FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28,May 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________________________ to _________________________________________
Commission file number: 1-8308
LUBY'S, INC.Luby's, Inc.
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 74-1335253
_______________________________________________________________________________________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2211 Northeast Loop 410, P. O. Box 33069
San Antonio, Texas 78265-3069
_______________________________________________________________________________________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
210/654-9000
_______________________________________________________________________________________________________________________________________________________________
(Registrant's telephone number, including area code)
_______________________________________________________________________________________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: 22,422,943 shares outstanding as of April 16,July 13, 2001
(exclusive of 4,980,124 treasury shares)
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LUBY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
____ ____ ____ ____
(Amounts in thousands except per share data)
Sales $112,219 $121,924 $226,119 $245,068
Costs and expenses:
Cost of food 28,984 29,823 58,344 60,222
Payroll and related costs 37,376 37,684 76,586 76,210
Occupancy and other operating
expenses 41,678 39,280 81,390 78,685
Provision for asset impairments
(See Note 4) 9,445 --- 10,199 ---
General and administrative expenses 6,827 5,659 13,022 10,862
_______ _______ _______ _______
124,310 112,446 239,541 225,979
_______ _______ _______ _______
Income (loss) from operations (12,091) 9,478 (13,422) 19,089
Interest expense (2,685) (1,253) (4,942) (2,309)
Other income, net 278 389 777 1,299
_______ _______ _______ _______
Income (loss) before income taxes (14,498) 8,614 (17,587) 18,079
Income tax expense (benefit) (5,074) 2,997 (6,155) 6,291
_______ _______ _______ _______
Net income (loss) $ (9,424) $ 5,617 $(11,432) $ 11,788
_______ _______ _______ _______
Net income (loss) per share
- basic and assuming dilution $(0.42) $0.25 $(0.51) $.53
_______ _______ _______ _______
Cash dividends declared per share $0.00 $0.20 $0.00 $.40Statements
LUBY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
May 31, May 31,
2001 2000 2001 2000
_____ ____ ____ ____
(Amounts in thousands except per share data)
Sales $121,677 $126,281 $347,796 $371,349
Costs and expenses:
Cost of food 30,305 32,954 88,649 93,177
Payroll and related costs 41,254 39,255 117,840 115,465
Occupancy and other operating
expenses 42,512 39,381 123,903 118,066
Provision for asset impairments
and store closings --- --- 10,199 ---
General and administrative
expenses 6,415 5,244 19,437 16,105
_______ _______ _______ _______
120,486 116,834 360,028 342,813
_______ _______ _______ _______
Income (loss) from operations 1,191 9,447 (12,232) 28,536
Interest expense (3,534) (1,645) (8,475) (3,954)
Other income, net 703 573 1,479 1,872
_______ _______ _______ _______
Income (loss) before
income taxes (1,640) 8,375 (19,228) 26,454
Income tax expense (benefit) (574) 2,540 (6,730) 8,831
_______ _______ _______ _______
Net income (loss) $ (1,066) $ 5,835 $(12,498) $ 17,623
_______ _______ _______ _______
Net income (loss) per share -
basic and assuming dilution $(0.05) $0.26 $(0.56) $0.79
_______ _______ _______ _______
Cash dividends per share $0.00 $0.20 $0.00 $0.60
_______ _______ _______ _______
Weighted average number of shares
outstanding - basic 22,423 22,420 22,422 22,420
Weighted average number of shares
outstanding - assuming dilution 22,632 22,420 22,475 22,422 22,420 22,421 22,420
Weighted average number of shares
outstanding - assuming dilution 22,435 22,420 22,421 22,421
See accompanying notes.
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
February 28,May 31, August 31,
2001 2000
____ ___________ __________
(Thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents $ 3,3367,591 $ 679
Short-term investments 5,935 ---
Trade accounts and other receivables 448458 403
Food and supply inventories 3,9873,821 3,853
Prepaid expenses 2,0821,755 4,481
Income tax receivable 5,0616,949 3,749
Deferred income taxes 1,8852,207 1,540
________ ________
Total current assets 16,79928,716 14,705
Property held for sale 13,2388,230 13,156
Investments and other assets 3561,896 4,858
Property, plant, and equipment - at cost, net 327,269324,186 338,124
________ ________
$357,662$363,028 $370,843
________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 19,86016,808 $ 19,843
Dividends payable --- 2,242
Accrued expenses and other liabilities 21,27326,976 24,040
Long-term debt classified as current (See Note 5) 123,000 ---
________ ________
Total current liabilities 164,13343,784 46,125
Long-term debt ---(Note 5) 123,000 116,000
Deferred income taxes and other credits 7,17410,336 10,162
Reserve for store closings 651604 1,815
Derivative financial instruments (See Note(Note 2) 9861,191 ---
Shareholders' equity:
Common stock 8,769 8,769
Paid-in capital 27,25227,847 27,202
Retained earnings 255,164254,097 266,596
Accumulated other comprehensive
income (loss) (641)(Note 3) (774) ---
Less cost of treasury stock (105,826) (105,826)
________ ________
Total shareholders' equity 184,718184,113 196,741
________ ________
$357,662$363,028 $370,843
________ ________
See accompanying notes.
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SixNine Months Ended
February 28, February 29,May 31,
2001 2000
____ ____
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(12,498) $ (11,432) $ 11,78817,623
Adjustments to reconcile net income (loss)(loss ) to net
cash provided by operating activities:
Depreciation and amortization 11,581 11,01417,320 16,847
Provision for asset impairmentimpairments 10,199 ---
Gain on disposal of assets (807) (357)
Change(1,156) ---
Non-cash stock compensation 558 ---
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses 2,399 (24)
Decrease in accrued expenses and
other liabilities (2,767) (4,014)
Increase in income tax receivable (1,312) (2,104)
Increase (decrease) in deferred income
taxes and other credits (2,988) 2,195
Decrease in reserve for store closings (1,164) (1,735)
Other, net 11 59
_________ _________(3,214) (7,975)
________ ________
Net cash provided by operating activities 3,720 16,822
_________ _________11,209 26,495
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property held for sale 3,4956,935 1,010
Purchases of land held for future use --- (2,414)(2,905)
Purchases of property, plant, and equipment (12,939) (29,065)
_________ _________(13,678) (40,827)
Purchases of short-term investments (5,935) ---
________ ________
Net cash used in investing activities (9,444) (30,469)
_________ _________(12,678) (42,722)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement 7,000 23,00031,000
Dividends paid (2,242) (8,969)(13,452)
Proceeds from borrowing against cash surrender
value of officers' life insurance policies 3,623 ---
_________ _________________ ________
Net cash provided by financing activities 8,381 14,031
_________ _________17,548
Net increase in cash and cash equivalents 2,657 3846,912 1,321
Cash and cash equivalents at beginning of period 679 286
_________ _________________ ________
Cash and cash equivalents at end of period $ 3,3367,591 $ 670
_________ _________1,607
See accompanying notes.
