<PAGE> 1
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 June 14, 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 June 14, 1995 was 14,466,089.
<PAGE> 2
STACEY'S BUFFET, INC.
INDEX
------
PART I: FINANCIAL INFORMATION
PAGE #
------
Item 1. Financial Statements:
Balance Sheets 3
At June 14, 1995 and December 28, 1994
Statements of Operations 5
For the Twelve Weeks and Twenty-Four Weeks Ended
June 14, 1995 and June 15, 1994
Statement of Stockholders' Equity 6
For the Twenty-four Weeks Ended June 14, 1995
Statements of Cash Flows 7
For the Twenty-four Weeks Ended June 14, 1995
and June 15, 1994
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operations
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matter to a Vote of Security Holders 12
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 June 14, 1995 and December 28, 1994
<TABLE>
<CAPTION>
June 14, December 28,
1995 1994
----------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 45,515 $ 30,207
Short-term investments 1,119,910 839,370
Receivables 33,562 42,246
Royalties 129,438 150,505
Inventory 401,061 559,929
Income tax refund receivable 0 19,199
Prepaid expenses and other 95,278 362,219
---------- ----------
Total current assets 1,824,764 2,003,675
Property and equipment, at cost, net of
accumulated depreciation 16,048,949 23,649,142
Deposits and other assets 145,101 163,143
Goodwill, net of accumulated amortization 10,813,809 11,081,797
---------- ----------
Total Assets $28,832,623 $36,897,757
========== ==========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE> 4
STACEY'S BUFFET, INC.
BALANCE SHEETS (Continued)
<TABLE>
<CAPTION>
June 14, December 28,
1995 1994
----------- ------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,447,297 $ 2,565,744
Current portion of obligations under
capital leases 107,719 107,719
Notes payable 58,000 188,000
Accrued expenses 913,161 1,887,574
Accrued rent 1,284,916 1,968,467
Provision for restaurant renovations
and closings 2,456,764 8,860,892
---------- ----------
Total current liabilities 7,267,857 15,578,396
Obligations under capital leases,
excluding current portion 106,985 156,984
Other liabilities 39,819 47,571
---------- ----------
Total Liabilities 7,414,661 15,782,951
========== ==========
Stockholders' equity:
Common stock, $.01 par value, authorized
25,000,000 shares, issued 14,466,089 shares
at June 14, 1995, 14,466,089 shares at
December 28, 1994 144,660 144,660
Additional paid in capital 45,168,109 45,168,109
Accumulated deficit (23,894,807) (24,197,963)
---------- ----------
Total Stockholders' Equity 21,417,962 21,114,806
---------- ----------
Total Liabilities and Stockholders'
Equity $28,832,623 $36,897,757
========== ==========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE> 5
STACEY'S BUFFET, INC.
STATEMENTS OF OPERATIONS
For the Twelve Weeks and Twenty-Four Weeks
Ended June 14, 1995 and June 15, 1994
(unaudited)
<TABLE>
<CAPTION>
Second Quarter Ended First Half Ended
June 14, June 15, June 14, June 15,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Restaurant Sales $11,342,992 $12,614,553 $26,657,984 $26,026,901
Cost of restaurant sales
Food cost 4,488,034 5,210,548 10,363,012 10,328,872
Labor cost 3,399,254 4,444,507 7,807,501 8,592,048
Operating cost 1,735,531 1,923,651 3,823,869 3,549,515
Occupancy cost 922,983 1,132,392 2,202,907 2,309,635
Depreciation 366,139 400,079 869,885 800,355
---------- ---------- ---------- ----------
Restaurant profit(loss) 431,051 (496,624) 1,590,810 446,476
Selling, general and
administrative expenses 635,140 862,032 1,252,251 1,811,799
Amortization of Goodwill 133,994 133,994 267,988 267,988
---------- ---------- ---------- ----------
Operating income(loss) (338,083) (1,492,650) 70,571 (1,633,311)
Other income (expense) 81,275 53,589 232,585 219,793
---------- ---------- ---------- ----------
Earnings (loss) before
income taxes (256,808) (1,439,061) 303,156 (1,413,518)
Income tax expense
(benefit) 0 0 0 0
Net earnings/(loss) $ (256,808) $(1,439,061) $ 303,156 $(1,413,518)
========== ========== ========== ==========
Net earnings (loss) per
share of common stock: $ (.02) $ (.10) $ .02 $ (.10)
Weighted average common
and common equivalent
shares outstanding 14,466,089 14,391,446 14,568,191 14,390,711
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE> 6
STACEY'S BUFFET, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Twenty-four Weeks Ended
June 14, 1995
(unaudited)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid in Accumulated Stockholders
Shares Amount Capital Deficit Equity
--------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances at
December 28, 1994 14,466,089 $144,660 $45,168,109 $(24,197,963) $21,114,806
Net Earnings 0 0 0 303,156 303,156
---------- ------- ---------- ----------- ----------
Balances at
June 14, 1995 14,466,089 $144,660 $45,168,109 $(23,894,807) $21,417,962
========== ======= ========== =========== ==========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE> 7
STACEY'S BUFFET, INC.
