<PAGE>
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 June 18, 1997.
/ / 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 33770
(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 July 31,
1997 was 2,493,144 shares.
<PAGE>
STACEY'S BUFFET, INC.
INDEX
----- PAGE #
------
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of June 18, 1997 and January 1, 1997 .................3
Statements of Operations for the Twelve Weeks and Twenty-
four Weeks Ended June 18, 1997 and June 19, 1996 ...................4
Statements of Stockholders' Equity for the Twenty-four
Weeks Ended June 18, 1997 and June 19, 1996 ........................5
Statements of Cash Flows for the Twenty-four Weeks
Ended June 18, 1997 and June 19, 1996 ..............................6
Notes to Financial Statements ..........................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ..........................8
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 ............................................12
Item 6. Exhibits and Reports on Form 8-K .............................12
Signatures .......................................................13
<PAGE>
<TABLE>
STACEY'S BUFFET, INC.
Balance Sheets
June 18, 1997 and January 1, 1997
(Unaudited)
<CAPTION>
June 18, January 1,
Assets 1997 1997
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 226,364 252,991
Short-term investments 254,866 806,194
Receivables 105,028 162,993
Inventory 284,767 309,013
Income tax refund receivable - -
Prepaid expenses and other 91,209 35,352
------------ ------------
Total current assets 962,234 1,566,543
Property and equipment,
less accumulated depreciation 6,453,770 6,939,536
Deposits and other assets 162,388 162,588
Goodwill, less accumulated amortization 7,890,988 8,109,988
------------ ------------
$ 15,469,380 16,778,655
============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 2,639,270 2,638,948
Line of credit - 340,000
Current portion of obligations
under capital leases 15,040 16,168
Accrued expenses 1,579,174 2,052,122
Accrued rent 457,992 607,818
Reserve for restaurant closings 1,818,524 2,174,623
------------ ------------
Total current liabilities 6,510,000 7,829,679
Obligations under capital leases,
excluding current portion 18,710 8,840
------------ ------------
Total liabilities 6,528,710 7,838,519
Stockholders' equity:
Common stock, $.01 par value.
Authorized 25,000,000 shares; issued
2,493,144 shares at June 18, 1997 and
January 1, 1997 24,931 24,931
Additional paid in capital 42,787,602 42,787,602
Accumulated deficit (33,871,863) (33,872,397)
------------ ------------
Net stockholders' equity 8,940,670 8,940,136
Commitments and contingencies
------------ ------------
$ 15,469,380 16,778,655
============ ============
3
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STACEY'S BUFFET, INC.
Statements of Operations
For the Twelve Weeks and Twenty-Four Weeks Ended
June 18, 1997 and June 19, 1996
(Unaudited)
<CAPTION>
Second Quarter Ended Year to Date Ended
-------------------- ------------------
June 18, June 19, June 18, June 19,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Restaurant sales $ 7,827,438 9,320,006 18,014,949 20,515,700
Cost of restaurant sales:
Food cost 3,057,605 3,606,251 6,830,602 7,732,682
Labor cost 2,584,365 2,775,281 5,368,080 5,905,433
Operating cost 1,345,389 1,543,999 2,794,102 3,128,849
Occupancy cost 710,548 814,832 1,350,242 1,560,550
Depreciation and amortization 236,858 209,966 472,728 415,336
----------- ----------- ------------ ------------
Total restaurant costs 7,934,765 8,950,329 16,815,754 18,742,850
----------- ----------- ------------ ------------
Restaurant profit (loss) (107,327) 369,677 1,199,195 1,772,850
General and administrative expenses 535,916 461,731 1,069,120 1,064,561
Amortization of goodwill 109,500 109,500 219,000 219,000
----------- ----------- ------------ ------------
Operating profit (loss) (752,743) (201,554) (88,925) 489,289
Other income 53,231 75,137 89,459 173,309
----------- ----------- ------------ ------------
Income (loss) before income taxes (699,512) (126,417) 534 662,598
Income taxes - - - -
----------- ----------- ------------ ------------
Net income (loss) $ (699,512) (126,417) 534 662,598
=========== =========== ============ ============
Net income (loss) per share
of common stock $ (0.28) (0.05) 0.00 0.27
=========== =========== ============ ============
Weighted average number of
common shares outstanding 2,493,144 2,493,144 2,493,144 2,493,144
=========== =========== ============ ============
4
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STACEY'S BUFFET, INC.
