Closures and Impairments Expense, Including Trademark Impairments

Closures and impairments, net include the following (in thousands):

	2017			2016			2015
Closures and impairments:
Property impairments	$	45,974		$	58,153		$	9,822
Closed restaurant lease reserves		18,035			4,090			1,461
Other closing expense		10,213			1,260			966
Gain on sale of surplus properties		(4,414	)		(822	)		(1,707	)
Lime Fresh trademark impairment		–			1,999			–
Closures and impairments, net	$	69,808		$	64,680		$	10,542

Included within Closures and impairments, net for fiscal year

2017

are impairments of

$43.1

million related to open restaurants with deteriorating operational performance,

$0.6

million related to surplus properties, and

$2.3

million associated with lease expirations and restaurant closures.

Also included within Closures and impairments, net for fiscal

2017

are

$31.5

million in closing expenses related to the

Asset Rationalization Plan closures.

During the

fourth

quarter of fiscal year

2016,

the Company

’s management began to formulate a plan in response to a comprehensive review of its property portfolio through the planned closure of restaurants with perceived limited upside due to market concentration, challenged trade areas, or other factors. Given the status of management’s proposed plan as of

May 31, 2016,

the Company determined that there was an impairment trigger as certain restaurants would be disposed of significantly before the end of their previously estimated useful lives. Accordingly, we recorded impairment charges of

$39.2

million during the

fourth

quarter of fiscal year

2016

related to these restaurants. On

August 11, 2016,

we announced a plan to close approximately

Company-owned restaurants by

September 2016.

Also included within Closures and impairments, net for fiscal year

2016

are impairments of

$14.7

million related to open Ruby Tuesday concept restaurants with deteriorating operational performance during the

first

three

quarters of fiscal year

2016

not

included within management’s developing closure plan during the

fourth

fiscal quarter and

$0.8

million related to surplus properties.

As previously discussed in Note

to the Consolidated Financial Statements, during fiscal year

2016,

we entered into an agreement to sell

eight

Company-owned Lime Fresh restaurants in Florida for

$6.0

million and closed the remaining

Company-owned Lime Fresh restaurants. Included within closures and impairments, net for the fiscal year ended

May 31, 2016

are

$6.4

million of impairments, lease reserves, and other charges relating to the closed Lime Fresh restaurants.

Included within Closures and impairments, net for fiscal year

2015

are impairments of

$7.7

million related to restaurants with deteriorating operational performance,

$1.8

million related to surplus properties, and

$0.3

million associated with lease expirations and restaurant closures.

In addition to impairment charges recorded in connection with the closed Lime Fresh restaurants as discussed above, during the

second

quarter of fiscal year

2016,

we recorded a

$2.0

million trademark impairment charge representing a partial impairment of the Lime Fresh trademark.

As previously discussed in Note

to the Consolidated Financial Statements, we sold the Lime Fresh brand's intellectual property, including the Lime Fresh trademark, during the

fourth

quarter of fiscal year

2016.

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

	Reserve for Lease Obligations
Balance at June 2, 2015	$	7,051
Closing expense including rent and other lease charges		4,090
Payments		(5,737	)
Adjustments to deferred escalating minimum rent and other		866
Balance at May 31, 2016		6,270
Closing expense including rent and other lease charges		18,035
Payments		(17,205	)
Adjustments to deferred escalating minimum rent and other		9,130
Balance at June 6, 2017	$	16,230

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,

$15.3

million and

$6.2

million are included within the Accrued liabilities – Rent and other caption in our Consolidated Balance Sheets as of

June 6, 2017

and

May 31, 2016,

respectively. For fiscal year

2018

and beyond, our focus will be on obtaining settlements, or subleases as necessary, on as many of these leases as possible and these settlements could be higher or lower than the amounts recorded. The actual amount of any cash payments made by the Company for lease contract termination costs will be dependent upon ongoing negotiations with the landlords of the leased restaurant properties.