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.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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