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

additional benefits would accrue and

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

not

be required to make contributions to the Retirement Plan in fiscal year

2018.

The Retirement Plan

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

	2017							2016
	Target Allocation				Actual Allocation			Target Allocation				Actual Allocation
Equity securities		41	-	71%		63	%		41	-	71%		61	%
Fixed income securities		13	-	43%		25	%		13	-	43%		20	%
Public real estate investment trusts		0	-	10%		0	%		0	-	10%		5	%
Cash and cash equivalents		0	-	20%		1	%		0	-	20%		4	%
Other		0	-	21%		11	%		0	-	21%		10	%

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

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. 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

16%

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):

	2017		2016
Level 2:
Cash and cash equivalents	$	80	$	249
Level 1:
Equity securities
U.S.-based companies		2,677		2,561
International-based companies		1,175		1,222
Fixed income securities		1,504		1,259
Public real estate investment trusts		–		315
Other		690		603
Total assets reported as of fiscal year end	$	6,126	$	6,209

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. The Executive Supplemental Pension Plan and the Management Retirement Plan have been amended so that

additional benefits will accrue and

new participants

may

enter the plan.

Although considered to be unfunded, we own whole-life insurance contracts in order to provide a source of funding for benefits due under the terms of the Executive Supplemental Pension Plan and the Management Retirement Plan. Benefits payable under these

two

plans are paid from a rabbi trust which holds the insurance contracts. We will on occasion contribute additional amounts into the rabbi trust in the event of a liquidity shortfall. We currently project that benefit payments from the rabbi trust for these

two

plans will approximate

$3.0

million in fiscal year

2018.

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
	2017			2016			2015

Service cost	$	26		$	312		$	301
Interest cost		1,711			1,999			1,773
Expected return on plan assets		(370	)		(411	)		(498	)
Amortization of prior service cost (a)		–			1			1
Recognized actuarial loss		1,542			2,218			1,718
Curtailment expense		–			1			–
Net periodic benefit cost	$	2,909		$	4,120		$	3,295

	Postretirement Medical and Life Benefits
	2017		2016		2015

Service cost	$	1	$	4	$	4
Interest cost		36		47		46
Recognized actuarial loss		71		130		134
Net periodic benefit cost	$	108	$	181	$	184

(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

2017

and

2016

Consolidated Financial Statements for the Pension Plans and the Postretirement Medical and Life Benefits plans (in thousands):

	Pension Plans						Postretirement Medical and Life Benefits
	2017			2016			2017			2016

Beginning of year	$	(16,821	)	$	(17,149	)	$	(491	)	$	(994	)
Net actuarial (loss)/gain		367			(1,891	)		147			373
Amortization of prior service credit		–			1			–			–
Amortization of actuarial loss		1,542			2,218			71			130
End of year	$	(14,912	)	$	(16,821	)	$	(273	)	$	(491	)

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
	2017			2016			2017			2016
Change in benefit obligation:
Beginning projected benefit obligation	$	44,429		$	43,843		$	1,100		$	1,404
Service cost		26			312			1			4
Interest cost		1,711			1,999			36			47
Plan participant contributions		–			–			84			73
Actuarial loss/(gain)		(183	)		1,411			(147	)		(373	)
Benefits paid		(3,403	)		(2,888	)		(85	)		(55	)
Curtailment gain		–			(248	)		–			–
Benefit obligation at end of year	$	42,580		$	44,429		$	989		$	1,100
Change in plan assets:
Beginning fair value of plan assets	$	6,209		$	6,786		$	–		$	–
Actual return on plan assets		554			(318	)		–			–
Employer contributions		2,766			2,629			1			(18	)
Plan participant contributions		–			–			84			73
Benefits paid		(3,403	)		(2,888	)		(85	)		(55	)
Fair value of plan assets at end of year	$	6,126		$	6,209		$	–		$	–

Funded status at end of year	$	(36,454	) *	$	(38,220	)*	$	(989	)	$	(1,100	)

Amounts recognized in the Consolidated Balance Sheets:
Accrued liabilities – payroll and related costs	$	(2,953	)	$	(2,527	)	$	(123	)	$	(113	)
Other deferred liabilities		(33,501	)		(35,693	)		(866	)		(987	)
Net amount recognized at year-end	$	(36,454	)	$	(38,220	)	$	(989	)	$	(1,100	)

Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss		(14,912	)		(16,821	)		(273	)		(491	)
Total amount recognized	$	(14,912	)	$	(16,821	)	$	(273	)	$	(491	)

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

), which are included within the Other Assets caption in our Consolidated Balance Sheets, was

$25.4

million and

$27.9

million at

June 6, 2017

and

May 31, 2016,

respectively. In addition, we reclassified as Restricted cash in our Consolidated Balance Sheets as of

June 6, 2017

and

May 31, 2016

$1.4

million and

$0.4

million, respectively, of cash held in trust that is restricted for benefit payments under these plans. We maintain a rabbi trust to hold the policies and death benefits as they are received.

