10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended: February 28, 2017

OR

☐	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 charter)

GEORGIA	63-0475239
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

333 East Broadway Avenue, Maryville, Tennessee 37804
(Address of principal executive offices and zip code)

(865) 379-5700
(Registrant’s telephone number, including area code)

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 ☒ No ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No  ☒

The number of shares of common stock outstanding as of April 4, 2017 was 60,564,134.

		Index
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Thirteen and Thirty-Nine Weeks Ended February 28, 2017 and March 1, 2016	4
	Condensed Consolidated Balance Sheets as of February 28, 2017 and May 31, 2016	5
	Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended February 28, 2017 and March 1, 2016	6
	Notes to Condensed Consolidated Financial Statements	7-28
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29-41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
	Signatures	45

2

Special Note Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements represent our expectations or beliefs concerning future events, including one or more of the following:  future financial performance (including our estimates of changes in same-restaurant sales, average unit volumes, operating margins, expenses, and other items), future capital expenditures, the effect of strategic initiatives (including statements relating to our review of strategic alternatives, asset rationalization project, cost savings initiatives, and the benefits of our marketing), the opening or closing of restaurants by us or our franchisees, sales of our real estate or purchases of new real estate, future borrowings and repayments of debt, availability of financing on terms attractive to the Company, compliance with financial covenants in our debt instruments, payment of dividends, stock and bond repurchases, restaurant acquisitions and dispositions, 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, including, without limitation, the risks and uncertainties described in the Risk Factors included in Part I, Item A of our Annual Report on Form 10-K for the year ended May 31, 2016 and 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, including those affecting labor and employee benefit costs, such as further potential increases in state and federally mandated minimum wages and healthcare reform;

● changes in senior management or in the Board of Directors;

● the results of our ongoing exploration of strategic alternatives to maximize shareholder value;

● the impact of pending litigation;

● customers’ acceptance of changes in menu items;

● changes in the availability and cost of capital, including the replacement of our existing revolving credit facility;

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

● weather conditions in the regions in which Company-owned and franchised restaurants are operated;

● costs and availability of food and beverage inventory, including supply and delivery shortages or interruptions;

● significant fluctuations in energy prices;

● security breaches of our customers’ or employees’ confidential information or personal data or the failure of our information technology and computer systems;

● 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 our restaurants or other competing restaurant concepts;

● effects of actual or threatened future terrorist attacks in the United States;

● prevailing conditions in the real estate market that may affect expected results under our Asset Rationalization Plan; and  

● our ability to obtain waivers under, or amendments to, certain of our debt agreements.

3

Part I - Financial Information

Item 1.

Ruby Tuesday, Inc. and Subsidiaries

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Operations and

Comprehensive Loss

(In thousands, except per-share data)

(Unaudited)

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
				(as adjusted)						(as adjusted)
Revenue:
Restaurant sales and operating revenue	$	224,938		$	269,868		$	694,517		$	807,105
Franchise revenue		794			1,602			2,591			4,801
Total revenue		225,732			271,470			697,108			811,906
Operating costs and expenses:
Cost of goods sold		64,340			75,143			198,672			221,689
Payroll and related costs		80,080			93,357			251,105			280,976
Other restaurant operating costs		45,086			55,311			149,069			173,903
Depreciation and amortization		10,121			12,732			31,838			38,474
General and administrative expenses		13,876			14,148			48,359			44,226
Marketing expenses, net		13,807			13,230			43,328			40,396
Closures and impairments, net		13,441			6,123			59,341			20,907
Interest expense, net		4,870			4,995			14,591			16,100
Total operating costs and expenses		245,621			275,039			796,303			836,671
Loss before income taxes		(19,889	)		(3,569	)		(99,195	)		(24,765	)
Benefit for income taxes		(84	)		(483	)		(1,742	)		(1,686	)
Net loss	$	(19,805	)	$	(3,086	)	$	(97,453	)	$	(23,079	)
Other comprehensive income:
Pension liability reclassification		356			885			1,066			1,347
Total comprehensive loss	$	(19,449	)	$	(2,201	)	$	(96,387	)	$	(21,732	)
Loss per share:
Basic	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)
Diluted	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)
Weighted average shares:
Basic		60,262			60,918			60,074			61,239
Diluted		60,262			60,918			60,074			61,239

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

4

Ruby Tuesday, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per-share data)

(Unaudited)

	February 28, 2017			May 31, 2016
Assets:
Current assets:
Cash and cash equivalents	$	32,627		$	67,341
Accounts and other receivables		13,415			12,827
Inventories:
Merchandise		11,384			13,799
China, silver and supplies		6,633			7,796
Income tax receivable		4,738			3,003
Prepaid rent and other expenses		8,135			11,508
Assets held for sale		20,450			4,642
Total current assets		97,382			120,916
Property and equipment, net		601,548			671,250
Other assets		43,880			45,751
Total assets	$	742,810		$	837,917
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable	$	23,583		$	22,141
Accrued liabilities:
Taxes, other than income and payroll		8,390			10,769
Payroll and related costs		15,296			14,561
Insurance		5,337			5,109
Rent and other		39,976			18,838
Deferred revenue – gift cards		17,472			16,354
Current maturities of long-term debt, including capital leases		349			9,934
Total current liabilities		110,403			97,706
Long-term debt and capital leases, less current maturities		213,533			213,803
Deferred escalating minimum rent		43,208			51,535
Other deferred liabilities		61,270			67,093
Total liabilities		428,414			430,137
Commitments and contingencies (Note 11)
Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares;
issued and outstanding: 2017 – 60,564 shares, 2016 – 60,137shares)		605			601
Capital in excess of par value		78,937			75,938
Retained earnings		243,897			341,350
Deferred compensation liability payable in Company stock		365			521
Company stock held by Deferred Compensation Plan		(365	)		(521	)
Accumulated other comprehensive loss		(9,043	)		(10,109	)
Total shareholders' equity		314,396			407,780
Total liabilities and shareholders' equity	$	742,810		$	837,917

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

5

Ruby Tuesday, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Thirty-NineWeeks Ended
	February 28, 2017			March 1, 2016
				(as adjusted)
Operating activities:
Net loss	$	(97,453	)	$	(23,079	)
Adjustments to reconcile net loss to net cash (used)/provided by operating activities:
Depreciation and amortization		31,838			38,474
Deferred income taxes		–			(832	)
Loss on impairments, including disposition of assets		32,668			17,489
Inventory write-off		2,754			–
Share-based compensation expense		3,029			1,680
Lease reserve adjustments		17,445			3,118
Deferred escalating minimum rent		585			1,630
Other, net		520			3,125
Changes in operating assets and liabilities:
Receivables		(5,137	)		(579	)
Inventories		1,045			(2,176	)
Income taxes		(1,735	)		(4,027	)
Prepaid and other assets		2,068			677
Accounts payable, accrued and other liabilities		(9,346	)		(16,961	)
Net cash (used) provided by operating activities		(21,719	)		18,539
Investing activities:
Purchases of property and equipment		(26,952	)		(27,346	)
Proceeds from sale of assets		22,044			6,193
Insurance proceeds from property claims		358			–
Reductions in Deferred Compensation Plan assets		1,702			833
Other, net		1,439			1,611
Net cash used by investing activities		(1,409	)		(18,709	)
Financing activities:
Principal payments on long-term debt and capital leases		(10,613	)		(12,664	)
Stock repurchases		(26	)		(10,009	)
Payments for debt issuance costs		(947	)		(30	)
Net cash used by financing activities		(11,586	)		(22,703	)
Decrease in cash and cash equivalents		(34,714	)		(22,873	)
Cash and cash equivalents:
Beginning of fiscal year		67,341			75,331
End of quarter	$	32,627		$	52,458
Supplemental disclosure of cash flow information:
Cash paid for:
Interest, net of amount capitalized	$	9,009		$	10,666
Income taxes, net	$	823		$	3,178
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	$	23,347		$	22,393
Reclassification of properties to assets held for sale	$	25,753		$	3,387
Monetization of, and subsequent reinvestment into, life insurance policies	$	–		$	5,642

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

6

Ruby Tuesday, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation

Description of Business

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we,” and/or “our”), owns and operates Ruby Tuesday® casual dining restaurants. We also franchise the Ruby Tuesday concept in selected domestic and international markets.

As discussed further in Note 7 to the Condensed Consolidated Financial Statements, during the 39 weeks ended February 28,  2017, we closed 102 Company-owned restaurants, 95 of which were closed following a comprehensive review of the Company’s property portfolio due to perceived limited upside due to market concentration, challenged trade areas, and other factors. At February 28, 2017, we owned and operated 544 Ruby Tuesday restaurants concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets.

As further discussed in Note 4 to the Condensed Consolidated Financial Statements, we entered into an agreement during fiscal year 2016 to sell the assets related to eight Company-owned Lime Fresh Mexican Grill® (“Lime Fresh”) restaurants. Our last remaining Company-owned Lime Fresh restaurant closed and transferred to the buyer during the second quarter of fiscal year 2017.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Condensed Consolidated Financial Statements”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. 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 considered necessary for a fair presentation have been included and are of a normal recurring nature. In addition, certain reclassifications were made to prior period amounts to conform to the current period presentation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. Operating results for the 13 and 39 weeks ended February 28, 2017 are not necessarily indicative of results that may be expected for the 53-week year ending June 6, 2017. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in RTI’s Annual Report on Form 10-K for the fiscal year ended May 31, 2016.

Reclassifications

As shown in the table below, we split our previously reported expenses within Selling, general, and administrative, net into separately reported General and administrative expenses and Marketing expenses, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the prior periods to be comparable with the classification for the 13 and 39 weeks ended February 28, 2017. Additionally, we reclassified an impairment of the Lime Fresh trademark to Closures and impairments, net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the 13 and 39 weeks ended March 1, 2016. Amounts presented are in thousands.

	Thirteen Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March 1, 2016
Selling, general, and administrative, net	$	27,378	$	(27,378	)	$	–
General and administrative expenses		–		14,148			14,148
Marketing expenses, net		–		13,230			13,230
Closures and impairments, net		6,123		–			6,123

	Thirty-nine Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March 1, 2016
Selling, general, and administrative, net	$	84,622	$	(84,622	)	$	–
General and administrative expenses		–		44,226			44,226
Marketing expenses, net		–		40,396			40,396
Closures and impairments, net		18,908		1,999			20,907
Trademark impairment		1,999		(1,999	)		–

7

As shown in the table below, we reclassified an impairment of the Lime Fresh trademark to Loss on impairments, including disposition of assets in the Condensed Consolidated Statement of Cash Flows for the 39 weeks ended March 1, 2016. Amounts presented are in thousands.

	Thirty-nine Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March 1, 2016
Loss on impairments, including disposition of assets	$	15,490	$	1,999		$	17,489
Trademark impairment		1,999		(1,999	)		–

2. Loss Per Share

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during each period presented. Diluted earnings per share gives effect to stock options and restricted stock outstanding during the applicable periods, except during loss periods as the effect would be anti-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						Thirty-nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
Net loss	$	(19,805	)	$	(3,086	)	$	(97,453	)	$	(23,079	)
Weighted-average common shares outstanding		60,262			60,918			60,074			61,239
Dilutive effect of stock options and restricted stock		–			–			–			–
Weighted average common and dilutive potential common shares outstanding		60,262			60,918			60,074			61,239
Basic loss per share	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)
Diluted loss per share	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)

The following table summarizes on a weighted-average basis stock options, restricted stock, and restricted stock units that were excluded from the computation of diluted loss per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended		Thirty-nine weeks ended
	February 28, 2017	March 1, 2016	February 28, 2017	March 1, 2016
Stock options	1,927	2,140	2,422	2,509
Restricted shares / Restricted share units	565	871	635	862
Total	2,492	3,011	3,057	3,371

3. Franchise Programs

As of February 28, 2017, our franchisees collectively operated 63 domestic and international Ruby Tuesday restaurants. We do not own any equity interests in our franchisees.

Under the terms of the franchise operating agreements, we charge a royalty fee (generally 4.0% of monthly gross sales), a marketing and purchasing fee (generally 1.5% of monthly gross sales), and a national advertising fee (generally 1.5% of monthly gross sales as of February 28, 2017, but up to a maximum of 3.0% under the terms of the franchise operating agreements).

Amounts received from franchisees for the marketing and purchasing fee and national advertising fee are considered by RTI to be reimbursements, recorded on an accrual basis as earned, and have been netted against Marketing expenses, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

8

For the 13 and 39 weeks ended February 28, 2017, we recorded $0.4 million and $0.8 million, respectively, and for the 13 and 39 weeks ended March 1, 2016, we recorded $0.5 million and $1.6 million, respectively, in marketing and purchasing fees and national advertising fund fees.

4. Accounts and Other Receivables

Accounts and other receivables consist of the following (in thousands):

	February 28, 2017		May 31, 2016
Insurance receivable	$	5,000	$	–
Amounts due from franchisees		3,799		3,013
Amounts due from distributor		1,317		560
Third-party gift card sales		984		1,272
Rebates receivable		786		1,001
Receivables from sales of Lime Fresh Mexican Grill assets		–		5,289
Other receivables		1,529		1,692
	$	13,415	$	12,827

The insurance receivable reflected in the table above represents the amount of an insurance recovery in connection with the settlement of a class action case.  See Notes 11 and 15 to the Condensed Consolidated Financial Statements for further information.

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 portion of which represents current and recently-invoiced billings.

As of February 28, 2017 and May 31, 2016, other receivables consisted primarily of amounts due from online ordering, sales and other miscellaneous tax refunds, and other receivables.

Sales of Lime Fresh Mexican Grill Assets

On May 31, 2016, we entered into agreements with two separate buyers to sell various Lime Fresh assets. Pursuant to the terms of an asset purchase agreement, we agreed to sell our eight remaining Company-owned Lime Fresh restaurants for $6.0 million. Given that closing requirements were satisfied for only six of the eight restaurants, an amendment was agreed upon which allowed for the payment of $5.0 million upon the transfer of the six restaurants and the holdback of $1.0 million until such time that both of the remaining two restaurants had closed and transferred to the buyer. The six restaurants closed and were transferred to the buyer on May 31, 2016. During the 39 weeks ended February 28, 2017, the two remaining restaurants closed and were transferred to the buyer. As a result of this, we collected the $1.0 million previously withheld.

The $5.3 million of receivables from sales of Lime Fresh assets included in the table above as of May 31, 2016 consists of $5.0 million due from the buyer of the formerly Company-owned Lime Fresh restaurants, which was collected on the first day of fiscal year 2017, and $0.3 million due from the buyer of the Lime Fresh brand.

5. Property, Equipment, and Assets Held for Sale

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

	February 28, 2017		May 31, 2016
Land	$	182,785	$	209,930
Buildings		372,430		398,984
Improvements		257,147		303,032
Restaurant equipment		206,107		222,646
Other equipment		74,712		82,204
Surplus properties*		17,894		4,354
Construction in progress and other		4,306		3,325
		1,115,381		1,224,475
Less accumulated depreciation		513,833		553,225
Property and equipment, net	$	601,548	$	671,250

9

* Surplus properties represent assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we have yet to conclude that we can 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, closed properties which include a building, and liquor licenses not needed for operations.

Included within the current assets section of our Condensed Consolidated Balance Sheets at February 28, 2017 and May 31, 2016 are amounts classified as assets held for sale totaling $20.5 million and $4.6 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 39 weeks ended February 28, 2017, we sold properties with carrying values of $7.5 million and $15.9 million, at net gains that were $2.3 million and negligible, respectively. Cash proceeds, net of broker fees, from these sales during the 13 and 39 weeks ended February 28, 2017 totaled $9.8 million and $15.9 million, respectively. During the 13 and 39 weeks ended March 1, 2016, we sold properties with carrying values of $2.4 million and $5.2 million, respectively, at net gains of $0.1 million and $1.0 million, respectively. Cash proceeds, net of broker fees, from these sales during the 13 and 39 weeks ended March 1, 2016 totaled $2.5 million and $6.2 million, respectively.    

6. Long-Term Debt and Capital Leases

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

	February 28, 2017			May 31, 2016
Senior unsecured notes	$	212,546		$	212,546
Unamortized discount		(1,476	)		(1,771	)
Unamortized debt issuance costs		(2,497	)		(2,995	)
Senior unsecured notes less unamortized discount and
debt issuance costs		208,573			207,780
Senior credit facility		–			–
Mortgage loan obligations		5,135			15,745
Unamortized (discount)/premium - mortgage loan obligations		(2	)		75
Unamortized debt issuance costs - mortgage loan obligations		(31	)		(74	)
Capital lease obligations		207			211
Total long-term debt and capital leases		213,882			223,737
Less current maturities		349			9,934
Long-term debt and capital leases, less current maturities	$	213,533		$	213,803

On May 14, 2012, we entered into an indenture (the “Indenture”) among Ruby Tuesday, Inc., 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 to interest expense, net 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 was $4.9 million and $1.0 million as of February 28, 2017 and May 31, 2016, respectively, and is included in Accrued liabilities:– Rent and other in our Condensed Consolidated Balance Sheets.

We may redeem the Senior Notes, in whole or in part, at the redemption prices specified in the Indenture plus accrued and unpaid interest. There is no sinking fund for the Senior Notes, which mature on May 15, 2020.

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.

10

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.

On December 3, 2013, we entered into a four-year revolving credit agreement (the “Senior Credit Facility”).  Under the terms of 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.  As of November 30, 2016, we did not attain the minimum fixed charge coverage ratio as required under the terms of the Senior Credit Facility.  While we obtained a waiver of this covenant violation through January 31, 2017 from our lenders, we believed, without certain modifications, that it was possible at some point during the next twelve months that we would again be in violation of the minimum fixed charge coverage ratio covenant.  Accordingly, on January 31, 2017, we entered into a seventh amendment and waiver to the Senior Credit Facility (the "Seventh Amendment and Waiver"). 

Among other things, the Seventh Amendment and Waiver reduces the amount the Company may borrow pursuant to the revolving loan commitment under the Senior Credit Facility from $50.0 million (including a $25.0 million sublimit for standby letters of credit),  to $30.0 million (including a $15.0 million sublimit for standby letters of credit), amends the termination date of the Senior Credit Facility from December 3, 2017 to June 2, 2017, and increases the flexibility of the financial covenants under the Senior Credit Facility.  Additionally, the Senior Credit Facility and the Seventh Amendment and Waiver contain 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, guarantee indebtedness, and prepay other indebtedness.

Under the Seventh Amendment and Waiver, 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 Seventh Amendment and Waiver require us to maintain a maximum leverage ratio of no more than 4.65 to 1.0 and a minimum fixed charge coverage ratio of no less than 1.25 to 1.0 for the quarter ended February 28, 2017.  We were in compliance with our maximum leverage ratio and minimum fixed charge coverage ratio as of February 28, 2017.

Under the terms of 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, provided that the rate shall not be less than zero. 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 LIBOR (as defined in the Senior Credit Facility) plus 1.0%. The applicable margin for the LIBOR-based option is a percentage ranging from 3.00% to 3.50% and for the Base Rate option is a percentage ranging from 2.00% to 2.50%. We pay commitment fees quarterly ranging from 0.50% 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, substantially all of the personal property of substantially all of our present and future subsidiaries, and the real property, improvements, and fixtures of 49 Ruby Tuesday restaurants. The real property, improvements, and fixtures of the 49 restaurants pledged as collateral appraised at $101.4 million at the time of the transaction and have a February 28, 2017 net book value of $80.0 million.

The Senior Credit Facility terminates no later than June 2, 2017.  Aside from the $11.1 million letters of credit outstanding as of February 28, 2017, we had no borrowings under the Senior Credit Facility.  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.  There are no assurances that our lenders will provide any future waivers of covenant violations or agree to any future amendments of our Senior Credit Facility. 

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 amended certain financial reporting requirements under the specified loans and modified and/or provided for certain financial covenants for the specified loans, including the maximum leverage ratio and the minimum fixed charge coverage ratio.

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Additionally, as of November 29, 2016, we did not attain the minimum fixed charge coverage ratio required under the terms of the mortgage loan obligations.  While we obtained a waiver of the covenant violation through January 31, 2017 from our lender, we believed without certain modifications, that it was possible at some point during the next twelve months, that we would again be in violation of the minimum fixed charge coverage ratio covenant under our mortgage loan obligations.  Accordingly, on January 31, 2017, we entered into a loan modification and waiver (the "Mortgage Loan Modification and Waiver").

Among other things, the Mortgage Loan Modification and Waiver increases the flexibility of the financial covenants under the mortgage loan obligations, restricts the Company to make certain acquisitions, and requires additional certain monthly financial reporting to the lender.  While we were in compliance with the financial covenants under the mortgage loan obligations as of February 28, 2017, there are no assurances that our lender will provide any future waivers of covenant violations or agree to any future amendments of our mortgage loan agreements.

Our $5.1 million in mortgage loan obligations as of February 28, 2017 consists of various loans acquired upon franchise acquisitions. These loans, which mature between February 2019 and October 2021, have balances which range from $0.5 million to $1.0 million and interest rates of 7.78% to 10.17%.  Many of the properties acquired from franchisees collateralize the loans outstanding.

7. Closures and Impairments Expense

Closures and impairments, net include the following (in thousands):

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
Property impairments	$	14,946		$	6,938		$	32,774		$	15,730
Closed restaurant lease reserves		(133	)		(1,207	)		17,445			3,118
Inventory write-off		–			–			2,754			–
Severance benefits		13			68			1,606			213
Other closing expense		949			403			4,830			877
Gain on sale of properties		(2,334	)		(79	)		(68	)		(1,030	)
Lime Fresh trademark impairment		–			–			–			1,999
Closures and impairments, net	$	13,441		$	6,123		$	59,341		$	20,907

During the 39 weeks ended February 28, 2017, we closed 102 Company-owned restaurants, 95 of which were closed in connection with an asset rationalization plan announced on August 11, 2016. The plan was formulated in response to a comprehensive review of our property portfolio which included the planned closure of restaurants with perceived limited upside due to market concentration, challenged trade areas, or other factors. Included within Closures and impairments, net for the 39 weeks ended February 28, 2017 are closed restaurant lease reserves, inventory write-off, severance benefits, and other closing expense of $30.2 million related to the closures in connection with the asset rationalization plan.

During the 39 weeks ended February 28, 2017, we sold one of two office buildings comprising our Restaurant Support Center in Maryville, Tennessee for net proceeds of $2.6 million. The building sold had a net book value of $5.8 million at the time of the sale. Accordingly, included within the loss on sale of surplus properties in the table above for the 39 weeks ended February 28, 2017 was a loss of $3.2 million related to the sale of the building. Our two Tennessee Restaurant Support Center office buildings were consolidated into the one remaining building during our third quarter of fiscal year 2017.

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

	Reserve for Lease Obligations
Balance at May 31, 2016	$	6,270
Closing expense including rent and other lease charges		17,445
Payments		(13,772	)
Adjustments to deferred escalating minimum rent and other		9,196
Balance at February 28, 2017	$	19,139

The amounts comprising future lease obligations associated with closed restaurants in the table above are estimated using certain assumptions, including the period of time it will take to settle the lease with the landlord or find a suitable sublease tenant, and the amount of actual future cash payments could differ from our recorded lease obligations. Of the total future lease obligations included in the table above, $18.1 million is included

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within Accrued liabilities:– Rent and other, $0.5 million is included within Deferred escalating minimum rent, and $0.5 million is included within Other deferred liabilities in our Condensed Consolidated Balance Sheet as of February 28, 2017.  For the remainder of fiscal year 2017 and beyond, our focus will be to obtain settlements, or subleases on as many leases as possible.

Settlements could be higher or lower than the lease obligations 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.

8. Employee Post-Employment Benefits

Pension and Postretirement Medical and Life Benefits

We sponsor three defined benefit pension plans for certain 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 could 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 all required contributions for fiscal year 2017 have been made. 

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 could enter the plan after that date. In December 2015, the Executive Supplemental Pension Plan was similarly amended effective as of January 1, 2016 for current participants, and as of January 1, 2018 for two specified potential participants, who are currently not named executive officers.

Included in our Condensed Consolidated Balance Sheets as of February 28, 2017 and May 31, 2016 are amounts within Accrued liabilities: Payroll and related costs of $3.9 million and $2.5 million, respectively, and amounts within Other deferred liabilities of $33.1 million and $35.7million, respectively, relating to our three defined benefit pension plans.

Postretirement Medical and Life Benefits
Our Postretirement Medical and Life Benefits plans provide medical benefits to substantially all retired employees 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.

Included in our Condensed Consolidated Balance Sheets as of February 28, 2017 and May 31, 2016 are amounts within Accrued liabilities: Payroll and related costs of $0.1 million as of both dates and amounts within Other deferred liabilities of $1.0 million as of both dates relating to our postretirement medical and life benefits.

The following tables detail the components of net periodic benefit cost 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, which is recorded as a component of General and administrative expenses in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Pension Plans
	Thirteen Weeks Ended					Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016			February 28, 2017			March 1, 2016
Service cost	$	5	$	33		$	18		$	305
Interest cost		420		495			1,260			1,535
Expected return on plan assets		(91)		(103	)		(273	)		(308	)
Recognized actuarial loss		339		730			1,014			1,831
Curtailment expense		–		1			–			1
Net periodic benefit cost	$	673	$	1,156		$	2,019		$	3,364

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	Postretirement Medical and Life Benefits
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Service cost	$	2	$	1	$	3	$	3
Interest cost		9		12		27		36
Recognized actuarial loss		17		32		51		97
Net periodic benefit cost	$	28	$	45	$	81	$	136

We reclassified recognized actuarial losses of $0.4 million and $1.1 million during the 13 and 39 weeks ended February 28, 2017, respectively, and $0.8 million and $1.9 million during the 13 and 39 weeks ended March 1, 2016, respectively, out of accumulated other comprehensive loss and into pension expense, which is included in General and administrative expenses within our Condensed Consolidated Statements of Operations and Comprehensive Loss.

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 May 31, 2016.

Restaurant Closures and Corporate Restructuring

We closed 102 Company-owned restaurants during the 39 weeks ended February 28, 2017, 95 of which were closed in connection with an asset rationalization plan as previously discussed in Note 7 to the Condensed Consolidated Financial Statements.

On September 13, 2016, James J. Buettgen resigned as Chairman of the Board of Directors, President, and Chief Executive Officer of the Company. On the same date, F. Lane Cardwell, Jr., a member of the Company’s Board of Directors since October 2012 and an executive with approximately 38 years of leadership experience in the restaurant industry, was appointed Interim President and Chief Executive Officer, Stephen I. Sadove, the Company’s then Lead Director, was appointed Chairman of the Board and Sue Briley was appointed Chief Financial Officer. Ms. Briley had been serving as Interim Chief Financial Officer since June 2016.  Included in the employee severance and unused vacation accruals in the table below are $3.1 million in severance accruals and other benefits in connection with Mr. Buettgen’s resignation.

As of February 28, 2017 and May 31, 2016, we had no accrued liability and $0.3million, respectively, representing unpaid obligations related to employee severance and vacation accruals, were included within Accrued liabilities: Payroll and related costs in our Condensed Consolidated Balance Sheet. Costs of $3.3 million and $1.6 million reflected in the table below related to employee severance and unused vacation accruals are included within General and administrative expenses and Closures and impairments, net, respectively, in our Condensed Consolidated Statements of Operations and Comprehensive Loss for the 39 weeks ended February 28, 2017. A roll forward of our obligations in connection with employee separations is as follows (in thousands):

Balance at May 31, 2016	$	317
Employee severance and unused vacation accruals		4,890
Cash payments		(5,207	)
Balance at February 28, 2017	$	–

9. Income Taxes

Companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period. 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 provision for the 13 and 39 weeks ended February 28, 2017 and March 1, 2016 based on the actual year-to-date results.

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 consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets for each jurisdiction. As of February 28, 2017, we have rolling three-year historical operating losses and have concluded that the negative evidence outweighs the positive evidence.

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In accordance with the applicable accounting standards, we are unable to use future income projections to support the realization of our deferred tax assets as a consequence of the above conclusion.   Instead, in determining the appropriate amount of the valuation allowance, we considered the timing of future reversal of our taxable temporary differences and available tax strategies that, if implemented, would result in the realization of deferred tax assets. Our valuation allowance for deferred tax assets totaled $131.3 million and $89.9 million as of February 28, 2017 and May 31, 2016, respectively.

We recorded a tax benefit of $0.1 million and $1.7 million for the 13 and 39 weeks ended February 28, 2017, respectively. We recorded a tax benefit of $0.5 million and $1.7 million for the 13 and 39 weeks ended March 1, 2016, respectively. Netted against our tax benefit for the 13 and 39 weeks ended February 28, 2017 were charges of $10.3 million and $44.1 million, respectively, representing increases in the valuation allowance for deferred tax assets recorded primarily against general business credit carryforwards and federal and state net operating loss carryforwards.

We had a gross liability for unrecognized tax benefits, exclusive of accrued interest and penalties, of $3.8 million and $4.5 million, respectively, as of February 28, 2017 and May 31, 2016, of which $3.3 million and $3.7 million were reclassified against our deferred tax assets, respectively. As of February 28, 2017 and May 31, 2016, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $2.4 million and $2.3 million, respectively. The liability for unrecognized tax benefits as of February 28, 2017 does not include anything 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 both February 28, 2017 and May 31, 2016, we had accrued $0.4 million for the payment of interest and penalties. During the first three quarters of fiscal year 2017, accrued interest and penalties increased by an insignificant amount.

At February 28, 2017, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2012, and with few exceptions, we are no longer subject to state and local examinations by tax authorities prior to fiscal year 2014.

10. Share-Based Employee Compensation

Preferred Stock

RTI is authorized, under its Certificate of Incorporation, to issue up to 250,000 shares of preferred stock with a par value of $0.01. These shares may be issued from time to time in one or more series. Each series will have dividend rates, rights of conversion and redemption, liquidation prices, and other terms or conditions as determined by the Board of Directors. No preferred shares have been issued as of February 28, 2017 and May 31, 2016.

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. Stock 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 stock 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 stock 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 February 28, 2017, we had reserved a total of 6,557,000 shares of common stock for the SIP and 1996 SIP. Of the reserved shares at February 28, 2017, 1,749,000 were subject to stock options outstanding. Stock option exercises are settled with the issuance of new shares. Net shares of common stock available for issuance at February 28, 2017 were 4,808,000. 

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Stock Options

The following table summarizes our stock option activity under these stock option plans for the 39 weeks ended February 28, 2017 (Stock Options and Aggregate Intrinsic Value are in thousands):

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Service-based vesting:
Outstanding at May 31, 2016		2,066		$	7.89
Granted		1,126			3.46
Cancellations and forfeitures		(40	)		4.53
Expired		(1,403	)		6.62
Outstanding at February 28, 2017		1,749		$	6.13		3.64	$	–
Exercisable at February 28, 2017		910		$	8.62		1.10	$	–

At February 28, 2017, there was approximately $0.6 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 1.4 years.

During the 39 weeks ended February 28, 2017, we granted 247,000 service-based stock options to our Interim Chief Executive Officer under the terms of the SIP. The stock options awarded cliff vest at the end of fiscal year 2017 and have a maximum life of seven years.

During the 39 weeks ended February 28 2017, we granted 878,000 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.

Restricted Stock and Restricted Stock Units (“RSU”)

The following table summarizes our restricted stock and RSU activity for the 39 weeks ended February 28, 2017 (in thousands, except per-share data):

	Shares			Weighted Average Fair Value
Service-Based Vesting:
Unvested at May 31, 2016		564		$	6.29
Granted		538			3.22
Vested		(535	)		5.79
Cancellations and forfeitures		(41	)		5.70
Unvested at February 28, 2017		526		$	3.71
Performance-Based Vesting:
Unvested at May 31, 2016		225		$	6.51
Cancellations and forfeitures		(84	)		6.51
Unvested at February 28, 2017		141		$	6.51

The fair value of restricted stock and RSU awards is based on the closing price of our common stock on the date prior to the grant date. At February 28, 2017, unrecognized compensation expense related to restricted stock and RSU grants expected to vest totaled $1.2 million and will be recognized over a weighted average vesting period of 1.2 years.

