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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________to ___________________
COMMISSION FILE NUMBER 1-9684
CHART HOUSE ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0147725
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
115 SOUTH ACACIA AVENUE
SOLANA BEACH, CALIFORNIA 92075
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number including area code: (619) 755-8281
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
INDICATE BY CHECK MARK WHETHER REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K ((S) 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN
DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART
III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 15, 1996 was $34,989,714.
The number of shares outstanding of common stock as of March 15, 1996 was
8,238,293.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the year
ended December 31, 1995 are incorporated herein by reference into Parts I and
II.
Portions of the Registrant's Proxy Statement for the Annual Meeting to be
held May 7, 1996 are incorporated herein by reference into Part III.
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PART I
ITEM 1. BUSINESS.
As of December 31, 1995, Chart House Enterprises, Inc. (the "Company")
operated 81 restaurants, including 63 Chart Houses, one Peohe's and 17 Islands
through its subsidiaries, Chart House, Inc. ("CHI") and Islands Restaurants,
Inc. In addition, the Company has exclusive rights to develop and operate
Islands restaurants under a license agreement granted by the owners of the
Islands concept and manages 15 Islands restaurants owned by the licensor. The
Company sold its Paradise Bakery subsidiary in December 1995. In March 1996,
the Company signed definitive agreements to sell its Islands restaurant
operations. The Company was incorporated in Delaware on July 25, 1985. The
Company's principal executive offices are located at 115 South Acacia Avenue,
Solana Beach, California 92075, and its telephone number is (619) 755-8281.
The following discussion describes the Company's restaurant operations.
CHART HOUSE
Chart House operations commenced in 1961 with the opening of the first Chart
House in Aspen, Colorado by a predecessor of the Company. Today, the Company's
Chart House restaurant division operates 63 Chart House restaurants located in
21 states, Puerto Rico and the U.S. Virgin Islands. The Chart House restaurant
division also operates Peohe's restaurant and Solana Beach Baking Company,
both located in California. The Chart House division accounted for about 85%
of the Company's revenues for the year ended December 31, 1995.
Chart House restaurants are full-service, casual dinner houses with a menu
featuring fresh fish, seafood, steaks, chicken, prime rib, pasta dishes and as
much salad and bread as the customer desires. Many of the Chart House
restaurants feature an elaborate salad bar where the customer prepares his or
her own salad and some Chart Houses have a seafood bar which offers various
appetizers.
The Company places great emphasis upon the location and exterior and
interior design of each Chart House restaurant. Each Chart House is unique and
designed to fit within and complement its surroundings. The restaurant
buildings are environmentally sensitive and functional in design.
Representative exteriors of Chart House restaurants range from the restored
1887 Victorian boathouse on Coronado Island in San Diego Bay to the modern
three-tiered glass restaurant in Philadelphia overlooking the Delaware River.
With a few exceptions, Chart House restaurants are free-standing buildings
with dinner seating capacities ranging from 112 to 388 and an average seating
capacity of 180. The restaurant interiors are contemporary in design and decor
and are accentuated by contemporary artwork.
In 1995 the annual sales for Chart House restaurants currently in operation
ranged from $946,000 to$6.8 million with an average annual sales per Chart
House restaurant of $2.3 million. The average dinner check was approximately
$24 per person, excluding alcoholic beverages. Almost all Chart House
restaurants accept dinner reservations. The operating hours for Chart House
restaurants are typically 5:00 p.m. to 11:00 p.m. on weekdays and 5:00 p.m. to
1:00 a.m. on weekends.
Alcoholic beverages are available at all Chart House locations. The sale of
alcoholic beverages accounted for approximately 22% of the revenues generated
by Chart House restaurants during each of the past three years.
Each Chart House restaurant is managed by one general manager and between
one and seven assistant managers, depending on the operating characteristics
and size of the restaurant. On average, general managers possess approximately
nine years experience with Chart House. The assistant managers generally are
required to participate in a comprehensive training program in restaurant
management and operations over a four-month period prior to the assumption of
their duties. In addition, each general manager is required to comply with an
1
extensive operations manual which contains procedures to ensure uniform
operations, consistently high quality products and service and proper
accounting for restaurant operations. The general manager and his or her
assistants are responsible for training restaurant employees.
