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, 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 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 October 31, 2000, was
approximately $112,028,000 (based upon the assumption that directors and
officers are the only affiliates).
As of November 27, 2000, there were 22,420,375 shares of the registrant's
Common Stock outstanding, exclusive of 4,982,692 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 2001
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.
The Company operates 219 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 219 restaurants
operated by the Company, 133 are at locations owned by the Company and 86 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. The
Company has redesigned its standard restaurant building to be more contemporary
and more efficient and to appeal to a wider range of customers. The new
prototype restaurants typically 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 2000 the Company spent approximately 2.1% of sales on
marketing, including radio and television advertising and product-specific
promotions. The marketing budget for fiscal 2001 is approximately 2.1% of
sales, with most of the amount allocated to radio and television advertising.
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. 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 cater primarily to shoppers and 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. All of the restaurants sell take-
out orders, and most of them have separate food-to-go entrances. Take-out
orders accounted for approximately 13% of sales in fiscal 2000.
During fiscal 1999 the Company tested the addition of drive-thru windows,
and the results were encouraging. By the end of fiscal 2000, 64 restaurants
had drive-thrus, and the Company plans to remodel additional restaurants to
include drive-thrus and expanded food-to-go areas. Management believes there
is excellent potential for growth in the Company's food-to-go business.
Each restaurant is operated as a separate unit under the control of a
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 219 senior managers employed by
the Company, 171 have been with the Company for more than ten years.
Generally, an individual is employed for a period of five to seven years before
he or she is considered qualified to become a senior 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 cooks or prepares substantially all of the food served,
including breads and pastries. The restaurants prepare food from the same
recipes, with minor variations to suit local tastes, although menus are not
uniform in all of the Company's restaurants on any particular day. Menus are
prepared to reflect local and seasonal food preferences and to take advantage
of any special food purchasing opportunities.
Quality control teams, each consisting of experienced cooks and a
supervisor, help to maintain uniform standards of food preparation. The teams
primarily assist in training new personnel during the opening of new
restaurants. The teams also visit the restaurants periodically and work with
the regular staffs 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 2000, the Company had approximately 14,000 employees,
consisting of 13,090 nonmanagement restaurant personnel; 750 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.
Expansion and Store Closings
During the fiscal year ended August 31, 2000, the Company opened 11 new
restaurants, relocated four restaurants, and closed three underperforming
units.
Since August 31, 2000, the Company has closed 12 underperforming
restaurants. During fiscal 2001, the Company expects to relocate one
restaurant and to open one new restaurant.
The Company continually evaluates prospective new restaurant sites and
typically has several sites for new restaurants under active consideration at
any given time. The rate at which new restaurants are opened is governed by
the Company's policy of controlled growth, which takes into account the
resources and capabilities of all departments involved, including real estate,
construction, equipment, and operations. It has been the Company's experience
that new restaurants generally become profitable within a few months after
opening.
The costs of opening new restaurants vary widely, depending on whether the
facilities are to be leased or owned, and if owned, on site acquisition and
construction costs. The Company estimates that in recent years it has cost
$2,000,000 to $2,800,000 to construct, equip, and furnish a new restaurant in a
freestanding building under normal conditions, including land acquisition
costs. The approximate cost to finish out, equip, and furnish a new restaurant
in a leased facility has ranged from $1,200,000 to $1,400,000.
Waterstreet Joint Venture
In January 1996 the Company announced a joint venture agreement with
Waterstreet, Inc., a seafood restaurant company operating in Corpus Christi,
Fort Worth and San Antonio, Texas. The venture was terminated during fiscal
2000.
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 restaurant
business. One restaurant using the name "Luby's" and one restaurant 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 restaurant 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.
Forward-Looking Statements
Certain statements made in this report are forward looking regarding cash
flow from operations, restaurant openings, operating margins, capital
requirements, the availability of acceptable real estate locations for new
restaurants, 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 133 of its
restaurants are located. In addition, the Company owns several restaurant
sites being held for future development and several properties are held for
sale.
Of the 219 restaurants operated by the Company, 86 are at locations held
under leases, including 49 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 Notes 5 and 8 of Notes to Financial Statements for information
concerning the Company's lease rental expenses, lease commitments, and
construction commitments. Of the 86 restaurant leases, the current terms of 27
expire from 2001 to 2005, 28 from 2006 to 2010, and 31 thereafter. Seventy
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: 11 in
Arizona, five in Arkansas, five in Florida, two in Louisiana, two in
Mississippi, two in Missouri, three in New Mexico, eight in Oklahoma, eight in
Tennessee, and 173 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, 2000, 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 2000 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
________________________ ________ ____________________________________ ___
David B. Daviss 1997 Chairman of the Board (since Oct. 64
1997); Acting Chief Executive
Officer (since Sept. 2000)(May-Oct.
1997); Director since 1984;
Chairman of the Executive
Committee and a member of the
Corporate Governance Committee;
investor.
Alan M. Davis 1998 Senior Vice President-Development 48
(since Nov. 2000); Senior Vice
President-Real Estate Development
(1998-2000); Vice President
of Real Estate, Boston Chicken, Inc.
and Boston Chicken Real Estate
Investments, Inc. prior to May 1998.
S. Darrell Wood 1997 Senior Vice President-Head of Field 38
Operations (since Nov. 2000); Senior
Vice President-Operations (Apr. -
Oct. 2000); Vice President-
New Concept Development (1998-1999);
Area Vice President (1997-1998);
Restaurant Manager prior to 1997.
Raymond C. Gabrysch 1988 Senior Vice President-Operations 49
(since Sept. 1997); Senior Vice
President-Human Resources (Jan.-
Aug. 1997); Vice President-Human
Resources (1996); Area Vice
President prior to 1996.
Clyde C. Hays III 1985 Senior Vice President-Operations 49
(since Jan. 1996); Vice President-
Operations prior to 1996.
