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 8, 1998 0-19907
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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 9, 1998
----- 39,092,967 shares
Common Stock, $.01 par value
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Index
Page
Number
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at September 8, 1998 and December 30, 1997 2
Condensed Consolidated Statements of Income
for the twelve weeks ended
September 8, 1998 and September 9, 1997 3
Condensed Consolidated Statements of Income
for the thirty-six weeks ended
September 8, 1998 and September 9, 1997 4
Condensed Consolidated Statements of
Cash Flows for the thirty-six weeks ended
September 8, 1998 and September 9, 1997 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
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Items 1 through 4 have been omitted
since the items are either not applicable or the
answer is negative
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8K 14
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<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 8, 1998 December 30, 1997
----------------- -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 93,685,702 $ 135,996,996
Inventories 12,000,326 10,955,361
Pre-opening costs - net 3,947,356 9,162,642
Other current assets 7,332,484 6,523,785
----------- -----------
Total current assets 116,965,868 162,638,784
Property and equipment, net 453,923,634 429,732,586
Intangible and other assets, net 27,459,839 28,440,560
----------- -----------
Total assets $ 598,349,341 $ 620,811,930
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,075,875 $ 16,746,604
Other current liabilities 20,687,920 29,118,934
------------ ------------
Total current liabilities 30,763,795 45,865,538
Deferred income taxes 12,501,693 8,619,262
Other non-current liabilities 90,836 158,736
Minority interest -- 19,927
Stockholders' Equity:
Preferred stock -- --
Common stock 392,180 411,562
Additional paid-in capital 318,461,282 349,607,732
Retained earnings 248,487,444 223,015,141
Accumulated other comprehensive loss (12,347,889) (6,885,968)
------------ ------------
Total stockholders' equity 554,993,017 566,148,467
------------ ------------
Total liabilities and stockholders' equity $ 598,349,341 $ 620,811,930
============ ============
</TABLE>
See accompanying notes.
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<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the twelve weeks ended
-----------------------------------------
September 8, 1998 September 9, 1997
-----------------------------------------
<S> <C> <C>
Net sales $ 142,156,518 $ 135,302,151
Costs and expenses:
Costs of sales 54,328,627 49,286,935
Restaurant operating expenses 67,050,857 51,324,510
Depreciation and amortization 7,980,957 6,883,306
------------ ------------
Restaurant costs and expenses 129,360,441 107,494,751
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Restaurant operating income 12,796,077 27,807,400
General and administrative expenses 8,113,477 5,089,334
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Income from operations 4,682,600 22,718,066
Other income, principally interest 674,083 1,057,163
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Income before income taxes and minority interest 5,356,683 23,775,229
Provision for income taxes (1,811,478) (8,655,179)
Minority interest 188,603 (64,954)
------------ ------------
Net income $ 3,733,808 $ 15,055,096
============ ============
Basic earnings per share $ 0.10 $ 0.36
============ ============
Diluted earnings per share $ 0.10 $ 0.36
============ ============
</TABLE>
See accompanying notes.
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<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the thirty-six weeks ended
-----------------------------------------
September 8, 1998 September 9, 1997
-----------------------------------------
<S> <C> <C>
Net sales $ 436,693,531 $ 398,917,647
Costs and expenses:
Costs of sales 164,991,040 142,077,678
Restaurant operating expenses 190,186,365 143,656,077
Depreciation and amortization 25,125,877 20,042,025
------------ ------------
Restaurant costs and expenses 380,303,282 305,775,780
------------ ------------
Restaurant operating income 56,390,249 93,141,867
General and administrative expenses 21,144,761 14,483,084
------------ ------------
Income from operations 35,245,488 78,658,783
Other income, principally interest 3,417,927 3,194,996
------------ ------------
Income before income taxes and minority interest 38,663,415 81,853,779
Provision for income taxes (13,464,316) (29,943,499
Minority interest 273,204 (105,445)
------------ ------------
Net income $ 25,472,303 $ 51,804,835
============ ============
Basic earnings per share $ 0.63 $ 1.26
============ ============
Diluted earnings per share $ 0.63 $ 1.24
============ ============
See accompanying notes.
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</TABLE>
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the thirty-six weeks ended
----------------------------------------------
September 8, 1998 September 9, 1997
----------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 25,472,303 $ 51,804,835
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 25,405,405 20,328,094
Net change in operating assets and liabilities:
Change in operating assets (2,788,828) (12,395,606)
Change in operating liabilities (11,287,212 3,261,147
----------- -----------
Net cash provided by operating activities 36,801,668 62,998,470
(46,321,618) (65,421,353)
(1,585,792) (3,974,316)
----------- -----------
Net cash used in investing activities (47,907,410) (69,395,669)
996,682 6,193,008
(32,162,514) --
----------- -----------
Net cash provided by (used in) financing activities (31,165,832) 6,193,008
(39,720) 144,092
----------- -----------
Net decrease in cash and cash equivalents (42,311,294) (60,099)
135,996,996 150,721,286
----------- -----------
$ 93,685,702 $ 150,661,187
=========== ===========
$ 16,776,032 $ 26,295,941
</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 thirty-six
weeks ended September 8, 1998, are not necessarily indicative of the results to
be expected for the full year ending December 29, 1998. This quarterly report on
Form 10-Q should be read in conjunction with the Company's audited consolidated
financial statements in its 1997 Form 10-K.
