EXPLANATORY NOTE:The registrant is hereby amending itsNOTE

This Amendment No. 2 to the Annual Report on Form 10-K for Luby’s, Inc. (the “Company”) for the fiscal year ended August 25, 2004 (SEC File Number 1-8308) is being filed to replacecorrect previously issued financial statements for fiscal years 2004, 2003 and 2002. The corrections are to account for scheduled rent increases on a straight-line basis, and for determining lives used in the sixth paragraphcalculation of depreciation of leasehold improvements for certain leased properties in a manner consistent with views recently expressed by the SEC and other recent interpretations. See Note 2 to the Company’s audited consolidated financial statements for additional discussion. Information not affected by the restatement is unchanged and reflects the disclosures made at the time of the filing of the Amendment No. 1 on Form 10-K/A.

Page 2

Luby’s, Inc.
Form 10-K
Year ended August 25, 2004
Table of Contents

Additional Information

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge via hyperlink on its website at www.lubys.com. The Company makes these reports available as soon as reasonably practicable upon filing with the SEC. Information on the Company’s website is not incorporated into this report.

Page 3

PART I

Item 1.Business

Overview

Luby’s, Inc. (formerly, Luby’s Cafeterias, Inc.) was originally incorporated in Texas in 1959 and was reincorporated in Delaware on December 31, 1991. Until December 3, 2004, the Company’s administrative offices will be located at 2211 Northeast Loop 410, P. O. Box 33069, San Antonio, Texas 78265-3069. On December 3, 2004, the Company will relocate its corporate offices to 13111 Northwest Freeway, Suite 600, Houston, Texas 77040.

Luby’s, Inc. was restructured into a holding company on February 1, 1997, at which time all of the operating assets were transferred to Luby’s Restaurants Limited Partnership, a Texas limited partnership composed of two wholly owned, indirect corporate subsidiaries of the Company. All restaurant operations are conducted by the partnership. Unless the context indicates otherwise, the word “Company” as used herein includes the partnership and the consolidated corporate subsidiaries of Luby’s, Inc.

As of October 20, 2004, the Company operated 136 restaurants under the name “Luby’s.” These establishments are located in close proximity to retail centers, business developments, and residential areas throughout five states (listed under Item 2). Of the 136 restaurants, 94 are at locations owned by the Company and 42 are on leased premises. Two of the restaurants primarily serve seafood, one is a steak buffet, three are full-time buffets, 11 are cafeteria-style restaurants with all-you-can-eat options, and 119 are traditional cafeterias.

Operations

The Company’s operations provide guests with a wide variety of delicious, home-style food, with the majority of locations serving cafeteria-style. Daily, each restaurant offers 20 to 22 entrees, 12 to 14 vegetable dishes, 12 to 16 salads, and 16 to 20 varieties of desserts. Food is prepared in small quantities throughout serving hours, and frequent quality checks are conducted.

The Company’s historical marketing research has shown that its products appeal to a broad range of value-oriented consumers with particular success among families with children, seniors, shoppers, travelers, and business people looking for a quick, home-style meal at a reasonable price. During fiscal 2004, the Company spent approximately 1.3% of its sales on traditional marketing venues, including television, newsprint, radio, point-of-purchase, and local-store marketing. The Company has invested in distinctive store marquees to enhance guest awareness of specific store promotions, with marquees at 99 operating locations as of the end of fiscal 2004.

Luby’s restaurants are generally open for lunch and dinner seven days a week. All of the restaurants sell take-out orders, and many of them have separate food-to-go entrances, which provide guests the option of enjoying complete and flavorful meals at the office or at home. Take-out orders accounted for 13.7% of sales in fiscal 2004. Breakfast is served on weekends in 34 of its restaurants, accounting for 1.2% of sales. Those locations offer a wide array of popular breakfast foods served buffet style. They also have made-to-order omelet, pancake, and waffle stations.

Each restaurant is operated as a separate unit under the control of a general manager who has responsibility for day-to-day operations, including food production and personnel employment and supervision. The Company’s philosophy is to grant authority to its restaurant managers to direct the daily operations of their stores and, in turn, to compensate them on the basis of their performance, believing this strategy to be a significant factor in restaurant profitability. Of the total number of general managers employed by the Company, 95 have been employed for more than ten years.

The Company operates from a centralized purchasing arrangement to obtain the economic benefit of bulk purchasing and lower prices for most of its food products. The arrangement involves a competitively selected prime vendor for each of its three major purchasing regions.

Page 4

Foods are prepared fresh daily at the Company’s restaurants. Menus are reviewed periodically by a committee of managers and chefs. The committee introduces newly developed recipes to ensure offerings are varied and that seasonal food preferences are incorporated.

