sec document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 30, 2003
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ______
Commission file number 0-19907
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LONE STAR STEAKHOUSE & SALOON, INC.
(Exact name of Registrant as specified in its charter)
Delaware 48-1109495
-------- ----------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
224 East Douglas, Suite 700
Wichita, Kansas 67202
(Address of principal executive offices) (Zip code)
(316) 264-8899
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes / / No / X /
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-20). Yes /X/ No / /
As of June 17, 2003, the aggregate market value of the Registrant's
Common Stock held by non-affiliates of the Registrant was $411,873,919. Solely
for the purpose of this calculation, shares held by directors and officers of
the Registrant have been excluded. Such exclusion should not be deemed a
determination by or an admission by the Registrant that such individuals are, in
fact, affiliates of the Registrant.
As of April 23, 2004, there were 21,286,402 shares outstanding of the
Registrant's Common Stock.
1
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the Directors of
the Company:
Name Age
Clark R. Mandigo 60
John D. White 56
Fred B. Chaney 67
William B. Greene, Jr. 66
Anthony Bergamo 57
Thomas C. Lasorda 76
Michael A. Ledeen 62
Mark G. Saltzgaber 36
William B. Greene, Jr. has been Chairman of the Board since July 14,
2003 and a Director of the Company since August 1999. Mr. Greene has been
Chairman, Chief Executive Officer and President of BancTenn Corp since 1974 and
Chairman, Chief Executive Officer and President of Carter County BancCorp since
1972. At the age of 26, Mr. Greene was the youngest bank President and CEO in
the United States and formed the first statewide banking organization in the
history of Tennessee, United Tennessee Bancshares Corporation. Mr. Greene was
the immediate past Chairman of the Wake Forest University Board of Trustees and
Chairman of the Wake Forest University Trustee Investment Policy Committee for
the last eight years, which oversees the University's billion-dollar endowment.
Mr. Greene is also a member of the Board of Trustees of Milligan College where
he recently received his Honorary Doctor of Economics. Mr. Greene was a member
of the Young Presidents' Organization for eighteen years and in 1998 served as
International President of the World Presidents' Organization, the graduate
school of YPO. Mr. Greene is a graduate of Wake Forest University with a B.S.
Degree in Philosophy, Psychology and History. Mr. Greene did post graduate work
at Wake Forest University and the University of Illinois. He is a graduate of
the Bank Marketing and Public Relations School at Northwestern University, and a
graduate of the Stonier Graduate School of Banking at Rutgers University.
Clark R. Mandigo served as the Chairman of the Board of the Company
from July 2001 through July 14, 2003 and has been a Director of the Company
since March 1992. Mr. Mandigo has been a Papa John's Pizza franchisee since
1995. From 1986 to 1991, he was President, Chief Executive Officer and Director
of Intelogic Trace, Inc., a corporation engaged in the sale, lease and support
of computer and communications systems and equipment. From 1985 to 1997, Mr.
Mandigo served on the Board of Directors of Physician Corporation of America, a
managed health care company, from 1993 to 1997, Mr. Mandigo served on the Board
of Palmer Wireless, Inc., a cellular telephone system operator, and from 1995 to
February 2004, Mr. Mandigo served on the Board of Horizon Organic Holdings
Corporation. Mr. Mandigo currently serves as a Trustee of Accolade Funds and
U.S. Global Investors Funds.
John D. White is Executive Vice President, Treasurer and a Director of
the Company, and was the Chief Financial Officer from 1992 to 1999. Prior to
joining the Company, Mr. White was employed as Senior Vice President of Finance
for Coulter Enterprises, Inc. Prior to that, Mr. White was a principal of Arthur
Young & Company and taught management development and computer auditing seminars
in their National Training Program. Mr. White earned a BBA in accounting from
Wichita State University in 1970 and is a graduate of the Stanford Executive
Program.
Anthony Bergamo has been a Director of the Company since May 29, 2002.
