Shake Shack 2016 Annual Report Download - page 4

Table of Contents
Part I
Item 1. Business.
Shake Shack Inc. is a Delaware corporation formed on September 23, 2014. Shake Shack Inc. Class A common stock trades on the New York Stock Exchange
under the symbol "SHAK." Unless the context otherwise requires, "we," "us," "our," "Shake Shack," the "Company" and other similar references refer to Shake
Shack Inc. and, unless otherwise stated, all of its subsidiaries, including SSE Holdings, LLC, which we refer to as "SSE Holdings."
INITIAL PUBLIC OFFERING AND ORGANIZATIONAL TRANSACTIONS
O n February 4, 2015, we completed an initial public offering ("IPO") of 5,750,000 shares of our Class A common stock at a public offering price of $21.00 per
share, which includes 750,000 shares issued pursuant to the underwriters' over-allotment option. We received $112.3 million in proceeds, net of underwriting
discounts and commissions, which we used to purchase newly-issued membership interests from SSE Holdings at a price per interest equal to the initial public
offering price of our Class A common stock of $21.00 .
Shake Shack is a holding company with no direct operations and our principal asset is our equity interest in SSE Holdings. In connection with the IPO, we
completed a series of organizational transactions including the following:
▪ We amended and restated the limited liability company agreement of SSE Holdings (as amended, the "SSE Holdings LLC Agreement") to, among other
things, (i) provide for a new single class of common membership interests in SSE Holdings ("LLC Interests"), (ii) exchange all of the then-existing
membership interests of the holders of SSE Holdings’ membership interests ("Original SSE Equity Owners") for LLC Interests and (iii) appoint Shake
Shack as the sole managing member of SSE Holdings;
▪ We amended and restated our certificate of incorporation to, among other things, (i) provide for Class B common stock with voting rights but no
economic interests (where “economic interests” means the right to receive any distributions or dividends, whether cash or stock, in connection with
common stock) and (ii) issue shares of Class B common stock to the Original SSE Equity Owners on a one-to-one basis with the number of LLC Interests
they own;
▪We acquired, by merger, two entities that were owned by certain former indirect members of SSE Holdings ("Former SSE Equity Owners"), for which we
issued 5,968,841 shares of Class A common stock as merger consideration (the "Mergers").
In August 2015, we completed a secondary offering of 4,000,000 shares of our Class A common stock at a price of $60.00 per share. All of the shares sold in the
offering were offered by affiliates of the Former SSE Equity Owners and certain of the Continuing SSE Equity Owners (the "Selling Stockholders"). We did not
receive any proceeds from the sale of shares of Class A common stock offered by the Selling Stockholders. The shares sold in the offering consisted of (i) 844,727
existing shares of Class A common stock held by the Former SSE Equity Owners and (ii) 3,155,273 newly-issued shares of Class A common stock issued in
connection with the redemption of 3,155,273 LLC Interests by the Continuing SSE Equity Owners that participated in the offering. Simultaneously, and in
connection with the redemption, 3,155,273 shares of Class B common stock were surrendered by the Continuing SSE Equity Owners and canceled. Additionally,
in connection with the redemption, we received 3,155,273 LLC Interests, increasing our total ownership interest in SSE Holdings.
See Note 1 to the consolidated financial statements included in Part II, Item 8 for more information about the above-mentioned transactions as well as the other
transactions completed in connection with our IPO, which we refer to collectively as the "Organizational Transactions." As of December 30, 2015 , we owned
54.6% of SSE Holdings and the SSE Holdings members subsequent to the Merger (the "Continuing SSE Equity Owners") owned the remaining 45.4% of SSE
Holdings.
Shake Shack Inc. Form 10-K | 2