Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: March 3, 2015

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to _________

Commission file number 1-12454

______________

RUBY TUESDAY, INC.

(Exact name of registrant as specified in its charter)

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

150 West Church Avenue, Maryville, Tennessee 37801

(Address of principal executive offices) (Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer x

Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

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

	62,075,421
(Number of shares of common stock, $0.01 par value, outstanding as of April 7, 2015)

RUBY TUESDAY, INC.

INDEX

	Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
MARCH 3, 2015 AND JUNE 3, 2014	4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS FOR THE THIRTEEN AND THIRTY-NINE
WEEKS ENDED MARCH 3, 2015 AND MARCH 4, 2014	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED MARCH 3, 2015 AND
MARCH 4, 2014	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS	7-30
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS	31-49
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK	49
ITEM 4. CONTROLS AND PROCEDURES	49
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	50
ITEM 1A. RISK FACTORS	50
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	50
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	51
ITEM 4. MINE SAFETY DISCLOSURES	51
ITEM 5. OTHER INFORMATION	51
ITEM 6. EXHIBITS	51
SIGNATURES	52

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Special Note Regarding Forward-Looking Information

This Quarterly Report on Form 10-Q contains various forward-looking statements, which represent our expectations or beliefs concerning future events, including one or more of the following: future financial performance (including our estimates of growth in same-restaurant sales, average sales per restaurant, operating margins, expenses, and other items), future capital expenditures, the effect of strategic initiatives (including statements relating to cost savings initiatives and the benefits of our television marketing), the opening or closing of restaurants by us or our franchisees, sales of our real estate or purchases of new real estate, future borrowings and repayments of debt, availability of financing on terms attractive to the Company, compliance with financial covenants in our debt instruments, payment of dividends, stock and bond repurchases, restaurant acquisitions, and changes in senior management and in the Board of Directors. We caution the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause our actual results to differ materially from those included in the forward-looking statements, including, without limitation, the following:

·	general economic conditions;

·	changes in promotional, couponing and advertising strategies;

·	changes in our customers’ disposable income;

·	consumer spending trends and habits;

·	increased competition in the restaurant market;

·	governmental laws and regulations, including those affecting labor and employee benefit costs, such as further potential increases in state and federally mandated minimum wages, and healthcare reform;

·	the impact of pending litigation;

·	customers’ acceptance of changes in menu items;

·	changes in the availability and cost of capital;

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

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

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

·	significant fluctuations in energy prices;

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

·	our ability to attract and retain qualified managers, franchisees and team members;

·	impact of adoption of new accounting standards;

·	impact of food-borne illnesses resulting from an outbreak at either one of our restaurant concepts or other competing restaurant concepts;

·	effects of actual or threatened future terrorist attacks in the United States; and

·	other risk factors discussed in our Annual Report on Form 10-K for the year ended June 3, 2014 in Part I, Item 1A. Risk Factors.

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PART I — FINANCIAL INFORMATION

ITEM 1.

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

	MARCH 3,			JUNE 3,
	2015			2014

Assets	(NOTE A)
Current assets:
Cash and cash equivalents	$	61,221		$	51,326
Accounts receivable		4,850			4,861
Inventories:
Merchandise		15,002			12,924
China, silver and supplies		7,942			8,250
Income tax receivable		2,366			2,133
Deferred income taxes		361			3,397
Prepaid rent and other expenses		12,808			12,216
Assets held for sale		5,067			4,683
Total current assets		109,617			99,790

Property and equipment, net		761,800			794,846
Other assets		58,470			61,791
Total assets	$	929,887		$	956,427

Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	20,836		$	26,201
Accrued liabilities:
Taxes, other than income and payroll		9,878			11,221
Payroll and related costs		17,729			22,637
Insurance		7,729			5,962
Deferred revenue – gift cards		19,276			16,584
Rent and other		24,872			26,402
Current portion of long-term debt, including capital leases		4,558			4,816
Total current liabilities		104,878			113,823

Long-term debt and capital leases, less current maturities		246,751			253,875
Deferred income taxes		2,770			3,500
Deferred escalating minimum rent		50,126			48,827
Other deferred liabilities		64,464			75,193
Total liabilities		468,989			495,218

Commitments and contingencies (Note N)

Shareholders’ equity:
Common stock, $0.01 par value; (authorized: 100,000 shares;
issued and outstanding: 62,075 shares at 3/03/15;
61,442 shares at 6/03/14)		621			614
Capital in excess of par value		82,038			76,269
Retained earnings		387,749			395,226
Deferred compensation liability payable in Company stock		460			622
Company stock held by Deferred Compensation Plan		(460	)		(622	)
Accumulated other comprehensive loss		(9,510	)		(10,900	)
Total shareholders’ equity		460,898			461,209

Total liabilities & shareholders’ equity	$	929,887		$	956,427

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

-4-

RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(IN THOUSANDS EXCEPT PER-SHARE DATA)

(UNAUDITED)

	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED
		MARCH 3,			MARCH 4,			MARCH 3,			MARCH 4,
		2015			2014			2015			2014
		(NOTE A)						(NOTE A)
Revenue:

Restaurant sales and operating revenue	$	284,392		$	293,964		$	825,055		$	856,775
Franchise revenue		1,521			1,588			4,699			4,660
		285,913			295,552			829,754			861,435
Operating costs and expenses:
Cost of goods sold		77,796			80,980			224,589			238,587
Payroll and related costs		96,680			101,351			286,486			301,601
Other restaurant operating costs		61,528			64,161			181,424			196,984
Depreciation		12,405			13,327			37,601			41,451
Selling, general and administrative, net		28,948			33,340			87,141			107,386
Closures and impairments, net		3,991			3,771			6,548			25,947
Trademark impairment		–			855			–			855
Interest expense, net		5,446			5,967			16,783			19,340
Loss on extinguishment of debt		–			–			–			1,183
		286,794			303,752			840,572			933,334
Loss from continuing operations before
income taxes		(881	)		(8,200	)		(10,818	)		(71,899	)
Benefit for income taxes from continuing
operations		(112	)		(807	)		(3,341	)		(7,870	)
Loss from continuing operations		(769	)		(7,393	)		(7,477	)		(64,029	)

Income from discontinued operations, net of tax		–			86			–			97
Net loss	$	(769	)	$	(7,307	)	$	(7,477	)	$	(63,932	)

Other comprehensive income:
Pension liability reclassification		463			477			1,390			1,432
Total comprehensive loss	$	(306	)	$	(6,830	)	$	(6,087	)	$	(62,500	)

Basic loss per share:
Loss from continuing operations	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)
Income from discontinued operations		–			–			–			–
Net loss per share	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)

Diluted loss per share:
Loss from continuing operations	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)
Income from discontinued operations		–			–			–			–
Net loss per share	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)

Weighted average shares:
Basic		60,643			60,351			60,532			60,191
Diluted		60,643			60,351			60,532			60,191

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

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RUBY TUESDAY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

	THIRTY-NINE WEEKS ENDED
	MARCH 3, 2015			MARCH 4, 2014

	(NOTE A)
Operating activities:
Net loss	$	(7,477	)	$	(63,932	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation		37,601			41,451
Amortization of intangibles		1,718			1,933
Deferred income taxes		(2,736	)		(312	)
Loss on impairments, including disposition of assets		6,755			20,242
Trademark impairment		–			855
Loss on extinguishment of debt		–			1,183
Share-based compensation expense		5,380			5,785
Excess tax benefits from share-based compensation		(37	)		(284	)
Lease reserve adjustments		1,141			4,549
Deferred escalating minimum rent		1,764			2,024
Other, net		1,600			4,009
Changes in operating assets and liabilities:
Receivables		(3	)		(137	)
Inventories		(1,770	)		8,132
Income taxes		(233	)		(2,341	)
Prepaid and other assets		(1,419	)		(204	)
Accounts payable, accrued and other liabilities		(14,857	)		6,201
Net cash provided by operating activities		27,427			29,154

Investing activities:
Purchases of property and equipment		(21,134	)		(22,557	)
Proceeds from sale-leaseback transactions, net		–			5,637
Proceeds from disposal of assets		8,696			10,949
Insurance proceeds from property claims		145			218
Reductions in Deferred Compensation Plan assets		1,243			770
Other, net		790			(146	)
Net cash used by investing activities		(10,260	)		(5,129	)

Financing activities:
Principal payments on long-term debt and capital leases		(7,412	)		(31,981	)
Stock repurchases		(73	)		(579	)
Payments for debt issuance costs		(281	)		(1,758	)
Proceeds from exercise of stock options		457			1,576
Excess tax benefits from share-based compensation		37			284
Net cash used by financing activities		(7,272	)		(32,458	)

Increase/(decrease) in cash and cash equivalents		9,895			(8,433	)
Cash and cash equivalents:
Beginning of year		51,326			52,907
End of quarter	$	61,221		$	44,474

Supplemental disclosure of cash flow information:
Cash paid for:
Interest, net of amount capitalized	$	11,173		$	13,191
Income taxes, net	$	1,721		$	1,513
Significant non-cash investing and financing activities:
Retirement of fully depreciated assets	$	17,510		$	34,090
Reclassification of properties to assets held for sale	$	5,572		$	8,049
Property and equipment purchases included in accounts payable	$	–		$	1,063
Monetization of, and subsequent reinvestment into, life insurance policies	$	6,851		$	7,972

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

-6-

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – BASIS OF PRESENTATION

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we,” and/or “our”), owns and operates Ruby Tuesday® casual dining and Lime Fresh Mexican Grill® (“Lime Fresh”) fast casual restaurants. We also franchise the Ruby Tuesday and Lime Fresh concepts in selected domestic and international markets. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring entries) considered necessary for a fair presentation have been included. The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the 13- and 39-week periods ended March 3, 2015 are not necessarily indicative of results that may be expected for the 52-week year ending June 2, 2015.

The Condensed Consolidated Balance Sheet at June 3, 2014 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP.

For further information, refer to the consolidated financial statements and footnotes thereto included in RTI’s Annual Report on Form 10-K for the fiscal year ended June 3, 2014.

NOTE B – LOSS PER SHARE AND STOCK REPURCHASES

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during each period presented. Diluted loss per share gives effect to stock options and restricted stock outstanding during the applicable periods, if dilutive. The following table reflects the calculation of weighted-average common and dilutive potential common shares outstanding as presented in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data):

	Thirteen weeks ended						Thirty-nine weeks ended
	March 3, 2015			March 4, 2014			March 3, 2015			March 4, 2014
Loss from continuing operations	$	(769	)	$	(7,393	)	$	(7,477	)	$	(64,029	)
Income from discontinued operations, net of tax		–			86			–			97
Net loss	$	(769	)	$	(7,307	)	$	(7,477	)	$	(63,932	)

Weighted-average common
shares outstanding		60,643			60,351			60,532			60,191
Dilutive effect of stock
options and restricted stock		–			–			–			–
Weighted average common
and dilutive potential
common shares outstanding		60,643			60,351			60,532			60,191

Loss per share – Basic
Loss from continuing operations	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)
Income from discontinued operations		–			–			–			–
Net loss per share	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)

Loss per share – Diluted
Loss from continuing operations	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)
Income from discontinued operations		–			–			–			–
Net loss per share	$	(0.01	)	$	(0.12	)	$	(0.12	)	$	(1.06	)

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Stock options with an exercise price greater than the average market price of our common stock and certain options and restricted shares with unrecognized compensation expense do not impact the computation of diluted loss per share because the effect would be anti-dilutive. The following table summarizes stock options and restricted shares that did not impact the computation of diluted loss per share because their inclusion would have had an anti-dilutive effect (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3, 2015		March 4, 2014		March 3, 2015		March 4, 2014
Stock options		3,057*		2,692*		3,087*		2,882*
Restricted shares		1,412*		1,090*		1,350*		1,136*
Total		4,469		3,782		4,437		4,018

*Due to a net loss from continuing operations for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014, all outstanding share-based awards were excluded from the computation of diluted loss per share.

During the 39 weeks ended March 3, 2015, we repurchased an insignificant number of shares of our common stock at a cost of $0.1 million. As of March 3, 2015, the total number of remaining shares authorized by our Board of Directors to be repurchased was 11.8 million. All shares repurchased during the first 39 weeks of fiscal year 2015 were cancelled as of March 3, 2015.

NOTE C – FRANCHISE PROGRAMS

As of March 3, 2015, our domestic and international franchisees collectively operated 79 Ruby Tuesday restaurants and seven Lime Fresh restaurants. We do not own any equity interest in our franchisees.

Under the terms of the franchise operating agreements, we charge a royalty fee (generally 4.0% of monthly gross sales for our Ruby Tuesday concept franchisees and 5.25% of monthly gross sales for our Lime Fresh concept franchisees) and require all domestic franchisees to contribute a percentage, 1.5% as of March 3, 2015, of monthly gross sales to a national advertising fund formed to cover their pro rata portion of the production and airing costs associated with our national advertising campaign. Under the terms of those agreements, we can charge up to 3.0% of monthly gross sales for this national advertising fund.

Advertising amounts received from domestic franchisees are considered by RTI to be reimbursements, recorded on an accrual basis as earned, and have been netted against Selling, general and administrative, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

In addition to the advertising fee discussed above, our Ruby Tuesday concept franchise agreements allow us to charge up to a 2.0% support service fee and a 1.5% marketing and purchasing fee. For the 13 and 39 weeks ended March 3, 2015, we recorded $0.3 million and $1.0 million, respectively, and for the 13 and 39 weeks ended March 4, 2014, we recorded $0.3 million and $0.8 million, respectively, in support service and marketing and purchasing fees, which were an offset to Selling, general and administrative, net in our Condensed Consolidated Statements of Operations and Comprehensive Loss.

NOTE D – DISCONTINUED OPERATIONS

In an effort to focus primarily on the sales turnaround of our core Ruby Tuesday concept and secondly, to improve the financial performance of our Lime Fresh concept, we completed the closure of our Marlin & Ray’s, Wok Hay, and Truffles restaurants during the fourth quarter of fiscal year 2013. We have classified the results of operations of our Company-owned Marlin & Ray’s, Wok Hay, and Truffles concepts as discontinued operations for the 13 and 39 weeks ended March 4, 2014. The results of operations of our discontinued operations are as follows (in thousands):

	Thirteen weeks ended			Thirty-nine weeks ended
	March 4, 2014			March 4, 2014
Restaurant sales and operating revenue	$	–		$	–
Income before income taxes	$	77		$	2
Benefit for income taxes		(9	)		(95	)
Income from discontinued operations	$	86		$	97

-8-

NOTE E – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following (in thousands):

	March 3, 2015		June 3, 2014

Rebates receivable	$	838	$	930
Amounts due from franchisees		1,640		1,281
Third-party gift card sales		1,020		1,636
Other receivables		1,352		1,014
	$	4,850	$	4,861

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 March 3, 2015 and June 3, 2014, Other receivables consisted primarily of amounts due from our distributor ($0.5 million and $0.4 million, respectively), receivables for insurance claims ($0.4 million and $0.1 million, respectively), and sales and other miscellaneous tax refunds ($0.2 million for each period).

NOTE F – INVENTORIES

Our merchandise inventory was $15.0 million and $12.9 million as of March 3, 2015 and June 3, 2014, 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 increase in our merchandise inventory from the end of the prior fiscal year is due primarily to advance purchases of lobster during the second quarter of fiscal year 2015.

NOTE G – PROPERTY, EQUIPMENT, ASSETS HELD FOR SALE, OPERATING LEASES, AND SALE-LEASEBACK TRANSACTIONS

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

	March 3, 2015		June 3, 2014
Land	$	212,073	$	214,277
Buildings		426,761		430,988
Improvements		362,481		365,599
Restaurant equipment		249,373		248,852
Other equipment		87,960		84,876
Surplus properties*		13,538		18,351
Construction in progress and other		3,188		3,895
		1,355,374		1,366,838
Less accumulated depreciation		593,574		571,992
	$	761,800	$	794,846

* Surplus properties represent assets held for sale that are not classified as such in the Condensed Consolidated Balance Sheets as we do not expect to sell these assets within the next 12 months. These assets primarily consist of parcels of land upon which we have no intention to build restaurants, closed properties which include a building, and liquor licenses not needed for operations.

-9-

Included within the current assets section of our Condensed Consolidated Balance Sheets at March 3, 2015 and June 3, 2014 are amounts classified as held for sale totaling $5.1 million and $4.7 million, respectively. Assets held for sale primarily consist of parcels of land upon which we have no intention to build restaurants, land and buildings of closed restaurants, and various liquor licenses. During the 13 and 39 weeks ended March 3, 2015, we sold surplus properties with carrying values of $2.8 million and $7.3 million, respectively, at net gains of $0.2 million and $1.3 million, respectively. Cash proceeds, net of broker fees, from these sales during the 13 and 39 weeks ended March 3, 2015 totaled $3.0 million and $8.6 million, respectively. During the 13 and 39 weeks ended March 4, 2014, we sold surplus properties with carrying values of $1.9 million and $10.1 million, respectively, at net gains of $0.6 million and $0.8 million, respectively. Cash proceeds, net of broker fees, from these sales during the 13 and 39 weeks ended March 4, 2014 totaled $2.5 million and $10.8 million, respectively.

Approximately 55% of our 677 Company-owned restaurants are located on leased properties. Of these, approximately 69% are land leases only; the other 31% 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 39 weeks ended March 4, 2014, we completed sale-leaseback transactions of the land and building for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $5.9 million, exclusive of transaction costs of approximately $0.3 million. Equipment was not included. The carrying value of the properties sold was $4.8 million. The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years following a rent reset based on fair market value at the end of the initial term. Net proceeds from fiscal year 2014’s sale-leaseback transactions were used for general corporate purposes, including debt payments and the repurchase of shares of our common stock.

We realized gains on these sale-leaseback transactions during the 39 weeks ended March 4, 2014 of $0.8 million, 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 was $1.1 million as of each of March 3, 2015 and June 3, 2014, and is included in Accrued liabilities – Rent and other in our Condensed Consolidated Balance Sheets. The long-term portion of the deferred gains on all sale-leaseback transactions was $12.2 million and $13.0 million as of March 3, 2015 and June 3, 2014, respectively, and is included in Other deferred liabilities in our Condensed Consolidated Balance Sheets. Amortization of the deferred gains of $0.3 million and $0.8 million for each of the 13- and 39-week periods ended March 3, 2015 and March 4, 2014, respectively, is included within Other restaurant operating costs in our Condensed Consolidated Statements of Operations and Comprehensive Loss.

NOTE H – LONG-TERM DEBT AND CAPITAL LEASES

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

	March 3, 2015			June 3, 2014

Senior unsecured notes	$	215,000		$	215,000
Unamortized discount		(2,250	)		(2,503	)
Senior unsecured notes less unamortized discount		212,750			212,497
Revolving credit facility		–			–
Mortgage loan obligations		37,845			45,252
Unamortized premium on mortgage loan obligations		519			741
Capital lease obligations		195			201
		251,309			258,691
Less current maturities		4,558			4,816
	$	246,751		$	253,875

-10-

On May 14, 2012, we entered into an indenture (the “Indenture”) among Ruby Tuesday, Inc., certain subsidiaries of the Company as guarantors and Wells Fargo Bank, National Association as trustee, governing the Company’s $250.0 million aggregate principal amount of 7.625% senior notes due 2020 (the “Senior Notes”). The Senior Notes were issued at a discount of $3.7 million, which is being amortized 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 Condensed 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. The Indenture also restricts the declaration and payment of a dividend or other distribution on, and/or repurchase by RTI in respect of, its outstanding common stock at any time and from time to time in an amount not to exceed $50.0 million in the aggregate. These covenants are subject to a number of important exceptions and qualifications, as described in the Indenture, and certain covenants will not apply at any time when the Senior Notes are rated investment grade by the Rating Agencies, as defined in the Indenture. The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately.

On December 3, 2013, we entered into a four-year revolving credit agreement (the “Senior Credit Facility”) under 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.

Under the terms of the Senior Credit Facility, interest rates charged on borrowings can vary depending on the interest rate option we choose to utilize. Our options for the rate are a Base Rate or LIBOR, plus an applicable margin. 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.

