FAIR VALUE MEASUREMENTS

9 Months Ended

Feb. 28, 2012

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 February 28, 2012 and May 31, 2011 (in thousands):

	Fair Value Measurements
	Level		February 28, 2012			May 31, 2011
Deferred compensation plan – Assets		1	$	8,551		$	8,792
Deferred compensation plan – Liabilities		1		(8,551	)		(8,792	)
Total			$	–		$	–

During the 39 weeks ended February 28, 2012 and March 1, 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 February 28, 2012 and May 31, 2011 (in thousands):

	Fair Value Measurements
	Level		February 28, 2012		May 31, 2011
Long-lived assets held for sale *		2	$	58,161	$	24,686
Long-lived assets held for use		2		4,145		747
Total			$	62,306	$	25,433

* Included in the carrying value of long-lived assets held for sale as of February 28, 2012 and May 31, 2011 are $19.1 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 39 weeks ended February 28, 2012 and March 1, 2011 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 Income (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	February 28, 2012		March 1,  2011		February 28, 2012		March 1,  2011
Long-lived assets held for sale	$	141	$	888	$	347	$	1,877
Long-lived assets held for use		11,393		–		12,023		349
	$	11,534	$	888	$	12,370	$	2,226

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 February 28, 2012 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):

	February 28, 2012				May 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Deferred Compensation Plan
investment in RTI common stock	$	1,487	$	1,205	$	1,556	$	1,653
Long-term debt and capital leases		307,248		311,500		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.