Cost of Sales, Operating Expenses as a Percent of Revenue Show Continued Improvement Even as Company Absorbs Dual Impact on 1Q99 Results of Extremely Severe Winter Weather and Delayed Start of NBA Season -- Further Compounded By Sales Peak in 1Q98 From Grand Opening of Auburn Hills Unit GAYLORD, Mich., May 21 /PRNewswire/ -- Big Buck Brewery & Steakhouse, Inc., (Nasdaq: BBUC), today announced results for the fiscal first quarter ended April 4, 1999. The different quarter end dates reflect the inclusion of comparable weekend periods, when restaurants typically experience peak sales. Summary of Financial Highlights (dollars in thousands except per share amounts) First Quarter Ended April 4, 1999 March 29, 1998 Change Total Revenue $3,286,671 $3,964,935 -17.1 % Restaurant Sales $3,165,427 $3,815,738 -17.0 % Restaurant Operating Income $396,457 $466,184 -15.0 % Income (Loss) From Operations $(261,825) $42,008 NM Net Loss $(473,789) $(489,053) NM Net Loss Per Common Share $(0.09) $(0.09)* NM Wtd. Avg. Shares Outstanding 5,285,000 5,285,000 -- * Includes one-time charge of 7 cents per share in first quarter 1998 due to change in accounting rules for pre-opening expenses. KEY DEVELOPMENTS - FIRST QUARTER 1999 -- Company demonstrates ongoing strength of Big Buck concept as well as improved operating efficiencies as restaurant operating income as a percent of sales climbs to 12.5 percent, versus 11.8 percent in 1Q98. -- All three locations in Michigan now licensed to sell Big Buck's exclusive selection of Auburn Hill wines. "We are obviously pleased to put the extraordinary challenges of the first quarter behind us... Also, as our results reflect, we are intentionally carrying the managerial and operational infrastructure for more than our current three locations since we must have these resources in place as we expand. The Company is in a key transitional stage and we encourage investors to stay focused on our ultimate objective of achieving multi-state growth." --Bill Rolinski, CEO While results reflect all three of the Company's locations in operation for the full periods, first quarter 1999 results include the effects of several major factors which contributed significantly to the differential between the comparable quarters as follows: -- Extremely severe winter weather impacted sales at all the Company's units. For example, during the first week of the quarter, the Company believes that it experienced in excess of $200,000 in unrealized sales versus its internal targets based on the comparable year ago period. According to the Wayne County Executive's office, this was the greatest snowfall recorded at Detroit Metro airport in the last 25 years. -- The delayed start of the NBA season due to a labor dispute adversely affected first quarter 1999 sales at the Auburn Hills unit, which is located two miles from the home of the Detroit Pistons, The Palace. The Auburn Hills unit has traditionally experienced significant customer flow in conjunction with Pistons' games, particularly home games. -- In addition, the Auburn Hills location experienced higher than normal sales levels during the year ago first quarter following its Grand Opening in October 1997. Since the Company has not opened any new locations since that time, there was no comparable event in the first quarter 1999 to offset this temporary peak in sales. First Quarter 1999 Results Total revenue for the first quarter 1999 was $3.3 million, compared to $4.0 million in the first quarter 1998, a decrease of 17.1 percent. Restaurant operating income for the first quarter 1999 was $396,000 or 12.5 percent of restaurant sales, compared to $466,000 or 11.8 percent of restaurant sales in the first quarter 1998. The improvement in restaurant operating income as a percent of restaurant sales is due to greater operational efficiencies coupled with a menu price increase. The net loss for the first quarter 1999 was $474,000 or 9 cents per share, versus $489,000 or 9 cents per share in the year ago quarter. The net loss per share in the first quarter 1998 included a one-time charge of 7 cents per share reflecting the cumulative effect of a mandatory change in accounting for restaurant start-up costs. Excluding this charge, the net loss for the first quarter 1998 would have been $143,000. Total costs and expenses for the first quarter 1999 declined 17.4 percent to $2.9 million, versus $3.5 million in the first quarter 1998. Cost of sales, which consists of food, merchandise and brewery supplies, decreased 21.5 percent to $1.1 million or 32.5 percent of revenues in the first quarter 1999, from $1.4 million or 34.3 percent of revenues in the first quarter 1998. This decrease is the result