<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File No. 000-22941
EXECUSTAY CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 52-2042280
(State of Incorporation) (I.R.S. Employer identification No.)
7595 RICKENBACKER DRIVE
GAITHERSBURG, MARYLAND 20879
(Address of principal executive offices)
(301) 948-4888
(Registrant's telephone number, including area code)
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 period 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
----- -----
At November 10, 1997, there were outstanding 6,983,500 shares of the
Company's common stock.
<PAGE> 2
EXECUSTAY CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Consolidated Financial Statements 3
Condensed Consolidated Balance Sheets as of September 30, 1997
and December 31, 1996 3
Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risks 13
PART II. OTHER INFORMATION 13
Item 1. Legal proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES
EXHIBIT INDEX
</TABLE>
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<PAGE> 3
Part I
Item 1 Consolidated Financial Statements
EXECUSTAY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
===============================================================================
SEPTEMBER 30, DECEMBER 31,
1997 1996
- -------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 17,890,658 $ 503,099
ACCOUNTS RECEIVABLE--trade 4,999,681 2,266,518
PREPAID RENT AND OTHER 484,625 323,521
PROPERTY ON OR HELD FOR LEASE, net 4,751,310 4,098,894
PROPERTY AND EQUIPMENT, net 2,091,198 2,076,330
OTHER ASSETS 3,255,449 410,114
----------------------------------
$ 33,472,921 $ 9,678,476
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
BANK LINE OF CREDIT $ - $ 800,000
NOTES PAYABLE TO BANK - 1,881,527
CAPITAL LEASE OBLIGATION 1,529,180 1,555,860
ACCOUNTS PAYABLE 1,486,598 1,110,592
ACCRUED AND OTHER LIABILITIES 1,354,123 1,347,664
DUE TO STOCKHOLDERS 1,000,000 -
CURRENT INCOME TAXES PAYABLE 49,000 -
DEFERRED TAX LIABILITIES 107,000 -
---------------------------------
TOTAL LIABILITIES 5,525,901 6,695,643
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value;
5,000,000 shares authorized,
none issued and outstanding - -
Common stock, $.01 par value;
45,000,000 shares authorized,
6,797,500 and 3,750,000 shares
issued and outstanding 67,975 37,500
Additional paid-in capital 27,789,215 1,135,280
Retained earnings 89,830 1,810,053
---------------------------------
TOTAL STOCKHOLDERS' EQUITY 27,947,020 2,982,833
---------------------------------
$ 33,472,921 $ 9,678,476
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
-3-
<PAGE> 4
EXECUSTAY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
===================================================================================================================================
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- --------------------------
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUE $ 14,817,296 $ 8,910,534 $ 35,253,084 $20,768,428
OPERATING COSTS AND EXPENSES
Cost of revenue 10,039,456 5,395,595 23,401,397 12,700,742
Personnel and payroll costs 2,315,751 1,543,788 5,821,419 4,006,572
Occupancy costs and nonrental
depreciation and amortization 481,005 247,909 1,166,090 674,566
Other operating costs 597,399 425,256 1,637,939 1,169,420
------------------------------------------------------------------------------
TOTAL COSTS AND EXPENSES 13,433,611 7,612,548 32,026,845 18,551,300
------------------------------------------------------------------------------
EARNINGS FROM OPERATIONS 1,383,685 1,297,986 3,226,239 2,217,128
INTEREST EXPENSE 69,227 89,540 278,188 223,044
------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 1,314,458 1,208,446 2,948,051 1,994,084
INCOME TAX EXPENSE (including $183,000
nonrecurring provision relating to
termination of Subchapter S status
on August 27, 1997) 156,000 - 156,000 -
------------------------------------------------------------------------------
NET INCOME $ 1,158,458 $ 1,208,446 $ 2,792,051 $ 1,994,084
- ----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA DATA
HISTORICAL EARNING BEFORE INCOME TAXES $ 1,314,458 $ 1,208,446 $ 2,948,051 $ 1,994,084
PROVISION FOR INCOME TAXES 526,000 483,000 1,179,000 798,000
------------------------------------------------------------------------------
PRO FORMA NET INCOME $ 788,458 $ 725,446 $ 1,769,051 $ 1,196,084
- ----------------------------------------------------------------------------------------------------------------------------------
PRO FORMA INCOME PER SHARE $ .16 $ .18 $ .41 $ .29
- ----------------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,851,025 4,074,000 4,335,855 4,074,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE> 5
EXECUSTAY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