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S, INC.
NOTES TO FINANCIAL STATEMENTS
February 28,May 31, 2001
(UNAUDITED)
Note 1: Basis of Presentation
The accompanying unaudited financial statements are presented in
accordance with the requirements of Form 10-Q and, consequently, do not
include all of the disclosures normally required by generally accepted
accounting principles. All adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim periods have been made. All such adjustments are of a normal
recurring nature. The results for the interim periods are not
necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the
consolidated financial statements and footnotes included in Luby's
annual report on Form 10-K for the year ended August 31, 2000. The
accounting policies used in preparing these consolidated financial
statements are the same as those described in Luby's annual report on
Form 10-K.
Note 2: Derivative Financial Instruments
The Company adopted Statement of Financial Accounting Standards No. 133
(FAS 133), "Accounting for Derivative Instruments and Hedging
Activities," and its amendments, Statements 137 and 138, on
September 1, 2000. FAS 133 requires that all derivative instruments be
recorded on the balance sheet at fair value. The Company has
designated its interest rate swap agreements as cash flow hedge
instruments. The swap agreements are used to manage exposure to
interest rate movement by effectively changing the variable rate to a
fixed rate. The critical terms of the interest rate swap agreements
and the interest-bearing debt associated with the swap agreements are
the same; therefore, the Company has assumed that there is no
ineffectiveness in the hedge relationship. Changes in fair value of the
interest rate swap agreements will be recognized in other comprehensive
income, net of tax effects, until the hedged items are recognized in
earnings. The Company has hedged its exposure to interest rate
movement through June 30, 2002.
At September 1, 2000, the swap agreements were in a favorable position
by approximately $175,000. In accordance with the transition
provisions of FAS 133, the net-of-tax cumulative effect of an
accounting change adjustment on September 1, 2000, was $114,000 in
accumulated other comprehensive income with a deferred income tax
liability of $61,000. At February 28,May 31, 2001, the fair value of the swap
agreements decreased to an unfavorable position; therefore, the
derivative financial instruments were adjusted to a liability of
$986,000.$1,191,000. Accumulated other comprehensive income (loss) was adjusted
to an accumulated loss of $641,000$774,000 and the deferred income tax was
adjusted to a $345,000$417,000 tax asset. As the swap agreements arewere deemed
to be effective cash flow hedges, there was no income statement impact
related to hedge ineffectiveness. TheIn anticipation of additional
future unfavorable interest rate changes, the Company expects to reclassify
approximately $215,000unraveled its
swap agreements on July 2, 2001, for a cash payment of existing losses in accumulated other
comprehensive income (loss), net of taxes, into net income (loss)
through August 31, 2001.$1,255,000.
Note 3: Comprehensive Income (Loss)
The Company's comprehensive income (loss) is comprised of net income
(loss) and adjustments to derivative financial instruments. The
components of comprehensive income (loss) are as follows:
Three Months Ended
February 28, February 29,May 31,
2001 2000
____ _________
(Thousands of dollars)
Net income (loss) $(9,424) $5,617$(1,066) $5,835
Other comprehensive income (loss),
net of taxes:
Net derivative income (loss),
net of taxes of $297 (552)$123 (228) ---
Reclassification adjustment for
(gains) losses included in net
income (loss), net of taxes of $10 18$51 95 ---
_______ ______
Comprehensive income (loss) $(9,958) $5,617$(1,199) $5,835
_______ ______
SixNine Months Ended
February 28, February 29,May 31,
2001 2000
____ _________
(Thousands of dollars)
Net income (loss) $(11,432) $11,788$(12,498) $17,623
Other comprehensive income (loss),
net of taxes:
Cumulative effect of a change
in accounting for derivative
financial instruments upon
adoption of FAS 133, net of
taxes of $61 114 ---
Net derivative income (loss),
net of taxes of $405 (753)$528 (981) ---
Reclassification adjustment for
(gains) losses included in net
income (loss), net of taxes of $1 (2)$50 93 ---
_________________ _______
Comprehensive income (loss) $(12,073) $11,788
________ _______$(13,272) $17,623
Note 4: Impairment of Long-Lived Assets and Store Closings
During fiscal year 2001, the Company recorded a pretax charge to
operating costs of $10.2 million of asset impairment charges in
accordance with Statement of Financial Accounting Standards No. 121
(FAS 121), "Accounting for the Impairment of Long-Lived Assets to be
Disposed of." The asset impairment for$9.4 million of the current quarter was $9.4
million. The charge related to the impairment of
13 restaurant properties. These properties have experienced specific
unfavorable market conditions that have contributed to their
impairment. The carrying values of the assets were written down to the
estimated future discounted cash flows or fully written off in the case
of negative future cash flows. Estimated future cash flows were based
on a regression analysis of averages for similar restaurants,
discounted at the Company's weighted average cost of capital. Three of
the 13 properties arewere designated for closure prior to May 31,and were closed April 30,
2001. The remaining $755,000 of impairment chargescharge was recorded during the
quarter ended November 30, 2000, in
accordance with FAS 121 for assets related to surplus properties held
for sale, which were written down to the lower of their historical
costs or estimated net realizable values.
In fiscal years 2000 and 1998 the Company also recorded a pretax
charge to operating costs of $14.5 million and $36.9 million,
respectively, for asset impairments and store closings.
In late fiscal 2000 the Company reviewed its restaurants from a capital
strategy standpoint to determine whether the closing of certain units
could positively impact sales and profitability at nearby locations
while also providing capital funds from the sale of these properties to
invest in other more profitable capital projects, such as food-to-
gofood-to-go
drive-thru expansions. As a result of this review and continual
evaluation of possible impairments, the Company recorded a pretax
charge of $14.5 million during the fourth quarter of fiscal 2000 for
store closings, associated closing costs, asset impairment charges in
accordance with FAS 121 and other unusual charges. The principal
components of the 2000 charge were as follows:
- $7.7 million for the closing of 15 restaurants that had not met the
Company's return on invested capital and sales growth requirements.
Fourteen of the 15 units were closed prior toas of February 2001, and the
remaining store is planned for closure prior to August 31, 2001. The
charge included the cost to write down the properties and equipment to
net realizable value and estimated costs for the settlement of lease
obligations, legal and professional fees, severance costs, and other
exit costs.
