UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2003 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ________ to ________ |
Commission File No. 1-15935
A. |
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Full title of the plan and the address of the plan, if different from that |
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of the issuer named below: |
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Outback Steakhouse, Inc. |
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B. |
Name of issuer of the securities held pursuant to the plan and the address |
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of its principal executive office: |
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Outback Steakhouse, Inc. |
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2202 North West Shore Boulevard, 5th Floor, Tampa, Florida 33607 |
Outback Steakhouse, Inc.
Salaried Employees 401(k) Plan and Trust
Report on Audits of Financial Statements
December 31, 2003 and 2002
Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Index
December 31, 2003 and 2002
Page(s)
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Report of Independent Registered Certified Public Accounting Firm
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1 |
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Financial Statements
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Statements of Net Assets Available for Benefits
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2 |
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Statements of Changes in Net Assets Available for Benefits
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3 |
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4-8 |
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Supplemental Schedules
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Schedule I: Schedule H, line 4i -- Schedule of Assets (Held at End of Year)
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9 |
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Note: Other schedules required by Sections 2520.103-10 of the Department of Labor Rules and Regulations for reporting and disclosure under ERISA have been omitted because they are not applicable.
To the Participants and Administrator of
the Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust (the “Plan”) at December 31, 2003 and 2002, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
June 16, 2004
Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Statements of Net Assets Available for Benefits
December 31, 2003 and 2002
2003 |
2002 |
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Assets |
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Investments, at fair value |
$ 39,902,514 |
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$ 27,738,337 |
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Receivables |
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Participant contributions |
120,659 |
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223,967 |
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Employer contributions |
1,026,638 |
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1,069,423 |
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Accrued interest and other receivables |
13,394 |
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10,309 |
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Total receivables |
1,160,691 |
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1,303,699 |
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Net assets available for benefits |
$ 41,063,205 |
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$ 29,042,036 |
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The accompanying notes are an integral part of these financial statements.
2
Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2003 and 2002
2003 |
2002 |
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Additions to net assets attributed to |
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Investment income |
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Net appreciation in fair value of investments |
$ 6,668,669 |
$ - |
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Interest and dividend income |
652,260 |
568,973 |
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7,320,929 |
568,973 |
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Contributions |
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Participant |
5,776,241 |
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5,386,530 |
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Participant rollovers |
349,866 |
212,359 |
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Employer |
1,035,926 |
1,174,496 |
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7,162,033 |
6,773,385 |
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Total additions |
14,482,962 |
7,342,358 |
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Deductions from net assets attributed to |
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Net depreciation in fair value of investments |
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2,997,009 |
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Benefits paid to participants |
2,346,272 |
2,215,775 |
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Administrative expenses |
115,521 |
99,503 |
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Total deductions |
2,461,793 |
5,312,287 |
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Net increase |
12,021,169 |
2,030,071 |
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Net assets available for benefits |
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Beginning of year |
29,042,036 |
27,011,965 |
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End of year |
$ 41,063,205 |
$ 29,042,036 |
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The accompanying notes are an integral part of these financial statements.
3
Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Notes to Financial Statements
December 31, 2003 and 2002
1. Description of the Plan
The following description of the Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan established as of January 1, 1994 by Outback Steakhouse, Inc. and its wholly-owned subsidiaries (the “Company”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Assets of the Plan are held and invested according to participant direction by the Merrill Lynch Trustee Company, FSB (the “Trustee”).
Eligibility
Substantially all of the Company’s salaried employees, except union and leased employees, who have reached the age of 18, are eligible to participate in the Plan, as defined by the Plan.
Contributions
Each year, participants may contribute from 1% to 20% of their pre-tax annual compensation and may change this contribution percentage prior to any pay period interval throughout the Plan year. Participants may also contribute amounts representing distributions from other qualified defined benefit or contribution plans. Contributions of non-periodic deferrals, such as bonuses, may also be made, subject to limitations of the Plan. Participants direct their contributions into various investment options offered by the Plan. Total participant contributions are subject to limitations imposed by the Internal Revenue Code.
Additional amounts may be contributed by the Company at the discretion of the Company’s board of directors in the form of a matching or profit sharing contribution. Employer matching contributions are allocated in the ratio of a participant’s total elective deferrals for the Plan year to the total elective deferrals of all participants for the Plan year. The profit sharing contribution is allocated to participants employed by the Company on the last day of the Plan year based on the ratio of a participant’s compensation for the Plan year to the compensation of all participants for the Plan year.
