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 loss per share gives effect to stock options and restricted stock outstanding during the applicable periods. The following table reflects the calculation of weighted-average common and dilutive potential common shares outstanding as presented in the accompanying Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per-share data):
|
|
2014
|
|
2013
|
|
2012
|
(Loss)/income from continuing operations
|
$
|
(64,910)
|
$
|
(23,434)
|
$
|
3,526
|
Income/(loss) from discontinued operations
|
|
564
|
|
(15,979)
|
|
(3,714)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
Dilutive effect of stock options and restricted stock
|
|
–
|
|
–
|
|
592
|
Weighted average common and dilutive potential
|
|
|
|
|
|
|
common shares outstanding
|
|
60,231
|
|
61,040
|
|
63,508
|
|
|
|
|
|
|
|
Loss per share – Basic
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
|
|
|
|
|
Income/(loss) from discontinued operations
|
|
0.01
|
|
(0.27)
|
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
$
|
(1.08)
|
$
|
(0.38)
|
$
|
0.06
|
Income/(loss) from discontinued operations
|
|
|
|
|
|
|
Net loss per share
|
$
|
(1.07)
|
$
|
(0.65)
|
$
|
(0.00)
|
Stock options with an exercise price greater than the average market price of our common stock and certain options with unrecognized compensation expense do not impact the computation of diluted loss per share because the effect would be anti-dilutive. The following table summarizes stock options and restricted shares that did not impact the computation of diluted loss per share because their inclusion would have had an anti-dilutive effect (in thousands):
|
|
2014
|
|
2013
|
|
2012
|
Stock options
|
|
2,833*
|
|
2,161*
|
|
2,229
|
Restricted shares
|
|
1,121*
|
|
1,492*
|
|
819
|
Total
|
|
3,954*
|
|
3,653*
|
|
3,048
|
*Due to a loss from continuing operations for the years ended June 3, 2014 and June 4, 2013, all then outstanding share-based awards were excluded from the computation of diluted loss per share.
Comprehensive Loss
Comprehensive loss includes net loss adjusted for certain revenue, expenses, gains and losses that are excluded from net loss in accordance with U.S. GAAP, such as pension adjustments. Comprehensive loss is shown as a separate component in the Consolidated Statements of Operations and Comprehensive Loss.
Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair values are assigned a level within the fair value hierarchy to prioritize the inputs used to measure the fair value of assets or liabilities. These levels are:
·
|
Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities;
|
·
|
Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
·
|
Level 3 – Unobservable inputs which require the reporting entity to develop its own assumptions.
|
See Note 15 to the Consolidated Financial Statements for a further discussion of our financial instruments.
Segment Reporting
Operating segments are components of an entity that engage in business activities with discrete financial information available that is regularly reviewed by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM is the Company’s President and Chief Executive Officer. As discussed further in Note 13 to the Consolidated Financial Statements, we consider our Ruby Tuesday concept and Lime Fresh concept to be our reportable operating segments.
Immaterial Reclassifications of Prior Period Consolidated Statements of Operations and Comprehensive Loss and Consolidated Statements of Cash Flows
We reclassified $0.5 million from Interest expense, net to Loss on extinguishment of debt in our Consolidated Statements of Operations and Comprehensive Loss for the year ended June 4, 2013. We also made certain reclassifications to prior year amounts in our Consolidated Statements of Cash Flows to conform to current year presentation (all reclassifications were within Operating activities).
Accounting Pronouncements Adopted During Fiscal 2014
In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, “
Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
”. ASU 2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. In addition, ASU 2014-08 requires additional disclosures about both discontinued operations and the disposal of an
individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. We adopted the provisions of ASU 2014-08 on a prospective basis during the fourth quarter of fiscal 2014. The adoption of this ASU did not have a material impact on our Consolidated Financial Statements.
Accounting Pronouncements Not Yet Adopted
In July 2013, the FASB issued ASU 2013-11, “
Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
”. The guidance requires an entity to present its unrecognized tax benefits net of its deferred tax assets when settlement in this manner is available under the tax law, which would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events. Gross presentation in the notes to the financial statements will still be required. ASU 2013-11 will apply on a prospective basis to all unrecognized tax benefits that exist at the effective date, with the option to apply it retrospectively. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 (our fiscal 2015 first quarter). We do not believe the adoption of this standard will have a significant impact on our Consolidated Financial Statements.
In May 2014, the FASB issued ASU 2014-09, “
Revenue from Contracts with Customers (Topic 606)
”. The ASU is a jointly converged standard between the FASB and the International Accounting Standards Board, and will replace almost all existing revenue recognition guidance, including industry specific guidance, upon its effective date. The standard’s core principle is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 also enhances disclosures about revenue, provides guidance for transactions that were not addressed comprehensively in previous guidance, and improves guidance for multiple-element arrangements. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 (our fiscal 2018 first quarter). We are currently evaluating the impact of this guidance on our Consolidated Financial Statements.
2. Franchise Programs
As of June 3, 2014, our franchise programs included arrangements with 27 domestic and international Ruby Tuesday concept franchisees and five domestic Lime Fresh franchisees. At the end of fiscal 2014, our franchisees collectively operated 79 Ruby Tuesday and six Lime Fresh restaurants. We do not own any equity interest in our existing franchisees.
We enter into development agreements with our franchisees that require them to open varying numbers of Ruby Tuesday or Lime Fresh restaurants. As of June 3, 2014, five of our 27 Ruby Tuesday concept franchisees had agreements to develop new franchised Ruby Tuesday restaurants. None of our five Lime Fresh concept domestic franchisees had an agreement to develop new Lime Fresh restaurants as of June 3, 2014. During fiscal 2014, 2013, and 2012, our Ruby Tuesday franchisees opened seven, two, and six restaurants, respectively, pursuant to development agreements, as follows:
|
|
|
Ruby Tuesday
|
|
Lime Fresh
|
Fiscal Year
|
|
|
Domestic
|
|
International
|
|
Total
|
|
|
2014
|
|
|
1
|
|
6
|
|
7
|
|
2*
|
2013
|
|
|
–
|
|
2
|
|
2
|
|
2*
|
2012
|
|
|
2
|
|
4
|
|
6
|
|
4*
|
*As discussed further in Note 4 to the Consolidated Financial Statements, on April 11, 2012 we acquired the royalty stream from four open, and one not yet open, Lime Fresh franchise restaurants. This restaurant opened in fiscal 2013. Additionally, one of the Lime Fresh franchise restaurant openings in each of fiscal 2014 and 2013 was opened in Chile by an international franchisee. Both of these restaurants closed during the fourth quarter of fiscal 2014.
In conjunction with these openings, we recognized development and licensing fee income totaling $0.2 million in each of fiscal 2014, 2013, and 2012.
Deferred development and licensing fees associated with all franchisees totaled $0.8 million as of both June 3, 2014 and June 4, 2013. We will recognize these fees as income when we have substantially performed all material services and the restaurant has opened for business.
3. Discontinued Operations
In an effort to focus primarily on the successful sales turnaround of our core Ruby Tuesday concept and secondly, to improve the financial performance of our Lime Fresh concept, we closed all 13 Marlin & Ray’s restaurants, the Company’s one Wok Hay restaurant, and our two Truffles restaurants during fiscal 2013. We have classified the results of operations of our Company-owned Marlin & Ray’s, Wok Hay, and Truffles concepts as discontinued operations for all periods presented. The results of operations of our discontinued operations are as follows (in thousands):
|
|
June 3, 2014
|
|
|
June 4, 2013
|
|
|
June 5, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales and operating revenue
|
|
$
|
–
|
|
|
$
|
11,884
|
|
|
$
|
14,015
|
|
Income/(loss) before income taxes
|
|
$
|
458
|
|
|
$
|
(24,498
|
)
|
|
$
|
(6,312
|
)
|
Benefit for income taxes
|
|
|
(106
|
)
|
|
|
(8,519
|
)
|
|
|
(2,598
|
)
|
Income/(loss) from discontinued operations
|
|
$
|
564
|
|
|
$
|
(15,979
|
)
|
|
$
|
(3,714
|
)
|
We had $4.2 million and $2.8 million of assets associated with the closed concept restaurants, which are included within Assets held for sale and Property and equipment, net, respectively, in our June 4, 2013 Consolidated Balance Sheet. There were no assets associated with the closed concept restaurants included within either Assets Held for sale or Property and equipment, net in our June 3, 2014 Consolidated Balance Sheet. See Note 9 to the Consolidated Financial Statements for a discussion of closed restaurant lease reserves as of June 3, 2014 and June 4, 2013 associated with the closed concept restaurants.
4. Business and License Acquisitions
Fiscal 2012 transactions
On April 11, 2012, we completed the acquisition of Lime Fresh, including the assets of seven Lime Fresh concept restaurants, the royalty stream from five Lime Fresh concept franchised restaurants (one of which was not yet open), and the Lime Fresh brand’s intellectual property for $24.1 million. Lime Fresh is a fast casual Mexican concept that then operated several restaurants primarily in the vicinity of Miami, Florida. The Lime Fresh concept menu features diverse menu offerings such as homemade tortilla chips, customizable nachos, salads, soups, fajitas, quesadillas, tacos, burritos, and salsa and guacamole.
Our Consolidated Financial Statements reflect the results of operations of these acquired restaurants subsequent to the date of acquisition.
The purchase price of the Lime Fresh acquisition during fiscal 2012 was allocated based on fair value estimates as follows (in thousands):
Trademarks
|
|
$
|
11,100
|
|
Goodwill
|
|
|
9,022
|
|
Acquired franchise rights
|
|
|
1,500
|
|
Property and equipment
|
|
|
2,405
|
|
Deferred income taxes
|
|
|
6
|
|
Other, net
|
|
|
(983
|
)
|
Net impact on Consolidated Balance Sheet
|
|
|
23,050
|
|
|
|
|
|
|
Write-off of previous license agreement
|
|
|
1,034
|
|
Net impact on Consolidated Statements of
|
|
|
|
|
Operations and Comprehensive Loss
|
|
|
1,034
|
|
Aggregate cash purchase price
|
|
$
|
24,084
|
|
For the year ended June 5, 2012, a $1.0 million loss on the write-off of a previous license agreement, representing the balance remaining from the September 13, 2010 licensing agreement with LMFG International, LLC, was included in Other restaurant operating costs in our Consolidated Statements of Operations and Comprehensive Loss. Further discussion regarding this agreement is presented later within this footnote.
We recorded $9.0 million of goodwill due to the purchase price exceeding the estimated fair value of the net assets acquired. As further discussed in Note 9 to the Consolidated Financial Statements, we determined during fiscal 2013 that the goodwill associated with our acquisition of Lime Fresh was fully impaired and recorded a charge of $9.0 million ($5.4 million, net of tax).
We amortize the acquired trademarks over a ten year period. As further discussed in Note 9 to the Consolidated Financial Statements, we determined during the third quarter of fiscal 2014 and the fourth quarter of fiscal 2013 that the Lime Fresh trademark was partially impaired and recorded charges of $0.9 million and $5.0 million, respectively. We amortize the acquired franchise rights associated with this acquisition on a straight-line basis over the remaining term of the franchise operating agreements, which are approximately five to nine years from the date of acquisition.
The revenues and operating results from April 11, 2012, the date of acquisition, through June 5, 2012 for the seven Lime Fresh restaurants acquired in fiscal 2012 were not material to our consolidated financial statements.
License Acquisitions and Related Party Transactions
On September 13, 2010, we entered into a licensing agreement with LFMG International, LLC which allowed us to operate multiple restaurants under the Lime Fresh concept. Under the terms of the agreement, we paid an initial development fee of $1.0 million and paid a license agreement fee of $5,000 for each Lime Fresh restaurant we opened. In addition, we paid a royalty fee of 2.0%, and an advertising fee of 1.0%, of gross sales of any Lime Fresh restaurant that we opened. The license agreement terminated when we acquired certain assets of LFMG International, LLC as discussed above. We opened four Lime Fresh restaurants during fiscal 2012 under the terms of the license agreement prior to the acquisition on April 11, 2012. As previously discussed, we wrote off the $1.0 million balance remaining on this license agreement upon completion of the acquisition in fiscal 2012.
On June 7, 2012 we entered into two marketing agreements with 50 Eggs Branding Company, LLC (“50 Eggs”). John Kunkel, the Chief Executive Officer of 50 Eggs, previously was the Chief Executive Officer of LFMG International, LLC, and is a current Lime Fresh franchisee. Under the terms of the first agreement, 50 Eggs provided marketing services for our Lime Fresh concept for a monthly fee of $52,500 plus out of pocket expenses. Under the terms of the second agreement, 50 Eggs provided marketing services for our Marlin & Ray’s concept for a monthly fee of $26,250 plus out of pocket expenses. We cancelled both agreements during fiscal 2013. Included within Selling, general, and administrative, net in our Consolidated Statements of Operations and Comprehensive Loss for the year ended June 4, 2013, are payments we made to 50 Eggs in connection with these agreements of $0.8 million. Additionally, during the year ended June 5, 2012, we made payments to 50 Eggs including $30,000 for marketing services and $26,139 for training consulting for our Lime Fresh concept.
On July 22, 2010, following the approval of the Audit Committee of our Board of Directors, we entered into a licensing agreement with Gourmet Market, Inc. which is owned by our former Chief Executive Officer’s brother, Price Beall. The licensing agreement allowed us to operate multiple restaurants under the Truffles name. Under the terms of the agreement, we paid a licensing fee to Gourmet Market, Inc. of 2.0% of gross sales of the Truffles we opened. Additionally, we paid Gourmet Market, Inc. a monthly fee two years for consulting services to be provided by Price Beall to assist us in developing and opening Truffles restaurants under the terms of the licensing agreement. During the first 12 months of the agreement we paid $20,833 per month for such services. During the second 12 months of the agreement we paid $10,417 per month. The consulting services agreement expired during the first quarter of fiscal 2013. As discussed further in Notes 3 and 9 to the Consolidated Financial Statements, we closed our two Truffles restaurants during the fourth quarter of fiscal 2013. During fiscal 2013 and 2012, we paid Gourmet Market, Inc. $80,361 and $197,623, respectively, under the terms of the agreement.
5. Accounts Receivable
Accounts receivable – current consist of the following (in thousands):
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Rebates receivable
|
|
$
|
930
|
|
|
$
|
874
|
|
Amounts due from franchisees
|
|
|
1,281
|
|
|
|
917
|
|
Other receivables
|
|
|
2,650
|
|
|
|
3,043
|
|
|
|
$
|
4,861
|
|
|
$
|
4,834
|
|
We negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of us and our franchise system. We receive various volume discounts and rebates based on purchases for our Company-owned restaurants from numerous suppliers.
Amounts due from franchisees consist of royalties, license, and other miscellaneous fees, a substantial portion of which represents current and recently-invoiced billings.
As of June 3, 2014 and June 4, 2013, Other receivables consisted primarily of amounts due for third-party gift card sales ($1.6 million and $1.8 million, respectively), amounts due from our distributor ($0.4 million for both periods), sales and other miscellaneous tax refunds ($0.2 million and $0.1 million, respectively), and amounts due from landlords (negligible and $0.5 million, respectively).
