<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 1998
FINE HOST CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 000-28590 06-1156070
- ---------------------------- ---------------- ------------------
(State of other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3 Greenwich Office Park, Greenwich, CT 06831
- ---------------------------------------- ---------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (203) 629-4320
<PAGE>
Item 5. Other Events
Item 5 of this Current Report on Form 8-K, as originally filed on February 6,
1998 is hereby amended by adding the following:
On February 17, 1998, Fine Host Corporation (the "Company") restated its
financial statements for the nine months ended September 24, 1997. As a result
of the restatement, the Company will report pre-tax losses of approximately
$11.4 million for the nine months ended September 24, 1997. A copy of the
Company's restated financial statements are filed as Exhibit 99.1.1 to this Form
8-K.
2
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits:
The following Exhibits are filed as part of this report.
Exhibit 99.1.1 Restated Financial Statements of the
Company for Nine Months Ended
September 24, 1997.
3
<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.
FINE HOST CORPORATION
Dated: February 17, 1998 By: /s/ Randy B. Spector
---------------------
Name: Randy B. Spector
Title: President
Chief Operating Officer
4
<PAGE>
EXHIBIT INDEX
Exhibit
Exhibit 99.1.1 Restated Financial Statements of the Company for the
Nine Months Ended September 24, 1997.
5
<PAGE>
Exhibit 99.1
FINE HOST CORPORATION AND SUBSIDIARIES
Financial Statements as of September 24, 1997
and for the Three and Nine Months
Ended September 24, 1997
(as restated, unaudited)
<PAGE>
INDEX TO UNAUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Consolidated Balance Sheet as of September 24, 1997 .....................F-3
Consolidated Statements of Operations for the Three and Nine Months
Ended September 24, 1997..................................................F-4
Consolidated Statement of Stockholders= Equity for the Nine Months
Ended September 24, 1997..................................................F-5
Consolidated Statement of Cash Flows for the Nine Months Ended
September 24, 1997 .......................................................F-6
Notes to Consolidated Financial Statements ...............................F-7
</TABLE>
F-2
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
September 24, 1997
------------------
(as restated, see Note 9)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................................. $ 5,580
Accounts receivable .................................................... 24,753
Inventories ............................................................ 6,702
Prepaid expenses and other current assets .............................. 2,758
---------
Total current assets .............................................. 39,793
Contract rights, net ..................................................... 35,129
Fixtures and equipment, net .............................................. 26,756
Excess of cost over fair value of net assets acquired, net ............... 57,651
Other assets ............................................................. 8,227
---------
Total assets ...................................................... $ 167,556
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses .................................. $ 37,367
Current portion of long-term debt ...................................... 264
Current portion of subordinated debt ................................... 2,187
---------
Total current liabilities ......................................... 39,818
Deferred income taxes .................................................... 1,928
Long-term debt ........................................................... 41,286
Subordinated debt ........................................................ 3,759
---------
Total liabilities ................................................. 86,791
Stockholders' equity:
Common Stock, $.01 par value, 25,000,000 shares authorized,
9,054,993 issued and outstanding at September 24, 1997 ............... 91
Additional paid-in capital ............................................. 103,643
Deficit ................................................................ (22,813)
Receivables from stockholders for purchase of Common Stock ............. (156)
---------
Total stockholders' equity ........................................ 80,765
Total liabilities and stockholders' equity ..................... $ 167,556
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-3
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 24, September 24,
1997 1997
------------------ -----------------
<S> <C> <C>
(as restated, see Note 9)
Net sales ......................... $ 64,198 $ 168,722
Cost of sales ..................... 60,192 157,575
-------- ---------
Gross profit .................... 4,006 11,147
General and administrative expenses 6,878 21,020
-------- ---------
Loss from operations ............ (2,872) (9,873)
Interest expense, net ............. 532 1,346
-------- ---------
Loss before tax provision ....... (3,404) (11,219)
Tax benefit ....................... (595) (2,005)
-------- ---------
Net loss ........................ $ (2,809) $ (9,214)
-------- ---------
-------- ---------
Loss per share of Common Stock .... $ (.31) $ (1.08)
-------- ---------