- $3.2 million for asset impairments of six restaurant properties which
the Company continues to operate. The carrying values of the assets
were written down to the estimated future discounted cash flows or
fully written off in the case of negative future cash flows. Estimated
future cash flows were based on a regression analysis of averages for
similar restaurants, discounted at the Company's weighted average cost
of capital.
- $1.3 million for the write-down of computer-related equipment and
software. The write-down included the abandonment of a payroll-
relatedpayroll-related
software package and several point-of-sale (POS) systems. The POS
systems were replaced with new touch-screen systems to provide better
information and customer service, especially in the food-to-go
expansions. As these items were abandoned, the remaining book value of
these assets was written off.
- $1.2 million additional write-down on surplus properties held for
sale. These properties were written down to the lower of their
historical carrying costs or estimated net realizable values.
- $1.1 million related to other unusual charges. The primary component
of this charge was the write-off of the remaining asset balance related
to L&W Seafood, Inc., a joint venture originally established between
the Company and Waterstreet, Inc.
Prior to August 31, 2000, all restaurant employees of the Company were notified
of the possibility of their termination due to future restaurant closures. As
of February 28,May 31, 2001, approximately 295300 employees have been terminated, and
approximately 30 additional employees will be terminated when the remaining
restaurant is closed during the coming year. The severance cost for these
employees was accrued and included in the store closing charge noted above.
During 1998 the Company recorded a similar pretax charge of $36.9 million as a
result of the adoption of its strategic plan, which included the disposition,
relocation, and write-down of several restaurants that had not met management's
financial return expectations. The principal components of the 1998 charge were
(1) $14.7 million for the closing of 14 underperforming restaurants; (2) $10.7
million for the closing and relocation of 16 restaurants to optimize their
market potential; (3) $11.4 million for asset impairments of 13 restaurants
which the Company continues to operate; and (4) $0.1 million additional write-
down on surplus properties held for sale.
At February 28,May 31, 2001, the balance in the reserve for store closings was $651,000.$604,000.
All material cash outlays related to the 1998 pretax charge have been made as of
February 28, 2001.November 2000. It is anticipated that all material cash outlays required for
the 2000 pretax charge will be made prior to August 31, 2001. The following
table presents a summary of the types and amounts recognized as accrued expenses
together with cash payments made against such accruals through the period ended
February 28,May 31, 2001:
_____________________________________________________
Legal
And
Lease Profes- Work Other
Settlement sional force Exit Total
Costs Fees Severance Costs Reserve
_____________________________________________________
(Thousands of dollars)
Reserve balance at
August 31, 1998 $ 4,537 $ 985 $ 260 $ 390 $ 6,172
Additions/transfers/transfer/
(reductions) (224) 150 56 (257) (275)
Cash payments (406) (135) (244) (45) (830)
_______ _______ _______ _______ _______
Reserve balance at
August 31, 1999 3,907 1,000 72 88 5,067
Additions/transfers/
(reductions) 675 350 375 300 1,700
Cash payments (3,817) (975) (72) (88) (4,952)
_______ _______ _______ _______ _______
Reserve balance at
August 31, 2000 765 375 375 300 1,815
Additions/transfers/
(reductions) 450 (200) (55) (195) ---
Cash payments (715) --- (306) (143) (1,164)(190) (1,211)
_______ _______ _______ _______ _______
Reserve balance at
February 29,May 31, 2001 $ 500 $ 175 $ 14 $ (38)(85) $ 651604
_______ _______ _______ _______ _______
Note 5:5. Debt
The Company has a $125 million credit facility with a syndication of
four banks. As part of this credit facility, the Company has a
revolving credit agreement which allows borrowings for varying periods
through June 30, 2002, at the lower of the prime rate or other rate
options available at the time of borrowing. As of February 28,May 31, 2001, the balance outstanding under the
line-of-credit agreement iswas $123 million. TheA portion of the remaining
portion ofbalance on the line of credit, is$1.1 million, has been committed to fund
obligations under letters of credit. The credit facility was amended
effective June 29, 2001, to include only one financial covenant
relative to EBITDA (Earnings Before Interest, Taxes, Depreciation, and
thereforeAmortization) and an extension of the Company hasagreement term to April 30, 2003.
Additional term extensions are also available if certain conditions are
met. There is no ability to borrow additional funds under itsthe credit
facility. The credit facility contains business covenants,Per the new amendment, scheduled principal payments will be
required and annual limits have been set for capital expenditures. In
addition to the scheduled principal payments, the Company made a
$1 million principal payment on July 6, 2001, which impose certain
financial restrictions onreduced the
Company.principal balance owed to $122 million. As a resultpart of the asset
impairment, lower same-store sales, and other unusual charges recorded
in the second quarter, the Company is not in compliance with the
Leverage Ratio and the Net Worth covenants as required by its credit
facility. In an effort to cure these defaults under itsamended credit
facility, the Company will pay interest at prime, plus an applicable
margin as defined in the amendment, on all debt outstanding. Based
upon the new covenant, the Company is no longer in discussions with its banks regarding
permanent amendments. Due to the pending naturedefault.
Note 6: Related Parties
A Director of the amendments,Company is also the Chief Operating Officer of an
investment firm that provides investment services for the Company's
debt associated withprofit sharing plan (the Plan). During the facility is classified as a
current liability innine months ended May 31,
2001, the February 28, 2001, financial statements.
Upon successful completion ofPlan paid the amendments, which the Company
anticipates will include an extension in the term of the credit
facility, theinvestment firm approximately $50,000 for its
services.
The recently hired Chief Executive Officer and Chief Operating Officer
of the Company own a restaurant company, which provides services to
Luby's. The services include general business consulting, basic
equipment maintenance, specialized equipment fabrication, and
warehousing support. The total cost of these services for the nine
months ended May 31, 2001, has been estimated at $100,000. All costs
to date were incurred in the third quarter after the chief officers
were hired.
The Chief Executive Officer and the Chief Operating Officer have
personally committed to loanloaning the Company a total of $10 million
before the end of the fiscal year to support the Company's future daily
cash needs. The Company received an installment toward this commitment
of $3 million on July 2, 2001, and the remainder on July 5, 2001.
The recently hired Chief Financial Officer and Senior Vice President of
Administration provide financial and legal services to the restaurant
company owned by the Chief Executive Officer and the Chief Operating
Officer of the Company. Compensation for the services provided by the
Chief Financial Officer and Senior Vice President of Administration to
the separate restaurant company are funded by that organization.
