FORM 10-QUNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
WASHINGTON, D.C. 20549(Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
May 8,November 20, 2002,OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from _____________________Transition Period From _____ to____________________________
Commission file
number:number1-8308LUBY'S, INC. _______________________________________________________________________________ (ExactLuby's, Inc.
(Exact name of registrant as specified in its charter)Delaware 74-1335253 _________________________________ _________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2211 Northeast Loop 410, P. O. Box 33069 San Antonio, Texas 78265-3069 _______________________________________________________________________________ (Address of principal executive offices) (Zip Code) 210/654-9000 _______________________________________________________________________________ (Registrant's telephone number, including area code) _______________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report)
Delaware
74-1335253
(State or other jurisdiction of
incorporation or organization)(IRS Employer Identification Number)
2211 Northeast Loop 410
San Antonio, Texas 78217(Address of principal executive offices, including zip code)
(210) 654-9000
www.lubys.com
(Registrant's telephone number, including area code, and Website)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes
xX No___ ___Indicate by check mark whether the
number of shares outstanding of eachregistrant is an accelerated filer (as defined in Rule 12b-2 of theissuer's classesExchange Act). Yes X NoAs of
common stock, asJanuary 3, 2003, there were 22,448,574 shares of thelatest practicable date.registrant's CommonStock: 22,433,043 sharesStock outstanding,aswhich does not include 4,954,493 treasury shares.Luby's, Inc.
Form 10-Q
Quarter ended November 20, 2002
Table ofJune 13, 2002, (exclusive of 4,970,024 treasury shares)Contents
Part I - Financial Information
Page
3
Management's Discussion and Analysis of Financial Condition and Results of Operations
16
23
23
Part II - Other Information
Page
24
24
29
30
32
Part I - FINANCIAL INFORMATION
Luby's, Inc.
Consolidated Balance Sheets
(In thousands)
November 20,
August 28,
2002
2002
(unaudited)
Assets
Current Assets:
Cash
$
199
$
1,584
Short-term investments (see Note 3)
21,587
24,122
Trade accounts and other receivables
299
185
Food and supply inventories
2,963
2,197
Prepaid expenses
1,533
1,667
Income tax receivable
7,245
7,245
Deferred income taxes (see Note 4)
2,726
2,726
Total current assets
36,552
39,726
Property held for sale
6,005
8,144
Investments and other assets
4,579
4,642
Property, plant, and equipment -- at cost, net (see Note 5)
288,498
289,967
Total assets
$
335,634
$
342,479
Liabilities and shareholders' equity
Current Liabilities:
Accounts payable
$
20,242
$
19,077
Accrued expenses and other liabilities
21,385
21,735
Current portion of debt (see Note 6)
113,507
118,448
Total current liabilities
155,134
159,260
Convertible subordinated notes, net -- related party (see Note 6)
5,994
5,883
Accrued claims and insurance
5,142
5,142
Deferred income taxes and other credits (see Note 4)
5,432
5,460
Reserve for restaurant closings (see Note 7)
3,058
3,114
Commitments and contingencies (see Note 8)
--
--
Total liabilities
174,760
178,859
Shareholders' equity
Common stock, $.32 par value; authorized 100,000,000 shares, issued
27,403,067 shares in fiscal 2003 and 20028,769
8,769
Paid-in capital
37,058
37,335
Deferred compensation
(1,687
)
(1,989
)
Retained earnings
221,961
225,062
Less cost of treasury shares, 4,954,493 and 4,970,024, in fiscal 2003 and 2002,
respectively(105,227
)
(105,557
)
Total shareholders' equity
160,874
163,620
Total liabilities and shareholders' equity
$
335,634
$
342,479
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Operations (unaudited)
(In thousands)
Quarter Ended
November 20,
November 21,
2002
2001
(84 days)
(82 days)
Sales
$
88,229
$
95,195
Costs and expenses:
Cost of food
25,019
24,650
Payroll and related costs
27,675
34,593
Occupancy and other operating expenses
34,370
36,384
General and administrative expenses
5,367
5,348
Provision for asset impairments and
restaurant closings (see Note 7)(163
)
130
92,268
101,105
Income (loss) from operations
(4,039
)
(5,910
)
Interest expense
(2,004
)
(2,570
)
Other income, net
2,942
448
Income (loss) before income taxes
(3,101
)
(8,032
)
Provision (benefit) for income taxes (see Note 4)
--
(2,687
)
Net income (loss)
$
(3,101
)
$
(5,345
)
Net income (loss) per share -- basic and assuming
dilution$
(0.14
)
$
(.24
)
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Quarter Ended
November 20,
November 21,
2002
2001
(84 days)
(82 days)
Cash flows from operating activities:
Net income (loss)
$
(3,101
)
$
(5,345
)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
5,011
4,942
Amortization of deferred loss on interest rate swaps
--
248
Amortization of discount on convertible subordinated notes
111
111
Provision for asset impairments and restaurant closings
(163
)
130
Gain on disposal of property held for sale
(2,735
)
(70
)
Loss on disposal of property, plant, and equipment
141
46
Noncash directors' fees
53
68
Noncash executive compensation expense
302
297
Cash provided by operating activities before
changes in operating assets and liabilities(381
)
427
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts and other receivables
(114
)
71
(Increase) decrease in food and supply inventories
(766
)
(433
)
(Increase) decrease in income tax receivable
--
(2,604
)
(Increase) decrease in prepaid expenses
134
223
(Increase) decrease in other assets
63
604
Increase (decrease) in accounts payable
1,165
8,109
Increase (decrease) in accrued claims and insurance, accrued
expenses, and other liabilities(350
)
(1,102
)
Increase (decrease) in deferred income taxes and other credits
(28
)
(131
)
Increase (decrease) in reserve for restaurant closings
(56
)
(195
)
Net cash provided by (used in) operating activities
$
(333
)
$
4,969
Luby's, Inc.
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Quarter Ended
November 20,
November 21,
2002
2001
(84 days)
(82 days)
Cash flows from investing activities:
(Increase) decrease in short-term investments
$
2,535
$
(2,984
)
Proceeds from disposal of property held for sale
4,991
790
Purchases of property, plant, and equipment
(3,637
)
(3,062
)
Net cash provided by (used in) investing activities
3,889
(5,256
)
Cash flows from financing activities:
Issuance (repayment) of debt
(4,941
)
(766
)
Net cash provided by (used in) financing activities
(4,941
)
(766
)
Net increase (decrease) in cash
(1,385
)
(1,053
)
Cash at beginning of period
1,584
4,099
Cash at end of period
$
199
$
3,046
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Shareholders' Equity (unaudited)
(In thousands)
Common Stock
Total
Issued
Treasury
Paid-In
Deferred
Retained
Shareholders'
Shares
Amount
Shares
Amount
Capital
Compensation
Earnings
Equity
Balance at August 28, 2002
27,403
$
8,769
(4,970
)
$
(105,557
)
$
37,335
$
(1,989
)
$
225,062
$
163,620
Net income (loss) for the quarter
(3,101
)
(3,101
)
Deferred Compensation/Options
302
302
Common stock issued under benefit plans, net of shares
tendered in partial payment and including tax benefits16
330
(277
)
53
Balance at November 20, 2002
27,403
$
8,769
(4,954
)
$
(105,227
)
$
37,058
$
(1,687
)
$
221,961
$
160,874
See accompanying notes.
Luby's, Inc.
Notes to Consolidated Financial Statements
LUBY'S, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands except per share data)Quarter Ended Three Quarters Ended May 8, May 31, May 8, May 31, 2002 2001 2002 2001 ____________ ____________ ____________ ____________ (84 days) (92 days) (250 days) (273 days)Sales $ 93,069 $121,677 $279,521 $347,796 Costs and expenses: Cost of food 23,902 30,305 71,092 88,649 Payroll and related costs 28,397 41,254 93,319 117,840 Occupancy and other operating expenses 34,044 42,512 104,637 123,903 Provision for asset impairments and restaurant closings (See Note 7) 128 - 259 10,199 General and administrative expenses 4,707 6,415 15,415 19,437 _________ ________ ________ ________ 91,178 120,486 284,722 360,028 _________ ________ ________ ________ Income (loss) from operations 1,891 1,191 (5,201) (12,232) Interest expense (2,317) (3,534) (7,300) (8,475) Other income, net 169 703 926 1,479 _________ ________ ________ ________ Income (loss) before income taxes (257) (1,640) (11,575) (19,228) Income tax expense (benefit) (83) (574) (3,894) (6,730) _________ ________ ________ ________ Net income (loss) $ (174) $ (1,066) $ (7,681) $(12,498) _________ ________ ________ ________ Net income (loss) per share - basic and assuming dilution $ (0.01) $ (0.05) $ (0.34) $ (0.56) _________ ________ ________ ________ EBITDA (See Note 6) $ 7,277 $ 7,239 $ 10,851 $ 15,597 _________ ________ ________ ________ EBITDA per share - basic $ 0.32 $ 0.32 $ 0.48 $ 0.70 _________ ________ ________ ________ See accompanying notes.LUBY'S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) May 8, August 31,(unaudited)
November 20, 20022001 _________ _________ ASSETS (unaudited) Current assets: Cash and cash equivalents $ 5,485 $ 4,099 Short-term investments (SeeNote
3) 20,567 19,984 Trade accounts and other receivables 239 358 Food and supply inventories 2,411 2,701 Prepaid expenses 2,306 2,765 Income tax receivable 5,343 4,468 ________ ________ Total current assets 36,351 34,375 Property held for sale 5,496 3,047 Investments and other assets 8,621 5,929 Deferred income taxes 1,779 4,931 Property, plant, and equipment - at cost, net (See Note 4) 292,246 305,180 ________ ________ Total assets $344,493 $353,462 ________ ________ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 19,167 $ 13,696 Accrued expenses and other liabilities (See Note 5) 27,553 34,585 ________ ________ Total current liabilities 46,720 48,281 Long-term debt (See Note 6) 120,944 122,000 Convertible subordinated notes - related party (See Note 6) 5,735 5,401 Deferred income taxes and other credits 2,990 2,271 Reserve for restaurant closings (See Note 7) 3,151 4,506 Commitments and contingencies (See Note 8) - - ________ ________ Total liabilities 179,540 182,459 ________ ________ Shareholders' equity: Common stock 8,769 8,769 Paid-in capital 37,209 37,181 Deferred compensation (See Note 9) (2,394) (3,299) Retained earnings 227,034 234,715 Accumulated other comprehensive income (loss) (See Note 10) (108) (592) Less cost1. Basis oftreasury stock (105,557) (105,771) ________ ________ Total shareholders' equity 164,953 171,003 ________ ________ Total liabilities and shareholders' equity $344,493 $353,462 ________ ________ See accompanying notes. LUBY'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) Three Quarters Ended May 8, May 31, 2002 2001 __________ __________ (250 days) (273 days) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(7,681) $(12,498) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 14,887 17,320 Amortization of deferred loss on interest rate swaps 745 - Amortization of discount on convertible subordinated notes 334 - Provision for asset impairments and restaurant closings 259 10,200 Gain on disposal of property held for sale (110) (1,201) Loss on disposal of property, plant, and equipment 146 45 Noncash directors' fees 188 84 Noncash compensation expense 905 560 _______ ________ Cash provided by operating activities before changes in operating assets and liabilities 9,673 14,510 Changes in operating assets and liabilities: (Increase) decrease in trade accounts and other receivables 119 (55) (Increase) decrease in food and supply inventories 290 32 (Increase) decrease in prepaid expenses 459 2,726 (Increase) decrease in income tax receivable (875) (3,200) (Increase) decrease in other assets 253 (1,418) Increase (decrease) in accounts payable 5,471 (3,035) Increase (decrease) in accrued expenses and other liabilities (7,032) 2,936 Increase (decrease) in deferred income taxes and other credits 3,611 (76) Increase (decrease) in reserve for restaurant closings (1,614) (1,211) _______ ________ Net cash provided by (used in) operating activities $10,355 $ 11,209 _______ ________ CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) decrease in short-term investments $ (583) $ (5,935) Proceeds from disposal of property held for sale 1,093 6,935 Purchases of property, plant, and equipment, net (8,477) (13,678) _______ ________ Net cash provided by (used in) investing activities (7,967) (12,678) _______ ________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from (payments on) long-term borrowings (1,056) 7,000 Proceeds from (payments on) borrowings against cash surrender value of officers' life insurance - 3,623 Proceeds received on the exercise of employee stock options 54 - Dividends paid - (2,242) _______ ________ Net cash provided by (used in) financing activities (1,002) 8,381 _______ ________ Net increase (decrease) in cash and cash equivalents 1,386 6,912 Cash and cash equivalents at beginning of period 4,099 679 _______ ________ Cash and cash equivalents at end of period $ 5,485 $ 7,591 _______ ________ See accompanying notes.
The accompanying unaudited financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all of the disclosures normally required by accounting principles generally accepted in the United States. All adjustments which are, in the opinion of management, necessary to a fair statementpresentation of the results for the interim periods have been made. All such adjustments are of a normal recurring nature. The results for the interim periods are not necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in Luby's annual reportAnnual Report on Form 10-K for the year ended August 31, 2001.28, 2002. The accounting policies used in preparing these consolidated financial statements are the same as those described in Luby's annual reportAnnual Report on Form 10-K.
Certain fiscal 2001 balances have been reclassified to conform with the fiscal
2002 presentation.
Note 2: ACCOUNTING-PERIOD CHANGE
2. Accounting Period Change
Beginning with the 2002 fiscal year, the Company changed its accounting intervals from 12 calendar months to 13 four-week periods. To properly accommodate this change, the first period in fiscal 2002 began September 1, 2001, and covered 26 days; subsequent periods covercovered 28 days. The first, second, third, and fourth quarters of fiscal year 2002 includeincluded 82, 84, 84, and 112 days, respectively. Fiscal year 2002 is therefore 362 days in length compared to 365
days in fiscal year 2001. Fiscal year 2003 and most years going forward will be 364 days in length.
length, comparatively with the first quarter covering 84 days.
Note 3: SHORT-TERM INVESTMENTS
3. Short-Term Investments
The Company maintained aCompany's balance of $20.6in short-term investments was $21.6 million and $20.0$24.1 million in short-
term investments as of May 8,November 20, 2002, and August 31, 2001,28, 2002, respectively. This cash is invested in money-market funds.
funds and time deposits.