========================================================================================================================
Nine months ended September 30, 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,792,051 $ 1,994,084
Adjustments to reconcile net income to net
cash provided by operating activities
Deferred tax expense 107,000 -
Depreciation and amortization 1,599,903 1,276,828
Net purchase of property on or held for lease (1,904,825) (2,342,366)
Changes in assets and liabilities (1,611,492) (2,407,042)
-------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 982,637 (1,478,496)
-------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchases of property and equipment (292,431) (252,331)
Net increase in due from unconsolidated affiliates (4,570) (30,235)
Cost of acquisitions (2,762,006) -
-------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (3,059,007) (282,566)
-------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments) borrowings on line of credit (800,000) 1,137,564
Distributions to shareholders (5,592,209) (1,050,934)
Borrowings on bank loans 4,350,000 1,900,000
Payments on bank loans (6,231,527) (425,381)
Payments on capital lease obligations (26,680) (21,289)
Net proceeds from public offering 27,764,345 -
-------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES 19,463,929 1,539,960
-------------------------------------------------
NET INCREASE IN CASH 17,387,559 221,102
CASH AT BEGINNING OF PERIOD 503,099 228,910
-------------------------------------------------
CASH AT END OF PERIOD $ 17,890,658 $ 7,808
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOWS INFORMATION:
Interest paid during the period $ 340,263 $ 205,735
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE> 6
EXECUSTAY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
==============================================================================
September 30, 1997
- ------------------------------------------------------------------------------
NOTE A--DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Execustay Corporation (the "Company") is a provider of interim housing for
corporate clients and professionals. In addition to providing fully
furnished housing, the Company also rents housewares and furniture to
property management companies and apartment communities. The Company has
offices in the mid-atlantic and southeast regions of the United States, and
in California.
The summarized financial information included herein does not include all
disclosures required to be included in a complete set of financial
statements prepared in conformity with generally accepted accounting
principles. Such disclosures were included with the financial statements of
the Company at December 31, 1996, and for the year then ended included in the
Registration Statement on Form S-1 (Registration No. 333-30049) and
related prospectus as declared effective by the Securities and Exchange
Commission on August 27, 1997. Such Statements should be read in
conjunction with the data herein.
The financial information contains all adjustments (consisting of normal
recurring accruals) which, in the opinion of management, are deemed for a fair
presentation of the results for the interim periods. The results for the
interim periods are not necessarily indicative of results that may be expected
for the full fiscal year.
===============================================================================
NOTE B--TERMINATION OF S-CORPORATION STATUS AND PRO FORMA INFORMATION
PRO FORMA INFORMATION
Prior to the consummation of the initial public offering, the Company filed its
federal and state income tax returns under the provisions of Subchapter S of
the Internal Revenue Code. Accordingly, no provision was provided in the
accompanying financial statements for federal and state income taxes for the S
Corporation periods, since the income of the Company was taxable directly to
its stockholders. On August 27, 1997, the Company converted to a C Corporation
and is subject to both federal and state income taxes. Accordingly, $183,000
additional federal and state income taxes, applicable to temporary differences
in the recognition of income and expenses for financial accounting and income
tax reporting purposes existing at August 27, 1997, have been recorded and
charged to operations for the nine months ended September 30, 1997. Such charge
is solely from the termination of the Subchapter S status and is nonrecurring.
The pro forma adjustment in the statements of earnings reflects a provision for
income taxes based upon pro forma pretax earnings as if the Company had been
subject to federal and state and local income taxes. The pro forma income tax
provision has been prepared in accordance with SFAS No. 109.