Quality control teams also help to maintain uniform standards of food preparation. The teams visit each restaurant as necessary and work with the staff to check adherence to Company recipes, train personnel in new techniques, and implement systems and procedures used universally throughout the Company.

During the fiscal year ended August 25, 2004, the Company closed approximately 10 underperforming units, of which approximately four were adopted into its business plan. Additionally, three stores closed in fiscal 2003 were also adopted into the plan.

As of the fiscal year-end, the Company had a workforce of approximately 7,400, consisting of 6,800 nonmanagement restaurant workers; 400 restaurant managers, associate managers, and assistant managers; and 200 clerical, administrative, and executive employees. Employee relations are considered to be good. The Company has never had a strike or work stoppage and is not subject to collective bargaining agreements.

Service Marks

The Company uses several service marks, including “Luby’s,” and believes that such marks are of material importance to its business. The Company has federal registrations for its service marks as deemed appropriate.

The Company is not the sole user of the name Luby’s in the cafeteria business. A cafeteria using the name Luby’s is being operated in Texas by an unaffiliated company. The Company’s legal counsel is of the opinion that the Company has the paramount right to use the name Luby’s as a service mark in the United States and that the other user could be precluded from expanding its use of the name as a service mark.

Competition and Other Factors

The foodservice business is highly competitive, and there are numerous restaurants and other foodservice operations in each of the markets where the Company operates. The quality of food served, in relation to price and public reputation, is an important factor in foodservice competition. Neither the Company nor any of its competitors has a significant share of the total market in any area in which the Company competes. The Company believes that its principal competitors include family-style and fast-casual restaurants, buffets, and quick-service establishments in the home-meal-replacement category.

The Company’s facilities and food products are subject to state and local health and sanitation laws. In addition, the Company’s operations are subject to federal, state, and local regulations with respect to environmental and safety matters, including regulations concerning air and water pollution and regulations under the Americans with Disabilities Act and the federal Occupational Safety and Health Act. Over the years, such laws and regulations have resulted in increased costs that have been absorbed by the Company, in turn, improving its compliance.

Item 2.Properties

The Company’s restaurants typically contain 8,000 to 10,500 square feet of floor space and can seat 250 to 300 guests simultaneously.

Luby’s restaurants are well maintained and in good condition. In order to maintain appearance and utility, the Company refurbishes and updates its restaurants and equipment and performs scheduled maintenance.

As of October 20, 2004, the Company’s restaurants are regionally located as follows: two in Arizona, two in Arkansas, two in Louisiana, three in Oklahoma, and 127 in Texas.

The Company owns the underlying land and buildings in which 94 of its restaurants are located. Several of these restaurant properties contain excess building space, which is rented to tenants unaffiliated with the Company.

Page 5

In addition to the owned locations, 42 other restaurants are held under leases, including 17 in regional shopping malls. Most of the leases provide for a combination of fixed-dollar and percentage rentals. Many require the Company to pay additional amounts related to property taxes, hazard insurance, and maintenance of common areas. See Note 10 of the Notes to Consolidated Financial Statements for information concerning the Company’s lease rental expenses and lease commitments. Of the 42 restaurant leases, the current terms of 23 expire before 2010, ten from 2010 to 2014, and nine thereafter. Thirty-six of the leases can be extended beyond their current terms at the Company’s option.

In addition to the properties currently in operation, the Company also has 26 locations on the market for sale.

The Company is moving its corporate offices from San Antonio, Texas, to Houston, Texas, with the relocation expected to be completed by December 3, 2004. After the relocation, the Company’s primary administrative offices will consist of 26,000 square feet of leased space located at 13111 Northwest Freeway in Houston, Texas.

The Company maintains public liability insurance and property damage insurance on its properties in amounts which management believes to be adequate.

Item 3.Legal Proceedings

The Company is from time to time subject to pending claims and lawsuits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of such claims and lawsuits will not have a material adverse effect on the Company’s operations or consolidated financial position. There are no material legal proceedings to which any director, officer, or affiliate of the Company, or any associate of any such director or officer, is a party, or has a material interest, adverse to the Company.

Item 4.Submission of Matters to a Vote of Security Holders

No matter was submitted during the fourth quarter of the fiscal year ended August 25, 2004, to a vote of security holders of the Company.

Item 4A.Executive Officers of the Registrant

Certain information is set forth below concerning the executive officers of the Company, each of whom has been elected to serve until his successor is duly elected and qualified:

Page 6

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Prices

The Company’s common stock is traded on the New York Stock Exchange under the symbol LUB. The following table sets forth, for the last two fiscal years, the high and low sales prices on the New York Stock Exchange from the consolidated transaction reporting system.

There were no sales of unregistered securities or issuer purchases of equity securities in fiscal 2004. As of October 20, 2004, there were approximately 3,344 record holders of the Company’s common stock.

