SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTER ENDED MARCH 28, 1997 COMMISSION FILE NO. 33-95060
HOST INTERNATIONAL, INC.
DELAWARE 52-1242334
------------------------ ---------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
6600 ROCKLEDGE DRIVE
BETHESDA, MARYLAND 20817
(301) 380-7000
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No __
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION (UNAUDITED):
Condensed Consolidated Statements of Operations -
For the Twelve Weeks Ended March 28, 1997 and March 22, 1996 2
Condensed Consolidated Balance Sheets -
As of March 28, 1997 and January 3, 1997 3
Condensed Consolidated Statements of Cash Flows -
For the Twelve Weeks Ended March 28, 1997 and March 22, 1996 4
Condensed Consolidated Statement of Shareholder's Deficit -
For the Twelve Weeks Ended March 28, 1997 5
Notes to Condensed Consolidated Financial Statements 6-10
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-16
PART II. OTHER INFORMATION AND SIGNATURE:
Legal Proceedings 17
Changes in Securities 17
Defaults Upon Senior Securities 17
Submission of Matters to a Vote of Security Holders 17
Other Information 17
Exhibits and Reports on Form 8-K 17
Signature 18
1
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
----------------------------------
MARCH 28, MARCH 22,
1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $238.8 $236.3
- -------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Cost of sales 69.4 70.2
Payroll and benefits 74.5 73.5
Occupancy costs 55.7 53.7
General and administrative 12.5 12.2
Other 23.3 24.3
- -------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 235.4 233.9
- -------------------------------------------------------------------------------------------------------------
OPERATING PROFIT 3.4 2.4
Interest expense (9.2) (9.2)
Interest income 0.7 0.2
- -------------------------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (5.1) (6.6)
Benefit for income taxes (2.0) (2.8)
- -------------------------------------------------------------------------------------------------------------
NET LOSS $ (3.1) $ (3.8)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 28, JANUARY 3,
1997 1997
- ------------------------------------------------------------------------------ ----------------- -- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 72.5 $ 93.1
Accounts receivable, net 29.9 26.2
Inventories 38.6 40.8
Deferred income taxes 26.2 27.0
Prepaid rent 6.4 5.9
Other current assets 4.3 3.4
- ------------------------------------------------------------------------------ ----------------- -- ----------------
Total current assets 177.9 196.4
Property and equipment, net 248.5 245.1
Intangible assets 24.5 23.1
Deferred income taxes 53.2 51.7
Other assets 19.4 19.6
- --------------------------------------------------------------------------------------------------- ----------------
Total assets $ 523.5 $ 535.9
- ------------------------------------------------------------------------------ ----------------- -- ----------------
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable $ 74.5 $ 93.1
Accrued payroll and benefits 43.4 45.7
Accrued interest payable 13.5 4.8
Current portion of long-term debt 0.8 0.8
Other current liabilities 62.3 59.4
- ------------------------------------------------------------------------------ ----------------- -- ----------------
Total current liabilities 194.5 203.8
Long-term debt 407.3 407.4
Other liabilities 55.4 54.7
- ------------------------------------------------------------------------------ ----------------- -- ----------------
Total liabilities 657.2 665.9
Common stock, no par value, 100 shares authorized,
issued and outstanding --- ---
Additional paid-in capital --- ---
Retained deficit (133.7) (130.0)
- --------------------------------------------------------------------------------------------------------------------
Total shareholder's deficit (133.7) (130.0)
- ------------------------------------------------------------------------------ ----------------- -- ----------------
Total liabilities and shareholder's deficit $ 523.5 $ 535.9
- ------------------------------------------------------------------------------ ----------------- -- ----------------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
--------------------------------------
MARCH 28, MARCH 22,
1997 1996
- ------------------------------------------------------------------------------ --------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (3.1) $ (3.8)
Adjustments to reconcile net income to cash from operations:
Depreciation and amortization 11.6 10.8
Amortization of deferred financing costs 0.2 0.2
Income taxes (0.7) (2.8)
Other 1.0 0.1
Working capital changes:
(Increase) decrease in accounts receivable (3.6) 0.8
Decrease in inventories 2.0 0.8
(Increase) decrease in other current assets (1.5) 0.1
Increase (decrease) in accounts payable and accruals (12.6) 8.7
- ------------------------------------------------------------------------------ ----------------- -- -----------------
Cash provided by (used in) operations (6.7) 14.9
INVESTING ACTIVITIES
Capital expenditures (12.2) (11.8)
Other, net (1.4) (0.6)
- ------------------------------------------------------------------------------ ----------------- -- -----------------
Cash used in investing activities (13.6) (12.4)
FINANCING ACTIVITIES
Repayments of long-term debt (0.2) (0.4)
Foreign exchange translation adjustments (0.1) ---
- ------------------------------------------------------------------------------ ----------------- -- -----------------
Cash used in financing activities (0.3) (0.4)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (20.6) 2.1
CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER 93.1 45.3
- ------------------------------------------------------------------------------ ----------------- -- -----------------
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 72.5 $ 47.4