Note 4: PROPERTY, PLANT, AND EQUIPMENT
4. Income Tax
Following is a summarization of deferred income tax assets and liabilities as of the current quarter and the prior fiscal year:
November 20, | August 28, | ||||||||||||||||
2002 | 2002 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Net deferred long-term income tax liability | $ | (5,432 | ) | $ | (5,460 | ) | |||||||||||
Less: other credits | 1,625 | 1,653 | |||||||||||||||
Net deferred long-term income tax liability | (3,807 | ) | (3,807 | ) | |||||||||||||
Net deferred short-term income tax asset | 2,726 | 2,726 | |||||||||||||||
Net deferred income tax liability | $ | (1,081 | ) | $ | (1,081 | ) | |||||||||||
The tax effect of temporary differences results in the following deferred income tax assets and liabilities as of the current quarter and the prior fiscal year:
November 20, | August 28, | |||||||||||||||
2002 | 2002 | |||||||||||||||
(In thousands) | ||||||||||||||||
Deferred tax assets: | ||||||||||||||||
Workers' compensation, employee injury, and | $ | 3,437 | $ | 3,501 | ||||||||||||
Deferred compensation | 1,953 | 1,806 | ||||||||||||||
Asset impairments and restaurant closure reserves | 17,726 | 19,243 | ||||||||||||||
Other | 231 | -- | ||||||||||||||
Subtotal | 23,347 | 24,550 | ||||||||||||||
Valuation allowance | (1,026 | ) | -- | |||||||||||||
Total deferred tax assets | 22,321 | 24,550 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Depreciation and amortization, including | 23,402 | 23,650 | ||||||||||||||
Other | -- | 1,981 | ||||||||||||||
Total deferred tax liabilities | 23,402 | 25,631 | ||||||||||||||
Net deferred tax liability | $ | (1,081 | ) | $ | (1,081 | ) | ||||||||||
The reconciliation of the benefit for income taxes to the expected income tax benefit computed using the statutory tax rate is as follows:
November 20, | November 21, | |||||||||||||||||||||
2002 | 2003 | |||||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||||
(In thousands and as a percent of pretax income) | ||||||||||||||||||||||
Normally expected income tax | ||||||||||||||||||||||
benefit | $ | (1,085 | ) | (35.0 | )% | $ | (2,811 | ) | (35.0 | )% | ||||||||||||
State income taxes | -- | -- | -- | -- | ||||||||||||||||||
Jobs tax credits | (50 | ) | (1.6 | ) | (95 | ) | (1.2 | ) | ||||||||||||||
Other differences | 109 | 3.5 | 219 | 2.7 | ||||||||||||||||||
Valuation allowance | 1,026 | 33.1 | -- | -- | ||||||||||||||||||
-- | -- | % | $ | (2,687 | ) | (33.5 | )% | |||||||||||||||
The Company generated an operating loss carryforward of approximately $6.0 million for the quarter ended November 20, 2002. The tax benefit for book purposes of $1.0 million was netted against a valuation allowance because loss carrybacks will be exhausted with the fiscal 2002 tax filing and because the timing of loss carryforward utilization is not certain.
Note 5. Property, Plant, and Equipment
The cost and accumulated depreciation of property, plant, and equipment at May 8,November 20, 2002, and August 31, 2001,28, 2002, together with the related estimated useful lives used in computing depreciation and amortization, are reflected below:
May 8, August 31, Estimated
2002 2001 Useful Lives
_________ _________ ____________
(In thousands)
Land $ 73,664 $ 79,977 -
Restaurant equipment and
furnishings 136,427 135,670 3 to 15 years
Buildings 236,556 236,091 20 to 40 years
Leasehold and leasehold
improvements 33,009 35,582 Term of leases
Office furniture and equipment 11,978 11,486 5 to 10 years
Transportation equipment 897 937 5 years
Construction in progress - 289 -
________ ________
492,531 500,032
Less accumulated depreciation
and amortization 200,285 194,852
________ ________
$292,246 $305,180
________ ________
were as follows:
November 20, | August 28, | Estimated | ||||||||||||||||||||||
2002 | 2002 | Useful Lives | ||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Land | $ | 73,664 | $ | 73,664 | ─ | |||||||||||||||||||
Restaurant equipment and furnishings | 139,981 | 138,846 | 3 to 15 years | |||||||||||||||||||||
Buildings | 237,094 | 236,806 | 20 to 40 years | |||||||||||||||||||||
Leasehold and leasehold improvements | 31,768 | 33,107 | Term of leases | |||||||||||||||||||||
Office furniture and equipment | 12,424 | 12,330 | 5 to 10 years | |||||||||||||||||||||
Transportation equipment | 777 | 811 | 5 years | |||||||||||||||||||||
Construction in progress | 11 | ─ | ─ | |||||||||||||||||||||
495,719 | 495,564 | |||||||||||||||||||||||
Less accumulated depreciation and | 207,221 | 205,597 | ||||||||||||||||||||||
$ | 288,498 | $ | 289,967 |
| ||||||||||||||||||||
Note 5: INSURANCE
In the summer of 2001, the Company initiated an accident-prevention program
designed to increase employee and guest safety. Shortly thereafter, to enhance
the program and to better control costs, the Company began managing new claims
in-house.
The Company obtains reserve estimates from key members of its risk management
department. These employees manage and review detailed information associated
with each claim. In addition, actuarial analysts review reserve estimates on
the claims. The analysts use actuarial techniques, including those focused on
historical claims, to arrive at their estimates. Consistent with prior
practice, the Company regularly reviews its recorded liability balance to
ensure that it falls within the range of estimates of the Company's risk
management staff and that of the actuarial analysts.
The expenses for workers' compensation and general liability are estimated
based on all known claims information. For the first three quarters of fiscal
2002, both the actuarial analysts and the Company's risk management staff
concluded that employee and guest injury claims under the new program are
occurring at a much lower level than those experienced in the first three
quarters of fiscal 2001.
Workers' Compensation Expense
___________________________________________________________________________
Period Ended
May 8, May 31, Decrease
2002 2001 (Increase)
______ _______ __________
(In thousands)
3rd quarter $ 545 $2,887 $2,342
______ ______ ______
Year to date $4,123 $7,379 $3,256
______ ______ ______
Actual claims settlements and expenses may differ from interim loss provisions.
The Company cannot make any assurances as to the ultimate level of claims under
the new in-house safety program or whether declines in incidence of claims as
well as claims costs experienced year to date in fiscal 2002 will continue in
future periods.
Note 6: DEBT
SENIOR DEBT
6. Debt
Senior Debt
At August 31, 2001,28, 2002, the Company had a credit facility balance of $122$118.4 million with a syndicate of four banks. Weakened demand and increased recessionary
trends following September 11, 2001, resulted in the Company's inability to
meet its first quarterly EBITDA covenant for fiscal year 2002. Accordingly,
the Company obtained a waiver and amendment to its credit agreement dated
December 5, 2001, which waived its noncomplianceIn accordance with first-quarter EBITDA
requirements, reset the EBITDA requirement to $16.6 million for fiscal 2002,
and limited capital expenditures for the year to $15 million. Per the amended
credit agreement, EBITDA is defined as operating income before interest, taxes,
depreciation, amortization, and the noncash portion of Harris J. Pappas's and
Christopher J. Pappas's stock option compensation. (See Note 9.) The Company
expects to be in compliance with its revised covenants for the remainder of
fiscal year 2002.
Three payments were made to date in fiscal 2002 which reduced the balanceprovisions of the credit facility, to $120.9 million. These payments were made in compliance
with the amended credit agreement, which requires that the Company paypaid the facilityoutstanding balance down in amounts equal to allby $4.9 million from proceeds received from the sale of real and personal property. The payments wereAs a result, the balance was lowered to $113.5 million at the end of three landthe first quarter of fiscal 2003. The interest rate was prime plus 1.5% at both November 20, 2002, and August 28, 2002.
Under previous agreement terms, the Company was required to meet certain EBITDA levels. EBITDA is defined in the credit agreement as earnings before interest, taxes, depreciation, amortization, and noncash executive compensation. The annual EBITDA requirement was met for fiscal year 2002. However, the Company fell short of its 2002 fourth quarter EBITDA requirement. Effective November 25, 2002, management obtained a waiver for the fourth-quarter and an amendment to the debt agreement. The amendment extended the debt's maturity to October 31, 2004, and increased the applicable interest rate from prime plus 1.5% to prime plus 2.5%. Additionally, the financial covenant was changed from quarterly and annual EBITDA measurements to one that assesses liquidity and future debt service. Management believes the new covenant is achievable and considers it to be more appropriate for the collateralized credit facility.
Meanwhile, the Company executed a commitment letter with another financial entity for an $80 million loan. Its purpose is to replace that amount of debt in the existing credit facility. Thus, the amendment discussed above requires that the entire proceeds from the other financial entity be used to pay down the credit facility. In the event the Company is unable to make the $80 million payment as currently planned, the amended loan would be in default. The existing lenders would then have the right to exercise any and all remedies, including the right to demand immediate repayment of the entire outstanding balance or the right to pursue foreclosure on the assets pledged as collateral. As of November 20, 2002, $241.6 million of the Company's total book value, or 72.0% of its total assets, including the Company's owned real estate, improvements, equipment, and fixtures, was pledged as collateral under the credit facility.
The nonbinding commitment letter with the new lender is subject to conditions the Company must satisfy before the actual financing can occur. Management is currently working toward satisfying those conditions and has high confidence that the transaction will be completed and the financing closed by January 31, 2003.
The Company also could pursue other options if its current refinancing plans cannot be finalized. Those options include financing through high-yield debt at higher than commercial rates or conducting additional equity security sales totaling
$1.1 million.
SUBORDINATED DEBT
through public or private offerings. Dilution to existing shareholders would result in the case of equity security sales.
Assuming the $80 million is financed with a third party, the amended facility also mentions two principal payments. The first is a target of $15 million that is to be paid by January 31, 2003, from either proceeds from the sale of property or operating cash flow. A total paydown of less than $15 million would result in a 1% increase in the applicable interest rate from prime plus 2.5% to prime plus 3.5%. The second payment, from property sales or operating cash flow, is an additional $10 million by September 1, 2003. Again, total payments of less than $10 million would result in another 1% increase in the applicable interest rate.
The credit facility includes a provision for the issuance of letters of credit in the amount of $1,184,000 and allows the Company to acquire additional letters of credit in the ordinary course of business.
Subordinated Debt
On March 9, 2001, the Company's newly appointed CEO and COO, Christopher J. Pappas and Harris J. Pappas, respectively, made commitmentscommitted to loanloaning the Company a total of $10 million in exchange for convertible subordinated notes that were funded in the fourth quarter of fiscal 2001. The notes, as formally executed, bear interest at LIBOR
(London InterBank Offered Rate) plus 2%, payable quarterly, and have a stated redemption date of March 1, 2011. Interest through September 1, 2003, may be paid in a combination of cash, common stock, or both at the Company's election, subject to certain restrictions on the amount of stock issued. All interest to date has been paid in cash. Interest incurred after September 1, 2003, must be paid in cash.
Notwithstanding any accrued interest that may also be converted to stock, the notes are convertible into the Company's common stock at $5.00 per share for 2,000,0002.0 million shares at the option of the holders at any time after January 2, 2003, and prior to the stated redemption date. The market price of the Company's stock on the commitment date (as determined by the closing price on the New York Stock Exchange on the date of issue) was $7.34. The difference between the market price and strike price of $5.00, or $2.34 per share, multiplied by the 2,000,0002.0 million convertible shares equalsequaled approximately $4.7 million. ApplicableUnder the Company's adopted intrinsic value method, applicable accounting principles require that this amount, which represents the intrinsic value of the beneficial conversion feature, be recorded as both a component of paid-in capital and a discount from the $10 million.
The conversion feature is being amortized over the term of the notes. The carrying value of the notes at August 31, 2001,28, 2002, net of the unamortized discount, was approximately $5.4$5.9 million. The comparative carrying value of the notes at May 8,November 20, 2002, was approximately $5.7$6.0 million.
The discount
Note 7. Impairment of $4.7 million is being amortized to interest expense over a
period of ten years. The Company has amortized $334,000 of this discount
during the fiscal year to date ended May 8, 2002. The amortization of the note
discount to date is as follows:
Balance of Convertible Subordinated Notes
_________________________________________
Original Discount
Period-End Balance Balance Net Balance
_______________________________________________________________________________
(In thousands)
As of June 29, 2001 $10,000 $(4,680) $5,320
As of August 31, 2001 10,000 (4,599) 5,401
As of May 8, 2002 10,000 (4,265) 5,735
EFFECT OF CONVERTIBLE NOTES AND OTHER SECURITIES ON EARNINGS PER SHARE
Potentially dilutive securities, which include the convertible subordinated
notesLong-Lived Assets and stock options, are antidilutive in loss periods. As the Company had
a net loss for the quarter and year to date, earnings per share assuming
dilution equals basic earnings per share.
Note 7: IMPAIRMENT OF LONG-LIVED ASSETS AND RESTAURANT CLOSINGS
Store Closings
Policy
In accordance with Company guidelines and its adoption of Financial Accounting Standards Board Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," management periodically reviews the financial performance of each restaurant for indicators of impairment or indicators that closure would be appropriate. Where indicators are present, such as three full fiscal years of negative cash flows or other unfavorable market conditions, the carrying values of assets are written down to the estimated future discounted cash flows or fully written off in the case of negative cash flows anticipated in the future. Estimated future cash flows are based upon regression analyses generated from similar Company restaurants, discounted at the Company's weighted-average cost of capital. No restaurants have been impaired during the first quarter of fiscal 2002.2003.
Restaurant Impairments and Closings
Impairment costs in the first quarter of fiscal 2003 comprised a credit of $163,000 related to changes in the expected value of property held for sale. In no case were assets written above original impaired values. The Company did close
one restaurant not previously designated for closure. The net quarterly
provision for asset impairment and restaurant closings includesrelated properties are under contracts to be sold, with expected closing dates scheduled within the loss
associated with closingnext 90 days.
During the restaurant offset by the charge reversals for two
lease settlements that were slightly more favorable than originally
anticipated.
Duringfirst quarter of fiscal 2001,2002, the Company recorded a pretax charge to operating costs of $130,000 related to employee termination costs for 11 of 17 restaurants that met the Company's criteria for closure in fiscal 2001. The employees of those 11 units received notification during the first quarter of fiscal 2002, and each unit was subsequently closed.
In 2002 and 2001, the Company recorded a charge to operating costs of $314,000 and $30.4 million, as a
result of its reviewsrespectively, for impairments in accordance with SFAS 121asset impairment and assessments ofstore closure costs. The principal components of the fiscal 2001 charge were as follows:
RESTAURANTS DESIGNATED FOR CLOSURE
Restaurants Designated for Closure - Charges of $11.6 million were incurred for the closing of 15 underperforming restaurants; subsequently, a totalrestaurants, two of 12 were closed during the first three
quarters of fiscal year 2002. (As explained below, two other restaurants were
closed for remodel and conversion to new concepts.)which are still operating. This charge included the cost to write down the properties and equipment to net realizable value and estimated costs for the settlement of lease obligations, legal and professional fees, and other exit costs. Employee severance costs were not accrued as of August 31, 2001, but were paid out and primarily expensed in the period of closure. As of May 8, 2002, approximately 531 employees have been terminated
due(As explained below, two other restaurants were closed for remodel and conversion to restaurant closings since September 1, 2001.