There are 10 Chart House regional managers, each of whom is responsible for
five to eight Chart House restaurants in a given area. Each regional manager
reports to a vice president of operations. There are two vice presidents of
operations, one based in California and one in Connecticut, each of whom
reports directly to the President and Chief Operating Officer of the Company.
The duties of the vice presidents of operations include supervising and
assisting the managerial and staff employees of all Chart House restaurants.
Peohe's
The Company opened its Peohe's restaurant in January 1988 in Coronado,
California overlooking San Diego Bay and the San Diego city skyline. Although
similar to the Company's Chart House restaurants in many respects, Peohe's
opened under a different name in part to minimize confusion and competition
with nearby Chart House restaurants and also to provide Chart House management
a suitable vehicle for experimentation and development of different menu
items, restaurant design and operating concepts. Peohe's has a more extensive
and higher priced menu, higher level of service and greater variety of cooking
techniques than the typical Chart House restaurant. Peohe's is operated by the
Chart House restaurant division.
Solana Beach Baking Company
Chart House operates a wholesale bakery in a leased facility located in
Carlsbad, California under the trade name "Solana Beach Baking Company." The
wholesale bakery supplies bread and other baked goods to Chart House
restaurants and also supplies muffins, croissants and other bakery products to
several hotels, food service distributors and other third party accounts. In
late-1994, the wholesale bakery began supplying cookies, cinnamon rolls and
other baked goods to Starbucks retail coffee outlets throughout Southern
California.
Quahogs
In September 1995, the Company closed its Quahogs restaurant in Warwick,
Rhode Island because of weak sales. The restaurant property, which is owned by
the Company, is currently being held for disposal. Quahogs was a sports-bar
concept that had been open for just over one year.
Site Development
The cost of opening a Chart House restaurant varies significantly from
restaurant to restaurant, depending upon, among other things, the location of
the site and whether the land, building, furniture, fixtures and equipment are
purchased or leased. For example, the Alexandria, Virginia restaurant, a
building which was constructed in 1990 on leased land, required total capital
expenditures of approximately $4.8 million, while the Longboat Key, Florida
restaurant, which involved construction of leasehold improvements to an
existing structure in 1989, required total capital expenditures of
approximately $955,000. Capital expenditures for the new Chart House in
Newport, Kentucky, which is being constructed on leased land and is scheduled
to open in April 1996, are expected to total about $2.5 million.
While identifying and developing restaurant sites, particular emphasis is
placed on a potential site's physical location, with a preference for
locations near water and within major metropolitan areas. Sales and profit
projections are then prepared to determine whether the proposed restaurant
will provide a targeted return on investment. The Company accords great
importance to the selection of and coordination with the architect to ensure
that the proposed restaurant structure fits the Chart House restaurant image.
Where a new free-standing building is required to be built, up to 2 1/2 years
may elapse from site selection to restaurant opening. However, where the
Company is able to locate a suitable restaurant for conversion to a Chart
House, the development period is generally six to 12 months.
2
Strategic Plan
Over the past few years, the Company had scaled back development of new
Chart House restaurants, in large part due to the redirection of expansion
efforts and capital to the development of Islands restaurants. In the fourth
quarter of 1995, the Company adopted a new strategic plan to improve
shareholder value by refocusing on its core business-- Chart House
restaurants. The key elements of the plan are as follows:
. Sell Paradise Bakery and Islands (see below), narrowing the Company's focus
to the remaining Chart House restaurant operations and Solana Beach Baking
Company.
. Add new tastes to the Chart House menu through a food development program
that responds to changing customer preferences and provides new lower-
priced entree choices in addition to the existing core menu items.
. Modernize and revitalize existing Chart House restaurants through concept,
decor and equipment enhancements and selected restaurant remodels.
. Implement an expanded marketing program emphasizing local-based direct
marketing and promotion efforts and use of the Aloha Club member data base.
. Expand the Chart House base at a moderate pace beginning with the
completion of the Newport, Kentucky (across the Ohio River from Cincinnati,
Ohio) restaurant in mid-1996 and developing at least one restaurant per
year thereafter.