Part I - FINANCIAL INFORMATION (continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
_______________________________
Cash and cash equivalents increased by $2,657,000$6,912,000 from the end of the preceding
fiscal year to February 28,May 31, 2001. All capital expenditures for fiscal 2001 are being
funded from cash flows from operations, cash equivalents, and long-term debt.
Capital expenditures for the sixnine months ended February 28,May 31, 2001, were $12,939,000.$13,678,000.
As of February 28,May 31, 2001, the Company owned 2718 properties held for sale, including
teneight undeveloped land sites. The Company also has two properties held for
future use.
To fund capital expenditures, the Company required external financing and
borrowed funds under a $125 million line-of-credit agreement. As of February 28,May 31,
2001, the amount outstanding under this line of credit is $123 million. The remainingA
portion of the remaining amount under the line of credit, $1.1 million, is
committed to fund obligations under letters of credit and therefore the Company hascredit. There is no ability to
borrow additional funds under itsthe credit facility. As a result of the asset
impairment, lower same-store sales, and other unusual charges recorded in the
second quarter, the Company is not in compliance at February 28, 2001, with
certain financial covenants as required by its credit facility. In an effort
to cure these defaults under its credit facility, the Company is in discussions
with its banks regarding permanent amendments. Due to the current pending
nature of the amendments, the Company's debt associated with the facility is
classified as a current liability in the February 28, 2001, financial
statements. Upon successful completion of the amendments, which the Company
anticipates will include an extension in the term of the credit facility, the
recently hired Chief Executive Officer and Chief Operating Officer
have committed to loan the Company a total of $10 million to support
future daily cash needs.
Interest Rate Swap Agreements
_____________________________
The Company has two interest rate swap agreements (swaps) that fix the rate on a
portion of the floating-rate debt outstanding under its revolving line of
credit. The swaps fix interest at a rate of 6.50% in the notional amounts of
$30 million and $15 million and both terminate as of June 30, 2002. The
differential to be paid or received as interest rates change is accrued and
recognized as an adjustment to interest expense related to the debt. The
related amount payable to or receivable from counterparties is included in other
liabilities or assets. The fair values of these agreements are estimated by
obtaining quoted market prices. The swap agreements were in an unfavorable
market value position of approximately $986,000$1,191,000 as of February 28,May 31, 2001. The
Company unraveled its swap agreements effective July 2, 2001, for a cash payment
of $1,255,000, in anticipation of additional future unfavorable interest rate
changes.
Trends and Uncertainties
_________________________________________________
FAS 121 requires the Company to review long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The Company considers a history of operating losses or
negative cash flows to be its main indicators of potential impairment. Assets
are generally evaluated for impairment at the restaurant level. If a restaurant
continues to incur negative cash flows or operating losses, an impairment or
restaurant closing charge may be recognized in future periods.
Reserve for Store ClosingClosings
__________________________
Of the 13 restaurants impaired in the first sixnine months of 2001, three arewere
designated for closure.closure and were closed April 30, 2001. The reserve for store
closure as of February 28,
2001,closings was not increased for the effect of these three restaurants as most
employees will transfertransferred to nearby locations and the properties are either owned or
the relativerelated leases have expired.
During the sixnine months ended February 28,May 31, 2001, the Company had cash outlays related
to itsthe reserve, which originally resulted from write-downs taken in fiscal year
2000 and fiscal year 1998. The write-downs were the result of the Company's
continuing efforts to redeploy both capital and human resources to improve the
Company's financial performance and strengthen the organization. The 2000 write-down resulted in a pretax charge to operating costs of $14.5
million during the fourth quarter for store closings, associated closing costs,
asset impairment charges in accordance with Statement of Financial Accounting
Standards No. 121 (FAS 121), "Accounting for the Impairment of Long-Lived
Assets to be Disposed of," and other unusual charges. The principal components
of the 2000 charge were (1) $7.7 million for the closing of 15 restaurants that
had not met the Company's return on invested capital and sales growth
requirements - 14 of the 15 units have been closed as of February 2001, and the
remaining store is planned for closure prior to August 31, 2001; (2) $3.2
million for asset impairments of six restaurant properties which the Company
continues to operate; (3) $1.3 million for the write-down of computer-related
equipment and software; (4) $1.2 million additional write-down on surplus
properties held for sale; and (5) $1.1 million related to other unusual
charges. The 1998 write-down resulted in a pretax charge to operating costs
of $36.9 million for stores that were closed, relocated, or impaired. The
principal components of the 1998 charge were (1) $14.7 million for the closing
of 14 underperforming restaurants; (2) $10.7 million for the closing and
relocation of 16 restaurants to optimize their market potential; (3) $11.4
million for asset impairments of 13 restaurants which the Company continues to
operate; and (4) $0.1 million additional write-down on surplus properties held
for sale. See further
discussion of the 2000 and 1998 pretax chargeswrite-downs in Note 4 of the Notes to
Consolidated Financial Statements for the period ended February 28,May 31, 2001.
At February 28, 2001, the balance in the reserve for store closings was
$651,000. All
material cash outlays related to the 1998 pretax charge had beenwere made as of
November 30, 2000. It is anticipated that all material cash outlays required
for the 2000 pretax charge will be made prior to August 31, 2001.
At May 31, 2001, the balance in the reserve for store closings was $604,000,
which relates to the 2000 pretax charge. The following table presents a summary
of the types and amounts recognized as accrued expenses together with cash
payments made against such accruals for the quarternine months ended February 28,May 31, 2001:
_____________________________________________________
Legal
And
Lease Profes- Work Other
Settlement sional force Exit Total
Costs Fees Severance Costs Reserve
_____________________________________________________
(Thousands of dollars)
Reserve balance at
August 31, 2000 $ 765 $ 375 $ 375 $ 300 $ 1,815
Additions/transfers/
(reductions) 450 (200) (55) (195) ---
Cash payments (715) --- (306) (143) (1,164)(190) (1,211)
_______ _______ _______ _______ _______
Reserve balance at
February 28, 2001 $ 500 $ 175 $ 14 $ (38)(85) $ 651604
_______ _______ _______ _______ _______
Results of Operations
_____________________
Quarter ended February 28,May 31, 2001, compared to the quarter ended February 29,May 31, 2000
____________________________________________________________________________
Sales decreased $9,705,000,$4,604,000, or 8.0%3.6%, due to the closing of three restaurants in
fiscal year 2000 and 1417 restaurants in fiscal year 2001, and excluding a leap
day in fiscal year 2000, a decline of 5.3% during the quarter in sales volumes
at restaurants opened over 18 months. This2001; this decrease was
partially offset by the opening of 11 new restaurants during fiscal year 2000
and one restaurant in fiscal year 2001. Same-store sales declined 0.4% during
the quarter at restaurants opened over 18 months. Additionally, in April 2001,
the Company effected a 50 cent price increase on its signature Lu Ann Plate.