IMPAIRED RESTAURANTSnew concepts.)
Impaired Restaurants - Charges of $17.0 million were incurred for asset impairment of 13 restaurants, thatten of which the Company continues to operate. In accordance with SFAS 121, the properties were written down to the estimated future discounted cash flows or fully written off in the case of negative future cash flows.
PROPERTY UNDER DISSOLVED JOINT VENTURE
Property Under Dissolved Joint Venture - Charges of $0.8$.8 million were incurred primarily for the impairment of one property operated under a joint venture with Waterstreet, Inc. The joint venture, L&W Seafood, Inc., was terminated in 1999. However, the property used by the joint venture was retained for a time to evaluate its potential use. This location remained vacant for over a year, after which time the Company decided against retaining it. This property was written down to its estimated net realizable value and was sold in fiscal year 2001.
NEW CONCEPTS
New Concepts - Charges of $1.0 million were associated with the write-off of assets for two locations that were slated for remodel and conversion to new concepts before the end of fiscal year 2002. The Company closed both units by October 31, 2001. Property that could not be salvaged, transferred, or effectively reused was written off. One of the two locations was reopened as a seafood restaurant in the second quarter of fiscal 2002. OPERATING RESULTS FOR RESTAURANTS DESIGNATED FOR CLOSURE
Plans for the second conversion are still in progress.
Operating Results for Restaurants Designated for Closure
The comparative quarterly and year-to-date results of operations for the 15 restaurants designated for closure, at August 31, 2001,two of which the Company continues to operate, were as follows:
Quarter Ended Three Quarters Ended
May 8, May 31, May 8, May 31,
2002 2001 2002 2001
________ ________ ________ ________
(84 days) (92 days) (250 days) (273 days)
(In thousands)
Sales $1,114 $5,069 $5,508 $14,840
Operating loss (674) (1,103) (2,667) (2,860)
RESERVE FOR RESTAURANT CLOSINGS
All material cash outlays associated with prior closure plans were completed by
August 31, 2001. Under the current plan, the
Quarter Ended | |||||||||
November 20, | November 21, | ||||||||
2002 | 2001 | ||||||||
(84 days) | (82 days) | ||||||||
(In thousands) | |||||||||
Sales | $ | 658 | $ | 2,848 | |||||
Operating loss | (470 | ) | (1,317 | ) | |||||
Reserve for Restaurant Closings
The Company had a reserve for restaurant closings of $3.2$3.1 million at May 8,both November 20, 2002, and August 28, 2002. Excluding lease termination settlements, it is anticipated that all material cash outlays required for the restaurantstore closings planned as of August 31, 2001, will be made prior to August 31, 2002.the end of fiscal 2003. The following is a summary offor the types andquarterly period ended November 20, 2002 for amounts recognized as restaurant-closure costsaccrued expenses together with cash payments made against such accruals under the fiscal year 2001 plan through the period ended May 8, 2002:
Reserve Balance
______________________________________________________
Lease Legalplan:
Reserve Balance | |||||||||||||||||||
Lease | Legal and |
|
|
| |||||||||||||||
(In thousands) | |||||||||||||||||||
As of August 28, 2002 | $ | 2,977 | $ | -- | $ | -- | $ | 137 | $ | 3,114 | |||||||||
Additions (reductions) | -- | -- | -- | -- | -- | ||||||||||||||
Cash payments | -- | -- | -- | (56 | ) | (56 | ) | ||||||||||||
As of November 20, 2002 | $ | 2,977 | $ | -- | $ | -- | $ | 81 | $ | 3,058 | |||||||||
Note 8. Commitments and Other
Settlement Professional Workforce Exit Total
Costs Fees Severance Costs Reserve
_______________________________________________________
(In thousands)
As of August 31, 2001 $4,206 $ - $ - $ 300 $ 4,506
Cash receipts (payments) (856) - (130) (126) (1,112)
Other additions
(reductions) (373) - 130 - (243)
______ ____ ____ ____ ______
As of May 8, 2002 $2,977 $ - $ - $174 $3,151
______ ____ ____ ____ ______
Note 8: COMMITMENTS AND CONTINGENCIES
OFFICER LOANS
Contingencies
Officer Loans
In fiscal 1999, the Company guaranteed loans of approximately $1.9 million relating to purchases of Company stock by various officers of the Company. Under the officer loan program, shares were purchased and funding was obtained from JPMorgan Chase Bank. As of May 8,November 20, 2002, the notes, which mature in fiscal 2004, have an outstanding balance of approximately $1.6 million. In the event of
possible default, the Company would purchase the loans from JPMorgan Chase Bank, become holder of the notes, record the receivables, and pursue collection in the event that note requirements are not met. The purchased Company stock has been and can be used by borrowers to satisfy a portion of their loan obligation. As of May 8,November 20, 2002, based on the market price on that day, approximately $712,000,$426,000, or 44%26.4% of the note balances, could have been covered by stock, while approximately $902,000,$1.2 million, or 56%73.6%, would have remained outstanding.
PENDING CLAIMS AND LAWSUITS
Pending Claims
Two former restaurant assistant managers have filed suit in federal district court alleging violations of the Fair Labor Standards Act and the commission of certain fraudulent acts by the Company. The plaintiffs also seek authorization to represent a class of all assistant managers employed by the Company throughout the United States who they claim, on information and belief, are similarly without the requisite job duties and responsibilities to be considered exempt from the overtime requirements of the Fair Labor Standards Act. The Company has asserted that no class is appropriate, that plaintiffs were exempt from the right to overtime compensation under the Fair Labor Standards Act under the white collar exemptions, and has denied any misrepresentations. The complaint does not specify the total amount of damages being sought. The court denied plaintiffs' request to certify a nationwide class, and instead certified a class consisting of assist ant managers that worked in the Memphis, Tennessee, area from August 1999 to July 2002. The plaintiffs are still seeking to expand the class beyond Memphis. The Company believes that the allegations are unfounded and intends to continue to diligently contest the claims of the plaintiffs.
The Company is presently, and from time to time, subject to pending claims and lawsuits arising in the ordinary course of business. In the opinion of management, other than the litigation described above, the outcome of which is not yet determined, the resolution of theseall other pending legal proceedings will not have a material adverse effect on the Company's operations or consolidated financial position.
Note 9: DEFERRED COMPENSATION9. Deferred Compensation - EXECUTIVE STOCK OPTIONS
Executive Stock Options
In connection with their employment agreements effective March 9, 2001, the CEO and the COO were granted a total of approximately 2.2 million stock options.options at a strike price of $5.00 per share, which was below the quoted market price on the date of grant. From that date through fiscal 2004, the Company will recognize a total of $5.2 million in noncash compensation expense associated with these options. A total of $905,000$302,000 was recognized for the first three quartersquarter of fiscal 2002, while
cumulatively for fiscal 2001 and 2002, $2.82003. Of the $5.2 million to be recognized, $3.5 million has been recognized to date.
date, while $1.7 million remains to be amortized.
Note 10: DERIVATIVE FINANCIAL INSTRUMENTS
The Company adopted Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments10. Related Parties
Profit Sharing and Hedging Activities," and its
amendments, Statements No. 137 and 138, on September 1, 2000. SFAS 133
requires that all derivative instruments be recorded on the balance sheet at
fair value. Pursuant to this standard, the Company designated its Interest
Rate Protection Agreements (Swaps) as cash flow hedge instruments. Swaps
have been used to manage exposure to interest rate movement by effectively
changing the variable rate to a fixed rate. The critical terms of the Swaps
and the interest-bearing debt associated with the Swaps were the same;
therefore, the Company assumed that there was no ineffectiveness in the hedge
relationship. Changes in fair value of the Swaps are recognized in other
comprehensive income (loss), net of tax effects, until the hedged items are
recognized in earnings. Due to declining interest rates and in anticipation of
additional future unfavorable interest rate changes, the Company terminated the
Swaps on July 2, 2001, for a cash payment of $1.3 million, including accrued
interest of $163,000.
In accordance with SFAS 133, the loss of $1.1 million is being recognized as
interest expense over the original term of the Swaps (through June 30, 2002).
At May 8, 2002, $108,000, net of taxes of $58,000, remains in accumulated other
comprehensive loss.
Note 11: COMPREHENSIVE INCOME (LOSS)
The Company's comprehensive income (loss) is comprised of net income (loss) and
adjustments to derivative financial instruments. The components of
comprehensive income (loss) are as follows:
Quarter Ended
May 8, May 31,
2002 2001
____________ ____________
(84 days) (92 days)
(In thousands)
Net income (loss) $ (174) $ (1,066)
Other comprehensive income, net of taxes:
Net derivative income (loss), net of taxes
of $123 - (228)
Reclassification adjustment for gains included
in net income (loss), net of taxes of $51 - 95
Reclassification adjustment for loss recognized on
termination of interest rate swaps, net of taxes
of $87 161 -
________ ________
Comprehensive income (loss) $ (13) $ (1,199)
_______ _______
Three Quarters Ended
May 8, May 31,
2002 2001
__________ __________
(250 days) (273 days)
(In thousands)
Net income (loss) $(7,681) $(12,498)
Other comprehensive income, net of taxes:
Cumulative effect of a change in accounting
for derivative financial instruments upon
adoption of SFAS 133, net of taxes of $61 - 114
Net derivative income (loss), net of taxes of $528 - (981)
Reclassification adjustment for gains included in
net income (loss), net of taxes of $50 - 93
Reclassification adjustment for loss recognized
on termination of interest rate swaps, net of
taxes of $261 484 -
_______ ________
Comprehensive income (loss) $(7,197) $(13,272)
_______ ________
Note 12: RELATED PARTIES
PROFIT SHARING AND RETIREMENT TRUST PLAN INVESTMENT ADVISORS
A director of the Company, Ronald K. Calgaard, is also a director of Retirement Trust Plan Investment Advisors
Austin, Calvert & Flavin, Inc., is a firm that provides investment services for the Company's profit sharing and retirement trust plan (the Plan). Effective October 25, 2002, Ronald K. Calgaard, a director of Austin, Calvert & Flavin, Inc., resigned from his position as a member of Luby's Board of Directors. Mr. Calgaard had previously resigned his position as Chairman of the Finance and Audit Committee of Luby's Board on September 23, 2002.
The PlanCompany currently uses the services of four investment advisors. Duringadvisors for the three
quarters ended May 8, 2002, thePlan. The Plan paid Austin, Calvert & Flavin, Inc. a
totalapproximately $12,000 and $15,000 in the first quarter of approximately $46,000.
AFFILIATE SERVICES AGREEMENT
fiscal 2003 and fiscal 2002, respectively.
Affiliate Services
The CEO and COO of the Company, Christopher J. Pappas and Harris J. Pappas, respectively, own atwo restaurant companyentities that providesprovide services to Luby's, Inc. as detailed in anthe Affiliate Services Agreement and the Master Sales Agreement. Under the terms of that
agreement, the restaurant company hasagreements, the Pappas entities have provided specialized (customized) equipment fabrication; basic equipment maintenance; and accounting, architectural, and general business services; basicservices. More specifically, the Master Sales Agreement includes the costs incurred for modifications to existing equipment, maintenance; specializedas well as custom-fabrication, including stainless steel stoves, shelving, rolling carts, and chef tables. The total cost of the custom-fabricated and refurbished equipment fabrication; and warehouse leasing. The scope and pricingfor the first quarter of services renderedfiscal 2003 was $47,000. All amounts charged under the Affiliate Services Agreement are reviewed periodically by theagreements have been paid.
The Finance and Audit Committee of the Company's Board. The CommitteeBoard of Directors also uses the services of
the Company's external auditors and independent valuation consultants to monitorassist in periodically monitoring pricing of the transactions associated with the agreementMaster Sales Agreement and the Affiliate Services Agreement. The Company's external auditors performed agreed upon procedures related to the affiliate services. The scope and sufficiency of such procedures are determined by management and the Board of Directors, and results are submitted to the Board for fairness.
As partits use in evaluating the fairness of thisthe transactions.
Operating Leases
In a separate contract from the Affiliate Services Agreement and the Master Sales Agreement, the Company entered into a three-
yearthree-year lease which commenced on June 1, 2001, and ends May 31, 2004. The leased property is used to accommodate the Company's own in-house repair and fabrication center. The amount paid by the Company pursuant to the terms of this lease was approximately $60,000$20,000 for the three quartersquarter ended May 8,November 20, 2002. The agreement also includes
the costs incurred for modifications to existing equipment, as well as custom-
fabrication, including stainless steel stoves, shelving, rolling carts, and
chef tables. The total cost of these services for fiscal 2002 year to date was
$461,000. The Company is currently reviewing the Affiliate Services Agreement
to address revisions that may be appropriate given the declining level and
scope of services being provided. All amounts charged under the Affiliate
Services Agreement have been paid except for the most recent professional and
consulting fees of approximately $3,000.
OPERATING LEASE
In aanother separate contract, from the Affiliate Services Agreement, pursuant to the terms of a ground lease dated March 25, 1994, the Company paid rent to PHCG Investments for a Luby's restaurant operating in Dallas, Texas. Christopher J. Pappas and Harris J. Pappas are general partners of PHCG Investments. The amount paid by the Company to PHCG Investments pursuant to the terms of the lease agreement during the fiscal year 2003 to date was approximately $63,000.$21,000. Rents paid for both the ground lease and the Affiliate Services Agreement leaseleases combined represent 2.2%2.4% of total rents paid by the Company for the three
quartersquarter ended May 8,November 20, 2002. SUBORDINATED DEBT
Relative to the PHCG Investments lease, the Company recently entered into a termination agreement with a third party unaffiliated with the Pappas entities to sever its interest in the PHCG property in exchange for a payment of cash, the right to remove fixtures and equipment from the premises, and the release of any future obligations under the lease agreement now owned by PHCG Investments. The closing of the transaction is conditioned upon the third party acquiring fee simple title to the property from PHCG Investments.
Subordinated Debt
As described in Note 6 in the section entitled "Subordinated Debt," the CEO and the COO loaned the Company a total of $10 million in the form of convertible subordinated notes to support the Company's future operating cash needs. The entire balance was outstanding as of May 8,November 20, 2002.
BOARD OF DIRECTORS
Board of Directors
Pursuant to the terms of a separate Purchase Agreement dated March 9, 2001, entered into by and among the Company, Christopher J. Pappas and Harris J. Pappas, the Company agreed to submit three persons designated by Christopher J.
Pappas and Harris J.Messrs. Pappas as nominees for election for directors. Messrs.
