WICHITA, Kan., Oct. 4, 2001 (PRIMEZONE) -- Lone Star Steakhouse & Saloon, Inc. (Nasdaq:STAR) announced operating results for the twelve-week period ended September 4, 2001. Adjusted net income (net income before unusual items and non-cash compensation accruals) increased 70% to $4,901,000 or $.20 per share ($.19 diluted) compared to $2,888,000 or $.11 per share ($.11 diluted) last year. Year to date adjusted net income was $15,899,000 or $.66 per share ($.63 diluted) compared to $15,649,000 or $.58 per share ($.57 diluted) in 2000. Due to a decline in the Company's common stock price during the quarter, the non-cash stock compensation credit associated with certain options repriced in prior years was $1,997,000 after tax, and the gain on sale of assets was $118,000 after tax, resulting in net income for the quarter of $7,016,000 or $.29 per share ($.28 diluted). Third quarter revenue grew 4.2% to $136,465,000 and year to date revenue increased 2.9% to $416,287,000.
Sullivan's Steakhouse restaurants continued to show strong comparable sales growth for the quarter of 12.8%, bringing year to date growth to 15.3%. Lone Star Steakhouse & Saloon restaurants same store sales increased 2.3% during the quarter, bringing year to date same store sales growth to .8%. Del Frisco's Double Eagle Steak House restaurants were affected by the well-publicized softening economic environment, posting a decline of 5.2% in comparable store sales for the quarter, bringing the year to date decline to 2.1%.
Jamie B. Coulter, Chief Executive Officer, stated that, "We are pleased that the ongoing efforts of the Company to retain qualified restaurant management and deliver quality food and services to our guests has resulted in strong comparable store sales growth at Lone Star and Sullivan's. We believe the Company is well positioned to continue improvements in operating results for the foreseeable future."
The Company's financial position remains strong, with cash of $58 million, no debt, and adjusted EBITDA for the quarter of $14.2 million or $.59 per share. Book value per share increased to $18.55 at the end of the quarter. The Board of Directors declared the Company's quarterly cash dividend of $.125 per share payable October 26, 2001 to shareholders of record on October 12, 2001.
The Company opened 2 Lone Star Steakhouse & Saloon restaurants in Sugarhouse, Utah and Effingham, Illinois in the third quarter.
Australian Lone Star's comparable store sales continue to be soft, declining 5.0% for the third quarter. Sales and operating margins in Australia are still suffering from the effects of the National General Sales Tax implemented by the Australian government in July 2000, which has had a negative impact on consumer spending. The Company is not optimistic about improvement in the Australian sales or operating results in the foreseeable future.
During the third quarter, the Company purchased 7,000 shares of its common stock. The total number of shares repurchased by the Company since the announcement of its stock buy back program is 17.3 million at an average price of $9.63 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 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 in the charge or credit for non-cash stock compensation.
During the quarter, the Company replaced its revolving term loan agreement with an unsecured revolving credit agreement with a group of banks led by SunTrust Bank. Under the terms of its credit facilities, the Company can borrow up to $55 million for general corporate purposes.
As previously announced, the Company is joining with several others in the restaurant industry in the "Dine for America" fundraising effort for the American Red Cross Disaster Relief Fund, and will donate 100% of revenues from all domestic restaurants on October 11, 2001 to this cause. It is estimated that this donation will reduce fourth quarter earnings by 4-5 cents per share.
As part of its continuing review of options for enhancing shareholder value, the Company has engaged UBS Warburg to advise the Board on alternatives for the use of the Company's strong balance sheet and cash flow, including continued share buy back, possible acquisitions or other strategies.
Since the September 11 tragedy, and its dramatic impact on business travel, comparable store sales at Sullivan's have declined 6.6% and at Del Frisco's, 25.0%. The domestic Lone Stars, however, have continued to generate comparable store sales gains of 2.0% for the 3 weeks ended October 2, 2001. If these trends continue at the same rate, the Company expects fourth quarter earnings to be in the range of $2,700,000 to $3,400,000 or $.11 to $.14 per share, excluding unusual items and changes in non-cash stock compensation expense.
Lone Star Steakhouse and Saloon, Inc. owns and operates 246 domestic and 26 international Lone Star Steakhouse & Saloon restaurants; 15 Sullivan's Steakhouse restaurants; and five Del Frisco's Double Eagle Steak House restaurants.