- ------------------------------------------------------------------------------ ----------------- -- -----------------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT (UNAUDITED)
TWELVE WEEKS ENDED MARCH 28, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL DEFICIT TOTAL
- -------------------------------------------- ----------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Balance, January 3, 1997 $ --- $ --- $(130.0) $(130.0)
Deferred compensation and other --- --- (0.6) (0.6)
Net loss --- --- (3.1) (3.1)
- -------------------------------------------- ----------------- ---------------- ----------------- -----------------
BALANCE, MARCH 28, 1997 $ --- $ --- $(133.7) $(133.7)
- -------------------------------------------- ----------------- ---------------- ----------------- -----------------
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed consolidated financial statements of Host
International, Inc. (the "Company", a wholly owned subsidiary of Host
Marriott Services Corporation) and its subsidiaries, have been prepared
without audit. The Company manages travel plazas on six tollroads for Host
Marriott Tollroads, Inc. (a wholly owned subsidiary of Host Marriott
Services Corporation) and receives management fees for such services. Base
management fees are determined as a percentage of revenues, with additional
incentive management fees determined as a percentage of available cash
flow.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes the
disclosures made are adequate to make the information presented not
misleading. However, the condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal
year ended January 3, 1997. Capitalized terms not otherwise defined herein
have the meanings specified in the Annual Report on Form 10-K.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
consolidated financial position of the Company as of March 28, 1997 and
January 3, 1997 and the results of operations and cash flows for the
interim periods presented. Interim results are not necessarily indicative
of fiscal year performance because of the impact of seasonal and short-term
variations.
The consolidated financial statements include the accounts of the Company
and its subsidiaries and controlled affiliates. Investments in 50% or less
owned affiliates over which the Company has the ability to exercise
significant influence are accounted for using the equity method. All
material intercompany transactions and balances between the Company and its
subsidiaries have been eliminated. Certain reclassifications were made to
the prior year financial statements to conform to the 1997 presentation.
2. The Company adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," during 1996. The Company is
required to adopt SFAS No. 129, "Disclosure of Information about Capital
Structure," no later than its fiscal year ending January 2, 1998. The
adoption of SFAS No. 129 will not have a material effect on the Company's
consolidated financial statements.
3. Management approved a formal restructuring plan in October 1995 and the
Company recorded a pretax restructuring charge to earnings of $14.5 million
in the fourth quarter of 1995. The restructuring charge was primarily
comprised of involuntary employee termination benefits (related to its
realignment of operational responsibilities) and lease cancellation penalty
fees and related costs resulting from the Company's plan to exit certain
activities in its entertainment venues.
The employee termination benefits included in the restructuring charge
reflect the immediate elimination of approximately 100 corporate and field
operations positions and the elimination of approximately 200 additional
field operations positions, all of which were specifically identified in
the restructuring plan. Certain initiatives of the restructuring plan were
scheduled to be implemented throughout the duration of the plan, resulting
in an extended period over which the 200 additional field operations
positions would be eliminated. The Company expects to complete its plan to
involuntarily terminate employees by the end of the second quarter of 1997,
although severance payments are expected to continue beyond the end of the
second quarter of 1997 due to the provisions of the program that allow for
extended severance payments. As of the end of the first quarter of 1997,
the Company had terminated 202 positions in connection with the
restructuring plan.
Also as a part of the restructuring, the Company committed to exit certain
operating units in entertainment venues which were deemed to be
inconsistent with the Company's core operating strategies. As of the end of
the first quarter of 1997, this portion of the restructuring plan was
essentially complete.
6
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
The following table sets forth the restructuring reserve and related
activity as of March 28, 1997:
<TABLE>
<CAPTION>
- -------------------------------------- --------------- -- -------------------------------------- -- -----------------
ACTIVITY TO DATE
--------------------------------------
CHANGES RESERVE
PROVISION COSTS IN AS OF
(IN MILLIONS) RECORDED INCURRED ESTIMATE 3/28/97
- -------------------------------------- --------------- -- ----------------- -- ----------------- -- -----------------
<S> <C> <C> <C> <C>
Employee termination benefits $11.6 $ 6.3 $ --- $ 5.3
Asset write-downs 0.5 0.8 0.3 ---
Lease cancellation penalty fees
and related costs 2.4 1.9 (0.3) 0.2
- -------------------------------------- --------------- -- ----------------- -- ----------------- -- -----------------
Total $14.5 $ 9.0 $ --- $ 5.5
- -------------------------------------- --------------- -- ----------------- -- ----------------- -- -----------------
</TABLE>
4. Cash and cash equivalents generally include all highly liquid investments
with a maturity of three months or less at the date of purchase. These
investments include money market assets and commercial paper used as a part
of the Company's cash management activities.
