Form 8-K BUFFALO WILD WINGS INC For: Oct 27

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October 27, 2014 4:09 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
�
FORM 8-K
�
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
�
�
Date of Report (Date of earliest event reported): �October 27, 2014
�
�
BUFFALO WILD WINGS, INC.
(Exact name of registrant as specified in its charter)
�
�
Minnesota
000-24743
31-1455915
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
�
5500 Wayzata Boulevard, Suite�1600
Minneapolis, Minnesota
�
�
55416
(Address of principal executive offices)
�
(Zip Code)
�
Registrants telephone number, including area code ���������952-593-9943����������
�
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
�
o���� Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
�
o�����Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
�
o�����Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
�
o�����Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02.
Results of Operations and Financial Condition.
�
On October 27, 2014, Buffalo Wild Wings, Inc. issued a press release announcing its 2014 third quarter financial results. A copy of the press release is furnished as Exhibit 99.1 hereto.
�
Item 9.01.
Financial Statements and Exhibits.
�
(d)�����Exhibits.
�




Exhibit
Description
�
�
99.1
Press Release dated October 27, 2014.




SIGNATURE
�
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 hereunto duly authorized.
�
�
BUFFALO WILD WINGS, INC. �
�
�
�
Date: October 27, 2014
By
/s/ Emily C. Decker�����
�
�
Emily C. Decker
�
�
Senior Vice President, General Counsel and�Secretary




EXHIBIT INDEX
�
Exhibit No.
Description
Manner of Filing
99.1
Press Release dated October 27, 2014.
Furnished Electronically




FOR IMMEDIATE RELEASE



Investor Relations Contact:
Heather Pribyl
952.253.0731
�

Buffalo Wild Wings, Inc. Announces
Third Quarter Earnings per Share of $1.14

Minneapolis, Minnesota, October 27, 2014  Buffalo Wild Wings, Inc. (NASDAQ: BWLD) announced today financial results for the third quarter ended September�28, 2014. Highlights for the third quarter versus the same period a year ago were:
�
Total revenue increased 18.3% to $373.5 million
�
Company-owned restaurant sales grew 18.5% to $350.5 million
�
Same-store sales increased 6.0% at company-owned restaurants and 5.7% at franchised restaurants
�
Net earnings increased 21.7% to $21.8 million from $17.9 million, and earnings per diluted share increased 20.0% to $1.14 from $0.95
Sally Smith, President and Chief Executive Officer, commented, Were pleased with our results in the third quarter. Same-store sales increased 6.0% at company-owned restaurants and 5.7% at franchised locations. Our strong same-store sales continued during the World Cup tournament, introducing the brand to new Guests. Fantasy football draft parties helped maintain the sales momentum through the quarter. Our restaurant teams were excited for the start of college and professional football and are delivering a great game-day experience to our Guests.

Ms. Smith continued, Our cost of sales percentage was lower than the prior year, driven by a decrease in the price per pound for traditional chicken wings and leverage from menu price increases taken over the last 12 months. We are nearing completion of staffing all of our company-owned Buffalo Wild Wings restaurants with Guest Experience Captains. These Team Members engage our Guests to deliver the ultimate social experience for sports fans and are an integral component of our Guest Experience strategy. Our strong sales growth, lower food costs, and a lower effective tax rate more than offset the increased labor cost of the Guest Experience Captains, producing net earnings growth of 21.7% and earnings per diluted share of $1.14 in the third quarter.



