Item 1. Business.
Luby's Cafeterias, Inc. (the "Company") operates 177 cafeterias under the name "Luby's" located in suburban shopping areas in Arizona, Arkansas, Florida, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Tennessee, and Texas. Of the 177 cafeterias operated by the Company, 99 are at locations owned by the Company and 78 are on leased premises.
Luby's Cafeterias, Inc. was originally incorporated in Texas in 1959 and was reincorporated in Delaware on December 31, 1991. The Company's executive offices are at 2211 Northeast Loop 410, P. O. Box 33069, San Antonio, Texas 78265-3069.
Marketing
The Company's product strategy is to provide a wide variety of freshly- prepared foods in an attractive and informal environment. The Company's research has shown that its products appeal to a broad range of value-oriented consumers with particular success among senior citizens, families with children, and business people looking for a quick, healthy meal at a reasonable price.
Prior to 1991 the Company relied primarily on customers' word-of-mouth recommendations and community relations activities to promote its business, spending approximately .5% of sales annually on these efforts. In 1991 the Company began developing a new marketing program under the direction of Joyce E. Rothenberg, who was elected vice president-marketing in 1992. Based on favorable results of radio and television advertising tests, the marketing budget increased to approximately 1.7% of sales for fiscal 1994 and will increase to approximately two percent of sales for fiscal 1995, primarily for increased radio and television advertising.
The Company intends to continue expending the majority of the market budget on television and radio advertising, as well as supporting the increased local marketing activities of the individual cafeterias. During fiscal 1994 the Company conducted its first cooperative promotion, joining forces with Southwest Airlines, Sea World of Texas, and Karena Hotels of Texas to target families with children. The Company plans to develop additional cooperative promotions for fiscal 1995.
Operations
The Company's operations combine the food quality and atmosphere of a good restaurant with the simplicity and visual food selection of cafeteria service. Food is prepared in small quantities throughout serving hours, and frequent quality checks are made. Each cafeteria offers a broad and varied menu and normally serves 12 to 14 entrees, 12 to 14 vegetable dishes, 22 to 25 salads, and 18 to 20 desserts.
The Company's cafeterias cater primarily to shoppers and office or store personnel for lunch and to families for dinner. The Company's cafeterias are open for lunch and dinner seven days a week. All of the cafeterias sell takeout orders, and most of them have separate food to go entrances. Takeout orders accounted for approximately nine percent of sales in fiscal 1994.
Each cafeteria is operated as a separate unit under the control of a manager who has responsibility for day-to-day operations, including food purchasing, menu planning, and personnel employment and supervision. Each cafeteria manager is compensated on the basis of his or her cafeteria's profits. Management believes that granting broad authority to its cafeteria managers and compensating them on the basis of their performance are significant factors in the profitability of its cafeterias. Of the 177 cafeteria managers employed by the Company, 149 have been with the Company for more than ten years. Currently, an individual is employed for a period of seven to ten years before he or she is considered qualified to become a cafeteria manager.
Each cafeteria cooks or prepares substantially all of the food served, including breads and pastries. The cafeterias prepare food from the same recipes, with minor variations to suit local tastes, although menus are not uniform in all of the Company's cafeterias on any particular day. Menus are prepared to reflect local and seasonal food preferences and to take advantage of any special food purchasing opportunities. Substantially all of the food served by each cafeteria is purchased from local suppliers. None of the cafeterias is dependent upon any one supplier, and the Company believes that alternative sources of supply are readily available.
Quality control teams, each consisting of experienced cooks and a supervisor, help to maintain uniform standards of food preparation. The teams primarily assist in the training of new personnel during the opening of new cafeterias. The teams also visit the cafeterias periodically and work with the regular staffs to check adherence to the Company's recipes, train personnel in new techniques, and evaluate procedures for possible use throughout the Company.
The Company conducts a training program in its training facilities in San Antonio. The training program is approximately four and one-half months in duration. Management personnel receive two weeks of classroom instruction and four months of practical training in operating cafeterias.
As of August 31, 1994, the Company had approximately 10,100 employees, consisting of 9,435 nonmanagement cafeteria personnel; 547 cafeteria managers, associate managers and assistant managers; and 118 executive, administrative, and clerical personnel. Employee relations are considered to be good, and the Company has never had a strike or work stoppage.
Expansion
During the fiscal year ended August 31, 1994, the Company opened eight new units and relocated three units. The new units are located in Leavenworth, Kansas; Shreveport, Louisiana; Morristown, Tennessee; and Grapevine, Houston, San Antonio, San Marcos, and Temple, Texas. The relocated units are in Dallas, Harlingen, and San Antonio, Texas. Since August 31, 1994, the Company has opened one new unit in Hattiesburg, Mississippi.
Ten new cafeterias are under construction in North Little Rock, Arkansas; Mission, Kansas; Nashville and Oak Ridge, Tennessee; and Beaumont, Fort Worth, Nassau Bay, Plano, San Antonio, and Weslaco, Texas. The new unit under construction in Beaumont is to be a relocation of an existing unit. During fiscal 1995 the Company expects to open 14 new cafeterias plus the unit to be relocated.
The Company continually evaluates prospective new cafeteria sites and typically has several sites for new cafeterias under active consideration at any given time. The rate at which new cafeterias are opened is governed by the Company's policy of controlled growth, which takes into account the resources and capabilities of all departments involved, including real estate, construction, equipment, and operations. It has been the Company's experience that new cafeterias generally become profitable within three months after opening.
The costs of opening new cafeterias vary widely, depending on whether the facilities are to be leased or owned, and if owned, on-site acquisition and construction costs. The Company estimates that in recent years it has cost $2,300,000 to $2,600,000 to construct, equip, and furnish a new cafeteria in a freestanding building under normal conditions, including land acquisition costs. A new building prototype has been developed and utilized for all of the fiscal 1994 openings, which reduced the initial investment in a typical new location to approximately $2,350,000.
Service Marks
The Company uses several service marks, including "Luby's," and believes that such marks are of material importance to its business. The Company has Federal service mark registrations for several of such marks.
The Company is not the sole user of the name "Luby's" in the cafeteria business. One cafeteria using the name "Luby's" and one cafeteria using the name "Pat Luby's" are being operated in two different cities in Texas by two different owners not affiliated with the Company. The Company's legal counsel is of the opinion that the Company has the paramount right to use the name "Luby's" as a service mark in the cafeteria business in the United States and that such other users can be precluded from expanding their use of the name as a service mark.
