FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ______________________
Commission file number: 1-8308
LUBY'S, INC.
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 74-1335253
_________________________ ____________________________________
(State of Incorporation) (I.R.S. Employer Identification No.)
2211 Northeast Loop 410
Post Office Box 33069
San Antonio, Texas 78265-3069 Area Code 210 654-9000
_______________________________________ _______________________________
(Address of principal executive office) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of Class which registered
______________ ______________________
Common Stock ($.32 par value) New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
____
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
___ ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the shares of Common Stock of the registrant
held by non-affiliates of the registrant as of November 14, 2001, was
approximately $133,439,000 (based upon the assumption that directors and
officers are the only affiliates).
As of November 14, 2001, there were 22,422,943 shares of the registrant's
Common Stock outstanding, exclusive of 4,980,124 treasury shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document are incorporated by reference into the
designated parts of this Form 10-K: proxy statement relating to 2002
annual meeting of shareholders (in Part III).
Item 1. Business
Luby's, Inc. (formerly, Luby's Cafeterias, Inc.) was originally
incorporated in Texas in 1959 and was reincorporated in Delaware on
December 31, 1991. The Company's executive offices are at 2211 Northeast Loop
410, P. O. Box 33069, San Antonio, Texas 78265-3069.
Luby's, Inc. was restructured into a holding company on February 1, 1997,
at which time all of the operating assets were transferred to Luby's
Restaurants Limited Partnership, a Texas limited partnership composed of two
wholly owned indirect corporate subsidiaries of the Company. All restaurant
operations are conducted by the partnership. Unless the context indicates
otherwise, the word "Company" as used herein includes the partnership and the
consolidated corporate subsidiaries of Luby's, Inc.
As of December 5, 2001, the Company operates 202 cafeteria-style
restaurants under the name "Luby's" located in close proximity to retail
centers, business developments, and residential areas in Arizona, Arkansas,
Florida, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Tennessee, and
Texas. Of the 202 restaurants operated by the Company, 125 are at locations
owned by the Company and 77 are on leased premises.
The Company's restaurants constructed prior to 1999 typically contain
9,000 to 10,500 square feet of floor space and seat 250 to 300 guests. In more
recent years, the Company built several more-contemporary units. They contain
6,000 to 8,600 square feet of floor space and seat 170 to 214 guests.
Marketing
The Company's product strategy is to provide a wide variety of freshly
cooked foods in an attractive and informal environment. The Company's research
has shown that its products appeal to a broad range of value-oriented consumers
with particular success among families with children, seniors, shoppers, and
business people looking for a quick, homestyle meal at a reasonable price.
During fiscal 2001, the Company spent approximately 1.6% of sales on
marketing, including radio and television advertising and product-specific
promotions. The marketing budget for fiscal 2002 is approximately 0.7% of
sales, with most of the amount allocated to point-of-purchase and local store
marketing.
Operations
The Company's operations provide customers with a wide variety of great
tasting food served cafeteria-style at reasonable prices. Food is prepared in
small quantities throughout serving hours, and frequent quality checks are
made. Toward the end of fiscal year 2001, the Company created a team of chefs
focused on recipe enhancement and consistent execution guidelines. Each
restaurant offers a broad and varied menu and normally serves 12 to 14 entrees,
12 to 14 vegetable dishes, 15 to 20 salads, and 18 to 20 desserts.
The Company's restaurants appeal primarily to shoppers, office or store
personnel for lunch, and to families for dinner. The Company's restaurants are
open for lunch and dinner seven days a week in most markets. All of the
restaurants sell take-out orders, and most of them have separate food-to-go
entrances. Take-out orders accounted for approximately 14.6% of sales in fiscal
2001.
Each restaurant is operated as a separate unit under the control of a
general manager who has responsibility for day-to-day operations, including menu
planning and personnel employment and supervision. Each restaurant manager is
compensated on the basis of his or her restaurant's profits. Management
believes that granting broad authority to its restaurant managers and
compensating them on the basis of their performance are significant factors in
the profitability of its restaurants. Of the 202 general managers employed by
the Company, 155 have been with the Company for more than ten years. Typically,
an individual is employed for a period of five to seven years before he or she
is considered qualified to become a general manager.
In 1999, the Company implemented a centralized purchasing arrangement to
obtain the economies of bulk purchasing and volume pricing for substantially
all food products used in the Company's restaurants. The arrangement involves
a prime vendor for each of the Company's three major regions. The Company
believes that alternative sources of supply are readily available in the event
the centralized purchasing arrangement is terminated.
Each restaurant prepares substantially all of the food served, including
breads and pastries. The restaurants follow Company recipes, with minor
variations to suit local tastes. Menus vary among the Company's restaurants
each day to reflect local and seasonal food preferences. The Company also takes
advantage of any special food purchasing opportunities.
Quality control teams also help to maintain uniform standards of food
preparation. The teams visit each restaurant periodically and work with
the staff to check adherence to the Company's recipes, train personnel
in new techniques, and evaluate procedures for possible use throughout the
Company.
As of November 2001, the Company had approximately 11,000 employees,
consisting of 10,240 nonmanagement restaurant personnel; 600 restaurant
managers, associate managers, and assistant managers; and 160 executive,
administrative, and clerical personnel. Employee relations are considered to
be good, and the Company has never had a strike or work stoppage. The Company
is not subject to any collective bargaining agreements.
Restaurant Growth
During the fiscal year ended August 31, 2001, the Company opened one new
restaurant and closed 19 underperforming units. Since August 31, 2001, the
Company has closed 11 underperforming restaurants. During fiscal 2002, the
Company expects six others to be closed. Openings of new ground-up stores will
not occur in fiscal year 2002.
The Company believes its opportunities for growth currently center around
improving same-store sales growth at existing locations and changing the
concepts in some locations that demographically would support different types
of food. Accordingly, the Company has plans to reopen two currently closed
stores under new concepts. At least one of the two will serve an appealing
variety of seafood.
Service Marks
The Company uses several service marks, including "Luby's," and believes
that such marks are of material importance to its business. The Company has
federal service mark registrations for several of such marks.
The Company is not the sole user of the name "Luby's" in the cafeteria
business. One cafeteria using the name "Luby's" and one cafeteria using the
name "Pat Luby's" are being operated in two different cities in Texas by two
different owners not affiliated with the Company. The Company's legal counsel
is of the opinion that the Company has the paramount right to use the name
"Luby's" as a service mark in the cafeteria business in the United States and
that such other users can be precluded from expanding their use of the name as
a service mark.
Competition and Other Factors
The foodservice business is highly competitive, and there are numerous
restaurants and other foodservice operations in each of the markets where the
Company operates. The quality of the food served, in relation to its price,
and public reputation are important factors in foodservice competition.
Neither the Company nor any of its competitors has a significant share of the
total market in any area in which the Company competes. The Company believes
that its principal competitors include family-style and casual-dining
restaurants, buffets, and quick-service restaurants in the home-meal-
replacement category.
The Company's facilities and food products are subject to state and local
health and sanitation laws. In addition, the Company's operations are subject
to federal, state, and local regulations with respect to environmental and
safety matters, including regulations concerning air and water pollution and
regulations under the Americans with Disabilities Act and the Federal
Occupational Safety and Health Act. Such laws and regulations, in the
Company's opinion, have not materially affected its operations, although
compliance has resulted in some increased costs.
The terrorist attacks of September 11, 2001, have had a devastating and
immeasurable effect on all Americans and the business climate in general. We
are staying focused on all of our original quality and operational improvements
as briefly described above.
Forward-Looking Statements
Certain statements made in this report are forward looking regarding cash
flow from operations, restaurant growth, operating margins, capital
requirements, the availability of credit, and other matters. In addition,
efforts to close, sell, or improve operating results of underperforming stores
depend on many factors not within the Company's control, such as the negotiation
of settlements of existing lease obligations under acceptable terms,
availability of qualified buyers for owned locations, and customer traffic.
These forward-looking statements involve risks and uncertainties and,
consequently, could be affected by general business conditions, the impact of
competition, the success of operating initiatives, changes in cost and supply of
food and labor, the seasonality of the Company's business, taxes, inflation, and
governmental regulations, which could cause actual results to differ materially
from current plans.
Item 2. Properties
The Company owns the underlying land and buildings in which 125 of its
restaurants are located. In addition, the Company owns several restaurant
sites being held for possible future development, and several properties are
held for sale.
Of the 202 restaurants operated by the Company, 77 are at locations held
under leases, including 42 in regional shopping malls. Most of the leases
provide for a combination of fixed-dollar and percentage rentals. Most of the
leases require the lessee to pay additional amounts related to property taxes,
hazard insurance, and maintenance of common areas.
See Note 6 of Notes to Financial Statements for information concerning the
Company's lease rental expenses and lease commitments. Of the 77 restaurant
leases, the current terms of 31 expire from 2002 to 2006, 25 from 2007 to 2011,
and 21 thereafter. Sixty-seven of the leases can be extended beyond their
current terms at the Company's option.
Most of the restaurants are located in modern buildings and all are in
good condition. It is the Company's policy to refurbish and modernize
restaurants as necessary to maintain their appearance and utility. The
equipment in all restaurants is well maintained. Several of the Company's
restaurant properties contain excess building space, which is rented to tenants
unaffiliated with the Company.
The Company's restaurants are located in ten states as follows: Eight in
Arizona, five in Arkansas, one in Florida, two in Louisiana, two in Mississippi,
two in Missouri, three in New Mexico, seven in Oklahoma, eight in Tennessee, and
164 in Texas.
