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:  December 3, 2013

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

61,425,092

(Number of shares of common stock, $0.01 par value, outstanding as of January 7, 2014)

RUBY TUESDAY, INC.

INDEX

	Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
DECEMBER 3, 2013 AND JUNE 4, 2013	4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS FOR THE THIRTEEN AND TWENTY-SIX
WEEKS ENDED DECEMBER 3, 2013 AND DECEMBER 4, 2012	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED
DECEMBER 3, 2013 AND DECEMBER 4, 2012	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS	7-31
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS	32-49
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK	50
ITEM 4. CONTROLS AND PROCEDURES	50
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	51
ITEM 1A. RISK FACTORS	51
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	51
ITEM 4. MINE SAFETY DISCLOSURES	51
ITEM 5. OTHER INFORMATION	52
ITEM 6. EXHIBITS	52
SIGNATURES	53

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, future capital expenditures, future borrowings and repayments of debt, availability of financing on terms attractive to the Company, compliance with financial covenants in our debt instruments, restaurant growth (both Company-owned and franchised), payment of dividends, stock and bond repurchases, restaurant acquisitions, 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, 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 customers’ 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;

·   customers’ acceptance of changes in menu items;

·   changes in the availability and cost of capital;

·   potential limitations imposed by debt covenants under our debt instruments;

·   mall-traffic trends;

·   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 one of our restaurant concepts or other competing restaurant concepts;

·   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)

	DECEMBER 3,			JUNE 4,
	2013			2013
Assets	(NOTE A)
Current assets:
Cash and cash equivalents	$	23,618		$	52,907
Accounts receivable		5,779			4,834
Inventories:
Merchandise		18,220			21,779
China, silver and supplies		9,195			9,093
Income tax receivable		5,343			1,900
Deferred income taxes		4,579			7,296
Prepaid rent and other expenses		14,293			14,180
Assets held for sale		4,432			9,175
Total current assets		85,459			121,164
Property and equipment, net		824,160			859,830
Other assets		62,823			62,189
Total assets	$	972,442		$	1,043,183
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	25,264		$	14,964
Accrued liabilities:
Taxes, other than income and payroll		11,241			11,311
Payroll and related costs		21,977			25,425
Insurance		8,120			9,095
Deferred revenue – gift cards		15,664			13,454
Rent and other		25,926			22,896
Current portion of long-term debt, including capital leases		9,838			8,487
Total current liabilities		118,030			105,632
Long-term debt and capital leases, less current maturities		263,304			290,515
Deferred income taxes		2,778			5,753
Deferred escalating minimum rent		48,583			46,892
Other deferred liabilities		73,498			77,556
Total liabilities		506,193			526,348
Commitments and contingencies (Note N)
Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares;
issued: 61,415 shares at 12/03/13; 61,248 shares at 6/04/13)		614			612
Capital in excess of par value		72,678			67,596
Retained earnings		402,947			459,572
Deferred compensation liability payable in
Company stock		638			1,094
Company stock held by Deferred Compensation Plan		(638	)		(1,094	)
Accumulated other comprehensive loss		(9,990	)		(10,945	)
Total shareholders’ equity		466,249			516,835
Total liabilities & shareholders’ equity	$	972,442		$	1,043,183

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

4

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

	THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
		DECEMBER 3,			DECEMBER 4,			DECEMBER 3,			DECEMBER 4,
		2013			2012			2013			2012
	(NOTE A)						(NOTE A)
Revenue:
Restaurant sales and operating revenue	$	274,719		$	298,597		$	562,811		$	624,864
Franchise revenue		1,490			1,480			3,072			3,136
		276,209			300,077			565,883			628,000
Operating costs and expenses:
Cost of merchandise		77,669			82,847			157,607			170,710
Payroll and related costs		97,517			100,731			200,250			207,923
Other restaurant operating costs		65,289			65,648			132,823			131,502
Depreciation		13,915			14,677			28,124			29,688
Selling, general and administrative, net		37,031			38,541			74,046			81,548
Closures and impairments, net		14,143			1,891			22,176			2,978
Interest expense, net		6,620			6,765			13,373			13,555
Loss/(gain) on extinguishment of debt		672			(155	)		1,183			(155	)
		312,856			310,945			629,582			637,749
Loss from continuing operations before
income taxes		(36,647	)		(10,868	)		(63,699	)		(9,749	)
Benefit for income taxes from continuing
operations		(1,910	)		(6,664	)		(7,063	)		(8,619	)
Loss from continuing operations		(34,737	)		(4,204	)		(56,636	)		(1,130	)
Gain/(loss) from discontinued operations, net of tax		354			(10,864	)		11			(11,339	)
Net loss	$	(34,383	)	$	(15,068	)	$	(56,625	)	$	(12,469	)
Other comprehensive income:
Pension liability reclassification, net of tax		477			380			955			761
Total comprehensive loss	$	(33,906	)	$	(14,688	)	$	(55,670	)	$	(11,708	)
Basic loss per share:
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)
Diluted loss per share:
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)
Weighted average shares:
Basic		60,196			62,005			60,111			62,409
Diluted		60,196			62,005			60,111			62,409
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)

	TWENTY-SIX WEEKS ENDED
	DECEMBER 3, 2013			DECEMBER 4, 2012
	(NOTE A)
Operating activities:
Net loss	$	(56,625	)	$	(12,469	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation		28,124			30,512
Amortization		1,370			2,436
Deferred income taxes		(259	)		(21,407	)
Loss on impairments, including disposition of assets		17,746			18,756
Loss/(gain) on extinguishment of debt		1,183			(155	)
Share-based compensation expense		4,049			1,609
Excess tax benefits from share-based compensation		(283	)		(11	)
Lease reserve adjustments		4,205			379
Deferred escalating minimum rent		1,397			1,740
Other, net		1,847			(680	)
Changes in operating assets and liabilities:
Receivables		(937	)		(2,071	)
Inventories		3,457			(10,315	)
Income taxes		(3,443	)		(985	)
Prepaid and other assets		(1,187	)		91
Accounts payable, accrued and other liabilities		(216	)		(6,821	)
Net cash provided by operating activities		428			609
Investing activities:
Purchases of property and equipment		(17,697	)		(18,505	)
Proceeds from sale-leaseback transactions, net		5,637			30,408
Proceeds from disposal of assets		8,457			2,085
Insurance proceeds from property claims		218			–
Reductions in Deferred Compensation Plan assets		115			498
Other, net		(146	)		(372	)
Net cash (used)/provided by investing activities		(3,416	)		14,114
Financing activities:
Principal payments on long-term debt		(25,806	)		(17,485	)
Stock repurchases		(540	)		(20,012	)
Payments for debt issuance costs		(1,718	)		–
Proceeds from exercise of stock options		1,480			173
Excess tax benefits from share-based compensation		283			11
Net cash used by financing activities		(26,301	)		(37,313	)
Decrease in cash and cash equivalents		(29,289	)		(22,590	)
Cash and cash equivalents:
Beginning of year		52,907			48,184
End of quarter	$	23,618		$	25,594
Supplemental disclosure of cash flow information:
Cash paid for:
Interest, net of amount capitalized	$	11,813		$	12,806
Income taxes, net	$	477		$	3,517
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	$	11,292		$	38,490
Reclassification of properties to assets held for sale	$	3,816		$	763

        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® casual dining and Lime Fresh Mexican Grill® (“Lime Fresh”) fast casual restaurants.  We also franchise the Ruby Tuesday and Lime Fresh 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- and 26-week periods ended December 3, 2013 are not necessarily indicative of results that may be expected for the 52-week year ending June 3, 2014.

The Condensed Consolidated Balance Sheet at June 4, 2013 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.  In addition to the reclassification of $0.4 million from Interest expense, net to Gain on extinguishment of debt for both the 13 and 26 weeks ended December 4, 2012, we made certain reclassifications to prior year amounts in our Condensed Consolidated Statements of Operations and Comprehensive Loss to reclassify the results of operations of our discontinued concepts as discontinued operations for all periods presented.  We also made certain reclassifications to prior year amounts in our Condensed Consolidated Statements of Cash Flows to conform to current period presentation (all reclassifications were within Operating activities).

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 4, 2013.

NOTE B – LOSS PER SHARE AND STOCK REPURCHASES

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during each period presented.  Diluted loss 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 Operations and Comprehensive Loss (in thousands, except per-share data):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4,  2012			December 3,  2013			December 4,  2012
Loss from continuing operations	$	(34,737	)	$	(4,204	)	$	(56,636	)	$	(1,130	)
Gain/(loss) from discontinued operations, net of tax		354			(10,864	)		11			(11,339	)
Net loss	$	(34,383	)	$	(15,068	)	$	(56,625	)	$	(12,469	)
Weighted-average common
shares outstanding		60,196			62,005			60,111			62,409
Dilutive effect of stock
options and restricted stock		–			–			–			–
Weighted average common
and dilutive potential
common shares outstanding		60,196			62,005			60,111			62,409
Loss per share – Basic
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)

7

Loss per share – Diluted
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)

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 loss 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 loss per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3,  2013			December 4, 2012			December 3, 2013			December 4, 2012
Stock options		2,839	*		3,371	*		2,977	*		3,002	*
Restricted shares		1,074	*		1,647	*		1,160	*		1,376	*
Total		3,913			5,018			4,137			4,378

* Due to a net loss for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012, all then outstanding share-based awards were excluded from the computation of diluted loss per share.

During the first 26 weeks of fiscal 2014, we repurchased 0.1 million shares of our common stock at a cost of $0.5 million.  As of December 3, 2013, the total number of remaining shares authorized by our Board of Directors to be repurchased was 11.8 million.  All shares repurchased during the 26 week period were cancelled as of December 3, 2013.

NOTE C – FRANCHISE PROGRAMS

As of December 3, 2013, our domestic and international franchisees collectively operated 76 Ruby Tuesday restaurants and eight Lime Fresh restaurants.  We do not own any equity interest in our franchisees.

Under the terms of the franchise operating agreements, we charge a royalty fee (generally 4.0% of monthly sales for Ruby Tuesday concept franchisees and 5.25% of monthly sales for Lime Fresh concept franchisees) and require all of our Ruby Tuesday domestic franchisees to contribute a percentage, 1.5% as of December 3, 2013, 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 Operations and Comprehensive Loss.

In addition to the advertising fee discussed above, our Ruby Tuesday concept franchise agreements allow us to charge up to a 2.0% support service fee and a 1.5% marketing and purchasing fee.  For the 13 and 26 weeks ended December 3, 2013 and December 4, 2012, we recorded $0.3 million and $0.5 million, respectively in fiscal 2014, and $0.1 million and $0.4 million, respectively in fiscal 2013, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Operations and Comprehensive Loss.

8

NOTE D – DISCONTINUED OPERATIONS

In an effort to focus primarily on the successful sales turnaround of our core Ruby Tuesday concept and secondly, to improve the financial performance of our Lime Fresh concept, we closed all 13 Marlin & Ray’s restaurants, the Company’s one Wok Hay restaurant, and our two Truffles restaurants during fiscal 2013.  We have classified the results of operations of our Company-owned Marlin & Ray’s, Wok Hay, and Truffles concepts as discontinued operations for all periods presented.  The results of operations of our discontinued operations are as follows (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	December 3, 2013		December 4, 2012			December 3, 2013			December 4, 2012
Restaurant sales and operating revenue	$	–	$	4,156		$	–		$	9,154
Gain/(loss) before income taxes	$	453	$	(17,919	)	$	(75	)	$	(18,767	)
Provision/(benefit) for income taxes		99		(7,055	)		(86	)		(7,428	)
Gain/(loss) from discontinued operations	$	354	$	(10,864	)	$	11		$	(11,339	)

As of December 3, 2013 and June 4, 2013, we had $0.8 million and $2.8 million, respectively, of assets associated with the closed concept restaurants, which are included in Property and equipment, net in our Condensed Consolidated Balance Sheets.  Additionally, included within Assets held for sale in our  December 3, 2013 and June 4, 2013 Condensed Consolidated Balance Sheet are $1.3 million and $4.2 million, respectively, of assets associated with the closed concept restaurants.  See Note I to the Condensed Consolidated Financial Statements for a discussion of closed restaurant lease reserves as of December 3, 2013 and June 4, 2013 associated with the closed concept restaurants.

NOTE E – ACCOUNTS RECEIVABLE

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

	December 3, 2013		June 4, 2013
Rebates receivable	$	1,088	$	874
Amounts due from franchisees		1,393		917
Other receivables		3,298		3,043
	$	5,779	$	4,834

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.

As of December 3, 2013 and June 4, 2013, Other receivables consisted primarily of amounts due for third-party gift card sales ($1.8 million for both periods), amounts due from our distributor ($0.7 million and $0.4 million, respectively), and amounts due from landlords ($0.1 million and $0.5 million, respectively).

NOTE F – INVENTORIES

Our merchandise inventory was $18.2 million and $21.8 million as of December 3, 2013 and June 4, 2013, respectively.  In order to ensure adequate supply and competitive pricing, we have historically purchased lobster in advance of our needs and stored it in third-party facilities prior to our distributor taking possession of the inventory.  The decrease in merchandise inventory from the end of the prior fiscal year is due primarily to a reduction in lobster inventory as we have suspended the advance purchasing of lobster to utilize the lobster that is currently on hand.

9

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):

	December 3, 2013		June 4, 2013
Land	$	218,759	$	222,385
Buildings		439,591		448,681
Improvements		377,432		402,371
Restaurant equipment		253,559		260,576
Other equipment		85,798		91,351
Construction in progress and other*		18,977		23,080
		1,394,116		1,448,444
Less accumulated depreciation		569,956		588,614
	$	824,160	$	859,830

* Included in Construction in progress and other as of December 3, 2013 and June 4, 2013 are $13.5 million and $14.8 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 December 3, 2013 and June 4, 2013 are amounts classified as held for sale totaling $4.4 million and $9.2 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.  During the 13 and 26 weeks ended December 3, 2013, we sold surplus properties with carrying values of $5.6 million and $8.2 million, respectively, at net gains of $0.3 million and $0.2 million, respectively.  Cash proceeds, net of broker fees, from these sales during the 13 and 26 weeks ended December 3, 2013 totaled $5.8 million and $8.4 million, respectively.  During the 13 and 26 weeks ended December 4, 2012, we sold surplus properties with carrying values of $1.6 million at net gains of $0.5 million for both periods.  Cash proceeds, net of broker fees, from these sales during the 13 and 26 weeks ended December 4, 2012 totaled $2.1 million for both periods.

Approximately 56% of our 724 restaurants are located on leased properties.  Of these, approximately 66% are land leases only; the other 34% are for both land and building.  The initial terms of these leases expire at various dates over the next 23 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 26 weeks ended December 3, 2013, we completed sale-leaseback transactions of the land and building for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $5.9 million, exclusive of transaction costs of approximately $0.3 million.  Equipment was not included.  The carrying value of the properties sold was $4.8 million.  None of these sale-leaseback transactions occurred during the 13 weeks ended December 3, 2013.  During the 13 and 26 weeks ended December 4, 2012, we completed sale-leaseback transactions of the land and building for five and 14 Company-owned Ruby Tuesday concept restaurants, respectively, for gross cash proceeds of $11.7 million and $32.0 million, respectively, exclusive of transaction costs of approximately $0.6 million and $1.6 million, respectively.  Equipment was not included.  The carrying value of the properties sold was $8.4 million and $22.7 million, respectively.  The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years following a rent reset based on fair market value at the end of the initial term.  Net proceeds from fiscal 2013 and 2014’s sale-leaseback transactions have been used for general corporate purposes, including debt payments and the repurchase of shares of our common stock.

10

We realized gains on these transactions during the 26 weeks ended December 3, 2013 and December 4, 2012 of $0.8 million and $7.7 million, respectively, and during the 13 weeks ended December 4, 2012 of $2.7 million, which have been deferred and are being recognized on a straight-line basis over the lease term.  The current portion of the deferred gains on all sale-leaseback transactions to date was $1.1 million and $1.0 million as of December 3, 2013 and June 4, 2013, 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 $13.5 million and $13.2 million as of December 3, 2013 and June 4, 2013, respectively, and is included in Other deferred liabilities in our Condensed Consolidated Balance Sheets.  Amortization of the deferred gains of $0.3 million and $0.5 million for the 13 and 26 weeks ended December 3, 2013, respectively, and $0.2 million and $0.3 million for the 13 and 26 weeks ended December 4, 2012, respectively, is included within Other restaurant operating costs in our Condensed Consolidated Statement of Operations and Comprehensive Loss.

NOTE H – LONG-TERM DEBT AND CAPITAL LEASES

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

	December 3, 2013			June 4, 2013
Senior unsecured notes	$	222,113		$	235,000
Unamortized discount		(2,753	)		(3,083	)
Senior unsecured notes less unamortized discount		219,360			231,917
Revolving credit facility		–			–
Mortgage loan obligations		53,601			66,883
Capital lease obligations		181			202
		273,142			299,002
Less current maturities		9,838			8,487
	$	263,304		$	290,515

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 to holders of record on the May 1 or November 1 immediately preceding the interest payment date.  Accrued interest on the Senior Notes and our other long-term debt and capital lease obligations is included in Accrued liabilities – Rent and other in our Consolidated Balance Sheets.  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

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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.

Under the terms of our December 2013 four-year revolving credit agreement (the “Senior Credit Facility” discussed below) we are allowed, under certain circumstances, to repurchase up to $20.0 million of the Senior Notes in any fiscal year.  During the 26 weeks ended December 3, 2013, we repurchased $12.9 million of the Senior Notes for $13.0 million plus $0.2 million of accrued interest.  We realized losses of $0.5 million on these transactions.  The balance on the Senior Notes was $222.1 million at December 3, 2013 as a result of these repurchases.

On December 3, 2013, we entered into the Senior Credit Facility under which we may borrow up to $50.0 million with the option, subject to certain conditions, to increase the facility by up to $35.0 million.  The Senior Credit Facility, which was obtained to provide capital for general corporate purposes, replaced a previous five-year $200.0 million credit facility that was set to expire in December 2015.  The terms of the Senior Credit Facility provide for a $25.0 million sublimit for the issuance of standby letters of credit.  In connection with entering into the Senior Credit Facility, included within Interest expense, net and Loss/(gain) on extinguishment of debt in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks ended December 3, 2013 are charges of $0.2 million and $0.7 million, respectively, relating to the write-off of the pro rata portion of unamortized debt issuance costs associated with our previous credit facility.

Under the Senior Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize.  Our options for the rate are a Base Rate or LIBOR, plus an applicable margin.  The Base Rate is defined as the highest of the issuing bank’s prime rate, the Federal Funds rate plus 0.50%, or the Adjusted LIBO rate (as defined in the Senior Credit Facility) plus 1.0%.  The applicable margin for the LIBOR rate-based option is a percentage ranging from 2.50% to 3.50% and for the Base Rate option is a percentage ranging from 1.50% to 2.50%.  We pay commitment fees quarterly ranging from 0.40% to 0.75% on the unused portion of the Senior Credit Facility.

As security for the Senior Credit Facility, we granted the lenders liens and security interests in substantially all of the shares of capital stock of the Company and each of our present and future subsidiaries and substantially all of the personal property of the Company and each of our present and future subsidiaries. Further, we are substantially complete in the process of finalizing a listing of approximately 50 Ruby Tuesday restaurants whose real property, improvements and fixtures would provide additional collateral with a fair market value of approximately $100.0 million as of December 3, 2013.  While the Company has no plans to borrow on the Senior Credit Facility prior to finalization of the collateral, there can be no assurance that the full amount of $50.0 million would be available until we are able to do so.

Under the terms of the Senior Credit Facility, we had no borrowings outstanding at December 3, 2013.  After consideration of letters of credit outstanding, we had $37.6 million available under the Senior Credit Facility as of December 3, 2013.

The Senior Credit Facility contains a number of customary affirmative and negative covenants that, among other things, 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 Senior 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.  The terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.50 to 1.0 and a minimum fixed charge coverage ratio of 1.50 to 1.0 for the quarter ended December 3, 2013.  For the remainder of fiscal 2014, the terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.75 to 1.0 and 5.00 to 1.0 for the quarters ending March 4, 2014 and June 3, 2014, respectively, and a minimum fixed charge coverage ratio of 1.40 to 1.0 and 1.30 to 1.0 for the quarters ending March 4, 2014 and June 3, 2014, respectively.  The minimum required ratios fluctuate thereafter as provided in Article VII of the Senior Credit Facility.

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The Senior Credit Facility terminates not later than December 3, 2017.  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 Senior Credit Facility and any ancillary loan documents.

On December 3, 2013, in connection with our entry into the Senior Credit Facility, the Company and certain of its subsidiaries entered into loan modification agreements (the “Loan Modification Agreements”) with certain mortgage lenders to, among other things, provide waivers and consents under certain of our mortgage loan obligations to enter into the Senior Credit Facility.  The Loan Modification Agreements also, among other things, amend certain financial reporting requirements under the specified loans and modify and/or provide for certain financial covenants for the specified loans, including the minimum consolidated fixed charge coverage ratio and the minimum adjusted total debt to EBITDAR ratio.  In conjunction with one of the loan modification agreements, on January 2, 2014,  we paid approximately $5.0 million to retire a specified portion of certain mortgage loan obligations.

Our $53.6 million in mortgage loan obligations as of December 3, 2013 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between February 2014 and November 2022, have balances which range from $0.1 million to $7.8 million and interest rates of 7.60% to 10.92%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairments, net include the following for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013		December 4, 2012
Closures and impairments from
continuing operations:
Property impairments	$	12,318		$	2,212		$	17,248	$	2,660
Closed restaurant lease reserves		1,702			(99	)		4,297		375
Other closing costs		110			285			578		541
Loss/(gain) on sale of surplus properties		13			(507	)		53		(598	)
Closures and impairments, net	$	14,143		$	1,891		$	22,176	$	2,978
Closures and impairments from
discontinued operations	$	(453	)	$	16,360		$	65	$	16,397

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

	Lease Obligations
	Continuing Operations			Discontinued Concepts			Total
Balance at June 4, 2013	$	6,417		$	2,310		$	8,727
Closing expense including rent and other lease charges		4,297			(92	)		4,205
Payments		(2,503	)		(821	)		(3,324	)
Other adjustments		42			–			42
Balance at December 3, 2013	$	8,253		$	1,397		$	9,650

For the remainder of fiscal 2014 and beyond, our focus will be on obtaining settlements, or subleases as necessary, 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.

As also discussed in Note R to the Condensed Consolidated Financial Statements, on January 7, 2014, the Board of Directors of Ruby Tuesday, Inc. approved a plan to close approximately 27 Ruby Tuesday concept restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter.  Of the 30 restaurants, approximately half are planned to close upon expiration of their lease.  Included within Closures and impairments, net for the 13 and 26 weeks ended December 3, 2013 are impairment charges of $4.4 million in connection with the planned closures.

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In addition to the impairment charges recorded in connection with the planned closures discussed above, during the 13 weeks ended December 3, 2013 we recorded $5.7 million of impairments relating to nine open restaurants with deteriorating operational performance.  At December 3, 2013, we had 58 restaurants that had been open more than one year with rolling 12-month negative cash flows of which 43 have been impaired to salvage value.  Of the 15 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 15 restaurants, six of which are located on owned properties, was $13.7 million at December 3, 2013.

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 $0.3 million to the Retirement Plan during the remainder of fiscal 2014.

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.

To provide a source for the payment of benefits under our non-qualified pension plans, we own whole-life insurance contracts on certain employees.  These policies are maintained in a rabbi trust.  During the second quarter of fiscal 2014, we sold certain of these policies, the proceeds from which we expect to reinvest in new policies during the third quarter of fiscal 2014.  As a result of the sale of these policies, we classified the $8.8 million restricted cash as Other assets in the noncurrent section of our December 3, 2013 Condensed Consolidated Balance Sheet.

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								Twenty-six weeks ended
	December 3,				December 4,				December 3,				December 4,
	2013				2012				2013				2012
Service cost		$	89			$	115			$	178			$	230
Interest cost			434				525				868				1,050
Expected return on plan assets			(111	)			(102	)			(222	)			(204	)
Amortization of prior service cost (a)			–				26				–				52
Recognized actuarial loss			428				565				856				1,130
Net periodic benefit cost		$	840			$	1,129			$	1,680			$	2,258

	Postretirement Medical and Life Benefits
	Thirteen weeks ended								Twenty-six weeks ended
	December 3,				December 4,				December 3,				December 4,
	2013				2012				2013				2012
Service cost		$	3			$	3			$	6			$	6
Interest cost			17				15				34				30
Amortization of prior service cost (a)			(11	)			(14	)			(22	)			(28	)
Recognized actuarial loss			61				53				122				106
Net periodic benefit cost		$	70			$	57			$	140			$	114

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

During the 13 and 26 weeks ended December 3, 2013, we reclassified $0.5 million and $1.0 million, respectively, of amortized prior service costs and recognized actuarial losses out of accumulated other comprehensive loss and into pension expense, which is included in Selling, general and administrative, net within our Condensed Consolidated Statements of Operations.

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 4, 2013.

Executive Separations and Corporate Support Services Restructuring

On June 7, 2013, our then Executive Vice President, Chief Operations Officer separated employment with the Company.  During the first quarter of fiscal 2014, we recorded severance expense of $0.9 million in connection with the separation agreement for the former executive, which represents obligations pursuant to the Ruby Tuesday, Inc. Severance Pay Plan (the “Severance Plan”) of two times base salary.  Of this amount, $0.5 million was paid to the former executive during the 13 weeks ended September 3, 2013, and the remaining $0.4 million was paid subsequent to December 3, 2013 in accordance with the Severance Plan.

On October 7, 2013, the Company terminated the Severance Plan.

On October 30, 2013, our then Senior Vice President, Chief People Officer separated employment with the Company.  During the second quarter of fiscal 2014, we recorded severance expense of $0.4 million in connection with his separation agreement, an amount representing one year of his annual base salary plus his remaining vacation for fiscal 2014.  Of this amount, an insignificant portion was paid during the quarter and the remaining amounts will be paid over three future installments.

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On November 20, 2013, we eliminated approximately 50 support center management and staff personnel at our Restaurant Support Services Center in Maryville, Tennessee.  These reductions occurred in connection with an ongoing comprehensive review of our cost structure.  These employee separations resulted in second quarter fiscal 2014 transition-related costs of $2.0 million for employee severance and unused vacation.

As of December 3, 2013, a liability of $2.4 million representing unpaid obligations in connection with the restructuring was included within Accrued liabilities: Payroll and related costs in our Condensed Consolidated Balance Sheet.  A roll forward of our obligations in connection with employee separations is as follows (in thousands):

Balance at June 4, 2013	$	310
Employee severance and unused vacation accruals		3,212
Cash payments		(1,139	)
Balance at December 3, 2013	$	2,383

See Notes L and R to the Condensed Consolidated Financial Statements for discussion of the impact of executive separations to our share-based employee compensation costs and further staff reductions subsequent to quarter end, respectively.

NOTE K – INCOME TAXES

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.  Due to changes in our projections, which have fluctuated as we work through our brand repositioning, a reliable projection of our annual effective rate has been difficult to determine.  As such, we recorded a tax benefit for the first two quarters of fiscal 2014 based on the actual year-to-date results, in accordance with ASC 740.

We recorded a tax benefit from continuing operations of $1.9 million and $7.1 million for the 13- and 26-week periods ended December 3, 2013, respectively, compared to $6.7 million and $8.6 million for the 13- and 26-week periods ended December 4, 2012, respectively, to reflect the current benefit of federal and certain state net operating loss carrybacks as well as the recognition of unrecognized tax benefits.  The change in income taxes is attributable to increased pre-tax losses for the 13 and 26 weeks ending December 3, 2013 as compared to the same periods of the prior year, offset by an increase in the valuation allowance for deferred tax assets as discussed below.

We regularly evaluate the need for a valuation allowance for deferred tax assets by assessing whether it is more likely than not that we will realize the deferred tax assets in the future.  A valuation allowance assessment is performed each reporting period, with any additions or adjustments reflected in earnings in the period of assessment.  In assessing the need for a valuation allowance, we have considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets for each jurisdiction.

Through the third quarter of fiscal 2013, we had concluded that objective and subjective positive evidence outweighed negative evidence, and concluded it was more likely than not to realize all of our federal and most of our state deferred tax assets, except for loss carryforwards in certain states that have had cumulative losses due to our state tax planning strategies and/or relatively short carryforward periods and annual limits on how much loss carryforward can be used to offset future taxable income.   During the fourth quarter of fiscal 2013, we recorded a valuation allowance following the conclusion that the negative evidence outweighed the positive evidence. 

Our valuation allowance totaled $45.4 million and $24.6 million as of December 3, 2013 and June 4, 2013, respectively.  Netted against our tax benefit from continuing operations for the 13- and 26-week periods ended December 3, 2013 were charges of $14.6 million and $21.9 million, respectively, representing the amount reserved for the increase in deferred tax assets during the periods which primarily related to general business credit carryforwards and state net operating loss carryforwards.

We had a liability for unrecognized tax benefits, exclusive of accrued interest and penalties, of $8.9 million and $13.0 million as of December 3, 2013 and June 4, 2013, respectively.  As of December 3, 2013 and

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June 4, 2013, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $3.6 million and $3.5 million, respectively.  The liability for unrecognized tax benefits as of December 3, 2013 includes $1.2 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 December 3, 2013 and June 4, 2013, we had accrued $1.0 million and $0.9 million, respectively, for the payment of interest and penalties.  During the first 26 weeks of fiscal 2014, accrued interest and penalties increased $0.1 million, all of which affected the effective tax rate for the same time period.

At December 3, 2013, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2010, and with few exceptions, state and local examinations by tax authorities prior to fiscal year 2009.

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 Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan

A committee, appointed by the Board of Directors, administers the Ruby Tuesday, Inc. Stock Incentive Plan (“SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees, officers, and non-employee directors to whom share-based incentives are granted and the terms and provisions of share-based incentives.  Option grants under the SIP and 1996 SIP can have varying vesting provisions and exercise periods as determined by such committee.  A majority of currently outstanding options granted under the SIP and 1996 SIP vest within three years following the date of grant and expire seven years after the date of grant.  The 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 SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At December 3, 2013, we had reserved a total of 4,857,000 and 170,000 shares of common stock for the SIP and 1996 SIP, respectively.  Of the reserved shares at December 3, 2013, 1,984,000 and 102,000 were subject to options outstanding for the 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 December 3, 2013 under the SIP and 1996 SIP were 2,873,000 and 68,000, respectively.  As discussed below, during the second quarter of fiscal 2014 our shareholders approved an amendment to the SIP allowing non-employee directors to participate in the SIP.

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.  On October 9, 2013, our shareholders approved an amendment to the SIP allowing non-employee directors to participate in the SIP instead of requiring that such awards be made from the Directors’ Plan.  The amendment did not increase the number of shares of common stock available for issuance under the SIP.  At December 3, 2013, there were no reserved shares or shares of common stock available for issuance under the Directors’ Plan.  All future share-based compensation granted to non-employee directors will be awarded from shares of common stock available for issuance under the SIP.

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Stock Options

The following table summarizes our stock option activity for the 26 weeks ended December 3, 2013 under these stock option plans (in thousands, except per-share data):

	Stock Options			Weighted Average Exercise Price
Service-based vesting:
Balance at June 4, 2013		1,911		$	8.27
Granted		601			9.34
Exercised		(229	)		6.45
Forfeited		(179	)		9.39
Balance at December 3, 2013		2,104		$	8.68
Exercisable		1,237		$	8.63
Market-based vesting:
Balance at June 4, 2013		250		$	7.81
Granted		570			9.34
Forfeited		(85	)		9.34
Balance at December 3, 2013		735		$	8.82
Exercisable		–		$	–

At December 3, 2013, there was approximately $3.9 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 1.7 years.

During the first quarter of fiscal 2014, we granted 601,000 service-based stock options to certain employees under the terms of the SIP.  The stock options awarded vest in equal annual installments over a three-year period following grant of the award, and have a maximum life of seven years.  

Also during the first quarter of fiscal 2014, we granted 570,000 market-based stock options to certain employees under the terms of the SIP.  The stock options vest if a share of our common stock appreciates to $14 per share or more for a period of 20 consecutive trading days on or before December 3, 2015.  The stock options have a maximum life of seven years.

Restricted Stock

The following table summarizes our restricted stock activity for the 26 weeks ended December 3, 2013 (in thousands, except per-share data):

				Weighted-Average
	Restricted			Grant-Date
	Stock			Fair Value
Performance-based vesting:
Non-vested at June 4, 2013		356		$	7.06
Granted		–			–
Vested		(18	)		7.87
Forfeited		(270	)		6.81
Non-vested at December 3, 2013		68		$	7.81
				Weighted-Average
	Restricted			Grant-Date
	Stock			Fair Value
Service-based vesting:
Non-vested at June 4, 2013		1,136		$	7.92
Granted		405			8.97
Vested		(395	)		8.12
Forfeited		(140	)		8.76
Non-vested at December 3, 2013		1,006		$	8.15

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The fair values of the restricted share awards reflected above were based on the fair market value of our common stock on the grant date.  At December 3, 2013, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $5.8 million and will be recognized over a weighted average vesting period of approximately 1.6 years.

During the second quarter of fiscal 2014, RTI granted approximately 60,000 restricted shares to non-employee directors under the terms of the Stock Incentive Plan and Directors’ Plan.  These shares cliff vest over a one year period following grant of the award.

During the first quarter of fiscal 2014, we granted 344,000 shares of service-based restricted stock to certain employees under the terms of the SIP and 1996 SIP, 186,000 of which will cliff vest 2.5 years following the grant date and 158,000 of which will vest in three equal installments over a three-year period following the date of grant.

Also during the first quarter of fiscal 2014, the Executive Compensation Committee of the Board of Directors determined that the performance condition was not achieved for 269,000 shares of performance-based restricted stock granted in fiscal 2013.  As a result, 235,000 shares of restricted stock were cancelled and returned to the pool of shares available for grant under the SIP and 1996 SIP and 34,000 shares of restricted stock awarded to our President and Chief Executive Officer were cancelled and retired.

As discussed further in Note J to the Condensed Consolidated Financial Statements, our Executive Vice President, Chief Operations Officer, Senior Vice President, Chief People Officer, and other management personnel separated employment with the Company during the first two quarters of fiscal 2014.  Several of these individuals held share-based compensation awards at the times of their separations, and these awards were either vested or forfeited in accordance with the terms of the original awards.

Included within share-based compensation expense for the 13- and 26-week periods ended December 3, 2013 are charges of $0.3 million, representing the incremental costs resulting from accelerated vesting, net of forfeitures.

NOTE M – SEGMENT REPORTING

Our President and Chief Executive Officer, who is our chief operating decision maker, with the assistance of our senior management, reviews discrete financial information for both the Ruby Tuesday and Lime Fresh restaurant concepts to assess performance and allocate resources.  We consider the Ruby Tuesday and Lime Fresh concepts to be our reportable segments as we do not believe they have similar economic and other characteristics to be aggregated into a single reportable segment.  Financial results by reportable segment for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 are as follows (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Revenues:
Ruby Tuesday concept	$	270,741		$	296,097		$	554,763		$	619,924
Lime Fresh concept		5,468			3,980			11,120			8,076
Total revenues	$	276,209		$	300,077		$	565,883		$	628,000
Segment (loss)/profit:
Ruby Tuesday concept	$	870		$	17,026		$	10,721		$	46,573
Lime Fresh concept		(1,783	)		(2,032	)		(4,237	)		(2,351	)
Total segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Depreciation and amortization:
Ruby Tuesday concept	$	13,456		$	14,382		$	27,248		$	29,141
Lime Fresh concept		545			576			1,044			1,095
Support center and other		597			571			1,180			1,143
Total depreciation and amortization	$	14,598		$	15,529		$	29,472		$	31,379

19

Capital expenditures:
Ruby Tuesday concept	$	14,114	$	12,197
Lime Fresh concept		2,699		2,873
Support center and other		884		3,435
Total capital expenditures	$	17,697	$	18,505

Total assets by reportable segment as of December 3, 2013 and June 4, 2013 are as follows (in thousands):

	December 3, 2013		June 4, 2013
Total assets:
Ruby Tuesday concept	$	854,707	$	893,750
Lime Fresh concept		19,080		18,943
Support center and other		98,655		130,490
Total assets	$	972,442	$	1,043,183

The following is a reconciliation of segment profit to loss from continuing operations before taxes for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Less:
Depreciation and amortization		(14,598	)		(15,529	)		(29,472	)		(31,379	)
Unallocated general and
administrative expenses		(13,760	)		(3,231	)		(25,657	)		(8,251	)
Preopening expenses		(41	)		(204	)		(395	)		(399	)
Interest expense, net		(6,620	)		(6,765	)		(13,373	)		(13,555	)
Other expense, net		(715	)		(133	)		(1,286	)		(387	)
Loss from continuing operations
before income taxes	$	(36,647	)	$	(10,868	)	$	(63,699	)	$	(9,749	)

NOTE N – 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 matters referred to below, will not have a material adverse effect on our operations, financial position, or cash flows.

On April 17, 2012, a wage and hour case styled Guttentag. et al vs. Ruby Tuesday, Inc. was filed in the United States District Court, Southern District of New York.  The named plaintiffs, and five additional former employees who have joined the suit as opt-in plaintiffs, allege that the Company violated the Fair Labor Standards Act and state wage and hour laws in New York and Florida.  Plaintiffs filed their motion for conditional certification on March 8, 2013, which sought a nationwide putative class of all current and former servers, bartenders, and food runners who worked for the Company between April 17, 2009 and the present.   On June 11, 2013 the court entered an order granting conditional certification of the nationwide class requested by plaintiffs.  Mediation was conducted in early September 2013, but the effort was unsuccessful.  We continue to explore a possible agreed resolution.  The court has made no findings as to the merits or lack of merits of the plaintiffs’ claims and we are vigorously defending this matter.  Notice of the lawsuit and the right to opt-in was mailed to the putative class members in November 2013, and at present approximately 4.5% of the putative class have filed consents to opt-in. 

On September 30, 2009, an age discrimination case styled Equal Employment Opportunity Commission (Pittsburgh) v. Ruby Tuesday, Inc. (the “EEOC Lawsuit”), was filed in the United States District Court for the Western District of Pennsylvania (the “Court”).  The U.S. Equal Employment Opportunity Commission (“EEOC”) Pittsburgh Area Office alleged in the suit that the Company violated 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 December 9, 2013, the Court approved a consent decree entered into between the EEOC and the Company in Civil Action No. 09-1330. Without any

20

admission of liability, the Company agreed to make five equal monthly payments totaling $575,000 into a qualified settlement account that individuals aged 40 or older who applied for a position at one of the six restaurants from January 1, 2005 through the date of the decree may apply to receive.  The Company also agreed to make efforts to recruit and hire more individuals aged 40 or older at the three restaurants involved in the litigation that are currently open.  Civil Action 09-1330 is closed, subject to the Court’s continuing jurisdiction over the consent decree.  Not closed, but inactive (as far as we are aware), is the EEOC’s 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 other restaurants in the United States.  On April 30, 2013, the Court entered an order terminating a miscellaneous action filed by the EEOC in furtherance of the DI.   We do not believe that the DI 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 December 3, 2013 and June 4, 2013 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.  On January 10, 2014, a voluntary dismissal without prejudice of this case was entered.

NOTE O – FAIR VALUE MEASUREMENTS

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

	Level		December 3, 2013			June 4, 2013
Deferred compensation plan: other investments – Assets		1	$	9,274		$	8,721
Deferred compensation plan: other investments – Liabilities		1		(9,274	)		(8,721	)
Deferred compensation plan: RTI common stock – Equity		1		638			1,094
Deferred compensation plan: RTI common stock – Equity		1		(638	)		(1,094	)
Total			$	–		$	–

During the 26 weeks ended December 3, 2013 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.

