<PAGE> 1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT
TO RULE 901 (d) OF REGULATION S-T
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 October 4, 1995 Commission File Number 000-16791
--------------- ---------
STACEY'S BUFFET, INC.
---------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2736736
------------------------------- --------------------------------
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
801 W. Bay Drive, Suite 704
Largo, FL 34640
----------------------------------------------------------
(Address of principal executive offices including zip code)
(813) 581-4492
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by a check mark whether the registrant (1) has filed all reports 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 ninety (90) days.
Yes ( X ) No ( )
The number of shares outstanding of registrants' Common Stock, par value
$.01 per share, at October 4, 1995 was 12,466,089.
<PAGE> 2
STACEY'S BUFFET, INC.
Index
PART I: FINANCIAL INFORMATION
PAGE #
------
Item 1. Financial Statements:
Balance Sheets 3
At October 4, 1995 and December 28, 1994
Statements of Operations 5
For the Sixteen Weeks and Forty Weeks Ended
October 4, 1995 and October 5, 1994
Statement of Stockholders' Equity 6
For the Forty Weeks Ended October 4, 1995
Statements of Cash Flows 7
For the Forty Weeks Ended October 4, 1995
and October 5, 1994
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of 10
Operations
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matter to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1: FINANCIAL STATEMENTS
STACEY'S BUFFET, INC.
BALANCE SHEETS
At October 4, 1995 and December 28, 1994
<TABLE>
<CAPTION>
October 4, December 28,
1995 1994
--------- ----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 94,181 $ 30,207
Short-term investments 753,341 839,370
Receivables 33,947 42,246
Royalties 18,030 150,505
Inventory 361,872 559,929
Income tax refund receivable 0 19,199
Prepaid expenses and other 210,031 362,219
--------- ---------
Total current assets 1,471,402 2,003,675
Property and equipment, at cost, net of
accumulated depreciation 12,699,634 23,649,142
Deposits and other assets 134,894 163,143
Goodwill, net of accumulated amortization 8,693,988 11,081,797
--------- ----------
Total Assets $22,999,918 $36,897,757
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE> 4
STACEY'S BUFFET, INC.
BALANCE SHEETS (Continued)
<TABLE>
<CAPTION>
October 4, December 28,
1995 1994
--------- -----------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,880,633 $ 2,565,744
Current portion of obligations under
capital leases 108,349 107,719
Notes payable 100,000 188,000
Accrued expenses 937,438 1,887,574
Accrued rent 770,434 1,968,467
Provision for restaurant renovations
and closings 1,318,902 8,860,892
---------- ----------
Total current liabilities 6,115,756 15,578,396
Obligations under capital leases,
excluding current portion 104,706 156,984
Other liabilities 29,472 47,571
---------- ----------
Total Liabilities 6,249,934 15,782,951
========== ==========
Stockholders' equity:
Common stock, $.01 par value, authorized
25,000,000 shares, issued 14,466,089 shares
at October 4, 1995, 14,466,089 shares at
December 28, 1994 144,660 144,660
Additional paid in capital 45,168,109 45,168,109
Less: Treasury stock at cost (2,500,000) 0
Accumulated deficit (26,062,785) (24,197,963)
---------- ----------
Total Stockholders' Equity 16,749,984 21,114,806
---------- ----------
Total Liabilities and Stockholders'
Equity $22,999,918 $36,897,757
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE> 5
STACEY'S BUFFET, INC.
STATEMENTS OF OPERATIONS
for the Sixteen Weeks and Forty Weeks
Ended October 4, 1995 and October 5, 1994
(unaudited)
<TABLE>
<CAPTION>
Third Quarter Ended Forty Weeks Ended
October 4, October 5, October 4, October 5,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Restaurant sales $12,276,450 $16,071,981 $38,934,434 $42,098,882
.