The Company's corporate offices are located in a building owned by the
Company containing approximately 40,000 square feet of office space. The
Company utilizes the space for its executive offices and related facilities.
The Company maintains public liability insurance and property damage
insurance on its properties in amounts which management believes to be adequate.
Item 3. Legal Proceedings
The Company is from time to time subject to pending claims and lawsuits
arising in the ordinary course of business. In the opinion of management, the
ultimate resolution of such claims and lawsuits will not have a material
adverse effect on the Company's operations or consolidated financial position.
There are no material legal proceedings to which any director, officer, or
affiliate of the Company, or any associate of any such director or officer, is
a party, or has a material interest, adverse to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of the fiscal year ended
August 31, 2001, to a vote of security holders of the Company.
Item 4A. Executive Officers of the Registrant
Certain information is set forth below concerning the executive officers
of the Company, each of whom has been elected to serve until the 2002 annual
meeting of shareholders and until his or her successor is duly elected and
qualified.
Served as
Officer Positions with Company and
Name Since Principal Occupation Last Five Years Age
________________________ ________ ____________________________________ ___
Christopher J. Pappas 2001 President and CEO (since March 2001); 54
CEO of Pappas Restaurants, Inc.
Harris J. Pappas 2001 Chief Operating Officer (since March 57
2001); President of Pappas Restaurants,
Inc.
Ernest Pekmezaris 2001 Senior Vice President and CFO (since 57
March 2001); Treasurer and CFO of
Pappas Restaurants, Inc. since 1992
S. Darrell Wood 1997 Senior Vice President-Head of Field 39
Operations (since October 2000);
Senior Vice President-Operations
(April 1999 - October 2000); Vice
President- New Concept Development
(1998-1999); Area Vice President
(1997-1998); Restaurant Manager
prior to 1997.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Stock Prices and Dividends
The Company's common stock is traded on the New York Stock Exchange under
the symbol LUB. The following table sets forth, for the last two fiscal
years, the high and low sales prices on the New York Stock Exchange from the
consolidated transaction reporting system and the per share cash dividends
declared on the common stock.
Fiscal Quarter Quarterly
Ended High Low Cash Dividend
_________________ ______ ______ ______________
November 30, 1999 $14.13 $11.31 $.20
February 29, 2000 11.94 9.69 .20
May 31, 2000 10.69 8.75 .20
August 31, 2000 9.63 5.63 .10
November 30, 2000 5.88 4.25 .00*
February 28, 2001 7.99 3.50 .00
May 31, 2001 8.98 6.65 .00
August 31, 2001 10.05 8.40 .00
*Dividend suspended October 26, 2000.
As of September 14, 2001, there were approximately 3,939 record holders
of the Company's common stock.
Item 6. Selected Financial Data.
Five-Year Summary of Operations
(Thousands of dollars except per share data)
Year ended August 31,
2001 2000 1999 1998 1997
_________ ________ ________ ________ ________
<s> <c> <c> <c> <c> <c>
Sales $467,161 $493,384 $501,493 $508,871 $495,446
Costs and expenses:
Cost of food 117,774 125,167 122,418 129,126 121,287
Payroll and related costs 166,404 155,769 154,817 155,152 146,940
Occupancy and other operating
expenses 166,533 159,793 155,828 154,501 150,638
General and administrative
expenses 25,355 20,999 22,031 22,061 19,451
Provision for asset impairments
and store closings 30,402 14,544 - 36,852 12,432
________ ________ ________ ________ ________
506,468 476,272 455,094 497,692 450,748
________ ________ ________ ________ ________
Income (loss) from
Operations (39,307) 17,112 46,399 11,179 44,698
________ ________ ________ ________ ________
Other income (expenses):
Interest expense (11,660) (5,908) (4,761) (5,078) (4,037)
Other income, net 2,188 2,217 1,846 1,778 2,001
________ ________ ________ ________ ________
(9,472) (3,691) (2,915) (3,300) (2,036)
________ ________ ________ ________ ________
Income (loss) before
income taxes (48,779) 13,421 43,484 7,879 42,662
Provision (benefit) for
income taxes (16,898) 4,296 14,871 2,798 14,215
________ ________ ________ ________ ________
Net income (loss) $(31,881) $ 9,125 $ 28,613 $ 5,081 $ 28,447
________ ________ ________ ________ ________
Net income (loss) per common
share - basic $ (1.42) $ 0.41 $ 1.27 $ 0.22 $ 1.22
________ ________ ________ ________ ________
Net income (loss) per common
share - assuming dilution $ (1.42) $ 0.41 $ 1.26 $ 0.22 $ 1.21
________ ________ ________ ________ ________
Cash dividend declared per common
share $ 0.00 $ 0.70 $ 0.80 $ 0.80 $ 0.80
________ ________ ________ ________ ________
At year-end:
Total assets $353,462 $370,843 $346,025 $339,041 $368,778
Long-term debt $127,401 $116,000 $ 78,000 $ 73,000 $ 84,000
Number of restaurants 213 231 223 229 229
Note: In fiscal year 2002, the Company will move from 12 calendar months to 13
four-week periods. The first period of fiscal year 2002 will begin September 1,
2001, and will cover 26 days. All subsequent periods will cover 28 days.
Fiscal years prior to 2002 were 365 days in length. Fiscal year 2002, the
Company's conversion year from months to periods, will be 362 days in length.
Fiscal years subsequent to 2002 will be 364 days in length.
<FN>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
_______________________________
During the last several years, the Company has funded all capital expenditures
from internally generated funds, cash equivalents, and credit-facility debt.
Capital expenditures for fiscal 2001 were $17,630,000. This 69% decrease from
fiscal 2000 was a result of fewer new restaurant openings and relocations in
comparison with the previous fiscal year. In fiscal 2001, one restaurant was
opened, one was relocated, and no restaurants were under construction at August
31, 2001. In comparison, in fiscal year 2000, 11 restaurants were opened, four
were relocated, and two restaurants were under construction at August 31, 2000.
Fiscal 2001 capital expenditures included approximately $4.1 million related to
remodels in 17 restaurants.
Capital expenditures for fiscal 2002 are expected to approximate $15 million.
The Company will focus on improving the appearance, functionality, and sales at
existing restaurants. These efforts will include changing several locations to
other dining concepts, where feasible. As a start, the Company plans to remodel
two currently closed units. One will reopen as a new seafood restaurant. The
new dining theme for the other restaurant is still under development.
At August 31, 2001, the Company had a working capital deficit of $8,975,000,
which compares to the prior year's working capital deficit of $31,420,000. The
working capital position improved during fiscal 2001 due primarily to expense-
control initiatives, price increases in the latter half of the year, and a $10
million loan from the CEO and COO. See Note 5 of the Consolidated Financial
Statements for additional information regarding the loan. The Company typically
carries current liabilities in excess of current assets because cash generated
from operating activities is reinvested in capital expenditures.
In the fourth quarter, the Company entered into an amendment of its credit-
facility agreement with a syndicate of four banks. Among other things, the
amendment provides for a reduction in commitment with each principal payment,
securing the credit-facility debt with real property, the modification of
financial compliance evaluations from three criteria to one criterion focused on
EBITDA, and a change in the interest rate. The Company made a $1 million
principal payment on July 6, 2001. At August 31, 2001, the Company had
$122,000,000 outstanding under its credit facility. The maturity date of the
amended credit facility is April 30, 2003, with a provision for extension to
April 30, 2004, given satisfactory conditions.
Subsequent to fiscal year-end 2001, the terrorist attacks of September 11 and
resulting recessionary trends negatively impacted the Company's ability 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 waives its noncompliance with first-quarter EBITDA levels, resets
remaining fiscal 2002 quarterly EBITDA targets, and limits capital expenditures
for the year to $15 million. The Company expects to be in compliance with its
revised covenants for fiscal year 2002. See Note 5 of the Notes to Consolidated
Financial Statements.
The Company believes that funds generated from operations are adequate for its
foreseeable needs.
Interest Rate Protection Agreements
The Company had two Interest Rate Protection Agreements (Swaps) that effectively
fixed the rate on a portion of the floating-rate debt outstanding under its
revolving line of credit. The Swaps fixed interest at a rate of 6.50% in the
notional amounts of $30 million and $15 million; both were scheduled to
terminate as of June 30, 2002. The differential to be paid or received as
interest rates changed was accrued and recognized as an adjustment to interest
expense related to the debt. Due to declining interest rates and in
anticipation of additional future unfavorable interest rate changes, the Company
terminated its Swaps effective July 2, 2001, for a cash payment of $1,255,000,
including accrued interest of $163,000.
Change in Accounting Estimate
Throughout the first three quarters of the fiscal year, the Company observed
increased costs relative to insurance. The costs primarily escalated in the
area of workers' compensation. In the fourth quarter, the Company consulted
with an outside actuarial firm that reassessed losses based upon increasing cost
trends and other pertinent information. The results indicated that a change in
accounting estimate was necessary. The effect of this change in the fourth
quarter was a reduction in pretax earnings of $6.6 million. The Company last
obtained a similar actuarial report for claim cost estimation purposes as of
December 15, 1997. Subsequent to August 31, 2001, the Company launched a new
in-house safety and claims program in order to decrease the incidence of
accidents and injuries and to better control expenses related to claims costs.
