<PAGE> 1
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): February 19, 1998
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BRIDGESTREET ACCOMMODATIONS, INC.
---------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 000-22843 04-3327773
-------- --------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
30670 BAINBRIDGE ROAD, SOLON, OH 44139
-------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (440) 248-3005
N.A.
----
(Former name or former address, if changed since last report)
<PAGE> 2
THIS FORM 8-K HAS BEEN AMENDED TO INCLUDE THE FINANCIAL STATEMENTS AND PRO FORMA
FINANCIAL INFORMATION OMITTED FROM THE INITIAL REPORT ON FORM 8-K FILED ON MARCH
4, 1998.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS:
On February 19, 1998, BridgeStreet Accommodations, Inc. (the "Company")
completed the acquisition of all of the issued and outstanding capital stock of
London Life Apartments Limited ("London Life"), a privately held corporation
that provides corporate lodging services in London, U.K. The transaction
consisted of the issuance of 165,998 shares of the Company's common stock, $0.01
par value per share (the "Common Stock") and the payment of $5.4 million in
cash.
The cash portion of the purchase price was funded from the proceeds of the
Company's September 1997 initial public offering of Common Stock. The purchase
price paid by the Company in connection with the acquisition was determined as
the result of negotiations between the Company and London Life.
London Life was founded in 1988 and provides both short and long term living
accommodations primarily to large corporations. London Life currently leases and
manages approximately 200 apartment units throughout Central London.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
London Life Apartments:
We have audited the accompanying balance sheet of London Life Apartments (a
United Kingdom Partnership) as of January 31, 1998 and the related statements of
operations, partnership funds and cash flows for the ten months then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of London Life Apartments as of
January 31, 1998, and the results of its operations and its cash flows for the
ten months then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
April 17, 1998.
<PAGE> 4
London Life Apartments
Balance sheet
January 31, 1998
<TABLE>
<CAPTION>
January 31
ASSETS 1998
----------
<S> <C>
CURRENT ASSETS
Cash $ 568,959
Trade receivables, less allowance for doubtful accounts of $98,100 877,997
Security deposits held by landlords 97,261
Prepaid rent 708,143
Other current assets 26,561
----------
TOTAL CURRENT ASSETS 2,278,921
----------
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 63,029
----------
TOTAL ASSETS $2,341,950
----------
LIABILITIES AND PARTNERSHIP FUNDS
CURRENT LIABILITIES
Accounts payable $ 363,704
Accrued expenses 115,639
Value added taxes payable 207,828
Deferred revenue 855,234
Security deposits due to customers 129,705
----------
TOTAL CURRENT LIABILITIES 1,672,110
----------
PARTNERSHIP FUNDS 669,840
----------
TOTAL LIABILITIES AND PARTNERSHIP FUNDS $2,341,950
----------
</TABLE>
The accompanying notes to financial statements are an integral part of this
balance sheet.
<PAGE> 5
London Life Apartments
Statement of operations
For the 10 months ended January 31, 1998
<TABLE>
<CAPTION>
Ten months
ended
January 31
1998
----------
<S> <C>
REVENUES $8,496,828
OPERATING EXPENSES
Cost of services 6,864,968
Selling, general and administrative expense 674,145
---------
TOTAL OPERATING EXPENSES 7,539,113
---------
OPERATING INCOME 957,715
---------
OTHER INCOME
Other income, net 28,099
---------
NET INCOME
$ 985,814
---------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 6
London Life Apartments
Statement of partnership funds
For the 10 months ended January 31, 1998
<TABLE>
<CAPTION>
Total
Samantha James partnership
Luff Koe funds
--------- --------- ---------
<S> <C> <C> <C>
Balance, 31 March 1997 $ 144,016 $ 151,069 $ 295,085
Net income 492,907 492,907 985,814
Distributions (227,896) (383,163) (611,059)
--------- --------- ---------
Balance, 31 January 1998 $ 409,027 $ 260,813 $ 669,840
--------- --------- ---------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 7
London Life Apartments
Statement of cash flows
For the 10 months ended January 31, 1998
<TABLE>
<CAPTION>
Ten months
ended
January 31
1998
-----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 985,814
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization 13,585
CHANGE IN OPERATING ASSETS AND LIABILITIES
Accounts receivable (271,618)
Security deposits held by landlords (3,368)
Other current assets (163,134)
Accounts payable 129,955
Accrued expenses 165,258
Security deposits due to customers 72,977
Deferred revenue 223,923
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,153,392
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (31,053)
-----------
NET CASH USED FOR INVESTING ACTIVITIES (31,053)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Partnership distributions (611,059)
-----------
NET CASH USED FOR FINANCING ACTIVITIES (611,059)
-----------
NET INCREASE IN CASH $ 511,280
CASH, BEGINNING OF PERIOD 57,679
-----------
CASH, END OF PERIOD $ 568,959
-----------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 8
London Life Apartments
Notes to financial statements
January 31, 1998
1. BUSINESS AND ORGANIZATION:
--------------------------
London Life Apartments is a United Kingdom (UK) partnership catering to the
short and long term accommodation needs of the business community.