-------- ---------
Average number of shares
of Common Stock outstanding .... 8,950 8,494
-------- ---------
-------- ---------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-4
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Receivables
from
Stockholders
for
Additional Purchase of
Common Stock Additional Purchase of
------------------ Paid-In Common Stockholders'
Shares Amount Capital Deficit Stock Equity
------ ------ ---------- ------- --------- -----------
(as restated, see Note 9)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 25, 1996 ........... 6,212,016 $62 $ 42,270 $(13,599) $(189) $ 28,544
Shares issued in connection
with follow-on public offering ... 2,689,000 27 59,073 59,100
Options exercised .................... 75,449 1 1,096 1,097
Conversion of Ideal convertible notes 76,332 1 1,144 1,145
Stockholder receivable collected ..... 33 33
Stock issued to non-employee directors 2,196 -- 60 60
Net loss ............................. (9,214) (9,214)
--------- ----- -------- -------- ----- --------
Balance, September 24, 1997 .......... 9,054,993 $91 $103,643 $(22,813) $(156) $ 80,765
--------- ----- -------- -------- ----- --------
--------- ----- -------- -------- ----- --------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-5
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 24,
1997
-----------------
(as restated, see Note 9)
<S> <C>
Cash flows from operating activities:
Net income .................................................................... $ (9,214)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .............................................. 6,301
Deferred income tax provision .............................................. (2,005)
Loss from terminated contract .............................................. 675
Changes in operating assets and liabilities, net of effects from acquisition
of businesses:
Accounts receivable ................................................... (3,039)
Inventories ........................................................... (1,164)
Prepaid expenses and other current assets ............................. (384)
Accounts payable and accrued expenses ................................. (6,285)
Decrease in other assets ................................................... 326
--------
Net cash used in operating activities ................................. (14,789)
--------
Cash flows from investing activities:
Increase in contract rights ................................................... (7,128)
Purchases of fixtures and equipment ........................................... (5,836)
Disposal of fixtures and equipment ............................................ 528
Acquisition of business, net of cash acquired ................................. (40,352)
Collection of notes receivable ................................................ 910
--------
Net cash used in investing activities .................................... (51,878)
--------
Cash flows from financing activities:
Borrowings under long-term debt agreement ..................................... 59,061
Issuance of subordinated debt ................................................. 1,233
Proceeds from issuance of common stock ........................................ 59,191
Payment of long-term debt ..................................................... (50,024)
Payment of subordinated debt .................................................. (2,469)
Proceeds from exercise of options ............................................. 508
--------
Net cash provided by financing activities ............................... 67,500
--------
Net increase in cash .......................................................... 833
Cash, beginning of period ..................................................... 4,747
--------
Cash, end of period ........................................................... $ 5,580
--------
--------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
F-6
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
1. Summary of Significant Accounting Policies
Basis of Presentation--The unaudited consolidated financial statements
include the accounts of Fine Host (the "Company") and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The unaudited financial statements include all
adjustments, all of which are of a normal recurring nature, which, in the
opinion of management, are necessary for a fair presentation of the results of
operations for the three and nine months ended September 24, 1997. The
accompanying unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements of the Company and notes
thereto for the fiscal year ended December 25, 1996 included in the Company's
Form 8-K filed on February 6, 1998.
Loss Per Share - Loss per share of Common Stock is computed based on the
weighted average number of common and common equivalent shares outstanding,
unless antidilutive.
Accounting Pronouncements C In February 1997, the FASB issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per share. SFAS No.
128 specifies the computation, presentation and disclosure requirements for
earnings per share ("EPS"). SFAS No. 128 is effective for financial statements
for interim and annual periods ending after December 15, 1997. Earlier
application is not permitted. On a pro forma basis computed in accordance with
SFAS No. 128, Basic EPS would have been $(.31) and $(1.08) for the three months
and nine months ended September 24, 1997, respectively.