Cost of restaurant sales
Food cost 4,941,340 6,543,620 15,304,352 16,872,492
Labor cost 3,858,781 5,277,243 11,666,282 13,869,291
Operating cost 2,103,408 2,552,839 5,927,277 6,102,354
Occupancy cost 1,196,550 1,548,004 3,399,457 3,857,639
Depreciation 461,803 528,589 1,331,688 1,328,944
----------- ----------- ----------- -----------
Restaurant profit(loss) (285,432) (378,314) 1,305,378 68,162
Selling, general and
administrative expenses 756,652 810,791 2,008,903 2,622,590
Amortization of Goodwill 154,165 178,696 422,153 446,684
Provision for restaurant
closings 1,100,000 - 1,100,000 -
----------- ----------- ----------- -----------
Operating income(loss) (2,296,249) (1,367,801) (2,225,678) (3,001,112)
Other income (expense) 128,271 1,559 360,856 221,352
----------- ----------- ----------- -----------
Earnings (loss) before
income taxes (2,167,978) (1,366,242) (1,864,822) (2,779,760)
Income tax expense
(benefit) - - - -
----------- ----------- ----------- -----------
Net earnings/(loss) $ (2,167,978) $(1,366,242) $(1,864,822) $(2,779,760)
=========== =========== =========== ===========
Net earnings (loss) per
share of common stock: $ (.17) $ (.09) $ (.13) $ (.19)
Weighted average common
and common equivalent
shares outstanding 12,966,089 14,406,089 13,866,089 14,396,862
</TABLE>
See accompanying notes to financial statements
<PAGE> 6
STACEY'S BUFFET, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Forty Weeks Ended
October 4, 1995
(unaudited)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid in Treasury Accumulated Stockholders
Shares Amount Capital Stock Deficit Equity
------ ------ ---------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances at
December 28, 1994 14,466,089 $144,660 $45,168,109 $ - $(24,197,963) $21,114,806
Purchase of 2,000,000
shares (2,500,000) (2,500,000)
Net Earnings - - - - (1,864,822) (1,864,822)
---------- -------- ----------- ----------- ------------- -----------
Balances at
October 4, 1995 14,466,089 $144,660 $45,168,109 $(2,500,000) $(26,062,785) $16,749,984
========== ======== =========== =========== ============= ===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 7
STACEY'S BUFFET, INC.
STATEMENTS OF CASH FLOWS
For the Forty Weeks ended October 4, 1995 and October 5, 1994
<TABLE>
<CAPTION>
1995 1994*
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income(loss) $(1,864,822) $ (2,779,760)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,867,698 1,873,819
Stock paid in lieu of compensation 0 33,750
Change in assets and liabilities:
Decrease in short-term investments 86,029 4,455,598
Decrease in receivables 140,774 100,107
Decrease (Increase) in inventory 198,057 (23,274)
Decrease in income tax refund
receivable 19,199 16,067
Decrease in prepaid expenses and other 152,188 259,909
(Increase) Decrease in deposits (13,414) 90,894
Increase in accounts payable 314,889 785,336
(Decrease) in accrued expenses (2,148,169) (1,089,767)
(Decrease) in other liabilities (18,099) (13,740)
Net cash effect of change in provision
for restaurant renovations and closings 1,783,390 (2,136,131)
----------- -----------
Net cash provided by
operating activities 517,720 1,572,808
----------- -----------
Cash flows (used) provided by investing
activities:
Capital expenditures, net (314,098) (1,981,761)
----------- -----------
Cash flows from financing activities:
Payments on capital lease obligations (51,648) (416,473)
Proceeds from stock options exercised 0 7,219
Payments on 1993 merger 0 (91,420)
Payments on note payable (88,000) -
----------- -----------
Net cash (used) by
financing activities (139,648) (500,674)
----------- -----------
Net increase (decrease) in cash 63,974 (909,627)
Cash and cash equivalents at beginning of
period 30,207 1,005,925
----------- -----------
Cash and cash equivalents at end of
period $ 94,181 $ 96,298
=========== ===========
</TABLE>
*Certain amounts as of October 5, 1994 have been reclassified to conform
to the October 4, 1995 presentation.
See accompanying notes to financial statements
<PAGE> 8
STACEY'S BUFFET, INC.
STATEMENTS OF CASH FLOWS
For the Forty Weeks ended October 4, 1995 and October 5, 1994
CONTINUED
Excluded from the October 4, 1995 statement of cash flows are the following
non-cash transactions:
- - - Write-off of equipment and leasehold improvements (net of
accumulated depreciation) included in the provision for
restaurant renovations and closings recorded in the year
ended December 28, 1994. $9,086,695
- - - Write-off of deposits included in the provision for
restaurant renovations and closings recorded in the year
ended December 28, 1994. $ 41,663
- - - Spin off of three restaurants to former Chairman of the
Board for return to Company of 2 million shares of stock. $2,500,000
See accompanying notes to financial statements
<PAGE> 9
STACEY'S BUFFET, INC.