During the 39 weeks ended February 28, 2017, we granted 219,000 restricted shares to non-employee directors under the terms of the SIP.  These shares cliff vest over a one year period following the grant date of the award.

During the 39 weeks ended February 28, 2017, we granted 319,000 service-based RSUs to certain employees under the terms of the SIP and 1996 SIP. The service-based RSUs will vest in three equal installments over a three-year period following the date of grant.

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Phantom Stock Units

We began granting phantom stock units during fiscal year 2017. Each phantom stock unit entitles the recipient to receive a cash payment equal to the value of a single share of our common stock upon vesting. During the second quarter of fiscal year 2017, we granted 81,000 service-based phantom stock units to our Interim Chief Executive Officer. The phantom stock units will cliff vest at the end of fiscal year 2017.

Also during the second quarter of fiscal year 2017, we granted 407,000 service-based phantom stock units to our senior executive team. The phantom stock units will cliff vest two years following the grant date of the award.

During the first quarter of fiscal year 2017, we granted 571,000 performance-based phantom stock units that will vest approximately three years after the grant date. Vesting of the performance-based phantom stock units is contingent upon the Company’s achievement of a same-restaurant sales performance condition related to the next three fiscal years. During the second quarter of fiscal year 2017, 210,000 of these performance-based phantom stock units were forfeited primarily in connection with the departure of our former President and Chief Executive Officer.

Included in our Condensed Consolidated Balance Sheets are amounts within Accrued liabilities: Payroll and related costs of $0.1 million as of February 28, 2017 and amounts within Other deferred liabilities of $0.3 million and $0.2 million as of  February 28, 2017 and May 31, 2016, respectively, relating to all of our long-term incentive awards that will settle in cash.

Included within General and administrative expenses in our Consolidated Statements of Operations and Comprehensive Loss is share-based compensation expense of $0.5 million and $3.0 million for the 13 and 39 weeks ended February 28, 2017, respectively, and $0.9 million and $1.7 million for the 13 and 39 weeks ended March 1, 2016.

11. Commitments and Contingencies

Litigation

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business. We provide reserves for such claims when payment is probable and estimable in accordance with GAAP. At this time, in the opinion of management, the ultimate resolution of pending legal proceedings, including the matter referred to below, will not have a material adverse effect on our condensed consolidated operations, financial position, or cash flows.

As also discussed in Note 15 to the Condensed Consolidated Financial Statements, in May 2014, a securities class action case styled Dennis Krystek v. Ruby Tuesday, Inc. et al, was filed in the U.S. District Court for the Middle District of Tennessee, Nashville Division.  The case alleged that the Company and some of its former executives made false and misleading statements about the Company's financial performance and the financial performance of the Lime Fresh concept.  On March 29, 2017, the Company agreed to settle the case for $5.0 million.  We maintain insurance to cover these types of claims with our primary insurance carrier, subject to a self-insured retention which had been met prior to February 28, 2017.  Our insurance policies cover amounts in excess of our self-insured retention. In accordance with ASC Subtopic 405-20-40, Extinguishment of Liabilities, and ASC Subtopic 210-20, Balance Sheet Offsetting, we have recorded both an accrued liability (included within Accrued liabilities: Rent and other) and an asset for insurance recovery (included within Accounts and other receivables), in the amount of $5.0 million, in our Condensed Consolidated Balance Sheet as of February 28, 2017.

12. 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		February 28, 2017			May 31, 2016
Deferred compensation plan – Assets		1	$	5,644		$	6,660
Deferred compensation plan – Liabilities		1		(5,644	)		(6,660	)

There were no transfers among levels within the fair value hierarchy during the 39 weeks ended February 28, 2017.

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 Consolidated Financial Statements. The investments held by these plans are considered trading securities and are reported at fair value based on third-party broker statements.

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The realized and unrealized holding gains and losses related to these other investments, as well as the offsetting compensation expense, is recorded in General and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The investment in RTI common stock and related liability payable in RTI common stock, which are reflected in Shareholders' Equity in the Condensed Consolidated Balance Sheets, are excluded from the fair value table above as these are considered treasury shares and reported at cost.

The following table presents the fair values on our Condensed Consolidated Balance Sheets as of February 28, 2017 for those assets and liabilities measured on a non-recurring basis (in thousands):

	Fair Value Measurements
	Level		February 28, 2017
Long-lived assets held for use		2	$	4,519
Long-lived assets held for sale		2		444
Total			$	4,963

The following table presents the losses recognized during the 13 and 39 weeks ended February 28, 2017 and March 1, 2016 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis. The amounts presented are included in Closures and impairments, net in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Long-lived assets held for use	$	14,914	$	6,764	$	29,930	$	15,206
Long-lived assets held for sale		32		174		2,844		524
Lime Fresh trademark		–		–		–		1,999
Long-lived asset impairments	$	14,946	$	6,938	$	32,774	$	17,729

Long-lived assets held for sale are valued using Level 2 inputs, primarily from information obtained through broker listings or sales agreements. Costs to market and/or sell are factored into the estimates of fair value for those properties 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 a restaurant may not be recoverable.

Long-lived assets held for use presented in the table above includes restaurants or groups of restaurants that we have impaired. From time to time, the table will also include closed restaurants or surplus sites not meeting held for sale criteria that have been offered for sale at a price less than their carrying value.

The fair values of our long-lived assets held for use are primarily based on broker estimates of the value of the land, building, leasehold improvements, and other residual assets (Level 2).

Our financial instruments at February 28, 2017 and May 31, 2016 consisted of cash and cash equivalents, accounts receivable and payable, and long-term debt. The fair values of cash and cash equivalents and accounts receivable and payable approximated their carrying values because of the short-term nature of these instruments. The carrying amounts and fair values of our long-term debt, which are not measured on a recurring basis using fair value, are as follows (in thousands):

	February 28, 2017				May 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt (Level 2)	$	213,675	$	210,586	$	223,526	$	223,212

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

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13. Supplemental Condensed Consolidating Financial Statements

As discussed in Note 6 to the Condensed 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 SEC, 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.

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Condensed Consolidating Balance Sheet

As of February 28, 2017

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	32,495		$	132	$	–		$	32,627
Accounts and other receivables		8,223			5,192		–			13,415
Inventories		13,068			4,949		–			18,017
Income tax receivable		173,370			–		(168,632	)		4,738
Other current assets		16,906			11,679		–			28,585
Total current assets		244,062			21,952		(168,632	)		97,382
Property and equipment, net		459,402			142,146		–			601,548
Investment in subsidiaries		70,596			–		(70,596	)		–
Due from/(to) subsidiaries		93,299			222,799		(316,098	)		–
Other assets		39,617			4,263		–			43,880
Total assets	$	906,976		$	391,160	$	(555,326	)	$	742,810
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	18,834		$	4,749	$	–		$	23,583
Accrued and other current liabilities		50,686			18,313		–			68,999
Deferred revenue – gift cards		(502	)		17,974		–			17,472
Current maturities of long-term debt,
including capital leases		(1,132	)		1,481		–			349
Income tax payable		–			168,632		(168,632	)		–
Total current liabilities		67,886			211,149		(168,632	)		110,403
Long-term debt and capital leases,
less current maturities		209,911			3,622		–			213,533
Due to/(from) subsidiaries		222,799			93,299		(316,098	)		–
Other deferred liabilities		91,984			12,494		–			104,478
Total liabilities		592,580			320,564		(484,730	)		428,414
Shareholders’ equity:
Common stock		605			–		–			605
Capital in excess of par value		78,937			–		–			78,937
Retained earnings		243,897			70,596		(70,596	)		243,897
Accumulated other comprehensive loss		(9,043	)		–		–			(9,043	)
Total shareholders’ equity		314,396			70,596		(70,596	)		314,396
Total liabilities & shareholders’ equity	$	906,976		$	391,160	$	(555,326	)	$	742,810

20

Condensed Consolidating Balance Sheet

As of May 31, 2016

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	67,208		$	133	$	–		$	67,341
Accounts and other receivables		8,102			4,725		–			12,827
Inventories		15,401			6,194		–			21,595
Income tax receivable		167,065			–		(164,062	)		3,003
Other current assets		11,282			4,868		–			16,150
Total current assets		269,058			15,920		(164,062	)		120,916
Property and equipment, net		501,482			169,768		–			671,250
Investment in subsidiaries		98,929			–		(98,929	)		–
Due from/(to) subsidiaries		76,208			213,816		(290,024	)		–
Other assets		40,626			5,125		–			45,751
Total assets	$	986,303		$	404,629	$	(553,015	)	$	837,917
Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	17,405		$	4,736	$	–		$	22,141
Accrued and other current liabilities		36,155			13,122		–			49,277
Deferred revenue – gift cards		(481	)		16,835		–			16,354
Current maturities of long-term debt,
including capital leases		(1,067	)		11,001		–			9,934
Income tax payable		–			164,062		(164,062	)		–
Total current liabilities		52,012			209,756		(164,062	)		97,706
Long-term debt and capital leases,
less current maturities		209,058			4,745		–			213,803
Due to/(from) subsidiaries		213,816			76,208		(290,024	)		–
Other deferred liabilities		103,637			14,991		–			118,628
Total liabilities		578,523			305,700		(454,086	)		430,137
Shareholders’ equity:
Common stock		601			–		–			601
Capital in excess of par value		75,938			–		–			75,938
Retained earnings		341,350			98,929		(98,929	)		341,350
Accumulated other comprehensive loss		(10,109	)		–		–			(10,109	)
Total shareholders’ equity		407,780			98,929		(98,929	)		407,780
Total liabilities & shareholders’ equity	$	986,303		$	404,629	$	(553,015	)	$	837,917

21

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirteen Weeks Ended February 28, 2017

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	165,005		$	59,933		$	–		$	224,938
Franchise revenue		–			794			–			794
Total revenue		165,005			60,727			–			225,732
Operating costs and expenses:
Cost of goods sold		47,164			17,176			–			64,340
Payroll and related costs		57,485			22,595			–			80,080
Other restaurant operating costs		33,356			11,730			–			45,086
Depreciation and amortization		7,509			2,612			–			10,121
General and administrative expenses		7,295			6,581			–			13,876
Intercompany general and administrative allocations		9,167			(9,167	)		–			–
Marketing expenses, net		10,296			3,511			–			13,807
Closures and impairments, net		11,253			2,188			–			13,441
Equity in earnings of subsidiaries		(2,017	)		–			2,017			–
Interest expense, net		4,688			182			–			4,870
Intercompany interest expense/(income)		3,035			(3,035	)		–			–
Total operating costs and expenses		189,231			54,373			2,017			245,621
(Loss)/income before income taxes		(24,226	)		6,354			2,017			(19,889	)
(Benefit)/provision for income taxes		(4,421	)		4,337			–			(84	)
Net (loss)/income	$	(19,805	)	$	2,017		$	(2,017	)	$	(19,805	)
Other comprehensive income:
Pension liability reclassification		356			–			–			356
Total comprehensive (loss)/income	$	(19,449	)	$	2,017		$	(2,017	)	$	(19,449	)

22

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirty-Nine Weeks Ended February 28, 2017

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	507,414		$	187,103		$	–		$	694,517
Franchise revenue		10			2,581			–			2,591
Total revenue		507,424			189,684			–			697,108
Operating costs and expenses:
Cost of goods sold		145,051			53,621			–			198,672
Payroll and related costs		179,149			71,956			–			251,105
Other restaurant operating costs		108,613			40,456			–			149,069
Depreciation and amortization		23,265			8,573			–			31,838
General and administrative expenses		26,376			21,983			–			48,359
Intercompany general and administrative allocations		28,223			(28,223	)		–			–
Marketing expenses, net		32,119			11,209			–			43,328
Closures and impairments, net		38,025			21,316			–			59,341
Equity in losses of subsidiaries		7,791			–			(7,791	)		–
Interest expense, net		13,829			762			–			14,591
Intercompany interest expense/(income)		8,983			(8,983	)		–			–
Total operating costs and expenses		611,424			192,670			(7,791	)		796,303
(Loss)/income before income taxes		(104,000	)		(2,986	)		7,791			(99,195	)
(Benefit)/provision for income taxes		(6,547	)		4,805			–			(1,742	)
Net loss	$	(97,453	)	$	(7,791	)	$	7,791		$	(97,453	)
Other comprehensive income:
Pension liability reclassification		1,066			–			–			1,066
Total comprehensive loss	$	(96,387	)	$	(7,791	)	$	7,791		$	(96,387	)

23

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirteen Weeks Ended March 1, 2016

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	194,527		$	75,341		$	–		$	269,868
Franchise revenue		90			1,512			–			1,602
Total revenue		194,617			76,853			–			271,470
Operating costs and expenses:
Cost of goods sold		54,209			20,934			–			75,143
Payroll and related costs		65,474			27,883			–			93,357
Other restaurant operating costs		40,008			15,303			–			55,311
Depreciation and amortization		9,008			3,724			–			12,732
General and administrative expenses		7,315			6,833			–			14,148
Intercompany general and administrative allocations		10,726			(10,726	)		–			–
Marketing expenses, net		9,685			3,545			–			13,230
Closures and impairments, net		3,993			2,130			–			6,123
Equity in earnings of subsidiaries		(5,676	)		–			5,676			–
Interest expense, net		4,556			439			–			4,995
Intercompany interest expense/(income)		3,058			(3,058	)		–			–
Total operating costs and expenses		202,356			67,007			5,676			275,039
(Loss)/income before income taxes		(7,739	)		9,846			(5,676	)		(3,569	)
(Benefit)/provision for income taxes		(4,653	)		4,170			–			(483	)
Net (loss)/income	$	(3,086	)	$	5,676		$	(5,676	)	$	(3,086	)
Other comprehensive income:
Pension liability reclassification, net of tax		885			–			–			885
Total comprehensive (loss)/income	$	(2,201	)	$	5,676		$	(5,676	)	$	(2,201	)

24

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirty-Nine Weeks Ended March 1, 2016

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	583,055		$	224,050		$	–		$	807,105
Franchise revenue		220			4,581			–			4,801
Total revenue		583,275			228,631			–			811,906
Operating costs and expenses:
Cost of goods sold		160,212			61,477			–			221,689
Payroll and related costs		197,732			83,244			–			280,976
Other restaurant operating costs		126,234			47,669			–			173,903
Depreciation and amortization		27,305			11,169			–			38,474
General and administrative expenses		23,797			20,429			–			44,226
Intercompany general and administrative allocations		32,188			(32,188	)		–			–
Marketing expenses, net		29,591			10,805			–			40,396
Closures and impairments, net		16,080			4,827			–			20,907
Equity in earnings of subsidiaries		(18,907	)		–			18,907			–
Interest expense, net		13,806			2,294			–			16,100
Intercompany interest expense/(income)		9,049			(9,049	)		–			–
Total operating costs and expenses		617,087			200,677			18,907			836,671
(Loss)/income before income taxes		(33,812	)		27,954			(18,907	)		(24,765	)
(Benefit)/provision for income taxes		(10,733	)		9,047			–			(1,686	)
Net (loss)/income	$	(23,079	)	$	18,907		$	(18,907	)	$	(23,079	)
Other comprehensive income:
Pension liability reclassification, net of tax		1,347			–			–			1,347
Total comprehensive (loss)/income	$	(21,732	)	$	18,907		$	(18,907	)	$	(21,732	)

25

Condensed Consolidating Statement of Cash Flows

For the Thirty-Nine Weeks Ended February 28, 2017

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(38,058	)	$	27,897		$	(11,558	)	$	(21,719	)
Investing activities:
Purchases of property and equipment		(21,631	)		(5,321	)		–			(26,952	)
Proceeds from disposal of assets		13,471			8,573			–			22,044
Insurance proceeds from property claims		358			–						358
Reductions in Deferred Compensation Plan assets		1,702			–						1,702
Other, net		1,439			–			–			1,439
Net cash (used)/provided by investing activities		(4,661	)		3,252			–			(1,409	)
Financing activities:
Principal payments on long-term debt		(4	)		(10,609	)		–			(10,613	)
Stock repurchases		(26	)		–			–			(26	)
Payments for debt issuance costs		(947	)		–			–			(947	)
Intercompany dividend		–			(20,541	)		20,541			–
Other intercompany transactions		8,983			–			(8,983	)		–
Net cash (used)/provided by financing activities		8,006			(31,150	)		11,558			(11,586	)
Decrease in cash and cash equivalents		(34,713	)		(1	)		–			(34,714	)
Cash and cash equivalents:
Beginning of fiscal year		67,208			133			–			67,341
End of quarter	$	32,495		$	132		$	–		$	32,627

26

Condensed Consolidating Statement of Cash Flows

For the Thirty-Nine Weeks Ended March 1, 2016

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(8,133	)	$	41,932		$	(15,260	)	$	18,539
Investing activities:
Purchases of property and equipment		(19,892	)		(7,454	)		–			(27,346	)
Proceeds from disposal of assets		6,193			–			–			6,193
Other, net		2,444			–			–			2,444
Net cash used by investing activities		(11,255	)		(7,454	)		–			(18,709	)
Financing activities:
Principal payments on long-term debt		(2,390	)		(10,274	)		–			(12,664	)
Stock repurchases		(10,009	)		–			–			(10,009	)
Payments for debt issuance costs		(30	)		–			–			(30	)
Intercompany dividend		–			(24,309	)		24,309			–
Other intercompany transactions		9,049			–			(9,049	)		–
Net cash (used)/provided by financing activities		(3,380	)		(34,583	)		15,260			(22,703	)
Decrease in cash and cash equivalents		(22,768	)		(105	)		–			(22,873	)
Cash and cash equivalents:
Beginning of fiscal year		75,034			297			–			75,331
End of quarter	$	52,266		$	192		$	–		$	52,458

14. Recently Issued Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Payments (“ASU 2016-15”), which provides clarification regarding how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues with the objective to reduce diversity in practice of how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods therein (our fiscal year 2019). Early application is permitted. We do not believe the adoption of this guidance will have a material impact on our Condensed Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods therein (our fiscal year 2018).  Early application is permitted. We are currently evaluating the impact of this guidance on our Condensed Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods therein (our fiscal year 2020). Early application is permitted. We are currently evaluating the impact of this guidance on our Condensed Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote

27

disclosures in certain circumstances. The guidance is effective for annual periods ending after December 15, 2016, and for interim periods within annual periods beginning thereafter (our fiscal year 2017). We do not believe the adoption of this guidance will have a material impact on our Condensed Consolidated Financial Statements.

In May 2014, the FASB and International Accounting Standards Board jointly issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 will replace almost all existing revenue recognition guidance, including industry specific guidance, upon its effective date. The standard's core principle is for a company to recognize revenue when it transfers goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled.

A company may also need to use more judgment and make more estimates when recognizing revenue, which could result in additional disclosures. ASU 2014-09 also provides guidance for transactions that were not addressed comprehensively in previous guidance, such as the recognition of breakage income from the sale of gift cards. The standard permits the use of either the retrospective or cumulative effect transition method. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 (our fiscal year 2019), with early application permitted in the first quarter of 2017. We do not expect the adoption of this guidance to impact our recognition of Company-owned restaurants sales and operating revenue or our recognition of continuing fees from franchisees, which are based on a percentage of franchise sales. We have not yet selected a transition method and are continuing to evaluate the impact of this guidance on our less significant revenue transactions, such as initial franchise license fees.

Additionally, in March and April 2016, the FASB issued the following amendments to ASU 2014-09 to clarify the implementation guidance: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) and ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. Under the new guidance, expected gift card breakage income will be required to be recognized proportionately as redemption occurs. Our current accounting policy of recognizing gift card breakage income applying the remote method will no longer be allowed. The timing of transition of this guidance is consistent with the new revenue recognition standard as discussed above. We expect to implement the provisions of ASU 2014-09 and the related amendments in the same period.

15. Subsequent Events

Appointment of Chief Executive Officer

On April 4, 2017, James F. Hyatt was appointed President and Chief Executive Officer of the Company, replacing F. Lane Cardwell, Jr., who has been serving as our Interim President and Chief Executive Officer.  Mr. Hyatt was also appointed to serve as a member of the Board of Directors of the Company (the "Board").  Mr. Cardwell will continue to serve as a member of the Board.  Also on April 4, 2017, we granted 142,045 service-based restricted stock units to Mr. Hyatt upon his appointment as President and Chief Executive Officer.  The service-based RSUs will vest in three equal installments over a three-year period following the date of grant.

Litigation Settlement

As also discussed in Notes 4 and 11 to the Condensed Consolidated Financial Statements, in May 2014, a securities class action case styled Dennis Krystek v. Ruby Tuesday, Inc. et al, was filed in the U.S. District Court for the Middle District of Tennessee, Nashville Division.  The case alleged that the Company and some of its former executives made false and misleading statements about the Company's financial performance and the financial performance of the Lime Fresh concept.  On March 29, 2017, the Company agreed to settle the case for $5.0 million.  We maintain insurance to cover these types of claims with our primary insurance carrier, subject to a self-insured retention which had been met prior to February 28, 2017.  Our insurance policies cover amounts in excess of our self-insured retention. In accordance with ASC Subtopic 405-20-40, Extinguishment of Liabilities, and ASC Subtopic 210-20, Balance Sheet Offsetting, we have recorded both an accrued liability (included within Accrued liabilities: Rent and other) and an asset for insurance recovery (included within Accounts and other receivables), in the amount of $5.0 million, in our Condensed Consolidated Balance Sheet as of February 28, 2017.

Lease Settlements

As previously mentioned in Note 7 to the Condensed Consolidated Financial Statements, we had a liability for future lease obligations of $19.1 million as of February 28, 2017. Since then and through the date of this filing, we settled four of these leases for $1.4 million, which approximated the amount of our accrual for those leases at February 28, 2017.

28

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.

Introduction

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we” and/or “our”), owns and operates Ruby Tuesday® casual dining restaurants. We also franchise the Ruby Tuesday concept in select domestic and international markets. As of February 28, 2017, we owned and operated 544, and franchised 63 Ruby Tuesday restaurants. Ruby Tuesday restaurants can be found in 41 states, 14 foreign countries, and Guam.

On August 11, 2016, following a comprehensive review of the Company’s property portfolio and in conjunction with the launch of a Fresh Start initiative as discussed below, we announced a plan to close 95 Company-owned restaurants with perceived limited upside due to market concentration, challenged trade areas, and other factors. The plan was designed to streamline the organization through asset rationalization, improve financial profitability, and ultimately create long-term value for shareholders. All of the identified restaurants were closed during the first quarter of fiscal year 2017.

In an effort to focus on our core Ruby Tuesday concept, during the second quarter of fiscal year 2016 we entered into an agreement to sell our eight remaining Company-owned Lime Fresh Mexican Grill® (“Lime Fresh”) restaurants, six of which we closed and transferred to the buyer during fiscal year 2016. During the first half of fiscal year 2017, we completed the closure and transfer of the two remaining Lime Fresh restaurants.

Overview and Strategies

The bar and grill segment of the casual dining industry in which we primarily 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. We continue to believe there are opportunities to grow our same-restaurant sales, strengthen our competitive position, enhance our profitability, and create value through the execution of the following strategies:

Review of Strategic Alternatives

On March 13, 2017, we announced that we are exploring strategic alternatives in order to maximize shareholder value and position the business for long-term success. We are considering all strategic alternatives including, but not limited to a potential sale or merger of the Company, and have retained a financial advisor to assist in the process. We do not intend to make any further comment regarding the review until it has been completed.

Fresh Start Initiatives

In August 2016, we announced the launch of our Fresh Start initiatives which are intended to streamline our organization, improve financial profitability and ultimately create long-term value for our shareholders. The Fresh Start initiatives were developed to drive more significant top line growth and profitability over time by re-engaging with more women and young families, which we believe represents the largest opportunity for incremental sales growth. The key components of the Fresh Start initiatives include:

● A new menu which is intended to provide culinary innovation and value to our guests while simplifying recipes and procedures for our kitchen. As consumer preference continues to migrate toward healthier food options, we will continue to make meaningful improvements in our core menu that will incorporate hand-crafted American favorites but will contain more lean proteins and fresh vegetables.

● A new Garden Bar which we restaged and improved to offer over 50 items in order to provide more desirable offering in a cost effective way. The Garden Bar is a key brand differentiator that we believe sets us apart from our competition and is the most important item on our menu. Approximately half our guests utilize the Garden Bar when they dine with us, either as an add-on or as a main course.

● A Fresh New Experience which is focused on revitalizing our brand through improving our service and overall guest experience. As part of our work in this area, we completed 13 store remodels in two test markets. Additionally, we are working with our teams at the restaurant level with service initiatives to improve the pace of meals and attentiveness, particularly through menu simplification. Pending the results of remodels in the two test markets, we have placed a temporary hold on further remodels while measuring the combined results from our new menu, new Garden Bar, and Fresh New Experience.

29

● The Asset Rationalization Plan involved a comprehensive restaurant-level review and analysis of the sales, cash flows and other key performance metrics of our corporate-owned restaurant properties, as well as site location, market positioning and lease status. Based upon our findings, we concluded that it was in the Company's and our shareholders' best interest to close 95 underperforming restaurants during the first quarter of fiscal year 2017.

Strengthen our Balance Sheet to Facilitate Growth and Value Creation

Our priority for the use of cash is to drive shareholder value. Our objective is to continue to maintain adequate cash levels to support business needs, while investing in key components of our Fresh Start initiatives. In fiscal year 2017, as a result of our Asset Rationalization Plan, we expect fluctuations in cash balances as we hope to generate cash through the sale of surplus properties while using cash to settle leases for closed restaurants. Additionally, from time to time, we have considered other options for cash such as reducing outstanding debt levels and share repurchases within the limitations of our debt covenants. Our success in the key strategic initiatives outlined above should enable us to improve both our returns on assets and equity and create additional shareholder value.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“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.

Results of Operations

The following is an overview of our results of operations for the 13- and 39- week periods ended February 28, 2017:

Net loss was $19.8 million for the 13 weeks ended February 28, 2017 compared to $3.1 million for the corresponding period of the previous fiscal year. Diluted loss per share for the 13 weeks ended February 28, 2017 was $0.33 compared to $0.05 for the corresponding period of the prior fiscal year as a result of an increase in net loss as discussed later within this MD&A.

During the 13 weeks ended February 28, 2017:

● Same-restaurant sales* at Company-owned Ruby Tuesday restaurants decreased 4.0% compared to the corresponding period of the prior fiscal year, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 0.1%;

● Two Company-owned Ruby Tuesday restaurants were closed; and

● One franchised Ruby Tuesday restaurant was opened and five were closed.

Net loss was $97.5 million for the 39 weeks ended February 28, 2017 compared to $23.1 million for the corresponding period of the previous fiscal year. Diluted loss per share for the 39 weeks ended February 28, 2017 was $1.62 compared to $0.38 for the corresponding period of the prior fiscal year as a result of an increase in net loss as discussed later within this MD&A.

During the 39 weeks ended February 28, 2017:

● Same-restaurant sales* at Company-owned Ruby Tuesday restaurants decreased 3.6% compared to the corresponding period of the prior fiscal year, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 2.1%;

● 95 Company-owned Ruby Tuesday restaurants were closed in connection with our Fresh Start initiative, which resulted in additional closed restaurant lease reserves, inventory write-off, severance benefits, and other closing expense of $30.2 million;

● Seven Company-owned Ruby Tuesday restaurants were closed as expected at, or near, lease expiration;

● Two franchised Ruby Tuesday restaurant were opened and 17 were closed;

● Two Company-owned Lime Fresh restaurants were closed; and

● On September 13, 2016, James J. Buettgen resigned as Chairman of the Board of Directors, President, and Chief Executive Officer of the Company. On the same date, F. Lane Cardwell, Jr., a member of the Company's Board of Directors since October 2012 and an executive with approximately 38 years of leadership experience in the restaurant industry, was appointed Interim President and Chief Executive

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Officer, Stephen I. Sadove, the Company’s then Lead Director, was appointed Chairman of the Board, and Sue Briley, who had been serving as interim Chief Financial Officer since June 2016, was appointed Chief Financial Officer.

* 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.

Operating Loss

The following table sets forth selected restaurant operating data as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, 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					Thirty-nine weeks ended
		February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Restaurant sales and operating revenue		99.6	%	99.4	%	99.6	%	99.4	%
Franchise revenue		0.4		0.6		0.4		0.6
Total revenue		100.0		100.0		100.0		100.0
Operating costs and expenses:
Cost of goods sold (1)		28.6		27.8		28.6		27.5
Payroll and related costs (1)		35.6		34.6		36.2		34.8
Other restaurant operating costs (1)		20.0		20.5		21.5		21.5
Depreciation and amortization (1)		4.5		4.7		4.6		4.8
General and administrative expenses		6.1		5.2		6.9		5.4
Marketing expenses, net		6.1		4.9		6.2		5.0
Closures and impairments, net		6.0		2.3		8.5		2.6
Interest expense, net		2.2		1.8		2.1		2.0
Total operating costs and expenses		108.8		101.3		114.2		103.1
Loss before income taxes		(8.8	)	(1.3	)	(14.2	)	(3.1	)
Benefit for income taxes		(0.0	)	(0.2	)	(0.2	)	(0.2	)
Net loss		(8.8	)%	(1.1	)%	(14.0	)%	(2.8	)%

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

The following table shows Company-owned Ruby Tuesday and Lime Fresh concept restaurant activity for the 13 and 39 weeks ended February 28, 2017 and March 1, 2016:

	Ruby Tuesday	Lime Fresh	Total
13 weeks ended February 28, 2017
Beginning number	546	-	546
Closed	(2)	-	(2)
Ending number	544	–	544
39 weeks ended February 28, 2017
Beginning number	646	2	648
Closed	(102)	(2)	(104)
Ending number	544	–	544
13 weeks ended March 1, 2016
Beginning number	655	8	663
Closed	(6)	–	(6)
Ending number	649	8	657
39 weeks ended March 1, 2016
Beginning number	658	19	677
Closed	(9)	(11)	(20)
Ending number	649	8	657

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The following table shows franchised Ruby Tuesday concept restaurant activity for the 13 and 39 weeks ended February 28, 2017 and March 1, 2016:

	Thirteen weeks ended		Thirty-nine weeks ended
	February 28, 2017	March 1, 2016		February 28, 2017	March 1, 2016
Beginning number	67	78	78		78
Opened	1	2	2		4
Closed	(5)	–	(17)		(2)
Ending number	63	80	63		80

Revenue 

Restaurant sales and operating revenue for the 13 weeks ended February 28, 2017 decreased 16.6% to $224.9 million compared to the corresponding period of the prior fiscal year. This decrease is primarily a result of restaurant closings since the corresponding period of the prior fiscal year, 95 of which closed during the first quarter of fiscal year 2017 in connection with our Asset Rationalization Plan as discussed previously within this MD&A, coupled with a 4.0% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants. The decrease in Ruby Tuesday concept same-restaurant sales is attributable to a 3.8% decrease in customer traffic coupled with a 0.2% decrease in net check. The 95 restaurants that closed during the first quarter of fiscal year 2017 produced revenues of $29.0 million during the 13 weeks ended March 1, 2016.

Franchise revenue for the 13 weeks ended February 28, 2017 decreased 50.4% to $0.8 million compared to the corresponding period of the prior fiscal year. Franchise revenue is predominantly comprised of domestic and international royalties, which totaled $0.8 million and $1.6 million for the 13 weeks ended February 28, 2017 and March 1, 2016, respectively. The decrease compared to the corresponding period of the prior fiscal year is primarily the result of the closure of ten restaurants by one of our domestic franchisees, the sale of our Lime Fresh franchising rights, and the royalty fee payment default of one of our international franchisees since the corresponding period of the prior fiscal year.     

