-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JOOvJElbjVgDbdYCS8t9TsxLjHn/FLXDVr/XFblDSNNHCiFkUXcBK05RlMRZZvIa Gg8lupetXQ1jgrWcPGyzzA== 0000016099-98-000008.txt : 19980707 0000016099-98-000008.hdr.sgml : 19980707 ACCESSION NUMBER: 0000016099-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980706 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUBYS CAFETERIAS INC CENTRAL INDEX KEY: 0000016099 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 741335253 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08308 FILM NUMBER: 98660502 BUSINESS ADDRESS: STREET 1: 2211 NE LOOP 410 STREET 2: P O BOX 33069 CITY: SAN ANTONIO STATE: TX ZIP: 78265-3069 BUSINESS PHONE: 2106549000 FORMER COMPANY: FORMER CONFORMED NAME: CAFETERIAS INC DATE OF NAME CHANGE: 19810126 10-Q 1 TEXT OF 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark One) [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1998 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 CAFETERIAS, INC. _______________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 74-1335253 _________________________________ ________________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2211 Northeast Loop 410, P. O. Box 33069 San Antonio, Texas 78265-3069 _______________________________________________________________________________ (Address of principal executive offices) (Zip Code) 210/654-9000 _______________________________________________________________________________ (Registrant's telephone number, including area code) _______________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock: 23,270,675 shares outstanding as of May 31, 1998 (exclusive of 4,132,392 treasury shares) Part I - FINANCIAL INFORMATION Item 1. Financial Statements. LUBY'S CAFETERIAS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Nine Months Ended May 31, May 31, 1998 1997 1998 1997 ____ ____ ____ ____ (Amounts in thousands except per share data) Sales $131,230 $127,630 $379,106 $368,747 Costs and expenses: Cost of food 33,151 30,978 95,897 90,021 Payroll and related costs 38,765 37,265 115,477 108,544 Occupancy and other operating expenses 39,059 38,317 114,933 111,547 General and administrative expenses 6,658 6,337 17,164 17,517 ________ ________ ________ _______ 117,633 112,897 343,471 327,629 ________ ________ ________ _______ Income from operations 13,597 14,733 35,635 41,118 Interest expense (1,288) (1,078) (3,813) (2,686) Other income, net 342 926 1,245 1,680 ________ ________ ________ _______ Income before income taxes 12,651 14,581 33,067 40,112 Provision for income taxes 4,504 4,998 11,772 13,959 ________ ________ ________ _______ Net income $ 8,147 $ 9,583 $ 21,295 $ 26,153 ________ ________ ________ _______ Net income per share - basic and assuming dilution $.35 $.41 $.92 $1.12 ________ ________ ________ _______ Cash dividends per share $.20 $.20 $.60 $.60 ________ ________ ________ _______ Average number of shares outstanding 23,271 23,366 23,270 23,453 See accompanying notes. Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S CAFETERIAS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) May 31, August 31, 1998 1997 ____ ____ (Thousands of dollars) ASSETS Current assets: Cash and cash equivalents $ 2,312 $ 6,430 Trade accounts and other receivables 684 510 Food and supply inventories 4,950 4,507 Prepaid expenses 4,239 3,586 Deferred income taxes 1,071 937 ________ ________ Total current assets 13,256 15,970 Property held for sale 9,652 12,680 Investments and other assets - at cost 7,549 6,111 Property, plant, and equipment - at cost, net 336,459 334,017 ________ ________ $366,916 $368,778 ________ ________ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable - trade $ 10,853 $ 13,584 Dividends payable 4,654 4,653 Accrued expenses and other liabilities 25,140 25,038 Income taxes payable 2,706 ` 2,406 ________ ________ Total current liabilities 43,353 45,681 Long-term debt 77,000 84,000 Deferred income taxes and other credits 20,294 20,257 Shareholders' equity: Common stock 8,769 8,769 Paid-in capital 26,999 26,945 Retained earnings 283,408 276,140 Less cost of treasury stock (92,907) (93,014) ________ ________ Total shareholders' equity 226,269 218,840 ________ ________ $366,916 $368,778 ________ ________ See accompanying notes. Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S CAFETERIAS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended May 31, 1998 1997 ____ ____ (Thousands of dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 21,295 $ 26,153 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,802 14,913 Increase (decrease) in accrued expenses and other liabilities 143 (1,617) Other, net (5,561) (1,354) ________ ________ Net cash provided by operating activities 31,679 38,095 ________ ________ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposal of property held for sale 3,568 2,300 Purchases of land held for future use (948) (12,134) Purchases of property, plant, and equipment (17,498) (40,839) ________ ________ Net cash used in investing activities (14,878) (50,673) ________ ________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock under stock option plan 42 2,878 Proceeds from long-term debt 658,000 760,000 Reductions of long-term debt (665,000) (711,000) Purchases of treasury stock --- (21,077) Dividends paid (13,961) (14,144) ________ ________ Net cash provided by (used in) financing activities (20,919) 16,657 ________ ________ Net increase (decrease) in cash and cash equivalents (4,118) 4,079 Cash and cash equivalents at beginning of period 6,430 2,687 ________ ________ Cash and cash equivalents at end of period $ 2,312 $ 6,766 ________ ________ See accompanying notes. Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S CAFETERIAS, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Nine Months Ended May 31, 1998 and 1997 (UNAUDITED)
Total Common Stock Paid-in Retained Shareholders' Issued Treasury Capital Earnings Equity _______ ________ _______ ________ ____________ (Thousands of dollars) Balance at August 31, 1996 $8,769 $(77,415) $26,945 $267,374 $225,673 Net income for the period --- --- --- 26,153 26,153 Common stock issued under employee benefit plans, net of shares tendered in partial payment and including tax benefits --- 4,320 --- (1,027) 3,293 Cash dividends --- --- --- (14,001) (14,001) Purchases of treasury stock --- (19,919) --- --- (19,919) Balance at May 31, 1997 $8,769 $(93,014) $26,945 $278,499 $221,199 ______ ________ _______ ________ ________ Balance at August 31, 1997 $8,769 $(93,014) $26,945 $276,140 $218,840 Net income for the period --- --- --- 21,295 21,295 Common stock issued under employee benefit plans, net of shares tendered in partial payment and including tax benefits --- 107 54 (65) 96 Cash dividends --- --- --- (13,962) (13,962) ______ ________ _______ ________ ________ Balance at May 31, 1998 $8,769 $(92,907) $26,999 $283,408 $226,269 ______ ________ _______ ________ ________ See accompanying notes.
Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S CAFETERIAS, INC. NOTES TO FINANCIAL STATEMENTS May 31, 1998 (UNAUDITED) Note 1: The accompanying unaudited financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all of the disclosures normally required by generally accepted accounting principles. All adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods have been made. All such adjustments are of a normal recurring nature. The results for the interim period are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in Luby's annual report on Form 10-K for the year ended August 31, 1997. The accounting policies used in preparing these consolidated financial statements are the same as those described in Luby's annual report on Form 10-K. Note 2: During the quarter ended February 28, 1998, the company adopted Statement of Financial Accounting Standards No. 128, Earnings Per Share. Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the reviously reported fully diluted earnings per share. Earnings per share amounts for all periods have been restated to conform to the requirements of Statement 128. Part I - FINANCIAL INFORMATION (continued) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources _______________________________ Cash and cash equivalents decreased by $4,118,000 from the end of the preceding fiscal year to May 31, 1998. All capital expenditures for fiscal 1998 are being funded from cash flows from operations, cash equivalents, and long-term debt. Capital expenditures for the nine months ended May 31, 1998, were $18,446,000. As of May 31, 1998, the company owned three undeveloped land sites and one land site on which a cafeteria is under construction. During fiscal year 1997 the company purchased 897,500 shares of its common stock at a cost of $19,918,000, which are being held as treasury stock. To complete the treasury stock purchases and fund capital expenditures, the company required external financing and borrowed funds under a $125,000,000 line-of-credit agreement. As of May 31, 1998, the amount outstanding under this line of credit was $77,000,000. The company believes that additional financing from external sources can be obtained on terms acceptable to the company in the event such financing is required. Results of Operations _____________________ Quarter ended May 31, 1998 compared to the quarter ended May 31, 1997. ______________________________________________________________________ Sales increased $3,600,000, or 2.8%, due to the addition of five new cafeterias in fiscal 1998 and 27 in fiscal 1997, and due to a slight increase in average sales volume at cafeterias opened over one year. This increase was partially offset by the closing of five units, two in August 1997, two in September 1997, and one in January 1998. Cost of food increased $2,173,000, or 7.0%. As a percentage of sales, food costs were higher versus the prior year due to higher commodity prices resulting from poor weather conditions, new menu item testing, and higher fish prices. Payroll and related costs increased $1,500,000, or 4.0%, due primarily to the increase in sales and the higher federal minimum wage which increased first on October 1, 1996, and again on September 1, 1997. Occupancy and other operating expenses increased $742,000, or 1.9%, due primarily to the increase in sales. This increase was partially offset by lower preopening expenses due to fewer new store openings as compared to the prior year. General and administrative expenses increased $321,000, or 5.1%, due to higher legal and professional fees associated with the company's strategic planning project. This increase was partially offset by a lower profit sharing contribution estimated for fiscal 1998 as compared to the estimate of the contribution for the same period in the prior year. Lump sum severance agreements were recorded during both periods. Interest expense increased $210,000 due primarily to lower capitalized interest on qualifying properties as a result of less construction in the current period. The provision for income taxes decreased $494,000, or 9.9%, due primarily to lower income from operations. The effective income tax rate increased from 34.3% to 35.6% since the rate in the third quarter of fiscal 1997 was more significantly impacted by the company restructuring into a holding company. Nine months ended May 31, 1998 compared to the nine months ended May 31, 1997. _____________________________________________________________________________ Sales increased $10,359,000, or 2.8%, due primarily to the addition of five new cafeterias in fiscal 1998 and 27 in fiscal 1997. The sales increase from new cafeterias was partially offset by a slight decrease in sales volume at cafeterias opened over one year and the closing of five units, two in August 1997, two in September 1997, and one in January 1998. Cost of food increased $5,876,000, or 6.5%, due primarily to the increase in sales. As a percentage of sales, food costs were higher versus the prior year due to higher commodity prices resulting from poor weather conditions, new menu item testing, and product promotions featured during the period which had slightly higher food costs. Payroll and related costs increased $6,933,000, or 6.4%, due primarily to the increase in sales and the higher federal minimum wage which increased first on October 1, 1996, and again on September 1, 1997. Occupancy and other operating expenses increased $3,386,000, or 3.0%, due primarily to the increase in sales. With the slight decline in same-store sales for the nine months ended May 31, 1998, certain fixed expenses in this category have increased as a percentage of sales, including depreciation, property taxes, utilities, rent, repairs, and group insurance. These increases were partially offset by lower preopening expenses due to fewer store openings as compared to the prior period. In addition, managers' salaries, which are based on the profitability of the cafeterias, decreased as a percent of sales due to lower store profits. General and administrative expenses decreased $353,000, or 2.0%, due primarily to a lower profit sharing contribution estimated for fiscal 1998 as compared to the estimate of the contribution for the same period in the prior year. This decrease was partially offset by higher legal and professional fees associated with the company's strategic planning process. Interest expense increased $1,127,000 due to lower capitalized interest on qualifying properties as a result of less construction in the current period and slightly higher borrowing rates under the interest rate swap agreements. The provision for income taxes decreased $2,187,000, or 15.7%, due primarily to lower income from operations. The effective income tax rate increased from 34.8% to 35.6%. The Year 2000 _____________ Some of the company's older computer programs were written using two digits rather than four to define the applicable year. As a result, those computer programs have time-sensitive software that recognizes a date using "00" as the year 1900 rather than the year 2000. This could cause a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, code invoices, or engage in similar normal business activities. The company has assessed the issue and will modify or replace its software so that its computer systems function properly with respect to dates in the year 2000 and thereafter. The company does not expect that the year 2000 issue will materially affect future financial results. Forward-Looking Statements __________________________ The company wishes to caution readers that various factors could cause the actual results of the company to differ materially from those indicated by forward-looking statements made from time to time in news releases, reports, proxy statements, registration statements, and other written communications (including the preceding sections of this Management's Discussion and Analysis), as well as oral statements made from time to time by representatives of the company. Except for historical information, matters discussed in such oral and written communications are forward-looking statements that involve risks and uncertainties, including but not limited to general business conditions, the impact of competition, the success of operating initiatives, changes in the cost and supply of food and labor, the seasonality of the company's business, taxes, inflation, and governmental regulations. Part II - OTHER INFORMATION (continued) Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 2 Agreement and Plan of Merger dated November 1, 1991, between Luby's Cafeterias, Inc., a Texas corporation, and Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 2 to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). 