UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For quarter ended Commission file number
June 11, 1996 0-19907
LONE STAR STEAKHOUSE & SALOON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 48-1109495
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
224 EAST DOUGLAS, SUITE 700
WICHITA, KANSAS 67202
(Address of principal executive offices) (Zip code)
(316) 264-8899
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
/X/ Yes / / No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 19, 1996
Common Stock, $.01 par value 40,482,192 shares
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at June 11, 1996 and December 26, 1995 2
Condensed Consolidated Statements of
Income for the twelve weeks ended
June 11, 1996 and June 13, 1995 3
Condensed Consolidated Statements of
Income for the twenty-four weeks ended
June 11, 1996 and June 13 , 1995 4
Condensed Consolidated Statements of
Cash Flows for the twenty-four weeks ended
June 11, 1996 and June 13, 1995 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION
Items 1 through 3 and Item 5 have been omitted
since the items are either inapplicable or the
answer is negative
Item 4. Submission of Matters to a Vote of
Stockholders 14
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 11, 1996 December 26, 1995
------------------ ------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 162,335,252 $ 67,424,884
Accounts receivable 1,811,550 1,308,865
Inventories 5,565,085 4,156,355
Pre-opening costs - net 9,654,353 10,328,686
Refundable income taxes - 5,006,856
Other current assets 350,412 90,092
----------- ----------
Total current assets 179,716,652 88,315,738
Property and equipment, net 278,597,476 245,334,956
Intangible and other assets, net 25,114,693 24,567,805
----------- -----------
Total assets $ 483,428,821 $ 358,218,499
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,759,286 $ 9,245,331
Income taxes payable 1,349,034 -
Other current liabilities 17,774,703 19,189,962
----------- -----------
Total current liabilities 29,883,023 28,435,293
Deferred income taxes 3,920,989 3,966,968
Other non-current liabilities 2,680,406 3,005,695
Stockholders' Equity:
Preferred stock - -
Common stock 404,821 375,879
Additional paid-in capital 331,305,649 228,578,790
Retained earnings 115,179,315 94,140,238
Translation adjustment 54,618 (284,364)
----------- -----------
Total stockholders' equity 446,944,403 322,810,543
------------ -----------
Total liabilities and stockholders' equity $ 483,428,821 $ 358,218,499
=========== ===========
</TABLE>
See accompanying notes.
- 2 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Twelve Weeks Ended
---------------------------------------
June 11, 1996 June 13, 1995
------------------ ------------------
<S> <C> <C>
Net sales $ 107,768,388 $ 71,695,398
Costs and expenses:
Costs of sales 38,194,413 25,708,966
Restaurant operating expenses 36,337,967 24,300,154
Depreciation and amortization 6,450,059 4,188,598
------------ ------------
Restaurant costs and expenses 80,982,439 54,197,718
------------ ------------
Restaurant operating income 26,785,949 17,497,680
General and administrative expenses 5,233,258 2,674,365
Loss on divestiture of European Joint Venture 8,557,176 --
------------ ------------
Income from operations 12,995,515 14,823,315
Other income, principally interest 721,027 634,928
------------ ------------
Income before income taxes and minority interest 13,716,542 15,458,243
Provision for income taxes (5,931,827) (5,548,268)
Minority interest 318,281 0
------------ ------------
Net income $ 8,102,996 $ 9,909,975
============ ============
Primary net income per share $ .21 $ 0.27
============ ============
Fully diluted net income per share $ 0.21 $ 0.27
============ ============
Unaudited pro forma information based on providing for income taxes on pooled
S-Corporations prior to acquisition at the estimated effective tax rate:
Income before income taxes $ 15,458,243
Pro forma provision for income taxes (5,842,679)
------------
Pro forma net income $ 9,615,564
============
Pro forma primary net income per share $ 0.26
============
Pro forma fully diluted net income per share $ 0.26
============
</TABLE>
See accompanying notes.