Restaurant sales and operating revenue for the 39 weeks ended February 28, 2017 decreased 13.9% to $694.5 million compared to the corresponding period of the prior fiscal year. This decrease is primarily a result of restaurant closings since the corresponding period of the prior fiscal year, 95 of which closed during the first quarter of fiscal year 2017, coupled with a 3.6% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants. The decrease in Ruby Tuesday concept same-restaurant sales is attributable to a 3.2% decrease in customer traffic coupled with a 0.4% decrease in net check. The 95 restaurants that closed during the first quarter of fiscal year 2017 produced revenues of $22.8 million and $86.7 million during the 39 weeks ended February 28, 2017 and March 1, 2016, respectively.

Franchise revenue for the 39 weeks ended February 28, 2017 decreased 46.0% to $2.6 million compared to the corresponding period of the prior fiscal year. Franchise revenue is predominantly comprised of domestic and international royalties, which totaled $2.6 million and $4.8 million for the 39 weeks ended February 28, 2017 and March 1, 2016, respectively. The decrease compared to the corresponding period of the prior fiscal year is primarily for the same reasons as discussed above for the 13-week period ended February 28, 2017.

Pre-tax Loss

Pre-tax loss increased from $3.6 million to $19.9 million for the 13 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. The increase in pre-tax loss is due primarily to higher closures and impairments expense ($7.3 million), a decrease in same-restaurant sales of 4.0% at Company-owned Ruby Tuesday restaurants, and an increase, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of costs of goods sold, payroll and related costs, general and administrative expenses, and marketing expenses, net. These were partially offset by a decrease in interest expense, net ($0.1 million) and a decrease, as a percentage of restaurant sales and operating revenue, of other restaurant operating costs and depreciation and amortization.

Pre-tax loss increased from $24.8 million to $99.2 million for the 39 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. The increase in pre-tax loss is due primarily to higher closures and impairments expense ($40.4 million), a decrease in same-restaurant sales of 3.6% at Company-owned Ruby Tuesday restaurants, and an increase, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of costs of goods sold, payroll and related costs, general and administrative expenses, and marketing expenses, net. These were partially offset by a decrease in interest expense, net ($1.5 million) and a decrease, as a percentage of restaurant sales and operating revenue, of depreciation and amortization.

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In the paragraphs that follow, we discuss in more detail the components of the changes in pre-tax loss for the 13 and 39 weeks ended February 28, 2017 compared to the corresponding periods of the prior fiscal year. Because a significant portion of the costs recorded in the cost of goods sold, payroll and related costs, other restaurant operating costs, and depreciation categories are either variable or highly correlate 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 fiscal year period.

Cost of Goods Sold
Cost of goods sold decreased $10.8 million (14.4%) to $64.3 million for the 13 weeks ended February 28, 2017, compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, cost of goods sold increased from 27.8% to 28.6%. Excluding the $8.4 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017 as part of our Asset Rationalization Plan as discussed previously within this MD&A, cost of merchandise decreased $2.4 million.

Cost of goods sold decreased $23.0 million (10.4%) to $198.7 million for the 39 weeks ended February 28, 2017, compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, cost of goods sold increased from 27.5% to 28.6%. Excluding the $18.3 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017, cost of merchandise decreased $4.7 million.

The absolute dollar decrease in cost of goods sold for the 13 and 39 weeks ended February 28, 2017 not attributable to the closing of 95 restaurants was primarily the result of a decline in same-restaurant sales.  These were partially offset by price increases on certain commodity items since the corresponding periods of the prior year, a shift in menu mix associated with core menu changes and promotional activity, and, for the 39-week period, settlement proceeds received during the corresponding periods of the prior fiscal year from a class-action lawsuit against a former vendor.

As a percentage of restaurant sales and operating revenue, the increase in cost of goods sold for the 13 and 39 weeks ended February 28, 2017 is primarily the result of price increases on certain commodity items and a shift in menu mix associated with menu changes and promotional activity since the corresponding periods of the prior fiscal year as discussed above.

Payroll and Related Costs
Payroll and related costs decreased $13.3 million (14.2%) to $80.1 million for the 13 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, payroll and related costs increased from 34.6% to 35.6%. Excluding the $12.2 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017, payroll and related costs decreased $1.1 million.

Payroll and related costs decreased $29.9 million (10.6%) to $251.1 million for the 39 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, payroll and related costs increased from 34.8% to 36.2%.  Excluding the $25.9 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017, payroll and related costs decreased $4.0 million.

The absolute dollar decrease in payroll and related costs for the 13 and 39 weeks ended February 28, 2017 not attributable to the closing of 95 restaurants was primarily the result of lower health insurance and workers®€™ compensation costs due to favorable claims experience which was partially offset by wage inflation.

As a percentage of restaurant sales and operating revenue, the increase in payroll and related costs for the 13 and 39 weeks ended February 28, 2017 is primarily the result of wage inflation and loss of leveraging associated with lower sales volumes.

Other Restaurant Operating Costs
Other restaurant operating costs decreased $10.2 million (18.5%) to $45.1 million for the 13 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, other restaurant operating costs decreased from 20.5% to 20.0%. Excluding the $8.2 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017, other restaurant operating costs decreased $2.0 million.

For the 13 weeks ended February 28, 2017, the decrease in other restaurant operating costs not attributable to the 95 restaurant closings related to the following (in thousands):

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Rent and leasing	$	1,299
Insurance		909
Other increases, net		(154	)
Net decrease	$	2,054

The absolute dollar decrease in other restaurant operating costs for the 13 weeks ended February 28, 2017 was a result of lower rent and leasing due in part to restaurant closures other than the 95 that closed as part of the Asset Rationalization Project coupled with lower insurance costs due primarily to proceeds from a fire damage claim and favorable general liability experience since the corresponding period of the prior fiscal year.

Other restaurant operating costs decreased $24.8 million (14.3%) to $149.1 million for the 39 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, other restaurant operating costs were consistent with the corresponding period of the prior fiscal year at 21.5% as lower costs as discussed below were offset by a loss of leveraging associated with lower sales volumes. Excluding the $17.8 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017, other restaurant operating costs decreased $7.0 million.

For the 39 weeks ended February 28, 2017, the decrease in other restaurant operating costs not attributable to the 95 restaurant closings related to the following (in thousands):

Rent and leasing	$	4,031
Repairs		1,001
Utilities		882
Insurance		403
Other decreases, net		714
Net decrease	$	7,031

The absolute dollar decrease in other restaurant operating costs for the 39 weeks ended February 28, 2017 was a result of lower rent and leasing, restaurant repairs, and utilities due in part to restaurant closures other than the 95 that closed as part of the Asset Rationalization Project coupled with lower insurance costs since the corresponding period of the prior fiscal year for similar reasons as discussed above for the 13-week period.

Depreciation and Amortization
Depreciation and amortization expense decreased $2.6 million (20.5%) to $10.1 million for the 13 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, depreciation expense decreased from 4.7% to 4.5%. Excluding the $1.2 million decrease from the elimination of the 95 restaurants closed during the first quarter of fiscal year 2017, depreciation and amortization decreased $1.4 million.

Depreciation and amortization expense decreased $6.6 million (17.2%) to $31.8 million for the 39 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year.  As a percentage of restaurant sales and operating revenue, depreciation expense decreased from 4.8% to 4.6%.  Excluding the $3.5 million decrease from the elimination of the 95 restaurant closed during the first quarter of fiscal 2017, depreciation and amortization decreased $3.1 million.

The absolute dollar decrease in depreciation and amortization for the 13 and 39 weeks ended February 28, 2017 is the result of assets that became fully depreciated or were impaired since the corresponding periods of the prior fiscal year coupled with restaurant closures not related to the Asset Rationalization Plan.

General and Administrative Expenses
General and administrative expenses decreased $0.3 million (1.9%) to $13.9 million for the 13 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year.

General and administrative expenses increased $4.1 million (9.3%) to $48.4 million for the 39 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year.

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The decrease in general and administrative expenses for the 13 weeks ended February 28, 2017 is primarily due to lower management labor, employee pension-related costs, and share-based compensation expense, which was partially offset by higher expense for executive bonus due to an adjustment in the corresponding period of the prior fiscal year.

The increase in general and administrative expenses for the 39 weeks ended February 28, 2017 is primarily due to higher severance as a result of the departure of our former Chief Executive Officer, an increase in share-based compensation expense as a result of the accelerated vesting during the second quarter of fiscal year 2017 of certain of our former Chief Executive Officer’s share-based awards upon his departure coupled with a forfeiture credit in the corresponding period of the prior fiscal year, and higher legal fees. These were partially offset by lower management labor, employee pension-related costs, and a reduction in the accrual for executive bonus.

Marketing Expenses, Net
Marketing expenses, net increased $0.6 million (4.4%) to $13.8 million for the 13 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year.

Marketing expenses, net increased $2.9 million (7.3%) to $43.3 million for the 39 weeks ended February 28, 2017 compared to the corresponding period of the prior fiscal year.

The increase in marketing expenses, net for the 13 weeks ended February 28, 2017 is primarily a result of higher television advertising due primarily to advertising associated with our new Garden Bar, which was partially offset by lower internet, direct mail, newspaper, and other promotional advertising costs since the corresponding period of the prior fiscal year.

The increase in marketing expenses, net for 39 weeks ended February 28, 2017 is primarily a result of higher television advertising for reasons as discussed above, and higher direct mail and other promotional advertising costs, which were partially offset by decreases in internet, magazine, and newspaper advertising since the corresponding period of the prior fiscal year.

Closures and Impairments, Net

Closures and impairments, net, increased $7.3 million to $13.4 million for the 13 weeks ended February 28, 2017, as compared to the corresponding period of the prior fiscal year. The increase is primarily due to higher property impairment charges ($8.0 million), closed restaurant lease reserves ($1.1 million), and other closing costs ($0.8 million). These increases were partially offset by higher gains on the sale of surplus properties ($2.3 million), and a decrease in severance benefits ($0.3 million).

Closures and impairments, net increased $38.4 million to $59.3 million for the 39 weeks ended February 28, 2017, as compared to the corresponding period of the prior fiscal year. The increase is primarily due to higher property impairment charges ($17.0 million), closed restaurant lease reserve expense ($14.3 million), and inventory write-off, severance benefits, and other closing costs ($8.1 million), coupled with lower gains on the sale of surplus properties ($1.0 million). These were partially offset by a partial impairment of the Lime Fresh trademark ($2.0 million) during the corresponding period of the prior fiscal year.

As previously discussed in Note 7 to the Condensed Consolidated Financial Statements, during the first quarter of fiscal year 2017, we closed 102 Company-owned restaurants, 95 of which were closed in connection with an asset rationalization plan announced on August 11, 2016. The plan was formulated in response to a comprehensive review of our property portfolio which included the planned closure of restaurants with perceived limited upside due to market concentration, challenged trade areas, or other factors. Included within Closures and impairments, net for the 39 weeks ended February 28, 2017 are closed restaurant lease reserves, inventory write-off, severance benefits, and other closing expense of $30.2 million related to these closures in connection with the Asset Rationalization Plan.

See Note 7 to the Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the 13 and 39 weeks ended February 28, 2017 and March 1, 2016.

Within our impairment analysis for the 13-week period ended February 28, 2017, we had 65 restaurants that had either been open for more than six full quarters with rolling 12-month negative cash flows or had suppressed levels of positive cash flows. Of these restaurants, 42 have been impaired to salvage value. The remaining net book value of the 23 restaurants, one of which is located on an owned property, was $4.9 million at February 28, 2017.

Should cash flows at these cash flow negative restaurants not improve within a reasonable period of time, further impairment charges may occur. 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 quarter to quarter and from our estimates.

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Interest Expense, Net
Interest expense, net decreased $0.1 million to $4.9 million for the 13 weeks ended February 28, 2017, as compared to the corresponding period of the prior fiscal year.

Interest expense, net decreased $1.5 million to $14.6 million for the 39 weeks ended February 28, 2017, as compared to the corresponding period of the prior fiscal year, primarily due to the early payoff of certain mortgage loans and repurchases of our Senior Notes during the prior fiscal year.

Benefit for Income Taxes

We recorded a tax benefit of $0.1 million and $1.7 million for the 13 and 39 weeks ended February 28, 2017, respectively, compared to a tax benefit of $0.5 million and $1.7 million for the 13 and 39 weeks ended March 1, 2016, respectively. Netted against our tax benefit for the 13 and 39 weeks ended February 28, 2017 were charges of $10.3 million and $44.1 million, respectively, representing increases in the valuation allowance for deferred tax assets recorded primarily against general business credit carryforwards and federal and state net operating loss carryforwards.

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 consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets for each jurisdiction.

We are required to assess whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. As a result of, among other charges, closures and impairments, we currently reflect a three-year cumulative pre-tax loss. A cumulative pre-tax loss is given more weight than projections of future income, and a recent historical cumulative loss is considered a significant factor that is difficult to overcome. Our valuation allowance for deferred tax assets totaled $131.3 and $89.9 million as of February 28, 2017 and May 31, 2016, respectively. Before consideration of the valuation allowance expense and including tax credits, we had an income tax benefit of $10.4 million and $45.8 million for the 13 and 39 weeks ended February 28, 2017, respectively, and $5.4 million and $17.0 million for the 13 and 39 weeks ended March 1, 2016, respectively.

Liquidity and Capital Resources

Sources and Uses of Cash

Our primary source of liquidity is cash provided by operations. The following table presents a summary of our cash flows from operating, investing, and financing activities for the first 39 weeks of fiscal years 2017 and 2016 (in thousands).

	Thirty-nine weeks ended
		February 28, 2017			March 1, 2016
Net cash (used)/provided by operating activities		$	(21,719	)	$	18,539
Net cash used by investing activities			(1,409	)		(18,709	)
Net cash used by financing activities			(11,586	)		(22,703	)
Net decrease in cash and cash equivalents		$	(34,714	)	$	(22,873	)

Operating Activities

Our cash provided by operations is generally derived from cash receipts generated by our restaurant customers and franchisees.  Substantially all of the $694.5 million and $807.1 million of restaurant sales and operating revenue disclosed in our Condensed Consolidated Statements of Operations and Comprehensive Loss for the 39 weeks ended February 28, 2017 and March 1, 2016, 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 and benefit costs, restaurant operating costs, general and administrative expenses, and marketing expenses, a significant portion of which are incurred and paid in the same period.

Cash used by operating activities for the 39 weeks ended February 28, 2017 was $21.7 million as compared to cash provided of $18.5 million for the corresponding period of the prior fiscal year. The change is primarily the result of lower Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") for reasons previously discussed within this MD&A, which was partially offset by decreases in amounts spent to acquire

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inventory (approximately $3.2 million), lower cash paid for taxes ($2.4 million), and lower cash paid for interest ($1.7 million) due to the prepayment of certain of our mortgage obligations and other principal payments on our debt since the corresponding period of the prior fiscal year.  These were partially offset by decreases in accounts payable, accrued, and other liabilities due to the timing of payments.

Our working capital deficiency and current ratio as of February 28, 2017 were $13.0 million and 0.9:1, respectively. As is typical 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, upkeep, and remodeling of our existing restaurants, limited new restaurant construction, investments in technology, equipment, and on occasion for the acquisition of franchisees or other restaurant concepts. Property and equipment expenditures purchased primarily with cash on hand and/or internally-generated cash flows for the 39 weeks ended February 28, 2017 and March 1, 2016 were $27.0 million and $27.3 million, respectively. In addition, proceeds from the disposal of assets produced $22.0 million and $6.2 million of cash during the 39 weeks ended February 28,  2017 and March 1, 2016, respectively.

We intend to fund our future investing activities with cash on hand, cash provided by operations, proceeds from the sale of surplus properties, or borrowings on the Senior Credit Facility.

Financing Activities

Historically our primary sources of cash have been operating activities, coupled with sales of surplus properties. When these alone have not provided sufficient funds for both our capital and other needs, we have obtained funds through the incurrence of indebtedness, sale-leaseback transactions, or through the issuance of additional shares of common stock.

Our current borrowings and credit facilities include $212.5 million outstanding principal of 7.625% senior notes due 2020 (the “Senior Notes”), a revolving credit agreement (the “Senior Credit Facility”) under which we may borrow up to $30.0 million, and $5.1 million of mortgage loan obligations assumed upon franchise acquisitions. Principal payments of long-term debt and capital leases for the 39 weeks ended February 28, 2017 and March 1, 2016 were $10.6 million and $12.7 million, respectively. See Note 6 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for key terms and further information on our Senior Notes, Senior Credit Facility, and mortgage loan obligations. In addition, we repurchased our common stock at an aggregate cost of $10.0 million during the 39 weeks ended March 1, 2016. 

Covenant Compliance

Under the terms of the Senior Credit Facility and our mortgage loan obligations, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio. As of November 29, 2016, we did not attain the minimum fixed charge coverage ratio as required under the terms of the Senior Credit Facility and mortgage loan obligations.  While we obtained waivers of this covenant violation through January 31, 2017 from our lenders, we believed, without certain modifications, that it was possible at some point during the next twelve months that we would again be in violation of the minimum fixed charge coverage ratio covenant.  Accordingly, on January 31, 2017, we entered into a seventh amendment and waiver to the Senior Credit Facility (the "Seventh Amendment and Waiver") and a loan modification and waiver (the "Mortgage Loan Modification and Waiver"). Among other things, the Seventh Amendment and Waiver reduces the amount the Company may borrow pursuant to the revolving loan commitment under the Senior Credit Facility from $50.0 million (including a $25.0 million sublimit for standby letters of credit), to $30.0 million (including a $15.0 million sublimit for standby letters of credit), amends the termination date of the Senior Credit Facility from December 3, 2017 to June 2, 2017, and increases the flexibility of the financial covenants under the Senior Credit Facility.

We were required under the Seventh Amendment and Waiver and the Mortgage Loan Modification and Waiver to maintain a maximum leverage ratio of no more than 4.65 to 1.0 and a minimum fixed charge coverage ratio of no less than 1.25 to 1.0 for the quarter ended February 28, 2017. We were in compliance with our maximum leverage ratio and minimum fixed charge coverage ratio as of February 28, 2017.

Additionally, the Senior Credit Facility and the Seventh Amendment and Waiver contain 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, guarantee indebtedness, and prepay other indebtedness.

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Maximum  Leverage Ratio

Our maximum leverage ratio 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). Consolidated EBITDAR is consolidated net 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.

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):

	February 28, 2017
Current portion of long-term debt	$	349
Long-term debt and capital leases, less current maturities		213,533
Total long-term debt and capital leases		213,882
Present value of operating leases*		152,901
Letters of credit*		11,091
Unrestricted cash in excess of $10.0 million		(22,465	)
Unamortized debt issuance costs		2,528
Unamortized discount of senior unsecured notes		1,478
Unamortized premium of mortgage loan obligations		–
Trade payables overdue by more than 120 days		6
Adjusted Total Debt	$	359,421

* 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
	February 28, 2017
Net loss	$	(125,056	)
Asset impairments		75,197
Rent expense		56,085
Depreciation and amortization		44,722
Interest expense		20,280
Restaurant closing costs*		15,608
Share-based compensation expense		3,443
Other, net		1,191
Gain on sales of Lime Fresh Mexican Grill assets		(5,988	)
Income taxes		(2,236	)
Consolidated EBITDAR	$	83,246

*Amount is comprised of restaurant closing and restructuring costs, closed-restaurant lease reserves, and impairment and asset write-off charges incurred in connection with the closure of 95 restaurants during the first quarter of fiscal year 2017.

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Adjusted Total Debt to Consolidated EBITDAR – Actual	4.32
Maximum allowed per covenant	4.65

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
	February 28, 2017
Consolidated EBITDAR	$	83,246
Interest*	$	17,691
Cash rents*		44,097
Total	$	61,788

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

Fixed Charge Covenant – Actual	1.35
Minimum allowed per covenant	1.25

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 ($17.7 million on a rolling 12 month basis) differs from interest expense determined in accordance with GAAP ($20.3 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 and Comprehensive Loss, they do not require on-going cash payments for servicing and therefore are not 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):

GAAP-based interest expense	$	20,280
Brokerage fees		(1,654	)
Prepayment penalties		(707	)
Amortization of loan fees and fair market
value adjustments		(228	)
Interest	$	17,691

Our Minimum Fixed Charge Coverage ratio also allows for recurring cash rents to be included in the denominator. Cash rents ($44.1 million on a rolling 12 month basis) differ from rents determined in accordance with GAAP ($56.1 million) by the following (amounts in thousands):

GAAP –based rent expense	$	56,085
Rent settlement payments		(8,029	)
Change in rent accruals		(3,959	)
Cash rents	$	44,097

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Significant Contractual Obligations and Commercial Commitments
Long-term financial obligations were as follows as of February 28, 2017 (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)	$     5,342	$         1,493	$       2,814	$          828	$         207
Senior unsecured notes (a)	212,546	–	–	212,546	–
Interest (b)	59,170	16,642	32,903	8,259	1,366
Operating leases (c)	518,102	41,875	75,293	65,301	335,633
Purchase obligations (d)	46,051	29,314	12,112	4,625	–
Pension obligations (e)	35,793	3,455	4,519	8,391	19,428
Total (f)	$   877,004	$      92,779	$  127,641	$   299,950	$  356,634

(a) Amounts included in the table above reflect the contractual due dates of our notes payable and long-term debt. See Note 6 to the Condensed Consolidated Financial Statements for more information on our debt.

(b) Amounts represent contractual interest payments on our fixed-rate debt instruments. Additionally, the amounts shown above include interest payments on the Senior Notes at the current interest rate of 7.625%.

(c) This amount includes lease payments for certain optional renewal periods for which exercise is considered reasonably assured as well as operating leases totaling $3.2million 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.

(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 8 to the Condensed Consolidated Financial Statements for more information.

(f) This amount excludes $3.8 million of unrecognized tax benefits due to the uncertainty regarding the timing of future cash outflows associated with such obligations.

Recently Issued Accounting Pronouncements

Information regarding accounting pronouncements not yet adopted is incorporated by reference from Note 13 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Known Events, Uncertainties, and Trends

Review of Strategic Alternatives

On March 13, 2017, we announced that we are exploring strategic alternatives in order to maximize shareholder value and position the business for long-term success. We are considering all strategic alternatives including, but not limited to a potential sale or merger of the Company, and have retained a financial advisor to assist in the process. We do not intend to make any further comment regarding the review until it has been completed.

Covenant Compliance

As previously mentioned within this MD&A, under the terms of the Senior Credit Facility and our mortgage loan obligations, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio. As of November 29, 2016, we did not attain the minimum fixed charge coverage ratio as required under the terms of the Senior Credit Facility and mortgage loan obligations.  While we obtained waivers of this covenant violation through January 31, 2017 from our lenders, we believed, without certain modifications, that it was possible at some point during the next twelve months that we would again be in violation of the minimum fixed charge coverage ratio covenant.  Accordingly, on January 31, 2017, we entered into a seventh amendment and waiver to the Senior Credit Facility (the "Seventh Amendment and Waiver") and a loan modification and waiver (the "Mortgage Loan Modification and Waiver"). 

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Among other things, the Seventh Amendment and Waiver reduces the amount the Company may borrow pursuant to the revolving loan commitment under the Senior Credit Facility from $50.0 million (including a $25.0 million sublimit for standby letters of credit), to $30.0 million (including a $15.0 million sublimit for standby letters of credit), amends the termination date of the Senior Credit Facility from December 3, 2017 to June 2, 2017, and increases the flexibility of the financial covenants under the Senior Credit Facility.

The Seventh Amendment and Waiver and the Mortgage Loan Modification and Waiver require us to maintain a maximum leverage ratio of no more than 4.65 to 1.0 and a minimum fixed charge coverage ratio of no less than 1.25 to 1.0 for the quarter ended February 28, 2017. While we were in compliance with our maximum leverage ratio and minimum fixed charge coverage ratio as of February 28, 2017, there are no assurances that our lenders will provide any future waivers of covenant violations or agree to any future amendments of our Senior Credit Facility or mortgage loan obligations.  As of the date of this filing, we are evaluating options to replace the Senior Credit Facility. 

Impact on Cash from Sale of Surplus Properties and Lease Settlements

As further discussed in Note 5 to the Condensed Consolidated Financial Statements, as of February 28, 2017 we had surplus properties classified as assets held for sale of $20.5 million and surplus properties of $17.9 million not classified as held for sale as we had yet to conclude for accounting purposes that we can sell these assets within 12 months of the balance sheet date. Additionally, as discussed in Note 7 to the Condensed Consolidated Financial Statements, as of February 28, 2017 we had a liability for future lease obligations of $19.1 million. While we settled four of these leases for $1.4 million since February 28, 2017, the amounts of future settlements could be higher or lower than the amounts recorded, and 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 properties. During the remainder of fiscal year 2017, we expect fluctuations in our cash balances as we hope to generate cash through the sale of surplus properties while using cash to settle closed restaurant lease obligations.

Financial Strategy and Stock Repurchase Plan

Cash and cash equivalents as of February 28, 2017 were $32.6 million. Our overall goal is to invest in our brand and to strengthen our balance sheet to improve credit metrics. As such, our first priority is to ensure that we have adequate cash levels to run the business and internally fund our capital expenditures. Our second priority is to reduce our outstanding debt to help improve our credit metrics with the goal of improved flexibility and access to capital at reasonable rates. Lastly, we would consider share repurchases within the limitations of our debt covenants to return capital to shareholders. As of February 28, 2017, the total number of remaining shares authorized to be repurchased was 9.9 million. Any of these actions, in any particular period and the actual amount thereof, remain at the discretion of the Board of Directors and are subject to debt covenant restrictions, and as such no assurance can be given that any such actions will be taken in the future.

Dividends

During fiscal 1997, our Board of Directors approved a dividend policy as an additional means of returning capital to our shareholders. No dividends were declared or paid during the 39 weeks ended February 28, 2017 or March 1, 2016. The payment of a dividend in any particular period and the actual amount thereof remain at the discretion of the Board of Directors and are subject to covenant restrictions, and as such no assurance can be given that dividends will be paid in the future.

Impact of Inflation
The impact of inflation on the cost of food, labor, supplies, utilities, real estate, and construction costs could adversely impact our operating results. Historically, we have been able to recover certain inflationary cost increases through increased menu prices coupled with more efficient purchasing practices and productivity improvements. Competitive pressures may limit our ability to completely recover such cost increases. Historically, the effect of inflation has not significantly impacted our results of operations.

Ability to Issue Preferred Stock

The Board of Directors, pursuant to the Company’s Certificate of Incorporation, has the authority to issue 250,000 shares of preferred stock in one or more series. The Board of Directors has the power to establish the dividend rates, rights of conversion and redemption, liquidation prices, and other terms or conditions of such preferred stock. This preferred stock may be issued at the discretion of the Board of Directors with preferences over shares of our common stock in a manner that is materially dilutive to shareholders. In addition, blank check preferred stock can be used to create a shareholder rights plan, or “poison pill”, which is designed to deter a hostile bidder from buying a controlling interest in our stock. While we have not adopted such a “poison pill” or issued any preferred stock as of the date of this filing, the Board of Directors has the ability to do so in the future, very rapidly and without stockholder approval.

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Item 3. Quantitative and Qualitative

Disclosure About Market Risk

There were no material changes during the 39 weeks ended February 28, 2017 to the disclosures made in Item 7A of our Form 10-K for the fiscal year ended May 31, 2016.

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 February 28, 2017.

Changes in Internal Control

During the fiscal quarter ended February 28, 2017, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information

Item 1. Legal Proceedings

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business, including claims relating to injury or wrongful death under “dram shop” laws, workers’ compensation and employment matters, claims relating to lease and contractual obligations, and claims from customers alleging illness or injury. We provide accruals 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, including the matter referred to below, will not have a material adverse effect on our condensed consolidated results of operations, financial position, or cash flows.

In May 2014, a securities class action case styled Dennis Krystek v. Ruby Tuesday, Inc. et al, was filed in the U.S. District Court for the Middle District of Tennessee, Nashville Division.  The case alleged that the Company and some of its former executives made false and misleading statements about the Company's financial performance and the financial performance of the Lime Fresh concept.  On March 29, 2017, the Company agreed to settle the case for $5.0 million.  We maintain insurance to cover these types of claims with our primary insurance carrier, subject to a self-insured retention which had been met prior to February 28, 2017.  Our insurance policies cover amounts in excess of our self-insured retention. In accordance with ASC Subtopic 405-20-40, Extinguishment of Liabilities, and ASC Subtopic 210-20, Balance Sheet Offsetting, we have recorded both an accrued liability (included within Accrued liabilities: Rent and other) and an asset for insurance recovery (included within Accounts and other receivables), in the amount of $5.0 million, in our Condensed Consolidated Balance Sheet as of February 28, 2017.

Item 1A. Risk Factors

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended May 31, 2016 in Part I, Item 1A. Risk Factors. Except as set forth elsewhere in this Form 10-Q, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table includes information regarding purchases of our common stock made by us during the fiscal quarter ended February 28, 2017:

	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	per share	announced plans or programs	under the plans or programs (1)
November 30 to January 3	–	$  –	–	9,884,829
January 4 to January 31	–	–	–	9,884,829
February 1 to February 28	–	–	–	9,884,829
Total	–	$  –	–

(1) As of February 28, 2017, 9.9 million shares remained available for purchase under an existing January 8, 2013 authorization by the Board of Directors 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 and debt covenant requirements.  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.

 Item 5. Other Information

On April 4, 2017, James F. Hyatt was appointed President and Chief Executive Officer of the Company, replacing F. Lane Cardwell, Jr., who has been serving as our Interim President and Chief Executive Officer.  Mr. Hyatt was also appointed to serve as a member of the Board of Directors of the Company (the "Board").  Mr. Cardwell will continue to serve as a member of the Board.  Prior to joining the Company, Mr. Hyatt (age 60) served as the President and Chief Executive Officer of Church's Chicken from 2011 until 2016.  

Mr. Hyatt will receive an annual base salary of $850,000 and will be eligible for an annual bonus with a target amount of 100% of base salary.  For fiscal year 2017, Mr. Hyatt's annual bonus will be dependent upon determination of the Compensation Committee of the Ruby Tuesday, Inc. Board of Directors that he has achieved specific performance goals, and the amount earned will be prorated based on the portion of the fiscal year that he is employed with the Company.  Thereafter, he will be eligible for an annual bonus under the Company's Executive Incentive Compensation Plan with a target amount of 100% of base salary.  On April 4, 2017, and on each of the three-month, six-month, nine-month and twelve-month anniversaries of such date, Mr. Hyatt will receive a restricted stock award with a target grant date value of $375,000. Each such award will vest in three equal installments over a three-year period following the date of grant. Accordingly, we granted 142,045 service-based restricted shares to Mr. Hyatt on April 4, 2017 upon his appointment as President and Chief Executive Officer. Thereafter, he will be eligible to receive an annual long-term incentive award, with respect to the beginning of our fiscal year 2019, with a target grant date value of $1.5 million to be granted under the Ruby Tuesday, Inc. Stock Incentive Plan.

Mr. Hyatt will be eligible for severance equal to his base salary if his employment is terminated during the first year following his appointment.  Thereafter, Mr. Hyatt will be eligible for severance in accordance with the terms of his offer letter and (i) the Ruby Tuesday, Inc. Executive Severance Plan, with severance equal to two times his base salary, or (ii) the Ruby Tuesday, Inc. Change in Control Severance Plan, with severance equal to two times the sum of his base salary and target bonus, as applicable.  Mr. Hyatt's receipt of severance will be subject to his compliance with certain restrictive covenants, including with regard to confidentiality and non-solicitation of employees.

