EX-99 2 exhibit99.htm EXHIBIT 99 LUBY'S PRESS RELEASE ANNOUNCING 3RD QTR EARNINGS exhibit99.htm
For Immediate Release                                
For additional information contact:
                  Rick Black, 713-329-6808      
 
Luby’s Announces Third Quarter Fiscal 2008 Results
New Replacement Restaurant Expected to Open in Houston in July 2008
New Restaurant in North Houston Expected to Open in July 2008
Same-Store Sales Declined 3.3%


HOUSTON, TX – June 10, 2008 – Luby’s, Inc. (NYSE: LUB) today announced unaudited financial results for the third quarter of fiscal 2008, which ended on May 7, 2008.

Third Quarter Fiscal 2008 Highlights:
· Culinary contract services sales increased to $1.8 million compared to $0.4 million in the same quarterlast year
· Restaurant sales were $72.8 million, a decrease of 4.1% compared to last year, approximately 0.8% of the decline relates to the net effect of sales from closed stores in the prior year partially offset by new store sales in the current year
· Store level profit, which the Company defines as restaurant sales minus costs of food, payroll and relatedcosts and other operating expenses, were $10.3 million, or 14.3% compared to $14.3 million, or 18.9% last year
· Same-store sales, which includes 121 units, declined 3.3% in the third quarter compared to the same quarter last year

Total sales decreased $1.6 million, or 2.1% in the third quarter fiscal 2008 to $74.6 million, compared to $76.2 million in the same quarter last year. Income from continuing operations in the third quarter was $1.0 million, or $0.03 per diluted share, compared to $3.9 million, or $0.14 per diluted share in the same quarter last year.

“Despite an extremely challenging consumer environment, our team continued to operate well in the field,” said Chris Pappas, president and CEO. “The restaurant industry remains under pressure from a number of economic factors which include higher gasoline prices, rising commodity costs and in general, negative economic news. The continued rise in gasoline prices is having an impact on how consumers eat out and at what frequency, as evidenced by the decline in the consumer confidence index. While our restaurant sales declined during the third quarter, our team managed food and labor costs well in a difficult environment. We remain confident that our long-term strategic plan to enhance and grow the Luby’s brand will optimize our competitive value proposition to the market and enhance shareholder value.”

Food costs decreased approximately $0.2 million, or 1.2%, in the third quarter fiscal 2008 compared to the same quarter last year. Food costs as a percentage of restaurant sales increased to 27.4% in the third quarter fiscal 2008 from 26.6% in the third quarter last year. Food commodity costs increased in most categories with oils and cheese having the greatest impact on food costs, partially offset by lower produce prices.

Payroll and related costs decreased $0.1 million in the third quarter fiscal 2008 compared to the same quarter last year. Payroll and related costs as a percentage of restaurant sales increased to 34.8% in the third quarter fiscal 2008 from 33.5% in the third last year, primarily due to the lower sales level.
 
Other operating expenses primarily include restaurant related expenses for utilities, repairs and maintenance, advertising, insurance, supplies, services and occupancy costs. Other operating expenses increased by approximately $1.2 million, or 7.6%, in the third quarter fiscal 2008 compared to the same quarter last year. As a percentage of restaurant sales, other operating expenses increased to 23.5% in the third quarter fiscal 2008 from 21.0% last year. Other operating expenses increased primarily due to 1) an approximate $0.6 million increase in repairs and maintenance expenses focused on improving the appearance and functionality of the cafeterias for the guests and employees; and 2) an approximate $0.8 million increase in utility expense resulting from higher utility rates.

Opening costs were approximately $0.2 million in the third quarter fiscal 2008 and reflects the labor, supplies, occupancy, and other costs necessary to support the unit through its opening period.

Cost of culinary contract services increased by approximately $1.2 million in the third quarter fiscal 2008 compared to the same quarter last year. This increase was related to the food, labor and other operating expenses associated with the increase in revenue for this line of business.

Depreciation and amortization expense increased approximately $0.4 million, or 10.6%, in third quarter fiscal 2008 compared with the same quarter last year due to higher depreciation resulting from new restaurant openings and existing restaurant upgrades and remodels.

General and administrative expenses include corporate salaries and benefits related costs, including restaurant area leaders, share-based compensation, professional fees, travel and recruiting expenses and other office expenses. General and administrative expenses increased by approximately $0.4 million, or 7.3% in the third quarter fiscal 2008 compared to the same quarter last year. As a percentage of total sales, general and administrative expenses increased to 7.7% in the third quarter fiscal 2008, from 7.0% last year. The increase was primarily due to an approximate $0.4 million increase in corporate salary expense related to staffing costs to support the culinary contract services business and other departments to support the Company’s strategic growth plan.
 
 
Company Outlook
The Company expects to open one replacement restaurant and one new restaurant in the Houston area in July 2008. Additionally, the Company has plans to open two to three new restaurants in calendar year 2008 and initiate new culinary contract services operations in two to three new healthcare facilities.