5. SUPPLEMENTAL GUARANTOR AND NON-GUARANTOR SUBSIDIARY INFORMATION
Certain subsidiaries of the Company guarantee the Senior Notes. The
separate financial statements of each guaranteeing subsidiary (together,
the "Guarantor Subsidiaries") are not presented because the Company's
management has concluded that such separate financial statements are not
material to investors. The guarantee of each Guarantor Subsidiary is full
and unconditional and joint and several and each Guarantor Subsidiary is a
wholly owned subsidiary of the Company. Certain of the Company's controlled
affiliates, in which the Company owns between 50% and 90% interest, are not
guarantors of the Senior Notes. The ability of the Company's Non-Guarantor
Subsidiaries to make dividends to the Company is restricted to the extent
of the minority interests' share in the affiliates' combined net assets.
There is no subsidiary of the Company the capital stock of which comprises
a substantial portion of the collateral for the Senior Notes within the
meaning of Rule 3-10 of Regulation S-X. The following condensed
consolidating financial information sets forth the combined results of
operations, financial position, and cash flows of the parent, Guarantor
Subsidiaries and Non-guarantor Subsidiaries. Certain reclassifications were
made to conform all of the supplemental information to the financial
presentation on a consolidated basis. The principal eliminating and
adjusting entries reflect (i) Company debt and related interest charges
reflected in the financial statements of the Company (as obligor) and also
the Guarantor Subsidiaries, (as guarantors), (ii) investments, advances and
equity in earnings in subsidiaries, and (iii) the minority interests'
equity interests in the partnership distributions and the minority interest
liabilities.
7
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
SUPPLEMENTAL CONSOLIDATING STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED MARCH 28,1997
- ----------------------------------------- --------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATIONS &
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Revenues $ --- $ 207.5 $31.3 $ --- $238.8
Operating costs and expenses --- 207.8 27.6 --- 235.4
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
Operating profit --- (0.3) 3.7 --- 3.4
Interest expense (9.0) (9.2) --- 9.0 (9.2)
Interest income 0.7 0.7 --- (0.7) 0.7
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
Income (loss) before income taxes (8.3) (8.8) 3.7 8.3 (5.1)
Benefit for income taxes (2.0) (2.0) --- 2.0 (2.0)
Equity interest in affiliates 3.2 --- --- (3.2) ---
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
Net income (loss) $ (3.1) $ (6.8) $ 3.7 $ 3.1 $(3.1)
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED MARCH 22, 1996
- ----------------------------------------- --------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATIONS &
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Revenues $ --- $208.3 $28.0 $ --- $ 236.3
Operating costs and expenses --- 208.1 25.8 --- 233.9
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
Operating profit --- 0.2 2.2 --- 2.4
Interest expense (9.0) (9.2) --- 9.0 (9.2)
Interest income 0.2 0.2 --- (0.2) 0.2
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
Income (loss) before income taxes (8.8) (8.8) 2.2 8.8 (6.6)
Benefit for income taxes (2.8) (2.8) --- 2.8 (2.8)
Equity interest in affiliates 2.2 --- --- (2.2) ---
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
Net income (loss) $ (3.8) $ (6.0) $ 2.2 $ 3.8 $ (3.8)
- ----------------------------------------- ----------- -------------- ------------------ ------------------ ---------------
</TABLE>
8
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
SUPPLEMENTAL CONSOLIDATING BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 28, 1997
1997
- --------------------------------------- ----------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATIONS &
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 41.5 $ 30.2 $ 0.8 $ --- $ 72.5
Other current assets --- 92.3 13.1 --- 105.4
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total current assets 41.5 122.5 13.9 --- 177.9
Property and equipment, net --- 229.1 19.4 --- 248.5
Other assets --- 97.1 --- --- 97.1
Investments in subsidiaries 224.8 --- --- (224.8) ---
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total Assets $ 266.3 $ 448.7 $ 33.3 $(224.8) $ 523.5
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Current liabilities:
Accounts payable $ --- $ 69.4 $ 5.1 $ --- $ 74.5
Accrued payroll and benefits --- 43.4 --- --- 43.4
Other current liabilities --- 66.9 9.7 --- 76.6
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total current liabilities --- 179.7 14.8 --- 194.5
Long-term debt 400.0 407.3 --- (400.0) 407.3
Other liabilities --- 49.7 0.1 5.6 55.4
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total Liabilities 400.0 636.7 14.9 (394.4) 657.2
Owner's equity (deficit) (133.7) (188.0) 18.4 169.6 (133.7)
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total Liabilities and Owner's Deficit $ 266.3 $ 448.7 $ 33.3 $(224.8) $ 523.5
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
JANUARY 3, 1997
- --------------------------------------- ----------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATIONS &
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 75.3 $ 16.1 $ 1.7 $ --- $ 93.1
Other current assets --- 93.5 9.8 --- 103.3
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total current assets 75.3 109.6 11.5 --- 196.4
Property and equipment, net --- 225.3 19.8 --- 245.1
Other assets --- 94.4 --- --- 94.4
Investments in subsidiaries 194.7 --- --- (194.7) ---
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total Assets $ 270.0 $ 429.3 $ 31.3 $(194.7) $ 535.9
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Current liabilities:
Accounts payable $ --- $ 83.0 $ 10.1 $ --- $ 93.1