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Item 6. Exhibit Index

The following exhibits are filed as part of this report:

Exhibit Number	Description of Exhibit
10.1	Seventh Amendment to Revolving Credit Agreement and Waiver, dated January 31, 2017.
10.2	Loan Modification Agreement and Waiver, dated January 31, 2017.
10.3	Amendment to the Ruby Tuesday, Inc. Change in Control Severance Plan, dated April 4, 2017.
10.4	Amendment to the Ruby Tuesday, Inc. Executive Severance Plan, dated April 4, 2017.
12.1	Ratio of Consolidated Earnings to Fixed Charges.
31.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Schema Document.
101.CAL	XBRL Calculation Linkbase Document.
101.DEF	XBRL Definition Linkbase Document.
101.LAB	XBRL Labels Linkbase Document.
101.PRE	XBRL Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Name	Position	Date
/s/ Sue Briley Sue Briley	Chief Financial Officer (Principal Financial Officer)	Date: April 7, 2017

/s/ Wayne Kalish Wayne Kalish Vice President, Corporate Controller (Principal Accounting Officer) Date: April 7, 2017

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EX-10.1

SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER

THIS SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT AND WAIVER, dated as of January 31, 2017 (this “Agreement”), is entered into among Ruby Tuesday, Inc., a Georgia corporation (the “Borrower”), the Guarantors, 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 by that certain First Amendment to Revolving Credit Agreement and Waiver dated as of January 10, 2014, that certain Second Amendment to Revolving Credit Agreement and Waiver dated as of February 7, 2014, that certain Third Amendment to Revolving Credit Agreement dated as of August 5, 2014, that certain Fourth Amendment to Revolving Credit Agreement dated as of June 29, 2015, that certain Fifth Amendment to Revolving Credit Agreement and Consent dated as of October 23, 2015, that certain Sixth Amendment to Revolving Credit Agreement dated as of August 10, 2016, and as further amended or modified from time to time, the “Credit Agreement”);

WHEREAS, the Borrower previously informed the Administrative Agent that an Event of Default has occurred under the Credit Agreement as a result of the Borrower’s failure to maintain a Consolidated Fixed Charge Coverage Ratio of not less than 1.65:1.00 as of the Fiscal Quarter ending November 29, 2016 pursuant to Section 7.1 of the Credit Agreement (the “Acknowledged Event of Default”);

WHEREAS, pursuant to that certain Waiver, dated as of December 31, 2016 (the “December 2016 Waiver”), the Lenders agreed to waive the Acknowledged Event of Default until January 31, 2017, subject to the terms and conditions set forth in the December 2016 Waiver; and

WHEREAS, the Borrower has requested that the Lenders permanently waive the Acknowledged Event of Default and amend the Credit Agreement, and the Required Lenders are willing to permanently waive the Acknowledged Event of Default and amend the Credit Agreement, in each case, as set forth below, subject to the terms and conditions set forth below.

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.     Waiver. Subject to the other terms and conditions of this Agreement, the Required Lenders hereby waive the Acknowledged Event of Default. The waiver set forth in this Section 2 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. The waiver set forth in this Section 2 is limited solely to the matter described in the first sentence of this Section 2 as of the date hereof, and nothing contained in this Agreement shall (a) modify the Loan Parties’ obligations to comply fully with all other 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. The waiver set forth in this Section 2 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.

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

(a)     The definition of “Aggregate Revolving Commitment Amount” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

 “Aggregate Revolving Commitment Amount” means the aggregate principal amount of the Revolving Commitments of all Lenders from time to time, as such aggregate principal amount shall be reduced or increased pursuant to the terms hereof. On the Seventh Amendment Effective Date, the Aggregate Revolving Commitment Amount equals THIRTY MILLION DOLLARS ($30,000,000).

(b)     The definition of “Applicable Margin” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

 “Applicable Margin” means, as of any date, the percentage per annum determined by reference to the applicable Adjusted Total Debt to EBITDAR Ratio in effect on such date as set forth on Schedule 1.1(a) attached hereto; provided, that a change in the Applicable Margin resulting from a change in such ratio shall be effective on the second Business Day after which the Borrower is required to deliver the financial statements required by Section 6.1(a) or (b) and the compliance certificate required by Section 6.1(c); provided, further, that if at any time the Borrower shall have failed to deliver such financial statements and such certificate, the Applicable Margin shall be at Level III until such time as such financial statements and certificate are delivered, at which time the Applicable Margin shall be determined as provided above. Notwithstanding the foregoing, the Applicable Margin from the Seventh Amendment Effective Date until the first Business Day immediately following the date a compliance certificate is delivered pursuant to Section 6.1(c) for the Fiscal Quarter ending February 28, 2017 shall be at Level III. Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Margin for any period shall be subject to the provisions of Section 2.13(b).

(c)     The definition of “Consolidated EBITDA” in Section 1.1 of the Credit Agreement is hereby amended by (i) deleting the “and” at the end of clause (d)(ix) thereof, (ii) changing clause (d)(x) to be clause (d)(xi), and (iii) adding a new clause (d)(x) to read as follows:

(x) executive transition charges incurred in connection with the departure of the Borrower’s chief executive officer; provided, that, the aggregate amount of executive transition charges added back pursuant to this clause (d)(x) for all periods shall not exceed $3,800,000, and

(d)     Clause (d) of the definition of “Defaulting Lender” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

(d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, (iii) taken any

2

action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment, or (iv) become the subject of a Bail-In Action; provided, that, a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interests in that Lender or any direct or indirect parent company thereof by a Governmental Authority.

(e)     The definition of “Federal Funds Rate” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

  “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, that, (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

(f)     The definition of “LC Commitment” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

  “LC Commitment” means that portion of the Aggregate Revolving Commitment Amount that may be used by the Borrower for the issuance of Letters of Credit in an aggregate face amount not to exceed $15,000,000.

(g)     The definition of “LIBOR” in Section 1.1 of the Credit Agreement is hereby amended to replace the reference therein to “Eurodollar Rate Loan” with “Eurodollar Loan”.

(h)     The last sentence in the definition of “Pro Rata Share” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

The Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 1.2 or in the Assignment and Acceptance pursuant to which such Lender becomes a party hereto after the Seventh Amendment Effective Date, as applicable.

(i)     The definition of “Revolving Commitment” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

  “Revolving Commitment” means, with respect to each Lender, the obligation of such Lender to make Revolving Loans to the Borrower and to participate in Letters of Credit (subject to the terms herein) in an aggregate principal amount not exceeding the amount set forth with respect to such Lender on Schedule 1.2, or in the case of a Person becoming a Lender after the Seventh Amendment Effective Date, the amount of the assigned “Revolving Commitment” as provided in the Assignment and Acceptance Agreement executed by such Person as an assignee, as the same may be changed pursuant to the terms hereof. Any reduction in the Aggregate Revolving Commitment Amount pursuant to Section 2.7 shall be applied to the Revolving Commitment of each Lender according to its Pro Rata Share.

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(j)     The definition of “Revolving Commitment Termination Date” in Section 1.1 of the Credit Agreement is hereby amended to read as follows:

  “Revolving Commitment Termination Date” means the earlier of (i) June 2, 2017, or (ii) the date on which all amounts outstanding under this Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).

(k)     The following defined terms are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“Seventh Amendment Effective Date” means January 31, 2017.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

(l)     Section 2.4 of the Credit Agreement is hereby amended to read as follows:

  Section 2.4     [Reserved].

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(m)    Section 2.10(b)(ii) of the Credit Agreement is hereby amended to read as follows:

(ii)     Dispositions. The Borrower shall prepay the Loans and/or provide Cash Collateral for the LC Exposure as hereinafter provided, in an aggregate amount equal to 100% of the Net Cash Proceeds of all sales, transfers and dispositions of property pursuant to Sections 8.5(d), (e) or (h), to the extent that (A) the aggregate of such Net Cash Proceeds pursuant to (1) Section 8.5(d) exceeds $5,000,000 in the aggregate during the period from the Seventh Amendment Effective Date through the Revolving Commitment Termination Date, (2) Section 8.5(e) exceeds $5,000,000 in the aggregate during the period from the Seventh Amendment Effective Date through the Revolving Commitment Termination Date, and/or (3) Section 8.5(h) exceeds $5,000,000 in the aggregate during the period from the Seventh Amendment Effective Date through the Revolving Commitment Termination Date, and (B) such Net Cash Proceeds are not reinvested in Eligible Assets within 180 days of the date of such sale, transfer or disposition. Any prepayment pursuant to this clause (ii) shall permanently reduce the Aggregate Revolving Commitment Amount on a dollar for dollar basis and shall be applied as set forth in clause (iv) below.

(n)     The second proviso in Section 2.23(b) of the Credit Agreement is hereby amended to read as follows:

provided, further, that, except to the extent otherwise expressly agreed by the affected parties (and, in any event, subject to Section 11.17), no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.

(o)     Section 6.1(d) of the Credit Agreement is hereby amended to read as follows:

  (d)     as soon as available and in any event within 30 days after the end of each fiscal month, an unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal month and the related unaudited consolidated statements of income of the Borrower and its Subsidiaries for such fiscal month and the then elapsed portion of the Borrower’s fiscal year and unaudited consolidated statements of cash flows for the then elapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the corresponding calendar month of the Borrower’s previous fiscal year and the corresponding portion of Borrower’s previous fiscal year, all certified by the chief financial officer or treasurer of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal quarterly and year-end audit adjustments and the absence of footnotes;

(p)     A new Section 6.18 is hereby added to the Credit Agreement to read as follows:

  Section 6.18EEA Financial Institutions.

  No Loan Party is an EEA Financial Institution.

(q)    Section 7.1 of the Credit Agreement is hereby amended to read as follows:

  Section 7.1Minimum Consolidated Fixed Charge Coverage Ratio.

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  The Consolidated Companies will maintain, as of the last day of the Fiscal Quarter ending on or about February 28, 2017, a Consolidated Fixed Charge Coverage Ratio of not less than 1:25:1.00.

(r)     Section 7.2 of the Credit Agreement is hereby amended to read as follows:

  Section 7.2Maximum Adjusted Total Debt to EBITDAR Ratio.

  The Consolidated Companies will maintain, as of the last day of each Fiscal Quarter, an Adjusted Total Debt to EBITDAR Ratio of 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
November 29, 2016	4.30:1.00
February 28, 2017	4.65:1.00

(s)     Section 7.3 of the Credit Agreement is hereby amended to read as follows:

  Section 7.3Capital Expenditures.

  The Consolidated Companies will not make Capital Expenditures in excess of (a) $11,000,000 in the Fiscal Quarter ending on or about February 28, 2017, and (b) $7,000,000 in any Fiscal Quarter ending thereafter.

(t)     Section 8.3(c) of the Credit Agreement is hereby amended to read as follows:

  (c)     Guarantees of Indebtedness in an amount not to exceed $5,000,000 in the aggregate at any one time outstanding;

(u)     Section 8.3(h)(iii) of the Credit Agreement is hereby amended to read as follows:

   (iii)     the business to be acquired in such Acquisition is pertaining to Ruby Tuesday units pursuant to the Borrower’s Traditional Franchisee program and/or Franchise Partner Program;

(v)     Section 8.3(h)(v) of the Credit Agreement is hereby amended to read as follows:

   (v)     the Borrower shall have delivered to the Administrative Agent not less than five (5) days prior to the consummation of such Acquisition a pro forma compliance certificate demonstrating that the Adjusted Total Debt to EBITDAR Ratio on a Pro Forma Basis (after giving effect to such Acquisition) is less than 3.25:1.00; and

(w)     Section 8.3(h)(vi) of the Credit Agreement is hereby amended to read as follows:

(vi)     the Borrower has at least $10,000,000 of availability under the Aggregate Revolving Commitments after giving effect to such Acquisition.

(x)     Section 8.3(j) of the Credit Agreement is hereby amended to read as follows:

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   (j)     Investments in joint ventures not to exceed $5,000,000 in the aggregate at any one time outstanding.

(y)     Section 8.4(d) of the Credit Agreement is hereby amended to read as follows:

   (d)     the Borrower may pay cash dividends on, and make cash redemptions of, the Equity Interests of the Borrower; provided, that (i) no Default or Event of Default shall have occurred and be continuing before or after giving effect to the payment of such dividend or redemption, (ii) the Adjusted Total Debt to EBITDAR Ratio on a Pro Forma Basis after giving effect to the payment of any such dividend or redemption is less than 3.25:1.00 and (iii) the Borrower does not have any Loans or other amounts outstanding hereunder after giving effect to the payment of such dividend or redemption.

(z)     Section 8.5(d) of the Credit Agreement is hereby amended to read as follows:

  (d)     the sale of any assets pertaining to Ruby Tuesday units pursuant to the Borrower’s Traditional Franchisee program and/or Franchise Partner Program, provided that the aggregate book value of the units sold pursuant to this Section 8.5(d) shall not exceed $5,000,000 in the aggregate during the period from the Seventh Amendment Effective Date through the Revolving Commitment Termination Date; provided, further, that (i) no Default or Event of Default has occurred and is continuing or would occur as a result of such sale and (ii) the Adjusted Total Debt to EBITDAR Ratio recomputed on a Pro Forma Basis (after giving effect to such sale) as of the end of the four Fiscal Quarter period most recently ended for which the Borrower has delivered financial statements pursuant to Section 6.1(a) or (b) would be at least 0.25 less than the maximum Adjusted Total Debt to EBITDAR Ratio permitted under Section 7.2 as of the end of such period;

(aa)     Section 8.5(e) of the Credit Agreement is hereby amended to read as follows:

(e)     sales of assets pursuant to Sale and Leaseback Transactions with an aggregate book value, when aggregated with all other such sales pursuant to Sale and Leaseback Transactions made since the Seventh Amendment Effective Date, not exceeding $5,000,000 on the date of such transfer; provided, that (i) no Default or Event of Default has occurred and is continuing or would occur as a result of such transaction and (ii) the Adjusted Total Debt to EBITDAR Ratio recomputed on a Pro Forma Basis (after giving effect to such transaction) as of the end of the four Fiscal Quarter period most recently ended for which the Borrower has delivered financial statements pursuant to Section 6.1(a) or (b) would be at least 0.25 less than the maximum Adjusted Total Debt to EBITDAR Ratio permitted under Section 7.2 as of the end of such period;

(bb)     Section 8.5(f) of the Credit Agreement is hereby amended by replacing the “.” at the end thereof with a “;”.

(cc)     Section 8.5 of the Credit Agreement is hereby amended to add the following clauses (g) and (h) at the end thereof to read as follows:

 (g)     the sale or other disposition of (i) the Borrower’s corporate headquarters building located at 150 W. Church Avenue, Maryville, Tennessee 37801, (ii) certain furniture, fixtures, equipment and other personal property located at such corporate headquarters, and (iii) certain furniture, fixtures, equipment and other personal property located at the premises of the stores subject of the 2016 Store Closures; and

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 (h)     other sales, dispositions or transfers of assets not otherwise permitted by the foregoing, provided that (i) the assets or other property are sold for fair market value, (ii) at least 75% of the aggregate consideration for any such disposition is received in cash or cash equivalents, (iii) no Default or Event of Default has occurred and is continuing or would occur as a result of such disposition, and (iv) the aggregate net book value of all assets disposed of pursuant to this clause (h) shall not exceed $5,000,000 in the aggregate during the period from the Seventh Amendment Effective Date through the Revolving Commitment Termination Date.

(dd)     Section 8.12(d) of the Credit Agreement is hereby amended to read as follows:

 (d)     purchase money Indebtedness (including Capital Lease Obligations or Synthetic Lease Obligations) incurred by the Borrower or any of its Subsidiaries to finance the purchase of fixed assets, and renewals, refinancings and extensions thereof; provided, that (i) the aggregate principal amount of all such Indebtedness at any one time outstanding shall not exceed $5,000,000, (ii) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed; and (iii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing;

(ee)     Section 8.12(e) of the Credit Agreement is hereby amended to read as follows:

 (e)     secured Indebtedness of the Loan Parties assumed in connection with a Permitted Acquisition so long as such Indebtedness (i) was not incurred in anticipation of or in connection with the respective Permitted Acquisition and (ii) does not exceed $5,000,000 in the aggregate at any time outstanding;

(ff)     A new Section 8.17 is hereby added to the Credit Agreement to read as follows:

Section 8.17 New Leases; Development of Fee Owned Real Properties.

From and after the Seventh Amendment Effective Date, the Borrower will not, and will not permit any of its Subsidiaries to, (a) enter into any lease, sub-lease or similar agreement (other than an extension or renewal of an existing lease, sub-lease or similar agreement) with respect to any real property, or (b) develop, improve or otherwise make any capital investment in, any fee owned real property; provided, however, after February 28, 2017, the Borrower or any Subsidiary may (a) enter into any lease, sub-lease or similar agreement with respect to any real property, or (b) develop, improve or otherwise make any capital investment in, any fee owned real property, in each case, so long as, the Adjusted Total Debt to EBITDAR Ratio is less than 4.00:1.00 as of the Fiscal Quarter ending on or about February 28, 2017.

(gg)     A new sentence is hereby added at the end of Section 11.3(a) of the Credit Agreement to read as follows:

For the avoidance of doubt, the Loan Parties agree that they shall pay all costs and expenses of the Administrative Agent and/or MLPF&S for any appraisals reasonably required by the Administrative Agent or MLPF&S related to real estate property and/or any equipment of any Loan Party incurred by the Administrative Agent and/or MLPF&S in connection with the Credit Agreement and the other Loan Documents.

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(hh)     A new Section 11.17 is hereby added to the Credit Agreement to read as follows:

 Section 11.17     Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

 Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and (b) the effects of any Bail-in Action on any such liability, including, if applicable, (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

(ii)     Schedule 1.1(a) of the Credit Agreement is hereby amended to read as set forth on Schedule 1.1(a) hereto.

(jj)     Schedule 1.2 of the Credit Agreement is hereby amended to read as set forth on Schedule 1.2 hereto.

4.     Reaffirmation; Lender Acknowledgement. Each Loan Party hereby acknowledges and agrees that as of January 31, 2017, (a) the outstanding principal amount of the Revolving Loans is $0.00; and (b) the aggregate amount of Letters of Credit issued under the Credit Agreement is $11,090,514.00, which amounts constitute valid and subsisting obligations of each Loan Party to the Administrative Agent and the Lenders that are not subject to any credits, offsets, defenses, claims, counterclaims or adjustments of any kind. Each Loan Party hereby acknowledges and reaffirms that it is (i) bound by all of the terms of the Credit Agreement and the other Loan Documents to which it is a party and (ii) 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 (A) 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 (B) by entering into this Agreement, except as expressly set forth herein, the Lenders do not waive 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. Each Lender party hereto acknowledges and agrees that (1) it has purchased from the Issuing Bank without recourse a participation in each Letter of Credit issued and outstanding as of the date hereof under the Credit Agreement pursuant to Section 2.21(a)(iii) of the Credit Agreement, and (2) to the extent required by and in accordance with Section 2.21 of the Credit Agreement, such Lender’s participation in each Letter of Credit issued and outstanding as of the date hereof under the Credit

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Agreement shall continue beyond the Revolving Commitment Termination Date and shall not be affected by the Borrower’s inability to provide credit support as required by Section 2.22(a) of the Credit Agreement.

5.     Release. In consideration of the Administrative Agent’s and the Lenders’ willingness to enter into this Agreement, each Loan Party hereby releases and forever discharges the Administrative Agent, the Issuing Bank, the Lenders and each of their respective predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives and affiliates (hereinafter, all of the above collectively referred to as the “Lender Group”) from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, in each case to the extent arising prior to the date hereof in connection with this Agreement or any of the other Loan Documents or any of the negotiations, activities, events or circumstances arising out of or related to this Agreement or the other Loan Documents through the date of this Agreement, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any Loan Party may have or claim to have against any entity within the Lender Group.

6.     Conditions Precedent. This Agreement shall be effective upon the receipt:

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

 (b)     by the Administrative Agent of a certificate of a Responsible Officer of the Borrower attaching and certifying as true and complete an agreement amending the documentation relating to any former franchise partner Indebtedness with respect to mortgage loan obligations existing on the date hereof (the “Mortgage Loan Documentation”) in a manner consistent with the amendments set forth in this Agreement and waiving all existing events of default under the Mortgage Loan Documentation, in each case, executed by the lender or lenders providing such Indebtedness and in form and substance reasonably satisfactory to the Administrative Agent;

 (c)     by the Administrative Agent, for the account of each Lender executing this Agreement, of a fee in an amount equal to 0.25% of such Lender’s Revolving Commitment (after giving effect to this Agreement); and

 (d)     by the Administrative Agent of all other fees and amounts due and payable on or prior to the date hereof, including reimbursement or payment of all out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document.

7.     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, except as expressly modified by this Agreement, shall remain in full force and effect according to their terms. This Agreement shall constitute a Loan Document.

 (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’

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rights generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity); and (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 (after giving effect to this Agreement) (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 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 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]

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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/ Rhonda Parish                    

Name:  Rhonda Parish

Title:    Chief Legal Officer and Secretary

GUARANTORS:                                                          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

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.

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RT NEW HAMPSHIRE RESTAURANT HOLDINGS, LLC

RT RESTAURANT SERVICES, LLC

RTTA, LP

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

RUBY TUESDAY OF RUSSELLVILLE, INC.

RUBY TUESDAY OF CONWAY, INC.

RT KCMO KANSAS, INC.

RUBY TUESDAY OF BRYANT, INC.

By:/s/ Rhonda Parish                    

Name:    Rhonda Parish

Title:     Vice President and Secretary

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BANK OF AMERICA, N.A.,

as Administrative Agent

By: /s/ Erik M. Truette

Name: Erik M. Truette

Title:   Vice President

14

BANK OF AMERICA, N.A.,

as a Lender and an Issuing Bank

By: /s/ Anthony Luppino

Name: Anthony Luppino

Title:   Vice President

15

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Lender

By: /s/ Maureen S. Malphus

Name: Maureen S. Malphus

Title:   Vice President

16

REGIONS BANK,

as a Lender

By: /s/ Margaret Renou 

Name: Margaret Renou

Title:   Vice President

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Schedule 1.1(a)

APPLICABLE MARGIN

Pricing Level	Adjusted Total Debt to EBITDAR Ratio	Adjusted LIBO Rate Loans	Base Rate Loans	Commitment Fee
I	< 3.50:1.0	3.00%	2.00%	0.500%
II	> 3.50:1.0 but < 4.00:1.0	3.25%	2.25%	0.625%
III	> 4.00:1.0	3.50%	2.50%	0.750%

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Schedule 1.2

REVOLVING COMMITMENTS

Lenders	Revolving Commitment	Pro Rata Share
Bank of America, N.A.	$11,000,000.00	36.666666667%
Wells Fargo Bank, National Association	$11,000,000.00	36.666666667%
Regions Bank	$8,000,000.00	26.666666667%
Total:	$30,000,000.00	100.000000000%

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EX-10.2

Execution Version

LOAN MODIFICATION AGREEMENT AND WAIVER

This LOAN MODIFICATION AGREEMENT AND WAIVER (as it may be amended, supplemented, extended or renewed from time to time, this “Agreement”) is entered into as of January 31, 2017 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 FIRST TENNESSEE BANK, N.A. (“Lender”), whose address is 17851 N. 85^th Street, Suite 155, Scottsdale, Arizona 85255.

RECITALS:

A.     Certain of the Borrowers are indebted to Lender with respect to the loans identified on Exhibit A attached hereto (each, a “Loan” and, collectively, the “Loans”), and all of the Borrowers have previously granted liens on and security interests in certain of their respective assets as security for the payment of the Loans and the performance of all obligations under the hereafter defined Loan Documents (which liens and security interests, and the Loan Documents evidencing the same, shall remain in full force and effect until all Loans have been indefeasibly paid in full). Lender is the current owner and holder 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”, as predecessors-in-interest to Lender, 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”, as predecessors-in-interest to Lender, party thereto, (iii) that certain Loan Modification Agreement dated as of May 14, 2012 (the “2012 Loan Modification Agreement”) by and among the Guarantor and the Borrowers and “Lenders”, as predecessors-in-interest to Lender, party thereto, (iv) that certain Loan Modification dated as of December 2, 2013 (the “2013 Loan Modification”) by and among the Guarantor and the Borrowers and “Lenders”, as predecessors-in-interest to Lender, party thereto and (v) that certain Loan Modification Agreement dated as of August 3, 2015 (the “2015 Loan Modification”); the 2015 Loan Modification, the 2013 Loan Modification, 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”, as predecessors-in-interest to Lender, 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”, as predecessors-in-interest to Lender, 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”, as predecessors-in-interest to Lender, described therein.

D.     Guarantor previously informed Lender that an Event of Default has occurred under the Loan Documents as a result of Guarantor’s failure to maintain a Consolidated Fixed Charge Coverage Ratio of not less than 1.65:1.00 as of the Fiscal Quarter ending November 29, 2016 pursuant to Section 2(b)(ii) of the 2013 Loan Modification Agreement, as modified by Section 2(b) of the 2015 Loan Modification Agreement (the “Acknowledged Event of Default”).

E.     Borrowers and Guarantor have requested that Lender waive the Acknowledged Event of Default and modify the Loans and the Current Loan Documents as provided in this Agreement, and Lender is 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 Lender agree as follows:

1.     Accuracy of Recitals; Effective Date. Borrowers, Guarantor and Lender 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 Lender pursuant to this Agreement will be effective on the date that Lender determines 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 2013 Loan Modification Agreement, as modified by Section 2(a) of the 2015 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

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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 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;

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(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 Guarantor’s fiscal year and unaudited consolidated statements of cash flows for the then elapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the corresponding fiscal month of Guarantor’s previous fiscal year and the corresponding portion of Guarantor’s previous fiscal year, all certified by the chief financial officer or treasurer 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 audit 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 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;

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(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 B attached hereto)) shall maintain, as of the last day of the fiscal quarter of Guarantor ending on or about February 28, 2017 and each fiscal quarter of Guarantor ending thereafter, a Consolidated Fixed Charge Coverage Ratio of not less than 1:25:1.00.

As used herein, the term “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 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 Lender 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, an Adjusted Total Debt to EBITDAR Ratio of 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
November 29, 2016	4.30:1.00

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February 28, 2017 and thereafter 4.65:1.00

     As used herein, the term “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 Lender 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) $11,000,000 in the fiscal quarter ending on or about February 28, 2017 and (B) $7,000,000 in any fiscal quarter ending 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)(iii), 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(a) and 2(b)(i)—(iii) of the 2013 Loan Modification Agreement, as modified by Section 2(a) of the 2015 Loan Modification Agreement.

(c)     Additional Defaults. The failure of Guarantor to comply with the requirements of Sections 2(a) and 2(b) above shall constitute an event of default under the Loan Documents.

(d)     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) 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

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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.

(e)     Cross-Collateralization. Without limiting the extent to which such matters are already granted and agreed to in the Current Loan Documents, Lender, Guarantor and Borrowers hereby agree, confirm, and acknowledge that: (i) the Collateral secures the payment and performance by 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, Lender’s 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 Lender or any affiliate of 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 Lender or any affiliate of 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.

(a)     Subject to the satisfaction of all conditions precedent set forth in Section 8 hereof, 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 in the Guarantor Credit 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).

(b)     Subject to the other terms and conditions of this Agreement, Lender hereby waives the Acknowledged Event of Default. The waiver set forth in this Section 3(b) shall be effective only in this specific instance and shall not obligate Lender to waive any other Default or Event of Default, now existing or hereafter arising. The waiver set forth in this Section 3(b) is limited solely to the matter described in the first sentence of this Section 3(b) as of the date hereof, and nothing contained in this Agreement shall (i)

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modify the obligations of Borrowers and Guarantor to comply fully with all other duties, terms, conditions or covenants contained in the Loan Documents, or (ii) be deemed to constitute a waiver of any other rights or remedies Lender may have under the Loan Documents or under applicable law. The waiver set forth in this Section 3(b) is a one-time waiver, and Lender shall have no obligation to amend, modify or waive any provision of any 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 Lender, the Borrowers or Guarantor.

4.     Borrower Representations, Warranties and Covenants. As additional consideration to and inducement for Lender to enter into this Agreement, each Borrower represents and warrants to and covenants with Lender 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 transactions contemplated by this Agreement, and will survive such consummation.

  (b)     No Defaults. After giving effect to the amendments as set forth in Section 2 above and 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.

  (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 Lender in connection with the Loans from the most recent financial statement received by 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. 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 Lender or its predecessors in

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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 Lender 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 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.

6.     Guarantor Representations and Warranties. Guarantor represents and warrants to Lender 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 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).

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 (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 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 Lender or any other party.

7.     Release. Guarantor and each Borrower fully, finally and forever release and discharge (a) Lender; (b) its predecessors in interest; (c) their respective successors, assigns and affiliates; and (d) the directors, officers, employees, agents and representatives of 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 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 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.”

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8.     Conditions Precedent. The obligations of Lender 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 Lender:

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

  (b)     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.

  (c)     Fees and Costs. Guarantor shall have paid to Lender all out-of-pocket costs and expenses incurred by Lender in connection with the preparation and negotiation of this Agreement and the closing of the transactions contemplated hereby, including attorneys’ fees incurred by Lender 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 Lender 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 Lender, 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 Lender shall not be deemed to limit or exclude any other rights to which Lender may now be or may hereafter become entitled to under the Loan Documents at law, in equity or otherwise.

11.     [Reserved].

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

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

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

15.     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.

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16.     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.

17.     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 Lender 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 Lender deems such proceedings necessary or advisable to exercise remedies available under any Loan Document. Lender, 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 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 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.

18.     Notices. All notices, demands, requests, directions and other communications (collectively, “Notices”) required or expressly authorized to be made by the Loan Documents

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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 Lender after the date hereof; and (b) if to Lender, at the address set forth above for Lender 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.

19.     WAIVER OF JURY TRIAL. LENDER, 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.

20.     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/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT WESTERN MISSOURI FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT ST. LOUIS FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT MINNEAPOLIS FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

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RT KCMO FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT NEW ENGLAND FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT OMAHA FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT LONG ISLAND FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

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RT DETROIT FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT MILLINGTON, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT MICHIANA FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT SMITH, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

16

RT MICHIGAN FRANCHISE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT O’TOOLE, LLC, a Delaware limited liability company

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT ORLANDO FRANCHISE, L.P., a Delaware limited partnership

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT SOUTH FLORIDA FRANCHISE, L.P., a Delaware limited partnership

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

17

RT WEST PALM BEACH FRANCHISE, L.P., a Delaware limited partnership

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT TAMPA FRANCHISE, L.P., a Delaware limited partnership

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

RT DENVER FRANCHISE, L.P., a Delaware limited partnership

By: /s/Rhonda J. Parish

Name: Rhonda J. Parish

Its: Vice President and Secretary

18

GUARANTOR: RUBY TUESDAY, INC., a Georgia corporation
By:	/s/ Rhonda J. Parish
	Name:Rhonda J. Parish
	Its:Chief Legal Officer and Secretary

19

LENDER: FIRST TENNESSEE BANK, N.A.
By:	/s/ Daniel Nunes
	Name: Daniel Nunes
	Its: Duly Authorized Signatory

20

Exhibit A     

Description of Loans

Loan ID No.	Borrower
111234	RT Indianapolis Franchise, LLC
111242	RT Western Missouri Franchise, LLC
111235	RT Michiana Franchise, LLC and RT Smith, LLC
111236	RT Michiana Franchise, LLC
111238	RT Michigan Franchise, LLC
111237	RT Michigan Franchise, LLC
111239	RT Orlando Franchise, L.P.
111240	RT West Palm Beach Franchise, L.P.

21

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 (as amended by that certain First Amendment to Revolving Credit Agreement and Waiver dated as of January 10, 2014, that certain Second Amendment to Revolving Credit Agreement and Waiver dated as of February 7, 2014, that certain Third Amendment to Revolving Credit Agreement dated as of August 5, 2014, that certain Fourth Amendment to Revolving Credit Agreement dated as of June 29, 2015, that certain Fifth Amendment to Revolving Credit Agreement and Consent dated as of October 23, 2015, that certain Sixth Amendment to Revolving Credit Agreement dated as of August 10, 2016 and that certain Seventh Amendment to Revolving Credit Agreement and Waiver dated as of January 31, 2017, 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,

22

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., 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.