Mr. Bergamo has been Managing Director of Milstein Hotel Group since April 1996
and Chief Executive Officer of Niagara Falls Redevelopment, Ltd. since August
1998. Mr. Bergamo has held various positions with MB Real Estate, a property
management company based in New York City and Chicago since April 1996,
including the position of Vice Chairman since May 2003. Mr. Bergamo has also
been a Director since 1995, a Trustee since 1986 and currently is Chairman of
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the Audit Committee of Dime Community Bancorp. Mr. Bergamo is also the Founder
and Chairman of the Federal Law Enforcement Foundation since 1988, a foundation
that provides economic assistance to both federal and local law enforcement
officers suffering from serious illness and to communities recovering from
natural disasters. Mr. Bergamo earned a B.S. in History from Temple University
in 1968 and a J.D. from New York Law School in 1973.
Fred B. Chaney, Ph.D., has been a director of the Company since May
1995. Dr. Chaney was President and Chief Executive Officer of TEC's parent
company, Vedax Sciences Corporation, until March 1998 when he sold his interest.
Dr. Chaney, through the TEC program, formed a worldwide network of CEO's and key
executives serving over 8,000 mid-sized growth companies. Dr. Chaney's early
business career was with the Boeing Company and Rockwell, where he implemented
management systems and quality motivational programs. In 1968, he co-authored
the book HUMAN FACTORS IN QUALITY ASSURANCE with Dr. D. H. Harris. Dr. Chaney
has been a guest lecturer on customer service at UCLA, Loyola, University of
Southern California and University of Colorado Business Schools. Dr. Chaney
previously served as a Director of Rusty Pelican Seafood, Inc. Dr. Chaney earned
his Bachelors "1959", "Masters" "1960", and Ph.D. "1962" in managerial
psychology at Purdue University. He also completed a National Science Foundation
Post-Doctorial Fellowship at University of London in 1964.
Thomas C. Lasorda has been a Director of the Company since November
2001. Mr. Lasorda, a member of the Baseball Hall of Fame, has been a Senior Vice
President of the Los Angeles Dodgers since February 1998 and prior thereto was a
Vice President of such team since July 1996. Mr. Lasorda is also an
internationally renowned motivational speaker. He was the manager of the gold
medal winning United States Baseball Team for the 2000 Summer Olympic Games in
Sydney, Australia and was the manager of the Los Angeles Dodgers for 20 years.
Michael A. Ledeen, Ph.D., has been a Director of the Company since
November 2001. Dr. Ledeen has been a resident scholar in the Freedom Chair at
the American Enterprise Institute since 1989 and was the Vice Chairman of the
U.S. - China Security Review Commission from 2001 to 2004. An expert in
contemporary history and international affairs, Dr. Ledeen is a frequent
contributor to the Wall Street Journal, the Weekly Standard, National Review,
and Commentary and serves as a foreign affairs editor of the American Spectator.
During the Reagan administration, from 1981 to 1987, Dr. Ledeen held numerous
positions including a consultant to the National Security Adviser, the Office of
the Secretary of Defense, and the State Department and was a special adviser to
the Secretary of State. Dr. Ledeen is the author of eighteen books, including
most recently "The War Against the Terror Masters" (St. Martin's Press, 2003).
Mark G. Saltzgaber has been a Director of the Company since November
2001. Mr. Saltzgaber is an experienced investment banker, consultant and private
equity investor in the restaurant industry. He is currently an independent
consultant to emerging restaurant chains and private equity firms. Mr.
Saltzgaber was previously a Venture Partner until March 2004 of Dorset Capital
Management, LLC ("Dorset Capital"), a consumer-focused private equity firm he
co-founded in 1999. Prior to Dorset Capital, Mr. Saltzgaber was a Managing
Director in the Equity Capital Markets Department at Montgomery Securities where
he was responsible for advising consumer growth companies. Prior to that, Mr.
Saltzgaber was also a Principal and Co-Director of the restaurant investment
banking practice at Montgomery Securities. Mr. Saltzgaber is currently a
director of Pasta Pomodoro, Inc. and Stir Crazy, Inc.