21

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 December 3, 2013 and June 4, 2013 (in thousands):

	Fair Value Measurements
	Level		December 3, 2013			June 4, 2013
Long-lived assets held for sale *		2		$	17,942		$	24,006
Long-lived assets held for use		2			12,949			5,802
Total				$	30,891		$	29,808

* Included in the carrying value of long-lived assets held for sale as of December 3, 2013 and June 4, 2013 are $13.5 million and $14.8 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 and 26 weeks ended December 3, 2013 and December 4, 2012 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis.  The losses associated with continuing operations are included in Closures and impairments, net and the losses associated with discontinued operations are included in Loss from discontinued operations in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	December 3,  2013		December 4, 2012		December 3,  2013		December 4, 2012
Included within continuing operations
Long-lived assets held for sale	$	315	$	354	$	584	$	511
Long-lived assets held for use		12,003		1,858		16,664		2,149
	$	12,318	$	2,212	$	17,248	$	2,660
Included within discontinued operations	$	–	$	16,302	$	153	$	16,302

Long-lived assets held for sale are valued using Level 2 inputs, primarily representing 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 we have impaired.  From time to time, this will also include closed restaurants or surplus sites that do not meet the held for sale criteria that we have offered for sale at a price less than 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 December 3, 2013 and June 4, 2013 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):

	December 3, 2013				June 4, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt and capital leases	$	273,142	$	263,497	$	299,002	$	310,441
Letters of credit		–		405		–		270

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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NOTE P – SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

As discussed in Note H to the Consolidated Financial Statements, the Senior Notes are a liability of Ruby Tuesday, Inc. (the “Parent”) and are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions (the “Guarantors”).  Each of the Guarantors is wholly-owned by Ruby Tuesday, Inc.  None of the few remaining subsidiaries of Ruby Tuesday, Inc., which were primarily created to hold liquor license assets, guarantee the Senior Notes (the “Non-Guarantors”).  Our Non-Guarantor subsidiaries are immaterial and are aggregated within the Parent information disclosed below.

The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(f) of Regulation S-X promulgated by the Securities and Exchange Commission, presents the condensed consolidating financial information separately for the Parent, the Guarantors, and elimination entries necessary to consolidate the Parent and Guarantors.  Investments in wholly-owned subsidiaries are accounted for using the equity method for purposes of the consolidated presentation.  The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

23

Condensed Consolidating Balance Sheet

As of December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	23,313		$	305	$	–		$	23,618
Accounts receivable		2,217			3,562		–			5,779
Inventories		19,477			7,938		–			27,415
Income tax receivable		130,721			–		(125,378	)		5,343
Deferred income taxes		1,377			3,202		–			4,579
Other current assets		15,237			3,488		–			18,725
Total current assets		192,342			18,495		(125,378	)		85,459
Property and equipment, net		611,147			213,013		–			824,160
Investment in subsidiaries		152,303			–		(152,303	)		–
Due from/(to) subsidiaries		90,802			236,998		(327,800	)		–
Other assets		48,465			14,358		–			62,823
Total assets	$	1,095,059		$	482,864	$	(605,481	)	$	972,442
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	20,934		$	4,330	$	–		$	25,264
Accrued and other current liabilities		47,703			35,225		–			82,928
Current maturities of long-term debt,
including capital leases		(341	)		10,179		–			9,838
Income tax payable		–			125,378		(125,378	)		–
Total current liabilities		68,296			175,112		(125,378	)		118,030
Long-term debt and capital leases,
less current maturities		219,882			43,422		–			263,304
Deferred income taxes		(4,192	)		6,970		–			2,778
Due to/(from) subsidiaries		236,998			90,802		(327,800	)		–
Other deferred liabilities		107,826			14,255		–			122,081
Total liabilities		628,810			330,561		(453,178	)		506,193
Shareholders’ equity:
Common stock		614			–		–			614
Capital in excess of par value		72,678			–		–			72,678
Retained earnings		402,947			152,303		(152,303	)		402,947
Accumulated other comprehensive loss		(9,990	)		–		–			(9,990	)
Total shareholders’ equity		466,249			152,303		(152,303	)		466,249
Total liabilities & shareholders’ equity	$	1,095,059		$	482,864	$	(605,481	)	$	972,442

24

Condensed Consolidating Balance Sheet

As of June 4, 2013

(In thousands)

	Parent			Guarantors			Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	52,635		$	272	$	–		$	52,907
Accounts receivable		1,854			2,980		–			4,834
Inventories		21,961			8,911		–			30,872
Income tax receivable		118,329			–		(116,429	)		1,900
Deferred income taxes		5,372			1,924		–			7,296
Other current assets		19,519			3,836		–			23,355
Total current assets		219,670			17,923		(116,429	)		121,164
Property and equipment, net		635,478			224,352		–			859,830
Investment in subsidiaries		167,887			–		(167,887	)		–
Due from/(to) subsidiaries		76,485			230,583		(307,068	)		–
Other assets		46,812			15,377		–			62,189
Total assets	$	1,146,332		$	488,235	$	(591,384	)	$	1,043,183
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	11,725		$	3,239	$	–		$	14,964
Accrued and other current liabilities		47,775			34,406		–			82,181
Current maturities of long-term debt,
including capital leases		(347	)		8,834		–			8,487
Income tax payable		–			116,429		(116,429	)		–
Total current liabilities		59,153			162,908		(116,429	)		105,632
Long-term debt and capital leases,
less current maturities		232,462			58,053		–			290,515
Deferred income taxes		(1,070	)		6,823		–			5,753
Due to/(from) subsidiaries		230,583			76,485		(307,068	)		–
Other deferred liabilities		108,369			16,079		–			124,448
Total liabilities		629,497			320,348		(423,497	)		526,348
Shareholders’ equity:
Common stock		612			–		–			612
Capital in excess of par value		67,596			–		–			67,596
Retained earnings		459,572			167,887		(167,887	)		459,572
Accumulated other comprehensive loss		(10,945	)		–		–			(10,945	)
Total shareholders’ equity		516,835			167,887		(167,887	)		516,835
Total liabilities & shareholders’ equity	$	1,146,332		$	488,235	$	(591,384	)	$	1,043,183

25

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Thirteen Weeks Ended December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	198,850		$	75,869		$	–		$	274,719
Franchise revenue		98			1,392			–			1,490
		198,948			77,261			–			276,209
Operating costs and expenses:
Cost of merchandise		56,320			21,349			–			77,669
Payroll and related costs		69,365			28,152			–			97,517
Other restaurant operating costs		46,493			18,796			–			65,289
Depreciation		10,208			3,707			–			13,915
Selling, general, and administrative		25,724			11,307			–			37,031
Intercompany selling, general, and
administrative allocations		14,008			(14,008	)		–			–
Closures and impairments		8,058			6,085			–			14,143
Equity in earnings of subsidiaries		104			–			(104	)		–
Interest expense, net		5,171			1,449			–			6,620
Intercompany interest expense/(income)		3,229			(3,229	)		–			–
Loss on extinguishment of debt		672			–			–			672
		239,352			73,608			(104	)		312,856
(Loss)/income from continuing operations
before income taxes		(40,404	)		3,653			104			(36,647	)
(Benefit)/provision for income taxes from
continuing operations		(5,667	)		3,757			–			(1,910	)
(Loss)/income from continuing operations		(34,737	)		(104	)		104			(34,737	)
Gain from discontinued operations, net of tax		354			–			–			354
Net (loss)/income	$	(34,383	)	$	(104	)	$	104		$	(34,383	)
Other comprehensive income:
Pension liability reclassification, net of tax		477			–			–			477
Total comprehensive (loss)/income	$	(33,906	)	$	(104	)	$	104		$	(33,906	)

26

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Twenty-Six Weeks Ended December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	408,932		$	153,879		$	–		$	562,811
Franchise revenue		119			2,953			–			3,072
		409,051			156,832			–			565,883
Operating costs and expenses:
Cost of merchandise		114,847			42,760			–			157,607
Payroll and related costs		142,891			57,359			–			200,250
Other restaurant operating costs		94,895			37,928			–			132,823
Depreciation		20,572			7,552			–			28,124
Selling, general, and administrative		51,718			22,328			–			74,046
Intercompany selling, general, and
administrative allocations		28,771			(28,771	)		–			–
Closures and impairments		13,223			8,953			–			22,176
Equity in earnings of subsidiaries		(4,421	)		–			4,421			–
Interest expense, net		10,231			3,142			–			13,273
Intercompany interest expense/(income)		6,414			(6,414	)		–			–
Loss on extinguishment of debt		1,183			–			–			1,183
		480,324			144,837			4,421			629,582
(Loss)/income from continuing operations
before income taxes		(71,273	)		11,995			(4,421	)		(63,699	)
(Benefit)/provision for income taxes from
continuing operations		(14,637	)		7,574			–			(7,063	)
(Loss)/income from continuing operations		(56,636	)		4,421			(4,421	)		(56,636	)
Gain from discontinued operations, net of tax		11			–			–			11
Net (loss)/income	$	(56,625	)	$	4,421		$	(4,421	)	$	(56,625	)
Other comprehensive income:
Pension liability reclassification, net of tax		955			–			–			955
Total comprehensive (loss)/income	$	(55,670	)	$	4,421		$	(4,421	)	$	(55,670	)

27

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Thirteen Weeks Ended December 4, 2012

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	216,215		$	82,382		$	–		$	298,597
Franchise revenue		41			1,439			–			1,480
		216,256			83,821			–			300,077
Operating costs and expenses:
Cost of merchandise		59,998			22,849			–			82,847
Payroll and related costs		71,486			29,245			–			100,731
Other restaurant operating costs		46,781			18,867			–			65,648
Depreciation		10,773			3,904			–			14,677
Selling, general, and administrative		24,971			13,570			–			38,541
Intercompany selling, general, and
administrative allocations		16,442			(16,442	)		–			–
Closures and impairments		2,137			(246	)		–			1,891
Equity in earnings of subsidiaries		(9,434	)		–			9,434			–
Interest expense, net		5,342			1,423			–			6,765
Intercompany interest expense/(income)		3,434			(3,434	)		–			–
Gain on extinguishment of debt		(155	)		–			–			(155	)
		231,775			69,736			9,434			310,945
(Loss)/income from continuing operations
before income taxes		(15,519	)		14,085			(9,434	)		(10,868	)
(Benefit)/provision for income taxes from
continuing operations		(11,315	)		4,651			–			(6,664	)
(Loss)/income from continuing operations		(4,204	)		9,434			(9,434	)		(4,204	)
Loss from discontinued operations, net of tax		(10,864	)		(580	)		580			(10,864	)
Net (loss)/income	$	(15,068	)	$	8,854		$	(8,854	)	$	(15,068	)
Other comprehensive income:
Pension liability reclassification, net of tax		380			–			–			380
Total comprehensive (loss)/income	$	(14,688	)	$	8,854		$	(8,854	)	$	(14,688	)

28

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Twenty-Six Weeks Ended December 4, 2012

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	454,187		$	170,677		$	–		$	624,864
Franchise revenue		133			3,003			–			3,136
		454,320			173,680			–			628,000
Operating costs and expenses:
Cost of merchandise		124,200			46,510			–			170,710
Payroll and related costs		147,679			60,244			–			207,923
Other restaurant operating costs		93,601			37,901			–			131,502
Depreciation		21,872			7,816			–			29,688
Selling, general, and administrative		53,992			27,556			–			81,548
Intercompany selling, general, and
administrative allocations		34,484			(34,484	)		–			–
Closures and impairments		2,974			4			–			2,978
Equity in earnings of subsidiaries		(21,466	)		–			21,466			–
Interest expense, net		10,641			2,914			–			13,555
Intercompany interest expense/(income)		6,822			(6,822	)		–			–
Gain on extinguishment of debt		(155	)		–			–			(155	)
		474,644			141,639			21,466			637,749
(Loss)/income from continuing operations
before income taxes		(20,324	)		32,041			(21,466	)		(9,749	)
(Benefit)/provision for income taxes from
continuing operations		(19,194	)		10,575			–			(8,619	)
(Loss)/income from continuing operations		(1,130	)		21,466			(21,466	)		(1,130	)
Loss from discontinued operations, net of tax		(11,339	)		(652	)		652			(11,339	)
Net (loss)/income	$	(12,469	)	$	20,814		$	(20,814	)	$	(12,469	)
Other comprehensive income:
Pension liability reclassification, net of tax		761			–			–			761
Total comprehensive (loss)/income	$	(11,708	)	$	20,814		$	(20,814	)	$	(11,708	)

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Condensed Consolidating Statement of Cash Flows

For the Twenty-Six Weeks Ended December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(22,630	)	$	36,648		$	(13,590	)	$	428
Investing activities:
Purchases of property and equipment		(12,902	)		(4,795	)		–			(17,697	)
Proceeds from sale-leaseback transactions, net		5,637			–			–			5,637
Proceeds from disposal of assets		7,434			1,023			–			8,457
Other, net		187			–			–			187
Net cash provided/(used) by investing activities		356			(3,772	)		–			(3,416	)
Financing activities:
Principal payments on long-term debt		(12,968	)		(12,838	)		–			(25,806	)
Stock repurchases		(540	)		–			–			(540	)
Payments for debt issuance costs		(1,718	)		–			–			(1,718	)
Proceeds from exercise of stock options		1,480			–			–			1,480
Excess tax benefits from share-based
compensation		283			–			–			283
Intercompany transactions		6,415			(20,005	)		13,590			–
Net cash used by financing activities		(7,048	)		(32,843	)		13,590			(26,301	)
(Decrease)/increase in cash and cash equivalents		(29,322	)		33			–			(29,289	)
Cash and cash equivalents:
Beginning of year		52,635			272			–			52,907
End of quarter	$	23,313		$	305		$	–		$	23,618

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Condensed Consolidating Statement of Cash Flows

For the Twenty-Six Weeks Ended December 4, 2012

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(15,104	)	$	27,846		$	(12,133	)	$	609
Investing activities:
Purchases of property and equipment		(14,936	)		(3,569	)		–			(18,505	)
Proceeds from sale-leaseback transactions, net		30,408			–			–			30,408
Proceeds from disposal of assets		885			1,200			–			2,085
Other, net		126			–			–			126
Net cash provided/(used) by investing activities		16,483			(2,369	)		–			14,114
Financing activities:
Principal payments on long-term debt		(10,981	)		(6,504	)		–			(17,485	)
Stock repurchases		(20,012	)		–			–			(20,012	)
Proceeds from exercise of stock options		173			–			–			173
Excess tax benefits from share-based
compensation		11			–			–			11
Intercompany transactions		6,823			(18,956	)		12,133			–
Net cash used by financing activities		(23,986	)		(25,460	)		12,133			(37,313	)
(Decrease)/increase in cash and cash equivalents		(22,607	)		17			–			(22,590	)
Cash and cash equivalents:
Beginning of year		47,986			198			–			48,184
End of quarter	$	25,379		$	215		$	–		$	25,594

NOTE Q – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Not Yet Adopted

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”).  The guidance requires an entity to present its unrecognized tax benefits net of its deferred tax assets when settlement in this manner is available under the tax law, which would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events.  Gross presentation in the notes to the financial statements will still be required.  ASU 2013-11 will apply on a prospective basis to all unrecognized tax benefits that exist at the effective date, with the option to apply it retrospectively.  The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (our fiscal 2015 first quarter).  While the adoption of ASU 2013-11 will not have an impact on our results of operations or cash flows, we are currently evaluating the impact of presenting unrecognized tax benefits net of our deferred tax assets where applicable on our Condensed Consolidated Balance Sheets.

NOTE R – SUBSEQUENT EVENTS

Restaurant Closings

As also discussed in Note I to the Condensed Consolidated Financial Statements, on January 7, 2014, the Board of Directors of Ruby Tuesday, Inc. approved a plan to close approximately 27 Ruby Tuesday concept restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter.  Of the 30 restaurants, approximately half are planned to close upon expiration of their lease.  As of the date of this filing, we have closed 25 of the 30 planned restaurants.  For the remainder of fiscal 2014, we anticipate incurring charges of approximately $2.0 million associated with lease termination and other closing costs. 

Corporate Support Services Restructuring

On December 11, 2013, we eliminated 17 additional support center management and staff personnel at our Restaurant Support Services Center in Maryville, Tennessee.  These reductions will result in third quarter fiscal 2014 transition-related costs of $0.3 million for employee severance and unused vacation.

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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® casual dining and Lime Fresh Mexican Grill® (“Lime Fresh”) fast casual restaurants.  As of December 3, 2013, we owned and operated 703, and franchised 76, Ruby Tuesday restaurants.  Ruby Tuesday restaurants can now be found in 45 states, the District of Columbia, 11 foreign countries, and Guam.

As of December 3, 2013, there were 21 Company-owned and operated Lime Fresh restaurants, as well as six domestic and two international Lime Fresh restaurants operated by franchisees.

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 as a result of our varied menu, we strive to operate at the higher-end of casual dining in terms of the quality of our food and service.  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 Through Repositioning of Our Core Brand

In an effort to stabilize and increase customer traffic, same-restaurant sales, and profitability, we are in the process of implementing new initiatives focused on promoting the Ruby Tuesday brand as more lively and approachable.  These initiatives include the introduction of new menu items, music soundscape upgrades, lighting improvements, and revitalizing the look and feel of our television advertising and other promotional materials to better reflect the variety on our menu and project a more casual, energetic, and approachable brand personality and dining experience.  Our marketing strategy historically has primarily focused on print promotions, digital media and local marketing programs, with a minimal amount spent on television.  However, based on the results from television test markets in fiscal 2012, we deployed a more balanced marketing program beginning in fiscal 2013 comprised of a mixture of network and national cable television advertising in tandem with direct mail and other print and electronic promotions.  We believe that having a more lively and approachable perception of our restaurants, communicated through television advertising expense in tandem 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 customers.

Focus on Low-Capital Intensive Potential Growth in the Fast Casual Sector

We have been focused on growing our Company in a low-capital intensive manner through Lime Fresh, our Mexican fast casual concept.  We initially opened Lime Fresh restaurants under a licensing agreement and, after over a year of experience that enabled us to better understand the concept’s positioning and potential in the high-quality fast casual segment, we acquired the business for $24.1 million in the fourth quarter of fiscal 2012 since we believed we could more effectively 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 provides a low-capital intensive potential growth option for us.  While the concept is still in its early stages, we believe it has the potential to generate attractive returns for us if we are able to realize our revenue and profitability targets.  We opened four Company-owned Lime Fresh restaurants during the 26 weeks ended December 3, 2013.

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Strengthen our Balance Sheet to Facilitate Growth and Value Creation

During the fourth quarter of fiscal 2012, we strengthened our balance sheet and created additional financial flexibility by issuing $250.0 million in senior unsecured notes 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 certain of our mortgage debt from previous franchise partnership acquisitions, reduce our revolver commitment size, obtain attractive interest rates, and extend the maturity date of the majority of our debt for up to eight years.  Additionally, we recently closed on a new $50.0 million revolving Senior Credit Facility (as defined below) which replaced our existing $200.0 million revolving credit facility.  Our new Senior Credit Facility, which is secured by substantially all of the shares of capital stock of the Company, real property, improvements and fixtures of 47 Ruby Tuesday restaurants, and substantially all of the personal property of the Company and each of its present and future subsidiaries, provides us with more covenant flexibility than our previous revolving credit facility and has a $35.0 million accordion feature which provides us with additional liquidity, in particular since our new $50.0 million revolving Senior Credit Facility is undrawn.

Our 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 for three primary reasons.  First, the program enabled us through a series of transactions to corroborate the estimated market value of our entire remaining real estate portfolio for both our equity and debt holders.  Second, the program enabled us to generate excess cash during fiscal 2013, when our free cash flow was at lower levels, in order to opportunistically pay off debt and repurchase our shares, which we would have been unable to do absent the sale-leaseback transactions.  Third, we were able to complete the sale-leaseback transactions at low capitalization rates with minimal tax leakage.

Our sale-leaseback program, which was completed during the first quarter of fiscal 2014, enabled us to raise approximately $82.5 million of gross proceeds through monetizing 37 restaurants during the entire program tenure, with $5.9 million of these proceeds being realized during fiscal 2014 through the monetization of three restaurants.  The $82.5 million of sale-leaseback gross proceeds were utilized for general corporate purposes, including capital expenditures, debt reduction, and the repurchase of shares of our common stock.  We have no plans at this time to pursue any additional sale-leaseback transactions.  See further discussion of our sale-leaseback transactions in the Investing Activities section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

Our objective over the next several years is to continue to reduce outstanding debt levels in order to lower our leverage, focus on prudent Lime Fresh restaurant development, and opportunistically repurchase outstanding shares under our share repurchase program.  Our success in the key strategic initiatives outlined above should enable us to improve both our return on assets and return on equity, and to create additional shareholder value.

 Results of Operations:

The following is an overview of our results of operations for the 13- and 26-week periods ended December 3, 2013:

Net loss increased to $34.4 million for the 13 weeks ended December 3, 2013 compared to $15.1 million for the same quarter of the previous year.  Diluted loss per share for the fiscal quarter ended December 3, 2013 was $0.57 compared to $0.24 for the corresponding quarter of the prior year as a result of the increase in net loss as discussed below.

During the 13 weeks ended December 3, 2013:

·   Incurred severance, payroll tax, share-based compensation, and other charges of $2.5 million in connection with the elimination of approximately 50 positions at our Restaurant Support Services Center;

·   One Company-owned Lime Fresh restaurant was opened and one was closed;

·   Two franchised Ruby Tuesday restaurants were opened and one was closed;

·   We replaced our existing $200.0 million credit facility with a $50.0 million four-year revolving credit agreement (the “Senior Credit Facility”);

·   Our President and Chief Executive Officer, James J. Buettgen, was appointed Chairman of the Board of Directors and Stephen Sadove was appointed Lead Director in connection with the resignation of Matthew Drapkin from the Board;

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·   Our former Senior Vice President, Chief People Officer, Robert LeBoeuf, separated employment with the Company on October 30, 2013; and

·   Same-restaurant sales* at Company-owned Ruby Tuesday restaurants decreased 7.8%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 5.3%.

Net loss increased to $56.6 million for the 26 weeks ended December 3, 2013 compared to $12.5 million for the same period of the previous year.  Diluted loss per share for the 26 weeks ended December 3, 2013 was $0.94 compared to $0.20 for the corresponding period of the prior year as a result of the increase in net loss as discussed below.

During the 26 weeks ended December 3, 2013:

·   Incurred severance, payroll tax, share-based compensation, and other charges of $2.5 million in connection with the elimination of approximately 50 positions at our Restaurant Support Services Center;

·   Four Company-owned Lime Fresh restaurants were opened and one was closed;

·   Three Company-owned Ruby Tueday restaurants were closed;

·   Two franchised Lime Fresh restaurants were opened;

·   Two franchised Ruby Tuesday restaurants were opened and three were closed;

·   We replaced our existing $200.0 million credit facility with the $50.0 million Senior Credit Facility;

·   We repurchased $12.9 million of our 7.625% senior notes due 2020 (the "Senior Notes"). The repurchases settled for $13.0 million plus $0.2 of accrued interest. We realized a $0.5 million loss on these transactions;

·   We prepaid and retired 16 mortgage loan obligations for $9.9 million plus prepayment penalties of $0.8 million and accrued interest of $0.1 million;

·   Our President and Chief Executive Officer, James J. Buettgen, was appointed Chairman of the Board of Directors and Stephen Sadove was appointed Lead Director in connection with the resignation of Matthew Drapkin from the Board;

·   Our former Executive Vice President, Chief Operations Officer, Kimberly Grant, separated employment with the Company on June 7, 2013 and Todd Burrowes was appointed President – Ruby Tuesday Concept and Chief Operations Officer on June 11, 2013;

·   Our former Senior Vice President, Chief People Officer, Robert LeBoeuf, separated employment with the Company on October 30, 2013; and

·   Same-restaurant sales* at Company-owned Ruby Tuesday restaurants decreased 9.7%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 6.9%.

* 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.

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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				Twenty-six weeks ended
	December 3,		December 4,		December 3,		December 4,
	2013		2012		2013		2012
Revenue:
Restaurant sales and operating revenue	99	.5%	99	.5%	99	.5%	99	.5%
Franchise revenue	0	.5	0	.5	0	.5	0	.5
Total revenue	100	.0	100	.0	100	.0	100	.0
Operating costs and expenses:
Cost of merchandise (1)	28	.3	27	.7	28	.0	27	.3
Payroll and related costs (1)	35	.5	33	.7	35	.6	33	.3
Other restaurant operating costs (1)	23	.8	22	.0	23	.6	21	.0
Depreciation (1)	5	.1	4	.9	5	.0	4	.8
Selling, general and administrative, net	13	.4	12	.8	13	.1	13	.0
Closures and impairments, net	5	.1	0	.6	3	.9	0	.5
Interest expense, net	2	.4	2	.3	2	.4	2	.2
Loss/(gain) on extinguishment of debt	0	.2	(0	.1)	0	.2	0	.0
Loss from continuing operations before
income taxes	(13	.3)	(3	.6)	(11	.3)	(1	.6)
Benefit for income taxes from continuing
operations	(0	.7)	(2	.2)	(1	.2)	(1	.4)
Loss from continuing operations	(12	.6)	(1	.4)	(10	.0)	(0	.2)
Gain/(loss) from discontinued operations, net of tax	0	.1	(3	.6)	0	.0	(1	.8)
Net loss	(12	.4)%	(5	.0)%	(10	.0)%	(2	.0)%

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

The following table shows Company-owned Ruby Tuesday, Lime Fresh, and discontinued concept restaurant activity for the 13- and 26-week periods ended December 3, 2013 and December 4, 2012.

	Ruby Tuesday	Lime Fresh	Discontinued Concepts*	Total
13 weeks ended December 3, 2013
Beginning number	703	21	–	724
Opened	–	1	–	1
Closed	–	(1))	–	(1))
Ending number	703	21	–	724
26 weeks ended December 3, 2013
Beginning number	706	18	–	724
Opened	–	4	–	4
Closed	(3))	(1))	–	(4))
Ending number	703	21	–	724
13 weeks ended December 4, 2012
Beginning number	712	15	14	741
Opened	–	2	2	4
Closed	(3))	–	–	(3))
Ending number	709	17	16	742
26 weeks ended December 4, 2012
Beginning number	714	13	14	741
Opened	–	4	2	6
Closed	(5))	–	–	(5))
Ending number	709	17	16	742

*Discontinued concepts include Marlin & Ray’s, Truffles, and Wok Hay.

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The following table shows franchised Ruby Tuesday and Lime Fresh concept restaurant activity for the 13- and 26-week periods ended December 3, 2013 and December 4, 2012.

	Thirteen weeks ended				Twenty-six weeks ended
	December 3, 2013		December 4, 2012		December 3, 2013		December 4, 2012
Ruby Tuesday
Beginning number		75		78		77		79
Opened		2		1		2		2
Closed		(1)		(2)		(3)		(4)
Ending number		76		77		76		77

Lime Fresh
Beginning number	8	5	6	4
Opened	–	–	2	1
Closed	–	–	–	–
Ending number	8	5	8	5

Revenue

RTI’s restaurant sales and operating revenue for the 13 weeks ended December 3, 2013 decreased 8.0% to $274.7 million compared to the same period of the prior year.  This decrease is primarily the result of a 7.8% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants.

The decrease in Ruby Tuesday concept same-restaurant sales is primarily attributable to a decrease in customer traffic coupled with a reduction in average net check in the second quarter of fiscal 2014 compared with the same quarter of the prior year.  The decrease in average net check was a result of the rollout during the latter part of the first quarter of our new menu including pretzel burgers and flatbreads which featured lower price points.  These declines were partially offset by reduced discounts during the second quarter of the current year compared to the prior year.

Franchise revenue for the 13 weeks ended December 3, 2013 increased 0.1% to $1.5 million compared to the same period of the prior year.  Franchise revenue is predominately comprised of domestic and international franchise royalties, which totaled $1.4 million for both 13-week periods ended December 3, 2013 and December 4, 2012.

For the 26 weeks ended December 3, 2013, sales at Company-owned restaurants decreased 9.9% to $562.8 million compared to the same period of the prior year.  This decrease is primarily the result of a 9.7% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants.

The decrease in Ruby Tuesday concept same-restaurant sales is primarily attributable to a decrease in customer traffic coupled with a reduction in average net check in the first two quarters of fiscal 2014 compared with the same period of the prior year.  The decrease in average net check was primarily the result of  the rollout of a new menu as discussed above which was partially offset by reduced discounts as compared to the same period of the prior year.

For the 26-week period ended December 3, 2013, franchise revenues decreased 2.0% to $3.1 million compared to the same period in the prior year.  Domestic and international royalties totaled $3.0 million for both 26-week periods ending December 3, 2013 and December 4, 2012.

Segment (Loss)/Profit

Our President and Chief Executive Officer, who is our chief operating decision maker, with the assistance of our senior management, reviews discrete financial information for both the Ruby Tuesday and Lime Fresh restaurant concepts to assess performance and allocate resources.  We consider the Ruby Tuesday and Lime Fresh concepts to be our reportable segments as we do not believe they have similar economic and other characteristics to be aggregated into a single reportable segment.  Segment (loss)/profit by reportable segment for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 are as follows (in thousands):

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	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Segment (loss)/profit:
Ruby Tuesday concept	$	870		$	17,026		$	10,721		$	46,573
Lime Fresh concept		(1,783	)		(2,032	)		(4,237	)		(2,351	)
Total segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222

Segment profit for the 13 weeks ended December 3, 2013 for the Ruby Tuesday concept decreased $16.2 million to $0.9 million compared to the second quarter of fiscal 2013 due primarily to the 7.8% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants discussed above, and higher closures and impairments expense of $12.4 million as we recorded impairments in conjunction with a plan to close approximately 27 Ruby Tuesday restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter.  We also recorded impairments on nine open Ruby Tuesday restaurants not planned for closure with deteriorating operational performance.  These were partially offset by lower cost of merchandise ($5.8 million) and payroll and related costs ($3.3 million) compared to the same quarter of the prior year which resulted from the declines in customer traffic, and reductions in advertising spending of $4.6 million (primarily due to reduced television advertising).  Segment losses for the 13 weeks ended December 3, 2013 for the Lime Fresh concept decreased $0.2 million compared to the first quarter of fiscal 2013 to $1.8 million due in part to reductions in impairment charges as compared to the same quarter of the prior year.

Segment profit for the 26 weeks ended December 3, 2013 for the Ruby Tuesday concept decreased $35.9 million to $10.7 million compared to the same period of fiscal 2013 due primarily to the 9.7% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants discussed above, and higher closures and impairments expense, for the reasons noted above, of $17.3 million.  These were partially offset by lower cost of merchandise ($14.4 million) and payroll and related costs ($7.3 million) compared to the same 26 week period of the prior year which resulted from the declines in customer traffic and reductions in advertising spending of $11.2 million (primarily due to reduced television advertising).  Segment losses for the 13 weeks ended December 3, 2013 for the Lime Fresh concept increased $1.9 million compared to the same period of fiscal 2013 to $4.2 million due to increases in the lease reserve of $1.7 million related to four undeveloped sites for which a management decision was reached to forego restaurant development.  Excluding the increase to lease reserves of $1.7 million, segment losses for the Lime Fresh concept would have increased $0.2 million as compared to the same quarter of the prior year due to lease reserve charges of $0.9 million recorded on a Lime Fresh restaurant contracted to be sold, offset by lower impairment charges of $0.5 million and lower advertising fees of $0.3 million, due to the termination of a marketing agreement with an agency whose CEO previously sold the Lime Fresh restaurant concept to us.

The following is a reconciliation of segment profit to loss from continuing operations before taxes for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Less:
Depreciation and amortization		(14,598	)		(15,529	)		(29,472	)		(31,379	)
Unallocated general and
administrative expenses		(13,760	)		(3,231	)		(25,657	)		(8,251	)
Preopening expenses		(41	)		(204	)		(395	)		(399	)
Interest expense, net		(6,620	)		(6,765	)		(13,373	)		(13,555	)
Other expense, net		(715	)		(133	)		(1,286	)		(387	)
Loss from continuing operations
before income taxes	$	(36,647	)	$	(10,868	)	$	(63,699	)	$	(9,749	)

Pre-tax Loss from Continuing Operations

Pre-tax loss from continuing operations increased $25.8 million to $36.6 million for the 13 weeks ended December 3, 2013, over the same quarter of the prior year.  The higher pre-tax loss is due to a decrease in same-restaurant sales of 7.8% at Company-owned Ruby Tuesday restaurants, higher closures and impairments expense ($12.3 million), higher loss on extinguishment of debt ($0.8 million), and increases, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of cost of

37

merchandise, payroll and related costs, other restaurant operating costs, depreciation, and selling, general, and administrative, net.

Pre-tax loss from continuing operations increased $54.0 million to $63.7 million for the 26 weeks ended December 3, 2013, over the same quarter of the prior year.  The higher pre-tax loss is due to a decrease in same-restaurant sales of 9.7% at Company-owned Ruby Tuesday restaurants, higher closures and impairments expense ($19.2 million), losses on the extinguishment of debt ($1.3 million), and increases, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of cost of merchandise, payroll and related costs, other restaurant operating costs, depreciation, and selling, general, and administrative, net.

In the paragraphs that follow, we discuss in more detail the components of the increase in pre-tax loss from continuing operations for the 13- and 26-week periods ended December 3, 2013, as compared to the comparable periods 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 $5.2 million (6.3%) to $77.7 million for the 13 weeks ended December 3, 2013, over the corresponding period of the prior year.  As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 27.7% to 28.3%.

Cost of merchandise decreased $13.1 million (7.7%) to $157.6 million for the 26 weeks ended December 3, 2013, over the corresponding period of the prior year.  As a percentage of restaurant sales and operating revenue, cost of merchandise increased from 27.3% to 28.0%.

The absolute dollar decrease for the 13-week and 26-week periods ended December 3, 2013 was the result of lower sales volumes, restaurant closures, and cost savings on certain products as a result of renegotiated contracts with certain vendors since the same periods of fiscal 2013.  These were partially offset by price increases on beef, poultry, and certain other products since the prior year.

As a percentage of restaurant sales and operating revenue, the increase in cost of merchandise for the 13 and 26 weeks ended December 3, 2013 is primarily the result of a shift in menu mix with the introduction of new menu items during the first quarter of fiscal 2014, loss of leveraging associated with lower sales volumes, and price increases in the cost of certain products.

Payroll and Related Costs

Payroll and related costs decreased $3.2 million (3.2%) to $97.5 million for the 13 weeks ended December 3, 2013, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, payroll and related costs increased from 33.7% to 35.5%.

Payroll and related costs decreased $7.7 million (3.7%) to $200.3 million for the 26 weeks ended December 3, 2013, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, payroll and related costs increased from 33.3% to 35.6%.

The absolute dollar decrease in payroll and related costs for the 13- and 26-week periods ended December 3, 2013 was due to lower hourly restaurant labor in connection with lower sales volumes and restaurant closures since the same periods of the prior year.  Other factors contributing to the declines included lower bonus expense, as fewer restaurants achieved the performance goals, and a reduction in the average number of managers per restaurant in the current periods as compared to the same periods of the prior year.  These reductions were partially offset by minimum wage increases in certain states and merit increases since the same periods of the prior year and higher health insurance due to unfavorable claims experience.

As a percentage of restaurant sales and operating revenue, the increase in payroll and related costs for the 13 and 26 weeks ended December 3, 2013 is primarily the result of loss of leveraging associated with lower sales volumes.

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Other Restaurant Operating Costs

Other restaurant operating costs decreased $0.4 million (0.5%) to $65.3 million for the 13-week period ended December 3, 2013, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, these costs increased from 22.0% to 23.8%.

For the 13 weeks ended December 3, 2013, the decrease in other restaurant operating costs related to the following (in thousands):

Utilities	$	(620	)
Amortization of intangible assets		(169	)
Other reductions, net		(618	)
Rent and leasing		667
Supplies		381
Net decrease	$	(359	)

In addition to restaurant closures since the second quarter of the prior year, the decrease in other operating costs in absolute dollars for the 13-week period ended December 3, 2013 was a result of decreased utilities based on reduced rates, lower amortization expense due in part to a partial write-off of our Lime Fresh trademark during the prior year, and other reductions.  These decreases were partially offset by higher rent and leasing charges as a result of sale-leaseback transactions since the second quarter of the prior year and increased supplies expense.

As a percentage of restaurant sales and operating revenue, the increase in other operating costs for the 13-week period ended December 3, 2013 is primarily the result of loss of leveraging associated with lower sales volumes.

Other restaurant operating costs increased $1.3 million (1.0%) to $132.8 million for the 26-week period ended December 3, 2013, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, these costs increased from 21.0% to 23.6%.

For the 26 weeks ended December 3, 2013, the increase in other restaurant operating costs related to the following (in thousands):

Rent and leasing	$	1,237
Insurance		778
Repairs		544
Other increases, net		354
Utilities		(1,592	)
Net increase	$	1,321

In both absolute dollars and as a percentage of restaurant sales and operating revenue for the 26-week period ended December 3, 2013, the increase in other operating costs was primarily a result of higher rent and leasing as a result of sale-leaseback transactions since the same periods of fiscal 2013, insurance due to favorable general liability claims experience in the prior year periods, and repairs due to building maintenance.  These increased costs were partially offset by restaurant closures since the same periods of the prior year and reduced utilities as a result of reduced rates with new contracts.

Depreciation

Depreciation expense decreased $0.8 million (5.2%) to $13.9 million for the 13-week period ended December 3, 2013, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, depreciation expense increased from 4.9% to 5.1%.

Depreciation expense decreased $1.6 million (5.3%) to $28.1 million for the 26-week period ended December 3, 2013, as compared to the corresponding period in the prior year.  As a percentage of restaurant sales and operating revenue, depreciation expense increased from 4.8% to 5.0%.

In terms of absolute dollars, the decrease for the 13- and 26-week periods ended December 3, 2013 is due primarily to assets that became fully depreciated since the same periods of the prior year coupled with sale-

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leaseback transactions and restaurant closures.  As a percentage of restaurant sales and operating revenue, the increase in depreciation for the 13- and 26-week periods ended December 3, 2013 is due to a loss of leveraging associated with lower sales volumes.

Selling, General and Administrative Expenses, Net

Selling, general and administrative expenses, net decreased $1.5 million (3.9%) to $37.0 million for the 13-week period ended December 3, 2013, as compared to the corresponding period in the prior year.

Selling, general and administrative expenses, net decreased $7.5 million (9.2%) to $74.0 million for the 26-week period ended December 3, 2013, as compared to the corresponding period in the prior year.

The decrease for the 13- and 26-week periods ended December 3, 2013 is due to lower advertising costs ($4.8 million and $11.5 million, respectively) primarily as a result of decreased television advertising and reduced direct mail and other promotional activity as compared to the same periods of fiscal 2013.  The lower advertising costs were partially offset by higher general and administrative costs ($3.3 million and $4.0 million, respectively) due primarily to severance, share-based compensation, and other charges in connection with the separation of certain executives and the elimination of 50 positions at our Restaurant Support Services Center during the current year.

Closures and Impairments

Closures and impairments increased $12.3 million to $14.1 million for the 13-week period ended December 3, 2013, as compared to the corresponding period of the prior year.  The increase for the 13-week period ended December 3, 2013 is primarily due to higher property impairment charges ($10.1 million), increased closed restaurant lease reserve expense ($1.8 million), and lower gains on the sale of surplus properties ($0.5 million), which were partially offset by reduced other closing costs ($0.1 million).

Closures and impairments increased $19.2 million to $22.2 million for the 26-week period ended December 3, 2013, as compared to the corresponding period of the prior year.  The increase for the 26-week period ended December 3, 2013 is primarily due to higher property impairment charges ($14.6 million), closed restaurant lease reserve expense ($3.9 million), and lower gains on the sale of surplus properties ($0.7 million).

For both the 13- and 26-week periods ended December 3, 2013, the higher property impairment charges were due in part to a plan formulated by management and approved on January 7, 2014 by the Ruby Tuesday, Inc. Board of Directors to close 27 Ruby Tuesday concept restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter.  Of the 30 restaurants, approximately half are planned to close upon expiration of their lease.  As a result of this decision, a pre-tax impairment charge of $4.4 million was recognized within Closures and Impairments Expense for the 13 and 26 weeks ended December 3, 2013.  We also recorded impairments on nine open Ruby Tuesday restaurants not planned for closure with deteriorating operational performance.  See Note I to our Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 and Note R to our Condensed Consolidated Financial Statements for further discussion of the planned closure of these restaurants.