23

EX-10.3

FIRST AMENDMENT TO THE RUBY TUESDAY, INC.
CHANGE IN CONTROL SEVERANCE PLAN

Pursuant to Section 8.20 of the Ruby Tuesday, Inc. Change in Control Severance Plan (the “CIC Severance Plan”) the Board of Directors of Ruby Tuesday, Inc. has determined to amend the CIC Severance Plan as described in the provision below. Accordingly, effective as of April 4, 2017, the CIC Severance Plan shall be, and hereby is, amended, as follows:

1. Appendix A of the CIC Severance Plan is hereby amended to read as follows:

“Appendix A – Covered Executives and Applicable Severance Multiples

Executive Name	Title	Severance Multiple
	Chief Executive Officer	2x
	Chief Legal Officer	2x
	Chief Financial Officer	2x
	President, Ruby Tuesday Concept	2x
	Chief Development Officer	2x
	Chief Marketing Officer	2x
	Chief People Officer	2x
	Vice President	1x

”

RATIFICATION AS AMENDED. Except as amended by this Amendment, the terms and conditions of the CIC Severance Plan are confirmed, approved and ratified, and the CIC Severance Plan, as amended by this Amendment, shall continue in full force and effect. Any reference to the “CIC Severance Plan” shall mean the CIC Severance Plan as amended by this Amendment.

EX-10.4

FIRST AMENDMENT TO
THE RUBY TUESDAY, INC. EXECUTIVE SEVERANCE PLAN

Pursuant to Section 8.3 of the Ruby Tuesday, Inc. Executive Severance Plan (the “Severance Plan”) the Board of Directors of Ruby Tuesday, Inc. has determined to amend the Severance Plan as described in the provision below. Accordingly, effective as of April 4, 2017, the Severance Plan shall be, and it hereby is, amended, as follows:

1. Appendix A of the Severance Plan is hereby amended to read as follows:

“Appendix A – Covered Executives and Applicable Severance Multiples

Executive Name	Title	Severance Multiple
	Chief Executive Officer	2x
	Chief Legal Officer	1.5x
	Chief Financial Officer	1.5x
	President, Ruby Tuesday Concept	1.5x
	Chief Development Officer	1.5x
	Chief Marketing Officer	1.5x
	Chief People Officer	1.5x
	Vice President	1x

”

RATIFICATION AS AMENDED. Except as amended by this Amendment, the terms and conditions of the Severance Plan are confirmed, approved and ratified, and the Severance Plan, as amended by this Amendment, shall continue in full force and effect. Any reference to the “Severance Plan” shall mean the Severance Plan as amended by this Amendment.

EX-12.1

Ruby Tuesday, Inc
Unaudited Computation of Ratio of Consolidated Earnings to Fixed Charges
(Dollar Amounts in Millions)
	Thirty-nine Weeks Ended		Fiscal Year Ended
	February 28, 2017		May 31, 2016		June 2, 2015		June 3, 2014			June 4, 2013
Earnings before fixed charges:
Loss from continuing operations before income taxes	$	(99.2)	$	(52.9)	$	(5.1)	$	(69.6)	$	(21.9)
Less Capitalized interest		0.6		0.6		0.5		0.5		0.5
		(98.6)		(52.3)		(4.6)		(69.1)		(21.4)
Fixed charges:
Interest expense		14.6		21.8		22.8		25.0		26.7
Interest portion of rent expense		8.5		13.6		14.9		16.0		16.6
Total fixed charges		23.1		35.4		37.7		41.0		43.3
Adjusted earnings from continuing operations before income taxes available to cover fixed charges	$	(75.5)	$	(16.9)	$	33.1	$	(28.1)	$	21.9
Ratio of earnings to fixed charges		(3.27)		(0.48)		0.88		(0.69)		0.51
Amount by which earnings were insufficient to cover fixed charges	$	(98.6)	$	(52.3)	$	(4.6)	$	(69.1)	$	(21.4)
* 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 F. Hyatt, 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: April 7, 2017	/s/ James F. Hyatt
	James F. Hyatt
	President and Chief
	Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sue Briley, 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: April 7, 2017	/s/ Sue Briley
	Sue Briley
	Chief Financial Officer

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 February 28, 2017 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, James F. Hyatt, 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: April 7, 2017	/s/ James F. Hyatt
	James F. Hyatt
	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 February 28, 2017 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Sue Briley, 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:  April 7, 2017	/s/ Sue Briley
	Sue Briley
	Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Feb. 28, 2017	Apr. 04, 2017
Document Information [Line Items]
Entity Registrant Name	RUBY TUESDAY INC
Entity Central Index Key	0000068270
Trading Symbol	rt
Current Fiscal Year End Date	--06-06
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		60,564,134
Document Type	10-Q
Document Period End Date	Feb. 28, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Revenue:
Restaurant sales and operating revenue	$ 224,938	$ 269,868	$ 694,517	$ 807,105
Franchise revenue	794	1,602	2,591	4,801
Total revenue	225,732	271,470	697,108	811,906
Operating costs and expenses:
Cost of goods sold	64,340	75,143	198,672	221,689
Payroll and related costs	80,080	93,357	251,105	280,976
Other restaurant operating costs	45,086	55,311	149,069	173,903
Depreciation and amortization	10,121	12,732	31,838	38,474
General and administrative expenses	13,876	14,148	48,359	44,226
Marketing expenses, net	13,807	13,230	43,328	40,396
Closures and impairments, net	13,441	6,123	59,341	20,907
Interest expense, net	4,870	4,995	14,591	16,100
Total operating costs and expenses	245,621	275,039	796,303	836,671
Loss before income taxes	(19,889)	(3,569)	(99,195)	(24,765)
Benefit for income taxes	(84)	(483)	(1,742)	(1,686)
Net loss	(19,805)	(3,086)	(97,453)	(23,079)
Other comprehensive income:
Pension liability reclassification	356	885	1,066	1,347
Total comprehensive loss	$ (19,449)	$ (2,201)	$ (96,387)	$ (21,732)
Loss per share:
Basic (in dollars per share)	$ (0.33)	$ (0.05)	$ (1.62)	$ (0.38)
Diluted (in dollars per share)	$ (0.33)	$ (0.05)	$ (1.62)	$ (0.38)
Weighted average shares:
Basic (in shares)	60,262	60,918	60,074	61,239
Diluted (in shares)	60,262	60,918	60,074	61,239

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Current assets:
Cash and cash equivalents	$ 32,627	$ 67,341
Accounts and other receivables	13,415	12,827
Inventories:
Merchandise	11,384	13,799
China, silver and supplies	6,633	7,796
Income tax receivable	4,738	3,003
Prepaid rent and other expenses	8,135	11,508
Assets held for sale	20,450	4,642
Total current assets	97,382	120,916
Property and equipment, net	601,548	671,250
Other assets	43,880	45,751
Total assets	742,810	837,917
Current liabilities:
Accounts payable	23,583	22,141
Accrued liabilities:
Taxes, other than income and payroll	8,390	10,769
Employee-related Liabilities, Current	15,296	14,561
Insurance	5,337	5,109
Rent and other	39,976	18,838
Deferred revenue – gift cards	17,472	16,354
Less current maturities	349	9,934
Total current liabilities	110,403	97,706
Long-term debt and capital leases, less current maturities	213,533	213,803
Deferred escalating minimum rent	43,208	51,535
Other deferred liabilities	61,270	67,093
Total liabilities	428,414	430,137
Commitments and contingencies (Note 11)
Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares; issued and outstanding: 2017 – 60,564 shares, 2016 – 60,137 shares)	605	601
Capital in excess of par value	78,937	75,938
Retained earnings	243,897	341,350
Deferred compensation liability payable in Company stock	365	521
Company stock held by Deferred Compensation Plan	(365)	(521)
Accumulated other comprehensive loss	(9,043)	(10,109)
Total shareholders' equity	314,396	407,780
Total liabilities and shareholders' equity	$ 742,810	$ 837,917

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares shares in Thousands	Feb. 28, 2017	May 31, 2016
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000	100,000
Common stock, shares issued (in shares)	60,564	60,137
Common stock, shares outstanding (in shares)	60,564	60,137

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016
Operating activities:
Net loss	$ (97,453)	$ (23,079)
Adjustments to reconcile net loss to net cash (used)/provided by operating activities:
Depreciation and amortization	31,838	38,474
Deferred income taxes		(832)
Loss on impairments, including disposition of assets	32,668	17,489
Inventory write-off	2,754
Share-based compensation expense	3,029	1,680
Lease reserve adjustments	17,445	3,118
Deferred escalating minimum rent	585	1,630
Other, net	520	3,125
Changes in operating assets and liabilities:
Receivables	(5,137)	(579)
Inventories	1,045	(2,176)
Income taxes	(1,735)	(4,027)
Prepaid and other assets	2,068	677
Accounts payable, accrued and other liabilities	(9,346)	(16,961)
Net cash (used) provided by operating activities	(21,719)	18,539
Investing activities:
Purchases of property and equipment	(26,952)	(27,346)
Proceeds from sale of assets	22,044	6,193
Insurance proceeds from property claims	358
Reductions in Deferred Compensation Plan assets	1,702	833
Other, net	1,439	1,611
Net cash used by investing activities	(1,409)	(18,709)
Financing activities:
Principal payments on long-term debt and capital leases	(10,613)	(12,664)
Stock repurchases	(26)	(10,009)
Payments for debt issuance costs	(947)	(30)
Net cash used by financing activities	(11,586)	(22,703)
Decrease in cash and cash equivalents	(34,714)	(22,873)
Cash and cash equivalents:
Beginning of fiscal year	67,341	75,331
End of quarter	32,627	52,458
Supplemental disclosure of cash flow information:
Interest, net of amount capitalized	9,009	10,666
Income taxes, net	823	3,178
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	23,347	22,393
Reclassification of properties to assets held for sale	25,753	3,387
Monetization of, and subsequent reinvestment into, life insurance policies		$ 5,642

XML

Note 1 - Basis of Presentation

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

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

1.

Basis of Presentation

Description of Business

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we,” and/or “our”), owns and operates Ruby Tuesday® casual dining restaurants. We also franchise the Ruby Tuesday concept in selected domestic and international

markets.

As discussed further in Note

7

to the Condensed Consolidated Financial Statements,

during the

39

weeks ended

February

 

28,

 

2017,

we closed

102

Company-owned restaurants,

95

of which were closed following a comprehensive review of the Company’s property portfolio due to perceived limited upside due to market concentration, challenged trade areas, and other factors. At

February

28,

2017,

we owned and operated

544

Ruby Tuesday restaurants concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets.

As further discussed in Note

4

to the Condensed Consolidated Financial Statements, we entered into an agreement during fiscal year

2016

to sell the assets related to

eight

Company-owned Lime Fresh Mexican Grill® (“Lime Fresh”) restaurants. Our last remaining Company-owned Lime Fresh restaurant closed and transferred to the buyer during the

second

quarter of fiscal year

2017.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements

(the “Condensed Consolidated Financial Statements”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. 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 considered necessary for a fair presentation have been included and are of a normal recurring nature. In addition, certain reclassifications were made to prior period amounts to conform to the current period presentation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. Operating results for the

13

and

39

weeks ended

February

 

28,

2017

are not necessarily indicative of results that

may

be expected for the

53

-week year ending

June

6,

2017.

These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in RTI’s Annual Report on Form

10

-K for the fiscal year ended

May

31,

2016.

Reclassifications

As shown in the table below, we

split our previously reported expenses within Selling, general, and administrative, net into separately reported General and administrative expenses and Marketing expenses, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the prior periods to be comparable with the classification for the

13

and 

39

weeks ended

February

28,

2017.

Additionally, we reclassified an impairment of the Lime Fresh trademark to Closures and impairments, net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the

13

and

39

weeks ended

March

 

1,

2016.

Amounts presented are in thousands.

	Thirteen Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March 1, 2016
Selling, general, and administrative, net	$	27,378	$	(27,378	)	$	–
General and administrative expenses		–		14,148			14,148
Marketing expenses, net		–		13,230			13,230
Closures and impairments, net		6,123		–			6,123

	Thirty-nine Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March  1, 2016
Selling, general, and administrative, net	$	84,622	$	(84,622	)	$	–
General and administrative expenses		–		44,226			44,226
Marketing expense s, net		–		40,396			40,396
Closures and impairments, net		18,908		1,999			20,907
Trademark impairment		1,999		(1,999	)		–

As shown in the table below, we

reclassified an impairment of the Lime Fresh trademark to Loss on impairments, including disposition of assets in the Condensed Consolidated Statement of Cash Flows for the

39

weeks ended

March

 

1,

2016.

Amounts presented are in thousands.

	Thirty-nine Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted  March 1, 2016
Loss on impairments, including disposition of assets	$	15,490	$	1,999		$	17,489
Trademark impairment		1,999		(1,999	)		–

XML

Note 2 - Loss Per Share

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

2.

Loss Per Share

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during each period presented. Diluted earnings per share gives effect to stock options and restricted stock outstanding during the applicable periods, except during loss periods as the effect would be anti-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						Thirty-nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
Net loss	$	(19,805	)	$	(3,086	)	$	(97,453	)	$	(23,079	)
Weighted-average common shares outstanding		60,262			60,918			60,074			61,239
Dilutive effect of stock options and restricted stock		–			–			–			–
Weighted average common and dilutive potential  common shares outstanding		60,262			60,918			60,074			61,239
Basic loss per share	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)
Diluted loss per share	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)

The following table summarizes on a weighted-average basis stock options, restricted stock, and restricted stock units that were excluded from the computation of diluted loss per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended		Thirty-nine weeks ended
	February 28, 2017	March  1, 2016	February 28, 2017	March  1, 2016
Stock options	1,927	2,140	2,422	2,509
Restricted shares / Restricted share units	565	871	635	862
Total	2,492	3,011	3,057	3,371

XML

Note 3 - Franchise Programs

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Franchise Programs [Text Block]

3.

Franchise Programs

As of

February

28

,

2017,

our franchisees collectively operated 

63

domestic and international Ruby Tuesday restaurants. We do not own any equity interests in our franchisees.

Under the terms of the franchise operating agreements, we charge a royalty fee (generally

4.0%

of monthly gross sales)

, a marketing and purchasing fee (generally

1.5%

of monthly gross sales), and a national advertising fee (generally

1.5%

of monthly gross sales as of

February

28,

2017,

but up to a maximum of

3.0%

under the terms of the franchise operating agreements).

Amounts received from franchisees for the marketing and purchas

ing fee and national advertising fee are considered by RTI to be reimbursements, recorded on an accrual basis as earned, and have been netted against Marketing expenses, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

For the

13

and

 

39

weeks ended

February

28,

2017,

we recorded

$0.4

million and

$0.8

million, respectively, and for the

13

and

39

weeks ended

March

 

1,

2016,

we recorded

$0.5

million and

$1.6

million, respectively, in marketing and purchasing fees and national advertising fund fees.

XML

Note 4 - Accounts and Other Receivables

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

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

4.

Accounts and Other Receivables

Accounts and other receivables consist of the following (in thousands):

	February  28, 2017		May 31, 2016
Insurance receivable	$	5,000	$	–
Amounts due from franchisees		3,799		3,013
Amounts due from distributor		1,317		560
Third-party gift card sales		984		1,272
Rebates receivable		786		1,001
Receivables from sales of Lime Fresh Mexican Grill asset s		–		5,289
Other receivables		1,529		1,692
	$	13,415	$	12,827

The insurance receivable reflected in the table above represents the amount of an insurance recovery in connection with the settlement of a class action case.  See Notes

11

and

15

to the Condensed Consolidated Financial Statements for further information.

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 portion of which represents current and recently-invoiced billings.

As of

February

28

,

2017

and

May

31,

2016,

other receivables consisted primarily of amounts due from online ordering, sales and other miscellaneous tax refunds, and other receivables.

Sale

s

of Lime Fresh Mexican Grill

Assets

On

May

31,

2016,

we entered into agreements with

two

separate buyers to sell various Lime Fresh assets.

Pursuant to the terms of an asset purchase agreement, we agreed to sell our

eight

remaining Company-owned Lime Fresh restaurants for

$6.0

million. Given that closing requirements were satisfied for only

six

of the

eight

restaurants, an amendment was agreed upon which allowed for the payment of

$5.0

million upon the transfer of the

six

restaurants and the holdback of

$1.0

million until such time that both of the remaining

two

restaurants had closed and transferred to the buyer. The

six

restaurants closed and were transferred to the buyer on

May

31,

2016.

During the

39

weeks ended

February

 

28,

2017,

the

two

remaining restaurants closed and were transferred to the buyer. As a result of this, we collected the

$1.0

million previously withheld.

The

$5.3

million of receivables from sales of Lime Fresh assets included in the table above as of

May

31,

2016

consists of

$5.0

million due from the buyer of the formerly Company-owned Lime Fresh restaurants, which was collected on the

first

day of fiscal year

2017,

and

$0.3

million due from the buyer of the Lime Fresh brand

.

XML

Note 5 - Property, Equipment, and Assets Held for Sale

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

5.

Property, Equipment,

and

Assets Held for Sale

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

	February 28 , 2017		May 31, 2016
Land	$	182,785	$	209,930
Buildings		372,430		398,984
Improvements		257,147		303,032
Restaurant equipment		206,107		222,646
Other equipment		74,712		82,204
Surplus properties*		17,894		4,354
Construction in progress and other		4,306		3,325
		1,115,381		1,224,475
Less accumulated depreciation		513,833		553,225
Property and equipment, net	$	601,548	$	671,250

* Surplus properties represent assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we

have yet to conclude that we can 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, closed properties which include a building, and liquor licenses not needed for operations.

Included within the current assets section of our

Condensed Consolidated Balance Sheets at

February

28,

2017

and

May

31,

2016

are amounts classified as assets held for sale totaling

$20.5

million and

$4.6

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

39

weeks ended

February

28,

2017,

we sold properties with carrying values of

$7.5

million and

$15.9

million, at net gains that were

$2.3

million and negligible, respectively. Cash proceeds, net of broker fees, from these sales during the

13

and

39

weeks ended

February

28,

2017

totaled

$9.8

million and

$15.9

million, respectively. During the

13

and

39

weeks ended

March

 

1,

2016,

we sold properties with carrying values of

$2.4

million and

$5.2

million, respectively, at net gains of

$0.1

million and

$1.0

million, respectively. Cash proceeds, net of broker fees, from these sales during the

13

and

39

weeks ended

March

1,

2016

totaled

$2.5

million and

$6.2

million, respectively.    

XML

Note 6 - Long-term Debt and Capital Leases

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Debt and Capital Leases Disclosures [Text Block]

6.

Long-Term Debt and Capital Leases

Long-term debt and

capital lease obligations consist of the following (in thousands):

	February 28, 2017			May 31 , 2016
Senior unsecured notes	$	212,546		$	212,546
Unamortized discount		( 1,476	)		(1,771	)
Unamortized debt issuance costs		( 2,497	)		(2,995	)
Senior unsecured notes less unamortized discount and
debt issuance costs		208,573			207,780
Senior credit facility		–			–
Mortgage loan obligations		5,135			15,745
Unamortized (discount)/premium - mortgage loan obligations		(2	)		75
Unamortized debt issuance costs - mortgage loan obligations		(31	)		(74	)
Capital lease obligations		207			211
Total long-term debt and capital leases		213,882			223,737
Less current maturities		349			9,934
Long-term debt and capital leases, less current maturities	$	213 ,533		$	213,803

On

May

14,

2012,

we entered into an indenture (the “Indenture”) among Ruby Tuesday, Inc., 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 to interest expense, net 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 was

$4.9

million and

$1.0

million as of

February

 

28,

2017

and

May

31,

2016,

respectively, and is included in Accrued liabilities:– Rent and other in our Condensed Consolidated Balance Sheets.

We

may

redeem the Senior Notes, in whole or in part, at the redemption prices specified in the Indenture plus accrued and unpaid interest. There is

no

sinking fund for the Senior Notes, which mature on

May

15,

2020.

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.

On

December

3,

2013,

we entered into a

four

-year revolving credit agreement (the “Senior Credit Facility”).  Under the terms of 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.  As of

November

30,

2016,

we did not attain the minimum fixed charge coverage ratio as required under the terms of the Senior Credit Facility.  While we obtained a waiver of this covenant violation through

January

31,

2017

from our lenders, we believed, without certain modifications, that it was possible at some point during the next

twelve

months that we would again be in violation of the minimum fixed charge coverage ratio covenant.  Accordingly, on

January

31,

2017,

we entered into a

seventh

amendment and waiver to the Senior Credit Facility (the "Seventh Amendment and Waiver"). 

Among other things, the Seventh Amendment and Waiver reduces the amount the Company

may

borrow pursuant to the revolving loan commitment under the Senior Credit Facility from

$50.0

million (including a

$25.0

million sublimit for standby letters of credit),  to

$30.0

million (including a

$15.0

million sublimit for standby letters of credit), amends the termination date of the Senior Credit Facility from

December

3,

2017

to

June

2,

2017,

and increases the flexibility of the financial covenants under the Senior Credit Facility.  Additionally, the Senior Credit Facility and the Seventh Amendment and Waiver contain 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, guarantee indebtedness, and prepay other indebtedness.

Under the Seventh Amendment and Waiver, 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 Seventh Amendment and Waiver require us to maintain a maximum leverage ratio of no more than

4.65

to

1.0

and a minimum fixed charge coverage ratio of no less than

1.25

to

1.0

for the quarter ended

February

28,

2017.

  We were in compliance with our maximum leverage ratio and minimum fixed charge coverage ratio as of

February

28,

2017.

Under the terms of 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, provided that the rate shall not be less than

zero.

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 LIBOR (as defined in the Senior Credit Facility) plus

1.0%.

The applicable margin for the LIBOR-based option is a percentage ranging from

3.00%

to

3.50%

and for the Base Rate option is a percentage ranging from

2.00%

to

2.50%.

We pay commitment fees quarterly ranging from

0.50%

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, substantially all of the personal property of substantially all of our present and future subsidiaries, and the real property, improvements, and fixtures of

49

Ruby Tuesday restaurants. The real property, improvements, and fixtures of the

49

restaurants pledged as collateral appraised at

$101.4

million at the time of the transaction and have a

February

28,

2017

net book value of

$80.0

million.

The Senior Credit Facility terminates no later than

June

2,

2017.

  Aside from the

$11.1

million letters of credit outstanding as of

February

28,

2017,

we had no borrowings under the Senior Credit Facility.  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.  There are no assurances that our lenders will provide any future waivers of covenant violations or agree to any future amendments of our Senior Credit Facility. 

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 amended certain financial reporting requirements under the specified loans and modified and/or provided for certain financial covenants for the specified loans, including the maximum leverage ratio and the minimum fixed charge coverage ratio.

Additionally, as of

November

29,

2016,

we did not attain the minimum fixed charge coverage ratio required under the terms of the mortgage loan obligations.

  While we obtained a waiver of the covenant violation through

January

31,

2017

from our lender, we believed without certain modifications, that it was possible at some point during the next

twelve

months,

that we would again be in violation of the minimum fixed charge coverage ratio covenant under our mortgage loan obligations.

  Accordingly, on

January

31,

2017,

we entered into a loan modification and waiver (the "Mortgage Loan Modification and Waiver").

Among other things, the Mortgage Loan Modification and Waiver increases the flexibility of the financial covenants under the mortgage loan obligations, restricts the Company to make certain acquisitions, and requires additional certain monthly financial reporting to the lender.

  While we were in compliance with the financial covenants under the mortgage loan obligations as of

February

28,

2017,

there are no assurances that our lender will provide any future waivers of covenant violations or agree to any future amendments of our mortgage loan agreements.

Our $

5.1

million in mortgage loan obligations as of

February

28,

2017

consists of various loans acquired upon franchise acquisitions. These loans, which mature between

February

 

2019

and

October

2021,

have balances which range from

$0.5

million to

$1.0

million and interest rates of

7.78%

to

10.17%.

 Many of the properties acquired from franchisees collateralize the loans outstanding.

XML

Note 7 - Closures and Impairments Expense

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Asset Impairment Charges [Text Block]

7.

Closures and Impairments Expense

Closures and impairments, net include the following (in thousands):

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
Property impairments	$	14,946		$	6,938		$	32,774		$	15,730
Closed restaurant lease reserves		(133	)		(1,207	)		17,445			3,118
Inventory write-off		–			–			2,754			–
Severance benefits		13			68			1,606			213
Other closing expense		949			403			4,830			877
Gain on sale of properties		(2,334	)		(79	)		(68	)		(1,030	)
Lime Fresh trademark impairment		–			–			–			1,999
Closures and impairments, net	$	13,441		$	6,123		$	59,341		$	20,907

During the

39

weeks ended

February

28,

2017,

we closed

102

Company-owned restaurants,

95

of which were closed in connection with an asset rationalization plan announced on

August

11,

2016.

The plan was formulated in response to a comprehensive review of our property portfolio which included the planned closure of restaurants with perceived limited upside due to market concentration, challenged trade areas, or other factors. Included within Closures and impairments, net for the

39

weeks ended

February

28,

2017

are closed restaurant lease reserves, inventory write-off, severance benefits, and other closing expense of

$30.2

 million related to the closures in connection with the asset rationalization plan.

During the

39

weeks ended

February

28,

2017,

we sold

one

of

two

office buildings comprising our Restaurant Support Center in Maryville, Tennessee

for net proceeds of

$2.6

million. The building sold had a net book value of

$5.8

million at the time of the sale. Accordingly, included within the loss on sale of surplus properties in the table above for the

39

weeks ended

February

28,

2017

was a loss of

$3.2

million related to the sale of the building. Our

two

Tennessee Restaurant Support Center office buildings were consolidated into the

one

remaining building during our 

third

quarter of fiscal year

2017.

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

	Reserve for Lease Obligations
Balance at May 31, 2016	$	6,270
Closing expense including rent and other lease charges		17,445
Payments		(13 ,772	)
A djustments to deferred escalating minimum rent and other		9,196
Balance at February 28, 2017	$	19,139

The amounts comprising future lease obligations associated with closed restaurants in the table above are estimated using certain assumptions, including the period of time it will take to settle the lease with the landlord or find a suitable sublease

tenant,

and the amount of actual future cash payments could differ from our recorded lease obligations. Of the total future lease obligations included in the table above,

$18.1

million is included

within Accrued liabilities:– Rent and other,

$0.5

million is included within Deferred escalating minimum rent, and

$0.5

million is included within Other deferred liabilities in our Condensed Consolidated Balance Sheet as of

February

28,

2017.

  For the remainder of fiscal year

2017

and beyond, our focus will be to obtain settlements, or subleases on as many leases as possible.

Settlements could be higher or lower than the lease obligations 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.

XML

Note 8 - Employee Post-employment Benefits

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

8.

Employee Post-Employment Benefits

Pension and Postretirement Medical and Life Benefits

We sponsor

three

defined benefit pension plans for certain 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 could 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 all required contributions for fiscal year

2017

have been made. 

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 could enter the plan after that date. In

December

2015,

the Executive Supplemental Pension Plan was similarly amended effective as of

January

1,

2016

for current participants, and as of

January

1,

2018

for

two

specified potential participants, who are currently not named executive officers.

Included in our Condensed Consolidated Balance Sheets as of

February

28,

2017

and

May

31,

2016

are amounts within Accrued liabilities: Payroll and related costs of

$3.9

million and

$2.5

million, respectively, and amounts within Other deferred liabilities of

$33.1

million and

$35.7

million, respectively, relating to our

three

defined benefit pension plans.

Postretirement Medical and Life Benefits

Our Postretirement Medical and Life Benefits plans provide medical benefits to substantially all retired employees 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.

Included in our Condensed Consolidated Balance Sheets as of

February

 

28,

2017

and

May

31,

2016

are amounts within Accrued liabilities: Payroll and related costs of

$0.1

million as of both dates and amounts within Other deferred liabilities of

$1.0

million as of both dates relating to our postretirement medical and life benefits.

The following tables detail the components of net periodic benefit cost 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, which is recorded as a component of General and administrative expenses in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Pension Plans
	Thirteen Weeks Ended					Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016			February 28, 2017			March 1, 2016
Service cost	$	5	$	33		$	18		$	305
Interest cost		420		495			1,260			1,535
Expected return on plan assets		(91)		(103	)		(273	)		(308	)
Recognized actuarial loss		339		730			1,014			1,831
Curtailment expense		–		1			–			1
Net periodic benefit cost	$	673	$	1,156		$	2,019		$	3,364

	Postretirement Medical and Life Benefits
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Service cost	$	2	$	1	$	3	$	3
Interest cost		9		12		27		36
Recognized actuarial loss		17		32		51		97
Net periodic benefit cost	$	28	$	45	$	81	$	136

We

reclassified recognized actuarial losses of

$0.4

million and

$1.1

million during the

13

and

39

weeks ended

February

 

28,

2017,

respectively, and

$0.8

million and

$1.9

million during the

13

and

39

weeks ended

March

1,

2016,

respectively, out of accumulated other comprehensive loss and into pension expense, which is included in General and administrative expenses within our Condensed Consolidated Statements of Operations and Comprehensive Loss.

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

May

31,

2016.

Restaurant Closures and

Corporate Restructuring

W

e closed

102

Company-owned restaurants during the

39

weeks ended

February

28,

2017,

95

of which were closed in connection with an asset rationalization plan as previously discussed in Note

7

to the Condensed Consolidated Financial Statements.

On

September

13,

2016,

James J. Buettgen resigned as Chairman of the Board of Directors, President, and Chief Executive Officer of the Company. On the same date, F. Lane Cardwell, Jr., a member of the Company

’s Board of Directors since

October

2012

and an executive with approximately

38

years of leadership experience in the restaurant industry, was appointed Interim President and Chief Executive Officer, Stephen I. Sadove, the Company’s then Lead Director, was appointed Chairman of the Board and Sue Briley was appointed Chief Financial Officer. Ms. Briley had been serving as Interim Chief Financial Officer since

June

2016.

 

Included in the employee severance and unused vacation accruals in the table

below are

$3.1

million in severance accruals and other benefits in connection with Mr. Buettgen’s resignation.

A

s of

February

 

28,

2017

and

May

31,

2016,

we had

no 

accrued liability and

$0.3

million, respectively, representing unpaid obligations related to employee severance and vacation accruals, were included within Accrued liabilities: Payroll and related costs in our Condensed Consolidated Balance Sheet. Costs of

$3.3

million and

$1.6

million reflected in the table below related to employee severance and unused vacation accruals are included within General and administrative expenses and Closures and impairments, net, respectively, in our Condensed Consolidated Statements of Operations and Comprehensive Loss for the

39

weeks ended

February

 

28,

2017.

A roll forward of our obligations in connection with employee separations is as follows (in thousands):

Balance at May 31, 2016	$	317
Employee severance and unused vacation accruals		4,890
Cash payments		(5,207	)
Balance at February 28, 2017	$	–

XML

Note 9 - Income Taxes

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9.

Income Taxes

C

ompanies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period. 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 provision for the

13

and

39

weeks ended

February

28,

2017

and

March

1,

2016

based on the actual year-to-date results.

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 consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets for each jurisdiction. As of

February

28,

2017,

we have rolling

three

-year historical operating losses and have concluded that the negative evidence outweighs the positive evidence.

In accordance with the applicable accounting standards, we are unable to use future income projections to support the realization of our deferred tax assets as a consequence of the above conclusion.

   Instead, in determining the appropriate amount of the valuation allowance, we considered the timing of future reversal of our taxable temporary differences and available tax strategies that, if implemented, would result in the realization of deferred tax assets. Our valuation allowance for deferred tax assets totaled

$131.3

million and

$89.9

million as of

February

28,

2017

and

May

31,

2016,

respectively.

We

recorded a tax benefit of

$0.1

million and

$1.7

million for the

13

and

39

weeks ended

February

 

28,

2017,

respectively. We recorded a tax benefit of

$0.5

million and

$1.7

million for the

13

and

39

weeks ended

March

1,

2016,

respectively. Netted against our tax benefit for the

13

and

39

weeks ended

February

28,

2017

were charges of

$10.3

million and

$44.1

million, respectively, representing increases in the valuation allowance for deferred tax assets recorded primarily against general business credit carryforwards and federal and state net operating loss carryforwards.

