<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Buffets, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
BUFFETS, INC.
10260 VIKING DRIVE SUITE 100
EDEN PRAIRIE, MINNESOTA 55344
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 14, 1996
To the Shareholders of Buffets, Inc.
The annual meeting of shareholders of Buffets, Inc., a Minnesota
corporation, will be held in accordance with the By-laws of the Company on
Tuesday, May 14, 1996, at 9:00 a.m. at the Company's Old Country Buffet
restaurant, 4808 Highway 101, Minnetonka, Minnesota, for the following purposes:
1. Electing a board of five directors for the ensuing year;
2. Approving Deloitte & Touche LLP as independent auditors
for the Company for the current fiscal year; and
3. Transacting such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on March 18, 1996
will be entitled to notice of and to vote at the annual meeting.
You are cordially invited to attend the meeting. However, whether or not
you plan to be personally present at the meeting, please mark, date and sign the
enclosed proxy and return it promptly in the enclosed envelope. If you later
desire to revoke your proxy, you may do so at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Diane M. Hasbargen
Diane M. Hasbargen, Secretary
Eden Prairie, Minnesota
March 29, 1996
<PAGE>
BUFFETS, INC.
10260 VIKING DRIVE SUITE 100
EDEN PRAIRIE, MINNESOTA 55344
PROXY STATEMENT
The approximate date on which this proxy statement and the
accompanying form of proxy are being first sent to shareholders is April 2,
1996.
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
Buffets, Inc., a Minnesota corporation, for use at the annual meeting of
shareholders to be held May 14, 1996. The Company will bear the cost of
preparing and mailing the proxy, proxy statement and any other material
furnished to shareholders by the Company in connection with the annual meeting.
Proxies will be solicited by use of the mails, and officers and employees of the
Company may also solicit proxies by telephone or personal contact. Officers and
employees of the Company will receive no special remuneration for any such
solicitation activities. The Company will inquire of any record holders known
to be brokers, dealers, banks or their nominees whether other persons are the
beneficial owners of shares held in their names and, if so, will take steps
necessary to supply copies of solicitation materials to such beneficial owners.
All valid proxies will be voted at the annual meeting in accordance with the
instructions set forth in the proxies.
A shareholder executing a proxy may revoke it at any time before its
exercise by filing with the Secretary of the Company, before or at the meeting,
a written instrument of revocation or a duly executed proxy bearing a later
date.
The Common Stock of the Company, par value $.01 per share, is the only
authorized and outstanding voting security of the Company. Only those holders
of the Company's Common Stock whose names appear of record on the Company's
books at the close of business on March 18, 1996 will be entitled to notice of
and to vote at the annual meeting. At the close of business on March 18, 1996,
there were 31,302,360 shares of Common Stock outstanding, each entitled to one
vote per share. Holders of Common Stock do not have cumulative voting rights.
The Annual Report of the Company, including financial statements, for the
year ended January 3, 1996 is being furnished to each shareholder with this
proxy statement.
ITEM 1: NUMBER AND ELECTION OF DIRECTORS
GENERAL
The By-laws of the Company provide that at each annual meeting the
shareholders shall determine the number of directors to constitute the Board of
Directors and shall elect such directors. Each director elected serves until
the next annual meeting of shareholders and until his or her successor is
elected and qualified.
<PAGE>
NOMINEES
The Board of Directors recommends that the shareholders set the number of
directors at five and that the nominees named below be elected as directors of
the Company for the ensuing year. It is intended that the persons named as
proxies in the enclosed form of proxy will vote the proxies received by them for
the election as directors of the nominees named in the table below except as
specifically directed otherwise. Each nominee has indicated a willingness to
serve, but in case any nominee is not a candidate at the annual meeting, for
reasons not now known to the Company, the proxies named in the enclosed form of
proxy may vote for a substitute nominee in their discretion. Information
regarding these nominees is set forth in the table below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME (AGE) DIRECTOR SINCE EXPERIENCE FOR LAST FIVE YEARS
- --------------------------------------------------------------------------------
<S> <C> <C>
Roe H. Hatlen (52) 1983 Founder of the Company; Chairman and
CEO of the Company since 1983;
President of the Company from May
1989 to September 1992; Director of
Pet Food Warehouse, Inc. since
November 1993(1)
Raymond A. Lipkin (53) 1984 Owner of Lipkin Capital Management,
Inc.; managing general partner of a
number of investment partnerships from
1979 through 1993; Director of CAMAX
Manufacturing Technologies, Inc. since
April 1994, and Chairman of the Board
of that company since June 1994(2)
Alan S. McDowell (57) 1984 Private investor since 1983; Director
of Chart House Enterprises, Inc. and
AGCO Corporation (3)
David Michael Winton (67) 1990 Managing Partner, Winton Partners and
Parsnip River Company since early
1980s(4)
Walter R. Barry, Jr. (62) 1995 Private investor since 1985; Executive
Vice President of General Mills Inc.