2. Stock Options
During the thirty-six week period ended September 8, 1998, the Company
granted stock options for 311,864 shares of Common Stock at exercise prices
ranging from $10.44 to $23.13 per share pursuant to its 1992 stock option plan
for employees.
3. Earnings Per Share
Basic earnings per share amounts are computed based on the weighted
average number of shares outstanding. The number of weighted average shares
outstanding for the twelve week period ended September 8, 1998 and September 9,
1997 was 39,236,003 and 41,064,372, respectively. The number of weighted average
shares outstanding for the thirty-six week period ended September 8, 1998 and
September 9, 1997 was 40,393,698 and 40,964,926, respectively.
For purposes of diluted computations, the number of shares that would be
issued from the exercise of dilutive stock options has been reduced by the
number of shares which could have been purchased from the proceeds at the
average market price of the Company's stock or the price of the Company's stock
on the exercise date if options were exercised during the period presented. The
number of shares resulting from this computation of diluted earnings per share
for the twelve weeks ended September 8, 1998, and September 9, 1997, was
39,255,090 and 41,882,374, respectively. The number of shares resulting from
this computation of diluted earnings per share for the thirty-six weeks ended
September 8, 1998, and September 9, 1997, was 40,429,716 and 41,741,169,
respectively.
4. Recently Issued Accounting Financial Standards
The Accounting Standards Executive Committee recently issued Statement of
Position 98-5, Reporting on Costs of Start-up Activities which will require the
Company to expense start-up costs, including organizational costs, as incurred
and to report the initial adoption as a cumulative effect of a change in
accounting principle as described in APBO No. 20, Accounting Changes, during the
first quarter of its fiscal year 1999. The cumulative effect upon adoption would
result in a one-time charge to income in an amount equal to the net book value
of the Company's pre-opening costs. A resulting benefit of this change is the
discontinuance of amortization expense in subsequent periods.
- 6 -
<PAGE>
5. Comprehensive Income
As of December 31, 1997, the Company adopted the Financial Accounting
Standards Board Statement 130, Reporting Comprehensive Income. Statement 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. Statement 130 requires the
Company's foreign currency translation adjustments, which prior to adoption were
reported separately in shareholders' equity, to be included in other
comprehensive income.
During the twelve weeks ended September 8, 1998 and September 9, 1997,
total comprehensive income totaled amounted to $4,262,008 and $14,801,968,
respectively.
During the thirty-six weeks ended September 8, 1998 and September 9,
1997, total comprehensive income totaled to $20,010,382 and $51,660,743,
respectively.
6. Stock Purchase
Pursuant to authorization by the Company's Board of Directors, the Company
purchased 2,000,000 shares of its Common Stock during the thirty-six week period
ended September 8, 1998 at an average price of $16.08 per share. The Company is
accounting for this purchase using the constructive retirement method of
accounting wherein the aggregate par value of the stock is charged to the stock
account and the excess of cost over par value is charged to paid in capital.
The Board of Directors authorized purchasing up to 10% of the then
remaining outstanding shares of Common Stock, totaling approximately 4 million
additional shares.
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<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 has maintained rapid expansion over the past three fiscal
years during which it opened 45 domestic restaurants in 1995, 45 restaurants in
1996 and 60 restaurants in 1997. The Company is slowing its development of Lone
Star Steakhouse & Saloon restaurants and expects to open up to 20 locations in
the fiscal year ended December 29, 1998. All units are expected to be
Company-owned and operated. As of September 8, 1998, the Company has opened two
domestic restaurants in 1998. A director of the Company operates three Lone Star
restaurants under license from the Company, one in Guam and two in California.
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 continuing to develop its upscale steakhouse concepts. The
Company is currently operating three Del Frisco's Double Eagle Steak House
restaurants. The Company has one additional Del Frisco's Double Eagle Steak
House restaurant with approximately 16,000 square feet of space in Rockefeller
Plaza in New York City under construction which is expected to open in the first
quarter of 1999. The Company also has a Del Frisco's licensee in Orlando,
Florida.
The Company operates a second upscale steak restaurant concept, Sullivan's
Steakhouse. The Company is operating eight Sullivan's Steakhouse restaurants and
expects to develop two or three additional Sullivan's Steakhouse restaurants in
1998. As of September 8, the Company has opened two domestic Sullivan's
restaurants in 1998.
Internationally, the Company, through a joint venture, operates 39 Lone
Star Steakhouse & Saloon restaurants in Australia, six of which opened this
year, and expects to open one additional restaurant in 1998.