Accrued payroll and benefits --- 45.7 --- --- 45.7
Other current liabilities --- 65.0 --- --- 65.0
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total current liabilities --- 193.7 10.1 --- 203.8
Long-term debt 400.0 407.4 --- (400.0) 407.4
Other liabilities --- 49.9 --- 4.8 54.7
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total Liabilities 400.0 651.0 10.1 (395.2) 665.9
Owner's equity (deficit) (130.0) (221.7) 21.2 200.5 (130.0)
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
Total Liabilities and Owner's Deficit $ 270.0 $ 429.3 $ 31.3 $(194.7) $ 535.9
- --------------------------------------- ------------- -------------- ------------------ ------------------ ---------------
</TABLE>
9
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
SUPPLEMENTAL CONSOLIDATING STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED MARCH 28, 1997
- ---------------------------------------- ------------------------------------------------------------------------------
NON- ELIMINATIONS
GUARANTOR GUARANTOR &
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operations $ (8.1) $ (11.6) $ 4.9 $ 8.1 $ (6.7)
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
Investing activities:
Capital expenditures --- (11.2) (1.0) --- (12.2)
Other --- (1.4) 0.5 (0.5) (1.4)
Advances (to) from subsidiaries (25.7) 38.6 (4.8) (8.1) ---
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
Cash provided by (used in)
investing activities (25.7) 26.0 (5.3) (8.6) (13.6)
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
Financing activities:
Repayments of debt --- (0.2) --- --- (0.2)
Foreign exchange translation
adjustments --- (0.1) --- --- (0.1)
Partnership contributions
(distributions), net --- --- (0.5) 0.5 ---
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
Cash used in
financing activities --- (0.3) (0.5) 0.5 (0.3)
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
Increase (decrease) in cash and
cash equivalents $ (33.8) $ 14.1 $ (0.9) $ --- $ (20.6)
- ---------------------------------------- -------------- --------------- -------------- ---------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED MARCH 22, 1996
- ---------------------------------------- ------------------------------------------------------------------------------
NON- ELIMINATIONS
GUARANTOR GUARANTOR &
PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operations $ (8.6) $ 11.3 $ 3.6 $ 8.6 $ 14.9
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
Investing activities:
Capital expenditures --- (5.5) (6.3) --- (11.8)
Other --- (0.6) (2.7) 2.7 (0.6)
Advances (to) from subsidiaries 22.1 (16.2) 2.7 (8.6) ---
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
Cash provided by (used in)
investing activities 22.1 (22.3) (6.3) (5.9) (12.4)
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
Financing activities:
Repayments of debt --- (0.4) --- --- (0.4)
Partnership contributions
(distributions), net --- --- 2.7 (2.7) ---
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
Cash provided by (used in)
financing activities --- (0.4) 2.7 (2.7) (0.4)
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
Increase (decrease) in cash and
cash equivalents $ 13.5 $ (11.4) $ --- $ --- $ 2.1
- ---------------------------------------- ------------- ---------------- -------------- --------------- ----------------
</TABLE>
10
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company manages travel plaza concessions contracts on six tollroads for Host
Marriott Tollroads, Inc. (a wholly owned subsidiary of Host Marriott Services
Corporation). Base management fees related to these travel plaza contracts are
based on a percentage of total revenues earned during the period by each of the
travel plazas, with additional incentive management fees determined as a
percentage of available cash flow.
REVENUES. Revenues, including management fee income, for the twelve weeks
("quarter") ended March 28, 1997 increased by $2.5 million, or 1.1%, to $238.8
million compared with revenues of $236.3 million in the first quarter of 1996.
This increase was driven by solid performance in comparable domestic airport
concessions operations and the opening of the Ontario Mills food court in the
fourth quarter of 1996.
AIRPORTS
Airport concession revenues were up $1.6 million, or 0.8%, to $197.9 million for
the first quarter of 1997 compared with $196.3 million for the same period in
1996. Domestic airport concession revenues increased by $0.6 million, or 0.3%,
to $184.9 million for the first quarter of 1997 compared to $184.3 million for
the same period in 1996. International airport revenues were $13.0 million for
the first quarter of 1997 compared with $12.0 million for the first quarter of
last year, an increase of $1.0 million, or 8.3%. Revenue growth in domestic
airport concessions can be attributed to strong fundamentals in the airport
business, with passenger enplanements at comparable airports up an estimated
4.3% over last year's first quarter. Comparable contracts exclude the negative
impact of contracts with significant changes in scope of operation and contracts
undergoing significant construction of new facilities. Revenue growth at
comparable domestic airport locations grew 7.0%. Revenue per enplaned passenger
("RPE") grew 2.7% at the Company's comparable airport locations in the first
quarter of 1997. The FAA forecast has projected annual passenger enplanement
growth of 4.1% through the year 2008. The growth in RPE can be attributed to the
continued addition of branded locations, moderate increases in menu prices,
various real estate maximization efforts and benefits from other operational
initiatives. Airport revenue growth in the first quarter of 1997 was achieved
despite the benefit of severe winter weather in 1996 which caused air traffic
delays; and the calendar shift (first quarter 1997 began January 4, after the
holiday travel season, while first quarter 1996 began December 30, 1995).