Total revenue increased 18.3% to $373.5 million in the third quarter compared to $315.8 million in the third quarter of 2013. Company-owned restaurant sales for the quarter increased 18.5% over the same period in 2013, to $350.5 million, driven by a same-store sales increase at company-owned Buffalo Wild Wings restaurants of 6.0% and 44 additional Buffalo Wild Wings restaurants at the end of third quarter of 2014 relative to the same period in 2013. Franchise royalties and fees increased 14.1% to $22.9 million for the quarter versus $20.1 million in the third quarter of 2013. This increase is attributed to a same-store sales increase at franchised Buffalo Wild Wings locations of 5.7% and 47 additional franchised Buffalo Wild Wings restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned Buffalo Wild Wings restaurants were $59,643 for the third quarter of 2014 compared to $55,592 for the same quarter last year, a 7.3% increase. Franchised Buffalo Wild Wings restaurants in the United States averaged $61,586 for the period versus $58,926 in the third quarter a year ago, a 4.5% increase.

For the third quarter, net earnings increased 21.7% to $21.8 million versus $17.9 million in the third quarter of 2013. Earnings per diluted share were $1.14, as compared to third quarter 2013 earnings per diluted share of $0.95.

2014 and 2015 Outlook
�
Ms. Smith remarked, Our restaurant teams are focused on providing our Guests with a unique and compelling social experience during football season, and we're pleased with our continued sales strength. Same-store sales increased about 5.4% at company-owned restaurants and 5.1% at franchised locations for the first four weeks of the fourth quarter compared to 5.3% and 3.0%, respectively, for the same period last year. Current costs for traditional chicken wings of $1.98 per pound are 30% higher than our third quarter average cost. Given this trend and known raises in certain minimum wage rates, we are increasing menu prices an average of 3.0% at the end of November. With our results for the first nine months and our outlook for the fourth quarter, we believe net earnings growth will exceed 28% for 2014.

Ms. Smith concluded, "Buffalo Wild Wings continues to expand toward our goal of 1,700 restaurants in the United States and Canada. In 2015, we plan to open approximately 50 company-owned Buffalo Wild Wings restaurants and expect our franchisees in the United States to add 40 franchised locations. Our international franchisees plan on opening eight to ten restaurants. We also plan to open a total of five company-owned Rusty Taco and PizzaRev locations, and both brands will continue their expansion through franchising. We believe with our planned unit growth and ongoing operational diligence we can achieve 18% net earnings growth for 2015.

Buffalo Wild Wings will be hosting a conference call today, October 27, 2014 at 4:00 p.m. Central Daylight Time to discuss these results. There will be a simultaneous webcast conducted at our investor website IR.BuffaloWildWings.com.

A replay of the call will be available until November 3, 2014. To access this replay, please dial 1.858.384.5517 password 5171702.





About the Company

Buffalo Wild Wings, Inc., founded in 1982 and headquartered in Minneapolis, is a growing owner, operator and franchisor of Buffalo Wild Wings� restaurants featuring a variety of boldly-flavored, made-to-order menu items including its namesake Buffalo, New York-style chicken wings. The Buffalo Wild Wings menu specializes in 21 mouth-watering signature sauces and seasonings with flavor sensations ranging from Sweet BBQ" to Blazin�. Guests enjoy a welcoming neighborhood atmosphere that includes an extensive multi-media system for watching their favorite sporting events. Buffalo Wild Wings is the recipient of hundreds of "Best Wings" and "Best Sports Bar" awards from across the country. There are currently more than 1,040 Buffalo Wild Wings locations in the United States, Canada, and Mexico.�

To stay up-to-date on all the latest events and offers for sports fans and wing lovers, like Buffalo Wild Wings on Facebook, follow @BWWings on Twitter and visit www.BuffaloWildWings.com.