. Dispose of selected Chart House restaurants that do not meet the Company's
performance criteria.
. Reorganize the management team, reduce overhead and implement succession
planning.
In connection with the adoption of the strategic plan, the Company in 1995
decided to dispose of certain underperforming restaurants and restaurants
properties, resulting in charges to income of approximately $4.4 million. See
Note 2 of the Notes to Consolidated Financial Statements as of December 31,
1995 for information with respect to the restructuring charges.
ISLANDS
In November 1991, the Company entered into an Area Development and License
Agreement with Seneca Partners, Inc. (formerly known as Islands Restaurants
("Seneca")), a company based in Costa Mesa, California, granting the Company
the exclusive right to develop and operate "Islands" restaurants in designated
metropolitan areas in accordance with a development schedule. In 1992 and
again in early 1993, the Area Development and License Agreement was amended to
modify the development schedule and the designated metropolitan areas.
In December 1993, the Area Development and License Agreement was amended and
restated to provide the Company's subsidiary, Islands Restaurants, Inc.
(formerly Big Wave, Inc. ("Islands")), as licensee, exclusive worldwide rights
to develop and operate Islands restaurants, including rights to sub-license or
franchise the concept. The Company paid $4,000,000 to Seneca for the expanded
territorial rights and will pay a continuing monthly license fee of 2% of the
gross sales of Islands restaurants operated under the license. The restated
license agreement, which has a term of 40 years and may be extended for an
additional 25 years, requires Islands to open a minimum of 100 restaurants at
a rate of five restaurants per year.
Concurrent with signing the restated license agreement, Islands and Seneca
also signed a long-term management agreement under which Islands, effective
January 1994, began managing 15 Islands restaurants previously managed by
Seneca as general partner of the limited partnership (Islands Restaurants,
L.P.) which owns the restaurants. Islands is entitled to receive a management
fee of 5% of the gross sales of the 15 restaurants, plus reimbursement for
certain accounting and administrative services provided to the limited
partnership.
3
On March 18, 1996, the Company signed definitive agreements for the sale of
a 75% interest in its Islands restaurant operations to two affiliated
partnerships of Islands Restaurants, L.P. for a total price of $23 million in
notes. The notes bear interest at a rate of 9% and are secured by restaurant
assets. The Company will retain a 25% interest as a limited partner in both of
the partnerships.
As part of the transaction, the existing area development agreement and
management agreement will terminate, thereby relieving the Company of its
obligation to continue developing five Islands restaurants each year, and
reverting the license and development rights back to Islands Restaurants,
L.P., which will also reassume responsibility for managing its 15 Islands
restaurants in the Los Angeles and Dallas markets as well as the new
restaurants to be acquired from the Company.
The closing of the transaction is subject to several conditions, including
obtaining consents of landlords, liquor licensing authorities and other third
parties. The closing is scheduled at the end of April 1996, but there can be
no assurance that the closing will occur.
Islands restaurants are mid-priced, "gourmet" burger restaurants which also
offer chicken sandwiches, soft tacos, salads and unique exotic beverages. The
restaurants follow a tropical theme, which is enhanced by indoor palms, open
atriums, decorative birds, colorful tile and photo art. There are presently 17
Company-owned Islands restaurants, located in Southeast Florida, San Diego
County, California and the Phoenix, Arizona area, and 15 Islands, operated
under the management agreement, located in Los Angeles and Orange Counties,
California, and in the Dallas, Texas area. Average annual sales for Islands
restaurants were $1.8 million for 1995, with a check average of approximately
$7.50.
The Company opened seven Islands restaurants in 1995, four in California,
two in Florida and one in Arizona. One new Islands is scheduled to open in
April 1996 in Arizona.
PARADISE BAKERY DISPOSITION
Effective December 31, 1995, the Company completed the sale of all of the
outstanding common stock of its wholly owned subsidiary, Paradise Bakery,
Inc., to Java Centrale, Inc., a publicly-traded company headquartered in
Sacramento, California. The total sale price was $6,725,000, consisting of
$5,375,000 cash proceeds and a $1,350,000 note. The note bears interest at a
rate of 10% and matures in 1998.