Page 7

Item 6.Selected Financial Data

The following selected financial data are derived from the Company’s consolidated financial statements and have been restated to reflect adjustments to the original Form 10-K that are further discussed in “Explanatory Note” in the forepart of this Form 10-K/A and in Note 2 to Consolidated Financial Statements, “Restatement of Financial Statements” in Item 8, “Financial Statements and Supplementary Data” of this Form 10-K/A.

Five-Year Summary of Operations

Page 8

Five-Year Summary Notes continued on next page.

Page 9

Five-Year Summary of Operations (continued)

Note: In fiscal year 2002, the Company moved from 12 calendar months to 13 four-week periods. The first period of fiscal year 2002 began September 1, 2001, and covered 26 days. All subsequent periods covered 28 days. Fiscal year 2002, the Company’s conversion year from months to periods, was 362 days in length. Fiscal 2003 and most years thereafter are 364 days in length.

Note: The Company’s business plan, as approved in fiscal 2003, called for the closure of approximately 50 locations. In accordance with the plan, the entire fiscal activity of the applicable stores closed through the end of the 2004 fiscal year were reclassified to discontinued operations. For comparison purposes, in prior fiscal years the entire activity for the same locations closed in fiscal 2003 and fiscal 2004 has also been reclassified to discontinued operations.

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Restatement of Financial Statements
The Company completed a review of its historical lease accounting expense calculations to determine whether the lease expense it had previously reported were materially in accordance with the views expressed by the Office of the Chief Accountant of the SEC on February 7, 2005 in a letter to the American Institute of Certified Public Accountants and other recent interpretations regarding certain operating lease accounting issues and their application under Generally Accepted Accounting Principles (“GAAP”). As a result of its review, the Company determined that its historical calculations for scheduled rent increases, and of determining lives used in the calculation of depreciation of leasehold improvements for certain leased properties, were materially different from current interpretations of GAAP. The Company has restated its consolidated financial statements in this Report for each of the fiscal years ended August 25, 2004, August 27, 2003 and August 28, 2002 to effect the appropriate changes.

As previously reported, the Company historically recognized scheduled rent increases as they occurred over the lease term. The Company annually reviewed its lease accounting expense calculations to determine whether the amounts it calculated were materially in accordance with GAAP. However, under current interpretations of GAAP, the Company has determined that the lease term used in calculating straight-line expense should commence on the date the Company takes possession of the leased space, which is generally six months prior to a store’s opening date. Additionally, the Company has determined that rent expense should be recorded on a straight-line basis over lease periods that are consistent with or greater than the number of periods over which depreciation of leasehold improvements is recorded. Historically, the life used for rent expense purposes in some instances was shorter than the life used for depreciation purposes. Excluding tax impacts, the Company has recorded adjustments to “Other liabilities,” “Property and equipment-at cost, net,” and “Retained earnings” on the consolidated balance sheets and to “Occupancy and other operating expenses,” “Depreciation and amortization,” “Provision for asset impairments and restaurant closings” and “Discontinued operations, net of taxes” on the consolidated statements of operations to correct historical accounting methods.

The cumulative effect of these accounting changes is a reduction to retained earnings of $5.9 million as of the beginning and end of fiscal year 2002 and incremental increases to retained earnings of $1.9 million and $461,000 for the fiscal years 2003 and 2004, respectively. See Note 13: 2 to the consolidated financial statements for summaries of the effects of related consolidated statements of operations, shareholders’ equity and cash flows for each of the three fiscal years in the period ended August 25, 2004. The accompanying Management’s Discussion and Analysis incorporates the effects of these corrections.

RESULTS OF OPERATIONS

Fiscal 2004 Compared to Fiscal 2003

Sales increased $4.8 million, or 1.6%, in fiscal 2004 compared to fiscal 2003. Of the total increase, $6.6 million was

Page 10

due to a 2.2% increase in same-store sales. (SeeSame-Store Salesunder Trends and Uncertainties for the definition of same-store sales.) This increase was offset by a decrease in sales of $1.8 million related to five stores closed prior to the adoption of the 2003 business plan, which therefore were not reclassified into discontinued operations. Despite store closures and the effects of increased competition in the marketplace, sales performance has improved. Promotions, new combination meals, and improved product and service execution have all contributed to this overall increase in sales.

Cost of food increased $637,000, or 0.8%, principally due to the increase in sales in fiscal 2004 compared to fiscal 2003. Upward pressure on beef pricing due to lower production numbers, reduced cattle weights, and an overall higher demand has negatively impacted food cost. Despite general commodity increases in food pricing, specifically related to the beef and dairy markets, food costs have experienced a slight decline as a percentage of sales, which decreased from 27.2% to 26.9%. Management’s discipline in the utilization of monthly budgeting and protein tracking tools in combination with various promotional offerings have assisted in reducing food costs. More specifically, food costs have declined in a higher commodity climate due to improved execution at each location in combination with carefully selected entree offerings for promotions which overall have very attractive cost structures.

