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
JULY 15, 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
<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 July 15, 1997 announcing second 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 July 15, 1997
ITEM 8. CHANGE IN FISCAL YEAR.
None.
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<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
JULY 15, 1997 /S/ BRIAN W. BETHERS
- --------------------- -------------------------------------------------
Date Brian W. Bethers
Senior Vice President and Chief Financial Officer
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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 55% GAIN IN SECOND QUARTER NET INCOME
STOCK REPURCHASE PROGRAM ANNOUNCED
BETHESDA, MD, JULY 15, 1997 -- Host Marriott Services [NYSE:HMS] today
reported net income for the second quarter of 1997 of $5.1 million, or $0.14 per
share, compared to net income of $3.3 million, or $0.09 per share, for the
second quarter of 1996. Earnings before interest expense, taxes, depreciation,
amortization and other non-cash items (EBITDA) was $30.7 million for the second
quarter of 1997, an increase of 9% over EBITDA of $28.1 million reported for the
second quarter of 1996. Revenues for the second quarter of 1997 increased by
$2.6 million, or 1%, to $292.6 million compared to revenues of $290.0 million in
the second quarter of 1996.
The company reported net income for the first two quarters of 1997 of
$0.8 million, or $0.02 per share, as compared to a net loss of ($1.6) million,
or ($0.05) per share, for the first half of 1996. EBITDA for the first half of
1997 grew to $45.6 million, increasing by 12% over the $40.7 million of EBITDA
posted over the comparable period in 1996. Revenues increased by 1% to $555.7
million for the first two quarters of 1997 from $549.8 million in 1996.
The company's concessions operations, both in airports and on
tollroads, are significantly affected by the various travel seasons. Traffic is
generally the strongest in the summer vacation months, particularly from
Memorial Day through Labor Day, which results in seasonally strong third quarter
earnings.
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EXHIBIT 20
PAGE 2 OF 4
ADD 1
HOST MARRIOTT SERVICES REPORTS 55% GAIN IN SECOND QUARTER NET INCOME
William W. McCarten, President and Chief Executive Officer, noted, "I
am very pleased with our cash flow and bottom line results achieved in the
second quarter and first half of 1997. We anticipate a strong third quarter and
expect continued improvement in operating performance over the remainder of the
year."
The company's operating profit increased by 11% during the second
quarter of 1997 to $16.6 million from $15.0 million for the second quarter of
1996. This improvement is attributable to several cost reduction initiatives
begun in 1996, which improved the operating profit margin to 5.7% from 5.2% a
year ago. Operating profit increased to $17.9 million for the first two quarters
of 1997 from $15.3 million in 1996, an increase of 17%. The company's operating
profit margin increased to 3.2% for the first half of 1997 from 2.8% in 1996.
Airport concession revenues grew by $1.2 million, or 1%, in the second
quarter of 1997. Excluding the effects of several 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 revenues, grew by 6% during the second quarter of 1997 despite weather
related benefits in 1996. Increased revenues during the second quarter of 1997
reflect an estimated 5% growth in passenger enplanements at the company's
comparable domestic airport locations.
Travel plaza revenues increased by $1.5 million or 2% for the second
quarter of 1997. This increase reflects minimal traffic growth.
The company also disclosed in a separate press release today that its
Board of Directors has authorized the repurchase of up to $15.0 million of the
company's stock on the open market. The shares may be used in connection with
employee stock ownership plans or for general corporate purposes. The company
expects to fund the repurchase program with available cash and does not
anticipate any change in its expansion plan.
Also in a separate press release today, the company announced that it
signed an agreement with The Mills Corporation [NYSE:MLS] to lease the food and
beverage facilities at a new 1.4 million square foot Mills mega-mall opening in
the middle of 1999 near Charlotte, North Carolina. This project will be similar
in size and scope to the company's first two mall agreements with The Mills
Corporation at Ontario Mills in Southern California (which opened in November
1996) and at Grapevine Mills in Dallas, Texas (which is scheduled to open late
this year).
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EXHIBIT 20
PAGE 3 OF 4
ADD 2
HOST MARRIOTT SERVICES REPORTS 55% GAIN IN SECOND QUARTER NET INCOME
During the second quarter of 1997, the company also announced a
ten-year agreement with Simon DeBartolo Group, the nation's largest shopping
mall developer, to operate and manage the food court at the Independence Center
Mall in Kansas City, Missouri. This is the first contract that the company has
obtained to renovate an existing mall. Also during the second quarter of this
year, the company was unanimously recommended by the Little Rock Airport
Commission for extensions of its food and beverage and retail leases. The
company is in the process of negotiating the terms of these lease extensions.
During the quarter, minor contracts at Columbus Airport and Des Moines Airport
expired.
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 TWENTY-FOUR TWENTY-FOUR
WEEKS ENDED WEEKS ENDED WEEKS ENDED WEEKS ENDED
JUNE 20, JUNE 14, JUNE 20, JUNE 14,
1997 1996 (A) 1997 1996 (A)
- -------------------------------------------------------- ------------------- ------------------ ------------------------------------
<S> <C> <C> <C> <C>
OPERATING SUMMARY
REVENUES $ 292.6 $ 290.0 $ 555.7 $ 549.8
OPERATING COSTS AND EXPENSES 276.0 275.0 537.8 534.5
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
OPERATING PROFIT 16.6 15.0 17.9 15.3
Interest expense (9.2) (9.3) (18.4) (18.5)
Interest income 1.0 0.1 1.8 0.4
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES 8.4 5.8 1.3 (2.8)
Provision (benefit) for income taxes 3.3 2.5 0.5 (1.2)
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
NET INCOME (LOSS) $ 5.1 $ 3.3 $ 0.8 $ (1.6)
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
INCOME (LOSS) PER COMMON SHARE $ 0.14 $ 0.09 $ 0.02 $ (0.05)
Weighted Average Common Shares Outstanding
Primary 36.2 35.3 36.2 32.9
Fully-Diluted 36.3 35.3 36.3 32.9
EBITDA $ 30.7 $ 28.1 $ 45.6 $ 40.7
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
REVENUES BY BUSINESS LINE
Airports $ 206.8 $ 205.6 $ 404.7 $ 401.0
Travel Plazas 72.8 71.3 125.5 123.2
Shopping Malls and Entertainment 13.0 13.1 25.5 25.6
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
Total revenues $ 292.6 $ 290.0 $ 555.7 $ 549.8
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
OPERATING PROFIT BY BUSINESS LINE (B)
Airports $ 21.2 $ 19.9 $ 38.0 $ 35.6
Travel Plazas 5.9 5.2 2.3 1.8
Shopping Malls and Entertainment 1.5 1.7 2.1 1.9
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
Total operating profit $ 28.6 $ 26.8 $ 42.4 $ 39.3
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
PERIOD END BALANCE SHEET DATA JUNE 20, 1997 June 14, 1996
------------------- ------------------
Cash and cash equivalents $ 67.9 $ 49.8
Total assets 550.2 528.1
Long-term debt 406.8 406.9
- -------------------------------------------------------- ------------------- ------------------ ------------------ -----------------
<FN>
(A) Certain minor reclassifications were made to the prior year financial
statements to conform to the 1997 presentation.
(B) Before general and administrative expenses.
</FN>
</TABLE>
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