WICHITA, Kan., Feb. 5, 2003 (PRIMEZONE) -- Lone Star Steakhouse & Saloon, Inc. (Nasdaq:STAR) ("Lone Star" or "Company") announced preliminary unaudited operating results for the seventeen-week fourth quarter and fifty-three week fiscal year ended December 31, 2002. The Company operates on a 52- or 53-week fiscal year ending the last Tuesday in December, and fiscal 2002 included 53 weeks, and the fourth quarter, seventeen weeks as compared to 52 and 16 weeks, respectively, for fiscal 2001.
Net income from continuing operations for the fourth quarter increased 42% to $12,900,000 or $.61 per share ($.55 diluted) from $9,085,000 or $.38 per share ($.35 diluted) in the prior year. For fiscal year 2002, net income from continuing operations increased 63% to $40,065,000 or $1.81 per share ($1.58 diluted) from $24,615,000 or $1.02 per share ($.97 diluted) in 2001.
Income from continuing operations before unusual items increased 3.1% to $12,452,000 or $.59 per share ($.54 diluted) for the fourth quarter and 49.2% to $42,276,000 or $1.91 per share ($1.67 diluted) for the year.
Revenue from continuing operations increased 8.0% to $194,697,000 from $180,233,000 for the fourth quarter and increased 3.9% to $615,715,000 from $592,459,000 for the fiscal year.
EBITDA from continuing operations increased 22.7% for the fourth quarter to $28,260,000 and increased 29.2% to $89,437,000 for the year. Adjusted for unusual items, EBITDA from continuing operations declined 0.1% for the quarter to $27,400,000 and increased 27.5% to $94,203,000 for the year.
Lone Star's Chief Executive Officer, Jamie Coulter, stated, "In this difficult environment, I am very proud of our Company's performance. Please note that a 53-week year occurs only once every seven years, so the impact of this phenomena is not readily understood. It caused the Company to have two New Year's Eve sales days in 2002 and none in fiscal year 2003. This will impact comparability for sales, profit and EBITDA for the first and fourth quarters of fiscal year 2003." The Company estimates that the extra week in fiscal 2002 added $12,600,000 to revenues, $2,000,000 or $.09 per share ($.09 diluted) to net income and $3,000,000 to EBITDA for the fourth quarter. Based on current comparable store sales trends, margin expectations and unit openings weighted late in the year, the Company's current guidance for the 52 week fiscal year 2003 is for sales of $605 - 610 million, income from continuing operations before unusual items of $38 - 40 million, and EBITDA of $83 - 88 million. Based on the current share count, that would translate into basic earnings per share of $1.70 - $1.80 and based on the current share price, diluted earnings per share of $1.60 to $1.70 per share.
In December 2002, the FASB issued SFAS No. 148 Accounting for Stock Based Compensation Transition and Disclosure, an amendment of SFAS No. 123. Accordingly, in the fourth quarter of fiscal 2002, the Company changed its method of accounting as the Company adopted the fair value recognition provision of SFAS No. 123 for employee stock based compensation. The Company now values stock options based upon an option pricing model and recognizes their value as an expense over the period in which options vest. The Company elected to apply the retroactive restatement method as provided in SFAS No. 148 and as a result all prior periods presented have been restated to reflect the compensation expense that would have been recognized had SFAS No. 123 been applied to all awards granted to employees after January 1, 1995. The effect of the accounting change is set forth on the table below.
In addition, during the first quarter of fiscal 2002, the Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets requiring that goodwill and intangible assets deemed to have indefinite lives will no longer be amortized. The application of the impairment provisions resulted in a charge for the cumulative effect of an accounting change $318,000 or $.01 per share, net of income taxes of $190,000 to reflect impairment of certain goodwill related to Australian investments. The effect of the application of the non-amortization rules on accounting for goodwill and other intangible assets is set forth on the table below.
The effect of the changes in accounting described previously was to increase net income in the periods presented as follows (in thousands of dollars, except per share amounts):
4th Quarter Fiscal Year
2002 2001 2002 2001
17 Weeks 16 Weeks 53 Weeks 52 Weeks
------- -------- ------- ---------
Stock based compensation $ 399 $ 4,727 $14,416 $ 9,645
Goodwill amortization 161 -- 523 --
Amortization of indefinite
lived intangibles 135 -- 400 --
------- -------- ------- ---------
Total Increase $ 695 $ 4,727 $15,339 $ 9,645
======= ======== ======= =========
Per Share:
Basic $ .03 $ .20 $ .69 $ .40
======= ======== ======= =========
Diluted $ .03 $ .18 $ .61 $ .38
======= ======== ======= =========
During the year, the Company adopted SFAS No. 144 as required, and as a result, the operations of certain restaurants have been reclassified to income or loss from discontinued operations on a historical basis.