2. Acquisitions
On August 27, 1997, the Company acquired 100% of the stock of Best, Inc.
("Best"). Best provides contract food services to approximately 150 healthcare,
corrections, business dining and education clients in Minnesota, Wisconsin,
North Dakota, South Dakota, Illinois and Iowa. The purchase price was
approximately $26,500, consisting of cash and assumed debt.
On August 6, 1997, the Company acquired 100% of the stock of Statewide
Industrial Catering, Inc. ("Statewide"). Statewide provides contract food
service to 25 school districts in the New York City Metropolitan Area. The
purchase price was approximately $3,200, consisting of cash, assumed debt of
Statewide and a subordinated promissory note.
On January 23, 1997, the Company acquired 100% of the stock of Versatile
Holding Corporation, which owns 100% of the stock of Serv-Rite Corporation
("Serv-Rite"), a contract food services management company that provides food
services to the education and business dining markets in New York and
Pennsylvania. The purchase price was approximately $7,500, consisting of cash
and assumed debt of Serv-Rite.
On December 30, 1996, the Company acquired 100% of the stock of Service
Dynamics Corp. ("Service Dynamics"). Service Dynamics provides contract food
service to the education and business dining markets primarily in New Jersey.
F-7
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
The purchase price was approximately $3,000, consisting of cash paid to the
seller.
The aforementioned acquisitions have been accounted for under the purchase
method of accounting and, accordingly, the accompanying unaudited consolidated
financial statements reflect the fair values of the assets acquired and
liabilities assumed or incurred as of the effective date of the acquisitions.
The results of operations of the acquired companies are included in the
accompanying unaudited consolidated financial statements since their respective
dates of acquisition.
The following table summarizes pro forma information with respect to the
income statement data for the nine months ended September 24, 1997, as if the
acquisitions of Best, Statewide, Serv-Rite and Service Dynamics had been
completed as of the beginning of such period. No adjustment for acquisition
synergies (i.e. overhead reductions) have been reflected:
<TABLE>
<CAPTION>
Nine Months Ended
September 24,
1997
----------------
<S> <C>
Summary statement of income data:
Net sales .............................................. $ 201,266
Loss from operations ................................... (10,483)
Net loss ............................................... (12,520)
Net loss per share of common stock ..................... $ (1.47)
---------
</TABLE>
This pro forma information is provided for informational purposes only. It
is based on historical information and does not necessarily reflect the actual
results that would have occurred nor is it necessarily indicative of future
results of operations of the combined enterprise.
3. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 24,
1997
-------------
<S> <C>
Accounts payable .................... $10,214
Accrued wages and benefits........... 6,971
Accrued rent to clients ............. 7,513
Accrued other ....................... 12,669
-------
Total .............................. $37,367
-------
-------
</TABLE>
4. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
September 24,
1997
-------------
<S> <C>
Working Capital Line $ 9,841
Guidance Line 30,900
Capital Lease Obligation, effective interest
rate of 5.2% 545
--------
Total $41,286
--------
--------
</TABLE>
The net proceeds from the follow on public offering (the "Follow-On
Offering"), on February 12, 1997, including the
F-8
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
exercise of the over allotment option granted to the underwriters (see Note 6),
were used to repay all of the long term debt outstanding at the close of the
transaction.
On July 30, 1997, the Company entered into the Fourth Amended and Restated
Loan Agreement, a $200 million credit facility with Bank Boston, N.A., as
Administrative Agent (the "Administrative Agent"), U.S. Trust, as Documentation
Agent, and certain banks and other financial institutions party thereto (the
"Credit Facility"). The Credit Facility provides for (i) a five year working
capital revolving credit line for general corporate purposes and letters of
credit, in the maximum aggregate amount of $50 million (the "Working Capital
Line") and (ii) a line of credit to provide for future expansion by the Company,
in the maximum amount of $150 million (the "Guidance Line"). The Working Capital
Line provides funds for liquidity, seasonal borrowing needs and other general
corporate purposes. The Guidance Line is available on a revolving basis until
July 30, 2000, to fund the Company's acquisitions and for investments made in
connection with facility agreements. At July 30, 2000, all loans outstanding
under the Guidance Line will convert to term loans, payable quarterly over a
three-year period. Interest on all loans under the Credit Facility will be based
on, at the Company's option, either a prime rate or a LIBOR rate plus an
incremental rate based on a ratio of debt to EBITDA, not to be less than .75% or
greater than 1.5%. EBITDA represents earnings before interest expense, income
tax expense, depreciation and amortization.
