The Steak N Shake Company Reports Full Year and Fiscal Fourth Quarter 2008 Results
INDIANAPOLIS, Nov. 10 // PRNewswire-FirstCall // -- The Steak n Shake Company (NYSE: SNS) today announced its results for the full year and fiscal fourth quarter 2008, which ended September 24, 2008.
Selected Results from Fiscal 2008:
- Total revenues of $610.1 million
- General and administrative expense reduction of $7.1 million or 12.3%
- Improved cash and investment balance by $5.4 million
- Reduction of $15.3 million on credit facilities and long-term debt
- Cash flow from operations of $24.4 million
In fiscal 2008, total revenues decreased 6.7% to $610.1 million as compared to $654.1 million in fiscal 2007. Same-store sales declined by 7.1% during fiscal 2008. The net loss for fiscal 2008 was $23.0 million, or $0.81 per diluted share, compared to net earnings of $11.8 million, or $0.42 per diluted share in the prior year. The fiscal 2008 results included $14.9 million ($9.2 million, or $0.33 per diluted share, net of tax) of non-cash impairment charges and store closing costs, including charges related to a group of stores that we closed in the fourth quarter of fiscal 2008 and restaurants that were impaired because the carrying values of their underlying assets exceeded their expected future cash flows. Also included is a store closure charge of $0.5 million arising from early termination of a lease on a property. In comparison, fiscal 2007 included an impairment charge of $5.4 million ($3.3 million, or $0.12 per diluted share, net of tax), which was offset by a $0.2 million gain on the sale of two units closed during a prior year.
Fiscal Fourth Quarter 2008 Results
Total revenues for the fiscal 2008 fourth quarter decreased 8.1% to $138.9 million from $151.1 million in the comparable period last year. During the fiscal 2008 fourth quarter, same-store sales declined by 7.4%. The net loss for the fiscal 2008 fourth quarter was $9.2 million, or $0.32 per diluted share as compared with net earnings of $1.5 million, or $0.05 per diluted share in the fourth quarter of the prior year.
Under new management and with a change in strategic direction during the fourth quarter of fiscal 2008, the Company decided to forgo certain initiatives developed under prior leadership and to implement new initiatives designed to generate cash. Moreover, several personnel changes resulted in severance expense in the quarter. A summary of significant non-cash write-offs and other expenditures incurred in the fiscal 2008 fourth quarter resulting from these strategic changes is listed below:
(Amounts in $000s)
Non-cash charges:
Disposal of software and
architectural designs $2,190
Disposal of uniforms 400
Other non-cash charges 1,036
$3,626
Other expenses:
Severance (1) $1,450
Proxy fees 500
Consulting fees for a fixed
asset tax study 435
Accelerate repairs and maintenance 355
$2,740
Total $6,366
Net of tax $4,074
(1) The fiscal 2007 fourth quarter included $1.1 million of severance
Strategic, operational, and financial initiatives are discussed in the Chairman's letter dated October 21, 2008 which may be accessed at http://www.steaknshake.com. At the end of the fourth quarter cash and cash equivalents were $6.9 million, and total obligations under credit facilities and long-term debt were $30.7 million. The Company owns the land and buildings of 150 properties. The Company also has for sale 14 improved properties and 20 parcels, which were previously purchased for development. Management's plan is to maximize free cash flows and maintain a strong balance sheet.
During the fiscal 2008 fourth quarter, the Company identified indicators that require management to further evaluate the carrying value of goodwill. Management is in the process of performing a detailed analysis, but does not currently believe the analysis will result in any impairment.
Investor Day
As previously announced, the Company plans to communicate with shareholders through an Investor Day scheduled for November 11, 2008. Beginning at 1 p.m. E.S.T., the meeting will take place at the Marriott Downtown, 350 West Maryland Street, Indianapolis, Indiana in the Indiana Ballroom. To ensure that all interested parties could be accommodated, the Company asks that interested shareholders, analysts, potential investors, and media return an RSVP to the Company at rsvp@steaknshake.com.
About Steak n Shake
Steak n Shake is a classic American brand serving premium burgers and milkshakes through its chain of 490 restaurants.