Conference Call
The company will host a conference call today at 4:00 p.m. Central Time, June 10, 2008, to discuss third quarter fiscal 2008 results. To access the call live, dial 888-755-9496 and use the participant pin code, Lubys (58297), at least 10 minutes prior to the start time, or listen live over the Internet by logging on to www.lubys.com.

About Luby’s
Luby’s operates 123 restaurants in Austin, Dallas, Houston, San Antonio, the Rio Grande Valley and other locations throughout Texas and other states.  Luby’s provides its customers with quality home-style food, value pricing, and outstanding customer service.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 


Consolidated Statements of Operations (unaudited)
(In thousands except per share data)


   
Quarter Ended
    
Three Quarters Ended
  
   
May 7,
    
May 9,
    
May 7,
    
May 9,
  
   
2008
    
2007
    
2008
    
2007
  
   
(84 days)
    
(84 days)
    
(252 days)
    
(252 days)
  
       
SALES
                        
        Restaurant sales
   $ 72,753     $ 75,836     $ 215,360     $ 221,596  
        Culinary contract services
     1,843       363       5,239       489  
TOTAL SALES
     74,596       76,199       220,599       222,085  
COSTS AND EXPENSES:
                                
        Cost of food
     19,965       20,208       59,560       59,547  
        Payroll and related costs
     25,322       25,396       74,256       74,999  
        Other operating expenses
     17,125       15,921       48,458       49,071  
        Opening costs
     190       —       212       —  
        Cost of culinary contract services
     1,582       395       4,660       561  
        Depreciation and amortization
     4,088       3,698       12,058       10,853  
        General and administrative expenses
     5,711       5,320       18,568       15,344  
        Provision for (reversal of) asset impairments
     —       15       717       205  
        Net loss on disposition of property and equipment
     114       57       209       551  
        Total costs and expenses
     74,097       71,010       218,698       211,131  
INCOME FROM OPERATIONS
     499       5,189       1,901       10,954  
        Interest income
     231       281       904       693  
        Interest expense
     (58 )     (191 )     (158 )     (582 )
        Interest related to income taxes
     —       —       1,319       —  
        Other income, net
     308       198       720       607  
Income before income taxes and discontinued operations
     980       5,477       4,686       11,672  
        Provision (benefit) for income taxes
     (27 )     1,579       (1,435 )     3,789  
Income from continuing operations
     1,007       3,898       6,121       7,883  
        Discontinued operations, net of income taxes
     (58 )     21       (116 )     (168 )
NET INCOME
   $ 949     $ 3,919     $ 6,005     $ 7,715  
Income per share from continuing operations
                                
        basic
   $ 0.03     $ 0.15     $ 0.22     $ 0.31  
        assuming dilution
     0.03       0.14       0.21       0.29  
Loss per share from discontinued operations
                                
        basic
   $ —     $ —     $ —     $ (0.01 )
        assuming dilution
     —       —       —       (0.01 )
Net income per share
                                
        basic
   $ 0.03     $ 0.15     $ 0.22     $ 0.30  
        assuming dilution
     0.03       0.14       0.21       0.28  
Weighted average shares outstanding:
                                
        basic
     27,925       26,132       27,739       26,104  
        assuming dilution
     28,042       27,173       28,052       27,171  




 
 
 


The following table contains information derived from the Company’s Consolidated Statements of Operations expressed as a percentage of sales.  Percentages may not add due to rounding.


   
Quarter Ended
  
Three Quarters Ended
  
   
May 7,
  
May 9,
  
May 7,
  
May 9,
  
   
2008
  
2007
  
2008
  
2007
  
   
(84 days)
  
(84 days)
  
(252 days)
  
(252 days)
  
       
Restaurant sales
    
97.5
%
  
99.5
%
  
97.6
%
  
99.8
%
Culinary contract services
    
2.5
%
  
0.5
%
  
2.4
%
  
0.2
%
TOTAL SALES
    
100
%
  
100
%
  
100
%
  
100
%
                           
COSTS AND EXPENSES:
                          
(As a percentage of restaurant sales)
                          
Cost of food
    
27.4
%
  
26.6
%
  
27.7
%
  
26.9
%
Payroll and related costs
    
34.8
%
  
33.5
%
  
34.5
%
  
33.8
%
Other operating expenses
    
23.5
%
  
21.0
%
  
22.5
%
  
22.1
%
Store level profit
    
14.3
%
  
18.9
%
  
15.3
%
  
17.2
%
                           
(As a percentage of total sales)
                          
General and administrative expenses
    
7.7
%
  
7.0
%
  
8.4
%
  
6.9
%
INCOME FROM OPERATIONS
    
0.7
%
  
6.8
%
  
0.9
%
  
4.9
%


 
 
 
 
 

 





 
 
 


Consolidated Balance Sheets
(In thousands except share data)


   
May7,
    
August 29,
  
   
2008
    
2007
  
   
(Unaudited)
        
ASSETS
      
Current Assets:
            