- 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 8, September 9, September 8, September 9,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Income Statement Data:
Net sales 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Costs of sales............................................. 38.2 36.4 37.8 35.7
Restaurant operating expenses.............................. 47.2 37.9 43.6 36.0
Depreciation and amortization.............................. 5.6 5.1 5.8 5.0
Restaurant costs and expenses......................... 91.0 79.4 87.1 76.7
Restaurant operating income...................................... 9.0 20.6 12.9 23.3
General and administrative expenses.............................. 5.7 3.8 4.8 3.6
Income from operations........................................... 3.3 16.8 8.1 19.7
Other income, principally interest and minority interest......... .5 .7 .8 .8
Income before provision for income taxes ........................ 3.8 17.5 8.9 20.5
Provision for income taxes....................................... 1.3 6.4 3.1 7.5
Net income ...................................................... 2.6% 11.1% 5.8% 13.0%
Restaurant Operating Data: (Dollars in thousands)
Average sales per restaurant on an annualized basis (2) $1,955 $2,240 $2,031 $2,328
Number of restaurants at end of the period 318 274 318 274
</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.
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<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Twelve Weeks Ended September 8, 1998 Compared to Twelve Weeks Ended
September 9, 1997
Net sales increased $6,854,000 (5.1%) to $142,156,518 for the twelve weeks
ended September 8, 1998, compared to $135,302,000 for the twelve weeks ended
September 9, 1997, mostly attributable to $14,353,000 in sales from the 28 new
domestic Lone Star restaurants opened since September 1997, additional sales
from the four Sullivan's restaurants opened since September 1997 and sales from
the 11 additional units opened in the Australian joint venture. The increase was
partially offset by a 7.7% decrease in same-store sales which resulted from
lower customer counts during the quarter while guest check averages remained
consistent.
Costs of sales, primarily food and beverages, increased as a percentage
of sales to 38.2% from 36.4% due to higher beef and produce prices, and the
higher cost of sales of new entree's introduced in the fourth quarter of 1997.
Restaurant operating expenses for the twelve weeks ended September 8,
1998, increased $15,726,000 (30.6%) from $51,325,000 in the twelve weeks ended
September 9, 1997, to $67,051,000, and increased as a percentage of net sales
from 37.9% to 47.2%. This increase is attributable to higher labor costs, higher
costs for building and equipment maintenance on the domestic Lone Star
restaurants, higher advertising costs associated with the national advertising
campaign and higher labor and occupancy costs in the Australian units, as well
as the effect of fixed cost components on lower average restaurant sales.
Depreciation and amortization increased $1,098,000 (15.9%) in the twelve
weeks ended September 8, 1998, over the twelve weeks ended September 9, 1997,
and increased as a percentage of net sales from 5.1% to 5.6%. The additional
fixed assets and capitalized pre-opening expenses for 32 new restaurants opened
domestically as well as 11 restaurants opened in Australia since September 1997
increased the depreciation and amortization for the third quarter of 1998 over
the prior year.
General and administrative expenses for the twelve weeks ended September
8, 1998, increased $3,024,000 (59.4%) from the comparable period in 1997,
primarily due to increased travel expenses associated with additional multi-unit
managers and production costs for the Company's national advertising campaign.
Certain accounting and administrative services have been 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 provided 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 $2,010,000, plus an additional fee of $440 per restaurant per
28-day accounting period and reimbursement of out-of-pocket costs and expenses
during the fiscal year ended December 30, 1997. The service agreement was
renewed for fiscal 1998 with the fixed annual charge increasing to $3,737,000
and the per restaurant, per accounting period fee increasing to $466. On October
19, 1998, the Company purchased certain assets and assumed certain liabilities
of Coulter Enterprises, Inc., for a purchase price of $10.5 million. As a result
of the Agreement, the Company will internally provide the accounting and
administrative services to the Company which had been provided by Coulter
Enterprises, Inc. See Item 5 -- Other Information.
Other income, principally interest, for the twelve weeks ended September
8, 1998, was $674,000, a $383,000 decrease from the comparable period in 1997,
reflecting a decrease in invested funds earning interest that were used to
purchase 2,000,000 shares of the Company's common stock.
The effective income tax rates for the twelve weeks ended September 8,
1998, and the twelve weeks ended September 9, 1997 were 32.7% and 36.5%,
respectively. The decrease in the rate is primarily due to the effect of the
tips tax credit on lower pre-tax earnings and a higher proportion of tax exempt
income (primarily interest) to taxable income.
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<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Thirty-six Weeks Ended September 8, 1998 Compared to Thirty-six Weeks Ended
September 9, 1997
Net sales increased $37,776,000 (9.5%) to $436,694,000 for the thirty-six
weeks ended September 8, 1998, compared to $398,918,000 for the thirty-six weeks
ended September 9, 1997, mostly attributable to $41,684,000 in sales from the 28
new domestic Lone Star restaurants opened since September 1997, additional sales
from the four Sullivan's restaurants opened since September 1997 and sales from
the 11 additional units opened in the Australian joint venture. The increase was
partially offset by a 8.2% decrease in same-store sales which resulted from
lower customer counts during the period while guest check averages remained
consistent.
Costs of sales, primarily food and beverages, increased as a percentage of
sales to 37.8% from 35.7% due to higher beef and produce prices, and the higher
cost of sales of new entree's introduced in the fourth quarter of 1997. Since
September, 1997, the Company has not purchased beef under contracted prices,
although there may be a possibility of contracting prices in the future.