-11-

improvements, and fixtures of the 49 restaurants pledged as collateral appraised at $101.4 million at the time of the transaction and have a March 3, 2015 net book value of $79.5 million.

Under the Senior Credit Facility, we had no borrowings outstanding at March 3, 2015. After consideration of letters of credit outstanding, we had $37.5 million available under the Senior Credit Facility as of March 3, 2015.

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. Under the terms of the Senior Credit Facility we are allowed, under certain circumstances, to repurchase up to $20.0 million of the Senior Notes in any fiscal year. We did not repurchase any Senior Notes during the 39 weeks ended March 3, 2015. The balance on the Senior Notes was $215.0 million at March 3, 2015.

In addition, under the Senior Credit Facility, we are required to comply with financial covenants relating to the maintenance of a maximum leverage ratio and a minimum fixed charge coverage ratio. The terms of the Senior Credit Facility require us to maintain a maximum leverage ratio of no more than 4.85 to 1.0 and a minimum fixed charge coverage ratio of 1.35 to 1.0 for the quarter ended March 3, 2015. 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.

We were in compliance with our maximum leverage ratio and our minimum fixed charge coverage ratio as of March 3, 2015.

Our $37.8 million in mortgage loan obligations as of March 3, 2015 consists of various loans acquired upon franchise acquisitions. These loans, which mature between June 2016 and November 2022, have balances which range from $0.2 million to $7.4 million and interest rates of 7.60% to 10.92%. Many of the properties acquired from franchisees collateralize the loans outstanding.

During the 39 weeks ended March 3, 2015, we prepaid and retired three mortgage loan obligations with an aggregate balance of $3.9 million using cash on hand. Additionally, we paid $0.4 million in prepayment premiums in connection with the retirement of these obligations.

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NOTE I – CLOSURES AND IMPAIRMENTS EXPENSE

Closures and impairments expense includes the following for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	March 3, 2015			March 4, 2014			March 3, 2015			March 4, 2014
Closures and impairments from
continuing operations:
Property impairments	$	3,578		$	2,908		$	5,850		$	20,156
Closed restaurant lease reserves		380			257			1,141			4,554
Other closing costs		277			983			905			1,561
Gain on sale of surplus properties		(244	)		(377	)		(1,348	)		(324	)
Closures and impairments, net	$	3,991		$	3,771		$	6,548		$	25,947

Closures and impairments from
discontinued operations				$	(77	)				$	(12	)

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

	Reserve for Lease Obligations
Balance at June 3, 2014	$	10,873
Closing expense including rent and other lease charges		1,141
Payments		(3,682	)
Other		(498	)
Balance at March 3, 2015	$	7,834

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, $7.7 million and $10.5 million are included within the Accrued liabilities – Rent and other caption in our Consolidated Balance Sheets as of March 3, 2015 and June 3, 2014, respectively. 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.

NOTE J – EMPLOYEE POST-EMPLOYMENT BENEFITS

We sponsor three defined benefit pension plans for active employees and offer certain postretirement benefits for retirees. A summary of each of these is presented below.

Retirement Plan

RTI sponsors the Morrison Restaurants Inc. Retirement Plan (the “Retirement Plan”). Effective December 31, 1987, the Retirement Plan was amended so that no additional benefits would accrue and no new participants may enter the Retirement Plan after that date. Participants receive benefits based upon salary and length of service.

Minimum funding for the Retirement Plan is determined in accordance with the guidelines set forth in employee benefit and tax laws. From time to time we may contribute additional amounts as we deem appropriate. We estimate that we will be required to make contributions totaling $0.2 million to the Retirement Plan during the remainder of fiscal year 2015.

Executive Supplemental Pension Plan and Management Retirement Plan

Under these unfunded defined benefit pension plans, eligible employees earn supplemental retirement income based upon salary and length of service, reduced by social security benefits and amounts otherwise receivable under other specified Company retirement plans. Effective June 1, 2001, the Management Retirement Plan was amended so that no additional benefits would accrue and no new participants may enter the plan after that date.

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Included in our Condensed Consolidated Balance Sheets as of March 3, 2015 and June 3, 2014 are amounts within Accrued liabilities: Payroll and related costs of $3.3 million as of both dates and amounts within Other deferred liabilities of $32.2 million and $32.5 million, respectively, relating to our three defined benefit pension plans.

Postretirement Medical and Life Benefits

Our Postretirement Medical and Life Benefits plans provide medical and life insurance benefits to certain retirees. The medical plan requires retiree cost sharing provisions that are more substantial for employees who retire after January 1, 1990.

The following tables detail the components of net periodic benefit costs and the amounts recognized in our Condensed Consolidated Financial Statements for the Retirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the “Pension Plans”) and the Postretirement Medical and Life Benefits plans (in thousands):

	Pension Benefits
	Thirteen weeks ended						Thirty-nine weeks ended
	March 3,			March 4,			March 3,			March 4,
	2015			2014			2015			2014
Service cost	$	75		$	89		$	225		$	267
Interest cost		443			435			1,330			1,303
Expected return on plan assets		(124	)		(111	)		(373	)		(333	)
Recognized actuarial loss		430			427			1,290			1,283
Net periodic benefit cost	$	824		$	840		$	2,472		$	2,520

	Postretirement Medical and Life Benefits
	Thirteen weeks ended						Thirty-nine weeks ended
	March 3,			March 4,			March 3,			March 4,
	2015			2014			2015			2014
Service cost	$	1		$	4		$	3		$	10
Interest cost		12			16			35			50
Amortization of prior service cost (a)		–			(12	)		–			(34	)
Recognized actuarial loss		33			61			100			183
Net periodic benefit cost	$	46		$	69		$	138		$	209

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

During the 13 and 39 weeks ended March 3, 2015 and March 4, 2014, we reclassified recognized actuarial losses and amortized prior service costs out of accumulated other comprehensive loss and into pension expense, which is included in Selling, general and administrative, net within our Condensed Consolidated Statements of Operations and Comprehensive Loss, as follows (in thousands):

	Thirteen weeks ended							Thirty-nine weeks ended
	March 3, 2015			March 4, 2014				March 3, 2015			March 4, 2014
Recognized actuarial loss		$	463		$	489			$	1,390		$	1,466
Amortization of prior service cost			–			(12	)			–			(34	)
Pension liability reclassification		$	463		$	477			$	1,390		$	1,432

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The following table is a rollforward of accumulated other comprehensive loss for the 39 weeks ended March 3, 2015 (in thousands):

	Accumulated Other Comprehensive Loss
Balance at June 3, 2014	$	(10,900	)
Pension liability reclassification		1,390
Balance at March 3, 2015	$	(9,510	)

We also sponsor two defined contribution retirement savings plans. Information regarding these plans is included in our Annual Report on Form 10-K for the fiscal year ended June 3, 2014.

Executive Separations

On June 26, 2014, our then Executive Vice President, Chief Financial Officer stepped down as Chief Financial Officer and subsequently retired from the Company on August 4, 2014. Additionally, our Senior Vice President, Chief Development Officer and Senior Vice President, Chief Legal Officer and Secretary left the Company on July 24, 2014 and December 12, 2014, respectively. During the 39 weeks ended March 3, 2015, we recorded severance expense and made severance payments of $0.3 million in connection with the separation agreements for certain of these former executives.

As of March 3, 2015, liabilities of $0.2 million, representing unpaid obligations in connection with the employee separations, were included within Accrued liabilities: Payroll and related costs in our Condensed Consolidated Balance Sheet. A rollforward of our obligations in connection with employee separations is as follows (in thousands):

Balance at June 3, 2014	$	1,055
Employee severance and unused vacation accruals		1,005
Cash payments		(1,853	)
Balance at March 3, 2015	$	207

See Note L to the Condensed Consolidated Financial Statements for discussion of the impact of executive separations to our share-based employee compensation costs.

NOTE K – INCOME TAXES

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 (“ASU 2013-11”). The guidance requires an entity to present its deferred tax asset for a net operating loss carryforward, similar tax loss, or a tax credit carryforward net of unrecognized tax benefits 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 of an unrecognized tax benefit will still be required in the notes to the financial statements. We adopted ASU 2013-11 on a prospective basis during the first quarter of fiscal year 2015. The adoption of this standard in the first quarter of fiscal year 2015 resulted in a reclassification of $5.0 million of our liability for unrecognized tax benefits against our deferred tax assets.

Under Accounting Standards Codification 740 (“ASC 740”), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period. Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. In this situation, the interim tax rate should be based on the actual year-to-date results. Due to changes in our projections, which have fluctuated as we work through our brand repositioning, a reliable projection of our annual effective rate has been difficult to determine. As such, we recorded a tax provision for the 39 weeks ended March 3, 2015 based on the actual year-to-date results, in accordance with ASC 740.

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.

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Prior to the fourth quarter of fiscal year 2013, we concluded that objective and subjective positive evidence outweighed negative evidence, and it was more likely than not that 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 that is available for use to offset future taxable income. During the fourth quarter of fiscal year 2013, we recorded a valuation allowance following the conclusion that the negative evidence outweighed the positive evidence.

We recorded a tax benefit from continuing operations of $0.1 million and $3.3 million for the 13 and 39 weeks ended March 3, 2015, respectively, compared to a tax benefit from continuing operations of $0.8 million and $7.9 million for the 13 and 39 weeks ended March 4, 2014, respectively. Included in our $3.3 million tax benefit from continuing operations for the 39 weeks ended March 3, 2015 was a benefit of $3.2 million recorded during the first quarter of fiscal year 2015 representing an immaterial prior period correction to our deferred tax asset valuation allowance.

Our valuation allowance for deferred tax assets totaled $60.8 million and $54.6 million as of March 3, 2015 and June 3, 2014, respectively.

We had a gross liability for unrecognized tax benefits, exclusive of accrued interest and penalties, of $3.9 million and $7.0 million as of March 3, 2015 and June 3, 2014, respectively. As of March 3, 2015 and June 3, 2014, the total amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate was $2.2 million and $2.6 million, respectively. The liability for unrecognized tax benefits as of March 3, 2015 includes $0.3 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations and negotiations with tax authorities.

Interest and penalties related to unrecognized tax benefits are recognized as components of income tax expense. As of March 3, 2015 and June 3, 2014, we had accrued $0.4 million and $0.5 million, respectively, for the payment of interest and penalties. During the first 39 weeks of fiscal year 2015, accrued interest and penalties decreased by $0.1 million.

At March 3, 2015, 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 2012.

NOTE L – SHARE-BASED EMPLOYEE COMPENSATION

We compensate our employees and directors using share-based compensation through the following plans:

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

A committee, appointed by the Board of Directors, administers the Ruby Tuesday, Inc. Stock Incentive Plan (“SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees, officers, and non-employee directors to whom share-based incentives are granted and the terms and provisions of share-based incentives. Option grants under the SIP and 1996 SIP can have varying vesting provisions and exercise periods as determined by such committee. A majority of currently outstanding options granted under the SIP and 1996 SIP vest within three years following the date of grant and expire seven years after the date of grant. The SIP and 1996 SIP permit the committee to make awards of shares of common stock, awards of stock options or other derivative securities related to the value of the common stock, and certain cash awards to eligible persons. These discretionary awards may be made on an individual basis or for the benefit of a group of eligible persons. All options awarded under the SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At March 3, 2015, we had reserved a total of 4,350,000 shares of common stock for the SIP and 1996 SIP. Of the reserved shares at March 3, 2015, 2,257,000 were subject to options outstanding. Stock option exercises are settled with the issuance of new shares. Net shares of common stock available for issuance at March 3, 2015 were 2,093,000.

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Stock Options

The following table summarizes the activity in options for the 39 weeks ended March 3, 2015 under these stock option plans (in thousands, except per-share data):

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Service-based vesting:
Balance at June 3, 2014		1,953		$	8.66
Granted		870			5.94
Exercised		(76	)		6.04
Forfeited		(252	)		8.70
Balance at March 3, 2015		2,495		$	7.79		4.59	$	630
Exercisable		1,323		$	8.56		3.36	$	11
Market-based vesting:
Balance at June 3, 2014		735		$	8.82
Forfeited		(220	)		9.34
Balance at March 3, 2015		515		$	8.60		5.09	$	–
Exercisable		–		$	–		–	$	–

At March 3, 2015, there was approximately $2.0 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.

Restricted Stock

The following table summarizes our restricted stock activity for the 39 weeks ended March 3, 2015 (in thousands, except per-share data):

				Weighted-Average
	Restricted			Grant-Date
Performance-based vesting:	Stock			Fair Value
Unvested at June 3, 2014		68		$	7.81
Granted		–			–
Vested		–			–
Forfeited		–			–
Unvested at March 3, 2015		68		$	7.81

				Weighted-Average
	Restricted			Grant-Date
Service-based vesting:	Stock			Fair Value
Unvested at June 3, 2014		1,008		$	8.11
Granted		620			6.03
Vested		(273	)		7.50
Forfeited		(53	)		6.84
Unvested at March 3, 2015		1,302		$	7.30

The fair values of the restricted stock awards reflected above were based on the fair market value of our common stock at the time of grant. At March 3, 2015, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $3.6 million and will be recognized over a weighted average vesting period of approximately 1.4 years.

Included within Selling, general, and administrative, net in our Condensed Consolidated Statements of Operations and Comprehensive Loss is share-based compensation expense of $1.7 million and $5.4 million for the 13 and 39 weeks ended March 3, 2015, respectively, and $1.7 million and $5.8 million for the 13 and 39 weeks ended March 4, 2014, respectively.

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NOTE M – SEGMENT REPORTING

Our President and Chief Executive Officer, who is our chief operating decision maker, with the assistance of our senior management, reviews discrete financial information for both the Ruby Tuesday and Lime Fresh restaurant concepts to assess performance and allocate resources. We consider the Ruby Tuesday and Lime Fresh concepts to be our reportable segments as we do not believe they have similar economic and other characteristics to be aggregated into a single reportable segment. Financial results by reportable segment for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 are as follows (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3, 2015		March 4, 2014		March 3, 2015			March 4, 2014
Revenues:
Ruby Tuesday concept	$	281,118	$	290,752	$	814,975		$	845,514
Lime Fresh concept		4,795		4,800		14,779			15,921
Total revenues	$	285,913	$	295,552	$	829,754		$	861,435

Segment profit/(loss):
Ruby Tuesday concept	$	28,307	$	24,139	$	79,152		$	34,860
Lime Fresh concept		133		1		(1,347	)		(4,236	)
Total segment profit	$	28,440	$	24,140	$	77,805		$	30,624

Depreciation and amortization:
Ruby Tuesday concept	$	12,010	$	12,840	$	36,426		$	40,088
Lime Fresh concept		419		473		1,279			1,517
Support center and other		532		599		1,614			1,779
Total depreciation and amortization	$	12,961	$	13,912	$	39,319		$	43,384

Capital expenditures:
Ruby Tuesday concept					$	19,917		$	18,744
Lime Fresh concept						145			2,793
Support center and other						1,072			1,020
Total capital expenditures					$	21,134		$	22,557

Total assets by reportable segment as of March 3, 2015 and June 3, 2014 are as follows (in thousands):

	March 3, 2015		June 3, 2014
Total assets:
Ruby Tuesday concept	$	796,421	$	824,293
Lime Fresh concept		12,921		15,203
Support center and other		120,545		116,931
Total assets	$	929,887	$	956,427

The following is a reconciliation of segment profit to loss from continuing operations before taxes for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	March 3, 2015			March 4, 2014			March 3, 2015			March 4, 2014
Segment profit	$	28,440		$	24,140		$	77,805		$	30,624
Less:
Depreciation and amortization		(12,961	)		(13,912	)		(39,319	)		(43,384	)
Unallocated general and
administrative expenses		(10,777	)		(11,551	)		(31,562	)		(37,208	)
Preopening expenses		(50	)		–			(253	)		(395	)
Trademark impairment		–			(855	)		–			(855	)
Interest expense, net		(5,446	)		(5,967	)		(16,783	)		(19,340	)
Other expense, net		(87	)		(55	)		(706	)		(1,341	)
Loss from continuing operations
before income taxes	$	(881	)	$	(8,200	)	$	(10,818	)	$	(71,899	)

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NOTE N – COMMITMENTS AND CONTINGENCIES

Litigation

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

On July 23, 2014, a case styled Kimberly LaFrance, on behalf of herself and all other similarly situated v. Ruby Tuesday, Inc., was filed against the Company in the State of New York Supreme Court, County of Onondaga on behalf of the plaintiff and all other similarly situated individuals. The plaintiff is alleging violations of certain wage notice requirements under New York law and is seeking wages, liquidated damages and attorneys’ fees. The matter has been removed to the United States District Court for the Northern District of New York. On November 20, 2014, we filed a motion to dismiss, which was followed by motions filed by the plaintiff on December 29, 2014, for class certification, and on December 31, 2014, for partial summary judgment. The court stayed briefing on the plaintiff’s motions seeking to first rule on our motion to dismiss. The parties have agreed to mediate the case, and on March 5, 2015, the court stayed all deadlines in the matter pending the completion of that mediation. While we believe that we have accrued an appropriate amount based on our current understanding of the case, we may increase our accrual in the future if a class is certified or if our understanding of the matter changes.

NOTE O – FAIR VALUE MEASUREMENTS

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


	Level	March 3, 2015			June 3, 2014
Deferred compensation plan: other investments – Assets	1	$	8,034		$	8,930
Deferred compensation plan: other investments – Liabilities	1		(8,034	)		(8,930	)
Deferred compensation plan: RTI common stock – Equity	1		460			622
Deferred compensation plan: RTI common stock – Equity	1		(460	)		(622	)
Total		$	–		$	–

There were no transfers among levels within the fair value hierarchy during the 39 weeks ended March 3, 2015.

The Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the “Deferred Compensation Plan”) and the Ruby Tuesday, Inc. Restated Deferred Compensation Plan (the “Predecessor Plan”) are unfunded, non-qualified deferred compensation plans for eligible employees. Assets earmarked to pay benefits under the Deferred Compensation Plan and Predecessor Plan are held by a rabbi trust. We report the accounts of the rabbi trust in our Condensed Consolidated Financial Statements. The investments held by these plans are reported at fair value based on third-party broker statements. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, is recorded in Selling, general and administrative expense, net in the Condensed Consolidated Financial Statements.

The following table presents the fair value of assets measured on a non-recurring basis during the 13 weeks ended March 3, 2015 and the level within the fair value hierarchy in which the measurements fall (in thousands):

	Fair Value Measurements
	Level	March 3, 2015
Long-lived assets held for sale	2	$	3,066
Long-lived assets held for use	2		1,110
Total		$	4,176

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The following table presents the losses recognized during the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 resulting from non-recurring fair value measurements. The losses associated with continuing operations are included in Closures and impairments, net and the losses associated with discontinued operations are included in Income from discontinued operations, net of tax in our Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3, 2015		March 4, 2014		March 3, 2015		March 4, 2014
Included within continuing operations
Long-lived assets held for sale	$	586	$	142	$	1,388	$	726
Long-lived assets held for use		2,992		3,621		4,462		20,285
	$	3,578	$	3,763	$	5,850	$	21,011

Included within discontinued operations			$	25			$	178

Long-lived assets held for sale are valued using Level 2 inputs, primarily representing information obtained through broker listings and sales agreements. Costs to market and/or sell the assets are factored into the estimates of fair value for those assets included in Assets held for sale on our Condensed Consolidated Balance Sheets.

We review our long-lived assets (primarily property, equipment, and, as appropriate, reacquired franchise rights and favorable leases) related to each restaurant to be held and used in the business, whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable.

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

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

Our financial instruments at March 3, 2015 and June 3, 2014 consisted of cash and cash equivalents, accounts receivable and payable, and long-term debt. The fair value of cash and cash equivalents and accounts receivable and payable approximated carrying value due to the short-term nature of these instruments. The carrying value and fair value of our other financial instruments not measured at fair value on a recurring basis, however subject to fair value disclosures, are as follows (in thousands):

	March 3, 2015				June 3, 2014
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
Long-term debt	$	251,114	$	260,952	$	258,490	$	262,985

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

-20-

NOTE P – SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

As discussed in Note H to the Condensed Consolidated Financial Statements, the Senior Notes held by Ruby Tuesday, Inc. (the “Parent”) 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.