Forward-looking Statements

Various remarks we make about future expectations, plans, and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements relate to our future financial and restaurant performance measures and growth goals, including but not limited to those relating to our fourth quarter sales trends and projected unit and net earnings growth rates for 2014, 2015, and beyond. All statements other than statements of historical fact are statements that could be deemed forward-looking statements and are based upon the current beliefs and expectations of our management. We have attempted to identify forward-looking statements by terminology, including anticipates, believes, can, continue, could, estimates, expects, intends, may, plans, potential, predicts, should or will or the negative of these terms or other comparable terminology. Actual results may vary materially from those contained in forward-looking statements based on a number of factors, including, but not limited to, our ability to achieve and manage our planned expansion, the ability of our franchisees to open and manage new restaurants, market acceptance in the new geographic regions we enter (particularly non-U.S. locations), success of acquired restaurants, success of investments in new or emerging concepts, unforeseen obstacles in developing nontraditional sites or non-U.S. locations, our ability to obtain and maintain licenses and permits necessary to operate our existing and new restaurants, our franchisees adherence to our system standards, the cost of commodities such as traditional chicken wings, the success of our key initiatives and our advertising and marketing campaigns, our ability to control restaurant labor and other restaurant operating costs, the continued service of key management personnel, our ability to protect our name and logo and other proprietary information, economic conditions (including changes in consumer preferences or consumer discretionary spending), the impact of federal, state or local government regulations relating to our employees, the sale of food and alcoholic beverages, the effect of competition in the restaurant industry, and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission, including the factors described under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2013, as updated in subsequent reports filed with the SEC. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of


the date on which they are made. We undertake no obligation to update any forward-looking statements.
# # #




BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
�
CONSOLIDATED STATEMENTS OF EARNINGS
�����
(Dollar and share amounts in thousands except per share data)
�
(unaudited)
�

�
Three months ended
�
Nine months ended
�
September�28,
2014
�
September�29,
2013
�
September�28,
2014
�
September�29,
2013
Revenue:
�
�
�
�
�
�
�
Restaurant sales
$
350,524

�
295,693

�
1,038,610

�
865,521

Franchise royalties and fees
22,934

�
20,108

�
68,697

�
59,651

Total revenue
373,458

�
315,801

�
1,107,307

�
925,172

Costs and expenses:
�
�
�
�
�
�
�
Restaurant operating costs:
�
�
�
�
�
�
�
Cost of sales
101,886

�
88,689

�
296,210

�
268,410

Labor
111,897

�
89,740

�
324,663

�
264,500

Operating
52,364

�
44,668

�
151,419

�
126,985

Occupancy
19,796

�
17,276

�
58,048

�
50,267

Depreciation and amortization
24,776

�
21,587

�
71,354

�
62,814

General and administrative
27,784

�
24,664

�
86,163

�
69,562

Preopening
3,594

�
2,991

�
8,369

�
9,682

Loss on asset disposals and impairment
1,371

�
902

�
3,369

�
1,702

Total costs and expenses
343,468

�
290,517

�
999,595

�
853,922

Income from operations
29,990

�
25,284

�
107,712

�
71,250

Other income (loss)
(236
)
�
383

�
(128
)
�
644

Earnings before income taxes
29,754

�
25,667

�
107,584

�
71,894

Income tax expense
8,001

�
7,796

�
33,812

�
21,155

Net earnings
$
21,753

�
17,871

�
73,772

�
50,739

Earnings per common share  basic
$
1.15

�
0.95

�
3.90

�
2.70

Earnings per common share  diluted
$
1.14

�
0.95

�
3.89

�
2.69

Weighted average shares outstanding  basic
18,923

�
18,779

�
18,900

�
18,765

Weighted average shares outstanding  diluted
19,021

�
18,889

�
18,985

�
18,842







The following table expresses results of operations as a percentage of total revenue for the periods presented, except for restaurant operating costs which are expressed as a percentage of restaurant sales:



�
Three months ended
�
Nine months ended
�
September�28,
2014
�
September�29,
2013
�
September�28,
2014
�
September�29,
2013
Revenue:
�
�
�
�
�
�
�
Restaurant sales
93.9
�%
�
93.6
%
�
93.8
�%
�
93.6
%
Franchise royalties and fees
6.1

�
6.4

�
6.2

�
6.4

Total revenue
100.0

�
100.0

�
100.0

�
100.0

Costs and expenses:
�
�
�
�
�
�
�
Restaurant operating costs:
�
�
�
�
�
�
�
Cost of sales
29.1

