UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 28, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ______
Commission file number 0-19907
LONE STAR STEAKHOUSE & SALOON, INC.
(Exact name of Registrant as specified in its charter)
Delaware 48-1109495
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
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)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Indicate by check mark whether the Registrant (1) has filed all 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. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes /X/ No / /
As of March 21, 2000, the aggregate market value of the Registrant's
Common Stock held by non-affiliates of the Registrant was $218,369,493. Solely
for the purpose of this calculation, shares held by directors and officers of
the Registrant have been excluded. Such exclusion should not be deemed a
determination by or an admission by the Registrant that such individuals are, in
fact, affiliates of the Registrant.
As of March 21, 2000, there were 26,887,952 shares outstanding of the
Registrant's Common Stock.
<PAGE>
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the Directors of
the Company:
Term of Office
Name Age
Jamie B. Coulter.................................................. 59
John D. White..................................................... 52
Fred B. Chaney.................................................... 63
William B. Greene, Jr............................................. 62
Clark R. Mandigo.................................................. 56
Jamie B. Coulter has served as Chairman and Chief Executive Officer of
the Company since January 1992 and President of the Company from January, 1992
to June, 1995.
John D. White has been an Executive Vice President since June, 1995, a
Director of the Company since January, 1992 and served as Chief Financial
Officer from January, 1992 until February 3, 2000.
Fred B. Chaney, Ph.D., has been a director of the Company since May,
1995. Dr. Chaney was President and Chief Executive Officer of TEC's parent
company, Vedax Sciences Corporation, until March, 1998 when he sold his
interest. Dr. Chaney through the TEC organization had formed a network of
various management organizations in several countries, including the United
States where approximately 4,000 presidents of companies meet on a quarterly
basis. Dr. Chaney's early business career was with the Boeing Company and
Rockwell, where he implemented management systems and quality motivational
programs. In 1968 he co-authored the book Human Factors in Quality Assurance
with Dr. D. H. Harris. Dr. Chaney has authored numerous publications and
professional papers and has taught management classes for the University of
Southern California. Dr. Chaney is a board member of Hobie Sports. Mr. Chaney
previously served as a Director of Rusty Pellican Seafood, Inc.
<PAGE>
William B. Greene, Jr. has been a member of the Board of Directors
since August 18, 1999. Mr. Greene served on the Board of Directors of the
Nashville City Bank in Nashville, Tennessee for fourteen years. Mr. Greene is
the founder of Bank of Tennessee in Kingsport, Tennessee, and has served as
Chairman of the bank since 1974. In addition, Mr. Greene has been Chairman of
BancTenn Corp., which owns 100% of Bank of Tennessee since 1980. Mr. Greene has
also served as Chairman and Chief Executive Officer of Carter County BanCorp,
since 1972. Mr. Greene has been a Director of JDN, a real estate investment
trust on the New York Stock Exchange since 1994. Mr. Greene also serves on the
Board of Trustees for Wake Forest University and is presently Chairman of the
University's Investment Committee. Mr. Greene is a Trustee of Milligan College
and served as International President of the World Presidents' Organization, the
graduate school of Young Presidents' Organization in 1998. Mr. Greene is a
retired Captain in the U.S. Army Infantry.
Clark R. Mandigo has been a Director of the Company since March 1992.
Mr. Mandigo has been a Papa John's Pizza franchisee since 1995. From 1986 to
1991, he was President, Chief Executive Officer and Director of Intelogic Trace,
Inc., a corporation engaged in the sale, lease and support of computer and
communications systems and equipment. From 1985 to 1997, Mr. Mandigo served on
the Board of Directors of Physician Corporation of America, a managed health
care company and from 1993 to 1997, Mr. Mandigo served on the Board of Palmer
Wireless, Inc., a cellular telephone system operator. Mr. Mandigo currently
serves on the Board of Directors of Horizon Organic Holdings Corporation and as
a Trustee of Accolade Funds.
In addition to Messrs. Coulter and White, the other Executive Officers
of the Company are as follows:
Gerald T. Aaron, 59, has been Senior Vice President - Counsel and
Secretary of the Company since January 1994.
Jeff Bracken, 34, has been Vice President - Operations since May 27,
1999. Mr. Bracken has worked for the Company since 1996, previously as a
Regional Manager. Prior to joining the Company, Mr. Bracken functioned in
various operational capacities for various Pizza Hut restaurants owned and
operated by Mr. Coulter from 1989 to 1996, most recently as Senior District
Manager.
Deidra Lincoln, 40, has been Vice President - Del Frisco's since
January, 2000. Ms. Lincoln is the co-founder of Del Frisco's Double Eagle Steak
House ("Del Frisco's"), which was acquired by the Company in 1995. Since 1995,
Ms. Lincoln has served in various managerial capacities and is responsible for
all of the Company's Del Frisco's operations.
