FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2211 Northeast Loop 410, P. O. Box 33069
San Antonio, Texas 78265-3069
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
210/654-9000
________________________________________________________________________________
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
____ ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock: 22,420,375 shares outstanding as of March 31, 2000
(exclusive of 4,982,692 treasury shares)
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
LUBY'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
February 29, February 28, February 29, February 28,
2000 1999 2000 1999
___________ ___________ ___________ ____________
(Amounts in thousands except per share data)
<S> <C> <C> <C> <C>
Sales $121,924 $123,771 $245,068 $249,479
Costs and expenses:
Cost of food 29,823 29,213 60,222 62,022
Payroll and related costs 37,684 37,344 76,210 76,453
Occupancy and other operating
expenses 39,280 39,360 78,685 77,872
General and administrative expenses 5,659 6,090 10,862 11,754
________ ________ ________ ________
112,446 112,007 225,979 228,101
________ ________ ________ ________
Income from operations 9,478 11,764 19,089 21,378
Interest expense (1,253) (1,280) (2,309) (2,446)
Other income, net 389 620 1,299 900
________ ________ ________ ________
Income before income taxes 8,614 11,104 18,079 19,832
Provision for income taxes 2,997 3,885 6,291 6,941
________ ________ ________ ________
Net income $ 5,617 $ 7,219 $ 11,788 $ 12,891
________ ________ ________ ________
Net income per share - basic and
assuming dilution $.25 $.32 $.53 $.57
Cash dividends per share $.20 $.20 $.40 $.40
Average number of shares outstanding 22,420 22,491 22,420 22,811
See accompanying notes.
</TABLE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
February 29, August 31,
2000 1999
____________ __________
(Thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents $ 670 $ 286
Trade accounts and other receivables 447 584
Food and supply inventories 3,740 3,686
Prepaid expenses 4,576 4,552
Deferred income taxes 917 956
________ ________
Total current assets 10,350 10,064
Property held for sale 11,770 12,322
Investments and other assets 7,134 9,221
Property, plant, and equipment - at cost, net 337,221 314,418
________ ________
$366,475 $346,025
________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 20,083 19,686
Dividends payable 4,484 4,484
Accrued expenses and other liabilities 21,246 25,260
Income taxes payable (1,722) 382
________ ________
Total current liabilities 44,091 49,812
Long-term debt 101,000 78,000
Deferred income taxes and other credits 12,098 9,942
Reserve for store closings 3,207 5,067
Shareholders' equity:
Common stock 8,769 8,769
Paid-in capital 27,152 27,096
Retained earnings 275,984 273,165
Less cost of treasury stock (105,826) (105,826)
________ ________
Total shareholders' equity 206,079 203,204
________ ________
$366,475 $346,025
________ _________
See accompanying notes.
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
February 29, February 28,
2000 1999
____________ ____________
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,788 $ 12,891
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 11,014 9,755
Decrease in accrued expenses and
other liabilities (4,014) (6,793)
Other, net (1,966) 1,232
__________ _________
Net cash provided by operating activities 16,822 17,085
__________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property held for sale 1,010 4,456
Purchases of land held for future use (2,414) (3,192)
Purchases of property, plant, and equipment (29,065) (10,754)
__________ _________
Net cash used in investing activities (30,469) (9,490)
__________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement 23,000 18,000
Purchases of treasury stock --- (13,389)
Dividends paid (8,969) (9,190)
__________ _________
Net cash provided by (used in)
financing activities 14,031 (4,579)
__________ _________
Net increase in cash and cash equivalents 384 3,016
Cash and cash equivalents at beginning of period 286 3,760
__________ _________
Cash and cash equivalents at end of period $ 670 $ 6,776
__________ _________
See accompanying notes.
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
<TABLE>
LUBY'S, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Six Months Ended February 29, 2000 and February 28, 1999
(UNAUDITED)
<CAPTION>
Total
Common Stock Paid-in Retained Shareholders'
Issued Treasury Capital Earnings Equity
______ ________ _______ ________ _____________
(Thousands of dollars)
<S> <C> <C> <C> <C> <C>
Balance at August 31, 1998 $8,769 $ (92,907) $27,012 $262,540 $205,414
Net income for the period --- --- --- 12,891 12,891
Common stock issued under benefit
plans, net of shares tendered
in partial payment and including
tax benefits --- 21 13 --- 34
Cash dividends --- --- --- (9,020) (9,020)
Purchases of treasury stock --- (12,918) --- --- (12,918)
______ _________ _______ ________ ________
Balance at February 28, 1999 $8,769 $(105,804) $27,025 $266,411 $196,401
______ _________ _______ ________ ________
Balance at August 31, 1999 $8,769 $(105,826) $27,096 $273,165 $203,204
Net income for the period --- --- --- 11,788 11,788
Common stock issued under benefit
plans, net of shares tendered
in partial payment and including
tax benefits --- --- 56 --- 56
Cash dividends --- --- --- (8,969) (8,969)
______ _________ _______ ________ ________
Balance at February 29, 2000 $8,769 $(105,826) $27,152 $275,984 $206,079
______ _________ _______ ________ ________
See accompanying notes.
</TABLE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S, INC.
