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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15 (d) of
The Securities Exchange Act of 1934
For Quarter Ended: Commission File Number
July 16, 1997 0-14370
BUFFETS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1462294
(State of incorporation) (I.R.S. Employer Identification No.)
10260 Viking Drive, Eden Prairie, MN 55344
(Address of principal executive offices)
(612) 942-9760
(Registrant's telephone number)
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
Class Outstanding as of August 5,1997
----- -------------------------------
Common Stock, $.01 par value 45,226,549 shares
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BUFFETS, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets-
January 1, 1997 and July 16, 1997 . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations-
Twenty-Eight Weeks ended July 17, 1996
and July 16, 1997 and Twelve Weeks ended
July 17, 1996 and July 16, 1997 . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows-
Twenty-Eight Weeks ended July 17, 1996
and July 16, 1997 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . .12
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Part I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
BUFFETS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JANUARY 1, JULY 16,
1997 1997
---------- ---------
(IN THOUSANDS)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . $ 10,772 $ 29,399
Receivable from landlords . . . . . . . . . . . . 2,642 3,368
Inventory . . . . . . . . . . . . . . . . . . . 3,653 4,032
Notes receivable . . . . . . . . . . . . . . . . 52 52
Prepaid rents . . . . . . . . . . . . . . . . . . 2,782 1,544
Other current assets . . . . . . . . . . . . . . 2,587 1,753
Deferred income taxes . . . . . . . . . . . . . 11,975 12,686
--------- --------
TOTAL CURRENT ASSETS . . . . . . . . . . . . 34,463 52,834
PROPERTY AND EQUIPMENT:
Land . . . . . . . . . . . . . . . . . . . . . . 15,686 15,688
Building. . . . . . . . . . . . . . . . . . . . . 30,537 31,014
Equipment . . . . . . . . . . . . . . . . . . . . 228,046 241,080
Leasehold improvements . . . . . . . . . . . . . 185,263 195,738
--------- --------
459,532 483,520
Less accumulated depreciation and amortization. . 131,811 150,704
--------- --------
327,721 332,816
GOODWILL, net of accumulated amortization of $1,615 and
$1,803, respectively . . . . . . . . . . . . . . 5,974 5,786
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . 2,525 2,348
--------- --------
$ 370,683 $393,784
--------- --------
--------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . $ 29,483 $ 26,613
Accrued payroll and related benefits . . . . . . 16,229 18,122
Accrued rents . . . . . . . . . . . . . . . . . . 13,892 13,936
Accrued sales taxes . . . . . . . . . . . . . . . 3,497 4,854
Accrued insurance . . . . . . . . . . . . . . . . 4,390 5,687
Accrued store closing costs . . . . . . . . . . . 7,703 6,863
Other accrued expenses . . . . . . . . . . . . . 5,779 7,296
Income taxes . . . . . . . . . . . . . . . . . . 615 6,470
Current portion of capital leases . . . . . . . . 2,055 2,007
--------- --------
TOTAL CURRENT LIABILITIES . . . . . . . . . 83,643 91,848
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . 41,500 41,500
LONG-TERM PORTION OF CAPITAL LEASES. . . . . . . . . . 5,078 4,028
DEFERRED INCOME . . . . . . . . . . . . . . . . . . . 405 193
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . 3,266 4,189
MINORITY INTEREST. . . . . . . . . . . . . . . . . . . 27
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,000 shares; none issued and outstanding
Common stock, $.01 par value; authorized 60,000
shares; issued and outstanding 45,159 and
45,221 shares, respectively . . . . . . . . 452 452
Additional paid-in capital . . . . . . . . . . . 116,330 116,671
Retained earnings . . . . . . . . . . . . . . . . 120,009 134,876
--------- --------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . 236,791 251,999
--------- --------
$ 370,683 $393,784
--------- --------
--------- --------
See Notes to Consolidated Financial Statements.
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BUFFETS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
TWENTY-EIGHT WEEKS ENDED TWELVE WEEKS ENDED
------------------------ ------------------
JULY 17, JULY 16, JULY 17, JULY 16,
1996 1997 1996 1997
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
RESTAURANT SALES . . . . . . . . . $399,991 $431,277 $182,539 $190,536
RESTAURANT COSTS:
Food costs . . . . . . . . . . 139,127 147,531 62,513 63,752
Labor costs . . . . . . . . . . 114,456 129,913 50,451 56,112
Direct and occupancy costs. . 93,203 104,719 41,551 45,768
-------- -------- -------- --------
Total restaurant costs . . . . 346,786 382,163 154,515 165,632
-------- -------- -------- --------
RESTAURANT PROFITS . . . . . . . . 53,205 49,114 28,024 24,904
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES . . . . 24,289 24,111 11,249 10,841
-------- -------- -------- --------
28,916 25,003 16,775 14,063
OTHER EXPENSE. . . . . . . . . . . 414 632 154 147
-------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES . . . 28,502 24,371 16,621 13,916
INCOME TAXES . . . . . . . . . . . 10,998 9,504 6,414 5,424
-------- -------- -------- --------
NET EARNINGS . . . . . . . . . . . $ 17,504 $ 14,867 $ 10,207 $ 8,492
-------- -------- -------- --------
-------- -------- -------- --------
NET EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE . . . . . $.38 $.33 $.22 $.19
-------- -------- -------- --------
-------- -------- -------- --------
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING . . . . . . . . . . . 45,669 45,470 45,687 45,511
See Notes to Consolidated Financial Statements.