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<PAGE>
Robert Martin, 69, has been Senior Vice President - Marketing since
February, 2000. Mr. Martin formerly served as a Director for Applebee's
Neighborhood Grills from 1989 to 1999. Mr. Martin also served Applebee's
Neighborhood Grills as Vice President of Marketing from 1991 to 1994, Senior
Vice President of Marketing from 1994 to 1996 and Executive Vice President of
Marketing from 1996 to 1999. From 1990 to April, 1991 Mr. Martin served as
President of Kayemar Enterprises, a Kansas City, Missouri-based marketing
consulting firm. From 1983 to January, 1990 Mr. Martin served as President,
Chief Operating Officer and a director of Juneau Holding Co. From July 1977 to
June, 1981 Mr. Martin served as President of United Vintners Winery and prior to
that time he was employed for twenty-five (25) years by Schlitz Brewing Company,
most recently in the position of Senior Vice President of Sales and Marketing.
T. D. O'Connell, 31, has been Senior Vice President - Operations since
December, 1999. Mr. O'Connell has been with the Company since March, 1995 and
has previously functioned in various operating and administrative positions.
Prior to joining the Company, Mr. O'Connell worked for the Ritz Carlton Hotel
Company from 1992 to 1995, most recently as Director of Guest Services. Mr.
O'Connell is a graduate of the Hotel and Restaurant Management School at the
University of Nevada at Las Vegas.
Randall H. Pierce, 60, has been Chief Financial Officer of the Company
since February, 2000. Mr. Pierce is a CPA and was a former partner of Ernst &
Young, LLP from 1962 to 1997. During Mr. Pierce's tenure in the Wichita, Kansas
office with Ernst & Young, LLP, Mr. Pierce served as an audit engagement partner
and served as the; Audit Partner from 1974 to 1997; and Office Managing Partner
from 1996 to 1997. Mr. Pierce served as Office Director of Accounting and
Auditing from 1974 through 1997. Mr. Pierce's duties included serving clients in
both the public and private sectors in matters related to accounting, auditing
and business matters as well as providing technical advice and consultation to
other accounting professionals in the office. From 1997 through January, 2000,
Mr. Pierce has served as a financial and business consultant focusing on
advising and negotiating merger and acquisition transactions, sale and
disposition transactions and general business strategies.
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<PAGE>
Item 11. EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") and the four most highly compensated executive officers of the Company
(collectively with the CEO the "Named Executive Officers") other than the CEO
whose salary and bonus exceeded $100,000 with respect to the fiscal year ended
December 28, 1999 .
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Number of
Other Annual Securities
Name and Principal Compensation Underlying All Other
Position Year Salary Bonus($) (1) Options(#) Compensation
<S> <C> <C> <C> <C> <C> <C>
Jamie B. Coulter
Chairman of the Board 1999 $300,000 -- $110,219 -- --
and Chief Executive 1998 $300,000 -- -- -- --
Officer 1997 $275,000 -- -- -- --
John D. White
Executive Vice President 1999 $283,000 -- $6,681 -- --
Chief Financial Officer 1998 $283,000 -- -- -- --
and Treasurer 1997 $259,600 -- -- -- --
Gerald T. Aaron
Senior Vice President - 1999 $228,000 -- $3,946 -- --
Counsel & Secretary 1998 $228,000 -- -- -- --
1997 $209,000 -- -- -- --
Deidra Lincoln
Vice President - Del 1999 $240,000 -- $5,548 117,672 --
Frisco's 1998 $235,000 -- -- -- --
1997 $220,000 -- -- -- --
T. D. O'Connell
Senior Vice President - 1999 $139,773 -- $3,381 81,479 --
Operations 1998 $ 92,069 -- -- -- --
1997 $ 66,981 -- -- -- --
</TABLE>
(1) Represents for 1999 fifty percent matching contributions by the Company
pursuant to the Company's Deferred Compensation Plan, which became
effective October 7, 1999. As to Mr. Coulter, the total includes
perquisites and other personal benefits, securities or property
received of $103,000. As to other executive officers, perquisites and
other personal benefits, securities or property received by each
executive officer did not exceed the lesser of $50,000 or 10% of such
executive officer's annual salary and bonus.