Fourth quarter comparable store sales growth (decline) was (1.8)% for domestic Lone Star Steakhouse & Saloon restaurants, (1.0)% for Sullivan's Steakhouse restaurants and 14.2% for Del Frisco's Double Eagle Steak House restaurants bringing the fiscal year comparable store sales growth to (0.4)%, (4.0)%, 8.0%, respectively. Del Frisco's comparable sales growth continues to be driven by increased sales in the New York restaurant. Excluding New York, Del Frisco's comparable store sales were (1.6)% for the quarter and (5.7)% for the fiscal year. Australian comparable store sales were (2.4)% for the fourth quarter and (4.4)% for the year.
As previously announced, the Company closed four underperforming Australian restaurants located in the city of Melbourne in the State of Victoria in the fourth quarter of 2002. No charges were required regarding these restaurants as impairment charges were recorded in prior years. Closing costs associated with these restaurants were not material.
During the fourth quarter, the Company repurchased 1,114,000 shares of its common stock for $22,374,000 ($20.08 average per share) bringing repurchases for fiscal year 2002 to 5,114,000 shares for $108,679,000 ($21.25 average per share). The current repurchase authorization has 1,082,000 shares remaining.
During the fiscal year, $23,550,000 was received from the exercise of stock options on 2,059,000 shares and $9,268,000 was received primarily from the sale of excess real estate.
Unusual items included in income from continuing operations for the fourth quarters and fiscal years include non-cash stock compensation, a previously recorded contribution to the American Red Cross in connection with the restaurant industry's "Dine for America" program, abandoned merger costs, gain or loss on sale of assets, and 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 fourth quarter ended
December 31, 2002 December 25, 2001
----------------- -----------------
Per Per
Amount Share Amount Share
------- ------- ------- -------
Non-cash stock compensation $ 500 $ .02 $ 723 $ .02
Dine For America Contribution -- -- 1,327 .06
Abandoned merger costs -- -- -- --
(Gain) on sale of assets (1,314) (.06) (44) --
Asset impairment and
store closings 366 .02 992 .04
------- ------- ------- -------
$ 448 $ .02 $ 2,998 $ .12
======= ======= ======= =======
For the fiscal year ended
December 31, 2002 December 25, 2001
----------------- -----------------
Per Per
Amount Share Amount Share
------- ------- ------- -------
Non-cash stock compensation $ 1,081 $ .05 $ 2,845 $ .12
Dine For America Contribution -- -- 1,327 .06
Abandoned merger costs 1,854 .08 -- --
(Gain) on sale of assets (1,215) (.05) (1,451) (.06)
Asset impairment and
store closings 491 .02 992 .04
------- ------- ------- -------
$ 2,211 $ .10 $ 3,713 $ .16
======= ======= ======= =======
On January 9, 2003, Lone Star Steakhouse & Saloon, Inc. announced that the Board of Directors declared the Company's quarterly cash dividend of $.15 per share payable February 5, 2003 to shareholders of record on January 22, 2003.
For interested parties, there will be a conference call with management at 9:00 AM Central Time on Friday, February 7, 2003 to discuss this fourth quarter earnings release. The call in number is (800)-219-6346. A recorded replay of the conference call will be available from 12:00 PM on February 7, 2003 through midnight February 21, 2003. The replay call in number is (706)-645-9291. 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 owns and operates 249 domestic and 20 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 Double Eagle Steak House restaurant.
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 2003 operating performance, comparable sales and the development plans of the Company, 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 Fourth Quarter 2002
- As Restated (A)
(In thousands except for per share amounts)
Dec. 31, Dec. 25,
2002 2001
--------- --------
Current Assets:
Cash and cash equivalents $ 65,369 $ 82,919
Other current assets 21,702 20,768
--------- --------
87,071 103,687
Property and equipment, net 338,735 369,883
Intangibles and other assets 47,507 62,455
--------- --------
$ 473,313 $ 536,025
========= ========
Current liabilities $ 42,496 $ 55,404
Noncurrent liabilities 11,058 5,187
Stockholders' equity 419,759 475,434
--------- --------
$ 473,313 $ 536,025
========= ========
For the Fourth quarter ended
Dec. 31, 2002 Dec. 25, 2001
------------- -------------
17 Weeks 16 Weeks
-------- --------
$ % $ %
-------- ---- -------- ----
Net Sales $194,697 $180,233
