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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (date of earliest event reported): December 24, 1997
CANDLEWOOD HOTEL COMPANY, INC.
(Exact name of Registrant as specified in charter)
DELAWARE 0-12708 48-1188025
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification Number)
LAKEPOINT OFFICE PARK, 9342 EAST CENTRAL
WICHITA, KANSAS 67206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (316) 631-1300
None
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Candlewood Hotel Company, Inc. (the "Registrant") hereby amends its
Current Report on Form 8-K dated December 24, 1997 by filing certain pro forma
financial information.
Certain matters discussed within this Form 8-K/A are forward-looking
statements within the meaning of the Private Litigation Reform Act of 1995 and
as such may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Registrant to be different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Although the Registrant
believes the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its expectations will
be attained. These risks are detailed from time to time in the Registrant's
filings with the Securities and Exchange Commission.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Unaudited consolidated pro forma financial information of the Registrant
reflecting the sale of 15 of the Registrant's Hotels to HPTCW Properties Trust,
as of and for the nine months ended September 30, 1997 and for the fiscal year
ended December 31, 1996:
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Page
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Candlewood Hotel Company, Inc. and Subsidiaries Unaudited
Consolidated Pro Forma Financial Statements............................. 5
Pro Forma Consolidated Balance Sheets for the nine months ended
September 30, 1997...................................................... 6
Pro Forma Condensed Consolidated Income Statements for the fiscal
year ended December 31, 1996 and for the nine months ended
September 30, 1997...................................................... 7
Notes to Unaudited Consolidated Pro Forma Financial Statements.......... 8
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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.
Dated: March 6, 1998 CANDLEWOOD HOTEL COMPANY, INC.
By: /s/ WARREN D. FIX
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Name: Warren D. Fix
Title: Chief Financial Officer
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CANDLEWOOD HOTEL COMPANY, INC. AND SUBSIDIARIES
Unaudited Consolidated Pro Forma Financial Statements
The following unaudited adjusted pro forma balance sheet at September
30, 1997 is intended to present the financial position of the Company as if the
transactions described in the Notes (the "Transactions") were consummated at
September 30, 1997. The following unaudited adjusted pro forma statements of
income are intended to present the results of operations of the Company as if
the Transactions were consummated on January 1, 1996. These unaudited adjusted
pro forma financial statements should be read in conjunction with, and are
qualified in their entirety by reference to, the separate financial statements
of the Company as of and for the year ended December 31, 1996 and for the nine
months ended September 30, 1997, incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 and
the Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1997, respectively.
These unaudited adjusted pro forma financial statements are not
necessarily indicative of the expected financial position or results of
operations of the Company for any future period. Differences would result from,
among other considerations, future changes in the Company's portfolio of
investments, changes in interest rates, changes in capital structure of the
Company, changes in operating results at individual hotels and changes in the
Company's operating expenses.
The following unaudited pro forma balance sheet and unaudited pro forma
statements of income were prepared pursuant to the Securities and Exchange
Commission's rules for the presentation of pro forma data. The pro forma and
adjusted pro forma data give effect to the consummation by the Company of the
Transactions. Certain properties reflected in the pro forma financial statements
are currently under construction or development and the Transactions have not
been consummated with respect to such properties. Other properties were under
construction during the periods presented. The accompanying pro forma operating
data does not give further effect to the completion of construction or the
related lease commencement for any period prior thereto. Construction projects
not completed by September 30, 1997 are likewise not reflected in the pro forma
balance sheet data, as described in the notes thereto.