Trends and Uncertainties
The tragic events of September 11, 2001, increased concerns over national
security, fueled the development of recessionary trends, and cast uncertainty on
the general economic outlook of the country. The long-term impact of these
trends and uncertainties on the Company will ultimately depend on their
resulting severity and duration and their effect on consumer spending. The
short-term effect on the Company's sales and cash flow was immediate and
contributed to its inability to meet its EBITDA covenant for the first quarter
of fiscal 2002. In response to these events, the Company obtained a waiver and
amendment from its syndicate of banks on December 5, 2001, which waived its
noncompliance with the first-quarter EBITDA and reset quarterly EBITDA and
capital spending targets for the remainder of fiscal 2002. For further
discussion, see Note 5 of the Notes to Consolidated Financial statements.
Statement of Financial Accounting Standards No. 121 (SFAS 121) requires the
Company to review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company considers a history of operating losses or negative
cash flows and unfavorable changes in market conditions to be its main
indicators of potential impairment. Assets are evaluated for impairment at the
restaurant level. As a result of these indicators, impairment or restaurant
closure charges may be recognized in future periods. See Note 2 of the Notes to
Consolidated Financial Statements for the year ended August 31, 2001, for
further discussion of 2001 and 2000 pretax impairment and store closure costs.
Reserve for Store Closings
As of August 31, 2001, 15 restaurants were designated for closure. The reserve
for store closings was increased from $1.8 million at August 31, 2000, to $4.5
million at August 31, 2001, in anticipation of lease settlement costs, legal and
professional fees, and other exit costs related to these stores.
During fiscal year 2001, the Company had cash outlays related to the reserve,
which originally resulted from provisions for closure costs made in fiscal year
2000. See further discussion of the 2001 and 2000 pretax store-closure costs in
Note 2 of the Notes to Consolidated Financial Statements for the year ended
August 31, 2001.
Results of Operations
Fiscal 2001 Compared to Fiscal 2000
___________________________________
Sales decreased $26,223,000, or 5.3%, primarily due to 19 store closures as well
as market conditions in the fiscal year. The closing of three restaurants in
fiscal 2000 contributed in part to the decrease in sales. This decline was
partially offset by a price increase on the Lu Ann platter. Additionally, the
heavily discounted Luby's platter and "Big2Do" bundled offerings that were
launched in the fourth quarter of 2000 were discontinued in the third quarter of
2001.
Cost of food decreased $7,393,000, or 5.9%, due to various factors, including
store closures and discontinuing "value-added" products in most restaurants.
Value-added products are typically more expensive as they have a built-in labor
component.
Although sales decreased, payroll and related costs increased by $10,635,000, or
6.8%, in comparison to the prior year. A significant portion of this,
$9,222,000, was due to higher claims accruals. The Company incurred higher than
average and more frequent workers' compensation claims than were experienced in
prior years. To help prevent injuries and better control costs in the future,
the Company launched a new in-house safety and claims program effective October
1, 2001.
Occupancy and other operating expenses increased $6,740,000, or 4.3%. This
increase was due primarily to higher utility costs resulting from increased
commodity rates, higher property taxes related to new stores and remodels, and
higher repair expenses incurred as part of an initiative by new management to
bring all stores up to a higher standard of maintenance and appearance. These
increases were partially offset by lower advertising expense due to a new
strategic focus. Lower preopening expenses due to opening fewer restaurants in
the current fiscal year contributed to the offset of these expenses.
General and administrative expenses increased by $4,356,000, or 20.8%, in
comparison to the prior year. The increase was due primarily to noncash
compensation of $1,942,000 related to stock options granted to the Company's CEO
and COO. Other costs that contributed to the increase included legal and
consulting fees primarily related to restructuring advice and bank negotiations
related to the fourth amendment agreement, the proxy, and the transaction to
hire the CEO and COO.
As a result of its continuing efforts to redeploy both capital and human
resources to improve financial performance and strengthen the organization, the
Company recorded a pretax charge of $30.4 million during the year for store
closings, associated costs, and asset impairment charges. The principal
components of the 2001 charge were as follows:
- $11.6 million for the closing of 15 underperforming restaurants. 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.
- $17.0 million for asset impairment of 13 restaurants that 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.
- $0.8 million 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. This property was written down to its
estimated net realizable value and was sold in fiscal year 2001.
- $1.0 million associated with the write-off of assets for two locations
that will be remodeled and reopened before the end of fiscal year 2002.
Property that cannot be salvaged, transferred, or effectively reused has
been written off.
At August 31, 2001 and 2000, the Company had a reserve for store closings of
$4.5 million and $1.8 million, respectively. Excluding lease 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 August 31, 2002. The
following is a summary of the types and amounts recognized as accrued expenses
together with cash payments made against such accruals for the three years
ended August 31, 2001:
Reserve Balance
_____________________________________________
Legal
and
Lease Profes- Other
Settlement sional Workforce Exit Total
Costs Fees Severance Costs Reserve
______________________________________________
(Thousands of dollars)
As of August 31, 1998 $ 4,537 $ 985 $ 260 $ 390 $ 6,172
Additions(reductions) (224) 150 56 (257) (275)
Cash payments (406) (135) (244) (45) (830)
______________________________________________
As of August 31, 1999 3,907 1,000 72 88 5,067
Additions(reductions) 675 350 375 300 1,700
Cash payments (3,817) (975) (72) (88) (4,952)
______________________________________________
As of August 31, 2000 765 375 375 300 1,815
Additions(reductions) 4,196 (375) (59) 693 4,455
Cash payments (755) - (316) (693) (1,764)
______________________________________________
As of August 31, 2001 $ 4,206 $ - $ - $ 300 $ 4,506
______________________________________________
See further discussion in Note 2 of the Consolidated Financial Statements.
Interest expense of $11,660,000 for fiscal 2001 was incurred in conjunction
with borrowings under the credit facility and is net of $336,000 capitalized on
qualifying properties. The increase from fiscal 2000 of $5,752,000, or 97%,
was due primarily to higher average borrowings under the credit-facility
agreement and less capitalized interest in the current year due to decreased
construction.
The provision for income taxes decreased $21,194,000, or 493%, due primarily to
lower income before income taxes. The Company anticipates that the effective
tax rate for fiscal 2002 will be approximately 35%.
Fiscal 2000 Compared to Fiscal 1999
___________________________________
Sales decreased $8,109,000, or 1.6%, primarily due to the decline in sales
volumes at restaurants open over 18 months of approximately 3.9%. Part of the
decrease was also caused by the closing of ten restaurants in fiscal 1999 and
three restaurants in fiscal 2000. This decline was partially offset by the
addition of 11 new restaurants in fiscal 2000 and four in fiscal 1999.
Cost of food increased $2,749,000, or 2.2%, due to various factors, including
efforts to increase dinner sales by offering additional higher-end entrees such
as steak, shrimp, and prime rib and efforts to drive customer traffic in
various markets by offering discount coupons. Also, higher commodity prices,
especially for pork, beef, and vegetables, had a negative impact on food costs.
In the second half of the fiscal year, food costs were also impacted by the
testing of various "value-added" products in most of the restaurants, which by
their nature are more expensive since they have a built-in labor component. In
restaurants where the Company was unsuccessful in lowering the labor hours due
to minimum production deployments, the usage of these products was cut back
beginning in July 2000.
Although sales decreased, payroll and related costs increased by $952,000, or
0.6%, in comparison to the prior year. Pressure from higher hourly wage rates
was partially offset by the usage of fewer labor hours in the restaurants.
Occupancy and other operating expenses increased $3,965,000, or 2.5%, due
primarily to higher utility costs resulting from increased rates; higher
property taxes related to new stores and remodels; higher preopening expenses
associated with more new store openings as compared to the prior year; higher
credit card fees due to increased credit card usage versus prior year; higher
food-to-go packaging costs related to increased food-to-go sales; and higher
depreciation expense associated with the new stores, restaurant remodels, and an
increase in technology-related spending. These increases were partially offset
by lower uniform expense due to the completion of the rollout of a uniform
program and lower management incentive pay as a result of lower sales and
profits. General and administrative expenses declined $1,032,000, or 4.7%,
primarily because of lower expenses for profit sharing and bonuses.
The Company recorded a pretax charge of $14.5 million during the fourth quarter
of the fiscal year for store closings, associated costs, asset impairments,
and other unusual charges. The principal components of the 2000 charge were as
follows:
- $7.7 million for the closing of 15 restaurants that did not meet the
Company's return on invested capital and sales growth requirements. All
were closed by August 31, 2001. 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, severance costs, and other exit costs. Prior to August 31, 2000,
all restaurant employees of the Company were notified of the possibility
of their termination due to planned restaurant closures. Approximately
300 employees were terminated. The severance costs for these employees
were accrued for and included in the store closing costs.
- $3.2 million for asset impairment of six properties that the Company did
not plan to close. The carrying value of the assets was written down to
estimated future discounted cash flows or fully written off in the case of
negative future cash flows.
- $1.3 million for the write-down of computer-related equipment and
software. The write-down included the abandonment of a payroll-related
software package and several point-of-sale (POS) systems.
- $1.2 million additional write-down on surplus properties held for sale.
These properties were written down to the lower of their historical
carrying costs or estimated net realizable values.
- $1.1 million related to other unusual charges. The primary component of
this charge was the write-off of the remaining asset balance related to
L&W Seafood, Inc., a joint venture with Waterstreet, Inc.
See Note 2 of the Consolidated Financial Statements.
Interest expense of $5,908,000, net of $958,000 capitalized on qualifying
properties for fiscal 2000, was incurred in conjunction with borrowings under
the credit facility. The increase from fiscal 1999 of $1,147,000, or 24%, was
due primarily to higher average borrowings under the credit-facility agreement
and a higher weighted average interest rate.