6. Inventories
Our merchandise inventory was $12.9 million and $21.8 million as of June 3, 2014 and June 4, 2013, respectively. In order to ensure adequate supply and competitive pricing, we sometimes purchase lobster in advance of our needs and store it in third-party facilities prior to our distributor taking possession of the inventory. The decrease in merchandise inventory from the end of the prior fiscal year is due primarily to a reduction in lobster inventory as we temporarily suspended the advance purchasing of lobster during the current fiscal year to utilize the lobster that is in our inventory.
7. Property, Equipment, Assets Held for Sale, Operating Leases, and Sale-Leaseback Transactions
Property and equipment, net, is comprised of the following (in thousands):
|
|
2014
|
|
|
2013
|
|
Land
|
|
$
|
214,277
|
|
|
$
|
222,385
|
|
Buildings
|
|
|
430,988
|
|
|
|
448,681
|
|
Improvements
|
|
|
365,599
|
|
|
|
402,371
|
|
Restaurant equipment
|
|
|
248,852
|
|
|
|
260,576
|
|
Other equipment
|
|
|
84,876
|
|
|
|
91,351
|
|
Construction in progress and other*
|
|
|
22,246
|
|
|
|
23,080
|
|
|
|
|
1,366,838
|
|
|
|
1,448,444
|
|
Less accumulated depreciation
|
|
|
571,992
|
|
|
|
588,614
|
|
|
|
$
|
794,846
|
|
|
$
|
859,830
|
|
* Included in Construction in progress and other as of June 3, 2014 and June 4, 2013 are $18.4 million and $14.8 million, respectively, of assets held for sale that are not classified as such in the Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months. These assets primarily consist of parcels of land upon which we have no intention to build restaurants and closed properties which include a building.
Included within the current assets section of our Consolidated Balance Sheets at June 3, 2014 and June 4, 2013 are amounts classified as assets held for sale totaling $4.7 million and $9.2 million, respectively. Assets held for sale primarily consist of parcels of land upon which we have no intention to build restaurants, land and buildings of closed restaurants, and various liquor licenses. In addition to operating restaurants sold and leased back, as discussed below, during fiscal 2014, 2013, and 2012 we sold surplus properties with carrying values of $14.0 million, $6.4 million, and $5.3 million, respectively, at net gains of $1.5 million, $0.6 million, and $0.8 million, respectively. Cash proceeds, net of broker fees, from these sales totaled $15.4 million, $7.0 million, and $6.0 million, respectively.
Approximately 56% of our 688 Company-owned restaurants are located on leased properties. Of these, approximately 68% are land leases only; the other 32% are for both land and building. The initial terms of these leases expire at various dates over the next 22 years. These leases may also contain required increases in minimum rent at varying times during the lease term and have options to extend the terms of the leases at a rate that is included in the original lease agreement. Most of our leases require the payment of additional (contingent) rent that is based upon a percentage of restaurant sales above agreed upon sales levels for the year. These sales levels vary for each restaurant and are established in the lease agreements. We recognize contingent rental expense (in annual as well as interim periods) prior to the achievement of the specified target that triggers the contingent rental expense, provided that achievement of that target is considered probable.
During the years ended June 3, 2014, June 4, 2013, and June 5, 2012, we completed sale-leaseback transactions of the land and building for three, 24, and 10 Company-owned Ruby Tuesday concept restaurants, respectively, for gross cash proceeds of $5.9 million, $54.4 million, and $22.2 million, respectively, exclusive of transaction costs of approximately $0.3 million, $2.6 million, and $1.1 million, respectively. Equipment was not included. The carrying value of the properties sold was $4.8 million, $41.4 million, and $16.5 million, respectively. The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years. Net proceeds from the sale-leaseback transactions were used for general corporate purposes, including capital expenditures, debt payments, and the repurchase of shares of our common stock.
We realized gains during fiscal 2014, 2013, and 2012 on these transactions of $0.8 million, $10.4 million, and $4.6 million, respectively, which have been deferred and are being recognized on a straight-line basis over the initial terms of the leases. The current portion of the deferred gains on all sale-leaseback transactions to date was $1.1 million and $1.0 million as of June 3, 2014 and June 4, 2013, respectively, and is included in Accrued liabilities – Rent and other in our Consolidated Balance Sheets. The long-term portion of the deferred gains on all sale-leaseback transactions to date was $13.0 million and $13.2 million as of June 3, 2014 and June 4, 2013, respectively, and is included in Other deferred liabilities in our Consolidated Balance Sheets. Amortization of the deferred gains of $1.1 million, $0.8 million, and $0.1 million is included within Other restaurant operating costs in our Consolidated Statements of Operations and Comprehensive Loss for the fiscal years ended June 3, 2014, June 4, 2013, and June 5, 2012, respectively.
The following is a schedule by year of future minimum lease payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of June 3, 2014 (in thousands):
|
|
|
|
2015
|
|
$
|
48,625
|
|
2016
|
|
|
44,381
|
|
2017
|
|
|
40,520
|
|
2018
|
|
|
37,266
|
|
2019
|
|
|
34,014
|
|
Subsequent years
|
|
|
166,424
|
|
Total minimum lease payments
|
|
$
|
371,230
|
|
The following schedule shows the future minimum sub-lease payments contractually due from franchisees and others for the next five years and thereafter under noncancelable sub-lease agreements (in thousands):
|
|
Franchisees
|
|
|
Others
|
|
|
Total
|
|
2015
|
|
$
|
243
|
|
|
$
|
233
|
|
|
$
|
476
|
|
2016
|
|
|
247
|
|
|
|
215
|
|
|
|
462
|
|
2017
|
|
|
247
|
|
|
|
75
|
|
|
|
322
|
|
2018
|
|
|
247
|
|
|
|
74
|
|
|
|
321
|
|
2019
|
|
|
208
|
|
|
|
74
|
|
|
|
282
|
|
Subsequent years
|
|
|
27
|
|
|
|
478
|
|
|
|
505
|
|
Total minimum sub-lease payments
|
|
$
|
1,219
|
|
|
$
|
1,149
|
|
|
$
|
2,368
|
|
The following table summarizes our minimum and contingent rent expense and our sublease rental income under our operating leases (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Included within continuing operations
|
|
|
|
|
|
|
|
|
|
Minimum rent
|
|
$
|
52,774
|
|
|
$
|
51,398
|
|
|
$
|
47,808
|
|
Contingent rent
|
|
|
430
|
|
|
|
472
|
|
|
|
467
|
|
|
|
|
53,204
|
|
|
|
51,870
|
|
|
|
48,275
|
|
Sublease rental income
|
|
|
(409
|
)
|
|
|
(357
|
)
|
|
|
(416
|
)
|
|
|
$
|
52,795
|
|
|
$
|
51,513
|
|
|
$
|
47,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within discontinued operations
|
|
$
|
–
|
|
|
$
|
546
|
|
|
$
|
967
|
|
The amounts shown for fiscal 2014, 2013, and 2012 above exclude rent expense of $5.7 million, $2.0 million, and $3.4 million, respectively, relating to lease reserves established for closed restaurants or dead sites, which is included within Closures and impairments expense in our Consolidated Statements of Operations and Comprehensive Loss.
8. Long-Term Debt and Capital Leases
Long-term debt and capital lease obligations consist of the following (in thousands):
|
|
2014
|
|
|
2013
|
|
Senior unsecured notes
|
|
$
|
215,000
|
|
|
$
|
235,000
|
|
Unamortized discount
|
|
|
(2,503
|
)
|
|
|
(3,083
|
)
|
Senior unsecured notes less unamortized discount
|
|
|
212,497
|
|
|
|
231,917
|
|
Revolving credit facility
|
|
|
–
|
|
|
|
–
|
|
Mortgage loan obligations
|
|
|
45,993
|
|
|
|
66,883
|
|
Capital lease obligations
|
|
|
201
|
|
|
|
202
|
|
|
|
|
258,691
|
|
|
|
299,002
|
|
Less current maturities
|
|
|
4,816
|
|
|
|
8,487
|
|
|
|
$
|
253,875
|
|
|
$
|
290,515
|
|
Estimated annual maturities of long-term debt and capital lease obligations at June 3, 2014 are as follows (in thousands):
2015
|
|
$
|
4,816
|
|
2016
|
|
|
5,047
|
|
2017
|
|
|
14,125
|
|
2018
|
|
|
5,558
|
|
2019
|
|
|
5,091
|
|
Subsequent years
|
|
|
224,054
|
|
|
|
$
|
258,691
|
|
On May 14, 2012, we entered into an indenture (the “Indenture”) among the Company, certain subsidiaries of the Company as guarantors and Wells Fargo Bank, National Association as trustee, governing the Company’s $250.0 million aggregate principal amount of 7.625% senior notes due 2020 (the “Senior Notes”). The Senior Notes were issued at a discount of $3.7 million, which is being amortized using the effective interest method over the eight-year term of the notes.
The Senior Notes are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions. They rank equal in right of payment with our existing and future senior indebtedness and senior in right of payment to any of our future subordinated indebtedness. The Senior Notes are effectively subordinated to all of our secured debt, including borrowings outstanding under our revolving credit facility, to the extent of the value of the assets securing such debt and structurally subordinated to all of the liabilities of our existing and future subsidiaries that do not guarantee the Senior Notes.
Interest on the Senior Notes is calculated at 7.625% per annum, payable semiannually on each May 15 and November 15 to holders of record on the May 1 or November 1 immediately preceding the interest payment date. Accrued interest on the Senior Notes and our other long-term debt and capital lease obligations is included in Accrued liabilities – Rent and other in our Consolidated Balance Sheets. The Senior Notes mature on May 15, 2020.
At any time prior to May 15, 2016, we may redeem the Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus an applicable “make-whole” premium and accrued and unpaid interest. At any time on or after May 15, 2016, we may redeem the Senior Notes, in whole or in part, at the redemption prices specified in the Indenture plus accrued and unpaid interest. At any time prior to May 15, 2015, we may redeem up to 35% of the Senior Notes from the proceeds of certain equity offerings. There is no sinking fund for the Senior Notes.
The Indenture contains covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur or guarantee additional indebtedness; (ii) declare or pay dividends, redeem stock or make other distributions to stockholders; (iii) make certain investments; (iv) create liens or use assets as security in other transactions; (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of their assets; (vi) enter into transactions with affiliates; and (vii) sell or transfer certain assets. These covenants are subject to a number of important exceptions and qualifications, as described in the Indenture, and certain covenants will not apply at any time when the Senior Notes are rated investment grade by the Rating Agencies, as defined in the Indenture. The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately.
Under the terms of our December 2013 four-year revolving credit agreement (the “Senior Credit Facility” discussed below) we are allowed, under certain circumstances, to repurchase up to $20.0 million of the Senior Notes in any fiscal year. During the year ended June 3, 2014, we repurchased $20.0 million of the Senior Notes for $20.0 million plus $0.2 million of accrued interest. We realized losses of $0.7 million on these transactions. The balance on the Senior Notes was $215.0 million at June 3, 2014 as a result of these repurchases.
On December 3, 2013, we entered into the Senior Credit Facility under which we may borrow up to $50.0 million with the option, subject to certain conditions, to increase the facility by up to $35.0 million. The Senior Credit Facility, which was obtained to provide access to capital for general corporate purposes, replaced a previous five-year $200.0 million credit facility that was set to expire in December 2015. The terms of the Senior Credit Facility provide for a
$25.0 million sublimit for the issuance of standby letters of credit. In connection with entering into the Senior Credit Facility, included within Interest expense, net and Loss on extinguishment of debt in our Consolidated Statements of Operations and Comprehensive Loss for the year ended June 3, 2014 are charges of $0.2 million and $0.7 million, respectively, relating to the write-off of the pro rata portion of unamortized debt issuance costs associated with our previous credit facility.
Under the Senior Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize. Our options for the rate are a Base Rate or LIBOR, plus an applicable margin. The Base Rate is defined as the highest of the issuing bank’s prime rate, the Federal Funds rate plus 0.50%, or the Adjusted LIBO rate (as defined in the Senior Credit Facility) plus 1.0%. The applicable margin for the LIBOR rate-based option is a percentage ranging from 2.50% to 3.50% and for the Base Rate option is a percentage ranging from 1.50% to 2.50%. We pay commitment fees quarterly ranging from 0.40% to 0.75% on the unused portion of the Senior Credit Facility.
As security for the Senior Credit Facility, we granted the lenders liens and security interests in substantially all of the shares of capital stock of the Company and each of our present and future subsidiaries, substantially all of the personal property of the Company and each 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 June 3, 2014 net book value of $81.3 million.
Under the Senior Credit Facility, we had no borrowings outstanding at June 3, 2014. After consideration of letters of credit outstanding, we had $37.6 million available under the Senior Credit Facility as of June 3, 2014.
The Senior Credit Facility contains a number of customary affirmative and negative covenants that, among other things, limit or restrict our ability to incur liens, engage in mergers or other fundamental changes, make acquisitions, investments, loans and advances, pay dividends or other distributions, sell or otherwise dispose of certain assets, engage in certain transactions with affiliates, enter into burdensome agreements or certain hedging agreements, amend organizational documents, change accounting practices, incur additional indebtedness and prepay other indebtedness. In addition, under the Senior Credit Facility, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio. The terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 5.00 to 1.0 and a minimum fixed charge coverage ratio of 1.30 to 1.0 for the quarter ending June 3, 2014. The minimum required ratios fluctuate thereafter as provided in the Senior Credit Facility.
The Senior Credit Facility terminates no later than December 3, 2017. Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Senior Credit Facility and any ancillary loan documents.
On December 3, 2013, in connection with our entry into the Senior Credit Facility, the Company and certain of its subsidiaries entered into loan modification agreements (the “Loan Modification Agreements”) with certain mortgage lenders to, among other things, provide waivers and consents under certain of our mortgage loan obligations to enter into the Senior Credit Facility. The Loan Modification Agreements also, among other things, amend certain financial reporting requirements under the specified loans and modify and/or provide for certain financial covenants for the specified loans, including the minimum consolidated fixed charge coverage ratio and the minimum adjusted total debt to EBITDAR ratio. In conjunction with one of the loan modification agreements, on January 2, 2014, we paid approximately $5.0 million to retire a specified portion of certain mortgage loan obligations.
Our $46.0 million in mortgage loan obligations as of June 3, 2014 consists of various loans acquired upon franchise acquisitions. These loans, which mature between January 2015 and November 2022, have balances which range from $0.1 million to $7.7 million and interest rates of 7.60% to 10.92%. Many of the properties acquired from franchisees collateralize the loans outstanding.
We capitalized interest expense related to new restaurant openings of our Lime Fresh concept restaurants and restaurant conversions of certain of our Ruby Tuesday concept restaurants totaling $0.1 million in each of fiscal 2014, 2013, and 2012.
