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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
-------------- --------------
COMMISSION FILE NUMBER 00028230
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PLANET HOLLYWOOD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 59-3283783
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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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 November 10, 1997, there were 97,018,580 shares of the registrant's
Class A Common Stock outstanding and 11,764,144 shares of the registrant's Class
B Common Stock outstanding.
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PLANET HOLLYWOOD INTERNATIONAL, INC.
INDEX
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Part I FINANCIAL INFORMATION
Item 1 -- Financial Statements........................................ 3
Condensed Consolidated Balance Sheets -- September 28, 1997
and December 29, 1996....................................... 3
Condensed Consolidated Statements of Operations -- Thirteen
Weeks and Thirty-nine Weeks ended September 28, 1997 and
September 29, 1996.......................................... 4
Condensed Consolidated Statements of Cash
Flows -- Thirty-nine Weeks ended September 28, 1997 and
September 29, 1996.......................................... 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 2 -- Changes in Securities....................................... 12
Item 6 -- Exhibits and Reports on Form 8-K............................ 12
SIGNATURES................................................................... 13
INDEX TO EXHIBITS............................................................ 14
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLANET HOLLYWOOD INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
STATED IN THOUSANDS OF U.S. DOLLARS
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<CAPTION>
SEPTEMBER 28, DECEMBER 29,
1997 1996
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ASSETS
Current assets:
Cash and cash equivalents................................. $ 18,557 $ 49,831
Accounts receivable....................................... 41,563 22,697
Inventories............................................... 36,002 20,604
Prepaid expenses.......................................... 10,632 5,479
Other current assets...................................... 16,167 15,262
-------- ---------
Total current assets.............................. 122,921 113,873
Property and equipment, net................................. 327,916 250,108
Goodwill.................................................... 30,963 25,779
Investment in affiliated entities........................... 32,523 10,013
Other assets, net........................................... 4,426 1,487
-------- ---------
$518,749 $ 401,260
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 52,657 $ 52,576
Notes payable -- current.................................. 635 746
-------- ---------
Total current liabilities......................... 53,292 53,322
Deferred rentals............................................ 10,540 10,329
Notes payable and other..................................... 50,428 8,378
Deferred credits............................................ 19,200 17,100
-------- ---------
Total liabilities................................. 133,460 89,129
Stockholders' equity:
Common stock -- Class A................................... 971 960
Common stock -- Class B................................... 115 115
Capital in excess of par value............................ 273,797 252,695
Deferred compensation..................................... (375) (525)
Retained earnings......................................... 110,453 58,386
Cumulative currency translation adjustment................ 328 500
-------- ---------
Total stockholders' equity........................ 385,289 312,131
-------- ---------
$518,749 $ 401,260
======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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PLANET HOLLYWOOD INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
STATED IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS
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THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
----------------------------- -----------------------------
SEPTEMBER 28, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29,
1997 1996 1997 1996
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Revenues..................................... $149,598 $111,840 $373,137 $274,231
Costs and expenses:
Cost of sales.............................. 38,978 27,705 97,556 70,318
Operating expenses......................... 55,254 44,492 154,287 114,340
General and administrative expenses........ 6,786 4,555 19,447 13,846
Depreciation and amortization.............. 9,469 6,875 26,291 20,770
-------- -------- -------- --------
110,487 83,627 297,581 219,274
Income from operations....................... 39,111 28,213 75,556 54,957
Non-operating expense (income):
Interest, net.............................. (206) (783) (1,227) 3,508
Equity in income of unconsolidated
affiliates.............................. (850) (1,603) (6,300) (3,008)
Minority interests......................... -- -- -- 1,037
-------- -------- -------- --------
Income before income taxes................... 40,167 30,599 83,083 53,420
Provision for income taxes................... 14,922 11,169 31,016 19,498
-------- -------- -------- --------
Income before extraordinary item............. 25,245 19,430 52,067 33,922
Extraordinary item, net...................... -- -- -- 10,421
-------- -------- -------- --------
Net income................................... $ 25,245 $ 19,430 $ 52,067 $ 23,501
======== ======== ======== ========
Earnings per share:
Income before extraordinary item........... $ 0.23 $ 0.18 $ 0.47 $ 0.34
======== ======== ======== ========
Net income................................. $ 0.23 $ 0.18 $ 0.47 $ 0.23
======== ======== ======== ========
Weighted average shares outstanding.......... 111,595 110,317 110,436 100,625
======== ======== ======== ========
Supplemental pro forma earnings per share(A):
Earnings per share before extraordinary
item.................................... $ 0.35
========
Earnings per share -- net income........... $ 0.25
========
Weighted average shares outstanding........ 104,460
========
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(A) Supplemental pro forma earnings per share gives effect to the prepayment 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.
