SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-08308

__________________________

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of ~~May~~January 27, ~~2020,~~2021, there were ~~30,498,404~~ 30,741,982 shares of the registrant’s common stock outstanding.

~~Explanatory Note~~

As previously disclosed in the Current Report on Form 8-K filed by Luby’s, Inc. on April 20, 2020, Luby’s, Inc. delayed the filing of this Quarterly Report on Form 10-Q in reliance on the U.S. Securities and Exchange Commission’s order under Section 36 of the Securities Exchange Act of 1934, as amended, and certain rules thereunder (Release No. 34-88465) due to the outbreak of, and local, state and federal governmental responses to, the novel coronavirus pandemic (“COVID-19 pandemic”). Luby’s, Inc.’s operations have experienced disruptions due to the circumstances surrounding the COVID-19 pandemic including, but not limited to, suggested and mandated social distancing and stay home orders, a significant number of temporary store closings, and limited service in other stores. These mandates and orders and the resulting office closures and staff reductions have severely limited access to Luby’s Inc.’s facilities by its financial reporting and accounting staff and impacted its ability to fulfill required preparation and review processes and procedures. In light of the impact of the factors described above, Luby’s, Inc. was unable to compile and review certain information required in order to permit Luby’s, Inc. to timely file this Quarterly Report on Form 10-Q without unreasonable effort or expense.

Additional Information

We file reports with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The SEC maintains an Internet site at http://www.sec.gov that contains the reports, proxy and information statements, and other information that we file electronically. Our website address is http://www.lubysinc.com. Please note that our website address is provided as an inactive textual reference only. We make available free of charge through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The information provided on our website is not part of this report, and is therefore not incorporated by reference unless such information is specifically referenced elsewhere in this report.

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated ~~Balance Sheets~~Statement of Net Assets in Liquidation

(In ~~thousands, except share data)~~thousands)

The accompanying notes are an integral part of these consolidated financial statements.

~~Luby’s, Inc.~~

~~Consolidated Statements of Operations (unaudited)~~

~~(In thousands, except per share data)~~

Quarter Ended Two Quarters Ended
March 11,
2020 March 13,
2019 March 11,
2020 March 13,
2019
(12 weeks) (12 weeks) (28 weeks) (28 weeks)
SALES:
Restaurant sales $ 60,391 $ 65,369 $ 143,949 $ 156,468
Culinary contract services 6,998 7,543 16,772 17,039
Franchise revenue 1,158 1,421 2,865 3,644
Vending revenue 14 90 124 190
TOTAL SALES 68,561 74,423 163,710 177,341
COSTS AND EXPENSES:
Cost of food 17,399 18,145 41,341 43,226
Payroll and related costs 23,782 24,730 55,915 59,244
Other operating expenses 10,065 11,412 24,860 27,914
Occupancy costs 3,783 4,166 8,773 10,041
Opening costs 2 11 14 44
Cost of culinary contract services 6,400 6,717 15,348 15,532
Cost of franchise operations 409 247 974 519
Depreciation and amortization 2,677 3,222 6,440 8,126
Selling, general and administrative expenses 6,816 7,753 16,974 17,763
Other Charges 1,509 1,263 2,748 2,477
Provision for asset impairments and restaurant closings 661 1,195 1,770 2,422
Net gain on disposition of property and equipment (2,527) (12,651) (2,498) (12,501)
Total costs and expenses 70,976 66,210 172,659 174,807
INCOME (LOSS) FROM OPERATIONS (2,415) 8,213 (8,949) 2,534
Interest income 5 19 28 19
Interest expense (1,473) (1,554) (3,435) (3,269)
Other income, net 148 55 388 86
Income (loss) before income taxes and discontinued operations (3,735) 6,733 (11,968) (630)
Provision for income taxes 62 93 156 213
Income (loss) from continuing operations (3,797) 6,640 (12,124) (843)
Loss from discontinued operations, net of income taxes (6) (8) (17) (13)
NET INCOME (LOSS) (3,803) 6,632 (12,141) (856)
Income (loss) per share from continuing operations:
Basic $ (0.13) $ 0.22 $ (0.40) $ (0.03)
Assuming dilution $ (0.13) $ 0.22 $ (0.40) $ (0.03)
Loss per share from discontinued operations:
Basic $ 0.00 $ 0.00 $ 0.00 $ 0.00
Assuming dilution $ 0.00 $ 0.00 $ 0.00 $ 0.00
Net income (loss) per share:
Basic $ (0.13) $ 0.22 $ (0.40) $ (0.03)
Assuming dilution $ (0.13) $ 0.22 $ (0.40) $ (0.03)
Weighted average shares outstanding:
Basic 30,215 29,769 30,123 29,671
Assuming dilution 30,215 29,799 30,123 29,671

~~The accompanying notes are an integral part of these consolidated financial statements.~~

Luby’s, Inc.

Consolidated Statement of ~~Shareholders’ Equity~~ Changes in Net Assets in Liquidation

(Liquidation Basis)

(unaudited)

(In thousands)

Common Stock Total
Issued Treasury Paid-In Retained Shareholders’
Shares Amount Shares Amount Capital Earnings Equity
Balance at August 29, 2018 30,003 $ 9,602 (500) $ (4,775) $ 33,872 $ 73,929 $ 112,628
Cumulative effect of accounting changes from the adoption of ASC Topic 606 — — — — — 2,479 2,479
Net loss — — — — — (7,489) (7,489)
Share-based compensation expense 42 13 — — 426 — 439
Common stock issued under employee benefit plans 81 26 — — (26) — —
Common stock issued under nonemployee benefit plans 38 12 — — (12) — —
Balance at December 19, 2018 30,164 $ 9,653 (500) $ (4,775) $ 34,260 $ 68,919 $ 108,057
Net income — — — — — 6,632 6,632
Share-based compensation expense 98 31 — — 363 — 394
Common stock issued under employee benefit plans 12 4 — — (4) — —
Common stock issued under nonemployee benefit plans 15 5 — — (5) — —
Balance at March 13, 2019 30,289 $ 9,693 (500) $ (4,775) $ 34,614 $ 75,551 $ 115,083

Common Stock Total
Issued Treasury Paid-In Retained Shareholders’
Shares Amount Shares Amount Capital Earnings Equity
Balance at August 28, 2019 30,478 $ 9,753 (500) $ (4,775) $ 34,870 $ 61,182 $ 101,030
Net loss — — — — — (8,338) (8,338)
Cumulative effect of accounting changes from the adoption of ASC Topic 842 — — — — — 1,027 1,027
Share-based compensation expense 58 19 — — 347 — 366
Common stock issued under employee benefit plans 45 15 — — (51) — (36)
Common stock issued under nonemployee benefit plans 64 20 — — (20) — —
Balance at December 18, 2019 30,645 $ 9,807 (500) $ (4,775) $ 35,146 $ 53,871 $ 94,049
Net loss — — — — — $ (3,803) $ (3,803)
Share-based compensation expense 101 32 — — 334 — 366
Common stock issued under employee benefit plans 6 2 — — (2) — —
Balance at March 11, 2020 30,752 $ 9,841 (500) $ (4,775) $ 35,478 $ 50,068 $ 90,612


	Period from November 19, 2020 through December 16, 2020
Net assets in liquidation, November 19, 2020	$	117,341
Changes in net assets in liquidation
Remeasurement of assets and liabilities	(36)
Changes in net assets in liquidation	(36)
Net assets in liquidation, December 16, 2020	$	117,305

The accompanying notes are an integral part of these consolidated financial statements.

Luby’s, Inc.

Consolidated ~~Statements of Cash Flows (unaudited)~~Balance Sheet

(Going Concern Basis)

(In ~~thousands)~~thousands, except share data)

Two Quarters Ended
March 11,
2020 March 13,
2019
(28 weeks) (28 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (12,141) $ (856)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for asset impairments and net (gains) losses on property sales (727) (10,079)
Depreciation and amortization 6,440 8,126
Amortization of debt issuance cost 577 811
Share-based compensation expense 732 823
Cash used in operating activities before changes in operating assets and liabilities (5,119) (1,175)
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts and other receivables 509 (414)
Increase in food and supply inventories (94) (45)
Decrease in prepaid expenses and other assets 197 1,115
Decrease in operating lease assets 2,407 —
Decrease in operating lease liabilities (3,541) —
Decrease in accounts payable, accrued expenses and other liabilities (263) (7,110)
Net cash used in operating activities (5,904) (7,629)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets and property held for sale 5,453 20,444
Purchases of property and equipment (1,490) (1,781)
Net cash provided by investing activities 3,963 18,663
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolver borrowings 3,300 34,500
Revolver repayments — (54,500)
Proceeds from term loan 2,500 58,400
Term loan repayments (831) (35,169)
Debt issuance costs — (3,236)
Taxes paid on equity withheld — (12)
Net cash provided by (used in) financing activities 4,969 (17)
Net increase in cash and cash equivalents and restricted cash 3,028 11,017
Cash and cash equivalents and restricted cash at beginning of period 12,756 3,722
Cash and cash equivalents and restricted cash at end of period $ 15,784 $ 14,739
Cash paid for:
Income taxes, net of (refunds) $ 7 $ 51
Interest 2,647 1,951


	August 26, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	15,069
Restricted cash and cash equivalents	6,756
Trade accounts and other receivables, net	6,092
Food and supply inventories	1,653
Prepaid expenses	1,577


Total current assets	31,147
Property held for sale	11,249
Assets related to discontinued operations	1,715
Property and equipment, net	100,599
Intangible assets, net	15,343
Goodwill	195
Operating lease right-of-use assets	16,756

Other assets	399
Total assets	$	177,403
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	6,770
Liabilities related to discontinued operations	17

Operating lease liabilities-current	3,903
Accrued expenses and other liabilities	19,569
Total current liabilities	30,259
Long-term debt, less current portion	54,118

Operating lease liabilities-noncurrent	17,797
Other liabilities	1,630
Total liabilities	$	103,804
Commitments and Contingencies	0
SHAREHOLDERS’ EQUITY
Common stock, $0.32 par value; 100,000,000 shares authorized; 31,125,470 shares issued and 30,625,470 shares outstanding at August 26, 2020.	$	9,960
Paid-in capital	35,655
Retained earnings	32,759
Less cost of treasury stock, 500,000 shares	(4,775)
Total shareholders’ equity	$	73,599
Total liabilities and shareholders’ equity	$	177,403

The accompanying notes are an integral part of these consolidated financial statements.

Luby’s, Inc.

Consolidated Statements of Operations (unaudited)

(Going Concern Basis)

(In thousands, except per share data)



	Period Ended November 18, 2020		Quarter Ended December 18, 2019
	(12 weeks)		(16 weeks)
SALES:
Restaurant sales	$	36,485	$	83,558
Culinary contract services	4,918		9,774
Franchise revenue	530		1,707
Vending revenue	14		110
TOTAL SALES	41,947		95,149
COSTS AND EXPENSES:
Cost of food	9,348		23,942
Payroll and related costs	12,964		32,134
Other operating expenses	7,154		14,794
Occupancy costs	2,634		4,990
Opening costs	0		12
Cost of culinary contract services	4,467		8,948
Cost of franchise operations	294		565
Depreciation and amortization	2,142		3,762
Selling, general and administrative expenses	4,267		10,158
Other charges	416		1,238
Net provision for asset impairments and restaurant closings	(85)		1,110
Net loss on disposition of property and equipment	117		30
Total costs and expenses	43,718		101,683
LOSS FROM OPERATIONS	(1,771)		(6,534)
Interest income	8		23
Interest expense	(1,212)		(1,962)
Other income, net	30		240
Loss before income taxes and discontinued operations	(2,945)		(8,233)
Provision for income taxes	58		94
Loss from continuing operations	(3,003)		(8,327)
Loss from discontinued operations, net of income taxes	(16)		(11)
NET LOSS	(3,019)		(8,338)
Loss per share from continuing operations:
Basic and diluted	$	(0.10)	$	(0.28)

Loss per share from discontinued operations:
Basic and diluted	$	0.00	$	0.00

Loss per share:
Basic and diluted	$	(0.10)	$	(0.28)

Weighted average shares outstanding:
Basic and diluted	30,662		30,054

The accompanying notes are an integral part of these consolidated financial statements.

Luby’s, Inc.

Consolidated Statement of Shareholders’ Equity (unaudited)

(Going Concern Basis)

(In thousands)


	Common Stock										Total
	Issued			Treasury			Paid-In		Retained		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
Balance at August 26, 2020	31,124	$	9,960	500	$	(4,775)	$	35,655	$	32,759	$	73,599
Net loss	—	—		—	—		—		(3,019)		(3,019)
Share-based compensation expense	51	16		—	—		167		—		183
Common stock issued under employee benefit plans	4	1		—	—		(1)		—		0

Balance at November 18, 2020	31,179	$	9,977	500	$	(4,775)	$	35,821	$	29,740	$	70,763


	Common Stock										Total
	Issued			Treasury			Paid-In		Retained		Shareholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
Balance at August 28, 2019	30,478	$	9,753	(500)	$	(4,775)	$	34,870	$	61,182	$	101,030
Net loss	—	—		—	—		—		(8,338)		(8,338)
Cumulative effect of accounting changes from the adoption of ASC Topic 842	—	—		—	—		—		1,027		1,027
Share-based compensation expense	58	19		—	—		347		—		366
Common stock issued under employee benefit plans	45	15		—	—		(51)		—		(36)
Common stock issued under nonemployee benefit plans	64	20		—	—		(20)		—		0
Balance at December 18, 2019	30,645	$	9,807	(500)	$	(4,775)	$	35,146	$	53,871	$	94,049

The accompanying notes are an integral part of these consolidated financial statements.

Luby’s, Inc.

Consolidated Statements of Cash Flows (unaudited)

(Going Concern Basis)

(In thousands)


	Period Ended November 18, 2020		Quarter Ended December 18, 2019
	(12 weeks)		(16 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,019)	$	(8,338)
Adjustments to reconcile net loss to net cash used in operating activities:
Net provision for asset impairments and restaurant closings	(85)		1,110
Net loss on disposition of property and equipment	117		30
Depreciation and amortization	2,142		3,762
Amortization of debt issuance cost	223		339
Share-based compensation expense	183		366

Cash used in operating activities before changes in operating assets and liabilities	(439)		(2,731)
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts and other receivables	679		(1,549)

Decrease (increase) in food and supply inventories	(950)		369
Decrease in prepaid expenses and other assets	909		804
Decrease in operating lease assets	1,928		1,922

Decrease in operating lease liabilities	(3,154)		(2,313)
Increase in accounts payable, accrued expenses and other liabilities	1,046		1,367
Net cash provided by (used in) operating activities	19		(2,131)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets and property held for sale	114		149

Purchases of property and equipment	(433)		(694)
Net cash used in investing activities	(319)		(545)
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolver borrowings	0		3,300






Net cash provided by financing activities	0		3,300
Net increase (decrease) in cash and cash equivalents and restricted cash	(300)		624
Cash and cash equivalents and restricted cash at beginning of period	21,825		12,756
Cash and cash equivalents and restricted cash at end of period	$	21,525	$	13,380
Cash paid for:
Income taxes, net of (refunds)	$	4	$	(17)
Interest	$	1,059	$	1,302

The accompanying notes are an integral part of these consolidated financial statements.

Luby’s, Inc.

Notes to Consolidated Financial Statements (unaudited)

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements of Luby’s, Inc. (the “Company”, "we", "our", "us", or “Luby’s”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements that are prepared for our Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods ~~ended March 11, 2020~~ are not necessarily indicative of the results that may be expected for the fiscal year ending August ~~26, 2020.~~

On June 3, 2020, we announced that our Board of Directors approved a course of action whereby we will immediately pursue the sale of our operating divisions and assets, including our real estate assets, or the sale of the Company in its entirety, and distribute the net proceeds to our stockholders after payment of debt and other obligations. During the sale process, certain of our restaurants will remain open to continue to serve our guests.