from June 1979 to December 1986;
Director of Interactive Technologies
Inc. since May, 1995 (5)
</TABLE>
__________________________
(1) Pet Food Warehouse, Inc. is a publicly held operator of warehouse
superstores selling pet food, supplies and services.
(2) Lipkin Capital Management, Inc. is a registered investment advisor. CAMAX
Manufacturing Technologies, Inc. is a manufacturer of CAD/CAM computer
software.
(3) Chart House Enterprises, Inc. is a publicly held company that principally
operates Chart House restaurants and Islands restaurants; AGCO Corporation
is a publicly held farm equipment manufacturer and distributor.
(4) Winton Partners and Parsnip River Company are investment partnerships.
(5) General Mills Inc. markets consumer foods and operates full-service
restaurants. Interactive Technologies Inc. designs, markets and
manufactures wireless security systems, access-control systems and
monitoring equipment.
2
<PAGE>
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock of the Company present in person or by proxy and entitled
to vote at the annual meeting is required for the election of each nominee. For
this purpose, a shareholder (including a broker) who does not give a proxy
authority to vote, or withholds authority to vote with respect to the election
of directors, shall not be considered present and entitled to vote on such
election. If a shareholder does not otherwise direct, the shares represented by
the proxy solicited hereby will be voted in favor of each of the above-named
nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY
VOTE FOR THE ELECTION OF EACH NOMINEE NAMED ABOVE.
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS OF THE COMPANY
During fiscal 1995, the Board of Directors of the Company met five times
and otherwise conducted business by written action. During this period each
director attended 75% or more of the aggregate of the total number of Board
meetings and total number of meetings held by all committees of the Board on
which he served. Board members who are not also officers or employees of the
Company receive a fee of $1,000 for each regular meeting attended, $500 for each
special meeting attended and a $2,000 quarterly fee. In addition, Board members
are reimbursed for travel expenses incurred in connection with Board and
committee meetings.
The Board of Directors has established an Audit Committee consisting of
Messrs. Lipkin, McDowell, Winton and Erickson (who is not standing for re-
election as a director at the annual meeting) during fiscal 1995. The principal
functions of the Audit Committee are to (i) recommend to the Board of Directors
the independent public accountants to act as the Company's independent auditors;
(ii) discuss with representatives of management and the independent auditors the
scope and procedures used in auditing the records of the Company; and (iii)
review the financial statements of the Company. The Audit Committee met once
during fiscal 1995. Audit Committee members receive a fee of $500 for each
special meeting attended.
The Company also has a Compensation and Stock Option Committee (the
"Compensation Committee") consisting of Messrs. Lipkin, McDowell, Winton and
Erickson, four of the five non-employee directors of the Company during fiscal
1995. The principal functions of the Compensation Committee are to review and
recommend compensation for executive personnel and to administer the Company's
stock option plans. The Compensation Committee met four times during fiscal 1995
and otherwise conducted business by written action. Compensation Committee
members receive a fee of $500 for each special meeting attended.
The Company has no nominating committee.
The Company also granted nonqualified stock options to purchase 10,000
shares of Common Stock of the Company at an exercise price of $10.50 per share
(the fair market value on the date of grant) to Walter R. Barry in connection
with his appointment as a new director of the Company. Options to purchase
5,000 shares were immediately exercisable on the date of grant and the remaining
options become exercisable in 1,000 share increments in each of October 1996,
1997, 1998, 1999 and 2000. The options expire on October 31, 2005.
3
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee establishes the general compensation policies of
the Company and specific compensation for each executive officer of the Company,
and administers the Company's stock option plans. The Compensation Committee
attempts to structure the compensation packages of the executive officers of the
Company to attract and retain persons of exceptional quality and to include
effective incentives to motivate Company executives to continue the success and
growth of the Company.