Restaurant operating expenses for the thirty-six weeks ended September 8,
1998 increased $46,530,000 (32.4%) from $143,656,000 in the thirty-six weeks
ended September 9, 1997, to $190,186,000, and increased as a percentage of net
sales from 36.0% to 43.6%. This increase is attributable to higher labor costs,
higher costs for building and equipment maintenance on the domestic Lone Star
restaurants, higher advertising costs associated with the national advertising
campaign and higher labor and occupancy costs in the Australian units, as well
as the effect of fixed cost components on lower average restaurant sales.
Depreciation and amortization increased $5,084,000 (25.4%) in the
thirty-six weeks ended September 8, 1998, over the thirty-six weeks ended
September 9, 1997, and increased as a percentage of net sales from 5.0% to 5.8%.
The additional fixed assets and capitalized pre-opening expenses for 32 new
restaurants opened domestically as well as 11 restaurants opened in Australia
since September 1997 increased the depreciation and amortization for the third
quarter of 1998 over the prior year.
General and administrative expenses for the thirty-six weeks ended
September 8, 1998 increased $6,662,000 (46.0%) from the comparable period in
1997, primarily due to additional personnel at the multi-unit management level,
increased travel expenses associated with the recertification process and
training materials for the management teams of all domestic Lone Star locations
and production costs for the Company's national advertising campaign.
Certain accounting and administrative services have been 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 provided 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 $2,010,000, plus an additional fee of $440 per restaurant per
28-day accounting period and reimbursement of out-of-pocket costs and expenses
during the fiscal year ended December 30, 1997. The service agreement was
renewed for fiscal 1998 with the fixed annual charge increasing to $3,737,000
and the per restaurant, per accounting period fee increasing to $466. On October
19, 1998, the Company purchased certain assets and assumed certain liabilities
of Coulter Enterprises, Inc., for a purchase price of $10.5 million. As a result
of the Agreement, the Company will internally provide the accounting and
administrative services to the Company which had been provided by Coulter
Enterprises, Inc. See Item 5 -- Other Information.
The effective income tax rates for the thirty-six weeks ended September 8,
1998, and the thirty-six weeks ended September 9, 1997, were 34.6% and 36.6%,
respectively. The decrease in the rate is primarily due to the effect of the
tips tax credit on lower pre-tax earnings and a higher proportion of tax exempt
income (primarily interest) to taxable income.
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<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, minimum wage changes have had
little effect on labor costs. To date, inflation has not had a material impact
on operating margins. Recently Issued Accounting Financial Standards
1. In June 1997, the FASB issued SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 requires disclosures of
certain information about operating segments and about products and services,
geographic areas in which the Company operates, and their major customers. This
Statement is effective for Financial Statements for periods beginning after
December 15, 1997. In the initial year of application, comparative information
for earlier years is to be presented. This Statement need not be applied to
interim periods in the initial year of its application, but comparative
information for interim periods in the initial year of application is to be
reported in Financial Statements for interim periods in the second year of
application.
2. In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 defines derivative instruments
and requires that these items be recognized as assets or liabilities in the
statement of financial position. This statement is effective for fiscal years
beginning after June 15, 1999. As of June 30, 1998 the Company does not have any
derivative instruments.
Year 2000 Compliance
Many software applications and operational programs written in the past
were not designed to recognize calendar dates beginning in the Year 2000. The
failure of such applications or systems to properly recognize the dates
beginning in the Year 2000 could result in miscalculations or system failures
which could result in an adverse effect on the Company's operations.
The Company has instituted a Year 2000 project to prepare its computer
systems and communication systems for the Year 2000. The project includes
identification and assessment of all software, hardware and equipment that could
potentially be affected by the Year 2000 issue and remedial action and further
testing, if necessary. The Company believes that the majority of its major
systems are Year 2000 compliant and costs to transition the remaining systems to
Year 2000 compliance are not anticipated to have a material adverse effect on
the Company's financial position or results of operations.
The Company is also contacting critical suppliers of products and services
to determine the extent to which the Company may be vulnerable to such parties
failure to resolve their own Year 2000 issues. Where practicable, the Company
will assess and attempt to mitigate its risks with respect to the failure of
these entities to be Year 2000 ready. The effect, if any, on the Company's
results of operations from the failure of such parties to be Year 2000 ready is
not reasonably estimable.
The Company receives representations and warranties from vendors of all
new hardware and software that such systems are Year 2000 compliant. See
Liquidity and Capital Resources.
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<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:
Thirty-six weeks ended
September 8, September 9,
1998 1997
------------- -----------
Net cash provided by operating activities .... $ 36,801,668 $ 62,998,470
Net cash used in investment activities ....... (47,907,410) (69,395,669)
Net cash provided by (used in) financing
activities ............................. (31,165,832) 6,193,008
Effect of exchange rate on cash .............. (39,720) 144,092
Net decrease in cash ......................... (42,311,294) (60,099)
During the thirty-six week period ended September 8, 1998, the Company's
investment in property and equipment was $46,322,000.
