10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended:  November 29, 2011

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to _________

Commission file number 1-12454

______________

RUBY TUESDAY, INC.

(Exact name of registrant as specified in its charter)

GEORGIA	63-0475239
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer identification no.)

150 West Church Avenue, Maryville, Tennessee 37801

(Address of principal executive offices)  (Zip Code)

        Registrant’s telephone number, including area code: (865) 379-5700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x    Accelerated filer o    Non-accelerated filer o    Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

63,779,476

(Number of shares of common stock, $0.01 par value, outstanding as of January 3, 2012)

RUBY TUESDAY, INC.

INDEX

	Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
NOVEMBER 29, 2011 AND MAY 31, 2011	4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED
NOVEMBER 29, 2011 AND NOVEMBER 30, 2010	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE TWENTY-SIX WEEKS ENDED
NOVEMBER 29, 2011 AND NOVEMBER 30, 2010	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS	7-22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS	23-36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK	36-37
ITEM 4. CONTROLS AND PROCEDURES	37
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	37
ITEM 1A. RISK FACTORS	38
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 6. EXHIBITS	39
SIGNATURES	40

2

Special Note Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q 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 repurchases, restaurant acquisitions, and conversions of Company-owned restaurants to other dining concepts.  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, and our targets for annual growth in same-restaurant sales and average annual sales per restaurant), 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 increases in state and federally mandated minimum wages, and healthcare reform;

·   guests’ acceptance of changes in menu items;

·   guests’ acceptance of our development prototypes, remodeled restaurants, and conversion strategy;

·   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.

3

PART I — FINANCIAL INFORMATION

ITEM 1.

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

	NOVEMBER 29,			MAY 31,
	2011			2011
Assets	(NOTE A)
Current assets:
Cash and short-term investments	$	8,886		$	9,722
Accounts receivable		7,275			7,531
Inventories:
Merchandise		29,107			25,627
China, silver and supplies		9,292			8,843
Income tax receivable		3,678			3,077
Deferred income taxes		14,518			14,429
Prepaid rent and other expenses		11,778			12,797
Assets held for sale		2,429			1,340
Total current assets		86,963			83,366
Property and equipment, net		1,015,471			1,031,151
Goodwill		15,571			15,571
Other assets		53,692			56,938
Total assets	$	1,171,697		$	1,187,026
Liabilities & shareholders’ equity
Current liabilities:
Accounts payable	$	30,540		$	29,807
Accrued liabilities:
Taxes, other than income and payroll		12,333			13,695
Payroll and related costs		25,191			27,559
Insurance		6,882			6,581
Deferred revenue – gift cards		8,685			8,731
Rent and other		19,037			17,861
Current portion of long-term debt, including capital leases		17,357			15,090
Total current liabilities		120,025			119,324
Long-term debt and capital leases, less current maturities		324,800			329,184
Deferred income taxes		43,408			42,923
Deferred escalating minimum rent		45,728			44,291
Other deferred liabilities		59,123			59,591
Total liabilities		593,084			595,313
Commitments and contingencies
Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares;
issued: 63,778 shares at 11/29/11; 65,098 shares at 5/31/11)		638			651
Capital in excess of par value		90,147			104,941
Retained earnings		500,265			499,173
Deferred compensation liability payable in
Company stock		1,513			1,556
Company stock held by Deferred Compensation Plan		(1,513	)		(1,556	)
Accumulated other comprehensive loss		(12,437	)		(13,052	)
Total shareholders’ equity		578,613			591,713
Total liabilities & shareholders’ equity	$	1,171,697		$	1,187,026

                   The accompanying notes are an integral part of the condensed consolidated financial statements.

4

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
	NOVEMBER 29,			NOVEMBER 30,			NOVEMBER 29,		NOVEMBER 30,
	2011			2010			2011		2010
	(NOTE A)						(NOTE A)
Revenue:
Restaurant sales and operating revenue	$	306,203		$	288,955		$	635,057	$	589,587
Franchise revenue		1,250			1,496			2,741		3,550
		307,453			290,451			637,798		593,137
Operating costs and expenses:
Cost of merchandise		91,562			84,537			189,137		169,630
Payroll and related costs		107,777			99,756			220,764		199,965
Other restaurant operating costs		65,429			61,157			134,084		120,800
Depreciation		16,414			15,619			32,700		30,741
Selling, general and administrative, net		23,386			21,237			50,162		43,780
Closures and impairments		653			348			1,098		2,087
Equity in earnings of unconsolidated
franchises					(27	)				(230	)
Interest expense, net		3,979			2,556			7,943		5,019
		309,200			285,183			635,888		571,792
(Loss)/income before income taxes		(1,747	)		5,268			1,910		21,345
Provision for income taxes		254			703			818		4,383
Net (loss)/income	$	(2,001	)	$	4,565		$	1,092	$	16,962
(Loss)/earnings per share:
Basic	$	(0.03	)	$	0.07		$	0.02	$	0.27
Diluted	$	(0.03	)	$	0.07		$	0.02	$	0.26
Weighted average shares:
Basic		62,598			64,011			63,177		63,846
Diluted		62,598			64,898			63,729		64,655
Cash dividends declared per share	$	-		$	-		$	-	$	-

                 The accompanying notes are an integral part of the condensed consolidated financial statements.

5

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

	TWENTY-SIX WEEKS ENDED
	NOVEMBER 29, 2011			NOVEMBER 30, 2010
	(NOTE A)
Operating activities:
Net income	$	1,092		$	16,962
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		32,700			30,741
Amortization of intangibles		1,036			393
Provision for bad debts		17			(318	)
Deferred income taxes		(211	)		1,023
Loss on impairments, including disposition of assets		1,028			1,529
Equity in earnings of unconsolidated franchises					(230	)
Share-based compensation expense		3,528			5,615
Excess tax benefits from share-based compensation		(24	)		(186	)
Gain on franchise partnership acquisitions, net of settlement losses					(1,660	)
Other		288			(2	)
Changes in operating assets and liabilities:
Receivables		(1,292	)		647
Inventories		(3,929	)		(13,218	)
Income taxes		(601	)		(3,756	)
Prepaid and other assets		2,699			(121	)
Accounts payable, accrued and other liabilities		654			(4,626	)
Net cash provided by operating activities		36,985			32,793
Investing activities:
Purchases of property and equipment		(20,664	)		(13,266	)
Acquisition of franchise and other entities					(1,832	)
Proceeds from disposal of assets		1,527			959
(Increases)/reductions in Deferred Compensation Plan assets		(76	)		62
Insurance proceeds from property claims		1,548
Other, net		(217	)		(49	)
Net cash used by investing activities		(17,882	)		(14,126	)
Financing activities:
Net proceeds/(payments) on revolving credit facility		5,000			(14,600	)
Principal payments on other long-term debt		(6,645	)		(6,420	)
Stock repurchases		(18,441	)
Proceeds from exercise of stock options		123			796
Excess tax benefits from share-based compensation		24			186
Net cash used by financing activities		(19,939	)		(20,038	)
Decrease in cash and short-term investments		(836	)		(1,371	)
Cash and short-term investments:
Beginning of year		9,722			9,569
End of year	$	8,886		$	8,198
Supplemental disclosure of cash flow information:
Cash paid/(received) for:
Interest, net of amount capitalized	$	8,640		$	5,132
Income taxes, net	$	1,151		$	6,061
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	$	5,168		$	5,120
Reclassification of properties to assets held for sale or receivables	$	2,705		$	2,464
Assumption of debt and capital leases related to franchise
partnership acquisitions				$	22,670
Liability for claim settlements and insurance receivables	$	(314	)	$	(2,171	)

                 The accompanying notes are an integral part of the condensed consolidated financial statements.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – BASIS OF PRESENTATION

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” “we” or the “Company”), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill®, Marlin & Ray’s™, Truffles®, and Wok Hay® casual dining restaurants.  We also franchise the Ruby Tuesday concept in select domestic and international markets.  The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring entries) considered necessary for a fair presentation have been included.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Operating results for the 13- and 26-week periods ended November 29, 2011 are not necessarily indicative of results that may be expected for the year ending June 5, 2012.

The condensed consolidated balance sheet at May 31, 2011 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in RTI’s Annual Report on Form 10-K for the fiscal year ended May 31, 2011.

NOTE B – (LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES

Basic (loss)/earnings per share is computed by dividing net (loss)/income by the weighted average number of common shares outstanding during each period presented.  Diluted (loss)/earnings per share gives effect to stock options and restricted stock outstanding during the applicable periods.  The following table shows the calculation of weighted-average common and dilutive potential common shares outstanding as presented in the accompanying Condensed Consolidated Statements of Operations (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Net (loss)/income	$	(2,001	)	$	4,565	$	1,092	$	16,962
Weighted-average common
shares outstanding		62,598			64,011		63,177		63,846
Dilutive effect of stock
options and restricted stock		–			887		552		809
Weighted average common
and dilutive potential
common shares outstanding		62,598			64,898		63,729		64,655
Basic (loss)/earnings per share	$	(0.03	)	$	0.07	$	0.02	$	0.27
Diluted (loss)/earnings per share	$	(0.03	)	$	0.07	$	0.02	$	0.26

Stock options with an exercise price greater than the average market price of our common stock and certain options with unrecognized compensation expense do not impact the computation of diluted (loss)/earnings per share because the effect would be anti-dilutive.  The following table summarizes stock options and restricted shares that did not impact the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Stock options		3,404	*		3,284		2,074		3,052
Restricted shares		1,143	*		443		899		465
Total		4,547			3,727		2,973		3,517

7

* Due to a net loss for the 13 weeks ended November 29, 2011, all then outstanding share-based awards were excluded from the computation of diluted loss per share.

During the first quarter of fiscal 2012, we repurchased 2.0 million shares of our common stock at a cost of $18.4 million.  As of November 29, 2011, the total number of remaining shares authorized by our Board of Directors to be repurchased was 5.9 million.  No shares were repurchased during the quarter ended November 29, 2011.

NOTE C – FRANCHISE PROGRAMS

As of November 29, 2011, our traditional domestic and international franchisees collectively operated 87 Ruby Tuesday restaurants.  We do not own any equity interest in our traditional franchisees.  As discussed further in Note D to the Condensed Consolidated Financial Statements, during fiscal 2011 we acquired the remaining membership interests of 11 franchise partnerships which operated 105 Ruby Tuesday restaurants, an additional Ruby Tuesday restaurant from a twelfth franchise partnership, and three Ruby Tuesday restaurants from a traditional domestic franchise.

Under the terms of the franchise operating agreements, we require all domestic franchisees to contribute a percentage, currently 0.5%, of monthly gross sales to a national advertising fund formed to cover their pro rata portion of the production and airing costs associated with our national advertising campaign.  Under the terms of those agreements, we have the right to charge up to 3.0% of monthly gross sales for this national advertising fund.

Advertising amounts received from domestic franchisees are considered by RTI to be reimbursements, recorded on an accrual basis as earned, and have been netted against selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In addition to the advertising fee discussed above, our franchise agreements allow us to charge up to a 1.5% support service fee and a 1.5% marketing and purchasing fee.  For the 13 and 26 weeks ended November 29, 2011 and November 30, 2010, we recorded $0.3 million and $0.6 million, respectively in fiscal 2012, and $0.4 million and $1.8 million, respectively in fiscal 2011, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Operations.

NOTE D – FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS

As part of our strategy to generate incremental revenue and EBITDA through new concept conversions and franchise partnership acquisitions, as discussed below, during fiscal 2011 we acquired 109 Ruby Tuesday restaurants, including 106 purchased from certain of our franchise partnerships and three purchased from a traditional domestic franchisee.  Of these 109 Ruby Tuesday restaurants, the following 23 restaurants were acquired as the result of the acquisition of two franchise partnerships and a traditional domestic franchise during the first two quarters of fiscal 2011.

On August 4, 2010, we acquired the remaining 99% and 50% of the membership interests of RT Long Island Franchise, LLC (“RT Long Island”) and RT New England Franchise, LLC (“RT New England”), respectively, thereby increasing our ownership to 100% of these companies.  RT Long Island and RT New England, previously franchise partnerships with 10 Ruby Tuesday restaurants each, were acquired for $0.2 million plus assumed debt.  As further consideration for the RT Long Island transaction, we surrendered collection of the note receivable and line of credit due from the franchise.  The note and line of credit, net of allowances for doubtful accounts and unearned revenue, totaled $0.4 million at the time of the transaction.RT Long Island and RT New England had total debt of $24.3 million at the time of acquisition, $1.9 million of which was payable to RTI.

On October 13, 2010, we acquired three Ruby Tuesday restaurants from a traditional domestic franchise in Kentucky for $1.6 million in cash.

We acquired the remaining 86 restaurants during the final two quarters of fiscal 2011, as follows.

On February 2, 2011, we acquired the remaining 50% of the membership interests of RT Western Missouri Franchise, LLC; RT Omaha Franchise, LLC; RT KCMO Franchise, LLC (“RT KCMO”); and RT St. Louis

8

Franchise, LLC; and the remaining 99% of the membership interests of RT Indianapolis Franchise, LLC (“RT Indianapolis”); RT Portland Franchise, LLC; and RT Denver Franchise, LP; thereby increasing our ownership to 100% of these seven companies.  These franchise partnerships collectively operated 72 restaurants at the time of acquisition, and were acquired for $0.5 million plus assumed debt.  As further consideration for these transactions, we surrendered collection of notes receivable and lines of credit due from certain of these franchisees.  The notes and lines of credit, net of allowances for doubtful accounts, totaled $0.9 million at the time of the transactions.  At the time of acquisition, these franchise partnerships had total debt of $106.6 million, $3.8 million of which was payable to RTI.

On February 25, 2011, we acquired one Ruby Tuesday restaurant from RT Utah Franchise, LLC (“RT Utah”), a franchise partnership in which we had a 1% ownership interest, for $2.0 million.  Shortly before completion of this transaction, RT Utah closed its other five restaurants.

On May 4, 2011, we acquired the remaining 50% of the membership interest of RT Minneapolis Franchise, LLC; and the remaining 99% of the membership interest of RT Las Vegas Franchise, LLC; thereby increasing our ownership to 100% of these two companies.  These franchise partnerships collectively operated 13 restaurants at the time of acquisition, and were acquired for assumed debt.  At the time of acquisition, these franchise partnerships had total debt of $18.7 million, $0.9 million of which was payable to RTI.

Our Condensed Consolidated Financial Statements reflect the results of operations of these acquired restaurants subsequent to the dates of acquisition.

The purchase prices of acquisitions during fiscal 2011 have preliminarily been allocated based on initial fair value estimates as follows (in thousands):

Property and equipment	$	137,075
Goodwill		15,571
Reacquired franchise rights		10,242
Other intangible assets, net of liabilities of $1,288		735
Deferred income taxes		380
Long-term debt and capital leases		(147,005	)
Other net liabilities		(4,536	)
Notes receivable		(1,529	)
Net impact on fiscal 2011 Consolidated Balance Sheet		10,933
Gain on settlement of preexisting contracts, net		(4,906	)
Gain on acquisitions		(1,770	)
Net impact on fiscal 2011 Consolidated Statement of Income		(6,676	)
Aggregate cash purchase prices	$	4,257

The RT Long Island, RT Indianapolis, and RT KCMO acquisitions were considered bargain purchases as the purchase prices were less than the values assigned to the assets and liabilities acquired.  For the 26 weeks ended November 30, 2010, a preliminary bargain purchase gain of $2.6 million, as well as a $1.0 million loss on settlement of preexisting contracts, was included in Other restaurant operating costs in our Condensed Consolidated Statements of Operations.  These preliminary estimates were adjusted in subsequent quarters as additional information was received.  The amounts in the table above include the revised amounts for RT Long Island and RT New England, which were acquired during the first quarter of fiscal 2011, as well as amounts recorded for RT Indianapolis and RT KCMO.

We recorded $15.6 million of goodwill due to the purchase price exceeding the estimated fair value of the net assets acquired in certain of the acquisitions.  Of the goodwill recorded, we anticipate that approximately $8.2 million will be nondeductible for tax purposes.

We amortize the $10.2 million of reacquired franchise rights associated with these acquisitions on a straight-line basis over the remaining term of the franchise operating agreements, which are approximately two to 12 years from the dates of acquisition.

9

Other intangible assets, net of liabilities consist of assets and liabilities resulting from the terms of acquired operating lease contracts being favorable or unfavorable relative to market terms of comparable leases on the acquisition date.  These assets and liabilities totaled $2.0 million and $1.3 million, respectively, at the time of acquisition and will be amortized as a component of rent expense over the remaining lives of the leases, which are approximately one to 33 years.

The table below shows operating results attributable to the restaurants acquired from franchisees in fiscal 2011 that are included in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks  ended November 29, 2011 and November 30, 2010 (in thousands).  Amounts shown for the 13 and 26 weeks ended November 29, 2011 include results for all 109 restaurants acquired during fiscal 2011 while amounts shown for the 13 and 26 weeks ended November 30, 2010 include results for the 23 restaurants acquired during the first two quarters of fiscal 2011 (from August 4, 2010 or October 13, 2010, the dates of acquisition, through November 30, 2010).

	(Unaudited)
	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Total revenue	$	41,271		$	10,191	$	86,891	$	13,327
Cost of merchandise		12,243			2,954		25,637		3,826
Payroll and related costs		15,128			3,441		30,964		4,403
Other restaurant operating costs		9,010			2,391		18,775		3,104
Depreciation		2,183			698		4,267		817
Selling, general, and administrative, net		2,762			630		5,848		798
		41,326			10,114		85,491		12,948
(Loss)/income before income taxes	$	(55	)	$	77	$	1,400	$	379

The following table presents supplemental pro forma information for the 13 and 26 weeks ended November 30, 2010 as if the 106 restaurants acquired during fiscal 2011 from franchise partnerships had occurred on June 2, 2010 for the 13 and 26 weeks ended November 30, 2010 (in thousands except per-share data):

	(Unaudited)
	Thirteen weeks ended		Twenty-six weeks ended
	November 30, 2010		November 30, 2010
Total revenue	$	325,753	$	672,772
Net income	$	4,643	$	17,075
Basic earnings per share	$	0.07	$	0.27
Diluted earnings per share	$	0.07	$	0.26

The unaudited pro forma consolidated results were prepared using the acquisition method of accounting and are based on the historical financial information of RTI and the franchises, reflected in fiscal 2011 RTI and franchise results of operations.  The historical financial information has been adjusted to give effect to the pro forma events that are:  (1) directly attributable to the acquisitions, (2) factually supportable and (3) expected to have a continuing impact on the combined results.   The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisitions on June 2, 2010.  In addition, the unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company nor do they reflect the expected realization of any cost savings or otherwise improved profits associated with the acquisitions.  The unaudited pro forma consolidated results for the 13 and 26 weeks ended November 30, 2010 reflect the following pro forma pre-tax adjustments:

·   Elimination of the franchises’ historical intangible asset amortization expense (negligible and approximately $0.1 million, respectively).

·   Elimination of RTI’s franchise revenue (negligible and approximately $0.4 million, respectively).

·   Elimination of RTI’s support service fee income and marketing reimbursements (approximately $0.2 million and $1.3 million, respectively).

10

·   Elimination of RTI’s equity in earnings of unconsolidated franchises (negligible and approximately $0.2 million, respectively).

·   Elimination of RTI’s bad debt charges relating to notes receivable and lines of credit due from the acquired franchises (approximately $0.1 million of expense and $0.1 million of income, respectively).

·   Additional amortization expense (approximately $0.3 million and $0.7 million, respectively) related to reacquired franchise rights.

·   Additional depreciation expense (approximately $0.2 million and $0.5 million, respectively) related to the fair value adjustments to property and equipment acquired.

·   Reduced interest expense (approximately $0.3 million and $0.6 million, respectively) related to the fair value adjustments of acquired franchise debt.

All of the above adjustments were adjusted for the applicable tax impact, which for the above would be the statutory tax rate of 39.7%.  In addition, the pro forma net income and earnings per share amounts presented above reflect our estimates of the franchises’ FICA Tip and Work Opportunity Tax Credits for the portions of the fiscal year prior to the dates of acquisition.  These credits were $0.2 million and $0.5 million, respectively, for the 13 and 26 weeks ended November 30, 2010.

License Acquisitions

On September 13, 2010, we entered into a licensing agreement with LFMG International, LLC which allows us to operate multiple restaurants under the Lime Fresh Mexican Grill® (“Lime”) name.  Lime is a fast-casual Mexican concept that currently operates several restaurants primarily in the vicinity of Miami, Florida.  The Lime concept menu features items such as homemade tortilla chips, customizable nachos, flautas, salads, soups, fajitas, quesadillas, tacos, burritos, and salsa and guacamole.  Under the terms of the agreement, we paid an initial development fee of $1.0 million and will pay a license agreement fee of $5,000 for each Lime restaurant we open up to a maximum of 200 restaurants.  In addition, we will pay a royalty fee of 2.0%, and an advertising fee of 1.0%, of gross sales of any Lime restaurant that we open.  LFMG International, LLC has the option to terminate future development rights if we do not operate at least 12 Lime restaurants within the first two years of the effective date of the licensing agreement or open at least six restaurants per year for the remainder of the 20-year agreement.  As of November 29, 2011, we owned and operated one Lime restaurant.  Management has yet to determine how many additional Lime restaurants will be opened.

Additionally, on July 22, 2010, following the approval of the Audit Committee of our Board of Directors, we entered into a licensing agreement with Gourmet Market, Inc. which is owned by our Chief Executive Officer’s brother, Price Beall.  The licensing agreement allows us to operate multiple restaurants under the Truffles® name.  Truffles is an upscale café concept that currently operates several restaurants in the vicinity of Hilton Head Island, South Carolina.  The Truffles concept offers a diverse menu featuring soups, salads, and sandwiches, a signature chicken pot pie, house-breaded fried shrimp, pasta, ribs, steaks, and a variety of desserts.

Under the terms of the agreement, we will pay a licensing fee to Gourmet Market, Inc. of 2.0% of gross sales of any Truffles we open.  Additionally, we will pay Gourmet Market, Inc. a monthly fee for up to two years for consulting services to be provided by Price Beall to assist us in developing and opening Truffles restaurants under the terms of the licensing agreement.  During the first 12 months of the agreement we will pay $20,833 per month for such services.  During the second 12 months of the agreement we will pay either $20,833 per month if we have a communicated plan to develop three or more Truffles restaurants or $10,417 per month if we have a communicated plan to develop two or fewer Truffles restaurants.  Gourmet Market, Inc. has the option to terminate future development rights if we do not operate 18 or more Truffles restaurants within five years or 40 or more Truffles within 10 years of the effective date of the agreement.  Management has yet to determine if it will open 18 or more Truffles restaurants within five years or 40 or more Truffles within 10 years.  We opened our first Truffles in Atlanta, Georgia in December 2010 and our second in Orlando, Florida in November 2011.  During the 13 and 26 weeks ended November 29, 2011 and November 30, 2010, we paid Gourmet Market, Inc. $38,265 and $98,097, and $62,500 and $83,333, respectively, under the terms of the agreement.

11

NOTE E – ACCOUNTS RECEIVABLE

Accounts receivable – current consist of the following (in thousands):

	November 29, 2011		May 31, 2011
Rebates receivable	$	862	$	1,055
Amounts due from franchisees		2,597		2,506
Other receivables		3,816		3,970
	$	7,275	$	7,531

We negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of us and our franchise system.  We receive various volume discounts and rebates based on purchases for our Company-owned restaurants from numerous suppliers.

Amounts due from franchisees consist of royalties, license and other miscellaneous fees, a substantial portion of which represents current and recently-invoiced billings.  Also included in this amount is the current portion of the straight-lined rent receivable from franchise sublessees.

We defer recognition of franchise fee revenue for any franchise with negative cash flows at times when the negative cash flows are deemed to be anything other than temporary and the franchise has borrowed directly from us.  We also do not recognize franchise fee revenue from franchises with fees in excess of 60 days past due.  Accordingly, we have deferred recognition of a portion of franchise revenue from certain franchisees.  Unearned income for franchise fees was $1.5 million and $1.2 million as of November 29, 2011 and May 31, 2011, respectively, which is included in Other deferred liabilities and/or Accrued liabilities – rent and other in the Condensed Consolidated Balance Sheets.

As of November 29, 2011 and May 31, 2011, other receivables consisted primarily of amounts due for third-party gift card sales ($1.3 million as of both dates), amounts due from our distributor for purchases of lobster ($0.9 million and $0.7 million, respectively), and amounts due relating to insurance claims ($0.5 million and $1.2 million, respectively).  See Note F to the Condensed Consolidated Financial Statements for discussion of our lobster inventory.

NOTE F – INVENTORIES

Beginning in fiscal 2010, we have purchased lobster in advance of our needs and stored it in third-party facilities prior to our distributor taking possession of the inventory.  Once the lobster is moved to our distributor’s facilities, we transfer ownership to the distributor.  We later reacquire the inventory from our distributor upon its subsequent delivery to our restaurants.  Lobster purchases are included within merchandise inventory in our Condensed Consolidated Balance Sheets.  Our merchandise inventory was $29.1 million and $25.6 million as of November 29, 2011 and May 31, 2011, respectively.

12

NOTE G – PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES

Property and equipment, net, is comprised of the following (in thousands):

	November 29, 2011		May 31, 2011
Land	$	256,730	$	256,761
Buildings		514,298		512,177
Improvements		428,706		427,169
Restaurant equipment		285,836		279,319
Other equipment		95,468		93,944
Construction in progress and other*		26,429		28,077
		1,607,467		1,597,447
Less accumulated depreciation		591,996		566,296
	$	1,015,471	$	1,031,151

* Included in Construction in progress and other as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.  These assets primarily consist of parcels of land upon which we have no intention to build restaurants.

Amounts included in assets held for sale at November 29, 2011 and May 31, 2011 totaled $2.4 million and $1.3 million, respectively, primarily consisting of parcels of land upon which we have no intention to build restaurants, land and buildings of closed restaurants, and various liquor licenses.  During the 13 and 26 weeks ended November 29, 2011, we sold surplus properties with carrying values of $1.5 million for both periods, at net gains that were negligible and $0.1 million, respectively.  Cash proceeds, net of broker fees, from these sales during the 13 and 26 weeks ended November 29, 2011 totaled $1.5 million for both periods.  During the 26 weeks ended November 30, 2010, we sold surplus properties with carrying values of $0.9 million at net gains of $0.1 million.  Cash proceeds, net of broker fees, from these sales totaled $1.0 million.  None of these surplus properties were sold during the 13 weeks ended November 30, 2010.

Approximately 51% of our 742 Ruby Tuesday restaurants are located on leased properties.  Of these, approximately 66% are land leases only; the other 34% are for both land and building.  The initial terms of these leases expire at various dates over the next 25 years.  These leases may also contain required increases in minimum rent at varying times during the lease term and have options to extend the terms of the leases at a rate that is included in the original lease agreement.  Most of our leases require the payment of additional (contingent) rent that is based upon a percentage of restaurant sales above agreed upon sales levels for the year.  These sales levels vary for each restaurant and are established in the lease agreements.  We recognize contingent rental expense (in annual as well as interim periods) prior to the achievement of the specified target that triggers the contingent rental expense, provided that achievement of that target is considered probable.

