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, 1994
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, 1994, was
approximately $535,103,656 (based upon the assumption that directors and
officers are the only affiliates).
As of November 15, 1994, there were 24,554,348 shares of the registrant's
Common Stock outstanding, exclusive of 2,848,719 treasury shares.
Portions of the following documents are incorporated by reference into the
designated parts of this Form 10-K: proxy statement relating to 1995 annual
meeting of shareholders (in Part III).<PAGE>
Item 1. Business.
Luby's Cafeterias, Inc. (the "Company") operates 177 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 177 cafeterias operated by the Company, 99 are
at locations owned by the Company and 78 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, 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 under the direction of
Joyce E. Rothenberg, who was elected vice president-marketing in 1992. Based
on favorable results of radio and television advertising tests, the marketing
budget increased to approximately 1.7% of sales for fiscal 1994 and will
increase to approximately two percent of sales for fiscal 1995, primarily for
increased radio and television advertising.
The Company intends to continue expending the majority of the market
budget on television and radio advertising, as well as supporting the
increased local marketing activities of the individual cafeterias. During
fiscal 1994 the Company conducted its first cooperative promotion, joining
forces with Southwest Airlines, Sea World of Texas, and Karena Hotels of Texas
to target families with children. The Company plans to develop additional
cooperative promotions for fiscal 1995.
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
takeout orders, and most of them have separate food to go entrances. Takeout
orders accounted for approximately nine percent of sales in fiscal 1994.
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 177
cafeteria managers employed by the Company, 149 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 is 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 in its training facilities in San
Antonio. The training program is approximately four and one-half months in
duration. Management personnel receive two weeks of classroom instruction and
four months of practical training in operating cafeterias.
As of August 31, 1994, the Company had approximately 10,100 employees,
consisting of 9,435 nonmanagement cafeteria personnel; 547 cafeteria managers,
associate managers and assistant managers; and 118 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, 1994, the Company opened eight
new units and relocated three units. The new units are located in
Leavenworth, Kansas; Shreveport, Louisiana; Morristown, Tennessee; and
Grapevine, Houston, San Antonio, San Marcos, and Temple, Texas. The relocated
units are in Dallas, Harlingen, and San Antonio, Texas. Since August 31,
1994, the Company has opened one new unit in Hattiesburg, Mississippi.
Ten new cafeterias are under construction in North Little Rock, Arkansas;
Mission, Kansas; Nashville and Oak Ridge, Tennessee; and Beaumont, Fort Worth,
Nassau Bay, Plano, San Antonio, and Weslaco, Texas. The new unit under
construction in Beaumont is to be a relocation of an existing unit. During
fiscal 1995 the Company expects to open 14 new cafeterias plus the unit to be
relocated.
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. A new building prototype has been developed and utilized for all of the
fiscal 1994 openings, which reduced the initial investment in a typical new
location to approximately $2,350,000.
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 good 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 99 of its
cafeterias are located. In addition, the Company owns several cafeteria sites
being held for future development.
Of the 177 cafeterias operated by the Company, 78 are at locations held
under leases. 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 78 cafeteria leases, the current terms of 14
expire from 1994 to 1999, 24 from 2000 to 2004, and 40 thereafter. Fifty-nine
of the leases can be extended beyond their current terms at the Company's
option.
Of the 177 cafeterias operated by the Company, 46 are in regional
shopping malls. 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.
<PAGE>
The 177 cafeterias operated by the Company are located
(locations are in Texas except as otherwise indicated):
Number Number
Location of Units Location of Units
Abilene 1 Lewisville 1
Albuquerque, New Mexico 2 Little Rock, Arkansas 1
Amarillo 2 Longview 1
Arlington 2 Lubbock 1
Austin 6 Lufkin 1
Bartlesville, Oklahoma 1 McAllen 2
Baytown 1 Memphis, Tennessee 3
Beaumont 1 Mesa, Arizona 2
Bedford 1 Mesquite 1
Bellmead 1 Midland 1
Bossier City, Louisiana 1 Mission 1
Broken Arrow, Oklahoma 1 Morristown, Tennessee 1
Brownsville 2 Murfreesboro, Tennessee 1
Bryan/College Station 1 Muskogee, Oklahoma 1
Carrollton 1 Nashville, Tennessee 1
Chandler, Arizona 1 New Braunfels 1
Clearwater, Florida 1 Odessa 1
Conroe 1 Oklahoma City, Oklahoma 3
Corpus Christi 2 Pasadena 1
Dallas 8 Pharr 1
Deer Park 1 Phoenix, Arizona 4
Denton 1 Pinellas Park, Florida 1
DeSoto 1 Plano 1
Duncanville 1 Port Arthur 2
El Paso 6 Richardson 1
Fayetteville, Arkansas 1 Round Rock 1
Fort Smith, Arkansas 1 San Angelo 1
Fort Worth 6 San Antonio 18
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 25 Sugar Land 1
Humble 1 Tampa, Florida 2
Independence, Missouri 1 Temple 1
Irving/Las Colinas 1 Texarkana 1
Kansas City, Missouri 1 The Woodlands 1
Killeen 1 Topeka, Kansas 1
Kingwood 1 Tucson, Arizona 2
Lake Jackson 1 Tulsa, Oklahoma 2
Laredo 1 Tyler 2
Las Cruces, New Mexico 1 Victoria 1
Leavenworth, Kansas 1 Waco 1
<PAGE>
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, 1994, 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 1995 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 70
the Executive Committee, and
Director; Chief Executive Officer
1984-90.