The Company's executive compensation packages, the terms of which generally
are established early each year, consist of three principal components: (1) base
salaries, (2) cash bonuses and (3) stock options. The Compensation Committee's
basic compensation philosophy is that a significant portion of each executive
officer's compensation should be tied directly to the Company's fortunes, and it
accordingly provides cash bonuses tied to net pre-tax profits that approach and
frequently exceed each such officer's annual base compensation, and stock
options with significant long-term appreciation potential.
BASE SALARIES AND CASH BONUSES
In order to set the base salary and bonus formula for each executive
officer, including the Chairman, the Compensation Committee reviews the
financial performance of the Company over the most recently completed fiscal
year (principally revenues, net income and return on equity), the
responsibilities and performance of each individual officer and the compensation
levels of personnel with similar responsibilities at other comparable companies
within the restaurant industry. Apart from the factors described in the
preceding sentence and the comparative measure of compensation further described
below, members of the Compensation Committee also take into account various
other factors considered by them to be relevant in evaluating the performance
and appropriate compensation of each individual officer (principally the rate of
operating management turnover, the number and cost of new restaurants opened
during the preceding fiscal year, the performance of both those restaurants and
older restaurants, the level of various categories of expenses and the general
effectiveness of asset utilization). All factors are evaluated subjectively in
the sense that the Compensation Committee does not attempt as part of its
deliberations to rigorously weight, quantify or otherwise relate them to
specific levels of compensation. The Compensation Committee believes that the
inherent flexibility and administrative simplicity of this approach outweigh the
benefits of a more elaborate quantitative approach.
4
<PAGE>
During early 1994, the Chairman prepared and the Committee reviewed a
comparative analysis of cash and stock compensation paid to the five highest
paid executive officers by a peer group consisting of 17 publicly held
restaurant companies. This compensation peer group was chosen to provide a
broadly representative cross-section of compensation practices in the restaurant
industry without regard to whether the included companies were also included in
the S&P Restaurant index, which is the peer group index included in the
Performance Graph contained elsewhere herein. (This analysis has not been
updated subsequent to its preparation in early 1994). Based in part upon the
results of such analyses, which showed that the Company ranked substantially
below average of the peer group on the basis of aggregate total cash
compensation as a percentage of net income, the Compensation Committee in early
1994 raised the base salary of the Chairman by 36% for 1994 and the base
salaries of all its executive officers, including the Chairman, by an average of
16% for 1994.
In late 1994 and early 1995, in response to certain disappointing trends in
the Company's operations and the unexpected death of a member of the Company's
management team, the Board of Directors of the Company implemented certain
structural changes to and a reduction in the overall number of the Company's
executive officers. Recognizing the increased responsibilities of the Company's
Executive Vice Presidents due to the reorganization, the Committee increased the
base salary of the Company's three Executive Vice Presidents by an average of
30% beginning in December, 1994. The Chairman's base compensation has not been
increased since the increase that occurred in early 1994.
The Compensation Committee establishes the formulas for cash bonuses to be
paid to each executive officer of the Company, including the Chairman, at the
same time it determines base salaries. Each executive officer's cash bonus is
computed as a percentage of the Company's net pre-tax profits. The Compensation
Committee selects a percentage for each executive officer intended to result in
bonus compensation which, if the Company meets profit objectives, will
constitute a substantial portion of such officer's total cash compensation for
the year. These percentages historically have not been adjusted frequently, and
they were not changed for 1995 (except in the case of promotion). Rather, as the
Company has become larger and more profitable, the size of each executive
officer's bonus has increased.
The Compensation Committee selects higher percentages for more senior
executive officers, in part to reflect higher base salaries, but also to ensure
that a greater portion of such officers' total cash compensation is exposed to
the risk of Company performance. Accordingly, in 1995, the cash bonus paid to
the Chairman represented approximately 59% of his total 1995 cash compensation,
and the aggregate bonuses paid to all of the executive officers of the Company
as a group, including the Chairman, represented approximately 54% of the group's
total 1995 cash compensation.
5
<PAGE>
STOCK OPTION PROGRAM
The Compensation Committee believes that compensation through the
Company's stock option program, which provides the opportunity for stock
ownership (and significant long-term appreciation in value), should represent
the most significant component of executive officer compensation. The
Compensation Committee believes that the use of such a stock option program is
the most effective means to align the long-term interests of its executive
officers with those of the Company's shareholders.
