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:  September 4, 2012

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 o                                                                                                         Accelerated filer x

Non-accelerated filer o (Do not check if a smaller reporting company)                         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

63,654,751

(Number of shares of common stock, $0.01 par value, outstanding as of October 8, 2012)

RUBY TUESDAY, INC.

INDEX

	Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 4, 2012 AND JUNE 5, 2012	4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME FOR THE THIRTEEN WEEKS
ENDED SEPTEMBER 4, 2012 AND AUGUST 30, 2011	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE THIRTEEN WEEKS ENDED
SEPTEMBER 4, 2012 AND AUGUST 30, 2011	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS	7-22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS	23-35
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK	35
ITEM 4. CONTROLS AND PROCEDURES	35-36
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	36
ITEM 1A. RISK FACTORS	36
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	37
ITEM 4. MINE SAFETY DISCLOSURES	37
ITEM 5. OTHER INFORMATION	37
ITEM 6. EXHIBITS	37
SIGNATURES	38

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 and bond repurchases, restaurant acquisitions, conversions of Company-owned restaurants to other dining concepts, and changes in senior management and in the Board of Directors.  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, our targets for annual growth in same-restaurant sales and average annual sales per restaurant, and the benefits of our television marketing), 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;

·   our ability to successfully integrate acquired companies;

·   our ability to complete our planned sale-leaseback transactions;

·   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)

	SEPTEMBER 4,			JUNE 5,
	2012			2012
Assets	(NOTE A)
Current assets:
Cash and cash equivalents	$	65,488		$	48,184
Accounts receivable		8,422			4,700
Inventories:
Merchandise		26,347			19,918
China, silver and supplies		9,076			9,112
Income tax receivable		–			837
Deferred income taxes		24,892			27,134
Prepaid rent and other expenses		14,297			13,670
Assets held for sale		7,855			4,713
Total current assets		156,377			128,268
Property and equipment, net		939,710			966,605
Goodwill		9,022			7,989
Other assets		70,400			70,675
Total assets	$	1,175,509		$	1,173,537
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	36,678		$	34,948
Accrued liabilities:
Taxes, other than income and payroll		13,325			14,475
Payroll and related costs		32,174			32,546
Insurance		7,349			7,433
Deferred revenue – gift cards		7,267			8,758
Rent and other		27,133			21,610
Current portion of long-term debt, including capital leases		11,477			12,454
Income tax payable		1,786			–
Total current liabilities		137,189			132,224
Long-term debt and capital leases, less current maturities		310,634			314,209
Deferred income taxes		26,792			37,567
Deferred escalating minimum rent		45,629			45,259
Other deferred liabilities		77,786			68,054
Total liabilities		598,030			597,313
Commitments and contingencies (Note M)
Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares;
issued: 63,828 shares at 9/04/12; 64,038 shares at 6/05/12)		638			640
Capital in excess of par value		89,134			90,856
Retained earnings		501,584			498,985
Deferred compensation liability payable in
Company stock		962			1,008
Company stock held by Deferred Compensation Plan		(962	)		(1,008	)
Accumulated other comprehensive loss		(13,877	)		(14,257	)
Total shareholders’ equity		577,479			576,224
Total liabilities & shareholders’ equity	$	1,175,509		$	1,173,537

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

4

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

	THIRTEEN WEEKS ENDED
	SEPTEMBER 4, 2012			AUGUST 30, 2011
	(NOTE A)
Revenue:
Restaurant sales and operating revenue	$	331,265		$	328,854
Franchise revenue		1,656			1,491
		332,921			330,345
Operating costs and expenses:
Cost of merchandise		89,525			97,575
Payroll and related costs		109,234			110,861
Other restaurant operating costs		67,156			68,737
Depreciation		15,392			16,286
Selling, general and administrative, net		43,429			28,387
Closures and impairments		1,124			445
Interest expense, net		6,790			4,397
		332,650			326,688
Income before income taxes		271			3,657
(Benefit)/provision for income taxes		(2,328	)		564
Net income	$	2,599		$	3,093
Other comprehensive income:
Pension liability reclassification, net of tax		380			308
Total comprehensive income	$	2,979		$	3,401
Earnings per share:
Basic	$	0.04		$	0.05
Diluted	$	0.04		$	0.05
Weighted average shares:
Basic		62,813			63,755
Diluted		62,956			64,476
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)

	THIRTEEN WEEKS ENDED
	SEPTEMBER 4, 2012			AUGUST 30, 2011
	(NOTE A)
Operating activities:
Net income	$	2,599		$	3,093
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		15,392			16,286
Amortization of intangibles		839			514
Deferred income taxes		(9,041	)		(252	)
Loss on impairments, including disposition of assets		441			284
Share-based compensation expense		851			2,662
Excess tax benefits from share-based compensation		(1	)		(14	)
Amortization of deferred gain on sale-leaseback transactions		(143	)		–
Other		23			163
Changes in operating assets and liabilities:
Receivables		(3,721	)		(2,268	)
Inventories		(6,393	)		(977	)
Income taxes		2,623			(152	)
Prepaid and other assets		(1,638	)		1,300
Accounts payable, accrued and other liabilities		9,371			660
Net cash provided by operating activities		11,202			21,299
Investing activities:
Purchases of property and equipment		(6,360	)		(8,402	)
Proceeds from sale-leaseback transactions		19,286			–
Proceeds from disposal of assets		5			32
Insurance proceeds from property claims		–			1,548
Reductions/(increases) in Deferred Compensation Plan assets		127			(29	)
Other, net		(227	)		(143	)
Net cash provided/(used) by investing activities		12,831			(6,994	)
Financing activities:
Net proceeds from revolving credit facility		–			6,200
Principal payments on other long-term debt		(4,474	)		(3,575	)
Stock repurchases		(2,346	)		(18,441	)
Proceeds from exercise of stock options		90			62
Excess tax benefits from share-based compensation		1			14
Net cash used by financing activities		(6,729	)		(15,740	)
Increase/(decrease) in cash and cash equivalents		17,304			(1,435	)
Cash and cash equivalents:
Beginning of year		48,184			9,722
End of year	$	65,488		$	8,287
Supplemental disclosure of cash flow information:
Cash paid for:
Interest, net of amount capitalized	$	1,683		$	3,468
Income taxes, net	$	238		$	357
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	$	12,614		$	1,561
Reclassification of properties to assets held for sale	$	3,298		$	2,705

                 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,” the “Company,” “we,” and/or “our”), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill® (“Lime Fresh”), Marlin & Ray’s™, and Wok Hay® casual dining restaurants.  We also operate Truffles® restaurants pursuant to a license agreement and franchise the Ruby Tuesday, Lime Fresh, and Wok Hay concepts in selected 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 notinclude 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 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-week period ended September 4, 2012 are not necessarily indicative of results that may be expected for the 52-week year ending June 4, 2013.

The condensed consolidated balance sheet at June 5, 2012 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 June 5, 2012.

Immaterial Reclassifications and Corrections of Prior Period Condensed Consolidated Statement of Income and Comprehensive Income

As shown in the table below, we made the following reclassifications and/or corrections to our Condensed Consolidated Statement of Income and Comprehensive Income for the 13 weeks ended August 30, 2011:

·   reclassified and/or corrected certain employee fringe benefit and payroll tax expenses for corporate employees and field executives from Payroll and related costs, which is intended to capture payroll and related expenses for restaurant level employees, to Selling, general and administrative, net.  Salaries and wages for these employees were already captured within the Selling, general and administrative, net caption;

·   reclassified certain expenses not directly related to restaurant operations from Other restaurant operating costs to Selling, general and administrative, net; and

·   corrected amortization expense of debt issuance costs and fees relating to our revolving credit facility from Other restaurant operating costs to Interest expense, net.

	As presented Thirteen weeks ended August 30, 2011	Reclassifications and Corrections	As adjusted Thirteen weeks ended August 30, 2011
Payroll and related costs	$ 112,987	$ (2,126)	$ 110,861
Other restaurant operating costs	68,655	82	68,737
Selling, general and administrative, net	26,776	1,611	28,387
Interest expense, net	3,964	433	4,397
Income before income taxes	3,657	0	3,657

We made these reclassifications and corrections as we believe that reporting these amounts as shown above will more accurately reflect the nature of the expenses in our Condensed Consolidated Statements of Income and Comprehensive Income and are necessary to conform to the current period presentation and GAAP.  We have determined the reclassifications and corrections made to the prior period Condensed Consolidated Statement of Income and Comprehensive Income in previous filings to be immaterial.

7

NOTE B – EARNINGS PER SHARE AND STOCK REPURCHASES

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

	Thirteen weeks ended
	September 4, 2012		August 30, 2011
Net income	$	2,599	$	3,093
Weighted-average common shares outstanding		62,813		63,755
Dilutive effect of stock options and restricted stock		143		721
Weighted average common and dilutive potential
common shares outstanding		62,956		64,476
Basic earnings per share	$	0.04	$	0.05
Diluted earnings per share	$	0.04	$	0.05

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 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
	September 4, 2012		August 30, 2011
Stock options		2,068		1,551
Restricted shares		1,105		852
Total		3,173		2,403

During the first quarter of fiscal 2013, we repurchased 0.4 million shares of our common stock at a cost of $2.3 million.  As of September 4, 2012, the total number of remaining shares authorized by our Board of Directors to be repurchased was 5.6 million.  All shares repurchased during the current quarter were cancelled as of September 4, 2012.

NOTE C – FRANCHISE PROGRAMS

As of September 4, 2012, our domestic and international franchisees collectively operated 78 Ruby Tuesday restaurants and five Lime Fresh restaurants.  We do not own any equity interest in our franchisees.

Under the terms of the franchise operating agreements, we require all domestic franchisees to contribute a percentage, currently 2.25%, 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 can 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 Income and Comprehensive Income.

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 weeks ended September 4, 2012 and August 30, 2011, we recorded $0.3 million and $0.4 million, respectively, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Income and Comprehensive Income.

8

NOTE D – BUSINESS AND LICENSE ACQUISITIONS

Lime Fresh Acquisition

As discussed in Note 3 to our Annual Report on Form 10-K for the year ended June 5, 2012, on April 11, 2012, we completed the acquisition of Lime Fresh, including the assets of seven Lime Fresh concept restaurants, the royalty stream from five Lime Fresh concept franchised restaurants (one of which was not yet open), and the Lime Fresh brand’s intellectual property for $24.1 million.  During the quarter ended September 4, 2012, we made adjustments to the preliminary purchase price allocation as follows (in thousands):

	As Previously			Fiscal 2013
	Reported			Adjustments			As Adjusted
Trademarks	$	11,100		$	–		$	11,100
Goodwill		7,989			1,033			9,022
Acquired franchise rights		2,460			(960	)		1,500
Property and equipment		2,405			–			2,405
Deferred income taxes		19			(13	)		6
Other, net		(923	)		(60	)		(983	)
Net impact on Condensed Consolidated
Balance Sheet		23,050			–			23,050
Write-off of previous license agreement		1,034			–			1,034
Aggregate cash purchase price	$	24,084		$	–		$	24,084

For the year ended June 5, 2012, a $1.0 million loss on the write-off of a previous license agreement, representing the balance remaining from the September 13, 2010 licensing agreement with LFMG International, LLC, was included in Other restaurant operating costs in our fiscal 2012 Consolidated Statement of Operations.

We recorded $9.0 million of goodwill due to the purchase price exceeding the estimated fair value of the net assets acquired.  Of the goodwill recorded, we anticipate that an insignificant amount will be nondeductible for tax purposes.

We amortize the $11.1 million of acquired trademarks over a ten year period.  We amortize the $1.5 million of acquired franchise rights associated with this acquisition on a straight-line basis over the remaining term of the franchise operating agreements, which are approximately five to nine years from the date of acquisition.

On June 7, 2012, we entered into two marketing agreements with 50 Eggs Branding Company, LLC (“50 Eggs”).  John Kunkel, the CEO of 50 Eggs, previously was the CEO of LFMG International, LLC, and is a current Lime Fresh franchisee.  Under the terms of the first agreement, 50 Eggs will provide marketing services for our Lime Fresh concept for a monthly fee of $52,500 plus out of pocket expenses.  Under the terms of the second agreement, 50 Eggs will provide marketing services for our Marlin & Ray’s concept for a monthly fee of $26,250 plus out of pocket expenses.  Both agreements expire on June 6, 2013.  During the 13 weeks ended September 4, 2012, we made payments of $0.3 million to 50 Eggs in connection with these agreements.

License Acquisitions

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 pay a licensing fee to Gourmet Market, Inc. of 2.0% of gross sales of any Truffles we open.  Additionally, we 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 paid $20,833

9

per month for such services.  During the second 12 months of the agreement we paid $10,417 per month.  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.  Based on having opened two Truffles to date and our current growth plans for the next few years, it is not likely that we will open 18 or more Truffles restaurants within five years or 40 or more Truffles within 10 years.  During the 13 weeks ended September 4, 2012 and August 30, 2011, we paid Gourmet Market, Inc. $38,826 and $59,831, respectively, under the terms of the agreement.

NOTE E – ACCOUNTS RECEIVABLE

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

	September 4, 2012		June 5, 2012
Rebates receivable	$	924	$	923
Amounts due from franchisees		675		770
Other receivables		6,823		3,007
	$	8,422	$	4,700

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.

As of September 4, 2012 and June 5, 2012, Other receivables consisted primarily of amounts due from our distributor ($5.0 million and $0.9 million, respectively) and amounts due for third-party gift card sales ($1.2 million and $1.3 million, respectively).  Similar to the explanation for the increase in merchandise inventory as discussed in Note F to the Condensed Consolidated Financial Statements, the increase in the receivable due from our distributor is related to lobster purchased from us by our distributor out of our lobster inventory stored in third-party facilities.  We transfer ownership of the lobster once it is moved to our distributor’s facilities.  We reacquire this lobster inventory from our distributor upon its subsequent delivery to our restaurants.

On June 20, 2012, RT Midwest Holdings, LLC, RT Chicago Franchise, LLC, RT Midwest Real Estate, LLC, and RT Northern Illinois Franchise, LLC (collectively “RT Midwest”), filed for Chapter 11 protection in the United States Bankruptcy Court for the District of Minnesota.  RT Midwest is a franchisee which operated 13 restaurants and had indebtedness of $2.3 million owed to RTI at the time of the Chapter 11 filing.  During the fourth quarter of fiscal 2012, we wrote off the $2.3 million in franchise fee receivables due from RT Midwest and the associated unearned franchise fees in anticipation of the Chapter 11 filing.  See Note I to the Condensed Consolidated Financial Statements for a discussion of closed restaurant lease reserve charges recorded during the 13 weeks ended September 4, 2012 in connection with a subleased restaurant that RT Midwest closed during the current quarter.

NOTE F – INVENTORIES
 

Our merchandise inventory was $26.3 million and $19.9 million as of September 4, 2012 and June 5, 2012, respectively.  In order to ensure adequate supply and competitive pricing, we purchase lobster in advance of our needs and store it in third-party facilities prior to our distributor taking possession of the inventory.  The increase in merchandise inventory from the end of the prior fiscal year is due primarily to advance purchases of lobster in part to ensure adequate supply for an upcoming promotion.

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

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

	September 4, 2012		June 5, 2012
Land	$	238,849	$	244,498
Buildings		482,341		494,537
Improvements		421,403		421,143
Restaurant equipment		273,208		276,576
Other equipment		91,341		95,400
Construction in progress and other*		23,351		26,473
		1,530,493		1,558,627
Less accumulated depreciation		590,783		592,022
	$	939,710	$	966,605

* Included in Construction in progress and other as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 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.

Included within the current assets section of our Condensed Consolidated Balance Sheets at September 4, 2012 and June 5, 2012 are amounts classified as held for sale totaling $7.9 million and $4.7 million, respectively.  Assets held for sale primarily consist of parcels of land upon which we have no intention to build restaurants, land and buildings of closed restaurants, and various liquor licenses.  With the exception of sale-leaseback transactions discussed below, we did not sell any properties during the 13 weeks ended September 4, 2012.  During the 13 weeks ended August 30, 2011, we sold surplus properties consisting primarily of a liquor license with no carrying value for negligible proceeds and a negligible gain.

Approximately 54% of our 741 restaurants are located on leased properties.  Of these, approximately 65% are land leases only; the other 35% are for both land and building.  The initial terms of these leases expire at various dates over the next 24 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.

During the 13 weeks ended September 4, 2012, we completed sale-leaseback transactions of the land and building for nine Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $20.2 million, exclusive of transaction costs of approximately $1.0 million.  Equipment was not included.  The carrying value of the properties sold was $14.2 million.  The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years.  Net proceeds from the sale-leaseback transactions were used for general corporate purposes, including the repurchase of shares of our common stock, and debt payments.

We realized gains on these transactions during the 13 weeks ended September 4, 2012 of $5.0 million, which have been deferred and are being recognized on a straight-line basis over the initial terms of the leases.  The current portion of the deferred gains on all sale-leaseback transactions to date was $0.6 million and $0.3 million as of September 4, 2012 and June 5, 2012, respectively, and is included in Accrued liabilities – Rent and other in our Condensed Consolidated Balance Sheets.  The long-term portion of the deferred gains on all sale-leaseback transactions to date was $8.8 million and $4.2 million as of September 4, 2012 and June 5, 2012, respectively, and is included in Other deferred liabilities in our Condensed Consolidated Balance Sheets.  Amortization of the deferred gains of $0.1 million is included within Other

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restaurant operating costs in our Condensed Consolidated Statement of Income and Comprehensive Income for the 13 weeks ended September 4, 2012.

NOTE H – LONG-TERM DEBT AND CAPITAL LEASES

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

	September 4, 2012			June 5, 2012
Senior unsecured notes	$	250,000		$	250,000
Unamortized discount		(3,563	)		(3,646	)
Senior unsecured notes less unamortized discount		246,437			246,354
Mortgage loan obligations		75,444			80,076
Capital lease obligations		230			233
		322,111			326,663
Less current maturities		11,477			12,454
	$	310,634		$	314,209

On May 14, 2012, we entered into an indenture (the “Indenture”) among the Company, certain subsidiaries of the Company as guarantors and Wells Fargo Bank, National Association as trustee, governing the Company’s $250.0 million aggregate principal amount of 7.625% senior notes due 2020 (the “Senior Notes”).  The Senior Notes were issued at a discount of $3.7 million, which is being amortized using the effective interest method over the eight year term of the notes.

The Senior Notes are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions.  They rank equal in right of payment with our existing and future senior indebtedness and senior in right of payment to any of our future subordinated indebtedness.  The Senior Notes are effectively subordinated to all of our secured debt, including borrowings outstanding under our revolving credit facility, to the extent of the value of the assets securing such debt and structurally subordinated to all of the liabilities of our existing and future subsidiaries that do not guarantee the Senior Notes.

Interest on the Senior Notes is calculated at 7.625% per annum, payable semiannually on each May 15 and November 15, commencing November 15, 2012, to holders of record on the May 1 or November 1 immediately preceding the interest payment date.  The Senior Notes mature on May 15, 2020.

At any time prior to May 15, 2016, we may redeem the Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest.  At any time on or after May 15, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices specified in the Indenture plus accrued and unpaid interest.  At any time prior to May 15, 2015, we may redeem up to 35% of the Senior Notes from the proceeds of certain equity offerings.  There is no sinking fund for the Senior Notes.

The Indenture contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur or guarantee additional indebtedness; (ii) declare or pay dividends, redeem stock or make other distributions to stockholders; (iii) make certain investments; (iv) create liens or use assets as security in other transactions; (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of their assets; (vi) enter into transactions with affiliates; and (vii) sell or transfer certain assets.  These covenants are subject to a number of important exceptions and qualifications, as described in the Indenture, and certain covenants will not apply at any time when the Senior Notes are rated investment grade by the Rating Agencies, as defined in the Indenture.  The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately.

In connection with the issuance of the Senior Notes, we have agreed to register with the SEC notes having substantially identical terms as the Senior Notes, as part of an offer to exchange freely tradable exchange notes for the Senior Notes.  We have agreed: (i) within 270 days after the issue date of the Senior Notes, to file a registration statement enabling holders of the Senior Notes to exchange the privately placed notes for publicly registered notes with substantially identical terms; (ii) to use commercially reasonable efforts to cause the registration statement to become effective within 365 days after the issue date of the Senior

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Notes; (iii) to consummate the exchange offer within 405 days after the issue date of the Senior Notes; and (iv) to file a shelf registration statement for resale of the notes if we cannot consummate the exchange offer within the time period listed above.

If we fail to meet these targets (each, a “registration default”), the annual interest rate on the Senior Notes will increase by 0.25%.  The annual interest rate on the Senior Notes will increase by an additional 0.25% for each subsequent 90-day period during which the registration default continues, up to a maximum additional interest rate of 1.0% per year over the otherwise applicable annual interest rate of 7.625%.  If we cure the registration default, the interest rate on the Senior Notes will revert to the original level.

On September 4, 2012, we initiated a repurchase of $1.5 million of the Senior Notes.  The repurchase did not settle until September 7, 2012.  As a result, the amount repurchased, along with a pro rata portion of the associated unamortized discount, is included within the Current portion of long-term debt, including capital leases caption in our September 4, 2012 Condensed Consolidated Balance Sheet.

On December 1, 2010, we entered into a five-year revolving credit agreement (the “Credit Facility”), under which we could borrow up to $320.0 million with the option to increase our capacity by $50.0 million to $370.0 million.  On May 14, 2012, we entered into the second amendment to our revolving credit facility to, among other things, reduce the maximum aggregate revolving commitment to $200.0 million, secure the revolving credit facility with a lien over the equity interests of certain subsidiaries, modify certain financial covenants and ratios and permit the issuance of the Senior Notes.

The terms of the Credit Facility provide for a $40.0 million letter of credit subcommitment.  The Credit Facility also includes a $50.0 million franchise facility subcommitment (the “Franchise Facility Subcommitment”), which covered our previous guarantees of franchise debt.  The Franchise Facility Subcommitment matures not later than December 1, 2015.  All amounts guaranteed under the Franchise Facility Subcommitment have been settled.

The interest rate 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 1.50%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.50% depending on our Total Debt to EBITDAR ratio.

