Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended: Commission file number:
January 3, 1996 0-14370
BUFFETS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1462294
(State of incorporation) (IRS Employer Identification No.)
10260 Viking Drive, Eden Prairie, Minnesota 55344
(Address of principal executive offices)
(612) 942-9760
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.01 per share
Preferred Share Purchase Rights
Indicate by check mark whether the 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 (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. [ ]
The aggregate market value of the shares of voting stock held by
non-affiliates of the registrant was approximately $388,933,386 at March 21,
1996, based on the closing sale price for such date as reported on The Nasdaq
Stock Market.
On March 21, 1996, there were 31,314,134 shares of common stock of the
Company, par value $.01 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement for its 1996 Annual Meeting to be
held May 14, 1996 are incorporated by reference in Part III. Portions of
Registrant's Annual Report to Shareholders for the fiscal year ended January 3,
1996 (the "1995 Annual Report") are incorporated by reference in Parts II and
IV.
1
PART I
ITEM 1. BUSINESS
General
Buffets, Inc., a Minnesota corporation, was organized in 1983. Its executive
offices are located at 10260 Viking Drive, Eden Prairie, Minnesota 55344.
References herein to the "Company" are to Buffets, Inc. and its subsidiaries,
Evergreen Buffets Inc., OCB Restaurant Co., OCB Realty Co., OCB Purchasing Co.
and OCB Property Co., unless the context indicates otherwise.
The Company is principally engaged in the development and operation of
"buffet" restaurants under the name "Old Country Buffet" ("Country Buffet" in
the state of Colorado). The Company obtained a federal trademark registration
covering the words "Old Country Buffet" in June of 1985.
The Company presently operates 248 company-owned restaurants in 31 states
(including six new openings and one closing since year end). The Company
contemplates that approximately 35 to 40 Company-owned restaurants will be
opened in 1996. In addition, six franchised Old Country Buffet restaurants are
in operation in Nebraska and Oklahoma.
The Company's restaurants offer a wide variety of freshly prepared menu items,
including soups, salads, entrees, vegetables, non-alcoholic beverages and
desserts, presented in a self-service buffet format in which customers select
the items and portions of their choice. The restaurants' typical dinner entrees
include chicken, carved roast beef and ham, and two or three other hot entrees
such as casseroles, shrimp and fish. Chicken, fish and two or three other
entrees usually are offered at lunch. The Company's restaurants utilize uniform
menus, recipes and ingredient specifications, except for certain variations
adopted in response to regional preferences.
The Company's restaurants range in size from approximately 8,000 to 14,840
square feet, seat from 260 to 390 people, and generally include areas that can
be partitioned to accommodate private meetings and group outings. The decor is
attractive and informal. To date, the Company has located its restaurants
primarily within or adjacent to strip or neighborhood shopping centers. The
Company also owns eight freestanding sites. The Company's restaurants generally
are open from 11:00 a.m. to 8:00 p.m. or 9:00 p.m. A majority of the Company's
restaurants also serve breakfast from 8:00 a.m. to 11:30 a.m. on weekends.
The discussion in this Annual Report on Form 10-K contains forward-looking
statements that involve risks and uncertainties. Actual results could differ
significantly from those discussed herein. Certain factors that could cause or
contribute to such differences are discussed herein and in the documents
incorporated by reference into this Form 10-K.
2
Scatter System Format
Menu items generally are presented to diners using a "scatter system" rather
than a conventional straight buffet serving line. Under the scatter system, six
to eight separate food islands or counters are used to present various courses
of each meal to diners (for example, salads on one island, desserts on another),
with diners able to proceed directly to those islands presenting the menu items
they desire at the time. The scatter system promotes easier food access and has
helped reduce the long lines that often occurred during peak hours in the
Company's restaurants utilizing the conventional straight-line serving format.
The scatter system was introduced by the Company in August 1989 and has been
utilized in all of its restaurants developed since March 1990. In addition,
because of the success of the scatter system, the Company pursued a remodeling
program from February 1990 through 1995 with the goal of converting
substantially all of its 71 then-existing restaurants from the conventional
straight-line format to the scatter system. The last restaurant was converted
in 1995.
Small Batch Preparation
To ensure freshness, hot foods and bakery items are prepared repeatedly
throughout the day in relatively small batches. Restaurant managers closely
monitor the servicing area for the quality and availability of all items. The
Company believes the freshness achieved through small batch preparation
contributes significantly to the high quality of its food.
