<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended JANUARY 1, 1997
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934For 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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each Exchange on
Title of each class which Registered
------------------- ----------------
COMMON STOCK, PAR VALUE $.01 PER SHARE NASDAQ - Small Cap Market
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K / /
The aggregate market value of the voting stock held by non-affiliates of
the registrant based upon the closing sale price of the registrants'common
stock on the National Market System of the NASDAQ Stock Market, as of March
26, 1997 was approximately $1,155,575.
The number of shares outstanding of registrant's common stock as of March
26, 1997 is 2,493,144 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for Annual Meeting of
stockholders to be held on June 20, 1997 are incorporated by reference into
Part III of this Annual Report.
<PAGE>
PART I
BUSINESS
- --------
The Company was originally incorporated under Florida law in August, 1986
to develop and operate a chain of buffet restaurants under the name
Homestyle Buffet, Inc. In December, 1993, the Company merged with a rival
private buffet chain called "Stacey's Buffet," which was owned by the
Stacey Lynn Group ("S-L Group"). S-L Group operated eleven buffet
restaurants and licensed eight buffet restaurants, all under the name
"Stacey's Buffet". S-L Group merged into Homestyle Buffet, Inc., which
changed its name to "Stacey's Buffet, Inc." The senior management of S-L
Group assumed control of the day-to-day operations of the Company.
The Company's restaurants, operating under the name Stacey's Buffet and
Homestyle Family Buffet, offer a broad selection of American and ethnic
menu items as complete meals in a self-service, fixed-price buffet format.
The Company is one of the largest chains of buffet-style restaurants in the
southeastern United States. At January 1, 1997, there were nineteen
company owned Stacey's Buffets located in Florida, one Homestyle Buffet
located in Florida, and four Stacey's Buffets located in the Northeastern
states of New York, Pennsylvania, and New Jersey. In January, 1997 the one
Homestyle Buffet location in Florida was converted to a Stacey's Buffet.
Additionally, there were two licensed Stacey's Buffets located in Florida.
STACEY'S BUFFET RESTAURANT CONCEPT
The Company's restaurants feature a wide variety of menu items presented in
the buffet format, providing complete meals for lunch and dinner. Lunches
are currently priced at $5.29 and dinners from $5.90 to $7.25 depending
upon the restaurant's market area and day of the week. In addition, the
Company has special pricing for children ages 10 and under. Children ages 3
and under eat free. Seniors may join the Company's 55 Plus Club which
gives them a discount on meals throughout the year. All of the Company's
restaurants are open every day of the year, except Christmas Day. The
style and decor of the restaurants is designed to provide a casual but
quiet and distinctive atmosphere. The Company intends its restaurants to
be particularly attractive to families and seniors. The Company actively
pursues a strategy of keeping prices as low as possible while relying on
volume to keep costs per customer low.
Stacey's Buffet restaurants generally offer more than 100 menu items
including a garden fresh 40 item salad bar, home style soups, pizza, hand-
carved roast beef, turkey or ham, a variety of hot vegetables, numerous
casseroles, baked dishes, warm fresh baked breads and an extensive
selection of desserts and beverages. Management believes that greater menu
selection attracts more customers and provides higher sales volumes for the
Company.
Most Stacey's Buffet restaurants present their menu items in a "scatter
bar" format. Guests proceed to the food bars of their choice. These bars
include a fresh salad bar with many choices and toppings. Other bars also
offer hearty vegetables, cream soups, and pizza.
Hot food bars serve baked and fried chicken and fish, along with other
entrees. Casseroles, baked dishes and special offerings change daily.
Hot, fresh baked breads are distributed on the bars. They include banana
nut bread, dinner rolls, corn muffins and cinnamon rolls. Guests can
choose from a number of hot meat entrees, plus two carved items at dinner.
A beverage bar offers milk, coffee, tea and popular soft drinks. No
alcoholic beverages are served. Additionally, a separate dessert bar is
offered. This bar features bread pudding, homemade cobblers, cakes, pies,
and hand-dipped or soft serve ice cream.
<PAGE> 2
In general, management believes that the "scatter bar" format is a
preferable buffet format because the approach offers customers the choice
of which food bar to go to first and greater menu item selection. The
scatter bar format also allows customers to sit down before selecting their
menu items. Furthermore, by allowing customers to select a specific item
or items to be eaten next rather than going through the "line" before
eating anything and selecting numerous items, customers are less likely to
take more food than they can eat. Management also believes that customers
prefer the less institutional feel and choices offered by the "scatter bar"
food presentation.
RESTAURANT OPERATIONS AND CONTROLS
The Company ensures food freshness by continuous food preparation. The
Company employs a quality assurance system designed to maintain the
Company's high standards of quality, service and cleanliness. The Company
utilizes established standards and controls to focus on the principal
aspects of restaurant operations and customer satisfaction, including
standards for ingredients and recipes, prepared food quality and
presentation, the appearance and maintenance of premises, and employee
appearance and conduct. Restaurant managers are responsible for adherence
to these standards.
Ingredient specifications, recipes and preparation procedures for the
Company restaurants are developed and monitored by headquarters personnel.
New items will be added to the menu from time to time as either specials
or regular menu items, after in-store evaluation by customers.
A typical restaurant is approximately 10,000 square feet in size,
accommodating approximately 300 customers, including a banquet room for
groups. Decor tends to be traditional with carpeted dining rooms and
upholstered chairs and booths. Most seating is at loose tables and chairs
which allow greater flexibility in seating large parties.
With the exception of Christmas Day, all Stacey's Buffet restaurants are
currently open seven days a week, serving lunch from 11:00 a.m. to 4:00
p.m. and dinner from 4:00 p.m. to 8:00 or 9:00 p.m., Monday through
Saturday, and dinner is served all day on Sunday from 11:00 a.m. to 8:00
p.m.
The operation of the Company's restaurants requires a general manager, two
assistant managers and approximately 50 other employees, including part-
time employees. Each general manager reports directly to the corporate
office. In addition to maintaining quality and service standards, general
managers are responsible for employee relations, labor scheduling,
determining the quantity of food and supplies needed and ordering those
items from approved vendors, adherence to cost controls, and restaurant
profitability. General managers and assistant managers are eligible for
cash bonus awards if they meet or exceed certain performance standards.
A number of the Company's managers had prior buffet or other restaurant
experience. The Company operates in-restaurant training programs to
instruct all managers in its policies and procedures and to prepare
managers for new restaurant openings. The Company's President and other
headquarters personnel personally oversee each opening of a new restaurant,
including training, food preparation and service operation.
<PAGE>
The Company's food and beverage ingredients and restaurant supplies are
purchased from independent suppliers approved by headquarters personnel who
negotiate quality specifications, delivery commitments, pricing and payment
terms directly with the suppliers. Management of the Company spends
considerable time and effort maintaining and improving its purchasing
relationships, which it believes has contributed significantly to Stacey's
Buffet's ability to operate in the competitive buffet restaurant market.
The Company attempts to obtain the most favorable prices through volume
discounts. Management anticipates that because of the varied menu offering
at a Stacey's Buffet, it will be able to maintain flexibility in setting
menus and determining daily specials based upon market opportunities. To
date, Stacey's Buffet has not experienced difficulty in obtaining adequate
supplies of food products meeting its quality standards at acceptable
prices.
3
MARKET PENETRATION
The Company's primary objective is to strengthen and maximize the benefits
of its strong market presence in Florida. From time to time, management
may open additional restaurants on an opportunistic basis where it believes
that there is substantial opportunity for success. In the past, the
Company has frequently opened new locations by leasing space previously
used as a restaurant or for a similar use, often buying the restaurant
equipment from the prior operator, and converting to the Stacey's Buffet
format. The historical cost of converting a restaurant site to a Stacey's
Buffet has been approximately $150,000.
Management believes that the Company's restaurants are typically frequented
by regular customers who have made a predetermined decision to dine at a
particular Stacey's restaurant rather than customers who make an impulsive
decision after first deciding to dine out. Stacey's has generally been
able to take advantage of this fact by locating its restaurants in
convenient and visible, but not the most expensive, sites.
To the extent that the Company chooses to open additional restaurants,
management intends to focus expansion in existing and contiguous markets,
thereby obtaining the benefit of existing name recognition, greater
advertising efficiency and more management control.
COMPETITION
The restaurant business is highly competitive with respect to location,
food types, quality, prices, service and decor. The business is affected
by changes in eating habits of the public, and by changes in local,
regional or national economic conditions, demographic trends and by factors
affecting consumers' disposable income. The Company not only competes with
other buffet restaurants but also with a variety of other types of
restaurants. A significant number of competitors are larger restaurant
chains with longer operating histories, greater name recognition and
greater financial resources.
The Company's restaurants offer a wide variety of foods and beverages with
no extra charge for additional helpings, in a complete meal format. The
decor is informal and attractive for leisurely dining. The moderate prices
are designed to attract a wide range of value conscious customers and the
Company's restaurant standards and controls are intended to ensure that
each diner enjoys quality food in a pleasant atmosphere.
<PAGE>
The Company is aware that other buffet restaurants utilize a concept
similar to Stacey's Buffet restaurants.
ADVERTISING AND PROMOTION
The Company budgets 1/2% of sales for advertising and promotion.
Advertising is concentrated within a 5 to 10 mile radius of the restaurant,
with emphasis on billboards in strategic areas and print media. The
Company targets families as well as the senior market. The Company also
relies upon word-of-mouth exposure to generate customer traffic.
Each general manager of a Company restaurant is given a nominal advertising
budget which will be used to promote local community advertising. All
advertising must be approved by headquarters personnel.
REGULATION
The Company's restaurants must be built to comply with local and state
building and zoning code requirements. The Company must operate its
restaurants in accordance with local, state and federal regulations
concerning food preparation and service. The Company is also subject to
state and federal labor laws that govern its relationships with its
employees, such as minimum wage requirements, overtime, working conditions
and citizenship requirements.
4
EMPLOYEES
Currently, the Company employs 1,099 people, of which 13 are corporate
supervisory and administrative personnel, 75 are restaurant managers or
management trainees, and 1,011 are non-management restaurant employees.
Approximately 49% of non-management restaurant employees work part-time.
None of the Company's employees are covered by a collective bargaining
agreement. The Company has not experienced difficulty in hiring qualified
employees at competitive wages. Relations with employees have been
satisfactory and the Company believes its working conditions and
compensation package compare favorably with its competition.
LICENSED RESTAURANTS
The Company has entered into license agreements covering certain
restaurants which operate under the name "Stacey's Buffet." One licensee,
Buffet Management, Inc., currently operates one restaurant located in
Kissimmee, Florida. A second licensee is currently operating a Stacey's
Buffet in South Daytona, Florida. Each licensee pays a royalty equal to 2%
of licensee gross sales, subject to certain maximum amounts, with payments
made on a monthly basis.
Pursuant to each license agreement, the Company has control over quality
and other aspects of the licensed services as well as the use of the mark,
advertising and any and all matters related to the licensed services and
the mark. The Company has the right to inspect the licensed locations and
has absolute discretion over the assignment or other transfer of the
license to a third party.
Except with respect to monitoring and overseeing the operations of the
licensed restaurants pursuant to the terms of the license agreements,
management of the Company has no substantive role in the day-to-day
operations and management of the licensed restaurants.
<PAGE>
PROPERTIES
- ----------
The Company's executive office is located in approximately 3,900 square
feet of leased space at 801 West Bay Drive, Suite #704, Largo, Florida.
All of the Company's current restaurants are located in leased premises in
shopping centers. The current restaurants range in size from
approximately 7,200 to 20,000 square feet. Buffet operations typically
require approximately 10,000 square feet in order to provide adequate
kitchen facilities, and ample room to comfortably accommodate 300 guest at
a sitting. At this size, the Company's restaurants normally experience
peak periods on weekends and at special events. During slower parts of the
week, banquet rooms can be closed to create a smaller, more efficient
dining area. Accordingly, the Company believes that the existing
facilities are appropriate and adequate to the needs of a buffet operation.
Minimum annual rents for the Company's existing restaurants range from
approximately $60,000 to $184,000. In addition, most of the Company's
leases contain clauses requiring the Company to pay rent calculated as a
5
percentage of restaurant sales (generally 3% to 5%) above certain annual
sales levels, typically $1,800,000 or more. The Company also pays
operating expenses for the leased space and a portion of common area
maintenance costs. The initial terms of such leases range from five to ten
years, and usually contain renewal options of from five to ten years.
Leasehold improvements made by the Company usually become the property of
the landlord upon expiration or termination of the lease. To date, nearly
all of the Company's landlords have agreed to bear a portion of the cost of
leasehold improvements. The Company owns substantially all of the
equipment, furniture and fixtures in its restaurants.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ---------------------------------------------------
No matters were submitted to a vote of security holders of the Company during
the fourth fiscal quarter of the Company's fiscal year ended January 1, 1997.
<PAGE>
PART II
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ---------------------------------------------------------------------
The Company's common stock is quoted on the National Association of
Securities Dealers Automated Quotations (NASDAQ) Small Caps System under the
symbol "SBUF". Prior to the merger on December 13, 1993, the symbol for the
Company was "HBUF". The table below represents the quarterly high and low
closings prices for the Company's common stock as reported through December
31, 1996. All previously reported amounts have been restated to reflect the
five-for-one reverse common stock split that became effective on July 17,
1996. The prices listed in this table reflect quotations without adjustment
for retail mark-ups, mark-downs or commissions. The Company has not paid any
cash dividends since inception, and intends to retain earnings , if any, in
the foreseeable future for use in Company expansion. The approximate number
of registered holders of record of the Company's common stock at March 20,
1997 was 667.