James Koe and Samantha Luff were 50:50 partners throughout the 10 months ended
January 31, 1998.
2. BASIS OF PRESENTATION:
----------------------
The accompanying statements present: (1) the assets and liabilities as of
January 31, 1998 of London Life Apartments (the Partnership) that were
transferred to London Life Apartments Limited (Limited) on January 16, 1998 and
subsequently acquired and assumed by BridgeStreet Accommodations, Inc. (the
Company) on February 19, 1998 effective February 1, 1998 and (2) the statements
of operations, partnership funds and cash flows of the Partnership for the ten
months ended January 31, 1998. These statements have been prepared solely as a
result of the requirements of Section 3.05 of Regulation S-X of the Securities
and Exchange Commission (SEC), for filing by the Company as part of the SEC Form
8-K reporting the acquisition of the subject assets.
The accompanying statements are prepared on the historical cost basis to the
Partnership and do not reflect any adjustments which may occur as a result of
the allocation of the purchase price by the Company to the assets acquired and
liabilities assumed.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
The following is a summary of significant accounting policies followed in the
preparation of these financial statements.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires the partners 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.
Revenue Recognition
- -------------------
Short Term Serviced Accommodation - Revenues are recognized on a pro rata basis
over the term of the lease with the guest. Estate Agency/Relocation Services -
Commissions are recognized at the time of the booking of the unit up to the
break option date. Corporate Lease Management - Revenues are recognized on a pro
rata basis over the term of the management agreement.
Rental Prepayments
- ------------------
The partnership records cash payments to landlords in advance of the relevant
rental period as prepayments and recognizes these amounts as costs on a pro rata
basis over the length of this period.
<PAGE> 9
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
-------------------------------------------------------
Property and Equipment
- ----------------------
Property and equipment are stated at cost less accumulated depreciation. Upon
sale or retirement, the related cost and accumulated depreciation are removed
from the accounts, and any gain or loss is recorded in the statement of
operations.
Notes to financial statements (continued)
The depreciation policy adopted by the Partnership is:
Automobiles - 20% on a reducing balance basis.
All other assets - 25% on a straight line basis with full
depreciation calculated in month of
purchase.
Repairs and maintenance are charged to expense as incurred.
Taxes
- -----
No provision for income taxes is necessary in the financial statements of the
Partnership as the tax effects of its activities accrue to the partners.
Currency Translation
- --------------------
The financial statements of the partnership are prepared in UK pounds sterling
and have been translated into US dollars using an assumed closing exchange rate
of (pound)1: $1.635. The year end exchange rate approximates the average
exchange rate for the period shown.
Accommodation
- -------------
The partnership leases a significant portion of its accommodations with lease
terms that range from three months to several years.
4. PROPERTY AND EQUIPMENT:
-----------------------
<TABLE>
<CAPTION>
January 31
1998
----------
<S> <C>
Computer equipment $ 42,293
Furniture, fittings and office equipment 22,174
Automobiles 50,023
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TOTAL PROPERTY AND EQUIPMENT $114,490
LESS-ACCUMULATED DEPRECIATION 51,461
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PROPERTY AND EQUIPMENT, NET $ 63,029
--------
</TABLE>
The depreciation expense for the period was $13,585.