Ralph Erben 1978 President, Chief Executive Officer 63
(since 1990), member of the
Executive Committee, and Director;
Chief Operating Officer 1988-90.
John E. Curtis, Jr. 1982 Senior Vice President and Chief 47
Financial Officer, Director (since
1991), and Treasurer (since 1990).
William E. Robson 1982 Senior Vice President-Operations 53
(since 1992), Senior Vice
President-Operations Development
prior to 1992, and Director (since
1993).
Clyde C. Hays III 1985 Vice President-Operations (since 43
1993); Area Vice President prior
to 1993.
Jimmy W. Woliver 1984 Vice President-Operations. 57
Ronald E. Riemenschneider 1990 Controller (since 1990); Director 36
of Internal Audit prior thereto.
James R. Hale 1980 Secretary; Member of law firm of 65
Cauthorn Hale Hornberger Fuller
Sheehan & Becker Incorporated
since 1992; member of law firm of
Cox & Smith Incorporated prior
thereto.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
Stock Prices and Dividends
The Company's common stock is traded on the New York Stock Exchange under
the symbol LUB. The following table sets forth, for the last two fiscal
years, the high and low sales prices on the New York Stock Exchange from the
consolidated transaction reporting system and the per share cash dividends
declared on the common stock.
Fiscal Quarter Quarterly
Ended High Low Cash Dividend
_________________ ______ ______ ______________
November 30, 1992 $20.00 $15.50 $.135
February 28, 1993 23.88 19.00 $.135
May 31, 1993 24.00 19.88 $.135
August 31, 1993 25.88 19.75 $.15
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
As of September 9, 1994, there were approximately 4,218 record holders of
the Company's common stock.
Item 6. Selected Financial Data.
<TABLE>
Five Year Summary of Operations
(Thousands of dollars except per share data)
Years ended August 31,
<CAPTION>
1994 1993 1992 1991 1990
________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C>
Sales $390,692 $367,757 $346,359 $328,236 $311,325
Costs and expenses:
Cost of food 98,223 92,957 86,507 83,273 80,455
Payroll and related costs 104,543 99,233 95,963 90,612 84,456
Occupancy and other operating
expenses 113,546 104,958 99,590 90,746 83,860
General and administrative
expenses 15,330 15,967 15,101 16,348 15,614
________ ________ ________ ________ ________
331,642 313,115 297,161 280,979 264,385
Income from operations 59,050 54,642 49,198 47,257 46,940
Other income, net 1,385 1,574 1,319 1,591 1,572
________ ________ ________ ________ ________
Income before income taxes
and accounting change 60,435 56,216 50,517 48,848 48,512
Provision for income taxes 22,663 20,687 17,924 16,502 16,412
________ ________ ________ ________ ________
Income before accounting
change 37,772 35,529 32,593 32,346 32,100
Cumulative effect of change in
accounting for income taxes 1,563 - - - -
________ ________ ________ ________ ________
Net income (a) $ 39,335 $ 35,529 $ 32,593 $ 32,346 $ 32,100
Income per share before accounting
change (b) $ 1.45 $ 1.31 $ 1.19 $ 1.18 $ 1.17
Net income per common share (b) $ 1.51 $ 1.31 $ 1.19 $ 1.18 $ 1.17
Cash dividend declared per common
share (b) $ .62 $ .56 $ .51 $ .47 $ .44
At year-end:
Total assets $289,668 $302,099 $276,319 $260,704 $235,344
Long-term debt - - $ 1,384 $ 1,851 $ 2,328
Number of cafeterias 176 168 162 150 137
<FN>
(a) Net income in 1994 includes the cumulative effect of change in accounting for income
taxes of $1,563, or $.06 per share.
(b) Per share data has been restated to reflect a 3-for-2 stock split effected in August
1990.
</TABLE>
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 1994 were $29,722,000, a 63%
increase from fiscal 1993. This increase in capital expenditures resulted in
part from the opening of eight new cafeterias in fiscal 1994 as compared to
six in fiscal 1993. The Company also purchased five sites as land held for
future use compared to one land site purchased during fiscal 1993. The
purchase of two cafeteria properties, one in Mission, Kansas, and one in
San Antonio, Texas, is also included in capital expenditures for fiscal 1994.
These two cafeterias will reopen in fiscal 1995 after extensive renovation.
Capital commitments budgeted for fiscal 1995 include the opening of
fifteen new cafeterias: nine on sites owned by the Company, two on land held
under long-term ground leases, and four in regional shopping malls. One of
these new cafeterias will be for the relocation of an existing unit located on
leased premises. Therefore, a net increase of fourteen cafeterias is
anticipated in fiscal 1995. 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, 1994, the Company owned 15 undeveloped cafeteria sites, and several
land site acquisitions were in varying stages of negotiation.
The Company generated cash from operations of $52,146,000 in fiscal 1994.
The Company had a balance of $17,000,000 outstanding at August 31, 1994, under
a $30,000,000 line-of-credit agreement with a bank. At August 31, 1994, the
Company had a working capital deficit of $38,228,000 which compares to the
prior year's working capital of $494,000. The working capital position
declined during fiscal 1994 due primarily to the decrease in cash and cash
equivalents of $23,396,000 and the short-term borrowings under the line of
credit to fund capital expenditures and treasury stock purchases.
