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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: November 14, 1997
BRISTOL HOTEL COMPANY
14295 Midway Road
Dallas, Texas 75244
972-391-3910
Commission File No. 1-14062
Incorporated in Delaware IRS No. 75-2584227
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ITEM 5. OTHER EVENTS
Bristol Hotel Company (the "Parent Company") is the issuer of its
11.22% Senior Notes due 2000 in the original principal amount of $70 million
(the "Senior Notes"). Until October 28, 1997, the Senior Notes were guaranteed
by Bristol Hotel Asset Company (the "Company"), a wholly owned subsidiary of
the Parent Company. The financial statements of Bristol Hotel Asset Company for
the three months and nine months ended September 30, 1997 and 1996 are attached
as Exhibit 99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99.1 Financial statements of Bristol Hotel Asset Company.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
BRISTOL HOTEL COMPANY
DATE: November 14, 1997 BY: /s/ Jeffrey P. Mayer
--------------------------------
Jeffrey P. Mayer
Senior Vice President and Chief
Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C>
99.1 Financial statements of Bristol Hotel Asset Company.
</TABLE>
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EXHIBIT 99.1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Condensed Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1996 5
Condensed Consolidated Statements of Income for the three months ended
September 30, 1997 and 1996 6
Condensed Consolidated Statements of Income for the nine months
ended September 30, 1997 and 1996 7
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1997 and 1996 8
Notes to Condensed Consolidated Financial Statements 9
</TABLE>
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BRISTOL HOTEL ASSET COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 53,610 $ 4,666
Marketable securities 152 116
Accounts receivable, net 30,156 10,501
Inventory 7,360 3,320
Deposits and other current assets 12,219 6,354
----------- -----------
Total current assets 103,497 24,957
Property and equipment, net 1,347,564 552,564
Other assets
Restricted cash 17,674 3,069
Goodwill, net 50,898 --
Investments in joint ventures, net 8,712 --
Deferred charges and other non-current assets, net 20,193 8,174
----------- -----------
Total assets $ 1,548,538 $ 588,764
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Current portion of long-term debt $ 7,042 $ 15,769
Accounts payable and accrued expenses 60,199 18,840
Accrued property, sales and use taxes 17,503 7,346
Accrued insurance reserves 8,181 6,920
----------- -----------
Total current liabilities 92,925 48,875
Long-term debt, excluding current portion 514,046 148,585
Deferred income taxes 236,871 75,619
Other liabilities 1,872 2,351
----------- -----------
Total liabilities 845,714 275,430
----------- -----------
Common stock -- --
Additional paid-in capital 648,096 286,465
Retained earnings 54,728 26,869
----------- -----------
Total stockholder's equity 702,824 313,334
----------- -----------
Total liabilities and stockholder's equity $ 1,548,538 $ 588,764
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
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BRISTOL HOTEL ASSET COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
September 30,
1997 1996
----------- -----------
<S> <C> <C>
REVENUE
Rooms $ 124,902 $ 43,578
Food and beverage 25,607 9,717
Management fees 1,298 574
Other 9,561 4,702
----------- -----------
Total revenue 161,368 58,571
----------- -----------
OPERATING COSTS AND EXPENSES
Departmental expenses:
Rooms 36,000 10,518
Food and beverage 21,115 7,437
Other 2,875 1,174
Undistributed operating expenses:
Administrative and general 14,299 4,576
Marketing 11,067 3,963
Property occupancy costs 25,933 7,312
Depreciation and amortization 12,722 4,983
Corporate expense 5,850 2,535
----------- -----------
Operating income 31,507 16,073
Other (income) expense:
Interest expense 10,763 3,179
Equity in income of joint ventures (539) --
----------- -----------
Income before income taxes 21,283 12,894
Provision for income taxes 8,407 4,745
----------- -----------
NET INCOME $ 12,876 $ 8,149
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
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BRISTOL HOTEL ASSET COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
September 30,
1997 1996
----------- -----------
<S> <C> <C>
REVENUE
Rooms $ 265,450 $ 114,846
Food and beverage 61,871 31,115
Management fees 2,254 1,524
Other 20,658 12,000
----------- -----------
Total revenue 350,233 159,485
----------- -----------
OPERATING COSTS AND EXPENSES
Departmental expenses:
Rooms 72,566 28,325
Food and beverage 46,825 22,618
Other 6,398 3,462
Undistributed operating expenses:
Administrative and general 29,607 13,377
Marketing 23,358 11,480
Property occupancy costs 54,327 21,109
Depreciation and amortization 28,181 13,392
Corporate expense 17,716 8,049
----------- -----------
Operating income 71,255 37,673
Other (income) expense:
Interest expense 24,082 7,820
Equity in income of joint ventures (830) --
----------- -----------
Income before income taxes and extraordinary item 48,003 29,853
Provision for income taxes 18,660 10,986
----------- -----------
Income before extraordinary item 29,343 18,867
Extraordinary loss on early extinguishment of debt, net of tax (1,338) --
----------- -----------
NET INCOME $ 28,005 $ 18,867
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
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BRISTOL HOTEL ASSET COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
September 30,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 28,005 $ 18,867
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 28,181 13,392
Amortization of deferred financing costs and
other non-current assets 1,364 1,224
Unrealized gain on marketable securities -- (341)
Non-cash portion of extraordinary item, net of tax 1,046 --
Equity in earnings of joint ventures (730) --
Distributions from joint ventures (100) --
Changes in working capital 17,135 (5,808)
Increase (decrease) in advance deposits 1,290 (5)
Increase in restricted cash (14,605) (2,952)
Provision for deferred income taxes 1,645 6,931
Decrease in other liabilities (479) (308)
----------- -----------
Cash provided by operating activities 62,752 31,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to property and equipment (27,936) (79,327)
Holiday Inn Acquisition and related costs (400,096) --
Sale of marketable securities -- 726
Purchase of property and equipment (35,000) (6,300)
----------- -----------
Cash used in investing activities (463,032) (84,901)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Parent Company 106,428 (4,787)
Repayments of long-term debt (138,676) (4,304)
Proceeds from issuance of other long-term debt 2,210 --
Proceeds from New Credit Facility 560,000 --
Repayment of New Credit Facility (108,000) --
Proceeds from senior term facility 41,200 64,602
Increase in deferred charges
and other non-current assets (13,938) (22)
----------- -----------
Cash provided by financing activities 449,224 55,489
----------- -----------
Net increase (decrease) in cash and cash equivalents 48,944 1,588
Cash and cash equivalents at beginning of period 4,666 7,906
----------- -----------
Cash and cash equivalents at end of period $ 53,610 $ 9,494
=========== ===========
Supplemental cash flow information:
Parent Company common stock issued in
Holiday Inn Acquisition $ 267,967 $ --
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
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BRISTOL HOTEL ASSET COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Bristol Hotel Asset Company (the "Company") was formed in November 1995
as a wholly owned subsidiary of Bristol Hotel Company (the "Parent
Company"). The operating results of the Company are substantially the
operating results of the Parent Company. However, the Parent Company
rather than the Company, is the obligor on the $70 million Senior Notes
as discussed in Note 3 below, and the Parent Company is the owner of
one property, one joint venture interest and seven management contracts
acquired in the Holiday Inn Acquisition as discussed below. Therefore,
the assets, liabilities, and operations attributable to these assets
are not reflected on the financial statements of the Company.