The accompanying notes are an integral part of these financial statements.
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PLANET HOLLYWOOD INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
STATED IN THOUSANDS OF U.S. DOLLARS
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THIRTY-NINE WEEKS ENDED
------------------------------
SEPTEMBER 28, SEPTEMBER 29,
1997 1996
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NET CASH PROVIDED BY OPERATING ACTIVITIES................... $ 32,149 $ 47,878
Cash flows from investing activities:
Additions to property and equipment....................... (92,251) (56,647)
Investment in affiliated entities......................... (15,440) --
Purchase of restaurant from franchisee.................... (8,025) --
Other..................................................... (1,361) (417)
--------- --------
NET CASH USED IN INVESTING ACTIVITIES....................... (117,077) (57,064)
--------- --------
Cash flows from financing activities:
Change in restricted cash and investments................. -- 610
Distributions to minority interests....................... -- (271)
Proceeds from issuance of common stock.................... 19,566 196,581
Proceeds from issuance of notes payable................... 35,000 --
Repayment of shareholder notes payable.................... -- (70,750)
IPO costs and financing costs capitalized................. -- (3,648)
Deferred financing costs.................................. (481) (162)
Repayment of notes payable................................ (431) (64,755)
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES................... 53,654 57,605
--------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (31,274) 48,419
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 49,831 14,923
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 18,557 $ 63,342
========= ========
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The accompanying notes are an integral part of these financial statements.
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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. (the "Company") have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. The following discussion may contain certain forward-looking
statements which are subject to the risk factors set forth in the first
paragraph of Item 2 of this Part I of the Form 10-Q.
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 Company's Form 10-K for the year ended December 29, 1996. Company management
believes that the disclosures are sufficient for interim financial reporting
purposes.
2. STOCK OFFERING
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.
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 1996 fiscal year.
4. NEW ACCOUNTING PRONOUNCEMENT
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information", which is effective for periods beginning
after December 15, 1997. SFAS No. 131 requires public business enterprises to
report certain information about operating segments in its financial statements.
The Company will implement SFAS No. 131 for its fiscal year ending December 27,
1998.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and Notes thereto included
elsewhere in this Form 10-Q. All statements contained herein that are not
historical facts including, but not limited to, statements regarding the
Company's current business strategy, the Company's projected sources and uses of
cash, and the Company's plans for future development and operations, are based
upon current expectations. Such statements are forward-looking in nature and
involve a number of risks and uncertainties. Consequently, actual results may
differ materially from the forward-looking statements. Among the factors that
could cause actual results to differ materially are the following: the
availability of sufficient capital to finance the Company's business plans on
terms satisfactory to the Company; the impact of competitive products and
pricing; changes in labor, equipment, food and capital costs; changes in, or the
failure to comply with, regulations affecting the Company's business; future
acquisitions or strategic partnerships; the availability, locations and terms of
sites for development; the timing and costs associated with new location
openings; acceptance by new guests of the Company's brands and concepts as the
Company continues to expand into new brands and/or regions; success of the
Company's frachisees and licensees and the manner in which they promote, operate
and develop the Company's brands; general business and economic conditions; and
factors described from time to time in the Company's reports filed with the
Securities and Exchange Commission. The Company cautions readers not to place
undue reliance on any such forward-looking statements, which statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.
