February 13, 2013 Item 3 Quantitative and Qualitative Disclosures about Market Risk ASSETS Current Assets: Cash and cash equivalents Trade accounts and other receivables, net Food and supply inventories Prepaid expenses Assets related to discontinued operations Deferred income taxes Total current assets Property held for sale Assets related to discontinued operations Property and equipment, net Intangible assets, net Goodwill Deferred incomes taxes Other assets Total assets LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable Liabilities related to discontinued operations Accrued expenses and other liabilities Total current liabilities Credit facility debt Liabilities related to discontinued operations Other liabilities Total liabilities Commitments and Contingencies SHAREHOLDERS’ EQUITY Common stock, $0.32 par value; 100,000,000 shares authorized; Shares issued were 28,677,203 and 28,677,203, respectively; Shares outstanding were 28,177,203 and 28,177,203, respectively Paid-in capital Retained earnings Less cost of treasury stock, 500,000 shares Total shareholders’ equity Total liabilities and shareholders’ equity SALES: Restaurant sales Culinary contract services Franchise revenue Vending revenue TOTAL SALES COSTS AND EXPENSES: Cost of food Payroll and related costs Other operating expenses Opening costs Cost of culinary contract services Depreciation and amortization General and administrative expenses Provision for asset impairments, net Net (gain) loss on disposition of property and equipment Total costs and expenses INCOME FROM OPERATIONS Interest income Interest expense Other income, net Income before income taxes and discontinued operations Provision for income taxes Income from continuing operations Loss from discontinued operations, net of income taxes NET INCOME Income per share from continuing operations: Basic Assuming dilution Loss per share from discontinued operations: Basic Assuming dilution Net income per share: Basic Assuming dilution Weighted average shares outstanding: Basic Assuming dilution thousands) BALANCE AT AUGUST 29, 2012 Net income Share-based compensation expense Increase in tax benefits from stock options BALANCE AT NOVEMBER 21, 2012 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Provision for asset impairments, net of gains/losses on property sales Depreciation and amortization Amortization of debt issuance cost Share-based compensation expense Tax increase on stock options Deferred tax benefit Cash provided by operating activities before changes in operating assets and liabilities Changes in operating assets and liabilities: Decrease in trade accounts and other receivables Increase in food and supply inventories Decrease (increase) in prepaid expenses and other assets Decrease in accounts payable, accrued expenses and other liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposal of assets and property held for sale Purchases of property and equipment Decrease (increase) in note receivable Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Credit facility borrowings Credit facility repayments Debt issuance costs Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Cash paid for: Income taxes Interest Sales: Company-owned restaurants Culinary contract services Franchising Total Segment level profit: Company-owned restaurants Culinary contract services Franchising Total Depreciation and amortization: Company-owned restaurants Culinary contract services Franchising Corporate Total Capital expenditures: Company-owned restaurants Culinary contract services Franchising Corporate Total Income before income taxes and discontinued operations: Segment level profit Opening costs Depreciation and amortization General and administrative expenses Provision for asset impairments, net Net gain (loss) on disposition of property and equipment Interest income Interest expense Other income, net Total Total assets: Company-owned restaurants Culinary contract services Franchising Corporate Total Continuing Operations Property and equipment related to company-owned assets Continuing Operations Property and equipment related to Culinary Contract Services Discontinued Operations Property and equipment related to corporate assets February 13, 2013. Land Restaurant equipment and furnishings Buildings Leasehold and leasehold improvements estimated useful life Office furniture and equipment Construction in progress Less accumulated depreciation and amortization Property and equipment, net Intangible assets, net Goodwill Provision for asset impairments Net (gain) loss on disposition of property and equipment Effect on EPS: Basic Assuming dilution Prepaid expenses Assets related to discontinued operations—current Property and equipment Other assets Assets related to discontinued operations—non-current Deferred income taxes Accrued expenses and other liabilities Liabilities related to discontinued operations—current Other liabilities Deferred income taxes Liabilities related to discontinued operations—non-current Pretax loss Income tax benefit on discontinued operations Loss on discontinued operations Discontinued locations closed during the period Impairments Gains Net (loss) gain Other Loss from discontinued operations Effect on EPS from discontinued operations—basic February 13, 2013. February 13, 2013. Affiliated rents paid for this restaurant property lease represented AFFILIATED COSTS INCURRED: General and administrative expenses—professional and other costs Capital expenditures—custom-fabricated and refurbished equipment and furnishings Other operating expenses and opening costs, including property leases Total RELATIVE TOTAL COMPANY COSTS: General and administrative expenses Capital expenditures Other operating expenses and opening costs Total AFFILIATED COSTS INCURRED AS A PERCENTAGE OF RELATIVE TOTAL COMPANY COSTS February 13, 2013. February 13, 2013. Outstanding at August 29, 2012 Granted Exercised Forfeited/Expired Outstanding at November 21, 2012 Exercisable at November 21, 2012 Unvested at August 29, 2012 Granted Vested Unvested at November 21, 2012 Numerator: Income (loss) from continuing operations Loss from discontinued operations Net income (loss) Denominator: Denominator for basic earnings per share—weighted-average shares Effect of potentially dilutive securities: Employee and non-employee stock options Denominator for earnings per share assuming dilution Income (loss) per share from continuing operations: Basic Assuming dilution Loss per share from discontinued operations: Basic Assuming dilution Net income (loss) per share: Basic Assuming dilution February 13, 2013. increased 0.1% in the two quarters ended February 13, 2013. approximate $0.4 million increase in utilities; (3) an approximate $0.8 million increase in restaurant supply and services expense; (4) an approximate $0.3 million increase in marketing expenses; and (5) an approximate $0.2 million increase in insurance and other expenses partially offset by (6) an approximate $0.3 million reduction in repairs and maintenance expenses. and the sales volume at those locations. We expanded our profit margin in this business segment to 8.9% of culinary contract services revenue in the quarter ended February 13, 2013 from 1.4% on the quarter ended February 15, 2012. Three of these restaurants were previously operated by franchise owners. February 15, 2012. one Culinary Contract Services location. February 13, 2013, and in the quarter ended February 15, 2012. balances. properties that we lease to third parties. February 15, 2012. February 15, 2012. The loss from discontinued operations of $0.4 million in the quarter ended Total cash provided by (used in): Operating activities