CALENDAR 1996 HIGH LOW CALENDAR 1995 HIGH LOW
- ------------- ---- --- ------------- ---- ---
First Quarter $4 1/16 $2 3/16 First Quarter $6 9/16 $3 9/32
Second Quarter 3 29/32 2 11/32 Second Quarter 8 3/4 3 3/4
Third Quarter 2 1/2 1 Third Quarter 6 9/16 3 3/4
Fourth Quarter 1 1/16 9/16 Fourth Quarter 4 11/16 1 7/8
6
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
- -----------------------
Fiscal Year Ended*
JANUARY 1, January 3, December 28, December 29, December 30,
1997 1996 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Restaurant sales $ 38,781,373 $ 48,826,319 $ 54,259,025 $ 35,261,577 $ 48,933,492
Restaurant costs 37,740,612 47,887,806 54,229,714 35,239,036 48,768,782
---------- ---------- ---------- ---------- ----------
Restaurant profit 1,040,761 938,513 29,311 22,541 164,710
General and administrative expenses 2,270,372 2,720,391 3,324,020 2,539,506 3,633,856
Amortization of goodwill 474,500 531,653 580,642 23,992 -
Provision for restaurant closings 225,000 1,750,000 2,191,881 6,025,169 6,549,325
Impairment of long-lived assets - 4,475,000 - - -
Other income (expense) 363,856 429,352 256,292 308,784 (197,501)
---------- ---------- ---------- ---------- ----------
Loss before income taxes (1,565,255) (8,109,179) (5,810,940) (8,257,342) (10,215,972)
Income tax benefit - - - - (456,000)
---------- ---------- ---------- ---------- ----------
Net loss $ (1,565,255) $ (8,109,179) $ (5,810,940) $ (8,257,342) $ (9,759,972)
========== ========== ========== ========== ==========
Net loss per share $ (.63) $ (3.00) $ (2.02) $ (6.43) $ (8.21)
========== ========== ========== ========== ==========
Weighted average common
and common equivalent
shares outstanding 2,493,144 2,704,538 2,880,128 1,283,736 1,188,395
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JANUARY 1, January 3, December 28, December 29, December 30,
1997 1996 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $ (6,263,136) $ (6,060,035) $(13,574,721) $ (8,234,702) $(10,005,990)
Total assets 16,778,655 18,461,622 36,897,757 43,561,902 28,055,441
Long-term debt 8,840 11,694 156,984 518,571 684,902
Stockholders' equity 8,940,136 10,505,627 21,114,806 26,904,947 15,286,104
RESTAURANT DATA:
Number of Company-owned
restaurants open at the
end of the fiscal year 24 28 43 41 34
<FN>
* Certain amounts as of January 1, 1996, December 28, 1994, December 29, 1993
and December 30, 1992 have been reclassified to conform to the January 1,
1997 presentation. See Note 1 to the Financial Statements.
</TABLE>
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ---------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
- ---------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
At the end of fiscal year 1996, the Company owned and operated twenty-four
restaurants. Additionally, there were four licensed restaurants operating
as "Stacey's Buffet", which are not owned by the Company and not included
in this analysis, except for the royalty income fees included in other
income. There were four restaurants in the Northeast closed during fiscal
1996; one new restaurant was opened in Florida and one restaurant in
Florida was sold.
At the end of fiscal year 1995, the Company owned and operated twenty-eight
restaurants. Additionally, there were nine licensed restaurants operating
as "Stacey's Buffet", which were not owned by the Company and not included
in this analysis, except for the royalty income fees included in other
income. There were thirteen restaurants in the Northeast closed during
fiscal 1995; one new restaurant was opened in Florida and three restaurants
in Florida were spun-off.
At the end of fiscal year 1994, the Company owned and operated forty-three
restaurants (six were included in the reserve for closed stores). Of the
forty-three restaurants, eleven were acquired in the December, 1993 merger
with the Stacey Lynn Group. In addition, there were nine licensed
restaurants operating as "Stacey's Buffet." There were two restaurants
closed during fiscal 1994; three new restaurants were opened and one
previously closed restaurant was reopened during the year. This restaurant
was reopened after obtaining additional incentives from the landlord to try
to improve the restaurants operating results and was permanently closed
when unprofitable operations continued after the reopening.. The Company
does not plan on reopening closed restaurant locations in the future. In
fiscal 1994 and prior years, operating results for reserved stores were
charged against the provision for restaurant and closings.
<PAGE>
A summary of financial information on the operating results of the Company's
restaurants is presented in the following table.
<TABLE>
<CAPTION>
JANUARY 1, JANUARY 3, DECEMBER 28,
1997 1996 1994
------ ------ ------
<S> <C> <C> <C>
Restaurant sales 100.0% 100.0% 100.0%
Cost of restaurant sales:
Food cost 38.9% 39.2% 40.0%
Labor cost 30.7% 30.1% 32.6%
Operating cost 16.4% 17.1% 15.0%
Occupancy cost 8.7% 8.3% 8.9%
Depreciation and amortization 2.6% 3.4% 3.5%
------ ------ ------
Total restaurant costs 97.3% 98.1% 100.0%
------ ------ ------
Restaurant profit 2.7% 1.9% 0.0%
General and administrative expenses 5.9% 5.5% 6.1%
Amortization of goodwill 1.2% 1.1% 1.1%
Provisions for restaurant closings 0.6% 3.6% 4.0%
Impairment of long-lived assets 0.0% 9.2% 0.0%
------ ------ ------
Operating loss -5.0% -17.5% -11.2%
Other income 0.9% 0.9% 0.5%
------ ------ ------
Loss before income taxes -4.1% -16.6% -10.7%
Income tax 0.0% 0.0% 0.0%
------ ------ ------
Net loss -4.1% -16.6% -10.7%
====== ====== ======
Number of Company-owned
restaurants open at end of period 24 28 43
</TABLE>
8
<PAGE>
RESTAURANT SALES
- ----------------
Restaurant sales for fiscal 1996 were $38,781,373, which was a decrease of
20.6% compared to fiscal 1995 sales of $48,826,319. This decrease was due
primarily to the closure of four restaurants located in the Northeast
during the year and the sale of one restaurant in Florida. Two of the four
stores were closed during the first quarter of 1996. In addition, same
store sales (stores open at the end of 1996 that were also open for all of
1996 and 1995) posted a 3.6% decrease for the year. One new location was
opened in Florida at the end of the first quarter of 1996.
Restaurant sales for fiscal 1995 were $48,826,319, which was a decrease of
10.0% compared to fiscal 1994 sales of $54,259,025. This decrease was due
primarily to the closure of thirteen restaurants located in the Northeast
during the year and the spin-off of three restaurants in Florida. Twelve
of the thirteen stores were closed during the first quarter of 1995. In
addition, same store sales (stores open at the end of 1995 that were also
open for all of 1995 and 1994) posted a 3.0% decrease for the year. One
new location was added in Florida in the latter part of the year.
RESTAURANT COSTS
- ----------------
Restaurant costs include food, labor, operating, occupancy, depreciation
and amortization expenses.
Food costs as a percentage of sales decreased from 39.2% in 1995, to 38.9%
in 1996, as a result of continuing efficient execution of the Stacey's
Buffet food program concept. Overall, wholesale food costs have remained
relatively stable during the current year.
Total labor costs as a percentage of sales increased from 30.1% in 1995 to
30.7% in 1996. This increase was related partly to the minimum wage
increase put into effect during 1996 and overall pressure to increase wages
to retain employees. Total labor costs as a percentage of sales decreased
from 32.6% in 1994 to 30.1% in 1995. This decrease was related to improved
efficiency of the Homestyle stores as they were integrated into the
Stacey's food program and the closing of the thirteen lower volume stores
in the Northeast that had higher labor costs as a percentage of sales.
Operating expenses and occupancy costs consist primarily of supplies,
utilities, advertising, maintenance, rent, real estate taxes, personal
property taxes, property insurance and liability insurance expenses.
Operating expenses as a percentage of sales decreased in 1996 to 16.4% from
17.1% in 1995 as a result of a decrease in general liability insurance
expense. The primary reason that operating expenses as a percentage of
sales increased in 1995 to 17.1% from 15.0% in 1994 results from an
increase in general liability insurance expense.
Total occupancy costs as a percentage of sales increased from 8.3% in 1995
to 8.7% in 1996 as a result of generally lower same store sales volumes.
Total occupancy costs as a percentage of sales decreased from 8.9% in 1994
to 8.3% in 1995 as a result of closing the thirteen Northeast stores that
had higher occupancy costs and generally lower sales volumes than the
remaining stores.
<PAGE>
Depreciation and amortization expense as a percentage of sales decreased
from 3.4% in 1995 to 2.6% in 1996 as a result of the impairment of long-
lived assets when the Company adopted during the fourth quarter ended
January 3, 1996, the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 121 ("Statement 121"), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," which is discussed below. Depreciation and amortization
expense as a percentage of sales decreased from 3.5% in 1994 to 3.4% in
1995 as a result of the closing of the thirteen Northeast stores and the
spin-off of the three Florida stores. In 1995, the closing of the thirteen
Northeast stores resulted in the write-off of approximately $9,319,000 of
leasehold improvements and equipment, net of accumulated depreciation and
amortization.
9
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
General and administrative expenses decreased from $2,720,391 in 1995 to
$2,270,372 in 1996 or a reduction of $450,019. The decrease in fiscal 1996
of $450,019 is primarily related to continued cost reductions in salaries
and wages, travel, legal fees and payroll taxes net of increases in
professional services fees and store management incentive awards.
General and administrative expenses decreased from $3,324,020 in 1994 to
$2,720,391 in 1995 or a reduction of $603,629. The reduction in fiscal
1995 of $603,629 is primarily related to reductions in salaries and wages,
health insurance, other taxes and licenses, incentive compensation,
professional fees and outside services net of increases in legal fees and
travel expenses.
AMORTIZATION OF GOODWILL
- ------------------------
This expense category was new in 1994 as a result of the Homestyle/Stacey
merger in December, 1993. Total goodwill is being amortized over 20 years.
In 1995, three restaurants were spun-off in exchange for the return to the
Company of 400,000 shares of its common stock. The fair market value of
the Company's common stock received in the spin-off approximated the net
book value of the restaurant assets and $1,966,000 of related goodwill.
The future amortization of the remaining balance of goodwill will result in
an annual charge of $474,500 per year.
<PAGE>
PROVISION FOR RESTAURANT CLOSINGS
- ---------------------------------
Because of losses and negative cash flow of certain restaurants in the
Northeast, it was necessary to establish a reserve for the costs associated
with closing these restaurants. These costs consist of the write-off of
the net book value of assets that will not be retained and the costs of
terminating long term leases. The reserve was originally established in
1990 and subsequently adjusted to reflect the current situation from year
to year.
For fiscal 1996, $225,000 was added to the existing reserve for restaurant
closings. This increase is attributable to the settlement of additional
lease termination agreements and revised cost estimates to settle lease
obligations. For fiscal 1995, $1,750,000 was added to the existing reserve
for restaurant closings. That amount was attributable to the settlement of
various lease termination agreements and revised cost estimates to settle
lease obligations. For fiscal 1994, $2,191,881 was added to the existing
reserve to cover anticipated closing costs.
IMPAIRMENT OF LONG-LIVED ASSETS
- -------------------------------
During the fourth quarter ended January 3, 1996, the Company adopted the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of," (" Statement 121") which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also requires that impairment losses be
recorded on long-lived assets to be disposed of when the carrying value of
the asset exceeds the fair value less the estimated selling costs.
As part of the implementation of Statement 121, all assets related to each
restaurant location, including goodwill, were tested for possible
impairment. As a result of this test, an impairment reserve totaling
$4,475,000 was charged against operations during the quarter ended January
3, 1996.
Fair value for the long-lived assets was determined based on estimated
market values for similar assets and on the expected discounted cash flows
from the assets.
10
<PAGE>
OTHER INCOME
- ------------
In 1996, other income consisted primarily of interest income, net of
interest expense, gain on sale of assets and royalty fees from licensees.
Income from royalty fees for 1996 was approximately $250,000. There was a
gain on the sale of assets of $75,000 included in other income in 1996.
Additionally, interest income was approximately $38,000 which was partially
offset by interest expense of $35,000 in 1996. It is anticipated that the
reduction in the number of stores subject to license agreements with the
Company will substantially reduce the income from royalty fees in fiscal
1997.
In 1995, other income and expense consisted primarily of interest income
and expense and royalty fees from licensees. Income from royalty fees for
1995 was approximately $289,000. Interest income was approximately $66,000
which was offset by interest expense of $47,000 in 1995.
In 1994, other income and expense consists primarily of interest income and
expense, royalty fees from franchisees, and gain or loss from sale of
investments. Income from royalty fees of approximately $328,000 was
partially offset by investment losses of $141,000 in 1994. Investment
losses derived from the sale of intermediate term bonds that declined in
value when short term interest rates rose during 1994. Interest income of
approximately $102,000 was earned on those bonds during 1994, and interest
expense of approximately $60,000 was incurred for 1994.
INCOME TAXES
- ------------
There was no income tax expense or benefit for 1996, 1995 and 1994 due to
net operating losses for which no tax benefit is provided.
