<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 27, 1996.
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from __________to ___________
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 (I.R.S. Employer Identification No.)
incorporation or organization)
801 West Bay Drive, Suite #704, Largo, FL 34640
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 581-4492
Indicate by check mark whether the registrant (1) has filed all reports
required 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 periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
The number of shares outstanding of registrant's common stock as of May 10,
1996 was 12,466,089 shares.
<PAGE> 2
STACEY'S BUFFET, INC.
INDEX
PAGE #
PART I: FINANCIAL INFORMATION ------
Item 1. Financial Statements:
Balance Sheets as of March 27, 1996 and
January 3, 1996 .................................... 3
Statements of Operations for the Twelve Weeks
Ended March 27, 1996 and March 22, 1995 ............ 4
Statements of Stockholders' Equity for the Twelve
Weeks Ended March 27, 1996 and March 22, 1995 ...... 5
Statements of Cash Flows for the Twelve Weeks
Ended March 27, 1996 and March 22, 1995 ............ 6
Notes to Financial Statements ........................ 8
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations ................ 9
PART II: OTHER INFORMATION
Item 1. Legal Proceedings ........................... 11
Item 2. Changes in Securities ....................... 11
Item 3. Defaults Upon Senior Securities ............. 11
Item 4. Submission of Matters to a Vote of
Security Holders ......................... 11
Item 5. Other Information ........................... 11
Item 6. Exhibits and Reports on Form 8-K ............ 11
Signatures ........................................... 12
<PAGE> 3
STACEY'S BUFFET, INC.
Balance Sheets
March 27, 1996 and January 3, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 27, January 3,
Assets 1996 1996
------ ------ ------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 343,514 548,791
Short-term investments 780,561 769,668
Receivables 151,449 101,208
Inventory 373,798 356,667
Prepaid expenses and other 67,328 80,590
---------- ----------
Total current assets 1,716,650 1,856,924
Property and equipment, net of
accumulated depreciation 7,744,056 7,846,665
Deposits and other assets 173,545 173,545
Goodwill, net of accumulated amortization 8,474,988 8,584,488
---------- ----------
$ 18,109,239 18,461,622
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 2,135,626 2,988,571
Line of credit - 175,000
Current portion of obligations under
capital leases 140,637 159,704
Accrued expenses 1,937,445 1,820,051
Accrued rent 652,763 708,991
Reserve for restaurant renovations
and closings 1,914,678 2,064,406
---------- ----------
Total current liabilities 6,781,149 7,916,723
Obligations under capital leases, excluding
current portion 8,711 11,694
Other liabilities 24,737 27,578
---------- ----------
Total liabilities 6,814,597 7,955,995
Stockholders' equity:
Common stock, $.01 par value. Authorized
25,000,000 shares; issued 12,466,089
shares at March 27, 1996 and January
3, 1996 124,660 124,660
Additional paid in capital 42,688,109 42,688,109
Accumulated deficit (31,518,127) (32,307,142)
---------- ----------
Net stockholders' equity 11,294,642 10,505,627
Commitments and contingencies
---------- ----------
$ 18,109,239 18,461,622
========== ==========
See accompanying notes to financial statements.
3
</TABLE>
<PAGE> 4
STACEY'S BUFFET, INC.
Statements of Operations
For the Twelve Weeks Ended March 27, 1996
and March 22, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 27, March 22,
1996 1995
------ ------
<S> <C> <C>
Restaurant sales $ 11,195,694 15,314,992
Cost of restaurant sales:
Food cost 4,126,431 5,874,978
Labor cost 3,130,152 4,408,247
Operating cost 1,584,850 2,088,338
Occupancy cost 745,718 1,279,924
Depreciation and amortization 205,370 503,746
---------- ----------
Restaurant profit 1,403,173 1,159,759
Selling, general and administrative
expenses 602,830 617,111
Amortization of goodwill 109,500 133,994
---------- ----------
Operating income 690,843 408,654
Other income (expense) 98,172 151,310
---------- ----------
Earnings before income taxes 789,015 559,964
Income taxes - -
---------- ----------
Net earnings $ 789,015 559,964
========== ==========
Net earnings per share of common stock $ 0.06 0.04
====== ======
See accompanying notes to financial statments.
4
</TABLE>
<PAGE> 5 STACEY'S BUFFET, INC.
