Employee Post-Employment

Benefits

Pension and Postretirement Medical and Life Benefits

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

Retirement Plan

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

Minimum funding for the Retirement Plan is determined in accordance with the guidelines set forth in employee benefit and tax laws. From time

to time we may contribute additional amounts as we deem appropriate. We estimate that we will be required to make contributions totaling $0.2 million to the Retirement Plan in fiscal year 2017.

The

Retirement Plan’s assets are held in a trust and were allocated as follows on the measurement dates:

	201 6						201 5
	Target Allocation			Actual Allocation			Target Allocation			Actual Allocation
Equity securities		41-71	%		61	%		39-69	%		58	%
Fixed income securities		13-43	%		20	%		12-42	%		23	%
Public real estate investment trusts		0-10	%		5	%		0-10	%		5	%
Cash and cash equivalents		0-20	%		4	%		0-20	%		1	%
Other		0-21	%		10	%		0-24	%		13	%

Total					100	%					100	%

The

Retirement Plan fiduciaries set investment policies and strategies for the Retirement Plan’s trust. The overall investment objective is to invest the Retirement Plan’s assets in a structure designed to produce returns, over a long-term horizon (greater than 10 years), that meets the actuarially assumed rate of return. The Retirement Plan’s fiduciaries oversee the investment allocation process, which includes selecting investment managers, commissioning periodic asset-liability studies, setting long-term strategic targets, and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, and occasionally the Retirement Plan’s fiduciaries will approve allocations above or below a target range. In fiscal year 2015, we changed our target allocation to reduce the Retirement Plan’s exposure to equity securities risk. The target allocation percentages presented above reflect an objective focused on capital appreciation with a secondary focus on current income through a higher allocation to equities than fixed income, and where appropriate, other asset classes.

Under the terms of the investment policy statement,

plan assets are comprised of two major classes: equity and fixed income securities. The goal of the equity portfolio is to produce a total return that will provide a hedge against inflation. Equity securities can include both domestic and international securities with a long-term strategic target to maintain an equity allocation of approximately 56% of the total market value of plan assets.

The goal of the fixed income portfolio is to

reduce the overall volatility of the Retirement Plan, provide a stable stream of income, and provide a hedge against deflation without exposure to excessive interest rate or credit rate risk. Fixed income securities should be primarily U.S. Treasury or Government Agency securities and investment-grade corporate bonds at the time of purchase with a long-term strategic target to maintain a fixed income allocation of approximately 28% of the total market value of plan assets.

Aside from equity and fixed income securities, the trust may also invest in alternative investments, such as public real estate investment trusts and mutual funds investing in hedge funds and commodities, with a long-term strategic target to maintain an allocation of approximately 1

6% of the total market value of plan assets.

The fair

values of assets held by the Retirement Plan by asset category are as follows (in thousands):

	201 6		201 5
Level 2:
Cash and cash equivalents	$	249	$	78
Level 1:
Equity securities
U.S.-based companies		2,561		2,701
International-based companies		1,222		1,277
Fixed income securities		1,259		1,584
Public real estate investment trusts		315		328
Other		603		883
Fair value of plan assets as of measurement date	$	6,209	$	6,851
Benefit payments after measurement date		–		(65	)
Total assets reported as of fiscal year end	$	6,209	$	6,786

Executive Supplemental Pension Plan and Management Retirement Plan

Under these unfunded defined benefit pension plans, eligible employees earn supplemental retirement income based upon salary and length of service, reduced by social security benefits and amounts otherwise receivable under other specified Company retirement plans. Effective June 1, 2001, the Management Retirement Plan was amended so that no additional benefits would accrue and no new participants could enter the plan after that date. In December 2015, the Executive Supplemental Pension Plan was similarly amended effective as of January 1, 2016 for current participants, and as of January 1, 2018 for two specified potential participants, who are currently not named executive officers. The amendment and related plan remeasurement did not have a material impact on our Consolidated Financial Statements.

Although considered to be unfunded, we own whole-life insurance contracts in order to provide a source of funding for benefits due under the terms of the Executive Supplemental Pension Plan and the Management Retirement Plan. Benefits payable under these two plans are paid from a rabbi trust which holds the insurance contracts. We will on occasion contribute additional amounts into the rabbi trust in the event of a liquidity shortfall. We currently project that benefit payments from the rabbi trust for these two plans will approximate $

2.5 million in fiscal year 2017.