During fiscal 1994 the Company purchased 2,268,300 shares of its common
stock at a cost of $51,490,000, which are being held as treasury stock. The
Board of Directors has authorized the repurchase of an additional 2,000,000
shares through December 31, 1995.
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 in the event such financing is required, are
adequate for its foreseeable needs.
Results of Operations
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. The Company expects this downward trend in workers'
compensation costs to stabilize during fiscal 1995. As a percent of sales,
workers' compensation costs in fiscal 1995 should remain level or increase
slightly over 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. During
fiscal 1995 the Company has budgeted advertising expense at 2% of sales, up
from 1.7% in fiscal 1994. 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. For fiscal 1995 the
Company estimates that its contribution to the profit sharing and retirement
plan as determined by the plan's provisions will increase by approximately
$2,500,000 over fiscal 1994.
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.
Fiscal 1993 Compared to Fiscal 1992
Sales increased $21,398,000, or 6%, due primarily to the addition of six
new cafeterias in fiscal 1993 and twelve cafeterias in fiscal 1992. The
average sales volume of cafeterias opened over one year increased to
$2,223,000 in fiscal 1993 from $2,217,000 in fiscal 1992. The increase
resulted from the implementation of new marketing programs and from improved
economies in some trade areas.
Cost of food increased $6,450,000, or 7%, due primarily to the increase
in sales. Payroll and related costs increased $3,270,000, or 3%, with the
opening of six new cafeterias. During the past three fiscal 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 1993. Occupancy and other operating expenses increased
$5,368,000, or 5%, due primarily to the increase in sales; the opening of six
new cafeterias; higher advertising expenditures; and higher managers'
salaries, which were based on the profitability of the cafeterias. General
and administrative expenses increased $866,000, or 6%, due primarily to higher
costs under employee benefit plans which were based on the earnings growth of
the Company.
The provision for income taxes increased $2,763,000, or 15%, due to
higher income from operations, the new Texas corporate income tax that was
effective January 1, 1992, and the new federal income tax rates that were
effective retroactively to January 1, 1993. The Company's effective income
tax rate increased from 35.5% in fiscal 1992 to 36.8% in fiscal 1993.
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. With the moderation of inflation from 1992 through
1994, increases in menu prices were less frequent than in previous periods.
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, 1994, 1993, and 1992
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, 1994 and 1993, and the related statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended August 31, 1994. 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, 1994 and 1993, and the results of its operations and its
cash flows for each of the three years in the period ended August 31, 1994, 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, 1994
Luby's Cafeterias, Inc.
Balance Sheets
August 31
1994 1993
________ _______
(Thousands of Dollars)
ASSETS
Current assets:
Cash and cash equivalents $ 10,909 $ 34,305
Trade accounts and other receivables 275 602
Food and supply inventories 3,851 3,426
Prepaid expenses 2,840 2,467
Deferred income taxes 259 3,018
________ ________
Total current assets 18,134 43,818
Investments and other assets - at cost:
Land held for future use 10,867 11,120
Other assets 2,835 2,375
________ ________
Total investments and other assets 13,702 13,495
Property, plant, and equipment - at cost, less
accumulated depreciation and amortization
(Note 2) 257,832 244,786
________ ________
Total assets $289,668 $302,099
________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings (Note 3) $ 17,000 $ -
Accounts payable - trade 10,341 9,688
Dividends payable 4,144 4,084
Accrued expenses and other liabilities (Note 11) 21,927 26,759
Income taxes payable 2,950 2,793
________ ________
Total current liabilities 56,362 43,324
Deferred income taxes and other credits 19,780 19,827
Commitments (Notes 4, 5, and 7) - -
Shareholders' equity (Notes 5 and 8):
Common stock, $.32 par value; authorized
100,000,000 shares in 1994 and 50,000,000
shares in 1993, issued 27,403,067 shares
in 1994 and 1993 8,769 8,769
Paid-in capital 26,945 27,037
Retained earnings 229,014 206,214
Less cost of treasury stock, 2,285,257
shares in 1994 and 175,959 shares in
1993 (51,202) (3,072)
________ ________
Total shareholders' equity 213,526 238,948
________ _________
Total liabilities and shareholders' equity $289,668 $302,099
________ ________
See accompanying notes.
Luby's Cafeterias, Inc.
Statements of Income
Years Ended August 31
1994 1993 1992
________ ________ ________
(Thousands of Dollars Except Per Share Data)
Sales $390,692 $367,757 $346,359
Costs and expenses:
Cost of food 98,223 92,957 86,507
Payroll and related costs 104,543 99,233 95,963
Occupancy and other operating
expenses 113,546 104,958 99,590
General and administrative expenses 15,330 15,967 15,101
________ ________ ________
331,642 313,115 297,161
________ ________ ________
Income from operations 59,050 54,642 49,198
Other income, net 1,385 1,574 1,319
________ _________ ________
Income before income taxes and
cumulative effect of change in method
of accounting for income taxes 60,435 56,216 50,517
Provision for income taxes (Note 6):
Current 18,909 20,401 17,202
Deferred 3,754 286 722
________ ________ ________
22,663 20,687 17,924
________ ________ ________
Income before cumulative effect of
change in method of accounting for
income taxes 37,772 35,529 32,593
Cumulative effect as of August 31,
1993 of change in method of
accounting for income taxes (Note 6) 1,563 - -
________ ________ ________
Net income $ 39,335 $ 35,529 $ 32,593
________ ________ ________
Earnings per share:
Income before cumulative effect of
change in method of accounting for
income taxes $ 1.45 $ 1.31 $ 1.19
Cumulative effect of change in
method of accounting for income
taxes .06 - -
________ ________ ________
Net income per share (Note 9) $ 1.51 $ 1.31 $ 1.19
________ ________ ________
See accompanying notes.
