BUFFALO WILD WINGS, INC.
5500 Wayzata Boulevard, Suite 1600
Minneapolis, MN 55416
(952) 593-9943
August 22, 2008
Via Edgar
Mr. David R. Humphrey
Branch Chief
Securities and Exchange Commission
100 F Street NE, Mail Stop 3561
Washington, DC 20549
Re: Buffalo Wild Wings, Inc. - File No. 0-24743
Form 10-K for Year Ended December 30, 2007
Dear Mr. Humphrey:
We have received your comment letter dated August 8, 2008 in connection with
your review of the Form 10-K for the year ended December 30, 2007 filed by
Buffalo Wild Wings, Inc. (the "Company"). To assist you in your review, we have
repeated the full text of the Staff's comments in italics, with our responses
immediately following.
Consolidated Financial Statements
- ---------------------------------
Consolidated Statements of Stockholders' Equity, page 36
- --------------------------------------------------------
1. Refer to our previous comment 1. Please confirm to us that you will
include this explanation and reconciliation in future filings for
clarity. Please also revise the description related to the shares used
for withholding taxes to indicate this amount relates to the shares
vesting during the current period, and not those granted.
Response: In response to comment 6, we are removing the unvested
restricted stock units from the Statement of Stockholders' Equity. In
the future, the explanation and reconciliation of "net issuances of
restricted stock" will not be needed, as these shares will not be
included in the rollforward. The following is an example of how our
fiscal 2007 Statement of Stockholders' Equity would have been
presented:
Common Stock
----------------------------
Deferred Retained
Shares Amount Compensation Earnings Total
------------- ----------- ----------------- -------------- -----------
Balance at December 31, 2006 17,268,016 $ 75,030 -- 41,186 116,216
Net earnings -- -- -- 19,654 19,654
Shares issued under employee
stock purchase plan 30,836 685 -- -- 685
Shares issued from restricted
stock units 116,776 (413) -- -- (413)
Exercise of stock options 241,437 761 -- -- 761
Tax benefit from stock issued -- 1,007 -- -- 1,007
Stock-based compensation -- 3,755 -- -- 3,755
------------- ----------- ----------------- -------------- -----------
Balance at December 30, 2007 17,657,065 $ 80,825 -- 60,840 141,665
============= =========== ================= ============== ===========
To provide clarity regarding the withholding taxes, we will revise the
footnote in future filings. The following is an example of how our
footnote 6b for 2007 would have been presented:
(b) Restricted stock units
Restricted stock units are granted annually at the discretion of the
Board under the plan. These units are subject to annual vesting upon
achieving performance targets established by the Board of Directors. We
record compensation expense for the restricted stock units if vesting,
based on the achievement of performance targets, is probable. The
restricted stock units may vest one-third annually over a ten-year
period as determined by meeting performance targets. However, the
second third of the restricted stock units is not subject to vesting
until the first one-third has vested, and the final one-third is not
subject to vesting until the first two-thirds of the award has vested.
Restricted stock units meeting the performance criteria will vest as of
the end of our fiscal year. The distribution of vested restricted stock
units as common stock typically occurs in March of the following year.
The common stock is issued to participants net of the number of shares
needed for the minimum employee withholding taxes. For fiscal 2007,
$413 in the Statement of Stockholders' Equity represents the amount
remitted for the minimum employee withholding taxes. Restricted stock
units are contingently issuable shares, and the activity for fiscal
2007 is as follows:
2
Weighted
Number of average grant
units date fair value
--------------- ----------------
Outstanding, December 31, 2006 168,212 $ 17.10
Granted 166,950 24.88
Vested (149,740) 20.96
Cancelled (44,730) 21.20
--------------- ----------------
Total 140,692 $ 20.92
2. Refer to our previous comment 2. Please provide us with a
reconciliation of the ($413,000) similar to that provided in your
response to our previous comment 1. Further please add this column to
the table requested in our previous comment 1 in your financial
statement footnotes. Please provide a draft of your proposed disclosure
with your response.
Response: The $413,000 represents the amount remitted for the minimum
employee withholding taxes. Please refer to our response to comment 1
for the disclosure that has been added to footnote 6b.
3. As a related matter, please separate your stock based compensation line
item into that associated with stock options and that associated with
your RSU's, for clarity. We would not object to tabular disclosure in
your footnotes leading to the total in your equity rollforward. Please
provide a draft of your proposed disclosure in your response.