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<PAGE>
Option Grant Table
The following table sets forth certain information regarding stock
option grants made to the CEO and other Named Executive Officers for services
performed during the fiscal year ended December 28, 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Rates of Stock Price
Appreciation for Option Term
Individual Grants (1)(2)
------------------------------------------------------------------------------------------------
Name Number of % of Total Exercise or Expiration 5% 10%
Securities Options Granted Base Price Date
Underlying to Employees in (#/Sh)
Options(#of Fiscal Year (3)
shares)
<S> <C> <C> <C> <C> <C> <C>
Deidra Lincoln 25,000 2.3% $8.188 02/02/09 $128,735 $326,239
92,672 8.3% $8.46875 01/07/10 $493,567 $1,250,795
T. D. O'Connell 60,000 5.4% $8.188 02/02/09 $308,963 $782,974
21,479 2.0% $8.46875 01/07/10 $114,369 $289,902
</TABLE>
(1) The options indicated vest ratably over a three-year period commencing
February 2, 2000 and January 7, 2001 respectively. The options issued
on January 7, 2000 were for past services.
(2) The potential realizable portion of the foregoing table illustrates
value that might be realized upon exercise of options immediately prior
to the expiration of their term, assuming the specified compounded
rates of appreciation on the Company's Common Stock over the term of
the options. These numbers do not take into account provisions of
certain options providing for termination of the option following
termination of employment, nontransferability or differences in vesting
periods. Regardless of the theoretical value of an option, its ultimate
value will depend on the market value of the Common Stock at a future
date, and that value will depend on a variety of factors, including the
overall condition of the stock market and the Company's results of
operations and financial condition. There can be no assurance that the
values reflected in this table will be achieved.
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<PAGE>
(3) Includes options during Fiscal 1999 and options granted on January 7,
2000 for services rendered in Fiscal 1999.
Effective January 7, 2000, the Board of Directors re-priced all
outstanding stock options, which had an exercise price in excess of $8.46875,
which included 48 individuals and also included Messrs. Coulter, White, Aaron
and Ms. Lincoln. The total number of options held by Messrs. Coulter, White,
Aaron and Ms. Lincoln that were repriced were 2,600,000, 1,000,000, 575,000 and
42,750 respectively at an exercise price of $18.25 per share.
Option Exercise Table
No options were exercised by the CEO and the other Named Executive
Officers during the fiscal year ended December 28, 1999. The following table
sets forth certain information concerning unexercised options held as of
December 28, 1999 by the CEO and the other Named Executive Officers. At December
28, 1999, the closing price of the Company's Common Stock, as reported by the
Nasdaq National Market, was $8.938.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at December 28, Value of Unexercised In-the-Money Options at
1999 December 28, 1999 ($) (1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jamie B. Coulter 2,200,000 400,000 -0- -0-
John D. White 800,000 200,000 -0- -0-
Gerald T. Aaron 475,000 100,000 -0- -0-
Deidra Lincoln 66,860 73,218 $22,615 $45,228
T. D. O'Connell 5,588 71,176 $ 5,242 $55,483
</TABLE>
Directors Compensation
Directors who are not employees of the Company receive an annual fee of
$5,000 and a fee of $1,250 for each Board of Directors meeting attended and are
reimbursed for their expenses. Employees who are Directors are not entitled to
any compensation for their service as a Director. Non-employee Directors are
also entitled to receive grants of options under the Company's 1992 Directors'
Stock Option Plan (the "Directors Plan"). Generally, upon election
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<PAGE>
to the Board, each director who is not an executive officer is granted a
one-time stock option to acquire 40,000 shares of Common Stock and receives an
annual grant upon anniversary date of 6,800 shares. The Company has amended the
Directors Plan to provide that the annual grant for all Board members will be
one day after the end of the Company's fiscal year. The exercise price for such
shares is equal to the closing sale price of the Common Stock as reported on the
Nasdaq National Market on the closing date of grant. Currently, options to
purchase an aggregate of 162,000 shares of Common Stock are outstanding under
the Directors Plan at exercise prices ranging from $6.688 per share to $8.8125
per share. In 1999, the Company's outside Directors were automatically granted
options to purchase an aggregate of 53,600 shares of Common Stock under the
Directors Plan at exercise prices ranging from $6.688 to $7.94 per share. On
September 10, 1999, the Board of Directors with outside, non-employee directors
abstaining from voting: (1) re-priced certain outstanding options held by
outside non-employee directors of the Company, including options previously
re-priced and options granted in the last fiscal year, so that such re-priced
options now have an exercise price of $7.94 per share, the closing market price
of the Company's Common Stock on September 10, 1999; and (2) adjusted the
expiration date to five (5) years from September 10, 1999.