9. Closures and Impairments Expense, Including Goodwill and Trademark Impairments
Closures and impairments, net include the following (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Closures and impairments from continuing operations:
|
|
|
|
|
|
|
|
|
|
Property impairments
|
|
$
|
24,335
|
|
|
$
|
11,325
|
|
|
$
|
12,240
|
|
Closed restaurant lease reserves
|
|
|
7,302
|
|
|
|
2,844
|
|
|
|
3,516
|
|
Other closing expense
|
|
|
2,181
|
|
|
|
1,152
|
|
|
|
1,673
|
|
(Gain)/loss on sale of surplus properties
|
|
|
(987
|
)
|
|
|
(665
|
)
|
|
|
(678
|
)
|
Closures and impairments, net
|
|
$
|
32,831
|
|
|
$
|
14,656
|
|
|
$
|
16,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closures and impairments from discontinued operations
|
|
$
|
(468
|
)
|
|
$
|
21,674
|
|
|
$
|
1,914
|
|
During the last two quarters of fiscal 2014, we closed 33 Ruby Tuesday concept restaurants in connection with a plan approved by the Board of Directors of Ruby Tuesday, Inc.. Of these closures, 11 of the restaurants closed upon expiration of their lease. Included within Closures and impairments, net for the year ended June 3, 2014 are impairment charges of $4.8 million in connection with early restaurant closures.
In addition to impairment charges recorded in connection with the planned closures discussed above, during fiscal 2014, we recorded $13.5 million of impairments relating to 32 open restaurants with deteriorating operational performance and a $0.9 million impairment charge for the Lime Fresh trademark. The Lime Fresh trademark, which previously had been impaired by $5.0 million in the fourth quarter of fiscal 2013, has a net book value of $3.6 million remaining at June 3, 2014.
Included in Closures and impairments, net from continuing operations for fiscal 2013 are $4.3 million of impairment and lease charges relating to the closing of four Lime Fresh concept restaurants and $3.6 million of impairment charges for four underperforming Lime Fresh open restaurants, two of which closed during fiscal 2014.
As discussed further in Note 3 to the Consolidated Financial Statements, in an effort to focus primarily on the successful sales turnaround of our core Ruby Tuesday concept and secondly, to improve the financial performance of our Lime Fresh concept, we closed all 13 Marlin & Ray’s restaurants, the Company’s one Wok Hay restaurant, and our two Truffles restaurants during fiscal 2013. As a result of these decisions, pre-tax charges of $21.7 million were recognized for asset impairments, lease reserves, and other closing costs within Loss from discontinued operations, net of tax for the fiscal year ended June 4, 2013.
Included in Closures and impairments, net from continuing operations for fiscal 2012 are property impairments of $9.7 million resulting from management’s decision to close approximately 25 to 27 Ruby Tuesday concept restaurants.
A rollforward of our future lease obligations associated with closed properties is as follows (in thousands):
|
|
Lease Obligations
|
|
|
|
Continuing
Operations
|
|
|
Discontinued
Concepts
|
|
|
Total
|
|
Balance at June 5, 2012
|
|
$
|
6,227
|
|
|
$
|
586
|
|
|
$
|
6,813
|
|
Closing expense including rent and other lease charges
|
|
|
2,844
|
|
|
|
1,404
|
|
|
|
4,248
|
|
Payments
|
|
|
(3,818
|
)
|
|
|
(808
|
)
|
|
|
(4,626
|
)
|
Other adjustments
|
|
|
1,164
|
|
|
|
1,128
|
|
|
|
2,292
|
|
Balance at June 4, 2013
|
|
|
6,417
|
|
|
|
2,310
|
|
|
|
8,727
|
|
Closing expense including rent and other lease charges
|
|
|
7,302
|
|
|
|
(487
|
)
|
|
|
6,815
|
|
Payments
|
|
|
(4,620
|
)
|
|
|
(1,185
|
)
|
|
|
(5,805
|
)
|
Other adjustments
|
|
|
1,138
|
|
|
|
(2
|
)
|
|
|
1,136
|
|
Balance at June 3, 2014
|
|
$
|
10,237
|
|
|
$
|
636
|
|
|
$
|
10,873
|
|
The amounts comprising future lease obligations 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, $10.5 million and $8.7 million are included within the Accrued liabilities – Rent and other caption in our Consolidated Balance Sheets as of June 3, 2014 and June 4, 2013, respectively. For fiscal 2015 and beyond, our focus will be on obtaining settlements, or subleases as necessary, on as many of these leases as possible and these settlements could be higher or lower than the amounts recorded. The actual amount of any cash payments made by the Company for lease contract termination costs will be dependent upon ongoing negotiations with the landlords of the leased restaurant properties.
Included within closing expense in the table above are $0.2 million in charges we recorded during fiscal 2013 associated with lease obligations on a restaurant subleased to RT Midwest that has closed. As of June 4, 2013, we continue to remain a sublease guarantor for three of RT Midwest’s operating restaurants, which have remaining lease terms extending through September 2019. As of June 3, 2014, cash rents of $1.2 million are required under the terms of the subleases. Should RT Midwest decide to close any of these restaurants we may incur further lease obligations associated with these subleases.
Goodwill
Goodwill represents the excess of costs over the fair market value of assets of businesses acquired. We recorded goodwill with the acquisition of Lime Fresh during fiscal 2012 and the acquisition of certain franchise partnerships during fiscal 2011. We perform tests for impairments annually, or more frequently when events or circumstances indicate it might be impaired.
Impairment tests for goodwill require a two-step process and are performed after testing of all other assets is complete. Under the first step, the estimation of fair value of the reporting unit is compared with its carrying value, including goodwill. If the first step indicates a potential impairment, the second step is performed to measure the amount of impairment, if any. Goodwill impairment exists when the implied fair value of goodwill is less than its carrying value. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation.
As we acquired Lime Fresh during the fourth quarter of fiscal 2012, we tested the goodwill associated with our Lime Fresh concept during the fourth quarter of fiscal 2013 using the two-step method as discussed above. The results of the first step indicated a potential goodwill impairment as the fair value of the Lime Fresh concept was less than its carrying value. We determined the fair value of the Lime Fresh concept using the discounted cash flow method. The results of the second step indicated that all of the goodwill recorded in connection with the Lime Fresh acquisition was impaired. Accordingly, during the fourth quarter of fiscal 2013 we recorded a charge of $9.0 million ($5.4 million, net of tax) representing the full value of our Lime Fresh concept goodwill.
In fiscal 2012, given our suppressed stock price and continued negative same-restaurant sales, we tested our Ruby Tuesday concept goodwill throughout the year and determined, in the fourth fiscal quarter, it to be fully impaired. As a result, we recorded a charge of $16.9 million ($12.0 million, net of tax) in fiscal 2012, representing the full value of our Ruby Tuesday concept goodwill.
The changes in the carrying amount of goodwill are as follows (in thousands):
Balance at May 31, 2011
|
|
$
|
15,571
|
|
Adjustments to fiscal year 2011
|
|
|
|
|
purchase price allocations
|
|
|
1,348
|
|
Acquisition
|
|
|
7,989
|
|
Impairment
|
|
|
(16,919
|
)
|
Balance at June 5, 2012
|
|
$
|
7,989
|
|
Adjustments to fiscal year 2012
|
|
|
|
|
purchase price allocation
|
|
|
1,033
|
|
Impairment
|
|
|
(9,022
|
)
|
Balance at June 4, 2013 and thereafter
|
|
$
|
–
|
|
10. Employee Post-Employment Benefits
Pension and Postretirement Medical and Life Benefits
We sponsor three defined benefit pension plans for active employees and offer certain postretirement benefits for retirees. A summary of each of these is presented below.
Retirement Plan
RTI sponsors the Morrison Restaurants Inc. Retirement Plan (the "Retirement Plan"). Effective December 31, 1987, the Retirement Plan was amended so that no additional benefits would accrue and no new participants 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 we will be required to make contributions totaling $0.5 million to the Retirement Plan in fiscal 2015.
The Retirement Plan’s assets are held in a trust and were allocated as follows on June 3, 2014 and June 4, 2013, the measurement dates:
|
Target
Allocation
|
2014
Allocation
|
2013
Allocation
|
Equity securities
|
60-80%
|
71%
|
71%
|
Fixed income securities
|
20-40%
|
22%
|
27%
|
Public real estate investment trusts
|
0-10%
|
4%
|
0%
|
Cash and cash equivalents
|
0%
|
2%
|
2%
|
Other
|
0-10%
|
1%
|
0%
|
|
|
|
|
Total
|
100%
|
100%
|
100%
|
Retirement Plan fiduciaries set investment policies and strategies for the Retirement Plan’s trust. The primary investment objectives are to maximize total return within a prudent level of risk, focus on a 3-5 year time horizon, fully diversify investment holdings, and meet the long-term return target selected as an actuarial assumption (currently 7.0%). The Retirement Plan’s fiduciaries oversee the investment allocation process, which includes selecting investment managers, commissioning periodic asset-liability studies, setting long-term strategic targets, and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, and occasionally the Retirement Plan’s fiduciaries will approve allocations above or below a target range.
Under the terms of the investment policy statement, plan assets are comprised of two major classes: equity and fixed income securities. The goal of the equity portfolio is to produce a total return that will provide a hedge against inflation. Equity securities can include both domestic and international securities with a long-term goal to maintain an equity allocation of approximately 60-80% of the total market value of plan assets. To be fully invested, the trust’s equity portfolio should not contain any domestic stock with value in excess of 10% of the total and the aggregate amount of the international equities should not exceed 30% of the total. The trust may also invest the equity portfolio in alternative investments, such as real estate and commodities, which are not to exceed 10% of the total.
The goal of the fixed income portfolio is to reduce the overall volatility of the Plan, provide a stable stream of income, and provide a hedge against deflation over an investment horizon spanning 5-10 years without exposure to excessive interest rate or credit rate risk. Fixed income securities should be primarily U.S. Treasury or Government Agency securities and investment-grade corporate bonds at the time of purchase with a long-term goal to maintain a fixed income allocation of approximately 20-40% of the total market value of plan assets. Investment grade bonds will include securities rated at least BBB by Standard & Poor’s or the equivalent Moody’s index. Any single non-government issue is limited to 10% of the portfolio.
The fair values of assets held by the Retirement Plan by asset category are as follows (in thousands):
|
|
Fair Value Measurements
|
|
|
|
Total Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Cash and cash equivalents
|
|
$
|
108
|
|
|
$
|
–
|
|
|
$
|
108
|
|
|
$
|
–
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.-based companies
|
|
|
3,798
|
|
|
|
3,798
|
|
|
|
–
|
|
|
|
–
|
|
International-based companies
|
|
|
1,161
|
|
|
|
1,161
|
|
|
|
–
|
|
|
|
–
|
|
Fixed income securities
|
|
|
1,546
|
|
|
|
1,546
|
|
|
|
–
|
|
|
|
–
|
|
Public real estate investment trusts
|
|
|
303
|
|
|
|
303
|
|
|
|
–
|
|
|
|
–
|
|
Other
|
|
|
104
|
|
|
|
104
|
|
|
|
–
|
|
|
|
–
|
|
Total
|
|
$
|
7,020
|
|
|
$
|
6,912
|
|
|
$
|
108
|
|
|
$
|
–
|
|
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.
On November 30, 2012, Samuel E. Beall, III, our former Chief Executive Officer (“CEO”), stepped down from management and the Board of Directors. Mr. Beall was paid a lump-sum pension payment of $8.1 million on June 4, 2013. Additionally, during the fourth quarter of fiscal 2013, we recorded a pre-tax curtailment expense of $2.5 million representing the recognition of a pro rata portion (calculated as the percentage reduction in the projected benefit obligation due to Mr. Beall’s lump-sum pension payment on June 4, 2013) of the unrecognized loss recorded within accumulated other comprehensive loss.
Although considered to be unfunded, we own whole-life insurance contracts in order to provide a source of funding for benefits due under the terms of the Executive Supplemental Pension Plan and the Management Retirement Plan. Benefits payable under these two plans are paid from a rabbi trust which holds the insurance contracts. We will on occasion contribute additional amounts into the rabbi trust in the event of a liquidity shortfall. We currently project that benefit payments from the rabbi trust for these two plans will approximate $3.3 million in fiscal 2015.
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.
The following tables detail the components of net periodic benefit cost and the amounts recognized in our Consolidated Financial Statements for the Retirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the "Pension Plans") and the Postretirement Medical and Life Benefits plans (in thousands):
|
|
Pension Benefits
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
356
|
|
|
$
|
460
|
|
|
$
|
545
|
|
Interest cost
|
|
|
1,737
|
|
|
|
2,100
|
|
|
|
2,346
|
|
Expected return on plan assets
|
|
|
(444
|
)
|
|
|
(409
|
)
|
|
|
(514
|
)
|
Amortization of prior service cost (a)
|
|
|
1
|
|
|
|
106
|
|
|
|
262
|
|
Recognized actuarial loss
|
|
|
1,711
|
|
|
|
2,259
|
|
|
|
1,738
|
|
Curtailment expense
|
|
|
–
|
|
|
|
2,481
|
|
|
|
–
|
|
Net periodic benefit cost
|
|
$
|
3,361
|
|
|
$
|
6,997
|
|
|
$
|
4,377
|
|
|
|
Postretirement Medical and Life Benefits
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
13
|
|
|
$
|
11
|
|
|
$
|
10
|
|
Interest cost
|
|
|
67
|
|
|
|
60
|
|
|
|
71
|
|
Amortization of prior service cost (a)
|
|
|
(46
|
)
|
|
|
(56
|
)
|
|
|
(55
|
)
|
Recognized actuarial loss
|
|
|
244
|
|
|
|
214
|
|
|
|
136
|
|
Net periodic benefit cost
|
|
$
|
278
|
|
|
$
|
229
|
|
|
$
|
162
|
|
(a) Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.