The Company's obligations under the Credit Facility are collateralized by a
pledge of shares of the common stock or other equity interests of the Company's
subsidiaries, as well as by certain fixtures and equipment, accounts receivable
and other assets, as well as the receipt, if any, of certain funds paid to the
Company with respect to the termination of client contracts prior to their
expiration.
The Credit Facility contains various financial and other restrictions,
including, but not limited to, restrictions on indebtedness, capital
expenditures, acquisitions and investments. In connection with the Rule 144A
private placement of $175 million of 5.0% Convertible Subordinated Notes (see
Note 8), the Credit Facility was amended to allow for the issuance of up to $200
million in publicly offered debt. The Credit Facility requires maintenance of
(i) certain financial ratios, including ratios of total debt to EBITDA and
EBITDA to interest paid, (ii) minimum net worth and (iii) minimum EBITDA. The
Credit Facility permits the payment of dividends subject to compliance with all
covenants.
At September 24, 1997, the Company had an outstanding letter of credit for
$20 million under the Credit Facility. The Company is currently in default
under certain provisions of the Credit Facility and, on December 15, 1997,
the Administrative Agent notified the Company that it would no longer extend
loans to the Company under the Credit Facility.
5. Subordinated Debt
In July 1996, as part of the acquisition of Ideal Management Services Inc.
("Ideal"), the Company issued to the stockholders of Ideal two convertible
subordinated promissory notes (the "Ideal Convertible Notes") each with a face
value of $710 at 7 1/4% interest per annum, payable in quarterly installments.
At the option of the note holders, the outstanding principal balance of the
convertible notes was convertible into common stock at a conversion price of $15
per share. On July 30, 1997, the aggregate outstanding principal balances of the
Ideal Convertible Notes of $1,145 was converted into 76,332 shares of common
stock.
F-9
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
6. Stockholders' Equity
On February 12, 1997, the Company conducted a Follow-On Offering as
authorized by its Board of Directors, selling 2,689,000 shares of its common
stock at a price of $23.50 per share, generating net proceeds (including the net
proceeds received by the Company upon the exercise of certain stock options held
by senior executives of the Company in connection with the Follow-On Offering)
of approximately $59.1 million, after deducting the underwriting discount and
offering expenses paid by the Company. The net proceeds were used to repay
obligations under the Company's then-existing credit facility and the remainder
of the net proceeds was invested in short term investments in accordance with
the Company's investment policy.
7. Income Taxes
For the nine months ended September 24, 1997, the Company recorded a tax
benefit of $2,005, which was entirely deferred. In addition, the Company had,
for Federal income tax reporting, an estimated net operating loss carry forward
of approximately $16,600 that expires at various dates through 2012.
8. Subsequent Events
On October 3, 1997, the Company acquired 100% of the stock of Total Food
Service Direction, Inc. ("Total"). Total provides contract food services to 35
business dining and educational facilities in southern Florida. The purchase
price was approximately $4,500, consisting of cash and subordinated promissory
notes to sellers.
On October 27, 1997, the Company issued $175 million of 5% convertible
Subordinated Notes due 2004 (the "Convertible Notes") in a private placement
under Rule 144A of the Securities Act of 1933. The Convertible Notes are
unsecured obligations of the Company and are convertible into common stock at a
conversion price of $44.50 per share. The net proceeds of $169.1 million, after
deducting discounts and certain expenses, were used to repay approximately $50
million in outstanding bank debt. The remaining proceeds were invested in
short-term investments in accordance with the Company's investment policy.