The Company has opened 245 restaurants in the past five fiscal years of
which 60 opened in 1997 and an additional 9 opened during the thirty-six weeks
ended September 8, 1998. 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 8, 1998, the Company had $93,686,000 in cash and cash
equivalents. On October 19, 1998, the Company purchased certain assets and
assumed certain liabilities of Coulter Enterprises, Inc. for a purchase price of
$10.5 million. See Item 5 -- Other Information. While the Company has not
established a credit facility, the Company believes it could establish a
facility on suitable terms. As of September 8, 1998, the Company has acquired 8
sites, and has entered into 4 lease agreements for future development. In
addition, the Company had entered into a commitment to purchase 6 additional
sites. On May 11, 1998 the Company announced suspension of future development
activities for Lone Star Steakhouse & Saloon restaurants. Total 1998 development
for Lone Star Steakhouse & Saloon restaurants will be approximately twenty (20)
units domestically. The Company expects to expend approximately $20,000,000 to
open new restaurants through the remainder of fiscal 1998.
The Company is in the process of installing sophisticated Point-of-Sale
devices in all of the Lone Star Steakhouse and Saloon restaurants. Additionally,
the Company is converting to a database management system in order to enhance
management's ability to process and analyze the data provided by the
Point-of-Sale systems. The Company expects these systems to be fully implemented
by mid 1999. These expenditures are expected to total approximately $13,000,000.
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<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
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 the forward-looking statements contained in the report will
prove to be accurate.
Item 5. Other Information
On October 19, 1998, the Company purchased certain assets and assumed
certain liabilities of Coulter Enterprises, Inc., a restaurant management
services company owned by Jamie B. Coulter, for a purchase price of $10.5
million. As a result of the Agreement, the Company will internally provide the
accounting and administrative services to the Company which had been provided by
Coulter Enterprises, Inc. The acquisition was approved by the independent
directors of the Company. The Company also engaged Houlihan, Lokey, Howard &
Zukin Financial Advisors, Inc. who rendered an opinion that the consideration
paid by the Company in connection with the transaction is fair to the Company
and its stockholders from a financial point of view.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(a) Exhibit 10.9.................Agreement, dated October 19, 1998,
between LS Management, Inc., a
wholly-owned subsidiary of Lone
Star Steakhouse and Saloon, Inc.
and Coulter Enterprises, Inc.
(b) Exhibit 27...................Financial Data Schedule
(c) 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)
Date: October 23, 1998 /s/ John D. White
-------------------
Chief Financial and Principal Accounting
Officer, Executive Vice President,
Treasurer and Director
- 15 -
ASSET PURCHASE AGREEMENT
------------------------
AGREEMENT dated this 19th day of October, 1998, between LS
Management, Inc., a Delaware corporation (the "Purchaser"), and Coulter
Enterprises, Inc., a Nevada corporation (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller desires to transfer, convey and assign,
and the Purchaser desires to purchase and acquire certain of the assets and
assume certain of the liabilities of the Seller described in this Agreement on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Purchase and Sale of Assets.
1.1. The Seller shall sell, transfer, convey,
assign and deliver to the Purchaser, and the Purchaser shall purchase, acquire
and accept from the Seller, on the Closing Date (as such term is defined in
Article 4 below) all of the right, title and interest of the Seller in and to
the assets set forth on Schedule 1.1 hereto (collectively the "Assets").
1.2. The transfer of the Assets shall be effected
by such bills of sale, assignments and other instruments of transfer, conveyance
and assignment as shall be necessary or appropriate to transfer, convey and
assign the Assets to the Purchaser on the Closing Date and as shall be
reasonably requested by the Purchaser. The Seller shall, at any time and from
time to time after the Closing Date, execute and deliver such other instruments
of transfer and conveyance and do all such further acts and things as may be
requested by the Purchaser to transfer, convey, assign and deliver to the
Purchaser or to aid and assist the Purchaser in collecting and reducing to
possession, any and all of the Assets, or to vest in the Purchaser good, valid
and marketable title to the Assets.
2. Assumption of Liabilities.
2.1. Except for those certain liabilities and
obligations set forth on Schedule 2.1 (the "Assumed Obligations"), as of the
Closing Date, Purchaser will not assume any liabilities or obligations of
Seller, including, but not limited to, any accounts payable, administrative
claims, executory contracts and any costs relating to the termination of
employees.
<PAGE>
3. Purchase Price and Payment: Allocation; Adjustment
of Purchase Price.
3.1. In consideration of the transfer, conveyance
and assignment of the Assets as contemplated herein, on the Closing Date, the
Purchaser shall pay the Seller and the Seller shall accept a purchase price
equal to $10,500,000 (Ten Million Five Hundred Thousand), by certified or bank
cashier's check payable to the order of the Seller, in addition to the
assumption of the Assumed Obligations (the "Purchase Price").
3.2. The Purchase Price shall be allocated to the
Assets as set forth on Schedule 3.2 attached hereto and made a part hereof.
4. Closing. The transactions contemplated by this
Agreement shall close and all deliveries to be made at the time of closing (the
"Closing") shall take place at 10:00 a.m., Central Standard Time on the date of
the execution of this Agreement (the "Closing Date"), by means of telephone
conference equipment or at such place as may be agreed upon in writing by the
parties hereto.
5. Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Purchaser as follows:
5.1. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all requisite power and authority, corporate or otherwise, to own, lease and
operate its properties and carry on its business as now being conducted. The
Seller is duly qualified to do business and is in good standing in all
jurisdictions in which such qualification is necessary because of the character
of the properties owned, leased or operated by it or the nature of its
activities.