All-Inclusive Price
The Company's restaurants currently charge, depending on the market area,
$5.39 to $5.99 for lunch Monday through Saturday and $6.99 to $8.19 for dinner
Monday through Sunday. On Saturday and Sunday, certain restaurants serve
breakfast at prices ranging from $5.49 to $6.19. Reduced prices are available
to senior citizens who purchase an annual senior club card for $1.00 per year
and to children under the age of ten or twelve depending on the market area.
Children's prices for all meals are $.40 to $.55 per year of their age from two
through ten or twelve. Customers pay prior to entering the dining area and are
assisted to tables by restaurant employees. They may return for second helpings
and additional beverages and desserts without additional charge.
3
Restaurant Operations and Controls
GENERAL. In order to maintain a consistently high level of food quality and
service in all of its restaurants, the Company has established uniform
operational standards which are implemented by the managers of each restaurant.
All restaurants are required to be operated in accordance with rigorous
standards and specifications relating to the quality of ingredients, preparation
of food, maintenance of premises and employee conduct.
MENU SELECTION AND PURCHASING. Headquarters personnel prepare and
periodically revise standard recipes and menus and a list of approved
ingredients and supplies based upon the quality, availability, cost and customer
acceptance of various menu items. Food quality is maintained through
centralized coordination with suppliers and frequent restaurant visits by
district managers and other management personnel.
The Company purchases its food and beverage inventories and restaurant
supplies from independent suppliers approved by headquarters personnel, who
negotiate quality specifications, delivery schedules and pricing and payment
terms (typically 28 days) directly with the suppliers. Although all supplier
invoices are paid from Company headquarters, restaurant managers place orders
for inventories and supplies with, and receive shipments directly from,
suppliers. Restaurant managers approve invoices before forwarding them to
Company headquarters for payment. To date, the Company has not experienced any
difficulties in obtaining food and beverage inventories or restaurant supplies,
and the Company does not anticipate that any material difficulties will develop
in the foreseeable future.
RESTAURANT MANAGEMENT. Each restaurant typically employs a general manager,
an associate general manager, and one to three assistant managers. Each of the
Company's restaurant general managers has primary responsibility for day-to-day
operations in one of the Company's restaurants, including customer relations,
food service, cost controls, restaurant maintenance, personnel relations,
implementation of Company policies and the restaurant's profitability. A
substantial portion of each general manager's and associate general manager's
compensation depends directly on the restaurant's profitability. In addition,
restaurant managers receive stock options under the Company's current stock
option program entitling them to acquire an equity interest in the Company. The
Company believes that its compensation policies have been important in
attracting, motivating and retaining qualified operating personnel.
Each restaurant general manager reports to a district manager, each of whom in
turn reports to a regional director (currently eight persons). Each regional
director reports to the Company's Executive Vice President of Operations.
The Company maintains centralized financial and accounting controls for its
restaurants. On a daily basis, restaurant managers forward customer counts,
sales, labor costs and deposit information to Company headquarters. On a weekly
basis, restaurant managers forward a summarized profit and loss statement, sales
report, and supplier invoices. Payroll data is forwarded every two weeks.
4
MANAGEMENT TRAINING. Old Country Buffet has a series of Training Programs
which are designed to provide managers with the appropriate knowledge and skills
necessary to be successful in their current position. All new managers, hired
from outside the Company, are required to complete an extensive seven-week in-
field training program which focuses on the basic operating skills and
management functions necessary to shift manage an Old Country Buffet restaurant.
The Company also emphasizes the internal development of new management. There
is a three week intensive Management Training Program for managers promoted from
hourly positions, conducted at the Company's Training Center located in Eden
Prairie, Minnesota. These managers-in-training participate in a series of
seminars designed to develop basic management skills, food production,
operational programs and personnel management. Training and development of
these new managers, both internal promotions and external hires, continues
beyond the initial training periods. Managers continue to work with a
structured, self paced, Management Skills Training Manual, a training program
designed to further develop their proficiency in management supervisory skills.
Before a manager is promoted this Management Skills Training Manual must be
completed.
Advancement is tied both to current operational performance and training.
Before being promoted to Food Manager, managers must successfully complete a
two-week training program in food quality, food training and food production
conducted at the Company's Training Center. Individuals designated for
promotion to General Manager attend a General Manager two-week training program
conducted at the Training Center. This program focuses on advanced management
skills with emphasis on team building and performance accountability. General
Managers being considered for promotion to District Manager complete a two-week
training program for new District Managers. This training is also conducted at
the Company's Training Center and focuses on impact management, personnel
development, advanced problem solving and action plans.