The bundled offerings of the Luby's Platter and the "Big2Do" were in turn
discontinued.
Cost of food decreased $839,000,$2,649,000, or 2.8%8.0%, due primarily to the decline in
sales. As a percentage of sales, food costs were higherlower due to recent
couponing, our drive to increase dinner traffic by offering higher-end entrees
such as steak, shrimp, and fresh fish, and increasedthe move from
deeply discounted bundled meal offerings. Payroll and related costs decreased $308,000,increased
$1,999,000, or 0.8%5.1%, due primarily to store
closures offset byhigher hourly labor costs and higher workers'
compensation costs. Occupancy and other operating expenses increased $2,398,000,$3,131,000,
or 6.1%8.0%, due primarily to increased utility costs due to higher rates;rates, higher
property taxes related to new stores and remodels;remodels, higher expenditures related
to improving the general condition of the restaurants, and higher depreciation expense associated with the new stores,
restaurant remodels, and an increase in technology-related spending.increased management
compensation. In addition, advertising expense was higher due to the timing of
expenditures. General and administrative expenses increased $1,171,000, or
22.3%, due primarily to higher officer salaries due to non-cash compensation
related to new management stock options and increased legal and professional
fees related to the debt restructuring. These increases were partially offset
by lower management incentive pay as a
result ofmanager trainee salaries due to fewer trainees and lower sales and profits. General and administrative expenses
increased $1,168,000, or 20.6%, due primarily to increased consulting services
and higher legal and professional fees related to the proxy and debt
restructuring. These increases were offset by lower profit sharing and
bonus expenses.
During the current quarter, the Company recorded a pretax charge to operating
costs of $9,445,000 as a result of asset impairment charges in accordance with
Statement of Financial Accounting Standards No. 121 (FAS 121), "Accounting for
the Impairment of Long-Lived Assets to be Disposed of." The charge related to
13 restaurant properties, which were written down to their estimated fair
value. These properties have experienced specific unfavorable market
conditions that have contributed to their impairment. The carrying values of
the assets were written down to the estimated future discounted cash flows or
fully written off in the case of negative future cash flows. Estimated future
cash flows were based on a regression analysis of averages for similar
restaurants, discounted at the Company's weighted average cost of capital.
Three of the properties have been designated for closure.travel-related
costs.
Interest expense increased $1,432,000,$1,889,000, or 114.3%114.8%, from the first quarter of
fiscal 2000 due to higher borrowings under
the line-of-credit agreement and higher interest rates.
Other income decreased $111,000increased $130,000 due to property tax late payment penalties
and other miscellaneous costs, which were partially offset by higher gains on the salessale of properties.
IncomeThe income tax benefit increased $8,071,000,$3,114,000, or 269.3%122.6%, due primarily to lower
income before income taxes. This was also raised by a slightan increase in the
effective income tax rate from 34.8%30.3% to 35.0%. SixIn the prior year, the Company
settled several tax items favorably which contributed to a lower effective tax
rate.
Nine months ended February 28,May 31, 2001, compared to the sixnine months ended February 29,May 31, 2000
__________________________________________________________________________________________________________________________________________________________
Sales decreased $18,949,000,$23,553,000, or 7.7%6.3%, due to the closing of three restaurants in
fiscal 2000 and 1417 restaurants in fiscal year 2001, and excluding a leap day
in fiscal year 2000, a decline of 6.2% during the six-month period in sales
volumes at restaurants opened over 18 months. This2001; this decrease was partially
offset by the opening of 11 new restaurants during fiscal 2000 and one
restaurant in fiscal year 2001. Excluding a leap day in fiscal year 2000, same
store sales declined 4.5% during the nine-month period at restaurants opened
over 18 months. Additionally, in April 2001, the Company effected a 50 cent
price increase on its signature Lu Ann Plate. The bundled offerings of the
Luby's Plate and the "Big2Do" were in turn discontinued.
Cost of food decreased $1,878,000,$4,528,000, or 3.1%4.9%, due primarily to the decline in
sales. As a percentage of sales, food costs were higherlower due to recent
couponing, our drive to increase dinner traffic by offering higher-end entrees
such as steak, shrimp, and fresh fish, and increasedthe move from
deeply discounted bundled meal offerings. Payroll and related costs increased
$376,000,$2,375,000, or 0.5%2.1%, primarily due to higher hourly labor costs and higher
workers' compensation costs, which were partially offset by lower payroll costs
related to store closures.compensations costs. Occupancy and other operating expenses increased
$2,705,000,$5,837,000, or 3.4%4.9%, due primarily to increased utility costs due to higher
rates;rates and higher rent expense due to new stores and the timing of percentage
rentals; higher property taxesexpenditures related to new stores and remodels; and higher
depreciation expense associatedimproving the general condition of the
restaurants. The provision for asset impairments of $10,199,000 during the
current year relates the pretax charge to operating costs which resulted from
asset impairment charges in accordance with the new stores, restaurant remodels, and
an increase in technology-related spending. These increases were partially
offset by lower advertising expense dueStatement of Financial
Accounting Standards No. 121 (FAS121), "Accounting for the Impairment of Long
Lived Assets to a change in the timing of
expenditures and lower management incentive pay as a result of lower sales and
profits.be Disposed of." See Note 4. General and administrative
expenses increased $2,160,000,$3,332,000, or 19.9%20.7%, due primarily to higher officers'
salaries related to incentive options for new executive management, as well as a
separation agreement negotiated with Luby's former President and CEO, increased
consulting services, and higher legal and professional fees related to the proxy
and debt restructuring. These increases were offset by lower profit sharing
and bonus
expenses.
During the period, the Company recorded a pretax charge to operating costs of
$10,199,000 as a result of asset impairment charges in accordance with
Statement of Financial Accounting Standards No. 121 (FAS 121), "Accounting for
the Impairment of Long-Lived Assets to be Disposed of." The charge related to
surplus properties held for sale and 13 restaurant properties which were
written down to their estimated fair value.expense.
Interest expense increased $2,633,000,$4,521,000, or 114.0%114.3%, from the first sixnine months of
fiscal 2000 due to higher borrowings under the line-of-credit agreement and
higher interest rates.
Other income decreased $522,000$393,000 due primarily to property tax late payment
penalties and other miscellaneous costs. IncomeThese decreases were offset by higher
gains on property sales.