A commitment fee for the account of each lender at a rate ranging from 0.300% to 0.450% (depending on our Total Debt to EBITDAR ratio) on the daily amount of the unused revolving commitment of such lender is payable on the last day of each calendar quarter and on the termination date of the Credit Facility.  On the first day after the end of each calendar quarter until the termination date of the Credit Facility, we are required to pay a letter of credit fee for the account of each lender with respect to such lender’s participation in each letter of credit.  The letter of credit fee accrues at the applicable margin for Eurodollar Loans then in effect on the average daily amount of such lender’s letter of credit exposure (excluding any portion attributable to unreimbursed letter of credit disbursements) attributable to such letter of credit during the period from and including the date of issuance of such letter of credit to but excluding the date on which such letter of credit expires or is drawn in full.  Besides the commitment fee and the letter of credit fee, we are also required to pay a fronting fee on the daily amount of the letter of credit exposure (excluding any portion attributable to unreimbursed letter of credit disbursements) on the tenth day after the end of each calendar quarter until the termination date of the Credit Facility.  We must also pay standard fees with respect to issuance, amendment, renewal or extension of any letter of credit or processing of drawings thereunder.

We are entitled to make voluntary prepayments of our borrowings under the Credit Facility at any time, in whole or in part, without premium or penalty.  Subject to certain exceptions, mandatory prepayments will be required upon occurrence of certain events, including the revolving credit exposure of all lenders exceeding the aggregate revolving commitment then in effect, sales of certain assets and any additional debt issuances.

Under the terms of the Credit Facility, we had no borrowings outstanding at either September 4, 2012 or June 5, 2012.  After consideration of letters of credit outstanding, we had $189.7 million available under the Credit Facility as of September 4, 2012.

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The Credit Facility contains a number of customary affirmative and negative covenants that, among others, limit or restrict our ability to incur liens, engage in mergers or other fundamental changes, make acquisitions, investments, loans and advances, pay dividends or other distributions, sell or otherwise dispose of certain assets, engage in certain transactions with affiliates, enter into burdensome agreements or certain hedging agreements, amend organizational documents, change accounting practices, incur additional indebtedness and prepay other indebtedness.  In addition, under the Credit Facility, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio and we were in compliance with these financial covenants as of September 4, 2012.  The terms of the Credit Facility require us to maintain a maximum leverage ratio of no more than 4.5 to 1.0 through the fiscal quarter ending on or about June 4, 2013 and 4.25 to 1.0 thereafter and a minimum fixed charge coverage ratio of 1.75 to 1.0 through and including the fiscal quarter ending on or about June 3, 2014 and 1.85 to 1.0 thereafter.

The Credit Facility terminates on December 1, 2015.  Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Facility and any ancillary loan documents.

Our $75.4 million in mortgage loan obligations as of September 4, 2012 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between November 2012 and November 2022, have balances which range from negligible to $8.3 million and interest rates of 3.94% to 11.28%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairment expenses include the following for the thirteen weeks ended September 4, 2012 and August 30, 2011 (in thousands):

	September 4, 2012		August 30, 2011
Property impairments	$	448	$	206
Closed restaurant lease reserves		478		79
Other closing expense		289		190
Gain on sale of surplus properties		(91)		(30)
	$	1,124	$	445

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

	Lease Obligations
Balance at June 5, 2012	$	6,813
Closing expense including rent and other lease charges		478
Payments		(792	)
Transfer of deferred escalating minimum rent balance		348
Other adjustments		(5	)
Balance at September 4, 2012	$	6,842

For the remainder of fiscal 2013 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.

Included within closing expense in the table above are $0.2 million in charges we recorded during the first quarter associated with lease obligations on a restaurant subleased to RT Midwest that has closed.  As of September 4, 2012, we subleased to RT Midwest three sites upon which the restaurants are still open.  Cash rents of $0.8 million are required under the terms of the subleases.  Should RT Midwest decide to close any of these restaurants we may incur further lease obligations associated with these subleases.

At September 4, 2012, we had 26 restaurants that had been open more than one year with rolling 12-month negative cash flows of which 15 have been impaired to salvage value.  Of the 11 which remained, we reviewed the plans to improve cash flows at each of the restaurants and determined that no impairment was necessary.  The remaining net book value of these 11 restaurants was $8.6 million at September 4, 2012.

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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 – EMPLOYEE POST-EMPLOYMENT 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 $0.5 million to the Retirement Plan during the remainder of fiscal 2013.

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.

Because Samuel E. Beall, III, our Chief Executive Officer has stated his intention to step down from management and the Board of Directors once the Company names his successor and, because he is entitled to receive his entire pension payment in a lump-sum following his retirement, we have classified an amount representing that pension payment ($8.1 million) into Accrued liabilities – Payroll and related costs in our September 4, 2012 and June 5, 2012 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.

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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
	September 4, 2012			August 30, 2011
Service cost	$	115		$	134
Interest cost		525			576
Expected return on plan assets		(102	)		(126	)
Amortization of prior service cost (a)		26			64
Recognized actuarial loss		565			426
Net periodic benefit cost	$	1,129		$	1,074
	Postretirement Medical and Life Benefits
	Thirteen weeks ended
	September 4, 2012			August 30, 2011
Service cost	$	3		$	2
Interest cost		15			18
Amortization of prior service cost (a)		(14	)		(14	)
Recognized actuarial loss		53			34
Net periodic benefit cost	$	57		$	40

(a)   Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.

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 June 5, 2012.

Executive Retirement

On June 6, 2012, we announced that Samuel E. Beall, III, our founder, President, Chief Executive Officer, and Chairman of the Board of Directors, decided to step down from management and the Board of Directors.  Mr. Beall intends to step down once the Company names his successor.  In connection with a transition agreement between the Company and Mr. Beall, the material terms of which were finalized as of June 5, 2012, we accrued $2.2 million of severance during the fourth quarter of fiscal 2012.  Mr. Beall’s severance payment will be payable 60 days after his departure from the Company.

As previously mentioned, Mr. Beall will receive a lump sum payment of $8.1 million, representing the full amount due to him under the Executive Supplemental Pension Plan, six-months following his retirement.  Should Mr. Beall retire prior to November 30, 2012, as is currently agreed, this payment will be required in fiscal 2013.  Due to the significance of this payment to the Executive Supplemental Pension Plan as a whole, the payment will constitute a partial plan settlement which will require a special valuation.  In addition to the expense we routinely record for the Executive Supplemental Pension Plan, a charge estimated to approximate $2.8 million will then be recorded, representing the recognition of a pro rata portion (calculated as the percentage reduction in the projected benefit obligation due to the lump-sum payment) of the then unrecognized loss recorded within accumulated other comprehensive loss.

NOTE K – INCOME TAXES

We had a liability for unrecognized tax benefits of $10.1 million and $6.4 million as of September 4, 2012 and June 5, 2012, respectively.  As of September 4, 2012 and June 5, 2012, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $4.4 million and $4.2 million, respectively.  The liability for unrecognized tax benefits as of September 4, 2012 includes $1.4

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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.

Interest and penalties related to unrecognized tax benefits are recognized as components of income tax expense.  As of September 4, 2012 and June 5, 2012, we had accrued $1.3 million and $1.0 million, respectively, for the payment of interest and penalties.  During the first quarter of fiscal 2013, accrued interest and penalties increased by $0.3 million, of which $0.2 million affected the effective tax rate for the quarter ended September 4, 2012.

Under Accounting Standards Codification 740 (“ASC 740”), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period.  Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable.  In this situation, the interim tax rate should be based on the actual year-to-date results.  Based on our current projections, a small change in pre-tax earnings would result in a material change in the estimated annual effective tax rate, producing significant variations in the customary relationship between income tax expense and pre-tax accounting income in interim periods.  As such, and in contrast with our previous methods of recording income tax expense, we recorded a tax benefit for the first quarter of fiscal 2013 based on the actual year-to-date results, in accordance with ASC 740.

We recorded a tax benefit of $2.3 million during the first quarter of fiscal 2013 compared to tax expense of $0.6 million in the prior year quarter.  The change in income taxes was attributable to lower pre-tax income for the current quarter as compared to the same period of the prior year and an increase in the tax benefit of FICA Tip credits based on actual year-to-date amounts as discussed above.  This benefit was partially offset by an increase in unrecognized tax benefits for the quarter.

At September 4, 2012, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2008 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 2008.

NOTE L – 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 either cliff vest after a one year period or vest in equal amounts after one, two, and three years provided the director continually serves on the Board of Directors.  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 of Directors, administers the Directors’ Plan.  At September 4, 2012, we had reserved 111,000 shares of common stock under the Directors’ Plan, 47,000 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 of Directors, 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.  A majority of the currently unvested restricted shares granted in fiscal year 2013 are performance-based and a majority of the unvested restricted shares granted in fiscal year 2012 are service-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, awards of stock options or other derivative securities related to the value of the common stock, and

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certain cash awards to eligible persons.  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 September 4, 2012, we had reserved a total of 4,772,000 and 941,000 shares of common stock for the 2003 SIP and 1996 SIP, respectively.  Of the reserved shares at September 4, 2012, 1,645,000 and 941,000 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 September 4, 2012 under the 2003 SIP and 1996 SIP were 3,127,000 and negligible, respectively.

Stock Options

The following table summarizes the activity in options for the 13 weeks ended September 4, 2012 under these stock option plans (in thousands, except per-share data):

				Weighted-
				Average
	Options			Exercise Price
Balance at June 5, 2012		2,716		$	8.79
Granted		–			–
Exercised		(13	)		7.00
Forfeited		(70	)		8.99
Balance at September 4, 2012		2,633		$	8.80
Exercisable at September 4, 2012		2,200		$	8.79

Included in the outstanding balance shown above are approximately 2.0 million of out-of-the-money options.  Of this amount, we expect that 0.2 million of these options will expire out-of-the-money during the remainder of the current fiscal year.

At September 4, 2012, there was approximately $0.2 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 0.7 years.

Restricted Stock

The following table summarizes our restricted stock activity for the 13 weeks ended September 4, 2012 (in thousands, except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Non-vested at June 5, 2012		423		$	7.75
Granted		242			6.64
Vested		(85	)		7.29
Forfeited		(314	)		7.87
Non-vested at September 4, 2012		266		$	6.74
				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Non-vested at June 5, 2012		797		$	8.37
Granted		213			6.64
Vested		(171	)		6.65
Forfeited		–			–
Non-vested at September 4, 2012		839		$	8.22

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 September 4, 2012, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $5.2 million and will be recognized over a weighted average vesting period of approximately 2.7 years.

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During the first quarter of fiscal 2013, we granted approximately 213,000 service-based restricted shares and 242,000 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 2.5 years following the grant date.  Vesting of the performance-based restricted shares is also contingent upon the Company’s achievement of certain performance conditions related to fiscal 2013 performance, which will be measured in the first quarter of fiscal 2014.  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.

Also during the first quarter of fiscal 2013, the Executive Compensation and Human Resources Committee of the Board of Directors determined that the performance condition was not achieved for 314,000 performance-based restricted shares awarded in August 2011 to vest.  As a result, the restricted shares were cancelled and returned to the pool of shares available for grant under the 2003 SIP and 1996 SIP.

NOTE M – COMMITMENTS AND CONTINGENCIES

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 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, 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 (“DI”), regarding potential age discrimination in violation of the ADEA in hiring and discharge for all positions at all restaurant facilities.  We have denied the allegations in the lawsuit and are vigorously defending against both the suit and the DI.  We have filed motions seeking to dismiss the lawsuit based on the EEOC’s failure to conciliate the matter prior to filing suit and objecting to the EEOC filing suit and launching the DI simultaneously.  Discovery is ongoing in both matters.  Despite the pending suit and DI, 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.  Included in the Maddy settlement was a payment made by our secondary insurance carrier of $2,750,000.  Despite making this voluntary payment, our secondary insurance carrier filed a claim against us based on our alleged failure to timely notify the carrier of the Maddy case in accordance with the terms of the policy. 

We believe our secondary insurance carrier received timely notice in accordance with the policy and we are vigorously defending this 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 September 4, 2012 and June 5, 2012 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 claim against us.

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NOTE N – FAIR VALUE MEASUREMENTS

The following table presents the fair values of our financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall (in thousands):

	Level	September 4, 2012			June 5, 2012
Deferred compensation plan: other investments – Assets	1	$	8,449		$	7,974
Deferred compensation plan: other investments – Liabilities	1		(8,449	)		(7,974	)
Deferred compensation plan: RTI common stock – Equity	1		962			1,008
Deferred compensation plan: RTI common stock – Equity	1		(962	)		(1,008	)
Total		$	–		$	–

During the 13 weeks ended September 4, 2012 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.  The investments held by these plans 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 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 September 4, 2012 and June 5, 2012 (in thousands):

	Fair Value Measurements
	Level	September 4, 2012		June 5, 2012
Long-lived assets held for sale *	2	$	26,256	$	26,495
Long-lived assets held for use	2		448		385
Total		$	26,704	$	26,880

* Included in the carrying value of long-lived assets held for sale as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 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 weeks ended September 4, 2012 and August 30, 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 and Comprehensive Income (in thousands):

	13 weeks ended
	September 4, 2012		August 30, 2011
Long-lived assets held for sale	$	157	$	206
Long-lived assets held for use		291		–
Total	$	448	$	206

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.

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Long-lived assets held for use presented in the table above include 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 September 4, 2012 and June 5, 2012 consisted of cash and cash equivalents, accounts receivable and payable, long-term debt, and letters of credit.  The fair values of cash and cash equivalents 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):

	September 4, 2012				June 5, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt and capital leases	$	322,111	$	318,540	$	326,663	$	312,225
Letters of credit		–		247		–		222

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

NOTE O – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted in Fiscal 2013

In June 2011, the Financial Accounting Standards Board (“FASB”) 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).  The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

In September 2011, the FASB 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 first quarter).  The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

Accounting Pronouncements Not Yet Adopted

In July 2012, the FASB issued guidance on testing indefinite-lived intangible assets for impairment.  Under the guidance, testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill has been simplified.  The guidance allows an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test.  An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired.  The guidance is effective for impairment tests for fiscal years beginning after September 15, 2012 (our fiscal 2014).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.

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NOTE P – SUBSEQUENT EVENTS

Sale-leaseback transactions

Subsequent to September 4, 2012, we completed sale-leaseback transactions of the land and building for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $7.5 million, exclusive of transaction costs of approximately $0.4 million.  Equipment was not included.  The carrying value of the properties sold was $5.6 million.  The leases have been classified as operating leases and have an initial term of 15 years, with renewal options of up to 20 years.  We realized gains on these transactions totaling $1.5 million, which have been deferred and are being recognized on a straight-line basis over the initial terms of the leases.

Share repurchases

Subsequent to September 4, 2012, we spent $1.2 million to repurchase 0.2 million shares of RTI common stock.

Repurchases of Senior Notes

On September 7, 2012, we repurchased $1.5 million of the Senior Notes for $1.4 million plus a negligible amount of accrued interest.  We realized a negligible gain on this transaction.

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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 Quarterly Report on 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 Quarterly Report on 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® (“Lime Fresh”), Marlin & Ray’s™, and Wok Hay® casual dining restaurants.  We also operate Truffles® restaurants pursuant to a license agreement and franchise the Ruby Tuesday, Lime Fresh, and Wok Hay concepts in select domestic and international markets.  As of September 4, 2012, we owned and operated 712, and franchised 78, Ruby Tuesday restaurants.  Ruby Tuesday restaurants can now be found in 45 states, the District of Columbia, 12 foreign countries, and Guam.

As of September 4, 2012, there were 15 Company-owned and operated Lime Fresh restaurants, 11 Marlin & Ray’s restaurants, two Truffles restaurants, and one Wok Hay restaurant.  In addition, there were five Lime Fresh restaurants operated by domestic franchisees as of September 4, 2012.

Overview and Strategies

Casual dining, the segment of the industry in which we operate, is intensely competitive with respect to prices, services, convenience, locations, employees, 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.  While we are in the bar and grill sector because of our varied menu, we operate at the higher-end of casual dining in terms of the quality of our food and service.  Our mission is to be the best in the bar and grill segment of casual dining by delivering to our guests a high-quality casual dining experience with compelling value.

We believe there are significant opportunities to grow our business, strengthen our competitive position, enhance our profitability, and create value through the execution of the following strategies:

Enhance Sales and Margins of Our Core Brand

In order to entice guests to see the new Ruby Tuesday, increase frequency of visits, drive same-restaurant sales growth and enhance brand visibility, we are increasing the amount we spend on television marketing. Our marketing strategy for the last several fiscal years has focused mainly on print promotions, digital media and local marketing programs, with a minimal amount spent on television.  In fiscal 2012, we began testing television marketing in certain markets with approximately 20% of our restaurants covered by television advertising in the third quarter and approximately 50% to 100% of our restaurants covered in our fourth quarter through leveraging a mixture of network and national cable at varying media weights.  Based on favorable trends exhibited by our test markets in fiscal 2012, at the start of fiscal 2013 we deployed a television marketing program which will cover the entire system of restaurants for a portion of each quarter with the remaining portion of the quarter to be supplemented by high-end direct mail and other promotions.  Our creative messaging will emphasize a “pure value and quality” advertisement, in addition to potential limited time offers throughout the year.  We believe that having television advertising expense levels more in line with our peers together with a more balanced approach on our promotional strategies will position us for improvements in same-restaurant sales in the future from repeat and new guests.

In order to fund the incremental television advertising efforts at no dilution to the overall profitability or cash flow of the Company, throughout fiscal 2012 we consulted with a leading enterprise improvement firm to assist us in identifying potential savings opportunities in a number of key areas including procurement, occupancy, and maintenance costs.  The majority of these cost savings will be reinvested into our television marketing programs.

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Focus on Low-Risk, Low-Capital Intensive, High-Return Growth

In an effort to be prudent with our capital, we have a strategy to grow our Company in a low-risk, low capital-intensive and high-return manner, with a focus on the fast casual segment.  During the fourth quarter of fiscal 2012, we acquired the Lime Fresh concept for $24.1 million.  We had previously opened Lime Fresh restaurants under a licensing agreement.  However, after over a year of experience with the brand and better understanding its positioning in the high-quality fast casual segment, we decided that we could more quickly grow the concept if we owned it.  The fast casual segment of our industry is a proven and growing segment where demand exceeds supply, and we believe opening smaller, inline locations under the Lime Fresh brand is a good potential growth option for us.  We also believe Lime Fresh can create good long-term value and strong cash flow with relatively low risk.  We opened two Company-owned Lime Fresh restaurants during the first quarter of fiscal 2013 and plan to open 10 to 14 Company-owned Lime Fresh restaurants during the remainder of the current fiscal year.  Over time, we also plan to open Company-owned, smaller inline-type Ruby Tuesday restaurants as well.

Increase Returns Through New Concept Conversions

Another 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 have been converting certain underperforming Ruby Tuesday concept restaurants into our internally-developed seafood concept, Marlin & Ray’s, which is a uniquely-differentiated, high-value casual dining brand.  We expect to convert five to seven Company-owned Ruby Tuesday restaurants to the Marlin & Ray’s concept during the remainder of fiscal 2013.  We believe the low capital requirement and potential increased revenue and EBITDA from these conversions, in addition to the revenue increases we are seeing at neighboring Ruby Tuesday locations, can potentially provide attractive cash-on-cash returns and strong cash flow.

Strengthen our Balance Sheet to Facilitate Growth and Value Creation

During the fourth quarter of fiscal 2012, we further strengthened our balance sheet and created additional financial flexibility by issuing $250.0 million in a senior unsecured notes offering with an eight-year maturity.  As a result of the transaction, we were able to pay off all of our outstanding debt with the exception of some of our mortgage debt from previous franchise partnership acquisitions, reduce our revolver commitment size from $380.0 million to $200.0 million, obtain attractive interest rates, extend the maturity date of the majority of our debt for up to eight years, and build excess cash which we will reinvest in the future.  We continue to maintain a strong balance sheet and have a sufficient amount of liquidity.  Our near-term capital expenditure requirements will consist of opening approximately 10 to 14 Lime Fresh restaurants and converting approximately five to seven Ruby Tuesday concept restaurants to the Marlin & Ray’s concept during the remainder of fiscal 2013.

Our strong balance sheet is supported by a high-quality portfolio of owned real estate, and during fiscal 2012 we commenced a sale-leaseback program on a portion of our properties in order to create greater financial flexibility and generate additional liquidity for debt reduction or reinvestment.  We are targeting to raise approximately $55.0 million of gross proceeds from sale-leaseback transactions, of which $42.5 million had been raised as of September 4, 2012, which was utilized for general corporate purposes, including the repurchase of shares of our common stock and debt reduction.  Since that date, we have raised an additional $7.5 million.  We anticipate the remaining sale-leaseback transactions to be completed over the next one to two fiscal quarters and plan to utilize the proceeds for general corporate purposes, including further debt reduction.  See further discussion in the Investing Activities section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

We generated $4.8 million of free cash flow during the first quarter of fiscal 2013, which, along with our proceeds from sale-leaseback transactions, was used to pay down debt, repurchase stock, and increase cash on hand.  We estimate we will generate approximately $15.2 to $25.2 million of free cash flow during the remainder of fiscal 2013.  Included in these estimates is anticipated capital spending of approximately $37.6 to $43.6 million.  Our objective over the next several years is to continue to reduce outstanding debt levels in order to reduce our leverage, focus on new Lime Fresh restaurant development and Marlin & Ray’s conversions, and opportunistically repurchase outstanding shares under our share repurchase program.

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.

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Results of Operations:

The following is an overview of our results of operations for the 13-week period ended September 4, 2012:

Net income decreased to $2.6 million for the 13 weeks ended September 4, 2012 compared to $3.1 million for the same quarter of the previous year.  Diluted earnings per share for the fiscal quarter ended September 4, 2012 decreased to $0.04 compared to $0.05 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 September 4, 2012:

● Two Company-owned Ruby Tuesday restaurants were closed, one of which is anticipated to be converted into a Marlin & Ray’s concept restaurant;

● Two Company-owned Lime Fresh restaurants were opened;

● One franchised Ruby Tuesday restaurant was opened and two were closed;

● One franchised Lime Fresh restaurant was opened;

● We repurchased 0.4 million shares of common stock at an aggregate cost of $2.3 million;

● We initiated a repurchase of $1.5 million of our 7.625% senior notes due 2020 (the “Senior Notes”).  The repurchase settled on September 7, 2012 for $1.4 million plus a negligible amount of accrued interest.  We realized a negligible gain on this transaction;

● Same-restaurant sales* at Company-owned Ruby Tuesday restaurants increased 1.9%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 1.6%; and

● Reclassified and/or corrected certain immaterial prior year income statement information which did not change net income.  See Note A to the Condensed Consolidated Financial Statements for more information.