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BUFFETS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Twenty-Eight Weeks Ended
------------------------
JULY 17, JULY 16,
1996 1997
---------- --------
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings . . . . . . . . . . . . . . . . . . $ 17,504 $14,867
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . 22,140 21,735
Tax benefit from early disposition of
common stock . . . . . . . . . . . . . . . . 70 143
Deferred income . . . . . . . . . . . . . . . . (211) (212)
Deferred income taxes . . . . . . . . . . . . . 400 212
Changes in assets and liabilities net of
acquisitions:
Inventory . . . . . . . . . . . . . . . . . 52 (379)
Other current assets . . . . . . . . . . . 497 2,072
Refundable income taxes . . . . . . . . . . 1,829
Other assets . . . . . . . . . . . . . . . (5) (2)
Accounts payable . . . . . . . . . . . . . (7,135) (2,870)
Accrued payroll and related benefits . . . (1,371) 1,893
Accrued store closing costs . . . . . . . . (840)
Other accrued expenses . . . . . . . . . . 5,291 4,215
Income taxes currently payable . . . . . . 4,555 5,855
---------- -------
Total adjustments . . . . . . . . . . . . . 26,112 31,822
---------- -------
Net cash provided by operating activities. . 43,616 46,689
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net of retirements . . . . (36,500) (29,571)
Cash received from landlords . . . . . . . . . . 1,553 2,409
Purchase of minority interest in HTB1 . . . . . . (950)
Purchase of investments . . . . . . . . . . . . . (106,349)
Proceeds from sale of investments . . . . . . . . 119,219
---------- -------
Net cash used in investing activities . . . (23,027) (27,162)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of employee stock options . 636 198
Payments of long-term debt . . . . . . . . . . . (14,000)
Payments on capital leases. . . . . . . . . . . . (999) (1,098)
Borrowings under long term debt . . . . . . . . . 3,000
---------- -------
Net cash used in financing activities . . . (11,363) (900)
---------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . 9,226 18,627
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . 14,530 10,772
---------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . $ 23,756 $29,399
---------- -------
---------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of capitalized interest of $164
and $142 in 1996 and 1997, respectively). . . . . $ 1,688 $ 1,922
Income taxes . . . . . . . . . . . . . . . . . . 3,737 3,294
See Notes to Consolidated Financial Statements.
5
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BUFFETS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of Management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position
of Buffets, Inc. and subsidiaries as of July 16, 1997 and the results
of operations for the twelve weeks ended July 17, 1996 and July 16, 1997
and the results of operations and cash flows for the twenty-eight
weeks ended July 17, 1996 and July 16, 1997.
2. Minority interest reflects a 20% ownership interest in Dinertainment, Inc.
3. On May 13, 1997, the Company's Board of Directors approved the repricing of
stock options to substantially all employees with outstanding options. The
employees had the opportunity from May 23, 1997 to June 30, 1997 to have
their options repriced at the higher of $9.00 per share or at the fair
market value of the Company's common stock on the date they elected to
reprice their options if they surrendered 50% of the options being
repriced. Employees having stock options to purchase 907,226 shares of
common stock with exercise prices ranging from $9.13 to $24.63 exchanged
those options for stock options to purchase 453,613 shares of common stock
with an average exercise price of $9.00.
Also on May 13, 1997 the Board approved a stock option grant plan for three
Executive Officers who were excluded from the repricing program. The plan
provides for the three Officers the option to purchase an aggregate of
275,000 shares for $9.00 per share, the fair market value on the date
awarded. The options vest one third if the fair market value as of the
close of trading exceeds $12 per share for thirty consecutive trading days,
one third if the price exceeds $16 per share for thirty consecutive trading
days and one third if the price exceeds $20 per share for thirty
consecutive trading days. The plan also provides that all options become
exercisable no later than May 19, 2006.
4. These statements should be read in conjunction with the Notes to
Consolidated Financial Statements contained in the Company's Annual
Report on Form 10-K for the fiscal year ended January 1, 1997 and with
Management's Discussion and Analysis of Financial Condition and Results
of Operations appearing on pages 7 through 11 of this quarterly report.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The Company operates on a fifty-two or fifty-three week fiscal year, which
ends on the Wednesday nearest December 31. The Company's first quarter consists
of sixteen weeks; all other quarters are comprised of twelve weeks. When a
fifty-three week year occurs, the Company's fourth quarter consists of thirteen
weeks.
RESULTS OF OPERATIONS
TWELVE WEEKS ENDED JULY 16, 1997
RESTAURANT SALES. Restaurant sales of $190.5 million during the second quarter
of 1997 represented a 4.4% increase over sales of $182.5 million for the
comparable period of 1996, primarily due to sales generated by new restaurants
and higher sales at recently converted restaurants, partially offset by the
temporary closing of restaurants during conversion. Two new restaurants opened
in the second quarter of 1997 compared to eight during the second quarter of
1996, bringing the total number of Company-owned restaurants to 357 at the end
of the quarter (250 Old Country Buffet, 103 HomeTown Buffet and four Roadhouse
Grill), compared to 334 restaurants open at the end of the second quarter of
1996. Eight Old Country Buffet restaurants were converted to HomeTown Buffet
restaurants during the quarter. Average weekly sales per restaurant for the
second quarter of 1997 decreased 1.2% to $45,543 from $46,092 in the comparable
period of 1996. The twelve new restaurants opened during 1997 generated average
weekly sales of $53,134 during the second quarter. Comparable restaurant sales
were down 3.9% for the comparable period. Management believes that this
decrease is partially attributable to lower advertising expenditure in the
second quarter of 1997 than in the second quarter of 1996. The Company's price
increases have been in line with inflation.
RESTAURANT COSTS. As a percentage of restaurant sales, total restaurant costs
increased to 86.9% for the second quarter of 1997 from 84.6% for the second
quarter of 1996. Food costs as a percentage of restaurant sales decreased to
33.5% from 34.2%, due primarily to a reduction in the cost of dairy products;
and labor costs increased to 29.4% of sales from 27.6%, primarily due to
increases in the base compensation of store level managers and higher
expenditure on hourly wages due to a system wide implementation of a menu change
and the rollout of a certified training program. Direct and occupancy costs
increased as a percentage of restaurant sales to 24.0% in 1997 from 22.8% in
1996, due to increases in various restaurant costs including janitorial and
repair and maintenance expenses.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses as a percentage of restaurant sales decreased to 5.7% in
the second quarter of 1997 from 6.2% in the second quarter of 1996. Such
expenses in absolute terms decreased 3.6% to $10.8 million for the second
quarter of 1997 from $11.2 million for the comparable period of 1996, primarily
due to a decrease in advertising expense in the 1997 quarter. The Company
expects to incur approximately $3.4 million in marketing expenditures in the
third quarter relating to the Company's new marketing campaign, which will cover
approximately 40% of the Company's buffet restaurants. The Company expects to
spend approximately 1.2% of restaurant sales on advertising in fiscal 1997.
INCOME TAXES. Income taxes were 39.0% of earnings before income taxes for the
1997 quarter and 38.6% in the 1996 quarter.