We have not established a definitive timeframe for completing this process which will most likely lead to the adoption by the Board of Directors of a formal plan of sale and proceeds distribution followed by an orderly wind down of any remaining operations. Such a plan of sale and proceeds distribution will require shareholder approval. There can be no assurance that such a plan of sale and proceeds distribution will be adopted by the Board of Directors or approved by the shareholders.

~~The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. See Note 3. Going Concern.~~

The consolidated balance sheet dated August 28, 2019, included in this Quarterly Report on Form 10-Q (this “Form 10-Q”), has been derived from our audited consolidated financial statements as of that date. However, this Form 10-Q does not include all of the information and footnotes required by GAAP for audited, year-end financial statements. Therefore, these25, 2021. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended August ~~28, 2019.~~26, 2020.

Prior to Adoption of the Plan of Liquidation

The consolidated financial statements prior to November 19, 2020 were prepared on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Plan of Liquidation

On November 17, 2020 our shareholders approved the Plan of Liquidation and Dissolution (the “Plan of Liquidation“ or the “Plan”). The Plan provides for an orderly sale of our businesses, operations, and real estate, payment of our liabilities and other obligations, and an orderly wind down of any remaining operations and dissolution of the Company. We intend to attempt to convert all of our assets into cash, satisfy or resolve our remaining liabilities and obligations, including contingent liabilities, claims and costs associated with the liquidation of the Company, and then file a certificate of dissolution with the state of Delaware. The assets to be sold include our Luby's Cafeterias, Fuddruckers, and Culinary Contract Services ("CCS") operating divisions, as well as our real estate. We currently anticipate that our common stock will be delisted from the New York Stock Exchange ("NYSE") upon the filing of the certificate of dissolution, which is not expected to occur until the earlier of the completion of all or substantially all of the asset sales or three years. The delisting of our common stock may occur sooner in accordance with the applicable rules of the NYSE.

Following the Adoption of the Plan of Liquidation

We have determined, as a result of the approval of the Plan by our shareholders, that liquidation is imminent, as defined in ASC 205-30 Financial Statement Presentation, Liquidation Basis of Accounting. Liquidation is considered imminent when the likelihood is remote that we will return from liquidation and either (a) the Plan is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the Plan will be blocked by other parties, or (b) the Plan is being imposed by other forces (for example, involuntary bankruptcy).

Accordingly, we have changed our basis of accounting from the going concern basis to the liquidation basis effective November 19, 2020. Although shareholder approval of the Plan occurred on November 17, 2020, we are using the liquidation basis of accounting effective November 19, 2020 as a convenience date. Any activity between November 17, 2020 and November 19, 2020 would not be materially different under the liquidation basis of accounting.

The liquidation basis of accounting differs significantly from the going concern basis, as summarized below.

Under the liquidation basis of accounting, the consolidated balance sheet and consolidated statements of operations, equity and cash flows are no longer presented.

The liquidation basis of accounting requires a statement of net assets in liquidation, a statement of changes in net assets in liquidation and all disclosures necessary to present relevant information about our expected resources in liquidation. The liquidation basis of accounting may only be applied prospectively from the day liquidation becomes imminent and the initial statement of changes in net assets in liquidation may present only changes in net assets that occurred during the period since that date.

Under the liquidation basis of accounting, our assets are measured at their estimated net realizable value, or liquidation value, which represents the amount of their estimated cash proceeds or other consideration from liquidation, based on current contracts, estimates and other indications of sales value, and may include previously unrecognized assets that we may expect to either sell in the course of our liquidation or use in settling liabilities, such as trademarks or other intangibles. In developing these estimates, we utilized third party valuation experts, investment bankers, real estate brokers, the expertise of members of the Special Committee of our Board of Directors, and forecasts generated by our management. For estimated real estate values, we considered comparable sales transactions, our past experience selling real estate assets of the Company and, in certain

instances, indicative offers, as well as capitalization rates observed for income-producing real estate. For estimated business unit valuations we considered estimated values of the economic components of possible transactions, the value of a buyer assuming certain liabilities in a purchase transaction, and, in certain instances, indicative offers, as well as the probabilities of certain outcomes. Estimates for the liquidation value of the business units, or subset of operating restaurants, were also tested for reasonableness through a multiple of historical and projected business cash flows. All estimates by nature involve a large degree of judgement and sensitivity to the underlying assumptions.

The liquidation basis of accounting requires us to accrue and present separately, without discounting, the estimated disposal and other costs, including any costs associated with the sale or settlement of our assets and liabilities and the estimated operating income or loss that we reasonably expect to incur, including providing for federal income taxes during the remaining expected duration of the liquidation period. In addition, deferred tax assets previously provided for under the going concern basis of accounting, which include net operating losses and other tax credits, may be realized partially or in full, subject to IRS limitations, to offset taxable income we expect to generate from the liquidation process.

Under the liquidation basis of accounting, we will recognize liabilities as they would have been recognized under the going concern basis as adjusted for the timing assumptions related to the liquidation process and they will not be reduced to expected settlement values prior to settlement.

These estimates will be periodically reviewed and adjusted as appropriate. There can be no assurance that these estimated values will be realized. Such amounts should not be taken as an indication of the timing or the amount of future distributions or our actual dissolution.

The valuation of our assets and liabilities, as described above, represents estimates, based on present facts and circumstances, of the net realizable value of the assets and costs associated with carrying out the Plan. The actual values and costs associated with carrying out the Plan may differ from amounts reflected in the accompanying consolidated financial statements because of the Plan's inherent uncertainty. These differences may be material. In particular, these estimates will vary with the length of time necessary to complete the Plan. It is currently anticipated that a majority of our assets will be sold by December 31, 2021, with a final liquidation by June 30, 2022; however, it is likely that the full realization of proceeds from these sales will extend beyond that date.

Net assets in liquidation represents the estimated liquidation value to holders of common shares upon liquidation. It is not possible to predict with certainty the timing or aggregate amount which may ultimately be distributed to our shareholders and no assurance can be given that the distributions will equal or exceed the estimate presented in these consolidated financial statements.

COVID-19

The novel coronavirus disease (“COVID-19”) pandemic has had a significant impact on our level of operations, guest behavior, guest traffic, and the number of locations where we and our Fuddruckers franchisees operate. As a result, at the onset of the COVID-19 pandemic in the spring of 2020, we modified our business operations within our restaurants and significantly reduced staffing at our corporate support office.

On March 13, 2020, President Donald Trump declared a national emergency in response to the COVID-19 pandemic. Throughout the remainder of calendar 2020, we cycled through periods initially when state government orders mandated a suspension of on-premise dining, followed by periods when our on-premise dining capacity was limited due to government order, a condition that continues through the date of this filing. Prior to the onset of the COVID-19 pandemic we operated 118 restaurants. As of December 16, 2020, we operated 83 restaurants (59 Luby’s cafeterias and 24 Fuddruckers restaurants). Additionally, our Fuddruckers franchisees operated 90 locations prior to the COVID-19 pandemic and operated 71 restaurants as of December 16, 2020.

While the vaccines for COVID-19, which were first made available in the United States ("U.S.") in December 2020, present an encouraging sign, we continue to see rising cases of COVID-19 infection throughout the U.S. As we execute on our Plan of Liquidation, we are still operating a number of restaurants as described above. Uncertainty remains regarding the rate of immunization in the public and timing of an economic recovery. The COVID-19 pandemic could continue to materially impact our cash flows and value of net assets in liquidation, while we execute on our Plan of Liquidation.

Accounting Periods

The Company’s fiscal year ends on the last Wednesday in August. Accordingly, each fiscal year normally consists of 13 four-week periods, or accounting periods, accounting for 364 days in the aggregate. However, every fifth or sixth year, we have a fiscal year that consists of 53 weeks, accounting for 371 days in the aggregate. The first fiscal quarter consists of four four-week periods, or 16 weeks, and the remaining three quarters typically include three four-week periods, or 12 weeks, in length. The fourth fiscal quarter includes 13 weeks in certain fiscal years to adjust for our standard 52 week, or 364 day, fiscal year compared to the 365 day calendar year.

Reportable Segments

~~Each~~Prior to the shareholder approval of the Plan, each restaurant iswas considered an operating segment because operating results and cash flow can be determined for each restaurant. We ~~aggregate~~aggregated our operating segments into reportable segments by restaurant brand due to the nature of the products and services, the production processes, the customers, the methods used to distribute the products and services, the similarity of store level profit margins and the nature of the regulatory environment are alike. The Company ~~has~~had 5 reportable segments: Luby’s cafeterias, Fuddruckers restaurants, Cheeseburger in Paradise restaurant, Fuddruckers franchise operations, and ~~Culinary Contract Services (“CCS”).~~

~~Prior~~CCS. Although we continue to ~~the fourth quarter of fiscal 2019~~operate our ~~internal organization~~restaurant, franchise and reporting structure supported three reportable segments; Company-owned restaurants, Franchise operations and Culinary Contract Services. The Company-owned restaurants consisted of the three brands discussed above, which were aggregated into one reportable segment. In the fourth quarter of fiscal 2019CCS businesses, we ~~re-evaluated and disaggregated the Company-owned restaurants into three reportable segments based on brand name. As such,~~no longer make operating decisions or assess performance by segment, as of the fourth quarter 2019, our five reportable segments are Luby’s cafeterias, Fuddruckers restaurants, Cheeseburger in Paradise restaurants, Fuddruckers franchise operations and Culinary Contract Services. Management believes this change better reflects the priorities and decision-making analysis around the allocation of our resources and better aligns to the economic characteristics within similar restaurant brands. We began reporting on the new structure in the fourth quarter of fiscal 2019 as reflected in our Annual Report on Form 10-K. The segment data for the comparable periods of fiscal 2019 has been recast to conform to the current period presentation. Recasting this historical information did not have an impact on the consolidated financial performance of Luby’s Inc. for any of the periods presented.

~~Other Charges~~

Other charges includes those expenses that we consider related to our restructuring efforts or are not part of our recurring operations. These expenses were included in our Selling, general, and administrative cost expense line in previously reported quarters of fiscal 2019. See Note 8 to these unaudited consolidated financial statements.

~~Recently Adopted Accounting Pronouncements~~

~~On August 29~~, 2019, the first day of fiscal 2020, (the "Effective Date") we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), along with related clarifications and improvements (“ASC 842”). ASC 842 requires lessees to recognize, on their consolidated balance sheet, a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset. The guidance requires lessors to classify leases as sales-type, direct financing or operating. The pronouncement also requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. We have implemented a new lease tracking and accounting system in connection with the adoption of ASC 842.

We elected the optional transition method to apply ASC 842 as of the effective date and therefore, we have not applied the standard to the comparative periods presented on our consolidated financial statements. We also elected the package of practical expedients that allowed us not to reassess previous accounting conclusions regarding lease identification, initial direct costs and classification for existing or expired leases as of the effective date. We did not elect the practical expedient that would have permitted us to use hindsight when determining the lease term, including option periods, and impairment of operating lease assets.

We have made an accounting policy election to account for lease components and non-lease components as a single lease component for all underlying classes of assets where (1) the lease component is predominant, (2) the lease component, if accounted for separately, would be classified as an operating lease and (3) the timing and pattern of the lease component and non-lease component are the same. We have also elected the short-term lease recognition exemption for all of our ~~leases that allows us to not recognize right-of-use~~ assets and ~~related liabilities~~businesses are now considered held for ~~leases with an initial term of 12 months or less~~sale. Accordingly, effective November 19, 2020, we have only 1 reporting and ~~that do not include an option to purchase the underlying asset that we are reasonably certain to exercise. Our transition to ASC 842 represents a change in accounting principle.~~

~~Upon adoption of ASC 842, we recorded~~ operating lease liabilities of approximately $32.5 million based on the present value of the remaining lease payments using discount rates as of the effective date. The current portion of the operating lease liabilities recorded was approximately $8.1 million. In addition, we recorded operating lease right-of-use assets of approximately $27.2 million , calculated as the initial amount of the operating lease liability, adjusted for amounts reclassified from other lease related asset and liability accounts (such as prepaid rent, favorable and unfavorable lease intangibles and straight-line rent timing differences), in accordance with the new guidance, and impairment of certain right-of-use assets recognized as a charge to retained earnings as of the effective date.

On the effective date, we recorded the $1.0 million net cumulative effect of the adoption as an increase to retained earnings. Included in the net cumulative effect was an adjustment of approximately $2.0 million to clear the unamortized balance for deferred gains from sale / leaseback transactions. For most future sale / leaseback transactions, the gain (adjusted for any off-market items) will be recognized immediately in the period that the sale / leaseback transaction occurs.

~~The impact of adopting ASC 842 on effected lines of our opening consolidated balance sheet was as follows:~~

Balance at August 28, 2019 ASC 842 Adjustment Balance at August 29, 2019
(In thousands)
ASSETS
Trade accounts and other receivables, net $ 8,852 $ 70 $ 8,922
Prepaid expenses 2,355 (225) 2,130
Total Current Assets 27,395 (155) 27,240
Intangible assets, net 16,781 (190) 16,591
Operating lease right-of-use assets, net — 27,191 27,191
Total Assets $ 186,000 $ 26,846 $ 212,846
LIABILITIES
Operating lease liabilities-current $ — $ 8,061 $ 8,061
Accrued expenses and other liabilities 24,475 (1,002) 23,473
Total Current Liabilities 32,954 7,059 40,013
Operating lease liabilities-non-current — 24,360 24,360
Other liabilities 6,577 (5,600) 977
Total Liabilities $ 84,970 $ 25,819 $ 110,789
SHAREHOLDERS’ EQUITY
Retained earnings $ 61,182 $ 1,027 $ 62,209
Total Shareholders Equity 101,030 1,027 102,057
Total Liabilities and Shareholders Equity $ 186,000 $ 26,846 $ 212,846

segment.

New Accounting Pronouncements - "to be Adopted"

There are no issued accounting pronouncements that ~~we have yet~~are applicable or relevant to ~~adopt that we believe would have a material effect on our financial statements.~~

us under the liquidation basis of accounting.

Subsequent Events

We evaluated events subsequent to ~~March 11,~~December 16, 2020 through the date the financial statements were issued to determine if the nature and significance of the events warrant inclusion in our consolidated financial statements. ~~See~~

On January 28, 2021, we were notified that our PPP Loan (see Note 2.15. Debt) had been selected for ~~subsequent events disclosures.~~review by the Small Business Administration ("SBA") and we will be responding to the information inquiry. This review may result in a determination that we were ineligible for the loan or are ineligible to receive the loan forgiveness amount that we have claimed or may delay our receipt of loan forgiveness, if any.

Effective January 27, 2021, Christopher Pappas resigned as President and Chief Executive Officer of Luby’s Inc. Mr. Pappas remains a member of the Board of Directors of the Company. Also effective January 27, 2021, the Board of Directors appointed John Garilli as the Company’s Interim President and Chief Executive Officer.

The Company and Mr. Garilli’s employer, Winthrop Capital Advisors LLC ("WCA"), have entered into an agreement (the “Agreement”), pursuant to which the Company will pay WCA a one-time fee of $50,000 and a monthly fee of $20,000 for so long as Mr. Garilli serves the Company in said positions. The Company has also entered into an Indemnity Agreement with Mr. Garilli and WCA. The Company and WCA previously entered into a consulting agreement, pursuant to which WCA provides consulting services related to the Company’s adoption of the liquidation basis of accounting.