The income tax benefit increased $12,446,000,$15,561,000, or 197.8%176.2%, due primarily to lower
income before income taxes. This was also raised by a slight increase in the
effective income tax rate from 34.8%33.4% to 35.0%. In the prior year, the Company
settled several items favorably which contributed to a lower effective tax rate
Forward-Looking Statements
__________________________
The Company wishes to caution readers that various factors could cause the
actual results of the Company to differ materially from those indicated by
forward-looking statements made from time to time in news releases, reports,
proxy statements, registration statements, and other written communications
(including the preceding sections of this Management's Discussion and Analysis),
as well as oral statements made from time to time by representatives of the
Company. Except for historical information, matters discussed in such oral and
written communications are forward-looking statements that involve risks and
uncertainties, including but not limited to general business conditions, the
impact of competition, the success of operating initiatives, changes in the cost
and supply of food and labor, the seasonality of the Company's business, taxes,
inflation, governmental regulations, and the availability of credit, as well as
other risks and uncertainties disclosed in periodic reports on Form 10-K.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
_______ _________________________________________________________
Excluding the interest rate swap agreements (swaps) in the combined notional
amount of $45 million, the Company has borrowed under its revolving credit agreement
at prime or other rate options available at the time of borrowing. The other
rate options arewere increased or decreased according to the Company's performance
in comparison to existing bank covenants.
As of February 28,May 31, 2001, the total amount of debt subject to interest rate
fluctuations was $78 million under its revolving credit agreement. A 1% change
in interest rates would result in an increase or decrease in interest expense of
$780,000 per year.
Part II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds.
_______ __________________________________________
Effective as of March 8, 2001, the Company amended the Rights Agreement dated
as of April 16, 1991 (as amended effective as of December 19, 1991, February 7,
1995, and May 29, 1995) between the Company and American Stock Transfer & Trust
Company as Rights Agent. The amendment modifies the Rights Agreement which
governs the common stock purchase rights associated with each outstanding share
of common stock of the Company. The amendment modifies the definition of
"Acquiring Person" and "Distribution Date" as used in the Rights Agreement,
exempts certain persons from the operation of the Rights Agreement, and extends
the final expiration date of the common stock purchase rights, among other
things. The Company filed a Form 8-A/A with the Securities and Exchange
Commission on March 22, 2001, in which it amended the description of the common
stock purchase rights as they were described in the Company's Form 8-A dated
April 16, 1991. The description of the common stock purchase rights is
qualified in its entirety by reference to these filings.
The general effect of modification to the Rights Agreement is to extend the
protections afforded to the shareholders of the Company by the agreement for an
additional two years.
Item 3. Defaults Upon Senior Securities
_______ _______________________________
See Part I -- Note 5: Debt.
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
______ ____________________________________________________
(a) The 2001 annual meeting of shareholders of Luby's, Inc. was held on
January 12, 2001.
(b) The directors elected at the meeting were Ronald K. Calgaard, Roger R.
Hemminghaus, and Jimmy W. Woliver. The other directors whose terms
continued after the meeting are Judith B. Craven, David B. Daviss,
Arthur R. Emerson, Robert T. Herres, Walter J. Salmon, and Joanne Winik.
(c) The matters voted upon at the meeting were (i) the election of three
directors to serve until the 2004 Annual Meeting of Shareholders; (ii) the
approval of the appointment of Ernst & Young LLP as auditors for the 2001
fiscal year; and (iii) to act upon the following nonbinding shareholder
proposals: (a) proposal to limit CEO compensation, (b) proposal regarding
board meeting agendas, (c) proposal to declassify the board of directors,
and (d) proposal to remove antitakeover provisions.
(d) With respect to the election of directors, the results of the voting were:
Shares Voted Shares Broker
Nominee For Abstained Nonvotes
_______________________ ____________ __________ _________
Ronald K. Calgaard 10,209,575 2,751,006 -0-
Roger R. Hemminghaus 10,736,295 2,222,427 -0-
Jimmy W. Woliver 11,349,204 1,918,181 -0-
Elise Jones Freeman 3,575,998 27,589 -0-
Herbert Leslie Goldberg 3,443,291 148,028 -0-
Thomas C. Palmer 3,162,972 132,460 -0-
(e) With respect to the approval of the appointment of auditors, the results
of the voting were:
Shares voted "for" 16,078,882
Shares voted "against" 381,908
Shares abstaining 101,554
Broker nonvotes -0-
(f) With respect to the nonbinding shareholder proposals:
(1) Proposal to limit CEO compensation:
Shares voted "for" 5,999,580
Shares voted "against" 8,335,754
Shares abstaining 1,174,319
Broker nonvotes -0-
(2) Proposal regarding board meeting agendas:
Shares voted "for" 5,797,428
Shares voted "against" 9,461,580
Shares abstaining 250,656
Broker nonvotes -0-
(3) Proposal to declassify the board of directors:
Shares voted "for" 8,810,394
Shares voted "against" 6,079,591
Shares abstaining 619,668
Broker nonvotes -0-
(4) Proposal to remove antitakeover provisions:
Shares voted "for" 9,535,570
Shares voted "against" 5,696,575
Shares abstaining 277,504
Broker nonvotes -0-
Part II - OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K.
_______ _________________________________
(a) Exhibits
3(a) Certificate of Incorporation of Luby's, Inc., as currently in effect
(filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1999, and incorporated herein
by reference).
3(b) Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c)
to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).
4(a) Description of Common Stock Purchase Rights of Luby's Cafeterias,
Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991,
File No. 1-8308,1 8308, and incorporated herein by reference).
4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(b) to the Company's QuarterlyQuarterl
Report on Form 10-Q for the quarter ended November 30, 1991, and
incorporated herein by reference).
4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1995, and
incorporated herein by reference).
4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April
16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1995, and incorporated herein
by reference).
4(e) Amendment No. 4 dated March 8, 2001, to Rights Agreement dated April
16, 1991 (filed as Exhibit 99.1 to the Company's Report on Form 8-A12B/8
A12B/A on March 22, 2001, and incorporated herein by Reference)reference).
4(f) Credit Agreement dated February 27, 1996, among Luby's Cafeterias,
Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as
Exhibit 4(e) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 29, 1996, and incorporated herein by
reference).
4(g) First Amendment to Credit Agreement dated January 24, 1997, among
Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas,
N.A. (filed as Exhibit 4(f) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1997, and incorporated herein
by reference).
4(h) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias,
Inc. and NationsBank, N.A., with Schedule and Confirmation dated July
7, 1997 (filed as Exhibit 4(g) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1997, and incorporated
herein by reference).
