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
OCTOBER 9, 1997
HOST MARRIOTT SERVICES CORPORATION
DELAWARE 1-14040 52-1938672
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
6600 ROCKLEDGE DRIVE
BETHESDA, MARYLAND 20817
(301) 380-7000
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
None.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
None.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
None.
ITEM 5. OTHER EVENTS.
News Release dated October 9, 1997 announcing third quarter results and
containing forward looking statements
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
None.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
EXHIBIT NO.
20 News Release dated October 9, 1997
ITEM 8. CHANGE IN FISCAL YEAR.
None.
2
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SIGNATURES
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 hereunto duly authorized.
HOST MARRIOTT SERVICES CORPORATION
OCTOBER 9, 1997 /S/ BRIAN W. BETHERS
- ---------------------- -------------------------------------------------
Date Brian W. Bethers
Senior Vice President and Chief Financial Officer
3
EXHIBIT 20
PAGE 1 OF 4
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION:
MEDIA INQUIRIES:
WENDY WATKINS: (301) 380-7903
INVESTOR RELATIONS:
SHARON WHITING: (301) 380-7215
HTTP://WWW.HMSCORP.COM
1-888-380-HOST
HOST MARRIOTT SERVICES REPORTS SOLID GAIN IN THIRD QUARTER NET INCOME
COMPANY ALSO ANNOUNCES KEY CONTRACT RENEWALS
BETHESDA, MD, OCTOBER 9, 1997 -- Host Marriott Services [NYSE:HMS]
today reported net income for the third quarter of 1997 of $18.9 million, an
increase of 26% compared to net income of $15.0 million for the third quarter of
1996. On a per share basis, the company reported net income of $0.52 per share
for the third quarter of 1997, compared to $0.42 per share for the same quarter
a year ago. Earnings before interest expense, taxes, depreciation, amortization
and other non-cash items (EBITDA) was $50.4 million for the third quarter of
1997, an increase of 5% over EBITDA of $48.1 million reported for the third
quarter of 1996. Revenues for the third quarter of 1997 increased by $5.6
million, or 2%, to $340.7 million compared to revenues of $335.1 million in the
third quarter of 1996.
Net income for the first three quarters of 1997 increased by 47% to
$19.7 million, or $0.54 per share, compared with net income of $13.4 million, or
$0.38 per share reported for the first three quarters of 1996. EBITDA for the
first three quarters of 1997 grew to $96.0 million, an increase of $7.2 million
over the $88.8 million of EBITDA posted in the comparable period in 1996.
Revenues increased to $896.4 million for the first three quarters of 1997 from
$884.9 million in 1996.
William W. McCarten, President and Chief Executive Officer, noted, "We
are pleased with our overall results thus far this year despite more moderate
traffic growth, and lower revenues and profits from two significant
noncomparable contracts. In addition, we have made significant progress in
renewing several of our largest contracts in our core business as well as
expanding in our growth venues."
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EXHIBIT 20
PAGE 2 OF 4
ADD 1
HOST MARRIOTT SERVICES REPORTS SOLID GAIN IN THIRD QUARTER NET INCOME
The company's operating profit increased by 6% during the third quarter
of 1997 to $36.6 million from $34.4 million for the third quarter of 1996.
Excluding the effects of two significant noncomparable contracts, operating
profit increased by 15% during the third quarter of 1997. The operating profit
margin increased to 10.7% for the third quarter of 1997 from 10.3% a year ago.
Operating profit increased to $54.5 million for the first three quarters of 1997
from $49.7 million in 1996, an increase of 10%. The company's operating profit
margin increased to 6.1% for the first three quarters of 1997 from 5.6% in 1996.
Contributing to the company's growth in net income for the quarter was
a reduction in the income tax provision. The company's income tax provision
includes a $1.9 million benefit recorded during the third quarter of 1997 to
recognize utilization of certain tax credits previously projected to expire
unrealized.
Airport concession revenues grew by $3.9 million, or 2%, in the third
quarter of 1997. Excluding the effects of noncomparable contracts (new
contracts, contracts with significant changes in scope of operation and
contracts undergoing significant construction of new facilities), revenues at
comparable domestic airport locations, which represent over 90% of the company's
total domestic airport revenues, grew by 5% during the third quarter of 1997
reflecting an estimated 3% growth in passenger enplanements and a 2% increase in
revenues per enplaning passenger.
Travel plaza revenues increased by $0.6 million or 1% for the third
quarter of 1997. This increase reflects minimal traffic growth and moderate
price increases, which were partially offset by one less week of peak summer
vacation travel on tollroads due to a calendar shift between fiscal years.
Third quarter revenues in the shopping mall and entertainment business
line were up 9% over a year ago principally due to the outstanding performance
of the Ontario Mills Mall food court which opened in November of 1996.
Operations at the company's second Mills project at the Grapevine Mills
Mall in Grapevine, Texas, are scheduled to commence on October 30 of this year.