<PAGE>
<TABLE>
Luby's Cafeterias, Inc.
Statements of Shareholders' Equity
<CAPTION>
Common Stock Total
Issued Treasury Paid-In Retained Shareholders'
Shares Amount Shares Amount Capital Earnings Equity
______________________________________________________________________________________________
(Amounts in thousands except per share data)
______________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
August 31, 1991 27,398 $8,767 - $ - $26,896 $167,119 $202,782
Net income for the
year - - - - - 32,593 32,593
Common stock issued
under stock option
plan, net of shares
tendered in partial
payment 5 2 - - 49 - 51
Cash dividends,
$.51 per share - - - - - (13,923) (13,923)
Purchases of treasury
stock - - (270) (4,252) - - (4,252)
_______ ______ ______ _______ _______ _______ _______
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,
$.56 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,
$.62 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
_______ ______ ______ ________ _______ ________ ________
See accompanying notes.
</TABLE>
<PAGE>
Luby's Cafeterias, Inc.
Statements of Cash Flows
Years Ended August 31
1994 1993 1992
________ ________ ________
(Thousands of Dollars)
OPERATING ACTIVITIES
Net income $ 39,335 $ 35,529 $ 32,593
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 15,700 15,415 14,453
Cumulative effect of change in
method of accounting (1,563) - -
Loss on disposal of land held for
future use 69 - -
Loss on disposal of property, plant,
and equipment 23 - 24
________ ________ ________
Cash provided by operating
activities before changes in
operating assets and liabilities 53,564 50,944 47,070
Changes in operating assets and
liabilities:
(Increase) decrease in trade
accounts and other receivables 327 (361) (51)
(Increase) decrease in food and
supply inventories (425) 216 625
(Increase) decrease in prepaid
expenses (373) (214) 315
Increase in other assets (460) (153) (233)
Increase (decrease) in accounts
payable - trade (87) 2,033 (502)
Increase (decrease) in accrued
expenses and other liabilities (4,832) 2,678 (614)
Increase (decrease) in income
taxes payable 157 (210) (640)
Increase in deferred income taxes
and other credits 4,275 457 681
_______ ________ ________
Net cash provided by operating
activities 52,146 55,390 46,651
INVESTING ACTIVITIES
Proceeds from disposal of land
held for future use 955 - -
Proceeds from disposal of property,
plant, and equipment 182 162 1,105
Purchase of land held for future use (3,470) (512) (4,229)
Purchase of property, plant, and
equipment (26,252) (17,771) (27,064)
_______ ________ ________
Net cash used in investing
activities (28,585) (18,121) (30,188)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock under employee benefit plans 2,524 1,695 51
Net proceeds from short-term
borrowings 17,000 - -
Principal payments of long-term debt - (1,847) (483)
Purchases of treasury stock (50,750) (425) (4,252)
Dividends paid (15,731) (14,681) (13,685)
_______ _______ _______
Net cash used in financing activities (46,957) (15,258) (18,369)
_______ _______ _______
Net increase (decrease) in cash
and cash equivalents (23,396) 22,011 (1,906)
Cash and cash equivalents at
beginning of year 34,305 12,294 14,200
________ ________ ________
Cash and cash equivalents at end
of year $ 10,909 $ 34,305 $ 12,294
________ ________ ________
See accompanying notes.
Luby's Cafeterias, Inc.
Notes to Financial Statements
August 31, 1994, 1993, and 1992
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, 1994 and 1993, together with the related estimated useful lives
used in computing depreciation and amortization, are reflected below:
Estimated
1994 1993 Useful Lives
________ ________ ____________
(Thousands of Dollars)
Land $ 58,352 $ 53,689 -
Cafeteria equipment and
furnishings 99,867 93,925 3 to 10 years
Buildings 166,287 153,673 20 to 40 years
Leasehold and leasehold
improvements 41,104 39,314 Term of leases
Office furniture and fixtures 1,862 1,779 10 years
Transportation equipment 655 596 5 years
Construction in progress 5,899 5,211 -
________ ________
374,026 348,187
Less accumulated depreciation
and amortization 116,194 103,401
________ ________
$257,832 $244,786
________ ________
Total interest expense incurred for 1994, 1993, and 1992 was $288,000,
$327,000, and $330,000, respectively, which approximated the amount paid in
each year. Substantially all of these amounts were capitalized on qualifying
properties in each of the respective years.
3. Debt
The Company has a $50,000,000 credit facility with a bank. As part of
this credit agreement, the Company has a $30,000,000 line-of-credit which
expires in January 1995. The Company began borrowing under this agreement in
February 1994. As of August 31, 1994, the balance outstanding was
$17,000,000, which 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 $4,485,000 and 4.6%,
respectively.
The credit facility also provides a maximum commitment for letters of
credit of $20,000,000. At August 31, 1994, letters of credit of approximately
$10,008,000 have been issued as security for the payment of insurance
obligations carried 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 twenty-five years and provide for contingent rentals based
on sales in excess of a base amount. Approximately 80% of the leases contain
renewal options ranging from five to thirty years.