Franchising and Joint Ventures
There currently are six franchised Old Country Buffet restaurants in Nebraska
and Oklahoma, owned by two franchisees. The Company's franchise agreements
generally have initial terms of 15 years and require the franchisee to pay an
initial fee of $25,000 and continuing royalties equal to four percent of the
franchisee's sales. The Company has an agreement with each franchisee whereby
the Company has options exercisable at various times over the next several years
to repurchase the Old Country Buffet restaurants developed by such franchisee at
a predetermined formula price based principally on restaurant gross sales.
The Company has taken advantage of joint venture opportunities from time to
time, principally as a means of entering new geographic markets. In November
1988, the Company established Evergreen Buffets, Inc., a majority owned joint
venture subsidiary of the Company, to develop and operate Old Country Buffet
restaurants in Washington and Oregon. The Company held 90% of the outstanding
capital stock of this subsidiary and, in December 1995, the Company purchased
the outstanding capital stock of the subsidiary held by the minority shareholder
in exchange for 92,991 shares of Company Common Stock and Evergreen Buffets,
Inc. thereby became a wholly owned subsidiary of the Company.
The Company at present is not actively seeking to grant additional franchises
or enter into additional joint ventures.
5
Competition
The food service industry is highly competitive. Menu, price, service,
convenience, location and ambience are all important competitive factors, with
the relative importance of many such factors varying among different segments of
the consuming public.
By providing a wide variety of food and beverages at reasonable prices in an
attractive and informal environment, the Company seeks to appeal to a broad
range of value-oriented consumers. The Company believes that its primary
competitors in this market segment are other buffet and cafeteria restaurants,
and traditional casual dining restaurants with full menus and table service.
The Company believes that its success to date has been due to its particular
approach combining pleasant ambience, high food quality, breadth of menu,
cleanliness and reasonable prices with satisfactory levels of service and
convenience.
Sales are seasonal, with a lower percentage of annual sales occurring in most
of its current market areas during the winter months. Sales may also be
affected by unusual weather patterns or matters of public interest that compete
for the customers' attention.
Advertising and Promotion
To date the Company has relied primarily on customers' word-of-mouth
recommendations to promote its business. As a result, prior to 1993, annual
advertising costs never exceeded 1.1% of restaurant sales, such costs being
incurred primarily for menu cards, brochures and a limited amount of local
newspaper, radio and television advertising. Based on favorable results, the
Company increased its rate of expenditure on advertising to 1.3% of restaurant
sales in 1994, primarily for increased radio and television advertising. The
Company lowered its advertising spending to .9% of restaurant sales in 1995 due
to the decision in the fourth quarter of 1994 to use those dollars in food and
labor to better serve the guest. The Company expects to spend approximately
1.5% of restaurant sales on advertising in 1996. The Company is prepared to
increase its advertising expenditures in the future if it determines that
further increases are likely to generate sufficient additional revenues. The
Company believes its senior citizen discount program has encouraged many senior
citizens to eat at the Company's restaurants.
Regulation
The Company's restaurants must be constructed to meet federal, state and local
building and zoning requirements and must be operated in accordance with state
and local regulations relating to the preparation and serving of food. The
Company is also subject to various federal and state labor laws which govern its
relationships with its employees, including those relating to minimum wages,
overtime and other working conditions. Environmental regulations have not had a
material effect on the operations of the Company. The Company to date has been
successful in obtaining all necessary permits and licenses and complying with
applicable regulations, and does not expect to encounter any material
difficulties in the future with respect to these matters.
6
Trademarks
In June 1985, the Company obtained a federal trademark registration covering
the words "Old Country Buffet." The Company has subsequently obtained trademark
protection for additional marks used in its business. Generally, federal
registration of a trademark gives the registrant the exclusive use of the
trademark in the United States in connection with the goods or services
associated with the trademark, subject to the common law rights of any other
person who began using the trademark (or a confusingly similar mark) prior to
the date of federal registration. Because of the common law rights of such a
pre-existing restaurant in certain portions of Colorado, the Company's
restaurants in that state use the name "Country Buffet." The Company intends to
take appropriate steps to develop and protect its marks.