-6-
<PAGE> 7
EXECUSTAY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
==============================================================================
September 30, 1997
- ------------------------------------------------------------------------------
NOTE B--TERMINATION OF S-CORPORATION STATUS AND PRO FORMA INFORMATION--CONTINUED
PRO FORMA EARNINGS PER SHARE
Pro forma earnings per share are based upon the weighted average number of
common and common equivalents shares outstanding during the period. The shares
outstanding for all periods give retroactive effect to the Recapitalization and
stock split of the Company as well as 324,000 shares deemed to be sold by the
Company (at the initial offering price of $10.00 per share) to fund the
S-Corporation distribution in excess of the previous 12 months undrawn earnings
totaling $3.1 million, and the $1.1 million distribution declared on June 13,
1997.
===============================================================================
NOTE C--STOCKHOLDERS' EQUITY
On August 27, 1997, the Company consummated an initial public offering of
2,650,000 shares of its common stock at a price of $10.00 per share. During
September 1997, the underwriters' exercised their over-allotment option to
purchase an additional 397,500 shares of the Company's common stock at a price
of $10.00 per share. The net proceeds to the Company from the offering were
approximately $27.8 million.
===============================================================================
NOTE D--STOCK OPTION PLAN
In June 1997, the Board of Directors and stockholders adopted the 1997
Incentive and Stock Option Plan (the "Plan"). The Plan provides for the
granting of options to employees of the Company to purchase shares of the
Company's common stock at a price equal to or in excess of the fair market
value of the common stock at the date of grant. Reserved for issuance under the
Plan are 700,000 shares of common stock. The Company granted options to
purchase an aggregate of 176,850 shares of common stock under the Plan at a
price of $10.00 per share.
-7-
<PAGE> 8
EXECUSTAY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements--Continued
==============================================================================
September 30, 1997
- ------------------------------------------------------------------------------
NOTE E--RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued three new accounting
standards that will affect the Company's financial reporting methods. Under
Statement of Financial Accounting Standards ("SFAS") No. 128, the Company will
be required to prospectively change the method used to compute fully diluted
earnings per share; however, the impact is not expected to be material. Under
SFAS No. 130, the Company will be required to display an amount representing
total comprehensive income and its components in the financial statements.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. Under SFAS No. 131, the Company will be
required to report certain information about its operating segments in its
interim and annual financial statements, and certain information about its
products and services, the geographic areas in which it operates and its major
customers. In the initial year of application, comparative information for
earlier years is to be restated. SFAS No. 128 is effective for the Company's
fiscal year 1998, and SFAS Nos. 130 and 131 are effective for the Company's
fiscal year 1999.
===============================================================================
NOTE F--ACQUISITION
On November 1, 1997, the Company purchased 100% of the outstanding common
stock of an interim housing company in New York for approximately $8,250,000,
consisting of $6,300,000 in cash and 186,000 of the Company's unregistered
shares of common stock valued at $1,950,000 at the time of the purchase. The
total purchase price is subject to a post-closing adjustment based upon the
seller's 1997 adjusted earnings before interest and taxes and a final
determination of the acquired company's tangible net book value. The purchase
price included seller non-compete agreements and employment agreements with
certain seller employees.
-8-
<PAGE> 9
Item 2. Management's Discussion And Analysis Of Financial Conditions And
Results Of Operations
OVERVIEW
ExecuStay Corporation ("ExecuStay" or the "Company") is a leading
provider of interim housing for corporate clients and professionals. ExecuStay
provides fully furnished high-quality apartments for stays of 30 days or more.
In addition to providing fully furnished interim housing to ExecuStay residents,
the Company also rents housewares and furniture to customers other than
ExecuStay residents such as owners and managers of apartment communities who
wish to offer fully furnished accommodations directly to their tenants. While
housewares rental services are provided by the Company in most locations where
it has sales offices, the Company provides furniture rental services to its
residents located within approximately 200 miles of its warehouse in
Gaithersburg, Maryland.
In recent years, the Company has experienced significant increases in
revenue from its interim housing operations. Since the costs associated with
interim housing revenue are greater as a percentage of revenue than the costs of
furniture and housewares revenue, the Company's earnings from operations as a
percentage of total revenue has declined as the revenue mix has shifted heavily
toward interim housing revenue. As interim housing revenue continues to increase
as a percentage of the company's total revenue, earnings as a percentage of
revenue may continue to decline slightly.
Growth in revenue is derived primarily from increases in the number of
leases signed with ExecuStay residents. As the Company has opened sales offices
and acquired other interim housing businesses, the number of apartments under
lease has increased each year at each office.