Investing activities Financing activities Increase in cash and cash equivalents other liabilities. of $0.3 million from the first two quarters of fiscal year 2012. costs and taxes other than income taxes. We are obligated to pay to the Administrative Agent for the account of each lender a quarterly commitment fee based on the average daily unused amount of the commitment of such lender, ranging from 0.30% to 0.40% per annum depending on our Total Leverage Ratio (as defined in the Credit Agreement) at the most recent determination date. February 13, 2013.x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 November 21, 2012¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 74-1335253 (IRS EmployerIdentification No.)77040 (Address of principal executive offices) (Zip Code) Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨ December 14, 2012March 18, 2013 there were 28,191,20328,232,692 shares of the registrant’s common stock outstanding.Page Page 3 Item 1 Financial Statements 3 Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 19 32 29 32 29 30 30Item 1 Legal Proceedings 33 30Item 1A Risk Factors 33 31Item 6 Exhibits 33 Signatures 34 November 21,
2012 August 29,
2012 (Unaudited) $ 1,955 $ 1,223 3,362 4,000 4,960 3,561 1,164 3,010 6 40 1,924 1,932 13,371 13,766 602 602 4,820 4,824 174,360 173,653 26,351 26,679 195 195 8,694 9,354 1,863 1,944 $ 230,256 $ 231,017 $ 16,675 $ 14,849 465 411 20,244 20,677 37,384 35,937 11,500 13,000 326 1,133 8,107 8,288 57,317 58,358 9,176 9,176 24,683 24,532 143,855 143,726 (4,775 ) (4,775 ) 172,939 172,659 $ 230,256 $ 231,017 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 2,897 $ 1,223 3,722 4,000 4,507 3,562 2,880 3,008 33 42 1,912 1,932 15,951 13,767 602 602 5,667 4,844 180,190 173,633 28,507 26,679 338 195 8,707 9,354 3,980 1,943 $ 243,942 $ 231,017 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: $ 16,339 $ 14,849 368 442 18,894 20,646 35,601 35,937 25,500 13,000 302 1,133 8,983 8,288 70,386 58,358 Commitments and Contingencies SHAREHOLDERS’ EQUITY Common stock, $0.32 par value; 100,000,000 shares authorized; Shares issued were 28,732,692 and 28,677,203, respectively; Shares outstanding were 28,232,692 and 28,177,203, respectively 9,194 9,176 25,079 24,532 144,058 143,726 (4,775 ) (4,775 ) 173,556 172,659 $ 243,942 $ 231,017 Quarter Ended Two Quarters Ended (12 weeks) (12 weeks) (24 weeks) (24 weeks) SALES: $ 82,152 $ 73,434 $ 156,120 $ 146,592 3,667 4,197 7,508 8,733 1,540 1,653 3,062 3,135 119 131 241 278 87,478 79,415 166,931 158,738 COSTS AND EXPENSES: 23,763 20,758 44,606 41,263 28,817 25,400 54,346 50,487 19,593 16,147 37,434 33,660 261 42 467 77 3,342 4,137 6,808 8,243 4,312 4,114 8,430 8,210 7,616 6,737 14,994 13,547 — — 90 175 Net loss (gain) on disposition of property and equipment (1,321 ) 72 (1,563 ) 81 86,383 77,407 165,612 155,743 1,095 2,008 1,319 2,995 2 2 4 3 (214 ) (215 ) (389 ) (494 ) 207 165 451 351 Income before income taxes and discontinued operations 1,090 1,960 1,385 2,855 487 603 566 928 603 1,357 819 1,927 Loss from discontinued operations, net of income taxes (400 ) (269 ) (487 ) (636 ) NET INCOME $ 203 $ 1,088 $ 332 $ 1,291 Income per share from continuing operations: $ 0.02 $ 0.05 $ 0.03 $ 0.07 0.02 0.05 0.03 0.07 Loss per share from discontinued operations: $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) (0.01 ) (0.01 ) (0.02 ) (0.02 ) Net income per share: $ 0.01 $ 0.04 $ 0.01 $ 0.05 0.01 0.04 0.01 0.05 Weighted average shares outstanding: 28,614 28,365 28,500 28,329 28,825 28,410 28,698 28,359 StatementsStatement of OperationsShareholders’ Equity (unaudited)thousands except per share data) Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) $ 73,968 $ 73,159 3,841 4,536 1,522 1,482 122 148 79,453 79,325 20,842 20,504 25,529 25,087 17,842 17,516 206 35 3,466 4,106 4,136 4,114 7,378 6,810 90 175 (242 ) 9 79,247 78,356 206 969 2 1 (175 ) (279 ) 234 217 267 908 78 325 189 583 (60 ) (379 ) $ 129 $ 204 $ 0.01 $ 0.02 0.01 0.02 $ — $ (0.01 ) — (0.01 ) $ 0.01 $ 0.01 0.01 0.01 28,386 28,262 28,567 28,304 Common Stock Total Issued Treasury Paid-In Retained Shareholders’ Shares Amount Shares Amount Capital Earnings Equity 28,677 $ 9,176 (500 ) $ (4,775 ) $ 24,532 $ 143,726 $ 172,659 — — — — — 332 332 Share-based compensation expense 14 4 — — 24 — 28 — — — — 37 — 37 Common stock issued under employee benefit plans 28 9 — — 120 — 129 Common stock issued under nonemployee benefit plans 14 5 — — 366 — 371 BALANCE AT FEBRUARY 13, 2013 28,733 $ 9,194 (500 ) $ (4,775 ) $ 25,079 $ 144,058 $ 173,556 StatementStatements of Shareholders’ EquityCash Flows (unaudited) Common Stock Paid-In
Capital Retained
Earnings Total
Shareholders’
Equity Issued Treasury Shares Amount Shares Amount 28,677 $ 9,176 (500 ) $ (4,775 ) $ 24,532 $ 143,726 $ 172,659 — — — — — 129 129 — — — — 137 — 137 — — — — 14 — 14 28,677 $ 9,176 (500 ) $ (4,775 ) $ 24,683 $ 143,855 $ 172,939 Two Quarters Ended (24 weeks) (24 weeks) CASH FLOWS FROM OPERATING ACTIVITIES: $ 332 $ 1,291 Adjustments to reconcile net income to net cash provided by operating activities: (967 ) 778 8,467 8,247 52 52 157 108 371 297 37 — (115 ) 415 Cash provided by operating activities before changes in operating assets and liabilities 8,334 11,188 385 571 (397 ) (690 ) 589 (503 ) (1,344 ) (441 ) 7,567 10,125 CASH FLOWS FROM INVESTING ACTIVITIES: 3,571 1,316 (11,435 ) (9,247 ) (10,706 ) — 20 (197 ) (18,550 ) (8,128 ) CASH FLOWS FROM FINANCING ACTIVITIES: 37,100 19,200 (24,600 ) (21,200 ) 157 — — (1 ) 12,657 (2,001 ) 1,674 (4 ) 1,223 1,252 $ 2,897 $ 1,248 Cash paid for: $ — $ — 334 423 Consolidated Statements of Cash Flows (unaudited)(In thousands) Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) $ 129 $ 204 (152 ) 551 4,136 4,114 26 26 137 209 14 — (113 ) (17 ) 4,177 5,087 638 209 (1,398 ) (1,707 ) 1,930 (582 ) 1,239 5,796 6,586 8,803 510 465 (4,874 ) (4,519 ) 10 (136 ) (4,354 ) (4,190 ) 12,600 9,800 (14,100 ) (13,800 ) — (1 ) (1,500 ) (4,001 ) 732 612 1,223 1,252 $ 1,955 $ 1,864 $ — $ — 146 228 The accompanying notes are an integral part of these consolidated financial statements.Luby’s, Inc.November 21, 2012November 21, 2012February 13, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending August 28, 2013.Property and equipment $ 6,220 License agreement and trade name 2,347 Accounts receivable 108 Inventories 548 Cash and cash equivalents 58 329 169 143 2,211 (570 ) (405 ) (185 ) Personal property and real estate tax liability (170 ) (97 ) Net cash paid for acquisition $ 10,706 Two Quarters Ended (Unaudited) (Unaudited) (In thousands) $ 178,542 $ 179,695 316 1,273 (171 ) 637 Pro forma income from continuing operations per share 0.01 0.04 0.01 0.04 Pro forma net income (loss) per share (0.01 ) 0.02 (0.01 ) 0.02 3.4. Reportable SegmentsFuddruckersCheeseburger in Paradise, with a couple of non-core restaurant locations under other brand names (i.e., Koo Koo Roo California Bistro and Bob Luby’s Seafood). Both Luby’s and FuddruckersAll company-owned restaurants are casual dining counter service restaurants. Each restaurant is an operating segment because operating results and cash flow can be determined for each restaurant.158183 at November 21, 2012February 13, 2013 and 154 at August 29, 2012.November 21, 2012February 13, 2013 and August 29, 2012.121119 at November 21, 2012February 13, 2013 and 125 at August 29, 2012. Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In Thousands) $ 74,090 $ 73,307 3,841 4,536 1,522 1,482 79,453 79,325 $ 9,877 $ 10,200 375 430 1,522 1,482 11,774 12,112 $ 3,675 $ 3,648 108 114 177 177 176 175 4,136 4,114 $ (4,820 ) $ (4,445 ) (1 ) (32 ) 0 0 (53 ) (42 ) (4,874 ) (4,519 ) $ 11,774 $ 12,112 (206 ) (35 ) (4,136 ) (4,114 ) (7,378 ) (6,810 ) (90 ) (175 ) 242 (9 ) 2 1 (175 ) (279 ) 234 217 $ 267 $ 908 November 21,
