FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended August 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to ______________________
Commission file number: 1-8308
LUBY'S CAFETERIAS, INC.
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 74-1335253
_________________________ ___________________________________
(State of Incorporation) (I.R.S. Employer Identification No.)
2211 Northeast Loop 410
Post Office Box 33069
San Antonio, Texas 78265-3069 Area Code 210 654-9000
_______________________________________ _______________________________
(Address of principal executive office) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of Class which registered
______________ ______________________
Common Stock ($.32 par value) New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
____
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the shares of Common Stock of the registrant
held by non-affiliates of the registrant as of November 15, 1995, was
approximately $484,097,000 (based upon the assumption that directors and
officers are the only affiliates).
As of November 15, 1995, there were 23,334,503 shares of the registrant's
Common Stock outstanding, exclusive of 4,068,564 treasury shares.
Portions of the following documents are incorporated by reference into the
designated parts of this Form 10-K: annual report to shareholders for the
fiscal year ended August 31, 1995 (in Part II) and proxy statement relating to
1996 annual meeting of shareholders (in Part III).
<PAGE>
Item 1. Business.
Luby's Cafeterias, Inc. (the "Company") operates 190 cafeterias under the
name "Luby's" located in suburban shopping areas in Arizona, Arkansas,
Florida, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma,
Tennessee, and Texas. Of the 190 cafeterias operated by the Company, 110 are
at locations owned by the Company and 80 are on leased premises.
Luby's Cafeterias, Inc. was originally incorporated in Texas in 1959 and
was reincorporated in Delaware on December 31, 1991. The Company's executive
offices are at 2211 Northeast Loop 410, P. O. Box 33069, San Antonio, Texas
78265-3069.
Marketing
The Company's product strategy is to provide a wide variety of freshly-
prepared foods in an attractive and informal environment. The Company's
research has shown that its products appeal to a broad range of value-oriented
consumers with particular success among senior citizens, families with
children, shoppers, and business people looking for a quick, healthy meal at a
reasonable price.
Prior to 1991 the Company relied primarily on customers' word-of-mouth
recommendations and community relations activities to promote its business,
spending approximately .5% of sales annually on these efforts. In 1991 the
Company began developing a new marketing program. Based on favorable
results of radio and television advertising tests, the marketing budget
increased to approximately two percent of sales for fiscal 1995. The Company
intends to continue expending the majority of the marketing budget on
television and radio advertising, as well as supporting the increased
local marketing activities of the individual cafeterias.
Operations
The Company's operations combine the food quality and atmosphere of a
good restaurant with the simplicity and visual food selection of cafeteria
service. Food is prepared in small quantities throughout serving hours, and
frequent quality checks are made. Each cafeteria offers a broad and varied
menu and normally serves 12 to 14 entrees, 12 to 14 vegetable dishes, 22 to 25
salads, and 18 to 20 desserts.
The Company's cafeterias cater primarily to shoppers and office or store
personnel for lunch and to families for dinner. The Company's cafeterias are
open for lunch and dinner seven days a week. All of the cafeterias sell
take-out orders, and most of them have separate food to go entrances. Take-
out orders accounted for approximately ten percent of sales in fiscal 1995.
Each cafeteria is operated as a separate unit under the control of a
manager who has responsibility for day-to-day operations, including food
purchasing, menu planning, and personnel employment and supervision. Each
cafeteria manager is compensated on the basis of his or her cafeteria's
profits. Management believes that granting broad authority to its cafeteria
managers and compensating them on the basis of their performance are
significant factors in the profitability of its cafeterias. Of the 190
cafeteria managers employed by the Company, 156 have been with the Company for
more than ten years. Currently, an individual is employed for a period of
seven to ten years before he or she is considered qualified to become a
cafeteria manager.
Each cafeteria cooks or prepares substantially all of the food served,
including breads and pastries. The cafeterias prepare food from the same
recipes, with minor variations to suit local tastes, although menus are not
uniform in all of the Company's cafeterias on any particular day. Menus are
prepared to reflect local and seasonal food preferences and to take advantage
of any special food purchasing opportunities. Substantially all of the food
served by each cafeteria is purchased from local suppliers. None of the
cafeterias are dependent upon any one supplier, and the Company believes that
alternative sources of supply are readily available.
Quality control teams, each consisting of experienced cooks and a
supervisor, help to maintain uniform standards of food preparation. The teams
primarily assist in the training of new personnel during the opening of new
cafeterias. The teams also visit the cafeterias periodically and work with
the regular staffs to check adherence to the Company's recipes, train
personnel in new techniques, and evaluate procedures for possible use
throughout the Company.
The Company conducts a training program comprised of both on-the-job
training and classroom instruction in its training facilities in
San Antonio. The training program is approximately four months in duration.
Management personnel receive one week of classroom instruction and spend
the remaining time on practical training in operating cafeterias. In order to
draw management trainees from regional talent pools, the Company has set
up satellite training schools in several key cafeterias to make on-the-job
training more accessible on a local level.
As of August 31, 1995, the Company had approximately 10,950 employees,
consisting of 10,243 nonmanagement cafeteria personnel; 585 cafeteria
managers, associate managers, and assistant managers; and 122 executive,
administrative, and clerical personnel. Employee relations are considered to
be good, and the Company has never had a strike or work stoppage.
Expansion
During the fiscal year ended August 31, 1995, the Company relocated one
cafeteria in Beaumont, Texas, and opened 11 new cafeterias in North Little
Rock, Arkansas; Mission, Kansas; Hattiesburg, Mississippi; Kansas City,
Missouri; Nashville and Oak Ridge, Tennessee; and Fort Worth, Houston, Plano,
San Antonio, and Weslaco, Texas. Since August 31, 1995, the Company has
opened four new cafeterias in Surprise, Arizona; and Corpus Christi, Houston,
and Tomball, Texas. Since August 31, 1995, the Company has closed a
cafeteria located on leased premises in El Paso, Texas.
Eight new cafeterias are under construction in Arlington, Dallas,
Fort Worth, Houston, and Kerrville, Texas. During fiscal 1996 the Company
expects to open 16 to 18 new cafeterias.
The Company continually evaluates prospective new cafeteria sites and
typically has several sites for new cafeterias under active consideration at
any given time. The rate at which new cafeterias are opened is governed by
the Company's policy of controlled growth, which takes into account the
resources and capabilities of all departments involved, including real estate,
construction, equipment, and operations. It has been the Company's experience
that new cafeterias generally become profitable within three months after
opening.
The costs of opening new cafeterias vary widely, depending on whether the
facilities are to be leased or owned, and if owned, on site acquisition and
construction costs. The Company estimates that in recent years it has cost
$2,300,000 to $2,600,000 to construct, equip, and furnish a new cafeteria in a
freestanding building under normal conditions, including land acquisition
costs. The approximate cost to finish out, equip, and furnish a new cafeteria
in a leased facility has ranged from $1,100,000 to $1,300,000. During
fiscal 1994 and 1995 a new building prototype has been utilized to reduce
the initial investment in a typical new location.
Service Marks
The Company uses several service marks, including "Luby's," and believes
that such marks are of material importance to its business. The Company has
federal service mark registrations for several of such marks.
The Company is not the sole user of the name "Luby's" in the cafeteria
business. One cafeteria using the name "Luby's" and one cafeteria using the
name "Pat Luby's" are being operated in two different cities in Texas by two
different owners not affiliated with the Company. The Company's legal counsel
is of the opinion that the Company has the paramount right to use the name
"Luby's" as a service mark in the cafeteria business in the United States and
that such other users can be precluded from expanding their use of the name as
a service mark.
Competition and Other Factors
The food service business is highly competitive, and there are numerous
restaurants and other food service operations in each of the markets where the
Company operates. The quality of the food served, in relation to its price,
and public reputation are important factors in food service competition.
Neither the Company nor any of its competitors has a significant share of the
total market in any area in which the Company competes. The Company believes
that its principal competitors are conventional restaurants and other
cafeterias.
The Company's facilities and food products are subject to state and local
health and sanitation laws. In addition, the Company's operations are subject
to federal, state, and local regulations with respect to environmental and
safety matters, including regulations concerning air and water pollution and
regulations under the Americans with Disabilities Act and the Federal
Occupational Safety and Health Act. Such laws and regulations, in the
Company's opinion, have not materially affected its operations, although
compliance has resulted in some increased costs.
Item 2. Properties.
The Company owns the underlying land and buildings in which 110 of its
cafeterias are located. In addition, the Company owns several cafeteria sites
being held for future development.
Of the 190 cafeterias operated by the Company, 80 are at locations held
under leases, including 48 in regional shopping malls. Most of the leases
provide for a combination of fixed-dollar and percentage rentals. Most of the
leases require the lessee to pay additional amounts related to property taxes,
hazard insurance, and maintenance of common areas.
See Notes 4 and 7 of Notes to Financial Statements for information
concerning the Company's lease rental expenses, lease commitments, and
construction commitments. Of the 80 cafeteria leases, the current terms of 20
expire from 1996 to 2000, 21 from 2001 to 2005, and 39 thereafter. Sixty-two
of the leases can be extended beyond their current terms at the Company's
option.
A typical cafeteria seats 250 to 300 persons and contains 9,000 to 10,500
square feet of floor space. Most of the cafeterias are located in modern
buildings and all are in good condition. It is the Company's policy to
refurbish and modernize cafeterias as necessary to maintain their appearance
and utility. The equipment in all cafeterias is well maintained. Several of
the Company's cafeteria properties contain excess building space which is
rented to tenants unaffiliated with the Company.