The Company declared a profit sharing contribution of approximately $1,269,000 and $1,069,000 for 2003 and 2002, respectively. The Company will use available plan forfeitures of approximately $242,000 to offset the contribution for 2003.
Participant Accounts
Each participant’s account is credited with the participant’s contributions, a prorata share of the Plan’s earnings, and any employer contributions. Plan earnings are allocated based upon the participant’s account balance. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
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Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Notes to Financial Statements
December 31, 2003 and 2002
Vesting
Participants are immediately vested in their contributions, including rollovers, plus actual earnings thereon. Vesting in the Company’s discretionary contributions, plus actual earnings thereon, is based on years of credited service. Upon completion of five years of service, participants become 100% vested in employer contributions.
Investment Options
At the time of enrollment in the Plan, a participant may direct his or her contributions, in 1% increments, in any of the nine core investment options, which includes mutual funds, a common collective trust fund, and the Company’s stock. Once enrolled, a participant may direct his or her investment options to include any of the additional seventeen non-core investment options.
Participant Loans
Loans are available to active participants who maintain an account balance under the Plan provided that the minimum loan amount is $1,000 with a maximum of $50,000 or 50% of the participant’s vested account balance. Such loans are collateralized by each respective participant’s account with interest and principal payments being credited to the participant’s account according to the then current investment choices. All loans are subject to repayment via payroll deductions over a maximum period of five years, except for the purchase of a primary residence, for which the period is 15 years. The interest for loans is determined as of the first day of each calendar quarter at an interest rate commensurate with local prevailing rates as determined by the Trustee.
Payment of Benefits
Upon termination of service due to death, disability or retirement, a participant may elect to receive a lump sum cash payment or installment payments payable in cash or in kind over a period not to exceed the participant’s expected future lifetime or the joint expected future lifetime of the participant and spouse. In addition, under very limited circumstances, a participant may receive a financial hardship distribution, in accordance with the Plan agreement. A maximum of four such withdrawals are permitted annually.
Forfeited Accounts
Forfeitures are used to pay plan expenses and reduce the Company’s profit sharing and/or matching contribution for the Plan year in which the forfeiture occurs. As of December 31, 2003 and 2002, there were approximately $258,000 and $178,000 in forfeitures available, respectively.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting, except for benefit payments, which are recorded when paid.
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value. Quoted market prices are used to value investments. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year end. Participant loans are valued at cost, which approximates fair value.
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Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Notes to Financial Statements
December 31, 2003 and 2002
Net realized and unrealized appreciation (depreciation) is recorded in the accompanying statements of changes in net assets available for benefits as net appreciation (depreciation) in fair value of investments.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Administrative Expenses
The Company provides certain administrative and accounting services to the Plan at no cost and also pays certain other administrative expenses on behalf of the Plan.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for plan benefits and changes therein. Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options which, in turn, invest in any combination of stocks, mutual funds, and other investment securities. Generally, all investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term could materially affect participant’s account balances, and the amounts reported in the Statements of Net Assets Available for Benefits and the Statements of Changes in Net Assets Available for Benefits.
3. Investments
The following table presents the fair value of investments at December 31, 2003 and 2002. Investments that represent 5% or more of the Plan’s net assets are separately stated.
2003 |
2002 |
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Investments, at fair value as determined by quoted market prices |
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Mutual funds |
$ 21,100,529 |
$ 13,477,497 |
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Outback Steakhouse, Inc. common stock |
12,110,678 |
8,817,764 |
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Common/collective trust |
3,520,322 |
2,874,630 |
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Participant loans |
3,170,985 |
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2,568,446 |
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Total investments |
$ 39,902,514 |
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$ 27,738,337 |
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6
Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Notes to Financial Statements
December 31, 2003 and 2002
During 2003 and 2002, the Plan’s investments, including gains and losses on investments bought and sold, as well as held during the year, appreciated (depreciated) in value, as follows:
2003 |
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2002 |
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Mutual funds |
$ 4,019,034 |
$ (2,991,912) |
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Outback Steakhouse, Inc. common stock |
2,649,635 |
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(5,097) |
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$ 6,668,669 |
$ (2,997,009) |
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The following individual investments represent 5% or more of the net assets available for plan benefits at December 31, 2003 and 2002:
2003 |
2002 |
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Outback Steakhouse, Inc. common stock |
$ 12,110,678 |
$ 8,817,764 |
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Merrill Lynch Retirement Preservation Trust |
3,520,322 |
2,874,360 |
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Merrill Lynch Balanced Capital Fund Class A |
2,243,814 |
1,680,327 |
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Merrill Lynch S&P 500 Index Fund Class I |
6,349,275 |
4,318,472 |
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Thornburg International Value Fund Class A |
3,309,120 |
2,038,149 |
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Participant Loans |
3,170,985 |
2,568,446 |
4. Party-in-Interest Transactions
Certain plan investments include shares of Company stock, participant loans and mutual funds that are managed by the Trustee and, therefore, these transactions qualify as party-in-interest transactions. Fees paid during the year for services rendered by parties-in-interest were based on customary rates for such services.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue employer contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
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Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Notes to Financial Statements
December 31, 2003 and 2002
6. Tax Status
The Internal Revenue Service has determined, and informed the Company by a letter dated September 27, 1995, that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code (the “IRC”). The Plan has been amended since receiving the original determination letter and the Company received a new letter dated December 17, 2003. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
In June 2004, the Plan became aware that operation of the Plan’s salary deferral feature might not meet certain IRC coverage requirements. The Plan does not believe that any potential resolution of this issue will have a material impact on the Plan’s status or financial statements.