2012 August 29,
2012 $ 182,874 $ 182,290 3,577 3,774 14,954 15,352 28,851 29,601 230,256 231,017 Quarter Ended Two Quarters Ended (12 weeks) (12 weeks) (24 weeks) (24 weeks) Sales: $ 82,271 $ 73,565 $ 156,361 $ 146,870 3,667 4,197 7,508 8,733 1,540 1,653 3,062 3,135 87,478 79,415 166,931 158,738 Segment level profit: $ 10,098 $ 11,260 $ 19,975 $ 21,460 325 60 700 490 1,540 1,653 3,062 3,135 11,963 12,973 23,737 25,085 Depreciation and amortization: $ 3,853 $ 3,679 $ 7,382 $ 7,328 106 108 214 221 177 177 354 354 176 150 480 (307 ) 4,312 4,114 8,430 8,210 Capital expenditures: $ 6,402 $ 4,648 $ 11,222 $ 9,132 40 43 41 76 — — — — 119 36 172 39 $ 6,561 $ 4,727 $ 11,435 $ 9,247 Income before income taxes and discontinues operations: $ 11,963 $ 12,973 $ 23,737 $ 25,085 (261 ) (42 ) (467 ) (77 ) (4,312 ) (4,114 ) (8,430 ) (8,210 ) (7,616 ) (6,737 ) (14,994 ) (13,547 ) — — (90 ) (175 ) Net gain (loss) on disposition of property and equipment 1,321 (72 ) 1,563 (81 ) 2 2 4 3 (214 ) (215 ) (389 ) (494 ) 207 165 451 351 $ 1,090 $ 1,960 $ 1,385 $ 2,855 Total assets: Company-owned restaurants $ 195,071 $ 182,287 Culinary contract services 3,557 3,774 Franchising 14,701 15,352 Corporate 30,613 29,604 Total $ 243,942 $ 231,017 4.5. Fair Value Measurements = Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. = Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. = Level 3: Defined as pricing inputs that are unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Fair Value
Measurement Using Quarter Ended
November 21,
2012 Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Impairments (In thousands) $ 20 $ — $ — $ 20 $ (90 ) Fair Value
Measurement Using Quarter Ended
November 23,
2011 Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Impairments (In thousands) $ 57 $ — $ — $ 57 $ (175 ) $ 802 $ — $ — $ 802 $ (373 ) (In thousands) Continuing Operations Property and equipment related to company-owned restaurant assets $ 20 $ — $ — $ 20 $ (90 ) Discontinued Operations Property and equipment related to corporate assets $ 1,634 $ — $ — $ 1,634 $ (506 ) (In thousands) Continuing Operations $ 57 $ — $ — $ 57 $ (175 ) Discontinued Operations Property and equipment related to corporate assets $ 1,875 $ — $ — $ 1,875 $ (510 ) 5.6. Income TaxesNovember 21, 2012.6.7. Property and Equipment, Intangible Assets and GoodwillNovember 21, 2012February 13, 2013 and August 29, 2012, together with the related estimated useful lives used in computing depreciation and amortization, were as follows: November 21,
2012 August 29,
2012 Estimated
Useful Lives (In thousands) $ 59,432 $ 59,159 — 110,491 109,059 1 to 15 years 172,689 167,346 20 to 33 years 33,450 32,913 Lesser of lease term or 7,071 7,030 3 to 10 years 413 3,890 — 383,546 379,397 (209,186 ) (205,744 ) $ 174,360 $ 173,653 $ 26,351 $ 26,679 21 years $ 195 $ 195 — (In thousands) $ 61,098 $ 59,159 — 116,590 109,039 1 to 15 170,640 167,346 20 to 33 34,824 32,913 7,276 7,030 3 to 10 712 3,890 — 391,140 379,377 Less accumulated depreciation and amortization (210,950 ) (205,744 ) $ 180,190 $ 173,633 $ 28,507 $ 26,679 21 $ 338 $ 195 — $3.3$3.6 million of accumulated amortization expense for the quarter ended November 21, 2012as of February 13, 2013 and $2.9 million of accumulated amortization expense as of August 29, 2012.November 21,August 29, 2012 and August 29, 2012.relates to our Company-owned restaurants reportable segment.7.8. Impairment of Long-Lived Assets, Discontinued Operations and Property Held for Sale Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In thousands, except per share data) $ 90 $ 175 (242 ) 9 $ 152 $ 184 $ 0.01 $ 0.01 $ 0.01 $ 0.01 Two Quarters ended (24 weeks) (24 weeks) (In thousands, except per share data) $ 90 $ 175 Net (gain) loss on disposition of property and equipment (1,563 ) 81 $ (1,473 ) $ 256 Effect on EPS: $ (0.05 ) $ 0.01 $ (0.05 ) $ 0.01 quartertwo quarters ended November 21, 2012February 13, 2013 is related to an operating Fuddruckers restaurant at a leased location.quartertwo quarters ended February 13, 2013 includes the gain on disposal of assets at a Koo Koo Roo leased location and proceeds from the eminent domain disposition of part of a parking lot at a Luby’s location net of asset retirements.The impairment charge for the quarter ended November 23, 2011 is related toculinary contract services agreement. The net loss for the quarter ended November 23, 2011 includes the resultsresult of asset retirements.Discontinued OperationsOf the 24 locations classified as discontinued operations in the first quarter of fiscal year 2010 15 locations have been sold, leases on 2 locations were terminatedadoption of the Company’s Cash Flow Improvement and 2 locations wereCapital Redeployment Plan (“the Plan”), the Company reclassified as for use in continuing23 operating stores and one previously closed location to discontinued operations. Of the 5 remaining locations, 3 locations are owned and we anticipate selling the locations within 18 months. The remaining 2 locations are leased with terms expiring in January 2013 and May 2018. The results of operations, assets and liabilities for all units included in the Plan have been reclassified to discontinued operations in the statement of operations and balance sheets for all periods presented. November 21,
2012 August 29,
2012 (in thousands) $ 6 $ 40 $ 6 $ 40 $ 4,812 $ 4,812 8 12 $ 4,820 $ 4,824 $ 298 $ 298 167 113 $ 465 $ 411 $ 108 $ 134 218 999 $ 326 $ 1,133 (in thousands) $ 33 $ 42 Assets related to discontinued operations—current $ 33 $ 42 $ 5,663 $ 4,812 4 8 Assets related to discontinued operations—non-current $ 5,667 $ 4,844 $ 297 $ 297 71 145 $ 368 $ 442 $ 84 $ 134 218 999 Liabilities related to discontinued operations—non-current $ 302 $ 1,133 thetwo ground leases were previously impaired to zero.As of November 21, 2012,February 13, 2013, the Company had 78 properties classified as discontinued operations assets. The carrying value of the owned properties was $4.8$5.7 million. The carrying values of thetwo ground leases were previously impaired to zero. but one of these properties for lease or sale and the Company’s results of discontinued operations will be affected by the disposal of properties related to discontinued operations to the extent proceeds from the sales exceed or are less than net book value. Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In thousands, except discontinued locations) $ (99 ) $ (594 ) 39 215 (60 ) (379 ) — — Two Quarters ended (24 weeks) (24 weeks) (In thousands, except discontinued locations) $ — $ — (767 ) (901 ) Income tax benefit (expense) on discontinued operations 280 265 Net income (loss) on discontinued operations (487 ) (636 ) Discontinued locations closed during the period — — Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In thousands, except per share data) $ — $ (373 ) — 6 — �� (367 ) (60 ) (12 ) $ (60 ) $ (379 ) $ — $ (0.01 ) Two Quarters ended (24 weeks) (24 weeks) (In thousands, except per share data) $ (506 ) $ (510 ) — (12 ) $ (506 ) (522 ) 19 (114 ) $ (487 ) $ (636 ) Effect on EPS from discontinued operations—basic $ (0.02 ) $ (0.02 ) November 21, 2012February 13, 2013 and August 29, 2012, the Company had one owned property recorded at approximately $0.6 million in property held for sale. The Company is actively marketing the location currently classified as property held for sale.8.9. Commitments and ContingenciesNovember 21, 2012.9.10. Related PartiesNovember 21,February 13, 2013 and February 15, 2012 and November 23, 2011 were zero and $63,000,$63,600, respectively. Services provided under this agreement are subject to review and approval by the Finance and Audit Committee of the Company’s Board of Directors.