In addition to Mr. White, the other Executive Officers of the Company
are as follows:
Jamie B. Coulter, 63, has served as Chief Executive Officer of the
Company since January 1992, served as President of the Company from January,
1992 to June, 1995 and served as Chairman from January 1992 to July 2001. In
1993, Mr. Coulter was inducted into the Pizza Hut Hall of Fame and was named
INC. Magazine's Midwest Region Master Entrepreneur of the year. Mr. Coulter
received the Nation's Restaurant News Golden Chain Award in 1995 and was
Restaurants & Institutions CEO of the year in 1996. In 1997, Mr. Coulter
received the Nation's Restaurant News Hot Concept Award. Mr. Coulter currently
serves as a director of the Federal Law Enforcement Foundation and Empower
America. Mr. Coulter has previously served as Chairman of the Board of Directors
of the Young Presidents' Organization. Mr. Coulter received a BS degree in
Business from Wichita State University in 1963 and is a graduate of the Stanford
University Executive Program.
Tomlinson D. O'Connell, 35, joined the Company in 1995, and has been
President of Lone Star Restaurants since September 2002 and Chief Operating
Officer of Lone Star Restaurants since December 2003. From December 1999 to
September 2002, Mr. O'Connell was Senior Vice President of Operations of Lone
Star Steakhouse & Saloon, Inc. Mr. O'Connell is currently responsible for the
operation of all Lone Star Steakhouse & Saloon restaurants. Mr. O'Connell
was with the Ritz-Carlton Hotel Company from 1992 to 1995. During his tenure
there the company was awarded the Malcolm Baldrige Award. Mr. O'Connell
graduated from the University of Nevada at Las Vegas in 1992 with a Bachelor of
Science degree in Hotel Administration.
3
Gerald T. Aaron, 63, has been Senior Vice President -- Counsel and
Secretary of the Company since January 1994. From November 1991 to January 1994,
Mr. Aaron was employed as General Counsel for Coulter Enterprises, Inc. From
March 1989 to November 1991, Mr. Aaron operated a franchise consultant practice.
From 1969 to 1984 Mr. Aaron was Vice President -- Counsel for Pizza Hut, Inc.
and from 1984 to 1989, Mr. Aaron was President of International Pizza Hut
Franchise Holders Association.
Deidra Lincoln, 44, has been Vice President of Del Frisco's since
January, 2000. Ms. Lincoln is the co-founder of Del Frisco's Double Eagle Steak
House ("Del Frisco's"), which was acquired by the Company in 1995. Since 1995,
Ms. Lincoln has served in various managerial capacities and is responsible for
all of the Company's Del Frisco's operations.
Randall H. Pierce, 64, has been Chief Financial Officer of the Company
since February, 2000. Mr. Pierce is a CPA and was a partner of Ernst & Young LLP
from 1974 to 1997. Mr. Pierce served in the Wichita, Kansas office as an Audit
Engagement Partner from 1974 to 1997 and Office Managing Partner from 1996 to
1997. Mr. Pierce served as Office Director of Accounting and Auditing from 1974
through 1997. From 1997 through January, 2000, Mr. Pierce served as a financial
and business consultant focusing on advising and negotiating merger and
acquisition transactions, sale and disposition transactions and general business
strategies.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Except as set forth herein, based solely upon a review of Forms 3 and
4 and amendments thereto, all directors, officers and beneficial owners of more
than 10 percent of the Company's beneficial securities timely filed their Forms
3, 4 and 5. Fred Chaney Ph.D. failed to timely file a Form 4 reflecting the sale
of 2,000 shares in July 2003. Anthony Bergamo failed to timely file a Form 5 in
2004 reflecting the acquisition in the fiscal years ended December 31, 2002 and
December 30, 2003 of an aggregate of 86 shares. Messrs. Chaney and Bergamo
subsequently made the applicable filings.
AUDIT COMMITTEE
The Company has an Audit Committee consisting of Messrs. Bergamo,
Greene and Mandigo. The Company has determined that all the members of the Audit
Committee are "financial experts" as defined by the rules promulgated under the
Sarbanes-Oxley Act of 2002.