* 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.

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 Quarterly Report on Form 10-Q.

	Thirteen weeks ended
	September 4,		August 30,
	2012		2011
Revenue:
Restaurant sales and operating revenue	99	.5%	99	.5%
Franchise revenue	0	.5	0	.5
Total revenue	100	.0	100	.0
Operating costs and expenses:
Cost of merchandise (1)	27	.0	29	.7
Payroll and related costs (1)	33	.0	33	.7
Other restaurant operating costs (1)	20	.3	20	.9
Depreciation (1)	4	.6	5	.0
Selling, general and administrative, net	13	.0	8	.6
Closures and impairments	0	.3	0	.1
Interest expense, net	2	.0	1	.3
Income before income taxes	0	.1	1	.1
Provision for income taxes	(0	.7)	0	.2
Net income	0	.8%	0	.9%

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

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The following table shows Company-owned Ruby Tuesday, Lime Fresh, Marlin & Ray’s, and other concept restaurant activity for the 13-week periods ended September 4, 2012 and August 30, 2011.

	Ruby Tuesday			Lime Fresh		Marlin & Ray’s		Other Concepts*		Total
13 weeks ended September 4, 2012
Beginning number		714			13		11		3		741
Opened		–			2		–		–		2
Closed		(2	)		–		–		–		(2	)
Ending number		712			15		11		3		741
13 weeks ended August 30, 2011
Beginning number		750			–		1		3		754
Opened		–			–		2		1		3
Closed		(4	)		–		–		–		(4	)
Ending number		746			–		3		4		753

*Other concepts include Truffles and Wok Hay.

The following table shows franchised Ruby Tuesday and Lime Fresh concept restaurant activity for the 13-week periods ended September 4, 2012 and August 30, 2011.

	Ruby Tuesday			Lime Fresh
13 weeks ended September 4, 2012
Beginning number		79			4
Opened		1			1
Closed		(2	)		–
Ending number		78			5
13 weeks ended August 30, 2011
Beginning number		96			–
Opened		2			–
Closed		(3	)		–
Ending number		95			–

We expect our domestic and international franchisees to open approximately eight to 10 additional Ruby Tuesday restaurants during the remainder of fiscal 2013.  We currently anticipate opening approximately 10 to 14 Lime Fresh restaurants and converting approximately five to seven Ruby Tuesday concept restaurants to the Marlin & Ray’s concept during the remainder of fiscal 2013.

Revenue

RTI’s restaurant sales and operating revenue for the 13 weeks ended September 4, 2012 increased 0.7% to $331.3 million compared to the same period of the prior year.  This increase is primarily a result of a 1.9% increase in same-restaurant sales at Company-owned Ruby Tuesday restaurants.

The increase in same-restaurant sales is attributable to an increase in average net check in the first quarter of fiscal 2013 compared with the same quarter of the prior year, which was partially offset by lower guest counts.  The increase in average net check was a result of reduced discounts and menu price increases during the first quarter of the current year compared to the prior year.

Franchise revenue for the 13 weeks ended September 4, 2012 increased 11.1% to $1.7 million compared to the same period of the prior year.  Franchise revenue is predominately comprised of domestic and international franchise royalties, which totaled $1.6 million and $1.4 million for the 13-week periods ended September 4, 2012 and August 30, 2011, respectively.  The increase in franchise royalties for the 13 weeks ended September 4, 2012 was due primarily to higher international royalties compared to the first quarter of the prior year.

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Pre-tax Income

Pre-tax income decreased $3.4 million to $0.3 million for the 13 weeks ended September 4, 2012, over the corresponding period of the prior year.  The lower pre-tax income is due to higher interest expense ($2.4 million), and increases, as a percentage of total revenue, of selling, general, and administrative, net and closures and impairments.  These higher costs were partially offset by an increase in same-restaurant sales of 1.9% at Company-owned Ruby Tuesday restaurants and decreases, as a percentage of restaurant sales and operating revenue, of cost of merchandise, payroll and related costs, other restaurant operating costs, and depreciation.

In the paragraphs that follow, we discuss in more detail the components of the decrease in pre-tax income for the 13-week period ended September 4, 2012, as compared to the comparable period 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.

Cost of Merchandise

Cost of merchandise decreased $8.1 million (8.3%) to $89.5 million for the 13 weeks ended September 4, 2012, over the corresponding period of the prior year.  As a percentage of restaurant sales and operating revenue, cost of merchandise decreased from 29.7% to 27.0%.

The absolute dollar decrease for the 13-week period ended September 4, 2012 was the result of cost savings negotiated with our primary food distributor coupled with renegotiated contracts and product specification changes on several items with certain vendors since the first quarter of fiscal 2012.  Restaurant closures further contributed to the reduction in cost of merchandise.

As a percentage of restaurant sales and operating revenue, the decrease in cost of merchandise for the 13 weeks ended September 4, 2012 is due primarily to cost savings negotiated with our primary food distributor and various other vendors and a reduction in coupons since the first quarter of the prior year.

Payroll and Related Costs

Payroll and related costs decreased $1.6 million (1.5%) to $109.2 million for the 13 weeks ended September 4, 2012, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, payroll and related costs decreased from 33.7% to 33.0%.

The absolute dollar decrease in payroll and related costs for the 13-week period ended September 4, 2012 was due to restaurant closures, decreases in hourly labor as a result of new staffing guidelines for certain positions in our restaurants, and lower management labor due to fewer managers per restaurant during the current versus prior year quarter.

As a percentage of restaurant sales and operating revenue, the decrease in payroll and related costs for the 13 weeks ended September 4, 2012 was primarily the result of decreased hourly and management labor due to restaurant closures and other reasons as discussed above, coupled with leveraging associated with higher sales volumes.

Other Restaurant Operating Costs

Other restaurant operating costs decreased $1.6 million (2.3%) to $67.2 million for the 13-week period ended September 4, 2012, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, these costs decreased from 20.9% to 20.3%.

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For the 13 weeks ended September 4, 2012, the decrease in other restaurant operating costs related to the following (in thousands):

Insurance	$	(869	)
Utilities		(858	)
Credit card expense		(708	)
Waste removal		(462	)
Supplies		(458	)
Other reductions		(448	)
Repairs		1,192
Rent and leasing		1,030
Net decrease	$	(1,581	)

In both absolute dollars and as a percentage of restaurant sales and operating revenue for the 13-week period ended September 4, 2012, in addition to restaurant closures since the first quarter of the prior year, the decrease was a result of reduced insurance expense due to favorable general liability claims experience, lower utilities expense based on reduced rates, lower credit card expense as a result of a reduction in interchange fees, and reductions in expenses for waste removal, supplies, and other.  These reduced costs were partially offset by higher repairs expense due in part to summer HVAC maintenance at several of our restaurants during the first quarter and higher rent and leasing charges as a result of sale-leaseback transactions since the first quarter of fiscal 2012.

Depreciation

Depreciation expense decreased $0.9 million (5.5%) to $15.4 million for the 13-week period ended September 4, 2012, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, depreciation expense decreased from 5.0% to 4.6%.

In terms of both absolute dollars and as a percentage of restaurant sales and operating revenue, the decrease for the 13-week period ended September 4, 2012 is due primarily to assets that became fully depreciated since the first quarter of the prior year coupled with sale-leaseback transactions and restaurant closures.

Selling, General and Administrative Expenses, Net

Selling, general and administrative expenses, net increased $15.0 million (53.0%) to $43.4 million for the 13-week period ended September 4, 2012, as compared to the corresponding period in the prior year.

The increase for the 13-week period ended September 4, 2012 is due to higher advertising costs ($15.2 million) primarily as a result of increased television advertising.  At the start of fiscal 2013, we deployed a television marketing program which will cover the entire system of restaurants for a portion of each quarter with the remaining portion of the quarter to be supplemented by high-end direct mail and other promotions.

Closures and Impairments

Closures and impairments increased $0.7 million to $1.1 million for the 13-week period ended September 4, 2012, as compared to the corresponding period of the prior year.  The increase for the 13-week period ended September 4, 2012 is primarily due to higher property impairment charges ($0.2 million), closed restaurant lease reserve expense ($0.4 million), and other closing costs ($0.1 million).  See Note I to our Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the first quarters of fiscal 2013 and 2012.

Interest Expense, Net

Interest expense, net increased $2.4 million to $6.8 million for the 13 weeks ended September 4, 2012, as compared to the corresponding period in the prior year, primarily due to interest expense on our Senior Notes which was partially offset by lower expense on our other debt due to pay downs since the first quarter of fiscal 2012.

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(Benefit)/Provision for Income Taxes

We recorded a tax benefit of $2.3 million during the first quarter of fiscal 2013 compared to tax expense of $0.6 million in the prior year quarter.  The change in income taxes was attributable to lower pre-tax income for the current quarter as compared to the same period of the prior year and an increase in the tax benefit of FICA Tip credits based on actual year-to-date amounts.  This benefit was partially offset by an increase in unrecognized tax benefits for the quarter.

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 June 5, 2012, we identified our critical accounting policies related to impairment of long-lived assets, business combinations, share-based employee compensation, income tax valuation allowances and tax accruals, lease obligations, revenue recognition for franchisees, and estimated liability for self-insurance.  During the first 13 weeks of fiscal 2013, we changed our methodology of accounting for income taxes in interim periods as discussed below.

Accounting for Income Taxes in Interim Periods

Prior to the 13 weeks ended September 4, 2012, we accounted for income taxes during interim periods by recording tax expense or a tax benefit during the respective quarterly period using the estimated annual effective tax rate for the fiscal year.  Under Accounting Standards Codification 740 (“ASC 740”), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period.  Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable.  In this situation, the interim tax rate should be based on the actual year-to-date results.  Based on our current projections, a small change in pre-tax earnings could result in a material change in the estimated annual effective tax rate, producing significant variations in the customary relationship between income tax expense and pre-tax accounting income in interim periods.  As such, and in contrast with our previous method of recording income tax expense, we recorded a tax benefit for the first quarter of fiscal 2013 based on the actual year-to-date results, in accordance with ASC 740.

Liquidity and Capital Resources:

Cash and cash equivalents increased/(decreased) by $17.3 million and ($1.4) million during the first 13 weeks of fiscal 2013 and 2012, respectively.  The change in cash and cash equivalents is as follows (in thousands):

	Thirteen weeks ended
	September 4,				August 30,
	2012				2011
Cash provided by operating activities		$	11,202			$	21,299
Cash provided/(used) by investing activities			12,831				(6,994	)
Cash used by financing activities			(6,729	)			(15,740	)
Increase/(decrease) in cash and cash equivalents		$	17,304			$	(1,435	)

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Operating Activities

Our cash provided by operations is generally derived from cash receipts generated by our restaurant customers and franchisees.  Substantially all of the $331.3 million and $328.9 million of restaurant sales and operating revenue disclosed in our Condensed Consolidated Statements of Income and Comprehensive Income for the 13 weeks ended September 4, 2012 and August 30, 2011, 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.

Cash provided by operating activities for the first 13 weeks of fiscal 2013 decreased $10.1 million (47.4%) from the corresponding period in the prior year to $11.2 million.  The decrease is due primarily to increases in amounts spent to acquire lobster inventory in advance of an upcoming promotion which was partially offset by lower cash paid for interest ($1.8 million).

Our working capital and current ratio as of September 4, 2012 were $19.2 million and 1.1:1, respectively.  As is common in the restaurant industry, we typically 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), debt reduction (a long-term liability), or stock repurchases, and receivable and inventory levels are generally not significant.  However, due to our excess cash on hand as a result of the issuance of the Senior Notes and recent sale-leaseback transactions, our current assets exceeded our current liabilities as of September 4, 2012.

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 13 weeks ended September 4, 2012 were $6.4 million.

During the 13 weeks ended September 4, 2012, we completed sale-leaseback transactions of the land and buildings for nine Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $20.2 million, exclusive of transaction costs of approximately $1.0 million.  Equipment was not included.  Net proceeds from the sale-leaseback transactions were used for general corporate purposes, including the repurchase of shares of our common stock and debt payments.  See Notes G to the Condensed Consolidated Financial Statements for further discussion of these transactions.

Capital expenditures for the remainder of the fiscal year are projected to be approximately $37.6 to $43.6 million based on our planned improvements for existing restaurants and our expectation that we will open approximately 10 to 14 Lime Fresh restaurants and convert approximately five to seven Company-owned Ruby Tuesday concept restaurants to the Marlin & Ray’s concept during the remainder of fiscal 2013.  We intend to fund our investing activities with cash currently on hand, cash provided by operations, or borrowings on our revolving credit facility.

Financing Activities

Historically our primary sources of cash have been operating activities 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 May 14, 2012, we entered into an indenture (the “Indenture”) among the Company, certain subsidiaries of the Company as guarantors and Wells Fargo Bank, National Association as trustee, governing the Company’s $250.0 million aggregate principal amount of Senior Notes.  The Senior Notes were issued at a discount of $3.7 million, which is being amortized using the effective interest method over the eight year term of the notes.

The Senior Notes are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions.  They rank equal in right of payment with our existing and future

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senior indebtedness and senior in right of payment to any of our future subordinated indebtedness.  The Senior Notes are effectively subordinated to all of our secured debt, including borrowings outstanding under our revolving credit facility, to the extent of the value of the assets securing such debt and structurally subordinated to all of the liabilities of our existing and future subsidiaries that do not guarantee the Senior Notes.

Interest on the Senior Notes is calculated at 7.625% per annum, payable semiannually on each May 15 and November 15, commencing November 15, 2012, to holders of record on the May 1 or November 1 immediately preceding the interest payment date.  The Senior Notes mature on May 15, 2020.

At any time prior to May 15, 2016, we may redeem the Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest.  At any time and from time to time on or after May 15, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices specified in the Indenture plus accrued and unpaid interest.  At any time prior to May 15, 2015, we may redeem up to 35% of the Senior Notes from the proceeds of certain equity offerings.  There is no sinking fund for the Senior Notes.

The Indenture contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur or guarantee additional indebtedness; (ii) declare or pay dividends, redeem stock or make other distributions to stockholders; (iii) make certain investments; (iv) create liens or use assets as security in other transactions; (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of their assets; (vi) enter into transactions with affiliates; and (vii) sell or transfer certain assets.  These covenants are subject to a number of important exceptions and qualifications, as described in the Indenture, and certain covenants will not apply at any time when the Senior Notes are rated investment grade by the Rating Agencies, as defined in the Indenture.  The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately.

In connection with the issuance of the Senior Notes, we have agreed to register with the SEC notes having substantially identical terms as the Senior Notes, as part of an offer to exchange freely tradable exchange notes for the Senior Notes.  We have agreed: (i) within 270 days after the issue date of the Senior Notes, to file a registration statement enabling holders of the Senior Notes to exchange the privately placed notes for publicly registered notes with substantially identical terms; (ii) to use commercially reasonable efforts to cause the registration statement to become effective within 365 days after the issue date of the Senior Notes; (iii) to consummate the exchange offer within 405 days after the issue date of the Senior Notes; and (iv) to file a shelf registration statement for resale of the notes if we cannot consummate the exchange offer within the time period listed above.

If we fail to meet these targets (each, a “registration default”), the annual interest rate on the Senior Notes will increase by 0.25%.  The annual interest rate on the Senior Notes will increase by an additional 0.25% for each subsequent 90-day period during which the registration default continues, up to a maximum additional interest rate of 1.0% per year over the otherwise applicable annual interest rate of 7.625%.  If we cure the registration default, the interest rate on the Senior Notes will revert to the original level.

On September 4, 2012, we initiated a repurchase of $1.5 million of the Senior Notes.  The repurchase did not settle until September 7, 2012.  As a result, the amount repurchased, along with a pro rata portion of the associated unamortized discount, is included within the Current portion of long-term debt, including capital leases caption in our September 4, 2012 Condensed Consolidated Balance Sheet.

On December 1, 2010, we entered into a five-year revolving credit agreement (the “Credit Facility”), under which we could borrow up to $320.0 million with the option to increase our capacity by $50.0 million to $370.0 million.  On May 14, 2012, we entered into the second amendment to our revolving credit facility to, among other things, reduce the maximum aggregate revolving commitment to $200.0 million, secure the revolving credit facility with a lien over the equity interests of certain subsidiaries, modify certain financial covenants and ratios and permit the issuance of the Senior Notes.

The terms of the Credit Facility provide for a $40.0 million letter of credit subcommitment.  The Credit Facility also includes a $50.0 million franchise facility subcommitment (the “Franchise Facility Subcommitment”), which covered our previous guarantees of franchise debt.  The Franchise Facility Subcommitment matures not later than December 1, 2015.  All amounts guaranteed under the Franchise Facility Subcommitment have been settled.

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The interest rate 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 1.50%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.50% depending on our Total Debt to EBITDAR ratio.

A commitment fee for the account of each lender at a rate ranging from 0.300% to 0.450% (depending on our Total Debt to EBITDAR ratio) on the daily amount of the unused revolving commitment of such lender is payable on the last day of each calendar quarter and on the termination date of the Credit Facility.  On the first day after the end of each calendar quarter until the termination date of the Credit Facility, we are required to pay a letter of credit fee for the account of each lender with respect to such lender’s participation in each letter of credit.  The letter of credit fee accrues at the applicable margin for Eurodollar Loans then in effect on the average daily amount of such lender’s letter of credit exposure (excluding any portion attributable to unreimbursed letter of credit disbursements) attributable to such letter of credit during the period from and including the date of issuance of such letter of credit to but excluding the date on which such letter of credit expires or is drawn in full.  Besides the commitment fee and the letter of credit fee, we are also required to pay a fronting fee on the daily amount of the letter of credit exposure (excluding any portion attributable to unreimbursed letter of credit disbursements) on the tenth day after the end of each calendar quarter until the termination date of the Credit Facility.  We must also pay standard fees with respect to issuance, amendment, renewal or extension of any letter of credit or processing of drawings thereunder.

We are entitled to make voluntary prepayments of our borrowings under the Credit Facility at any time and from time to time, in whole or in part, without premium or penalty.  Subject to certain exceptions, mandatory prepayments will be required upon occurrence of certain events, including the revolving credit exposure of all lenders exceeding the aggregate revolving commitment then in effect, sales of certain assets and any additional debt issuances.

Under the terms of the Credit Facility, we had no borrowings outstanding at either September 4, 2012 or June 5, 2012.  After consideration of letters of credit outstanding, we had $189.7 million available under the Credit Facility as of September 4, 2012.

The Credit Facility contains a number of customary affirmative and negative covenants that, among others, limit or restrict our ability to incur liens, engage in mergers or other fundamental changes, make acquisitions, investments, loans and advances, pay dividends or other distributions, sell or otherwise dispose of certain assets, engage in certain transactions with affiliates, enter into burdensome agreements or certain hedging agreements, amend organizational documents, change accounting practices, incur additional indebtedness and prepay other indebtedness.  In addition, under the Credit Facility, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio and we were in compliance with these financial covenants as of September 4, 2012.  The terms of the Credit Facility require us to maintain a maximum leverage ratio of no more than 4.5 to 1.0 through the fiscal quarter ending on or about June 4, 2013 and 4.25 to 1.0 thereafter and a minimum fixed charge coverage ratio of 1.75 to 1.0 through and including the fiscal quarter ending on or about June 3, 2014 and 1.85 to 1.0 thereafter.

The Credit Facility terminates on December 1, 2015.  Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Facility and any ancillary loan documents.

Our $75.4 million in mortgage loan obligations as of September 4, 2012 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between November 2012 and November 2022, have balances which range from negligible to $8.3 million and interest rates of 3.94% to 11.28%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

During the 13 weeks ended September 4, 2012, we spent $2.3 million to repurchase 0.4 million shares of RTI common stock.  As of September 4, 2012, the total number of remaining shares authorized to be repurchased was 5.6 million.  We spent $18.4 million to repurchase 2.0 million shares of RTI common stock during the 13 weeks ended August 30, 2011.

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During the remainder of fiscal 2013, we expect to fund operations, capital expansion, stock repurchases, and any other investments from cash currently on hand, 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 September 4, 2012 (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)	$	73,850	$	9,832	$	19,940	$	23,258	$	20,820
Senior unsecured notes (a)		250,000		1,500		–		–		248,500
Interest (b)		176,269		24,593		46,847		43,351		61,478
Operating leases (c)		380,790		46,077		82,352		67,440		184,921
Purchase obligations (d)		97,859		55,457		25,052		17,350		–
Pension obligations (e)		40,804		11,430		6,135		8,915		14,324
Total (f)	$	1,019,572	$	148,889	$	180,326	$	160,314	$	530,043

(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 notes payable with balances of $4.4 million as of September 4, 2012 have been excluded from the amounts shown above, primarily because the balances outstanding can fluctuate monthly.  Additionally, the amounts shown above include interest payments on the Senior Notes at the current interest rate of 7.625%, respectively.

(c)   This amount includes operating leases totaling $1.3 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 cash commitments under contract 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 $10.1 million of unrecognized tax benefits due to the uncertainty regarding the timing of future cash outflows associated with such obligations.

Commercial Commitments as of September 4, 2012 (in thousands):

	Payments Due By Period
		Less than	1-3	3-5	More than 5
	Total	1 year	Years	years	Years
Letters of credit	$   10,317	$   10,317	$         –	$            –	$            –
Divestiture guarantees	7,734	887	1,708	1,934	3,205
Total	$   18,051	$   11,204	$ 1,708	$    1,934	$    3,205

At September 4, 2012, we had divestiture guarantees, which arose in fiscal 1996, when 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”). Subsequent to that date Piccadilly Cafeterias, Inc. (“Piccadilly”) acquired MFC and Compass Group (“Compass”) acquired MHC. 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.

We estimated our divestiture guarantees at September 4, 2012 to be $6.9 million for employee benefit plans (all of which resides with MHC following Piccadilly’s bankruptcy in fiscal 2004).  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.

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Accounting Pronouncements Adopted in Fiscal 2013

In June 2011, the Financial Accounting Standards Board (“FASB”) 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).  The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

In September 2011, the FASB 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 first quarter).  The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

Accounting Pronouncements Not Yet Adopted

In July 2012, the FASB issued guidance on testing indefinite-lived intangible assets for impairment.  Under the guidance, testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill has been simplified.  The guidance allows an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test.  An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired.  The guidance is effective for impairment tests for fiscal years beginning after September 15, 2012 (our fiscal 2014).  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:

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 quarter of fiscal 2013, we repurchased 0.4 million shares of RTI common stock at an aggregate cost of $2.3 million.  As of September 4, 2012, the total number of remaining shares authorized to be repurchased was 5.6 million.  To the extent not funded with cash on hand or cash from operating activities, additional repurchases, if any, may be funded by sale-leaseback transactions and 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.

