of November 20, 2000 between the Registrant and
General Electric Capital Business Asset Funding Corporation and General
Electric Business Asset Funding Corporation of Arkansas; Agreement
Regarding Collateral dated as of November 20, 2000 between the
Registrant and General Electric Capital Business Asset Funding
Corporation and General Electric Business Asset Funding Corporation of
Arkansas and Specialty Restaurant Group, LLC; Debt Subordination
Agreement dated as of November 20, 2000 made by Registrant, Specialty
Restaurant Group, LLC, General Electric Capital Business Asset
Funding Corporation and General Electric Business Asset Funding
Corporation of Arkansas; Agreement dated as of November 20, 2000 by and
between the Registrant and James CarMichael; Promissory Note dated
November 20, 2000 by Specialty Restaurant Group, LLC in favor of the
Registrant; Member Pledge Agreement, dated November 20, 2000, made
by and among each of the individuals listed on Schedule I thereto,
Specialty Restaurant Group, LLC, and Registrant; Option Agreement dated
as of November 20, 2000 between Specialty Restaurant Group, LLC and the
Registrant; Nonsolicitation Agreement dated as of November 20, 2000
between Specialty Restaurant Group, LLC and the Registrant; Support
Services Agreement dated as of November 20, 2000 between Specialty
Restaurant Group, LLC and the Registrant; Intellectual Property
Agreement dated as of November 20, 2000 between Specialty Restaurant
Group, LLC and the Registrant; Assignment and Assumption of Certain
Agreements by and between Registrant, and Specialty Restaurant Group,
LLC; Indemnity Agreement dated as of November 20, 2000 by and between
Registrant and Specialty Restaurant Group, LLC.
Footnote Description
(1) Incorporated by reference to Exhibit 99.5 on Form 10-Q dated
September 3, 2000 of Ruby Tuesday, Inc. (File No. 1-12454)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Ruby Tuesday, Inc.
/s/ J. Russell Mothershed
By: J. Russell Mothershed
Title: Senior Vice President
December 5, 2000
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(Date)