TRAVEL PLAZAS
Travel plaza concession revenues for the first quarter of 1997 were $26.0
million, a decrease of $0.1 million or 0.4%, compared to the same quarter a year
ago. The calendar shift referred to above negatively impacted
quarter-over-quarter sales.
SHOPPING MALLS AND ENTERTAINMENT
Shopping malls and entertainment concession revenues, primarily consisting of
merchandise, food and beverage sales at food courts in shopping malls, stadiums,
arenas, and other tourist attractions, increased by $0.9 million or 7.8%, to
$12.5 million for the first quarter of 1997 from $11.6 million for the same
period in 1996. The increase in shopping malls and entertainment concessions
revenues was primarily attributable to the opening of the Ontario Mills Mall
food court in the fourth quarter of 1996. The strong performance of the shopping
mall facilities was offset by the Company's planned exit from certain retail
operations in the business line that were deemed to be inconsistent with the
Company's core strategies.
The Company announced in the second quarter of 1996 a definitive agreement on a
second mall project with The Mills Corporation to operate the food and beverage
locations at the Grapevine Mills Outlet Mall outside of Dallas, Texas. The mall
is expected to open in the Fall of 1997, and the Company's food and beverage
operations will be similar in size and scope to the Ontario Mills Outlet Mall
project.
MANAGEMENT FEE INCOME. Travel plaza management fee income for the first quarter
of 1997 was $2.4 million compared with $2.3 million for the same period of 1996.
A slight increase in revenues at the managed tollroads
11
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
accounted for the increase in management fee income, as management fees are
calculated as a set percentage of revenues.
OPERATING COSTS AND EXPENSES. The Company's total operating costs and expenses
were $235.4 million for the first quarter of 1997, or 98.6% of total revenues,
compared with $233.9 million for the first quarter of 1996, or 99.0% of total
revenues. The improved operating profit margin quarter-to-quarter of 0.4%
reflects operating leverage benefits derived from revenue growth and an
improvement in the cost-of-sales margin resulting from the implementation of
several operating initiatives.
Cost of sales for the first quarter of 1997 was $69.4 million, a decrease of
$0.8 million, or 1.1%, below the first quarter of last year. Cost of sales as a
percentage of total revenues decreased 60 basis points during the first quarter
of 1997, most notably due to various cost controlling initiatives implemented
during the year. These initiatives include the roll out of the Store Manager
concept intended to move management closer to the customer to improve customer
satisfaction; the renegotiation of distributor agreements for books and
magazines in the Company's airports and travel plazas to improve service,
in-stock availability and cost margins as well as a program under which brand
experts ("Brand Champions") are assigned to certain of the Company's largest
selling branded concepts. The Brand Champions' function is to promote
operational excellence and create operating efficiencies across all of the
Company's locations of a particular brand.
Payroll and benefits totaled $74.5 million during the first quarter of 1997, a
1.4%, or $1.0 million, increase over the first quarter of 1996. Payroll and
benefits as a percentage of total revenues for the first quarter of 1997
increased slightly to 31.2% from the 31.1% reported for the same period in 1996.
Occupancy costs consist of rent, royalties and depreciation and amortization
expenses. Occupancy costs were $55.7 million for the first quarter of 1997, up
$2.0 million or 3.7% compared to the first quarter of 1996. As a percentage of
total revenues, occupancy costs increased to 23.3% for the first quarter of 1997
compared to 22.7% for the first quarter of 1996.
Rent expense totaled $39.9 million for the first quarter of 1997, an increase of
$0.6 million, or 1.5%, over the first quarter of 1996. The majority of increased
rent expense is attributable to equipment rentals, which are related to a new
point of sale and back office computer system that the Company is rolling out to
each of its operating units. The remainder of increased rent expense is due to
increased revenues on contracts with rentals determined as a percentage of
revenues.
Royalties expense for the first quarter of 1997 increased by 21.1% to $4.6
million from $3.8 million for the first quarter of last year. As a percentage of
total revenues, royalties expense increased to 1.9% for the first quarter of
1997 compared to 1.6% for the first quarter of 1996. These increases reflect the
Company's continued introduction of branded concepts to its airport concessions
operations. Royalties expense as a percentage of branded sales decreased to 6.5%
for the first quarter of 1997 from 6.6% for the same period in 1996. This margin
decrease is attributable to the addition of branded concepts with
lower-than-average royalty percentages. Branded facilities generate higher sales
per square foot and contribute toward increased RPE, which offset royalty
payments required to operate the concepts. Branded concepts in all of the
Company's managed and operated venues have grown at a compound annual growth
rate of 12.2% over the last five fiscal years. No single branded concept
accounts for more than 10% of total revenues. Branded revenues increased 19.6%
for the first quarter of 1997 when compared with the same period in 1996, the
majority of which related to branded sales at airports.
