SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Form 8-K/AA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) JANUARY 10, 1997
HOSPITALITY WORLDWIDE SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
NEW YORK 0-23054 11-3096379
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
450 PARK AVENUE, SUITE 2603, NEW YORK, NEW YORK 10022
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 223-0699
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) The Registrant hereby amends Item 7(a) of this Form 8-K by
including the requisite Financial Statements of Leonard Parker Company, a
Florida corporation and affiliates ("LPC").
(b) The Registrant hereby amends Item 7(b) of this Form 8-K by
including the requisite pro forma financial information with respect to the
Registrant's acquisition of LPC.
(c) EXHIBIT NO. EXHIBITS
---------- --------
2.1* Agreement and Plan of Merger, dated as of January 9,
1997, by and among The Leonard Parker Company, a
Florida corporation, Leonard Parker, Douglas Parker,
Bradley Parker, Philip Parker, Mitchell Parker and
Gregg Parker, Hospitality Worldwide Services, Inc., a
New York corporation and LPC Acquisition Corp. a
Florida corporation.
3.1* Certificate of Incorporation of Hospitality Worldwide
Services, Inc., as amended.
27 Financial Data Schedule.
99.1 Financial Statements of LPC.
99.2 Pro forma financial information with respect to the
Registrant's acquisition of LPC.
----------------------
* Previously filed
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 hereunto duly authorized.
HOSPITALITY WORLDWIDE SERVICES, INC.
Dated: March 25, 1997 By: /S/ HOWARD G. ANDERS
--------------------
Howard G. Anders
Executive Vice President
-2-
LEONARD PARKER COMPANY AND AFFILIATES
INDEX TO FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants........................F-2
Combined Balance Sheet at December 31, 1996...............................F-4
Combined Statements of Operations for the two years ended
December 31, 1996 and 1995.......................................F-5
Combined Statements of Stockholders' Equity for the two years ended
December 31, 1996 and 1995.......................................F-6
Combined Statements of Cash Flows for the two years ended
December 31, 1996 and 1995.......................................F-7
Summary of Accounting Policies............................................F-9
Notes to Combined Financial Statements...................................F-11
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
LEONARD PARKER COMPANY AND AFFILIATES
We have audited the accompanying combined balance sheet of Leonard Parker
Company and Affiliates as of December 31, 1996, and the related combined
statements of operations, stockholders' equity and cash flows for each of the
two years ended December 31, 1996 and 1995. These combined financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.
We did not audit the financial statements of Leonard Parker Company (Africa)
(Propriety) Limited, a foreign affiliate, which statements reflect total assets
of $597,378 as of December 31, 1996, and total revenues of $1,039,762 and
$311,062 for the two years ended December 31, 1996 and 1995, respectively. Those
statements were audited by other auditors whose unqualified auditor's report has
been furnished to us, and our opinion insofar as it relates to the amounts
included for such affiliate, is based solely on the report of the other
auditors.
We conducted our audits 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 our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
combined financial statements referred to above present fairly, in all material
respects, the financial position of Leonard Parker Company and Affiliates as of
December 31, 1996, and the results of their operations and their cash flows for
each of the two years ended December 31, 1996 and 1995 in conformity with
generally accepted accounting principles.
/s/ BDO Seidman, LLP
--------------------
Miami, Florida BDO Seidman, LLP
February 27, 1997
F-2
<PAGE>
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS
We have audited the annual financial statements set out on pages two to eight.
These financial statements are the responsibility of the company's directors.
Our responsibility is to report on these financial statements.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance that, in all material respects, fair presentation is achieved in the
financial statements. An audit includes an evaluation of the appropriateness of
the accounting policies, an examination, on a test basis, of evidence supporting
the amounts and disclosures included in the financial statements, an assessment
of the reasonableness of significant estimates and a consideration of the
appropriateness of the overall financial statement presentation. We consider
that our audit procedures were appropriate in the circumstances to express our
opinion presented below.
In our opinion these financial statements fairly present the financial position
of the company at December 31, 1996, and the result of its operations and cash
flow information for the year then ended in conformity with generally accepted
accounting practice and in the manner required by the Companies Act.
