WICHITA, Kan., Sept. 19, 2002 (PRIMEZONE) -- Lone Star Steakhouse & Saloon, Inc. (Nasdaq:STAR) announced operating results for the third quarter ended September 3, 2002. Adjusted net income (net income before unusual items including non-cash compensation amounts) increased 57% to $7,829,000 or $.35 per share ($.32 diluted) compared to $4,977,000 or $.21 per share ($.20 diluted) last year. Year to date adjusted net income was up 84% to $29,638,000 or $1.25 per share ($1.13 diluted) compared to $16,133,000 or $.67 per share ($.64 diluted) in 2001. Unusual items, primarily non-cash stock compensation benefits were $5,744,000 after tax, resulting in net income for the quarter of $13,573,000 or $.61 per share ($.55 diluted). Unusual items in the year to date period, consisting primarily of non-cash stock compensation expense and abandoned merger costs, were $(17,207,000), after tax, resulting in net income year to date of $12,431,000 or $.52 per share ($.47 diluted). Third quarter revenue declined .9% to $134,492,000 and year to date revenue increased 2.1% to $422,339,000.
During the year, the Company adopted SFAS No. 144, and as a result, the operations of certain closed restaurants have been reclassified to income or loss from discontinued operations on a historical basis.
Third quarter comparable store sales growth (decline) was (1.7)% for domestic Lone Star Steakhouse & Saloon restaurants, (7.6)% for Sullivan's Steakhouse restaurants and .9% for Del Frisco's Double Eagle Steak House restaurants, bringing the year to date comparable store sales figures to .3%, (5.5)%, and 4.7%, respectively. Australian comparable store sales declined 5.2% for the third quarter and have declined 5.3% for the year. The Company closed one Australian restaurant in the first week of the third quarter.
At the end of the third quarter, the Company's financial position remained strong, with cash of $53.4 million and no debt. Adjusted EBITDA for the quarter was $18.0 million or $.73 per share diluted bringing year to date adjusted EBITDA to $66.7 million or $2.54 per share diluted. Book value per share was $19.14 at the end of the quarter.
The Board of Directors declared the Company's regular quarterly cash dividend of $.15 per share payable October 18, 2002 to shareholders of record on October 4, 2002.
Unusual items for the third quarter and year to date include non-cash stock compensation charges or benefits, abandoned merger costs, gain or loss on sale of assets, loss from discontinued operations, and cumulative effect of accounting change. A summary of the unusual charge and (credit) items net of applicable tax is set forth below in thousands of dollars, except per share amounts:
For the third quarter ended
Sept. 3, 2002 Sept. 4, 2001
Per Per
Amount Share Amount Share
------- ------- ------- -------
Non-cash stock compensation $(5,767) $ (0.26) $(1,997) $ (0.08)
Abandoned merger costs -- -- -- --
(Gain) loss on sale of assets 5 -- (336) (0.01)
Loss from discontinued
operations 18 -- 294 0.01
Cumulative effect of
accounting change -- -- -- --
------- ------- ------- -------
$(5,744) $ (0.26) $(2,039) $ (0.08)
======= ======= ======= =======
For the three quarters ended
Sept. 3, 2002 Sept. 4, 2001
Per Per
Amount Share Amount Share
------- ------- ------- -------
Non-cash stock compensation $ 14,589 $ 0.62 $ 7,097 $ 0.30
Abandoned merger costs 1,854 0.08 -- --
(Gain) loss on sale of assets 221 0.01 (1,344) (0.06)
Loss from discontinued
operations 225 0.01 444 0.02
Cumulative effect of
accounting change 318 0.01 -- --
------- ------- ------- -------
$ 17,207 $ 0.73 $ 6,197 $ 0.26
======= ======= ======= =======
During the third quarter, the Company purchased 4 million shares of its common stock upon the closing of its previously announced modified Dutch auction tender offer, for $86.3 million including expenses. The total number of shares repurchased by the Company since the announcement of its stock buy back program are 21.4 million at an average price of $11.84 per share.
Future reported earnings will continue to be impacted by FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB No. 25" which requires a quarterly non-cash charge for the "in-the-money" component of stock options that have been modified in a manner requiring variable accounting. In subsequent quarters, the charge or credit to non-cash compensation expense will be for the change in the stock price, either up or down from the previous reported quarter. This non-cash charge could cause extreme volatility in reported earnings. For greater clarity and comparability, the Company will continue to report adjusted net income without unusual items including the charge or credit for non-cash stock compensation.
Lone Star owns and operates 249 domestic and 24 international Lone Star Steakhouse & Saloon restaurants; 15 Sullivan's Steakhouse restaurants; and five Del Frisco's Double Eagle Steak House restaurants. Licensees operate three domestic and one international Lone Star restaurants, and one domestic Del Frisco's Steak House restaurant.
For interested parties, there will be a conference call with management at 9:00 AM Central Time on Tuesday, September 24, 2002 to discuss this third quarter earnings release. The call in number is (719)-457-2600 and the confirmation code is 517501. A recorded replay of the conference call will be available from 12:00 PM on September 24, 2002 thru midnight October 8, 2002. The replay call in number is (719)-457-0820 and the confirmation code is 517501. A listen only connection to the conference call, as well as the replay, will be available on the Internet through the Company's website, www.lonestarsteakhouse.com.
Lone Star Steakhouse & Saloon, Inc.
