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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: May 14, 1998
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 Secured 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
ended March 31, 1998 and 1997 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: May 14, 1998 BY: /s/ John D. Bailey
-------------------------------
John D. Bailey
Vice President, Controller and
Chief Accounting 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 March 31, 1998 and
December 31, 1997................................................................. 5
Condensed Consolidated Statements of Income for the three months ended
March 31, 1998 and 1997........................................................... 6
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1998 and 1997..................................................... 7
Notes to Condensed Consolidated Financial Statements................................ 8
</TABLE>
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BRISTOL HOTEL ASSET COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
ASSETS (Unaudited)
------
<S> <C> <C>
Current assets
Cash and cash equivalents .................................... $ 79,158 $ 85,996
Accounts receivable (net of allowance of $2,178 and $2,255) .. 34,767 29,675
Inventory .................................................... 8,264 8,140
Deposits and other current assets ............................ 10,343 9,271
---------- ----------
Total current assets .............................. 132,532 133,082
Property and equipment (net of accumulated depreciation
of $87,880 and $75,925) ....................................... 1,435,878 1,406,776
Other assets
Restricted cash .............................................. 8,178 9,662
Goodwill (net of accumulated amortization of
$1,198 and $868) .......................................... 51,333 51,705
Investments in joint ventures, net ........................... 8,257 8,101
Deferred charges and other non-current assets, net ........... 12,546 13,124
---------- ----------
Total assets ...................................... $1,648,724 $1,622,450
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt ............................ $ 7,699 $ 8,137
Accounts payable and accrued expenses ........................ 44,608 33,826
Accrued property, sales and use taxes ........................ 13,151 15,880
Accrued insurance reserves ................................... 10,773 9,530
---------- ----------
Total current liabilities ......................... 76,231 67,373
Long-term debt, excluding current portion ........................ 664,354 666,312
Deferred income taxes ............................................ 241,718 240,497
Other liabilities ................................................ 2,693 2,702
---------- ----------
Total liabilities ................................. 984,996 976,884
---------- ----------
Additional paid-in capital ....................................... 597,126 590,995
Foreign currency translation adjustment .......................... 406 286
Retained earnings ................................................ 66,196 54,285
---------- ----------
Total stockholder's equity ........................ 663,728 645,566
---------- ----------
Total liabilities and stockholder's equity ........ $1,648,724 $1,622,450
========== ==========
</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 MARCH 31, 1998 AND 1997
(Unaudited, in thousands)
<TABLE>
<CAPTION>
March 31,
------------------------
1998 1997
--------- ---------
<S> <C> <C>
REVENUE
Rooms ............................... $ 117,905 $ 41,731
Food and beverage ................... 27,620 12,475
Management fees ..................... 887 85
Other ............................... 8,539 3,970
--------- ---------
Total revenue ............ 154,951 58,261
--------- ---------
OPERATING COSTS AND EXPENSES
Departmental expenses:
Rooms ........................... 32,680 9,888
Food and beverage ............... 20,715 8,410
Other ........................... 2,409 1,207
Undistributed operating expenses:
Administrative and general ...... 15,342 5,116
Marketing ....................... 10,984 3,837
Property occupancy costs ........ 23,793 8,326
Depreciation and amortization ... 12,114 5,164
Corporate expense ............... 6,290 3,012
--------- ---------
Operating income ........................ 30,624 13,301
Other (income) expense:
Interest expense .................... 11,215 3,987
Equity in income of joint ventures .. (442) --
--------- ---------
Income before income taxes .............. 19,851 9,314
Provision for income taxes .............. 7,940 3,465
--------- ---------
Net income .............................. $ 11,911 $ 5,849
========= =========
</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 THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited, in thousands)
<TABLE>
<CAPTION>
March 31,
----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................. $ 11,911 $ 5,849
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .......................... 12,114 5,164
Amortization of deferred financing costs
and other non-current assets ........................ 1,143 273
Equity in joint ventures ............................... (442) --
Non-cash portion of foreign currency translation ....... 120 --
Changes in working capital ................................. 2,961 (7,735)
Increase in advance deposits ............................... 714 286
(Increase) decrease in restricted cash ..................... 1,484 (190)
Provision for deferred income taxes ........................ 1,221 624
Decrease in other liabilities .............................. (9) (1,062)
-------- --------
Cash provided by operating activities ........... 31,217 3,209
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to property and equipment ..................... (41,057) (6,156)
Purchase of property and equipment ......................... -- (35,000)
-------- --------
Cash used in investing activities ............... (41,057) (41,156)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Parent Company ............................... 6,133 3,546
Repayments of long-term debt ............................... (2,396) (1,770)
Proceeds from senior term facility ......................... -- 41,200
Increase in deferred charges and other non-current assets .. (735) (3,716)
-------- --------
Cash provided by financing activities ........... 3,002 39,260
-------- --------
Net increase (decrease) in cash and cash equivalents ........... (6,838) 1,313
Cash and cash equivalents at beginning of period ............... 85,996 4,666
-------- --------
Cash and cash equivalents at end of period ..................... $ 79,158 $ 5,979
======== ========
</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
The Company is a Delaware corporation which began operations on
December 18, 1995 by issuing 1,000 shares of common stock ($.01 par
value) to the Parent Company at $1.00 per share in exchange for the
Parent Company's investment in certain subsidiaries. At March 31,
1998, the Company owned 84 hotels and managed an additional eight
hotels, one of which is owned by a joint venture in which the Company
owns a 50% interest.
