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
September 9, 1997 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 October 7, 1997
----- ------------------------------
Common Stock, $.01 par value 41,093,600 shares
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Index
Page
Number
------
PART I. FINANCIAL INFORMATION
- - -------------------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at September 9, 1997 and December 31, 1996 2
Consolidated Statements of Income
for the twelve weeks ended
September 9, 1997 and September 3, 1996 3
Consolidated Statements of Income
for the thirty-six weeks ended
September 9, 1997 and September 3, 1996 4
Condensed Consolidated Statements of
Cash Flows for the thirty-six weeks ended
September 9, 1997 and September 3, 1996 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition
Results of Operations 8
PART II. OTHER INFORMATION
- - ---------------------------
Items 1 through 5 have been omitted
since the items are either inapplicable or the
answer is negative
Item 6. Exhibits and Reports on Form 8-K 14
PART III. EXHIBITS
- - -------------------
11.1 Statement regarding computation of per share earnings
27 Financial Data Schedule
-1-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 9, 1997 December 31, 1996
----------------- ------------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 150,661,187 $ 150,721,286
Accounts receivable 2,307,805 2,233,119
Inventories 9,011,460 4,728,071
Pre-opening costs - net 6,593,067 6,250,241
Deferred income taxes 1,302,270 584,780
Other current assets 1,464,303 783,557
----------- -----------
Total current assets 171,340,092 165,301,054
Property and equipment, net 402,835,092 350,588,246
Intangible and other assets, net (principally goodwill) 29,409,653 26,262,455
----------- -----------
Total assets $ 603,584,837 $ 542,151,755
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,316,721 $ 8,202,116
Other current liabilities 35,827,809 30,854,934
------------ ------------
Total current liabilities 44,144,530 39,057,050
Deferred income taxes 5,713,308 7,306,978
Other non-current liabilities 195,847 247,510
Minority interest 150,384 301,384
Stockholders' Equity:
Preferred stock - -
Common stock 410,857 407,027
Additional paid-in capital 347,347,670 341,158,492
Retained earnings 206,012,367 154,207,532
Translation adjustment (390,126) (534,218)
------------ ------------
Total stockholders' equity 553,380,768 495,238,833
------------ ------------
Total liabilities and stockholders' equity $ 603,584,837 $ 542,151,755
============ ============
</TABLE>
See accompanying notes.
- 2 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the twelve weeks ended
----------------------------------------------------
September 9, 1997 September 3, 1996
----------------------------------------------------
<S> <C> <C>
Net sales $ 135,302,151 $ 113,746,124
Costs and expenses:
Costs of sales 49,286,935 39,953,800
Restaurant operating expenses 51,324,510 38,020,727
Depreciation and amortization 6,883,306 6,894,996
------------ ------------
Restaurant costs and expenses 107,494,751 84,869,523
------------ ------------
Restaurant operating income 27,807,400 28,876,601
General and administrative expenses 5,089,334 4,395,194
------------ ------------
Income from operations 22,718,066 24,481,407
Other income, principally interest 1,057,163 1,073,302
------------ ------------
Income before income taxes and minority interest 23,775,229 25,554,709
Provision for income taxes (8,655,179) (9,609,313)
Minority interest (64,954) (106,924)
------------ ------------
Net income $ 15,055,096 $ 15,838,472
============ ============
Primary net income per share $ 0.36 $ 0.38
============ ============
</TABLE>
See accompanying notes.
- 3 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the thirty-six weeks ended
---------------------------------------------------
September 9, 1997 September 3, 1996
---------------------------------------------------
<S> <C> <C>
Net sales $ 398,917,647 $ 327,889,840
Costs and expenses:
Costs of sales 142,077,678 115,732,240
Restaurant operating expenses 143,656,077 112,077,657
Depreciation and amortization 20,042,025 19,658,085
------------ ------------
Restaurant costs and expenses 305,775,780 247,467,982
------------ ------------
Restaurant operating income 93,141,867 80,421,858
General and administrative expenses 14,483,084 14,294,254
Loss on divestiture of European Joint Venture - 8,557,176
------------ ------------
Income from operations 78,658,783 57,570,428
Other income, principally interest 3,194,996 2,428,523
------------ ------------
Income before income taxes and minority interest 81,853,779 59,998,951
Provision for income taxes (29,943,499) (23,724,998)
Minority interest (105,445) 603,598
------------ ------------
Net income $ 51,804,835 $ 36,877,551
============ ============
Primary net income per share $ 1.24 $ 0.92
============ ============
</TABLE>
See accompanying notes.