INFLATION
- ---------
During the three year period covered by this report, there were no
significant commodity price increases that had a major impact on our food
programs. Effective menu management helped to suppress any increases in
key items. There was a $.50 per hour increase in the minimum wage to $4.75
per hour, that was effective September 1, 1996. There is an additional
increase in the minimum wage scheduled to become effective on September 1,
1997 for an additional $.40 per hour. There were no increases in the
minimum wage during 1995 and 1994.
The overall impact of inflation during the past three years has largely
been offset by greater volume-purchase discounts and cost reduction
programs.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's cash flow provided by operating activities was approximately
$146,000 for fiscal 1996 compared with approximately $824,000 for fiscal
1995 and approximately $2,401,000 in fiscal 1994. Differences between
fiscal 1996 and 1995 are primarily a result of working capital uses of cash
primarily as a result of changes in accounts payable and the provision for
restaurant closings.
The Company's cash flow used in investing activities was approximately
$295,000 for fiscal 1996 compared with approximately $183,000 for fiscal
1995 and $2,953,000 in fiscal 1994. The primary investing activity for
each of these three years was capital expenditures. Capital expenditures
for fiscal 1996 related to the costs of opening a new store in Florida and
the replacement costs of major renewals of restaurant equipment. Capital
expenditures for fiscal 1995 related to the costs of converting one new
store in Florida that was previously operated as a Stacey's Buffet under a
license agreement and the replacement costs of major renewals of restaurant
equipment. The capital expenditures in 1994 relate primarily to the
conversion of the Homestyle stores to Stacey's Buffet concept after the
merger in December, 1993.
The Company's cash flow used in financing activities was approximately
$147,000 for fiscal 1996 compared with approximately $123,000 for fiscal
1995 and $424,000 for fiscal 1994. The primary use of cash flows used in
financing activities in fiscal 1996, 1995 and 1994 were payments made under
capital lease obligations.
The Company's liquidity 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 used most of the Company's cash reserves. At January 1, 1997,
there is $806,194 in short-term investments, which is being used to secure
a $500,000 line of credit and a $250,000 letter of credit that supports our
self-funded worker's compensation and general liability insurance programs.
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.
The Company's ratio of current assets to current liabilities at year-end
1996 was .20 compared to .23 at year-end 1995 and .21 at year-end 1994.
Included in current liabilities at year-end for 1996 is $2,175,000 for the
provision for restaurant closings. Approximately $1,167,000 of that
reserve is for anticipated write-offs of equipment and leasehold
improvements, which do not affect the use of cash.
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, the Company
expects cash flows generated from restaurant operations will be adequate to
pay debts as they become due.
12
<PAGE>
PART III
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; EXECUTIVE COMPENSATION;
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT; AND CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by these items is omitted because the Company is
filing a definitive proxy statement pursuant to Regulation 14A not later than
120 days after the end of the fiscal year covered by this Report which
includes the required information. The required information contained in the
Company's proxy statement is incorporated herein by reference.
PART IV
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- ----------------------------------------------------------------
(a) (1) FINANCIAL STATEMENTS
The following financial statements of Stacey's Buffet, Inc. are included
in Part II, Item 8:
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BALANCE SHEETS as of January 1, 1997 and January 3, 1996
STATEMENTS OF OPERATIONS for the years ended January 1, 1997,
January 3, 1996 and December 28, 1994
STATEMENTS OF STOCKHOLDERS' EQUITY for the years ended January 1,
1997, January 3, 1996 and December 28, 1994
STATEMENTS OF CASH FLOWS for the years ended January 1, 1997,
January 3,1996, and December 28, 1994
NOTES TO FINANCIAL STATEMENTS
(2) OTHER SCHEDULES
All other schedules are omitted since the required information is not
present or is not present in an amount sufficient to require submission
of the schedules, or because the information required is included in the
financial statements and notes thereto.
(3) EXHIBITS
The following exhibit is filed as part of this report or incorporated
herein by reference.
Exhibit 3.1 Articles of Incorporation, as amended
Exhibit 3.2 By Laws, as amended
13
<PAGE>
(b) REPORTS ON FORM 8-K
Reports on Form 8-K filed during the fourth quarter of 1996:
The Company filed a Form 8-K dated November 1, 1996 reporting that
Stacey's Buffet, Inc. had implemented its Shareholder Rights Plan.
(c) EXHIBITS
Exhibits to this form 10-K are attached or incorporated by reference as
stated above.
(d) NOT APPLICABLE
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 31, 1997
By: /s/Stephen J. Marrier
----------------------------------
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report to be signed below by the following persons on behalf of the registrant
and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- --------- ---------
/s/ Stephen J. Marrier Chairman and Chief Executive March 31, 1997
---------------------- Officer and Director
/s/ Garrett B. Hunter Director March 31, 1997
----------------------
/s/ Peter J. Hurley Director March 31, 1997
----------------------
/s/ Daniel J. Sullivan Chief Financial Officer (Principal March 31, 1997
(Principal Financial and Accounting
Officer)
15
<PAGE>
STACEY'S BUFFET, INC.
Financial Statements
January 1, 1997 and January 3, 1996
With Independent Auditors' Report Thereon
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Stacey's Buffet, Inc.:
We have audited the accompanying balance sheets of Stacey's Buffet, Inc.
as of January 1, 1997 and January 3, 1996, and the related statements of
operations, stockholders' equity, and cash flows for each of the years
in the three-year period ended January 1, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Stacey's
Buffet, Inc. as of January 1, 1997 and January 3, 1996, and the results
of its operations and its cash flows for each of the years in the three-
year period ended January 1, 1997 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Tampa, Florida
February 14, 1997
<PAGE>
<TABLE>
<CAPTION>
STACEY'S BUFFET, INC.
Balance Sheets
January 1, 1997 and January 3, 1996
January 1, January 3,
Assets 1997 1996
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 252,991 548,791
Short-term investments 806,194 769,668
Receivables 162,993 101,208
Inventory 309,013 356,667
Prepaid expenses and other 35,352 80,354
----------- ----------
Total current assets 1,566,543 1,856,688
Property and equipment, less accumulated
depreciation 6,939,536 7,846,665
Deposits and other assets 162,588 173,545
Goodwill, less accumulated amortization 8,109,988 8,584,488
----------- -----------
$ 18,461,622 18,461,386
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 2,638,948 2,988,571
Line of credit 340,000 175,000
Current portion of obligations
under capital leases 16,168 159,704
Accrued expenses 2,052,122 1,820,051
Accrued rent 607,818 708,991
Reserve for restaurant closings 2,174,623 2,064,406
----------- -----------
Total current liabilities 7,829,679 7,916,723
Obligations under capital leases,
excluding current portion 8,840 11,694
Other liabilities - 25,578
----------- -----------
Total liabilities 7,838,519 7,955,995
Stockholders' equity:
Common stock, $.01 par value. Authorized
25,000,000 shares; issued 2,493,144 shares
at January 1, 1997 and January 3, 1996 24,931 24,931
Additional paid in capital 42,787,602 42,787,602
Accumulated deficit (33,872,397) (32,307,142)
----------- -----------
Net stockholders' equity 8,940,136 10,505,391
Commitments and contingencies
----------- -----------
$ 16,788,655 18,461,386
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STACEY'S BUFFET, INC.
Statements of Operations
Years ended January 1, 1997, January 3, 1996
and December 28, 1994
January 1, Janaury 3, December 28,
1997 1996 1994
---- ---- ----
<S> <C> <C> <C>
Restaurant sales $ 38,781,373 48,826,319 54,259,025
Cost of restaurant sales:
Food cost 15,085,912 19,151,959 21,708,862
Labor cost 11,909,174 14,690,105 17,667,224
Operating cost 6,374,458 8,343,591 8,121,165
Occupancy cost 3,376,938 4,034,199 4,831,502
Depreciation and amortization 994,130 1,667,952 1,900,961
------------ ------------ ------------
Total restaurant costs 37,740,612 47,887,806 54,229,714
------------ ------------ ------------
Restaurant profit 938,513 29,311 22,541
General and administrative expenses 2,270,372 2,720,391 3,324,020
Amortization of goodwill 474,500 531,653 580,642
Provisions for restaurant closings 225,000 1,750,000 2,191,881
Impairment of long-lived assets - 4,475,000 -
------------ ------------ ------------
Operating loss (1,929,111) (8,538,531) (6,067,232)
Other income 363,856 429,352 256,292
------------ ------------ ------------
Loss before income taxes (1,565,255) (8,109,179) (5,810,940)
Income taxes - - -
------------ ------------ ------------
Net loss $ (1,565,255) (8,109,179) (5,810,940)
============ ============ ============
Net loss per share of common stock $ (0.60) (0.40) (1.29)
======= ======= =======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STACEY'S BUFFET, INC.
Statements of Stockholders' Equity
Years ended January 1, 1997, January 3, 1996
and December 28, 1994
Additional Net
Common stock paid-in Treasury Accumulated stockholders'
Shares Amount capital stock deficit equity
------ -------- ------- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 29, 1993 14,388,339 $ 143,883 45,148,851 - (18,387,023) 26,904,711
Effect of July 17, 1996 five-
for-one reverse stock split (11,510,745) (115,108) 115,108 - - -
---------- --------- ---------- --------- ------------ ------------
Adjusted balances at December 29, 1993 2,877,594 28,775 45,262,959 - (18,387,023) 26,904,711
Exercise of stock options 550 6 7,213 - - 7,219
Stock issued to officer 3,000 30 33,720 - - 33,750
Expenses incurred in connection
with 1993 rights offering - - (91,420) - - (91,420)
Stock issued to settle leases 12,000 120 71,130 - - 71,250
Net loss - - - - (5,810,940) (5,810,940)
---------- --------- ---------- --------- ------------ ------------
Balances at December 28, 1994 2,893,144 28,931 45,283,602 - (24,197,963) 21,114,570
Purchase of shares - - - (2,500,000) - (2,500,000)
Retirement of treasury stock (400,000) (4,000) (2,496,000) 2,500,000 - -
Net loss - - - - (8,109,179) (8,109,179)
---------- --------- ---------- --------- ------------ -----------
Balances at January 3, 1996 2,493,144 $ 24,931 42,787,602 - (32,307,142) 10,505,391
Net loss - - - - (1,565,255) (1,565,255)
---------- --------- ---------- --------- ------------ -----------
Balances at January 1, 1997 2,493,144 $ 24,931 42,787,602 - (33,872,397) 10,505,627
========== ========= ========== ========= ============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STACEY'S BUFFET, INC.
Statements of Cash Flows
Years ended January 1, 1997, January 3, 1996
and December 28, 1994
January 1, January 3, December 28,
1997 1996 1994
---- ---- ----
<S> <C> <C> <C>
Cash flow from operating activities:
Net loss $ (1,565,255) (8,109,179) (5,810,940)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,677,019 2,384,139 2,481,603
Provision for restaurant closings 225,000 1,750,000 2,191,881
Provision for impairment of long-lived assets - 4,475,000 -
Change in assets and liabilities:
(Increase) decrease in assets:
Short-term investments (36,526) 69,702 4,787,351
Receivables (61,785) (33,457) 37,263
Inventory 47,654 162,322 (94,437)
Income tax refund receivable - 19,199 37,610
Prepaid expenses and other 45,002 281,629 115,696
Deposits and other assets 10,957 (10,402) 105,895
Increase (decrease) in liabilities:
Accounts payable (349,623) 422,827 (105,507)
Line of credit 165,000 (13,000) 188,000
Accrued expenses 130,898 (1,326,999) 66,201
Other liabilities (27,578) (19,993) 6,765
Reserve for restaurant closings (114,783) 772,641 (1,606,156)
----------- ----------- -----------
Net cash provided by operating activities 145,980 824,429 2,401,225
Cash flows from investing activities:
Capital expenditures (295,390) (175,705) (2,952,843)
Other - (7,460) -
----------- ----------- -----------
Net cash used in investing activities (183,165) (2,952,843) (4,611,874)
Cash flows from financing activities:
Proceeds from stock options exercised - - 7,192
Payments on capital lease obligations (146,390) (122,680) (431,292)
----------- ----------- -----------
Net cash used in financing activities (146,390) (122,680) (424,100)
----------- ----------- -----------
Net (decrease) increase in cash (295,800) 518,584 (975,718)
Cash and cash equivalents at beginning of period 548,791 30,207 1,005,925
----------- ----------- -----------
Cash and cash equivalents at end of period $ 252,991 548,791 30,207
=========== =========== ===========
(Continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STACEY'S BUFFET, INC.
Statements of Cash Flows, Continued
January 1, January 3, December 28,
1997 1996 1994
---- ---- ----
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Interest paid $ 35,587 $ 46,849 $ 60,735
========== ========== ==========
Supplemental schedule of noncash investing and
financing activities:
Write-off of leasehold improvements and equipment
(net of accumulated depreciation) against the
reserve for restaurant renovations and closings $ - $ 9,319,127 $ 1,183,896
========== ========== ==========
Issuance of 12,000 shares of common stock to
landlord for lease conssions and as part
of the settlement to terminate lease $ - $ - $ 71,250
========== ========== ==========
Issuance of 3,000 shares of common stock to officer $ - $ - $ 33,750
========== ========== ==========
Property and equipment acquired in restaurant
acquisition in exchange for royalty receivable
forgiveness $ - $ 125,000 $ -
=========== ========== ==========
Obligations under capital leases assumed in
restaurant acquisition $ - $ 29,375 $ -
=========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STACEY'S BUFFET, INC.
