UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 2003
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THE STEAK n SHAKE COMPANY
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(Exact name of registrant as specified in its charter)
Indiana 000-08445 37-0684070
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification Number)
incorporation)
36 S. Pennsylvania St., Suite 500
Indianapolis, Indiana 46204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 633-4100
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 12, 2003, The Steak n Shake Company (the "Registrant" or "Company")
issued a Press Release announcing its fourth quarter and fiscal year 2003
results. The information in the Press Release is attached hereto as Exhibit
99.1.
The Company has included the non-GAAP financial measure of adjusted net earnings
and adjusted diluted earnings per share in the Press Release. Adjusted net
earnings consists of net earnings adjusted for the provision for store closings.
The Company believes adjusted net earnings and adjusted diluted earnings per
share are measures that should be presented in addition to net earnings as
determined in accordance with generally accepted accounting principles ("GAAP")
because they provide useful measures of comparing ongoing operations between
past, current, and future periods. Additionally, the Company believes the
provision for store closings is unusual in nature, and would not be indicative
of ongoing operating results.
A reconciliation of adjusted net earnings to net earnings in accordance with
GAAP is as follows:
TWELVE WEEKS ENDED YEAR ENDED
9/24/03 9/25/02 9/24/03 9/25/02
Net earnings . . . . . . . . . . . . . . . . . . . . . $3,609,041 $5,947,243 $20,939,135 $23,089,208
Provision for restaurant closings, net of income taxes 3,360,000 - 3,360,000 -
Adjusted net earnings. . . . . . . . . . . . . . . . . $6,969,041 $5,947,243 $24,299,135 $23,089,208
========== ========== =========== ===========
A reconciliation of adjusted diluted earnings per share to diluted earnings per
share in accordance with GAAP is as follows:
TWELVE WEEKS ENDED YEAR ENDED
9/24/03 9/25/02 9/24/03 9/25/02
Net earnings . . . . . . . . . . . . . . . . . . . . . $ .13 $ .22 $ .77 $ .83
Provision for restaurant closings, net of income taxes .13 - .13 -
Adjusted net earnings. . . . . . . . . . . . . . . . . $ .26 $ .22 $ .90 $ .83
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SIGNATURES
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 thereunto duly authorized.
THE STEAK N SHAKE COMPANY
By: /s/ James W. Bear
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James W. Bear, Senior Vice President
and Chief Financial Officer
Dated: November 12, 2003
Exhibit Index
Number assigned
in Regulation S-K
Item Description of Exhibits
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(__) 99.1 Press Release, dated November 12, 2003, announcing fourth
quarter and fiscal year 2003 results.
Exhibit 99.1
THE STEAK N SHAKE COMPANY
REPORTS ITS FISCAL YEAR 2003 RESULTS.
INDIANAPOLIS, November 12, 2003 - The Steak n Shake Company (NYSE:SNS)
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reported today its revenues and earnings for the full fiscal year (FY 2003 ended
September 24, 2003) and for the fiscal Fourth Quarter.
Highlights of the year and fiscal Fourth Quarter are:
- Same store sales increased 4.9% for the year and 12.4% for the Fourth
Quarter.
- System-wide sales increased 8.2% for the year to $592,599,961 and
increased 15.0% to $150,046,385 for the Fiscal Fourth Quarter.
- Revenues for the Fiscal Year increased 8.7% to $499,103,555 and Fourth
Quarter revenues increased 15.1% to $126,108,100.
The Company identified nine under-performing restaurants to close and recorded a
provision for restaurant closings of $5,200,000 ($3,360,000 net of income taxes
or $.13 per diluted share.) Because of this event, Net Earnings for the Quarter
were $3,609,041 and $20,939,135 for the year. Diluted Earnings per share for
the Quarter were $.13 and $.77 for the year. While the chain experienced record
growth for the year, these nine restaurants did not perform to expectations due
to trade area changes, location challenges or physical facility issues. The
potential for these closings was reported in July 2003. The Company determined
that it is in the long-term best interest of the shareholders to decisively
discontinue operations in these restaurants that represent less than 1% of total
sales.
Closing these restaurants is the result of the Company's increased emphasis on
ensuring that every asset earns more than the cost of capital. As a result of
this decision,
on-going Earnings, Cash Flow and Return on Assets are expected to improve. In
addition, management will be able to focus more on assets with higher potential
as well as on future growth.
Net Earnings, exclusive of the provision for restaurant closings ("Adjusted Net
Earnings"), were $6,969,041 for the Quarter and $24,299,135 for the year.