Postretirement Medical and Life Benefits

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

The following

tables detail the components of net periodic benefit cost for the Retirement Plan, Management Retirement Plan, and the Executive Supplemental Pension Plan (collectively, the "Pension Plans") and the Postretirement Medical and Life Benefits plans, which is recorded as a component of Selling, general, and administrative expense, net in our Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	Pension Plans
	20 1 6			20 15			20 14

Service cost	$	312		$	301		$	356
Interest cost		1,999			1,773			1,737
Expected return on plan assets		(411	)		(498	)		(444	)
Amortization of prior service cost (a)		1			1			1
Recognized actuarial loss		2,218			1,718			1,711
Curtailment expense		1			–			–
Net periodic benefit cost	$	4,120		$	3,295		$	3,361

	Postretirement Medical and Life Benefits
	201 6		201 5		201 4

Service cost	$	4	$	4	$	13
Interest cost		47		46		67
Amortization of prior service cost (a)		–		–		(46	)
Recognized actuarial loss		130		134		244
Net periodic benefit cost	$	181	$	184	$	278

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

The following table

details changes in the amounts recognized in accumulated other comprehensive loss in our 2016 and 2015 Consolidated Financial Statements for the Pension Plans and the Postretirement Medical and Life Benefits plans (in thousands):

	Pension Plans							Postretirement Medical and Life Benefits
	20 1 6			20 15			20 1 6			20 15

Beginning of year	$	(17,149	)	$	(17,086	)	$	(994	)	$	(1,017	)
Net actuarial (loss)/gain		(1,891	)		(1,782	)		373			(111	)
Amortization of prior service credit		1			1			–			–
Amortization of actuarial loss		2,218			1,718			130			134
End of year	$	(16,821	)	$	(17,149	)	$	(491	)	$	(994	)

The change in benefit obligation and plan assets and reconciliation of funded status is as follows (in thousands

	Pension Plans						Postretirement Medical and Life Benefits
	20 1 6			20 15			20 1 6			20 15
Change in benefit obligation:
Beginning projected benefit obligation	$	43,843		$	42,774		$	1,404		$	1,376
Service cost		312			301			4			4
Interest cost		1,999			1,773			47			46
Plan participant contributions		–			–			73			78
Actuarial loss /(gain)		1,411			1,620			(373	)		111
Benefits paid		(2,888	)		(2,625	)		(55	)		(211	)
Curtailment gain		(248	)		–			–			–
Benefit obligation at end of year	$	44,429		$	43,843		$	1,100		$	1,404
Change in plan assets:
Beginning fair value of plan assets	$	6,786		$	7,020		$	–		$	–
Actual return on plan assets		(318	)		336		–				–
Employer contributions		2,629			2,055			(18	)		133
Plan participant contributions		–			–			73			78
Benefits paid		(2,888	)		(2,625	)		(55	)		(211	)
Fair value of plan assets at end of year	$	6,209		$	6,786		$	–		$	–

Funded status at end of year	$	(38,220	) *	$	(37,057	)*	$	(1,100	)	$	(1,404	)

Amounts recognized in the
Consolidated Balance Sheets:
Accrued liabilities – payroll and related
costs	$	(2,527	)	$	(3,185	)	$	(113	)	$	(137	)
Other deferred liabilities		(35,693	)		(33,872	)		(987	)		(1,267	)
Net amount recognized at year-end	$	(38,220	)	$	(37,057	)	$	(1,100	)	$	(1,404	)

Amounts recognized in accumulated
other comprehensive loss:
Prior service cost	$	–		$	(1	)	$	–		$	–
Net actuarial loss		(16,821	)		(17,148	)		(491	)		(994	)
Total amount recognized	$	(16,821	)	$	(17,149	)	$	(491	)	$	(994	)

The funded status reflected above includes the liabilities attributable to all of the Pension Plans but only the assets of the Retirement Plan as the other plans are not considered funded for Employee Retirement Income Security Act purposes. To provide a

source for the payment of benefits under the Executive Supplemental Pension Plan and the Management Retirement Plan, we own life insurance contracts on some of the participants. The cash value of these policies (Level 2), which are included within the Other Assets caption in our Consolidated Balance Sheets, was $27.9 million and $29.5 million at May 31, 2016 and June 2, 2015, respectively. In addition, we held in trust $0.4 million and a negligible amount of cash and cash equivalents as of May 31, 2016 and June 2, 2015, respectively, relating to these policies. We maintain a rabbi trust to hold the policies and death benefits as they are received.