<PAGE>
The 190 cafeterias operated by the Company are located as follows
(locations are in Texas except as otherwise indicated):
Number Number
Location of Units Location of Units
Abilene 1 Lubbock 1
Albuquerque, New Mexico 2 Lufkin 1
Amarillo 2 McAllen 2
Arlington 2 Memphis, Tennessee 3
Austin 6 Mesa, Arizona 2
Bartlesville, Oklahoma 1 Mesquite 1
Baytown 1 Midland 1
Beaumont 1 Mission, Kansas 1
Bedford 1 Mission, Texas 1
Bellmead 1 Morristown, Tennessee 1
Bossier City, Louisiana 1 Murfreesboro, Tennessee 1
Broken Arrow, Oklahoma 1 Muskogee, Oklahoma 1
Brownsville 2 Nashville, Tennessee 2
Bryan/College Station 1 New Braunfels 1
Carrollton 1 North Little Rock, Arkansas 1
Chandler, Arizona 1 Oak Ridge, Tennessee 1
Clearwater, Florida 1 Odessa 1
Conroe 1 Oklahoma City, Oklahoma 3
Corpus Christi 3 Pasadena 1
Dallas 8 Pharr 1
Deer Park 1 Phoenix, Arizona 4
Denton 1 Pinellas Park, Florida 1
DeSoto 1 Plano 2
Duncanville 1 Port Arthur 2
El Paso 5 Richardson 1
Fayetteville, Arkansas 1 Round Rock 1
Fort Smith, Arkansas 1 San Angelo 1
Fort Worth 7 San Antonio 19
Franklin, Tennessee 1 San Marcos 1
Galveston 1 Santa Fe, New Mexico 1
Garland 1 Scottsdale, Arizona 1
Glendale, Arizona 1 Sebring, Florida 1
Grand Prairie 1 Shawnee, Oklahoma 1
Grapevine 1 Sherman 1
Harlingen 2 Shreveport, Louisiana 1
Hattiesburg, Mississippi 1 Stafford 1
Houston 27 Sugar Land 1
Humble 1 Surprise, Arizona 1
Independence, Missouri 1 Tampa, Florida 2
Irving/Las Colinas 1 Temple 1
Kansas City, Missouri 2 Texarkana 1
Killeen 1 The Woodlands 1
Kingwood 1 Tomball 1
Lake Jackson 1 Topeka, Kansas 1
Laredo 1 Tucson, Arizona 2
Las Cruces, New Mexico 1 Tulsa, Oklahoma 2
Leavenworth, Kansas 1 Tyler 2
Lewisville 1 Victoria 1
Little Rock, Arkansas 1 Waco 1
Longview 1 Weslaco 1
The Company's corporate offices are located in a building owned by the
Company containing approximately 40,000 square feet of office space. The
Company utilizes the space for its executive offices and related facilities.
The Company maintains public liability insurance and property damage
insurance on its properties in amounts which management believes to be
adequate.
Item 3. Legal Proceedings.
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company is a
party, or of which any of its property is the subject. There are no material
legal proceedings to which any director, officer, or affiliate of the Company,
or any associate of any such director or officer, is a party, or has a
material interest, adverse to the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year
ended August 31, 1995, to a vote of security holders of the Company.
Item 4A. Executive Officers of the Registrant.
Certain information is set forth below concerning the executive officers
of the Company, each of whom has been elected to serve until the 1996 annual
meeting of shareholders and until his successor is duly elected and qualified.
Served as
Officer Positions with Company and
Name Since Principal Occupation Last Five Years Age
________________________ ________ ____________________________________ ___
John B. Lahourcade 1969 Chairman of the Board, Chairman of 71
the Executive Committee, and
Director; Chief Executive Officer
1984-1990.
Ralph Erben 1978 President, Chief Executive Officer 64
(since 1990), member of the
Executive Committee, and Director;
Chief Operating Officer 1988-1990.
John E. Curtis, Jr. 1982 Executive Vice President, Chief 48
Financial Officer, and Director
(since 1991); Senior Vice President
and Chief Financial Officer 1988-
1995; Treasurer 1990-1995.
William E. Robson 1982 Executive Vice President-Operations 54
and Director (since 1993); Senior
Vice President-Operations 1992-1995;
Senior Vice President-Operations
Development prior to 1992.
Clyde C. Hays III 1985 Vice President-Operations (since 44
1993); Area Vice President prior
to 1993.
Jimmy W. Woliver 1984 Vice President-Operations. 58
Ronald E. Riemenschneider 1990 Vice President and Treasurer (since 37
1995); Controller 1990-1995.
James R. Hale 1980 Secretary; Member of law firm of 66
Cauthorn Hale Hornberger Fuller
Sheehan & Becker Incorporated
since 1992; member of law firm of
Cox & Smith Incorporated prior
to 1992.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
Stock Prices and Dividends
The Company's common stock is traded on the New York Stock Exchange under
the symbol LUB. The following table sets forth, for the last two fiscal
years, the high and low sales prices on the New York Stock Exchange from the
consolidated transaction reporting system and the per share cash dividends
declared on the common stock.
Fiscal Quarters Quarterly
Ended High Low Cash Dividend
_________________ ______ ______ ______________
November 30, 1993 $25.75 $20.88 $.15
February 28, 1994 23.88 21.50 .15
May 31, 1994 24.63 22.50 .15
August 31, 1994 24.13 22.13 .165
November 30, 1994 24.63 22.00 .165
February 28, 1995 23.25 22.00 .165
May 31, 1995 22.88 18.50 .165
August 31, 1995 21.25 19.25 .18
As of September 8, 1995, there were approximately 4,604 record holders of
the Company's common stock.
Item 6. Selected Financial Data.
<TABLE>
Five Year Summary of Operations
(Thousands of dollars except per share data)
Years ended August 31,
<CAPTION>
1995 1994 1993 1992 1991
________ ________ ________ ________ ________
<S> <C> <C> <C> <C> <C>
Sales $419,024 $390,692 $367,757 $346,359 $328,236
Costs and expenses:
Cost of food 103,611 98,223 92,957 86,507 83,273
Payroll and related costs 113,952 104,543 99,233 95,963 90,612
Occupancy and other operating
expenses 123,907 113,546 104,958 99,590 90,746
General and administrative
expenses 18,672 15,330 15,967 15,101 16,348
________ ________ ________ ________ ________
360,142 331,642 313,115 297,161 280,979
Income from operations 58,882 59,050 54,642 49,198 47,257
Other income (expenses):
Interest expense (1,749) - - - -
Interest and other 1,805 1,385 1,574 1,319 1,591
________ ________ ________ ________ ________
56 1,385 1,574 1,319 1,591
________ ________ ________ ________ ________
Income before income taxes
and accounting change 58,938 60,435 56,216 50,517 48,848
Provision for income taxes 21,923 22,663 20,687 17,924 16,502
________ ________ ________ ________ ________
Income before accounting
change 37,015 37,772 35,529 32,593 32,346
Cumulative effect of change in
accounting for income taxes - 1,563 - - -
________ ________ ________ ________ ________
Net income (a) $ 37,015 $ 39,335 $ 35,529 $ 32,593 $ 32,346
Income per share before accounting
change $ 1.55 $ 1.45 $ 1.31 $ 1.19 $ 1.18
Net income per common share $ 1.55 $ 1.51 $ 1.31 $ 1.19 $ 1.18
Cash dividend declared per common
share $ .68 $ .62 $ .56 $ .51 $ .47
At year-end:
Total assets $312,380 $289,668 $302,099 $276,319 $260,704
Long-term debt $ - $ - $ - $ 1,384 $ 1,851
Number of cafeterias 187 176 168 162 150
<FN>
(a) Net income in 1994 includes the cumulative effect of change in accounting
for income taxes of $1,563, or $.06 per share.
</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 1995 were $37,246,000, a 25%
increase from fiscal 1994. This increase in capital expenditures resulted in
part from the opening of 11 new cafeterias in fiscal 1995 as compared to eight
in fiscal 1994. The Company also purchased ten sites as land held for future
use compared to five land sites purchased during fiscal 1994.
Capital commitments budgeted for fiscal 1996 include the opening of 16 to
18 new cafeterias: 12 to 13 on sites owned by the Company, two on land held
under long-term ground leases, and two to three in regional shopping malls.
In addition, an existing unit on leased premises will be relocated to a site
owned by the Company. At the end of September 1995 the Company closed one of
its El Paso cafeterias which had been in operation since 1951. The age and
condition of the downtown location, in addition to the impact of the Mexican
peso devaluation, were the key factors in this decision. Therefore, a net
increase of 15 to 17 cafeterias is anticipated in fiscal 1996. Construction
costs for the new cafeterias are expected to be funded by cash flow from
operations, cash currently held in cash equivalent investments, and short-term
borrowings. In addition, as of August 31, 1995, the Company owned 13
undeveloped cafeteria sites, and several land site acquisitions were in
varying stages of negotiation.
The Company generated cash from operations of $56,398,000 in fiscal 1995.
The Company had a balance of $57,000,000 outstanding at August 31, 1995, under
a $100,000,000 line-of-credit agreement with a bank. At August 31, 1995, the
Company had a working capital deficit of $79,316,000 which compares to the
prior year's working capital deficit of $38,228,000. The working capital
position declined during fiscal 1995 due primarily to the $40,000,000 increase
in short-term borrowings under the line of credit to fund capital expenditures
and treasury stock purchases.
During fiscal 1995 the Company purchased 2,000,000 shares of its common
stock at a cost of $45,176,000, which are being held as treasury stock.
The Company believes that funds generated from operations and short-term
or long-term financing from external sources, which can be obtained on terms
acceptable to the Company, are adequate for its foreseeable needs.
Results of Operations
Fiscal 1995 Compared to Fiscal 1994
Sales increased $28,332,000, or 7%, due in part to the addition of 11 new
cafeterias in fiscal 1995 and eight cafeterias in fiscal 1994. The average
sales volume of cafeterias opened over one year increased to $2,321,000 in
fiscal 1995 from $2,287,000 in fiscal 1994. The increase resulted from the
implementation of new marketing programs and from higher average tray prices
over the prior year.