PappasThey designated themselves and Frank Markantonis as their nominees for directors, all of whom were subsequently elected. Christopher J. Pappas and Harris J. Pappas are brothers. As disclosed in the proxy statement for the January 11, 2002,31, 2003, annual meeting of shareholders, Frank Markantonis is an attorney whose principal client is Pappas Restaurants, Inc., an entity owned by Harris J. Pappas and Christopher J. Pappas.
KEY MANAGEMENT PERSONNEL
Key Management Personnel
Ernest Pekmezaris, the Chief Financial Officer of the Company, is also the Treasurer of Pappas Restaurants, Inc. Compensation for the services provided by Mr. Pekmezaris to Pappas Restaurants, Inc. is paid entirely by that entity.
Peter Tropoli, the Senior Vice President-Administration of the Company, is an attorney who, from time to time, has provided litigation services to entities controlled by Christopher J. Pappas and Harris J. Pappas. Mr. Tropoli is the stepson of Frank Markantonis, who, as previously mentioned, is a director of the Company.
Paulette Gerukos, Administration Assistant of the Human Resources Department of the Company, is the sister-in-law of Harris J. Pappas, the Chief Operating Officer.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and footnotes for the quarter ended May 8,November 20, 2002, and the audited financial statements filed on Form 10-K for the fiscal year ended August 31,
2001.
OVERVIEW
28, 2002.
Overview
As of May 8,November 20, 2002, Luby's, Inc.the Company operated 193 restaurants under the name "Luby's." These establishments are located in close proximity to retail centers, business developments, and residential areas throughout ten states (six in Arizona, five in Arkansas, one in Florida, two in Louisiana, two in Mississippi, two in Missouri, two in New Mexico, seven in Oklahoma, seven in Tennessee, and 159 in Texas). Of the 193 restaurants, 124 are at locations owned by the Company and operated 19869 are on leased premises. Additionally, one of the restaurants located
primarily serves seafood, one is a steak buffet, 28 are all-you-can-eat concepts, and 163 are traditional cafeterias.
RESULTS OF OPERATIONS
Quarter ended November 20, 2002, compared to the quarter ended November 21, 2001
Sales decreased $7.0 million, or 7.3%, in the southernfirst quarter of fiscal 2003 compared to the first quarter of fiscal 2002. Of the total decline, $4.3 million was due to the closure of 22 restaurants since August 31, 2001, and southwestern United States. The Company provides
its customers with$4.6 million was due to a wide variety5.1% decrease in same-store sales. These contributors to the total decline were offset by the positive impact of freshly cooked foods at reasonable prices
in an attractivetwo additional days of sales of $1.9 million.
Cost of food increased $369,000, or 1.5%, and informal environment. The Company's primary competitors
include family-style and casual-dining restaurants, buffets, cafeterias, and
quick-service restaurantsas a percentage of sales increased from 25.9% to 28.4% in the home-meal-replacement category.
13-PERIOD YEAR
Thecurrent quarter in comparison with the same period last year. Various "manager's special" promotions coupled with new "all-you-can-eat" offerings at selected locations have contributed to higher food costs.
Payroll and related costs decreased $6.9 million, or 20.0%, due primarily to restaurant closures, various Company modifiedinitiatives to reduce labor costs, and lower workers' compensation expense in the current quarter. Of the total reduction, $5.0 million was due to lower wages resulting from numerous store closures coupled with various Company initiatives to reduce labor costs. An additional $1.5 million of the total decline was due to lower workers' compensation costs resulting from the new in-house training and safety programs.
Occupancy and other operating expenses decreased $2.0 million, or 5.5%. Although the dollar decrease is primarily due to store closures, other factors contributed to the fluctuation. Utility costs decreased principally due to lower commodity prices. Repairs and maintenance costs decreased primarily due to more efficiencies from the Company's in-house repair program as provided by its accounting fiscal year from one separated into 12
calendar monthsin-house service center. Food-to-go packaging costs further declined due to one separated into 13, 28-day intervals. Although this
change generates notable timing differences when comparing the currentless expensive packaging and a program to redirect these customers at many locations to inside dining.
General and administrative expenses were approximately equal to the prior fiscal year, financial results on an annual basis should be substantially
unaffected. with only a slight increase of $19,000, or .4%. Small variances exist among these expenses which, when taken as a whole, are not significant.
The primary purposeprovision for this changeasset impairments and restaurant closings was credited $163,000 for the quarter ended November 20, 2002, relative to providenew and pending property sales contracts that were more consistent
timing and comparabilityfavorable than previously obtained appraisals. Costs in the future.
RESULTS OF OPERATIONS
first quarter of fiscal 2002 were $130,000, which related to employee terminations.
Interest expense decreased $566,000, or 22.0%, due primarily to lower effective interest rates on outstanding debt, the payoff of the loans on surrendered officers' life insurance policies, fully exhausted amortization of the loss of interest rate swaps, and payment reductions in the line of credit. These factors were offset by amortization of amendment fees for the credit facility.
Other income increased by $2.5 million primarily due to gains on the sales of assets, which reflect the sale of two previously closed stores.
The income tax benefit decreased by $2.7 million. While loss carrybacks are no longer available, the Company could use certain existing assets in a tax strategy that would support the recording of an estimated tax benefit in the current quarter. However, one was not recorded because the timing of loss carryforward utilization is not certain.
The Company had a reserve for restaurant closings of $3.1 million both at November 20, 2002, and August 28, 2002. Excluding lease termination settlements, it is anticipated that all material cash outlays required for the store closings planned as of August 31, 2001, will be made prior to the end of fiscal 2003.
EBITDA
EBITDA, excluding noncash stock compensation, increased by $1.7 million for the current quarter in comparison with the same quarter of the prior fiscal year.
Quarter Ended | |||||||||||||||||||||
November 20, | November 21, | ||||||||||||||||||||
2002 | 2001 | ||||||||||||||||||||
(84 days) | (82 days) | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Income (loss) from operations | $ | (4,039 | ) | $ | (5,910 | ) | |||||||||||||||
Less excluded items: | |||||||||||||||||||||
Provision for asset impairments and restaurant closings | (163 | ) | 130 | ||||||||||||||||||
Depreciation and amortization | 5,011 | 4,942 | |||||||||||||||||||
Noncash executive compensation expense | 302 | 297 | |||||||||||||||||||
EBITDA | $ | 1,111 | $ | (541 | ) | ||||||||||||||||
The Company's operating performance of the Company is evaluated using several measures, one of which is EBITDA. Per the Company's amended credit agreement,The Company defines EBITDA is
defined as operating income from operations before interest, taxes, depreciation, amortization, and the noncash portion of Harris J. Pappas'sthe CEO's and Christopher J. Pappas'sthe COO's stock option compensation. While the Company and many in the financial community consider EBITDA to be an important measure of operating performance, it should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States, such as operating income and net income. In addition, the Company's definition of EBITDA is not necessarily comparable to similarly titled measures reported by other companies.
QUARTER ENDED MAY 8, 2002, COMPARED TO THE QUARTER ENDED MAY 31, 2001
Sales decreased $28.6 million, or 23.5%, in the third quarter of fiscal 2002
compared to the third quarter of fiscal 2001. Eight fewer days in the current
quarter accounted for approximately $9.1 million of the total sales decline.
Revenues were also $5.5 million lower due to the closure of 18 restaurants
since May 31, 2001. Excluding the effect of fewer days and restaurants in this
quarter, same-store sales declined $14.0 million, or 13.2%, for the quarter.
Cost of food decreased $6.4 million, or 21.1%, due primarily to a decline in
sales significantly impacted by fewer restaurants and days. Food cost as a
percentage of sales increased slightly from 24.9% to 25.7% in the third quarter
in comparison with the same period last year. In the prior year, price
increases in that quarter affected food margins.
Payroll and related costs decreased $12.9 million, or 31.2%, due primarily to
restaurant closures, eight fewer days in the quarter, and lower workers'
compensation expense. The ratio of payroll costs to sales improved
significantly from 33.9% to 30.5% in the third quarter in comparison with the
same period last year. Of the total reduction, $2.3 million, or 18.2% of the
total decline, is due to lower workers' compensation costs under the new in-
house claims management program initiated in October 2001.
Occupancy and other operating expenses decreased $8.5 million, or 19.9%.
Although the dollar decrease is primarily due to fewer stores, other factors
contributed to the fluctuation. Utility costs also decreased due to lower
energy costs coupled with moderate temperatures and conservation. Advertising
costs declined due to reduced emphasis on print and television advertising.
Depreciation was lower due to write-offs and impairments at August 31, 2001,
while food-to-go packaging costs further declined due to the intentional
redirection at many locations to inside dining.
The provision for asset impairments and restaurant closings increased by
$128,000 due to an additional store closing, net of lease settlements that were
more favorable than anticipated. There were no charges in this category in the
same period of fiscal 2001.
General and administrative expenses decreased $1.7 million, or 26.6%, due
primarily to lower officers' compensation, officers' life insurance, customer
research charges, and professional and consulting fees. Officers' compensation
decreased principally due to a reduction in relative headcount. Officers' life
insurance decreased principally due to a one-time $216,000 benefit realized on
the surrender of officer life insurance policies during the current fiscal
year. No customer research expenditures were incurred during the current
quarter. Charges related to the proxy and restructuring advice contributed to
the higher professional costs in the prior year. Consulting fees decreased
principally due to termination of the search for new senior management and a
reduction in other consulting services.
Interest expense decreased $1.2 million, or 34.4%, due primarily to a lower
effective interest rate on outstanding debt, the payoff of the loans on
surrendered officers' life insurance policies, and eight fewer days of interest
expense in the quarter, offset by interest on the $10 million in new
subordinated debt, amortization of the loss on interest rate Swaps, and the
amortization of amendment fees for the credit facility.
Other income decreased $534,000 principally due to lower gains on sales of
properties.
The income tax benefit decreased by $491,000, or 85.5%, due primarily to a
significantly lower incurred loss in fiscal 2002 versus fiscal 2001.
EBITDA, excluding noncash stock compensation, increased by $38,000 in the third
quarter in comparison with the same period last year.
THREE QUARTERS ENDED MAY 8, 2002, COMPARED TO THE THREE QUARTERS ENDED MAY 31,
2001
Sales decreased $68.3 million, or 19.6%, for the first three quarters of fiscal
2002 compared to the first three quarters of fiscal 2001. Twenty-three fewer
days in the first three quarters of fiscal 2002 accounted for approximately
$28.6 million of the total sales decline. Revenues were also $15.6 million
lower due to the closure of 35 restaurants since August 2000. Excluding the
effect of fewer days and restaurants, same-store sales would have declined
$24.1 million, or 8.1%, for the three quarters.
Cost of food decreased $17.6 million, or 19.8%, due primarily to a decline in
sales significantly impacted by fewer restaurants and days. Food cost as a
percentage of sales improved slightly for the first three quarters of fiscal
2002 in comparison with the same period last year due to less price
discounting.
Payroll and related costs decreased $24.5 million, or 20.8%, due primarily to
restaurant closures, twenty-three fewer days in the first three quarters of
fiscal 2002, and lower workers' compensation expense. Wages as a percentage of
sales increased slightly primarily due to the first quarter of fiscal 2002,
which included September 11, 2001. Management initiatives to improve labor
scheduling are currently in place and have led to improvements in labor expense
in the second and third quarters of fiscal 2002 versus the first quarter of
fiscal 2002. This category has also declined due to lower workers'
compensation costs under the new in-house claims management program.
Occupancy and other operating expenses decreased $19.3 million, or 15.6%.
Although the dollar decrease is primarily due to fewer stores, in most cases,
other factors also contributed to the change. Utility costs also decreased due
to lower energy prices coupled with moderate temperatures and conservation.
Advertising costs declined due to a planned reduction in print and television
advertising. Depreciation was lower due to write-offs and impairments at
August 31, 2001, while food-to-go packaging costs further declined due to the
intentional redirection at many locations to inside dining.
The provision for asset impairments and restaurant closings decreased by $9.9
million, or 97.5%, primarily due to charges of $259,000 recorded to date in
fiscal 2002 associated mainly with employee termination costs in comparison
with various asset impairments totaling $10.2 million recorded in fiscal 2001.
General and administrative expenses decreased $4.0 million, or 20.7%, due
primarily to lower officers' compensation, professional and consulting fees,
and customer research charges. Officers' compensation decreased principally due
to a reduction in relative headcount. Significant expenditures related to the
proxy and restructuring advice were a contributing factor to higher
professional costs in the prior year. Consulting services decreased
principally due to termination of the search for new senior management and a
reduction in other consulting fees. No customer research expenditures were
incurred during the current quarter.
Total interest expense decreased $1.2 million, or 13.9%, due primarily to a
lower effective interest rate on outstanding debt, the payoff of the loans on
surrendered officers' life insurance policies, and twenty-three fewer days of
interest expense for the first three quarters of fiscal 2002 in comparison to
the first three quarters of fiscal 2001. These savings were partially offset
by interest on the $10 million in new subordinated debt, amortization of the
loss on interest rate Swaps, and amortization of amendment fees for the credit
facility.
Other income decreased $553,000 due primarily to lower gains on sales of
properties partially offset by a decrease in property tax late-payment
penalties and other miscellaneous costs.
The reduction in the income tax benefit of $2.8 million, or 42.1%, was due
primarily to a significantly lower incurred loss in fiscal 2002 versus fiscal
2001.
EBITDA, excluding noncash stock compensation, decreased by $4.7 million in the
first three quarters of fiscal 2002 versus the corresponding quarters of fiscal
2001. This decrease was due primarily to the loss incurred in the first
quarter of fiscal 2002, which included September 11, 2001.
LIQUIDITY AND CAPITAL RESOURCES
CASH AND WORKING CAPITAL
Cash and cash equivalents increasedWorking Capital
Cash decreased by $1.4 million from the end of the preceding fiscal year to May 8, 2002. A net improvement inNovember 20, 2002, primarily due to capital expenditures and operating cash flow and an income tax refund of $6.8 million were offset by property tax payments.
Approximately $0.4 millionneeds.
Excluding the reclassification of the $5.3 million total income tax receivablecredit facility balance as of May 8, 2002, relates to the prior fiscal year and is expected to
be refunded before the end of fiscal 2002. The remainder relates to current
year tax benefits that are also recoverableexplained in the form of refunds in the next
fiscal year due to recently enacted changes in tax legislation that will allow
for extended carrybacks of net operating losses.
The Company typically carries current liabilities in excess of current assets
because a substantial portion of cash generated from operating activities is
reinvested in capital expenditures. At May 8, 2002,Debt section below, the Company had a working capital deficit of $10.4$5.1 million at November 20, 2002, in comparison to a working capital deficit of $13.9$1.1 million at August 31, 2001.28, 2002. The lowerincrease in the deficit was primarily attributable to an increasea reduction in income tax receivable and a decrease in accrued expenses and
other liabilities; this was offset by an increase in payables.