- 4 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
For the thirty-six weeks ended
--------------------------------------------------
September 9, 1997 September 3, 1996
--------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 51,804,835 $ 36,877,551
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,328,094 19,658,085
Non-cash loss on divestiture of European Joint Venture - 8,337,176
Net change in operating assets and liabilities:
Change in operating assets (12,395,606) (6,646,607)
Change in operating liabilities 3,261,147 6,537,352
----------- -----------
Net cash provided by operating activities 62,998,470 64,763,557
Cash flows from investing activities:
Purchases of property and equipment (65,421,353) (73,680,097)
Other (3,974,316) (298,896)
----------- -----------
Net cash used in investing activities (69,395,669) (73,978,993)
Cash flows from financing activities:
Net proceeds from issuance of common stock 6,193,008 107,055,662
----------- -----------
Net cash provided by financing activities 6,193,008 107,055,662
Effect of exchange rate on cash 144,092 (335,706)
----------- -----------
Net increase (decrease) in cash and cash equivalents (60,099) 97,504,520
Cash and cash equivalents at beginning of period 150,721,286 67,424,884
----------- -----------
Cash and cash equivalents at end of period $ 150,661,187 $ 164,929,404
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 26,295,941 $ 14,538,771
</TABLE>
See accompanying notes.
- 5 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The unaudited Condensed Consolidated Financial
Statements have been prepared by the Company, pursuant to the rules and
regulations of the Securities and Exchange Commission. The information furnished
herein reflects all adjustments (consisting of normal recurring accruals and
adjustments) which are, in the opinion of management, necessary to fairly
present the operating results for the respective periods. Certain information
and footnote disclosures normally presented in annual financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. These financial statements
should be read in conjunction with the consolidated financial statements in its
1996 Form 10-K. The results of the twelve weeks ended September 9, 1997 are not
necessarily indicative of the results to be expected for the full year ending
December 30, 1997.
2. Stock Options
-------------
During the thirty-six week period ended September 9,
1997, the Company granted stock options for 3,655,335 shares of Common Stock at
exercise prices ranging from $17.38 to $28.38 per share pursuant to its 1992
stock option plan for employees. In addition, effective April 24, 1997 the Stock
Option Committee of the Company's Board of Directors repriced the exercise price
of 7,713,201 options at $18.25, the closing price on that date, that had been
granted at higher prices prior to that date.
3. Earnings Per Share
------------------
Primary earnings per share amounts are computed based on
the weighted average number of shares actually outstanding plus the number of
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 September 9, 1997 and September 3, 1996
was 41,881,271 and 41,649,960, respectively. The number of shares resulting from
this computation for the thirty-six weeks ended September 9, 1997 and September
3, 1996 was 41,738,583 and 39,967,438, respectively. 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 period because that price was higher than the average
market prices during the period. The number of shares resulting from this
computation of fully diluted earnings per share for the twelve weeks ended
September 9, 1997 and September 3, 1996 was 41,882,374 and 41,649,885
respectively. The number of shares resulting from this computation of fully
diluted earnings per share for the thirty-six weeks ended September 9, 1997 and
September 3, 1996 was 41,741,169 and 39,971,237, respectively.
-6-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
4. Recently Issued Accounting Standards
------------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS
128"), which specifies the computation, presentation, and disclosure
requirements for earnings per share with the objective to simplify the
computation of earnings per share. FAS 128 is effective for financial statements
for periods ending after December 15, 1997 and earlier application is not
permitted. After the effective date, all prior period earnings per share data
shall be restated to conform with the provisions of FAS 128. The adoption of FAS
128 is not expected to have a material impact on the Company's earnings per
share data.