Interest Expense, Net

Interest expense, net decreased $0.1 million to $6.6 million for the 13 weeks ended December 3, 2013, as compared to the corresponding period in the prior year, primarily due to lower interest expense on our Senior Notes due to repurchases since the same quarter of the prior year.  Interest expense, net decreased $0.1 million to $13.4 million for the 26-week period ended December 3, 2013, as compared to the corresponding period in the prior year, primarily for the same reasons mentioned above.

Loss/(gain) on Extinguishment of Debt

Loss on extinguishment of debt was $0.7 million and $1.2 million for the 13 and 26 weeks ended December 3, 2013, respectively.  We incurred a $0.7 million charge in the second quarter of fiscal 2014 relating to the write-off of the pro rata portion of unamortized debt issuance costs associated with the previous credit facility.  During the first quarter of fiscal 2014, we repurchased $12.9 million of the Senior

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Notes for $13.0 million plus $0.2 million of accrued interest.  We realized a $0.5 million loss on the repurchases.  We did not repurchase any of the Senior Notes during the current quarter.

Gain on extinguishment of debt was $0.2 million for the 13 and 26 weeks ended December 4, 2012.  During the second quarter of fiscal 2013, we repurchased $11.5 million of the Senior Notes for $10.9 million plus a negligible amount of accrued interest.

Benefit for Income Taxes from Continuing Operations

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.  Due to changes in our projections, which have fluctuated as we work through our brand repositioning, a reliable projection of our annual effective rate has been difficult to determine.  As such, we recorded a tax benefit for the first two quarters quarter of fiscal 2014 based on the actual year-to-date results, in accordance with ASC 740.

We recorded a tax benefit from continuing operations of $1.9 million and $7.1 million for the 13- and 26-week periods ended December 3, 2013, respectively, compared to $6.7 million and $8.6 million for the 13- and 26-week periods ended December 4, 2012, respectively, to reflect the current benefit of federal and certain state net operating loss carrybacks as well as the recognition of unrecognized tax benefits.  The change in income taxes is attributable to increased pre-tax losses for the 13 and 26 weeks ended December 3, 2013 as compared to the same periods of the prior year offset by an increase in the valuation allowance for deferred tax assets as discussed below.

We regularly evaluate the need for a valuation allowance for deferred tax assets by assessing whether it is more likely than not that we will realize the deferred tax assets in the future.  A valuation allowance assessment is performed each reporting period, with any additions or adjustments reflected in earnings in the period of assessment.  In assessing the need for a valuation allowance, we have considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets for each jurisdiction.

Through the third quarter of fiscal 2013, we had concluded that objective and subjective positive evidence outweighed negative evidence, and concluded it was more likely than not to realize all of our federal and most of our state deferred tax assets, except for loss carryforwards in certain states that have had cumulative losses due to our state tax planning strategies and/or relatively short carryforward periods and annual limits on how much loss carryforward can be used to offset future taxable income.   During the fourth quarter of fiscal 2013, we recorded a valuation allowance following the conclusion that the negative evidence outweighed the positive evidence. 

Our valuation allowance totaled $45.4 million and $24.6 million as of December 3, 2013 and June 4, 2013, respectively.  Netted against our tax benefit from continuing operations for the 13- and 26-week periods ended December 3, 2013 were charges of $14.6 million and $21.9 million, respectively, representing the amount reserved for the increase in deferred tax assets during the periods which primarily related to general business credit carryforwards and state net operating loss carryforwards.

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Discontinued Operations

In an effort to focus primarily on the successful sales turnaround of our core Ruby Tuesday concept and secondly, to improve the financial performance of our Lime Fresh concept, we closed all 13 Marlin & Ray’s restaurants, the Company’s one Wok Hay restaurant, and our two Truffles restaurants during fiscal 2013.  We have classified the results of operations of our Company-owned Marlin & Ray’s, Wok Hay, and Truffles concepts as discontinued operations for all periods presented.  The results of operations of our discontinued operations are as follows (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	December 3, 2013		December 4,  2012			December 3, 2013			December 4, 2012
Restaurant sales and operating revenue	$	–	$	4,156		$	–		$	9,154
Gain/(loss) before income taxes	$	453	$	(17,919	)	$	(75	)	$	(18,767	)
Provision/(benefit) for income taxes		99		(7,055	)		(86	)		(7,428	)
Gain/(loss) from discontinued operations	$	354	$	(10,864	)	$	11		$	(11,339	)

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 4, 2013, we identified our critical accounting policies related to impairment of long-lived assets, income tax valuation allowances and tax accruals, segment reporting, discontinued operations, share-based employee compensation, business combinations, lease obligations, revenue recognition for franchisees, and estimated liability for self-insurance.  During the first 26 weeks of fiscal 2014, there have been no changes in our critical accounting policies.

Liquidity and Capital Resources:

Cash and cash equivalents decreased by $29.3 million and $22.6 million during the first 26 weeks of fiscal 2014 and 2013, respectively.  The change in cash and cash equivalents is as follows (in thousands):

	Twenty-six weeks ended
	December 3,				December 4,
	2013				2012
Cash provided by operating activities		$	428			$	609
Cash (used)/provided by investing activities			(3,416	)			14,114
Cash used by financing activities			(26,301	)			(37,313	)
Decrease in cash and cash equivalents		$	(29,289	)		$	(22,590	)

Operating Activities

Our cash provided by operations is generally derived from cash receipts generated by our restaurant customers and franchisees.  Substantially all of the $562.8 million and $624.9 million of restaurant sales and operating revenue disclosed in our Condensed Consolidated Statements of Operations and Comprehensive Loss for the 26 weeks ended December 3, 2013 and December 4, 2012, respectively, was received in cash either at the point of sale or within two to four days (when our customers paid with debit or credit cards).  Our primary uses of cash for operating activities are food and beverage purchases, payroll

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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 26 weeks of fiscal 2014 decreased $0.2 million (29.7%) from the corresponding period in the prior year to $0.4 million.  The decrease is due primarily to lower EBITDA as a result of a 9.7% decrease in same-restaurant sales at Company-owned Ruby Tuesday concept restaurants.  This was partially offset by decreases in amounts spent on media advertising (approximately $13.3 million), reductions in amounts spent to acquire inventory (approximately $13.8 million) as we have suspended the advance purchasing of lobster in order to utilize the lobster that is currently on hand, lower cash paid for income taxes ($3.0 million), and a decrease in cash paid for interest ($1.0 million) due primarily to lower interest payments on our Senior Notes due to repurchases since the same period of the prior year.

Our working capital deficiency and current ratio as of December 3, 2013 were $32.6 million and 0.7:1, 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 (thereby reducing equity), and receivable and inventory levels are generally not significant.

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 proceeds from disposal of assets and sale-leaseback transactions for the 26 weeks ended December 3, 2013 and December 4, 2012 were $17.7 million and $18.5 million, respectively.

During the 26 weeks ended December 3, 2013, we completed sale-leaseback transactions of the land and buildings for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $5.9 million, exclusive of transaction costs of approximately $0.3 million.  Equipment was not included.  Net proceeds from the sale-leaseback transactions were used for general corporate purposes, including debt payments.  See Note 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 $11.3 to $15.3 million.  We intend to fund our investing activities with cash currently on hand, cash provided by operations, or borrowings on the Senior Credit Facility.

Financing Activities

Historically our primary sources of cash have been operating activities, coupled with sale-leaseback 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 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 the Senior 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.

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Interest on the Senior Notes is calculated at 7.625% per annum, payable semiannually on each May 15 and November 15 to holders of record on the May 1 or November 1 immediately preceding the interest payment date.  Accrued interest on the Senior Notes and our other long-term debt and capital lease obligations is included in Accrued liabilities – Rent and other in our Consolidated Balance Sheets.  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.

Under the terms of our December 2013 Senior Credit Facility, we are allowed, under certain circumstances, to repurchase up to $20.0 million of the Senior Notes in any fiscal year.  During the 26 weeks ended December 3, 2013, we repurchased $12.9 million of the Senior Notes for $13.0 million plus $0.2 million of accrued interest.  We realized losses of $0.5 million on these transactions.  The balance on the Senior Notes was $222.1 million at December 3, 2013 as a result of these repurchases.

On December 3, 2013, we entered into the Senior Credit Facility under which we may borrow up to $50.0 million with the option, subject to certain conditions, to increase the facility by up to $35.0 million.  The Senior Credit Facility, which was obtained to provide capital for general corporate purposes, replaced a previous five-year $200.0 million credit facility that was set to expire in December 2015.  The terms of the Senior Credit Facility provide for a $25.0 million sublimit for the issuance of standby letters of credit.  In connection with entering into the Senior Credit Facility, included within Interest expense, net and Loss/(gain) on extinguishment of debt in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks ended December 3, 2013 are charges of $0.2 million and $0.7 million, respectively, relating to the write-off of the pro rata portion of unamortized debt issuance costs associated with our previous credit facility.

Under the Senior Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize.  Our options for the rate are a Base Rate or LIBOR, plus an applicable margin.  The Base Rate is defined as the highest of the issuing bank’s prime rate, the Federal Funds rate plus 0.50%, or the Adjusted LIBO rate (as defined in the Senior Credit Facility) plus 1.0%.  The applicable margin for the LIBOR rate-based option is a percentage ranging from 2.50% to 3.50% and for the Base Rate option is a percentage ranging from 1.50% to 2.50%.  We pay commitment fees quarterly ranging from 0.40% to 0.75% on the unused portion of the Senior Credit Facility.

As security for the Senior Credit Facility, we granted the lenders liens and security interests in substantially all of the shares of capital stock of the Company and each of our present and future subsidiaries and substantially all of the personal property of the Company and each of our present and future subsidiaries.  Further, we are substantially complete in the process of finalizing a listing of approximately 50 Ruby Tuesday restaurants whose real property, improvements and fixtures would provide additional collateral with a fair market value of approximately $100 million as of December 3, 2013.  While the Company has no plans to borrow on the Senior Credit Facility prior to finalization of the collateral, there can be no assurance that the full amount of $50.0 million would be available until we are able to do so.

Under the terms of the Senior Credit Facility, we had no borrowings outstanding at December 3, 2013.  After consideration of letters of credit outstanding, we had $37.6 million available under the Senior Credit Facility as of December 3, 2013.

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The Senior Credit Facility contains a number of customary affirmative and negative covenants that, among other things, 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 Senior 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.  The terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.50 to 1.0 and a minimum fixed charge coverage ratio of 1.50 to 1.0 for the quarter ended December 3, 2013.  For the remainder of fiscal 2014, the terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.75 to 1.0 and 5.00 to 1.0 for the quarters ending March 4, 2014 and June 3, 2014, respectively, and a minimum fixed charge coverage ratio of 1.40 to 1.0 and 1.30 to 1.0 for the quarters ending March 4, 2014 and June 3, 2014, respectively.  The minimum required ratios fluctuate thereafter as provided in Article VII of the Senior Credit Facility.

The Senior Credit Facility terminates not later than December 3, 2017.  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 Senior Credit Facility and any ancillary loan documents.

On December 3, 2013, in connection with our entry into the Senior Credit Facility, the Company and certain of its subsidiaries entered into loan modification agreements (the “Loan Modification Agreements”) with certain mortgage lenders to, among other things, provide waivers and consents under certain of our mortgage loan obligations to enter into the Senior Credit Facility.  The Loan Modification Agreements also, among other things, amend certain financial reporting requirements under the specified loans and modify and/or provide for certain financial covenants for the specified loans, including the minimum consolidated fixed charge coverage ratio and the minimum adjusted total debt to EBITDAR ratio.  In conjunction with one of the loan modification agreements, on January 2, 2014, we paid approximately $5.0 million to retire a specified portion of certain mortgage loan obligations.

Our $53.6 million in mortgage loan obligations as of December 3, 2013 consists of various loans acquired upon franchise acquisitions.  These loans, which mature between February 2014 and November 2022, have balances which range from $0.1 million to $7.8 million and interest rates of 7.60% to 10.92%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

During the 26 weeks ended December 3, 2013, we spent $0.5 million to repurchase 0.1 million shares of RTI common stock.  As of December 3, 2013, the total number of remaining shares authorized to be repurchased was 11.8 million.  We spent $20.0 million to repurchase 2.8 million shares of RTI common stock during the 26 weeks ended December 4, 2012.

During the remainder of fiscal 2014, we expect to fund operations, capital expansion, and any other investments from cash currently on hand, operating cash flows, or our Senior Credit Facility.

Covenant Compliance

Under the terms of the Senior Credit Facility, we are required to satisfy and maintain specified financial ratios and other financial condition tests and covenants.  The financial ratios include maximum funded debt and minimum fixed charge coverage covenants.  Our continued ability to meet those financial ratios, tests and covenants can be affected by events beyond our control, and we cannot assure you that we will meet those ratios, tests and covenants.

Maximum Funded Debt Covenant

Our maximum funded debt covenant is an Adjusted Total Debt to Consolidated EBITDAR ratio.  Adjusted Total Debt, as defined in our covenants, includes items both on-balance sheet (debt and capital lease obligations) and off-balance sheet (such as the present value of leases, letters of credit and guarantees).  In addition to transitionally allowing for the add-back of certain losses from discontinued operations and store closing costs, Consolidated EBITDAR is consolidated net income/(loss) (for the Company and its majority-owned subsidiaries) plus interest charges, income tax, depreciation, amortization, rent and other non-cash charges.  Among other charges, we have reflected share-based compensation, asset impairment and bad debt expense, as non-cash.

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Consolidated EBITDAR and Adjusted Total Debt are not presentations made in accordance with U.S. generally accepted accounting principles (“GAAP”), and, as such, should not be considered a measure of financial performance or condition, liquidity or profitability.  They also should not be considered alternatives to GAAP-based net income or balance sheet amounts or operating cash flows or indicators of the amount of free cash flow available for discretionary use by management, as Consolidated EBITDAR does not consider certain cash requirements such as interest payments, tax payments or debt service requirements and Adjusted Total Debt includes certain off-balance sheet items.  Further, because not all companies use identical calculations, amounts reflected by RTI as Consolidated EBITDAR or Adjusted Total Debt may not be comparable to similarly titled measures of other companies.  We believe the information shown below is relevant as it presents the amounts used to calculate covenants which are provided to our lenders.  Non-compliance with our debt covenants could result in the requirement to immediately repay all amounts outstanding under such agreements.

The following is a reconciliation of our total long-term debt and capital leases, which are GAAP-based, to Adjusted Total Debt as defined in our bank covenants (in thousands):

	December 3, 2013
Current portion of long-term debt, including capital leases	$	9,838
Long-term debt and capital leases, less current maturities		263,304
Total long-term debt and capital leases		273,142
Present value of operating leases*		226,628
Letters of credit*		12,402
Unrestricted cash in excess of $10.0 million		(13,618	)
Unamortized discount of senior unsecured notes		2,753
Unamortized premium of mortgage loan obligations		(976	)
Adjusted Total Debt	$	500,331

* Non-GAAP measure.  See below for discussion regarding reconciliation to GAAP-based amounts.

The following is a reconciliation of net loss, which is a GAAP-based measure of our operating results, to Consolidated EBITDAR as defined in our bank covenants (in thousands):

	Twelve Months
	Ended
	December 3, 2013
Net loss	$	(83,569	)
Rent expense		58,090
Depreciation		57,630
Asset impairments		33,639
Interest expense		26,471
Goodwill impairments		9,022
Share-based compensation expense		6,921
Losses on discontinued operations		3,566
Amortization of intangibles		2,936
Pension curtailment expense		2,481
Restructuring costs		2,121
Income taxes		1,879
Non-cash accruals		1,527
Restaurant closing costs		915
Other		2,639
Consolidated EBITDAR	$	126,268
Adjusted Total Debt to Consolidated EBITDAR – Actual		3.96	x
Maximum allowed per covenant (1)		4.50	x

(1) For the remainder of fiscal 2014, the Senior Credit Facility requires us to maintain a maximum Adjusted Total Debt to EBITDAR ratio of less than or equal to 4.75x for the quarter ending March 4, 2014 and 5.00x for the quarter ending June 3, 2014.  The maximum Adjusted Total Debt to EBITDAR ratio fluctuates thereafter as provided in Article VII of the Senior Credit Facility.

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Minimum Fixed Charge Coverage

Our fixed charge coverage ratio compares Consolidated EBITDAR (as discussed above) to interest and cash-based rents.

The following shows our computation of our fixed charge coverage ratio (in thousands):

	Twelve Months
	Ended
	December 3, 2013
Consolidated EBITDAR		$	126,268
Interest*		$	23,852
Cash rents*			51,662
Total		$	75,514

* Non-GAAP measure.  See below for discussion regarding reconciliation to GAAP-based amounts.

Fixed Charge Covenant – Actual	1.67x
Minimum allowed per covenant (2)	1.50x

(2) For the remainder of fiscal 2014, the Senior Credit Facility requires us to maintain a minimum fixed charge coverage ratio of greater than or equal to 1.40x for the quarter ending March 4, 2014 and 1.30x for the quarter ending June 3, 2014.  The minimum fixed charge coverage ratio fluctuates thereafter as provided in Article VII of the Senior Credit Facility.

Non-GAAP Amounts Used in Debt Covenant Calculations

As previously discussed, we use various non-GAAP amounts in our Adjusted Total Debt, Consolidated EBITDAR, and Fixed Charge covenant calculations.  Two of the amounts presented in the Adjusted Total  Debt calculation, the present value of operating leases and letters of credit, are off-balance sheet and there is no corresponding amount presented in our Condensed Consolidated Balance Sheets.

Our Minimum Fixed Charge Coverage ratio requires interest to be included in the denominator.  The amount we reflect for interest in the denominator of this calculation ($23.9 million on a rolling 12 month basis) differs from interest expense determined in accordance with GAAP ($26.5 million) because of three adjustments we make.  As shown below, we exclude brokerage fees, prepayment penalties, and the amortization of loan fees and fair market value adjustments.  While these items are reflected as interest expense in our Condensed Consolidated Statements of Operations, they don’t require on-going cash payments for servicing and therefore aren’t impacted by future Consolidated EBITDAR.  The table below reconciles debt covenant interest for the preceding 12 months to GAAP interest for the same time period (amounts in thousands):

Interest	$	23,852
Brokerage fees		1,855
Prepayment penalties		1,147
Amortization of loan fees and fair market
value adjustments		(383	)
GAAP-based interest expense	$	26,471

Our Minimum Fixed Charge Coverage ratio also allows for recurring cash rents to be included in the denominator.  Cash rents ($51.7 million on a rolling 12 month basis) differ from rents determined in accordance with GAAP ($58.1 million) by the following (amounts in thousands):

Cash rents	$	51,662
Change in rent accruals		4,076
Rent settlement payments		2,352
GAAP-based rent expense	$	58,090

47

Significant Contractual Obligations and Commercial Commitments

Long-term financial obligations were as follows as of December 3, 2013 (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)	$	52,806	$	9,832	$	10,395	$	20,218	$	12,361
Senior unsecured notes (a)		222,113		–		–		–		222,113
Interest (b)		125,835		20,639		39,993		36,940		28,263
Operating leases (c)		373,120		46,615		83,175		69,839		173,491
Purchase obligations (d)		104,484		72,584		31,885		15		–
Pension obligations (e)		32,545		3,384		5,142		5,268		18,751
Total (f)	$	910,903	$	153,054	$	170,590	$	132,280	$	454,979

(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 $2.5 million as of December 3, 2013 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 $1.6 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 $8.9 million of unrecognized tax benefits due to the uncertainty regarding the timing of future cash outflows associated with such obligations.

Commercial Commitments as of December 3, 2013 (in thousands):

	Payments Due By Period
		Less than	1-3	3-5	More than 5
	Total	1 year	Years	years	Years
Letters of credit	$ 12,402	$ 12,402	$         –	$           –	$           –
Divestiture guarantees	6,646	827	1,980	1,643	2,196
Total	$ 19,048	$ 13,229	$ 1,980	$   1,643	$   2,196

At December 3, 2013, 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 December 3, 2013 to be $6.0 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.

48

Accounting Pronouncements Not Yet Adopted

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”).  The guidance requires an entity to present its unrecognized tax benefits net of its deferred tax assets when settlement in this manner is available under the tax law, which would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events.  Gross presentation in the notes to the financial statements will still be required.  ASU 2013-11 will apply on a prospective basis to all unrecognized tax benefits that exist at the effective date, with the option to apply it retrospectively.  The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (our fiscal 2015 first quarter).  While the adoption of ASU 2013-11 will not have an impact on our results of operations or cash flows, we are currently evaluating the impact of presenting unrecognized tax benefits net of our deferred tax assets where applicable on our Condensed Consolidated Balance Sheets.

Known Events, Uncertainties and Trends:

Restaurant Closures

As discussed in Note I to the Condensed Consolidated Financial Statements, we incurred impairment charges of $4.4 million in the second quarter of fiscal 2014 associated with the planned closing of 27 Ruby Tuesday restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter.  Approximately half of these closings are in advance of normal lease expirations.  As of the date of this filing, we have closed 25 of these restaurants.  Accordingly, in conjunction with the closings, our third quarter Closures and Impairments Expense will include costs associated with lease terminations, future lease obligations, severance, and inventory obsolescence charges.  For the remainder of fiscal 2014, we anticipate incurring charges of approximately $2.0 million associated with lease termination and other closing costs.  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.

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 our common stock.  During the first two quarters of fiscal 2014, we repurchased 0.1 million shares of our common stock at an aggregate cost of $0.5 million.  As of December 3, 2013, the total number of remaining shares authorized to be repurchased was 11.8 million.  To the extent not funded with cash on hand or cash from operating activities, additional repurchases, if any, may be funded by available cash on hand or 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

We are allowed under the terms of the Senior Credit Facility to prepay up to $20.0 million of indebtedness in any fiscal year to various holders of the Senior Notes.  As discussed in Note H to the Condensed Consolidated Financial Statements, we repurchased $12.9 million of the Senior Notes during the 26 weeks ended December 3, 2013 for $13.0 million plus $0.2 million of accrued interest.  We realized a $0.5 million loss on these transactions.  As of the date of this filing, we may repurchase an additional $7.1 million of the Senior Notes during the remainder of fiscal 2014.  Any future repurchases of the Senior Notes, if any, will be funded with available cash on hand.

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.

49

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 Senior Credit Facility can vary based on the interest rate option we choose to utilize.  Our options for the rate are LIBOR or a Base Rate plus an applicable margin.  The Base Rate is defined as the highest of the issuing bank’s prime rate, the Federal Funds rate plus 0.50%, or the Adjusted LIBO rate (as defined in the Senior Credit Facility) plus 1.0%.  The applicable margin for the LIBOR rate-based option is a percentage ranging from 2.50% to 3.50% and for the Base Rate option is a percentage ranging from 1.50% to 2.50%.  As of December 3, 2013, the total amount of outstanding debt subject to interest rate fluctuations was $2.5 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 December 3, 2013.

Changes in Internal Controls

During the fiscal quarter ended December 3, 2013, 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.

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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 customers 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 N to the Condensed Consolidated Financial Statements for further information about our legal proceedings as of December 3, 2013.

ITEM 1A.  RISK FACTORS

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended June 4, 2013 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 our second fiscal quarter ending December 3, 2013:

	(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
(September 4 to October 8)	–	–	–	11,779,339
Month #2
(October 9 to November 5)	–	–	–	11,779,339
Month #3
(November 6 to December 3)	–	–	–	11,779,339
Total	–	–	–

(1) No shares were repurchased other than through our publicly-announced repurchase programs and authorizations during the first two quarters of our year ending June 3, 2014.

(2) As of December 3, 2013, 11.8 million shares remained available for purchase under existing programs, which consists of 1.8 million shares remaining under a July 11, 2007 authorization by the Board of Directors to repurchase 6.5 million shares and a January 8, 2013 authorization by the Board of Directors, not yet begun, to repurchase 10.0 million shares.  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.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

Restaurant Closures

On January 7, 2014, the Board approved a plan to close approximately 27 Ruby Tuesday concept restaurants in the third quarter of fiscal 2014 and approximately 3 additional locations in the fourth quarter. The closures are part of the Company’s ongoing strategic planning and comprehensive cost reduction initiative.

Of the 30 restaurants, approximately half are planned to close upon the expiration of their lease. As a result of this decision, a pre-tax impairment charge of $4.4 million was recognized within Closures and Impairments Expense for the 13 and 26 weeks ended December 3, 2013, as disclosed in the Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q.
 

Amendment to Senior Credit Facility

As previously disclosed, the Company entered into the Senior Credit Facility on December 3, 2013.  Pursuant to the terms of the Senior Credit Facility, the Company had thirty days from the date of closing to provide the administrative agent certain environmental assessment reports for the properties to be mortgaged as collateral.  On January 10, 2014, the Company and its wholly-owned guarantor subsidiaries entered into an amendment to the Senior Credit Facility with the banks and other financial institutions that are party to the Senior Credit Facility.  The amendment provides additional time for the Company to replace the mortgages on certain real property with mortgages on substitute real property and supply the administrative agent with acceptable environmental assessment reports.  Under the terms of the amendment, the Company has sixty (60) days from the date of the amendment to provide the required mortgages and environmental assessments.  The amendment does not change the requirement that the Company provide mortgages on real property that the administrative agent is reasonably satisfied that the appraised value, in the aggregate, is at least $100,000,000.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

 Exhibit No.

10	.1	Agreement for Separation of Employment.
10	.2	Loan Modification Agreement.
10	.3	Waiver and Consent in Connection with Revolving Credit Facility.
10	.4	First Amendment to Revolving Credit Agreement and Waiver.
12	.1	Statement regarding computation of Consolidated Ratio of Earnings to Fixed Charges.
31	.1	Certification of James J. Buettgen, 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.

52

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.

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: January 13, 2014  BY: /s/ MICHAEL O. MOORE —————————————— Michael O. Moore Executive Vice President – Chief Financial Officer and Assistant Secretary (Principal Financial Officer)

Date: January 13, 2014  BY: /s/ FRANKLIN E. SOUTHALL, JR. ————————————————— Franklin E. Southall, Jr. Vice President – Corporate Controller and Principal Accounting Officer (Principal Accounting Officer)

53

EX-10.1

AGREEMENT FOR SEPARATION OF EMPLOYMENT

This Agreement for Separation of Employment (herein the “Agreement”) is made by and between Robert LeBoeuf (herein “Employee”), a resident of the State of Tennessee, and Ruby Tuesday, Inc. (“RTI” and/or the “Company”), a Georgia corporation.

1.             This Agreement stipulates the terms of Employee’s separation of employment with the Company.

2.             In order to cover the requirements of the Age Discrimination in Employment Act, Employee has twenty-one (21) days from the date of Employee’s receipt of this Agreement in which to consider the Agreement.  Employee has the election to accept or reject this offer within the twenty-one (21) day period.  It is recommended that Employee consult with an attorney about the Company's offer and Employee’s rights before signing it. Employee understands he will not, however, waive or give up any rights or claims he may have against the Company that may arise after the date that Employee accepts the Company's offer by signing this Agreement.  If Employee signs this Agreement, Employee specifically and unequivocally agrees to every term in the Waiver of Rights attached hereto as Exhibit A and incorporated herein.  If Employee signs this Agreement, he will have seven (7) days following the signing of the Agreement and the return of the signed Agreement to change his mind and revoke the Agreement.  To revoke the Agreement, Employee must ensure that written notice is delivered to Scarlett May, Senior Vice President and Chief Legal Officer, Ruby Tuesday, Inc., 150 West Church Avenue, Maryville, Tennessee  37801 by the end of the day on the seventh calendar day after Employee signs this Agreement.  If Employee does not revoke this Agreement within seven (7) days of signing, this Agreement will become final and binding on the day following such seven (7) day period.  If Employee signs the Agreement and does not revoke it during the seven (7) day revocation period, it shall become effective as of the last date of Employee’s employment, October 30, 2013 (alternatively, the “Separation Date” or “Effective Date”).  Whether or not Employee signs this Agreement, Employee is no longer an employee of the Company as of the Separation Date.

3.In consideration of the releases, waivers, representations and obligations contained herein, Employee shall receive the aggregate sum of Four Hundred Three Thousand Six Hundred Fifty and No/100 Dollars ($403,650.00), payable in four separate installments, as follows:  Thirty-Eight Thousand Six Hundred Fifty and No/100 Dollars ($38,650.00) shall be paid by the 5th business day following the expiration of the seven (7) day period referenced in Section 2; Two Hundred Fifteen Thousand and No/100 Dollars ($215,000) shall be paid on January 1, 2014 (or the immediately succeeding business day if such date is not a business day); Seventy-Five Thousand and No/100 Dollars ($75,000.00) shall be paid on the first anniversary of the Separation Date (or the immediately succeeding business day if such date is not a business day); and Seventy-Five Thousand and No/100 Dollars ($75,000.00) shall be paid on the second anniversary of the Separation Date (or the immediately succeeding business day if such date is not a business day).  RTI shall deduct from each installment payment all required withholdings and deductions.  RTI shall also pay Employee his unpaid base salary through November 12, 2013 and his accrued, unused vacation or compensatory time off in the amount of $26,392 to be paid on January 1, 2014.  Aside from the compensation set forth in this Section 3, Employee will not receive any additional compensation, including but not limited to, bonuses, auto allowance, or compensatory time off.

4.            The Company will provide Employee with information covering his health insurance entitlements under COBRA and other employee benefits upon the Separation Date.  Such benefits will be provided pursuant to the terms and conditions of the policies and, to the extent applicable, governing plan documents applicable to the benefits in question.  Subject to any conflicting terms of the governing plan documents, the treatment applicable under certain benefit plans is described below:

(a) Salary Deferral Plan / Deferred Compensation Plan / Executive Supplemental Pension Plan.  If Employee participated in the Ruby Tuesday, Inc. Salary Deferral 401(k) Plan or the Deferred Compensation Plan, Employee may receive monies in accordance with the terms of those plans, but Employee will not be allowed to make any contributions or receive Company matching contributions under these plans with respect to any compensation otherwise payable to Employee following the Separation Date.  The Employee will receive benefits payable, if any, under the Executive Supplemental Pension Plan in accordance with the terms of such plan, but the Employee will not earn any benefits under the plan with respect to compensation otherwise payable to Employee following the Separation Date.

(b) Credit Union.  If Employee is currently a member of the Morrison Employees' Federal Credit Union, he may continue to participate in that program, subject only to observing the rules and qualifications governing participation.

(c) Options / Restricted Stock / Performance Awards.  Exhibit B to this Agreement contains a complete list of Employee’s outstanding Company-granted stock options, restricted stock and/or performance cash awards.  Employee is not eligible for any grants of restricted stock or options to acquire Company stock following the Separation Date.  Employee’s rights under the Company-granted restricted stock and/or stock options that he currently holds are controlled by the terms of the applicable written restricted stock, stock option and/or performance cash award or agreement, except as otherwise provided herein.

5.           Aside from the amounts to which Employee is entitled under the terms of the Agreement, Employee acknowledges that he has received any and all compensation and remuneration of any kind and character, including, but not limited to, salary (other than salary accrued through the Separation Date), bonuses, commissions, vacation, restricted stock, stock options, performance cash and severance pay, which he may be entitled to receive from the Company at any time now or in the future.  It is understood that the Company's offer is in lieu of any other severance or separation pay.

6.This Agreement shall in no way be construed as an admission by the Company that it has acted wrongfully with respect to Employee or any other person or that Employee has any rights whatsoever against the Company or any other party.  The Company specifically disclaims any liability to or wrongful acts against Employee or any other person on the part of itself, its employees or its agents.

7.Employee represents and warrants that Employee has not filed, nor assigned to others the right to file, nor are there currently pending, any complaints, charges, claims, grievances, or lawsuits against the Company with any administrative, state, federal, or governmental entity or agency or with any court.  Nothing herein is intended to or shall preclude Employee from filing a

complaint and/or charge with any appropriate federal, state, or local government agency or cooperating with said agency in its investigation.  Employee, however, shall not be entitled to receive any relief or recovery in connection with any complaint or charge brought against the Company, without regard as to who brought said complaint or charge.

8.Employee represents that he has returned any and all Company property currently in his possession to a Company representative, including all electronic property that Employee received from the Company and/or that Employee used in the course of his/her employment with the Company and that are the property of the Company, but excluding the Apple laptop computer, Serial No. C02JT167DKQ5, issued to the Employee as of the Separation Date.  Employee acknowledges and agrees that Employee will not delete, destroy or erase any data stored on or associated with such property, including but not limited to data stored on computers, phones, or other electronic devices.

9.Employee acknowledges that he has access to Trade Secrets (as defined under the Uniform Trade Secrets Act or other applicable law), which are the sole and exclusive property of RTI.  Employee agrees that for the maximum period of time following the Separation Date allowable under applicable law Employee shall not reproduce, use, distribute or disclose any Trade Secrets to any other person including without limitation, any competitors or potential competitors of RTI.

10.         As an employee of RTI, Employee has access to Confidential Information (as defined herein).  Employee agrees to maintain the confidentiality of all Confidential Information for a period of two (2) years following the Effective Date.  For purposes of this Section, the term “Confidential Information” means data and information relating to the business of RTI which does not rise to the level of a Trade Secret and which is or has been disclosed to Employee or of which Employee has become aware as a consequence of or through Employee’s employment relationship with RTI (or such subsidiary or affiliate) and which has value to RTI (or such subsidiary or affiliate) and is not generally known to its competitors including, without limitation, financial information, processes, manuals, technology, business strategies, tactics and future restaurant opening schedules.  Confidential Information shall not include (a) any data or information that (i) has been voluntarily disclosed to the public by RTI (except where such public disclosure was effected by Employee without authorization), (ii) has been independently developed and disclosed by others or (iii) otherwise enters the public domain through lawful means, or (b) Employee’s skills or experience developed in connection with performance of job functions.

11.For a period of six (6) months from the Effective Date, Employee shall not perform any services of any type for the following competitors: Applebee’s, Chili’s, T.G.I. Friday’s, O’Charley’s, Red Robin Gourmet Burgers, Olive Garden or Outback Steak House unless Employee obtains the Company's prior written consent. Employee and Company agree that this covenant is reasonable and necessary to protect the business, interests and properties of the Company and that the damages which Company will suffer in the event of Employee’s breach of the foregoing covenant are impossible to quantify and determine.  Therefore, the parties agree that in the event of each such breach, Company shall have all rights and remedies available to it by law or in equity, including by way of example and not of limitation, a temporary restraining order and temporary and permanent injunctions to prevent a breach or contemplated breach of this Section 11 and to any other remedies, including forfeiture, as described in Section 15.

12.For a period of two (2) years from the Effective Date, Employee shall not, for himself or on behalf of or for the benefit of any other person, corporation or entity, seek to employ, solicit or recruit any employee of the Company, or a subsidiary or affiliate of the Company, or any of their respective franchisees or licensees for employment by any third party, or induce or encourage any such employee to terminate such employment, nor will Employee knowingly provide the name of any employee of the Company, any such subsidiary, affiliate, franchisee or licensee for the purpose of solicitation or recruitment by any third party.  The parties agree that the damages which the Company will suffer in the event of the Employee’s breach of the foregoing covenant are difficult to quantify and determine.  Therefore, the parties agree that in the event of each such breach, the Employee may apply the remedies of forfeiture as described in Section 15.

13.Employee shall not disparage RTI or communicate any false or adverse information about RTI, the terms of this Agreement, or any matter relating to RTI’s restaurants or food products.  RTI shall not disparage or communicate any false information about Employee, the terms of this Agreement, or Employee’s skills or job performance.  Additionally, in response to reference requests from a prospective employer, RTI will only state the Employee resigned and provide his dates of employment and last position held.

14.Employee agrees that upon reasonable notice, he will fully cooperate with the Company and make himself available to assist the Company in transitioning any duties or responsibilities to other employees or vendors, if necessary.  Employee further agrees that he will fully cooperate and consult with the Company, answer questions for the Company, and provide information as needed by the Company from time to time on a reasonable basis, including but not limited to cooperation in connection with litigation, audits, investigations, claims, or personnel matters that arise or have arisen over actions or matters that occurred or failed to occur during Employee’s employment with the Company.  Employee agrees to assist the Company as a witness or during any audit, investigation, or litigation (including depositions, affidavits and trial) if requested by the Company.  Employee agrees to meet at reasonable times and with the Company’s representatives, agents or attorneys for the purposes of preparing for such activities.  To the extent practicable and within the control of the Company, the Company will use reasonable efforts to schedule the timing of Employee’s participation in any such activities in a reasonable manner to take into account Employee’s then current employment, and will pay the reasonable documented out-of-pocket expenses that the Company pre-approves and that Employee incurs with respect to those activities.

15.Employee acknowledges that the obligations and covenants of the Employee set forth in Sections 7 through 14 are reasonable and necessary to protect the business, interests and properties of the Company and are material to this Agreement.  Therefore, the parties agree that in the event of any breach of any such obligation or covenant, Company shall have all rights and remedies available to it by law or in equity, including but not limited to a forfeiture of any payments remaining as payable pursuant to Section 3 herein.  The Employee acknowledges that all remedies available to the Company shall be cumulative.

16.Employee acknowledges and agrees and understands that the consideration described in Section 3 is not required by the Company’s policies and procedures and that the consideration in Section 3 exceeds any and all pay and benefits to which Employee already may have been entitled by contract or law and constitutes good, valuable and sufficient consideration for Employee’s covenants and agreements contained in this Agreement.  Except as contemplated by

Section 5 above, Employee acknowledges, understands and agrees that Employee has been paid in full for all hours that Employee has worked for the Company and that Employee has been paid any and all compensation or bonuses which have been earned by Employee through the date of execution of this Agreement.  Employee acknowledges, understands and agrees that Employee has been notified of Employee’s rights under the Family and Medical Leave Act (FMLA) and state leave laws.  Employee further acknowledges, understands and agrees that Employee has not been denied any leave requested under the FMLA or applicable state leave laws and that, to the extent applicable, Employee has been returned to Employee’s job, or an equivalent position, following any FMLA or state leave taken pursuant to the FMLA or state laws.  Employee acknowledges, understands and agrees that it is Employee’s obligation to make a timely report, in accordance with the Company’s policy and procedures, of any work related injury or illness.  Employee further acknowledges, understands and agrees that Employee has reported to the Company’s management personnel any work related injury or illness that occurred up to and including Employee’s last day of employment.  Employee acknowledges, understands, and agrees that Employee has no knowledge of any actions or inactions by any of the persons identified in the Waiver of Rights or by Employee that Employee believes could possibly constitute a basis for a clamed violation of any federal, state, or local law, any common law or any rule promulgated by an administrative body.

17.There are no other promises, agreements, or understandings between you and the Company, and it is the intent of this Agreement that it embodies any and all promises, agreements, and understandings between Employee and the Company.  No changes or modifications may be made in the terms stated in this Agreement unless made in writing and signed by Employee or his authorized representative and an authorized representative of the Company.  This Agreement will inure to the benefit of, and will be binding on both parties, and their personal representatives, heirs, successors, and assigns.

18.Employee acknowledges, understands and agrees that Employee will not hereafter disclose any information concerning this Agreement to anyone other than Employee’s immediate family, accountants, attorneys and other professional representatives who will be informed of and bound by this confidentiality clause

19.It is understood and agreed that if any provision or part of this Agreement is found to be unenforceable, illegal, or inoperable, such provision or part shall be severed, and all remaining provisions and parts of this Agreement shall remain fully valid and enforceable.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates noted below.