13

NOTE H – LONG-TERM DEBT AND CAPITAL LEASES

Long-term debt and capital lease obligations consist of the following (in thousands):

	November 29, 2011		May 31, 2011
Revolving credit facility	$	182,000	$	177,000
Series B senior notes,
due April 2013		44,442		44,442
Mortgage loan obligations		115,471		122,546
Capital lease obligations		244		286
		342,157		344,274
Less current maturities		17,357		15,090
	$	324,800	$	329,184

On December 1, 2010, we entered into a five-year revolving credit agreement (the “Credit Facility”).  Under the original terms of the Credit Facility, we were allowed to borrow up to $320.0 million with the option to increase our capacity by $50.0 million to $370.0 million.  On July 19, 2011, we entered into an amendment of the Credit Facility to increase the amount of the optional additional revolving commitments available from $50.0 million to $60.0 million, thereby increasing the maximum aggregate revolving commitment amount under the Credit Facility from $370.0 million to $380.0 million.   On the same date, we exercised our option to increase the revolving commitments from $320.0 million to $380.0 million pursuant to new lender commitment agreements with the existing lenders and an additional new lender.

The terms of the Credit Facility provide for a $40.0 million swingline subcommitment and a $50.0 million letter of credit subcommitment.  The Credit Facility also includes a $50.0 million franchise facility subcommitment, which covered our guarantees of debt of the franchise partners (the “Franchise Facility Subcommitment”).  All amounts guaranteed under the Franchise Facility Subcommitment were settled during fiscal 2011.

The interest rates charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option we choose to utilize.  Our Base Rate for borrowings is defined to be the higher of Bank of America’s prime rate, the Federal Funds Rate plus 0.5%, or an adjusted LIBO Rate plus 1.00%, plus an applicable margin ranging from 0.25% to 1.25%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.25%.

Under the terms of the Credit Facility, we had borrowings of $182.0 million with an associated floating rate of interest of 2.58% at November 29, 2011.  As of May 31, 2011, we had $177.0 million outstanding with an associated floating rate of interest of 2.27%.  After consideration of letters of credit outstanding, we had $188.7 million available under the Credit Facility as of November 29, 2011.  The Credit Facility will mature on December 1, 2015.

The Credit Facility contains financial covenants relating to the maintenance of leverage and fixed charge coverage ratios and minimum net worth.  We were in compliance with our debt covenants as of November 29, 2011 and the date of this filing.

On April 3, 2003, we issued notes totaling $150.0 million through a private placement of debt (the “Private Placement”).  On December 1, 2010, we entered into an amendment of the notes issued in the Private Placement (the “Note Amendment”).  Among other changes, this amendment conformed the covenants in this agreement to the covenants contained in the Credit Facility discussed above.

At November 29, 2011 and May 31, 2011, the Private Placement consisted of $44.4 million in notes with an interest rate of 7.17% (the “Series B Notes”).  The Series B Notes mature on April 1, 2013, and thus have been classified as non-current in our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets.

Our $115.5 million in mortgage loan obligations as of November 29, 2011 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between December 2011 and March 2024, have balances which range from negligible to $8.5 million and interest rates of 3.35% to 11.28%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

14

NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairment expenses include the following for the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011			November 30, 2010
Property impairments	$	630		$	12	$	836		$	1,338
Closed restaurant lease reserves		(153	)		327		(74	)		663
Other closing costs		226			9		416			83
(Gain)/loss on sale of surplus properties		(50	)		–		(80	)		3
	$	653		$	348	$	1,098		$	2,087

A rollforward of our future lease obligations associated with closed properties is as follows (in thousands):

	Lease Obligations
Balance at May 31, 2011	$	2,660
Closing expense including rent and other lease charges		(74	)
Payments		(522	)
Other adjustments		(138	)
Balance at November 29, 2011	$	1,926

For the remainder of fiscal 2012 and beyond, our focus will be on obtaining settlements on as many of these leases as possible and these settlements could be higher or lower than the amounts recorded.  The actual amount of any cash payments made by the Company for lease contract termination costs will be dependent upon ongoing negotiations with the landlords of the leased restaurant properties.

At November 29, 2011, we had 30 restaurants that had been open more than one year with rolling 12-month negative cash flows of which 21 have been impaired to salvage value.  Of the nine which remained, we reviewed the plans to improve cash flows at each of the restaurants and recorded impairment expense as necessary.  The remaining net book value of these nine restaurants was $13.3 million at November 29, 2011.

Should sales at these restaurants not improve within a reasonable period of time, further impairment charges are possible.  Considerable management judgment is necessary to estimate future cash flows, including cash flows from continuing use, terminal value, closure costs, salvage value, and sublease income.  Accordingly, actual results could vary significantly from our estimates.

NOTE J – RETIREMENT BENEFITS

We sponsor three defined benefit pension plans for active employees and offer certain postretirement benefits for retirees.  A summary of each of these is presented below.

Retirement Plan

RTI sponsors the Morrison Restaurants Inc. Retirement Plan (the “Retirement Plan”).  Effective December 31, 1987, the Retirement Plan was amended so that no additional benefits would accrue and no new participants may enter the Retirement Plan after that date.  Participants receive benefits based upon salary and length of service.

Minimum funding for the Retirement Plan is determined in accordance with the guidelines set forth in employee benefit and tax laws.  From time to time we may contribute additional amounts as we deem appropriate.  We estimate that we will be required to make contributions totaling $0.4 million to the Retirement Plan during the remainder of fiscal 2012.

Executive Supplemental Pension Plan and Management Retirement Plan

Under these unfunded defined benefit pension plans, eligible employees earn supplemental retirement income based upon salary and length of service, reduced by social security benefits and amounts otherwise receivable under other specified Company retirement plans.  Effective June 1, 2001, the Management

15

Retirement Plan was amended so that no additional benefits would accrue and no new participants may enter the plan after that date.

As discussed further in Note N to the Condensed Consolidated Financial Statements, we are contingently liable for retirement benefits accrued through March 1996 for certain employees of two companies formerly owned by RTI.

Because our Chief Executive Officer (“CEO”) is currently retirement-eligible and would be entitled to receive his entire pension payment in a lump sum six months following his retirement, we have classified an amount representing that pension payment ($8.1 million) into Accrued liabilities – payroll and related costs in our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets.

Postretirement Medical and Life Benefits

Our Postretirement Medical and Life Benefits plans provide medical and life insurance benefits to certain retirees.  The medical plan requires retiree cost sharing provisions that are more substantial for employees who retire after January 1, 1990.

The following tables detail the components of net periodic benefit costs and the amounts recognized in our Condensed Consolidated Financial Statements for the Retirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the “Pension Plans”) and the Postretirement Medical and Life Benefits plans (in thousands):

	Pension Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	November 29,			November 30,			November 29,			November 30,
	2011			2010			2011			2010
Service cost	$	134		$	129		$	268		$	258
Interest cost		576			573			1,152			1,146
Expected return on plan assets		(126	)		(98	)		(252	)		(196	)
Amortization of prior service cost		64			82			128			164
Recognized actuarial loss		426			398			852			796
Net periodic benefit cost	$	1,074		$	1,084		$	2,148		$	2,168
	Postretirement Medical and Life Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	November 29,			November 30,			November 29,			November 30,
	2011			2010			2011			2010
Service cost	$	2		$	2		$	4		$	4
Interest cost		18			19			36			38
Amortization of prior service cost		(14	)		(15	)		(28	)		(30	)
Recognized actuarial loss		34			28			68			56
Net periodic benefit cost	$	40		$	34		$	80		$	68

We also sponsor two defined contribution retirement savings plans. Information regarding these plans is included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2011.

NOTE K – INCOME TAXES

We had a liability for unrecognized tax benefits of $5.1 million and $5.2 million as of November 29, 2011 and May 31, 2011, respectively.  As of both November 29, 2011 and May 31, 2011, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $3.4 million.  The liability for unrecognized tax benefits as of November 29, 2011 includes $1.8 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve

16

months based on the outcome of examinations and negotiations with tax authorities.  In addition, it is reasonably possible that $0.2 million of the liability for unrecognized tax benefits could change within the next twelve months as a result of a lapse of statute of limitations.

Interest and penalties related to unrecognized tax benefits are recognized as components of income tax expense.  As of November 29, 2011 and May 31, 2011, we had accrued $1.9 million and $1.6 million, respectively, for the payment of interest and penalties.  During the first 26 weeks of fiscal 2012, accrued interest and penalties increased by $0.3 million, of which $0.2 million affected the effective tax rate for the same time period.

The effective tax rate for the 13- and 26- week periods ended November 29, 2011 was (14.6)% and 42.8%, respectively, as compared to 13.3% and 20.5%, respectively, for the same periods of the prior year.  The change in the effective tax rate for the 13-week period ended November 29, 2011 was attributable to an increase in unrecognized tax benefits and a decrease in FICA Tip and Work Opportunity Tax Credits recognized for the quarter.  The increase in the effective tax rate for the 26-week period ended November 29, 2011 was attributable to an increase in unrecognized tax benefits partially offset by a higher percentage benefit for FICA Tip and Work Opportunity Tax Credits as a result of lower pretax income for the current quarter compared to the same period of the prior year.

At November 29, 2011, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2007 with the exception of our fiscal years 2004 and 2005 as a result of fiscal 2009 NOL carryback, and with few exceptions, state and local examinations by tax authorities prior to fiscal year 2007.

NOTE L – COMPREHENSIVE (LOSS)/INCOME

U.S. GAAP require the disclosure of certain revenue, expenses, gains andlosses that are excluded from net (loss)/income.  Items that currently impact our other comprehensive income are pension liability adjustments.  Amounts shown in the table below are in thousands.

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Net (loss)/income	$	(2,001	)	$	4,565	$	1,092	$	16,962
Pension liability reclassification, net of tax		308			298		616		595
Comprehensive (loss)/income	$	(1,693	)	$	4,863	$	1,708	$	17,557

NOTE M – SHARE-BASED EMPLOYEE COMPENSATION

We compensate our employees and Directors using share-based compensation through the following plans:

The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors

Under the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors (the “Directors’ Plan”), non-employee directors are eligible for awards of share-based incentives.  Restricted shares granted under the Directors’ Plan vest in equal amounts after one, two, and three years provided the Director continually serves on the Board.  Options issued under the Directors’ Plan become vested after 30 months and are exercisable until five years after the grant date.  Stock option exercises are settled with the issuance of new shares of common stock.

All options awarded under the Directors’ Plan have been at the fair market value at the time of grant.  A Committee, appointed by the Board, administers the Directors’ Plan.  At November 29, 2011, we had reserved 122,000 shares of common stock under the Directors’ Plan, 58,000 of which were subject to options outstanding, for a net of 64,000 shares of common stock currently available for issuance under the Directors’ Plan.

The Ruby Tuesday, Inc. 2003 Stock Incentive Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan

A Committee, appointed by the Board, administers the Ruby Tuesday, Inc. 2003 Stock Incentive Plan (“2003 SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees and officers to whom share-based incentives are granted and the terms and provisions of share-based incentives.  Option grants under the 2003 SIP and 1996 SIP can

17

have varying vesting provisions and exercise periods as determined by such Committee.  Options granted under the 2003 SIP and 1996 SIP vest in periods ranging from immediate to fiscal 2014, with the majority vesting within three years following the date of grant, and the majority expiring five or seven (but some up to 10) years after grant.  The majority of currently unvested restricted shares granted in fiscal 2012 and 2010 are performance-based.  All of the currently unvested restricted shares granted during fiscal 2011 are service-based.  The 2003 SIP and 1996 SIP permit the Committee to make awards of shares of common stock and awards of stock options or other derivative securities related to the value of the common stock.  These discretionary awards may be made on an individual basis or for the benefit of a group of eligible persons.  All options awarded under the 2003 SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At November 29, 2011, we had reserved a total of 5,090,000 and 1,024,000 shares of common stock for the 2003 SIP and 1996 SIP, respectively.  Of the reserved shares at November 29, 2011, 2,363,000 and 982,000 were subject to options outstanding for the 2003 SIP and 1996 SIP, respectively.  Stock option exercises are settled with the issuance of new shares.  Net shares of common stock available for issuance at November 29, 2011 under the 2003 SIP and 1996 SIP were 2,727,000 and 42,000, respectively.

Stock Options

The following table summarizes the activity in options for the 26 weeks ended November 29, 2011 under these stock option plans (in thousands except per-share data):

				Weighted-
				Average
	Options			Exercise Price
Balance at May 31, 2011		3,239		$	13.10
Granted		253			7.87
Exercised		(23	)		5.26
Forfeited		(65	)		28.84
Balance at November 29, 2011		3,404		$	12.47
Exercisable at November 29, 2011		2,327		$	14.30

Included in the outstanding balance shown above are approximately 2,753,000 of out-of-the-money options.  Of this amount, we expect that approximately 852,000 of these options will expire out-of-the-money in the next two fiscal years.

At November 29, 2011, there was approximately $0.8 million of unrecognized pre-tax compensation expense related to non-vested stock options.  This cost is expected to be recognized over a weighted-average period of 1.1 years.

During the first quarter of fiscal 2012, we granted approximately 253,000 stock options to our CEO under the terms of the 2003 SIP.  These stock options vest in equal annual installments over a three-year period following grant of the award, and have a maximum life of seven years.  These stock options provide for immediate vesting if the optionee retires during the option period as well as if certain other events occur.  As our CEO was retirement-eligible at the time of grant, the accelerated vesting provision rendered the requisite service condition non-substantive under GAAP, and we therefore fully expensed the $1.2 million fair value of stock options awarded to our CEO on the date of grant.

Restricted Stock

The following table summarizes our restricted stock activity for the 26 weeks ended November 29, 2011 (in thousands except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Non-vested at May 31, 2011		299		$	7.24
Granted		384			7.87
Vested		(242	)		7.39
Forfeited		–			–
Non-vested at November 29, 2011		441		$	7.70

18

				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Non-vested at May 31, 2011		551		$	8.22
Granted		274			7.68
Vested		(122	)		8.02
Forfeited		(1	)		9.39
Non-vested at November 29, 2011		702		$	8.04

The fair values of the restricted share awards reflected above were based on the fair market value of our common stock at the time of grant.  At November 29, 2011, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $3.8 million and will be recognized over a weighted average vesting period of approximately 1.7 years.

During the second quarter of fiscal 2012, RTI granted approximately 88,000 restricted shares to non-employee directors under the terms of the Directors’ Plan.  These shares vest in equal annual installments over a three year period following grant of the award.

During the first quarter of fiscal 2012, we granted approximately 186,000 service-based restricted shares and 384,000 performance-based restricted shares of our common stock to certain employees under the terms of the 2003 SIP and 1996 SIP.  The service-based restricted shares cliff vest on December 1, 2013.  Vesting of the performance-based restricted shares, including 203,000 shares that were awarded to our CEO, is also contingent upon the Company’s achievement of certain performance conditions related to fiscal 2012 performance, which will be measured in the first quarter of fiscal 2013.  In addition to satisfaction of the performance conditions for the performance-based restricted shares, recipients must satisfy the same service condition as described above for the service-based restricted shares.

For the same reason as mentioned above in regards to our stock options, we recorded during the first quarter of fiscal 2012 an expense of $0.7 million related to the performance-based restricted shares awarded on August 23, 2011 to our CEO.  Should our CEO retire prior to the end of the performance period, the number of restricted shares he would receive would not be determinable until the completion of the performance period.  The expense we recorded for this award was determined using a model that estimated the projected achievement of the performance conditions.

NOTE N – COMMITMENTS AND CONTINGENCIES

Guarantees

At November 29, 2011, we had certain third-party guarantees, which primarily arose in connection with our divestiture activities.  The majority of these guarantees have no expiration date.  Generally, we are required to perform under these guarantees in the event that a third-party fails to make contractual payments.

During fiscal 1996, our shareholders approved the distribution of our family dining restaurant business (Morrison Fresh Cooking, Inc., “MFC”) and our health care food and nutrition services business (Morrison Health Care, Inc., “MHC”). Subsequently, Piccadilly Cafeterias, Inc. (“Piccadilly”) acquired MFC and Compass Group (“Compass”) acquired MHC. Prior to the distribution, we entered into various guarantee agreements with both MFC and MHC, most of which have expired. As agreed upon at the time of the distribution, we have been contingently liable for payments to MFC and MHC employees retiring under MFC’s and MHC’s versions of the Management Retirement Plan and the Executive Supplemental Pension Plan (the two non-qualified defined benefit plans) for the accrued benefits earned by those participants as of March 1996.

On October 29, 2003, Piccadilly filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in Fort Lauderdale, Florida.  Following this, we have recorded, and begun to pay, our pro-rata share of the Piccadilly liabilities for which we have provided guarantees, including those for MFC employee benefit plans.

We estimated our divestiture guarantees related to MHC at November 29, 2011 to be $2.7 million for employee benefit plans.  In addition, we remain contingently liable for MHC’s portion (estimated to be $2.0 million) of the MFC employee benefit plan liability for which MHC is currently responsible under the

19

divestiture guarantee agreements.  We believe the likelihood of being required to make payments for MHC’s portion to be remote due to the size and financial strength of MHC and Compass.

Litigation

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business.  We provide reserves for such claims when payment is probable and estimable in accordance with U.S. GAAP.  At this time, in the opinion of management, the ultimate resolution of pending legal proceedings, including the matter referred to below, will not have a material adverse effect on our operations, financial position, or cash flows.

On September 30, 2009, the U.S. Equal Employment Opportunity Commission (“EEOC”) Pittsburgh Area Office filed suit in the United States District Court for the Western District of Pennsylvania Civil Action No. 2:09-cv-01330-DSC alleging the Company was in violation of the Age Discrimination in Employment Act (“ADEA”) by failing to hire employees within the protected age group in five Pennsylvania restaurants and one Ohio restaurant.  On October 19, 2009, the EEOC filed a Notice of an ADEA Directed Investigation Charge No. 533-2010-00062 regarding potential age discrimination in violation of the ADEA in hiring and discharge for all positions at all restaurant facilities.

The Company and the EEOCentered into anagreement to stay the lawsuit and the request for nationwide information under the directed investigation.  Pursuant to that stay both parties agreed to an exchange of information and to engage in mediation following the stay.

We have denied the allegations and intend to vigorously defend against the suit andthecharge.  Despite itspreliminary status, we do not believe that this matter will have a material adverse effect on our operations, financial position, or cash flows.

On November 8, 2010, a personal injury case styled Dan Maddy v. Ruby Tuesday, Inc., which had been filed in the Circuit Court for Rutherford County, Tennessee, was resolved through mediation.  Given that we maintain primary and secondary insurance coverage for claims such as the Maddy case, and we had previously paid the amount required by our self-insured retention limit, no payment was made by us at settlement.

Included in the Maddy settlement was a payment made by our secondary insurance carrier of $2,750,000.  Despite making this payment, our secondary insurance carrier filed a counterclaim against us, in connection with the coverage suit we brought against our carrier prior to the carrier’s payment of a portion of the Maddy settlement, claiming it did not receive timely notice of this matter in accordance with the terms of the policy.  Pursuant to an agreement we reached with our secondary carrier prior to the Maddy settlement and as a result of the carrier’s payment of a portion of the Maddy settlement, we dismissed our claims against this carrier for bad faith, breach of contract and violation of the state consumer protection act.  We have preserved any claims for declaratory relief as well as a claim for attorney fees in the event we prevail in the underlying litigation. We believe our secondary insurance carrier received timely notice in accordance with the policy and we will vigorously defend the matter.   Should we incur potential liability to our secondary carrier, we believe we have indemnification claims against two claims administrators. 

We believe, and have obtained a consistent opinion from outside counsel, that we have valid coverage under our insurance policies for any amounts in excess of our self-insured retention.  We believe this provides a basis for not recording a liability for any contingency associated with the Maddy settlement.  We further believe we have the right to the indemnification referred to above.  Based on the information currently available, our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets reflect no accrual relating to the Maddy case.  There can be no assurance, however, that we will be successful in our defense of our carrier’s counterclaim against us.

20

NOTE O – FAIR VALUE MEASUREMENTS

The following table presents the fair values of our financial assets and liabilities measured at fair value on a recurring basis as of November 29, 2011 and May 31, 2011 (in thousands):

	Fair Value Measurements
	Level		November 29, 2011				May 31, 2011
Deferred compensation plan – Assets		1		$	7,920			$	8,792
Deferred compensation plan – Liabilities		1			(7,920	)			(8,792	)
Total				$	–			$	–

During the 26 weeks ended November 29, 2011 there were no transfers among levels within the fair value hierarchy.

The Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the “Deferred Compensation Plan”) and the Ruby Tuesday, Inc. Restated Deferred Compensation Plan (the “Predecessor Plan”) are unfunded, non-qualified deferred compensation plans for eligible employees.  Assets earmarked to pay benefits under the Deferred Compensation Plan and Predecessor Plan are held by a rabbi trust.  We report the accounts of the rabbi trust in our Condensed Consolidated Financial Statements.  With the exception of the investment in RTI common stock, the investments held by these plans are considered trading securities and are reported at fair value based on third-party broker statements.  The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, is recorded in Selling, general and administrative expense in the Condensed Consolidated Financial Statements.

The investment in RTI common stock and related liability payable in RTI common stock, which are reflected in Shareholders’ Equity in the Condensed Consolidated Balance Sheets, are excluded from the fair value table above as these are considered treasury shares and reported at cost.

The following table presents the fair values for those assets and liabilities measured on a non-recurring basis and remaining on our Condensed Consolidated Balance Sheets as of November 29, 2011 and May 31, 2011 (in thousands):

	Fair Value Measurements
		Level	November 29, 2011		May 31, 2011
Long-lived assets held for sale *		2	$	23,187	$	24,686
Long-lived assets held for use		2		839		747
Total			$	24,026	$	25,433

* Included in the carrying value of long-lived assets held for sale as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

The following table presents the losses recognized during the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis.  These losses are included in Closures and impairments in our Condensed Consolidated Statements of Operations (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	November 29, 2011		November 30, 2010		November 29, 2011		November 30, 2010
Long-lived assets held for sale	$	–	$	–	$	206	$	989
Long-lived assets held for use		630		12		630		349
	$	630	$	12	$	836	$	1,338

Long-lived assets held for sale are valued using Level 2 inputs, primarily information obtained through broker listings and sales agreements.  Costs to market and/or sell the assets are factored into the estimates of fair value for those assets included in Assets held for sale on our Condensed Consolidated Balance Sheets.

We review our long-lived assets (primarily property, equipment, and, as appropriate, reacquired franchise rights and favorable leases) related to each restaurant to be held and used in the business, whenever events

21

or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable.

Long-lived assets held for use presented in the table above include our company airplane and restaurants or groups of restaurants that were impaired as a result of our quarterly impairment review.  From time to time, the table will also include closed restaurants or surplus sites not meeting held for sale criteria that have been offered for sale at a price less than their carrying value.  

The Level 2 fair values of our long-lived assets held for use are based on broker estimates of the value of the land, building, leasehold improvements, and other residual assets.

Our financial instruments at November 29, 2011 and May 31, 2011 consisted of cash and short-term investments, accounts receivable and payable, long-term debt, letters of credit, and, as previously discussed, deferred compensation plan investments.  The fair values of cash and short-term investments and accounts receivable and payable approximated carrying value because of the short-term nature of these instruments.  The carrying amounts and fair values of our other financial instruments not measured on a recurring basis using fair value, however subject to fair value disclosures are as follows (in thousands):

	November 29, 2011		May 31, 2011
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Deferred Compensation Plan
investment in RTI common stock	$     1,513	$      1,035	$     1,556	$      1,653
Long-term debt and capital leases	342,157	343,432	344,274	348,272
Letters of credit	–	222	–	178

We estimated the fair value of debt and letters of credit using market quotes and present value calculations based on market rates.

NOTE P – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Not Yet Adopted

In June 2011, the Financial Accounting Standards Board issued guidance on the presentation of total comprehensive income, the components of net income, and the components of other comprehensive income.  This guidance is intended to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (our fiscal 2013 first quarter).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

In September 2011, the Financial Accounting Standards Board issued guidance modifying the impairment test for goodwill by allowing businesses to first decide whether they need to do the two-step impairment test.  Under the guidance, a business no longer has to calculate the fair value of a reporting unit unless it believes it is very likely that the reporting unit’s fair value is less than the carrying value.  The guidance is effective for impairment tests for fiscal years beginning after December 15, 2011 (our fiscal 2013).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

NOTE Q – SUBSEQUENT EVENTS

On December 30, 2011, we completed the sale-leaseback transaction of a Company-owned restaurant for gross cash proceeds of $2.3 million.  The carrying value of the property was $1.5 million at the time of sale.  The gain recorded on this transaction will be deferred and recognized on a straight-line basis over the term of the lease.

22

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The discussion and analysis below for the Company should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the notes to such financial statements included elsewhere in this Form 10-Q.  The discussion below contains forward-looking statements which should be read in conjunction with the “Special Note Regarding Forward-Looking Information” included elsewhere in this Form 10-Q.

General:

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we” and/or “our”), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill®, Marlin & Ray’s™, Truffles®, and Wok Hay® casual dining restaurants.  We also franchise the Ruby Tuesday and Wok Hay concepts in select domestic and international markets.  As of November 29, 2011 we owned and operated 742, and franchised 87, Ruby Tuesday restaurants.  Ruby Tuesday restaurants can now be found in 45 states, the District of Columbia, 14 foreign countries, and Guam.

Overview and Strategies

Casual dining, the segment of the industry in which we operate, is intensely competitive with respect to prices, services, convenience, locations, advertising and promotion, and the types and quality of food.  We compete with other food service operations, including locally-owned restaurants, and other national and regional restaurant chains that offer similar types of services and products as we do.  In 2007 we deployed a brand repositioning initiative designed to clearly differentiate Ruby Tuesday from our competitors since we believed, as the bar and grill segment continued to mature, our lack of differentiation in this segment would potentially make it increasingly difficult to attract new guests.  Our brand repositioning initiative first focused on food, then service, and finally on the creation of a fresh new look for our restaurants, which was the most capital-intensive aspect of our brand reimaging program.  In order to maximize sales in our newly-reimaged brand, our marketing strategy for the last three years has focused on the key pillars of print promotions, digital media, and local marketing programs to entice guests to see the new Ruby Tuesday, increase frequency of visits, and enhance brand visibility.  Going forward, we hope to leverage these marketing pillars to drive traffic and trial of the Ruby Tuesday brand, in addition to increasing our value position among consumers with various limited time offers and other promotions which will be communicated through an increase in our overall marketing dollars in order to be competitive with our peer group.