During

fiscal years 2016, 2015, and 2014, we reclassified the following items out of accumulated other comprehensive loss and into Pension and Postretirement Medical and Life Benefits expense, which is included in Selling, general and administrative, net within our Consolidated Statements of Operations and Comprehensive Loss, as follows (in thousands):

	201 6		201 5		201 4
Recognized actuarial loss	$	2,348	$	1,852	$	1,955
Amortization of prior service cost/(credit)		1		1		(46	)
Curtailment expense		1		–		–
		2,350		1,853		1,909
Income taxes		–		–		–
Pension reclassification, net of tax	$	2,350	$	1,853	$	1,909

The estimated net loss for the Pension and the Postretirement Medical and Life Benefits

plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost in fiscal year 2017 is $1.7 million.

Additional

measurement date information for the Pension and Postretirement Medical and Life Benefits plans which have benefit obligations in excess of plan assets (in thousands):

	Pension Plans				Postretirement Medical and Life Benefits
	May 31, 2016		June 2, 2015		May 31, 2016		June 2, 2015
Projected benefit obligation	$	44,429	$	43,843	$	1,100	$	1,404
Accumulated benefit obligation		44,428		43,518		1,100		1,404
Fair value of plan assets		6,209		6,786		–		–

The weighted

average assumptions used to determine the net periodic benefit cost for fiscal years are set forth below:

	Pension Plans
	2016			2015			2014
Discount rate		4.2	%		4.4	%		4.5	%
Expected return on plan assets		6.3	%		7.0	%		7.0	%
Rate of compensation increase		2.0	%		2.0	%		2.0	%

	Postretirement Medical and Life Benefits
	2016			2015			2014
Discount rate		3.6	%		3.5	%		3.7	%
Rate of compensation increase		2.0	%		2.0	%		2.0	%

Our estimated long-term rate of return on plan assets represents the weighted average of expected future returns on the asset categories included in our target investment allocation based primarily on the historical returns for each asset category, adjusted for an assessment of current market conditions.

The

weighted average assumptions used to determine benefit obligations at the measurement dates are set forth below:

	Pension Plans
	201 6			201 5
Discount rate		4.0	%		4.2	%
Rate of compensation increase		2.0	%		2.0	%

	Postretirement Medical and Life Benefits
	201 6			201 5
Discount rate		3.5	%		3.6	%
Rate of compensation increase		2.0	%		2.0	%

We currently are assuming a gross medical

trend rate of 7.6% for fiscal 2017. We expect this rate to decrease at varying amounts per year with an ultimate trend rate of 5.0% in fiscal 2026. A change in this rate of 1.0% would have no significant impact on our net periodic postretirement benefit expense or our accrued postretirement benefits liability.

The

benefits expected to be paid in each of the next five years and in the aggregate for the five years thereafter are set forth below (in thousands):

	Pension Plans		Postretirement Medical and Life Benefits
201 7	$	3,311	$	113
201 8		2,411		122
201 9		2,352		108
20 20		2,751		100
20 21		5,236		102
2022-2026		17,785		401

Expected benefit payments are estimated based on the same assumptions used to measure our benefit obligation on our measurement date of

May 31, 2016 and, where applicable, include benefits attributable to estimated further employee service.

Defined Contribution Plans

We sponsor two defined contribution plans for active employees, as summarized below.

Salary

Deferral Plan

RTI offers certain employees a 401(k) plan called the Ruby Tuesday, Inc. Salary Deferral Plan (“401(k) Plan”). We make matching contributions to the 401(k) Plan based on each eligible employee's pre-tax contribution and years of service. We match in cash each fiscal quarter 25% of the participating employee's first 4% of contributions. Company matches vest immediately. Fiscal year 2016 401(k) Plan expenses for the Company match were $0.3 million. During fiscal years 2015 and 2014, we matched participating employee’s contributions based on a same-restaurant sales performance factor. Given that the Company did not achieve the fiscal year 2015 or 2014 same-restaurant sales performance factor in order for there to be an employer match, we had no expense related to the 401(k) Plan for fiscal years 2015 or 2014.