-21-

Condensed Consolidating Balance Sheet

As of March 3, 2015

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	60,925		$	296	$	–		$	61,221
Accounts receivable		1,934			2,916		–			4,850
Inventories		16,271			6,673		–			22,944
Income tax receivable		150,115			–		(147,749	)		2,366
Deferred income taxes		(3,038	)		3,399		–			361
Other current assets		15,520			2,355		–			17,875
Total current assets		241,727			15,639		(147,749	)		109,617

Property and equipment, net		563,153			198,647		–			761,800
Investment in subsidiaries		136,416			–		(136,416	)		–
Due from/(to) subsidiaries		67,992			223,095		(291,087	)		–
Other assets		47,094			11,376		–			58,470
Total assets	$	1,056,382		$	448,757	$	(575,252	)	$	929,887

Liabilities & Shareholders’ Equity
Current liabilities:
Accounts payable	$	17,052		$	3,784	$	–		$	20,836
Accrued and other current liabilities		43,512			35,972		–			79,484
Current maturities of long-term debt,
including capital leases		(361	)		4,919		–			4,558
Income tax payable		–			147,749		(147,749	)		–
Total current liabilities		60,203			192,424		(147,749	)		104,878

Long-term debt and capital leases,
less current maturities		213,307			33,444		–			246,751
Deferred income taxes		(1,914	)		4,684		–			2,770
Due to/(from) subsidiaries		223,095			67,992		(291,087	)		–
Other deferred liabilities		100,793			13,797		–			114,590
Total liabilities		595,484			312,341		(438,836	)		468,989

Shareholders’ equity:
Common stock		621			–		–			621
Capital in excess of par value		82,038			–		–			82,038
Retained earnings		387,749			136,416		(136,416	)		387,749
Accumulated other comprehensive loss		(9,510	)		–		–			(9,510	)
Total shareholders’ equity		460,898			136,416		(136,416	)		460,898

Total liabilities & shareholders’ equity	$	1,056,382		$	448,757	$	(575,252	)	$	929,887

-22-

Condensed Consolidating Balance Sheet

As of June 3, 2014

(In thousands)

	Parent			Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	51,012		$	314	$	–		$	51,326
Accounts receivable		1,725			3,136		–			4,861
Inventories		15,114			6,060		–			21,174
Income tax receivable		138,524			–		(136,391	)		2,133
Deferred income taxes		(548	)		3,945		–			3,397
Other current assets		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	)		–
Other assets		48,780			13,011		–			61,791
Total assets	$	1,093,878		$	479,483	$	(616,934	)	$	956,427

Liabilities & Shareholders’ Equity
Current liabilities:
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,
including capital leases		(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
Deferred income taxes		(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:
Common stock		614			–		–			614
Capital in excess of par value		76,269			–		–			76,269
Retained earnings		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

-23-

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirteen Weeks Ended March 3, 2015

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	204,278		$	80,114		$	–		$	284,392
Franchise revenue		4			1,517			–			1,521
		204,282			81,631			–			285,913

Operating costs and expenses:
Cost of goods sold		55,793			22,003			–			77,796
Payroll and related costs		67,959			28,721			–			96,680
Other restaurant operating costs		43,643			17,885			–			61,528
Depreciation		9,229			3,176			–			12,405
Selling, general, and administrative		18,244			10,704			–			28,948
Intercompany selling, general, and
administrative allocations		11,371			(11,371	)		–			–
Closures and impairments		2,086			1,905			–			3,991
Equity in earnings of subsidiaries		(7,171	)		–			7,171			–
Interest expense, net		4,654			792			–			5,446
Intercompany interest expense/(income)		3,040			(3,040	)		–			–
		208,848			70,775			7,171			286,794

(Loss)/income before income taxes		(4,566	)		10,856			(7,171	)		(881	)
(Benefit)/provision for income taxes		(3,797	)		3,685			–			(112	)

Net loss	$	(769	)	$	7,171		$	(7,171	)	$	(769	)

Other comprehensive income:
Pension liability reclassification, net of tax		463			–			–			463
Total comprehensive loss	$	(306	)	$	7,171		$	(7,171	)	$	(306	)

-24-

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirty-Nine Weeks Ended March 3, 2015

(In thousands)

	Parent			Guarantor			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	595,401		$	229,654		$	–		$	825,055
Franchise revenue		188			4,511			–			4,699
		595,589			234,165			–			829,754

Operating costs and expenses:
Cost of goods sold		162,041			62,548			–			224,589
Payroll and related costs		202,349			84,137			–			286,486
Other restaurant operating costs		130,551			50,873			–			181,424
Depreciation		27,960			9,641			–			37,601
Selling, general, and administrative		55,013			32,128			–			87,141
Intercompany selling, general, and
administrative allocations		32,986			(32,986	)		–			–
Closures and impairments		4,390			2,158			–			6,548
Equity in earnings of subsidiaries		(19,278	)		–			19,278			–
Interest expense, net		13,901			2,882			–			16,783
Intercompany interest expense/(income)		8,930			(8,930	)		–			–
		618,843			202,451			19,278			840,572

(Loss)/income before income taxes		(23,254	)		31,714			(19,278	)		(10,813	)
(Benefit)/provision for income taxes		(15,777	)		12,436			–			(3,341	)

Net loss	$	(7,477	)	$	19,278		$	(19,278	)	$	(7,477	)

Other comprehensive income:
Pension liability reclassification, net of tax		1,390			–			–			1,390
Total comprehensive loss	$	(6,087	)	$	19,278		$	(19,278	)	$	(6,087	)

-25-

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirteen Weeks Ended March 4, 2014

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	212,249		$	81,715		$	–		$	293,964
Franchise revenue		63			1,525			–			1,588
		212,312			83,240			–			295,552

Operating costs and expenses:
Cost of goods sold		58,550			22,430			–			80,980
Payroll and related costs		71,742			29,609			–			101,351
Other restaurant operating costs		46,765			17,396			–			64,161
Depreciation		9,787			3,540			–			13,327
Selling, general, and administrative		16,532			16,808			–			33,340
Intercompany selling, general, and
administrative allocations		14,908			(14,908	)		–			–
Closures and impairments		2,407			1,364			–			3,771
Trademark impairment		–			855			–			855
Equity in earnings of subsidiaries		(8,886	)		–			8,886			–
Interest expense, net		5,089			878			–			5,967
Intercompany interest expense/(income)		3,274			(3,274	)		–			–
		220,168			74,698			8,886			303,752

(Loss)/income from continuing operations
before income taxes		(7,856	)		8,542			(8,886	)		(8,200	)
Benefit for income taxes from
continuing operations		(463	)		(344	)		–			(807	)
Loss from continuing operations		(7,393	)		8,886			(8,886	)		(7,393	)

Income from discontinued operations, net of tax		86			–			–			86
Net loss	$	(7,307	)	$	8,886		$	(8,886	)	$	(7,307	)

Other comprehensive income:
Pension liability reclassification, net of tax		477			–			–			477
Total comprehensive loss	$	(6,830	)	$	8,886		$	(8,886	)	$	(6,830	)

-26-

Condensed Consolidating Statement of Operations and

Comprehensive Loss

For the Thirty-Nine Weeks Ended March 4, 2014

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated
Revenue:
Restaurant sales and operating revenue	$	621,181		$	235,594		$	–		$	856,775
Franchise revenue		182			4,478			–			4,660
		621,363			240,072			–			861,435

Operating costs and expenses:
Cost of goods sold		173,397			65,190			–			238,587
Payroll and related costs		214,633			86,968			–			301,601
Other restaurant operating costs		141,660			55,324			–			196,984
Depreciation		30,359			11,092			–			41,451
Selling, general, and administrative		68,250			39,136			–			107,386
Intercompany selling, general, and
administrative allocations		43,679			(43,679	)		–			–
Closures and impairments		15,630			10,317			–			25,947
Trademark impairment		–			855			–			855
Equity in earnings of subsidiaries		(13,307	)		–			13,307
Interest expense, net		15,320			4,020			–			19,340
Intercompany interest expense/(income)		9,688			(9,688	)		–			–
Loss on extinguishment of debt		1,183			–			–			1,183
		700,492			219,535			13,307			933,334

(Loss)/income from continuing operations
before income taxes		(79,129	)		20,537			(13,307	)		(71,899	)
(Benefit)/provision for income taxes from
continuing operations		(15,100	)		7,230			–			(7,870	)
Loss from continuing operations		(64,029	)		13,307			(13,307	)		(64,029	)

Income from discontinued operations, net of tax		97			–			–			97
Net loss	$	(63,932	)	$	13,307		$	(13,307	)	$	(63,932	)

Other comprehensive income:
Pension liability reclassification, net of tax		1,432			–			–			1,432
Total comprehensive loss	$	(62,500	)	$	13,307		$	(13,307	)	$	(62,500	)

-27-

Condensed Consolidating Statement of Cash Flows

For the Thirty-Nine Weeks Ended March 3, 2015

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated

Net cash provided by operating activities	$	37,226		$	51,900		$	(61,699	)	$	27,427

Investing activities:
Purchases of property and equipment		(16,569	)		(4,565	)		–			(21,134	)
Proceeds from disposal of assets		7,649			1,047			–			8,696
Other, net		2,043			135			–			2,178
Net cash used by investing activities		(6,877	)		(3,383	)		–			(10,260	)

Financing activities:
Principal payments on long-term debt		(6	)		(7,406	)		–			(7,412	)
Stock repurchases		(73	)		–			–			(73	)
Payments for debt issuance costs		(281	)		–			–			(281	)
Proceeds from exercise of stock options		457			–			–			457
Excess tax benefits from share-based
compensation		37			–			–			37
Intercompany transactions		(20,570	)		(41,129	)		61,699			–
Net cash used by financing activities		(20,436	)		(48,535	)		61,699			(7,272	)

Increase/(decrease) in cash and cash equivalents		9,913			(18	)		–			9,895
Cash and cash equivalents:
Beginning of year		51,012			314			–			51,326
End of quarter	$	60,925		$	296		$	–		$	61,221

-28-

Condensed Consolidating Statement of Cash Flows

For the Thirty-Nine Weeks Ended March 4, 2014

(In thousands)

	Parent			Guarantors			Eliminations			Consolidated

Net cash (used)/provided by operating activities	$	(4,304	)	$	51,122		$	(17,664	)	$	29,154

Investing activities:
Purchases of property and equipment		(16,855	)		(5,702	)		–			(22,557	)
Proceeds from sale-leaseback transactions, net		5,637			–			–			5,637
Proceeds from disposal of assets		9,926			1,023			–			10,949
Other, net		842			–			–			842
Net cash used by investing activities		(450	)		(4,679	)		–			(5,129	)

Financing activities:
Principal payments on long-term debt		(12,958	)		(19,023	)		–			(31,981	)
Stock repurchases		(579	)		–			–			(579	)
Payments for debt issuance costs		(1,758	)		–			–			(1,758	)
Proceeds from exercise of stock options		1,576			–			–			1,576
Excess tax benefits from share-based
compensation		284			–			–			284
Intercompany transactions		9,688			(27,352	)		17,664			–
Net cash used by financing activities		(3,747	)		(46,375	)		17,664			(32,458	)

(Decrease)/increase in cash and cash equivalents		(8,501	)		68			–			(8,433	)
Cash and cash equivalents:
Beginning of year		52,635			272			–			52,907
End of quarter	$	44,134		$	340		$	–		$	44,474

-29-

NOTE Q – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted During Fiscal Year 2015

As discussed further in Note K to the Condensed Consolidated Financial Statements, we adopted 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 during the first quarter of fiscal year 2015.

Accounting Pronouncements Not Yet Adopted

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the financial statements are available to be issued when applicable) and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter (our fiscal year 2017). Early application is permitted. We do not believe the adoption of this guidance will have a significant impact on our Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 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 standard permits the use of either the retrospective or cumulative effect transition method. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 (the first quarter of our fiscal year 2018). We have not yet selected a transition method and are currently evaluating the impact of this guidance on our Condensed Consolidated Financial Statements.

-30-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The discussion and analysis below for the Company should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the notes to such financial statements included elsewhere in this Quarterly Report on Form 10-Q. The discussion below contains forward-looking statements which should be read in conjunction with the “Special Note Regarding Forward-Looking Information” included elsewhere in this Quarterly Report on Form 10-Q.

General:

Ruby Tuesday, Inc., including its wholly-owned subsidiaries (“RTI,” the “Company,” “we” and/or “our”), owns and operates Ruby Tuesday® casual dining and Lime Fresh Mexican Grill® (“Lime Fresh”) fast casual restaurants. As of March 3, 2015, we owned and operated 658, and franchised 79, Ruby Tuesday restaurants. Ruby Tuesday restaurants can be found in 44 states, 13 foreign countries, and Guam.

As of March 3, 2015, there were 19 Company-owned and operated Lime Fresh restaurants, as well as seven domestic Lime Fresh restaurants operated by franchisees.

Overview and Strategies

The bar and grill segment of the casual dining industry in which we primarily operate is intensely competitive with respect to prices, services, convenience, locations, employees, advertising and promotion, and the types and quality of food. We compete with other food service operations, including locally-owned restaurants, and other national and regional restaurant chains that offer similar types of services and products as we do. We continue to believe there are opportunities to grow our business, strengthen our competitive position, enhance our profitability, and create value through the execution of the following strategies:

Enhancing Our Business Model

Over the past year, we made significant progress towards lowering our overall cost structure with identified reductions in cost of goods sold and selling, general, and administrative expenses. In April 2014, we implemented a new labor management system to facilitate more efficient staffing that is contributing to lower labor costs. Further, we are in the process of implementing enhanced business processes and capabilities, an inventory/food waste management system that should benefit our business model by reducing food waste and manager time on inventory management leading to a better guest experience and improved profitability. We believe there is opportunity to further improve our business model with a continued focus on improving our restaurant level margins through the implementation of business technology platforms and through a continued focus on lowering our overall cost structure.

Enhance Sales and Margins Through Repositioning of Our Core Brand

We are in the process of executing a strategic brand transformation of the Ruby Tuesday concept which is designed to make our brand more energetic, affordable, and broadly appealing. We believe the execution of this strategy provides opportunities for increased customer counts, same-restaurant sales growth, and increased shareholder value. Our brand transformation is supported by four key pillars: food, service, atmosphere, and communication.

As part of our transformation strategy, we have taken what we believe to be meaningful steps to improve our food, customer experience, organizational capabilities, and business model. We continue to transform our menu to be broadly appealing, approachable, and affordable by offering compelling value throughout the menu at a wide-range of price points. Our intent is to incorporate guest feedback to continue to evolve our menu as well as to promote menu items that guests find highly satisfying.

Enhancing our service and atmosphere are also critical components of our brand transformation strategy. As we introduced new menu and culinary platforms, we also simplified recipes and operational processes which we believe will result in better and more consistent food and service execution. Further, in January 2015, we rolled-out a new service training platform which encourages our restaurant teams to provide a genuine, customized experience to our guests while also reinforcing techniques to build add-on sales for beverages, appetizers and desserts.

-31-

To further enhance the atmosphere of our restaurants, we are currently developing a remodel plan which we expect to begin testing prototypes in fiscal 2016 to determine sales building potential, cost effectiveness, and return on investment. We also introduced more casual and colorful new team uniforms and have evolved the menu design, both of which better reflect our brand personality. We believe these combined changes will deliver an improved guest experience and create a more energetic dining atmosphere for our customers.

The fourth pillar of our brand transformation strategy is our communication and marketing programs. The program is designed to reshape consumer perceptions of the Ruby Tuesday brand and enhance our Fresh American Grill positioning, by showcasing our brand personality in a fresh and energetic way, featuring compelling new food products, highlighting the freshness and variety of our Garden Bar, and effectively communicating value and affordability. We continue to build key capabilities in our marketing organization, strengthen our culinary innovation pipeline, and become more efficient and cost-effective with our marketing spend.

The four key areas of menu, service, atmosphere, and communication will continue to be foundational drivers of our brand transformation and key to building a stronger business model. We expect the culmination of the four pillars working fluidly in concert with each other with engaged restaurant and support teams will drive guest counts, sales and average check.

Strengthen our Balance Sheet to Facilitate Growth and Value Creation

Our objective over the next several years is to grow our net cash provided by operating activities which will provide us with funds that can be used to reinvest in our restaurants to support the business and to continue to reduce outstanding debt levels in order to improve our credit metrics to ensure adequate access to capital at reasonable rates while providing flexibility for overall business needs and economic conditions. Our success in the key strategic initiatives outlined above should enable us to improve both our return on assets and return on equity, and to create additional shareholder value.

During the second quarter of fiscal year 2014, we entered into a four-year $50.0 million revolving credit agreement (the “Senior Credit Facility”). Our Senior Credit Facility, which is secured by substantially all of the shares of capital stock of the Company’s subsidiaries, real property, improvements and fixtures of 49 Ruby Tuesday restaurants, and substantially all of the personal property of the Company and each of its present and future subsidiaries, was obtained to provide access to capital for general corporate purposes and provides us with more covenant flexibility than our previous revolving credit facility. The Senior Credit Facility has a $35.0 million accordion feature which provides us with additional liquidity if needed. Aside from the $12.5 million allocated to letters of credit issued primarily in conjunction with our insurance programs, the $50.0 million revolving Senior Credit Facility has remained undrawn.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make subjective or complex judgments that may affect the reported financial condition and results of operations. We base our estimates on historical experience and other assumptions that we believe to be reasonable in the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We continually evaluate the information used to make these estimates as our business and the economic environment change.

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Results of Operations:

The following is an overview of our results of operations for the 13- and 39-week periods ended March 3, 2015:

Net loss was $0.8 million for the 13 weeks ended March 3, 2015 compared to a net loss of $7.3 million for the same quarter of the previous fiscal year. Diluted loss per share for the fiscal quarter ended March 3, 2015 was $0.01 compared to a diluted loss per share of $0.12 for the corresponding period of the prior fiscal year as a result of the decrease in net loss as discussed below.

During the 13 weeks ended March 3, 2015:

·	Same-restaurant sales* at Company-owned Ruby Tuesday restaurants decreased 0.3%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants increased 5.0%;

·	Five Company-owned Ruby Tuesday restaurants were closed;

·	One franchised Ruby Tuesday restaurant was opened and three were closed;

·	One Company-owned Lime Fresh restaurant was closed;

·	One franchised Lime Fresh restaurant was closed;

·	John Connelly was appointed Senior Vice President and Chief Marketing Officer on December 29, 2014; and

·	Scarlett A. May, our former Senior Vice President and Chief Legal Officer, left the Company on December 12, 2014. **

Net loss was $7.5 million for the 39 weeks ended March 3, 2015 compared to a net loss of $63.9 million for the same period of the previous fiscal year. Diluted loss per share for the 39 weeks ended March 3, 2015 was $0.12 compared to a diluted loss per share of $1.06 for the corresponding period of the prior fiscal year as a result of the decrease in net loss as discussed below.

During the 39 weeks ended March 3, 2015:

·	Same-restaurant sales* at Company-owned Ruby Tuesday restaurants were flat as compared to the prior year, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants increased 6.2%;

·	One Company-owned Ruby Tuesday restaurants was opened and 11 were closed;

·	Six franchised Ruby Tuesday restaurants were opened and six were closed;

·	One Company-owned Lime Fresh restaurant was closed;

·	Two franchised Lime Fresh restaurant were open and one was closed;

·	John Connelly was appointed Senior Vice President and Chief Marketing Officer on December 29, 2014;

·	Scarlett A. May, our former Senior Vice President and Chief Legal Officer, left the Company on December 12, 2014; **

·	Michael O. Moore stepped down as our Chief Financial Officer on June 26, 2014 and Jill M. Golder was appointed Executive Vice President, Chief Financial Officer, and Treasurer on the same date. Mr. Moore left the Company on August 4, 2014; and

·	Jeffrey C. Wood, our former Senior Vice President and Chief Development Officer, left the Company on July 24, 2014.