Repurchases of Senior Notes

On August 10, 2012, we entered into an amendment of our Credit Facility which allows us to prepay up to $15.0 million of indebtedness in any fiscal year to various holders of the Senior Notes.  As discussed in Notes H and P to the Condensed Consolidated Financial Statements, we repurchased $1.5 million of the Senior Notes on September 7, 2012 for $1.4 million plus a negligible amount of accrued interest.  We realized a negligible gain on this transaction.  As of the date of this filing, we may repurchase an additional $13.5 million of the Senior Notes during the remainder of fiscal 2013.  Any future repurchases of the Senior Notes, if any, will be funded with available cash on hand.

Step Down of Chief Executive Officer

On June 6, 2012, we announced that Samuel E. Beall, III, our founder, President, Chief Executive Officer, and Chairman of the Board of Directors, has decided to step down from management and the Board of Directors.  Mr. Beall intends to step down once the Company names his successor.

We anticipate that Mr. Beall will step down from management and the Board of Directors prior to or on November 30, 2012.  Mr. Beall is entitled to receive his entire $8.1 million pension payment in a lump-sum six months following his retirement and we therefore expect that this payment will be made later in fiscal 2013.  Due to the significance of Mr. Beall’s lump-sum payment to the Executive Supplemental Pension Plan liability as a whole, the payment will constitute a partial plan settlement which will require a special valuation.  In addition to the expense we routinely record for the Executive Supplemental Pension Plan, a

34

charge estimated to approximate $2.8 million will then be recorded, representing the recognition of a pro rata portion (calculated as the percentage reduction in the projected benefit obligation due to the lump-sum payment) of the then unrecognized loss recorded within accumulated other comprehensive income.

Possible Second Tranche of Sale-Leaseback Transactions

Over the last four fiscal quarters, we have been pursuing sale-leaseback transactions on a portion of our real estate in order to create financial flexibility.  We are targeting to raise approximately $55.0 million of gross proceeds from such sale-leaseback transactions, of which $42.5 million had been raised as of September 4, 2012, which was utilized for general corporate purposes, including the repurchase of shares of our common stock and debt reduction.  Since that date, we have raised an additional $7.5 million.

Given our viewpoint that capitalization rates remain favorable, we are now pursuing a smaller second tranche of up to 20 sale-leaseback properties in order to raise additional proceeds.  We anticipate the second tranche of sale-leaseback transactions to be completed over the next three to five fiscal quarters.

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.

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 1.50%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.50%.  As of September 4, 2012, the total amount of outstanding debt subject to interest rate fluctuations was $4.4 million.  A hypothetical 100 basis point change in short-term interest rates would result in an increase or decrease in interest expense of an insignificant amount 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 (the “Exchange Act”), 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 September 4, 2012.

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Changes in Internal Controls

During the fiscal quarter ended September 4, 2012, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) 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 M to the Condensed Consolidated Financial Statements for further information about our legal proceedings as of September 4, 2012.

ITEM 1A.  RISK FACTORS

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended June 5, 2012 in Part I, Item 1A. Risk Factors.  There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table includes information regarding purchases of our common stock made by us during the first quarter ending September 4, 2012:

	(a)	(b)	(c)	(d)
	Total number	Average	Total number of shares	Maximum number of shares
	of shares	price paid	purchased as part of publicly	that may yet be purchased
Period	purchased (1)	per share	announced plans or programs (1)	under the plans or programs (2)
Month #1
(June 6 to July 10)	–	–	–	5,919,227
Month #2
(July 11 to August 7)	174,500	$6.12	174,500	5,744,727
Month #3
(August 8 to September 4)	189,309	$6.75	189,309	5,555,418

(1) No shares were repurchased other than through our publicly-announced repurchase programs and authorizations during the first quarter of our year ending June 4, 2013.

(2) As of September 4, 2012, 5.6 million shares remained available for purchase under existing programs.  The timing, price, quantity, and manner of the purchases to be made are at the discretion of management upon instruction from the Board of Directors, depending upon market conditions.  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.

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ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAEFTY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

 Exhibit No.

10	.1	Form of Service-Based Restricted Stock Award.
10	.2	Form of Performance-Based Restricted Stock Award.
10	.3	Form of Performance-Based Cash Incentive Award.
10	.4	Form of Restricted Stock Award for Directors.
31	.1	Certification of Samuel E. Beall, III, Chairman of the Board, President, and Chief Executive Officer.
31	.2	Certification of Michael O. Moore, Executive 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.DEF	XBRL Definition Linkbase Document.
10	1.LAB	XBRL Labels Linkbase Document.
10	1.PRE	XBRL Presentation Linkbase Document.

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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: October 11, 2012  BY: /s/ MICHAEL O. MOORE —————————————— Michael O. Moore Executive Vice President – Chief Financial Officer, Treasurer, and Assistant Secretary (Principal Financial Officer)

Date: October 11, 2012  BY: /s/ FRANKLIN E. SOUTHALL, JR. ————————————————— Franklin E. Southall, Jr. Vice President – Corporate Controller and Principal Accounting Officer (Principal Accounting Officer)

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EX-10.1

RUBY TUESDAY, INC.

SERVICE-BASED RESTRICTED STOCK AWARD

This SERVICE-BASED RESTRICTED STOCK AWARD (the “Restricted Stock Award” or “Award”) is made and entered into as of the ___ of _____, ___ by and between Ruby Tuesday, Inc. (the “Company”), a Georgia corporation, and _________ (the “Employee”).

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 Employee the Restricted Shares described below pursuant to the Ruby Tuesday, Inc. 1996 Stock Incentive Plan or 2003 Stock Incentive Plan (the “Plan”) in consideration of the Employee’s services to the Company.

A.           Grant Date:  _____, ___.

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 and to the extent the Service Condition is satisfied.  The Service Condition is satisfied only if the Employee provides Continuous Service to the Company and/or any affiliate for the period beginning with the Grant Date through the date described in the following Vesting Schedule:

Continuous Service Date	Percentage of Restricted Shares which are Vested Shares
Prior to ________, ___	0%
________, ___and after	100%

The Employee shall be determined to have provided “Continuous Service” through the date specified in the Vesting Schedule above if the Employee continues in the employ of the Company and/or any affiliate without experiencing a Termination of Employment, regardless of the reason.

Notwithstanding the foregoing, the Service Condition will be deemed satisfied as to all or a portion of the Restricted Shares, as indicated below, if the Employee provides Continuous Service to the Company and/or any affiliate following the Grant Date through the date of any of the earlier events listed below:

(a)           (i) In the event of a Termination of Employment due to Disability or death; (ii) in the event of an involuntary Termination of Employment by the Company or an affiliate, other than for Cause; or (iii) upon attainment of age sixty-five (65) or satisfaction of the Rule of 90 (if eligible) under the Ruby Tuesday, Inc. Executive Supplemental Pension Plan, all of the Restricted Shares shall be deemed to have satisfied the Service Condition.

(b)           In the event of a Change in Control, all of the Restricted Shares shall be deemed to have satisfied the Service Condition immediately prior to the effective date of such 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.”  Any portion of the Restricted Shares which have not become Vested Shares in accordance with this Paragraph C before or at the time of Employee’s Termination of Employment shall be forfeited.

D.           Holding Period:  Once Restricted Shares become Vested Shares they generally become subject to a six-month holding period, as provided in Section 4(b) of the attached Terms and Conditions.

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

RUBY TUESDAY, INC.

                      By:                           

                                             Employee

   Title: Chairman and Chief Executive Officer

2

ADDITIONAL TERMS AND CONDITIONS OF

RUBY TUESDAY, INC.

SERVICE-BASED RESTRICTED STOCK AWARD

1.           Condition to Delivery of Restricted Shares.

    (a)          Employee must deliver to the Company, within two (2) business days after the earlier of (i) the date (the “Vesting Date”) on which any Restricted Shares become Vested Shares, or (ii) the date the Employee makes an election pursuant to Section 83(b) of the Internal Revenue Code as to all or any portion of the Restricted Shares, either cash or a certified check payable to the Company in the amount of all tax withholding obligations (whether federal, state or local) imposed on the Company by reason of the vesting of the Restricted Shares, or the making of an election pursuant to Section 83(b) of the Internal Revenue Code, as applicable, except as provided in Section 1(b).

(b)           If the Employee does not make an election pursuant to Section 83(b) of the Internal Revenue Code, in lieu of paying the withholding tax obligations in cash or by certified check as required by Section 1(a), Employee may elect (the “Withholding Election”) to have the actual number of shares of Common Stock that become Vested Shares reduced by the smallest number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock determined by the closing price for the Common Stock on the last business day immediately preceding the applicable Vesting Date, is sufficient to satisfy the amount of the tax withholding obligations imposed on the Company by reason of the vesting of the Restricted Shares on the applicable Vesting Date.  Employee may make a Withholding Election only if all of the following conditions are met:

(i)           the Withholding Election must be made on or prior to the Vesting Date by executing and delivering to the Company a properly completed Notice of Withholding Election form, available from the Company upon request; and

(ii)            any Withholding Election made will be irrevocable; however, the Committee may, in its sole discretion, disapprove and give no effect to any Withholding Election.

(c)           Unless and until the Employee provides for the payment of the tax withholding obligations in accordance with the provisions of this Section 1, the Company shall have no obligation to deliver any of the Vested Shares and may take any other actions necessary to satisfy such obligations, including withholding of appropriate sums from other amounts payable to the Employee.  At the request of the Employee, the Committee may authorize the Company to participate in such arrangements between the Employee and a broker, dealer or other “creditor” (as defined by Regulation T issued by the Board of Governors of the Federal Reserve System) acting on behalf of the Employee for the receipt from such broker, dealer or other “creditor” of cash by the Company in an amount necessary to satisfy the Employee’s tax withholding obligations in exchange for delivery of a number of Vested Shares directly to the broker, dealer or other “creditor” having a value equal to the cash delivered.

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:

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(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, prior to, and for a period of six (6) months after, the Restricted Shares become Vested Shares in accordance with the Vesting Schedule.

(b)           When the Vested Shares cease to be subject to the transfer restrictions under Section 4(b), the Company or the Share Custodian, as the case may be, shall deliver the Vested Shares to the Employee 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 Employee, in either case, reduced by any Vested Shares withheld and returned to the Company pursuant to Section 1(b) above or delivered to a broker, dealer or other “creditor” as contemplated by Section 1(c) above (such reduced number of Vested Shares are referred to in this Section 2(b) as the “Net Vested Shares”).  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 Employee, and the number of Vested Shares shall be rounded down to the next nearest whole number.  At any time after receipt by the Designated Broker, the Employee may require that the Designated Broker deliver the Net Vested Shares to the Employee pursuant to such arrangements or agreements as may exist between the Designated Broker and the Employee.

(c)           In the event that the Employee 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)           Employee hereby irrevocably appoints the Share Custodian, and any successor thereto, as the true and lawful attorney-in-fact of Employee 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 Employee.  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 Employee as Net Vested Shares or are returned to the Company as forfeited Restricted Shares or as Vested Shares withheld and returned to the Company pursuant to Section 1(b), as provided by the applicable terms of this Award.

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

(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 Employee 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

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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 Employee 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 Employee, 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.

(a)           Restrictions on Restricted Shares.  Except as provided by this Award, the Employee 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 Employee (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)           Restrictions on Vested Shares.  Except to the extent of the number of Vested Shares that may be transferred in connection with the satisfaction of tax withholding obligations as contemplated by Section 1(b) or Section 1(c), the Employee 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 Vested Shares for a period of six (6) months immediately following the date such shares become Vested Shares.  Any such disposition not made in accordance with this Award shall be deemed null and void.  Any sale, pledge or other transfer (or any attempt to effect the same) of any Vested Shares by the Employee or any subsequent transferee in violation of this Section 4(b) 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 Vested Shares as the owner or pledgee of such Vested Shares for any purpose.  If an event specified in Paragraph C(4) of the Award occurs prior to or during the six (6)-month holding period described in this Section 4(b), the holding period shall be deemed satisfied.

                (c)           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.

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      (a)          In addition to any legends required under applicable securities laws, the certificates representing the Restricted Shares and Vested Shares, to the extent applicable, shall be endorsed with the following legend and the Employee shall not make any transfer of the Restricted Shares or Vested 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 or Vested 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 (the “Securities Act”) 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 and applicable state securities laws is required in connection with such transfer.

6.           Change in Capitalization.

     (a)          The number and kind of Restricted Shares and Vested 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 and Vested Shares such that other securities, cash or other property may be substituted for the Common Stock held by Share Custodian or recorded in book entry form pursuant to this Award.

     (c)         The existence of the Plan and the Restricted Stock 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 Employee resides, and/or any other applicable securities laws.

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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 Employment.  Neither the establishment of the Plan nor the Restricted Stock Award made pursuant to this Award shall be construed as giving Employee the right to any continued service relationship with the Company or any affiliate of the Company.

15.           Special Definitions.  For purposes of this Award, the following terms shall have the meanings ascribed to it in this Section 15, as follows:

(a)           “Cause” has the same meaning as provided in the employment agreement currently or most recently in effect between the Employee and the Company or, if applicable, any affiliate of the Company, or if no such definition or employment agreement ever existed, “Cause” means conduct amounting to (i) fraud or dishonesty in the performance of the duties of Employee’s service with the Company or its affiliates, (ii) Employee’s willful misconduct, refusal to follow the reasonable directions of his/her supervisors, or knowing violation of law, rules or regulations (including misdemeanors relating to public intoxication, driving under the influence, use or possession of controlled substances or relating to conduct of a similarly nature), (iii) acts of moral turpitude or personal conduct in violation of Company’s Code of Business Conduct and Ethics, (iv) absence from work without reasonable excuse, (v) intoxication with alcohol or drugs while on Company’s or affiliates’ premises, (vi) a conviction or plea of guilty or nolo contendere to a crime involving dishonesty, or (vii) a breach or violation of the terms of any agreement to which Employee and the Company (or any affiliate) are party.

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(b)           “Change in Control” means any one of the following events:

(i)           the acquisition by any individual, entity or “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of voting securities of the Company where such acquisition causes any such Person to own twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities then entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that the following shall not constitute a Change in Control:  (1) any acquisition directly from the Company, unless such a Person subsequently acquires additional shares of Outstanding Voting Securities other than from the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate.

(ii)           within any twelve-month period (beginning on or after the Grant Date), the persons who were directors of the Company immediately before the beginning of such twelve-month period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors of the Company; provided that any director who was not a director as of the Grant Date shall be deemed to be an Incumbent Director if that director was elected to the Board of Directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors shall be deemed to be an Incumbent Director;

(iii)           the consummation of a reorganization, merger or consolidation, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities;

(iv)           the sale, transfer or assignment of all or substantially all of the assets of the Company and its affiliates to any third party; or

(v)           the liquidation or dissolution of the Company.

(c)           “Disability” has the same meaning as provided in the employment agreement currently or most recently in effect between the Employee and the Company or, if applicable, any affiliate of the Company, or if no such definition or employment agreement ever existed, “Disability” shall be given the meaning provided in the Plan.

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EX-10.2

RUBY TUESDAY, INC.

PERFORMANCE-BASED RESTRICTED STOCK AWARD

This PERFORMANCE-BASED RESTRICTED STOCK AWARD (the “Restricted Stock Award” or “Award”) is made and entered into as of the __ day of _____, ___ by and between Ruby Tuesday, Inc. (the “Company”), a Georgia corporation, and _______ (the “Employee”).

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 Employee the Restricted Shares described below pursuant to the Ruby Tuesday, Inc. 1996 Stock Incentive Plan or 2003 Stock Incentive Plan (the “Plan”) in consideration of the Employee’s services to the Company.

A.           Grant Date:  _____, ___.

B.           Restricted Shares:  The aggregate number of shares of the Company’s common stock (“Common Stock”), $.01 par value per share, identified in Paragraphs C(1) and C(2) below.

C.           Vesting:  The Restricted Shares are divided into two (2) tranches, as and to the extent indicated below, and shall become vested only if and to the extent the applicable Performance Condition and Service Condition, each as specified below, are satisfied.

(1)           Tranche 1 Performance Condition. ___ of the Restricted Shares are allocated to Tranche 1 (the “Tranche 1 Restricted Shares”).  The number of Tranche 1 Restricted Shares that become Net Restricted Shares shall be determined based upon the Company’s Adjusted EBITDA performance measured for the Company’s Fiscal Year ___, as determined in accordance with the table below:

Fiscal ____ Adjusted EBITDA	Net Tranche 1 Restricted Shares Percentage
Less than $_	_%
$_	_%
$_	_%
$_	_%
$_	_%
$_	_%
$_ or more	_%

The number of Tranche 1 Restricted Shares becoming Net Restricted Shares shall be determined by multiplying the “Net Tranche 1 Restricted Shares Percentage,” based upon the corresponding “Fiscal ___ Adjusted EBITDA” results, by the number of Tranche 1 Restricted Shares specified in this Paragraph C(1) (as that number may be adjusted pursuant to Section 6 of the Additional Term and Conditions).  For results above $____ that are between the benchmarks indicated, the number of Tranche 1 Restricted Shares becoming Net Restricted Shares shall be determined by straight line interpolation.  For purposes of the performance table above in this Paragraph C(1), “Adjusted EBITDA” means earnings before interest, taxes, depreciation and amortization, as adjusted to disregard the impact of (i) charges from accounting rules adopted or which become effective after the end of the Company’s Fiscal Year ___; (ii) charges related to the high-level strategic direction of the Company as recorded in accordance with U.S. generally accepted accounting principles, as follows: executive terminations or retirements; divestiture guarantees; penalties from early retirements of debt; termination, including settlement charges, of any of the Company’s three defined benefit pension plans; any Change in Control; and the Chief Executive Officer transition process, including recruiting and relocation fees, duplicate salary costs, bonus accruals for guarantees in excess of bonus levels otherwise earned; (iii) charges due to external

events beyond the control of the Company, as follows: terrorist attacks; natural disasters; federal health care legislation; industry-wide food borne illness outbreak or pandemic; and hostile shareholder activism; (iv) savings generated from spending less than ___ percent (_%) ($___) of the advertising budget of $___; and (v) the reclassification of brokerage fees from other restaurant operating costs to interest expense; all as determined by the Committee for Fiscal Year ____.

The number of Tranche 1 Restricted Shares that do not become Net Restricted Shares shall be forfeited as of the date of the ___ meeting of the Committee in which the Committee determines the extent to which the performance actually realized, as measured against the Tranche 1 Performance Condition, results in fewer than all (or none) of the Tranche 1 Restricted Shares becoming Net Restricted Shares based upon the performance table set forth above.

(2)           Tranche 2 Performance Condition. ____ of the Restricted Shares are allocated to Tranche 2 (the “Tranche 2 Restricted Shares”).  The number of Tranche 2 Restricted Shares that become Net Restricted Shares shall be determined based upon the annual same-restaurant sales growth percentage of Company-owned restaurants under the Ruby Tuesday concept for the Company’s Fiscal Year ____ as determined in accordance with the following schedule:

Annual Ruby Tuesday Concept Same-Restaurant Sales	Net Tranche 2 Restricted Shares Percentage
Less than _%	_%
_%	_%
_%	_%
_%	_%
_%	_%
_% or more	_%

The number of Tranche 2 Restricted Shares becoming Net Restricted Shares shall be determined by multiplying the “Net Tranche 2 Restricted Shares Percentage,” based upon the corresponding “Annual Ruby Tuesday Concept Same-Restaurant Sales,” by the number of Tranche 2 Restricted Shares specified in this Paragraph C(2) (as that number may be adjusted pursuant to Section 6 of the Additional Term and Conditions).  For results above _% that are between the benchmarks indicated, the number of Tranche 2 Restricted Shares becoming Net Restricted Shares shall be determined by straight line interpolation.

The number of Tranche 2 Restricted Shares that do not become Net Restricted Shares shall be forfeited as of the date of the ___ meeting of the Committee in which the Committee determines the extent to which the performance actually realized, as measured against the Tranche 2 Performance Condition, results in fewer than all (or none) of the Tranche 2 Restricted Shares becoming Net Restricted Shares based upon the performance table set forth above.

(3)           Service Condition.  Net Restricted Shares determined in accordance with Paragraphs C(1) and C(2) become Vested Shares if and to the extent the Service Condition is satisfied.  The Service Condition is satisfied only if the Employee provides Continuous Service to the Company and/or any affiliate for the period beginning with the Grant Date through the date described in the following Vesting Schedule:

Continuous Service Date	Percentage of Net Restricted Shares which are Vested Shares
Prior to _______, ___	0%
_______, ___ and after	100%

The Employee shall be determined to have provided “Continuous Service” through the date

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specified in the Vesting Schedule above if the Employee continues in the employ of the Company and/or any affiliate without experiencing a Termination of Employment.

(4)           Exceptions to Service Condition.  Notwithstanding the foregoing provisions of this Paragraph C, the Service Condition will be deemed satisfied as to all or any portion of the Net Restricted Shares, as determined in accordance with Paragraphs C(1) and C(2), if the Employee provides Continuous Service to the Company and/or any affiliate following the Grant Date through the date of any of the earlier events listed below:

(a)           (i) In the event of a Termination of Employment due to Disability or death; (ii) in the event of an involuntary Termination of Employment by the Company or an affiliate, other than for Cause; or (iii) upon attainment of age sixty-five (65) or satisfaction of the Rule of 90 (if eligible) under the Ruby Tuesday, Inc. Executive Supplemental Pension Plan, all of the Net Restricted Shares shall be deemed to have satisfied the Service Condition.

(b)           In the event of a Change in Control, all of the Net Restricted Shares shall be deemed to have satisfied the Service Condition immediately prior to the effective date of such Change in Control.

The Net Restricted Shares which have satisfied the Performance Condition(s) and Service Condition, or any exception to the Service Condition provided in Paragraph C(4), are herein referred to as the “Vested Shares.”  Any portion of the Net Restricted Shares which have not become Vested Shares in accordance with this Paragraph C shall be forfeited.

D.           Holding Period:  Once Net Restricted Shares become Vested Shares they generally become subject to a six-month holding period, as provided in Section 4(b) of the attached Terms and Conditions.