STATEMENTS OF CASH FLOWS
For the Twenty-Four Weeks ended June 14, 1995 and June 15, 1994
<TABLE>
<CAPTION>
1995 1994*
----------- -------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income(loss) $ 303,156 $ (1,413,518)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,204,400 1,316,654
Stock paid in lieu of compensation 0 33,750
Change in assets and liabilities:
(Increase) Decrease in short-term investments (280,540) 2,994,073
Decrease (Increase) in receivables 29,751 (23,834)
Decrease (Increase) in inventory 158,868 (37,928)
Decrease (Increase) in income
tax refund receivable 19,199 (8,421)
Decrease in prepaid expenses and other 266,941 240,944
(Increase) Decrease in deposits (23,621) 68,005
(Decrease) Increase in accounts payable (118,447) 678,435
(Decrease) in accrued expenses (1,657,964) (816,547)
(Decrease) in other liabilities (7,752) (6,276)
Net cash effect of change in provision for
restaurant renovations and closings 361,349 (1,942,575)
Net cash (used) provided by
operating activities 255,340 1,082,762
---------- -----------
Cash flows (used) provided by investing
activities:
Capital expenditures, net (60,033) (1,503,029)
---------- -----------
Cash flows from financing activities:
Payments on capital lease obligations (49,999) (378,168)
Proceeds from stock options exercised 0 7,219
Payments on 1993 merger 0 (65,778)
Payments on note payable (130,000) 0
---------- -----------
Net cash (used) provided by
financing activities (179,999) (436,727)
---------- -----------
Net decrease in cash 15,308 (856,994)
Cash and cash equivalents at beginning of
period 30,207 1,005,925
---------- -----------
Cash and cash equivalents at end of period $ 45,515 $ 148,931
========== ===========
</TABLE>
[FN]
*Certain amounts as of June 15, 1994 have been reclassified to conform
to the June 14, 1995 presentation.
See accompanying notes to financial statements
<PAGE> 8
STACEY'S BUFFET, INC.
STATEMENTS OF CASH FLOWS
For the Twenty-Four Weeks ended June 14, 1995 and June 15, 1994
CONTINUED
Excluded from the June 14, 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. $6,608,743
- - - Write-off of deposits included in the provision for
restaurant renovations and closings recorded in the year
ended December 28, 1994. $ 41,663
[FN]
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 twelve weeks and twenty-four weeks ended June 14, 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
for the second quarter of 1995, conversion of options and warrants are not
considered for those periods because of antidilution.
3. In 1994 the Company's balance sheet included a provision of $8.9 million
for the estimated cost to close certain underperforming restaurants.
Effective for fiscal 1995, only exit costs are charged to this provision,
whereas in 1994 and prior years, all operating losses for stores held for
closures were chargeable to this provision. There were $143,800 of exit
costs (primarily occupancy and depreciation costs after closing) charged
to this reserve during the second quarter of 1995, and $259,000 charged to
this reserve for the year-to-date. Similar charges for the second quarter
and year-to-date for 1994 were $448,314 and $907,575, respectfully.
<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 twelve weeks ("second quarter") and twenty-four
weeks ("first half") ended June 14, 1995, as compared to the same periods
last year:
RESTAURANT SALES of $11,342,992 for the quarter ended June 14, 1995
represents a decrease of $1,271,561 or 10.1% from the same quarter in 1994
and net sales of $26,657,984 for the first half represents an increase of
$631,083 or 2.4%. The decrease in the second quarter reflects the operation
of 31 restaurants this year, compared to 36 restaurants during the same
quarter last year. Same store sales for the second quarter of 1995 were down
4% from the second quarter of 1994. Due to the first quarter elimination of
twelve units in the Northeast, which had lower than average weekly sales, the
average weekly sales for the second quarter of 1995 increased to $30,492,
compared to $29,200 for the same quarter, 1994.
The overall increase in sales for the year-to-date, 1995 over 1994 is the
result of several factors. We added three new units in Florida, which
generated higher average sales volumes than the Northeast stores which were
closed. Price increases in the Northeast in the late fall added to the sales
increases for 1995. In addition, the extremely harsh winter of 1994 and the
closings for remodelling had a negative effect on sales volumes in 1994.