5.2. The Seller has all requisite power and
authority, corporate or otherwise, to enter into this Agreement and to perform
its obligations hereunder. The execution and delivery of this Agreement and the
performance by the Seller of its obligations hereunder have been duly and
validly authorized by all necessary corporate action of the Seller and no
further action or approval, corporate or otherwise, is required in order to
constitute this Agreement as a valid, binding and enforceable obligation of the
Seller.
5.3. No action, approval, consent or
authorization, including, but not limited to, any action, approval, consent or
authorization by or filing with any governmental or quasi-governmental agency,
commission, board, bureau or instrumentality is necessary or required as to the
-2-
<PAGE>
Seller in order to constitute this Agreement as a valid, binding and enforceable
obligation of the Seller in accordance with its terms.
5.4. The Seller has good and marketable title to
the Assets, free and clear of any liens, claims, or other encumbrances of any
nature. To the best of Seller's knowledge, each such asset and item is in good
operating condition and repair.
5.5. Except as set forth on Schedule 5.5 since
the date of Seller's October 19, 1998 balance sheet, there have been no adverse
changes in the condition (financial or otherwise) of the Assets, and the Seller
has not other than in the ordinary course of business, mortgaged, pledged,
granted or suffered to exist any lien or other encumbrance or charge on any of
the Assets.
5.6. Within the times and in the manner
prescribed by law, Seller has filed all tax returns and reports required to be
filed by law, including, without limitation, estimated returns with respect to
Federal, state and local income taxes, sales tax returns, and personal property
returns and has paid all taxes, interest, penalties, assessments and
deficiencies which have become due and payable in connection with such returns.
Seller is not a party to any material, pending action or proceeding and, to the
knowledge of Seller, there is no material action or proceeding threatened by any
government authority for the assessment or collection of taxes or other
governmental charges and no unresolved claim or lien for assessment or
collection of taxes or have such charges been asserted against Seller or the
Assets being conveyed hereunder. There are no outstanding waivers or extensions
of time with respect to the assessment or audit of any tax or tax return of
Seller.
5.7. There are no claims, actions, suits,
proceedings or investigations pending or, to the best knowledge of Seller,
threatened against or affecting Seller with respect or to the Assets before any
federal, state, local or foreign court or other governmental body. Seller is not
subject to or in default with respect to any judgment, order, writ, injunction
or decree or any governmental restriction, which relates to or restricts the
transfer of the Assets to Purchaser or the operation of Seller's business.
5.8. All of the contracts of the Seller
constituting a portion of the Assets set forth on Schedule 1.1 (the "Contracts")
are valid and binding, in full force and effect and enforceable in accordance
with their respective provisions. Except as set forth in Schedule 5.8, no
consent is required to assign any of the Contracts to the Purchaser. Seller
covenants to obtain any such consents required for assignment of the Contracts
-3-
<PAGE>
listed on Schedule 5.8 as promptly as possible, but in no event shall such
consents be obtained later than October 31, 1998. The Seller has not assigned,
mortgaged, pledged, encumbered, or otherwise hypothecated any of its right,
title or interest under the Contracts. The Seller is not in violation of, in
default in respect of nor has there occurred an event or condition which, with
the passage of time or giving of notice (or both), would constitute a violation
or a default of any such Contract. No notice has been received by Seller
claiming any default by Seller or indicating the desire or intention of any
other party thereto to amend, modify, rescind or terminate any Contract.
6. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the
Seller as follows:
6.1. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority, corporate or otherwise, to
own, lease and operate its properties and carry on its business as and in the
places where such properties are now owned, leased or operated or such business
is now being conducted.
6.2. The Purchaser has all requisite power and
authority, corporate or otherwise, to enter into this Agreement and to assume
and perform its obligations hereunder. The execution and delivery of this
Agreement and the performance by the Purchaser or its obligations hereunder have
been duly authorized by all necessary corporate action of the Purchaser and no
further action or approval, corporate or otherwise, is required in order to
constitute this Agreement as a valid, binding and enforceable obligation of the
Purchaser.
6.3. No action, approval, consent or
authorization, including, but not limited to any action, approval, consent or
authorization by or filing with any governmental or quasi-governmental agency,
commission, board, bureau or instrumentality is necessary or required as to the
Purchaser in order to constitute this Agreement as a valid, binding and
enforceable obligation of the Purchaser in accordance with its terms.
7. Covenants.
7.1. Unless required by applicable law or
regulatory authority, none of the parties hereto shall issue any report,
statement or press release to the public, the trade or the press or any third
party relating to this Agreement and the transactions contemplated hereby,
except as mutually agreed to in writing by the parties hereto.
-4-
<PAGE>
7.2. Each of the parties hereto shall use its
reasonable commercial efforts to take or cause to be taken all action and do or
cause to be done all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement including, without limitation, to
obtain all permits, approvals (regulatory, governmental or otherwise),
authorizations and consents of all third parties and to make all filings with
and give all notices to third parties that may be necessary or required in order
to effectuate the transactions contemplated hereby.