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
(UNAUDITED)
Note 1: The accompanying unaudited financial statements are presented in
accordance with the requirements of Form 10-Q and, consequently, do
not include all of the disclosures normally required by generally
accepted accounting principles. All adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim periods have been made. All such adjustments are of
a normal recurring nature. The results for the interim period are
not necessarily indicative of the results to be expected for the
full year.
These financial statements should be read in conjunction with the
consolidated financial statements and footnotes included in Luby's
annual report on Form 10-K for the year ended August 31, 1999. The
accounting policies used in preparing these consolidated financial
statements are the same as those described in Luby's annual report
on Form 10-K.
Part I - FINANCIAL INFORMATION (continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
________________________________
Cash and cash equivalents increased by $384,000 from the end of the preceding
fiscal year to February 29, 2000. All capital expenditures for fiscal 2000
are being funded from cash flows from operations, cash equivalents, and long-
term debt. Capital expenditures for the six months ended February 29, 2000,
were $31,479,000. As of February 29, 2000, the company owned four
undeveloped land sites, four land sites on which restaurants were under
construction, and several properties held for sale.
To fund capital expenditures, the company required external financing and
borrowed funds under a $125,000,000 line-of-credit agreement. As of
February 29, 2000, the amount outstanding under this line of credit was
$101,000,000. The company believes that additional financing from external
sources can be obtained on terms acceptable to the company in the event such
financing is required.
Results of Operations
_____________________
Quarter ended February 29, 2000 compared to the quarter ended February 28, 1999
_______________________________________________________________________________
Sales decreased $1,847,000, or 1.5%, due to the closing of ten restaurants in
fiscal 1999 and a decline of 3.4% during the quarter in sales volumes at
restaurants opened over 18 months. This decrease was partially offset by the
opening of six new restaurants during fiscal 2000 and four during fiscal 1999.
Cost of food increased $610,000, or 2.1%, versus the second quarter of last
year. During the prior year period, the company experienced favorable food
costs as a perentage of sales due primarily to a price increase during
January 1999. In addition, beef and pork prices were higher this year versus
the prior year period. Payroll and related costs increased $340,000, or
0.9%, due primarily to higher hourly wage rates related to tight labor
markets for entry-level employees, which was offset by our initiative to be
more labor efficient in our restaurants. Occupancy and other operating
expenses remained relatively flat versus prior year but increased as a
percent of sales due primarily to 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; and higher
depreciation expense associated with the new stores, restaurant remodels
and an increase in technology-related spending. These increases were offset
by lower linen and uniform expense due to the completion of the rollout of
the new uniform program, lower advertising expenditures, and lower
management compensation, which is based on sales growth and store-level
controllable profits. General and administrative expenses decreased $431,000,
or 7.1%, due to savings in many expense categories, including travel, moving,
and bonuses.
Other income decreased $231,000 due primarily to the recording of gains in
the prior year quarter on the sale of two properties which were held for
sale.
The provision for income taxes decreased $888,000 due primarily to lower income
before income taxes. In addition, there was a slight decrease in the effective
income tax rate from 35.0% to 34.8% due to higher estimated tax credits.
Six months ended February 29, 2000 compared to the six months ended
February 28, 1999
___________________________________________________________________
Sales decreased $4,411,000, or 1.8%, due to the closing of ten restaurants in
fiscal 1999 and a decline of 2.8% in sales volumes at restaurants opened over
18 months. This decrease was partially offset by the opening of six new
restaurants during fiscal 2000 and four during fiscal 1999.
Cost of food decreased $1,800,000, or 2.9%, due primarily to the savings
associated with the consolidation of our purchasing under a prime vendor
program and the decline in sales. Payroll and related costs are relatively
flat in comparison to prior year. Occupancy and other operating expenses
increased $813,000, or 1.0%, due primarily to 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 linen and uniform expense due to the completion of the
rollout of the new uniform program and lower advertising expenditures. General
and administrative expenses decreased $892,000, or 7.6%, due to savings in many
expense categories, including travel, moving, and bonuses.
Interest expense decreased $137,000, or 5.6%, due to higher capitalized
interest related to more properties under construction during the current
year. This was partially offset by higher average borrowings under the line-
of-credit agreement.
Other income increased $399,000 due primarily to the recording of gains on the
sale of properties which were held for sale.
The provision for income taxes decreased $650,000, or 9.4%, due primarily to
lower income before income taxes. In addition, there was a slight decrease
in the effective income tax rate from 35.0% to 34.8% due to higher estimated
tax credits.
The Year 2000
_____________
The Year 2000 has not posed significant operational problems for the company's
computer systems. To date, there have been no major disruptions which have had
an adverse effect on the company's consolidated financial position, results of
operations, and cash flows. The company intends to continue to monitor any
Year 2000 concerns that might develop. The cost of the Year 2000 project was
approximately $200,000, primarily for services and costs of updating some
existing software.
Forward-Looking Statements
__________________________
The company wishes to caution readers that various factors could cause the
actual results of the company to differ materially from those indicated by
forward-looking statements made from time to time in news releases, reports,
proxy statements, registration statements, and other written communications
(including the preceding sections of this Management's Discussion and
Analysis), as well as oral statements made from time to time by
representatives of the company. Except for historical information, matters
discussed in such oral and written communications are forward-looking
statements that involve risks and uncertainties, including but not limited to
general business conditions, the impact of competition, the success of
operating initiatives, changes in the cost and supply of food and labor, the
seasonality of the company's business, taxes, inflation, and governmental
regulations, as well as other risks and uncertainties disclosed in periodic
reports on Form 10-K.
