FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended August 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 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 November 15, 1995, was approximately $484,097,000 (based upon the assumption that directors and officers are the only affiliates). As of November 15, 1995, there were 23,334,503 shares of the registrant's Common Stock outstanding, exclusive of 4,068,564 treasury shares. Portions of the following documents are incorporated by reference into the designated parts of this Form 10-K: annual report to shareholders for the fiscal year ended August 31, 1995 (in Part II) and proxy statement relating to 1996 annual meeting of shareholders (in Part III). Item 1. Business. Luby's Cafeterias, Inc. (the "Company") operates 190 cafeterias under the name "Luby's" located in suburban shopping areas in Arizona, Arkansas, Florida, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Tennessee, and Texas. Of the 190 cafeterias operated by the Company, 110 are at locations owned by the Company and 80 are on leased premises. 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. Marketing The Company's product strategy is to provide a wide variety of freshly- prepared 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 senior citizens, families with children, shoppers, and business people looking for a quick, healthy meal at a reasonable price. Prior to 1991 the Company relied primarily on customers' word-of-mouth recommendations and community relations activities to promote its business, spending approximately .5% of sales annually on these efforts. In 1991 the Company began developing a new marketing program. Based on favorable results of radio and television advertising tests, the marketing budget increased to approximately two percent of sales for fiscal 1995. The Company intends to continue expending the majority of the marketing budget on television and radio advertising, as well as supporting the increased local marketing activities of the individual cafeterias. Operations The Company's operations combine the food quality and atmosphere of a good restaurant with the simplicity and visual food selection of cafeteria service. Food is prepared in small quantities throughout serving hours, and frequent quality checks are made. Each cafeteria offers a broad and varied menu and normally serves 12 to 14 entrees, 12 to 14 vegetable dishes, 22 to 25 salads, and 18 to 20 desserts. The Company's cafeterias cater primarily to shoppers and office or store personnel for lunch and to families for dinner. The Company's cafeterias are open for lunch and dinner seven days a week. All of the cafeterias sell take-out orders, and most of them have separate food to go entrances. Take- out orders accounted for approximately ten percent of sales in fiscal 1995. Each cafeteria is operated as a separate unit under the control of a manager who has responsibility for day-to-day operations, including food purchasing, menu planning, and personnel employment and supervision. Each cafeteria manager is compensated on the basis of his or her cafeteria's profits. Management believes that granting broad authority to its cafeteria managers and compensating them on the basis of their performance are significant factors in the profitability of its cafeterias. Of the 190 cafeteria managers employed by the Company, 156 have been with the Company for more than ten years. Currently, an individual is employed for a period of seven to ten years before he or she is considered qualified to become a cafeteria manager. Each cafeteria cooks or prepares substantially all of the food served, including breads and pastries. The cafeterias prepare food from the same recipes, with minor variations to suit local tastes, although menus are not uniform in all of the Company's cafeterias on any particular day. Menus are prepared to reflect local and seasonal food preferences and to take advantage of any special food purchasing opportunities. Substantially all of the food served by each cafeteria is purchased from local suppliers. None of the cafeterias are dependent upon any one supplier, and the Company believes that alternative sources of supply are readily available. Quality control teams, each consisting of experienced cooks and a supervisor, help to maintain uniform standards of food preparation. The teams primarily assist in the training of new personnel during the opening of new cafeterias. The teams also visit the cafeterias 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. The Company conducts a training program comprised of both on-the-job training and classroom instruction in its training facilities in San Antonio. The training program is approximately four months in duration. Management personnel receive one week of classroom instruction and spend the remaining time on practical training in operating cafeterias. In order to draw management trainees from regional talent pools, the Company has set up satellite training schools in several key cafeterias to make on-the-job training more accessible on a local level. As of August 31, 1995, the Company had approximately 10,950 employees, consisting of 10,243 nonmanagement cafeteria personnel; 585 cafeteria managers, associate managers, and assistant managers; and 122 executive, administrative, and clerical personnel. Employee relations are considered to be good, and the Company has never had a strike or work stoppage. Expansion During the fiscal year ended August 31, 1995, the Company relocated one cafeteria in Beaumont, Texas, and opened 11 new cafeterias in North Little Rock, Arkansas; Mission, Kansas; Hattiesburg, Mississippi; Kansas