RESULTS OF OPERATIONS
Thirteen weeks ended September 28, 1997 compared to thirteen weeks ended
September 29, 1996
Revenues. Total revenues increased to $149.6 million for the thirteen
weeks ended September 28, 1997 from $111.8 million for the thirteen weeks ended
September 29, 1996, an increase of $37.8 million or 33.8%. The growth in
revenues is due primarily to the opening of new units, both Company owned and
franchised, and the expansion of the Company's retail distribution system,
including direct merchandise sales to other retailers in international markets.
Direct revenues increased 36.6% from $102.8 million for the thirteen weeks
ended September 29, 1996 to $140.4 million for the thirteen weeks ended
September 28, 1997, due primarily to the opening of nineteen Company-owned units
after the third quarter of fiscal 1996, including the acquisition of a
previously franchised unit, and the sale of merchandise to retailers in
international markets. The Company continues to market its brands in innovative
ways to increase the brands' accessibility to consumers worldwide, including the
distribution of branded merchandise through traditional retailers that have a
strong distribution and marketing presence worldwide. Same unit direct revenues
(twenty-four units), including the effect of unit specific merchandise sold
through the retail distribution system, decreased 2% for the thirteen weeks
ended September 28, 1997 compared to the thirteen weeks ended September 29,
1996. Excluding the effect of the direct merchandise sales, negative foreign
exchange impact in Europe, and the positive impact of the Olympics in the third
quarter of 1996, same unit direct revenues decreased approximately 9%. Because
the Company operates in an increasingly competitive environment with numerous
competing themed restaurants entering many of the Company's existing markets,
and as the Company continues to expand into smaller markets, the Company could
experience declines in same unit direct revenues. As a percentage of direct
revenues, merchandise sales increased from 37.9% for the thirteen weeks ended
September 29, 1996 to 46.3% for the thirteen weeks ended September 28, 1997.
This increase in the merchandise sales mix is due primarily to the direct sale
of merchandise to other retailers. Excluding the direct merchandise sales, the
merchandise sales mix for the thirteen weeks ended September 28, 1997 was 40% on
a same unit basis and 36.3% overall. As the Company continues to expand into
secondary and smaller tourist markets, it is expecting a decline in merchandise
sales mix on a unit level. Royalties and other revenues increased from $1.4
million for the thirteen weeks ended September 29, 1996 to $4.5 million for the
thirteen weeks ended September 28, 1997. This increase is due primarily to the
growth in the number of franchised units from September 29, 1996 to September
28, 1997, increased brand licensing fees and other income. Franchise fees for
the thirteen weeks ended September 28, 1997 were $4.8 million, compared to $7.7
million for the thirteen weeks ended
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September 29, 1996. The decrease in franchise fees is due primarily to three
franchises opening in the thirteen week period ended September 28, 1997 versus
five opening in the thirteen week period ended September 29, 1996.
Costs and expenses. Food and beverage costs increased from 22.8% of food
and beverage revenues for the thirteen weeks ended September 29, 1996 to 23.3%
for the thirteen weeks ended September 28, 1997. This increase was primarily due
to the introduction of a new menu and a decrease in liquor sales as a percentage
of the overall food and beverage mix. Merchandise costs decreased from 33.7% of
merchandise revenues for the thirteen weeks ended September 29, 1996 to 32.9%
for the thirteen weeks ended September 28, 1997. This decrease was primarily due
to higher sales of T-shirts and hats, two of the Company's higher margin retail
items, and increased sourcing of merchandise in the Far East at favorable
prices. Operating expenses, which consist primarily of labor, occupancy and
other direct unit operating costs, decreased from 43.3% of direct revenues for
the thirteen weeks ended September 29, 1996 to 39.4% for the thirteen weeks
ended September 28, 1997. This decrease was primarily due to the increased
merchandise sales mix. With the addition of units throughout Europe and Canada,
which generally have higher labor and other operating costs, average operating
costs at the unit level are expected to increase. Additionally, labor costs
within the United States have increased due to costs related to the Company's
enhanced employee benefits package and increases in the minimum wage rate.