Annual future minimum lease payments under noncancelable operating leases
as of August 31, 1994, are as follows:
(Thousands of Dollars)
Years ending August 31:
1995 $ 5,495
1996 5,578
1997 5,560
1998 6,143
1999 5,422
Thereafter 48,512
_________
Total minimum lease payments $ 76,710
_________
Total rent expense for operating leases for the years ended August 31,
1994, 1993, and 1992 was as follows:
1994 1993 1992
________ ________ ________
(Thousands of Dollars)
Minimum rentals $ 5,141 $ 4,850 $ 4,509
Contingent rentals 1,436 1,380 1,393
________ ________ ________
$ 6,577 $ 6,230 $ 5,902
________ ________ ________
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 $1,481,000, $1,098,000, and
$242,000 in 1994, 1993, and 1992, respectively. No shares of common stock
have been issued under the plans during the three-year period ended August 31,
1994.
Stock Option Plans
The Company has 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 may be granted at prices not less than 100% of fair market value
at date of grant. Options are exercisable for such periods as the
Compensation Committee shall determine, but not for more than ten years from
date of grant.
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, 1994, 1993, and 1992:
Common
Option Price Shares Options Options
Per Share Reserved Outstanding Exercisable
_____________ _________ ___________ ___________
Balances - August 31, 1991 14.83 to 18.09 2,833,422 2,012,538 187,976
Granted 15.00 to 16.25 - 213,275 -
Became exercisable 16.42 to 17.88 - - 187,777
Canceled or expired 14.83 to 18.09 - (207,837) (123,242)
Exercised 14.83 to 15.78 (27,009) (27,009) (27,009)
_________ _________ ________
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
Canceled 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
Canceled 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
_________ _________ ________
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, 1994, 1993, and 1992 amounted to
$78,000, $76,000, and $25,000, 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 two years 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 $1,886,000,
$2,942,000, and $2,170,000 for 1994, 1993, and 1992, 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 by $1,563,000, or $.06 per share.
The tax effect of temporary differences results in deferred income tax
assets and liabilities as follows:
August 31, 1994
Assets Liabilities
________ ___________
(Thousands of Dollars)
Workers' compensation insurance $ 259 $ -
Amortization of capitalized interest - 546
Depreciation and amortization - 17,263
Deferred compensation 908 -
Other - 256
_______ _______
$ 1,167 $18,065
_______ _______
The above amounts aggregate to a current deferred tax asset of $259,000
and to a noncurrent deferred tax liability of $17,157,000 at August 31, 1994.
The components of deferred income tax expense for 1993 and 1992 as
recorded prior to the adoption of Statement No. 109 are as follows:
1993 1992
______ ______
(Thousands of Dollars)
Workers' compensation insurance $ (551) $ 51
Amortization of capitalized interest 87 30
Depreciation and amortization 554 619
Deferred compensation (69) 5
Prepaid expense 97 -
Property taxes 158 -
Other 10 17
______ ______
$ 286 $ 722
______ ______
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:
1994 1993 1992
Amount % Amount % Amount %
_______ ____ _______ ____ _______ ____
(Thousands of Dollars and as a Percent of Pretax Income)
Normally expected
income tax expense $21,152 35.0% $19,490 34.7% $17,176 34.0%
State income taxes 1,625 2.7 1,579 2.8 1,107 2.2
Jobs tax credits (260) (.4) (392) (.7) (365) (.7)
Other differences 146 .2 10 - 6 -
_______ ____ _______ ____ _______ ____
$ 22,663 37.5% $ 20,687 36.8% $17,924 35.5%
________ ____ ________ ____ _______ ____
Deferred income taxes payable, net of the current deferred tax asset,
amounted to $16,898,000 and $14,707,000 at August 31, 1994 and 1993,
respectively.
Cash payments for income taxes for 1994, 1993, and 1992 were $18,752,000,
$20,611,000, and $17,842,000, respectively.
7. Commitments
At August 31, 1994, the Company had five cafeterias under construction.
The aggregate unexpended costs under the construction contracts were
approximately $3,199,000.
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 1994, the Company purchased 2,268,300 shares of its common
stock at a cost of $51,490,000, which are being held as treasury stock.
During September 1994, the Company announced that the Board of Directors
authorized the purchase in the open market of an additional 2,000,000 shares
of the Company's outstanding common stock. If not extended, the purchase
program will be discontinued on December 31, 1995.
9. Per Share Information
The weighted average number of shares used in the net income per share
computation was 25,981,840 for 1994, 27,194,502 for 1993, and 27,344,397 for
1992.
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:
1994 1993
_______ _______
(Thousands of Dollars)
Salaries and bonuses $ 7,866 $ 8,265
Rent 922 970
Taxes, other than income 4,847 5,154
Profit sharing plan 1,886 2,942
Insurance 6,136 8,791
Other 270 637
_______ _______
$21,927 $26,759
_______ _______
12. Quarterly Financial Information (Unaudited)
The following is a summary of quarterly unaudited financial information
for 1994 and 1993:
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
Three Months Ended
November 30, February 28, May 31, August 31,
1992 1993 1993 1993
________ ________ ________ _________
(Thousands of Dollars Except Per Share Data)
Sales $ 88,597 $ 88,297 $ 94,791 $ 96,072
Gross profit 41,661 42,026 45,366 46,514
Net income 7,852 8,008 9,707 9,962
Net income per share .29 .29 .36 .37
(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 1995 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 1995 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 1995 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 1995 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, 1994 and 1993
Statements of income for each of the three years in the period
ended August 31, 1994
Statements of shareholders' equity for each of the three years in
the period ended August 31, 1994
Statements of cash flows for each of the three years in the
period ended August 31, 1994
Notes to financial statements
Report of independent auditors
2. Financial Statement Schedules
The following consent and the following schedules for each of the
three years in the period ended August 31, 1994, are filed as part of
this Report:
Consent of Independent Auditors
Schedule V - Property, plant, and equipment
Schedule VI - Accumulated depreciation and amortization of
property, plant, and equipment
Schedule X - Supplementary income statement information
All other 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 (filed as Exhibit 3(a)
to the Company's Quarterly Report on Form 10-Q for
the quarter ended November 30, 1991, and incorporated
herein by reference).