~~Note 2. Subsequent Events~~

~~COVID-19 Pandemic~~

On March 13, 2020, President Trump declared a national emergency in response to the novel coronavirus disease ("COVID-19") pandemic. On March 19, 2020, Governor Greg Abbott of Texas issued a public health disaster for the state of Texas to bring the entire state in line with CDC guidelines including, (1) closing of schools statewide, (2) ban on dine-in eating and gatherings of groups of more than 10 people, and (3) closing of gyms and bars. Governor Abbott followed with an essential services order on March 31, 2020, requiring anyone who is not considered an essential, critical infrastructure worker to stay home except for essential activity, essential businesses, essential government functions and critical care facilities. Most other states, including those states where we operate, have issued similar orders. The governor of Texas began relaxing some restrictions on businesses operating in Texas beginning May 1, 2020, which permitted a gradual reopening of businesses, including restaurants, with modified operations..

The spread of the COVID-19 pandemic has affected the United States economy, our operations and those of third parties on which we rely. Beginning on March 17, 2020, we began suspending on-premise dining at our restaurants and substantially all employees at those locations were placed on furlough. By March 31, 2020 we had suspended on-premise dining at all 118 of our company-owned restaurants and had suspended all operations at 50 of our Luby's Cafeteria's, 36 company-owned Fuddruckers restaurants and our 1 ~~Cheeseburger in Paradise restaurant. The 28 Luby's Cafeteria's and 3 Fuddruckers~~

912

~~restaurants~~Note 2. Liability for Estimated Costs in Excess of Estimated Receipts During Liquidation

The liquidation basis of accounting requires us to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation. We project that ~~remained open were providing take-out, drive-through~~we will have estimated costs in excess of estimated receipts during the liquidation period. These amounts can vary significantly due to, among other things, the timing and ~~curbside pickup,~~estimates for receipts and costs associated with the operations of our business units until they are sold, the timing of business and property sales, estimates of direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities, the costs associated with the winding up of operations, and other costs that we may incur which are not currently foreseeable. These receipts and accruals will be adjusted periodically as projections and assumptions change. These receipts and costs are estimated and are anticipated to be collected and paid out over the liquidation period. Upon transition to the liquidation basis of accounting on November 19, 2020, the Company accrued the following revenues and expenses expected to be earned or ~~delivery with reduced~~incurred during liquidation (in thousands):


Initial Liability for Estimated Costs in Excess of Estimated Receipts During Liquidation	November 19, 2020




Total estimated receipts during liquidation	92,017






Total estimated costs of operations	(76,151)
Selling, general and administrative expenses	(18,745)

Interest expense	(2,305)
Interest component of operating lease payments	(7,064)
Capital expenditures	(943)
Sales costs	(4,079)
Total estimated costs during liquidation	(109,287)
Liability for estimated costs in excess of estimated receipts during liquidation	$	(17,270)

The change in the liability for estimated costs in excess of estimated receipts during liquidation between November 19, 2020 and December 16, 2020 is as follows (in thousands):


	November 19, 2020		Net Change in Working Capital		Remeasurement of Assets and Liabilities (3)		December 16, 2020

Assets:
Estimated net inflows from operations (1)	$	7,859	$	(2,470)	$	0	$	5,389

	7,859		(2,470)		0		5,389
Liabilities:
Sales costs	(4,079)		0		0		(4,079)
Corporate expenditures (2)	(21,050)		2,929		36		(18,085)

	(25,129)		2,929		36		(22,164)

Liability for estimated costs in excess of estimated receipts during liquidation	$	(17,270)	$	459	$	36	$	(16,775)

(1) Estimated net inflows from operations consists of total estimated receipts during liquidation less the sum of (i) total estimated costs of operations during liquidation, (ii) interest component of operating ~~hours~~lease payments and ~~on-site staff. In addition, more than 50 percent~~(iii) capital expenditures.

(2) Corporate expenditures consists of ~~our~~(i) selling, general and administrative ~~staff were placed on furlough~~expenses and ~~salaries were temporarily reduced~~(ii) interest expense.

(3) Net assets in liquidation decreased by ~~50 percent~~$36 thousand during the period from November 19, 2020 through December 16, 2020. The primary reason for the ~~remaining general~~decrease in net assets was due to a remeasurement of expected cash flows from operations.

Note 3. Net Assets in Liquidation

The following is a reconciliation of total shareholders’ equity under the going concern basis of accounting as of November 18, 2020 to net assets in liquidation under the liquidation basis of accounting as of November 19, 2020 (in thousands):


Total Shareholders' Equity as of November 18, 2020	$	70,763
Increase due to estimated net realizable value of properties and business units (1)	78,985
Decrease due to write-off of deferred financing costs	(2,260)


Decrease due to write-off of operating lease right-of-use assets	(14,829)
Net increase due to write-off of deferred assets, deferred income and goodwill	1,952
Liability for estimated costs in excess of estimated receipts during liquidation	(17,270)
Adjustment to reflect the change to the liquidation basis of accounting	46,578
Estimated value of net assets in liquidation as of November 19, 2020	$	117,341

(1) Under liquidation basis of accounting, all assets are recorded at net realizable value which implicitly includes the tangible and ~~administrative staff~~intangible value of all assets. This adjustment at November 19, 2020 reflects adjusting real properties to net realizable value and ~~other salaried employees, including all senior management. Furthermore,~~recording an estimated value for our business units, Luby's Cafeterias, Fuddruckers restaurants and franchise ~~owners suspended~~ operations, ~~or moved to limited food-to-go operations~~and Culinary Contract Services.

We have one class of common stock. The net assets in liquidation at ~~their locations, reducing~~December 16, 2020 would result in liquidating distributions of approximately $3.82 per common share based on the number of ~~franchise locations~~common shares outstanding at that date. This estimate is dependent on projections of costs and expenses to be incurred during the period required to complete the Plan and the realization of estimated net realizable value of our properties and business units. There is inherent uncertainty with these estimates, and they could change materially based on the timing of business and property sales, the performance of the underlying assets, any changes in ~~operation to 37 by early~~the underlying assumptions of the projected cash flows, as well as the ultimate vesting of outstanding restricted share awards and exercise of vested stock options. The estimated liquidating distributions per share on a fully diluted basis, assuming all restricted stock awards vest and all in-the-money stock options are exercised, is not materially different than the amount stated above. No assurance can be given that the liquidating distributions will equal or exceed the estimate presented in these consolidated financial statements.

PPP Loan

As discussed in more detail at Note 15. Debt, in April 2020 ~~from 90 prior~~we received a $10.0 million PPP Loan. In November 2020 we submitted an application for forgiveness of the full $10.0 million. While we believe that we qualify for full forgiveness pursuant to the ~~COVID-19 pandemic.~~

~~Beginning in May 2020,~~terms of the loan agreement, under the liquidation basis of accounting we ~~began to gradually reopen~~must account for the ~~dining rooms with state-mandated limits on guest capacity~~liability at the ~~28 Luby's locations~~full $10.0 million face amount until such time as the forgiveness has been approved by the Small Business Administration ("SBA") and ~~3 Fuddruckers locations that had~~the loan has been ~~previously operating with food-to-go service only. We also began to reopen restaurants that were temporarily closed. As~~settled.

Lease Obligations

Under both the going concern basis of accounting and the liquidation basis of accounting, lease obligations are recorded at the present value of the ~~date of this filing, there~~ ~~were 31~~ ~~Luby's Cafeteria's and~~ 8 ~~Fuddruckers restaurants operating,~~ ~~all~~ ~~of which had their dining rooms open at limited capacity. There were 59 franchise locations in operation~~total fixed lease payments over the reasonably certain lease term using discount rates as of the effective date of ~~this filing.~~

~~The full extent~~the lease and ~~duration~~the obligation is reduced as we make lease payments. As a result of the ~~impact~~same accounting treatment, there is no reconciling entry to adjust total shareholders’ equity under the going concern basis of accounting as of November 18, 2020 to net assets in liquidation under the ~~COVID-19 pandemic on our operations and financial performance is currently~~ ~~unknown, and depends on future developments that are uncertain and unpredictable, including~~liquidation basis of accounting as of November 19, 2020.

During the duration of the spread of the pandemic, its impact of capital and financial markets on a macro-scale and any new information that may emerge concerning the severity of the virus, its spread to other regions, the actions to contain the virus or treat its impact, and consumer attitudes and behaviors, among others.

We are currently evaluating the potential short-term and long-term implications of the COVID-19 pandemic on our consolidated financial statements. The potential impacts will occur as early as the thirdfourth quarter of fiscal 2020 and ~~include, but are not limited to: impairment~~the first quarter of ~~long-lived assets, including property~~fiscal 2021, we were able to settle 24 leases of closed restaurant properties and ~~equipment, definite-lived intangible assets~~negotiated an early termination date and reduced lease payment at 1 operating restaurant property. While the amounts paid to settle our lease ~~right-of-use assets related to our restaurants, impairment of goodwill and collectability of receivables.~~

~~See Note 3. Going Concern.~~

~~Payroll Protection Plan (PPP) Loan and Credit Facility Debt Modification~~

~~On April 21, 2020 we entered into a promissory note with Texas Capital Bank, N.A., effective April 12, 2020 that provides for a loan~~liabilities varied, in the ~~amount~~aggregate, we have settled these 24 leases for approximately 25% of ~~$10.0 million (the "PPP loan") pursuant to~~ the ~~Paycheck Protection Program~~total undiscounted base rent payments that would otherwise have been due under the ~~Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). The PPP Loan matures on April 12, 2022 and bears interest at a rate of 1.0% per annum. Monthly amortized principle and interest~~leases through their original contractual termination date. We can offer no assurances that we will continue to settle any lease obligations for less than the total undiscounted base rent payments, ~~are deferred~~or for six months after the date of disbursement. The PPP Loan funds were received on April 21, 2020. The PPP Loan contains events of default and other provisions customary for a loan of this type. The Payroll Protection Program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially forgivenless than their discounted value recorded within net assets in ~~accordance with the terms of CARES Act to the extent applicable. We are not yet able to determine the amount that might be forgiven.~~

Additionally, we entered into the Third Amendment to Credit Agreement, dated April 21, 2020 (the "Third Amendment"). The Credit Agreement is further described at Note 15. Debt. The Third Amendment permitted us to incur indebtedness under the PPP Loan and terminated the $5.0 million undrawn portion of the delayed draw term loan upon receipt of the PPP Loan.

~~Note 3. Going Concern~~liquidation.

~~The Company sustained a net loss of approximately $15.2 million and cash flow from operations was a use of cash of approximately $13.1 million in fiscal year ended August 28, 2019. In the~~ ~~two quarters ended~~ March 11, 2020 (a period prior to the COVID-19 pandemic), the Company sustained a net loss of $12.1 million and cash flow from operations was a use of cash of $5.9 million. On March 13, 2020, shortly after the end of the Company's second quarter, President Trump declared a national emergency in response to the COVID-19 pandemic followed by Governor Greg Abbott of Texas issuing a public health disaster for the state of Texas on March 19, 2020. The Company took the necessary actions described in "Note 2. Subsequent Events" which further stressed the liquid financial resources of the Company. In response, the company borrowed the remaining $1.4 million available on its revolving line of credit with MSD Capital, borrowed $2.5 million on its Delayed Draw Term Loan, and applied for and received a $10.0 million PPP Loan as described in "Note 2. Subsequent Events". As of the date of this filing, the Company has no undrawn borrowing capacity under the Credit Agreement. Further, the Company does not believe that it would be able to secure any additional debt financing currently.

The full extent and duration of the impact of the COVID-19 pandemic on our operations and financial performance is currently unknown. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations and its ability to generate proceeds from real estate property sales to meet its obligations. The above conditions and events, in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern. Notwithstanding the aforementioned substantial doubt, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result

should the Company be unable to continue as a going concern Management has assessed the Company’s ability to continue as a going concern as of the balance sheet date, and for at least one year beyond the financial statement issuance date. The assessment of a company’s ability to meet its obligations is inherently judgmental.

On June 3, 2020, the Company announced that the Board of Directors of the Company will aggressively pursue a sale of its operations and assets and distribute the net proceeds to our stockholder, after payment of debt and other obligations. This course of action is more fully explained in "Note 1 - Basis of Presentation". We have not established a timeframe, nor have we committed to a plan, but such a plan could extend beyond one year. Until an actionable plan is approved, we believe we will be able to meet our obligations for the next 12 months when they come due through 1) cash flow from operating certain restaurants, 2) available cash balances, and 3) proceeds generated from real estate property sales as discussed below.

Throughout April and May of 2020, the Company reviewed and modified many aspects of its operating plan within its restaurants and corporate overhead. The Company is now operating at an increased level of operational cost efficiency. These efforts are expected to mitigate the adverse impacts of COVID-19. Additionally, the sale of some assets will likely be necessary for the Company to generate cash to fund its operations. The Company has historically been able to successfully generate proceeds from property sales. Although the Company has been successful in these endeavors in the past, there are no assurances the Company will generate sufficient funds to meet all its obligations as they become due. The following conditions were considered in management’s evaluation of going concern and its efforts to mitigate that concern:

•Revamping restaurant operations to generate cost efficiencies resulting in higher restaurant operating margins even if sales levels do not return to pre-COVID-19 pandemic levels. As the restaurants adapted to the new operating environment, a lower cost labor model was deployed, food costs declined as menu offerings were concentrated among the historically top selling items, and various restaurant service and supplier costs were reevaluated.

•Restructuring of corporate overhead earlier in calendar 2020 prior to the pandemic, including a transition to 3rd party provider for certain accounting and payroll function. Significant further restructuring took place in April and May of 2020, as we reviewed all corporate service providers, information technology needs, and personnel requirements to support a reduced level of operations going forward.

•Securing the PPP Loan which was necessary for funding continuing operations. We believe that a portion of the loan will be eligible for forgiveness; however, that amount cannot currently be calculated.

•~~Continued efforts to close real estate sales transactions with anticipated aggregate sales proceeds in excess of $20.0 million prior to the end of fiscal 2020. I~~n addition, the we have identified other real estate properties that may be sold to generate funds for ongoing operations should the identification of a buyer for one or more of the operating divisions not occur timely.

We believe these plans are sufficient to overcome the significant doubt whether we can meet our liquidity needs for the 12 months from the issuance of these financial statements. However, we can not predict with certainty that these efforts will be successful or sufficient.

Note 4. Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


		March 11, 2020		August 28, 2019			November 18, 2020		August 26, 2020
		(in thousands)							(in thousands)
Cash and cash equivalents	Cash and cash equivalents	$	7,080	$	3,640	Cash and cash equivalents	$	14,874	$	15,069
Restricted cash and cash equivalents	Restricted cash and cash equivalents	8,704		9,116		Restricted cash and cash equivalents	6,651		6,756
Total cash and cash equivalents shown in our consolidated statements of cash flows	Total cash and cash equivalents shown in our consolidated statements of cash flows	$	15,784	$	12,756	Total cash and cash equivalents shown in our consolidated statements of cash flows	$	21,525	$	21,825

Restricted cash and cash equivalents as of December 16, 2020 was $6.7 million. Amounts included in restricted cash represent those required to be set aside for (1) ~~maximum~~estimated amount of interest payable in the next 12 months under the ~~2018~~ Credit Agreement (see ~~Note 15)~~"Note 15. Debt"), (2) collateral for letters of credit issued for potential insurance obligations, which letters of credit expire within 12 months and (3) prefunding of the credit limit under our corporate purchasing card program.

