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
February 5, 1997
HOST MARRIOTT SERVICES CORPORATION
Delaware 1-14040 52-1938672
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification Number)
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-7000
<PAGE>
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 February 5, 1997 announcing fiscal year 1996 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 February 5, 1997
Item 8. Change in Fiscal Year.
None.
2
<PAGE>
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
February 5, 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:
Investor / Analyst Information
Lori Cramp, V.P. & Treasurer
(301) 380-4840
Sharon Whiting, Director of Investor Relations
(301) 380-7215
Media Information
Wendy Watkins, Director of Public Relations
(301) 380-7903
HOST MARRIOTT SERVICES REPORTS DRAMATIC INCREASE IN 1996 NET INCOME
BETHESDA, MD, FEBRUARY 5, 1997 -- Host Marriott Services Corporation
today reported annual net income for the fifty-three weeks of 1996 of $14.3
million, or $0.40 per share, compared to a net loss of ($63.5) million, or
($2.01) per share, for the fifty-two weeks of 1995. Earnings before interest
expense, taxes, depreciation, amortization and other non-cash items (EBITDA) was
$119.4 million for 1996, an increase of 13% over EBITDA of $105.4 million
reported for 1995. Revenues for 1996 increased by $119.0 million, or 10%, to
$1.28 billion compared to revenues of $1.16 billion in 1995.
William W. McCarten, President and Chief Executive Officer, noted,
"1996 was an extremely successful year for Host Marriott Services. Industry
fundamentals were strong and we achieved excellent growth in sales and earnings.
Besides our financial success, we also had an outstanding year with our
development efforts both domestically and internationally. We opened our first
shopping mall food court at Ontario Mills in California, and will open our
second mall food court at Grapevine Mills in Texas in November 1997. We also
added two new international contracts at Cairns International Airport in
Australia and Montreal International Airport - Dorval in Canada, and continued
to demonstrate our excellent contract retention rate by obtaining ten lease
extensions in our core markets. In 1997, we expect to build on our outstanding
1996 performance, with continuing solid growth in earnings and cashflow. We
think this puts us on track toward achieving our corporate goal of generating
revenues of $2.0 billion within five years. We further anticipate that 25% of
total revenues will come from new markets such as international airports and
food courts in shopping malls by that time."
- More -
4
<PAGE>
EXHIBIT 20
PAGE 2 OF 4
ADD 1
HOST MARRIOTT SERVICES REPORTS DRAMATIC INCREASE IN 1996 NET INCOME
The company's operating profit increased by 55%, to $62.3 million for
1996 from $40.1 million for 1995, excluding the noncomparable effects of unusual
items recorded in 1995. Unusual items included in the 1995 results were a $46.8
million write-down of long-lived assets reflecting the adoption of a new
accounting standard and $14.5 million of restructuring charges related to
initiatives to improve future operating results. The operating profit margin,
excluding the 1995 unusual items, improved to 4.9% in 1996 from 3.5% for 1995.
The company's 1995 results were also affected by the establishment of a
valuation allowance to reduce its net deferred tax asset by $24.9 million.
Excluding the non-comparable effects of unusual items and the establishment of
the valuation allowance during 1995, the company's net income for 1995 was $1.3
million, compared to the $14.3 million of net income reported for 1996.
The company reported net income of $0.9 million, or $0.03 per share,
for the fourth quarter of 1996, which included seventeen weeks, compared to a
net loss of ($67.8) million, or ($2.13) per share, for the fourth quarter of
1995, which included sixteen weeks. The company's operating profit increased to
$12.7 million for the fourth quarter of 1996 from $4.3 million reported in 1995,
an increase of 195%, excluding the non-comparable effects of unusual items that
were recorded during the fourth quarter of 1995. EBITDA was $30.6 million for
the fourth quarter of 1996, an increase of 15% over EBITDA of $26.5 million
reported for the fourth quarter of 1995. Revenues for the fourth quarter of 1996
increased by $33.9 million, or 9%, to $392.5 million compared to revenues of
$358.6 million in the fourth quarter of 1995.
Airport concession revenues grew by $115.6 million, or 15%, in 1996.
The increase in revenues for the year reflects an estimated 7% growth in
enplaning passengers at the company's comparable airport locations, moderate
increases in menu prices, the addition of new branded locations, benefits from
other strategic initiatives and the added benefit of the fifty-third week in
1996.