/s/ Fotinakis Phitidis
---------------------------
FOTINAKIS PHITIDIS
JOHANNESBURG Chartered Accountants (SA)
March 14, 1997
F-3
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1996
- --------------------------------------------------------------------------------------
ASSETS
CURRENT
<S> <C>
Cash 781,221
Restricted cash 188,779
Accounts receivable - (net of allowance of $336,000) 6,128,047
Prepaid expenses and other current assets 660,561
- --------------------------------------------------------------------------------------
Total current assets 7,758,608
Property and equipment, net 986,475
- --------------------------------------------------------------------------------------
8,745,083
- --------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable 4,619,765
Accrued expenses 326,031
Current maturities of long-term debt and capital lease obligation 65,198
Customer deposits 3,277,038
- --------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 8,288,032
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION, LESS CURRENT MATURITIES 108,861
- --------------------------------------------------------------------------------------
Total liabilities 8,396,893
- --------------------------------------------------------------------------------------
COMMITMENTS, CONTINGENCIES AND SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock 72,382
Retained earnings 285,954
Cumulative foreign currency translation adjustment (10,146)
- --------------------------------------------------------------------------------------
Total stockholders' equity 348,190
- --------------------------------------------------------------------------------------
$8,745,083
- --------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO COMBINED FINANCIAL
STATEMENTS.
F-4
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 1995
- -------------------------------------------------------------------------------
NET SALES $56,890,803 $43,862,635
COST OF SALES 51,881,883 40,785,288
- -------------------------------------------------------------------------------
GROSS PROFIT 5,008,920 3,077,347
Service fees 1,809,809 1,280,844
Operating expenses (8,516,311) $(4,462,775)
- -------------------------------------------------------------------------------
LOSS FROM OPERATIONS (1,697,582) (104,584)
- -------------------------------------------------------------------------------
Interest income 259,251 145,425
Interest expense (18,572) (24,601)
Other expense (49,694) (25,752)
- -------------------------------------------------------------------------------
Loss before income taxes (1,506,597) (9,512)
Provision for foreign taxes 45,571 2,281
- -------------------------------------------------------------------------------
NET LOSS $(1,552,168) $ (11,793)
- -------------------------------------------------------------------------------
Proforma
Loss before income taxes (1,506,597) (9,512)
Benefit for income taxes 439,205 2,281
- -------------------------------------------------------------------------------
Proforma net loss $(1,067,392) $ (7,231)
- -------------------------------------------------------------------------------
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO COMBINED FINANCIAL
STATEMENTS.
F-5
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN TOTAL
CURRENCY STOCK-
COMMON RETAINED TRANSLATION HOLDERS'
STOCK EARNINGS ADJUSTMENT EQUITY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $ 71,782 $ 3,211,536 $ 9,880 $ 3,293,198
Capital contribution 600 - - 600
Distributions - (480,000) - (480,000)
Net loss - (11,793) - (11,793)
Foreign currency translation
adjustment - - (10,804) (10,804)
- -------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 72,382 2,719,743 (924) 2,791,201
Distributions - (881,621) - (881,621)
Net loss - (1,552,168) - (1,552,168)
Foreign currency translation
adjustment - - (9,222) (9,222)
- -------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 $ 72,382 $ 285,954 $ (10,146) $ 348,190
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO COMBINED FINANCIAL
STATEMENTS.
F-6
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995
- -------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(1,552,168) $ (11,793)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Loss on disposal of assets 49,694 25,752
Depreciation and amortization 185,355 167,825
Property distribution treated as compensation 528,663 -
Changes in assets and liabilities:
(Increase) decrease accounts receivable (3,241,743) 8,144,218
(Increase) decrease in prepaid expenses
and other current assets (248,158) 943,560
Increase (decrease) in accounts payable 3,197,341 (4,804,282)
Increase (decrease) in accrued expenses 268,917 (2,981)
Decrease in customers deposits and advances (478,787) (1,177,588)
- -------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) operating activities (1,290,886) 3,284,711
- -------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Net purchases of property and equipment (633,427) (303,520)
Increase in cash surrender value of officer's life insurance (65,412) (59,505)
Purchases of securities (202,046) (200,000)
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (900,885) (563,025)
- -------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 600
Restricted deposits (188,779) -
Distributions to shareholders (31,621) (480,000)
Payments of long-term debt and capital lease obligation (125,409) (67,491)
Proceeds of long-term debt and capital lease obligation 16,061 48,276
- -------------------------------------------------------------------------------------------------------------------
Cash used in financing activities (329,748) (498,615)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net increase (decrease) in cash (2,521,519) 2,223,071
Effect of exchange rate changes in cash (9,222) (10,804)
Cash, at beginning of year 3,311,962 1,099,695
- ------------------------------------------------------------------------------------
Cash, at end of year $ 781,221 $3,311,962
- ------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION:
Cash Paid During the Year For:
Interest $ 16,202 $ 11,820
Income Taxes $ 38,009 $ 10,538
Capital lease obligation incurred $ 74,665 $ -
Non-cash distribution of assets to stockholders $ 1,439,568 $ -
- ------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO COMBINED FINANCIAL
STATEMENTS.