The improvements we have made over the last several years are enabling us to execute on our three-to-five year strategies to further strengthen and grow our business in a low-risk, low-capital, and high-return manner.  The key initiatives in our long-range plan are focused in the following four areas:

·   Enhance Sales and Margins of Our Core Brand.  We have evolved our existing menu items to support our high-quality casual dining position, broaden our appeal with product extensions offering more variety and cravability, and provide our guests with compelling value.  Late in the second quarter of fiscal 2010, we introduced a menu which included an expanded appetizer line and new dinner entrees featuring a variety of lobster combinations.  Additionally, we have also launched a Sunday brunch offering and enhanced our bar area with high definition televisions and an enhanced food and drink menu, both of which have driven incremental sales and traffic in addition to enhancing the overall perception of the Ruby Tuesday brand.  In the first quarter of fiscal 2011, we rolled out a new menu, began offering a complimentary bread program, and enhanced our fresh garden bar and Sunday brunch.  Our new menu items include 10 entrees; Fit & Trim offerings, which include 12 menu items that are 700 calories or less; side offerings, which now include fresh grilled green beans, fresh grilled zucchini, baked mac ‘n cheese, and blue cheese coleslaw; and a Sunday brunch menu with 15 total items including French toast and new omelets.  We enhanced our garden bar with more variety and freshness.  The addition of our fresh baked garlic cheese biscuits should further increase the overall value perception of our brand, in line with other high-quality casual dining restaurants.  Recently we have been focused on increasing our value position in certain test markets through our free Fresh Endless Garden Bar

23

and fresh-baked garlic cheese biscuits complimentary with over 40 entrees and a starting price of $8.99.  Additionally, we have also tested in certain markets our limited-time lunch offers of soup, salad bowl or salad bar, and garlic cheese biscuits starting at $5.99 to $6.99.  Both of these offerings provide compelling value to the consumer and we will continue to make any necessary refinements prior to deploying them across the entire system in the next few quarters.

In order to better promote our new value-oriented offerings going forward to drive traffic and same-restaurant sales, we plan on increasing our television marketing spend as we believe this is necessary in order to remain competitive with our peer group.  To that end, we have engaged a leading enterprise improvement consulting firm to assist us in identifying potential savings opportunities in a number of key areas including procurement, occupancy, and maintenance costs.  We are estimating annualized savings from these initiatives of approximately $15.0 to $20.0 million, a small portion of which is expected to be realized during the remainder of fiscal 2012.  A majority of these cost savings will be reinvested in our marketing programs, primarily in television.

·   Increase Shareholder Returns Through New Concept Conversions.  Part of our long-term plan is to get more out of existing restaurants by generating higher average restaurant volumes and thus more profit and cash flow with minimal capital investment.  Therefore, we will be converting certain underperforming Ruby Tuesday concept restaurants into other high-quality casual dining brands which might be better suited for success in selected markets.  Our potential conversion concepts now include Marlin & Ray’s, which is our new internally-developed seafood concept, and Truffles, which is an upscale café concept.  We anticipate converting approximately four to six Company-owned Ruby Tuesday restaurants to the Marlin & Ray’s or Truffles concepts during the remainder of fiscal 2012.  We believe the low capital requirement and potential increased revenue and EBITDA from these conversions have the potential to provide attractive cash-on-cash returns for our shareholders.

·   Focus on Low Risk, Low Capital-Intensive, High-Return Growth.  In an effort to be prudent with our capital and in order to maximize returns for our shareholders, we are starting to slowly grow our Company in a low risk, low capital-intensive and high-return manner.  On September 13, 2010, we entered into a licensing agreement with LFMG International, LLC which allows us to operate multiple restaurants under the Lime Fresh Mexican Grill® (“Lime”) name.  Lime is a fast casual Mexican concept that currently operates several restaurants primarily in the vicinity of Miami, Florida.  Given that the fast casual segment of our industry is a proven and growing segment where demand exceeds supply, we believe opening smaller, inline locations under the Lime brand is a potential growth option for us.  We opened one Company-owned Lime restaurant during the quarter ended November 29, 2011 and expect to open five to seven Company-owned Lime restaurants during the remainder of fiscal 2012.  Over time, we also plan on opening Company-owned, smaller inline-type Ruby Tuesday restaurants as well.  The ability to enter the growing fast casual segment with a strong brand such as Lime and further expand our Ruby Tuesday Company-owned brand provides a growth option that has the potential to create long-term value for our shareholders with relatively low risk.

·   Allocate Capital to Enhance Shareholder Value.  We continue to maintain a strong balance sheet and have a five-year revolving credit facility (the “Credit Facility”) in place which provides us with good flexibility.  If we are successful in continuing to stabilize our same-restaurant sales and maintaining or lowering our cost structure, we have the opportunity to generate substantial levels of free cash flow assuming our capital expenditure needs continue to be modest.  We define “free cash flow” to be the net amount remaining when purchases of property and equipment are subtracted from net cash provided by operating activities.  Our near-term capital expenditure requirements are relatively modest as we anticipate converting four to six Ruby Tuesday concept restaurants into other concepts and opening approximately five to seven smaller, inline Lime restaurants during the remainder of fiscal 2012.

We generated $16.3 million of free cash flow during the first two quarters of fiscal 2012, all of which was used to repurchase stock.  We estimate we will generate approximately $75.0 to $85.0 million of free cash flow during the remainder of fiscal 2012.  Included in these estimates is anticipated capital spending of approximately $12.0 to $16.0 million.  Our objective over the next several years is to be in a position to return excess capital to our shareholders through an opportunistic share repurchase program and to continue to reduce our debt levels in order to

24

further reduce the financial risk related to our leverage.  Additionally, we are also pursuing sale-leaseback transactions on a portion of our real estate in order to create greater financial flexibility and communicate to investors the significant market value of our owned real estate portfolio in relation to our peer group.  We are targeting to raise approximately $50.0 million of gross proceeds over the next two to three quarters to be utilized for opportunistic share repurchases and debt reduction.    See further discussion in the Financing Activities section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

Our success in the four key long range plan initiatives outlined above should enable us to improve both our return on assets and return on equity, and to create additional shareholder value.

Results of Operations:

The following is an overview of our results of operations for the 13- and 26-week periods ended November 29, 2011:

Net loss was $2.0 million for the 13 weeks ended November 29, 2011 compared to net income of $4.6 million for the same quarter of the previous year.  Diluted loss per share for the fiscal quarter ended November 29, 2011 was $0.03 compared to diluted earnings per share of $0.07 for the corresponding period of the prior year as a result of the decrease in net income as discussed below.

During the 13 weeks ended November 29, 2011:

·   Two Company-owned Ruby Tuesday restaurants were converted to Marlin & Ray’s concept restaurants;

·   One Company-owned Truffles restaurant was opened;

·   One Company-owned Lime restaurant was opened;

·   Four Company-owned Ruby Tuesday restaurants were closed, one of which was converted into a Marlin & Ray’s concept restaurant, and two of which are anticipated to be converted to Marlin & Ray’s restaurants later in fiscal 2012;

·   One franchised Ruby Tuesday concept restaurant was opened and nine were closed;

·   One franchised Wok Hay restaurant was closed; and

·   Same-restaurant sales* at Company-owned restaurants decreased 4.2%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 6.0%.

Net income was $1.1 million for the 26 weeks ended November 29, 2011 compared to $17.0 million for the same period of the previous year.  Diluted earnings per share for the 26 weeks ended November 29, 2011 was $0.02 compared to $0.26 for the corresponding period of the prior year as a result of the decrease in net income as discussed below.

During the 26 weeks ended November 29, 2011:

·   Four Company-owned Ruby Tuesday restaurants were converted to Marlin & Ray’s concept restaurants;

·   One Company-owned Truffles restaurant was opened;

·   One Company-owned Lime restaurant was opened;

·   One Company-owned Wok Hay restaurant was opened and one franchised Wok Hay restaurant was closed;

·   Eight Company-owned Ruby Tuesday restaurants were closed, three of which were converted into Marlin & Ray’s concept restaurants, and two of which are anticipated to be converted to Marlin & Ray’s restaurants later in fiscal 2012;

·   Three franchised Ruby Tuesday restaurants were opened and 12 were closed;

·   Two million shares of common stock were repurchased at an aggregate cost of $18.4 million; and

·   Same-restaurant sales* at Company-owned restaurants decreased 4.2%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 4.8%.

* We define same-restaurant sales as a year-over-year comparison of sales volumes for restaurants that, in the current year have been open at least 18 months, in order to remove the impact of new openings in comparing the operations of existing restaurants.

25

The following table sets forth selected restaurant operating data as a percentage of total revenue, except where otherwise noted, for the periods indicated.  All information is derived from our Condensed Consolidated Financial Statements included in this Form 10-Q.

	Thirteen weeks ended				Twenty-six weeks ended
	November 29,		November 30,		November 29,		November 30,
	2011		2010		2011		2010
Revenue:
Restaurant sales and operating revenue	99	.6%	99	.5%	99	.6%	99	.4%
Franchise revenue	0	.4	0	.5	0	.4	0	.6
Total revenue	100	.0	100	.0	100	.0	100	.0
Operating costs and expenses:
Cost of merchandise (1)	29	.9	29	.3	29	.8	28	.8
Payroll and related costs (1)	35	.2	34	.5	34	.8	33	.9
Other restaurant operating costs (1)	21	.4	21	.2	21	.1	20	.5
Depreciation (1)	5	.4	5	.4	5	.1	5	.2
Selling, general and administrative, net	7	.6	7	.3	7	.9	7	.4
Closures and impairments	0	.2	0	.1	0	.2	0	.4
Interest expense, net	1	.3	0	.9	1	.2	0	.8
(Loss)/income before income taxes	(0	.6)	1	.8	0	.3	3	.6
Provision for income taxes	0	.1	0	.2	0	.1	0	.7
Net (loss)/income	(0	.7)%	1	.6%	0	.2%	2	.9%

(1)     As a percentage of restaurant sales and operating revenue.

The following table shows Company-owned Ruby Tuesday, Lime, Marlin & Ray’s, Truffles, and Wok Hay concept restaurant activity for the 13- and 26-week periods ended November 29, 2011 and November 30, 2010.

	Ruby Tuesday			Lime		Marlin & Ray’s		Truffles		Wok Hay		Total
13 weeks ended November 29, 2011
Beginning number		746			–		3		1		3		753
Opened		–			1		2		1		–		4
Closed		(4	)		–		–		–		–		(4	)
Ending number		742			1		5		2		3		753
26 weeks ended November 29, 2011
Beginning number		750			–		1		1		2		754
Opened		–			1		4		1		1		7
Closed		(8	)		–		–		–		–		(8	)
Ending number		742			1		5		2		3		753
13 weeks ended November 30, 2010
Beginning number		674			–		–		–		2		676
Opened		–			–		–		–		–		–
Acquired from franchisees		3			–		–		–		–		3
Closed		(1	)		–		–		–		–		(1	)
Ending number		676			–		–		–		2		678
26 weeks ended November 30, 2010
Beginning number		656			–		–		–		2		658
Opened		–			–		–		–		–		–
Acquired from franchisees		23			–		–		–		–		23
Closed		(3	)		–		–		–		–		(3	)
Ending number		676			–		–		–		2		678

26

The following table shows franchised Ruby Tuesday concept restaurant activity for the 13- and 26-week periods ended November 29, 2011 and November 30, 2010.

	Thirteen weeks ended						Twenty-six weeks ended
	November 29, 2011			November 30, 2010			November 29, 2011			November 30, 2010
Beginning number		95			203			96			223
Opened		1			2			3			5
Sold to RTI		–			(3	)		–			(23	)
Closed		(9	)		(4	)		(12	)		(7	)
Ending number		87			198			87			198

In addition to the Ruby Tuesday concept restaurant activity in the table above, a traditional international franchisee closed its Wok Hay concept franchised restaurant during the quarter ended November 29, 2011.

We expect our domestic and international franchisees to open approximately four to six additional Ruby Tuesday restaurants during the remainder of fiscal 2012.  We currently anticipate converting four to six Company-owned Ruby Tuesday concept restaurants to the Marlin & Ray’s or Truffles concepts, and opening five to seven smaller prototype, inline Company-owned Lime concept restaurants during the remainder of fiscal 2012.

Revenue

RTI’s restaurant sales and operating revenue for the 13 weeks ended November 29, 2011 increased 6.0% to $306.2 million compared to the same period of the prior year.  This increase primarily resulted from the acquisition of 86 formerly franchised restaurants during the third and fourth quarters of fiscal 2011 as discussed below, partially offset by a 4.2% decrease in same-restaurant sales.  The decrease in same-restaurant sales is attributable to lower guest counts, which was partially offset by an increase in average net check in the second quarter of fiscal 2012 compared with the same quarter of the prior year.  The increase in average net check was a result of menu price increases and a shift in menu mix.

Franchise revenue for the 13 weeks ended November 29, 2011 decreased 16.4% to $1.3 million compared to the same period of the prior year.  Franchise revenue is predominately comprised of domestic and international royalties, which totaled $1.2 million and $1.3 million for the 13-week periods ended November 29, 2011 and November 30, 2010, respectively.  This decrease is due to a $0.1 million decline in royalties from our traditional domestic franchisees compared with the same quarter of the prior year.

For the 26 weeks ended November 29, 2011, sales at Company-owned restaurants increased 7.7% to $635.1 million compared to the same period of the prior year.  This increase primarily resulted from the acquisition of 109 formerly franchised restaurants during fiscal 2011 as discussed below, partially offset by a 4.2% decrease in same-restaurant sales.  The decrease in same-restaurant sales is attributable to lower guest counts, which was partially offset by an increase in average net check in the first two quarters of fiscal 2012 compared with the same period of the prior year.  The increase in average net check was a result of menu price increases and a shift in menu mix.

For the 26-week period ended November 29, 2011, franchise revenues decreased 22.8% to $2.7 million compared to the same period in the prior year.  Domestic and international royalties totaled $2.6 million and $3.2 million for the 26-week periods ending November 29, 2011 and November 30, 2010, respectively.  This decrease is due primarily to a $0.4 million decline in royalties from our franchise partnerships due to the acquisition of 109 restaurants from our franchise partners during fiscal 2011.

Under our accounting policy, we do not recognize franchise fee revenue for any franchise with negative cash flows at times when the negative cash flows are deemed to be anything other than temporary and the franchise has borrowed directly from us.  We also do not recognize additional franchise fee revenue from franchisees with fees in excess of 60 days past due.  Accordingly, we have deferred recognition of a portion of franchise revenue from certain franchisees.  Unearned income for franchise fees was $1.5 million and $1.2 million as of November 29, 2011 and May 31, 2011, respectively, which are included in Other deferred liabilities and/or Accrued liabilities – rent and other in the Condensed Consolidated Balance Sheets.

27

Pre-tax (Loss)/Income

Pre-tax loss was $1.7 million for the 13 weeks ended November 29, 2011, compared to pre-tax income of $5.3 million from the same period of the prior year.  The change from the prior year is due to a decrease in same-restaurant sales of 4.2% at Company-owned restaurants, higher interest expense ($1.4 million), and increases, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of cost of merchandise, payroll and related costs, other restaurant operating costs, selling, general, and administrative, net, and closures and impairments.

For the 26-week period ended November 29, 2011, pre-tax income decreased $19.4 million to $1.9 million, from the same period of the prior year.  The lower pre-tax income is due to a decrease in same-restaurant sales of 4.2% at Company-owned restaurants, higher interest expense ($2.9 million), and increases, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of cost of merchandise, payroll and related costs, other restaurant operating costs, and selling, general, and administrative, net.  These were partially offset by a decrease, as a percentage of total revenue, of closures and impairments.

In the paragraphs that follow, we discuss in more detail the components of the decrease in pre-tax income for the 13-week and 26-week periods ended November 29, 2011, as compared to the comparable periods in the prior year.  Because a significant portion of the costs recorded in the cost of merchandise, payroll and related costs, other restaurant operating costs, and depreciation categories are either variable or highly correlative with the number of restaurants we operate, we evaluate our trends by comparing the costs as a percentage of restaurant sales and operating revenue, as well as the absolute dollar change, to the comparable prior year period.

Fiscal 2011 Franchise Restaurant Acquisitions

The table below shows operating results attributable to the restaurants acquired from franchisees in fiscal 2011 that are included in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 (in thousands).  Amounts shown for the 13 and 26 weeks ended November 29, 2011 include results for all 109 restaurants acquired during fiscal 2011 while amounts shown for the 13 and 26 weeks ended November 30, 2010 include results for the 23 restaurants acquired during the first two quarters of fiscal 2011 (from August 4, 2010 or October 13, 2010, the dates of acquisition, through November 30, 2010).

	(Unaudited)
	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Total revenue	$	41,271		$	10,191	$	86,891	$	13,327
Cost of merchandise		12,243			2,954		25,637		3,826
Payroll and related costs		15,128			3,441		30,964		4,403
Other restaurant operating costs		9,010			2,391		18,775		3,104
Depreciation		2,183			698		4,267		817
Selling, general, and administrative, net		2,762			630		5,848		798
		41,326			10,114		85,491		12,948
(Loss)/income before income taxes	$	(55	)	$	77	$	1,400	$	379

See Note D to the Condensed Consolidated Financial Statements for supplemental pro forma information for the 13 and 26 weeks ended November 30, 2010 as if the 106 restaurants acquired during fiscal 2011 from franchise partnerships had occurred on June 2, 2010.

Cost of Merchandise

Cost of merchandise increased $7.0 million (8.3%) to $91.6 million for the 13 weeks ended November 29, 2011, from the corresponding period of the prior year.  As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 29.3% to 29.9%.  Excluding the $9.3 million increase from the 109 restaurants acquired in fiscal 2011, cost of merchandise decreased $2.3 million.

28

Cost of merchandise increased $19.5 million (11.5%) to $189.1 million for the 26 weeks ended November 29, 2011, from the corresponding period of the prior year.  As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 28.8% to 29.8%.  Excluding the $21.8 million increase from the 109 restaurants acquired in fiscal 2011, cost of merchandise decreased $2.3 million.

For the 13 and 26 weeks ended November 29, 2011, the decrease in absolute dollars not attributable to the restaurant acquisitions is primarily a result of the 4.2% decrease in same-restaurant sales for both periods.

As a percentage of restaurant sales and operating revenue, the increase for the 13 and 26 weeks ended November 29, 2011 is due primarily to the impact on net sales of increased value-focused promotional activity, rollout of the endless garden bar with the purchase of an entrée at several of our restaurants during the second quarter of the current year, and, for the 26-week period, the rollout of garlic cheese biscuits at the end of the first quarter of fiscal 2011.

Payroll and Related Costs

Payroll and related costs increased $8.0 million (8.0%) to $107.8 million for the 13 weeks ended November 29, 2011, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, payroll and related costs increased from 34.5% to 35.2%.  Excluding the $11.7 million increase from the 109 restaurants acquired in fiscal 2011, payroll and related costs decreased $3.7 million.

Payroll and related costs increased $20.8 million (10.4%) to $220.8 million for the 26 weeks ended November 29, 2011, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, payroll and related costs increased from 33.9% to 34.8%.  Excluding the $26.6 million increase from the 109 restaurants acquired in fiscal 2011, payroll and related costs decreased $5.8 million.

For the 13 and 26 weeks ended November 29, 2011, the decrease in absolute dollars not attributable to the restaurant acquisitions is primarily a result of new staffing guidelines for certain positions in our restaurants and lowered staffing levels attributable to reduced guest traffic from the same periods of the prior year.

As a percentage of restaurant sales and operating revenue, the increase in payroll and related costs for both the 13 and 26 weeks ended November 29, 2011 is due to higher management labor as a result of merit increases during the current year, minimum wage increases in several states since the prior year periods, and higher FUTA tax owed following the failure of several states to repay the federal government for unemployment insurance loans, coupled with the impact on net sales of increased value-focused promotional activity and loss of leveraging with lower sales volumes.

Other Restaurant Operating Costs

Other restaurant operating costs increased $4.3 million (7.0%) to $65.4 million for the 13-week period ended November 29, 2011, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, these costs increased from 21.2% to 21.4%.  Excluding the $6.6 million increase from the 109 restaurants acquired in fiscal 2011, other restaurant operating costs decreased $2.3 million.

Other restaurant operating costs increased $13.3 million (11.0%) to $134.1 million for the 26-week period ended November 29, 2011, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, these costs increased from 20.5% to 21.1%.  Excluding the $15.7 million increase from the 109 restaurants acquired in fiscal 2011, other restaurant operating costs decreased $2.4 million.

29

For the 13 weeks ended November 29, 2011, the decrease in other restaurant operating costs not attributable to the restaurant operations of the acquired franchise partnership restaurants related to the following (in thousands):

Insurance	$	732
Utilities		694
Supplies		517
Other decreases		404
Net decrease	$	2,347

For the 13-week period ended November 29, 2011, the absolute dollar change not directly attributable to the operations of 109 restaurants acquired from franchisees was a result of reductions in insurance expense due to favorable general liability claims experience, utilities expense based on more favorable rates, and supplies expense in part because of negotiated savings from vendors since the same quarter of the prior year.

For the 26 weeks ended November 29, 2011, the decrease in other restaurant operating costs not attributable to the restaurant operations of the acquired franchise partnership restaurants related to the following (in thousands):

Supplies	$	1,451
Utilities		1,141
Insurance		912
Other taxes		755
Income from company-owned life insurance		503
Net gain on franchise acquisitions		(1,660	)
Other increases		(715	)
Net decrease	$	2,387

For the 26-week period ended November 29, 2011, the absolute dollar change not directly attributable to the operations of 109 restaurants acquired from franchisees was a result of reductions in supplies and utilities expense for similar reasons as noted above in the 13-week period explanation, a decrease in insurance expense primarily due to property insurance proceeds received during the first quarter of the current year relating to storm damage at two of our restaurants, lower other taxes as a result of a reduction in the franchise tax base, and accrued income relating to the death benefit from a company-owned life insurance policy.  Partially offsetting these are net gains on restaurant acquisitions recorded during the prior year as further discussed in Note D to the Condensed Consolidated Financial Statements.

For the 13- and 26-week periods ended November 29, 2011, the increase in other restaurant operating costs as a percentage of restaurant sales and operating revenue is primarily due to the impact on net sales of increased value-focused promotional activity.

Depreciation

Depreciation expense increased $0.8 million (5.1%) to $16.4 million for the 13-week period ended November 29, 2011, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, depreciation expense was consistent with the same quarter of the prior year at 5.4%. Excluding the $1.5 million increase from the 109 restaurants acquired in fiscal 2011, depreciation expense decreased $0.7 million.

Depreciation expense increased $2.0 million (6.4%) to $32.7 million for the 26-week period ended November 29, 2011, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, this expense decreased from 5.2% to 5.1%. Excluding the $3.5 million increase from the 109 restaurants acquired in fiscal 2011, depreciation expense decreased $1.5 million.

In terms of both absolute dollars and as a percentage of restaurant sales and operating revenue, the increase for the 13- and 26-week periods ended November 29, 2011 is due to depreciation on the restaurants

30

acquired from franchisees in fiscal 2011, which was partially offset by reduced depreciation on assets that became fully depreciated or were retired from service since the same periods of the prior year.

Selling, General and Administrative Expenses, Net

Selling, general and administrative expenses, net of support service fee income, increased $2.1 million (10.1%) to $23.4 million for the 13-week period ended November 29, 2011, as compared to the corresponding period in the prior year.  Excluding the $2.1 million increase from the 109 restaurants acquired in fiscal 2011, other restaurant operating costs increased by a negligible amount.

Selling, general and administrative expenses, net of support service fee income, increased $6.4 million (14.6%) to $50.2 million for the 26-week period ended November 29, 2011, as compared to the corresponding period in the prior year.  Excluding the $5.1 million increase from the 109 restaurants acquired in fiscal 2011, other restaurant operating costs increased $1.3 million.

The increase for the 13- and 26-week periods ended November 29, 2011 is due to higher advertising costs ($1.6 million and $7.0 million, respectively) primarily as a result of increased television advertising, coupled with higher general and administrative expense ($0.6 million) for the 13-week period and offset by lower general and administrative expense ($0.6 million) for the 26-week period.  The increase in general and administrative expense for the 13-week period was due primarily to higher consulting fees, primarily relating to cost control projects, partially offset by reductions in bonus expense based on current expectations.  The decrease in general and administrative expense for the 26-week period was due primarily to reductions in bonus expense, as previously mentioned, and lower share-based compensation expense as a result of the inclusion within a portion of the fiscal 2012 share-based compensation award of performance conditions for which we expect less than full achievement, compared to the prior year share-based compensation award which contained only service conditions.  These decreases were partially offset by higher management labor and consulting fees and reductions in franchise support service fee income due to the acquisition of 109 franchise restaurants in the prior year.

Closures and Impairments

Closures and impairments expense increased $0.3 million to $0.7 million for the 13-week period ended November 29, 2011, as compared to the corresponding period of the prior year.  The increase for the 13-week period is due primarily to higher restaurant impairment charges ($0.6 million) and other closing costs ($0.2 million) offset by lower closed restaurant lease reserve expense ($0.5 million) and higher gains during the current year period on the sale of surplus properties ($0.1 million).

Closures and impairments expense decreased $1.0 million to $1.1 million for the 26-week period ended November 29, 2011, as compared to the corresponding period of the prior year.  The decrease for the 26-week period is due primarily to lower closed restaurant lease reserve expense ($0.7 million), reductions in restaurant impairment charges ($0.5 million), and higher gains during the current year on the sale of surplus properties ($0.1 million).  These were partially offset by higher other closing costs ($0.3 million).

See Note I to our Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the first two quarters of fiscal 2012 and 2011.

Equity in Earnings of Unconsolidated Franchises

As of November 30, 2010, we held 50% equity investments in each of five franchise partnerships, which collectively operated 60 Ruby Tuesday restaurants.

Our equity in the earnings of those unconsolidated franchises was negligible and $0.2 million for the 13 and 26 weeks ended November 30, 2010, respectively.  We acquired all five of the franchise partnerships during the remainder of fiscal 2011.

Interest Expense, Net

Net interest expense increased $1.4 million to $4.0 million for the 13 weeks ended November 29, 2011, as compared to the corresponding period in the prior year, primarily due to higher mortgage loan obligations outstanding due to the acquisition of 109 restaurants from the franchise partnerships in fiscal 2011.  Net

31

interest expense increased $2.9 million to $7.9 million for the 26-week period ended November 29, 2011, as compared to the corresponding period in the prior year, primarily for the same reasons mentioned above.

(Benefit)/Provision for Income Taxes

The effective tax rate for the current quarter was (14.6)% compared to 13.3% for the same period of the prior year.  The effective tax rate was 42.8% for the 26-week period ended November 29, 2011 compared to 20.5% for the corresponding period of the prior year.  The change in the effective tax rate for the 13-week period ended November 29, 2011 was attributable to an increase in unrecognized tax benefits and a decrease in FICA Tip and Work Opportunity Tax Credits recognized for the quarter.  The increase in the effective tax rate for the 26-week period ended November 29, 2011 was attributable to an increase in unrecognized tax benefits partially offset by a higher percentage benefit for FICA Tip and Work Opportunity Tax Credits as a result of lower pretax income for the current quarter compared to the same period of the prior year.