Cost of food increased $5,388,000, or 5%, due primarily to the increase
in sales. Food cost margins improved from the price increase on the Lu Ann
Platter, which took effect on December 1, 1994, and an additional price
increase on selected individual items effective June 10, 1995. Payroll and
related costs increased $9,409,000, or 9%, due primarily to the increase in
sales, higher wages for hourly employees in existing cafeterias, and higher
wage costs associated with increased expansion over the prior year. As the
expansion rate increases for fiscal 1996, the Company anticipates that payroll
and related costs will increase as a percentage of sales over fiscal 1995.
Occupancy and other operating expenses increased $10,361,000, or 9%, due
primarily to the increase in sales, the opening of 11 new cafeterias, higher
advertising expenditures, higher costs for a new uniform program, and higher
costs for paper supplies. For fiscal 1996 the Company plans to maintain the
budget for advertising expense at 2% of sales. General and administrative
expenses increased $3,342,000, or 22%, due primarily to the higher Company
contribution to the profit sharing and retirement plan as determined by the
plan's provisions, which increased approximately $3,000,000 over fiscal 1994.
The Company expects the contribution for fiscal 1996 to be more comparable to
fiscal 1995, increasing only approximately $200,000 over fiscal 1995.
Interest expense for fiscal 1995 was incurred in conjunction with
borrowings under the line-of-credit agreement and is net of $895,000
capitalized on qualifying properties.
The provision for income taxes decreased $740,000, or 3%, due in part to
lower income before income taxes. The Company's effective income tax rate
decreased slightly from 37.5% in fiscal 1994 to 37.2% in fiscal 1995.
Fiscal 1994 Compared to Fiscal 1993
Sales increased $22,935,000, or 6%, due in part to the addition of eight
new cafeterias in fiscal 1994 and six cafeterias in fiscal 1993. The average
sales volume of cafeterias opened over one year increased to $2,287,000 in
fiscal 1994 from $2,223,000 in fiscal 1993. The increase resulted from the
implementation of new marketing programs and from improved economies in some
trade areas.
Cost of food increased $5,266,000, or 6%, due primarily to the increase
in sales. Payroll and related costs increased $5,310,000, or 5%, with the
opening of eight new cafeterias. During the past several years, the Company
has instituted various programs to address the related payroll cost of
workers' compensation insurance; and these efforts, coupled with the revised
Texas workers' compensation law, resulted in lower workers' compensation costs
during fiscal 1994. Occupancy and other operating expenses increased
$8,588,000, or 8%, due primarily to the increase in sales; the opening of
eight new cafeterias; higher advertising expenditures; and higher managers'
salaries, which were based on the profitability of the cafeterias. General
and administrative expenses decreased $637,000, or 4%, due primarily to the
lower Company contribution to the profit sharing and retirement plan as
determined by the plan's provisions. The decline was partially offset by
higher costs under employee benefit plans which were based on the earnings
growth of the Company.
The provision for income taxes increased $1,976,000, or 10%, due to
higher income from operations and the new federal income tax rates that were
effective January 1, 1993. The Company's effective income tax rate increased
from 36.8% in fiscal 1993 to 37.5% in fiscal 1994.
The Company adopted the Financial Accounting Standards Board's Statement
No. 109, "Accounting for Income Taxes," in fiscal 1994, as discussed in Note 6
of Notes to Financial Statements.
Inflation
The Company's policy is to maintain stable menu prices without regard to
seasonal variations in food costs. General increases in costs of food, wages,
supplies, and services make it necessary for the Company to increase its menu
prices from time to time. To the extent prevailing market conditions allow,
the Company intends to adjust menu prices to maintain profit margins.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
LUBY'S CAFETERIAS, INC.
FINANCIAL STATEMENTS
Years Ended August 31, 1995, 1994, and 1993
with Report of Independent Auditors
Report of Independent Auditors
The Board of Directors and Shareholders
Luby's Cafeterias, Inc.
We have audited the accompanying balance sheets of Luby's Cafeterias,
Inc. at August 31, 1995 and 1994, and the related statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended August 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Luby's Cafeterias,
Inc. at August 31, 1995 and 1994, and the results of its operations and its
cash flows for each of the three years in the period ended August 31, 1995, in
conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial statements, in 1994 the Company
changed its method of accounting for income taxes.
ERNST & YOUNG LLP
San Antonio, Texas
October 3, 1995
<PAGE>
Luby's Cafeterias, Inc.
Balance Sheets
August 31
1995 1994
________ _______
(Thousands of Dollars)
Assets
Current assets:
Cash and cash equivalents $ 12,392 $ 10,909
Trade accounts and other receivables 311 275
Food and supply inventories 4,034 3,851
Prepaid expenses 2,849 2,840
Deferred income taxes 629 259
________ ________
Total current assets 20,215 18,134
Investments and other assets - at cost:
Land held for future use 9,820 10,867
Other assets 3,188 2,835
________ ________
Total investments and other assets 13,008 13,702
Property, plant, and equipment - at cost, less
accumulated depreciation and amortization
(Note 2) 279,157 257,832
________ ________
Total assets $312,380 $289,668
________ ________
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings (Note 3) $ 57,000 $ 17 000
Accounts payable - trade 10,969 10,341
Dividends payable 4,196 4,144
Accrued expenses and other liabilities (Note 11) 24,895 21,927
Income taxes payable 2,471 2,950
________ ________
Total current liabilities 99,531 56,362
Deferred income taxes and other credits 20,145 19,780
Commitments (Notes 4, 5, and 7) - -
Shareholders' equity (Notes 5 and 8):
Common stock, $.32 par value; authorized
100,000,000 shares in 1995 and 1994,
issued 27,403,067 shares in 1995 and 1994 8,769 8,769
Paid-in capital 26,945 26,945
Retained earnings 248,973 229,014
Less cost of treasury stock, 4,089,935
shares in 1995 and 2,285,257 shares in
1994 (91,983) (51,202)
________ ________
Total shareholders' equity 192,704 213,526
________ ________
Total liabilities and shareholders' equity $312,380 $289,668
________ ________
See accompanying notes.
<PAGE>
Luby's Cafeterias, Inc.
Statements of Income
Years Ended August 31
1995 1994 1993
________ ________ ________
(Thousands of dollars except per share data)
Sales $419,024 $390,692 $367,757
Costs and expenses:
Cost of food 103,611 98,223 92,957
Payroll and related costs 113,952 104,543 99,233
Occupancy and other operating
expenses 123,907 113,546 104,958
General and administrative expenses 18,672 15,330 15,967
________ ________ ________
360,142 331,642 313,115
________ ________ ________
Income from operations 58,882 59,050 54,642
Interest expense (1,749) - -
Other income, net 1,805 1,385 1,574
________ ________ ________
Income before income taxes and
cumulative effect of change in method
of accounting for income taxes 58,938 60,435 56,216
Provision for income taxes (Note 6):
Current 21,750 18,909 20,401
Deferred 173 3,754 286
________ ________ ________
21,923 22,663 20,687
________ ________ ________
Income before cumulative effect of
change in method of accounting for
income taxes 37,015 37,772 35,529
Cumulative effect as of August 31,
1993 of change in method of
accounting for income taxes (Note 6) - 1,563 -
________ ________ ________
Net income $ 37,015 $ 39,335 $ 35,529
________ ________ ________
Earnings per share:
Income before cumulative effect of
change in method of accounting for
income taxes $ 1.55 $ 1.45 $ 1.31
Cumulative effect of change in
method of accounting for income
taxes - .06 -
________ ________ ________
Net income per share (Note 9) $ 1.55 $ 1.51 $ 1.31
________ ________ ________
See accompanying notes.
<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, 1992 27,403 $8,769 (270) $ (4,252) $26,945 $185,789 $217,251
Net income for the
year - - - - - 35,529 35,529
Common stock issued
under stock option
plan, net of shares
tendered in partial
payment - - 113 1,605 92 (2) 1,695
Cash dividends,
$.555 per share - - - - - (15,102) (15,102)
Purchases of treasury
stock - - (19) (425) - - (425)
_______ ______ ______ _______ _______ _______ _______
Balance at
August 31, 1993 27,403 8,769 (176) (3,072) 27,037 206,214 238,948
Net income for the
year - - - - - 39,335 39,335
Common stock issued
under stock option
plan, net of shares
tendered in partial
payment - - 159 3,360 (92) (744) 2,524
Cash dividends,
$.615 per share - - - - - (15,791) (15,791)
Purchases of treasury
stock - - (2,268) (51,490) - - (51,490)
_______ ______ ______ _______ _______ _______ _______
Balance at
August 31, 1994 27,403 8,769 (2,285) (51,202) 26,945 229,014 213,526
Net income for the
year - - - - - 37,015 37,015
Common stock issued
under employee bene-
fit plans, net of
shares tendered in
partial payment - - 195 4,395 - (1,086) 3,309
Cash dividends,
$.675 per share - - - - - (15,970) (15,970)
Purchases of treasury
stock - - (2,000) (45,176) - - (45,176)
_______ ______ ______ _______ _______ _______ _______
Balance at
August 31, 1995 27,403 $8,769 (4,090) $(91,983) $26,945 $248,973 $192,704
_______ ______ ______ _______ _______ _______ _______
See accompanying notes.
</TABLE>
<PAGE>
Luby's Cafeterias, Inc.
