<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
<TABLE>
<C> <S>
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
</TABLE>
COMMISSION FILE NUMBER 00028230
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PLANET HOLLYWOOD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 59-3283783
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
7380 SAND LAKE ROAD, SUITE 600, ORLANDO, FLORIDA 32819
(Address of principal executive office, including zip code)
(407) 363-7827
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of August 8, 1996, there were 94,215,067 shares of the registrant's
Common Stock outstanding.
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PLANET HOLLYWOOD INTERNATIONAL, INC.
INDEX
<TABLE>
<C> <S> <C>
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements...................................................... 3
Condensed Consolidated Balance Sheets -- June 30, 1996 and December 31,
1995.................................................................... 3
Condensed Consolidated Statements of Operations -- Thirteen Weeks and
Twenty-six Weeks ended June 30, 1996 and 1995........................... 4
Condensed Consolidated Statements of Cash Flows -- Twenty-six Weeks ended
June 30, 1996 and 1995.................................................. 5
Notes to Condensed Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 7
Part II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................................... 10
Signature Page............................................................ 11
</TABLE>
2
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
STATED IN THOUSANDS OF U.S. DOLLARS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 62,890 $ 14,923
Inventories....................................................... 12,870 12,769
Prepaid expenses.................................................. 6,242 3,701
Other current assets.............................................. 24,232 24,462
----------- ------------
Total current assets...................................... 106,234 55,855
Property and equipment, net......................................... 203,612 169,997
Investment in affiliated entities................................... 7,038 5,574
Other assets, net................................................... 29,800 8,759
----------- ------------
$ 346,684 $240,185
=========== ============
LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.......................... $ 39,856 $ 39,619
Notes payable -- current.......................................... 30 708
----------- ------------
Total current liabilities................................. 39,886 40,327
Deferred rentals.................................................... 9,033 6,502
Notes payable....................................................... 1,068 51,995
Notes payable to shareholders....................................... -- 70,750
Deferred credits.................................................... 20,306 17,000
----------- ------------
Total liabilities......................................... 70,293 186,574
Minority interests.................................................. -- 10,466
----------- ------------
Redeemable warrants................................................. -- 15,000
----------- ------------
Shareholders' equity:
Common stock -- Class A........................................... 942 801
Common stock -- Class B........................................... 115 --
Capital in excess of par value.................................... 251,603 7,807
Deferred compensation............................................. (647) (770)
Retained earnings................................................. 24,798 20,727
Cumulative currency translation adjustment........................ (420) (420)
----------- ------------
Total shareholders' equity................................ 276,391 28,145
----------- ------------
$ 346,684 $240,185
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
STATED IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>
THIRTEEN WEEKS TWENTY-SIX WEEKS
ENDED ENDED
------------------- -------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues............................................. $ 85,366 $ 65,784 $162,391 $117,549
Costs and expenses:
Cost of sales...................................... 21,907 18,145 42,613 33,126
Operating expenses................................. 34,680 26,556 69,848 48,840
General and administrative expenses................ 4,336 3,652 9,291 7,928
Depreciation and amortization...................... 7,021 5,372 13,895 10,096
Equity in unconsolidated affiliates................ (657) (30) (1,405) (40)
-------- -------- -------- --------
67,287 53,695 134,242 99,950
Income from operations............................... 18,079 12,089 28,149 17,599
Other expenses:
Interest expense, net.............................. 260 1,610 4,291 3,131
Minority interests................................. 272 1,281 1,036 1,746
-------- -------- -------- --------
Income before income taxes........................... 17,547 9,198 22,822 12,722
Provision for income taxes........................... 6,405 -- 8,330 --
-------- -------- -------- --------
Income before extraordinary item..................... 11,142 9,198 14,492 12,722
Extraordinary item, net.............................. 10,421 -- 10,421 --
-------- -------- -------- --------
Net income........................................... $ 721 $ 9,198 $ 4,071 $ 12,722
======== ======= ======== ========
Earnings per share:
Income before extraordinary item................... $ .11 $ .11 $ .15 $ .15
======== ======= ======== ========
Net income......................................... $ .01 $ .11 $ .04 $ .15
======== ======= ======== ========
Weighted average shares outstanding................ 105,258 86,814 96,034 86,814
======== ======= ======== ========
Supplemental pro forma earnings per share:
Earnings per share before extraordinary item....... $ .11 $ .17
======== ========
Earnings per share -- net income................... $ .01 $ .07
======== ========
Weighted average shares outstanding................ 107,239 101,532
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
STATED IN THOUSANDS OF U.S. DOLLARS
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED
-------------------
JUNE 30, JUNE 30,
1996 1995
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES................................ $ 30,927 $ 13,280
-------- --------
Cash flows from investing activities:
Additions to property and equipment................................. (39,081) (30,647)
Other............................................................... (321) --
-------- --------
NET CASH USED IN INVESTING ACTIVITIES.................................... (39,402) (30,647)
-------- --------
Cash flows from financing activities:
Change in restricted cash and investments........................... 69 2,859
Distributions to minority interests................................. (271) (608)
Deferred financing costs............................................ (162) --
Proceeds from issuance of common stock.............................. 209,128 --
IPO costs and financing costs....................................... (16,217) --
Proceeds from notes and advances from shareholders.................. -- 20,000
Repayment of shareholder notes payable.............................. (70,750) --
Repayment of notes payable.......................................... (65,355) (561)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES................................ 56,442 21,690
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................................ 47,967 4,323
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD......................... 14,923 5,024
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................... $ 62,890 $ 9,347
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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PLANET HOLLYWOOD INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Planet Hollywood International, Inc. have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission.