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

RUBY TUESDAY, INC.

                      By:                           

                                              Employee

   Title: Chairman and Chief Executive Officer

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ADDITIONAL TERMS AND CONDITIONS OF

RUBY TUESDAY, INC.

PERFORMANCE-BASED RESTRICTED STOCK AWARD

1.           Condition to Delivery of Restricted Shares.

    (a)          Employee must deliver to the Company, within two (2) business days after the earlier of (i) the date (the “Vesting Date”) on which any Restricted Shares become Vested Shares, or (ii) the date the Employee makes an election pursuant to Section 83(b) of the Internal Revenue Code as to all or any portion of the Restricted Shares, either cash or a certified check payable to the Company in the amount of all tax withholding obligations (whether federal, state or local) imposed on the Company by reason of the vesting of the Restricted Shares, or the making of an election pursuant to Section 83(b) of the Internal Revenue Code, as applicable, except as provided in Section 1(b).

(b)           If the Employee does not make an election pursuant to Section 83(b) of the Internal Revenue Code, in lieu of paying the withholding tax obligations in cash or by certified check as required by Section 1(a), Employee may elect (the “Withholding Election”) to have the actual number of shares of Common Stock that become Vested Shares reduced by the smallest number of whole shares of Common Stock which, when multiplied by the Fair Market Value of the Common Stock determined by the closing price for the Common Stock on the last business day immediately preceding the applicable Vesting Date, is sufficient to satisfy the amount of the tax withholding obligations imposed on the Company by reason of the vesting of the Restricted Shares on the applicable Vesting Date.  Employee may make a Withholding Election only if all of the following conditions are met:

(i)           the Withholding Election must be made on or prior to the Vesting Date by executing and delivering to the Company a properly completed Notice of Withholding Election form, available from the Company upon request; and

(ii)            any Withholding Election made will be irrevocable; however, the Committee may, in its sole discretion, disapprove and give no effect to any Withholding Election.

(c)           Unless and until the Employee provides for the payment of the tax withholding obligations in accordance with the provisions of this Section 1, the Company shall have no obligation to deliver any of the Vested Shares and may take any other actions necessary to satisfy such obligations, including withholding of appropriate sums from other amounts payable to the Employee.  At the request of the Employee, the Committee may authorize the Company to participate in such arrangements between the Employee and a broker, dealer or other “creditor” (as defined by Regulation T issued by the Board of Governors of the Federal Reserve System) acting on behalf of the Employee for the receipt from such broker, dealer or other “creditor” of cash by the Company in an amount necessary to satisfy the Employee’s tax withholding obligations in exchange for delivery of a number of Vested Shares directly to the broker, dealer or other “creditor” having a value equal to the cash delivered.

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

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(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 Vested Shares cease to be subject to the transfer restrictions under Section 4(b), the Company or the Share Custodian, as the case may be, shall deliver the Vested Shares to the Employee 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 Employee, in either case, reduced by any Vested Shares withheld and returned to the Company pursuant to Section 1(b) above or delivered to a broker, dealer or other “creditor” as contemplated by Section 1(c) above (such reduced number of Vested Shares are referred to in this Section 2(b) as the “Net Vested Shares”).  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 Employee, and the number of Vested Shares shall be rounded down to the next nearest whole number.  At any time after receipt by the Designated Broker, the Employee may require that the Designated Broker deliver the Net Vested Shares to the Employee pursuant to such arrangements or agreements as may exist between the Designated Broker and the Employee.

(c)           In the event that the Employee 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)           Employee hereby irrevocably appoints the Share Custodian, and any successor thereto, as the true and lawful attorney-in-fact of Employee 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 Employee.  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 Employee as Net Vested Shares or are returned to the Company as forfeited Restricted Shares or as Vested Shares withheld and returned to the Company pursuant to Section 1(b), as provided by the applicable terms of this Award.

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

(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 Employee 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.

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3.           Dividends.  The Employee 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 Employee, 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.

(a)           Restrictions on Restricted Shares.  Except as provided by this Award, the Employee 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 Employee (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)           Restrictions on Vested Shares.  Except to the extent of the number of Vested Shares that may be transferred in connection with the satisfaction of tax withholding obligations as contemplated by Section 1(b) or Section 1(c), the Employee 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 Vested Shares for a period of six (6) months immediately following the date such shares become Vested Shares.  Any such disposition not made in accordance with this Award shall be deemed null and void.  Any sale, pledge or other transfer (or any attempt to effect the same) of any Vested Shares by the Employee or any subsequent transferee in violation of this Section 4(b) 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 Vested Shares as the owner or pledgee of such Vested Shares for any purpose.  If an event specified in Paragraph C(4) of the Award occurs prior to or during the six (6)-month holding period described in this Section 4(b), the holding period shall be deemed satisfied.

                 (c)           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.

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5.           Additional Restrictions on Transfer.

       (a)          In addition to any legends required under applicable securities laws, the certificates representing the Restricted Shares and Vested Shares, to the extent applicable, shall be endorsed with the following legend and the Employee shall not make any transfer of the Restricted Shares or Vested 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 or Vested 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 (the “Securities Act”) 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 and applicable state securities laws is required in connection with such transfer.

6.           Change in Capitalization.

         (a)          The number and kind of Restricted Shares and Vested 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 and Vested Shares such that other securities, cash or other property may be substituted for the Common Stock held by Share Custodian or recorded in book entry form pursuant to this Award.

         (c)          The existence of the Plan and the Restricted Stock 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

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reasonable judgment of the Committee, in compliance with exemptions under applicable state securities laws of the state in which the Employee 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 Employment.  Neither the establishment of the Plan nor the Restricted Stock Award made pursuant to this Award shall be construed as giving Employee the right to any continued service relationship with the Company or any affiliate of the Company.

15.           Special Definitions.  For purposes of this Award, the following terms shall have the meanings ascribed to it in this Section 15, as follows:

(a)           “Cause” has the same meaning as provided in the employment agreement currently or most recently in effect between the Employee and the Company or, if applicable, any affiliate of the Company, or if no such definition or employment agreement ever existed, “Cause” means conduct amounting to (i) fraud or dishonesty in the performance of the duties of Employee’s service with the Company or its affiliates, (ii) Employee’s willful misconduct, refusal to follow the reasonable directions of his/her supervisors, or knowing violation of law, rules or regulations (including misdemeanors relating to public intoxication, driving under the influence, use or possession of controlled substances or relating to conduct of a similarly nature), (iii) acts of moral turpitude or personal conduct in violation of Company’s Code of Business Conduct and Ethics, (iv) absence from work without reasonable excuse, (v) intoxication with alcohol or drugs while on Company’s or affiliates’ premises, (vi) a conviction or plea of guilty or nolo contendere to a crime involving dishonesty, or (vii) a breach or violation of the terms of any agreement to which Employee and the Company (or any affiliate) are party.

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(b)           “Change in Control” means any one of the following events:

(i)           the acquisition by any individual, entity or “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of voting securities of the Company where such acquisition causes any such Person to own twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities then entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that the following shall not constitute a Change in Control:  (1) any acquisition directly from the Company, unless such a Person subsequently acquires additional shares of Outstanding Voting Securities other than from the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate.

(ii)           within any twelve-month period (beginning on or after the Grant Date), the persons who were directors of the Company immediately before the beginning of such twelve-month period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors of the Company; provided that any director who was not a director as of the Grant Date shall be deemed to be an Incumbent Director if that director was elected to the Board of Directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors shall be deemed to be an Incumbent Director;

(iii)           the consummation of a reorganization, merger or consolidation, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities;

(iv)           the sale, transfer or assignment of all or substantially all of the assets of the Company and its affiliates to any third party; or

(v)           the liquidation or dissolution of the Company.

(c)           “Disability” has the same meaning as provided in the employment agreement currently or most recently in effect between the Employee and the Company or, if applicable, any affiliate of the Company, or if no such definition or employment agreement ever existed, “Disability” shall be given the meaning provided in the Plan.

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EX-10.3

RUBY TUESDAY, INC.

PERFORMANCE-BASED CASH INCENTIVE AWARD

This PERFORMANCE-BASED CASH INCENTIVE AWARD (the “Performance Cash Incentive Award” or “Award”) is made and entered into as of the ___ day of ____, ___ by and between Ruby Tuesday, Inc. (the “Company”), a Georgia corporation, and ________ (the “Employee”).

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 Employee the Performance Incentive described below pursuant to the Ruby Tuesday, Inc. 1996 Stock Incentive Plan or 2003 Stock Incentive Plan (the “Plan”) in consideration of the Employee’s services to the Company.

A.           Grant Date:  _____, ___.

B.           Performance Incentive:  The aggregate amounts identified in Paragraphs C(1) and C(2) below.

C.           Vesting:  The Performance Incentive is divided into two (2) tranches, as and to the extent indicated below, and shall become vested only if and to the extent the applicable Performance Condition and Service Condition, each as specified below, are satisfied.

(1)           Tranche 1 Performance Condition.  $____ is allocated to Tranche 1 (the “Tranche 1 Partial Incentive”).  The amount of the Tranche 1 Partial Incentive that becomes part of the Net Incentive shall be determined based upon the Company’s Adjusted EBITDA performance measured for the Company’s Fiscal Year ____, as determined in accordance with the table below:

Fiscal ____ Adjusted EBITDA	Net Tranche 1 Incentive Percentage
Less than $_	_%
$_	_%
$_	_%
$_	_%
$_	_%
$_	_%
$_ or more	_%

The amount of the Tranche 1 Partial Incentive becoming part of the Net Incentive shall be determined by multiplying the “Net Tranche 1 Incentive Percentage,” based upon the corresponding “Fiscal ___ Adjusted EBITDA” results, by the amount of the Tranche 1 Partial Incentive specified in this Paragraph C(1).  For results above $__ that are between the benchmarks indicated, the amount of the Tranche 1 Partial Incentive becoming part of the Net Incentive shall be determined by straight line interpolation.  For purposes of the performance table above in this Paragraph C(1), “Adjusted EBITDA” means earnings before interest, taxes, depreciation and amortization, as adjusted to disregard the impact of (i) charges from accounting rules adopted or which become effective after the end of the Company’s Fiscal Year ___; (ii) charges related to the high-level strategic direction of the Company as recorded in accordance with U.S. generally accepted accounting principles, as follows: executive terminations or retirements; divestiture guarantees; penalties from early retirements of debt; termination, including settlement charges, of any of the Company’s three defined benefit pension plans; any Change in Control; and the Chief Executive Officer transition process, including recruiting and relocation fees, duplicate salary costs, bonus accruals for guarantees in excess of bonus levels otherwise earned; (iii) charges due to external events beyond the control of the Company, as

follows: terrorist attacks; natural disasters; federal health care legislation; industry-wide food borne illness outbreak or pandemic; and hostile shareholder activism; (iv) savings generated from spending less than ___ percent (_%) ($___) of the advertising budget of $___; and (v) the reclassification of brokerage fees from other restaurant operating costs to interest expense; all as determined by the Committee for Fiscal Year ___.

The amount of the Tranche 1 Partial Incentive that does not become part of the Net Incentive shall be forfeited as of the date of the ___ meeting of the Committee in which the Committee determines the extent to which the performance actually realized, as measured against the Tranche 1 Performance Condition, results in fewer than the entire (or none) of the Tranche 1 Partial Incentive becoming part of the Net Incentive based upon the performance table set forth above.

(2)           Tranche 2 Performance Condition. $____ is allocated to Tranche 2 (the “Tranche 2 Partial Incentive”).  The amount of the Tranche 2 Partial Incentive that becomes part of the Net Incentive shall be determined based upon the annual same-restaurant sales growth percentage of Company-owned restaurants under the Ruby Tuesday concept for the Company’s Fiscal Year ___ as determined in accordance with the following schedule:

Annual Ruby Tuesday Concept Same-Restaurant Sales	Net Tranche 2 Incentive Percentage
Less than _%	_%
_%	_%
_%	_%
_%	_%
_%	_%
_% or more	_%

The amount of the Tranche 2 Partial Incentive becoming part of the Net Incentive shall be determined by multiplying the “Net Tranche 2 Incentive Percentage,” based upon the corresponding “Annual Ruby Tuesday Concept Same-Restaurant Sales,” by the amount of the Tranche 2 Partial Incentive specified in this Paragraph C(2).  For results above _% that are between the benchmarks indicated, the amount of the Tranche 2 Partial Incentive becoming part of the Net Incentive shall be determined by straight line interpolation.

The amount of the Tranche 2 Partial Incentive that does not become part of the Net Incentive shall be forfeited as of the date of the ___ meeting of the Committee in which the Committee determines the extent to which the performance actually realized, as measured against the Tranche 2 Performance Condition, results in fewer than all (or none) of the Tranche 2 Partial Incentive becoming part of the Net Incentive based upon the performance table set forth above.

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(3)           Service Condition.  The Net Incentive determined in accordance with Paragraphs C(1) and C(2) becomes payable only if and to the extent the Service Condition is satisfied.  The Service Condition is satisfied only to the extent the Employee provides Continuous Service to the Company and/or any affiliate for the period beginning with the Grant Date through the dates described in the following Vesting Schedule:

Continuous Service Date	Percentage of Net Incentive Becoming Payable
Prior to ______, ___	0%
______, ___	_%
______, ___	_%

The Employee shall be determined to have provided “Continuous Service” through each date specified in the Vesting Schedule as to the portions of the Net Incentive indicated above if the Employee continues in the employ of the Company and/or any affiliate without experiencing a Termination of Employment through the applicable date.

(4)           Exceptions to Service Condition.  Notwithstanding the foregoing provisions of Paragraph C(3), the Service Condition will be deemed satisfied as to all or a portion of the Net Incentive, as determined in accordance with Paragraphs C(1) and C(2) above, if the Employee provides Continuous Service to the Company and/or any affiliate following the Grant Date through the date of any of the earlier events listed below:

(a)           (i) In the event of the Employee’s Termination of Employment due to Disability or death; (ii) in the event of an involuntary Termination of Employment by the Company or an affiliate, other than for Cause; or (iii) upon attainment of age sixty-five (65) or satisfaction of the Rule of 90 if eligible for such retirement under the Ruby Tuesday, Inc. Executive Supplemental Pension Plan, all of the Net Incentive shall be deemed to have satisfied the Service Condition.

(b)           In the event of a Change in Control, all of the Net Incentive shall be deemed to have satisfied the Service Condition immediately prior to the effective date of such Change in Control.

Any portion of the Net Incentive which has not become payable in accordance with this Paragraph C shall be forfeited.

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

RUBY TUESDAY, INC.

                      By:                           

                                              Employee

   Title: Chairman and Chief Executive Officer

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ADDITIONAL TERMS AND CONDITIONS OF

RUBY TUESDAY, INC.

PERFORMANCE-BASED CASHINCENTIVE AWARD

1.           Payment of  Award.  The Committee shall certify any Performance Condition results before any Net Incentive amount is paid.  Any portion of the Net Incentive that becomes payable shall be paid in cash or cash equivalents within thirty (30) days of the date any portion of the Net Incentive is otherwise payable in accordance with Paragraph C of the Award.

2.           Taxes.  The Company shall withhold the amount of taxes, which in the determination of the Company are required to be withheld under federal, state and local laws and all other applicable payroll withholding with respect to any amount payable under the Award.

3.           Change in Capitalization.  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.

4.           Governing Laws.  This Award shall be construed, administered and enforced according to the laws of the State of Georgia.

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

6.           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.

7.           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.

8.           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.

9.           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

10.           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

4

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.

11.           No Right to Continued Employment.  Neither the establishment of the Plan nor the Performance Incentive made pursuant to this Award shall be construed as giving Employee the right to any continued service relationship with the Company or any affiliate of the Company.

12.           Special Definitions.  For purposes of this Award, the following terms shall have the meanings ascribed to it in this Section 12, as follows:

(a)           “Cause” has the same meaning as provided in the employment agreement currently or most recently in effect between the Employee and the Company or, if applicable, any affiliate of the Company, or if no such definition or employment agreement ever existed, “Cause” means conduct amounting to (i) fraud or dishonesty in the performance of the duties of Employee’s service with the Company or its affiliates, (ii) Employee’s willful misconduct, refusal to follow the reasonable directions of his/her supervisors, or knowing violation of law, rules or regulations (including misdemeanors relating to public intoxication, driving under the influence, use or possession of controlled substances or relating to conduct of a similarly nature), (iii) acts of moral turpitude or personal conduct in violation of Company’s Code of Business Conduct and Ethics, (iv) absence from work without reasonable excuse, (v) intoxication with alcohol or drugs while on Company’s or affiliates’ premises, (vi) a conviction or plea of guilty or nolo contendere to a crime involving dishonesty, or (vii) a breach or violation of the terms of any agreement to which Employee and the Company (or any affiliate) are party.

(b)           “Change in Control” means any one of the following events:

(i)           the acquisition by any individual, entity or “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of voting securities of the Company where such acquisition causes any such Person to own twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities then entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that the following shall not constitute a Change in Control:  (1) any acquisition directly from the Company, unless such a Person subsequently acquires additional shares of Outstanding Voting Securities other than from the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate.

(ii)           within any twelve-month period (beginning on or after the Grant Date), the persons who were directors of the Company immediately before the beginning of such twelve-month period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors of the Company; provided that any director who was not a director as of the Grant Date shall be deemed to be an Incumbent Director if that director was elected to the Board of Directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors shall be deemed to be an Incumbent Director;

(iii)           the consummation of a reorganization, merger or consolidation, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more

5

than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities;

(iv)           the sale, transfer or assignment of all or substantially all of the assets of the Company and its affiliates to any third party; or

(v)           the liquidation or dissolution of the Company.

(c)           “Disability” has the same meaning as provided in the employment agreement currently or most recently in effect between the Employee and the Company or, if applicable, any affiliate of the Company, or if no such definition or employment agreement ever existed, “Disability” shall have the meaning provided in the Plan.

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EX-10.4

RUBY TUESDAY, INC.

RESTRICTED STOCK AWARD

This RESTRICTED STOCK AWARD (the “Award”) is made and entered into as of the ___ day of October, 2012 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 __, 2012.

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 (i) through the day immediately preceding the first anniversary of the Grant Date or (ii) if the next regularly scheduled annual meeting of the Company’s stockholders following the Grant Date falls on a date prior to such first anniversary, through the day immediately prior to such earlier 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 Employee 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 October ___ 2012, 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.

#6169610 v1

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 the 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: October 11, 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, Michael O. Moore, 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 the 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: October 11, 2012	/s/ Michael O. Moore
	Michael O. Moore
	Executive Vice President –
	Chief Financial Officer, Treasurer
	and Assistant Secretary

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 quarter ended September 4, 2012 (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: October 11, 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 quarter ended September 4, 2012 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Michael O. Moore, Executive 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: October 11, 2012	/s/ Michael O. Moore
	Michael O. Moore
	Executive Vice President –
	Chief Financial Officer, Treasurer
	and Assistant Secretary

XML

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, OPERATING LEASES, AND SALE-LEASEBACK TRANSACTIONS (Details) (USD $)	3 Months Ended
	Sep. 04, 2012		Jun. 05, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,530,493,000		$ 1,558,627,000
Less accumulated depreciation	590,783,000		592,022,000
Property and equipment, net	939,710,000		966,605,000
Assets held for sale, noncurrent	18,400,000		21,800,000
Assets held for sale	7,855,000		4,713,000
Operating Leases [Abstract]
Percentage of restaurants located on leased properties (in hundredths)	54.00%
Number of company owned restaurants	741
Percentage of restaurants located on leased land (in hundredths)	65.00%
Percentage of restaurants located on leased land and building (in hundredths)	35.00%
Expiration of operating leases (in years)	24Y
Sale-Leaseback Transactions [Abstract]
Number of restaurants	9
Sale-leaseback transaction, gross proceeds	20,200,000
Sale-leaseback transaction costs	1,000,000
Sale-leaseback transaction, carrying value	14,200,000
Sale-leaseback transaction, lease terms (in years)	15 years
Sale-leaseback transaction, renewal terms (in years)	20 years
Sale-leaseback transaction, deferred gain	5,000,000
Sale-leaseback transactions, current portion of deferred gain	600,000		300,000
Sale-leaseback transactions, noncurrent portion of deferred gain	8,800,000		4,200,000
Amortization of deferred gains	100,000
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	238,849,000		244,498,000
Building [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	482,341,000		494,537,000
Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	421,403,000		421,143,000
Restaurant Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	273,208,000		276,576,000
Other Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	91,341,000		95,400,000
Construction in Progress and Other [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 23,351,000	[1]	$ 26,473,000	[1]

[1] Included in Construction in progress and other as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 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.

XML

FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended
	Sep. 04, 2012		Aug. 30, 2011	Jun. 05, 2012
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt and capital leases	$ 322,111,000			$ 326,663,000
Letters of credit	0			0
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt and capital leases	318,540,000			312,225,000
Letters of credit	247,000			222,000
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long lived assets held for sale included in construction in progress	18,400,000			21,800,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan: other investments - Assets	8,449,000			7,974,000
Deferred compensation plan: other investments - Liabilities	(8,449,000)			(7,974,000)
Deferred compensation plan: RTI common stock - Equity	962,000			1,008,000
Deferred compensation plan: RTI common stock - Equity	(962,000)			(1,008,000)
Total	0			0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-lived assets held for sale	26,256,000	[1]		26,495,000	[1]
Long-lived assets held for use	448,000			385,000
Total	26,704,000			26,880,000
Long-lived assets held for sale	157,000		206,000
Long-lived assets held for use	291,000		0
Total impairment of long-lived assets	$ 448,000		$ 206,000

[1] Included in the carrying value of long-lived assets held for sale as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheet as we do not expect to sell these assets within the next 12 months.