The Parent Company is a Delaware corporation which began operations in
February 1995 after the acquisitions of Harvey Hotel Company, Ltd. and
its subsidiaries and United Inns, Inc. At March 31, 1998, the Parent
Company owned 86 hotels and managed 15 additional hotels, two of which
are owned by joint ventures in which the Parent Company owns a 50%
interest. The Parent Company acquired the ownership and/or management
of 60 of these properties on April 28, 1997 (the "Holiday Inn
Acquisition"). The Parent Company rather than the Company, is the
obligor on the $70 million, 11.22% Senior Secured Notes due 2000 (the
"Senior Notes").
The operating results of the Company are substantially the operating
results of the Parent Company for the related period; therefore, these
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, 1997 and Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
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BRISTOL HOTEL ASSET COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION (CONTINUED)
The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited balance sheet at that date. The condensed
consolidated balance sheet at March 31, 1998, the condensed
consolidated statements of income for the three months ended March 31,
1998 and 1997, and the condensed consolidated statements of cash flow
for the three months ended March 31, 1998 and 1997 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 March 31, 1998, the results of operations for the
three months ended March 31, 1998 and 1997, and cash flows for the
three months ended March 31, 1998 and 1997 have been made. Interim
results are not necessarily indicative of fiscal year performance
because of the impact of seasonal and short-term variations.
2. COMMITMENTS AND CONTINGENCIES
The Company is a guarantor of the $70 million Senior Notes of the
Parent Company. At March 31, 1998, there was $30 million outstanding on
the Senior Notes.
On April 14, 1998, the Parent Company gave notice to the trustee of the
Senior Notes of its intention to redeem all of the outstanding Senior
Notes on June 15, 1998, and on May 11, 1998, deposited into escrow the
redemption amount.
3. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial data give effect to the
Holiday Inn Acquisition and related debt refinancings as if each event
had occurred on January 1, 1997. The pro forma financial data are
presented for illustrative purposes only and do not purport to be
indicative of the results that would have actually been obtained had
such transactions been completed as of the assumed dates and for the
periods presented or that may be obtained in the future.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
------------------
(dollars in thousands)
<S> <C>
Total revenues $ 147,389
Net income $ 8,983
</TABLE>
4. PROPOSED MERGER WITH FELCOR SUITE HOTELS, INC.
On March 24, 1998, the Parent Company announced a proposed merger with
FelCor Suite Hotels, Inc. ("FelCor"), subject to approval by
shareholders of both companies. Under the terms of the proposed merger
(the "FelCor Merger"), FelCor will acquire the real estate holdings
and assume the associated debt of the Parent Company and its
subsidiaries in return for 31.7 million shares of newly issued FelCor
stock. Prior to the FelCor Merger, the Parent Company will spin-off,
as a
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BRISTOL HOTEL ASSET COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. PROPOSED MERGER WITH FELCOR SUITE HOTELS, INC. (CONTINUED)
taxable dividend, its hotel operating business as a separate publicly
traded hotel operating company to be known as Bristol Hotels & Resorts
("New Bristol"). The spin-off will be followed by the merger of the
Parent Company into FelCor, with FelCor acquiring all of Bristol's
remaining assets, including its 110 owned hotels (giving effect to
acquisitions closed subsequent to quarter end).
Each of the Parent Company's hotels acquired by FelCor in the merger
will be leased to and operated by New Bristol. The merged company,
which will be renamed FelCor Lodging Trust, Ltd., will be the largest
non-paired share lodging REIT and New Bristol will be the largest
independent hotel operating company in the U.S. The two companies will
be separately owned and managed, but are expected to work together in
the acquisition and leasing of additional hotels.
5. SUBSEQUENT EVENTS
On April 21, 1998, the Parent Company entered into an interim credit
facility with FelCor (the "FelCor Facility") pursuant to which the
Company can borrow up to $120 million to fund acquisitions,
redevelopment costs and other corporate purposes. The FelCor Facility
bears interest at a rate of LIBOR plus 2% and will mature on December
31, 2003.
On May 11, 1998, the Company refinanced its existing $455 million loan
from Nomura Asset Capital Corporation and Bankers Trust Company with a
new $455 million loan from Bankers Trust Company (the "BT Loan"). The
BT Loan is secured by a pledge of stock in the Company and its
subsidiaries, bears interest at LIBOR plus 1-3/4% and matures on May
11, 2001. The Company incurred approximately $34 million in yield
maintenance costs and prepayment penalties related to the payoff of the
existing facility, which, along with approximately $6.8 million of
deferred financing charges, will be recognized as an extraordinary loss
in the second quarter of 1998.
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