Payroll and related costs decreased $2.1 million, or 2.4%, and as a percentage of sales decreased from 28.8% to 27.7%. The decrease is due to continued improvements made in labor deployment and efficiency as a result of various Company initiatives to better manage labor costs, offset by an increase in estimated workers’ compensation costs.

Occupancy and other operating expenses increased $3.8 million, or 4.2%, due primarily to increased advertising expense and higher insurance costs. Occupancy and other operating expenses, as a percentage of sales, increased 0.7% to 30.6% from 29.9%. The launch of the Company’s new marketing campaign, featuring television advertising, led to an increase in marketing costs. Insurance costs increased as a result of higher cost of insurance coverage and related premiums. These increases were primarily offset by a reduction in property tax expense due to store closures and related property sales.

Depreciation and amortization expense decreased $628,000, or 3.6%, due to fewer depreciable properties resulting from impairments and property sales.

Due to the current-year accrual of voluntary severance costs in relation to the relocation of the corporate offices from San Antonio, Texas, to Houston, Texas, voluntary severance costs increased by $860,000. See Note 6 of the Notes to Consolidated Financial Statements for more information.

General and administrative expenses decreased $3.6 million, or 15.3%. As a percentage of sales, general and administrative expenses decreased 1.3% to 6.4% compared to 7.7%. This decrease is due to fewer regional management positions due to store closures. It is also a result of lower professional and consulting services fees associated with a fixed-asset cost-segregation study on tax depreciation and consulting fees related to the debt refinancing, both of which occurred in the prior year.

The provision for asset impairments and restaurant closings decreased by $1.1 million primarily due to a gain realized on the sale of a property which had been previously impaired, coupled with significant impairment charges incurred in the prior year. This provision included write-downs to currently operating restaurants of $1.2 million offset by a gain of $500,000 related to one property sale.

Interest expense increased $484,000, or 6.4%, due to the accelerated amortization of the subordinated debt discount resulting from the amended subordinated note agreements, coupled with an increase in the effective interest rate on outstanding debt prior to the debt refinancing in June 2004. Subsequent to the debt refinancing, interest expense has declined principally due to lower amortization of the discount on the restructured subordinated debt, coupled with the effect of a lower senior debt balance.

Other income decreased $4.4 million primarily due to gains on sales of assets recognized in the prior year, which reflected the sale of five previously closed stores. These gains were partially offset by a loan commitment fee expensed in fiscal 2003.

Page 11

No provision for income taxes on continuing operations was provided for in fiscal 2004 because the Company’s loss carryforward was sufficient to offset income from continuing operations.

The loss from discontinued operations decreased by $23.1 million principally due to numerous impairment charges incurred in the prior year on various locations which were closed as a part of the Company’s business plan offset by ongoing periodic property maintenance costs incurred until the properties are sold.

Fiscal 2003 Compared to Fiscal 2002

Sales decreased $14.7 million, or 4.6%, in fiscal 2003 compared to fiscal 2002. Of the total decline, $11.8 million was due to the closure of 20 restaurants since August 31, 2001, that were not included in the business plan and therefore were not reclassified into discontinued operations, and $7.5 million was due to a 2.5% decrease in same-store sales. These decreases were offset by the positive impact of two additional days of sales of $2.0 million and the opening of three restaurants since August 28, 2002, that accounted for $2.6 million in sales.

The cost of food increased $1.7 million, or 2.1%, and as a percentage of sales increased from 25.4% to 27.2% in fiscal 2003 compared to fiscal 2002. Early in the fiscal year, the increase in food cost was related primarily to efforts to implement value offerings for the Company’s guests. Those offerings were a planned part of the Company’s strategy aimed at increasing value while maintaining quality. Also in the beginning of the year, fresh produce pricing was negatively impacted by increased transportation costs due to the higher cost of diesel fuel. Toward the end of the year, upward pressure on beef pricing due to lower availability, reduced cattle weights, and an overall higher demand negatively impacted food cost. These increases completely offset reductions due to store closures. Even so, the increases were partially mitigated in the later part of the year by targeted cost control programs.

Payroll and related costs decreased $13.4 million, or 13.3%, and as a percentage of sales decreased from 31.7% to 28.8%. The decrease was due primarily to improved labor deployments and efficiencies resulting from various Company initiatives to manage labor costs, lower workers’ compensation cost estimates resulting from the Company’s in-house training and safety programs, and stores closed prior to the adoption of the business plan.

