Lub Liquidating Trust (LUB) 8-K Luby’s Reports Third Quarter Results and Announces Expansion Plans for 2008

For additional information contact:Rick Black, 713-329-6808

FOR IMMEDIATE RELEASE

Luby’s Reports Third Quarter Results and Announces Expansion Plans for 2008

HOUSTON, TX - June 11, 2007- Luby's, Inc. (NYSE: LUB) today announced unaudited financial results for the third quarter fiscal 2007, which ended on May 9, 2007. Sales in the third quarter fiscal 2007 were $75.9 million, down 2.7 percent compared to $78.0 million in the third quarter fiscal 2006. On a same-store basis, sales decreased 1.9 percent for the 127 operating units in the third quarter compared to the same period last year. Same-store sales in the third quarter 2006 represented a 4.1 percent increase compared to the third quarter 2005.

Net income was $3.9 million, or $0.14 per share diluted, in the third quarter compared to $6.9 million, or $0.25 per share diluted, in the third quarter 2006.The Company’s third quarter 2007 income tax provision represented $0.06 per share diluted. This compares with an income tax benefit of $0.09 per share diluted in the third quarter of 2006 resulting from the recognition of previously deferred tax benefits.

“While the macro environment remains challenging, we maintained store level profit margins during the quarter despite lower sales, which reflects the hard work of our store employees and the strength of our entire team,” said Chris Pappas, President and CEO. “Our team is focused on executing customer service and operations initiatives in our restaurants to provide an exceptional customer experience with the goal of driving guest traffic and higher average unit volumes. These efforts generate cash flow that will fund further expansion as well as capital improvements in existing stores. We are committed to a long-term growth strategy through the development of new stores, beginning with the new store prototype that will open later this summer in Houston and Port Arthur. In 2008 we plan to build four to six stores using the new prototype. We believe the expansion of new units will generate favorable unit sales and strong returns on investment creating an attractive long-term growth vehicle for the company and will enhance shareholder value.”

Cash flow from operations was $24.9 million for the first three quarters of fiscal 2007, compared to $17.5 million for the first three quarters of fiscal 2006.

Food costs decreased approximately $0.4 million, or 2.1 percent, in the third quarter 2007 compared to the same quarter last year and increased 0.1 percent as a percentage of sales, to 26.6 percent. The company continues to manage food costs by offering menu items and combination meals with favorable cost structures.

Payroll and related costs decreased approximately $1.1 million, or 4.3 percent, in the third quarter 2007 compared to the same quarter last year and decreased 0.6 percent as a percentage of sales to 33.5 percent. The year over year improvement was due primarily to continued focus on labor productivity.

Other operating costs decreased by approximately $0.5 million, or 3.0 percent, in the third quarter 2007 compared to the same quarter last year and decreased 0.1 percent as a percentage of sales to 21.0 percent. The year-over-year improvement was due to lower utility costs, offset by higher marketing and advertising expenses.

General and administrative costs in the third quarter were $5.3 million, compared to $5.4 million in the same quarter last year.

Company Outlook

Pappas said, “We have seen industry-wide pressure on customer traffic in the casual and family dining segments for several quarters and we expect those sales trends to continue. We expect our fourth quarter sales trends to be similar to our second and third quarters of fiscal 2007, which were down approximately 2.0 percent. Additionally, there are a few factors to keep in mind with respect to the comparison of fourth quarter 2006 results:

-   Net income for the fourth quarter 2006 included a non-cash income tax benefit of $2.1 million, or $0.09 per share diluted, associated with a favorable tax settlement and a tax benefit generated in previous years that were not recognized in those years because of uncertainty of future realization;

-   Other operating expenses in the fourth quarter 2006 were partially offset by a $1.1 million, or approximately $0.02 per share diluted, from an insurance recovery associated with a business interruption claim due to Hurricane Rita;

-   Sales in the fourth quarter 2006 included an approximately $0.5 million sales contribution from one store that was closed earlier this year and will not contribute to fourth quarter 2007 sales.”

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Conference Call

The company will host a conference call today at 4:00 p.m. Central Time, June 11, 2007, to discuss third quarter fiscal 2007 results. To access the call live, dial 800-901-5213 and use the participant pin code, Lubys, at least 10 minutes prior to the start time, or listen live over the Internet by logging on to http://www.lubys.com/06aboutusEvents.asp. A replay of the call will be available through June 18, 2007. The replay number is (888) 286-8010 and the pin code is 61893505, the webcast replay will also be available on the Company’s website at www.lubys.com.

About Luby’s

Luby’s operates 127 restaurants in Austin, Dallas, Houston, San Antonio, the Rio Grande Valley and other locations throughout Texas and other states.  Luby’s provides its customers with quality home-style food, value pricing, and outstanding customer service. For more information about Luby’s, visit the Company’s website at www.lubys.com. 