City, Missouri; Nashville and Oak Ridge, Tennessee; and Fort Worth, Houston, Plano, San Antonio, and Weslaco, Texas. Since August 31, 1995, the Company has opened four new cafeterias in Surprise, Arizona; and Corpus Christi, Houston, and Tomball, Texas. Since August 31, 1995, the Company has closed a cafeteria located on leased premises in El Paso, Texas. Eight new cafeterias are under construction in Arlington, Dallas, Fort Worth, Houston, and Kerrville, Texas. During fiscal 1996 the Company expects to open 16 to 18 new cafeterias. The Company continually evaluates prospective new cafeteria sites and typically has several sites for new cafeterias under active consideration at any given time. The rate at which new cafeterias 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 cafeterias generally become profitable within three months after opening. The costs of opening new cafeterias 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 $2,300,000 to $2,600,000 to construct, equip, and furnish a new cafeteria in a freestanding building under normal conditions, including land acquisition costs. The approximate cost to finish out, equip, and furnish a new cafeteria in a leased facility has ranged from $1,100,000 to $1,300,000. During fiscal 1994 and 1995 a new building prototype has been utilized to reduce the initial investment in a typical new location. 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 cafeteria business. One cafeteria using the name "Luby's" and one cafeteria 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 cafeteria 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 food service business is highly competitive, and there are numerous restaurants and other food service 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 food service 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 are conventional restaurants and other cafeterias. 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. Item 2. Properties. The Company owns the underlying land and buildings in which 110 of its cafeterias are located. In addition, the Company owns several cafeteria sites being held for future development. Of the 190 cafeterias operated by the Company, 80 are at locations held under leases, including 48 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 4 and 7 of Notes to Financial Statements for information concerning the Company's lease rental expenses, lease commitments, and construction commitments. Of the 80 cafeteria leases, the current terms of 20 expire from 1996 to 2000, 21 from 2001 to 2005, and 39 thereafter. Sixty-two of the leases can be extended beyond their current terms at the Company's option. A typical cafeteria seats 250 to 300 persons and contains 9,000 to 10,500 square feet of floor space. Most of the cafeterias are located in modern buildings and all are in good condition. It is the Company's policy to refurbish and modernize cafeterias as necessary to maintain their appearance and utility. The equipment in all cafeterias is well maintained. Several of the Company's cafeteria properties contain excess building space which is rented to tenants unaffiliated with the Company. The 190 cafeterias operated by the Company are located as follows (locations are in Texas except as otherwise indicated): Number Number Location of Units Location of Units Abilene 1 Lubbock 1 Albuquerque, New Mexico 2 Lufkin 1 Amarillo 2 McAllen 2 Arlington 2 Memphis, Tennessee 3 Austin 6 Mesa, Arizona 2 Bartlesville, Oklahoma 1 Mesquite 1 Baytown 1 Midland 1 Beaumont 1 Mission, Kansas 1 Bedford 1 Mission, Texas 1 Bellmead 1 Morristown, Tennessee 1 Bossier City, Louisiana 1 Murfreesboro, Tennessee 1 Broken Arrow, Oklahoma 1 Muskogee, Oklahoma 1 Brownsville 2 Nashville, Tennessee 2 Bryan/College Station 1 New Braunfels 1 Carrollton 1 North Little Rock, Arkansas 1 Chandler, Arizona 1 Oak Ridge, Tennessee 1 Clearwater, Florida 1 Odessa 1 Conroe 1 Oklahoma City, Oklahoma 3 Corpus Christi 3 Pasadena 1 Dallas 8 Pharr 1 Deer Park 1 Phoenix, Arizona 4 Denton 1 Pinellas Park, Florida 1 DeSoto 1 Plano 2 Duncanville 1 Port Arthur 2 El Paso 5 Richardson 1 Fayetteville, Arkansas 1 Round Rock 1 Fort Smith, Arkansas 1 San Angelo 1 Fort Worth 7 San Antonio 19 Franklin, Tennessee 1 San Marcos 1 Galveston 1 Santa Fe, New Mexico 1 Garland 1 Scottsdale, Arizona 1 Glendale, Arizona 1 Sebring, Florida 1 Grand Prairie 1 Shawnee, Oklahoma 1 Grapevine 1 Sherman 1 Harlingen 2 Shreveport, Louisiana 1 Hattiesburg, Mississippi 1 Stafford 1 Houston 27 Sugar Land 1 Humble 1 Surprise, Arizona 1 Independence, Missouri 1 Tampa, Florida 2 Irving/Las Colinas 1 Temple 1 Kansas City, Missouri 2 Texarkana 1 Killeen 1 The Woodlands 1 Kingwood 1 Tomball 1 Lake Jackson 1 Topeka, Kansas 1 Laredo 1 Tucson, Arizona 2 Las Cruces, New Mexico 1 Tulsa, Oklahoma 2 Leavenworth, Kansas 1 Tyler 2 Lewisville 1 Victoria 1 Little Rock, Arkansas 1 Waco 1 Longview 1 Weslaco 1 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. There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company is a party, or of which any of its property is the subject. 