$56,000$144,000 and $77,000$133,000 in the two quarters ended November 21,February 13, 2013 and February 15, 2012, and November 23, 2011, respectively.in the quartertwo quarters ended November 21, 2012.1.9%2.2% and 2.6%2.3% of total rents for continuing operations for the two quarters ended November 21,February 13, 2013 and February 15, 2012, and November 23, 2011, respectively. Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In thousands, except percentages) $ 13 $ 13 — 63 106 67 $ 119 $ 143 $ 7,378 $ 6,810 4,874 4,519 18,048 17,551 $ 30,300 $ 28,880 0.39 % 0.50 % Two Quarters Ended (24 weeks) (24 weeks) (In thousands, except percentages) AFFILIATED COSTS INCURRED: General and administrative expenses – professional and other costs $ 25 $ 25 Capital expenditures – custom-fabricated and refurbished equipment and furnishings — 63 Other operating expenses and opening costs, including property leases 145 108 $ 170 $ 196 RELATIVE TOTAL COMPANY COSTS: $ 14,994 $ 13,547 11,435 9,247 Other operating expenses and opening costs 37,901 33,737 $ 64,330 $ 56,531 AFFILIATED COSTS INCURRED AS A PERCENTAGE OF RELATIVE TOTAL COMPANY COSTS 0.26 % 0.35 % December 20, 2011,January 25, 2013, the Board of Directors of the Company approved the renewal of a consultant agreement with Ernest Pekmezaris, the Company’s former Chief Financial Officer. Under the agreement, Mr. Pekmezaris will continue to furnish to the Company advisory and consulting services related to finance and accounting matters and other related consulting services. The agreement expires on JanuaryJuly 31, 2013. Mr. Pekmezaris 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.10.11. Share-Based Compensationoriginal 0.41.1 million shares approved for issuance under the Non-employeeNonemployee Director Stock Plan, 0.50.6 million options, restricted stock units and restricted stock awards were granted, and 0.1 million options were cancelled or expired and added back into the plan. Approximately 2,0000.6 shares remain available for future issuance as of November 21, 2012.February 13, 2013. Compensation cost for share-based payment arrangements under the Non-employeeNonemployee Director Stock Plan, recognized in general and administrative expenses for the two quarters ended November 21,February 13, 2013 and February 15, 2012 were approximately $57,000 and November 23, 2011 was approximately $27,000 and $72,000,$155,000, respectively. original 2.6 million shares approved for issuance under the Employee Stock Plan, 4.6 million options and restricted stock units were granted, and 2.9 million options and restricted stock units were cancelled or expired and added back into the plan. Approximately 0.9 million shares remain available for future issuance as of November 21, 2012.February 13, 2013. Compensation cost for share-based payment arrangements under the Employee Stock Plan, recognized in general and administrative expenses for the two quarters ended November 21,February 13, 2013 and February 15, 2012 and November 23, 2011 waswere approximately $0.1$0.3 million and $0.1$0.2 million, respectively.Non-employeeNonemployee Director Stock Plan have exercise prices equal to the market price of the Company’s common stock at the date of the grant.Non-employeeNonemployee Director Stock Plan generally vest 100% on the first anniversary of the grant date and expire ten years from the grant date. No options were granted under the Non-employeeNonemployee Director Stock Plan in the first quarter of fiscal yeartwo quarters ended February 13, 2013. However, options to purchase 38,00024,000 shares at option prices from $1.98$4.47 to $6.45 per share remain outstanding as of November 21, 2012.the first quarter of fiscal year 2013 were granted under the Employee Stock Plan. OptionOptions to purchase 964,994919,585 shares at option prices of $3.44 to $11.10 per share remain outstanding as of November 21, 2012.November 21, 2012February 13, 2013 is presented in the following table: Shares Under
Fixed Options Weighted-Average
Exercise Price Weighted-Average
Remaining
Contractual Term Aggregate Intrinsic
Value (Years) (In thousands) 1,175,224 $ 6.31 3.8 $ 1,456 109,335 5.95 0 0 0 0 0 0 (281,565 ) 0 0 0 1,002,994 $ 5.17 5.1 $ 1,527 642,895 $ 5.25 4.4 $ 1,055 (Years) (In thousands) 1,175,224 $ 6.31 3.8 $ 1,456 109,335 5.95 — — (41,489 ) 3.78 — — Forfeited/Expired (299,485 ) — — — 943,585 $ 5.24 5.0 $ 2,654 660,687 $ 5.36 4.4 $ 1,852 November 21, 2012,February 13, 2013, and the grant price.first quarter of fiscal yeartwo quarters ended February 15, 2013 is presented in the following table: Restricted Stock
Units Weighted
Average
Fair Value Weighted-Average
Remaining
Contractual Term (Per share) (In years) 163,946 $ 4.83 1.8 214,290 5.95 — (14,000 ) 3.46 — 364,236 $ 5.54 2.4 (Per share) (In years) 163,946 $ 4.83 1.8 274,290 6.17 — (14,000 ) 3.46 — 424,236 $ 5.74 2.2 November 21, 2012,February 13, 2013, there was approximately $1.6$1.9 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.72.6 years.Non-EmployeeNonEmployee Director Stock Plan, directors are granted restricted stock in lieu of cash payments, for all or a portion of their compensation as directors. Directors may opt to receive 20% more shares of restricted stock awards by accepting more than the minimum required stock instead of cash. The number of shares granted is valued at the closing market price of the Company’s stock at the date of the grant. Restricted stock awards vest when granted because they are granted in lieu of a cash payment. However, directors are restricted from selling their shares until after the third anniversary of the date of the grant.11.12. Earnings Per Sharequartertwo quarters ended November 21, 2012February 13, 2013 include approximately 89,00075,000 shares with exercise prices exceeding market prices and approximately 5,00033,000 shares whose inclusion would also be antidilutive. Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In thousands expect per share data) $ 189 $ 583 (60 ) (379 ) $ 129 $ 204 28,386 28,262 181 42 28,567 28,304 $ 0.01 $ 0.02 0.01 0.02 $ — $ (0.01 ) — (0.01 ) $ 0.01 $ 0.01 0.01 0.01 Note 12. Subsequent EventLuby’s Inc., via a wholly owned subsidiary, purchased all the Membership Units of Paradise Restaurants Group, LLC, and certain of their affiliates, collectively known as Cheeseburger In Paradise, for approximately $11.0 million in cash plus reimbursements for cash on hand, inventory and accounts receivable offset by liabilities assumed at closing on December 5, 2012 and took over operations on December 6, 2012. Luby’s Fuddruckers Restaurants, LLC will operate 23 Cheeseburger in Paradise restaurants, located in 14 states. Quarter Ended Two Quarters Ended (12 weeks) (12 weeks) (24 weeks) (24 weeks) (In thousands except per share data) Numerator: $ 603 $ 1,357 $ 819 $ 1,927 (400 ) (269 ) (487 ) (636 ) Net income $ 203 $ 1,088 $ 332 $ 1,291 Denominator: Denominator for basic earnings per share – weighted-average shares 28,614 28,365 28,500 28,329 211 45 198 30 Denominator for earnings per share assuming dilution 28,825 28,410 28,698 28,359 Income per share from continuing operations: $ 0.02 $ 0.05 $ 0.03 $ 0.07 $ 0.02 $ 0.05 $ 0.03 $ 0.07 Loss per share from discontinued operations: $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) Net income per share: $ 0.01 $ 0.04 $ 0.01 $ 0.05 $ 0.01 $ 0.04 $ 0.01 $ 0.05 November 21, 2012February 13, 2013 included in Item 1 of Part I of this Quarterly Report on Form 10-Q, and the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended August 29, 2012.Cafeterias,Cafeteria, Luby’s