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 February 29, 1996
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: 23,612,081 shares outstanding as of February 29, 1996
(exclusive of 3,790,986 treasury shares)
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LUBY'S CAFETERIAS, INC.
STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
____ ____ ____ ____
(Amounts in thousands except per share data)
Sales $108,835 $100,570 $217,172 $202,016
Costs and expenses:
Cost of food 26,207 24,709 53,213 49,981
Payroll and related costs 29,994 27,415 60,298 55,228
Occupancy and other operating expenses 32,171 30,024 64,343 59,986
General and administrative expenses 5,291 4,781 10,264 9,550
________ ________ ________ ________
93,663 86,929 188,118 174,745
________ ________ ________ ________
Income from operations 15,172 13,641 29,054 27,271
Interest expense (671) (369) (1,199) (449)
Other income, net 373 459 723 802
________ ________ ________ ________
Income before income taxes 14,874 13,731 28,578 27,624
Provision for income taxes 5,552 5,149 10,691 10,359
________ ________ ________ ________
Net income $ 9,322 $ 8,582 $ 17,887 $ 17,265
________ ________ ________ ________
Net income per share $.40 $.36 $.77 $.71
________ ________ ________ ________
Cash dividends per share $.18 $.165 $.36 $.33
________ ________ ________ ________
Average number of shares outstanding 23,432 24,132 23,377 24,456
See accompanying notes.
/TABLE
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S CAFETERIAS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
February 29, August 31,
1996 1995
____ ____
(Thousands of dollars)
ASSETS
Current assets:
Cash and cash equivalents $ 1,502 $ 12,392
Trade accounts and other receivables 439 311
Food and supply inventories 3,260 4,034
Prepaid expenses 3,434 2,849
Deferred income taxes 634 629
________ ________
Total current assets 9,269 20,215
Investments and other assets - at cost 13,004 13,008
Property, plant, and equipment - at cost, net 291,438 279,157
________ ________
$313,711 $312,380
________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ --- $ 57,000
Accounts payable - trade 8,229 10,969
Dividends payable 4,250 4,196
Accrued expenses and other liabilities 18,063 24,895
Income taxes payable 2,267 2,471
________ ________
Total current liabilities 32,809 99,531
Long-term debt 53,000 ---
Deferred income taxes and other credits 20,360 20,145
Shareholders' equity:
Common stock 8,769 8,769
Paid-in capital 26,945 26,945
Retained earnings 257,071 248,973
Less cost of treasury stock (85,243) (91,983)
________ ________
Total shareholders' equity 207,542 192,704
________ ________
$313,711 $312,380
________ ________
See accompanying notes.
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S CAFETERIAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
February 29, February 28,
1996 1995
____ ____
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $17,887 $17,265
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,674 8,120
Decrease in accrued expenses and other liabilities (6,610) (3,593)
Other (2,732) (2,754)
_______ _______
Net cash provided by operating activities 17,219 19,038
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of land held for future use --- 495
Purchases of land held for future use (3,999) (4,808)
Purchases of property, plant, and equipment (16,605) (10,904)
_______ _______
Net cash used in investing activities (20,604) (15,217)
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under
stock option plan 4,891 2,892
Net proceeds (payments) of short-term borrowings (57,000) 32,000
Net proceeds from long-term debt 53,000 ---
Purchases of treasury stock --- (35,566)
Dividends paid (8,396) (8,167)
_______ _______
Net cash used in financing activities (7,505) (8,841)
_______ _______
Net decrease in cash and cash equivalents (10,890) (5,020)
Cash and cash equivalents at beginning of period 12,392 10,909
_______ _______
Cash and cash equivalents at end of period $ 1,502 $ 5,889
_______ _______
See accompanying notes.
/TABLE
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S CAFETERIAS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For the Six Months Ended February 29, 1996 and February 28, 1995
(UNAUDITED)
Total
Common Stock Paid-in Retained Shareholders'
Issued Treasury Capital Earnings Equity
______ ________ _______ ________ ____________
(Thousands of dollars)
Balance at August 31, 1994 $8,769 $(51,202) $26,945 $229,014 $213,526
Net income for the period --- --- --- 17,265 17,265
Common stock issued under
employee benefit plans, net
of shares tendered in partial
payment --- 3,994 --- (990) 3,004
Cash dividends --- --- --- (7,929) (7,929)
Purchases of treasury stock --- (37,219) --- --- (37,219)
______ ________ _______ ________ ________
Balance at February 28, 1995 $8,769 $(84,427) $26,945 $237,360 $188,647
______ ________ _______ ________ ________
Balance at August 31, 1995 $8,769 $(91,983) $26,945 $248,973 $192,704
Net income for the period --- --- --- 17,887 17,887
Common stock issued under
employee benefit plans, net
of shares tendered in partial
payment and including tax
benefits --- 6,740 --- (1,339) 5,401
Cash dividends --- --- --- (8,450) (8,450)
______ ________ _______ ________ ________
Balance at February 29, 1996 $8,769 $(85,243) $26,945 $257,071 $207,542
______ ________ _______ ________ ________
See accompanying notes.
/TABLE
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
LUBY'S CAFETERIAS, INC.
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
(UNAUDITED)
Note 1: 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.
Note 2: Certain reclassifications have been made to prior year amounts to
conform to current year presentation.
Note 3: The Company entered into a new $100 million credit facility with a
syndication of four banks. As part of this credit facility, the
Company has a revolving credit agreement which allows borrowings for
varying periods through February 27, 2001, at the lower of the prime
rate or other rate options available at the time of borrowing. The
credit facility includes a maximum commitment for letters of credit of
$20 million. The Company pays a facility fee of .1% on the total
commitment. The credit facility contains business covenants which,
among other things, impose certain financial restrictions on the
Company relating primarily to leverage and net worth. As of
February 29, 1996, the balance outstanding under the revolving credit
agreement was $53,000,000 at an interest rate of 5.54%.
