PROSPECTUS
THE STEAK N SHAKE COMPANY
53,832 SHARES OF
COMMON STOCK
TERMS OF THE OFFERING
- Alva T. Bonda, Charles E. Lanham, J. Fred Risk, John W. Ryan and James
Williamson, Jr., some of our current and former directors, and the estate of
Neal Gilliatt, former director, are offering to sell up to 53,832 shares of our
common stock and related preferred stock purchase rights under our shareholder
rights plan. For ease of reference, in this prospectus we refer to the shares
of stock and rights offered for sale by the selling shareholders collectively as
the shares.
- The selling shareholders will receive all of the net proceeds from the sale
of the shares.
- The selling shareholders will sell the shares over time through brokers at
market prices or in negotiated transactions.
- On June 3, 2004, the last reported sale price of our common stock on the New
York Stock Exchange was $ 17.60 per share.
- Our common stock is traded on and price information is reported by the New
York Stock Exchange under the symbol "SNS".
- As of the date of this prospectus, none of the selling shareholders has any
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agreement with any broker or dealer with respect to the sale of the shares.
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THIS INVESTMENT INVOLVES RISK. SEE THE RISK FACTORS BEGINNING ON PAGE 3 OF
THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Additional information regarding our business is available to you without charge
upon written or oral request to us. Please contact David C. Milne, General
Counsel and Secretary, by mail at The Steak n Shake Company, 500 Century
Building, 36 South Pennsylvania Street, Indianapolis, Indiana 46204, or by
telephone at (317) 633-4100.
The date of this prospectus is June 4, 2004.
TABLE OF CONTENTS
TERMS OF THE OFFERING
RISK FACTORS 3
THE COMPANY 5
USE OF PROCEEDS 5
SELLING SHAREHOLDERS 5
PLAN OF DISTRIBUTION 7
LEGAL MATTERS 8
EXPERTS 8
WHERE YOU CAN FIND MORE INFORMATION 8
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 8
RISK FACTORS
Certain statements contained in this prospectus and in other reports the
Company files with the Securities and Exchange Commission ("SEC") contain
forward-looking information. In general, forward-looking statements include
estimates of future revenues, cash flows, capital expenditures, or other
financial items, and assumptions underlying any of the foregoing.
Forward-looking statements reflect management's current expectations regarding
future events and use words such as "anticipate", "believe", "expect", "may",
"will", and other similar terminology. These statements speak only as of the
date they are made and involve a number of risks and uncertainties that could
cause actual results to differ materially from those expressed in the
forward-looking statements. Several factors, many beyond our control, could
cause actual results to differ significantly from our expectations. Some of
these factors are as follows:
Our ability to attract and retain guests to our restaurants is dependent upon
our ability to execute our operating initiatives effectively. If we do not
deliver an enjoyable dining experience to our guests they may not return to our
restaurants, and our results may be negatively affected.
Changes in economic conditions may impact our guests' discretionary spending.
If guests choose not to spend money on dining at our restaurants, our results
May be negatively affected.
Our unique advertising and marketing programs are an essential part of our plan
to attract and retain guests. If these programs do not continue to be as
effective at attracting guests in the future as they have been in the past, our
results may be negatively affected.
Many of our restaurants are located in the Midwest portion of the United States.
During the first and second fiscal quarters, many restaurants face harsh winter
weather conditions, which may make it more difficult for guests to visit our
restaurants. If guests are unable to visit our restaurants, our sales and
operating results may be negatively affected.
Our associates are essential to the operation of our restaurants and our ability
to deliver an enjoyable dining experience to our guests. If we are unable to
attract and retain qualified restaurant personnel at a reasonable cost, and if
they do not deliver an enjoyable dining experience, our results may be
negatively affected.
Our menu offerings include Steakburgers, chicken sandwiches, french fries, and
hand-dipped milk shakes. If consumer tastes change, or consumer behavior
changes based on publicity or concerns relating to food safety, food-borne
illnesses or changes in dietary preferences, and we are unable to meet these
changes in demand, our results may be negatively affected.