On December 12, 1997, the Company announced that the Audit Committee of its
Board of Directors had instructed the commencement of an inquiry into certain
accounting practices, including the capitalization of certain expenses, and that
the Audit Committee determined on December 12, 1997, based upon their
preliminary inquiry, that certain expenses incurred during 1997 were incorrectly
capitalized rather than expensed in the period in which they were incurred. The
Company stated that it believed the amounts would be material and that earnings
for each of the first three quarters of 1997 would need to be restated.
On December 15, 1997, the Company announced that preliminary indications
were that the accounting problems were not limited to the incorrect
capitalization of expenses and that periods prior to 1997 would also need to be
restated. The Company also stated that the outside directors of the Company's
Board of Directors (the "Outside Directors") had terminated the employment of
Richard E. Kerley, Chairman of the Board and Chief Executive Officer, and Nelson
A. Barber, Senior Vice President and Treasurer.
On December 16, 1997, the Company retained a crisis management firm and
counsel to the Outside Directors retained an independent accounting firm to
conduct a forensic review of the Company's accounting practices. On December 18,
1997, Neal F. Finnegan resigned as a director of the Company. On December 19,
1997, the Board of Directors held a
F-10
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
special meeting and appointed a Special Committee (the "Special Committee")
comprised of the Outside Directors.
The Nasdaq Stock Market ("Nasdaq") suspended trading in shares of the
Company's common stock on December 12, 1997. In early January 1998, Nasdaq
commenced a proceeding to delist the common stock from trading. The Company
promptly appealed Nasdaq's determination, resulting in a stay of the
proceeding pending a hearing held on February 5, 1998. The Company is
awaiting Nasdaq's decision.
Counsel to the Special Committee met with representatives of the Securities
and Exchange Commission (the "SEC") on January 12, 1998. The SEC is currently
pursuing an informal investigation.
On January 21, 1998, Mr. Kerley resigned as a director of the Company.
Between December 15, 1997 and February 13, 1998, thirteen purported class
action lawsuits were filed in the United States District Court for the District
of Connecticut against the Company and certain of its officers and/or directors.
On or about January 30, 1998, the Company was named as a defendant in an action
arising out of the issuance and sale in October 1997 of $175 million in the
aggregate principal amount of the Company's 5% Convertible Subordinated Notes
due 2004 (the "Notes"). The plaintiffs allegedly purchased Notes in the
aggregate principal amount of $7.5 million. The complaint alleges, among other
things, that the Offering Memorandum prepared by the Company in connection with
this offering contained materially false information. The complaint asserts
various claims against the Company, including claims alleging violations of
Sections 10(b), 18(a) and 20(a) of the Securities Exchange Act of 1934 and
various rules promulgated thereunder, as well as fraud and negligent
misrepresentation. The relief sought by plaintiffs includes damages, including
the alleged difference in the value of the Notes when purchased and their actual
value, or alternatively rescission of their purchase of the Notes, plus
interest, costs and disbursements, and attorneys' fees. The Company is currently
reviewing these complaints. The Company is unable to assess the impact of these
suits on its financial condition or results of operations, but expects that the
impact will be material.
In connection with the Company's private offering of the Convertible Notes,
the Company had agreed to file a shelf Registration Statement, which would cause
the Convertible Notes to be freely tradable. As a result of the need to restate
financial statements, the Company has been unable to file the shelf Registration
Statement and, therefore, is obligated to pay liquidated damages on the
Convertible Notes, from January 25, 1998, in the amount of $.05 per week per $1
principal amount, or an aggregate of $9 per week, subject to increase every
quarter up to a maximum amount of approximately 1.3% per annum.
The Company expects to incur costs of approximately $8 million to cover
(i) the write-off of deferred debt costs in connection with the Credit
Facility (see Note 4), (ii) the costs of legal, accounting and crisis
management fees, and (iii) the cost of rescinding the 10 year lease that was
signed in October 1997 for the relocation of its corporate headquarters. Such
costs are to be incurred in the fourth quarter of 1997 and throughout 1998.