PROCUREMENT OF FOOD AND SUPPLIES
The Company's ability to maintain consistent quality throughout its
restaurants depends in part upon the ability to acquire food products and
related items from reliable sources in accordance with Company specifications.
Chart House restaurants have purchased virtually all of the meat and frozen
seafood used in the restaurants on a national basis from one distributor for
the past 26 years. Management believes that adequate alternative sources of
supply are readily available.
EMPLOYEES AND LABOR RELATIONS
As of December 31, 1995, the Company employed approximately 6,600 persons,
of whom approximately 6,140 were hourly restaurant or clerical employees and
approximately 460 were salaried, managerial employees engaged in
administrative and supervisory capacities. A majority of the hourly employees
are employed on a part-time basis to provide services necessary during peak
periods of restaurant operations. None of the Company's employees is covered
by a collective bargaining agreement. The Company has never experienced a work
stoppage and believes its labor relations to be good.
4
COMPETITION
In general, the restaurant business is highly competitive and can be
affected by competition created by similar restaurants in a geographic area,
changes in the public's eating habits and preferences and local and national
economic conditions affecting consumer spending habits, population trends and
traffic patterns. Key competitive factors in the industry are the quality and
value of the food products offered, quality of service, cleanliness, name
identification, restaurant locations, price and attractiveness of facilities.
The Company's strategy is to differentiate itself from its competitors by
providing consistently high quality products, and efficient and friendly
service in a unique setting.
MARKETING
The Company has developed an extensive, coordinated marketing communications
program. Prior to 1993, the Chart House division had not utilized any
significant advertising other than yellow pages and selected local print
advertising and limited test marketing programs in 1991 and 1992. The 1993
program developed for Chart House consisted of a national print media brand
awareness campaign, and the implementation of the Aloha Club, a frequent diner
program, in October 1993. Efforts in 1995 were devoted to supporting the Aloha
Club, which has a current enrollment of 300,000 members. The Islands division
uses media advertising and local promotions to a limited extent.
GOVERNMENT REGULATION
Each of the Company's restaurants is subject to various federal, state and
local laws, regulations and administrative practices affecting its business
and must comply with provisions regulating health and sanitation standards,
equal employment, public accommodations for disabled patrons, minimum wages,
worker safety and compensation and licensing for the sale of food and
alcoholic beverages. Difficulties or failures in obtaining or maintaining
required liquor licenses, or other required licenses or approvals, could delay
or prevent the opening of new restaurants or adversely affect the operations
of existing restaurants.
Federal and state environmental regulations have not had a material effect
on the Company's operations but more stringent and varied requirements of
local governmental bodies with respect to zoning, land use and environmental
factors could delay construction of new restaurants and add to their cost.
The Company is also subject to the Fair Labor Standards Act, which governs
such matters as minimum wages, overtime and other working conditions. A
significant number of the Company's food service personnel are paid at rates
related to federal and state minimum wage requirements and, accordingly,
increases in the minimum wage or decreases in the allowable tip credit will
increase the Company's labor cost. There can be no assurance that future
legislation covering, among other matters, mandated health insurance, will not
be enacted which could have a significant effect on the Company.
The Company believes it is operating in substantial compliance with
applicable laws and regulations governing its operations.
TRADEMARKS AND SERVICE MARKS
The "Chart House" logo and trademark were registered with the United States
Patent and Trademark Office (the "USPTO") in 1972 and 1977, respectively. The
"Peohe's" logo and trademark were registered with the USPTO in 1988.
Applications to register the "Aloha Club" trademark and logo are pending with
the USPTO.
The "Chart House" trademark and logo are licensed by the Company to the
operator of one Chart House restaurant located in Honolulu, Hawaii.
In November 1991, the Company acquired from Seneca a license to develop and
operate restaurants under the name "Islands." See "Islands."
5
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information about the executive
officers of the Company. Unless otherwise indicated, all positions are with
Chart House Enterprises, Inc.
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
John M. Creed........................ 59 Chairman of the Board and Chief
Executive Officer
Harry F. Roberts..................... 53 President and Chief Operating Officer
William R. Kuntz, Jr. ............... 46 Executive Vice President, General
Counsel and Secretary
Harold E. Gaubert, Jr. .............. 46 Vice President, Treasurer and Chief
Financial Officer
Douglas E. Kollus.................... 46 Vice President of the Company and
President and Chief Operating Officer
of Islands
Executive officers of the Company are appointed annually by the Board of
Directors and serve at the Board's discretion.