CODE OF ETHICS
The Company has adopted a code of ethics (the "Code") that applies to
all directors and officers. The Code is reasonably designed to deter wrongdoing
and promote (i) honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and professional
relationships, (ii) full, fair, accurate, timely and understandable disclosure
in reports and documents filed with, or submitted to, the SEC and in other
public communications made by the Company, (iii) compliance with applicable
governmental laws, rules and regulations, (iv) the prompt internal reporting of
violations of the Code to appropriate persons identified in the Code, and (v)
accountability for adherence to the Code. Amendments to the Code and any grant
of a waiver from a provision of the Code requiring disclosure under applicable
SEC rules will be disclosed on the Company's website at
www.lonestarsteakhouse.com. The Code has been filed as an exhibit to this Form
10-KA and is also available on the Company's website referenced above.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") and the four most highly compensated executive officers of the Company
(collectively with the CEO the "Named Executive Officers") other than the CEO
whose salary and bonus exceeded $100,000 with respect to the fiscal year ended
December 30, 2003.
4
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
NUMBER OF
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL COMPENSATION (# OF COMPENSATION
POSITION YEAR SALARY BONUS($) (1) SHARES) (2)
------------------------------ ----- ---------- ----------- ------------- ---------- ------------
James B. Coulter ............. 2003 $ 823,558 $ 145,493 $ 110,104(4) -- $ 95,318
Chief Executive Officer ...... 2002 $ 750,000 $1,051,500 $ 109,848(4) -- $ 180,150
2001 $ 750,000 $ 226,500(3) $ 97,473(4) -- $ 97,650
John D. White ................ 2003 $ 600,000 $ 158,583 $ 61,047(5) -- $ 74,704
Executive Vice President and . 2002 $ 600,000 $ 270,353 $ 50,522(5) -- $ 87,035
Treasurer ................. 2001 $ 600,000 $ 181,500(3) -- -- $ 78,150
Tomlinson D. O'Connell ....... 2003 $ 347,115 $ 151,500 $ 27,415 -- $ 49,189
President and ................ 2002 $ 200,000 $ 301,500 $ 57,785(6) -- $ 50,150
Chief Operating Officer of
Lone Star Restaurants .... 2001 $ 200,000 $ 301,500(3) -- -- $ 50,150
Jeff Bracken(7) .............. 2003 $ 248,558 $ 76,500 -- -- $ 32,025
Former Chief Operating Officer 2002 $ 175,000 $ 131,582 -- -- $ 30,658
2001 $ 175,000 $ 89,000(3) -- -- $ 17,332
Gerald T. Aaron .............. 2003 $ 250,000 $ 66,951 -- -- $ 31,214
Senior Vice President, ....... 2002 $ 250,000 $ 80,189 -- -- $ 25,000
Counsel & Secretary ....... 2001 $ 250,000 $ 76,500(3) -- -- $ 25,000
(1) As to Named Executive Officers, except as set forth herein perquisites and
other personal benefits, securities or property received by each Named
Executive Officer did not exceed the lesser of $50,000 or 10% of such Named
Executive Officer's annual salary and bonus.
(2) Represents fifty percent matching contributions by the Company pursuant to
the Company's Deferred Compensation Plan which became effective October 7,
1999.
(3) Such bonus was paid in 2002 for services performed in 2001.
(4) During the fiscal years ended December 30, 2003, December 31, 2002 and
December 25, 2001, Mr. Coulter received benefits primarily relating to tax,
accounting and administrative services provided by Company personnel,
$87,038, $82,850 and $67,700, respectively. The balance was primarily for
reimbursement for certain medical insurance premiums and expenses.
(5) During the fiscal year ended December 30, 2003 Mr. White received benefits
primarily relating to personal use of the Company's airplane ($38,209). The
balance was primarily for reimbursement for certain medical insurance
premiums and expenses. During the fiscal year ended December 31, 2002 Mr.
White received benefits primarily relating to certain medical insurance
premiums and expenses ($28,909) The balance was primarily for the personal
use of the Company's airplane.
(6) During the fiscal year ended December 31, 2002, Mr. O'Connell received
benefits primarily relating to the personal use of the Company's airplane
($54,396). The balance was primarily for reimbursement for certain medical
insurance premiums and expenses.
(7) Resigned as Chief Operating Officer on December 30, 2003.