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 2000 annual meeting of shareholders of Luby's, Inc. was held on
January 14, 2000.
(b) The directors elected at the meeting were Robert T. Herres, Barry J.C.
Parker, Walter J. Salmon and Joanne Winik. The other directors whose
terms continued after the meeting are Ronald K. Calgaard, Lauro F.
Cavazos, Judith B. Craven, David B. Daviss, Arthur R. Emerson, Roger R.
Hemminghaus, John B. Lahourcade, and George H. Wenglein.
(c) The matters voted upon at the meeting were (i) the election of four
directors to serve until the 2003 annual meeting of shareholders;
(ii) the approval of an amendment and restatement of the Nonemployee
Director Stock Option Plan; and (iii) the approval of the appointment of
Ernst & Young LLP as auditors for the 2000 fiscal year.
(d) With respect to the election of directors, the results of the voting
were:
Shares Voted Shares Broker
Nominee For Abstained Nonvotes
________________ __________ _________ ________
Robert T. Herres 18,338,463 1,569,265 -0-
Barry J.C. Parker 17,917,109 1,990,620 -0-
Walter J. Salmon 17,657,841 2,249,886 -0-
Joanne Winik 18,215,421 1,692,305 -0-
(e) With respect to the approval of the amendment and restatement of the
Nonemployee Director Stock Option Plan, the results of the voting were:
Shares voted "for" 16,328,656
Shares voted "against" 3,161,183
Shares abstaining 417,876
Broker nonvotes -0-
(f) With respect to the approval of the appointment of auditors, the
results of the voting were:
Shares voted "for" 19,711,810
Shares voted "against" 78,123
Shares abstaining 117,791
Broker nonvotes -0-
Part II - OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3(a) Certificate of Incorporation of Luby's, Inc., as currently in
effect (filed as Exhibit 3(b) to the company's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1999, and
incorporated herein by reference).
3(b) Bylaws of Luby's, Inc. as currently in effect (filed as
Exhibit 3(c) to the company's Quarterly Report on Form 10-Q
for the quarter ended February 28, 1998, and incorporated
herein by reference).
4(a) Description of Common Stock Purchase Rights of Luby's
Cafeterias, Inc. in Form 8-A (filed April 17, 1991, effective
April 26, 1991, File No. 1-8308, 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) 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(f) 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(g) 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(h) 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(i) 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).
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) Performance Unit Plan of Luby's Cafeterias, Inc. approved by
the shareholders January 12, 1984 (filed as Exhibit 10(f) to
the company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1984, and incorporated herein by
reference).*
10(d) Amendment to Performance Unit Plan of Luby's Cafeterias, Inc.
adopted January 14, 1997 (filed as Exhibit 10(h) to the
company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and incorporated herein by reference).*
10(e) 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(f) 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(g) 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(h) 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(i) 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(j) Amended and Restated Nonemployee Director Stock Option Plan
of Luby's, Inc. approved by the shareholders of Luby's, Inc.
on January 14, 2000.*
10(k) Employment Contract dated January 12, 1996, between Luby's
Cafeterias, Inc. and John B. Lahourcade (filed as Exhibit
10(i) to the company's Quarterly Report on Form 10-Q for the
quarter ended February 29, 1996, and incorporated herein by
reference).*
10(l) 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(m) 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(n) 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, 1999, and incorporated herein by
reference).*
10(o) 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(p) Employment Agreement dated September 15, 1997, between Luby's
Cafeterias, Inc. and Barry J.C. Parker (filed as Exhibit
10(u) to the company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1997, and incorporated herein by
reference).*
10(q) Amendment dated January 8, 1999, to Employment Agreement
between Luby's Cafeterias, Inc. and Barry J.C. Parker (filed
as Exhibit 10(r) to the company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1998, and
incorporated herein by reference).*
10(r) Amendment dated October 15, 1999, to Employment Agreement
between Luby's Cafeterias, Inc. and Barry J.C. Parker (filed
as Exhibit 10(s) to the company's Annual Report on Form 10-K
to the fiscal year ended August 31, 1999, and incorporated
herein by reference).*
10(s) Term Promissory Note of Barry J.C. Parker in favor of Luby's
Cafeterias, Inc., dated November 10, 1997, in the original
principal sum of $199,999.00 (filed as Exhibit 10(v) to the
company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1997, and incorporated herein by
reference).*
10(t) Stock Agreement dated November 10, 1997, between Barry J.C.