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Consolidated Statements of Operations (unaudited)

(In thousands except per share data)

	Quarter Ended						Three Quarters Ended
	May 9,			May 10,			May 9,			May 10,
	2007			2006			2007			2006
	(84 days)			(84 days)			(252 days)			(252 days)
SALES	$	75,886		$	77,954		$	221,701		$	225,570
COSTS AND EXPENSES:
Cost of food		20,193			20,634			59,565			60,565
Payroll and related costs		25,433			26,571			75,073			78,395
Other operating expenses		15,944			16,440			49,047			48,858
Depreciation and amortization		3,698			3,632			10,853			10,747
General and administrative expenses		5,321			5,357			15,344			15,129
Asset impairments and restaurant closings		15			700			205			532
Net loss on disposition of property and equipment		57			337			551			330
Total costs and expenses		70,660			73,671			210,638			214,556
INCOME FROM OPERATIONS		5,226			4,283			11,063			11,014
Interest income		281			62			693			156
Interest expense		(191	)		(221	)		(582	)		(742	)
Other income, net		198			218			607			633
Income before income taxes and discontinued operations		5,514			4,342			11,781			11,061
Provision (benefit) for income taxes		1,579			(2,483	)		3,788			(2,419	)
Income from continuing operations		3,935			6,825			7,993			13,480
Discontinued operations, net of income taxes		(16	)		76			(278	)		(1,059	)
NET INCOME	$	3,919		$	6,901		$	7,715		$	12,421
Income per share - from continuing operations
- basic	$	0.15		$	0.26		$	0.31		$	0.52
- assuming dilution		0.15			0.25			0.30			0.49
Income (loss) per share - from discontinued operations
- basic	$	—		$	—		$	(0.01	)	$	(0.04	)
- assuming dilution		—			—			(0.01	)		(0.04	)
Net income per share
- basic	$	0.15		$	0.26		$	0.30		$	0.48
- assuming dilution		0.14			0.25			0.28			0.45
Weighted average shares outstanding:
- basic		26,132			26,047			26,104			26,007
- assuming dilution		27,202			27,565			27,180			27,509

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The following table contains information derived from the Company’s Consolidated Statements of Operations expressed as a percentage of sales. Percentages may not add due to rounding.

	Quarter Ended						Three Quarters Ended
	May 9,			May 10,			May 9,			May 10,
	2007			2006			2007			2006
	(84 days)			(84 days)			(252 days)			(252 days)
SALES		100	%		100	%		100	%		100	%
COSTS AND EXPENSES:
Cost of food		26.6	%		26.5	%		26.9	%		26.8	%
Payroll and related costs		33.5	%		34.1	%		33.9	%		34.8	%
Other operating expenses		21.0	%		21.1	%		22.1	%		21.7	%
Store level profit		18.9	%		18.3	%		17.1	%		16.7	%
Depreciation and amortization		4.9	%		4.6	%		4.9	%		4.8	%
General and administrative expenses		7.0	%		6.9	%		6.9	%		6.7	%
Asset impairments and restaurant closings		0.0	%		0.9	%		0.1	%		0.2	%
Net loss on disposition of property and equipment		0.1	%		0.4	%		0.2	%		0.1	%
Total costs and expenses		93.1	%		94.5	%		95.0	%		95.1	%
INCOME FROM OPERATIONS		6.9	%		5.5	%		5.0	%		4.9	%

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Consolidated Balance Sheets

(In thousands except share data)

	May 9,			August 30,
	2007			2006
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,167		$	9,715
Short-term investments		22,377			—
Trade accounts and other receivables, net		360			1,461
Food and supply inventories		2,492			2,392
Prepaid expenses		1,784			1,609
Deferred income taxes		888			1,160
Total current assets		31,068			16,337
Property and equipment, net		182,736			183,990
Property held for sale		736			1,661
Deferred income taxes		684			3,600
Other assets		965			1,111
Total assets	$	216,189		$	206,699
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	13,428		$	10,932
Accrued expenses and other liabilities		21,910			23,119
Total current liabilities		35,338			34,051
Other liabilities		6,218			7,089
Total liabilities		41,556			41,140
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common stock, $0.32 par value; 100,000,000 shares authorized; 27,829,952 shares and 27,748,983 shares issued and outstanding as of May 9, 2007 and August 30, 2006, respectively		8,906			8,880
Paid-in capital		43,032			41,699
Retained earnings		158,298			150,584
Less cost of treasury stock, 1,676,403 shares		(35,604	)		(35,604	)
Total shareholders' equity		174,633			165,559
Total liabilities and shareholders' equity	$	216,189		$	206,699

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Consolidated Statements of Cash Flows (unaudited)

(In thousands)

	Three Quarters Ended
	May 9,			May 10,
	2007			2006
	(252 days)			(252 days)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,715		$	12,421
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for asset impairments, net of gains/losses on property sales		648			385
Depreciation and amortization		10,853			10,755
Amortization of debt issuance cost		322			322
Non-cash compensation expense		165			138
Share-based compensation expense		664			317
Deferred income tax expense (benefit)		3,240			(2,541	)
Cash provided by operating activities before changes in operating assets and liabilities		23,607			21,797
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts and other receivables, net		1,101			(502	)
Increase in food and supply inventories		(100	)		(156	)
Increase in prepaid expenses and other assets		(351	)		(303	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		687			(3,347	)
Net cash provided by operating activities		24,944			17,489
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from redemption/maturity of short-term investments		9,500			1,667
Purchases of short-term investments		(31,877	)		—
Proceeds from disposal of assets and property held for sale		1,743			5,936
Purchases of property and equipment		(11,388	)		(8,671	)
Net cash used in investing activities		(32,022	)		(1,068	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt		—			2,000
Repayment of debt		—			(15,500	)
Proceeds received on exercise of stock options		530			991
Net cash provided by (used in) financing activities		530			(12,509	)
Net increase (decrease) in cash and cash equivalents		(6,548	)		3,912
Cash and cash equivalents at beginning of period		9,715			2,789
Cash and cash equivalents at end of period	$	3,167		$	6,701
Cash paid for:
Income taxes	$	229		$	181
Interest		113			492

The company wishes to caution readers that various factors could cause its actual financial and operational results 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, 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, plans for expansion of the company’s business, changes in the cost and supply of food and labor, the seasonality of the company’s business, taxes, inflation, governmental regulations, and the availability of credit, as well as other risks and uncertainties disclosed in periodic reports on Form 10-K and Form 10-Q.

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