Drew R. Fuller, Jr. 2000 Secretary (since Oct. 2000); Member 42
of law firm of Cauthorn Hale
Hornberger Fuller Sheehan Becker &
Beiter, Incorporated since 1993.
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, 1998 $16.25 $13.38 $.20
February 28, 1999 16.00 13.59 .20
May 31, 1999 18.63 13.50 .20
August 31, 1999 17.13 13.31 .20
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
As of September 8, 2000, there were approximately 4,280 record holders
of the Company's common stock. After the fiscal year end, the Company
suspended payment of quarterly dividends. Future dividend policy will be
determined by, among other things, the Company's operating results and cash
requirements.
Item 6. Selected Financial Data.
<TABLE>
Five-Year Summary of Operations
(Thousands of dollars except per share data)
Years ended August 31,
<CAPTION>
2000 1999 1998 1997 1996
________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C>
Sales $493,384 $501,493 $508,871 $495,446 $450,128
Costs and expenses:
Cost of food 125,167 122,418 129,126 121,287 110,008
Payroll and related costs 155,769 154,817 155,152 146,940 124,333
Occupancy and other operating
expenses 159,793 155,828 154,501 150,638 132,595
General and administrative
expenses 20,999 22,031 22,061 19,451 20,217
Provision for asset impairments
and store closings 14,544 - 36,852 12,432 -
________ ________ ________ ________ ________
476,272 455,094 497,692 450,748 387,153
________ ________ ________ ________ ________
Income from operations 17,112 46,399 11,179 44,698 62,975
________ ________ ________ ________ ________
Other income (expenses):
Interest expense (5,908) (4,761) (5,078) (4,037) (2,130)
Interest and other 2,217 1,846 1,778 2,001 1,697
________ ________ ________ ________ ________
(3,691) (2,915) (3,300) (2,036) (433)
________ ________ ________ ________ ________
Income before income taxes 13,421 43,484 7,879 42,662 62,542
Provision for income taxes 4,296 14,871 2,798 14,215 23,334
________ ________ ________ ________ ________
Net income $ 9,125 $ 28,613 $ 5,081 $ 28,447 $ 39,208
________ ________ ________ ________ ________
Net income per common share -
basic $ 0.41 $ 1.27 $ 0.22 $ 1.22 $ 1.66
________ ________ ________ ________ ________
Net income per common share -
assuming dilution $ 0.41 $ 1.26 $ 0.22 $ 1.21 $ 1.64
________ ________ ________ ________ ________
Cash dividend declared per common
share $ 0.70 $ 0.80 $ 0.80 $ 0.80 $ 0.74
________ ________ ________ ________ ________
At year-end:
Total assets $367,094 $346,025 $339,041 $368,778 $335,290
Long-term debt $116,000 $ 78,000 $ 73,000 $ 84,000 $ 41,000
Number of restaurants 231 223 229 229 204
<FN>
</TABLE>
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 long-term
debt. Capital expenditures for fiscal 2000 were $56,872,000, a 47% increase
from fiscal 1999. The increase in fiscal 2000 resulted in part from the
opening of 11 new restaurants, four relocations, and two restaurants under
construction at August 31, 2000, as compared to the opening of four new
restaurants in fiscal 1999, one relocation, and six restaurants under
construction at August 31, 1999. As part of the Company's strategic initiative
to expand into smaller Texas markets, included in the 11 new restaurants in
fiscal 2000 were five small market prototype restaurants. Fiscal 2000 capital
expenditures also included approximately $16 million related to other strategic
initiatives, including food-to-go expansions, drive-thrus, or remodels in over
40 restaurants.
Capital expenditures for fiscal 2001 are expected to approximate $23
million. Plans for fiscal 2001 include the opening of one new restaurant and
the relocation of one restaurant, both on sites owned by the Company. As of
August 31, 2000, the Company owned two undeveloped restaurant sites, and
several land site acquisitions were in varying stages of negotiation. Fiscal
2001 capital expenditures also include approximately $12 million related to
food-to-go expansions with the addition of drive-thrus and remodels.
Approximately 40 projects are planned, 25 of which will include drive-thru
additions. Construction costs for new restaurants, food-to-go expansions, and
remodels are expected to be funded by cash flow from operations and long-term
debt. The Company also anticipates that proceeds from property held for sale
will partially offset future capital requirements.
The Company generated cash from operations of $35,266,000 in fiscal 2000.
The Company had $116,000,000 outstanding at August 31, 2000, under a
$125,000,000 credit facility with a syndication of four banks. At August 31,
2000, the Company had a working capital deficit of $31,420,000 which compares
to the prior year's working capital deficit of $39,748,000. The working capital
position improved during fiscal 2000 due primarily to the decrease in dividends
payable and income taxes payable of $6,373,000 in total. The Company typically
carries current liabilities in excess of current assets because cash generated
from operating activities is reinvested in capital expenditures.
Effective October 2000, the Company amended its credit facility agreement
that, among other things, modified the net worth covenant effective August 31,
2000, modified the leverage covenant effective October 2000, and added a fixed
charge coverage ratio for the remaining term of the agreement, beginning in the
quarter ending November 30, 2000. The amendment did not modify the total
amount of the credit facility, which remains at $125 million. See further
discussion in Note 4 of the Consolidated Financial Statements.
The Company believes that funds generated from operations and short-term
or long-term financing from external sources, which can be obtained on terms
acceptable to the Company, are adequate for its foreseeable needs.
Results of Operations
Fiscal 2000 Compared to Fiscal 1999
Sales decreased $8,109,000, or 1.6%, primarily due to the decline in sales
volumes at restaurants opened 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 more higher-end entrees
such as steak, shrimp, and prime rib and efforts to drive customer traffic in
various markets by offering discount coupons. In addition, 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 labor
component built into the cost. In restaurants where the Company was unable to
lower labor hours due to minimum production deployments, the usage level 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 due to 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 the new
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.