Adjusted Diluted Earnings per share for the Quarter were $.26 and $.90 for the
year. The Company believes that Adjusted Net Earnings and Adjusted Diluted
Earnings per share are Non-GAAP financial measures that should be presented in
addition to Net Earnings and Diluted Earnings per share in accordance with GAAP
because they provide useful measures of comparing on-going operations between
past, current and future periods. In addition, the Company believes the
provision for restaurant closings is unusual in nature and is not indicative of
ongoing operating results.
After adjustments for the provision for store closings, the Non-GAAP results are
as follows:
- Adjusted Net Earnings for the Fourth Quarter were $6,969,041, a gain of
17.2%, and Adjusted Diluted Earnings per share were $.26, a gain of 18.2%.
- Adjusted Net Earnings for Fiscal Year 2003 were $24,299,135, a gain of
5.2%, and Adjusted Diluted Earnings per share were $.90, a gain of 8.4%.
The increasing momentum of same store sales and earnings versus prior year is
based in large part on the progress the Company has made on five key business
fundamentals.
- Supporting and Enabling Effective Field Leadership
- Improving Associate Satisfaction and Training
- Growing Guest Counts
- Continually Improving Margins
- Expanding the Brand
Progress continues in reducing management turnover and in meeting staffing goals
to support both current operations and future expansion.
Progress has been made in improving associate satisfaction through increased
training, enhanced benefit offerings, and associate involvement in the planning
process, which have all contributed to turnover reduction.
Guest counts have grown progressively throughout the Year due to optimized and
integrated marketing programs via consumer research, new products like the three
new Milk Shakes, new television marketing and credit card acceptance.
Once new guests visited, their experiences were faster and friendlier via
improved service execution as evidenced by expanded guest satisfaction
measurements.
The significant growth in guest counts for the Quarter and Year were fueled by
investments in incremental marketing, consumer research, credit card
availability, field bonuses, mystery shopping, training and new market
development. In FY 2004, the Company will continue investing in associates and
guests. The forward looking Earnings objective for Fiscal Year 2004 is between
$.98 and $1.02 Diluted Earnings per share.
As of September 25, 2002, there were 404 Steak n Shake restaurants of which 56
were franchised. As of September 24, 2003, there were 413 Steak n Shake
restaurants of which 57 were franchised. Subsequent to the expected store
closings, there will be 410 Steak n Shake restaurants of which 58 are
franchised. This estimate includes three Company restaurants and one franchise
restaurant that have opened since the beginning of FY 2004. This does not
include the three Company restaurants that were razed and rebuilt at their
current locations during Fiscal Year 2003. In Fiscal 2004, the Company expects
to open 15-20 restaurants, of which several will be franchise locations.
To date, the Company has purchased about 3,400,000 shares as authorized by its
4,000,000 Share Stock Repurchase program. No additional shares were purchased
in the Fourth Quarter.
Steak n Shake is a full service, casual dining restaurant serving a core menu of
its famous Steakburgers, thin 'n crispy French Fries and old fashioned
hand-dipped Milk Shakes. Menu variety includes sandwiches, such as the Turkey
Melt and the Grilled Chicken Breast, as well as Chili, home style soups, fresh
salads, a variety of desserts and breakfast. All of the food is prepared to the
guest's order and served by friendly, well-trained associates. Steak n Shake
restaurants feature full-service dining areas, counter service and drive-thru
windows. Restaurants are open 24 hours a day, seven days a week.
This press release contains various "forward looking statements" which represent
the company's expectations or beliefs concerning future events. Investors are
cautioned that reliance on "forward looking statements" involves risks and
uncertainties, and although the Company believes that the assumptions on which
the "forward looking statements" contained herein are based, are reasonable, any
of these assumptions could prove to be inaccurate and, as a result, the "forward
looking statements" based upon those assumptions also could be incorrect.
Investors are referred to the full discussion of risk and uncertainties
associated with "forward looking statements" contained in the company's filings
with the Securities and Exchange Commission.