Culinary Contract Services, Fuddruckers, and Cheeseburger in Paradise. Also included in our brands are Luby’s, Etc. and Koo Koo Roo Chicken Bistro. We purchased substantially all of the assets of Fuddruckers, Inc., Magic Brands, LLC and certain of their affiliates (collectively, “Fuddruckers”) in July 2010. We purchased all of the Membership Units of Paradise Restaurant Group, LLC and certain of their affiliates (collectively known as, “Cheeseburger in Paradise”) effective December 6,5, 2012. Accordingly, we were not the operator of the Cheeseburger in Paradise restaurants until after the end of the quarter ended November 21, 2012 and therefore none of the results of operations from the Cheeseburger in Paradise restaurants are included in this discussion.November 21, 2012,February 13, 2013, we owned and operated 158183 restaurants, of which 93 are traditional cafeterias, 6264 are gourmet hamburger restaurants, 23 are casual dining bar and restaurants, two are upscale fast serve chicken restaurants, and one primarily serves seafood. These establishments are located in close proximity to retail centers, business developments and residential areas mostly throughout the United States. On December 6, 2012 we took over operations of 23 Cheeseburger in Paradise restaurant and bar locations located across 14 states.November 21, 2012,February 13, 2013, we operated 18 Culinary Contract Service facilities. These facilities are located within healthcare and education settings in Texas and Louisiana. These facilities provide food service options to varied populations including in-hospital-room patient meal service, retail food-court style restaurant dining, and coffee/snack kiosks.November 21, 2012,February 13, 2013, we are a franchisor for a network of 121119 franchised Fuddruckers restaurants. The owners of these franchise units pay royalty revenue to us as a franchisor.FirstSecond Quarter and Year-to-Date Fiscal Year 2013 versus the FirstSecond Quarter and Year-to-Date Fiscal Year 2012$0.1$8.1 million, or 0.2%10.2%, in the quarter ended November 21, 2012February 13, 2013 compared to quarter ended November 23, 2011,February 15, 2012, consisting primarily of a $0.8$8.7 million increase in restaurant sales, offset by a $0.7$0.5 million decrease in Culinary Contract Sales.Sales and a $0.1 million decrease in franchise revenue. The other componentscomponent of total sales areis vending income.revenue andrevenue. The other component of total sales is vending income.Company ownedCompany-owned restaurants, franchise operations, and Culinary Contract Services.Company Owned$0.8$8.7 million in the quarter ended November 21, 2012February 13, 2013, compared to the quarter ended November 23, 2011.February 15, 2012. The increase in restaurant sales included a $0.4$7.7 million increase due to the acquisition of 23 Cheeseburger in Paradise branded stores, a $1.0 million increase in sales from Fuddruckers-branded restaurants and a less than $0.1 million increase in sales at Luby’s cafeteria-branded restaurants and a $0.4 million increase in sales from Fuddruckers-brandedCafeteria-branded restaurants. On a same store-store basis, restaurant sales increased 0.2%decreased 0.6%. The increasedecrease in same store sales was achieveddue primarily by declines in guest traffic partially offset by increases in the per person average spend offset by declines in guest traffic.spend. The increase in per person average spend was a result of altering the mix of menu items offered and selected by our customers and by motivating the purchase of additional items on the customer ticket.$0.3$3.0 million, or 1.6%14.5%, in the quarter ended November 21, 2012February 13, 2013, compared to the quarter ended November 23, 2011February 15, 2012 due primarily to total food and beverage rebatesthe addition of approximately $0.3 million recorded23 Cheeseburger in the quarter ended November 21, 2012 compared to $0.6 million in rebates recorded in the quarter ended November 23, 2011.Paradise branded stores. Removing the impact of Cheeseburger in Paradise and food and beverage rebates, food costs were comparable inincreased $0.7 million for the quarter ended November 21, 2012February 13, 2013, compared to the quarter ended November 23, 2011.February 15, 2012. Food commodity prices for our basket of food commodity purchases were mostly stable; however, we were affectedhigher by 2.1% for our Luby’s Cafeteria-branded restaurants offset by a decrease in the higher costsFuddruckers-branded restaurants of turkey which is a key component of our Thanksgiving offerings.1.6%. As a percentage of restaurant sales, food cost increased 0.2%0.6% to 28.2%28.9% in the quarter ended November 21, 2012February 13, 2013, compared to the quarter ended November 23, 2011.February 15, 2012. Removing the impact of Cheeseburger in Paradise, food costs as a percent of sales were 28.8%.aswere $0.7 million higher for the two quarters ended February 13, 2013, compared to the two quarters ended February 15, 2012. For the two quarters ended February 13, 2013, food commodity prices for our basket of food commodity purchases were higher due to a 2.1% increase for our Luby’s Cafeteria-branded restaurants offset by a 1.5% decrease for our Fuddruckers-branded restaurants. As a percentage of restaurant sales, decreased 0.3%food cost increased, 0.4% to 28.6% in the quartertwo quarters ended November 21, 2012 compared to the quarter ended November 23, 2011. Careful food cost management and menu mix management was partially offset byFebruary 13, 2013. Removing the impact of Cheeseburger in Paradise, food costs as a re-introductionpercentage of discounted limited time offers at certain locationssales were 28.5% in the latter part of the quartertwo quarters ended November 21, 2012.$0.4$3.4 million in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011.February 15, 2012. Hourly labor costs increased in partprimarily due to the addition of 23 new restaurants and a greater number of hours deployed during their first 60 days of operations. CrewCheeseburger in Paradise branded stores. Restaurant management labor training costs also increased $0.9 million in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011 as additional focus was placed on developing all restaurant employees to most effectively serve our customers and properly execute restaurant operational processes. Restaurant management labor costs were comparable in the quarter ended November 21,February 15, 2012, primarily due to the quarter ended Novemberaddition of the 23 2011.Cheeseburger in Paradise branded stores. As a percentage of restaurant sales, payroll and related costs increased, 0.2%0.5%, to 34.5%,35.1% in the quarter ended November 21, 2012February 13, 2013, compared to 34.3%34.6% in the quarter ended NovemberFebruary 15, 2012, primarily due to the acquisition of Cheeseburger in Paradise branded stores. Excluding Cheeseburger in Paradise, payroll and related costs were 34.6% in the quarter ended February 13, 2013.2011,new Cheeseburger in Paradise branded stores. Restaurant management labor costs increased $0.9 million in the two quarters ended February 13, 2013 compared to the two quarters ended February 15, 2012, primarily due to the addition of the Cheeseburger in partParadise branded stores. As a percentage of restaurant sales, payroll and related costs increased, 0.4%, to higher crew training34.8% in the two quarters ended February 13, 2013, compared to 34.4% in the two quarters ended February 15, 2012, primarily due to the acquisition of Cheeseburger in Paradise branded stores. Excluding the impact of Cheeseburger in Paradise, payroll and related costs offset by leveraging management costs on higher sales volumes.