John M. Creed became Chief Executive Officer in February 1996 after having
served as President and Chief Executive Officer since November 1985. He has
been a director of the Company since November 1985 and was named Chairman of
the Board in August 1987. Mr. Creed has been with the Chart House restaurant
organization, or a parent company thereof, continuously for the past 28 years.
Harry F. Roberts joined the Company as President and Chief Operating Officer
in February 1996. He has been a director of the Company since 1993. He was
Vice President of Starbucks Coffee Company from July 1993 to January 1996.
From 1990 to July 1993, Mr. Roberts was President and Chief Executive Officer
of EvansGroup Portland, which is part of the EvansGroup multi-state marketing
communications network.
William R. Kuntz, Jr. became Executive Vice President, General Counsel and
Secretary in February 1996. He joined the Company as Vice President, General
Counsel and Secretary in June 1988. Mr. Kuntz was previously a partner in the
Los Angeles and San Diego offices of Morgan, Lewis & Bockius, a national law
firm.
Harold E. Gaubert, Jr. has been Vice President, Treasurer and Chief
Financial Officer of the Company since November 1985. He has been a member of
the American Institute of Certified Public Accountants since 1974. Mr. Gaubert
has been with the Chart House restaurant organization, or a parent company
thereof, continuously for the past 20 years.
Douglas E. Kollus has been a Vice President of the Company since February
1992 and became President and Chief Operating Officer of Islands in January
1994. He was Executive Vice President--Operations of Islands from February
1993 to January 1994. Mr. Kollus was President and Chief Operating Officer of
Mangos Restaurants, Inc. from May 1992 to February 1993 and was President and
Chief Operating Officer of Paradise Bakery, Inc., from December 1988 to May
1992. Mr. Kollus has been with the Chart House organization for the past 22
years.
6
ITEM 2. PROPERTIES.
A majority of the restaurant properties used by the Company are leased from
others. The following table sets forth the number of restaurants owned, leased
and operated pursuant to ground leases and the average remaining lease term
(including renewal options) in years as of December 31, 1995. The table does
not include owned properties or leases under which the Company was not engaged
in restaurant operations at year end.
AVERAGE
REMAINING
GROUND LEASE
OWNED LEASED(1) LEASES(2) TOTAL TERM(3)
----- --------- --------- ----- ---------
Chart House and Peohe's............ 12 35 16 63 26
Islands............................ -- 3 14 17 28
--- --- --- ---
Total............................. 12 38 30 80
=== === === ===
- --------
(1) The Company leases restaurant properties (a) pursuant to standard lease or
sublease arrangements and (b) under "build-to-suit" arrangements pursuant
to which the landowner/landlord builds a restaurant to the Company's
specifications. Each restaurant property is owned by the
landowner/landlord and at the expiration or termination of the lease term,
the Company will have no interest in the restaurant or any other material
improvements constructed on the real property.
(2) Under ground lease arrangements, the Company, as tenant, leases
undeveloped real property and is responsible for constructing all or
substantially all improvements on the real property. In a typical ground
lease, the improvements constructed by the Company are owned by the
Company and the landowner/landlord has no interest in the improvements
constructed by the Company until the expiration or termination of the
lease, at which time the improvements become the property of the
landowner/landlord.
(3) Includes renewal options.
The amount of rent paid to lessors and the methods of computing rent vary
considerably from lease to lease. Most leases contain a provision for a rental
equal to the greater of a fixed minimum amount or a percentage of restaurant
sales at the leased premises.
Substantially all of the owned Chart House restaurants and certain of the
leased Chart House restaurants are subject to mortgages in favor of certain
lenders. See Note 6 of the Notes to Consolidated Financial Statements as of
December 31, 1995 for information with respect to security agreements and
obligations under mortgages.
The Company operates one Chart House restaurant under a management agreement
with the owner of the property. The restaurant, located in Weehawken, New
Jersey, covers approximately 22,000 square feet.