Notes to Financial Statements
January 1, 1997 and January 3, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
DESCRIPITION OF BUSINESS
------------------------
Homestyle Buffet, Inc. merged with Stacey-Lynn Group, Inc. on December
13, 1993 and changed its name to Stacey's Buffet, Inc. (the "Company").
The Company operates a chain of buffet-style restaurants. The Company
had twenty-four stores open at January 1, 1997, twenty-eight stores
open at January 3, 1996, and forty-three stores open at December 28,
1994. Of the stores opened at January 1, 1997, twenty are located in
the state of Florida. Four restaurants were closed in 1996, one
restaurant was sold, and one new restaurant was opened. Thirteen
restaurants were closed in 1995, three restaurants were sold, and one
restaurant was acquired from a licensee. Two stores were closed and
four stores were opened during 1994.
FISCAL YEAR
-----------
The Company's fiscal year ends on the Wednesday nearest December 31.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents includes cash and investments with original
and purchased maturities less than 90 days.
SHORT-TERM INVESTMENTS
----------------------
Short-term investments are carried at market, and consist of U.S.
Treasury and corporate bonds. Substantially all of the short-term
investments have been pledged as security for the Company's line of
credit and a letter of credit facilities.
The carrying amount of short-term investments approximates fair value
because of the short maturity, generally less than three months, of
these instruments.
INVENTORY
---------
Inventory is stated at the lower of cost (first-in, first-out method)
or market.
<PAGE>
LONG-LIVED ASSETS
-----------------
Property and equipment are stated at cost. Depreciation on property
and equipment is calculated on the straight-line method over the
estimated useful lives of the assets.
Goodwill relates to the merger with Stacey-Lynn Group, Inc. and is
being amortized over 20 years.
The Company accounts for long-lived assets in accordance with the
Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." In
the event that facts and circumstances indicate that the cost of
long-lived assets, including goodwill, may be impaired, an evaluation
of the recoverability would be performed. If an evaluation is
required, the estimated future undiscounted cash flows associated with
the asset would be compared to the assets carrying amount to determine
if a write-down to market value or discounted cash flow is required.
(Continued)
2
STACEY'S BUFFET, INC.
Notes to Financial Statements
INCOME TAXES
------------
The Company accounts for income taxes in accordance with the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 109 ("Statement 109"), "Accounting for Income Taxes."
Under the asset and liability method of Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
included the enactment date.
EARNINGS (LOSS) PER SHARE
-------------------------
Earnings (loss) per share information is computed based on the weighted
average number of common shares outstanding of 2,493,144 for the year
ended January 1, 1997, 2,704,539 for the year ended January 3, 1996 and
2,880,128 for the year ended December 28, 1994.
<PAGE>
USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amount of revenues
and expenses during the reporting period. Actual results could differ
from these estimates.
RECLASSIFICATIONS
-----------------
Certain amounts as of January 3, 1996 and December 28, 1994 have been
reclassified to conform to the January 1, 1997 presentation.
(2) PROPERTY AND EQUIPMENT
----------------------
Property and equipment, consists of the following:
JANUARY 1, JANUARY 3, USEFUL LIVES
1997 1996 IN YEARS
---- ---- ------
Restaurant equipment $ 9,610,938 10,027,140 5 - 12
Leasehold improvements 4,741,255 4,866,625 15 - 20
Other equipment 570,203 591,663 5
----------- ----------- =======
14,922,396 15,485,428
Less accumulated depreciation 7,982,860 7,638,763
----------- -----------
$ 6,939,536 7,846,665
=========== ===========
(3) LEASES
------
The Company's restaurants are in leased facilities. These leases are
operating leases with initial terms from five to ten years with options
to renew, resulting in maximum lease terms of fifteen to twenty years.
(Continued)
<PAGE>
3
STACEY'S BUFFET, INC.
Notes to Financial Statements
Future minimum lease payments under signed noncancelable operating
leases as of January 1, 1997 are as follows:
EXISTING
FISCAL YEAR FACILITIES
----------- ----------
1997 $ 2,496,188
1998 2,396,524
1999 1,584,612
2000 1,159,522
2001 796,143
Thereafter 432,910
==========
Total rent expense was approximately $2,700,000 for the year ended
January 1, 1997, $3,480,000 for the year ended January 1, 1996 and
$4,627,000 for the year ended December 28, 1994. Certain leases have
initial free periods and annual fixed escalators which are expensed on
a straight-line basis over the lease term.
(4) LONG-LIVED ASSETS
-----------------
During the fourth quarter ended January 3, 1996, the Company adopted
the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 121 (" Statement 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by
those assets are less than the assets' carrying amount. Statement 121
also requires that impairment losses be recorded on long-lived assets
to be disposed of when the carrying value of the asset exceeds the fair
value less the estimated selling costs.
As part of the implementation of Statement 121, all assets related to
each restaurant location, including goodwill, were tested for possible
impairment. As a result of this test, $4,475,000 was charged against
operations during the quarter ended January 3,1996 for asset
impairments.
Impaired long-lived assets "fair value" was determined based on
estimated market values for similar assets and on the expected
discounted cash flows from those assets.
<PAGE>
(5) LINE OF CREDIT
--------------
The Company executed a line of credit on June 2, 1994 to support short-
term working capital requirements for $500,000. Interest is at the
prime rate and payable monthly. The line is secured by short-term
investments held by the Company. As of January 1, 1997, the unused
line was $160,000. This line of credit expired on January 6, 1997,
and was paid in full. Additionally, the short-term investments that
secured the line of credit were converted to cash in January, 1997.
(6) RESERVE FOR RESTAURANT CLOSINGS
-------------------------------
The Company increased the estimated reserve for restaurant closings in
the year ended December 28, 1994 by $2,191,881. The increase was
attributable to revised cost estimates to settle lease obligations, the
addition of several new stores targeted for closing, and the decision
to hold certain stores for sale. The Company charged $2,790,052
against the reserve for the year ended December 28, 1994.
(Continued)
<PAGE>
4
STACEY'S BUFFET, INC.
Notes to Financial Statements
The Company increased the reserve for restaurant closings in the year
ended January 3, 1996 by $1,750,000. The increase is attributable to
the settlement of various lease termination agreements, revised cost
estimates to settle lease obligations and two additional stores which
have closed subsequent to January 3, 1996. The Company charged
$8,546,486 (net of accrued rent and expenses related to closed stores)
against the reserve for restaurant closings for the year ended January
3, 1996. Additionally, during the year ended January 3, 1996, the
Company entered into several lease termination agreements with various
landlords to facilitate the closing of unprofitable stores. These
agreements are all non-interest bearing and require varying payments
over five years.
The Company increased the reserve for restaurant closings in the year
ended January 1, 1997 by a $225,000 charge to the provision for store
closings and $377,876 reclassed from accrued liabilities. The increase
was attributable to revised cost estimates to settle lease obligations
and the addition of five stores that were closed in 1996. The Company
charged $426,338 in cash payments for settlement agreements and $66,321
in cash payments for legal fees and to move retained equipment against
the reserve for store closings for the year ended January 1, 1997.
The balance of the reserve for restaurant closings as of January 1,
1997 is comprised of the following:
RESTAURANT
CLOSINGS
--------
Lease termination agreements and
remaining lease expense $ 1,007,487
Disposal of leasehold improvements
and equipment 1,167,136
----------
$ 2,174,623
==========
During the year ended December 28, 1994, the results of eight
restaurants were charged against the reserve for restaurant renovations
and closings. There were no such charges against the reserve in 1995
or in 1996.
<PAGE>
(7) INCOME TAXES
------------
Income tax benefit attributable to loss before income taxes differ from
the amounts computed by applying the U.S. federal income tax rate of 35
percent for January 1, 1997, January 3, 1996 and December 28, 1994 to
loss before income taxes as a result of the following:
<TABLE>
<CAPTION>
JANUARY 1, JANUARY 3, DECEMBER 28,
1997 1996 1994
---- ---- ----
<S> <C> <C> <C>
Computed "expected" tax benefit $ (548,000) (2,838,000) (2,035,000)
Increase (reduction) in income
taxes resulting from:
Change in the beginning of
the year balance of the
valuation allowance for
deferred tax assets
allocated to income tax
expense 660,000 3,419,000 2,296,000
State tax benefit, net of
Federal effect (112,000) (316,000) (312,000)
Other, net - 265,000 51,000
---------- ---------- ----------
$ - - -
========== ========== ==========
</TABLE>
(Continued)
<PAGE>
5
STACEY'S BUFFET, INC.
Notes to Financial Statements
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below.
<TABLE>
<CAPTION>
JANUARY 1, JANUARY 3,
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Impairment of long-lived assets $ 1,621,000 1,790,000
Provision for store closings 870,000 826,000
Net operating loss carryforward 12,619,000 12,252,000
Miscellaneous tax credits 121,000 120,000
Goodwill 427,000 309,000
Other 117,000 55,000
------------ ------------
Total gross deferred tax assets 15,775,000 15,352,000
Less valuation allowance (13,061,000) (12,401,000)
------------ ------------
Net deferred tax assets 2,714,000 2,951,000
------------ ------------
Deferred tax liabilities:
Property and equipment, due to
differences in depreciation methods
and useful lives (2,435,000) (2,686,000)
Training (279,000) (265,000)
------------ ------------
Total gross deferred tax liabilities (2,714,000) (2,951,000)
------------ ------------
Net deferred tax asset $ - -
============ ============
</TABLE>
The valuation allowance as of January 1, 1997 was $13,061,000. The net
change in the total valuation allowance was an increase of $660,000 and
$3,419,000 for the years ended January 1, 1997 and January 3, 1996,
respectively. The realization of deferred tax assets is dependent upon
sufficient future taxable income. Based on prior operating results,
the Company has a valuation allowance of its potential deferred net tax
assets due to the uncertainty of the realization of the net deferred
tax assets.
At January 1, 1997, the Company has net operating loss carryforwards
for Federal income tax purposes of approximately $31,500,000, which is
available to offset future taxable income, if any, through 2011.
<PAGE>
(8) SHAREHOLDER RIGHTS PLAN
-----------------------
The Company has adopted a Shareholder Rights Plan (the "Plan") which is
designed to prevent an acquirer from gaining control of the Company
without offering a fair price to all shareholders. Under the Plan,
each of the Company's outstanding shares is now accompanied by a Right
that would become exercisable at the close of business on the tenth day
following the earlier to occur of:
1. A public announcement that a person or group had acquired
beneficial ownership of 15% or more of the Company's common
stock or
2. the commencement of, or the first public announcement or
announcement of an intention of any person or group to
commence, a tender offer or exchange offer which would result
in that person or group acquiring beneficial ownership of 15%
or more of the Company's common stock.
Once the Rights become exercisable, each Right entitles the holder to
purchase nine shares of the Company's common stock at a purchase price
of $.01 per share. The Rights may be redeemed by the Company at a
redemption price of $0.001 per right at anytime prior to the Rights
becoming exercisable.
(Continued)
6
STACEY'S BUFFET, INC.
Notes to Financial Statements
(9) STOCKHOLDERS' EQUITY
--------------------
On July 17, 1996, the Company effected a five-to-one reverse stock split
that had been previously approved by the Board of Directors and was
approved by the shareholders at the annual shareholders meeting on June
21, 1996. All references to the number of shares and per share amounts
have been restated to reflect the effect of the reverse split in the
financial statements for all periods presented.
<PAGE>
(10) STOCK OPTION PLANS AND WARRANTS
-------------------------------
Effective February 19, 1987, an employee stock option plan was adopted
for which 104,593 shares of the Company's common stock were reserved.
Effective May 9, 1990, the Company adopted a second employee stock
option plan for which 42,000 shares of the Company's common stock were
reserved. The option prices are to be no less than the fair market
value of stock at the date of grant.
During the year ended December 28, 1994, options were granted to
purchase 36,350 shares at $15.00 per share, 1,600 shares at $11.55 per
share, 4,900 shares at $7.80 per share, and 10,700 shares at $5.20 per
share. During the 1994, options to purchase 27,121 shares were
canceled, and options to purchase 550 shares were exercised.
During the year ended January 3, 1996, options were granted to purchase
7,100 shares at $7.50 per share, 8,700 shares at $3.125 per share,
36,000 shares at $3.75, 17,000 shares at $22.00, 75,000 shares at
$10.00, and 5,000 shares at $4.70, and 20,000 at $5.00. During 1995,
options to purchase 18,864 shares were canceled, and no options to
purchase shares were exercised.
During the year ended January 1, 1997, options were granted to purchase
14,100 shares at $3.60 per share and 150,000 shares at $2.35 per share.
During 1996, options to purchase 10,150 shares were canceled, and no
options to purchase shares were exercised.
Under the employee stock option plan, options vest 25% per year for
four years. Options to purchase 236,363 shares were exercisable at
January 1, 1997. The vesting schedule by fiscal year for shares
covered by the options is as follows:
FISCAL YEAR
-----------
1997 52,788
1998 48,288
1999 46,663
2000 41,650
---------
189,389
=========
The Company has warrants outstanding for the purchase of 425,000 shares
at $4.50 per warrant exercisable through November 1998. The result of
the July 17, 1996, five-for-one reverse stock split requires five
warrants to purchase one share of common stock. As of January 1, 1997,
the Company has granted 231,000 stock options to officers that were
unrelated to the employee stock option plan and 26,000 stock options to
the underwriter and a former landlord.
(Continued)
<PAGE>
7
STACEY'S BUFFET, INC.