Witness	RUBY TUESDAY, INC.
/s/ Angela Jacobus
	By: Scarlett May
	Date:  12/03/13
Witness	EMPLOYEE
/s/ K LeBoeuf	/s/ Robert LeBoeuf
	Robert LeBoeuf
	Date:  11/20/13

EXHIBIT A

WAIVER OF RIGHTS

I, Robert LeBoeuf, knowingly and voluntarily, agree to waive, settle, release and discharge Ruby Tuesday, Inc., (the “Company”), its subsidiaries and affiliates and their successors and assigns, and the officers, directors, employees and agents of each of them (collectively the "Releasees") from any and all claims, demands, damages, actions or causes of action, including any claims for attorneys' fees which I have against the Releasees arising out of or relating to my employment with the Company or the termination or other change of status of my employment with the Company under the terms of the Agreement executed by myself and containing an Effective Date of October 30, 2013 (the “Separation Agreement”).  I understand this waiver includes any and all claims relating to my employment with the Company or termination of my employment with the Company as may be made under the (1) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991; (2) the Americans with Disabilities Act, as amended; (3) 42 U.S.C. § 1981; (4) the Age Discrimination in Employment Act (29 U.S.C. §§ 621-624); (5) 29 U.S.C. § 206(d)(1); (6) Executive Order 11246; (7) Executive Order 11141; (8) Section 503 of the Rehabilitation Act of 1973; (9) Employee Retirement Income Security Act (ERISA); (10) the Occupational Safety and Health Act; (11) the Worker Adjustment and Retraining Notification (WARN) Act; (12)  the Family and Medical Leave Act; (13) the Ledbetter Fair Pay Act; (14) Fair Labor Standards Act, and (15) other federal, state and local discrimination laws, including those of the State of Tennessee.

I further acknowledge that I am releasing, in addition to all other claims, any and all claims based on any tort, whistle-blower, personal injury, defamation, invasion of privacy or wrongful discharge theory; retaliatory discharge theory; any and all claims based on any oral, written or implied contract or on any contractual theory (including any offer letter or employment agreement); any claims based on a severance pay plan; and all claims based on any other federal, state or local Constitution, regulation, law (statutory or common), or other legal theory, as well as any and all claims for punitive, compensatory, and/or other damages, back pay, front pay, fringe benefits and attorneys’ fees, costs or expenses.

I acknowledge and understand that I waive my right to file suit for any claim I may have or assert against the Releasees including, but not limited to, those which may arise under the laws and the statutes named in the paragraph above.  I further waive my right to claim or receive damages as a result of any charge of discrimination, which may be filed by me or anyone acting on my behalf.  However, nothing in this Waiver shall be construed as preventing me from bringing any action to enforce the terms of the Separation Agreement or from pursuing any claims for unemployment or workers’ compensation or claims that cannot be released by private agreement.

EXHIBIT B

OPTIONS/RESTRICTED STOCK/PERFORMANCE CASH LIST

1.   STOCK OPTION:

Grant Date	Grant Price	Description/Notes
7/7/2009	$6.58	14,592 Stock Option (Right to Buy) will expire 90 days after separation
7/21/2010	$9.39	29,766 Stock Option (Right to Buy) will expire 90 days after separation
7/24/2013	$9.34	22,573 Stock Option (Right to Buy) will expire 90 days after separation
7/24/2013	$9.34	60,000 High-Performance Stock Option forfeited

2.   RESTRICTED STOCK:

A.   SERVICE-BASED RESTRICTED-STOCK AWARD:

Grant Date	Description/Notes
8/23/2011	6,353 Restricted Shares vest at separation *
7/24/2012	10,010 Restricted Shares vest at separation *
7/24/2013	5,353 Restricted Shares vest at separation *

B.   PERFORMANCE-BASED RESTRICTED-STOCK AWARD:

Grant Date	Description/Notes
8/23/2011	1,588 Performance Shares vest at separation *

*subject to six-month hold after vesting

3.   PERFORMANCE-BASED CASH INCENTIVE AWARD:

Grant Date	Description/Notes
8/23/2011	$6,250 Performance Cash Incentive, paid on November 6, 2013
7/24/2013	Performance Cash Incentive; amount to be determined Summer, 2014 and award, if any, will vest upon determination of performance

EX-10.2

LOAN MODIFICATION AGREEMENT

This LOAN MODIFICATION AGREEMENT (as it may be amended, supplemented, extended or renewed from time to time, this “Agreement”) is entered into as of December 2, 2013 by and among RUBY TUESDAY, INC., a Georgia corporation (“Guarantor”), whose address is 150 West Church Avenue, Maryville, Tennessee 37801, the borrowers listed on the signature page hereto (each, a “Borrower” and, collectively, “Borrowers”), each of whose address is 150 West Church Avenue, Maryville, Tennessee 37801, and the lenders listed on the signature page hereto (each, a “Lender” and, collectively, “Lenders”), each of whose address is 8377 East Hartford Drive, Suite 200, Scottsdale, Arizona 85255-5401.

RECITALS:

A.           Borrowers are indebted to Lenders with respect to the loans identified on Exhibit A attached hereto (each, a “Loan” and, collectively, the “Loans”).  Lenders are the current owners and holders of the Loans, as well as all promissory notes, instruments and documents evidencing, securing and guarantying the Loans, including, without limitation, the hereafter defined Guaranties, all as previously modified, amended, supplemented, extended and renewed from time to time, including, without limitation, as modified by the hereafter defined Existing Loan Modification Agreements (collectively, the “Current Loan Documents”).  The Current Loan Documents were previously modified pursuant to (i) that certain Loan Modification Agreement dated as of August 31, 2009 (the “2009 Loan Modification Agreement”) by and among Guarantor and the Borrowers and Lenders party thereto, (ii) that certain Loan Modification Agreement dated as of May 31, 2011 (the “2011 Loan Modification Agreement”) by and among the Guarantor and the Borrowers and Lenders party thereto and (iii) that certain Loan Modification Agreement dated as of May 14, 2012 (the “2012 Loan Modification Agreement”; the 2012 Loan Modification Agreement, the 2011 Loan Modification Agreement and the 2009 Loan Modification Agreement, collectively, the “Existing Loan Modification Agreements”) by and among the Guarantor and the Borrowers and Lenders party thereto.  The Current Loan Documents, as modified by this Agreement, are referred to herein as the “Loan Documents,” and references in the Current Loan Documents and this Agreement to the “Loan Documents,” or any of them, shall be deemed to be a reference to such Loan Documents, as modified by this Agreement.  This Agreement shall be deemed to be one of the Loan Documents.

B.           Each Borrower is a direct or indirect subsidiary of Guarantor.

C.           The Loans have been guaranteed by Guarantor pursuant to (i) that certain Guaranty dated as of August 31, 2009 (the “2009 Guaranty”) by Guarantor in favor of the Lenders described therein and (ii) that certain Guaranty dated as of May 31, 2011 (the “2011 Guaranty”; the 2011 Guaranty and the 2009 Guaranty, together, the “Guaranties”) by Guarantor in favor of the Lenders described therein.

D.           Borrowers and Guarantor have requested that Lenders modify the Loans and the Current Loan Documents as provided in this Agreement, and Lenders are willing to so modify the Loans and the Current Loan Documents, subject to the terms and conditions set forth in this Agreement.

AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrowers, Guarantorand Lenders agree as follows:

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  1.           Accuracy of Recitals; Effective Date.  Borrowers, Guarantor and Lenders acknowledge the accuracy of the Recitals set forth above and the parties hereby agree that the Recitals are a part of this Agreement.  Borrowers and Guarantor also acknowledge and agree that the information set forth on Exhibit A attached hereto with respect to each Loan is complete and correct, and that the outstanding principal indebtedness with respect to each Loan, together with all accrued unpaid interest thereon, is due and owing under the Loan Documents, without defense, offset or counterclaim. The modifications of the Current Loan Documents and the obligations of Borrowers, Guarantor and Lenders pursuant to this Agreement will be effective on the date that Lenders determine that the conditions precedent set forth in this Agreement have been satisfied in full (such date, the “Effective Date”).

2.Modification of Current Loan Documents.  The Current Loan Documents are hereby modified as follows:

(a)         Guarantor Reporting Requirements.  From and after the Effective Date, Guarantor shall comply with the financial reporting requirements set forth in subclauses (a)(i) through (a)(viii) below, which financial reporting requirements shall be in lieu of and shall replace the financial reporting requirements set forth in Section 2(a) of the 2011 Loan Modification Agreement.

(i)           as soon as available and in any event upon the earlier of the date that is 90 days after the end of each fiscal year of Guarantor and the date that is 2 days after such information is filed with the Securities and Exchange Commission (the “SEC”), (A) a copy of the annual audited report for such fiscal year for Guarantor, Borrowers and the other subsidiaries of Guarantor (collectively, the “Reporting Parties”), containing consolidated balance sheets of the Reporting Parties as of the end of such fiscal year and the related consolidated statements of income, stockholders’ equity and cash flows (together with all footnotes thereto) of the Reporting Parties for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and reported on by KPMG L.L.P. or other independent public accountants of nationally recognized standing (without a “going concern” or like qualification, exception or explanation  and without any qualification or exception as to scope of such audit) to the effect that such financial statements present fairly in all material respects the financial condition and the results of operations of the Reporting Parties for such fiscal year on a consolidated basis in accordance with GAAP and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards, and (B) with respect to each restaurant site operated by a Borrower (each, a “Borrower Site”), the gross sales, net income and cash rent charges (for leased Borrower Sites) for such Borrower Site for the fiscal year then ended;

(ii)           as soon as available and in any event upon the earlier of the date that is 45 days after the end of each of the first three fiscal quarters of each fiscal year of Guarantor and the date that is 2 days after such information is filed with the SEC, an unaudited consolidated balance sheet of the Reporting Parties as of the end of such fiscal quarter and the related unaudited consolidated statements of income of the Reporting Parties for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of Guarantor’s previous fiscal year, all certified by the chief financial officer or principal accounting officer of Guarantor as presenting fairly in all material respects the financial condition and results of

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operations of the Reporting Parties on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;

(iii)           concurrently with the delivery of the financial statements referred to in subclauses (i) and (ii) above, a certificate of the chief financial officer or principal accounting officer of Guarantor, (A) certifying as to whether there exists a default or an event of default (however defined) under any of the Loan Documents on the date of such certificate, and if a default or an event of default then exists, specifying the details thereof and the action which Guarantor has taken or proposes to take with respect thereto, (B) setting forth in reasonable detail calculations demonstrating compliance with the financial covenants set forth in Section 2(b)(i) through 2(b)(iii) below and (C) stating whether any change in GAAP or the application thereof has occurred since the date of Guarantor’s most recent audited financial statements which have been previously delivered hereunder and, if any change has occurred, specifying the effect  of such change on the financial statements accompanying such certificate;

(iv)           as soon as available and in any event within 30 days after the end of each fiscal month of Guarantor, an unaudited consolidated balance sheet of the Reporting Parties as of the end of such fiscal month and the related unaudited consolidated statements of income of the Reporting Parties for such fiscal month and the then elapsed portion of such fiscal year and unaudited consolidated statements of cash flows for the then elapsed portion of such fiscal year, all certified by the chief financial officer of Guarantor as presenting fairly in all material respects the financial condition and results of operations of the Reporting Parties on a consolidated basis in accordance with GAAP, subject to normal quarterly and year-end adjustments and the absence of footnotes;

(v)           promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed with the SEC, or any governmental authority succeeding to any or all functions of said SEC, or with any national securities exchange, or distributed by Guarantor to its shareholders generally, as the case may be;

(vi)          promptly following any request therefor, such other information regarding the results of operations, business affairs and  financial condition of the Reporting Parties as any Lender may reasonably request;

(vii)         concurrently with the financial statement referred to in subclause (i) above, beginning with the fiscal year ending June 3, 2014, (A) financial projections for the Reporting Parties containing pro forma income statement, balance sheet and cash flow statement for each quarter of the next fiscal year and (B) an updated corporate chart for the Reporting Parties; and

(viii)        commencing with Guarantor’s first fiscal quarter for which Guarantor is required, and continuing for so long as Guarantor is required, pursuant to FASB Accounting Standards of Codification No. 810, as amended (“ASC 810”), or any other authoritative accounting guidance (collectively, “Authoritative Guidance”), to consolidate its franchisees or any other less than 100% owned entity not previously required, under GAAP as in effect on the Effective Date, to be so consolidated (collectively, the “Consolidated Entities”), each set of financial statements delivered pursuant to subclauses (i) and (ii) above shall be

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accompanied by unaudited financial statements of the character and for the dates and periods as in said subclauses (i) and (ii) covering each of the following:

(A)           the Reporting Parties on a consolidated basis, before giving effect to any consolidation of the Consolidated Entities;

(B)           the Consolidated Entities on a consolidated basis; and

(C)           consolidating statements reflecting eliminations or adjustments required in order to reconcile the consolidated statements referred to in subclauses (viii)(A) and (viii)(B) above with the consolidated financial statements of the Reporting Parties delivered pursuant to subclauses (i) and (ii) above,

setting forth in each case (commencing, in the case of the consolidation of any Consolidated Entity pursuant to published guidelines of any governmental authority, with Guarantor’s fiscal quarter that is four fiscal quarters following such consolidation) in comparative form the figures for the corresponding periods in the previous fiscal year.

(b)           Guarantor Financial Covenants.

(i)           Minimum Consolidated Fixed Charge Coverage Ratio.  From and after the Effective Date, the Consolidated Companies (as defined in the Guarantor Credit Agreement as defined on Exhibit Battached hereto)) shall maintain, as of the last day of each fiscal quarter of Guarantor their Consolidated Fixed Charge Coverage Ratio of not less than the ratio set forth below for such fiscal quarter:

Fiscal Quarter Ending on or about:	Minimum Consolidated Fixed Charge Coverage Ratio
December 3, 2013	1.50:1.00
March 4, 2014	1.40:1.00
June 3, 2014	1.30:1.00
September 2, 2014	1.30:1.00
December 2, 2014	1.35:1.00
March 3, 2015	1.35:1.00
June 2, 2015	1.40:1.00
September 1, 2015	1.45:1.00
December 1, 2015	1.50:1.00
March 1, 2016	1.55:1.00
May 31, 2016	1.60:1.00
August 30, 2016	1.60:1.00
November 29, 2016	1.65:1.00
February 28, 2017	1.65:1.00
June 6, 2017	1.70:1.00

As used herein, “Consolidated Fixed Charge Coverage Ratio” shall have the meaning ascribed to such term in (and shall for all purposes be calculated in the manner required pursuant to) the Guarantor Credit Agreement (as amended, modified or supplemented from

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time to time); provided, however, that no change to the definition of the Consolidated Fixed Charge Coverage Ratio (nor any of the components thereof or the manner of calculation thereof) under the Guarantor Credit Agreement from that reflected in the Guarantor Credit Agreement existing as of the Effective Date and described on Exhibit B attached hereto (without giving effect to any amendments or modifications thereto or supplements thereof) shall be effective to change the definition of the Consolidated Fixed Charge Coverage Ratio (or the manner of calculation thereof) required to be maintained by Guarantor pursuant to this Section 2(b)(i), unless Lenders shall have approved such change in writing (which approval shall not be unreasonably withheld).  

(ii)           Maximum Adjusted Total Debt to EBITDAR Ratio.  From and after the Effective Date, the Consolidated Companies shall maintain as of the last day of each fiscal quarter of Guarantor their Adjusted Total Debt to EBITDAR Ratio at not greater than the ratio set forth below for such fiscal quarter:

Fiscal Quarter Ending on or about:	Maximum Adjusted Total Debt to EBITDAR Ratio
December 3, 2013	4.50:1.00
March 4, 2014	4.75:1.00
June 3, 2014	5.00:1.00
September 2, 2014	5.00:1.00
December 2, 2014	4.85:1.00
March 3, 2015	4.85:1.00
June 2, 2015	4.75:1.00
September 1, 2015	4.75:1.00
December 1, 2015	4.50:1.00
March 1, 2016	4.50:1.00
May 31, 2016	4.40:1.00
August 30, 2016	4.40:1.00
November 29, 2016	4.30:1.00
February 28, 2017	4.30:1.00
June 6, 2017	4.25:1.00

As used herein, “Adjusted Total Debt to EBITDAR Ratio” shall have the meaning ascribed to such term in (and shall for all purposes be calculated in the manner required pursuant to) the Guarantor Credit Agreement (as amended, modified or supplemented from time to time); provided, however, that no change to the definition of the Adjusted Total Debt to EBITDAR Ratio (nor any of the components thereof or the manner of calculation thereof) under the Guarantor Credit Agreement from that reflected in the Guarantor Credit Agreement existing as of the Effective Date and described on Exhibit B attached hereto (without giving effect to any amendments or modifications thereto or supplements thereof) shall be effective to change the definition of the Adjusted Total Debt to EBITDAR Ratio (or the manner of calculation thereof) required to be maintained by Guarantor pursuant to this Section 2(b)(ii), unless Lenders shall have approved such change in writing (which approval shall not be unreasonably withheld).  

(iii)           Capital Expenditures.  From and after the Effective Date, the Consolidated Companies will not make Capital Expenditures in excess of (A) $40,000,000 in each of the

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fiscal years ending June 3, 2014 and June 2, 2015 and (B) $45,000,000 in any fiscal year thereafter.  As used herein, “Capital Expenditures” shall have the meaning ascribed to such term in (and shall for all purposes be calculated in the manner required pursuant to) the Guarantor Credit Agreement (as amended, modified or supplemented from time to time); provided, however, that no change to the definition of Capital Expenditures (nor any of the components thereof or the manner of calculation thereof) under the Guarantor Credit Agreement from that reflected in the Guarantor Credit Agreement existing as of the Effective Date and described on Exhibit B attached hereto (without giving effect to any amendments or modifications thereto or supplements thereof) shall be effective to change the definition of Capital Expenditures (or the manner of calculation thereof) for purposes of this Section 2(b)(ii), unless Lenders shall have approved such change in writing (which approval shall not be unreasonably withheld).  

(iv)           Existing Financial Covenants.  From and after the Effective Date, Guarantor shall not be required to maintain compliance with the financial covenants described in Sections 2(c)(i)-(ii) of the 2012 Loan Modification Agreement, Sections 2(c)(i)-(iii) of the 2011 Loan Modification Agreement or Section 2(c) of the 2009 Loan Modification Agreement.

(c)           Prepayment of Designated Loans.  Notwithstanding anything to the contrary set forth in the related Loan Documents, on or after January 1, 2014, but on or before February 15, 2014, RT Western Missouri Franchise, LLC and Guarantor shall prepay in full the outstanding principal balance of the Loans identified on Exhibit A attached hereto as Loan ID Nos. 000431892 and 000431895, which Loans are evidenced by the promissory notes described on Exhibit C attached hereto (together, the “Designated Loans”), together with all accrued and unpaid interest thereon and all fees, charges and other amounts payable by RT Western Missouri Franchise, LLC under the related Loan Documents, including, without limitation, all prepayment fees payable under the Loan Documents related to each of the Designated Loans .

(d)           Additional Defaults.  The failure of Guarantor to comply with the requirements of Sections 2(a) and 2(b) above, or the failure of Guarantor and RT Western Missouri Franchise, LLC to comply with the requirements of Section 2(c) above, shall constitute an event of default under the Loan Documents.

(e)           Cross-Default to the Senior Credit Facilities.  From and after the Effective Date, the occurrence of (i) a payment default under the documents, instruments and agreements evidencing and securing the senior credit facilities of Guarantor and more particularly described on Exhibit B attached hereto (collectively, the “Senior Credit Facility Documentation”), following the expiration of all applicable notice and cure periods, or (ii) the occurrence of any other default or event of default (however defined) under the Senior Credit Facility Documentation, following the expiration of all applicable notice and cure periods and as a result of which all or any portion of the indebtedness outstanding under the Senior Credit Facility Documentation shall have been accelerated in accordance with the terms of the Senior Credit Facility Documentation, shall, in each case, constitute an event of default hereunder and under each of the Loan Documents.

(f)           Cross-Collateralization.  Without limiting the extent to which such matters are already granted and agreed to in the Current Loan Documents, Lenders, Guarantor and Borrowers hereby agree, confirm, and acknowledge that:  (i) the Collateral secures the payment and performance by

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Borrowers and Guarantor of all of their respective obligations under the Loan Documents (collectively, the “Obligations”); and (ii) except as otherwise expressly provided in the Loan Documents, Lenders’ respective liens on and security interests in the Collateral shall not be terminated or released in whole or in part unless and until all of the Obligations are fully paid and satisfied, notwithstanding the fact that one or more of the Loans may become fully paid.  As used herein, the term “Collateral” means all real and personal property, tangible and intangible, as to which any Lender or any affiliate of any Lender is granted a lien or security interest pursuant to any of the Loan Documents and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a lien or security interest in favor of any Lender or any affiliate of any Lender, with references to the Collateral to include all or any portion of or interest in any of the Collateral.

3.Waiver and Consent by Lenders.  Subject to the satisfaction of all conditions precedent set forth in Section 8 hereof, each Lender hereby waives, effective as of the Effective Date, any default or event of default under the Loan Documents and any other documents ancillary or related thereto resulting solely and directly from, and, solely as it relates to the Senior Credit Facility Documentation, any covenant under the Loan Documents which prohibits, and hereby consents to, (a) the execution and delivery by Guarantor and Borrowers of the Senior Credit Facility Documentation, (b) the incurrence by Guarantor or any Borrower of the indebtedness or other obligations contemplated by the Senior Credit Facility Documentation (the “Senior Credit Facility Indebtedness”) and the guaranty of such Senior Credit Facility Indebtedness by Borrowers pursuant to the terms of the Senior Credit Facility Documentation, and (c) the granting of security interests in and the pledge of the Pledged Collateral pursuant to the Pledge Agreement (as defined on Exhibit B attached hereto) by Guarantor and the other pledgors party thereto and the other collateral pledged pursuant to the Senior Credit Facility Documentation as of the closing date thereof, as security for the payment of the Senior Credit Facility Indebtedness and the performance of all other obligations under the Senior Credit Facility Documentation.  As used herein, the term “Pledged Collateral” shall have the meaning assigned to such term in the Pledge Agreement, without giving effect to any changes to the definition thereof from that reflected in the Pledge Agreement existing as of the Effective Date and described on Exhibit B attached hereto).

4.Borrower Representations, Warranties and Covenants.  As additional consideration to and inducement for Lenders to enter into this Agreement, each Borrower represents and warrants to and covenants with Lenders as follows:

(a)    Representations and Warranties.  Each and all representations and warranties of each Borrower in the Current Loan Documents are and will continue to be accurate, complete and correct in all material respects (other than any representation or warranty expressly relating to an earlier date).  The representations and warranties in this Agreement are true, complete and correct as of the date set forth above, will continue to be true, complete and correct as of the consummation of the modifications contemplated by this Agreement, and will survive such consummation.

(b)    No Defaults.  After giving effect to the waivers described in Section 3 above, no Borrower is in default under any of the Current Loan Documents, nor has any event or circumstance occurred that is continuing that, with the giving of notice or the passage of time, or both, would be a default or an event of default by a Borrower under any of the Current Loan Documents.

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(c)    No Material Changes.  There has been no material adverse change in the financial condition of Guarantor, any Borrower or any other person whose financial statement has been delivered to a Lender in connection with the Loans from the most recent financial statement received by a Lender from Guarantor, any Borrower or such other persons.

(d)    No Conflicts; No Consents Required.  Neither execution nor delivery of this Agreement nor fulfillment of or compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms or conditions of, or constitute a default under, any agreement or instrument to which any Borrower is a party or by which any Borrower may be bound.  No consents, approvals or authorizations are required for the execution and delivery of this Agreement by any Borrower or for any Borrower’s compliance with its terms and provisions.

(e)    Claims and Defenses.  No Borrower has any claims, counterclaims, defenses or set-offs with respect to the Loans or the Loan Documents.  Each Lender and its predecessors in interest have performed all of their obligations under the Loan Documents, and no Borrower has any defenses, offsets, counterclaims, claims or demands of any nature which can be asserted against any Lender or its predecessors in interest for damages or to reduce or eliminate all or any part of the obligations of such Borrower under the Loan Documents.

(f)Validity.  This Agreement and the other Loan Documents are and will continue to be the legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their terms.

(g)     Valid Existence, Execution and Delivery, and Due Authorization.  Each Borrower validly exists under the laws of the State of its formation or organization and has the requisite power and authority to execute and deliver this Agreement and to perform the Loan Documents.  The execution and delivery of this Agreement and the performance of the Loan Documents have been duly authorized by all requisite action by or on behalf of each Borrower.  This Agreement has been duly executed and delivered on behalf of each Borrower.

(h)Ratification of Current Loan Documents and Collateral.  The Current Loan Documents, as modified by this Agreement, are ratified and affirmed by each Borrower and shall remain in full force and effect.  The liens of Lenders on and security interests in any and all real or personal property (tangible or intangible) granted as security for any of the Loans shall continue in full force and effect and none of such property is or shall be released from such liens and security interests.  Except as expressly provided herein, this Agreement shall not constitute a waiver of any rights or remedies of any Lender in respect of the Loan Documents.

(i)No Duress.  Each Borrower has executed this Agreement as a free and voluntary act, without any duress, coercion or undue influence exerted by or on behalf of Lender or any other party.

5.Consent; Reaffirmation; and Acknowledgement. Guarantor (a) consents to the terms and conditions of this Agreement and (b) reaffirms the Guaranties and confirms and agrees that, notwithstanding this Agreement and the consummation of the transactions contemplated hereby and thereby, the Guaranties and all of Guarantor’s covenants, obligations, agreements, waivers, and liabilities set forth in the Guaranties continue in full force and effect in accordance with their terms with respect to the obligations guaranteed.

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6.Guarantor Representations and Warranties.  Guarantor represents and warrants to Lenders that:

(a)    No Material Changes.  There has been no material adverse change in the financial condition of Guarantor from the most recent financial statement received by a Lender from Guarantor.

(b)   Existing Representations and Warranties.  Each and all representations and warranties of Guarantor in the Current Loan Documents are and will continue to be accurate, complete and correct in all material respects (other than any representation or warranty expressly relating to an earlier date).

(c)    No Conflicts; No Consents Required.  Neither execution nor delivery of this Agreement nor fulfillment of or compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms or conditions of, or constitute a default under, any agreement or instrument to which Guarantor is a party or by which Guarantor may be bound.  No consents, approvals or authorizations are required for the execution and delivery of this Agreement by Guarantor or for Guarantor’s compliance with its terms and provisions.

(d)    Claims and Defenses.  Guarantor has no claims, counterclaims, defenses, or offsets against any Lender or its predecessors in interest or with respect to any of its obligations or other liabilities under the Guaranties as a result of this Agreement or otherwise, any such claims, counterclaims, defenses or offsets being hereby waived and released.

(e)Validity.  This Agreement, the Existing Loan Modification Agreements and the Guaranties are the legal, valid and binding agreements of Guarantor and are enforceable against Guarantor in accordance with their terms.

(f)Power and Authority.  Guarantor has the full power, authority, capacity and legal right to execute and deliver this Agreement, and the party executing this Agreement on behalf of Guarantor is fully authorized and directed to execute the same to bind Guarantor.

(g)    No Duress.  Guarantor has executed this Agreement as a free and voluntary act, without any duress, coercion or undue influence exerted by or on behalf of any Lender or any other party.

7.Release.  Guarantor and each Borrower fully, finally and forever release and discharge (a) each Lender; (b) its predecessors in interest; (c) their respective successors, assigns and affiliates; and (d) the directors, officers, employees, agents and representatives of each Lender, such predecessors in interest, and such successors, assigns and affiliates (individually a “Lender Party”) from any and all actions, causes of action, claims, debts, demands, liabilities, obligations and suits, of whatever kind or nature, in law or equity, that Guarantor or any Borrower has or in the future may have, whether known or unknown (i) in respect of the Loans, this Agreement, the other Loan Documents or the actions or omissions of any Lender in respect of the Loans or the Loan Documents and (ii) arising from events occurring prior to the date of this Agreement.  GUARANTOR AND EACH BORROWER EXPRESSLY WAIVES ANY PROVISION OF STATUTORY OR DECISIONAL LAW TO THE EFFECT THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN SUCH PARTY’S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY SUCH PARTY, MUST HAVE MATERIALLY AFFECTED SUCH PARTY’S

9

SETTLEMENT WITH THE RELEASED PARTIES, INCLUDING PROVISIONS SIMILAR TO SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES:  “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

8.Conditions Precedent.  The obligations of Lenders to consummate the transactions contemplated by this Agreement are subject to satisfaction of the following conditions precedent, each in the sole and absolute discretion of Lenders:

(a)Borrower Performance.  Guarantor and Borrowers have duly executed and delivered this Agreement to Lenders.

(b)Representations and Warranties.  The representations and warranties of Guarantor and Borrowers contained in this Agreement and any other document or instrument expressly contemplated by this Agreement shall be true and correct in all material respects.

(c)No Default.  After giving effect to the waivers described in Section 3 above, no event or circumstance shall have occurred that is continuing, that, with the giving of notice or the passage of time, or both, would be a default or an event of default under any of the Loan Documents.

(d)Authority.  Borrowers and Guarantor shall have provided Lenders with certificates of the Secretary, Assistant Secretary, Manager or other appropriate officer, as applicable, of Guarantor and each Borrower, certifying as to (i) the resolution of the board of directors or consent of the managers, as applicable, of Guarantor and Borrowers, authorizing the execution, delivery and performance of the this Agreement and any related documents, (ii) the bylaws or operating agreements, as applicable, of Guarantor and Borrowers, and (iii) the signatures of the officers or agents of Guarantor and Borrowers authorized to execute and deliver this Agreement on behalf of Guarantor and Borrowers.

(e)Senior Credit Facility Documentation.  Lenders shall have received copies of the fully-executed Senior Credit Facility Documentation, and the transactions contemplated under the Senior Credit Facility Documentation shall have closed concurrently with the Effective Date.

(f)Fees and Costs.  Guarantor shall have paid to Lenders all out-of-pocket costs and expenses incurred by Lenders in connection with the preparation and negation of this Agreement and the closing of the transactions contemplated hereby, including attorneys’ fees incurred by Lenders in connection with the foregoing.

9.Entire Agreement; Change; Discharge; Termination or Waiver.  The Loan Documents, as modified by this Agreement, contain the entire understanding and agreement of Guarantor, Borrowers and Lenders in respect of the Loans and supersede all prior representations, warranties, agreements and understandings.  No provision of the Loan Documents may be changed, discharged, supplemented, terminated or waived except in a writing signed by Lenders, Guarantor and Borrowers.

10.         No Limitations.  The description of the Loan Documents contained in this Agreement is for informational and convenience purposes only and shall not be deemed to limit, imply or modify the terms or otherwise affect the Loan Documents.  The description in this Agreement of the specific rights of Lenders

10

shall not be deemed to limit or exclude any other rights to which Lenders may now be or may hereafter become entitled to under the Loan Documents at law, in equity or otherwise.

11.         Time of the Essence.  Time is of the essence in this Agreement.

12.         Binding Effect.  This Agreement and the other Loan Documents shall be binding upon, and inure to the benefit of, Borrowers, Guarantor and Lenders and their respective successors and assigns.

13.         Further Assurances.  Guarantor and Borrowers shall execute, acknowledge (as appropriate) and deliver to Lenders such additional agreements, documents and instruments as reasonably required by Lenders to carry out the intent of this Agreement.

14.         Counterpart Execution.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document.  Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document.

15.         Limitation of Liability for Certain Damages.  In no event shall any Lender Party be liable to Guarantor, any Borrower or any of theirrespective affiliates (collectively the “Credit Parties” and individually a “Credit Party”) on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).  GUARANTOR, BORROWERS AND EACH OTHER CREDIT PARTY HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON (AND GUARANTOR AND BORROWERS SHALL CAUSE EACH OF THE OTHER CREDIT PARTIES TO SO WAIVE, RELEASE, AND AGREE NOT TO SUE UPON) ANY SUCH CLAIM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

16.         Jurisdiction and Service of Process.

(a)Submission to Jurisdiction.  Any legal action or proceeding with respect to any Loan Document shall be brought exclusively in the courts of the State of Arizona located in Maricopa County or of the United States for the District of Arizona, and Guarantor, each Borrower and each other Credit Party accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts; provided, however, that nothing in this Agreement shall limit or restrict the right of Lenders to commence any proceeding in the federal or state courts located in the States in which the property securing the Loans is located to the extent Lenders deem such proceedings necessary or advisable to exercise remedies available under any Loan Document.  Lenders, Guarantor, each Borrower and each other Credit Party hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.

(b)Service of Process.  Guarantor, each Borrower and each other Credit Party hereby irrevocably waive personal service of any and all legal process, summons, notices and other documents and other service of process of any kind and consents to such service in any suit, action or proceeding brought in the United States of America with respect to or otherwise arising out of or in connection with any Loan Document by any means permitted by applicable law, including by the mailing thereof (by registered or certified mail, postage prepaid) to the address of Guarantor or

11

Borrowers specified above (and shall be effective when such mailing shall be effective, as provided in Section 17 below).  Guarantor, each Borrower and each other Credit Party agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(c)Non-Exclusive Jurisdiction.  Nothing contained in this Section shall affect the right of any Lender to serve process in any other manner permitted by applicable law or commence legal proceedings or otherwise proceed against any Borrower Party in any other jurisdiction.

17.           Notices.  All notices, demands, requests, directions and other communications (collectively, “Notices”) required or expressly authorized to be made by the Loan Documents will be written and addressed (a) if to Guarantor, a Borrower or any other Credit Party, to the address set forth above for Guarantor or such Borrower or other Credit Party or such other address as shall be notified in writing to Lenders after the date hereof; and (b) if to a Lender, at the address set forth above for Lenders or such other address as shall be notified in writing to Guarantor or any Borrower after the date hereof.  Notices may be given by hand delivery; by overnight delivery service, freight prepaid; or by U.S. mail, postage paid.  Notices given as described above shall be effective and be deemed to have been received (x) upon personal delivery to a responsible individual at Lender’s business office in Scottsdale, Arizona, if the Notice is given by hand delivery; (y) one business day after delivery to an overnight delivery service, if the Notice is given by overnight delivery service; and (z) two business days following deposit in the U.S. mail, if the Notice is given by U.S. mail.

18.           WAIVER OF JURY TRIAL.  LENDERS, GUARANTOR, BORROWERS AND EACH OTHER CREDIT PARTY, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

19.           Governing Law.  The laws of the State of Arizona (without giving effect to its conflicts of laws principles) shall govern all matters arising out of, in connection with or relating to this Agreement, including its validity, interpretation, construction, performance and enforcement.

[SIGNATURE PAGE FOLLOWS]

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Executed and effective as of the date first set forth above.

BORROWERS:

RT INDIANAPOLIS FRANCHISE, LLC, a

Delaware limited liability company 

By:  /s/ Scarlett May

Name:  Scarlett May

Its:       Vice President

RT WESTERN MISSOURI FRANCHISE,

LLC, a Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT ST. LOUIS FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT MINNEAPOLIS FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

[EXECUTION PAGE OF BORROWERS

TO LOAN MODIFICATION AGREEMENT]

13

RT KCMO FRANCHISE, LLC, a Delaware

limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT NEW ENGLAND FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT OMAHA FRANCHISE, LLC, a Delaware

limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT LONG ISLAND FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

[EXECUTION PAGE OF BORROWERS

TO LOAN MODIFICATION AGREEMENT]

14

RT DETROIT FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT MILLINGTON, LLC, a Delaware

limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT MICHIANA FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT SMITH, LLC, a Delaware limited

liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

[EXECUTION PAGE OF BORROWERS

TO LOAN MODIFICATION AGREEMENT]

15

RT MICHIGAN FRANCHISE, LLC, a

Delaware limited liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT O'TOOLE, LLC, a Delaware limited

liability company

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT ORLANDO FRANCHISE, L.P., a

Delaware limited partnership

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT SOUTH FLORIDA FRANCHISE,

L.P., a Delaware limited partnership

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

[EXECUTION PAGE OF BORROWERS

TO LOAN MODIFICATION AGREEMENT

16

RT WEST PALM BEACH FRANCHISE,

L.P., a Delaware limited partnership

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT TAMPA FRANCHISE, L.P., a

Delaware limited partnership

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

RT DENVER FRANCHISE, L.P., a

Delaware limited partnership

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

[EXECUTION PAGE OF BORROWERS

TO LOAN MODIFICATION AGREEMENT]

17

GUARANTOR:

RUBY TUESDAY, INC., a Georgia

corporation

By: /s/ Scarlett May

Name: Scarlett May

Its:      Vice President

[EXECUTION PAGE OF GUARANTOR

TO LOAN MODIFICATION AGREEMENT]

18

LENDERS:

GENERAL ELECTRIC CAPITAL

CORPORATION, a Delaware corporation

By: /s/ Joseph Eichler

Printed Name: Joseph Eichler

Its: Authorized Signatory

GENERAL ELECTRIC CAPITAL BUSINESS ASSET FUNDING CORPORATION OF CONNECTICUT, a Delaware corporation
By:	GE CAPITAL FRANCHISE
	FINANCE CORPORATION, a
	Delaware corporation
	By: /s/ Joseph Eichler
	Printed Name: Joseph Eichler
	Its: Authorized Signatory

GE COMMERCIAL FINANCE BUSINESS

PROPERTY CORPORATION, a Delaware

corporation

By: /s/ Joseph Eichler

Printed Name: Joseph Eichler

Its: Authorized Signatory

[EXECUTION PAGE OF LENDERS

TO LOAN MODIFICATION AGREEMENT]

19

GECPAC INVESTMENT II INC., a Delaware corporation
By:	GENERAL ELECTRIC CAPITAL
	CORPORATION, a Delaware
	corporation, Servicer
	By: /s/ Joseph Eichler
	Printed Name: Joseph Eichler
	Its: Authorized

CEF FUNDING II, L.L.C.,  a Delaware limited liability corporation
By:	GE CAPITAL FRANCHISE
	FINANCE CORPORATION, a
	Delaware corporation, Sub-servicer
	By: /s/ Joseph Eichler
	Printed Name: Joseph Eichler
	Its: Authorized

[EXECUTION PAGE OF LENDERS

TO LOAN MODIFICATION AGREEMENT]

20

EXHIBIT A

DESCRIPTION OF LOANS

Loan ID No.	Borrower	Current Holder (Lender)
000432114	RT Indianapolis  Franchise, LLC	General Electric Capital Corporation (“GECC”)
000432115	RT Indianapolis Franchise, LLC	GECC
000432116	RT Indianapolis Franchise, LLC	GECC
000432117	RT Indianapolis Franchise, LLC	GECC
000431892	RT Western Missouri Franchise, LLC	GECC
000431893	RT Western Missouri Franchise, LLC	GECC
000431894	RT Western Missouri Franchise, LLC	GECC
000431895	RT Western Missouri Franchise, LLC	GECC
000428085	RT St. Louis Franchise, LLC	General Electric Capital Business Asset Funding Corporation of Connecticut (“GECBAFCC”)
000429043	RT St. Louis Franchise, LLC	GE Commercial Finance Business Property Corporation (“GECFBP”)
000429044	RT St. Louis Franchise, LLC	GECFBP
000430217	RT St. Louis Franchise, LLC	GECBAFCC
000427917	RT Minneapolis Franchise, LLC	GECC
000429893	RT Minneapolis Franchise, LLC	GECBAFCC
000429894	RT Minneapolis Franchise, LLC	GECBAFCC
000429895	RT Minneapolis Franchise, LLC	GECBAFCC

21

000430650	RT Minneapolis Franchise, LLC	GECPAC Investment II, Inc. (“GECPAC II”)
000427903	RT KCMO Franchise, LLC	CEF Funding II, L.L.C. (“CEF II”)
000429746	RT KCMO Franchise, LLC	GECC
000429997	RT KCMO Franchise, LLC	GECBAFCC
000428127	RT New England Franchise, LLC	GECBAFCC
000429199	RT New England Franchise, LLC	CEF II
000427931	RT Omaha Franchise, LLC	GECBAFCC
000428731	RT Omaha Franchise, LLC	GECFBP
000434855	RT Long Island Franchise, LLC	GECBAFCC
000430270	RT Detroit Franchise, LLC	GECBAFCC
000430272	RT Detroit Franchise, LLC	GECBAFCC
000429492	RT Detroit Franchise, LLC	GECC
000430639	RT Michiana Franchise, LLC and RT Smith, LLC	GECPAC II
000430711	RT Michiana Franchise, LLC	GECPAC II
000427904	RT Michiana Franchise, LLC	GECC
000430713	RT Michigan Franchise, LLC and RT O’Toole, LLC	GECPAC II
000430712	RT Michigan Franchise, LLC and RT O’Toole, LLC	GECPAC II
000430666	RT Michigan Franchise, LLC	GECPAC II
000429912	RT Michigan Franchise, LLC	GECBAFCC

22

000430714	RT Michigan Franchise, LLC and RT O’Toole, LLC	GECPAC II
19194	RT Michigan	GECFBP
000428982	RT Michigan Franchise, LLC	GECFBP
000429970	RT Michigan Franchise, LLC	GECBAFCC
000429971	RT Michigan Franchise, LLC	GECBAFCC
000428984	RT Michigan Franchise, LLC	CEF II
000429642	RT Orlando Franchise, L.P.	GECBAFCC
000430663	RT Orlando Franchise, L.P.	GECPAC II
000430693	RT Orlando Franchise, L.P.	GECPAC II
000430623	RT South Florida Franchise, L.P.	GECPAC II
000428688	RT South Florida Franchise, L.P.	GECFBP
000430622	RT South Florida Franchise, L.P.	GECPAC II
000430696	RT West Palm Beach Franchise, L.P.	GECPAC II
000430700	RT West Palm Beach Franchise, L.P.	GECPAC II
18178	RT West Palm Beach Franchise, L.P.	GECFBP
000428851	RT West Palm Beach Franchise, L.P.	CEF II
18182	RT West Palm Beach Franchise, L.P.	CEF II
000428733	RT Tampa Franchise, L.P.	GECC
000428732	RT Tampa Franchise, L.P.	GECC

 Loan ID No.:  000427903 et al.