-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 is continuing its rapid expansion under which it has
opened 260 restaurants since 1992, including 42 in the thirty-six weeks ended
September 9, 1997. As of September 9, 1997 the Company has opened 34 of the 1997
domestic development restaurants.
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.
The Company is expanding its upper-end steakhouse presence, where
average checks are $60 or more, by developing the Del Frisco's Double Eagle
Steak House concept ("Del Frisco's") in addition to its Lone Star Steakhouse &
Saloon restaurants. The Company opened its third Del Frisco's in Denver,
Colorado in January, 1997 and expects to open one additional Del Frisco's in
1997.
The Company is also developing its upscale steak restaurant concept
under the tradename Sullivan's Steakhouse. The average check per Sullivan's
Steakhouse customer is approximately $40. The Company opened two Sullivan's
Steakhouses in 1996 and expects to develop three or four additional Sullivan's
restaurants in 1997.
Internationally, the Company, through a joint venture, operates
twenty-seven Lone Star Steakhouse & Saloon restaurants in Australia, seven of
which opened this year, and expects to open an additional two to four units in
1997.
-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) Thirty-six Weeks Ended
September 9, September 3, September 9, September 3,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income Statement Data:
Net Sales ............................................................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Costs of sales ..................................................... 36.4 35.1 35.7 35.3
Restaurant operating expenses ...................................... 37.9 33.4 36.0 34.2
Depreciation and amortization ...................................... 5.1 6.1 5.0 6.0
----- ----- ----- -----
Restaurant costs and expenses ................................. 79.4 74.6 76.7 75.5
----- ----- ----- -----
Restaurant operating income ........................................... 20.6 25.4 23.3 24.5
General and administrative expenses ................................... 3.8 3.9 3.6 4.4
Loss on write-off of European Joint Venture ........................... -- -- -- 2.5
----- ----- ----- -----
Income from operations ................................................ 16.8 21.5 19.7 17.6
Other income, principally interest and minority interest .............. .7 .9 .8 .8
----- ----- ----- -----
Income before provision for income taxes .............................. 17.5 22.4 20.5 18.4
Provision for income taxes ............................................ 6.4 8.5 7.5 7.2
----- ----- ----- -----
Net income ............................................................ 11.1% 13.9% 13.0% 11.2%
===== ===== ===== =====
Restaurant Operating Data: (dollars in thousands)
Average sales per restaurant on an annualized basis (2) ...... $2,240 $2,528 $2,328 $2,578
Number of restaurants at end of the period ................... 274 198 274 198
</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) 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.
-9-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Twelve Weeks Ended September 9, 1997 Compared to
Twelve Weeks Ended September 3, 1996
Net sales increased $21,556,000 (19.0%) to $135,302,000 for the
twelve weeks ended September 9, 1997 compared to $113,746,000 for the twelve
weeks ended September 3, 1996, principally attributable to $26,574,000 in sales
from the 59 new domestic Lone Star restaurants opened since September 3, 1996,
reduced by a $5,018,000 decline in the sales from the 180 domestic restaurants
which were open at that date. Same store sales were down 7.0% in the third
quarter.
Costs of sales, primarily food and beverages increased as a
percentage of sales to 36.4% from 35.1% due to slightly higher beef prices as
well as some discounted menu items and free appetizers offered in a national
marketing campaign. During these periods, the Company purchased beef under
contracted prices which allowed the company to maintain more stable beef costs.
Such contracts will expire after September, 1997 and as of October 7, 1997 the
contracts have not been extended which may result in higher and fluctuating cost
of sales during periods when the Company purchases beef in the cash market.
Restaurant operating expenses for the twelve weeks ended September
9, 1997 increased $13,304,000 (35.0%) from $38,021,000 in the twelve weeks ended
September 3, 1996 to $51,325,000, and such expenses increased as a percentage of
net sales from 33.4% to 37.9%. This increase is attributable to introduction of
the costs of the national marketing program, higher maintenance costs in the
domestic Lone Star restaurants, and the effect of fixed cost components on lower
average restaurant sales.