The Company's stock option plans authorize the Compensation Committee to
award key employees, including the Chairman and the other executive officers,
options to purchase Common Stock of the Company. The option plans provide the
Compensation Committee with broad discretion to determine the recipients of such
awards and the terms of the options awarded. The Compensation Committee has
exercised such discretion in implementing a program of annual stock option
grants to Company employees. The annual grant program, which has been in place
for the past four years, consists of annual grants of specified numbers of
options to employees in specified job positions, ranging from 500 for restaurant
level and certain administrative employees to 15,000 for the Chairman, 10,000
for each Executive Vice President, and 5,000 for each Vice President of the
Company. The Compensation Committee has established the number of options to be
granted to each executive employee after considering the same factors considered
in setting base salary and bonuses, as well as additional factors such as the
number of options available under the Company's stock option plans and the
historical performance of the Company's stock. The number established for
various levels of executive employees generally increases with their authority
and responsibility for Company affairs. Grants are made at the time a person
first qualifies for options under the program (for example, when promoted to a
new position) and then again annually in each succeeding year. Employees may
receive two option grants in any fiscal year in which they have been promoted.
The annual grant program is subject to change from time to time by the
Compensation Committee.
In addition to the annual grant program, the Compensation Committee has
made in the past, and may make in the future, further stock option grants to
employees, including executive officers. In connection with the management
reorganization that occurred in late 1994, the Compensation Committee made
additional option grants, for the expanded responsibilty of the Company's newly
appointed Executive Vice Presidents, in the following amounts: Mr. White--30,000
shares; Mr. Grant--15,000 shares; and Ms. Rostollan--20,000 shares. Additional
information about stock option awards made to the executive officers of the
Company is set forth in the tables below.
The Compensation Committee believes that its approach to compensation, as
represented by the different components of each executive's compensation
package, and the resulting levels of compensation paid to the Company's
executive officers continues to be appropriate.
6
<PAGE>
OTHER ANNUAL COMPENSATION
The Company also provides certain executive officers (including the
Chairman) with automobile allowances and pays certain travel expenses. In
addition, the Company occasionally defrays moving expenses of executive officers
(as well as other management employees) when such a move is made at the
Company's request. The Compensation Committee considers such payments, which
are administered by the Company, to be incidental to the primary compensation
objectives described above, and the amounts of such payments are for the most
part unrelated to Company performance. Such payments to the Chairman amounted to
an aggregate of $3,276 in fiscal 1995.
POLICY AS TO NONDEDUCTIBLE COMPENSATION
Internal Revenue Code Section 162(m) limits the deductibility of
compensation over $1,000,000 paid by a company to an executive officer. Other
than limiting the maximum number of shares that may be awarded to any employee
under the 1995 Stock Option Plan in any calender year to 100,000 shares, the
Compensation Committee currently does not have a policy with respect to Section
162(m) because it is unlikely that such limit will apply to compensation paid by
the Company to any of the Company's executive officers for at least the current
year.
Raymond A. Lipkin
Alan S. McDowell
Keith H. Erickson
David Michael Winton
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the cash and noncash
compensation for each of the last three fiscal years awarded to or earned by the
Chief Executive Officer and each of the other three highest paid executive
officers of the Company at the end of fiscal 1995. Amounts shown indicate
compensation paid for service to the Company in all capacities.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
---------------- -----------------
NAME AND PRINCIPAL SHARES UNDERLYING
POSITION[S] YEAR SALARY(2) BONUS OPTIONS(#)(1)
- ----------------------- ---- ------ ----- -------------
<S> <C> <C> <C> <C>
Roe H. Hatlen, Chairman 1995 152,885 219,605 15,000
of the Board and Chief 1994 140,615 194,585 15,000
Executive Officer 1993 110,000 172,658 75,000
Rick H. White, Executive 1995 101,923 87,842 40,000
Vice President of 1994 73,846 77,833 10,000
Operations(3) 1993 65,000 69,063 33,000
Clark C. Grant, Executive 1995 81,538 87,842 25,000
Vice President of 1994 63,827 77,833 5,000
Finance and 1993 60,000 66,060 25,000
Administration(4)
Jean C. Rostollan, 1995 81,538 87,842 30,000
Executive Vice President 1994 58,827 68,104 5,000
of Development & 1993 51,300 57,803 25,000
Purchasing (5)
</TABLE>
_________________________________
(1) Adjusted to reflect a two-for-one stock split effected in May 1993.