NOTES TO FINANCIAL STATEMENTS
1. The financial statements are unaudited and reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of
the financial position and operating results for the interim periods. The
financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual Report to
Stockholders for the fiscal year ended December 28, 1994. The results of
operations for the sixteen weeks and forty weeks ended October 4, 1995
are not necessarily indicative of the results for the entire fiscal year
ending January 3, 1996.
2. Earnings (loss) per share is based on the weighted average number of
common shares outstanding in each period. Due to the loss in 1994 and
1995, conversion of options and warrants are not considered for those
periods because of antidilution.
3. The Company's balance sheet at year end 1994 included a reserve of $8.9
million for the estimated cost of the Company's plan to close
underperforming restaurants (the "Closing Reserve"). During 1995, the
Company has closed 13 restaurants, which exceeded the Company's original
plans. The Company has entered into definitive lease termination agree-
ments with regard to 12 of the locations, with the remaining agreement
under current negotiation. The agreements have generally involved
transferring of some restaurant assets to landlords and agreements to
make termination payments over the next one to five years (together, the
"Settlement Costs").
Due to the additional closings, the costs associated with such closings
is now expected to exceed the original Closing Reserve by approximately
$1,100,000, which amount is being charged against earnings in the third
quarter of 1995.
4. During fiscal 1995, only Settlement Costs and other charges directly
related to the closure of restaurants ("Exit Costs") were charged against
the Closing Reserve, whereas during 1994 and prior years, operating losses
for stores held for closure were charged to this reserve. Excluding asset
writedowns, there were $121,000 of Exit Costs (primarily occupancy and
depreciation costs after closing) charged to the Closing Reserve during
the third quarter of 1995, and $380,000 charged to this reserve for the
year-to-date. Similar charges for the third quarter and first three
quarters of 1994 were $675,416 and $1,582,991 respectively.
5. During the third quarter of 1995, a subsidiary of the Company that owned
three restaurants was spun-off to the Company's former Chairman of the
Board and principal shareholder, in exchange for his return to the Company
of two million shares of the Company's common stock. This transaction was
tax-free to both parties under federal law, and no gain or loss was
realized from an accounting perspective, although the write-off of
goodwill ssociated with two of the restaurants will have the effect of
reducing future amortization of goodwill by $105,600 over each of the next
18 years.
<PAGE> 10
STACEY'S BUFFET, INC.
Item 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Results of operations for the sixteen weeks ("third quarter") and forty weeks
ended October 4, 1995, as compared to the same periods last year:
RESTAURANT SALES of $12,276,450 for the quarter ended October 4, 1995
represents a decrease of $3,795,531 or 23.6% from the same quarter in 1994
and net sales of $38,934,434 for the year-to-date represents a decrease of
$3,164,448 or 7.5%. The decrease in the third quarter reflects the operation
of 28 restaurants this year, compared to 36 restaurants during the same
quarter last year. Same store sales for the third quarter of 1995 were down
9.0% from the third quarter of 1994. This decrease in sales was due to the
remodeling and extensive advertising done in 1994 to promote the conversion
of stores from Homestyle Buffet to Stacey's Buffet. Year over year store
sales are typically lower when compared to a "honeymoon" year. In addition,
some market cannibalization took place after the conversion of Homestyle
units which shared the same market area with an existing Stacey's Buffet
unit. Because of the elimination of 13 units in the Northeast, which
typically had higher sales during the summer months, and the fact that the
Summer is the slow season in Florida, where most of the stores are located,
the average weekly sales for the third quarter of 1995 fell to $26,922
compared to $27,903 for the same quarter, 1994.
The overall decrease in sales, year-to-date, 1995 v. 1994 was due to the
closing of 13 units in the Northeast and the spin-off of three units to the
former Chairman of the Board.
COST OF RESTAURANT SALES includes food, labor, and direct operating costs,
including occupancy. Direct operating costs consist primarily of costs of
supplies, utilities, maintenance, rent, real estate and personal property
taxes, insurance and depreciation.
Food and labor costs as a percentage of sales for the sixteen and forty weeks
ended October 4, 1995 were 71.6% and 69.3% respectively. The comparable food
and labor costs for 1994 were 73.5% and 73.0%, respectfully. The primary
factor in reducing the overall costs was the constant monitoring and the
scrutiny of all operating costs. We have recently instituted a strategic
planning committee, comprised of top management and regional supervisors to
meet periodically to review and discuss all areas of cost containment, and
restaurant operations in general. A formal management training program has
been initiated in the third quarter.