�
30.0

�
28.5

�
31.0

Labor
31.9

�
30.3

�
31.3

�
30.6

Operating
14.9

�
15.1

�
14.6

�
14.7

Occupancy
5.6

�
5.8

�
5.6

�
5.8

Depreciation and amortization
6.6

�
6.8

�
6.4

�
6.8

General and administrative
7.4

�
7.8

�
7.8

�
7.5

Preopening
1.0

�
0.9

�
0.8

�
1.0

Loss on asset disposals and impairment
0.4

�
0.3

�
0.3

�
0.2

Total costs and expenses
92.0

�
92.0

�
90.3

�
92.3

Income from operations
8.0

�
8.0

�
9.7

�
7.7

Other income (loss)
(0.1
)
�
0.1

�
0.0

�
0.1

Earnings before income taxes
8.0

�
8.1

�
9.7

�
7.8

Income tax expense
2.1

�
2.5

�
3.1

�
2.3

Net earnings
5.8
�%
�
5.7
%
�
6.7
�%
�
5.5
%


BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
(unaudited)

�
September�28,
2014
�
December 29,
2013
Assets
�
�
�
Current assets:
�
�
�
Cash and cash equivalents
$
74,095

�
57,502

Marketable securities
26,234

�
7,584

Accounts receivable, net of allowance of $155 and $25, respectively
25,585

�
21,845

Inventory
9,975

�
9,492

Prepaid expenses
11,759

�
4,509

Refundable income taxes


�
4,329

Deferred income taxes
12,405

�
9,287

Restricted assets
48,493

�
68,208

Total current assets
208,546

�
182,756

�
�
�
�
Property and equipment, net
471,485

�
440,538

Reacquired franchise rights, net
32,517

�
33,403

Other assets
19,960

�
16,498

Goodwill
34,810

�
32,533

Total assets
$
767,318

�
705,728

�
�
�
�
Liabilities and Stockholders Equity
�
�
�
Current liabilities:
�
�
�
Unearned franchise fees
$
2,241

�
1,818

Accounts payable
41,404

�
31,806

Accrued compensation and benefits
41,025

�
52,049

Accrued expenses
14,949

�
13,784

Income tax payable
2,429

�


System-wide payables
48,101

�
67,017

Total current liabilities
150,149

�
166,474

�
�
�
�
Long-term liabilities:
�
�
�
Other liabilities
6,774

�
1,913

Deferred income taxes
21,820

�
37,822

Deferred lease credits
37,046

�
33,711

Total liabilities
215,789

�
239,920

�
�
�
�
Commitments and contingencies
�
�
�
Stockholders equity:
�
�
�
Undesignated stock, 1,000,000 shares authorized


�


Common stock, no par value. Authorized 44,000,000 shares; issued and outstanding 18,925,231 and 18,803,663, respectively
145,092

�
133,203

Retained earnings
407,373

�
333,601

Accumulated other comprehensive loss
(1,561
)
�
(996
)
Total stockholders equity
550,904

�
465,808

Noncontrolling interests
625

�


Total equity
551,529

�
465,808

Total liabilities and equity
$
767,318

�
705,728



BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(unaudited)
�
Nine months ended
�
September�28,
2014
�
September�29,
2013
Cash flows from operating activities:
�
�
�
Net earnings
$
73,772

�
50,739

Adjustments to reconcile net earnings to net cash provided by operations:
�
�
�
Depreciation
67,932

�
59,004

Amortization
3,422

�
3,810

Loss on asset disposals and impairment
3,369

�
1,682

Deferred lease credits
4,209

�
3,852

Deferred income taxes
(18,774
)
�
(1,547
)
Stock-based compensation
10,251

�
7,290

Excess tax deficiency (tax benefit) from stock issuance
217

�
(399
)
Change in operating assets and liabilities, net of effect of acquisitions:
�
�
�
Trading securities
(657
)
�
(829
)
Accounts receivable
(3,323
)
�
(266
)
Inventory
(400
)
�
(1,039
)
Prepaid expenses
(7,245
)
�
(225
)
Other assets
(160
)
�
(772
)
Unearned franchise fees
333