Statements of Cash Flows
Years Ended August 31
1995 1994 1993
________ ________ ________
(Thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 37,015 $ 39,335 $ 35,529
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 16,417 15,700 15,415
Cumulative effect of change in
method of accounting - (1,563) -
(Gain) loss on disposal of land
held for future use (106) 69 -
(Gain) loss on disposal of
property, plant, and equipment (313) 23 -
________ ________ ________
Cash provided by operating
activities before changes in
operating assets and liabilities 53,013 53,564 50,944
Changes in operating assets and
liabilities:
(Increase) decrease in trade
accounts and other receivables (36) 327 (361)
(Increase) decrease in food and
supply inventories (183) (425) 216
(Increase) in prepaid expenses (9) (373) (214)
(Increase) in other assets (353) (460) (153)
Increase (decrease) in accounts
payable - trade 1,368 (87) 2,033
Increase (decrease) in accrued
expenses and other liabilities 3,082 (4,832) 2,678
Increase (decrease) in income
taxes payable (479) 157 (210)
Increase (decrease) in deferred
income taxes and other credits (5) 4,275 457
_______ ________ ________
Net cash provided by operating
activities 56,398 52,146 55,390
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of land
held for future use 495 955 -
Proceeds from disposal of property,
plant, and equipment 474 182 162
Purchases of land held for future use (7,531) (3,470) (512)
Purchases of property, plant, and
equipment (29,715) (26,252) (17,771)
_______ ________ ________
Net cash used in investing
activities (36,277) (28,585) (18,121)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
under stock option plans 3,196 2,524 1,695
Net proceeds from short-term
borrowings 40,000 17,000 -
Principal payments of long-term debt - - (1,847)
Purchases of treasury stock (45,916) (50,750) (425)
Dividends paid (15,918) (15,731) (14,681)
_______ _______ _______
Net cash used in financing activities (18,638) (46,957) (15,258)
_______ _______ _______
Net increase (decrease) in cash
and cash equivalents 1,483 (23,396) 22,011
Cash and cash equivalents at
beginning of year 10,909 34,305 12,294
________ ________ ________
Cash and cash equivalents at end
of year $ 12,392 $ 10,909 $ 34,305
________ ________ ________
See accompanying notes.
<PAGE>
Luby's Cafeterias, Inc.
Notes to Financial Statements
August 31, 1995, 1994, and 1993
1. Significant Accounting Policies
Inventories
The food and supply inventories are stated at the lower of cost
(first-in, first-out) or market.
Depreciation and Amortization
Luby's Cafeterias, Inc. (the Company) depreciates the cost of plant and
equipment over their estimated useful lives using both straight-line and
accelerated methods. Leasehold improvements are amortized over the related
lease lives, which are in some cases shorter than the estimated useful lives
of the improvements.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid financial instruments purchased with an original maturity of
three months or less to be cash equivalents.
Preopening Expenses
New store preopening costs are expensed as incurred.
2. Property, Plant, and Equipment
The cost and accumulated depreciation of property, plant, and equipment
at August 31, 1995 and 1994, together with the related estimated useful lives
used in computing depreciation and amortization, are reflected below:
Estimated
1995 1994 Useful Lives
________ ________ _______________
(Thousands of dollars)
Land $ 66,405 $ 58,352 -
Cafeteria equipment and
furnishings 106,540 99,867 3 to 10 years
Buildings 181,389 166,287 20 to 40 years
Leasehold and leasehold
improvements 43,752 41,104 Term of leases
Office furniture and equipment 2,271 1,862 5 to 10 years
Transportation equipment 674 655 5 years
Construction in progress 9,225 5,899 -
________ ________
410,256 374,026
Less accumulated depreciation
and amortization 131,099 116,194
________ ________
$279,157 $257,832
________ ________
Total interest expense incurred for 1995, 1994, and 1993 was $2,644,000,
$288,000, and $327,000, respectively, which approximated the amount paid in
each year. In 1994 and 1993, substantially all of these amounts were
capitalized on qualifying properties. In 1995, $895,000 was capitalized
on qualifying properties.
3. Debt
The Company has a $112,000,000 credit facility with a bank. As part of
this credit agreement, the Company has a $100,000,000 line-of-credit which
expires in December 1995. As of August 31, 1995, the balance outstanding was
$57,000,000, and $61,000,000 was the maximum amount outstanding during the
period. The average amount outstanding during the year and the weighted
average interest rate based on the number of days outstanding were $40,400,000
and 6.4%, respectively.
The credit facility also provides a maximum commitment for letters of
credit of $12,000,000. At August 31, 1995, letters of credit of approximately
$10,379,000 have been issued as security for the payment of insurance
obligations classified as accrued expenses on the balance sheet.
4. Leases
The Company conducts a major part of its operations from facilities which
are leased under noncancelable lease agreements. Most of the leases are for
periods of ten to 25 years and provide for contingent rentals based on sales
in excess of a base amount. Approximately 80% of the leases contain renewal
options ranging from five to 30 years.
Annual future minimum lease payments under noncancelable operating leases
as of August 31, 1995, are as follows:
(Thousands of dollars)
Years ending August 31:
1996 $ 5,687
1997 5,716
1998 5,641
1999 5,584
2000 5,397
Thereafter 46,603
__________
Total minimum lease payments $ 74,628
__________
Total rent expense for operating leases for the years ended August 31,
1995, 1994, and 1993 was as follows:
1995 1994 1993
________ ________ ________
(Thousands of dollars)
Minimum rentals $ 5,477 $ 5,141 $ 4,850
Contingent rentals 1,229 1,436 1,380
________ ________ ________
$ 6,706 $ 6,577 $ 6,230
________ ________ ________
5. Employee Benefit Plans and Agreements
Incentive Compensation
The Company has various incentive compensation plans covering officers
and other key employees that are based upon the achievement of specified
earnings goals and performance factors. Awards under the plans are payable in
cash and/or in shares of common stock. Charges to expense for current and
future distributions under the plans amounted to $431,000, $1,481,000, and
$1,098,000 in 1995, 1994, and 1993, respectively. No shares of common stock
were issued under the plans during the two-year period ended August 31,
1994. During the year ended August 31, 1995, 4,820 shares of common stock
were issued under the plans out of treasury stock.
Stock Option Plans
The Company had an Employee Stock Option Plan for executive and other key
salaried employees. Under the terms of the stock option plan, nonqualified
options and incentive stock options totaling 225,000 shares of the Company's
common stock could be granted at prices not less than 100% of fair market
value at date of grant. Options were exercisable for such periods as the
Compensation Committee determined, but not for more than ten years from
date of grant. All options outstanding under this plan either expired or were
exercised as of August 31, 1995.
In 1990 the Company adopted a new Management Incentive Stock Plan to
replace the current Employee Stock Option Plan and to provide for market-based
incentive awards, including stock options, stock appreciation rights,
restricted stock, and performance share awards. Under the terms of the
Management Incentive Stock Plan, nonqualified options and incentive stock
options totaling 2,700,000 shares of the Company's common stock are reserved
for grants to the officer group, certain administrative personnel, and
cafeteria management personnel. Stock options may be granted at prices not
less than 100% of fair market value at date of grant. Options granted to the
participants of the plan are exercisable over staggered periods and expire,
depending upon the type of grant, in five to seven years. The plan provides
for various vesting methods, depending upon the category of personnel.
Following is a summary of activity in the stock option plans for the
three years ended August 31, 1995, 1994, and 1993:
<TABLE>
<CAPTION>
Common
Option Price Shares Options Options
Per Share Reserved Outstanding Exercisable
________________ _________ ___________ ___________
<S> <C> <C> <C> <C>
Balances - August 31, 1992 $14.83 to $18.09 2,806,413 1,990,967 225,502
Granted 16.50 to 23.25 - 218,950 -
Became exercisable 15.00 to 17.88 - - 210,531
Cancelled or expired 15.00 to 23.25 - (182,029) (71,880)
Exercised 14.83 to 17.88 (151,719) (151,719) (151,719)
_________ _________ ________
Balances - August 31, 1993 14.83 to 23.25 2,654,694 1,876,169 212,434
Granted 21.75 to 21.75 - 370,725 -
Became exercisable 15.00 to 23.25 - - 246,327
Cancelled or expired 15.00 to 23.25 - (139,294) (41,633)
Exercised 14.83 to 17.88 (191,366) (191,366) (191,366)
_________ _________ _______
Balances - August 31, 1994 15.00 to 23.25 2,463,328 1,916,234 225,762
Granted 22.75 to 23.75 - 136,100 -
Became exercisable 15.00 to 23.75 - - 582,379
Cancelled or expired 15.00 to 23.75 - (95,467) (43,552)
Exercised 15.00 to 21.75 (209,753) (209,753) (209,753)
_________ _________ ________
Balances - August 31, 1995 $15.00 to $23.75 2,253,575 1,747,114 554,836
_________ _________ ________
</TABLE>
Deferred Compensation
Deferred compensation agreements exist for several key management
employees, all of whom are officers and/or directors. Under the agreements,
the Company is obligated to provide for each such employee or his
beneficiaries, during a period of ten years after the employee's death,
disability, or retirement, annual benefits ranging from $15,500 to $43,400.
The estimated present value of future benefits to be paid is being
accrued over the period from the effective date of the agreements until the
expected retirement dates of the participants. The net expense incurred for
this plan for the years ended August 31, 1995, 1994, and 1993 amounted to
$79,000, $78,000, and $76,000, respectively.
Profit Sharing
The Company has a profit sharing plan and retirement trust covering
substantially all employees who have attained the age of 21 years and have
completed one year of continuous service. The plan is administered by a
corporate trustee, is a "qualified plan" under Section 401(a) of the Internal
Revenue Code, and provides for the payment of the employee's vested portion of
the plan upon retirement, termination, disability, or death. The plan is
funded by contributions of a portion of the net earnings of the Company. The
plan provides that for each fiscal year in which the Company's net income
(before income taxes and before any contribution to the plan) meets certain
minimum standards, the Company is obligated to contribute to the plan, at a
minimum, an amount equal to a defined percentage of the participants'
compensation. In no event will the required contribution exceed 10% of the
Company's income before income taxes and before any contribution to the plan.
The Company's annual contribution to the plan amounted to $4,888,000,
$1,886,000, and $2,942,000 for 1995, 1994, and 1993, respectively.