Page 12

Occupancy and other operating expenses decreased $3.9 million, or 4.1%. As a percentage of sales, occupancy and other operating expenses increased 0.2% to 29.9% compared to 29.7%. Several factors contributed to this fluctuation. Net repairs and maintenance costs decreased primarily due to increased efficiencies from the Company’s in-house repair program as provided by its in-house service center. Food-to-go packaging costs further declined due to less expensive packaging. These decreases were partially offset by property/employee insurance, which increased principally due to premium increases for owned properties coupled with pass-through insurance adjustments from landlords of leased properties, as well as premium increases for directors’ and officers’ liability.

Depreciation and amortization expense was approximately equal to the prior fiscal year, with a decrease of $33,000.

General and administrative expenses increased $2.1 million, or 10.0%. Several factors contributed to this increase. As a percentage of sales, general and administrative expenses increased 1.0% to 7.7%, compared to 6.7%. Professional fees increased principally due to a fixed-asset, cost-segregation study on tax depreciation. Consulting costs increased principally due to fees paid to outside firms relating to the Company’s bank group. Excluding those items, the Company showed higher year-over-year general and administrative expenses because of the increased investment in support personnel to improve its focus on operational efficiencies and facilities maintenance.

Interest expense was approximately equal to the prior fiscal year, with only a slight decrease of $66,000. The payoff of loans on officers’ life insurance policies, which were surrendered during the prior year, in addition to amortization of the loss on interest rate swaps and principal reductions on the outstanding bank debt, contributed to this decrease. These decreases were partially offset by an increase in the effective interest rate on outstanding debt coupled with an increase in the amortization of the discount on the subordinated notes. Approximately $2.7 million and $2.6 million were reclassified from interest expense to discontinued operations in fiscal 2003 and 2002, respectively. These reclassifications related to the launch of the Company’s business plan whereby the proceeds from certain properties closed and sold are committed to paying down debt.

Other income increased $4.7 million primarily due to gains on the sales of assets, which reflect the sale of nine previously closed stores. These gains were partially offset by a loan commitment fee expensed in fiscal 2003.

The income tax benefit decreased by $2,000. No benefit was recorded in fiscal 2003 because the realization of loss carryforward utilization is uncertain.

The loss from discontinued operations increased by $23.5 million principally due to approximately $19.4 million in noncash impairments, with the remainder in carrying costs, allocated bank debt interest, and certain settlement fees incurred on various locations closed as part of the Company’s business plan. The impairment charges included reductions in the fourth quarter of 2003 from gains on the disposal of properties previously held for sale.

Relative to prior closure plans, the Company had a reserve for restaurant closings of approximately $1.7 million and $3.1 million at August 27, 2003, and August 28, 2002, respectively. Excluding certain lease termination settlements, all material cash outlays required for the store closings originally planned as of August 31, 2001, were made prior to August 27, 2003. See further discussion in Note 8 of the Notes to Consolidated Financial Statements.

EBITDA

The Company’s operating performance is evaluated using several measures. One of those measures, EBITDA, is derived from the Income (Loss) From Operations GAAP measurement. EBITDA has historically been used by the Company’s lenders to measure compliance with certain financial debt covenants. The Company’s senior debt agreements define EBITDA as the consolidated income (loss) from operations set forth in the Company’s consolidated statements of operations before depreciation, amortization, other noncash expenses, interest expense, taxes, noncash income and extraordinary gains or losses, and other nonrecurring items of income or expense as approved by the required lenders.

EBITDA increased by $5.4 million from fiscal 2003 to 2004 compared to a decrease of $1.2 million from fiscal 2002 to 2003. These net changes were due to various applicable reasons noted in the Results of Operations section above. Prior year amounts have been reclassified to conform to the current year presentation.

Page 13

As noted previously, prior year amounts have been reclassified to conform to the current year presentation, including the applicable reclassifications of store activity discontinued in accordance with the implementation of the business plan. While the Company and many in the financial community consider EBITDA to be an important measure of operating performance, it should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles, such as operating income and net income. In addition, the Company’s definition of EBITDA is not necessarily comparable to similarly titled measures reported by other companies.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents and Working Capital

Cash and cash equivalents increased by $340,000 from the end of the preceding fiscal year to August 25, 2004, primarily due to improved cash management strategies. Short-term investments decreased by $16.1 million due to payments made to reduce the senior debt.

The Company received a comprehensive income tax refund of $13.4 million in the third quarter of fiscal 2003 that resulted from changes in tax legislation that extended carrybacks of net operating losses. In addition, the refund was higher than the original fiscal 2002 estimate primarily due to increases in tax depreciation relative to an updated cost-segregation study.

The Company had a working capital deficit of $24.0 million as of August 25, 2004, compared to $104.9 million as of August 27, 2003. The improvement was primarily attributable to the reclassification of the debt to long-term liabilities subsequent to the debt refinancing. Excluding the reclassification of the senior debt and subordinated notes explained in theDebt section below, the Company’s working capital deficit increased $17.7 million. That increase in the deficit was primarily attributable to debt paydown and refinancing. The Company’s working capital requirements are expected to be met through cash flows from operations and the available line of credit.