of a menu price increase as well as additional savings from greater purchasing volume. Operating expenses declined to $631,000 or 19.2 percent of revenues in the first quarter 1999, from $806,000 or 20.3 percent of revenues in the first quarter 1998, reflecting a refocusing of advertising and marketing efforts and tighter cost controls. General and administrative expenses for the first quarter 1999 were 16.2 percent of revenues or $531,000, compared to 10.7 percent of revenues or $424,000 in the first quarter 1998. This increase primarily reflects lower sales volume as well as costs associated with preparations in advance of the planned opening of the fourth location in Grapevine, Texas. Restaurant salaries and benefits decreased 13.7 percent to $989,000 in the first quarter 1999, from $1.1 million in the first quarter 1998. This decrease is attributable to lower staffing needs for hourly employees as a result of lower sales volume. As a percent of revenues, restaurant salaries and benefits increased to 30.1 percent in the first quarter 1999 compared to 28.9 percent in the first quarter 1998. This increase is the result of higher restaurant management wages and benefits which do not decrease directly with decreases in sales volume as compared to hourly employee wages. This increase also reflects training and retention of additional assistant managers under the Managers-in-Training Program, which is intended to provide Big Buck with trained managers to meet the Company's projected needs beyond its current three locations. Big Buck CEO Bill Rolinski Comments Big Buck CEO Bill Rolinski said: "We are obviously pleased to put the extraordinary challenges of the first quarter behind us. Frankly, we believe the fact that the Company was able to simultaneously absorb the impact of these events as well as it did is a testament to the strength of our concept, the loyalty of our customers, and the dedication of our employees. As a case in point, our operating efficiency continues to improve with the aid of the systems and procedures we've established to help better serve our large customer base and leverage our costs across multiple units. The introduction of our Auburn Hill Winery is also being well-received by customers and all three Big Buck locations in Michigan are now licensed to serve wine. "Our principal goals for 1999 are to expand the Big Buck concept beyond Michigan and to meet or surpass our industry and peer group benchmarks for operating efficiency. As our results reflect, we are intentionally carrying the managerial and operational infrastructure for more than our current three locations since we must have these resources in place as we expand. The Company is in a key transitional stage and we encourage investors to stay focused on our ultimate objective of achieving multi-state growth. Our management team is enthusiastic about Big Buck's expansion potential and remains committed to demonstrating the ability to successfully expand beyond Michigan." Big Buck/Bass Pro Joint Venture Location The Company announced in November 1998 that it plans to open a Big Buck Brewery & Steakhouse in Grapevine, Texas, a major suburb of Dallas, during 1999. This new location will be owned by Buck & Bass L.P., a joint venture of Big Buck Brewery & Steakhouse, Inc. and Bass Pro Outdoor World, L.P., the nation's premier retailer of outdoor sports equipment. This location will be connected through a central lobby to both the 190,000 square foot Bass Pro Shops Outdoor World superstore and a new 330-room Embassy Suites Outdoor World hotel and convention center. The restaurant will occupy 20,500 square feet of space and will include dining and bar areas seating a total of 500 guests and featuring Sterling Silver(TM) beef and twelve different award-winning craft- brewed beers. The Big Buck restaurant, Bass Pro store and hotel complex are all designed to be a major attraction for outdoor enthusiasts. They will be located on Highway 121, the major artery between downtown Dallas and one mile from the Dallas/Fort Worth airport. The 38-acre site is near Grapevine Mills, a 1.5 million square-foot value retail and entertainment-oriented megamall. An Opryland hotel and convention center, with 1,500 rooms and 350,000 square feet of convention and exhibit space, is scheduled to open in Grapevine in 2003. The $300 million Opryland complex will cover 77 acres and include many recreation and entertainment facilities, attracting visitors from around the world. About the Company Big Buck Brewery & Steakhouse, Inc. develops and operates microbrewery restaurants. The Company currently operates Big Buck Brewery & Steakhouse restaurants in Gaylord, Grand Rapids and