Statements of Stockholders' Equity
For the Twelve Weeks Ended March 27, 1996
and March 22, 1995
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional Net
-------------------- paid-in Accumulated stockholders'
Shares Amount capital deficit equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at January 3, 1996 12,466,089 $ 124,660 42,688,109 (32,307,142) 10,505,627
Net earnings - - - 789,015 789,015
---------- --------- ---------- ---------- ----------
Balances at March 27, 1996 12,466,089 $ 124,660 42,688,109 (31,518,127) 11,294,642
========== ========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Common Stock Additional Net
-------------------- paid-in Accumulated stockholders'
Shares Amount capital deficit equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at December 27, 1994 14,466,089 $ 144,660 45,168,109 (24,197,963) 21,114,806
Net earnings - - - 559,964 559,964
---------- --------- ---------- ---------- ----------
Balances at March 22, 1995 14,466,089 $ 144,660 45,168,109 (23,637,999) 21,674,770
========== ========= ========== ========== ==========
See accompanying notes to financial staements.
5
</TABLE>
<PAGE> 6
STACEY'S BUFFET, INC.
Statements of Cash Flows
For the Twelve Weeks Ended March 27, 1996
and March 22, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 27, March 22,
1996 1995
Cash flow from operating activities: ------ ------
<S> <C> <C>
Net earnings $ 789,015 559,964
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 379,275 637,740
Change in assets and liabilities:
(Increase) decrease in assets:
Short-term investments (10,893) (995,186)
Receivables (50,241) (39,772)
Inventory (17,131) 68,681
Income tax refund receivable - 19,199
Prepaid expenses and other 13,262 275,206
Deposits and other assets - (23,621)
Increase (decrease) in liabilities:
Accounts payable (852,945) 487,960
Line of credit (175,000) (188,000)
Accrued expenses 61,166 (794,879)
Other liabilities (2,841) (4,338)
Reserve for restaurant renovations
and closings, net (149,728) 113,657
--------- ---------
Net cash provided by (used in)
operating activities (16,061) 116,611
Cash flows from investing activities:
Capital expenditures, net (167,166) (21,699)
--------- ---------
Net cash used in investing activities (167,166) (21,699)
Cash flows from financing activities:
Payments on capital lease obligations (22,050) (24,876)
--------- ---------
Net cash (used in) provided by
financing activities (22,050) (24,876)
--------- ---------
Net (decrease) increase in cash (205,277) 70,036
Cash and cash equivalents at beginning of period 548,791 30,207
--------- ---------
Cash and cash equivalents at end of period $ 343,514 100,243
========= =========
(Continued)
</TABLE>
6
<PAGE> 7
STACEY'S BUFFET, INC.
Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
March 27, March 22,
1996 1995
Supplemental disclosure of cash flow information: ------ ------
<S> <C> <C>
Cash payments during the period for:
Interest paid $ 6,856 14,892
========== =========
Excluded from the March 27, 1996, and March 22,
1995 statement of cash flows are the following
noncash transactions:
Write-off of leasehold improvements and
equipment (net of accumulated depreciation)
against the reserve for restaurant
renovations and closings $ - 5,705,876
========== =========
Write-off of deposits against the resrve
for restaurant renovations and closings $ - 41,663
========== =========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 8
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 period. 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 January 3, 1996. The results of
operations for the twelve weeks ended March 27, 1996 are not
necessarily indicative of the results for the entire fiscal year
ending January 1, 1997.
2. Earnings per share is based on the weighted average number
of common shares and common share equivalents outstanding in
each period.
3. Effective January 4, 1996, the Company adopted Statement of
Financial Accounting Standard No. 123, Accounting for Stock
Based Compensation. This standard allows the Company to select
either a fair value based method or it's current intrinsic value
based method of accounting for employee stock-based
compensation. The Company retained it's intrinsic value method
of accounting and, therefore, the adoption of this standard did
not have a material effect on the Company's financial
statements.
<PAGE> 9
STACEY'S BUFFET, INC.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
Results of operations are for the twelve weeks ("first quarter")
ended March 27, 1996, as compared to the twelve weeks ended March 22,
1995. During January 1996, two underperforming restaurants located
in the Northeast were closed. In March 1996, a new restaurant in Florida
was opened. During fiscal 1995, 13 underperforming restaurants were
closed and 3 restaurants were spun-off. Of the total restaurants closed
and spun-off in fiscal 1995, ten underperforming restaurants were closed
during the latter part of the quarter ended March 22, 1995. At the end of
the first quarter 1996, there were 27 Company-owned restaurants in
operation.
RESTAURANT SALES of $11,195,694 for the quarter ended March 27, 1996
represents an decrease of $4,119,298 or 26.9% from the same quarter in
1995. This decrease reflects the fewer number of restaurants operating
in first quarter of 1996 compared to the first quarter of 1995 due to the
restaurants closed and spun-off. Additionally, sales were adversely
effected due to the harsh winter weather experienced in the Northeast
during the first quarter of fiscal 1996. Due to the severe snow storms in
the Northeast, some restaurants were unable to open for business and some
were forced to close down early. On some of the days that the restaurants
were able to remain open, the volume of business was significantly less
than normal due to the limited number of people traveling in the severe
weather and limited number of streets cleared for travel.