Capital expenditures for the fiscal year to date were $8.5 million. All
capital expenditures for fiscal 2002 are being funded from cash flows from
operations and cash equivalents. As of the quarter-end, the Company owned 11
properties held for sale, including six undeveloped land sites. The Company
also has 11 properties held for future use.
short-term investments.
Capital expenditures for fiscal 20022003 are expected to approximate no more than
$15 million. The CompanyManagement continues to focus on improving the appearance, functionality, and sales at existing restaurants. These efforts also include, where feasible, remodeling certain locations to other dining concepts. One
existing property wasDuring the current quarter, the Company remodeled in the second quarter to create the Company'sand reopened a previously closed location as its first steak buffet. The new concept, Luby's Seafood, in Huntsville, Texas. Potential dining themes for the other closed restaurantsthree planned remodels in fiscal 2003 are still under consideration. LONG-TERM DEBT
As of September 1, 2001,
Senior Debt
At August 28, 2002, the Company had a credit facility balance of $122$118.4 million with a syndicate of four banks. In accordance with provisions of the credit facility, the Company paid the outstanding underbalance down by $4.9 million from proceeds received from the sale of real and personal property. As a result, the balance was lowered to $113.5 million at the end of the first quarter of fiscal 2003. The interest rate was prime plus 1.5% at both November 20, 2002, and August 28, 2002.
Under the agreement terms, the Company was required to meet certain indicated EBITDA levels. EBITDA is defined in the credit agreement as earnings before interest, taxes, depreciation, amortization, and noncash executive compensation. The annual EBITDA requirement was met for fiscal year 2002. However, the Company fell short of its fourth quarter EBITDA requirement. Effective November 25, 2002, management obtained a waiver for the fourth-quarter and an amendment to the debt agreement.
The amendment extended the debt's maturity to October 31, 2004, and increased the applicable interest rate from prime plus 1.5% to prime plus 2.5%. Additionally, the financial covenant was changed from quarterly and annual EBITDA measurements to one that assesses liquidity and future debt service. Management believes the new covenant is achievable and considers it to be more appropriate for the collateralized credit facility.
In addition, the Company executed a commitment letter with another financial entity for an $80 million loan. Its purpose is to replace that amount of debt in the existing credit facility. Thus, the amendment discussed above requires that the entire proceeds from the other financial entity be used to pay down the credit facility. Year to date for fiscal year 2002, three payments
totaling $1.1 million were made to the credit facility, which brought the
balance to $120.9 million as of May 8, 2002. There is no ability to borrow
additional funds under the credit facility.
Due to reduced demand after the events of September 11, 2001, and the resulting
impact on the economy, the Company was unable to meet its first-quarter fiscal
2002 EBITDA covenant requirement. Accordingly, the Company obtained a waiver
and amendment to its credit facility dated December 5, 2001, which waived its
EBITDA noncompliance, reset remaining fiscal 2002 quarterly EBITDA targets to a
total of $16.6 million for the year, and limited capital expenditures to $15
million.
The current maturity date of the Company's credit facility is April 30, 2003,
with a provision for further extension to April 30, 2004, given satisfaction of
"Further Extension Conditions" detailed in the Waiver and Fifth Amendment to
the Credit Facility. The conditions stipulate a higher minimum annual EBITDA
of $20 million for fiscal 2002, that no default has occurred, that all required
payments have been made, and that the Company pay an administrative fee at the
time of extension. The Company is engaged in ongoing discussions with members
of its bank group regarding refinancing. Although the Company expects that no
default will occur and all payments will be made timely, it intends to explore
refinancing or alternative financing at the proper time, if necessary.
Based on current projections for fiscal 2002, management believes that the
Company's operating results will generate sufficient working capital, along
with available cash, to sustain operations and meet required loan covenants and
interest payment obligations throughout the year. In the event that the Company is unable to refinancemake the existing debt at maturity, it$80 million payment as currently planned, the amended loan would be classified as current and the Company's credit facilityin default. The existing lenders would then have the right to exercise any and all remedies, including the right to demand immediate repayment of the entire amount outstanding ($120.9 million at May 8, 2002)balance or the right to pursue foreclosure on the assets pledged as collateral. As of May 8,November 20, 2002, $250$241.6 million of the Company's total book value, or 72.6%72.0% of its total assets, inincluding the Company's owned real estate, improvements, equipment, and fixtures, was pledged as collateral under the credit facility. IfThe nonbinding commitment letter with the new lender is subject to conditions the Company must satisfy before the actual financing can occur. Management is required to arrange alternatecurrently working toward this goal and has high confidence that the transaction will be completed and the financing it may not be able
to obtain such financing from traditional commercial lenders. closed by January 31, 2003.
The Company may
have to arrangealso could pursue other options if its current refinancing plans cannot be finalized. Those options include financing through high-yield debt at higher than commercial rates or conductconducting additional sales
of its equity securitiessecurity sales through public or private financing. The Company
would be subject to higher than prevailing interest rates than would be
obtainable through commercial lenders if financing were arranged through high-
yield debt. Substantial and immediate dilutionofferings. Dilution to existing shareholders would likely result from salesin the case of equity securities.
Insecurity sales.
Assuming the interim,$80 million is financed with a third party, the Company has taken stepsamended facility also mentions two principal payments. The first is a target of $15 million that is also to improve its fiscal 2002be paid by January 31, 2003, from either proceeds from the sale of property or operating results and anticipated cash flows, including cost-saving initiativesflow. A total paydown of less than $15 million would result in a 1% increase in the areas of risk management, labor optimization, and purchasing.
VARIABLE-RATE DEBT
In prior fiscal years, the Company had Interest Rate Protection Agreements
(Swaps) that effectively fixed theapplicable interest rate on a portionfrom prime plus 2.5% to prime plus 3.5%. The second payment, from property sales or operating cash flow, is an additional $10 million by September 1, 2003. Again, total payments of its floating-
rate debt under its line of credit. Theless than $10 million would result in another 1% increase in the applicable interest rate.
Subordinated Debt
On March 9, 2001, the Company's newly appointed CEO and COO, Christopher J. Pappas and Harris J. Pappas, respectively, committed to loaning the Company terminated its Swaps effective
July 2, 2001, due to declining interest rates. The Company currently has a total of $130.9 million in variable-rate debt: $120.9 million under its credit
facility at prime plus an applicable margin as required by the amended credit
facility and $10 million in exchange for convertible subordinated convertible notes loaned tothat were funded in the Company by its CEO and COOfourth quarter of fiscal 2001. The notes, as formally executed, bear interest at LIBOR plus 2%. (See Note 6.)
, payable quarterly, and have a stated redemption date of March 1, 2011. Interest through September 1, 2003, may be paid in a combination of cash, common stock, or both at the Company's election, subject to certain restrictions on the amount of stock issued. All interest to date has been paid in cash. Interest incurred after September 1, 2003, must be paid in cash.
Notwithstanding any accrued interest that may also be converted to stock, the notes are convertible into the Company's common stock at $5.00 per share for two million shares at the option of the holders at any time after January 2, 2003, and prior to the stated redemption date. The market price of the Company's stock on the commitment date (as determined by the closing price on the New York Stock Exchange on the date of issue) was $7.34. The difference between the market price and strike price of $5.00, or $2.34 per share, multiplied by the two million convertible shares equaled approximately $4.7 million. Under the Company's adopted intrinsic value method, applicable accounting principles require that this amount, which represents the beneficial conversion feature, be recorded as both a component of paid-in capital and a discount from the $10 million.
The conversion feature is being amortized over the term of the notes. The carrying value of the notes at August 28, 2002, net of the unamortized discount, was approximately $5.9 million. The comparative carrying value of the notes at November 20, 2002, was approximately $6.0 million.
COMMITMENTS AND CONTINGENCIES
In connection with the Luby's Incentive Stock Plan as approved by the
shareholders of the Company at the January 8,fiscal 1999, annual meeting of
shareholders, the Company guaranteed loans in fiscal 1999 of approximately $1.9 million relating to enablepurchases of Company stock by various officers to purchase stock inof the Company. Under the officer loan program, shares were purchased and funding was obtained from JPMorgan Chase Bank. As of May 8,November 20, 2002, the notes, which each officer obtained from JPMorgan Chase Bank and mature in fiscal 2004, have a totalan outstanding balance of approximately $1.6 million. In the event of default, the Company would purchase the loans from JPMorgan Chase Bank, become holder of the notes, record the receivables, and pursue collection in the event that note requirements are not met. The purchased Company stock has been and can be used by the borrowers to satisfy a portion of their loan obligation. The Company does not anticipate defaultAs of November 20, 2002, based on the loans by
anymarket price on that day, approximately $426,000, or 26.4% of the borrowers; however, in the event of default, the Company is
obligated to purchase the specific borrower's loan from JPMorgan Chase Bank andnote balances, could have been covered by stock, while approximately $1.2 million, or 73.6%, would therefore become the holderhave remained outstanding. ;(See Note 8 of the note. If the Company becomes the
holder of any defaulted notes, it intendsNotes to pursue collection using all
available remedies. (See Note 8.Consolidated Financial Statements.)
AFFILIATE SERVICES AGREEMENT
The Company entered into an Affiliate Services Agreement effective August 31, 2001, with two companies, Pappas Partners, LPL.P. and Pappas Restaurants, Inc., which are restaurant businessesentities owned by Christopher J. Pappas and Harris J. Pappas. Initially, one of the purposes of theThat agreement, was to enhance certain
areas of the Company by utilizing management and operational support from the
Pappas entities. The Company has since hired its own employees in these areas,
and consequently,as amended on July 23, 2002, limited the scope of supportexpenditures therein to professional and consulting services. The Company completed this amendment due to a significant decline in the use of professional and consulting services provided byfrom Pappas entities.
Additionally, on July 23, 2002, the Company entered into a Master Sales Agreement with the same Pappas entities
has greatly declined.
As partentities. Through this agreement, the Company contractually separated the design and fabrication of equipment and furnishings from the Affiliate Services Agreement. The Master Sales Agreement the Company leases a facility
(Houston Service Center), which represents 21,000 square feet of shop
space and 5,664 square feet of office space, at a rental rate of $0.24 per
square foot per month. The office space is primarily used for dispatching
repair and maintenance service calls to the Company's restaurants. The
remainder of the facility is used primarily for repair and storage of new and
used equipment.
The agreement also includescovers the costs incurred for modifications to existing equipment, as well as custom-fabrication,custom fabrication, including stainless steel stoves, shelving, rolling carts, and chef tables. These items are custom-designed and built to fit the designated kitchens and are also engineered to give a longer service life than comparablecomparably manufactured equipment.
The pricing of equipment, repair, and maintenance is set and evaluated periodically and evaluated on an ongoing basis. Based on a periodic review of third-party
pricing, it is management's opinion that pricing is setconsidered by management to be primarily at or below market for comparable goods and services. The Finance and Audit Committee of the Company's Board of Directors also uses independent valuation consultants and the Company's external auditors to assist in periodically monitoring the scope, pricing and fairness of the transactions associated with the Master Sales Agreement and the Affiliate Services Agreement. The Company's external auditors performed agreed upon procedures related to the affiliate services. The scope and sufficiency of such procedures are determined by management and the Board of Directors, and results are submitted to the Board for its use in evaluating the fairness of the transactions.
As part of the affiliation with the Pappas entities, the Company leases a facility, the Houston Service Center, in which Luby's has established a centralized restaurant service center to support field operations. The building at this location has 21,000 square feet of warehouse space and 5,664 square feet of office space. It is leased from the Pappas entities by the Company at a monthly rate of $.24 per square foot. From this center, Luby's repair and service teams are dispatched to the Company's restaurants when facility or equipment maintenance and servicing are needed. The facility is also used for repair and storage of new and used equipment.
The following compares inception-to-date charges incurred under the Master Sales Agreement, the Affiliate Services Agreement, and affiliated property leases to total general and administrative expenses, capital expenditures, and occupancy and other costs:
Quarter Ended | ||||||||||||||||
November 20, | November 21, | |||||||||||||||
(84 days) | (82 days) | |||||||||||||||
(In thousands) | ||||||||||||||||
Affiliate Services Incurred Costs: | ||||||||||||||||
General and administrative expenses -- professional services | $ | -- | $ | 5 | ||||||||||||
Capital expenditures -- custom-fabricated and refurbished equipment | 47 | 287 | ||||||||||||||
Occupancy and other operating expenses, including property leases | 44 | 54 | ||||||||||||||
Less pass-through amounts to third parties | -- | (81 | ) | |||||||||||||
Total | $ | 91 | $ | 265 | ||||||||||||
Applicable Total Company Costs: | ||||||||||||||||
General and administrative expenses | $ | 5,367 | $ | 5,348 | ||||||||||||
Capital expenditures | 3,637 | 3,062 | ||||||||||||||
Occupancy and other operating expenses | 34,370 | 36,384 | ||||||||||||||
Total | $ | 43,374 | $ | 44,794 | ||||||||||||
Affiliate Services Incurred Costs As a Percentage of Applicable | ||||||||||||||||
Quarter to Date | 0.21 | % | 0.59 | % | ||||||||||||
Inception to Date | 0.19 | % | ||||||||||||||
TRENDS AND UNCERTAINTIES
SAME-STORE SALES
Same-Store Sales
The restaurant business is highly competitive with respect to food quality, concept, location, price, and service. The Company has experienced declining same-store sales since 1996 as a result of unevenprevious execution of food and
service,strategies, as well as increased industry-wide competition. The Company competes with a large number of other restaurants, many of which have greater financial resources. Management believes the Company's success will depend largely on its ability to execute its new strategies, optimize its financial resources, and respond to changes in consumer preferences, as well as to general economic conditions.
The following shows the same-store sales change from the comparative change in same-store sales:
Fiscal 2001 Fiscal 2002
_____________________________ ______________________
Q1 Q2 Q3 Q4 Q1 Q2 Q3
-6.8% -5.3% -0.4% -0.7% -2.7% -8.6% -13.2%
_____________________________ ______________________
quarter of the prior year:
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Fiscal 2003 |
| Fiscal 2002 |
| Fiscal 2001 | ||||||||
| Q1 |
|
| Q4 | Q3 | Q2 | Q1 |
| Q4 | Q3 | Q2 | Q1 |
| (5.1)% |
|
| (13.0)% | (13.2)% | (8.6)% | (2.7)% |
| 1.9% | (0.4)% | (5.3)% | (6.8)% |
The Company enacted price increases in the third and fourth quarters of fiscal 2001. The first quarter of fiscal 2002 includes September 11, 2001. In the third quarterand fourth quarters of fiscal 2002, the Company was able to maintain its comparative cash flow level with declining sales by lowering related operating costs.
The Company may havecontinues to seek additional opportunities to lower costs; however, continued declines in net same-store sales could reduce operating cash flow. If more severe declines in cash flow were to develop without offsetting reductions in uses of cash, the Company's ability to maintain compliance with the financial covenants of the amended credit facility couldmay be impaired. In such an event, the lender haswould have the right to terminate the credit facility, accelerate the maturity of any outstanding obligation under that facility, and pursue foreclosure on assets pledged as collateral.