Note 5. Revenue Recognition

Under the going concern basis of accounting, we recognized revenue as described below. Under the liquidation basis of accounting, we estimate the cash receipts from food and beverage sales at each of our restaurants, royalties and fees from our Fuddruckers franchisees, and fees under our culinary contract services ("CCS") contracts. We estimate these expected cash receipts from operating these businesses through the point when the operations of these businesses are either sold to a new owner or when we otherwise estimate operations cease. This estimated ending period for operating these businesses generally varies from third quarter fiscal 2021 through first quarter fiscal 2022. These estimated revenues are included in estimated costs in excess of estimated receipts during liquidation on our consolidated statement of net assets in liquidation. Estimated proceeds from the sale of our operating businesses and real estate assets are recorded separately for the estimated operating revenues and are included in properties and business units for sale on our consolidated statement of net assets in liquidation.

Restaurant Sales

~~Restaurant~~Under the going concern basis of accounting, restaurant sales ~~consist~~consisted of sales of food and beverage products to restaurant guests at our Luby’s cafeterias and our Fuddruckers and Cheeseburger in Paradise restaurants. Revenue from restaurant sales iswas recognized at the point of sale and iswas presented net of discounts, coupons, employee meals and complimentary meals. Sales taxes that we ~~collect~~collected and ~~remit~~remitted to the appropriate taxing authority related to these sales ~~are~~were excluded from revenue. Under the liquidation basis of accounting, we have estimated the sales to be collected at each restaurant through the point when we estimate operations cease at each restaurant under our ownership. This estimated point when operations cease varies based on whether the restaurant location is operated as a Luby's cafeteria or a Fuddruckers restaurant, whether the restaurant location is situated on property we own or lease, and other factors. However, it is estimated that most restaurant operations would cease operations under our ownership by the end of fiscal 2021. During this holding period when we operate restaurants, sales are estimated based on recent sales history and consideration of historical seasonal patterns.

We sell gift cards to our customers in our venues and through certain third-party distributors. These gift cards do not expire and do not incur a service fee on unused balances. ~~Sales~~Under the going concern basis of accounting sales of gift cards to our restaurant customers ~~are~~were initially recorded as a contract liability, included in accrued expenses and other liabilities, at their expected redemption value. When gift cards ~~are~~were redeemed, we ~~recognize~~recognized revenue and ~~reduce~~reduced the contract liability. Discounts on gift cards sold by third parties ~~are~~were recorded as a reduction to accrued expenses and other liabilities and ~~are~~were recognized as a reduction to revenue over a period that ~~approximates~~approximated redemption patterns. The portion of gift cards sold to customers that are never redeemed is commonly referred to as gift card breakage. We ~~recognize~~recognized gift card breakage revenue in proportion to the pattern of gift card redemptions exercised by our customers, using an estimated breakage rate based on our historical experience. Under the liquidation basis of accounting, the unredeemed gift card balance, net of estimated breakage, is included in accrued expenses and other liabilities on our consolidated statement of net assets in liquidation.

~~Culinary contract services~~CCS revenue

Our ~~Culinary Contract Services~~CCS segment provides food, beverage and catering services to our clients at their locations. Depending on the type of client and service, we are either paid directly by our client and/or directly by the customer to whom we have been provided access by our client.

We typically use one of the following types of client ~~contracts:~~contracts in our CCS business:

Fee-Based Contracts

Revenue from fee-based contracts iswas based on our costs incurred and invoiced to the client for reimbursement along with the agreed management fee, which may be calculated as a fixed dollar amount or a percentage of sales or other variable measure. Some fee-based contracts entitle us to receive incentive fees based upon our performance under the contract, as measured by factors such as sales, operating costs and client satisfaction surveys. This potential incentive revenue iswas allocated entirely to the management services performance obligation. ~~We recognize~~Under the going concern basis of accounting, we recognized revenue from our management fee and payroll cost reimbursement over time as the services ~~are performed. We recognize~~were performed; and we recognized revenue from our food and 3^rdthird party purchases reimbursement at the point in time when the vendor ~~delivers~~delivered the goods or ~~performs~~performed the services.

Profit and Loss Contracts

Revenue from profit and loss contracts ~~consist~~consisted primarily of sales made to consumers, typically with little or no subsidy charged to clients. ~~Revenue is~~Under the going concern basis of accounting, revenue was recognized at the point of sale to the consumer. Sales taxes that we ~~collect~~collected and ~~remit~~remitted to the appropriate taxing authority related to these sales ~~are~~were excluded from revenue.

As part of client contracts, we sometimes make payments to clients, such as concession rentals, vending commissions and profit share. These payments ~~are~~were accounted for as operating costs when incurred.

Revenue from the sale of frozen foods ~~includes~~included royalty fees based on a percentage of frozen food sales and iswas recognized at the point in time when product iswas delivered by our contracted manufacturers to the retail outlet.

Under the liquidation basis of accounting, we have estimated the cash receipts, based on recent cash collections and forecasted level of operations for our CCS contracts through the expected holding period for this business unit. The estimated cash receipts are included in estimated costs in excess of estimated receipts on our consolidated statement of net assets in liquidation.

Disaggregation of Total Revenues (in millions):

Franchise revenues

Franchise revenues ~~consist~~consisted primarily of royalties, marketing and advertising fund (“MAF”) contributions, initial and renewal franchise fees, and upfront fees from area development agreements related to our Fuddruckers restaurant brand. Our performance obligations under franchise agreements consist of: (1) a franchise license, including a license to use our brand and MAF management, (2) pre-opening services, such as training and inspections and (3) ongoing services, such as development of training materials and menu items as well as restaurant monitoring and inspections. These performance obligations are highly interrelated, so we do not consider them to be individually distinct. We ~~account~~accounted for them as a single performance obligation, which iswas satisfied over time by providing a right to use our intellectual property over the term of each franchise agreement.

Royalties, including franchisee MAF contributions, are calculated as a percentage of franchise restaurant sales. MAF contributions paid by franchisees are used for the creation and development of brand advertising, marketing and public relations, merchandising research and related programs, activities and materials. The initial franchisee fee is payable upon execution of the franchise agreement and the renewal fee is due and payable at the expiration of the initial term of the franchise agreement. Our franchise agreement royalties, including advertising fund contributions, represent sales-based royalties that are related entirely to our performance obligation under the franchise agreement and ~~are~~were recognized as franchise sales occur.

~~Initial~~Under the going concern basis of accounting, initial and renewal franchise fees and area development fees ~~are~~were recognized as revenue over the term of the respective agreement. Area development fees are not distinct from franchise fees, so upfront fees paid by franchisees for exclusive

development rights ~~are~~were deferred and apportioned to each franchise restaurant opened by the franchisee. The pro-rata amount apportioned to each restaurant iswas accounted for as an initial franchise fee.

Revenue from vending machine sales iswas recorded at the point in time when the sale ~~occurs.~~occurred.

Under the liquidation basis of accounting, we have estimated the cash collections from Fuddruckers franchisees over an anticipated holding period. Recent trends in collection of Fuddruckers franchise royalties were used as a basis for this forecast.

Contract Liabilities

Contract liabilities ~~consist~~consisted of (1) deferred revenue resulting from initial and renewal franchise fees and upfront area development fees paid by franchisees, which, ~~are~~under the going concern basis of accounting, were generally recognized on a straight-line basis over the term of the underlying agreement, (2) liability for unused gift cards and (3) unamortized discount on gift cards sold to 3^rdthird party retailers. These contract liabilities are included in accrued expenses and other liabilities in our consolidated balance ~~sheets.~~sheet as of August 26, 2020. The following table reflects the change in contract ~~liabilities:~~

Gift Cards, net of discounts Franchise Fees
(In thousands)
Balance at August 28, 2019 $ 2,882 $ 1,287
Revenue recognized that was included in the contract liability balance at the beginning of the year (978) (20)
Increase, net of amounts recognized as revenue during the period 1,455 —
Balance at March 11, 2020 $ 3,359 $ 1,267

~~The following table illustrates~~liabilities for the ~~estimated revenues expected to be recognized in~~fiscal year ended August 26, 2020, under the ~~future related to our deferred franchise fees that are unsatisfied (or partially unsatisfied) as~~going concern basis of ~~March 11, 2020:~~

~~Franchise Fees~~

~~(In thousands)~~

~~Remainder of fiscal 2020~~

~~Fiscal 2021~~

~~Fiscal 2022~~

~~Fiscal 2023~~

~~Fiscal 2024~~

~~Thereafter~~

~~343~~

~~Total operating franchise restaurants~~

~~512~~

~~Franchise restaurants not yet opened~~⁽¹⁾

~~755~~

~~Total~~

~~1,267~~

⁽¹⁾Amortization of the deferred franchise fees will begin when the restaurant commences operations and revenue will be recognized straight-line over the franchise term (which is typically 20 years). If the franchise agreement is terminated, the deferred franchise fee will be recognized in full in the period of termination.

accounting:

1316


	Gift Cards, net of discounts		Franchise Fees
	(In thousands)
Balance at August 28, 2019	$	2,880	$	1,287
Revenue recognized that was included in the contract liability balance at the beginning of the year	(1,011)		(128)
Increase, net of amounts recognized as revenue during the period	1,541		0
Balance at August 26, 2020	$	3,410	$	1,159

Disaggregation of Total Revenues (in millions):

Quarter Ended Two Quarters Ended
March 11, 2020 March 13, 2019 March 11, 2020 March 13, 2019
(in millions)
Revenue from performance obligations:
Satisfied at a point in time $ 63.8 $ 69.2 $ 152.0 $ 165.0
Satisfied over time 4.8 5.2 11.7 12.3
Total Sales $ 68.6 $ 74.4 $ 163.7 $ 177.3


	Period Ended		Quarter Ended
	November 18, 2020		December 18, 2019
	(12 weeks)		(16 weeks)
	(in millions)
Revenue from performance obligations:
Satisfied at a point in time	$	38.5	$	88.3
Satisfied over time	3.4		6.8
Total Sales	$	41.9	$	95.1

See ~~Note~~"Note 7. Reportable ~~Segments~~Segments" for disaggregation of revenue by reportable segment.

Note 6. Leases

~~Lessee~~Under the going concern basis of accounting, we accounted for our operating leases as described below. Under the liquidation basis of accounting, we value the operating lease right-of-use assets at 0, since we do not expect to receive cash proceeds or other consideration for the right-of-use assets.

We determine if a contract contains a lease at the inception date of the contract. Our material operating leases consist of restaurant locations and administrative facilities ("Property Leases"). U.S. GAAP requires that our leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the date on which the leased asset is available for our use (the “Commencement Date”) and the lease term used in the evaluation includes the non-cancellable period for which we have the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty (the "Reasonably Certain Lease Term"). Our lease agreements generally contain a primary term of five to 30 years with one or more options to renew or extend the lease generally from one to five years each. In addition to leases for our restaurant locations and administrative facilities, we also lease vehicles and administrative equipment under operating leases. ~~As of March 11, 2020, we did not have any finance leases.~~

At the inception of a new lease, we ~~recognize~~recognized an operating lease liability and a corresponding ~~right of use~~right-of-use asset, which are calculated as ~~the~~ the present value of the total fixed lease payments over the reasonably certain lease term using discount rates as of the effective date.

Property lease agreements may include rent holidays, rent escalation clauses and contingent rent provisions based on a percentage of sales in excess of specified levels. Contingent rental expenses (“variable lease cost”) ~~are~~were recognized prior to the achievement of a specified target, provided that the achievement of the target iswas considered probable. Most of our lease agreements include renewal periods at our option. We ~~include~~included the rent holiday periods and scheduled rent increases in our calculation of straight-line rent expense.

Lease cost for operating leases iswas recognized on a straight-line basis and ~~includes~~included the amortization of the right-of-use asset and interest expense related to the operating lease liability. We ~~use~~used the reasonably certain lease term in our calculation of straight-line rent expense. We ~~expense~~expensed rent from commencement date through restaurant open date as opening expense. Once a restaurant ~~opens~~opened for business, we ~~record~~recorded straight-line rent expense plus any additional variable contingent rent expense (such as common area maintenance, insurance and property tax costs) to the extent it is due under the lease agreement as occupancy expense for our restaurants and selling, general and administrative expense for our corporate office and support facilities. The interest expense related to the lease liability for abandoned leases iswas recorded to provision for asset impairments

and store closings. Rental expense for lease properties that ~~are~~were subsequently subleased to franchisees or other third parties iswas recorded as other income.

We ~~make~~made judgments regarding the reasonably certain lease term for each property lease, which ~~can impact~~impacted the classification and accounting for a lease as a finance lease or an operating lease, the rent holiday and/or escalations in payments that ~~are~~were taken into consideration when calculating straight-line rent, and the term over which leasehold improvements for each restaurant ~~are~~were amortized. These judgments may produce materially different amounts of depreciation, amortization and rent expense than would be reported if different assumed lease terms were used.

The discount rate used to determine the present value of the lease payments is the Company’s estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the Company generally cannot determine the interest rate implicit in the lease.

Lessor

We occasionally lease or sublease certain restaurant properties to our franchisees or to third parties. The lease descriptions, terms, variable lease payments and renewal options are generally similar to our lessee leases described above. Similar to our lessee accounting, we elected the ~~lessor~~ practical expedient that allows us to not separate non-lease components from lease components in regard to all property leases where we are the lessor. ~~As of March 11, 2020, we did not have any sales-type or direct financing leases.~~

Supplemental balance sheet information related to our leases was as follows:

~~Operating Leases~~

~~Classification~~

~~March 11, 2020~~

~~(in thousands)~~

~~Right-of-use assets~~

~~Operating lease right-of-use assets~~

~~24,296~~

~~Current lease liabilities~~

~~Operating lease liabilities-current~~

~~5,916~~

~~Non-current lease liabilities~~

~~Operating lease liabilities-noncurrent~~

~~23,047~~

~~Total lease liabilities~~

~~28,963~~


Operating Leases	Balance Sheet Classification	December 16, 2020		August 26, 2020
		(Liquidation Basis)		(Going Concern Basis)
		(in thousands)
Right-of-use assets	Operating lease right-of-use assets	$	—	$	16,756

Current lease liabilities	Operating lease liabilities-current	N/A		$	3,903
Non-current lease liabilities	Operating lease liabilities-noncurrent	N/A		17,797
Total lease liabilities		$	18,563	$	21,700

See the Lease Liabilities section of Note 3. Net Assets in Liquidation for further discussion of our lease liabilities.

Weighted-average lease terms and discount rates ~~at March 11, 2020~~ were as follows:


~~Weighted-average remaining lease term~~						~~6.02 years~~

~~Weighted-average discount rate~~						~~9.6%~~

December 16, 2020

August 26, 2020

Weighted-average remaining lease term

6.18 years

5.73 years

Weighted-average discount rate

9.71%

9.57%

~~Components~~Under the going concern basis of accounting, components of lease expense were as follows:


		12 Weeks Ended		28 Weeks Ended			12 Weeks Ended		16 Weeks Ended
		March 11, 2020							November 18, 2020		December 18, 2019
		(in thousands)							(in thousands)
Operating lease expense	Operating lease expense	$	1,874	$	4,412	Operating lease expense	$	1,120	$	2,597
Variable lease expense	Variable lease expense	257		553		Variable lease expense	138		296
Short-term lease expense	Short-term lease expense	62		125		Short-term lease expense	92		63
Sublease expense	Sublease expense	161		382		Sublease expense	18		221
Total lease expense	Total lease expense	$	2,354	$	5,472	Total lease expense	$	1,368	$	3,177

~~Operating~~Under the going concern basis of accounting, operating lease income iswas included in other income on our consolidated statements of operations and was comprised of:

Supplemental disclosures of cash flow information related to leases were as follows:

12 Weeks Ended 28 Weeks Ended
March 11, 2020
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities $ 2,431 $ 5,282
Right-of-use assets obtained in exchange for lease liabilities $ 903 $ 903


	12 Weeks Ended		16 Weeks Ended
	November 18, 2020		December 18, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	2,358	$	2,850

Right-of-use assets obtained in exchange for lease liabilities	$	0	$	0

Operating lease obligations maturities in accordance with Topic 842 as of ~~March 11,~~December 16, 2020 were as follows:

(in thousands)

Remainder of FY ~~2020~~2021

~~3,323~~3,762

~~FY 2021~~

~~8,273~~

FY 2022

~~6,066~~3,712

FY 2023

~~5,133~~3,762

FY 2024

~~4,244~~2,960

FY 2025

3,730

Thereafter

~~11,855~~7,479

Total lease payments

~~38,894~~25,405

Less: imputed interest

~~(9,931)~~(6,842)

Present value of operating lease obligations

~~28,963~~18,563

The operating lease obligation and rent expense tables above include amounts related to ~~two~~2 leases with related parties, which are further described at "Note 14. Related Parties".