Critical Accounting Policies:

Our MD&A is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires us to make subjective or complex judgments that may affect the reported financial condition and results of operations.  We base our estimates on historical experience and other assumptions that we believe to be reasonable in the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.  We continually evaluate the information used to make these estimates as our business and the economic environment changes.

In our Annual Report on Form 10-K for the year ended May 31, 2011, we identified our critical accounting policies related to business combinations, impairment of long-lived assets, share-based employee compensation, revenue recognition for franchisees, income tax valuation allowances and tax accruals, lease obligations, and estimated liability for self-insurance.  During the first 26 weeks of fiscal 2012, there have been no changes in our critical accounting policies.

Liquidity and Capital Resources:

Cash and cash equivalents decreased by $0.8 million and $1.4 million during the first 26 weeks of fiscal 2012 and 2011, respectively.  The change in cash and cash equivalents is as follows (in thousands):

	Twenty-six weeks ended
	November 29,				November 30,
	2011				2010
Cash provided by operating activities		$	36,985			$	32,793
Cash used by investing activities			(17,882	)			(14,126	)
Cash used by financing activities			(19,939	)			(20,038	)
Decrease in cash and cash equivalents		$	(836	)		$	(1,371	)

Operating Activities

Our cash provided by operations is generally derived from cash receipts generated by our restaurant customers and franchisees.  Substantially all of the $635.1 million and $589.6 million of restaurant sales and operating revenue disclosed in our Condensed Consolidated Statements of Operations for the 26 weeks ended November 29, 2011 and November 30, 2010, respectively, was received in cash either at the point of sale or within two to four days (when our guests paid with debit or credit cards).  Our primary uses of cash for operating activities are food and beverage purchases, payroll and benefit costs, restaurant operating costs, general and administrative expenses, and marketing, a significant portion of which are incurred and paid in the same period.

32

Cash provided by operating activities for the first 26 weeks of fiscal 2012 increased $4.2 million (12.8%) from the corresponding period in the prior year to $37.0 million.  The increase is due to a reduction in cash paid for income taxes ($4.9 million) and decreasing growth in the amounts spent to acquire inventory, which was partially offset by higher cash paid for interest ($3.5 million) due to higher debt outstanding during the current year as a result of franchise acquisitions in fiscal 2011.

Our working capital deficiency and current ratio as of November 29, 2011 were $33.1 million and 0.7:1, respectively.  As is common in the restaurant industry, we carry current liabilities in excess of current assets because cash (a current asset) generated from operating activities is reinvested in capital expenditures (a long-term asset) or debt reduction (a long-term liability) and receivable and inventory levels are generally not significant.

Investing Activities

We require capital principally for the maintenance and upkeep of our existing restaurants, limited new or converted restaurant construction, investments in technology, equipment, remodeling of existing restaurants, and on occasion for the acquisition of franchisees or other restaurant concepts.  Property and equipment expenditures purchased with internally generated cash flows for the 26 weeks ended November 29, 2011 were $20.7 million.

Capital expenditures for the remainder of the fiscal year are projected to be approximately $12.0 to $16.0 million based on our planned improvements for existing restaurants and our expectation that we will open approximately five to seven Lime restaurants, and convert approximately four to six Company-owned Ruby Tuesday concept restaurants to the Marlin & Ray’s or Truffles concepts during the remainder of fiscal 2012.  We intend to fund our investing activities with cash provided by operations or borrowings on our Credit Facility.

As discussed further in Note D to the Condensed Consolidated Financial Statements, during the first 26 weeks of fiscal 2011, we spent $1.8 million, plus assumed debt, to acquire the remaining membership interests of two franchise partnerships which collectively operated 20 restaurants and three restaurants from a traditional domestic franchise.

Financing Activities

Historically our primary sources of cash have been operating activities and proceeds from stock option exercises and refranchising transactions.  When these alone have not provided sufficient funds for both our capital and other needs, we have obtained funds through the issuance of indebtedness or through the issuance of additional shares of common stock.  Our current borrowings and credit facilities are described below.

On December 1, 2010, we entered into a five-year revolving credit agreement, the Credit Facility.  Under the original terms of the Credit Facility, we were allowed to borrow up to $320.0 million with the option to increase our capacity by $50.0 million to $370.0 million.  On July 19, 2011, we entered into an amendment of the Credit Facility to increase the amount of the optional additional revolving commitments available from $50.0 million to $60.0 million, thereby increasing the maximum aggregate revolving commitment amount under the Credit Facility from $370.0 million to $380.0 million.   On the same date, we exercised our option to increase the revolving commitments from $320.0 million to $380.0 million pursuant to new lender commitment agreements with the existing lenders and an additional new lender.

The terms of the Credit Facility provide for a $40.0 million swingline subcommitment and a $50.0 million letter of credit subcommitment.  The Credit Facility also includes a $50.0 million franchise facility subcommitment, which covered our guarantees of debt of the franchise partners (the “Franchise Facility Subcommitment”).  All amounts guaranteed under the Franchise Facility Subcommitment were settled during fiscal 2011.

The interest rates charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option we choose to utilize.  Our Base Rate for borrowings is defined to be the higher of Bank of America’s prime rate, the Federal Funds Rate plus 0.5%, or an adjusted LIBO Rate plus 1.00%, plus an applicable margin ranging from 0.25% to 1.25%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.25%.

33

Under the terms of the Credit Facility, we had borrowings of $182.0 million with an associated floating rate of interest of 2.58% at November 29, 2011.  As of May 31, 2011, we had $177.0 million outstanding with an associated floating rate of interest of 2.27%.  After consideration of letters of credit outstanding, we had $188.7 million available under the Credit Facility as of November 29, 2011.  The Credit Facility will mature on December 1, 2015.

The Credit Facility contains financial covenants relating to the maintenance of leverage and fixed charge coverage ratios and minimum net worth.  We were in compliance with our debt covenants as of November 29, 2011 and the date of this filing.

On April 3, 2003, we issued notes totaling $150.0 million through a private placement of debt (the “Private Placement”).  On December 1, 2010, we entered into an amendment of the notes issued in the Private Placement (the “Note Amendment”).  Among other changes, this amendment conformed the covenants in this agreement to the covenants contained in the Credit Facility discussed above.

At November 29, 2011 and May 31, 2011, the Private Placement consisted of $44.4 million in notes with an interest rate of 7.17% (the “Series B Notes”).  The Series B Notes mature on April 1, 2013, and thus have been classified as non-current in our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets.

Our $115.5 million in mortgage loan obligations as of November 29, 2011 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between December 2011 and March 2024, have balances which range from negligible to $8.5 million and interest rates of 3.35% to 11.28%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

During the 26 weeks ended November 29, 2011, we spent $18.4 million to repurchase 2.0 million shares of RTI common stock.  As of November 29, 2011, the total number of remaining shares authorized to be repurchased was 5.9 million.  No shares were repurchased during the first two quarters of the prior year.

During the remainder of fiscal 2012, we expect to fund operations, capital expansion, stock repurchases, and any other investments from operating cash flows, our Credit Facility, and proceeds from sale-leaseback transactions.

Significant Contractual Obligations and Commercial Commitments

Long-term financial obligations were as follows as of November 29, 2011 (in thousands):

	Payments Due By Period
			Less than		1-3	3-5	More than 5
	Total		1 year		years	years	years
Notes payable and other    long-term debt, including
current maturities (a)	$	115,715	$	17,357	25,947	29,609	$	42,802
Revolving credit facility (a)		182,000		–	–	182,000		–
Unsecured senior notes
(Series B) (a)		44,442		–	44,442	–		–
Interest (b)		41,593		11,057	14,260	8,667		7,609
Operating leases (c)		357,268		44,197	79,407	63,583		170,081
Purchase obligations (d)		96,310		44,481	30,433	19,651		1,745
Pension obligations (e)		39,249		11,162	6,011	5,039		17,037
Total (f)	$	876,577	$	128,254	200,500	308,549	$	239,274

(a)   See Note H to the Condensed Consolidated Financial Statements for more information. 

(b)   Amounts represent contractual interest payments on our fixed-rate debt instruments.  Interest payments on our variable-rate revolving credit facility and variable-rate notes payable with balances of $182.0 million and $14.6 million, respectively, as of November 29, 2011 have been excluded from the amounts shown above, primarily because the balance outstanding under the Credit Facility, described further in Note H of the Condensed Consolidated Financial Statements,  fluctuates daily.  Additionally, the amounts shown above include interest payments on the Series B Notes at the current interest rates of 7.17%, respectively.

34

(c)   This amount includes operating leases totaling $2.3 million for which sublease income from franchisees or others is expected.  Certain of these leases obligate us to pay maintenance costs, utilities, real estate taxes, and insurance, which are excluded from the amounts shown above.  See Note G to the Condensed Consolidated Financial Statements for more information.

(d)   The amounts for purchase obligations include commitments for food items and supplies, advertising, utility contracts, and other miscellaneous commitments.

(e)   See Note J to the Condensed Consolidated Financial Statements for more information.

(f)   This amount excludes $5.1 million of unrecognized tax benefits due to the uncertainty regarding the timing of future cash outflows associated with such obligations.

Commercial Commitments as of November 29, 2011 (in thousands):

	Payments Due By Period
		Less than	1-3	3-5	More than 5
	Total	1 year	Years	years	Years
Letters of credit	$     9,284	$     9,284	$            –	$            –	$            –
Divestiture guarantees	5,687	1,386	963	898	2,440
Total	$   14,971	$   10,670	$        963	$        898	$     2,440

See Note N to the Condensed Consolidated Financial Statements for more information.

Off-Balance Sheet Arrangements

See Note N to the Condensed Consolidated Financial Statements for information regarding our franchise partnership and divestiture guarantees.

Accounting Pronouncements Not Yet Adopted

In June 2011, the Financial Accounting Standards Board issued guidance on the presentation of total comprehensive income, the components of net income, and the components of other comprehensive income.  This guidance is intended to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (our fiscal 2013 first quarter).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

In September 2011, the Financial Accounting Standards Board issued guidance modifying the impairment test for goodwill by allowing businesses to first decide whether they need to do the two-step impairment test.  Under the guidance, a business no longer has to calculate the fair value of a reporting unit unless it believes it is very likely that the reporting unit’s fair value is less than the carrying value.  The guidance is effective for impairment tests for fiscal years beginning after December 15, 2011 (our fiscal 2013).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

Known Events, Uncertainties and Trends:

Goodwill Impairment Evaluation

Our goodwill, which totaled $15.6 million at November 29, 2011, is not amortized.  We perform tests for impairment annually (as of the end of our third fiscal quarter), or more frequently if events or circumstances indicate it might be impaired.  Impairment tests for goodwill include comparing the fair value of the respective reporting unit with its carrying value, including goodwill.  We use a variety of methodologies in conducting these impairment assessments, including cash flow analyses that are consistent with the assumptions we believe hypothetical marketplace participants would use, estimates of sales proceeds and other measures, such as fair market price of our common stock, as evidenced by closing trading price.  Where applicable, we use an appropriate discount rate that is commensurate with the risk inherent in the projected cash flows.

35

In early August 2011, the closing trading price of our common stock fell below our net book value per share and has remained there since.   Despite our belief that this is temporary, we did perform additional procedures to analyze the carrying value of our goodwill, including a review of Company cash flows and market multiples associated with recent restaurant transactions.  Based on our assessment, we concluded that there was no impairment of goodwill at November 29, 2011.

As required by our policy, we will perform our annual goodwill impairment procedures as of the end of our third fiscal quarter.  If market conditions at either the restaurant store level or system-wide deteriorate, or if operating results decline further, we may be required to record impairment charges.

Sale-Leaseback Transactions

Over the next two to three fiscal quarters, we will be pursuing sale-leaseback transactions on a portion of our real estate in order to create greater financial flexibility and communicate to investors the significant market value of our owned real estate portfolio in relation to our peer group.  We are targeting to raise approximately $50.0 million of gross proceeds from these transactions to be utilized for opportunistic share repurchases and debt reduction.

On December 30, 2011, we completed a sale-leaseback transaction of a Company-owned restaurant for gross cash proceeds of $2.3 million.  The carrying value of the property was $1.5 million at the time of sale.  Any gains recorded on this and future sale-leaseback transactions will be deferred and recognized on a straight-line basis over the terms of the leases.

Financial Strategy and Stock Repurchase Plan

Our financial strategy is to utilize a prudent amount of debt, including operating leases, letters of credit, and any guarantees, to minimize the weighted average cost of capital while allowing financial flexibility.  This strategy has periodically allowed us to repurchase RTI common stock.  During the first two quarters of fiscal 2012, we repurchased 2.0 million shares of RTI common stock at an aggregate cost of $18.4 million.  As of November 29, 2011, the total number of remaining shares authorized to be repurchased was 5.9 million.  To the extent not funded with cash from operating activities and proceeds from stock option exercises, additional repurchases, if any, may be funded by borrowings on the Credit Facility.  The repurchase of shares in any particular future period and the actual amount thereof remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future.

Dividends

During fiscal 1997, our Board of Directors approved a dividend policy as an additional means of returning capital to our shareholders.  Thepayment of a dividend in any particular period and the actual amount thereof remain at the discretion of the Board of Directors, and no assurance can be given that dividends will be paid in the future.

Fiscal Year

Our fiscal 2012 will contain 53 weeks and end on June 5, 2012.  As a result, the fourth quarter of fiscal 2012 will contain 14 weeks.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures about Market Risk

We are exposed to market risk from fluctuations in interest rates and changes in commodity prices.  The interest rate charged on our Credit Facility can vary based on the interest rate option we choose to utilize.  Our Base Rate for borrowings is defined to be the higher of Bank of America’s prime lending rate, the Federal Funds Rate plus 0.5%, or an adjusted LIBO Rate plus 1.00%, plus an applicable margin ranging from 0.25% to 1.25%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.25%.  As of November 29, 2011, the total amount of outstanding debt subject to interest rate fluctuations was

36

$196.6 million.  A hypothetical 100 basis point change in short-term interest rates would result in an increase or decrease in interest expense of $2.0 million per year, assuming a consistent capital structure.

Many of the ingredients used in the products we sell in our restaurants are commodities that are subject to unpredictable price volatility.  This volatility may be due to factors outside our control such as weather and seasonality.  We attempt to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients.  Historically, and subject to competitive market conditions, we have been able to mitigate the negative impact of price volatility through adjustments to average check or menu mix.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and under the supervision of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.  The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of November 29, 2011.

Changes in Internal Controls

During the fiscal quarter ended November 29, 2011, there were no changes in our internal control over financial reporting (as defined in Rule 13a – 15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business, including claims relating to injury or wrongful death under “dram shop” laws, workers’ compensation and employment matters, claims relating to lease and contractual obligations, and claims from guests alleging illness or injury.  We provide reserves for such claims when payment is probable and estimable in accordance with U.S. generally accepted accounting principles.  At this time, in the opinion of management, the ultimate resolution of pending legal proceedings will not have a material adverse effect on our consolidated operations, financial position, or cash flows.  See Note N to the Condensed Consolidated Financial Statements for further information about our legal proceedings as of November 29, 2011.

37

ITEM 1A.

RISK FACTORS

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended May 31, 2011 in Part I, Item 1A. Risk Factors.  There have been no material changes from the risk factors previously disclosed in our Form 10-K.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From time to time our Board of Directors has authorized the repurchase of shares of our common stock as a means to return excess capital to our shareholders.  The timing, price, quantity and manner of the purchases have been made at the discretion of management, depending upon market conditions and the restrictions contained in our loan agreements.  As of November 29, 2011, 5.9 million shares remained available for purchase under existing programs.  We did not repurchase any shares of RTI common stock during the 13 weeks ended November 29, 2011.  During the first quarter of fiscal 2012, we spent $18.4 million to repurchase 2.0 million shares of RTI common stock.  The repurchase of shares in any particular future period and the actual amount thereof remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future.  There were no unregistered sales of equity securities during the 13 and 26 weeks ended November 29, 2011.

38

ITEM 6.

EXHIBITS

The following exhibits are filed as part of this report:

 Exhibit No.

10	.1	Form of Director Restricted Stock Award.
10	.2	Second Amendment, dated as of January 5, 2012, to the Ruby Tuesday, Inc. Stock Incentive and
		Deferred Compensation Plan for Directors (Amended and Restated as of October 8, 2008).
10	.3	Third Amendment, dated as of July 20, 2011, to the Ruby Tuesday, Inc. 2003 Stock Incentive Plan.
10	.4	Fourth Amendment, dated as of January 5, 2012, to the Ruby Tuesday, Inc. 2003 Stock Incentive
		Plan.
31	.1	Certification of Samuel E. Beall, III, Chairman of the Board, President, and Chief Executive Officer.
31	.2	Certification of Marguerite N. Duffy, Senior Vice President, Chief Financial Officer.
32	.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
		Sarbanes-Oxley Act of 2002.
32	.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
		Sarbanes-Oxley Act of 2002.
10	1.INS	XBRL Instance Document.
10	1.SCH	XBRL Schema Document.
10	1.CAL	XBRL Calculation Linkbase Document.
10	1.LAB	XBRL Labels Linkbase Document.
10	1.PRE	XBRL Presentation Linkbase Document.
10	1.DEF	XBRL Definition Linkbase Document.

39

SIGNATURES

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, thereunto duly authorized.

RUBY TUESDAY, INC.

(Registrant)

Date: January 6, 2012  BY: /s/ MARGUERITE N. DUFFY —————————————— Marguerite N. Duffy Senior Vice President and Chief Financial Officer and Principal Accounting Officer

40

EX-10.1

RUBY TUESDAY, INC.

RESTRICTED STOCK AWARD

This RESTRICTED STOCK AWARD (the “Award”) is made and entered into as of the 5th day of October, 2011 by and between Ruby Tuesday, Inc. (the “Company”), a Georgia corporation, and _________________________ (the “Director”).

Upon and subject to the Additional Terms and Conditions attached hereto and incorporated herein by reference as part of this Award, the Company hereby awards as of the Grant Date to the Director the Restricted Shares described below pursuant to the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors (the “Plan”) in consideration of the Director’s services to the Company.

A.           Grant Date:  October 5, 2011.

B.           Restricted Shares:  _______ shares of the Company’s common stock (“Common Stock”), $.01 par value per share.

C.           Vesting:  The Restricted Shares shall become vested, as and to the extent indicated below, only if the Service Condition, as specified herein, is satisfied.  The Service Condition is satisfied only if the Director provides continuous services to the Company as a member of its Board of Directors for the period following the Grant Date through the day immediately preceding the first anniversary of the Grant Date and, except as provided in this Paragraph C, does not experience a Termination of Service during that period, regardless of the reason.  Notwithstanding the foregoing, the Service Condition will be deemed satisfied as to all of the Restricted Shares if the Director provides continuous services to the Company and/or any affiliate following the Grant Date through the date of any of the following earlier events: (a) the date the Director (i) experiences a Termination of Service due to death; (ii) experiences an involuntary Termination of Service without Cause on or after age 50; (iii) becomes subject to a Disability, or (iv) attains age 70 (whether before or after the Grant Date); or (b) the effective date of a Change in Control.  The Restricted Shares which have satisfied (or are deemed to have satisfied) the Service Condition are herein referred to as the “Vested Shares.”  If the Service Condition is satisfied, then all of the Restricted Shares shall become Vested Shares as of the day immediately preceding the first anniversary of the Grant Date.  If the Service Condition is not satisfied, then all of the Restricted Shares shall be forfeited.

IN WITNESS WHEREOF, the Company and Director have signed this Award as of the Grant Date set forth above.

RUBY TUESDAY, INC.

By:                                            Director                 

Title: Chairman and Chief Executive Officer

ADDITIONAL TERMS AND CONDITIONS OF

RUBY TUESDAY, INC.

RESTRICTED STOCK AWARD

1.           Acknowledgement by Director of Tax Election Opportunity.  Director acknowledges that the award of the Restricted Shares constitutes a transfer of property for federal income tax purposes under Section 83 of the Internal Revenue Code and that the Director shall have the sole responsibility for determining whether to elect early income tax treatment by making an election permitted under Subsection (b) of Section 83 and the sole responsibility for effecting any such election in an appropriate and on a timely basis.

2.           Issuance of Restricted Shares.

(a)           The Company shall issue the Restricted Shares as of the Grant Date in either manner described below, as determined by the Committee in its sole discretion

               (i)           by the issuance of share certificate(s) evidencing Restricted Shares to the Secretary of the Company or such other agent of the Company as may be designated by the Committee or the Secretary (the “Share Custodian”); or

                (ii)           by documenting the issuance in uncertificated or book entry form on the Company’s stock records.

Evidence of the Restricted Shares either in the form of share certificate(s) or book entry, as the case may be, shall be held by the Company or Share Custodian, as applicable, until the Restricted Shares become Vested Shares in accordance with the Vesting Schedule.

(b)           When the Restricted Shares become Vested Shares, the Company or the Share Custodian, as the case may be, shall deliver the Vested Shares to the Director or, at the Company’s election, to a broker designated by the Company (the “Designated Broker”) by either physical delivery of the share certificate(s) or book entry transfer, as applicable, for the benefit of an account established in the name of the Director.  If the number of Vested Shares includes a fraction of a share, neither the Company nor the Share Custodian shall be required to deliver the fractional share to the Director, and the Company shall pay the Director the amount determined by the Company to be the estimated fair market value therefor.  At any time after receipt by the Designated Broker, the Director may require that the Designated Broker deliver the Vested Shares to the Director pursuant to such arrangements or agreements as may exist between the Designated Broker and the Director.

(c)           In the event that the Director forfeits any of the Restricted Shares, the Company shall cancel the issuance on its stock records and, if applicable, the Share Custodian shall promptly deliver the share certificate(s) representing the forfeited shares to the Company.

(d)           Director hereby irrevocably appoints the Share Custodian, and any successor thereto, as the true and lawful attorney-in-fact of Director with full power and authority to execute any stock transfer power or other instrument necessary to transfer any Restricted Shares to the Company in accordance with this Award, in the name, place, and stead of the Director.  The term of such appointment shall commence on the Grant Date of this Award and shall continue until the last of the Restricted Shares are delivered to the Director as Vested Shares or are returned to the Company as forfeited Restricted Shares.

(e)           Except as otherwise expressly provided in this Award, the Director shall be entitled to all rights respecting the Restricted Shares applicable to holders of shares of Common Stock including, without limitation, the right to vote such shares and to receive dividends or other distributions thereon as provided by Section 3.

(f)           In the event the number of shares of Common Stock is increased or reduced as a result of a subdivision or combination of shares of Common Stock or the payment of a stock dividend or any other increase or decrease in the number of shares of Common Stock or other transaction such as a merger, reorganization or other change in the capital structure of the Company, the Director agrees that any certificate representing shares of Common Stock or other securities of the Company issued as a result of any of the foregoing shall be delivered to the Share Custodian or recorded in book entry form, as applicable, and shall be subject to all of the provisions of this Award as if initially granted hereunder.

3.           Dividends.  The Director shall be entitled to dividends or other distributions paid or made on Restricted Shares but only as and when the Restricted Shares to which the dividends or other distributions are attributable become Vested Shares.  Dividends paid on Restricted Shares will be held by the Company and transferred to the Director, without interest, on such date as the Restricted Shares become Vested Shares.  Dividends or other distributions paid on Restricted Shares that are forfeited shall be retained by the Company.

4.           Restrictions on Transfer of Restricted Shares.

(a)           General Restrictions.  Except as provided by this Award, the Director shall not have the right to make or permit to exist any transfer or hypothecation, whether outright or as security, with or without consideration, voluntary or involuntary, of all or any part of any right, title or interest in or to any Restricted Shares.  Any such disposition not made in accordance with this Award shall be deemed null and void.  The Company will not recognize, or have the duty to recognize, any disposition not made in accordance with the Plan and this Award, and any Restricted Shares so transferred will continue to be bound by the Plan and this Award.  The Director (and any subsequent holder of Restricted Shares) may not sell, pledge or otherwise directly or indirectly transfer (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in or any beneficial interest in any Restricted Shares except pursuant to the provisions of this Award.  Any sale, pledge or other transfer (or any attempt to effect the same) of any Restricted Shares in violation of any provision of the Plan or this Award shall be void, and the Company shall not record such transfer, assignment, pledge or other disposition on its books or treat any purported transferee or pledgee of such Restricted Shares as the owner or pledgee of such Restricted Shares for any purpose.

                (b)           Certain Permitted Transfers.  The restrictions contained in this Section 4 will not apply with respect to transfers of the Restricted Shares pursuant to applicable laws of descent and distribution; provided that the restrictions contained in this Section 4 will continue to be applicable to the Restricted Shares after any such transfer; and provided further that the transferee(s) of such Restricted Shares must agree in writing to be bound by the provisions of the Plan and this Award.

5.           Additional Restrictions on Transfer.

                (a)           In addition to any legends required under applicable securities laws, any certificates representing the Restricted Shares shall be endorsed with the following legend and the Director shall not make any transfer of the Restricted Shares without first complying with the restrictions on transfer described in such legend:

transfer is restricted

The securities evidenced by this certificate are subject to

restrictions on transfer and forfeiture provisions which also

apply to the transferee as set forth in a restricted stock Award,

dated ___________, a copy of which is available from the Company.

 (b)           Opinion of Counsel.  No holder of Restricted Shares may sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in or any beneficial interest in any Restricted Shares, except (i) pursuant to an effective registration statement under the Securities Act of 1933 or (ii) in a transaction that fully complies with Rule 144, without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act of 1933 and applicable state securities laws is required in connection with such transfer.

6.           Change in Capitalization.

                (a)           The number and kind of Restricted Shares shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or combination of shares or the payment of a stock dividend in shares of Common Stock to holders of outstanding shares of Common Stock or any other increase or decrease in the number of shares of Common Stock outstanding effected without receipt of consideration by the Company.  No fractional shares shall be issued in making such adjustment.  All adjustments made by the Committee under this Section shall be final, binding, and conclusive.

                (b)           In the event of a merger, consolidation, extraordinary dividend (including a spin-off), reorganization, recapitalization, sale of substantially all of the Company’s assets, other change in the capital structure of the Company, tender offer for shares of Common Stock or a Change in Control, an appropriate adjustment may be made with respect to the Restricted Shares such that other securities, cash or other property may be substituted for the Common Stock held by the Share Custodian pursuant to this Award or recorded in book entry form pursuant to this Award.

                (c)           The existence of the Plan and the Award shall not affect the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Common Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or part of its business or assets, or any other corporate act or proceeding.