As a result of its continuing efforts to redeploy both capital and human
resources to improve the Company's financial performance and strengthen the
organization, the Company recorded a pretax charge to operating costs of $14.5
million during the fourth quarter for store closings, associated closing costs,
asset impairment charges in accordance with Statement of Financial Accounting
Standards No. 121 (FAS 121), "Accounting for the Impairment of Long-Lived
Assets to be Disposed of," and other unusual charges. The principal components
of the 2000 charge were as follows:
- $7.7 million for the closing of 15 restaurants that had not met the
Company's return on invested capital and sales growth requirements.
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. Other exit costs included estimated incremental
increases in workers' compensation and health and welfare costs
related to claims prior to the exit plan and attributable to the
exit plan. Eleven of the 15 units were closed in September 2000,
and the remaining four are planned for closure prior to August 31,
2001.
- $3.2 million for asset impairments of six restaurant properties which
the Company plans to continue to operate. The carrying values of
the assets were written down to the estimated future discounted cash
flows or fully written off in the case of negative future cash flows.
Estimated future cash flows were based on a regression analysis of
averages for similar restaurants, discounted at the Company's
weighted average cost of capital.
- $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.
The POS systems were replaced with new touch-screen systems to
provide better information and customer service, especially in the
food-to-go expansions. As these items have been abandoned, the
remaining book value of these assets was written off.
- $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
originally established between the Company and Waterstreet, Inc.
The Company sold its interest in the joint venture to Waterstreet,
Inc. during November 1999. During the fourth quarter, L&W Seafood,
Inc. defaulted under the terms of the note agreement.
At August 31, 2000 and 1999, the Company had a reserve for store closings
of $1.8 million and $5.1 million, respectively. It is anticipated that all
material cash outlays required for these store closings will be made prior to
August 31, 2001. 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, 2000:
Legal
and
Lease Profes- Other
Settlement sional Workforce Exit Total
Costs Fees Severance Costs Reserve
_____________________________________________
(Thousands of dollars)
Reserve balance at August 31, 1997 - - - - -
Additions/(reductions) 4,537 985 260 390 6,172
_____________________________________________
Reserve balance at August 31, 1998 4,537 985 260 390 6,172
Additions/(reductions) (224) 150 56 (257) (275)
Cash payments (406) (135) (244) (45) (830)
_____________________________________________
Reserve balance at 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)
_____________________________________________
Reserve balance at August 31, 2000 765 375 375 300 1,815
_____________________________________________
See further discussion in Note 2 of the Consolidated Financial Statements.
Interest expense of $5,908,000 for fiscal 2000 was incurred in conjunction
with borrowings under the credit facility and is net of $958,000 capitalized on
qualifying properties. The increase from fiscal 1999 of $1,147,000, or 24%, was
due primarily to higher average borrowings under the line-of-credit agreement
and a higher weighted average interest rate.
Other income increased $371,000 due primarily to the recording of gains on
the sale of properties which were held for sale and the recording of a 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 anticipates that the effective tax rate for
fiscal 2001 will be approximately 35%.
Fiscal 1999 Compared to Fiscal 1998
Sales decreased $7,378,000, or 1%, due to the closing of ten restaurants
in fiscal 1999 and five restaurants in fiscal 1998. This decrease was
partially offset by the opening of four new restaurants during fiscal 1999 and
five during fiscal 1998. The average sales volume for restaurants opened over
18 months increased slightly to $2,255,000 in fiscal 1999 from $2,253,000 in
fiscal 1998.
Cost of food decreased $6,708,000, or 5%, due primarily to the savings
associated with the consolidation of our purchasing under a prime vendor
program and the decline in sales. As a percentage of sales, food costs were
lower versus the prior year due to various additional factors including
increased drink sales from new self-serve drink counters and other sales mix
changes, the impact of a new manager compensation plan which provided more of
an incentive to improve margins at all sales volumes, and certain menu price
increases. Although total sales declined, payroll and related costs remained
fairly flat due to higher hourly wage rates related to tight labor markets for
entry-level employees. Occupancy and other operating expenses increased
$1,327,000, or 1%, due to an increase in advertising expenditures, higher food-
to-go packaging costs, and higher costs associated with the rollout of a new
uniform program for all hourly employees. This increase was partially offset
by fewer restaurants and lower depreciation expense associated with store
closings and asset impairments. General and administrative expenses declined
slightly due to the recording of a lump sum severance agreement and
professional fees associated with the Company's strategic plan recorded in the
prior year which were offset by higher corporate salaries and benefits
associated with the addition of new positions to support the implementation of
the Company's strategic plan and costs relating to increased recruiting and
training efforts for store management in the current year.
As part of its strategic planning efforts, the Company completed an
assessment of underperforming restaurants and recorded a $36.9 million pretax
charge during fiscal 1998 for stores to be closed, relocated, or impaired. The
principal components of the 1998 charge were as follows:
- $14.7 million for the closing of 14 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.
As of August 31, 1999, all but two of these units had been closed.
The final two units are scheduled for closure in December 2000 and
January 2001.
- $10.7 million for the closing and relocation of 16 restaurants to
optimize their market potential. This charge included the cost to
write down the properties and equipment to net realizable value.
Of the 16 units, three have been relocated and five are scheduled
for future relocations. In addition, due to changes in operating
conditions, the Company decided to close five of these units and
will continue to operate three units. The carrying values of the
three units that will remain in operation were moved out of property
held for sale into operating assets.
- $11.4 million for asset impairments of 13 restaurants which the
Company continued to operate. In accordance with FAS 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.
Estimated future cash flows were based on a regression analysis of
averages for similar restaurants, discounted at the Company's weighted
average cost of capital.
- $0.1 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.
See further discussion in Note 2 of the Consolidated Financial Statements.