Solana Beach Baking Company leases approximately 13,000 square feet of space
in a building in Carlsbad, California for use as a wholesale bakery. The
initial term of the lease expires in 1998 and there is an option for an
additional five year term.
The Company's principal executive offices occupy approximately 20,400 square
feet of office space in a building located in Solana Beach, California, which
is owned and used by the Company.
ITEM 3. LEGAL PROCEEDINGS.
Management of the Company believes that there are no material legal
proceedings pending or threatened to which the Company is or may be a party or
to which any of its property is subject. The Company is involved in various
lawsuits incidental to its business. Management does not believe that the
outcome of such litigation will have a material adverse effect upon the
consolidated operations or financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
7
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information appearing under the caption "Common Stock Information" on
page 25 of the Company's Annual Report to Stockholders for the year ended
December 31, 1995 (the "Annual Report") is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data for the Company and its subsidiaries on page 14
of the Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations appears on pages 11, 12 and 13 of the Annual Report and is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS.
The consolidated financial statements of the Company and its subsidiaries,
listed under Item 14, appear on pages 15 through 24 of the Annual Report and
are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors. The information appearing under the caption "Election of
Directors" on pages 3, 4 and 5 of the Company's Proxy Statement for its Annual
Meeting of Stockholders to be held on May 7, 1996 (the "Proxy Statement") is
incorporated herein by reference.
Executive Officers. The information with respect to executive officers
appearing under the caption "Executive Officers of the Company" is included in
Item 1 of this Annual Report on Form 10-K on page 6 and is incorporated herein
by reference pursuant to general instruction G and instruction 3 to Item
401(b) of Regulation S-K.
Compliance with Section 16(a) of the Exchange Act. The information appearing
under the caption "Security Ownership of Management--Compliance with Section
16(a) of the Exchange Act" on page 13 of the Proxy Statement is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information appearing under the caption "Executive Compensation"
commencing on page 6 of the Proxy Statement is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information appearing under the captions "Principal Stockholders" on
page 2 and "Security Ownership of Management" on page 12 of the Proxy
Statement is incorporated herein by reference.
8
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements:
Included in Part II of this report are the following financial statements
incorporated herein by reference to the following pages of the Annual
Report.
PAGE
-----
Consolidated Balance Sheets as of December 31, 1995 and 1994.......... 15
Consolidated Statements of Income for the years ended December 31,
1995, 1994 and 1993.................................................. 16
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993..................................... 16
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993.................................................. 17
Notes to Consolidated Financial Statements............................ 18-23
Report of Independent Public Accountants.............................. 24
(2) Financial Statement Schedules:
All schedules have been omitted since the information required to be
submitted has been included in the consolidated financial statements or notes
thereto or have been omitted as not applicable or not required.
(3) Exhibits:
3.1(1) Restated Certificate of Incorporation of the Company, as
amended.(1)
(2) Certificate of Amendment of Restated Certificate of Incorporation
of the Company.(2)
3.2 Amended and Restated Bylaws of the Company.(1)
4.1 Specimen Common Stock Certificate.(2)
4.2 Section 203 of the Delaware General Corporation Law.(2)
10.1(1) Amended and Restated Revolving Credit and Term Loan Agreement
dated as of December 17, 1993 by and among CHI, as borrower, the
Company, Big Wave, Inc., and Paradise Bakery, Inc., as
guarantors, and The First National Bank of Boston ("FNBB") and
Sanwa Bank California ("Sanwa"), as lenders, together with
Restated Revolving Credit Notes dated December 17, 1993.(7)
(2) First Amendment dated September 30, 1994 to Amended and Restated
Revolving Credit and Term Loan Agreement.(8)
(3) Second Amendment dated April 24, 1995 to Amended and Restated
Revolving Credit and Term Loan Agreement.
(4) Third Amendment dated June 14, 1995 to Amended and Restated
Revolving Credit and Term Loan Agreement.
(5) Fourth Amendment dated August 25, 1995 to Amended and Restated
Revolving Credit and Term Loan Agreement.