TWENTY-EIGHT WEEKS ENDED JULY 16, 1997
RESTAURANT SALES. For the first twenty-eight weeks of 1997, restaurant sales
increased 7.8% to $431.3 million from $400.0 million in 1996, primarily due to
sales generated by new restaurants and higher sales at recently converted
restaurants, partially offset by the temporary closing of restaurants during
conversion. Twelve new restaurants opened, and one restaurant (previously
reserved for) closed, in the first half of 1997, compared to 22 new restaurants
opened in the first half of 1996. The average weekly sales per restaurant in
the 1997 period increased slightly by .1% to $44,139 from $44,093 in 1996.
Comparable restaurant sales were down 3.1% for the comparable periods.
Management believes that this decrease is partially attributable to lower
advertising expenditure in the first half of 1997 than in the first half of
1996. The Company's price increases have been in line with inflation.
RESTAURANT COSTS. Restaurant costs for the first twenty-eight weeks in 1997
increased to $382.2 million from $346.8 million in 1996. As a percentage of
restaurant sales, the 1997 period costs were 88.6% and the 1996 period costs
were 86.7%. Food costs decreased to 34.2% from 34.8% for the comparable
periods; and labor costs increased to 30.1% from 28.6%, primarily due to
increases in the base compensation of store level managers and higher
expenditure on hourly wages due to a system wide implementation of a menu change
and the rollout of a certified training program. Direct and occupancy costs
increased to 24.3% in the first twenty-eight weeks of 1997 from 23.3% in the
comparable period in 1996, due to increases in various restaurant costs
including janitorial and repair and maintenance expenses.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the first twenty-eight weeks
of 1997, selling, general and administrative expenses decreased to $24.1 million
from $24.3 million in 1996. This decrease was primarily due to a decrease in
advertising expense in 1997. As a percentage of sales, selling, general and
administrative expenses decreased to 5.6% in the 1997 period from 6.1% in the
1996 period. Advertising for the first twenty-eight weeks of 1997 was .7% of
restaurant sales compared to 1.0% in the comparable 1996 period.
INCOME TAXES. Income taxes were 39.0% of earnings before income taxes for the
1997 period and 38.6% for the 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's restaurants generate cash immediately through sales. New
restaurants are generally profitable shortly after opening. The Company does
not have significant assets in the form of trade receivables or inventory, and
often receives several weeks of trade credit from food and supply purveyors;
therefore, the Company's operations generate substantial cash which is available
to fund new restaurants. The investment of cash flow from operations in
restaurant property and equipment results in a "working capital deficit"
(current liabilities exceeding current assets) which, to a considerable extent,
represents interest-free financing from trade creditors that the Company intends
to continue to utilize.
The Company currently has an unsecured revolving line of credit of up to
$50 million with interest payable at the option of the Company, at the
applicable "eurodollar rate", "certificate of deposit rate", or the "reference
rate" of the bank at the time of the advance. The Company is also required to
pay a commitment fee equal to 1/4 of 1% per annum of the unused balance, payable
quarterly in arrears. On July 1, 1999, providing no default or event of default
has occurred and is continuing, the line of credit is convertible, at the
Company's option, to a three-year term loan, maturing on July 1, 2002. As of
July 16, 1997, the Company had no borrowings outstanding under this credit line.
In 1995, HomeTown Buffet, Inc., a wholly-owned subsidiary of the Company
("HomeTown"), issued $41.5 million in aggregate principal amount of 7.0%
subordinated convertible notes due on December 1, 2002. Interest is payable
semi-annually on June 1 and December 1, commencing June 1, 1996. The notes are
convertible into shares of the Company's common stock at a conversion price of
$11.67, subject to adjustment under certain conditions, at any time until
maturity. The notes are subordinated in right of payment to all existing and
future senior indebtedness of the Company. The notes are redeemable in whole or
in part, at the option of the Company, at any time on or after December 2, 1998.
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The Company continues to require substantial amounts of capital to fund its
growth. The Company currently expects to open a total of approximately 21 to 23
new restaurants and convert 25 to 30 restaurants, principally from Old Country
Buffets to HomeTown Buffets and one HomeTown Buffet to a Roadhouse Grill, during
1997, with 12 new restaurants already opened and 17 conversions completed at
July 16, 1997.
The Company expects to spend an aggregate of approximately $10 to $13
million during the remainder of 1997 on its restaurants being opened in 1997,
depending on the level of contributions obtained from landlords for leasehold
improvements and the amount of land purchased for freestanding buildings. The
Company anticipates that, as it further pursues the development of freestanding
locations, the cost per location and related cash requirements will increase
substantially over prior years and that these costs will not be offset by
landlord contributions that typically have been associated with strip mall
locations. The capital expenditure required for a freestanding location can be
over 100% greater than for a mall location. The Company estimates that
approximately 50% of 1997 new locations will be freestanding units, and of the
freestanding restaurants virtually all will be ground leased rather than owned.
The Company expects to spend an aggregate of approximately $3 to $4 million
during the remainder of 1997 on the conversion of restaurants. Sources of
capital for restaurant development projects are anticipated to be funds provided
by operations, credit received from trade suppliers, landlord contributions to
leasehold improvements and current bank financing. The Company believes that
these sources will be adequate to finance operations and the additional
restaurants and restaurant conversions included in the Company's restaurant
development plans for at least through fiscal 1997 and early fiscal 1998.
However, in order to remain prepared for further significant growth in future
years, the Company will continue to evaluate its financing needs and seek
additional funding if appropriate.
NON-PERFORMING RESTAURANTS
The Company evaluates impairment of individual restaurants whenever events
or changes in circumstances indicate the carrying amount of a restaurant may not
be recoverable. If individual restaurant sales during the third quarter do not
meet management's expectations, it is reasonably possible although not currently
quantifiable that the Company will incur impairment charges. The Company has
seven locations that have incurred negative cash flows on a year to date basis
for 1997. The Company is considering options for these locations including
expanding advertising or conversion to a different brand or concept.
ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE, which is
effective for interim and annual reporting periods ending after December 15,
1997. SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15,
EARNINGS PER SHARE, and replaces the presentation of primary earnings per share
10
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with a presentation of basics earnings per share. It also requires dual
presentation for all entities with complex capital structures and provides
guidance on other computational changes. Basic earnings per share is not
expected to be materially different than primary earnings per share due to the
impact of common stock equivalents being insignificant.