Parker and Luby's Cafeterias, Inc. (filed as Exhibit 10(w) to
the company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1997, and incorporated herein by
reference).*
10(u) 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(v) Salary Continuation Agreement dated May 14, 1998, between
Luby's Cafeterias, Inc. and Sue Elliott (filed as Exhibit
10(cc) to the company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 1998, and incorporated herein by
reference).*
10(w) Salary Continuation Agreement dated June 1, 1998, between
Luby's Cafeterias, Inc. and Alan M. Davis (filed as Exhibit
10(dd) to the company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 1998, and incorporated herein by
reference).*
10(x) 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(y) Incentive Bonus Plan for Fiscal 1999 adopted October 16, 1998
(filed as Exhibit 10(dd) to the company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1998, and
incorporated herein by reference).*
10(z) Form of Change in Control Agreement entered into between
Luby's, Inc. and Barry J.C. Parker, President and Chief
Executive Officer, as of January 8, 1999 (filed as Exhibit
10(z) to the company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1999, and incorporated herein by
reference).*
10(aa) 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(bb) 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(cc) Luby's, Inc. Incentive Bonus Plan for Fiscal 2000 (filed as
Exhibit 10(dd) to the company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1999, and incorporated
herein by reference).*
11 Statement re computation of per share earnings.
99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc. as
amended January 14, 2000.
*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 quarter for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUBY'S, INC.
(Registrant)
By: BARRY J.C. PARKER
_____________________________
Barry J. C. Parker
President and
Chief Executive Officer
By: LAURA M. BISHOP
_____________________________
Laura M. Bishop
Senior Vice President and
Chief Financial Officer
Dated: April 7, 2000
EXHIBIT INDEX
Number Document
______ ________
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) 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(f) 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(g) 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(h) 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(i) 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).
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) Performance Unit Plan of Luby's Cafeterias, Inc.
approved by the shareholders January 12, 1984 (filed as
Exhibit 10(f) to the company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1984, and incorporated
herein by reference).*
10(d) Amendment to Performance Unit Plan of Luby's Cafeterias,
Inc. adopted January 14, 1997 (filed as Exhibit 10(h) to
the company's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1997, and incorporated herein by reference).*
10(e) 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(f) 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(g) 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(h) 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(i) 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(j) Amended and Restated Nonemployee Director Stock
Option Plan of Luby's, Inc. approved by the
shareholders of Luby's, Inc. on January 14, 2000.*
10(k) Employment Contract dated January 12, 1996, between
Luby's Cafeterias, Inc. and John B. Lahourcade (filed
as Exhibit 10(i) to the company's Quarterly Report on
Form 10-Q for the quarter ended February 29, 1996,
and incorporated herein by reference).*
10(l) 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(m) 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(n) 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, 1999,
and incorporated herein by reference).*
10(o) 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(p) Employment Agreement dated September 15, 1997,
between Luby's Cafeterias, Inc. and Barry J.C. Parker
(filed as Exhibit 10(u) to the company's Annual Report
on Form 10-K for the fiscal year ended August 31,
1997, and incorporated herein by reference).*
10(q) Amendment dated January 8, 1999, to Employment Agreement
between Luby's Cafeterias, Inc. and Barry J.C. Parker
(filed as Exhibit 10(r) to the company's Quarterly Report
on Form 10-Q for the quarter ended February 28,
1998, and incorporated herein by reference).*
10(r) Amendment dated October 15, 1999, to Employment
Agreement between Luby's Cafeterias, Inc. and Barry J.C.
Parker (filed as Exhibit 10(s) to the company's Annual
Report on Form 10-K to the fiscal year ended August 31,
1999, and incorporated herein by reference).*
10(s) Term Promissory Note of Barry J.C. Parker in favor
of Luby's Cafeterias, Inc., dated November 10, 1997,
in the original principal sum of $199,999.00 (filed as
Exhibit 10(v) to the company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1997, and
incorporated herein by reference).*
10(t) Stock Agreement dated November 10, 1997, between Barry J.C.
Parker and Luby's Cafeterias, Inc. (filed as Exhibit 10(w)
to the company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1997, and incorporated
herein by reference).*
10(u) 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(v) Salary Continuation Agreement dated May 14, 1998,
between Luby's Cafeterias, Inc. and Sue Elliott (filed as
Exhibit 10(cc) to the company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1998, and
incorporated herein by reference).*
10(w) Salary Continuation Agreement dated June 1, 1998,
between Luby's Cafeterias, Inc. and Alan M. Davis
(filed as Exhibit 10(dd) to the company's Quarterly
Report on Form 10-Q for the quarter ended May 31,
1998, and incorporated herein by reference).*
10(x) 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(y) Incentive Bonus Plan for Fiscal 1999 adopted
October 16, 1998 (filed as Exhibit 10(dd) to the
company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1998, and incorporated
herein by reference).*
10(z) Form of Change in Control Agreement entered into
between Luby's, Inc. and Barry J.C. Parker,
President and Chief Executive Officer, as of
January 8, 1999 (filed as Exhibit 10(z) to the
company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1999, and incorporated
herein by reference).*
10(aa) 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 Quarter Report on Form 10-Q
for the quarter ended February 28, 1999, and
incorporated herein by reference).*
10(bb) 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(cc) Luby's, Inc. Incentive Bonus Plan for Fiscal 2000
(filed as Exhibit 10(dd) to the company's Annual
Report on Form 10-K for the fiscal year ended August 31,
1999, and incorporated herein by reference).*
11 Statement re computation of per share earnings.
99(a) Corporate Governance Guidelines of Luby's Cafeterias,
Inc. as amended January 14, 2000.
*Denotes management contract or compensatory plan or arrangement.
Exhibit 10(j)
LUBY'S, INC.