(2) 1995 base salaries are for a 53 week fiscal year.
(3) Position held since December 1994. From September 1992 to December 1994 Mr.
White served as a Vice President of Operations.
(4) Position held since December 1994. From January 1991 to December 1994 Mr.
Grant served as Vice President of Finance.
(5) Position held since December 1994. From September 1992 to December 1994 Ms.
Rostollan served as Vice President of Purchasing and Distribution.
8
<PAGE>
OPTIONS GRANTED IN FISCAL 1995
The following table sets forth, as to each executive officer named in the
Summary Compensation Table, certain information with respect to stock options
granted during the fiscal year ended January 3, 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- --------------------------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------- ---------- ------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roe H. Hatlen 15,000 2.19% $ 9.3125 4/04/05 $ 87,849 $222,626
Rick H. White 40,000 5.85 10.7500 2/20/05 270,425 685,309
Clark C. Grant 25,000 3.65 10.7500 2/20/05 169,015 428,318
Jean C. Rostollan 30,000 4.38 10.7500 2/20/05 202,819 513,982
</TABLE>
______________________________
(1) The 5% and 10% assumed rates of appreciation are mandated by the rules
of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future Common Stock price.
These options were granted under the Company's 1985 or 1988 Stock Option
Plan as discussed in "Compensation Committee Report on Executive
Compensation--Stock Option Program" set forth above. Such options have ten year
terms, have exercise prices per share equal to fair market value, as determined
under the Plan, of a share of Common Stock on the date of grant, and are
exercisable in 20% increments on the five anniversary dates after the date of
grant. Such options are exercisable only while the named executive is an
employee of the Company or, if such officer has been continuously employed by
the Company (or a parent or subsidiary thereof) for at least twelve full
calendar months following the grant of the option, during a limited period after
cessation of such officer's employment (and then only to the extent such options
were exercisable immediately prior to such cessation), the duration of which
period ranges from three months to one year depending on the timing of and
reason for such cessation. Such options expire when they cease to become
exercisable. Such options are automatically accelerated (and become exercisable
in full) in the event of a friendly or hostile "change in control" of the
Company. A "change in control" will result if certain changes in the Board of
Directors, certain concentrations of voting power or certain mergers, sales of
corporate assets or similar transactions occur. The grants to each named
executive are conditioned upon such officer agreeing not to compete with the
Company during such officer's employment and for a period of two years
thereafter.
9
<PAGE>
ADDITIONAL INFORMATION ABOUT OPTIONS
The following table sets forth, as to each executive officer named in the
Summary Compensation Table, certain information with respect to stock options
exercised during the last fiscal year and unexercised options held as of the end
of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END (#) FISCAL YEAR-END (1)
ACQUIRED VALUE ---------------------------- ---------------------------
ON REALIZED (2)
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ------------ ------------ ----------- ------------- ----------- -------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Roe H. Hatlen 0 0 366,000 144,000 $974,063 $142,500
Rick H. White 7,950 $37,281 39,450 65,100 42,203 118,606
Clark C. Grant 0 0 48,500 39,000 180,719 66,250
Jean C. Rostollan 0 0 65,028 43,000 307,248 79,500
</TABLE>
____________________________
(1) Market value of underlying securities at year-end minus the exercise price.
(2) Market value of underlying securities on date of exercise minus the
exercise price.
10
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return, assuming
the reinvestment of all dividends, on the Common Stock of the Company for the
last five fiscal years with the cumulative total return on the Standard &
Poor's 500 Stock Index and the Standard & Poor's Restaurant Index for the same
periods.
[GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
S&P 500 INDEX $100 $130.47 $140.41 $154.56 $156.60 $215.45
BUFFETS, INC. 100 261.22 268.36 420.41 161.22 224.49
RESTAURANTS 100 134.86 172.77 201.69 201.06 301.56
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
SUMMARY OF OWNERSHIP
The following table shows ownership of the Common Stock of the Company
as of March 1, 1996 (unless otherwise indicated), by each person who, to the
knowledge of the Company, owned beneficially more than five percent of such
stock, by each director, by each executive officer named in the Summary
Compensation Table and by all directors and executive officers as a group.