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, 1995, 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 1996 annual meeting of shareholders and until his successor is duly elected and qualified. Served as Officer Positions with Company and Name Since Principal Occupation Last Five Years Age ________________________ ________ ____________________________________ ___ John B. Lahourcade 1969 Chairman of the Board, Chairman of 71 the Executive Committee, and Director; Chief Executive Officer 1984-1990. Ralph Erben 1978 President, Chief Executive Officer 64 (since 1990), member of the Executive Committee, and Director; Chief Operating Officer 1988-1990. John E. Curtis, Jr. 1982 Executive Vice President, Chief 48 Financial Officer, and Director (since 1991); Senior Vice President and Chief Financial Officer 1988- 1995; Treasurer 1990-1995. William E. Robson 1982 Executive Vice President-Operations 54 and Director (since 1993); Senior Vice President-Operations 1992-1995; Senior Vice President-Operations Development prior to 1992. Clyde C. Hays III 1985 Vice President-Operations (since 44 1993); Area Vice President prior to 1993. Jimmy W. Woliver 1984 Vice President-Operations. 58 Ronald E. Riemenschneider 1990 Vice President and Treasurer (since 37 1995); Controller 1990-1995. James R. Hale 1980 Secretary; Member of law firm of 66 Cauthorn Hale Hornberger Fuller Sheehan & Becker Incorporated since 1992; member of law firm of Cox & Smith Incorporated prior to 1992. 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 Quarters Quarterly Ended High Low Cash Dividend _________________ ______ ______ ______________ November 30, 1993 $25.75 $20.88 $.15 February 28, 1994 23.88 21.50 .15 May 31, 1994 24.63 22.50 .15 August 31, 1994 24.13 22.13 .165 November 30, 1994 24.63 22.00 .165 February 28, 1995 23.25 22.00 .165 May 31, 1995 22.88 18.50 .165 August 31, 1995 21.25 19.25 .18 As of September 8, 1995, there were approximately 4,604 record holders of the Company's common stock. Item 6. Selected Financial Data. Five Year Summary of Operations (Thousands of dollars except per share data) Years ended August 31, 1995 1994 1993 1992 1991 ________ ________ ________ ________ ________ Sales $419,024 $390,692 $367,757 $346,359 $328,236 Costs and expenses: Cost of food 103,611 98,223 92,957 86,507 83,273 Payroll and related costs 113,952 104,543 99,233 95,963 90,612 Occupancy and other operating expenses 123,907 113,546 104,958 99,590 90,746 General and administrative expenses 18,672 15,330 15,967 15,101 16,348 ________ ________ ________ ________ ________ 360,142 331,642 313,115 297,161 280,979 Income from operations 58,882 59,050 54,642 49,198 47,257 Other income (expenses): Interest expense (1,749) - - - - Interest and other 1,805 1,385 1,574 1,319 1,591 ________ ________ ________ ________ ________ 56 1,385 1,574 1,319 1,591 ________ ________ ________ ________ ________ Income before income taxes and accounting change 58,938 60,435 56,216 50,517 48,848 Provision for income taxes 21,923 22,663 20,687 17,924 16,502 ________ ________ ________ ________ ________ Income before accounting change 37,015 37,772 35,529 32,593 32,346 Cumulative effect of change in accounting for income taxes - 1,563 - - - ________ ________ ________ ________ ________ Net income (a) $ 37,015 $ 39,335 $ 35,529 $ 32,593 $ 32,346 Income per share before accounting change $ 1.55 $ 1.45 $ 1.31 $ 1.19 $ 1.18 Net income per common share $ 1.55 $ 1.51 $ 1.31 $ 1.19 $ 1.18 Cash dividend declared per common share $ .68 $ .62 $ .56 $ .51 $ .47 At year-end: Total assets $312,380 $289,668 $302,099 $276,319 $260,704 Long-term debt $ - $ - $ - $ 1,384 $ 1,851 Number of cafeterias 187 176 168 162 150 <FN> (a) Net income in 1994 includes the cumulative effect of change in accounting for income taxes of $1,563, or $.06 per share. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources During the last three years the Company has financed all capital expenditures from internally-generated funds, cash equivalents, and short-term borrowings. Capital expenditures for fiscal 1995 were $37,246,000, a 25% increase from fiscal 1994. This increase in capital expenditures resulted in part from the opening of 11 new cafeterias in fiscal 1995 as compared to eight in fiscal 1994. The Company also purchased ten sites as land held for future use compared to five land sites purchased during fiscal 1994. Capital commitments budgeted for fiscal 1996 include the opening of 16 to 18 new cafeterias: 12 to 13 on sites owned by the Company, two on land held under long-term ground leases, and two to three in regional shopping malls. In addition, an existing unit on leased premises will be relocated to a site owned by the Company. At the end of September 1995 the Company closed one of its El Paso cafeterias which had been in operation since 1951. The age and condition of the downtown location, in addition to the impact of the Mexican peso devaluation, were the key factors in this decision. Therefore, a net increase of 15 to 17 cafeterias is anticipated in fiscal 1996. Construction costs for the new cafeterias are expected to be funded by cash flow from operations, cash currently held in cash equivalent investments, and short-term borrowings. In addition, as of August 31, 1995, the Company owned 13 undeveloped cafeteria sites, and several land site acquisitions were in varying stages of negotiation. The Company generated cash from operations of $56,398,000 in fiscal 1995. The Company had a balance of $57,000,000 outstanding at August 31, 1995, under a $100,000,000 line-of-credit agreement with a bank. At August 31, 1995, the Company had a working capital deficit of $79,316,000 which compares to the prior year's working capital deficit of $38,228,000. The working capital position declined during fiscal 1995 due primarily to the $40,000,000 increase in short-term borrowings under the line of credit to fund capital expenditures and treasury stock purchases. During fiscal 1995 the Company purchased 2,000,000 shares of its common stock at a cost of $45,176,000, which are being held as treasury stock. 