Interest expense of $4,761,000 for fiscal 1999 was incurred in conjunction
with borrowings under the credit facility and is net of $409,000 capitalized on
qualifying properties. The decrease from fiscal 1998 of $317,000, or 6%, was
due primarily to higher capitalized interest on qualifying properties as a
result of more construction in fiscal 1999. The average borrowing rate was
also slightly lower in fiscal 1999.
The provision for income taxes increased $12,073,000 due to higher income
before income taxes. The Company's effective income tax rate decreased from
35.5% in fiscal 1998 to 34.2% in fiscal 1999 due primarily to higher than
expected tax credits.
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.
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
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, the
availability of acceptable real estate locations for new restaurants, 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.
See information in Item 8 of Part II of this Report appearing
in the Notes to Consolidated Financial Statements under the caption
"Interest-Rate Swap Agreements" in Note 1 and in Note 4.
Item 8. Financial Statements and Supplementary Data.
LUBY'S, INC.
FINANCIAL STATEMENTS
Years Ended August 31, 2000, 1999, and 1998
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, 2000 and 1999, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the
three years in the period ended August 31, 2000. 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 generally accepted auditing
standards. 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, 2000 and 1999, and the results
of its operations and its cash flows for each of the three years in the period
ended August 31, 2000, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
San Antonio, Texas
October 9, 2000
Luby's, Inc.
Consolidated Balance Sheets
August 31,
2000 1999
________ _______
(Thousands of dollars)
Assets
Current assets:
Cash and cash equivalents $ 679 $ 286
Trade accounts and other receivables 403 584
Food and supply inventories 3,853 3,686
Prepaid expenses 4,481 4,552
Deferred income taxes 1,540 956
________ ________
Total current assets 10,956 10,064
________ ________
Property held for sale 13,156 12,322
Investments and other assets:
Land held for future use 756 3,739
Other assets 4,102 5,482
________ ________
Total investments and other assets 4,858 9,221
________ ________
Property, plant, and equipment - at cost, less
accumulated depreciation and amortization 338,124 314,418
________ ________
$367,094 $346,025
________ ________
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 19,843 $ 19,686
Dividends payable 2,242 4,484
Accrued expenses and other liabilities 24,040 25,260
Income taxes payable (3,749) 382
________ ________
Total current liabilities 42,376 49,812
________ ________
Long-term debt 116,000 78,000
Deferred income taxes and other credits 10,162 9,942
Reserve for store closings 1,815 5,067
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 27,202 27,096
Retained earnings 266,596 273,165
Less cost of treasury stock, 4,982,692
shares in 2000 and 1999 (105,826) (105,826)
________ ________
Total shareholders' equity 196,741 203,204
________ ________
$367,094 $346,025
________ ________
See accompanying notes.
Luby's, Inc.
Consolidated Statements of Income
Years Ended August 31,
2000 1999 1998
________ ________ ________
(Thousands of dollars except per share data)
Sales $493,384 $501,493 $508,871
Costs and expenses:
Cost of food 125,167 122,418 129,126
Payroll and related costs 155,769 154,817 155,152
Occupancy and other operating
expenses 159,793 155,828 154,501
General and administrative expenses 20,999 22,031 22,061
Provision for asset impairments
and store closings 14,544 - 36,852
________ ________ ________
476,272 455,094 497,692
________ ________ ________
Income from operations 17,112 46,399 11,179
Interest expense (5,908) (4,761) (5,078)
Other income, net 2,217 1,846 1,778
________ ________ ________
Income before income taxes 13,421 43,484 7,879
Provision (benefit) for income taxes:
Current 4,528 11,558 15,515
Deferred (232) 3,313 (12,717)
________ ________ ________
4,296 14,871 2,798
________ ________ ________
Net income $ 9,125 $ 28,613 $ 5,081
________ ________ ________
Net income per share - basic $ 0.41 $ 1.27 $ 0.22
________ ________ ________
Net income per share -
assuming dilution $ 0.41 $ 1.26 $ 0.22
________ ________ ________
See accompanying notes.
<TABLE>
Luby's, Inc.
Consolidated Statements of Shareholders' Equity
<CAPTION>
Common Stock Total
Issued Treasury Paid-In Retained Shareholders'
Shares Amount Shares Amount Capital Earnings Equity
__________________________________________________________________________________________
(Amounts in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
August 31, 1997 27,403 $8,769 (4,137) $ (93,014) $26,945 $276,140 $218,840
Net income for the
year - - - - - 5,081 5,081
Common stock issued
under benefit
plans, net of
shares tendered in
partial payment and
including tax benefits - - 5 107 67 (65) 109
Cash dividends,
$.80 per share - - - - - (18,616) (18,616)
______ ______ ______ _______ _______ _______ _______
Balance at
August 31, 1998 27,403 8,769 (4,132) (92,907) 27,012 262,540 205,414
Net income for the
year - - - - - 28,613 28,613
Common stock issued
under benefit
plans, net of
shares tendered in
partial payment and
including tax benefits - - - - 84 - 84
Cash dividends,
$.80 per share - - - - - (17,988) (17,988)
Purchase of treasury
Stock - - (851) (12,919) - - (12,919)
______ ______ ______ _______ _______ _______ _______
Balance at
August 31, 1999 27,403 8,769 (4,983) (105,826) 27,096 273,165 203,204
Net income for the
year - - - - - 9,125 9,125
Common stock issued
under benefit
plans, net of
shares tendered in
partial payment and
including tax benefits - - - - 106 - 106
Cash dividends,
$.70 per share - - - - - (15,694) (15,694)
______ ______ ______ _______ _______ ________ ________
Balance at
August 31, 2000 27,403 $8,769 (4,983) $(105,826) $27,202 $266,596 $196,741
______ ______ ______ _______ _______ ________ ________
See accompanying notes.
</TABLE>
Luby's, Inc.