Asset No.:  021714 et al.

[FINAL EXECUTION COPY]

4830-7110-9910.5

23

EXHIBIT B

Senior Credit Facility Documentation

1.            Indenture dated as of May 14, 2012 (the “Indenture”) among Wells Fargo Bank, National Association, as trustee, Guarantor, RTBD, Inc., RT Finance, Inc., Ruby Tuesday GC Cards, Inc., RT Tampa Franchise, L.P., RT Orlando Franchise, L.P., RT South Florida Franchise, L.P., RT New York Franchise, LLC, RT Southwest Franchise, LLC, RT Michiana Franchise, LLC, RT Franchise Acquisition, LLC, RT Kentucky Restaurant Holdings, LLC, RT Florida Equity, LLC, RTGC, LLC, RT Detroit Franchise, LLC, RT Michigan Franchise, LLC, RT West Palm Beach Franchise, L.P., RT New England Franchise, LLC, RT Long Island Franchise, LLC, Ruby Tuesday, LLC, RT Las Vegas Franchise, LLC, RT Minneapolis Franchise, LLC, RT Indianapolis Franchise, LLC, RT Denver Franchise, L.P., RT Omaha Franchise, LLC, RT KCMO Franchise, LLC, RT Portland Franchise, LLC, RT St. Louis Franchise, LLC, RT Western Missouri Franchise, LLC, Quality Outdoor Services, Inc., RT Airport, Inc., RT Louisville Franchise, LLC, RT McGhee-Tyson, LLC, RT One Percent Holdings, Inc., RT One Percent Holdings, LLC, RT Minneapolis Holdings, LLC, RT Omaha Holdings, LLC, RT Denver, Inc., RT Louisville, Inc., RT Orlando, Inc., RT South Florida, Inc., RT Tampa, Inc., RT West Palm Beach, Inc., RT New Hampshire Restaurant Holdings, LLC, RT Restaurant Services, LLC, RT Northern California Franchise, LLC, RTTA, LP, Work Hay 2, LLC, RT Distributing, LLC, RT O’Toole, LLC, RT Smith, LLC, RT Millington, LLC, 4721 RT of Pennsylvania, Inc., RTTT, LLC, RTT Texas, Inc., RT Jonesboro Club, RT Arkansas Club, Inc., Ruby Tuesday of Russellville, Inc., Ruby Tuesday of Conway, Inc., RT KCMO Kansas, Inc. and Ruby Tuesday of Bryant, Inc. and the other guarantors party thereto from time to time pursuant to a Supplement to the Indenture.

2.            Ruby Tuesday, Inc. 7⅝% Senior Notes Due 2020 and any Additional Notes and Exchange Notes issued in accordance with the terms of the Indenture, in an aggregate original principal amount of up to $250,000,000, (the “Senior Notes”).

3.            Revolving Credit Agreement dated as of December 3, 2013 the “Guarantor Credit Agreement”) among Guarantor, the lenders from time to time party thereto (the “Revolving Credit Lenders”), Bank of America, N.A., in its capacity as administrative agent for the Revolving Credit Lenders (the “Administrative Agent”), as issuing bank (the “Issuing Bank”), and RTBD, Inc., RT Finance, Inc., Ruby Tuesday GC Cards, Inc., RT Tampa Franchise, L.P., RT Orlando Franchise, L.P., RT South Florida Franchise, L.P., RT New York Franchise, LLC, RT Southwest Franchise, LLC, RT Michiana Franchise, LLC, RT Franchise Acquisition, LLC, RT Kentucky Restaurant Holdings, LLC, RT Florida Equity, LLC, RTGC, LLC, RT Detroit Franchise, LLC, RT Michigan Franchise, LLC, RT West Palm Beach Franchise, L.P., RT New England Franchise, LLC, RT Long Island Franchise, LLC, Ruby Tuesday, LLC, RT Las Vegas Franchise, LLC, RT Minneapolis Franchise, LLC, RT Indianapolis Franchise, LLC, RT Denver Franchise, L.P., RT Omaha Franchise, LLC, RT KCMO Franchise, LLC, RT Portland Franchise, LLC, RT St. Louis Franchise, LLC, RT Western Missouri Franchise, LLC, Quality Outdoor Services, Inc., RT Airport, Inc., RT Louisville Franchise, LLC, RT McGhee-Tyson, LLC, RT One Percent Holdings, Inc., RT One Percent Holdings, LLC, RT Minneapolis Holdings, LLC, RT Omaha Holdings, LLC, RT Denver, Inc., RT Louisville, Inc., RT Orlando, Inc., RT South Florida, Inc., RT Tampa, Inc., RT West Palm Beach, Inc., RT New Hampshire Restaurant Holdings, LLC, RT Restaurant Services, LLC, RT Northern California Franchise, LLC, RTTA, LP, Work Hay 2, LLC, RT Distributing, LLC, RT O’Toole, LLC, RT Smith, LLC, RT Millington, LLC, 4721 RT of Pennsylvania, Inc., RTTT, LLC, RTT Texas, Inc., RT Jonesboro Club, RT

Loan ID No.: 000427903 et al.

Asset No.: 021714 et al.

[FINAL EXECUTION COPY]

4830-7110-9910.5

24

Arkansas Club, Inc., Ruby Tuesday of Russellville, Inc., Ruby Tuesday of Conway, Inc., RT KCMO Kansas, Inc. and Ruby Tuesday of Bryant, Inc., as guarantors and the other guarantors party thereto from time to time pursuant to a Joinder Agreement to the Guarantor Credit Agreement (collectively, the “Subsidiary Guarantors”).

4.            Security Agreement dated as of December 3, 2013 (the “Security Agreement”) by Guarantor, RTBD, Inc., RT Finance, Inc., Ruby Tuesday GC Cards, Inc., RT Tampa, Inc., RT Orlando, Inc., RT South Florida, Inc., RT West Palm Beach, Inc., RT One Percent Holdings, Inc., RT New York Franchise, LLC, RT Southwest Franchise, LLC, RT Franchise Acquisition, LLC, RT Kentucky Restaurant Holdings, LLC, RT Florida Equity, LLC, RTGC, LLC, Ruby Tuesday, LLC, RT Las Vegas Franchise, LLC, Quality Outdoor Services, Inc., RT Airport, Inc., RT Denver, Inc., RT Louisville, Inc., RT Restaurant Services, LLC, RT One Percent Holdings, LLC, RT Louisville Franchise, LLC, RT McGhee Tyson, LLC, RT Minneapolis Holdings, LLC, RT Omaha Holdings, LLC, RT New Hampshire Restaurant Holdings, LLC, RT Northern California Franchise, LLC, RTTA, LP, Wok Hay 2, LLC, RT Distributing, LLC, RTT Texas, Inc., RTTT, LLC, RT Jonesboro Club, RT Arkansas Club, Inc., Ruby Tuesday of Russellville, Inc., Ruby Tuesday of Conway, Inc., RT KCMO Kansas, Inc., Ruby Tuesday of Bryant, Inc. and the other grantors party thereto from time to time pursuant to a Joinder Agreement to the Security Agreement, in favor of Administrative Agent.

5.            Pledge Agreement dated as of December 3, 2013 (the “Pledge Agreement”) by Guarantor, RTBD, Inc., RT Finance, Inc., Ruby Tuesday GC Cards, Inc., RT Tampa, Inc., RT Orlando, Inc., RT South Florida, Inc., RT West Palm Beach, Inc., RT One Percent Holdings, Inc., RT New York Franchise, LLC, RT Southwest Franchise, LLC, RT Franchise Acquisition, LLC, RT Kentucky Restaurant Holdings, LLC, RT Florida Equity, LLC, RTGC, LLC, Ruby Tuesday, LLC, RT Las Vegas Franchise, LLC, Quality Outdoor Services, Inc., RT Airport, Inc., RT Denver, Inc., RT Louisville, Inc., RT Restaurant Services, LLC, RT One Percent Holdings, LLC, RT Louisville Franchise, LLC, RT McGhee-Tyson, LLC, RT Minneapolis Holdings, LLC, RT Omaha Holdings, LLC, RT New Hampshire Restaurant Holdings, LLC, RT Northern California Franchise, LLC, RTTA, LP, Wok Hay 2, LLC, RT Distributing, LLC, RTT Texas, Inc., RTTT, LLC, RT Jonesboro Club, RT Arkansas Club, Inc., Ruby Tuesday of Russellville, Inc., Ruby Tuesday of Conway, Inc., RT KCMO Kansas, Inc., Ruby Tuesday of Bryant, Inc. and the other pledgors party thereto from time to time pursuant to a Joinder Agreement to the Pledge Agreement in favor of Administrative Agent, in favor of Administrative Agent.

Loan ID No.:  000427903 et al.

Asset No.:  021714 et al.

[FINAL EXECUTION COPY]

4830-7110-9910.5

25

EXHIBIT C

Designated Loans

Loan ID No.	Borrower	Current Holder (Lender)	Description of Promissory Note
000431892	RT Western Missouri Franchise, LLC	GECC	Equipment Promissory Note dated as of December 14, 2006 by RT Western Missouri Franchise, LLC in favor of GECC, in the original principal amount of $9,807,397.14
000431895	RT Western Missouri Franchise, LLC	GECC	Equipment Promissory Note dated as of January 10, 2007 by RT Western Missouri Franchise, LLC in favor of GECC, in the original principal amount of $2,796,678.00

 Loan ID No.:  000427903 et al.

Asset No.:  021714 et al.

[FINAL EXECUTION COPY]

4830-7110-9910.5

26

EX-10.3

WAIVER AND CONSENT

IN CONNECTION WITH REVOLVING CREDIT FACILITY

As of December 3, 2013

Ladies and Gentlemen:

Reference is made to those certain Loan and Security Agreements listed on Schedule A hereto (as may be amended from time to time, the “Loan Agreements”), by and among the entities listed on Schedule B hereto (the “Companies”), on the one hand, and First Franchise Capital Corporation, formerly known as Irwin Franchise Capital Corporation (the “Lender”) on the other, whereby the Companies granted Lender a security interest in certain property. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreements. This Waiver and Consent in Connection with Revolving Credit Facility shall be referred to herein as this “Agreement”.

Pursuant to the request of the Companies, in connection with the revolving credit facility to be entered into on or about December 3, 2013 among Ruby Tuesday, Inc. (the “Parent”), the lenders party thereto and Bank of America, N.A., as administrative agent (the “Revolving Credit Facility”), to be evidenced by a Revolving Credit Agreement and secured by, among other things, guarantees by the Companies and other direct and indirect subsidiaries of the Parent (such documents, including without limitation those listed on Schedule C attached hereto, together as the same may be amended, modified, renewed, restated, replaced or otherwise modified from time to time, the “Revolving Credit Facility Documentation”), in accordance with the provisions related to amendments and consents of and in connection with the Loan Agreements, the parties to this Agreement hereby agree as follows:

1.WAIVER AND CONSENT IN CONNECTION WITH THE REVOLVING CREDIT FACILITY.

           Subject to the satisfaction of all conditions precedent set forth in Section 2hereof, Lender hereby waives, effective as of the Effective Date, any default or event of default under the Loan Agreements and any other documents ancillary or related thereto as it relates to the Revolving Credit Facility Documentation, any covenant under the Loan Agreements which prohibits, and hereby consents to (a) the execution and delivery by the Parent and the Companies of the Revolving Credit Facility Documentation, (b) the incurrence by the Parent or the Companies of the indebtedness or other obligations contemplated by the Revolving Credit Facility Documentation (the “Revolving Credit Facility Indebtedness”) and the guaranty of such Revolving Credit Facility Indebtedness by the Companies pursuant to the terms of the Revolving Credit Facility Documentation, and (c) the granting of security interests in and the pledge by the Companies of the collateral pledged pursuant to the Revolving Credit Facility Documentation as security for the payment of the Revolving Credit Facility Indebtedness and the performance of all other obligations under the Revolving Credit Facility.  From and after the Effective Date and until the consummation and delivery of the Master Amendment Documents (defined below), the Companies  agree to abide by the covenants, including financial covenants, set forth in the Term Sheet (also defined below) for purposes of the loans evidenced by the Loan Agreements.

2.CONDITIONS TO EFFECTIVENESS.

a.Executed Counterparts.  The Lender shall have received a counterpart of this Agreement executed by the Companies.

b.Representations and Warranties as of December 3, 2013.  The representations and warranties contained in Section 4 below shall be true on and as of the date hereof.

c.Master Amendment.  The Companies, the Parent and the Lender will enter into a master amendment to the Loan Agreements and certain ancillary documents and amendments related thereto (the “Master Amendment Documents”) on the terms and conditions described in the term sheet dated November 27, 2013 (“Term Sheet”), attached as Schedule D hereto, within sixty (60) days of the signing of the Term Sheet.

3.REPRESENTATIONS AND WARRANTIES.  To induce you to enter into this Agreement, the Companies represent, warrant and acknowledge as follows:

a.The execution, delivery and performance by the Companies of this Agreement (i) is within their power and (ii) is legal and does not conflict with, result in any breach of, constitute a default under, or, except as set forth in the Revolving Credit Facility Documentation, result in the creation of any lien upon any property of the Companies under the provisions of: (A) the Companies’ constitutive documents, (B) any order, judgment, decree or ruling of any court, arbitrator or governmental authority applicable to them or their property, or (C) any agreement or instrument to which they are a party or by which they or any of their properties may be bound or any statute or other rule or regulation of any governmental authority applicable to them or their properties, except where such conflict, breach, default or lien could not reasonably be expected to have a material adverse effect.

b.This Agreement has been duly authorized, executed and delivered by a duly authorized officer of each of the Companies, and constitutes the legal, valid and binding obligations of each of the Companies, enforceable in accordance with its terms, except that enforceability may be limited by applicable bankruptcy, reorganization, arrangement, insolvency, fraudulent conveyance, moratorium or other similar laws affecting the enforceability of creditors’ rights generally and subject to the availability of equitable remedies.

c.After giving effect to this Agreement, no Event of Default has occurred and is continuing.

d.No consent, approval, authorization or order of, or filing, registration or qualification with, any court or administrative or governmental body or third party is required in connection with the execution, delivery or performance by the Companies of this Agreement.

4.MISCELLANEOUS.

a.Effect of Waiver.  Except as expressly provided herein, (i) no terms or provisions of the Loan Agreements or any other agreement are modified or changed by this Agreement and (ii) the terms of this Agreement shall not operate as a waiver by the Lender of, or otherwise prejudice the Lender’s rights, remedies or powers under, the Loan Agreements or under any applicable law, and all of such rights, remedies and powers are hereby expressly reserved.

b.This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

c.This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument.

[signature pages follow]

The undersigned has caused this Agreement to be executed and delivered by its duly authorized officer as an agreement under seal as of the date first above written (the “Effective Date”).

First Franchise Capital Corporation
By: /s/ Alan Paterson
Name:  Alan C. Paterson
Title:    First Vice President &
	Credit Officer

RT New England Franchise, LLC
	By:  /s/ Scarlett May
	Name:  Scarlett May
	Title:    Vice President

RT Denver Franchise, L.P.
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Long Island Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Western Missouri Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Omaha Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Minneapolis Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Indianapolis Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Detroit Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT St. Louis Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

RT Portland Franchise, LLC
	By: /s/ Scarlett May
	Name: Scarlett May
	Title: Vice President

Schedule A

Ruby Tuesday, Inc.
First Financial Balances
Sept. 3, 2013
Franchise Partner	Location	Loan number	Balance
Denver	Irwin - Ridgeview Construction	007-0018793-102	1,421,195.52
Denver	Irwin - Tower Road Construction	007-0018793-100	1,349,924.92
Detroit	Irwin- Allen Park Construction	007-0019363-100	528,075.15
Indianapolis	Irwin - US Hwy 31 Construction	007-0019179-102	1,789,809.47
Long Island	Irwin - Sayville Construction	007-0018826-104	1,134,687.66
Minneapolis	Irwin - Shakopee Construction	007-0019006-100	1,327,614.04
New England	Irwin - Auburn Construction	007-0018714-102	337,472.63
New England	Irwin - Augusta Construction	007-0018714-104	441,695.45
Omaha	Irwin - Council Bluffs Construction	007-0018963-104	1,268,810.55
Omaha	Irwin - Grand Island Construction	007-0018963-100	857,594.12
Omaha	Irwin - Kearney Construction	007-0018963-102	977,364.27
Omaha	Irwin - North Platte Construction	007-0018963-106	1,221,541.75
Portland	Irwin - Refinance	007-0022129-100	179,295.93
St. Louis	Irwin - Cape Girardeau Construction	007-0020202-104	611,794.03
St. Louis	Irwin - Valley Park Construction	007-0020202-100	995,876.65
St. Louis	Irwin - Wentzville Construction	007-0020202-102	997,999.19
Western Missouri	Irwin - Bass Pro Construction	007-0018907-100	1,151,169.58
Western Missouri	Irwin - Conway Construction	007-0018907-106	1,331,927.82
Western Missouri	Irwin - Kirksville Construction	007-0018907-102	1,006,591.34
Western Missouri	Irwin - Republic Construction	007-0018907-104	1,334,698.78
Western Missouri	Irwin - West Plains Construction	007-0018907-108	735,066.60
			21,000,205.45

Schedule B

RT New England Franchise, LLC

RT Denver Franchise, L.P.

RT Long Island Franchise, LLC

RT Western Missouri Franchise, LLC

RT Omaha Franchise, LLC

RT Minneapolis Franchise, LLC

RT Indianapolis Franchise, LLC

RT Detroit Franchise, LLC

RT St. Louis Franchise, LLC

RT Portland Franchise, LLC

Schedule C

Senior Credit Facility Documentation

1.            Revolving Credit Agreement dated as of December 3, 2013 among Parent, certain subsidiaries of Parent as guarantors, including RT New England Franchise, LLC, RT Denver, L.P., RT Long Island Franchise, LLC, RT Western Missouri Franchise, LLC, RT Omaha Franchise, LLC, RT Minneapolis Franchise, LLC, RT Indianapolis Franchise, LLC, RT Detroit Franchise, LLC, RT St. Louis Franchise, LLC and RT Portland Franchise, LLC, the lenders from time to time party thereto (the “Revolving Credit Lenders”), Bank of America, N.A., in its capacity as administrative agent for the Revolving Credit Lenders (the “Administrative Agent”) and as issuing bank (the “Issuing Bank”), and Regions Bank and Wells Fargo Bank, National Association (the “Co-Syndication Agents”), (the “Guarantor Credit Agreement”).

               2.            Pledge Agreement dated as of December 3, 2013 (the “Pledge Agreement”) by Parent, RTBD, Inc., RT Finance, Inc., Ruby Tuesday GC Cards, Inc., RT Tampa, Inc., RT Orlando, Inc., RT South Florida, Inc., RT West Palm Beach, Inc., RT One Percent Holdings, Inc., RT New York Franchise, LLC, RT Southwest Franchise, LLC, RT Franchise Acquisition, LLC, RT Kentucky Restaurant Holdings, LLC, RT Florida Equity, LLC, RTGC, LLC, Ruby Tuesday, LLC, RT Las Vegas Franchise, LLC, Quality Outdoor Services, Inc., RT Airport, Inc., RT Denver, Inc., RT Louisville, Inc., RT Restaurant Services, LLC, RT One Percent Holdings, LLC, RT Louisville Franchise, LLC, RT McGhee-Tyson, LLC, RT Minneapolis Holdings, LLC, RT Omaha Holdings, LLC, RT New Hampshire Restaurant Holdings, LLC, RT Northern California Franchise, LLC, RTTA, LP, Wok Hay 2, LLC, RT Distributing, LLC, RTT Texas, Inc., RTTT, LLC, RT Jonesboro Club, RT Arkansas Club, Inc., Ruby Tuesday of Russellville, Inc., Ruby Tuesday of Conway, Inc., RT KCMO Kansas, Inc., Ruby Tuesday of Bryant, Inc. and the other pledgors party thereto from time to time pursuant to a Joinder Agreement to the Pledge Agreement in favor of Administrative Agent.

               3.            Security Agreement dated as of December 3, 2013 (the “Security Agreement”) by Parent, RTBD, Inc., RT Finance, Inc., Ruby Tuesday GC Cards, Inc., RT Tampa, Inc., RT Orlando, Inc., RT South Florida, Inc., RT West Palm Beach, Inc., RT One Percent Holdings, Inc., RT New York Franchise, LLC, RT Southwest Franchise, LLC, RT Franchise Acquisition, LLC, RT Kentucky Restaurant Holdings, LLC, RT Florida Equity, LLC, RTGC, LLC, Ruby Tuesday, LLC, RT Las Vegas Franchise, LLC, Quality Outdoor Services, Inc., RT Airport, Inc., RT Denver, Inc., RT Louisville, Inc., RT Restaurant Services, LLC, RT One Percent Holdings, LLC, RT Louisville Franchise, LLC, RT McGhee Tyson, LLC, RT Minneapolis Holdings, LLC, RT Omaha Holdings, LLC, RT New Hampshire Restaurant Holdings, LLC, RT Northern California Franchise, LLC, RTTA, LP, Wok Hay 2, LLC, RT Distributing, LLC, RTT Texas, Inc., RTTT, LLC, RT Jonesboro Club, RT Arkansas Club, Inc., Ruby Tuesday of Russellville, Inc., Ruby Tuesday of Conway, Inc., RT KCMO Kansas, Inc., Ruby Tuesday of Bryant, Inc. and the other grantors party thereto from time to time pursuant to a Joinder Agreement to the Security Agreement in favor of Administrative Agent.

Schedule D

[Space left Intentionally Blank]

Term Sheet

November 27, 2013

Proposed Master Amendment to Ruby Tuesday Loan Relationship

Scope of the Master Amendment:

The Master Amendment will address and amend all Loan Agreements and other Loan Documents related to all loans originated by FFCC to various “Franchise Partner” entities, which entities have since been (re)acquired by RTI and which loans have since fallen within the scope of the Corporate Guarantee of all such loans executed by RTI in May of 2011.  At this writing, balances outstanding under the loans within the scope total approximately $20.47 Million.

Note:

Most, although not all, of the subject loans were secured by first priority liens against real properties as perfected with Mortgages, Deeds of Trust or other similar documents accepted by the political jurisdictions in which the properties were located when originated.  FFCC’s counsel will be the sole decision maker as to whether or not the collateral documents securing any given loan must be amended in concert with the proposed Master Amendment in order to preserve FFCC’s first priority position.

Cross-Collateralization and Cross Default:

All collateral pledged in support of all loans to any Franchise Partner loan shall be cross-collateralized with that pledged to any such loan.  In addition, all Franchise Partner loans shall be cross-defaulted with all other such loans.

Collateral pledged to now paid-in-full loans that were also made by FFCC to those Franchise Partner entities whose loans remain open and unpaid on the books of FFCC or to other Franchise Partner entities whose debt has now been fully repaid that has not been released by FFCC at RTI’s specific prior request will remain pledged to the collective loans covered under the scope of the proposed Master Amendment.  These collateral sites may be released by FFCC at its sole discretion at some point in the future, based entirely upon the merits of the request(s) when presented.  FFCC counsel will also determine whether or not any of the collateral instruments executed in support of these now paid-in-full loans must be amended in concert with the proposed Master Amendment.

Actions to be Taken Within the Proposed Master Amendment:

Action One:

Re-define Fixed Charge Ratio (“FCCR”) Covenant Definition as follows:

EBITDAR (Defined as Net Income PLUS Taxes PLUS Interest PLUS Depreciation & Amortization PLUS or MINUS non-cash items as commonly accepted by users of GAAP

DIVIDED BY:

All Scheduled Principal & Interest Payments PLUS All Rents paid to third party Landlords PLUS All Pre-payment Fees (recorded as Interest Expense per GAAP) in excess of $2,500,000 over any Trailing Twelve Month period

Action Two:

Re-set required FCCR levels as follows:

Period                                Requested                                Proposed

3Q14                                1.10X                                1.10X

4Q14                                1.05X                                1.05X

1Q15                                1.05X                                1.05X

2Q15                                1.10X                                1.10X

3Q15                                1.10X                                1.10X

4Q15                                1.15X                                1.20X

1Q16                                1.15X                                1.20X

2Q16                                1.20X                                1.25X

3Q16                                1.25X                                1.25X

4Q16                                1.30X                                1.30X

1Q17                                1.30X                                1.30X

2Q17                                1.35X                                1.30X

3Q17                                1.35X                                1.30X

4Q17                                1.40X                                1.30X

Beyond                             N/A                                 1.30X

Action Three:

Add a provision calling for RTI to provide internally prepared unit-level financial data for those units remaining in the FFCC collateral pool and for which there is debt outstanding to FFCC within 45 days of the end of each fiscal quarter.

Amendment Fee:

Seventy-five Thousand Dollars ($75,000), payable within 30 days of the execution of the proposed Master Amendment document.

Out-of-Pocket Expenses:

RTI to reimburse FFCC for all out-of-pocket expenses including, but not limited to, all Legal, Title, Filing and Recording Fees.  This reimbursement is also to be due within 30 days of the execution of the proposed Master Amendment document or at such time as any such fees are assessed to FFCC thereafter.

Events Preceding Execution of the proposed Master Amendment (Execution of Consent):

Upon acceptance of this Term Sheet (see Page 3, below), FFCC agrees that it will execute a document consenting to RTI’s proposed execution of a Loan Agreement and all other requisite Loan Documents related to the establishment of a Revolving Credit Facility with a bank group led by the Merrill Lynch unit of Bank of America and being participated to various other subscribing bank group members.  The anticipated Consent document will provide for a period of up to sixty (60) days following the closing of RTI’s new Revolving Credit Facility for RTI and FFCC to execute the proposed Master Amendment and all documents related to the Master Amendment that may be called for by FFCC or its Counsel.  Furthermore, the content of the Consent will be acceptable to FFCC in its sole discretion and an executed copy of this Term Sheet shall be made an Exhibit thereto.  In the event that RTI and FFCC cannot agree upon the content of the proposed Master Amendment document and the Master Amendment is not executed within the time frame provided in this Section of the Term Sheet, the existing Loan Documents and the Corporate Guarantee referenced above will remain in full force and effect and any event of default defined under those documents will be enforced in FFCC’s sole discretion.

ACCEPTANCE

By signing this Acceptance the Undersigned acknowledges that (s)he is an Officer of Ruby Tuesday, Inc. and that (s)he has been granted the authority to accept the Terms and Conditions proposed herein by the Board of Directors and/or the Board’s Designee.

Accepted this 27th day of November by Ruby Tuesday, Inc.

By: /s/ Scarlett May

Its: SVP, Chief Legal Officer & Secretary

EX-10.4

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER, dated as of January 10, 2014 (the “Agreement”), is entered into among Ruby Tuesday, Inc., a Georgia corporation (the “Borrower”), the Guarantors party hereto, the Lenders party hereto and Bank of America, N.A., as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).  All capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement (as defined below).

RECITALS

WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent entered into that certain Revolving Credit Agreement dated as of December 3, 2013 (as amended or modified from time to time, the “Credit Agreement”);

WHEREAS, pursuant to Section 6.15(a) of the Credit Agreement, the Borrower is required to provide to the Administrative Agent an environmental assessment report as to each Mortgaged Property described on Schedule 1 to this Agreement, in form and substance and from professional firms reasonably acceptable to the Administrative Agent, within thirty (30) days following the Closing Date (the “ESA Requirement”);

WHEREAS, the environmental assessment reports provided to the Administrative Agent for the Mortgaged Properties set forth on Schedule 1 to this Agreement were not acceptable to the Administrative Agent and the Borrower and the Administrative Agent have agreed to replace such Mortgaged Properties with additional fee owned real properties;

WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement as set forth below, subject to the terms and conditions specified in this Agreement;

WHEREAS, the Lenders, by action of the Required Lenders, are willing to amend the Credit Agreement as set forth below, subject to the terms and conditions specified in this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Incorporation of Recitals.  The recitals to this Agreement are incorporated fully and made a part of this Agreement.

2.Reaffirmation.  Each of the Loan Parties acknowledges and reaffirms (a) that it is bound by all of the terms of the Credit Agreement and the other Loan Documents to which it is a party and (b) that it is responsible for the observance and full performance of all Obligations, including without limitation, the repayment of the Loans and reimbursement of any drawings on a Letter of Credit.  Without limiting the generality of the preceding sentence, each of the Guarantors restates and reaffirms that it guarantees the prompt payment when due of all Obligations, in accordance with, and pursuant to the terms of the Credit Agreement.  Furthermore, the Loan Parties acknowledge and confirm (i) that the Administrative Agent and the Lenders have performed fully all of their respective obligations under the Credit Agreement and the other Loan Documents and (ii) by entering into this Agreement, the Lenders do not waive (except as specifically provided in Section 3 hereof) or release any term or condition of the Credit Agreement or any of the other Loan Documents or any of their rights or remedies under such Loan Documents or applicable law or any of the obligations of the Loan Parties thereunder.

3.           Waiver.  Subject to the other terms and conditions of this Agreement, the Administrative Agent and the Lenders agree to waive the ESA Requirement and any Default or Event of Default arising as a direct result therefrom.  The waiver set forth herein shall be effective only in this specific instance and shall not obligate the Lenders or the Administrative Agent to waive any other Default or Event of Default, now existing or hereafter arising.  This waiver is limited solely to the matters described in the first sentence of this Section 3 as of the date hereof, and nothing contained in this Agreement shall (a) modify the Loan Parties’ obligations to comply fully with all duties, terms, conditions or covenants contained in the Credit Agreement and the other Loan Documents or (b) be deemed to constitute a waiver of any other rights or remedies the Administrative Agent or any Lender may have under the Credit Agreement or any other Loan Documents or under applicable law.  This is a one-time waiver, and the Administrative Agent and the Lenders shall have no obligation to amend, modify or waive any provision of the Credit Agreement or any other Loan Document in the future.  The provisions and agreements set forth in this Agreement shall not establish a custom or course of dealing or conduct between the Administrative Agent, the Issuing Bank, any Lender, the Borrower or any other Loan Party.

4.           Amendments.  The Credit Agreement is hereby amended as follows:

(a)           The following definition is hereby added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“First Amendment Effective Date” means January 10, 2014.

(b)           The definition of “Mortgaged Properties” in Section 1.01 of the Credit Agreement is hereby amended to read as follows:

“Mortgaged Properties” means the real property of the Borrower or any Subsidiary that is subject to a Mortgage, including those real properties set forth on Schedule 6.13(c) and those real properties pledged pursuant to Section 6.16.

(c)           The following section is hereby added as a new Section 6.16 to Article VI of the Credit Agreement to read as follows:

Section 6.16.  Additional Mortgaged Properties.

(a)           Within sixty (60) days following the First Amendment Effective Date, provide to the Administrative Agent a fully executed and notarized Mortgage encumbering the fee interest of the applicable Loan Party in such additional fee owned real properties of the Borrower and its Subsidiaries as are agreed to by the Administrative Agent and the Borrower such that the Administrative Agent shall be reasonably satisfied that the appraised value of all Mortgaged Properties is at least $100,000,000, together with (i) such other Real Property Security Documents with respect to such additional real properties as are requested by the Administrative Agent, in each case, in form and substance satisfactory to the Administrative Agent and (ii) an environmental assessment report as to each such additional real property, in form and substance and from professional firms reasonably acceptable to the Administrative Agent.

(b)           Upon satisfaction of the covenants set forth in clause (a) above, the Administrative Agent will release its security interest in each of the real properties set forth on Schedule 6.16 and provide such release documents as are

2 

reasonably requested by the Borrower, in each case, at the sole expense of the Borrower.

(d)           Schedule 1 hereto is added as a new Schedule 6.16 to the Credit Agreement.

5.           Conditions Precedent.  This Agreement shall be effective upon satisfaction of the following conditions precedent:

(a)receipt by the Administrative Agent of counterparts of this Agreement, duly executed by the Borrower, the Guarantors, the Administrative Agent and the Required Lenders; and

(b)           receipt by Moore & Van Allen PLLC, counsel to the Administrative Agent, of its fees and expenses incurred in connection with this Agreement.

6.           Miscellaneous.

(a) The Credit Agreement, and the obligations of the Loan Parties thereunder and under the other Loan Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms.

(b) Each Loan Party hereby represents and warrants as follows:

(i)           Each Loan Party has taken all necessary action to authorize the execution, delivery and performance of this Agreement.

(ii)           This Agreement has been duly executed and delivered by each Loan Party and constitutes the legal, valid and binding obligations of each Loan Party, enforceable in accordance with its terms, except as such enforceability may be subject to (A) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(iii)           No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by any Loan Party of this Agreement.

(c) Each Loan Party represents and warrants to the Lenders that (i) the representations and warranties set forth in Article V of the Credit Agreement and in each other Loan Document are true and correct in all material respects (before and after giving effect to this Agreement) as of the date hereof with the same effect as if made on and as of the date hereof, except to the extent such representations and warranties expressly relate to an earlier date and (ii) no unwaived event has occurred and is continuing which constitutes a Default or an Event of Default.

(d) This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by telecopy shall be

3

effective as an original and shall constitute a representation that an executed original shall be delivered.

(e)           THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

[remainder of page intentionally left blank]

4 

Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

BORROWER:                                                                       RUBY TUESDAY, INC.

By:      /s/ Scarlett May

Name:         Scarlett May

Title:           Senior Vice President,

    Chief Legal Officer and Secretary

GUARANTORS:                                                                  RTBD, INC.

By: /s/ Scarlett May               

Name:         Scarlett May

Title:           Vice President and Secretary

RT FINANCE, INC.

By: /s/ Scarlett May                 

Name:         Scarlett May

Title:           Vice President and Secretary

RUBY TUESDAY GC CARDS, INC.

By: /s/ Scarlett May                                                       

Name:         Scarlett May

Title:           Vice President and Secretary

RT TAMPA FRANCHISE, L.P.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT ORLANDO FRANCHISE, L.P.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT SOUTH FLORIDA FRANCHISE, L.P.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT NEW YORK FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT SOUTHWEST FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT MICHIANA FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT FRANCHISE ACQUISITION, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT KENTUCKY RESTAURANT HOLDINGS, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT FLORIDA EQUITY, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RTGC, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT DETROIT FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT MICHIGAN FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT WEST PALM BEACH FRANCHISE, L.P.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT NEW ENGLAND FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT LONG ISLAND FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RUBY TUESDAY, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT LAS VEGAS FRANCHISE, LLC

By:              /s/ Scarlett May                                         

Name:         Scarlett May

Title:           Vice President and Secretary

RT MINNEAPOLIS FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT INDIANAPOLIS FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT DENVER FRANCHISE, L.P.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT OMAHA FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT KCMO FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT PORTLAND FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT ST. LOUIS FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT WESTERN MISSOURI FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

QUALITY OUTDOOR SERVICES, INC.

By:              /s/ Scarlett May                                       

Name:         Scarlett May

Title:           Vice President and Secretary

RT AIRPORT, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT LOUISVILLE FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT MCGHEE-TYSON, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT ONE PERCENT HOLDINGS, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT ONE PERCENT HOLDINGS, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT MINNEAPOLIS HOLDINGS, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT OMAHA HOLDINGS, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT DENVER, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT LOUISVILLE, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT ORLANDO, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT SOUTH FLORIDA, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT TAMPA, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT WEST PALM BEACH, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT NEW HAMPSHIRE RESTAURANT HOLDINGS, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT RESTAURANT SERVICES, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT NORTHERN CALIFORNIA FRANCHISE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RTTA, LP

By:              /s/ Scarlett May                                         

Name:         Scarlett May

Title:           Vice President

WOK HAY 2, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT DISTRIBUTING, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT O’TOOLE, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT SMITH, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RT MILLINGTON, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

4721 RT OF PENNSYLVANIA, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RTTT, LLC

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Manager

RTT TEXAS, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Treasurer

RT JONESBORO CLUB

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Secretary and Treasurer

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

RT ARKANSAS CLUB, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Secretary and Treasurer

RUBY TUESDAY OF RUSSELLVILLE, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Secretary and Treasurer

RUBY TUESDAY OF CONWAY, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Secretary and Treasurer

RT KCMO KANSAS, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Vice President and Secretary

RUBY TUESDAY OF BRYANT, INC.

By:              /s/ Scarlett May                                        

Name:         Scarlett May

Title:           Secretary and Treasurer

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

ADMINISTRATIVE AGENT:                                            BANK OF AMERICA, N.A.,

as Administrative Agent

By      /s/ Erik M. Truette

Name: Erik M. Truette

Title:  Assistant Vice President

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

LENDERS:                                                                             BANK OF AMERICA, N.A.,

as a Lender and an Issuing Bank

By       /s/ John H. Schmidt

Name:  John H. Schmidt

Title:   Senior Vice President

 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Lender

By      /s/ Sally Hoffman

Name: Sally Hoffman

Title:   Managing Directory

 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

REGIONS BANK,

as a Lender

By      /s/ Jay Sim

Name: Jay Sim

Title:   Vice President

 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

RUBY TUESDAY, INC.

Schedule 1

Schedule 6.16

1) 2316 N. Main Street, Crossville, TN 38555

2) 2250 Southgate Parkway, Cambridge, OH 43725

3) 731 Highway 53E, Calhoun, GA 30701

4) 2235 E. Sharon Road, Sharonville, OH 45241

5) 119 Industrial Park Drive, Smithfield, NC 27577

6) 1812 West Lucas Street, Florence, SC 29501

7) 1480 Snider’s Highway, Walterboro, SC 29488

8) 4600 Devine Street, Columbia, SC 29205

9) 1168 Highway 20, McDonough, GA 30253

CHAR1\1343309v2

EX-12.1

Ruby Tuesday, Inc
Unaudited Computation of Ratio of Consolidated Earnings to Fixed Charges
(Dollar Amounts in Millions)
	Twenty-six  Weeks Ended		Fiscal Year Ended
	December 3,  2013			June 4,  2013		June 5,  2012		May 31,  2011		June 1,  2010		June 2,  2009
Earnings before fixed charges:
(Loss)/income from continuing operations before income taxes	$	(63.7)	$	(21.9)	$	(8.6)	$	57.1	$	58.6	$	(40.5)
Add equity in losses (deduct equity in earnings) of equity interest		-		-		-		0.6		0.3		-
Distribution of earnings from equity investees		-		-		-		-		-		-
Less Capitalized interest		0.3		0.5		0.5		0.6		0.6		0.5
		(63.4)		(21.4)		(8.1)		58.3		59.5		(40.0)
Fixed charges:
Interest expense		13.4		26.7		23.5		14.1		18.0		36.7
Interest portion of rent expense		8.4		16.6		15.8		14.7		14.0		15.7
Total fixed charges		21.8		43.3		39.3		28.8		32.0		52.4
Adjusted earnings from continuing operations before income taxes available to cover fixed charges	$	(41.6)	$	21.9	$	31.2	$	87.1	$	91.5	$	12.4
Ratio of earnings to fixed charges		(1.91)		0.51		0.79		3.03		2.86		0.24
Amount by which earnings were insufficient to cover fixed charges		(63.4)	$	(21.4)		(8.1)		N/A		N/A	$	(40.0)

* We are presenting the ratio above solely pursuant to the requirement set forth in Item 503 of Regulation S-K.  The earnings and fixed charges in the above ratio are calculated using the definitions as set for by Regulation S-K. 