- 3 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Twenty-four Weeks Ended
-------------------------------------
June 11, 1996 June 13, 1995
------------------ ----------------
<S> <C> <C>
Net sales $ 214,143,716 $ 141,088,255
Costs and expenses:
Costs of sales 75,778,440 50,553,905
Restaurant operating expenses 74,056,934 47,512,598
Depreciation and amortization 12,763,089 8,153,118
------------ -----------
Restaurant costs and expenses 162,598,463 106,219,621
------------ -----------
Restaurant operating income 51,545,253 34,868,634
General and administrative expenses 9,899,060 5,651,986
Loss on divestiture of European Joint Venture 8,557,176 -
------------ -----------
Income from operations 33,089,017 29,216,648
Other income, principally interest 1,355,221 793,512
------------ -----------
Income before income taxes and minority interest 34,444,238 30,010,160
Provision for income taxes (14,115,683) (10,863,371)
Minority interest 710,522 0
------------ -----------
Net income $ 21,039,077 $ 19,146,789
============ ===========
Primary net income per share $ 0.54 $ 0.53
============ ===========
Fully diluted net income per share $ 0.54 $ 0.53
============ ===========
</TABLE>
<TABLE>
<CAPTION>
Unaudited pro forma information based on providing for income taxes on pooled
S-Corporations prior to acquisition at the estimated effective tax rate:
<S> <C>
Income before income taxes $ 30,010,160
Pro forma provision for income taxes (11,525,011)
-----------
Pro forma net income $ 18,485,149
===========
Pro forma primary net income per share $ 0.51
===========
Pro forma fully diluted net income per share $ 0.51
===========
</TABLE>
See accompanying notes.
- 4 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Consolidated Statements of Cash Flows
Increase (decrease) in cash and cash equivalents
(Unaudited)
<TABLE>
<CAPTION>
For the twenty-four weeks ended
---------------------------------------
June 11, 1996 June 13, 1995
------------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 21,039,077 $ 19,146,789
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,763,089 8,153,118
Non-cash losses on divestiture of European Joint Venture 8,337,176 -
Net change in operating assets and liabilities:
Change in operating assets (3,456,724) (1,051,565)
Change in operating liabilities 1,447,730 1,516,442
----------- -----------
Net cash provided by operating activities 36,956,171 27,764,784
Cash flows from investing activities:
Purchases of property and equipment (47,767,875) (32,447,564)
Other (207,906) 1,139,489
----------- -----------
Net cash used in investing activities (44,801,604) (31,308,075)
Cash flows from financing activities:
Net proceeds from issuance of common stock 102,755,801 86,429,838
Payment of notes payable on company acquired - (696,390)
Dividends on prior S-Corporation Income - (912,380)
----------- -----------
Net cash provided by (used in) financing activities 102,755,801 84,821,069
----------- -----------
Net increase (decrease) in cash and cash equivalents 94,910,368 81,277,778
Cash and cash equivalents at beginning of period 67,424,884 45,861,351
----------- -----------
Cash and cash equivalents at end of period $ 162,335,252 $ 127,139,129
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ 74,987
Cash paid for income taxes $ 9,977,302 $ 4,437,269
</TABLE>
See accompanying notes.
- 5 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOTE 1) BASIS OF PRESENTATION
The unaudited Condensed Consolidated Financial Statements include all
adjustments, consisting of normal, recurring accruals, which the Company
considers necessary for a fair presentation of the financial position and the
results of operations for the periods presented. The results of the twenty-four
weeks ended June 11, 1996, are not necessarily indicative of the results to be
expected for the full year ending December 31, 1996. This quarterly report on
Form 10-Q should be read in conjunction with the Company's audited consolidated
financial statements in its 1995 Form 10-K.
(NOTE 2) STOCK OPTIONS
During the twenty-four week period ended June 11, 1996, the Company granted
stock options for 1,228,474 shares of Common Stock at prices ranging from $30.88
to $41.63 per share pursuant to its 1992 stock option plan for employees.
(NOTE 3) ADDITIONAL PUBLIC OFFERINGS
On May 21, 1996 the Company completed an offering of 2,500,000 of its
Common Stock (the "May 1996 Offering") at $40.13 per share. Total net proceeds
to the Company of approximately $96,000,000 are being used for restaurant
development. Subsequent to June 11, 1996, the Underwriter of the May 1996
Offering exercised the over-allotment option resulting in the issuance of an
additional 150,000 shares of Common Stock and the receipt of approximately
$5,760,000 in additional net proceeds.
(NOTE 4) DIVESTITURE OF EUROPEAN OPERATIONS
In June of 1996 the Company divested its interest in an European Joint
Venture that operated three Lone Star Steakhouse & Saloon restaurants with one
additional restaurant under construction. The divestiture resulted in a charge
to earnings of $5,964,664 net of the tax benefit totaling $2,592,512.