3(b) - Certificate of Amendment to Certificate of Incorporation
of Luby's Cafeterias, Inc., a Delaware corporation,
as filed in the Office of the Secretary of State of Delaware
on January 18, 1994 (filed as Exhibit 3(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended February 28,
1994, and incorporated herein by reference).
3(c) - 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(d) - 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) - Form of certificate representing shares of common stock of
Luby's Cafeterias, Inc. (filed as Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1991, and incorporated herein by reference).
4(b) - 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(c) - 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(d) - Promissory Note (Loan Agreement) dated January 31, 1994, in
favor of NationsBank of Texas, N.A., in the maximum amount
of $30,000,000 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28,
1994, and incorporated herein by reference).
10(a) - Form of Deferred Compensation Agreement entered into between
Luby's Cafeterias, Inc. and various officers (filed as Exhibit
10(b) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1981, and incorporated herein by
reference).
10(b) - 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(c) - 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(d) - 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(e) - Management Incentive Stock Plan of Luby's Cafeterias, Inc.
(filed as Exhibit 10(i) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1989, and incorporated
herein by reference).
11 - Statement re computation of per share earnings.
13 - Luby's Cafeterias, Inc. 1994 annual report to shareholders
(furnished for the information of the Commission and not deemed
to be "filed" except for those portions expressly incorporated
by reference).
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.
<PAGE>
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 28, 1994 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 28, 1994
RALPH ERBEN Ralph Erben, President, Chief
_______________________________ Executive Officer, and Director
November 28, 1994
JOHN E. CURTIS, JR. John E. Curtis, Jr.
_______________________________ Senior Vice President, Chief
November 28, 1994 Financial Officer, Treasurer, and
Director
WILLIAM E. ROBSON William E. Robson, Senior Vice
________________________________ President and Director
November 28, 1994
RONALD E. RIEMENSCHNEIDER Ronald E. Riemenschneider
________________________________ Controller
November 28, 1994
LAURO F. CAVAZOS Laura F. Cavazos, Director
________________________________
November 28, 1994
DAVID B. DAVISS David B. Daviss, Director
________________________________
November 28, 1994
ROGER R. HEMMINGHAUS Roger R. Hemminghaus, Director
________________________________
November 28, 1994
WALTER J. SALMON Walter J. Salmon, Director
________________________________
November 28, 1994
GEORGE H. WENGLEIN George H. Wenglein, Director
________________________________
November 28, 1994
JOANNE WINIK Joanne Winik, Director
________________________________
November 28, 1994
<PAGE>
Consent of Independent Auditors
We consent to the addition of the financial statement schedules listed in Item
14.(a)2. of Form 10-K, to the financial statements covered by our report dated
October 3, 1994.
Our audits also included the financial statement schedules of Luby's
Cafeterias, Inc. listed in Item 14.(a)2. These schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
ERNST & YOUNG LLP
San Antonio, Texas
October 3, 1994<PAGE>
<TABLE>
Luby's Cafeterias, Inc.
Schedule V - Property, Plant, and Equipment
Years Ended August 31, 1994, 1993, and 1992
<CAPTION>
Column A Column B Column C Column D Column E Column F
______________________________________________________________________________________________
Balance at Other Balance
Beginning Additions Changes- at End
Classification of Period at Cost Retirements Add (Deduct) of Period
______________________________________________________________________________________________
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Year Ended August 31, 1992
Land (B) $ 49,514 $ - $ (111) $ 2,256 (C) $51,659
Cafeteria equipment and
furnishings 80,766 10,341 (1,751) 451 (A) 89,807
Buildings 128,951 9,877 (866) 5,593 (A) 143,555
Leasehold and leasehold
improvements 34,945 2,335 (498) 1,213 (A) 37,995
Office furniture and
fixtures 1,696 35 - - 1,731
Transportation equipment 591 240 (217) - 614
Construction in progress 7,910 4,236 - (7,257)(A) 4,889
________ ________ ________ ________ ________
$304,373 $ 27,064 $ (3,443) $ 2,256 $330,250
________ ________ ________ ________ ________
Year Ended August 31, 1993
Land (B) $ 51,659 $ 30 $ (47) $ 2,047 (C) $ 53,689
Cafeteria equipment and
furnishings 89,807 5,151 (1,357) 324 (A) 93,925
Buildings 143,555 6,538 - 3,580 (A) 153,673
Leasehold and leasehold
improvements 37,995 1,542 (266) 43 (A) 39,314
Office furniture and fixtures 1,731 83 (35) - 1,779
Transportation equipment 614 158 (176) - 596
Construction in progress 4,889 4,269 - (3,947)(A) 5,211
________ ________ ________ ________ ________
$330,250 $ 17,771 $ (1,881) $ 2,047 $348,187
________ ________ ________ ________ ________
Year Ended August 31, 1994
Land (B) $ 53,689 $ 1,964 $ - $ 2,699 (C) $ 58,352
Cafeteria equipment and
furnishings 93,925 7,933 (2,137) 146 (A) 99,867
Buildings 153,673 8,690 - 3,924 (A) 166,287
Leasehold and leasehold
improvements 39,314 2,451 (707) 46 (A) 41,104
Office furniture and fixtures 1,779 90 (7) - 1,862
Transportation equipment 596 320 (261) - 655
Construction in progress 5,211 4,804 - (4,116)(A) 5,899
________ ________ ________ ________ ________
$348,187 $ 26,252 $ (3,112) $ 2,699 $374,026
________ ________ ________ ________ ________
<FN>
(A) Reclassification resulting from completion of cafeterias that were under
construction at the beginning of each year.