* We define same-restaurant sales as a year-over-year comparison of sales volumes for restaurants that, in the current year have been open at least 18 months, in order to remove the impact of new openings in comparing the operations of existing restaurants.

** Rhonda Parish was appointed Senior Vice President and Chief Legal Officer on March 16, 2015.

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The following table sets forth selected restaurant operating data as a percentage of total revenue, except where otherwise noted, for the periods indicated. All information is derived from our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3,		March 4,		March 3,		March 4,
	2015		2014		2015		2014
Revenue:
Restaurant sales and operating revenue	99	.5%	99	.5%	99	.4%	99	.5%
Franchise revenue	0	.5	0	.5	0	.6	0	.5
Total revenue	100	.0	100	.0	100	.0	100	.0
Operating costs and expenses:
Cost of goods sold (1)	27	.4	27	.5	27	.2	27	.8
Payroll and related costs (1)	34	.0	34	.5	34	.7	35	.2
Other restaurant operating costs (1)	21	.6	21	.8	22	.0	23	.0
Depreciation (1)	4	.4	4	.5	4	.6	4	.8
Selling, general and administrative, net	10	.1	11	.3	10	.5	12	.5
Closures and impairments, net	1	.4	1	.3	0	.8	3	.0
Trademark impairment		–	0	.3		–	0	.1
Interest expense, net	1	.9	2	.0	2	.0	2	.2
Loss on extinguishment of debt		–		–		–	0	.1
Loss from continuing operations before
income taxes	(0	.3)	(2	.8)	(1	.3)	(8	.3)
Benefit for income taxes from continuing
operations		–	(0	.3)	(0	.4)	(0	.9)
Loss from continuing operations	(0	.3)	(2	.5)	(0	.9)	(7	.4)
Income from discontinued operations, net of tax		–		–		–		–
Net loss	(0	.3)%	(2	.5)%	(0	.9)%	(7	.4)%

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

The following table shows Company-owned Ruby Tuesday and Lime Fresh concept restaurant activity for the 13- and 39-week periods ended March 3, 2015 and March 4, 2014.

	Ruby Tuesday		Lime Fresh		Total
13 weeks ended March 3, 2015
Beginning number	663		20		683
Opened	–		–		–
Closed	(5)	)	(1)	)	(6)	)
Ending number	658		19		677

39 weeks ended March 3, 2015
Beginning number	668		20		688
Opened	1		–		1
Closed	(11)	)	(1)	)	(12)	)
Ending number	658		19		677

13 weeks ended March 4, 2014
Beginning number	703		21		724
Opened	–		–		–
Closed	(24)	)	(1)	)	(25)	)
Ending number	679		20		699

39 weeks ended March 4, 2014
Beginning number	706		18		724
Opened	–		4		4
Closed	(27)	)	(2)	)	(29)	)
Ending number	679		20		699

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The following table shows franchised Ruby Tuesday and Lime Fresh concept restaurant activity for the 13- and 39-week periods ended March 3, 2015 and March 4, 2014.

	Thirteen weeks ended		Thirty-nine weeks ended
	March 3, 2015	March 4, 2014	March 3, 2015	March 4, 2014
Ruby Tuesday
Beginning number	81	76	79	77
Opened	1	2	6	4
Closed	(3)	(2)	(6)	(5)
Ending number	79	76	79	76

Lime Fresh
Beginning number	8	8	6	6
Opened	–	–	2	2
Closed	(1)	–	(1)	–
Ending number	7	8	7	8

Revenue

Restaurant sales and operating revenue by concept for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 was as follows (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3, 2015		March 4, 2014		March 3, 2015		March 4, 2014
Restaurant sales and operating revenues:
Ruby Tuesday concept	$	279,798	$	289,335	$	810,888	$	841,392
Lime Fresh concept		4,594		4,629		14,167		15,383
Total	$	284,392	$	293,964	$	825,055	$	856,775

The Ruby Tuesday concept restaurant sales and operating revenue for the 13 weeks ended March 3, 2015 decreased 3.3% to $279.8 million compared to the same quarter of the prior fiscal year. This decrease is primarily a result of restaurant closings since the same quarter of the prior fiscal year coupled with a 0.3% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants. The decrease in Ruby Tuesday concept same-restaurant sales is attributable to a 1.0% decrease in customer traffic offset by a 0.7% increase in net check.

The Lime Fresh concept restaurant sales and operating revenue totaled $4.6 million for both the 13 weeks ended March 3, 2015 and March 4, 2014.

The Ruby Tuesday concept restaurant sales and operating revenue for the 39 weeks ended March 3, 2015 decreased 3.6% to $810.9 million compared to the same period of the prior fiscal year. This decrease is primarily a result of restaurant closings since the same period of the prior fiscal year.

The Lime Fresh concept restaurant sales and operating revenue for the 39 weeks ended March 3, 2015 decreased 7.2% to $14.2 million compared to the same period of the prior fiscal year. This decrease is primarily a result of a restaurant closing in the prior fiscal year coupled with lower sales at certain other Lime Fresh open restaurants.

Included within total revenues above for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 was franchise revenue as follows (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3, 2015		March 4, 2014		March 3, 2015		March 4, 2014
Franchise revenue	$	1,521	$	1,588	$	4,699	$	4,660

Franchise revenue for the 13 weeks ended March 3, 2015 decreased 4.2% to $1.5 million compared to the same quarter of the prior fiscal year. Franchise revenue is predominately comprised of domestic and international franchise royalties, which totaled $1.5 million for both 13-week periods ended March 3, 2015 and March 4, 2014.

Franchise revenue for the 39 weeks ended March 3, 2015 increased 0.8% to $4.7 million compared to the same quarter of the prior fiscal year. Franchise revenue is predominately comprised of domestic and international franchise royalties, which totaled $4.5 million for both 39-week periods ended March 3, 2015 and March 4, 2014.

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Segment Profit/(Loss)

Our President and Chief Executive Officer, who is our chief operating decision maker, with the assistance of our senior management, reviews discrete financial information for both the Ruby Tuesday and Lime Fresh restaurant concepts to assess performance and allocate resources. We consider the Ruby Tuesday and Lime Fresh concepts to be our reportable segments as we do not believe they have similar economic and other characteristics to be aggregated into a single reportable segment. Segment profit/(loss) by reportable segment for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 are as follows (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended
	March 3, 2015		March 4, 2014		March 3, 2015			March 4, 2014
Segment profit/(loss):
Ruby Tuesday concept	$	28,307	$	24,139	$	79,152		$	34,860
Lime Fresh concept		133		1		(1,347	)		(4,236	)
Total segment profit	$	28,440	$	24,140	$	77,805		$	30,624

Segment profit for the 13 weeks ended March 3, 2015 for the Ruby Tuesday concept increased $4.2 million to $28.3 million compared to the third quarter of fiscal year 2014 due primarily to decreases in advertising expense of $4.3 million as a result of reduced television advertising and improvements in cost of goods sold, payroll and related costs, and other restaurant operating costs due to initiatives discussed later within this MD&A. These were partially offset by a 0.3% decrease in same-restaurant sales at Company-owned Ruby Tuesday restaurants discussed above.

Segment profit for the 13 weeks ended March 3, 2015 for the Lime Fresh concept increased $0.1 million compared to the third quarter of fiscal year 2014 to $0.1 million due primarily to improvements in cost of goods sold, payroll and related costs, and other restaurant operating costs due to initiatives discussed later within this MD&A, which was partially offset by higher closures and impairments expense of $0.3 million due to favorable lease reserve adjustments in the prior year.

Segment profit for the 39 weeks ended March 3, 2015 for the Ruby Tuesday concept increased $44.3 million to $79.2 million compared to the same period of fiscal year 2014 due primarily to improvements in cost of goods sold, payroll and related costs, and other restaurant operating costs due to initiatives discussed later within this MD&A, and decreases in closures and impairments expense of $18.0 million and advertising expense of $15.2 million. The reduction in closures and impairments expense compared to the same period of the prior fiscal year is primarily attributable to a decrease of impairments in connection with open restaurants with deteriorating operational performance ($9.5 million), early restaurant closures ($4.4 million), and upcoming lease terminations ($1.4 million) as prior fiscal year same-restaurant sales were down 7.2% and we closed 24 Ruby Tuesday restaurants during the third quarter of the prior fiscal year. The reduction in advertising spending relates to reduced cable and television advertising.

Segment losses for the 39 weeks ended March 3, 2015 for the Lime Fresh concept decreased $2.9 million compared to the same period of fiscal year 2014 to $1.3 million due primarily to decreases in closures and impairments expense of $1.9 million as the prior fiscal year Lime Fresh segment losses included lease reserve charges related to four undeveloped sites for which management decided to forego restaurant development and a lease reserve charge on a Lime Fresh restaurant contracted to be sold. This was coupled with improvements in cost of goods sold, payroll and related costs, and other restaurant operating costs due to initiatives discussed later within this MD&A.

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The following is a reconciliation of segment profit to loss from continuing operations before taxes for the 13 and 39 weeks ended March 3, 2015 and March 4, 2014 (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	March 3, 2015			March 4, 2014			March 3, 2015			March 4, 2014
Segment profit	$	28,440		$	24,140		$	77,805		$	30,624
Less:
Depreciation and amortization		(12,961	)		(13,912	)		(39,319	)		(43,384	)
Unallocated general and
administrative expenses		(10,777	)		(11,551	)		(31,562	)		(37,208	)
Preopening expenses		(50	)		–			(253	)		(395	)
Trademark impairment		–			(855	)		–			(855	)
Interest expense, net		(5,446	)		(5,967	)		(16,783	)		(19,340	)
Other expense, net		(87	)		(55	)		(706	)		(1,341	)
Loss from continuing operations
before income taxes	$	(881	)	$	(8,200	)	$	(10,818	)	$	(71,899	)

Pre-tax Loss from Continuing Operations

Pre-tax loss from continuing operations was $0.9 million for the 13 weeks ended March 3, 2015 compared to $8.2 million for the corresponding quarter of the prior fiscal year. The decrease in pre-tax loss is due to decreases, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of cost of goods sold, payroll and related costs, other restaurant operating costs, depreciation, and selling general, and administrative, net, as well as lower trademark impairment charges ($0.9 million) and interest expense ($0.5 million). These were partially offset by a decrease in same-restaurant sales of 0.3% at Company-owned Ruby Tuesday restaurants and higher closures and impairments expense ($0.2 million).

Pre-tax loss from continuing operations was $10.8 million for the 39 weeks ended March 3, 2015 compared to $71.9 million for the corresponding period of the prior fiscal year. The decrease in pre-tax loss is due to lower closures and impairments expense ($19.4 million) and interest expense ($2.6 million) and decreases, as a percentage of restaurant sales and operating revenue or total revenue, as appropriate, of cost of goods sold, payroll and related costs, other restaurant operating costs, depreciation, and selling, general, and administrative, net.

In the paragraphs that follow, we discuss in more detail the components of the decrease in pre-tax loss from continuing operations for the 13- and 39-week periods ended March 3, 2015, as compared to the comparable periods in the prior fiscal year. Because a significant portion of the costs recorded in the cost of goods sold, payroll and related costs, other restaurant operating costs, and depreciation categories are either variable or highly correlative with the number of restaurants we operate, we evaluate our trends by comparing the costs as a percentage of restaurant sales and operating revenue, as well as the absolute dollar change, to the comparable prior fiscal year period.

Cost of Goods Sold

Cost of goods sold decreased $3.2 million (3.9%) to $77.8 million for the 13 weeks ended March 3, 2015, over the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, cost of goods sold decreased from 27.5% to 27.4%.

Cost of goods sold decreased $14.0 million (5.9%) to $224.6 million for the 39 weeks ended March 3, 2015, over the corresponding period of the prior fiscal year. As a percentage of restaurant sales and operating revenue, cost of goods sold decreased from 27.8% to 27.2%.

The absolute dollar decrease in cost of goods sold for the 13- and 39-week periods ended March 3, 2015 was the result of restaurant closures and cost savings on certain products as a result of renegotiated contracts with certain vendors since the same periods of fiscal year 2014. These were partially offset by price increases on beef, seafood, poultry, and certain other products since the same periods of the prior fiscal year.

As a percentage of restaurant sales and operating revenue, the decrease in cost of goods sold for the 13- and 39-week periods ended March 3, 2015 is primarily the result of renegotiated contracts with certain vendors since the same periods of fiscal year 2014.

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Payroll and Related Costs

Payroll and related costs decreased $4.7 million (4.6%) to $96.7 million for the 13 weeks ended March 3, 2015, as compared to the corresponding period in the prior fiscal year. As a percentage of restaurant sales and operating revenue, payroll and related costs decreased from 34.5% to 34.0%.

Payroll and related costs decreased $15.1 million (5.0%) to $286.5 million for the 39 weeks ended March 3, 2015, as compared to the corresponding period in the prior fiscal year. As a percentage of restaurant sales and operating revenue, payroll and related costs decreased from 35.2% to 34.7%.

The absolute dollar decrease in payroll and related costs for the 13-week period ended March 3, 2015 was primarily due to restaurant closures, decreases in hourly labor as a result of scheduling improvements with the rollout of a new labor forecasting system in our restaurants, and lower management labor.

The absolute dollar decrease in payroll and related costs for the 39-week period ended March 3, 2015 was primarily due to the same reasons as discussed above for the 13-week period, which were partially offset by higher health insurance costs as a result of unfavorable claims experience and higher bonus expense as more restaurants achieved the performance goals as compared to the same period of the prior fiscal year.

As a percentage of restaurant sales and operating revenue, the decrease in payroll and related costs for the 13 weeks ended March 3, 2015 was primarily the result of decreased hourly and management labor due to reasons as discussed above.

As a percentage of restaurant sales and operating revenue, the decrease in payroll and related costs for the 39 weeks ended March 3, 2015 was primarily the result of decreased hourly and management labor due to reasons as discussed above, offset by higher health insurance costs.

Other Restaurant Operating Costs

Other restaurant operating costs decreased $2.6 million (4.1%) to $61.5 million for the 13-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year. As a percentage of restaurant sales and operating revenue, these costs decreased from 21.8% to 21.6%.

For the 13 weeks ended March 3, 2015, the decrease in other restaurant operating costs related to the following (in thousands):

Legal	$	1,580
Utilities		1,186
Other increases, net		(133	)
Net decrease	$	2,633

In both absolute dollars and as a percentage of restaurant sales and operating revenue for the 13-week period ended March 3, 2015, the decrease was a result of reduced legal costs related to pending litigation and lower utilities due primarily to restaurant closures since the same period of the prior fiscal year.

Other restaurant operating costs decreased $15.6 million (7.9%) to $181.4 million for the 39-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year. As a percentage of restaurant sales and operating revenue, these costs decreased from 23.0% to 22.0%.

For the 39 weeks ended March 3, 2015, the decrease in other restaurant operating costs related to the following (in thousands):

Repairs	$	5,853
Utilities		2,993
Legal		1,856
Rent and leasing		1,519
Gift card breakage		1,084
Business interruption recoveries		1,050
Other decreases, net		1,205
Net decrease	$	15,560

-38-

In both absolute dollars and as a percentage of restaurant sales and operating revenue for the 39-week period ended March 3, 2015, the decrease was a result of reduced building repairs, utilities, and rent and leasing due primarily to restaurant closures since the same period of the prior fiscal year, lower legal costs related to pending litigation, higher gift card breakage income, and business interruption recoveries related to claims collected for certain of our restaurants in the Gulf Coast area.

Depreciation

Depreciation expense decreased $0.9 million (6.9%) to $12.4 million for the 13-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year. As a percentage of restaurant sales and operating revenue, depreciation expense decreased from 4.5% to 4.4%.

Depreciation expense decreased $3.9 million (9.3%) to $37.6 million for the 39-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year. As a percentage of restaurant sales and operating revenue, depreciation expense decreased from 4.8% to 4.6%.

In terms of absolute dollars and as a percentage of restaurant sales and operating revenue, the decrease for the 13- and 39-week periods ended March 3, 2015 is due primarily to assets that became fully depreciated since the same periods of the prior fiscal year coupled with restaurant closures.

Selling, General and Administrative Expenses, Net

Selling, general and administrative expenses, net decreased $4.4 million (13.2%) to $28.9 million for the 13-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year.

Selling, general and administrative expenses, net decreased $20.2 million (18.9%) to $87.1 million for the 39-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year.

The decrease for the 13- and 39-week periods ended March 3, 2015 is due to lower advertising costs ($4.3 million and $15.4 million, respectively), primarily as a result of decreased television advertising, and a reduction in general and administrative costs ($0.1 million and $4.8 million, respectively) due to lower management labor from reductions in staffing, a decrease in consulting fees, and, for the 39 weeks ended March 3, 2015, lower legal fees. The decrease in overall television advertising is attributable to management’s desire to spend marketing dollars more efficiently, with an increased focus on supporting our national cable television advertising with print and electronic promotions. These were partially offset by higher accruals for support center bonus.

Closures and Impairments

Closures and impairments increased $0.2 million to $4.0 million for the 13-week period ended March 3, 2015, as compared to the corresponding period of the prior fiscal year. The increase for the 13-week period ended March 3, 2015 is primarily due to higher property impairment charges ($0.7 million), increased closed restaurant lease reserve expense ($0.1 million), and lower gains on the sale of surplus properties ($0.1 million), which were partially offset by decreased other closing costs ($0.7 million).

Closures and impairments decreased $19.4 million to $6.5 million for the 39-week period ended March 3, 2015, as compared to the corresponding period of the prior fiscal year. The decrease for the 39-week period ended March 3, 2015 is primarily due to lower property impairment charges ($14.3 million), closed restaurant lease reserve expense ($3.4 million), and other closing costs ($0.7 million) coupled with higher gains on the sale of surplus properties ($1.0 million).

The increase for the 13-week period ended March 3, 2015 is primarily due to higher property impairment charges attributable to open Ruby Tuesday concept restaurants experiencing deteriorating operational performance. The decrease for the 39-week periods ended March 3, 2015 is primarily due to lower property impairment charges as the same periods of the prior fiscal year included, among other charges, impairments of $12.5 million attributable to open Ruby Tuesday concept restaurants experiencing deteriorating operational performance, and $4.4 million related to early restaurant closures. Prior fiscal year same-restaurant sales for Ruby Tuesday concept restaurants were down 1.9% and 7.2% for the 13 and 39 weeks ended March 4, 2014, respectively. The prior fiscal year charges were also due to a plan we announced to close approximately 30 Ruby Tuesday concept restaurants by the end of fiscal year 2014.

-39-

See Note I to our Condensed Consolidated Financial Statements for further information on our closures and impairment charges recorded during the first three quarters of fiscal years 2015 and 2014.

At March 3, 2015, we had 48 restaurants that had been open for more than six full quarters with rolling 12-month negative cash flows of which 31 have been impaired to salvage value. Charges totaling $3.0 million were recorded for three open Ruby Tuesday concept restaurants impaired to salvage during the 13-week period ended March 3, 2015. Of the 17 which remained, we reviewed the plans to improve cash flows at each of the restaurants and determined that no impairment was necessary. The remaining net book value of these 17 restaurants, five of which are located on owned properties, was $16.4 million at March 3, 2015.

Should cash flows at these 17 cash flow negative and other cash flow declining restaurants not improve within a reasonable period of time, further impairment charges are possible. Considerable management judgment is necessary to estimate future cash flows, including cash flows from continuing use, terminal value, closure costs, salvage value, and sublease income. Accordingly, actual results could vary significantly from our estimates.

Interest Expense, Net

Interest expense, net decreased $0.5 million to $5.4 million for the 13 weeks ended March 3, 2015, as compared to the corresponding period in the prior fiscal year, primarily due to lower interest expense on our Senior Notes due to repurchases and the early payoff of certain mortgage loans since the third quarter of fiscal year 2014. Interest expense, net decreased $2.6 million to $16.8 million for the 39-week period ended March 3, 2015, as compared to the corresponding period in the prior fiscal year, primarily for the same reasons mentioned above.