Consolidated Statements of Cash Flows
Years Ended August 31,
2000 1999 1998
_______ ________ ________
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,125 $28,613 $ 5,081
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 22,784 20,025 21,121
Provision for asset impairments
and store closings 14,544 - 36,852
Gain on disposal of property
held for sale (397) (382) (704)
Loss on disposal of property,
plant, and equipment 11 84 142
Settlements associated with store
closings (125) (275) -
_______ ________ ________
Cash provided by operating
activities before changes in
operating assets and liabilities 45,942 48,065 62,492
Changes in operating assets and
liabilities:
(Increase) decrease in trade
accounts and other receivables 181 120 (194)
(Increase) decrease in food and
supply inventories (167) 1,386 (565)
(Increase) decrease in prepaid expenses 71 (177) (789)
(Increase) decrease in other assets (232) 912 (1,881)
Increase (decrease )in accounts
payable (93) 7,204 (1,102)
Increase (decrease) in accrued
expenses and other liabilities (1,114) (2,887) 3,260
Decrease in income taxes payable (4,131) (1,687) (337)
Increase (decrease) in deferred
income taxes and other credits (364) 3,168 (12,263)
Decrease in reserve for store
closings (4,827) (830) (664)
_______ _______ ________
Net cash provided by operating
activities 35,266 55,274 47,957
_______ _______ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of property
held for sale 1,861 5,850 4,888
Proceeds from disposal of property,
plant, and equipment 74 178 73
Purchases of land held for future use (3,378) (6,926) (933)
Purchases of property, plant, and
equipment (53,494) (31,773) (25,082)
_______ _______ ________
Net cash used in investing
activities (54,937) (32,671) (21,054)
_______ _______ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock under stock option plan - - 42
Net borrowings (payments)
under revolving credit agreement 38,000 5,000 (11,000)
Purchases of treasury stock - (12,919) -
Dividends paid (17,936) (18,158) (18,615)
_______ _______ _______
Net cash provided by
(used in) financing activities 20,064 (26,077) (29,573)
_______ _______
Net increase (decrease) in cash
and cash equivalents 393 (3,474) (2,670)
Cash and cash equivalents at
beginning of year 286 3,760 6,430
_______ ________ ________
Cash and cash equivalents at end
of year $ 679 $ 286 $ 3,760
_______ ________ ________
See accompanying notes.
Luby's, Inc.
Notes to Consolidated Financial Statements
August 31, 2000, 1999, and 1998
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, 2000, the Company operated a total of 231 units. The Company
locates its restaurants convenient to shopping and business developments as
well as to residential areas. Accordingly, the restaurants cater primarily
to shoppers and 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 as an indicator 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.
Advertising Expenses
Advertising costs are expensed as incurred. Advertising expense as a
percentage of sales approximates 2.1%, 2.4%, and 2.0% for fiscal years
2000, 1999, and 1998, 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.
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 (SFAS) No.
123, "Accounting for Stock-Based Compensation."
Earnings Per Share
Earnings per share of common stock are calculated under the provisions of SFAS
No. 128, "Earnings Per Share."
Interest-Rate Swap Agreements
The Company enters into interest-rate swap agreements to modify the
interest characteristics of its outstanding debt. Each interest-rate swap
agreement is designated with all or a portion of the principal balance and
term of a specific debt obligation. These agreements involve the exchange of
amounts based on a fixed interest rate for amounts based on variable
interest rates over the life of the agreement without an exchange of the
notional amount upon which the payments are based. The differential to be
paid or received as interest rates change is accrued and recognized as an
adjustment to interest expense related to the debt. The related amount
payable to or receivable from counterparties is included in other
liabilities or assets. The fair values of these agreements are estimated
by obtaining quoted market prices.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, 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
In June 1998 the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
is required to be adopted in years beginning after June 15, 2000. Because
of the Company's minimal use of derivatives, management does not anticipate
that the adoption of the new statement will have a significant effect on
earnings or the financial position of the Company.
2. Impairment of Long-Lived Assets and Store Closings
In 2000 and 1998 the Company recorded a charge to operating costs of $14.5
million and $36.9 million, respectively, for asset impairments and store
closings. In late fiscal 2000, the Company reviewed its restaurants from a
capital strategy standpoint to determine whether the closing of certain units
could positively impact sales and profitability at nearby locations while also
providing capital funds from the sale of these properties to invest in other
more profitable capital projects, such as food-to-go drive-thru expansions. As
a result of this review and continual evaluation of possible impairments, the
Company recorded a pretax charge of $14.5 million during the fourth quarter of
fiscal 2000 for store closings, associated closing costs, asset impairment
charges in accordance with Statement of Financial Accounting Standards No. 121
(FAS 121), "Accounting for the Impairment of Long-Lived Assets to be Disposed
of," and other unusual charges. The principal components of the 2000 charge
were as follows:
- $7.7 million for the closing of 15 restaurants that had not met the
Company's return on invested capital and sales growth requirements. 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. Eleven of the 15 units were closed in September 2000, and the
remaining four are planned for closure prior to August 31, 2001.
- $3.2 million for asset impairments of six restaurant properties which the
Company plans to continue to operate. The carrying values of the assets
were written down to the estimated future discounted cash flows or fully
written off in the case of negative future cash flows. Estimated future
cash flows were based on a regression analysis of averages for similar
restaurants, discounted at the Company's weighted average cost of capital.
- $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. The POS systems
were replaced with new touch-screen systems to provide better information
and customer service, especially in the food-to-go expansions. As these
items have been abandoned, the remaining book value of these assets was
written off.
- $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 originally established between the
Company and Waterstreet, Inc. The Company sold its interest in the joint
venture to Waterstreet, Inc. during November 1999. During the fourth
quarter, L&W Seafood, Inc. defaulted under the terms of the note
agreement.