(B) Land held for future use is reflected on the balance sheet as an
investment. Accordingly, additions to the account of $3,470,000, $512,000,
and $4,229,000, for 1994, 1993, and 1992, respectively, are omitted from this
schedule.
(C) Reclassification from land held for future use when land is placed in service.
/TABLE
<PAGE>
<TABLE>
Luby's Cafeterias, Inc.
Schedule VI - Accumulated Depreciation and Amortization of
Property, Plant, and Equipment
Years Ended August 31, 1994, 1993, and 1992
<CAPTION>
Column A Column B Column C Column D Column F
______________________________________________________________________________________________
Additions
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Retirements of Period
______________________________________________________________________________________________
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Year Ended August 31, 1992
Cafeteria equipment and
furnishings $ 40,561 $ 7,832 $ (1,668) $ 46,725
Buildings 22,648 4,278 - 26,926
Leasehold improvements 12,826 2,090 (497) 14,419
Office furniture and
fixtures 1,221 95 - 1,316
Transportation equipment 309 158 (148) 319
________ ________ ________ ________
$ 77,565 $ 14,453 $ (2,313) $ 89,705
________ ________ ________ ________
Year Ended August 31, 1993
Cafeteria equipment and
furnishings $ 46,725 $ 8,285 $ (1,284) $ 53,726
Buildings 26,926 4,728 - 31,654
Leasehold improvements 14,419 2,152 (263) 16,308
Office furniture and
fixtures 1,316 97 (35) 1,378
Transportation equipment 319 153 (137) 335
________ ________ ________ ________
$ 89,705 $ 15,415 $ (1,719) $103,401
________ ________ ________ ________
Year Ended August 31, 1994
Cafeteria equipment and
furnishings $ 53,726 $ 8,155 $ (2,030) $59,851
Buildings 31,654 5,075 - 36,729
Leasehold improvements 16,308 2,204 (682) 17,830
Office furniture and
fixtures 1,378 98 (6) 1,470
Transportation equipment 335 168 (189) 314
________ ________ ________ ________
$103,401 $ 15,700 $ (2,907) $116,194
________ ________ ________ ________
<FN>
The answers to Column E - Other changes are none.
/TABLE
<PAGE>
Luby's Cafeterias, Inc.
Schedule X - Supplementary Income Statement Information
Years Ended August 31, 1994, 1993, and 1992
Charged to Costs and Expenses
_____________________________
1994 1993 1992
______________________________
(Thousands of Dollars)
Maintenance and repairs $ 5,567 $ 5,024 $ 4,767
_______________________________
Taxes, other than payroll
and income taxes $ 5,652 $ 5,493 $ 5,273
_______________________________
Advertising costs $ 6,619 $ 4,292 $ 2,854
_______________________________
The amount for depreciation and amortization is not presented, as such amount
has been disclosed in the financial statements.
<PAGE>
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 (filed as Exhibit 3(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November
30, 1991, and incorporated herein by reference).
3(b) - Certificate of Amendment to Certificate of Incorporation of
Luby's Cafeterias, Inc., a Delaware corporation, as filed in
the Office of the Secretary of State of Delaware on January 18,
1994 (filed as Exhibit 3(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended February 28, 1994, and
incorporated herein by reference).
3(c) - 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(d) - 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) - Form of certificate representing shares of common stock of
Luby's Cafeterias, Inc. (filed as Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November
30, 1991, and incorporated herein by reference).
4(b) - 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(c) - 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(d) - Promissory Note (Loan Agreement) dated January 31, 1994, in
favor of NationsBank of Texas, N.A., in the maximum amount of
$30,000,000 (filed as Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1994,
and incorporated herein by reference).
10(a) - Form of Deferred Compensation Agreement entered into between
Luby's Cafeterias, Inc. and various officers (filed as Exhibit
10(b) to the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1981, and incorporated herein by
reference).
10(b) - 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(c) - 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(d) - 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(e) - Management Incentive Stock Plan of Luby's Cafeterias, Inc.
(filed as Exhibit 10(i) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1989, and
incorporated herein by reference).
11 - Statement re computation of per share earnings.
13 - Luby's Cafeterias, Inc. 1994 annual report to shareholders
(furnished for the information of the Commission and not deemed
to be "filed" except for those portions expressly incorporated
by reference).
99(a) - Consent of Ernst & Young LLP.
99(b) - Consent of Ernst & Young LLP.
Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
The following is a computation of the weighted average number of shares
outstanding which is used in the computation of per share earnings for Luby's
Cafeterias, Inc. for the three and twelve months ended August 31, 1994 and
1993.