Annual future minimum lease payments under non-cancelable operating leases with terms in excess of one year as of August 28, 2019 in accordance with the previous lease accounting standard (ASC 840) are as follows:


~~Fiscal Year Ending:~~	~~(In thousands)~~
~~August 26, 2020~~	$	~~8,841~~
~~August 25, 2021~~	~~7,155~~
~~August 31, 2022~~	~~5,643~~
~~August 30, 2023~~	~~4,410~~
~~August 28, 2024~~	~~3,768~~
~~Thereafter~~	~~10,312~~
~~Total minimum lease payments~~	$	~~40,129~~

Note 7. Reportable Segments

As more fully ~~discussed~~described at ~~"Note~~Note 1. Basis of ~~Presentation",~~Presentation, through November 18, 2020, we had 5 reportable segments: Luby’s Cafeterias, Fuddruckers Restaurants, Cheeseburger in ~~the fourth quarter~~Paradise Restaurants, Fuddruckers franchise operations, and CCS. In connection with our Plan of ~~fiscal 2019, the Company reevaluated its~~Liquidation, we have 1 reportable ~~segments and has disaggregated its~~ segment as of November 19, 2020.

Company-owned restaurants

Company-owned restaurants ~~into 3 reportable segments;~~consisted of Luby’s ~~cafeterias,~~Cafeterias, Fuddruckers ~~restaurants~~Restaurants and Cheeseburger in Paradise restaurants. We began reporting on the new structure in the fourth quarter of fiscal 2019. The segment data for the comparable periods presented has been recast to conform to the current period presentation. We have 5 reportable segments: Luby’s cafeterias, Fuddruckers restaurants, Cheeseburger in Paradise restaurants, Fuddruckers franchise operations, and Culinary contract services.

~~Company-owned restaurants~~

~~Company-owned restaurants consists of Luby’s cafeterias, Fuddruckers restaurants and Cheeseburger in Paradise restaurant~~Restaurant reportable segments. We ~~consider~~considered each restaurant to be an operating segment because operating results and cash flow ~~can~~could be determined for each restaurant. We ~~aggregate~~aggregated our restaurant operating segments into reportable segments by restaurant brand because the nature of the products and services, the production processes, the customers, the methods used to distribute the products and services, the long-term store level profit margins, and the nature of the regulatory environment ~~are~~were similar. The chief operating decision maker ~~analyzes~~analyzed store level profit which is defined as restaurant sales and vending revenue, less cost of food, payroll and related costs, other operating expenses and occupancy costs. All Company-owned Luby’s cafeterias, Fuddruckers and Cheeseburger in Paradise restaurants are casual dining restaurants.

The Luby’s ~~cafeterias~~Cafeterias segment ~~includes~~included the results of our company-owned Luby’s Cafeterias restaurants. The total number of Luby’s cafeterias operating at ~~March 11,~~November 18, 2020 and August ~~28, 2019~~26, 2020 were 7860 and ~~79,~~61, respectively.

The Fuddruckers restaurant segment ~~includes~~included the results of our company-owned Fuddruckers restaurants. The total number of Fuddruckers restaurants operating at ~~March 11,~~November 18, 2020 and August ~~28, 2019~~26, 2020 were 3924 and ~~44,~~24, respectively.

The Cheeseburger in Paradise restaurant segment includes the results of our Cheeseburger in Paradise restaurants. The total number of Cheeseburger in Paradise restaurants at both March 11, 2020 and August 28, 2019 was 1.

Included in the restaurant counts above are 5 Combo units, where a Luby's cafeteria and a Fuddruckers restaurant occupy the same location. The Combo units are included in the above counts for both Luby's cafeteria and Fuddruckers restaurants.

~~Culinary Contract Services ("CCS")~~We operated 1 Cheeseburger in Paradise restaurant during the quarter ended December 16, 2019, which was closed permanently in March 2020.

CCS, branded as Luby’s Culinary Services, consists of a business line servicing healthcare, sport stadiums, corporate dining clients, and sales through retail grocery stores. The healthcare accounts are full service and typically include in-room delivery, catering, vending, coffee service, and retail dining. CCS had contracts with long-term acute care hospitals, acute care medical centers, ambulatory surgical centers, retail grocery stores, behavioral hospitals, a senior living facility, sports stadiums, government, and business and industry clients. CCS has the unique ability to deliver quality services that include facility design and procurement as well as nutrition and branded food services to our clients. The cost of ~~culinary contract services~~CCS on our consolidated statements of operations includes all food, payroll and related costs, other operating expenses, and other direct general and administrative expenses related to CCS sales. The total number of CCS contracts at ~~March 11,~~November 18, 2020 and August ~~28, 2019~~26, 2020 were 2826 and ~~31,~~26, respectively.

CCS began selling Luby's Famous Fried Fish, Macaroni & Cheese and Chicken Tetrazzini in February 2017, December 2016, and May, 2019, respectively, in the freezer section of H-E-B stores, a Texas-born retailer. H-E-B stores now stock the family-sized versions of Luby's Classic Macaroni and Cheese , Chicken Tetrazzini, and Luby's Fried Fish. HEB also stocks single serve versions of these three items as well as Jalapeno Macaroni and Cheese.

Fuddruckers Franchise Operations

We only offer franchises for the Fuddruckers brand. ~~Franchises are sold in markets where expansion is deemed advantageous to the development of the Fuddruckers concept and system of restaurants.~~ Initial franchise agreements generally have a term of 20 years. Franchise agreements typically grant franchisees an exclusive territorial license to operate a single restaurant within a specified area.

Franchisees bear all direct costs involved in the development, construction, and operation of their restaurants. In exchange for a franchise fee, we provide franchise assistance in the following areas: site selection, prototypical architectural plans, interior and exterior design and layout, training, marketing and sales techniques, assistance by a Fuddruckers “opening team” at the time a franchised restaurant opens, and operations and accounting guidelines set forth in various policies and procedures manuals.

All franchisees are required to operate their restaurants in accordance with Fuddruckers standards and specifications, including controls over menu items, food quality, and preparation. The Company requires the successful completion of its training program by a minimum of ~~three~~3 managers for each franchised restaurant. In addition, franchised restaurants are evaluated regularly by the Company for compliance with franchise agreements, including standards and specifications through the use of periodic, unannounced, on-site inspections and standards evaluation reports.

~~The number of~~We had 71 franchised restaurants at ~~March 11,~~both November 18, 2020 and August ~~28, 2019 were 90 and 102, respectively.~~26, 2020.

The tables below show segment financial ~~information.~~information under the going concern basis of accounting. The table also lists total assets for each reportable segment. Corporate assets include cash and cash equivalents, restricted cash, property and equipment, assets related to discontinued operations, property held for sale, deferred tax assets, and prepaid expenses.

Fuddruckers restaurants ⁽¹⁾

Cheeseburger in Paradise restaurants ⁽²⁾

Fuddruckers franchise operations ⁽³⁾

Fuddruckers restaurants (1)

Cheeseburger in Paradise restaurants (2)

Fuddruckers franchise operations (3)

(1) Includes Fuddruckers trade name intangible of ~~7.2 million and 7.5~~$6.9 million at ~~March 11, 2020 and~~ August ~~28, 2019, respectively.~~26, 2020.

(2) Includes Cheeseburger in Paradise liquor licenses, and Jimmy Buffett intangibles of ~~$45 thousand and $46~~$34 thousand at ~~March 11, 2020 and~~ August ~~28, 2019, respectively.~~26, 2020.

(3) Fuddruckers franchise operations segment includes royalty intangibles of ~~$8.8 million and $9.2~~$8.4 million at ~~March 11, 2020 and~~ August ~~28, 2019 respectively.~~26, 2020.

Note 8. Other Charges

~~Other~~Under the going concern basis of accounting, other charges ~~includes~~included those expenses that we ~~consider~~considered related to our restructuring efforts or ~~are~~were not part of our ongoing operations.

Under the liquidation basis of accounting, costs that are expected to be settled in cash have been accrued for and are included in estimated costs in excess of estimated receipts on our consolidated statement of net assets in liquidation.

Note 9. Fair Value Measurements

(Going Concern Basis)

GAAP establishes a framework for using fair value to measure assets and liabilities and expands disclosure about fair value measurements. Fair value measurements guidance applies whenever other authoritative accounting guidance requires or permits assets or liabilities to be measured at fair value.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers include:

•Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.

•Level 3: Defined as pricing inputs that are unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The fair values of the Company's cash and cash equivalents, restricted cash and cash equivalents, trade receivables and other receivables, net, and accounts payable approximate their carrying value due to their short duration. The carrying value of the Company's total ~~credit facility~~long-term debt, net of unamortized discounts and debt issue costs, at ~~March 11,~~August 26, 2020 ~~and August 28, 2019~~ was approximately ~~$50.8~~$54.1 million, ~~and $45.4 million, respectively,~~ which approximates fair value because the applicable interest rate is adjusted frequently based on short-term market rates (Level 2).

There were no recurring fair value measurements related to assets or liabilities at March 11, 2020 or March 13, 2019 . We terminated our interest rate swap in the first quarter of fiscal 2019 and received cash proceeds of approximately $0.3 million which is recorded in other income.

There were no ~~recurring~~non-recurring fair value ~~measurements related to liabilities at March 11,~~measurement adjustments for the 12 week period ended November 18, 2020. ~~The fair value of the Company's 2017 Performance Based Incentive Plan liabilities was 0 at March 13, 2019.~~

Non-recurring fair value measurements related to impaired operating lease right-of-use assets and property held for sale ~~and property and equipment~~for the quarter ended December 18, 2019 consisted of the following:

Fair Value
Measurement Using
March 11, 2020 Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Total
Impairments⁽³⁾
Nonrecurring Fair Value Measurements (In thousands)
Continuing Operations
Property held for sale ⁽¹⁾
$ 3,362 $ — $ — $ 3,362 $ (14)
Operating lease right-of-use assets ⁽²⁾
— — — — (1,181)
Total Nonrecurring Fair Value Measurements $ 3,362 $ — $ — $ 3,362 $ (1,195)


			Fair Value Measurement Using
	December 18, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments(3)
Nonrecurring Fair Value Measurements			(In thousands)
Continuing Operations
Property held for sale (1)	$	4,661	$	0	$	0	$	4,661	$	(19)

Operating lease right-of-use assets (2)	0		0		0		0		(488)

Total Nonrecurring Fair Value Measurements	$	4,661	$	0	$	0	$	4,661	$	(507)

(1) In accordance with Subtopic 360-10, long-lived assets held for sale with a carrying value of approximately ~~$3.4~~$4.7 million were written down to their fair value, less ~~cost~~costs to sell, of approximately ~~$3.4~~$4.7 million, resulting in an impairment charge of approximately ~~$14~~$19 thousand.

⁽²⁾ In accordance with Subtopic 360-10, operating lease ~~right-to-use~~right-of-use assets with a carrying ~~value~~amount of approximately ~~$1.2~~$0.5 million were written down to their fair value of 0, resulting in an impairment charge of approximately ~~$1.2~~$0.5 million.

⁽³⁾ Total impairments for continuing operations are included in provision for asset impairments and restaurant closings in our consolidated statement of operations for the two quarters ended March 11, 2020.

Fair Value
Measurement Using
March 13, 2019 Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Total
Impairments⁽³⁾
Nonrecurring Fair Value Measurements (In thousands)
Continuing Operations
Property held for sale ⁽¹⁾
$ 6,573 $ — $ — $ 6,573 $ (62)
Property and equipment related to company-owned restaurants ⁽²⁾
704 — — 704 (1,129)
Total Nonrecurring Fair Value Measurements $ 7,277 $ — $ — $ 7,277 $ (1,191)

⁽¹⁾ In accordance with Subtopic 360-10, long-lived assets held for sale with a carrying value of approximately $6.6 million were written down to their fair value, less costs to sell, of approximately $6.6 million, resulting in an impairment charge of approximately $62 thousand.

⁽²⁾ In accordance with Subtopic 360-10, long-lived assets held and used with a carrying amount of approximately $1.8 million were written down to their fair value of approximately $0.7 million, resulting in an impairment charge of approximately $1.1 million.

⁽³⁾ Total impairments are included in provision for asset impairments and restaurant closings in our unaudited consolidated statement of operations for the ~~two quarters~~quarter ended ~~March 13,~~December 18, 2019.

Note 10. Income Taxes

NaN cash payments of estimated federal income taxes were made during the ~~two quarters~~12 week period ended ~~March 11,~~November 18, 2020 and ~~March 13,~~the quarter ended December 18, 2019, respectively. ~~Deferred~~Under the going concern basis of accounting, deferred tax assets and liabilities ~~are~~were recorded based on differences between the financial reporting basis and the tax basis of assets and liabilities using currently enacted rates and laws that will be in effect when the differences are expected to reverse.

Under the liquidation basis of accounting, we have estimated the actual cash tax payments based on our estimate of operations and the timing and amount to be collected on the sale of our assets. We have included this amount in estimated costs in excess of estimated receipts on our consolidated statement of net assets in liquidation.

Deferred tax assets are recognized to the extent future taxable income is expected to be sufficient to utilize those assets prior to their expiration. If current available evidence and information raises doubt regarding the realization of the deferred tax assets, on a more likely than not basis, a valuation allowance is necessary. In evaluating our ability to realize the Company's deferred tax assets, the Company considered available positive and negative evidence, scheduled reversals of deferred tax liabilities, tax-planning strategies, and results of recent operations. ~~As of March 11, 2020, management continues to maintain a full valuation allowance against net deferred tax assets.~~

The effective tax rate ("ETR") for continuing operations was a negative ~~1.6%~~2.0% for the 12 week period ended November 18, 2020 and a negative 1.1% for the quarter ended ~~March 11, 2020 and 1.4% for the quarter ended March 13,~~December 18, 2019. The ETR for the ~~quarter~~12 week period ended ~~March 11,~~November 18, 2020 differs from the federal statutory rate of 21% due to management's full valuation allowance conclusion, ~~anticipated federal jobs credits,~~ state income taxes, and other discrete items.

The ETR for continuing operations was a negative 1.3% for the two quarters ended March 11, 2020 and a negative 33.8% for the two quarters ended March 13, 2019. The ETR for the two quarters ended ended March 11, 2020 differs from the federal statutory rate of 21% due to management's full valuation allowance conclusion, anticipated federal jobs credits, state income taxes, and other discrete items.

Management believes that adequate provisions for income taxes have been reflected in the financial statements and is not aware of any significant exposure items that have not been reflected in our consolidated financial statements. Amounts considered probable of settlements within one year have been included in the accrued expenses and other liabilities in the accompanying consolidated balance sheet.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act contains numerous tax provisions; however, there was no impact on our income tax provision due to management's full valuation allowance conclusion. We will continue to assess the effect of the CARES Act and the ongoing other legislation related to the COVID-19 pandemic that may be issued, including the subsequent event of the Consolidated Appropriations Act 2021 that was signed in law on December 27, 2020.