Benefit for Income Taxes from Continuing Operations

Under Accounting Standards Codification 740 (“ASC 740”), companies are required to apply their estimated annual tax rate on a year-to-date basis in each interim period. Under ASC 740, companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. In this situation, the interim tax rate should be based on the actual year-to-date results. Due to changes in our projections, which have fluctuated as we work through our brand repositioning, a reliable projection of our annual effective rate has been difficult to determine. As such, we recorded a tax provision for the 39 weeks ended March3, 2015 based on the actual year-to-date results, in accordance with ASC 740.

We recorded a tax benefit from continuing operations of $0.1 million and $3.3 million during the 13 and 39 weeks ended March 3, 2015, respectively, compared to a tax benefit from continuing operations of $0.8 million and $7.9 million during the 13 and 39 weeks ended March 4, 2014, respectively. Included in our $3.3 million tax benefit from continuing operations for the 39 weeks ended March 3, 2015 was a benefit of $3.2 million recorded during the first quarter of fiscal year 2015 representing an immaterial prior period correction to our deferred tax asset valuation allowance.

-40-

Discontinued Operations

	Thirteen weeks ended			Thirty-nine weeks ended
	March 4, 2014			March 4, 2014
Restaurant sales and operating revenue	$	–		$	–
Income before income taxes	$	77		$	2
Benefit for income taxes		(9	)		(95	)
Income from discontinued operations	$	86		$	97

Liquidity and Capital Resources:

Cash and cash equivalents increased/(decreased) by $9.9 million and $(8.4) million during the first 39 weeks of fiscal years 2015 and 2014, respectively. The change in cash and cash equivalents is as follows (in thousands):

	Thirty-nine weeks ended
	March 3,				March 4,
	2015				2014
Cash provided by operating activities		$	27,427			$	29,154
Cash used by investing activities			(10,260	)			(5,129	)
Cash used by financing activities			(7,272	)			(32,458	)
Increase/(decrease) in cash and cash equivalents		$	9,895			$	(8,433	)

Operating Activities

Our cash provided by operations is generally derived from cash receipts generated by our restaurant customers and franchisees. Substantially all of the $825.1 million and $856.8 million of restaurant sales and operating revenue disclosed in our Condensed Consolidated Statements of Operations and Comprehensive Loss for the 39 weeks ended March 3, 2015 and March 4, 2014, respectively, was received in cash either at the point of sale or within two to four days (when our customers paid with debit or credit cards). Our primary uses of cash for operating activities are food and beverage purchases, payroll and benefit costs, restaurant operating costs, general and administrative expenses, and marketing, a significant portion of which are incurred and paid in the same period.

Cash provided by operating activities for the first 39 weeks of fiscal year 2015 decreased $1.7 million from the corresponding period in the prior fiscal year to $27.4 million. The decrease is primarily the result of decreases in accounts payable, accrued, and other liabilities due to the timing of payments (approximately $21.1 million) and higher amounts spent to acquire inventory (approximately $9.9 million) due primarily to the bulk purchase of lobster during our second quarter of fiscal year 2015. These were partially offset by higher Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) due in part to restaurant-level cost improvements, reductions in amounts spent on media advertising (approximately $9.2 million), and lower cash paid for interest ($2.0 million) due to the prepayment of certain of our mortgage obligations and other principal payments on our debt since the same quarter of the prior fiscal year.

Our working capital and current ratio as of March 3, 2015 were $4.7 million and 1.0:1, respectively. While we typically carry current liabilities in excess of current assets as is common in the restaurant industry, we have grown our cash accounts since year end and simultaneously reduced our accounts payable.

-41-

Investing Activities

We require capital principally for the maintenance and upkeep of our existing restaurants, limited new restaurant construction, investments in technology, equipment, remodeling of existing restaurants, and on occasion for the acquisition of franchisees or other restaurant concepts. Property and equipment expenditures purchased with internally generated cash flows for the 39 weeks ended March 3, 2015 and March 4, 2014 were $21.1 million and $22.6 million, respectively.

During the 39 weeks ended March 4, 2014, we completed sale-leaseback transactions of the land and buildings for three Company-owned Ruby Tuesday concept restaurants for gross cash proceeds of $5.9 million, exclusive of transaction costs of approximately $0.3 million. Equipment was not included. Net proceeds from the sale-leaseback transactions were used for general corporate purposes, including debt payments.

Capital expenditures for the remainder of the fiscal year are projected to be approximately $6.9 million to $10.9 million. We intend to fund our investing activities with cash currently on hand, cash provided by operations, or borrowings on the Senior Credit Facility.

Financing Activities

Historically our primary sources of cash have been operating activities and refranchising transactions. When these alone have not provided sufficient funds for both our capital and other needs, we have obtained funds through the issuance of indebtedness or through the issuance of additional shares of common stock. Our current borrowings and credit facilities are described below.

On May 14, 2012, we entered into an indenture (the “Indenture”) among the Company, certain subsidiaries of the Company as guarantors and Wells Fargo Bank, National Association as trustee, governing the Company’s $250.0 million aggregate principal amount of 7.625% senior notes due 2020 (the “Senior Notes”). The Senior Notes were issued at a discount of $3.7 million, which is being amortized using the effective interest method over the eight-year term of the notes.

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exceptions and qualifications, as described in the Indenture, and certain covenants will not apply at any time when the Senior Notes are rated investment grade by the Rating Agencies, as defined in the Indenture. The Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Senior Notes to be due and payable immediately.

On December 3, 2013, we entered into 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.

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 March 3, 2015 net book value of $79.5 million.

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. Under the terms of the Senior Credit Facility we are allowed, under certain circumstances, to repurchase up to $20.0 million of the Senior Notes in any fiscal year. We did not repurchase any of the Senior Notes during the 39 weeks ended March 3, 2015. The balance on the Senior Notes was $215.0 million at March 3, 2015.

As discussed further within the Covenant Compliance section of this MD&A, we were in compliance with our maximum leverage ratio and our minimum fixed charge coverage ratio as of March 3, 2015.

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During the 39 weeks ended March 3, 2015, we repurchased an insignificant number of shares of our common stock at a cost of $0.1 million. As of March 3, 2015, the total number of remaining shares authorized to be repurchased was 11.8 million. We spent $0.6 million to repurchase 0.1 million shares of RTI common stock during the 39 weeks ended March 4, 2014.

During the remainder of fiscal year 2015, we expect to fund operations, capital expansion, and any other investments from cash currently on hand, operating cash flows, or our Senior Credit Facility.

Covenant Compliance

Under the terms of the Senior Credit Facility, we are required to satisfy and maintain specified financial ratios and other financial condition tests and covenants. The financial ratios include maximum funded debt and minimum fixed charge coverage covenants. While as of March 3, 2015 we were in compliance with the financial ratios contained in our Senior Credit Facility, our continued ability to meet those financial ratios, tests, and covenants can be affected by events beyond our control, and we cannot assure you that we will meet those ratios, tests, and covenants.

Maximum Funded Debt Covenant

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

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

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

	March 3, 2015
Current portion of long-term debt, including capital leases	$	4,558
Long-term debt and capital leases, less current maturities		246,751
Total long-term debt and capital leases		251,309
Present value of operating leases*		204,536
Letters of credit*		12,502
Unrestricted cash in excess of $10.0 million		(51,051	)
Unamortized discount of senior unsecured notes		2,250
Unamortized premium of mortgage loan obligations		(519	)
Adjusted Total Debt	$	419,027

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

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

	Twelve Months
	Ended
	March 3, 2015
Net loss	$	(7,891	)
Rent expense		53,752
Depreciation		50,978
Interest expense		22,425
Asset impairments		10,030
Share-based compensation expense		7,175
Amortization of intangibles		2,304
Other		1,406
Restaurant closing costs		1,403
Restructuring costs		625
Income taxes		(147	)
Non-cash accruals		(1,371	)
Consolidated EBITDAR	$	140,689

Adjusted Total Debt to Consolidated EBITDAR – Actual		2.98	x
Maximum allowed per covenant (1)		4.85	x

(1) For the quarter ending June 2, 2015, the Senior Credit Facility requires us to maintain a maximum Adjusted Total Debt to EBITDAR ratio of less than or equal to 4.75x. For fiscal year 2016 and thereafter, the maximum Adjusted Total Debt to EBITDAR ratio fluctuates as provided in Article VII of the Senior Credit Facility.

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Minimum Fixed Charge Coverage

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

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

	Twelve Months
	Ended
	March 3, 2015
Consolidated EBITDAR		$	140,689

Interest*		$	20,606
Cash rents*			52,086
Total		$	72,692

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

Fixed Charge Covenant – Actual		1.94x
Minimum allowed per covenant (2)		1.35x

(2) For the quarter ending June 2, 2015, the Senior Credit Facility requires us to maintain a minimum fixed charge coverage ratio of greater than or equal to 1.40x. For fiscal year 2016 and thereafter, the minimum fixed charge coverage ratio fluctuates as provided in Article VII of the Senior Credit Facility.

Non-GAAP Amounts Used in Debt Covenant Calculations

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

Our Minimum Fixed Charge Coverage ratio requires interest to be included in the denominator. The amount we reflect for interest in the denominator of this calculation ($20.6 million on a rolling 12 month basis) differs from interest expense determined in accordance with GAAP ($22.4 million) because of three adjustments we make. As shown below, we exclude brokerage fees, prepayment penalties, and the amortization of loan fees and fair market value adjustments. While these items are reflected as interest expense in our Condensed Consolidated Statements of Operations and Comprehensive Loss, they do not require on-going cash payments for servicing and therefore are not impacted by future Consolidated EBITDAR. The table below reconciles debt covenant interest for the preceding 12 months to GAAP interest for the same time period (amounts in thousands):

Interest	$	20,606
Brokerage fees		1,392
Prepayment penalties		370
Amortization of loan fees and fair market
value adjustments		57
GAAP-based interest expense	$	22,425

Our Minimum Fixed Charge Coverage ratio also allows for recurring cash rents to be included in the denominator. Cash rents ($52.1 million on a rolling 12 month basis) differ from rents determined in accordance with GAAP ($54.0 million) by the following (amounts in thousands):

Cash rents	$	52,086
Change in rent accruals		472
Rent settlement payments		1,487
GAAP-based rent expense*	$	54,045

* Rent expense of $0.3 million is included within Restaurant closing costs in the preceding Consolidated EBITDAR table.

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Significant Contractual Obligations and Commercial Commitments

Long-term financial obligations were as follows as of March 3, 2015 (in thousands):

	Payments Due By Period
			Less than		1-3		3-5		More than 5
	Total		1 year		years		years		years
Notes payable and other long-term debt, including
current maturities (a)	$	38,040	$	4,722	$	19,511	$	9,456	$	4,351
Senior unsecured notes (a)		215,000		–		–		–		215,000
Interest (b)		100,381		19,331		36,672		34,415		9,963
Operating leases (c)		350,276		47,214		84,922		70,372		147,768
Purchase obligations (d)		79,475		48,773		24,352		4,734		1,616
Pension obligations (e)		31,033		2,886		4,939		4,717		18,491
Total (f)	$	814,205	$	122,926	$	170,396	$	123,694	$	397,189

(a)	See Note H to the Condensed Consolidated Financial Statements for more information.

(b)

Amounts represent contractual interest payments on our fixed-rate debt instruments. Interest payments on our variable-rate notes payable with balances of $1.3 million as of March 3, 2015 have been excluded from the amounts shown above, primarily because the balances outstanding can fluctuate monthly. Additionally, the amounts shown above include interest payments on the Senior Notes at the current interest rate of 7.625%.

(c)

This amount includes operating leases totaling $2.9 million for which sublease income from franchisees or others is expected. Certain of these leases obligate us to pay maintenance costs, utilities, real estate taxes, and insurance, which are excluded from the amounts shown above. See Note G to the Condensed Consolidated Financial Statements for more information.

(d)	The amounts for purchase obligations include cash commitments under contract for food items and supplies, advertising, utility contracts, and other miscellaneous commitments.

(e)	See Note J to the Condensed Consolidated Financial Statements for more information.

(f)	This amount excludes $3.9 million of gross unrecognized tax benefits due to the uncertainty regarding the timing of future cash outflows associated with such obligations.

Commercial Commitments as of March 3, 2015 (in thousands):

	Payments Due By Period
				Less than			1-3		3-5			More than 5
	Total			1 year			years		years			years
Letters of credit		$	12,502		$	12,502	$	–		$	–		$	–
Divestiture guarantees			5,610			1,012		1,822			1,688			1,088
Lease guarantees			1,432			269		543			458			162
Total		$	19,544		$	13,783	$	2,365		$	2,146		$	1,250

At March 3, 2015, we had divestiture guarantees, which arose in fiscal 1996, when our shareholders approved the distribution of our family dining restaurant business (Morrison Fresh Cooking, Inc., “MFC”) and our health care food and nutrition services business (Morrison Health Care, Inc., “MHC”). Subsequent to that date Piccadilly Cafeterias, Inc. (“Piccadilly”) acquired MFC and Compass Group (“Compass”) acquired MHC. As agreed upon at the time of the distribution, we have been contingently liable for payments to MFC and MHC employees retiring under MFC’s and MHC’s versions of the Management Retirement Plan and the Executive Supplemental Pension Plan (the two non-qualified defined benefit plans) for the accrued benefits earned by those participants as of March 1996.

We estimated our divestiture guarantees at March 3, 2015 to be $5.2 million for employee benefit plans (all of which resides with MHC following Piccadilly’s bankruptcy in fiscal year 2004). We believe the likelihood of being required to make payments for MHC’s portion to be remote due to the size and financial strength of MHC and Compass.

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As of March 3, 2015, we are the guarantor of two third-party leases associated with closed concept restaurants. Lease guarantee amounts in the table above represent lease payments for which we are contingently liable. While we believe that the likelihood of being required to make these lease payments is remote, we recorded a guarantee liability of $0.1 million in our Condensed Consolidated Balance Sheets at both March 3, 2015 and June 3, 2014.

Accounting Pronouncements Adopted During Fiscal Year 2015

Accounting Pronouncements Not Yet Adopted

Known Events, Uncertainties and Trends:

Financial Strategy and Stock Repurchase Plan

Cash and cash equivalents as of March 3, 2015 has increased to $61.2 million. Our overall goal is to invest in our brand and to strengthen our balance sheet to improve credit metrics. As such, our first priority is to ensure that we have adequate cash levels to run the business and internally fund our capital expenditures. Our second priority would be to reduce our outstanding debt to help improve our credit metrics with the goal of improved flexibility and access to capital at reasonable rates. Lastly, we would consider share repurchase within the limitations of our debt covenants to return capital to shareholders. Any of these actions, in any particular period and the actual amount thereof, remain at the discretion of the Board of Directors, and no assurance can be given that any such actions will be taken in the future.

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Repurchases of Senior Notes

We are allowed under the terms of the Senior Credit Facility to repurchase, in any fiscal year, up to $20.0 million of indebtedness to various holders of the Senior Notes. We did not repurchase any of the Senior Notes during the 39 weeks ended March 3, 2015. As of the date of this filing, we may repurchase $20.0 million of the Senior Notes during the remainder of fiscal year 2015. Any future repurchases of the Senior Notes, if any, will be funded with available cash on hand.

Dividends

During fiscal 1997, our Board of Directors approved a dividend policy as an additional means of returning capital to our shareholders. No dividends were declared or paid during the 39 weeks ended March 3, 2015 or March 4, 2014. The payment of a dividend in any particular period and the actual amount thereof remain at the discretion of the Board of Directors, and no assurance can be given that dividends will be paid in the future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures about Market Risk

We are exposed to market risk from fluctuations in interest rates and changes in commodity prices. The interest rate charged on our Senior Credit Facility can vary based on the interest rate option we choose to utilize. Our options for the rate are LIBOR or a Base Rate plus an applicable margin. The Base Rate is defined as the highest of the issuing bank’s prime rate, the Federal Funds rate plus 0.50%, or the Adjusted LIBO rate (as defined in the Senior Credit Facility) plus 1.0%. The applicable margin for the LIBOR rate-based option is a percentage ranging from 2.50% to 3.50% and for the Base Rate option is a percentage ranging from 1.50% to 2.50%. As of March 3, 2015, the total amount of outstanding debt subject to interest rate fluctuations was $1.3 million. A hypothetical 100 basis point change in short-term interest rates would result in an increase or decrease in interest expense of an insignificant amount per year, assuming a consistent capital structure.

Many of the ingredients used in the products we sell in our restaurants are commodities that are subject to unpredictable price volatility. This volatility may be due to factors outside our control such as weather and seasonality. We attempt to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients. Historically, and subject to competitive market conditions, we have been able to mitigate the negative impact of price volatility through adjustments to average check or menu mix.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and under the supervision of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 3, 2015.

Changes in Internal Control

During the fiscal quarter ended March 3, 2015, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business, including claims relating to injury or wrongful death under “dram shop” laws, workers’ compensation and employment matters, claims relating to lease and contractual obligations, and claims from customers alleging illness or injury. We provide reserves for such claims when payment is probable and estimable in accordance with U.S. generally accepted accounting principles. At this time, in the opinion of management, the ultimate resolution of pending legal proceedings will not have a material adverse effect on our consolidated operations, financial position, or cash flows. See Note N to the Condensed Consolidated Financial Statements for further information about our legal proceedings as of March 3, 2015.

ITEM 1A. RISK FACTORS

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended June 3, 2014 in Part I, Item 1A. Risk Factors. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table includes information regarding purchases of our common stock made by us during the third quarter ended March 3, 2015:

(a)

(b)

(c)

(d)

Total number

Average

Total number of shares

Maximum number of shares

of shares

price paid

purchased as part of publicly

that may yet be purchased

Period

purchased (1)

per share

announced plans or programs (1)

under the plans or programs (2)

Month #1

(December 3 to January 6)

2,209

8.21

2,209

11,764,096

Month #2

(January 7 to February 3)

–

11,764,096

Month #3

(February 4 to March 3)

–

11,764,096

Total

2,209

8.21

2,209

(1) No shares were repurchased other than through our publicly-announced repurchase programs and authorizations during the third quarter of our year ending June 2, 2015.

(2) As of March 3, 2015, 11.8 million shares remained available for purchase under existing programs, which consists of 1.8 million shares remaining under a July 11, 2007 authorization by the Board of Directors to repurchase 6.5 million shares and a January 8, 2013 authorization by the Board of Directors, not yet begun, to repurchase 10.0 million shares. The timing, price, quantity, and manner of the purchases to be made are at the discretion of management upon instruction from the Board of Directors, depending upon market conditions. The repurchase of shares in any particular future period and the actual amount thereof remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

We have adopted a Code of Business Conduct and Ethics that applies to all employees. A copy of our Code of Business Conduct and Ethics is available on our website, free of charge. The Internet address for our website is www.rubytuesday.com, and the Code of Business Conduct and Ethics may be found from our main webpage by clicking first on “Investors” and then on “Corporate Governance” and next on “Code of Business Conduct and Ethics.” We are not including the information contained on or available through our web site as a part of, or incorporating such information into, this Quarterly Report on Form 10-Q.

We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, on the webpage found by clicking through to “Code of Business Conduct and Ethics” as specified above.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report:

Exhibit No.

10	.1	Ruby Tuesday, Inc. Stock Incentive Plan (Amended and Restated April 8, 2015).

10	.2	Ruby Tuesday, Inc. 2015 Executive Incentive Compensation Plan.

12	.1	Statement regarding computation of Consolidated Ratio of Earnings to Fixed Charges.

31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32	.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
		Section 906 of the Sarbanes-Oxley Act of 2002.

32	.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
		Section 906 of the Sarbanes-Oxley Act of 2002.

10	1.INS	XBRL Instance Document.

10	1.SCH	XBRL Schema Document.

10	1.CAL	XBRL Calculation Linkbase Document.

10	1.DEF	XBRL Definition Linkbase Document.

10	1.LAB	XBRL Labels Linkbase Document.

10	1.PRE	XBRL Presentation Linkbase Document.

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SIGNATURES

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

RUBY TUESDAY, INC.

(Registrant)

Date: April 13, 2015

BY: /s/ JILL M. GOLDER

——————————————

Jill M. Golder

Executive Vice President – Chief Financial Officer, Treasurer, and Assistant Secretary

(Principal Financial Officer)

Date: April 13, 2015

BY: /s/ FRANKLIN E. SOUTHALL, JR.