Contact: Victor F. Yeandel
Vic.yeandel@steaknshake.com
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www.steaknshake.com
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(317) 633-4100
11
THE STEAK N SHAKE COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
TWELVE YEAR
WEEKS ENDED ENDED
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9/24/2003 9/25/2002 9/24/2003 9/25/2002
(UNAUDITED) (UNAUDITED)
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REVENUES
Net sales . . . . . . . . . . . . . . . . . $125,108,570 $108,719,354 $495,276,837 $455,359,393
Franchise fees. . . . . . . . . . . . . . . 999,530 846,372 3,826,718 3,655,070
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126,108,100 109,565,726 499,103,555 459,014,463
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COSTS AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . 29,379,202 24,893,843 113,496,038 105,325,485
Restaurant operating costs. . . . . . . . . 62,051,457 53,275,602 245,524,172 222,433,486
General and administrative. . . . . . . . . 8,628,230 7,564,883 37,908,447 34,214,802
Depreciation and amortization . . . . . . . 5,828,761 5,617,143 24,169,474 23,095,399
Marketing . . . . . . . . . . . . . . . . . 4,720,613 3,814,735 18,856,484 16,062,012
Interest. . . . . . . . . . . . . . . . . . 3,286,191 3,432,175 13,390,635 14,072,120
Rent. . . . . . . . . . . . . . . . . . . . 1,724,890 1,507,513 8,308,972 7,407,722
Provision for store closings. . . . . . . . 5,200,000 0 5,200,000 0
Pre-opening costs . . . . . . . . . . . . . 426,668 719,940 1,889,044 2,212,381
Other income, net . . . . . . . . . . . . . (557,953) (471,851) (2,063,846) (1,853,152)
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120,688,059 100,353,983 466,679,420 422,970,255
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EARNINGS BEFORE INCOME TAXES. . . . . . . . . . 5,420,041 9,211,743 32,424,135 36,044,208
INCOME TAXES. . . . . . . . . . . . . . . . . . 1,811,000 3,264,500 11,485,000 12,955,000
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NET EARNINGS. . . . . . . . . . . . . . . . . . $ 3,609,041 $ 5,947,243 $ 20,939,135 $ 23,089,208
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NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Basic . . . . . . . . . . . . . . . . . . . $ 0.13 $ 0.22 $ 0.78 $ 0.83
Diluted . . . . . . . . . . . . . . . . . . $ 0.13 $ 0.22 $ 0.77 $ 0.83
WEIGHTED AVERAGE SHARES
AND EQUIVALENTS:
Basic . . . . . . . . . . . . . . . . . . . 27,052,774 27,276,383 27,010,024 27,814,485
Diluted . . . . . . . . . . . . . . . . . . 27,279,788 27,447,387 27,110,065 27,985,911
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
9/24/2003 9/25/2002
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ASSETS
Current assets. . . . . . . . . . . . . . . $ 39,255,997 $ 18,627,724
Property and equipment - net. . . . . . . . 360,878,710 359,721,706
Leased property - net. . . . . . . . . . . 3,721,063 4,079,558
Other assets. . . . . . . . . . . . . . . . 10,779,813 13,466,001
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Total assets. . . . . . . . . . . . . . . . $414,635,583 $395,894,989
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities . . . . . . . . . . . . $ 61,640,791 $ 50,291,476
Deferred income taxes and credits . . . . . 2,897,887 5,599,138
Obligations under capital leases. . . . . . 145,124,559 148,531,256
Senior note . . . . . . . . . . . . . . . . 16,203,175 24,418,571
Shareholders' equity. . . . . . . . . . . . 188,769,171 167,054,548
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Total liabilities and shareholders' equity. $414,635,583 $395,894,989
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A RECONCILIATION OF ADJUSTED NET EARNINGS TO NET EARNINGS
IN ACCORDANCE WITH GAAP IS AS FOLLOWS:
FY 2003 GAAP - NON-GAAP NET EARNINGS RECONCILIATION
TWELVE WEEKS ENDED YEAR ENDED
9/24/03 9/25/02 9/24/03 9/25/02
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Net Earnings (GAAP) . . . . . . . . . . . . . . . . . . $3,609,041 $5,947,243 $20,939,135 $23,089,208
Provision for restaurant closings, net of income taxes. 3,360,000 - 3,360,000 -
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Adjusted Net Earnings (Non-GAAP). . . . . . . . . . . . $6,969,041 $5,947,243 $24,299,135 $23,089,208
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Adjusted Net Earnings increase. . . . . . . . . . . . . +17.2% +5.2%
A RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE TO
DILUTED EARNINGS PER SHARE IN ACCORDANCE WITH GAAP IS AS FOLLOWS:
FY 2003 GAAP - NON-GAAP DILUTED EARNINGS PER SHARE RECONCILIATION
TWELVE WEEKS ENDED YEAR ENDED
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9/24/03 9/25/02 9/24/03 9/25/02
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Diluted Earnings per share (GAAP) . . . . . . . . . . . $ .13 $ .22 $ .77 $ .83
Provision for restaurant closings, net of income taxes. .13 - .13 -
Adjusted Diluted Earnings per share (Non-GAAP). . . . . $ .26 $ .22 $ .90 $ .83
========= ========= ======== ========
Adjusted Diluted Earnings per share increase. . . . . . +18.2% +8.4%