(NOTE 5) EARNINGS PER SHARE
Primary earnings per share amounts are computed based on the weighted
average number of shares actually outstanding plus the shares that would be
outstanding assuming exercise of dilutive stock options which are considered to
be common stock equivalents. The number of shares that would be issued from the
exercise of stock options has been reduced by the number of shares that could
have been purchased from the proceeds at the average market price of the
company's stock. The number of shares resulting from this computation for the
twelve weeks ended June 11, 1996 and June 13, 1995 was 39,410,290 and
37,207,748, respectively. The number of shares resulting from this computation
for the twenty-four weeks ended June 11, 1996 and June 13, 1995 was 39,163,895
and 36,268,734, respectively.
- 6 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOTE 5) EARNINGS PER SHARE (CONTINUED)
For purposes of fully diluted computations, the number of shares that would
be issued from the exercise of stock options has been reduced by the number of
shares which could have been purchased from the proceeds at the market price of
the Company's stock on the last day of the fiscal year because that price was
higher than the average market prices during the year. The number of shares
resulting from this computation of fully diluted earnings per share for the
twelve weeks ended June 11, 1996 and June 13, 1995 was 39,426,453, and
37,283,888, respectively. The number of shares resulting from this computation
of fully diluted earnings per share for the twenty-four weeks ended June 11,
1996 and June 13, 1995 was 39,180,058 and 36,344,874, respectively.
(NOTE 6) ACQUISITION OF 16 GROUND ROUND RESTAURANTS
On July 1, 1996 the Company announced the signing of a definitive
agreement, subject to the satisfaction of certain closing conditions, to acquire
up to 16 restaurant locations primarily in the Northeastern United States from
Ground Round Restaurants, Inc. for approximately $16 million.
- 7 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto included elsewhere in this Form 10-Q.
The Company began 1992 with 15 restaurants, opened 17 restaurants during
1992, 36 restaurants during 1993, 48 restaurants during 1994, 47 restaurants
during the year ended December 26, 1995, and eleven restaurants during the
twenty-four week period ended June 11, 1996. In August 1995, the Company
completed an acquisition, pursuant to which it acquired 11 licensed Lone Star
Steakhouse & Saloon restaurants as well as three additional restaurants, one
Italian, and two Mexican, from a group of related entities which were operated
under common control, (collectively, the "CCC Group"). The transaction was
accounted for as a pooling of interests and, accordingly, the accompanying
consolidated financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations have been restated to include the
accounts and operations of CCC Group for all periods prior to the acquisition.
Pre-opening costs include labor costs, costs of hiring and training
personnel and certain other costs relating to opening new restaurants, and are
capitalized and amortized over a 12 month period, beginning in the period that
the restaurants open.
In September 1995, the Company entered the upper-end steakhouse market by
acquiring the rights to operate the Del Frisco's Double Eagle Steak House ("Del
Fisco's") located in Dallas, Texas, a Del Frisco's under construction in Fort
Worth, Texas (which opened in April 1996), and the right to further develop Del
Frisco's. The Company also became the licensor of two Del Frisco's in Houston,
Texas and Orlando, Florida. The Company expects to open one additional Del
Frisco's in 1996. The average check per customer at Del Frisco's is
approximately $60.
The Company is also developing an upscale steak restaurant concept under
the tradename Sullivan's Steakhouse. The average check per Sullivan's Steakhouse
customer is anticipated to be $35 to $40. The Company opened the first
restaurant in May 1996 and expects to develop one or two additional Sullivan's
restaurants in 1996.
Internationally, the Company through a joint venture operates twelve Lone
Star Steakhouse & Saloon restaurants in Australia and will open an additional
five units in Australia. In June 1996, the Company terminated its European joint
venture and accordingly the Company divested its interest in three existing
restaurants and a fourth restaurant under construction. The divestiture resulted
in a charge to earnings of $5,964,664 net of the tax benefit totaling
$4,592,512. The restaurants will no longer operate as Lone Star Steakhouse &
Saloon restaurants.