Average weekly sales per restaurant for the twelve week quarter ended
March 27, 1996 was $35,096, compared to average weekly sales of $31,774
per restaurant during the same period last year. The increase in average
weekly sales in 1996 compared to the same period last year is due largely
to the exclusion of the underperforming restaurants in 1996 that are
included in the 1995 average weekly sales.
COST OF RESTAURANT SALES includes food, labor, operating, occupancy and
depreciation and amortization expenses. Operating costs consist primarily
of costs of supplies, utilities, maintenance, personal property taxes,
and insurance.
Cost of food and labor as a percentage of sales for the twelve weeks
ended March 22, 1995 decreased to 64.9% from 67.1% in the same quarter,
last year. This reduction was due to continuing to monitor the food and
labor costs, and providing product mix in our menus that yield more
favorable results. Other operating costs, occupancy and depreciation,
were 22.7% for the first quarter, 1996 compared to costs of 25.3% in the
comparable quarter of 1995. Occupancy costs for the first quarter of 1996
compare favorable as a percentage of sales compared to the same period in
1995 primarily due to the closing of the underperforming restaurants.
<PAGE> 10
STACEY'S BUFFET, INC.
SELLING, GENERAL AND ADMINISTRATIVE COSTS decreased by $14,281
or 2.3% for the first quarter, 1996 as compared to the same
period for the previous year. Total selling, general and
administrative expenses, as a percentage of sales, was 5.4% for
the first quarter of 1996, as compared to 4.0% for the first
quarter of 1995. This increase as a percentage of sales is a
result of sales for the first quarter of fiscal 1996 being less
than sales for the same period in 1995.
Amortization of goodwill was $109,500 for the first quarter of
1995, compared to $133,994 for the first quarter of 1995. This
reduction in amortization expense results from the reduction in
goodwill related to the spin-off of three restaurants in fiscal
1995. Goodwill amortization is a non-cash expense that was the
result of the 1993 merger.
OTHER INCOME (EXPENSE) for the first quarter, 1995 was $98,172
compared to $151,310 in the same quarter, last year. Other
income (expense) consists primarily of royalty fees earned,
interest income, interest expense.
INFLATIONARY FACTORS were minimal on the operating results of
the Company. Wholesale food costs have remained stable during
the first quarter of 19965, 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
January 3, 1996 were decreases in the line of credit and
accounts payable. As of March 27, 1996, Stacey's ratio of
current assets to current liabilities was .25, as compared to
.23 at January 3, 1996. Current liabilities as of March 27,
1996, include $1,914,678 for the provision for restaurant
renovations and closings.
The Company's capital has been obtained through cash from
operations, credit from trade suppliers, and the sale of common
stock related to the merger in December with the Stacey Lynn
Group. The remodeling and conversion program undertaken during
1994 and the operational losses incurred in prior years used up
most of the Company's cash reserves. Based on current operating
results and management's projected operating results, the
Company believes cash flow generated from restaurant operations
will be sufficient to pay debts as they become due.
<PAGE> 11
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 Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8K
-------------------------------
a) Exhibits:
None
b) Reports on Form 8K:
No Form 8-K was required to be filed during the first
quarter, 1996.
<PAGE> 12
STACEY'S BUFFET, INC.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
STACEY'S BUFFET, INC.
--------------------------
(Registrant)
By: /s/ Daniel J. Sullivan
---------------------------
Daniel J. Sullivan
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STACEY'S BUFFET, INC. FOR THE TWELVE WEEKS ENDED
MARCH 27, 1996, AND IS QUALIFIED IN ITS ENTRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-01-1997
<PERIOD-END> MAR-27-1996
<CASH> 343,514
<SECURITIES> 780,561
<RECEIVABLES> 151,449
<ALLOWANCES> 0
<INVENTORY> 373,798
<CURRENT-ASSETS> 1,716,650
<PP&E> 15,768,342
<DEPRECIATION> 7,744,056
<TOTAL-ASSETS> 18,109,239
<CURRENT-LIABILITIES> 6,781,149
<BONDS> 0
<COMMON> 124,660
0
0
<OTHER-SE> 8,169,982
<TOTAL-LIABILITY-AND-EQUITY> 18,109,239
<SALES> 11,195,694
<TOTAL-REVENUES> 11,195,694
<CGS> 9,792,521
<TOTAL-COSTS> 9,792,521
<OTHER-EXPENSES> 712,330
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,856
<INCOME-PRETAX> 789,015
<INCOME-TAX> 0
<INCOME-CONTINUING> 789,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 789,015
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