NEW PROGRAMS
Although there can be no assurance that
New Programs
In addition to the current strategies will proveinitiatives referred to be
successful,in other sections of this report, listed below are anumber of programs the Company has initiated a number of programslaunched since March 2001 that are intended to address the decline in total and same-store sales, while increasing profitability by
building sales and prudently managing costs. The programs include:
- - Food excellence;
- - Service excellence;
- - Increased emphasis on employee trainingcosts and development;
- - Targeted marketing;
- - increasing overall profitability:
- | Food excellence; |
- | Service excellence; |
- | Emphasis on value, including all-you-can-eat promotions; |
- | Increased emphasis on employee training and development; |
- | Targeted marketing, especially directed at families; |
- | Closure of certain underperforming restaurants; |
- | New concept conversions; and |
- | Continued emphasis on in-house safety training, accident prevention, |
Impairment
Statement of certain underperforming restaurants;
- - New concept offerings; and
- - A new in-house safety and claims program.
IMPAIRMENT
SFAS 121Financial Accounting Standards (SFAS) 144 requires the Company to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company considers a history of operating losses or negative cash flows and unfavorable changes in market conditions to be its main indicators of potential impairment. Assets are generally evaluated for impairment at the restaurant level. If a restaurant does not meet its financial investment objectives or continues to incur negative cash flows or operating losses, an impairment or restaurant closing
charge may be recognized in future periods.
INSURANCE
Year-to-date workers'
Insurance and Claims
Workers' compensation and employee injury claims expense has decreased substantially in comparison with the same quarter of the prior fiscal year to date. Future related costs could
increase due to unforeseen circumstances.
MINIMUM WAGE
improved cost control, safety training and accident prevention efforts, as well as the management of new claims in-house. Actual claims settlements and expenses may differ from estimated interim loss provisions. The Company cannot make any assurances as to the ultimate level of claims under the in-house safety program or whether declines in incidence of claims as well as claims costs experienced since inception will continue in future periods.
The Company may be the subject of claims or litigation from guests and employees alleging injuries as a result of its operations. In addition, unfavorable publicity from such allegations could have an adverse impact on financial results, regardless of their validity or ultimate outcome.
Minimum Wage and Labor Costs
From time to time, the U.S. Congress considers an increase in the federal minimum wage. The restaurant industry is intensely competitive, and in such case, the Company may not be able to transfer all of the resulting increases in operating costs to its customers in the form of price increases. RESERVE FOR RESTAURANT CLOSINGS
The reserve declined from $4.5 million at August 31, 2001, to $3.2 million at
May 8, 2002, primarily due toIn addition, since the payment of lease settlement costs of
approximately $856,000 and further reductions associated with more favorable
lease settlements than originally anticipated.
Company's business is labor-intensive, shortages in the labor pool or other inflationary pressure could increase labor costs.
CRITICAL ACCOUNTING POLICIES
The Company has identified the following policies below as critical to its business and the understanding of its results of operations. The Company believes it is improbable that materially different amounts would be reported relating to the accounting policies described below if other acceptable approaches were adopted. However, the application of these accounting policies, involvesas described below, involve the exercise of judgment and use of assumptions as to future uncertainties; therefore, actual results could differ from these estimates.
INCOME TAXES
estimates generated from their use.
Income Taxes
The Company records the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carrybacks and carryforwards. The Company periodically reviews the recoverability of
any tax assets recorded on the balance sheet and provides valuation allowances as management deems necessary. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management's opinion, adequate provisions for income taxes have been made for all years.
IMPAIRMENT OF LONG-LIVED ASSETS
Impairment of Long-Lived Assets
The Company periodically evaluates long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing impairment reviews of individualsuch restaurants, the Company estimates future cash flows expected to result from the use of the asset and itsthe possible residual value associated with their eventual disposition. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management's subjective judgments. The time periods for estimating future cash flows is often lengthy, which increases the sensitivity to assumptions made. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets can vary within a wide range of outcomes. The Company considers the likelihood of possible outcomes in determining the best estimate of future cash flows.
INSURANCE RESERVES
Insurance and Claims
The Company periodically reviews its workers' compensation and general liability reserves to ensure reasonableness. TheIn fiscal 2001, the Company initiated an in-house safety and claims program focused on safety training and rigorous scrutiny of new claims, which has reduced costs significantly. LiabilityConsistent with the prior year, the Company's liability is based upon estimates are
obtained both from an actuarial firm andactuary, internal risk management staff. The
Company's recorded liability falls within the range of these two estimates.staff, and external adjusters. Assumptions and judgments are used in evaluating this liability.these costs. The possibility exists that future insurance-relatedclaims-related liabilities could increase due to unforeseen circumstances. (See Note 5.)
NEW ACCOUNTING PRONOUNCEMENTS
The Company reviewed recent accounting pronouncements, including
In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS 144,
entitled "Accounting for the Impairment or Disposal of Long-Lived Assets." This Standard requires the recognition and measurement of the impairment of long-lived assets to be held and used and the measurement of long-lived assets to be disposed of by sale. The provisionsCompany adopted the pronouncement in the first quarter of SFAS 144 supersede SFAS 121, "Accountingfiscal 2003. The impact of this Standard on its results of operations or financial condition has not been material.
The Company has accounted for the Impairmentcessation of Long-Lived Assets and for Long-Lived Assets to be Disposed of," and will take
effect in fiscal 2003 for the Company. At that time, the Company will ensure
existing policies are consistent withoperations under the provisions of Emerging Issues Task Force No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity." In June 2002, FASB issued SFAS 144. The146, "Accounting for Costs Associated with Exit or Disposal Activities." In the current fiscal quarter, the Company does not currently expectalso early adopted the adoptionaccounting requirements of SFAS 144146. The impact of this Standard on the Company's results of operations or financial condition is expected to havebe timing changes in the recognition of charges. Previously, except for one-time employee termination benefits, the Company recognized exit costs at the plan commitment date. In the future, costs will be estimated in a material effect on
earnings ormanner consistent with prior practices; however, charges under new exit and disposal plans will be recognized when such liabilities are incurred.
OTHER
Inflation
The Company's policy is to maintain stable menu prices without regard to seasonal variations in food costs. General increases in costs of food, wages, supplies, and services make it necessary for the financial position ofCompany to increase its menu prices from time to time. To the Company.
FORWARD-LOOKING STATEMENTS
extent prevailing market conditions allow, the Company intends to adjust menu prices to maintain profit margins.
Forward-Looking Statements
The Company wishes to caution readers that various factors could cause its actual financial and operational results to differ materially from those indicated by forward-looking statements made from time to time in news releases, reports, proxy statements, registration statements, and other written communications (including the preceding sections of this Management's Discussion and Analysis), as well as oral statements made from time to time by representatives of the Company. Except for historical information, matters discussed in such oral and written communications are forward-looking statements that involve risks and uncertainties, including but not limited to general business conditions, the impact of competition, the success of operating initiatives, changes in the cost and supply of food, labor, and labor,other operating expenses; the seasonality of the Company's business, taxes, inflation, and governmental regulations,regulations; and the availability of credit,credit; as well as other risks and uncertainties disclosed in periodic reports on Form 10-K and Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk from changes in interest rates affecting its variable-rate debt. As of November 20, 2002, $113.5 million was outstanding under its credit facility at prime plus 1.5%. Additionally, the Company had $10 million in notes which bear interest at LIBOR plus 2%. The total amount of debt subject to interest rate fluctuations was $123.5 million. Assuming a consistent level of debt, a 1% change in interest rates effective from the beginning of the year would result in an increase or decrease in the quarter's interest expense of $277,000 and annual interest expense of $1.2 million. Although the Company is not currently using interest rate swaps, it has previously used and may in the future use these instruments to manage cash flow risk on a portion of its variable-rate debt.
Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its President and CEO and its CFO, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures which, by their nature, can provide only reasonable assurance regarding management's control objectives.
During the 45 days prior to January 3, 2003, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. The Company's President and CEO and the CFO participated and provided input into this process. Based upon the foregoing, these senior officers concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's Exchange Act reports.
There have been no significant changes in the Company's internal controls or in other factors which could significantly affect internal controls subsequent to the date the President and CEO and the CFO carried out their evaluation.
Item 1. Legal Proceedings
Two former assistant managers of
No material developments have occurred since those reported in the Company have filed suit against the
Company in federal district court alleging violations of the Fair Labor
Standards Act and the commission of certain fraudulent acts by the Company.
The plaintiffs also seek authorization to represent a class of all assistant
managers employed by the Company throughout the United States who they claim,
on information and belief, are similarly without the requisite job duties and
responsibilities to be considered exempt from the overtime requirements of the
Fair Labor Standards Act. The Company has asserted that no class is
appropriate, that plaintiffs are exempt from the right to overtime under the
Fair Labor Standards Act under the white collar exemptions, and has denied any
misrepresentations. The complaint does not specify the total amount of damages
being sought. The Company believes that the allegations are unfounded and
intends to continue to diligently contest the claims of the plaintiffs.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
3(a) - Certificate of Incorporation of Luby's, Inc., as currently in effect
(filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1999, and incorporated herein by
reference).
3(b) - Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c)
to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).
4(a) - Description of Common Stock Purchase Rights of Luby's Cafeterias,
Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991,
File No. 1-8308, and incorporated herein by reference).
4(b) - Amendment No. 1 dated December 19, 1991, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 1991, and
incorporated herein by reference).
4(c) - Amendment No. 2 dated February 7, 1995, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1995, and
incorporated herein by reference).
4(d) - Amendment No. 3 dated May 29, 1995, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1995, and
incorporated herein by reference).
4(e) - Amendment No. 4 dated March 8, 2001, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 99.1 to the Company's Report on Form
8-A12B/A on March 22, 2001, and incorporated herein by reference).
4(f) - Credit Agreement dated February 27, 1996, among Luby's Cafeterias,
Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as
Exhibit 4(e) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 29, 1996, and incorporated herein by
reference).
4(g) - First Amendment to Credit Agreement dated January 24, 1997, among
Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas,
N.A. (filed as Exhibit 4(f) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1997, and incorporated herein
by reference).
4(j) - Second Amendment to Credit Agreement dated July 3, 1997, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A.
(filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997,28, 2002.
Item 6. Exhibits and incorporated herein by
reference).
4(k) - Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as
Exhibit 4(j) to the Company's Annual ReportReports on Form 10-K for the
fiscal year ended August 31, 2000, and incorporated herein by
reference).
4(l) - Fourth Amendment to Credit Agreement dated July 9, 2001, among Luby's,
Inc., Bank of America, N.A., and other creditors of its bank group
(filed8-K
A. Exhibits
The following exhibits are filed as Exhibit 4(l) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).
4(m) - Deed of Trust, Assignment, Security Agreement, and Financing Statement
dated July 2001, executed asa part of the Fourth Amendment to Credit
Agreement (filed as Exhibit 4(m) to the Company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 2001, and incorporated herein
by reference).
4(n) - Subordination and Intercreditor Agreement dated June 29, 2001, between
Harris J. Pappas and Christopher J. Pappas, Bank of America, N.A.
Agreement [as the bank group agent], and Luby's, Inc. (filed as
Exhibit 4(n) to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 2001, and incorporated herein by reference).
4(o) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of $1,500,000
(filed as Exhibit 4(o) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).
4(p) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $1,500,000 (filed
as Exhibit 4(p) to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 2001, and incorporated herein by reference).
4(q) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of $3,500,000
(filed as Exhibit 4(q) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).
4(r) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $3,500,000 (filed
as Exhibit 4(r) to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 2001, and incorporated herein by reference).
4(s) - Fifth Amendment to Credit Agreement dated December 5, 2001, among
Luby's, Inc., Bank of America, and other creditors of its bank group
(filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 2001, and incorporated herein by
reference).