Note 11. Property and Equipment, Intangible Assets and Goodwill

Under the going concern basis of accounting, our property and equipment, intangible assets and goodwill was accounted for as described below. Under the liquidation basis of accounting, our property and equipment and intangible assets, including intangible assets not recognized on the going concern basis, are recorded on the statement of net assets in liquidation at the amount of their estimated cash proceeds or other consideration from liquidation.

~~The costs,~~Our property and equipment were recorded at cost, net of impairment, and accumulated depreciation of property and equipment at ~~March 11,~~August 26, 2020, ~~and August 28, 2019,~~ together with the related estimated useful lives used in computing depreciation and amortization, ~~were~~ as ~~follows:~~summarized below:

March 11,
2020 August 28,
2019 Estimated
Useful Lives
(years)
(In thousands)
Land $ 45,822 $ 45,845 —
Restaurant equipment and furnishings 68,437 67,015 3 to 15
Buildings 127,011 126,957 20 to 33
Leasehold and leasehold improvements 22,164 22,098 Lesser of lease term or estimated useful life
Office furniture and equipment 3,315 3,364 3 to 10
266,749 265,279
Less accumulated depreciation and amortization (149,319) (143,536)
Property and equipment, net $ 117,430 $ 121,743
Intangible assets, net $ 16,025 $ 16,781 15 to 21


		August 26, 2020		Estimated Useful Lives (years)
	(In thousands)
Land		$	42,572		—
Restaurant equipment and furnishings		60,685		3	to	15
Buildings		114,909		20	to	33
Leasehold and leasehold improvements		20,429		Lesser of lease term or estimated useful life
Office furniture and equipment		3,178		3	to	10

		241,773
Less accumulated depreciation and amortization		(141,174)
Property and equipment, net		$	100,599
Intangible assets, net		$	15,343	15	to	21

Intangible assets, net, ~~includes~~included the Fuddruckers trade name and franchise agreements ~~and are~~were amortized. ~~The Company believes~~We believed the Fuddruckers brand name ~~has~~had an expected accounting life of 21 years from the date of acquisition based on the expected use of its assets and the restaurant environment in which it is being used. The trade name ~~represents~~represented a respected brand with customer loyalty and the Company ~~intends~~intended to cultivate and protect the use of the trade name. The franchise agreements, after considering renewal periods, ~~have~~had an estimated accounting life of 21 years from the date of acquisition, July 2010, and ~~will be~~was being amortized over this period of time.

Intangible assets, net, also ~~includes~~included the license agreement and trade name related to Cheeseburger in Paradise and the value of the acquired licenses and permits allowing the sales of beverages with alcohol. These assets ~~have~~had an expected useful life of 15 years from the date of acquisition, December 2012.

The aggregate amortization expense related to intangible assets subject to amortization was approximately ~~$0.8~~$0.3 million and ~~$0.7~~$0.4 million for the ~~two quarters~~12 week period ended ~~March 11,~~November, 18, 2020 and ~~March 13,~~the quarter ended December 18, 2019, respectively. ~~The aggregate amortization expense related to intangible assets subject to amortization is expected to be approximately $1.4 million in each of the next five successive fiscal years.~~

The following table presents intangible assets as of ~~March 11, 2020 and~~ August ~~28, 2019:~~26, 2020.


		August 26, 2020
	(In thousands)
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets Subject to Amortization:

Fuddruckers trade name and franchise agreements		$	29,496	$	(14,189)	$	15,307

Cheeseburger in Paradise trade name and license agreements		146		(110)		36

Intangible assets, net		$	29,642	$	(14,299)	$	15,343

March 11, 2020 August 29, 2018
(In thousands) (In thousands)
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Intangible Assets Subject to Amortization:
Fuddruckers trade name and franchise agreements $ 29,486 $ (13,506) $ 15,980 $ 29,486 $ (12,752) $ 16,734
Cheeseburger in Paradise trade name and license agreements 146 (101) 45 146 (99) 47
Intangible assets, net $ 29,632 $ (13,607) $ 16,025 $ 29,632 $ (12,851) $ 16,781

~~Goodwill,~~Under the going concern basis of accounting, goodwill, net of accumulated impairments, ~~of approximately $1.9 million,~~ was approximately ~~$514~~$195 thousand as of ~~March 11, 2020 and~~ August 28, 2019, respectively. Goodwill has been allocated and impairment is assessed at the reporting level, which is the individual restaurants within our Fuddruckers and Cheeseburger in Paradise reporting segments that were acquired in fiscal 2010 and fiscal 2013, respectively. The net Goodwill balance at March 11, 2020 is comprised of amounts assigned to one Cheeseburger in Paradise restaurant that is still operated by us, and the goodwill from the Fuddruckers acquisition in 2010. The Company performs a goodwill impairment test annually as of the end of the second fiscal quarter of each year and more frequently when negative conditions or a triggering event arises. Management prepares valuations for each of its restaurants using a discounted cash flow analysis (Level 3 inputs) to determine the fair value of each reporting unit for comparison with the reporting unit's carrying value in determining if there has been an impairment of goodwill at the reporting level.

26, 2020. The Company recorded 0 goodwill impairment charges during the ~~two quarters~~12 week period ended ~~March 11,~~November 18, 2020 and ~~March 13, 2019.~~

the quarter ended December 18, 2019, respectively. Under the liquidation basis of accounting, there is 0 goodwill included on our statement of net assets in liquidation.

Note 12. Impairment of Long-Lived Assets, Discontinued Operations, Property Held for Sale and Store Closings

Impairment of Long-Lived Assets and Store Closings

WeUnder the going concern basis of accounting, we periodically ~~evaluate~~evaluated long-lived assets held for use and held for sale whenever events or changes in circumstances ~~indicate~~indicated that the carrying amount of those assets may not be recoverable. We ~~analyze~~analyzed historical cash flows of operating locations and ~~compare~~compared results of poorer performing locations to more profitable locations. We also ~~analyze~~analyzed lease terms, condition of the assets and related need for capital expenditures or repairs, as well as construction activity and the economic and market conditions in the surrounding area.

For assets held for use, we ~~estimate~~estimated future cash flows using assumptions based on possible outcomes of the areas analyzed. If the estimated undiscounted future cash flows ~~are~~were less than the carrying value of the location’s assets, we ~~record~~recorded an impairment loss based on an estimate of discounted cash flows. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, ~~require~~required management’s subjective judgments. Assumptions and estimates used ~~include~~included operating results, changes in working capital, discount rate, growth rate, anticipated net proceeds from disposition of the property and, if applicable, lease terms. The span of time for which future cash flows ~~are~~were estimated iswas often lengthy, increasing the sensitivity to assumptions made. The time span could be 20 to 25 years for newer properties, but only 5 to 10 years for older properties.

Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets ~~can~~could vary within a wide range of outcomes. We ~~consider~~considered the likelihood of possible outcomes in determining the best estimate of future cash flows. The measurement for such an impairment loss iswas then based on the fair value of the asset as determined by discounted cash flows.

We recognized the following impairment charges to income from operations:


	Period Ended		Quarter Ended
	November 18, 2020		December 18, 2019
	(12 weeks)		(16 weeks)
	(In thousands, except per share data)
Net provision for asset impairments and restaurant closings	$	(85)	$	1,110
Net loss on disposition of property and equipment	117		30

	$	32	$	1,140
Effect on EPS:
Basic	$	0	$	(0.04)
Assuming dilution	$	0	$	(0.04)

Quarter Ended
March 11,
2020 March 13,
2019
(28 weeks) (28 weeks)
(In thousands, except per share data)
Provision for asset impairments and restaurant closings $ 1,770 $ 2,422
Net gain on disposition of property and equipment (2,498) (12,501)
$ (728) $ (10,079)
Effect on EPS:
Basic $ 0.02 $ 0.34
Assuming dilution $ 0.02 $ 0.34

The ~~$1.8~~$0.1 million net gain in provision for asset impairments and restaurant closings for the period ended November 18, 2020 is primarily related to a $0.7 million net gain on the termination of 7 leases where we permanently ceased operations and negotiated buyouts of the leases, partially offset by a $0.6 million write-off of the right-of-use asset for 1 of our leased locations.

The $1.1 million provision for asset impairments and restaurant closings for the ~~two quarters~~quarter ended ~~March 11, 2020~~December 18, 2019 was ~~due~~ primarily related to the impairment of ~~certain surplus equipment written down to fair value and~~ the right-of-use asset for ~~two~~2 of our leased locations where we ceased operations during the ~~period.~~

~~The $2.5 million net gain on disposition of property~~period and certain surplus equipment ~~for the two quarters ended March 11, 2020 was primarily related to gains on the sale of 2 previously held for sale properties partially offset by routine asset retirements.~~

The $2.4 million provision for asset impairments and restaurant closings for the two quarters ended March 13, 2019 was primarily related to assets at 8 property locations, 6 properties held for sale and 1 international joint venture investment written down to ~~their~~ fair ~~values.~~

The $12.5 million net gain on disposition of property and equipment for the two quarters ended March 13, 2019 is primarily related to gains on the sale and leaseback of 2 properties partially offset by routine asset retirements.

Discontinued Operations

As a result of the first quarter fiscal 2010 adoption of our Cash Flow Improvement and Capital Redeployment Plan, we reclassified 24 Luby’s Cafeterias to discontinued operations. AsUnder the going concern basis of ~~March 11,~~accounting, at November 18, 2020, 1 non-operating location ~~remains~~remained held for sale.

The following table sets forth the assets and liabilities for all discontinued operations:

March 11,
2020 August 28,
2019
(In thousands)
Property and equipment $ 1,813 $ 1,813
Assets related to discontinued operations—non-current $ 1,813 $ 1,813
Accrued expenses and other liabilities $ 5 $ 14
Liabilities related to discontinued operations—current $ 5 $ 14


		August 26, 2020
	(In thousands)


Property and equipment		$	1,715

Assets related to discontinued operations—non-current		$	1,715

Accrued expenses and other liabilities		$	17
Liabilities related to discontinued operations—current		$	17

AsUnder the going concern basis of March 11, 2020, we had 1 property classified as discontinued operations. The asset carrying value of the owned property was approximately $1.8 million and is included in assets related to discontinued operations. We are actively marketing this property for sale. The asset carrying value at 1 other property with a ground lease, included in discontinued operations, was previously impaired to 0.

~~The following table sets forth the sales and pretax~~accounting, losses ~~reported~~ from ~~discontinued operations:~~

Two Quarters Ended
March 11,
2020 March 13,
2019
(28 weeks) (28 weeks)
(In thousands)
Sales $ — $ —
Pretax loss $ (17) $ (13)
Income tax expense from discontinued operations — —
Loss from discontinued operations, net of income taxes $ (17) $ (13)

~~The following table summarizes~~ discontinued operations for the ~~two quarters of fiscal~~12 week period ended November 18, 2020 and ~~2019:~~the quarter ended December 18, 2019 were not significant.

Two Quarters Ended
March 11,
2020 March 13,
2019
(28 weeks) (28 weeks)
(In thousands, except per share data)
Discontinued operating loss $ (17) $ (13)
Impairments — —
Pretax loss (17) (13)
Income tax expense from discontinued operations — —
Loss from discontinued operations, net of income taxes $ (17) $ (13)
Effect on EPS from discontinued operations—basic $ (0.00) $ (0.00)

Property Held for Sale

Under the going concern basis of accounting, property held for sale was accounted for as discussed below. Under the liquidation basis of accounting, all of our property is for sale and is recorded on the statement of net assets in liquidation at the amount of their estimated cash proceeds or other consideration from liquidation.

WeUnder the going concern basis of accounting, we periodically ~~review~~reviewed long-lived assets against our plans to retain or ultimately dispose of properties. If we ~~decide~~decided to dispose of a property, it ~~will be~~was moved to property held for sale, actively marketed and recorded at fair value less transaction costs. We ~~analyze~~analyzed market conditions each reporting period and ~~record~~recorded additional impairments due to declines in market values of like assets. The fair value of the property iswas determined by observable inputs such as appraisals and prices of comparable properties in active markets for assets like ours. Gains ~~are~~were not recognized until the properties ~~are~~were sold.

~~Property~~Under the going concern basis of accounting, property held for sale ~~includes~~included unimproved land, closed restaurant properties, properties with operating restaurants that our Board of Directors ~~has~~had approved for sale, and related equipment for locations not classified as discontinued operations. The specific assets ~~are~~were valued at the lower of net depreciated value or net realizable value.

At ~~March 11,~~August 26, 2020, ~~and August 28, 2019~~ we had ~~12 and 14~~10 owned properties with a carrying value of approximately ~~$13.8~~$11.2 million ~~and $16.5 million, respectively,~~ in property held for sale. During the two quarters ended March 11, 2020, 2 properties were sold that were previously classified as held for sale. The pretax profit (loss) for the disposal group of 12 locations operating for the two quarters ended March 11, 2020 and March 13, 2019 was a pretax gain of approximately $0.1 million and a pretax loss of approximately $0.1 million, respectively.

~~We are actively marketing the locations currently classified as property held for sale.~~

Abandoned Leased Facilities - Liability for Store Closings

As of ~~March 11,~~December 16, 2020 and August 26, 2020, we classified 1011 and 18 leased ~~restaurants located in Arizona, California, Illinois, Maryland, and Texas~~restaurant locations as ~~abandoned.~~abandoned, respectively. Although we remain obligated under the terms of the leases for the rent and other costs that may be associated with the leases, we decided to cease operations and we have no foreseeable plans to occupy the spaces as a company restaurant in the future. ~~In connection with~~The total liability represents the ~~adoption of ASC 842 (see Note 1.), we reclassified the rent portion~~present value of the total amount of rent and other direct costs (such as common area costs, property taxes, and insurance allocated by the landlord) for the remaining lease term less the present value of any sublease income expected to be collected. During the quarter ended December 16, 2020, we settled and terminated 7 leases.

The liability for ~~store closings in the amount of $1.0 million to operating lease liabilities-current. During the two quarters ended March 11,~~our abandoned leases at December 16, 2020 ~~3 of the leases we considered abandoned~~and August 26, 2020 is as of August 28, 2019 expired and the operating lease liability-current of approximately $0.6 million for these 3 locations was reclassified to the liability for store closings. The liability at March 11,follows (in thousands):


	December 16, 2020		August 26, 2020
	(Liquidation Basis)		(Going Concern Basis)
Short-term lease liability	N/A		$	365
Long-term lease liability	N/A		2,348
Operating lease liabilities	$	1,987	2,713
Accrued expenses and other liabilities	1,721		2,088
Total	$	3,708	$	4,801

2020 is equal to our estimate of direct costs for the remaining period of time the properties will be unoccupied as well as unpaid rent and direct costs for the 3 expired leases discussed above. Accrued lease termination expense liability was approximately $1.0 million and $1.4 million as of March 11, 2020 and August 28, 2019, respectively.

Note 13. Commitments and Contingencies

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

From time to time, the Company is subject to various private lawsuits, administrative proceedings, and claims that arise in the ordinary course of its business. A number of these lawsuits, proceedings, and claims may exist at any given time. These matters typically involve claims from guests, employees, and others related to issues common to the restaurant industry. The Company currently believes that the final disposition of these types of lawsuits, proceedings, and claims will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity. It is possible, however, that the Company’s future results of operations for a particular fiscal quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings, or claims.