F-8
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
SUMMARY OF ACCOUNTING POLICIES
DESCRIPTION OF THE LEONARD PARKER COMPANY (THE COMPANY) WAS ORGANIZED
BUSINESS IN 1976 UNDER THE LAWS OF THE STATE OF FLORIDA,
OPERATING AS A PURCHASING AGENT FOR HOTEL FURNISHINGS.
IN RECENT YEARS, THE COMPANY HAS EXPANDED ITS
OPERATIONS OVERSEAS AND IS CURRENTLY DOING BUSINESS IN
SOUTH AFRICA AND ASIA IN ADDITION TO ITS DOMESTIC
OPERATIONS. (SEE NOTE 6).
SUBSIDIARIES TO FACILITATE THE OPERATIONS IN TWO OF THESE COUNTRIES,
AND BASIS OF TWO NEW COMPANIES WERE FORMED AND BEGAN DOING BUSINESS
PRESENTATION DURING 1994. LEONARD PARKER COMPANY PACIFIC/ASIA PTE.
LTD. OPERATES IN SINGAPORE AND LEONARD PARKER COMPANY
(AFRICA) (PROPRIETARY) LIMITED OPERATES IN SOUTH
AFRICA. DURING 1995, PARKER REORDER CORPORATION WAS
FORMED IN THE UNITED STATES. ALL THREE COMPANIES ARE
COLLECTIVELY KNOWN AS THE "AFFILIATES."
THE FOREIGN AFFILIATES' FINANCIAL STATEMENTS HAVE BEEN
PREPARED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES TRANSLATED TO UNITED STATES
DOLLARS (U.S. $) USING A METHODOLOGY CONSISTENT WITH
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 52,
FOREIGN CURRENCY TRANSLATION. ASSETS AND LIABILITIES
ARE TRANSLATED TO U.S. $ AT THE RATE PREVAILING ON THE
BALANCE SHEET DATES AND THE INCOME STATEMENTS HAVE BEEN
TRANSLATED FROM THE FUNCTIONAL CURRENCY TO U.S. $ USING
AN AVERAGE EXCHANGE RATE FOR THE APPLICABLE PERIOD.
RESULTS OF THIS TRANSLATION PROCESS ARE ACCUMULATED AS
A SEPARATE COMPONENT OF STOCKHOLDERS' EQUITY. EXCHANGE
LOSSES (APPROXIMATELY $19,000 AND $13,000 FOR THE YEARS
ENDED DECEMBER 31, 1996 AND 1995, RESPECTIVELY) ARE
INCLUDED IN OPERATING EXPENSE IN THE ACCOMPANYING
COMBINED STATEMENTS OF OPERATIONS.
PRINCIPLES OF THE ACCOMPANYING COMBINED FINANCIAL STATEMENTS INCLUDE
COMBINATION THE ACCOUNTS OF THE COMPANY AND THE AFFILIATES, ALL OF
WHICH ARE UNDER COMMON CONTROL. INTERCOMPANY
TRANSACTIONS AND BALANCES HAVE BEEN ELIMINATED IN
COMBINATION.
ACCOUNTS THE COMPANIES PROVIDE AN ALLOWANCE FOR LOSSES ON
RECEIVABLE RECEIVABLES BASED ON A REVIEW OF THE CURRENT STATUS OF
EXISTING RECEIVABLES AND HISTORICAL COLLECTION
EXPERIENCE, AND CONSIDER THE CURRENT PROVISION TO BE
ADEQUATE.
PROPERTY AND PROPERTY AND EQUIPMENT ARE RECORDED AT COST AND LEASED
EQUIPMENT EQUIPMENT UNDER CAPITAL LEASES ARE RECORDED AT THE
PRESENT VALUE OF FUTURE LEASE PAYMENTS. DEPRECIATION
AND AMORTIZATION ARE PROVIDED BY THE ACCELERATED AND
STRAIGHT-LINE METHODS OVER THE ESTIMATED USEFUL
ECONOMIC LIVES OF THE ASSETS, RANGING FROM FIVE TO
EIGHT YEARS.