Employees
As of March 13, 1996, the Company employed approximately 15,540 persons,
including 990 supervisory and administrative, 260 managerial, and 14,290
restaurant employees. Approximately 66% of the Company's restaurant employees
work part-time. Relations with employees have been satisfactory and no work
stoppages due to labor disputes have occurred. The Company anticipates that its
work force will increase by more than 16% by the end of 1996.
Restaurant Development
GENERAL. The Company opened 38 restaurants and closed three in 1995 and
expects to open approximately 35 to 40 restaurants in 1996, of which six were
open as of March 18, 1996. One restaurant was closed in February 1996. The
Company intends to pursue expansion during 1996 in both existing and new
markets.
The ability of the Company to open new restaurants depends on a number of
factors, including its ability to find suitable locations and negotiate
acceptable leases and land purchases, its ability to attract and retain a
sufficient number of qualified restaurant managers, and the availability of
capital. The Company actively and continuously attempts to identify and
negotiate leases and land purchases for additional new locations, and expects
that it will be able to achieve its intended development schedule for 1996,
though there is no assurance that this will be the case.
GEOGRAPHIC EXPANSION STRATEGY. The Company initially concentrated its
restaurant development in the Midwest, and then after several years expanded to
other regions of the country. The Company currently operates in 31 states and
opened its first restaurants in West Virginia and Maine during 1995. The
Company attempts to cluster its restaurants in geographic areas to achieve
economies of scale in costs of supervision, marketing and purchasing.
7
SITE SELECTION CRITERIA. The primary criteria considered by the Company in
selecting new locations are a high level of customer traffic, convenience to
both lunch and dinner customers in demographic groups (such as families and
senior citizens) that tend to favor the Company's restaurants, and the occupancy
cost of the proposed restaurant. The Company has found that these criteria
frequently are satisfied by well-located strip shopping centers that benefit
from cotenancy with strong national retailers and visibility to high traffic
roads. All but 56 of the Company's current restaurants are located in such
centers. Twenty-eight of the other 56 restaurants are located in regional or
other enclosed shopping malls and twenty-eight are located in free-standing
structures. The Company will pursue free-standing locations only if the
projected return on investment falls within acceptable ranges. The Company
typically requires a population density of at least 100,000 within five miles of
each new location, and currently is concentrating its development efforts on
urban areas that can accommodate a number of Company restaurants. Because an
Old Country Buffet restaurant typically draws a significant volume of customers
and because of the Company's financial strength, the Company often has been able
to negotiate favorable lease terms.
RESTAURANT CONSTRUCTION. In an effort to better control costs and improve
quality, the Company is closely involved in the construction of its restaurants,
and also in the acquisition and installation of fixtures and equipment. The
Company acts as its own general contractor, using restaurant designs prepared by
the Company's own architectural staff. The Company normally satisfies the
equipment and other restaurant supply needs of its new restaurants from
inventory acquired directly from manufacturers and stored at the Company's
warehouse in Eden Prairie, Minnesota. Restaurants located in shopping centers
typically open approximately 11 weeks after construction begins, while free-
standing restaurants typically open approximately 17 weeks after construction
begins. The average cost to develop an Old Country Buffet restaurant located in
a shopping center during fiscal 1995 was approximately $759,000 for leasehold
improvements (net of landlord contributions) and approximately $627,000 for
equipment and furnishings. Free-standing owned restaurants developed in 1995
and the first part of 1996 entailed an average land cost of $521,000 and a
projected average building cost of $1,474,000. It is expected the increased
development of free-standing restaurants will increase the average cost per unit
and associated capital requirements in 1996.
ITEM 2. PROPERTIES
The Company's executive offices are located in approximately 30,000 square
feet of leased space in Eden Prairie, Minnesota, for a term ending October 31,
1997. The Company has the option to extend the lease or seek other
alternatives, including the development of a corporate headquarters in Eagan, MN
on a parcel of land purchased in 1995 for this potential use. The Company also
leases a 22,200 square foot warehouse and training center in Eden Prairie,
Minnesota for a term ending January 31, 1997. The lease has 5 one year options
which the Company could exercise to extend the lease through January 31, 2002.
The Company owns a 72,000 square foot facility in Marshfield, Wisconsin which it
utilizes for the fabrication of cabinetry and fixtures for restaurants.
8
Most of the Company's restaurants are located in leased facilities, although
land purchases for free-standing restaurants will be considered in instances
where more acceptable return on investment justifies the additional investment.
