Note 3 - Lime Fresh Mexican Grill and Other Former Concepts

12 Months Ended

May 31, 2016

Notes to Financial Statements

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

3

.  

Lime Fresh

Mexican Grill

and Other

Former Concepts

Fiscal 201

6

On May 31, 2016, we entered into agreements with two separate buyers to sell various Lime Fresh Mexican Grill assets.

Pursuant to the terms of an asset purchase agreement with another restaurant company, we agreed to sell our eight remaining Lime Fresh Mexican Grill Company-owned restaurants for $6.0 million. Given that closing requirements were satisfied for only six of the eight restaurants, an amendment was agreed upon which allowed for the payment of $5.0 million upon the transfer of the six restaurants and the holdback of $1.0 million until such time that both of the remaining two restaurants had closed and transferred to the buyer. The six restaurants closed and were transferred on May 31, 2016. Both of the remaining two Lime Fresh restaurants remained open and operated by Ruby Tuesday as of our May 31 fiscal year-end. While we were able to close one of the two restaurants and transfer it to the buyer on June 14, 2016, the final restaurant is expected to remain open and be operated by Ruby Tuesday until a date in our second quarter of fiscal year 2017.

Because we did not collect the $5.0 million on the

sale of the six Lime Fresh restaurants until the first day of our fiscal year 2017, the gain of $3.1 million included in our fiscal year 2016 Consolidated Statements of Operations and Comprehensive Loss is non-cash. Further, given that the closing requirements were not satisfied on the two remaining restaurants as of the close of our fiscal year, we did not reflect those restaurants as having been sold in fiscal year 2016, nor we did accrue as a receivable the $1.0 million holdback.

Also on May 31, 2016, we sold the

Lime Fresh Mexican Grill brand, including the intellectual property and franchising rights for all eight Lime Fresh franchised restaurants to a third party buyer for $4.6 million, substantially all of which was received in cash on that date. We recognized a gain of $2.8 million on the transaction.

See Note 11 to the Consolidated Financial Statements for additional information regarding financial results of the Lime Fresh segment during fiscal

years 2016, 2015, and 2014.

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In an effort to focus primarily on the sales turnaround of our core Ruby Tuesday concept, we c

ompleted the closure of our Marlin & Ray’s, Wok Hay, and Truffles restaurants during fiscal year 2013. We have classified the results of operations of these three concepts as discontinued operations for the fiscal year ended June 3, 2014. The results of operations of our discontinued operations are as follows (in thousands):

	June 3, 2014
Restaurant sales and operating revenue	$	–
Income before income taxes	$	458
Benefit for income taxes		(106	)
Income from discontinued operations	$	564