The following table details changes in the amounts recognized in accumulated other comprehensive loss in our 2014 and 2013 Consolidated Financial Statements for the Pension Plans and the Postretirement Medical and Life Benefits plans (in thousands):
|
|
Pension Benefits
|
|
|
Postretirement Medical
and Life Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Prior service cost
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Net actuarial loss/(gain)
|
|
|
2,379
|
|
|
|
(915
|
)
|
|
|
(514
|
)
|
|
|
426
|
|
Amortization of prior service cost
|
|
|
(1
|
)
|
|
|
(106
|
)
|
|
|
46
|
|
|
|
56
|
|
Amortization of actuarial gain
|
|
|
(1,711
|
)
|
|
|
(4,740
|
)
|
|
|
(244
|
)
|
|
|
(214
|
)
|
Total recognized in accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive income
|
|
$
|
667
|
|
|
$
|
(5,761
|
)
|
|
$
|
(712
|
)
|
|
$
|
268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in net periodic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit cost and accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive income
|
|
$
|
4,028
|
|
|
$
|
1,236
|
|
|
$
|
(434
|
)
|
|
$
|
497
|
|
The change in benefit obligation and plan assets and reconciliation of funded status is as follows (in thousands):
|
|
Pension Benefits
|
|
|
Postretirement Medical
and Life Benefits
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning projected benefit obligation
|
|
$
|
40,308
|
|
|
$
|
48,592
|
|
|
$
|
1,896
|
|
|
$
|
1,614
|
|
Service cost
|
|
|
356
|
|
|
|
460
|
|
|
|
13
|
|
|
|
11
|
|
Interest cost
|
|
|
1,737
|
|
|
|
2,100
|
|
|
|
67
|
|
|
|
60
|
|
Plan participant contributions
|
|
|
–
|
|
|
|
–
|
|
|
|
91
|
|
|
|
90
|
|
Actuarial loss/(gain)
|
|
|
2,736
|
|
|
|
(358
|
)
|
|
|
(514
|
)
|
|
|
426
|
|
Benefits paid
|
|
|
(2,363
|
)
|
|
|
(10,486
|
)
|
|
|
(177
|
)
|
|
|
(305
|
)
|
Benefit obligation at end of year
|
|
$
|
42,774
|
|
|
$
|
40,308
|
|
|
$
|
1,376
|
|
|
$
|
1,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning fair value of plan assets
|
|
$
|
6,506
|
|
|
$
|
5,758
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Actual return on plan assets
|
|
|
800
|
|
|
|
966
|
|
|
|
––
|
|
|
|
–
|
|
Employer contributions
|
|
|
2,077
|
|
|
|
10,268
|
|
|
|
86
|
|
|
|
215
|
|
Plan participant contributions
|
|
|
–
|
|
|
|
–
|
|
|
|
91
|
|
|
|
90
|
|
Benefits paid
|
|
|
(2,363
|
)
|
|
|
(10,486
|
)
|
|
|
(177
|
)
|
|
|
(305
|
)
|
Fair value of plan assets at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
end of year
|
|
$
|
7,020
|
|
|
$
|
6,506
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
Funded status at end of year
|
|
$
|
(35,754
|
)*
|
|
$
|
(33,802
|
)*
|
|
$
|
(1,376
|
)
|
|
$
|
(1,896
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in the
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued liabilities – payroll and related
|
|
|
|
|
|
|
|
|
|
|
|
|
costs
|
|
$
|
(3,277
|
)
|
|
$
|
(3,206
|
)
|
|
$
|
(128
|
)
|
|
$
|
(163
|
)
|
Other deferred liabilities
|
|
|
(32,477
|
)
|
|
|
(30,596
|
)
|
|
|
(1,248
|
)
|
|
|
(1,733
|
)
|
Net amount recognized at year-end
|
|
$
|
(35,754
|
)
|
|
$
|
(33,802
|
)
|
|
$
|
(1,376
|
)
|
|
$
|
(1,896
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service (cost) credit
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
–
|
|
|
$
|
46
|
|
Net actuarial loss
|
|
|
(17,084
|
)
|
|
|
(16,416
|
)
|
|
|
(1,017
|
)
|
|
|
(1,776
|
)
|
Total amount recognized
|
|
$
|
(17,086
|
)
|
|
$
|
(16,418
|
)
|
|
$
|
(1,017
|
)
|
|
$
|
(1,730
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
The funded status reflected above includes the liabilities attributable to all of the Pension Plans but only the assets of the Retirement Plan as the other plans are not considered funded for ERISA purposes. To provide a source for the payment of benefits under the Executive Supplemental Pension Plan and the Management Retirement Plan, we own whole-life insurance contracts on some of the participants. The cash value of these policies, which are included within the Other Assets caption in our Consolidated Balance Sheets, was $29.7 million and $29.2 million at June 3, 2014 and June 4, 2013, respectively. In addition, we held in trust $0.2 million and $0.4 million of cash and cash equivalents as of June 3, 2014 and June 4, 2013, respectively, relating to these policies. We maintain a rabbi trust to hold the policies and death benefits as they are received.
|
During fiscal 2014, 2013, and 2012, we reclassified the following items out of accumulated other comprehensive loss and into pension expense, which is included in Selling, general and administrative, net within our Consolidated Statements of Operations and Comprehensive Loss, as follows (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Recognized actuarial loss
|
|
$
|
1,955
|
|
|
$
|
2,473
|
|
|
$
|
1,874
|
|
Amortization of prior service cost
|
|
|
(46
|
)
|
|
|
50
|
|
|
|
207
|
|
Curtailment expense
|
|
|
–
|
|
|
|
2,481
|
|
|
|
–
|
|
|
|
|
1,909
|
|
|
|
5,004
|
|
|
|
2,081
|
|
Income taxes
|
|
|
–
|
|
|
|
(1,986
|
)
|
|
|
(826
|
)
|
Pension reclassification, net of tax
|
|
$
|
1,909
|
|
|
$
|
3,018
|
|
|
$
|
1,255
|
|
The estimated prior service cost for the Pension Plans and the Postretirement Medical and Life Benefits plans that will be amortized from accumulated other comprehensive income into net periodic pension cost in fiscal 2015 is insignificant. The estimated net loss for the Pension Plans and the Postretirement Medical and Life Benefits plans that will be amortized from accumulated other comprehensive income into net periodic pension cost in fiscal 2015 is $1.7 million and $0.1 million, respectively.
Additional measurement date information for the pension plans which have benefit obligations in excess of plan assets (in thousands):
|
|
Pension Benefits
|
|
|
Postretirement Medical
and Life Benefits
|
|
|
|
June 3, 2014
|
|
|
June 4, 2013
|
|
|
June 3, 2014
|
|
|
June 4, 2013
|
|
Projected benefit obligation
|
|
$
|
42,774
|
|
|
$
|
40,308
|
|
|
$
|
1,376
|
|
|
$
|
1,896
|
|
Accumulated benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligation
|
|
|
42,002
|
|
|
|
39,515
|
|
|
|
1,376
|
|
|
|
1,896
|
|
Fair value of plan assets
|
|
|
7,020
|
|
|
|
6,506
|
|
|
|
–
|
|
|
|
–
|
|
The weighted-average assumptions used to determine the net periodic benefit cost for fiscal years are set forth below:
|
Pension Benefits
|
|
2014
|
2013
|
2012
|
Discount rate
|
4.5%
|
4.5%
|
5.3%
|
Expected return on plan assets
|
7.0%
|
7.3%
|
8.0%
|
Rate of compensation increase
|
2.0%
|
2.0%
|
2.0%
|
|
|
|
|
|
Postretirement Medical and Life Benefits
|
|
2014
|
2013
|
2012
|
Discount rate
|
3.7%
|
3.9%
|
5.3%
|
Rate of compensation increase
|
2.0%
|
2.0%
|
2.0%
|
Our estimated long-term rate of return on plan assets represents the weighted-average of expected future returns on the asset categories included in our target investment allocation based primarily on the historical returns for each asset category, adjusted for an assessment of current market conditions.
The weighted average assumptions used to determine benefit obligations at the measurement dates are set forth below:
|
Pension Benefits
|
|
2014
|
2013
|
Discount rate
|
4.4%
|
4.5%
|
Rate of compensation increase
|
2.0%
|
2.0%
|
|
Postretirement Medical and Life Benefits
|
|
2014
|
2013
|
Discount rate
|
3.5%
|
3.7%
|
Rate of compensation increase
|
2.0%
|
2.0%
|
We currently are assuming a gross medical trend rate of 7.25% for fiscal 2015. We expect this rate to decrease approximately 0.25% per year for an ultimate trend rate of 5.0% in fiscal 2024. A change in this rate of 1.0% would have no significant impact on our net periodic postretirement benefit expense or our accrued postretirement benefits liability.
The benefits expected to be paid in each of the next five years and in the aggregate for the five years thereafter are set forth below (in thousands):
|
|
Pension Benefits
|
|
|
Postretirement Medical
and Life Benefits
|
|
2015
|
|
$
|
4,055
|
|
|
$
|
129
|
|
2016
|
|
|
2,315
|
|
|
|
138
|
|
2017
|
|
|
2,360
|
|
|
|
133
|
|
2018
|
|
|
2,296
|
|
|
|
148
|
|
2019
|
|
|
2,243
|
|
|
|
103
|
|
2020-2024
|
|
|
19,728
|
|
|
|
523
|
|
Expected benefits are estimated based on the same assumptions used to measure our benefit obligation on our measurement date of June 3, 2014 and, where applicable, include benefits attributable to estimated further employee service.
Defined Contribution Plans
We sponsor two defined contribution plans for active employees, as summarized below.
Salary Deferral Plan
RTI offers certain employees a 401(k) plan called the Ruby Tuesday, Inc. Salary Deferral Plan (“401(k) Plan”). We make matching contributions to the 401(k) Plan based on each eligible employee's pre-tax contribution and years of service. We match in cash each fiscal quarter a specified percentage of the participating employee's first 6% of pre-tax contribution based on achievement of a same-restaurant sales performance factor. Company matches do not vest until
the employees have worked for us three years. Given that the Company did not achieve the 2014, 2013, or 2012 same-restaurant sales performance factor in order for there to be an employer match, we had no expense related to the 401(k) Plan for fiscal 2014, 2013, or 2012.
Deferred Compensation Plan
On January 5, 2005, our Board of Directors approved the adoption of the Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the “Deferred Compensation Plan”), effective as of January 1, 2005, and froze the existing deferred compensation plan, the Ruby Tuesday, Inc. Restated Deferred Compensation Plan (the “Predecessor Plan”), effective as of December 31, 2004, in order to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, enacted as part of the American Jobs Creation Act of 2004.
Like the Predecessor Plan, the Deferred Compensation Plan is an unfunded, non-qualified deferred compensation plan for eligible employees. The provisions of the Deferred Compensation Plan are similar to those of the 401(k) Plan. We had no expenses for company match under the Deferred Compensation Plan for fiscal 2014, 2013, or 2012. Assets earmarked to pay benefits under the Deferred Compensation Plan are held by a rabbi trust. Assets and liabilities of a rabbi trust must be accounted for as if they are Company assets or liabilities, therefore, all earnings and expenses are recorded in our consolidated financial statements. The Deferred Compensation Plan’s assets and liabilities approximated $9.6 million and $9.8 million as of June 3, 2014 and June 4, 2013, respectively. Of these amounts, $0.5 million and $0.7 million was included in Prepaid and other expenses and Accrued liabilities – Payroll and related costs, and $8.4 million and $8.0 million was included in Other assets, net and Other deferred liabilities in the June 3, 2014 and June 4, 2013 Consolidated Balance Sheets, respectively. The investment in RTI common stock and the related liability payable in RTI common stock, which totaled $0.6 million and $1.1 million as of June 3, 2014 and June 4, 2013, respectively, is reflected in Shareholders’ Equity in the Consolidated Balance Sheets.
Executive Separations and Corporate Support Services Restructuring
Fiscal 2014
On June 7, 2013, our then Executive Vice President, Chief Operations Officer left the Company. During fiscal 2014, we recorded severance expense of $0.9 million in connection with the separation agreement for the former executive, which represents obligations pursuant to the Ruby Tuesday, Inc. Severance Pay Plan (the “Severance Plan”) of two times base salary. The Severance Plan was subsequently terminated on October 7, 2013.
On October 30, 2013, our then Senior Vice President, Chief People Officer left the Company. During the second quarter of fiscal 2014, we recorded severance expense of $0.4 million in connection with his separation agreement, an amount representing one year of his annual base salary plus his remaining vacation for fiscal 2014. Of this amount, $0.3 million was paid during fiscal 2014 and the remaining amounts will be paid over two equal future installments.
Between November 20, 2013 and June 3, 2014, we eliminated approximately 82 management and staff personnel, respectively, at our Restaurant Support Services Center in Maryville, Tennessee. These reductions occurred in connection with an ongoing comprehensive review of our cost structure. These executive and other employee separations resulted in transition-related costs during the year ended June 3, 2014 of $4.3 million for employee severance and unused vacation.
Fiscal 2013 and 2012
On November 30, 2012, Sandy E. Beall, III, our founder and former President, Chief Executive Officer, and Chairman of the Board of Directors stepped down from management and the Board of Directors. In connection with a transition agreement between the Company and Mr. Beall, the material terms of which were finalized as of June 5, 2012, we accrued $2.2 million of severance during the fourth quarter of fiscal 2012. Mr. Beall’s severance was paid during the third quarter of fiscal 2013. As previously mentioned, on June 4, 2013, Mr. Beall received a lump sum payment of $8.1 million, representing the full amount due to him under the Executive Supplemental Pension Plan, six-months following his retirement.
During the fourth quarter of fiscal 2012, each of our then Chief Financial Officer and Chief Technology Officer left the Company. During fiscal 2012, we recorded severance expense of $1.7 million in connection with separation agreements for these executives, which represents obligations pursuant to the Ruby Tuesday, Inc. Severance Pay Plan of two times base salary for both executives. In addition, we also recorded during fiscal 2012 additional share-based
compensation of $0.4 million for these executives due to the accelerated vesting or modification of certain share-based awards in connection with their separation from the Company.
As of June 3, 2014, liabilities of $1.0 million and $0.1 million, representing unpaid obligations in connection with the restructurings, were included within Accrued liabilities: Payroll and related costs and Other deferred liabilities, respectively, in our Consolidated Balance Sheet. A roll forward of our obligations in connection with employee separations is as follows (in thousands):
Balance at June 4, 2013
|
|
$
|
310
|
|
Employee severance and unused vacation accruals
|
|
|
4,294
|
|
Cash payments
|
|
|
(3,549
|
)
|
Balance at June 3, 2014
|
|
$
|
1,055
|
|
See Note 12 to the Consolidated Financial Statements for discussion of the impact of executive separations to our share-based employee compensation costs.
11. Income Taxes
Income tax benefit for fiscal 2014, 2013, and 2012 was allocated as follows (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
(Benefit)/provision for income taxes from
|
|
|
|
|
|
|
|
|
|
continuing operations
|
|
$
|
(4,665
|
)
|
|
$
|
1,500
|
|
|
$
|
(12,152
|
)
|
Benefit for income taxes from
|
|
|
|
|
|
|
|
|
|
|
|
|
discontinued operations
|
|
|
(106
|
)
|
|
|
(8,519
|
)
|
|
|
(2,598
|
)
|
Total benefit for income taxes
|
|
$
|
(4,771
|
)
|
|
$
|
(7,019
|
)
|
|
$
|
(14,750
|
)
|
Income tax (benefit)/expense from continuing operations includes the following components (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Current:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(5,047
|
)
|
|
$
|
8,966
|
|
|
$
|
3,169
|
|
State
|
|
|
(1,586
|
)
|
|
|
1,200
|
|
|
|
3,321
|
|
Foreign
|
|
|
322
|
|
|
|
163
|
|
|
|
155
|
|
|
|
|
(6,311
|
)
|
|
|
10,329
|
|
|
|
6,645
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
2,346
|
|
|
|
(8,397
|
)
|
|
|
(17,402
|
)
|
State
|
|
|
(700
|
)
|
|
|
(432
|
)
|
|
|
(1,395
|
)
|
|
|
|
1,646
|
|
|
|
(8,829
|
)
|
|
|
(18,797
|
)
|
|
|
$
|
(4,665
|
)
|
|
$
|
1,500
|
|
|
$
|
(12,152
|
)
|
Deferred tax assets and liabilities are comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
Deferred tax assets:
|
|
|
|
|
|
|
General business credits carryforward
|
|
$
|
48,007
|
|
|
$
|
31,063
|
|
Employee benefits
|
|
|
22,748
|
|
|
|
22,485
|
|
Deferred escalating minimum rents
|
|
|
19,832
|
|
|
|
19,055
|
|
Goodwill
|
|
|
11,691
|
|
|
|
12,004
|
|
State net operating losses
|
|
|
10,260
|
|
|
|
8,394
|
|
Insurance reserves
|
|
|
6,267
|
|
|
|
5,777
|
|
Deferred gain on sale-leaseback transactions
|
|
|
5,148
|
|
|
|
5,232
|
|
Closed restaurant lease reserves
|
|
|
4,316
|
|
|
|
3,464
|
|
Other
|
|
|
13,202
|
|
|
|
16,705
|
|
Gross deferred tax assets
|
|
|
141,471
|
|
|
|
124,179
|
|
Deferred tax asset valuation allowances
|
|
|
(54,582
|
)
|
|
|
(24,566
|
)
|
Net deferred tax assets
|
|
|
86,889
|
|
|
|
99,613
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Depreciable property and equipment
|
|
|
(73,954
|
)
|
|
|
(87,542
|
)
|
Other
|
|
|
(13,038
|
)
|
|
|
(10,528
|
)
|
Total deferred tax liabilities
|
|
|
(86,992
|
)
|
|
|
(98,070
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax (liability)/asset
|
|
$
|
(103
|
)
|
|
$
|
1,543
|
|
|
|
|
|
|
|
|
Reported in Consolidated Balance Sheets as:
|
|
|
|
|
|
|
Deferred income taxes – current asset
|
|
$
|
3,397
|
|
|
$
|
7,296
|
|
Deferred income taxes – noncurrent liability
|
|
|
(3,500
|
)
|
|
|
(5,753
|
)
|
|
|
$
|
(103
|
)
|
|
$
|
1,543
|
|
The above deferred tax assets and liabilities include the income tax effect of temporary differences between financial reporting and tax reporting. Temporary differences represent the cumulative taxable or deductible amounts recorded in the consolidated financial statements in different years than recognized in the tax returns. General business credits carryforward and state net operating losses may be used to offset future taxable income, and their benefit is reflected in the deferred tax assets. Other deferred tax assets, such as employee benefits, escalating minimum rents, and certain others listed, become deductible in the tax return upon payment or funding in qualified trusts. The depreciable property and equipment temporary difference represents generally tax depreciation in excess of financial statement depreciation.