Costs and expenses:
Costs of sales 64,180 33.0 59,354 32.9
Restaurant operating expenses 89,766 46.1 82,970 46.0
Depreciation and amortization 7,954 4.1 8,333 4.6
Provison for asset impairment
and store closings 592 0.3 1,551 0.9
------- ---- ------- ----
Restaurant costs and expenses 162,492 83.5 152,208 84.4
------- ---- ------- ----
Restaurant operating income 32,205 16.5 28,025 15.6
General and administrative
expenses 14,951 7.7 12,671 7.1
Non-cash option compensation 676 0.3 810 0.5
Contribution - "Dine for
America" 2,124 1.2
------- ---- ------- ----
Earnings from operations 16,578 8.5 12,420 6.8
Other income 2,455 1.3 1,073 0.6
------- ---- -------- ----
Earnings-continuing-before income
taxes 19,033 9.8 13,493 7.4
Provision for income taxes 6,133 3.2 4,408 2.4
------- ---- ------ ----
Earnings - continuing operations 12,900 6.6 9,085 5.0
Loss from discontinued
operations - Net (139) (0.1) (1,037) (0.6)
Cumulative effect of accounting
change
------- ---- ------- ----
Net earnings $ 12,761 6.5 $ 8,048 4.4
======= ==== ======= ====
Basic earnings per share $0.60 $0.33
===== =====
Diluted earnings per share $0.55 $0.31
===== =====
Average shares outstanding - Basic 21,157 24,048
Average shares outstanding - Diluted 23,271 25,740
Restaurants included at end of period 290 298
Comparable sales growth (0.6)% 3.4%
For the fiscal year ended
Dec. 31, 2002 Dec. 25, 2001
------------- -------------
53 Weeks 52 Weeks
-------- --------
$ % $ %
-------- ---- -------- ----
Net Sales $615,715 $592,459
Costs and expenses:
Costs of sales 201,716 32.8 202,786 34.2
Restaurant operating expenses 280,973 45.6 279,801 47.2
Depreciation and amortization 25,579 4.2 27,361 4.6
Provison for asset impairment
and store closings 792 0.1 1,551 0.3
-------- ---- -------- ----
Restaurant costs and expenses 509,060 82.7 511,499 86.3
-------- ---- -------- ----
Restaurant operating income 106,655 17.3 80,960 13.7
General and administrative
expenses 47,021 7.6 41,933 7.1
Non-cash option compensation 2,949 0.5 3,212 0.5
Contribution - "Dine for
America" 2,124 0.4
-------- ---- -------- ----
Earnings from operations 56,685 9.2 33,691 5.7
Other income 3,249 0.5 4,239 0.7
-------- ---- -------- ----
Earnings-continuing-before income
taxes 59,934 9.7 37,930 6.4
Provision for income taxes 19,869 3.2 13,315 2.2
-------- ---- -------- ----
Earnings - continuing operations 40,065 6.5 24,615 4.2
Loss from discontinued
operations - Net (538) (0.1) (1,713) (0.3)
Cumulative effect of accounting
change (318) (0.1)
-------- ---- -------- ----
Net earnings $ 39,209 6.3 $22,902 3.9
======= ==== ======= ====
Basic earnings per share $1.77 $0.95
===== =====
Diluted earnings per share $1.55 $0.90
===== =====
Average shares outstanding - Basic 22,099 24,037
Average shares outstanding - Diluted 25,295 25,324
Restaurants included at end of period 290 298
Comparable sales growth (0.4)% 2.2%
Analysis of components of net earnings and basic
per share amounts
For the Fourth quarter ended
Dec. 31, 2002 Dec. 25, 2001
------------- -------------
17 Weeks 16 Weeks
-------- --------
Per Per
$ Amt. Share $ Amt. Share
-------- ------ -------- ------
Net earnings - continuing
before unusual items $ 12,452 $0.59 $ 12,083 $0.50
Non-cash stock
compensation - net of
tax (500) (0.02) (723) (0.02)
Contribution - "Dine for
American" - net of tax (1,327) (0.06)
Abandoned merger costs -
net of tax
Gain on sale of assets -
net of tax 1,314 0.06 44 0.00
Provision for asset
impairment and store
closings - net of tax (366) (0.02) (992) (0.04)
-------- ------ -------- ------
Net earnings from
continuing operations $ 12,900 $0.61 $ 9,085 $0.38
======== ====== ======== ======
Analysis of components of net earnings and basic
per share amounts
For the fiscal year ended
Dec. 31, 2002 Dec. 25, 2001
------------- -------------
53 Weeks 52 Weeks
-------- --------
Per Per
$ Amt. Share $ Amt. Share
-------- ------ -------- ------
Net earnings - continuing
before unusual items $ 42,276 $1.91 $ 28,328 $1.18
Non-cash stock
compensation - net of
tax (1,081) (0.05) (2,845) (0.12)
Contribution - "Dine for
American" - net of tax (1,327) (0.06)
Abandoned merger costs -
net of tax (1,854) (0.08)
Gain on sale of assets -
net of tax 1,215 0.05 1,451 0.06
Provision for asset
impairment and store
closings - net of tax (491) (0.02) (992) (0.04)
-------- ------ -------- ------
Net earnings from
continuing operations $ 40,065 $1.81 $ 24,615 $1.02
======== ====== ======== ======
(A) All periods presented have been restated to reflect the change in
accounting for employee stock based compensation as previously
described.