Risks Associated with Forward-Looking Statements
Certain statements contained in this press release represent forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures or other financial items, as well as 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" and other similar terminology. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, many beyond our control, including, but not limited to: the poor performance or closing of even a small number of restaurants; our ability to attract and retain guests; the ability of our franchisees to operate profitable restaurants; changes in guest preferences, tastes and dietary habits; minimum wage rates; the availability and cost of qualified personnel; fluctuations in food commodity prices and the availability of food commodities; harsh weather conditions; unfavorable publicity relating to food safety or food borne illness; our ability to comply with the restrictions and covenants to our debt agreements; our ability to renegotiate our debt agreements and refinance our current debt at similar rates; our ability to comply with existing and future governmental regulations; our ability to adequately protect our trademarks, service marks and other components of our brand; and other risks identified in the periodic reports we file with the Securities and Exchange Commission. Additional risks and uncertainties not currently known to us or that are currently deemed immaterial may also become important factors that may harm our business, financial condition, results of operations or cash flows. We assume no obligation to update forward-looking statements except as required in our periodic reports.
THE STEAK N SHAKE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in $000s, except share and per share data)
Twelve Weeks Ended
September 24, September 26,
2008 2007
(Unaudited) (Unaudited)
Revenues:
Net sales $138,005 99.4% $150,203 99.4%
Franchise fees 880 0.6% 936 0.6%
Total revenues 138,885 100.0% 151,139 100.0%
Costs and Expenses:
Cost of sales (1) 35,530 25.7% 35,710 23.8%
Restaurant operating costs(1) 78,696 57.0% 79,822 53.1%
General and administrative 15,251 11.0% 13,722 9.1%
Depreciation and amortization 7,734 5.6% 7,557 5.0%
Marketing 5,657 4.1% 6,016 4.0%
Interest 3,195 2.3% 3,326 2.2%
Rent 3,610 2.6% 3,349 2.2%
Pre-opening costs 29 0.0% 362 0.2%
Asset impairments and provision
for restaurant closings 769 0.6% - 0.0%
Other income, net (508) -0.4% (553) -0.4%
Total costs and expenses 149,963 108.0% 149,311 98.8%
(Loss) Earnings Before Income
Taxes (11,078) -8.0% 1,828 1.2%
Income Taxes (1,893) -1.4% 301 0.2%
Net (Loss) Earnings $(9,185) -6.6% $1,527 1.0%
Basic (Loss) Earnings Per Common
and Common Equivalent Share $(0.32) $0.05
Diluted (Loss) Earnings Per
Common and Common Equivalent
Share $(0.32) $0.05
Weighted Average Shares and
Equivalents:
Basic 28,295,615 28,070,158
Diluted 28,295,615 28,216,741
(1) Cost of sales and restaurant operating costs are expressed as a
percentage of net sales. All other items are expressed as a percentage
of revenues.
THE STEAK N SHAKE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in $000s, except share and per share data)
Fifty-two Weeks Ended
September 24, September 26,
2008 2007
(Unaudited) (Unaudited)
Revenues:
Net sales $606,076 99.3% $650,416 99.4%
Franchise fees 3,985 0.7% 3,726 0.6%
Total revenues 610,061 100.0% 654,142 100.0%
Costs and Expenses:
Cost of sales (1) 151,188 24.9% 150,286 23.1%
Restaurant operating costs(1) 337,786 55.7% 336,955 51.8%
General and administrative 50,425 8.3% 57,525 8.8%
Depreciation and amortization 33,659 5.5% 32,185 4.9%
Marketing 28,700 4.7% 28,644 4.4%
Interest 14,011 2.3% 14,015 2.1%
Rent 14,717 2.4% 13,961 2.1%
Pre-opening costs 1,272 0.2% 2,689 0.4%
Asset impairments and provision
for restaurant closings 14,858 2.4% 5,176 0.8%
Other income, net (1,771) -0.3% (2,165) -0.3%
Total costs and expenses 644,845 105.7% 639,271 97.7%
(Loss) Earnings Before Income
Taxes (34,784) -5.7% 14,871 2.3%
Income Taxes (11,805) -1.9% 3,063 0.5%
Net (Loss) Earnings $(22,979) -3.8% $11,808 1.8%
Basic (Loss) Earnings Per Common
and Common Equivalent Share $(0.81) $0.42
Diluted (Loss) Earnings Per
Common and Common Equivalent
Share $(0.81) $0.42
Weighted Average Shares and
Equivalents:
Basic 28,254,129 28,018,014
Diluted 28,254,129 28,215,647
(1) Cost of sales and restaurant operating costs are expressed as a
percentage of net sales. All other items are expressed as a percentage
of revenues.