General and administrative expenses increased from $4.6 million for the
thirteen weeks ended September 29, 1996 to $6.8 million for the thirteen weeks
ended September 28, 1997, due primarily to the continued expansion of the
Company's corporate infrastructure to support the Company's existing and
emerging concepts. General and administrative expenses are anticipated to
further increase as the Company unveils new concepts and develops businesses.
Depreciation and amortization increased 37.8% from $6.9 million for the thirteen
weeks ended September 29, 1996 to $9.5 million for the thirteen weeks ended
September 28, 1997, due primarily to the larger number of units in operation
during the third quarter of fiscal 1997 and the amortization of goodwill
relating to franchise units which were reacquired by the Company in fiscal 1996
and 1997.
Interest, net. Net interest income decreased from $0.8 million for the
thirteen weeks ended September 29, 1996 to $0.2 million for the thirteen weeks
ended September 28, 1997. This decrease is due primarily to the Company's
utilization of proceeds from its initial public offering and subsequent debt
financing to fund the development of new units and new concepts.
Equity in Income of Unconsolidated Affiliates. Equity in income of
unconsolidated affiliates decreased from $1.6 million for the thirteen weeks
ended September 29, 1996 to $0.9 million for the thirteen weeks ended September
28, 1997. This decrease is primarily attributable to a decline in revenues for
PH Asia resulting from the general economic downturn in Asia, principally Hong
Kong.
Provision for Income Taxes. The provision for income taxes was $11.2
million or 36.5% of pretax income for the thirteen weeks ended September 29,
1996. For the thirteen weeks ended September 28, 1997, the Company recorded a
provision for income taxes of $14.9 million or 37.2% of pretax income. This
increase in the Company's effective tax rate is primarily due to foreign, state
and local income taxes in areas where the Company is developing new units.
Thirty-nine weeks ended September 28, 1997 compared to thirty-nine weeks ended
September 29, 1996
Revenues. Total revenues increased 36.1% from $274.2 million for the
thirty-nine weeks ended September 29, 1996 to $373.1 million for the thirty-nine
weeks ended September 28, 1997. The increase in revenues is due primarily to the
Company's continued expansion through the development of new themed restaurants,
franchising activities and the expansion of its retail distribution system,
including direct merchandise sales.
Direct revenues increased 37.3% from $260.1 million for the thirty-nine
weeks ended September 29, 1996 to $356.9 million for the thirty-nine weeks ended
September 28, 1997, due primarily to the opening of nineteen Company-owned units
after the third quarter of fiscal 1996 and the direct sale of merchandise to
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other retailers and promoters through the Company's retail distribution system.
The Company continues to market its brands in innovative ways to increase the
brands' accessibility to consumers worldwide, including the distribution of
branded merchandise through traditional retailers that have a strong
distribution and marketing presence worldwide. Same unit direct revenues
(twenty-four units), including the effect of unit specific merchandise sold
through the retail distribution system, decreased 2% from $242.8 million for the
thirty-nine weeks ended September 29, 1996 to $238.9 million for the thirty-nine
weeks ended September 28, 1997. Because the Company operates in an increasingly
competitive environment with numerous competing themed restaurants entering many
of the Company's existing markets, and as the Company continues to expand into
smaller markets, the Company could experience declines in same unit direct
revenues. As a percentage of direct revenues, merchandise sales increased from
37.3% for the thirty-nine weeks ended September 29, 1996 to 41.0% for the
thirty-nine weeks ended September 28, 1997. The increase in merchandise sales
mix is primarily due to the introduction of new product lines and the direct
retail and promotional sales which occurred in the thirty-nine week period ended
September 28, 1997. Franchise fees were $8.3 million for the thirty-nine weeks
ended September 28, 1997, as compared to $10.7 million for the thirty-nine weeks
ended September 29, 1996. The decrease in franchise fees is primarily due to the
franchises opened in fiscal 1997 being in smaller tourist markets and having
lower fees than those opened in fiscal 1996. Royalty and other revenue increased
from $3.5 million for the thirty-nine weeks ended September 29, 1996 to $7.9
million for the thirty-nine weeks ended September 28, 1997, due primarily to the
opening of sixteen franchised Planet Hollywood and Official All Star Cafe units
after the third quarter of fiscal 1996.