10(c) - this Report:
3(a) | Certificate of Incorporation of Luby's, Inc. as currently in effect (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and incorporated herein by reference). | |
3(b) | Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). | |
4(a) | Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference). | |
4(b) | Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). | |
4(c) | Amendment No. 2 dated February 7, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). | |
4(d) | Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, and incorporated herein by reference). | |
4(e) | Amendment No. 4 dated March 8, 2001, to Rights Agreement dated April 16, 1991 (filed as Exhibit 99.1 to the Company's Report on Form 8-A12B/A on March 22, 2001, and incorporated herein by reference). | |
4(f) | Credit Agreement dated February 27, 1996, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(e) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). | |
4(g) | First Amendment to Credit Agreement dated January 24, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(f) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). | |
4(h) | Second Amendment to Credit Agreement dated July 3, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). | |
4(i) | Third Amendment to Credit Agreement dated October 27, 2000, among Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as Exhibit 4(j) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000, and incorporated herein by reference). | |
4(j) | Fourth Amendment to Credit Agreement dated July 9, 2001, among Luby's, Inc., Bank of America, N.A. and other creditors of its bank group (filed as Exhibit 4(l) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(k) | Deed of Trust, Assignment, Security Agreement, and Financing Statement dated July 2001, executed as part of the Fourth Amendment to Credit Agreement (filed as Exhibit 4(m) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(l) | Subordination and Intercreditor Agreement dated June 29, 2001, between Harris J. Pappas and Christopher J. Pappas, Bank of America, N.A. [as the bank group agent], and Luby's, Inc. (filed as Exhibit 4(n) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(m) | Convertible Subordinated Promissory Note dated June 29, 2001, between Christopher J. Pappas and Luby's, Inc. in the amount of $1,500,000 (filed as Exhibit 4(o) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(n) | Convertible Subordinated Promissory Note dated June 29, 2001, between Harris J. Pappas and Luby's, Inc. in the amount of $1,500,000 (filed as Exhibit 4(p) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(o) | Convertible Subordinated Promissory Note dated June 29, 2001, between Christopher J. Pappas and Luby's, Inc. in the amount of $3,500,000 (filed as Exhibit 4(q) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(p) | Convertible Subordinated Promissory Note dated June 29, 2001, between Harris J. Pappas and Luby's, Inc. in the amount of $3,500,000 (filed as Exhibit 4(r) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(q) | Fifth Amendment to Credit Agreement dated December 5, 2001, among Luby's, Inc., Bank of America, N.A. and other creditors of its bank group (filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). | |
4(r) | Sixth Amendment to Credit Agreement dated November 25, 2002, by and among Luby's, Inc., Bank of America, N.A. and other creditors of its bank group (filed as Exhibit 4(t) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
10(a) | Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as Exhibit 10(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989, and incorporated herein by reference).* | |
10(b) | Amendment to Management Incentive Stock Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference).* | |
10(c) | Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1994, and incorporated herein by reference).* | |
10(d) | Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference).* | |
10(e) | Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference).* | |
10(f) | Amended and Restated Nonemployee Director Stock Option Plan of Luby's, Inc. approved by the shareholders of Luby's, Inc. on January 14, 2000 (filed as Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 2000, and incorporated herein by reference).* | |
10(g) | Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated May 30, 1996 (filed as Exhibit 10(j) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996, and incorporated herein by reference).* | |
10(h) | Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 14, 1997 (filed as Exhibit 10(r) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference).* | |
10(i) | Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 9, 1998 (filed as Exhibit 10(u) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference).* | |
10(j) | Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted May 21, 1999 (filed as Exhibit 10(q) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and incorporated herein by reference.)* | |
10(k) | Severance Agreement between Luby's, Inc. and Barry J.C. Parker dated December 19, 2000 (filed as Exhibit 10(r) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2000, and incorporated herein by reference.)* | |
10(l) | Luby's Incentive Stock Plan adopted October 16, 1998 (filed as Exhibit 10(cc) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, and incorporated herein by reference).* | |
10(m) | Form of Change in Control Agreement entered into between Luby's, Inc. and each of its Senior Vice Presidents as of January 8, 1999 (filed as Exhibit 10(aa) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1999, and incorporated herein by reference).* | |
10(n) | Luby's, Inc. Deferred Compensation Plan effective June 1, 1999 (filed as Exhibit 10(cc) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and incorporated herein by reference).* | |
10(o) | Registration Rights Agreement dated March 9, 2001, by and among Luby's, Inc., Christopher J. Pappas, and Harris J. Pappas (filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference). | |
10(p) | Purchase Agreement dated March 9, 2001, by and among Luby's, Inc., Harris J. Pappas, and Christopher J. Pappas (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference). | |
10(q) | Employment Agreement dated March 9, 2001, between Luby's, Inc. and Christopher J. Pappas (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference).* | |
10(r) | Employment Agreement dated March 9, 2001, between Luby's, Inc. and Harris J. Pappas (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference).* | |
10(s) | Luby's, Inc. Incentive Bonus Plan for Fiscal 2001 (filed as Exhibit 10(z) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000, and incorporated herein by reference).* | |
10(t) | Luby's, Inc. Stock Option granted to Christopher J. Pappas on March 9, 2001 (filed as Exhibit 10(w) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference).* | |
10(u) | Luby's, Inc. Stock Option granted to Harris J. Pappas on March 9, 2001 (filed as Exhibit 10(x) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference).* | |
10(v) | Affiliate Services Agreement dated August 31, 2001, by and among Luby's, Inc., Christopher J. Pappas, Harris J. Pappas, Pappas Restaurants, L.P., and Pappas Restaurants, Inc. (filed as Exhibit 10(y) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, refiled as Exhibit 10(y) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 13, 2002, to include signature reference and an exhibit that were inadvertently omitted, and incorporated herein by reference). | |
10(w) | Ground Lease for a cafeteria site dated March 25, 1994, by and between Luby's Cafeterias, Inc. and PHCG Investments, as amended by Lease Amendment dated July 6, 1994 (filed as Exhibit 10(z) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). | |
10(x) | Lease Agreement for dated June 1, 2001, by and between Luby's, Inc. and Pappas Restaurants, Inc. (filed as Exhibit 10(aa) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). | |
10(y) | Final Severance Agreement and Release between Luby's, Inc. and Alan M. Davis dated July 20, 2001 (filed as Exhibit 10(bb) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). While in search for new executive management, the Company entered into an employment agreement with Mr. Davis in January 2001. The value of that one-year contract was a year's salary upon termination. After new management was secured, the Company finalized the exhibited agreement that provides for the payment of monthly consulting fees to Mr. Davis until July 2002, but releases the Company from all prior employment commitments.* | |
10(z) | Consultant Agreement between Luby's Restaurants Limited Partnership and Alan M. Davis dated July 20, 2001 (filed as Exhibit 10(cc) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference).* | |
10(aa) | Luby's, Inc. Amended and Restated Nonemployee Director Phantom Stock Plan effective September 28, 2001 (filed as Exhibit 10(dd) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 13, 2002, and incorporated herein by reference).* | |
10(bb) | Final Severance Agreement and Release between Luby's, Inc. and S. Darrell Wood effective July 28, 2002 (filed as Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference).* | |
10(cc) | Consultant Agreement dated August 30, 2002, between Luby's Restaurants Limited Partnership and Stephen Darrell Wood (filed as Exhibit 10(ff) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference).* | |
10(dd) | Form of Indemnification Agreement entered into between Luby's, Inc. and each member of its Board of Directors initially dated July 23, 2002 (filed as Exhibit 10(gg) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
10(ee) | Amended and Restated Affiliate Services Agreement dated July 23, 2002, by and among Luby's, Inc., Pappas Restaurants, L.P., and Pappas Restaurants, Inc. (filed as Exhibit 10(hh) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
10(ff) | Master Sales Agreement dated July 23, 2002, by and among Luby's, Inc., Pappas Restaurants, L.P., and Pappas Restaurants, Inc. and Procedure adopted by the Finance and Audit Committee of the Board of Directors on July 23, 2002, pursuant to Section 2.3 of the Master Sales Agreement (filed as Exhibit 10(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
11 | Statement re computation of per share earnings. | |
99(a) | Corporate Governance Guidelines of Luby's, Inc., as amended October 25, 2001 (filed as Exhibit 99(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 13, 2002, and incorporated herein by reference). | |
*
10(d) - Amendment to Management Incentive Stock Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1997,
and incorporated herein by reference).*
10(e) - Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias,
Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1994,
and incorporated herein by reference).*
10(f) - Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(g) - Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).*
10(h) - Amended and Restated Nonemployee Director Stock Option Plan of Luby's,
Inc. approved by the shareholders of Luby's, Inc. on January 14, 2000
(filed as Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q
for the quarter ended February 29, 2000, and incorporated herein by
reference).*
10(i) - Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated
May 30, 1996 (filed as Exhibit 10(j) to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1996, and incorporated
herein by reference).*
10(j) - Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement
Plan adopted January 14, 1997 (filed as Exhibit 10(r) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1997,
and incorporated herein by reference).*
10(k) - Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement
Plan adopted January 9, 1998 (filed as Exhibit 10(u) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1998,
and incorporated herein by reference).*
10(l) - Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement
Plan adopted May 21, 1999 (filed as Exhibit 10(q) to the Company's
Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and
incorporated herein by reference.)*
10(m) - Severance Agreement between Luby's, Inc. and Barry J.C. Parker dated
December 19, 2000 (filed as Exhibit 10(r) to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 2000, and
incorporated herein by reference.)*
10(o) - Luby's Incentive Stock Plan adopted October 16, 1998 (filed as Exhibit
10(cc) to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1998, and incorporated herein by reference).*
10(p) - Form of Change in Control Agreement entered into between Luby's, Inc.,
and each of its Senior Vice Presidents as of January 8, 1999 (filed as
Exhibit 10(aa) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1999, and incorporated herein by
reference).*
10(q) - Luby's, Inc. Deferred Compensation Plan effective June 1, 1999 (filed
as Exhibit 10(cc) to the Company's Quarterly Report on Form 10-Q for
the quarter ended May 31, 1999, and incorporated herein by
reference).*
10(r) - Registration Rights Agreement dated March 9, 2001, by and among
Luby's, Inc., Christopher J. Pappas, and Harris J. Pappas (filed as
Exhibit 10.4 to the Company's Current Report on Form 8-K dated
March 9, 2001, and incorporated herein by reference).
10(s) - Purchase Agreement dated March 9, 2001, by and among Luby's, Inc.
Harris J. Pappas, and Christopher J. Pappas (filed as Exhibit 10.1 to
the Company's Current Report on Form 8-K dated March 9, 2001, and
incorporated herein by reference).
10(t) - Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Christopher J. Pappas (filed as Exhibit 10.2 to the Company's Current
Report on Form 8-K dated March 9, 2001, and incorporated herein by
reference).*
10(u) - Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Harris J. Pappas (filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated March 9, 2001, and incorporated herein by
reference).*
10(v) - Luby's, Inc. Incentive Bonus Plan for Fiscal 2001 (filed as Exhibit
10(z) to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 2000, and incorporated herein by reference).*
10(w) - Luby's, Inc. Stock Option granted to Christopher J. Pappas on March 9,
2001 (filed as Exhibit 10(w) to the Company's Quarterly Report on Form
10-Q for the quarter ended May 31, 2001, and incorporated herein by
reference).*
10(x) - Luby's, Inc. Stock Option granted to Harris J. Pappas on March 9, 2001
(filed as Exhibit 10(x) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).*
10(y) - Affiliate Services Agreement dated August 31, 2001, by and among
Luby's, Inc., Christopher J. Pappas, Harris J. Pappas, Pappas
Restaurants, L. P., and Pappas Restaurants, Inc. (filed as Exhibit
10(y) to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 2001, and refiled herewith to include signature
references and an exhibit that were inadvertently omitted).
10(z) - Ground Lease for a cafeteria site dated March 25, 1994, by and between
Luby's Cafeterias, Inc. and PHCG Investments, as amended by Lease
Amendment dated July 6, 1994 (filed as Exhibit 10(z) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference).
10(aa)- Lease Agreement dated June 1, 2001, by and between Luby's, Inc. and
Pappas Restaurants, Inc. (filed as Exhibit 10(aa) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference).
10(bb)- Final Severance Agreement and Release between Luby's, Inc. and Alan M.
Davis dated July 20, 2001 (filed as Exhibit 10(bb) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference). While in search for new
executive management, the Company entered into an employment agreement
with Mr. Davis in January 2001. The value of that one-year contract
was a year's salary upon termination. After new management was
secured, the Company finalized the exhibited agreement that provides
for the payment of monthly consulting fees to Mr. Davis until July
2002, but releases the Company from all prior employment commitments.*
10(cc)- Consultant Agreement between Luby's Restaurants Limited Partnership
and Alan M. Davis dated July 20, 2001 (filed as Exhibit 10(cc) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2001, and incorporated herein by reference).*
10(dd)- Luby's, Inc. Amended and Restated Nonemployee Director Phantom Stock
Plan effective September 28, 2001.*
11 - Statement re computation of per share earnings.
99(a) - Corporate Governance Guidelines of Luby's, Inc., as amended
October 25, 2001 (filed as Exhibit 99(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 13, 2002, and
incorporated herein by reference).
*DenotesDenotes management contract or compensatory plan or arrangement.
B.
(b) Reports on Form 8-K
8-K.
No reports on Form 8-K have been filed during the quarter for which this report is filed.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LUBY'S, INC.
(Registrant)
LUBY'S, INC. | |
(Registrant) |
Date: January 3, 2003 | By: | /s/Christopher J. Pappas | |||
Christopher J. Pappas | |||||
President and | |||||
Chief Executive Officer | |||||
Date: January 3, 2003 | By: | /s/Ernest Pekmezaris | |||
Ernest Pekmezaris | |||||
Senior Vice President and | |||||
Chief Financial Officer | |||||
Certification
Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
I, Christopher J. Pappas, ________________________certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Luby's, Inc.; | |||||||
2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; | |||||||
3. | Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; | |||||||
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: | |||||||
a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |||||||
b) | evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of the quarterly report (the "Evaluation Date"); and | |||||||
c) | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; | |||||||
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): | |||||||
a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and | |||||||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and | |||||||
6. | The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. | |||||||
Date: | January 3, 2003 | |||||||
/s/Christopher J. Pappas | ||||||||
Christopher J. Pappas | ||||||||
President and | ||||||||
Chief Executive Officer | ||||||||
Certification
Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
I, Ernest Pekmezaris, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Luby's, Inc.; | |||||||
2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; | |||||||
3. | Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; | |||||||
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: | |||||||
a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |||||||
b) | evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of the quarterly report (the "Evaluation Date"); and | |||||||
c) | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; | |||||||
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): | |||||||
a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and | |||||||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and | |||||||
6. | The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. | |||||||
Date: | January 3, 2003 | |||||||
/s/Ernest Pekmezaris | ||||||||
Ernest Pekmezaris | ||||||||
Senior Vice President and | ||||||||
Chief Financial Officer | ||||||||
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Luby's, Inc. on Form 10-Q for the fiscal quarter ended November 20, 2002, as filed with the Securities and Exchange Commission on the date hereof, I, Christopher J. Pappas, President and Chief Executive Officer By:/s/Ernest Pekmezaris
________________________of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: | January 3, 2003 | /s/Christopher J. Pappas | ||
Christopher J. Pappas | ||||
President and | ||||
Chief Executive Officer | ||||
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of Luby's, Inc. on Form 10-Q for the fiscal quarter ended November 20, 2002, as filed with the Securities and Exchange Commission on the date hereof, I, Ernest Pekmezaris, Senior Vice President and Chief Financial Officer Dated: June 19,of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: | January 3, 2003 | /s/Ernest Pekmezaris | ||
Ernest Pekmezaris | ||||
Senior Vice President and | ||||
Chief Financial Officer | ||||
EXHIBIT INDEX
3(a) - Certificate of Incorporation of Luby's, Inc.,
The following exhibits are filed as currently in effect
(filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1999, and incorporated herein by
reference).
3(b) - Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c)
to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).
4(a) - Description of Common Stock Purchase Rights of Luby's Cafeterias,
Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991,
File No. 1-8308, and incorporated herein by reference).
4(b) - Amendment No. 1 dated December 19, 1991, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 1991, and
incorporated herein by reference).
4(c) - Amendment No. 2 dated February 7, 1995, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1995, and
incorporated herein by reference).
4(d) - Amendment No. 3 dated May 29, 1995, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1995, and
incorporated herein by reference).
4(e) - Amendment No. 4 dated March 8, 2001, to Rights Agreement dated
April 16, 1991 (filed as Exhibit 99.1 to the Company's Report on Form
8-A12B/A on March 22, 2001, and incorporated herein by reference).
4(f) - Credit Agreement dated February 27, 1996, among Luby's Cafeterias,
Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as
Exhibit 4(e) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 29, 1996, and incorporated herein by
reference).
4(g) - First Amendment to Credit Agreement dated January 24, 1997, among
Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas,
N.A. (filed as Exhibit 4(f) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1997, and incorporated herein
by reference).
4(j) - Second Amendment to Credit Agreement dated July 3, 1997, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A.
(filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1997, and incorporated herein by
reference).
4(k) - Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as
Exhibit 4(j) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2000, and incorporated herein by
reference).
4(l) - Fourth Amendment to Credit Agreement dated July 9, 2001, among Luby's,
Inc., Bank of America, N.A., and other creditors of its bank group
(filed as Exhibit 4(l) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).
4(m) - Deed of Trust, Assignment, Security Agreement, and Financing Statement
dated July 2001, executed asa part of the Fourth Amendment to Credit
Agreement (filed as Exhibit 4(m) to the Company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 2001, and incorporated herein
by reference).