Statements of Stockholders' Equity
For the Twenty-four Weeks Ended June 18, 1997
and June 19, 1996
(Unaudited)
<CAPTION>
Common stock Additional Net
------------------ paid-in Accumulated stockholders'
Shares Amount capital deficit equity
------ ------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1997 2,493,144 $ 24,931 42,787,602 (33,872,397) 8,940,136
Net income - - - 534 534
----------- --------- ------------ ------------ -----------
Balances at June 18, 1997 2,493,144 $ 24,931 42,787,602 (33,871,863) 8,940,670
=========== ========= ============ ============ ===========
</TABLE>
<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 2,493,144 $ 24,931 42,787,602 (32,307,142) 10,505,391
Net income - - - - 662,598
----------- --------- ------------ ------------ -----------
Balances at June 19, 1996 2,493,144 $ 24,931 42,787,602 (31,644,544) 11,167,989
=========== ========= ============ ============ ===========
5
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STACEY'S BUFFET, INC.
Statements of Cash Flows
For the Twenty-four Weeks Ended June 18, 1997
and June 19, 1996
(Unaudited)
<CAPTION>
June 18, June 19,
1997 1996
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net earnings (loss) $ 534 662,598
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 779,737 762,597
Change in assets and liabilities:
(Increase) decrease in assets:
Short-term investments 551,328 (15,152)
Receivables 57,965 (12,575)
Inventory 24,246 44,580
Prepaid expenses and other (55,857) (4,805)
Deposits and other assets 200 -
Increase (decrease) in liabilities:
Accounts payable 322 (1,175,966)
Line of credit (340,000) 76,000
Accrued expenses (622,774) (194,199)
Other liabilities - (27,578)
Reserve for restaurant closings (356,099) (233,895)
---------- ----------
Net cash provided by (used in)
operating activities 39,602 (118,395)
Cash flows from investing activities:
Capital expenditures (74,971) (221,816)
---------- ----------
Net cash used in investing activities 74,971 (200,117)
Cash flows from financing activities:
Proceeds from notes payable 18,178 -
Payments on capital lease obligations (9,436) (37,374)
---------- ----------
Net cash used in financing activities 8,742 (37,374)
---------- ----------
Net decrease in cash (26,627) (377,585)
Cash and cash equivalents at beginning of period 252,991 548,791
---------- ----------
Cash and cash equivalents at end of period $ 226,364 171,206
========== ==========
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Interest paid $ 2,563 5,529
========== ==========
6
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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 1, 1997. The
results of operations for the twelve and twenty-four weeks
ended June 18, 1997 are not necessarily indicative of the
results for the entire fiscal year ending December 31, 1997.
2. Earnings per share is based on the weighted average number
of common shares and common share equivalents outstanding in
each period.
7
<PAGE>
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 18, 1997, as
compared to the same periods last year:
RESTAURANT SALES of $7,827,438 for the quarter ended June 18,
1997 represents a decrease of $1,492,568 or 19.1% from the same
quarter in 1996 and net sales of $18,014,949 for the first half
of 1997represents an decrease of $2,500,751 or 12.2% compared
to same period in 1996. The decrease in sales reflects the
fewer number of restaurants operating in 1997 compared to 1996.
Average weekly sales per restaurant location decreased to
$31,276 in the first half of 1997 compared to $31,758 for the
same period in 1996.
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 June 18, 1997 increased to 72.1% compared to 68.5%
for the twelve weeks ended June 19, 1996. Cost of food and
labor as a percentage of sales for the twenty-four weeks ended
June 18, 1997 increased to 67.7% compared to 66.5% for the
twenty-four weeks ended June 19, 1996. These increases in
costs as a percentage of sales were primarily due to the
decrease in sales volumes as they relate to the relatively
fixed cost of indirect labor, that consists of restaurant
managers' salaries.
Operating costs and occupancy costs increased as a percentage
of sales for the twelve and twenty-four weeks ended June 18,
1997 to 26.3% and 23.0% respectively compared to 25.3% and
22.9% for the same periods in 1996. The increase as a
percentage of sales results from these costs that are less
variable in nature to sales volumes being computed as a
percentage of lower sales levels per store.
Depreciation and amortization expense increased as a percentage
of sales a percentage of sales for the twelve and twenty-four
weeks ended June 18, 1997 to 3.0% and 2.6% respectively
compared to 2.3% and 2.0% for the same periods in 1996. The
increase as a percentage of sales results from these costs
being amortized on a straight line basis and are not variable
in nature to sales volumes computed as a percentage of lower
sales levels per store.
8
<PAGE>
STACEY'S BUFFET, INC.