Other income increased $371,000 due primarily to recorded gains on the sale of
properties that were held for sale and a recorded tenant lease buyout.
The provision for income taxes decreased $10,575,000, or 71%, due primarily to
lower income before income taxes. In addition, the effective tax rate
decreased from 34.2% to 32.0%. This was due to the completion of a federal tax
audit covering several periods, which resulted in favorable determinations in
several areas. The Company anticipated that the effective tax rate for fiscal
2001 would be approximately 35%.
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 Company to increase its menu
prices from time to time. To the extent prevailing market conditions allow,
the Company intends to adjust menu prices to maintain profit margins.
Forward-Looking Statements
__________________________
Except for the historical information contained in this annual report, certain
statements made herein are forward looking regarding cash flow from operations,
restaurant openings, operating margins, capital requirements, and other
matters. In addition, efforts to close, sell, or improve operating results of
underperforming stores depend on many factors not within the Company's control
such as the negotiation of settlements of existing lease obligations under
acceptable terms, availability of qualified buyers for owned locations, and
customer traffic. These forward-looking statements involve risks and
uncertainties and, consequently, could be affected by general business
conditions, the impact of competition, the success of operating initiatives,
changes in cost and supply of food and labor, the seasonality of the Company's
business, taxes, inflation, and governmental regulations, which could cause
actual results to differ materially from current plans. Management does not
expect to update such forward-looking statements continually as conditions
change, and readers should consider that such statements pertain only to the
date hereof.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company has $122 million outstanding under its credit facility at prime plus
an applicable margin. Additionally, the Company has $10 million in notes which
bears interest at LIBOR plus 2%.
At August 31, 2001, the total amount of debt subject to interest rate
fluctuations was $132 million. A 1% change in interest rate would result in an
increase or decrease in annual interest expense of $1,320,000.
Item 8. Financial Statements and Supplementary Data
LUBY'S, INC.
FINANCIAL STATEMENTS
Years Ended August 31, 2001, 2000, and 1999
with Report of Independent Auditors
Report of Independent Auditors
The Board of Directors and Shareholders
Luby's, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Luby's,
Inc. and Subsidiaries at August 31, 2001 and 2000, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended August 31, 2001. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Luby's, Inc. and Subsidiaries at August 31, 2001 and 2000, and the results
of its operations and its cash flows for each of the three years in the period
ended August 31, 2001, in conformity with accounting principles generally
accepted in the United States.
/s/ERNST & YOUNG LLP
San Antonio, Texas
October 15, 2001,
except for the third
paragraph of Note 5,
as to which the date
is December 5, 2001
Luby's, Inc.
Consolidated Balance Sheets
August 31,
2001 2000
________ _______
(Thousands of dollars)
Assets
Current assets:
Cash and cash equivalents $ 4,099 $ 679
Short-term investments 19,984 -
Trade accounts and other receivables 358 403
Food and supply inventories 2,701 3,853
Income tax receivable 4,468 3,749
Prepaid expenses 2,765 4,481
Deferred income taxes 4,931 1,540
________ ________
Total current assets 39,306 14,705
________ ________
Property held for sale 3,047 13,156
Investments and other assets:
Land held for future use 5,333 756
Other assets 596 4,102
________ ________
Total investments and other assets 5,929 4,858
________ ________
Property, plant, and equipment - at cost, less
accumulated depreciation and amortization 305,180 338,124
________ ________
Total assets $353,462 $370,843
________ ________
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 13,696 $ 19,843
Dividends payable - 2,242
Accrued expenses and other liabilities 34,585 24,040
________ ________
Total current liabilities 48,281 46,125
________ ________
Long-term debt 127,401 116,000
Deferred income taxes and other liabilities 2,271 10,162
Reserve for store closings 4,506 1,815
Commitments and contingencies - -
Shareholders' equity:
Common stock, $.32 par value; authorized
100,000,000 shares, issued 27,403,067 shares 8,769 8,769
Paid-in capital 33,882 27,202
Accumulated other comprehensive income (loss) (592) -
Retained earnings 234,715 266,596
Less cost of treasury stock, 4,980,124 and
4,982,692 shares in 2001 and 2000, respectively (105,771) (105,826)
________ ________
Total shareholders' equity 171,003 196,741
________ ________
Total liabilities and shareholders' equity $353,462 $370,843
________ ________
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Operations
Year Ended August 31,
2001 2000 1999
____ ____ ____
(Thousands of dollars except per share data)
Sales $467,161 $493,384 $501,493
Costs and expenses:
Cost of food 117,774 125,167 122,418
Payroll and related costs 166,404 155,769 154,817
Occupancy and other operating
expenses 166,533 159,793 155,828
General and administrative expenses 25,355 20,999 22,031
Provision for asset impairments
and store closings 30,402 14,544 -
________ ________ ________
506,468 476,272 455,094
_______ ________
Income (loss) from operations (39,307) 17,112 46,399
Interest expense (11,660) (5,908) (4,761)
Other income, net 2,188 2,217 1,846
________ ________ ________
Income (loss) before
income taxes (48,779) 13,421 43,484
Provision (benefit) for income taxes:
Current (6,276) 4,528 11,558
Deferred (10,622) (232) 3,313
________ ________ ________
(16,898) 4,296 14,871
________ ________ ________
Net income (loss) $(31,881) $ 9,125 $ 28,613
________ ________ ________
Net income (loss) per share -
basic $ (1.42) $ 0.41 $ 1.27
________ ________ ________
Net income (loss) per share -
assuming dilution $ (1.42) $ 0.41 $ 1.26
________ ________ ________
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Shareholders' Equity
Accumu-
lated
Compre- Compre- Total
hensive Common Stock hensive Share-
Income Issued Treasury Paid-In Retained Income holders'
(Loss) Shares Amount Shares Amount Capital Earnings (loss) Equity
_____________________________________________________________________________________________
(Amounts in thousands except per share data)
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Balance at
August 31,
1998 27,403 $8,769 (4,132) $ (92,907) $27,012 $262,540 $ - $205,414
Net income
(loss) for
the year $28,613 - - - - - 28,613 - 28,613
Common stock
issued under
benefit plans,
net of shares
tendered in
partial pay-
ment and
including
tax benefits - - - - 84 - - 84
Cash dividends,
$.80 per share - - - - - (17,988) - (17,988)
Purchases of
treasury stock - - (851) (12,919) - - - (12,919)
______ _______ ______ ______ ________ _______ _______ ____ _______
Balance at
August 31,
1999 28,613 27,403 8,769 (4,983) (105,826) 27,096 273,165 - 203,204
_______
Net income
(loss) for
the year 9,125 - - - - - 9,125 - 9,125
Common stock
issued under
benefit plans,
net of shares
tendered in
partial pay-
ment and
including
tax benefits - - - - 106 - - 106
Cash dividends,
$.70 per share - - - - - (15,694) - (15,694)
______ _______ ______ ______ ________ _______ _______ ____ _______
Balance at
August 31,
2000 9,125 27,403 8,769 (4,983) (105,826) 27,202 266,596 - 196,741
________
Other com-
prehensive
income (loss),
net of taxes:
Cumulative
effect of a
change in
accounting
for deriva-
tive finan-
cial instru-
ments upon
adoption of
SFAS 133,
net of
taxes of
$61 114 - - - - - - 114 114
Net deriva-
tive loss,
net of
taxes of
$514 (958) - - - - - - (958) (958)
Reclassifi-
cation ad-
justment for
loss included
in net income
(loss), net
of taxes of
$71 133 - - - - - - 133 133
Reclassifi-
cation ad-
justment for
loss recog-
nized on
termination
of interest
rate swaps,
net of taxes
of $64 119 - - - - - - 119 119
________
(592)
Net income
(loss) for
the year (31,881) - - - - - (31,881) - (31,881)
Common stock
issued under
benefit plans,
net of shares
tendered in
partial pay-
ment and
including
tax benefits - - 3 55 58 - - 113
Noncash stock
compensation
expense - - - - 1,942 - - 1,942
Intrinsic value
of beneficial
conversion
feature on
convertible
subordinated
notes - - - - 4,680 - - 4,680
______ _______ ______ ______ ________ _______ _______ ____ _______
Balance at
August 31,
2001 $(32,473) 27,403 $8,769 (4,980) $(105,771) $33,882 $234,715 $(592) $171,003
______ _______ ______ ______ ________ _______ _______ ____ _______
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Cash Flows
Year Ended August 31,
2001 2000 1999
_____ _____ _____
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(31,881) $ 9,125 $28,613
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 23,065 22,784 20,025
Amortization of deferred loss on
interest rate swaps 183 - -
Amortization of discount on
convertible subordinated notes 81 - -
Noncash directors' fees 112 - -
Noncash compensation expense 1,942 - -
Provision for asset impairments
and store closings 30,402 14,544 -
Gain on disposal of property
held for sale (1,741) (397) (382)
Loss on disposal of property,
plant, and equipment 547 11 84
Settlements associated with store
closings - (125) (275)
________ ________ ________
Cash provided by operating
activities before changes in
operating assets and liabilities 22,710 45,942 48,065
Changes in operating assets and
liabilities:
(Increase) decrease in trade
accounts and other receivables 45 181 120
(Increase) decrease in food and
supply inventories 1,152 (167) 1,386
(Increase) decrease in income tax
receivable (719) - -
(Increase) decrease in prepaid
expenses 1,716 71 (177)
(Increase) decrease in other assets (117) (232) 912
Increase (decrease) in accounts
payable (6,147) (93) 7,204
Increase (decrease) in accrued
expenses and other liabilities 10,545 (1,114) (2,887)
Increase (decrease) in income taxes
payable - (4,131) (1,687)
Increase (decrease) in deferred
income taxes and other credits (10,964) (364) 3,168
Increase (decrease) in reserve for
store closings (1,301) (4,827) (830)
________ ________ ________
Net cash provided by operating
activities $ 16,920 $35,266 $55,274
________ ________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in short-term
investments (19,984) - -
Proceeds from disposal of property
held for sale 7,825 1,861 5,850
Proceeds from disposal of property,
plant, and equipment - 74 178
Purchases of land held for future use - (3,378) (6,926)
Purchases of property, plant, and
equipment (17,630) (53,494) (31,773)
________ ________ ________
Net cash used in investing
activities (29,789) (54,937) (32,671)
________ ________ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible subordinated
notes 10,000 - -
Net borrowings under credit facility 6,000 38,000 5,000
Purchases of treasury stock - - (12,919)
Dividends paid (2,242) (17,936) (18,158)
Cash paid upon termination of
interest rate swaps (1,092) - -
Proceeds from borrowing against cash
surrender value of officers' life
insurance 3,623 - -
________ ________ ________
Net cash provided by
(used in) financing activities 16,289 20,064 (26,077)
________ ________ ________
Net increase (decrease) in cash
and cash equivalents 3,420 393 (3,474)
Cash and cash equivalents at
beginning of year 679 286 3,760
________ ________ ________
Cash and cash equivalents at end
of year $ 4,099 $ 679 $ 286
________ ________ ________
See accompanying notes.
