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.