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 1995 Compared to Fiscal 1994 Sales increased $28,332,000, or 7%, due in part to the addition of 11 new cafeterias in fiscal 1995 and eight cafeterias in fiscal 1994. The average sales volume of cafeterias opened over one year increased to $2,321,000 in fiscal 1995 from $2,287,000 in fiscal 1994. The increase resulted from the implementation of new marketing programs and from higher average tray prices over the prior year. Cost of food increased $5,388,000, or 5%, due primarily to the increase in sales. Food cost margins improved from the price increase on the Lu Ann Platter, which took effect on December 1, 1994, and an additional price increase on selected individual items effective June 10, 1995. Payroll and related costs increased $9,409,000, or 9%, due primarily to the increase in sales, higher wages for hourly employees in existing cafeterias, and higher wage costs associated with increased expansion over the prior year. As the expansion rate increases for fiscal 1996, the Company anticipates that payroll and related costs will increase as a percentage of sales over fiscal 1995. Occupancy and other operating expenses increased $10,361,000, or 9%, due primarily to the increase in sales, the opening of 11 new cafeterias, higher advertising expenditures, higher costs for a new uniform program, and higher costs for paper supplies. For fiscal 1996 the Company plans to maintain the budget for advertising expense at 2% of sales. General and administrative expenses increased $3,342,000, or 22%, due primarily to the higher Company contribution to the profit sharing and retirement plan as determined by the plan's provisions, which increased approximately $3,000,000 over fiscal 1994. The Company expects the contribution for fiscal 1996 to be more comparable to fiscal 1995, increasing only approximately $200,000 over fiscal 1995. Interest expense for fiscal 1995 was incurred in conjunction with borrowings under the line-of-credit agreement and is net of $895,000 capitalized on qualifying properties. The provision for income taxes decreased $740,000, or 3%, due in part to lower income before income taxes. The Company's effective income tax rate decreased slightly from 37.5% in fiscal 1994 to 37.2% in fiscal 1995. Fiscal 1994 Compared to Fiscal 1993 Sales increased $22,935,000, or 6%, due in part to the addition of eight new cafeterias in fiscal 1994 and six cafeterias in fiscal 1993. The average sales volume of cafeterias opened over one year increased to $2,287,000 in fiscal 1994 from $2,223,000 in fiscal 1993. The increase resulted from the implementation of new marketing programs and from improved economies in some trade areas. Cost of food increased $5,266,000, or 6%, due primarily to the increase in sales. Payroll and related costs increased $5,310,000, or 5%, with the opening of eight new cafeterias. During the past several years, the Company has instituted various programs to address the related payroll cost of workers' compensation insurance; and these efforts, coupled with the revised Texas workers' compensation law, resulted in lower workers' compensation costs during fiscal 1994. Occupancy and other operating expenses increased $8,588,000, or 8%, due primarily to the increase in sales; the opening of eight new cafeterias; higher advertising expenditures; and higher managers' salaries, which were based on the profitability of the cafeterias. General and administrative expenses decreased $637,000, or 4%, due primarily to the lower Company contribution to the profit sharing and retirement plan as determined by the plan's provisions. The decline was partially offset by higher costs under employee benefit plans which were based on the earnings growth of the Company. The provision for income taxes increased $1,976,000, or 10%, due to higher income from operations and the new federal income tax rates that were effective January 1, 1993. The Company's effective income tax rate increased from 36.8% in fiscal 1993 to 37.5% in fiscal 1994. The Company adopted the Financial Accounting Standards Board's Statement No. 109, "Accounting for Income Taxes," in fiscal 1994, as discussed in Note 6 of Notes to Financial Statements. 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. Item 8. Financial Statements and Supplementary Data. LUBY'S CAFETERIAS, INC. FINANCIAL STATEMENTS Years Ended August 31, 1995, 1994, and 1993 with Report of Independent Auditors Report of Independent Auditors The Board of Directors and Shareholders Luby's Cafeterias, Inc. We have audited the accompanying balance sheets of Luby's Cafeterias, Inc. at August 31, 1995 and 1994, and the related statements of income, shareholders' equity, and cash flows for each of the three years in the period ended August 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in all material respects, the financial position of Luby's Cafeterias, Inc. at August 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note 6 to the financial statements, in 1994 the Company changed its method of accounting for income taxes. ERNST & YOUNG LLP San Antonio, Texas October 3, 1995 Luby's Cafeterias, Inc. Balance Sheets August 31 1995 1994 ________ _______ (Thousands of Dollars) Assets Current assets: Cash and cash equivalents $ 12,392 $ 10,909 Trade accounts and other receivables 311 275 Food and supply inventories 4,034 3,851 Prepaid expenses 2,849 2,840 Deferred income taxes 629 259 ________ ________ Total current assets 20,215 18,134 Investments and other assets - at cost: Land held for future use 9,820 10,867 Other assets 3,188 2,835 ________ ________ Total investments and other assets 13,008 13,702 Property, plant, and equipment - at cost, less accumulated depreciation and amortization (Note 2) 279,157 257,832 ________ ________ Total assets $312,380 $289,668 ________ ________ Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings (Note 3) $ 57,000 $ 17 000 Accounts payable - trade 10,969 10,341 Dividends payable 4,196 4,144 Accrued expenses and other liabilities (Note 11) 24,895 21,927 Income taxes payable 2,471 2,950 ________ ________ Total current liabilities 99,531 56,362 Deferred income taxes and other credits 20,145 19,780 Commitments (Notes 4, 5, and 7) - - Shareholders' equity (Notes 5 and 8): Common stock, $.32 par value; authorized 100,000,000 shares in 1995 and 1994, issued 27,403,067 shares in 1995 and 1994 8,769 8,769 Paid-in capital 26,945 26,945 Retained earnings 248,973 229,014 Less cost of treasury stock, 4,089,935 shares in 1995 and 2,285,257 shares in 1994 (91,983) (51,202) ________ ________ Total shareholders' equity 192,704 213,526 ________ ________ Total liabilities and shareholders' equity $312,380 $289,668 ________ ________ See accompanying notes. Luby's Cafeterias, Inc. Statements of Income Years Ended August 31 1995 1994 1993 ________ ________ ________ (Thousands of dollars except per share data) Sales $419,024 $390,692 $367,757 Costs and expenses: Cost of food 103,611 98,223 92,957 Payroll and related costs 113,952 104,543 99,233 Occupancy and other operating expenses 123,907 113,546 104,958 General and administrative expenses 18,672 15,330 15,967 ________ ________ ________ 360,142 331,642 313,115 ________ ________ ________ Income from operations 58,882 59,050 54,642 Interest expense (1,749) - - Other income, net 1,805 1,385 1,574 ________ ________ ________ Income before income taxes and cumulative effect of change in method of accounting for income taxes 58,938 60,435 56,216 Provision for income taxes (Note 6): Current 21,750 18,909 20,401 Deferred 173 3,754 286 ________ ________ ________ 21,923 22,663 20,687 ________ ________ ________ Income before cumulative effect of change in method of accounting for income taxes 37,015 37,772 35,529 Cumulative effect as of August 31, 1993 of change in method of accounting for income taxes (Note 6) - 1,563 - ________ ________ ________ Net income $ 37,015 $ 39,335 $ 35,529 ________ ________ ________ Earnings per share: Income before cumulative effect of change in method of accounting for income taxes $ 1.55 $ 1.45 $ 1.31 Cumulative effect of change in method of accounting for income taxes - .06 - ________ ________ ________ Net income per share (Note 9) $ 1.55 $ 1.51 $ 1.31 ________ ________ ________ See accompanying notes. Luby's Cafeterias, Inc. 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, 1992 27,403 $8,769 (270) $ (4,252) $26,945 $185,789 $217,251 Net income for the year - - - - - 35,529 35,529 Common stock issued under stock option plan, net of shares tendered in partial payment - - 113 1,605 92 (2) 1,695 Cash dividends, $.555 per share - - - - - (15,102) (15,102) Purchases of treasury stock - - (19) (425) - - (425) _______ ______ ______ _______ _______ _______ _______ Balance at August 31, 1993 27,403 8,769 (176) (3,072) 27,037 206,214 238,948 Net income for the year - - - - - 39,335 39,335 Common stock issued under stock option plan, net of shares tendered in partial payment - - 159 3,360 (92) (744) 2,524 Cash dividends, $.615 per share - - - - - (15,791) (15,791) Purchases of treasury stock - - (2,268) (51,490) - - (51,490) _______ ______ ______ _______ _______ _______ _______ Balance at August 31, 1994 27,403 8,769 (2,285) (51,202) 26,945 229,014 213,526 Net income for the year - - - - - 37,015 37,015 Common stock issued under employee bene- fit plans, net of shares tendered in partial payment - - 195 4,395 - (1,086) 3,309 Cash dividends, $.675 per share - - - - - (15,970) (15,970) Purchases of treasury stock - - (2,000) (45,176) - - (45,176) _______ ______ ______ _______ _______ _______ _______ Balance at August 31, 1995 27,403 $8,769 (4,090) $(91,983) $26,945 $248,973 $192,704 _______ ______ ______ _______ _______ _______ _______ See accompanying notes. Luby's Cafeterias, Inc. Statements of Cash Flows Years Ended August 31 1995 1994 1993 ________ ________ ________ (Thousands of dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 37,015 $ 39,335 $ 35,529 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,417 15,700 15,415 Cumulative effect of change in method of accounting - (1,563) - (Gain) loss on disposal of land held for future use (106) 69 - (Gain) loss on disposal of property, plant, and equipment (313) 23 - ________ ________ ________ Cash provided by operating activities before changes in operating assets and liabilities 53,013 53,564 50,944 Changes in operating assets and liabilities: (Increase) decrease in trade accounts and other receivables (36) 327 (361) (Increase) decrease in food and supply inventories (183) (425) 216 (Increase) in prepaid expenses (9) (373) (214) (Increase) in other assets (353) (460) (153) Increase (decrease) in accounts payable - trade 1,368 (87) 2,033 Increase (decrease) in accrued expenses and other liabilities 3,082 (4,832) 2,678 Increase (decrease) in income taxes payable (479) 157 (210) Increase (decrease) in deferred income taxes and other credits (5) 4,275 457 _______ ________ ________ Net cash provided by operating activities 56,398 52,146 55,390 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposal of land held for future use 495 955 - Proceeds from disposal of property, plant, and equipment 474 182 162 Purchases of land held for future use (7,531) (3,470) (512) Purchases of property, plant, and equipment (29,715) (26,252) (17,771) _______ ________ ________ Net cash used in investing activities (36,277) (28,585) (18,121) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common under stock