AMENDED AND RESTATED
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Introduction. This Amended and Restated Nonemployee Director Stock
Option Plan (the "Plan") of Luby's, Inc. (the "Company"), upon approval of the
Plan by the shareholders of the Company at their 2000 annual meeting, shall
amend and restate the Nonemployee Director Stock Option Plan approved by the
shareholders of the Company on January 13, 1995, and amended by the Board of
Directors on January 14, 1997 (the "Original Plan").
2. Effectiveness. Upon approval of the Plan by the shareholders of the
Company at their 2000 annual meeting, the Plan shall become effective as of
January 1, 2000. If the Plan is not approved by the shareholders at such
meeting, it shall not become effective, and the Original Plan shall continue in
force and effect.
3. Purpose. The Purpose of the Plan is to promote the interests of the
Company and its shareholders by strengthening the Company's ability to attract
and retain the services of experienced and knowledgeable Nonemployee Directors.
To accomplish these objectives, the Plan authorizes awards of options (the
"Options") to purchase shares of the Company's common stock par value $.32 per
share ("Common Stock") to Nonemployee Directors, thereby encouraging such
directors to acquire an increased proprietary interest in the Company.
4. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). The decision of the Board on any
questions concerning the interpretation or administration of the Plan shall, as
between the Company and the Option holders, be final and conclusive. The Board
may consult with counsel, who may be counsel to the Company, and shall not incur
any liability for any action taken in good faith in reliance upon the advice of
counsel.
5. Types of Options. Options granted under the Plan do not meet the
requirements of Section 422 of the Internal Revenue Code and are commonly
referred to as "nonqualified stock options."
6. Participants. Participants shall be the directors of the Company who
are not employees of the Company or a subsidiary of the Company or any other
business entity in which the Company, directly or indirectly, owns 50% or more
of the capital or profit interest ("Nonemployee Directors").
7. Shares. Subject to the adjustment provisions of Section 10, the number
of shares of Common Stock of the Company which may be issued upon exercise of
Options granted pursuant to the Plan shall not exceed 200,000 shares. If,
however, any Option granted under the Plan shall expire, terminate, or be
canceled without having been exercised in full, the unpurchased shares shall
continue to be available for purposes of the Plan. More than one Option may be
granted to the same participant.
8. Grant of Options. The Board shall select the Nonemployee Directors who
are to be granted Options under the Plan and, subject to the provisions of the
Plan, shall determine the terms, conditions, and limitations applicable to each
Option. No Nonemployee Director may receive, under the Plan, Options for more
than 5,000 shares in any 12-month period.
9. Listing and Registration. The Company, in its discretion, may postpone
the issuance and delivery of shares, upon exercise of an Option, until
completion of such stock exchange listing, or registration, or other
qualification of such shares under any federal or state law, rule, or
regulation, as the Company may consider appropriate. The Company may require
any person exercising an Option to make such representations and to furnish such
information as the Company may consider appropriate in connection with the
issuance of the shares in compliance with applicable law.
10. Adjustment Provisions. In the event the outstanding shares of Common
Stock of the Company are increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company or
another corporation, through reorganization, merger, consolidation, liquidation,
recapitalization, reclassification, stock split-up, combination of shares, or
dividend payable in stock of the class which is subject to the Plan, appropriate
adjustment in the number and kind of shares as to which Options may be granted
and as to which Options or portions thereof then unexercised shall be
exercisable, and in the option price thereof, shall be made to the end that the
proportionate number of shares or other securities as to which Options may be
granted and the Option holder's proportionate interest under outstanding Options
shall be maintained as before the occurrence of such event.
11. Option Price. The option price shall be 100% of the Fair Market Value
of the shares at the time of the granting of the Option. Such Fair Market Value
shall be determined by the Board and shall be the closing price of the Common
Stock on the New York Stock Exchange on the day on which the Option is granted
or, if no sale of the Common Stock shall have been made on the Exchange on that
day, then on the next preceding day on which a sale was made.
12. Payment for Shares. Payment for shares purchased upon exercise of an
Option shall be made in full at the time of exercise of the Option. No loan
shall be made or guaranteed by the Company for the purpose of financing the
purchase of any optioned shares. Payment of the option price shall be made in
cash, or by delivering Common Stock of the Company having a Fair Market Value
(determined as provided in Section 11) at least equal to the option price, or a
combination of Common Stock and cash. Payment in shares of Common Stock shall
be made by delivering to the Company certificates, duly endorsed for transfer,
representing shares of Common Stock having an aggregate Fair Market Value on the
date of exercise equal to that portion of the option price which is to be paid
in Common Stock. Whenever payment of the option price would require delivery of
a fractional share, the optionee shall deliver the next lower whole number of
shares of Common Stock and a cash payment shall be made by the optionee for the
balance of the option price.
13. Terms and Exercise of Options.
(a) Term. An Option shall terminate upon the expiration of ten years
from the date the Option is granted or one year from the date the
optionee ceases to be a director of the Company, whichever first
occurs (the "Expiration Date"). In no event shall an Option be
exercised after the Expiration Date.
(b) Exercise. To the extent that an Option is exercisable, it may be
exercised by the optionee or the legal representative of the
optionee or the legal representative of the optionee's estate.
Except as provided in subsection (c) below, an Option may not be
exercised prior to the expiration of one year from the date the
Option is granted. Once an Option becomes exercisable, it may
thereafter be exercised, wholly or in part, at any time prior to
its Expiration Date.