The Company announced on February 11, 1998 that it had engaged Price
Waterhouse LLP as its independent auditors for the fiscal year ended December
31, 1997. Price Waterhouse replaced Deloitte & Touche LLP, which served as the
Company's independent auditors since 1985.
9. Restatement of Consolidated Financial Statements
Subsequent to the issuance of the Company's September 24, 1997 Consolidated
Financial Statements, the Company's management determined that (i) certain
overhead expenses had been improperly capitalized; (ii) insufficient reserves
and accruals had been recorded, including inappropriate purchase accounting
reserves; (iii) certain non-performing assets had
F-11
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
not been written-off; (iv) improper revenue recognition had been used in regards
to certain contracts and agreements; and (v) adjustments for the settlement of
certain terminated contracts were not recorded.
As a result, the Company's financial statements as of and for the three and
nine months ended September 24,1997 have been restated from the amounts
previously reported to (i) reflect certain items previously improperly
capitalized as period costs; (ii) adjust previously recorded reserves and
accruals for certain items; (iii) write off certain non-performing assets; (iv)
properly recognize revenue related to certain contracts and agreements; and (v)
record adjustments for the settlement of certain terminated contracts.
The summary of the significant effects of the restatement is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 24, 1997 September 24, 1997
----------------------------- ---------------------------
As As
Previously As Previously As
Reported Restated Reported Restated
<S> <C> <C> <C> <C>
Net Sales ........................ $70,439 $ 64,198 $173,283 $ 168,722
Cost of sales .................... 61,890 60,192 154,277 157,575
Gross profit ..................... 8,549 4,006 19,006 11,147
General and admin. expenses ...... 2,954 6,878 8,899 21,020
Income/(loss) from operations .... 5,595 (2,872) 10,107 (9,873)
Interest expense, net ............ 491 532 1,319 1,346
Income/(loss) before tax provision 5,104 (3,404) 8,788 (11,219)
Tax provision/(benefit) .......... 2,118 (595) 3,703 (2,005)
Net income/(loss) ................ 2,986 (2,809) 5,085 (9,214)
Income/(loss) per share of
common stock ................... .32 (.31) .57 (1.08)
</TABLE>
F-12
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(unaudited and as restated, see Note 9)
<TABLE>
<CAPTION>
As of September 24, 1997
------------------------
As
Previously As
Reported Restated
---------- ---------
<S> <C> <C>
Cash and Cash Equivalents ........................... $ 5,557 $ 5,580
Accounts receivable ................................. 35,793 24,753
Inventories ......................................... 6,565 6,702
Prepaid expenses and other current assets ........... 5,519 2,758
Total current assets ................................ 53,434 39,793
Contract rights, net ................................ 48,036 35,129
Fixtures and equipment, net ......................... 39,346 26,756
Excess of cost over fair value of net assets
acquired, net .................................... 66,784 57,651
Other assets ........................................ 7,168 8,227
Total assets ........................................ 214,768 167,556
Accounts payable and accrued expenses ............... 37,001 37,367
Current portion of long-term debt ................... -- 264
Total current liabilities ........................... 39,188 39,818
Deferred income taxes ............................... 17,788 1,928
Long-term debt ...................................... 40,741 41,286
Subordinated debt ................................... 3,759 3,759
Total liabilities ................................... 101,476 86,791
Additional paid-in capital .......................... 103,151 103,643
Retained earnings (deficit) ......................... 10,206 (22,813)
Total stockholders' equity/deficiency in net assets.. 113,292 80,765
Total liabilities and stockholders' equity/deficiency
in net assets .................................... 214,768 167,556
</TABLE>
<TABLE>
<CAPTION>
As
Previously As
Reported Restated
--------- --------
<S> <C> <C>
Balance at December 25, 1996
Retained Earnings (deficit)............................ $5,121 $(13,599)
</TABLE>
F-13
