SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------
MAY 21, 1996 (MAY 21, 1996)
(Date of Report (date of earliest event reported)
HFS Incorporated
(Exact name of Registrant as specified in its charter)
Delaware 1-11402 22-3059335
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or organization Identification Number)
339 Jefferson Road 07054
Parsippany, New Jersey (Zip Code)
(Address of principal executive)
(201) 428-9700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if applicable)
Item 5. Other Events
This Current Report on Form 8-K is being filed by HFS Incorporated (the
"Registrant") for purposes of incorporating by reference the exhibits listed in
Item 7 hereof in the Registrant's effective Registration Statements currently on
file with the Commission.
Item 7. Exhibits
Exhibit
No. Description
- ------- -----------
99.1 The unaudited consolidated financial statements of Coldwell Banker
Corporation and subsidiaries as of March 31, 1996 and for the three
months ended March 31, 1996 and 1995.
1
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.
HFS INCORPORATED
By: /s/ Stephen P. Holmes
-----------------------
Stephen Holmes
Executive Vice President
And Chief Financial Officer
(Principal Financial Officer
And Principal Accounting Officer)
Date: May 20, 1996
2
HFS INCORPORATED
CURRENT REPORT ON FORM 8-K
Report Dated May 21, 1996 (May 21, 1996)
EXHIBIT INDEX
Exhibit
No. Description Page No.
- ------- ----------- --------
99.1 The unaudited consolidated financial statements of Coldwell
Banker Corporation and subsidiaries as of March 31, 1996 and
for the three months ended March 31, 1996 and 1995.
<PAGE>
COLDWELL BANKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- --------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ....................... $ 23,149 $ 21,449
Accounts and commissions receivable (net of
allowance of $1,180 in 1996 and $1,093 in 1995) . 9,605 10,215
Subordinated receivable from sale of relocation
receivables .................................... 83,670 47,311
Notes receivable, current portion (net of
allowance of $1,285 in 1996 and $1,442 in 1995) . 1,440 2,284
Deferred income taxes ........................... 4,541 4,818
Prepaid expenses and other current assets ....... 4,742 4,686
----------- --------------
Total current assets .......................... 127,147 90,765
NOTES RECEIVABLE, LONG-TERM PORTION (NET OF
ALLOWANCE OF $507 IN 1996 AND 1995) .............. 5,332 4,811
DEFERRED INCOME TAXES .............................. 9,503 9,551
PROPERTY & EQUIPMENT, NET .......................... 63,210 63,230
GOODWILL AND OTHER INTANGIBLES, NET ................ 35,275 37,091
OTHER ASSETS ....................................... 5,688 4,481
----------- --------------
Total assets .................................. $246,155 $209,929
=========== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
COLDWELL BANKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------ --------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses ...... $ 98,222 $ 102,381
Accrued salaries and benefits .............. 14,730 18,000
Income taxes payable ....................... 8,175 9,002
Other notes payable, current portion ....... 33,370 37,425
Deferred revenue ........................... 3,229 2,236
----------- --------------
Total current liabilities ................ 157,726 169,044
LONG-TERM DEBT ................................ 132,000 83,500
OTHER NOTES PAYABLE, LONG TERM PORTION ....... 1,316 1,405
POSTRETIREMENT BENEFITS ....................... 1,765 1,721
OTHER LIABILITIES ............................. 866 932
----------- --------------
Total liabilities ........................ 293,673 256,602
----------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock, $.01 par value, 10,000,000
shares authorized; 5,749,155 shares issued
and outstanding ........................... 58 58
CAPITAL IN EXCESS OF PAR VALUE ............. 59,124 59,124
ACCUMULATED DEFICIT ........................ (106,700) (105,855)
----------- --------------
TOTAL STOCKHOLDERS' DEFICIENCY ........... (47,518) (46,673)
----------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY ................................. $ 246,155 $ 209,929
=========== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
COLDWELL BANKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
REVENUES:
Real estate commissions ....................... $113,399 $ 94,340
Franchise and service fees .................... 13,010 11,353
Fees for relocation services, net ............. 15,936 12,036
Interest ...................................... 1,405 1,945
Other ......................................... 8,865 7,177
-------------- --------------
Total revenues ............................... 152,615 126,851
-------------- --------------
EXPENSES:
Commissions, fees and other direct expenses .. 69,444 57,078
Other operating expenses ...................... 79,480 75,519
Interest ...................................... 1,831 900
Amortization of goodwill and other intangibles 1,823 2,657
Other ......................................... 1,438 1,604
-------------- --------------
Total expenses ............................... 154,016 137,758
-------------- --------------
LOSS BEFORE BENEFIT FOR INCOME TAXES
AND EXTRAORDINARY ITEM ....................... (1,401) (10,907)
BENEFIT FOR INCOME TAXES ....................... (556) (4,640)