Notes to Financial Statements
(11) STOCK BASED COMPENSATION
------------------------
During the year ended January 1, 1997, the Company adopted the
Financial Accounting Standards Board's Statement of Financial
Accounting No. 123, "Accounting for Stock-Based Compensation," ("SFAS
No. 123") which recommends stock based compensation be measured at fair
value rather than intrinsic value and requires additional pro forma
disclosure for companies that do not measure stock based compensation
using the fair value method.
The Company applies APB Opinion No. 25 in accounting for its stock
options and warrants and, accordingly, no compensation cost has been
recognized for its stock options in the financial statements. Had the
Company determined compensation cost based on the fair value at the
grant date for its stock options and warrants under SFAS No. 123, the
Company's net loss and loss per share for the years ended January 1,
1997 and January 1, 1996, respectively, would have been increased by
negligible pro forma amounts. This pro forma net loss and loss per
share applies only to options and warrants granted in 1996 and 1995.
Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not considered in the pro forma net loss
and loss per share amounts referred to because compensation costs are
reflected over the options and warrants vesting periods and
compensation cost for options and warrants granted prior to December
29, 1994 is not considered.
(12) RELATED PARTIES
---------------
During 1995, the Company and its former Chairman and Chief Executive
Officer ("former Officer"), agreed to spin-off three restaurants in
exchange for 400,000 shares of the Company's common stock. The fair
market value of the Company's common stock received in the spin-off
approximated the net book value of the restaurant assets and $1,966,000
of related goodwill. The former Officer entered into a license
agreement to operate the stores under the Stacey's name using the
buffet concept which requires the payment of a two percent royalty
after six months of operations. During 1996, the former Officer
terminated the license agreement and no longer operates these stores as
Stacey Buffet restaurants. As part of the transaction, former Officer
granted the Board of Directors the right to direct the voting of his
remaining 400,000 shares through 1999.
<PAGE>
(13) CONTINGENCIES
-------------
The Company has various pending claims incurred in the ordinary course
of business which, in the opinion of management, based on the advice of
outside legal counsel, will not have a material effect on the financial
statements.
(14) LIQUIDITY
---------
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 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>
ARTICLES OF INCORPORATION
OF
HOMESTYLE BUFFET, INC.
I, the undersigned, hereby make, subscribe, acknowledge and
file with the Secretary of State of the State of Florida these
Articles of Incorporation for the purpose of forming a corporation
for profit in accordance with the laws of the State of Florida.
ARTICLE I
Name
----
The name of this corporation shall be:
Homestyle Buffet, Inc.
ARTICLE II
Existence of Corporation
------------------------
This corporation shall begin existence on August 22, 1996, and
shall have perpetual existence.
ARTICLE III
Purpose
-------
The corporation may engage in the transaction of any or all
lawful business for which corporations may be incorporated under
the laws of the State of Florida.
ARTICLE IV
General Powers
--------------
The corporation shall have power:
(a) To have a corporate seal, which may be altered at
pleasure, and to use the same by causing it, or a facsimile
thereof, to be impressed, affixed, or in any other manner
reproduced.
(b) To purchase, take, receive,lease, or otherwise acquire,
own, hold, improve, use, and otherwise deal in and with real
personal property or any interest therein, wherever situated.
<PAGE>
(c) To sell, convey, mortgage, pledge, create a security
interest in, lease, exchange, transfer, and otherwise dispose of
all or any part of its property and assets.
(d) To lend money to, and use its credit to assist, its
officers and employees in accordance with Section 607.141, Florida
Statutes.
(e) To purchase, take, receive, subscribe for, or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and
with, shares or other interests in, or obligations of, other
domestic or foreign corporations, associations, partnerships, or
individuals, or direct or indirect obligations of the United States
or of any other government, state, territory, governmental
district, or municipality or of any instrumentality thereof.
(f) To make contracts and guarantees and incur liabilities,
borrow money at such rates of interest as the corporation may
determine, issue its notes, bonds, and other obligations, and
secure any of its obligations by mortgage or pledge of all or any
of its property, franchises, and income.
(g) To lend money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as
security for the payment of funds so loaned or invested.
(h) To conduct its business, carry on its operations, and
have offices and exercise the powers granted by this act within or
without this state.
(i) To elect or appoint officers and agents of the
corporation and define their duties and fix their compensation.
(j) To make and alter bylaws, not inconsistent with its
Articles of Incorporation or with the laws of the State of Florida,
for the administration and regulation of the affairs of the
corporation.
<PAGE>
(k) Top make donations for the public welfare or for
charitable, scientific, or educational purposes.
(l) To transact any lawful business which the Board of
Directors shall find will be in aid of governmental policy.
(m) To pay pensions and establish and carry out pension
plans, profit sharing plans, stock bonus plants, stock option
plans, retirement plans, benefit plans, and other incentive and
compensation plans for any or all of its directors, officers, and
employees and for any or all of the directors, officers and
employees of its subsidiaries.
(n) To provide insurance for its benefit on the life of any
of its directors, officers, or employees, or on the life of any
shareholder for the purpose of acquiring at his death shares of its
stock owned by the shareholder or by the spouse or children of the
shareholder.
(o) To be a promoter, incorporator, general partner, limited
partner, member, associate, or manager of any corporation,
partnership, limited partnership, joint venture, trust, or other
enterprise.
(p) To have and exercise all powers necessary or convenient
to effect its purposes.
ARTICLE V
Capital Stock
-------------
(a) The total number of shares of capital stock authorized
to be issued by the corporation shall be 2,000,000 shares having a
par value of $.01 per share. Each of the said shares of stock
shall entitle the holder thereof to one (1) vote at any meeting of
the stockholders. All or any part of said capital stock may be
paid for in cash, in property or in labor or services actually
performed for the corporation and valued at a fair valuation to be
fixed by the Board of Directors at a meeting called for such
purpose. All stock when issued shall be paid for and shall be
nonassessable.
<PAGE>
(b) In the election of directors of this corporation there
shall be no cumulative voting of the stock entitled to vote at such
election.
ARTICLE VI
Registered Office and Registered Agent
--------------------------------------
The street address of the corporation's initial registered
office is 501 East Kennedy Boulevard, Suite 1700, Tampa, Florida,
33602, and the name of the corporation's initial registered agent
at such address is E. Jackson Boggs. The corporation may change
its registered office or its registered agent or both by filing
with the Department of State of the State of Florida a statement
complying with Section 607.037, Florida Statutes.
ARTICLE VII
Initial Board of Directors
--------------------------
The number of directors constituting the initial Board of
Directors shall be three (3), and the name and address of each
person who is to serve as a member thereof is as follows:
Name Address
Dermont F. Rowland Bears Paw Country Club
1225 Wildwood Lane
Naples, Florida 33942
Kevin T. Bradley Bears Paw Country Club
1225 Wildwood Lane
Naples, Florida 33942
Doron R. Jensen Bears Paw Country Club
1225 Wildwood Lane
Naples, Florida 33942
ARTICLE VIII
Incorporators
-------------
The name and address of the incorporator of this corporation
is as follows:
<PAGE>
Name Address
E. Jackson Boggs 501 East Kennedy Boulevard
Suite 1700
Tampa, Florida 33602
ARTICLE VIX
Amendment of Articles of Incorporation
--------------------------------------
The corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation
in the manner now or hereafter prescribed by statute, and all
rights conferred upon the stockholders herein are subject to this
reservation.
IN WITNESS WHEREOF, I, the undersigned, have executed these
Articles for the uses and purposes therein stated.
/s/ E. Jackson Boggs
----------------------
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
BEFORE ME, the undersigned authority, on this 22nd day of
August, 1986, personally appeared E. JACKSON BOGGS, to me well
known to be the person described in and who signed the foregoing
Articles of Incorporation, and acknowledge tome that he executed
the same freely and voluntarily for the uses and purposes therein
expressed.
WITNESS my hand and official seal the date aforesaid.
/s/J. Bordwell
---------------
Notary Public
My Commission Expires:
Notary Public State of Florida
My Commission exp. March 22, 1989
Bonded thru General Ins. Und.
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
HOMESTYLE BUFFET, INC.
WHEREAS, the Articles of Incorporation of HOMESTYLE BUFFET,
INC. were filed with and approved by the Secretary of State of
Florida on the 25th day of August, 1986, effective August 22, 1986;
and
WHEREAS, it is the intention of all of the directors and all
of the stockholders of HOMESTYLE BUFFET, INC. that the Articles of
Incorporation of HOMESTYLE BUFFET, INC. be amended in accordance
with the proposed amendment hereinafter set forth; and
WHEREAS, the proposed amendment to the Articles of
Incorporation of HOMESTYLE BUFFET, INC. hereinafter set forth was
approved by all of the directors and all of the stockholders of
HOMESTYLE BUFFET, INC. pursuant to the provisions of Florida
Statutes, Section 607.181(3), on the 20th date of April, 1987; and
WHEREAS, the approval of the Secretary of Sate of Florida of
the proposed amendment hereinafter set forth is hereby requested.
NOW, THEREFORE, the Articles of Incorporation of HOMESTYLE
BUFFET, INC. are hereby amended by deleting in its entirety the
present Article V and by substituting therefor the following, to-
wit:
"ARTICLE V
Capital Stock
-------------
(a) The total number of shares of capital stock authorized
to be issued by the corporation shall be 5,000,000 shares having a
par value of $.01 per share. Each of the said shares of stock
shall entitle the holder thereof to one (1) vote at any meeting of
the stockholders. All or any part of said capital stock may be
paid for in cash, in property or in labor or services actually
performed for the corporation and valued at a fair valuation to be
fixed by the Board of Directors at a meeting called for such
purpose. All stock when issued shall be paid for and shall be
nonassessable.
(b) In the election of directors of this corporation there
shall be no cumulative voting of the stock entitled to vote at such
election."
IN WITNESS WHEREOF, this Amendment to Articles of
Incorporation is hereby executed on behalf of HOMESTYLE BUFFET,
INC. by its President and Secretary this 19 day of May, 1987.
HOMESTYLE BUFFET, INC.
By: /s/ Dermont S. Rowland
Dermont S. Rowland, President and Secretary
<PAGE>
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 19th
day of May, 1987, by DERMONT F. ROWLAND, President and Secretary,
of HOMESTYLE BUFFET, INC., a Florida corporation, on behalf of the
corporation.
/s/ Stuart Brull
Notary Public
My Commission Expires:
Notary Public; State of Florida
at Large
My Commission Expires August 4, 1990
Bonded thru Agent's Notary & Surety
Brokerage
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION OF
HOMESTYLE BUFFET, INC.
WHEREAS, the Articles of Incorporation of Homestyle Buffet,
Inc. were filed with and approved by the Secretary of State of
Florida on the 25th day of August, 1986, effective August 22, 1986;
and
WHEREAS, an Amendment to the Articles of Incorporation of
Homestyle Buffet, Inc. was filed with and approved by the
Secretary of State of Florida on June 8, 1987; and
WHEREAS, it is the intention of all of the directors and a
majority of the stockholders of Homestyle Buffet, Inc. that the
Articles of Incorporation of Homestyle Buffet, Inc. be amended in
accordance with the proposed amendment hereinafter set forth; and
WHEREAS, the proposed amendment to Articles of Incorporation
of Homestyle Buffet, Inc. hereinafter set forth was approved by all
of the directors and a majority of the stockholders of Homestyle
Buffet, Inc. pursuant to the provisions of Florida Statutes,
Section 607.181(1) on the 9th day of May, 1990.
WHEREAS, the approval of the Secretary of State of Florida of
the proposed amendment hereinafter set forth is hereby requested;
NOW, THEREFORE, the Articles of Incorporation of Homestyle
Buffet, Inc. are hereby amended by deleting in its entirety the
present Article V and by substituting therefor the following:
"ARTICLE V
Capital Stock
-------------
(a) The total number of shares of capital stock authorized
to be issued by the corporation shall be 10,000,000 shares having a
par value of $.01 per share. Each os the said shares of stock
shall entitle the holder thereof to one (1) vote at any meeting of
the stockholders. All or any part of said capital stock may be paid
for in cash, in property or in labor or services actually performed
for the corporation and valued at a fair valuation to be fixed by
the Board of Directors at a meeting called for such purpose. All
stock when issued shall be paid for and shall be nonassessable.
(b) In the election of directors of this corporation there
shall be no cumulative voting of the stock entitled to vote at such
election."
IN WITNESS WHEREOF, this Amendment to Articles of
Incorporation is hereby executed on behalf of Homestyle Buffet,
Inc. by its President and Secretary this 9th day of May, 1990.
HOMESTYLE BUFFET, INC.
By: /s/ George Burkhardt
----------------------------
George Burkhardt, President
By: /s/ Barry M. Rowles
----------------------------
Barry M. Rowles, Secretary
<PAGE>
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of May, 1990, by George Burkhardt and Barry M. Rowles,
President and Secretary, respectively, of Homestyle Buffet, Inc., a
Florida Corporation, on behalf of the corporation.
/s/ Annette Rayburn
Notary Public
My Commission Expires:
Notary Public, State of Florida
My Commission Expires: Mar. 29, 1994
Bonded thru Notary Public Underwriters
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION OF
HOMESTYLE BUFFET, INC.