FORWARD-LOOKING INFORMATION
Certain statements in this quarterly report and in the Company's press
releases and oral statements made by or with the approval of the Company's
executive officers constitute or will constitute "forward-looking statements."
All forward-looking statements involve risks and uncertainties, and actual
results may be materially different. The following factors are among those that
could cause the Company's actual results to differ materially from those set
forth in such forward-looking statements.
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 proportion of new restaurants that will be free-standing units,
either owned or leased, rather than strip mall locations will depend upon the
availability of suitable mall locations. The costs of restaurant development
and conversion will depend upon the level of contributions from landlords for
leasehold improvements, the actual number of free-standing sites utilized in
such development, and whether such sites involve land purchases, the cost of
building supplies and general construction risks and costs. The Company's
ability to generate revenue as currently expected, unexpected expenses and the
need for additional funds to react to changes in the marketplace, including
unexpected increases in personnel costs and food supply costs, may impact
whether the Company has sufficient cash resources to fund its restaurant
development and conversion plans for 1997 and early 1998.
Other factors that could cause actual results of the Company to differ
materially from those contained in any such forward-looking statements include
the success and timing of the continuing integration of the operations of the
Company and HomeTown, the number, cost and success of restaurant conversions,
changes in the cost and supply of food and labor, the impact of menu changes,
the timing of television advertising planned for the remainder of 1997 and the
cost and effectiveness of such advertising as well as the Company's other
marketing programs, general economic conditions, the actions of existing and
future competitors, weather factors, unforseen health and safety developments
regarding restaurant operations, and regulatory constraints. The Company
assumes no obligation to publicly release the results of any revision or updates
to these forward-looking statements to reflect future events or unanticipated
occurrences.
11
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various legal actions arising in the
normal course of business. Management is of the opinion that their
outcome will not have a significant effect on the Company's
consolidated financial statements.
The Company and certain of its directors and executive officers
have been named as defendants in a Third Amended Consolidated Class
Action Complaint (the "complaint") brought on behalf of a putative
class of all purchasers of common stock of the Company from October
26, 1993 through October 25, 1994 (the "class period") in the United
States District Court for the District of Minnesota. The 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 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
complaint alleges that the defendants' conduct violated the Securities
Exchange Act of 1934 and seeks compensatory damages in an unspecified
amount, prejudgement interest, and an award of attorneys fees, costs
and expenses. The defendants have moved to dismiss the current
complaint with prejudice. A hearing on the motion to dismiss was held
before the Honorable Michael J. Davis, United States District Judge,
on June 13, 1997. Judge Davis took the motion under advisement, and
has not indicated when or how he might rule. The two previous
complaints were dismissed without prejudice. Management of the
Company believes that the action is without merit and intends to
defend it vigorously. Although the outcome of this action 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.
On August 9, 1996 HTB Restaurants, Inc. ("HTB Restaurants"), a
franchisee of HomeTown, along with its parent entities, Summit Family
Restaurants, Inc. ("Summit") and CKE Restaurants, Inc. (collectively,
the "Plaintiffs"), filed suit against the Company and HomeTown in
United States District Court for the District of Utah, Central
Division. The suit alleges, among other
12
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things, that the Company and HomeTown illegally conspired to restrict
competition and to prevent the Plaintiffs from developing additional
HomeTown restaurants under the Multiple Unit Agreement between
HomeTown and HTB Restaurants (the "Multiple Unit Agreement"). The
suit includes claims against the Company and HomeTown for violations
of both federal and state antitrust laws, for unfair business
practices, and for tortious interference with contract and economic
relations. The suit also alleges claims against HomeTown for breach
of contract and breach of the covenant of good faith and fair dealing.
Plaintiffs seek damages and attempted to enjoin the merger between the
Company and HomeTown. On September 19, 1996, the court denied
Plaintiffs' motion for preliminary injunctive relief. On January 31,
1997, an arbitrator ruled in binding arbitration that HomeTown is
entitled to terminate the Multiple Unit Agreement, along with all of
HTB Restaurants' future development rights. HTB Restaurants and
Summit have moved to vacate the arbitrator's award, while HomeTown has
moved to confirm it. A hearing in court on both motions is scheduled
for August 29, 1997. Discovery continues on the remaining claims in
the lawsuit. The Company and HomeTown believe that the suit is
without merit, and intend to vigorously defend the arbitrator's award
and the remaining claims under the lawsuit. Although the outcome of
this action cannot be predicted with certainty, the Company's
management believes that the outcome should not have a material effect
on the financial condition of the Company.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on May 13,
1997. At the meeting the number of directors of the Company was set
at six, six directors were elected, and the appointment of Deloitte &
Touche LLP as the Company's independent auditors for the current year
was approved, by the following votes:
Election of Directors FOR WITHHOLD NONVOTES
--------------------- ---------- -------- ---------
Walter R. Barry, Jr. 40,088,679 383,741 0
Roe H. Hatlen 40,101,277 371,143 0
Christian F. Horn 40,146,581 325,839 0
Alan S. McDowell 40,147,331 325,089 0
C. Dennis Scott 40,147,231 325,189 0
David Michael Winton 40,101,077 371,343 0
FOR AGAINST ABSTAIN NONVOTES
---------- ------- ------- --------
Approval of auditors 40,364,321 60,934 47,165 0
13
<PAGE>
Item 5. Other Information
On August 5, 1997, the Board of Directors appointed an additional
board member to serve until the next election. Marvin W. Goldstein is
currently the Chief Operating Officer of Regis Corporation, and was
formerly Chairman, President and Chief Executive Officer of Pet Food
Warehouse, Inc., and Chairman, Chief Executive Officer and President
of the Department Store Division of Dayton Hudson Corporation.
Item 6. Exhibits and reports on Form 8-K
a) Exhibits
3(a) Composite Amended and Restated Articles of Incorporation (1)
3(b) By-laws of the Company (2)
4(a) Form of Rights Agreement, dated as of October 24, 1995
between the Company and the American Stock Transfer and
Trust Company, as Rights Agent (3)
10(a) Separation Agreement dated June 30, 1997 between the Company
and Rick H. White
27 Financial Data Schedule
b) Reports on 8-K
None
(1) Incorporated by reference to Exhibit 4.1 to Registration Statement on Form
S-3 dated June 2, 1993 (Registration No. 33-63694).