- 8 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated (i) the
percentages which certain items included in the Condensed Consolidated Statement
of Income bear to net sales, and (ii) other selected operating data:
<TABLE>
<CAPTION>
Twelve Weeks Ended (1) Twenty-four weeks, ended
June 11, June 13, June 11, June 13,
1996 1995 1996 1995
-------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Income Statement Data:
Net Sales 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Costs of sales 35.4 35.9 35.4 35.5
Restaurant operating expenses........................ 33.7 33.9 34.6 33.7
Depreciation and amortization........................ 6.0 5.8 6.0 5.8
Restaurant costs and expenses.................... 75.1 75.6 76.0 75.3
Restaurant operating income.............................. 24.9 24.4 24.0 24.7
General and administrative expenses...................... 4.9 3.7 4.6 4.0
Loss on divestiture of European Joint Venture.............. 7.9 - 3.9 -
-
Income from operations................................... 12.1 20.7 15.5 20.7
Other income and minority interest, principally interest. 0.9 0.8 0.9 0.6
Income before provision for income taxes (2)............. 13.0 21.5 16.4 21.3
Provision for income taxes............................... 5.5 8.1 6.6 8.2
Net income (Pro forma for 1995).......................... 7.5% 13.4% 9.8% 13.1%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Restaurant Operating Data:
Average sales per restaurant on an annualized basis (3) $2,540 $2,522 $2,587 $2,545
Number of restaurants at end of the period 178 127 178 127
Number of full restaurant months open during the period (4) 517 381 1,014 742
</TABLE>
(1) The Company operates on a fifty-two or fifty-three week fiscal year ending
the last Tuesday in December. The fiscal quarters for the Company consist
of accounting periods of twelve, twelve, twelve and sixteen or seventeen
weeks, respectively.
(2) Gives pro forma effect to providing for income taxes on pooled
S-Corporations of CCC Group prior to the August, 1995, acquisition at the
estimated effective tax rate.
(3) Average sales per restaurant on an annualized basis are computed by
dividing a restaurant's total sales for full accounting periods open during
the period by the number of full accounting periods open, and multiplying
the result by thirteen.
(4) Full restaurant months are four week accounting periods (excluding the
first partial weeks of operations) that a restaurant was open.
- 9 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
TWELVE WEEKS ENDED JUNE 11, 1996 COMPARED TO TWELVE WEEKS ENDED JUNE 13, 1995
Net sales increased $36,073,000 (50.3%) for the twelve weeks ended June 11,
1996 compared to 1995 principally attributable to $26,847,000 in sales from the
47 new domestic restaurants opened since June 1995, and sales from the
Australian and European joint ventures. Same store sales were flat in the second
quarter.
Costs of sales, primarily food and beverages, decreased as a percentage of
sales to 35.4% for the twelve weeks ended June 11, 1996, from 35.9% in 1995 due
to slightly lower beef prices.
Restaurant operating expenses for the twelve weeks ended June 11, 1996
increased $12,038,000 (49.5%) to $36,338,000, and such expenses decreased as a
percentage of net sales from 33.9% to 33.7%. Although the foreign joint venture
operations have higher labor and occupancy rates the improved labor costs in
domestic Lone Star Steakhouse & Saloon restaurants allowed for the decrease.
Depreciation and amortization increased $2,261,000 (54.0%) in the twelve
weeks ended June 11, 1996 over 1995, principally reflecting the amortization of
capitalized pre-opening expenses relating to the opening of 47 new restaurants
since June 1995 and increases in depreciation relating to additional owned
properties. General and administrative expenses for the twelve weeks ended June
11, 1996, increased $2,559,000 (95.7%) from the comparable period in 1995. The
increase reflects the consolidation in the foreign joint venture administration
expenses as well as the costs associated with additional multi-unit supervisors.
Certain accounting and administrative services are contracted from Coulter
Enterprises, Inc, a restaurant management services company owned by the
Company's Chairman of the Board and Chief Executive Officer. The service
agreement provides for specified accounting and administration services to be
provided on a cost pass-through basis under which the Company paid a fixed
annual charge of $837,000, plus an additional fee of $406 per restaurant per
28-day accounting period and reimbursement of out-of-pocket costs and expenses
during the fiscal year ended December 26, 1995. The service agreement was
renewed for fiscal 1996 with the fixed annual charge increasing to $1,272,000
and the per restaurant, per accounting period fee increasing to $416. Should the
service agreement not be renewed in the future, the Company would incur direct
costs for accounting and administration, personnel, rent and other costs
associated with a separate office; however, the Company believes that such
direct costs would not be materially different than the costs under the
contractual arrangement.
Other income, principally interest, for the twelve weeks ended June 11,
1996, was $721,000 a $86,000 increase from the comparable period in 1995,
reflecting increased interest income from the investment of the net proceeds
from the May 1996 Offering.
The effective income tax rate for the twelve weeks ended June 11, 1996 and
the effective pro forma income tax rate for the twelve weeks ended June 13, 1995
was 42.3% and 37.8%, respectively. The increase in the rate is primarily due to
the inability to recognize for tax purposes, the entire loss on the write-off of
the European Joint Venture.