4(i) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias,
Inc. and Texas Commerce Bank National Association, with Schedule and
Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997, and incorporated herein by reference).
4(j) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A.
(filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1997, and incorporated herein by
reference).
4(k) Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as
Exhibit 4(j) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2000, and incorporated herein by
reference).
4(l) Fourth Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Bank of America and other creditors of its bank group.
4(m) Deed of Trust, Assignment, Security Agreement, and Financing
Statement dated July 2001, executed as part of the Fourth Amendment
to the Credit Agreement.
4(n) Subordination and Intercreditor Agreement dated June 29, 2001,
between Harris J. and Christopher J. Pappas, Bank of America, N.A.
(as the bank group agent), and Luby's, Inc.
4(o) Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of $1,500,000.00
4(p) Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $1,500,000.00.
4(q) Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of
$3,500,000.00.
4(r) Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $3,500,000.00.
10(a) Form of Deferred Compensation Agreement entered into between Luby's
Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1981, and incorporated herein by reference).*
10(b) Form of Amendment to Deferred Compensation Agreement between Luby's
Cafeterias, Inc. and various officers and former officers adopted
January 14, 1997 (filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1997, and
incorporated herein by reference).*
10(c) Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as
Exhibit 10(i) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1989, and incorporated herein by
reference).*
10(d) Amendment to Management Incentive Stock Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(e) Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1994, and incorporated herein by reference).*
10(f) Amendment to Nonemployee Director Deferred Compensation Plan of
Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit
10(m) to the Company's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1997, and incorporated herein by reference).*
10(g) Amendment to Nonemployee Director Deferred Compensation Plan of
Luby's Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit
10(o) to the Company's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1998, and incorporated herein by reference).*
10(h) Amended and Restated Nonemployee Director Stock Option Plan of
Luby's, Inc. approved by the shareholders of Luby's, Inc. on January
14, 2000 (filed as Exhibit 10(j) to the Company's Quarterly Report
on Form 10-Q for the quarter ended February 29, 2000, and
incorporated herein by reference).*
10(i) Employment Contract dated January 12, 1996, between Luby's Cafeterias,
Inc. and John B. Lahourcade (filed as Exhibit 10(i) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference).*
10(j) Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated
May 30, 1996 (filed as Exhibit 10(j) to the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 1996, and
incorporated herein by reference).*
10(k)10(j) Amendment to Luby's Cafeterias, Inc. Supplemental Executive
Retirement Plan adopted January 14, 1997 (filed as Exhibit 10(r) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(l)10(k) Amendment to Luby's Cafeterias, Inc. Supplemental Executive
Retirement Plan adopted January 9, 1998 (filed as Exhibit 10(u) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).*
10(m)10(l) Amendment to Luby's Cafeterias, Inc. Supplemental Executive
Retirement Plan adopted May 21, 1999 (filed as Exhibit 10(q) to the
Company's Quarterly Report on Form 10-Q for the quarter ended May
31, 1999, and incorporated herein by reference.)*
10(n)10(m) Severance Agreement between Luby's, Inc. and Barry J.C. Parker dated
December 19, 2000 (filed as Exhibit 10(r) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30,
2000, and incorporated herein by reference).*
10(o)10(n) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan
adopted March 19, 1998 (filed as Exhibit 10(aa) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28,
1998, and incorporated herein by reference).*
10(p)10(o) Luby's Incentive Stock Plan adopted October 16, 1998 (filed as
Exhibit 10(cc) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1998, and incorporated herein by
reference).*
10(q)10(p) Form of Change in Control Agreement entered into between Luby's,
Inc., and each of its Senior Vice Presidents as of January 8, 1999
(filed as Exhibit 10(aa) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1999, and incorporated
herein by reference).*
10(r)10(q) Luby's, Inc. Deferred Compensation Plan effective June 1, 1999
(filed as Exhibit 10(cc) to the Company's Quarterly Report on Form
10-Q for the quarter ended May 31, 1999, and incorporated herein by
reference).*
10(s)
10(r) Registration Rights Agreement dated March 9, 2001, by and among
Luby's, Inc. Christopher J. Pappas, and Harris J. Pappas (filed as
Exhibit 10.4 to the Company's Current Report on Form 8-K dated March
9, 2001, and incorporated hereby by reference).
10(t)10(s) Purchase Agreement dated March 9, 2001, by and among Luby's, Inc.,
Harris J. Pappas and Christopher J. Pappas (filed as Exhibit 10.1 to
the Company's Current Report on Form 8-K dated March 9, 2001, and
incorporated herein by reference).
10(u)10(t) Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Christopher J. Pappas (filed as Exhibit 10.2 to the Company's
Current Report on Form 8-K dated March 9, 2001, and incorporated
herein by reference).*
10(v)10(u) Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Harris J. Pappas (filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated March 9, 2001, and incorporated herein by
reference).*
10(w)10(v) Luby's, Inc. Incentive Bonus Plan for Fiscal 2001 (filed as Exhibit
10(z) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 2000, and incorporated herein by reference).*
10(w) Luby's Inc. Stock Option granted to Christopher J. Pappas on March
9, 2001.*
10(x) Luby's Inc. Stock Option granted to Harris J. Pappas on March 9,
2001.*
11 Statement re computation of per share earnings.
99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc., as
amended July 20, 2000 (filed as Exhibit 99(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31,
2000, and incorporated herein by reference).
*Denotes management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
No reportsThe Company filed a report on Form 8-K have been filed duringdated March 15, 2001, relating to
the quarter for which this
report is filed.employment of Harris J. and Christopher J. Pappas, the agreement of Messrs.
Pappas to purchase $10 million in subordinated convertible notes, the election
of Messrs. Pappas to the Board of Directors of the Company, and an amendment to
the Company's shareholder right plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUBY'S, INC.
(Registrant)
By: /s/CHRISTOPHER J. PAPPAS
________________________________________________________
Christopher J. Pappas
President and Chief Executive
Officer
By: /s/ERNEST PEKMEZARIS
_________________________:________________________________
Ernest Pekmezaris
Senior Vice President and
Chief Financial Officer
Dated: AprilJuly 16, 2001
EXHIBIT INDEX
Number Document _______ __________Page
3(a) Certificate of Incorporation of Luby's, Inc., as currently in effect
(filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1999, and incorporated herein by
reference).
3(b) Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c)
to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).
4(a) Description of Common Stock Purchase Rights of Luby's Cafeterias,
Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991,
File No. 1-8308,1 8308, and incorporated herein by reference).