7.           Governing Laws.  This Award shall be construed, administered and enforced according to the laws of the State of Georgia; provided, however, no Restricted Shares shall be issued except, in the reasonable judgment of the Committee, in compliance with exemptions under applicable state securities laws of the state in which the Director resides, and/or any other applicable securities laws.

8.           Successors.  This Award shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties.

9.           Notice.  Except as otherwise specified herein, all notices and other communications under this Award shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of the recipient.  Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein.  Notices sent to the Company shall be addressed to the attention of the Secretary of the Company.

10.           Severability.  In the event that any one or more of the provisions or portion thereof contained in this Award shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award, and this Award shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

11.           Entire Agreement.  Subject to the terms and conditions of the Plan, this Award expresses the entire understanding and agreement of the parties with respect to the subject matter.  This Award may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

12.           Headings and Capitalized Terms.  Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award.  Capitalized terms used, but not defined, in this Award shall be given the meaning ascribed to them in the Plan

13.           Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

14.           No Right to Continued Service.  Neither the establishment of the Plan nor the existence of the Award shall be construed as giving the Director the right to any continued service relationship with the Company or any affiliate of the Company.

EX-10.2

SECOND AMENDMENT TO THE

RUBY TUESDAY, INC. STOCK INCENTIVE AND

DEFERRED COMPENSATION PLAN FOR DIRECTORS

(AS AMENDED AND RESTATED AS OF OCTOBER 8, 2008)

THIS SECOND AMENDMENT is made on this 5th day of January, 2012 by Ruby Tuesday, Inc. a corporation duly organized and existing under the laws of the State of Georgia (hereinafter called the “Primary Sponsor”).

WITNESSETH:

WHEREAS, the Primary Sponsor maintains the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors (the “Plan”) under an amended and restated indenture which became effective as of October 8, 2008 and was subsequently amended by the First Amendment thereto dated July 21, 2011; and

WHEREAS, the Primary Sponsor now wishes to amend the Plan to reduce the aggregate annual award value; to provide the Committee (as defined in the Plan) with the discretion to include specified accelerated vesting events as terms in both newly granted and outstanding Annual Options (as defined in the Plan) and Restricted Stock Awards (as defined in the Plan); and to modify the scheduled vesting dates for Restricted Stock Awards.

NOW, THEREFORE, the Primary Sponsor does hereby amend the Plan, effective with respect to Stock Incentives (as defined in the Plan) granted on and after the date this Second Amendment is approved by the Board of Directors of the Primary Sponsor, as follows:

1.           By deleting Subsection (c) of Section 1.1 in its entirety and by substituting therefor the following:

“(c)           ‘Award Value’ means an amount equal to $80,000, adjusted cumulatively thereafter on an annual basis for inflation based on the twelve months’ percent change in the national Consumer Price Index for all Urban Consumers (CPI-U), US City Average for All Items, not seasonally adjusted, for the fiscal year of the Company ending prior to the date of grant.”

2.           By deleting Subsection (a) of Section 3.2 in its entirety and by substituting therefor the following:

      “(a)           Vesting.  Each Annual Option granted under this Plan is exercisable by whom, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee specifies in the Stock Incentive Agreement; provided, however, that no Annual Option shall initially provide a vesting schedule permitting the exercise of any portion of an Annual Option any earlier than on the day immediately preceding the first anniversary of the grant date for that Annual Option, unless the next regularly scheduled annual meeting of  the Company’s stockholders following the grant date falls on a date prior to the first anniversary of the grant date, in which case the Annual Option shall vest on the day immediately prior to such earlier date, provided the Participant remains a member of the Board of Directors as of such date.  Notwithstanding the foregoing, the terms of a Stock Incentive Agreement, or any amendment thereto, may include terms accelerating the time or times at which an Annual

Option, or any portion thereof, may be exercised upon the occurrence of specified events, including, without limitation, upon death, Disability, attainment of age seventy (70), retirement or a Change in Control.  Any portion of an Annual Option that has not become exercisable as of the date the Participant’s service as a director of the Company ceases, that unvested portion of the Annual Option shall be forfeited.

3.           By deleting Section 4.3 in its entirety and by substituting therefor the following:

“4.3           Vesting.  The shares of Stock subject to a Restricted Stock Award shall vest on the day immediately preceding the first anniversary of the grant date for that Restricted Stock Award, unless the next regularly scheduled annual meeting of  the Company’s stockholders following the grant date falls on a date prior to the first anniversary of the grant date, in which case the Restricted Stock Award shall vest on the day immediately prior to such earlier date (in either case, the “Scheduled Vesting Date”), provided the Participant remains a member of the Board of Directors as of the Scheduled Vesting Date.  In the event a Participant ceases to be a member of the Board of Directors prior to the Scheduled Vesting Date of a Restricted Stock Award, all unvested shares under that Restricted Stock Award shall be forfeited.  Notwithstanding the preceding sentence, to the extent determined by the Committee in the applicable Stock Incentive Agreement, or any amendment thereto, all shares of Stock subject to a Restricted Stock Award may become vested prior to the Scheduled Vesting Date on any one or more of the following earlier events:  (a) the Participant’s death or Disability; (b) upon the Participant attaining age seventy (70); (c) retirement; or (d) upon a Change in Control.”

Except as specifically amended hereby, the Plan shall remain in full force and effect prior to this Second Amendment.

IN WITNESS WHEREOF, the Primary Sponsor has caused this Second Amendment to be executed on the day and year first above written.

RUBY TUESDAY, INC.

By:      /s/ Samuel E. Beall, III

Samuel E. Beall, III

Chairman of the Board,

Chief Executive Officer and President

ATTEST:

By:         /s/ Scarlett May

Scarlett May

Secretary

[CORPORATE SEAL]

EX-10.3

THIRD AMENDMENT TO THE

RUBY TUESDAY, INC.

2003 STOCK INCENTIVE PLAN

THIS THIRD AMENDMENT is made as of this 20th day of July, 2011, by Ruby Tuesday, Inc., a corporation organized and existing under the laws of the State of Georgia (hereinafter called the “Company”).

W I T N E S S E T H:

WHEREAS, the Company maintains the Ruby Tuesday, Inc. 2003 Stock Incentive Plan (the “Plan”) under an amended and restated indenture dated as of July 9, 2003, as amended by the First and Second Amendments thereto;

WHEREAS, the Company wishes to amend the Plan primarily to make changes to the Plan to revise the performance goals used to qualify certain awards as performance-based compensation under Section 162(m) of the Internal Revenue Code; and

WHEREAS, this Third Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

NOW, THEREFORE, the Company does hereby amend the Plan, effective as of various dates indicated below, as follows:

1.By deleting Section 1.1(l-1) in its entirety and substituting therefor the following:

“(l-1)           ‘Performance Goals’ means the measurable performance objectives, if any, established by the Committee for a Performance Period that are to be achieved with respect to a Stock Incentive granted to a Participant under the Plan.  Performance Goals may be described in terms of (i) Company-wide objectives, (ii) objectives that are related to performance of the division, department or function within the Company or an affiliate in which the Participant receiving the Stock Incentive is employed or on which the Participant’s efforts have the most influence, (iii) performance solely in relation to objectives achieved during the Performance Period or as compared to past performance periods, and/or (iv) performance relative to the performance by a company or group of companies selected by the Committee with respect to one or more Performance Goals established by the Committee. The Performance Goal(s) established by the Committee under an objective formula for any Performance Period under the Plan will consist of one or more of the following criteria:

Cash flow   Earnings before interest, taxes, depreciation and amortization (EBITDA)   Earnings per share (EPS)   Retention of Company team members in general or in any specific category or level of employment   Earnings before interest, depreciation and amortization (EBIDA)

Net operating profit after taxes (NOPAT)   Return on assets (ROA)   Return on net assets (RONA)   Return on equity (ROE)   Return on invested capital (ROIC)   Company, franchise or system same restaurant sales (SRS)   Company, franchise or system traffic growth (Guest Count Growth)   Market share or related strength of brand measures related to consumer perception, including but not limited to brand relevance and guest satisfaction, in each case based on objective data such as guest or market surveys   Economic value added (dollar spread between return on capital and cost of capital) (EVA)   Gross revenues   Operating income   Operating cash flow   Revenue, less cost of merchandise, payroll and related costs and other restaurant operating costs (Gross profit) Earnings before interest and taxes (EBIT)   Earnings before interest, taxes, depreciation, amortization and rent (EBITDAR)   Company, franchise or system restaurant growth in number of new restaurants   Average restaurant volume growth   Fixed charge coverage ratio   Sales and earnings performance   Total shareholder return   General and administrative costs (as a percentage of net sales or flat dollar amount)   Consolidated net income   Management of capital or operating expenditures   Appreciation of stock price   Market value added (Company market value less total capital employed)   Debt levels, either alone or as a percentage of any other Performance Goal

If the Committee determines that, as a result of a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or any other events or circumstances, including, but not limited to a change in applicable law, the Performance Goals are no longer suitable, the Committee may in its discretion modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, with respect to a period as the Committee deems appropriate and equitable.  For example, the Committee may appropriately adjust any evaluation of performance under a Performance Goal to remove the effect of equity compensation expense under Financial Accounting Standards No. 123R; amortization of acquired technology and intangibles; asset write-downs; litigation or claim judgments or settlements; changes in or provisions under tax law, accounting principles or other such laws or provisions affecting reported results; accruals for reorganization and restructuring programs; discontinued operations; and any items that are extraordinary, unusual in nature, non-recurring or infrequent in occurrence.  In any

such case, the Committee shall consider whether any modification of the Performance Goals or minimum acceptable level of achievement would cause the exemption under Code Section 162(m) to become unavailable.”

2.By adding a new Subsection (h) to Section 3.1, as follows:

“(h)           Dividends payable on Stock subject to a Stock Incentive and dividend equivalent rights payable with respect to a Stock Incentive shall not be paid prior to the vesting of the portion of the Stock Incentive to which they relate.”

3.By deleting Clause (iv) of Subsection 3.2(a) and substituting therefor the following

“(iv)           No Repricing or Buyouts.  Except as provided in Section 5.2, without the approval of the Company’s stockholders, the Exercise Price of an Option may not be reduced, directly or indirectly, after the grant of the Option, including any surrender of the Option in consideration of, or in exchange for: (1) the grant of a new Option having an Exercise Price below that of the Option that was surrendered; (2) Stock; (3) cash; or (4) any other Stock Incentive.”

4.By deleting from Subsection (c) of Section 3.2 the phrase “for at least six (6) months prior to the date of exercise”.

5.           By adding a new Subsection (f) to Section 3.2, as follows:

“(f)           No Reload Grants.   Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other option held by a Participant.”

6.           By deleting Subsection (b) of Section 3.4 in its entirety and substituting therefor the following:

“(b)           Any Stock Award that does not contain forfeitability provisions based upon Performance Goals shall vest over a period of no less than two (2) years, subject to exceptions for death, Disability, retirement and similar events as may be prescribed by the Committee.”

7.           By adding a new Subsection (d) to Section 3.4, as follows:

“(d)           Minimum Holding Period.  Any Stock Award granted under the Plan shall provide that the Stock subject to the Stock Award, net of shares of Stock withheld or otherwise applied to satisfy tax withholding obligations, shall be subject to a minimum holding period of six (6) months from the date the shares of Stock cease to be forfeitable, subject to exceptions for death, Disability, retirement and similar events as may be prescribed by the Committee.”

8.           By deleting Section 5.3 and substituting therefor the following:  “[Reserved.]”

The provisions of the Plan, as amended by this Third Amendment, shall become effective with respect to Stock Incentives granted on and after the date it is approved by stockholders at the 2011 annual meeting of the Company’s stockholders and if the stockholders of the Company fail to approve the Third Amendment at the 2011 annual meeting of shareholders, the Third Amendment shall be null and void but only as to those amendments pertaining to the use of Performance Goals (Paragraph 1 hereof).  In that event, the surviving provisions of the Third Amendment shall be effective with respect to Stock Incentives granted on and after the date of the 2011 annual meeting of stockholders, regardless of whether stockholder approval is received.

IN WITNESS WHEREOF, the Company has caused this Third Amendment to be executed as of the day and year first above written.

RUBY TUESDAY, INC.
 

By:    /s/ Samuel E. Beall, III

Samuel E. Beall, III

Chairman of the Board,

Chief Executive Officer and President

ATTEST:

By:         /s/ Scarlett May

Scarlett May

Secretary

[CORPORATE SEAL]

EX-10.4

FOURTH AMENDMENT TO THE

RUBY TUESDAY, INC.

2003 STOCK INCENTIVE PLAN

THIS FOURTH AMENDMENT is made as of this 5th day of January, 2012, by Ruby Tuesday, Inc., a corporation organized and existing under the laws of the State of Georgia (hereinafter called the “Company”).

W I T N E S S E T H:

WHEREAS, the Company maintains the Ruby Tuesday, Inc. 2003 Stock Incentive Plan (the “Plan”) under an amended and restated indenture dated as of July 9, 2003, as amended by the First, Second and Third Amendments thereto;

WHEREAS, the Company wishes to amend the Plan primarily to establish a minimum duration for performance periods and to increase the minimum forfeitability period for restricted stock awards that are not subject to performance goals; and

WHEREAS, this Fourth Amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

NOW, THEREFORE, the Company does hereby amend the Plan, effective as of date indicated below, as follows:

1.By deleting Section 1.1(l-2) in its entirety and substituting therefor the following:

“(l-2)           ‘Performance Period’ means, with respect to a Stock Incentive, a period of time of not less than twelve (12) months’ duration within which the Performance Goals relating to such Stock Incentive are to be measured.  The Performance Period, if any, will be established by the Committee at the time the Stock Incentive is granted.”

2.           By deleting Subsection (b) of Section 3.4 in its entirety and substituting therefor the following:

“(b)           Any Stock Award that does not contain forfeitability provisions based upon Performance Goals shall vest over a period of no less than thirty (30) months, subject to exceptions for death, Disability, retirement and similar events as may be prescribed by the Committee.”

The provisions of the Plan, as amended by this Fourth Amendment, shall become effective with respect to Stock Incentives granted on and after the date it is approved by the Board of Directors of the Company.

IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to be executed as of the day and year first above written.

RUBY TUESDAY, INC.

By:      /s/ Samuel E. Beall, III   

Samuel E. Beall, III

Chairman of the Board,

Chief Executive Officer and President

ATTEST:

By:          /s/ Scarlett May 

Scarlett May

Secretary

[CORPORATE SEAL]

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Samuel E. Beall, III, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Ruby Tuesday, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 6, 2012	/s/ Samuel E. Beall, III
	Samuel E. Beall, III
	Chairman of the Board, President
	and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Marguerite N. Duffy, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Ruby Tuesday, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 6, 2012	/s/ Marguerite N. Duffy
	Marguerite N. Duffy
	Senior Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ruby Tuesday, Inc. (the “Company”) on Form 10-Q for the period ended November 29, 2011 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Samuel E. Beall, III, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 6, 2012	/s/ Samuel E. Beall, III
	Samuel E. Beall, III
	Chairman of the Board, President
	and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ruby Tuesday, Inc. (the “Company”) on Form 10-Q for the period ended November 29, 2011 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Marguerite N. Duffy, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 6, 2012	/s/ Marguerite N. Duffy
	Marguerite N. Duffy
	Senior Vice President and
	Chief Financial Officer

XML

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES (Details) (USD $)	3 Months Ended		6 Months Ended
	Nov. 29, 2011		Nov. 29, 2011		Nov. 30, 2010	May 31, 2011
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,607,467,000		$ 1,607,467,000			$ 1,597,447,000
Less accumulated depreciation	591,996,000		591,996,000			566,296,000
Property and equipment, net	1,015,471,000		1,015,471,000			1,031,151,000
Assets held for sale, noncurrent	20,700,000		20,700,000			23,300,000
Assets held for sale	2,429,000		2,429,000			1,340,000
Carrying values of assets disposed	1,500,000		1,500,000		900,000
Net (loss) gain on sale on disposal of assets	100,000		100,000		100,000
Proceeds from disposal of assets	1,527,000		1,527,000		959,000
Operating Leases [Abstract]
Percentage of restaurants located on leased properties (in hundredths)	51.00%		51.00%
Number of company owned restaurants	742		742
Percentage of restaurants located on leased land (in hundredths)	66.00%		66.00%
Percentage of restaurants located on leased land and building (in hundredths)	34.00%		34.00%
Expiration of operating leases (in years)			25Y
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	256,730,000		256,730,000			256,761,000
Building [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	514,298,000		514,298,000			512,177,000
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	428,706,000		428,706,000			427,169,000
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	285,836,000		285,836,000			279,319,000
Other Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	95,468,000		95,468,000			93,944,000
Construction in Progress and Other [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 26,429,000	[1]	$ 26,429,000	[1]		$ 28,077,000	[1]

[1] Included in Construction in progress and other as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

XML

SUBSEQUENT EVENTS (Details) (Sale Leaseback Transaction [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Dec. 31, 2011
Sale Leaseback Transaction [Member]
Sale leaseback transaction subsequent event [Abstract]
Sale leaseback transaction, description	On December 30, 2011, we completed the sale-leaseback transaction of a Company-owned restaurant for gross cash proceeds of 2.3 million.
Cash Proceeds - Sale leaseback transaction of a Company-owned restaurant	$ 2.3
Carrying value of the property	$ 1.5

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Nov. 29, 2011
Divestiture Guarantee [Abstract]
Non-qualified defined benefit plans - divestiture guarantees	2
Litigation [Abstract]
Alleged Age Discrimination and Employment Act Violations	alleging the Company was in violation of the Age Discrimination in Employment Act “ADEA” by failing to hire employees within the protected age group in five Pennsylvania restaurants and one Ohio restaurant.
Dan Maddy v Ruby Tuesday [Member]
Litigation [Abstract]
Payment made by our secondary insurance carrier for Maddy lawsuit settlement	2.75
Number of claims administrators against whom Company has indemnification claims in the event of potential liability to secondary carrier	2
Divestiture Guarantee [Member]
Divestiture Guarantee [Abstract]
Divestiture guarantees related to MHC for employee benefit plans	2.7
Divestiture guarantees contingent liability for MHC portion of employee benefit plans	2.0

XML

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Nov. 29, 2011

FAIR VALUE MEASUREMENTS [Abstract]

Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis

The following table presents the fair values of our financial assets and liabilities measured at fair value on a recurring basis as of November 29, 2011 and May 31, 2011 (in thousands):

	Fair Value Measurements
	Level		November 29, 2011				May 31, 2011
Deferred compensation plan – Assets		1		$	7,920			$	8,792
Deferred compensation plan – Liabilities		1			(7,920	)			(8,792	)
Total				$	–			$	–

Fair Values of Financial Assets and Liabilities Measured on a Non-Recurring basis

The following table presents the fair values for those assets and liabilities measured on a non-recurring basis and remaining on our Condensed Consolidated Balance Sheets as of November 29, 2011 and May 31, 2011 (in thousands):

	Fair Value Measurements
		Level	November 29, 2011		May 31, 2011
Long-lived assets held for sale *		2	$	23,187	$	24,686
Long-lived assets held for use		2		839		747
Total			$	24,026	$	25,433

* Included in the carrying value of long-lived assets held for sale as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

The following table presents the losses recognized during the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis.  These losses are included in Closures and impairments in our Condensed Consolidated Statements of Operations (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	November 29, 2011		November 30, 2010		November 29, 2011		November 30, 2010
Long-lived assets held for sale	$	–	$	–	$	206	$	989
Long-lived assets held for use		630		12		630		349
	$	630	$	12	$	836	$	1,338

Carrying Amounts and Fair Values of Other Financial Instruments Not Measured on a Recurring Basis

The carrying amounts and fair values of our other financial instruments not measured on a recurring basis using fair value, however subject to fair value disclosures are as follows (in thousands):

	November 29, 2011		May 31, 2011
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Deferred Compensation Plan
investment in RTI common stock	$     1,513	$      1,035	$     1,556	$      1,653
Long-term debt and capital leases	342,157	343,432	344,274	348,272
Letters of credit	–	222	–	178

XML

FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS (Tables)

6 Months Ended

Nov. 29, 2011

FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS [Abstract]

Allocation of purchase prices of acquisitions

The purchase prices of acquisitions during fiscal 2011 have preliminarily been allocated based on initial fair value estimates as follows (in thousands):

Property and equipment	$	137,075
Goodwill		15,571
Reacquired franchise rights		10,242
Other intangible assets, net of liabilities of $1,288		735
Deferred income taxes		380
Long-term debt and capital leases		(147,005	)
Other net liabilities		(4,536	)
Notes receivable		(1,529	)
Net impact on fiscal 2011 Consolidated Balance Sheet		10,933
Gain on settlement of preexisting contracts, net		(4,906	)
Gain on acquisitions		(1,770	)
Net impact on fiscal 2011 Consolidated Statement of Income		(6,676	)
Aggregate cash purchase prices	$	4,257

Operating results for acquired franchise partnerships

The table below shows operating results attributable to the restaurants acquired from franchisees in fiscal 2011 that are included in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks  ended November 29, 2011 and November 30, 2010 (in thousands).  Amounts shown for the 13 and 26 weeks ended November 29, 2011 include results for all 109 restaurants acquired during fiscal 2011 while amounts shown for the 13 and 26 weeks ended November 30, 2010 include results for the 23 restaurants acquired during the first two quarters of fiscal 2011 (from August 4, 2010 or October 13, 2010, the dates of acquisition, through November 30, 2010).

	(Unaudited)
	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Total revenue	$	41,271		$	10,191	$	86,891	$	13,327
Cost of merchandise		12,243			2,954		25,637		3,826
Payroll and related costs		15,128			3,441		30,964		4,403
Other restaurant operating costs		9,010			2,391		18,775		3,104
Depreciation		2,183			698		4,267		817
Selling, general, and administrative, net		2,762			630		5,848		798
		41,326			10,114		85,491		12,948
(Loss)/income before income taxes	$	(55	)	$	77	$	1,400	$	379

Supplemental pro forma information

The following table presents supplemental pro forma information for the 13 and 26 weeks ended November 30, 2010 as if the 106 restaurants acquired during fiscal 2011 from franchise partnerships had occurred on June 2, 2010 for the 13 and 26 weeks ended November 30, 2010 (in thousands except per-share data):

	(Unaudited)
	Thirteen weeks ended			Twenty-six weeks ended
	November 30, 2010			November 30, 2010
Total revenue		$	325,753		$	672,772
Net income		$	4,643		$	17,075
Basic earnings per share		$	0.07		$	0.27
Diluted earnings per share		$	0.07		$	0.26

XML

RETIREMENT BENEFITS (Details) (USD $)	6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Nov. 29, 2011	May 31, 2011	Nov. 29, 2011 Pension Plans, Defined Benefit [Member]	Nov. 30, 2010 Pension Plans, Defined Benefit [Member]	Nov. 29, 2011 Pension Plans, Defined Benefit [Member]	Nov. 30, 2010 Pension Plans, Defined Benefit [Member]	Nov. 29, 2011 Postretirement Medical and Life Benefits [Member]	Nov. 30, 2010 Postretirement Medical and Life Benefits [Member]	Nov. 29, 2011 Postretirement Medical and Life Benefits [Member]	Nov. 30, 2010 Postretirement Medical and Life Benefits [Member]
RETIREMENT BENEFITS [Abstract]
Defined benefit pension plans	3
Estimated contributions to be made in remainder of fiscal year	$ 400,000
Lump sum pension payment accrued liability for CEO	8,100,000
Defined Benefit Plan Disclosure [Line Items]
Service cost			134,000	129,000	268,000	258,000	2,000	2,000	4,000	4,000
Interest cost			576,000	573,000	1,152,000	1,146,000	18,000	19,000	36,000	38,000
Expected return on plan assets			(126,000)	(98,000)	(252,000)	(196,000)
Amortization of prior service cost			64,000	82,000	128,000	164,000	(14,000)	(15,000)	(28,000)	(30,000)
Recognized actuarial loss			426,000	398,000	852,000	796,000	34,000	28,000	68,000	56,000
Net periodic benefit cost			$ 1,074,000	$ 1,084,000	$ 2,148,000	$ 2,168,000	$ 40,000	$ 34,000	$ 80,000	$ 68,000
Time following retirement before payment is to be made (in months)	6M
Defined contribution plans		2

XML

ACCOUNTS RECEIVABLE (Details) (USD $)	3 Months Ended
	Nov. 29, 2011	May 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	$ 7,275,000	$ 7,531,000
Past due days for franchise fee revenue not recognized	60 days past due
Unearned income for franchise fees	1,500,000	1,200,000
Due for third-party gift card sales	1,300,000	1,300,000
Due from our distributor for purchases of lobster	900,000	700,000
Amounts due relating to insurance claims	500,000	1,200,000
Rebates Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	862,000	1,055,000
Amounts Due from Franchisees [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	2,597,000	2,506,000
Other Receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	$ 3,816,000	$ 3,970,000

XML

FAIR VALUE MEASUREMENTS (Details) (USD $) In Thousands, unless otherwise specified							3 Months Ended		6 Months Ended
	Nov. 29, 2011 Carrying (Reported) Amount, Fair Value Disclosure [Member]	May 31, 2011 Carrying (Reported) Amount, Fair Value Disclosure [Member]	Nov. 29, 2011 Estimate of Fair Value, Fair Value Disclosure [Member]	May 31, 2011 Estimate of Fair Value, Fair Value Disclosure [Member]	Nov. 29, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	May 31, 2011 Fair Value, Measurements, Recurring [Member] Fair Value, Inputs, Level 1 [Member]	Nov. 29, 2011 Fair Value, Measurements, Nonrecurring [Member]	Nov. 30, 2010 Fair Value, Measurements, Nonrecurring [Member]	Nov. 29, 2011 Fair Value, Measurements, Nonrecurring [Member]	Nov. 30, 2010 Fair Value, Measurements, Nonrecurring [Member]	Nov. 29, 2011 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 2 [Member]		May 31, 2011 Fair Value, Measurements, Nonrecurring [Member] Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan - Assets					$ 7,920	$ 8,792
Deferred compensation plan - Liabilities					(7,920)	(8,792)
Total					0	0
Long-lived assets held for sale											23,187	[1]	24,686	[1]
Long-lived assets held for use											839		747
Total											24,026		25,433
Long-lived assets held for sale included in construction in progress											20,700		23,300
Long-lived assets held for sale							0	0	206	989
Long-lived assets held for use							630	12	630	349
Total impairment of long-lived assets							630	12	836	1,338
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Deferred Compensation Plan investment in RTI common stock	1,513	1,556	1,035	1,653
Long-term debt and capital leases	342,157	344,274	343,432	348,272
Letters of credit	$ 0	$ 0	$ 222	$ 178

[1] Included in the carrying value of long-lived assets held for sale as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

XML

FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS

6 Months Ended

Nov. 29, 2011

FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS [Abstract]

FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS

NOTE D – FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS

As part of our strategy to generate incremental revenue and EBITDA through new concept conversions and franchise partnership acquisitions, as discussed below, during fiscal 2011 we acquired 109 Ruby Tuesday restaurants, including 106 purchased from certain of our franchise partnerships and three purchased from a traditional domestic franchisee.  Of these 109 Ruby Tuesday restaurants, the following 23 restaurants were acquired as the result of the acquisition of two franchise partnerships and a traditional domestic franchise during the first two quarters of fiscal 2011.

