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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: August 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"). The Senior Notes are 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
six months ended June 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: August 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 June 30, 1997 and
December 31, 1996 5
Condensed Consolidated Statements of Income for the three months ended
June 30, 1997 and 1996 6
Condensed Consolidated Statements of Income for the six months
ended June 30, 1997 and 1996 7
Condensed Consolidated Statements of Cash Flows for the six months
ended June 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 JUNE 30, 1997 AND DECEMBER 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 33,916 $ 4,666
Marketable securities 126 116
Accounts receivable, net 31,325 10,501
Inventory 5,967 3,320
Deposits and other current assets 13,890 6,354
---------- --------
Total current assets 85,224 24,957
Property and equipment, net 1,346,917 552,564
Other assets
Restricted cash 11,970 3,069
Goodwill, net 51,484 --
Investments in joint ventures, net 8,445 --
Deferred charges and other non-current assets, net 16,546 8,174
---------- --------
Total assets $1,520,586 $588,764
========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Current portion of long-term debt $ 8,047 $ 15,769
Accounts payable and accrued expenses 51,277 18,840
Accrued property, sales and use taxes 14,488 7,346
Accrued insurance reserves 7,647 6,920
---------- --------
Total current liabilities 81,459 48,875
Long-term debt, excluding current portion 515,861 148,585
Deferred income taxes 230,515 75,619
Other liabilities 1,864 2,351
---------- --------
Total liabilities 829,699 275,430
---------- --------
Common stock -- --
Additional paid-in capital 649,034 286,465
Retained earnings 41,853 26,869
---------- --------
Total stockholder's equity 690,887 313,334
---------- --------
Total liabilities and stockholder's equity $1,520,586 $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 JUNE 30, 1997 AND 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
--------- -------
<S> <C> <C>
REVENUE
Rooms $ 98,817 $35,814
Food and beverage 23,789 10,799
Management fees 871 950
Other 7,127 3,674
--------- -------
Total revenue 130,604 51,237
--------- -------
OPERATING COSTS AND EXPENSES
Departmental expenses:
Rooms 26,661 9,234
Food and beverage 17,272 7,988
Other 2,316 1,143
Undistributed operating expenses:
Administrative and general 10,609 4,167
Marketing 8,084 3,786
Property occupancy costs 20,067 6,664
Depreciation and amortization 10,295 4,421
Corporate expense 8,854 2,552
--------- -------
Operating income 26,446 11,282
Other (income) expense:
Interest expense 9,333 2,389
Equity in income of joint ventures (291) --
--------- -------
Income before income taxes and extraordinary item 17,404 8,893
Provision for income taxes 6,788 3,273
--------- -------
Income before extraordinary item 10,616 5,620
Extraordinary loss on early extinguishment of debt, net of tax (1,338) --
--------- -------
NET INCOME $ 9,278 $ 5,620
========= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
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BRISTOL HOTEL ASSET COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
--------- --------
<S> <C> <C>
REVENUE
Rooms $ 140,548 $ 71,268
Food and beverage 36,264 21,398
Management fees 956 950
Other 11,097 7,298
--------- --------
Total revenue 188,865 100,914
--------- --------
OPERATING COSTS AND EXPENSES
Departmental expenses:
Rooms 36,566 17,808
Food and beverage 25,710 15,181
Other 3,523 2,288
Undistributed operating expenses:
Administrative and general 15,308 8,800
Marketing 12,291 7,516
Property occupancy costs 28,394 13,797
Depreciation and amortization 15,459 8,409
Corporate expense 11,866 5,514
--------- --------
Operating income 39,748 21,601
Other (income) expense:
Interest expense 13,319 4,642
Equity in income of joint ventures (291) --
--------- --------
Income before income taxes and extraordinary item 26,720 16,959
Provision for income taxes 10,253 6,242
--------- --------
Income before extraordinary item 16,467 10,717
Extraordinary loss on early extinguishment of debt, net of tax (1,338) --
--------- --------
NET INCOME $ 15,129 $ 10,717
========= ========
</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 SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited, in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,129 $ 10,717
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15,459 8,409
Amortization of deferred financing costs and
other non-current assets 858 825
Unrealized gain on marketable securities -- (447)
Non-cash portion of extraordinary item, net of tax 1,046 --
Equity in earnings of joint ventures (291) --
Changes in working capital 4,463 8,000
Increase in advance deposits 454 6,391
Increase in restricted cash (8,901) (1,253)
Provision for deferred income taxes (5,355) 2,481
Decrease in other liabilities (487) (277)
--------- --------
Cash provided by operating activities 22,375 34,846
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to property and equipment (15,290) (63,754)
Holiday Inn Acquisition and related costs (400,196) --
Purchase of property and equipment (35,000) (6,300)
--------- --------
Cash used in investing activities (450,486) (70,054)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Parent Company 107,366 57
Repayments of long-term debt (2,316) (3,562)
Early extinguishment of long-term debt (133,540) --
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 37,721
Increase in deferred charges
and other non-current assets (9,559) (427)
--------- --------
Cash provided by financing activities 457,361 33,789
--------- --------
Net increase (decrease) in cash and cash equivalents 29,250 (1,419)
Cash and cash equivalents at beginning of period 4,666 7,906
--------- --------
Cash and cash equivalents at end of period $ 33,916 $ 6,487
========= ========
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 in
Note 2). Therefore, the assets, liabilities, and operations
attributable to these assets are not reflected on the financial
statements of the Company.
