UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
|
Date
of Report (Date of earliest event
reported) |
May
11, 2005 |
|
|
|
THE
STEAK n SHAKE COMPANY |
|
(Exact
name of registrant as specified in its charter) |
|
|
|
Indiana |
000-08445 |
37-0684070 |
|
(State
or other jurisdiction |
(Commission |
(IRS
Employer |
|
of
incorporation) |
File
Number) |
Identification
No.) |
|
|
|
|
|
36
South Pennsylvania Street, Suite 500
Indianapolis,
Indiana 46204 |
|
(Address
of principal executive offices) (Zip
Code) |
|
|
|
|
|
Registrant's
telephone number, including area
code |
(317)
633-4100 |
|
|
|
|
Not
Applicable |
|
(Former
name or former address, if changed since last
report.) |
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
2.02. Results of Operations and Financial Condition.
On
May 16, 2005, The Steak n Shake Company (the "Registrant" or "Company") issued a
Press Release announcing its fiscal year 2005 second quarter results. The
Registrant's earnings release is attached as Exhibit 99.1 and the information
set forth therein is incorporated herein by reference and constitutes a part of
this report. In addition the press release contained matters discussed under
Item 4.02 below.
The
Registrant is furnishing the information contained in this report, including the
Exhibits, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and
Exchange Commission ("the SEC"). This information shall not be deemed to
be "filed" with the SEC or incorporated by reference into any other filing with
the SEC. By filing this report on Form 8-K and furnishing this
information, the Registrant makes no admission as to the materiality of any
information in this report, including the Exhibits.
Item
4.02. Non-Reliance on Previously Issued Financial Statements or a Related Report
or Completed Interim Review
In light
of the views expressed by the Office of the Chief Accountant of the SEC and
following announcements that other restaurant companies were revising their
accounting practices for leases, the Company's management conducted a review of
its accounting policies applicable to leases, leasehold improvements, rent
commencement, deferred rent, and other items. The Company has determined that
its accounting for certain leases was not in conformity with generally accepted
accounting principles in the United States of America ("GAAP"). As a result of
this determination, and after consultation with its independent auditors,
Deloitte and Touche, LLP, the Company's management recommended to the Audit
Committee of the Board of Directors that a restatement was necessary. The Audit
Committee concluded on May 11, 2005 that the Company will restate its previously
filed consolidated financial statements for the fiscal years ended 2002 through
2004 and for the first quarter of fiscal 2005 to comply with existing
interpretations of GAAP. As a result, the annual financial statements ended
September 29, 2004, September 24, 2003, and September 25, 2002, contained in the
Company's annual report on Form 10-K filed on December 6, 2004, and related
reports of its independent registered public accounting firm, and interim
financial statements contained in the Company's quarterly reports on Form 10-Q
for the period ended December 22, 2004 filed on January 28,
2005, should no longer be relied upon.
The
Company will restate its prior period financial statements as a result of the
following:
Historically,
when accounting for ground leases with renewal options, the Company depreciated
its buildings over a period of 25 years (estimated economic life of buildings).
In certain cases, the term of 25 years included both the initial lease term and
certain renewal option periods under the lease. The Company recorded rent
expense from the rent commencement date through the initial term of the lease.
The Company will restate its financial statements to recognize rent expense on a
straight-line basis over the lease term including any additional cancelable
option periods where failure to exercise such options would result in a
significant economic penalty.
Additionally,
the Company had recognized rent expense for its operating leases using a lease
term that commenced when rent payments began, which generally coincided with a
point in time near the date the Company’s restaurants opened. This generally had
the effect of excluding the restaurant build-out period (during which the
Company typically made no rent payments) from the calculation of the period over
which rent was expensed. The Company has determined that, under GAAP, it should
have recognized rent expense over a lease term that included the build-out
period, which, in most cases, will cause rent expense to be recognized sooner
than previously reported. The Company will restate its financial statements to
recognize rent expense beginning in the build-out period.
The
Company has also determined that certain build-to-suit leases should have been
treated as sale leaseback transactions to more fully reflect the provisions of
Statement of Financial Accounting Standards No. 98, "Accounting for
Leases" and Emerging Issues Task Force 97-10, "The Effect of Lessee
Involvement in Asset Construction". Under an interpretation of the
statement, the Company was determined to have continued involvement in the
property, which required the proceeds from these build-to-suit leases to have
been accounted for as a "finance obligations," reflected as a liability and
amortized over the life of the related lease. The related assets should be
depreciated over their estimated useful lives. The Company will restate its
financial statements to record the lease payments as interest expense and debt
repayment, as opposed to rent expense. In addition, the Company will record
additional depreciation expense for the related assets.
The total
estimated impact of the adjustments reduced the Company's net income for
the fiscal years ended September 29, 2004, September 24, 2003, and September 25,
2002 by $71,000, $78,000 and $97,000 respectively. Additionally, beginning
retained earnings for the fiscal year ended September 25, 2002 were reduced by
$537,000. These estimates are subject to change as the Company's independent
registered public accounting firms complete their reviews.
There is
no evidence that these adjustments to certain prior period financial statements
are attributable to any material non-compliance by the Company, or are a result
of any misconduct with any financial reporting requirements under securities
laws. The Company expects to amend the Annual Report on Form 10 - K for the year
ended September 29, 2004 and the Interim Report on Form 10 - Q for the quarter
ended December 22, 2004, with the SEC to include any restated financial
statements prior to the filing of the second quarter fiscal 2005 Form 10-Q,
which is due by May 23, 2005. The Company's Audit Committee has discussed the
matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02
with the Company's independent registered public accounting firm, Deloitte &
Touche, LLP.
Item
9.01. Financial Statements and Exhibits
(c) Exhibits
99.1 Press
Release, dated May 16, 2005, issued by Registrant
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/
Jeffrey A. Blade
Jeffrey A. Blade,
Senior Vice President and Chief Financial Officer
Dated: May 16, 2005