Luby's, Inc.
Notes to Consolidated Financial Statements
August 31, 2001, 2000, and 1999
1. Nature of Operations and Significant Accounting Policies
Nature of Operations
Luby's, Inc. and Subsidiaries (the Company), based in San Antonio, Texas,
owns and operates restaurants in the southern United States. As of
August 31, 2001, the Company operated a total of 213 units. The Company
locates its restaurants convenient to shopping and business developments as
well as to residential areas. Accordingly, the restaurants appeal primarily
to shoppers, store and office personnel at lunch, and to families at
dinner.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Luby's, Inc. and its wholly owned and majority-owned
subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Inventories
The food and supply inventories are stated at the lower of cost (first-in,
first-out) or market.
Property Held for Sale
Property held for sale is stated at the lower of cost or estimated net
realizable value.
Depreciation and Amortization
The Company depreciates the cost of plant and equipment over their estimated
useful lives using both straight-line and accelerated methods. Leasehold
improvements are amortized over the related lease lives, which are in some
cases shorter than the estimated useful lives of the improvements.
Long-Lived Assets
Impairment losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount.
The Company evaluates impairments on a restaurant-by-restaurant basis and
uses three or more years of negative cash flows and other market conditions as
indicators of impairment. Impairment losses are also recorded for long-lived
assets that are expected to be disposed of.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly
liquid financial instruments purchased with an original maturity of three
months or less to be cash equivalents.
Preopening Expenses
New store preopening costs are expensed as incurred.
Fiscal Year
In fiscal year 2002, the Company will move from 12 calendar months to 13 four-
week periods. The first period of fiscal year 2002 will begin September 1,
2001, and will cover 26 days. All subsequent period will cover 28 days.
Fiscal year 2002 will end on August 28, 2002.
Advertising Expenses
Advertising costs are expensed as incurred. Advertising expense as a
percentage of sales approximates 1.6%, 2.1%, and 2.4% for fiscal years
2001, 2000, and 1999, respectively.
Income Taxes
Deferred income taxes are computed using the liability method. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities (temporary differences) and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year presentation.
Stock-Based Compensation
The Company accounts for its stock compensation arrangements under the
provisions of Accounting Principles Board (APB) No. 25, "Accounting for Stock
Issued to Employees," and makes the pro forma information disclosures required
under the provisions of Statement of Financial Accounting Standards No. 123
(SFAS 123), "Accounting for Stock-Based Compensation." Stock-based
compensation expense is recognized as vested on a straight-line basis.
Derivative Financial Instruments
The Company adopted Statement of Financial Accounting Standards No. 133 (SFAS
133), "Accounting for Derivative Instruments 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.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from these estimates.
New Accounting Pronouncements
The Company reviewed recent accounting pronouncements, including SFAS 144,
entitled "Accounting for the Impairment or Disposal of Long-Lived Assets." The
provisions of SFAS 144 supersede SFAS 121, "Accounting for the Impairment 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 with the provisions of SFAS 144. Relative to
the other recent pronouncements, management does not anticipate that their
effect upon adoption, if applicable, will have a significant effect on earnings
or the financial position of the Company.
2. Impairment of Long-Lived Assets and Store Closings
In 2001 and 2000, the Company recorded a charge to operating costs of $30.4
million and $14.5 million, respectively, for asset impairment and store closure
costs. In accordance with Company guidelines, management periodically reviews
the financial performance of each store for indicators of impairment or
indicators that closure would be appropriate. Where indicators are present,
such as three full 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 restaurants, discounted at the
Company's weighted average cost of capital.
During 2001, the Company recorded a pretax charge of $30.4 million as a result
of its reviews for impairments in accordance with SFAS 121 and assessments of
closure costs. The principal components of the 2001 charge were as follows:
- $11.6 million for the closing of 15 underperforming restaurants. 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.
- $17.0 million for asset impairment of 13 restaurants that 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.
- $0.8 million 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. This property was written down to its
estimated net realizable value and was sold in fiscal year 2001.
- $1.0 million associated with the write-off of assets for two locations
that will be remodeled and reopened before the end of fiscal year 2002.
The Company closed these units by October 31, 2001. Property that cannot
be salvaged, transferred, or effectively reused has been written off.
The results of operations for the 15 restaurants designated for closure at
August 31, 2001, were as follows:
Year Ended August 31,
2001 2000 1999
__________________________
(Thousands of dollars)
Sales $19,327 $19,190 $16,669
Operating loss (4,289) (3,145) (1,245)
The Company recorded a pretax charge of $14.5 million during the fourth quarter
of fiscal year 2000 for store closures, associated costs, asset impairments in
accordance with SFAS 121, and other unusual charges. The principal components
of the charge were as follows:
- $7.7 million for the closing of 15 restaurants that did not meet the
Company's return on invested capital and sales growth requirements. All
were closed by August 31, 2001. 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, severance costs, and other exit costs. Prior to August 31, 2000,
all restaurant employees of the Company were notified of the possibility
of their termination due to planned restaurant closures. Approximately
300 employees were terminated. The severance costs for these employees
were accrued for and included in the store closing costs.
- $3.2 million for asset impairment of six properties that the Company did
not plan to close. The carrying value of the assets was written down to
estimated future discounted cash flows or fully written off in the case of
negative future cash flows.
- $1.3 million for the write-down of computer-related equipment and
software. The write-down included the abandonment of a payroll-related
software package and several point-of-sale (POS) systems.
- $1.2 million additional write-down on surplus properties held for sale.
These properties were written down to the lower of their historical
carrying costs or estimated net realizable values.
- $1.1 million related to other unusual charges. The primary component of
this charge was the write-off of the remaining asset balance related to
L&W Seafood, Inc.
The results of operations for the 15 restaurants designated for closure at
August 31, 2000, were as follows:
Year Ended August 31,
2001 2000 1999
__________________________
(Thousands of dollars)
Sales $2,632 $19,296 $21,244
Operating loss (923) (1,470) (205)
At August 31, 2001 and 2000, the Company had a reserve for store closings of
$4.5 million and $1.8 million, respectively. All material cash outlays
associated with the closures planned as of August 31, 2000, were completed by
August 31, 2001. 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 August 31, 2002. The following is a
summary of the types and amounts recognized as accrued expenses together with
cash payments made against such accruals for the three years ended August 31,
2001:
Reserve Balance
_____________________________________________
Legal
and
Lease Profes- Other
Settlement sional Workforce Exit Total
Costs Fees Severance Costs Reserve
______________________________________________
(Thousands of dollars)
As of August 31, 1998 $ 4,537 $ 985 $ 260 $ 390 $ 6,172
Additions(reductions) (224) 150 56 (257) (275)
Cash payments (406) (135) (244) (45) (830)
______________________________________________
As of August 31, 1999 3,907 1,000 72 88 5,067
Additions(reductions) 675 350 375 300 1,700
Cash payments (3,817) (975) (72) (88) (4,952)
______________________________________________
As of August 31, 2000 765 375 375 300 1,815
Additions(reductions) 4,196 (375) (59) 693 4,455
Cash payments (755) - (316) (693) (1,764)
______________________________________________
As of August 31, 2001 $ 4,206 $ - $ - $ 300 $ 4,506
______________________________________________
3. Property, Plant, and Equipment
The cost and accumulated depreciation of property, plant, and equipment at
August 31, 2001 and 2000, together with the related estimated useful lives
used in computing depreciation and amortization, are reflected below:
Estimated
2001 2000 Useful Lives
________ ________ _______________
(Thousands of dollars)
Land $ 79,977 $ 79,279 -
Restaurant equipment and
furnishings 135,670 144,160 3 to 15 years
Buildings 236,091 251,260 20 to 40 years
Leasehold and leasehold
improvements 35,582 41,215 Term of leases
Office furniture and equipment 11,486 10,504 5 to 10 years
Transportation equipment 937 975 5 years
Construction in progress 289 3,382 -
________ ________
500,032 530,775
Less accumulated depreciation
and amortization 194,852 192,651
________ ________
$305,180 $338,124
________ ________
4. Change in Accounting Estimate
Throughout the first three quarters of fiscal year 2001, the Company observed
increased costs relative to insurance. The costs primarily escalated in the
area of workers' compensation. In the fourth quarter, the Company consulted
with an outside actuarial firm that reassessed losses based upon increasing
cost trends and other pertinent information. The results indicated that a
change in accounting estimate was necessary. The after-tax effect of this
change in the fourth quarter was a reduction in earnings of $4.3 million, or
$0.19 per share. The Company last obtained a similar actuarial report for
claim cost estimation purposes as of December 15, 1997. Subsequent to August
31, 2001, the Company launched a new in-house safety and claims program in
order to decrease the incidence of accidents and injuries and better control
expenses related to claims costs.
