EX-99 2 li3745ex99.txt EXHIBIT 99 Exhibit 99 LUBY'S ANNOUNCES FOURTH QUARTER RESULTS SAME-STORE SALES GROWTH OF 7.2 PERCENT HOUSTON, Oct. 18 /PRNewswire-FirstCall/ -- Luby's, Inc. (NYSE: LUB) today announced unaudited financial results for its fourth quarter and fiscal 2005, which ended on August 31, 2005. Fiscal year 2005 was a 53 week year for Luby's, with the extra week occurring in the fourth quarter. The fourth quarter of fiscal 2005 was a 17 week period compared to a 16 week period in the fourth quarter of fiscal 2004. Sales in the fourth quarter of fiscal 2005 were $105.4 million, an increase of 13.8% compared to the fourth quarter of fiscal 2004. Excluding the additional week, same-store sales growth for the fourth quarter of fiscal 2005 were 7.2%. All of the Company's sales during the fourth quarter were characterized as same-store sales. The Company reported a net loss of $1.9 million, or $0.08 per share fully diluted, in the fourth quarter of fiscal 2005 compared to net income of $3.0 million, or $0.13 per share fully diluted, in the fourth quarter of fiscal 2004. The fourth quarter net loss in fiscal 2005 was primarily attributed to the one time non-cash charge of $8.0 million to net income in the fourth quarter. This charge represented the write-off of the unamortized portion of the discount associated with the conversion feature of the subordinated convertible notes held by Chris and Harris Pappas, which were converted to common stock in August 2005. Luby's reduced its outstanding debt by $16.3 million during the fourth quarter and decreased its total debt to $13.5 million as of August 31, 2005. The Company also has a new three year, unsecured revolving credit facility in the amount of $45 million with the capacity to expand up to $60 million, which replaced the Company's prior $50 million secured revolving line of credit. "We are pleased to announce our seventh consecutive quarter and second consecutive fiscal year of same-store sales growth," said Chris Pappas, President and CEO. "Financially, we have reduced total debt, restructured our credit facility, reduced our interest rates and created greater flexibility for the Company. Operationally we remain committed to enhancing our restaurants, increasing same store-sales and improving our customers' dining experience." Income from operations in the 17 week fourth quarter fiscal 2005 was $9.4 million, an increase of 192.9% compared to $3.2 million for the fourth quarter of fiscal 2004. EBITDA in the 17 week fourth quarter fiscal 2005 was $13.6 million, an increase of 52.3% compared to EBITDA of $9.0 million in the fourth quarter of fiscal 2004. Total prime costs of food and labor in the fourth quarter of fiscal 2005 were 61.3% of sales, an improvement compared to 65.5% in the fourth quarter of fiscal 2004. The improvement in food costs came from the Company's ability to partially offset higher commodity prices for beef, poultry and dairy by promoting combination meals with favorable cost structures. The improvement in labor costs was primarily the result of a reduction in worker compensation expense and enhanced productivity due to higher sales and effective labor deployment. Other operating expenses were 18.6% of sales in the fourth quarter of fiscal 2005 compared to 18.6% of sales in the same quarter of fiscal 2004. General and Administrative costs were 7.1% of sales in the fourth quarter of 2005 compared to 6.2% of sales in the fourth quarter of fiscal 2004. This increase was driven by increased professional service costs related to Sarbanes Oxley and the implementation of new technical systems. Fiscal year 2005 sales were $322.2 million, an increase of 8.2% compared to $297.8 million in fiscal 2004. Excluding the additional week in 2005, same-store sales growth for fiscal 2005 was 6.1%. All of the Company's sales during fiscal 2005 were characterized as same-store sales. Net income in fiscal 2005 was $3.4 million, or $0.15 per share fully diluted, compared to a loss of $6.0 million, or $0.26 per share fully diluted, in fiscal 2004. Income from operations in the 53 week fiscal year 2005 was $19.8 million, an increase of 139.8% compared to $8.2 million in fiscal 2004. EBITDA in the 53 week fiscal year 2005 was $34.8 million, an increase of 31.7% compared to EBITDA of $26.4 million in fiscal 2004. "Fiscal 2005 was a year of strong improvement for Luby's financial results which were a direct result of our employee's hard work over the last four years implementing efficiencies into the business and improving execution," said Chris Pappas, President and CEO. "In fiscal 2006 we will continue our focus on same-store sales growth in our existing units while developing two new stores that will open in fiscal 2007." Conference Call The company will host a conference call at 10:00 a.m. Central on October 18, 2005 to discuss financial results for the quarter. Those interested in participating may call (866) 613-5217 and use the pin code 6720611. A replay of the call will be available approximately two hours following the call through October 25, 2005. The replay number is (866) 453-6660 and the pin code is 206511. A live audio webcast of the conference call will be available via the Company's website at http://www.lubys.com/aboutusEvents.asp for all interested parties to listen online. A replay of the webcast will also be available on the Company's website soon after the call is concluded. About Luby's Luby's provides its customers with delicious, home-style food, value pricing, and outstanding customer service at its 131 restaurants in Dallas, Houston, San Antonio, the Rio Grande Valley, and other locations throughout Texas and other states. For more information about Luby's, visit the Company's website at http://www.lubys.com. Prior period results have been reclassified to show the retroactive effect of discontinued operations per the new business plan. Reclassification facilitates more meaningful comparability to the Company's current information. As stores are closed in the future and presented in discontinued operations, quarterly and annual financial statements, where applicable, will be reclassified for further comparability. Certain reclassifications of prior period results have been made to conform to current year presentation. In this regard, store management compensation has been reclassified from "Other Operating Expenses" to "Payroll and Related Costs" to provide comparability to financial results reported by our peers in the industry. These amounts were $11.1 million and $9.7 million for the quarters ended August 31, 2005 and August 25, 2004 respectively. These amounts were $33.7 million and $30.8 million for the fiscal years ended August 31, 2005 and August 25, 2004 respectively. Consolidated Statements of Operations (unaudited) (In thousands except per share data)

