WICHITA, Kan., June 27, 2002 (PRIMEZONE) -- Lone Star Steakhouse & Saloon, Inc. (Nasdaq:STAR) announced operating results for the second quarter ended June 11, 2002. Adjusted net income (net income before unusual items including non-cash compensation expense) was $8,772,000 or $.35 per share ($.32 diluted) compared to $3,615,000 or $.15 per share ($.14 diluted) last year. Year to date adjusted net income was $21,640,000 or $.88 per share ($.80 diluted) compared to $10,998,000 or $.46 per share ($.44 diluted) in 2001. Unusual items, primarily non-cash stock compensation and abandoned merger expenses, were $6,088,000 after tax, resulting in net income for the quarter of $2,684,000 or $.11 per share ($.10 diluted). Unusual items in the year to date period, again consisting primarily of non-cash stock compensation and abandoned merger costs, were $22,782,000, after tax, resulting in a net loss year to date of $1,142,000 or $.05 per share. Second quarter revenue grew 2.7% to $139,720,000 and year to date revenue increased 3.1% to $288,528,000.
Second quarter comparable store sales growth (decline) was 1.3% for domestic Lone Star Steakhouse & Saloon restaurants, (6.5)% for Sullivan's Steakhouse restaurants and 7.3% for Del Frisco's Double Eagle Steak House restaurants, bringing the year to date comparable store sales figures to 1.2%, (4.5)%, 6.5%, respectively. Australian comparable store sales declined (2.9)% for the second quarter and have declined (5.3)% for the year. The Company closed one Australian restaurant in December 2001 and another in the first week of the third quarter of 2002 and is not optimistic about significant improvements in Australian sales or operating results in the near future.
At the end of the second quarter, the Company's financial position remained strong, with cash of $121 million, no debt, and adjusted EBITDA for the quarter of $20.5 million or $.84 per share bringing year to date adjusted EBITDA to $48.4 million or $1.98 per share. Book value per share increased to $19.71 at the end of the quarter. The Board of Directors declared the Company's regular quarterly cash dividend of $.15 per share payable July 12, 2002 to shareholders of record on June 28, 2002.
Unusual items for the second quarter and year to date include non-cash stock compensation charges, abandoned merger costs, gain or loss on sale of assets and provisions for asset impairment and store closings. 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 second quarter ended
June 11, 2002 June 12, 2001
Per Per
Amount Share Amount Share
------- ------- ------- ------
Non-cash stock
compensation $ 3,983 $0.16 $ 9,094 $0.38
Abandoned merger costs 1,854 0.07 - -
Asset impairment and
store closings 162 0.01 - -
(Gain) loss on sale
of assets 89 0.00 (159) (0.01)
Cumulative effect of
accounting change - - - -
------- ------- ------- ------
$ 6,088 $0.24 $ 8,935 $0.37
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For the two quarters ended
June 11, 2002 June 12, 2001
Per Per
Amount Share Amount Share
------- ------- ------- ------
Non-cash stock
compensation $20,356 $0.83 $ 9,094 $0.38
Abandoned merger costs 1,854 0.08 - -
Asset impairment and
store closings 162 0.01 - -
(Gain) loss on sale
of assets 92 0.00 (1,016) (0.04)
Cumulative effect of
accounting change 318 0.01 - -
------- ------- ------- ------
$22,782 $0.93 $ 8,078 $0.34
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Shortly after the end of this second quarter, the Company purchased 4 million shares of its common stock upon the closing of its previously announced modified Dutch auction tender offer, for $85,500,000 excluding 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.
For the first two weeks of the third quarter, comparable store sales were (2.2)% for domestic Lone Stars, (8.3)% for Sullivan's and (2.6)% at Del Frisco's. The Company believes that most of this current trend is related to rolling over the successful direct mail campaign launched at the end of the second quarter last year.
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 subsequent quarters, the charge or credit to non-cash compensation expense will be for the change, either up or down from the previous reported quarter. This non-cash charge could introduce 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 9:30 AM Central Time on Monday, July 1, 2002 to discuss this second quarter earnings release. The call in number is (719)-457-2637 and the confirmation code is 608795. A recorded replay of the conference call will be available from 12:30 PM on July 1, 2002 through midnight July 15, 2002. The replay call in number is (719)-457-0820 and the confirmation code is 608795. 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.
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.
Lone Star Steakhouse & Saloon, Inc.