Branded revenues in airports have increased 22.6% in the first quarter of 1997
compared to the same period in 1996. This increase can be attributed to large
new branded concept developments in Dulles International Airport (just outside
of Washington, D.C.), San Diego International Airport, Los Angeles International
Airport and Hartsfield Atlanta International Airport. Airport branded product
sales in the first quarter increased to $53.1 million, or 26.8% of total airport
revenues, compared with $43.3 million, or 22.1% of total airport revenues, in
the first quarter of 1996.
12
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
Depreciation and amortization expense, excluding $0.4 million of corporate
depreciation on property and equipment which is included as a component of
general and administrative expenses, was $11.2 million for the first quarter of
1997, up 5.7% compared to $10.6 million for the first quarter of 1996. The
increase in depreciation was largely due to developments at the Ontario Mills
Mall food court and Los Angeles International Airport.
General and administrative expenses were $12.5 million for the first quarter of
1997, an increase of $0.3 million, or 2.5%, over the $12.2 million for the first
quarter of 1996. This increase is primarily attributable to higher corporate
depreciation expense associated with the new headquarters and financial system,
which was partially offset by a decrease in corporate payroll and benefits
expense.
Other operating expenses, which includes utilities, casualty insurance,
equipment maintenance, trash removal and other miscellaneous expenses, were
$23.3 million for the first quarter of 1997, a $1.0 million, or 4.1% decrease
from the $24.3 million reported in the first quarter of 1996. As a percentage of
total revenues, other operating expenses decreased to 9.8% compared with 10.3%
for the first quarter of 1997 and 1996, respectively.
OPERATING PROFIT. As a result of the changes in revenues and operating costs and
expenses discussed above, operating profit increased to $3.4 million, or 1.4% of
revenues, for the first quarter of 1997, from $2.4 million, or 1.0% of revenues,
for the first quarter of 1996. Operating profit for airports, prior to the
allocation of corporate general and administrative expenses, was $16.8 million
for the first quarter of 1997 as compared with $15.6 million for the first
quarter of 1996. Operating loss for the travel plaza business line, excluding
general and administrative expenses, increased $0.1 million to $1.5 million for
the first quarter of 1997. Operating profit for shopping malls and
entertainment, excluding general and administrative expenses, totaled $0.6
million and $0.4 million for the first quarter of 1997 and 1996, respectively.
The operating profit (loss) margins totaled 8.5%, (5.3)% and 4.8% for airports,
travel plazas and shopping malls and entertainment, respectively, in the first
quarter of 1997. During the first quarter of 1996, the operating profit (loss)
margins totaled 7.9%, (4.9)% and 3.4% for airports, travel plazas and shopping
malls and entertainment, respectively. Several strategic initiatives, including
the Store Manager concept and the Brand Champion program in the Company's
largest selling branded concepts have contributed toward improved cost
management.
INTEREST EXPENSE. Interest expense was unchanged at $9.2 million for the first
quarter of 1997 compared with the same quarter in 1996, reflecting the fixed
rate of 9.5% on the Company's $400.0 million of Senior Notes.
INTEREST INCOME. Interest income totaled $0.7 million for the first quarter of
1997, a $0.5 million increase when compared with the $0.2 million reported for
the same period in 1996. The Company's acceleration of the transfer of cash
balances from local depository accounts to corporate interest bearing
consolidation accounts contributed to the increase in interest income during the
quarter. The Company's strong financial performance during the quarter and in
1996 contributed significantly to increases in cash balances. Cash balances
during the quarter were also temporarily higher due to a transition to a new
financial system at year-end 1996. This transition resulted in beginning cash
balances being higher than the Company's normal seasonal level.
INCOME TAXES. The benefit for income taxes for the first quarters of 1997 and
1996 was $2.0 million and $2.8 million, respectively.
NET LOSS. The Company's net loss for the first quarter of 1997 was $3.1 million
compared with a net loss of $3.8 million for the first quarter of 1996.
13
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its capital requirements with a combination of existing cash
balances, operating cash flow and debt and equity financing and contributions
from the Company's parent. The Company believes that cash flow generated from
ongoing operations, current cash balances and funds available from existing
credit facilities are more than adequate to finance ongoing capital
expenditures, as well as, meet debt service requirements. The Company also has
the ability to fund its planned growth initiatives from the sources identified
above; however, should significant growth opportunities arise, such as business
combinations or contract acquisitions, alternative financing arrangements will
be evaluated and considered.
The Company is required to make semi-annual cash interest payments on the Senior
Notes at a fixed interest rate of 9.5%. The Company is not required to make
principal payments on the Senior Notes until maturity except in the event of (i)
certain changes in control or (ii) certain asset sales in which the proceeds are
not invested in other properties within a specified period of time. Management
does not expect either of these events to occur and therefore does not
anticipate that the principal payments on the Senior Notes will be due before
maturity.