~~Cheeseburger in Paradise Royalty Commitment~~

The license agreement and trade name relates to a perpetual license to use intangible assets including trademarks, service marks and publicity rights related to Cheeseburger in Paradise owned by Jimmy Buffett and affiliated entities. In return, the Company pays a royalty fee of 2.5% of gross sales, less discounts, at the Company's operating Cheeseburger in Paradise location to an entity owned or controlled by Jimmy Buffett. The trade name represents a respected brand with positive customer loyalty, and the Company intends to cultivate and protect the use of the trade name.

Note 14. Related Parties

Christopher J. Pappas, the Company’s former Chief Executive Officer (see Subsequent Events section of Note 1. Basis of Presentation), and Harris J. Pappas, a former director of Company, own 2 restaurant related entities (the “Pappas entities”) that may, from time to time, ~~may~~ provide services to the Company and its subsidiaries, as detailed in the Amended and Restated Master Sales Agreement dated August 2, 2017 among the Company and the Pappas entities. Collectively, Messrs. Pappas and the Pappas entities own greater than 5 percent of the Company's common stock.

Under the terms of the Amended and Restated Master Sales Agreement, the Pappas entities may provide specialized (customized) equipment fabrication and basic equipment maintenance, including stainless steel stoves, shelving, rolling carts, and chef tables. ~~The Company incurred~~We received 0 ~~and $13 thousand~~services under the Amended and Restated Master Sales Agreement for custom-fabricated and refurbished equipment in the ~~two~~ quarters ended ~~March 11,~~December 16, 2020 and ~~March 13,~~December 18, 2019, respectively. Services provided under this agreement are subject to review and approval by the Finance and Audit Committee of our Board of Directors.

In the third quarter of fiscal 2004, Messrs. Pappas became partners in a limited partnership which purchased a retail strip center in Houston, Texas. Messrs. Pappas collectively own a 50% limited partnership interest and a 50% general partnership interest in the limited partnership. A third party company manages the center. One of the Company’s restaurants has rented approximately 7% of the space in that center since July 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.

On November 22, 2006, the Company executed a new lease agreement with respect to this shopping center. Effective upon the Company’s relocation and occupancy into the new space in July 2008, the new lease agreement provides for a primary term of approximately 12 years with 2 subsequent ~~five-year~~five-year options and gives the landlord an option to buy out the tenant on or after the calendar year 2015 by paying the then unamortized cost of improvements to the tenant. The Company pays rent of $22.00 per square foot plus maintenance, taxes, and insurance during the remaining primary term of the lease. Thereafter, the lease provides for increases in rent at set intervals. The new lease agreement was approved by the Finance and Audit Committee of our Board of Directors. Due to the COVID-19 pandemic, the landlord agreed to abate the rent for April, 2020. We entered into an amendment to the lease, effective July 1, 2020, whereby (1) the lease was terminated early on December 31, 2020, (2) the rent for May and June of 2020 was abated and (3) commencing July 1, 2020 through the early termination date, the monthly rent was a fixed gross amount. The amendment was approved by the Finance and Audit Committee of our Board of Directors.

In the third quarter of fiscal 2014, on March 12, 2014, the Company executed a new lease agreement with Pappas Restaurants, Inc. for one of our Fuddruckers locations in Houston, Texas. The lease ~~provides~~provided for a primary term of approximately six years with 2 subsequent ~~five-year~~five-year options. Pursuant to the lease agreement, the Company paid $28.53 per square foot plus maintenance, taxes, and insurance from March 12, 2014 until May 31, 2020. Currently, the lease agreement provides for increases in rent at set intervals. The new lease agreement was approved by the Finance and Audit Committee of our Board of Directors.

In December 2019 we exercised the first five-year renewal option, effective June 1, 2020. The renewal was approved by the Finance and Audit Committee of our Board of Directors. Due to the COVID-19 pandemic, Pappas Restaurants, Inc. agreed to abate the rent for April and May of 2020.

For the ~~two~~ quarters ended ~~March 11,~~December 16, 2020 and ~~March 13,~~December 18, 2019, affiliated rents incurred as a percentage of relative total Company cost was ~~0.58%~~0.72% and ~~0.57%~~0.50%, respectively. Rent payments under the two lease agreements described above were ~~$300~~$105 thousand and ~~$314~~$154 thousand, respectively.

Key Management Personnel

~~The~~Mr. Paapas resigned his position as President and Chief Executive Officer, effective January 27, 2021. Previously, on December 11, 2017, the Company had entered into a new employment agreement with ~~Christopher Pappas on December 11, 2017.~~Mr. Pappas. Under the employment agreement, which is no longer effective as of January 27, 2021 (see Subsequent Events section of Note 1. Basis of Presentation), the initial term of Mr. Pappas' employment ended on August 28, 2019 and automatically ~~renews~~renewed for additional one year periods, unless terminated in accordance with its terms. ~~Mr. Pappas continues to devote his primary time and business efforts to the Company while maintaining his role at Pappas Restaurants, Inc.~~ The employment agreement ~~was~~had been unanimously approved by the Executive Compensation Committee ~~(the “Committee”)~~ of our Board of Directors as well as by the full ~~Board. Effective~~Board at that time. Previously, effective August 1, 2018, the Company and ~~Christopher J.~~Mr. Pappas agreed to reduce his fixed annual base salary to ~~one~~1 dollar.

Paulette Gerukos, Vice President of Human Resources of the Company, is the sister-in-law of Harris J. Pappas.

The following table summarizes ~~credit facility~~ debt ~~less current portion~~balances at ~~March 11,~~December 16, 2020 (liquidation basis) and August ~~28, 2019 (in thousands):~~26, 2020 (going concern basis), in thousands:

On April 21, 2020. we entered into a promissory note with Texas Capital Bank, N.A., ("TCB") effective April 12, 2020, that provides for a loan in the amount of $10.0 million (the 'PPP Loan") pursuant to the Paycheck Protection Program ("PPP") established under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). The PPP Loan is subject to forgiveness under the PPP upon our request to the extent that the proceeds are used to pay expenses permitted by the PPP, including payroll costs, covered rent and mortgage obligations, and covered utility payments. The PPP Loan matures on April 12, 2022, two years from the commencement date and bears interest at a rate of 1.0% per annum.

On June 5, 2020, the Paycheck Protection Program Flexibility Act (the “new Act”) was signed into law and made significant changes to the PPP to provide additional relief for borrowers under the PPP. The new Act increased flexibility for businesses that were unable to operate as normal due to COVID-19 related restrictions. The new Act extended the period that businesses have to use PPP funds to qualify for loan forgiveness to 24 weeks, up from 8 weeks under the original rules, relaxed the requirements that loan recipients must adhere to in order to qualify for loan forgiveness, and extended the payment deferral period to the earlier of the date when the amount of loan forgiveness is determined by the SBA and lender or 10 months after the 24 week covered period ends. Initially, all payments were to be deferred for six months. Under the new Act, payments are deferred until the SBA remits any loan forgiveness amount to the lender, TCB in the case of the Company. Interest accrues over the entire period of the PPP Loan for the portion of the PPP that is not ultimately forgiven.

On November 12, 2020, we submitted an application for forgiveness of the entire $10.0 million due on the PPP Loan. Notwithstanding our application for loan forgiveness, we are unable to predict the actual amount of loan forgiveness that will be approved. As of December 16, 2020, we were in full compliance with all covenants with respect to the PPP Loan. See Note 1. Basis of Presentation, Subsequent Events.

On December 13, 2018, ~~the Company~~we entered into a credit agreement ~~(as amended by the First Amendment (as~~(amended as defined below), the ~~“2018 Credit~~“Credit Agreement”) among the Company, the lenders from time to time party thereto, and a subsidiary of MSD Capital, MSD PCOF Partners VI, LLC

(“MSD”), as Administrative Agent, pursuant to which the lenders party thereto agreed to make loans to the Company from time to time up to an aggregate principal amount of $80 million consisting of a $10 million revolving credit facility (the ~~“2018 Revolver”~~“Revolver”), a $10 million delayed draw term loan (“~~2018~~ Delayed Draw Term Loan”), and a $60 million term loan (the ~~“2018 Term~~“Term Loan”, and together with the ~~2018~~ Revolver and the ~~2018~~ Delayed Draw Term Loan, the ~~“2018 Credit~~“Credit Facility”). The ~~2018~~ Credit Facility terminates on, and all amounts owing thereunder must be repaid on, December 13, 2023.

On July 31, 2019, ~~the Company~~we entered into the First Amendment to the ~~2018~~ Credit Agreement (the “First Amendment”) to extend the ~~2018~~ Delayed Draw Term Loan expiration date for up to one year to the earlier to occur of (a) the date on which the commitments under the ~~2018~~ Delayed Draw Term Loan have been terminated or reduced to ~~zero~~0 in accordance with the terms

of the ~~2018~~ Credit Agreement and (b) September 13, 2020. On December 18, 2019, ~~the Company~~we entered into the Second Amendment to the ~~2018~~ Credit Agreement which did not change any terms of the agreement permanently. The amendment only decreased the amount of mandatory prepayment related to the sale of two properties in the ~~.quarter~~quarter ended March 11, 2020. ~~See Note 2. Subsequent Events for discussion of~~We entered into the Third Amendment to Credit Agreement, dated April 21, 2020 (the "Third Amendment"). The Third Amendment permitted us to incur indebtedness under the PPP Loan and terminated the $5.0 million undrawn portion of the delayed draw term loan upon receipt of the PPP Loan. On August 21, 2020, we entered ~~subsequent~~into the Fourth Amendment to the ~~end~~Credit Agreement that decreased the amount of mandatory prepayments related to the sale of two properties in the quarter ended August 26, 2020. No other terms of the ~~second quarter of fiscal 2020..~~agreement were changed permanently by this amendment.

Borrowings under the ~~2018~~ Revolver, ~~2018~~ Delayed Draw Term Loan, and ~~2018~~ Term Loan ~~will~~ bear interest at the London InterBank Offered Rate ("LIBOR") plus 7.75% per annum. Interest is payable quarterly and accrues daily. Under the terms of the ~~2018~~ Credit Agreement, the maximum amount of interest payable, based on the aggregate principal amount of $80.0 million and interest rates in effect at December 13, 2018, in the next 12 months was required to be prefunded at the closing date of the 2018 Credit Agreement. The prefunded amount at ~~March 11,~~December 16, 2020 of approximately ~~$6.1~~$4.1 million is recorded in restricted cash and cash equivalents on ~~the Company's~~our consolidated ~~balance sheet.~~statement of net asset in liquidation. LIBOR is set to terminate in December 2021. We expect to agree to a replacement rate with MSD prior to the LIBOR termination.

The ~~2018~~ Credit Facility is subject to the following minimum amortization payments: 1st anniversary: $10.0 million; 2nd anniversary: $10.0 million; 3rd anniversary: $15.0 million; and 4th anniversary: $15.0 million.

As of December 16, 2020, we have approximately $6.6 million principal payments due under the Credit Facility in the next 12 months.

The Company also ~~pays~~paid a quarterly commitment fee based on the unused portion of the ~~2018~~ Revolver and the ~~2018~~ Delayed Draw Term Loan at 0.50% per annum. Voluntary prepayments, refinancing and asset dispositions constituting a sale of all or substantially all assets, under the ~~2018~~ Delayed Draw Term Loan and the ~~2018~~ Term Loan are subject to a make whole premium during years one and two equal to the present value of all interest otherwise owed from the date of the prepayment through the end of year two, a 2.0% fee during year three, and a 1.0% fee during year four. Finally, the Company paid to the lenders a one-time fee of $1.6 million in connection with the closing of the ~~2018~~ Credit Facility.

Indebtedness under the ~~2018~~ Credit Facility is secured by a security interest in, among other things, all of ~~the Company’s~~our present and future personal property (other than certain excluded assets), all of the personal property of ~~its~~our guarantors (other than certain excluded assets) and all Mortgaged Property (as defined in the ~~2018~~ Credit Agreement) of the Company and its subsidiaries. Under the Credit Facility, 80% of net proceeds from asset sales, including real property sales, are applied as mandatory prepayments of our Term Loan.

The ~~2018~~ Credit Facility contains customary covenants and restrictions on ~~the Company’s~~our ability to engage in certain activities, including financial performance covenants, asset sales and acquisitions, and contains customary events of default. Specifically, among other things, ~~the Company is~~we are required to maintain minimum Liquidity (as defined in the ~~2018~~ Credit Agreement) of $3.0 million as of the last day of each fiscal quarter and a minimum Asset Coverage Ratio (as defined in the ~~2018~~ Credit Agreement) of 2.50 to 1.00. As of ~~March 11,~~December 16, 2020, the ~~Company was~~we were in full compliance with all covenants with respect to the ~~2018~~ Credit Facility.

All amounts owing by the Company under the ~~2018~~ Credit Facility are guaranteed by the subsidiaries of the Company.

As of ~~March 11,~~December 16, 2020, we had approximately ~~$1.7~~$1.8 million committed under letters of credit, which are used as security for the payment of insurance obligations and are fully cash collateralized, and approximately ~~$0.1 million~~$18 thousand in other indebtedness.

As of ~~June 5, 2020,~~February 1, 2021, the Company was in compliance with all covenants under the terms of the ~~2018~~ Credit Agreement.

~~2016 Credit Agreement~~

~~On December 13, 2018, the 2016 Credit Agreement was terminated with all outstanding amounts paid in full.~~

Note 16. Share-Based and Other Compensation

We have 2 active ~~share based~~share-based stock plans, the Luby's Incentive Stock Plan, as amended and restated effective December 5, 2015 (the "Employee Stock Plan") and the Non-employee Director Stock Plan, as amended and restated effective February 9, 2018. Both plans authorize the granting of stock options, restricted stock, and other types of awards consistent with the purpose of the plans.

~~Of the aggregate 2.1 million~~As of December 16, 2020, 0 shares ~~approved~~remain available for future issuance under the Non-employee Director Stock Plan, as amended, 1.8 million options, restricted stock units and restricted stock awards have been granted to date, and 0.1 million options were canceled or expired and added back into the plan since the plan’s inception. As of March 11, 2020, approximately 0.4 million shares remain available for future issuance.Plan. Compensation costs for share-based payment arrangements under the Non-employee Director Stock Plan, recognized in selling, general and administrative expenses, ~~for the two quarters ended March 11, 2020 and March 13, 2019~~ was approximately ~~$390~~$158 thousand and ~~$289 thousand, respectively, and approximately $237 thousand and $168~~$153 thousand for the ~~quarters~~12 weeks ended ~~March 11,~~November 18, 2020 and ~~March 13,~~the quarter ended December 18, 2019, respectively.

Of the aggregate 4.1 million shares approved for issuance under the Employee Stock Plan, as amended, ~~7.3~~7.4 million options and restricted stock units have been granted to date, and ~~4.5~~5.2 million options and restricted stock units were canceled or expired and added back into the plan since the plan’s inception in 2005. As of ~~March 11,~~December 16, 2020, approximately ~~1.4~~1.9 million shares remain available for future issuance. Compensation costs for share-based payment arrangements under the Employee Stock Plan, recognized in selling, general and administrative expenses, ~~for the two quarters ended March 11, 2020 and March 13, 2019~~ was approximately ~~$136~~$25 thousand and ~~$296 thousand, respectively, and approximately $40 thousand and $113~~$212 thousand, respectively, for the ~~quarters~~12 weeks ended ~~March 11,~~November 18, 2020 and ~~March 13,~~the quarter ended December 18, 2019.

Stock options granted under either the Employee Stock Plan or the Non-employee Director Stock Plan have exercise prices equal to the market price of the Company’s common stock at the date of the grant.

Option awards under the Non-employee Director Stock Plan generally vest 100% on the first anniversary of the grant date and expire ten years from the grant date. NaN options were granted under the Non-employee Director Stock Plan in the ~~two quarters~~quarter ended ~~March 11,~~December 16, 2020. NaN options to purchase shares were outstanding under ~~this plan~~the Non-employee Director Stock Plan as of ~~March 11,~~December 16, 2020.