RESULTS OF OPERATIONS
In the following discussions, revenue includes the total charges to
ExecuStay residents for their housing accommodations, including charges for
furniture, housewares, accessories and utilities, as well as furniture and
housewares rental and sale revenue from customers other than ExecuStay
residents.
Cost of revenue includes costs related to apartment units rented to
ExecuStay residents, such as property rent, furniture and houseware rental
costs, utilities, telephone and cable television expenses. Also included is
depreciation on furniture and housewares inventory used or held in inventory.
-9-
<PAGE> 10
Comparison of the Three Months Ended September 30, 1997 to the Three Months
Ended September 30, 1996
Revenue increased 66% to $14.8 million for the three months ended
September 30, 1997 from $8.9 million for the same period in 1996. The increase
in revenue was due primarily to a 93% increase in interim housing revenue, from
$6.4 million in the third quarter of 1996 to $12.3 million in the third quarter
of 1997. Aggregate interim housing revenue from the seven offices that were
operating during both periods increased 34%, accounting for $2.1 million of the
interim housing revenue increase, which reflects the continued development and
market penetration of these offices. Consistent with the Company's growth
strategy, revenue from rental and sale of furniture and housewares did not
increase or decrease materially in the third quarter of 1997 as compared to the
third quarter of 1996.
Cost of revenue increased by $4.6 million or 86% from $5.4 million for
the three months ended September 30, 1996 to $10.0 million for the three months
ended September 30, 1997. The increase in cost of revenue was primarily due to
the growth in interim housing business. Because of the continuing change in
revenue mix from interim housing and furniture and housewares rentals (interim
housing revenue accounted for 83% of revenue for the three months ended
September 30, 1997 and 71% of revenues for the three months ended September 30,
1996), the gross margin (revenue less cost of revenue) decreased from 39% for
the three months ended September 30, 1996 to 32% for the same period in 1997.
Personnel and payroll costs increased 50% from $1.5 million in the third
quarter of 1996 to $2.3 million in the third quarter of 1997. The increase was
due mainly to the addition of sales and office personnel who were necessary to
support the Company's growth. Occupancy costs and nonrental depreciation and
amortization increased by $233,000, a 94% increase over the same period in 1996.
This increase was primarily the result of the expansion of the Company's office
and housewares warehouse locations. Other operating costs for the three months
ended September 30, 1997 increased 40% to $597,000, mainly because of increased
advertising and promotional expenses incurred as the Company expanded into new
markets.
Interest expense for the three months ended September 30, 1997 was
$69,000 compared to $90,000 for the same period in 1996. Interest expenses were
low in the third quarter of 1996 because the Company did not complete any
acquisitions prior to or during that period. Interest expenses were also
relatively low in the third quarter of 1997 because the Company used the
proceeds from its initial public offering to repay the debt incurred in
connection with acquisitions made earlier in 1997. Interest earned on the
remaining offering proceeds has been offset against interest expense incurred
during the quarter.
-10-
<PAGE> 11
Pro forma net income increased from $725,000 ($.18 per share) for the
three months ended September 30, 1996 to $788,000 ($.16 per share) for the three
months ended September 30, 1997. A significant reason for the decrease in
quarterly pro forma net income per share is that the weighted average number of
common shares outstanding increased from 4,074,000 during the three months ended
September 30, 1996 to 4,851,025 during the three months ended September 30,
1997. Additionally, income per share for the quarter ended September 30, 1996
was positively affected by one time events, including an adjustment made to
depreciation expense, increased business levels as a result of the effects of a
hurricane in North Carolina and increased business levels in Los Angeles due to
a disruption of a competitor's business.
Comparison of the Nine Months Ended September 30, 1997 to the Nine Months Ended
September 30, 1996
Revenue increased 70% to $35.3 million for the nine months ended
September 30, 1997 from $20.8 million for the same period in 1996. Most of this
increase was due to a $13.5 million increase (94%) in interim housing revenue,
reflecting the Company's focus on expanding its interim housing business.