(2) Incorporated by reference to Exhibit 3(b) to Annual Report on Form 10-K for
the fiscal year ended December 29, 1993.
(3) Incorporated by reference to Exhibit 1 to Report on Form 8-K dated October
24, 1995.
14
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
August 12, 1997
/s/ Roe H. Hatlen
---------------------------------------
Roe H. Hatlen
Chairman of the Board,
Chief Executive Officer
(Principal Executive Officer)
/s/ Clark C. Grant
---------------------------------------
Clark C. Grant
Executive Vice President of
Finance and Administration
and Treasurer
(Principal Financial
Officer)
15
<PAGE>
EXHIBIT INDEX
Exhibits Page
-------- ----
3(a) Composite Amended and Restated
Articles of Incorporation . . . . . Incorporated by Reference
3(b) By-laws of the Company . . . . . . Incorporated by Reference
4(a) Form of Rights Agreement, dated
as of October 24, 1995 between
the Company and the American
Stock Transfer and Trust Company,
as Rights Agent . . . . . . . . . Incorporated by Reference
10(a) Separation Agreement dated
June 30, 1997 between the
Company and Rick H. White . . . . . Filed Electronically
27 Financial Data Schedule . . . . . . Filed Electronically
____________________
<PAGE>
Exhibit 10(a)
SEPARATION AGREEMENT
WHEREAS, RICK H. WHITE ("EMPLOYEE") is employed by BUFFETS, INC.
("EMPLOYER") as Executive Vice President of Operations.
WHEREAS, EMPLOYEE and EMPLOYER are ending their employment
relationship; and
WHEREAS, EMPLOYEE and EMPLOYER wish to set forth the terms and
conditions under which they will end their employment relationship;
NOW THEREFORE, in consideration of the premises and the mutual
agreements, covenants, and provisions contained in this Separation Agreement
("Agreement") and the companion General Release, the parties hereto agree as
follows:
1. RESIGNATION. EMPLOYEE agrees to resign his employment with
EMPLOYER, effective June 30, 1997, the date of this Agreement ("Separation
Date").
2. RELEASE OF CLAIMS BY EMPLOYEE. Contemporaneously with the
execution of this Agreement, EMPLOYEE will also execute a General Release in
favor of EMPLOYER, its insurers, affiliates, divisions, committees, directors,
officers, employees, agents, successors, and assigns ("General Release"). This
Agreement will not be interpreted or construed to limit the companion General
Release in any manner.
3. PAYMENT. Provided EMPLOYEE complies with the provisions of this
Agreement and the General Release, and further provided that EMPLOYEE has not
rescinded the General Release within the applicable rescission period, EMPLOYER
or its agent will pay EMPLOYEE the amounts set forth in Subparagraphs 3(a) and
3(b) below (collectively, the "Payments") as EMPLOYER's sole payment obligation
to EMPLOYEE in consideration of this Agreement and the General Release. In the
event that EMPLOYEE rescinds the General Release, EMPLOYER's obligation to make
the Payments shall be null and void
a. BASE CONSIDERATION: Subject to the provisions of the
initial paragraph in Section 3 as set forth above, EMPLOYER shall pay EMPLOYEE
the amount of One Hundred Forty Thousand and No/100's Dollars ($140,000.00),
payable in two installments. The first installment of Seventy Thousand and
No/100's Dollars ($70,000) shall be payable on the date the provisions of
Section 3 above are met, and the second installment of Seventy Thousand and
No/100's Dollars ($70,000) shall be payable six (6) months from the date the
provisions of Section 3 above are met and provided that EMPLOYEE has otherwise
continuously complied with the terms of this Agreement and the General Release.
Payments shall be made on the first EMPLOYER regular payroll date following the
dates specified above.
b. GROUP HEALTH INSURANCE CONTINUATION: As of and after the
Separation Date, EMPLOYEE will be entitled to continue his group medical and
dental insurance and life insurance under such terms as are made available to
similarly situated former employees of EMPLOYER. In order to continue such
coverage, EMPLOYEE must maintain continued coverage under EMPLOYER's plan.
Subject to the provisions of the initial paragraph in Section 3 as set forth
above and for the duration specified below in this Section 3(b), EMPLOYER will
pay Seventy Five Percent (75%) of the total contribution cost of the plan.
EMPLOYEE shall be responsible for the remaining Twenty Five (25%) of the total
contribution cost of the plan, plus all deductibles, co-pays and
<PAGE>
any other payment obligations specified under the plan. EMPLOYEE'S coverage
under the plan, and EMPLOYER's obligation pursuant to this Section 3(b), shall
terminate in the event that EMPLOYEE fails to make the contributions required in
this Section 3(b), consistent with the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA")) until EMPLOYEE obtains other such
benefits, or until twelve (12) months from the date EMPLOYEE executes this
Agreement, whichever comes first. If EMPLOYEE has not obtained other benefits
one year from the date of this Agreement, EMPLOYEE may continue coverage under
EMPLOYER's plan, entirely at his own expense, at rates then specified by the
EMPLOYER for coverage continuation for former corporate office employees.
EMPLOYEE acknowledges that EMPLOYER may modify its premium structure, the terms
of its plan and the coverage of the plan, including the termination of all or a
part of a plan. All insurance shall terminate the earlier of eighteen (18)
months after the date that EMPLOYEE resigned his employment, or when EMPLOYEE
becomes a participant under another group medical plan (except in certain
circumstances where that plan has a pre-existing conditions clause that is
applicable to a covered person, coverage might not terminate), or when COBRA
permits termination. EMPLOYEE agrees to notify EMPLOYER when he begins
participation in another group plan. Except as expressly provided in this
Agreement, EMPLOYEE will not be eligible to participate in any of EMPLOYER's
employee benefit plans after the date of this Agreement.
4. REFERENCES. EMPLOYEE agrees to direct or cause to be directed to
the EMPLOYER all future requests for references concerning him. EMPLOYER agrees
to respond to all future requests for references concerning EMPLOYEE by
confirming the dates of his employment with EMPLOYER and identifying the last
position that he held while he worked at EMPLOYER.