—————————————————

Franklin E. Southall, Jr.

Vice President – Corporate Controller and

Principal Accounting Officer

(Principal Accounting Officer)

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RUBY TUESDAY, INC.

STOCK INCENTIVE PLAN

RUBY TUESDAY, INC.

STOCK INCENTIVE PLAN

TABLE OF CONTENTS

			Page
SECTION	1	DEFINITIONS.	1
1.1		Definitions.	1

SECTION	2	THE STOCK INCENTIVE PLAN.	6
2.1		Purpose of the Plan.	6
2.2		Stock Subject to the Plan.	6
2.3		Administration of the Plan.	6
2.4		Eligibility and Limits.	7

SECTION	3	TERMS OF STOCK INCENTIVES.	7
3.1		Terms and Conditions of All Stock Incentives..	7
3.2		Terms and Conditions of Options.	9
3.3		Terms and Conditions of Stock Appreciation Rights.	11
3.4		Terms and Conditions of Stock Awards..	11
3.5		Terms and Conditions of Dividend Equivalent Rights.	12
3.6		Terms and Conditions of Performance Unit Awards.	13
3.7		Terms and Conditions of Phantom Shares.	13
3.8		Treatment of Awards Upon Termination of Service.	14

SECTION	4	RESTRICTIONS ON STOCK.	14
4.1		Escrow of Shares.	14
4.2		Forfeiture of Shares.	14
4.3		Restrictions on Transfer.	15

SECTION	5	GENERAL PROVISIONS.	15
5.1		Withholding.	15
5.2		Changes in Capitalization; Merger; Liquidation.	15
5.3		Compliance with Code.	15
5.4		Right to Terminate Employment.	17
5.5		Restrictions on Delivery and Sale of Shares; Legends.	17
5.6		Non-alienation of Benefits.	17
5.7		Term; Termination and Amendment of the Plan.	17
5.8		Choice of Law.	18
5.9		Effective Date of Plan.	18
5.10		Shareholder Approval.	18

RUBY TUESDAY, INC.

STOCK INCENTIVE PLAN

Ruby Tuesday, Inc., formerly known as Morrison Restaurants Inc., originally adopted the Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan, which was amended and renamed as of March 6, 1996 as the Morrison Restaurants Inc. 1996 Non-Executive Stock Incentive Plan; was amended and renamed again as of April 12, 1999 as the Ruby Tuesday, Inc. 1996 Non-Executive Stock Incentive Plan; was subsequently amended, restated and renamed as of July 9, 2003 as the Ruby Tuesday, Inc. 2003 Stock Incentive Plan; and was amended, restated and renamed as the Ruby Tuesday, Inc. Stock Incentive Plan effective as of October 9, 2013. Ruby Tuesday, Inc. is now amending and restating the Ruby Tuesday, Inc. Stock Incentive Plan to consolidate amendments thereto made subsequent to the 2013 restatement and to increase the number of shares of stock reserved for issuance thereunder. .

SECTION 1 DEFINITIONS

1.1 Definitions. Whenever used herein, the masculine pronoun shall be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and phrases are used herein with the meaning thereafter ascribed:

(a) “Board of Directors” means the board of directors of the Company.

(b) “Cause” has the meaning defined by the Committee in the applicable Stock Incentive Award or Stock Incentive Program or, if no such definition exists, Cause shall have the same meaning as provided in any employment agreement between the Participant and the Company or, if applicable, any affiliate of the Company on the date of Termination of Service, or if no such definition or employment agreement exists, “Cause” means conduct amounting to: (1) fraud or dishonesty in the performance of Participant’s duties with the Company or its affiliates; (2) willful misconduct, refusal to follow the reasonable directions of any superior, or knowing violation of law, rules or regulations (including misdemeanors relating to public intoxication, driving under the influence, use or possession of controlled substances or relating to conduct of a similar nature); (3) acts of moral turpitude or personal conduct in violation of the Company’s Code of Business Conduct and Ethics; (4) repeated and extended absence from work without reasonable excuse; (5) a conviction or plea of guilty or nolo contendere to a felony; or (6) a material breach or violation of the terms of any agreement to which the Participant and the Company (or any affiliate) are party.

(i) the acquisition by any individual, entity or “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of voting securities of the Company where such acquisition causes any such Person to own twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities then entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that the following shall not constitute a Change in Control: (1) any acquisition directly from the Company, unless such a Person subsequently acquires additional shares of Outstanding Voting Securities other than from the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate;

(ii) within any twelve-month period (beginning on or after the date the Stock Incentive is granted), the persons who were directors of the Company immediately before the beginning of such twelve-month period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors of the Company; provided that any director who was not a director as of the date the Stock Incentive is granted shall be deemed to be an Incumbent Director if that director was elected to the Board of Directors by, or on the

recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors shall be deemed to be an Incumbent Director;

(iii) the consummation of a reorganization, merger or consolidation, with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities;

(iv) the sale, transfer or assignment of all or substantially all of the assets of the Company and its affiliates to any third party; or

(v) the liquidation or dissolution of the Company.

(d) “Code” means the Internal Revenue Code of 1986, as amended, and the applicable rules and regulations promulgated thereunder.

(e) “Committee” means the committee appointed by the Board of Directors to administer the Plan; provided that, if no such committee is appointed, the Board of Directors in its entirety shall constitute the Committee. The Board of Directors shall consider the advisability of whether the members of the Committee shall consist solely of two or more members of the Board of Directors who are “outside directors” as defined in Treas. Reg. § 1.162-27(e) and “non-employee directors” as defined in Rule 16b-3(b)(3) as promulgated under the Securities Exchange Act of 1934, and if applicable, who satisfy the requirements of the national securities exchange or nationally recognized quotation or market system on which the Stock is then traded. Notwithstanding the foregoing, with respect to Stock Incentives granted by an officer or officers of the Company and/or a director of the Board of Directors pursuant to Plan Section 2.3, the “Committee” as used in the Plan shall mean such officer(s) and/or director(s), unless the context would clearly indicate otherwise

(f) “Company” means Ruby Tuesday, Inc., a Georgia corporation, or its successor.

(g) “Disability” has the same meaning as provided in the long-term disability plan or policy maintained or, if applicable, most recently maintained, by the Company or, if applicable, any affiliate of the Company for the Participant, unless otherwise defined by the Committee in the applicable Stock Incentive Award or Stock Incentive Program. If no special definition applies and no long-term disability plan or policy was ever maintained on behalf of the Participant, Disability shall mean that condition described in Code Section 22(e)(3), as amended from time to time. In the event of a dispute, the determination of Disability shall be made by the Board of Directors and shall be supported by advice of a physician competent in the area to which such Disability relates.

(h) “Disposition” means any conveyance, sale, transfer, assignment, pledge or hypothecation, whether outright or as security, inter vivos or testamentary, with or without consideration, voluntary or involuntary.

(i) “Dividend Equivalent Rights” means certain rights to receive cash payments as described in Plan Section 3.5.

(j) “Fair Market Value” with regard to a date means the closing price at which Stock shall have been sold on the last trading date prior to that date as reported by a national securities exchange selected by the Committee on which the shares of Stock are then actively traded and published in The Wall Street Journal; provided that, Fair Market Value of the shares of Stock may be determined by the Committee by reference to the average market value determined over a period certain or as of specified dates, to a tender offer price for the shares of Stock (if settlement of an award is triggered by such an event) or to any other reasonable measure of fair market value; provided further, that, for purposes of granting Options or Stock Appreciation Rights, Fair Market Value shall be determined in a manner consistent with the requirements of Code Section 409A.

(k) “Option” means a non-qualified stock option as described in Plan Section 3.2.

(l) “Participant” means an individual who receives a Stock Incentive hereunder.

(m) “Performance Goals” means the measurable performance objectives, if any, established by the Committee for a Performance Period that are to be achieved with respect to a Stock Incentive granted to a Participant under the Plan. Performance Goals may be described in terms of (1) Company-wide objectives, (2) objectives that are related to performance of the division, department or function within the Company or an affiliate in which the Participant receiving the Stock Incentive is employed or on which the Participant’s efforts have the most influence, (3) performance solely in relation to objectives achieved during the Performance Period or as compared to past performance periods, and/or (4) performance relative to the performance by a company or group of companies selected by the Committee with respect to one or more Performance Goals established by the Committee. The Performance Goal(s) established by the Committee under an objective formula for any Performance Period under the Plan will consist of one or more of the following criteria:

	Cash flow	Retention of Company team members
	Earnings before interest and taxes and	in general or in any specific category or
	before depreciation and amortization	level of employment
	(EBITDA)	Earnings before interest, depreciation
	Earnings per share (EPS)	and amortization (EBIDA)
	Net operating profit after taxes	Earnings before interest and taxes

	(NOPAT)	(EBIT)
	Return on net assets (RONA)	Earnings before interest, taxes,
	Return on assets (ROA)	depreciation, amortization and rent
	Return on equity (ROE)	(EBITDAR)
	Return on invested capital (ROIC)	Company, franchise or system
	Company, franchise or system same	restaurant growth in number of new
	restaurant sales (SRS)	restaurants
	Company, franchise or system traffic	Average restaurant volume growth
	growth (Guest Count Growth)	Fixed charge coverage ratio
	Market share or related strength of	Sales and earnings performance
	brand measures related to consumer	Total shareholder return
	perception, including but not limited	General and administrative costs (as a
	to brand relevance and guest	percentage of net sales or flat dollar
	satisfaction, in each case based on	amount)
	objective data such as guest or market	Consolidated net income
	surveys	Management of capital or operating
	Economic Value Added (dollar spread	expenditures
	between return on capital and cost of	Appreciation of stock price
	capital) (EVA)	Market value added (Company market
	Gross revenues	value less total capital employed)
	Operating income	Debt levels, either alone or as a
	Operating cash flow	percentage of any other Performance
	Revenue, less cost of merchandise,	Goal
	payroll and related costs and other
	restaurant operating costs (Gross
	profit)

If the Committee determines that, as a result of a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or any other events or circumstances, including, but not limited to a change in applicable law, the Performance Goals are no longer suitable, the Committee may in its discretion modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, with respect to a period as the Committee deems appropriate and equitable. For example, the Committee may appropriately adjust any evaluation of performance under a Performance Goal to remove the effect of equity compensation expense under Financial Accounting Standards No. 123R; amortization of acquired technology and intangibles; asset write-downs; litigation or claim judgments or settlements; changes in or provisions under tax law, accounting principles or other such laws or provisions affecting reported results; accruals for reorganization and restructuring programs; discontinued operations; and any items that are extraordinary, unusual in nature, non-recurring or infrequent in occurrence. In any such case, the Committee shall consider whether any modification of the Performance Goals or minimum acceptable level of achievement would cause the exemption under Code Section 162(m) to become unavailable.

(n) “Performance Period” means, with respect to a Stock Incentive, a period of time of not less than twelve (12) months’ duration within which the Performance Goals relating to such Stock Incentive are to be measured. The Performance Period, if any, will be established by the Committee at the time the Stock Incentive is granted.

(o) “Performance Unit Award” refers to a performance unit award described in Plan Section 3.6.

(p) “Phantom Shares” refers to the rights described in Plan Section 3.7.

(q) “Plan” means the Ruby Tuesday, Inc. Stock Incentive Plan, as set forth herein; provided, however, that in the event that the Company is replaced by a successor in interest, the title of the Plan shall thereafter be the name of the successor in interest followed by the phrase “Stock Incentive Plan.”

(r) “Stock” means the Company’s common stock, $.01 par value.

(s) “Stock Appreciation Right” means a stock appreciation right described in Plan Section 3.3.

(t) “Stock Award” means a stock award described in Plan Section 3.4.

(u) “Stock Incentive Agreement” means an agreement between the Company and a Participant or other documentation evidencing an award of a Stock Incentive.

(v) “Stock Incentive Program” means a written agreement established by the Committee pursuant to which Stock Incentives, other than Options or Stock Appreciation Rights, are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program.

(w) “Stock Incentives” means, collectively, Dividend Equivalent Rights, Options, Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards.

(x) “Termination of Service” means the termination of the employee-employer or other service relationship between a Participant and the Company and its affiliates, regardless of the fact that severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement. The Committee shall, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Service, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Service, or whether a Termination of Service is for Cause.

SECTION 2 THE STOCK INCENTIVE PLAN

2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive to Participants to stimulate their efforts toward the continued success of the Company and to operate and manage the business in a manner that will provide for the long-term growth and profitability of the Company; (b) encourage stock ownership by Participants by providing them with a means to acquire a proprietary interest in the Company by acquiring shares of Stock or to receive compensation which is based upon appreciation in the value of Stock; and (c) provide a means of obtaining and rewarding key personnel.

2.2 Stock Subject to the Plan. Subject to adjustment in accordance with Plan Section 5.2, 21,800,000 shares of Stock (the “Maximum Plan Shares”) are hereby reserved exclusively for issuance pursuant to Stock Incentives. At no time shall the Company have outstanding Stock Incentives and shares of Stock issued in respect of Stock Incentives in excess of the Maximum Plan Shares. The shares of Stock attributable to the nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of any Stock Incentive that is forfeited or cancelled or expires or terminates for any reason without becoming vested, paid, exercised, converted or otherwise settled in full shall again be available for purposes of the Plan. Notwithstanding the foregoing, the maximum aggregate number of shares of the Stock from which grants or awards of Stock Incentives, other than Options, may be made under the Plan shall not exceed twenty-five percent (25%) of the Maximum Plan Shares.

2.3 Administration of the Plan. The Plan shall be administered by the Committee. The Board of Directors may from time to time remove members from or add members to the Committee. Vacancies on the Committee shall be filled by the Board of Directors.

The Committee shall have full authority in its discretion to determine from among the eligible individuals of the Company or its affiliates to whom Stock Incentives shall be granted and the terms and provisions of Stock Incentives, subject to the Plan. Subject to the provisions of the Plan, the Committee shall have full and conclusive authority to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the respective Stock Incentive Agreements or Stock Incentive Programs and to make all other determinations necessary or advisable for the proper administration of the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan (whether or not such persons are similarly situated). The Committee’s decisions shall be final and binding on all Participants. As to any matter involving a Participant who is not a “reporting person” for purposes of Section 16 of the Securities Exchange Act of 1934, the Committee may delegate to any member of the Board of Directors or officer of the Company the administrative authority: (a) to grant Stock Incentives to eligible individuals of the Company and its affiliates, subject (i) to individual and aggregate quantitative limitations on the number of, or, in the case of cash-based Stock Incentives, the value of, Stock Incentives that may be granted pursuant to such delegated authority and (ii) to the requirement that all such exercises of the delegated authority be reported on a timely basis to the Committee; (b) to interpret the provisions of the

Participant’s Stock Incentive Agreement and (c) to determine the treatment of Stock Incentives upon a Termination of Service, as contemplated by Plan Section 3.8.

2.4 Eligibility and Limits.

(a) Stock Incentives may be granted to officers and employees of the Company or an affiliate of the Company. To the extent required under Section 162(m) of the Code and the regulations thereunder, for compensation to be treated as qualified performance-based compensation, subject to adjustment in accordance with Plan Section 5.2, the maximum number of shares of Stock with respect to which (1) Options, (2) Stock Appreciation Rights and (3) other Stock Incentives (to the extent they are granted with the intent that they qualify as performance-based compensation under Section 162(m) of the Code) may be granted during any fiscal year of the Company to any employee may not exceed 750,000. In applying this limitation, if a Stock Incentive is cancelled for any reason, then any shares of Stock attributable to such cancellation either shall continue to be counted as an outstanding grant or shall be counted as a new grant of shares of Stock, as the case may be, against the affected person’s 750,000 share limit for the appropriate fiscal year. The maximum aggregate dollar amount of cash-settled Stock Incentives that may be paid during any fiscal year of the Company to any employee may not exceed $6,000,000.

(b) Stock Incentives also may be granted to non-employee directors of the Company or an affiliate of the Company; provided, however, that the maximum number of shares of Stock with respect to which Stock Incentives that are to be settled in shares of Stock may be granted during any fiscal year of the Company to any non-employee director may not exceed a number of shares having a Fair Market Value, determined at the date of grant, in excess of $300,000 and no non-employee director may be granted a Stock Incentive to be settled in cash (other than pursuant to Plan Section 5.2).

SECTION 3 TERMS OF STOCK INCENTIVES

3.1 Terms and Conditions of All Stock Incentives.

(a) The number of shares of Stock, if any, as to which a Stock Incentive may be granted will be determined by the Committee in its sole discretion, subject to the provisions of Plan Section 2.2 as to the total number of shares available for grants under the Plan and subject to the limits on Options and Stock Appreciation Rights and other Stock Incentives in Plan Section 2.4.

(b) Each Stock Incentive will either be evidenced by a Stock Incentive Agreement in such form and containing such, terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, Performance Goals or other performance criteria, if any, that must be achieved as a condition to vesting or settlement of the Stock Incentive, or be made subject to the terms of a Stock Incentive Program, containing such terms, conditions and restrictions as the Committee may determine to be appropriate, including without limitation, Performance Goals or other performance criteria, if

any, that must be achieved as a condition to vesting or settlement of the Stock Incentive. Each Stock Incentive Agreement or Stock Incentive program is subject to the terms of the Plan and any provision contained in a Stock Incentive Agreement or Stock Incentive Program that is contrary with the Plan are null and void. Performance Goals, if any, shall be established before within ninety (90) days of the first day of a Performance Period. In addition, at the time any Performance Goals are established, the outcome as to whether the Performance Goals will be met must be substantially uncertain. If any Performance Goals are established as a condition to vesting or settlement of a Stock Incentive, the Committee shall certify in writing that the applicable Performance Goals were in fact satisfied before such Stock Incentive is vested or settled, as applicable. Each Stock Incentive Agreement or Stock Incentive Program is subject to the terms of the Plan and any provisions contained in the Stock Incentive Agreement or Stock Incentive Program that are inconsistent with the Plan are null and void. To the extent a Stock Incentive is subject to Performance Goals with the intent that the Stock Incentive constitute performance-based compensation under Code Section 162(m), the Committee shall comply with all applicable requirements under Code Section 162(m) in granting and settling such Stock Incentive, except as otherwise provided herein. The Committee may, but is not required to, structure any Stock Incentive as performance-based compensation under Code Section 162(m).

(c) The date a Stock Incentive is granted shall be the date on which the Committee has approved the terms and conditions of the Stock Incentive and has determined the recipient of the Stock Incentive and the number of shares covered by the Stock Incentive and has taken all such other action necessary to complete the grant of the Stock Incentive or such later date as may be specified in the approval of the Stock Incentive Agreement or Stock Incentive Program.

(d) The Committee may provide in any Stock Incentive Agreement or pursuant to any Stock Incentive Program (or subsequent to the award of a Stock Incentive but prior to its expiration or cancellation, as the case may be) that, in the event of a Change in Control, the Stock Incentive shall or may be cashed out on the basis of any price not greater than the highest price paid for a share of Stock in any transaction reported by the National Association of Securities Dealer Automated Quotation System or any national securities exchange selected by the Committee on which the shares of Stock are then actively traded during a specified period immediately preceding or including the date of the Change in Control or offered for a share of Stock in any tender offer occurring during a specified period immediately preceding or including the date the tender offer commences; provided that, in no case shall any such specified period exceed one (1) year (the “Change in Control Price”). For purposes of this Subsection, the cash-out of a Stock Incentive shall be determined as follows:

(1) Options shall be cashed out on the basis of the excess, if any, of the Change in Control Price over the Exercise Price with or without regard to whether the Option may otherwise be exercisable only in part;

(2) Stock Awards and Phantom Shares shall be cashed out in an amount equal to the Change in Control Price with or without regard to any conditions or restrictions otherwise applicable to any such Stock Incentive; and

(3) Stock Appreciation Rights, Dividend Equivalent Rights and Performance Unit Awards shall be cashed out with or without regard to any conditions or restrictions otherwise applicable to any such Stock Incentive and the amount of the cash out shall be determined by reference to the number of shares of Stock that would be required to pay the Participant in kind for the value of the Stock Incentive as of the date of the Change in Control multiplied by the Change in Control Price.