4(n) - Subordination and Intercreditor Agreement dated June 29, 2001, between
Harris J. Pappas and Christopher J. Pappas, Bank of America, N.A.
Agreement [as the bank group agent], and Luby's, Inc. (filed as
Exhibit 4(n) to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 2001, and incorporated herein by reference).
4(o) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of $1,500,000
(filed as Exhibit 4(o) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).
4(p) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $1,500,000 (filed
as Exhibit 4(p) to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 2001, and incorporated herein by reference).
4(q) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Christopher J. Pappas and Luby's, Inc. in the amount of $3,500,000
(filed as Exhibit 4(q) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).
4(r) - Convertible Subordinated Promissory Note dated June 29, 2001, between
Harris J. Pappas and Luby's, Inc. in the amount of $3,500,000 (filed
as Exhibit 4(r) to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 2001, and incorporated herein by reference).
4(s) - Fifth Amendment to Credit Agreement dated December 5, 2001, among
Luby's, Inc., Bank of America, and other creditors of its bank group
(filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 2001, and incorporated herein by
reference).
10(c) - this Report:
3(a) | Certificate of Incorporation of Luby's, Inc. as currently in effect (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and incorporated herein by reference). | |
3(b) | Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). | |
4(a) | Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference). | |
4(b) | Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). | |
4(c) | Amendment No. 2 dated February 7, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). | |
4(d) | Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, and incorporated herein by reference). | |
4(e) | Amendment No. 4 dated March 8, 2001, to Rights Agreement dated April 16, 1991 (filed as Exhibit 99.1 to the Company's Report on Form 8-A12B/A on March 22, 2001, and incorporated herein by reference). | |
4(f) | Credit Agreement dated February 27, 1996, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(e) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). | |
4(g) | First Amendment to Credit Agreement dated January 24, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(f) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). | |
4(h) | Second Amendment to Credit Agreement dated July 3, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). | |
4(i) | Third Amendment to Credit Agreement dated October 27, 2000, among Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as Exhibit 4(j) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000, and incorporated herein by reference). | |
4(j) | Fourth Amendment to Credit Agreement dated July 9, 2001, among Luby's, Inc., Bank of America, N.A. and other creditors of its bank group (filed as Exhibit 4(l) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(k) | Deed of Trust, Assignment, Security Agreement, and Financing Statement dated July 2001, executed as part of the Fourth Amendment to Credit Agreement (filed as Exhibit 4(m) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(l) | Subordination and Intercreditor Agreement dated June 29, 2001, between Harris J. Pappas and Christopher J. Pappas, Bank of America, N.A. [as the bank group agent], and Luby's, Inc. (filed as Exhibit 4(n) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(m) | Convertible Subordinated Promissory Note dated June 29, 2001, between Christopher J. Pappas and Luby's, Inc. in the amount of $1,500,000 (filed as Exhibit 4(o) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(n) | Convertible Subordinated Promissory Note dated June 29, 2001, between Harris J. Pappas and Luby's, Inc. in the amount of $1,500,000 (filed as Exhibit 4(p) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(o) | Convertible Subordinated Promissory Note dated June 29, 2001, between Christopher J. Pappas and Luby's, Inc. in the amount of $3,500,000 (filed as Exhibit 4(q) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(p) | Convertible Subordinated Promissory Note dated June 29, 2001, between Harris J. Pappas and Luby's, Inc. in the amount of $3,500,000 (filed as Exhibit 4(r) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference). | |
4(q) | Fifth Amendment to Credit Agreement dated December 5, 2001, among Luby's, Inc., Bank of America, N.A. and other creditors of its bank group (filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). | |
4(r) | Sixth Amendment to Credit Agreement dated November 25, 2002, by and among Luby's, Inc., Bank of America, N.A. and other creditors of its bank group (filed as Exhibit 4(t) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
10(a) | Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as Exhibit 10(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989, and incorporated herein by reference).* | |
10(b) | Amendment to Management Incentive Stock Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference).* | |
10(c) | Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1994, and incorporated herein by reference).* | |
10(d) | Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference).* | |
10(e) | Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference).* | |
10(f) | Amended and Restated Nonemployee Director Stock Option Plan of Luby's, Inc. approved by the shareholders of Luby's, Inc. on January 14, 2000 (filed as Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 2000, and incorporated herein by reference).* | |
10(g) | Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated May 30, 1996 (filed as Exhibit 10(j) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996, and incorporated herein by reference).* | |
10(h) | Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 14, 1997 (filed as Exhibit 10(r) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference).* | |
10(i) | Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 9, 1998 (filed as Exhibit 10(u) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference).* | |
10(j) | Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted May 21, 1999 (filed as Exhibit 10(q) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and incorporated herein by reference.)* | |
10(k) | Severance Agreement between Luby's, Inc. and Barry J.C. Parker dated December 19, 2000 (filed as Exhibit 10(r) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2000, and incorporated herein by reference.)* | |
10(l) | Luby's Incentive Stock Plan adopted October 16, 1998 (filed as Exhibit 10(cc) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, and incorporated herein by reference).* | |
10(m) | Form of Change in Control Agreement entered into between Luby's, Inc. and each of its Senior Vice Presidents as of January 8, 1999 (filed as Exhibit 10(aa) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1999, and incorporated herein by reference).* | |
10(n) | Luby's, Inc. Deferred Compensation Plan effective June 1, 1999 (filed as Exhibit 10(cc) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and incorporated herein by reference).* | |
10(o) | Registration Rights Agreement dated March 9, 2001, by and among Luby's, Inc., Christopher J. Pappas, and Harris J. Pappas (filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference). | |
10(p) | Purchase Agreement dated March 9, 2001, by and among Luby's, Inc., Harris J. Pappas, and Christopher J. Pappas (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference). | |
10(q) | Employment Agreement dated March 9, 2001, between Luby's, Inc. and Christopher J. Pappas (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference).* | |
10(r) | Employment Agreement dated March 9, 2001, between Luby's, Inc. and Harris J. Pappas (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated March 9, 2001, and incorporated herein by reference).* | |
10(s) | Luby's, Inc. Incentive Bonus Plan for Fiscal 2001 (filed as Exhibit 10(z) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000, and incorporated herein by reference).* | |
10(t) | Luby's, Inc. Stock Option granted to Christopher J. Pappas on March 9, 2001 (filed as Exhibit 10(w) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference).* | |
10(u) | Luby's, Inc. Stock Option granted to Harris J. Pappas on March 9, 2001 (filed as Exhibit 10(x) to the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2001, and incorporated herein by reference).* | |
10(v) | Affiliate Services Agreement dated August 31, 2001, by and among Luby's, Inc., Christopher J. Pappas, Harris J. Pappas, Pappas Restaurants, L.P., and Pappas Restaurants, Inc. (filed as Exhibit 10(y) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, refiled as Exhibit 10(y) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 13, 2002, to include signature reference and an exhibit that were inadvertently omitted, and incorporated herein by reference). | |
10(w) | Ground Lease for a cafeteria site dated March 25, 1994, by and between Luby's Cafeterias, Inc. and PHCG Investments, as amended by Lease Amendment dated July 6, 1994 (filed as Exhibit 10(z) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). | |
10(x) | Lease Agreement for dated June 1, 2001, by and between Luby's, Inc. and Pappas Restaurants, Inc. (filed as Exhibit 10(aa) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). | |
10(y) | Final Severance Agreement and Release between Luby's, Inc. and Alan M. Davis dated July 20, 2001 (filed as Exhibit 10(bb) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference). While in search for new executive management, the Company entered into an employment agreement with Mr. Davis in January 2001. The value of that one-year contract was a year's salary upon termination. After new management was secured, the Company finalized the exhibited agreement that provides for the payment of monthly consulting fees to Mr. Davis until July 2002, but releases the Company from all prior employment commitments.* | |
10(z) | Consultant Agreement between Luby's Restaurants Limited Partnership and Alan M. Davis dated July 20, 2001 (filed as Exhibit 10(cc) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001, and incorporated herein by reference).* | |
10(aa) | Luby's, Inc. Amended and Restated Nonemployee Director Phantom Stock Plan effective September 28, 2001 (filed as Exhibit 10(dd) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 13, 2002, and incorporated herein by reference).* | |
10(bb) | Final Severance Agreement and Release between Luby's, Inc. and S. Darrell Wood effective July 28, 2002 (filed as Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference).* | |
10(cc) | Consultant Agreement dated August 30, 2002, between Luby's Restaurants Limited Partnership and Darrell Wood (filed as Exhibit 10(ff) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference).* | |
10(dd) | Form of Indemnification Agreement entered into between Luby's, Inc. and each member of its Board of Directors initially dated July 23, 2002 (filed as Exhibit 10(gg) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
10(ee) | Amended and Restated Affiliate Services Agreement dated July 23, 2002, by and among Luby's, Inc., Pappas Restaurants, L.P., and Pappas Restaurants, Inc. (filed as Exhibit 10(hh) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
10(ff) | Master Sales Agreement dated July 23, 2002, by and among Luby's, Inc., Pappas Restaurants, L.P., and Pappas Restaurants, Inc. and Procedure adopted by the Finance and Audit Committee of the Board of Directors on July 23, 2002, pursuant to Section 2.3 of the Master Sales Agreement (filed as Exhibit 10(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2002, and incorporated herein by reference). | |
11 | Statement re computation of per share earnings. | |
99(a) | Corporate Governance Guidelines of Luby's, Inc., as amended October 25, 2001 (filed as Exhibit 99(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 13, 2002, and incorporated herein by reference). | |
*
10(d) - Amendment to Management Incentive Stock Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1997,
and incorporated herein by reference).*
10(e) - Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias,
Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1994,
and incorporated herein by reference).*
10(f) - Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(g) - Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).*
10(h) - Amended and Restated Nonemployee Director Stock Option Plan of Luby's,
Inc. approved by the shareholders of Luby's, Inc. on January 14, 2000
(filed as Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q
for the quarter ended February 29, 2000, and incorporated herein by
reference).*
10(i) - Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated
May 30, 1996 (filed as Exhibit 10(j) to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1996, and incorporated
herein by reference).*
10(j) - Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement
Plan adopted January 14, 1997 (filed as Exhibit 10(r) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1997,
and incorporated herein by reference).*
10(k) - Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement
Plan adopted January 9, 1998 (filed as Exhibit 10(u) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1998,
and incorporated herein by reference).*
10(l) - Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement
Plan adopted May 21, 1999 (filed as Exhibit 10(q) to the Company's
Quarterly Report on Form 10-Q for the quarter ended May 31, 1999, and
incorporated herein by reference.)*
10(m) - Severance Agreement between Luby's, Inc. and Barry J.C. Parker dated
December 19, 2000 (filed as Exhibit 10(r) to the Company's Quarterly
Report on Form 10-Q for the quarter ended November 30, 2000, and
incorporated herein by reference.)*
10(o) - Luby's Incentive Stock Plan adopted October 16, 1998 (filed as Exhibit
10(cc) to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1998, and incorporated herein by reference).*
10(p) - Form of Change in Control Agreement entered into between Luby's, Inc.,
and each of its Senior Vice Presidents as of January 8, 1999 (filed as
Exhibit 10(aa) to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1999, and incorporated herein by
reference).*
10(q) - Luby's, Inc. Deferred Compensation Plan effective June 1, 1999 (filed
as Exhibit 10(cc) to the Company's Quarterly Report on Form 10-Q for
the quarter ended May 31, 1999, and incorporated herein by
reference).*
10(r) - Registration Rights Agreement dated March 9, 2001, by and among
Luby's, Inc., Christopher J. Pappas, and Harris J. Pappas (filed as
Exhibit 10.4 to the Company's Current Report on Form 8-K dated
March 9, 2001, and incorporated herein by reference).
10(s) - Purchase Agreement dated March 9, 2001, by and among Luby's, Inc.
Harris J. Pappas, and Christopher J. Pappas (filed as Exhibit 10.1 to
the Company's Current Report on Form 8-K dated March 9, 2001, and
incorporated herein by reference).
10(t) - Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Christopher J. Pappas (filed as Exhibit 10.2 to the Company's Current
Report on Form 8-K dated March 9, 2001, and incorporated herein by
reference).*
10(u) - Employment Agreement dated March 9, 2001, between Luby's, Inc. and
Harris J. Pappas (filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated March 9, 2001, and incorporated herein by
reference).*
10(v) - Luby's, Inc. Incentive Bonus Plan for Fiscal 2001 (filed as Exhibit
10(z) to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 2000, and incorporated herein by reference).*
10(w) - Luby's, Inc. Stock Option granted to Christopher J. Pappas on March 9,
2001 (filed as Exhibit 10(w) to the Company's Quarterly Report on Form
10-Q for the quarter ended May 31, 2001, and incorporated herein by
reference).*
10(x) - Luby's, Inc. Stock Option granted to Harris J. Pappas on March 9, 2001
(filed as Exhibit 10(x) to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 2001, and incorporated herein by
reference).*
10(y) - Affiliate Services Agreement dated August 31, 2001, by and among
Luby's, Inc., Christopher J. Pappas, Harris J. Pappas, Pappas
Restaurants, L. P., and Pappas Restaurants, Inc. (filed as Exhibit
10(y) to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 2001, and refiled herewith to include signature
references and an exhibit that were inadvertently omitted).
10(z) - Ground Lease for a cafeteria site dated March 25, 1994, by and between
Luby's Cafeterias, Inc. and PHCG Investments, as amended by Lease
Amendment dated July 6, 1994 (filed as Exhibit 10(z) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference).
10(aa)- Lease Agreement dated June 1, 2001, by and between Luby's, Inc. and
Pappas Restaurants, Inc. (filed as Exhibit 10(aa) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference).
10(bb)- Final Severance Agreement and Release between Luby's, Inc. and Alan M.
Davis dated July 20, 2001 (filed as Exhibit 10(bb) to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference). While in search for new
executive management, the Company entered into an employment agreement
with Mr. Davis in January 2001. The value of that one-year contract
was a year's salary upon termination. After new management was
secured, the Company finalized the exhibited agreement that provides
for the payment of monthly consulting fees to Mr. Davis until July
2002, but releases the Company from all prior employment commitments.*
10(cc)- Consultant Agreement between Luby's Restaurants Limited Partnership
and Alan M. Davis dated July 20, 2001 (filed as Exhibit 10(cc) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 2001, and incorporated herein by reference).*
10(dd)- Luby's, Inc. Amended and Restated Nonemployee Director Phantom Stock
Plan effective September 28, 2001.*
11 - Statement re computation of per share earnings.
99(a) - Corporate Governance Guidelines of Luby's, Inc., as amended
October 25, 2001 (filed as Exhibit 99(a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 13, 2002, and
incorporated herein by reference).
*DenotesDenotes management contract or compensatory plan or arrangement.