6. Income Taxes
Effective September 1, 1993, the Company adopted FASB Statement No. 109,
"Accounting for Income Taxes." Under Statement No. 109, the liability method
is used in accounting for income taxes. Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities (temporary differences) and
are measured using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse. Prior to the adoption of
Statement No. 109, income tax expense was determined using the deferred
method. Deferred tax expense was based on items of income and expense that
were reported in different years in the financial statements and tax returns
and were measured at the tax rate in effect in the year the difference
originated.
As permitted by Statement No. 109, the Company has elected not to restate
the financial statements of any prior years. The effect of the change on
pretax income from continuing operations for the years ended August 31, 1994
and 1993, was not material; however, the cumulative effect of the change
increased net income in fiscal 1994 by $1,563,000, or $.06 per share.
The tax effect of temporary differences results in deferred income tax
assets and liabilities as of August 31 as follows:
1995 1994
________ ___________
(Thousands of dollars)
Deferred tax liabilities:
Amortization of capitalized interest $ 522 $ 546
Depreciation and amortization 17,566 17,263
Deferred compensation (766) (908)
Other 378 256
_______ _______
Total deferred tax liabilites 17,700 17,157
Deferred tax asset:
Workers' compensation insurance 629 259
_______ _______
Net deferred tax liabilities $17,071 $16,898
_______ _______
The components of deferred income tax expense for 1993 as
recorded prior to the adoption of Statement No. 109 are as follows:
1993
______
(Thousands of dollars)
Workers' compensation insurance $ (551)
Amortization of capitalized interest 87
Depreciation and amortization 554
Deferred compensation (69)
Prepaid expense 97
Property taxes 158
Other 10
______
$ 286
______
The Omnibus Budget Reconciliation Act of 1993 increased the federal tax
rate to 35% beginning January 1, 1993. Accordingly, a blend of the old and
new rates is used for the tax year ended August 31, 1993. The reconciliation
of the provision for income taxes to the expected income tax expense (computed
using the statutory tax rate) is as follows:
1995 1994 1993
Amount % Amount % Amount %
_______ ____ _______ ____ _______ ____
(Thousands of dollars and as a percent of pretax income)
Normally expected
income tax expense $20,628 35.0% $21,152 35.0% $19,490 34.7%
State income taxes 1,616 2.7 1,625 2.7 1,579 2.8
Jobs tax credits (151) (.2) (260) (.4) (392) (.7)
Other differences (170) (.3) 146 .2 10 -
_______ ____ _______ ____ ______ ____
$ 21,923 37.2% $ 22,663 37.5% $20,687 36.8%
_______ ____ _______ ____ ______ ____
Cash payments for income taxes for 1995, 1994, and 1993 were $22,229,000,
$18,752,000, and $20,611,000, respectively.
7. Commitments
At August 31, 1995, the Company had ten cafeterias under construction.
The aggregate unexpended costs under the construction contracts were
approximately $7,952,000.
The Company has unconditionally guaranteed a $2,000,000 loan under a line
of credit for an unrelated limited partnership in exchange for advertising
rights and a participation in future profits of the venture.
8. Common Stock
In 1991 the Board of Directors adopted a Shareholder Rights Plan and
declared a dividend of one common stock purchase right for each outstanding
share of common stock. The rights are not initially exercisable. The rights
may become exercisable under circumstances described in the Plan if any person
or group (an Acquiring Person) becomes the beneficial owner of 15% or more of
the common stock. Once the rights become exercisable, each right will be
exercisable to purchase, for $27.50 (the Purchase Price), one-half of one
share of common stock, par value $.32 per share, of the Company. If any
person becomes the beneficial owner of 15% or more of the common stock, each
right will entitle the holder, other than the Acquiring Person, to purchase
for the Purchase Price a number of shares of the Company's common stock having
a market value of four times the Purchase Price.
During fiscal 1995 the Company purchased 2,000,000 shares of its common
stock at a cost of $45,176,000, which are being held as treasury stock.
9. Per Share Information
The weighted average number of shares used in the net income per share
computation was 23,908,087 for 1995, 25,981,840 for 1994, and 27,194,502 for
1993.
10. Business Segments
The Company operates exclusively in the domestic cafeteria business.
11. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities at August 31 consisted of:
1995 1994
_______ _______
(Thousands of dollars)
Salaries and bonuses $ 7,542 $ 7,866
Rent 841 922
Taxes, other than income 4,886 4,847
Profit sharing plan 4,888 1,886
Insurance 6,417 6,136
Other 321 270
_______ _______
$24,895 $21,927
_______ _______
12. Quarterly Financial Information (Unaudited)
The following is a summary of quarterly unaudited financial information
for 1995 and 1994:
Three Months Ended
November 30, February 28, May 31, August 31,
1994 1995 1995 1995
________ ________ ________ _________
(Thousands of dollars except per share data)
Sales $101,446 $100,570 $106,899 $110,109
Gross profit 48,361 48,446 51,523 53,131
Net income 8,683 8,582 9,907 9,843
Net income per share .35 .36 .42 .42
Three Months Ended
November 30, February 28, May 31, August 31,
1993 1994 1994 1994
________ ________ ________ _________
(Thousands of dollars except per share data)
Sales $94,166 $93,719 $101,060 $101,747
Gross profit 44,197 44,815 49,670 49,244
Income before
cumulative effect of
change in method of
accounting (a) 8,605 8,581 10,386 10,200
Net income 10,168 8,581 10,386 10,200
Income per share
before cumulative effect
of change in method of
accounting (a) .32 .33 .40 .40
Net income per share .38 .33 .40 .40
(a) See Note 6 for information on the cumulative effect of the change in
method of accounting.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
There is incorporated in this Item 10 by reference that portion
of the Company's definitive proxy statement for the 1996 annual
meeting of shareholders appearing therein under the captions "Election
of Directors" and "Information Concerning Directors and Executive
Officers." See also the information in Item 4A of Part I of this
Report.
Item 11. Executive Compensation.
There is incorporated in this Item 11 by reference that portion
of the Company's definitive proxy statement for the 1996 annual
meeting of shareholders appearing therein under the caption "Executive
Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
There is incorporated in this Item 12 by reference that portion
of the Company's definitive proxy statement for the 1996 annual
meeting of shareholders appearing therein under the captions
"Principal Shareholders" and "Management Shareholders."
Item 13. Certain Relationships and Related Transactions.
There is incorporated in this Item 13 by reference that portion
of the Company's definitive proxy statement for the 1996 annual
meeting of shareholders appearing therein under the caption "Certain
Relationships and Related Transactions."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents.
1. Financial Statements
The following financial statements are filed as part of this Report:
Balance sheets at August 31, 1995 and 1994
Statements of income for each of the three years in the period
ended August 31, 1995
Statements of shareholders' equity for each of the three years in
the period ended August 31, 1995
Statements of cash flows for each of the three years in the
period ended August 31, 1995
Notes to financial statements
Report of independent auditors
2. Financial Statement Schedules
All schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission
of the schedule or because the information required is included in the
financial statements and notes thereto.
3. Exhibits
The following exhibits are filed as a part of this Report:
2 - Agreement and Plan of Merger dated November 1, 1991,
between Luby's Cafeterias, Inc., a Texas corporation,
and Luby's Cafeterias, Inc., a Delaware corporation
(filed as Exhibit 2 to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 30, 1991,
and incorporated herein by reference).
3(a) - Certificate of Incorporation of Luby's Cafeterias, Inc., a
Delaware corporation, as in effect February 28, 1994 (filed
as Exhibit 3(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1994, and
incorporated herein by reference).
3(b) - Bylaws of Luby's Cafeterias, Inc., a Delaware corporation (filed
as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
for the quarter ended November 30, 1991, and incorporated
herein by reference).
4(a) - Description of Common Stock Purchase Rights of Luby's
Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective
April 26, 1991, File No. 1-8308, and incorporated herein by
reference).
4(b) - Amendment No. 1 dated December 19, 1991, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1991, and incorporated herein by reference).
4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
February 28, 1995, and incorporated herein by reference).
<PAGE>
4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended May 31,
1995, and incorporated herein by reference).
4(e) - Promissory Note (Loan Agreement) dated September 30, 1995, in
favor on NationsBank of Texas, N.A., in the maximum amount
of $100,000,000.
10(a) - Form of Deferred Compensation Agreement entered into between
Luby's Cafeterias, Inc. and various officers (filed as Exhibit
10(b) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1981, and incorporated herein by
reference).
10(b) - Annual Incentive Plan for Area Vice Presidents of Luby's
Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit
10(d) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1983, and incorporated herein by
reference).
10(c) - Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted
October 19, 1983 (filed as Exhibit 10(e) to the Company's
Annual Report of Form 10-K for the fiscal year ended
August 31, 1983, and incorporated herein by reference).
10(d) - Performance Unit Plan of Luby's Cafeterias, Inc. approved by
the shareholders on January 12, 1984 (filed as Exhibit 10(f) to
the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1984, and incorporated herein by reference).
10(e) - Employment Contract dated January 8, 1988, between Luby's
Cafeterias, Inc. and George H. Wenglein (filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1988, and incorporated herein by reference).
10(f) - Management Incentive Stock Plan of Luby's Cafeterias, Inc.
(filed as Exhibit 10(i) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1989, and incorporated
herein by reference).
10(g) - Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit
10(g) to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1994, and incorporated herein by
reference).
10(h) - Nonemployee Director Stock Option Plan of Luby's Cafeterias,
Inc. approved by the shareholders on January 13, 1995 (filed
as Exhibit 10(h) to the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1995, and
incorporated herein by reference).
11 - Statement re computation of per share earnings.
99(a) - Consent of Ernst & Young LLP.
99(b) - Consent of Ernst & Young LLP.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of
the period covered by this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: November 21, 1995 LUBY'S CAFETERIAS, INC.