Competition and Other Factors
The food service business is highly competitive, and there are numerous restaurants and other food service operations in each of the markets where the Company operates. The quality of the food served, in relation to its price, and public reputation are important factors in food service competition. Neither the Company nor any of its competitors has a significant share of the total market in any area in which the Company competes. The Company believes that its principal competitors are good conventional restaurants and other cafeterias.
The Company's facilities and food products are subject to state and local health and sanitation laws. In addition, the Company's operations are subject to Federal, state, and local regulations with respect to environmental and safety matters, including regulations concerning air and water pollution and regulations under the Americans with Disabilities Act and the Federal Occupational Safety and Health Act. Such laws and regulations, in the Company's opinion, have not materially affected its operations, although compliance has resulted in some increased costs.
Item 2.
Item 2. Properties.
The Company owns the underlying land and buildings in which 99 of its cafeterias are located. In addition, the Company owns several cafeteria sites being held for future development.
Of the 177 cafeterias operated by the Company, 78 are at locations held under leases. Most of the leases provide for a combination of fixed-dollar and percentage rentals. Most of the leases require the lessee to pay additional amounts related to property taxes, hazard insurance, and maintenance of common areas.
See Notes 4 and 7 of Notes to Financial Statements for information concerning the Company's lease rental expenses, lease commitments, and construction commitments. Of the 78 cafeteria leases, the current terms of 14 expire from 1994 to 1999, 24 from 2000 to 2004, and 40 thereafter. Fifty-nine of the leases can be extended beyond their current terms at the Company's option.
Of the 177 cafeterias operated by the Company, 46 are in regional shopping malls. A typical cafeteria seats 250 to 300 persons and contains 9,000 to 10,500 square feet of floor space. Most of the cafeterias are located in modern buildings and all are in good condition. It is the Company's policy to refurbish and modernize cafeterias as necessary to maintain their appearance and utility. The equipment in all cafeterias is well maintained. Several of the Company's cafeteria properties contain excess building space which is rented to tenants unaffiliated with the Company.
The 177 cafeterias operated by the Company are located (locations are in Texas except as otherwise indicated):
Number Number Location of Units Location of Units
Abilene 1 Lewisville 1 Albuquerque, New Mexico 2 Little Rock, Arkansas 1 Amarillo 2 Longview 1 Arlington 2 Lubbock 1 Austin 6 Lufkin 1 Bartlesville, Oklahoma 1 McAllen 2 Baytown 1 Memphis, Tennessee 3 Beaumont 1 Mesa, Arizona 2 Bedford 1 Mesquite 1 Bellmead 1 Midland 1 Bossier City, Louisiana 1 Mission 1 Broken Arrow, Oklahoma 1 Morristown, Tennessee 1 Brownsville 2 Murfreesboro, Tennessee 1 Bryan/College Station 1 Muskogee, Oklahoma 1 Carrollton 1 Nashville, Tennessee 1 Chandler, Arizona 1 New Braunfels 1 Clearwater, Florida 1 Odessa 1 Conroe 1 Oklahoma City, Oklahoma 3 Corpus Christi 2 Pasadena 1 Dallas 8 Pharr 1 Deer Park 1 Phoenix, Arizona 4 Denton 1 Pinellas Park, Florida 1 DeSoto 1 Plano 1 Duncanville 1 Port Arthur 2 El Paso 6 Richardson 1 Fayetteville, Arkansas 1 Round Rock 1 Fort Smith, Arkansas 1 San Angelo 1 Fort Worth 6 San Antonio 18 Franklin, Tennessee 1 San Marcos 1 Galveston 1 Santa Fe, New Mexico 1 Garland 1 Scottsdale, Arizona 1 Glendale, Arizona 1 Sebring, Florida 1 Grand Prairie 1 Shawnee, Oklahoma 1 Grapevine 1 Sherman 1 Harlingen 2 Shreveport, Louisiana 1 Hattiesburg, Mississippi 1 Stafford 1 Houston 25 Sugar Land 1 Humble 1 Tampa, Florida 2 Independence, Missouri 1 Temple 1 Irving/Las Colinas 1 Texarkana 1 Kansas City, Missouri 1 The Woodlands 1 Killeen 1 Topeka, Kansas 1 Kingwood 1 Tucson, Arizona 2 Lake Jackson 1 Tulsa, Oklahoma 2 Laredo 1 Tyler 2 Las Cruces, New Mexico 1 Victoria 1 Leavenworth, Kansas 1 Waco 1
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.
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.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year ended August 31, 1994, to a vote of security holders of the Company.
Item 4A. Executive Officers of the Registrant.
Certain information is set forth below concerning the executive officers of the Company, each of whom has been elected to serve until the 1995 annual meeting of shareholders and until his successor is duly elected and qualified.
Served as Officer Positions with Company and Name Since Principal Occupation Last Five Years Age ________________________ ________ ____________________________________ ___
John B. Lahourcade 1969 Chairman of the Board, Chairman of 70 the Executive Committee, and Director; Chief Executive Officer 1984-90.
Ralph Erben 1978 President, Chief Executive Officer 63 (since 1990), member of the Executive Committee, and Director; Chief Operating Officer 1988-90.
John E. Curtis, Jr. 1982 Senior Vice President and Chief 47 Financial Officer, Director (since 1991), and Treasurer (since 1990).
William E. Robson 1982 Senior Vice President-Operations 53 (since 1992), Senior Vice President-Operations Development prior to 1992, and Director (since 1993).
Clyde C. Hays III 1985 Vice President-Operations (since 43 1993); Area Vice President prior to 1993.
Jimmy W. Woliver 1984 Vice President-Operations. 57
Ronald E. Riemenschneider 1990 Controller (since 1990); Director 36 of Internal Audit prior thereto.
James R. Hale 1980 Secretary; Member of law firm of 65 Cauthorn Hale Hornberger Fuller Sheehan & Becker Incorporated since 1992; member of law firm of Cox & Smith Incorporated prior thereto.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Stock Prices and Dividends
The Company's common stock is traded on the New York Stock Exchange under the symbol LUB. The following table sets forth, for the last two fiscal years, the high and low sales prices on the New York Stock Exchange from the consolidated transaction reporting system and the per share cash dividends declared on the common stock.