OPTION GRANTS IN LAST FISCAL YEAR
Due to the fact that the Company's 1992 Incentive and Non-Qualified
Stock option Plan (the "Plan") has expired, no options were granted to the CEO
or any Named Executive Officer for services rendered during the fiscal year
ended December 30, 2003.
OPTION EXERCISE TABLE
The following table provides information with respect to the exercise
of stock options by Named Executive Officers during the fiscal year ended
December 30, 2003, and also sets forth certain information concerning
unexercised options held as of December 30, 2003 by the CEO and the other Named
5
Executive Officers. At December 30, 2003, the closing price of the Company's
Common Stock, as reported by the Nasdaq National Market, was $23.11.
FISCAL YEAR-END OPTION VALUES
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF SECURITIES
ON VALUE OPTIONS AT DECEMBER 30, IN-THE-MONEY OPTIONS AT
NAME EXERCISE REALIZED(1) 2003 DECEMBER 30, 2003
---------------------- --------- ------------ ------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Jamie B. Coulter 700,000 9,107,764(2) 1,900,000 -0- $27,818,375 -0-
John D. White -- -- 825,000 -0- $12,079,031 -0-
Tomlinson D. O'Connell -- -- 88,449 -0- $ 1,261,980 -0-
Jeff Bracken -- -- 76,429 -0- $ 1,104,319 -0-
Gerald T. Aaron -- -- 475,000 -0- $ 6,954,594 -0-
---------------------
(1) Based on the difference between the exercise price of the options and the
fair market value of a share of Common Stock at exercise, as reported on
the Nasdaq National Market.
(2) Between October 2003 and December 2003, Mr. Coulter exercised options to
purchase 400,000 shares resulting in a value realized of $5,444,389. In
addition, in January 2003, Mr. Coulter exercised options to purchase
300,000 shares resulting in a value realized of $3,663,375. In connection
with the implementation of the Lone Star Steakhouse & Saloon, Inc. Stock
Option Deferred Compensation Plan (the "Stock Deferral Plan"), Mr. Coulter
agreed to the Company's request to defer receipt of income he was entitled
to receive upon the exercise of the options to purchase 300,000 shares
until 30 days after the termination of his employment with the Company.
DIRECTORS COMPENSATION
Directors who are not employees receive an annual fee of $20,000; each
Chairman of a Committee receives an additional annual fee of $5,000; each member
of the Audit Committee receives an additional annual fee of $5,000; directors
who are not employees also receive $1,000 for each telephonic meeting, $2,000
for each Committee Meeting attended (if no Board of Directors Meeting is being
held on the same day) and $2,500 for attending Board and Committee Meetings held
on the same day. In addition, the Chairman of the Board is paid a Chairman's fee
of $100,000 per year. The Company revised the directors' fees as a result of the
additional time and effort required from the directors to ensure that they are
fulfilling their increased obligations under the Sarbanes-Oxley Act. The Company
previously granted options to non-employee directors under the Directors Plan.
Currently, options to purchase an aggregate of 384,800 shares of Common Stock
are outstanding under the Directors Plan at exercise prices ranging from $6.688
per share to $22.25 per share. The Company was unable to grant any stock options
to any of the Directors for the fiscal year ended December 30, 2003 since the
Directors Plan has expired and, at this time, the Company has no other stock
option plans in effect for Directors. It is the intent of the Company to submit
a new Director Stock Option Plan for consideration by the Company's Stockholders
in the near future.
EMPLOYMENT AGREEMENTS
The Company entered into separate employment agreements, with each of
Messrs. White, Aaron, and O'Connell, on April 29, 2003, providing for the
employment of these individuals as Executive Vice President, Senior Vice
President -- Counsel and Secretary and President of Lone Star Restaurants,
respectively. Each employment agreement provides that the officer shall devote
their entire business time to the business of the Company. The Employment
Agreements provide base salaries in the amounts of $600,000, $250,000 and
$350,000, respectively, for Messrs. White, Aaron and O'Connell, subject to
increases as determined by the Compensation/ Stock Option Committee and ratified
by the Board of Directors. Each agreement terminates in April 2006.