Prior to August 31, 2000, all restaurant employees of the Company were notified
of the possibility of their termination due to future restaurant
closures. As of September 30, 2000, approximately 200 employees were
terminated, and approximately 100 additional employees will be terminated when
the remaining four restaurants are closed during the coming year. The
severance cost for these employees was accrued and included in the store
closing charge noted above.
The results of operations from the 15 restaurants scheduled for closure were as
follows:
Fiscal Years Ended
August 31,
2000 1999 1998
________________________
(Thousands of dollars)
Sales 19,296 21,244 22,155
Operating income (loss) (1,470) (205) 8
During 1998 the Company recorded a pretax charge of $36.9 million as a result
of the adoption of its strategic plan which included the disposition,
relocation, and write-down of several restaurants that had not met management's
financial return expectations. The principal components of the 1998 charge
were as follows:
- $14.7 million for the closing of 14 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. As of
August 31, 1999, all but two of these units had been closed. The final
two units are scheduled for closure in December 2000 and January 2001.
- $10.7 million for the closing and relocation of 16 restaurants to optimize
their market potential. This charge included the cost to write down the
properties and equipment to net realizable value. Of the 16 units, three
have been relocated and five are scheduled for future relocations. In
addition, due to changes in operating conditions, the Company decided to
close five of these units and continue to operate three units. The
carrying values of the three units that will remain in operation were
moved out of property held for sale into operating assets.
- $11.4 million for asset impairments of 13 restaurants which the Company
continued to operate. In accordance with FAS 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. Estimated future
cash flows were based on a regression analysis of averages for similar
restaurants, discounted at the Company's weighted average cost of capital.
- $0.1 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.
The results of operations from the 12 restaurants that were closed as a result
of the fiscal year 1998 strategic plan efforts are shown below. The results of
operations from the two remaining units scheduled for closure and the five
units originally planned for relocations that were subsequently closed have
been included in the operating results disclosure for the fiscal year 2000
closures.
Fiscal Years Ended
August 31,
2000 1999 1998
________________________
(Thousands of dollars)
Sales - 3,732 14,077
Operating income (loss) - (1,028) (3,434)
At August 31, 2000 and 1999, the Company had a reserve for store closings of
$1.8 million and $5.1 million, respectively. It is anticipated that all
material cash outlays required for these store closings will be made prior to
August 31, 2001. 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, 2000:
Legal
and
Lease Profes- Other
Settlement sional Workforce Exit Total
Costs Fees Severance Costs Reserve
_____________________________________________
(Thousands of dollars)
Reserve balance at August 31, 1997 - - - - -
Additions/(reductions) 4,537 985 260 390 6,172
_____________________________________________
Reserve balance at August 31, 1998 4,537 985 260 390 6,172
Additions/(reductions) (224) 150 56 (257) (275)
Cash payments (406) (135) (244) (45) (830)
_____________________________________________
Reserve balance at 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)
_____________________________________________
Reserve balance at August 31, 2000 765 375 375 300 1,815
_____________________________________________
3. Property, Plant, and Equipment
The cost and accumulated depreciation of property, plant, and equipment at
August 31, 2000 and 1999, together with the related estimated useful lives
used in computing depreciation and amortization, are reflected below:
Estimated
2000 1999 Useful Lives
________ ________ _______________
(Thousands of dollars)
Land $ 79,279 $ 75,446 -
Restaurant equipment and
furnishings 144,160 130,533 3 to 15 years
Buildings 251,260 221,024 20 to 40 years
Leasehold and leasehold
improvements 41,215 42,727 Term of leases
Office furniture and equipment 10,504 9,599 5 to 10 years
Transportation equipment 975 772 5 years
Construction in progress 3,382 7,812 -
________ ________
530,775 487,913
Less accumulated depreciation
and amortization 192,651 173,495
________ ________
$338,124 $314,418
________ ________
Total interest expense incurred for 2000, 1999, and 1998 was $6,866,000,
$5,170,000, and $5,354,000, respectively, which approximated the amount paid
in each year. The amounts capitalized on qualifying properties in 2000,
1999, and 1998 were $958,000, $409,000, and $276,000, respectively.
4. Debt
The Company has a $125 million credit facility with a syndication of four
banks. As part of this credit facility, the Company has a revolving credit
agreement which allows borrowings for varying periods through June 30, 2002, at
the lower of the prime rate or other rate options available at the time of
borrowing. The credit facility has a negotiated facility fee of .085% on the
total commitment. The credit facility also includes a maximum commitment for
letters of credit of $20 million. The credit facility contains business
covenants which, among other things, impose certain financial restrictions on
the Company relating primarily to leverage and net worth.
In addition, the Company has two Interest Rate Protection Agreements (swaps),
that fix the rate on a portion of the floating-rate debt outstanding under its
revolving line of credit. The swaps are fixed-rate agreements in the notional
amounts of $30 million and $15 million. Both swaps have an interest rate of
6.50% and a termination date of June 30, 2002. At August 31, 2000, these swaps
were in a net favorable position of approximately $175,000.
Effective October 2000, the Company amended the credit facility agreement
that, among other things, modified the net worth covenant, effective August
31, 2000, and the leverage covenant, effective October 2000. The amendment
resulted in an increase in the facility fee from .085% to .100%. The amendment
also added a fixed-charge coverage ratio to the covenants for the remaining
term of the agreement, beginning in the quarter ended November 30, 2000. The
amendment did not modify the total amount of the credit facility, which will
remain at $125 million.
As of August 31, 2000, the balance outstanding under the revolving credit
agreement is $116,000,000 at an interest rate of 6.6%.
At August 31, 2000, letters of credit of approximately $2,932,000 and surety
bonds of approximately $6,585,000 have been issued as security for the payment
of insurance obligations classified as accrued expenses on the balance sheets.