We had a gross liability for unrecognized tax benefits, exclusive of accrued interest and penalties, of

$3.8

million and

$4.5

million, respectively, as of

February

 

28,

2017

and

May

31,

2016,

of which

$3.3

million and

$3.7

million were reclassified against our deferred tax assets, respectively. As of

February

28,

2017

and

May

31,

2016,

the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was

$2.4

million and

$2.3

million, respectively. The liability for unrecognized tax benefits as of

February

28,

2017

does

not

include anything 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

both

February

28,

2017

and

May

31,

2016,

we had accrued

$0.4

million for the payment of interest and penalties. During the

first

three

quarters of fiscal year

2017,

accrued interest and penalties increased by an insignificant amount.

At

February

 

28,

2017,

we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to

2012,

and with few exceptions, we are no longer subject to state and local examinations by tax authorities prior to fiscal year

2014.

XML

Note 10 - Share-based Employee Compensation

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

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

10.

Share-Based Employee Compensation

Preferred Stock

RTI is authorized, under its Certificate of Incorporation, to issue up to

250,000

shares of preferred stock with a par value of

$0.01.

These shares

may

be issued from time to time in

one

or more series. Each series will have dividend rates, rights of conversion and

redemption, liquidation prices, and other terms or conditions as determined by the Board of Directors.

No

preferred shares have been issued as of

February

28,

2017

and

May

31,

2016.

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. Stock 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 stock 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 stock 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

February

 

28,

2017,

we had reserved a total of

6,557,000

shares of common stock for the SIP and

1996

SIP. Of the reserved shares at

February

28,

2017,

1,749,000

were subject to stock options outstanding. Stock option exercises are settled with the issuance of new shares. Net shares of common stock available for issuance at

February

28,

2017

were

4,808,000.

 

Stock Options

The following table summarizes our stock option activity under these stock option plans for the

39

weeks ended

February

28,

2017

(Stock Options and Aggregate Intrinsic Value are in thousands):

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Service-based vesting:
Outstanding at May 31, 2016		2,066		$	7. 89
Granted		1,126			3.46
Cancellations and forfeitures		(40	)		4.53
Expired		(1,403	)		6.62
Outstanding at February 28, 2017		1,749		$	6.13		3.64	$	–
Exercisable at February 28, 2017		910		$	8.62		1.10	$	–

At

February

28,

2017,

there was approximately

$0.6

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

1.4

years.

During the

39

weeks ended

February

28,

2017,

we granted

247,000

service-based stock options to our Interim Chief Executive Officer under the terms of the SIP. The stock options awarded cliff vest at the end of fiscal year

2017

and have a maximum life of

seven

years.

During the 

39

weeks ended

February

28

2017,

we granted

878,000

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.

Restricted Stock and Restricted Stock Units (“RSU”)

The following table summarizes our restricted stock and RSU activity for the

39

weeks ended

February

28,

2017

(in thousands, except per-share data):

	Shares			Weighted Average Fair Value
Service-Based Vesting:
Unvested at May 31, 2016		564		$	6. 29
Granted		538			3.22
Vested		(535	)		5.79
Cancellations and forfeitures		(41	)		5.70
Unvested at  February 28, 2017		526		$	3.71
Performance-Based Vesting:
Unvested at May 31, 2016		225		$	6.51
Cancellations and forfeitures		(84	)		6.51
Unvested at February 28, 2017		141		$	6.51

The fair value of restricted stock and RSU awards is based on the closing price of our common stock on the date prior to the grant date. At

February

28

,

2017,

unrecognized compensation expense related to restricted stock and RSU grants expected to vest totaled

$1.2

million and will be recognized over a weighted average vesting period of

1.2

years.

During the

39

weeks ended

February

28,

2017,

we granted

219,000

restricted shares to non-employee directors under the terms of the SIP.

  These shares cliff vest over a

one

year period following the grant date of the award.

During

the 

39

weeks ended

February

 

28,

2017

, we granted

319,000

service-based RSUs to certain employees under the terms of the SIP and

1996

SIP. The service-based RSUs will vest in

three

equal installments over a

three

-year period following the date of grant.

Phantom Stock Units

We began granting phantom stock units during fiscal year

2017.

Each phantom stock unit entitles the recipient to receive a cash payment equal to the value of a single share of our common stock upon vesting. During the

second

quarter of fiscal year

2017

, we granted

81,000

service-based phantom stock units to our Interim Chief Executive Officer. The phantom stock units will cliff vest at the end of fiscal year

2017.

Also during the

second

quarter of fiscal year

2017,

we granted

407,000

service-based phantom stock units to our senior executive team.

The phantom stock units will cliff vest

two

years following the grant date of the award.

D

uring the

first

quarter of fiscal year

2017,

we granted

571,000

performance-based phantom stock units that will vest approximately

three

years after the grant date. Vesting of the performance-based phantom stock units is contingent upon the Company’s achievement of a same-restaurant sales performance condition related to the next

three

fiscal years. During the

second

quarter of fiscal year

2017,

210,000

of these performance-based phantom stock units were forfeited primarily in connection with the departure of our former President and Chief Executive Officer.

Included in our Condensed Consolidated Balance Sheets

are amounts within Accrued liabilities: Payroll and related costs of

$0.1

million as of

February

28,

2017

and amounts within Other deferred liabilities of

$0.3

million and

$0.2

million as of  

February

28,

2017

and

May

31,

2016,

respectively, relating to all of our long-term incentive awards that will settle in cash.

I

ncluded within General and administrative expenses in our Consolidated Statements of Operations and Comprehensive Loss is share-based compensation expense of

$0.5

million and

$3.0

million for the

13

and 

39

weeks ended

February

 

28,

2017,

respectively, and

$0.9

million and

$1.7

million for the

13

and 

39

weeks ended

March

 

1,

2016.

XML

Note 11 - Commitments and Contingencies

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

1

1

. Commitments and Contingencies

Litigation

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business. We provide reserves for such claims when payment is probable and estimable in accordance with GAAP. At this time, in the opinion of management, the ultimate resolution of pending legal proceedings, including the matter referred to below, will not have a material adverse effect on our condensed 

consolidated operations, financial position, or cash flows.

As also discussed in Note

15

to the Condensed Consolidated Financial Statements, in

May

2014,

a securities class action case styled Dennis Krystek v. Ruby Tuesday, Inc. et al, was filed in the U.S. District Court for the Middle District of Tennessee, Nashville Division.

  The case alleged that the Company and some of its former executives made false and misleading statements about the Company's financial performance and the financial performance of the Lime Fresh concept.  On

March

29,

2017,

the Company agreed to settle the case for

$5.0

million.  We maintain insurance to cover these types of claims with our primary insurance carrier, subject to a self-insured retention which had been met prior to

February

28,

2017.

  Our insurance policies cover amounts in excess of our self-insured retention. In accordance with ASC Subtopic

405

-

20

-

40,

Extinguishment of Liabilities

, and ASC Subtopic

210

-

20,

Balance Sheet Offsetting

, we have recorded both an accrued liability (included within Accrued liabilities: Rent and other) and an asset for insurance recovery (included within Accounts and other receivables), in the amount of

$5.0

million, in our Condensed Consolidated Balance Sheet as of

February

28,

2017.

XML

Note 12 - Fair Value Measurements

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

1

2

. 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		February 28, 2017			May 31, 2016
Deferred compensation plan – Assets		1	$	5,644		$	6,660
Deferred compensation plan – Liabilities		1		(5 ,644	)		(6,660	)

There were no transfers among levels within the fair value hierarchy during

the

39

weeks ended

February

28,

2017.

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 Consolidated Financial Statements. The investments held by these plans are considered trading securities and are reported at fair value based on

third

-party broker statements.

The realized and unrealized holding gains and losses related to these other investments, as well as the offsetting compensation expense, is recorded in General and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The investment in RTI common stock and related liability payable in RTI common stock, which are reflected in Shareholders'

 Equity in the Condensed Consolidated Balance Sheets, are excluded from the fair value table above as these are considered treasury shares and reported at cost.

The following table

presents the fair values on our Condensed Consolidated Balance Sheets as of

February

28,

2017

for those assets and liabilities measured on a non-recurring basis (in thousands):

	Fair Value Measurements
	Level		February 28 , 2017
Long-lived assets held for use		2	$	4,519
Long-lived assets held for sale		2		444
Total			$	4,963

The following table presents the losses recognized during the

13

and

39

weeks ended

February

28,

2017

and

March

 

1,

2016

resulting from fair value measurements of assets and liabilities measured on a non-recurring basis. The amounts presented are included in Closures and impairments, net in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Long-lived assets held for use	$	14,914	$	6,764	$	29,930	$	15,206
Long-lived assets held for sale		32		174		2,844		524
Lime Fresh trademark		–		–		–		1,999
Long-lived asset impairments	$	14,946	$	6,938	$	32,774	$	17,729

Long-lived assets held for sale are valued using Level

2

inputs, primarily from information obtained through broker listings or sales agreements. Costs to market and/or sell are factored into the estimates of fair value for those properties 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 a restaurant

may

not be recoverable.

Long-lived assets held for use presented in the table above includes restaurants or groups of restaurants that we have impaired. From time to time, the table will also include closed restaurants or surplus sites not meeting held for sale criteria that have been offered for sale at a price less than their carrying value.

The fair values of our long-lived assets held for use are primarily based on broker estimates of the value of the land, building, leasehold improvements, and other residual assets (Level

2).

Our

financial instruments at

February

28,

2017

and

May

31,

2016

consisted of cash and cash equivalents, accounts receivable and payable, and long-term debt. The fair values of cash and cash equivalents and accounts receivable and payable approximated their carrying values because of the short-term nature of these instruments. The carrying amounts and fair values of our long-term debt, which are not measured on a recurring basis using fair value, are as follows (in thousands):

	February 28 , 2017				May 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt (Level 2)	$	213,675	$	210,586	$	223,526	$	223,212

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

XML

Note 13 - Supplemental Condensed Consolidating Financial Statements

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Condensed Financial Statements [Text Block]

13

. Supplemental Condensed Consolidating Financial Statements

As discussed in Note

6

to the

Condensed 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 SEC, 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

February

 

28

,

2017

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	32,495		$	132	$	–		$	32,627
Accounts and other receivables		8,223			5,192		–			13,415
Inventories		13,068			4,949		–			18,017
Income tax receivable		173,370			–		(168 ,632	)		4,738
Other current assets		16,906			11,679		–			28,585
Total current assets		244,062			21,952		(168,632	)		97,382
Property and equipment, net		459,402			142,146		–			601,548
Investment in subsidiaries		70,596			–		(70 ,596	)		–
Due from/(to) subsidiaries		93,299			222,799		(316 ,098	)		–
Other assets		39,617			4,263		–			43,880
Total assets	$	906,976		$	391,160	$	(555 ,326	)	$	742,810
Liabilities & Shareholders ’ Equity
Current liabilities:
Accounts payable	$	18,834		$	4,749	$	–		$	23,583
Accrued and other current liabilities		50,686			18,313		–			68,999
Deferred revenue – gift cards		(502	)		17,974		–			17,472
Current maturities of long-term debt,
including capital leases		(1 ,132	)		1,481		–			349
Income tax payable		–			168,632		(168 ,632	)		–
Total current liabilities		67,886			211,149		(168,632	)		110,403
Long-term debt and capital leases,
less current maturities		209,911			3,622		–			213 ,533
Due to/(from) subsidiaries		222,799			93,299		(316 ,098	)		–
Other deferred liabilities		91,984			12,494		–			104,478
Total liabilities		592,580			320,564		(484 ,730	)		428,414
Shareholders ’ equity:
Common stock		605			–		–			605
Capital in excess of par value		78,937			–		–			78,937
Retained earnings		243,897			70,596		( 70,596	)		243,897
Accumulated other comprehensive loss		(9 ,043	)		–		–			(9,043	)
Total shareholders ’ equity		314,396			70,596		(70,596	)		314,396
Total liabilities & shareholders ’ equity	$	906,976		$	391,160	$	(555 ,326	)	$	742,810

Condensed Consolidating Balance Sheet

As of

May

31,

2016

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	67,208		$	133	$	–		$	67,341
Accounts and other receivables		8,102			4,725		–			12,827
Inventories		15,401			6,194		–			21,595
Income tax receivable		167,065			–		(164,062	)		3,003
Other current assets		11,282			4,868		–			16,150
Total current assets		269,058			15,920		(164,062	)		120,916
Property and equipment, net		501,482			169,768		–			671,250
Investment in subsidiaries		98,929			–		(98,929	)		–
Due from/(to) subsidiaries		76,208			213,816		(290,024	)		–
Other assets		40,626			5,125		–			45,751
Total assets	$	986,303		$	404,629	$	(553,015	)	$	837,917
Liabilities & Shareholders ’ Equity
Current liabilities:
Accounts payable	$	17,405		$	4,736	$	–		$	22,141
Accrued and other current liabilities		36,155			13,122		–			49,277
Deferred revenue – gift cards		(481	)		16,835		–			16,354
Current maturities of long-term debt,
including capital leases		(1,067	)		11,001		–			9,934
Income tax payable		–			164,062		(164,062	)		–
Total current liabilities		52,012			209,756		(164,062	)		97,706
Long-term debt and capital leases,
less current maturities		209,058			4,745		–			213,803
Due to/(from) subsidiaries		213,816			76,208		(290,024	)		–
Other deferred liabilities		103,637			14,991		–			118,628
Total liabilities		578,523			305,700		(454,086	)		430,137
Shareholders ’ equity:
Common stock		601			–		–			601
Capital in excess of par value		75,938			–		–			75,938
Retained earnings		341,350			98,929		(98,929	)		341,350
Accumulated other comprehensive loss		(10,109	)		–		–			(10,109	)
Total shareholders ’ equity		407,780			98,929		(98,929	)		407,780
Total liabilities & shareholders ’ equity	$	986,303		$	404,629	$	(553,015	)	$	837,917

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the

Thirteen Weeks Ended

February

28

,

2017

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	165,005		$	59,933		$	–		$	224,938
Franchise revenue		–			794			–			794
Total revenue		165,005			60,727			–			225,732
Operating costs and expenses:
Cost of goods sold		47,164			17,176			–			64,340
Payroll and related costs		57,485			22,595			–			80,080
Other restaurant operating costs		33,356			11,730			–			45,086
Depreciation and amortization		7,509			2,612			–			10,121
G eneral and administrative expenses		7,295			6,581			–			13,876
Intercompany general and administrative allocations		9,167			(9,167	)		–			–
Marketing expenses, net		10,296			3,511			–			13,807
Closures and impairments, net		11,253			2,188			–			13,441
Equity in earnings of subsidiaries		(2,017	)		–			2,017			–
Interest expense, net		4,688			182			–			4,870
Intercompany interest expense/(income)		3,035			(3,035	)		–			–
Total operating costs and expenses		189,231			54,373			2,017			245,621
(Loss)/income before income taxes		(24 ,226	)		6,354			2,017			(19,889	)
(Benefit)/provision for income taxes		(4,421	)		4,337			–			(84	)
Net (loss)/income	$	(19 ,805	)	$	2,017		$	(2,017	)	$	(19,805	)
Other comprehensive income:
Pension liability reclassification		356			–			–			356
Total comprehensive (loss)/income	$	(19 ,449	)	$	2,017		$	(2,017	)	$	(19,449	)

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirty

-Nine

Weeks Ended

February

28

,

2017

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	507,414		$	187,103		$	–		$	694,517
Franchise revenue		10			2,581			–			2,591
Total revenue		507,424			189,684			–			697,108
Operating costs and expenses:
Cost of goods sold		145,051			53,621			–			198,672
Payroll and related costs		179,149			71,956			–			251,105
Other restaurant operating costs		108,613			40,456			–			149,069
Depreciation and amortization		23,265			8,573			–			31,838
G eneral and administrative expenses		26,376			21,983			–			48,359
Intercompany general and administrative allocations		28,223			(28,223	)		–			–
Marketing expenses, net		32,119			11,209			–			43,328
Closures and impairments, net		38,025			21,316			–			59,341
Equity in losses of subsidiaries		7,791			–			(7 ,791	)		–
Interest expense, net		13,829			762			–			14,591
Intercompany interest expense/(income)		8,983			(8,983	)		–			–
Total operating costs and expenses		611,424			192,670			(7 ,791	)		796,303
(Loss)/income before income taxes		(104 ,000	)		(2 ,986	)		7,791			(99 ,195	)
(Benefit)/provision for income taxes		(6 ,547	)		4,805			–			(1 ,742	)
Net loss	$	(97 ,453	)	$	(7 ,791	)	$	7,791		$	(97,453	)
Other comprehensive income:
Pension liability reclassification		1,066			–			–			1,066
Total comprehensive loss	$	(96,387	)	$	(7 ,791	)	$	7,791		$	(96,387	)

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the

Thirteen Weeks Ended

March

 

1,

2016

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	194,527		$	75,341		$	–		$	269,868
Franchise revenue		90			1,512			–			1,602
Total revenue		194,617			76,853			–			271,470
Operating costs and expenses:
Cost of goods sold		54,209			20,934			–			75,143
Payroll and related costs		65,474			27,883			–			93,357
Other restaurant operating costs		40,008			15,303			–			55,311
Depreciation and amortization		9,008			3,724			–			12,732
General and administrative expenses		7,315			6,833			–			14,148
Intercompany general and administrative allocations		10,726			(10,726	)		–			–
Marketing expenses, net		9,685			3,545			–			13,230
Closures and impairments, net		3,993			2,130			–			6,123
Equity in earnings of subsidiaries		(5,676	)		–			5,676			–
Interest expense, net		4,556			439			–			4,995
Intercompany interest expense/(income)		3,058			(3,058	)		–			–
Total operating costs and expenses		202,356			67,007			5,676			275,039
(Loss)/income before income taxes		(7,739	)		9,846			(5,676	)		(3,569	)
(Benefit)/provision for income taxes		(4,653	)		4,170			–			(483	)
Net (loss)/income	$	(3,086	)	$	5,676		$	(5,676	)	$	(3,086	)
Other comprehensive income:
Pension liability reclassification, net of tax		885			–			–			885
Total comprehensive (loss)/income	$	(2,201	)	$	5,676		$	(5,676	)	$	(2,201	)

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirty-Nine Weeks Ended

March

 

1,

2016

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	583,055		$	224,050		$	–		$	807,105
Franchise revenue		220			4,581			–			4,801
Total revenue		583,275			228,631			–			811,906
Operating costs and expenses:
Cost of goods sold		160,212			61,477			–			221,689
Payroll and related costs		197,732			83,244			–			280,976
Other restaurant operating costs		126,234			47,669			–			173,903
Depreciation and amortization		27,305			11,169			–			38,474
General and administrative expenses		23,797			20,429			–			44,226
Intercompany general and administrative allocations		32,188			(32,188	)		–			–
Marketing expenses, net		29,591			10,805			–			40,396
Closures and impairments, net		16,080			4,827			–			20,907
Equity in earnings of subsidiaries		(18,907	)		–			18,907			–
Interest expense, net		13,806			2,294			–			16,100
Intercompany interest expense/(income)		9,049			(9,049	)		–			–
Total operating costs and expenses		617,087			200,677			18,907			836,671
(Loss)/income before income taxes		(33,812	)		27,954			(18,907	)		(24,765	)
(Benefit)/provision for income taxes		(10,733	)		9,047			–			(1,686	)
Net (loss)/income	$	(23,079	)	$	18,907		$	(18,907	)	$	(23,079	)
Other comprehensive income:
Pension liability reclassification, net of tax		1,347			–			–			1,347
Total comprehensive (loss)/income	$	(21,732	)	$	18,907		$	(18,907	)	$	(21,732	)

Condensed Consolidating Statement of Cash Flows

For the Thirty

-Nine

Weeks Ended

February

28

,

2017

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/pr ovided by operating activities	$	(38,058	)	$	27,897		$	(11 ,558	)	$	(21,719	)
Investing activities:
Purchases of property and equipment		( 21,631	)		(5 ,321	)		–			(26 ,952	)
Proceeds from disposal of assets		13,471			8,573			–			22,044
Insurance proceeds from property claims		358			–						358
Reductions in Deferred Compensation Plan assets		1,702			–						1,702
Other, net		1,439			–			–			1,439
Net cash (used)/provided by investing activities		(4,661	)		3 ,252			–			(1,409	)
Financing activities:
Principal payments on long-term debt		(4	)		(10,609	)		–			(10,613	)
Stock repurchases		(26	)		–			–			(26	)
Payments for debt issuance costs		(947	)		–			–			(947	)
Intercompany dividend		–			(20 ,541	)		20,541			–
Other i ntercompany transactions		8,983			–			(8,983	)		–
Net cash ( used)/provided by financing activities		8,006			(31 ,150	)		11,558			( 11,586	)
De crease in cash and cash equivalents		(34,713	)		(1	)		–			(34,714	)
Cash and cash equivalents:
Beginning of fiscal year		67,208			133			–			67,341
End of quarter	$	32,495		$	132		$	–		$	32,627

Condensed Consolidating Statement of Cash Flows

For the Thirty

-Nine

Weeks Ended 

March

1,

2016

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(8 ,133	)	$	41,932		$	( 15,260	)	$	18,539
Investing activities:
Purchases of property and equipment		( 19,892	)		( 7,454	)		–			( 27,346	)
Proceeds from disposal of assets		6,193			–			–			6,193
Other, net		2,444			–			–			2,444
Net cash used by investing activities		( 11,255	)		(7 ,454	)		–			( 18,709	)
Financing activities:
Principal payments on long-term debt		( 2,390	)		(10,274	)		–			(12,664	)
Stock repurchases		(10,009	)		–			–			(10,009	)
Payments for debt issuance costs		( 30	)		–			–			(30	)
Intercompany dividend		–			(24,309	)		24,309			–
Other intercompany transactions		9,049			–			(9,049	)		–
Net cash (used)/provided by financing activities		(3,380	)		(34 ,583	)		15,260			(22 ,703	)
Decrease in cash and cash equivalents		(22,768	)		(105	)		–			(22 ,873	)
Cash and cash equivalents:
Beginning of fiscal year		75,034			297			–			75,331
End of quarter	$	52,266		$	192		$	–		$	52,458

XML

Note 14 - Recently Issued Accounting Pronouncements

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

14

. Recently Issued Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In

August

2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flows (Topic

230):

Classification of Certain Cash Receipts and Payments

(“ASU

2016

-

15”),

which provides clarification regarding how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The guidance addresses

eight

specific cash flow issues with the objective to reduce diversity in practice of how certain transactions are classified within the statement of cash flows. ASU

2016

-

15

is effective for annual periods beginning after

December

15,

2017,

and interim periods therein (our fiscal year

2019).

Early application is permitted. We do not believe the adoption of this guidance will have a material impact on our Condensed Consolidated Financial Statements.

In

March

 

2016,

the FASB issued ASU

2016

-

09,

Compensation - Stock Compensation (Topic

718):

Improvements to Employee Share-Based Payment Accounting

 (“ASU

2016

-

09”),

which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  ASU

2016

-

09

is effective for annual periods beginning after

December

15,

2016,

and interim periods therein (our fiscal year

2018).

  Early application is permitted. We are currently evaluating the impact of this guidance on our Condensed Consolidated Financial Statements.

In

February

2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842)

(“ASU

2016

-

02”),

which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than

12

months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities

may

elect to apply. ASU

2016

-

02

is effective for annual periods beginning after

December

15,

2018,

and interim periods therein (our fiscal year

2020).

Early application is permitted. We are currently evaluating the impact of this guidance on our Condensed Consolidated Financial Statements.

In

August

2014,

the FASB issued ASU

2014

-

15,

Presentation of Finan

cial Statements – Going Concern (Subtopic

205

-

40):

Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

(“ASU

2014

-

15”)

.

The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within

one

year after the date that the financial statements are issued and to provide related footnote

disclosures in certain circumstances. The guidance is effective for annual periods ending after

December

15,

2016,

and for interim periods within annual periods beginning thereafter (our fiscal year

2017).

We do not believe the adoption of this guidance will have a material impact on our Condensed Consolidated Financial Statements.

In

May

2014,

the FASB and International Accounting Standards Board jointly issued ASU

2014

-

09,

Revenue from Contracts with Customers (Topic

606)

("ASU

2014

-

09")

.

ASU

2014

-

09

will replace almost all existing revenue recognition guidance, including industry specific guidance, upon its effective date. The standard's core principle is for a company to recognize revenue when it transfers goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled.

A company

may

also need to use more judgment and make more estimates when recognizing revenue, which could result in additional disclosures. ASU

2014

-

09

also provides guidance for transactions that were not addressed

comprehensively in previous guidance, such as the recognition of breakage income from the sale of gift cards. The standard permits the use of either the retrospective or cumulative effect transition method. The guidance is effective for fiscal years, and interim periods within those years, beginning after

December

15,

2017

(our fiscal year

2019),

with early application permitted in the

first

quarter of

2017.

We do not expect the adoption of this guidance to impact our recognition of Company-owned restaurants sales and operating revenue or our recognition of continuing fees from franchisees, which are based on a percentage of franchise sales. We have not yet selected a transition method and are continuing to evaluate the impact of this guidance on our less significant revenue transactions, such as initial franchise license fees.

Additionally, i

n

March

and

April

2016,

the FASB issued the following amendments to ASU

2014

-

09

to clarify the implementation guidance: ASU

2016

-

08,

Revenue from Contracts with Customers (Topic

606):

Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

and ASU

2016

-

10,

Revenue from Contracts with Customers (Topic

606):

Identifying Performance Obligations and Licensing

. Under the new guidance, expected gift card breakage income will be required to be recognized proportionately as redemption occurs. Our current accounting policy of recognizing gift card breakage income applying the remote method will no longer be allowed. The timing of transition of this guidance is consistent with the new revenue recognition standard as discussed above. We expect to implement the provisions of ASU

2014

-

09

and the related amendments in the same period.

XML

Note 15 - Subsequent Events

9 Months Ended

Feb. 28, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

15

. Subsequent Events

Appointment of Chief Executive Officer

On

April

4,

2017,

James F. Hyatt was appointed President and Chief Executive Officer of the Company, replacing F. Lane Cardwell, Jr., who has been serving as our Interim President and Chief Executive Officer.

  Mr. Hyatt was also appointed to serve as a member of the Board of Directors of the Company (the "Board").  Mr. Cardwell will continue to serve as a member of the Board.  Also on

April

4,

2017,

we granted

142,045

service-based restricted stock units to Mr. Hyatt upon his appointment as President and Chief Executive Officer.  The service-based RSUs will vest in

three

equal installments over a

three

-year period following the date of grant.

Litigation Settlement

As also discussed in Notes

4

and

11

 to the Condensed Consolidated Financial Statements, in

May

2014,

a securities class action case styled Dennis Krystek v. Ruby Tuesday, Inc. et al, was filed in the U.S. District Court for the Middle District of Tennessee, Nashville Division.

  The case alleged that the Company and some of its former executives made false and misleading statements about the Company's financial performance and the financial performance of the Lime Fresh concept.  On

March

29,

2017,

the Company agreed to settle the case for

$5.0

million.  We maintain insurance to cover these types of claims with our primary insurance carrier, subject to a self-insured retention which had been met prior to

February

28,

2017.

  Our insurance policies cover amounts in excess of our self-insured retention. In accordance with ASC Subtopic

405

-

20

-

40,

Extinguishment of Liabilities

, and ASC Subtopic

210

-

20,

Balance Sheet Offsetting

, we have recorded both an accrued liability (included within Accrued liabilities: Rent and other) and an asset for insurance recovery (included within Accounts and other receivables), in the amount of

$5.0

million, in our Condensed Consolidated Balance Sheet as of

February

28,

2017.

Lease Settlements

As previously mentioned in Note

7

to the Condensed Consolidated Financial Statements,

we had a liability for future lease obligations of

$19.1

million as of

February

28,

2017.

Since then and through the date of this filing, we settled 

four

 of these leases for

$1.4

 million, which approximated the amount of our accrual for those leases at 

February

28,

2017.