3(a) Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation, as in effect February 28, 1994 (filed as Exhibit 3(a) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference). 3(b) Bylaws of Luby's Cafeterias, Inc. as currently in effect (filed as Exhibit 3(c) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 4(a) Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc. in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference). 4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). 4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, and incorporated herein by reference). 4(e) Credit Agreement dated February 27, 1996, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(e) to the company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). 4(f) First Amendment to Credit Agreement dated January 24, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(f) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 4(g) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias, Inc. and NationsBank, N.A., with Schedule and Confirmation dated July 7, 1997 (filed as Exhibit 4(g) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(h) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias, Inc. and Texas Commerce Bank National Association, with Schedule and Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(i) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(i) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(a) Form of Deferred Compensation Agreement entered into between Luby's Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference). 10(b) Form of Amendment to Deferred Compensation Agreement between Luby's Cafeterias, Inc. and various officers and former officers adopted January 14, 1997 (filed as Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(c) Annual Incentive Plan for Area Vice Presidents of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(d) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference). 10(d) Amendment to Annual Incentive Plan for Area Vice Presidents of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(d) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(e) Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(e) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference). 10(f) Amendment to Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(f) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(g) Luby's Cafeterias, Inc. Incentive Bonus Plan for Fiscal 1998 adopted by the Board of Directors on January 9, 1998 (filed as Exhibit 10(g) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(h) Performance Unit Plan of Luby's Cafeterias, Inc. approved by the shareholders on 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(i) 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(j) Employment Contract dated January 8, 1988, between Luby's Cafeterias, Inc. and George H. Wenglein (filed as Exhibit 10(h) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1988, and incorporated herein by reference). 10(k) 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(l) 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(m) 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(n) 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(o) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted by the Board of Directors on 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(p) Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. approved by the shareholders on January 13, 1995 (filed as Exhibit 10(h) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 10(q) Amendment to Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(o) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(r) 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(s) 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(t) 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(u) Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted by the Board of Directors on 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(v) Luby's Cafeterias, Inc. Welfare Benefit Plan Trust dated July 18, 1996 (filed as Exhibit 10(k) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996, and incorporated herein by reference). 10(w) Retirement Agreement dated March 17, 1997, between Luby's Cafeterias, Inc. and Ralph Erben (filed as Exhibit 10(t) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(x) 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(y) Term Promissory Note of Barry J.C. Parker in favor of Luby's Cafeterias, Inc., dated November 10, 1997, in the original principal sum of $199,999.00 (filed as Exhibit 10(v) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(z) 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(aa) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan adopted by the Board of Directors on 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(bb) Agreement of Resignation, Severance, Confidentiality, Non-Solicitation, Arbitration and General Release of All Claims dated April 30, 1998, between Luby's Cafeterias, Inc. and William E. Robson. 10(cc) Salary Continuation Agreement dated May 14, 1998, between Luby's Cafeterias, Inc. and Sue Elliott. 10(dd) Salary Continuation Agreement dated June 1, 1998, between Luby's Cafeterias, Inc. and Alan M. Davis. 11 Statement re computation of per share earnings. 99 Corporate Governance Guidelines of Luby's Cafeterias, Inc. adopted by the Board of Directors on March 19, 1998 (filed as Exhibit 99 to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LUBY'S CAFETERIAS, INC. (Registrant) BARRY J.C. PARKER By: _____________________________ Barry J. C. Parker President and Chief Executive Officer LAURA M. BISHOP By: _____________________________ Laura M. Bishop Senior Vice President and Chief Financial Officer Dated: July 6, 1998 EXHIBIT INDEX Number Document 2 Agreement and Plan of Merger dated November 1, 1991, between Luby's Cafeterias, Inc., a Texas corporation, and Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 2 to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). 3(a) Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation, as in effect February 28, 1994 (filed as Exhibit 3(a) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference). 