Additionally, each agreement contains non-competition and non-solicitation
provisions which apply for twenty-four months after cessation of employment and
confidentiality provisions which apply for ten years after cessation of
employment. Mr. Coulter does not have an employment, non-competition or
non-solicitation agreement with the Company.
6
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth information concerning ownership of the
Company's Common Stock, as of April 20, 2004, by each person known by the
Company to be the beneficial owner of more than five percent of the Common
Stock, each director, each executive officer as defined in Item 402(a)(3) of
Regulation S-K and by all directors and executive officers of the Company as a
group. Unless otherwise indicated, the address for five percent stockholders,
directors and executive officers of the Company is 224 East Douglas, Suite 700,
Wichita, Kansas 67202-3414. The percentage of shares owned is based on
21,286,402 shares outstanding as of April 23, 2004.
SHARES PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY HELD OF CLASS
-------------------------------------------------------------------------------- ------------------ -----------
Jamie B. Coulter................................................................ 4,295,393(1) 18.5%
John D. White................................................................... 973,025(2) 4.4%
Gerald T. Aaron................................................................. 512,707(3) 2.4%
Tomlinson D. O'Connell.......................................................... 89,449(4) *
Fred B. Chaney.................................................................. 20,134(5) *
William B. Greene, Jr........................................................... 62,034(6) *
Clark R. Mandigo................................................................ 97,734(7) *
Mark Saltzgaber................................................................. 33,701(8) *
Thomas Lasorda.................................................................. 32,501(9) *
Michael Ledeen.................................................................. 31,201(9) *
Anthony Bergamo................................................................. 3,086 *
Dimensional Fund Advisors Inc................................................... 1,579,000(10) 7.4%
Barclays Global Investors, NA, Barclays Global Fund Advisors and Barclays
Capital Inc..................................................................... 1,672,299(11) 7.9%
Pioneer Global Asset Management................................................. 1,318,000(12) 6.2%
Brandywine Asset Management, LLC................................................ 1,165,186(13)` 5.5%
NFJ Investment Group L.P........................................................ 1,117,300(14) 5.2%
All directors and executive officers as a group (16) persons (1-9).............. 6,346,310(15) 25.4%
-----------------
* Less than 1%
(1) Includes presently exercisable options to purchase 1,900,000 shares of
Common Stock. Does not include 177,145 shares held by Intrust Bank as
Trustee of a Rabbi Trust for the Company. Under the terms of a Deferred
Compensation Agreement, Mr. Coulter defers receipt of the value of his
deferred compensation account until 30 days after the termination of his
employment with the Company.
(2) Includes presently exercisable options to purchase 825,000 shares of Common
Stock.
(3) Includes presently exercisable options to purchase 475,000 shares of Common
Stock.
(4) Includes presently exercisable options to purchase 88,449 shares of Common
Stock.
(5) Includes presently exercisable options to purchase 18,134 shares of Common
Stock.
(6) Includes presently exercisable options to purchase 58,134 shares of Common
Stock.
(7) Includes presently exercisable options to purchase 67,734 shares of Common
Stock.
(8) Consists of 2,500 shares held by a Family Trust and presently exercisable
options to purchase 31,201 shares of Common Stock.
(9) Includes or consists of presently exercisable options to purchase 31,201
shares of Common Stock.
(10) Based on a Schedule 13G filed in February 2004, Dimensional Fund Advisors
Inc. beneficially holds 1,579,000 shares of the Company's Common Stock. The
address of Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401.
(11) Based on a Schedule 13G filed in February 2004, Barclays Global Investors,
N.A. beneficially holds 1,289,686 shares of the Company's Common Stock,
Barclays Global Fund Advisors beneficially holds 319,413 shares of the
Company's Common Stock and Barclays Capital Inc. beneficially holds 63,200
shares of the Company's Common Stock. The address of Barclays Global
Investors, N.A. and Barclays Global Fund Advisors is 45 Fremont Street, San
Francisco, CA 94105 and the address of Barclays Capital Inc. is 200 Park
Avenue, New York, New York 10166.
(12) Based on a Schedule 13G filed in December 2001, Pioneer Global Asset
Management beneficially holds 1,318,000 shares of the Company's Common
Stock. The address of Pioneer Global Asset Management is Galleria San Carlo
6, 20122 Milan, Italy.