Response: This disclosure was included in our 2007 Form 10-K on page
42, footnote 1(w), paragraphs 4 and 5.
4. Please expand the description of your policy for earnings per common
share to explain how you account for contingently issuable shares with
respect to unvested restricted stock units. See paragraphs 30-35 of
SFAS 128 for guidance.
Response: We will incorporate an expanded description in future
filings. The following is an example of how our footnote 1(s) for 2007
would have been presented:
(s) Earnings Per Common Share
Basic earnings per common share excludes dilution and is computed by
dividing the net earnings available to common stockholders by the
weighted average number of common shares outstanding during the period.
Diluted earnings per common share include dilutive common stock
equivalents consisting of stock options determined by the treasury
stock method. Restricted stock units are contingently issuable shares
subject to vesting based on performance criteria. Vesting typically
occurs in the fourth quarter of the year when income targets have been
met. Upon vesting, the shares to be issued are included in the diluted
earnings per share calculation as of the beginning of the period in
which the vesting conditions are satisfied.
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Note 6(b) - Restricted Stock, page 48
- -------------------------------------
5. Refer to our previous comment 4. Confirm to us that you will revise
your disclosure related to your table on page 48 to clarify this table
represents contingently issuable shares.
Response: In future filings, we will delete the sentence "Restricted
stock activity is summarized for fiscal year 200X:" and will replace it
with "Restricted stock units are contingently issuable shares, and the
activity for fiscal 200X is as follows:". See our example in comment 1.
6. With respect to the table on page 48, we note your assertion that
amounts shown represent contingently issuable shares, not actual
outstanding shares. However, in your response to our previous comment
1, you stated that restricted stock units are treated as outstanding
common stock when they are granted. Therefore, please clarify for what
purposes you treat RSU's as outstanding common stock.
Response: Historically, we have included our restricted stock units as
issued and outstanding shares on our Balance Sheet on the date of
grant, and in "net issuances of restricted stock" on our Statement of
Stockholders' Equity. The restricted stock units are not included in
the basic earnings per share calculation, but are included in the
diluted earnings per share calculation per SFAS 128, paragraph 30 & 31.
To provide greater clarity and less confusion, we will remove the
contingently issuable shares of restricted stock units on the
Consolidated Balance Sheet and Statement of Stockholders' Equity in
future filings. See our response to comment 1 as an example of the
future presentation of our Statement of Stockholders' Equity.
Note 7 - Earnings Per Common Share, page 49
- -------------------------------------------
7. Please explain to us why the denominators used in your 2006 and 2007
calculations of basic earnings per common share are both less than the
number of common shares outstanding at the beginning of each respective
year when there were no retirements of common stock during either year.
With no retirements, it would be expected that weighted-average shares
outstanding for any given year would be an amount that was between the
beginning and ending numbers of outstanding shares for such year.
Response: See our response to comments 1 and 6.
8. Refer to our previous comment 6. We continue to believe that providing
additional information would be meaningful. As such, please show the
effect of your dilutive securities separately.
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Response: We will present stock options and restricted stock units on
separate lines in future filings. The following is an example of how
our footnote 7 for 2007 would have been presented:
Fiscal year ended December 30, 2007
-------------------------------------------------
Earnings Shares Per-share
(numerator) (denominator) amount
-------------------------------------------------
Net earnings $ 19,654
----------------
Earnings per common share 19,654 17,553,998 $ 1.12
Effect of dilutive securities - stock options -- 189,238
- restricted stock units -- 89,587
----------------
Earnings per common share - assuming dilution $ 19,654 17,832,825 1.10
================
9. It is unclear why you exclude restricted stock units from the
calculation of fully diluted earnings per common share. Since the
effect of including these units would increase the denominator of the
calculation, it appears their effect would be dilutive. In this regard,
we note your response to our previous comment 1 states that restricted
stock units are treated as outstanding common stock when they are
granted.
Response: We do include our restricted stock units in the fully diluted
earnings per share calculation. Please see our response to comment 4
and 6.
The Company hereby acknowledges that:
o the Company is responsible for the adequacy and accuracy of the
disclosure in the filing;
o staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to
the filing; and
o the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
If you have any questions or comments, please feel free to contact me at
952.540.2203.
Very truly yours,
/s/ Mary J. Twinem
Mary J. Twinem
Executive Vice President and Chief Financial Officer
cc: Securities and Exchange Commission
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