XML

BASIS OF PRESENTATION (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 04, 2012	Aug. 30, 2011
Other restaurant operating costs to Interest expense net [Abstract]
Payroll and related costs	$ 109,234	$ 110,861
Other restaurant operating costs	67,156	68,737
Selling, general and administrative, net	43,429	28,387
Interest expense, net	6,790	4,397
Income before income taxes	271	3,657
As Previously Reported [Member]
Other restaurant operating costs to Interest expense net [Abstract]
Payroll and related costs		112,987
Other restaurant operating costs		68,655
Selling, general and administrative, net		26,776
Interest expense, net		3,964
Income before income taxes		3,657
Reclassifications and Corrections [Member]
Other restaurant operating costs to Interest expense net [Abstract]
Payroll and related costs		(2,126)
Other restaurant operating costs		82
Selling, general and administrative, net		1,611
Interest expense, net		433
Income before income taxes		$ 0

XML

BUSINESS AND LICENSE ACQUISITIONS (Tables)

3 Months Ended

Sep. 04, 2012

BUSINESS AND LICENSE ACQUISITIONS [Abstract]

Allocation of purchase prices of acquisitions

As discussed in Note 3 to our Annual Report on Form 10-K for the year ended June 5, 2012, on April 11, 2012, we completed the acquisition of Lime Fresh, including the assets of seven Lime Fresh concept restaurants, the royalty stream from five Lime Fresh concept franchised restaurants (one of which was not yet open), and the Lime Fresh brand's intellectual property for $24.1 million.  During the quarter ended September 4, 2012, we made adjustments to the preliminary purchase price allocation as follows (in thousands):

	As Previously			Fiscal 2013
	Reported			Adjustments			As Adjusted
Trademarks	$	11,100		$	–		$	11,100
Goodwill		7,989			1,033			9,022
Acquired franchise rights		2,460			(960	)		1,500
Property and equipment		2,405			–			2,405
Deferred income taxes		19			(13	)		6
Other, net		(923	)		(60	)		(983	)
Net impact on Condensed Consolidated Balance Sheet		23,050			–			23,050
Write-off of previous license agreement		1,034			–			1,034
Aggregate cash purchase price	$	24,084		$	–		$	24,084

XML

EMPLOYEE POST-EMPLOYMENT BENEFITS (Details) (USD $)	0 Months Ended	3 Months Ended
	Jun. 05, 2012	Sep. 04, 2012	Sep. 04, 2012 Pension Plans, Defined Benefit [Member]		Aug. 30, 2011 Pension Plans, Defined Benefit [Member]		Sep. 04, 2012 Postretirement Medical and Life Benefits [Member]		Aug. 30, 2011 Postretirement Medical and Life Benefits [Member]
EMPLOYEE POST-EMPLOYMENT BENEFITS [Abstract]
Defined benefit pension plans		3
Estimated contributions to be made in remainder of fiscal year		$ 500,000
Lump sum pension payment accrued liability for CEO	(8,100,000)	(8,100,000)
Defined contribution plans	2
Defined Benefit Plan Disclosure [Line Items]
Service cost			115,000		134,000		3,000		2,000
Interest cost			525,000		576,000		15,000		18,000
Expected return on plan assets			(102,000)		(126,000)
Amortization of prior service cost			26,000	[1]	64,000	[1]	(14,000)	[1]	(14,000)	[1]
Recognized actuarial loss			565,000		426,000		53,000		34,000
Net periodic benefit cost			1,129,000		1,074,000		57,000		40,000
Executive Retirements [Abstract]
Severance Costs	2,200,000
No of days after which severence payment will be made	60 days
Pension Plan, estimated charge		$ 2,800,000

[1] Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.

XML

ACCOUNTS RECEIVABLE (Details) (USD $)	Sep. 04, 2012	Jun. 05, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	$ 8,422,000	$ 4,700,000
Due from our distributor for purchases of lobster	5,000,000	900,000
Due for third-party gift card sales	1,200,000	1,300,000
Number of Restaurants	741
Rebates Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	924,000	923,000
Amounts Due from Franchisees [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	675,000	770,000
Other Receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts and notes receivable - current, gross	6,823,000	3,007,000
RT Midwest [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Restaurants	13
Total indebtness owed by RT Midwest to RTI as of date of RT Midwest bankruptcy filing	2,300,000
Franchise fee receivables	$ 2,300,000

XML

SUBSEQUENT EVENTS (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 04, 2012
Sale-leaseback transaction [Abstract]
Sale-leaseback transaction, gross proceeds	$ 20.2
Sale-leaseback transaction, costs	1.0
Sale-leaseback transaction, carrying value	14.2
Sale-leaseback transaction, lease terms (in years)	15 years
Sale-leaseback transaction, lease renewal terms (in years)	20 years
Sale-leaseback transaction, deferred gain	5.0
Share repurchases [Abstract]
Stock repurchase amount	1.2
Stock repurchase (in shares)	0.2
Sale Leaseback Transaction [Member]
Sale-leaseback transaction [Abstract]
Number of restaurants	3
Sale-leaseback transaction, gross proceeds	7.5
Sale-leaseback transaction, costs	0.4
Sale-leaseback transaction, carrying value	5.6
Sale-leaseback transaction, lease terms (in years)	15 years
Sale-leaseback transaction, lease renewal terms (in years)	20 years
Sale-leaseback transaction, deferred gain	1.5
Senior Notes [Member]
Repurchases of Senior Notes [Abstract]
Repayments of notes payable	1.5
Accrued interest	$ 1.4

XML

BUSINESS AND LICENSE ACQUISITIONS

3 Months Ended

Sep. 04, 2012

BUSINESS AND LICENSE ACQUISITIONS [Abstract]

BUSINESS AND LICENSE ACQUISITIONS

NOTE D – BUSINESS AND LICENSE ACQUISITIONS

Lime Fresh Acquisition

As discussed in Note 3 to our Annual Report on Form 10-K for the year ended June 5, 2012, on April 11, 2012, we completed the acquisition of Lime Fresh, including the assets of seven Lime Fresh concept restaurants, the royalty stream from five Lime Fresh concept franchised restaurants (one of which was not yet open), and the Lime Fresh brand's intellectual property for $24.1 million.  During the quarter ended September 4, 2012, we made adjustments to the preliminary purchase price allocation as follows (in thousands):

	As Previously			Fiscal 2013
	Reported			Adjustments			As Adjusted
Trademarks	$	11,100		$	–		$	11,100
Goodwill		7,989			1,033			9,022
Acquired franchise rights		2,460			(960	)		1,500
Property and equipment		2,405			–			2,405
Deferred income taxes		19			(13	)		6
Other, net		(923	)		(60	)		(983	)
Net impact on Condensed Consolidated Balance Sheet		23,050			–			23,050
Write-off of previous license agreement		1,034			–			1,034
Aggregate cash purchase price	$	24,084		$	–		$	24,084

For the year ended June 5, 2012, a $1.0 million loss on the write-off of a previous license agreement, representing the balance remaining from the September 13, 2010 licensing agreement with LFMG International, LLC, was included in Other restaurant operating costs in our fiscal 2012 Consolidated Statement of Operations.

We recorded $9.0 million of goodwill due to the purchase price exceeding the estimated fair value of the net assets acquired.  Of the goodwill recorded, we anticipate that an insignificant amount will be nondeductible for tax purposes.

We amortize the $11.1 million of acquired trademarks over a ten year period.  We amortize the $1.5 million of acquired franchise rights associated with this acquisition on a straight-line basis over the remaining term of the franchise operating agreements, which are approximately five to nine years from the date of acquisition.

On June 7, 2012, we entered into two marketing agreements with 50 Eggs Branding Company, LLC ("50 Eggs").  John Kunkel, the CEO of 50 Eggs, previously was the CEO of LFMG International, LLC, and is a current Lime Fresh franchisee.  Under the terms of the first agreement, 50 Eggs will provide marketing services for our Lime Fresh concept for a monthly fee of $52,500 plus out of pocket expenses.  Under the terms of the second agreement, 50 Eggs will provide marketing services for our Marlin & Ray's concept for a monthly fee of $26,250 plus out of pocket expenses.  Both agreements expire on June 6, 2013.  During the 13 weeks ended September 4, 2012, we made payments of $0.3 million to 50 Eggs in connection with these agreements.

License Acquisitions

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 pay a licensing fee to Gourmet Market, Inc. of 2.0% of gross sales of any Truffles we open.  Additionally, we 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 paid $20,833 per month for such services.  During the second 12 months of the agreement we paid $10,417 per month.  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.  Based on having opened two Truffles to date and our current growth plans for the next few years, it is not likely that we will open 18 or more Truffles restaurants within five years or 40 or more Truffles within 10 years.  During the 13 weeks ended September 4, 2012 and August 30, 2011, we paid Gourmet Market, Inc. $38,826 and $59,831, respectively, under the terms of the agreement.

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INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 04, 2012	Jun. 05, 2012
INCOME TAXES [Abstract]
Unrecognized tax benefits	$ 10.1	$ 6.4
Total amount of unrecognized tax benefits that impact the effective tax rate	4.4	4.2
Accrued interest and penalties	1.3	1.0
Increased accrued interest and penalties	0.3
Increased accrued interest and penalties which affected the effective tax rate	0.2
Tax benefit	2.3
Tax expense	$ 0.6

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CLOSURES AND IMPAIRMENTS EXPENSE (Tables)

3 Months Ended

Sep. 04, 2012

CLOSURES AND IMPAIRMENTS EXPENSE [Abstract]

Closures and impairments expenses

Closures and impairment expenses include the following for the thirteen weeks ended September 4, 2012 and August 30, 2011 (in thousands):

	September 4, 2012			August 30, 2011
Property impairments	$	448		$	206
Closed restaurant lease reserves		478			79
Other closing expense		289			190
Gain on sale of surplus properties		(91	)		(30	)
	$	1,124		$	445

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 June 5, 2012	$	6,813
Closing expense including rent and other lease charges		478
Payments		(792	)
Transfer of deferred escalating minimum rent balance		348
Other adjustments		(5	)
Balance at September 4, 2012	$	6,842

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LONG-TERM DEBT AND CAPITAL LEASES (Tables)

3 Months Ended

Sep. 04, 2012

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):

	September 4, 2012			June 5, 2012
Senior unsecured notes	$	250,000		$	250,000
Unamortized discount		(3,563	)		(3,646	)
Senior unsecured notes less unamortized discount		246,437			246,354
Mortgage loan obligations		75,444			80,076
Capital lease obligations		230			233
		322,111			326,663
Less current maturities		11,477			12,454
	$	310,634		$	314,209

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SHARE-BASED EMPLOYEE COMPENSATION (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Sep. 04, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (in years)	30 months
Vesting period of restricted shares issued and options granted, maximum (in years)	30 months
Options expiration period Tier 1	5 years
Options expiration period Tier 2	7 years
Options expiration period Tier 3	10 years
Vesting Period of options issued (in months)	30 months
Exercisable period of options issued (in years)	5 years
Reserved shares of common stock under the Plan (in shares)	111,000
Reserved shares of common stock subject to options outstanding under the plan (in shares)	47,000
Common stock currently available for issuance (in shares)	64,000
SIP 2003 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock currently available for issuance (in shares)	3,127,000
Weighted average exercise price [Abstract]
Performance-based restricted shares awarded	314,000
Weighted average grant-date fair value [Abstract]
Shares of common stock awarded to retirement-eligible CEO (in shares)	314,000
SIP 1996 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the Plan (in shares)	941,000
Reserved shares of common stock subject to options outstanding	941,000
Common stock currently available for issuance (in shares)	3,127,000
Weighted average exercise price [Abstract]
Performance-based restricted shares awarded	314,000
Weighted average grant-date fair value [Abstract]
Shares of common stock awarded to retirement-eligible CEO (in shares)	314,000
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (in years)	1 year
Vesting period of restricted shares issued and options granted, maximum (in years)	1 year
Vesting Period of options issued (in months)	1 year
Stock Options [Member]
Options, outstanding [Roll forward]
Beginning balance (in shares)	2,716
Granted (in shares)	0
Exercised (in shares)	(13)
Forfeited (in shares)	(70)
Ending balance (in shares)	2,633
Exercisable at end of period (in shares)	2,200
Weighted average exercise price [Abstract]
Beginning balance (in dollars per share)	8.79
Granted (in dollars per share)	0
Exercised (in dollars per share)	7.00
Forfeited (in dollars per share)	8.99
Ending balance (in dollars per share)	8.80
Exercisable at end of period (in dollars per share)	8.79
Out-of-the money options included in outstanding balance (in shares)	2.0
Out Of Money Options Included In Outstanding Balance expect to be expired	0.2
Unrecognized pre-tax compensation expense related to share based compensation	0.2
Unrecognized pre-tax compensation expense expected to be recognized over a weighted average period (in years)	8 months 12 days
Weighted average grant-date fair value [Abstract]
Ending balance (in dollars per share)	8.80
Exercisable at end of period (in dollars per share)	8.79
Stock Options [Member] | SIP 2003 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved shares of common stock under the Plan (in shares)	4,772,000
Reserved shares of common stock subject to options outstanding	1,645,000
Restricted Shares [Member]
Weighted average exercise price [Abstract]
Unrecognized pre-tax compensation expense related to share based compensation	5.2
Unrecognized pre-tax compensation expense expected to be recognized over a weighted average period (in years)	2 years 8 months 12 days
Service Based Deferred Compensation [Member]
Weighted average exercise price [Abstract]
Unrecognized pre-tax compensation expense expected to be recognized over a weighted average period (in years)	2 years 6 months
Service Based Deferred Compensation [Member] | SIP 2003 [Member]
Weighted average exercise price [Abstract]
Service-based restricted shares of common stock granted to certain employees (in shares)	213,000
Service Based Deferred Compensation [Member] | Stock Options [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (in years)	3 years
Vesting period of restricted shares issued and options granted, maximum (in years)	3 years
Vesting Period of options issued (in months)	3 years
Exercisable period of options issued (in years)	7 years
Service Based Deferred Compensation [Member] | Restricted Shares [Member]
Weighted average exercise price [Abstract]
Ending balance (in dollars per share)	8.22
Restricted stock activity, shares [Roll forward]
Non-vested at beginning of year (in shares)	797
Granted (in shares)	213
Vested (in shares)	(171)
Forfeited (in shares)	0
Non-vested at end of year (in shares)	839
Weighted average grant-date fair value [Abstract]
Beginning balance (in dollars per share)	8.37
Granted (in dollars per share)	6.64
Vested (in dollars per share)	6.65
Forfeited (in dollars per share)	0
Ending balance (in dollars per share)	8.22
Performance Based - Incentive [Member] | SIP 1996 [Member]
Weighted average exercise price [Abstract]
Service-based restricted shares of common stock granted to certain employees (in shares)	242,000
Performance Based - Incentive [Member] | Restricted Shares [Member]
Weighted average exercise price [Abstract]
Ending balance (in dollars per share)	6.74
Restricted stock activity, shares [Roll forward]
Non-vested at beginning of year (in shares)	423
Granted (in shares)	242
Vested (in shares)	(85)
Forfeited (in shares)	(314)
Non-vested at end of year (in shares)	266
Weighted average grant-date fair value [Abstract]
Beginning balance (in dollars per share)	7.75
Granted (in dollars per share)	6.64
Vested (in dollars per share)	7.29
Forfeited (in dollars per share)	7.87
Ending balance (in dollars per share)	6.74

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EMPLOYEE POST-EMPLOYMENT BENEFITS (Tables)

3 Months Ended

Sep. 04, 2012

EMPLOYEE POST-EMPLOYMENT 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
	September 4, 2012			August 30, 2011
Service cost	$	115		$	134
Interest cost		525			576
Expected return on plan assets		(102	)		(126	)
Amortization of prior service cost (a)		26			64
Recognized actuarial loss		565			426
Net periodic benefit cost	$	1,129		$	1,074
	Postretirement Medical and Life Benefits
	Thirteen weeks ended
	September 4, 2012			August 30, 2011
Service cost	$	3		$	2
Interest cost		15			18
Amortization of prior service cost (a)		(14	)		(14	)
Recognized actuarial loss		53			34
Net periodic benefit cost	$	57		$	40

(a)   Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.

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SHARE-BASED EMPLOYEE COMPENSATION (Tables)

3 Months Ended

Sep. 04, 2012

SHARE-BASED EMPLOYEE COMPENSATION [Abstract]

Summary of stock option activity

The following table summarizes the activity in options for the 13 weeks ended September 4, 2012 under these stock option plans (in thousands, except per-share data):

	Options			Weighted- Average Exercise Price
Balance at June 5, 2012		2,716		$	8.79
Granted		–			–
Exercised		(13	)		7.00
Forfeited		(70	)		8.99
Balance at September 4, 2012		2,633		$	8.80
Exercisable at September 4, 2012		2,200		$	8.79

Summary of restricted stock activity

Restricted Stock

The following table summarizes our restricted stock activity for the 13 weeks ended September 4, 2012 (in thousands, except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Non-vested at June 5, 2012		423		$	7.75
Granted		242			6.64
Vested		(85	)		7.29
Forfeited		(314	)		7.87
Non-vested at September 4, 2012		266		$	6.74
				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Non-vested at June 5, 2012		797		$	8.37
Granted		213			6.64
Vested		(171	)		6.65
Forfeited		–			–
Non-vested at September 4, 2012		839		$	8.22

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FRANCHISE PROGRAMS

3 Months Ended

Sep. 04, 2012

FRANCHISE PROGRAMS [Abstract]

FRANCHISE PROGRAMS

NOTE C – FRANCHISE PROGRAMS

As of September 4, 2012, our domestic and international franchisees collectively operated 78 Ruby Tuesday restaurants and five Lime Fresh restaurants.  We do not own any equity interest in our franchisees.

Under the terms of the franchise operating agreements, we require all domestic franchisees to contribute a percentage, currently 2.25%, 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 can 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 Income and Comprehensive Income.

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 weeks ended September 4, 2012 and August 30, 2011, we recorded $0.3 million and $0.4 million, respectively, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Income and Comprehensive Income.

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Sep. 04, 2012

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 and the level within the fair value hierarchy in which the measurements fall (in thousands):

	Level		September 4, 2012			June 5, 2012
Deferred compensation plan: other investments – Assets		1	$	8,449		$	7,974
Deferred compensation plan: other investments – Liabilities		1		(8,449	)		(7,974	)
Deferred compensation plan: RTI common stock – Equity		1		962			1,008
Deferred compensation plan: RTI common stock – Equity		1		(962	)		(1,008	)
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 September 4, 2012 and June 5, 2012 (in thousands):

	Fair Value Measurements
	Level		September 4, 2012			June 5, 2012
Long-lived assets held for sale *		2		$	26,256		$	26,495
Long-lived assets held for use		2			448			385
Total				$	26,704		$	26,880

* Included in the carrying value of long-lived assets held for sale as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheet as we do not expect to sell these assets within the next 12 months.

The following table presents the losses recognized during the 13 weeks ended September 4, 2012 and August 30, 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 and Comprehensive Income (in thousands):

	13 weeks ended
	September 4, 2012		August 30, 2011
Long-lived assets held for sale	$	157	$	206
Long-lived assets held for use		291		–
Total	$	448	$	206

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

Our financial instruments at September 4, 2012 and June 5, 2012 consisted of cash and cash equivalents, accounts receivable and payable, long-term debt, and letters of credit.  The fair values of cash and cash equivalents 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):

	September 4, 2012				June 5, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt and capital leases	$	322,111	$	318,540	$	326,663	$	312,225
Letters of credit		–		247		–		222

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LONG-TERM DEBT AND CAPITAL LEASES (Details) (USD $)			12 Months Ended					12 Months Ended					3 Months Ended
	Sep. 04, 2012	Jun. 05, 2012	Jun. 05, 2012 Maximum [Member]	Jun. 05, 2012 Minimum [Member]	Jun. 05, 2012 Senior Notes [Member]	Sep. 04, 2012 Senior Notes [Member]	May 14, 2012 Senior Notes [Member]	Jun. 05, 2012 Revolving Credit Facility [Member]	May 31, 2011 Revolving Credit Facility [Member]	Sep. 04, 2012 Revolving Credit Facility [Member]	Jun. 05, 2012 Revolving Credit Facility [Member] Letter of Credit [Member]	Jun. 05, 2012 Revolving Credit Facility [Member] Franchise Facility Subcommitment [Member]	Sep. 04, 2012 Mortgage Loan Obligations [Member]	Jun. 05, 2012 Mortgage Loan Obligations [Member]	Sep. 04, 2012 Capital Lease Obligations [Member]	Jun. 05, 2012 Capital Lease Obligations [Member]
Debt Instrument [Line Items]
Senior unsecured notes	$ 250,000,000	$ 250,000,000
Unamortized discount	(3,563,000)	(3,646,000)					(3,700,000)
Senior unsecured notes less unamortized discount	246,437,000	246,354,000
Long-term debt	322,111,000	326,663,000											75,444,000	80,076,000	230,000	233,000
Less current maturities	11,477,000	12,454,000
Long-term debt and capital leases, less current maturities	310,634,000	314,209,000
Aggregate principal amount							250,000,000
Debt Instrument, Interest Rate, Stated Percentage (in hundredths)							7.625%
Unamortized discount	3,563,000	3,646,000					3,700,000
Senior note amortization term							8 years
Maturity date of long-term debt					May 15, 2020
Redemption price percentage on principal amount after 5/15/2016 (in hundredths)					100.00%
Percentage of senior notes redeem from equity offering prior to 5/15/2016 (in hundredths)					35.00%
Number of days in which registration statement filed per Senior note agreement					270 days
Number of days for the registration to become effective per senior notes agreement					365 days
Number of days within in which exchange offer consummate					405 days
Debt instrument interest rate increase (in hundredths)					0.0025
Increase in interest rate for each subsequent 90 day period (in hundredths)					0.25%
Subsequent period used in interest calculation					90 days
Additional interest rate maximum (in hundredths)					1.00%
Debt Instrument, Repurchased Face Amount						1,500,000
Line of credit initiation date									Dec. 01, 2010
Revolving credit agreement									5 years
Revolving credit facility, borrowing capacity									320,000,000
Option to Increase Revolving Credit Facility Capacity									50,000,000
Maximum borrowing capacity including option to increase line of credit borrowing capacity									370,000,000
Revolving commitments after second amendment								200,000,000
Credit facility subcommitment agreement											40,000,000	50,000,000
Revolving credit facility borrowing rate								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 1.50%. The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.50%
Commitment fee on unused revolving commitment (in hundredths)			0.45%	0.30%
Line of credit facility, outstanding amount								0		0
Line of credit facility, remaining borrowing capacity										189,700,000
Line Of Credit Facility leverage ratio Description									The terms of the Credit Facility require us to maintain a maximum leverage ratio of no more than 4.5 to 1.0 through the fiscal quarter ending on or about June 4, 2013 and 4.25 to 1.0 thereafter and a minimum fixed charge coverage ratio of 1.75 to 1.0 through and including the fiscal quarter ending on or about June 3, 2014 and 1.85 to 1.0 thereafter.
Maturity date range of debt, start													Nov. 01, 2012
Maturity date range of debt, end													Nov. 30, 2022
Range of loan balances, maximum													$ 8,300,000
Interest rates of loans, minimum (in hundredths)													3.94%
Interest rates of loans, maximum (in hundredths)													11.28%