Fiscal Quarter Quarterly Ended High Low Cash Dividend _________________ ______ ______ ______________
November 30, 1992 $20.00 $15.50 $.135 February 28, 1993 23.88 19.00 $.135 May 31, 1993 24.00 19.88 $.135 August 31, 1993 25.88 19.75 $.15 November 30, 1993 25.75 20.88 $.15 February 28, 1994 23.88 21.50 $.15 May 31, 1994 24.63 22.50 $.15 August 31, 1994 24.13 22.13 $.165
As of September 9, 1994, there were approximately 4,218 record holders of the Company's common stock.
Item 6.
Item 6. Selected Financial Data.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
During the last three years the Company has financed all capital expenditures from internally generated funds, cash equivalents, and short-term borrowings. Capital expenditures for fiscal 1994 were $29,722,000, a 63% increase from fiscal 1993. This increase in capital expenditures resulted in part from the opening of eight new cafeterias in fiscal 1994 as compared to six in fiscal 1993. The Company also purchased five sites as land held for future use compared to one land site purchased during fiscal 1993. The purchase of two cafeteria properties, one in Mission, Kansas, and one in San Antonio, Texas, is also included in capital expenditures for fiscal 1994. These two cafeterias will reopen in fiscal 1995 after extensive renovation.
Capital commitments budgeted for fiscal 1995 include the opening of fifteen new cafeterias: nine on sites owned by the Company, two on land held under long-term ground leases, and four in regional shopping malls. One of these new cafeterias will be for the relocation of an existing unit located on leased premises. Therefore, a net increase of fourteen cafeterias is anticipated in fiscal 1995. Construction costs for the new cafeterias are expected to be funded by cash flow from operations, cash currently held in cash equivalent investments, and short-term borrowings. In addition, as of August 31, 1994, the Company owned 15 undeveloped cafeteria sites, and several land site acquisitions were in varying stages of negotiation.
The Company generated cash from operations of $52,146,000 in fiscal 1994. The Company had a balance of $17,000,000 outstanding at August 31, 1994, under a $30,000,000 line-of-credit agreement with a bank. At August 31, 1994, the Company had a working capital deficit of $38,228,000 which compares to the prior year's working capital of $494,000. The working capital position declined during fiscal 1994 due primarily to the decrease in cash and cash equivalents of $23,396,000 and the short-term borrowings under the line of credit to fund capital expenditures and treasury stock purchases.
During fiscal 1994 the Company purchased 2,268,300 shares of its common stock at a cost of $51,490,000, which are being held as treasury stock. The Board of Directors has authorized the repurchase of an additional 2,000,000 shares through December 31, 1995.
The Company believes that funds generated from operations and short-term or long-term financing from external sources, which can be obtained on terms acceptable to the Company in the event such financing is required, are adequate for its foreseeable needs.
Results of Operations
Fiscal 1994 Compared to Fiscal 1993
Sales increased $22,935,000, or 6%, due in part to the addition of eight new cafeterias in fiscal 1994 and six cafeterias in fiscal 1993. The average sales volume of cafeterias opened over one year increased to $2,287,000 in fiscal 1994 from $2,223,000 in fiscal 1993. The increase resulted from the implementation of new marketing programs and from improved economies in some trade areas.
Cost of food increased $5,266,000, or 6%, due primarily to the increase in sales. Payroll and related costs increased $5,310,000, or 5%, with the opening of eight new cafeterias. During the past several years, the Company has instituted various programs to address the related payroll cost of workers' compensation insurance; and these efforts, coupled with the revised Texas workers' compensation law, resulted in lower workers' compensation costs during fiscal 1994. The Company expects this downward trend in workers' compensation costs to stabilize during fiscal 1995. As a percent of sales, workers' compensation costs in fiscal 1995 should remain level or increase slightly over fiscal 1994. Occupancy and other operating expenses increased $8,588,000, or 8%, due primarily to the increase in sales; the opening of eight new cafeterias; higher advertising expenditures; and higher managers' salaries, which were based on the profitability of the cafeterias. During fiscal 1995 the Company has budgeted advertising expense at 2% of sales, up from 1.7% in fiscal 1994. General and administrative expenses decreased $637,000, or 4%, due primarily to the lower Company contribution to the profit sharing and retirement plan as determined by the plan's provisions. The decline was partially offset by higher costs under employee benefit plans which were based on the earnings growth of the Company. For fiscal 1995 the Company estimates that its contribution to the profit sharing and retirement plan as determined by the plan's provisions will increase by approximately $2,500,000 over fiscal 1994.
The provision for income taxes increased $1,976,000, or 10%, due to higher income from operations and the new federal income tax rates that were effective January 1, 1993. The Company's effective income tax rate increased from 36.8% in fiscal 1993 to 37.5% in fiscal 1994.
The Company adopted the Financial Accounting Standards Board's Statement No. 109, "Accounting for Income Taxes," in fiscal 1994, as discussed in Note 6 of Notes to Financial Statements.
Fiscal 1993 Compared to Fiscal 1992
Sales increased $21,398,000, or 6%, due primarily to the addition of six new cafeterias in fiscal 1993 and twelve cafeterias in fiscal 1992. The average sales volume of cafeterias opened over one year increased to $2,223,000 in fiscal 1993 from $2,217,000 in fiscal 1992. The increase resulted from the implementation of new marketing programs and from improved economies in some trade areas.
Cost of food increased $6,450,000, or 7%, due primarily to the increase in sales. Payroll and related costs increased $3,270,000, or 3%, with the opening of six new cafeterias. During the past three fiscal years the Company has instituted various programs to address the related payroll cost of workers' compensation insurance; and these efforts, coupled with the revised Texas workers' compensation law, resulted in lower workers' compensation costs during fiscal 1993. Occupancy and other operating expenses increased $5,368,000, or 5%, due primarily to the increase in sales; the opening of six new cafeterias; higher advertising expenditures; and higher managers' salaries, which were based on the profitability of the cafeterias. General and administrative expenses increased $866,000, or 6%, due primarily to higher costs under employee benefit plans which were based on the earnings growth of the Company.
The provision for income taxes increased $2,763,000, or 15%, due to higher income from operations, the new Texas corporate income tax that was effective January 1, 1992, and the new federal income tax rates that were effective retroactively to January 1, 1993. The Company's effective income tax rate increased from 35.5% in fiscal 1992 to 36.8% in fiscal 1993.
Inflation
The Company's policy is to maintain stable menu prices without regard to seasonal variations in food costs. General increases in costs of food, wages, supplies, and services make it necessary for the Company to increase its menu prices from time to time. With the moderation of inflation from 1992 through 1994, increases in menu prices were less frequent than in previous periods. To the extent prevailing market conditions allow, the Company intends to adjust menu prices to maintain profit margins.
