sec document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 2, 2002
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Date of Report
(Date of earliest event reported)
Lone Star Steakhouse & Saloon, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-19907 48-1109495
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
224 East Douglas, Suite 700, Wichita, KS 67202
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(Address of Principal Executive Offices) (Zip Code)
(316) 254-8899
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(Registrant's telephone number,
including area code)
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(Former Name or Former Address, if Changed Since Last Report.)
Item 5. Other Events.
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On April 2, 2002, Lone Star Steakhouse & Saloon, Inc. (Nasdaq
National Market: STAR) issued two press releases, set forth as Exhibits 99.1 and
99.2 to this Current Report. For additional information, reference is made to
the press releases which are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits
Exhibit No. Exhibits
99.1 Press Release of Lone Star Steakhouse & Saloon, Inc. dated April 2, 2002.
99.2 Press Release of Lone Star Steakhouse & Saloon, Inc. dated April 2, 2002.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Lone Star Steakhouse & Saloon, Inc.
Dated: April 3, 2002 By: /s/ John D. White
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Name: John D. White
Title: Executive Vice President
Exhibit 99.1
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For Immediate Release Contact: John D. White
(316) 264-8899
Lone Star Steakhouse & Saloon, Inc. Nasdaq: STAR
Letter of Intent for Sale and Merger of the Company for $20.50 Per Share in Cash
Wichita, Kansas April 2, 2002
The Company announced today that it has entered into a non-binding Letter of
Intent with a prominent National buy-out firm ("Buyer") with respect to the
proposed acquisition of all of the outstanding shares of common stock of Lone
Star for $20.50 per share. The Letter of Intent was unanimously approved by the
Board of Directors of Lone Star. Clark R. Mandigo, Lone Star's Chairman of the
Board, stated "this transaction reflects the outstanding results that have been
achieved by our CEO, Jamie Coulter and the superb management team he has
assembled."
The Letter of Intent grants the Buyer a 30 day exclusivity period to negotiate
and sign a definitive agreement which is expected to be executed on or before
the expiration of the Letter of Intent on April 27, 2002. The transaction is
subject to a number of conditions, including confirmatory due diligence, receipt
of proceeds from sale and leaseback transactions and debt financing, as well as
various regulatory and corporate approvals, including the approval by Lone
Star's shareholders. The Company expects to file a Proxy Statement with the SEC
shortly after the signing of a definitive agreement, followed by the mailing of
such Proxy statement calling for a shareholder vote to approve the transaction.
Pending SEC comments and a positive shareholder vote the transaction is
anticipated to close in the third quarter.
There can be no assurance that a definitive agreement will be entered into or
that any such transaction will be consummated. UBS Warburg is acting as
financial advisor to Lone Star.
The transaction would take the form of a statutory merger of Lone Star with a
newly created entity to be formed by Buyer ("NEWCO") pursuant to which the
holders of Lone Star's issued and outstanding common stock would be entitled to
receive $20.50 per share in cash.
The price represents a premium of 3.6% from the 30 day average trading price of
$19.78. It also represents a 111.3% premium over the last trading price prior to
the announcement of the engagement of UBS Warburg to review strategic
alternatives of $9.70 on October 4, 2001.
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 including those related
to cost savings, future results and a potential transaction resulting in a
change of control of the Company. 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.
Exhibit 99.2
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For Immediate Release Contact: John D. White
(316) 264-8899
Lone Star Steakhouse & Saloon, Inc. Nasdaq: STAR
First quarter Earnings News Release
Wichita, Kansas April 2, 2002
Lone Star Steakhouse & Saloon, Inc. announced operating results for the twelve
week first quarter ended March, 19, 2002. For the quarter, adjusted net income
(net income before unusual charges and credits, including non-cash stock
compensation and the cumulative effect of a change in accounting for goodwill
impairment under FAS 142 which the Company was required to adopt on December 26,
2001) increased 75.3% to $12,868,000 or $0.53 per share ($0.48 diluted) from
$7,342,000 or $0.30 ($0.30 diluted) in the prior year.
First quarter revenues increased 3.5% to $148,808,000 from $143,753,000 last
year. Comparable store sales changes, by concept, were positive 1.1% for
domestic Lone Star Steakhouse & Saloon restaurants, (2.6%) for Sullivan's
Steakhouse restaurants and positive 5.7% for Del Frisco's Double Eagle Steak
House restaurants.
Adjusted EBITDA for the quarter increased 53% to $27.9 million or $1.15 per
share compared to $18.3 million or $0.76 per share last year. Financial position
remains exceptionally strong, with $102 million in cash, no debt and a book
value of $19.59 per share.
Unusual items net of applicable tax, primarily non-cash compensation expense
resulting from the increase in the price of the Company's common stock during
the quarter, were a net charge of $16,694,000 or $0.69 per share as compared to
a credit of $898,000 or $0.04 per share in the prior year, resulting in a net
loss for the quarter of $3,826,000 or $0.16 per share compared to net income of
$8,240,000 or $0.34 per share last year.