F-9
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
SUMMARY OF ACCOUNTING POLICIES
RESTRICTED CASH RESTRICTED CASH CONSISTS OF DEPOSITS TO COLLATERALIZE
OBLIGATIONS UNDER CERTAIN CONTRACTS.
REVENUE REVENUES ARE RECOGNIZED AT THE TIME OF SHIPMENT OF THE
RECOGNITION RESPECTIVE MERCHANDISE OR AT THE TIME THE SERVICE IS
PROVIDED DEPENDING ON THE CONTRACT.
CUSTOMER DEPOSITS CONSISTS OF AMOUNTS REMITTED TO THE
COMPANY BY CUSTOMERS AS DEPOSITS ON SPECIFIC CONTRACTS.
INCOME TAXES THE COMPANY, WITH THE CONSENT OF ITS SHAREHOLDERS,
ELECTED TO BE TAXED AS AN S CORPORATION. SHAREHOLDERS
OF AN S CORPORATION ARE TAXED ON THEIR PROPORTIONATE
SHARE OF THE COMPANY'S TAXABLE INCOME. ACCORDINGLY, NO
PROVISION FOR FEDERAL OR STATE INCOME TAX IS REQUIRED.
TWO OF THE AFFILIATES ARE SUBJECT TO TAXATION IN SOUTH
AFRICA AND SINGAPORE RESPECTIVELY, AND ACCORDINGLY
CALCULATE AND REPORT TAX CHARGES IN ACCORDANCE WITH
APPLICABLE STATUTORY REGULATIONS.
THE PROFORMA BENEFIT FOR INCOME TAXES REPRESENTS THE
ESTIMATED INCOME TAXES THAT WOULD HAVE BEEN REPORTED
HAD THE COMPANY NOT BEEN AN S CORPORATION AND HAD BEEN
SUBJECT TO FEDERAL AND STATE INCOME TAXES.
APPROXIMTAELY $1,300,000 OF THE COMPANY'S DOMESTIC LOSS
CAN BE CARRIED BACK AND USED TO OFFSET PREVIOUS TAXABLE
INCOME. REALIZATION OF THE REMAINING LOSS CARRY FORWARD
IS NOT CONSIDERED MORE LIKELY THAN NOT. ACCORDINGLY, A
VALUATION ALLOWANCE HAS BEEN ESTABLISHED FOR THE CARRY
FORWARD PORTION.
USE OF ESTIMATES THE PREPARATION OF THE FINANCIAL STATEMENTS IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES REQUIRES MANAGEMENT TO MAKE ESTIMATES AND
ASSUMPTIONS THAT EFFECT THE REPORTED AMOUNTS OF 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 ESTIMATED AMOUNTS.
FINANCIAL THE CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS INCLUDING
INSTRUMENTS ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, ACCRUED EXPENSES
AND LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
APPROXIMATED FAIR VALUE DUE TO THE RELATIVELY SHORT
MATURITY.
F-10
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. PROPERTY AND PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING:
EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------------------
<S> <C>
Office equipment $592,445
Furniture and fixtures 466,858
Computer software 369,577
Leasehold improvements 203,022
Telephone equipment under capital leases 74,665
Vehicles 39,329
- -------------------------------------------------------------------------------------
1,745,896
Less: accumulated depreciation
and amortization 759,421
- ------------------------------------------------------------------------------------
$ 986,475
- ------------------------------------------------------------------------------------
2. LONG-TERM DEBT Long-term debt and lease obligations consists of:
AND CAPITAL
LEASE
OBLIGATIONS
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------
<S> <C>
Prime + 3/4% (9 1/4% at December 31, 1996)
note payable with a financial institution,
principal and interest due monthly,
matures June 1998, secured by all
corporate assets. $ 83,333
19 1/2% note payable, principal and interest
due monthly, matures August 2001, collateralized
by property and equipment. 19,989
9 3/4% capital lease obligation, payable in monthly
installments of $1,578, expiring in August 2001,
collateralized by telephone equipment 70,737
- --------------------------------------------------------------------------------------
174,059
Less current maturities 65,198
- --------------------------------------------------------------------------------------
$ 108,861
- ------------------------------------------------------------------------------------------
</TABLE>
F-11
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
At December 31, 1996, maturities of notes payable and
capital lease obligations are as follows:
YEARS ENDED DECEMBER 31, AMOUNT
- --------------------------------------------------------------------------------
1997 $ 65,198
1998 50,620
1999 19,438
2000 21,886
2001 16,917
- ------------------------------------------------------------------------------
$174,059
- --------------------------------------------------------------------------------
The Company has available a revolving line of credit
with a bank for up to $2 million collateralized by
accounts receivable. The line of credit has a rate of
prime + 1/2% and is payable monthly. This agreement is
renewed annually. The agreement matures in July 1997.