Quarter Ended Fiscal Year Ended ---------------------------- ---------------------------- August 31, August 25, August 31, August 25, 2005 2004 2005 2004 (119 days) (112 days) (371 days) (364 days) ------------ ------------ ------------ ------------ SALES $ 105,423 $ 92,646 $ 322,151 $ 297,849 COSTS AND EXPENSES: Cost of food 27,641 24,941 86,280 79,923 Payroll and related costs 37,028 35,784 115,481 112,961 Other operating expenses 19,598 17,258 64,796 59,447 Depreciation and amortization 4,475 4,938 15,054 16,259 Relocation and voluntary severance costs 14 860 669 860 General and administrative expenses 7,513 5,703 20,750 19,748 (Reversal of) Provision for asset impairments and restaurant closings (236) (44) (632) 413 96,033 89,440 302,398 289,611 INCOME FROM OPERATIONS 9,390 3,206 19,753 8,238 Interest expense (9,201) (1,657) (11,636) (8,094) Other income, net 116 1,989 574 2,689 Income from continuing operations before income taxes 305 3,538 8,691 2,833 Provision for income taxes 117 - 117 - Income from continuing operations 188 3,538 8,574 2,833 Discontinued operations (2,048) (529) (5,126) (8,811) NET (LOSS) INCOME $ (1,860) $ 3,009 $ 3,448 $ (5,978) Income per share - before discontinued operations - basic $ 0.01 $ 0.16 $ 0.38 $ 0.13 - assuming dilution 0.01 0.15 0.37 0.13 Loss per share - from discontinued operations - basic $ (0.09) $ (0.02) $ (0.23) $ (0.39) - assuming dilution (0.09) (0.02) (0.22) (0.39) Net income (loss) per share - basic $ (0.08) $ 0.13 $ 0.15 $ (0.26) - assuming dilution (0.08) 0.13 0.15 (0.26) Weighted average shares outstanding: - basic 22,696 22,472 22,608 22,470 - assuming dilution(a) 23,849 22,993 23,455 22,619