(c) Acceleration. Upon the occurrence of any of the following events
prior to the Expiration Date of an Option, the Option shall
become immediately and fully exercisable:
(i) death of the optionee;
(ii) resignation or removal of the optionee as a director of
the Company by reason of a physical or mental impairment
which prevents the optionee from performing the duties of
his or her directorship for a period of six months or
more;
(iii) resignation of the optionee as a director of the Company
after having served at least two full terms as a director;
or
(iv) expiration of the optionee's term of office as a director
of the Company, without being reelected to the Board,
after having served at least two full terms as a director.
14. Transferability. No Option shall be assignable or transferable other
than by will or the laws of descent and distribution. During an optionee's
lifetime, only the optionee or his or her guardian or legal representative may
exercise an option.
15. Provision for Taxes. It shall be a condition to the Company's
obligation to issue or reissue shares of Common Stock upon exercise of an Option
that the optionee pay, or make provision satisfactory to the Company for payment
of, any federal or state income or other taxes which the Company is obligated to
withhold or collect with respect to the issuance or reissuance of such shares.
16. Term of Plan. Subject to the provisions of Section 18, the Plan shall
continue in effect until the maximum number of shares of Common Stock issuable
under the Plan has been issued.
17. Restrictions on Exercise. Any provision of the Plan to the contrary
notwithstanding, no Option granted pursuant to the Plan shall be exercisable at
any time, in whole or in part, (i) prior to the shares of Common Stock subject
to the Option being authorized for listing on the New York Stock Exchange or
(ii) if issuance and delivery of the shares of Common Stock subject to the
Option would be in violation of any applicable laws or governmental regulations.
18. Amendment and Termination. Subject to the limitation that the
provisions of the Plan shall not be amended more than once every six months
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder, the Board may at any
time amend, suspend or discontinue the Plan or alter or amend any or all Options
under the Plan to the extent permitted by law. However, no such action by the
Board may, without approval of the shareholders of the Company, alter the
provisions of the Plan so as to:
(a) increase the maximum number of shares of Common Stock that may be
issued upon exercise of Options granted under the Plan except
pursuant to Section 10;
(b) change the class of individuals eligible to receive Options under
the Plan; or
(c) effect any other amendment to the Plan for which approval of the
Company's shareholders is required by Rule 16b-3 under the
Securities Exchange Act of 1934.
19. Unfunded Plan. The Plan shall be unfunded. Neither the Company nor
the Board shall be required to segregate any assets in connection with Options
issued pursuant to the Plan. Any liability of the Company to any Nonemployee
Director with respect to an Option shall be based solely upon contractual
obligations created by the Plan and any Option agreement. No such obligation
shall be deemed to be secured by any pledge or any encumbrance on any property
of the Company.
20. Governing Law. This Plan shall be governed by, construed, and
enforced in accordance with the internal laws of the State of Delaware, and,
where applicable, the laws of the United States.
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
The following is a computation of the weighted average number of shares
outstanding which is used in the computation of per share earnings for Luby's,
Inc. for the three and six months ended February 29, 2000, and February 28,
1999.
Three months ended February 29, 2000:
22,420,375 x shares outstanding for 91 days 2,040,254,125
Divided by number of days in the period 91
_____________
22,420,375
Six months ended February 29, 2000:
22,420,375 x shares outstanding for 182 days 4,080,508,250
Divided by number of days in the period 182
_____________
22,420,375
Three months ended February 28, 1999:
22,626,065 x shares outstanding for 31 days 701,408,015
22,420,375 x shares outstanding for 59 days 1,322,802,125
_____________
2,024,210,140
Divided by number of days in the period 90
_____________
22,491,224
Six months ended February 28, 1999:
23,270,675 x shares outstanding for 52 days 1,210,075,100
23,163,097 x shares outstanding for 9 days 208,467,873
22,870,798 x shares outstanding for 30 days 686,123,940
22,626,065 x shares outstanding for 31 days 701,408,015
22,420,375 x shares outstanding for 59 days 1,322,802,125
_____________
4,128,877,053
Divided by number of days in the period 181
_____________
22,811,475
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 670
<SECURITIES> 0
<RECEIVABLES> 447
<ALLOWANCES> 0
<INVENTORY> 3,740
<CURRENT-ASSETS> 10,350
<PP&E> 520,646
<DEPRECIATION> 183,425
<TOTAL-ASSETS> 366,475
<CURRENT-LIABILITIES> 44,091
<BONDS> 0
0
0
<COMMON> 8,769
<OTHER-SE> 197,310<F1>
<TOTAL-LIABILITY-AND-EQUITY> 366,475
<SALES> 245,068
<TOTAL-REVENUES> 245,068
<CGS> 136,432
<TOTAL-COSTS> 136,432
<OTHER-EXPENSES> 78,685
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,309
<INCOME-PRETAX> 18,079
<INCOME-TAX> 6,291
<INCOME-CONTINUING> 11,788
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,788
<EPS-BASIC> 0.53
<EPS-DILUTED> 0.53
<FN>
<F1>Other stockholders' equity amount is less cost of treasury stock of
$105,826.
</FN>
</TABLE>
Exhibit 99(a)
LUBY'S, INC.