5. CLAIMS INVOLVING EMPLOYER. EMPLOYEE will not recommend or
suggest to any potential claimants against or employees of EMPLOYER or their
attorneys or agents that they initiate claims or lawsuits against EMPLOYER, any
of its affiliates, or any of its or their directors, officers, employees, or
agents, nor will EMPLOYEE voluntarily aid, assist, or cooperate with any
claimants against or employees of EMPLOYER or their attorneys or agents in any
claims or lawsuits now pending or commenced in the future against EMPLOYER, any
of its affiliates, or any of its or their directors, officers, employees, or
agents; provided, however, that nothing in this paragraph will be construed to
prevent EMPLOYEE from giving truthful testimony in response to direct questions
asked pursuant to a lawful subpoena during any future legal proceedings
involving EMPLOYER, any of its affiliates, or any of its or their directors,
officers, employees, or agents.
6. CONFIDENTIALITY. It is the intent of the parties that the
terms and conditions of this Separation Agreement and the companion General
Release ("Confidential Information"), will be treated as confidential.
Accordingly, EMPLOYEE and his attorneys will not disclose Confidential
Information to anyone at any time, except as follows: EMPLOYEE may disclose
Confidential Information: (1) to his spouse; (2) to his attorney; or (3) to
his accountants or tax planners. If EMPLOYEE discloses Confidential Information
to any person identified above, he must simultaneously inform the person to whom
the disclosure is being made that he or she must keep such Confidential
Information strictly confidential and that he or she may not disclose such
Confidential Information to any other person without the advance written consent
of EMPLOYEE and EMPLOYER. EMPLOYER may disclose Confidential Information to the
extent that it is required to do so under federal or state securities
regulations or other applicable law, and EMPLOYER presently believes that such
disclosure will be necessary. Furthermore, either EMPLOYEE or EMPLOYER may
disclose Confidential Information in the event that they are legally required to
do so subject to the order of a court of applicable jurisdiction. If EMPLOYEE
is subpoenaed in any proceeding to disclose any Confidential Information, he
shall give EMPLOYER prompt notice of such request so that EMPLOYER may have the
ability to seek an appropriate protective order. It is further agreed that, if
in the absence of a protective order EMPLOYEE is nonetheless compelled to
disclose Confidential Information through a subpoena or other lawful process,
EMPLOYEE may disclose such information without liability hereunder; provided,
however, that EMPLOYEE gives EMPLOYER written notice of the information to be
disclosed as far in advance of its disclosure as is practicable and, upon
EMPLOYER'S request, use it's best efforts to obtain assurances that confidential
treatment will be accorded to such information.
-2-
<PAGE>
7. FULL COMPENSATION. EMPLOYEE agrees that the Payments made and
other consideration provided by EMPLOYER under this Agreement constitute full
compensation for and extinguish all EMPLOYEE's claims as set forth in the
companion General Release, including, but not limited to, all claims for
attorneys' fees, costs, and disbursements, and all claims for any type of legal
or equitable relief. EMPLOYEE acknowledges and agrees that all salary, bonus,
vacation and other payments associated with EMPLOYEE's employment with EMPLOYER
shall terminate effective as of the Separation Date. EMPLOYEE agrees that he
has received all bonuses for which he is due, and that he is ineligible to
receive bonuses under the EMPLOYER's bonus programs for the 1997 fiscal year,
since they are calculated based upon year-end corporate performance and apply
only to individuals that are active employees as of the end of the 1997 fiscal
year.
8. EMPLOYEE'S CONTINUED AVAILABILITY. For a six month period
commencing as of the Separation Date (or for such longer period reasonably
required by EMPLOYER to support the EMPLOYER in any pending litigation),
EMPLOYEE will make himself reasonably available from time to time upon
reasonable advance notice to confer with EMPLOYER'S senior executive officers,
directors, and lawyers at mutually convenient times during regular business
hours for reasonable amounts of time regarding EMPLOYER's significant business
matters and legal affairs. EMPLOYER will reimburse EMPLOYEE for any actual
out-of-pocket expenses that he incurs when conferring with EMPLOYER's senior
executive officers, directors, and lawyers, but will not make any other payments
to him for so conferring. The consulting provided hereunder shall be requested
at times and locations which, to the extent reasonably possible, will not
interfere with other employment which EMPLOYEE may now or hereafter obtain.
9. RECORDS, DOCUMENTS AND PROPERTY. EMPLOYEE acknowledges that he
has returned to EMPLOYER all records, correspondence, documents, financial data,
plans, computer disks, computer tapes, keys, credit cards, and other tangible
property in his possession belonging to EMPLOYER.
10. STOCK OPTION PLANS. EMPLOYEE is a participant in EMPLOYER's
employee stock option plans ("Stock Option Plans"). EMPLOYEE acknowledges that
neither his separation of employment or entry into this Agreement or
accompanying General Release shall serve to amend the Stock Option Plans or
create new or differing rights than those set forth in the Stock Option Plans
and associated written incentive stock option agreements to which EMPLOYEE is a
party. EMPLOYEE further acknowledges that his ability to exercise stock options
under the Stock Option Plans following his separation of employment is
restricted per the terms of the Stock Option Plans, it being EMPLOYEE's
responsibility to monitor the associated timing provisions and otherwise comply
with terms of the Stock Option Plans.
11. NO ADMISSION OF WRONGDOING. EMPLOYEE understands that this
Agreement does not constitute an admission that EMPLOYER has violated any local
ordinance, state or federal statute, or principle of common law, or that
EMPLOYER has engaged in any improper or unlawful conduct or wrongdoing against
EMPLOYEE. EMPLOYEE agrees that he will not characterize this Agreement or the
payment of any money or other consideration in accord with this Agreement as an
admission that EMPLOYER has engaged in any wrongdoing.
12. AUTHORITY. EMPLOYEE represents and warrants that he has the
authority to enter into this Agreement and the companion General Release, and
that no causes of action, claims, or demands released pursuant to this Agreement
and the companion General Release have been assigned to any person or entity not
a party to this Agreement and the companion General Release.
13. REPRESENTATION. EMPLOYEE acknowledges that he has been
represented by his own attorney in this matter, that he has had a full
opportunity to consider this Agreement and the companion General Release, that
he has had a full opportunity to ask any questions that he may have concerning
this Agreement and the companion General Release, and that he has not relied
upon any statements made by EMPLOYER or its attorneys, other than the statements
made in this Agreement and any EMPLOYER employee benefit plans in which EMPLOYEE
is a participant.