Shares are held directly with sole investment and voting power unless otherwise
indicated.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF INDIVIDUAL APPROXIMATE
OR IDENTITY OF GROUP NUMBER OF SHARES PERCENT
<S> <C> <C>
Roe H. Hatlen 1,584,166 (1) 5.0%
10260 Viking Drive
Eden Prairie, MN 55344
Rick H. White 53,410 (2) *
Clark C. Grant 72,966 (3) *
Jean C. Rostollan 79,838 (4) *
Raymond A. Lipkin 20,300 (5) *
Alan S. McDowell 255,680 (6) *
Keith H. Erickson 457,302 1.5
David Michael Winton 1,291,641 (7) 4.1
Walter R. Barry, Jr. 25,124 (8) *
General American 1,653,550 (9) 5.3
Investors Company, Inc.
450 Lexington Avenue
New York, NY 10017
Massachusetts Financial 2,050,910 (10) 6.5
Services Company
500 Boylston Street
Boston, MA 02116
All directors and 3,880,751 (1)(2)(3)(4)(5) 12.2%
executive officers (6)(7)(8)(11)
as a group (12 persons)
</TABLE>
________________________________
* Less than one percent.
(Footnotes on following page)
12
<PAGE>
(1) Includes 132,026 shares owned of record by members of Mr. Hatlen's family
sharing his household and 122,244 shares owned of record by Mr. Hatlen's
wife as trustee for their children, as to all of which Mr. Hatlen disclaims
beneficial ownership, and 71,000 shares owned of record by the Hatlen
Foundation (of which Mr. Hatlen is an officer) and 387,000 shares subject
to stock options exercisable within 60 days.
(2) Includes 10 shares owned by Mr. White's wife, as to which Mr. White
disclaims beneficial ownership, and 45,450 shares subject to stock options
exercisable within 60 days.
(3) Includes 10 shares owned by Mr. Grant's wife, as to which Mr. Grant
disclaims beneficial ownership, 5,850 shares owned of record by Mr. Grant
as custodian for his children and 52,500 shares subject to stock options
exercisable within 60 days.
(4) Includes 10 shares owned by Ms. Rostollan's husband and 69,028 shares
subject to stock options exercisable within 60 days.
(5) Includes 300 shares owned of record by Mr. Lipkin as custodian for his
daughter.
(6) Includes 19,680 shares owned of record by Mr. McDowell's daughter and son
and 17,000 shares owned of record by the McDowell Foundation (of which Mr.
McDowell is an officer), as to all of which Mr. McDowell disclaims
beneficial ownership.
(7) Includes 1,251,874 shares over which Mr. Winton shares both voting and
investment discretion as a general partner of Parsnip River Company, and
39,083 shares over which Mr. Winton shares voting and investment power as
trustee of certain trusts for the benefit of his children.
(8) Includes 5,000 shares subject to stock options exercisable within 60 days.
(9) General American Investors Company, Inc., and its wholly-owned subsidiary,
General American Advisors, Inc., are considered benefical owners in the
aggregate of 1,653,550 shares, with sole power to vote 1,371,800 of such
shares, shared power to vote 198,659 of such shares, sole power to dispose
of 1,454,891 of such shares and shared power to dispose of 198,659 of such
shares. The information relating to the share ownership of General American
Investors Company, Inc. and General American Advisors, Inc. has been
derived from the Schedule 13G dated February 9, 1996 filed by General
American Investors Company, Inc. on behalf of itself and General American
Advisors, Inc. with the Securities and Exchange Commission. The number of
shares owned by General American Investors Company, Inc. and General
American Advisors, Inc. is stated as of December 31, 1995.
(10) Massachusetts Financial Services Company has sole power to vote 2,021,510
of such shares and sole power to dispose of all of such shares. The
information relating to the share ownership of Massachusetts Financial
Services Company has been derived from the Schedule 13G dated February 12,
1996 filed by Massachusetts Financial Services Company with the Securities
and Exchange Commission. The number of shares owned by Massachusetts
Financial Services Company is stated as of December 31, 1995.
(11) Includes an aggregate of 597,852 shares subject to stock options held by
all executive officers, which options are exercisable within 60 days.