Three months ended August 31, 1994:
25,440,811 x shares outstanding for 14 days 356,171,354
25,400,907 x shares outstanding for 16 days 406,414,512
25,360,562 x shares outstanding for 20 days 507,211,240
25,312,432 x shares outstanding for 11 days 278,436,752
25,268,032 x shares outstanding for 14 days 353,752,448
25,157,400 x shares outstanding for 17 days 427,675,800
_____________
2,329,662,106
92
_____________
25,322,414
Twelve months ended August 31, 1994:
27,227,108 x shares outstanding for 1 day 27,227,108
27,214,570 x shares outstanding for 15 days 408,218,550
27,145,448 x shares outstanding for 14 days 380,036,272
27,022,276 x shares outstanding for 12 days 324,267,312
26,820,618 x shares outstanding for 19 days 509,591,742
26,420,208 x shares outstanding for 11 days 290,622,288
26,388,690 x shares outstanding for 21 days 554,162,490
26,389,190 x shares outstanding for 10 days 263,891,900
26,314,582 x shares outstanding for 19 days 499,977,058
26,077,694 x shares outstanding for 16 days 417,243,104
26,066,151 x shares outstanding for 15 days 390,992,265
26,054,664 x shares outstanding for 14 days 364,765,296
25,907,814 x shares outstanding for 14 days 362,709,396
25,813,627 x shares outstanding for 17 days 438,831,659
25,768,465 x shares outstanding for 14 days 360,758,510
25,679,895 x shares outstanding for 19 days 487,918,005
25,588,896 x shares outstanding for 14 days 358,244,544
25,543,726 x shares outstanding for 16 days 408,699,616
25,462,707 x shares outstanding for 12 days 305,552,484
25,440,811 x shares outstanding for 14 days 356,171,354
25,400,907 x shares outstanding for 16 days 406,414,512
25,360,562 x shares outstanding for 20 days 507,211,240
25,312,432 x shares outstanding for 11 days 278,436,752
25,268,032 x shares outstanding for 14 days 353,752,448
25,157,400 x shares outstanding for 17 days 427,675,800
_____________
9,483,371,705
365
_____________
25,981,840
Three months ended August 31, 1993:
27,238,969 x shares outstanding for 28 days 762,691,132
27,239,941 x shares outstanding for 13 days 354,119,233
27,231,274 x shares outstanding for 3 days 81,693,822
27,227,141 x shares outstanding for 22 days 598,997,102
27,227,880 x shares outstanding for 19 days 517,329,720
27,227,108 x shares outstanding for 7 days 190,589,756
_____________
2,505,420,765
92
_____________
27,232,834
Twelve months ended August 31, 1993:
27,133,567 x shares outstanding for 28 days 759,739,876
27,133,663 x shares outstanding for 23 days 624,074,249
27,134,265 x shares outstanding for 43 days 1,166,773,395
27,134,512 x shares outstanding for 14 days 379,883,168
27,141,134 x shares outstanding for 17 days 461,399,278
27,149,905 x shares outstanding for 25 days 678,747,625
27,179,067 x shares outstanding for 4 days 108,716,268
27,227,626 x shares outstanding for 15 days 408,414,390
27,238,292 x shares outstanding for 42 days 1,144,008,264
27,238,969 x shares outstanding for 90 days 2,451,507,210
27,239,941 x shares outstanding for 13 days 354,119,233
27,231,274 x shares outstanding for 3 days 81,693,822
27,227,141 x shares outstanding for 22 days 598,997,102
27,227,880 x shares outstanding for 19 days 517,329,720
27,227,108 x shares outstanding for 7 days 190,589,756
_____________
9,925,993,356
365
_____________
27,194,502
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<CASH> 10,909
<SECURITIES> 0
<RECEIVABLES> 275
<ALLOWANCES> 0
<INVENTORY> 3,851
<CURRENT-ASSETS> 18,134
<PP&E> 374,026
<DEPRECIATION> 116,194
<TOTAL-ASSETS> 289,668
<CURRENT-LIABILITIES> 56,362
<BONDS> 0
<COMMON> 8,769
0
0
<OTHER-SE> 204,757<F1>
<TOTAL-LIABILITY-AND-EQUITY> 289,668
<SALES> 390,692
<TOTAL-REVENUES> 390,692
<CGS> 202,766
<TOTAL-COSTS> 202,766
<OTHER-EXPENSES> 113,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 60,435
<INCOME-TAX> 22,663
<INCOME-CONTINUING> 37,772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 1,563
<NET-INCOME> 39,335
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
<FN>
<F1>Other stockholder's equity amount is less cost of treasury stock of $51,202.
</FN>
</TABLE>
Exhibit 99(a)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-10559) pertaining to the Luby's Cafeterias, Inc. Performance
Unit Plan of our report dated October 3, 1994 with respect to the financial
statements and schedules of Luby's Cafeterias, Inc. incorporated by reference
in the Annual Report (Form 10-K) for the year ended August 31, 1994 filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Antonio, Texas
November 28, 1994
<PAGE>
Exhibit 99(b)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-36791) pertaining to the Luby's Cafeterias, Inc. Management
Incentive Stock Plan of our report dated October 3, 1994 with respect to the
financial statements and schedules of Luby's Cafeterias, Inc. incorporated by
reference in the Annual Report (Form 10-K) for the year ended August 31, 1994
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Antonio, Texas
November 28, 1994