As of December 31, 1996, no amounts are outstanding
under this agreement.
3. COMMITMENTS The Company and Affiliates rent office space under
AND non-cancellable operating leases expiring in 2001.
Future minimum payments under all lease agreements are
CONTINGENCIES as follows:
Years Ended December 31, Amount
- --------------------------------------------------------------------------------
1997 $ 607,000
1998 626,000
1999 625,000
2000 572,000
2001 476,000
- --------------------------------------------------------------------------------
$ 2,906,000
- --------------------------------------------------------------------------------
Rent expense totalled approximately $537,000 and
$463,000 in 1996 and 1995, respectively.
F-12
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
The Company, acting as agent for two of its customers,
maintains two repurchase agreement accounts in the name
of the Company as agent for the customers. These
accounts are used to fund the purchases of merchandise.
The balance in these accounts as of December 31, 1996,
totaled approximately $22,000.
The Company is currently a defendant of a lawsuit for
copyright infringement. The claimant is seeking an
award of $100,000 per infringement and there are two
alleged copyrights in the suit. Management and the
Company's counsel believe that the Company has defenses
in this matter and that it will not have a material
adverse effect on these financial statements.
The Florida Department of Revenue has assessed the
Company with a sales tax deficiency in the amount of
approximately $237,000, including penalties and
interest. The Company is appealing the assessment.
Management has provided for approximately $209,000 in
connection with this matter. However, the Company
intends to vigorously defend this matter.
4. STOCKHOLDERS' Common stock consists of the following at December 31,
EQUITY 1996 and 1995:
<TABLE>
<CAPTION>
Shares Amount
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Leonard Parker Company, Inc., 1000 shares authorized,
$10 par value 100 1,000
Leonard Parker Company (Africa)(Proprietary) Limited,
1000 share authorized, R$1 par value 6 2
Leonard Parker Company Pacific/Asia PTE Ltd., 100,000
shares authorized, S$1 par value 100,000 70,780
Parker Reorder Corporation, 10,000 shares
authorized, $1 par value 600 600
- -------------------------------------------------------------------------------------------------
100,706 72,382
- -------------------------------------------------------------------------------------------------
</TABLE>
F-13
<PAGE>
LEONARD PARKER COMPANY
AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
During December 1996, the stockholders received a
distribution of assets with a book value of
approximately $1,440,000 of which approximately
$850,000 was recorded as a dividend and approximately
$590,000 was recorded as compensation and other
expenses. Furthermore, additional bonuses of
approximately $1,446,000 were paid in 1996.
5. SIGNIFICANT For 1996 and 1995, one customer accounted for 11% and
CUSTOMERS 13% of combined revenues, respectively.
6. FOREIGN Information about the Company's operations in different
OPERATIONS geographic areas for the years ended December 31, 1996
and 1995 is as follows:
<TABLE>
<CAPTION>
United South
States Singapore Africa Combined
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1996:
Sales $ 55,993,092 $ 103,838 $793,873 $ 56,890,803
- ---------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (1,638,614) $ (167,927) $108,959 $ (1,697,582)
- ---------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (1,638,614) $ (167,927) $108,959 $ (1,697,582)
- ---------------------------------------------------------------------------------------------------------------------
Loss before income taxes (1,472,437) (161,974) 127,714 (1,506,697)
- ---------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1995:
Sales $ 43,554,034 $ 132,398 $176,203 $43,862,635
- ---------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (83,223) $ (25,866) $ 4,505 $(104,584)
- ---------------------------------------------------------------------------------------------------------------------
Loss before income taxes 10,546 (25,952) 5,894 (9,512)
- ---------------------------------------------------------------------------------------------------------------------
Identifiable assets $ 8,024,892 $ 104,111 $106,304 $ 8,235,307
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
7. SUBSEQUENT On January 9, 1997, the Leonard Parker Company and its
EVENTS affiliates collectively entered into an agreement to
merge with a New York corporation.