On August 4, 2010, we acquired the remaining 99% and 50% of the membership interests of RT Long Island Franchise, LLC (“RT Long Island”) and RT New England Franchise, LLC (“RT New England”), respectively, thereby increasing our ownership to 100% of these companies.  RT Long Island and RT New England, previously franchise partnerships with 10 Ruby Tuesday restaurants each, were acquired for $0.2 million plus assumed debt.  As further consideration for the RT Long Island transaction, we surrendered collection of the note receivable and line of credit due from the franchise.  The note and line of credit, net of allowances for doubtful accounts and unearned revenue, totaled $0.4 million at the time of the transaction.RT Long Island and RT New England had total debt of $24.3 million at the time of acquisition, $1.9 million of which was payable to RTI.

On October 13, 2010, we acquired three Ruby Tuesday restaurants from a traditional domestic franchise in Kentucky for $1.6 million in cash.

We acquired the remaining 86 restaurants during the final two quarters of fiscal 2011, as follows.

On February 2, 2011, we acquired the remaining 50% of the membership interests of RT Western Missouri Franchise, LLC; RT Omaha Franchise, LLC; RT KCMO Franchise, LLC (“RT KCMO”); and RT St. Louis

Franchise, LLC; and the remaining 99% of the membership interests of RT Indianapolis Franchise, LLC (“RT Indianapolis”); RT Portland Franchise, LLC; and RT Denver Franchise, LP; thereby increasing our ownership to 100% of these seven companies.  These franchise partnerships collectively operated 72 restaurants at the time of acquisition, and were acquired for $0.5 million plus assumed debt.  As further consideration for these transactions, we surrendered collection of notes receivable and lines of credit due from certain of these franchisees.  The notes and lines of credit, net of allowances for doubtful accounts, totaled $0.9 million at the time of the transactions.  At the time of acquisition, these franchise partnerships had total debt of $106.6 million, $3.8 million of which was payable to RTI.

On February 25, 2011, we acquired one Ruby Tuesday restaurant from RT Utah Franchise, LLC (“RT Utah”), a franchise partnership in which we had a 1% ownership interest, for $2.0 million.  Shortly before completion of this transaction, RT Utah closed its other five restaurants.

On May 4, 2011, we acquired the remaining 50% of the membership interest of RT Minneapolis Franchise, LLC; and the remaining 99% of the membership interest of RT Las Vegas Franchise, LLC; thereby increasing our ownership to 100% of these two companies.  These franchise partnerships collectively operated 13 restaurants at the time of acquisition, and were acquired for assumed debt.  At the time of acquisition, these franchise partnerships had total debt of $18.7 million, $0.9 million of which was payable to RTI.

Our Condensed Consolidated Financial Statements reflect the results of operations of these acquired restaurants subsequent to the dates of acquisition.

The purchase prices of acquisitions during fiscal 2011 have preliminarily been allocated based on initial fair value estimates as follows (in thousands):

Property and equipment	$	137,075
Goodwill		15,571
Reacquired franchise rights		10,242
Other intangible assets, net of liabilities of $1,288		735
Deferred income taxes		380
Long-term debt and capital leases		(147,005	)
Other net liabilities		(4,536	)
Notes receivable		(1,529	)
Net impact on fiscal 2011 Consolidated Balance Sheet		10,933
Gain on settlement of preexisting contracts, net		(4,906	)
Gain on acquisitions		(1,770	)
Net impact on fiscal 2011 Consolidated Statement of Income		(6,676	)
Aggregate cash purchase prices	$	4,257

The RT Long Island, RT Indianapolis, and RT KCMO acquisitions were considered bargain purchases as the purchase prices were less than the values assigned to the assets and liabilities acquired.  For the 26 weeks ended November 30, 2010, a preliminary bargain purchase gain of $2.6 million, as well as a $1.0 million loss on settlement of preexisting contracts, was included in Other restaurant operating costs in our Condensed Consolidated Statements of Operations.  These preliminary estimates were adjusted in subsequent quarters as additional information was received.  The amounts in the table above include the revised amounts for RT Long Island and RT New England, which were acquired during the first quarter of fiscal 2011, as well as amounts recorded for RT Indianapolis and RT KCMO.

We recorded $15.6 million of goodwill due to the purchase price exceeding the estimated fair value of the net assets acquired in certain of the acquisitions.  Of the goodwill recorded, we anticipate that approximately $8.2 million will be nondeductible for tax purposes.

We amortize the $10.2 million of reacquired franchise rights associated with these acquisitions on a straight-line basis over the remaining term of the franchise operating agreements, which are approximately two to 12 years from the dates of acquisition.

Other intangible assets, net of liabilities consist of assets and liabilities resulting from the terms of acquired operating lease contracts being favorable or unfavorable relative to market terms of comparable leases on the acquisition date.  These assets and liabilities totaled $2.0 million and $1.3 million, respectively, at the time of acquisition and will be amortized as a component of rent expense over the remaining lives of the leases, which are approximately one to 33 years.

The table below shows operating results attributable to the restaurants acquired from franchisees in fiscal 2011 that are included in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks  ended November 29, 2011 and November 30, 2010 (in thousands).  Amounts shown for the 13 and 26 weeks ended November 29, 2011 include results for all 109 restaurants acquired during fiscal 2011 while amounts shown for the 13 and 26 weeks ended November 30, 2010 include results for the 23 restaurants acquired during the first two quarters of fiscal 2011 (from August 4, 2010 or October 13, 2010, the dates of acquisition, through November 30, 2010).

	(Unaudited)
	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Total revenue	$	41,271		$	10,191	$	86,891	$	13,327
Cost of merchandise		12,243			2,954		25,637		3,826
Payroll and related costs		15,128			3,441		30,964		4,403
Other restaurant operating costs		9,010			2,391		18,775		3,104
Depreciation		2,183			698		4,267		817
Selling, general, and administrative, net		2,762			630		5,848		798
		41,326			10,114		85,491		12,948
(Loss)/income before income taxes	$	(55	)	$	77	$	1,400	$	379

The following table presents supplemental pro forma information for the 13 and 26 weeks ended November 30, 2010 as if the 106 restaurants acquired during fiscal 2011 from franchise partnerships had occurred on June 2, 2010 for the 13 and 26 weeks ended November 30, 2010 (in thousands except per-share data):

	(Unaudited)
	Thirteen weeks ended		Twenty-six weeks ended
	November 30, 2010		November 30, 2010
Total revenue	$	325,753	$	672,772
Net income	$	4,643	$	17,075
Basic earnings per share	$	0.07	$	0.27
Diluted earnings per share	$	0.07	$	0.26

The unaudited pro forma consolidated results were prepared using the acquisition method of accounting and are based on the historical financial information of RTI and the franchises, reflected in fiscal 2011 RTI and franchise results of operations.  The historical financial information has been adjusted to give effect to the pro forma events that are:  (1) directly attributable to the acquisitions, (2) factually supportable and (3) expected to have a continuing impact on the combined results.   The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisitions on June 2, 2010.  In addition, the unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company nor do they reflect the expected realization of any cost savings or otherwise improved profits associated with the acquisitions.  The unaudited pro forma consolidated results for the 13 and 26 weeks ended November 30, 2010 reflect the following pro forma pre-tax adjustments:

·   Elimination of the franchises' historical intangible asset amortization expense (negligible and approximately $0.1 million, respectively).

·   Elimination of RTI's franchise revenue (negligible and approximately $0.4 million, respectively).

·   Elimination of RTI's support service fee income and marketing reimbursements (approximately $0.2 million and $1.3 million, respectively).

·   Elimination of RTI's equity in earnings of unconsolidated franchises (negligible and approximately $0.2 million, respectively).

·   Elimination of RTI's bad debt charges relating to notes receivable and lines of credit due from the acquired franchises (approximately $0.1 million of expense and $0.1 million of income, respectively).

·   Additional amortization expense (approximately $0.3 million and $0.7 million, respectively) related to reacquired franchise rights.

·   Additional depreciation expense (approximately $0.2 million and $0.5 million, respectively) related to the fair value adjustments to property and equipment acquired.

·   Reduced interest expense (approximately $0.3 million and $0.6 million, respectively) related to the fair value adjustments of acquired franchise debt.

All of the above adjustments were adjusted for the applicable tax impact, which for the above would be the statutory tax rate of 39.7%.  In addition, the pro forma net income and earnings per share amounts presented above reflect our estimates of the franchises' FICA Tip and Work Opportunity Tax Credits for the portions of the fiscal year prior to the dates of acquisition.  These credits were $0.2 million and $0.5 million, respectively, for the 13 and 26 weeks ended November 30, 2010.

License Acquisitions

On September 13, 2010, we entered into a licensing agreement with LFMG International, LLC which allows us to operate multiple restaurants under the Lime Fresh Mexican Grill® (“Lime”) name.  Lime is a fast-casual Mexican concept that currently operates several restaurants primarily in the vicinity of Miami, Florida.  The Lime concept menu features items such as homemade tortilla chips, customizable nachos, flautas, salads, soups, fajitas, quesadillas, tacos, burritos, and salsa and guacamole.  Under the terms of the agreement, we paid an initial development fee of $1.0 million and will pay a license agreement fee of $5,000 for each Lime restaurant we open up to a maximum of 200 restaurants.  In addition, we will pay a royalty fee of 2.0%, and an advertising fee of 1.0%, of gross sales of any Lime restaurant that we open.  LFMG International, LLC has the option to terminate future development rights if we do not operate at least 12 Lime restaurants within the first two years of the effective date of the licensing agreement or open at least six restaurants per year for the remainder of the 20-year agreement.  As of November 29, 2011, we owned and operated one Lime restaurant.  Management has yet to determine how many additional Lime restaurants will be opened.

Additionally, on July 22, 2010, following the approval of the Audit Committee of our Board of Directors, we entered into a licensing agreement with Gourmet Market, Inc. which is owned by our Chief Executive Officer's brother, Price Beall.  The licensing agreement allows us to operate multiple restaurants under the Truffles® name.  Truffles is an upscale café concept that currently operates several restaurants in the vicinity of Hilton Head Island, South Carolina.  The Truffles concept offers a diverse menu featuring soups, salads, and sandwiches, a signature chicken pot pie, house-breaded fried shrimp, pasta, ribs, steaks, and a variety of desserts.

Under the terms of the agreement, we will pay a licensing fee to Gourmet Market, Inc. of 2.0% of gross sales of any Truffles we open.  Additionally, we will pay Gourmet Market, Inc. a monthly fee for up to two years for consulting services to be provided by Price Beall to assist us in developing and opening Truffles restaurants under the terms of the licensing agreement.  During the first 12 months of the agreement we will pay $20,833 per month for such services.  During the second 12 months of the agreement we will pay either $20,833 per month if we have a communicated plan to develop three or more Truffles restaurants or $10,417 per month if we have a communicated plan to develop two or fewer Truffles restaurants.  Gourmet Market, Inc. has the option to terminate future development rights if we do not operate 18 or more Truffles restaurants within five years or 40 or more Truffles within 10 years of the effective date of the agreement.  Management has yet to determine if it will open 18 or more Truffles restaurants within five years or 40 or more Truffles within 10 years.  We opened our first Truffles in Atlanta, Georgia in December 2010 and our second in Orlando, Florida in November 2011.  During the 13 and 26 weeks ended November 29, 2011 and November 30, 2010, we paid Gourmet Market, Inc. $38,265 and $98,097, and $62,500 and $83,333, respectively, under the terms of the agreement.

XML

INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 29, 2011	Nov. 30, 2010	Nov. 29, 2011	Nov. 30, 2010	May 31, 2011
INCOME TAXES [Abstract]
Unrecognized tax benefits	$ 5.1		$ 5.1		$ 5.2
Total amount of unrecognized tax benefits that impact the effective tax rate	3.4		3.4		3.4
Tax position included in unrecognized tax benefits liabilty	1.8		1.8
Portion of liability for unrecognized tax benefits subject to change	0.2		0.2
Accrued interest and penalties	1.9		1.9		1.6
Increased accrued interest and penalties			0.3
Increased accrued interest and penalties which affected the effective tax rate			$ 0.2
Effective tax rate (in hundredths)	(14.60%)	13.30%	42.80%	20.50%

XML

CLOSURES AND IMPAIRMENTS EXPENSE (Tables)

6 Months Ended

Nov. 29, 2011

Closures And Impairments Expense [Abstract]

Closures and Impairments Expenses

Closures and impairment expenses include the following for the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011			November 30, 2010
Property impairments	$	630		$	12	$	836		$	1,338
Closed restaurant lease reserves		(153	)		327		(74	)		663
Other closing costs		226			9		416			83
(Gain)/loss on sale of surplus properties		(50	)		–		(80	)		3
	$	653		$	348	$	1,098		$	2,087

Future lease obligations associated with closed properties

A rollforward of our future lease obligations associated with closed properties is as follows (in thousands):

	Lease Obligations
Balance at May 31, 2011	$	2,660
Closing expense including rent and other lease charges		(74	)
Payments		(522	)
Other adjustments		(138	)
Balance at November 29, 2011	$	1,926

XML

LONG TERM DEBT AND CAPITAL LEASES (Tables)

6 Months Ended

Nov. 29, 2011

LONG TERM DEBT AND CAPITAL LEASES [Abstract]

Long-term debt and capital lease obligations

Long-term debt and capital lease obligations consist of the following (in thousands):

	November 29, 2011		May 31, 2011
Revolving credit facility	$	182,000	$	177,000
Series B senior notes,
due April 2013		44,442		44,442
Mortgage loan obligations		115,471		122,546
Capital lease obligations		244		286
		342,157		344,274
Less current maturities		17,357		15,090
	$	324,800	$	329,184

XML

COMPREHENSIVE (LOSS)/INCOME (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 29, 2011	Nov. 30, 2010	Nov. 29, 2011	Nov. 30, 2010
COMPREHENSIVE (LOSS)/INCOME [Abstract]
Net (loss)/income	$ (2,001)	$ 4,565	$ 1,092	$ 16,962
Pension liability reclassification, net of tax	308	298	616	595
Comprehensive (loss)/income	$ (1,693)	$ 4,863	$ 1,708	$ 17,557

XML

RETIREMENT BENEFITS (Tables)

6 Months Ended

Nov. 29, 2011

RETIREMENT BENEFITS [Abstract]

Defined Benefit Plan Disclosure

The following tables detail the components of net periodic benefit costs and the amounts recognized in our Condensed Consolidated Financial Statements for the Retirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the “Pension Plans”) and the Postretirement Medical and Life Benefits plans (in thousands):

	Pension Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	November 29,			November 30,			November 29,			November 30,
	2011			2010			2011			2010
Service cost	$	134		$	129		$	268		$	258
Interest cost		576			573			1,152			1,146
Expected return on plan assets		(126	)		(98	)		(252	)		(196	)
Amortization of prior service cost		64			82			128			164
Recognized actuarial loss		426			398			852			796
Net periodic benefit cost	$	1,074		$	1,084		$	2,148		$	2,168
	Postretirement Medical and Life Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	November 29,			November 30,			November 29,			November 30,
	2011			2010			2011			2010
Service cost	$	2		$	2		$	4		$	4
Interest cost		18			19			36			38
Amortization of prior service cost		(14	)		(15	)		(28	)		(30	)
Recognized actuarial loss		34			28			68			56
Net periodic benefit cost	$	40		$	34		$	80		$	68

XML

COMPREHENSIVE (LOSS)/INCOME (Tables)

6 Months Ended

Nov. 29, 2011

COMPREHENSIVE (LOSS)/INCOME [Abstract]

Comprehensive Income (Loss)

U.S. GAAP require the disclosure of certain revenue, expenses, gains andlosses that are excluded from net (loss)/income.  Items that currently impact our other comprehensive income are pension liability adjustments.  Amounts shown in the table below are in thousands.

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Net (loss)/income	$	(2,001	)	$	4,565	$	1,092	$	16,962
Pension liability reclassification, net of tax		308			298		616		595
Comprehensive (loss)/income	$	(1,693	)	$	4,863	$	1,708	$	17,557

XML

FRANCHISE PROGRAMS

6 Months Ended

Nov. 29, 2011

FRANCHISE PROGRAMS [Abstract]

FRANCHISE PROGRAMS

NOTE C – FRANCHISE PROGRAMS

As of November 29, 2011, our traditional domestic and international franchisees collectively operated 87 Ruby Tuesday restaurants.  We do not own any equity interest in our traditional franchisees.  As discussed further in Note D to the Condensed Consolidated Financial Statements, during fiscal 2011 we acquired the remaining membership interests of 11 franchise partnerships which operated 105 Ruby Tuesday restaurants, an additional Ruby Tuesday restaurant from a twelfth franchise partnership, and three Ruby Tuesday restaurants from a traditional domestic franchise.

Under the terms of the franchise operating agreements, we require all domestic franchisees to contribute a percentage, currently 0.5%, of monthly gross sales to a national advertising fund formed to cover their pro rata portion of the production and airing costs associated with our national advertising campaign.  Under the terms of those agreements, we have the right to charge up to 3.0% of monthly gross sales for this national advertising fund.

Advertising amounts received from domestic franchisees are considered by RTI to be reimbursements, recorded on an accrual basis as earned, and have been netted against selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

In addition to the advertising fee discussed above, our franchise agreements allow us to charge up to a 1.5% support service fee and a 1.5% marketing and purchasing fee.  For the 13 and 26 weeks ended November 29, 2011 and November 30, 2010, we recorded $0.3 million and $0.6 million, respectively in fiscal 2012, and $0.4 million and $1.8 million, respectively in fiscal 2011, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Operations.

XML

SHARE-BASED EMPLOYEE COMPENSATION (Tables)

6 Months Ended

Nov. 29, 2011

SHARE-BASED EMPLOYEE COMPENSATION [Abstract]

Summary of stock option activity

The following table summarizes the activity in options for the 26 weeks ended November 29, 2011 under these stock option plans (in thousands except per-share data):

				Weighted-
				Average
	Options			Exercise Price
Balance at May 31, 2011		3,239		$	13.10
Granted		253			7.87
Exercised		(23	)		5.26
Forfeited		(65	)		28.84
Balance at November 29, 2011		3,404		$	12.47
Exercisable at November 29, 2011		2,327		$	14.30

Summary of restricted stock activity

The following table summarizes our restricted stock activity for the 26 weeks ended November 29, 2011 (in thousands except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Non-vested at May 31, 2011		299		$	7.24
Granted		384			7.87
Vested		(242	)		7.39
Forfeited		–			–
Non-vested at November 29, 2011		441		$	7.70

				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Non-vested at May 31, 2011		551		$	8.22
Granted		274			7.68
Vested		(122	)		8.02
Forfeited		(1	)		9.39
Non-vested at November 29, 2011		702		$	8.04

XML

LONG TERM DEBT AND CAPITAL LEASES (Details) (USD $)	6 Months Ended		6 Months Ended		6 Months Ended			6 Months Ended		6 Months Ended
	May 31, 2011	Nov. 29, 2011	Nov. 29, 2011 Line of Credit [Member]	May 31, 2011 Line of Credit [Member]	Nov. 29, 2011 Line of Credit [Member] Line of Credit Amendment [Member]	Nov. 29, 2011 Line of Credit [Member] SwingLine[Member]	Nov. 29, 2011 Line of Credit [Member] Franchise Facility [Member]	Nov. 29, 2011 Series B Senior Notes due April 2013 [Member]	May 31, 2011 Series B Senior Notes due April 2013 [Member]	Nov. 29, 2011 Mortgages [Member]	May 31, 2011 Mortgages [Member]	Nov. 29, 2011 Capital Lease Obligations [Member]	May 31, 2011 Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Long-term debt	$ 344,274,000	$ 342,157,000	$ 182,000,000	$ 177,000,000				$ 44,442,000	$ 44,442,000	$ 115,471,000	$ 122,546,000	$ 244,000	$ 286,000
Less current maturities	15,090,000	17,357,000
Long-term debt and capital leases, less current maturities	329,184,000	324,800,000
Line of credit initiation date			2010-12-01		2011-07-19
Revolving credit agreement (in years)			5Y
Revolving credit facility, borrowing capacity	320,000,000				370,000,000
Option to increase line of credit borrowing capacity, additional amount	50,000,000				60,000,000
Option to increase line of credit borrowing capacity, adjusted amount	370,000,000				380,000,000
Increase to revolving commitments					380,000,000
Credit facility Sub-commitment agreement	50,000,000					40,000,000	50,000,000
Revolving credit facility borrowing rate			The interest rates charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option we choose to utilize. Our Base Rate for borrowings is defined to be the higher of Bank of America's prime rate, the Federal Funds Rate plus 0.5%, or an adjusted LIBO Rate plus 1.00%, plus an applicable margin ranging from 0.25% to 1.25%. The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.25%.
Floating rate of interest (in hundredths)			2.58%	2.27%
Line of credit facility, remaining borrowing capacity			188,700,000
Maturity date of long-term debt			Dec. 01, 2015					Apr. 01, 2013
Issuance of notes payable								150,000,000
Interest rate of long-term debt (in hundredths)								7.17%	7.17%
Maturity date range of debt, start										2011-12-31
Maturity date range of debt, end										2024-03-31
Range of loan balances, maximum										$ 8,500,000
Interest rates of loans, minimum (in hundredths)										3.35%
Interest rates of loans, maximum (in hundredths)										11.28%

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Nov. 29, 2011	May 31, 2011
Current assets:
Cash and short-term investments	$ 8,886	$ 9,722
Accounts receivable	7,275	7,531
Inventories:
Merchandise	29,107	25,627
China, silver and supplies	9,292	8,843
Income tax receivable	3,678	3,077
Deferred income taxes	14,518	14,429
Prepaid rent and other expenses	11,778	12,797
Assets held for sale	2,429	1,340
Total current assets	86,963	83,366
Property and equipment, net	1,015,471	1,031,151
Goodwill	15,571	15,571
Other assets	53,692	56,938
Total assets	1,171,697	1,187,026
Current liabilities:
Accounts payable	30,540	29,807
Accrued liabilities:
Taxes, other than income and payroll	12,333	13,695
Payroll and related costs	25,191	27,559
Insurance	6,882	6,581
Deferred revenue - gift cards	8,685	8,731
Rent and other	19,037	17,861
Current portion of long-term debt, including capital leases	17,357	15,090
Total current liabilities	120,025	119,324
Long-term debt and capital leases, less current maturities	324,800	329,184
Deferred income taxes	43,408	42,923
Deferred escalating minimum rent	45,728	44,291
Other deferred liabilities	59,123	59,591
Total liabilities	593,084	595,313
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; (authorized: 100,000 shares; issued: 63,778 shares at 11/29/11; 65,098 shares at 5/31/11)	638	651
Capital in excess of par value	90,147	104,941
Retained earnings	500,265	499,173
Deferred compensation liability payable in Company stock	1,513	1,556
Company stock held by Deferred Compensation Plan	(1,513)	(1,556)
Accumulated other comprehensive loss	(12,437)	(13,052)
Total shareholders' equity	578,613	591,713
Total liabilities & shareholders' equity	$ 1,171,697	$ 1,187,026

XML

SHARE-BASED EMPLOYEE COMPENSATION (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Nov. 29, 2011
SHARE-BASED EMPLOYEE COMPENSATION [Abstract]
Vesting period of restricted shares issued and options granted, minimum (in years)	1Y
Vesting period of restricted shares issued and options granted, maximum (in years)	3Y
Vesting period of options issued (in months)	30M
Exercisable period of options issued (in years)	5Y
Reserved shares of common stock under the Plan (in shares)	122,000
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the plan (in shares)	58,000
Common stock currently available for issuance (in shares)	64,000
Performance Based - Incentive [Member]
Weighted average grant-date fair value [Abstract]
Service-based restricted shares of common stock granted to certain employees (in shares)	384,000
Performance Based - Incentive [Member] | Chief Executive Officer [Member]
Weighted average grant-date fair value [Abstract]
Shares of common stock awarded to retirement-eligible CEO (in shares)	203,000
Recognized expense on the grant date of common stock award to retirement-eligible CEO	0.7
Service Based - Deferred Compensation [Member]
Weighted average grant-date fair value [Abstract]
Service-based restricted shares of common stock granted to certain employees (in shares)	186,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance (in shares)	3,239
Granted (in shares)	253
Exercised (in shares)	(23)
Forfeited (in shares)	(65)
Ending balance (in shares)	3,404
Exercisable at end of period (in shares)	2,327
Weighted average grant-date fair value [Abstract]
Beginning balance (in dollars per share)	13.10
Exercised (in dollars per share)	5.26
Forfeited (in dollars per share)	28.84
Ending balance (in dollars per share)	12.47
Exercisable at end of period (in dollars per share)	14.30
Out-of-the money options included in outstanding balance (in shares)	2,753,000
Out-of-the money options included in the outstanding balance, expiring during the next two fiscal years (in shares)	852,000
Unrecognized pre-tax compensation expense related to share based compensation	0.8
Unrecognized pre-tax compensation expense expected to be recognized over a weighted average period (in years)	1.1
Stock Options [Member] | Service Based - Deferred Compensation [Member] | Chief Executive Officer [Member]
Weighted average grant-date fair value [Abstract]
Options granted to CEO (in shares)	253,000
Expensed related to stock options awarded to CEO	1.2
Restricted Stock [Member]
Weighted average grant-date fair value [Abstract]
Unrecognized pre-tax compensation expense related to share based compensation	3.8
Unrecognized pre-tax compensation expense expected to be recognized over a weighted average period (in years)	1.7
Restricted shares granted to non-employee directors under the terms of the Directors' Plan (in shares)	88,000
Restricted Stock [Member] | Performance Based - Incentive [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance (in shares)	299
Granted (in shares)	384
Vested (in shares)	(242)
Forfeited (in shares)	0
Ending balance (in shares)	441
Weighted average grant-date fair value [Abstract]
Beginning balance (in dollars per share)	7.24
Granted (in dollars per share)	7.87
Vested (in dollars per share)	7.39
Forfeited (in dollars per share)	0
Ending balance (in dollars per share)	7.70
Restricted Stock [Member] | Service Based - Deferred Compensation [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning balance (in shares)	551
Granted (in shares)	274
Vested (in shares)	(122)
Forfeited (in shares)	(1)
Ending balance (in shares)	702
Weighted average grant-date fair value [Abstract]
Beginning balance (in dollars per share)	8.22
Granted (in dollars per share)	7.68
Vested (in dollars per share)	8.02
Forfeited (in dollars per share)	9.39
Ending balance (in dollars per share)	8.04
SIP 2003 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the plan (in shares)	5,090,000
SIP 2003 [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the plan (in shares)	2,363,000
Common stock currently available for issuance (in shares)	2,727,000
SIP 1996 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the plan (in shares)	1,024,000
SIP 1996 [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the plan (in shares)	982,000
Common stock currently available for issuance (in shares)	42,000

XML

BASIS OF PRESENTATION

6 Months Ended

Nov. 29, 2011

BASIS OF PRESENTATION [Abstract]

BASIS OF PRESENTATION

NOTE A – BASIS OF PRESENTATION

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” “we” or the “Company”), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill®, Marlin & Ray's™, Truffles®, and Wok Hay® casual dining restaurants.  We also franchise the Ruby Tuesday concept in select domestic and international markets.  The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring entries) considered necessary for a fair presentation have been included.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Operating results for the 13- and 26-week periods ended November 29, 2011 are not necessarily indicative of results that may be expected for the year ending June 5, 2012.