3(b) Bylaws of Luby's Cafeterias, Inc. as currently in effect (filed as Exhibit 3(c) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 4(a) Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc. in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference). 4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). 4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, and incorporated herein by reference). 4(e) Credit Agreement dated February 27, 1996, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(e) to the company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). 4(f) First Amendment to Credit Agreement dated January 24, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(f) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 4(g) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias, Inc. and NationsBank, N.A., with Schedule and Confirmation dated July 7, 1997 (filed as Exhibit 4(g) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(h) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias, Inc. and Texas Commerce Bank National Association, with Schedule and Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(i) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(i) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(a) Form of Deferred Compensation Agreement entered into between Luby's Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference). 10(b) Form of Amendment to Deferred Compensation Agreement between Luby's Cafeterias, Inc. and various officers and former officers adopted January 14, 1997 (filed as Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(c) Annual Incentive Plan for Area Vice Presidents of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(d) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference). 10(d) Amendment to Annual Incentive Plan for Area Vice Presidents of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(d) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(e) Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(e) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference). 10(f) Amendment to Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(f) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(g) Luby's Cafeterias, Inc. Incentive Bonus Plan for Fiscal 1998 adopted by the Board of Directors on January 9, 1998 (filed as Exhibit 10(g) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(h) Performance Unit Plan of Luby's Cafeterias, Inc. approved by the shareholders on 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(i) 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(j) Employment Contract dated January 8, 1988, between Luby's Cafeterias, Inc. and George H. Wenglein (filed as Exhibit 10(h) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1988, and incorporated herein by reference). 10(k) 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(l) 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(m) 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(n) 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(o) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted by the Board of Directors on 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(p) Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. approved by the shareholders on January 13, 1995 (filed as Exhibit 10(h) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 10(q) Amendment to Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(o) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(r) 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(s) 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(t) 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(u) Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted by the Board of Directors on 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(v) Luby's Cafeterias, Inc. Welfare Benefit Plan Trust dated July 18, 1996 (filed as Exhibit 10(k) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996, and incorporated herein by reference). 10(w) Retirement Agreement dated March 17, 1997, between Luby's Cafeterias, Inc. and Ralph Erben (filed as Exhibit 10(t) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(x) 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(y) Term Promissory Note of Barry J.C. Parker in favor of Luby's Cafeterias, Inc., dated November 10, 1997, in the original principal sum of $199,999.00 (filed as Exhibit 10(v) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(z) 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(aa) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan adopted by the Board of Directors on 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(bb) Agreement of Resignation, Severance, Confidentiality, Non- Solicitation, Arbitration and General Release of All Claims dated April 30, 1998, between Luby's Cafeterias, Inc. and William E. Robson. 10(cc) Salary Continuation Agreement dated May 14, 1998, between Luby's Cafeterias, Inc. and Sue Elliott. 10(dd) Salary Continuation Agreement dated June 1, 1998, between Luby's Cafeterias, Inc. and Alan M. Davis. 11 Statement re computation of per share earnings. 99 Corporate Governance Guidelines of Luby's Cafeterias, Inc. adopted by the Board of Directors on March 19, 1998 (filed as Exhibit 99 to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). EX-10 2 SEVERANCE AGREEMENT;SALARY CONTINUATION AGREEMENTS Exhibit 10(bb) AGREEMENT OF RESIGNATION, SEVERANCE, CONFIDENTIALITY, NON-SOLICITATION, ARBITRATION AND GENERAL RELEASE OF ALL CLAIMS This AGREEMENT OF RESIGNATION, SEVERANCE, CONFIDENTIALITY, NON-SOLICITATION, ARBITRATION AND GENERAL RELEASE OF ALL CLAIMS (hereinafter "Agreement") is made and entered into between William E. Robson (hereinafter "Robson" or "Employee") and Luby's Cafeterias, Inc. and its subsidiaries and affiliate organizations and Luby's Restaurants Limited Partnership (hereinafter "Luby's" or "Employer"), for the consideration and mutual promises hereinafter stated, as follows: 1. This Agreement shall become effective on the date of execution by Robson. The parties agree that Robson will receive the following compensation in exchange for and consideration of this Agreement: a. Robson will receive his regular monthly salary through July 1, 1998. b. Beginning on August 1, 1998 and ending on November 1, 2006, Robson will receive a single monthly check representing the following two (2) components: (1) Component One: Three Thousand Dollars ($3,000.00) gross. Component One is considered previously earned by Robson under a deferred compensation agreement dated April 5, 1982, and amended thereafter, as well as a Supplemental Executive Retirement Plan (SERP) effective December 31, 1995 under which Robson is covered. Component One shall be paid until November 1, 2006 in 100 monthly payments to Robson, his spouse or his estate. (2) Component Two: Five Thousand Dollars ($5,000.00) gross. Component Two shall be paid until November 1, 2006 in 100 monthly payments, except as otherwise provided in this Agreement. In the event of Robson's death before the age of 65, the $5,000.00 per month sum shall be reduced to $2,500.00 per month which will thereafter be paid to Robson's surviving spouse during her lifetime for the duration of the 100-month period. NOTE: The parties agree that Component One monthly