Item 8.
Item 8. Financial Statements and Supplementary Data.
LUBY'S CAFETERIAS, INC. FINANCIAL STATEMENTS
Years Ended August 31, 1994, 1993, and 1992 with Report of Independent Auditors
Report of Independent Auditors
The Board of Directors and Shareholders Luby's Cafeterias, Inc.
We have audited the accompanying balance sheets of Luby's Cafeterias, Inc. at August 31, 1994 and 1993, and the related statements of income, shareholders' equity, and cash flows for each of the three years in the period ended August 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Luby's Cafeterias, Inc. at August 31, 1994 and 1993, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 6 to the financial statements, in 1994 the Company changed its method of accounting for income taxes.
ERNST & YOUNG LLP San Antonio, Texas October 3, 1994
Luby's Cafeterias, Inc. Balance Sheets
August 31 1994 1993 ________ _______ (Thousands of Dollars)
ASSETS Current assets: Cash and cash equivalents $ 10,909 $ 34,305 Trade accounts and other receivables 275 602 Food and supply inventories 3,851 3,426 Prepaid expenses 2,840 2,467 Deferred income taxes 259 3,018 ________ ________ Total current assets 18,134 43,818
Investments and other assets - at cost: Land held for future use 10,867 11,120 Other assets 2,835 2,375 ________ ________ Total investments and other assets 13,702 13,495
Property, plant, and equipment - at cost, less accumulated depreciation and amortization (Note 2) 257,832 244,786 ________ ________ Total assets $289,668 $302,099 ________ ________
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings (Note 3) $ 17,000 $ - Accounts payable - trade 10,341 9,688 Dividends payable 4,144 4,084 Accrued expenses and other liabilities (Note 11) 21,927 26,759 Income taxes payable 2,950 2,793 ________ ________ Total current liabilities 56,362 43,324
Deferred income taxes and other credits 19,780 19,827
Commitments (Notes 4, 5, and 7) - -
Shareholders' equity (Notes 5 and 8): Common stock, $.32 par value; authorized 100,000,000 shares in 1994 and 50,000,000 shares in 1993, issued 27,403,067 shares in 1994 and 1993 8,769 8,769 Paid-in capital 26,945 27,037 Retained earnings 229,014 206,214 Less cost of treasury stock, 2,285,257 shares in 1994 and 175,959 shares in 1993 (51,202) (3,072) ________ ________ Total shareholders' equity 213,526 238,948 ________ _________
Total liabilities and shareholders' equity $289,668 $302,099 ________ ________ See accompanying notes.
Luby's Cafeterias, Inc. Statements of Income
Years Ended August 31 1994 1993 1992 ________ ________ ________ (Thousands of Dollars Except Per Share Data)
Sales $390,692 $367,757 $346,359
Costs and expenses: Cost of food 98,223 92,957 86,507 Payroll and related costs 104,543 99,233 95,963 Occupancy and other operating expenses 113,546 104,958 99,590 General and administrative expenses 15,330 15,967 15,101 ________ ________ ________ 331,642 313,115 297,161 ________ ________ ________
Income from operations 59,050 54,642 49,198
Other income, net 1,385 1,574 1,319 ________ _________ ________
Income before income taxes and cumulative effect of change in method of accounting for income taxes 60,435 56,216 50,517
Provision for income taxes (Note 6): Current 18,909 20,401 17,202 Deferred 3,754 286 722 ________ ________ ________ 22,663 20,687 17,924 ________ ________ ________
Income before cumulative effect of change in method of accounting for income taxes 37,772 35,529 32,593
Cumulative effect as of August 31, 1993 of change in method of accounting for income taxes (Note 6) 1,563 - - ________ ________ ________ Net income $ 39,335 $ 35,529 $ 32,593 ________ ________ ________
Earnings per share: Income before cumulative effect of change in method of accounting for income taxes $ 1.45 $ 1.31 $ 1.19
Cumulative effect of change in method of accounting for income taxes .06 - - ________ ________ ________ Net income per share (Note 9) $ 1.51 $ 1.31 $ 1.19 ________ ________ ________ See accompanying notes.
Luby's Cafeterias, Inc. Statements of Cash Flows
Years Ended August 31 1994 1993 1992 ________ ________ ________ (Thousands of Dollars) OPERATING ACTIVITIES Net income $ 39,335 $ 35,529 $ 32,593 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,700 15,415 14,453 Cumulative effect of change in method of accounting (1,563) - - Loss on disposal of land held for future use 69 - - Loss on disposal of property, plant, and equipment 23 - 24 ________ ________ ________ Cash provided by operating activities before changes in operating assets and liabilities 53,564 50,944 47,070 Changes in operating assets and liabilities: (Increase) decrease in trade accounts and other receivables 327 (361) (51) (Increase) decrease in food and supply inventories (425) 216 625 (Increase) decrease in prepaid expenses (373) (214) 315 Increase in other assets (460) (153) (233) Increase (decrease) in accounts payable - trade (87) 2,033 (502) Increase (decrease) in accrued expenses and other liabilities (4,832) 2,678 (614) Increase (decrease) in income taxes payable 157 (210) (640) Increase in deferred income taxes and other credits 4,275 457 681 _______ ________ ________ Net cash provided by operating activities 52,146 55,390 46,651
INVESTING ACTIVITIES Proceeds from disposal of land held for future use 955 - - Proceeds from disposal of property, plant, and equipment 182 162 1,105 Purchase of land held for future use (3,470) (512) (4,229) Purchase of property, plant, and equipment (26,252) (17,771) (27,064) _______ ________ ________ Net cash used in investing activities (28,585) (18,121) (30,188)
FINANCING ACTIVITIES Proceeds from issuance of common stock under employee benefit plans 2,524 1,695 51 Net proceeds from short-term borrowings 17,000 - - Principal payments of long-term debt - (1,847) (483) Purchases of treasury stock (50,750) (425) (4,252) Dividends paid (15,731) (14,681) (13,685) _______ _______ _______ Net cash used in financing activities (46,957) (15,258) (18,369) _______ _______ _______ Net increase (decrease) in cash and cash equivalents (23,396) 22,011 (1,906)
Cash and cash equivalents at beginning of year 34,305 12,294 14,200 ________ ________ ________ Cash and cash equivalents at end of year $ 10,909 $ 34,305 $ 12,294 ________ ________ ________ See accompanying notes.