WHEREAS, the Articles of Incorporation of Homestyle Buffet,
Inc. (the "Corporation") were filed with and approved by the
Secretary of State of Florida on the 25th day of August, 1986,
effective August 22, 1986; and
WHEREAS, an Amendment to the Articles of Incorporation of the
Corporation was filed with and approved by the Secretary of State
of Florida on June 8, 1987; and
WHEREAS, an additional Amendment to the Articles of
Incorporation of the Corporation was filed with and approved by the
Secretary of the State of Florida on May 10, 1990; and
WHEREAS, it is the intention of all of the directors and a
majority of the stockholders of the Corporation that the Articles
of Incorporation of the Corporation be amended in accordance with
the proposed amendment hereinafter set forth; and
WHEREAS, the proposed amendment to Articles of Incorporation
of the Corporation hereinafter set forth was approved by a majority
of the stockholders pursuant to the provisions of Section 607.1003,
Florida Statutes, at a meeting duly called and convened on November
24, 1993, which majority vote was sufficient to approve the
proposed amendment to the Articles of Incorporation of the
Corporation in accordance with the Articles of Incorporation and
the Bylaws of the Corporation; and
WHEREAS, the approval of the Secretary of State of Florida of
the proposed amendment hereinafter set forth is hereby requested;
NOW, THEREFORE, the Articles of Incorporation of the
Corporation are hereby amended by deleting in its entirety the
present Article V and by substituting therefor the following:
"ARTICLE V
Capital Stock
-------------
(a) The total number of shares of capital stock authorized
to be issued by the corporation shall be 25,000,000 shares of
common stock having a par value of $.01 per share. Each of the
said shares of stock shall entitle the holder thereof to one (1)
vote at any meeting of the stockholders. All or any part of said
capital stock may be paid for in cash, in property or in labor or
services actually performed for the corporation and valued at a
fair valuation to be fixed by the Board of Directors at a meeting
called for such purpose. All stock when issued shall be paid for
and shall be nonassessable.
(b) In the election of directors of this corporation there
shall be no cumulative voting of stock entitled to vote at such
election."
IN WITNESS WHEREOF, this Amendment to Articles of
Incorporation is hereby executed on behalf of the Corporation by
its Vice Chairman and Secretary this 9th day of December, 1993.
<PAGE>
HOMESTYLE BUFFET, INC.
By: /s/ Robert J. Stetson
-----------------------------
Robert J. Stetson, Vice Chairman
By: /s/ Stephen J. Marrier
------------------------------
Stephen J. Marrier, Secretary
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of December, 1993, by Robert J. Stetson and Stephen J. Marrier,
as Vice Chairman and Secretary, respectively, of Homestyle Buffet,
Inc., a Florida corporation, on behalf of the corporation. They
are personally known to me or have produced
as identification.
/s/ Barbara A. Murphy
-----------------------
Notary Public
Barbara A. Murphy
(Print, Type or Stamp Name)
My Commission Expires:
Barbara A. Murphy
My Commission # AA 747535
EXPIRES: February 8, 1994
<PAGE>
PLAN AND ARTICLES OF MERGER
THIS PLAN AND ARTICLES OF MERGER, is entered into as of the
9th day of December, 1993, by and between HOMESTYLE BUFFET, INC., a
Florida corporation (the "Surviving Corporation"), and STACEY-LYNN
CORPORATION, an Ohio corporation ("S-LC"), STACEY-LYNN OF LAKELAND,
INC., a Florida corporation ("S-LLI"), CASMO OF FLORIDA, INC., a
Florida corporation ("CASMO"), and DMY, INC., a Florida corporation
("DMY") (S-LC, S-LLI, CASMO, AND DMY are collectively hereinafter
referred to as the "Merged Corporations").
W I T N E S E T H:
WHEREAS, the Board of Directors of each of the parties hereto
deem it advisable and in the best interest of the parties hereto
and their respective stockholders that the Merged Corporations
should be merged into the Surviving Corporation, and that the
Surviving Corporation merge the Merged Corporations into itself,
pursuant to the terms and conditions hereinafter set forth and in
the manner prescribed by the laws of the State of Florida, and to
the extent applicable, the laws of the State of Ohio;
WHEREAS, the Surviving Corporation, by its Articles of
Incorporation, which were filed in the office of the Secretary of
State of Florida on August 25, 1986, as subsequently amended, has
authorized capital stock of 25,000,000 shares of $.01 par value
common capital stock, of which 6,140,089 shares are issued and
outstanding on the date of the execution hereof;
WHEREAS, S-LC, by its Articles of Incorporation which were
filed in the office of the Secretary of State of Ohio on November
18, 1983, has an authorized capital of stock of 750 shares of
common capital stock without par value, of which 100 shares are
issued and outstanding on the date of the execution hereof;
WHEREAS, S-LLI, by its Articles of Incorporation which were
filed in the office of the Secretary of State of Florida on July
25, 1991, has authorized capital stock of 7,500 shares of common
capital stock of $1.00 par value, of which 500 shares are issued
and outstanding on the date of the execution hereof;
WHEREAS, CASMO, by its Articles of Incorporation which were
filed in the office of the Secretary of State of Florida on
November 13, 1986, has an authorized capital stock of 7,500 shares
of common capital stock of $1.00 par value, of which 1,000 shares
are issued and outstanding on the date of the execution hereof; and
<PAGE>
WHEREAS, DMY, by its Articles of Incorporation which were
filed in the office of the Secretary of State of Florida on
December 28, 1989, has an authorized capital stock of 7,500 shares
of common capital stock of $1.00 par value, of which 100 shares are
issued and outstanding on the date of the execution hereof.
NOW, THEREFORE, the parties hereto agree to this Plan and
Articles of Merger, whereby the Merged Corporations are merged into
the Surviving Corporation, and the Surviving Corporation merges the
Merged Corporations into itself in the manner prescribed by the
laws of the State of Florida, and to the extent applicable, the
laws of the State of Ohio, and the terms and conditions of the
aforesaid merger and the mode of carrying the same into effect are
as follows:
ARTICLE I
Each of the Merged Corporations shall be and is hereby merged
into the Surviving Corporation, and the Surviving Corporation shall
and does hereby merge each of the Merged Corporations into itself
(the "Merger"). The Surviving Corporation shall continue to be
governed by the laws of the State of Florida.
ARTICLE II
Upon the Merger becoming effective, the Articles of
Incorporation of the Surviving Corporation shall be amended so that
Article I, "Name," is changed, in the manner set forth in Exhibit A
attached hereto and incorporated herein in its entirety. As so
amended, the Articles of Incorporation of the Surviving Corporation
shall continue to be the Articles of Incorporation of the Surviving
Corporation after the Merger, and said Articles of Incorporation of
the Surviving Corporation, as herein amended, shall continue in
full force and effect until further amended and changed in the
manner prescribed by law.
ARTICLE III
(a) Each share of the issued and outstanding capital stock
of the Merged Corporations shall upon the Merger contemplated by
this Plan and Articles of Merger becoming effective immediately,
and without any further action on the part of the parties hereto or
their stockholders, be converted into the consideration described
on Exhibit B attached hereto and incorporated by reference herein
(the "Merger Consideration"). The shareholders of the Merged
Corporations shall surrender their certificates representing the
outstanding capital stock of the Merged Corporations to the
Surviving Corporation and shall then be paid the Merger
Consideration, which Merger Consideration shall consist of cash and
shares of stock in the Surviving Corporation as described on
Exhibit B.
<PAGE>
(b) Each share of capital stock of the Surviving Corporation
authorized and issued when the Merger becomes effective shall
constitute and remain unchanged as one share of capital stock of
the Surviving Corporation.
ARTICLE IV
The terms and conditions of this Merger and the mode of
carrying it into effect are as follows:
(a) Until altered, amended or repealed as therein provided,
the bylaws of the Surviving Corporation as they shall exist on the
effective date of this Plan and Articles of Merger shall be the
bylaws of the Surviving Corporation after the effective date of
this Plan and Articles of Merger.
(b) The first annual meeting of the stockholders of the
Surviving Corporation to be held after the date this Merger becomes
effective shall be the annual meeting provided or to be provided by
the bylaws thereof.
(c) The first regular meeting of the Board of Directors of
the Surviving Corporation to be held after the date this Merger
becomes effective shall be the annual meeting provided or to be
provided by the bylaws thereof.
(d) Upon the effective date of this Merger, the separate
existence of the Merged Corporations shall cease, and the Merged
Corporations shall be merged into the Surviving Corporation, in
accordance with the provisions of this Plan and Articles of Merger,
and the Surviving Corporation shall possess all the rights,
privileges, immunities, powers and franchises of a public and
private nature, and shall be subject to all the restrictions,
disabilities and duties of the Surviving Corporation and the Merged
Corporations, and shall have all of the rights, privileges, powers
and franchises of the Surviving Corporation and the Merged
Corporations; and all property, real, personal and mixed, and all
debts due to the Surviving Corporation and the Merged Corporations
shall be vested in the Surviving Corporation, and all property,
rights and privileges, powers and franchises of the Surviving
Corporation and the Merged Corporations and all and every other
interest of them shall be thereafter as effectually the property of
the Surviving Corporation as they were of the Surviving Corporation
and the Merged Corporations; and the title to any real estate,
whether by deed or otherwise, vested in the Surviving Corporation
and the Merged Corporations shall not revert or be in any way
impaired by reason of this Merger, provided that all rights of
creditors and all liens upon the property of the Surviving
Corporation and the Merged Corporations shall be preserved
unimpaired; and all debts, liabilities and duties of the Merged
Corporation shall thenceforth attach to the Surviving Corporation
and may be enforced against it to the same extent as if said debts,
liabilities and duties have been incurred or contracted by it. The
Surviving Corporation may cause a copy of this Plan and Articles of
Merger to be file din the office of the official who is the
recording officer of each County in the State of Florida in which
real property, if any, of the Merged Corporations are situated.
<PAGE>
(e) If, at any time, the Surviving Corporation shall deem it
advisable that any further assignments or assurances in law or any
things necessary or desirable to vest in the Surviving Corporation,
according to the terms hereof, the title to any property or rights
of the merged Corporations, the proper officers and directors of
the Merged Corporations shall execute and make all such proper
assignments and assurances and do all things necessary and proper
to vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes of this Plan
and Articles of Merger.
ARTICLE V
(a) The plan of merger described herein was approved by the
board of directors of the Surviving Corporation at a duly called
and constituted meeting of the board of directors on August 27,
1993 and by the stockholders of the Surviving Corporation at a duly
called and constituted special meeting on November 24, 1993.
(b) The plan of Merger described herein was approved by the
stockholders and directors of the Merged Corporations on September
10,1993 by Actions by Unanimous Written Consent in accordance with
the provisions of Section 607.0704 and Section 607.0821, Florida
Statutes; and Section 1701.54 of the Ohio Revised Code. The plan
of merger described herein is permitted by the laws of the State of
Ohio, as applicable to S-LC, and S-LC has complied with the laws of
the State of Ohio in effecting this Merger.
ARTICLE VI
In order to facilitate the filing and recording of this Plan
and Articles of Merger, the same by be simultaneously executed in
several counterparts, each of which shall be deemed to be an
original, and such counterparts shall together constitute one and
the same instrument.
ARTICLE VII
The date of the Merger contemplated by this Plan and Articles
of Merger shall be as of the date and time of the filing of this
Plan and Articles of Merger with the Secretary of State of Florida.
ARTICLE VIII
The principal office of the Surviving Corporation in the State
of Florida (which is the sate of incorporation of the Surviving
Corporation) shall be located at the following address 35207 U.S.
Highway 19, North, Palm Harbor, Florida 34684.
ARTICLE IX
The Surviving Corporation hereby consents to service of
process in the State of Ohio and hereby irrevocably appoints the
Secretary of State of the State of Ohio as its agent to accept
service of process in any proceeding in the State of Ohio to
enforce against the Surviving Corporation any obligation of S-LC or
to enforce against the Surviving Corporation the rights of a
dissenting shareholder of S-LC.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan
and Articles of Merger to be executed by the Vice Chairman and
Secretary of the Surviving Corporation, and the Chairman and
Secretary of the Merged Corporations, pursuant to authority given
by their respective Boards of Directors and stockholders as
described in Article V hereof.
ATTEST: HOMESTYLE BUFFET, INC, a Florida
corporation
By: /s/ Stephen J. Marrier By: /s/ Robert J. Stetson
- ------------------------------ ------------------------------
Stephen J. Marrier, Secretary Robert J. Stetson, Vice Chairman
Date: December 9, 1993 Date: December 9, 1993
(Corporate Seal) "Surviving Corporation"
ATTEST: STACEY-LYNN CORPORATION, an Ohio
corporation
By: /s/ Sonja Money By: /s/ Homer Duff
- ------------------------------ ------------------------------
Sonja Money, Secretary Homer Duff, Chairman
Date: December 9, 1993 Date: December 9, 1993
(Corporate Seal)
ATTEST: STACEY-LYNN OF LAKELAND, INC., a Florida
corporation
By: /s/ Sonja Money By: /s/ Homer Duff
- ------------------------------ ------------------------------
Sonja Money, Secretary Homer Duff, Chairman
Date: December 9, 1993 Date: December 9, 1993
(Corporate Seal)
<PAGE>
ATTEST: CASMO OF FLORIDA, INC., a Florida
corporation
By: /s/ Sonja Money By: /s/ Homer Duff
- ------------------------------ ------------------------------
Sonja Money, Secretary Homer Duff, Chairman
Date: December 9, 1993 Date: December 9, 1993
(Corporate Seal)
ATTEST: DMY, INC., a Florida
corporation
By: /s/ Sonja Money By: /s/ Homer Duff
- ------------------------------ ------------------------------
Sonja Money, Secretary Homer Duff, Chairman
Date: December 9, 1993 Date: December 9, 1993
(Corporate Seal)
"Merged Corporations"
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of December, 1993, by Robert J. Stetson , and Stephen J.
