Luby's, Inc. (NYSE: LUB) today announced unaudited financial results for the second quarter fiscal 2006, which ended on February 15, 2006. Sales increased 5.7% over the second quarter fiscal 2005 and the Company generated net income of $3.3 million and reduced outstanding debt by $2.8 million in the second quarter to $7.2 million.

Sales in the second quarter fiscal 2006 were $75.0 million, an increase of 5.7% compared to the second quarter fiscal 2005, which ended on February 9, 2005. On a same-store basis, sales increased 6.7% for the 128 operating units during the second quarter fiscal 2006 over the second quarter fiscal 2005. As of September 21, 2005, one unit is closed pending reconstruction due to storm damage suffered during Hurricane Rita.

The Company reported net income of $3.3 million, or $0.12 per share fully diluted, in the second quarter fiscal 2006 compared to net income of $2.6 million, or $0.10 per share fully diluted, in the second quarter fiscal 2005. During both periods, net income was generated from continuing operations.

"The second quarter marked our ninth consecutive quarter of same-store sales growth," said Chris Pappas, President and CEO. "We are pleased with our sales and net income increases over a strong comparable quarter last year, despite a challenging expense environment."

Total prime costs of food and payroll in the second quarter fiscal 2006 were 61.5% of sales, an improvement compared to 62.6% in the second quarter fiscal 2005. As a percentage of sales, food costs in the second quarter fiscal 2006 increased 0.1% compared to the second quarter fiscal 2005 due to higher prices in commodity sectors such as seafood, shortenings, oils and fresh produce. Payroll costs as a percentage of sales decreased in the second quarter fiscal 2006 by 1.2% compared to the second quarter fiscal 2005 primarily due to increased sales and continued operational focus on efficient labor utilization. Other operating costs increased as a percentage of sales in the second quarter by 1.4% compared to the same quarter last year due to increased utility costs primarily caused by rising natural gas prices and higher repair and maintenance costs associated with required repairs at store facilities. General and administrative costs as a percentage of sales in the second quarter increased 0.4% compared to the same quarter last year, primarily due to increased staffing and salary market adjustments, stock option expenses and continued consulting fees associated with the implementation and integration of new business systems.

Conference Call

The Company will host a conference call at 4:00 p.m. Central time today, March 27, 2006, to discuss financial results for the quarter. The second quarter conference call can be accessed live telephonically by dialing (800) 638-4817 and using the pin code 65713877. A replay of the call will be available approximately two hours after the call ends through April 3, 2006. The replay number is (888) 286-8010 and the pin code is 85019254. A live audio webcast of the conference call will also be available via the Company's website at http://www.lubys.com/aboutusEvents.asp to listen online. A replay of the webcast will be available on the Company's website soon after the call is concluded. The second quarter press release will also be available on the Company's web site, http://www.lubys.com .

About Luby's

Luby's operates 128 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. 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.

Consolidated Statements of Operations (unaudited)

(In thousands except per share data)

Quarter Ended Two Quarters Ended

Feb. 15, Feb. 9, Feb. 15, Feb. 9,

2006 2005 2006 2005

(84 days) (84 days) (168 days) (168 days)

SALES $75,034 $70,969 $147,615 $138,737

COSTS AND EXPENSES:

Cost of food 20,224 19,039 39,931 37,978

Payroll and related costs 25,934 25,363 51,589 50,375

Other operating expenses 16,482 14,623 32,417 30,238

Depreciation and amortization 3,567 3,567 7,115 7,101

Relocation and voluntary

severance costs --- 308 --- 580

General and administrative

expenses 5,272 4,699 10,006 8,783

Provision for (reversal of)

asset impairments and

restaurant closings 259 (29) (174) (29)

Total costs and expenses 71,738 67,570 140,884 135,026

INCOME FROM OPERATIONS 3,296 3,399 6,731 3,711

Interest expense, net (179) (938) (427) (1,609)

Other income, net 270 205 415 136

Income from continuing

operations before

income taxes 3,387 2,666 6,719 2,238

Provision for income taxes 45 --- 64 ---

Income from continuing

operations 3,342 2,666 6,655 2,238

Discontinued operations (45) (39) (1,135) (634)

NET INCOME $3,297 $2,627 $5,520 $1,604

Income per share - from

continuing operations

- basic $0.13 $0.12 $0.26 $0.10

- assuming dilution 0.12 0.10 0.24 0.08

Net income per share

- basic $0.13 $0.12 $0.21 $0.07

- assuming dilution 0.12 0.10 0.20 0.06

Weighted average shares

outstanding:

- basic 26,020 22,609 25,988 22,551

- assuming dilution 27,536 26,533 27,481 26,558

Consolidated Balance Sheets

(In thousands except share data)

February 15, August 31,

2006 2005

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents $5,628 $2,789

Short-term investments --- 1,667

Trade accounts and other receivables, net 434 151

Food and supply inventories 2,539 2,215

Prepaid expenses 2,982 1,639

Deferred income taxes 78 865

Total current assets 11,661 9,326

Property and equipment, net 185,988 186,009

Property held for sale 4,243 9,346

Other assets 1,317 1,533

Total assets 203,209 206,214

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable 19,259 17,759

Accrued expenses and other liabilities 14,115 17,720

Total current liabilities 33,374 35,479

Credit facility debt 7,200 13,500

Other liabilities 7,266 7,910

Deferred income taxes 4,345 5,039

Total liabilities 52,185 61,928

SHAREHOLDERS' EQUITY

Common stock, $.32 par value; authorized

100,000,000 shares, issued 27,717,474

shares and 27,610,708 shares as of

February 15, 2006, and August 31, 2005,

respectively 8,869 8,835

Paid-in capital 41,216 40,032

Retained earnings 136,543 131,023

Less cost of treasury stock, 1,676,403 shares (35,604) (35,604)

Total shareholders' equity 151,024 144,286

Total liabilities and shareholders' equity $203,209 $206,214

EBITDA, is a commonly used valuation statistic, not in conformity with Generally Accepted Accounting Principles in the United States ("GAAP"), that is derived from the Company's Income (Loss) From Operations, which is a GAAP measurement. Adjusted EBITDA represents a non-traditional calculation of EBITDA as defined in the Company's revolving credit facility 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, Adjusted EBITDA, with Income from Operations, prepared in accordance with GAAP.

Quarter Ended Two Quarters Ended

Feb. 15, Feb. 9, Feb. 15, Feb. 9,

2006 2005 2006 2005

(84 days) (84 days) (168 days) (168 days)

(In thousands)

Income from operations $3,296 $3,399 $6,731 $3,711

Plus excluded items:

Provision for (reversal of)

asset impairments and

restaurant closings 259 (29) (174) (29)

Relocation and voluntary

severance costs --- 308 --- 580

Depreciation and amortization 3,567 3,567 7,115 7,101

Share-based compensation expense 126 --- 195 ---

Adjusted EBITDA $7,248 $7,245 $13,867 $11,363

While the Company and many in the financial community consider adjusted EBITDA to be an important supplemental valuation statistic, it should be considered in addition to, but not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP, such as operating income and net income.

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 and economic conditions, the impact of competition, the Company's operating initiatives, fluctuations in the costs of commodities, changes in the availability and costs of 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 and other filings with the Securities and Exchange Commission.

For additional information contact: Rick Black, 713-329-6808

Source: prnewswire