CORPORATE GOVERNANCE GUIDELINES
Amended January 14, 2000
ROLE AND RESPONSIBILITIES OF BOARD
1. Ethical Business Environment
The Board believes that the long-term success of Luby's is dependent on the
maintenance of an ethical business environment that focuses on adherence to
both the letter and spirit of the law and regulations and the highest
standards of corporate citizenship.
2. Oversight
The Board acknowledges that Luby's has many different stakeholders.
However, the paramount duty of Luby's Board and management is to the
shareholders; the interests of other stakeholders are relevant as a
derivative of the duty to shareholders. The Board is the ultimate decision
making body except for those matters reserved by law to the shareholders.
The management team is charged by the Board with the management of Luby's
affairs. The Board monitors corporate performance against business plans
on a regular basis to evaluate whether the business is being properly
managed.
3. Senior Management
The Board selects and regularly evaluates the CEO. The appointment and
regular evaluation of a Chief Operating Officer, if any, will be made by
the Board in conjunction with the CEO. The Board determines the CEO's
compensation and reviews and approves the salaries of senior management
named in the Summary Compensation Table of the Proxy Statement. The Board
also reviews and approves threshold, target, and stretch points for the
annual Incentive Bonus Plan. It periodically reviews succession planning
and management development with the CEO.
4. Strategy
The Board ensures that a strategic planning process is in place, is used,
and produces sound choices. It reviews and approves major corporate
strategies and monitors the implementation of current strategic initiatives
to assess whether they are on schedule, on budget, and producing effective
results.
5. Material Transactions
The Board reviews and approves significant capital allocations and
expenditures and material transactions not in the ordinary course of
business.
6. Internal Controls, Reporting, and Compliance
The Board satisfies itself as to the adequacy of internal controls, risk
management, financial reporting, and compliance with laws and regulations.
7. Corporate Governance
The Board nominates directors to serve on the Board and ensures that the
structure and practices of the Board provide for sound corporate
governance.
COMPOSITION OF THE BOARD
8. Independent Director
An "Independent Director" is a person who is not a current and, generally,
not a former member of management and has no relationship or activity that
could affect or appear to affect his or her ability to exercise independent
judgment as a director. The Governance Committee reviews the circumstances
in each case and determines when a Board member or candidate is not
independent. The Board will seek to maintain a substantial majority of
independent directors. Various regulatory agencies have adopted differing
concepts of independence (e.g. SEC, NYSE, IRS). These external definitions
are not part of these Guidelines and should be consulted only for the
specific purposes for which they were intended.
9. Number of Directors
The Board believes that the number of directors should not be less than
nine or more than twelve. The Board may adjust the number upward to
accommodate an outstanding potential candidate or during periods of
transition when new directors may overlap with retiring directors.
10. Membership Criteria
The Governance Committee is responsible for recommending to the Board the
appropriate skills and characteristics for prospective Board candidates in
the context of the current Board makeup and the perceived needs of Luby's
at that point in time. This assessment should include issues of general
business experience, specialized knowledge, functional skills, other Board
and time commitments, personal characteristics, age, independence, and
diversity.
11. Screening, Selection, and Invitation to Serve
Luby's Bylaws provide that director candidates standing for election by the
shareholders shall be nominated by the Board or by a shareholder as
provided in the Bylaws. Vacancies in the Board shall be filled by
selection of the current directors. The Governance Committee is
responsible for screening potential candidates with input from all Board
members. The COB will coordinate the extension of an invitation to Board
membership.
12. Directors Who Change Principal Job Responsibility
Directors who have a significant change in their professional roles and
responsibilities, such as retirement or a change in employer, should submit
a letter to the Chairman of the Board explaining the circumstances. The
Board, through its Governance Committee, should review the circumstances
and decide whether it is in the best interest of Luby's that the director
continue to serve.
13. Retirement Age and Term Limits
A director shall not be eligible to stand for election or reelection to the
Board after reaching the age of 70 years. Except for incumbent directors
as of March 19, 1998, who were then 70 years of age or older, a director
will offer his or her resignation from the Board upon reaching the age of
70 years effective at the next annual meeting of shareholders. The Board
does not believe that there should be term limits for directors. Rather,
the Board believes that the Governance Committee should consider each
Director's contribution to the Board every three years, prior to his of her
nomination for reelection.
14. Selection of CEO and COB
There is no policy as to whether the offices of the CEO and COB should be
separate and, if separate, whether the COB should be an independent
director. The Board remains free to make these choices in any way it deems
best at the time.
15. Lead Director
If the offices of the CEO and COB are not separate or if the COB is not
considered by the Board to be an independent director, the independent
directors will elect one of their number to serve as Lead Director. The
Lead Director will chair meetings of independent directors, will facilitate
communications between other members of the Board and the CEO and COB, and
will assume other duties which the independent directors as a whole may
designate from time to time. Directors are always free to communicate
directly with the CEO and COB.
16. Limitations on Tenure as Independent COB or Lead Director
An Independent COB or Lead Director serves at the pleasure of the Board.
It is the sense of the Board that a director's service as Independent COB
or Lead Director should generally not extend beyond the annual meeting of
shareholders after three consecutive years of service.
FUNCTIONING OF THE BOARD
17. Board Meetings
Article III of Luby's Bylaws spells out required procedures for calling and
conducting meetings of the Board in order to conduct corporate business.