Our expansion plans are based on identifying opportunities for new restaurants
in new and existing markets. Our plans also involve identifying new franchisees
and expanding relationships with current franchisees. If the Company and its
franchisees are unable to locate suitable sites for new restaurants, negotiate
acceptable lease or purchase terms, and meet construction schedules, our
expansion plans may be negatively affected.
Many of our associates are paid wages that relate to federal and state minimum
wage rates. Any changes in minimum wage rates may significantly increase our
operating costs.
Changes in accounting standards promulgated by the SEC and the Public Company
Accounting Oversight Board and other authorities may affect our reported
Financial results.
The foregoing list of important factors is not intended to be all-inclusive as
other general market, industry, economic, and political factors may also impact
our operations. Readers are cautioned not to place undue reliance on our
forward-looking statements, which speak only as of the date of this prospectus,
as we assume no obligation to update forward-looking statements.
WE FACE SIGNIFICANT COMPETITION ON A NATIONAL AND LOCAL BASIS.
The restaurant business is one of the most intensely competitive industries
in the United States, with price, menu offerings, location and service all being
significant competitive factors. Our competitors include national, regional and
local chains as well as local, owner-operated establishments. There are
established competitors with greater financial and other resources in all of our
current and proposed future market areas. We face competition for sites on
which to locate new restaurants, as well as for personnel and guests. The
restaurant business is often affected by changes in consumer tastes and by
national, regional and local economic conditions and demographic trends. The
performance of individual restaurants may be affected by factors such as traffic
patterns, demographic factors, harsh weather conditions, and the type, number
and location of competing restaurants. Additional factors that may adversely
affect the restaurant industry in general, and our restaurants in particular,
are inflation of food, labor and associate benefit costs, and difficulty in
attracting qualified management personnel and hourly associates.
GOVERNMENTAL REGULATION AFFECTS OUR OPERATIONS IN A NUMBER OF WAYS.
We are subject to various federal, state and local laws affecting its
business. Each of our restaurants is subject to licensing and regulation by a
number of governmental authorities, including health and safety and fire
agencies in the state and municipality in which the restaurant is located. The
development and construction of restaurants is subject to compliance with
applicable zoning, land use and environmental regulations. Difficulties in
obtaining, or failure to obtain, the required licenses or approvals could delay
or prevent the development of a new restaurant in a particular area.
Our restaurant operations are also subject to federal and state minimum
wage laws and laws governing such matters as working conditions, child labor,
overtime and tip credits. Many of our restaurant associates are paid at rates
related to the federal and state minimum wage laws, and accordingly, further
increases in the minimum wage would increase our labor costs.
We currently have franchise operations in eight states -- Georgia,
Illinois, Indiana, Kentucky, Mississippi, Missouri, North Carolina and Tennessee
-- and is subject to certain federal and state laws controlling the offering and
conduct of our franchise business in those states. In addition, we are subject
to franchise registration requirements in several states in which it is now
conducting or will conduct its franchise business in the future.
OUR EXPANSION PLANS ARE SUBJECT TO RISKS, INCLUDING LOCATING ATTRACTIVE SITES
AND QUALIFIED FRANCHISEES.
We intend to continue to expand our Steak n Shake restaurants through both
opening and operating Company-owned Steak n Shake restaurants and franchising
additional restaurants with new and current franchisees. Meeting our expansion
goal is dependent upon our continued success in addressing factors relevant to
our expansion plan. Those factors include, but are not limited to:
- locating available and attractive sites for new restaurants;
- negotiating acceptable purchase or lease terms for restaurant sites;
- availability of adequate financing for our expansion;
- ability to attract qualified franchisees and the ability of franchisees to
perform their obligations to us;
- hiring, training and retaining competent managers and other personnel;
- obtaining necessary governmental permits and approvals; and
- suitable economic and business conditions in the markets in which our
restaurants are to be located.
Some of the factors on which the success of our plan depends are not within our
control.
WE DEPEND ON OUR KEY PERSONNEL.
We are dependent upon the continued availability of the services of our
executive officers. The loss of the services of key personnel could have a
material adverse effect on our business.
THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SUBSTANTIALLY.
Our quarterly operating results, those of other restaurant companies,
changes in general conditions in the economy, the financial markets, natural
disasters, terrorist activities, changes in earnings estimates or
recommendations by research analysts, or other developments affecting us, our
competitors, or the restaurant industry could cause the market price of our
common stock to fluctuate substantially. In addition, in recent years the stock
market has experienced extreme price and volume fluctuations. This volatility
has had a significant effect on the market prices of securities issued by many
companies for reasons unrelated to the operating performance of these companies.
THE COMPANY
We are primarily engaged in the ownership, operation and franchising of
Steak n Shake restaurants through our wholly-owned subsidiaries, Steak n Shake
Operations, Inc. and Steak n Shake, L.P. Founded in 1934 in Normal, Illinois,
Steak n Shake is one of the oldest restaurant chains in the country. As of
April 7, 2004, our fiscal second quarter end, we had 356 Company-owned
restaurants and 59 franchised restaurants located in 19 midwestern and
southeastern states. Steak n Shake restaurants are generally open 24 hours a
day, seven days a week, and in addition to our core menu, offer a breakfast menu
during breakfast hours. During fiscal 2003, lunch and dinner sales accounted
for approximately 36.4% and 44.4% of sales, respectively, while breakfast and
late night sales accounted for 7.1% and 12.1% of sales, respectively.
USE OF PROCEEDS
The shares being offered were issued by us to the selling shareholders
pursuant to their exercise of stock options granted to them in their capacities
as directors pursuant to our Nonemployee Director Stock Option Plans for 1998,
1999, and 2000 (the "Plans"). We will receive none of the proceeds from the
sale of the shares being offered. All proceeds from the sale will be paid to
the individual selling shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
selling shareholders as of the date of this prospectus. Charles E. Lanham, J.
Fred Risk, John W. Ryan and James Williamson, Jr. are currently directors of the
Company. Alva T. Bonda retired from the Board of Directors on February 9, 2000.
Neal Gilliatt died while serving as Director Emeritus of the Company in
September, 2000. Mr. Gilliatt's options may be exercised by his estate pursuant
to the terms of the Plans.
We do not know when or in what amounts the selling shareholders may offer shares
for sale. The selling shareholders may elect not to sell any or all of the
shares offered by this prospectus. Because the selling shareholders may offer
all or some of the shares pursuant to this offering, and because there are
currently no agreements, arrangements or understandings with respect to the sale
of any of the shares that will be held by the selling shareholders after
completion of the offering, we cannot estimate the number of the shares that
will be held by the selling shareholders after completion of the offering.
However, for purposes of this table, we have assumed that, after completion of
the offering, none of the shares covered by the prospectus will be held by the
selling shareholders.
The following table sets forth, to our knowledge, information concerning the
selling shareholders as of May 7, 2004.
PERCENTAGE OWNED AFTER
SHARES REGISTERED SALE OF ALL SHARES
NAME. . . . . . . . . . SHARES OWNED HEREUNDER REGISTERED HEREUNDER (7)
----------------------- ------------ --------------------------- --------------------------------------------------------------
Alva T. Bonda 112,035 (1) 8,422 *
Estate of Neal Gilliatt 27,832 11,722 *
Charles E. Lanham 391,480 (2) 8,422 1.5%
J. Fred Risk 116,299 (3) 8,422 *
John W. Ryan 19,382 (4) 8,422 *
James Williamson, Jr. 326,752 (5) 8,422 1.3%
----------- -------- -----
Total 993,780 (6) 53,832 3.6%
=========== ======== ======
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* Less than 1%.
(1) Includes 70,458 shares held by the Bonda Family Limited Partnership, and
2,000 shares held by a marital trust, with respect to which he disclaims
beneficial ownership.
(2) Includes 9,300 shares which may be acquired pursuant to stock options
exercisable within 60 days. Also includes 10,928 shares owned of record and
beneficially by Mr. Lanham's wife, with respect to which he disclaims beneficial
ownership, and 21,750 shares held by Hartford Heritage, LLC, of which Mr. Lanham
is Managing Member.