        Cash and cash equivalents
  
$
11,728
    
$
17,514
  
        Short-term investments
    
5,150
      
8,600
  
        Trade accounts and other receivables, net
    
1,687
      
1,657
  
        Food and supply inventories
    
2,887
      
2,574
  
        Prepaid expenses
    
834
      
1,398
  
        Deferred income taxes
    
712
      
624
  
               Total current assets
    
22,998
      
32,367
  
Property and equipment, net
    
191,377
      
185,983
  
Property held for sale
    
5,411
      
736
  
Long-term investments
    
9,099
      
—
  
Other assets
    
438
      
548
  
Total assets
  
$
229,323
    
$
219,634
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
Current Liabilities:
                
        Accounts payable
  
$
14,926
    
$
12,882
  
        Accrued expenses and other liabilities
    
17,018
      
21,400
  
              Total current liabilities
    
31,944
      
34,282
  
Other liabilities
    
6,504
      
7,088
  
             Total liabilities
    
38,448
      
41,370
  
Commitments and Contingencies
                
SHAREHOLDERS' EQUITY
                
Common stock, $0.32 par value; 100,000,000 shares authorized;
        Shares issued were 28,429,854 and 27,835,901, respectively;
        Shares outstanding were 27,929,854 and 26,159,498, respectively
    
9,098
      
8,907
  
Paid-in capital
    
19,995
      
43,514
  
Retained earnings
    
166,958
      
161,447
  
Accumulated other comprehensive loss
    
(401
)
    
—
  
Less cost of treasury stock, 500,000 and 1,676,403 shares, respectively
    
(4,775
)
    
(35,604
)
              Total shareholders' equity
    
190,875
      
178,264
  
Total liabilities and shareholders' equity
  
$
229,323
    
$
219,634
  


 

 





 
 
 

Consolidated Statements of Cash Flows (unaudited)
(In thousands)


   
Three Quarters Ended
  
   
May 7,
    
May 9,
  
   
2008
    
2007
  
   
(252 days)
    
(252 days)
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
        Net income
  
$
6,005
    
$
7,715
  
Adjustments to reconcile net income to net cash provided by operating activities:
                
        Provision for asset impairments, net of gains and losses on property sales
    
926
      
648
  
        Depreciation and amortization
    
12,058
      
10,853
  
        Amortization of debt issuance cost
    
61
      
322
  
        Non-cash compensation expense
    
169
      
165
  
        Share-based compensation expense
    
865
      
664
  
        Interest related to income taxes
    
(1,319
)
    
—
  
        Deferred tax provision
    
1,400
      
3,240
  
Cash provided by operating activities before changes in operating assets and liabilities
    
20,165
      
23,607
  
        Changes in operating assets and liabilities:
                
        Decrease in trade accounts and other receivables
    
162
      
1,101
  
        Increase in food and supply inventories
    
(313
)
    
(100
)
        (Increase) decrease in prepaid expenses and other assets
    
613
      
(351
)
        Increase (decrease) in accounts payable, accrued expenses and other liabilities
    
(3,834
)
    
687
  
Net cash provided by operating activities
    
16,793
      
24,944
  
CASH FLOWS FROM INVESTING ACTIVITIES:
                
        Proceeds from redemption or maturity of short-term investments
    
19,600
      
9,500
  
        Purchases of short-term investments
    
(25,650
)
    
(31,877
)
        Proceeds from disposal of assets
    
2,353
      
1,743
  
        Purchases of property and equipment
    
(25,350
)
    
(11,388
)
Net cash used in investing activities
    
(29,047
)
    
(32,022
)
CASH FLOWS FROM FINANCING ACTIVITIES:
                
        Proceeds received on exercise of stock options
    
11,243
      
530
  
        Purchase of treasury stock
    
(4,775
)
    
—
  
Net cash provided by financing activities
    
6,468
      
530
  
Net decrease in cash and cash equivalents
    
(5,786
)
    
(6,548
)
Cash and cash equivalents at beginning of period
    
17,514
      
9,715
  
Cash and cash equivalents at end of period
  
$
11,728
    
$
3,167
  
Cash paid for:
                
     Income taxes
  
$
1,602
    
$
229
  
     Interest
    
87
      
113
  

The Company wishes to caution readers that various factors could cause its actual financial and operational results to differ materially from those indicated by forward-looking statements made from time to time in news releases, reports, proxy statements, registration statements, and other written communications, as well as oral statements made from time to time by representatives of the Company. Any statements made in this news release and in such oral and written communications other than historical statements, including statements regarding the expected financial performance of the Company’s prototype restaurant, the execution of the Company’s strategic plan, and future openings of new or replacement restaurants are forward-looking statements. Forward-looking statements involve risks and uncertainties, including but not limited to general business conditions, the impact of competition, the success of operating initiatives, changes in the cost and supply of food and labor, the seasonality of the Company’s business, taxes, inflation, governmental regulations, and the availability of credit, as well as other risks and uncertainties disclosed in the Company’s periodic reports on Form 10-K and Form 10-Q.
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