Luby's Cafeterias, Inc. Notes to Financial Statements August 31, 1994, 1993, and 1992
1. Significant Accounting Policies
Inventories
The food and supply inventories are stated at the lower of cost (first-in, first-out) or market.
Depreciation and Amortization
Luby's Cafeterias, Inc. (the Company) depreciates the cost of plant and equipment over their estimated useful lives using both straight-line and accelerated methods. Leasehold improvements are amortized over the related lease lives, which are in some cases shorter than the estimated useful lives of the improvements.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents.
Preopening Expenses
New store preopening costs are expensed as incurred.
2. Property, Plant, and Equipment
The cost and accumulated depreciation of property, plant, and equipment at August 31, 1994 and 1993, together with the related estimated useful lives used in computing depreciation and amortization, are reflected below:
Estimated 1994 1993 Useful Lives ________ ________ ____________ (Thousands of Dollars)
Land $ 58,352 $ 53,689 - Cafeteria equipment and furnishings 99,867 93,925 3 to 10 years Buildings 166,287 153,673 20 to 40 years Leasehold and leasehold improvements 41,104 39,314 Term of leases Office furniture and fixtures 1,862 1,779 10 years Transportation equipment 655 596 5 years Construction in progress 5,899 5,211 - ________ ________
374,026 348,187
Less accumulated depreciation and amortization 116,194 103,401 ________ ________
$257,832 $244,786 ________ ________
Total interest expense incurred for 1994, 1993, and 1992 was $288,000, $327,000, and $330,000, respectively, which approximated the amount paid in each year. Substantially all of these amounts were capitalized on qualifying properties in each of the respective years.
3. Debt
The Company has a $50,000,000 credit facility with a bank. As part of this credit agreement, the Company has a $30,000,000 line-of-credit which expires in January 1995. The Company began borrowing under this agreement in February 1994. As of August 31, 1994, the balance outstanding was $17,000,000, which was the maximum amount outstanding during the period. The average amount outstanding during the year and the weighted average interest rate based on the number of days outstanding were $4,485,000 and 4.6%, respectively.
The credit facility also provides a maximum commitment for letters of credit of $20,000,000. At August 31, 1994, letters of credit of approximately $10,008,000 have been issued as security for the payment of insurance obligations carried on the balance sheet.
4. Leases
The Company conducts a major part of its operations from facilities which are leased under noncancelable lease agreements. Most of the leases are for periods of ten to twenty-five years and provide for contingent rentals based on sales in excess of a base amount. Approximately 80% of the leases contain renewal options ranging from five to thirty years.
Annual future minimum lease payments under noncancelable operating leases as of August 31, 1994, are as follows: (Thousands of Dollars) Years ending August 31: 1995 $ 5,495 1996 5,578 1997 5,560 1998 6,143 1999 5,422 Thereafter 48,512 _________ Total minimum lease payments $ 76,710 _________
Total rent expense for operating leases for the years ended August 31, 1994, 1993, and 1992 was as follows:
1994 1993 1992 ________ ________ ________ (Thousands of Dollars)
Minimum rentals $ 5,141 $ 4,850 $ 4,509 Contingent rentals 1,436 1,380 1,393 ________ ________ ________ $ 6,577 $ 6,230 $ 5,902 ________ ________ ________
5. Employee Benefit Plans and Agreements
Incentive Compensation
The Company has various incentive compensation plans covering officers and other key employees that are based upon the achievement of specified earnings goals and performance factors. Awards under the plans are payable in cash and/or in shares of common stock. Charges to expense for current and future distributions under the plans amounted to $1,481,000, $1,098,000, and $242,000 in 1994, 1993, and 1992, respectively. No shares of common stock have been issued under the plans during the three-year period ended August 31, 1994.
Stock Option Plans
The Company has an Employee Stock Option Plan for executive and other key salaried employees. Under the terms of the stock option plan, nonqualified options and incentive stock options totaling 225,000 shares of the Company's common stock may be granted at prices not less than 100% of fair market value at date of grant. Options are exercisable for such periods as the Compensation Committee shall determine, but not for more than ten years from date of grant.
In 1990 the Company adopted a new Management Incentive Stock Plan to replace the current Employee Stock Option Plan and to provide for market-based incentive awards, including stock options, stock appreciation rights, restricted stock, and performance share awards. Under the terms of the Management Incentive Stock Plan, nonqualified options and incentive stock options totaling 2,700,000 shares of the Company's common stock are reserved for grants to the officer group, certain administrative personnel, and cafeteria management personnel. Stock options may be granted at prices not less than 100% of fair market value at date of grant. Options granted to the participants of the plan are exercisable over staggered periods and expire, depending upon the type of grant, in five to seven years. The plan provides for various vesting methods, depending upon the category of personnel.
Following is a summary of activity in the stock option plans for the three years ended August 31, 1994, 1993, and 1992:
Common Option Price Shares Options Options Per Share Reserved Outstanding Exercisable _____________ _________ ___________ ___________
Balances - August 31, 1991 14.83 to 18.09 2,833,422 2,012,538 187,976 Granted 15.00 to 16.25 - 213,275 - Became exercisable 16.42 to 17.88 - - 187,777 Canceled or expired 14.83 to 18.09 - (207,837) (123,242) Exercised 14.83 to 15.78 (27,009) (27,009) (27,009) _________ _________ ________ Balances - August 31, 1992 14.83 to 18.09 2,806,413 1,990,967 225,502 Granted 16.50 to 23.25 - 218,950 - Became exercisable 15.00 to 17.88 - - 210,531 Canceled or expired 15.00 to 23.25 - (182,029) (71,880) Exercised 14.83 to 17.88 (151,719) (151,719) (151,719) _________ _________ _______ Balances - August 31, 1993 14.83 to 23.25 2,654,694 1,876,169 212,434 Granted 21.75 to 21.75 - 370,725 - Became exercisable 15.00 to 23.25 - - 246,327 Canceled or expired 15.00 to 23.25 - (139,294) (41,633) Exercised 14.83 to 17.88 (191,366) (191,366) (191,366) _________ _________ ________ Balances - August 31, 1994 15.00 to 23.25 2,463,328 1,916,234 225,762 _________ _________ ________
Deferred Compensation
Deferred compensation agreements exist for several key management employees, all of whom are officers and/or directors. Under the agreements, the Company is obligated to provide for each such employee or his beneficiaries, during a period of ten years after the employee's death, disability, or retirement, annual benefits ranging from $15,500 to $43,400. The estimated present value of future benefits to be paid is being accrued over the period from the effective date of the agreements until the expected retirement dates of the participants. The net expense incurred for this plan for the years ended August 31, 1994, 1993, and 1992 amounted to $78,000, $76,000, and $25,000, respectively.