The information furnished herein reflects all adjustments (consisting of
only normal recurring accruals and adjustments) which are, in the opinion of
management, necessary to fairly state the operating results for the respective
periods. Certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The notes to the condensed consolidated financial statements should be read in
conjunction with the notes to the consolidated financial statements contained in
the April 18, 1996 Form S-1. Company management believes that the disclosures
are sufficient for interim financial reporting purposes.
2. STOCK OFFERING AND EXTRAORDINARY CHARGE
In April 1996, the Company completed an initial public offering of
12,406,452 shares of common stock at an offering price of $18.00 per share,
including 1,618,233 shares from the exercise of the Underwriters' over allotment
option. The Company received net proceeds of approximately $196.6 million after
the payment of approximately $12.5 million in related underwriting discount and
offering costs.
The Company incurred a one-time extraordinary charge of $10.4 million, net
of $5.9 million in taxes, as a result of the early extinguishment of the Senior
Subordinated Notes.
3. EARNINGS PER SHARE
Earnings per share is based on the weighted average number of shares
outstanding during the period increased by common equivalent shares (stock
options) determined using the treasury stock method.
Supplemental pro forma earnings per share gives effect to the repayment of
certain indebtedness by application of a portion of the net proceeds from the
initial public offering, as if the prepayment had occurred at the beginning of
the fiscal year.
4. ACQUISITIONS
The Company acquired the remaining minority interests in All Star Cafe,
Inc. and PH London and the minority interests in the Company's subsidiaries that
operate Planet Hollywood units in Maui, Washington D.C. and New York. These
acquisitions were accounted for using the purchase method of accounting.
The following unaudited pro forma information has been prepared assuming
that these acquisitions took place at the beginning of fiscal 1996. The
unaudited pro forma financial information does not purport to be indicative of
the results of operations had the transaction been effected on the assumed
dates, nor to project results for any future period:
<TABLE>
<CAPTION>
THIRTEEN WEEKS TWENTY-SIX WEEKS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1996
--------------- ----------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Revenues.............................................. $85,366 $162,391
Income before extraordinary item...................... 11,268 14,911
Net income............................................ 847 4,490
Earnings per share before extraordinary item.......... $ .10 $ .14
Earnings per share -- net income...................... $ .01 $ .04
</TABLE>
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended June 30, 1996 compared to three months ended June 30, 1995
Revenues. Total revenues increased 29.8% from $65.8 million for the three
months ended June 30, 1995 to $85.4 million for the three months ended June 30,
1996.
Direct revenues increased 29.0% from $63.6 million for the three months
ended June 30, 1995 to $82.1 million for the three months ended June 30, 1996,
due primarily to the opening of nine Company-owned units after the second
quarter of fiscal 1995 with three units opening in the three months ended June
30, 1996, which was partially offset by the sale of the Planet Hollywood unit in
Cancun in fiscal 1995. Direct revenues on a same unit basis (9 units) decreased
3.5% from $26.6 million for the three months ended June 30, 1995 to $25.7
million for the three months ended June 30, 1996. As a percentage of Direct
Revenues, merchandise sales for all Company-owned units decreased from 40.1% for
the three months ended June 30, 1995 to 37.4% for the three months ended June
30, 1996. Franchise fees were $2.0 million for each of the periods ending June
30. Royalties increased from $0.2 million for the three months ended June 30,
1995 to $1.3 million for the three months ended June 30, 1996, due primarily to
the opening of the Official All Star Cafe in Cancun in the first quarter of
1996, the opening of four franchised Planet Hollywood units after the second
quarter of fiscal 1995 and the sale of the Planet Hollywood unit in Cancun to a
franchisee in fiscal 1995.