The condensed consolidated balance sheet at May 31, 2011 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in RTI's Annual Report on Form 10-K for the fiscal year ended May 31, 2011.

XML

FRANCHISE PROGRAMS (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended					12 Months Ended		12 Months Ended
	Nov. 29, 2011	Aug. 30, 2011	Nov. 30, 2010	Aug. 30, 2010	Nov. 29, 2011 No Equity Interest in Operated Ruby Tuesday Restaurant [Member]	May 31, 2011 Eleven Franchise Partnerships [Member]	Nov. 29, 2011 Eleven Franchise Partnerships [Member]	May 31, 2011 Traditional Franchise Partnerships [Member]	May 31, 2011 Twelfth Franchise Partnership [Member]
Franchisor Disclosure [Line Items]
Restaurants operated by traditional franchisees					87
Acquired remaining membership interest, franchise partnerships							11
Restaurants acquired from traditional and partnership franchises						105		3	1
Operating agreements, national advertising fund gross sales contribution (in hundredths)	0.50%
Operating agreements, national advertising fund gross sales contribution, maximum (in hundredths)	3.00%
Operating agreements, support service fee, gross sales contribution, maximum (in hundredths)	1.50%
Operating agreements, marketing and purchase fee, gross sales contribution, maximum (in hundredths)	1.50%
Support service and marketing and purchasing fees	$ 0.3	$ 0.4	$ 0.6	$ 1.8

XML

SUBSEQUENT EVENTS

6 Months Ended

Nov. 29, 2011

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE Q – SUBSEQUENT EVENTS

On December 30, 2011, we completed the sale-leaseback transaction of a Company-owned restaurant for gross cash proceeds of $2.3 million.  The carrying value of the property was $1.5 million at the time of sale.  The gain recorded on this transaction will be deferred and recognized on a straight-line basis over the term of the lease.

XML

FISCAL 2011 BUSINESS AND LICENSE ACQUISITIONS (Details) (USD $)	3 Months Ended		6 Months Ended			12 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended		6 Months Ended	12 Months Ended		3 Months Ended	6 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended	12 Months Ended		12 Months Ended			6 Months Ended				6 Months Ended		6 Months Ended
	Nov. 29, 2011	Nov. 30, 2010	Nov. 29, 2011	May 31, 2011	Nov. 30, 2010	May 31, 2011	May 31, 2010	Nov. 29, 2011 Franchise Partnership Acquisitions [Member]	Nov. 30, 2010 Franchise Partnership Acquisitions [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member]	Nov. 30, 2010 Franchise Partnership Acquisitions [Member]	May 31, 2011 Franchise Partnership Acquisitions [Member]	Aug. 04, 2010 Franchise Partnership Acquisitions [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] RT Minneapolis Franchise, LLC [Member]	May 31, 2011 Franchise Partnership Acquisitions [Member] RT Minneapolis Franchise, LLC [Member]	May 04, 2011 Franchise Partnership Acquisitions [Member] RT Minneapolis Franchise, LLC [Member]	Aug. 30, 2010 Franchise Partnership Acquisitions [Member] North East Acquisitions [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] North East Acquisitions [Member]	Aug. 04, 2010 Franchise Partnership Acquisitions [Member] North East Acquisitions [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member]	Mar. 01, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Utah Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Utah Franchise, LLC [Member]	Feb. 25, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Utah Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Western Missouri Franchise, LLC [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Western Missouri Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Omaha Franchise, LLC [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Omaha Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT KMCO Franchise, LLC [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT KMCO Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT St Louis Franchise, LLC [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT St Louis Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Indianapolis Franchise, LLC [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Indianapolis Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Portland Franchise, LLC [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Portland Franchise, LLC [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Denver Franchise, LP [Member]	Feb. 02, 2011 Franchise Partnership Acquisitions [Member] Mid West and West [Member] RT Denver Franchise, LP [Member]	Nov. 29, 2011 Franchise Partnership Acquisitions [Member] Minneapolis and Las Vegas [Member]	May 31, 2011 Franchise Partnership Acquisitions [Member] Minneapolis and Las Vegas [Member]	May 04, 2011 Franchise Partnership Acquisitions [Member] Minneapolis and Las Vegas [Member]	May 31, 2011 Traditional Domestic Franchises [Member]	May 31, 2011 Traditional Domestic Franchises [Member] Mid West and West [Member]	Oct. 13, 2010 Traditional Domestic Franchises [Member] Mid West and West [Member]	Nov. 29, 2011 Gourmet Market, Inc [Member]	Nov. 29, 2011 Franchise Rights [Member]	Nov. 29, 2011 Assets Intangible Assets Operating Lease Contracts [Member]	May 31, 2011 Assets Intangible Assets Operating Lease Contracts [Member]	Nov. 29, 2011 Liabilities Intangible Assets Unfavorable Operating Lease Contracts [Member]	May 31, 2011 Liabilities Intangible Assets Unfavorable Operating Lease Contracts [Member]	Nov. 29, 2011 LFMG International [Member]
Business Acquisition [Line Items]
Number of restaurants acquired				86	23	109						106					20						1																13			3	3
Effective date of acquisition															2011-05-04			2010-08-04				2011-02-25			2011-02-02		2011-02-02		2011-02-02		2011-02-02		2011-02-02		2011-02-02		2011-02-02			2011-05-04			2010-10-13
Ownership interest (in hundredths)										100.00%				100.00%				100.00%							100.00%		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%		100.00%
Ownership interest acquired (in hundredths)													50.00%			50.00%			99.00%							50.00%		50.00%		50.00%		50.00%		99.00%		99.00%		99.00%			99.00%
Ownership interest prior to acquisition (in hundredths)																							1.00%
Number of restaurants operated by franchise acquired																		10		72
Purchase consideration cash																			$ 200,000		$ 500,000			$ 2,000,000																				$ 1,600,000
Notes and lines of credit, net of allowances for doubtful accounts																			400,000		900,000
Franchise partnerships acquired total debt																			24,300,000		106,600,000																				18,700,000
Franchise partnerships debt payable to acquirer																			1,900,000		3,800,000																				900,000
Number of restaurants closed before acquisition transaction																							5
Preliminary bargain purchase gain			2,600,000
(Gain) / loss on settlement of preexisting contracts, net			900,000
Goodwill, expected tax nondeductible amount							8,200,000
Other intangible assets, amortization period, range minimum (in years)																																														2Y	1Y		1Y
Other intangible assets, amortization period, range maximum (in years)																																														12Y	33Y		33Y
Pro forma information [Abstract]
Elimination of the franchises' historical intangible asset amortization expense		0			100,000
Elimination of RTI's franchise revenue		0			400,000
Elimination of RTI's support service fee income and marketing reimbursements		200,000			1,300,000
Elimination of RTI's equity in losses of unconsolidated franchises		0			200,000
Elimination of RTI's bad debt charges relating to notes receivable and lines of credit due from the acquired franchises		(100,000)			100,000
Additional amortization expense related to reacquired franchise rights		300,000			700,000
Additional depreciation expense related to the fair value adjustments to property and equipment		200,000			500,000
Reduced interest expense related to the fair value adjustments of acquired franchise debt		300,000			600,000
Statutory tax rate (in hundredths)		39.70%
Franchises' FICA Tip and Work Opportunity Tax Credits		200,000			500,000
Total revenue		325,753,000			672,772,000
Net income		4,643,000			17,075,000
Basic earnings per share (in dollars per share)		$ 0.07			$ 0.27
Diluted earnings per share (in dollars per share)		$ 0.07			$ 0.26
License acquisitions [Abstract]
Initiation date of license agreement																																													Jul. 22, 2010						Sep. 13, 2010
Initial development fee																																																			1,000,000
Licensing fee per new restaurant opening																																																			5,000
Restaurants to open for with license fee, maximum																																																			200
Royalty fee to gross sales (in hundredths)																																																			2.00%
Licensing fee to gross sales (in hundredths)																																													2.00%
Advertising fee to gross sales (in hundredths)																																																			1.00%
Monthly fee for consulting services, maximum period (in years)																																													2Y
Monthly fee for consulting services, first year (per month)																																													20,833
Monthly fee for consulting services option 1, second year (per month)																																													20,833
Basis for paying second year option 1, Concept restaurant openings, minimum threshold																																													three or more
Monthly fee for consulting services option 2, second year (per month)																																													10,417
Basis for paying second year rent option 2, concept restaurant openings, maximum threshold																																													two or fewer
Licensing option 1 to terminate future development rights, Concept restaurant openings, minimum threshold																																													18 or more						12 or more
License option 1 for future development rights, opened concept restaurants, maximum (in years)																																													5Y						2Y
Licensee option 2 to terminate future development rights, opened concept restaurants																																													40 or more						6 or more
Licensee option 2 for future development rights, maximum (in years)																																													10Y						1Y
Duration of license agreement (in years)																																																			20Y
Payments for consulting services			20,833																																										59,831
Allocation of purchase prices of acquisition [Abstract]
Property and equipment				137,075,000		137,075,000
Goodwill				15,571,000		15,571,000
Reacquired franchise rights				10,242,000		10,242,000
Other intangible assets, net of liabilities				735,000		735,000																																										2,000,000		1,300,000
Deferred income taxes				380,000		380,000
Long-term debt and capital leases				(147,005,000)		(147,005,000)
Other net liabilities				(4,536,000)		(4,536,000)
Notes receivable				(1,529,000)		(1,529,000)
Net impact on fiscal 2011 Consolidated Balance Sheet				10,933,000		10,933,000
Gain on settlement of preexisting contracts, net						(4,906,000)
Gain on acquisitions						(1,770,000)
Net impact on fiscal 2011 Consolidated Statement of Income						(6,676,000)
Aggregate cash purchase prices				4,257,000		4,257,000
Liabilities - Net with other intangible assets				1,288,000		1,288,000
Operating results for acquired franchise partnerships [Abstract]
Total revenue	306,203,000	288,955,000	635,057,000		589,587,000			41,271,000	10,191,000	86,891,000	13,327,000
Cost of merchandise	91,562,000	84,537,000	189,137,000		169,630,000			12,243,000	2,954,000	25,637,000	3,826,000
Payroll and related costs	107,777,000	99,756,000	220,764,000		199,965,000			15,128,000	3,441,000	30,964,000	4,403,000
Other restaurant operating costs	65,429,000	61,157,000	134,084,000		120,800,000			9,010,000	2,391,000	18,775,000	3,104,000
Depreciation								2,183,000	698,000	4,267,000	817,000
Selling, general, and administrative, net	23,386,000	21,237,000	50,162,000		43,780,000			2,762,000	630,000	5,848,000	798,000
Total operating costs and expenses	309,200,000	285,183,000	635,888,000		571,792,000			41,326,000	10,114,000	85,491,000	12,948,000
(Loss)/income before income taxes	$ (1,747,000)	$ 5,268,000	$ 1,910,000		$ 21,345,000			$ (55,000)	$ 77,000	$ 1,400,000	$ 379,000

XML

(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES (Tables)

6 Months Ended

Nov. 29, 2011

(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES [Abstract]

Earnings per Share

The following table shows the calculation of weighted-average common and dilutive potential common shares outstanding as presented in the accompanying Condensed Consolidated Statements of Operations (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Net (loss)/income	$	(2,001	)	$	4,565	$	1,092	$	16,962
Weighted-average common
shares outstanding		62,598			64,011		63,177		63,846
Dilutive effect of stock
options and restricted stock		–			887		552		809
Weighted average common
and dilutive potential
common shares outstanding		62,598			64,898		63,729		64,655
Basic (loss)/earnings per share	$	(0.03	)	$	0.07	$	0.02	$	0.27
Diluted (loss)/earnings per share	$	(0.03	)	$	0.07	$	0.02	$	0.26

Anti-dilutive stock options and restricted shares

The following table summarizes stock options and restricted shares that did not impact the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Stock options		3,404	*		3,284		2,074		3,052
Restricted shares		1,143	*		443		899		465
Total		4,547			3,727		2,973		3,517

XML

(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES

6 Months Ended

Nov. 29, 2011

(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES [Abstract]

(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES

NOTE B – (LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES

Basic (loss)/earnings per share is computed by dividing net (loss)/income by the weighted average number of common shares outstanding during each period presented.  Diluted (loss)/earnings per share gives effect to stock options and restricted stock outstanding during the applicable periods.  The following table shows the calculation of weighted-average common and dilutive potential common shares outstanding as presented in the accompanying Condensed Consolidated Statements of Operations (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Net (loss)/income	$	(2,001	)	$	4,565	$	1,092	$	16,962
Weighted-average common
shares outstanding		62,598			64,011		63,177		63,846
Dilutive effect of stock
options and restricted stock		–			887		552		809
Weighted average common
and dilutive potential
common shares outstanding		62,598			64,898		63,729		64,655
Basic (loss)/earnings per share	$	(0.03	)	$	0.07	$	0.02	$	0.27
Diluted (loss)/earnings per share	$	(0.03	)	$	0.07	$	0.02	$	0.26

Stock options with an exercise price greater than the average market price of our common stock and certain options with unrecognized compensation expense do not impact the computation of diluted (loss)/earnings per share because the effect would be anti-dilutive.  The following table summarizes stock options and restricted shares that did not impact the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Stock options		3,404	*		3,284		2,074		3,052
Restricted shares		1,143	*		443		899		465
Total		4,547			3,727		2,973		3,517

* Due to a net loss for the 13 weeks ended November 29, 2011, all then outstanding share-based awards were excluded from the computation of diluted loss per share.

During the first quarter of fiscal 2012, we repurchased 2.0 million shares of our common stock at a cost of $18.4 million.  As of November 29, 2011, the total number of remaining shares authorized by our Board of Directors to be repurchased was 5.9 million.  No shares were repurchased during the quarter ended November 29, 2011.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Nov. 29, 2011	May 31, 2011
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	100,000	100,000
Common stock, issued (in shares)	63,778	65,098

XML

COMPREHENSIVE (LOSS)/INCOME

6 Months Ended

Nov. 29, 2011

COMPREHENSIVE (LOSS)/INCOME [Abstract]

COMPREHENSIVE (LOSS)/INCOME

NOTE L – COMPREHENSIVE (LOSS)/INCOME

U.S. GAAP require the disclosure of certain revenue, expenses, gains andlosses that are excluded from net (loss)/income.  Items that currently impact our other comprehensive income are pension liability adjustments.  Amounts shown in the table below are in thousands.

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011		November 30, 2010
Net (loss)/income	$	(2,001	)	$	4,565	$	1,092	$	16,962
Pension liability reclassification, net of tax		308			298		616		595
Comprehensive (loss)/income	$	(1,693	)	$	4,863	$	1,708	$	17,557

XML

Document And Entity Information (USD $)	3 Months Ended
	Nov. 29, 2011	Nov. 30, 2010
Entity Registrant Name	RUBY TUESDAY INC
Entity Central Index Key	0000068270
Current Fiscal Year End Date	--05-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 830,759,511
Entity Common Stock, Shares Outstanding	63,778,434
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 29, 2011

XML

SHARE-BASED EMPLOYEE COMPENSATION

6 Months Ended

Nov. 29, 2011

SHARE-BASED EMPLOYEE COMPENSATION [Abstract]

SHARE-BASED EMPLOYEE COMPENSATION

NOTE M – SHARE-BASED EMPLOYEE COMPENSATION

We compensate our employees and Directors using share-based compensation through the following plans:

The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors

Under the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for Directors (the “Directors' Plan”), non-employee directors are eligible for awards of share-based incentives.  Restricted shares granted under the Directors' Plan vest in equal amounts after one, two, and three years provided the Director continually serves on the Board.  Options issued under the Directors' Plan become vested after 30 months and are exercisable until five years after the grant date.  Stock option exercises are settled with the issuance of new shares of common stock.

All options awarded under the Directors' Plan have been at the fair market value at the time of grant.  A Committee, appointed by the Board, administers the Directors' Plan.  At November 29, 2011, we had reserved 122,000 shares of common stock under the Directors' Plan, 58,000 of which were subject to options outstanding, for a net of 64,000 shares of common stock currently available for issuance under the Directors' Plan.

The Ruby Tuesday, Inc. 2003 Stock Incentive Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan

A Committee, appointed by the Board, administers the Ruby Tuesday, Inc. 2003 Stock Incentive Plan (“2003 SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees and officers to whom share-based incentives are granted and the terms and provisions of share-based incentives.  Option grants under the 2003 SIP and 1996 SIP can have varying vesting provisions and exercise periods as determined by such Committee.  Options granted under the 2003 SIP and 1996 SIP vest in periods ranging from immediate to fiscal 2014, with the majority vesting within three years following the date of grant, and the majority expiring five or seven (but some up to 10) years after grant.  The majority of currently unvested restricted shares granted in fiscal 2012 and 2010 are performance-based.  All of the currently unvested restricted shares granted during fiscal 2011 are service-based.  The 2003 SIP and 1996 SIP permit the Committee to make awards of shares of common stock and awards of stock options or other derivative securities related to the value of the common stock.  These discretionary awards may be made on an individual basis or for the benefit of a group of eligible persons.  All options awarded under the 2003 SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At November 29, 2011, we had reserved a total of 5,090,000 and 1,024,000 shares of common stock for the 2003 SIP and 1996 SIP, respectively.  Of the reserved shares at November 29, 2011, 2,363,000 and 982,000 were subject to options outstanding for the 2003 SIP and 1996 SIP, respectively.  Stock option exercises are settled with the issuance of new shares.  Net shares of common stock available for issuance at November 29, 2011 under the 2003 SIP and 1996 SIP were 2,727,000 and 42,000, respectively.

Stock Options

The following table summarizes the activity in options for the 26 weeks ended November 29, 2011 under these stock option plans (in thousands except per-share data):

				Weighted-
				Average
	Options			Exercise Price
Balance at May 31, 2011		3,239		$	13.10
Granted		253			7.87
Exercised		(23	)		5.26
Forfeited		(65	)		28.84
Balance at November 29, 2011		3,404		$	12.47
Exercisable at November 29, 2011		2,327		$	14.30

Included in the outstanding balance shown above are approximately 2,753,000 of out-of-the-money options.  Of this amount, we expect that approximately 852,000 of these options will expire out-of-the-money in the next two fiscal years.

At November 29, 2011, there was approximately $0.8 million of unrecognized pre-tax compensation expense related to non-vested stock options.  This cost is expected to be recognized over a weighted-average period of 1.1 years.

During the first quarter of fiscal 2012, we granted approximately 253,000 stock options to our CEO under the terms of the 2003 SIP.  These stock options vest in equal annual installments over a three-year period following grant of the award, and have a maximum life of seven years.  These stock options provide for immediate vesting if the optionee retires during the option period as well as if certain other events occur.  As our CEO was retirement-eligible at the time of grant, the accelerated vesting provision rendered the requisite service condition non-substantive under GAAP, and we therefore fully expensed the $1.2 million fair value of stock options awarded to our CEO on the date of grant.

Restricted Stock

The following table summarizes our restricted stock activity for the 26 weeks ended November 29, 2011 (in thousands except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Non-vested at May 31, 2011		299		$	7.24
Granted		384			7.87
Vested		(242	)		7.39
Forfeited		–			–
Non-vested at November 29, 2011		441		$	7.70

				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Non-vested at May 31, 2011		551		$	8.22
Granted		274			7.68
Vested		(122	)		8.02
Forfeited		(1	)		9.39
Non-vested at November 29, 2011		702		$	8.04

The fair values of the restricted share awards reflected above were based on the fair market value of our common stock at the time of grant.  At November 29, 2011, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $3.8 million and will be recognized over a weighted average vesting period of approximately 1.7 years.

During the second quarter of fiscal 2012, RTI granted approximately 88,000 restricted shares to non-employee directors under the terms of the Directors' Plan.  These shares vest in equal annual installments over a three year period following grant of the award.

During the first quarter of fiscal 2012, we granted approximately 186,000 service-based restricted shares and 384,000 performance-based restricted shares of our common stock to certain employees under the terms of the 2003 SIP and 1996 SIP.  The service-based restricted shares cliff vest on December 1, 2013.  Vesting of the performance-based restricted shares, including 203,000 shares that were awarded to our CEO, is also contingent upon the Company's achievement of certain performance conditions related to fiscal 2012 performance, which will be measured in the first quarter of fiscal 2013.  In addition to satisfaction of the performance conditions for the performance-based restricted shares, recipients must satisfy the same service condition as described above for the service-based restricted shares.

For the same reason as mentioned above in regards to our stock options, we recorded during the first quarter of fiscal 2012 an expense of $0.7 million related to the performance-based restricted shares awarded on August 23, 2011 to our CEO.  Should our CEO retire prior to the end of the performance period, the number of restricted shares he would receive would not be determinable until the completion of the performance period.  The expense we recorded for this award was determined using a model that estimated the projected achievement of the performance conditions.

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 29, 2011	Nov. 30, 2010	Nov. 29, 2011	Nov. 30, 2010
Revenue:
Restaurant sales and operating revenue	$ 306,203	$ 288,955	$ 635,057	$ 589,587
Franchise revenue	1,250	1,496	2,741	3,550
Total Revenue	307,453	290,451	637,798	593,137
Operating costs and expenses:
Cost of merchandise	91,562	84,537	189,137	169,630
Payroll and related costs	107,777	99,756	220,764	199,965
Other restaurant operating costs	65,429	61,157	134,084	120,800
Depreciation	16,414	15,619	32,700	30,741
Selling, general and administrative, net	23,386	21,237	50,162	43,780
Closures and impairments	653	348	1,098	2,087
Equity in earnings of unconsolidated franchises	0	(27)	0	(230)
Interest expense, net	3,979	2,556	7,943	5,019
Total	309,200	285,183	635,888	571,792
(Loss)/income before income taxes	(1,747)	5,268	1,910	21,345
Provision for income taxes	254	703	818	4,383
Net (loss)/income	$ (2,001)	$ 4,565	$ 1,092	$ 16,962
(Loss)/earnings per share:
Basic (in dollars per share)	$ (0.03)	$ 0.07	$ 0.02	$ 0.27
Diluted (in dollars per share)	$ (0.03)	$ 0.07	$ 0.02	$ 0.26
Weighted average shares:
Basic (in shares)	62,598	64,011	63,177	63,846
Diluted (in shares)	62,598	64,898	63,729	64,655
Cash dividends declared per share (in dollars per share)	$ 0	$ 0	$ 0	$ 0

XML

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES

6 Months Ended

Nov. 29, 2011

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES [Abstract]

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES

NOTE G – PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES

Property and equipment, net, is comprised of the following (in thousands):

	November 29, 2011		May 31, 2011
Land	$	256,730	$	256,761
Buildings		514,298		512,177
Improvements		428,706		427,169
Restaurant equipment		285,836		279,319
Other equipment		95,468		93,944
Construction in progress and other*		26,429		28,077
		1,607,467		1,597,447
Less accumulated depreciation		591,996		566,296
	$	1,015,471	$	1,031,151

* Included in Construction in progress and other as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

These assets primarily consist of parcels of land upon which we have no intention to build restaurants.

Amounts included in assets held for sale at November 29, 2011 and May 31, 2011 totaled $2.4 million and $1.3 million, respectively, primarily consisting of parcels of land upon which we have no intention to build restaurants, land and buildings of closed restaurants, and various liquor licenses.  During the 13 and 26 weeks ended November 29, 2011, we sold surplus properties with carrying values of $1.5 million for both periods, at net gains that were negligible and $0.1 million, respectively.  Cash proceeds, net of broker fees, from these sales during the 13 and 26 weeks ended November 29, 2011 totaled $1.5 million for both periods.  During the 26 weeks ended November 30, 2010, we sold surplus properties with carrying values of $0.9 million at net gains of $0.1 million.  Cash proceeds, net of broker fees, from these sales totaled $1.0 million.  None of these surplus properties were sold during the 13 weeks ended November 30, 2010.

Approximately 51% of our 742 Ruby Tuesday restaurants are located on leased properties.  Of these, approximately 66% are land leases only; the other 34% are for both land and building.  The initial terms of these leases expire at various dates over the next 25 years.  These leases may also contain required increases in minimum rent at varying times during the lease term and have options to extend the terms of the leases at a rate that is included in the original lease agreement.  Most of our leases require the payment of additional (contingent) rent that is based upon a percentage of restaurant sales above agreed upon sales levels for the year.  These sales levels vary for each restaurant and are established in the lease agreements.  We recognize contingent rental expense (in annual as well as interim periods) prior to the achievement of the specified target that triggers the contingent rental expense, provided that achievement of that target is considered probable.

XML

INVENTORIES

6 Months Ended

Nov. 29, 2011

INVENTORIES [Abstract]

INVENTORIES

NOTE F – INVENTORIES

Beginning in fiscal 2010, we have purchased lobster in advance of our needs and stored it in third-party facilities prior to our distributor taking possession of the inventory.  Once the lobster is moved to our distributor's facilities, we transfer ownership to the distributor.  We later reacquire the inventory from our distributor upon its subsequent delivery to our restaurants.  Lobster purchases are included within merchandise inventory in our Condensed Consolidated Balance Sheets.  Our merchandise inventory was $29.1 million and $25.6 million as of November 29, 2011 and May 31, 2011, respectively.

XML

BASIS OF PRESENTATION (Policies)

6 Months Ended

Nov. 29, 2011

BASIS OF PRESENTATION [Abstract]

Consolidation Policy

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” “we” or the “Company”), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill®, Marlin & Ray's™, Truffles®, and Wok Hay® casual dining restaurants.  We also franchise the Ruby Tuesday concept in select domestic and international markets.  The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring entries) considered necessary for a fair presentation have been included.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.  Operating results for the 13- and 26-week periods ended November 29, 2011 are not necessarily indicative of results that may be expected for the year ending June 5, 2012.

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Nov. 29, 2011

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE N – COMMITMENTS AND CONTINGENCIES

Guarantees

At November 29, 2011, we had certain third-party guarantees, which primarily arose in connection with our divestiture activities.  The majority of these guarantees have no expiration date.  Generally, we are required to perform under these guarantees in the event that a third-party fails to make contractual payments.