Twenty-eight restaurants are located in free-standing buildings, twenty-eight
are located in regional or other enclosed shopping malls, and the rest are
located in strip or neighborhood shopping centers. Most of the leases provide
for a minimum annual rent and additional rent calculated as a percentage of
restaurant sales, generally 3% to 5%, if the rents so calculated exceed the
minimum. The initial terms of the Company's leases generally range from ten to
fifteen years, and the leases usually have renewal options for additional five
to ten year periods.
The Company owns substantially all of the equipment, furniture and fixtures in
its restaurants. Leasehold improvements made by the Company in leased premises
usually become the property of the landlord upon expiration or termination of
the lease. To date, most of the Company's strip mall landlords have agreed to
bear a portion of the cost of leasehold improvements by way of either rent
concessions or cash contributions.
ITEM 3. LEGAL PROCEEDINGS
IN RE BUFFETS, INC. SECURITIES LITIGATION, United States District Court for
the District of Minnesota, Master No. 3-94-1447. This action is a consolidation
of four separate lawsuits. The first lawsuit was commenced by ZSA Asset
Allocation Fund and ZSA Equity Fund on or about November 7, 1994. Three other
substantially similar actions were filed shortly thereafter by alleged
shareholders Marc Kushner, Trustee for Service Lamp Corp. Profit Sharing Plan,
Jerrine Fernandes, and John J. Nuttall. By Pretrial Order No. 1, entered in
early January 1995, the District Court ordered that the four lawsuits be
consolidated into the single pending action and that plaintiffs serve and file a
Consolidated Amended Class Action Complaint (the "Complaint"), which was served
on or about January 31, 1995. The Court ordered the dismissal of the Complaint
upon motion by the defendants, but granted plaintiffs leave to replead.
Plaintiffs filed their Second Amended, Consolidated Class Action Complaint (the
"Second Complaint") on December 11, 1995. Defendants have moved to dismiss the
Second Complaint, but defendants' motion has not yet been heard by the Court.
The Second Complaint is against the Company and several of its officers and
directors. In the Second Complaint, plaintiffs seek to represent a putative
class consisting of all persons and entities (excluding defendants and certain
others) who purchased shares of the Company's Common Stock during the period
commencing October 26, 1993 and ending October 25, 1994 (the "Class Period").
The Second Complaint alleges that the defendants made misrepresentations and
omissions of material fact during the Class Period with respect to the Company's
operations and restaurant development activities, as a result of which the price
of the Company's stock allegedly was artificially inflated during the Class
Period. The Second Complaint further alleges that certain defendants made sales
of Common Stock of the Company during the Class Period while in possession of
material undisclosed information about the Company's operations and restaurant
development activities. The Second Complaint alleges that the defendants'
conduct violated the Securities Exchange Act of 1934 and seeks compensatory
damages in an unspecified amount, prejudgment interest, and an award of
attorneys' fees, costs and expenses.
9
Management of the Company believes that the action is without merit and
intends to defend it vigorously. Although the outcome of this proceeding cannot
be predicted with certainty, the Company's management believes that while the
outcome may have a material effect on earnings in a particular period, the
outcome should not have a material effect on the 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 of the Company during
the fourth quarter of the fiscal year covered by this report.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers are elected annually by the Board of Directors to serve
until the next annual meeting of the Board. The following table contains
information regarding the present executive officers, and all persons chosen to
become executive officers, of the Company.
Executive Principal Occupation and
Officer Business Experience
Name and Age Since For Last Five Years
- - --------------------------------------------------------------------------------
Roe H. Hatlen (52) 1983 Founder and Chairman and Chief
Executive Officer of the Company since
December 1983; President of the Company, May
1989 to September 1992; Treasurer of the
Company, November 1983 to May 1986.
Clark C. Grant (44) 1986 Executive Vice President of
Finance and Administration since
December 1994 and Treasurer of the Company
since May 1986; Vice President of Finance of
the Company, January 1991 to December
1994; Controller of the Company, July 1984 to
April 1989.
10
Executive Principal Occupation and
Officer Business Experience
Name and Age Since For Last Five Years
- - --------------------------------------------------------------------------------
Jean C. Rostollan (44) 1991 Executive Vice President of
Development and Purchasing since
December 1994 and Assistant
Secretary of the Company since
February 1992; Vice President of
Purchasing and Distribution of the Company,
September 1992 to December 1994; Vice
President of Purchasing and Marketing of the
Company, January 1991 to August 1992;
Director of Purchasing and Marketing of the
Company, June 1987 to January 1991; Director
of Purchasing of the Company, October 1986 to
June 1987.