Costs and expenses. Food and beverage costs decreased from 23.9% of food
and beverage revenues for the three months ended June 30, 1995 to 22.5% for the
three months ended June 30, 1996, primarily as a result of improved buying power
and efficiencies from the greater unit base, allowing for favorable negotiations
with suppliers. Merchandise costs decreased from 35.4% of merchandise revenues
for the three months ended June 30, 1995 to 33.8% for the three months ended
June 30, 1996 primarily as a result of improved buying power and favorable
negotiation with suppliers. Operating expenses, which consist primarily of
labor, occupancy and other direct unit operating costs, increased from 41.7% of
Direct Revenues for the three months ended June 30, 1995 to 42.2% for the three
months ended June 30, 1996, primarily due to the effect of the opening of
Company-owned units in Europe since the second quarter of 1995 and the lower
operating costs of the Planet Hollywood unit in Cancun included in the second
quarter of 1995.
General and administrative expenses increased from $3.7 million for the
three months ended June 30, 1995 to $4.3 million for the three months ended June
30, 1996, due primarily to the continued development of the Official All Star
Cafe corporate infrastructure. As a percent of total revenues, general and
administrative expenses decreased from 5.6% for the three months ended June 30,
1995 to 5.1% for the three months ended June 30, 1996, as a result of the larger
number of units in operation during the second quarter of fiscal 1996.
Depreciation and amortization increased 30.7% from $5.4 million for the three
months ended June 30, 1995 to $7.0 million for the three months ended June 30,
1996, due primarily to the larger number of units in operation during the second
quarter of fiscal 1996. As a percent of total revenues, depreciation and
amortization costs remained 8.2% for the three months ended June 30, 1995 and
1996. Equity in income of unconsolidated affiliates increased from $30,000 for
the three months ended June 30, 1995 to $657,000 for the three months ended June
30, 1996, which was attributable to the Company's minority investment in ECE
acquired in the 3rd quarter of fiscal 1995.
Interest expense, net. Net interest expense decreased from $1.6 million
for the three months ended June 30, 1995 to $0.3 million for the three months
ended June 30, 1996, as a result of repayment of Company debt in the three
months ended June 30, 1996 with the proceeds from the IPO.
Other. Minority interests decreased from $1.3 million for the three months
ended June 30, 1995 to $0.3 million for the three months ended June 30, 1996,
due to the acquisition by the Company of all minority interests in the three
months ended June 30, 1996.
7
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Provision for income taxes. The provision for income taxes was $6.4
million for the three months ended June 30, 1996. For the three months ended
June 30, 1995, the Company had no provision for income taxes due to a reversal
of a portion of the Company's deferred tax valuation allowance.
Extraordinary item, net. The Company incurred an extraordinary charge in
the second quarter of 1996 of $10.4 million, net of $5.9 million in taxes, as a
result of the early extinguishment of long-term notes payable.
Six months ended June 30, 1996 compared to six months ended June 30, 1995
Revenues. Total revenues increased 38.1% from $117.5 million for the six
months ended June 30, 1995 to $162.4 million for the six months ended June 30,
1996.
Direct revenues increased 36.5% from $115.2 million for the six months
ended June 30, 1995 to $157.3 million for the six months ended June 30, 1996,
due primarily to the opening of nine Company-owned units after the second
quarter of fiscal 1995 with five units opening in the six months ended June 30,
1996, which was partially offset by the sale of the Planet Hollywood unit in
Cancun in fiscal 1995. Direct revenues on a same unit basis (9 units) decreased
4.0% from $50.7 million for the six months ended June 30, 1995 to $48.7 million
for the six months ended June 30, 1996. As a percentage of Direct Revenues,
merchandise sales for all Company-owned units decreased from 39.9% for the six
months ended June 30, 1995 to 36.9% for the six months ended June 30, 1996.
Franchise fees were $3.0 million for the six months ended June 30, 1996, as
compared to $2.0 million in 1995. Royalties increased from $0.3 million for the
six months ended June 30, 1995 to $2.1 million for the six months ended June 30,
1996, due primarily to the opening of the Official All Star Cafe in Cancun in
the first quarter of 1996, the opening of four franchised Planet Hollywood units
after the second quarter of fiscal 1995 and the sale of the Planet Hollywood
unit in Cancun to a franchisee in fiscal 1995.