Capital expenditures for the fiscal year ended August 25, 2004, were $8.9 million. Consistent with prior fiscal years, the Company used most of its capital funds to maintain its investment in existing operating units. Based on the business plan, the Company again expects to be able to fund all capital expenditures in Fiscal 2005 using cash flows from operations and expects to spend approximately $12 million to $14 million.

Page 14

DEBT

Previous Senior Debt

During the mid-1990’s, the Company entered into a revolving line of credit with a group of four banks. The line was primarily used for financing long-term objectives, including capital acquisitions and a stock repurchase program. These large demands of cash contributed to the capacity under that credit facility being fully exhausted in fiscal 2001.

From March 2001 until the fourth quarter of fiscal 2004, the Company financed capital acquisitions and working capital needs through careful cash management and the provision of an additional $10 million in subordinate financing from the Company’s CEO and the COO. The additional subordinate financing was funded toward the end of fiscal 2001. Although no further borrowings were allowed under the senior credit facility, the bank group subsequently authorized an extension of its maturity date, allowing the Company time to seek a replacement to the credit facility that would provide the financing on more favorable terms. During this period, the Company implemented a new business plan that included the closure of certain underperforming stores and the use of proceeds from resulting property sales to pay down the line of credit.

New Senior Debt

The Company’s failure to arrange replacement financing by the extended maturity date of the credit facility caused a technical default under that facility. However in the fourth quarter of fiscal 2004, the Company successfully refinanced the senior credit facility with two new instruments. The first is a secured, three-year line of credit for $50 million. Of the total line, only $36.3 million was originally drawn in connection with the refinancing. This instrument was funded by a new group of independent lenders.

In addition to the new line of credit, the Company concurrently negotiated another secured, three-year term loan for $27.9 million. The term loan was funded by a third-party financial institution not related to any member of the bank group that funded the new line of credit. Under the term-loan agreement, no periodic principal payments are required other than net proceeds from properties currently marked for sale. Any balance remaining at the loan’s maturity must be paid in full.

In the fourth quarter of fiscal 2004, as a result of the refinancing, the Company’s new senior debt was in good standing. Pursuant to the terms of the Subordination and Intercreditor Agreement dated June 7, 2004, if the new senior debt were to be in default at some time in the future, Chris and Harris Pappas have a contractual right (but no obligation) to purchase those loans.

At August 25, 2004, the Company’s outstanding senior debt balance was $51.5 million. From its new revolving line of credit, the Company had an outstanding debt balance of $28.0 million. This level is down $8.3 million from its original drawn amount of $36.3 million, which occurred in June 2004. Of the $8.3 million reduction, $2.7 million was derived from a sale leaseback of one property, and $5.6 million was from excess cash. From its term loan, the Company had an outstanding debt balance of $23.5 million. This level is down $4.4 million from its original note balance of $27.9 million, which also occurred in June 2004. The reduction was primarily made with proceeds received on the sale of properties. Of the $50 million total commitment under the line of credit, $20.8 million was available to the Company at August 25, 2004.

Additionally, as of August 25, 2004, the Company has approximately $2.2 million available under letters of credit through a separate arrangement with another bank.

Both the new line of credit and the term loan contain financial performance covenants, provisions limiting the use of the Company’s cash, and descriptions of certain events of default that could be triggered by changes in the Company’s relationship with its CEO and its COO. As the focus continues toward further strengthening operational and financial performance, management believes that the two new debt instruments will provide the proper level of financing to improve its liquidity. Additionally, the Company expects to be able to maintain compliance with the specific requirements of each agreement.

As of August 25, 2004, substantially all of the Company’s assets were pledged as collateral under the line of credit and the term loan. These pledged assets included the Company’s owned real estate, improvements, equipment, and fixtures.

Page 15

Subordinated Notes

As mentioned earlier, in the fourth quarter of fiscal 2001, the Company’s CEO, Christopher J. Pappas, and Harris J. Pappas, the Company’s COO, formally loaned the Company a total of $10 million in exchange for convertible subordinated notes. While certain terms of the original notes have since been modified, they are still in place as of August 25, 2004, with maturity dates of June 6, 2011. At a stated conversion price of $5.00 per shares, the notes are convertible into 2.0 million shares of the Company’s common stock. As a result of the amended subordinated note agreements, at the earlier of June 7, 2005, a default under the senior debt, or a “change in control” as defined in the amended notes, the conversion price will lower to $3.10 per share for 3.2 million shares.

Because the stated conversion price represented a discount from the market price ($5.63) of the Company’s common stock on the commitment date, a beneficial conversion feature of $8.2 million was created. This was recorded as a discount to debt with an offset to paid-in capital. The discount is being amortized over the term of the notes through noncash charges to interest expense amounting to approximately $1.2 million per year.