(a) Convertible subordinated notes have been excluded as anti dilutive because of the income effect of the $8.0 million charge related to their August 31, 2005 conversion. Had these shares been included they would have increased the quarterly and annual weighted average shares outstanding for the diluted earnings per share calculation by 3.225 million shares. Consolidated Balance Sheets (In thousands, except share and per share amounts)

August 31, August 25, 2005 2004 ------------ ------------ (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 2,789 $ 3,311 Short-term investments 1,667 2,284 Trade accounts and other receivables, net 151 101 Food and supply inventories 2,215 2,092 Prepaid expenses 1,639 1,028 Deferred income taxes 865 1,073 Total current assets 9,326 9,889 Property, plant, and equipment, net 186,009 194,042 Property held for sale 9,346 24,594 Other assets 1,533 3,756 Total assets $ 206,214 $ 232,281 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 17,759 $ 15,888 Accrued expenses and other liabilities 16,870 18,006 Total current liabilities 34,629 33,894 Credit facility debt 13,500 28,000 Term debt - 23,470 Convertible subordinated notes, net-related party - 2,091 Other liabilities 8,760 10,215 Deferred income taxes 5,039 5,061 Total liabilities 61,928 102,731 SHAREHOLDERS' EQUITY Common stock, $.32 par value; authorized 100,000,000 shares, issued 27,610,708 Shares at August 31, 2005 and 27,410,567 shares at August 25, 2004, respectively 8,835 8,771 Paid-in capital 44,526 43,564 Retained earnings 126,529 181,986 Less cost of treasury stock, 1,676,403 shares at August 31, 2005 and 4,933,063 shares at August 25, 2004 (35,604) (104,771) Total shareholders' equity 144,286 129,550 Total liabilities and shareholders' equity $ 206,214 $ 232,281

The Company's operating performance is evaluated using several measures. One of those measures, EBITDA, is a non-GAAP financial measure that is derived from the Company's Income (Loss) From Operations, which is a GAAP measurement. EBITDA has historically been used by the Company's lenders to measure compliance with certain financial debt covenants and the Company believes that EBITDA provides a meaningful measure of liquidity, providing additional information regarding the Company's cash earnings from ongoing operations and the Company's ability to service its long-term debt and other fixed obligations. The Company's senior debt agreements define EBITDA as the consolidated income (loss) from operations set forth in the Company's consolidated statements of operations before depreciation, amortization, other noncash expenses, interest expense, taxes, noncash income and extraordinary gains or losses, and other nonrecurring items of income or expense as approved by the required lenders. The following table reconciles the Company's non-GAAP financial measure, EBITDA, with Income (Loss) from Operations, prepared in accordance with GAAP.

Quarter Ended Fiscal Year Ended ---------------------------- ---------------------------- August 31, August 25, August 31, August 25, 2005 2004 2005 2004 (119 days) (112 days) (371 days) (364 days) ------------ ------------ ------------ ------------ (In thousands) Income from operations $ 9,390 $ 3,206 $ 19,753 $ 8,238 Plus excluded items: Reversal of provision for asset impairments and restaurant closings (236) (44) (632) 413 Relocation and voluntary severance costs 14 860 669 860 Depreciation and amortization 4,475 4,938 15,054 16,259 Noncash executive compensation expense - - - 679 EBITDA $ 13,643 $ 8,960 $ 34,844 $ 26,449

While the Company and many in the financial community consider EBITDA to be an important measure of operating performance, it should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles, such as operating income, net income and cash flow from operating activities. In addition, the Company's definition of EBITDA is not necessarily comparable to similarly titled measures reported by other companies. 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. Except for historical information, matters discussed in such oral and written communications are forward-looking statements that 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 periodic reports on Form 10-K and Form 10-Q. SOURCE Luby's, Inc. -0- 10/18/2005 /CONTACT: Rick Black of Luby's, Inc., +1-713-329-6808 / /Web site: http://www.lubys.com / (LUB)