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.
Through the third quarter of fiscal 2013, we concluded that objective and subjective positive evidence outweighed negative evidence, and it was more likely than not we would realize all of our federal and most of our state deferred tax assets, except for loss carryforwards in certain states that have had cumulative losses and/or relatively short carryforward periods and annual limits of loss carryforward available for use to offset future taxable income. As of June 4, 2013, we recorded a valuation allowance following the conclusion that the negative evidence outweighed the positive evidence. This conclusion was reached primarily as a result of changes in our rolling three-year historical operating losses, as recent decisions by our new senior management team to discontinue certain concepts and slow down the growth of our Lime Fresh concept led to impairment and other losses and caused our three-year cumulative pre-tax income as of the third quarter end to swing to a three-year cumulative pre-tax loss as of the fourth quarter end.
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.
We increased our valuation allowance to $54.6 million as of June 3, 2014. Included within the $30.9 million expensed in fiscal 2014 was $31.2 million attributable to our loss from continuing operations and a benefit of $(0.3) million attributable to our income from discontinued operations. Fiscal 2013 and 2012 included expenses for increases in deferred tax asset valuation allowances of $22.2 million and $0.9 million, respectively, of which $20.9 million and $0.9 million, respectively, was attributable to continuing operations.
A rollforward of our valuation allowance is as follows (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
$
|
(24,566
|
)
|
|
$
|
(2,392
|
)
|
|
$
|
(1,501
|
)
|
Changes in estimated realization of deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(31,187
|
)
|
|
|
(20,885
|
)
|
|
|
(866
|
)
|
Discontinued operations
|
|
|
288
|
|
|
|
(1,289
|
)
|
|
|
(25
|
)
|
Other reductions
|
|
|
883
|
|
|
|
–
|
|
|
|
–
|
|
End of year
|
|
$
|
(54,582
|
)
|
|
$
|
(24,566
|
)
|
|
$
|
(2,392
|
)
|
As of June 4, 2013, we had state net operating loss carryforwards of approximately $218.1 million which expire at varying times between fiscal 2015 and 2034. The above accounting has no effect on our ability to use our state operating loss carryforwards or general business carryforward credits, which don’t begin to expire for eighteen years, in the future to reduce cash tax payments.
A reconciliation from the statutory federal income tax benefit to the reported income tax (benefit)/expense from continuing operations is as follows (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
Statutory federal income taxes
|
|
$
|
(24,351
|
)
|
|
$
|
(7,677
|
)
|
|
$
|
(3,019
|
)
|
State income taxes, net of federal income tax benefit
|
|
|
(3,564
|
)
|
|
|
(1,484
|
)
|
|
|
(1,639
|
)
|
FICA tip credit
|
|
|
(7,533
|
)
|
|
|
(8,189
|
)
|
|
|
(8,192
|
)
|
Work opportunity tax credit
|
|
|
(1,233
|
)
|
|
|
(1,366
|
)
|
|
|
(2,150
|
)
|
Other federal tax credits
|
|
|
(103
|
)
|
|
|
(155
|
)
|
|
|
(384
|
)
|
Increase in valuation allowance
|
|
|
31,187
|
|
|
|
20,885
|
|
|
|
866
|
|
Permanent differences
|
|
|
2,243
|
|
|
|
339
|
|
|
|
1,293
|
|
Other, net
|
|
|
(1,311
|
)
|
|
|
(853
|
)
|
|
|
1,073
|
|
|
|
$
|
(4,665
|
)
|
|
$
|
1,500
|
|
|
$
|
(12,152
|
)
|
We had a liability for unrecognized tax benefits, exclusive of accrued interest and penalties, of $7.0 million at June 3, 2014, $2.6 million of which, if recognized, would impact our effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal 2014 and 2013 follows (in thousands):
|
|
2014
|
|
|
2013
|
|
Beginning of year
|
|
$
|
13,016
|
|
|
$
|
6,424
|
|
Additions for tax positions related to the current year
|
|
|
532
|
|
|
|
4,594
|
|
Additions for tax positions of prior years
|
|
|
321
|
|
|
|
4,468
|
|
Reductions for tax positions of prior years
|
|
|
(5,186
|
)
|
|
|
(1,856
|
)
|
Reductions for settlements with taxing authorities
|
|
|
(619
|
)
|
|
|
(408
|
)
|
Reductions due to statute settlements
|
|
|
(1,099
|
)
|
|
|
(206
|
)
|
End of year
|
|
$
|
6,965
|
|
|
$
|
13,016
|
|
The liability for unrecognized tax benefits as of June 3, 2014 includes $3.2 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations and negotiations with tax authorities, along with the pending approval of accounting method changes.
As discussed in Note 1 to the Consolidated Financial Statements, our policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes. Interest is computed on the difference between our uncertain tax benefit positions and the amount deducted or expected to be deducted in our tax returns. At June 3, 2014, we had $0.5 million of accrued interest and penalties related to unrecognized tax benefits.
During 2014, accrued interest and penalties decreased by $0.4 million, of which $0.2 million affected the 2014 effective tax rate. If we were to prevail on all uncertain tax positions, the reversal of this accrual would also be a benefit to our effective tax rate. At June 3, 2014, total liabilities of $7.4 million, including the above-mentioned $0.5 million for the payment of accrued interest and penalties, are included in Accrued liabilities – Rent and other and Other deferred liabilities as reported on the Consolidated Balance Sheets.
At June 3, 2014, we are no longer subject to U.S. federal income tax examinations by tax authorities for fiscal years prior to 2011, and with few exceptions, state and local examinations by tax authorities prior to fiscal year 2011.
12. 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 June 3, 2014 and June 4, 2013.
The Ruby Tuesday, Inc. Stock Incentive Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan
A committee, appointed by the Board of Directors, administers the Ruby Tuesday, Inc. Stock Incentive Plan (“SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees, officers, and non-employee directors to whom share-based incentives are granted and the terms and provisions of share-based incentives. Option grants under the SIP and 1996 SIP can have varying vesting provisions and exercise periods as determined by such committee. A majority of currently outstanding options granted under the SIP and 1996 SIP vest within three years following the date of grant and expire seven years after the date of grant. The SIP and 1996 SIP permit the committee to make awards of shares of common stock, awards of stock options or other derivative securities related to the value of the common stock, and certain cash awards to eligible persons. These discretionary awards may be made on an individual basis or for the benefit of a group of eligible persons. All options awarded under the SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.
At June 3, 2014, we had reserved a total of 4,849,000 and 143,000 shares of common stock for the SIP and 1996 SIP, respectively. Of the reserved shares at June 3, 2014, 1,857,000 and 77,000 were subject to options outstanding for the SIP and 1996 SIP, respectively. Stock option exercises are settled with the issuance of new shares. Net shares of common stock available for issuance at June 3, 2014 under the SIP and 1996 SIP were 2,992,000 and 66,000, respectively. As discussed below, during the second quarter of
fiscal 2014 our shareholders approved an amendment to the SIP allowing non-employee directors to participate in the SIP.
The Ruby Tuesday, Inc. Deferred Compensation Plan for Directors
In addition to providing for the awards of share-based incentives, the Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for directors (the “Directors’ Plan”) has historically provided our non-employee directors the opportunity to defer certain of their compensation. On October 9, 2013, our shareholders approved an amendment to the SIP allowing non-employee directors to participate in the SIP instead of requiring that such awards be made from the Directors’ Plan. The amendment did not increase the number of shares of common stock available for issuance under the SIP. On April 9, 2014, our Board of Directors adopted a resolution amending and restating the Directors’ Plan to terminate those portions of the plan providing for the award of share-based compensation to non-employee directors but preserving the deferred compensation component of the plan. The amendment and restatement also changed the name of the Directors’ Plan to the Ruby Tuesday, Inc. Deferred Compensation Plan for Directors. All
remaining shares of common stock available for issuance under the Directors’ Plan, which were insignificant as of the date of the resolution, were released and will not be reserved for any future purpose. All future share-based compensation granted to non-employee directors will be awarded from shares of common stock available for issuance under the SIP.
Chief Executive Officer Awards
On December 1, 2012, James J. Buettgen became
President and CEO of the Company. In connection with Mr. Buettgen’s appointment as CEO, on December 3, 2012 he received an initial award of approximately 68,000 service-based restricted shares and 102,000 performance-based restricted shares, both of which cliff vest 2.5 years following the grant date. Pursuant to the terms of Mr. Buettgen’s employment agreement, the Company has guaranteed the earning of the performance-based restricted shares as the greater of the target value of the award or based on
the Company’s achievement of certain performance conditions related to fiscal 2013, which were measured in the first quarter of fiscal 2014.
The Executive Compensation Committee of the Board of Directors determined during the first quarter of fiscal 2014 that the performance conditions were not achieved for 34,000 shares of restricted stock awarded to our President and CEO during fiscal 2013, and these shares were cancelled and retired accordingly.
In addition to the above, on December 3, 2012, Mr. Buettgen received a one-time make-whole equity award which was comprised of approximately 179,000 service-based restricted shares and 253,000 service-based stock options. The restricted shares cliff vest 2.5 years following the grant date and the stock options vest in three equal annual installments following the date of grant.
Finally, on that same date, Mr. Buettgen received a one-time high-performance and inducement award which was comprised of approximately 250,000 service-based restricted shares, 250,000 service-based stock options, and 250,000 market-based stock options. The restricted shares cliff vest 2.5 years following the grant date and the service-based stock options vest in three equal annual installments following the date of grant. The market-based stock options will cliff vest if and when the Company’s stock price appreciates to $14 per share for a period of 20 consecutive days within Mr. Buettgen’s first three years of employment.
Stock Options
The following table summarizes our stock option activity under these stock option plans (Options and Aggregate Intrinsic Value are in thousands):
|
|
Stock Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted Average
Remaining Contractual
Term (years)
|
|
|
Aggregate
Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 31, 2011
|
|
|
3,239
|
|
|
$
|
13.10
|
|
|
|
|
|
|
|
|
|
|
253
|
|
|
|
7.87
|
|
|
|
|
|
|
|
Exercised
|
|
|
(61
|
)
|
|
|
5.82
|
|
|
|
|
|
|
|
|
|
|
(715
|
)
|
|
|
28.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,716
|
|
|
$
|
8.79
|
|
|
|
|
|
|
|
Granted
|
|
|
503
|
|
|
|
7.81
|
|
|
|
|
|
|
|
|
|
|
(591
|
)
|
|
|
6.93
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(717
|
)
|
|
|
11.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 4, 2013
|
|
|
1,911
|
|
|
$
|
8.27
|
|
|
|
|
|
|
|
Granted
|
|
|
601
|
|
|
|
9.34
|
|
|
|
|
|
|
|
Exercised
|
|
|
(244
|
)
|
|
|
6.45
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(315
|
)
|
|
|
9.29
|
|
|
|
|
|
|
|
Balance at June 3, 2014
|
|
|
1,953
|
|
|
$
|
8.66
|
|
|
|
4.60
|
|
|
$
|
89
|
|
Exercisable
|
|
|
1,110
|
|
|
$
|
8.61
|
|
|
|
3.62
|
|
|
$
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market-based vesting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 5, 2012
|
|
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
250
|
|
|
|
7.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 4, 2013
|
|
|
250
|
|
|
$
|
7.81
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
570
|
|
|
|
9.34
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(85
|
)
|
|
|
9.34
|
|
|
|
|
|
|
|
|
|
Balance at June 3, 2014
|
|
|
735
|
|
|
$
|
8.82
|
|
|
|
5.93
|
|
|
$
|
–
|
|
Exercisable
|
|
|
–
|
|
|
$
|
–
|
|
|
|
–
|
|
|
$
|
–
|
|
The aggregate intrinsic value represents the closing stock price as of June 3, 2014 less the strike price, multiplied by the number of stock options that have a strike price that is less than that closing stock price. The total intrinsic value of stock options exercised during fiscal 2014, 2013, and 2012 was $0.7 million, $1.0 million, and $0.1 million, respectively.
At June 3, 2014, there was approximately $2.5 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. The total fair value at grant date of awards vested during fiscal 2014, 2013, and 2012 totaled $1.0 million, $2.2 million, and $5.5 million, respectively.
During fiscal 2014 and 2012, we granted 601,000 and 253,000 stock options, respectively, to certain employees under the terms of the SIP and 1996 SIP. The stock options awarded in those fiscal years vest in equal annual installments over a three-year period following grant of the award, and have a maximum life of seven years. There are no performance-based vesting requirements associated with these stock options. These stock options do provide for immediate vesting if the optionee retires during the option period. For employees meeting this criterion at the time of grant, the accelerated vesting provision renders the requisite service condition non-substantive and we therefore fully expense the fair value of stock options awarded to retirement-eligible employees on the date of grant. As a result, we recorded expense during the first quarter of fiscal 2012 of $1.2 million related to stock options awarded to our former CEO.
Also during fiscal 2014, we granted 570,000 market-based stock options to certain employees under the terms of the SIP. The stock options vest if a share of our common stock appreciates to $14 per share or more for a period of 20 consecutive trading days on or before December 3, 2015. The stock options have a maximum life of seven years.