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 twelve and twenty-four
weeks ended June 14, 1995 were 69.6% and 68.2% respectively. The comparable
food and labor costs for 1994 were 76.5% and 72.7%, respectfully. The
significant reduction in these costs was partially due to a slight price
increase in the Northeast taken in the latter part of 1994, but 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 early in the third quarter to provide a source of experienced
managers for turnover and new locations.
Total operating costs and depreciation costs as a percentage of sales for the
second quarter of 1995 showed no change when compared to the same quarter of
1994. Occupancy costs as a percentage of sales decreased to 8.1% in the 1995
second quarter, compared to 9.0% in the second quarter of 1994. This
improvement was derived from the elimination of 12 Northeastern restaurants
with higher than average rents and related factors.
<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 $226,892, or 26.3% for
the second quarter, 1995 and by $559,548, or 30.9% for the first half of 1995
as compared to the previous year. These decreases were realized in several
areas: the elimination of overlapping management from the December, 1993
merger; the reduction of some 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 $133,994 for the second quarter, 1995 and 1994.
This non-cash expense is the result of the 1993 merger.
OTHER INCOME for the quarter and year-to-date, 1995 was $81,275 and $232,585,
respectively, compared to $53,589 and $219,793 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 second quarter
of 1995, and there have not been any noticeable increases in supplies and
other costs.
LIQUIDITY AND CAPITAL RESOURCES
The principal changes in the Company's financial condition from December 28,
1994 were increases in cash and short term investments. Decreases since the
prior year-end were in receivables, inventories, prepaid expenses, notes
payable, accounts payable, accrued expenses, and the provision for restaurant
closings, capital lease obligations, and other liabilities. There is
adequate cash flow in the company to pay current obligations within terms.
As of June 14, 1995, Stacey's ratio of current assets to current liabilities,
excluding the provision for restaurant closings, was .38, as compared to .30
at December 28, 1994. The provision for restaurant closings at June 14, 1995
is $2,456,764. This amount provides for some additional asset write-offs and
the payout for lease terminations, which are payable over the next five
years.
<PAGE> 12
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
The annual meeting of shareholders of Stacey's Buffet, Inc. was
held on May 25, 1995, for the following purposes:
1. To elect a Board of Directors consisting of five directors.
2. To consider and vote upon a proposal to ratify the appointment
of KPMG Peat Marwick as independent auditors for Stacey's
Buffet, Inc.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Proxies for the meeting were solicited pursuant to Section 14(a) of
the Securities and Exchange Act of 1934. There was no solicitation
in opposition to management solicitation, and all of management's
nominees for directors as listed in the proxy statement were
elected.
The election of the Board of Directors, each to serve until the
next annual meeting of stockholders or as otherwise provided, was
approved by the following vote:
<PAGE> 13
STACEY'S BUFFET, INC.
PART II: OTHER INFORMATION
(continued)
Shares Voted
Director "For"
Homer Duff 12,377,781
Stephen J. Marrier 12,374,356
John F. Robenalt 12,358,836
Scott W. Ryan 12,378,999
Leslie A. Spang 12,379,759
The proposal to ratify the appointment of KPMG Peat Marwick as
independent auditors for Stacey's Buffet, Inc. was approved by the
following vote:
Shares Voted Shares Voted Shares Voted
"For" "Against" "Abstaining"
12,425,193 57,372 29,989
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: The Company filed a Form 8-K on April 24,
1995 reporting that Stacey's Buffet, Inc. had executed or
agreed in principle to settlements with landlords representing
twelve restaurants that the Company has closed or intends to
close.
<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)
<TABLE>
<S> <C>
Date: July 25,1995 Leslie A. Spang
-------------------------
Leslie A. Spang
Chief Financial Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-03-1996
<PERIOD-END> JUN-14-1995
<CASH> 45,515
<SECURITIES> 1,119,910
<RECEIVABLES> 163,000
<ALLOWANCES> 0
<INVENTORY> 401,061
<CURRENT-ASSETS> 1,824,764
<PP&E> 23,786,661
<DEPRECIATION> 7,737,712
<TOTAL-ASSETS> 28,832,623
<CURRENT-LIABILITIES> 7,267,857
<BONDS> 0
<COMMON> 144,660
0
0
<OTHER-SE> 21,273,302
<TOTAL-LIABILITY-AND-EQUITY> 28,832,623
<SALES> 26,657,984
<TOTAL-REVENUES> 26,657,984
<CGS> 25,067,174
<TOTAL-COSTS> 25,067,174
<OTHER-EXPENSES> 1,520,239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,009
<INCOME-PRETAX> 303,156
<INCOME-TAX> 0
<INCOME-CONTINUING> 303,156
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 303,156
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