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 June 30, 1997, the condensed consolidated
statements of income for the three and six months ended June 30, 1997
and 1996, and the condensed consolidated statements of cash flow for
the six months ended June 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 June 30, 1997, the results of operations for the
three and six months ended June 30, 1997 and 1996, and cash flows for
the six months ended June 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 June 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. HOLIDAY INN ACQUISITION
On April 28, 1997, the Company acquired the ownership of 44
full-service Holiday Inns and the management of an additional eight
Holiday Inn properties, of which two are owned by joint ventures in
which the Company acquired a 50% interest. In addition, the Parent
Company acquired one full-service Holiday Inn property, and the
management contracts of seven additional properties, of which one
property is owned by a joint venture in which the Parent Company
acquired a 50% interest. The Company's acquisition and the Parent
Company's acquisition are collectively referred to as the "Holiday Inn
Acquisition" and the assets acquired as the "Holiday Inn Assets." As
consideration for the Holiday Inn Acquisition, the Company paid $398
million in cash and the Parent Company issued 9,381,308 shares of its
common stock. The acquisition has been accounted for as a purchase and
the results of operations of the Holiday Inn Assets have been included
in the consolidated financial statements since April 28, 1997. The
purchase price, including liabilities assumed in the acquisition
(principally deferred tax liabilities), was allocated to the assets
acquired based upon their estimated fair market values. The excess of
the purchase price over the estimated fair market value of the net
assets acquired was recorded as goodwill to be amortized over a 40-year
life.
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BRISTOL HOTEL ASSET COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. COMMITMENTS AND CONTINGENCIES
The Company is 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.
4. NEW CREDIT FACILITY
The Company obtained the financing for the Holiday Inn Acquisition
under a new senior term facility which provides for up to $560 million
aggregate amount of term loan borrowings (the "New Credit Facility").
The New Credit Facility was utilized to repay existing debt of
approximately $134 million, to fund the cash portion of the Holiday Inn
Acquisition and to pay closing costs.
The New Credit Facility will mature in three years, subject to the
Company's option to extend the maturity for up to two additional years.
Outstanding principal amounts under the New Credit Facility bear
interest at a rate equal to, at the Company's election, one-, two-,
three-, or six-month LIBOR plus 2.00%, subject to adjustment downward
to 1.50% if certain ratings and financial tests are satisfied. The
Company has purchased an interest rate cap whereby the LIBOR rate is
capped at a rate of 6% in the notional amount of $300 million. The
agreements were effective June 30, 1997 and terminate April 30, 1998.
The Company's obligations under the New Credit Facility are secured
principally by a pledge of the outstanding capital stock of the
Company's subsidiaries and mortgages on certain hotels.
The Company repaid $108 million of borrowings from the New Credit
Facility in May 1997 with the proceeds from the Parent Company's
secondary offering of its common stock.
5. EXTRAORDINARY ITEM
The Company recognized an extraordinary loss of $1.3 million (net of
tax effect of $.9 million) in the current quarter, related to the early
extinguishment of debt repaid with proceeds from the New Credit
Facility. The loss on extinguishment reflects the write-off of deferred
financing fees related to the debt repaid of approximately $1.7 million
and prepayment penalties and other costs of $.5 million.
6. 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
under the New Credit Facility, and 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. Amounts presented
are in thousands.
<TABLE>
<CAPTION>
For The Quarter For The Six Months
Ended June 30, Ended June 30
-----------------------------------------------------------------------
1997 1996 1997 1996
---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Revenues $ 161,292 $ 143,400 $ 308,681 $ 276,040
Income before income taxes 24,457 20,607 40,996 33,161
Net income 14,851 12,591 25,008 20,407
</TABLE>
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