Costs and expenses. Food and beverage costs increased from 22.7% of food
and beverage revenues for the thirty-nine weeks ended September 29, 1996 to
22.8% for the thirty-nine weeks ended September 28, 1997. This slight increase
was due primarily to the introduction of a new menu during the final thirteen
weeks of the period and a decrease in liquor sales as a percentage of the food
and beverage mix. Merchandise costs for the thirty-nine weeks ended September
29, 1996 decreased from 34.3% of merchandise revenues to 33.9% for the
thirty-nine weeks ended September 28, 1997. This decrease was primarily due to
higher sales of T-shirts and hats, two of the Company's higher margin retail
items, and increased sourcing of merchandise in the Far East at favorable
prices. Operating expenses, which consist primarily of labor, occupancy and
other direct unit operating costs, decreased from 44.0% of direct revenues for
the thirty-nine weeks ended September 29, 1996 to 43.2% for the thirty-nine
weeks ended September 28, 1997, primarily due to the increased merchandise sales
mix. With the addition of units throughout Europe and Canada, which generally
have higher labor and other operating costs, average operating costs at the unit
level are expected to increase. Additionally, labor costs within the United
States have increased due to costs related to the Company's enhanced employee
benefits package and increases in the minimum wage rate.
General and administrative expenses increased from $13.8 million for the
thirty-nine weeks ended September 29, 1996 to $19.5 million for the thirty-nine
weeks ended September 28, 1997, due primarily to the expansion of the Company's
corporate infrastructure to support the Company's existing and emerging
concepts. As a percent of total revenues, general and administrative expenses
were 5.0% and 5.2% for the thirty-nine weeks ended September 29, 1996 and
September 28, 1997, respectively. Depreciation and amortization increased 26.6%
from $20.8 million for the thirty-nine weeks ended September 29, 1996 to $26.3
million for the thirty-nine weeks ended September 28, 1997, due primarily to the
larger number of units in operation during the thirty-nine weeks ended September
28, 1997. As a percent of total revenues, depreciation and amortization costs
were 7.6% for the thirty-nine weeks ended September 29, 1996 and were 7.0% for
the thirty-nine weeks ended September 28, 1997. This percentage decrease is due
primarily to the continued growth of the Company, which has resulted in
depreciation and amortization costs being absorbed over a larger revenue base.
Interest, net. For the thirty-nine weeks ended September 29, 1996, net
interest expense was $3.5 million compared to net interest income of $1.2
million for the thirty-nine weeks ended September 28, 1997. This change is
attributable primarily to extinguishment of Company debt in April of 1996 with
the proceeds from the Company's initial public offering and interest earned on
the investment of remaining funds.
Equity in Income of Unconsolidated Affiliates. Equity in income of
unconsolidated affiliates increased from $3.0 million for the thirty-nine weeks
ended September 29, 1996 to $6.3 million for the thirty-nine weeks
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ended September 28, 1997, which was primarily attributable to franchise openings
by ECE and PH Asia since the third quarter of fiscal 1996.
Other. Minority interests decreased from $1.0 million for the thirty-nine
weeks ended September 29, 1996 to zero for the thirty-nine weeks ended September
28, 1997, due to the acquisition by the Company of all minority interests in the
second quarter of fiscal 1996.
Provision for Income Taxes. For the thirty-nine weeks ended September 29,
1996, the provision for income taxes was $19.5 million or 36.5% of pretaxable
income. The provision for income taxes was $31.0 million or 37.4% of pretaxable
income for the thirty-nine weeks ended September 28, 1997. This increase in the
Company's effective tax rate is primarily due to foreign, state and local income
taxes in areas where the Company is developing new units.
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
Net cash used in investing activities for the thirty-nine weeks ended
September 29, 1996 and September 28, 1997 was $57.1 million and $117.1 million,
respectively. This increase can be attributed to capital expenditures, primarily
new site and corporate headquarter costs, the purchase of a domestic franchise
unit, an increase in the Company's investment in ECE and funding for a joint
venture investment for a hotel in New York City (see discussion in "Other
Matters" below).