During fiscal years

2017,

2016,

and

2015,

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):

	2017		2016		2015
Recognized actuarial loss	$	1,613	$	2,348	$	1,852
Amortization of prior service cost/(credit)		–		1		1
Curtailment expense		–		1		–
Pension reclassification	$	1,613	$	2,350	$	1,853

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

2018

$0.7

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
	June 6, 2017		May 31, 2016		June 6, 2017		May 31, 2016
Projected benefit obligation	$	42,580	$	44,429	$	989	$	1,100
Accumulated benefit obligation		42,580		44,428		989		1,100
Fair value of plan assets		6,126		6,209		–		–

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

	Pension Plans
	2017			2016			2015
Discount rate		4.1	%		4.2	%		4.4	%
Expected return on plan assets		6.3	%		6.3	%		7.0	%
Rate of compensation increase		2.0	%		2.0	%		2.0	%

	Postretirement Medical and Life Benefits
	2017			2016			2015
Discount rate		3.5	%		3.6	%		3.5	%
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
	2017			2016
Discount rate		3.9	%		4.0	%
Rate of compensation increase		2.0	%		2.0	%

	Postretirement Medical and Life Benefits
	2017			2016
Discount rate		3.5	%		3.5	%
Rate of compensation increase		2.0	%		2.0	%

We currently are assuming a gross medical trend rate of

7.1%

for fiscal

2018.

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

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
2018	$	3,716	$	123
2019		2,274		109
2020		2,214		101
2021		5,212		103
2022		8,138		95
2023-2027		11,585		356

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

June 6, 2017

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. We match in cash each fiscal quarter

25%

of the participating employee's

first

of contributions. Company matches vest immediately. Fiscal years

2017

and

2016

had

401

(k) Plan expenses for the Company match of

$0.3

million for both periods. During fiscal year

2015,

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

same-restaurant sales performance factor in order for there to be an employer match, we had

expense related to the

401

(k) Plan for fiscal year

2015.

Deferred Compensation Plan

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 years

2017

and

2016

Deferred Compensation Plan expenses were negligible for both periods. For similar reasons as discussed above for the

401

(k) Plan, we had

expenses for Company match under the Deferred Compensation Plan for fiscal year

2015.

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

$5.6

million and

$6.7

million as of

June 6, 2017

and

May 31, 2016,

respectively. Of these amounts as of

June 6, 2017

and

May 31, 2016,

$0.6

million and

$0.7

million, respectively, was included in Prepaid and other expenses and Accrued liabilities – Payroll and related costs for both periods, and

$5.0

million and

$6.0

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

$0.3

million and

$0.5

million as of

June 6, 2017

and

May 31, 2016,

respectively, is reflected in Shareholders’ Equity in the Consolidated Balance Sheets.

Executive Separations and Corporate Support Services Restructuring

Fiscal

2017

September 13, 2016,

James J. Buettgen resigned as Chairman of the Board of Directors, President, and Chief Executive Officer of the Company.

In connection with Mr. Buettgen's resignation,

$3.0

million in severance accruals and other benefits were paid during fiscal

2017.

We also recorded a charge of approximately

$0.9

million in connection with the accelerated vesting of Mr. Buettgen's share-based compensation awards. The Ruby Tuesday Concept President and a Divisional Vice President departed the Company

April 24, 2017

and

June 2, 2017,

respectively. During the fiscal year ended

June 6, 2017,

we recorded severance expense of

$0.8

million and made severance payments of

$0.1

million in connection with these

two

departures coupled with recording a charge of

$0.2

million related to their accelerated vesting of share-based compensation awards.

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

to the Consolidated Financial Statements, we recorded

$1.6

million of forfeiture credits during fiscal year

2016

in connection with these resignations.

Fiscal

2015

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 fiscal 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.

As of both

June 6, 2017

and

May 31, 2016,

liabilities of

$0.9

million and

$0.3

million, respectively, 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 of

$4.2

million and

$1.6

million are reflected in the table below related to employee severance and unused vacation accruals are included within General and administrative expenses, and Closures and impairments, net, respectively, 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 2, 2015	$	313
Employee severance and unused vacation accruals		1,006
Cash payments		(1,002	)
Balance at May 31, 2016	$	317
Employee severance and unused vacation accruals		5,807
Cash payments		(5,270	)
Balance at June 6, 2017	$	854