$0.3$3.4 million, or 1.8%21.4%, in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011,February 15, 2012, primarily due to (1) $2.4 million increase from the addition of 23 Cheeseburger in Paradise branded stores; (2) an approximate $0.3 million increase in marketing and advertising costs; (2)utilities; (3) an approximate $0.3$0.4 million increase in restaurant supply and services expense; and (3) an approximate $0.5 million increase in occupancy and insurance, and other costs partially offset by (3)(4) an approximate $0.3$0.2 million reduction in repairs and maintenance expenses and insurance expenses. As a percentage of restaurant sales, other operating expenses increased 0.2%1.8%, to 24.1%23.8%, in the quarter ended November 21, 2012February 13, 2013 compared to 23.9%22.0% in the quarter ended November 23, 2011,February 15, 2012, due to (1) the cost increases, partially offset by the costs decreases, enumerated above andabove; (2) the ability to leverage the fixed cost components of certaintypically higher operating costs overfor the four to eight weeks after opening a new restaurant; and (3) a decline in sales in our same store group of restaurants. Excluding the impact of Cheeseburger in Paradise, other operating expenses costs as a percentage of sales were 23.1%, in the quarter ended February 13, 2013.increased sales volume.increased $40decreased $113 thousand in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011.February 15, 2012. The $40$113 thousand increasedecrease in franchise revenue includes $20an $18 thousand increasedecrease in franchise royalties and $20a $95 thousand increasedecrease in franchise fees.November 23, 2011,February 15, 2012, there were 121122 Fuddruckers franchise units in the system. Over the prior one year period ended November 21, 2012,February 13, 2013, our franchisees have opened six4 units, including one in Mexico where we are a joint venture partner. Over the prior one year period ended November 21, 2012February 13, 2013 there were also sixfive franchise units that closed on a permanent basis.basis and two units that transferred to us as the franchisor to operate as company-operated units. As such, at the quarter ended November 21, 2012,February 13, 2013, there were 121119 Fuddruckers franchise units in the system.duringin the quarter ended November 21, 2012 compared to 21 client locations duringFebruary 13, 2013 and 19 in the quarter ended November 23, 2011.February 15, 2012. In fiscal year 2012, we refined our operating model by concentrating on clients able to enter into agreements where all operating costs are reimbursed to us and we generally charge a fixed fee. These agreements typically present lower financial risk to the company.$0.7$0.5 million, or 15.3%12.6% in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011.February 15, 2012. The decrease in revenue was primarily due to the reduction in the number of locations where we operate and the sales volume at those locations. Whilehas declined,where we believe we now operate with a stronger mix of clients.$0.6$0.8 million, or 15.6%19.2%, in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011,February 15, 2012, due to a commensurate decrease in culinary contract sales volume.$0.2 million in the quarter ended November 21, 2012 compared to approximately $35$261 thousand in the quarter ended November 23, 2011.February 13, 2013 compared to approximately $42 thousand in the quarter ended February 15, 2012. The quarter ended November 21, 2012February 13, 2013 and the quarter ended November 23, 2011February 15, 2012 included carrying costs of locations to be developed for future restaurant openings. The quarter ended November 21,February 13, 2013 also included the labor, supplies, and other costs necessary to support the opening of two Fuddruckers restaurants, one of which was previously operated by a franchise owner.threefive Fuddruckers restaurants.$22 thousand,$0.2 million, or 0.5%4.3%, in the quarter ended November 21, 2012February 13, 2013, compared to the quarter ended November 23, 2011February 15, 2012, due to the addition of depreciation related to Cheeseburger in Paradise, and new capital expenditures for new construction and remodel activity partially offset by certain assets reaching the end of their depreciable lives.$0.6$0.9 million, or 8.3%13.0%, in the quarter ended November 21, 2012February 13, 2013 compared to the quarter ended November 23, 2011.February 15, 2012. The increase was primarily due to higher salarythe integration costs of $0.4 million and benefitsincremental personnel costs of approximately $0.2 million related to the acquisition of Cheeseburger in Paradise. The remaining increase was related to professional fees, corporate supply costs, and other expenses. As a percentage of total revenue, general and administrative expenses increased to 8.7% in the quarter ended February 13, 2013, compared to 8.5% in the quarter ended February 15, 2012.an approximateadministrative expenses increased by approximately $1.4 million, or 10.7%, in the two quarters ended February 13, 2013, compared to the two quarters ended February 15, 2012. The increase was primarily due to (1) integration costs of $0.4 million and incremental personnel costs of approximately $0.2 million related to the acquisition of Cheeseburger in Paradise; (2) professional fees, corporate supply costs, and other expenses; and (3) a non-recurring receipt of $0.3 million settlement in our favor from a class action suit related to credit card interchange fees that was recorded in the quarter ended November 23, 2011. As a percentage of total sales,revenue, general and administrative expenses increased to 9.3%9.0% in the quartertwo quarters ended November 21, 2012February 13, 2013, compared to 8.6%8.5% in the quartertwo quarters ended November 23, 2011.quartertwo quarters ended November 21, 2012February 13, 2013, reflects the impairment of one leased location where the projected future cash flows through the end of the lease term are now not expected to support the value of the assets at the location. Theinfor the quartertwo quarters ended November 23, 2011February 15, 2012, was related to a culinary contract services agreement.$0.2$1.3 million in the quarter ended November 21, 2012February 13, 2013, and related to the saledisposition of a portion of our leasehold interest inparking lot at one restaurant location offset by normal asset retirement activity in our restaurant units. The loss or gain on disposition of property and equipment was a loss of nine thousand dollars in the quarter ended November 23, 2011.Interest IncomeInterest income increased by approximately $1$72 thousand in the quarter ended November 21,February 15, 2012, comparedand related primarily to normal asset retirement activity.November 23, 2011.November 21,February 13, 2013 was $0.2 million and $0.4 million in the quarter ended February 15, 2012 due to similar debt balances and interest rates.interest expense in the quartertwo quarters ended November 23, 2011,February 15, 2012, due to lower outstandingaverage debt balances resulting from the application of cash from operations and property sales to our debt balance.November 21, 2012February 13, 2013 increased approximately $17 thousand compared to the quarter ended November 23, 2011.February 15, 2012. The increase was primarily due to (1)higher net rental income on properties that we lease to third parties; (2) oil and gas royalty income; and (3)parties.prepaid sales tax discounts earnednet rental income on a higher sales volumes.November 21, 2012,February 13, 2013, the income taxes related to continuing operations resulted in a tax provision of $0.1 million$487 thousand compared to a tax provision of $0.3 million$603 thousand for the quarter ended November 23, 2011.