Profit Sharing
The Company has a profit sharing plan and retirement trust covering substantially all employees who have attained the age of 21 years and have completed two years of continuous service. The plan is administered by a corporate trustee, is a "qualified plan" under Section 401(a) of the Internal Revenue Code, and provides for the payment of the employee's vested portion of the plan upon retirement, termination, disability, or death. The plan is funded by contributions of a portion of the net earnings of the Company. The plan provides that for each fiscal year in which the Company's net income (before income taxes and before any contribution to the plan) meets certain minimum standards, the Company is obligated to contribute to the plan, at a minimum, an amount equal to a defined percentage of the participants' compensation. In no event will the required contribution exceed 10% of the Company's income before income taxes and before any contribution to the plan. The Company's annual contribution to the plan amounted to $1,886,000, $2,942,000, and $2,170,000 for 1994, 1993, and 1992, respectively.
6. Income Taxes
Effective September 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes." Under Statement No. 109, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities (temporary differences) and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Prior to the adoption of Statement No. 109, income tax expense was determined using the deferred method. Deferred tax expense was based on items of income and expense that were reported in different years in the financial statements and tax returns and were measured at the tax rate in effect in the year the difference originated.
As permitted by Statement No. 109, the Company has elected not to restate the financial statements of any prior years. The effect of the change on pretax income from continuing operations for the years ended August 31, 1994 and 1993 was not material; however, the cumulative effect of the change increased net income by $1,563,000, or $.06 per share.
The tax effect of temporary differences results in deferred income tax assets and liabilities as follows: August 31, 1994 Assets Liabilities ________ ___________ (Thousands of Dollars)
Workers' compensation insurance $ 259 $ - Amortization of capitalized interest - 546 Depreciation and amortization - 17,263 Deferred compensation 908 - Other - 256 _______ _______ $ 1,167 $18,065 _______ _______
The above amounts aggregate to a current deferred tax asset of $259,000 and to a noncurrent deferred tax liability of $17,157,000 at August 31, 1994.
The components of deferred income tax expense for 1993 and 1992 as recorded prior to the adoption of Statement No. 109 are as follows:
1993 1992 ______ ______ (Thousands of Dollars)
Workers' compensation insurance $ (551) $ 51 Amortization of capitalized interest 87 30 Depreciation and amortization 554 619 Deferred compensation (69) 5 Prepaid expense 97 - Property taxes 158 - Other 10 17 ______ ______ $ 286 $ 722 ______ ______
The Omnibus Budget Reconciliation Act of 1993 increased the federal tax rate to 35% beginning January 1, 1993. Accordingly, a blend of the old and new rates is used for the tax year ended August 31, 1993. The reconciliation of the provision for income taxes to the expected income tax expense (computed using the statutory tax rate) is as follows:
1994 1993 1992 Amount % Amount % Amount % _______ ____ _______ ____ _______ ____ (Thousands of Dollars and as a Percent of Pretax Income)
Normally expected income tax expense $21,152 35.0% $19,490 34.7% $17,176 34.0% State income taxes 1,625 2.7 1,579 2.8 1,107 2.2 Jobs tax credits (260) (.4) (392) (.7) (365) (.7) Other differences 146 .2 10 - 6 - _______ ____ _______ ____ _______ ____ $ 22,663 37.5% $ 20,687 36.8% $17,924 35.5% ________ ____ ________ ____ _______ ____
Deferred income taxes payable, net of the current deferred tax asset, amounted to $16,898,000 and $14,707,000 at August 31, 1994 and 1993, respectively.
Cash payments for income taxes for 1994, 1993, and 1992 were $18,752,000, $20,611,000, and $17,842,000, respectively.
7. Commitments
At August 31, 1994, the Company had five cafeterias under construction. The aggregate unexpended costs under the construction contracts were approximately $3,199,000.
The Company has unconditionally guaranteed a $2,000,000 loan under a line of credit for an unrelated limited partnership in exchange for advertising rights and a participation in future profits of the venture.
8. Common Stock
In 1991, the Board of Directors adopted a Shareholder Rights Plan and declared a dividend of one common stock purchase right for each outstanding share of common stock. The rights are not initially exercisable. The rights may become exercisable under circumstances described in the Plan if any person or group (an Acquiring Person) becomes the beneficial owner of 15% or more of the common stock. Once the rights become exercisable, each right will be exercisable to purchase, for $27.50 (the Purchase Price), one-half of one share of common stock, par value $.32 per share, of the Company. If any person becomes the beneficial owner of 15% or more of the common stock, each right will entitle the holder, other than the Acquiring Person, to purchase for the Purchase Price a number of shares of the Company's common stock having a market value of four times the Purchase Price.
During fiscal 1994, the Company purchased 2,268,300 shares of its common stock at a cost of $51,490,000, which are being held as treasury stock. During September 1994, the Company announced that the Board of Directors authorized the purchase in the open market of an additional 2,000,000 shares of the Company's outstanding common stock. If not extended, the purchase program will be discontinued on December 31, 1995.
9. Per Share Information
The weighted average number of shares used in the net income per share computation was 25,981,840 for 1994, 27,194,502 for 1993, and 27,344,397 for 1992.
10. Business Segments
The Company operates exclusively in the domestic cafeteria business.
11. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities at August 31 consisted of:
1994 1993 _______ _______ (Thousands of Dollars)
Salaries and bonuses $ 7,866 $ 8,265 Rent 922 970 Taxes, other than income 4,847 5,154 Profit sharing plan 1,886 2,942 Insurance 6,136 8,791 Other 270 637 _______ _______ $21,927 $26,759 _______ _______
12. Quarterly Financial Information (Unaudited)
The following is a summary of quarterly unaudited financial information for 1994 and 1993:
Three Months Ended November 30, February 28, May 31, August 31, 1993 1994 1994 1994 ________ ________ ________ _________ (Thousands of Dollars Except Per Share Data)
Sales $ 94,166 $ 93,719 $101,060 $101,747 Gross profit 44,197 44,815 49,670 49,244 Income before cumulative effect of change in method of accounting (a) 8,605 8,581 10,386 10,200 Net income 10,168 8,581 10,386 10,200 Income per share before cumulative effect of change in method of accounting (a) .32 .33 .40 .40 Net income per share .38 .33 .40 .40
Three Months Ended November 30, February 28, May 31, August 31, 1992 1993 1993 1993 ________ ________ ________ _________ (Thousands of Dollars Except Per Share Data)
Sales $ 88,597 $ 88,297 $ 94,791 $ 96,072 Gross profit 41,661 42,026 45,366 46,514 Net income 7,852 8,008 9,707 9,962 Net income per share .29 .29 .36 .37
(a) See Note 6 for information on the cumulative effect of the change in method of accounting.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable. PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
There is incorporated in this Item 10 by reference that portion of the Company's definitive proxy statement for the 1995 annual meeting of shareholders appearing therein under the captions "Election of Directors" and "Information Concerning Directors and Executive Officers." See also the information in Item 4A of Part I of this Report.