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CANDLEWOOD HOTEL COMPANY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
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Historical Pro Forma
September 30, Pro Forma September 30,
1997 Adjustment 1997
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Assets:
Cash and cash equivalents $ 7,680 $ 3,483 (2) $ 11,163
Marketable securities 5,900 - 5,900
Other current assets 1,379 - 1,379
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Total current assets 14,959 3,483 18,442
--------- --------- --------
Construction in progress - hotel properties 54,174 - 54,174
Property and equipment, net 31,940 (26,431)(3) 5,509
Security and other deposits - 5,110 (4) 5,110
Deferred taxes - 971 (5) 971
Other assets, net 9,203 - 9,203
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$ 110,276 $ (16,867) $ 93,409
========= ========= ========
Liabilities and stockholders' equity:
Total current liabilities $ 4,043 $ - $ 4,043
Deferred gain on sale - 2,521 (6) 2,521
Notes payable 50,064 (19,388)(7) 30,676
Redeemable preferred stock 23,652 - 23,652
Stockholders' equity:
Common stock 90 - 90
Additional paid-in capital 35,270 - 35,270
Accumulated deficit (2,843) - (2,843)
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Total stockholders' equity 32,517 - 32,517
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$ 110,276 $ (16,867) $ 93,409
========= ========= ========
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CANDLEWOOD HOTEL COMPANY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED INCOME STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
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HISTORICAL PRO FORMA
YEAR ENDED YEAR ENDED
DECEMBER 31, PRO FORMA DECEMBER 31,
1996(8) ADJUSTMENTS 1996
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Revenues
Hotel operations $ 686 $ -- $ 686
Other revenues -- -- --
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Total revenues 686 -- 686
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Operating costs and expenses:
Hotel operating expenses 366 -- 366
Corporate operating expenses 1,671 -- 1,671
Lease payment -- 313 (9) 313
Depreciation and amortization 249 (180)(10) 69
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Total operating costs and expenses 2,286 133 2,419
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Loss from operations (1,600) (133) (1,733)
Interest income 328 -- 328
Interest expense (81) 81 (11) --
------- ------- --------
Net loss $(1,353) $ (52) $ (1,405)
======= ======= ========
Net loss per share $ (0.23) $ (0.24)
Weighted average shares outstanding 5,764 5,764
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HISTORICAL PRO FORMA
NINE NINE MONTHS
MONTHS ENDED ENDED
SEPTEMBER 30, PRO FORMA SEPTEMBER 30,
1997(8) ADJUSTMENTS 1997
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Revenues:
Hotel operations $ 3,449 $ -- $ 3,449
Other revenues 138 -- 138
Proceeds from the sale of hotels (net of deferred
gain of $2,521) -- 26,431 (6) 26,431
------- ------- --------
Total revenues 3,587 26,431 30,018
------- ------- --------
Operating costs and expenses:
Hotel operating expenses 1,811 -- 1,811
Corporate operating expenses 2,375 -- 2,375
Lease payment -- 1,730 (9) 1,730
Depreciation and amortization 834 (779)(10) 55
Cost of hotels sold -- 26,431 (6) 26,431
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Total operating costs and expenses 5,020 27,382 32,402
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Loss from operations (1,433) (951) (2,384)
Interest income 743 -- 743
Income expense (198) 198 (11) --
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Net loss $ (888) $ (753) $ (1,641)
======= ======= ========
Net loss per share $ (0.10) $ (0.18)
Weighted average shares outstanding 9,025 9,025
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CANDLEWOOD HOTEL COMPANY, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Pro Forma Financial Statements
(amounts in thousands)
1) Represents the historical balance sheet of the Company at September 30, 1997.
2) Represents the net effect of the pro forma adjustments on cash:
Purchase price $ 28,952
Repayment of Loans
on the six open hotels (19,388)
Security deposits and
other deposits held by HPT (5,110)
Taxes (971)
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Net effect on cash $ 3,483
==========
The Company expects that the total purchase price for the 15 hotels in
the Transaction will be approximately $100,000 and that the total
security and other deposits held by the purchaser, Hospitality
Properties Trust ("HPT"), will be approximately $15,000.
3) Represents the sale of the six hotels open as of September 30, 1997.
Nine of the 15 hotels to be sold in the Transactions were under
development by the Company as of September 30, 1997. The total value of
the hotels under development, as reflected on the balance sheet item
Construction in progress, was approximately $26,061. The pro forma
adjustments do not reflect the sale of these nine properties.
4) Represents security and other deposits held by HPT.
5) Represents the payment of deferred taxes, calculated using the Company's
estimated statutory rate of 38.5%.
6) Represents the calculation of deferred gain on the sale of the six
hotels open as of September 30, 1997:
Proceeds from the sale of hotels $ 28,952
Cost of hotels sold (26,431)
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Deferred gain on sale $ 2,521
=========
7) Represents the repayment of the loans on the six hotels open as of
September 30, 1997. The total outstanding indebtedness on the nine
hotels under development as of September 30, 1997 was approximately
$11,378. The pro forma adjustments do not reflect the sale of these nine
properties.
8) Represents the historical income statement of the Company for the
periods presented.
9) Represents the pro forma effect of leases entered into for hotels open
during the period presented. The foregoing pro forma income statement
assumes the six hotels which were completed prior to September 30, 1997
were sold as of their completion date. The Company estimates that in the
first full year following the sale of all 15 hotels the lease payment
will be approximately $10,000. Pro forma percentage rent cannot be
calculated at this time, as no hotels have reached their stabilization
for the periods presented. Stabilization commences the first day of the
thirteenth month following the hotel opening.
10) Represents the pro forma adjustment to depreciation and amortization.
The lease is considered an operating lease under FAS 13, and therefore
the Company would not have to record depreciation and amortization for
the hotels in the Transaction.
11) Represents the pro forma effect on interest.
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