Steak ‘n Shake Restates Financial Statements

    Industry News | December 9, 2002

    The Steak 'n Shake Company (NYSE: SNS) and its auditors have concluded that the accounting for leases arising from build-to-suit and sale and leaseback transactions should be changed to more fully reflect the provisions of Statement of Financial Accounting Standards No. 98, "Accounting for Leases" (SFAS No. 98).

    Because the leases provide for the purchase or substitution of properties at the end of lease terms (including extensions), the company is considered to have continued involvement and must consider them financing leases. As a result, the new accounting calls for cash proceeds from these transactions to be accounted for as a "finance obligation", reflected as a liability and amortized over the life of the related lease and the related assets are depreciated over their estimated useful lives. This accounting requires that the lease payments be recorded as interest expense and debt repayment as opposed to rent expense.

    Diluted earnings per share for fiscal 2001 were restated as $0.72 rather than the $0.76 originally reported. Diluted earnings per share for fiscal 2002 were restated as $0.83 rather than the $0.86 originally reported.

    Steak ‘n Shake says it intends to renegotiate and amend these leases to remove the two provisions which triggered the technical interpretation of these leases as financing leases.

    News and information presented in this release has not been corroborated by WTWH Media LLC.