The Company has agreed to reserve shares held in treasury for issuance to the holders of the subordinated notes upon conversion of the debt. The Company’s treasury shares have also been reserved for two other purposes — the issuance of shares to Messrs. Pappas upon exercise of the options granted to them on March 9, 2001, and for shares issuable under the Company’s Nonemployee Director Phantom Stock Plan. In accordance with an agreement between Messrs. Pappas and the Company dated June 7, 2004, Chris and Harris Pappas have agreed to limit their exercise of stock options to a number that will ensure the “net treasury shares available” are not exceeded. Pursuant to the terms of that agreement, the Company indicated that it will use reasonable efforts to list on the New York Stock Exchange additional shares which would permit full exercise of those options. “Net Treasury Shares Available” is defined in the debt agreements as the number of shares of common stock then held by the Company in treasury, minus the number of shares of common stock issuable or issued after June 7, 2004, under the Nonemployee Director Phantom Stock Plan, minus the number of shares of common stock issuable or issued upon conversion of the subordinated notes, calculated assuming the lowest conversion price stated in the subordinated notes.

COMMITMENTS AND CONTINGENCIES

Officer Loans

In fiscal 1999, the Company guaranteed loans relating to purchases of Luby’s stock by various officers of the Company pursuant to the terms of a shareholder-approved plan. Under the officer loan program, shares were purchased and funding was provided by bank loans to the participating officers. Per the original terms of the guaranteed loan agreements, these instruments only required annual interest to be paid by the individual debtors, with the entire principal balances due upon their respective original maturity dates, which occurred during the period from January through March of 2004. As of August 25, 2004, the total of the principal balances due under these loans was approximately $1.0 million. The purchased Company stock has been and can be used by borrowers to satisfy a portion of their loan obligation. As of August 25, 2004, based on the market price on that day, approximately $315,000, or 30.9% of the note balances, could have been covered by stock, while approximately $705,000, or 69.1%, would have remained outstanding.

In connection with the renegotiation of its senior debt, the Company arranged for the issuance of a letter of credit, entered into on June 7, 2004, for approximately $1.2 million. That amount is intended as an estimate to cover principal and cumulative accrued interest that was due as of September 30, 2004. After that date, JPMorgan Chase Bank can use the letter of credit to draw on the current line of credit to pay down any portion of the unpaid officer loans, as well as the accrued interest, for any loans that are in default. As of the date of this report, JPMorgan Chase Bank has not taken any action to draw upon the letter of credit.

In anticipation of the maturity of its obligation to purchase the loans, the Company worked out settlement agreements with several of the debtors pursuant to which the Company would contribute up to $530,000 under the terms of the settlement agreement. As of August 25, 2004, the Company has recognized a liability of $530,000 in accrued expenses and other liabilities.

Page 16

Off-Balance-Sheet Arrangements

The Company has no off-balance-sheet structured financing arrangements; however, under the terms of applicable SEC rules, the Company’s obligation to repurchase the officer loans could be deemed a guarantee contract, which the SEC considers an off-balance-sheet arrangement. If the Company is required to purchase the officer loans, it would have a maximum cash payout exposure of approximately $1.2 million.

Contractual Obligations

As of August 25, 2004, the Company had contractual obligations and other commercial commitments as described below.

In addition to the commitments represented in the above tables, the Company enters into a number of cancelable and noncancelable commitments during the year. Typically, these commitments are for less than a year in duration and are generally focused on food inventory. The Company does not maintain any long-term or exclusive commitments or arrangements to purchase products from any single supplier. Substantially all of the Company’s product purchase commitments are cancelable up to 30 days prior to the vendor’s scheduled shipment date.

Long-term liabilities reflected in the Company’s consolidated financial statements as of August 25, 2004, included deferred income taxes ($5.1 million), deferred gain on the sale of property ($382,000), amounts accrued for benefit payments under the Company’s supplemental executive retirement plan ($488,000) and deferred compensation agreements ($551,000), accrued insurance reserves ($3.9 million), deferred rent liabilities ($4.3 million) and reserve for restaurant closings ($500,000).

The Company is also contractually obligated to the chief executive officer and the chief operating officer pursuant to employment agreements. See theRelated Partiessection of “Affiliations and Related Parties” for further information.

Page 17

AFFILIATIONS AND RELATED PARTIES

Affiliations

The Company entered into an Affiliate Services Agreement effective August 31, 2001, with two companies, Pappas Partners, L.P. and Pappas Restaurants, Inc., which are restaurant entities owned by Christopher J. Pappas and Harris J. Pappas. That agreement, as amended on July 23, 2002, limited the scope of expenditures therein to professional and consulting services. The Company completed this amendment due to a significant decline in the use of professional and consulting services from Pappas entities.

