On Tuesday, Dec. 19, restaurant operator Luby's (NYSE:LUB) released first-quarter 2007 earnings for the period ended Nov. 22.

  • Management proudly pointed out that year-over-year same-store sales grew for the 12th consecutive quarter. It isn't quite as happy about the minuscule 1.7% same-store growth rate.
  • But Luby's did set aside $1.1 million of income taxes in this quarter, compared with $18,000 in the year-ago period. The company has been in the habit of booking tax benefits rather than paying anything, ever since a horrendous 2001 essentially hit the reset button on its books.
  • The hefty increase in operational cash flow is the result of major sequential changes on the balance sheet, like a $5.5 million jump in accounts payable and $2.1 million more in accrued expenses.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$73,868

$72,582

1.8%

Net Profit

$1,915

$2,223

(13.9%)

EPS

$0.07

$0.08

(12.5%)

Diluted Shares

27102

27325

(0.8%)



Get back to basics with a look at the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

73.2%

72.9%

0.3

Operating Margin

3.9%

4.6%

(0.7)

Net Margin

2.6%

3.1%

(0.5)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$18,650

$4,855

284.1%

Accounts Rec.

$616

$460

33.9%

Inventory

$3,724

$3,638

2.4%



Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$15,373

$17,142

(10.3%)

Long-Term Debt

$0

$10,000

(100%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

$11,861

$3,751

216.2%

Capital Expenditures

$3,012

$2,336

28.9%

Free Cash Flow

$8,849

$1,415

525.4%

Owner Earnings

$2,488

$3,440

(27.7%)



Find out why Fools always follow the money.

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At the time of publication, Fool contributor Anders Bylund had no position in any company mentioned. Fool rules are here .