(3) Includes 9,300 shares which may be acquired pursuant to stock options
exercisable within 60 days. Also includes 7,726 shares owned of record and
beneficially by Mr. Risk's wife, with respect to which he disclaims beneficial
ownership.
(4) Includes 9,300 shares which may be acquired pursuant to stock options
exercisable within 60 days.
(5) Includes 9,300 shares which may be acquired pursuant to stock options
exercisable within 60 days. Also includes 19,011 shares owned of record and
beneficially by Mr. Williamson's wife, with respect to which he disclaims
beneficial ownership.
(6) Includes 37,200 shares which may be acquired pursuant to stock options
exercisable within 60 days.
(7) Based upon 27,455,223 total shares of common stock outstanding as of May
7, 2004, as listed on our most recent Form 10-Q for the period ended April 7,
2004, which was filed with the SEC on May 19, 2004.
PLAN OF DISTRIBUTION
TRANSACTIONS. The shares covered by this prospectus may be offered and sold from
time to time by the selling shareholders. The term "selling shareholders"
includes pledgees, donees, transferees or other successors in interest selling
shares received after the date of this prospectus from one of the selling
shareholders as a pledge, gift or other non-sale related transfer. To the
extent required, this prospectus may be amended and supplemented from time to
time to describe a specific plan of distribution. The selling shareholders may
offer and sell their shares in one or more of the following transactions:
- on the New York Stock Exchange
- in negotiated transactions or
- in a combination of any of these transactions
In addition, any shares that qualify for sale pursuant to Rule 144 under the
Securities Act of 1933 (the "Securities Act") may be sold under Rule 144 rather
than pursuant to this prospectus.
PRICES. The selling shareholders may sell their shares at any of the following
prices:
- fixed prices which may be changed
- market prices prevailing at the time of sale
- prices related to prevailing market prices or
- negotiated prices
DIRECT SALES; AGENTS, DEALERS AND UNDERWRITERS. The selling shareholders may
sell their shares in any of the following ways:
- directly to purchasers or
- to or through agents, dealers or underwriters designated from time to time
Agents, dealers or underwriters may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling shareholders
and/or the purchasers of shares for whom they act as agent or to whom they sell
as principals, or both. The selling shareholders and any agents, dealers or
underwriters that act in connection with the sale of shares might be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any discount or commission received by them and any profit on the resale of
shares as principal might be deemed to be underwriting discounts or commissions
under the Securities Act.
We have advised the selling shareholders that the anti-manipulation rules of
Regulation M under the Securities Exchange Act of 1934 (the "Exchange Act") may
apply to sales of shares in the market and to the activities of the selling
shareholders and their affiliates. In addition, we will make copies of this
prospectus available to the selling shareholders for the purpose of satisfying
the prospectus delivery requirements of the Securities Act. The selling
shareholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act.
SUPPLEMENTS. To the extent required, we will set forth in a supplement to
this prospectus filed with the SEC the number of shares to be sold, the purchase
price and public offering price, the name or names of any agent, dealer or
underwriter, and any applicable commissions or discounts with respect to a
particular offering.
STATE SECURITIES LAWS. Under the securities laws of some states, the selling
shareholders may only sell the shares in those states through registered or
licensed brokers or dealers. In addition, in some states the selling
shareholders may not sell the shares unless they have been registered or
qualified for sale in that state or an exemption from registration or
qualification is available and is satisfied.
EXPENSES; INDEMNIFICATION. We will not receive any of the proceeds from the
sale of the shares sold by the selling shareholders under this prospectus. We
will bear all expenses related to the registration of this offering but will not
pay for underwriting commissions, fees or discounts, if any. The expenses we
will pay include:
- all registration and filing fees
- all fees and expenses of complying with state blue sky or securities laws
- all costs of preparation of the registration statement
- all fees of our counsel and independent auditors
EFFECTIVENESS. We intend to keep the Registration Statement of which this
prospectus constitutes a part effective until the earlier of such time as:
- all of the shares covered by this prospectus have been disposed of
pursuant to the Registration Statement or
- all unsold shares may be sold pursuant to Rule 144 without regard to any
volume limitations.
