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.