- 10 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
TWENTY-FOUR WEEKS ENDED JUNE 11, 1996 COMPARED TO TWENTY-FOUR WEEKS ENDED
JUNE 13, 1995
Net sales increased $73,055,000 (51.8%) for the twenty-four weeks ended
June 11, 1996 compared to 1995 principally attributable to $52,520,000 in sales
from the 47 new domestic restaurants opened since June 1995, and sales from the
Australian and European joint ventures. Same store sales increased 0.4%
primarily due to the growth in customer counts .
Costs of sales, primarily food and beverages, decreased as a percentage of
sales to 35.4% for the twenty-four weeks ended June 11, 1996, from 35.8% in 1995
due to slightly lower beef prices.
Restaurant operating expenses for the twenty-four weeks ended June 11, 1996
increased $26,544,000 (55.9%) to $74,057,000, and such expenses increased as a
percentage of net sales from 33.7% to 34.6%, The consolidation of the foreign
joint venture operations with their higher labor and occupancy ratios accounted
for most of the increase.
Depreciation and amortization increased $4,610,000 (56.5%) in the
twenty-four weeks ended June 11, 1996 over 1995, principally reflecting the
amortization of capitalized pre-opening expenses relating to the opening of 47
new restaurants since June 1995 and increases in depreciation related to
additional owned properties. General and administrative expenses for the
twenty-four weeks ended June 11, 1996, increased $4,247,000 (75.1%) from the
comparable period in 1995, reflecting costs associated with additional
multi-unit supervisors as well as an increase from the consolidation of the
foreign joint venture operations with its higher administration expense.
Pursuant to the Company's service agreement with Coulter Enterprises, Inc.,
for the current fiscal year the Company will pay a fixed annual charge of
$1,272,000, plus an additional fee of $416 per restaurant per 28 day accounting
period and reimbursement of out-of-pocket costs and expenses.
Other income, principally interest, for the twenty-four weeks ended June
11, 1996, was $1,355,000 a $562,000 increase from the comparable period in 1995,
reflecting increased interest income from the investment of the net proceeds
from the May 1996 Offering.
The effective income tax rate for the twenty-four weeks ended June 11, 1996
and the effective pro forma income tax rate for the twelve weeks ended June 13,
1995 was 40.2.0% and 38.4%, respectively. The increase in the rate is primarily
due to the inability to recognize for tax purposes, the entire loss on the
write-off of the European Joint Venture.
- 11 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
IMPACT OF INFLATION
The primary inflationary factors affecting the Company's operations include
food and labor costs. A large number of the Company's restaurant personnel are
paid at the federal and state established minimum wage levels and, accordingly,
changes in such wage levels affect the Company's labor costs. As costs of food
and labor have increased, the Company has historically been able to offset these
increases through economies of scale, although there is no assurance that such
offsets will continue. To date, inflation has not had a material impact on
operating margins.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, amended. Investors are cautioned
that all forward-looking statements involve risks and uncertainty, including
without limitation, the ability of the Company to continue its aggressive
expansion strategy, changes in costs of food and labor, the ability of the
Company to acquire prime locations at acceptable lease or purchase terms, as
well as general market conditions, competition and pricing. Although the Company
believes the assumptions underlying the forward-looking statements contained
herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
contained in the report will prove to be accurate.
- 12 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents a summary of the Company's cash flows for each
of the twenty-four weeks ended June 11, 1996 and June 13, 1995.
<TABLE>
<CAPTION>
Twenty-four weeks ended
June 11, June 13,
1996 1995
-------------- -----------
<S> <C> <C>
Net cash provided by operating activities....................... $ 36,956,171 $27,764,784
Net cash used in investment activities.......................... 47,975,781 31,308,075
Net cash provided by financing
activities................................................ 102,755,801 84,821,069
Net increase (decrease) in cash................................. 94,910,368 81,277,778
</TABLE>
During the twenty-four week period ended June 11, 1996, the Company's investment
in property and equipment was $47,767,875.
The Company has opened 151 restaurants in the past four fiscal years of
which 45 opened in 1995 and an additional eleven opened during the twenty-four
weeks ended June 11, 1996. The Company does not have significant receivables or
inventory and receives trade credit based upon negotiated terms in purchasing
food and supplies. Because funds available from cash sales are not needed
immediately to pay for food and supplies, or to finance inventory, they may be
considered as a source of financing for noncurrent capital expenditures.