XML

Note 1 - Basis of Presentation (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

Reclassification of Line Items Reported in Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) [Table Text Block]

	Thirteen Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March 1, 2016
Selling, general, and administrative, net	$	27,378	$	(27,378	)	$	–
General and administrative expenses		–		14,148			14,148
Marketing expenses, net		–		13,230			13,230
Closures and impairments, net		6,123		–			6,123

	Thirty-nine Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted March  1, 2016
Selling, general, and administrative, net	$	84,622	$	(84,622	)	$	–
General and administrative expenses		–		44,226			44,226
Marketing expense s, net		–		40,396			40,396
Closures and impairments, net		18,908		1,999			20,907
Trademark impairment		1,999		(1,999	)		–

Reclassification of Line Items Reported in Condensed Consolidated Statements of Cash Flows [Table Text Block]

	Thirty-nine Weeks Ended
	As presented March 1, 2016		Reclassifications			As adjusted  March 1, 2016
Loss on impairments, including disposition of assets	$	15,490	$	1,999		$	17,489
Trademark impairment		1,999		(1,999	)		–

XML

Note 2 - Loss Per Share (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

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

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
Net loss	$	(19,805	)	$	(3,086	)	$	(97,453	)	$	(23,079	)
Weighted-average common shares outstanding		60,262			60,918			60,074			61,239
Dilutive effect of stock options and restricted stock		–			–			–			–
Weighted average common and dilutive potential  common shares outstanding		60,262			60,918			60,074			61,239
Basic loss per share	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)
Diluted loss per share	$	(0.33	)	$	(0.05	)	$	(1.62	)	$	(0.38	)

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

	Thirteen weeks ended		Thirty-nine weeks ended
	February 28, 2017	March  1, 2016	February 28, 2017	March  1, 2016
Stock options	1,927	2,140	2,422	2,509
Restricted shares / Restricted share units	565	871	635	862
Total	2,492	3,011	3,057	3,371

XML

Note 4 - Accounts and Other Receivables (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

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

	February  28, 2017		May 31, 2016
Insurance receivable	$	5,000	$	–
Amounts due from franchisees		3,799		3,013
Amounts due from distributor		1,317		560
Third-party gift card sales		984		1,272
Rebates receivable		786		1,001
Receivables from sales of Lime Fresh Mexican Grill asset s		–		5,289
Other receivables		1,529		1,692
	$	13,415	$	12,827

XML

Note 5 - Property, Equipment, and Assets Held for Sale (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	February 28 , 2017		May 31, 2016
Land	$	182,785	$	209,930
Buildings		372,430		398,984
Improvements		257,147		303,032
Restaurant equipment		206,107		222,646
Other equipment		74,712		82,204
Surplus properties*		17,894		4,354
Construction in progress and other		4,306		3,325
		1,115,381		1,224,475
Less accumulated depreciation		513,833		553,225
Property and equipment, net	$	601,548	$	671,250

XML

Note 6 - Long-term Debt and Capital Leases (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

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

	February 28, 2017			May 31 , 2016
Senior unsecured notes	$	212,546		$	212,546
Unamortized discount		( 1,476	)		(1,771	)
Unamortized debt issuance costs		( 2,497	)		(2,995	)
Senior unsecured notes less unamortized discount and
debt issuance costs		208,573			207,780
Senior credit facility		–			–
Mortgage loan obligations		5,135			15,745
Unamortized (discount)/premium - mortgage loan obligations		(2	)		75
Unamortized debt issuance costs - mortgage loan obligations		(31	)		(74	)
Capital lease obligations		207			211
Total long-term debt and capital leases		213,882			223,737
Less current maturities		349			9,934
Long-term debt and capital leases, less current maturities	$	213 ,533		$	213,803

XML

Note 7 - Closures and Impairments Expense (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

Closures and Impairment Expenses [Table Text Block]

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	February 28, 2017			March 1, 2016			February 28, 2017			March 1, 2016
Property impairments	$	14,946		$	6,938		$	32,774		$	15,730
Closed restaurant lease reserves		(133	)		(1,207	)		17,445			3,118
Inventory write-off		–			–			2,754			–
Severance benefits		13			68			1,606			213
Other closing expense		949			403			4,830			877
Gain on sale of properties		(2,334	)		(79	)		(68	)		(1,030	)
Lime Fresh trademark impairment		–			–			–			1,999
Closures and impairments, net	$	13,441		$	6,123		$	59,341		$	20,907

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

	Reserve for Lease Obligations
Balance at May 31, 2016	$	6,270
Closing expense including rent and other lease charges		17,445
Payments		(13 ,772	)
A djustments to deferred escalating minimum rent and other		9,196
Balance at February 28, 2017	$	19,139

XML

Note 8 - Employee Post-employment Benefits (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Pension Plans
	Thirteen Weeks Ended					Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016			February 28, 2017			March 1, 2016
Service cost	$	5	$	33		$	18		$	305
Interest cost		420		495			1,260			1,535
Expected return on plan assets		(91)		(103	)		(273	)		(308	)
Recognized actuarial loss		339		730			1,014			1,831
Curtailment expense		–		1			–			1
Net periodic benefit cost	$	673	$	1,156		$	2,019		$	3,364

	Postretirement Medical and Life Benefits
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Service cost	$	2	$	1	$	3	$	3
Interest cost		9		12		27		36
Recognized actuarial loss		17		32		51		97
Net periodic benefit cost	$	28	$	45	$	81	$	136

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

Balance at May 31, 2016	$	317
Employee severance and unused vacation accruals		4,890
Cash payments		(5,207	)
Balance at February 28, 2017	$	–

XML

Note 10 - Share-based Employee Compensation (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

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

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Service-based vesting:
Outstanding at May 31, 2016		2,066		$	7. 89
Granted		1,126			3.46
Cancellations and forfeitures		(40	)		4.53
Expired		(1,403	)		6.62
Outstanding at February 28, 2017		1,749		$	6.13		3.64	$	–
Exercisable at February 28, 2017		910		$	8.62		1.10	$	–

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

	Shares			Weighted Average Fair Value
Service-Based Vesting:
Unvested at May 31, 2016		564		$	6. 29
Granted		538			3.22
Vested		(535	)		5.79
Cancellations and forfeitures		(41	)		5.70
Unvested at  February 28, 2017		526		$	3.71
Performance-Based Vesting:
Unvested at May 31, 2016		225		$	6.51
Cancellations and forfeitures		(84	)		6.51
Unvested at February 28, 2017		141		$	6.51

XML

Note 12 - Fair Value Measurements (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

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

	Level		February 28, 2017			May 31, 2016
Deferred compensation plan – Assets		1	$	5,644		$	6,660
Deferred compensation plan – Liabilities		1		(5 ,644	)		(6,660	)

Fair Value Measurements, Nonrecurring [Table Text Block]

	Fair Value Measurements
	Level		February 28 , 2017
Long-lived assets held for use		2	$	4,519
Long-lived assets held for sale		2		444
Total			$	4,963

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

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	February 28, 2017		March 1, 2016		February 28, 2017		March 1, 2016
Long-lived assets held for use	$	14,914	$	6,764	$	29,930	$	15,206
Long-lived assets held for sale		32		174		2,844		524
Lime Fresh trademark		–		–		–		1,999
Long-lived asset impairments	$	14,946	$	6,938	$	32,774	$	17,729

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

	February 28 , 2017				May 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt (Level 2)	$	213,675	$	210,586	$	223,526	$	223,212

XML

Note 13 - Supplemental Condensed Consolidating Financial Statements (Tables)

9 Months Ended

Feb. 28, 2017

Notes Tables

Condensed Balance Sheet [Table Text Block]

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	32,495		$	132	$	–		$	32,627
Accounts and other receivables		8,223			5,192		–			13,415
Inventories		13,068			4,949		–			18,017
Income tax receivable		173,370			–		(168 ,632	)		4,738
Other current assets		16,906			11,679		–			28,585
Total current assets		244,062			21,952		(168,632	)		97,382
Property and equipment, net		459,402			142,146		–			601,548
Investment in subsidiaries		70,596			–		(70 ,596	)		–
Due from/(to) subsidiaries		93,299			222,799		(316 ,098	)		–
Other assets		39,617			4,263		–			43,880
Total assets	$	906,976		$	391,160	$	(555 ,326	)	$	742,810
Liabilities & Shareholders ’ Equity
Current liabilities:
Accounts payable	$	18,834		$	4,749	$	–		$	23,583
Accrued and other current liabilities		50,686			18,313		–			68,999
Deferred revenue – gift cards		(502	)		17,974		–			17,472
Current maturities of long-term debt,
including capital leases		(1 ,132	)		1,481		–			349
Income tax payable		–			168,632		(168 ,632	)		–
Total current liabilities		67,886			211,149		(168,632	)		110,403
Long-term debt and capital leases,
less current maturities		209,911			3,622		–			213 ,533
Due to/(from) subsidiaries		222,799			93,299		(316 ,098	)		–
Other deferred liabilities		91,984			12,494		–			104,478
Total liabilities		592,580			320,564		(484 ,730	)		428,414
Shareholders ’ equity:
Common stock		605			–		–			605
Capital in excess of par value		78,937			–		–			78,937
Retained earnings		243,897			70,596		( 70,596	)		243,897
Accumulated other comprehensive loss		(9 ,043	)		–		–			(9,043	)
Total shareholders ’ equity		314,396			70,596		(70,596	)		314,396
Total liabilities & shareholders ’ equity	$	906,976		$	391,160	$	(555 ,326	)	$	742,810

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	67,208		$	133	$	–		$	67,341
Accounts and other receivables		8,102			4,725		–			12,827
Inventories		15,401			6,194		–			21,595
Income tax receivable		167,065			–		(164,062	)		3,003
Other current assets		11,282			4,868		–			16,150
Total current assets		269,058			15,920		(164,062	)		120,916
Property and equipment, net		501,482			169,768		–			671,250
Investment in subsidiaries		98,929			–		(98,929	)		–
Due from/(to) subsidiaries		76,208			213,816		(290,024	)		–
Other assets		40,626			5,125		–			45,751
Total assets	$	986,303		$	404,629	$	(553,015	)	$	837,917
Liabilities & Shareholders ’ Equity
Current liabilities:
Accounts payable	$	17,405		$	4,736	$	–		$	22,141
Accrued and other current liabilities		36,155			13,122		–			49,277
Deferred revenue – gift cards		(481	)		16,835		–			16,354
Current maturities of long-term debt,
including capital leases		(1,067	)		11,001		–			9,934
Income tax payable		–			164,062		(164,062	)		–
Total current liabilities		52,012			209,756		(164,062	)		97,706
Long-term debt and capital leases,
less current maturities		209,058			4,745		–			213,803
Due to/(from) subsidiaries		213,816			76,208		(290,024	)		–
Other deferred liabilities		103,637			14,991		–			118,628
Total liabilities		578,523			305,700		(454,086	)		430,137
Shareholders ’ equity:
Common stock		601			–		–			601
Capital in excess of par value		75,938			–		–			75,938
Retained earnings		341,350			98,929		(98,929	)		341,350
Accumulated other comprehensive loss		(10,109	)		–		–			(10,109	)
Total shareholders ’ equity		407,780			98,929		(98,929	)		407,780
Total liabilities & shareholders ’ equity	$	986,303		$	404,629	$	(553,015	)	$	837,917

Condensed Income Statement [Table Text Block]

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	165,005		$	59,933		$	–		$	224,938
Franchise revenue		–			794			–			794
Total revenue		165,005			60,727			–			225,732
Operating costs and expenses:
Cost of goods sold		47,164			17,176			–			64,340
Payroll and related costs		57,485			22,595			–			80,080
Other restaurant operating costs		33,356			11,730			–			45,086
Depreciation and amortization		7,509			2,612			–			10,121
G eneral and administrative expenses		7,295			6,581			–			13,876
Intercompany general and administrative allocations		9,167			(9,167	)		–			–
Marketing expenses, net		10,296			3,511			–			13,807
Closures and impairments, net		11,253			2,188			–			13,441
Equity in earnings of subsidiaries		(2,017	)		–			2,017			–
Interest expense, net		4,688			182			–			4,870
Intercompany interest expense/(income)		3,035			(3,035	)		–			–
Total operating costs and expenses		189,231			54,373			2,017			245,621
(Loss)/income before income taxes		(24 ,226	)		6,354			2,017			(19,889	)
(Benefit)/provision for income taxes		(4,421	)		4,337			–			(84	)
Net (loss)/income	$	(19 ,805	)	$	2,017		$	(2,017	)	$	(19,805	)
Other comprehensive income:
Pension liability reclassification		356			–			–			356
Total comprehensive (loss)/income	$	(19 ,449	)	$	2,017		$	(2,017	)	$	(19,449	)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	507,414		$	187,103		$	–		$	694,517
Franchise revenue		10			2,581			–			2,591
Total revenue		507,424			189,684			–			697,108
Operating costs and expenses:
Cost of goods sold		145,051			53,621			–			198,672
Payroll and related costs		179,149			71,956			–			251,105
Other restaurant operating costs		108,613			40,456			–			149,069
Depreciation and amortization		23,265			8,573			–			31,838
G eneral and administrative expenses		26,376			21,983			–			48,359
Intercompany general and administrative allocations		28,223			(28,223	)		–			–
Marketing expenses, net		32,119			11,209			–			43,328
Closures and impairments, net		38,025			21,316			–			59,341
Equity in losses of subsidiaries		7,791			–			(7 ,791	)		–
Interest expense, net		13,829			762			–			14,591
Intercompany interest expense/(income)		8,983			(8,983	)		–			–
Total operating costs and expenses		611,424			192,670			(7 ,791	)		796,303
(Loss)/income before income taxes		(104 ,000	)		(2 ,986	)		7,791			(99 ,195	)
(Benefit)/provision for income taxes		(6 ,547	)		4,805			–			(1 ,742	)
Net loss	$	(97 ,453	)	$	(7 ,791	)	$	7,791		$	(97,453	)
Other comprehensive income:
Pension liability reclassification		1,066			–			–			1,066
Total comprehensive loss	$	(96,387	)	$	(7 ,791	)	$	7,791		$	(96,387	)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	194,527		$	75,341		$	–		$	269,868
Franchise revenue		90			1,512			–			1,602
Total revenue		194,617			76,853			–			271,470
Operating costs and expenses:
Cost of goods sold		54,209			20,934			–			75,143
Payroll and related costs		65,474			27,883			–			93,357
Other restaurant operating costs		40,008			15,303			–			55,311
Depreciation and amortization		9,008			3,724			–			12,732
General and administrative expenses		7,315			6,833			–			14,148
Intercompany general and administrative allocations		10,726			(10,726	)		–			–
Marketing expenses, net		9,685			3,545			–			13,230
Closures and impairments, net		3,993			2,130			–			6,123
Equity in earnings of subsidiaries		(5,676	)		–			5,676			–
Interest expense, net		4,556			439			–			4,995
Intercompany interest expense/(income)		3,058			(3,058	)		–			–
Total operating costs and expenses		202,356			67,007			5,676			275,039
(Loss)/income before income taxes		(7,739	)		9,846			(5,676	)		(3,569	)
(Benefit)/provision for income taxes		(4,653	)		4,170			–			(483	)
Net (loss)/income	$	(3,086	)	$	5,676		$	(5,676	)	$	(3,086	)
Other comprehensive income:
Pension liability reclassification, net of tax		885			–			–			885
Total comprehensive (loss)/income	$	(2,201	)	$	5,676		$	(5,676	)	$	(2,201	)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	583,055		$	224,050		$	–		$	807,105
Franchise revenue		220			4,581			–			4,801
Total revenue		583,275			228,631			–			811,906
Operating costs and expenses:
Cost of goods sold		160,212			61,477			–			221,689
Payroll and related costs		197,732			83,244			–			280,976
Other restaurant operating costs		126,234			47,669			–			173,903
Depreciation and amortization		27,305			11,169			–			38,474
General and administrative expenses		23,797			20,429			–			44,226
Intercompany general and administrative allocations		32,188			(32,188	)		–			–
Marketing expenses, net		29,591			10,805			–			40,396
Closures and impairments, net		16,080			4,827			–			20,907
Equity in earnings of subsidiaries		(18,907	)		–			18,907			–
Interest expense, net		13,806			2,294			–			16,100
Intercompany interest expense/(income)		9,049			(9,049	)		–			–
Total operating costs and expenses		617,087			200,677			18,907			836,671
(Loss)/income before income taxes		(33,812	)		27,954			(18,907	)		(24,765	)
(Benefit)/provision for income taxes		(10,733	)		9,047			–			(1,686	)
Net (loss)/income	$	(23,079	)	$	18,907		$	(18,907	)	$	(23,079	)
Other comprehensive income:
Pension liability reclassification, net of tax		1,347			–			–			1,347
Total comprehensive (loss)/income	$	(21,732	)	$	18,907		$	(18,907	)	$	(21,732	)

Condensed Cash Flow Statement [Table Text Block]

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/pr ovided by operating activities	$	(38,058	)	$	27,897		$	(11 ,558	)	$	(21,719	)
Investing activities:
Purchases of property and equipment		( 21,631	)		(5 ,321	)		–			(26 ,952	)
Proceeds from disposal of assets		13,471			8,573			–			22,044
Insurance proceeds from property claims		358			–						358
Reductions in Deferred Compensation Plan assets		1,702			–						1,702
Other, net		1,439			–			–			1,439
Net cash (used)/provided by investing activities		(4,661	)		3 ,252			–			(1,409	)
Financing activities:
Principal payments on long-term debt		(4	)		(10,609	)		–			(10,613	)
Stock repurchases		(26	)		–			–			(26	)
Payments for debt issuance costs		(947	)		–			–			(947	)
Intercompany dividend		–			(20 ,541	)		20,541			–
Other i ntercompany transactions		8,983			–			(8,983	)		–
Net cash ( used)/provided by financing activities		8,006			(31 ,150	)		11,558			( 11,586	)
De crease in cash and cash equivalents		(34,713	)		(1	)		–			(34,714	)
Cash and cash equivalents:
Beginning of fiscal year		67,208			133			–			67,341
End of quarter	$	32,495		$	132		$	–		$	32,627

	Parent			Guarantors			Eliminations			Consolidated
Net cash (used)/provided by operating activities	$	(8 ,133	)	$	41,932		$	( 15,260	)	$	18,539
Investing activities:
Purchases of property and equipment		( 19,892	)		( 7,454	)		–			( 27,346	)
Proceeds from disposal of assets		6,193			–			–			6,193
Other, net		2,444			–			–			2,444
Net cash used by investing activities		( 11,255	)		(7 ,454	)		–			( 18,709	)
Financing activities:
Principal payments on long-term debt		( 2,390	)		(10,274	)		–			(12,664	)
Stock repurchases		(10,009	)		–			–			(10,009	)
Payments for debt issuance costs		( 30	)		–			–			(30	)
Intercompany dividend		–			(24,309	)		24,309			–
Other intercompany transactions		9,049			–			(9,049	)		–
Net cash (used)/provided by financing activities		(3,380	)		(34 ,583	)		15,260			(22 ,703	)
Decrease in cash and cash equivalents		(22,768	)		(105	)		–			(22 ,873	)
Cash and cash equivalents:
Beginning of fiscal year		75,034			297			–			75,331
End of quarter	$	52,266		$	192		$	–		$	52,458

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Note 1 - Basis of Presentation (Details Textual)		9 Months Ended	12 Months Ended
	Aug. 11, 2016	Feb. 28, 2017	May 31, 2016	Dec. 03, 2013
Number of Restaurants Closed	95	102
Number of Restaurants				49
Ruby Tuesday [Member]
Number of Restaurants		544
Lime Fresh [Member]
Number of Company-owned Restaurants Agreed During the Period to Sell			8

XML

Note 1 - Basis of Presentation - Reclassification of Line Items Reported in Condensed Consolidated Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Selling, general, and administrative, net
General and administrative expenses	$ 13,876	14,148	$ 48,359	44,226
Marketing expenses, net	13,807	13,230	43,328	40,396
Closures and impairments, net	$ 13,441	6,123	$ 59,341	20,907
Trademark impairment
Lime Fresh [Member] | Trademarks [Member]
Trademark impairment
Scenario, Previously Reported [Member]
Selling, general, and administrative, net		27,378		84,622
General and administrative expenses
Marketing expenses, net
Closures and impairments, net		6,123		18,908
Trademark impairment				1,999
Scenario, Previously Reported [Member] | Lime Fresh [Member] | Trademarks [Member]
Trademark impairment				1,999
Scenario, Adjustment [Member]
Selling, general, and administrative, net		(27,378)		(84,622)
General and administrative expenses		14,148		44,226
Marketing expenses, net		13,230		40,396
Closures and impairments, net				1,999
Trademark impairment				(1,999)
Scenario, Adjustment [Member] | Lime Fresh [Member] | Trademarks [Member]
Trademark impairment				$ (1,999)

XML

Note 1 - Basis of Presentation - Reclassification of Line Items Reported in Condensed Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016
Loss on impairments, including disposition of assets	$ 32,668	$ 17,489
Trademark impairment
Scenario, Previously Reported [Member]
Loss on impairments, including disposition of assets		15,490
Trademark impairment		1,999
Scenario, Adjustment [Member]
Loss on impairments, including disposition of assets		1,999
Trademark impairment		$ (1,999)

XML

Note 2 - Loss Per Share - Weighted-average Common and Dilutive Potential Common Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Net loss	$ (19,805)	$ (3,086)	$ (97,453)	$ (23,079)
Weighted-average common shares outstanding (in shares)	60,262	60,918	60,074	61,239
Dilutive effect of stock options and restricted stock (in shares)
Weighted average common and dilutive potential common shares outstanding (in shares)	60,262	60,918	60,074	61,239
Basic loss per share (in dollars per share)	$ (0.33)	$ (0.05)	$ (1.62)	$ (0.38)
Diluted loss per share (in dollars per share)	$ (0.33)	$ (0.05)	$ (1.62)	$ (0.38)

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Note 2 - Loss Per Share - Antidilutive Shares Excluded From Computation of Diluted Earnings (Loss) Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Antidilutive securities (in shares)	2,492	3,011	3,057	3,371
Employee Stock Option [Member]
Antidilutive securities (in shares)	1,927	2,140	2,422	2,509
Restricted Stock [Member]
Antidilutive securities (in shares)	565	871	635	862

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Note 3 - Franchise Programs (Details Textual) $ in Millions	3 Months Ended		9 Months Ended
	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)
Development and Licensing Fee Income in Conjunction with New Openings	$ 0.4	$ 0.5	$ 0.8	$ 1.6
Ruby Tuesday [Member]
Number of Franchise Restaurants	63		63
Royalty Fee Percentage			4.00%
Operating Agreements Marketing and Purchase Fee Gross Sales Contribution Maximum			1.50%
Operating Agreements National Advertising Fund Gross Sales Contribution Maximum			1.50%
Operating Agreements Support Service Fee Gross Sales Contribution Maximum			3.00%

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Note 4 - Accounts and Other Receivables (Details Textual) $ in Thousands			9 Months Ended		12 Months Ended
	Aug. 11, 2016	May 31, 2016 USD ($)	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)	May 31, 2016 USD ($)
Disposal Group, Including Discontinued Operation, Consideration		$ 5,289			$ 5,289
Number of Restaurants Closed	95		102
Proceeds from Sale of Property, Plant, and Equipment			$ 22,044	$ 6,193
Lime Fresh [Member]
Sale of Assets, Number of Buyers		2
Number of Company-owned Restaurants Agreed During the Period to Sell		8
Disposal Group, Including Discontinued Operation, Consideration		$ 5,300			5,300
Company-owned Restaurants Agreed to Sell, Number of Restaurants for Which Closing Requirements Were Satisfied		6
Sale of Assets, Amount to Be Received, Holdback Until Transfer of All Remaining Restaurants		$ 1,000			$ 1,000
Sale of Assets, Number of Restaurants Remaining to Be Closed and Transferred to the Buyer		2			2
Number of Restaurants Closed		6
Number of Restaurants Sold			2
Sale of Assets, Amount Received, Holdback Until Transfer of All Remaining Restaurants			$ 1,000
Lime Fresh [Member] | Buyer of Lime Fresh Restuarants [Member]
Proceeds from Sale of Property, Plant, and Equipment					$ 5,000
Lime Fresh [Member] | Buyer of Lime Fresh Brand [Member]
Disposal Group, Including Discontinued Operation, Consideration		$ 300			300
Lime Fresh [Member] | Six Restaurants Meeting the Closing Requirements [Member]
Disposal Group, Including Discontinued Operation, Consideration		5,000			5,000
Lime Fresh [Member] | Pre-amendment [Member]
Disposal Group, Including Discontinued Operation, Consideration		$ 6,000			$ 6,000

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Note 4 - Accounts and Other Receivables - Accounts Receivable, Current (Details) - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Insurance receivable	$ 5,000
Amounts due from franchisees	3,799	3,013
Amounts due from distributor	1,317	560
Third-party gift card sales	984	1,272
Receivables	13,415	12,827
Receivables from sales of Lime Fresh Mexican Grill assets		5,289
Other receivables	1,529	1,692
Rebates [Member]
Receivables	$ 786	$ 1,001

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Note 5 - Property, Equipment, and Assets Held for Sale (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016	May 31, 2016
Disposal Group, Including Discontinued Operation, Assets, Current	$ 20,450		$ 20,450		$ 4,642
Property, Plant and Equipment, Disposals	7,500	$ 2,400	15,900	$ 5,200
Gain (Loss) on Disposition of Property Plant Equipment	2,300	100		1,000
Proceeds from Sale of Property Plant and Equipment, Net	$ 9,800	$ 2,500	$ 15,900	$ 6,200

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Note 5 - Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-leaseback Transactions - Property and Equipment, Net (Details) - USD ($) $ in Thousands		Feb. 28, 2017	May 31, 2016
Property, plant and equipment		$ 1,115,381	$ 1,224,475
Less accumulated depreciation		513,833	553,225
Property and equipment, net		601,548	671,250
Land [Member]
Property, plant and equipment		182,785	209,930
Building [Member]
Property, plant and equipment		372,430	398,984
Building Improvements [Member]
Property, plant and equipment		257,147	303,032
Restaurant Equipment [Member]
Property, plant and equipment		206,107	222,646
Other Equipment [Member]
Property, plant and equipment		74,712	82,204
Other Capitalized Property Plant and Equipment [Member]
Property, plant and equipment	[1]	17,894	4,354
Construction in Progress and Other [Member]
Property, plant and equipment		$ 4,306	$ 3,325

[1] Surplus properties represent assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we have yet to conclude that we can 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, closed properties which include a building, and liquor licenses not needed for operations.

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Note 6 - Long-term Debt and Capital Leases (Details Textual)			3 Months Ended	9 Months Ended
	Dec. 03, 2013 USD ($)	May 14, 2012 USD ($)	Feb. 28, 2017 USD ($)	Feb. 28, 2017 USD ($)	Jan. 31, 2017 USD ($)	May 31, 2016 USD ($)
Number of Restaurants	49
Letters of Credit Outstanding, Amount			$ 11,100,000	$ 11,100,000
Secured Debt			$ 5,135,000	5,135,000		$ 15,745,000
Revolving Credit Facility [Member]
Debt Instrument, Term	4 years
Line of Credit Facility, Current Borrowing Capacity	$ 50,000,000				$ 30,000,000
Line of Credit Facility, Maximum Leverage Ratio			4.65
Line of Credit Facility, Minimum Fixed Charge Coverage Ratio			1.25
Credit Facility Interest Rate, Floor	0.00%
Debt Instrument, Collateral Amount, Appraised Value	$ 101,400,000
Debt Instrument, Collateral Amount			$ 80,000,000	80,000,000
Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.50%
Revolving Credit Facility [Member] | Maximum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.75%
Revolving Credit Facility [Member] | Federal Funds Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.00%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	3.00%
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	3.50%
Revolving Credit Facility [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.00%
Revolving Credit Facility [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.50%
Sub-limit for Standby Letters of Credit [Member]
Line of Credit Facility, Current Borrowing Capacity	$ 25,000,000				$ 15,000,000
Rent and Other Line Item [Member]
Interest Payable, Current			4,900,000	4,900,000		1,000,000
Senior Notes [Member]
Debt Instrument, Face Amount		$ 250,000,000
Debt Instrument, Interest Rate, Stated Percentage		7.625%
Debt Instrument, Unamortized Discount		$ 3,700,000	1,476,000	1,476,000		$ 1,771,000
Debt Instrument, Term		8 years
Debt Instrument, Cumulative Sinking Fund Payments			0	$ 0
Debt Instrument, Maturity Date				May 15, 2020
Mortgages [Member]
Secured Debt			5,100,000	$ 5,100,000
Mortgages [Member] | Minimum [Member]
Range of Loan Balances			$ 500,000	$ 500,000
Debt Instrument, Interest Rate, Effective Percentage			7.78%	7.78%
Mortgages [Member] | Maximum [Member]
Range of Loan Balances			$ 1,000,000	$ 1,000,000
Debt Instrument, Interest Rate, Effective Percentage			10.17%	10.17%

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Note 6 - Long-term Debt and Capital Leases - Long-term Debt and Capital Lease Obligations (Details) - USD ($)	Feb. 28, 2017	May 31, 2016	May 14, 2012
Unamortized debt issuance costs	$ (31,000)	$ (74,000)
Mortgage loan obligations	5,135,000	15,745,000
Unamortized (discount)/premium - mortgage loan obligations	(2,000)	75,000
Capital lease obligations	207,000	211,000
Total long-term debt and capital leases	213,882,000	223,737,000
Less current maturities	349,000	9,934,000
Long-term debt and capital leases, less current maturities	213,533,000	213,803,000
Senior Notes [Member]
Senior unsecured notes	212,546,000	212,546,000
Unamortized discount	(1,476,000)	(1,771,000)	$ (3,700,000)
Unamortized debt issuance costs	(2,497,000)	(2,995,000)
Senior unsecured notes less unamortized discount and debt issuance costs	$ 208,573,000	$ 207,780,000

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Note 7 - Closures and Impairments Expense (Details Textual) $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 11, 2016	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)	May 31, 2016 USD ($)
Number of Restaurants Closed	95			102
Closures and Impairments Expenses		$ 13,441	$ 6,123	$ 59,341	$ 20,907
Proceeds from Sale of Property, Plant, and Equipment				22,044	6,193
Property, Plant and Equipment, Disposals		7,500	$ 2,400	15,900	$ 5,200
Operating Lease Obligation		19,139		19,139		$ 6,270
Rent and Other [Member]
Operating Lease Obligation		18,100		18,100
Deferred Escalating Minimum Rent [Member]
Operating Lease Obligation		500		500
Other Deferred Liabilities [Member]
Operating Lease Obligation		$ 500		$ 500
Restaurant Support Center in Maryville, Tennessee [Member]
Number of Buildings Sold				1
Proceeds from Sale of Property, Plant, and Equipment				$ 2,600
Property, Plant and Equipment, Disposals				5,800
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property				(3,200)
Closed Restaurant Lease Reserves, Inventory Write-off, Severance Benefits, and Other Closing Expenses [Member]
Closures and Impairments Expenses				$ 30,200

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Note 7 - Closures and Impairments Expense, Including Trademark Impairments - Closures and Impairments Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Closures and Impairments Expenses	$ 13,441	$ 6,123	$ 59,341	$ 20,907
Closed restaurant lease reserves			17,445
Inventory write-off			2,754
Trademark impairment
Continuing Operations [Member]
Closures and Impairments Expenses	13,441	6,123	59,341	20,907
Closed restaurant lease reserves	(133)	(1,207)	17,445	3,118
Inventory write-off			2,754
Severance benefits	13	68	1,606	213
Gain on sale of properties	(2,334)	(79)	(68)	(1,030)
Continuing Operations [Member] | Lime Fresh Trademark [Member]
Trademark impairment				1,999
Continuing Operations [Member] | Other Closing Expense [Member]
Closures and Impairments Expenses	949	403	4,830	877
Property [Member] | Continuing Operations [Member]
Closures and Impairments Expenses	$ 14,946	$ 6,938	$ 32,774	$ 15,730

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Note 7 - Closures and Impairments Expense, Including Trademark Impairments - Future Liabilites Associated with Closed Properties (Details) $ in Thousands	9 Months Ended
	Feb. 28, 2017 USD ($)
Balance	$ 6,270
Closing expense including rent and other lease charges	17,445
Payments	(13,772)
Adjustments to deferred escalating minimum rent and other	9,196
Balance	$ 19,139

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Note 8 - Employee Post-employment Benefits (Details Textual) $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 11, 2016	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)	Feb. 28, 2017 USD ($)	Mar. 01, 2016 USD ($)	May 31, 2016 USD ($)
Defined Benefit Pension Plans		3		3
Number of Restaurants Closed	95			102
Employee-related Liabilities, Current		$ 15,296		$ 15,296		$ 14,561
Closures and Impairments Expenses		13,441	$ 6,123	59,341	$ 20,907
Employee Severance [Member]
Severance Costs				4,890
Employee-related Liabilities, Current		0		0		300
Closures and Impairments Expenses				3,300
James J. Buettgen [Member]
Severance Costs				3,100
Selling, General and Administrative Expenses [Member]
Defined Benefit Plan, Amortization of Gains (Losses)		400	800	1,100	1,900
Selling, General and Administrative Expense [Member] | Employee Severance [Member]
Closures and Impairments Expenses				1,600
Pension Plan [Member]
Defined Benefit Plan, Amortization of Gains (Losses)		(339)	$ (730)	(1,014)	$ (1,831)
Pension Plan [Member] | Payroll and Related Costs [Member]
Defined Benefit Pension Plan Liabilities, Current		3,900		3,900		2,500
Pension Plan [Member] | Other Deferred Liabilities [Member]
Defined Benefit Pension Plan, Liabilities, Noncurrent		33,100		33,100		35,700
Post-retirement Medical and Life Benefits Plans [Member] | Payroll and Related Costs [Member]
Defined Benefit Pension Plan Liabilities, Current		100		100		100
Post-retirement Medical and Life Benefits Plans [Member] | Other Deferred Liabilities [Member]
Defined Benefit Pension Plan, Liabilities, Noncurrent		$ 1,000		$ 1,000		$ 1,000

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Note 8 - Employee Post-employment Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Pension Plan [Member]
Service cost	$ 5	$ 33	$ 18	$ 305
Interest cost	420	495	1,260	1,535
Expected return on plan assets	(91)	(103)	(273)	(308)
Recognized actuarial loss	339	730	1,014	1,831
Curtailment expense		1		1
Net periodic benefit cost	673	1,156	2,019	3,364
Postretirement Medical and Life Benefits [Member]
Service cost	2	1	3	3
Interest cost	9	12	27	36
Recognized actuarial loss	17	32	51	97
Net periodic benefit cost	$ 28	$ 45	$ 81	$ 136

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Note 8 - Employee Post-employment Benefits - Roll Forward of Employee Separation Obligations (Details) - Employee Severance [Member] $ in Thousands	9 Months Ended
	Feb. 28, 2017 USD ($)
Balance	$ 317
Employee severance and unused vacation accruals	4,890
Cash payments	(5,207)
Balance

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Note 9 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016	May 31, 2016
Deferred Tax Assets, Valuation Allowance	$ 131,300		$ 131,300		$ 89,900
Income Tax Expense (Benefit)	(84)	$ (483)	(1,742)	$ (1,686)
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	10,300		44,100
Unrecognized Tax Benefits	3,800		3,800		4,500
Unrecognized Tax Benefit Reclassified Against Deferred Tax Assets			3,300		3,700
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	2,400		2,400		2,300
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	400		400		$ 400
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit	$ 0		$ 0