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James J. Buettgen, 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: January 13, 2014	/s/ James J. Buettgen
	James J. Buettgen
	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: January 13, 2014	/s/ Michael O. Moore
	Michael O. Moore
	Executive Vice President –
	Chief Financial Officer 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 December 3, 2013 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, James J. Buettgen, 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: January 13, 2014	/s/ James J. Buettgen
	James J. Buettgen
	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 December 3, 2013 (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: January 13, 2014	/s/ Michael O. Moore
	Michael O. Moore
	Executive Vice President –
	Chief Financial Officer and
	Assistant Secretary

XML

Note B - Loss per Share and Stock Repurchases (Details) - Antidilutive Shares Excluded from Computation of Diluted Loss Per Share In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Dec. 03, 2013		Dec. 04, 2012		Dec. 03, 2013		Dec. 04, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	3,913		5,018		4,137		4,378
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	2,839	[1]	3,371	[1]	2,977	[1]	3,002	[1]
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	1,074	[1]	1,647	[1]	1,160	[1]	1,376	[1]

[1] Due to a net loss for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012, all then outstanding share-based awards were excluded from the computation of diluted loss per share.

XML

Note J - Employee Post-Employment Benefits (Details) - Components of Net Periodic Benefit Cost (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Dec. 03, 2013		Dec. 04, 2012		Dec. 03, 2013	Dec. 04, 2012
Pension Benefits [Member]
Note J - Employee Post-Employment Benefits (Details) - Components of Net Periodic Benefit Cost [Line Items]
Service cost	$ 89		$ 115		$ 178	$ 230
Interest cost	434		525		868	1,050
Expected return on plan assets	(111)		(102)		(222)	(204)
Amortization of prior service cost		[1]	26	[1]		52
Recognized actuarial loss	428		565		856	1,130
Net periodic benefit cost	840		1,129		1,680	2,258
Postretirement Medical and Life Benefits [Member]
Note J - Employee Post-Employment Benefits (Details) - Components of Net Periodic Benefit Cost [Line Items]
Service cost	3		3		6	6
Interest cost	17		15		34	30
Amortization of prior service cost	(11)	[1]	(14)	[1]	(22)	(28)
Recognized actuarial loss	61		53		122	106
Net periodic benefit cost	$ 70		$ 57		$ 140	$ 114

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

XML

Note H - Long-Term Debt and Capital Leases (Details) (USD $)			1 Months Ended		6 Months Ended			6 Months Ended			6 Months Ended		3 Months Ended	6 Months Ended		6 Months Ended			6 Months Ended				6 Months Ended
	Dec. 03, 2013	Jun. 04, 2013	Feb. 15, 2014 Subsequent Event [Member] Mortgages [Member]	Dec. 03, 2013 Real Property [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Federal Funds Rate [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 London Interbank Offered Rate (LIBOR) [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Replaced Credit Facility ]Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Senior Notes [Member]	Jun. 04, 2013 Senior Notes [Member]	May 14, 2012 Senior Notes [Member]	Dec. 03, 2013 Mortgages [Member]	Feb. 15, 2014 Mortgages [Member]	Dec. 03, 2013 Revolving Credit Facility [Member]	Dec. 03, 2013 Revolving Credit Facility [Member]	Dec. 03, 2013 Franchise Facility Subcommitment [Member]	Dec. 03, 2013 Minimum [Member] Eurodollar [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Minimum [Member] Base Rate [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Minimum [Member] Mortgages [Member]	Dec. 03, 2013 Minimum [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Maximum [Member] Eurodollar [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Maximum [Member] Base Rate [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Maximum [Member] Mortgages [Member]	Dec. 03, 2013 Maximum [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Quarter Ending March 4, 2014 [Member] Revolving Credit Facility [Member]	Dec. 03, 2013 Quarter Ending June 3, 2014 [Member] Revolving Credit Facility [Member]
Note H - Long-Term Debt and Capital Leases (Details) [Line Items]
Debt Instrument, Face Amount								$ 250,000,000
Debt Instrument, Interest Rate, Stated Percentage								7.625%
Debt Instrument, Unamortized Discount								2,753,000	3,083,000	3,700,000
Senior Note Amortized Term										8 years
Debt Instrument, Maturity Date								May 15, 2020
Redemption Price Percentage on Principal Amount								100.00%
Percentage of Senior Notes Redeemed from Equity Offering								35.00%
Debt Instrument, Term														4 years
Debt Instrument Repurchased Amount Authorized								20,000,000
Debt Instrument, Repurchased Face Amount								12,900,000
Debt Instrument, Repurchase Amount								13,000,000
Interest Paid								200,000
Gain (Loss) on Repurchase of Debt Instrument								(500,000)
Long-term Debt, Gross								222,113,000	235,000,000
Line of Credit Facility, Current Borrowing Capacity													50,000,000	50,000,000	25,000,000
Option to Increase Revolving Credit Facility Capacity													35,000,000	35,000,000
Line of Credit Facility, Maximum Borrowing Capacity							200,000,000
Write off of Deferred Debt Issuance Cost													(200,000)	(700,000)
Debt Instrument, Basis Spread on Variable Rate					0.50%	1.00%										2.50%	1.50%			3.50%	2.50%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage																			0.40%				0.75%
Debt Instrument, Collateral Amount				100,000,000
Line of Credit Facility, Remaining Borrowing Capacity													37,600,000	37,600,000
Line of Credit Facility, Maximum Leverage Ratio for Fiscal Year														4.50
Line of Credit Facility, Minimum Fixed Charge Coverage Ratio for Fiscal Year														1.50										1.40
Line of Credit Facility Maximum Leverage Ratio Thereafter																								4.75	5.00
Line of Credit Facility, Minimum Fixed Charge Coverage Ratio Thereafter																									1.30
Payments of Debt Extinguishment Costs			5,000,000
Secured Debt	53,601,000	66,883,000										53,600,000
Debt Instrument, Maturity Date Range, Start											Feb. 28, 2014
Debt Instrument, Maturity Date Range, End											Nov. 30, 2022
Range of Loan Balances																		$ 100,000				$ 7,800,000
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Minimum											7.60%
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Maximum											10.92%

XML

Note J - Employee Post-Employment Benefits (Details) - Roll Forward of Employee Separation Obligations (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 03, 2013	Dec. 03, 2013 Severance Plan [Member]	Jun. 04, 2013 Severance Plan [Member]
Note J - Employee Post-Employment Benefits (Details) - Roll Forward of Employee Separation Obligations [Line Items]
Balance		$ 2,383	$ 310
Employee severance and unused vacation accruals	3,212
Cash payments	(1,139)
Balance		$ 2,383	$ 310

XML

Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012	Dec. 31, 2008	Jun. 04, 2013
Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) [Line Items]
Assets Held-for-sale, Current	$ 4,432,000		$ 4,432,000			$ 9,175,000
Property, Plant and Equipment, Disposals	5,600,000	1,600,000	8,200,000	1,600,000
Gain (Loss) on Disposition of Property Plant Equipment	300,000	500,000	200,000	500,000
Proceeds from Sale of Property, Plant, and Equipment, Net	5,800,000		8,400,000
Proceeds from Sale of Property, Plant, and Equipment		2,100,000	8,457,000	2,085,000	2,085,000
Percentage of Restaurants Located on Leased Properties	56.00%		56.00%
Number of Restaurants	724		724
Percentage of Restaurants Located on Leased Land	66.00%		66.00%
Percentage of Restaurants Located on Leased Land and Building	34.00%		34.00%
Sale Leaseback Transaction, Gross Proceeds		11,700,000	5,900,000	32,000,000
Sale Leaseback Transaction Costs		600,000	300,000	1,600,000
Sale Leaseback Transaction, Net Book Value	4,800,000		4,800,000
Sale Leaseback Transaction Lease Terms 1			15 years
Sale Leaseback Transaction Lease Renewal Terms			20 years
Sale Leaseback Transaction, Deferred Gain, Gross	800,000		800,000
Sale Leaseback Transactions Current Portion of Deferred Gain	1,100,000		1,100,000			1,000,000
Sale Leaseback Transactions Noncurrent Portion of Deferred Gain	13,500,000		13,500,000			13,200,000
Amortization of Deferred Charges	300,000	200,000	500,000	300,000
Construction in Progress [Member]
Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) [Line Items]
Assets Held for Sale, Property Plant and Equipment, Noncurrent	13,500,000		13,500,000			14,800,000
Company Owned Ruby Tuesday Concept Restaurants [Member]
Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) [Line Items]
Sale Leaseback Transaction, Number of Restaurants			3	14
Land and Building Transactions [Member]
Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) [Line Items]
Sale Leaseback Transaction, Number of Restaurants		5
5 Company Owned Restaurants [Member]
Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) [Line Items]
Sale Leaseback Transaction, Net Book Value		8,400,000		8,400,000
Sale Leaseback Transaction, Deferred Gain, Gross		2,700,000		2,700,000
14 Company Owned Restaurants [Member]
Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) [Line Items]
Sale Leaseback Transaction, Net Book Value		22,700,000		22,700,000
Sale Leaseback Transaction, Deferred Gain, Gross		$ 7,700,000		$ 7,700,000

XML

Note M - Segment Reporting (Tables)

6 Months Ended

Dec. 03, 2013

Note M - Segment Reporting (Tables) [Line Items]

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Less:
Depreciation and amortization		(14,598	)		(15,529	)		(29,472	)		(31,379	)
Unallocated general and administrative expenses		(13,760	)		(3,231	)		(25,657	)		(8,251	)
Preopening expenses		(41	)		(204	)		(395	)		(399	)
Interest expense, net		(6,620	)		(6,765	)		(13,373	)		(13,555	)
Other expense, net		(715	)		(133	)		(1,286	)		(387	)
Loss from continuing operations before income taxes	$	(36,647	)	$	(10,868	)	$	(63,699	)	$	(9,749	)

Income Statement [Member]

Note M - Segment Reporting (Tables) [Line Items]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Revenues:
Ruby Tuesday concept	$	270,741		$	296,097		$	554,763		$	619,924
Lime Fresh concept		5,468			3,980			11,120			8,076
Total revenues	$	276,209		$	300,077		$	565,883		$	628,000
Segment (loss)/profit:
Ruby Tuesday concept	$	870		$	17,026		$	10,721		$	46,573
Lime Fresh concept		(1,783	)		(2,032	)		(4,237	)		(2,351	)
Total segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Depreciation and amortization:
Ruby Tuesday concept	$	13,456		$	14,382		$	27,248		$	29,141
Lime Fresh concept		545			576			1,044			1,095
Support center and other		597			571			1,180			1,143
Total depreciation and amortization	$	14,598		$	15,529		$	29,472		$	31,379
Capital expenditures:
Ruby Tuesday concept							$	14,114		$	12,197
Lime Fresh concept								2,699			2,873
Support center and other								884			3,435
Total capital expenditures							$	17,697		$	18,505

Balance Sheet [Member]

Note M - Segment Reporting (Tables) [Line Items]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	December 3, 2013		June 4, 2013
Total assets:
Ruby Tuesday concept	$	854,707	$	893,750
Lime Fresh concept		19,080		18,943
Support center and other		98,655		130,490
Total assets	$	972,442	$	1,043,183

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Note L - Share-Based Employee Compensation (Details) (USD $)	3 Months Ended	6 Months Ended	12 Months Ended	3 Months Ended				3 Months Ended	6 Months Ended	3 Months Ended			6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended		3 Months Ended		3 Months Ended
	Sep. 03, 2013	Dec. 03, 2013	Dec. 31, 2008	Sep. 03, 2013 Cliff Vest [Member] Restricted Stock, Service-based [Member] SIP and 1996 SIP [Member]	Sep. 03, 2013 Annual Installments [Member] Restricted Stock, Service-based [Member] SIP and 1996 SIP [Member]	Dec. 03, 2013 Employee Stock Option [Member] SIP [Member]	Dec. 03, 2013 Employee Stock Option [Member] SIP 1996 [Member]	Dec. 03, 2013 Employee Stock Option [Member] SIP and Directors' Plan [Member]	Dec. 03, 2013 Employee Stock Option [Member]	Sep. 03, 2013 Restricted Stock [Member] SIP and 1996 SIP [Member]	Dec. 03, 2013 Restricted Stock [Member] SIP and Directors' Plan [Member]	Sep. 03, 2013 Restricted Stock [Member] Chief Executive Officer [Member]	Dec. 03, 2013 Restricted Stock [Member]	Sep. 03, 2013 Restricted Stock, Service-based [Member] SIP and 1996 SIP [Member]	Dec. 03, 2013 Restricted Stock, Service-based [Member]	Sep. 03, 2013 Restricted Stock, Performance-based [Member]	Dec. 03, 2013 Restricted Stock, Performance-based [Member]	Sep. 03, 2013 SIP and 1996 SIP [Member] Certain Employees [Member]	Dec. 03, 2013 SIP and 1996 SIP [Member]	Sep. 03, 2013 SIP [Member] Certain Employees [Member]	Dec. 03, 2013 SIP [Member]	Sep. 03, 2013 SIP [Member] Maximum [Member] Certain Employees [Member]	Dec. 03, 2013 SIP 1996 [Member]	Dec. 03, 2013 Accelerated Vesting Options [Member]
Note L - Share-Based Employee Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				2 years 6 months				1 year											3 years	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term																		7 years	7 years			7 years
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						4,857,000	170,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number																					1,984,000		102,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant						2,873,000	68,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)									$ 3,900,000				$ 5,800,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition									1 year 255 days				1 year 219 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross											60,000							601,000		570,000
Share-based Compensation Arrangement by Share Based Payment Award, Benchmark Price Per Share (in Dollars per share)	$ 14
Consecutive Days to Vest	20 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period				186,000	158,000									344,000	405,000
Number of Annual Installments														3
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period										235,000		34,000			(140,000)	(269,000)	(270,000)
Share-based Compensation (in Dollars)		$ 4,049,000	$ 1,609,000																					$ 300,000

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Note P - Supplemental Condensed Consolidating Financial Statements (Details) - Condensed Consolidating Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 31, 2008
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	$ 428	$ 609	$ 609
Investing activities:
Purchases of property and equipment	(17,697)	(18,505)	(18,505)
Proceeds from sale-leaseback transactions	5,637	30,408	30,408
Proceeds from disposal of assets	8,457	2,085	2,085
Other, net	187	126
Net cash used by investing activities	(3,416)	14,114	14,114
Financing activities:
Principal payments on long-term debt	(25,806)	(17,485)	(17,485)
Stock repurchases	(540)	(20,012)	(20,012)
Payments for debt issuance costs	(1,718)
Proceeds from exercise of stock options	1,480	173	173
Excess tax benefits from share-based compensation	283	11	11
Net cash provided/(used) by financing activities	(26,301)	(37,313)	(37,313)
Increase/(decrease) in cash and cash equivalents	(29,289)	(22,590)	(22,590)
Cash and cash equivalents:
Beginning of year	52,907	48,184	48,184
End of quarter	23,618	25,594	25,594
Consolidation, Eliminations [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	(13,590)	(12,133)
Financing activities:
Intercompany transactions	13,590	12,133
Net cash provided/(used) by financing activities	13,590	12,133
Cash and cash equivalents:
End of quarter	0
Parent Company [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	(22,630)	(15,104)
Investing activities:
Purchases of property and equipment	(12,902)	(14,936)
Proceeds from sale-leaseback transactions	5,637	30,408
Proceeds from disposal of assets	7,434	885
Other, net	187	126
Net cash used by investing activities	356	16,483
Financing activities:
Principal payments on long-term debt	(12,968)	(10,981)
Stock repurchases	(540)	(20,012)
Payments for debt issuance costs	(1,718)
Proceeds from exercise of stock options	1,480	173
Excess tax benefits from share-based compensation	283	11
Intercompany transactions	6,415	6,823
Net cash provided/(used) by financing activities	(7,048)	(23,986)
Increase/(decrease) in cash and cash equivalents	(29,322)	(22,607)
Cash and cash equivalents:
Beginning of year	52,635	47,986
End of quarter	23,313	25,379
Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by operating activities	36,648	27,846
Investing activities:
Purchases of property and equipment	(4,795)	(3,569)
Proceeds from disposal of assets	1,023	1,200
Net cash used by investing activities	(3,772)	(2,369)
Financing activities:
Principal payments on long-term debt	(12,838)	(6,504)
Intercompany transactions	(20,005)	(18,956)
Net cash provided/(used) by financing activities	(32,843)	(25,460)
Increase/(decrease) in cash and cash equivalents	33	17
Cash and cash equivalents:
Beginning of year	272	198
End of quarter	$ 305	$ 215

XML

Note B - Loss per Share and Stock Repurchases (Tables)

6 Months Ended

Dec. 03, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Loss from continuing operations	$	(34,737	)	$	(4,204	)	$	(56,636	)	$	(1,130	)
Gain/(loss) from discontinued operations, net of tax		354			(10,864	)		11			(11,339	)
Net loss	$	(34,383	)	$	(15,068	)	$	(56,625	)	$	(12,469	)
Weighted-average common shares outstanding		60,196			62,005			60,111			62,409
Dilutive effect of stock options and restricted stock	–			–			–			–
Weighted average common and dilutive potential common shares outstanding		60,196			62,005			60,111			62,409
Loss per share – Basic
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)
Loss per share – Diluted
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Thirteen weeks ended				Twenty-six weeks ended
	December 3, 2013		December 4, 2012		December 3, 2013		December 4, 2012
Stock options*		2,839		3,371		2,977		3,002
Restricted shares*		1,074		1,647		1,160		1,376
Total		3,913		5,018		4,137		4,378

XML

Note I - Closures and Impairments Expense (Details) (USD $) In Millions, unless otherwise specified		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended
	Dec. 03, 2013	Jun. 04, 2014 Subsequent Event [Member] Planned Closures [Member]	Jun. 04, 2014 Subsequent Event [Member]	Mar. 03, 2014 Subsequent Event [Member]	Jun. 04, 2014 Subsequent Event [Member]	Dec. 03, 2013 Open Restaurants With Deteriorating Operational Performance [Member]	Dec. 03, 2013 Open more than one year with rolling 12-month negative cash flows [Member]	Dec. 03, 2013 Impaired to salvage value [Member]	Dec. 03, 2013 Not impaired to salvage value [Member]	Dec. 03, 2013 Located on owned properties [Member]
Note I - Closures and Impairments Expense (Details) [Line Items]
Number of Restaurants Scheduled for Closure			3	27	30
Impairment of Intangible Assets, Finite-lived (in Dollars)		$ 4.4				$ 5.7
Number of Restaurants	724					9	58	43	15	6
Negative cash flow restaurants not recorded at salvage value, remaining net book value (in Dollars)	$ 13.7

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Note D - Discontinued Operations (Details) - Financial Results of Discontinued Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012
Financial Results of Discontinued Operations [Abstract]
Restaurant sales and operating revenue		$ 4,156		$ 9,154
Gain/(loss) before income taxes	453	(17,919)	(75)	(18,767)
Provision/(benefit) for income taxes	99	(7,055)	(86)	(7,428)
Gain/(loss) from discontinued operations	$ 354	$ (10,864)	$ 11	$ (11,339)

XML

Note B - Loss per Share and Stock Repurchases (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Dec. 03, 2013
Earnings Per Share [Abstract]
Stock Repurchased and Retired During Period, Shares	0.1
Stock Repurchased and Retired During Period, Value (in Dollars)	$ 0.5
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased	11.8

XML

Note I - Closures and Impairments Expense (Details) - Future Liabilites Associated with Closed Properties (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Dec. 03, 2013
Note I - Closures and Impairments Expense (Details) - Future Liabilites Associated with Closed Properties [Line Items]
Balance at June 4, 2013	$ 8,727
Closing expense including rent and other lease charges	4,205
Payments	(3,324)
Other adjustments	42
Balance at December 3, 2013	9,650
Continuing Operations [Member]
Note I - Closures and Impairments Expense (Details) - Future Liabilites Associated with Closed Properties [Line Items]
Balance at June 4, 2013	6,417
Closing expense including rent and other lease charges	4,297
Payments	(2,503)
Other adjustments	42
Balance at December 3, 2013	8,253
Discontinued Operations [Member]
Note I - Closures and Impairments Expense (Details) - Future Liabilites Associated with Closed Properties [Line Items]
Balance at June 4, 2013	2,310
Closing expense including rent and other lease charges	(92)
Payments	(821)
Balance at December 3, 2013	$ 1,397

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Note O - Fair Value Measurements (Details) - Losses Recognized from Fair Value Measurements on Non-recurring Basis (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended	3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Dec. 03, 2013	Dec. 31, 2008	Dec. 03, 2013 Continuing Operations [Member]	Dec. 04, 2012 Continuing Operations [Member]	Dec. 03, 2013 Continuing Operations [Member]	Dec. 04, 2012 Continuing Operations [Member]	Dec. 04, 2012 Discontinued Operations [Member]	Dec. 03, 2013 Discontinued Operations [Member]	Dec. 04, 2012 Discontinued Operations [Member]
Note O - Fair Value Measurements (Details) - Losses Recognized from Fair Value Measurements on Non-recurring Basis [Line Items]
Long-lived assets held for sale			$ 315	$ 354	$ 584	$ 511
Long-lived assets held for use			12,003	1,858	16,664	2,149
Asset impairment charges	$ 17,746	$ 18,756	$ 12,318	$ 2,212	$ 17,248	$ 2,660	$ 16,302	$ 153	$ 16,302

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Note M - Segment Reporting (Details) - Financial Results by Reportable Segment (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Total assets:
Total assets	$ 972,442	$ 1,043,183
Ruby Tuesday [Member]
Total assets:
Total assets	854,707	893,750
Lime Fresh [Member]
Total assets:
Total assets	19,080	18,943
Support Center and Other [Member]
Total assets:
Total assets	$ 98,655	$ 130,490

XML

Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Details) - Property and Equipment, Net (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013		Jun. 04, 2013
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,394,116		$ 1,448,444
Less accumulated depreciation	569,956		588,614
	824,160		859,830
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	218,759		222,385
Building [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	439,591		448,681
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	377,432		402,371
Restaurant Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	253,559		260,576
Other Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	85,798		91,351
Construction in Progress and Other [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 18,977	[1]	$ 23,080	[1]

[1] Included in Construction in progress and other as of December 3, 2013 and June 4, 2013 are $13.5 million and $14.8 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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Note D - Discontinued Operations

6 Months Ended

Dec. 03, 2013

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE D – DISCONTINUED OPERATIONS

In an effort to focus primarily on the successful sales turnaround of our core Ruby Tuesday concept and secondly, to improve the financial performance of our Lime Fresh concept, we closed all 13 Marlin & Ray’s restaurants, the Company’s one Wok Hay restaurant, and our two Truffles restaurants during fiscal 2013. We have classified the results of operations of our Company-owned Marlin & Ray’s, Wok Hay, and Truffles concepts as discontinued operations for all periods presented. The results of operations of our discontinued operations are as follows (in thousands):

	Thirteen weeks ended					Twenty-six weeks ended
	December 3, 2013		December 4, 2012			December 3, 2013			December 4, 2012
Restaurant sales and operating revenue	$	–	$	4,156		$	–		$	9,154
Gain/(loss) before income taxes	$	453	$	(17,919	)	$	(75	)	$	(18,767	)
Provision/(benefit) for income taxes		99		(7,055	)		(86	)		(7,428	)
Gain/(loss) from discontinued operations	$	354	$	(10,864	)	$	11		$	(11,339	)

As of December 3, 2013 and June 4, 2013, we had $0.8 million and $2.8 million, respectively, of assets associated with the closed concept restaurants, which are included in Property and equipment, net in our Condensed Consolidated Balance Sheets. Additionally, included within Assets held for sale in our December 3, 2013 and June 4, 2013 Condensed Consolidated Balance Sheet are $1.3 million and $4.2 million, respectively, of assets associated with the closed concept restaurants. See Note I to the Condensed Consolidated Financial Statements for a discussion of closed restaurant lease reserves as of December 3, 2013 and June 4, 2013 associated with the closed concept restaurants.

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Note M - Segment Reporting (Details) - Reconciliation of Segment Profit to (Loss)/Income from Continuing Operations before Taxes (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment (loss)/profit	$ (913)	$ 14,994	$ 6,484	$ 44,222
Less:
Depreciation and amortization	(14,598)	(15,529)	(29,472)	(31,379)
Unallocated general and administrative expenses	(37,031)	(38,541)	(74,046)	(81,548)
Preopening expenses	(41)	(204)	(395)	(399)
Interest expense, net	(6,620)	(6,765)	(13,373)	(13,555)
Other expense, net	(715)	(133)	(1,286)	(387)
Loss from continuing operations before income taxes	(36,647)	(10,868)	(63,699)	(9,749)
Corporate, Non-Segment [Member]
Less:
Unallocated general and administrative expenses	$ (13,760)	$ (3,231)	$ (25,657)	$ (8,251)

XML

Note E - Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Note E - Accounts Receivable (Details) [Line Items]
Other Receivables, Net, Current	$ 3,298	$ 3,043
Third-party Gift Card Sales [Member]
Note E - Accounts Receivable (Details) [Line Items]
Other Receivables, Net, Current	1,800	1,800
Due from Distributor [Member]
Note E - Accounts Receivable (Details) [Line Items]
Other Receivables, Net, Current	700	400
Due from Landlords [Member]
Note E - Accounts Receivable (Details) [Line Items]
Other Receivables, Net, Current	$ 100	$ 500

XML

Note H - Long-Term Debt and Capital Leases (Tables)

6 Months Ended

Dec. 03, 2013

Disclosure Text Block Supplement [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

	December 3, 2013			June 4, 2013
Senior unsecured notes	$	222,113		$	235,000
Unamortized discount		(2,753	)		(3,083	)
Senior unsecured notes less unamortized discount		219,360			231,917
Revolving credit facility	–			–
Mortgage loan obligations		53,601			66,883
Capital lease obligations		181			202
		273,142			299,002
Less current maturities		9,838			8,487
	$	263,304		$	290,515

XML

Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions (Tables)

6 Months Ended

Dec. 03, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	December 3, 2013		June 4, 2013
Land	$	218,759	$	222,385
Buildings		439,591		448,681
Improvements		377,432		402,371
Restaurant equipment		253,559		260,576
Other equipment		85,798		91,351
Construction in progress and other*		18,977		23,080
		1,394,116		1,448,444
Less accumulated depreciation		569,956		588,614
	$	824,160	$	859,830

XML

Note K - Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012	Jun. 04, 2013
Note K - Income Taxes (Details) [Line Items]
Income Tax Expense (Benefit)	$ (1,910,000)	$ (6,664,000)	$ (7,063,000)	$ (8,619,000)
Deferred Tax Assets, Valuation Allowance	45,400,000		45,400,000		24,600,000
Valuation Allowance, Deferred Tax Asset, Change in Amount	14,600,000		21,900,000
Unrecognized Tax Benefits	8,900,000		8,900,000		13,000,000
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	3,600,000		3,600,000		3,500,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	1,000,000		1,000,000		900,000
Accrual Interest and Penalties Increase Decrease			100,000
Reasonably Possible Amounts Will Change Within Next Twelve Months [Member]
Note K - Income Taxes (Details) [Line Items]
Unrecognized Tax Benefits	$ 1,200,000		$ 1,200,000

XML

Note E - Accounts Receivable (Details) - Accounts Receivable, Current (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, current	$ 5,779	$ 4,834
Amounts due from franchisees	1,393	917
Other receivables	3,298	3,043
Rebates [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable, current	$ 1,088	$ 874

XML

Note I - Closures and Impairments Expense (Tables)

6 Months Ended

Dec. 03, 2013

Disclosure Text Block Supplement [Abstract]

Closures and Impairment Expenses [Table Text Block]

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013		December 4, 2012
Closures and impairments from continuing operations:
Property impairments	$	12,318		$	2,212		$	17,248	$	2,660
Closed restaurant lease reserves		1,702			(99	)		4,297		375
Other closing costs		110			285			578		541
Loss/(gain) on sale of surplus properties		13			(507	)		53		(598	)
Closures and impairments, net	$	14,143		$	1,891		$	22,176	$	2,978
Closures and impairments from discontinued operations	$	(453	)	$	16,360		$	65	$	16,397

Future Lease Obligations Associated with Closed Properties [Table Text Block]

	Lease Obligations
	Continuing Operations			Discontinued Concepts			Total
Balance at June 4, 2013	$	6,417		$	2,310		$	8,727
Closing expense including rent and other lease charges		4,297			(92	)		4,205
Payments		(2,503	)		(821	)		(3,324	)
Other adjustments		42		–				42
Balance at December 3, 2013	$	8,253		$	1,397		$	9,650

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Note J - Employee Post-Employment Benefits (Tables)

3 Months Ended

Sep. 03, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

	Pension Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	December 3,			December 4,			December 3,			December 4,
	2013			2012			2013			2012
Service cost	$	89		$	115		$	178		$	230
Interest cost		434			525			868			1,050
Expected return on plan assets		(111	)		(102	)		(222	)		(204	)
Amortization of prior service cost (a)	–				26		–				52
Recognized actuarial loss		428			565			856			1,130
Net periodic benefit cost	$	840		$	1,129		$	1,680		$	2,258

	Postretirement Medical and Life Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Service cost	$	3		$	3		$	6		$	6
Interest cost		17			15			34			30
Amortization of prior service cost (a)		(11	)		(14	)		(22	)		(28	)
Recognized actuarial loss		61			53			122			106
Net periodic benefit cost	$	70		$	57		$	140		$	114

Schedule of Unpaid Employee Separation Obligations Included in Accrued Payroll and Related Costs [Table Text Block]

Balance at June 4, 2013	$	310
Employee severance and unused vacation accruals		3,212
Cash payments		(1,139	)
Balance at December 3, 2013	$	2,383

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Note C - Franchise Programs

6 Months Ended

Dec. 03, 2013

Franchise Programs [Abstract]

Franchise Programs [Text Block]

NOTE C – FRANCHISE PROGRAMS

As of December 3, 2013, our domestic and international franchisees collectively operated 76 Ruby Tuesday restaurants and eight Lime Fresh restaurants. We do not own any equity interest in our franchisees.

Under the terms of the franchise operating agreements, we charge a royalty fee (generally 4.0% of monthly sales for Ruby Tuesday concept franchisees and 5.25% of monthly sales for Lime Fresh concept franchisees) and require all of our Ruby Tuesday domestic franchisees to contribute a percentage, 1.5% as of December 3, 2013, 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 Operations and Comprehensive Loss.

In addition to the advertising fee discussed above, our Ruby Tuesday concept franchise agreements allow us to charge up to a 2.0% support service fee and a 1.5% marketing and purchasing fee. For the 13 and 26 weeks ended December 3, 2013 and December 4, 2012, we recorded $0.3 million and $0.5 million, respectively in fiscal 2014, and $0.1 million and $0.4 million, respectively in fiscal 2013, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Operations and Comprehensive Loss.

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Note L - Share-Based Employee Compensation (Tables)

6 Months Ended

Dec. 03, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Stock Options			Weighted Average Exercise Price
Service-based vesting:
Balance at June 4, 2013		1,911		$	8.27
Granted		601			9.34
Exercised		(229	)		6.45
Forfeited		(179	)		9.39
Balance at December 3, 2013		2,104		$	8.68
Exercisable		1,237		$	8.63
Market-based vesting:
Balance at June 4, 2013		250		$	7.81
Granted		570			9.34
Forfeited		(85	)		9.34
Balance at December 3, 2013		735		$	8.82
Exercisable		–			–

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Restricted Stock			Weighted-Average Grant-Date Fair Value
Performance-based vesting:
Non-vested at June 4, 2013		356		$	7.06
Granted		–			–
Vested		(18	)		7.87
Forfeited		(270	)		6.81
Non-vested at December 3, 2013		68		$	7.81

	Restricted Stock			Weighted-Average Grant-Date Fair Value
Service-based vesting:
Non-vested at June 4, 2013		1,136		$	7.92
Granted		405			8.97
Vested		(395	)		8.12
Forfeited		(140	)		8.76
Non-vested at December 3, 2013		1,006		$	8.15

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Note C - Franchise Programs (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012
Note C - Franchise Programs (Details) [Line Items]
Support service and marketing and purchasing fees (in Dollars)	$ 0.3	$ 0.1	$ 0.5	$ 0.4
Ruby Tuesday [Member]
Note C - Franchise Programs (Details) [Line Items]
Number of Franchise Restaurants	76		76
Royalty fee percentage			4.00%
Operating agreements, national advertising fund gross sales contribution			1.50%
Operating agreements, national advertising fund gross sales contribution, maximum			3.00%
Operating agreements, support service fee, gross sales contribution, maximum			2.00%
Operating agreements, marketing and purchase fee,gross sales contribution, maximum			1.50%
Lime Fresh [Member]
Note C - Franchise Programs (Details) [Line Items]
Number of Franchise Restaurants	8		8
Royalty fee percentage			5.25%

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Note J - Employee Post-Employment Benefits (Details) (USD $)	3 Months Ended	6 Months Ended				6 Months Ended	1 Months Ended	3 Months Ended	1 Months Ended
	Dec. 03, 2013	Dec. 03, 2013	Jun. 04, 2013	Dec. 03, 2013 Other Noncurrent Assets [Member]	Dec. 31, 2013 Accounts Payable and Accrued Liabilities [Member]	Dec. 03, 2013 Retirement Plan [Member]	Dec. 31, 2013 Severance Plan [Member] Chief Operating Officer [Member]	Sep. 03, 2013 Severance Plan [Member] Chief Operating Officer [Member]	Dec. 31, 2013 Chief People Officer [Member]	Dec. 31, 2013 Support Center Management and Staff [Member]
Note J - Employee Post-Employment Benefits (Details) [Line Items]
Defined Benefit Pension Plans	3	3
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year						$ 300,000
Restricted Cash and Cash Equivalents				8,800,000
Other Comprehensive Income (Loss), Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service (Cost) Credit, Net of Tax	500,000	1,000,000
Defined contribution plans	2	2
Severance Costs (in Dollars)		3,212,000						900,000	400,000	2,000,000
Payments for Postemployment Benefits							400,000	500,000
Employee-related Liabilities	$ 21,977,000	$ 21,977,000	$ 25,425,000		$ 2,400,000

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Note R - Subsequent Events (Details) (USD $)	6 Months Ended		1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Jun. 04, 2014 Subsequent Event [Member] Lease Termination [Member]	Jan. 13, 2014 Subsequent Event [Member]	Jun. 04, 2014 Subsequent Event [Member]	Mar. 03, 2014 Subsequent Event [Member]	Jun. 04, 2014 Subsequent Event [Member]
Note R - Subsequent Events (Details) [Line Items]
Number of Restaurants Scheduled for Closure				3	27	30
Number of Restaurants Closed			25
Restructuring Charges (in Dollars)		$ 2,000,000
Severance Costs (in Dollars)	$ 3,212,000			$ 300,000

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Current assets:
Cash and cash equivalents	$ 23,618	$ 52,907
Accounts receivable	5,779	4,834
Inventories:
Merchandise	18,220	21,779
China, silver and supplies	9,195	9,093
Income tax receivable	5,343	1,900
Deferred income taxes	4,579	7,296
Prepaid rent and other expenses	14,293	14,180
Assets held for sale	4,432	9,175
Total current assets	85,459	121,164
Property and equipment, net	824,160	859,830
Other assets	62,823	62,189
Total assets	972,442	1,043,183
Current liabilities:
Accounts payable	25,264	14,964
Accrued liabilities:
Taxes, other than income and payroll	11,241	11,311
Payroll and related costs	21,977	25,425
Insurance	8,120	9,095
Deferred revenue – gift cards	15,664	13,454
Rent and other	25,926	22,896
Current portion of long-term debt, including capital leases	9,838	8,487
Total current liabilities	118,030	105,632
Long-term debt and capital leases, less current maturities	263,304	290,515
Deferred income taxes	2,778	5,753
Deferred escalating minimum rent	48,583	46,892
Other deferred liabilities	73,498	77,556
Total liabilities	506,193	526,348
Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares; issued: 61,415 shares at 12/03/13; 61,248 shares at 6/04/13)	614	612
Capital in excess of par value	72,678	67,596
Retained earnings	402,947	459,572
Deferred compensation liability payable in Company stock	638	1,094
Company stock held by Deferred Compensation Plan	(638)	(1,094)
Accumulated other comprehensive loss	(9,990)	(10,945)
Total shareholders’ equity	466,249	516,835
Total liabilities & shareholders’ equity	$ 972,442	$ 1,043,183

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Note F - Inventories (Details) (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Inventory Disclosure [Abstract]
Retail Related Inventory, Merchandise	$ 18,220	$ 21,779

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Note A - Basis of Presentation

6 Months Ended

Dec. 03, 2013

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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® casual dining and Lime Fresh Mexican Grill® (“Lime Fresh”) fast casual restaurants. We also franchise the Ruby Tuesday and Lime Fresh 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 not include 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- and 26-week periods ended December 3, 2013 are not necessarily indicative of results that may be expected for the 52-week year ending June 3, 2014.

The Condensed Consolidated Balance Sheet at June 4, 2013 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. In addition to the reclassification of $0.4 million from Interest expense, net to Gain on extinguishment of debt for both the 13 and 26 weeks ended December 4, 2012, we made certain reclassifications to prior year amounts in our Condensed Consolidated Statements of Operations and Comprehensive Loss to reclassify the results of operations of our discontinued concepts as discontinued operations for all periods presented. We also made certain reclassifications to prior year amounts in our Condensed Consolidated Statements of Cash Flows to conform to current period presentation (all reclassifications were within Operating activities).

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 4, 2013.