(e) Any Stock Incentive may be granted in connection with all or any portion of a previously or contemporaneously granted Stock Incentive. Exercise or vesting of a Stock Incentive granted in connection with another Stock Incentive may result in a pro rata surrender or cancellation of any related Stock Incentive, as specified in the applicable Stock Incentive Agreement or Stock Incentive Program.

(f) Stock Incentives shall not be transferable or assignable except by will or by the laws of descent and distribution and shall be exercisable, during the Participant’s lifetime, only by the Participant; in the event of the Disability of the Participant, by the legal representative of the Participant; or in the event of the death of the Participant, by the personal representative of the Participant’s estate or if no personal representative has been appointed, by the successor in interest determined under the Participant’s will.

(g) After the date of grant of a Stock Incentive, the Committee may, in its sole discretion, modify the terms and conditions of a Stock Incentive, except to the extent that such modification would be inconsistent with other provisions of the Plan or would adversely affect the rights of a Participant under the Stock Incentive (except as otherwise permitted under the Plan) or to the extent that the mere possession (as opposed to the exercise) of such power would result in adverse tax consequences to any Participant under Code Section 409A.

(h) Dividends payable on Stock subject to a Stock Incentive and dividend equivalent rights payable with respect to a Stock Incentive shall not be paid prior to the vesting of the portion of the Stock Incentive to which they relate.

3.2 Terms and Conditions of Options. Each Option granted under the Plan shall be evidenced by a Stock Incentive Agreement.

(a) Option Price. Subject to adjustment in accordance with Plan Section 5.2 and the other provisions of this Section 3.2, the exercise price (the “Exercise Price”) per share of Stock purchasable under any Option shall be as set forth in the applicable Stock Incentive Agreement. With respect to each grant of an Option to a Participant, the Exercise Price per share shall not be less than its Fair Market Value on the date the Option is granted.

(b) Option Term. The term of an Option shall be as specified in the applicable Stock Incentive Agreement; provided, however that no Option granted to a Participant shall be exercisable after the expiration of ten (10) years from the date the Option is granted.

(c) Payment. Payment for all shares of Stock purchased pursuant to exercise of an Option shall be made in any form or manner authorized by the Committee in the Stock Incentive Agreement or by amendment thereto, including, but not limited to, cash, cash equivalents or, if the Stock Incentive Agreement provides, (1) by delivery to the Company of a number of shares of Stock which have been owned by the holder having an aggregate Fair Market Value of not less than the product of the Exercise Price multiplied by the number of shares the Participant intends to purchase upon exercise of the Option on the date of delivery; (2) in a cashless exercise through a broker; provided, however, that any such cashless exercise is consistent with the restrictions of Section 13(k) of the Securities Exchange Act of 1934 (Section 402 of the Sarbanes-Oxley Act of 2002); (3) by having a number of shares of Stock withheld, the Fair Market Value of which as of the date of exercise is sufficient to satisfy the Exercise Price; or (4) by any combination of the foregoing. Payment shall be made at the time that the Option or any part thereof is exercised, and no shares shall be issued or delivered upon exercise of an option until full payment has been made by the Participant. The holder of an Option, as such, shall have none of the rights of a shareholder.

(d) Conditions to the Exercise of an Option. Each Option granted under the Plan shall be exercisable by whom, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the Stock Incentive Agreement; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may modify the terms of an Option to the extent not prohibited by the terms of the Plan, including accelerating the time or times at which such Option may be exercised in whole or in part, including, without limitation, upon a Change in Control and may permit the Participant or any other designated person to exercise the Option, or any portion thereof, for all or part of the remaining Option term notwithstanding any provision of the Stock Incentive Agreement to the contrary.

(e) Special Provisions for Certain Substitute Options. Notwithstanding anything to the contrary in this Section 3.2, any Option issued in substitution for an option previously issued by another entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for an exercise price computed in accordance with such Code Section and the regulations thereunder and may contain such other terms and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms and conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option being replaced thereby.

(f) No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Stock to the

Company in payment of the exercise price and/or tax withholding obligation under any other option held by a Participant.

(g) No Repricing or Buyouts. Except as provided in Plan Section 5.2, without the approval of the Company’s shareholders, the Exercise Price of an Option may not be reduced, directly or indirectly, after the grant of the Option, including any surrender of the Option in consideration of, or in exchange for: (1) the grant of a new Option having an Exercise Price below that of the Option that was surrendered; (2) Stock; (3) cash; or (4) any other Stock Incentive

3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock Appreciation Right granted under the Plan shall be evidenced by a Stock Incentive Agreement. A Stock Appreciation Right may be granted in connection with all or any portion of a previously or contemporaneously granted Stock Incentive or not in connection with a Stock Incentive. A Stock Appreciation Right shall entitle the Participant to receive the excess of (a) the Fair Market Value of a specified or determinable number of shares of the Stock at the time of payment or exercise over (b) a specified or determinable price, which shall not be less than the Fair Market Value of the Stock at the time of the award. A Stock Appreciation Right granted in connection with a Stock Incentive may only be exercised to the extent that the related Stock Incentive has not been exercised, paid or otherwise settled. The exercise of a Stock Appreciation Right granted in connection with a Stock Incentive shall result in a pro rata surrender or cancellation of any related Stock Incentive to the extent the Stock Appreciation Right has been exercised.

(a) Settlement. Upon settlement of a Stock Appreciation Right, the Company shall pay to the Participant the appreciation in cash and/or shares of Stock (valued at the aggregate Fair Market Value on the date of payment or exercise), as provided in the Stock Incentive Agreement or, in the absence of such provision, as the Committee may determine.

(b) Conditions to Exercise. Each Stock Appreciation Right granted under the Plan shall be exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the Stock Incentive Agreement; provided, however, that subsequent to the grant of a Stock Appreciation Right, the Committee, at any time before complete termination of such Stock Appreciation Right, may accelerate the time or times at which such Stock Appreciation Right may be exercised or paid in whole or in part.

3.4 Terms and Conditions of Stock Awards.

(a) Grants. The number of shares of Stock subject to a Stock Award and restrictions or conditions on such shares, if any, will be as the Committee determines, including, without limitation, Performance Goals, if any, that must be achieved as a condition to vesting of the Stock Award and the certificate for such shares will bear evidence of any restrictions or conditions. Subsequent to the date of the grant of the Stock Award, the Committee shall have the power to permit, in its discretion, an acceleration of the expiration of an applicable

restriction period with respect to any part or all of the shares awarded to a Participant. Subject to Subsections (b) and (c) below, the Committee may require a cash payment from the Participant in an amount no greater than the aggregate Fair Market Value of the shares of Stock awarded determined at the date of grant in exchange for the grant of a Stock Award or may grant a Stock Award without the requirement of a cash payment.

(b) Vesting. Any Stock Award that does not contain forfeitability provisions based upon Performance Goals shall vest over a period of no less than thirty (30) months, subject to exceptions for death, Disability, retirement and similar events as may be prescribed by the Committee.

(c) Grants in Lieu of Salary. Any Stock Award that does not contain any forfeitability provisions shall be granted only in lieu of salary or cash bonus otherwise payable to a Participant and may be granted at up to a fifteen percent (15%) discount to the Fair Market Value of the Stock as of the date of grant only if the Stock is subject to material restrictions on transferability.

(d) Minimum Holding Period. Any Stock Award granted under the Plan shall provide that the Stock subject to the Stock Award, net of shares of Stock withheld or otherwise applied to satisfy tax withholding obligations, shall be subject to a minimum holding period of six (6) months from the date the shares of Stock cease to be forfeitable, subject to exceptions for death, Disability, retirement and similar events as may be prescribed by the Committee.

3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend Equivalent Right shall entitle the Participant to receive payments from the Company in an amount determined by reference to any cash dividends paid on a specified number of shares of Stock to Company shareholders of record during the period such rights are effective. The Committee may impose such restrictions and conditions on any Dividend Equivalent Rights as the Committee determines, including, without limitation, Performance Goals and the date any such right shall terminate. The Committee may reserve the right to terminate, amend or suspend any such right at any time.

(a) Payment. Payment in respect of a Dividend Equivalent Right may be made by the Company in cash or shares of Stock (valued at Fair Market Value on the date of payment) as provided in the Stock Incentive Agreement or Stock Incentive Program or, in the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Dividend Equivalent Right granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the applicable Stock Incentive Agreement or Stock Incentive Program; provided, however, that subsequent to the grant of a Dividend Equivalent Right, the Committee, at any time before complete termination of such

Dividend Equivalent Right, may accelerate the time or times at which such Dividend Equivalent Right may be paid in whole or in part.

3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit Award shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of the value of either a specified or determinable number of units (stated in terms of a designated or determinable dollar amount per unit) or a percentage or multiple of a specified amount determined by the Committee. At the time of the grant, the Committee must determine the base value of each unit, the number of units subject to a Performance Unit Award, and the performance factors, including, but not limited to, one or more Performance Goals, applicable to the determination of the ultimate payment value of the Performance Unit Award and the period over which Company performance shall be measured. The Committee may provide for an alternate base value for each unit under certain specified conditions.

(a) Payment. Payment in respect of Performance Unit Awards may be made by the Company in cash or shares of Stock (valued at Fair Market Value on the date of payment), as provided in the applicable Stock Incentive Agreement or Stock Incentive Program or, in the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Performance Unit Award granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the applicable Stock Incentive Agreement or Stock Incentive Program; provided, however, that subsequent to the grant of a Performance Unit Award, the Committee, at any time before complete termination of such Performance Unit Award, may accelerate the time or times at which such Performance Unit Award may be paid in whole or in part.

3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall entitle the Participant to receive, at a specified future date, payment of an amount equal to all or a portion of the Fair Market Value of a specified number of shares of Stock at the end of a specified period. At the time of the grant, the Committee will determine the factors which will govern the portion of the rights so payable, including, at the discretion of the Committee, any performance criteria that must be satisfied as a condition to payment including, but not limited to, one or more Performance Goals.

(a) Payment. Payment in respect of Phantom Shares may be made by the Company in cash or shares of Stock (valued at Fair Market Value on the date of payment), as provided in the applicable Stock Incentive Agreement or Stock Incentive Program or, in the absence of such provision, as the Committee may determine.

(b) Conditions to Payment. Each Phantom Share granted under the Plan shall be payable at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the applicable Stock Incentive Agreement or Stock Incentive Program; provided, however, that subsequent to the grant of a Phantom Share,

the Committee, at any time before complete termination of such Phantom Share, may accelerate the time or times at which such Phantom Share may be paid in whole or in part.

3.8 Treatment of Awards Upon Termination of Service. Any award under this Plan to a Participant who suffers a Termination of Service may be cancelled, accelerated, paid or continued, as provided in the Stock Incentive Agreement or Stock Incentive Program or, in the absence of such provision, as the Committee may determine to the extent not prohibited by the Plan. The portion of any award exercisable in the event of continuation or the amount of any payment due under a continued award may be adjusted by the Committee to reflect the Participant’s period of service from the date of grant through the date of the Participant’s Termination of Service or such other factors as the Committee determines are relevant to its decision to continue the award.

SECTION 4 RESTRICTIONS ON STOCK

4.1 Escrow of Shares. Any certificates representing the shares of Stock issued under the Plan shall be issued in the Participant’s name, but, if the applicable Stock Incentive Agreement or Stock Incentive Program so provides, the shares of Stock shall be held by a custodian designated by the Committee (the “Custodian”). Each applicable Stock Incentive Agreement or Stock Incentive Program providing for transfer of shares of Stock to the Custodian may require a Participant to complete an irrevocable stock power appointing the Custodian as the attorney-in-fact for the Participant for the term specified in the applicable Stock Incentive Agreement or Stock Incentive Program, with full power and authority in the Participant’s name, place and stead to transfer, assign and convey to the Company any shares of Stock held by the Custodian for such Participant, if the Participant forfeits the shares under the terms of the applicable Stock Incentive Agreement or Stock Incentive Program. During the period that the Custodian holds the shares subject to this Section, the Participant shall be entitled to all rights, except as provided in the applicable Stock Incentive Agreement or Stock Incentive Program, applicable to shares of Stock not so held. Any dividends declared on shares of Stock held by the Custodian shall, as the Committee may provide in the applicable Stock Incentive Agreement or Stock Incentive Program, be paid directly to the Participant or, in the alternative, be retained by the Custodian until the expiration of the term specified in the applicable Stock Incentive Agreement or Stock Incentive Program and shall then be delivered, together with any proceeds, with the shares of Stock to the Participant or to the Company, as applicable.

4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set forth in any Stock Incentive Agreement or Stock Incentive Program, in the event that the Participant violates a noncompetition agreement as set forth in the Stock Incentive Agreement or Stock Incentive Program, all Stock Incentives and shares of Stock issued to the holder pursuant to the Plan shall be forfeited; provided, however, that the Company shall return to the holder the lesser of any consideration paid by the Participant in exchange for Stock issued to the Participant pursuant to the Plan or the then Fair Market Value of the Stock forfeited hereunder.

4.3 Restrictions on Transfer. The Participant shall not have the right to make or permit to exist any Disposition of the shares of Stock issued pursuant to the Plan except as provided in the Plan or the applicable Stock Incentive Agreement or Stock Incentive Program. Any Disposition of the shares of Stock issued under the Plan by the Participant not made in accordance with the Plan or the applicable Stock Incentive Agreement or Stock Incentive Program shall be void. The Company shall not recognize, or have the duty to recognize, any Disposition not made in accordance with the Plan and the applicable Stock Incentive Agreement or Stock Incentive Program, and the shares so transferred shall continue to be bound by the Plan and the applicable Stock Incentive Agreement or Stock Incentive Program.

SECTION 5 GENERAL PROVISIONS

5.1 Withholding. The Company shall deduct from all cash distributions under the Plan any taxes required to be withheld by federal, state or local government. Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan or upon the vesting of any Stock Award, the Company has the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state and local tax withholding requirements prior to the delivery of any certificate or certificates for such shares or the vesting of such Stock Award. A Participant may satisfy the withholding obligation in cash, cash equivalents or, if the applicable Stock Incentive Agreement or Stock Incentive Program provides, a Participant may elect to have the number of shares of Stock the Participant is to receive reduced by, or with respect to a Stock Award, tender back to the Company, the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock determined as of the Tax Date (defined below), is sufficient to satisfy the minimum required federal, state and local, if any, withholding taxes arising from exercise or payment of a Stock Incentive (a “Withholding Election”). A Participant may make a Withholding Election only if both of the following conditions are met:

(a) The Withholding Election must be made on or prior to the date on which the amount of tax required to be withheld is determined (the “Tax Date”) by executing and delivering to the Company a properly completed notice of Withholding Election as prescribed by the Committee; and

(b) Any Withholding Election made will be irrevocable; however, the Committee may in its sole discretion disapprove and give no effect to the Withholding Election.

5.2 Changes in Capitalization; Merger; Liquidation.

(a) The number of shares of Stock reserved for the grant of Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards; the number of shares of Stock reserved for issuance upon the exercise, vesting, grant or settlement, as applicable, of each outstanding Option, Dividend Equivalent Right, Performance Unit Award, Phantom Share, Stock Appreciation Right and Stock Award and to which each such award pertains; the Exercise Price of each outstanding

Option; the specified price of each outstanding Stock Appreciation Right; and the maximum fiscal year limitations on the number of shares of Stock granted to any single individual under Stock Incentives shall be proportionately adjusted for any nonreciprocal transaction between the Company and the holders of capital stock of the Company that causes the per share value of the shares of Stock underlying an award to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through a large, nonrecurring cash dividend (each, an “Equity Restructuring”).

(b) In the event of any merger, consolidation, extraordinary dividend (including a spin-off), reorganization, recapitalization, sale of substantially all of the Company’s assets, other change in the capital structure of the Company, tender offer for shares of Stock, or a Change in Control of the Company, that in each case is not an Equity Restructuring, the Committee, in its sole discretion, may make such adjustments with respect to awards and take such other action as it deems necessary or appropriate, including without limitation, the assumption of other awards, the substitution of new awards, the adjustment of outstanding awards, the acceleration of awards, the removal of restrictions on outstanding awards, the settlement of any awards in cash or cash equivalents, or the termination of outstanding awards in exchange for the cash value determined in good faith by the Committee of the vested and/or unvested portion of the award, all as may be provided in the applicable Stock Incentive Agreement or Stock Incentive Program or, if not expressly addressed therein, as the Committee subsequently may determine in its sole discretion. Any adjustment pursuant to this Section 5.2 may provide, in the Committee’s discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Stock Incentive, but except as set forth in this Section may not otherwise diminish the then value of the Stock Incentive. In making any such adjustment, the Committee shall consider the impact of any adverse tax consequences that may affect the Participant under Code Section 409A and any adverse financial accounting consequences that may affect the Company.

(c) The existence of the Plan and the Stock Incentives granted pursuant to the Plan shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.

5.3 Compliance with Code. Except to the extent provided otherwise by the Committee, awards under the Plan are intended to satisfy the requirements of Code Section 409A so as to avoid the imposition of any additional taxes or penalties under Code Section 409A. If the Committee determines that a Stock Incentive Agreement or Stock Incentive Program, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under Code Section 409A, then unless the Committee provides otherwise, such Stock Incentive Agreement or Stock

Incentive Program, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan, Stock Incentive Agreement, and/or Stock Incentive Program will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Code Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Participant.

5.4 Right to Terminate Employment. Nothing in the Plan or in any Stock Incentive shall confer upon any Participant the right to continue as an employee, officer, director or other service provider of the Company or any of its affiliates or affect the right of the Company or any of its affiliates to terminate the Participant’s employment or services at any time.

5.5 Restrictions on Delivery and Sale of Shares; Legends. Each Stock Incentive is subject to the condition that if at any time the Committee, in its discretion, shall determine that the listing, registration or qualification of the shares covered by such Stock Incentive upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection with the granting of such Stock Incentive or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such Stock Incentive may be withheld unless and until such listing, registration or qualification shall have been effected. If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under Stock Incentives then outstanding, the Committee may require, as a condition of exercise of any Option or as a condition to any other delivery of Stock pursuant to a Stock Incentive, that the Participant or other recipient of a Stock Incentive represent, in writing, that the shares received pursuant to the Stock Incentive are being acquired for investment and not with a view to distribution and agree that the shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities laws. The Company may include on certificates representing shares delivered pursuant to a Stock Incentive such legends referring to the foregoing representations or restrictions or any other applicable restrictions on resale as the Company, in its discretion, shall deem appropriate.

5.6 Non-alienation of Benefits. Other than as specifically provided with regard to the death of a Participant, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void. No such benefit shall, prior to receipt by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Participant.

5.7 Term; Termination and Amendment of the Plan. The Plan shall expire on the day immediately preceding the tenth (10th) anniversary of the approval of this restatement of the Plan by shareholders, unless its continuation beyond such date is approved by the shareholders of the Company. Notwithstanding the foregoing, the Board of Directors at any time prior to the

expiration of the Plan may amend or terminate the Plan without shareholder approval; provided, however, that the Board of Directors shall obtain shareholder approval for any amendment to the Plan that, except as provided under Plan Section 5.2, increases the number of shares of Stock available under the Plan, materially expands the classes of individuals eligible to receive Stock Incentives, materially expands the type of awards available for issuance under the Plan, or would otherwise require shareholder approval under the rules of the applicable exchange. Unless a Stock Incentive Agreement or Stock Incentive Program expressly provides otherwise, no such termination or amendment without the consent of the holder of a Stock Incentive may adversely affect the rights of the Participant under such Stock Incentive.

5.8 Choice of Law. The laws of the State of Georgia shall govern the Plan, to the extent not preempted by federal law, without reference to the principles of conflict of laws.

5.9 Effective Date of Plan. The Plan, as amended and restated, shall become effective upon the date the Plan, as so amended and restated, is approved by the shareholders of the Company.