Auburn Hills, Mich., offering casual dining featuring a high quality, moderately priced menu and a variety of award-winning craft-brewed beers. The Company's common shares are listed on the Nasdaq SmallCap Market under the symbol "BBUC." Forward-Looking Statements Some of the information contained in this news release includes forward- looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the general economic climate; competition within the markets in which the Company's restaurants operate; the availability of financing for expansion; the cost of property acquisition, construction and materials; management of growth and expansion; and other risks associated with the operation of restaurants, including risks that sales levels may be lower than projected or that operating costs may be greater than anticipated; joint ventures that are pursued by the Company may not be consummated for a variety of reasons, including the failure to reach agreement with other parties or the failure to obtain adequate financing; and the other risk factors set forth in the Company's filings with the Securities and Exchange Commission. Visit the web site at: www.bigbuck.com BIG BUCK BREWERY & STEAKHOUSE, INC. Balance Sheets April 4, 1999 January 3, 1999 (Unaudited) ASSETS CURRENT ASSETS: Cash $119,915 $500,236 Accounts receivable 106,740 216,147 Inventories 270,724 308,286 Prepaids and other 312,039 274,819 Total current assets 809,418 1,299,488 PROPERTY AND EQUIPMENT, net 19,390,859 18,847,968 MINORITY INTERST IN JOINT VENTURE 3,289 0 OTHER ASSETS, net 621,402 672,530 $20,824,968 $20,819,986 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,822,281 $925,031 Accrued expenses 371,863 709,070 Current maturities of long-term obligations 1,639,329 1,644,228 Total current liabilities 3,833,473 3,278,329 LONG-TERM DEBT, less current maturities 6,953,956 7,030,329 Total liabilities 10,787,429 10,308,658 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock, $.01 par value, 20,000,000 shares authorized; 5,285,000 shares issued and outstanding 52,850 52,850 Warrants 153,650 153,650 Additional paid-in capital 13,407,694 13,407,694 Accumulated deficit (3,576,655) (3,102,866) Total shareholders' equity 10,037,539 10,511,328 $20,824,968 $20,819,986 BIG BUCK BREWERY & STEAKHOUSE, INC. Statements of Operations (Unaudited) Three Months Ended April 4, 1999 March 29, 1998 REVENUE: Restaurant sales $3,165,427 $3,815,738 Wholesale beer and gift shop sales 121,244 149,197 Total revenue 3,286,671 3,964,935 COSTS AND EXPENSES: Cost of Sales 1,067,582 1,359,163 Restaurant salaries and benefits 989,372 1,146,341 Operating expenses 631,171 805,737 Depreciation and amortization 202,089 187,510 Total costs and expenses 2,890,214 3,498,751 Restaurant operating income 396,457 466,184 Start-up costs 127,151 General and administrative expenses 531,131 424,176 Income (loss) from operations (261,825) 42,008 OTHER INCOME (EXPENSE): Interest expense (215,612) (188,026) Interest income and other 359 3,512 Other income (expense), net (215,253) (184,514) Minority interest share of joint venture 3,289 LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $(473,789) $ 142,506 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE FOR PREOPENING COSTS $ $(346,547) NET LOSS $(473,789) $(489,053) BASIC AND DILUTED NET LOSS PER COMMON SHARE $(0.09) $(0.09) WEIGHTED AVERAGE SHARES OUTSTANDING 5,285,000 5,285,000 BIG BUCK BREWERY & STEAKHOUSE, INC. Statements of Cash Flows (Unaudited) Three Months Ended Three Months Ended April 4, 1999 March 29, 1998 OPERATING ACTIVITIES: Net loss $(473,789) $(489,053) Adjustments to reconcile net loss to cash flow used in operating activities- Depreciation and amortization 202,089 187,510 Cumulative effect of change in accounting for preopening costs 346,547 Change in operating assets and liabilities: Accounts receivable 106,118 99,196 Inventories 37,562 593 Prepaids and other (37,220) 10,286 Accounts payable 897,250 (92,957) Accrued expenses (337,207) (213,766) Net cash provided by (used in) operating activities 394,803 151,644 INVESTING ACTIVITIES: Purchases of property and equipment, net (733,457) (355,378) Decrease in other assets 39,605 (42,284) Net cash used in investing activities (693,852) (397,662) FINANCING ACTIVITIES: Proceeds from long-term debt and capital lease obligations 699,650 Payments on long-term debt and capital lease obligations (81,272) (65,125) Net cash used provided by (used in) financing activities (81,272) 634,525 INCREASE (DECREASE) IN CASH (380,321) 85,219 CASH, beginning of period 500,236 354,015 CASH, end of period 119,915 439,234 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $233,584 $193,556 Income taxes paid  