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Note 10 - Share-based Employee Compensation (Details Textual) $ / shares in Units, $ in Millions	3 Months Ended				9 Months Ended		12 Months Ended
	Feb. 28, 2017 USD ($) $ / shares shares	Nov. 29, 2016 shares	Aug. 30, 2016 shares	Mar. 01, 2016 USD ($)	Feb. 28, 2017 USD ($) $ / shares shares	Mar. 01, 2016 USD ($)	May 31, 2016 USD ($) shares
Preferred Stock, Shares Authorized	250,000				250,000
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 0.01				$ 0.01
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $	$ 0.5			$ 0.9	$ 3.0	$ 1.7
Preferred Stock, Shares Issued	0				0		0
Payroll and Related Costs [Member]
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $					$ 0.1
Other Deferred Liabilities [Member]
Share-based Compensation Arrangement by Share-based Payment Award Accelerated Compensation Cost | $					$ 0.3		$ 0.2
Restricted Stock Service-based [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					538,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period					41,000
Employee Stock Option [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 0.6				$ 0.6
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					1 year 146 days
Stock Options Services-Based [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term					3 years 233 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	1,749,000				1,749,000		2,066,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross					1,126,000
Restricted Stock Units (RSUs) [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 1.2				$ 1.2
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					1 year 73 days
Phantom Stock Units Service-based [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		81,000
Phantom Stock Units Service-based [Member] | Senior Executive Team [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		2 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		407,000
SIP and 1996 SIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	6,557,000				6,557,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	1,749,000				1,749,000
SIP and 1996 SIP [Member] | Restricted Stock Service-based [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					3 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term					7 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross					878,000
SIP and 1996 SIP [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	4,808,000				4,808,000
SIP and 1996 SIP [Member] | Restricted Stock Units Service-based [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					319,000
Number Of Annual Installments					3
SIP and 1996 SIP [Member] | Phantom Stock Units Performance-based [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			571,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period		210,000
SIP [Member] | Stock Options Services-Based [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross					247,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					7 years
SIP [Member] | Restricted Stock [Member] | Non-employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period					1 year
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period					219,000

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Note 10 - Share-based Employee Compensation - Summary of Stock Option Activity (Details) - Stock Options Services-Based [Member] shares in Thousands	9 Months Ended
	Feb. 28, 2017 $ / shares shares
Outstanding, Shares (in shares) | shares	2,066
Outstanding, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 7.89
Granted, Shares (in shares) | shares	1,126
Granted, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 3.46
Cancellations and Forfeitures, Shares (in shares) | shares	(40)
Cancellations and Forfeitures, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 4.53
Expired, Shares (in shares) | shares	(1,403)
Expired, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 6.62
Outstanding, Shares (in shares) | shares	1,749
Outstanding, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 6.13
Outstanding, Weighted Average Remaining Contractual Term (Year)	3 years 233 days
Exercisable, Shares (in shares) | shares	910
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 8.62
Exercisable, Weighted Average Remaining Contractual Term (Year)	1 year 36 days

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Note 10 - Share-based Employee Compensation - Summary of Restricted Stock Activity (Details) shares in Thousands	9 Months Ended
	Feb. 28, 2017 $ / shares shares
Restricted Stock Service-based [Member]
Unvested, Shares (in shares) | shares	564
Unvested, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 6.29
Granted, Shares (in shares) | shares	538
Granted, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 3.22
Vested, Shares (in shares) | shares	(535)
Vested, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 5.79
Cancellations and Forfeitures, Shares (in shares) | shares	(41)
Cancellations and Forfeitures, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 5.70
Unvested (in shares) | shares	526
Unvested, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 3.71
Restricted Stock Performance-based [Member]
Unvested, Shares (in shares) | shares	225
Unvested, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 6.51
Cancellations and Forfeitures, Shares (in shares) | shares	(84)
Cancellations and Forfeitures, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 6.51
Unvested (in shares) | shares	141
Unvested, Weighted Average Fair Value (in dollars per share) | $ / shares	$ 6.51

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Note 11 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands	Mar. 29, 2017	Feb. 28, 2017	May 31, 2016
Insurance Settlements Receivable, Current		$ 5,000
Dennis Krystek v. Ruby Tuesday [Member] | Rent and Other [Member]
Loss Contingency Accrual		5,000
Dennis Krystek v. Ruby Tuesday [Member] | Accounts and Other Receivables [Member]
Insurance Settlements Receivable, Current		$ 5,000
Subsequent Event [Member] | Dennis Krystek v. Ruby Tuesday [Member]
Litigation Settlement, Amount	$ (5,000)

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Note 12 - Fair Value Measurements - Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - Fair Value, Inputs, Level 1 [Member] - USD ($) $ in Thousands	May 31, 2016	Feb. 28, 2016
Deferred compensation plan – Assets	$ 6,660	$ 5,644
Deferred compensation plan – Liabilities	$ (6,660)	$ (5,644)

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Note 12 - Fair Value Measurements - Fair Values Financial Assets and Liabilities Measured on a Non-recurring Basis (Details) $ in Thousands	Feb. 28, 2017 USD ($)
Assets, Fair Value Disclosure, Nonrecurring	$ 4,963
Fair Value, Inputs, Level 2 [Member] | Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
Assets, Fair Value Disclosure, Nonrecurring	444
Fair Value, Inputs, Level 2 [Member] | Assets Held for Use [Member]
Assets, Fair Value Disclosure, Nonrecurring	$ 4,519

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Note 12 - Fair Value Measurements - Losses Recognized from Fair Value Measurement on Non-recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Long-lived asset impairments			$ 32,668	$ 17,489
Closure and Impairments [Member]
Long-lived assets held for use	$ 14,914	$ 6,764	29,930	15,206
Long-lived assets held for sale	32	174	2,844	524
Lime Fresh trademark				1,999
Long-lived asset impairments	$ 14,946	$ 6,938	$ 32,774	$ 17,729

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Note 12 - Fair Value Measurements - Carrying Amounts and Fair Values of Other Financial Instruments Not Measured on a Recurring Basis (Details) - Fair Value, Inputs, Level 2 [Member] - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016
Long-term debt, carrying amount	$ 213,675	$ 223,526
Long-term debt, fair value	$ 210,586	$ 223,212

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Note 13 - Supplemental Condensed Consolidating Financial Statements - Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands	Feb. 28, 2017	May 31, 2016	Mar. 01, 2016	Jun. 02, 2015
Cash and cash equivalents	$ 32,627	$ 67,341	$ 52,458	$ 75,331
Accounts and other receivables	13,415	12,827
Inventories	18,017	21,595
Income tax receivable	4,738	3,003
Other current assets	28,585	16,150
Total current assets	97,382	120,916
Property and equipment, net	601,548	671,250
Investment in subsidiaries
Due from/(to) subsidiaries
Other assets	43,880	45,751
Total assets	742,810	837,917
Accounts payable	23,583	22,141
Accrued and other current liabilities	68,999	49,277
Deferred revenue – gift cards	17,472	16,354
Current maturities of long-term debt, including capital leases	349	9,934
Income tax payable
Total current liabilities	110,403	97,706
Long-term debt and capital leases, less current maturities	213,533	213,803
Due to/(from) subsidiaries
Other deferred liabilities	104,478	118,628
Total liabilities	428,414	430,137
Common stock	605	601
Capital in excess of par value	78,937	75,938
Retained earnings	243,897	341,350
Accumulated other comprehensive loss	(9,043)	(10,109)
Total shareholders’ equity	314,396	407,780
Total liabilities & shareholders’ equity	742,810	837,917
Current assets:
Cash and cash equivalents	32,627	67,341	52,458	75,331
Accounts and other receivables	13,415	12,827
Inventories	18,017	21,595
Income tax receivable	4,738	3,003
Other current assets	28,585	16,150
Total current assets	97,382	120,916
Property and equipment, net	601,548	671,250
Investment in subsidiaries
Due from/(to) subsidiaries
Other assets	43,880	45,751
Total assets	742,810	837,917
Current liabilities:
Accounts payable	23,583	22,141
Accrued and other current liabilities	68,999	49,277
Deferred revenue – gift cards	17,472	16,354
Current maturities of long-term debt, including capital leases	349	9,934
Income tax payable
Total current liabilities	110,403	97,706
Long-term debt and capital leases, less current maturities	213,533	213,803
Due to/(from) subsidiaries
Other deferred liabilities	104,478	118,628
Total liabilities	428,414	430,137
Shareholders’ equity:
Common stock	605	601
Capital in excess of par value	78,937	75,938
Retained earnings	243,897	341,350
Accumulated other comprehensive loss	(9,043)	(10,109)
Total shareholders’ equity	314,396	407,780
Total liabilities & shareholders’ equity	742,810	837,917
Consolidation, Eliminations [Member]
Cash and cash equivalents
Accounts and other receivables
Inventories
Income tax receivable	(168,632)	(164,062)
Other current assets
Total current assets	(168,632)	(164,062)
Property and equipment, net
Investment in subsidiaries	(70,596)	(98,929)
Due from/(to) subsidiaries	(316,098)	(290,024)
Other assets
Total assets	(555,326)	(553,015)
Accounts payable
Accrued and other current liabilities
Deferred revenue – gift cards
Current maturities of long-term debt, including capital leases
Income tax payable	(168,632)	(164,062)
Total current liabilities	(168,632)	(164,062)
Long-term debt and capital leases, less current maturities
Due to/(from) subsidiaries	(316,098)	(290,024)
Other deferred liabilities
Total liabilities	(484,730)	(454,086)
Common stock
Capital in excess of par value
Retained earnings	(70,596)	(98,929)
Accumulated other comprehensive loss
Total shareholders’ equity	(70,596)	(98,929)
Total liabilities & shareholders’ equity	(555,326)	(553,015)
Current assets:
Cash and cash equivalents
Accounts and other receivables
Inventories
Income tax receivable	(168,632)	(164,062)
Other current assets
Total current assets	(168,632)	(164,062)
Property and equipment, net
Investment in subsidiaries	(70,596)	(98,929)
Due from/(to) subsidiaries	(316,098)	(290,024)
Other assets
Total assets	(555,326)	(553,015)
Current liabilities:
Accounts payable
Accrued and other current liabilities
Deferred revenue – gift cards
Current maturities of long-term debt, including capital leases
Income tax payable	(168,632)	(164,062)
Total current liabilities	(168,632)	(164,062)
Long-term debt and capital leases, less current maturities
Due to/(from) subsidiaries	(316,098)	(290,024)
Other deferred liabilities
Total liabilities	(484,730)	(454,086)
Shareholders’ equity:
Common stock
Capital in excess of par value
Retained earnings	(70,596)	(98,929)
Accumulated other comprehensive loss
Total shareholders’ equity	(70,596)	(98,929)
Total liabilities & shareholders’ equity	(555,326)	(553,015)
Parent Company [Member]
Cash and cash equivalents	32,495	67,208	52,266	75,034
Accounts and other receivables	8,223	8,102
Inventories	13,068	15,401
Income tax receivable	173,370	167,065
Other current assets	16,906	11,282
Total current assets	244,062	269,058
Property and equipment, net	459,402	501,482
Investment in subsidiaries	70,596	98,929
Due from/(to) subsidiaries	93,299	76,208
Other assets	39,617	40,626
Total assets	906,976	986,303
Accounts payable	18,834	17,405
Accrued and other current liabilities	50,686	36,155
Deferred revenue – gift cards	(502)	(481)
Current maturities of long-term debt, including capital leases	(1,132)	(1,067)
Income tax payable
Total current liabilities	67,886	52,012
Long-term debt and capital leases, less current maturities	209,911	209,058
Due to/(from) subsidiaries	222,799	213,816
Other deferred liabilities	91,984	103,637
Total liabilities	592,580	578,523
Common stock	605	601
Capital in excess of par value	78,937	75,938
Retained earnings	243,897	341,350
Accumulated other comprehensive loss	(9,043)	(10,109)
Total shareholders’ equity	314,396	407,780
Total liabilities & shareholders’ equity	906,976	986,303
Current assets:
Cash and cash equivalents	32,495	67,208	52,266	75,034
Accounts and other receivables	8,223	8,102
Inventories	13,068	15,401
Income tax receivable	173,370	167,065
Other current assets	16,906	11,282
Total current assets	244,062	269,058
Property and equipment, net	459,402	501,482
Investment in subsidiaries	70,596	98,929
Due from/(to) subsidiaries	93,299	76,208
Other assets	39,617	40,626
Total assets	906,976	986,303
Current liabilities:
Accounts payable	18,834	17,405
Accrued and other current liabilities	50,686	36,155
Deferred revenue – gift cards	(502)	(481)
Current maturities of long-term debt, including capital leases	(1,132)	(1,067)
Income tax payable
Total current liabilities	67,886	52,012
Long-term debt and capital leases, less current maturities	209,911	209,058
Due to/(from) subsidiaries	222,799	213,816
Other deferred liabilities	91,984	103,637
Total liabilities	592,580	578,523
Shareholders’ equity:
Common stock	605	601
Capital in excess of par value	78,937	75,938
Retained earnings	243,897	341,350
Accumulated other comprehensive loss	(9,043)	(10,109)
Total shareholders’ equity	314,396	407,780
Total liabilities & shareholders’ equity	906,976	986,303
Guarantor Subsidiaries [Member]
Cash and cash equivalents	132	133	192	297
Accounts and other receivables	5,192	4,725
Inventories	4,949	6,194
Income tax receivable
Other current assets	11,679	4,868
Total current assets	21,952	15,920
Property and equipment, net	142,146	169,768
Investment in subsidiaries
Due from/(to) subsidiaries	222,799	213,816
Other assets	4,263	5,125
Total assets	391,160	404,629
Accounts payable	4,749	4,736
Accrued and other current liabilities	18,313	13,122
Deferred revenue – gift cards	17,974	16,835
Current maturities of long-term debt, including capital leases	1,481	11,001
Income tax payable	168,632	164,062
Total current liabilities	211,149	209,756
Long-term debt and capital leases, less current maturities	3,622	4,745
Due to/(from) subsidiaries	93,299	76,208
Other deferred liabilities	12,494	14,991
Total liabilities	320,564	305,700
Common stock
Capital in excess of par value
Retained earnings	70,596	98,929
Accumulated other comprehensive loss
Total shareholders’ equity	70,596	98,929
Total liabilities & shareholders’ equity	391,160	404,629
Current assets:
Cash and cash equivalents	132	133	$ 192	$ 297
Accounts and other receivables	5,192	4,725
Inventories	4,949	6,194
Income tax receivable
Other current assets	11,679	4,868
Total current assets	21,952	15,920
Property and equipment, net	142,146	169,768
Investment in subsidiaries
Due from/(to) subsidiaries	222,799	213,816
Other assets	4,263	5,125
Total assets	391,160	404,629
Current liabilities:
Accounts payable	4,749	4,736
Accrued and other current liabilities	18,313	13,122
Deferred revenue – gift cards	17,974	16,835
Current maturities of long-term debt, including capital leases	1,481	11,001
Income tax payable	168,632	164,062
Total current liabilities	211,149	209,756
Long-term debt and capital leases, less current maturities	3,622	4,745
Due to/(from) subsidiaries	93,299	76,208
Other deferred liabilities	12,494	14,991
Total liabilities	320,564	305,700
Shareholders’ equity:
Common stock
Capital in excess of par value
Retained earnings	70,596	98,929
Accumulated other comprehensive loss
Total shareholders’ equity	70,596	98,929
Total liabilities & shareholders’ equity	$ 391,160	$ 404,629

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Note 13 - Supplemental Condensed Consolidating Financial Statements - Condensed Consolidating Statement of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	Feb. 28, 2017	Mar. 01, 2016
Restaurant sales and operating revenue	$ 224,938	$ 269,868	$ 694,517	$ 807,105
Franchise revenue	794	1,602	2,591	4,801
Total revenue	225,732	271,470	697,108	811,906
Cost of goods sold	64,340	75,143	198,672	221,689
Payroll and related costs	80,080	93,357	251,105	280,976
Other restaurant operating costs	45,086	55,311	149,069	173,903
Depreciation and amortization	10,121	12,732	31,838	38,474
General and administrative expenses	13,876	14,148	48,359	44,226
Intercompany general and administrative allocations
Marketing expenses, net	13,807	13,230	43,328	40,396
Closures and Impairments Expenses	13,441	6,123	59,341	20,907
Equity in earnings of subsidiaries
Interest expense, net	4,870	4,995	14,591	16,100
Intercompany interest expense/(income)
Total operating costs and expenses	245,621	275,039	796,303	836,671
(Loss)/income before income taxes	(19,889)	(3,569)	(99,195)	(24,765)
Income Tax Expense (Benefit)	(84)	(483)	(1,742)	(1,686)
Net loss	(19,805)	(3,086)	(97,453)	(23,079)
Pension liability reclassification	356	885	1,066	1,347
Total comprehensive (loss)/income	(19,449)	(2,201)	(96,387)	(21,732)
Revenue:
Restaurant sales and operating revenue	224,938	269,868	694,517	807,105
Franchise revenue	794	1,602	2,591	4,801
Total revenue	225,732	271,470	697,108	811,906
Operating costs and expenses:
Cost of goods sold	64,340	75,143	198,672	221,689
Payroll and related costs	80,080	93,357	251,105	280,976
Other restaurant operating costs	45,086	55,311	149,069	173,903
Depreciation and amortization	10,121	12,732	31,838	38,474
General and administrative expenses	13,876	14,148	48,359	44,226
Intercompany general and administrative allocations
Marketing expenses, net	13,807	13,230	43,328	40,396
Closures and Impairments Expenses	13,441	6,123	59,341	20,907
Equity in earnings of subsidiaries
Interest expense, net	4,870	4,995	14,591	16,100
Intercompany interest expense/(income)
Total operating costs and expenses	245,621	275,039	796,303	836,671
(Loss)/income before income taxes	(19,889)	(3,569)	(99,195)	(24,765)
Income Tax Expense (Benefit)	(84)	(483)	(1,742)	(1,686)
Net loss	(19,805)	(3,086)	(97,453)	(23,079)
Total operating costs and expenses		275,039
Other comprehensive income:
Pension liability reclassification	356	885	1,066	1,347
Total comprehensive (loss)/income	(19,449)	(2,201)	(96,387)	(21,732)
Consolidation, Eliminations [Member]
Restaurant sales and operating revenue
Franchise revenue
Total revenue
Cost of goods sold
Payroll and related costs
Other restaurant operating costs
Depreciation and amortization
General and administrative expenses
Intercompany general and administrative allocations
Marketing expenses, net
Closures and Impairments Expenses
Equity in earnings of subsidiaries	2,017	5,676	(7,791)	18,907
Interest expense, net
Intercompany interest expense/(income)
Total operating costs and expenses	2,017		(7,791)	18,907
(Loss)/income before income taxes	2,017	(5,676)	7,791	(18,907)
Income Tax Expense (Benefit)
Net loss	(2,017)	(5,676)	7,791	(18,907)
Pension liability reclassification
Total comprehensive (loss)/income	(2,017)	(5,676)	7,791	(18,907)
Revenue:
Restaurant sales and operating revenue
Franchise revenue
Total revenue
Operating costs and expenses:
Cost of goods sold
Payroll and related costs
Other restaurant operating costs
Depreciation and amortization
General and administrative expenses
Intercompany general and administrative allocations
Marketing expenses, net
Closures and Impairments Expenses
Equity in earnings of subsidiaries	2,017	5,676	(7,791)	18,907
Interest expense, net
Intercompany interest expense/(income)
Total operating costs and expenses	2,017		(7,791)	18,907
(Loss)/income before income taxes	2,017	(5,676)	7,791	(18,907)
Income Tax Expense (Benefit)
Net loss	(2,017)	(5,676)	7,791	(18,907)
Total operating costs and expenses		5,676
Other comprehensive income:
Pension liability reclassification
Total comprehensive (loss)/income	(2,017)	(5,676)	7,791	(18,907)
Parent Company [Member]
Restaurant sales and operating revenue	165,005	194,527	507,414	583,055
Franchise revenue		90	10	220
Total revenue	165,005	194,617	507,424	583,275
Cost of goods sold	47,164	54,209	145,051	160,212
Payroll and related costs	57,485	65,474	179,149	197,732
Other restaurant operating costs	33,356	40,008	108,613	126,234
Depreciation and amortization	7,509	9,008	23,265	27,305
General and administrative expenses	7,295	7,315	26,376	23,797
Intercompany general and administrative allocations	9,167	10,726	28,223	32,188
Marketing expenses, net	10,296	9,685	32,119	29,591
Closures and Impairments Expenses	11,253	3,993	38,025	16,080
Equity in earnings of subsidiaries	(2,017)	(5,676)	7,791	(18,907)
Interest expense, net	4,688	4,556	13,829	13,806
Intercompany interest expense/(income)	3,035	3,058	8,983	9,049
Total operating costs and expenses	189,231		611,424	617,087
(Loss)/income before income taxes	(24,226)	(7,739)	(104,000)	(33,812)
Income Tax Expense (Benefit)	(4,421)	(4,653)	(6,547)	(10,733)
Net loss	(19,805)	(3,086)	(97,453)	(23,079)
Pension liability reclassification	356	885	1,066	1,347
Total comprehensive (loss)/income	(19,449)	(2,201)	(96,387)	(21,732)
Revenue:
Restaurant sales and operating revenue	165,005	194,527	507,414	583,055
Franchise revenue		90	10	220
Total revenue	165,005	194,617	507,424	583,275
Operating costs and expenses:
Cost of goods sold	47,164	54,209	145,051	160,212
Payroll and related costs	57,485	65,474	179,149	197,732
Other restaurant operating costs	33,356	40,008	108,613	126,234
Depreciation and amortization	7,509	9,008	23,265	27,305
General and administrative expenses	7,295	7,315	26,376	23,797
Intercompany general and administrative allocations	9,167	10,726	28,223	32,188
Marketing expenses, net	10,296	9,685	32,119	29,591
Closures and Impairments Expenses	11,253	3,993	38,025	16,080
Equity in earnings of subsidiaries	(2,017)	(5,676)	7,791	(18,907)
Interest expense, net	4,688	4,556	13,829	13,806
Intercompany interest expense/(income)	3,035	3,058	8,983	9,049
Total operating costs and expenses	189,231		611,424	617,087
(Loss)/income before income taxes	(24,226)	(7,739)	(104,000)	(33,812)
Income Tax Expense (Benefit)	(4,421)	(4,653)	(6,547)	(10,733)
Net loss	(19,805)	(3,086)	(97,453)	(23,079)
Total operating costs and expenses		202,356
Other comprehensive income:
Pension liability reclassification	356	885	1,066	1,347
Total comprehensive (loss)/income	(19,449)	(2,201)	(96,387)	(21,732)
Guarantor Subsidiaries [Member]
Restaurant sales and operating revenue	59,933	75,341	187,103	224,050
Franchise revenue	794	1,512	2,581	4,581
Total revenue	60,727	76,853	189,684	228,631
Cost of goods sold	17,176	20,934	53,621	61,477
Payroll and related costs	22,595	27,883	71,956	83,244
Other restaurant operating costs	11,730	15,303	40,456	47,669
Depreciation and amortization	2,612	3,724	8,573	11,169
General and administrative expenses	6,581	6,833	21,983	20,429
Intercompany general and administrative allocations	(9,167)	(10,726)	(28,223)	(32,188)
Marketing expenses, net	3,511	3,545	11,209	10,805
Closures and Impairments Expenses	2,188	2,130	21,316	4,827
Equity in earnings of subsidiaries
Interest expense, net	182	439	762	2,294
Intercompany interest expense/(income)	(3,035)	(3,058)	(8,983)	(9,049)
Total operating costs and expenses	54,373		192,670	200,677
(Loss)/income before income taxes	6,354	9,846	(2,986)	27,954
Income Tax Expense (Benefit)	4,337	4,170	4,805	9,047
Net loss	2,017	5,676	(7,791)	18,907
Pension liability reclassification
Total comprehensive (loss)/income	2,017	5,676	(7,791)	18,907
Revenue:
Restaurant sales and operating revenue	59,933	75,341	187,103	224,050
Franchise revenue	794	1,512	2,581	4,581
Total revenue	60,727	76,853	189,684	228,631
Operating costs and expenses:
Cost of goods sold	17,176	20,934	53,621	61,477
Payroll and related costs	22,595	27,883	71,956	83,244
Other restaurant operating costs	11,730	15,303	40,456	47,669
Depreciation and amortization	2,612	3,724	8,573	11,169
General and administrative expenses	6,581	6,833	21,983	20,429
Intercompany general and administrative allocations	(9,167)	(10,726)	(28,223)	(32,188)
Marketing expenses, net	3,511	3,545	11,209	10,805
Closures and Impairments Expenses	2,188	2,130	21,316	4,827
Equity in earnings of subsidiaries
Interest expense, net	182	439	762	2,294
Intercompany interest expense/(income)	(3,035)	(3,058)	(8,983)	(9,049)
Total operating costs and expenses	54,373		192,670	200,677
(Loss)/income before income taxes	6,354	9,846	(2,986)	27,954
Income Tax Expense (Benefit)	4,337	4,170	4,805	9,047
Net loss	2,017	5,676	(7,791)	18,907
Total operating costs and expenses		67,007
Other comprehensive income:
Pension liability reclassification
Total comprehensive (loss)/income	$ 2,017	$ 5,676	$ (7,791)	$ 18,907

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Note 13 - Supplemental Condensed Consolidating Financial Statements - Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Feb. 28, 2017	Mar. 01, 2016	May 31, 2016
Net cash (used)/provided by operating activities	$ (21,719)	$ 18,539
Purchases of property and equipment	(26,952)	(27,346)
Proceeds from Sale of Property, Plant, and Equipment	22,044	6,193
Insurance proceeds from property claims	358
Reductions in Deferred Compensation Plan assets	1,702	833
Other, net	1,439	2,444
Net cash (used)/provided by investing activities	(1,409)	(18,709)
Principal payments on long-term debt	(10,613)	(12,664)
Stock repurchases	(26)	(10,009)
Payments for debt issuance costs	(947)	(30)
Intercompany dividend
Other intercompany transactions
Net cash (used)/provided by financing activities	(11,586)	(22,703)
Decrease in cash and cash equivalents	(34,714)	(22,873)
Beginning of fiscal year	67,341	75,331	$ 75,331
End of quarter	32,627	52,458	67,341
Investing activities:
Purchases of property and equipment	(26,952)	(27,346)
Proceeds from Sale of Property, Plant, and Equipment	22,044	6,193
Other, net	1,439	2,444
Net cash (used)/provided by investing activities	(1,409)	(18,709)
Financing activities:
Principal payments on long-term debt	(10,613)	(12,664)
Stock repurchases	(26)	(10,009)
Payments for debt issuance costs	(947)	(30)
Intercompany dividend
Other intercompany transactions
Net cash (used)/provided by financing activities	(11,586)	(22,703)
Decrease in cash and cash equivalents	(34,714)	(22,873)
Beginning of fiscal year	67,341	75,331	75,331
End of quarter	32,627	52,458	67,341
Consolidation, Eliminations [Member]
Net cash (used)/provided by operating activities	(11,558)	(15,260)
Purchases of property and equipment
Proceeds from Sale of Property, Plant, and Equipment
Insurance proceeds from property claims
Reductions in Deferred Compensation Plan assets
Other, net
Net cash (used)/provided by investing activities
Principal payments on long-term debt
Stock repurchases
Payments for debt issuance costs
Intercompany dividend	20,541	24,309
Other intercompany transactions	(8,983)	(9,049)
Net cash (used)/provided by financing activities	11,558	15,260
Decrease in cash and cash equivalents
Beginning of fiscal year
End of quarter
Investing activities:
Purchases of property and equipment
Proceeds from Sale of Property, Plant, and Equipment
Other, net
Net cash (used)/provided by investing activities
Financing activities:
Principal payments on long-term debt
Stock repurchases
Payments for debt issuance costs
Intercompany dividend	20,541	24,309
Other intercompany transactions	(8,983)	(9,049)
Net cash (used)/provided by financing activities	11,558	15,260
Decrease in cash and cash equivalents
Beginning of fiscal year
End of quarter
Parent Company [Member]
Net cash (used)/provided by operating activities	(38,058)	(8,133)
Purchases of property and equipment	(21,631)	(19,892)
Proceeds from Sale of Property, Plant, and Equipment	13,471	6,193
Insurance proceeds from property claims	358
Reductions in Deferred Compensation Plan assets	1,702
Other, net	1,439	2,444
Net cash (used)/provided by investing activities	(4,661)	(11,255)
Principal payments on long-term debt	(4)	(2,390)
Stock repurchases	(26)	(10,009)
Payments for debt issuance costs	(947)	(30)
Intercompany dividend
Other intercompany transactions	8,983	9,049
Net cash (used)/provided by financing activities	8,006	(3,380)
Decrease in cash and cash equivalents	(34,713)	(22,768)
Beginning of fiscal year	67,208	75,034	75,034
End of quarter	32,495	52,266	67,208
Investing activities:
Purchases of property and equipment	(21,631)	(19,892)
Proceeds from Sale of Property, Plant, and Equipment	13,471	6,193
Other, net	1,439	2,444
Net cash (used)/provided by investing activities	(4,661)	(11,255)
Financing activities:
Principal payments on long-term debt	(4)	(2,390)
Stock repurchases	(26)	(10,009)
Payments for debt issuance costs	(947)	(30)
Intercompany dividend
Other intercompany transactions	8,983	9,049
Net cash (used)/provided by financing activities	8,006	(3,380)
Decrease in cash and cash equivalents	(34,713)	(22,768)
Beginning of fiscal year	67,208	75,034	75,034
End of quarter	32,495	52,266	67,208
Guarantor Subsidiaries [Member]
Net cash (used)/provided by operating activities	27,897	41,932
Purchases of property and equipment	(5,321)	(7,454)
Proceeds from Sale of Property, Plant, and Equipment	8,573
Insurance proceeds from property claims
Reductions in Deferred Compensation Plan assets
Other, net
Net cash (used)/provided by investing activities	3,252	(7,454)
Principal payments on long-term debt	(10,609)	(10,274)
Stock repurchases
Payments for debt issuance costs
Intercompany dividend	(20,541)	(24,309)
Other intercompany transactions
Net cash (used)/provided by financing activities	(31,150)	(34,583)
Decrease in cash and cash equivalents	(1)	(105)
Beginning of fiscal year	133	297	297
End of quarter	132	192	133
Investing activities:
Purchases of property and equipment	(5,321)	(7,454)
Proceeds from Sale of Property, Plant, and Equipment	8,573
Other, net
Net cash (used)/provided by investing activities	3,252	(7,454)
Financing activities:
Principal payments on long-term debt	(10,609)	(10,274)
Stock repurchases
Payments for debt issuance costs
Intercompany dividend	(20,541)	(24,309)
Other intercompany transactions
Net cash (used)/provided by financing activities	(31,150)	(34,583)
Decrease in cash and cash equivalents	(1)	(105)
Beginning of fiscal year	133	297	297
End of quarter	$ 132	$ 192	$ 133

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Note 15 - Subsequent Events (Details Textual) $ in Thousands			1 Months Ended
	Apr. 04, 2017 shares	Mar. 29, 2017 USD ($)	Apr. 07, 2017 USD ($)	Feb. 28, 2017 USD ($)	May 31, 2016 USD ($)
Operating Lease Obligation				$ 19,139	$ 6,270
Insurance Settlements Receivable, Current				5,000
Rent and Other [Member]
Operating Lease Obligation				18,100
Dennis Krystek v. Ruby Tuesday [Member] | Rent and Other [Member]
Loss Contingency Accrual				5,000
Dennis Krystek v. Ruby Tuesday [Member] | Accounts and Other Receivables [Member]
Insurance Settlements Receivable, Current				$ 5,000
Subsequent Event [Member]
Operating Lease Obligation, Leases Settled, Number			4
Operating Lease Obligation, Leases Settled, Amount			$ 1,400
Subsequent Event [Member] | Dennis Krystek v. Ruby Tuesday [Member]
Litigation Settlement, Amount		$ (5,000)
Restricted Stock Units (RSUs) [Member] | Chief Executive Officer [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | shares	142,045
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Number of Vesting Installments	3
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years