payments will be reported to Robson and the IRS on Form 1099-R, and Component Two monthly payments will be reported to Robson and the IRS on Form W-2. The issuance of W-2 statements does not imply that Robson continues in the capacity of an employee of Luby's. c. Luby's will continue payment of premiums for Robson's current health insurance until September 1, 1998. Thereafter, Robson may continue coverage under Luby's' health insurance program until he reaches the age of 65 as long as Robson pays the premium (set at the cost to Luby's). Failure by Robson to timely reimburse Luby's for the cost of health insurance premiums will result in cancellation of coverage. The provisions of this paragraph dealing with Robson's right to continue purchasing health insurance benefits under an existing Luby's program shall remain effective only for so long as Luby's health plan(s) permit. d. The parties understand and agree that this Agreement is not intended to and in no manner waives any existing rights Robson has to exercise stock options pursuant to the Management Incentive Stock Plan. Provided, however, that by execution of this agreement, Robson does in all particulars waive his rights, if any, to receive any benefits under any performance unit awards granted to Robson. Robson further understands and agrees that he must continue to abide by the terms of the Management Incentive Stock Plan in order to preserve and/or avoid waiving his rights under said Plan. e. The parties understand and agree that Robson has been a participant in the Luby's Profit Sharing Plan, and said Plan provides him the option to remain a participant therein until he reaches the age of sixty-five (65). Nothing in this Agreement is intended to in any way limit Robson's right to participate in said Plan pursuant to the Plan's policies. Similarly, the parties understand and agree that Robson has participated in a 401K Plan adopted by Luby's in March of 1997. Robson, likewise, has the option of continuing to participate in said 401K Plan, provided he pays the annual fee required of all retired participants. Nothing in this Agreement is intended to in any way affect Robson's rights to participate in said 401K Plan, subject to the limitations applicable to retired participants. f. The parties understand and agree that this Agreement shall in all particulars terminate Robson's Supplemental Executive Retirement Plan (SERP) and Robson's deferred compensation Agreement. g. Effective as of the effective date of this Agreement or sooner, Luby's will transfer title to the company vehicle (as of March 31, 1998, said vehicle having a book value of $11,671.00) currently being driven by Robson into Robson's name. As of the date of transfer of title in said vehicle to Robson from Luby's, Luby's shall cause to be issued to Robson a statement of the book value of said vehicle as of the last day of the month immediately preceding the date of transfer. The meal card as currently available to Robson will continue as available to other individuals retired from Luby's. h. Luby's will provide Robson with out-placement service for six (6) months from the date of execution of this Agreement and will consider extending such out-placement service if, pursuant to the written opinion of a representative of the out-placement firm, Robson is actively and aggressively engaged in finding employment. 2. Robson agrees, contemporaneous with the signing of this Agreement, to resign as an employee of Luby's Restaurants Limited Partnership as of September 1, 1998, subject to his right to resign prior to said date by giving notice of such intent, in writing, to Luby's and Robson further agrees to resign as an Officer and Director of Luby's Cafeterias, Inc. and its subsidiaries effective immediately upon the execution of this Agreement and as set forth in Exhibit "A" to this Agreement, attached hereto and incorporated by reference herein. Robson may (at his election) remain on Luby's Restaurants Limited Partnership's payroll in a leave of absence capacity for purposes of Luby's' Profit Sharing Plan to September 1, 1998. In order to protect Robson's rights, Luby's' Board of Directors will approve his retirement from Luby's Restaurants Limited Partnership under its current retirement program, effective September 1, 1998. Upon resignation by Robson, all benefits of employment with Luby's will terminate except as those specifically set forth in this Agreement. Only those rights, benefits and payments as specifically set forth herein will be preserved and, by this Agreement, Robson waives claim to any other benefits. Robson further acknowledges that, except as specifically set forth elsewhere in this Agreement, the above payments constitute full satisfaction of all salary, bonuses, vacation and compensation obligations to Robson on behalf of Luby's. 3. Robson, with full understanding of the contents and legal effect of this Agreement, promises to and does hereby completely release and forever discharge Luby's, and any of its respective parent, affiliated or related companies, divisions, or subsidiaries and its respective officers, directors, agents, employees, attorneys, successors and assigns ("Released Parties") from any and all claims, of any and every kind, nature and character, known or unknown, including any and all claims which Robson may now have, or has ever had, against the Released Parties which arose or may have arisen, in whole or in part, before the date of this Agreement, back to the beginning of time, regardless of whether such claims are real or fanciful or known to Robson at this time, including, but not limited to, any and all claims, rights, demands, or causes of action, including, but not limited to causes of action arising out of or in connection with the employment relationship between Employee and Employer prior to, and as of the effective date hereof. The foregoing Release includes, but is not necessarily limited to, any and all claims arising under any federal law such as Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. section 2000 e et seq., the Age Discrimination in Employment Act, 29 U.S.C. section 621 et seq., the Older Workers' Benefit Protection Act of 1990, 29 U.S.C. section 623 et seq., the Employment Retirement Income Security Act of 1975, as amended, "ERISA", 29 U.S.C. section 1001 et seq., the Civil Rights Acts appearing at 42 U.S.C. section 1981-88, the Civil Remedies Provisions available pursuant to 18 U.S.C. section 1964, the Americans With Disabilities Act, 42 U.S.C. section 12101 et seq., the Fair Labor Standards Act, 29 U.S.C. section 201 et seq., and as amended, the Equal Pay Act of 1963, 29 U.S.C. section 206, any claim arising out of any state law including the Texas Commission on Human Rights Act, Texas Labor Code Sections 21.001 et seq.; the Texas Workers' Compensation Act, Texas Labor Code Sections 401.001 et seq., including Section 451.001 et seq. and any and all other federal, state or local legislation relating to, governing or protecting employment relationships, employment practices or any other matters. Also released are any and all claims arising under common law, including, but not limited to, those for breach of contract, wrongful termination, breach of the covenant of good faith and fair dealing, termination for reasons violative of public policy, constructive discharge, intentional and/or negligent infliction of emotional distress, inducing breach of contract, interference with contractual relationship, interference with prospective economic advantage, retaliation, or defamation, including self-compelled publication. Robson acknowledges that this Agreement includes a release of any and all damages of whatever nature or extent for which Robson could have sought recovery. 