8. Conditions of Closing.
8.1. The obligation of the Purchaser to close
hereunder shall be subject to the fulfillment and satisfaction, prior to or at
the Closing, of the following conditions or the written waiver thereof by the
Purchaser;
8.1.1. The representations and
warranties of the Seller in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date and the Purchaser shall have received a
certificate to that effect dated the Closing Date and executed by an authorized
officer of the Seller.
8.1.2. Each of the agreements and
covenants of the Seller to be performed under this Agreement at or prior to the
Closing Date shall have been duly performed in all material respects and the
Purchaser shall have received a certificate to that effect dated the Closing
Date and executed by an authorized officer of the Seller.
8.1.3. No injunction or restraining
order shall be in effect to forbid or enjoin the consummation of the
transactions contemplated by this Agreement and no Federal, state, local or
foreign statute, rule or regulation shall have been enacted which prohibits,
restricts or delays the consummation hereof.
8.1.4. The Seller shall have delivered
the written consent of all parties necessary in order to duly transfer or assign
all of the Assets in form acceptable to the Purchaser.
8.1.5. The Seller shall have delivered
a Good and sufficient General Conveyance, Assignment and Bill of Sale conveying,
selling, transferring and assigning to Purchaser title to all of the Assets,
free and clear of all security interests, liens, charges, encumbrances or
equities whatsoever.
-5-
<PAGE>
8.1.6. The Seller shall have delivered
Assignments and Assumptions relating to the Assumed Obligations.
8.1.7. Resolutions of the board of
directors of Seller authorizing the execution and delivery of this Agreement by
Seller and the performance of its obligations hereunder, certified by the
Secretary of Seller.
8.1.8. The Purchaser shall have
received such further certificates and documents as shall have been requested by
the Purchaser, including such other separate instruments of sale, assignment or
transfer that Purchaser may reasonably deem necessary or appropriate in order to
perfect, confirm or evidence title to all or any part of the Assets.
8.2. The obligation of the Seller to close
hereunder shall be subject to the fulfillment and satisfaction, prior to or at
the Closing, of the following conditions or the written waiver thereof by the
Seller:
8.2.1. The representations and
warranties of the Purchaser in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date and the Seller shall have received a
certificate to that effect dated the Closing Date and executed by an authorized
officer of the Purchaser.
8.2.2. Each of the agreements and
covenants of the Purchaser to be performed under this Agreement at or prior to
the Closing Date shall have been duly performed in all material respects and the
Seller shall have received a certificate to that effect dated the Closing Date
and executed by an authorized officer of the Purchaser.
8.2.3. No injunction or restraining
order shall be in effect to forbid or enjoin the consummation of the
transactions contemplated by this Agreement and no Federal, state, local or
foreign statute, rule or regulation shall have been enacted which prohibits,
restricts or delays the consummation hereof.
8.2.4. The Seller shall have received
the Purchase Price in accordance with the provisions of Article 3 hereof.
8.2.5. Resolutions of the board of
directors of Purchaser authorizing the execution and delivery of this Agreement
by Purchaser and the performance of its obligations hereunder, certified by the
Secretary of Purchaser.
-6-
<PAGE>
8.2.6. The Purchaser shall have
received a written opinion or valuation from a nationally recognized independent
firm, in form satisfactory to the Seller, that the Purchase Price for the Assets
is equal to or less than the fair market value of the Assets.
8.2.7. The Seller shall have received
such further certificates and documents as shall have been reasonably requested
by the Seller.
9. Further Covenants and Agreements of the Purchaser.
The Purchaser hereby covenants and agrees that the Purchaser shall pay or
otherwise discharge all sales taxes and compensating use taxes arising out of
the sale of the Assets and shall furnish to the Seller evidence of such payment
and all correspondence in connection therewith with all applicable taxing
authorities.
10. Indemnification.
10.1. The Purchaser shall defend and promptly
indemnify the Seller and save and hold the Seller harmless from, against, for
and in respect of and shall pay any and all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses, including,
without limitation, reasonable attorneys fees and other costs and expenses
incident to any action, investigation, claim or proceeding (all hereinafter
collectively referred to as Losses ) suffered, sustained, incurred or required
to be paid by the Seller by reason of (i) the Assumed Obligations or (ii) any
breach or failure of observance or performance of any representation, warranty,
covenant, agreement or commitment made by the Purchaser hereunder or relating
hereto or as a result of any such representation, warranty, covenant, agreement
or commitment being untrue or incorrect in any respect.
10.2. The Seller shall defend and promptly
indemnify the Purchaser and save and hold the Purchaser harmless from, against,
for and in respect of and pay any and all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses, including
without limitation, reasonable attorneys fees and other costs and expenses
incident to any suit, action, investigation, claim or proceeding (all
hereinafter collectively referred to as Losses) suffered, sustained, incurred or
required to be paid by the Purchaser by reason of (i) any and all obligations
and liabilities of the Seller other than the Assumed Obligations; or (ii) any
breach or failure of observance or performance of any representation, warranty,
covenant, agreement or commitment made by the Seller hereunder or relating
hereto or as a result of any such representation, warranty, covenant, agreement
or commitment being untrue or incorrect in any respect.