Aggregate interim housing revenue from the five offices that were operating
during both periods increased 42%, accounting for $5.4 million of the interim
housing revenue increase, which reflects the continued development and market
penetration of these offices. The balance of the increase in revenue resulted
from a $980,000 increase (15%) in furniture and houseware revenue for the first
nine months of 1997 compared to the same period in 1996. This increase included
a furniture sale of approximately $480,000 to one customer in 1997.
Cost of revenue increased 84% for the nine months ended September 30,
1997 to $23.4 million from $12.7 million for the same period in 1996. This
increase was driven by the Company's continued growth in the volume of interim
housing units leased and rented to customers. The Company's gross margin
(revenue less cost of revenue) decreased from 39% to 32% primarily because of
the Company's changing revenue mix as discussed above.
Compared to the first nine months of 1996, personnel and payroll cost
during the first nine months of 1997 increased by $1.8 million (45%), and
occupancy and nonrental depreciation and amortization increased by $492,000
(73%). These increases were due to the addition of sales and office personnel as
well as increases in office space and related costs in some offices, which were
necessary to create and support the Company's growth. Other operating costs
increased 40% to $1.6 million from $1.2 million during the same period,
primarily as a result of increased national advertising and promotional
expenses.
-11-
<PAGE> 12
Interest expense increased by $55,000 in the nine months ended September
30, 1997 (from $223,000 to $278,000) due to greater use of the Company's bank
line of credit to finance internal expansion of the Company and acquisitions of
interim housing businesses in Orlando, Florida and San Francisco, California.
Pro forma net income increased from $1.2 million ($.29 per share) for
the nine months ended September 30, 1996 to $1.8 million ($.41 per share) for
the nine months ended September 30, 1997. A significant reason for the decrease
in quarterly pro forma net income per share is that the weighted average number
of common shares outstanding increased from 4,074,000 for the nine months ended
September 30, 1996 to 4,335,855 for the nine months ended September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1997 the Company's cash and
cash equivalents increased by $17.4 million, from $500,000 to $17.9 million. The
increase was due mostly to the Company's initial public offering completed in
August 1997, pursuant to which the Company received $27.8 million in net
proceeds, as well as net cash provided by operating activities of $983,000. The
$983,000 in net cash provided by operating activities was the result of $2.8
million in net income for the nine months ended September 30, 1997, plus
$107,000 in deferred tax expenses and $1.6 million in depreciation and
amortization. These amounts were offset by $1.9 million from the net purchase of
property on or held for lease and $1.6 million in changes in assets and
liabilities.
Cash used in investing activities for the nine month period ended
September 30, 1997 was $3.1 million, of which $2.8 million was related to the
cost of acquisitions in Orlando and San Francisco.
Cash flows provided by financing activities for the nine month period
totaled $19.5 million. This amount was the result of $27.8 million in proceeds
from the Company's August offering and $4.4 million in borrowings on bank loans
used primarily to finance the acquisitions completed in April and June 1997.
Upon completion of the stock offering, the Company repaid $6.2 million in bank
loans and borrowings under a line of credit. The Company also used proceeds from
its August offering to repay $3.1 million in final distributions of
undistributed earnings to stockholders and to make a $1.1 million dividend
distribution declared on June 13, 1997.
In addition to the $17.9 million in cash available to the Company as of
September 30, 1997, the Company also has available a revolving line of credit in
the amount of $2 million, which is available for operating purposes. The Company
is in the process of negotiating the terms of a $20 million bank revolving line
of credit to be used to finance acquisitions of interim housing businesses.
-12-
<PAGE> 13
CAUTIONARY NOTE
This Quarterly Report on Form 10-Q contains forward-looking statements
reflecting management's knowledge and judgment about factors which could
materially affect Company performance in the future. Terms indicating future
expectation and optimism about future potential and anticipated growth in
revenue and earnings of the Company's business lines and like expressions
typically identify such statements. Actual results and events may differ
significantly from those discussed in forward-looking statements.
All forward-looking statements are subject to the risks and
uncertainties inherent with predictions and forecasts. They are necessarily
speculative statements, and unforeseen factors, such as a significant downturn
in the economy, increased competitive pressures, failure to absorb newly
acquired businesses or to successfully develop newly opened offices, could cause
results to differ materially from any that may be projected.