The partnership property and equipment was effectively valued at $81,750 in the
acquisition in note 7.
5. DEFERRED REVENUE:
-----------------
Deferred revenue represents rent received from the customers relating to a
period after January 31, 1998. All deferred revenue at January 31, 1998 will be
recognized in the following year.
6. SIGNIFICANT CUSTOMERS:
----------------------
The partners are aware that several customers have each provided the partnership
with in excess of 10% of its total revenues for the 10 months to 31 January
1998.
<PAGE> 10
Notes to financial statements (continued)
7. LEASE COMMITMENTS:
------------------
The Company leases administrative offices, through June 2005. Minimum future
rental payments on non-cancellable leases at January 31, 1998 are as follows:
<TABLE>
<CAPTION>
Operating
leases
----------
<S> <C>
1998 $ 37,469
1999 40,875
2000 40,875
2001 40,875
2002 40,875
Thereafter 101,336
--------
Total $302,305
========
</TABLE>
8. SUBSEQUENT EVENTS:
------------------
On January 31, 1998 the Partnership's goodwill and a number of assets and
liabilities were effectively acquired by BridgeStreet Accommodations, Inc
through a newly formed UK subsidiary.
The partnership ceased trading as of this date.
<PAGE> 11
PRO FORMA FINANCIAL INFORMATION
The following unaudited Pro Forma Consolidated Balance Sheet of BridgeStreet
Accommodations, Inc. (the Company) as of December 31, 1997 is presented as if
the acquisition of London Life Apartments Limited (London Life) had been
consummated as of December 31, 1997. The unaudited Pro Forma Consolidated
Statement of Operations of the Company for the year ended December 31, 1997 is
presented as if ( i ) the Company's initial public offering as of September 24,
1997 (the Offering) , ( ii) the acquisition of HAI Acquisition Corp. on March
31, 1997 ( iii ) the acquisition of certain assets of Accommodations by Apple,
Inc. (ABA of Dallas) on December 1, 1997, ( iv ) the acquisition of certain
assets of Accommodations by Apple, Inc. (ABA of Phoenix) on December 1, 1997,
and ( v ) the acquisition of London Life had been consummated as of January 1,
1997. The pro forma information is not necessarily indicative of what actual
financial position or results of operations of the Company would have been had
such transactions been consummated as of the dates indicated, nor does it
purport to represent the financial position or results of operations for future
periods.
<PAGE> 12
BRIDGESTREET ACCOMMODATIONS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Historical London Life
Company Acquisition Pro Forma
------------------------------------------
(A) (B)
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 8,922 ($ 5,401) $ 3,521
Trade accounts receivable, net 2,218 2,218
Other current assets 2,316 493 2,809
-------- -------- -------
Total current assets 13,456 (4,908) 8,548
-------- -------- -------
Property, equipment and operating stock, net 4,218 63 4,281
Goodwill, net of amortization 24,332 7,805 32,137
Other assets 557 557
-------- -------- -------
Total assets $ 42,563 $ 2,960 $ 45,523
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 20 20
Due to Stockholders and affiliates 101 101
Accounts payable and accrued expenses 3,013 125 3,138
Other current liabilities 1,149 985 2,134
-------- -------- -------
Total Current Liabilities 4,283 1,110 5,393
Long-term debt, net of current maturities 26 26
Deferred income taxes 676 676
Stockholder's' equity 37,578 1,850 39,428
-------- -------- -------
Total liabilities and stockholders' equity $ 42,563 $ 2,960 $ 45,523
======== ======== ========
</TABLE>
See the accompanying notes to pro forma consolidated balance sheet.
<PAGE> 13
BRIDGESTREET ACCOMMODATIONS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
(A) Represents the Company's audited historical balance sheet as of December
31, 1997 as reported in the Company's Form 10-K for the twelve month period
then ended.
(B) Represents the pro forma adjustments to reflect the Company's acquisition
of London Life for $7.25 million consisting of $5.4 million in cash,
funded from the proceeds of the Company's Offering and the issuance of
165,998 shares of Common Stock valued at $1.85 million. In connection
with the acquisition the Company did not acquire the cash, accounts
receivable, accounts payable and certain accrued liabilities of London
Life.