5. Debt
Credit Facility
The Company had a $125 million credit facility with a syndicate of four banks.
Effective June 29, 2001, the Company amended its credit facility to include a
reduction in commitment with each principal payment, securing of the debt with
real property, and the modification of financial compliance requirements to one
criterion focused on EBITDA levels.
The Company made a $1 million principal payment on July 6, 2001, which reduced
the balance of the credit facility to $122 million. In cases where the
Company's performance exceeds EBITDA levels required in the amended credit
facility, a portion of that excess will be paid as additional principal
reductions. Per the amendment, the Company is also required to pay the
facility down in amounts equal to all proceeds received from the sale of real
and personal property. The maturity date of the amended credit facility is
April 30, 2003, with an extension provision to April 30, 2004, given
satisfaction of certain conditions. The interest rate on the outstanding
balance of the credit facility is the prime rate plus an applicable margin as
required by the amended credit facility.
Subsequent to fiscal year-end 2001, the terrorist attacks of September 11 and
increased recessionary trends 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 waives its noncompliance with first-quarter EBITDA levels, resets
remaining fiscal 2002 quarterly EBITDA targets, and limits capital expenditures
for the year to $15 million. The Company expects to be in compliance with its
revised covenants for fiscal year 2002.
The credit facility includes a provision for the issuance of letters of credit
in the amount of $1,184,000. The credit facility allows the Company to acquire
additional letters of credit in the ordinary course of business.
The Company had two Swaps, which effectively fixed the rate on a portion of the
floating-rate debt outstanding under its line of credit. The Swaps were fixed-
rate agreements in the notional amounts of $30 million and $15 million. Both
Swaps offered fixed rates, at 6.50%, in exchange for the Company's floating
line of credit rate. The original termination date for each Swap was June 30,
2002. At September 1, 2000, the Swaps were in a favorable position by
approximately $175,000. In accordance with the transition provisions of SFAS
133, the net-of-tax cumulative effect of an accounting change adjustment on
September 1, 2000, was $114,000 in accumulated other comprehensive income
(loss), with a deferred income tax liability of $61,000. Due to declining
interest rates and in anticipation of additional future unfavorable interest
rate changes, the Company terminated its Swaps on July 2, 2001, for a cash
payment of $1,255,000, including accrued interest of $163,000. In accordance
with SFAS 133, the loss of $1,092,000 is being recognized as interest expense
over the original term of the Swaps. At August 31, 2001, $592,000, net of taxes
of $318,000, remains in accumulated other comprehensive loss.
Convertible Subordinated Notes
On March 9, 2001, the Company's newly appointed CEO and COO, Christopher J.
Pappas and Harris J. Pappas, respectively, made a commitment to loan the
Company $10 million in exchange for convertible subordinated notes that were
funded in the fourth quarter of fiscal 2001. The notes bear interest at LIBOR
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. Notwithstanding any accrued
interest that may also be converted to options, the notes are convertible into
the Company's common stock at $5.00 per share, or 2,000,000 shares, at the
option of the holders at any time after January 2, 2003, and prior to the
stated redemption date.
The conversion price on the notes was less than the market value of the
Company's common stock (as determined by the closing price on the New York
Stock Exchange on the date of issue). The intrinsic value of this beneficial
conversion feature of $4,680,000 has been recorded as a component of paid-in
capital and a discount on the notes, which will be amortized to interest
expense through the redemption date. The Company has amortized $81,000 of this
discount through August 31, 2001. The carrying value of the notes at August
31, 2001, net of the unamortized discount, was approximately $5,401,000.
Interest Expense
Total interest expense incurred for 2001, 2000, and 1999 was $11,996,000,
$6,866,000, and $5,170,000, respectively, which approximated the amount paid
in each year. The amounts capitalized on qualifying properties in 2001, 2000,
and 1999 were $336,000, $958,000, and $409,000, respectively.
6. Leases
The Company conducts part of its operations from facilities that are leased
under noncancelable lease agreements. Most of the leases are for periods of
ten to twenty-five years and provide for contingent rentals based on sales in
excess of a base amount. Approximately 80% of the leases contain renewal
options ranging from five to thirty years.
Annual future minimum lease payments under noncancelable operating leases as
of August 31, 2001, are as follows:
Year ending August 31: (Thousands of dollars)
2002 $ 6,502
2003 6,154
2004 5,890
2005 5,472
2006 4,830
Thereafter 29,126
_______
Total minimum lease payments $57,974
_______
Total rent expense for operating leases for the years ended August 31, 2001,
2000, and 1999, was as follows:
2001 2000 1999
____ ____ _____
(Thousands of dollars)
Minimum rentals $6,914 $6,829 $7,052
Contingent rentals 437 660 843
______ ______ ______
$7,351 $7,489 $7,895
______ ______ ______
7. Employee Benefit Plans and Agreements
Incentive Compensation
The Company has various incentive compensation plans covering officers and
other key employees that are based upon the achievement of specified earnings
goals and performance factors. Awards under the plans are payable in cash
and/or in shares of common stock. Charges to expense for distributions under
the plans amounted to $0, $0, and $355,000 in 2001, 2000, and 1999,
respectively.
Executive Stock Options
In conjunction with their employment agreements effective March 9, 2001, the CEO
and COO were each granted 1,120,000 stock options with an exercise price of
$5.00 per share and a vesting period of three years. As the exercise price was
less than market value of the Company's common stock on the date of grant, the
Company will recognize $5,242,000 in compensation expense over the vesting
period of the options. Vesting was accelerated on 25% of the options in
accordance with the agreements when the closing price of the Company's common
stock reached and maintained a predetermined price for 20 consecutive trading
days. The weighted average exercise price and the Black-Scholes fair value of
these options at August 31, 2001, are $5.00 and $4.05, respectively.
Approximately $1,942,000 in compensation expense was recognized in fiscal
year 2001.
Other Stock Options
The Company has an Incentive Stock Plan (ISP) to provide for market-based
incentive awards, including stock options, stock appreciation rights, and
restricted stock. Under this plan, stock options may be granted at prices not
less than 100% of fair market value on the date of grant. Options granted to the
participants of the plan are exercisable over staggered periods and expire,
depending upon the type of grant, in five to ten years. The plan provides for
various vesting methods, depending upon the category of personnel.
During 1999, the Company authorized 2,000,000 shares of the Company's common
stock for the ISP. Under the terms of the ISP, including the 1999
authorization, nonqualified stock options, incentive stock options, and other
types of awards for not more than 4,900,000 shares of the Company's common
stock may be granted to eligible employees of the Company.
Following is a summary of activity in the Company's ISP and the executive stock
options for the three years ended August 31, 2001, 2000, and 1999:
Weighted Average
Exercise Price Per
Share-Options Options Options
Outstanding Outstanding Exercisable
________________ ___________ ___________
Balances - August 31, 1998 $20.17 764,246 225,704
Granted 15.18 1,532,732 -
Became exercisable - - 113,732
Canceled or expired 19.49 (260,350) (161,662)
Exercised - - -
_________ _________
Balances - August 31, 1999 16.47 2,036,628 177,774
Granted 11.40 622,000 -
Became exercisable - - 406,001
Canceled or expired 15.21 (363,087) (58,836)
Exercised - - -
_________ _________
Balances - August 31, 2000 $15.30 2,295,541 524,939
Granted 5.26 2,958,000 -
Became exercisable - - 993,803
Canceled or expired 13.95 (747,300) (77,252)
Exercised - - -
_________ _________
Balances - August 31, 2001 $ 8.93 4,506,241 1,441,490
_________ _________
Exercise prices for options outstanding as of August 31, 2001, range from $5.00
to $23.13 per share. The weighted average remaining contractual life of these
options is 6.74 years. The options exercisable as of August 31, 2001,
excluding 560,000 executive stock options, which have an exercise price of
$5.00 per share, have a weighted average exercise price of $16.09 per share.
At August 31, 2001 and 2000, the number of incentive stock option shares
available to be granted under the plans was 874,810 and 845,510 shares,
respectively.
The Company has elected to follow APB 25, "Accounting for Stock Issued to
Employees." Accordingly, since employee stock options, with the exception of
the executive stock options discussed above, are granted at market price on the
date of grant, no compensation expense is recognized. However, SFAS 123
requires presentation of pro forma net income and earnings per share as if the
Company had accounted for its employee stock options granted under the fair
value method of that statement.