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Sep. 04, 2012	Jun. 05, 2012
Current assets:
Cash and cash equivalents	$ 65,488	$ 48,184
Accounts receivable	8,422	4,700
Inventories:
Merchandise	26,347	19,918
China, silver and supplies	9,076	9,112
Income tax receivable		837
Deferred income taxes	24,892	27,134
Prepaid rent and other expenses	14,297	13,670
Assets held for sale	7,855	4,713
Total current assets	156,377	128,268
Property and equipment, net	939,710	966,605
Goodwill	9,022	7,989
Other assets	70,400	70,675
Total assets	1,175,509	1,173,537
Current liabilities:
Accounts payable	36,678	34,948
Accrued liabilities:
Taxes, other than income and payroll	13,325	14,475
Payroll and related costs	32,174	32,546
Insurance	7,349	7,433
Deferred revenue - gift cards	7,267	8,758
Rent and other	27,133	21,610
Current portion of long-term debt, including capital leases	11,477	12,454
Income tax payable	1,786
Total current liabilities	137,189	132,224
Long-term debt and capital leases, less current maturities	310,634	314,209
Deferred income taxes	26,792	37,567
Deferred escalating minimum rent	45,629	45,259
Other deferred liabilities	77,786	68,054
Total liabilities	598,030	597,313
Commitments and contingencies (Note M)
Shareholders' equity:
Common stock, $0.01 par value; (authorized: 100,000 shares; issued: 63,828 shares at 9/04/12; 64,038 shares at 6/05/12)	638	640
Capital in excess of par value	89,134	90,856
Retained earnings	501,584	498,985
Deferred compensation liability payable in Company stock	962	1,008
Company stock held by Deferred Compensation Plan	(962)	(1,008)
Accumulated other comprehensive loss	(13,877)	(14,257)
Total shareholders' equity	577,479	576,224
Total liabilities & shareholders' equity	$ 1,175,509	$ 1,173,537

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended
	Sep. 04, 2012
Insurance Claims [Member]
Litigation [Abstract]
Number of claims administrators against whom Company has indemnification claims in the event of potential liability to secondary carrier	2
Dan Maddy v Ruby Tuesday [Member]
Litigation [Abstract]
Payment made by our secondary insurance carrier for Maddy lawsuit settlement	$ 2,750,000
Pennsylvania [Member]
Guarantor Obligations [Line Items]
Number of restaurants alleged violators of the Age Discrimination in Employment Act	5
Ohio [Member]
Guarantor Obligations [Line Items]
Number of restaurants alleged violators of the Age Discrimination in Employment Act	1

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BASIS OF PRESENTATION

3 Months Ended

Sep. 04, 2012

BASIS OF PRESENTATION [Abstract]

BASIS OF PRESENTATION

NOTE A – BASIS OF PRESENTATION

Ruby Tuesday, Inc., including its wholly-owned subsidiaries ("RTI," the "Company," "we," and/or "our"), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill® ("Lime Fresh"), Marlin & Ray's™, and Wok Hay® casual dining restaurants.  We also operate Truffles® restaurants pursuant to a license agreement and franchise the Ruby Tuesday, Lime Fresh, and Wok Hay concepts in selected 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 notinclude 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-week period ended September 4, 2012 are not necessarily indicative of results that may be expected for the 52-week year ending June 4, 2013.

The condensed consolidated balance sheet at June 5, 2012 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 June 5, 2012.

Immaterial Reclassifications and Corrections of Prior Period Condensed Consolidated Statement of Income and Comprehensive Income

As shown in the table below, we made the following reclassifications and/or corrections to our Condensed Consolidated Statement of Income and Comprehensive Income for the 13 weeks ended August 30, 2011:

·   reclassified and/or corrected certain employee fringe benefit and payroll tax expenses for corporate employees and field executives from Payroll and related costs, which is intended to capture payroll and related expenses for restaurant level employees, to Selling, general and administrative, net.  Salaries and wages for these employees were already captured within the Selling, general and administrative, net caption;

·   reclassified certain expenses not directly related to restaurant operations from Other restaurant operating costs to Selling, general and administrative, net; and

·   corrected amortization expense of debt issuance costs and fees relating to our revolving credit facility from Other restaurant operating costs to Interest expense, net.

	As presented Thirteen weeks ended August 30, 2011		Reclassifications and Corrections			As adjusted Thirteen weeks ended August 30, 2011
Payroll and related costs	$	112,987	$	(2,126	)	$	110,861
Other restaurant operating costs		68,655		82			68,737
Selling, general and administrative, net		26,776		1,611			28,387
Interest expense, net		3,964		433			4,397
Income before income taxes		3,657		0			3,657

We made these reclassifications and corrections as we believe that reporting these amounts as shown above will more accurately reflect the nature of the expenses in our Condensed Consolidated Statements of Income and Comprehensive Income and are necessary to conform to the current period presentation and GAAP.  We have determined the reclassifications and corrections made to the prior period Condensed Consolidated Statement of Income and Comprehensive Income in previous filings to be immaterial.

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FRANCHISE PROGRAMS (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 04, 2012	Aug. 30, 2011
Franchisor Disclosure [Line Items]
Lime Fresh franchise restaurants	5
Operating agreements, national advertising fund gross sales contribution (in hundredths)	2.25%
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
No Equity Interest in Operated Ruby Tuesday Restaurant [Member]
Franchisor Disclosure [Line Items]
Restaurants operated by traditional franchisees	78

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Sep. 04, 2012

BASIS OF PRESENTATION [Abstract]

Consolidation Policy

Ruby Tuesday, Inc., including its wholly-owned subsidiaries ("RTI," the "Company," "we," and/or "our"), owns and operates Ruby Tuesday®, Lime Fresh Mexican Grill® ("Lime Fresh"), Marlin & Ray's™, and Wok Hay® casual dining restaurants.  We also operate Truffles® restaurants pursuant to a license agreement and franchise the Ruby Tuesday, Lime Fresh, and Wok Hay concepts in selected 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 notinclude 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-week period ended September 4, 2012 are not necessarily indicative of results that may be expected for the 52-week year ending June 4, 2013.

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BUSINESS AND LICENSE ACQUISITIONS (Details) (USD $)	3 Months Ended					0 Months Ended	3 Months Ended
	Sep. 04, 2012	Sep. 04, 2012 Minimum [Member]	Sep. 04, 2012 Maximum [Member]	Sep. 04, 2012 Gourmet Market, Inc [Member]	Aug. 30, 2011 Gourmet Market, Inc [Member]	Jun. 05, 2012 Previously Reported [Member]	Sep. 04, 2012 Adjustments [Member]	Sep. 04, 2012 As Adjusted [Member]	Sep. 04, 2012 Lime Fresh Mexican Grill [Member]
Business Acquisition [Line Items]
Number of restaurants acquired									7
Number of franchises receiving royalty stream	5
Effective date of acquisition									Apr. 11, 2012
Allocation of purchase prices of acquisition [Abstract]
Trademarks						$ 11,100,000	$ 0	$ 11,100,000
Goodwill						7,989,000	1,033,000	9,022,000
Acquired franchise rights	1,500,000					2,460,000	(960,000)	1,500,000
Property and equipment						2,405,000	0	2,405,000
Deferred income taxes						19,000	(13,000)	6,000
Other, net						(923,000)	(60,000)	(983,000)
Net impact on Condensed Consolidated Balance Sheet						23,050,000	0	23,050,000
Write-off of previous license agreement						1,034,000	0	1,034,000
Aggregate cash purchase price						24,084,000	0	24,084,000	24,100,000
Goodwill, Net of tax	9,000,000
Remaining term of the franchise operating agreements (in years)	10 years
Acquired franchise rights	1,500,000					2,460,000	(960,000)	1,500,000
Remaining lives of leases period		5 years	9 years
Number of Marketing agreements	2
Monthly fee for Lime Fresh concept	52,500
Monthly fee for Marlin and Ray's concept	26,250
Cash paid for marketing agreement	300,000
License acquisitions [Abstract]
Number of restaurants opened during fiscal year	4
Licensing fee to Gourmet Market, Inc.				2.00%
Monthly fee for consulting services, maximum period (in years)				2 Years
Monthly fee for consulting services, first year (per month)				20,833
Monthly fee for consulting services option 1, second year (per month)				10,417
Licensing option 1 to terminate future development rights, Concept restaurant openings, minimum threshold				18 or more
License option 1 for future development rights, opened concept restaurants, maximum (in years)				5 years
Licensee option 2 to terminate future development rights, opened concept restaurants				40 or more
Licensee option 2 for future development rights, maximum (in years)				10 years
Payments for consulting services				$ 38,826	$ 59,831

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EARNINGS PER SHARE AND STOCK REPURCHASES (Tables)

3 Months Ended

Sep. 04, 2012

EARNINGS PER SHARE AND STOCK REPURCHASES [Abstract]

Earnings per share

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

	Thirteen weeks ended
	September 4, 2012		August 30, 2011
Net income	$	2,599	$	3,093
Weighted-average common shares outstanding		62,813		63,755
Dilutive effect of stock options and restricted stock		143		721
Weighted average common and dilutive potential
common shares outstanding		62,956		64,476
Basic earnings per share	$	0.04	$	0.05
Diluted earnings per share	$	0.04	$	0.05

Anti-dilutive stock options and restricted shares

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 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
	September 4, 2012		August 30, 2011
Stock options		2,068		1,551
Restricted shares		1,105		852
Total		3,173		2,403

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EARNINGS PER SHARE AND STOCK REPURCHASES

3 Months Ended

Sep. 04, 2012

EARNINGS PER SHARE AND STOCK REPURCHASES [Abstract]

EARNINGS PER SHARE AND STOCK REPURCHASES

NOTE B – EARNINGS PER SHARE AND STOCK REPURCHASES

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

	Thirteen weeks ended
	September 4, 2012		August 30, 2011
Net income	$	2,599	$	3,093
Weighted-average common shares outstanding		62,813		63,755
Dilutive effect of stock options and restricted stock		143		721
Weighted average common and dilutive potential
common shares outstanding		62,956		64,476
Basic earnings per share	$	0.04	$	0.05
Diluted earnings per share	$	0.04	$	0.05

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 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
	September 4, 2012		August 30, 2011
Stock options		2,068		1,551
Restricted shares		1,105		852
Total		3,173		2,403

During the first quarter of fiscal 2013, we repurchased 0.4 million shares of our common stock at a cost of $2.3 million.  As of September 4, 2012, the total number of remaining shares authorized by our Board of Directors to be repurchased was 5.6 million.  All shares repurchased during the current quarter were cancelled as of September 4, 2012.

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 04, 2012	Jun. 05, 2012
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)	63,828	64,038

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SHARE-BASED EMPLOYEE COMPENSATION

3 Months Ended

Sep. 04, 2012

SHARE-BASED EMPLOYEE COMPENSATION [Abstract]

SHARE-BASED EMPLOYEE COMPENSATION

NOTE L – 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 either cliff vest after a one year period or vest in equal amounts after one, two, and three years provided the director continually serves on the Board of Directors.  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 of Directors, administers the Directors' Plan.  At September 4, 2012, we had reserved 111,000 shares of common stock under the Directors' Plan, 47,000 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 of Directors, 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.  A majority of the currently unvested restricted shares granted in fiscal year 2013 are performance-based and a majority of the unvested restricted shares granted in fiscal year 2012 are service-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, awards of stock options or other derivative securities related to the value of the common stock, and certain cash awards to eligible persons.  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 September 4, 2012, we had reserved a total of 4,772,000 and 941,000 shares of common stock for the 2003 SIP and 1996 SIP, respectively.  Of the reserved shares at September 4, 2012, 1,645,000 and 941,000 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 September 4, 2012 under the 2003 SIP and 1996 SIP were 3,127,000 and negligible, respectively.

Stock Options

The following table summarizes the activity in options for the 13 weeks ended September 4, 2012 under these stock option plans (in thousands, except per-share data):

	Options			Weighted- Average Exercise Price
Balance at June 5, 2012		2,716		$	8.79
Granted		–			–
Exercised		(13	)		7.00
Forfeited		(70	)		8.99
Balance at September 4, 2012		2,633		$	8.80
Exercisable at September 4, 2012		2,200		$	8.79

Included in the outstanding balance shown above are approximately 2.0 million of out-of-the-money options.  Of this amount, we expect that 0.2 million of these options will expire out-of-the-money during the remainder of the current fiscal year.

At September 4, 2012, there was approximately $0.2 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 0.7 years.

Restricted Stock

The following table summarizes our restricted stock activity for the 13 weeks ended September 4, 2012 (in thousands, except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Non-vested at June 5, 2012		423		$	7.75
Granted		242			6.64
Vested		(85	)		7.29
Forfeited		(314	)		7.87
Non-vested at September 4, 2012		266		$	6.74
				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Non-vested at June 5, 2012		797		$	8.37
Granted		213			6.64
Vested		(171	)		6.65
Forfeited		–			–
Non-vested at September 4, 2012		839		$	8.22

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 September 4, 2012, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $5.2 million and will be recognized over a weighted average vesting period of approximately 2.7 years.

During the first quarter of fiscal 2013, we granted approximately 213,000 service-based restricted shares and 242,000 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 2.5 years following the grant date.  Vesting of the performance-based restricted shares is also contingent upon the Company's achievement of certain performance conditions related to fiscal 2013 performance, which will be measured in the first quarter of fiscal 2014.  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.

Also during the first quarter of fiscal 2013, the Executive Compensation and Human Resources Committee of the Board of Directors determined that the performance condition was not achieved for 314,000 performance-based restricted shares awarded in August 2011 to vest.  As a result, the restricted shares were cancelled and returned to the pool of shares available for grant under the 2003 SIP and 1996 SIP.

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Document and Entity Information	3 Months Ended
	Sep. 04, 2012	Oct. 08, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	RUBY TUESDAY INC
Entity Central Index Key	0000068270
Current Fiscal Year End Date	--06-05
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		63,654,751
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 04, 2012

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Sep. 04, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE M – COMMITMENTS AND CONTINGENCIES

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 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, 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 ("DI"), regarding potential age discrimination in violation of the ADEA in hiring and discharge for all positions at all restaurant facilities.  We have denied the allegations in the lawsuit and are vigorously defending against both the suit and the DI.  We have filed motions seeking to dismiss the lawsuit based on the EEOC's failure to conciliate the matter prior to filing suit and objecting to the EEOC filing suit and launching the DI simultaneously.  Discovery is ongoing in both matters.  Despite the pending suit and DI, 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.  Included in the Maddy settlement was a payment made by our secondary insurance carrier of $2,750,000.  Despite making this voluntary payment, our secondary insurance carrier filed a claim against us based on our alleged failure to timely notify the carrier of the Maddy case in accordance with the terms of the policy. 

We believe our secondary insurance carrier received timely notice in accordance with the policy and we are vigorously defending this 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 September 4, 2012 and June 5, 2012 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 claim against us.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 04, 2012	Aug. 30, 2011
Revenue:
Restaurant sales and operating revenue	$ 331,265	$ 328,854
Franchise revenue	1,656	1,491
Total revenue	332,921	330,345
Operating costs and expenses:
Cost of merchandise	89,525	97,575
Payroll and related costs	109,234	110,861
Other restaurant operating costs	67,156	68,737
Depreciation	15,392	16,286
Selling, general and administrative, net	43,429	28,387
Closures and impairments	1,124	445
Interest expense, net	6,790	4,397
Total operating and costs and expenses	332,650	326,688
Income before income taxes	271	3,657
(Benefit)/provision for income taxes	(2,328)	564
Net income	2,599	3,093
Other comprehensive income:
Pension liability reclassification, net of tax	380	308
Total comprehensive income	$ 2,979	$ 3,401
Earnings per share:
Basic (in dollars per share)	$ 0.04	$ 0.05
Diluted (in dollars per share)	$ 0.04	$ 0.05
Weighted average shares:
Basic (in shares)	62,813	63,755
Diluted (in shares)	62,956	64,476
Cash dividends declared per share (in dollars per share)	$ 0	$ 0

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PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, OPERATING LEASES, AND SALE-LEASEBACK TRANSACTIONS

3 Months Ended

Sep. 04, 2012

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

PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, OPERATING LEASES, AND SALE-LEASEBACK TRANSACTIONS

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

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

	September 4, 2012		June 5, 2012
Land	$	238,849	$	244,498
Buildings		482,341		494,537
Improvements		421,403		421,143
Restaurant equipment		273,208		276,576
Other equipment		91,341		95,400
Construction in progress and other*		23,351		26,473
		1,530,493		1,558,627
Less accumulated depreciation		590,783		592,022
	$	939,710	$	966,605

* Included in Construction in progress and other as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 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.

Included within the current assets section of our Condensed Consolidated Balance Sheets at September 4, 2012 and June 5, 2012 are amounts classified as held for sale totaling $7.9 million and $4.7 million, respectively.  Assets held for sale primarily consist of parcels of land upon which we have no intention to build restaurants, land and buildings of closed restaurants, and various liquor licenses.  With the exception of sale-leaseback transactions discussed below, we did not sell any properties during the 13 weeks ended September 4, 2012.  During the 13 weeks ended August 30, 2011, we sold surplus properties consisting primarily of a liquor license with no carrying value for negligible proceeds and a negligible gain.

Approximately 54% of our 741 restaurants are located on leased properties.  Of these, approximately 65% are land leases only; the other 35% are for both land and building.  The initial terms of these leases expire at various dates over the next 24 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.

During the 13 weeks ended September 4, 2012, we completed sale-leaseback transactions of the land and building for nine Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $20.2 million, exclusive of transaction costs of approximately $1.0 million.  Equipment was not included.  The carrying value of the properties sold was $14.2 million.  The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years.  Net proceeds from the sale-leaseback transactions were used for general corporate purposes, including the repurchase of shares of our common stock, and debt payments.

We realized gains on these transactions during the 13 weeks ended September 4, 2012 of $5.0 million, which have been deferred and are being recognized on a straight-line basis over the initial terms of the leases.  The current portion of the deferred gains on all sale-leaseback transactions to date was $0.6 million and $0.3 million as of September 4, 2012 and June 5, 2012, respectively, and is included in Accrued liabilities – Rent and other in our Condensed Consolidated Balance Sheets.  The long-term portion of the deferred gains on all sale-leaseback transactions to date was $8.8 million and $4.2 million as of September 4, 2012 and June 5, 2012, respectively, and is included in Other deferred liabilities in our Condensed Consolidated Balance Sheets.  Amortization of the deferred gains of $0.1 million is included within Other restaurant operating costs in our Condensed Consolidated Statement of Income and Comprehensive Income for the 13 weeks ended September 4, 2012.

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INVENTORIES

3 Months Ended

Sep. 04, 2012

INVENTORIES [Abstract]

INVENTORIES

NOTE F – INVENTORIES

Our merchandise inventory was $26.3 million and $19.9 million as of September 4, 2012 and June 5, 2012, respectively.  In order to ensure adequate supply and competitive pricing, we purchase lobster in advance of our needs and store it in third-party facilities prior to our distributor taking possession of the inventory.  The increase in merchandise inventory from the end of the prior fiscal year is due primarily to advance purchases of lobster in part to ensure adequate supply for an upcoming promotion.

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BASIS OF PRESENTATION (Tables)

3 Months Ended

Sep. 04, 2012

BASIS OF PRESENTATION [Abstract]

Schedule of other operating cost to interest expense

As shown in the table below, we made the following reclassifications and/or corrections to our Condensed Consolidated Statement of Income and Comprehensive Income for the 13 weeks ended August 30, 2011:

·   reclassified and/or corrected certain employee fringe benefit and payroll tax expenses for corporate employees and field executives from Payroll and related costs, which is intended to capture payroll and related expenses for restaurant level employees, to Selling, general and administrative, net.  Salaries and wages for these employees were already captured within the Selling, general and administrative, net caption;

·   reclassified certain expenses not directly related to restaurant operations from Other restaurant operating costs to Selling, general and administrative, net; and

·   corrected amortization expense of debt issuance costs and fees relating to our revolving credit facility from Other restaurant operating costs to Interest expense, net.

	As presented Thirteen weeks ended August 30, 2011		Reclassifications and Corrections			As adjusted Thirteen weeks ended August 30, 2011
Payroll and related costs	$	112,987	$	(2,126	)	$	110,861
Other restaurant operating costs		68,655		82			68,737
Selling, general and administrative, net		26,776		1,611			28,387
Interest expense, net		3,964		433			4,397
Income before income taxes		3,657		0			3,657

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FAIR VALUE MEASUREMENTS

3 Months Ended

Sep. 04, 2012

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE N – FAIR VALUE MEASUREMENTS

The following table presents the fair values of our financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the measurements fall (in thousands):

	Level		September 4, 2012			June 5, 2012
Deferred compensation plan: other investments – Assets		1	$	8,449		$	7,974
Deferred compensation plan: other investments – Liabilities		1		(8,449	)		(7,974	)
Deferred compensation plan: RTI common stock – Equity		1		962			1,008
Deferred compensation plan: RTI common stock – Equity		1		(962	)		(1,008	)
Total			$	–		$	–

During the 13 weeks ended September 4, 2012 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.  The investments held by these plans 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 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 September 4, 2012 and June 5, 2012 (in thousands):

	Fair Value Measurements
	Level		September 4, 2012			June 5, 2012
Long-lived assets held for sale *		2		$	26,256		$	26,495
Long-lived assets held for use		2			448			385
Total				$	26,704		$	26,880

* Included in the carrying value of long-lived assets held for sale as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 million, respectively, of assets included in Construction in progress in the Condensed Consolidated Balance Sheet as we do not expect to sell these assets within the next 12 months.

The following table presents the losses recognized during the 13 weeks ended September 4, 2012 and August 30, 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 and Comprehensive Income (in thousands):

	13 weeks ended
	September 4, 2012		August 30, 2011
Long-lived assets held for sale	$	157	$	206
Long-lived assets held for use		291		–
Total	$	448	$	206

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 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 September 4, 2012 and June 5, 2012 consisted of cash and cash equivalents, accounts receivable and payable, long-term debt, and letters of credit.  The fair values of cash and cash equivalents 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):

	September 4, 2012				June 5, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt and capital leases	$	322,111	$	318,540	$	326,663	$	312,225
Letters of credit		–		247		–		222

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

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EMPLOYEE POST-EMPLOYMENT BENEFITS

3 Months Ended

Sep. 04, 2012

EMPLOYEE POST-EMPLOYMENT BENEFITS [Abstract]

EMPLOYEE POST-EMPLOYMENT BENEFITS

NOTE J – EMPLOYEE POST-EMPLOYMENT 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 $0.5 million to the Retirement Plan during the remainder of fiscal 2013.