Total operating costs and depreciation costs as a percentage of sales for the
third quarter of 1995 showed an increase to 21.0%, up from 19.2% in the same
quarter of 1994. This increase is primarily a function of fixed operating
costs remaining much the same, while sales were lower. Occupancy costs as a
percentage of sales were relatively constant at 9.8% during the third quarter
of 1995, when compared to the third quarter of 1994.
<PAGE> 11
STACEY'S BUFFET, INC.
Item 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
SELLING, GENERAL AND ADMINISTRATIVE COSTS decreased by $64,000 or 8.0% for
the third quarter, 1995 and by $623,727 or 23.8% for the first three quarters
of 1995 as compared to the previous year. These decreases were realized in
several areas: the elimination of excess corporate management; a reduction in
insurance costs, due to the conversion to a self-insurance program; an
overall reduction in legal and auditing fees by more efficient use of these
outside services; the elimination of outside payroll preparation services by
going in-house with these functions.
Amortization of goodwill was $154,165 for the third quarter, 1995, down from
$178,696 in 1994 because of the elimination of a portion of goodwill
associated with the spin-off of stores earlier in the quarter with the former
Chairman. This non-cash expense is the result of the 1993 merger.
As explained in the notes to the financial statements, the Company recorded
a charge to earnings of $1,100,000 during the current quarter to reflect the
cost of additional store closings made this year. This was reflected as an
addition to the Provision for restaurant closings. The remaining provision
is necessary to cover the cost of lease termination payments that will be
made over the next five years.
OTHER INCOME for the third quarter and year-to-date, 1995 was $139,738 and
$372,322 respectively, compared to $1,559 and $221,352 for the prior year.
Most of the other income was from royalty fees.
INFLATIONARY FACTORS had minimal impact on the operating results of the
Company. Wholesale food costs have remained stable during the third quarter
of 1995, and there have not been any noticeable increases in supplies and
other costs.
<PAGE> 12
STACEY'S BUFFET, INC.
Item 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
LIQUIDITY AND CAPITAL RESOURCES
Cash levels dropped from the fiscal 1994 year end level by $22,055. This was
not significant to the overall liquidity of the Company. There was an
increase in accounts payable during the three quarters ended October 4, 1995,
and an decrease in receivables, inventories, prepaid expenses, notes payable
and other liabilities. These were primarily the result of downsizing the
Company during the past year. A reduction of $2,148,169 in accrued
liabilities since year end 1994 was the result of terminating and settling
several leases and related costs, and generally operating a lower number of
restaurants this year. The Company believes that cash provided by operations
and the $500,000 line of credit with our bank will be adequate to meet
current obligations.
As of October 4, 1995, Stacey's ratio of current assets to current
liabilities, excluding the provision for restaurant closings, was .31, as
compared to .30 at December 28, 1994. The provision for restaurant closings
at October 4, 1995 is $1,318,902. This amount provides for the payout for
lease terminations, which are payable over the next five years.
<PAGE> 13
STACEY'S BUFFET, INC.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
The registrant is not party to any material legal proceedings.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matter to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8K
a) Exhibits: EX-27 - Financial Data Schedule
b) Reports on Form 8K: None
<PAGE> 14
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.
STACEY'S BUFFET, INC.
--------------------
(Registrant)
Date: November 13, 1995 By /s/ Leslie A. Spang
------------------ ----------------------
Chief Financial Officer
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STACEY'S BUFFET, INC. FOR THE FORTY WEEKS ENDED
OCTOBER 4, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-03-1996
<PERIOD-END> OCT-04-1995
<CASH> 94,181
<SECURITIES> 753,341
<RECEIVABLES> 51,977
<ALLOWANCES> 0
<INVENTORY> 361,872
<CURRENT-ASSETS> 1,471,402
<PP&E> 19,931,993
<DEPRECIATION> 7,232,359
<TOTAL-ASSETS> 22,999,918
<CURRENT-LIABILITIES> 6,115,756
<BONDS> 0
<COMMON> 144,660
0
0
<OTHER-SE> 16,605,324
<TOTAL-LIABILITY-AND-EQUITY> 22,999,918
<SALES> 38,934,434
<TOTAL-REVENUES> 38,934,434
<CGS> 37,629,056
<TOTAL-COSTS> 37,629,056
<OTHER-EXPENSES> 3,531,056
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,168
<INCOME-PRETAX> (1,864,822)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,864,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,864,822)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