Rick H. White (38) 1993 Executive Vice President of Operations of the
Company since December 1994; Vice President
of Operations of the Company,
September 1992 to December 1994; Regional
Director of the Company, October 1990 to
August 1992; District Manager of the Company,
February 1988 to September 1990; Restaurant
General Manager of the Company, January 1986
to February 1988.
Marguerite C. Nesset (39) 1994 Vice President of Accounting since July 1994
and Controller of the Company since April
1989; Assistant Controller of the Company,
April 1987 to April 1989.
Brent P. DeMesquita (47) 1995 Vice President of Training and Human
Resources since June 1995; Director of
Training of the Company, September
1993 to June 1995; Vice President of
Organizational Development of Taco Time
International, Inc., July 1991 to September
1993; Vice President of Human Resources
and Training of Taco Time International,
Inc., December 1990 to June 1991; Director of
Human Resources and Training of Taco Time
International, Inc., August 1990 to November
1990; Director of Training of Taco Time
International, Inc., June 1987 to July 1990.
(1)
11
Executive Principal Occupation and
Officer Business Experience
Name and Age Since For Last Five Years
- - --------------------------------------------------------------------------------
H. Thomas Mitchell (39) 1995 Vice President and General Counsel of the
Company since June 1995; Corporate Counsel of
the Company, June 1994 to June 1995; General
Counsel of Lend Lease Trucks Inc., February
1992 to June 1994 (2); Senior Vice President
and General Counsel of Consul Restaurant
Corporation, February 1988 to February
1992.(3)
Brad J. McNaught (35) 1995 Vice President of Real Estate of the Company
since June 1995; Director of Real Estate of
the Company, June 1994 to June 1995; Real
Estate Representative of the Company,
September 1991 to June 1994; Asset Manager
for Dain Corporation, July 1988 to
September 1991. (4)
(1) Taco Time International, Inc. is a privately held operator of Mexican fast
food restaurants.
(2) Lend Lease Trucks Inc. is a privately held company providing leasing and
rentals of trucks.
(3) Consul Restaurant Corporation was a publicly held franchisee of Chi Chi's
restaurants which filed for Chapter 11 Bankruptcy protection in 1991.
(4) Dain Corporation is a full service real estate investment firm affiliated
with Dain Bosworth Incorporated., a subsidiary of Inter-Regional Financial
Group.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information set forth under the caption "Market for the Company's Common
Stock and Related Stockholder Matters" on page 19 of the 1995 Annual Report is
incorporated herein by reference.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information set forth under the caption, "Selected Consolidated Financial
Data" on page 4 of the 1995 Annual Report is incorporated herein by reference.
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information set forth under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 5 through 8
of the Company's 1995 Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required under this Item 8 is incorporated herein by reference
to pages 9 through 19 of the Company's 1995 Annual Report.
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.
Incorporated herein by reference to the sections captioned "Number and
Election of Directors", "Certain Information Regarding Board of Directors of the
Company" and "Beneficial Ownership Reporting" in the Proxy Statement for the
Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission within 120 days of the close of the fiscal year ended January 3,
1996. For information concerning executive officers, see Item 4A of this Annual
Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated herein by reference to the section captioned "Compensation of
Executive Officers" in the Proxy Statement for the Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days of the close of the fiscal year ended January 3, 1996; provided, however,
that the subsection thereof entitled "Compensation Committee Report on Executive
Compensation" is not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated herein by reference to the similarly captioned section in the
Proxy Statement for the Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission within 120 days of the close of the fiscal
year ended January 3, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated herein by reference to the section captioned "Certain
Transactions" in the Proxy Statement for the Annual Meeting of Shareholders to
be filed with the Securities and Exchange Commission within 120 days of the
close of the fiscal year ended January 3, 1996.
13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as part of this
Report.