For interested parties, there will be a conference call with management at 10:00 a.m. Central Time on Tuesday, October 9, 2001 to discuss this third quarter earnings release. The call in number is (913) 981-5522 and the confirmation code is 441224. A recorded replay of the conference call will be available from 12:00 p.m. on October 9, 2001 through midnight October 23, 2001. The replay call in number is (719) 457-0820 and the confirmation code is 441224. 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, 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 Third Quarter 2001
(In thousands except for per share amounts)
Sept. 4, Dec. 26,
2001 2000
-------- --------
Current Assets:
Cash and cash equivalents $ 57,501 $ 29,029
Other current assets 17,752 18,119
-------- --------
75,253 47,148
Property and equipment, net 384,106 406,761
Intangibles and other assets 39,296 35,014
-------- --------
$498,655 $488,923
======== ========
Current liabilities $ 48,381 $ 48,864
Noncurrent liabilities 3,997 2,276
Stockholders' equity 446,277 437,783
-------- --------
$498,655 $488,923
======== ========
For the third quarter ended
Sept. 4, 2001 Sept. 5, 2000
---------------- -------------
12 Weeks 12 Weeks
-------- --------
$ % $ %
--------- ----- --------- ------
Net Sales $136,465 $130,953
Costs and expenses:
Costs of sales 47,971 35.2 46,904 35.8
Restaurant operating
expenses 65,229 47.8 64,504 49.3
Depreciation and
amortization 6,428 4.7 6,589 5.0
Provision for asset
impairment and
store closings 541 0.4
--------- ----- --------- ------
Restaurant costs
and expenses 119,628 87.7 118,538 90.5
--------- ----- --------- ------
Restaurant operating
income 16,837 12.3 12,415 9.5
General and
administrative
expenses 10,221 7.5 8,747 6.7
Non-cash stock
compensation
expense (3,170) (2.3)
--------- ----- --------- ------
Earnings from
operations 9,786 7.1 3,668 2.8
Other income 490 0.4 271 0.2
--------- ----- --------- ------
Earnings before
income taxes 10,276 7.5 3,939 3.0
Provision for
income taxes 3,260 2.4 1,392 1.1
--------- ----- --------- ------
Net earnings $ 7,016 5.1 $ 2,547 1.9
========= ===== ========= ======
Basic earnings
per share $0.29 $0.10
===== ======
Diluted earnings
per share $0.28 $0.10
===== ======
Average shares
outstanding-Basic 24,031 25,680
Average shares
outstanding-Diluted 25,453 26,227
Restaurants included
at end of period 294 292
Comparable sales
growth 2.6% (0.8)%
Analysis of components of net earnings
and basic per share amounts
For the third quarter ended
Sept. 4, 2001 Sept. 5, 2000
12 Weeks 12 Weeks
Per Per
$ Amt. Share $ Amt. Share
------- ----- ------- -----
Adjusted net income $ 4,901 $0.20 $ 2,888 $0.11
Non-cash stock
compensation
expense - net of tax 1,997 0.08
Gain on sale of assets -
net of tax 118 0.01
Provision for asset
impairment and
store closings (341) (0.01)
------- ----- ------- -----
Net earnings $ 7,016 $0.29 $ 2,547 $0.10
======= ===== ======= =====
For the three quarters ended
Sept. 4, 2001 Sept. 5, 2000
36 Weeks 36 Weeks
$ % $ %
------- ----- ------- -----
Net Sales $416,287 $404,395
Costs and expenses:
Costs of sales 145,295 34.9 141,790 35.1
Restaurant
operating expenses 199,461 47.9 190,275 47.0
Depreciation and
amortization 19,310 4.7 19,749 4.9
Provision for asset
impairment and
store closing 541 0.1
------- ----- ------- -----
Restaurant costs
and expenses 364,066 87.5 352,355 87.1
------- ----- ------- -----
Restaurant operating
income 52,221 12.5 52,040 12.9
General and
administrative
expenses 29,264 7.0 29,102 7.2
Non-cash stock
compensation expense 11,265 2.7
------- ----- ------- -----
Earnings from
operations 11,692 2.8 22,938 5.7
Other income 2,817 0.7 1,080 0.2
------- ----- ------- -----
Earnings before
income taxes 14,509 3.5 24,018 5.9
Provision for
income taxes 4,573 1.1 8,510 2.1
------- ----- ------- -----
Net earnings $ 9,936 2.4 $ 15,508 3.8
======= ===== ======= =====
Basic earnings
per share $0.41 $0.58
======= =======
Diluted earnings
per share $0.40 $0.57
======= =======
Average shares
outstanding-Basic 24,032 26,763
Average shares
outstanding-Diluted 25,099 27,299
Restaurants included
at end of period 294 292
Comparable sales growth 1.7% 0.2%
Analysis of components of net earnings
and basic per share amounts
For the three quarters ended
Sept. 4, 2001 Sept. 5, 2000
36 Weeks 36 Weeks
Per Per
$ Amt. Share $ Amt. Share
------- ----- ------- -----
Adjusted net income $ 15,899 $0.66 $ 15,649 $0.58
Non-cash stock
compensation
expense - net of tax (7,097) (0.30)
Gain on sale of assets -
net of tax 200 0.01
Provision for
asset impairment
and store closing 1,134 0.05 (341) (0.01)
------- ----- ------- -----
Net earnings $ 9,936 $0.41 $ 15,508 $0.58
======= ===== ======= =====