�
465

Accounts payable
4,128

�
(6,925
)
Income taxes
6,541

�
6,271

Accrued expenses
99

�
1,283

Net cash provided by operating activities
143,714

�
122,394

Cash flows from investing activities:
�
�
�
Acquisition of property and equipment
(95,347
)
�
(96,552
)
Acquisition of businesses/investments in affiliates
(7,307
)
�
(10,288
)
Purchase of marketable securities
(17,993
)
�


Proceeds from marketable securities


�
3,282

Net cash used in investing activities
(120,647
)
�
(103,558
)
Cash flows from financing activities:
�
�
�
Proceeds from line of credit


�
5,000

Repayments of line of credit


�
(5,000
)
Issuance of common stock
1,829

�
1,237

Excess tax benefit (tax deficiency) from stock issuance
(217
)
�
399

Tax payments for restricted stock units
(7,474
)
�
(4,813
)
Net cash used in financing activities
(5,862
)
�
(3,177
)
Effect of exchange rate changes on cash and cash equivalents
(612
)
�
(328
)
Net increase in cash and cash equivalents
16,593

�
15,331

Cash and cash equivalents at beginning of period
57,502

�
21,340

Cash and cash equivalents at end of period
$
74,095

�
36,671




BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

Restaurant Count
Company-owned Restaurants (includes Buffalo Wild Wings, Rusty Taco, and Buffalo Wild Wings-owned PizzaRev locations):
�
Q1
Q2
Q3
Q4
2014
443
449
463

2013
397
407
415
434
2012
327
330
343
381
2011
263
277
288
319
2010
235
234
244
259

Franchised Restaurants (includes Buffalo Wild Wings and Rusty Taco locations):
�
Q1
Q2
Q3
Q4
2014
569
579
588

2013
514
525
534
559
2012
505
505
511
510
2011
488
492
498
498
2010
430
447
457
473


Same-Store Sales at Buffalo Wild Wings locations in United States and Canada
Company-owned Restaurants:
�
Q1
Q2
Q3
Q4
Year
2014
6.6%
7.7%
6.0%


2013
1.4%
3.8%
4.8%
5.2%
3.9%
2012
9.2%
5.3%
6.2%
5.8%
6.6%
2011
3.9%
5.9%
5.7%
8.9%
6.1%
2010
0.1%
(0.1%)
2.6%
(0.3%)
0.6%

Franchised Restaurants:
�
Q1
Q2
Q3
Q4
Year
2014
5.0%
6.5%
5.7%


2013
2.2%
4.1%
3.9%
3.1%
3.3%
2012
7.3%
5.5%
5.8%
7.4%
6.5%
2011
1.6%
2.7%
4.2%
5.9%
3.6%
2010
0.7%
(0.7%)
0.3%
(1.1%)
(0.2%)

�


BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Supplemental Information

Average Weekly Sales Volumes at Buffalo Wild Wings locations in United States and Canada
�
Company-owned Restaurants:
�
�
Q1
Q2
Q3
Q4
Year
2014
$
60,966
59,403
59,643


2013
�
56,953
54,759
55,592
58,204
56,392
2012
�
55,131
51,524
52,561
55,595
53,783
2011
�
48,845
47,970
49,461
51,983
49,627
2010
�
45,327
43,021
44,394
45,595
44,601

Franchised Restaurants:
�
�
Q1
Q2
Q3
Q4
Year
2014
$
63,852
61,845
61,586


2013
�
60,050
58,186
58,926
61,167
59,594
2012
�
57,282
54,766
55,608
58,490
56,570
2011
�
52,744
50,995
51,350
53,385
52,081
2010
�
51,532
49,051
49,005
49,837
49,835


�



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