Item 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------
(continued)
GENERAL AND ADMINISTRATIVE COSTS increased by $74,185 for the
second quarter of 1997 compared to the second quarter of 1996
and by $4,559 for the first half of 1997 as compared to the
first half of 1996. The increase in the second quarter of
1997's general and administrative expenses were due to
increases in outside professional services and legal fees net
of decreases in salaries and wages, travel and depreciation
expenses.
Amortization of goodwill was $109,500 for the second quarter,
1997 and 1996. This non-cash expense is the result of the
1993 merger.
OTHER INCOME for the quarter and year-to-date, 1997 was
$53,231 and $89,459, respectively, compared to $75,137 and
$173,309 for the prior year. Most of the other income was
from royalty fees from licensing the Stacey's name and buffet
concept. The reduction in other income is primarily due to
the reduction in the number of restaurants operating under
licensing agreements.
INFLATIONARY FACTORS had minimal impact on the operating
results of the Company. Wholesale food costs have remained
stable during the second quarter of 1996, and there have not
been any noticeable increases in supplies and other costs.
The Company expects the proposed increase in the minimum wage
will result in an increase in direct labor costs when the
second phase of increases are required to be implemented later
this year.
LIQUIDITY AND CAPITAL RESOURCES
The principal changes in the Company's financial condition from
January 1, 1997 were decreases in accounts payable, short-term
investments, the line of credit, the reserve for store closings
and accrued expenses. As of June 18, 1997, Stacey's ratio of
current assets to current liabilities was .15, as compared to
.20 at January 1, 1997. Current liabilities as of June 18,
1997, include $1,818,524 for the reserve for restaurant
closings.
On January 5, 1997, the line of credit facility expired and all
amounts outstanding under the line were repaid. Approximately
$581,000 of the short-term investments were released from the
security agreement and converted to cash for operating working
capital.
9
<PAGE>
STACEY'S BUFFET, INC.
Item 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------
(continued)
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 1993, 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 for fiscal 1997 of the remaining twenty-four
restaurants, using actual fiscal 1996 results as the basis of these
projections, and assuming the Company's receipt of the proceeds of
the $2,000,000 loan for which it has entered into a letter of
intent with CKE Restaurants, Inc., the Company expects cash flows
will be adequate to pay debts in the ordinary course.
10
<PAGE>
STACEY'S BUFFET, INC.
PART II: OTHER INFORMATION
- -------------------------------------------------------------------------
Item 1. Legal Proceedings
Not Applicable
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 August 1, 1997, 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.
11
<PAGE>
STACEY'S BUFFET, INC.
PART II: OTHER INFORMATION
- -------------------------------------------------------------------------
(continued)
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:
Shares Voted Shares Voted Shares Voted
Director "For" "Against" "Abstaining"
------------------ --------- ------- ----------
Garrett B. Hunter 2,156,689 126,057 -
Peter J. Hurley 2,157,077 125,564 -
Stephen J. Marrier 2,157,077 125,669 -
Daniel J. Sullivan 2,161,142 121,604 -
Maureen A. Jack 2,161,137 121,609 -
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
---------- ------------ ----------
2,229,374 18,895 34,477
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8K
a)Exhibits: None
b)Reports on Form 8K:
The Company filed a Form 8-K on July 28, 1997 reporting that
Stacey's Buffet, Inc. had entered into a letter of intent to
form a strategic alliance with Star Buffet, Inc., a wholly-owned
subsidiary of CKE Restaurants, Inc.
12
<PAGE>
SIGNATURE
----------
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)
By /s/ Daniel J. Sullivan
---------------------------
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STACEY'S BUFFET, INC. FOR THE TWENTY FOUR WEEKS
ENDED JUNE 18, 1997, AND IS QUALIFIED IN ITS ENTRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-18-1997
<CASH> 226,364
<SECURITIES> 254,866
<RECEIVABLES> 115,028
<ALLOWANCES> 10,000
<INVENTORY> 284,767
<CURRENT-ASSETS> 962,234
<PP&E> 15,869,481
<DEPRECIATION> 9,415,711
<TOTAL-ASSETS> 15,469,380
<CURRENT-LIABILITIES> 6,510,000
<BONDS> 0
<COMMON> 24,931
0
0
<OTHER-SE> 8,915,739
<TOTAL-LIABILITY-AND-EQUITY> 15,469,380
<SALES> 18,014,949
<TOTAL-REVENUES> 18,104,408
<CGS> 16,815,754
<TOTAL-COSTS> 16,815,754
<OTHER-EXPENSES> 1,288,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,563
<INCOME-PRETAX> 534
<INCOME-TAX> 0
<INCOME-CONTINUING> 534
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 534
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
