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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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LONE STAR STEAKHOUSE & SALOON, INC.
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(Name of Registrant as Specified In Its Charter)
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Lone Star Steakhouse & Saloon
[Company logo]
June 14, 2001
Who's Here
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o Jamie Coulter - Chairman and CEO
o John White - Executive Vice President
o William Greene, Jr. - Director
[Company logo]
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Lone Star Steakhouse - Snapshot
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o Lone Star Steakhouse & Saloon owns and operates
- 243 domestic and 26 international Lone Star Steakhouse & Saloon
restaurants ($17.50 check average)
- 15 Sullivan's Steakhouse restaurants ($47 check average)
- 5 Del Frisco's Double Eagle Steak House restaurants ($68 check
average)
o Annual revenue $500+ million
o 18,200 employees
o 8,000 stockholders [Company logo]
[Company logo]
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Operational Results
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o Strong first quarter 2001 results and increased comparative store sales at
all concepts
- 16.3% for Sullivan's
- 29% for Del Frisco's
- 1.3% for domestic Lone Star restaurants
o Powerful new growth vehicles in Sullivan's and Del Frisco's restaurants.
[Company logo]
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Strong Balance Sheet
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o Strong EBITDA cash flow in excess of $57 million annually over the last
seven years
o Strong, debt-free balance sheet
o Company-owned real estate at over 55% of restaurant locations
o Book value of $18.26 per share as of March 20, 2001
[Company logo]
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Stockholder Results - Proof is the Price
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o 58% improvement in Lone Star's stock price in 2001 through June 13th
- NASDAQ declined 7% during the same period
o $0.50 per share annual cash dividend, beginning in FY 2000 to deliver
immediate returns to stockholders
- $12.4 million in aggregate has been returned to stockholders over the
past 12 months
o Aggressive share repurchase program
- Over 17 million shares of stock repurchased since 1998 at a discount
to book value
[Company logo]
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Classic Case of Growing Too Fast
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o Opened 120 restaurants in 2 years
- Required 600 management positions to be filled
- Hiring for 4,800-6,000 other positions
o Key people lured away by competitors
- Could not match competitors' compensation packages at the time
[Company logo]
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Operational Strategy - Focus on Fundamentals
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o Locations
- Well-sited
- Own 55% of locations - competitive advantage
- Fine tuning in under-performing markets
o People
- Attracting good managers and employees
- Right incentive structures now in place
o Marketing / Advertising
o New upscale concepts (Del Friscos / Sullivans)
o Responding to the economic environment
- Expanding choices and driving down costs
[Company logo]
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Compensation - Restoring Level Playing Field
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People critical to the continued success of Lone Star
o At the center of the restaurant business
Employment and compensation arrangements designed to:
o Retain the services of key employees
o Recruit new employees
o In line with industry practices
Changes to the terms of outstanding options - made to retain key employees
o Keeps employee stability
o Gives long-term employees same incentives as newly hired employees
[Company logo]
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Governance
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Track record of implementing important corporate governance reforms
o Policy for independent directors
o Will not reprice or replace options for senior executives and directors
without stockholder vote
o Created nominating committee of independent directors
Will strongly consider other reforms
o Declassified board / expanded board
o However, must keep reasonable protections in place to protect stockholder's
long-term interests
[Company logo]
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Guy Adams - Check the Facts
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o Guy Adams has no experience as a public company director
o Guy Adams has no
experience overseeing the operations of any public company
o Guy Adams has no
experience in the restaurant industry
o Guy Adams - short term stockholder
- Currently owns 1,100 shares
- Last year Guy Adams owned 1,000 shares of Lone Star stock for only 48
days
- He sold his stock prior to the 2000 Annual Meeting, but attended the
Meeting and was a vocal participant.
[Company logo]
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Mr. Coulter - 10 Years of Leadership, Growth and Success
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o 30+ years of executive experience
o Lone Star's growth under Mr. Coulter:
- 1992 - 8 restaurants with revenue of $11 million
- 2001 - Approx 300 restaurants with revenue over $500 million
o Mr. Coulter and Lone Star have received numerous awards:
- IPO of the Year
- Best Small Company in America - Forbes, 3 consecutive years
- CEO of the Year - Restaurants and Institutions Magazine
o Interests firmly aligned with stockholders
- Largest stockholder - approx. 10% of the shares outstanding
- In Feb '99, Mr. Coulter purchased 365,000 STAR shares in the open
market, investing $3.2 million of his personal funds
[Company logo]
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Summary
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o Turnaround in progress
o Experienced executive team
o Appropriate incentive structures
o Track record of governance reforms
o Rising share price
o Primary focus on enhancing shareholder value
[Company logo]
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