The weighted average fair value of the individual options granted during 2001,
2000, and 1999 is estimated as $3.16, $1.51, and $3.00, respectively, on the
date of grant. The impact on net income is minimal; therefore, the pro forma
disclosure requirements of SFAS 123 are not significant to the Company. The
fair values were determined using a Black-Scholes option pricing model with the
following assumptions:
2001 2000 1999
____ ____ ____
Dividend yield - 6.90% 5.20%
Volatility .41 .22 .19
Risk-free interest rate 4.44% 7.00% 7.00%
Expected life 8.65 6.11 6.07
Deferred Compensation
The Company has a Supplemental Executive Retirement Plan (SERP) for key
executives and officers. The SERP is a "target" benefit plan, with the annual
lifetime benefit based upon a percentage of average salary during the final
five years of service at age 65, offset by several sources of income including
benefits payable under deferred compensation agreements, if applicable, the
profit sharing plan, and Social Security. SERP benefits will be paid from the
Company's assets. The net expense incurred for this plan for the years ended
August 31, 2001, 2000, and 1999, was $296,000, $161,000, and $150,000,
respectively, and the unfunded accrued pension liability as of August 31, 2001,
2000, and 1999, was approximately $622,000, $692,000, and $564,000,
respectively.
The current year expense was partially offset by a net curtailment gain of
$197,000. The gain was recorded due to forfeited benefits for employees who
terminated during the fiscal year.
The Company also has a voluntary 401(k) employee savings plan to provide
substantially all salaried and hourly employees of the Company an opportunity
to accumulate personal funds for their retirement. These contributions may be
made on a before-tax basis to the plan. The Company matches 25% of the
participant's contributions up to 4% of the participant's salary.
During 1999, the Company established a nonqualified deferred compensation plan
for highly compensated executives allowing deferral of a portion of their
annual salary and up to 100% of bonuses before taxes. The Company does not
match any deferral amounts and retains ownership of all assets until
distributed. The liability under this deferred compensation plan at August 31,
2001 and 2000, was approximately $70,000 and $287,000, respectively.
Profit Sharing
The Company has a profit sharing and retirement trust plan (the Plan) covering
substantially all employees who have attained the age of 21 years and have
completed one year of continuous service. The Plan is administered by a
corporate trustee, is a "qualified plan" under Section 401(a) of the Internal
Revenue Code, and provides for the payment of the employee's vested portion of
the Plan upon retirement, termination, disability, or death. The Plan has been
funded by contributions of a portion of the net earnings of the Company. The
Plan was amended effective August 31, 2001, to make all contributions
discretionary. The Company's annual contribution to the Plan amounted to $0,
$700,000, and $1,700,000, for 2001, 2000, and 1999, respectively.
8. Related Parties
A director of the Company is also a director of an investment firm that
provides investment services for the Company's profit sharing and retirement
trust plan (the Plan). During the year ended August 31, 2001, the Plan paid the
investment firm approximately $74,000 for its services.
The recently hired CEO and COO of the Company own a restaurant company that
provides services to the Company. The services include general business
consulting, basic equipment maintenance, specialized equipment fabrication, and
warehousing support. The total cost of these services for the fiscal year ended
August 31, 2001, was $271,000. All costs to date were incurred in the third and
fourth quarters after the chief officers were hired.
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 daily cash
needs. The entire balance was outstanding as of August 31, 2001.
The recently hired CFO and the Senior Vice President-Administration provide
financial and legal services to the restaurant company owned by the CEO and the
COO of the Company; compensation for the services provided by the CFO and the
Senior Vice President-Administration to the separate restaurant company are
funded by that organization.
9. Income Taxes
The tax effect of temporary differences results in deferred income tax assets
and liabilities as of August 31 as follows:
2001 2000
________ _________
(Thousands of dollars)
Deferred tax assets:
Workers' compensation insurance $ 4,613 $ 1,540
Deferred compensation 1,482 722
Asset impairments and store closure reserves 21,108 14,074
Other 318 -
_______ _______
Total deferred tax assets 27,521 16,336
Deferred tax liabilities:
Amortization of capitalized interest 484 641
Depreciation and amortization 22,023 20,477
Other 502 1,646
_______ _______
Total deferred tax liabilities 23,009 22,764
_______ _______
Net deferred tax asset (liability) $ 4,512 $(6,428)
_______ _______
The reconciliation of the (benefit) provision for income taxes to the expected
income tax (benefit) expense (computed using the statutory tax rate) is as
follows:
2001 2000 1999
____ ____ ____
Amount % Amount % Amount %
______ ____ _______ ____ _______ ____
(Thousands of dollars and as a percent of pretax income)
Normally expected
income tax
(benefit) expense $(17,073) (35.0)% $4,697 35.0% $15,219 35.0%
State income taxes 125 .3 163 1.2 156 .4
Jobs tax credits (381) (.8) (152) (1.1) (155) (.4)
Other differences 431 .9 (412) (3.1) (349) (.8)
______ ____ _______ ____ _______ ____
$(16,898) (34.6)% $4,296 32.0% $14,871 34.2%
______ ____ _______ ____ _______ ____
Cash payments for state and federal income taxes for 2001, 2000, and 1999 were
$92,000, $8,659,000 and $13,245,000, respectively.
10. Commitments and Contingencies
The Company has guaranteed loan balances outstanding at August 31, 2001, of
$1,651,000 relating to purchases of Company stock made by officers of the
Company under an officer loan program. Under the program, officers purchased
shares; funding, if necessary, was obtained from an unrelated third party.
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, resolution of these pending legal proceedings will not have a
material adverse effect on the Company's operations or consolidated financial
position.
At August 31, 2001, surety bonds in the amount of $10,115,000 have been issued
as security for the payment of insurance obligations classified as accrued
expenses on the balance sheet.
11. Common Stock
In 1991, the Board of Directors adopted a Shareholder Rights Plan and declared
a dividend of one common stock purchase right for each outstanding share of
common stock. The rights are not initially exercisable. The Company amended
the Shareholder Rights Plan effective March 8, 2001. The rights may become
exercisable under circumstances described in the plan if any person or group
becomes the beneficial owner of 15% or more of the common stock or announces a
tender or exchange offer, the completion of which would result in the ownership
by a person or group of 15% or more of the common stock (either, an Acquiring
Person). Once the rights become exercisable, each right will be exercisable to
purchase, for $27.50 (the Purchase Price), one-half of one share of common
stock, par value $.32 per share, of the Company. If any person becomes an
Acquiring Person, each right will entitle the holder, other than the Acquiring
Person, to purchase for the Purchase Price a number of shares of the Company's
common stock having a market value of four times the Purchase Price.
In connection with the employment of Christopher J. Pappas, the Company's
President and Chief Executive Officer, and Harris J. Pappas, the Company's
Chief Operating Officer, the Shareholder Rights Plan was amended to exempt from
the operation of the plan Messrs. Pappas' ownership of the Company, which was
acquired prior to March 8, 2001 (and certain additional shares permitted to be
acquired) and certain shares of common stock which may be acquired in
connection with options issued on the date of their employment and the
convertible notes subsequently purchased from the Company.
The Board of Directors periodically authorizes the purchase in the open market
of shares of the Company's outstanding common stock. Under such authorizations,
the Company purchased 850,300 shares of its common stock at a cost of
$12,919,000 in 1999, which are being held as treasury stock.
Common stock is reserved for approximately 4,506,000 shares for issuance upon
the exercise of outstanding stock options and 2,000,000 shares for issuance
upon the conversion of subordinated notes.
In the second quarter of fiscal year 2001, in accordance with the nonemployee
director phantom stock plan, the Company distributed 2,568 shares of treasury
stock to a retiring Board member.
12. Per Share Information
A reconciliation of the numerators and denominators of basic earnings per share
and earnings per share assuming dilution is shown in the table below:
August 31,
2001 2000 1999
____ ____ ____
(Thousands of dollars except per share data)
Numerator:
Net income (loss) $(31,881) $ 9,125 $28,613
________ _______ _______
Effect of dilutive securities:
Interest on convertible
subordinated notes 194 - -
________ _______ _______
Numerator for net income (loss)
per common share - diluted $(31,687) $ 9,125 $28,613
Denominator for basic earnings
per share -
weighted average shares 22,422 22,420 22,614
Effect of dilutive securities:
Employee stock options 96 2 23
Convertible subordinated notes 312 - -
________ _______ _______
Denominator for earnings
per share - assuming
dilution - adjusted
weighted average shares 22,830 22,422 22,637
________ _______ _______
Net income (loss) per share - basic $ (1.42) $ 0.41 $ 1.27
________ _______ _______
Net income (loss) per share -
assuming dilution(a) $ (1.42) $ 0.41 $ 1.26
________ _______ _______
(a) As the Company had a net loss for the year ended August 31, 2001, earnings
per share assuming dilution equals basic earnings per share as potentially
dilutive securities are antidilutive in loss periods.
13. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities at August 31 consist of:
2001 2000
_______ _______
(Thousands of dollars)
Salaries and bonuses $ 6,017 $ 7,467
Rent 453 537
Taxes, other than income 10,124 6,115
Profit sharing plan - 702
Workers' compensation and
general liability insurance 16,199 7,112
Other 1,792 2,107
_______ _______
$34,585 $24,040
_______ _______
14. Quarterly Financial Information (Unaudited)
The following is a summary of quarterly unaudited financial information
for 2001 and 2000:
Three Months Ended
__________________
November 30, February 28, May 31, August 31,
2000 2001 2001 2001
________ ________ ________ _________
(Thousands of dollars except per share data)
Sales $113,900 $112,219 $121,677 $119,365
Gross profit 45,330 45,859 50,118 41,676
Net income (loss) (2,008) (9,424)* (1,066) (19,383)*
Net income (loss) per share (.09) (.42)* (.05) (.86)*
Three Months Ended
__________________
November 30, February 29, May 31, August 31,
1999 2000 2000 2000
________ ________ ________ _________
(Thousands of dollars except per share data)
Sales $123,144 $121,924 $126,281 $122,035
Gross profit 54,219 54,417 54,071 49,741
Net income (loss) 6,171 5,617 5,835 (8,498)*
Net income (loss) per share .28 .25 .26 (.38)*
*See Notes 2 and 4 for discussion of charges recorded during the second quarter
of 2001 and the fourth quarters of 2001 and 2000.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
There is incorporated in this Item 10 by reference that portion of the
Company's definitive proxy statement for the 2002 annual meeting of
shareholders appearing therein under the captions "Election of Directors,"
"Information Concerning Directors and Committees," and "Certain Relationships
and Related Transactions." See also the information in Item 4A of Part I of
this Report.
Item 11. Executive Compensation.
There is incorporated in this Item 11 by reference that portion of the
Company's definitive proxy statement for the 2002 annual meeting of
shareholders appearing therein under the captions "Compensation of Directors,"
"Personnel and Administrative Policy Committee Report," "Executive
Compensation," "Deferred Compensation," and "Certain Relationships and Related
Transactions."
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
There is incorporated in this Item 12 by reference that portion of the
Company's definitive proxy statement for the 2002 annual meeting of
shareholders appearing therein under the captions "Principal Shareholders"
and "Management Shareholders" and "Principal Shareholders."
Item 13. Certain Relationships and Related Transactions.
There is incorporated in this Item 13 by reference that portion of the
Company's definitive proxy statement for the 2002 annual meeting of
Shareholders appearing therein under the caption "Certain Relationships
and Related Transactions."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents.
1. Financial Statements
The following financial statements are filed as part of this Report:
Consolidated balance sheets at August 31, 2001 and 2000
Consolidated statements of operations for each of the three years in the
period ended August 31, 2001
Consolidated statements of shareholders' equity for each of the three
years in the period ended August 31, 2001
Consolidated statements of cash flows for each of the three years in the
period ended August 31, 2001
Notes to consolidated financial statements
Report of independent auditors
2. Financial Statement Schedules
All schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule or
because the information required is included in the financial statements and
notes thereto.
3. Exhibits
The following exhibits are filed as a part of 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) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias,
Inc. and NationsBank, N.A., with Schedule and Confirmation dated
July 7, 1997 (filed as Exhibit 4(g) to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1997, and incorporated
herein by reference).
4(i) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias,
Inc. and Texas Commerce Bank National Association, with Schedule and
Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997, and incorporated herein by reference).
4(j) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A.
(filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1997, and incorporated herein by
reference).
4(k) Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as
Exhibit 4(j) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2000, and incorporated herein by
reference).
4(l) Fourth Amendment to Credit Agreement dated July 9, 2001, among Luby's,
Inc., Bank of America 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 as part of the Fourth Amended 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 American 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.
10(a) Form of Deferred Compensation Agreement entered into between Luby's
Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1981, and incorporated herein by reference).*
10(b) Form of Amendment to Deferred Compensation Agreement between Luby's
Cafeterias, Inc. and various officers and former officers adopted
January 14, 1997 (filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1997, and
incorporated herein by reference).*
10(c) Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as
Exhibit 10(i) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1989, and incorporated herein by
reference).*
10(d) Amendment to Management Incentive Stock Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1997,
and incorporated herein by reference).*
10(e) Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias,
Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1994,
and incorporated herein by reference).*
10(f) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(g) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).*
10(h) Amended and Restated Nonemployee Director Stock Option Plan of Luby's,
Inc. approved by the shareholders of Luby's, Inc. on January 14, 2000
(filed as Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q
for the quarter ended February 29, 2000, and incorporated herein by
reference).*
10(i) 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(n) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan
adopted March 19, 1998 (filed as Exhibit 10(aa) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1998,
and incorporated herein by reference).*
10(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.
10(Z) Ground Lease dated March 25, 1994, by and between Luby's Cafeterias,
Inc. and PHCG Investments, as amended by Lease Amendment dated July 6,
1994.
10(aa) Lease Agreement dated June 1, 2001, by and between Luby's, Inc. and
Pappas Restaurants, Inc.
10(bb) Final Severance Agreement and Release between Luby's, Inc. and Alan M.
Davis dated July 20, 2001.*
10(cc) Consultant Agreement between Luby's Restaurants Limited Partnership and
Alan M. Davis dated July 20, 2001.*
11 Statement re computation of per share earnings.
13 Luby's, Inc. 2001 annual report to shareholders (furnished for the
information of the Commission and not deemed to be "filed" except for
those portions expressly incorporated by reference).
21 Subsidiaries of Luby's, Inc. (filed as Exhibit 21 to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference).
99(a) Corporate Governance Guidelines of Luby's, Inc., as amended
July 26, 2001.
99(b) Consent of Ernst & Young LLP.
*Denotes management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of the period
covered by this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: December 5, 2001 LUBY'S, INC.
(Registrant)
By: /s/ CHRISTOPHER J. PAPPAS
____________________________
Christopher J. Pappas, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature and Date Name and Title
__________________ __________________________
/s/ROBERT T. HERRES Robert T. Herres, Director and
________________________________ Chairman of the Board
December 5, 2001
/s/CHRISTOPHER J. PAPPAS Christopher J. Pappas, Director
________________________________ and President and Chief Executive
December 5, 2001 Officer
/s/HARRIS J. PAPPAS Harris J. Pappas, Director and
________________________________ Chief Operating Officer
December 5, 2001
/s/ERNEST PEKMEZARIS Ernest Pekmezaris, Senior Vice
________________________________ President and Chief Financial
December 5, 2001 Officer
/s/RONALD K. CALGAARD Ronald K. Calgaard, Director
________________________________
December 5, 2001
/s/JUDITH B. CRAVEN Judith B. Craven, Director
________________________________
December 5, 2001
/s/DAVID B. DAVISS David B. Daviss, Director
________________________________
December 5, 2001
/s/ARTHUR R. EMERSON Arthur R. Emerson, Director
________________________________
December 5, 2001
/s/ROGER R. HEMMINGHAUS Roger R. Hemminghaus, Director
________________________________
December 5, 2001
/s/WALTER J. SALMON Walter J. Salmon, Director
________________________________
December 5, 2001
/s/JOANNE WINIK Joanne Winik, Director
________________________________
December 5, 2001
/s/JIM W. WOLIVER Jim W. Woliver, Director
________________________________
December 5, 2001
EXHIBIT INDEX
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) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias,
Inc. and NationsBank, N.A., with Schedule and Confirmation dated
July 7, 1997 (filed as Exhibit 4(g) to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1997, and incorporated
herein by reference).
4(i) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias,
Inc. and Texas Commerce Bank National Association, with Schedule and
Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997, and incorporated herein by reference).
4(j) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A.
(filed as Exhibit 4(i) to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1997, and incorporated herein by
reference).
4(k) Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A. (filed as
Exhibit 4(j) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2000, and incorporated herein by
reference).
4(l) Fourth Amendment to Credit Agreement dated July 9, 2001, among Luby's,
Inc., Bank of America 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 as part of the Fourth Amended 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 American 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.
10(a) Form of Deferred Compensation Agreement entered into between Luby's
Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1981, and incorporated herein by reference).*
10(b) Form of Amendment to Deferred Compensation Agreement between Luby's
Cafeterias, Inc. and various officers and former officers adopted
January 14, 1997 (filed as Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1997, and
incorporated herein by reference).*
10(c) Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as
Exhibit 10(i) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1989, and incorporated herein by
reference).*
10(d) Amendment to Management Incentive Stock Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1997,
and incorporated herein by reference).*
10(e) Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias,
Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1994,
and incorporated herein by reference).*
10(f) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(g) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1998, and incorporated herein by reference).*
10(h) Amended and Restated Nonemployee Director Stock Option Plan of Luby's,
Inc. approved by the shareholders of Luby's, Inc. on January 14, 2000
(filed as Exhibit 10(j) to the Company's Quarterly Report on Form 10-Q
for the quarter ended February 29, 2000, and incorporated herein by
reference).*
10(i) 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(n) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan
adopted March 19, 1998 (filed as Exhibit 10(aa) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28, 1998,
and incorporated herein by reference).*
10(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.
10(Z) Ground Lease dated March 25, 1994, by and between Luby's Cafeterias,
Inc. and PHCG Investments, as amended by Lease Amendment dated July 6,
1994.
10(aa) Lease Agreement dated June 1, 2001, by and between Luby's, Inc. and
Pappas Restaurants, Inc.
10(bb) Final Severance Agreement and Release between Luby's, Inc. and Alan M.
Davis dated July 20, 2001.*
10(cc) Consultant Agreement between Luby's Restaurants Limited Partnership and
Alan M. Davis dated July 20, 2001.*
11 Statement re computation of per share earnings.
13 Luby's, Inc. 2001 annual report to shareholders (furnished for the
information of the Commission and not deemed to be "filed" except for
those portions expressly incorporated by reference).
21 Subsidiaries of Luby's, Inc. (filed as Exhibit 21 to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31, 2001,
and incorporated herein by reference).
99(a) Corporate Governance Guidelines of Luby's, Inc., as amended July 26,
2001.
99(b) Consent of Ernst & Young LLP.
*Denotes management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of the period
covered by this Report.