Marrier, as Vice Chairman and Secretary, respectively, of HOMESTYLE
BUFFET, INC., a Florida corporation, on behalf of the corporation.
They are personally known to me or have produced
as identification.
/s/ Barbara A. Murphy
---------------------
Notary Public
Barbara A. Murphy
--------------------------
(Print, Type or Stamp Name)
My Commission Expires:
Barbara A. Murphy
My Commission # AA 747535
EXPIRES: February 8, 1994
<PAGE>
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of December, 1993, by Homer Duff and Sonja Money, as Chairman
and Secretary, respectively, of STACEY-LYNN CORPORATION, an Ohio
corporation, on behalf of the corporation. They are personally
known to me or have produced as identification.
------------------
/s/ Barbara A. Murphy
---------------------
Notary Public
Barbara A. Murphy
--------------------------
(Print, Type or Stamp Name)
My Commission Expires:
Barbara A. Murphy
My Commission # AA 747535
EXPIRES: February 8, 1994
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of December, 1993, by Homer Duff and Sonja Money, as Chairman
and Secretary, respectively, of STACEY-LYNN OF LAKELAND, INC., a
Florida corporation, on behalf of the corporation. They are
personally known to me or have produced as
identification. ------------------
/s/ Barbara A. Murphy
---------------------
Notary Public
Barbara A. Murphy
--------------------------
(Print, Type or Stamp Name)
My Commission Expires:
Barbara A. Murphy
My Commission # AA 747535
EXPIRES: February 8, 1994
<PAGE>
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of December, 1993, by Homer Duff and Sonja Money, as Chairman
and Secretary, respectively, of CASMO OF FLORIDA, INC., a Florida
corporation, on behalf of the corporation. They are personally
known to me or have produced as identification.
------------------
/s/ Barbara A. Murphy
---------------------
Notary Public
Barbara A. Murphy
--------------------------
(Print, Type or Stamp Name)
My Commission Expires:
Barbara A. Murphy
My Commission # AA 747535
EXPIRES: February 8, 1994
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 9th
day of December, 1993, by Homer Duff and Sonja Money, as Chairman
and Secretary, respectively, of DMY, INC., a Florida corporation,
on behalf of the corporation. They are personally known to me or
have produced as identification.
------------------
/s/ Barbara A. Murphy
---------------------
Notary Public
Barbara A. Murphy
--------------------------
(Print, Type or Stamp Name)
My Commission Expires:
Barbara A. Murphy
My Commission # AA 747535
EXPIRES: February 8, 1994
<PAGE>
EXHIBIT A
---------
Article I of the Articles of Incorporation of Homestyle
Buffet, Inc., a Florida corporation, filed on August 26, 1986, is
hereby amended and restated in its entirety to read:
"ARTICLE I
Name
----
The name of this corporation shall be:
Stacey's Buffet, Inc."
<PAGE>
<TABLE>
<CAPTIONS>
EXHIBIT B
---------
Description of Merger Consideration
Merger Corporations Apportionment Apportionment of Surviving
and Shareholders of Cash Corporation Stock
- ---------------- ------- -----------------
<S> <C> <C>
1. Stacey-Lynn Corporation,
an Ohio corporation and
Stacey-Lynn of Lakeland, Inc.
a Florida corporation
-- Homer Duff $1,555,208 $4,000,000
2. CASMO of Florida, Inc.,
a Florida corporation
-- Homer Duff $1,424,872 0
-- Les Spang 151,986 0
-- Sonja Money 94,991 0
-- Richard Cummings 94,991 0
-- Dorothy Cummings 94,991 0
-- Doug Desserich 37,996 0
----------- -------
$1,899,827 0
3. DMY, Inc., a Florida corporation
-- Homer Duff $ 319,920 0
-- Amos & Sonja Money 310,512 0
-- Mary Young 310,512 0
---------- -------
$ 940,944 0
</TABLE>
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION OF
STACEY'S BUFFET, INC.
WHEREAS, the following amendment to Articles of
Incorporation of Stacey's Buffet, Inc. (the "Corporation") was
approved by all of the directors and a majority of the
stockholders of the Corporation pursuant to the provisions of
Florida Statutes, Section 607.181(1) on May 6, 1996 and June 21,
1996, respectively.
WHEREAS, the approval of the Secretary of State of Florida
of the proposed amendment hereinafter set forth is hereby
requested;
NOW THEREFORE, the Articles of Incorporation of the
Corporation are hereby amended by deleting in its entirety the
present Article V and by substituting therefor the following:
"Article V
Capital Stock
-------------
Each outstanding share of Common Stock, $.01 par value per
share, of the Corporation (the "Old Common Stock"), shall be
changed into and reclassified as .2 (2/10ths) shares of Common
Stock, $.01 par value per share of the Corporation (the "New
Common Stock").
Upon the effective filing hereof, the conversion of the
issued and outstanding shares of Old Common Stock into issued and
outstanding shares of New Common Stock shall occur automatically
without any further action by the holders of such shares of Old
Common Stock and whether or not the certificates representing the
shares of Old Common Stock are surrendered to the Corporation;
provided, however, that the Corporation shall not be obligated to
issue certificates evidencing the shares of New Common Stock
issuable upon such conversion unless certificates evidencing such
shares of Old Common Stock which have been converted are either
delivered to the Corporation, as hereinafter provided, or the
holder notifies the Corporation that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory
to the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith.
<PAGE>
Upon the occurrence of the automatic conversion of the Old
Common Stock, the holders of Old Common Stock shall surrender the
certificates representing such shares to the transfer agent for
the Corporation. Thereupon, there shall be issued and delivered
to such holder, in the name shown on such surrendered certificate
or certificates, a certificate or certificates for the number of
shares of New Common Stock into which the shares of Old Common
Stock surrendered are convertible, dated as of the date on which
such automatic conversion occurs, with all fractional shares of
New Common Stock to be retired by the Corporation by paying cash
for each fraction of a share of New Common Stock in an amount to
be determined on the basis of the average closing price of the
Old Common Stock for the ten trading days immediately preceding
the effective filing hereof.
The total number of shares of capital stock authorized to be
issued by the Corporation shall be 25,000,000 shares of Common
Stock having a par value of $.01 per share. Each of the said
shares of stock shall entitle the holder thereof to one (1) vote
upon each matter properly submitted to the stockholders at any
meeting of the stockholders. All or any part of said capital
stock may be paid for in cash, in property or in labor or
services actually performed for the Corporation and valued at a
fair valuation to be fixed by the Board of Directors at a meeting
called for such purpose. All stock when issued shall be paid for
and shall be nonassessable.
In the election of directors of the Corporation there shall
be no cumulative voting of the stock entitled to vote at such
election."
IN WITNESS WHEREOF, this Amendment to Articles of
Incorporation is hereby executed on behalf of the Corporation by
its Chief Executive Officer and Secretary this 11th day of July,
1996. ----
STACEY'S BUFFET, INC.
By: /S/ Stephen J. Marrier
---------------------------
Stephen J. Marrier
Chief Executive Officer
By: /s/ Maureen A. Jack
---------------------------
Maureen A. Jack
Secretary
<PAGE>
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, on this 11th day of July, 1996, before
me personally appeared Stephen J. Marrier, to me known and known
by me to be the Chief Executive Officer of Stacey's Buffet, Inc.,
and the person executing the foregoing instrument on behalf of
Stacey's Buffet, Inc., and he acknowledged said instrument by
him so executed to be his free act and deed in such capacity and
the free act and deed of Stacey's Buffet, Inc.
/s/ Meride J. Dooriss
---------------------------
Notary Public
Meride J. Dooriss
---------------------------
(Print, Type or Stamp Name)
My commission expires:
STATE OF FLORIDA
COUNTY OF PINELLAS
The foregoing instrument was acknowledged before me this
12th day of July, 1996, by Maureen A. Jack, as Secretary of
Stacey's Buffet, Inc., a Florida corporation, on behalf of the
corporation. She is personally known to me or has produced
_____________________ as identification.
/s/ Janet L. Davis
--------------------------
Notary Public
Janet L. Davis
---------------------------
(Print, Type or Stamp Name)
My commission expires:
<PAGE>
BYLAWS OF
STACEY'S BUFFET, INC.
ARTICLE I
Offices
The principal office shall be in the City of Largo,
County of Pinellas, and State of Florida.
The corporation may also have offices at such other
places both within and without the State of Florida as the Board
of Directors may from time to time determine or the business of
the corporation may require.
ARTICLE II
Stockholders
Section 1. Annual Meeting. The annual meeting of the
Stockholders shall be held on or before June 30 of each year for
the purpose of electing Directors and for the transaction of such
other business as may come before the meeting; the actual day
thereof to be set forth in the Notice of Meeting or in the Call
and Waiver of Notice of Meeting. If the election of Directors
shall not be held at any such annual meeting of the Stockholders
or at any adjournment thereof, the Board of Directors shall cause
the election to be held at a Special Meeting of the Stockholders
as soon thereafter as may be convenient.
Section 2. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise
prescribed by law or by the Articles of Incorporation, may be
called by the President or by the Board of Directors, and shall
be called by the President or Secretary at the request in writing
of a majority of the Board of Directors then in office, or at the
request in writing of stockholders owning not less than one-tenth
(1/10th) of the entire capital stock of the corporation issued
and outstanding and entitled to vote thereat. Such request shall
state the purpose or purposes of the proposed meeting. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice thereof.
Section 3. Place of Meeting. The Board of Directors
may designate any place either within or without the State of
Florida, unless otherwise prescribed by law or by the Articles of
Incorporation, as the place of meeting for any annual meeting or
for any special meeting of the stockholders. A waiver of notice
signed by all stockholders entitled to vote at a meeting may
designate any place either within or without the State of
Florida, unless otherwise prescribed by law or by the Articles of
Incorporation, as the place for the holding of such meeting. If
no designation is made or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the
corporation in the State of Florida.
<PAGE>
Section 4. Notice of Meeting. Written or printed
notice stating the place, day and hour of the meeting, and in the
case of a special meeting, the purpose or purposes for which the
meeting is called shall be delivered not less than ten (10) nor
more than sixty (60) days before the date of the meeting, either
by hand delivery, express or other delivery service, telecopier,
telegram, telex, mailgram, cablegram or other delivery method or
by first-class mail, by or at the direction of the Chief
Executive Officer, the President or the Secretary, or the officer
or persons calling the meeting, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall
be deemed to be delivered when deposited in the United States
mail, addressed to the stockholder at the business or home
address of the stockholder as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Section 5. Waiver of Notice of Meeting. Whenever any
notice to a stockholder is required pursuant to the provisions of
Section 4 hereinabove, each stockholder may waive such notice in
writing at any time before or after the time for the delivery of
such notice, and such written waiver of notice shall be
equivalent to the giving of such notice. Attendance at any
meeting by any stockholder to whom notice of such meeting must be
given pursuant to the provisions of Section 4 hereinabove shall
constitute a waiver of notice of such meeting by such
stockholder, except when the stockholder attends such meeting for
the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business at the meeting
because the meeting is not lawfully called or convened.
Section 6. Voting Lists. The officer or agent having
charge of the stock transfer books for shares of the corporation
shall make, at least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof arranged in
alphabetical order, with the address and the number and class and
series of shares held by each; which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the
principal office of the corporation and shall be subject to
inspection of any stockholder during the whole time of the
meeting. The original stock transfer book shall be prima facie
evidence as to the identity of the stockholders entitled to
examine such list or transfer books or to vote at any meeting of
the stockholders.
Section 7. Quorum. A majority of the outstanding
shares of the corporation entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of
stockholders, unless otherwise provided in the Articles of
Incorporation, but in no event shall a quorum consist of less
than one-third (1/3) of the shares entitled to vote at the
meeting. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally called. The stockholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal from
the meeting of enough stockholders to leave less than a quorum.
<PAGE>
Section 8. Voting of Shares. Each stockholder
entitled to vote shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy, signed by him,
for each share of the voting stock held by him that has been
transferred on the books of the corporation prior to such
meeting. Such right to vote shall be subject to the right of the
Board of Directors to close the transfer books or to fix a record
date for voting stockholders pursuant to the provisions of
Article VIII hereinafter.
Section 9. Proxies. At all meetings of stockholders,
a stockholder may vote by proxy, executed in writing by the
stockholder or by his duly authorized attorney-in-fact; but no
proxy shall be valid after eleven (11) months from its date,
unless the proxy provides for a longer period. Such proxies
shall be filed with the Secretary of the corporation before or at
the time of the meeting.
Section 10. Informal Action by Stockholders.
(a) Any action which may be taken or is required by
law to be taken at any annual or special meeting of the
stockholders may be taken without a meeting and without a
vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of a majority of the
outstanding stock of the corporation. If any class of stock
is entitled to vote thereon as a class, such written consent
shall be required of the holders of a majority of the stock
of each class of stock entitled to vote as a class thereon
and of the total stock entitled to vote thereon.
(b) Unless all of the holders of the outstanding stock
of the corporation have signed a written consent to an
action in accordance with the provisions of paragraph (a)
hereinabove, then within ten (10) days after obtaining such
written consent notice must be given to those stockholders
who have not so consented in writing. The notice shall
fairly summarize the material features of the authorized
action, and, if the action be a merger, consolidation, or
sale or exchange of assets for which dissenters' rights are
provided by Florida law, the notice shall contain a clear
statement of the right of stockholders dissenting therefrom
to be paid the fair value of their shares upon compliance
with Florida law regarding the rights of dissenting
stockholders.