The weighted average Black-Scholes grant date fair value for options awarded during fiscal 2014, 2013, and 2012 was $4.43, $4.37, and $4.60 per share, respectively. The grant date fair values of unvested stock options are amortized over the respective vesting period of the awards unless a recipient becomes retirement eligible during the vesting period. For retirement eligible individuals, the grant date fair value of the award is amortized from the period of the date of grant through the date upon which the individual becomes retirement eligible. Our former CEO was the only recipient of stock option awards during fiscal 2012. The weighted average assumptions used in our Black-Scholes option-pricing model are as follows:
|
2014
|
2013
|
2012
|
Risk-free interest rate
|
1.17%
|
0.62%
|
0.80%
|
Expected dividend yield
|
0%
|
0%
|
0%
|
Expected stock price volatility
|
58.03%
|
71.84%
|
75.63%
|
Expected life (in years)
|
4.50
|
4.50
|
4.50
|
As previously mentioned, we awarded 570,000 market-based stock options to certain employees during fiscal 2014 and 250,000 market-based stock options to our CEO during fiscal 2013. We estimated the grant date fair value of these awards at $2.42 and $2.14 per share, respectively, using the Monte-Carlo simulation model. The primary assumptions used in our Monte-Carlo simulation model are as follows:
|
2014
|
2013
|
Risk-free interest rate
|
0.45%
|
0.34%
|
Expected dividend yield
|
0%
|
0%
|
Expected stock price volatility
|
42.86%
|
46.71%
|
Expected life (in years)
|
2.40
|
1.52
|
Restricted Stock
The following table summarizes the status of our restricted stock activity (in thousands, except per-share data):
|
|
2014
|
|
2013
|
2012
|
|
|
Shares
|
Weighted
Average
Fair Value
|
Shares
|
Weighted
Average
Fair Value
|
Shares
|
Weighted
Average
Fair Value
|
|
Performance-Based Vesting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at beginning of year
|
356
|
|
$
|
7.06
|
423
|
|
$
|
7.75
|
299
|
|
$
|
7.24
|
|
Granted
|
–
|
|
|
–
|
344
|
|
|
6.99
|
384
|
|
|
7.87
|
|
Vested
|
(18
|
)
|
|
7.87
|
(89)
|
|
|
7.31
|
(260)
|
|
|
7.33
|
|
Forfeited
|
(270
|
)
|
|
6.81
|
(322)
|
|
|
7.82
|
–
|
|
|
–
|
|
Unvested at end of year
|
68
|
|
$
|
7.81
|
356
|
|
$
|
7.06
|
423
|
|
$
|
7.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service-Based Vesting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at beginning of year
|
1,136
|
|
$
|
7.92
|
797
|
|
$
|
8.37
|
551
|
|
$
|
8.22
|
|
Granted
|
423
|
|
|
8.83
|
795
|
|
|
7.47
|
495
|
|
|
8.30
|
|
Vested
|
(411
|
)
|
|
8.10
|
(340)
|
|
|
7.56
|
(248)
|
|
|
7.89
|
|
Forfeited
|
(140
|
)
|
|
8.76
|
(116)
|
|
|
8.92
|
(1)
|
|
|
9.39
|
|
Unvested at end of year
|
1,008
|
|
$
|
8.11
|
1,136
|
|
$
|
7.92
|
797
|
|
$
|
8.37
|
|
The fair value of restricted share awards is based on the closing price of our common stock at the time of grant. At June 3, 2014, unrecognized compensation expense related to restricted stock grants expected to vest totaled $3.8 million and will be recognized over a weighted-average vesting period of 1.2 years.
During the first quarter of fiscal 2014, we granted 344,000 shares of service-based restricted stock to certain employees under the terms of the SIP and 1996 SIP, 186,000 of which will cliff vest 2.5 years following the grant date and 158,000 of which will vest in three equal installments over a three-year period following the date of grant.
During fiscal 2013 and 2012, we granted 213,000 and 186,000 service-based restricted shares, respectively, and 242,000 and 384,000 performance-based restricted shares, respectively, of our common stock to certain employees under the terms of the SIP and 1996 SIP. The service-based restricted shares cliff vest approximately 2.5 years following the grant date. Vesting of the performance-based restricted shares was also contingent upon the Company’s achievement of certain performance conditions related to fiscal 2013 and 2012, which was measured in the first quarters of fiscal 2014 and 2013, respectively. In addition to satisfaction of the performance conditions, recipients must satisfy the same service condition as is required for the service-based restricted shares.
The Executive Compensation Committee of the Board of Directors determined during the first quarters of fiscal 2014 and 2013 that the performance conditions were not achieved for 269,000 and 314,000 shares of performance-based restricted stock granted in fiscal 2013 and 2012, respectively. As a result, the restricted shares were cancelled and returned to the pool of shares available for grant under the SIP and 1996 SIP.
During the fourth quarter of fiscal 2012, we granted 221,000 service-based restricted shares of our common stock to certain employees under the terms of the SIP. The shares vest in three equal installments over periods ranging from the grant date through October 2017.
During fiscal 2014, 2013, and 2012, we granted 60,000, 63,000, and 88,000 restricted shares, respectively, to non-employee directors. The shares cliff vest over a one year period following the grant of the award.
As discussed further in Note 10 to the Consolidated Financial Statements, our former Executive Vice President, Chief Operations Officer, Senior Vice President, Chief People Officer, and other management personnel left the Company during the first three quarters of fiscal 2014. Several of these individuals held share-based compensation awards at the times of their separations, and these awards were either vested or forfeited in accordance with the terms of the original awards.
Included within share-based compensation expense for fiscal 2014 were charges of $0.3 million representing the incremental costs resulting from accelerated vesting, net of forfeitures.
13. Segment Reporting
Our President and Chief Executive Officer, who is our CODM, with the assistance of our senior management, reviews discrete financial information for both the Ruby Tuesday and Lime Fresh restaurant concepts to assess performance and allocate resources. We consider the Ruby Tuesday and Lime Fresh concepts to be our reportable segments as we do not believe they have similar economic and other characteristics to be aggregated into a single reportable segment. Financial results by reportable segment for fiscal 2014, 2013, and 2012 are as follows (in thousands):
|
|
Fiscal Year
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Ruby Tuesday concept
|
|
$
|
1,147,348
|
|
|
$
|
1,234,730
|
|
|
$
|
1,308,385
|
|
Lime Fresh concept
|
|
|
21,398
|
|
|
|
16,757
|
|
|
|
3,378
|
|
Total revenues
|
|
$
|
1,168,746
|
|
|
$
|
1,251,487
|
|
|
$
|
1,311,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ruby Tuesday concept
|
|
$
|
69,543
|
|
|
$
|
111,367
|
|
|
$
|
123,517
|
|
Lime Fresh concept
|
|
|
(6,070
|
)
|
|
|
(10,204
|
)
|
|
|
(1,954
|
)
|
Total segment profit
|
|
$
|
63,473
|
|
|
$
|
101,163
|
|
|
$
|
121,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ruby Tuesday concept
|
|
$
|
51,219
|
|
|
$
|
57,900
|
|
|
$
|
63,798
|
|
Lime Fresh concept
|
|
|
1,259
|
|
|
|
2,196
|
|
|
|
366
|
|
Support center and other
|
|
|
2,350
|
|
|
|
2,302
|
|
|
|
2,294
|
|
Total depreciation and amortization
|
|
$
|
54,828
|
|
|
$
|
62,398
|
|
|
$
|
66,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ruby Tuesday concept
|
|
$
|
24,553
|
|
|
$
|
22,609
|
|
|
$
|
23,421
|
|
Lime Fresh concept
|
|
|
2,742
|
|
|
|
10,036
|
|
|
|
6,675
|
|
Support center and other
|
|
|
1,044
|
|
|
|
4,472
|
|
|
|
7,870
|
|
Total capital expenditures
|
|
$
|
28,339
|
|
|
$
|
37,117
|
|
|
$
|
37,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ruby Tuesday concept
|
|
$
|
824,293
|
|
|
$
|
893,750
|
|
|
$
|
978,473
|
|
Lime Fresh concept
|
|
|
15,203
|
|
|
|
18,943
|
|
|
|
31,491
|
|
Support center and other
|
|
|
116,931
|
|
|
|
130,490
|
|
|
|
163,573
|
|
Total assets
|
|
$
|
956,427
|
|
|
$
|
1,043,183
|
|
|
$
|
1,173,537
|
|
The following is a reconciliation of segment profit to loss from continuing operations before taxes for fiscal 2014, 2013, and 2012 (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Segment profit
|
|
$
|
63,473
|
|
|
$
|
101,163
|
|
|
$
|
121,563
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
(54,828
|
)
|
|
|
(62,398
|
)
|
|
|
(66,458
|
)
|
Unallocated general and administrative expenses
|
|
|
(47,946
|
)
|
|
|
(18,026
|
)
|
|
|
(22,069
|
)
|
Preopening expenses
|
|
|
(395
|
)
|
|
|
(761
|
)
|
|
|
(556
|
)
|
Goodwill and trademark impairments
|
|
|
(855
|
)
|
|
|
(14,058
|
)
|
|
|
(16,919
|
)
|
Interest expense, net
|
|
|
(24,945
|
)
|
|
|
(26,576
|
)
|
|
|
(23,312
|
)
|
Other expense, net
|
|
|
(4,079
|
)
|
|
|
(1,278
|
)
|
|
|
(875
|
)
|
Loss from continuing operations before income taxes
|
|
$
|
(69,575
|
)
|
|
$
|
(21,934
|
)
|
|
$
|
(8,626
|
)
|
14. 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 operations, financial position, or cash flows.
On April 17, 2012, a wage and hour case styled
Guttentag, et al vs. Ruby Tuesday, Inc.
was filed in the United States District Court, Southern District of New York. The named plaintiffs, and five additional former employees who have joined the suit as opt-in plaintiffs, alleged that the Company violated the Fair Labor Standards Act and state wage and hour laws in New York and Florida. Plaintiffs filed their motion for conditional certification on March 8, 2013, which sought a nationwide putative class of all current and former servers, bartenders, and food runners who worked for the Company for the three-year period prior to the filing of the lawsuit. On June 11, 2013, the court entered an order granting conditional certification of the nationwide class requested by plaintiffs, but for the time frame of June 11, 2010 to the present. Notice of the lawsuit and the right to opt-in was mailed to the putative class members in November 2013, and approximately 5%, or about 4,166 of the putative class members, filed consents to opt-in. The parties have been engaged in mediation and recently reached a preliminary settlement agreement that, if approved by the court, will resolve the lawsuit and result in its dismissal with prejudice. The total settlement sum is $3.0 million, and would cover the claims of all plaintiffs, including plaintiffs’ claims for costs and attorneys’ fees. Accordingly, included within Accrued liabilities – Rent and other in our June 3, 2014 Consolidated Balance Sheet is a $3.0 million accrual in connection with this case. While the settlement agreement is final, the approval process requires that all plaintiffs be notified and be given the opportunity to opt-out of the case. Once that process is completed, the parties will then ask the court to approve the settlement. The process will likely take several more months.
Insurance Programs
We are currently self-insured for a portion of our expected workers’ compensation, employment practices liability, general liability, and automobile liability losses (collectively, “casualty losses”) as well as property losses and certain other insurable risks. To mitigate the cost of our exposures for certain property and casualty losses, we make annual decisions to either retain the risks of loss up to a certain maximum per occurrence, aggregate loss limits negotiated with our insurance carriers, or fully insure those risks. We are also self-insured for healthcare claims for eligible participating employees subject to certain deductibles and limitations. We have accounted for our retained liabilities for casualty losses and healthcare claims, including reported and incurred but not reported claims, based on information provided by third-party actuaries. At June 3, 2014, we were committed under letters of credit totaling $12.4 million issued primarily in connection with our workers’ compensation and casualty insurance programs.
Purchase Commitments
We have minimum purchase commitments with various vendors.
Outstanding commitments as of June 3, 2014 were approximately $60.6 million. These obligations consist of supplies, advertising, utility contracts, and various types of meat, beverages, and other food products, which are an integral part of our business operations.
15. 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
|
|
June 3, 2014
|
|
June 4, 2013
|
|
Deferred compensation plan: other investments – Assets
|
1
|
|
$
|
8,930
|
|
$
|
8,721
|
|
Deferred compensation plan: other investments – Liabilities
|
1
|
|
|
(8,930
|
)
|
|
(8,721
|
)
|
Deferred compensation plan: RTI common stock – Equity
|
1
|
|
|
622
|
|
|
1,094
|
|
Deferred compensation plan: RTI common stock – Equity
|
1
|
|
|
(622
|
)
|
|
(1,094
|
)
|
Total
|
|
|
|
$
|
–
|
|
$
|
–
|
|
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 Selling, general, and administrative expense, net in the Consolidated Financial Statements.
The following table presents the fair values for those assets and liabilities measured on a non-recurring basis and remaining on our Consolidated Balance Sheets as of June 3, 2014 and June 4, 2013 (in thousands):
|
Fair Value Measurements
|
|
|
Level
|
|
June 3, 2014
|
|
June 4, 2013
|
|
Long-lived assets held for sale *
|
2
|
|
$
|
23,035
|
|
$
|
24,006
|
|
Long-lived assets held for use
|
2
|
|
|
8,882
|
|
|
5,802
|
|
Total
|
|
|
|
$
|
31,917
|
|
$
|
29,808
|
|
* Included in the carrying value of long-lived assets held for sale as of June 3, 2014 and June 4, 2013 are $18.4 million and $14.8 million, respectively, of assets included in Construction in progress and other in the Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months.
The following table presents the losses recognized during the fiscal years ended June 3, 2014, June 4, 2013, and June 5, 2012 resulting from fair value measurements of assets and liabilities measured on a non-recurring basis. The losses associated with continuing operations are included in Closures and impairments, net and Goodwill and trademark impairments, and the losses associated with discontinued operations are included in Loss from discontinued operations in our Consolidated Statements of Operations and Comprehensive Loss (in thousands):
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
Included within continuing operations
|
|
|
|
|
|
|
|
|
|
Long-lived assets held for sale
|
|
$
|
872
|
|
|
$
|
3,556
|
|
|
$
|
891
|
|
Long-lived assets held for use
|
|
|
24,319
|
|
|
|
12,804
|
|
|
|
11,349
|
|
|
|
$
|
25,191
|
|
|
$
|
16,360
|
|
|
$
|
12,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within discontinued operations
|
|
$
|
177
|
|
|
$
|
18,842
|
|
|
$
|
1,393
|
|
Long-lived assets held for sale are valued using Level 2 inputs, primarily from information obtained through broker listings and 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 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. Included within discontinued operations in the table above are charges related to restaurants that were impaired as a result of the closing of 13 Marlin & Ray’s restaurants, two Truffles restaurants, and one Wok Hay restaurant during fiscal 2013.
The Level 2 fair values of our long-lived assets held for use are based on broker estimates of the value of the land, building, leasehold improvements, and other residual assets.
Our financial instruments at June 3, 2014 and June 4, 2013 consisted of cash and cash equivalents, accounts receivable and payable, long-term debt, and letters of credit. The fair values of cash and cash equivalents and accounts receivable and payable approximated their carrying values because of the short-term nature of these instruments. The carrying amounts and fair values of our other financial instruments not measured on a recurring basis using fair value, that are subject to fair value disclosures are as follows (in thousands):
|
|
June 3, 2014
|
|
|
June 4, 2013
|
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
Long-term debt and capital leases
|
|
$
|
258,691
|
|
|
$
|
263,526
|
|
|
$
|
299,002
|
|
|
$
|
310,441
|
|
Letters of credit
|
|
|
–
|
|
|
|
405
|
|
|
|
–
|
|
|
|
270
|
|
We estimated the fair value of debt and letters of credit using market quotes and present value calculations based on market rates.