LEGAL MATTERS
The validity of the shares offered hereby have been passed on for us by
Baker & Daniels, Indianapolis, Indiana.
EXPERTS
Our consolidated financial statements as of and for the year ended
September 24, 2003, incorporated by reference from our Annual Report on Form
10-K for the year ended September 24, 2003, have been audited by Deloitte &
Touche LLP, independent auditors, as set forth in their report, which is
incorporated herein by reference. Our consolidated financial statements as of
and for the years ended September 23, 2002 and September 26, 2001, incorporated
by reference from our Annual Report on Form 10-K for the year ended September
24, 2003, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report, which is incorporated herein by reference. Our financial
statements are incorporated by reference in reliance on the reports of Deloitte
& Touche LLP and Ernst & Young LLP, given their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a Registration Statement with the SEC under the Securities
Act that registers the sale of the shares of the Company's common stock and the
related preferred stock purchase rights offered by this prospectus. The
Registration Statement, including the attached exhibits and schedules, contains
additional relevant information about us, the common stock and the related
preferred stock purchase rights. The rules and regulations of the SEC allow us
to omit certain information included in the Registration Statement from this
prospectus.
In addition, we file periodic reports, proxy statements and other information
with the SEC under the Exchange Act. You may read and copy this information at
the Public Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet web
site that contains reports, proxy statements and other information about issuers
like the Company that file information electronically with the SEC. The address
of that site is: http://www.sec.gov.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information that is
included directly in this document.
This prospectus incorporates by reference the documents listed below that we
have previously filed with the SEC. They contain important information about us
and our financial condition.
1) Annual Report on Form 10-K for the year ended September 24, 2003.
2) Definitive Proxy Statement on Schedule 14A, dated December 19, 2003.
3) Quarterly Reports on Form 10-Q for the periods ended December 17, 2003
and April 7, 2004.
4) Current Reports on Form 8-K filed on November 12, 2003, January 20, 2004,
February 12, 2004 and May 4, 2004.
5) The description of our common stock set forth in the Registration
Statement on Form 8-A, dated October 28, 1996, including any amendment or report
filed with the SEC for the purpose of updating that description.
6) The description of our preferred stock purchase rights set forth in the
Registration Statement on Form 8-A filed on May 17, 2001, including any
amendment or report filed with the SEC for the purpose of updating that
description.
In addition, all documents and reports filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
prospectus shall be deemed to be incorporated by reference in this prospectus
and to be a part hereof from the date of filing of such documents or reports.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein or in any other
subsequently filed document, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
You can obtain copies of any of the documents incorporated by reference in this
document from the SEC through its web site or at the Public Reference Room at
the address described above. Documents incorporated by reference are also
available from us without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit to
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
David C. Milne
General Counsel and Secretary
The Steak n Shake Company
500 Century Building
36 South Pennsylvania Street
Indianapolis, Indiana 46204
Telephone: (317) 633-4100
www.steaknshake.com
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS ABOUT THE OFFERING MADE BY THIS PROSPECTUS THAT IS DIFFERENT
FROM, OR IN ADDITION TO, THE INFORMATION CONTAINED IN THIS PROSPECTUS OR IN ANY
OF THE MATERIALS THAT WE HAVE INCORPORATED INTO THIS DOCUMENT. THEREFORE, IF
ANYONE DOES GIVE YOU INFORMATION OF THIS SORT, YOU SHOULD NOT RELY ON IT. IF
YOU ARE IN A JURISDICTION WHERE OFFERS TO EXCHANGE OR SELL, OR SOLICITATIONS OF
OFFERS TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS DOCUMENT OR THE
SOLICITATION OF PROXIES IS UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT IS
UNLAWFUL TO DIRECT THESE TYPES OF ACTIVITIES, THEN THE OFFER PRESENTED IN THIS
DOCUMENT DOES NOT EXTEND TO YOU. THE INFORMATION CONTAINED IN THIS DOCUMENT
SPEAKS ONLY AS OF THE DATE OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.