1. Financial Statements
Consolidated Balance Sheets at December 28,
1994 and January 3, 1996*
Consolidated Statements of Earnings for the
Years Ended December 29, 1993, December 28,
1994 and January 3, 1996*
Consolidated Statements of Stockholders'
Equity for the Years Ended December 29, 1993,
December 28, 1994, and January 3, 1996*
Consolidated Statements of Cash Flows for the
Years Ended December 29, 1993, December
28, 1994, and January 3, 1996*
Notes to Consolidated Financial Statements*
Independent Auditors' Report*
_________________________
*Incorporated herein by reference to pages 9 through 19 of the
Company's 1995 Annual Report
14
2. Supplemental Financial Schedules
None
3. Exhibits
3 (a) Composite Amended and Restated Articles
of Incorporation (1)
3 (b) By-laws of the Company (2)
3 (c) Form of Rights Agreement, dated as of October 24, 1995
between the Company and the American Stock Transfer &
Trust Company, as Rights Agent (the "Rights Agreement")
(3)
10(a) 1985 Stock Option Plan (4)*
10(b) 1988 Stock Option Plan (5)*
10(c) Amended and Restated Credit Agreement by and between
First Bank National Association and the Company dated as
of April 16, 1993 (1)
10(d) Amendment No. 1 to Amended and Restated Credit Agreement
dated as of June 29, 1993 between the Company and First
Bank National Association (6)
10(e) Letter dated July 8, 1993 from First Bank National
Association to the Company amending Amended and Restated
Credit Agreement (6)
10(f) Amendment No. 2 to Amended and Restated Credit Agreement
dated as of March 24, 1994 between the Company and First
Bank National Association (7)
10(g) Amendment No. 3 to Amended and Restated Credit Agreement
dated as of April 8, 1994 between the Company and First
Bank National Association (10)
10(h) Amendment No. 4 to Amended and Restated Credit Agreement
dated as of June 30, 1994 between the Company and First
Bank National Association (8)
10(i) Separation Agreement and Release dated March 2, 1995
between the Company and Joseph A. Conti, Sr. (9)
10(j) Amendment No. 5 Amended and Restated Credit Agreement
dated as of August 4, 1995 between the Company and First
Bank National Association (10)
10(k) 1995 Stock Option Plan(11)*
15
11 Statement Regarding Computation of Per Share Earnings
13 Annual Report to Shareholders for the fiscal year ended
January 3, 1996
21 Subsidiaries of the Company
23 Consent of Deloitte & Touche LLP
dated March 27, 1996
27 Financial Data Schedule
*Management contract or compensatory plan or arrangement required to be filed
pursuant Item 14(c) of Form 10-K.
______________________________
(1) Incorporated by reference to Exhibits to Registration Statement on Form S-3
dated June 2, 1993 (Registration No.33-63694.)
(2) Incorporated by reference to Exhibits to Annual Report on Form 10-K for
fiscal year ended December 29, 1993.
(3) Incorporated by reference to Exhibits to Report on Form 8-K, dated October
24, 1995.
(4) Incorporated by reference to Exhibits to Registration Statement on Form S-1
dated October 25, 1985 (Registration No. 33-171).
(5) Incorporated by reference to Exhibits to Annual Report on Form 10-K for
fiscal year ended December 30, 1992.
(6) Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q for
the quarter ended July 14, 1993.
(7) Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q for
the quarter ended April 20, 1994.
(8) Incorporated by reference to Exhibits to Quarterly Report on Form
10-Q for the quarter ended July 13, 1994.
(9) Incorporated by reference to Exhibits to Annual Report on Form
10-K for the fiscal year ended December 28, 1994.
(10) Incorporated by reference to Exhibits to Quarterly Report on Form
10-Q for the quarter ended July 12, 1995.
(11) Incorporated by reference to Exhibits to Quarterly Report on Form
10-Q for the quarter ended October 4, 1995.
(b) Reports on Form 8-K.
The Company filed a Report on Form 8-K on November 1, 1995 relating to
the Rights Agreement.
16
ANNUAL REPORT AND PROXY STATEMENT
With the exception of the matters specifically incorporated herein by
reference to the Company's 1995 Annual Report to Shareholders or to the
Company's Proxy Statement for the Annual Meeting of Shareholders to be held on
May 14, 1996, no other portions of such 1995 Annual Report to Shareholders or
Proxy Statement are deemed to be filed as part of this Annual Report on Form
10-K.
17
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.
Buffets, Inc.