The Company acquired the ownership of 44 full-service Holiday Inn
hotels and the management of an additional eight Holiday Inn properties
in a business combination accounted for as a purchase on April 28, 1997
(the "Holiday Inn Acquisition"). Accordingly, the condensed
consolidated statements of income for the three and nine months ended
September 30, 1996 do not include any of the operating results of the
properties acquired in the Holiday Inn Acquisition.
The condensed consolidated balance sheet at December 31, 1996 has been
derived from the audited balance sheet at that date. The condensed
consolidated balance sheet at September 30, 1997, the condensed
consolidated statements of income for the three and nine months ended
September 30, 1997 and 1996, and the condensed consolidated statements
of cash flow for the nine months ended September 30, 1997 and 1996 have
been prepared by the Company and are unaudited. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly, in all material respects, the
financial position of the Company as of September 30, 1997, the results
of operations for the three and nine months ended September 30, 1997
and 1996, and cash flows for the nine months ended September 30, 1997
and 1996 have been made. Interim results are not necessarily indicative
of fiscal year performance because of the impact of seasonal and
short-term variations.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. The Company
believes the disclosures made are adequate to make the information
presented not misleading. However, the condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Parent Company's
Annual Report on Form 10-K for the year ended December 31, 1996, the
Parent Company's Form 10-Q for the quarter ended September 30, 1997 and
the Parent Company's Current Report on Form 8-K/A dated March 14, 1997,
which contains the audited financial statements of the Company for the
year ended December 31, 1996.
2. COMMITMENTS AND CONTINGENCIES
At September 30, 1997, the Company was guarantor of the $70 million
Senior Notes of the Parent Company, which are also secured by a
first-priority pledge of all outstanding shares of capital stock of the
Company.
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BRISTOL HOTEL ASSET COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. PRO FORMA FINANCIAL INFORMATION
The following pro forma financial data give effect to the Holiday Inn
Acquisition, the refinancing of the indebtedness pursuant to borrowings
in connection with the Holiday Inn Acquisition (the "New Credit
Facility"), and the repayment of $108 million of borrowings under the
New Credit Facility with proceeds from the Parent Company's common
stock offering (collectively, the "Pro Forma Transactions") as if these
transactions had occurred on January 1 of each period presented. The
Holiday Inn Acquisition has been accounted for under the purchase
method of accounting. The following unaudited pro forma financial data
are not necessarily indicative of the results that actually would have
occurred had the Pro Forma Transactions been consummated on the dates
indicated or that may occur in the future. Amounts presented are in
thousands.
<TABLE>
<CAPTION>
For The Quarter For The Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 161,368 $ 152,321 $ 470,049 $ 428,361
Income before income taxes 21,283 22,856 62,280 56,017
Net income 12,876 13,987 37,885 34,394
</TABLE>
4. NEW ACCOUNTING PRONOUNCEMENTS
The Company is required to adopt Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" and Statement of
Financial Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" in fiscal year 1998. The adoption of
these statements is not expected to have a material effect on the
Company's consolidated financial statements.
5. SUBSEQUENT EVENTS
On October 28, 1997, the Parent Company completed the refinancing (the
"Refinancing") of its existing $560 million New Credit Facility (of
which $452 million was outstanding as of September 30, 1997). The
Refinancing has two tranches: $145 million at a fixed interest rate of
7.46%, a term of 10 years, and which is secured by 15 hotel properties;
and $455 million at a fixed interest rate of 7.66%, a term of 12 years
and which is secured by 63 hotel properties. The Parent Company received
$500 million of the proceeds of the Refinancing at closing and will
receive the remaining $100 million on December 1, 1997. Additionally,
the Parent Company entered into a new $250 million secured line of
credit, which will be used for future acquisitions and other business
purposes.
Concurrently with the Refinancing, the Parent Company transferred its
interest in the Company to a newly formed entity, Bristol Hotel
Operating Company ("BHOC"). BHOC is a wholly owned subsidiary of the
Parent Company. BHOC assumed the guarantee of the Parent Company's
Senior Notes, relieving the Company of the obligation.
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