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 $10,890,000 from the end of the
preceding fiscal year to February 29, 1996. All capital expenditures for
fiscal 1996 are being funded from cash flows from operations, cash
equivalents, short-term borrowings, and long-term debt. Capital expenditures
for the six months ended February 29, 1996, were $20,604,000. As of
February 29, 1996, the Company owned 16 undeveloped land sites and nine land
sites on which cafeterias are under construction.
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. To complete
the treasury stock purchases and fund capital expenditures, the Company
required external financing and borrowed funds under a $100,000,000
line-of-credit agreement. During February 1996, the Company entered into a
new $100 million credit facility with a syndication of four banks. As part of
this credit facility, the Company has a revolving credit agreement which
allows borrowings for varying periods through February 27, 2001, at the lower
of the prime rate or other rate options available at the time of borrowing.
As of February 29, 1996, the amount outstanding under this revolving credit
agreement was $53,000,000. 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 February 29, 1996 compared to the quarter ended February 28,
1995.
______________________________________________________________________________
Sales increased $8,265,000, or 8.2%, due to the addition of eight new
cafeterias in fiscal 1996 and 11 in fiscal 1995, and due to an increase in
average sales volume at cafeterias opened over one year.
Cost of food increased $1,498,000, or 6.1%, due primarily to the increase in
sales and was offset by improved margins from the price increase on the Lu Ann
Platter, which took effect on December 1, 1995. Payroll and related costs
increased $2,579,000, or 9.4%, 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. Occupancy and other
operating expenses increased $2,147,000, or 7.2%, due primarily to the
increase in sales; the opening of four new cafeterias; and higher managers'
salaries, which are based on the profitability of the cafeterias. General and
administrative expenses increased $510,000, or 10.7%, due primarily to two
additional area vice president positions, higher manager trainee salaries, and
higher moving expenses, all associated with the increased number of new store
openings.
Interest expense increased $302,000 due to higher borrowings under the
line-of-credit agreement.
Six months ended February 29, 1996 compared to the six months ended
February 28, 1995.
______________________________________________________________________________
Sales increased $15,156,000, or 7.5%, due primarily to the addition of eight
new cafeterias in fiscal 1996 and 11 in fiscal 1995, and due to an increase in
average sales volume at cafeterias opened over one year.
Cost of food increased $3,232,000, or 6.5%, due primarily to the increase in
sales and was offset by improved margins from price increases. Payroll and
related costs increased $5,070,000, or 9.2%, 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. Occupancy
and other operating expenses increased $4,357,000, or 7.3%, due primarily to
the increase in sales; the opening of eight new cafeterias; and higher
managers' salaries, which are based on the profitability of the cafeterias.
General and administrative expenses increased $714,000, or 7.5%, due primarily
to additional corporate expenses associated with the increased number of new
store openings as discussed above.
Interest expense increased $750,000 due to higher borrowings under the
line-of-credit agreement.
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 1996 annual meeting of shareholders of Luby's Cafeterias, Inc. was
held on January 12, 1996.
(b) The directors elected at the meeting were David B. Daviss, Roger R.
Hemminghaus, and William E. Robson. The other directors whose terms
continued after the meeting are Lauro F. Cavazos, John E. Curtis, Jr.,
Ralph Erben, John B. Lahourcade, Walter J. Salmon, George H. Wenglein,
and Joanne Winik.
(c) The matters voted upon at the meeting were (i) the election of three
directors to serve until the 1999 annual meeting of shareholders and
(ii) the approval of the appointment of Ernst & Young LLP as auditors
for the 1996 fiscal year.
(d) With respect to the election of directors, the results of the voting
were:
Shares Voted Shares Broker
Nominee For Abstained Nonvotes
David B. Daviss 19,877,086 871,882 -0-
Roger R. Hemminghaus 20,627,828 121,140 -0-
George H. Wenglein 20,629,275 119,693 -0-
(e) With respect to approval of the appointment of auditors, the results
of the voting were:
Shares voted "for" 20,688,253
Shares voted "against" 15,722
Shares abstaining 44,993
Broker nonvotes -0-
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., 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) Credit Agreement dated February 27, 1996, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank of Texas,
N.A.
10(a) Form of Deferred Compensation Agreement entered
into between Luby's Cafeterias, Inc. and various officers
(filed as Exhibit 10(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1981, and
incorporated herein by reference).
10(b) 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
Cafeteris, 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).
10(i) Employment Contract dated January 12, 1996, between Luby's
Cafeterias, Inc. and John B. Lahourcade.
11 Statement re computation of per share earnings.
(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)
By: Ralph Erben
_____________________________
Ralph Erben
Chairman of the Board and
Chief Executive Officer
By: John E. Curtis, Jr.
_____________________________
John E. Curtis, Jr.
President,
Chief Operating Officer, and
Chief Financial Officer
Dated: April 12, 1996
EXHIBIT INDEX
Exhibit 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) Credit Agreement dated February 27, 1996, among Luby's
Cafeterias, Inc., Certain Lenders, and NationsBank
of Texas, N.A.
10(a) Form of Deferred Compensation Agreement entered into
between Luby's Cafeterias, Inc. and various officers
(filed as Exhibit 10(b) to the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 1981,
and incorporated herein by reference).
10(b) 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 Cafeteris, 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).
10(i) Employment Contract dated January 12, 1996, between
Luby's Cafeterias, Inc. and John B. Lahourcade.
11 Statement re computation of per share earnings.