$0.1 million in the quarter ended November 21, 2012 compared to a loss of $0.4 million in the quarter ended November 23, 2011. TheFebruary 13, 2013 compared to a loss forof $0.3 million in the quarter ended November 21, 2012 reflects the carrying costs associated with assets that are related to discontinued operation, offset by the income tax benefit related to discontinued operations.November 23, 2011February 13, 2013 included (1) $0.2$0.1 million in carrying costs associated with assets related to discontinued operations, (2) an asset impairment of $0.4 million; partially$0.5 million and (3) an income tax benefit of $0.2 million. The loss of $0.3 million from discontinued operations in the quarter ended February 15, 2012 included $0.2 million in carrying costs associated with assets related to discontinued operations and an asset impairment of $0.1 million.a $0.2$0.3 million income tax benefit related to discontinued operations.General. Our primary sources of short-term and long-term liquidity are cash flows from operations and our revolving credit facility. CashDuring the two quarters ended February 13, 2013, cash provided by operating activities was $6.6$7.6 million and by financing activities was $12.7 million offset by cash used in investing activities of $4.4 million and financing activities of $1.5$18.6 million. Cash and cash equivalents increased $0.7$1.7 million in the first quartertwo quarters of fiscal year 2013 and $0.6 millioncompared to no increase or decrease in the first quartertwo quarters of fiscal year 2012. Cash provided by operating activities was $8.8$10.1 million offset by cash used in investing activities or $4.2of $8.1 million and financing activities of $4.0$2.0 million in the first quartertwo quarters of fiscal year 2012. We plan to continue the level of capital and repair and maintenance expenditures necessary to keep our restaurants attractive and operating efficiently.reduce our debt;purchase Cheeseburger in Paradise;fromfor our Company-owned restaurants and CCS agreements. Quarter Ended November 21,
2012 November 23,
2011 (12 weeks) (12 weeks) (In thousands) $ 6,586 $ 8,803 (4,354 ) (4,190 ) (1,500 ) (4,001 ) $ 732 $ 612 Two Quarters ended (24 weeks) (24 weeks) (In thousands) Total cash provided by (used in): $ 7,567 $ 10,125 (18,550 ) (8,128 ) 12,657 (2,001 ) $ 1,674 $ (4 ) $6.6$7.6 million in the first quartertwo quarters of fiscal year 2013, a $2.2$2.6 million decrease from the first quartertwo quarters of fiscal year 2012. The $2.2$2.6 million decrease in cash is due to a $0.9$2.9 million decrease in cash from operations before changes in operating assets and liabilities andoffset by a $1.3$0.3 million decreasechange in cash fromgenerated by changes in operating assets and liabilities.liabilities for the two quarters ended February 13, 2013 and February 15, 2012.$4.2$8.3 million in the first quartertwo quarters of fiscal year 2013, a $0.9$2.9 million decrease compared to the first quartertwo quarters of fiscal year 2012. CashThe $2.9 million decrease in cash provided by operating activities before changes in operating assets and liabilities was due to less cash generated by thesegment level profit of $1.5 million for company-owned restaurant segment was $0.2restaurants and $0.1 million lessfor franchising and $0.4 million increase in the first quarter of fiscal year 2013 compared to fiscal year 2012 and cash used for opening costs and $1.1 million increase in cash used in general and administrative activities for legal and professional, payroll and related costs and director fees offset by an increase in cash provided by culinary contract services.$0.2a $0.8 million higheruse of cash in the first quarter of fiscal year 2013 than fiscal year 2012. Cash used in discontinued operations was $0.1 million in the first quartertwo quarters of fiscal year 2013, a $0.3 million decrease in cash flow from the first quarter of fiscal year 2012.Cash generated by changes in operating assets and liabilities was $2.4 million in the first quarter of fiscal year 2013, a $1.3 million decrease in cashincrease compared to the first quartertwo quarters of fiscal year 2012. The $0.3 million increase in the source of cash was due to differences in the change in accounts payable, accruedasset and liability balances during the two quarters ended February 13, 2013 and February 15, 2012. The favorable differences in the change in prepaid expenses and other liabilitiesassets which includes prepayments for rent, insurance premiums and software maintenance was a $1.2 million source of cash in the first quarter of fiscal year 2013, a $4.6 million decrease from the first quarter of fiscal year 2012 offset by a $3.3 million increase in operating assets.The $4.6 million decrease in cash from current operating liabilities in the first quarter of fiscal year 2013 compared to the first quarter of fiscal year 2012 was primarily due to timing differences in payments and accruals of salary and related costs of $3.3 million. The increase in accounts payable was $0.9 million less in the first quarter of fiscal year 2013 compared to the first quarter of fiscal year 2012.The $3.3 million increase in cash flow from current operating assets in the first quarter of fiscal year 2013 compared to the first quarter of fiscal year 2012 was primarily due to changes in prepaid expenses. The decrease in cash due to changes in prepaid rent expenses in the first quarter of fiscal year 2013 compared to fiscal year 2012 was primarily due to timing differences between the two quarters for insurance of $1.1 million and rent of $1.0 million. Other increases in cash flow due to changes in current operating assets include the decrease$0.3 million for food and supply inventories, offset by unfavorable differences in trade accounts and other receivables of $0.4$0.2 million more in the first quarter of fiscal year 2013, than the first quarter of fiscal year 2012 and the increase in food$0.9 million for accounts payable, accrued expenses and supply inventories of $0.3 million less in the first quarter of fiscal year 2013 than the first quarter of fiscal year 2012.$4.4$18.6 million in the first quarter of fiscal yeartwo quarters ended February 13, 2013 and $4.2$8.1 million in the first quarter of fiscal yeartwo quarters ended February 15, 2012. Capital expenditures were $4.9$11.4 million in the first quarter of fiscal yeartwo quarters ended February 13, 2013, a $0.4$2.2 million increase compared to the first quarter of fiscal yeartwo quarters ended February 15, 2012. Proceeds from the disposal of assets was $0.5$3.6 million in the first quartertwo quarters of fiscal years 2013 and $1.3 million in the first two quarters of fiscal year 2012.usedprovided by financing activities was $1.5$12.7 million in the first quarter of fiscal yeartwo quarters ended February 13, 2013, a $2.5$14.7 million decreaseincrease compared to the first quarter of fiscal yeartwo quarters ended February 15, 2012.November 21, 2012,February 13, 2013, we did not hold any long-term investments.decreased $0.4increased $2.2 million in the first quartertwo quarters of fiscal year 2013 compared to an increase of $2.8$0.4 million in the first quartertwo quarters of fiscal year 2012. In the first quartertwo quarters of fiscal year 2013, prepaid expensescash increased $1.7 million and food and supply inventory increased $0.9 million; partially offset by decreases in trade accounts and other receivables decreased $1.8of $0.3 million and $0.6 million, partially offset by increases in inventory and cashprepaid expenses of $1.4 million and $0.7 million, respectively.