Employment Agreements
The Company has entered into separate employment agreements, with each
of Messrs. White, Aaron, Bracken, Martin, O'Connell and , Pierce, dated as of
March 22, 2000, providing for the employment of such individuals as Executive
Vice President, Senior Vice President Counsel, Vice President - Operations,
Senior Vice President - Marketing, Senior Vice President - Operations, and Chief
Financial Officer, respectively. Each employment agreement provides that the
officer shall devote substantially all of his professional time to the business
of the Company. The Employment Agreements provide base salaries in the amount of
$600,000, $228,000, $175,000, $180,000, $200,000, and $200,000, respectively,
for Messrs. White, Aaron, Bracken, Martin, O'Connell, and Pierce, subject to
increases as determined by the Board of Directors. Ms. Lincoln's base salary is
$260,000. In addition, Mr. Martin's agreement provides for a signing bonus of
$250,000, which was paid to Mr. Martin on January 3, 2000. The agreements for
Messrs. Martin and Pierce also provide for stock option grants of 20,000 shares
and 100,000 shares, respectively. Each agreement terminates in March, 2003, but
the Company has the option to extend the term annually for additional one year
periods. Each agreement contains non-competition, confidentiality and
non-solicitation provisions which apply for twenty-four months after cessation
of employment.
Mr. Coulter has also entered into a non-competition, confidentiality
and non-solicitation agreement with the Company. Mr. Coulter's base salary in
1999 was $300,000. Mr. Coulter was awarded a 150% increase in his base salary to
$750,000 effective December 29, 1999.
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<PAGE>
Compensation Committee Interlocks
The Compensation Committee consists of Messrs. Chaney, Greene and
Mandigo. None of such Directors was a party to any transaction with the Company
which requires disclosure under Item 402(j) of Regulation S-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information concerning ownership of the
Company's Common Stock, as of April 14, 2000, by each person known by the
Company to be the beneficial owner of more than five percent of the Company's
Common Stock, $.01 par value (the "Common Stock") each director, each executive
officer as defined in Item 402(a)(3) of Regulation S-K ("Item 402(a)(3)") and by
all directors and executive officers of the Company as a group. Unless otherwise
indicated, the address for five percent stockholders, directors and executive
officers of the Company is 224 East Douglas, Suite 700, Wichita, Kansas
67202-3414.
<TABLE>
<CAPTION>
Shares
Name and Address Beneficially Percentage
of Beneficial Owner Held of Class
<S> <C> <C>
Jamie B. Coulter...................................... 4,995,393(1) 17.3%
John D. White......................................... 1,148,025(2) 4.2%
Gerald T. Aaron....................................... 612,707(3) 2.3%
Deidra Lincoln........................................ 80,194(4) *
T. D. O'Connell....................................... 25,588(5) *
Fred B. Chaney........................................ 56,267(6) *
William B. Greene, Jr................................. 0 *
Clark R. Mandigo...................................... 72,801(7) *
Lazard Freres & Co., LLC.............................. 1,737,500(8) 5.25%(8)
Dimensional Fund Advisors, Inc........................ 1,905,200(9) 5.76%(8)
All directors and executive officers as a group 7,058,621(10) 22.9%
(11) persons (1-7)
</TABLE>
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* Less than 1%
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<PAGE>
(1) Includes presently exercisable options to purchase 2,600,000 shares of
Common Stock.
(2) Includes presently exercisable options to purchase 1,000,000 shares of
Common Stock.
(3) Includes presently exercisable options to purchase 575,000 shares of
Common Stock.
(4) Includes presently exercisable options to purchase 75,194 shares of
Common Stock.
(5) Includes presently exercisable options to purchase 25,588 shares of
Common Stock
(6) Includes presently exercisable options to purchase 52,267 shares of
Common Stock.
(7) Includes presently exercisable options to purchase 42,801 shares of
Common Stock.
(8) Based on a Schedule 13G filed in February, 2000, Lazard Freres & Co.,
LLC beneficially holds 1,737,500 shares of the Company's Common Stock.
The address of Lazard Freres & Co., LLC is 30 Rockefeller Plaza, New
York, NY 10020.
(9) Based on a Schedule 13G filed in February, 2000, Dimensional Fund
Advisors beneficially holds 1,905,200 shares of the Company's Common
Stock. The address of Dimensional Fund Advisors is 1299 Ocean Avenue,
11th Floor, Santa Monica, CA 90401.
(10) Includes presently exercisable options to purchase 4,433,946 shares of
Common Stock, which includes presently exercisable options to purchase
63,096 shares of Common Stock held by executive officers, who are not
specifically identified in the Security Ownership Table above.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other Affiliated Transactions
In 1999, the Company purchased business gifts and awards in the amount
of $8,172 from a retail establishment owned by Mr. Coulter.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
LONE STAR STEAKHOUSE & SALOON, INC.
By: /s/ Gerald T. Aaron
----------------------------------------
Gerald T. Aaron, Senior Vice President-
Counsel and Secretary
Dated: April 26, 2000
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