(13) Based on a Schedule 13G filed in February 2004, Brandywine Asset
Management, LLC beneficially holds 1,165,186 shares of the Company's Common
Stock. The address of Brandywine Asset Management LLC is Three Christina
Center, Ste. 1200, 201 N. Walnut Street, Wilmington, DE 19801.
7
(14) Based on a Schedule 13G filed in February, 2004, NFJ Investment Group, L.P.
has sole dispositive power with respect to 1,117,300 shares of the
Company's Common Stock. The address of NFJ Investment Group L.P. is 2121
San Jancinto, Suite 1840, Dallas, TX 75201.
(15) Includes presently exercisable options to purchase 3,713,804 shares of
Common Stock, which includes presently exercisable options to purchase
187,750 shares of Common Stock held by executive officers, who are not
specifically identified in the Security Ownership Table above. The
executive officers who are not specifically identified in the Security
Ownership Table also collectively own an additional 7,595 shares of Common
Stock.
EQUITY COMPENSATION PLAN INFORMATION
The Company previously issued options under the Company's 1992
Directors Stock Option Plan (the "Directors Plan") and the Plan. The ability to
issue options under both plans has expired. The following table gives
information about stock option awards under the plans as of December 30, 2003.
The plans are discussed further in Note 6 to the Company's Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 30, 2003.
Number of
Securities
Number of Remaining Available
Securities to be for Future Issuance
Issued Upon Weighted-Average under Equity
Exercise of Exercise Price of Compensation Plans
Outstanding Outstanding (Excluding
Options, Warrants Options, Warrants Securities Reflected
and Rights and Rights in Column (a))
Plan Category (a) (b) (c)
----------------------------------------------- ----------------- ------------------- -----------------------
Equity compensation plans
approved by security holders................ 4,518,703 8.98 0
Equity compensation plans not
approved by security holders................ 0 -- 0
----------------- ------------------- -----------------------
Total....................................... 4,518,703 8.98 0
======================================================================================================================
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The adult son of Gerald T. Aaron is employed by the Company as a
District Manager. The Company has a total of 30 District Managers. Total
compensation in 2003 payable to the adult son of Mr. Aaron was $84,076 which
amount is substantially similar to the compensation paid to other District
Managers.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Aggregate fees for professional services rendered to the Company by
Ernst & Young LLP for the years ended December 30, 2003 and December 31, 2002,
were:
2003 2002
-------- --------
Audit ........................................ $297,317 $284,430
Audit Related ................................ 89,360 22,800
Tax .......................................... 232,948 352,375
Other ........................................ -- --
-------- --------
Total ..................................... 619,675 659,605
======== ========
AUDIT FEES
Audit fees for 2003 and 2002 were for professional services rendered
for the audits of the consolidated financial statements of the Company,
statutory and subsidiary audits, timely reviews of quarterly financial
statements, consents and assistance with review of documents filed with the
Securities Exchange Commission.
AUDIT RELATED FEES
Audit Related fees for 2003 were primarily for consultations relating
to Stock-Repurchase and matters related to Sarbanes-Oxley Act advisory services.
Audit related fees for 2002 were primarily for due diligence related to merger
and acquisitions and consultations relating to stock repurchase issues.
TAX FEES
Tax fees for 2003 and 2002 were for services related to (i) tax
compliance ($159,428 for the fiscal year ended December 30, 2003 and $208,922
for the fiscal year ended December 31, 2002), including the preparation of tax
returns and (ii) tax planning and tax advice related primarily to the Company's
Australian operations.
ALL OTHER FEES
There were no other fees paid to Ernst & Young LLP for the fiscal
years ended December 30, 2003 and December 31, 2002.
The Audit Committee reviews audit and non-audit services performed by
Ernst & Young LLP as well as the fees charged by Ernst & Young LLP for such
services. In its review of non-audit service fees, the Audit Committee
considers, among other things, the possible effect of the performance of such
services on the auditor's independence.
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PRE-APPROVAL POLICIES AND PROCEDURES
All audit and non-audit services to be performed by the Company's
independent accountant must be approved in advance by the Audit Committee.