4. Luby's and any of its respective parent, affiliated or related companies, divisions, or subsidiaries and its respective officers, directors, agents, employees, attorneys, successors and assigns with full understanding of the contents and legal effect of this Agreement, promises to and does hereby completely release and forever discharge Robson, his assigns, heirs, administrators and executors from any and all claims, of any and every kind, nature and character, known and unknown including any and all claims which Luby's may now have, or has ever had, against Robson which arose or may have arisen, in whole or in part, before the date of this Agreement, back to the beginning of time, regardless of whether such claims are real or fanciful or known to Luby's at this time, including, but not limited to, any and all claims, rights, demands, or causes of action, including, but not limited to causes of action arising out of or in connection with the employment relationship between Employee and Employer prior to, and as of the effective date thereof. The parties understand and agree that the indemnification portions of Article VIII of Luby's' bylaws remain in effect. The parties further understand and agree that nothing in this Agreement shall be construed to amend and/or provide any greater rights to indemnity for Employee than those provided in Article VIII of Luby's' bylaws. 5. In consideration of the mutual covenants set forth herein, Robson and Luby's agree that Employer's participation in and execution of this Agreement does not in any way constitute an admission by the Employer of any liability to Employee for any breach of any aspect of the employment relationship which existed between Employer and Employee, including, but not limited to the commission of any tortious or other acts by Employer against Employee or any other unlawful act whatsoever. Employee understands that this Agreement does not constitute an acknowledgment by Employer of any liability to or any wrongful act toward him. 6. It is mutually agreed and understood by Robson and Luby's that this Agreement shall resolve any and all obligations the parties have to one another arising out of the employment relationship and contractual terms which existed between Robson and Luby's, except as specifically set forth in this Agreement. It is also the understood purpose and intent of this Agreement to resolve any and all claims which Employee may have against Employer and which could be asserted against Employer arising out of the relationship which has at any time existed between Robson and Luby's. 7. Employee acknowledges that the previously existing employment relationship between him and Employer has at all times been one of employment at will, with either party having had the right to terminate the employment relationship at any time, with or without cause, or other justification. Such mutual right of termination is and has been in full force and effect throughout the entire period of the employment relationship. 8. Robson acknowledges that Luby's has heretofore paid him all wages, bonus and vacation pay to which Employee was due as of the close of business on the effective date of this Agreement. These payments were due to Employee and are not consideration for this Agreement. Robson agrees and understands that the compensation provided pursuant this Agreement includes any and all benefits owing and due to him arising from the employment relationship prior to and as of the effective date hereof, including, but not limited to all unused vacation, bonus pay, wages, salaries or other compensation and all other terms and conditions of employment. 9. Robson, having been an officer and member of the Board of Directors of Luby's prior to his resignation, agrees that in said capacities he owed a duty of loyalty to Luby's as well as a fiduciary duty to Luby's and its stockholders, and, therefore, Robson agrees not to use or provide to any third party any trade secrets, confidential or proprietary information obtained by him from Luby's unless specifically agreed to in writing by Employer. In addition, Robson specifically agrees to refrain from solicitation for employment and agrees to refrain from assisting another in the solicitation for employment of any current or future management level employee of Luby's or its affiliates (including, but not limited to Water Street) or any non-management level employee who, at the date of solicitation, has ten (10) years of service with Luby's and/or its affiliate(s) (including, but not limited to, Water Street) organizations. In this regard, the parties understand and agree that the term "management level employee" shall include all officers and/or directors of Luby's or any of its affiliate organizations and all cafeteria managers, associate managers, assistant managers and/or manager trainees. Robson agrees that he will not interfere in any employment relationship which exists between Luby's and any current or future management level employee or non-management level employee with ten (10) or more years of service with Luby's. Should Robson commence employment with and/or provide services of any form on behalf of any enterprise whose primary line of business is the operation of conventional cafeterias, all Component Two payments referenced in Paragraph 1(b)(2) of this Agreement shall cease as of the date of such violation. Robson and Luby's agree that if Robson violates any non-solicitation provisions, Employer's obligation to make the Component Two monthly payments as set forth in this Agreement will cease as of the date of such violation. Termination of these payments under this provision will not affect the remaining obligations, waivers and releases contained in this Agreement. The parties agree that Luby's can enforce Robson's promises not to solicit employees, above described, through a court proceeding seeking injunctive and monetary damage relief in addition to the other provisions of this Agreement. Robson further agrees that he will not make derogatory or disparaging remarks regarding Luby's, its officers, directors, and/or members of management. Additionally, Robson shall make no derogatory or disparaging remarks concerning his employment with or the circumstances surrounding his resignation from Luby's and Luby's agrees to make no derogatory or disparaging remarks concerning Robson's employment with Luby's or in regards to the circumstances surrounding his resignation. 10. On or before the effective date of this Agreement, Robson shall return to Employer any and all property of Employer, except as provided in paragraph (1)(g) of this Agreement, in his possession or custody, such as keys, credit cards and documents. 