Item 11.
Item 11. Executive Compensation.
There is incorporated in this Item 11 by reference that portion of the Company's definitive proxy statement for the 1995 annual meeting of shareholders appearing therein under the caption "Executive Compensation."
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
There is incorporated in this Item 12 by reference that portion of the Company's definitive proxy statement for the 1995 annual meeting of shareholders appearing therein under the captions "Principal Shareholders" and "Management Shareholders."
Item 13.
Item 13. Certain Relationships and Related Transactions.
There is incorporated in this Item 13 by reference that portion of the Company's definitive proxy statement for the 1995 annual meeting of shareholders appearing therein under the caption "Certain Relationships and Related Transactions."
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents.
1. Financial Statements
The following financial statements are filed as part of this Report:
Balance sheets at August 31, 1994 and 1993
Statements of income for each of the three years in the period ended August 31, 1994
Statements of shareholders' equity for each of the three years in the period ended August 31, 1994
Statements of cash flows for each of the three years in the period ended August 31, 1994
Notes to financial statements
Report of independent auditors
2. Financial Statement Schedules
The following consent and the following schedules for each of the three years in the period ended August 31, 1994, are filed as part of this Report:
Consent of Independent Auditors
Schedule V - Property, plant, and equipment
Schedule VI - Accumulated depreciation and amortization of property, plant, and equipment
Schedule X - Supplementary income statement information
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements and notes thereto.
3. Exhibits
The following exhibits are filed as a part of this Report:
2 - Agreement and Plan of Merger dated November 1, 1991, between Luby's Cafeterias, Inc., a Texas corporation, and Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
3(a) - Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
3(b) - Certificate of Amendment to Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation, as filed in the Office of the Secretary of State of Delaware on January 18, 1994 (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference).
3(c) - Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation, as in effect February 28, 1994 (filed as Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference).
3(d) - Bylaws of Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
4(a) - Form of certificate representing shares of common stock of Luby's Cafeterias, Inc. (filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
4(b) - Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference).
4(c) - Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
4(d) - Promissory Note (Loan Agreement) dated January 31, 1994, in favor of NationsBank of Texas, N.A., in the maximum amount of $30,000,000 (filed as Exhibit 4(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference).
10(a) - Form of Deferred Compensation Agreement entered into between Luby's Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference).
10(b) - Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference).
10(c) - Performance Unit Plan of Luby's Cafeterias, Inc. approved by the shareholders on January 12, 1984 (filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1984, and incorporated herein by reference).
10(d) - Employment Contract dated January 8, 1988, between Luby's Cafeterias, Inc. and George H. Wenglein (filed as Exhibit 10(h) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1988, and incorporated herein by reference).
10(e) - Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as Exhibit 10(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989, and incorporated herein by reference).
11 - Statement re computation of per share earnings.
13 - Luby's Cafeterias, Inc. 1994 annual report to shareholders (furnished for the information of the Commission and not deemed to be "filed" except for those portions expressly incorporated by reference).
99(a) - Consent of Ernst & Young LLP.
99(b) - Consent of Ernst & Young LLP.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of the period covered by this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 28, 1994 LUBY'S CAFETERIAS, INC. (Registrant)
By: RALPH ERBEN ___________________________ Ralph Erben, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature and Date Name and Title
JOHN B. LAHOURCADE John B. Lahourcade, Chairman of _______________________________ the Board and Director November 28, 1994
RALPH ERBEN Ralph Erben, President, Chief _______________________________ Executive Officer, and Director November 28, 1994
JOHN E. CURTIS, JR. John E. Curtis, Jr. _______________________________ Senior Vice President, Chief November 28, 1994 Financial Officer, Treasurer, and Director
WILLIAM E. ROBSON William E. Robson, Senior Vice ________________________________ President and Director November 28, 1994
RONALD E. RIEMENSCHNEIDER Ronald E. Riemenschneider ________________________________ Controller November 28, 1994
LAURO F. CAVAZOS Laura F. Cavazos, Director ________________________________ November 28, 1994
DAVID B. DAVISS David B. Daviss, Director ________________________________ November 28, 1994
ROGER R. HEMMINGHAUS Roger R. Hemminghaus, Director ________________________________ November 28, 1994
WALTER J. SALMON Walter J. Salmon, Director ________________________________ November 28, 1994
GEORGE H. WENGLEIN George H. Wenglein, Director ________________________________ November 28, 1994
JOANNE WINIK Joanne Winik, Director ________________________________ November 28, 1994
Consent of Independent Auditors
We consent to the addition of the financial statement schedules listed in Item 14.(a)2. of Form 10-K, to the financial statements covered by our report dated October 3, 1994.
