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Total sales for the quarter ended March 31, 2001 were $13.5 million, down 4.3% compared to total sales of $14.2 million for the same period last year. Average unit sales were $282,000, down 4.1% for the second quarter of fiscal 2001 compared with average unit sales of $294,000 for the second quarter 2000. Same store sales were down 4.2% for the quarter versus the prior year quarter.
Net loss for the second quarter was $501,000, or $(0.34) per share, compared with net earnings of $840,000, or $.58 per share, for the same quarter last year. The loss was primarily due to lower sales this quarter versus the prior year quarter, positive adjustments in the prior year quarter of $883,000 in insurance reserves versus positive adjustments in the current quarter of $87,000, and higher general and administrative costs resulting from the pending merger.
Total sales were $26.3 million for the first six months of 2001 versus $27.5 million for the first six months of 2000, a 4.1% decrease. Average unit sales were $548,000, down 3.4% from $567,000 in 2000. Same store sales were down 4.8% for the first six months of 2001 compared with the first six months of 2000.
Net loss for the first six months of 2001 was $1,158,000, or $(0.78) per share, compared with net earnings of $463,000, or $0.32 per share for the first six months of 2000. The $1,621,000 decrease was primarily due to lower sales, positive adjustments in the prior fiscal year of $1,020,000 in insurance reserves versus positive adjustments this year of only $87,000, and higher general and administrative costs of approximately $200,000 from the pending merger.
On April 2, 2001, the company announced that it had signed a definitive agreement to merge with Pancho's Restaurants, Inc., an affiliate of Stephen Oyster of Austin, Texas. Pursuant to the merger agreement, each share of Pancho's common stock will be converted into the right to receive $4.60 cash per share. Pancho's currently has approximately 1.5 million shares outstanding, and outstanding options to purchase approximately 175,000 shares.
Pancho's Board of Directors has unanimously approved the merger and will recommend that the Company's stockholders adopt the merger agreement at the special stockholders meeting to be held for that purpose. Wells Fargo Van Kasper is serving as financial advisor to the Company.
"The Merger Agreement is the culmination of the efforts of our investment bankers, Wells Fargo Van Kasper, working closely with our Board of Directors to find strategic financial alternatives for the Company to maximize stockholder value,'' said Hollis Taylor, President and Chief Executive Officer of the Company. "The Company's Board of Directors concluded that the cash transaction with Mr. Oyster's affiliated companies offered the best financial alternative for the company's stockholders.''
The merger is expected to be completed by the end of the second quarter of 2001, and is subject to approval by the Company's stockholders and certain other conditions. These conditions include Mr. Oyster's obtaining the financing to consummate the transaction, the company's obtaining an opinion from Wells Fargo Van Kasper that the merger consideration of $4.60 per share is fair to the stockholders from a financial point of view, and the company's meeting certain performance criteria prior to its filing the final proxy statement with the Securities and Exchange Commission in connection with the special stockholders meeting which will be scheduled and held in connection with seeking the approval of the merger agreement by the Company's stockholders.
Based in Fort Worth, Pancho's Mexican Buffet, Inc. is the only publicly held company offering all-you-can-eat Mexican food in a buffet-style format. The company operates 48 restaurants in Texas, Arizona, Louisiana, New Mexico and Oklahoma.