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Note L - Share-Based Employee Compensation (Details) - Summary of Restricted Stock Activity (USD $)	3 Months Ended	6 Months Ended
	Sep. 03, 2013	Dec. 03, 2013
Restricted Stock, Performance-based [Member]
Note L - Share-Based Employee Compensation (Details) - Summary of Restricted Stock Activity [Line Items]
Non-vested at beginning of year	356,000	356,000
Non-vested at beginning of year (in Dollars per share)	$ 7.06	$ 7.06
Vested		(18,000)
Vested (in Dollars per share)		$ 7.87
Forfeited	(269,000)	(270,000)
Forfeited (in Dollars per share)		$ 6.81
Non-vested at end of year		68,000
Non-vested at end of year (in Dollars per share)		$ 7.81
Restricted Stock, Service-based [Member]
Note L - Share-Based Employee Compensation (Details) - Summary of Restricted Stock Activity [Line Items]
Non-vested at beginning of year	1,136,000	1,136,000
Non-vested at beginning of year (in Dollars per share)	$ 7.92	$ 7.92
Granted		405,000
Granted (in Dollars per share)		$ 8.97
Vested		(395,000)
Vested (in Dollars per share)		$ 8.12
Forfeited		(140,000)
Forfeited (in Dollars per share)		$ 8.76
Non-vested at end of year		1,006,000
Non-vested at end of year (in Dollars per share)		$ 8.15

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Note P - Supplemental Condensed Consolidating Financial Statements (Tables)

6 Months Ended

Dec. 03, 2013

Disclosure Text Block Supplement [Abstract]

Condensed Balance Sheet [Table Text Block]

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	23,313		$	305	–			$	23,618
Accounts receivable		2,217			3,562	–				5,779
Inventories		19,477			7,938	–				27,415
Income tax receivable		130,721		–			(125,378	)		5,343
Deferred income taxes		1,377			3,202	–				4,579
Other current assets		15,237			3,488	–				18,725
Total current assets		192,342			18,495		(125,378	)		85,459
Property and equipment, net		611,147			213,013	–				824,160
Investment in subsidiaries		152,303		–			(152,303	)	–
Due from/(to) subsidiaries		90,802			236,998		(327,800	)	–
Other assets		48,465			14,358	–				62,823
Total assets	$	1,095,059		$	482,864	$	(605,481	)	$	972,442
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	20,934		$	4,330	–			$	25,264
Accrued and other current liabilities		47,703			35,225	–				82,928
Current maturities of long-term debt, including capital leases		(341	)		10,179	–				9,838
Income tax payable	–				125,378		(125,378	)	–
Total current liabilities		68,296			175,112		(125,378	)		118,030
Long-term debt and capital leases, less current maturities		219,882			43,422	–				263,304
Deferred income taxes		(4,192	)		6,970	–				2,778
Due to/(from) subsidiaries		236,998			90,802		(327,800	)	–
Other deferred liabilities		107,826			14,255	–				122,081
Total liabilities		628,810			330,561		(453,178	)		506,193
Shareholders’ equity:
Common stock		614		–		–				614
Capital in excess of par value		72,678		–		–				72,678
Retained earnings		402,947			152,303		(152,303	)		402,947
Accumulated other comprehensive loss		(9,990	)	–		–				(9,990	)
Total shareholders’ equity		466,249			152,303		(152,303	)		466,249
Total liabilities & shareholders’ equity	$	1,095,059		$	482,864	$	(605,481	)	$	972,442

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	52,635		$	272	–			$	52,907
Accounts receivable		1,854			2,980	–				4,834
Inventories		21,961			8,911	–				30,872
Income tax receivable		118,329		–			(116,429	)		1,900
Deferred income taxes		5,372			1,924	–				7,296
Other current assets		19,519			3,836	–				23,355
Total current assets		219,670			17,923		(116,429	)		121,164
Property and equipment, net		635,478			224,352	–				859,830
Investment in subsidiaries		167,887		–			(167,887	)	–
Due from/(to) subsidiaries		76,485			230,583		(307,068	)	–
Other assets		46,812			15,377	–				62,189
Total assets	$	1,146,332		$	488,235	$	(591,384	)	$	1,043,183
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	11,725		$	3,239	–			$	14,964
Accrued and other current liabilities		47,775			34,406	–				82,181
Current maturities of long-term debt, including capital leases		(347	)		8,834					8,487
Income tax payable	–				116,429		(116,429	)	–
Total current liabilities		59,153			162,908		(116,429	)		105,632
Long-term debt and capital leases, less current maturities		232,462			58,053	–				290,515
Deferred income taxes		(1,070	)		6,823	–				5,753
Due to/(from) subsidiaries		230,583			76,485		(307,068	)	–
Other deferred liabilities		108,369			16,079	–				124,448
Total liabilities		629,497			320,348		(423,497	)		526,348
Shareholders’ equity:
Common stock		612		–		–				612
Capital in excess of par value		67,596		–		–				67,596
Retained earnings		459,572			167,887		(167,887	)		459,572
Accumulated other comprehensive loss		(10,945	)	–		–				(10,945	)
Total shareholders’ equity		516,835			167,887		(167,887	)		516,835
Total liabilities & shareholders’ equity	$	1,146,332		$	488,235	$	(591,384	)	$	1,043,183

Condensed Income Statement [Table Text Block]

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	198,850		$	75,869		–			$	274,719
Franchise revenue		98			1,392		–				1,490
		198,948			77,261		–				276,209
Operating costs and expenses:
Cost of merchandise		56,320			21,349		–				77,669
Payroll and related costs		69,365			28,152		–				97,517
Other restaurant operating costs		46,493			18,796		–				65,289
Depreciation		10,208			3,707		–				13,915
Selling, general, and administrative		25,724			11,307		–				37,031
Intercompany selling, general, and administrative allocations		14,008			(14,008	)	–			–
Closures and impairments		8,058			6,085		–				14,143
Equity in earnings of subsidiaries		104		–				(104	)	–
Interest expense, net		5,171			1,449		–				6,620
Intercompany interest expense/(income)		3,229			(3,229	)	–			–
Loss on extinguishment of debt		672		–			–				672
		239,352			73,608			(104	)		312,856
(Loss)/income from continuing operations before income taxes		(40,404	)		3,653			104			(36,647	)
(Benefit)/provision for income taxes from continuing operations		(5,667	)		3,757		–				(1,910	)
(Loss)/income from continuing operations		(34,737	)		(104	)		104			(34,737	)
Gain from discontinued operations, net of tax		354		–			–				354
Net (loss)/income	$	(34,383	)	$	(104	)	$	104		$	(34,383	)
Other comprehensive income:
Pension liability reclassification, net of tax		477		–			–				477
Total comprehensive (loss)/income	$	(33,906	)	$	(104	)	$	104		$	(33,906	)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	408,932		$	153,879		–			$	562,811
Franchise revenue		119			2,953		–				3,072
		409,051			156,832		–				565,883
Operating costs and expenses:
Cost of merchandise		114,847			42,760		–				157,607
Payroll and related costs		142,891			57,359		–				200,250
Other restaurant operating costs		94,895			37,928		–				132,823
Depreciation		20,572			7,552		–				28,124
Selling, general, and administrative		51,718			22,328		–				74,046
Intercompany selling, general, and administrative allocations		28,771			(28,771	)	–			–
Closures and impairments		13,223			8,953		–				22,176
Equity in earnings of subsidiaries		(4,421	)	–				4,421		–
Interest expense, net		10,231			3,142		–				13,373
Intercompany interest expense/(income)		6,414			(6,414	)	–			–
Loss on extinguishment of debt		1,183		–			–				1,183
		480,324			144,837			4,421			629,582
(Loss)/income from continuing operations before income taxes		(71,273	)		11,995			(4,421	)		(63,699	)
(Benefit)/provision for income taxes from continuing operations		(14,637	)		7,574		–				(7,063	)
(Loss)/income from continuing operations		(56,636	)		4,421			(4,421	)		(56,636	)
Gain from discontinued operations, net of tax		11		–			–				11
Net (loss)/income	$	(56,625	)	$	4,421		$	(4,421	)	$	(56,625	)
Other comprehensive income:
Pension liability reclassification, net of tax		955		–			–				955
Total comprehensive (loss)/income	$	(55,670	)	$	4,421		$	(4,421	)	$	(55,670	)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	216,215		$	82,382		–			$	298,597
Franchise revenue		41			1,439		–				1,480
		216,256			83,821		–				300,077
Operating costs and expenses:
Cost of merchandise		59,998			22,849		–				82,847
Payroll and related costs		71,486			29,245		–				100,731
Other restaurant operating costs		46,781			18,867		–				65,648
Depreciation		10,773			3,904		–				14,677
Selling, general, and administrative		24,971			13,570		–				38,541
Intercompany selling, general, and administrative allocations		16,442			(16,442	)	–			–
Closures and impairments		2,137			(246	)	–				1,891
Equity in earnings of subsidiaries		(9,434	)	–				9,434		–
Interest expense, net		5,342			1,423		–				6,765
Intercompany interest expense/(income)		3,434			(3,434	)	–			–
Gain on extinguishment of debt		(155	)	–			–				(155	)
		231,775			69,736			9,434			310,945
(Loss)/income from continuing operations before income taxes		(15,519	)		14,085			(9,434	)		(10,868	)
(Benefit)/provision for income taxes from continuing operations		(11,315	)		4,651		–				(6,664	)
(Loss)/income from continuing operations		(4,204	)		9,434			(9,434	)		(4,204	)
Loss from discontinued operations, net of tax		(10,864	)		(580	)		580			(10,864	)
Net (loss)/income	$	(15,068	)	$	8,854		$	(8,854	)	$	(15,068	)
Other comprehensive income:
Pension liability reclassification, net of tax		380		–			–				380
Total comprehensive (loss)/income	$	(14,688	)	$	8,854		$	(8,854	)	$	(14,688	)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	454,187		$	170,677		–			$	624,864
Franchise revenue		133			3,003		–				3,136
		454,320			173,680		–				628,000
Operating costs and expenses:
Cost of merchandise		124,200			46,510		–				170,710
Payroll and related costs		147,679			60,244		–				207,923
Other restaurant operating costs		93,601			37,901		–				131,502
Depreciation		21,872			7,816		–				29,688
Selling, general, and administrative		53,992			27,556		–				81,548
Intercompany selling, general, and administrative allocations		34,484			(34,484	)	–			–
Closures and impairments		2,974			4		–				2,978
Equity in earnings of subsidiaries		(21,466	)	–				21,466		–
Interest expense, net		10,641			2,914		–				13,555
Intercompany interest expense/(income)		6,822			(6,822	)	–			–
Gain on extinguishment of debt		(155	)	–			–				(155	)
		474,644			141,639			21,466			637,749
(Loss)/income from continuing operations before income taxes		(20,324	)		32,041			(21,466	)		(9,749	)
(Benefit)/provision for income taxes from continuing operations		(19,194	)		10,575		–				(8,619	)
(Loss)/income from continuing operations		(1,130	)		21,466			(21,466	)		(1,130	)
Loss from discontinued operations, net of tax		(11,339	)		(652	)		652			(11,339	)
Net (loss)/income	$	(12,469	)	$	20,814		$	(20,814	)	$	(12,469	)
Other comprehensive income:
Pension liability reclassification, net of tax		761		–			–				761
Total comprehensive (loss)/income	$	(11,708	)	$	20,814		$	(20,814	)	$	(11,708	)

Condensed Cash Flow Statement [Table Text Block]

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(22,630	)	$	36,648		$	(13,590	)	$	428
Investing activities:
Purchases of property and equipment		(12,902	)		(4,795	)	–				(17,697	)
Proceeds from sale-leaseback transactions, net		5,637		–			–				5,637
Proceeds from disposal of assets		7,434			1,023		–				8,457
Other, net		187		–			–				187
Net cash provided/(used) by investing activities		356			(3,772	)	–				(3,416	)
Financing activities:
Principal payments on long-term debt		(12,968	)		(12,838	)	–				(25,806	)
Stock repurchases		(540	)	–			–				(540	)
Payments for debt issuance costs		(1,718	)	–			–				(1,718	)
Proceeds from exercise of stock options		1,480		–			–				1,480
Excess tax benefits from share-based compensation		283		–			–				283
Intercompany transactions		6,415			(20,005	)		13,590		–
Net cash used by financing activities		(7,048	)		(32,843	)		13,590			(26,301	)
(Decrease)/increase in cash and cash equivalents		(29,322	)		33		–				(29,289	)
Cash and cash equivalents:
Beginning of year		52,635			272		–				52,907
End of quarter	$	23,313		$	305		–			$	23,618

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(15,104	)	$	27,846		$	(12,133	)	$	609
Investing activities:
Purchases of property and equipment		(14,936	)		(3,569	)	–				(18,505	)
Proceeds from sale-leaseback transactions, net		30,408		–			–				30,408
Proceeds from disposal of assets		885			1,200		–				2,085
Other, net		126		–			–				126
Net cash provided/(used) by investing activities		16,483			(2,369	)	–				14,114
Financing activities:
Principal payments on long-term debt		(10,981	)		(6,504	)	–				(17,485	)
Stock repurchases		(20,012	)	–			–				(20,012	)
Proceeds from exercise of stock options		173		–			–				173
Excess tax benefits from share-based compensation		11		–			–				11
Intercompany transactions		6,823			(18,956	)		12,133		–
Net cash used by financing activities		(23,986	)		(25,460	)		12,133			(37,313	)
(Decrease)/increase in cash and cash equivalents		(22,607	)		17		–				(22,590	)
Cash and cash equivalents:
Beginning of year		47,986			198		–				48,184
End of quarter	$	25,379		$	215		–			$	25,594

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Note O - Fair Value Measurements (Details) - Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Note O - Fair Value Measurements (Details) - Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis [Line Items]
Deferred compensation plan: RTI common stock – Equity	$ 638	$ 1,094
Deferred compensation plan: RTI common stock – Equity	(638)	(1,094)
Deferred Compensation Plan [Member]
Note O - Fair Value Measurements (Details) - Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis [Line Items]
Deferred compensation plan: other investments – Assets	9,274	8,721
Deferred compensation plan: other investments – Liabilities	$ (9,274)	$ (8,721)

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Note Q - Recently Issued Accounting Pronouncements

6 Months Ended

Dec. 03, 2013

Disclosure Text Block [Abstract]

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

NOTE Q – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Not Yet Adopted

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). The guidance requires an entity to present its unrecognized tax benefits net of its deferred tax assets when settlement in this manner is available under the tax law, which would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events. Gross presentation in the notes to the financial statements will still be required. ASU 2013-11 will apply on a prospective basis to all unrecognized tax benefits that exist at the effective date, with the option to apply it retrospectively. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (our fiscal 2015 first quarter). While the adoption of ASU 2013-11 will not have an impact on our results of operations or cash flows, we are currently evaluating the impact of presenting unrecognized tax benefits net of our deferred tax assets where applicable on our Condensed Consolidated Balance Sheets.

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Note A - Basis of Presentation (Details) (Other Reclassifications and Corrections [Member], USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Dec. 04, 2012	Dec. 04, 2012
Other Reclassifications and Corrections [Member]
Note A - Basis of Presentation (Details) [Line Items]
Prior Period Reclassification Adjustment	$ 0.4	$ 0.4

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Accounting Policies, by Policy (Policies)

6 Months Ended

Dec. 03, 2013

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Pronouncements Not Yet Adopted

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). The guidance requires an entity to present its unrecognized tax benefits net of its deferred tax assets when settlement in this manner is available under the tax law, which would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events. Gross presentation in the notes to the financial statements will still be required. ASU 2013-11 will apply on a prospective basis to all unrecognized tax benefits that exist at the effective date, with the option to apply it retrospectively. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (our fiscal 2015 first quarter). While the adoption of ASU 2013-11 will not have an impact on our results of operations or cash flows, we are currently evaluating the impact of presenting unrecognized tax benefits net of our deferred tax assets where applicable on our Condensed Consolidated Balance Sheets.

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Note O - Fair Value Measurements (Details) - Carrying Amounts and Fair Values of Other Financial Instruments Not Measured on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Carrying Amounts and Fair Values of Other Financial Instruments Not Measured on a Recurring Basis [Abstract]
Long-term debt and capital leases	$ 273,142	$ 299,002
Long-term debt and capital leases	263,497	310,441
Letters of credit	$ 405	$ 270

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Note B - Loss per Share and Stock Repurchases

6 Months Ended

Dec. 03, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE B – LOSS PER SHARE AND STOCK REPURCHASES

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during each period presented. Diluted loss 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 Operations and Comprehensive Loss (in thousands, except per-share data):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Loss from continuing operations	$	(34,737	)	$	(4,204	)	$	(56,636	)	$	(1,130	)
Gain/(loss) from discontinued operations, net of tax		354			(10,864	)		11			(11,339	)
Net loss	$	(34,383	)	$	(15,068	)	$	(56,625	)	$	(12,469	)
Weighted-average common shares outstanding		60,196			62,005			60,111			62,409
Dilutive effect of stock options and restricted stock	–			–			–			–
Weighted average common and dilutive potential common shares outstanding		60,196			62,005			60,111			62,409
Loss per share – Basic
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)
Loss per share – Diluted
Loss from continuing operations	$	(0.58	)	$	(0.07	)	$	(0.94	)	$	(0.02	)
Gain/(loss) from discontinued operations		0.01			(0.17	)		0.00			(0.18	)
Net loss per share	$	(0.57	)	$	(0.24	)	$	(0.94	)	$	(0.20	)

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 loss 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 loss per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	December 3, 2013		December 4, 2012		December 3, 2013		December 4, 2012
Stock options*		2,839		3,371		2,977		3,002
Restricted shares*		1,074		1,647		1,160		1,376
Total		3,913		5,018		4,137		4,378

* Due to a net loss for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012, all then outstanding share-based awards were excluded from the computation of diluted loss per share.

During the first 26 weeks of fiscal 2014, we repurchased 0.1 million shares of our common stock at a cost of $0.5 million. As of December 3, 2013, the total number of remaining shares authorized by our Board of Directors to be repurchased was 11.8 million. All shares repurchased during the 26 week period were cancelled as of December 3, 2013.

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, authorized	100,000	100,000
Common stock, issued	61,415	61,248

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Note L - Share-Based Employee Compensation

6 Months Ended

Dec. 03, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

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 Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan

A committee, appointed by the Board of Directors, administers the Ruby Tuesday, Inc. Stock Incentive Plan (“SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees, officers, and non-employee directors to whom share-based incentives are granted and the terms and provisions of share-based incentives. Option grants under the SIP and 1996 SIP can have varying vesting provisions and exercise periods as determined by such committee. A majority of currently outstanding options granted under the SIP and 1996 SIP vest within three years following the date of grant and expire seven years after the date of grant. The 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 SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At December 3, 2013, we had reserved a total of 4,857,000 and 170,000 shares of common stock for the SIP and 1996 SIP, respectively. Of the reserved shares at December 3, 2013, 1,984,000 and 102,000 were subject to options outstanding for the 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 December 3, 2013 under the SIP and 1996 SIP were 2,873,000 and 68,000, respectively. As discussed below, during the second quarter of fiscal 2014 our shareholders approved an amendment to the SIP allowing non-employee directors to participate in the SIP. 

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. On October 9, 2013, our shareholders approved an amendment to the SIP allowing non-employee directors to participate in the SIP instead of requiring that such awards be made from the Directors’ Plan. The amendment did not increase the number of shares of common stock available for issuance under the SIP. At December 3, 2013, there were no reserved shares or shares of common stock available for issuance under the Directors’ Plan. All future share-based compensation granted to non-employee directors will be awarded from shares of common stock available for issuance under the SIP.     

Stock Options

The following table summarizes our stock option activity for the 26 weeks ended December 3, 2013 under these stock option plans (in thousands, except per-share data):

	Stock Options			Weighted Average Exercise Price
Service-based vesting:
Balance at June 4, 2013		1,911		$	8.27
Granted		601			9.34
Exercised		(229	)		6.45
Forfeited		(179	)		9.39
Balance at December 3, 2013		2,104		$	8.68
Exercisable		1,237		$	8.63
Market-based vesting:
Balance at June 4, 2013		250		$	7.81
Granted		570			9.34
Forfeited		(85	)		9.34
Balance at December 3, 2013		735		$	8.82
Exercisable		–			–

At December 3, 2013, there was approximately $3.9 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 1.7 years.

During the first quarter of fiscal 2014, we granted 601,000 service-based stock options to certain employees under the terms of the SIP. The stock options awarded vest in equal annual installments over a three-year period following grant of the award, and have a maximum life of seven years.

Also during the first quarter of fiscal 2014, we granted 570,000 market-based stock options to certain employees under the terms of the SIP. The stock options vest if a share of our common stock appreciates to $14 per share or more for a period of 20 consecutive trading days on or before December 3, 2015. The stock options have a maximum life of seven years.

Restricted Stock

The following table summarizes our restricted stock activity for the 26 weeks ended December 3, 2013 (in thousands, except per-share data):

	Restricted Stock			Weighted-Average Grant-Date Fair Value
Performance-based vesting:
Non-vested at June 4, 2013		356		$	7.06
Granted		–			–
Vested		(18	)		7.87
Forfeited		(270	)		6.81
Non-vested at December 3, 2013		68		$	7.81

	Restricted Stock			Weighted-Average Grant-Date Fair Value
Service-based vesting:
Non-vested at June 4, 2013		1,136		$	7.92
Granted		405			8.97
Vested		(395	)		8.12
Forfeited		(140	)		8.76
Non-vested at December 3, 2013		1,006		$	8.15

The fair values of the restricted share awards reflected above were based on the fair market value of our common stock on the grant date. At December 3, 2013, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $5.8 million and will be recognized over a weighted average vesting period of approximately 1.6 years.

During the second quarter of fiscal 2014, RTI granted approximately 60,000 restricted shares to non-employee directors under the terms of the Stock Incentive Plan and Directors’ Plan.  These shares cliff vest over a one year period following grant of the award.

During the first quarter of fiscal 2014, we granted 344,000 shares of service-based restricted stock to certain employees under the terms of the SIP and 1996 SIP, 186,000 of which will cliff vest 2.5 years following the grant date and 158,000 of which will vest in three equal installments over a three-year period following the date of grant.

Also during the first quarter of fiscal 2014, the Executive Compensation Committee of the Board of Directors determined that the performance condition was not achieved for 269,000 shares of performance-based restricted stock granted in fiscal 2013. As a result, 235,000 shares of restricted stock were cancelled and returned to the pool of shares available for grant under the SIP and 1996 SIP and 34,000 shares of restricted stock awarded to our President and Chief Executive Officer were cancelled and retired.

As discussed further in Note J to the Condensed Consolidated Financial Statements, our Executive Vice President, Chief Operations Officer, Senior Vice President, Chief People Officer, and other management personnel separated employment with the Company during the first two quarters of fiscal 2014. Several of these individuals held share-based compensation awards at the times of their separations, and these awards were either vested or forfeited in accordance with the terms of the original awards.

Included within share-based compensation expense for the 13- and 26-week periods ended December 3, 2013 are charges of $0.3 million, representing the incremental costs resulting from accelerated vesting, net of forfeitures.

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Document And Entity Information	6 Months Ended
	Dec. 03, 2013	Jan. 07, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	RUBY TUESDAY INC
Document Type	10-Q
Current Fiscal Year End Date	--06-03
Entity Common Stock, Shares Outstanding		61,425,092
Amendment Flag	false
Entity Central Index Key	0000068270
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 03, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note M - Segment Reporting

6 Months Ended

Dec. 03, 2013

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE M – SEGMENT REPORTING

Our President and Chief Executive Officer, who is our chief operating decision maker, with the assistance of our senior management, reviews discrete financial information for both the Ruby Tuesday and Lime Fresh restaurant concepts to assess performance and allocate resources. We consider the Ruby Tuesday and Lime Fresh concepts to be our reportable segments as we do not believe they have similar economic and other characteristics to be aggregated into a single reportable segment. Financial results by reportable segment for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 are as follows (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Revenues:
Ruby Tuesday concept	$	270,741		$	296,097		$	554,763		$	619,924
Lime Fresh concept		5,468			3,980			11,120			8,076
Total revenues	$	276,209		$	300,077		$	565,883		$	628,000
Segment (loss)/profit:
Ruby Tuesday concept	$	870		$	17,026		$	10,721		$	46,573
Lime Fresh concept		(1,783	)		(2,032	)		(4,237	)		(2,351	)
Total segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Depreciation and amortization:
Ruby Tuesday concept	$	13,456		$	14,382		$	27,248		$	29,141
Lime Fresh concept		545			576			1,044			1,095
Support center and other		597			571			1,180			1,143
Total depreciation and amortization	$	14,598		$	15,529		$	29,472		$	31,379
Capital expenditures:
Ruby Tuesday concept							$	14,114		$	12,197
Lime Fresh concept								2,699			2,873
Support center and other								884			3,435
Total capital expenditures							$	17,697		$	18,505

Total assets by reportable segment as of December 3, 2013 and June 4, 2013 are as follows (in thousands):

	December 3, 2013		June 4, 2013
Total assets:
Ruby Tuesday concept	$	854,707	$	893,750
Lime Fresh concept		19,080		18,943
Support center and other		98,655		130,490
Total assets	$	972,442	$	1,043,183

The following is a reconciliation of segment profit to loss from continuing operations before taxes for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Segment (loss)/profit	$	(913	)	$	14,994		$	6,484		$	44,222
Less:
Depreciation and amortization		(14,598	)		(15,529	)		(29,472	)		(31,379	)
Unallocated general and administrative expenses		(13,760	)		(3,231	)		(25,657	)		(8,251	)
Preopening expenses		(41	)		(204	)		(395	)		(399	)
Interest expense, net		(6,620	)		(6,765	)		(13,373	)		(13,555	)
Other expense, net		(715	)		(133	)		(1,286	)		(387	)
Loss from continuing operations before income taxes	$	(36,647	)	$	(10,868	)	$	(63,699	)	$	(9,749	)

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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012
Revenue:
Restaurant sales and operating revenue	$ 274,719	$ 298,597	$ 562,811	$ 624,864
Franchise revenue	1,490	1,480	3,072	3,136
	276,209	300,077	565,883	628,000
Operating costs and expenses:
Cost of merchandise	77,669	82,847	157,607	170,710
Payroll and related costs	97,517	100,731	200,250	207,923
Other restaurant operating costs	65,289	65,648	132,823	131,502
Depreciation	13,915	14,677	28,124	29,688
Selling, general and administrative, net	37,031	38,541	74,046	81,548
Closures and impairments, net	14,143	1,891	22,176	2,978
Interest expense, net	6,620	6,765	13,373	13,555
Loss/(gain) on extinguishment of debt	672	(155)	1,183	(155)
	312,856	310,945	629,582	637,749
Loss from continuing operations before income taxes	(36,647)	(10,868)	(63,699)	(9,749)
Benefit for income taxes from continuing operations	(1,910)	(6,664)	(7,063)	(8,619)
Loss from continuing operations	(34,737)	(4,204)	(56,636)	(1,130)
Gain/(loss) from discontinued operations, net of tax	354	(10,864)	11	(11,339)
Net loss	(34,383)	(15,068)	(56,625)	(12,469)
Other comprehensive income:
Pension liability reclassification, net of tax	477	380	955	761
Total comprehensive loss	$ (33,906)	$ (14,688)	$ (55,670)	$ (11,708)
Basic loss per share:
Loss from continuing operations (in Dollars per share)	$ (0.58)	$ (0.07)	$ (0.94)	$ (0.02)
Gain/(loss) from discontinued operations (in Dollars per share)	$ 0.01	$ (0.17)	$ 0.00	$ (0.18)
Net loss per share (in Dollars per share)	$ (0.57)	$ (0.24)	$ (0.94)	$ (0.20)
Diluted loss per share:
Loss from continuing operations (in Dollars per share)	$ (0.58)	$ (0.07)	$ (0.94)	$ (0.02)
Gain/(loss) from discontinued operations (in Dollars per share)	$ 0.01	$ (0.17)	$ 0.00	$ (0.18)
Net loss per share (in Dollars per share)	$ (0.57)	$ (0.24)	$ (0.94)	$ (0.20)
Weighted average shares:
Basic (in Shares)	60,196	62,005	60,111	62,409
Diluted (in Shares)	60,196	62,005	60,111	62,409

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Note G - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions

6 Months Ended

Dec. 03, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

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):

	December 3, 2013		June 4, 2013
Land	$	218,759	$	222,385
Buildings		439,591		448,681
Improvements		377,432		402,371
Restaurant equipment		253,559		260,576
Other equipment		85,798		91,351
Construction in progress and other*		18,977		23,080
		1,394,116		1,448,444
Less accumulated depreciation		569,956		588,614
	$	824,160	$	859,830

* Included in Construction in progress and other as of December 3, 2013 and June 4, 2013 are $13.5 million and $14.8 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 December 3, 2013 and June 4, 2013 are amounts classified as held for sale totaling $4.4 million and $9.2 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. During the 13 and 26 weeks ended December 3, 2013, we sold surplus properties with carrying values of $5.6 million and $8.2 million, respectively, at net gains of $0.3 million and $0.2 million, respectively. Cash proceeds, net of broker fees, from these sales during the 13 and 26 weeks ended December 3, 2013 totaled $5.8 million and $8.4 million, respectively. During the 13 and 26 weeks ended December 4, 2012, we sold surplus properties with carrying values of $1.6 million at net gains of $0.5 million for both periods. Cash proceeds, net of broker fees, from these sales during the 13 and 26 weeks ended December 4, 2012 totaled $2.1 million for both periods.

Approximately 56% of our 724 restaurants are located on leased properties. Of these, approximately 66% are land leases only; the other 34% are for both land and building. The initial terms of these leases expire at various dates over the next 23 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 26 weeks ended December 3, 2013, we completed sale-leaseback transactions of the land and building for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $5.9 million, exclusive of transaction costs of approximately $0.3 million. Equipment was not included. The carrying value of the properties sold was $4.8 million. None of these sale-leaseback transactions occurred during the 13 weeks ended December 3, 2013. During the 13 and 26 weeks ended December 4, 2012, we completed sale-leaseback transactions of the land and building for five and 14 Company-owned Ruby Tuesday concept restaurants, respectively, for gross cash proceeds of $11.7 million and $32.0 million, respectively, exclusive of transaction costs of approximately $0.6 million and $1.6 million, respectively. Equipment was not included. The carrying value of the properties sold was $8.4 million and $22.7 million, respectively. The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years following a rent reset based on fair market value at the end of the initial term. Net proceeds from fiscal 2013 and 2014’s sale-leaseback transactions have been used for general corporate purposes, including debt payments and the repurchase of shares of our common stock.

We realized gains on these transactions during the 26 weeks ended December 3, 2013 and December 4, 2012 of $0.8 million and $7.7 million, respectively, and during the 13 weeks ended December 4, 2012 of $2.7 million, which have been deferred and are being recognized on a straight-line basis over the lease term. The current portion of the deferred gains on all sale-leaseback transactions to date was $1.1 million and $1.0 million as of December 3, 2013 and June 4, 2013, 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 $13.5 million and $13.2 million as of December 3, 2013 and June 4, 2013, respectively, and is included in Other deferred liabilities in our Condensed Consolidated Balance Sheets. Amortization of the deferred gains of $0.3 million and $0.5 million for the 13 and 26 weeks ended December 3, 2013, respectively, and $0.2 million and $0.3 million for the 13 and 26 weeks ended December 4, 2012, respectively, is included within Other restaurant operating costs in our Condensed Consolidated Statement of Operations and Comprehensive Loss.

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Note F - Inventories

6 Months Ended

Dec. 03, 2013

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE F – INVENTORIES

Our merchandise inventory was $18.2 million and $21.8 million as of December 3, 2013 and June 4, 2013, respectively. In order to ensure adequate supply and competitive pricing, we have historically purchased lobster in advance of our needs and stored it in third-party facilities prior to our distributor taking possession of the inventory. The decrease in merchandise inventory from the end of the prior fiscal year is due primarily to a reduction in lobster inventory as we have suspended the advance purchasing of lobster to utilize the lobster that is currently on hand.

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Note R - Subsequent Events

6 Months Ended

Dec. 03, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE R – SUBSEQUENT EVENTS

Restaurant Closings

As also discussed in Note I to the Condensed Consolidated Financial Statements, on January 7, 2014, the Board of Directors of Ruby Tuesday, Inc. approved a plan to close approximately 27 Ruby Tuesday concept restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter. Of the 30 restaurants, approximately half are planned to close upon expiration of their lease. As of the date of this filing, we have closed 25 of the 30 planned restaurants. For the remainder of fiscal 2014, we anticipate incurring charges of approximately $2.0 million associated with lease termination and other closing costs.    

Corporate Support Services Restructuring

On December 11, 2013, we eliminated 17 additional support center management and staff personnel at our Restaurant Support Services Center in Maryville, Tennessee. These reductions will result in third quarter fiscal 2014 transition-related costs of $0.3 million for employee severance and unused vacation.

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Note N - Commitments and Contingencies

6 Months Ended

Dec. 03, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE N – 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 matters referred to below, will not have a material adverse effect on our operations, financial position, or cash flows.

On April 17, 2012, a wage and hour case styled Guttentag, et al vs. Ruby Tuesday, Inc. was filed in the United States District Court, Southern District of New York.  The named plaintiffs, and five additional former employees who have joined the suit as opt-in plaintiffs, allege that the Company violated the Fair Labor Standards Act and state wage and hour laws in New York and Florida.  Plaintiffs filed their motion for conditional certification on March 8, 2013, which sought a nationwide putative class of all current and former servers, bartenders, and food runners who worked for the Company between April 17, 2009 and the present.   On June 11, 2013 the court entered an order granting conditional certification of the nationwide class requested by plaintiffs.  Mediation was conducted in early September 2013, but the effort was unsuccessful. We continue to explore a possible agreed resolution. The court has made no findings as to the merits or lack of merits of the plaintiffs’ claims and we are vigorously defending this matter. Notice of the lawsuit and the right to opt-in was mailed to the putative class members in November 2013, and at present approximately 4.5% of the putative class have filed consents to opt-in. 

On September 30, 2009, an age discrimination case styled Equal Employment Opportunity Commission (Pittsburgh) v. Ruby Tuesday, Inc. (the “EEOC Lawsuit”), was filed in the United States District Court for the Western District of Pennsylvania (the “Court”). The U.S. Equal Employment Opportunity Commission (“EEOC”) Pittsburgh Area Office alleged in the suit that the Company violated 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 December 9, 2013, the Court approved a consent decree entered into between the EEOC and the Company in Civil Action No. 09-1330. Without any admission of liability, the Company agreed to make five equal monthly payments totaling $575,000 into a qualified settlement account that individuals aged 40 or older who applied for a position at one of the six restaurants from January 1, 2005 through the date of the decree may apply to receive. The Company also agreed to make efforts to recruit and hire more individuals aged 40 or older at the three restaurants involved in the litigation that are currently open. Civil Action 09-1330 is closed, subject to the Court’s continuing jurisdiction over the consent decree. Not closed, but inactive (as far as we are aware), is the EEOC’s 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 other restaurants in the United States. On April 30, 2013, the Court entered an order terminating a miscellaneous action filed by the EEOC in furtherance of the DI. We do not believe that the DI 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 December 3, 2013 and June 4, 2013 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.  On January 10, 2014, a voluntary dismissal without prejudice of this case was entered.

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Note J - Employee Post-Employment Benefits

6 Months Ended

Dec. 03, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

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 $0.3 million to the Retirement Plan during the remainder of fiscal 2014.

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.

To provide a source for the payment of benefits under our non-qualified pension plans, we own whole-life insurance contracts on certain employees. These policies are maintained in a rabbi trust. During the second quarter of fiscal 2014, we sold certain of these policies, the proceeds from which we expect to reinvest in new policies during the third quarter of fiscal 2014. As a result of the sale of these policies, we classified the $8.8 million restricted cash as Other assets in the noncurrent section of our December 3, 2013 Condensed Consolidated Balance Sheet.

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						Twenty-six weeks ended
	December 3,			December 4,			December 3,			December 4,
	2013			2012			2013			2012
Service cost	$	89		$	115		$	178		$	230
Interest cost		434			525			868			1,050
Expected return on plan assets		(111	)		(102	)		(222	)		(204	)
Amortization of prior service cost (a)	–				26		–				52
Recognized actuarial loss		428			565			856			1,130
Net periodic benefit cost	$	840		$	1,129		$	1,680		$	2,258

	Postretirement Medical and Life Benefits
	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013			December 4, 2012
Service cost	$	3		$	3		$	6		$	6
Interest cost		17			15			34			30
Amortization of prior service cost (a)		(11	)		(14	)		(22	)		(28	)
Recognized actuarial loss		61			53			122			106
Net periodic benefit cost	$	70		$	57		$	140		$	114

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

During the 13 and 26 weeks ended December 3, 2013, we reclassified $0.5 million and $1.0 million, respectively, of amortized prior service costs and recognized actuarial losses out of accumulated other comprehensive loss and into pension expense, which is included in Selling, general and administrative, net within our Condensed Consolidated Statements of Operations.

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 4, 2013.

Executive Separations and Corporate Support Services Restructuring

On June 7, 2013, our then Executive Vice President, Chief Operations Officer separated employment with the Company. During the first quarter of fiscal 2014, we recorded severance expense of $0.9 million in connection with the separation agreement for the former executive, which represents obligations pursuant to the Ruby Tuesday, Inc. Severance Pay Plan (the “Severance Plan”) of two times base salary. Of this amount, $0.5 million was paid to the former executive during the 13 weeks ended September 3, 2013, and the remaining $0.4 million was paid subsequent to December 3, 2013 in accordance with the Severance Plan.

On October 7, 2013, the Company terminated the Severance Plan.

On October 30, 2013, our then Senior Vice President, Chief People Officer separated employment with the Company. During the second quarter of fiscal 2014, we recorded severance expense of $0.4 million in connection with his separation agreement, an amount representing one year of his annual base salary plus his remaining vacation for fiscal 2014. Of this amount, an insignificant portion was paid during the quarter and the remaining amounts will be paid over three future installments.

On November 20, 2013, we eliminated approximately 50 support center management and staff personnel at our Restaurant Support Services Center in Maryville, Tennessee. These reductions occurred in connection with an ongoing comprehensive review of our cost structure. These employee separations resulted in second quarter fiscal 2014 transition-related costs of $2.0 million for employee severance and unused vacation.

As of December 3, 2013, a liability of $2.4 million representing unpaid obligations in connection with the restructuring was included within Accrued liabilities: Payroll and related costs in our Condensed Consolidated Balance Sheet. A roll forward of our obligations in connection with employee separations is as follows (in thousands):

Balance at June 4, 2013	$	310
Employee severance and unused vacation accruals		3,212
Cash payments		(1,139	)
Balance at December 3, 2013	$	2,383

See Notes L and R to the Condensed Consolidated Financial Statements for discussion of the impact of executive separations to our share-based employee compensation costs and further staff reductions subsequent to quarter end, respectively.

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Note M - Segment Reporting (Details) - Financial Results by Reportable Segment (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012
Revenues:
Revenues	$ 276,209	$ 300,077	$ 565,883	$ 628,000
Segment (loss)/profit:
Segment profit	(913)	14,994	6,484	44,222
Depreciation and amortization:
Depreciation and amoritzation	14,598	15,529	29,472	31,379
Capital expenditures:
Capital expenditures			17,697	18,505
Ruby Tuesday [Member]
Revenues:
Revenues	270,741	296,097	554,763	619,924
Segment (loss)/profit:
Segment profit	870	17,026	10,721	46,573
Depreciation and amortization:
Depreciation and amoritzation	13,456	14,382	27,248	29,141
Capital expenditures:
Capital expenditures			14,114	12,197
Lime Fresh [Member]
Revenues:
Revenues	5,468	3,980	11,120	8,076
Segment (loss)/profit:
Segment profit	(1,783)	(2,032)	(4,237)	(2,351)
Depreciation and amortization:
Depreciation and amoritzation	545	576	1,044	1,095
Capital expenditures:
Capital expenditures			2,699	2,873
Support Center and Other [Member]
Depreciation and amortization:
Depreciation and amoritzation	597	571	1,180	1,143
Capital expenditures:
Capital expenditures			$ 884	$ 3,435

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Note H - Long-Term Debt and Capital Leases

6 Months Ended

Dec. 03, 2013

Disclosure Text Block Supplement [Abstract]

Debt and Capital Leases Disclosures [Text Block]

NOTE H – LONG-TERM DEBT AND CAPITAL LEASES

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

	December 3, 2013			June 4, 2013
Senior unsecured notes	$	222,113		$	235,000
Unamortized discount		(2,753	)		(3,083	)
Senior unsecured notes less unamortized discount		219,360			231,917
Revolving credit facility	–			–
Mortgage loan obligations		53,601			66,883
Capital lease obligations		181			202
		273,142			299,002
Less current maturities		9,838			8,487
	$	263,304		$	290,515

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 to holders of record on the May 1 or November 1 immediately preceding the interest payment date. Accrued interest on the Senior Notes and our other long-term debt and capital lease obligations is included in Accrued liabilities – Rent and other in our Consolidated Balance Sheets. 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.

Under the terms of our December 2013 four-year revolving credit agreement (the “Senior Credit Facility” discussed below) we are allowed, under certain circumstances, to repurchase up to $20.0 million of the Senior Notes in any fiscal year. During the 26 weeks ended December 3, 2013, we repurchased $12.9 million of the Senior Notes for $13.0 million plus $0.2 million of accrued interest. We realized losses of $0.5 million on these transactions. The balance on the Senior Notes was $222.1 million at December 3, 2013 as a result of these repurchases.

On December 3, 2013, we entered into the Senior Credit Facility under which we may borrow up to $50.0 million with the option, subject to certain conditions, to increase the facility by up to $35.0 million. The Senior Credit Facility, which was obtained to provide capital for general corporate purposes, replaced a previous five-year $200.0 million credit facility that was set to expire in December 2015. The terms of the Senior Credit Facility provide for a $25.0 million sublimit for the issuance of standby letters of credit. In connection with entering into the Senior Credit Facility, included within Interest expense, net and Loss/(gain) on extinguishment of debt in our Condensed Consolidated Statements of Operations for the 13 and 26 weeks ended December 3, 2013 are charges of $0.2 million and $0.7 million, respectively, relating to the write-off of the pro rata portion of unamortized debt issuance costs associated with our previous credit facility.