$0.1 million. In the first quartertwo quarters of fiscal year 2012, food inventories increased $1.7 million, cash increased $0.6$0.7 million and prepaid expenses increased $0.6$0.3 million while trade accounts and other receivable decreased $0.2$0.6 million. The change in prepaid expenses and other assets was a $1.9$2.0 million source of cash in the first two quarters of fiscal year 2013, an increase of $2.5$1.4 million from the first quartertwo quarters of fiscal year 2012. The $2.5change in trade accounts and other receivables was a $0.3 million source of cash in the first two quarters of fiscal year 2013, a decrease of $0.3 million from the first two quarters of fiscal year 2012. The change in food and supplies inventory was a $0.9 million use of cash in the first two quarters of fiscal year 2013, an increase was primarily due to timing differences in payments and accruals for insurance, rent and advertising.increased $1.4decreased $0.3 million in the first quartertwo quarters of fiscal year 2013 compared to a $4.6$1.6 million increasedecrease in the first quartertwo quarters of fiscal year 2012. In the first quartertwo quarters of fiscal year 2013, accounts payables increased $1.8$1.5 million and accrued expenses and other liabilities decreased $0.4$1.7 million. In the first quartertwo quarters of fiscal year 2012 accounts payables increased $2.7$0.6 million and accrued expenses and other liabilities increased $1.8decreased $2.0 million. The change in accounts payables, accrued expenses and other liabilities was a $1.2$1.9 million usesource of cash in the first quartertwo quarters of fiscal year 2013, which was $4.6an increase of $2.3 million less thanfrom the first quartertwo quarters of fiscal year 2012. The $4.6$2.3 million difference in the two quarters was primarily due to timing differences in the accrual and payment of salary related costs.quartertwo quarters of fiscal year 2013 were approximately $4.9$11.4 million and related to recurring maintenance of our existing units, to improvement of our culinary contract services business and the development of future restaurant sites. We expect to be able to fund all capital expenditures in fiscal year 2013 using proceeds from the sale of assets, cash flows from operations and our available credit. We expect to spend approximately $24.0 million to $29.0 million on capital expenditures in fiscal year 2013.and October 20, 2011 and February 14, 2013 (the revolving credit facility, together with all amendments thereto, is referred to as the “2009 Credit Facility”). The 2009 Credit Facility is governed by the Credit Agreement dated as of November 9, 2009 (as amended to date, the “Credit Agreement”) among us, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and Amegy Bank, National Association, as Syndication Agent. The maturity date of the 2009 Credit Facility is September 1, 2014.November 21, 2012.February 13, 2013. The 2009 Credit Facility also provides for the issuance of letters of credit in a maximum aggregate amount of $15.0 million outstanding at any one time. At November 21, 2012, $37.5February 13, 2013, $23.5 million was available under the 2009 Credit Facility.November 21, 2012,February 13, 2013, the carrying value of the collateral securing the 2009 Credit Facility was $87.7$88.3 million.to the sum of (1) the lesser of (a) $38.0 million or (b) the sum of (x) an amount equal to 130% of EBITDA for the immediately preceding fiscal year plus (2)(y) any unused availability for capital expenditures from the immediately preceding fiscal year, andNovember 21, 2012.November 21, 2012,February 13, 2013, we had $11.5$25.5 million in outstanding loans and $1.0 million committed under letters of credit, which were issued as security for the payment of insurance obligations.154183 restaurants as of November 21, 2012February 13, 2013 and periodically experience unanticipated changes in our assumptions and estimates. Those changes could have a significant impact on discounted cash flow models with a corresponding significant impact on the measurement of an impairment.$315,000,$0.3 million, with respect to which it is possible that an impairment charge could be taken over the next 12 months.November 21, 2012,February 13, 2013, the total amount of debt subject to interest rate fluctuations outstanding under our 2009 Credit Facility was $10.5$22.5 million. Assuming an average debt balance of $10.5$22.5 million, a 1.0% increase in prevailing interest rates would increase our annual interest expense by $0.1$0.2 million.November 21, 2012.February 13, 2013. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of November 21, 2012,February 13, 2013, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.November 21, 2012February 13, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.November 21, 2012February 13, 2013 to the Risk Factors discussed in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended August 29, 2012.10.1 2.1*10.2Membership Unit(s) Sale And PurchaseSeventh Amendment to Credit Agreement, dated as of November 21, 2012, byFebruary 14, 2013, among the Company, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent, and among High Tides, LLC, Ticket to Paradise, LLC, Open Water Holdings, LLC, Paradise Restaurants Group LLC, and Paradise Cheeseburgers, LLC.Amegy Bank National Association, as syndication agent.31.1 Rule 13a-14(a)/15d-14(a) certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Rule 13a-14(a)/15d-14(a) certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 32.2 Section 1350 certification of the Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Schema Document 101.CAL XBRL Calculation Linkbase Document 101.DEF XBRL Definition Linkbase Document 101.LAB XBRL Label Linkbase Document 101.PRE XBRL Presentation Linkbase Document *The registrant has omitted the schedules to this exhibit pursuant to the provisions of Regulation S-K, Item 601(b)(2). The registrant shall supplementary furnish a copy of the omitted schedules to the Securities and Exchange Commission upon request. LUBY’S, INC.(Registrant)Date: December 26, 2012March 25, 2013 By: /s/ Christopher J. Pappas Christopher J. Pappas President and Chief Executive Officer (Principal Executive Officer) Date: December 26, 2012March 25, 2013 By: /s/ K. Scott Gray K. Scott Gray Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 10.1 Luby’s, Inc. Second Amended and Restated Nonemployee Director Stock Plan (Amended and Restated as of January 25, 2013). 2.1*10.2Membership Unit(s) Sale And PurchaseSeventh Amendment to Credit Agreement, dated as of November 21, 2012, byFebruary 14, 2013, among the Company, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent, and among High Tides, LLC, Ticket to Paradise, LLC, Open Water Holdings, LLC, Paradise Restaurants Group LLC, and Paradise Cheeseburgers, LLC.Amegy Bank National Association, as syndication agent.31.1 Rule 13a-14(a)/15d-14(a) certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Rule 13a-14(a)/15d-14(a) certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Section 1350 certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Section 1350 certification of the Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Schema Document 101.CAL XBRL Calculation Linkbase Document 101.DEF XBRL Definition Linkbase Document 101.LAB XBRL Label Linkbase Document 101.PRE XBRL Presentation Linkbase Document *The registrant has omitted the schedules to this exhibit pursuant to the provisions of Regulation S-K, Item 601(b)(2). The registrant shall supplementary furnish a copy of the omitted schedules to the Securities and Exchange Commission upon request.32