The Senior Notes mature in 2005 and are fully and unconditionally guaranteed on
a joint and several basis by certain subsidiaries of the Company (the
"Guarantors"). The Senior Notes are also secured by a pledge of the capital
stock of the Guarantors. The indenture governing the Senior Notes (the
"Indenture") contains covenants that, among other things, limit the ability of
the Guarantors to incur additional indebtedness and issue preferred stock, pay
dividends or make other distributions, repurchase capital stock or subordinated
indebtedness, create certain liens, enter into certain transactions with
affiliates, sell certain assets, issue or sell capital stock of the Guarantors,
and enter into certain mergers and consolidations.
The First National Bank of Chicago, as agent for a group of participating
lenders, has provided credit facilities (the "Facilities") to the Company.
During the first quarter of 1997 the Company negotiated several enhancements to
the Facilities. The enhancements increased the aggregate principal amount of the
Facilities from $75.0 million through 2001 to $100.0 million through April 2002
(the "Total Commitment"). The Total Commitment consists of (i) a letter of
credit facility in the amount of $25.0 million for the issuance of financial and
non-financial letters of credit and (ii) a revolving credit facility in the
amount of $75.0 million (the "Revolver Facility") for working capital and
general corporate purposes other than hostile acquisitions. All borrowings under
the Facilities are senior obligations of the Company and are secured by Host
Marriott Services Corporation's pledge of, and a first perfected security
interest in, all of the capital stock of the Company and certain of its
subsidiaries.
The loan agreements relating to the Facilities contain dividend and stock
retirement covenants that are substantially similar to those set forth in the
Indenture, provided that dividends payable to Host Marriott Services Corporation
are limited to 25% of the Company's consolidated net income and provided,
further, that no dividends can be declared by the Company prior to June 20,
1997. The loan agreements also contain certain financial ratio and capital
expenditure covenants. The enhancements to the Facility during the first quarter
of 1997 eliminated the Revolver Facility's annual 30-day repayment provision.
Any indebtedness outstanding under the Facilities may be declared due and
payable upon the occurrence of certain events of default, including the
Company's failure to comply with the several covenants noted above, or the
occurrence of certain events of default under the Indenture. As of March 28,
1997 and throughout the twelve weeks ended March 28, 1997, there was no
outstanding indebtedness under the Revolver Facility and the Company was in
compliance with the covenants described above.
The Company's cash flows from operating activities are affected by seasonality.
Cash from operations generally is the strongest in the summer months between
Memorial Day and Labor Day. Cash provided by operations, before changes in
working capital, totaled $9.0 million for the first quarter of 1997 as compared
with cash provided by operations of $4.5 million for the same period in 1996.
The primary uses of cash in investing activities consist of capital expenditures
and acquisitions. The Company incurs capital expenditures to build out new
facilities, expand or re-concept existing facilities, and to maintain the
quality and
14
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
improve operations of existing facilities. The Company's capital
expenditures in the first quarter of 1997 and 1996, totaled $12.2 million and
$11.8 million, respectively. For the entire fiscal year of 1997, the Company
expects to make capital expenditure investments of approximately $58.0 million
in its core domestic airport and travel plaza business lines and approximately
$20.0 million in growth markets in international airports and food courts in
domestic shopping malls. The timing of actual capital expenditures can vary from
expected timing due to project scheduling and delays inherent in the
construction and approval process. The Company expects to fund these 1997
expenditures with its operating cash flow.
The Company's cash used in financing activities in the first quarter of 1997 was
$0.3 million, compared with cash used in financing activities of $0.4 million
for the same period in 1996.
Working capital is managed throughout the year to effectively maximize the
financial returns to the Company. As a cash driven business, the Company
benefits from maintaining negative working capital. At March 28, 1997, the
Company's working capital resulted in its current liabilities exceeding its
current assets by $16.6 million. If needed, the Company's Revolver Facility
provides funds for liquidity, seasonal borrowing needs and other general
corporate purposes. In the fourth quarter of 1996, the Company transitioned to a
new financial system, which included the centralization of the accounts payable
function. As a result of the transition, the Company experienced unusually high
balances in cash and cash equivalents and current liabilities.
The Company's consolidated earnings before interest expense, taxes,
depreciation, amortization and other non-cash items ("EBITDA") increased $2.4
million, or 17.8%, to $15.9 million in the first quarter of 1997. The increase
in EBITDA reflects the impact of improved operating results in 1997. The Company
believes that EBITDA is one meaningful measure of its operating performance and
is used by certain investors to estimate the Company's ability to meet debt
service requirements and fund capital investments. EBITDA information should not
be considered an alternative to net income, operating profit, cash flows from
operations, or any other operating or liquidity performance measure recognized
by Generally Accepted Accounting Principles ("GAAP"). The calculation of EBITDA
for the Company may not be comparable to the same calculation by other companies
because the definition of EBITDA varies throughout the industry.