(Registrant)
By: RALPH ERBEN
___________________________
Ralph Erben, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature and Date Name and Title
JOHN B. LAHOURCADE John B. Lahourcade, Chairman of
_______________________________ the Board and Director
November 21, 1995
RALPH ERBEN Ralph Erben, President, Chief
_______________________________ Executive Officer, and Director
November 21, 1995
JOHN E. CURTIS, JR. John E. Curtis, Jr.,
_______________________________ Executive Vice President, Chief
November 21, 1995 Financial Officer, and Director
WILLIAM E. ROBSON William E. Robson, Executive Vice
________________________________ President and Director
November 21, 1995
RONALD E. RIEMENSCHNEIDER Ronald E. Riemenschneider, Vice
________________________________ President, Treasurer, and
November 21, 1995 Principal Accounting Officer
LAURO F. CAVAZOS Laura F. Cavazos, Director
________________________________
November 21, 1995
DAVID B. DAVISS David B. Daviss, Director
________________________________
November 21, 1995
ROGER R. HEMMINGHAUS Roger R. Hemminghaus, Director
________________________________
November 21, 1995
WALTER J. SALMON Walter J. Salmon, Director
________________________________
November 21, 1995
GEORGE H. WENGLEIN George H. Wenglein, Director
________________________________
November 21, 1995
JOANNE WINIK Joanne Winik, Director
________________________________
November 21, 1995
<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, as in effect February 28, 1994 (filed
as Exhibit 3(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended February 28, 1994, and
incorporated herein by reference).
3(b) - Bylaws of Luby's Cafeterias, Inc., a Delaware corporation (filed
as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q
for the quarter ended November 30, 1991, and incorporated
herein by reference).
4(a) - Description of Common Stock Purchase Rights of Luby's
Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective
April 26, 1991, File No. 1-8308, and incorporated herein by
reference).
4(b) - Amendment No. 1 dated December 19, 1991, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1991, and incorporated herein by reference).
4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
February 28, 1995, and incorporated herein by reference).
4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement
dated April 16, 1991 (filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the quarter ended May 31,
1995, and incorporated herein by reference).
4(e) - Promissory Note (Loan Agreement) dated September 30, 1995, in
favor of NationsBank of Texas, N.A., in the maximum amount
of $100,000,000.
10(a) - Form of Deferred Compensation Agreement entered into between
Luby's Cafeterias, Inc. and various officers (filed as Exhibit
10(b) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1981, and incorporated herein by
reference).
10(b) - Annual Incentive Plan for Area Vice Presidents of Luby's
Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit
10(d) to the Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1983, and incorporated herein by
reference).
10(c) - Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted
October 19, 1983 (filed as Exhibit 10(e) to the Company's
Annual Report on Form 10-K for the fiscal year ended
August 31, 1983, and incorporated herein by reference).
10(d) - Performance Unit Plan of Luby's Cafeterias, Inc. approved by
the shareholders on January 12, 1984 (filed as Exhibit 10(f) to
the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1984, and incorporated herein by reference).
10(e) - Employment Contract dated January 8, 1988, between Luby's
Cafeterias, Inc. and George H. Wenglein (filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1988, and incorporated herein by reference).
10(f) - Management Incentive Stock Plan of Luby's Cafeterias, Inc.
(filed as Exhibit 10(i) to the Company's Annual Report on Form
10-K for the fiscal year ended August 31, 1989, and incorporated
herein by reference).
10(g) - Nonemployee Director Deferred Compensation Plan of Luby's
Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit
10(g) to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1994, and incorporated herein by
reference).
10(h) - Nonemployee Director Stock Option Plan of Luby's Cafeterias,
Inc. approved by the shareholders on January 13, 1995 (filed
as Exhibit 10(h) to the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1995, and
incorporated herein by reference).
11 - Statement re computation of per share earnings.
99(a) - Consent of Ernst & Young LLP.
99(b) - Consent of Ernst & Young LLP.
Exhibit 4(e)
PROMISSORY NOTE
Dallas, Texas September 30, 1995
Borrower: LUBY'S CAFETERIAS, INC.
Maximum Amount: $100,000,000.00
Interest Rate Options (check options available):
x Agreed Rate
___
x Prime Rate (-) .50 %
___
x CD Rate + .50 %
___
x Eurodollar Rate + .375 %
___
Loan Type (Check only one option):
_____ This Note evidences Loans made by Lender to Borrower pursuant to a
line of credit in the Maximum Amount. From the date hereof to
_________________, 19____ (the "Commitment Termination Date"),
Borrower, subject to the terms and conditions of this Note and
provided that no Event of Default is then existing, may borrow,
repay and reborrow up to the Maximum Amount ("Committed Loans").
x This Note evidences Loans made by Lender to Borrower, which in the
_____ aggregate principal amount outstanding shall not exceed the
Maximum Amount. Each Loan evidenced hereby shall mature not later
than December 31, 1995. Borrower acknowledges and agrees that
(i) Lender has no obligation to make any Loans and (ii) each Loan
shall be in the sole discretion of Lender ("Uncommitted Loans").
Borrower, for the value received, promises to pay to the order of
NATIONSBANK OF TEXAS, N.A. ("Lender"), at its banking house in Dallas, Texas,
or at any other place designated to Borrower in writing by Lender, in lawful
money of the United States of America and in immediately available funds prior
to 11:00 a.m. Dallas time on the date due, the principal amount of each Loan,
on the earlier of (i) declaration by Lender pursuant to Section 1.7 hereof, or
(ii) the last day of the Interest Period of such Loan, together with interest
on the unpaid principal balance of such Loan at the applicable rates herein
set forth.
This Note is issued upon the following terms and conditions:
ARTICLE I.
THE LOANS
1.1. Definitions. Defined terms used herein shall have the meanings
given to them above and in Article III hereof.
1.2. Making the Loans. Each Fixed Rate Loan shall be in an aggregate
amount which is an integral multiple of $100,000.00. Each Loan shall be made
by notice to Lender (stating the Type Loan, the amount of the Loan, the date
of the Loan and the Interest Period for the Loan) not later than 11:30 a.m.,
Dallas time, given by Borrower to Lender (i) as to any Eurodollar Rate Loan,
at least two (2) Business Days prior to the date of such Type Loan, (ii) as to
any CD Rate Loan, at least one (1) Business Day prior to the date of such Type
Loan, and (iii) as to any Agreed Rate Loan and any Prime Rate Loan, on the day
of such Type Loan. Lender shall on the date of each Loan not later than 1:00
p.m., Dallas time, in immediately available funds, deposit the proceeds of
such Loan in the general deposit account of Borrower with Lender.
1.3. Repayment. Borrower shall repay the principal amount of each Loan
on the earlier of (i) declaration by Lender pursuant to Section 1.7 hereof, or
(ii) the last day of the Interest Period for such Loan.
1.4. Prepayments. Borrower may prepay any Prime Rate Loan, without
penalty or premium. No prepayment of any Fixed Rate Loan shall be permitted
without the prior written consent of Lender. Notwithstanding such prohibition,
if there is a prepayment of any Fixed Rate Loan, whether by consent of Lender
or because of acceleration or otherwise, Borrower shall, within fifteen (15)
days of any request by Lender, pay to Lender any loss or expense which Lender
may incur or sustain as a result of any such prepayment.
A statement as to the amount of such loss or expense, prepared in good
faith and in reasonable detail by Lender and submitted by Lender to Borrower
shall be conclusive and binding for all purposes absent manifest error in
computation. Calculation of all amounts payable to Lender under this Section
1.4 shall be made as though Lender shall have actually funded or committed to
fund the relevant Fixed Rate Loan through the purchase of an underlying
deposit in an amount equal to the amount of such Loan and having a maturity
comparable to the related Interest Period; provided, however, that Lender may
fund any Fixed Rate Loan in any manner it sees fit and the foregoing
assumption shall be utilized only for the purpose of calculation of amounts
payable under this Section 1.4.
1.5. Yield Protection and Indemnity. If at any time after the
date hereof, and from time to time, Lender determines that the adoption or
modification of any applicable law, rule or regulation regarding taxation,
Lender's required levels of reserves, deposits, insurance or capital
(including any allocation of capital requirements or conditions), or similar
requirements, or any interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation, administration or compliance of Lender with any of such
requirements, has or would have the effect of (i) increasing Lender's costs
relating to the Obligation hereunder, or (ii) reducing the yield
or rate of return of Lender on the Obligation hereunder to a level below that
which Lender could have achieved but for the adoption or modification of any
such requirements, Borrower shall, within fifteen (15) days of any request by
Lender, pay to Lender such additional amounts as (in Lender's sole judgment,
after good faith and reasonable computation) will compensate Lender for such
increase in costs or reduction in yield or rate of return of Lender. No
failure by Lender to immediately demand payment of any additional amounts
payable hereunder shall constitute a waiver of Lender's right to demand
payment of such amounts at any subsequent time. Nothing herein contained shall
be construed or so operate as to require Borrower to pay any interest, fees,
costs or charges at a rate or in an amount greater than is permitted by
Applicable Law.
1.6. Interest.
(a) Prime Rate Loans. The unpaid principal balance of each Loan
outstanding from time to time as a Prime Rate Loan shall bear interest during
each Interest Period at the Prime Rate plus the percentage, if any, set forth
in the "Interest Rate Options" section of this Note, which interest rate shall
change without notice with each change in such Prime Rate as of the date of
any such change; provided that, if at any time the Prime Rate plus the
percentage, if any, set forth in the "Interest Rate Options" section of this
Note exceeds the Highest Lawful Rate, the rate of interest which each Prime
Rate Loan bears shall be limited to the Highest Lawful Rate, but any
subsequent reductions in the Prime Rate shall not reduce the rate of interest
which each Prime Rate Loan bears below the Highest Lawful Rate until the
amount of interest accrued on each Prime Rate Loan equals the amount of
interest which would have accrued if the Prime Rate plus the percentage, if
any, set forth in the "Interest Rate Options" section of this Note had at all
times been in effect. Interest on each Prime Rate Loan for each Interest
Period shall be payable on the last day thereof.