Depreciation and amortization decreased $12,000 (0.2%) in the twelve
weeks ended September 9, 1997 over the twelve weeks ended September 3, 1996, and
such expenses decreased as a percentage of net sales from 6.1% to 5.1%. The
reduction of capitalized pre-opening expenses per unit for 59 new restaurants
opened since September 1996 versus the restaurants opened in 1995 and the first
two quarters of 1996 resulted in a reduction of pre-opening expense
amortization. This improvement offset the additional depreciation and
amortization expenses related to the new units opened since September 1996.
General and administrative expenses for the twelve weeks ended
September 9, 1997 increased $694,000 (15.8%) from the comparable period in 1996,
primarily due to increases in the compensation and number of district personnel
and travel costs associated with opening units. 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 $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 during the fiscal year ended
December 31, 1996. The service agreement was renewed for fiscal 1997 with the
fixed annual charge increasing to $2,010,000 and the per restaurant, per
accounting period fee increasing to $440. 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.
The effective income tax rate for the twelve weeks ended September
9, 1997 and for the twelve weeks ended September 3, 1996 was 36.5% and 37.8%,
respectively. The decrease in the rate is primarily due to a reduction in the
effective state tax rate.
-10-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Thirty-six Weeks Ended September 9, 1997 Compared to
Thirty-six Weeks Ended September 3, 1996
Net sales increased $71,028,000 (21.7%) to $398,918,000 for the
thirty-six weeks ended September 9, 1997 compared to $327,890,000 for the
thirty-six weeks ended September 3, 1996, principally attributable to
$65,482,000 in sales from the 59 new domestic Lone Star restaurants opened since
September 3, 1996, additional sales from the Sullivan's and Del Frisco's
restaurants opened in 1996 and 1997 and sales from the twelve additional units
opened in the Australian joint venture. Same store sales were down 6.5% for the
thirty-six weeks.
Costs of sales, primarily food and beverages increased as a
percentage of sales to 35.7% from 35.3% due to slightly higher beef prices in
the third quarter as well as some discounted menu items and free appetizers
offered in a national marketing campaign. During these periods, the Company
purchased beef under contracted prices which allowed the company to maintain
more stable beef costs. Such contracts will expire after September, 1997 and as
of October 7, 1997 the contracts have not been extended which may result in
higher and fluctuating cost of sales during periods when the company purchases
beef in the cash market.
Restaurant operating expenses for the thirty-six weeks ended
September 9, 1997 increased $31,578,000 (28.2%) from $112,078,000 in the
thirty-six weeks ended September 3, 1996 to $143,656,000, and such expenses
increased as a percentage of net sales from 34.2% to 36.0%. Most of this
increase is attributable to the introduction of the national marketing program,
higher maintenance costs in the domestic Lone Star restaurants, and the effect
of fixed cost components on lower average restaurant sales.
Depreciation and amortization increased $384,000 (2.0%) in the
thirty-six weeks ended September 9, 1997 over the thirty-six weeks ended
September 3, 1996, and such expenses decreased as a percentage of net sales from
6.0% to 5.0%. The reduction of capitalized pre-opening expenses per unit for 59
new restaurants opened since September 1996 versus the restaurants opened in
1995 and the first quarter of 1996 resulted in a reduction of pre-opening
expense amortization. This improvement offset the additional depreciation and
amortization expenses related to the new units opened since September 1996.
General and administrative expenses for the thirty-six weeks ended
September 9, 1997 increased $189,000 (1.3%) from the comparable period in 1996,
primarily due to increases in the compensation and number of district personnel
and travel costs associated with opening units offset by the elimination of
expenses of the Company's former European Joint Venture.
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 $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
during the fiscal year ended December 31, 1996. The service agreement was
renewed for fiscal 1997 with the fixed annual charge increasing to $2,010,000
and the per restaurant, per accounting period fee increasing to $440. 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 thirty-six weeks ended
September 9, 1997 was $3,195,000, a $766,000 increase from the comparable period
in 1996, reflecting increased interest income from the investment of the net
proceeds of the 1996 public offering.
-11-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Thirty-six Weeks Ended September 9, 1997 Compared to
Thirty-six Weeks Ended September 3, 1996 (continued)
The effective income tax rate for the thirty-six weeks ended September 9, 1997
and the thirty-six weeks ended September 3, 1996 was 36.6% and 39.1%,
respectively. The decrease in the rate is primarily due to certain losses in
1996 resulting from the write-off of the European Joint Venture that are not
currently available for deduction as well as an increase in 1997 interest income
that is nontaxable at the federal level and a reduction in the effective state
tax rate.