5. Leases
The Company conducts part of its operations from facilities which 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, 2000, are as follows:
Years ending August 31: (Thousands of dollars)
2001 $ 6,577
2002 6,396
2003 6,249
2004 5,985
2005 5,568
Thereafter 32,263
_______
Total minimum lease payments $63,038
_______
Total rent expense for operating leases for the years ended August 31, 2000,
1999, and 1998, was as follows:
2000 1999 1998
_______ ________ ________
(Thousands of dollars)
Minimum rentals $6,829 $7,052 $7,286
Contingent rentals 660 843 976
______ ______ ______
$7,489 $7,895 $8,262
______ ______ ______
6. 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-, $355,000, and $658,000 in 2000, 1999, and 1998,
respectively.
Stock Option Plan
The Company has an Incentive Stock Plan (Stock Plan) to provide for market-
based incentive awards, including stock options, stock appreciation rights,
restricted stock, and performance share awards. Stock options may be granted
at prices not less than 100% of fair market value at 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 Stock Plan. Under the terms of the Stock Plan, 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, including
officers.
Following is a summary of activity in the Stock Plan for the three
years ended August 31, 2000, 1999, and 1998:
Weighted Average
Exercise Price Per
Share-Options Options Options
Outstanding Outstanding Exercisable
________________ ___________ ___________
Balances - August 31, 1997 21.76 397,298 317,533
Granted 19.33 488,498 -
Became exercisable - - 11,119
Canceled or expired 22.63 (111,175) (92,573)
Exercised 16.25 (10,375) (10,375)
_________ _________
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
_________ _________
Exercise prices for options outstanding as of August 31, 2000, range from
$7.81 to $23.75 per share. The weighted average remaining contractual life
of these options is 4.40 years. The options exercisable as of August 31, 2000,
have a weighted average exercise price of $17.93 per share.
At August 31, 2000 and 1999, the number of stock option shares available to
be granted under the plans was 845,510 and 1,004,423 shares, respectively.
The Company has elected to follow APB 25, "Accounting for Stock Issued to
Employees." Accordingly, since employee stock options 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
2000, 1999, and 1998 is estimated as $1.51, $3.00, and $3.25,respectively,
on the date of grant. The impact on net income is minimal; therefore, the
pro forma disclosure requirements prescribed by SFAS 123 are not significant
to the Company. The fair values were determined using a Black-Scholes option
pricing model with the following assumptions:
2000 1999 1998
____ ____ ____
Dividend yield 6.90% 5.20% 4.40%
Volatility .22 .19 .18
Risk-free interest rate 7.00% 7.00% 7.00%
Expected life 6.11 6.07 5.16
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, 2000, 1999, and 1998 was $161,000, $150,000,
and $163,000, respectively, and the unfunded accumulated benefit obligation
as of August 31, 2000, 1999, and 1998 was approximately $692,000, $564,000, and
$447,000, respectively.
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
does not match the participants' contributions to the plan.
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, 2000 and 1999, was approximately $287,000 and $39,000, respectively.
Profit Sharing
The Company has a profit sharing plan and retirement trust 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 is
funded by contributions of a portion of the net earnings of the Company. The
plan provides that for each fiscal year in which the Company's net income
(before income taxes and before any contribution to the plan) meets certain
minimum standards, the Company is obligated to contribute to the plan, at a
minimum, an amount equal to a defined percentage of the participants'
compensation. In no event will the required contribution exceed 10% of the
Company's income before income taxes and before any contribution to the plan.
At the discretion of the board of directors, the Company can make a greater
contribution than required, subject to certain limitations. The Company's
annual contribution to the plan amounted to $700,000, $1,700,000, and
$1,800,000 for 2000, 1999, and 1998, respectively.
7. Income Taxes
The tax effect of temporary differences results in deferred income tax assets
and liabilities as of August 31 as follows:
2000 1999
________ ___________
(Thousands of dollars)
Deferred tax assets:
Workers' compensation insurance $ 1,540 $ 956
Deferred compensation 722 775
Asset impairments and store closing reserves 14,074 14,523
_______ _______
Total deferred tax assets 16,336 16,254
Deferred tax liabilities:
Amortization of capitalized interest 641 495
Depreciation and amortization 20,477 20,544
Other 1,646 1,875
_______ _______
Total deferred tax liabilities 22,764 22,914
_______ _______
Net deferred tax liability $ 6,428 $ 6,660
_______ _______
The reconciliation of the provision for income taxes to the expected income
tax expense (computed using the statutory tax rate) is as follows:
2000 1999 1998
____ ____ ____
Amount % Amount % Amount %
______ ____ _______ ____ _______ ____
(Thousands of dollars and as a percent of pretax income)
Normally expected
income tax expense $ 4,697 35.0% $15,219 35.0% $ 2,758 35.0%
State income taxes 163 1.2 156 .4 114 1.4
Jobs tax credits (152) (1.1) (155) (.4) (26) (.3)
Other differences (412) (3.1) (349) (.8) (48) (.6)
______ ____ _______ ____ _______ ____
$ 4,296 32.0% $14,871 34.2% $ 2,798 35.5%
______ ____ _______ ____ _______ ____
Cash payments for income taxes for 2000, 1999, and 1998 were $8,659,000
$13,245,000, and $15,852,000, respectively.
8. Commitments and Contingencies
At August 31, 2000, the Company had two restaurants and several restaurant
remodels under construction. The aggregate unexpended cost under the
construction contracts was approximately $1,150,000.
The Company has guaranteed loan balances outstanding at August 31, 2000, of
$1,724,000 relating to purchases of Company stock made by officers of the
Company under an officer loan program. Under the program, shares were
purchased by officers; and 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, the ultimate resolution of these pending legal proceedings will
not have a material adverse effect on the Company's operations or
consolidated financial position.
9. 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 rights may
become exercisable under circumstances described in the plan if any person or
group (an Acquiring Person) becomes the beneficial owner of 15% or more of
the common stock. 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 the beneficial owner of 15% or more of the common stock, 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.