7. Concentrations of Credit Risk
Financial instruments which potentially subject the Plan to concentrations of credit risk consist of the Plan’s investments. Approximately 29 and 30 percent of the net assets available for benefits were held in Company stock at December 31, 2003 and 2002, respectively. These assets are exposed to market risk from changes in asset valuations.
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Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust
Schedule H, Line 4i -- Schedule of Assets (Held at End of Year)
December 31,
2003
Schedule I
Identity of issue, borrower, |
Description of |
Current |
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lessor, or similar party |
investment |
value |
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Outback Steakhouse, Inc. |
Common Stock |
$ 12,110,678 |
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Merrill Lynch Retirement Preservation Trust |
Common/Collective Trust |
3,520,322 |
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AIM International Growth Fund Class A |
Mutual Fund |
318 |
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AIM Small Cap Growth Fund Class A |
Mutual Fund |
490,325 |
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Davis New York Venture Fund Class A |
Mutual Fund |
323,307 |
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Evergreen Growth & Income Fund Class A |
Mutual Fund |
72,692 |
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Fidelity Advanced Equity Growth Fund |
Mutual Fund |
709,371 |
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GAM Global Fund Class A |
Mutual Fund |
32,599 |
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GAM American Focus Fund Class A |
Mutual Fund |
20,768 |
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Massachusetts Investors Trust Class A |
Mutual Fund |
141,352 |
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Merrill Lynch Balanced Capital Fund Class A |
Mutual Fund |
2,243,814 |
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Merrill Lynch Basic Value Fund Class A |
Mutual Fund |
60,512 |
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Merrill Lynch Fundamental Growth Fund Class A |
Mutual Fund |
545,648 |
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Merrill Lynch S&P 500 Index Fund Class I |
Mutual Fund |
6,349,275 |
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Merrill Lynch Small Cap Value Fund Class A |
Mutual Fund |
583,408 |
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MFS Core Growth Fund Class A |
Mutual Fund |
677,841 |
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Oppenheimer Quest Int Value Fund Class A |
Mutual Fund |
160,646 |
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Oppenheimer Strategic Income Fund Class A |
Mutual Fund |
92,626 |
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PIMCO Mid Cap Growth Fund Class A |
Mutual Fund |
457,528 |
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PIMCO Small Cap Value Fund Class A |
Mutual Fund |
509,838 |
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PIMCO Total Return Fund Class A |
Mutual Fund |
1,816,866 |
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State Street Research Mid Cap Value Fund Class A |
Mutual Fund |
1,786,280 |
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State Street Research Government Income Fund |
Mutual Fund |
194,215 |
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Thornburg International Value Fund Class A |
Mutual Fund |
3,309,120 |
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Van Kampen Growth & Income Fund Class A |
Mutual Fund |
319,931 |
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Van Kampen Growth & Income Fund Class B |
Mutual Fund |
202,249 |
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Total Mutual Funds |
21,100,529 |
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Participant Loans |
Fully amortized with various maturity dates and interest rates ranging from 4.00% to 10.50% |
3,170,985 |
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Total |
$ 39,902,514 |
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* |
Items represent party-in-interest |
9
See accompanying Report of Independent Registered Certified Public Accounting Firm
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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Outback Steakhouse, Inc. Salaried Employees 401(k) Plan and Trust |
Date: June 29, 2004 |
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By: /s/ Robert S.
Merritt |
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Exhibit
23.1 |
Consent of Independent Registered Certified Public Accounting Firm |
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