Options granted under the Employee Stock Plan generally vest 50% on the first anniversary date of the grant date, 25% on the second anniversary of the grant date and 25% on the third anniversary of the grant date, with all options expiring ten years from the grant date. NaN options were granted in the ~~two quarters~~quarter ended ~~March 11,~~December 16, 2020. Options to purchase ~~1,174,247~~849,970 shares at option prices of $2.82 to $5.95 per share remain outstanding as of ~~March 11,~~December 16, 2020.

A summary of the Company’s stock option activity for the ~~two quarters~~quarter ended ~~March 11,~~December 16, 2020 is presented in the following table:

Shares
Under
Fixed
Options Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Term Aggregate
Intrinsic
Value
(Per share) (In years) (In thousands)
Outstanding at August 28, 2019 1,387,412 $ 4.06 5.7 $ —
Cancelled / Forfeited (53,165) $ 4.54 — —
Expired (160,000) $ 3.44 — —
Outstanding at March 11, 2020 1,174,247 $ 4.12 5.9 $ —
Exercisable at March 11, 2020 1,108,153 $ 4.20 5.8 $ —


	Shares Under Fixed Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
		(Per share)		(In years)	(In thousands)
Outstanding at August 26, 2020	860,501	$	4.07	5.0	$	0




Expired	(10,531)	$	5.39	—	—
Outstanding at December 16, 2020	849,970	$	4.05	4.7	$	5.0
Exercisable at December 16, 2020	849,970	$	4.05	4.7	$	5.0

The intrinsic value for stock options is defined as the difference between the current market value, or closing price on ~~March 11,~~December 16, 2020, and the grant price on the measurement dates in the table above.

At ~~March 11,~~December 16, 2020, there ~~was approximately $46 thousand of total~~is 0 unrecognized compensation cost related to unvested ~~options that are expected to be recognized over a weighted-average period of 0.7 years.~~options.

Restricted Stock Units

Grants of restricted stock units consist of the Company’s common stock and generally vest after three years. All restricted stock units are cliff-vested. Restricted stock units are valued at the closing market price of the Company’s common stock at the date of grant.

A summary of the Company’s restricted stock unit activity during the ~~two quarters~~quarter ended ~~March 11,~~December 16, 2020 is presented in the following table:

Restricted
Stock
Units Weighted
Average
Fair Value Weighted-
Average
Remaining
Contractual
Term
(Per share) (In years)
Unvested at August 28, 2019 274,009 $ 3.40 1.2
Granted 65,236 $ 2.27 —
Vested (121,111) $ 4.27 —
Unvested at March 11, 2020 218,134 $ 2.62 2.1

At March 11, 2020, there was approximately $0.2 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.1 years.


	Restricted Stock Units	Weighted Average Fair Value		Weighted- Average Remaining Contractual Term
		(Per share)		(In years)
Unvested at August 26, 2020	173,808	$	2.57	2.0

Vested	(52,782)	$	2.80	—

Unvested at December 16, 2020	121,026	$	2.47	2.0

Performance Based Incentive Plan

The 2018 TSR Performance Based Incentive Plan (the "2018 TSR Plan") ~~provides~~provided for a specified number of shares of common stock under the Employee Stock Plan based on the total shareholder return ranking compared to a selection of peer companies over a period of three years. The grant date fair value of the 2018 TSR Plan was determined based on a Monte Carlo simulation model for a period of three years. The target number of shares for distribution at 100% of the award was 373,294 on the grant date. The 2018 TSR Plan iswas accounted for as an equity award since it provides for a specified number of shares. The expense for this plan year iswas amortized over a period of three years based on 100% target award. The three years measurement period ended on August 26, 2020. Based on our total shareholder return ranking, no shares were vested and distributed.

Non-cash compensation expense related to ~~the Company's~~our 2018 TSR ~~Performance Based Incentive Plans,~~Plan, recorded in selling, general and administrative expenses, was approximately ~~$207 thousand and $237~~$118 thousand in the ~~two quarters~~quarter ended ~~March 11, 2020 and March 13, 2019, respectively, and approximately $89 thousand and $118 thousand, respectively in the quarters ended March 11, 2020 and March 13,~~December 18, 2019.


Title of each class	Trading Symbol(s)	Name of each exchange at which registered
Common Stock ($0.32 par value per share)	LUB	New York Stock Exchange
Common Stock Purchase Rights	N/A	New York Stock Exchange


			~~Page~~

~~Part I—Financial Information~~

~~Item 1 Financial Statements~~			3

~~Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations~~			34

~~Item 3 Quantitative and Qualitative Disclosures About Market Risk~~			59

~~Item 4 Controls and Procedures~~			59

~~Part II—Other Information~~

~~Item 1 Legal Proceedings~~			60

~~Item 1A Risk Factors~~			60

~~Item 5 Other Information~~			60

~~Item 6 Exhibits~~			61

~~Signatures~~			62


			Page

Part I—Financial Information

Item 1 Financial Statements			4

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			35

Item 3 Quantitative and Qualitative Disclosures About Market Risk			48

Item 4 Controls and Procedures			49

Part II—Other Information

Item 1 Legal Proceedings			50

Item 1A Risk Factors			50

Item 5 Other Information			51

Item 6 Exhibits			52

Signatures			53



	March 11, 2020		August 28, 2019
	(In thousands)
Total assets:
Luby's cafeterias	$	106,132	$	107,287
Fuddruckers restaurants ⁽¹⁾	37,984		25,725
Cheeseburger in Paradise restaurants ⁽²⁾	363		829
Culinary contract services	7,212		6,703
Fuddruckers franchise operations ⁽³⁾	9,494		10,034
Corporate	42,112		$	35,422
Total	$	203,297	$	186,000


		Quarter Ended						Two Quarters Ended							Period Ended November 18, 2020	Quarter Ended December 18, 2019
		March 11 2020		March 13 2019		March 11 2020		March 13 2019			(12 weeks)		(16 weeks)
		(In thousands)														(In thousands)
Proxy communication related		$	—	$	1,061	$	—	$	1,802

Employee severances	Employee severances	544		173		1,162		645		Employee severances	$	0	$	619
Restructuring related	Restructuring related	966		30		1,586		30		Restructuring related	416		619
Total Other charges	Total Other charges	$	1,510	$	1,264	$	2,748	$	2,477	Total Other charges	$	416	$	1,238


	Two Quarters Ended
	March 11, 2020		March 13, 2019
	(28 weeks)		(28 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(12,141)	$	(856)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for asset impairments and net (gains) losses on property sales	(727)		(10,079)
Depreciation and amortization	6,440		8,126
Amortization of debt issuance cost	577		811
Share-based compensation expense	732		823

Cash used in operating activities before changes in operating assets and liabilities	(5,119)		(1,175)
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts and other receivables	509		(414)

Increase in food and supply inventories	(94)		(45)
Decrease in prepaid expenses and other assets	197		1,115
Decrease in operating lease assets	2,407		—

Decrease in operating lease liabilities	(3,541)		—
Decrease in accounts payable, accrued expenses and other liabilities	(263)		(7,110)
Net cash used in operating activities	(5,904)		(7,629)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets and property held for sale	5,453		20,444

Purchases of property and equipment	(1,490)		(1,781)
Net cash provided by investing activities	3,963		18,663
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolver borrowings	3,300		34,500
Revolver repayments	—		(54,500)
Proceeds from term loan	2,500		58,400
Term loan repayments	(831)		(35,169)
Debt issuance costs	—		(3,236)
Taxes paid on equity withheld	—		(12)
Net cash provided by (used in) financing activities	4,969		(17)
Net increase in cash and cash equivalents and restricted cash	3,028		11,017
Cash and cash equivalents and restricted cash at beginning of period	12,756		3,722
Cash and cash equivalents and restricted cash at end of period	$	15,784	$	14,739
Cash paid for:
Income taxes, net of (refunds)	$	7	$	51
Interest	2,647		1,951


	Balance at August 28, 2019		ASC 842 Adjustment		Balance at August 29, 2019
	(In thousands)
ASSETS
Trade accounts and other receivables, net	$	8,852	$	70	$	8,922
Prepaid expenses	2,355		(225)		2,130
Total Current Assets	27,395		(155)		27,240
Intangible assets, net	16,781		(190)		16,591
Operating lease right-of-use assets, net	—		27,191		27,191
Total Assets	$	186,000	$	26,846	$	212,846
LIABILITIES
Operating lease liabilities-current	$	—	$	8,061	$	8,061
Accrued expenses and other liabilities	24,475		(1,002)		23,473
Total Current Liabilities	32,954		7,059		40,013
Operating lease liabilities-non-current	—		24,360		24,360
Other liabilities	6,577		(5,600)		977
Total Liabilities	$	84,970	$	25,819	$	110,789
SHAREHOLDERS’ EQUITY
Retained earnings	$	61,182	$	1,027	$	62,209
Total Shareholders Equity	101,030		1,027		102,057
Total Liabilities and Shareholders Equity	$	186,000	$	26,846	$	212,846


			Fair Value Measurement Using
	March 13, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments⁽³⁾
Nonrecurring Fair Value Measurements			(In thousands)
Continuing Operations
Property held for sale ⁽¹⁾	$	6,573	$	—	$	—	$	6,573	$	(62)
Property and equipment related to company-owned restaurants ⁽²⁾	704		—		—		704		(1,129)

Total Nonrecurring Fair Value Measurements	$	7,277	$	—	$	—	$	7,277	$	(1,191)


	March 11, 2020		August 28, 2019		Estimated Useful Lives (years)
	(In thousands)
Land	$	45,822	$	45,845		—
Restaurant equipment and furnishings	68,437		67,015		3	to	15
Buildings	127,011		126,957		20	to	33
Leasehold and leasehold improvements	22,164		22,098		Lesser of lease term or estimated useful life
Office furniture and equipment	3,315		3,364		3	to	10

	266,749		265,279
Less accumulated depreciation and amortization	(149,319)		(143,536)
Property and equipment, net	$	117,430	$	121,743
Intangible assets, net	$	16,025	$	16,781	15	to	21


	March 11, 2020										August 29, 2018
	(In thousands)										(In thousands)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets Subject to Amortization:

Fuddruckers trade name and franchise agreements	$	29,486	$	(13,506)	$	15,980	$	29,486	$	(12,752)	$	16,734

Cheeseburger in Paradise trade name and license agreements	146		(101)		45		146		(99)		47

Intangible assets, net	$	29,632	$	(13,607)	$	16,025	$	29,632	$	(12,851)	$	16,781



		March 11, 2020		August 28, 2019			December 16, 2020		August 26, 2020
Long-Term Debt	Long-Term Debt					Long-Term Debt	(Liquidation Basis)		(Going Concern Basis)
2018 Credit Agreement - Revolver	2018 Credit Agreement - Revolver	$	8,600	$	5,300	2018 Credit Agreement - Revolver	$	10,000	$	10,000
2018 Credit Agreement - Term Loan		45,067		43,399
2018 Credit Agreement - Term Loans						2018 Credit Agreement - Term Loans	36,583		36,583
Total credit facility debt	Total credit facility debt	53,667		48,699		Total credit facility debt	46,583		46,583
2020 PPP Loan						2020 PPP Loan	10,000		10,000
Total Long-Term Debt						Total Long-Term Debt	N/A		56,583
Less:	Less:					Less:
Unamortized debt issue costs	Unamortized debt issue costs	(1,630)		(1,887)		Unamortized debt issue costs	N/A		(1,410)
Unamortized debt discount	Unamortized debt discount	(1,202)		(1,373)		Unamortized debt discount	N/A		(1,055)
Total credit facility debt, less unamortized debt issuance costs		50,835		45,439
Total long-term debt, less unamortized debt issuance costs						Total long-term debt, less unamortized debt issuance costs	N/A		54,118
Current portion of credit facility debt	Current portion of credit facility debt	2,567		—		Current portion of credit facility debt	N/A		0
Credit facility debt, less current portion		$	48,268	$	45,439
Long-term debt, less current portion						Long-term debt, less current portion	N/A		$	54,118


	Units	Weighted Average Fair Value
		(Per share)
Unvested at August 28, 2019	266,443	$	3.68



Unvested at March 11, 2020	266,443	$	3.68


	August 28, 2019	FY20 YTDQ2 Openings	FY20 YTDQ2 Closings	March 11, 2020
Luby’s Cafeterias	79	—	(1)	78
Fuddruckers Restaurants	44	—	(5)	39
Cheeseburger in Paradise	1	—	—	1

Total	124	—	(6)	118


	August 26, 2020	FY21 YTDQ1 Openings	FY21 YTDQ1 Closings	December 16, 2020
Luby’s cafeterias	61	—	(2)	59
Fuddruckers restaurants	24	—	—	24


Total	85	—	(2)	83


		Quarter Ended		Quarter Ended										Three Periods Ended		Quarter Ended
($000s)	($000s)	March 11, 2020		March 13, 2019		Increase/ (Decrease)							($000s)	November 18, 2020		December 18, 2019		Increase/ (Decrease)
		(12 weeks)		(12 weeks)		(12 weeks vs 12 weeks)								(12 weeks)		(16 weeks)		12 weeks vs 16 weeks
Restaurant sales	Restaurant sales	$	60,391	$	65,369	$	(4,978)	(7.6)	%	Restaurant sales	$	36,485		$	83,558	$	(47,073)	(56.3)	%
Culinary contract services	Culinary contract services	6,998		7,543		(545)		(7.2)	%	Culinary contract services	4,918			9,774		(4,856)		(49.7)	%
Franchise revenue	Franchise revenue	1,158		1,421		(263)		(18.5)	%	Franchise revenue	530			1,707		(1,177)		(69.0)	%
Vending revenue	Vending revenue	14		90		(76)		(84.4)	%	Vending revenue	14			110		(96)		(87.3)	%
TOTAL SALES	TOTAL SALES	$	68,561	$	74,423	$	(5,862)	(7.9)	%	TOTAL SALES	$	41,947		$	95,149	$	(53,202)	(55.9)	%


~~4.1~~10.1			~~Second Amendment to Rights~~Professional Services Agreement, dated as of February ~~14, 2020, by and~~1, 2021, between Luby’s Inc. and American Stock Transfer & Trust Company, LLC, as rights agent (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 14, 2020, File No. 1-08308).Winthrop Capital Advisors LLC.

~~10.1~~			Promissory Note, effective as of April 12, 2020, between Luby’s, Inc., as borrower, and Texas Capital Bank, N.A., as lender (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 23, 2020, File No. 1-08308).

~~10.2~~			Third Amendment to Credit Agreement, dated as of April 21, 2020, among the Company, the lenders from time to time party thereto, and MSD PCOF Partners VI, LLC, as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 23, 2020, File No. 1-08308).

~~10.3~~			~~Final Separation Agreement and Release, dated April 24, 2020, by and between Kennedy Scott Gray and Luby's, Inc.~~

31.1			Rule 13a-14(a)/15d-14(a) certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Rule 13a-14(a)/15d-14(a) certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Section 1350 certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Section 1350 certification of the Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document

101.SCH			XBRL Schema Document

101.CAL			XBRL Calculation Linkbase Document

101.DEF			XBRL Definition Linkbase Document

101.LAB			XBRL Label Linkbase Document

101.PRE			XBRL Presentation Linkbase Document


	LUBY’S, INC. (Registrant)

Date: ~~6/5/2020~~2/1/2021	By:	/s/ ~~Christopher J. Pappas~~John Garilli
		~~Christopher J. Pappas~~John Garilli
		Interim President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~6/5/2020~~2/1/2021	By:	/s/ Steven Goodweather
		Steven Goodweather
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)