10.2(1) Amended and Restated Security and Inter-Creditor Agreement dated
as of December 17, 1993 by and among CHI, as debtor, and FNBB, as
security agent for itself, Sanwa and Metropolitan Life Insurance
Company ("Metropolitan"), as secured parties.(7)
10.2(2) Amended and Restated Pledge Agreement dated as of December 17,
1993 by and among CHI, as pledgor, and FNBB, as pledgee on behalf
of itself, Sanwa and Metropolitan.(7)
9
10.2(3) Amended and Restated Notice of Security Interest in Trademarks
dated December 17, 1993 by CHI in favor of FNBB, as security
agent for itself, Sanwa and Metropolitan.(7)
10.2(4) Amended and Restated Pledge Agreement dated as of December 17,
1993 by and among the Company, as pledgor, and FNBB, as
pledgee on behalf of itself, Sanwa and Metropolitan.(7)
10.2(5) Security and Inter-Creditor Agreement dated as of December 17,
1993 by and among Big Wave, Inc., as debtor, and FNBB, as
security agent for itself, Sanwa and Metropolitan, as secured
parties.(7)
10.3 Amended and Restated Note Purchase and Guarantee Agreement
dated as of December 30, 1993 by and among CHI, as note
issuer, the Company, Big Wave, Inc., and Paradise Bakery,
Inc., as guarantors, and Metropolitan, as note purchaser,
with respect to CHI's 10.40% Senior Secured Notes Due
2000.(7)
10.4 Note Purchase and Guarantee Agreement dated as of December 30,
1993 by and among CHI, as note issuer, the Company, Big Wave,
Inc., and Paradise Bakery, Inc., as guarantors, and
Metropolitan, as note purchaser, with respect to CHI's 6.69%
Senior Secured Notes Due 2001.(7)
10.5(1) Registration Rights Agreement dated November 27, 1985 among
the Company and its stockholders.(1)
(2) First Amendment to Registration Rights Agreement dated as of
April 28, 1986.(1)
(3) Second Amendment to Registration Rights Agreement dated as of
April 21, 1987.(1)
(4) Third Amendment to Registration Rights Agreement dated as of
September 6, 1989.(3)
10.6 [Intentionally Omitted]
10.7 [Intentionally Omitted]
10.8 Marks Licensing Agreement and Settlement Agreement, each dated
as of June 30,
1987 between CHI and Cabell Enterprises, Inc.(1)
10.9 Compensatory Plans, Contracts and Agreements:
(1) 1985 Incentive Stock Option Plan of the Company, as
amended.(1)
(2)(a) 1989 Non-Qualified Stock Option Plan of the Company.(2)
(b) Form of 1989 Non-Qualified Stock Option Plan Agreement.(2)
(3)(a) 1992 Stock Option Plan.(5)
(b) Form of 1992 Stock Option Plan Agreement.(5)
(4) Non-Qualified Stock Option Agreement dated as of June 1, 1988
between the Company
and William R. Kuntz, Jr.(2)
(5)(a) Chart House Enterprises, Inc. 401(k) Plan, effective January
1, 1987, as amended and
restated.(2)
(b) Amendment to Chart House Enterprises, Inc. 401(k) Plan dated
July 25, 1991.(6)
(c) Second Amendment to Chart House Enterprises, Inc. 401(k) Plan
dated July 1,
1992.(6)
(d) Trust Agreement between Shearson Lehman Trust Company and the
Company,
effective as of June 24, 1993.(7)
(6) Executive Benefit and Wealth Accumulation Plan of the Company,
effective January 27,
1986.(1)
(7) Chart House Enterprises, Inc. Incentive Compensation Plan,
effective January 1,
1993.(6)
10.10(1) Warrant Agreement dated as of September 6, 1989 between the
Company and FBMIP,
together with form of Warrant.(3)
10
(2) Registration Rights Agreement dated as of September 6, 1989 between the Company
and FBMIP.(3)
10.11(a) Stock Purchase Agreement dated as of December 30, 1988 by and among Luther's
Acquisition Corporation, CHI and Luther's Bar-B-Que, Inc.(2)
(b) Registration Rights Agreement dated as of December 30, 1988 between Luther's
Acquisition Corporation and certain shareholders, including CHI.(2)
(c) Shareholders' Agreement dated as of December 30, 1988 by and among Luther's
Acquisition Corporation and certain shareholders, including CHI.(2)
10.12 Amended and Restated Area Development and License Agreement dated as of
December 16, 1993 by and between Islands Restaurants and Big Wave, Inc.(7)
10.13 Management Agreement dated as of December 16, 1993 by and between Islands
Restaurants and Big Wave, Inc.(7)
10.14 Management Agreement dated as of February 14, 1994 by and between North Pier
Associates and CHI.(8)
10.15(1) Asset Purchase Agreement dated December 20, 1994 among Cork 'N Cleaver, Inc.,
Seward's Folly, Inc., and Walter Seward.(8)
(2) Asset Purchase Agreement dated December 20, 1994 among Cork 'N Cleaver of
Kalamazoo, Inc., Seward's Folly Michigan, Inc. and Walter Seward.(8)
(3) Management Agreement dated as of December 20, 1994 between Cork 'N Cleaver
of Kalamazoo, Inc., Seward's Folly Michigan, Inc. and Walter Seward.(8)
10.16(1) Agreement dated as of June 1, 1995 by and between the Edward Fineman Company, Inc.