11. Robson acknowledges that, except as expressly set forth herein, no representations of any kind or character have been made by or on behalf of Employer to induce his execution of this document. Robson further states that the only representations made in order to obtain his consent to this Agreement are stated herein and that he is signing this Agreement voluntarily and without coercion, intimidation or threat of retaliation. Robson hereby acknowledges that he has been advised (and has had an adequate opportunity) to have this document reviewed by an attorney or representative of his choice acting on his behalf and that the contents of this document have been explained to the Employee and he understands them in full. 12. Employee further understands and acknowledges that Employer has offered to provide him a period of at least twenty-one (21) days to consider whether to execute this Agreement. Both Employee and Employer further understand and acknowledge that Employee is not required to wait until the expiration of said 21-day period to advise Employer whether he has determined to execute this Agreement. 13. Employer understands and acknowledges that, should Employee in fact execute this Agreement, he shall have a period of seven (7) calendar days following the date of such execution in which to revoke this Agreement. Both Employee and Employer further understand and acknowledge that this Agreement shall not become effective or enforceable until Employee has executed this Agreement and the seven calendar day period has expired without Employee exercising his right to revoke this Agreement. If Employee chooses to revoke this Agreement, he shall do so in writing by delivering such writing in person to Barry J.C. Parker at the offices of Luby's. 14. The parties agree that, except as expressly provided herein, all disputes related to the terms and conditions of this Agreement, including interpretation of those terms and conditions and claims that this Agreement has been breached, shall be submitted to final and binding arbitration in accordance with the provisions of the Federal Arbitration Act ("FAA"), 9 U.S.C. section 1, et seq. If for any reason the FAA is found to be inapplicable, such action may be commenced pursuant to the Texas General Arbitration Act, TEX. CIV. PRAC. & REM. CODE ANN. section 171.001 (Vernon Supp. 1998). The parties agree to the following terms: a. Agreement to Arbitrate. The parties recognize and agree, in lieu of any other state or federal law, statute, provision, and/or requirement that should any dispute, claim, or controversy arise between the parties concerning the interpretation and/or application of the terms of this Agreement and/or any other disputes between the parties that arose, or may have arisen, as a result of the employment relationship between Robson and Luby's and/or its affiliates and/or Robson's status as an officer and/or director of Luby's, the parties must submit such dispute(s) to final and binding arbitration as the exclusive remedy to all parties herein. The forum will be Bexar County, San Antonio, Texas. Employer and Employee further agree that such agreement to arbitrate shall not encompass any claims by Employer or Employee for injunctive or equitable relief. b. Selection of Arbitrator. Employer and Employee agree that any dispute, claim or controversy described above which cannot otherwise be settled amicably between the parties in a mutually agreeable fashion, shall, upon the written request of one party served upon the other, be submitted to and settled by arbitration in accordance with the provisions of the Federal Arbitration Act, 9 U.S.C. section 1-15, as amended. Each of the parties to this Agreement shall appoint one person as an arbitrator to hear and determine such disputes, and if they should be unable to agree, then the two arbitrators shall choose a third arbitrator from a panel made up of experienced arbitrators selected pursuant to the rules and procedures set forth in the "Employment Dispute Mediation and Arbitration Procedure" manual of Conflict Solutions, LLC ("CSL"). "CSL" may be contacted at: 112 E. Pecan, 25th Floor, San Antonio, Texas, 78205; (210) 227- 8060; fax (210) 227-4268. c. Authority of Arbitrator. The parties agree that a decision by the arbitrator so selected shall be final and binding upon both parties, their heirs, representatives, and/or assigns. The arbitrator shall have exclusive authority to determine the arbitrability of any dispute. The arbitrator shall issue a written report in which he fully explains the reasons for his decision and the results reached. The arbitrator shall issue such report within thirty (30) calendar days following the close of the hearing and/or the date of the receipt of the transcript (if any) of the hearing, or within such further time as is mutually agreed to by the parties. The award of the arbitrator shall be final and judgement upon the award may be entered in any state or federal court having jurisdiction. d. Costs. The parties will share equally the cost of the arbitrator as to fees and expenses. Each party will be required to pay their own expenses, such as cost of counsel, witnesses, and copies of transcript (if any) ordered, except that the arbitrator shall have the authority to assess costs against the losing party and to award reasonable attorney's fees to the prevailing party where such award would be permitted under the law governing the claims involved. e. Status, Pending Arbitration. Both parties hereto agree that in the event that either party alleges a violation of this agreement that either party may seek injunctive relief. In the event a Court of competent jurisdiction determines that injunctive relief is proper, then both parties hereto agree that the term of any injunctive relief will continue through the date of the decision of the arbitrator becomes final. 15. Robson and Luby's agree that the monies paid to Robson hereunder are gross amounts due, with Luby's being required to make such deductions therefrom as required by applicable State and/or Federal taxing authorities. Robson is solely responsible for the payment of all assessments and/or taxes due, or allegedly due, by him to such taxing authorities for the sums received. Robson further agrees to indemnify Luby's in the event of any taxing authority seeking payment from Luby's of Robson's taxes and/or assessments that are due by Robson to any taxing authority. 16. This Agreement shall be binding on Robson's representatives, counsel, heirs, legatees, executors, administrators, successors and assigns, and shall inure to the benefit of Luby's and the released parties, its successors, and assigns and its officers, directors, agents and Employees. 17. This Agreement shall be construed and governed by the laws of the State of Texas with venue in Bexar County. The parties hereto further agree that if, for any reason, any provision hereof is unenforceable, the remainder of this Agreement shall nonetheless remain binding and in effect. 