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.