Forward-looking statements are made in the context of information
available as of the date stated. The Company undertakes no obligation to update
or revise such statements to reflect new circumstances or unanticipated events
as they occur.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
a. Changes in Securities.
None.
b. Recent Sales of Unregistered Securities.
None.
c. Use of Proceeds.
The Company's initial Registration Statement on Form S-1, file no.
333-0049, was declared effective by the Securities and Exchange Commission on
August 26, 1997. The offering of the Company's Common Stock covered by such
Registration Statement commenced on August 27, 1997. A.G. Edwards & Sons, Inc.
and Equitable
-13-
<PAGE> 14
Securities Corporation acted as the managing underwriters (the
"Representatives") for the offering. A total of 3,047,500 shares of Common
Stock, including 397,500 shares subject to the Representatives' over-allotment
option, were registered. The aggregate offering price of the registered Common
Stock was $30,475,000. This entire amount has been sold and the offering has
terminated.
The amount of expenses incurred for the Company's account in connection
with the issuance and distribution of the securities registered are as follows:
<TABLE>
<S> <C>
Underwriting discounts and commissions: $ 2,133,250
Finders' fees: 0
Expenses paid to or for underwriters: 0
Other expenses: 577,405
------------
Total expenses $ 2,710,655
</TABLE>
All such expenses were paid directly or indirectly to others.
The net offering proceeds to the Company after deducting expenses were
$27,764,345.
The amount of net offering proceeds to the Company were used for the
following purposes:
<TABLE>
<S> <C>
Construction of plant, building and facilities: $ 0
Purchase and installation of machinery
and equipment: 0
Purchase of real estate: 0
Repayment of indebtedness: 6,250,411
Acquisition of other business: 0
Working capital: 0
Temporary investments:
Short term bonds 9,958,078
Interest bearing money market accounts 7,344,856
Other purposes:
Undistributed S corporation earnings 3,131,064
Payment of previously declared distribution 1,079,936
</TABLE>
The undistributed S corporation earnings ($3,131,064) and the payment of
previously declared distributions ($1,079,936) were made directly to the
following individuals in the amounts indicated: (i) $1,333,484 to Gary R.
Abrahams, Chief Executive Officer, President, Director and a greater than ten
percent (10%) shareholder of the Company; (ii) $1,333,483 to Marc B. Kaplan,
Chief Financial Officer, Treasurer, Director and a greater than ten percent
(10%) shareholder of the
-14-
<PAGE> 15
Company; (iii) $1,333,483 to Robert W. Zaugg, Chief Operating Officer,
Secretary, Director and a greater than ten percent (10%) shareholder of the
Company; and (iv) $210,550 to Benny E. Anderson, Executive Vice President of
Western Operations of the Company.
All other payments were made directly or indirectly to persons other
than officers, directors, affiliates or greater than ten percent (10%)
shareholders of the Company.
The use of proceeds contained herein do not represent a material change
in the use of proceeds described in the prospectus.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27.1 Financial Data Schedule
b. Reports on Form 8-K
None.
-15-
<PAGE> 16
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.
Date: November 13, 1997
ExecuStay Corporation
By: /s/ Marc B. Kaplan
----------------------
Marc B. Kaplan
Chief Financial Officer
-16-
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Page
- ----------- ----
<S> <C>
27.1 Financial Data Schedule
</TABLE>
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF EXECUSTAY CORPORATION AND SUBSIDIARIES AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,890,658
<SECURITIES> 0
<RECEIVABLES> 5,477,780
<ALLOWANCES> (478,099)
<INVENTORY> 4,751,310
<CURRENT-ASSETS> 0
<PP&E> 3,361,627
<DEPRECIATION> (1,270,429)
<TOTAL-ASSETS> 33,472,921
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 67,975
<OTHER-SE> 27,879,045
<TOTAL-LIABILITY-AND-EQUITY> 33,472,921
<SALES> 0
<TOTAL-REVENUES> 35,253,084
<CGS> 0
<TOTAL-COSTS> 23,401,397
<OTHER-EXPENSES> 8,625,448
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 278,188
<INCOME-PRETAX> 2,948,051
<INCOME-TAX> 156,000
<INCOME-CONTINUING> 2,792,051
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,792,051
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