March 27, 1996 By /s/ Roe H. Hatlen
- - -------------------- -------------------
Date Roe H. Hatlen
Chairman of the Board
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 and on the dates indicated:
Signature Capacity Date
--------- -------- ----
/s/ Roe H. Hatlen Chairman of the Board March 27,1996
- - ---------------------- and Chief Executive -------------
Roe H. Hatlen Officer (Principal
Executive Officer)
/s/ Clark C. Grant Executive Vice President March 27, 1996
- - ---------------------- of Finance and --------------
Clark C. Grant Administration and
Treasurer (Principal
Financial Officer)
/s/ Marguerite C. Nesset Vice President of March 27, 1996
- - ------------------------ Accounting and --------------
Marguerite C. Nesset Controller (Principal
Accounting Officer)
/s/ Alan S. McDowell Director March 27, 1996
- - ------------------------ --------------
Alan S. McDowell
/s/ Raymond A. Lipkin Director March 27, 1996
- - ------------------------ --------------
Raymond A. Lipkin
/s/ Keith H. Erickson Director March 27, 1996
- - ------------------------ --------------
Keith H. Erickson
/s/ David Michael Winton Director March 27, 1996
- - ------------------------ --------------
David Michael Winton
/s/ Walter R. Barry, Jr. Director March 27, 1996
- - ------------------------ --------------
Walter R. Barry, Jr.
18
EXHIBIT INDEX
Exhibits Page
-------- ----
3 (a) Composite Amended and Restated Articles of Incorporation (1)
3 (b) By-laws of the Company (2)
3 (c) Form of Rights Agreement, dated as of October 24, 1995 between
the Company and the American Stock Transfer & Trust Company,
as Rights Agent (3)
10(a) 1985 Stock Option Plan (4)
10(b) 1988 Stock Option Plan (5)
10(c) Amended and Restated Credit Agreement by and between First
Bank National Association and the Company dated as of
April 16, 1993 (1)
10(d) Amendment No. 1 to Amended and Restated Credit Agreement dated
as of June 29, 1993 between the Company and First Bank National
Association (6)
10(e) Letter dated July 8, 1993 from First Bank National Association
to the Company amending Amended and Restated Credit Agreement (6)
10(f) Amendment No. 2 to Amended and Restated Credit Agreement dated
as of March 24, 1994 between the Company and First Bank National
Association (7)
10(g) Amendment No. 3 to Amended and Restated Credit Agreement dated as
of April 8, 1994 between the Company and First Bank National
Association (10)
10(h) Amendment No.4 to Amended and Restated Credit Agreement dated as
of June 30, 1994 between the Company and First Bank National
Association (8)
10(i) Separation Agreement and Release dated March 2, 1995 between the
Company and Joseph A. Conti, Sr. (9)
10(j) Amendment No.5 to Amended and Restated Credit Agreement dated as
of August 4, 1995 between the Company and First Bank National
Association (10)
10(k) 1995 Stock Option Plan (11)
11 Statement Regarding Computation of Per
Share Earnings . . . . . . . . . . . . . . . Filed Electronically
13 Annual Report to Shareholders for the fiscal
year ended January 3, 1996 . . . . . . . . . Filed Electronically
21 Subsidiaries of the Company. . . . . . . . . Filed Electronically
23 Consent of Deloitte & Touche LLP . . . . . . Filed Electronically
27 Financial Data Schedule. . . . . . . . . . . Filed Electronically
____________________
(1) Incorporated by reference to Exhibits to Registration
Statement on Form S-3 dated June 2, 1993 (Registration No.
33-63694.)
(2) Incorporated by reference to Exhibits to Annual Report on
Form 10-K for fiscal year ended December 29, 1993.
(3) Incorporated by reference to Exhibits to Report on Form 8-K,
dated October 24, 1995.
(4) Incorporated by reference to Exhibits to Registration
Statement on Form S-1 dated October 25, 1985 (Registration No.
33-171.)
(5) Incorporated by reference to Exhibits to Annual Report on
Form 10-K for fiscal year ended December 30, 1992.
(6) Incorporated by reference to Exhibits to Quarterly Report
on Form 10-Q for the quarter ended July 14, 1993.
(7) Incorporated by reference to Exhibits to Quarterly Report
on Form 10-Q for the quarter ended April 20, 1994.
(8) Incorporated by reference to Exhibits to Quarterly Report
on Form 10-Q for the quarter ended July 13, 1994.
(9) Incorporated by reference to Exhibits to Annual Report on
Form 10-K for the fiscal year ended December 28, 1994.
(10) Incorporated by reference to Exhibits to Quarterly
Report on Form 10-Q for the quarter ended July 12, 1995.
(11) Incorporated by reference to Exhibits to Quarterly
Report on Form 10-Q for the quarter ended October 4, 1995.