(b) CD Rate Loans. The unpaid principal balance of each Loan outstanding
from time to time as a CD Rate Loan shall bear interest during each
Interest Period at the CD Rate for such CD Rate Loan plus the percentage, if
any, set forth in the "Interest Rate Options" section of this Note. Interest
on each CD Rate Loan for each Interest Period shall be payable on the last day
thereof.
(c) Eurodollar Rate Loans. The unpaid principal balance of each
Loan outstanding from time to time as a Eurodollar Rate Loan shall bear
interest during each Interest Period at the Eurodollar Rate for such
Eurodollar Rate Loan plus the percentage, if any, set forth in the "Interest
Rate Options" section of this Note. Interest on each Eurodollar Rate Loan for
each Interest Period shall be payable on the last day thereof.
(d) Agreed Rate Loans. The unpaid principal balance of each Loan
outstanding from time to time as an Agreed Rate Loan shall bear interest
during each Interest Period at the Agreed Rate for such Agreed Rate Loan.
Interest on each Agreed Rate Loan for each Interest Period shall be payable on
the last day thereof.
(e) Computations. Subject to the provisions of Section 2.5 of
this Note, interest on each Loan and any commitment fee shall be calculated on
the basis of actual days elapsed, but computed as if each year consisted of
360 days. The books and records of Lender shall be prima facie evidence of
all sums due Lender.
(f) Past Due Principal and Interest. All past due principal of
and, to the extent permitted by Applicable Law, all past due interest on any
Loan and any other past due amount owing on this Note, shall bear interest
from the date due until paid at the Default Rate.
1.7. Events of Default. It shall be an event of default ("Event of
Default") under this Note and each of any other documents executed in
connection herewith if any one of the following shall occur: (i) Borrower
shall fail to make any payment of principal, interest or other amounts under
this Note when due; (ii) Borrower or any guarantor of this Note shall fail to
make any payment when due on any debt for borrowed money, purchase money debt
or contingent debt which Borrower or any guarantor of this Note is obligated
to pay as borrower, guarantor or in any other capacity or any default or event
of default shall occur under any agreement evidencing or providing for the
creation of such debt or under any other document executed in connection with
this Note; (iii) any voluntary or involuntary bankruptcy proceeding or any
similar action is commenced with respect to Borrower or any guarantor of this
Note or any of its assets; (iv) Lender shall in good faith believe that the
prospect of payment of amounts due with respect to this Note has been
impaired; or (v) any representation or warranty made by Borrower or any
guarantor of this Note in connection with this Note shall be false or
incorrect in any material respect when made or deemed made.
If one or more of the foregoing Events of Default shall occur, all or any
part of the outstanding principal of this Note plus accrued unpaid interest on
this Note and any other accrued unpaid amount owing under this Note shall at
the option of Lender become due and payable immediately without notice to
Borrower, which is hereby waived by Borrower, and Lender shall have no further
obligation (if any) to make Loans under this Note, and Lender may exercise any
and all available rights and remedies under any document or instrument
executed in connection with this Note or under Applicable Law.
ARTICLE II.
MISCELLANEOUS
2.1. Waivers and Consents. Borrower and all endorsers, sureties and
guarantors of this Note hereby severally waive demand and notice of demand,
presentment for payment, protest, notice of protest, notice of acceleration of
the maturity of this Note, notice of intention to accelerate the maturity of
this Note, diligence in collecting, the bringing of any suit against any
Person, and any notice of or defense on account of any extensions, renewals,
partial payments or changes in this Note or in any of its terms, provisions
and covenants, or any releases or substitutions of any security for this Note,
or any delay, indulgence or other act of any holder hereof, whether before or
after maturity.
2.2 Fees. Borrower agrees to pay to Lender, on the date or dates set
forth below, the following fee or fees (check applicable provisions):
N/A On the date hereof, a facility fee in the amount of
____ ___________________ Dollars ($______________________).
N/A On the last day of each Interest Period for Prime Rate Loans and
____ on the Commitment Termination Date, a commitment fee at the
rate of ____________ percent (___ %) per annum on the average
daily unborrowed portion of the Maximum Amount.
2.3. Expenses. If this Note is placed in the hands of an attorney for
collection after the occurrence of an Event of Default, or if all or any part
of the indebtedness evidenced hereby is proved, established or collected in
any court or in any bankruptcy, receivership, debtor relief, probate or other
court proceedings, Borrower and all endorsers, sureties and guarantors of this
Note jointly and severally agree to pay reasonable attorneys' fees and
collection costs to the holder hereof in addition to the principal and
interest and other amounts payable hereunder. In addition, Borrower agrees to
pay Lender all reasonable costs and expenses, including reasonable attorneys'
fees, incurred by Lender in connection with the preparation of this Note and
any documents or instruments executed in connection herewith, making the Loans
hereunder, and all amendments, consents and waivers related to the Loans and
requests therefor by Borrower.
2.4. Governing Law. This Note is payable and performable in Dallas
County, Texas, and shall be construed and enforced in accordance with and
governed by the Laws of the State of Texas and the Federal Laws of the United
States of America. Tex. Rev. Civ. Stat. Ann. art. 5069 Ch. 15 (which regulates
certain revolving credit loan accounts and revolving tri-party accounts) shall
not apply to the Loans evidenced by this Note. Without excluding any other
jurisdiction, Borrower agrees that the courts of the State of Texas sitting in
Dallas, Dallas County, Texas, and the federal courts sitting in Dallas, Dallas
County, Texas, will have jurisdiction over proceedings in connection herewith.
2.5. Controlling Agreement. Interest paid or agreed to be paid in this
Note or in any other documents executed in connection herewith shall not
exceed the Highest Lawful Rate, and, in any contingency whatsoever, if Lender
shall receive anything of value deemed interest under Applicable Law which
would exceed the Highest Lawful Rate, the excessive interest shall be applied
to the reduction of unpaid principal or refunded to Borrower, if it exceeds
unpaid principal. It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged,
or received by Lender or any holder of this Note that are made for the purpose
of determining whether such rate exceeds the Highest Lawful Rate shall be
made, to the extent permitted by usury laws applicable to Lender (now or
hereafter enacted), by amortizing, prorating, and spreading during the period
of the full stated term of the Loans evidenced by this Note all interest at
any time contracted for, charged, or received by Lender in connection
therewith.
2.6. Binding Effect. This Note shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns,
except that Borrower shall not have the right to assign its rights or
obligations hereunder or any interest herein without the prior written consent
of Lender. Lender may assign to one or more banks, all or any part of, or
may grant participations to one or more banks in or to all or part of, any
Loan or Loans and this Note, and to the extent of any such assignment or
participation (except where otherwise stated) the assignee or participant of
such assignment or participation shall have the rights and benefits with
respect to each Loan or Loans and this Note, including Section 1.5 hereof, as
it would have if it was Lender hereunder.
2.7. Titles. The titles to paragraphs in this Note are inserted for
convenience only and do not constitute a part of the text hereof.
2.8. Notices. Notices hereunder must be given in writing to be effective
and shall be effective upon receipt by Borrower or Lender at the address set
forth below its signature below or at such other address as Borrower or Lender
may notify the other.
ARTICLE III
DEFINITIONS
As used in and for all purposes of this Note, the terms defined in this
Article III shall have the following meanings, and the singular shall include
the plural, and vice versa, unless otherwise specifically required by the
context:
"Agreed Rate" shall mean a fixed rate per annum mutually agreed upon by
Borrower and Lender, to be confirmed in writing by Borrower.
"Agreed Rate Loan" shall mean each Loan which bears interest at the
Agreed Rate.
"Applicable Law" shall mean the Laws of the United States of America
applicable to contracts made or performed or to be performed in the State of
Texas, including, without limitation, 12 U.S.C. section 85 and 86(a), as
heretofore or hereafter amended, and any other statute of the United States of
America now or at any time hereafter prescribing maximum rates of interest on
loans, advances and extensions of credit, and the Laws of the State of Texas,
including, without limitation, Articles 5069-1.04 and 5069-1.07(a), Title 79,
Revised Civil Statutes of Texas, 1925, as heretofore or hereafter amended
("Art. 1.04").
"Art. 1.04" has the meaning given to such term in the definition of
Applicable Law in this Article III.
"Assessment Rate" shall mean, with respect to any CD Rate Loan, the
actual (if known) or the estimated (if the actual rate is not known) net
annual assessment rate (rounded upwards, if necessary, to the next higher
1/100 of 1%) charged by the Federal Deposit Insurance Corporation (or any
successor) for such corporation's (or such successor's) insuring liability for
time deposits of Lender, as in effect from time to time. The Assessment Rate
shall be a fixed percentage calculated as of and effective with the first day
of each Interest Period, taking into consideration changes scheduled to occur
during such Interest Period.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to close in Dallas, Texas, and, if the applicable
Business Day relates to any Eurodollar Rate Loans, a day of the year on which
dealings are carried on in the London interbank market.
"CD Rate" shall mean an interest rate per annum equal to a rate
determined pursuant to the following formula:
Derivation CD Rate + Assessment Rate
_____________________________
100% - CD Reserve Percentage
"CD Rate Loan" shall mean each Loan which bears interest based on the
CD Rate.
"CD Reserve Percentage" shall mean, for the applicable Interest Period,
the then applicable maximum reserve requirement (including, without
limitation, any basic, supplemental, marginal and emergency reserves)
(expressed as a percentage) under Regulation D of the Board of Governors of
the Federal Reserve System, or such additional, substituted or amended reserve
requirement, applicable to member banks of the Federal Reserve System, in
respect of non-personal time deposits in Dollars in the City of Dallas, Texas,
having a maturity comparable to such Interest Period and in an amount of
$100,000.00 or more. The CD Reserve Percentage shall be a fixed percentage
calculated as of and effective with the first day of such Interest Period,
taking into consideration changes scheduled to occur during such Interest
Period.