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 -0-, 850,300, and -0- shares of its
common stock at a cost of $-0-, $12,919,000, and $-0- during 2000,
1999, and 1998, respectively, which are being held as treasury stock.
10. Per Share Information
A reconciliation of the numerators and denominators of basic earnings per
share and diluted earnings per share for the years ended August 31, 2000,
1999, and 1998, is shown in the table below.
August 31,
2000 1999 1998
________ __________ __________
(Thousands of dollars except per share data)
Numerator:
Net income $ 9,125 $28,613 $ 5,081
________ __________ __________
Denominator for basic earnings
per share -
weighted average shares 22,420 22,614 23,270
Effect of dilutive securities:
Employee stock options 2 23 2
________ __________ __________
Denominator for earnings
per share - assuming
dilution - adjusted
weighted average shares 22,422 22,637 23,272
________ __________ __________
Net income per share - basic $ 0.41 $ 1.27 $ 0.22
________ __________ __________
Net income per share - assuming
dilution $ 0.41 $ 1.26 $ 0.22
________ __________ __________
11. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities at August 31 consist of:
2000 1999
_______ _______
(Thousands of dollars)
Salaries and bonuses $ 7,467 $ 6,815
Rent 537 702
Taxes, other than income 6,115 6,428
Profit sharing plan 702 1,713
Insurance 7,112 9,134
Other 2,107 468
_______ _______
$24,040 $25,260
_______ _______
12. Quarterly Financial Information (Unaudited)
The following is a summary of quarterly unaudited financial information
for 2000 and 1999:
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)*
Three Months Ended
__________________
November 30, February 28, May 31, August 31,
1998 1999 1999 1999
________ ________ ________ _________
(Thousands of dollars except per share data)
Sales $125,708 $123,771 $127,084 $124,930
Gross profit 53,790 57,214 58,435 54,819
Net income 5,672 7,219 8,776 6,946
Net income per share .25 .32 .39 .31
*See Note 2 for discussion of charges recorded during the fourth quarter of
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 2001 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 2001 annual meeting of
shareholders appearing therein under the captions "Executive Compensation,"
"Deferred Compensation," "Certain Relationships and Related Transactions,"
and "Compensation of Chief Executive Officer."
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 2001 annual meeting of
shareholders appearing therein under the captions "Principal Shareholders"
and "Management 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 2001 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, 2000 and 1999
Consolidated statements of income for each of the three years in the
period ended August 31, 2000
Consolidated statements of shareholders' equity for each of the three
years in the period ended August 31, 2000
Consolidated statements of cash flows for each of the three years in the
period ended August 31, 2000
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) 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).
4(j) Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A.
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 (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(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, 1998, and incorporated herein by reference).*
10(o) Amendment to Luby's Cafeterias, Inc. Supplemental 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, 1999, and incorporated herein by
reference).*
10(r) Amendment dated October 15, 1999, to Employment Agreement between
Luby's, Inc., and Barry J.C. Parker (filed as Exhibit 10(s) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1999, and incorporated herein by reference).*
10(s) Amendment dated July 25, 2000, to Employment Agreement between
Luby's Cafeterias, Inc. and Barry J.C. Parker.*
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) 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(w) 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(x) 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(y) 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.)*
10(z) Incentive Bonus Plan for Fiscal 2001.*
11 Statement re computation of per share earnings.
13 Luby's, Inc. 2000 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.
27 Financial Data Schedule.
99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc., as
amended July 20, 2000.
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: November 29, 2000 LUBY'S, INC.
(Registrant)
By: DAVID B. DAVISS
____________________________
David B. Daviss, Chairman of the
Board and Acting 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/DAVID B. DAVISS David B. Daviss, Chairman
_______________________________ of the Board
November 29, 2000
/s/CATHERINE A. RADEMACHER Catherine A. Rademacher,
_________________________________ Controller
November 29, 2000
/s/RONALD K. CALGAARD Ronald K. Calgaard, Director
________________________________
November 29, 2000
Lauro F. Cavazos, Director
________________________________
November 29, 2000
Judith B. Craven, Director
________________________________
November 29, 2000
/s/ARTHUR R. EMERSON Arthur R. Emerson, Director
________________________________
November 29, 2000
Roger R. Hemminghaus, Director
________________________________
November 29, 2000
________________________________ Robert T. Herres, Director
November 29, 2000
JOHN B. LAHOURCADE John B. Lahourcade, Director
________________________________
November 29, 2000
Walter J. Salmon, Director
________________________________
November 29, 2000
/s/GEORGE H. WENGLEIN George H. Wenglein, Director
________________________________
November 29, 2000
/s/JOANNE WINIK Joanne Winik, Director
________________________________
November 29, 2000
EXHIBIT INDEX
Exhibit
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).
4(j) Third Amendment to Credit Agreement dated October 27, 2000, among
Luby's, Inc., Certain Lenders, and Bank of America, N.A.
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 (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(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, 1998, and incorporated herein by reference).*
10(o) Amendment to Luby's Cafeterias, Inc. Supplemental 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, 1999, and incorporated herein by
reference).*
10(r) Amendment dated October 15, 1999, to Employment Agreement between
Luby's, Inc., and Barry J.C. Parker (filed as Exhibit 10(s) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1999, and incorporated herein by reference).*
10(s) Amendment dated July 25, 2000, to Employment Agreement between
Luby's Cafeterias, Inc. and Barry J.C. Parker.*
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) 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(w) 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(x) 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(y) 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.)*
10(z) Incentive Bonus Plan for Fiscal 2001.*
11 Statement re computation of per share earnings.
13 Luby's, Inc. 2000 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.
27 Financial Data Schedule.
99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc., as
amended July 20, 2000.
99(b) Consent of Ernst & Young LLP.
*Denotes management contract or compensatory plan or arrangement.