During the third quarter, the company signed its first agreement with General
Growth Properties, Inc. [NYSE:GGP] to master lease the food court at the Vista
Ridge Mall in Lewisville, Texas, beginning in December of this year. This
represents our second agreement at an existing mall undergoing renovation, a key
component of our expansion strategy, and establishes a relationship with a third
shopping mall developer.
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EXHIBIT 20
PAGE 3 OF 4
ADD 2
HOST MARRIOTT SERVICES REPORTS SOLID GAIN IN THIRD QUARTER NET INCOME
During the third quarter, the company was awarded a ten-year lease
renewal to operate the food and beverage and retail concessions at the Charlotte
Douglas International Airport through 2010. In addition, the company has reached
an agreement with the Chicago Department of Aviation to renew its largest
airport food and beverage concessions contract which would continue its presence
at the Chicago O'Hare International Airport for at least ten years. A vote for
final approval from the City Council is expected within the next four weeks.
The company recently submitted a proposal to enter into a long-term
lease agreement for 70% of the food and beverage concessions at the Miami
International Airport. This agreement would replace the current management
agreement between the company and Dade County. The company's proposal is the
only proposal currently being considered by the Miami Aviation Committee.
Host Marriott Services, with its worldwide headquarters in Bethesda,
Maryland, is the leading food, beverage and retail concessionaire at nearly 200
travel and entertainment venues, with approximately 23,000 employees in five
countries around the globe. Host Marriott Services is best known for its custom
solutions business approach that combines internationally known brands with
regional favorites in airports, travel plazas, shopping malls and entertainment
attractions. Many of the company's concessions operate under license agreements
with branded partners such as Burger King, Starbucks Coffee, Pizza Hut, Chili's,
T.G.I. Friday's, Cinnabon, TCBY, Sbarro, Taco Bell, Cheers, California Pizza
Kitchen, Tie Rack and The Body Shop.
CERTAIN MATTERS DISCUSSED WITHIN THIS NEWS RELEASE ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE LITIGATION REFORM ACT OF 1995 AND
AS SUCH MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF HOST MARRIOTT
SERVICES TO BE DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. ALTHOUGH HOST MARRIOTT
SERVICES BELIEVES THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS
ARE BASED UPON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCE THAT ITS
EXPECTATIONS WILL BE ATTAINED. THESE RISKS ARE DETAILED FROM TIME TO TIME IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
--Table Follows--
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EXHIBIT 20
PAGE 4 OF 4
HOST MARRIOTT SERVICES CORPORATION
CONSOLIDATED OPERATING RESULTS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWELVE TWELVE THIRTY-SIX THIRTY-SIX
WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
SEPTEMBER 12, SEPTEMBER 6, SEPTEMBER 12, SEPTEMBER 6,
1997 1996 (A) 1997 1996 (A)
- ------------------------------------------------------ ------------------ ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
OPERATING SUMMARY
REVENUES $ 340.7 $ 335.1 $ 896.4 $ 884.9
OPERATING COSTS AND EXPENSES 304.1 300.7 841.9 835.2
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
OPERATING PROFIT 36.6 34.4 54.5 49.7
Interest expense (9.2) (9.2) (27.6) (27.7)
Interest income 0.7 0.7 2.5 1.1
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
INCOME BEFORE INCOME TAXES 28.1 25.9 29.4 23.1
Provision for income taxes (B) 9.2 10.9 9.7 9.7
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
NET INCOME $ 18.9 $ 15.0 $ 19.7 $ 13.4
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
INCOME PER COMMON SHARE $ 0.52 $ 0.42 $ 0.54 $ 0.38
Weighted Average Common Shares Outstanding
Primary 36.6 35.2 36.4 35.0
Fully-Diluted 36.6 35.3 36.6 35.1
EBITDA $ 50.4 $ 48.1 $ 96.0 $ 88.8
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
REVENUES BY BUSINESS LINE
Airports $ 230.0 $ 226.1 $ 634.7 $ 627.1
Travel Plazas 97.8 97.2 223.3 220.4
Shopping Malls and Entertainment 12.9 11.8 38.4 37.4
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
Total revenues $ 340.7 $ 335.1 $ 896.4 $ 884.9
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
OPERATING PROFIT BY BUSINESS LINE (C)
Airports $ 31.2 $ 27.7 $ 69.2 $ 63.3
Travel Plazas 17.1 16.3 19.4 18.1
Shopping Malls and Entertainment 0.9 1.6 3.0 3.5
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
Total operating profit $ 49.2 $ 45.6 $ 91.6 $ 84.9
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
PERIOD END BALANCE SHEET DATA September 12, September 6,
1997 1996
------------------ ------------------
Cash and cash equivalents $ 93.2 $ 99.6
Total assets 584.3 579.8
Long-term debt 406.4 406.3
- ------------------------------------------------------- ------------------ ------------------ ----------------- ------------------
<FN>
(A) Certain minor reclassifications were made to the prior year financial statements to conform to the 1997
presentation.
(B) The company's provision for income taxes includes a $1.9 million benefit
recorded in the third quarter to recognize certain tax credits that were
previously considered unrealizable.
(C) Before general and administrative expenses.
</FN>
</TABLE>
