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 17, 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 July 15, 1997
Common Stock, $.01 par value 41,017,831 shares
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
AT JUNE 17, 1997 AND DECEMBER 31, 1996 2
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME FOR THE TWELVE WEEKS ENDED
JUNE 17, 1997 AND JUNE 11, 1996 3
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME FOR THE TWENTY-FOUR WEEKS ENDED
JUNE 17, 1997 AND JUNE 11, 1996 4
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE TWENTY-FOUR WEEKS ENDED
JUNE 17, 1997 AND JUNE 11, 1996 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 5 HAVE BEEN OMITTED
SINCE THE ITEMS ARE EITHER INAPPLICABLE OR THE
ANSWER IS NEGATIVE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
PART III. EXHIBITS
11.1 STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
99.1 TWELVE MONTH EARNINGS STATEMENT FOR PERIOD ENDED JUNE 17, 1997
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 17, 1997 December 31, 1996
------------- -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 148,450,661 $ 150,721,286
Accounts receivable 2,330,435 2,233,119
Inventories 8,816,284 4,728,071
Pre-opening costs - net 5,602,358 6,250,241
Deferred income taxes 1,302,270 584,780
Other current assets 2,960,629 783,557
------------- -------------
Total current assets 169,462,637 165,301,054
Property and equipment, net 382,664,510 350,588,246
Intangible and other assets, net (principally goodwill) 29,012,754 26,262,455
------------- -------------
Total assets $ 581,139,901 $ 542,151,755
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,600,714 $ 8,202,116
Other current liabilities 26,070,285 30,854,934
------------- -------------
Total current liabilities 36,670,999 39,057,050
Deferred income taxes 6,603,128 7,306,978
Other non-current liabilities 205,451 247,510
Minority interest 5,098 301,384
Stockholders' Equity:
Preferred stock -- --
Common stock 410,173 407,027
Additional paid-in capital 346,424,779 341,158,492
Retained earnings 190,957,271 154,207,532
Translation adjustment (136,998) (534,218)
------------- -------------
Total stockholders' equity 537,655,225 495,238,833
------------- -------------
Total liabilities and stockholders' equity $ 581,139,901 $ 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
-----------------------------------------
June 17, 1997 June 11, 1996
-------------- --------------
<S> <C> <C>
Net sales $ 133,359,880 $ 107,768,388
Costs and expenses:
Costs of sales 46,833,703 38,194,413
Restaurant operating expenses 46,941,973 36,337,967
Depreciation and amortization 6,728,165 6,450,059
------------- -------------
Restaurant costs and expenses 100,503,841 80,982,439
------------- -------------
Restaurant operating income 32,856,039 26,785,949
General and administrative expenses 4,750,362 5,233,258
Loss on divestiture of European Joint Venture -- 8,557,176
------------- -------------
Income from operations 28,105,677 12,995,515
Other income, principally interest 1,151,686 721,027
------------- -------------
Income before income taxes and minority interest 29,257,363 13,716,542
Provision for income taxes (10,685,532) (5,931,827)
Minority interest (25,608) 318,281
------------- -------------
Net income $ 18,546,223 $ 8,102,996
============= =============
Primary net income per share $ 0.45 $ 0.21
============= =============
</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 17, 1997 June 11, 1996
-------------- --------------
<S> <C> <C>
Net sales $ 263,615,496 $ 214,143,716
Costs and expenses:
Costs of sales 92,790,743 75,778,440
Restaurant operating expenses 92,331,567 74,056,934
Depreciation and amortization 13,158,719 12,763,089
------------- -------------
Restaurant costs and expenses 198,281,029 162,598,463
------------- -------------
Restaurant operating income 65,334,467 51,545,253
General and administrative expenses 9,393,750 9,899,060
Loss on divestiture of European Joint Venture -- 8,557,176
------------- -------------
Income from operations 55,940,717 33,089,017
Other income, principally interest 2,137,833 1,355,221
------------- -------------
Income before income taxes and minority interest 58,078,550 34,444,238
Provision for income taxes (21,288,320) (14,115,683)
Minority interest (40,491) 710,522
------------- -------------
Net income $ 36,749,739 $ 21,039,077
============= =============
Primary net income per share $ 0.88 $ 0.54
============= =============
</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 17, 1997 June 11, 1996
------------- --------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 36,749,739 $ 21,039,077
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,289,044 12,763,089
Non-cash loss on divestiture of European Joint Venture -- 8,337,176
Net change in operating assets and liabilities:
Change in operating assets (10,686,308) (3,456,724)
Change in operating liabilities (3,428,246) 1,447,730
------------- -------------
Net cash provided by operating activities 35,924,229 40,130,348
Cash flows from investing activities:
Purchases of property and equipment (40,612,780) (47,767,875)
Other (3,248,727) (207,906)
------------- -------------
Net cash used in investing activities (43,861,507) (47,975,781)
Cash flows from financing activities:
Net proceeds from issuance of common stock 5,269,433 102,755,801
------------- -------------
Net cash provided by financing activities 5,269,433 102,755,801
------------- -------------
Effect of exchange rate on cash 397,220 --
Net increase (decrease) in cash and cash equivalents (2,270,625) 94,910,368
Cash and cash equivalents at beginning of period 150,721,286 67,424,884
------------- -------------
Cash and cash equivalents at end of period $ 148,450,661 $ 162,335,252
============= =============
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 25,820,925 $ 9,977,302
</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 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 17, 1997, are not necessarily indicative of the results to be
expected for the full year ending December 30, 1997. This quarterly report on
Form 10-Q should be read in conjunction with the Company's audited consolidated
financial statements in its 1996 Form 10-K.