Consistent with applicable law, limited amounts of services, other than audit,
review or attest services, may be approved by one or more members of the Audit
Committee pursuant to authority delegated by the Audit Committee, provided each
such approved service is reported to the full Audit Committee at its next
meeting.
All of the engagements and fees for the Company's fiscal year ended
December 30, 2003 were approved by the Audit Committee. In connection with the
audit of the Company's Financial Statements for the Fiscal Year ended December
30, 2003, Ernst & Young LLP only used full-time, permanent employees.
The Audit Committee of the Board of Directors considered whether the
provision of non-audit services by Ernst & Young LLP was compatible with its
ability to maintain independence from an audit standpoint and concluded that
Ernst & Young LLP's independence was not compromised.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The required Financial Statements were previously filed on this
Form 10-K.
Exhibits
INDEX TO EXHIBITS
EXHIBIT EXHIBIT
NUMBER
**3.1 Company's Certificate of Incorporation as amended
***3.3 Company's Amended and Re-Stated By-Laws
******10.2 1992 Lone Star Steakhouse & Saloon, Inc.
Directors' Stock Option Plan as amended the
"Director's Plan"
****10.3 1992 Lone Star Steakhouse & Saloon, Inc. Incentive
and Non-qualified Stock Option Plan (the "Plan")
as amended
**10.4 Form of Indemnification Agreement for officers and
directors of the Company
*****10.7 Employment Agreement between the Company and
Gerald T. Aaron, dated April 24, 2003.
*****10.8 Employment Agreement between the Company and
Randall H. Pierce, dated April 24, 2003
*****10.9 Employment Agreement between the Company and T.D.
O'Connell, dated April 24, 2003
*****10.11 Employment Agreement between the Company and John
D. White, dated April 24, 2003
******10.20 Non-Qualified Deferred Compensation Plan
*******10.21 Revolver Loan Agreement dated August 10, 2001
between the Company and Sun Trust Bank
**********10.23 Lone Star Steakhouse & Saloon, Inc. Stock Option
Deferred Compensation Plan dated September 30,
2002
**********10.24 Deferred Compensation Agreement dated October 4,
2002 between LS Management, Inc. and Jamie B.
Coulter
********10.25 Agreement dated as of April 24, 2002 between the
Company and Mark Saltzgaber
*********10.26 Amendment to the Director's Plan
*********10.27 Amendment to the Plan
*14.1 Code of Ethics
***********21.1 Subsidiaries of the Company
***********23.1 Independent Auditors' consent to the
incorporation by reference in the Company's
Registration Statements on Form S-8 of the
independent auditors' report included herein
*31.1 Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act
*31.2 Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act
*32.1 Certification of Chief Executive Officer pursuant
to Section 906 of the Sarbanes-Oxley Act
*32.2 Certification of Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act
-----------------
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(b) Reports on Form 8-K: During the fourth quarter of 2003, the Company
filed four reports on Form 8-K under Item #5 - Other Events on the
following dates, December 2, 2003, December 10, 2003, December 22,
2003 and December 23, 2003.
* Filed herewith.
** Incorporated by reference to the Company's Registration Statement
on Form S-1, filed with the Commission on January 31, 1992 (Commission File No.
33-45399), as amended.
*** Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 12, 2001.
**** Incorporated by reference to the Company's Registration Statement
on Form S-8, filed with the Commission on January 12, 1996 (Commission File No.
33-00280), as amended.
***** Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 17, 2003.
****** Incorporated by reference to the Company's Registration Statement on
Form S-8, filed with the Commission on March 31, 2000 (Commission File No.
333-33762).
******* Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended September 4, 2001.
******** Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 11, 2002.
********* Incorporated by Reference to the Company's Registration Statement on
Form S-8, filed with the Commission on July 24, 2002 (Commission File No.
333-97271).
********** Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 2002.
*********** Incorporated by Reference to the Company's Annual Report on Form
10-K for the year ended December 30, 2003.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
LONE STAR STEAKHOUSE & SALOON, INC.
By: /s/ Randall H. Pierce
------------------------------------------
Randall H. Pierce, Chief Financial Officer
Dated: April 28, 2004
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