10-K405 1 0001.txt FORM 10-K TEXT 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. Five-Year Summary of Operations (Thousands of dollars except per share data) Years ended August 31,

2000 1999 1998 1997 1996 ________ ________ ________ ________ ________ 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

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. Luby's, Inc. Consolidated Statements of Shareholders' Equity

Common Stock Total Issued Treasury Paid-In Retained Shareholders' Shares Amount Shares Amount Capital Earnings Equity __________________________________________________________________________________________ (Amounts in thousands except per share data) 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.

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.