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. Since
the majority of hourly paid personnel are tipped employees and the recent
minimum wage changes did not include an increase in the cash wage rate for
tipped employees, the impact of the minimum wage change has not been
significant. 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 report 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. Stockholders are cautioned
that all forward-looking statements involve risks and uncertainty, including
without limitation, the ability of the Company to open new restaurants, 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 thirty-six weeks ended September 9, 1997 and September 3, 1996.
Thirty-six weeks ended
September 9, September 3,
1997 1996
------------ ------------
Net cash provided by operating activities ... $ 62,998,470 $ 64,763,557
Net cash used in investment activities ...... (69,395,669) (73,978,993)
Net cash provided by financing activities .... 6,193,008 107,055,662
Net cash increase (decrease) by changes
in exchange rates .......................... 144,092 (335,706)
Net increase (decrease) in cash .............. (60,099) 97,504,520
During the thirty-six week period ended September 9, 1997, the Company's
investment in property and equipment was $65,421,353.
The Company has opened 260 restaurants in the past five fiscal years
of which 59 opened in 1996 and an additional 42 opened during the thirty-six
weeks ended September 9, 1997. 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 September 9, 1997, the Company had $150,661,000 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
September 9, 1997, the Company had acquired 18 sites for future development, 5
of which are leased. In addition, as of such date the Company had entered into
six contracts to purchase sites. The Company was also actively negotiating to
purchase or lease 31 additional sites. The Company expects to expend
approximately $55,000,000 for new restaurant development costs through the
remainder of fiscal 1997.
-13-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit 11.1 Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
(b) Forms on 8-K............ None
-14-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
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
----------------------------------------
Chief Financial and Principal Accounting
Officer, Executive Vice President,
Treasurer and Director
EXHIBIT 11.1
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Twelve Weeks Ended For the Thirty-six Weeks Ended
---------------------------------------- ------------------------------------
September 9, 1997 September 3, 1996 September 9, 1997 September 3, 1996
---------------------------------------- ------------------------------------
(in thousands, except per share amounts) (in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Primary:
Average weighted shares outstanding 41,064 40,611 40,965 38,766
Net effect of dilutive stock options-based
on the treasury stock method using
average market price 817 1,039 774 1,202
------- ------- ------- -------
Total 41,881 41,650 41,739 39,967
======= ======= ======= =======
Net Income $15,055 $15,838 $51,805 $36,878
======= ======= ======= =======
Per share amount $ 0.36 $ 0.38 $ 1.24 $ 0.92
======= ======= ======= =======
Fully Diluted:
Average weighted shares outstanding 41,064 40,611 40,965 38,766
Net effect of dilutive stock options-based
on the treasury stock method using
period-end market price, if higher
than average market price 818 1,039 776 1,206
------- ------- ------- -------
Total 41,882 41,650 41,741 39,971
======= ======= ======= =======
Net Income $15,055 $15,838 $51,805 $36,878
======= ======= ======= =======
Per share amount $ 0.36 $ 0.38 $ 1.24 $ 0.92
======= ======= ======= =======
</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 SEPTEMBER 9, 1997 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-30-1997
<PERIOD-START> JUN-18-1997
<PERIOD-END> SEP-9-1997
<CASH> 150,661
<SECURITIES> 0
<RECEIVABLES> 2,308
<ALLOWANCES> 0
<INVENTORY> 9,011
<CURRENT-ASSETS> 171,340
<PP&E> 402,835
<DEPRECIATION> 0
<TOTAL-ASSETS> 603,585
<CURRENT-LIABILITIES> 44,145
<BONDS> 0
0
0
<COMMON> 411
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 603,585
<SALES> 135,302
<TOTAL-REVENUES> 135,302
<CGS> 49,287
<TOTAL-COSTS> 107,495
<OTHER-EXPENSES> 5,089
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,057
<INCOME-PRETAX> 23,775
<INCOME-TAX> 8,720
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,055
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