18. This Agreement constitutes the complete understanding between Robson and Luby's and supersedes any and all prior agreements, promises and inducements concerning the subject matter, except as expressly set forth herein. DATED at San Antonio, Bexar County, Texas this 30th day of April, 1998. WILLIAM E. ROBSON ____________________________________ William E. Robson LUBY'S CAFETERIAS, INC. AND ITS SUBSIDIARIES AND AFFILIATE ORGANIZATIONS AND LUBY'S RESTAURANTS LIMITED PARTNERSHIP BARRY J.C. PARKER ___________________________________ By: Barry J.C. Parker President STATE OF TEXAS COUNTY OF BEXAR BEFORE ME, this day personally appeared William E. Robson, who after first being sworn, did state and depose on his oath that he is the person whose signature appears above, and that he has executed the foregoing Agreement of Resignation, Severance, Confidentiality, Non-Solicitation, Arbitration and General Release of All Claims for the purposes and consideration therein expressed. WITNESS MY HAND AND SEAL OF OFFICE, this 30th day of April, 1998. RENE ALFARO, JR. ___________________________________________ Notary Public in and for the State of Texas STATE OF TEXAS COUNTY OF BEXAR BEFORE ME, this day personally appeared Barry J.C. Parker, who after first being sworn, did state and depose on his oath that he is the person whose signature appears above, and that he has executed the foregoing Agreement of Resignation, Severance, Confidentiality, Non-Solicitation, Arbitration and General Release of All Claims for the purposes and consideration therein expressed. WITNESS MY HAND AND SEAL OF OFFICE, this 7th day of April, 1998. DEBRA L. WAINSCOTT ___________________________________________ Notary Public in and for the State of Texas EXHIBIT "A" TO: Barry J.C. Parker FROM: William E. Robson SUBJECT: Resignation DATE: April 30, 1998 I hereby resign from employment with Luby's Restaurants Limited Partnership effective September 1, 1998, which resignation is irrevocable and, as an Officer and Director of Luby's Cafeterias, Inc. and its subsidiaries and affiliate organizations and Luby's Restaurants Limited Partnership, effective as of the date of this memorandum. WILLIAM E. ROBSON ______________________________ William E. Robson Exhibit 10(cc) SALARY CONTINUATION AGREEMENT This agreement is made and entered into as of May 14, 1998, between LUBY'S CAFETERIAS, INC., a Delaware corporation (the "Company"), and SUE ELLIOTT ("Employee"). 1. Employment. Employee has accepted employment with the Company as its Senior Vice President-Human Resources. In connection with such employment, the Company has agreed to a continuation of Employee's salary under certain circumstances, as set forth herein. 2. Salary Continuation. If the employment of Employee is terminated by the Company without good cause (as hereinafter defined) prior to May 14, 2000, the Company will continue to pay Employee's regular monthly salary until the later of (a) May 14, 2000, or (b) the expiration of 12 months after the date such employment is terminated by the Company; provided, however, that no salary payments shall be made subsequent to the date on which Employee accepts employment with another employer. 3. Good Cause Defined. The term "good cause" as used in this Agreement shall mean (a) willful and continued failure of Employee to substantially perform his duties as a senior officer of the Company, or (b) Employee's willfully engaging in gross misconduct materially injurious to the Company. 4. Termination for Good Cause. If the Employment of Employee is terminated by the Company for good cause, no salary payments shall thereafter be made by the Company to Employee. Executed in duplicate originals as of the date first above written. LUBY'S CAFETERIAS, INC. BY: BARRY J.C. PARKER ________________________ Barry J.C. Parker President and Chief Executive Officer SUE ELLIOTT ________________________ Sue Elliott Exhibit 10(dd) SALARY CONTINUATION AGREEMENT This agreement is made and entered into as of June 1, 1998, between LUBY'S CAFETERIAS, INC., a Delaware corporation (the "Company"), and ALAN DAVIS ("Employee"). 1. Employment. Employee has accepted employment with the Company as its Senior Vice President-Real Estate Development. In connection with such employment, the Company has agreed to a continuation of Employee's salary under certain circumstances, as set forth herein. 2. Salary Continuation. If the employment of Employee is terminated by the Company without good cause (as hereinafter defined) prior to June 1, 2000, the Company will continue to pay Employee's regular monthly salary until the later of (a) June 1, 2000, or (b) the expiration of 12 months after the date such employment is terminated by the Company; provided, however, that no salary payments shall be made subsequent to the date on which Employee accepts employment with another employer. 2. Good Cause Defined. The term "good cause" as used in this Agreement shall mean (a) willful and continued failure of Employee to substantially perform his duties as a senior officer of the Company, or (b) Employee's willfully engaging in gross misconduct materially injurious to the Company. 3. Termination for Good Cause. If the Employment of Employee is terminated by the Company for good cause, no salary payments shall thereafter be made by the Company to Employee. Executed in duplicate originals as of the date first above written. LUBY'S CAFETERIAS, INC. By: BARRY J.C. PARKER _________________________ Barry J.C. Parker President and Chief Executive Officer ALAN DAVIS _________________________ Alan Davis EX-11 3 COMPUTATION OF EARNINGS PER SHARE Exhibit 11 COMPUTATION OF PER SHARE EARNINGS The following is a computation of the weighted average number of shares outstanding which is used in the computation of per share earnings for Luby's Cafeterias, Inc. for the three and nine months ended May 31, 1998 and 1997. Three months ended May 31, 1998: 23,270,675 x shares outstanding for 92 days 2,140,902,100 Divided by number of days in the period 92 _____________ 23,270,675 Nine months ended May 31, 1998: 23,266,374 x shares outstanding for 18 days 418,794,732 23,266,921 x shares outstanding for 17 days 395,537,657 23,268,328 x shares outstanding for 9 days 209,414,952 23,270,675 x shares outstanding for 229 days 5,328,984,575 _____________ 6,352,731,916 Divided by number of days in the period 273 _____________ 23,270,080 Three months ended May 31, 1997: 23,410,574 x shares outstanding for 31 days 725,727,794 23,406,574 x shares outstanding for 30 days 702,197,220 23,280,909 x shares outstanding for 31 days 721,708,179 _____________ 2,149,633,193 Divided by the number of days in the period 92 _____________ 23,365,578 Nine months ended May 31, 1997: 23,892,819 x shares outstanding for 30 days 716,784,570 23,666,720 x shares outstanding for 31 days 733,668,320 23,281,927 x shares outstanding for 30 days 698,457,810 23,329,990 x shares outstanding for 31 days 723,229,690 23,404,092 x shares outstanding for 31 days 725,526,852 23,409,028 x shares outstanding for 28 days 655,452,784 23,410,574 x shares outstanding for 31 days 725,727,794 23,406,574 x shares outstanding for 30 days 702,197,220 23,280,909 x shares outstanding for 31 days 721,708,179 _____________ 6,402,753,219 Divided by the number of days in the period 273 _____________ 23,453,308 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS AUG-31-1998 MAY-31-1998 2,312 0 684 0 4,950 13,256 506,800 170,341 366,916 43,353 0 0 0 8,769 217,500 366,916 379,106 379,106 211,374 211,374 114,933 0 3,813 33,067 11,772 21,295 0 0 0 21,295 0.92 0.92 Other stockholders' equity amount is less cost of treasury stock of $92,907.
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