5.10 Shareholder Approval. The Plan shall be submitted to the shareholders of the Company for their approval within twelve (12) months after the adoption of the restated Plan by the Board of Directors. If such approval is not obtained, the Plan will be terminated and shall be maintained prospectively only for the purpose of administering Stock Incentive granted prior to the date of the adoption of the restatement by the Board of Directors.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Company has executed this Plan as of April 8 , 2015, the date of its adoption by the Board of Directors.

	RUBY TUESDAY, INC.

	By:	/s/ James J. Buettgen

	Name:	James J. Buettgen

	Title:	Chairman, President & Chief Executive Officer

ATTEST:

/s/ Rhonda Parrish

Secretary

[CORPORATE SEAL]

RUBY TUESDAY, INC.

2015 EXECUTIVE INCENTIVE COMPENSATION PLAN

ARTICLE I.

INTRODUCTION

1.1. Purpose. The purpose of this Plan is to enable Ruby Tuesday, Inc. (the “Company”) to recruit and retain highly qualified eligible executives, provide incentives to such individuals to attain the goals of the Company and its Affiliates (as defined below) and provide such executives with incentive compensation based on the performance of the Company consistent with the overall goal of enhancing shareholder value. The Plan is designed with the intent that the incentive awards paid hereunder to eligible participants be fully deductible without regard to the deductibility limitations provided under Section 162(m) of the Code (as defined below). This Plan is meant to supersede in its entirety the Ruby Tuesday, Inc. 2010 Executive Incentive Compensation Plan (the “Prior Plan”) effective as of the Company’s 2016 fiscal year; provided, however, that the adoption of this Plan shall not affect incentive compensation awards for the Company’s 2015 fiscal year previously established under the Prior Plan.

1.2. Description. This Plan is the means by which the Committee (as defined below) shall determine incentive awards and implement awards for participating employees hereunder.

ARTICLE II.

DEFINITIONS

As used in this Plan, the following terms shall have the following meanings:

“Affiliate” means (a) an entity that directly or through one or more intermediaries is controlled by the Company, and (b) any entity in which the Company has a significant ownership interest, as determined by the Company.

“Average Base Compensation” means the average annual base salary paid to a Participant over a Performance Period, exclusive of bonus and other incentive compensation, commissions, fringe benefits, employee benefits, expense allowances (nonaccountable or otherwise) and other nonrecurring forms of remuneration.

“Board” means the Board of Directors of the Company.

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“Committee” means the Compensation Committee of the Board, which shall consist of two or more members of the Board of Directors of the Company, each of whom shall be an “outside director” within the meaning of Code Section 162(m); provided, however, that, if the

Compensation Committee of the Board is not comprised solely of members who are “outside directors”, the term “Committee” shall mean the subcommittee of the Compensation Committee established by the Compensation Committee and comprised of two or more members of the Compensation Committee, each of whom shall be an “outside director” within the meaning of Code Section 162(m).

“Eligible Employee” means each employee of the Company holding a position of Senior Vice President or above as indicated by its organizational chart. No employees of an Affiliate shall be eligible for the Plan.

“Executive Compensation Clawback Policy” means the policy then maintained by the Company, as the same may be amended from time to time following its adoption by the Board, pursuant to which the Company may withhold and forfeit compensation otherwise payable or seek recovery of compensation previously paid, as the case may be, in situations involving accounting restatements where the amount of compensation to be paid was based, in whole or in part, on erroneous financial data or in other circumstances as the Executive Compensation Clawback Policy may identify from time to time.

“Incentive Award” means an award payable with respect to a Performance Period determined in accordance with Article V hereof.

“Participant” means any Eligible Employee for the Performance Period(s) as to which he or she is eligible to receive an Incentive Award, as designated by the Committee.

“Performance Measures” means the measurable performance objectives, if any, established by the Committee for a Performance Period that are to be achieved with respect to an Incentive Award granted to a Participant under the Plan. Performance Measures may be described in terms of (i) Company-wide objectives, (ii) objectives that are related to performance of the division, department or function within the Company or an Affiliate in which the Participant receiving the Incentive Award is employed or on which the Participant’s efforts have the most influence, (iii) performance solely in relation to objectives achieved during the Performance Period or as compared to past performance periods, and/or (iv) performance relative to the performance by a company or group of companies selected by the Committee with respect to one or more Performance Measures established by the Committee. The Performance Measure(s) established by the Committee under an objective formula for any Performance Period under the Plan will consist of one or more of the following criteria:

	Cash flow	Retention of Company team members
	Earnings before interest and taxes and	in general or in any specific category or
	before depreciation and amortization	level of employment
	(EBITDA)	Earnings before interest, depreciation
	Earnings per share (EPS)	and amortization (EBIDA)
	Net operating profit after taxes	Earnings before interest and taxes

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	(NOPAT)	(EBIT)
	Return on net assets (RONA)	Earnings before interest, taxes,
	Return on assets (ROA)	depreciation, amortization and rent
	Return on equity (ROE)	(EBITDAR)
	Return on invested capital (ROIC)	Company, franchise or system
	Company, franchise or system same	restaurant growth in number of new
	restaurant sales (SRS)	restaurants
	Company, franchise or system traffic	Average restaurant volume growth
	growth (Guest Count Growth)	Fixed charge coverage ratio
	Market share or related strength of	Sales and earnings performance
	brand measures related to consumer	Total shareholder return
	perception, including but not limited	General and administrative costs (as a
	to brand relevance and guest	percentage of net sales or flat dollar
	satisfaction, in each case based on	amount)
	objective data such as guest or market	Consolidated net income
	surveys	Management of capital or operating
	Economic Value Added (dollar spread	expenditures
	between return on capital and cost of	Appreciation of stock price
	capital) (EVA)	Market value added (Company market
	Gross revenues	value less total capital employed)
	Operating income	Debt levels, either alone or as a
	Operating cash flow	percentage of any other Performance
	Revenue, less cost of merchandise,	Measure
	payroll and related costs and other
	restaurant operating costs (Gross
	profit)

“Performance Period” means, with respect to an Incentive Award, a period of time within which the Performance Measure(s) relating to such Incentive Award are to be

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measured. The Performance Period, if any, will be established by the Committee pursuant to Section 5.1 at the time the Incentive Award is granted.

“Plan” means the Ruby Tuesday, Inc. 2015 Executive Incentive Compensation Plan, as in effect and as amended from time to time.

ARTICLE III.

ADMINISTRATION

The administration and operation of the Plan shall be supervised by the Committee with respect to all matters. The Committee may delegate responsibility for the day-to-day administration and operation of the Plan to such employees of the Company as it shall designate from time-to-time. The Committee shall interpret and construe any and all provisions of the Plan and any determination made by the Committee under the Plan shall be final and conclusive. Neither the Board nor the Committee, nor any member of the Board, nor any employee of the Company shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan (other than acts of willful misconduct) and the members of the Board and the Committee and the employees of the Company shall be entitled to indemnification and reimbursement by the Company to the maximum extent permitted at law in respect of any claim, loss, damage or expense (including counsel’s fees) arising from their acts, omissions and conduct in their official capacity with respect to the Plan. The Plan shall be interpreted in view of the intention that any grant of compensation pursuant to the Plan is intended to qualify as performance-based compensation within the meaning of Code Section 162(m) and the regulations and interpretations promulgated thereunder.

ARTICLE IV.

PARTICIPATION

4.1 Eligibility for Participation. The Committee shall designate those Eligible Employees who are to be Participant(s) for a Performance Period within ninety (90) days of the first day of the Performance Period. A Participant may be eligible to receive awards under the Plan for one or more Performance Periods, as determined by the Committee.

4.2 Conditions to and Limitations upon Participation. An Eligible Employee’s acceptance of the designation as a Participant for any and each Performance Period and his or her acceptance of the payment of any Incentive Award is conditioned upon the Participant’s compliance with the terms of the Executive Compensation Clawback Policy. The Committee may require a Participant to affirmatively acknowledge and agree to the application of the Executive Compensation Clawback Policy in connection with his or her participation in the Plan upon his or her initial designation as a Participant, at the commencement of any or each Performance Period and/or prior to the payment of any or each Incentive Award; however, any such affirmative acknowledgement and agreement is intended to supplemental the Company’s ability to enforce the Executive Compensation Clawback Policy and the absence of any such affirmative acknowledgement and consent shall not diminish the Company’s ability

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to enforce the terms of the Executive Compensation Clawback Policy as an express condition to participate in, and receive benefits under, the Plan.

ARTICLE V.

INCENTIVE AWARD

5.1. Establishment of Performance Period and Performance Measures. From time to time while the Plan is maintained by the Company, the Committee may establish Performance Period(s) for one or more Participants. Within ninety (90) days of the first day of a Performance Period, but in any event prior to the expiration of twenty-five percent (25%) of the applicable Performance Period, the Committee shall establish the Performance Measure(s) for the payment of Incentive Awards under the Plan. At the time any Performance Measures are established, the outcome as to whether the Performance Measures will be met must be substantially uncertain. The Performance Period(s), Performance Measure(s) and other terms of the Incentive Awards contemplated under this Article V shall be set forth in writing in such detail so that a third party having knowledge of the relevant Performance Period(s), Performance Measure(s) and performance results could calculate whether the Performance Measure(s) have been met and the amount of the Incentive Award to be paid to each Participant.

5.2. Incentive Awards. The Committee may establish either flat dollar amount(s) or percentage(s) of each Participant’s Average Base Compensation to be paid as an Incentive Award under this Article V upon the attainment of one or more of the Performance Measures for a Performance Period. After establishing the dollar amount of an Incentive Award or the percentages of Average Base Compensation to be paid as an Incentive Award under this Article V for each Participant, the Committee may reduce, but not increase, by up to twenty-five percent (25%) of the amount of the Incentive Award which would have otherwise been payable to the Participant based upon the Committee’s determination of the performance of such Participant for the Performance Period in other quantitative and qualitative goals established by the Committee from time to time. In no event shall the amount of the Incentive Award payable to any Participant attributable to a Performance Period exceed $5,000,000 if the Performance Period consists of twelve (12) months or less or exceed $8,000,000 if the Performance Period consists of more than twelve (12) months.

5.3. Determination of Achievement of Performance Measures. The Committee shall certify the level of achievement of the Performance Measure(s) as soon as practical after the end of the Performance Period for which the determination is being made.

5.4. Payment of Incentive Awards.

(a) As soon as practicable after the expiration of each Performance Period, but not later than two and one-half (2½) months thereafter, subject to the provisions of Section 2.2, each eligible Participant shall be entitled to receive payment of his or her Incentive Award, as determined in accordance with the terms of the Incentive Award and this Article V. For purposes of this Section 5.4(a), an “eligible” Participant shall include each Participant who

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has remained in the employ of the Company until the last day of the Performance Period and, at the discretion of the Committee, any Participant whose Incentive Award provides for a pro rata payment in the event the Participant ceases to be employed by the Company during the Performance Period. Whether an Incentive Award provides for a pro rata payment in the event of any cessation of employment during a Performance Period shall be determined by the Committee in its sole discretion at the time the terms of an Incentive Award are established in accordance with Section 5.1. Any Incentive Award that provides for a pro rata payment in accordance with this Subsection (a) shall be prorated based on the number of days elapsed during such Performance Period prior to the date of the Participant’s cessation of employment divided by the total number of days in such Performance Period. Payment of Incentive Awards shall be made in a lump sum as soon as practicable after the last day of the Performance Period, but not prior to the Committee’s certification as to the level of the achievement of the Performance Measure(s), as contemplated by Section 5.4(c). Incentive Awards shall be paid in cash unless the Committee determines that all or a portion of the Incentive Award shall be made in shares of the Company’s common stock; provided, however, that any portion of an Incentive Award paid in shares of the Company’s common stock shall be funded under the Ruby Tuesday, Inc. Stock Incentive Plan or Ruby Tuesday, Inc. 1996 Stock Incentive Plan (or any successor plans), subject to any additional limitations therein, if any.

(b) The Committee may, in its discretion, institute a program allowing Participants to defer the receipt of all or a portion of their Incentive Award otherwise payable under Subsection (a) of this Section 5.4 in accordance with and subject to the rules and regulations promulgated under Code Section 409A.

(c) Before any Incentive Award is paid to any Participant or beneficiary of a Participant, the Committee shall certify in writing that the applicable Performance Measure(s) were in fact satisfied.

5.5. Participants’ Rights Unsecured. The right of any Participant or beneficiary of a Participant to receive an Incentive Award under the Plan shall constitute an unsecured claim against the general assets of the Company.

5.6. Withholding Taxes. The Company shall have the right to deduct from each Incentive Award payment any federal, state and local taxes required by the laws of such jurisdictions to be withheld with respect to such payment.

5.7. Limitation on Other Incentive Awards. A Participant may have one or more Performance Periods for which he or she is designated as an eligible Participant by the Committee, which Performance Periods may overlap. A Participant shall not be eligible to participate in any other similar performance-based compensation programs maintained by the Company during any Performance Period for which the Participant is designated as an eligible Participant by the Committee other than as contemplated in. Plan Section 5.4(a) and except that such Participant may receive equity awards under any shareholder approved equity incentive plan maintained by the Company that complies with Code Section 162(m);

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provided, however, that no grant of such equity awards shall be made contingent upon the failure of the Participant to attain the Performance Measures pursuant to this Plan. Nothing in this Section 5.7 or any other provision of the Plan shall preclude the payment by the Company of discretionary bonuses to eligible Participants; provided, however, that, as a preliminary matter, the Committee shall reasonably conclude that the payment of any discretionary bonus shall not cause the payment of any Incentive Award under this Plan to fail to qualify as performance-based compensation within the meaning of Code Section 162(m).

ARTICLE VI.

GENERAL PROVISIONS

6.1. Adjustment of Performance Measures. The Committee may amend or adjust the Performance Measures or other terms and conditions of an outstanding Incentive Award in recognition of unusual or nonrecurring events of a material nature affecting the Company or its financial statements or changes in law or accounting or any other criteria as may be permissible in accordance with Code Section 162(m) requirements. In making any such adjustment, the Committee shall consider whether it would cause any portion of the award, upon payment, to be nondeductible pursuant to Code Section 162(m).

6.2. Amendment and Termination. The Committee may at any time amend, suspend, discontinue or terminate the Plan except to the extent that the terms of any Incentive Award provides otherwise and in no event will such amendment, suspension, discontinuance or termination without the consent of the holder of an Incentive Award adversely affect the rights of the Participant under such Incentive Award to the extent that the Incentive Award has been earned but not yet paid. In addition, any such amendment, suspension, discontinuance or termination shall require shareholder approval to the extent necessary to continue to qualify the payment or other settlement of Incentive Awards as performance-based compensation within the meaning of Code Section 162(m) or to the extent such shareholder approval would be required under the rules of the national securities exchange or Nasdaq quotation or market system on which the Company’s common stock is then traded. All determinations concerning the interpretation and application of this Section 6.2 shall be made by the Committee.

6.3. Designation of Beneficiary. Each Participant may designate a beneficiary or beneficiaries (which beneficiary may be an entity other than a natural person) to receive any payments to be made following the Participant’s death or legal incapacity. Such designation may be changed or cancelled at any time without the consent of any such beneficiary. Any such designation, change or cancellation must be made on a form provided for that purpose by the Committee and shall not be effective until received by the Committee. If no beneficiary has been named, or the designated beneficiary or beneficiaries shall have predeceased the Participant, the beneficiary shall be the Participant’s spouse or, if no such spouse shall survive the Participant, the Participant’s estate. If a Participant designates more than one beneficiary,

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the rights of such beneficiaries shall be made in equal shares, unless the Participant has designated otherwise.

6.4. Miscellaneous.

(a) No Right of Continued Employment. Nothing in this Plan shall be construed as conferring upon any Participant any right to continue in the employment or other service of the Company or any of its subsidiaries or Affiliates or any of their successors.

(b) Nonalienation of Benefits. Except as expressly provided herein, no Participant or his or her beneficiaries shall have the power or right to transfer, anticipate, or otherwise encumber the Participant’s interest under the Plan. The Company’s obligations under this Plan are not assignable or transferable except to a corporation that acquires all or substantially all of the assets of the Company or any corporation into which the Company may be merged or consolidated. The provisions of the Plan shall inure to the benefit of each Participant and his or her beneficiaries, heirs, executors, administrators or successors in interest.

(c) Severability. If any provision of this Plan is held unenforceable, the remainder of the Plan shall continue in full force and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision were not contained in the Plan.

(d) Shareholder Approval. The Plan shall be submitted to the shareholders of the Company for their approval before any payments of compensation are made to any Participant. If such approval is not obtained, the Plan shall be deemed null and void and no compensation shall be payable to Participants under the Plan.

(e) Governing Law. The Plan shall be construed in accordance with and governed by the laws of the State of Georgia, without reference to the principles of conflict of laws.

(f) Effective Date. The Plan shall be effective as of the first day of the Company’s 2016 fiscal year; subject to the shareholder approval requirement in Section 6.4(d) above. If shareholder approval is not obtained at the 2015 annual meeting of shareholders, the adoption of the Plan, as amended and restated, shall be null and void.

(g) Headings. Headings are inserted in this Plan for convenience of reference only and are to be ignored in a construction of the provisions of the Plan.

(h) Term of Plan. The Plan shall continue in effect until terminated by the Board; provided, however, that the Plan shall terminate automatically if it is not reapproved by the Company’s shareholders by the first annual meeting of shareholders that occurs in the fifth year following the year in which shareholders originally approve the Plan pursuant to Section 6.4(d) (the “Reapproval Date”). If such reapproval by shareholders is not obtained,

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then the Plan shall terminate following the close of the last Performance Period commencing immediately prior to the Reapproval Date.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed as of the 8 day of April, 2015.

RUBY TUESDAY, INC.

By: /s/ James J. Buettgen

Name: James J. Buettgen

Title: Chairman, President & Chief Executive Officer

ATTEST:

/s/ Rhonda Parrish

Secretary

[Corporate Seal]

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Ruby Tuesday, Inc
Unaudited Computation of Ratio of Consolidated Earnings to Fixed Charges
(Dollar Amounts in Millions)


	Thirty-nine Weeks Ended		Fiscal Year Ended
	March 3,			June 3,		June 4,		June 5,		May 31,		June 1,
	2015			2014		2013		2012		2011		2010
Earnings before fixed charges:
(Loss)/income from continuing operations before income taxes	$	(10.8)	$	(69.6)	$	(21.9)	$	(8.6)	$	57.1	$	58.6

Add equity in losses (deduct equity in earnings) of equity interest		-		-		-		-		0.6		0.3

Less Capitalized interest		0.3		0.5		0.5		0.5		0.6		0.6
		(10.5)		(69.1)		(21.4)		(8.1)		58.3		59.5

Fixed charges:

Interest expense		16.8		25.0		26.7		23.5		14.1		18.0

Interest portion of rent expense		11.3		16.0		16.6		15.8		14.7		14.0

Total fixed charges		28.1		41.0		43.3		39.3		28.8		32.0

Adjusted earnings from continuing operations before income taxes available to cover fixed charges	$	17.6	$	(28.1)	$	21.9	$	31.2	$	87.1	$	91.5

Ratio of earnings to fixed charges		.63		(0.69)		0.51		0.79		3.03		2.86

Amount by which earnings were insufficient to cover fixed charges		(10.5)		(69.1)	$	(21.4)		(8.1)		N/A		N/A

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

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James J. Buettgen, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ruby Tuesday, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 13, 2015		/s/ James J. Buettgen
		James J. Buettgen
		Chairman of the Board, President,
		and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jill M. Golder, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Ruby Tuesday, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 13, 2015		/s/ Jill M. Golder
		Jill M. Golder
		Executive Vice President,
		Chief Financial Officer, Treasurer, and Assistant Secretary

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ruby Tuesday, Inc. (the “Company”) on Form 10-Q for the quarter ended March 3, 2015 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, James J. Buettgen, Chairman of the Board, President, and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 13, 2015		/s/ James J. Buettgen
		James J. Buettgen
		Chairman of the Board, President, and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ruby Tuesday, Inc. (the “Company”) on Form 10-Q for the quarter ended March 3, 2015 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, Jill M. Golder, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.