Pancho’s Mexican Buffet, Inc. reports results for the second fiscal quarter and six
months ended March 31, 2001.
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.