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.

Because Samuel E. Beall, III, our Chief Executive Officer has stated his intention to step down from management and the Board of Directors once the Company names his successor and, because he is entitled to receive his entire pension payment in a lump-sum following his retirement, we have classified an amount representing that pension payment ($8.1 million) into Accrued liabilities – Payroll and related costs in our September 4, 2012 and June 5, 2012 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
	September 4, 2012			August 30, 2011
Service cost	$	115		$	134
Interest cost		525			576
Expected return on plan assets		(102	)		(126	)
Amortization of prior service cost (a)		26			64
Recognized actuarial loss		565			426
Net periodic benefit cost	$	1,129		$	1,074
	Postretirement Medical and Life Benefits
	Thirteen weeks ended
	September 4, 2012			August 30, 2011
Service cost	$	3		$	2
Interest cost		15			18
Amortization of prior service cost (a)		(14	)		(14	)
Recognized actuarial loss		53			34
Net periodic benefit cost	$	57		$	40

(a)   Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.

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 June 5, 2012.

Executive Retirement

On June 6, 2012, we announced that Samuel E. Beall, III, our founder, President, Chief Executive Officer, and Chairman of the Board of Directors, decided to step down from management and the Board of Directors.  Mr. Beall intends to step down once the Company names his successor.  In connection with a transition agreement between the Company and Mr. Beall, the material terms of which were finalized as of June 5, 2012, we accrued $2.2 million of severance during the fourth quarter of fiscal 2012.  Mr. Beall's severance payment will be payable 60 days after his departure from the Company.

As previously mentioned, Mr. Beall will receive a lump sum payment of $8.1 million, representing the full amount due to him under the Executive Supplemental Pension Plan, six-months following his retirement.  Should Mr. Beall retire prior to November 30, 2012, as is currently agreed, this payment will be required in fiscal 2013.  Due to the significance of this payment to the Executive Supplemental Pension Plan as a whole, the payment will constitute a partial plan settlement which will require a special valuation.  In addition to the expense we routinely record for the Executive Supplemental Pension Plan, a charge estimated to approximate $2.8 million will then be recorded, representing the recognition of a pro rata portion (calculated as the percentage reduction in the projected benefit obligation due to the lump-sum payment) of the then unrecognized loss recorded within accumulated other comprehensive loss.

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LONG-TERM DEBT AND CAPITAL LEASES

3 Months Ended

Sep. 04, 2012

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):

	September 4, 2012			June 5, 2012
Senior unsecured notes	$	250,000		$	250,000
Unamortized discount		(3,563	)		(3,646	)
Senior unsecured notes less unamortized discount		246,437			246,354
Mortgage loan obligations		75,444			80,076
Capital lease obligations		230			233
		322,111			326,663
Less current maturities		11,477			12,454
	$	310,634		$	314,209

On May 14, 2012, we entered into an indenture (the "Indenture") among the Company, certain subsidiaries of the Company as guarantors and Wells Fargo Bank, National Association as trustee, governing the Company's $250.0 million aggregate principal amount of 7.625% senior notes due 2020 (the "Senior Notes").  The Senior Notes were issued at a discount of $3.7 million, which is being amortized using the effective interest method over the eight year term of the notes.

The Senior Notes are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions.  They rank equal in right of payment with our existing and future senior indebtedness and senior in right of payment to any of our future subordinated indebtedness.  The Senior Notes are effectively subordinated to all of our secured debt, including borrowings outstanding under our revolving credit facility, to the extent of the value of the assets securing such debt and structurally subordinated to all of the liabilities of our existing and future subsidiaries that do not guarantee the Senior Notes.

Interest on the Senior Notes is calculated at 7.625% per annum, payable semiannually on each May 15 and November 15, commencing November 15, 2012, to holders of record on the May 1 or November 1 immediately preceding the interest payment date.  The Senior Notes mature on May 15, 2020.

At any time prior to May 15, 2016, we may redeem the Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus an applicable "make-whole" premium and accrued and unpaid interest.  At any time on or after May 15, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices specified in the Indenture plus accrued and unpaid interest.  At any time prior to May 15, 2015, we may redeem up to 35% of the Senior Notes from the proceeds of certain equity offerings.  There is no sinking fund for the Senior Notes.

The Indenture contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur or guarantee additional indebtedness; (ii) declare or pay dividends, redeem stock or make other distributions to stockholders; (iii) make certain investments; (iv) create liens or use assets as security in other transactions; (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of their assets; (vi) enter into transactions with affiliates; and (vii) sell or transfer certain assets.  These covenants are subject to a number of important exceptions and qualifications, as described in the Indenture, and certain covenants will not apply at any time when the Senior Notes are rated investment grade by the Rating Agencies, as defined in the Indenture.  The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately.

In connection with the issuance of the Senior Notes, we have agreed to register with the SEC notes having substantially identical terms as the Senior Notes, as part of an offer to exchange freely tradable exchange notes for the Senior Notes.  We have agreed: (i) within 270 days after the issue date of the Senior Notes, to file a registration statement enabling holders of the Senior Notes to exchange the privately placed notes for publicly registered notes with substantially identical terms; (ii) to use commercially reasonable efforts to cause the registration statement to become effective within 365 days after the issue date of the Senior Notes; (iii) to consummate the exchange offer within 405 days after the issue date of the Senior Notes; and (iv) to file a shelf registration statement for resale of the notes if we cannot consummate the exchange offer within the time period listed above.

If we fail to meet these targets (each, a "registration default"), the annual interest rate on the Senior Notes will increase by 0.25%.  The annual interest rate on the Senior Notes will increase by an additional 0.25% for each subsequent 90-day period during which the registration default continues, up to a maximum additional interest rate of 1.0% per year over the otherwise applicable annual interest rate of 7.625%.  If we cure the registration default, the interest rate on the Senior Notes will revert to the original level.

On September 4, 2012, we initiated a repurchase of $1.5 million of the Senior Notes.  The repurchase did not settle until September 7, 2012.  As a result, the amount repurchased, along with a pro rata portion of the associated unamortized discount, is included within the Current portion of long-term debt, including capital leases caption in our September 4, 2012 Condensed Consolidated Balance Sheet.

On December 1, 2010, we entered into a five-year revolving credit agreement (the "Credit Facility"), under which we could borrow up to $320.0 million with the option to increase our capacity by $50.0 million to $370.0 million.  On May 14, 2012, we entered into the Second Amendment to our revolving credit facility to, among other things, reduce the maximum aggregate revolving commitment to $200.0 million, secure the revolving credit facility with a lien over the equity interests of certain subsidiaries, modify certain financial covenants and ratios and permit the issuance of the Senior Notes.

The terms of the Credit Facility provide for a $40.0 million letter of credit subcommitment.  The Credit Facility also includes a $50.0 million franchise facility subcommitment (the "Franchise Facility Subcommitment"), which covered our previous guarantees of franchise debt.  The Franchise Facility Subcommitment matures not later than December 1, 2015.  All amounts guaranteed under the Franchise Facility Subcommitment have been settled.

The interest rate 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 1.50%.  The applicable margin for our Eurodollar Borrowings ranges from 1.25% to 2.50% depending on our Total Debt to EBITDAR ratio.

A commitment fee for the account of each lender at a rate ranging from 0.300% to 0.450% (depending on our Total Debt to EBITDAR ratio) on the daily amount of the unused revolving commitment of such lender is payable on the last day of each calendar quarter and on the termination date of the Credit Facility.  On the first day after the end of each calendar quarter until the termination date of the Credit Facility, we are required to pay a letter of credit fee for the account of each lender with respect to such lender's participation in each letter of credit.  The letter of credit fee accrues at the applicable margin for Eurodollar Loans then in effect on the average daily amount of such lender's letter of credit exposure (excluding any portion attributable to unreimbursed letter of credit disbursements) attributable to such letter of credit during the period from and including the date of issuance of such letter of credit to but excluding the date on which such letter of credit expires or is drawn in full.  Besides the commitment fee and the letter of credit fee, we are also required to pay a fronting fee on the daily amount of the letter of credit exposure (excluding any portion attributable to unreimbursed letter of credit disbursements) on the tenth day after the end of each calendar quarter until the termination date of the Credit Facility.  We must also pay standard fees with respect to issuance, amendment, renewal or extension of any letter of credit or processing of drawings thereunder.

We are entitled to make voluntary prepayments of our borrowings under the Credit Facility at any time, in whole or in part, without premium or penalty.  Subject to certain exceptions, mandatory prepayments will be required upon occurrence of certain events, including the revolving credit exposure of all lenders exceeding the aggregate revolving commitment then in effect, sales of certain assets and any additional debt issuances.

Under the terms of the Credit Facility, we had no borrowings outstanding at either September 4, 2012 or June 5, 2012.  After consideration of letters of credit outstanding, we had $189.7 million available under the Credit Facility as of September 4, 2012.

The Credit Facility contains a number of customary affirmative and negative covenants that, among others, limit or restrict our ability to incur liens, engage in mergers or other fundamental changes, make acquisitions, investments, loans and advances, pay dividends or other distributions, sell or otherwise dispose of certain assets, engage in certain transactions with affiliates, enter into burdensome agreements or certain hedging agreements, amend organizational documents, change accounting practices, incur additional indebtedness and prepay other indebtedness.  In addition, under the Credit Facility, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio and we were in compliance with these financial covenants as of September 4, 2012.  The terms of the Credit Facility require us to maintain a maximum leverage ratio of no more than 4.5 to 1.0 through the fiscal quarter ending on or about June 4, 2013 and 4.25 to 1.0 thereafter and a minimum fixed charge coverage ratio of 1.75 to 1.0 through and including the fiscal quarter ending on or about June 3, 2014 and 1.85 to 1.0 thereafter.

The Credit Facility terminates on December 1, 2015.  Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Facility and any ancillary loan documents.

Our $75.4 million in mortgage loan obligations as of September 4, 2012 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between November 2012 and November 2022, have balances which range from negligible to $8.3 million and interest rates of 3.94% to 11.28%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

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CLOSURES AND IMPAIRMENTS EXPENSE

3 Months Ended

Sep. 04, 2012

CLOSURES AND IMPAIRMENTS EXPENSE [Abstract]

CLOSURES AND IMPAIRMENTS EXPENSE

NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairment expenses include the following for the thirteen weeks ended September 4, 2012 and August 30, 2011 (in thousands):

	September 4, 2012			August 30, 2011
Property impairments	$	448		$	206
Closed restaurant lease reserves		478			79
Other closing expense		289			190
Gain on sale of surplus properties		(91	)		(30	)
	$	1,124		$	445

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

	Lease Obligations
Balance at June 5, 2012	$	6,813
Closing expense including rent and other lease charges		478
Payments		(792	)
Transfer of deferred escalating minimum rent balance		348
Other adjustments		(5	)
Balance at September 4, 2012	$	6,842

For the remainder of fiscal 2013 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.

Included within closing expense in the table above are $0.2 million in charges we recorded during the first quarter associated with lease obligations on a restaurant subleased to RT Midwest that has closed.  As of September 4, 2012, we subleased to RT Midwest three sites upon which the restaurants are still open.  Cash rents of $0.8 million are required under the terms of the subleases.  Should RT Midwest decide to close any of these restaurants we may incur further lease obligations associated with these subleases.

At September 4, 2012, we had 26 restaurants that had been open more than one year with rolling 12-month negative cash flows of which 15 have been impaired to salvage value.  Of the 11 which remained, we reviewed the plans to improve cash flows at each of the restaurants and determined that no impairment was necessary.  The remaining net book value of these 11 restaurants was $8.6 million at September 4, 2012.

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.

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INCOME TAXES

3 Months Ended

Sep. 04, 2012

INCOME TAXES [Abstract]

INCOME TAXES

NOTE K – INCOME TAXES

We had a liability for unrecognized tax benefits of $10.1 million and $6.4 million as of September 4, 2012 and June 5, 2012, respectively.  As of September 4, 2012 and June 5, 2012, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $4.4 million and $4.2 million, respectively.  The liability for unrecognized tax benefits as of September 4, 2012 includes $1.4 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.

Interest and penalties related to unrecognized tax benefits are recognized as components of income tax expense.  As of September 4, 2012 and June 5, 2012, we had accrued $1.3 million and $1.0 million, respectively, for the payment of interest and penalties.  During the first quarter of fiscal 2013, accrued interest and penalties increased by $0.3 million, of which $0.2 million affected the effective tax rate for the quarter ended September 4, 2012.

Under Accounting Standards Codification 740 ("ASC 740"), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period.  Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable.  In this situation, the interim tax rate should be based on the actual year-to-date results.  Based on our current projections, a small change in pretax earnings would result in a material change in the estimated annual effective tax rate, producing significant variations in the customary relationship between income tax expense and pretax accounting income in interim periods.  As such, and in contrast with our previous methods of recording income tax expense, we recorded a tax benefit for the first quarter of fiscal 2013 based on the actual year-to-date results, in accordance with ASC 740.

We recorded a tax benefit of $2.3 million during the first quarter of fiscal 2013 compared to tax expense of $0.6 million in the prior year quarter.  The change in income taxes was attributable to lower pretax income for the current quarter as compared to the same period of the prior year and an increase in the tax benefit of FICA Tip credits based on actual year-to-date amounts as discussed above.  This benefit was partially offset by an increase in unrecognized tax benefits for the quarter.

At September 4, 2012, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2008 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 2008.

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EARNINGS PER SHARE AND STOCK REPURCHASES (Details) (USD $)	3 Months Ended
	Sep. 04, 2012	Aug. 30, 2011
EARNINGS PER SHARE AND STOCK REPURCHASES [Abstract]
Net income	$ 2,599,000	$ 3,093,000
Weighted-average common shares outstanding (in shares)	62,813,000	63,755,000
Dilutive effect of stock options and restricted stock (in shares)	143,000	721,000
Weighted average common and dilutive potential common shares outstanding (in shares)	62,956,000	64,476,000
Basic earnings per share (in dollars per share)	$ 0.04	$ 0.05
Diluted earnings per share (in dollars per share)	$ 0.04	$ 0.05
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares that did not impact the computation of diluted earnings per share (in shares)	3,173,000	2,403,000
Repurchased common stock (in shares)	400,000
Repurchased common stock	$ 2,300,000
Remaining shares authorized repurchased (in shares)	5,600,000
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares that did not impact the computation of diluted earnings per share (in shares)	2,068,000	1,551,000
Restricted Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total shares that did not impact the computation of diluted earnings per share (in shares)	1,105,000	852,000

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SUBSEQUENT EVENTS

3 Months Ended

Sep. 04, 2012

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE P – SUBSEQUENT EVENTS

Sale-leaseback transactions

Subsequent to September 4, 2012, we completed sale-leaseback transactions of the land and building for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $7.5 million, exclusive of transaction costs of approximately $0.4 million.  Equipment was not included.  The carrying value of the properties sold was $5.6 million.  The leases have been classified as operating leases and have an initial term of 15 years, with renewal options of up to 20 years.  We realized gains on these transactions totaling $1.5 million, which have been deferred and are being recognized on a straight-line basis over the initial terms of the leases.

Share repurchases

Subsequent to September 4, 2012, we spent $1.2 million to repurchase 0.2 million shares of RTI common stock.

Repurchases of Senior Notes

On September 7, 2012, we repurchased $1.5 million of the Senior Notes for $1.4 million plus a negligible amount of accrued interest.  We realized a negligible gain on this transaction.

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ACCOUNTS RECEIVABLE (Tables)

3 Months Ended

Sep. 04, 2012

ACCOUNTS RECEIVABLE [Abstract]

ACCOUNTS RECEIVABLE

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

	September 4, 2012		June 5, 2012
Rebates receivable	$	924	$	923
Amounts due from franchisees		675		770
Other receivables		6,823		3,007
	$	8,422	$	4,700

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CLOSURES AND IMPAIRMENTS EXPENSE (Details) (USD $)	3 Months Ended
	Sep. 04, 2012	Aug. 30, 2011
Impairment Expense [Abstract]
Property impairments	$ 448,000	$ 206,000
Closed restaurant lease reserves	478,000	79,000
Other closing costs	289,000	190,000
(Gain)/loss on sale of surplus properties	(91,000)	(30,000)
Total closure and impairments expenses	1,124,000	445,000
Closed Location Lease Obligation [Roll Forward]
Beginning balance	6,813,000
Closing expense including rent and other lease charges	478,000
Payments	(792,000)
Transfer of deferred escalating minimum rent balance	348,000
Other adjustments	(5,000)
Ending balance	6,842,000
Lease obligation charge of closed restaurant, Subleased	200,000
Number of sites subleased	3
Amount required under the terms of sublease	800,000
Restaurants open more than one year with rolling 12-month negative cash flows [Abstract]
Restaurants open more than a year with negative cash flows	26
Negative cash flows rolling months period	12 months
Negative cash flow restaurants impaired at salvage value	15
Negative cash flow restaurants not recorded at salvage value	11
Negative cash flow restaurants not recorded at salvage value, remaining net book value.	$ 8,600,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 04, 2012	Aug. 30, 2011
Operating activities:
Net income	$ 2,599	$ 3,093
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	15,392	16,286
Amortization of intangibles	839	514
Deferred income taxes	(9,041)	(252)
Loss on impairments, including disposition of assets	441	284
Share-based compensation expense	851	2,662
Excess tax benefits from share-based compensation	(1)	(14)
Amortization of deferred gain on sale leaseback transactions	(143)
Other	23	163
Changes in operating assets and liabilities:
Receivables	(3,721)	(2,268)
Inventories	(6,393)	(977)
Income taxes	2,623	(152)
Prepaid and other assets	(1,638)	1,300
Accounts payable, accrued and other liabilities	9,371	660
Net cash provided by operating activities	11,202	21,299
Investing activities:
Purchases of property and equipment	(6,360)	(8,402)
Proceeds from sale-leaseback transactions	19,286
Proceeds from disposal of assets	5	32
Insurance proceeds from property claims		1,548
Reductions/(increases) in Deferred Compensation Plan assets	127	(29)
Other, net	(227)	(143)
Net cash provided/(used) by investing activities	12,831	(6,994)
Financing activities:
Net proceeds from revolving credit facility		6,200
Principal payments on other long-term debt	(4,474)	(3,575)
Stock repurchases	(2,346)	(18,441)
Proceeds from exercise of stock options	90	62
Excess tax benefits from share-based compensation	1	14
Net cash used by financing activities	(6,729)	(15,740)
Increase/(decrease) in cash and cash equivalents	17,304	(1,435)
Cash and cash equivalents:
Beginning of year	48,184	9,722
End of year	65,488	8,287
Cash paid for:
Interest, net of amount capitalized	1,683	3,468
Income taxes, net	238	357
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	12,614	1,561
Reclassification of properties to assets held for sale	$ 3,298	$ 2,705

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ACCOUNTS RECEIVABLE

3 Months Ended

Sep. 04, 2012

ACCOUNTS RECEIVABLE [Abstract]

ACCOUNTS RECEIVABLE

NOTE E – ACCOUNTS RECEIVABLE

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

	September 4, 2012		June 5, 2012
Rebates receivable	$	924	$	923
Amounts due from franchisees		675		770
Other receivables		6,823		3,007
	$	8,422	$	4,700

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.

As of September 4, 2012 and June 5, 2012, Other receivables consisted primarily of amounts due from our distributor ($5.0 million and $0.9 million, respectively) and amounts due for third-party gift card sales ($1.2 million and $1.3 million, respectively).  Similar to the explanation for the increase in merchandise inventory as discussed in Note F to the Condensed Consolidated Financial Statements, the increase in the receivable due from our distributor is related to lobster purchased from us by our distributor out of our lobster inventory stored in third-party facilities.  We transfer ownership of the lobster once it is moved to our distributor's facilities.  We reacquire this lobster inventory from our distributor upon its subsequent delivery to our restaurants.

On June 20, 2012, RT Midwest Holdings, LLC, RT Chicago Franchise, LLC, RT Midwest Real Estate, LLC, and RT Northern Illinois Franchise, LLC (collectively "RT Midwest"), filed for Chapter 11 protection in the United States Bankruptcy Court for the District of Minnesota.  RT Midwest is a franchisee which operated 13 restaurants and had indebtedness of $2.3 million owed to RTI at the time of the Chapter 11 filing.  During the fourth quarter of fiscal 2012, we wrote off the $2.3 million in franchise fee receivables due from RT Midwest and the associated unearned franchise fees in anticipation of the Chapter 11 filing.  See Note I to the Condensed Consolidated Financial Statements for a discussion of closed restaurant lease reserve charges recorded during the 13 weeks ended September 4, 2012 in connection with a subleased restaurant that RT Midwest closed during the current quarter.

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

3 Months Ended

Sep. 04, 2012

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

Schedule of property, plant and equipment, net

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

	September 4, 2012		June 5, 2012
Land	$	238,849	$	244,498
Buildings		482,341		494,537
Improvements		421,403		421,143
Restaurant equipment		273,208		276,576
Other equipment		91,341		95,400
Construction in progress and other*		23,351		26,473
		1,530,493		1,558,627
Less accumulated depreciation		590,783		592,022
	$	939,710	$	966,605

* Included in Construction in progress and other as of September 4, 2012 and June 5, 2012 are $18.4 million and $21.8 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.

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 04, 2012	Jun. 05, 2012
INVENTORIES [Abstract]
Merchandise inventory	$ 26,347	$ 19,918

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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Sep. 04, 2012

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

NOTE O – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted in Fiscal 2013

In June 2011, the Financial Accounting Standards Board ("FASB") 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).  The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

In September 2011, the FASB 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 first quarter).  The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements.

Accounting Pronouncements Not Yet Adopted

In July 2012, the FASB issued guidance on testing indefinite-lived intangible assets for impairment.  Under the guidance, testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill has been simplified.  The guidance allows an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test.  An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is "more likely than not" that the asset is impaired.  The guidance is effective for impairment tests for fiscal years beginning after September 15, 2012 (our fiscal 2014).  We do not expect the adoption of this guidance to have a material impact on our Condensed Consolidated Financial Statements.