Deferred Compensation Plan

On January 5, 2005, our Board of Directors approved the adoption of the Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the “Deferred Compensation Plan”), effective as of January 1, 2005, and froze the existing deferred compensation plan, the Ruby Tuesday, Inc. Restated Deferred Compensation Plan (the “Predecessor Plan”), effective as of December 31, 2004, in order to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, enacted as part of the American Jobs Creation Act of 2004.

Like the Predecessor Plan, the Deferred Compensation Plan is an unfunded, non-qualified deferred compensation plan for eligible employees. The

Company matching provisions of the Deferred Compensation Plan are similar to those of the 401(k) Plan. Fiscal year 2016 Deferred Compensation Plan expenses were negligible. For similar reasons as discussed above for the 401(k) Plan, we had no expenses for Company match under the Deferred Compensation Plan for fiscal years 2015 and 2014. Assets earmarked to pay benefits under the Deferred Compensation Plan are held by a

rabbi trust. Assets and liabilities of a rabbi trust must be accounted for as if they are Company assets or liabilities and are therefore reported on our Consolidated Balance Sheets. Furthermore, all Deferred Compensation Plan earnings and expenses are recorded in our Consolidated Statements of Operations and Comprehensive Loss. The Deferred Compensation Plan’s assets and liabilities approximated $6.7 million and $8.0 million as of May 31, 2016 and June 2, 2015, respectively. Of these amounts as of May 31, 2016 and June 2, 2015, $0.7 million was included in Prepaid and other expenses and Accrued liabilities – Payroll and related costs for both periods, and $6.0 million and $7.3 million, respectively, was included in Other assets, net and Other deferred liabilities in the Consolidated Balance Sheets. The investment in RTI common stock and the related liability payable in RTI common stock, which totaled $0.5 million and $0.7 million as of May 31, 2016 and June 2, 2015, respectively, is reflected in Shareholders’ Equity in the Consolidated Balance Sheets.

Executive Separations and Corporate Support Services Restructuring

Fiscal 2016

Our former

President-Ruby Tuesday Concept and Chief Operations Officer and Executive Vice President, Chief Financial Officer resigned from the Company on July 25, 2015 and April 11, 2016, respectively. As further discussed in Note 10 to the Consolidated Financial Statements, we recorded $1.6 million of forfeiture credits during fiscal year 2016 in connection with these resignations.

Fiscal 2015

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,

three Senior Vice Presidents, our Chief Development Officer, Chief Legal Officer and Secretary, and Chief Marketing Officer left the Company on July 24, 2014, December 12, 2014, and April 27, 2015, respectively. During the year ended June 2, 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.

Fiscal 2014

On June 7, 2013, our then

President, Ruby Tuesday Concept, Chief Operations Officer left the Company. During fiscal 2014, we recorded severance expense of $0.9 million in connection with the separation agreement for the former executive, which represents obligations pursuant to the Ruby Tuesday, Inc. Severance Pay Plan (the “Severance Plan”) of two times base salary. The Severance Plan was subsequently terminated on October 7, 2013.

On October 30, 2013, our then Senior Vice President, Chief People Officer

left the Company. During the second quarter of fiscal 2014, we recorded severance expense of $0.4 million in connection with his separation agreement, an amount representing one year of his annual base salary plus his remaining vacation for fiscal 2014.

Between

November 20, 2013 and June 3, 2014, we eliminated approximately 82 management and staff personnel, respectively, at our Restaurant Support Services Center in Maryville, Tennessee. These reductions occurred in connection with an ongoing comprehensive review of our cost structure. These executive and other employee separations resulted in transition-related costs during the year ended June 3, 2014 of $4.3 million for employee severance and unused vacation.

As of

both May 31, 2016 and June 2, 2015, liabilities of $0.3 million, representing unpaid obligations in connection with the separations and restructurings, were included within Accrued liabilities: Payroll and related costs in our Consolidated Balance Sheet. Costs reflected in the table below related to employee severance and unused vacation accruals are included within Selling, general, and administrative, net in our Consolidated Statements of Operations and Comprehensive Loss. A roll forward 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		1,211
Cash payments		(1,953	)
Balance at June 2, 2015	$	313
Employee severance and unused vacation accruals		1,006
Cash payments		(1,002	)
Balance at May 31, 2016	$	317