Unaudited Summary Financial Data for the Second Quarter 2002
(In thousands except for per share amounts)
June 11, Dec. 25,
2002 2001
--------- --------
Current Assets:
Cash and cash equivalents $ 121,431 $ 82,919
Other current assets 19,976 20,768
--------- --------
141,407 103,687
Property and equipment, net 357,584 369,883
Intangibles and other assets 54,693 41,459
--------- --------
$ 553,684 $ 515,029
========= ========
Current liabilities $ 46,469 $ 55,403
Noncurrent liabilities 8,108 5,187
Stockholders' equity 499,107 454,439
--------- --------
$ 553,684 $ 515,029
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For the second quarter ended
June 11,2002 June 12,2001
12 Weeks 12 Weeks
$ % $ %
-------- ---- -------- ----
Net Sales $139,720 $136,069
Costs and expenses:
Costs of sales 46,320 33.2 47,621 35.0
Restaurant operating expenses 64,194 45.9 66,327 48.7
Depreciation and amortization 5,930 4.2 6,428 4.7
------- ---- ------- ----
Restaurant costs and expenses 116,444 83.3 120,376 88.4
------- ---- ------- ----
Restaurant operating income 23,276 16.7 15,693 11.6
General and administrative
expenses 13,210 9.5 9,885 7.3
Non-cash stock option
compensation 6,374 4.6 14.435 10.6
------- ---- ------- ----
Earnings(loss) from operations 3,692 2.6 (8,627) (6.3)
Other income 263 0.2 628 0.4
------- ---- ------- ----
Earnings(loss) before
income taxes 3,955 2.8 (7,999) (5.9)
Provision(benefit) for
income taxes 1,271 0.9 (2,679) (2.0)
------- ---- ------- ----
Earnings (loss) before change
in accounting 2,684 1.9 (5,320) (3.9)
Cumulative effect of change
in accounting
------- ---- ------- ----
Net earnings(loss) $ 2,684 1.9 $(5,320) (3.9)
======= ==== ======= ====
Basic earnings(loss) per share $ 0.11 $ (0.22)
======= =======
Diluted earnings(loss) per share $ 0.10 $ (0.22)
======= =======
Average shares outstanding -
Basic 24,747 24,032
Restaurants included at
end of period 294 292
Comparable sales growth 0.7% 0.1%
For the two quarters ended
June 11,2002 June 12,2001
24 Weeks 24 Weeks
$ % $ %
-------- ---- -------- ----
Net Sales $288,528 $279,821
Costs and expenses:
Costs of sales 95,150 33.0 97,324 34.8
Restaurant operating expenses 128,299 44.5 134,232 48.0
Depreciation and amortization 11,927 4.1 12,882 4.6
------- ---- ------- ----
Restaurant costs and expenses 235,376 81.6 244,438 87.4
------- ---- ------- ----
Restaurant operating income 53,152 18.4 35,383 12.6
General and administrative
expenses 22,456 7.7 19,042 6.8
Non-cash stock option
compensation 32,571 11.3 14,435 5.1
------- ---- ------- ----
Earnings(loss) from operations (1,875) (0.6) 1,906 0.7
Other income 647 0.2 2,327 0.8
------- ---- ------- ----
Earnings(loss) before
income taxes (1,228) (0.4) 4,233 1.5
Provision(benefit) for
income taxes (404) (0.1) 1,313 0.5
------- ---- ------- ----
Earnings (loss) before change
in accounting (824) (0.3) 2,920 1.0
Cumulative effect of change
in accounting (318) (0.1)
------- ---- ------- ----
Net earnings(loss) $(1,142) (0.4) $ 2,920 1.0
======= ==== ======= ====
Basic earnings(loss) per share $ (0.05) $ 0.12
======= =======
Diluted earnings(loss) per share $ (0.05) $ 0.12
======= =======
Average shares outstanding -
Basic 24,473 24,033
Restaurants included at end
of period 294 292
Comparable sales growth 0.6% 1.2%
Analysis of components of net earnings (loss)
and basic per share amounts
For the second quarter ended
June 11,2002 June 12,2001
12 Weeks 12 Weeks
Per Per
$ Amt. Share $ Amt. Share
-------- ------ -------- ------
Net earnings excluding
unusual charges $ 8,772 $ 0.35 $ 3,615 $ 0.15
Non-cash stock option
compensation - net of
tax (3,983) (0.16) (9,094) (0.38)
Abandoned merger
expenses - net of tax (1,854) (0.07)
Impairment and sale of
assets - net of tax (251) (0.01) 159 0.01
Cumulative effect of change
in accounting - net of tax
-------- ------ -------- ------
Net earnings(loss) $ 2,684 $ 0.11 $(5,320) $(0.22)
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Analysis of components of net earnings (loss)
and basic per share amounts
For the two quarters ended
June 11,2002 June 12,2001
24 Weeks 24 Weeks
Per Per
$ Amt. Share $ Amt. Share
-------- ------ -------- ------
Net earnings excluding
unusual charges $ 21,640 $ 0.88 $ 10,998 $ 0.46
Non-cash stock option
compensation - net of
tax (20,356) (0.83) (9,094) (0.38)
Abandoned merger
expenses - net of tax (1,854) (0.08)
Impairment and sale of
assets - net of tax (254) (0.01) 1,016 0.04
Cumulative effect of change
in accounting - net of tax (318) (0.01)
-------- ------ -------- ------
Net earnings(loss) $ (1,142) $(0.05) $ 2,920 $ 0.12
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