Our audits also included the financial statement schedules of Luby's Cafeterias, Inc. listed in Item 14.(a)2. These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
San Antonio, Texas October 3, 1994
Luby's Cafeterias, Inc. Schedule V - Property, Plant, and Equipment Years Ended August 31, 1994, 1993, and 1992
Column A Column B Column C Column D Column E Column F ______________________________________________________________________________________________ Balance at Other Balance Beginning Additions Changes- at End Classification of Period at Cost Retirements Add (Deduct) of Period ______________________________________________________________________________________________ (Thousands of Dollars)
Year Ended August 31, 1992
Land (B) $ 49,514 $ - $ (111) $ 2,256 (C) $51,659 Cafeteria equipment and furnishings 80,766 10,341 (1,751) 451 (A) 89,807 Buildings 128,951 9,877 (866) 5,593 (A) 143,555 Leasehold and leasehold improvements 34,945 2,335 (498) 1,213 (A) 37,995 Office furniture and fixtures 1,696 35 - - 1,731 Transportation equipment 591 240 (217) - 614 Construction in progress 7,910 4,236 - (7,257)(A) 4,889 ________ ________ ________ ________ ________ $304,373 $ 27,064 $ (3,443) $ 2,256 $330,250 ________ ________ ________ ________ ________
Year Ended August 31, 1993
Land (B) $ 51,659 $ 30 $ (47) $ 2,047 (C) $ 53,689 Cafeteria equipment and furnishings 89,807 5,151 (1,357) 324 (A) 93,925 Buildings 143,555 6,538 - 3,580 (A) 153,673 Leasehold and leasehold improvements 37,995 1,542 (266) 43 (A) 39,314 Office furniture and fixtures 1,731 83 (35) - 1,779 Transportation equipment 614 158 (176) - 596 Construction in progress 4,889 4,269 - (3,947)(A) 5,211 ________ ________ ________ ________ ________
$330,250 $ 17,771 $ (1,881) $ 2,047 $348,187 ________ ________ ________ ________ ________
Year Ended August 31, 1994
Land (B) $ 53,689 $ 1,964 $ - $ 2,699 (C) $ 58,352 Cafeteria equipment and furnishings 93,925 7,933 (2,137) 146 (A) 99,867 Buildings 153,673 8,690 - 3,924 (A) 166,287 Leasehold and leasehold improvements 39,314 2,451 (707) 46 (A) 41,104 Office furniture and fixtures 1,779 90 (7) - 1,862 Transportation equipment 596 320 (261) - 655 Construction in progress 5,211 4,804 - (4,116)(A) 5,899 ________ ________ ________ ________ ________
$348,187 $ 26,252 $ (3,112) $ 2,699 $374,026 ________ ________ ________ ________ ________
(A) Reclassification resulting from completion of cafeterias that were under construction at the beginning of each year. (B) Land held for future use is reflected on the balance sheet as an investment. Accordingly, additions to the account of $3,470,000, $512,000, and $4,229,000, for 1994, 1993, and 1992, respectively, are omitted from this schedule. (C) Reclassification from land held for future use when land is placed in service. /TABLE
Luby's Cafeterias, Inc. Schedule VI - Accumulated Depreciation and Amortization of Property, Plant, and Equipment Years Ended August 31, 1994, 1993, and 1992
Column A Column B Column C Column D Column F ______________________________________________________________________________________________ Additions Balance at Charged to Balance at Beginning Costs and End Description of Period Expenses Retirements of Period ______________________________________________________________________________________________ (Thousands of Dollars)
Year Ended August 31, 1992
Cafeteria equipment and furnishings $ 40,561 $ 7,832 $ (1,668) $ 46,725 Buildings 22,648 4,278 - 26,926 Leasehold improvements 12,826 2,090 (497) 14,419 Office furniture and fixtures 1,221 95 - 1,316 Transportation equipment 309 158 (148) 319 ________ ________ ________ ________
$ 77,565 $ 14,453 $ (2,313) $ 89,705 ________ ________ ________ ________ Year Ended August 31, 1993
Cafeteria equipment and furnishings $ 46,725 $ 8,285 $ (1,284) $ 53,726 Buildings 26,926 4,728 - 31,654 Leasehold improvements 14,419 2,152 (263) 16,308 Office furniture and fixtures 1,316 97 (35) 1,378 Transportation equipment 319 153 (137) 335 ________ ________ ________ ________ $ 89,705 $ 15,415 $ (1,719) $103,401 ________ ________ ________ ________ Year Ended August 31, 1994
Cafeteria equipment and furnishings $ 53,726 $ 8,155 $ (2,030) $59,851 Buildings 31,654 5,075 - 36,729 Leasehold improvements 16,308 2,204 (682) 17,830 Office furniture and fixtures 1,378 98 (6) 1,470 Transportation equipment 335 168 (189) 314 ________ ________ ________ ________
$103,401 $ 15,700 $ (2,907) $116,194 ________ ________ ________ ________
The answers to Column E - Other changes are none. /TABLE
Luby's Cafeterias, Inc. Schedule X - Supplementary Income Statement Information Years Ended August 31, 1994, 1993, and 1992
Charged to Costs and Expenses _____________________________
1994 1993 1992 ______________________________ (Thousands of Dollars)
Maintenance and repairs $ 5,567 $ 5,024 $ 4,767 _______________________________
Taxes, other than payroll and income taxes $ 5,652 $ 5,493 $ 5,273 _______________________________
Advertising costs $ 6,619 $ 4,292 $ 2,854 _______________________________
The amount for depreciation and amortization is not presented, as such amount has been disclosed in the financial statements.
EXHIBIT INDEX
Number Document
2 - Agreement and Plan of Merger dated November 1, 1991, between Luby's Cafeterias, Inc., a Texas corporation, and Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
3(a) - Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
3(b) - Certificate of Amendment to Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation, as filed in the Office of the Secretary of State of Delaware on January 18, 1994 (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference).
3(c) - Certificate of Incorporation of Luby's Cafeterias, Inc., a Delaware corporation, as in effect February 28, 1994 (filed as Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference).
3(d) - Bylaws of Luby's Cafeterias, Inc., a Delaware corporation (filed as Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
4(a) - Form of certificate representing shares of common stock of Luby's Cafeterias, Inc. (filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
4(b) - Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc., in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference).
4(c) - Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference).
4(d) - Promissory Note (Loan Agreement) dated January 31, 1994, in favor of NationsBank of Texas, N.A., in the maximum amount of $30,000,000 (filed as Exhibit 4(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1994, and incorporated herein by reference).
10(a) - Form of Deferred Compensation Agreement entered into between Luby's Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference).
10(b) - Incentive Bonus Plan of Luby's Cafeterias, Inc. adopted October 19, 1983 (filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1983, and incorporated herein by reference).
10(c) - Performance Unit Plan of Luby's Cafeterias, Inc. approved by the shareholders on January 12, 1984 (filed as Exhibit 10(f) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1984, and incorporated herein by reference).
10(d) - Employment Contract dated January 8, 1988, between Luby's Cafeterias, Inc. and George H. Wenglein (filed as Exhibit 10(h) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1988, and incorporated herein by reference).
10(e) - Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as Exhibit 10(i) to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989, and incorporated herein by reference).
11 - Statement re computation of per share earnings.
13 - Luby's Cafeterias, Inc. 1994 annual report to shareholders (furnished for the information of the Commission and not deemed to be "filed" except for those portions expressly incorporated by reference).
99(a) - Consent of Ernst & Young LLP.
99(b) - Consent of Ernst & Young LLP.