16. Supplemental Condensed Consolidating Financial Statements
As discussed in Note 8 to the Consolidated Financial Statements, the Senior Notes are a liability of Ruby Tuesday, Inc. (the “Parent”) and are guaranteed on a senior unsecured basis by our existing and future domestic restricted subsidiaries, subject to certain exceptions (the “Guarantors”). Each of the Guarantors is wholly-owned by Ruby Tuesday, Inc. None of the few remaining subsidiaries of Ruby Tuesday, Inc., which were primarily created to hold liquor license assets, guarantee the Senior Notes (the “Non-Guarantors”). Our Non-Guarantor subsidiaries are immaterial and are aggregated within the Parent information disclosed below.
The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(f) of Regulation S-X promulgated by the Securities and Exchange Commission, presents the condensed consolidating financial information separately for the Parent, the Guarantors, and elimination entries necessary to consolidate the Parent and Guarantors. Investments in wholly-owned subsidiaries are accounted for using the equity method for purposes of the consolidated presentation. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.
Index
Condensed Consolidating Balance Sheet
As of June 3, 2014
(In thousands)
|
|
Parent
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
51,012
|
|
|
$
|
314
|
|
|
$
|
–
|
|
|
$
|
51,326
|
|
|
|
|
1,725
|
|
|
|
3,136
|
|
|
|
–
|
|
|
|
4,861
|
|
Inventories
|
|
|
15,114
|
|
|
|
6,060
|
|
|
|
–
|
|
|
|
21,174
|
|
|
|
|
138,524
|
|
|
|
–
|
|
|
|
(136,391
|
)
|
|
|
2,133
|
|
Deferred income taxes
|
|
|
(548
|
)
|
|
|
3,945
|
|
|
|
–
|
|
|
|
3,397
|
|
|
|
|
14,610
|
|
|
|
2,289
|
|
|
|
–
|
|
|
|
16,899
|
|
Total current assets
|
|
|
220,437
|
|
|
|
15,744
|
|
|
|
(136,391
|
)
|
|
|
99,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
587,783
|
|
|
|
207,063
|
|
|
|
–
|
|
|
|
794,846
|
|
Investment in subsidiaries
|
|
|
158,266
|
|
|
|
–
|
|
|
|
(158,266
|
)
|
|
|
–
|
|
Due from/(to) subsidiaries
|
|
|
78,612
|
|
|
|
243,665
|
|
|
|
(322,277
|
)
|
|
|
–
|
|
|
|
|
48,780
|
|
|
|
13,011
|
|
|
|
–
|
|
|
|
61,791
|
|
Total assets
|
|
$
|
1,093,878
|
|
|
$
|
479,483
|
|
|
$
|
(616,934
|
)
|
|
$
|
956,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
20,545
|
|
|
$
|
5,656
|
|
|
$
|
–
|
|
|
$
|
26,201
|
|
Accrued and other current liabilities
|
|
|
46,450
|
|
|
|
36,356
|
|
|
|
–
|
|
|
|
82,806
|
|
Current maturities of long-term debt,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(341
|
)
|
|
|
5,157
|
|
|
|
|
|
|
|
4,816
|
|
Income tax payable
|
|
|
–
|
|
|
|
136,391
|
|
|
|
(136,391
|
)
|
|
|
–
|
|
Total current liabilities
|
|
|
66,654
|
|
|
|
183,560
|
|
|
|
(136,391
|
)
|
|
|
113,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and capital leases,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
less current maturities
|
|
|
213,039
|
|
|
|
40,836
|
|
|
|
–
|
|
|
|
253,875
|
|
|
|
|
(445
|
)
|
|
|
3,945
|
|
|
|
–
|
|
|
|
3,500
|
|
Due to/(from) subsidiaries
|
|
|
243,665
|
|
|
|
78,612
|
|
|
|
(322,277
|
)
|
|
|
–
|
|
Other deferred liabilities
|
|
|
109,756
|
|
|
|
14,264
|
|
|
|
–
|
|
|
|
124,020
|
|
Total liabilities
|
|
|
632,669
|
|
|
|
321,217
|
|
|
|
(458,668
|
)
|
|
|
495,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
614
|
|
|
|
–
|
|
|
|
–
|
|
|
|
614
|
|
Capital in excess of par value
|
|
|
76,269
|
|
|
|
–
|
|
|
|
–
|
|
|
|
76,269
|
|
|
|
|
395,226
|
|
|
|
158,266
|
|
|
|
(158,266
|
)
|
|
|
395,226
|
|
Accumulated other comprehensive loss
|
|
|
(10,900
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(10,900
|
)
|
Total shareholders’ equity
|
|
|
461,209
|
|
|
|
158,266
|
|
|
|
(158,266
|
)
|
|
|
461,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities & shareholders’ equity
|
|
$
|
1,093,878
|
|
|
$
|
479,483
|
|
|
$
|
(616,934
|
)
|
|
$
|
956,427
|
|
Condensed Consolidating Balance Sheet
As of June 4, 2013
(In thousands)
|
|
Parent
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
52,635
|
|
|
$
|
272
|
|
|
$
|
–
|
|
|
$
|
52,907
|
|
|
|
|
1,854
|
|
|
|
2,980
|
|
|
|
–
|
|
|
|
4,834
|
|
Inventories
|
|
|
21,961
|
|
|
|
8,911
|
|
|
|
–
|
|
|
|
30,872
|
|
|
|
|
118,329
|
|
|
|
–
|
|
|
|
(116,429
|
)
|
|
|
1,900
|
|
Deferred income taxes
|
|
|
5,372
|
|
|
|
1,924
|
|
|
|
–
|
|
|
|
7,296
|
|
|
|
|
19,519
|
|
|
|
3,836
|
|
|
|
–
|
|
|
|
23,355
|
|
Total current assets
|
|
|
219,670
|
|
|
|
17,923
|
|
|
|
(116,429
|
)
|
|
|
121,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
635,478
|
|
|
|
224,352
|
|
|
|
–
|
|
|
|
859,830
|
|
Investment in subsidiaries
|
|
|
167,887
|
|
|
|
–
|
|
|
|
(167,887
|
)
|
|
|
–
|
|
Due from/(to) subsidiaries
|
|
|
76,485
|
|
|
|
230,583
|
|
|
|
(307,068
|
)
|
|
|
–
|
|
|
|
|
46,812
|
|
|
|
15,377
|
|
|
|
–
|
|
|
|
62,189
|
|
Total assets
|
|
$
|
1,146,332
|
|
|
$
|
488,235
|
|
|
$
|
(591,384
|
)
|
|
$
|
1,043,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
11,725
|
|
|
$
|
3,239
|
|
|
$
|
–
|
|
|
$
|
14,964
|
|
Accrued and other current liabilities
|
|
|
47,775
|
|
|
|
34,406
|
|
|
|
–
|
|
|
|
82,181
|
|
Current maturities of long-term debt,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(347
|
)
|
|
|
8,834
|
|
|
|
|
|
|
|
8,487
|
|
Income tax payable
|
|
|
–
|
|
|
|
116,429
|
|
|
|
(116,429
|
)
|
|
|
–
|
|
Total current liabilities
|
|
|
59,153
|
|
|
|
162,908
|
|
|
|
(116,429
|
)
|
|
|
105,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and capital leases,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
less current maturities
|
|
|
232,462
|
|
|
|
58,053
|
|
|
|
–
|
|
|
|
290,515
|
|
|
|
|
(1,070
|
)
|
|
|
6,823
|
|
|
|
–
|
|
|
|
5,753
|
|
Due to/(from) subsidiaries
|
|
|
230,583
|
|
|
|
76,485
|
|
|
|
(307,068
|
)
|
|
|
–
|
|
Other deferred liabilities
|
|
|
108,369
|
|
|
|
16,079
|
|
|
|
–
|
|
|
|
124,448
|
|
Total liabilities
|
|
|
629,497
|
|
|
|
320,348
|
|
|
|
(423,497
|
)
|
|
|
526,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
612
|
|
|
|
–
|
|
|
|
–
|
|
|
|
612
|
|
Capital in excess of par value
|
|
|
67,596
|
|
|
|
–
|
|
|
|
–
|
|
|
|
67,596
|
|
|
|
|
459,572
|
|
|
|
167,887
|
|
|
|
(167,887
|
)
|
|
|
459,572
|
|
Accumulated other comprehensive loss
|
|
|
(10,945
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(10,945
|
)
|
Total shareholders’ equity
|
|
|
516,835
|
|
|
|
167,887
|
|
|
|
(167,887
|
)
|
|
|
516,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities & shareholders’ equity
|
|
$
|
1,146,332
|
|
|
$
|
488,235
|
|
|
$
|
(591,384
|
)
|
|
$
|
1,043,183
|
|
Condensed Consolidating Statement of Operations and
Comprehensive (Loss)/Income
For the Fiscal Year Ended June 3, 2014
(In thousands)
|
|
Parent
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales and operating revenue
|
|
$
|
842,842
|
|
|
$
|
319,581
|
|
|
$
|
–
|
|
|
$
|
1,162,423
|
|
Franchise revenue
|
|
|
223
|
|
|
|
6,100
|
|
|
|
–
|
|
|
|
6,323
|
|
|
|
|
843,065
|
|
|
|
325,681
|
|
|
|
–
|
|
|
|
1,168,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of merchandise
|
|
|
233,562
|
|
|
|
87,959
|
|
|
|
–
|
|
|
|
321,521
|
|
Payroll and related costs
|
|
|
287,358
|
|
|
|
117,021
|
|
|
|
–
|
|
|
|
404,379
|
|
Other restaurant operating costs
|
|
|
187,055
|
|
|
|
73,392
|
|
|
|
–
|
|
|
|
260,447
|
|
|
|
|
40,188
|
|
|
|
14,640
|
|
|
|
–
|
|
|
|
54,828
|
|
Selling, general, and administrative
|
|
|
87,248
|
|
|
|
49,903
|
|
|
|
–
|
|
|
|
137,151
|
|
Intercompany selling, general, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative allocations
|
|
|
59,257
|
|
|
|
(59,257
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
18,904
|
|
|
|
13,927
|
|
|
|
–
|
|
|
|
32,831
|
|
Trademark impairment
|
|
|
–
|
|
|
|
855
|
|
|
|
–
|
|
|
|
855
|
|
Equity in earnings of subsidiaries
|
|
|
(21,005
|
)
|
|
|
–
|
|
|
|
21,005
|
|
|
|
–
|
|
Interest expense, net
|
|
|
19,978
|
|
|
|
4,967
|
|
|
|
–
|
|
|
|
24,945
|
|
Intercompany interest expense/(income)
|
|
|
13,081
|
|
|
|
(13,081
|
)
|
|
|
–
|
|
|
|
–
|
|
Loss on extinguishment of debt
|
|
|
1,364
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,364
|
|
|
|
|
926,990
|
|
|
|
290,326
|
|
|
|
21,005
|
|
|
|
1,238,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes
|
|
|
(83,925
|
)
|
|
|
35,355
|
|
|
|
(21,005
|
)
|
|
|
(69,575
|
)
|
(Benefit)/provision for income taxes from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
continuing operations
|
|
|
(19,015
|
)
|
|
|
14,350
|
|
|
|
–
|
|
|
|
(4,665
|
)
|
(Loss)/income from continuing operations
|
|
|
(64,910
|
)
|
|
|
21,005
|
|
|
|
(21,005
|
)
|
|
|
(64,910
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
|
564
|
|
|
|
–
|
|
|
|
–
|
|
|
|
564
|
|
Net (loss)/income
|
|
$
|
(64,346
|
)
|
|
$
|
21,005
|
|
|
$
|
(21,005
|
)
|
|
$
|
(64,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability reclassification, net of tax
|
|
|
45
|
|
|
|
–
|
|
|
|
–
|
|
|
|
45
|
|
Total comprehensive (loss)/income
|
|
$
|
(64,301
|
)
|
|
$
|
21,005
|
|
|
$
|
(21,005
|
)
|
|
$
|
(64,301
|
)
|
Condensed Consolidating Statement of Operations and
Comprehensive (Loss)/Income
For the Fiscal Year Ended June 4, 2013
(In thousands)
|
|
Parent
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales and operating revenue
|
|
$
|
904,761
|
|
|
$
|
340,465
|
|
|
$
|
–
|
|
|
$
|
1,245,226
|
|
Franchise revenue
|
|
|
188
|
|
|
|
6,073
|
|
|
|
–
|
|
|
|
6,261
|
|
|
|
|
904,949
|
|
|
|
346,538
|
|
|
|
–
|
|
|
|
1,251,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of merchandise
|
|
|
248,378
|
|
|
|
93,134
|
|
|
|
–
|
|
|
|
341,512
|
|
Payroll and related costs
|
|
|
298,194
|
|
|
|
121,485
|
|
|
|
–
|
|
|
|
419,679
|
|
Other restaurant operating costs
|
|
|
185,224
|
|
|
|
73,790
|
|
|
|
–
|
|
|
|
259,014
|
|
|
|
|
43,541
|
|
|
|
15,581
|
|
|
|
–
|
|
|
|
59,122
|
|
Selling, general, and administrative
|
|
|
91,587
|
|
|
|
47,195
|
|
|
|
–
|
|
|
|
138,782
|
|
Intercompany selling, general, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative allocations
|
|
|
68,466
|
|
|
|
(68,466
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
13,181
|
|
|
|
1,475
|
|
|
|
–
|
|
|
|
14,656
|
|
Goodwill and trademark impairments
|
|
|
9,023
|
|
|
|
5,035
|
|
|
|
–
|
|
|
|
14,058
|
|
Equity in earnings of subsidiaries
|
|
|
(38,485
|
)
|
|
|
–
|
|
|
|
38,485
|
|
|
|
–
|
|
Interest expense, net
|
|
|
20,920
|
|
|
|
5,656
|
|
|
|
–
|
|
|
|
26,576
|
|
Intercompany interest expense/(income)
|
|
|
13,826
|
|
|
|
(13,826
|
)
|
|
|
–
|
|
|
|
–
|
|
Loss on extinguishment of debt
|
|
|
22
|
|
|
|
–
|
|
|
|
–
|
|
|
|
22
|
|
|
|
|
953,877
|
|
|
|
281,059
|
|
|
|
38,485
|
|
|
|
1,273,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
before income taxes
|
|
|
(48,928
|
)
|
|
|
65,479
|
|
|
|
(38,485
|
)
|
|
|
(21,934
|
)
|
Provision/(benefit) for income taxes from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
continuing operations
|
|
|
(25,494
|
)
|
|
|
26,994
|
|
|
|
–
|
|
|
|
1,500
|
|
(Loss)/income from continuing operations
|
|
|
(23,434
|
)
|
|
|
38,485
|
|
|
|
(38,485
|
)
|
|
|
(23,434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(15,979
|
)
|
|
|
(810
|
)
|
|
|
810
|
|
|
|
(15,979
|
)
|
Net (loss)/income
|
|
$
|
(39,413
|
)
|
|
$
|
37,675
|
|
|
$
|
(37,675
|
)
|
|
$
|
(39,413
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability reclassification, net of tax
|
|
|
3,312
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,312
|
|
Total comprehensive (loss)/income
|
|
$
|
(36,101
|
)
|
|
$
|
37,675
|
|
|
$
|
(37,675
|
)
|
|
$
|
(36,101
|
)
|
Condensed Consolidating Statement of Operations and
Comprehensive (Loss)/Income
For the Fiscal Year Ended June 5, 2012
(In thousands)
|
|
Parent
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant sales and operating revenue
|
|
$
|
944,501
|
|
|
$
|
361,524
|
|
|
$
|
–
|
|
|
$
|
1,306,025
|
|
Franchise revenue
|
|
|
216
|
|
|
|
5,522
|
|
|
|
–
|
|
|
|
5,738
|
|
|
|
|
944,717
|
|
|
|
367,046
|
|
|
|
–
|
|
|
|
1,311,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of merchandise
|
|
|
271,559
|
|
|
|
104,014
|
|
|
|
–
|
|
|
|
375,573
|
|
Payroll and related costs
|
|
|
309,854
|
|
|
|
130,899
|
|
|
|
–
|
|
|
|
440,753
|
|
Other restaurant operating costs
|
|
|
186,754
|
|
|
|
75,819
|
|
|
|
–
|
|
|
|
262,573
|
|
|
|
|
47,475
|
|
|
|
16,669