-------------- --------------
LOSS BEFORE EXTRAORDINARY ITEM ................. (845) (6,267)
EXTRAORDINARY ITEM, LOSS ON EARLY
EXTINGUISHMENT OF DEBT, NET OF TAX BENEFIT
OF $1,593 .................................... 2,027
-------------- --------------
NET LOSS ....................................... $ (845) $ (8,294)
============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
COLDWELL BANKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
--------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT TOTAL
----------- -------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE
December 31, 1995 (Audited) 5,749,155 $58 $59,124 $(105,855) $(46,673)
Net loss for the three months
ended March 31, 1996 ........ (845) (845)
----------- -------- ------------ ------------- -----------
BALANCE
March 31, 1996 (Unaudited) . 5,749,155 $58 $59,124 $(106,700) $(47,518)
=========== ======== ============ ============= ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
COLDWELL BANKER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities ....... ($37,944) $ 10,400
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment ..................... (3,545) (2,223)
Expenditures for capitalized direct franchising costs ...... (1,171) (650)
Payments for acquisitions ................................... (37) (8,690)
Other ....................................................... 152 531
-------------- --------------
Net cash used in investing activities ..................... (4,601) (11,032)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in other notes payable ......................... (4,255) (1,381)
Repayments under senior subordinated notes .................. (29,350)
Extraordinary item, loss on early extinguishment of debt,
net ........................................................ (2,027)
Borrowings under senior revolver, net ....................... 48,500 34,000
-------------- --------------
Net cash provided by financing activities ................. 44,245 1,242
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................... 1,700 610
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .............. 21,449 28,740
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................... $23,149 $ 29,350
============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
COLDWELL BANKER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months ended March 31, 1996 and 1995
1. Basis of Presentation
The consolidated balance sheet of Coldwell Banker Corporation (the
"Company") as of March 31, 1996, the consolidated statements of income and cash
flows for the three months ended March 31, 1996 and 1995 and the consolidated
statement of stockholders' deficiency for the three months ended March 31, 1996
are unaudited. In the opinion of management, all adjustments necessary for a
fair presentation of such financial statements have been included. Such
adjustments consisted only of normal recurring items. The consolidated financial
statements and notes are presented as would have been required by Form 10-Q and
do not contain certain information included in the Company's annual consolidated
financial statements. The December 31, 1995 consolidated balance sheet and
statement of stockholders' deficiency was derived from the Company's audited
financial statements and should be read in conjunction with the Company's
consolidated financial statements and notes thereto.
The Company experiences seasonal revenue patterns similar to those of
the real estate industry wherein the summer months produce higher revenue than
other periods of the year. Accordingly, the first and fourth quarters are
traditionally weaker than the second and third quarters and interim results are
not necessarily indicative of results for a full year.
Through its subsidiaries, all of which are wholly-owned, the Company
operates a network of company-owned brokerage offices, which conduct real estate
brokerage, leasing and management activities in the residential real estate
market in the United States. As the franchiser of the Coldwell Banker name and
systems, the Company through a subsidiary, Coldwell Banker Residential
Affiliates, Inc., also provides services, products and certain rights to the
Coldwell Banker name to independently owned franchisees throughout the United
States, Canada and Puerto Rico. Another subsidiary, Coldwell Banker Relocation
Services, Inc., provides various relocation services to client corporations that
transfer their employees to other geographic locations. Other subsidiaries
provide various other real estate related services.
2. Income Taxes
The effective income tax rate is based on estimated annual taxable
income and other factors.
3. Pending Acquisitions by HFS
On May 1, 1996, the Company entered into an agreement to be acquired by
merger ("the Merger") by HFS Incorporated ("HFS") who engages in the business of
franchising guest lodging facilities and real estate brokerage offices. HFS
agreed to pay $640 million in cash for all of the outstanding capital stock of
the Company and to repay approximately $100 million of indebtedness of the
Company. While completion of this transaction is not assured, the Company
expects that the transaction will be completed on or about May 31, 1996. The
Merger, if consummated, will be accounted for under the purchase method of
accounting.