4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 1991, and
incorporated herein by reference).
4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1995, and
incorporated herein by reference).
4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April
16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1995, and incorporated herein
by reference).
4(e) Amendment No. 4 dated March 8, 2001, to Rights Agreement dated April
16, 1991 (filed as Exhibit 99.1 to the Company's Report on Form 8-A12B/8-
A12B/A on March 22, 2001, and incorporated herein by Reference)reference).
4(f) Credit Agreement dated February 27, 1996, among Luby's Cafeterias,
Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as
Exhibit 4(e) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 29, 1996, and incorporated herein by
reference).
4(g) First Amendment to Credit Agreement dated January 24, 1997, among
Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas,
N.A. (filed as Exhibit 4(f) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1997, and incorporated herein
by reference).
4(h) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias,
Inc. and NationsBank, N.A., with Schedule and Confirmation dated July
7, 1997 (filed as Exhibit 4(g) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1997, and incorporated
herein by reference).
4(i) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias,
Inc. and Texas Commerce Bank National Association, with Schedule and
Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1997, and incorporated herein by reference).
4(j) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A.
(filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1997, and incorporated herein by
reference).
4(k) Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as
Exhibit 4(j) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2000, and incorporated herein by
reference).
4(l) Fourth Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Bank of America and other creditors of its bank group.
4(m) Deed of Trust, Assignment, Security Agreement, and Financing
Statement dated July 2001, executed as part of the Fourth Amendment
to the Credit Agreement.
4(n) Subordination and Intercreditor Agreement dated June 29, 2001,
between Harris J. and Christopher J. Pappas, Bank of America, N.A.
(as the bank group agent), and Luby's, Inc.
4(o) Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of
$1,500,000.00.
4(p) Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $1,500,000.00.
4(q) Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of
$3,500,000.00.
4(r) Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $3,500,000.00.
10(a) Form of Deferred Compensation Agreement entered into between Luby's
Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1981, and incorporated herein by reference).*
10(b) Form of Amendment to Deferred Compensation Agreement between Luby's
Cafeterias, Inc. and various officers and former officers adopted
January 14, 1997 (filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1997, and
incorporated herein by reference).*
10(c) Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as
Exhibit 10(i) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1989, and incorporated herein by
reference).*
10(d) Amendment to Management Incentive Stock Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(e) Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1994, and incorporated herein by reference).*
10(f) Amendment to Nonemployee Director Deferred Compensation Plan of
Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit
10(m) to the Company's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1997, and incorporated herein by reference).*
10(g) Amendment to Nonemployee Director Deferred Compensation Plan of
Luby's Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit
10(o) to the Company's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1998, and incorporated herein by reference).*
10(h) Amended and Restated Nonemployee Director Stock Option Plan of
Luby's, Inc. approved by the shareholders of Luby's, Inc. on January
14, 2000 (filed as Exhibit 10(j) to the Company's Quarterly Report
on Form 10-Q for the quarter ended February 29, 2000, and
incorporated herein by reference).*
10(i) Employment Contract dated January 12, 1996, between Luby's Cafeterias,
Inc. and John B. Lahourcade (filed as Exhibit 10(i) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference).*
10(j) Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated
May 30, 1996 (filed as Exhibit 10(j) to the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 1996, and
incorporated herein by reference).*
10(k)10(j) Amendment to Luby's Cafeterias, Inc. Supplemental Executive
Retirement Plan adopted January 14, 1997 (filed as Exhibit 10(r) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(l)10(k) Amendment to Luby's Cafeterias, Inc. Supplemental Executive
Retirement Plan adopted January 9, 1998 (filed as Exhibit 10(u) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).*
10(m)10(l) Amendment to Luby's Cafeterias, Inc. Supplemental Executive
Retirement Plan adopted May 21, 1999 (filed as Exhibit 10(q) to the
Company's Quarterly Report on Form 10-Q for the quarter ended May
31, 1999, and incorporated herein by reference.)*
10(n)10(m) Severance Agreement between Luby's, Inc. and Barry J.C. Parker dated
December 19, 2000 (filed as Exhibit 10(r) to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 2000, and
incorporated herein by reference).*
10(o)10(n) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan
adopted March 19, 1998 (filed as Exhibit 10(aa) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28,
1998, and incorporated herein by reference).*
10(p)10(o) Luby's Incentive Stock Plan adopted October 16, 1998 (filed as
Exhibit 10(cc) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1998, and incorporated herein by
reference).*
10(q)10(p) Form of Change in Control Agreement entered into between Luby's,
Inc., and each of its Senior Vice Presidents as of January 8, 1999
(filed as Exhibit 10(aa) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1999, and incorporated
herein by reference).*
10(r)10(q) Luby's, Inc. Deferred Compensation Plan effective June 1, 1999
(filed as Exhibit 10(cc) to the Company's Quarterly Report on Form
10-Q for the quarter ended May 31, 1999, and incorporated herein by
reference).*
10(s)10(r) Registration Rights Agreement dated March 9, 2001, by and among
Luby's, Inc. Christopher J. Pappas, and Harris J. Pappas (filed as
Exhibit 10.4 to the Company's Current Report on Form 8-K dated March
9, 2001, and incorporated hereby by reference).
10(t)10(s) Purchase Agreement dated March 9, 2001, by and among Luby's, Inc.,
Harris J. Pappas and Christopher J. Pappas (filed as Exhibit 10.1 to
the Company's Current Report on Form 8-K dated March 9, 2001, and
incorporated herein by reference).
10(u)10(t) Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Christopher J. Pappas (filed as Exhibit 10.2 to the Company's
Current Report on Form 8-K dated March 9, 2001, and incorporated
herein by reference).*
10(v)10(u) Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Harris J. Pappas (filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated March 9, 2001, and incorporated herein by
reference).*
10(w)10(v) Luby's, Inc. Incentive Bonus Plan for Fiscal 2001 (filed as Exhibit
10(z) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 2000, and incorporated herein by reference).*
10(w) Luby's Inc. Stock Option granted to Christopher J. Pappas on March
9, 2001.*
10(x) Luby's Inc. Stock Option granted to Harris J. Pappas on March 9,
2001.*
11 Statement re computation of per share earnings.
99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc., as
amended July 20, 2000 (filed as Exhibit 99(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31,
2000, and incorporated herein by reference).
*Denotes management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated March 15, 2001, relating to
the employment of Harris J. and Christopher J. Pappas, the agreement of Messrs.
Pappas to purchase $10 million in subordinated convertible notes, the election
of Messrs. Pappas to the Board of Directors of the Company, and an amendment to
the Company's shareholder right plan.