Unaudited Summary Financial Data for the Third Quarter 2002
(In thousands except for per share amounts)
Sept. 3, Dec. 25,
2002 2001
-------- --------
Current Assets:
Cash and cash equivalents $ 53,428 $ 82,919
Other current assets 19,803 20,768
-------- --------
73,231 103,687
Property and equipment, net 349,625 369,883
Intangibles and other assets 51,052 41,459
-------- --------
$473,908 $515,029
======== ========
Current liabilities $ 43,471 $ 55,403
Noncurrent liabilities 8,751 5,187
Stockholders' equity 421,686 454,439
-------- --------
$473,908 $515,029
======== ========
For the third quarter ended
Sept. 3, 2002 Sept. 4, 2001
12 Weeks 12 Weeks
$ % $ %
------ ------ ------ ------
Net Sales $134,492 $135,685
Costs and expenses:
Costs of sales 44,532 33.1 47,698 35.2
Restaurant operating expenses 63,451 47.2 64,646 47.6
Depreciation and amortization 5,855 4.4 6,384 4.7
------ ------ ------ ------
Restaurant costs and
expenses 113,838 84.7 118,728 87.5
------ ------ ------ ------
Restaurant operating income 20,654 15.3 16,957 12.5
General and administrative
expenses 9,614 7.1 10,221 7.5
Non-cash stock option
compensation (9,228) (6.9) (3,170) (2.3)
------ ------ ------ ------
Earnings from operations 20,268 15.1 9,906 7.3
Other income 197 0.1 840 0.6
------ ------ ------ ------
Earnings-continuing-before
income taxes 20,465 15.2 10,746 7.9
Provision for income taxes 6,874 5.1 3,436 2.5
------ ------ ------ ------
Earnings - continuing
operations 13,591 10.1 7,310 5.4
Loss from discontinued
operations (18) -- (294) (0.2)
Cumulative effect of
accounting change -- -- -- --
------ ------ ------ ------
Net earnings $ 13,573 10.1 $ 7,016 5.2
====== ====== ====== ======
Basic earnings per share $0.61 $0.29
===== =====
Diluted earnings per share $0.55 $0.28
===== =====
Average shares
outstanding - Basic 22,263 24,031
Average shares
outstanding - Diluted 24,582 25,453
Restaurants included at
end of period 294 294
Comparable sales growth (2.4)% 2.6%
For the three quarters ended
Sept. 3, 2002 Sept. 4, 2001
36 Weeks 36 Weeks
$ % $ %
------ ------ ------ ------
Net Sales $ 422,339 $413,810
Costs and expenses:
Costs of sales 139,414 33.0 144,408 34.9
Restaurant operating expenses 191,098 45.2 197,648 47.8
Depreciation and amortization 17,695 4.2 19,175 4.6
------ ------ ------ ------
Restaurant costs
and expenses 348,207 82.4 361,231 87.3
------ ------ ------ ------
Restaurant operating income 74,132 17.6 52,579 12.7
General and administrative
expenses 32,070 7.6 29,264 7.1
Non-cash stock option
compensation 23,343 5.5 11,265 2.7
------ ------ ------ ------
Earnings from operations 18,719 4.5 12,050 2.9
Other income 844 0.2 3,167 0.8
------ ------ ------ ------
Earnings-continuing-before
income taxes 19,563 4.7 15,217 3.7
Provision for income taxes 6,589 1.6 4,837 1.2
------ ------ ------ ------
Earnings - continuing
operations 12,974 3.1 10,380 2.5
Loss from discontinued
operations (225) (0.1) (444) (0.1)
Cumulative effect of
accounting change (318) (0.1) -- --
------ ------ ------ ------
Net earnings $ 12,431 2.9 $ 9,936 2.4
====== ====== ====== ======
Basic earnings per share $0.52 $0.41
===== =====
Diluted earnings per share $0.47 $0.40
===== =====
Average shares
outstanding - Basic 23,736 24,032
Average shares
outstanding - Diluted 26,254 25,099
Restaurants included at
end of period 294 294
Comparable sales growth (0.4)% 1.7%
Analysis of components of net earnings and basic
per share amounts - (all net of income taxes)
For the third quarter ended
Sept. 3, 2002 Sept. 4, 2001
12 Weeks 12 Weeks
Per Per
$ Amt. Share $ Amt. Share
-------- -------- -------- --------
Net earnings excluding
unusual charges $ 7,829 $ 0.35 $ 4,977 $ 0.21
Non-cash stock option
compensation 5,767 0.26 1,997 0.08
Abandoned merger costs
(Gain) loss on sale of
assets (5) -- 336 0.01
Loss from discontinued
operations (18) -- (294) (0.01)
Cumulative effect of
accounting change
-------- -------- -------- --------
Net earnings $ 13,573 $ 0.61 $ 7,016 $ 0.29
======== ======== ======== ========
Analysis of components of net earnings and basic
per share amounts - (all net of income taxes)
For the three quarters ended
Sept. 3, 2002 Sept. 4, 2001
36 Weeks 36 Weeks
Per Per
$ Amt. Share $ Amt. Share
-------- -------- -------- --------
Net earnings excluding
unusual charges $ 29,638 $ 1.25 $ 16,133 $ 0.67
Non-cash stock option
compensation (14,589) (0.62) (7,097) (0.30)
Abandoned merger costs (1,854) (0.08)
(Gain) loss on sale of
assets (221) (0.01) 1,344 0.06
Loss from discontinued
operations (225) (0.01) (444) (0.02)
Cumulative effect of
accounting change (318) (0.01)
-------- ----- -------- -----
Net earnings $ 12,431 $ 0.52 $ 9,936 $ 0.41
======== ===== ======== =====
This press release 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, as amended. Although the Company believes the assumptions underlying the forward-looking statements contained herein, including the development plans of the Company and its future operating and financial performance, are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements contained in the press release will prove to be accurate.