At June 11, 1996, the Company had $162,335,252 in cash and cash
equivalents. While the Company has not established a credit facility, the
Company believes it could establish a facility on suitable terms. As of June 11,
1996, the Company has acquired 19 sites, three of which are leased. In addition,
as of such date the Company had entered into one new lease and 31 contracts to
purchase sites. The Company was also actively negotiating to purchase or lease
approximately 23 additional sites. In the future, the Company anticipates that a
greater proportion of its new restaurant locations will be purchased rather than
leased. The Company expects to expend approximately $60,000,000 to open new
restaurants through the remainder of fiscal 1996. In addition, the Company has
signed a definitive agreement to acquire up to 16 restaurant locations from
Ground Round for approximately $16,000,000.
- 13 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
ITEM. 4 SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
On June 3, 1996, the Company held its Annual Meeting of Stockholders (the
"Meeting"). At the meeting the stockholders elected Fred B. Chaney and Clark R.
Mandigo to the Board of Directors to serve until the 1999 Annual Meeting of
Stockholders and until their successors have been duly elected and qualified. As
to the newly elected Directors, there were 32,412,876 votes "For" and 15,845
votes "Withheld" for Fred B. Chaney and 32,412,726 votes "For" and 15,995 votes
"Withheld" for Clark R. Mandigo. In addition, the stockholders approved an
amendment to the Company's 1992 Stock Option Plan to increase the number of
shares reserved for issuance pursuant to the 1992 Plan from 7,000,000 shares of
Common Stock to 10,000,000 shares. As to the amendment to the 1992 Stock Option
Plan, there were 18,003,648 votes "For," 11,001,132 votes "Against" and 74,606
votes "Abstained." In addition, the stockholders ratified the appointment of
Ernst & Young LLP as the Company's independent auditors for the year ending
December 31, 1996. As to the ratification of auditors there were 32,396,018
votes "For", 16,879 votes "Against," and 15,824 votes "Abstained."
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11.1 Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
- 14 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
LONE STAR STEAKHOUSE & SALOON, INC.
(Registrant)
/s/ John D. White
-----------------
John D. White
Chief Financial and Principal Accounting
Officer, Executive Vice President,
Treasurer and Director
- 15 -
<PAGE>
Exhibit 11.1
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Twelve Weeks Ended For the Twenty-four Weeks Ended
------------------------------------ -------------------------------
June 11, 1996 June 13, 1995 June 11, 1996 June 13, 1995
----------------- ----------------- ------------- ---------------
(in thousands, except per share amounts) (in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Primary:
Average weighted shares outstanding 38,090 36,192 37,843 35,253
Net effect of dilutive stock options-based
on the treasury stock method using
average market price 1,321 1,016 1,321 1,016
------- ------- ------- -------
Total 39,410 37,208 39,164 36,269
======= ======= ======= =======
Net Income $ 8,103 $ 9,910 $21,039 $19,147
======= ======= ======= =======
Per share amount $ 0.21 $ 0.27 $ 0.54 $ 0.53
======= ======= ======= =======
Fully Diluted:
Average weighted shares outstanding 38,090 36,192 37,843 35,253
Net effect of dilutive stock options-based
on the treasury stock method using
period-end market price, if higher
than average market price 1,337 1,092 1,337 1,092
------- ------- ------- -------
Total 39,426 37,284 39,180 36,345
======= ======= ======= =======
Net Income $ 8,103 $ 9,910 $21,039 $19,147
======= ======= ======= =======
Per share amount $ 0.21 $ 0.27 $ 0.54 $ 0.53
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S FORM 10-Q FOR THE QUARTER ENDED JUNE 11, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-20-1996
<PERIOD-END> JUN-11-1996
<CASH> 162,335
<SECURITIES> 0
<RECEIVABLES> 1,812
<ALLOWANCES> 0
<INVENTORY> 5,565
<CURRENT-ASSETS> 182,357
<PP&E> 278,597
<DEPRECIATION> 0
<TOTAL-ASSETS> 486,069
<CURRENT-LIABILITIES> 32,523
<BONDS> 0
0
0
<COMMON> 404,821
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 486,069
<SALES> 107,768
<TOTAL-REVENUES> 107,768
<CGS> 38,194
<TOTAL-COSTS> 80,982
<OTHER-EXPENSES> 13,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (721)
<INCOME-PRETAX> 13,717
<INCOME-TAX> 5,932
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,103
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0
</TABLE>