2. STOCK OPTIONS
During the twenty-four week period ended June 17, 1997, the Company
granted stock options for 3,404,361 shares of Common Stock at exercise prices
ranging from $19.63 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 at $18.25, the closing price on
that date, 7,713,201 shares that had been granted at higher prices prior to this
date.
3. 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 17, 1997 and June 11, 1996 was 41,555,756 and
39,410,290, respectively. The number of shares resulting from this computation
for the twenty-four weeks ended June 17, 1997 and June 11, 1996 was 41,565,383
and 39,163,895, 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 June 17, 1997 and June 11, 1996 was 41,982,331 and
39,426,453 respectively. The number of shares resulting from this computation of
fully diluted earnings per share for the twenty-four weeks ended June 17, 1997
and June 11, 1996 was 41,604,705 and 39,180,058, 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 36
restaurants in 1993, 48 restaurants in 1994, 45 restaurants in 1995, 45
restaurants in 1996 and intends to open at least 60 Lone Star Steakhouse &
Saloon restaurants in 1997, all of which are expected to be Company-owned and
operated. As of June 17, 1997 the Company has opened 19 of the 1997 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 two or three 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 $35 to $40. The Company opened two Sullivan's
Steakhouses in 1996 and expects to develop four to six additional Sullivan's
restaurant in 1997.
Internationally, the Company, through a joint venture, operates
twenty-three Lone Star Steakhouse & Saloon restaurants in Australia, three of
which opened this year, and expects to open an additional six to eight 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) TWENTY-FOUR WEEKS ENDED
JUNE 17, JUNE 11, JUNE 17, JUNE 11,
1997 1996 1997 1996
----- ----- ----- -----
(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 35.1 35.4 35.2 35.4
Restaurant operating expenses 35.2 33.7 35.0 34.6
Depreciation and amortization 5.1 6.0 5.0 6.0
----- ----- ----- -----
Restaurant costs and expenses 75.4 75.1 75.2 76.0
----- ----- ----- -----
Restaurant operating income 24.6 24.9 24.8 24.0
General and administrative expenses 3.6 4.9 3.6 4.6
Loss on write-off of European Joint Venture -- 7.9 - 3.9
----- ----- ----- -----
Income from operations 21.0 12.1 21.2 15.5
Other income, principally interest and minority interest .9 .9 .8 .9
----- ----- ----- -----
Income before provision for income taxes 21.9 13.0 22.0 16.1
Provision for income taxes 8.0 5.5 8.1 6.6
----- ----- ----- -----
Net income 13.9% 7.5% 13.9% 9.8%
===== ===== ===== =====
RESTAURANT OPERATING DATA:
Average sales per restaurant on an annualized basis (2) $ 2,344 $ 2,540 $ 2,374 $ 2,587
Number of restaurants at end of the period 255 189 255 189
</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 JUNE 17, 1997 COMPARED TO TWELVE WEEKS ENDED JUNE 11, 1996
Net sales increased $25,592,000 (23.7%) to $133,360,000 for the twelve
weeks ended June 17, 1997 compared to $107,768,000 for the twelve weeks ended
June 11, 1996 principally attributable to $25,497,000 in sales from the 52 new
domestic Lone Star restaurants opened since June 1996, additional sales from the
Sullivan's and Del Frisco's restaurants opened in 1996 and and 1997 and sales
from the twelve additional units opened in the Australian joint venture. Same
store sales were down 6.4% in the second quarter.