During fiscal 1996, our shareholders approved the distribution of our family dining restaurant business (Morrison Fresh Cooking, Inc., “MFC”) and our health care food and nutrition services business (Morrison Health Care, Inc., “MHC”). Subsequently, Piccadilly Cafeterias, Inc. (“Piccadilly”) acquired MFC and Compass Group (“Compass”) acquired MHC. Prior to the distribution, we entered into various guarantee agreements with both MFC and MHC, most of which have expired. As agreed upon at the time of the distribution, we have been contingently liable for payments to MFC and MHC employees retiring under MFC's and MHC's versions of the Management Retirement Plan and the Executive Supplemental Pension Plan (the two non-qualified defined benefit plans) for the accrued benefits earned by those participants as of March 1996.

On October 29, 2003, Piccadilly filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in Fort Lauderdale, Florida.  Following this, we have recorded, and begun to pay, our pro-rata share of the Piccadilly liabilities for which we have provided guarantees, including those for MFC employee benefit plans.

We estimated our divestiture guarantees related to MHC at November 29, 2011 to be $2.7 million for employee benefit plans.  In addition, we remain contingently liable for MHC's portion (estimated to be $2.0 million) of the MFC employee benefit plan liability for which MHC is currently responsible under the  divestiture guarantee agreements.  We believe the likelihood of being required to make payments for MHC's portion to be remote due to the size and financial strength of MHC and Compass.

Litigation

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business.  We provide reserves for such claims when payment is probable and estimable in accordance with U.S. GAAP.  At this time, in the opinion of management, the ultimate resolution of pending legal proceedings, including the matter referred to below, will not have a material adverse effect on our operations, financial position, or cash flows.

On September 30, 2009, the U.S. Equal Employment Opportunity Commission (“EEOC”) Pittsburgh Area Office filed suit in the United States District Court for the Western District of Pennsylvania Civil Action No. 2:09-cv-01330-DSC alleging the Company was in violation of the Age Discrimination in Employment Act (“ADEA”) by failing to hire employees within the protected age group in five Pennsylvania restaurants and one Ohio restaurant.  On October 19, 2009, the EEOC filed a Notice of an ADEA Directed Investigation Charge No. 533-2010-00062 regarding potential age discrimination in violation of the ADEA in hiring and discharge for all positions at all restaurant facilities.

The Company and the EEOCentered into anagreement to stay the lawsuit and the request for nationwide information under the directed investigation.  Pursuant to that stay both parties agreed to an exchange of information and to engage in mediation following the stay.

We have denied the allegations and intend to vigorously defend against the suit andthecharge.  Despite itspreliminary status, we do not believe that this matter will have a material adverse effect on our operations, financial position, or cash flows.

On November 8, 2010, a personal injury case styled Dan Maddy v. Ruby Tuesday, Inc., which had been filed in the Circuit Court for Rutherford County, Tennessee, was resolved through mediation.  Given that we maintain primary and secondary insurance coverage for claims such as the Maddy case, and we had previously paid the amount required by our self-insured retention limit, no payment was made by us at settlement.

Included in the Maddy settlement was a payment made by our secondary insurance carrier of $2,750,000.  Despite making this payment, our secondary insurance carrier filed a counterclaim against us, in connection with the coverage suit we brought against our carrier prior to the carrier's payment of a portion of the Maddy settlement, claiming it did not receive timely notice of this matter in accordance with the terms of the policy.  Pursuant to an agreement we reached with our secondary carrier prior to the Maddy settlement and as a result of the carrier's payment of a portion of the Maddy settlement, we dismissed our claims against this carrier for bad faith, breach of contract and violation of the state consumer protection act.  We have preserved any claims for declaratory relief as well as a claim for attorney fees in the event we prevail in the underlying litigation. We believe our secondary insurance carrier received timely notice in accordance with the policy and we will vigorously defend the matter.   Should we incur potential liability to our secondary carrier, we believe we have indemnification claims against two claims administrators. 

We believe, and have obtained a consistent opinion from outside counsel, that we have valid coverage under our insurance policies for any amounts in excess of our self-insured retention.  We believe this provides a basis for not recording a liability for any contingency associated with the Maddy settlement.  We further believe we have the right to the indemnification referred to above.  Based on the information currently available, our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets reflect no accrual relating to the Maddy case.  There can be no assurance, however, that we will be successful in our defense of our carrier's counterclaim against us.

XML

RETIREMENT BENEFITS

6 Months Ended

Nov. 29, 2011

RETIREMENT BENEFITS [Abstract]

RETIREMENT BENEFITS

NOTE J – RETIREMENT BENEFITS

We sponsor three defined benefit pension plans for active employees and offer certain postretirement benefits for retirees.  A summary of each of these is presented below.

Retirement Plan

RTI sponsors the Morrison Restaurants Inc. Retirement Plan (the “Retirement Plan”).  Effective December 31, 1987, the Retirement Plan was amended so that no additional benefits would accrue and no new participants may enter the Retirement Plan after that date.  Participants receive benefits based upon salary and length of service.

Minimum funding for the Retirement Plan is determined in accordance with the guidelines set forth in employee benefit and tax laws.  From time to time we may contribute additional amounts as we deem appropriate.  We estimate that we will be required to make contributions totaling $0.4 million to the Retirement Plan during the remainder of fiscal 2012.

Executive Supplemental Pension Plan and Management Retirement Plan

Under these unfunded defined benefit pension plans, eligible employees earn supplemental retirement income based upon salary and length of service, reduced by social security benefits and amounts otherwise receivable under other specified Company retirement plans.  Effective June 1, 2001, the Management

Retirement Plan was amended so that no additional benefits would accrue and no new participants may enter the plan after that date.

As discussed further in Note N to the Condensed Consolidated Financial Statements, we are contingently liable for retirement benefits accrued through March 1996 for certain employees of two companies formerly owned by RTI.

Because our Chief Executive Officer (“CEO”) is currently retirement-eligible and would be entitled to receive his entire pension payment in a lump sum six months following his retirement, we have classified an amount representing that pension payment ($8.1 million) into Accrued liabilities – payroll and related costs in our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets.

Postretirement Medical and Life Benefits

Our Postretirement Medical and Life Benefits plans provide medical and life insurance benefits to certain retirees.  The medical plan requires retiree cost sharing provisions that are more substantial for employees who retire after January 1, 1990.

The following tables detail the components of net periodic benefit costs and the amounts recognized in our Condensed Consolidated Financial Statements for the Retirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the “Pension Plans”) and the Postretirement Medical and Life Benefits plans (in thousands):

	Pension Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	November 29,			November 30,			November 29,			November 30,
	2011			2010			2011			2010
Service cost	$	134		$	129		$	268		$	258
Interest cost		576			573			1,152			1,146
Expected return on plan assets		(126	)		(98	)		(252	)		(196	)
Amortization of prior service cost		64			82			128			164
Recognized actuarial loss		426			398			852			796
Net periodic benefit cost	$	1,074		$	1,084		$	2,148		$	2,168
	Postretirement Medical and Life Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	November 29,			November 30,			November 29,			November 30,
	2011			2010			2011			2010
Service cost	$	2		$	2		$	4		$	4
Interest cost		18			19			36			38
Amortization of prior service cost		(14	)		(15	)		(28	)		(30	)
Recognized actuarial loss		34			28			68			56
Net periodic benefit cost	$	40		$	34		$	80		$	68

We also sponsor two defined contribution retirement savings plans. Information regarding these plans is included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2011.

XML

LONG TERM DEBT AND CAPITAL LEASES

6 Months Ended

Nov. 29, 2011

LONG TERM DEBT AND CAPITAL LEASES [Abstract]

LONG TERM DEBT AND CAPITAL LEASES

NOTE H – LONG-TERM DEBT AND CAPITAL LEASES

Long-term debt and capital lease obligations consist of the following (in thousands):

	November 29, 2011		May 31, 2011
Revolving credit facility	$	182,000	$	177,000
Series B senior notes,
due April 2013		44,442		44,442
Mortgage loan obligations		115,471		122,546
Capital lease obligations		244		286
		342,157		344,274
Less current maturities		17,357		15,090
	$	324,800	$	329,184

On December 1, 2010, we entered into a five-year revolving credit agreement (the “Credit Facility”).  Under the original terms of the Credit Facility, we were allowed to borrow up to $320.0 million with the option to increase our capacity by $50.0 million to $370.0 million.  On July 19, 2011, we entered into an amendment of the Credit Facility to increase the amount of the optional additional revolving commitments available from $50.0 million to $60.0 million, thereby increasing the maximum aggregate revolving commitment amount under the Credit Facility from $370.0 million to $380.0 million.   On the same date, we exercised our option to increase the revolving commitments from $320.0 million to $380.0 million pursuant to new lender commitment agreements with the existing lenders and an additional new lender.

The terms of the Credit Facility provide for a $40.0 million swingline subcommitment and a $50.0 million letter of credit subcommitment.  The Credit Facility also includes a $50.0 million franchise facility subcommitment, which covered our guarantees of debt of the franchise partners (the “Franchise Facility Subcommitment”).  All amounts guaranteed under the Franchise Facility Subcommitment were settled during fiscal 2011.

The interest rates charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option we choose to utilize.  Our Base Rate for borrowings is defined to be the higher of Bank of America's prime rate, the Federal Funds Rate plus 0.5%, or an adjusted LIBO Rate plus 1.00%, plus an applicable margin ranging from 0.25% to 1.25%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.25%.

Under the terms of the Credit Facility, we had borrowings of $182.0 million with an associated floating rate of interest of 2.58% at November 29, 2011.  As of May 31, 2011, we had $177.0 million outstanding with an associated floating rate of interest of 2.27%.  After consideration of letters of credit outstanding, we had $188.7 million available under the Credit Facility as of November 29, 2011.  The Credit Facility will mature on December 1, 2015.

The Credit Facility contains financial covenants relating to the maintenance of leverage and fixed charge coverage ratios and minimum net worth.  We were in compliance with our debt covenants as of November 29, 2011 and the date of this filing.

On April 3, 2003, we issued notes totaling $150.0 million through a private placement of debt (the “Private Placement”).  On December 1, 2010, we entered into an amendment of the notes issued in the Private Placement (the “Note Amendment”).  Among other changes, this amendment conformed the covenants in this agreement to the covenants contained in the Credit Facility discussed above.

At November 29, 2011 and May 31, 2011, the Private Placement consisted of $44.4 million in notes with an interest rate of 7.17% (the “Series B Notes”).  The Series B Notes mature on April 1, 2013, and thus have been classified as non-current in our November 29, 2011 and May 31, 2011 Condensed Consolidated Balance Sheets.

Our $115.5 million in mortgage loan obligations as of November 29, 2011 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between December 2011 and March 2024, have balances which range from negligible to $8.5 million and interest rates of 3.35% to 11.28%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

XML

CLOSURES AND IMPAIRMENTS EXPENSE

6 Months Ended

Nov. 29, 2011

Closures And Impairments Expense [Abstract]

CLOSURES AND IMPAIRMENTS EXPENSE

NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairment expenses include the following for the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	November 29, 2011			November 30, 2010		November 29, 2011			November 30, 2010
Property impairments	$	630		$	12	$	836		$	1,338
Closed restaurant lease reserves		(153	)		327		(74	)		663
Other closing costs		226			9		416			83
(Gain)/loss on sale of surplus properties		(50	)		–		(80	)		3
	$	653		$	348	$	1,098		$	2,087

A rollforward of our future lease obligations associated with closed properties is as follows (in thousands):

	Lease Obligations
Balance at May 31, 2011	$	2,660
Closing expense including rent and other lease charges		(74	)
Payments		(522	)
Other adjustments		(138	)
Balance at November 29, 2011	$	1,926

For the remainder of fiscal 2012 and beyond, our focus will be on obtaining settlements on as many of these leases as possible and these settlements could be higher or lower than the amounts recorded.  The actual amount of any cash payments made by the Company for lease contract termination costs will be dependent upon ongoing negotiations with the landlords of the leased restaurant properties.

At November 29, 2011, we had 30 restaurants that had been open more than one year with rolling 12-month negative cash flows of which 21 have been impaired to salvage value.  Of the nine which remained, we reviewed the plans to improve cash flows at each of the restaurants and recorded impairment expense as necessary.  The remaining net book value of these nine restaurants was $13.3 million at November 29, 2011.

Should sales at these restaurants not improve within a reasonable period of time, further impairment charges are possible.  Considerable management judgment is necessary to estimate future cash flows, including cash flows from continuing use, terminal value, closure costs, salvage value, and sublease income.  Accordingly, actual results could vary significantly from our estimates.

XML

INCOME TAXES

6 Months Ended

Nov. 29, 2011

INCOME TAXES [Abstract]

INCOME TAXES

NOTE K – INCOME TAXES

We had a liability for unrecognized tax benefits of $5.1 million and $5.2 million as of November 29, 2011 and May 31, 2011, respectively.  As of both November 29, 2011 and May 31, 2011, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $3.4 million.  The liability for unrecognized tax benefits as of November 29, 2011 includes $1.8 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve

months based on the outcome of examinations and negotiations with tax authorities.  In addition, it is reasonably possible that $0.2 million of the liability for unrecognized tax benefits could change within the next twelve months as a result of a lapse of statute of limitations.

Interest and penalties related to unrecognized tax benefits are recognized as components of income tax expense.  As of November 29, 2011 and May 31, 2011, we had accrued $1.9 million and $1.6 million, respectively, for the payment of interest and penalties.  During the first 26 weeks of fiscal 2012, accrued interest and penalties increased by $0.3 million, of which $0.2 million affected the effective tax rate for the same time period.

The effective tax rate for the 13- and 26- week periods ended November 29, 2011 was (14.6)% and 42.8%, respectively, as compared to 13.3% and 20.5%, respectively, for the same periods of the prior year.  The change in the effective tax rate for the 13-week period ended November 29, 2011 was attributable to an increase in unrecognized tax benefits and a decrease in FICA Tip and Work Opportunity Tax Credits recognized for the quarter.  The increase in the effective tax rate for the 26-week period ended November 29, 2011 was attributable to an increase in unrecognized tax benefits partially offset by a higher percentage benefit for FICA Tip and Work Opportunity Tax Credits as a result of lower pretax income for the current quarter compared to the same period of the prior year.

At November 29, 2011, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2007 with the exception of our fiscal years 2004 and 2005 as a result of fiscal 2009 NOL carryback, and with few exceptions, state and local examinations by tax authorities prior to fiscal year 2007.

XML

(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES (Details) (USD $)	3 Months Ended				6 Months Ended
	Nov. 29, 2011		Aug. 30, 2011	Nov. 30, 2010	Nov. 29, 2011	Nov. 30, 2010
(LOSS)/EARNINGS PER SHARE AND STOCK REPURCHASES [Abstract]
Net (loss)/income	$ (2,001,000)			$ 4,565,000	$ 1,092,000	$ 16,962,000
Weighted-average common shares outstanding (in shares)	62,598,000			64,011,000	63,177,000	63,846,000
Dilutive effect of stock options and restricted stock (in shares)	0			887,000	552,000	809,000
Weighted average common and dilutive potential common shares outstanding (in shares)	62,598,000			64,898,000	63,729,000	64,655,000
Basic (loss)/earnings per share (in dollars per share)	$ (0.03)			$ 0.07	$ 0.02	$ 0.27
Diluted (loss)/earnings per share (in dollars per share)	$ (0.03)			$ 0.07	$ 0.02	$ 0.26
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	4,547,000			3,727,000	2,973,000	3,517,000
Repurchased common stock (in shares)	0		2,000,000
Repurchased common stock			$ 18,400,000
Remaining shares authorized repurchased (in shares)	5,900,000				5,900,000
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	3,404,000	[1]		3,284,000	2,074,000	3,052,000
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	1,143,000	[1]		443,000	899,000	465,000

[1] Due to a net loss for the 13 weeks ended November 29, 2011, all then outstanding share-based awards were excluded from the computation of diluted loss per share.

XML

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Nov. 29, 2011

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

NOTE P – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Not Yet Adopted

In June 2011, the Financial Accounting Standards Board issued guidance on the presentation of total comprehensive income, the components of net income, and the components of other comprehensive income.  This guidance is intended to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income.  The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (our fiscal 2013 first quarter).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

In September 2011, the Financial Accounting Standards Board issued guidance modifying the impairment test for goodwill by allowing businesses to first decide whether they need to do the two-step impairment test.  Under the guidance, a business no longer has to calculate the fair value of a reporting unit unless it believes it is very likely that the reporting unit's fair value is less than the carrying value.  The guidance is effective for impairment tests for fiscal years beginning after December 15, 2011 (our fiscal 2013).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

XML

ACCOUNTS RECEIVABLE (Tables)

6 Months Ended

Nov. 29, 2011

ACCOUNTS RECEIVABLE [Abstract]

ACCOUNTS RECEIVABLE

Accounts receivable – current consist of the following (in thousands):

	November 29, 2011		May 31, 2011
Rebates receivable	$	862	$	1,055
Amounts due from franchisees		2,597		2,506
Other receivables		3,816		3,970
	$	7,275	$	7,531

XML

CLOSURES AND IMPAIRMENTS EXPENSE (Details) (USD $)	3 Months Ended		6 Months Ended
	Nov. 29, 2011	Nov. 30, 2010	Nov. 29, 2011	Nov. 30, 2010
Impairment Expense [Abstract]
Property impairments	$ 630,000	$ 12,000	$ 836,000	$ 1,338,000
Closed restaurant lease reserves	(153,000)	327,000	(74,000)	663,000
Other closing costs	226,000	9,000	416,000	83,000
(Gain)/loss on sale of surplus properties	(50,000)	0	(80,000)	3,000
Total Closure and Impairments Expenses	653,000	348,000	1,098,000	2,087,000
Closed Location Lease Obligation [Roll Forward]
Beginning balance			2,660,000
Closing expense including rent and other lease charges			(74,000)
Payments			(522,000)
Other adjustments			(138,000)
Ending balance	1,926,000		1,926,000
Restaurants open more than one year with rolling 12-month negative cash flows [Abstract]
Restaurants open more than a year with negative cash flows			30
Negative cash flows rolling months period (in months)			12M
Negative cash flow restaurants recorded at salvage value			21
Negative cash flow restaurants not recorded at salvage value			9
Negative cash flow restaurants not recorded at salvage value, remaining net book value.	$ 13,300,000		$ 13,300,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 29, 2011	Nov. 30, 2010
Operating activities:
Net income	$ 1,092	$ 16,962
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	32,700	30,741
Amortization of intangibles	1,036	393
Provision for bad debts	17	(318)
Deferred income taxes	(211)	1,023
Loss on impairments, including disposition of assets	1,028	1,529
Equity in earnings of unconsolidated franchises	0	(230)
Share-based compensation expense	3,528	5,615
Excess tax benefits from share-based compensation	(24)	(186)
Gain on franchise partnership acquisitions, net of settlement losses		(1,660)
Other	288	(2)
Changes in operating assets and liabilities:
Receivables	(1,292)	647
Inventories	(3,929)	(13,218)
Income taxes	(601)	(3,756)
Prepaid and other assets	2,699	(121)
Accounts payable, accrued and other liabilities	654	(4,626)
Net cash provided by operating activities	36,985	32,793
Investing activities:
Purchases of property and equipment	(20,664)	(13,266)
Acquisition of franchise and other entities		(1,832)
Proceeds from disposal of assets	1,527	959
(Increases)/reductions in Deferred Compensation Plan assets	(76)	62
Insurance proceeds from property claims	1,548
Other, net	(217)	(49)
Net cash used by investing activities	(17,882)	(14,126)
Financing activities:
Net proceeds/(payments) on revolving credit facility	5,000	(14,600)
Principal payments on other long-term debt	(6,645)	(6,420)
Stock repurchases	(18,441)
Proceeds from exercise of stock options	123	796
Excess tax benefits from share-based compensation	24	186
Net cash used by financing activities	(19,939)	(20,038)
Decrease in cash and short-term investments	(836)	(1,371)
Cash and short-term investments:
Beginning of year	9,722	9,569
End of year	8,886	8,198
Cash paid/(received) for:
Interest, net of amount capitalized	8,640	5,132
Income taxes, net	1,151	6,061
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	5,168	5,120
Reclassification of properties to assets held for sale or receivables	2,705	2,464
Assumption of debt and capital leases related to franchise partnership acquisitions	0	22,670
Liability for claim settlements and insurance receivables	$ (314)	$ (2,171)

XML

ACCOUNTS RECEIVABLE

6 Months Ended

Nov. 29, 2011

ACCOUNTS RECEIVABLE [Abstract]

ACCOUNTS RECEIVABLE

NOTE E – ACCOUNTS RECEIVABLE

Accounts receivable – current consist of the following (in thousands):

	November 29, 2011		May 31, 2011
Rebates receivable	$	862	$	1,055
Amounts due from franchisees		2,597		2,506
Other receivables		3,816		3,970
	$	7,275	$	7,531

We negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of us and our franchise system.  We receive various volume discounts and rebates based on purchases for our Company-owned restaurants from numerous suppliers.

Amounts due from franchisees consist of royalties, license and other miscellaneous fees, a substantial portion of which represents current and recently-invoiced billings.  Also included in this amount is the current portion of the straight-lined rent receivable from franchise sublessees.

We defer recognition of franchise fee revenue for any franchise with negative cash flows at times when the negative cash flows are deemed to be anything other than temporary and the franchise has borrowed directly from us.  We also do not recognize franchise fee revenue from franchises with fees in excess of 60 days past due.  Accordingly, we have deferred recognition of a portion of franchise revenue from certain franchisees.  Unearned income for franchise fees was $1.5 million and $1.2 million as of November 29, 2011 and May 31, 2011, respectively, which is included in Other deferred liabilities and/or Accrued liabilities – rent and other in the Condensed Consolidated Balance Sheets.

As of November 29, 2011 and May 31, 2011, other receivables consisted primarily of amounts due for third-party gift card sales ($1.3 million as of both dates), amounts due from our distributor for purchases of lobster ($0.9 million and $0.7 million, respectively), and amounts due relating to insurance claims ($0.5 million and $1.2 million, respectively).  See Note F to the Condensed Consolidated Financial Statements for discussion of our lobster inventory.

XML

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES (Tables)

6 Months Ended

Nov. 29, 2011

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, AND OPERATING LEASES [Abstract]

Schedule of Property, Plant and Equipment, Net

Property and equipment, net, is comprised of the following (in thousands):

	November 29, 2011		May 31, 2011
Land	$	256,730	$	256,761
Buildings		514,298		512,177
Improvements		428,706		427,169
Restaurant equipment		285,836		279,319
Other equipment		95,468		93,944
Construction in progress and other*		26,429		28,077
		1,607,467		1,597,447
Less accumulated depreciation		591,996		566,296
	$	1,015,471	$	1,031,151

XML

INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Nov. 29, 2011	May 31, 2011
INVENTORIES [Abstract]
Merchandise inventory	$ 29,107	$ 25,627

XML

FAIR VALUE MEASUREMENTS

6 Months Ended

Nov. 29, 2011

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE O – FAIR VALUE MEASUREMENTS

The following table presents the fair values of our financial assets and liabilities measured at fair value on a recurring basis as of November 29, 2011 and May 31, 2011 (in thousands):

	Fair Value Measurements
	Level		November 29, 2011				May 31, 2011
Deferred compensation plan – Assets		1		$	7,920			$	8,792
Deferred compensation plan – Liabilities		1			(7,920	)			(8,792	)
Total				$	–			$	–

During the 26 weeks ended November 29, 2011 there were no transfers among levels within the fair value hierarchy.

The Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the “Deferred Compensation Plan”) and the Ruby Tuesday, Inc. Restated Deferred Compensation Plan (the “Predecessor Plan”) are unfunded, non-qualified deferred compensation plans for eligible employees.  Assets earmarked to pay benefits under the Deferred Compensation Plan and Predecessor Plan are held by a rabbi trust.  We report the accounts of the rabbi trust in our Condensed Consolidated Financial Statements.  With the exception of the investment in RTI common stock, the investments held by these plans are considered trading securities and are reported at fair value based on third-party broker statements.  The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, is recorded in Selling, general and administrative expense in the Condensed Consolidated Financial Statements.

The investment in RTI common stock and related liability payable in RTI common stock, which are reflected in Shareholders' Equity in the Condensed Consolidated Balance Sheets, are excluded from the fair value table above as these are considered treasury shares and reported at cost.

The following table presents the fair values for those assets and liabilities measured on a non-recurring basis and remaining on our Condensed Consolidated Balance Sheets as of November 29, 2011 and May 31, 2011 (in thousands):

	Fair Value Measurements
		Level	November 29, 2011		May 31, 2011
Long-lived assets held for sale *		2	$	23,187	$	24,686
Long-lived assets held for use		2		839		747
Total			$	24,026	$	25,433

* Included in the carrying value of long-lived assets held for sale as of November 29, 2011 and May 31, 2011 are $20.7 million and $23.3 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.

The following table presents the losses recognized during the 13 and 26 weeks ended November 29, 2011 and November 30, 2010 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis.  These losses are included in Closures and impairments in our Condensed Consolidated Statements of Operations (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	November 29, 2011		November 30, 2010		November 29, 2011		November 30, 2010
Long-lived assets held for sale	$	–	$	–	$	206	$	989
Long-lived assets held for use		630		12		630		349
	$	630	$	12	$	836	$	1,338

Long-lived assets held for sale are valued using Level 2 inputs, primarily information obtained through broker listings and sales agreements.  Costs to market and/or sell the assets are factored into the estimates of fair value for those assets included in Assets held for sale on our Condensed Consolidated Balance Sheets.

We review our long-lived assets (primarily property, equipment, and, as appropriate, reacquired franchise rights and favorable leases) related to each restaurant to be held and used in the business, whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable.

Long-lived assets held for use presented in the table above include our company airplane and restaurants or groups of restaurants that were impaired as a result of our quarterly impairment review.  From time to time, the table will also include closed restaurants or surplus sites not meeting held for sale criteria that have been offered for sale at a price less than their carrying value.  

The Level 2 fair values of our long-lived assets held for use are based on broker estimates of the value of the land, building, leasehold improvements, and other residual assets.

Our financial instruments at November 29, 2011 and May 31, 2011 consisted of cash and short-term investments, accounts receivable and payable, long-term debt, letters of credit, and, as previously discussed, deferred compensation plan investments.  The fair values of cash and short-term investments and accounts receivable and payable approximated carrying value because of the short-term nature of these instruments.  The carrying amounts and fair values of our other financial instruments not measured on a recurring basis using fair value, however subject to fair value disclosures are as follows (in thousands):

	November 29, 2011		May 31, 2011
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Deferred Compensation Plan
investment in RTI common stock	$     1,513	$      1,035	$     1,556	$      1,653
Long-term debt and capital leases	342,157	343,432	344,274	348,272
Letters of credit	–	222	–	178

We estimated the fair value of debt and letters of credit using market quotes and present value calculations based on market rates.