-3-
<PAGE>
14. INVALIDITY. In the event that any provision of this Agreement or
the companion General Release is determined by a court of competent jurisdiction
to be invalid, illegal, or unenforceable in any respect, such a determination
will not affect the validity, legality, or enforceability of the remaining
provisions of this Agreement or the companion General Release, and the remaining
provisions of this Agreement and the companion General Release will continue to
be valid and enforceable.
15. ENTIRE AGREEMENT. This Agreement, Exhibit "A" hereto, the
companion General Release, and any EMPLOYER employee benefit plans and Stock
Option Plans in which EMPLOYEE is a participant, contain all the agreements
between EMPLOYEE and EMPLOYER related to the subject matter contained therein.
This Agreement does not, however, limit the effectiveness or terms of any
existing written confidentiality, non-compete, and non-inducement agreements or
similar covenants binding EMPLOYEE, including those contained in the various
stock option agreements (collectively, "Continuing Undertakings") between
EMPLOYER AND EMPLOYEE, all of which remain in full force and effect, with the
proviso that if there exist any conflicts in interpretation among the various
Continuing Undertakings with respect to the matters contained in Exhibit "A"
hereto, then the terms of Exhibit "A" shall control. EMPLOYEE's performance of
the undertakings set forth in Exhibit "A" are a material inducement for EMPLOYER
to enter into this Agreement.
16. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
17. GOVERNING LAW. This Agreement and the companion General Release
will be construed in accord with, and any dispute or controversy arising from
any breach or asserted breach of this Agreement or the companion General Release
will be governed by, the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates indicated at their respective signatures below.
EMPLOYEE
Dated: June 30, 1997.
----------------------------------------
Rick H. White
Dated: June 30, 1997. EMPLOYER
Buffets, Inc.
By:
-------------------------------------
Its:
------------------------------
-4-
<PAGE>
EXHIBIT "A"
TO THE SEPARATION AGREEMENT BETWEEN BUFFETS, INC. AND RICK WHITE
DATE JUNE 30, 1997 ("AGREEMENT")
RESTRICTIONS ON COMPETITION BY EMPLOYEE. In partial consideration for
EMPLOYEE's receipt of the payments to be made by EMPLOYER pursuant to the
Agreement:
(a) The EMPLOYEE acknowledges that the EMPLOYEE has had and may continue
to have access to significant confidential and valuable information which can be
used unfairly to the harm of EMPLOYER and its subsidiary or affiliated companies
(collectively, the "Company") by present or potential competitors in the buffet
segment of the restaurant industry.
(b) The EMPLOYEE agrees that through and until June 30, 1999, the EMPLOYEE
will not render services or give advice to, or affiliate with (as employee,
partner, consultant or otherwise) or invest or acquire any interest in, any
other person or organization which is engaged in or about to become engaged in
franchising, developing, owning or operating a restaurant or other food service
establishment that utilizes, in whole or in significant part, a buffet,
smorgasbord or cafeteria service format (collectively, a "Conflicting
Organization"), operating within twenty-five miles of any location where an Old
Country Buffet restaurant or HomeTown Buffet restaurant is then currently
operating, or where the Company, an affiliate or a present or prospective
franchise operator has leased or purchased, or is then negotiating to lease or
purchase, a site on which it plans to operate an Old Country Buffet restaurant
or HomeTown Buffet restaurant. Notwithstanding the foregoing, if the business
of the Conflicting Organization has separate and distinct divisions, EMPLOYEE
may, following termination of such employment, render services or give advice
to, or affiliate with, a division which would not itself constitute a
Conflicting Organization if, prior thereto, the Company receives written
assurances satisfactory to the Company from the Conflicting Organization and
EMPLOYEE that EMPLOYEE will not directly or indirectly render services or give
advice or information to any division of such Conflicting Organization which
would itself constitute a Conflicting Organization. In addition to the
foregoing, but only in the states of California, Oregon, Washington and
Minnesota, EMPLOYEE agrees that it will observe identical covenants to those
described above but with respect to restaurants utilizing a casual western theme
restaurant concept similar to that operated by EMPLOYER under the Roadhouse
Grill trademark.
(c) The EMPLOYEE further agrees that, during the period described in
subparagraph (b) of this Exhibit "A", the EMPLOYEE will not, directly or
indirectly, assist or encourage any other person to carry out, directly or
indirectly, any activity that would be prohibited by the above provisions of
this Exhibit "A" if such activity were carried out by the EMPLOYEE, either
directly or indirectly; and in particular the EMPLOYEE agrees that the EMPLOYEE
will not, directly or indirectly, induce any employee of the Company to carry
out, directly or indirectly, any such activity.
(d) The EMPLOYEE acknowledges and agrees that the Company will not have an
adequate remedy at law in the event of any breach by the EMPLOYEE of this
Exhibit "A" and the Company shall therefore be entitled, in addition to any
other remedies that may be available, to injunctive and/or other equitable
relief to prevent or remedy a breach of this Exhibit "A" by the EMPLOYEE.
(e) The EMPLOYEE acknowledges that this Exhibit "A" limits the EMPLOYEE's
right to compete only to the extent necessary to protect the Company from unfair
competition. The EMPLOYEE therefore agrees that a court of competent
jurisdiction may, if it finds the restrictions to be unlawful or excessive,
modify and enforce them to the extent it believes to be reasonable under the
circumstances.
(f) The EMPLOYEE acknowledges that he has knowledge of material non-public
information regarding the Company's finances, business and strategic plans,
budgets, forecasts, operational practices, policies, procedures, systems,
recipes, and other confidential, proprietary and/or trade secret information
(collectively, "Confidential Information") that could cause irreparable harm to
the Company if disclosed without first obtaining the Company's prior written
consent, signed by an officer of EMPLOYER. Furthermore, EMPLOYEE agrees that he
will not use any of the Confidential Information for personal gain or the
benefit of others. The confidentiality obligations contained in this paragraph
(d) shall be indefinite, and shall survive the two year term of EMPLOYEE's other
obligations contained in this Exhibit "A".
-5-
<PAGE>
GENERAL RELEASE
DEFINITIONS. I intend all words used in this General Release to have
their plain meanings in ordinary English. Technical legal words are not needed
to describe what I mean. Specific terms I use in this General Release have the
following meanings:
A. "I", "ME", and "MY" mean both me and anyone who has or obtains
any legal rights or claims through me.
