Jeffrey Moore

Notes from Steak 'n Shake's Investor Day

1) Interest Expense: Management is not lying;actually, it is quite the opposite. FASB standards have specific criteria in regard to how lease accounting must be done, here is a good summation: ez13.com/capexamp.htm

I am guessing that he reason for the rule is that you can enter into leases for property/goods, and make your ROA/ROIC look a lot better than it really is.

2) Property: There is an example of a single property (that was not owned by SNS) being recently sold for $1.6 Million: www.costar.com/News/Ar.... While this is not necessarily a good representation of all of their properties, it certainly shows that the real estate still has significant worth, as is shown by the future cash flows that the property can provide. This is something that the turnaround going on at SNS will on only help.

Management has said that property will selectively be sold, and has been selling properties where the economics of the deal make good sense. With SNS, you are not only investing in their brand and real estate, but also their management's strong record of excellent capital allocation skills.

On Jan 07 09:51 PM 123 wrote:

> 1) If the debt is not interest-bearing, why is there about $13M of
> interest expense the last 4 quarters? That amount capitalized at
> 6% is around $215M. Hmmm....
>
> 2) If the real estate is so valuable, why hasn't it been sold? My
> guess is that prices are lower today than they were 6 months or a
> year ago. But I also don't think prices are likely to go up any
> time in the next couple of years. So that cash flow really will
> not be coming in any time soon.
>
> Anyone can give phony, overly optimistic projections. It seems management
> here is outright lying.