Costs and expenses. Food and beverage costs decreased from 24.0% of food
and beverage revenues for the six months ended June 30, 1995 to 22.7% for the
six months ended June 30, 1996, primarily as a result of improved buying power
and efficiencies from the greater unit base, allowing for favorable negotiations
with suppliers. Merchandise costs decreased from 35.9% of merchandise revenues
for the six months ended June 30, 1995 to 34.6% for the six months ended June
30, 1996 primarily as a result of improved buying power and favorable
negotiation with suppliers. Operating expenses, which consist primarily of
labor, occupancy and other direct unit operating costs, increased from 42.4% of
Direct Revenues for the six months ended June 30, 1995 to 44.4% for the six
months ended June 30, 1996, primarily due to the effect of the opening of
Company-owned units in Europe since the second quarter of 1995 and the lower
operating costs of the Planet Hollywood unit in Cancun included in the second
quarter of 1995.
General and administrative expenses increased from $7.9 million for the six
months ended June 30, 1995 to $9.3 million for the six months ended June 30,
1996, due primarily to the continued development of the Official All Star Cafe
corporate infrastructure. As a percent of total revenues, general and
administrative expenses decreased from 6.7% for the six months ended June 30,
1995 to 5.7% for the six months ended June 30, 1996, as a result of the larger
number of units in operation during the second quarter of fiscal 1996.
Depreciation and amortization increased 37.6% from $10.1 million for the six
months ended June 30, 1995 to $13.9 million for the six months ended June 30,
1996, due primarily to the larger number of units in operation during the second
quarter of fiscal 1996. As a percent of total revenues, depreciation and
amortization costs remained 8.6% for the six months ended June 30, 1995 and
1996. Equity in income of unconsolidated affiliates increased from $40,000 for
the six months ended June 30, 1995 to $1.4 million for the six months ended June
30, 1996, which was attributable to the Company's minority investment in ECE
acquired in the 3rd quarter of fiscal 1995.
Interest expense, net. Net interest expense increased from $3.1 million
for the six months ended June 30, 1995 to $4.3 million for the six months ended
June 30, 1996, due primarily to first quarter of 1996 interest charges
associated with the Senior Subordinated Notes (issued in August 1995). These
Notes, along with essentially all Company debt, were repaid in April 1996 with
the proceeds from the IPO.
8
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Other. Minority interests decreased from $1.7 million for the six months
ended June 30, 1995 to $1.0 million for the six months ended June 30, 1996, due
to the acquisition by the Company of all minority interests in the second
quarter of 1996.
Provision for Income Taxes. The provision for income taxes was $8.3
million for the six months ended June 30, 1996. For the six months ended June
30, 1995, the Company had no provision for income taxes due to a reversal of a
portion of the Company's deferred tax valuation allowance.
Extraordinary item, net. The Company incurred an extraordinary charge in
the second quarter of 1996 of $10.4 million, net of $5.9 million in taxes, as a
result of the early extinguishment of long-term notes payable.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended June 30, 1996, the Company completed an initial
public offering and received approximately $197.0 million in net proceeds. The
Company used a portion of these proceeds to pay certain indebtedness of
approximately $66.0 million of notes payable to an affiliate of a director of
the Company, $60.0 million of Senior Subordinated Notes held by institutional
investors and notes payable totaling $4.5 million to the President and Chairman
of the Company. The remaining of such net proceeds will be used for general
corporate purposes, including the development and construction of new units
during 1996.
9
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PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
No report on Form 8-K was filed during the period covered by this
report
10
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SIGNATURES
Pursuant to the requirements of the Securities Exhange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLANET HOLLYWOOD INTERNATIONAL, INC.
(Registrant)
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<S> <C>
Date: August 12, 1996 By: /s/ ROBERT EARL
-----------------------------------------
Robert Earl
President and Chief Executive Officer
Date: August 12, 1996 By: /s/ THOMAS AVALLONE
-----------------------------------------
Thomas Avallone
Chief Financial Officer
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PLANET HOLLYWOOD FOR THE SIX MONTHS ENDED JUNE 30, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 62,890
<SECURITIES> 0
<RECEIVABLES> 8,606
<ALLOWANCES> 0
<INVENTORY> 12,870
<CURRENT-ASSETS> 106,234
<PP&E> 222,022
<DEPRECIATION> 18,410
<TOTAL-ASSETS> 346,684
<CURRENT-LIABILITIES> 39,886
<BONDS> 0
0
0
<COMMON> 1,057
<OTHER-SE> 275,334
<TOTAL-LIABILITY-AND-EQUITY> 346,684
<SALES> 157,276
<TOTAL-REVENUES> 162,391
<CGS> 42,613
<TOTAL-COSTS> 134,242
<OTHER-EXPENSES> 1,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,291
<INCOME-PRETAX> 22,822
<INCOME-TAX> 8,330
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 10,421
<CHANGES> 0
<NET-INCOME> 4,071
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