and CHI.
(2) Agreement dated as of June 1, 1995 by and between the Edward Fineman Company, Inc.
and Islands Restaurants, Inc.
10.17 Stock Purchase Agreement dated as of December 14, 1995 by and among Java Centrale,
Inc., Chart House Enterprises, Inc. and Paradise Bakery, Inc.(9)
13. Annual Report to Stockholders for the year ended December 31, 1995.
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP, Independent Public Accountants.
27. Financial Data Schedule (required for electronic filing only).
- --------
(1) Filed as an exhibit to the Company's Registration Statement on Form S-1
dated August 27, 1987 or amendments thereto dated October 6, 1987 and
October 14, 1987 (Registration No. 33-16795).
(2) Filed as an exhibit to the Company's Registration Statement on Form S-1
dated July 20, 1989 or amendment thereto dated August 25, 1989
(Registration No. 33-30089).
(3) Filed as an exhibit to Form 10-K for the fiscal year ended December 31,
1989.
(4) Filed as an exhibit to Form 10-K for the fiscal year ended December 31,
1990.
(5) Filed as an exhibit to Form 10-K for the fiscal year ended December 31,
1991.
(6) Filed as an exhibit to Form 10-K for the fiscal year ended December 31,
1992.
(7) Filed as an exhibit to Form 10-K for the fiscal year ended December 31,
1993.
(8) Filed as an exhibit to Form 10-K for the fiscal year ended December 31,
1994.
(9) Filed as an exhibit to Form 8-K dated January 12, 1996, for the event
reported as of December 31, 1995.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed by the
Company during the fourth quarter of the fiscal year covered by this report.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CHART HOUSE ENTERPRISES, INC.
Date: March 29, 1996
By JOHN M. CREED
-------------------------------------
John M. Creed
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
NAME TITLE DATE
---- ----- ----
Chairman of the Board and
Chief Executive Officer
JOHN M. CREED (Principal Executive
- ---------------------------------------- Officer); Director March 29, 1996
John M. Creed
HARRY F. ROBERTS President and Chief Operating
- ---------------------------------------- Officer; Director March 29, 1996
Harry F. Roberts
Vice President, Treasurer and
HAROLD E. GAUBERT, JR. Chief Financial Officer
- ---------------------------------------- (Principal Financial Officer) March 29, 1996
Harold E. Gaubert, Jr.
Vice President and
Chief Accounting Officer
JAMES C. WENDLER (Principal Accounting
- ---------------------------------------- Officer) March 29, 1996
James C. Wendler
WILLIAM M. DIEFENDERFER
- ---------------------------------------- Director March 29, 1996
William M. Diefenderfer
WILLIAM E. MAYER
- ---------------------------------------- Director March 29, 1996
William E. Mayer
ALAN S. McDOWELL
- ---------------------------------------- Director March 29, 1996
Alan S. McDowell
ARTHUR J. NAGLE
- ---------------------------------------- Director March 29, 1996
Arthur J. Nagle
PATRICK W. ROSE
- ---------------------------------------- Director March 29, 1996
Patrick W. Rose
12