Under the Senior Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize. Our options for the rate are a Base Rate or LIBOR, plus an applicable margin. The Base Rate is defined as the highest of the issuing bank’s prime rate, the Federal Funds rate plus 0.50%, or the Adjusted LIBO rate (as defined in the Senior Credit Facility) plus 1.0%. The applicable margin for the LIBOR rate-based option is a percentage ranging from 2.50% to 3.50% and for the Base Rate option is a percentage ranging from 1.50% to 2.50%. We pay commitment fees quarterly ranging from 0.40% to 0.75% on the unused portion of the Senior Credit Facility.

As security for the Senior Credit Facility, we granted the lenders liens and security interests in substantially all of the shares of capital stock of the Company and each of our present and future subsidiaries and substantially all of the personal property of the Company and each of our present and future subsidiaries. Further, we are substantially complete in the process of finalizing a listing of approximately 50 Ruby Tuesday restaurants whose real property, improvements and fixtures would provide additional collateral with a fair market value of approximately $100.0 million as of December 3, 2013. While the Company has no plans to borrow on the Senior Credit Facility prior to finalization of the collateral, there can be no assurance that the full amount of $50.0 million would be available until we are able to do so. 

Under the terms of the Senior Credit Facility, we had no borrowings outstanding at December 3, 2013. After consideration of letters of credit outstanding, we had $37.6 million available under the Senior Credit Facility as of December 3, 2013.

The Senior Credit Facility contains a number of customary affirmative and negative covenants that, among other things, 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 Senior 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. The terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.50 to 1.0 and a minimum fixed charge coverage ratio of 1.50 to 1.0 for the quarter ended December 3, 2013. For the remainder of fiscal 2014, the terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.75 to 1.0 and 5.00 to 1.0 for the quarters ending March 4, 2014 and June 3, 2014, respectively, and a minimum fixed charge coverage ratio of 1.40 to 1.0 and 1.30 to 1.0 for the quarters ending March 4, 2014 and June 3, 2014, respectively. The minimum required ratios fluctuate thereafter as provided in Article VII of the Senior Credit Facility.

The Senior Credit Facility terminates not later than December 3, 2017.  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 Senior Credit Facility and any ancillary loan documents.

On December 3, 2013, in connection with our entry into the Senior Credit Facility, the Company and certain of its subsidiaries entered into loan modification agreements (the “Loan Modification Agreements”) with certain mortgage lenders to, among other things, provide waivers and consents under certain of our mortgage loan obligations to enter into the Senior Credit Facility. The Loan Modification Agreements also, among other things, amend certain financial reporting requirements under the specified loans and modify and/or provide for certain financial covenants for the specified loans, including the minimum consolidated fixed charge coverage ratio and the minimum adjusted total debt to EBITDAR ratio. In conjunction with one of the loan modification agreements, on January 2, 2014, we paid approximately $5.0 million to retire a specified portion of certain mortgage loan obligations.

Our $53.6 million in mortgage loan obligations as of December 3, 2013 consists of various loans acquired upon franchise acquisitions. These loans, which mature between February 2014 and November 2022, have balances which range from $0.1 million to $7.8 million and interest rates of 7.60% to 10.92%. Many of the properties acquired from franchisees collateralize the loans outstanding.

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Note I - Closures and Impairments Expense

6 Months Ended

Dec. 03, 2013

Disclosure Text Block Supplement [Abstract]

Asset Impairment Charges [Text Block]

NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairments, net include the following for the 13 and 26 weeks ended December 3, 2013 and December 4, 2012 (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	December 3, 2013			December 4, 2012			December 3, 2013		December 4, 2012
Closures and impairments from continuing operations:
Property impairments	$	12,318		$	2,212		$	17,248	$	2,660
Closed restaurant lease reserves		1,702			(99	)		4,297		375
Other closing costs		110			285			578		541
Loss/(gain) on sale of surplus properties		13			(507	)		53		(598	)
Closures and impairments, net	$	14,143		$	1,891		$	22,176	$	2,978
Closures and impairments from discontinued operations	$	(453	)	$	16,360		$	65	$	16,397

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

	Lease Obligations
	Continuing Operations			Discontinued Concepts			Total
Balance at June 4, 2013	$	6,417		$	2,310		$	8,727
Closing expense including rent and other lease charges		4,297			(92	)		4,205
Payments		(2,503	)		(821	)		(3,324	)
Other adjustments		42		–				42
Balance at December 3, 2013	$	8,253		$	1,397		$	9,650

For the remainder of fiscal 2014 and beyond, our focus will be on obtaining settlements, or subleases as necessary, 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.

As also discussed in Note R to the Condensed Consolidated Financial Statements, on January 7, 2014, the Board of Directors of Ruby Tuesday, Inc. approved a plan to close approximately 27 Ruby Tuesday concept restaurants in the third quarter of fiscal 2014 and three more in the fourth quarter. Of the 30 restaurants, approximately half are planned to close upon expiration of their lease. Included within Closures and impairments, net for the 13 and 26 weeks ended December 3, 2013 are impairment charges of $4.4 million in connection with the planned closures.

In addition to the impairment charges recorded in connection with the planned closures discussed above, during the 13 weeks ended December 3, 2013 we recorded $5.7 million of impairments relating to nine open restaurants with deteriorating operational performance. At December 3, 2013, we had 58 restaurants that had been open more than one year with rolling 12-month negative cash flows of which 43 have been impaired to salvage value. Of the 15 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 15 restaurants, six of which are located on owned properties, was $13.7 million at December 3, 2013.

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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Note K - Income Taxes

6 Months Ended

Dec. 03, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE K – INCOME TAXES

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. Due to changes in our projections, which have fluctuated as we work through our brand repositioning, a reliable projection of our annual effective rate has been difficult to determine. As such, we recorded a tax benefit for the first two quarters of fiscal 2014 based on the actual year-to-date results, in accordance with ASC 740.

We recorded a tax benefit from continuing operations of $1.9 million and $7.1 million for the 13- and 26-week periods ended December 3, 2013, respectively, compared to $6.7 million and $8.6 million for the 13- and 26-week periods ended December 4, 2012, respectively, to reflect the current benefit of federal and certain state net operating loss carrybacks as well as the recognition of unrecognized tax benefits. The change in income taxes is attributable to increased pre-tax losses for the 13 and 26 weeks ending December 3, 2013 as compared to the same periods of the prior year, offset by an increase in the valuation allowance for deferred tax assets as discussed below.   

We regularly evaluate the need for a valuation allowance for deferred tax assets by assessing whether it is more likely than not that we will realize the deferred tax assets in the future.  A valuation allowance assessment is performed each reporting period, with any additions or adjustments reflected in earnings in the period of assessment.  In assessing the need for a valuation allowance, we have considered both positive and negative evidence related to the likelihood of realization of the deferred tax assets for each jurisdiction.

Through the third quarter of fiscal 2013, we had concluded that objective and subjective positive evidence outweighed negative evidence, and concluded it was more likely than not to realize all of our federal and most of our state deferred tax assets, except for loss carryforwards in certain states that have had cumulative losses due to our state tax planning strategies and/or relatively short carryforward periods and annual limits on how much loss carryforward can be used to offset future taxable income.   During the fourth quarter of fiscal 2013, we recorded a valuation allowance following the conclusion that the negative evidence outweighed the positive evidence. 

Our valuation allowance totaled $45.4 million and $24.6 million as of December 3, 2013 and June 4, 2013, respectively. Netted against our tax benefit from continuing operations for the 13- and 26-week periods ended December 3, 2013 were charges of $14.6 million and $21.9 million, respectively, representing the amount reserved for the increase in deferred tax assets during the periods which primarily related to general business credit carryforwards and state net operating loss carryforwards.

We had a liability for unrecognized tax benefits, exclusive of accrued interest and penalties, of $8.9 million and $13.0 million as of December 3, 2013 and June 4, 2013, respectively. As of December 3, 2013 and June 4, 2013, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $3.6 million and $3.5 million, respectively. The liability for unrecognized tax benefits as of December 3, 2013 includes $1.2 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 December 3, 2013 and June 4, 2013, we had accrued $1.0 million and $0.9 million, respectively, for the payment of interest and penalties. During the first 26 weeks of fiscal 2014, accrued interest and penalties increased $0.1 million, all of which affected the effective tax rate for the same time period.

At December 3, 2013, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2010, and with few exceptions, state and local examinations by tax authorities prior to fiscal year 2009. 

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Note O - Fair Value Measurements (Details) (Construction in Progress [Member], USD $) In Millions, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013
Construction in Progress [Member]
Note O - Fair Value Measurements (Details) [Line Items]
Assets Held for Sale, Property Plant and Equipment, Noncurrent	$ 13.5	$ 14.8

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Note O - Fair Value Measurements (Details) - Fair Values Financial Assets and Liabilities Measured on a Non-recurring Basis (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013		Jun. 04, 2013
Note O - Fair Value Measurements (Details) - Fair Values Financial Assets and Liabilities Measured on a Non-recurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 30,891		$ 29,808
Assets Held-for-sale [Member]
Note O - Fair Value Measurements (Details) - Fair Values Financial Assets and Liabilities Measured on a Non-recurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	17,942	[1]	24,006	[1]
Assets Held-for-Use [Member]
Note O - Fair Value Measurements (Details) - Fair Values Financial Assets and Liabilities Measured on a Non-recurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 12,949		$ 5,802

[1] Included in the carrying value of long-lived assets held for sale as of December 3, 2013 and June 4, 2013 are $13.5 million and $14.8 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.

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Note N - Commitments and Contingencies (Details) (USD $)		0 Months Ended
	Dec. 03, 2013	Dec. 09, 2013 Subsequent Event [Member] Equal Employement Opportunity (Pittsburgh) [Member]	Nov. 08, 2010 Dan Maddy v Ruby Tuesday [Member]	Dec. 03, 2012 Dan Maddy v Ruby Tuesday [Member]	Sep. 30, 2009 Pennslyvania [Member] Equal Employement Opportunity (Pittsburgh) [Member]	Sep. 30, 2009 Ohio [Member] Equal Employement Opportunity (Pittsburgh) [Member]
Note N - Commitments and Contingencies (Details) [Line Items]
Number of Restaurants	724				5	1
Litigation Settlement, Amount (in Dollars)		$ 575,000
Supplemental Information for Property, Casualty Insurance Underwriters, Current Year Claims and Claims Adjustment Expense (in Dollars)			$ 2,750,000
Loss Contingency, Pending Claims, Number				2

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Note O - Fair Value Measurements (Tables)

6 Months Ended

Dec. 03, 2013

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Level		December 3, 2013			June 4, 2013
Deferred compensation plan: other investments – Assets		1	$	9,274		$	8,721
Deferred compensation plan: other investments – Liabilities		1		(9,274	)		(8,721	)
Deferred compensation plan: RTI common stock – Equity		1		638			1,094
Deferred compensation plan: RTI common stock – Equity		1		(638	)		(1,094	)
Total			–			–

Fair Value Measurements, Nonrecurring [Table Text Block]

	Fair Value Measurements
	Level		December 3, 2013		June 4, 2013
Long-lived assets held for sale *		2	$	17,942	$	24,006
Long-lived assets held for use		2		12,949		5,802
Total			$	30,891	$	29,808

Schedule of Gains and Losses Recognized from Fair Value Measurements on Non-recurring Basis [Table Text Block]

	Thirteen weeks ended				Twenty-six weeks ended
	December 3, 2013		December 4, 2012		December 3, 2013		December 4, 2012
Included within continuing operations
Long-lived assets held for sale	$	315	$	354	$	584	$	511
Long-lived assets held for use		12,003		1,858		16,664		2,149
	$	12,318	$	2,212	$	17,248	$	2,660
Included within discontinued operations	$	–	$	16,302	$	153	$	16,302

Fair Value, by Balance Sheet Grouping [Table Text Block]

	December 3, 2013				June 4, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt and capital leases	$	273,142	$	263,497	$	299,002	$	310,441
Letters of credit	–			405	–			270

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Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012
Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses [Line Items]
Closures and impairment expenses	$ 14,143	$ 1,891	$ 22,176	$ 2,978
Loss/(gain) on sale of surplus properties	13	(507)	53	(598)
Closed restaurant lease reserves			4,205
Property [Member]
Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses [Line Items]
Closures and impairment expenses	12,318	2,212	17,248	2,660
Operating Lease Reserve [Member]
Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses [Line Items]
Closed restaurant lease reserves	1,702	(99)	4,297	375
Other Closing Expense [Member]
Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses [Line Items]
Closures and impairment expenses	110	285	578	541
Continuing Operations [Member]
Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses [Line Items]
Closures and impairment expenses	14,143	1,891	22,176	2,978
Closed restaurant lease reserves			4,297
Discontinued Operations [Member]
Note I - Closures and Impairments Expense (Details) - Closures and Impairments Expenses [Line Items]
Closures and impairment expenses	(453)	16,360	65	16,397
Closed restaurant lease reserves			$ (92)

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Note P - Supplemental Condensed Consolidating Financial Statements

6 Months Ended

Dec. 03, 2013

Disclosure Text Block Supplement [Abstract]

Condensed Financial Statements [Text Block]

NOTE P – SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

As discussed in Note H to the Consolidated Financial Statements, the Senior Notes are a liability of Ruby Tuesday, Inc. (the “Parent”) and are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions (the “Guarantors”). Each of the Guarantors is wholly-owned by Ruby Tuesday, Inc. None of the few remaining subsidiaries of Ruby Tuesday, Inc., which were primarily created to hold liquor license assets, guarantee the Senior Notes (the “Non-Guarantors”). Our Non-Guarantor subsidiaries are immaterial and are aggregated within the Parent information disclosed below.

The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(f) of Regulation S-X promulgated by the Securities and Exchange Commission, presents the condensed consolidating financial information separately for the Parent, the Guarantors, and elimination entries necessary to consolidate the Parent and Guarantors. Investments in wholly-owned subsidiaries are accounted for using the equity method for purposes of the consolidated presentation. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

Condensed Consolidating Balance Sheet

As of December 3, 2013

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	23,313		$	305	–			$	23,618
Accounts receivable		2,217			3,562	–				5,779
Inventories		19,477			7,938	–				27,415
Income tax receivable		130,721		–			(125,378	)		5,343
Deferred income taxes		1,377			3,202	–				4,579
Other current assets		15,237			3,488	–				18,725
Total current assets		192,342			18,495		(125,378	)		85,459
Property and equipment, net		611,147			213,013	–				824,160
Investment in subsidiaries		152,303		–			(152,303	)	–
Due from/(to) subsidiaries		90,802			236,998		(327,800	)	–
Other assets		48,465			14,358	–				62,823
Total assets	$	1,095,059		$	482,864	$	(605,481	)	$	972,442
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	20,934		$	4,330	–			$	25,264
Accrued and other current liabilities		47,703			35,225	–				82,928
Current maturities of long-term debt, including capital leases		(341	)		10,179	–				9,838
Income tax payable	–				125,378		(125,378	)	–
Total current liabilities		68,296			175,112		(125,378	)		118,030
Long-term debt and capital leases, less current maturities		219,882			43,422	–				263,304
Deferred income taxes		(4,192	)		6,970	–				2,778
Due to/(from) subsidiaries		236,998			90,802		(327,800	)	–
Other deferred liabilities		107,826			14,255	–				122,081
Total liabilities		628,810			330,561		(453,178	)		506,193
Shareholders’ equity:
Common stock		614		–		–				614
Capital in excess of par value		72,678		–		–				72,678
Retained earnings		402,947			152,303		(152,303	)		402,947
Accumulated other comprehensive loss		(9,990	)	–		–				(9,990	)
Total shareholders’ equity		466,249			152,303		(152,303	)		466,249
Total liabilities & shareholders’ equity	$	1,095,059		$	482,864	$	(605,481	)	$	972,442

Condensed Consolidating Balance Sheet

As of June 4, 2013

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	52,635		$	272	–			$	52,907
Accounts receivable		1,854			2,980	–				4,834
Inventories		21,961			8,911	–				30,872
Income tax receivable		118,329		–			(116,429	)		1,900
Deferred income taxes		5,372			1,924	–				7,296
Other current assets		19,519			3,836	–				23,355
Total current assets		219,670			17,923		(116,429	)		121,164
Property and equipment, net		635,478			224,352	–				859,830
Investment in subsidiaries		167,887		–			(167,887	)	–
Due from/(to) subsidiaries		76,485			230,583		(307,068	)	–
Other assets		46,812			15,377	–				62,189
Total assets	$	1,146,332		$	488,235	$	(591,384	)	$	1,043,183
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	11,725		$	3,239	–			$	14,964
Accrued and other current liabilities		47,775			34,406	–				82,181
Current maturities of long-term debt, including capital leases		(347	)		8,834					8,487
Income tax payable	–				116,429		(116,429	)	–
Total current liabilities		59,153			162,908		(116,429	)		105,632
Long-term debt and capital leases, less current maturities		232,462			58,053	–				290,515
Deferred income taxes		(1,070	)		6,823	–				5,753
Due to/(from) subsidiaries		230,583			76,485		(307,068	)	–
Other deferred liabilities		108,369			16,079	–				124,448
Total liabilities		629,497			320,348		(423,497	)		526,348
Shareholders’ equity:
Common stock		612		–		–				612
Capital in excess of par value		67,596		–		–				67,596
Retained earnings		459,572			167,887		(167,887	)		459,572
Accumulated other comprehensive loss		(10,945	)	–		–				(10,945	)
Total shareholders’ equity		516,835			167,887		(167,887	)		516,835
Total liabilities & shareholders’ equity	$	1,146,332		$	488,235	$	(591,384	)	$	1,043,183

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Thirteen Weeks Ended December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	198,850		$	75,869		–			$	274,719
Franchise revenue		98			1,392		–				1,490
		198,948			77,261		–				276,209
Operating costs and expenses:
Cost of merchandise		56,320			21,349		–				77,669
Payroll and related costs		69,365			28,152		–				97,517
Other restaurant operating costs		46,493			18,796		–				65,289
Depreciation		10,208			3,707		–				13,915
Selling, general, and administrative		25,724			11,307		–				37,031
Intercompany selling, general, and administrative allocations		14,008			(14,008	)	–			–
Closures and impairments		8,058			6,085		–				14,143
Equity in earnings of subsidiaries		104		–				(104	)	–
Interest expense, net		5,171			1,449		–				6,620
Intercompany interest expense/(income)		3,229			(3,229	)	–			–
Loss on extinguishment of debt		672		–			–				672
		239,352			73,608			(104	)		312,856
(Loss)/income from continuing operations before income taxes		(40,404	)		3,653			104			(36,647	)
(Benefit)/provision for income taxes from continuing operations		(5,667	)		3,757		–				(1,910	)
(Loss)/income from continuing operations		(34,737	)		(104	)		104			(34,737	)
Gain from discontinued operations, net of tax		354		–			–				354
Net (loss)/income	$	(34,383	)	$	(104	)	$	104		$	(34,383	)
Other comprehensive income:
Pension liability reclassification, net of tax		477		–			–				477
Total comprehensive (loss)/income	$	(33,906	)	$	(104	)	$	104		$	(33,906	)

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Twenty-Six Weeks Ended December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	408,932		$	153,879		–			$	562,811
Franchise revenue		119			2,953		–				3,072
		409,051			156,832		–				565,883
Operating costs and expenses:
Cost of merchandise		114,847			42,760		–				157,607
Payroll and related costs		142,891			57,359		–				200,250
Other restaurant operating costs		94,895			37,928		–				132,823
Depreciation		20,572			7,552		–				28,124
Selling, general, and administrative		51,718			22,328		–				74,046
Intercompany selling, general, and administrative allocations		28,771			(28,771	)	–			–
Closures and impairments		13,223			8,953		–				22,176
Equity in earnings of subsidiaries		(4,421	)	–				4,421		–
Interest expense, net		10,231			3,142		–				13,373
Intercompany interest expense/(income)		6,414			(6,414	)	–			–
Loss on extinguishment of debt		1,183		–			–				1,183
		480,324			144,837			4,421			629,582
(Loss)/income from continuing operations before income taxes		(71,273	)		11,995			(4,421	)		(63,699	)
(Benefit)/provision for income taxes from continuing operations		(14,637	)		7,574		–				(7,063	)
(Loss)/income from continuing operations		(56,636	)		4,421			(4,421	)		(56,636	)
Gain from discontinued operations, net of tax		11		–			–				11
Net (loss)/income	$	(56,625	)	$	4,421		$	(4,421	)	$	(56,625	)
Other comprehensive income:
Pension liability reclassification, net of tax		955		–			–				955
Total comprehensive (loss)/income	$	(55,670	)	$	4,421		$	(4,421	)	$	(55,670	)

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Thirteen Weeks Ended December 4, 2012

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	216,215		$	82,382		–			$	298,597
Franchise revenue		41			1,439		–				1,480
		216,256			83,821		–				300,077
Operating costs and expenses:
Cost of merchandise		59,998			22,849		–				82,847
Payroll and related costs		71,486			29,245		–				100,731
Other restaurant operating costs		46,781			18,867		–				65,648
Depreciation		10,773			3,904		–				14,677
Selling, general, and administrative		24,971			13,570		–				38,541
Intercompany selling, general, and administrative allocations		16,442			(16,442	)	–			–
Closures and impairments		2,137			(246	)	–				1,891
Equity in earnings of subsidiaries		(9,434	)	–				9,434		–
Interest expense, net		5,342			1,423		–				6,765
Intercompany interest expense/(income)		3,434			(3,434	)	–			–
Gain on extinguishment of debt		(155	)	–			–				(155	)
		231,775			69,736			9,434			310,945
(Loss)/income from continuing operations before income taxes		(15,519	)		14,085			(9,434	)		(10,868	)
(Benefit)/provision for income taxes from continuing operations		(11,315	)		4,651		–				(6,664	)
(Loss)/income from continuing operations		(4,204	)		9,434			(9,434	)		(4,204	)
Loss from discontinued operations, net of tax		(10,864	)		(580	)		580			(10,864	)
Net (loss)/income	$	(15,068	)	$	8,854		$	(8,854	)	$	(15,068	)
Other comprehensive income:
Pension liability reclassification, net of tax		380		–			–				380
Total comprehensive (loss)/income	$	(14,688	)	$	8,854		$	(8,854	)	$	(14,688	)

Condensed Consolidating Statement of Operations and

Comprehensive (Loss)/Income

For the Twenty-Six Weeks Ended December 4, 2012

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	454,187		$	170,677		–			$	624,864
Franchise revenue		133			3,003		–				3,136
		454,320			173,680		–				628,000
Operating costs and expenses:
Cost of merchandise		124,200			46,510		–				170,710
Payroll and related costs		147,679			60,244		–				207,923
Other restaurant operating costs		93,601			37,901		–				131,502
Depreciation		21,872			7,816		–				29,688
Selling, general, and administrative		53,992			27,556		–				81,548
Intercompany selling, general, and administrative allocations		34,484			(34,484	)	–			–
Closures and impairments		2,974			4		–				2,978
Equity in earnings of subsidiaries		(21,466	)	–				21,466		–
Interest expense, net		10,641			2,914		–				13,555
Intercompany interest expense/(income)		6,822			(6,822	)	–			–
Gain on extinguishment of debt		(155	)	–			–				(155	)
		474,644			141,639			21,466			637,749
(Loss)/income from continuing operations before income taxes		(20,324	)		32,041			(21,466	)		(9,749	)
(Benefit)/provision for income taxes from continuing operations		(19,194	)		10,575		–				(8,619	)
(Loss)/income from continuing operations		(1,130	)		21,466			(21,466	)		(1,130	)
Loss from discontinued operations, net of tax		(11,339	)		(652	)		652			(11,339	)
Net (loss)/income	$	(12,469	)	$	20,814		$	(20,814	)	$	(12,469	)
Other comprehensive income:
Pension liability reclassification, net of tax		761		–			–				761
Total comprehensive (loss)/income	$	(11,708	)	$	20,814		$	(20,814	)	$	(11,708	)

Condensed Consolidating Statement of Cash Flows

For the Twenty-Six Weeks Ended December 3, 2013

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(22,630	)	$	36,648		$	(13,590	)	$	428
Investing activities:
Purchases of property and equipment		(12,902	)		(4,795	)	–				(17,697	)
Proceeds from sale-leaseback transactions, net		5,637		–			–				5,637
Proceeds from disposal of assets		7,434			1,023		–				8,457
Other, net		187		–			–				187
Net cash provided/(used) by investing activities		356			(3,772	)	–				(3,416	)
Financing activities:
Principal payments on long-term debt		(12,968	)		(12,838	)	–				(25,806	)
Stock repurchases		(540	)	–			–				(540	)
Payments for debt issuance costs		(1,718	)	–			–				(1,718	)
Proceeds from exercise of stock options		1,480		–			–				1,480
Excess tax benefits from share-based compensation		283		–			–				283
Intercompany transactions		6,415			(20,005	)		13,590		–
Net cash used by financing activities		(7,048	)		(32,843	)		13,590			(26,301	)
(Decrease)/increase in cash and cash equivalents		(29,322	)		33		–				(29,289	)
Cash and cash equivalents:
Beginning of year		52,635			272		–				52,907
End of quarter	$	23,313		$	305		–			$	23,618

Condensed Consolidating Statement of Cash Flows

For the Twenty-Six Weeks Ended December 4, 2012

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(15,104	)	$	27,846		$	(12,133	)	$	609
Investing activities:
Purchases of property and equipment		(14,936	)		(3,569	)	–				(18,505	)
Proceeds from sale-leaseback transactions, net		30,408		–			–				30,408
Proceeds from disposal of assets		885			1,200		–				2,085
Other, net		126		–			–				126
Net cash provided/(used) by investing activities		16,483			(2,369	)	–				14,114
Financing activities:
Principal payments on long-term debt		(10,981	)		(6,504	)	–				(17,485	)
Stock repurchases		(20,012	)	–			–				(20,012	)
Proceeds from exercise of stock options		173		–			–				173
Excess tax benefits from share-based compensation		11		–			–				11
Intercompany transactions		6,823			(18,956	)		12,133		–
Net cash used by financing activities		(23,986	)		(25,460	)		12,133			(37,313	)
(Decrease)/increase in cash and cash equivalents		(22,607	)		17		–				(22,590	)
Cash and cash equivalents:
Beginning of year		47,986			198		–				48,184
End of quarter	$	25,379		$	215		–			$	25,594

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Note D - Discontinued Operations (Tables)

6 Months Ended

Dec. 03, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]

	Thirteen weeks ended					Twenty-six weeks ended
	December 3, 2013		December 4, 2012			December 3, 2013			December 4, 2012
Restaurant sales and operating revenue	$	–	$	4,156		$	–		$	9,154
Gain/(loss) before income taxes	$	453	$	(17,919	)	$	(75	)	$	(18,767	)
Provision/(benefit) for income taxes		99		(7,055	)		(86	)		(7,428	)
Gain/(loss) from discontinued operations	$	354	$	(10,864	)	$	11		$	(11,339	)

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Note H - Long-Term Debt and Capital Leases (Details) - Long-term Debt and Capital Lease Obligations (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013	May 14, 2012
Debt Instrument [Line Items]
Mortgage loan obligations	$ 53,601	$ 66,883
Capital lease obligations	181	202
	273,142	299,002
Less current maturities	9,838	8,487
	263,304	290,515
Senior Notes [Member]
Debt Instrument [Line Items]
Senior unsecured notes	222,113	235,000
Unamortized discount	(2,753)	(3,083)	(3,700)
Senior unsecured notes less unamortized discount	$ 219,360	$ 231,917

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Note D - Discontinued Operations (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 04, 2013 Marlin & Ray's [Member]	Jun. 04, 2013 Wok Hay [Member]	Jun. 04, 2013 Truffles [Member]	Dec. 03, 2013 Restaurants Closed [Member]	Jun. 04, 2013 Restaurants Closed [Member]
Note D - Discontinued Operations (Details) [Line Items]
Number of Restaurants Closed	13	1	2
Disposal Group, Including Discontinued Operation, Property, Plant, and Equipment, Net				$ 0.8	$ 2.8
Assets Held-for-sale, Property, Plant and Equipment				$ 1.3	$ 4.2

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Dec. 03, 2013	Dec. 31, 2008
Operating activities:
Net loss	$ (56,625)	$ (12,469)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	28,124	30,512
Amortization	1,370	2,436
Deferred income taxes	(259)	(21,407)
Loss on impairments, including disposition of assets	17,746	18,756
Loss/(gain) on extinguishment of debt	1,183	(155)
Share-based compensation expense	4,049	1,609
Excess tax benefits from share-based compensation	(283)	(11)
Lease reserve adjustments	4,205	379
Deferred escalating minimum rent	1,397	1,740
Other, net	1,847	(680)
Changes in operating assets and liabilities:
Receivables	(937)	(2,071)
Inventories	3,457	(10,315)
Income taxes	(3,443)	(985)
Prepaid and other assets	(1,187)	91
Accounts payable, accrued and other liabilities	(216)	(6,821)
Net cash provided by operating activities	428	609
Investing activities:
Purchases of property and equipment	(17,697)	(18,505)
Proceeds from sale-leaseback transactions, net	5,637	30,408
Proceeds from disposal of assets	8,457	2,085
Insurance proceeds from property claims	218
Reductions in Deferred Compensation Plan assets	115	498
Other, net	(146)	(372)
Net cash (used)/provided by investing activities	(3,416)	14,114
Financing activities:
Principal payments on long-term debt	(25,806)	(17,485)
Stock repurchases	(540)	(20,012)
Payments for debt issuance costs	(1,718)
Proceeds from exercise of stock options	1,480	173
Excess tax benefits from share-based compensation	283	11
Net cash used by financing activities	(26,301)	(37,313)
Decrease in cash and cash equivalents	(29,289)	(22,590)
Cash and cash equivalents:
Beginning of year	52,907	48,184
End of quarter	23,618	25,594
Cash paid for:
Interest, net of amount capitalized	11,813	12,806
Income taxes, net	477	3,517
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	11,292	38,490
Reclassification of properties to assets held for sale	$ 3,816	$ 763

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Note E - Accounts Receivable

6 Months Ended

Dec. 03, 2013

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE E – ACCOUNTS RECEIVABLE

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

	December 3, 2013		June 4, 2013
Rebates receivable	$	1,088	$	874
Amounts due from franchisees		1,393		917
Other receivables		3,298		3,043
	$	5,779	$	4,834

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.

As of December 3, 2013 and June 4, 2013, Other receivables consisted primarily of amounts due for third-party gift card sales ($1.8 million for both periods), amounts due from our distributor ($0.7 million and $0.4 million, respectively), and amounts due from landlords ($0.1 million and $0.5 million, respectively).

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Note L - Share-Based Employee Compensation (Details) - Summary of Stock Option Activity (USD $)	6 Months Ended
	Dec. 03, 2013
Note L - Share-Based Employee Compensation (Details) - Summary of Stock Option Activity [Line Items]
Forfeited	(85,000)
Forfeited (in Dollars per share)	$ 9.34
Stock Options, Service-based [Member]
Note L - Share-Based Employee Compensation (Details) - Summary of Stock Option Activity [Line Items]
Balance, beginning of year	1,911,000
Balance, beginning of year (in Dollars per share)	$ 8.27
Granted	601,000
Granted (in Dollars per share)	$ 9.34
Exercised	(229,000)
Exercised (in Dollars per share)	$ 6.45
Forfeited	(179,000)
Forfeited (in Dollars per share)	$ 9.39
Balance, end of quarter	2,104,000
Balance, end of quarter (in Dollars per share)	$ 8.68
Exercisable	1,237,000
Exercisable (in Dollars per share)	$ 8.63
Stock Options, Performanced-based [Member]
Note L - Share-Based Employee Compensation (Details) - Summary of Stock Option Activity [Line Items]
Balance, beginning of year	250,000
Balance, beginning of year (in Dollars per share)	$ 7.81
Granted	570,000
Granted (in Dollars per share)	$ 9.34
Balance, end of quarter	735,000
Balance, end of quarter (in Dollars per share)	$ 8.82
Exercisable
Exercisable (in Dollars per share)

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Note P - Supplemental Condensed Consolidating Financial Statements (Details) - Condensed Consolidating Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 03, 2013	Jun. 04, 2013	Dec. 04, 2012	Jun. 05, 2012	Dec. 31, 2008	Dec. 31, 2007
Current assets:
Cash and cash equivalents	$ 23,618	$ 52,907	$ 25,594	$ 48,184	$ 25,594	$ 48,184
Accounts receivable	5,779	4,834
Inventories	27,415	30,872
Income tax receivable	5,343	1,900
Deferred income tax assets	4,579	7,296
Other current assets	18,725	23,355
Total current assets	85,459	121,164
Property and equipment, net	824,160	859,830
Other assets	62,823	62,189
Total assets	972,442	1,043,183
Current liabilities:
Accounts payable	25,264	14,964
Accrued and other current liabilities	82,928	82,181
Current maturities of long-term debt, including capital leases	9,838	8,487
Total current liabilities	118,030	105,632
Long-term debt and capital leases, less current maturities	263,304	290,515
Deferred income tax liabilities	2,778	5,753
Other deferred liabilities	122,081	124,448
Total liabilities	506,193	526,348
Shareholders’ equity:
Common stock	614	612
Capital in excess of par value	72,678	67,596
Retained earnings	402,947	459,572
Accumulated other comprehensive loss	(9,990)	(10,945)
Total shareholders’ equity	466,249	516,835
Total liabilities & shareholders’ equity	972,442	1,043,183
Consolidation, Eliminations [Member]
Current assets:
Cash and cash equivalents	0
Income tax receivable	(125,378)	(116,429)
Total current assets	(125,378)	(116,429)
Investment in subsidiaries	(152,303)	(167,887)
Due from/(to) subsidiaries	(327,800)	(307,068)
Total assets	(605,481)	(591,384)
Current liabilities:
Income tax payable	(125,378)	(116,429)
Total current liabilities	(125,378)	(116,429)
Due to/(from) subsidiaries	(327,800)	(307,068)
Total liabilities	(453,178)	(423,497)
Shareholders’ equity:
Retained earnings	(152,303)	(167,887)
Total shareholders’ equity	(152,303)	(167,887)
Total liabilities & shareholders’ equity	(605,481)	(591,384)
Parent Company [Member]
Current assets:
Cash and cash equivalents	23,313	52,635	25,379	47,986
Accounts receivable	2,217	1,854
Inventories	19,477	21,961
Income tax receivable	130,721	118,329
Deferred income tax assets	1,377	5,372
Other current assets	15,237	19,519
Total current assets	192,342	219,670
Property and equipment, net	611,147	635,478
Investment in subsidiaries	152,303	167,887
Due from/(to) subsidiaries	90,802	76,485
Other assets	48,465	46,812
Total assets	1,095,059	1,146,332
Current liabilities:
Accounts payable	20,934	11,725
Accrued and other current liabilities	47,703	47,775
Current maturities of long-term debt, including capital leases	(341)	(347)
Total current liabilities	68,296	59,153
Long-term debt and capital leases, less current maturities	219,882	232,462
Deferred income tax liabilities	(4,192)	(1,070)
Due to/(from) subsidiaries	236,998	230,583
Other deferred liabilities	107,826	108,369
Total liabilities	628,810	629,497
Shareholders’ equity:
Common stock	614	612
Capital in excess of par value	72,678	67,596
Retained earnings	402,947	459,572
Accumulated other comprehensive loss	(9,990)	(10,945)
Total shareholders’ equity	466,249	516,835
Total liabilities & shareholders’ equity	1,095,059	1,146,332
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	305	272	215	198
Accounts receivable	3,562	2,980
Inventories	7,938	8,911
Deferred income tax assets	3,202	1,924
Other current assets	3,488	3,836
Total current assets	18,495	17,923
Property and equipment, net	213,013	224,352
Due from/(to) subsidiaries	236,998	230,583
Other assets	14,358	15,377
Total assets	482,864	488,235
Current liabilities:
Accounts payable	4,330	3,239
Accrued and other current liabilities	35,225	34,406
Current maturities of long-term debt, including capital leases	10,179	8,834
Income tax payable	125,378	116,429
Total current liabilities	175,112	162,908
Long-term debt and capital leases, less current maturities	43,422	58,053
Deferred income tax liabilities	6,970	6,823
Due to/(from) subsidiaries	90,802	76,485
Other deferred liabilities	14,255	16,079
Total liabilities	330,561	320,348
Shareholders’ equity:
Retained earnings	152,303	167,887
Total shareholders’ equity	152,303	167,887
Total liabilities & shareholders’ equity	$ 482,864	$ 488,235

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Note E - Accounts Receivable (Tables)

6 Months Ended

Dec. 03, 2013

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	December 3, 2013		June 4, 2013
Rebates receivable	$	1,088	$	874
Amounts due from franchisees		1,393		917
Other receivables		3,298		3,043
	$	5,779	$	4,834

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Note B - Loss per Share and Stock Repurchases (Details) - Weighted-average Common and Dilutive Potential Common Shares Outstanding (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 03, 2013	Dec. 04, 2012	Dec. 03, 2013	Dec. 04, 2012	Dec. 31, 2008
Weighted-average Common and Dilutive Potential Common Shares Outstanding [Abstract]
Loss from continuing operations (in Dollars)	$ (34,737)	$ (4,204)	$ (56,636)	$ (1,130)
Gain/(loss) from discontinued operations, net of tax (in Dollars)	354	(10,864)	11	(11,339)
Net loss (in Dollars)	$ (34,383)	$ (15,068)	$ (56,625)	$ (12,469)	$ (12,469)
Weighted-average common shares outstanding (in Shares)	60,196	62,005	60,111	62,409
Weighted average common and dilutive potential common shares outstanding (in Shares)	60,196	62,005	60,111	62,409
Loss from continuing operations	$ (0.58)	$ (0.07)	$ (0.94)	$ (0.02)
Gain/(loss) from discontinued operations	$ 0.01	$ (0.17)	$ 0.00	$ (0.18)
Net loss per share	$ (0.57)	$ (0.24)	$ (0.94)	$ (0.20)
Loss from continuing operations	$ (0.58)	$ (0.07)	$ (0.94)	$ (0.02)
Gain/(loss) from discontinued operations	$ 0.01	$ (0.17)	$ 0.00	$ (0.18)
Net loss per share	$ (0.57)	$ (0.24)	$ (0.94)	$ (0.20)

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Note O - Fair Value Measurements

6 Months Ended

Dec. 03, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE O – FAIR VALUE MEASUREMENTS

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

	Level		December 3, 2013			June 4, 2013
Deferred compensation plan: other investments – Assets		1	$	9,274		$	8,721
Deferred compensation plan: other investments – Liabilities		1		(9,274	)		(8,721	)
Deferred compensation plan: RTI common stock – Equity		1		638			1,094
Deferred compensation plan: RTI common stock – Equity		1		(638	)		(1,094	)
Total			–			–

During the 26 weeks ended December 3, 2013 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 December 3, 2013 and June 4, 2013 (in thousands):

	Fair Value Measurements
	Level		December 3, 2013		June 4, 2013
Long-lived assets held for sale *		2	$	17,942	$	24,006
Long-lived assets held for use		2		12,949		5,802
Total			$	30,891	$	29,808

* Included in the carrying value of long-lived assets held for sale as of December 3, 2013 and June 4, 2013 are $13.5 million and $14.8 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 and 26 weeks ended December 3, 2013 and December 4, 2012 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis. The losses associated with continuing operations are included in Closures and impairments, net and the losses associated with discontinued operations are included in Loss from discontinued operations in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	December 3, 2013		December 4, 2012		December 3, 2013		December 4, 2012
Included within continuing operations
Long-lived assets held for sale	$	315	$	354	$	584	$	511
Long-lived assets held for use		12,003		1,858		16,664		2,149
	$	12,318	$	2,212	$	17,248	$	2,660
Included within discontinued operations	$	–	$	16,302	$	153	$	16,302

Long-lived assets held for sale are valued using Level 2 inputs, primarily representing 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 we have impaired. From time to time, this will also include closed restaurants or surplus sites that do not meet the held for sale criteria that we have offered for sale at a price less than 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 December 3, 2013 and June 4, 2013 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):

	December 3, 2013				June 4, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt and capital leases	$	273,142	$	263,497	$	299,002	$	310,441
Letters of credit	–			405	–			270

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