Costs of sales, primarily food and beverages decreased as a percentage of
sales to 35.1% from 35.4% due to slightly lower beef prices and improved
controls. During these periods, the Company purchased beef under contracted
prices which allowed the company to maintain more stable beef costs. Such
contracts have been extended through September 1997.
Restaurant operating expenses for the twelve weeks ended June 17, 1997
increased $10,604,000 (29.2%) from $36,338,000 in the twelve weeks ended June
11, 1996 to $46,942,000, and such expenses increased as a percentage of net
sales from 33.7% to 35.2%. Most of this increase is attributable to higher
building and equipment maintenance costs on the domestic Lone Star restaurants
as well as higher labor and occupancy costs in the Australian units, and the
effect of fixed cost components on lower average restaurant sales.
Depreciation and amortization increased $278,000 (4.3%) in the twelve
weeks ended June 17, 1997 over the twelve weeks ended June 11, 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 52 new restaurants opened since
June 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 June 1996. General and administrative expenses for the twelve
weeks ended June 17, 1997 decreased $483,000 (9.2%) from the comparable period
in 1996, primarily due to the elimination of the 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 twelve weeks ended June 17,
1997 was $1,152,000, a $431,000 increase from the comparable period in 1996,
reflecting increased interest income from the investment of the net proceeds of
the 1996 public offering.
The effective income tax rate for the twelve weeks ended June 17, 1997 and
the effective income tax rate for the twelve weeks ended June 11, 1996 was 36.6%
and 42.3%, 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.
-10-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
TWENTY-FOUR WEEKS ENDED JUNE 17, 1997 COMPARED TO TWENTY-FOUR WEEKS ENDED
JUNE 11, 1996
Net sales increased $49,471,000 (23.1%) to $263,615,000 for the
twenty-four weeks ended June 17, 1997 compared to $214,144,000 for the
twenty-four weeks ended June 11, 1996 principally attributable to $46,651,000 in
sales from the 52 new domestic Lone Star restaurants opened since June 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 5.7% for the twenty-four weeks.
Costs of sales, primarily food and beverages decreased as a percentage of
sales to 35.1% from 35.4% due to slightly lower beef prices and improved
controls. During these periods, the Company purchased beef under contracted
prices which allowed the company to maintain more stable beef costs. Such
contracts have now been extended through September 1997.
Restaurant operating expenses for the twenty-four weeks ended June 17,
1997 increased $18,275,000 (24.7%) from $74,057,000 in the twenty-four weeks
ended June 11, 1996 to $92,332,000, and such expenses increased as a percentage
of net sales from 34.6% to 35.0%. Most of this increase is attributable to
higher building and equipment maintenance costs on the domestic Lone Star
restaurants and the effect of fixed cost components on lower average restaurant
sales.
Depreciation and amortization increased $396,000 (3.1%) in the twenty-four
weeks ended June 17, 1997 over the twenty-four weeks ended June 11, 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 52 new restaurants
opened since June 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 June 1996. General and administrative
expenses for the twenty-four weeks ended June 17, 1997 decreased $505,000 (5.1%)
from the comparable period in 1996, primarily due to the elimination of the
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 twenty-four weeks ended
June 17, 1997 was $2,138,000, a $783,000 increase from the comparable period
in 1996, reflecting increased interest income from the investment of the net
proceeds of the 1996 public offering.
The effective income tax rate for the twenty-four weeks ended June 17,
1997 and the effective income tax rate for the twenty-four weeks ended June 11,
1996 was 36.7% and 40.2% 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.
-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. Since
the majority of personnel are tipped employees the recent minimum wage changes
will have very little effect on 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 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 twenty-four weeks ended June 17, 1997 and June 11, 1996.
<TABLE>
<CAPTION>
Twenty-four weeks ended
June 17, June 11,
1997 1996
---- ----
<S> <C> <C>
Net cash provided by operating activities....................... $ 35,924,229 $ 40,130,348
Net cash used in investment activities.......................... (43,861,507) (47,975,781)
Net cash provided by financing
activities................................................ 5,269,433 102,755,801
Net cash provided by changes in exchange rates.................. 397,220 -
Net increase (decrease) in cash................................. (2,270,625) 94,910,368
</TABLE>
During the twenty-four week period ended June 17, 1997, the Company's investment
in property and equipment was $40,612,780.