Condensed Consolidated Statements of Financial Position
The Steak n Shake Company
(Amounts in $000s except share and per share data)
September 24, September 26,
2008 2007
(Unaudited) (Unaudited)
Assets:
Current Assets
Cash and cash equivalents $6,855 $1,497
Receivables, net(1) 15,622 6,289
Inventories 6,795 7,226
Deferred income taxes 3,260 3,616
Assets held for sale 25,395 18,571
Other current assets 3,009 10,998
Total current assets 60,936 48,197
Net property and equipment 432,690 492,610
Goodwill 14,503 14,503
Other intangible assets, net 1,765 1,959
Other assets 10,242 7,945
Total assets $520,136 $565,214
Liabilities and Shareholders' Equity:
Current Liabilities
Accounts payable $25,302 $28,195
Accrued expenses 31,685 32,624
Current portion of long-term debt 733 2,390
Line of credit 14,180 27,185
Current portion of obligations under
leases 4,417 4,180
Total current liabilities 76,317 94,574
Deferred income taxes 2,209 5,060
Other long-term liabilities 7,439 5,701
Obligations under leases 134,809 139,493
Long-term debt 15,783 16,522
Commitments and Contingencies
Shareholders' Equity:
Common stock - $0.50 stated value,
50,000,000 shares authorized -
shares issued: 30,332,839 15,166 15,166
Additional paid-in capital 128,526 126,415
Retained earnings 161,733 185,024
Treasury stock - at cost: 1,760,531
shares in 2008; 1,959,931 shares
in 2007 (21,846) (22,741)
Total shareholders' equity 283,579 303,864
Total liabilities and shareholders'
equity $520,136 $565,214
(1) Receivables, net, includes $13.2 million related to taxes receivable.
Condensed Consolidated Statements of Cash Flows
The Steak n Shake Company
(Amounts in $000s)
Fifty-Two Weeks Ended
September 24, September 26,
2008 2007
(Unaudited) (Unaudited)
Operating Activities:
Net (loss) earnings $(22,979) $11,808
Adjustments to reconcile net (loss)
earnings to net cash provided by
operating activities:
Depreciation and amortization 33,659 32,185
Provision for deferred income taxes (2,193) (483)
Asset impairments and provision for
restaurant closings 14,858 5,176
Non-cash expense for stock-based
compensation and deferred rent 2,656 3,322
Loss on disposal of property 3,138 601
Changes in receivables and
inventories 316 (639)
Changes in other assets (1,160) (265)
Changes in accounts payable and
accrued expenses (3,865) (8,274)
Net cash provided by operating
activities 24,430 43,431
Investing Activities:
Additions of property and equipment (31,443) (68,643)
Proceeds from property and equipment
disposals 14,851 8,533
Net cash used in investing activities (16,592) (60,110)
Financing Activities:
Net (payments on) proceeds from line
of credit facility (13,005) 2,120
Proceeds from issuance of long-term
debt - 15,000
Principal payments on long-term debt (2,396) (2,511)
Proceeds from equipment and property
sale-leasebacks 15,993 800
Principal payments on direct
financing lease obligations (4,213) (4,149)
Proceeds from exercise of stock
options 138 660
Excess tax benefits from stock-based
awards 10 202
Repurchase of employee shares for tax
withholding (11) -
Proceeds from employee stock purchase
plan 1,004 1,234
Net cash (used in) provided by
financing activities (2,480) 13,356
Increase (decrease) in cash and cash
equivalents 5,358 (3,323)
Cash and cash equivalents at
beginning of year 1,497 4,820
Cash and cash equivalents at end of
year $6,855 $1,497
SOURCE The Steak n Shake Company
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