-7-
<PAGE>
10.3. For purposes of this Section, the party
entitled to indemnification shall be known as the Injured Party and the party
required to indemnify shall be known as the Other Party. In the event that the
Other Party shall be obligated to the Injured Party pursuant to this Section or
in the event that a suit, action, investigation, claim or proceeding is begun,
made or instituted as a result of which the Other Party may become obligated to
the Injured Party hereunder, the Injured Party shall give prompt written notice
to the Other Party of the occurrence of such event. The Other Party agrees to
defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding at the Other Party's own cost and expense.
The Injured Party shall have the right but not the obligation to participate at
its own expense in the defense thereof by counsel of its own choice. In the
event that the Other Party fails timely to defend, contest or otherwise protect
against any such suit, action, investigation, claim or proceeding, the Injured
Party shall have the right to defend, contest or otherwise protect against the
same and may make any compromise or settlement thereof and recover the entire
cost thereof from the Other Party including without limitation, reasonable
attorneys fees, disbursements and all amounts paid as a result of such suit,
action, investigation, claim or proceeding or compromise or settlement thereof.
10.4. Expenses. The Purchaser and the Seller shall
each bear their own expenses in connection with this transaction.
11. Brokers. The Seller and the Purchaser covenant and
represent to each other that they had no dealings with any broker or finder in
connection with this Agreement or the transactions contemplated hereby and no
broker, finder or other person is entitled to receive any brokers commissions or
finders fee or similar compensation in connection with any such transaction.
Each of the parties agrees to defend, indemnify and hold harmless the other
from, against, for and in respect of any and all losses sustained by the other
as a result of any liability or obligation to any broker or finder on the basis
of any arrangement, agreement or acts made by or on behalf of such party with
any person or persons whatsoever.
12. Miscellaneous.
12.1. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof. The
representations, warranties, covenants and agreements set forth in this
Agreement and in any financial statements, schedules or exhibits delivered
pursuant hereto constitute all the representations, warranties, covenants and
agreements of the parties hereto and upon which the parties have relied and
except as may be specifically provided herein, no change, modification,
-8-
<PAGE>
amendment, addition or termination of this Agreement or any part thereof shall
be valid unless in writing and signed by or on behalf of the party to be charged
therewith.
12.2. Any and all notices or other communications
or deliveries required or permitted to be given or made pursuant to any of the
provisions of this Agreement shall be deemed to have been duly given or made for
all purposes if sent by certified or registered mail, return receipt requested
and postage prepaid, hand delivered or sent by telegraph or telex as follows:
If to the Purchaser, at:
LS Management, Inc.
224 East Douglas
Suite 700
Wichita, Kansas 67206
Attn: John D. White
President
If to the Seller, at:
Coulter Enterprises, Inc.
224 East Douglas
Suite 700
Wichita, Kansas 67206
Attn: Jamie B. Coulter
President
or at such other address as any party may specify by notice given to other party
in accordance with this Section. The date of giving of any such notice shall be
the date of hand delivery, the date following the posting of the mail or
delivery to the telegraph company or when sent by telex.
12.3. No waiver of the provisions hereof shall be
effective unless in writing and signed by the party to be charged with such
waiver. No waiver shall be deemed a continuing waiver or waiver in respect of
any subsequent breach or default, either of similar or different nature, unless
expressly so stated in writing.
12.4. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the State of Delaware
applicable to contracts to be performed entirely within that State. Should any
clause, section or part of this Agreement be held or declared to be void or
illegal for any reason, all other clauses, sections or parts of this Agreement
which can be effected without such illegal clause, section or part shall
nevertheless continue in full force and effect.
-9-
<PAGE>
12.5. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns or heirs and personal representatives; provided, however, that no party
may assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other parties hereto.
12.6. The headings or captions under sections of
this Agreement are for convenience and reference only and do not in any way
modify, interpret or construe the intent of the parties or effect any of the
provisions of this Agreement.
12.7. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed on the date and year first above written.
LS MANAGEMENT, INC.
By: /s/ John D. White
--------------------
Name: John D. White
Title: President
ATTEST:
/s/ Gerald T. Aaron
- -----------------------------
Name: Gerald T. Aaron
Title: Secretary
[SEAL]
COULTER ENTERPRISES, INC.
By: /s/ Jamie B. Coulter
--------------------
Name: Jamie B. Coulter
Title: President
ATTEST:
/s/ Steven M. Johnson
- -----------------------------
Name: Steven M. Johnson
Title: Secretary
[SEAL]
-10-
<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 8, 1998 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-29-1998
<PERIOD-START> DEC-31-1997
<PERIOD-END> SEP-9-1998
<CASH> 93,686
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 12,000
<CURRENT-ASSETS> 116,966
<PP&E> 453,924
<DEPRECIATION> 0
<TOTAL-ASSETS> 598,349
<CURRENT-LIABILITIES> 30,764
<BONDS> 0
0
0
<COMMON> 392,180
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 598,349
<SALES> 142,157
<TOTAL-REVENUES> 142,157
<CGS> 54,329
<TOTAL-COSTS> 129,360
<OTHER-EXPENSES> 8,113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 674
<INCOME-PRETAX> 5,357
<INCOME-TAX> 1,811
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,734
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