The Board sets the number and schedule of Regular Board meetings for the
entire year at the annual meeting of the Board in January. Currently the
Board has five Regular Meetings each year. The COB , the CEO, or a
majority of directors may call Special Meetings of the Board as necessary.
18. Board Agendas
The CEO in conjunction with the COB or Lead Director will establish and
publish an agenda for each meeting of the Board. Board members may suggest
items for inclusion on the agenda and, subject to the authority of the COB
and the will of the majority, may raise for discussion at any Board meeting
subjects not on the agenda.
19. Board Materials Distributed in Advance
Information and data that are important to the Board's understanding of the
business of the meeting and presentations on special subjects should, when
practical, be distributed at least one week in advance of the meeting to
permit directors to prepare for the meeting. This will conserve Board
meeting time and allow discussion to focus on questions and analysis of
these materials. Management will try to keep materials as brief as
possible while still providing the desired information. Lengthy reports or
documents, when practical, should be accompanied by executive summaries.
Directors are encouraged to comment on the adequacy and effectiveness of
materials provided.
20. Attendance of Nondirectors at Board Meetings
The CEO may invite members of senior management who are not Board members
to regularly participate in portions of the Board meeting. Further, the
Board encourages the participation at Board meetings of managers who can
provide additional insight into items being discussed or who have
substantial future potential in the Company and who should be given
exposure to the Board. Portions of all Board meetings will be reserved for
private deliberation among Board members.
21. Meetings of Independent Directors
Independent directors will, at least twice a year, meet privately at the
request of the COB (or Lead Director) or upon the Board's own motion.
These meetings may include a discussion with the CEO.
FUNCTIONING OF COMMITTEES OF THE BOARD
22. Board Committees
The current standing committees of the Board are: Executive, Audit,
Compensation, and Governance. From time to time the Board may create a new
or disband an existing Committee depending on particular interests of the
Board, issues facing the Company, or legal requirements.
23. Committee Charters
Each Committee should, with leadership from its Chair, develop and maintain
a charter describing its duties and responsibilities. Charters developed
or amended will be reviewed by the Governance Committee and approved by the
full Board.
24. Assignment and Rotation of Committee Membership
The Governance Committee in consultation with the COB or Lead Director, the
CEO, and individual Board members, will assign Board members and chairs to
various Committees, subject to Board approval. Assignments should comply
with various applicable regulations (e.g. SEC, NYSE, IRS) and with the
desires of individual members insofar as possible. Consideration should be
given to rotating committee membership and chairs from time to time
generally on a three to five year schedule.
25. Scheduling of Committee Meetings and Committee Agendas
The Chair of each Committee, in consultation with its members, the COB, and
management, determines the frequency, length, and agenda of each meeting of
the Committee.
26. Committee Reports to the Board
The Chair of each Committee will report to the full Board as soon as
practical following a Committee meeting all significant matters discussed,
decisions reached, and recommendations made for Board approval. The Chair
will have an opportunity to comment on Committee activities at each Board
meeting. Minutes of all Committee meetings will be distributed to all
Board members.
MISCELLANEOUS
27. Board Access to Management
Board members have complete access to Luby's management. Board members
should use judgment to insure that this contact is not distracting to
business operations or that it could be perceived as infringing on the
responsibilities of the CEO. Correspondence from a Board member to a
member of management should be copied to the CEO and COB.
28. Communications with the Public and Various Constituencies
The CEO is responsible for establishing effective communications with
Luby's various constituencies, i.e. press, shareholders, potential
investors, customers, communities, suppliers, creditors, and corporate
partners. Management speaks for Luby's, and Board members should
communicate with these constituencies only with the consent and generally
at the request of management.
29. Assessing Board Performance
Approximately annually, the COB will survey Board members on their
perceptions of the performance and effectiveness of the Board and solicit
suggestions for improving its performance. The objective is to increase
the effectiveness of the Board and not to evaluate individual Board
members. The results of this survey will be reported by the COB to the
full Board.
30. Board Compensation
Luby's policy is to compensate nonmanagement directors competitively
relative to companies of comparable size. The Governance Committee will
annually recommend to the full Board for its consideration director
compensation for the next year.
31. Stock Ownership Guidelines for Directors
The Board believes that each Luby's director should accumulate a meaningful
investment in Luby's stock and has established guidelines for share
ownership. Currently, directors are expected to accumulate, over time,
common shares with a market value of at least $100,000. Luby's has
established a tax deferred Nonemployee Director Phantom Stock Plan.
Beginning in 1999 and until the ownership guidelines are met, the
nonemployee director will receive at least $10,000 of the annual retainer
in phantom stock units to be redeemed for a like number of common shares
when he or she ceases for any reason to be a director. Once ownership
guidelines have been met, the director will not be obligated to acquire
additional phantom stock units or common shares.
32. Review of Guidelines
The Governance Committee is responsible for periodic review of these
Guidelines, as well as consideration of other corporate governance issues
that may, from time to time, merit consideration of the entire Board.
33. Intent
These Guidelines are intended to be a statement of general principles to
guide the Board in formulating corporate policy. The Guidelines are not
rules or bylaws. They may be amended from time to time by the Board. In
addition, the Board may on occasion depart from the Guidelines when
circumstances indicate that a departure is in the best interest of the
Company and its shareholders.