The following is a reconciliation of EBITDA to net loss:
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
--------------------------------
MARCH 28, MARCH 22,
(IN MILLIONS) 1997 1996
- ------------------------------------------- ----------------- ---------------- --- --------------- ----------------
<S> <C> <C>
EBITDA $ 15.9 $ 13.5
Interest expense (1) (9.2) (9.2)
Benefit for income taxes 2.0 2.8
Depreciation and amortization (1) (11.6) (10.8)
Other non-cash items (0.2) (0.1)
- ------------------------------------------- ----------------- ---------------- --- --------------- ----------------
NET LOSS $ (3.1) $ (3.8)
- ------------------------------------------- ----------------- ---------------- --- --------------- ----------------
<FN>
(1) Amortization of deferred financing costs of $0.2 million for both the first quarters of 1997 and 1996 is
included as a component of interest expense.
</FN>
</TABLE>
IMPAIRMENTS OF LONG-LIVED ASSETS
Effective September 9, 1995, the Company adopted SFAS No. 121, which requires
that an impairment loss be recognized when the carrying amount of an asset
exceeds the sum of the estimated undiscounted future cash flows of the asset. In
adopting SFAS No. 121 (and thereby changing its method of measuring long-lived
asset impairments from
15
<PAGE>
HOST INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
a business-line basis to an individual operating-unit basis), the Company wrote
down the assets (primarily leasehold improvements and equipment) of 14
individual operating units to the extent the carrying value of the assets
exceeded the fair value of the assets in 1995. Eleven of the fourteen units had
projected cash flow deficits, and, accordingly the assets of these units were
written off in their entirety. The remaining three units had projected positive
cash flows and the assets were partially written down to their estimated fair
values.
During 1996, 5 of the original 14 impaired units were either disposed of or the
lease term expired. As of March 28, 1997, the total cash flow deficit (including
operating cash flows and necessary capital expenditures) from the remaining 9
operating units was projected to be approximately $16.8 million during the
remaining terms of the lease agreements. Substantially all of the remaining
deficit is attributable to two airport units.
DEFERRED INCOME TAXES
Realization of the net deferred tax assets totaling $79.4 million as of March
28, 1997, is dependent on the Company's ability to generate future taxable
income. Management believes that it is more likely than not that future taxable
income will be sufficient to realize the net deferred tax assets recorded at
March 28, 1997. Management anticipates that increases in taxable income will
arise in future periods primarily as a result of business strategies and reduced
operating costs resulting from the ongoing restructuring of the Company's
business processes. The anticipated improvement in operating results is expected
to increase the taxable income base to a level which would allow realization of
the existing net deferred tax assets within nine to twelve years.
Future levels of operating income and other taxable gains are dependent upon
general economic and industry conditions, including airport and tollroad
traffic, inflation, competition, demand for development of concepts and other
factors beyond the Company's control, and no assurance can be given that
sufficient taxable income will be generated for full utilization of the tax
credits and deductible temporary differences giving use to the net deferred tax
credits. Management has considered these factors in reaching its conclusion that
it is more likely than not that operating income will be sufficient to utilize
these tax credits and temporary deferred deductions fully. The amount of the net
deferred tax assets considered realizable, however, could be reduced if
estimates of future taxable income are not achieved.
16
<PAGE>
PART II. OTHER INFORMATION AND SIGNATURE
ITEM 1. LEGAL PROCEEDINGS
LITIGATION
The Company and its subsidiaries are involved in litigation incidental to
their businesses. Such litigation is not considered by management to be
significant and its resolution would not have a material adverse effect on
the financial condition or results of operations of the Company or its
subsidiaries.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K:
None.
17
<PAGE>
PART II. OTHER INFORMATION AND SIGNATURE, continued
SIGNATURE
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.
HOST INTERNATIONAL, INC.
MAY 9, 1997 /S/ BRIAN W. BETHERS
- --------------------- --------------------------------------------
Date Brian W. Bethers
Vice President (Principal Financial Officer)
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1998
<PERIOD-END> MAR-28-1997
<CASH> 72,500
<SECURITIES> 0
<RECEIVABLES> 30,600
<ALLOWANCES> 0
<INVENTORY> 38,600
<CURRENT-ASSETS> 177,900
<PP&E> 599,900
<DEPRECIATION> 351,400
<TOTAL-ASSETS> 523,500
<CURRENT-LIABILITIES> 194,500
<BONDS> 408,100
0
0
<COMMON> 0
<OTHER-SE> (133,700)
<TOTAL-LIABILITY-AND-EQUITY> 523,500
<SALES> 238,800
<TOTAL-REVENUES> 238,800
<CGS> 69,400
<TOTAL-COSTS> 235,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,200
<INCOME-PRETAX> (5,100)
<INCOME-TAX> (2,000)
<INCOME-CONTINUING> (3,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,100)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