"Default Rate" shall mean (i) from the date that any payment is due until
ten (10) days thereafter, an interest rate per annum equal to the lesser of
(y) two (2) percent above the interest rate otherwise applicable to such
payment or, if there is no otherwise applicable interest rate, two (2) percent
above the Prime Rate or (z) the Highest Lawful Rate and thereafter (ii) the
Highest Lawful Rate.
"Derivation CD Rate" shall mean, for the applicable Interest Period, the
rate per annum determined by Lender, in accordance with its customary general
practice from time to time, to be the rate that is or would be offered or
quoted to Lender at its request by one or more primary dealers who make
markets in certificates of deposit for the purchase at face value from Lender
of certificates of deposit issued by Lender in the amount of Five Million
Dollars ($5,000,000.00), having a term comparable to such Interest Period, as
of approximately 8:00 a.m. Dallas, Texas time (or as soon thereafter as
practicable) on the first day of such Interest Period. If no such offers or
quotes are generally available for such amount, then Lender shall be entitled
to determine the Derivation CD Rate by estimating in its reasonable judgment
the per annum rate (as described above) that would be applicable if such
quotes or offers were generally available.
"Dollars" and the sign "$" shall mean lawful money of the United States
of America.
"Eurodollar Rate" shall mean an interest rate per annum equal to a rate
determined pursuant to the following formula:
London Interbank Rate
_____________________________________
100% - Eurodollar Reserve Percentage
"Eurodollar Rate Loan" shall mean each Loan which bears interest based
on the Eurodollar Rate.
"Eurodollar Reserve Percentage" shall mean the maximum reserve
requirement (including, without limitation, any basic, supplemental, marginal
and emergency reserves) (expressed as a percentage) applicable to member banks
of the Federal Reserve System in respect of "Eurocurrency Liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System, or such
additional, substituted or amended reserve requirement as may be hereafter
applicable to member banks of the Federal Reserve System.
"Fixed Rate Loan" shall mean an Agreed Rate Loan, CD Rate Loan, or
Eurodollar Rate Loan, as the context requires.
"hereof," "hereto," "hereunder" and similar terms shall refer to this
Note and not to any particular section or provision of this Note.
"Highest Lawful Rate" shall mean at the particular time in question the
maximum rate of interest per annum which, under Applicable Law, Lender is then
permitted to charge Borrower on the Obligation. If the Highest Lawful Rate
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to Borrower; provided, however, the Highest Lawful Rate shall decrease with
respect to the Note only if required by Applicable Law. For purposes of
determining the Highest Lawful Rate under the Applicable Law of the State of
Texas, the applicable rate ceiling shall be the indicated rate ceiling
described in and computed in accordance with the provisions of Section (a)(1)
of Art. 1.04, provided, that at any time such indicated rate ceiling shall be
less than 18% per annum or more than 24% per annum, the provisions of Section
(b)(1) and (2) of Art. 1.04 shall control for purposes of such determination,
as applicable.
"Interest Period" means, for each Loan, the period commencing on the date
of such Loan and ending on the last day of such period as selected by Borrower
pursuant to the provisions hereof. The duration of each such Interest Period
for (i) each Eurodollar Rate Loan shall be 1, 2 or 3 months, (ii) each CD Rate
Loan shall be 30, 60 or 90 days, (iii) each Prime Rate Loan shall be from the
date of such Prime Rate Loan to the next succeeding April 1, July 1,
October 1 or January 1, and (iv) each Agreed Rate Loan shall be up to 30 days
as agreed to by Borrower and Lender and confirmed in writing by Borrower,
subject to the other provisions hereof, as Borrower may select: provided
however, that:
(i) Whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business
Day, provided, in the case of any Interest Period for a Eurodollar
Rate Loan, that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding
Business Day; and
(ii) No Interest Period may extend beyond September 30, 1995.
"Laws" shall mean all constitutions, treaties, statutes, laws,
ordinances, regulations, orders, writs, injunctions, or decrees of the United
States, any state or commonwealth, any municipality, any foreign country, any
territory or possession or any Tribunal.
"Loan" shall mean any Prime Rate Loan, Agreed Rate Loan, CD Rate Loan or
Eurodollar Rate Loan, as the context requires.
"London Interbank Rate" shall mean, for the applicable Interest Period,
the rate of interest per annum (rounded upward, if necessary, to the next
higher 1/16 of 1%) determined by Lender, in accordance with its customary
general practice from time to time, to be the rate at which deposits in
immediately available funds in Dollars are or would be offered or quoted by
Lender to major banks in the London interbank market, as of approximately
11:00 a.m. London time, or as soon thereafter as practicable, on the second
Business Day immediately preceding the first day of such Interest Period, for
a term comparable to such Interest Period and in the amount of Five Million
Dollars ($5,000,000.00). If no such offers or quotes are generally available
for such amount, then Lender shall be entitled to determine the London
Interbank Rate by estimating in its reasonable judgement the per annum rate
(as described above) that would be applicable if such quotes or offers were
generally available.
"Obligation" shall mean (without duplication) the aggregate principal
amount of and any interest, fees, and other charges payable by Borrower in
respect of the Loans.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department, agency or political subdivision thereof.
"Prime Rate" shall mean the prime interest rate charged by Lender as
announced or published by Lender from time to time. It is understood that the
Prime Rate is set by Lender as a general reference rate of interest and is not
necessarily the lowest or best rate actually charged to any customer or a
favored rate.
"Prime Rate Loan" shall mean each Loan which bears interest based on the
Prime Rate.
"Taxes" shall mean all taxes, assessments, fees or other charges from
time to time or at any time imposed by any Laws or by any Tribunal.
"Tribunal" shall mean any state, commonwealth, federal foreign,
territorial, or other court or governmental department, commission, board,
bureau, district, agency or instrumentality.
"Type Loan" shall mean with respect to the Loan, a Prime Rate Loan,
Agreed Rate Loan, CD Rate Loan, or a Eurodollar Rate Loan.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE AND ANY OTHER
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
BORROWER:
LUBY'S CAFETERIAS, INC.
By: Ralph Erben
___________________
Name: Ralph Erben
Title: President and CEO
By: John E. Curtis, Jr.
___________________
Name: John E. Curtis, Jr.
Title: Executive Vice President and CFO
Executed by Lender for the purpose of the Notice of Final Agreement set
forth above.
LENDER:
NATIONSBANK OF TEXAS, N.A.
By: Doug Hutt
__________________
Name: Douglas E. Hutt
Title: Senior Vice President
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, 1995 and
1994.
Three months ended August 31, 1995:
23,310,232 x shares outstanding for 26 days 606,066,032
23,310,732 x shares outstanding for 38 days 885,807,816
23,311,932 x shares outstanding for 4 days 93,247,728
23,313,132 x shares outstanding for 24 days 559,515,168
_____________
2,144,636,744
Divided by number of days in period 92
_____________
23,311,269
Twelve months ended August 31, 1995:
25,074,982 x shares outstanding for 18 days 451,349,676
24,941,910 x shares outstanding for 12 days 299,302,920
24,934,917 x shares outstanding for 16 days 398,958,672
24,713,278 x shares outstanding for 15 days 370,699,170
24,520,641 x shares outstanding for 17 days 416,850,897
24,416,386 x shares outstanding for 13 days 317,413,018
24,383,698 x shares outstanding for 14 days 341,371,772
24,270,808 x shares outstanding for 20 days 485,416,160
24,189,103 x shares outstanding for 28 days 677,294,884
23,851,100 x shares outstanding for 28 days 667,830,800
23,660,154 x shares outstanding for 14 days 331,242,156
23,575,659 x shares outstanding for 17 days 400,786,203
23,424,790 x shares outstanding for 12 days 281,097,480
23,310,232 x shares outstanding for 75 days 1,748,267,400
23,310,732 x shares outstanding for 38 days 885,807,816
23,311,932 x shares outstanding for 4 days 93,247,728
23,313,132 x shares outstanding for 24 days 559,515,168
_____________
8,726,451,920
Divided by number of days in period 365
_____________
23,908,087
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
Divided by number of days in period 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
Divided by number of days in period 365
_____________
25,981,840
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 12,392
<SECURITIES> 0
<RECEIVABLES> 311
<ALLOWANCES> 0
<INVENTORY> 4,034
<CURRENT-ASSETS> 20,215
<PP&E> 410,256
<DEPRECIATION> 131,099
<TOTAL-ASSETS> 312,380
<CURRENT-LIABILITIES> 99,531
<BONDS> 0
<COMMON> 8,769
0
0
<OTHER-SE> 183,935<F1>
<TOTAL-LIABILITY-AND-EQUITY> 312,380
<SALES> 419,024
<TOTAL-REVENUES> 419,024
<CGS> 217,563
<TOTAL-COSTS> 217,563
<OTHER-EXPENSES> 123,907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,749
<INCOME-PRETAX> 58,938
<INCOME-TAX> 21,923
<INCOME-CONTINUING> 37,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,015
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
<FN>
<F1>Other stockholders' equity amount is less cost of treasury stock of $91,983.
</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, 1995, with respect to the financial
statements of Luby's Cafeterias, Inc. incorporated by reference in the Annual
Report (Form 10-K) for the year ended August 31, 1995.
ERNST & YOUNG LLP
San Antonio, Texas
November 20, 1995
<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, 1995, with respect to the
financial statements of Luby's Cafeterias, Inc. incorporated by reference in
the Annual Report (Form 10-K) for the year ended August 31, 1995.
ERNST & YOUNG LLP
San Antonio, Texas
November 20, 1995