The unusual charges and (credit) items net of applicable income tax are set
forth below in thousands of dollars, except for per share amounts:
For the first quarter ended
March 19, 2002 March 20, 2001
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Amount Per Share Amount Per share
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Non-cash stock compensation $16,373 $ 0.68 $ - $ -
Loss (gain) on sale of assets 3 0.00 (898) (0.04)
Cumulative effect of change in accounting 318 0.01 - -
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$16,694 $ 0.69 $ (898) $ (0.04)
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Domestic margins improved due to higher average unit sales, continued
improvement in operating controls aided by lower beef and natural gas prices,
lower cost and more effective marketing programs than last year.
Australian comparable store sales declined 7.9%. Sales and operating margins in
Australia continue to be negatively impacted by the Goods and Services Tax on
restaurant sales and the soft Australian economy. As part of the Company's plan
to improve Australian operations, Australian Lone Stars will begin a test of
shallow discount marketing similar to the program that has been successful in
the domestic Lone Stars for the past three quarters. The test will begin this
week.
The Board of Directors declared the Company's quarterly cash dividend of $.15
per share payable April 24, 2002 to shareholders of record on April 10, 2002.
The Company owns and operates 249 domestic Lone Star Steakhouse & Saloon
restaurants; fifteen Sullivan's Steakhouse restaurants; and five Del Frisco's
Double Eagle Steak House restaurants. There are 25 company owned international
Lone Star Steakhouse & Saloon restaurants. Licensees operate three domestic and
one international Lone Star restaurants, and one domestic Del Frisco's Steak
House restaurant.
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 net income both
with the non-cash charge or credit and also adjusted to exclude the charge or
credit for non-cash stock compensation.
For interested parties, there will be a conference call with management at 8:00
AM Central Time on Wednesday, April 3, 2002 to discuss this first quarter
earnings release. The call in number is (719)-457-2657 and the confirmation code
is 595134. A recorded replay of the conference call will be available from 12:00
PM on April 3, 2002 thru midnight April 17, 2002. The replay call in number is
(719)-457-0820 and the confirmation code is 595134. 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 First Quarter 2002
(In thousands except for per share amounts)
Mar. 19, Dec. 25,
2002 2001
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Current Assets:
Cash and cash equivalents $ 102,046 $ 82,919
Other current assets 18,953 20,768
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120,999 103,687
Property and equipment, net 362,797 369,883
Intangibles and other assets 52,742 41,459
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$ 536,538 $ 515,029
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Current liabilities $ 52,130 $ 55,403
Noncurrent liabilities 7,612 5,187
Stockholders' equity 476,796 454,439
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$ 536,538 $ 515,029
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For the first quarter ended
Mar. 19, 2002 Mar. 20, 2001
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12 Weeks 12 Weeks
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$ % $ %
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Net Sales $148,808 $143,753
Costs and expenses:
Costs of sales 48,830 32.8 49,703 34.6
Restaurant operating expenses 64,103 43.1 67,904 47.2
Depreciation and amortization 5,998 4.0 6,455 4.5
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Restaurant costs and expenses 118,931 79.9 124,062 86.3
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Restaurant operating income 29,877 20.1 19,691 13.7
General and administrative
expenses 9,246 6.2 9,158 6.4
Non-cash stock option
compensation 26,197 17.6
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Earnings(loss) from operations (5,566) (3.7) 10,533 7.3
Other income 383 0.2 1,699 1.2
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Earnings(loss) before
income taxes (5,183) (3.5) 12,232 8.5
Provision(benefit) for
income taxes (1,675) (1.1) 3,992 2.8
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Earnings (loss) before change
in accounting (3,508) (2.4) 8,240 5.7
Cumulative effect of change
in accounting (318) (0.2)
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Net earnings(loss) $(3,826) (2.6) $8,240 5.7
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Basic earnings(loss) per share $(0.16) $0.34
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Diluted earnings(loss) per share $(0.14) $0.34
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Average shares outstanding - Basic 24,198 24,033
Average shares outstanding - Diluted 26,664 24,435
Restaurants included at end of period 295 290
Comparable sales growth 0.6% 2.3%
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Analysis of components of net earnings (loss)
and basic per share amounts
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Per Per
$ Amt. Share $ Amt. Share
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Net earnings excluding
unusual charges $ 12,868 $ 0.53 $ 7,342 $ 0.30
Non-cash stock option
compensation - net of
tax (16,373) $(0.68)
Cumulative effect of change
in accounting - net of tax (318) $(0.01)
Gain(loss) on sale of
assets - net of tax (3) 898 $ 0.04
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Net earnings(loss) $ (3,826) $(0.16) $ 8,240 $ 0.34
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