Net cash provided by financing activities for the thirty-nine weeks ended
September 29, 1996 and September 28, 1997 was $57.6 million and $53.7 million,
respectively. During the thirty-nine weeks ended September 28, 1997, the Company
received proceeds of approximately $20 million from the issuance of stock to an
investor and franchisee. Additionally, the Company received proceeds of $35
million from its credit facility with a consortium of financial institutions.
Net cash provided by operating activities for the thirty-nine weeks ended
September 29, 1996 and September 28, 1997 was $47.9 million and $32.1 million,
respectively. While operating revenues have increased, cash provided from
operations has decreased due primarily to an increase in inventory and
receivables, a decrease in payables, and an increase in equity in income of
unconsolidated affiliates. The increase in inventory is due primarily to the
opening of new units since December 29, 1996 and the expansion of the Company's
product lines. Receivables have increased due to the expansion of the Company's
retail distribution system.
In September 1997, the Company replaced its existing $50 million credit
agreement with a $120 million multi-currency, long-term credit facility with a
consortium of financial institutions. The Company anticipates utilizing the
credit facility to fund the expansion of both new and existing concepts. The
Company expects that cash on hand, cash generated from operations and funds
available under the credit facility will be sufficient to meet its capital
requirements.
OTHER MATTERS
In September 1997, the Company and Dreyer's Grand Ice Cream, Inc. entered
into a long-term agreement to develop and market a line of premium ice cream
products under the brand name "Cool Planet Ice Cream" to supermarkets, Planet
Hollywood restaurants and ice cream shops and cafes which the Company will
develop and operate. The Company expects to open three Cool Planet Cafes in
high-profile, high-traffic locations by Spring 1998 with an estimated seven
additional Cool Planet Cafes opened by the end of 1998.
Also, in September 1997, the Company entered into a joint venture to
remodel and renovate the Hotel Pennsylvania in New York City. The Company's
initial investment in the venture was approximately $9 million and is estimated
to total $20 million after the redevelopment for its 20% equity investment in
the
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venture. The renovated hotel will be branded the Official All-Star Hotel, and
the Company will receive royalties for the use of its "Official All Star Hotel"
trademark.
In October 1997, the Company announced that it had entered into an
agreement to partner with Aladdin Gaming, LLC to develop, own and operate a
1,000 room hotel and 50,000 square foot casino in Las Vegas, Nevada. The new
project will be a joint venture, with each partner contributing initial equity
valued at approximately $41 million. The Company will initially contribute cash
for its ownership interest and will receive ongoing licensing and marketing
fees.
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PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
The Company filed two Registration Statements on Form S-8 with the
Securities and Exchange Commission on July 21, 1997 (file nos. 333-31683 and
333-31685), registering, in total, 12,000,000 shares of the Company's Class A
Common Stock which may be issued pursuant to (a) the First Amended and Restated
Planet Hollywood International, Inc. 1995 Celebrity Stock Award and Incentive
Plan and (b) the First Amended and Restated Planet Hollywood International, Inc.
1995 Stock Award and Incentive Plan. As of September 28, 1997, no shares were
issued pursuant to the two Registration Statements on Form S-8, although certain
options have been granted. The two Registration Statements on Form S-8 are
hereby incorporated by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
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Exhibit 4.1* Registration Statement on Form S-8 relating to that certain
First Amended and Restated Planet Hollywood International,
Inc. 1995 Celebrity Stock Award and Incentive Plan (file no.
333-31683)
Exhibit 4.2* Registration Statement on Form S-8 relating to that certain
First Amended and Restated Planet Hollywood International,
Inc. 1995 Stock Award and Incentive Plan (file no.
333-31685)
Exhibit 11 Statement regarding computation of per share earnings
(Unaudited)
Exhibit 27 Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* Incorporated by reference to the Registration Statement on Form S-8 previously
filed by the Company with the Securities and Exchange Commission on July 21,
1997.
b. Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for which this
report is filed.
12
<PAGE> 13
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, thereunto duly authorized.
PLANET HOLLYWOOD INTERNATIONAL, INC.