<PAGE> 14
BRIDGESTREET ACCOMMODATIONS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical All Other London Life
Company Offering Acquisitions Acquisition Pro Forma
-------------------------------------------------------------
(A) (B) (C) (D)
<S> <C> <C> <C> <C> <C>
Revenues 50,750 10,633 8,497 69,880
Operating Expenses:
Cost of services 37,737 8,513 6,800 53,050
Selling, general and administrative expense 9,887 1,275 1,004 12,166
Officers' stock compensation 1,210 0 0 1,210
Goodwill amortization 489 220 224 933
----------- --- --- --- ------
Total operating expenses 49,323 0 10,008 8,028 67,359
----------- --- --- --- ------
Operating income 1,427 0 625 469 2,521
Other income, net 398 120 2 27 547
Income before provision for income
taxes 1,825 120 627 496 3,068
Provision for income taxes 1,371 48 266 288 1,973
----------- --- --- --- ------
Net income 454 72 361 208 1,095
=========== === === === ======
Net income per share - basic and dilutive $0.08 $0.14
=========== =====
Weighted average shares outstanding - basic 5,904 8,033
Weighted average shares outstanding -
dilutive 5,930 8,059
</TABLE>
See the accompanying notes to pro forma consolidated statement of operations.
<PAGE> 15
BRIDGESTREET ACCOMMODATIONS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED, AMOUNTS IN THOUSANDS)
(A) Represents the Company's audited historical consolidated statement of
operations for the year ended December 31, 1997 as reported in the
Company's Form 10-K for the twelve month period then ended.
(B) Represents pro forma adjustments to the Company's historical consolidated
statement of operations for the year ended December 31, 1997 to reflect the
assumed consummation of the Offering as of January 1, 1997. For additional
information, please see pages F - 6 through F - 8 (historical and pro forma
financial statements) of the Company's prospectus dated September 24, 1997
and the Company's annual report on Form 10-K for the year ended December
31, 1997.
(C) Represents pro forma adjustments to reflect the assumed consummation of the
acquisitions of ( i ) HAI Acquisition Corp. on March 31, 1997 ( ii ) the
acquisition of certain assets of Accommodations by Apple, Inc. (ABA of
Dallas) on December 1, 1997, and ( iii ) the acquisition of certain assets
of Accommodations by Apple, Inc. (ABA of Phoenix) on December 1, 1997 as of
January 1, 1997. The pro forma adjustments include the following:
1. Compensation of certain key executives of the acquired companies has
been adjusted to reflect the compensation to be paid pursuant to
employment agreements signed in connection with the acquisition.
2. Amortization of goodwill over 35 years.
3. Provision of income taxes has been adjusted to reflect the Company's
consolidated effective tax rate, after considering non-deductible
goodwill amortization.
(D) Represents pro forma adjustment to reflect the assumed consummation of the
acquisition of London Life on February 19, 1998 as of January 1, 1997. The
pro forma adjustments reflect the operations of London Life for the ten
months ended January 31, 1998 which for the purposes of this filing
constitutes a full year. Pro forma adjustments include the following:
1. Compensation of certain key executives has been adjusted by $330 to
reflect the compensation to be paid pursuant to employment agreements
signed in connection with the acquisition.
2. Amortization of goodwill over 35 years.
3. Provision of income taxes has been adjusted to reflect the Company's
consolidated effective tax rate, after considering non-deductible
goodwill amortization.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused Amendment No. 1 to this report to be signed on its
behalf by the undersigned hereunto duly authorized:
BRIDGESTREET ACCOMMODATIONS, INC.
By: /s/ Mark D. Gagne
------------------------------------
Mark D. Gagne, C.P.A.
Chief Financial Officer
Date: May 4, 1998
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
BridgeStreet Accommodations, Inc.
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 8-K/A, as amended, into the Company's previously
filed Registration Statement (No. 333-37697) on Form S-8.
Arthur Andersen LLP
Cleveland, Ohio,
May 4, 1998.