|
|
|
|
–
|
|
|
|
64,144
|
|
Selling, general, and administrative
|
|
|
79,594
|
|
|
|
40,770
|
|
|
|
–
|
|
|
|
120,364
|
|
Intercompany selling, general, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative allocations
|
|
|
71,670
|
|
|
|
(71,670
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
12,282
|
|
|
|
4,469
|
|
|
|
–
|
|
|
|
16,751
|
|
Goodwill impairment
|
|
|
1,440
|
|
|
|
15,479
|
|
|
|
–
|
|
|
|
16,919
|
|
Equity in earnings of subsidiaries
|
|
|
(35,905
|
)
|
|
|
–
|
|
|
|
35,905
|
|
|
|
–
|
|
Interest expense, net
|
|
|
13,295
|
|
|
|
10,017
|
|
|
|
–
|
|
|
|
23,312
|
|
Intercompany interest expense/(income)
|
|
|
13,096
|
|
|
|
(13,096
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
971,114
|
|
|
|
313,370
|
|
|
|
35,905
|
|
|
|
1,320,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,397
|
)
|
|
|
53,676
|
|
|
|
(35,905
|
)
|
|
|
(8,626
|
)
|
(Benefit)/provision for income taxes from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,923
|
)
|
|
|
17,771
|
|
|
|
–
|
|
|
|
(12,152
|
)
|
Income from continuing operations
|
|
|
3,526
|
|
|
|
35,905
|
|
|
|
(35,905
|
)
|
|
|
3,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(3,714
|
)
|
|
|
(1,392
|
)
|
|
|
1,392
|
|
|
|
(3,714
|
)
|
|
|
$
|
(188
|
)
|
|
$
|
34,513
|
|
|
$
|
(34,513
|
)
|
|
$
|
(188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension liability reclassification, net of tax
|
|
|
(1,205
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,205
|
)
|
Total comprehensive (loss)/income
|
|
$
|
(1,393
|
)
|
|
$
|
34,513
|
|
|
$
|
(34,513
|
)
|
|
$
|
(1,393
|
)
|
Condensed Consolidating Statement of Cash Flows
For the Fiscal Year Ended June 3, 2014
(In thousands)
|
|
|
Parent
|
|
|
|
Guarantors
|
|
|
|
Eliminations
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
5,854
|
|
|
$
|
57,064
|
|
|
$
|
(17,543
|
)
|
|
$
|
45,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(21,132
|
)
|
|
|
(7,207
|
)
|
|
|
–
|
|
|
|
(28,339
|
)
|
Proceeds from sale-leaseback transactions, net
|
|
|
5,637
|
|
|
|
–
|
|
|
|
–
|
|
|
|
5,637
|
|
Proceeds from disposal of assets
|
|
|
14,503
|
|
|
|
1,023
|
|
|
|
–
|
|
|
|
15,526
|
|
Other, net
|
|
|
973
|
|
|
|
–
|
|
|
|
–
|
|
|
|
973
|
|
Net cash used by investing activities
|
|
|
(19
|
)
|
|
|
(6,184
|
)
|
|
|
–
|
|
|
|
(6,203
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt
|
|
|
(20,019
|
)
|
|
|
(20,213
|
)
|
|
|
–
|
|
|
|
(40,232
|
)
|
|
|
|
(579
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(579
|
)
|
Proceeds from exercise of stock options
|
|
|
1,576
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,576
|
|
Payments for debt issuance costs
|
|
|
(1,802
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,802
|
)
|
Excess tax benefits from share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284
|
|
|
|
–
|
|
|
|
–
|
|
|
|
284
|
|
Intercompany transactions
|
|
|
13,082
|
|
|
|
(30,625
|
)
|
|
|
17,543
|
|
|
|
–
|
|
Net cash used by financing activities
|
|
|
(7,458
|
)
|
|
|
(50,838
|
)
|
|
|
17,543
|
|
|
|
(40,753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash and cash equivalents
|
|
|
(1,623
|
)
|
|
|
42
|
|
|
|
–
|
|
|
|
(1,581
|
)
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,635
|
|
|
|
272
|
|
|
|
–
|
|
|
|
52,907
|
|
End of year
|
|
$
|
51,012
|
|
|
$
|
314
|
|
|
$
|
–
|
|
|
$
|
51,326
|
|
Index
Condensed Consolidating Statement of Cash Flows
For the Fiscal Year Ended June 4, 2013
(In thousands)
|
|
|
Parent
|
|
|
|
Guarantors
|
|
|
|
Eliminations
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
34,877
|
|
|
$
|
89,925
|
|
|
$
|
(88,848
|
)
|
|
$
|
35,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(31,531
|
)
|
|
|
(5,586
|
)
|
|
|
–
|
|
|
|
(37,117
|
)
|
Proceeds from sale-leaseback transactions, net
|
|
|
51,765
|
|
|
|
–
|
|
|
|
–
|
|
|
|
51,765
|
|
Proceeds from disposal of assets
|
|
|
4,421
|
|
|
|
2,576
|
|
|
|
–
|
|
|
|
6,997
|
|
Other, net
|
|
|
468
|
|
|
|
–
|
|
|
|
–
|
|
|
|
468
|
|
Net cash used by investing activities
|
|
|
25,123
|
|
|
|
(3,010
|
)
|
|
|
–
|
|
|
|
22,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt
|
|
|
(14,514
|
)
|
|
|
(12,666
|
)
|
|
|
–
|
|
|
|
(27,180
|
)
|
|
|
|
(30,278
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(30,278
|
)
|
Proceeds from exercise of stock options
|
|
|
4,090
|
|
|
|
–
|
|
|
|
–
|
|
|
|
4,090
|
|
Payments for debt issuance costs
|
|
|
(358
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(358
|
)
|
Excess tax benefits from share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
382
|
|
|
|
–
|
|
|
|
–
|
|
|
|
382
|
|
Intercompany transactions
|
|
|
(14,673
|
)
|
|
|
(74,175
|
)
|
|
|
88,848
|
|
|
|
–
|
|
Net cash used by financing activities
|
|
|
(55,351
|
)
|
|
|
(86,841
|
)
|
|
|
88,848
|
|
|
|
(53,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
4,649
|
|
|
|
74
|
|
|
|
–
|
|
|
|
4,723
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,986
|
|
|
|
198
|
|
|
|
–
|
|
|
|
48,184
|
|
End of year
|
|
$
|
52,635
|
|
|
$
|
272
|
|
|
$
|
–
|
|
|
$
|
52,907
|
|
Index
Condensed Consolidating Statement of Cash Flows
For the Fiscal Year Ended June 5, 2012
(In thousands)
|
|
Parent
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
48,516
|
|
|
$
|
105,820
|
|
|
$
|
(42,085
|
)
|
|
$
|
112,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(28,253
|
)
|
|
|
(9,713
|
)
|
|
|
–
|
|
|
|
(37,966
|
)
|
Acquisition of franchise and other entities, net
|
|
|
(24,084
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(24,084
|
)
|
Proceeds from sale-leaseback transactions
|
|
|
21,150
|
|
|
|
–
|
|
|
|
–
|
|
|
|
21,150
|
|
Proceeds from disposal of assets
|
|
|
5,834
|
|
|
|
160
|
|
|
|
–
|
|
|
|
5,994
|
|
Other, net
|
|
|
1,151
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,151
|
|
Net cash used by investing activities
|
|
|
(24,202
|
)
|
|
|
(9,553
|
)
|
|
|
–
|
|
|
|
(33,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of senior unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246,340
|
|
|
|
–
|
|
|
|
|
|
|
|
246,340
|
|
Net payments on revolving credit facility
|
|
|
(177,000
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(177,000
|
)
|
Principal payments on long-term debt
|
|
|
(44,437
|
)
|
|
|
(41,120
|
)
|
|
|
–
|
|
|
|
(85,557
|
)
|
Stock repurchases
|
|
|
(18,441
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(18,441
|
)
|
Payment for debt issuance costs
|
|
|
(5,767
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(5,767
|
)
|
Proceeds from exercise of stock options
|
|
|
355
|
|
|
|
–
|
|
|
|
–
|
|
|
|
355
|
|
Excess tax benefits from share-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation
|
|
|
36
|
|
|
|
–
|
|
|
|
–
|
|
|
|
36
|
|
Intercompany transactions
|
|
|
13,096
|
|
|
|
(55,181
|
)
|
|
|
42,085
|
|
|
|
–
|
|
Net cash provided/(used) by financing activities
|
|
|
14,182
|
|
|
|
(96,301
|
)
|
|
|
42,085
|
|
|
|
(40,034
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(decrease) in cash and cash equivalents
|
|
|
38,496
|
|
|
|
(34
|
)
|
|
|
–
|
|
|
|
38,462
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
9,490
|
|
|
|
232
|
|
|
|
–
|
|
|
|
9,722
|
|
|
|
$
|
47,986
|
|
|
$
|
198
|
|
|
$
|
–
|
|
|
$
|
48,184
|
|
17. Supplemental Quarterly Financial Data (Unaudited)
Quarterly financial results for the years ended June 3, 2014 and June 4, 2013, are summarized below.
(In thousands, except per-share data)
|
|
For the Year Ended June 3, 2014
|
|
|
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
289,674
|
|
|
$
|
276,209
|
|
|
$
|
295,552
|
|
|
$
|
307,311
|
|
|
$
|
1,168,746
|
|
Gross profit*
|
|
$
|
39,469
|
|
|
$
|
35,734
|
|
|
$
|
49,060
|
|
|
$
|
58,136
|
|
|
$
|
182,399
|
|
(Loss)/income from continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations before income taxes
|
|
$
|
(27,052
|
)
|
|
$
|
(36,647
|
)
|
|
$
|
(8,200
|
)
|
|
$
|
2,324
|
|
|
$
|
(69,575
|
)
|
(Benefit)/provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing operations
|
|
|
(5,153
|
)
|
|
|
(1,910
|
)
|
|
|
(807
|
)
|
|
|
3,205
|
|
|
|
(4,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(21,899
|
)
|
|
$
|
(34,737
|
)
|
|
$
|
(7,393
|
)
|
|
$
|
(881
|
)
|
|
$
|
(64,910
|
)
|
(Loss)/income from discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations, net of tax
|
|
|
(343
|
)
|
|
|
354
|
|
|
|
86
|
|
|
|
467
|
|
|
|
564
|
|
Net loss
|
|
$
|
(22,242
|
)
|
|
$
|
(34,383
|
)
|
|
$
|
(7,307
|
)
|
|
$
|
(414
|
)
|
|
$
|
(64,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations **
|
|
$
|
(0.36
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.08
|
)
|
(Loss)/income from discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations **
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.01
|
|
Net loss per share
|
|
$
|
(0.37
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations **
|
|
$
|
(0.36
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.08
|
)
|
(Loss)/income from discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations **
|
|
|
(0.01
|
)
|
|
|
0.01
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.01
|
|
Net loss per share
|
|
$
|
(0.37
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.07
|
)
|
|
|
For the Year Ended June 4, 2013
|
|
|
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
327,923
|
|
|
$
|
300,077
|
|
|
$
|
307,383
|
|
|
$
|
316,104
|
|
|
$
|
1,251,487
|
|
Gross profit*
|
|
$
|
67,014
|
|
|
$
|
50,851
|
|
|
$
|
56,278
|
|
|
$
|
57,139
|
|
|
$
|
231,282
|
|
Income/(loss) from continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations before income taxes
|
|
$
|
1,119
|
|
|
$
|
(10,868
|
)
|
|
$
|
2,701
|
|
|
$
|
(14,886
|
)
|
|
$
|
(21,934
|
)
|
Provision/(benefit) for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from continuing operations
|
|
|
(1,955
|
)
|
|
|
(6,664
|
)
|
|
|
(2,015
|
)
|
|
|
12,134
|
|
|
|
1,500
|
|
Income/(loss) from continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
$
|
3,074
|
|
|
$
|
(4,204
|
)
|
|
$
|
4,716
|
|
|
$
|
(27,020
|
)
|
|
$
|
(23,434
|
)
|
Loss from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of tax
|
|
|
(475
|
)
|
|
|
(10,864
|
)
|
|
|
(2,520
|
)
|
|
|
(2,120
|
)
|
|
|
(15,979
|
)
|
Net income/(loss)
|
|
$
|
2,599
|
|
|
$
|
(15,068
|
)
|
|
$
|
2,196
|
|
|
$
|
(29,140
|
)
|
|
$
|
(39,413
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
$
|
0.05
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.44
|
)
|
|
$
|
(0.38
|
)
|
Loss from discontinued operations
|
|
|
(0.01
|
)
|
|
|
(0.17
|
)
|
|
|
(0.04
|
)
|
|
|
(0.05
|
)
|
|
|
(0.27
|
)
|
Net earnings/(loss) per share
|
|
$
|
0.04
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.49
|
)
|
|
$
|
(0.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings/(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from continuing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
$
|
0.05
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.44
|
)
|
|
$
|
(0.38
|
)
|
Loss from discontinued operations
|
|
|
(0.01
|
)
|
|
|
(0.17
|
)
|
|
|
(0.04
|
)
|
|
|
(0.05
|
)
|
|
|
(0.27
|
)
|
Net earnings/(loss) per share
|
|
$
|
0.04
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.49
|
)
|
|
$
|
(0.65
|
)
|
* We define gross profit as revenue less cost of merchandise, payroll and related costs, and other restaurant operating costs.
** The sum of the quarterly amounts do not equal the reported annual amount as each is computed independently based upon the weighted-average number of shares outstanding for the period.
18. Subsequent Events
Change in Chief Financial Officer
On June 26, 2014, Michael O. Moore stepped down as our Chief Financial Officer. On the same date, our then Senior Vice President, Finance, Jill M. Golder, was appointed Executive Vice President, Chief Financial Officer.
Share-based compensation awards
On August 4
, 2014, the Executive Compensation and Human Resources Committee of the Board of Directors approved the grant of approximately
810,000 service-based stock options and 382,000 service-based restricted shares under the terms of the SIP and 1996 SIP. The service-based stock options vest in three equal annual installments following the date of grant and the restricted shares cliff vest 2.5 years following the grant date.
Index