The Company has opened 241 restaurants in the past five fiscal years of
which 48 opened in 1996 and an additional 23 opened during the twenty-four weeks
ended June 17, 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 June 17, 1997, the Company had $148,451,000 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 June 17,
1997, the Company has acquired 25 sites for future development, 8 of which are
leased. In addition, as of such date the Company had entered into nine contracts
to purchase sites. The Company was also actively negotiating to purchase or
lease 15 additional sites. The Company expects to expend approximately
$95,000,000 to open new restaurants through the remainder of fiscal 1997.
-13-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS.
On May 23, 1997, the Company held its Annual Meeting of
Stockholders(the "Meeting"). At the meeting the stockholders elected John D.
White and H. Gilliland Nickel to the Board of Directors to serve until the 2000
Annual Meeting of Stockholders and until their successors have been duly elected
and qualified. As to the newly elected Directors, there were 34,448,779 votes
"For" and 675,796 votes "Withheld" for John D. White, and 34,448,779 votes "For"
and 675,796 votes "Withheld" for H. Gilliland Nickel. In addition, the
stockholders ratified the appointment of Ernst & Young as the Company's
independent auditors for the year ending December 30, 1997. As to the
ratification of auditors there were 35,235,061 votes "For", 200 votes "Against",
and 5,130 votes "Abstained."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11.1 Computation of Per Share Earnings
Exhibit 99.1 Twelve Month Earnings Statement
Exhibit 27 Financial Data Schedule
(b) Forms on 8-K................None
-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-
EXHIBIT 11.1
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Twelve Weeks Ended For the Twenty-four Weeks Ended
June 17, 1997 June 11, 1996 June 17, 1997 June 11, 1996
(in thousands, except (in thousands, except
per share amounts) per share amounts)
<S> <C> <C> <C> <C>
Primary:
Average weighted shares outstanding 40,990 38,090 40,915 37,843
Net effect of dilutive stock options-based
on the treasury stock method using
average market price 566 1,321 650 1,321
------- ------- ------- -------
Total 41,556 39,410 41,565 39,164
======= ======= ======= =======
Net Income $18,546 $ 8,103 $36,750 $21,039
======= ======= ======= =======
Per share amount $ 0.45 $ 0.21 $ 0.88 $ 0.54
======= ======= ======= =======
Fully Diluted:
Average weighted shares outstanding 40,990 38,090 40,915 37,843
Net effect of dilutive stock options-based
on the treasury stock method using
period-end market price, if higher
than average market price 992 1,337 690 1,337
------- ------- ------- -------
Total 41,982 39,426 41,605 39,180
======= ======= ======= =======
Net Income $18,546 $ 8,103 $36,750 $21,039
======= ======= ======= =======
Per share amount $ 0.44 $ 0.21 $ 0.88 $ 0.54
======= ======= ======= =======
</TABLE>
EXHIBIT 99.1
LONE STAR STEAKHOUSE & SALOON, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE FIFTY-THREE WEEKS ENDED JUNE 17, 1997
(UNAUDITED)
Net sales $ 541,226,050
Costs and expenses:
Costs of sales 189,350,437
Restaurant operating expenses 186,145,926
Depreciation and amortization 28,779,798
-------------
Restaurant costs and expenses 404,276,161
-------------
Restaurant operating income 136,949,889
General and administrative expenses 20,778,897
-------------
Income from operations 116,170,992
Other income, principally interest 4,464,105
-------------
Income before income taxes and minority interest 120,635,097
Provision for income taxes (44,690,330)
Minority interest (166,811)
-------------
Net income $ 75,777,956
=============
Primary net income per share $ 1.82
=============
<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 17, 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> JAN-01-1997
<PERIOD-END> JUN-17-1997
<CASH> 148,451
<SECURITIES> 0
<RECEIVABLES> 2,330
<ALLOWANCES> 0
<INVENTORY> 8,816
<CURRENT-ASSETS> 169,463
<PP&E> 382,665
<DEPRECIATION> 0
<TOTAL-ASSETS> 581,140
<CURRENT-LIABILITIES> 36,671
<BONDS> 0
0
0
<COMMON> 410
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 581,140
<SALES> 133,360
<TOTAL-REVENUES> 133,360
<CGS> 46,834
<TOTAL-COSTS> 100,504
<OTHER-EXPENSES> 4,750
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,152
<INCOME-PRETAX> 29,257
<INCOME-TAX> 10,686
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,546
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.44
</TABLE>