Travel plaza revenues increased slightly by $2.4 million or 1% for
1996. Excluding the noncomparable effects of the company's exit from two minor
contracts during the fourth quarter of 1995, travel plaza revenues increased by
4% for 1996. This increase reflects minimal traffic growth, moderate price
increases and the added benefit of the fifty-third week in 1996.
- More -
5
<PAGE>
EXHIBIT 20
PAGE 3 OF 4
ADD 2
HOST MARRIOTT SERVICES REPORTS DRAMATIC INCREASE IN 1996 NET INCOME
On December 29, 1995, the company was spun off from Host Marriott
Corporation. The 1995 amounts are presented on a pro forma basis to be more
consistent with the 1996 amounts, and assume that the company operated on a
separate basis, independent of Host Marriott Corporation, during 1995.
The pro forma information was derived from the company's 1995
historical operating results which are not materially different from the pro
forma operating results before an extraordinary item in 1995 related to the
extinguishment of debt.
Host Marriott Services Corporation [NYSE:HMS], with its worldwide
headquarters in Bethesda, Maryland, is the leading food, beverage and retail
concessionaire at nearly 200 travel and entertainment venues, with over 20,000
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 sports 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--
6
<PAGE>
EXHIBIT 20
PAGE 4 OF 4
HOST MARRIOTT SERVICES CORPORATION
CONSOLIDATED OPERATING RESULTS (Unaudited)
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Seventeen Sixteen Fifty-Three Fifty-Two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
January 3, December 29, January 3, December 29,
1997 1995 (1) 1997 1995 (1)
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
<S> <C> <C> <C> <C>
OPERATING SUMMARY
REVENUES $ 392.5 $ 358.6 $ 1,277.7 $ 1,158.7
OPERATING COSTS AND EXPENSES
Operating costs 379.8 354.3 1,215.4 1,118.6
Write-downs of long-lived assets --- 46.8 --- 46.8
Restructuring and other special charges, net --- 14.5 --- 14.5
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
Total Operating Costs and Expenses 379.8 415.6 1,215.4 1,179.9
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
OPERATING PROFIT (LOSS) 12.7 (57.0) 62.3 (21.2)
Interest expense (12.4) (12.3) (40.1) (39.1)
Interest income 1.1 0.1 2.3 0.7
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
INCOME (LOSS) BEFORE INCOME TAXES 1.4 (69.2) 24.5 (59.6)
Provision (benefit) for income taxes 0.5 (1.4) 10.2 3.9
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
NET INCOME (LOSS) $ 0.9 $ (67.8) $ 14.3 $ (63.5)
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
INCOME (LOSS) PER COMMON SHARE
Primary income (loss) per common share $ 0.03 $ (2.13) $ 0.40 $ (2.01)
Fully-Diluted income (loss) per common share $ 0.03 $ (2.13) $ 0.40 $ (2.01)
Weighted Average Common Shares Outstanding
Primary 36.1 31.9 35.5 31.7
Fully-Diluted 36.2 31.9 35.9 31.7
EBITDA $ 30.6 $ 26.5 $ 119.4 $ 105.4
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
REVENUES BY BUSINESS LINE
Airports $ 281.8 $ 256.2 $ 911.9 $ 796.3
Travel Plazas 91.9 86.6 312.3 309.9
Sports and Entertainment 18.8 15.8 53.5 52.5
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
Total revenues $ 392.5 $ 358.6 $ 1,277.7 $ 1,158.7
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
OPERATING PROFIT BY BUSINESS LINE (2)
Airports $ 23.0 $ 16.1 $ 86.2 $ 65.2
Travel Plazas 4.0 2.2 22.1 19.6
Sports and Entertainment 1.2 0.5 4.6 3.3
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
Total operating profit $ 28.2 $ 18.8 $ 112.9 $ 88.1
- ---------------------------------------------------- ----------------- ----------------- -- ----------------- ----------------
<FN>
(1) Data presented on a pro forma basis for 1995 as if the Host Marriott
Services spin-off and related transactions occurred at the beginning of
1995.
(2) Excludes unusual items (write-downs of long-lived assets and restructuring
and other special charges, net)and general and administrative expenses.
</FN>
</TABLE>
7