option plans 3,196 2,524 1,695 Net proceeds from short-term borrowings 40,000 17,000 - Principal payments of long-term debt - - (1,847) Purchases of treasury stock (45,916) (50,750) (425) Dividends paid (15,918) (15,731) (14,681) _______ _______ _______ Net cash used in financing activities (18,638) (46,957) (15,258) _______ _______ _______ Net increase (decrease) in cash and cash equivalents 1,483 (23,396) 22,011 Cash and cash equivalents at beginning of year 10,909 34,305 12,294 ________ ________ ________ Cash and cash equivalents at end of year $ 12,392 $ 10,909 $ 34,305 ________ ________ ________ See accompanying notes. Luby's Cafeterias, Inc. Notes to Financial Statements August 31, 1995, 1994, and 1993 1. Significant Accounting Policies Inventories The food and supply inventories are stated at the lower of cost (first-in, first-out) or market. Depreciation and Amortization Luby's Cafeterias, Inc. (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. 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. 2. Property, Plant, and Equipment The cost and accumulated depreciation of property, plant, and equipment at August 31, 1995 and 1994, together with the related estimated useful lives used in computing depreciation and amortization, are reflected below: Estimated 1995 1994 Useful Lives ________ ________ _______________ (Thousands of dollars) Land $ 66,405 $ 58,352 - Cafeteria equipment and furnishings 106,540 99,867 3 to 10 years Buildings 181,389 166,287 20 to 40 years Leasehold and leasehold improvements 43,752 41,104 Term of leases Office furniture and equipment 2,271 1,862 5 to 10 years Transportation equipment 674 655 5 years Construction in progress 9,225 5,899 - ________ ________ 410,256 374,026 Less accumulated depreciation and amortization 131,099 116,194 ________ ________ $279,157 $257,832 ________ ________ Total interest expense incurred for 1995, 1994, and 1993 was $2,644,000, $288,000, and $327,000, respectively, which approximated the amount paid in each year. In 1994 and 1993, substantially all of these amounts were capitalized on qualifying properties. In 1995, $895,000 was capitalized on qualifying properties. 3. Debt The Company has a $112,000,000 credit facility with a bank. As part of this credit agreement, the Company has a $100,000,000 line-of-credit which expires in December 1995. As of August 31, 1995, the balance outstanding was $57,000,000, and $61,000,000 was the maximum amount outstanding during the period. The average amount outstanding during the year and the weighted average interest rate based on the number of days outstanding were $40,400,000 and 6.4%, respectively. The credit facility also provides a maximum commitment for letters of credit of $12,000,000. At August 31, 1995, letters of credit of approximately $10,379,000 have been issued as security for the payment of insurance obligations classified as accrued expenses on the balance sheet. 4. Leases The Company conducts a major part of its operations from facilities which are leased under noncancelable lease agreements. Most of the leases are for periods of ten to 25 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 30 years. Annual future minimum lease payments under noncancelable operating leases as of August 31, 1995, are as follows: (Thousands of dollars) Years ending August 31: 1996 $ 5,687 1997 5,716 1998 5,641 1999 5,584 2000 5,397 Thereafter 46,603 __________ Total minimum lease payments $ 74,628 __________ Total rent expense for operating leases for the years ended August 31, 1995, 1994, and 1993 was as follows: 1995 1994 1993 ________ ________ ________ (Thousands of dollars) Minimum rentals $ 5,477 $ 5,141 $ 4,850 Contingent rentals 1,229 1,436 1,380 ________ ________ ________ $ 6,706 $ 6,577 $ 6,230 ________ ________ ________ 5. 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 current and future distributions under the plans amounted to $431,000, $1,481,000, and $1,098,000 in 1995, 1994, and 1993, respectively. No shares of common stock were issued under the plans during the two-year period ended August 31, 1994. During the year ended August 31, 1995, 4,820 shares of common stock were issued under the plans out of treasury stock. Stock Option Plans The Company had an Employee Stock Option Plan for executive and other key salaried employees. Under the terms of the stock option plan, nonqualified options and incentive stock options totaling 225,000 shares of the Company's common stock could be granted at prices not less than 100% of fair market value at date of grant. Options were exercisable for such periods as the Compensation Committee determined, but not for more than ten years from date of grant. All options outstanding under this plan either expired or were exercised as of August 31, 1995. In 1990 the Company adopted a new Management Incentive Stock Plan to replace the current Employee Stock Option Plan and to provide for market-based incentive awards, including stock options, stock appreciation rights, restricted stock, and performance share awards. Under the terms of the Management Incentive Stock Plan, nonqualified options and incentive stock options totaling 2,700,000 shares of the Company's common stock are reserved for grants to the officer group, certain administrative personnel, and cafeteria management personnel. 