Additionally, on July 23, 2002, the Company entered into a Master Sales Agreement with the following:same Pappas entities. Through this agreement, the Company contractually separated the design and fabrication of equipment and furnishings from the Affiliate Services Agreement. The Master Sales Agreement covers the costs incurred for modifications to existing equipment, as well as custom fabrication, including stainless steel stoves, shelving, rolling carts, and chef tables. These items are custom-designed and built to fit the designated kitchens and are also engineered to give a longer service life than comparably manufactured equipment.

The pricing of equipment, repair, and maintenance is set and evaluated periodically and is considered by management to be primarily at or below market for comparable goods and services. To assist in periodically monitoring pricing of the transactions associated with the Master Sales Agreement and the Affiliate Services Agreement, the Finance and Audit Committee of the Company’s Board of Directors has periodically in the past used independent valuation consultants.

As part of the affiliation with the Pappas entities, the Company leases a facility, the Houston Service Center, in which Luby’s has installed a centralized restaurant service center to support field operations. The building at this location has 22,253 square feet of warehouse space and 5,664 square feet of office space. It is leased from the Pappas entities by the Company at an approximate monthly rate of $0.24 per square foot. From this center, Luby’s repair and service teams are dispatched to the Company’s restaurants when facility or equipment maintenance and servicing are needed. The facility is also used for repair and storage of new and used equipment. The amount paid by the Company pursuant to the terms of this lease was approximately $82,000, $79,000, and $78,000 for fiscal 2004, 2003, and 2002, respectively.

The Company previously leased a location from an unrelated third party. That location is used to house increased equipment inventories due to store closures under the business plan. The Company considered it more prudent to lease this location rather than to pursue purchasing a storage facility, as its strategy is to focus its capital expenditures on its operating restaurants. In a separate transaction, the third-party property owner sold the location to the Pappas entities during the fourth quarter of fiscal 2003, with the Pappas entities becoming the Company’s landlord for that location effective August 1, 2003. The storage site complements the Houston Service Center with approximately 27,000 square feet of warehouse space at an approximate monthly rate of $0.21 per square foot. The amount paid by the Company pursuant to the terms of this lease was approximately $69,000 for fiscal 2004.

In another separate contract, pursuant to the terms of a ground lease dated March 25, 1994, the Company paid rent to PHCG Investments for a Luby’s restaurant the Company operated in Dallas, Texas, until that location was closed early in the third quarter of fiscal 2003. Christopher J. Pappas and Harris J. Pappas are general partners of PHCG Investments. Preceding the store’s closure, the Company entered into a lease termination agreement with a third party unaffiliated with the Pappas entities. That agreement severed the Company’s interest in the PHCG property in exchange for a payment of cash to the Company. The Company also obtained the right to remove fixtures and equipment from the premises, and it was released from any future obligations under the lease agreement. The closing of the transaction was completed during the third quarter of fiscal 2003, resulting in a gain of $735,000, and the gross proceeds were used to pay down debt. The amount paid by the Company pursuant to the terms of this lease before its termination was approximately $42,000 and $85,000 in fiscal 2003 and 2002, respectively. No costs were incurred under this lease in fiscal 2004.

Page 18

Late in the third quarter of fiscal 2004, Chris and Harris Pappas became limited partners in a limited partnership which purchased a retail strip center in Houston, Texas. Messrs. Pappas own a 50% limited partnership and a 50%interest. Neither of Messrs. Pappas own any interest in the general partner of the limited partnership. The general partner of the limited partnership interest.controls the operational decisions of the partnership. One of the Company’s restaurants has rented approximately 7% of the space in that center since July of 1969. No changes were made to the Company’s lease terms as a result of the transfer of ownership of the center to the new partnership. The amount paid by the Company pursuant to the terms of this lease since the Pappas’s inclusion of Chris and Harris Pappas as limited and general partners was $56,000 in fiscal 2004. Management is under instruction that no amendments can be made to this lease without the approval of the Finance and Audit Committee.

This Amendment No. 1Affiliated rents paid for the Houston Service Center, the separate storage facility, the Dallas property, and the Houston property leases combined represented 5.2%, 4.3%, and 3.6% of total rents for continuing operations for fiscal 2004, 2003, and 2002, respectively.

The following compares current and prior fiscal year-to-date charges incurred under the Master Sales Agreement, the Affiliate Services Agreement, and affiliated property leases to Annual Report on Form 10-K amends only the paragraph above. AllCompany’s total capital expenditures, as well as relative general and administrative expenses and occupancy and other components of the original 10-K remain unchanged. This Form 10-K/A does not reflect events occurring after the filing of the original Form 10-K, nor modify or update those disclosuresoperating expenses included in any way other than to add the information included above.

See accompanying notes.

Page 27

Luby’s, Inc.