<PAGE>
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs
of the Corporation shall be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The
number of directors of the corporation shall be not less than one
(1), nor more than fifteen (15); the number of directors to be
fixed by the Board of Directors at any annual or special meeting.
Each Director shall hold office until the next annual meeting of
stockholders or until his successor has been elected, unless
sooner removed by the stockholders at any general or special
meeting. None of the Directors need be residents of the State of
Florida.
Section 3. Annual Meeting. After each annual meeting
of stockholders, the Board of Directors shall hold its annual
meeting at the same place as and immediately following such
annual meeting of stockholders for the purpose of the election of
officers and the transaction of such other business as may come
before the meeting; and if a majority of the Directors be present
at such place and time, no prior notice of such meeting shall be
required to be given to the Directors. The place and time of
such meeting may also be fixed by written consent of the
Directors.
Section 4. Regular Meetings. Regular meetings of the
Board of Directors may be held without notice at such time and at
such place as shall be determined from time to time by the Board
of Directors.
Section 5. Special Meetings. Special meetings of the
Board of Directors may be called by the Chairman of the Board, if
there be one, or the Chief Executive Officer or the President, or
by any two (2) Directors. The person or persons authorized to
call special meetings of the Board of Directors may fix the
place, time and date for holding any special meetings of the
Board of Directors called by them.
Section 6. Notice of Meeting or Waiver Thereof.
Notice of any special meeting shall be given at least two (2)
days prior thereto by written notice delivered personally or
mailed to each Director at his business or home address. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed with postage
thereon prepaid. If notice be given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to
the telegraph company. If notice is given by cablegram, such
notice shall be deemed to be delivered when the cablegram is
dispatched. Any Director may waive notice of such meeting either
before, at, or after such meeting. The attendance of a Director
at a meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Notice need not
specify the purpose of any meeting.
<PAGE>
Section 7. Quorum. A majority of the Directors shall
constitute a quorum, but a smaller number may adjourn from time
to time without further notice until a quorum is secured.
Section 8. Manner of Acting. The act of a majority of
the Directors voting for or against, (disregarding any
abstentions) at a meeting at which a quorum is present shall be
the act of the Board of Directors.
Section 9. Vacancies. Any vacancy occurring in the
Board of Directors, including any vacancy created by reason of an
increase in the number of Directors, may be filled by the
affirmative vote of a majority of the remaining Directors, though
less than a quorum of the Board of Directors. A Director elected
to fill a vacancy shall be elected for the unexpired term of his
predecessor in office.
Section 10. Compensation. By resolution of the Board
of Directors, the Directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors, and may
be paid a fixed sum for attendance at each meeting of the Board
of Directors, or a stated salary as Directors. No payment shall
preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 11. Presumption of Assent. A Director who is
present at a meeting at which action on any corporate matter is
taken shall be presumed to have assented to the action taken,
unless he votes against such action or abstains from voting with
respect thereto. A Director may abstain from voting on any
matter in his sole discretion.
Section 12. Informal Action by Board. Any action
required or permitted to be taken by any provisions of law, of
the Articles of Incorporation or these bylaws at any meeting of
the Board of Directors or of any committee thereof may be taken
without a meeting if, prior to such action, a written consent
thereto is signed by all members of the Board or of such
committee, as the case may be, setting forth the actions so to be
taken and filed in the minutes of the proceedings of the Board or
of the committee.
Section 13. Telephonic Meetings. Members of the Board
of Directors or of any committee thereof shall be deemed present
at a meeting of such Board or committee if a conference
telephone, or similar communications equipment, by means of which
all persons participating in the meeting can hear each other at
the same time, is used.
Section 14. Removal. Any director may be removed,
with or without cause, by the stockholders at any general or
special meeting of the stockholders whenever, in the judgment of
the stockholders, the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person removed. This bylaw
shall not be subject to change by the Board of Directors.
<PAGE>
ARTICLE IV
Officers
Section 1. Number. The officers of the corporation
shall be a Chief Executive officer, a Chief Operations Officer, a
President, a Secretary and a Treasurer and/or a Chief Financial
Officer, each of whom shall be elected by the Board of Directors.
The Board of Directors may also elect a Chairman of the Board,
one or more Vice Presidents, one or more Assistant Secretaries
and Assistant Treasurers and such other officers as the Board of
Directors shall deem appropriate. Any two (2) or more offices
may be held by the same person.
Section 2. Election and Term of Office. The officers
of the corporation shall be elected annually by the Board of
Directors at its first meeting after each annual meeting of
stockholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
may be convenient. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified
or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
Section 3. Removal. Any officer elected or appointed
by the Board of Directors may be removed by the Board of
Directors whenever, in its judgment, the best interests of the
corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person
so removed.
Section 4. Vacancies. A vacancy in any office because
of death, resignation, removal, disqualification or otherwise,
may be filled by the Board of Directors for the unexpired portion
of the term.
Section 5. Duties of Officers. The Chairman of the
Board of the corporation, or the Chief Executive Officer if there
shall not be a Chairman of the Board, shall preside over all
meetings of the Board of Directors and of the stockholders, which
he shall attend. Subject to the foregoing, the officers of the
corporation shall have such powers and duties as usually pertain
to their respective offices and such additional powers and duties
specifically conferred by law, by the Articles of Incorporation,
by these bylaws, or as may be assigned to them from time to time
by the Board of Directors.
Section 6. Salaries. The salaries of the officers
shall be fixed from time to time by the Board of Directors or by
a committee thereof, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a
Director of the corporation.
Section 7. Delegation of Duties. In the absence of or
disability of any officer of the corporation or for any other
reason deemed sufficient by the Board of Directors, the Board may
delegate his powers or duties to any other officer or to any
other Director for such period as the Board of Directors may deem
appropriate.
<PAGE>
ARTICLE V
Executive and Other Committees
Section 1. Creation of Committees. The Board of
Directors may, by resolution passed by a majority of the Board,
designate an Executive Committee and one (1) or more other
committees, each to consist of one (1) or more of the Directors
of the corporation.
Section 2. Executive Committee. The Executive
Committee, if there shall be one, shall consult with and advise
the officers of the corporation in the management of the
business of the corporation and shall have and may exercise, to
the extent provided in the resolution of the Board of Directors
creating such Executive Committee, such powers of the Board of
Directors as may be lawfully delegated by the Board.
Section 3. Other Committees. Such other committees
shall have such functions and may exercise the powers of the
Board of Directors, as may be lawfully delegated to such
committees, and to the extent provided in the resolution or
resolutions creating such committee or committees.
Section 4. Meetings of Committees. Regular meetings
of the Executive Committee and other committees may be held
without notice at such time and at such place as shall from time
to time be determined by the Executive Committee or such other
committees, and special meetings of the Executive Committee or
such other committees may be called by any member thereof upon
two (2) days' notice to each of the other members of such
committee; or on such shorter notice as may be agreed to in
writing by each of the other members of such committee, given
either personally or in the manner provided in Section 6 of
Article III of these bylaws (pertaining to notice for Directors'
meetings).
Section 5. Vacancies on Committees. Vacancies on the
Executive Committee or on such other committees shall be filled
by the Board of Directors then in office at any regular or
special meeting.
Section 6. Quorum of Committees. At all meetings of
the Executive Committee or such other committees, a majority of
the committee's members then in office shall constitute a quorum
for the transaction of business.
Section 7. Manner of Acting of Committees. The acts
of a majority of the members of the Executive Committee or such
other committees present at any meeting at which there is a
quorum shall be the act of such committee.
Section 8. Minutes of Committees. The Executive
Committee, if there shall be one, and such other committees shall
keep regular minutes of their proceedings and report the same to
the Board of Directors when required.
<PAGE>
Section 9. Compensation. Members of the Executive
Committee and such other committees may be paid compensation in
accordance with the provisions of Section 10 of Article III
(pertaining to compensation of Directors).
ARTICLE VI
Indemnification and Advancement of
Expenses for Directors and Officers
The Corporation shall indemnify and hold harmless any
person who was or is a party to any proceeding by reason of the
fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, from and against any and all
liabilities, costs or expenses (including reasonable attorneys'
fees incurred at the pretrial, trial and appellate levels),
incurred in connection with such proceeding, including any appeal
thereof, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any proceeding by judgment, order,
settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best
interests of the Corporation or, with respect to any criminal
action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
ARTICLE VII
Certificates of Stock
Section 1. Certificates for Shares. Every holder of
stock in the corporation shall be entitled to have a certificate,
signed by the President or a Vice President and the Secretary or
an Assistant Secretary exhibiting the holder's name and
certifying the number of shares owned by him in the corporation.
The certificates shall be numbered and entered in the books of
the corporation as they are issued.
Section 2. Transfer of Shares. Transfers of shares of
the corporation shall be made upon its books by the holder of the
shares in person or by his lawfully constituted representative
upon surrender of the certificate of stock for cancellation. The
person in whose name shares stand on the books of the corporation
shall be deemed by the corporation
to be the owner thereof for all purposes, and the corporation
shall not be bound to recognize any equitable or other claim to
or interest in such shares on the part of any other person
whether or not it shall have express or other notice thereof,
except as expressly provided by the laws of the State of Florida.
<PAGE>
Section 3. Facsimile Signature. Where a certificate
is manually signed on behalf of a transfer agent or a registrar
other than the corporation itself or an employee of the
corporation, the signature of any such President, Vice President,
Secretary or Assistant Secretary may be a facsimile. In case any
officer or officers who have signed or whose facsimile signature
or signatures shall cease to be such officer or officers of the
corporation, such certificate or certificates may, nevertheless,
be adopted by the corporation and be issued and delivered as
though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the
corporation.
Section 4. Lost Certificates. The Board of Directors
may direct that a new certificate or certificates be issued in
place of any certificate or certificates theretofore issued by
the corporation and alleged to have been lost or destroyed, upon
the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost
or destroyed certificate or certificates or his legal
representative to advertise the same in such manner as it shall
require and/or to give the corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged
to have been lost or destroyed.
ARTICLE VIII
Record Date
The Board of Directors is authorized from time to time
to fix in advance a date, not more than sixty (60) nor less than
ten (10) days before the date of any meeting of stockholders, or
not more than sixty (60) days prior to the date for the payment
of any dividend or the date for the allotment of rights, or the
date when any change or conversion of or exchange of stock shall
go into effect, or a date in connection with the obtaining of the
consent of stockholders for any purpose, as a record date for the
determination of the stockholders entitled to notice of and to
vote at any such meeting and any adjournment thereof, or entitled
to receive payment of any such dividend, or to any such
allotment, or to exercise the rights in respect of any such
change, conversion or exchange of stock, or to give such consent,
as the case may be; and, in such case, such stockholders and only
such stockholders as shall be stockholders of record on the date
so fixed shall be entitled to such notice of and to vote at such
meeting and any adjournment thereof or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
<PAGE>
ARTICLE IX
Dividends
The Board of Directors may from time to time declare
and the corporation may pay dividends on its outstanding shares
of capital stock in the manner and upon the terms and conditions
provided by the Articles of Incorporation and applicable law.
Dividends may be paid in cash, in property or in shares of stock,
subject to the provisions of the Articles of Incorporation and
applicable law.
ARTICLE X
Fiscal Year
The fiscal year of the corporation shall be the 52 or
53 week period that ends on the closest Wednesday to December
31st selected by the Board of Directors as the taxable year of
the corporation for federal income tax purposes.
ARTICLE XI
Seal
The corporate seal shall bear the name of the
corporation, which shall be between two concentric circles, and
in the inside of the inner circle shall be the calendar year of
incorporation; an impression of said seal appearing on the margin
hereof.
ARTICLE XII
Stock in Other Corporations
Shares of stock in other corporations held by this
corporation shall be voted by such officer or officers of this
corporation as the Board of Directors shall from time to time
designate for such purpose, or by a proxy thereunto duly
authorized by said Board.
ARTICLE XIII
Amendments
Except as provided herein, these bylaws may be altered,
amended, or repealed in whole or in part, and new bylaws may be
adopted by the Board of Directors or by the vote of stockholders
owning a majority of the stock of the corporation entitled to
vote thereon.
<TABLE> <S> <C>
<PAGE>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STACEY'S BUFFET, INC. FOR THE YEAR ENDED JANUARY 1,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-1997
<PERIOD-END> JAN-01-1997
<CASH> 252,991
<SECURITIES> 806,194
<RECEIVABLES> 162,993
<ALLOWANCES> 10,000
<INVENTORY> 309,013
<CURRENT-ASSETS> 1,566,543
<PP&E> 14,922,396
<DEPRECIATION> 7,982,860
<TOTAL-ASSETS> 16,778,655
<CURRENT-LIABILITIES> 7,829,679
<BONDS> 0
<COMMON> 24,931
0
0
<OTHER-SE> 8,915,466
<TOTAL-LIABILITY-AND-EQUITY> 16,778,655
<SALES> 38,781,373
<TOTAL-REVENUES> 38,781,373
<CGS> 37,740,612
<TOTAL-COSTS> 40,710,484
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,000
<INCOME-PRETAX> (1,565,255)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,565,255)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,565,255)
<EPS-PRIMARY> (0.63)
<EPS-DILUTED> (0.63)
</TABLE>