13
<PAGE>
BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of the Company's Common Stock, to file periodic reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based solely
on its review of the copies of such reports received by it and of written
representations from certain reporting persons regarding filings required to be
made by such persons, the Company believes that all persons required under
Section 16(a) to file beneficial ownership reports with respect to the Company's
Common Stock during the fiscal year ended January 3, 1996 or prior years
complied with all such reporting requirements except as follows: Rick H. White,
an officer of the Company, reported a transaction occuring in October 1995 in a
report covering the month of November 1995.
ITEM 2: SELECTION OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as independent
auditors of the Company for the year ending January 1, 1997, it being intended
that such appointment would be presented for ratification by the shareholders.
Deloitte & Touche LLP has audited the financial statements of the Company for
the fiscal year ended January 3, 1996. Deloitte & Touche LLP will have
representatives at the meeting who will have an opportunity to make a statement
and will be available to respond to appropriate questions.
In the event the shareholders do not ratify the appointment of Deloitte &
Touche LLP, the selection of other independent auditors will be considered by
the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
14
<PAGE>
CERTAIN TRANSACTIONS
In 1995, the Company committed to make charitable contributions aggregating
$250,000 to Minnesota Life College, a Minnesota nonprofit corporation. Of this
sum, $30,000 was paid to Minnesota Life College in 1995, with the remainder
expected to be paid in 1996, although the entire amount was expensed in 1995.
Minnesota Life College is organized and operated to help young adults with
learning disabilities make the transition to independent living. Roe H. Hatlen,
the Chairman and Chief Executive Officer of the Company, is a founder and a
director of Minnesota Life College; his wife, Beverly T. Hatlen, is a founder
and Chair of the Board; Marguerite C. Nesset, the Vice President of Accounting
and Controller of the Company, is the Treasurer and a director. The Company is
entitled to appoint two directors of Minnesota Life College. The directors
currently appointed by the Company are Mr. Hatlen and Ms. Nesset.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
All shareholder proposals to be presented at the next annual meeting of the
Company and to be included in the Company's proxy statement and form of proxy
must be received by the Company no later than December 3, 1996. The Company
suggests that all such proposals be sent to the Company by certified mail return
receipt requested.
Please mark, sign, date and return promptly the enclosed proxy provided.
The signing of a proxy will not prevent you from attending the meeting in
person.
BY ORDER OF THE BOARD OF
DIRECTORS
/s/ Diane M. Hasbargen
Diane M. Hasbargen, Secretary
Dated: March 29, 1996.
15
<PAGE>
BUFFETS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Clark C. Grant and Diane M. Hasbargen, and
each of them, with full power of substitution, as proxies to vote on behalf of
the undersigned all shares which the undersigned may be entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at the Old Country
Buffet restaurant, 4808 Highway 101, Minnetonka, Minnesota at 9:00 a.m. on
Tuesday, May 14, 1996, and at any adjournments thereof, with all powers the
undersigned would possess if personally present, upon the matters set forth in
the Notice of Annual Meeting and Proxy Statement, as directed on the reverse
side hereof.
Any proxy heretofore given by the undersigned with respect to such shares
is hereby revoked. Receipt of the Notice of Annual Meeting and Proxy Statement
is hereby acknowledged.
(To be Completed, Signed and Dated on Reverse Side)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
/x/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD The Board of Directors shall FOR AGAINST ABSTAIN
1. ELECTION / / / / consist of five members. 2. Approving Deloitte & Touche LLP as / / / / / /
OF NOMINEES: Roe H. Hatlen independent auditors for the current
DIRECTORS Raymond A. Lipkin fiscal year.
(Instruction: To withhold Alan S. McDowell
authority to vote for any D. Michael Winton 3. Transaction of such other business as may properly come before
individual nominee, write Walter R. Barry, Jr. the meeting and any adjournments thereof.
that nominee's name below)
- ----------------------------
NOTE: THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, IT WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL 1, AND FOR PROPOSAL
2. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION WITH RESPECT
TO OTHER MATTERS WHICH MAY COME BEFORE THE MEETING.
SIGNATURE___________________________________ DATE________________ SIGNATURE__________________________________ DATE________________
(SIGNATURE IF HELD JOINTLY)
NOTE: Please mark, date and sign exactly as name appears hereon, including designation as executor, trustee, etc. if applicable. A
corporation must sign in its name by the President or other authorized officer. All co-owners must sign. PLEASE RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