DATE: November 12, 1997 By: /s/ ROBERT EARL
------------------------------------
Name: Robert Earl
Its: President and Chief
Executive Officer
DATE: November 12, 1997 By: /s/ THOMAS AVALLONE
------------------------------------
Name: Thomas Avallone
Its: Chief Financial Officer
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 4.1* -- Registration Statement on Form S-8 relating to that certain
First Amended and Restated Planet Hollywood International,
Inc. 1995 Celebrity Stock Award and Incentive Plan (file no.
333-31683)
Exhibit 4.2* -- Registration Statement on Form S-8 relating to that certain
First Amended and Restated Planet Hollywood International,
Inc. 1995 Stock Award and Incentive Plan (file no.
333-31685)
Exhibit 11 -- Statement regarding computation of per share earnings
(Unaudited)
Exhibit 27 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* Incorporated by reference to the Registration Statement on Form S-8 previously
filed by the Company with the Securities and Exchange Commission on July 21,
1997.
14
<PAGE> 1
EXHIBIT 11
PLANET HOLLYWOOD INTERNATIONAL, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (UNAUDITED)
STATED IN THOUSANDS OF U.S. DOLLARS, EXCEPT EARNINGS PER SHARE
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
----------------------------- -----------------------------
SEPTEMBER 26, SEPTEMBER 29, SEPTEMBER 28, SEPTEMBER 29,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary:
Net earnings available to common
shareholders.......................... $ 25,245 $ 19,430 $ 52,057 $ 23,501
======== ======== ======== ========
Weighted average shares outstanding:
Common shares outstanding at end of
period............................. 108,784 107,518 108,784 107,518
Common equivalent shares outstanding
at end of period................... 2,811 2,799 2,305 2,525
-------- -------- -------- --------
Total common and equivalent common
shares outstanding at end of period... 111,595 110,317 111,069 110,043
Effects of using weighted average common
and common equivalent shares
outstanding........................... -- -- (653) (9,418)
-------- -------- -------- --------
Shares used in computing earnings per
share................................. 111,595 110,317 110,436 100,625
======== ======== ======== ========
Net earnings per common and common
equivalent share, primary............. $ 0.23 $ 0.18 $ 0.47 $ 0.23
======== ======== ======== ========
Fully Diluted:
Net earnings available to common
shareholders.......................... $ 25,245 $ 19,430 $ 52,067 $ 23,501
======== ======== ======== ========
Weighted average shares outstanding:
Common shares outstanding at end of
period............................. 108,784 107,518 108,784 107,518
Common equivalent shares outstanding
at end of period................... 2,811 3,029 2,306 3,029
======== ======== ======== ========
Total common and equivalent common
shares outstanding at end of period... 111,595 110,547 111,089 110,547
Effects of using weighted average common
and common equivalent shares
outstanding........................... -- -- (853) (9,754)
-------- -------- -------- --------
Shares used in computing earnings per
share................................. 111,595 110,547 110,436 100,793
======== ======== ======== ========
Net earnings per common and common
equivalent share, primary............. $ 0.23 $ 0.18 $ 0.47 $ 0.23
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PLANET HOLLYWOOD INTERNATIONAL, INC. FOR THE THIRTY-NINE
WEEKS ENDED SEPTEMBER 28, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> SEP-28-1997
<CASH> 18,557
<SECURITIES> 0
<RECEIVABLES> 39,764
<ALLOWANCES> 0
<INVENTORY> 36,002
<CURRENT-ASSETS> 122,763
<PP&E> 363,754
<DEPRECIATION> (35,838)
<TOTAL-ASSETS> 518,591
<CURRENT-LIABILITIES> 55,704
<BONDS> 0
0
0
<COMMON> 1,086
<OTHER-SE> 385,104
<TOTAL-LIABILITY-AND-EQUITY> 518,591
<SALES> 356,971
<TOTAL-REVENUES> 373,137
<CGS> 97,556
<TOTAL-COSTS> 297,581
<OTHER-EXPENSES> (6,300)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,227)
<INCOME-PRETAX> 83,083
<INCOME-TAX> 31,016
<INCOME-CONTINUING> 52,067
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,067
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
</TABLE>