B. "EMPLOYER" means Buffets, Inc., any company related to Buffets,
Inc. in the present or past, any company providing insurance to
Buffets, Inc. in the present or past, any present or past
employee benefit plan sponsored by Buffets, Inc., any present or
past affiliates, divisions, committees, directors,officers,
employees, agents, successors, or assigns of Buffets, Inc., and
any person who acted on behalf of or on instructions from
Buffets, Inc.
C. "MY CLAIMS" mean all of my existing rights to any relief of any
kind from the Employer, whether or not I now know about those
rights, including, but not limited to:
1. all claims that arise out of or that relate to my employment
or the termination of my employment with the Employer;
2. all claims that arise out of or that relate to the
statements or actions of the Employer;
3. all claims for any alleged unlawful discrimination or any
other alleged unlawful practices that arise out of or that
relate to the statements or actions of the Employer,
including, but not limited to, claims under the Civil Rights
Act of 1964, the Americans with Disabilities Act, the
National Labor Relations Act, the Employee Retirement Income
Security Act, the Minnesota Human Rights Act, the Minnesota
Workers' Compensation Act, and any federal or state wage and
hour laws; and claims that the Employer engaged in
conduct prohibited on any other basis under any federal,
state, or local statute, ordinance, or regulation;
4. all claims for alleged unpaid compensation, expenses, and
employee benefits; wrongful discharge; breach of contract;
breach of implied contract; breach of a covenant of good
faith and fair dealing; defamation; intentional or negligent
infliction of emotional distress; fraud; negligent
misrepresentation; negligence; assault and battery; false
imprisonment; invasion of privacy; interference with
contractual or business relationships; breach of
fiduciary duty; and promissory or equitable estoppel; and
any other wrongful employment practices or violations of
common law; and
5. all claims for attorneys' fees, liquidated damages, punitive
damages, costs, and disbursements.
AGREEMENT TO RELEASE MY CLAIMS. I will receive a certain sum of money
and other consideration from the Employer or its agents as set forth in the
companion Separation Agreement if I sign and do not rescind this General Release
as provided below. In exchange for that money and other consideration, I agree
to give up all My Claims against the Employer. I will not bring any lawsuits or
make any other demands against the Employer based on My Claims. The money and
other consideration that I will receive in exchange for this General Release and
the companion Separation Agreement is a full and fair payment for the release of
My Claims. The Employer does not owe me anything for the release of My Claims
in addition to the money and other consideration that I am receiving in exchange
for this General Release and the companion Separation Agreement.
-1-
<PAGE>
MY RIGHT TO RESCIND THIS GENERAL RELEASE AND THE COMPANION SEPARATION
AGREEMENT. I understand that I have the right to rescind (that is, cancel or
revoke) this General Release for any reason within 15 (fifteen) calendar days
after I sign it. I understand that this General Release will not become
effective or enforceable unless and until I have not rescinded it and the
rescission period has expired. I understand that if I wish to rescind, the
rescission must be in writing and hand-delivered or mailed to the Employer. If
hand-delivered, the rescission must be (a) addressed to Buffets, Inc., attn:
General Counsel, 10260 Viking Drive, Eden Prairie, MN 55344, and (b) delivered
to said General Counsel within the 15 (fifteen) day period. If mailed, the
rescission must be: (i) postmarked within the 15 (fifteen) day period;
(ii) addressed consistent with the foregoing instructions; and (iii) sent by
certified mail, return receipt requested.
ADDITIONAL AGREEMENTS AND UNDERSTANDINGS. Even though the Employer
will pay me for the release of My Claims, the Employer does not admit that it is
responsible or legally obligated to me for My Claims. In fact, I understand
that the Employer denies that it is responsible or legally obligated for My
Claims or that it has engaged in any improper or unlawful conduct or wrongdoing
against me.
I also understand that the terms of this General Release and the
companion Separation Agreement are confidential, and that I may not disclose
those terms to any person except under the circumstances described in the
companion Separation Agreement.
I have read this General Release and the companion Separation
Agreement carefully and I understand all its terms. I have been advised to
consult with my own attorneys prior to executing this General Release and the
companion Separation Agreement. I have discussed this General Release and the
companion Separation Agreement with my own attorneys, and they have fully
explained them to me. In agreeing to sign this General Release and the
companion Separation Agreement I have not relied on any statements or
explanations made by the Employer or its attorneys, other than statements made
in the companion Separation Agreement and any employee benefit plans sponsored
by the Employer in which I am a participant.
I understand and agree that this General Release, the companion
Separation Agreement, and any employee benefit plans sponsored by the Employer
in which I am a participant contain all the agreements between the Employer and
me relating to this separation. We have no other written or oral agreements
relating to this separation.
I am age 18 or older, and I am not under any legal disabilities that
prevent me from being legally bound by the agreements that I am making in this
General Release and the companion Separation Agreement.
I have not filed for personal bankruptcy or been involved in any
personal bankruptcy proceedings between the accrual of My Claims and the date of
my signature below. I am legally able and entitled to receive the money and
other consideration that I will receive from the Employer as set forth in the
companion Separation Agreement in separation of My Claims.
Dated: June 30, 1997
----------------------------------------
Rick H. White
Witnesses:
- ------------------------------
- ------------------------------
-2-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JULY 16, 1997 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE TWENTY-EIGHT WEEK PERIOD ENDED JULY 16, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-02-1997
<PERIOD-END> JUL-16-1997
<CASH> 29,399
<SECURITIES> 0
<RECEIVABLES> 3,368
<ALLOWANCES> 0
<INVENTORY> 4,032
<CURRENT-ASSETS> 52,834
<PP&E> 483,520
<DEPRECIATION> 150,704
<TOTAL-ASSETS> 393,784
<CURRENT-LIABILITIES> 91,848
<BONDS> 45,528
0
0
<COMMON> 452
<OTHER-SE> 251,547
<TOTAL-LIABILITY-AND-EQUITY> 393,784
<SALES> 431,277
<TOTAL-REVENUES> 431,277
<CGS> 382,163
<TOTAL-COSTS> 382,163
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 848
<INCOME-PRETAX> 24,371
<INCOME-TAX> 9,504
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,867
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