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 seven years. The plan provides for various vesting methods, depending upon the category of personnel. Following is a summary of activity in the stock option plans for the three years ended August 31, 1995, 1994, and 1993: Common Option Price Shares Options Options Per Share Reserved Outstanding Exercisable ________________ _________ ___________ ___________ Balances - August 31, 1992 $14.83 to $18.09 2,806,413 1,990,967 225,502 Granted 16.50 to 23.25 - 218,950 - Became exercisable 15.00 to 17.88 - - 210,531 Cancelled or expired 15.00 to 23.25 - (182,029) (71,880) Exercised 14.83 to 17.88 (151,719) (151,719) (151,719) _________ _________ ________ Balances - August 31, 1993 14.83 to 23.25 2,654,694 1,876,169 212,434 Granted 21.75 to 21.75 - 370,725 - Became exercisable 15.00 to 23.25 - - 246,327 Cancelled or expired 15.00 to 23.25 - (139,294) (41,633) Exercised 14.83 to 17.88 (191,366) (191,366) (191,366) _________ _________ _______ Balances - August 31, 1994 15.00 to 23.25 2,463,328 1,916,234 225,762 Granted 22.75 to 23.75 - 136,100 - Became exercisable 15.00 to 23.75 - - 582,379 Cancelled or expired 15.00 to 23.75 - (95,467) (43,552) Exercised 15.00 to 21.75 (209,753) (209,753) (209,753) _________ _________ ________ Balances - August 31, 1995 $15.00 to $23.75 2,253,575 1,747,114 554,836 _________ _________ ________ Deferred Compensation Deferred compensation agreements exist for several key management employees, all of whom are officers and/or directors. Under the agreements, the Company is obligated to provide for each such employee or his beneficiaries, during a period of ten years after the employee's death, disability, or retirement, annual benefits ranging from $15,500 to $43,400. The estimated present value of future benefits to be paid is being accrued over the period from the effective date of the agreements until the expected retirement dates of the participants. The net expense incurred for this plan for the years ended August 31, 1995, 1994, and 1993 amounted to $79,000, $78,000, and $76,000, 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. The Company's annual contribution to the plan amounted to $4,888,000, $1,886,000, and $2,942,000 for 1995, 1994, and 1993, respectively. 6. Income Taxes Effective September 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes." Under Statement No. 109, the liability method is used in accounting for income taxes. 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. Prior to the adoption of Statement No. 109, income tax expense was determined using the deferred method. Deferred tax expense was based on items of income and expense that were reported in different years in the financial statements and tax returns and were measured at the tax rate in effect in the year the difference originated. As permitted by Statement No. 109, the Company has elected not to restate the financial statements of any prior years. The effect of the change on pretax income from continuing operations for the years ended August 31, 1994 and 1993, was not material; however, the cumulative effect of the change increased net income in fiscal 1994 by $1,563,000, or $.06 per share. The tax effect of temporary differences results in deferred income tax assets and liabilities as of August 31 as follows: 1995 1994 ________ ___________ (Thousands of dollars) Deferred tax liabilities: Amortization of capitalized interest $ 522 $ 546 Depreciation and amortization 17,566 17,263 Deferred compensation (766) (908) Other 378 256 _______ _______ Total deferred tax liabilites 17,700 17,157 Deferred tax asset: Workers' compensation insurance 629 259 _______ _______ Net deferred tax liabilities $17,071 $16,898 _______ _______ The components of deferred income tax expense for 1993 as recorded prior to the adoption of Statement No. 109 are as follows: 1993 ______ (Thousands of dollars) Workers' compensation insurance $ (551) Amortization of capitalized interest 87 Depreciation and amortization 554 Deferred compensation (69) Prepaid expense 97 Property taxes 158 Other 10 ______ $ 286 ______ The Omnibus Budget Reconciliation Act of 1993 increased the federal tax rate to 35% beginning January 1, 1993. Accordingly, a blend of the old and new rates is used for the tax year ended August 31, 1993. The reconciliation of the provision for income taxes to the expected income tax expense (computed using the statutory tax rate) is as follows: 1995 1994 1993 Amount % Amount % Amount % _______ ____ _______ ____ _______ ____ (Thousands of dollars and as a percent of pretax income) Normally expected income tax expense $20,628 35.0% $21,152 35.0% $19,490 34.7% State income taxes 1,616 2.7 1,625 2.7 1,579 2.8 Jobs tax credits (151) (.2) (260) (.4) (392) (.7) Other differences (170) (.3) 146 .2 10 - _______ ____ _______ ____ ______ ____ $ 21,923 37.2% $ 22,663 37.5% $20,687 36.8% _______ ____ _______ ____ ______ ____ Cash payments for income taxes for 1995, 1994, and 1993 were $22,229,000, $18,752,000, and $20,611,000, respectively. 7. Commitments At August 31, 1995, the Company had ten cafeterias under construction. The aggregate unexpended costs under the construction contracts were approximately $7,952,000. The Company has unconditionally guaranteed a $2,000,000 loan under a line of credit for an unrelated limited partnership in exchange for advertising rights and a participation in future profits of the venture. 8. 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. During fiscal 1995 the Company purchased 2,000,000 shares of its common stock at a cost of $45,176,000, which are being held as treasury stock. 9. Per Share Information The weighted average number of shares used in the net income per share computation was 23,908,087 for 1995, 25,981,840 for 1994, and 27,194,502 for 1993. 10. Business Segments The Company operates exclusively in the domestic cafeteria business. 11. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities at August 31 consisted of: 1995 1994 _______ _______ (Thousands of dollars) Salaries and bonuses $ 7,542 $ 7,866 Rent 841 922 Taxes, other than income 4,886 4,847 Profit sharing plan 4,888 1,886 Insurance 6,417 6,136 Other 321 270 _______ _______ $24,895 $21,927 _______ _______ 12. Quarterly Financial Information (Unaudited) The following is a summary of quarterly unaudited financial information for 1995 and 1994: Three Months Ended November 30, February 28, May 31, August 31, 1994 1995 1995 1995 ________ ________ ________ _________ (Thousands of dollars except per share data) Sales $101,446 $100,570 $106,899 $110,109 Gross profit 48,361 48,446 51,523 53,131 Net income 8,683 8,582 9,907 9,843 Net income per share .35 .36 .42 .42 Three Months Ended November 30, February 28, May 31, August 31, 1993 1994 1994 1994 ________ ________ ________ _________ (Thousands of dollars except per share data) Sales $94,166 $93,719 $101,060 $101,747 Gross profit 44,197 44,815 49,670 49,244 Income before cumulative effect of change in method of accounting (a) 8,605 8,581 10,386 10,200 Net income 10,168 8,581 10,386 10,200 Income per share before cumulative effect of change in method of accounting (a) .32 .33 .40 .40 Net income per share .38 .33 .40 .40 (a) See Note 6 for information on the cumulative effect of the change in method of accounting. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. 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 1996 annual meeting of shareholders appearing therein under the captions "Election of Directors" and "Information Concerning Directors and Executive Officers." 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 1996 annual meeting of shareholders appearing therein under the caption "Executive Compensation." 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 1996 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 1996 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: Balance sheets at August 31, 1995 and 1994 Statements of income for each of the three years in the period ended August 31, 1995 Statements of shareholders' equity for each of the three years in the period ended August 31, 1995 Statements of cash flows for each of the three years in the period ended August 31, 1995 Notes to 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: 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., a Delaware corporation (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, 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) - Promissory Note (Loan Agreement) dated September 30, 1995, in favor on NationsBank of Texas, N.A., in the maximum amount of $100,000,000. 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) - 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(c) - Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(e) to the Company's Annual Report of Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference). 10(d) - 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(e) - 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(f) - 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(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) - 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). 11 - Statement re computation of per share earnings. 99(a) - Consent of Ernst & Young LLP. 99(b) - Consent of Ernst & Young LLP. (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 21, 1995 LUBY'S CAFETERIAS, INC. (Registrant) By: RALPH ERBEN ___________________________ Ralph Erben, President and 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 JOHN B. LAHOURCADE John B. Lahourcade, Chairman of _______________________________ the Board and Director November 21, 1995 RALPH ERBEN Ralph Erben, President, Chief _______________________________ Executive Officer, and Director November 21, 1995 JOHN E. CURTIS, JR. John E. Curtis, Jr., _______________________________ Executive Vice President, Chief November 21, 1995 Financial Officer, and Director WILLIAM E. ROBSON William E. Robson, Executive Vice ________________________________ President and Director November 21, 1995 RONALD E. RIEMENSCHNEIDER Ronald E. Riemenschneider, Vice ________________________________ President, Treasurer, and November 21, 1995 Principal Accounting Officer LAURO F. CAVAZOS Laura F. Cavazos, Director ________________________________ November 21, 1995 DAVID B. DAVISS David B. Daviss, Director ________________________________ November 21, 1995 ROGER R. HEMMINGHAUS Roger R. Hemminghaus, Director ________________________________ November 21, 1995 WALTER J. SALMON Walter J. Salmon, Director ________________________________ November 21, 1995 GEORGE H. WENGLEIN George H. Wenglein, Director ________________________________ November 21, 1995 JOANNE WINIK Joanne Winik, Director ________________________________ November 21, 1995 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., a Delaware corporation (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, 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) - Promissory Note (Loan Agreement) dated September 30, 1995, in favor of NationsBank of Texas, N.A., in the maximum amount of $100,000,000. 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) - 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(c) - 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(d) - 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(e) - 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(f) - 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(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) - 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). 11 - Statement re computation of per share earnings. 99(a) - Consent of Ernst & Young LLP. 99(b) - Consent of Ernst & Young LLP.