At the time of closing the stockholders of the Company
converted the common stock of the Company into an
aggregate of (a) 1,250,000 shares of common stock of
the New York corporation; and (b) 200,000 shares of
preferred stock, stated value of $25 per share of the
New York corporation.
F-14
HOSPITALITY WORLDWIDE SERVICES, INC. AND
LEONARD PARKER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On January 10, 1997, Hospitality Worldwide Services, Inc. (the "Company")
acquired Leonard Parker Company and affiliates, ("LPC"), a leading purchasing
company for the hospitality industry that acts as an agent for the purchase of
goods and services for its customers which include major hotel and management
companies worldwide.
The purchase price approximately consisted of 1,250,000 newly issued Common
Stock of the Company and $5 million par value of newly issued 6% convertible
preferred stock of the Company, convertible into 1,000,000 shares of common
stock (at present market value) not earlier than January 1, 1998.
The acquisition has been accounted for as a purchase, with the assets acquired
and liabilities assumed recorded at fair values, and the results of LPC's
operations included in the Company's consolidated financial statements from the
date of acquisition.
The accompanying unaudited pro forma condensed consolidated financial statements
illustrate the effect of the acquisition on the Company's financial position and
results of operations. The condensed consolidated balance sheet as of December
31, 1996 is based on the historical balance sheets of the Company and LPC as of
December 1996 and assumes the acquisition took place on that date. The unaudited
pro forma condensed consolidated statements of income for the years ended
December 31, 1996 and 1995 assumes the acquisition took place on January 1,
1995.
The unaudited pro forma condensed consolidated financial statements have been
included as required by the rules of the SEC and are provided for comparative
purposes only. The pro forma statements do not purport to be indicative of the
results which would have been obtained if the acquisition had been effected on
the date or dates indicated or which may be obtained in the future. The
unaudited pro forma consolidated financial statements are based on management's
current estimate of the allocation of the purchase price, the actual allocation
of which may differ.
The accompanying unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the respective historical financial
statements of the Company and those of LPC which are contained elsewhere herein.
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND LEONARD PARKER COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Pro Forma
HWS LPC Adjustments (A) Pro Forma
==========================================================
CURRENT ASSETS:
<S> <C> <C> <C>
Cash and cash equivalents $ 276,191 $ 970,000 $ $ 1,246,191
Accounts receivable 3,184,841 6,128,047 9,312,888
Costs in excess of billings 2,121,907 2,121,907
Prepaid and other current assets 278,949 660,561 1,039,510
----------------------------------------------------------
Total current assets 5,961,888 7,758,608 0 13,720,496
----------------------------------------------------------
Property and equipment 142,877 986,475 1,129,352
Notes receivable 392,354 392,354
Goodwill 6,049,669 12,000,000 18,049,669
Other assets 223,100 223,100
----------------------------------------------------------
Total other assets 6,808,000 986,475 12,000,000 19,794,475
----------------------------------------------------------
TOTAL $12,769,888 $8,745,083 $ 12,000,000 $33,514,971
==========================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt $ $ 65,198 $ $ 65,198
Accounts payable 1,175,068 4,511,897 5,686,965
Loan Payable - Bank 1,300,000 107,868 1,407,868
Accrued and other liabilities 1,947,389 319,882 395,000 2,662,271
Customer deposits 3,277,038 3,277,038
Billings in excess of costs 200,802 200,802
Income taxes payable 260,603 6,149 266,752
----------------------------------------------------------
Total current liabilities 4,983,862 8,288,032 395,000 13,666,894
----------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
Long term debt 108,861 108,861
STOCKHOLDERS' EQUITY
Preferred stock 5,000,000 5,000,000
Common stock 72,262 73,382 (59,882) 84,762
Additional paid-in capital 8,185,405 6,940,690 15,126,095
Treasury stock (715,000) (715,000)
Retained earnings 243,359 275,808 (275,808) 243,359
-----------------------------------------------------------
Total stockholders' equity 7,786,026 348,190 11,605,000 19,739,216
-----------------------------------------------------------
TOTAL $12,769,888 $8,745,083 $12,000,000 $33,514,971
===========================================================
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND LEONARD PARKER COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
HWS LPC Adjustments(B) Pro Forma
========================================================================
<S> <C> <C> <C> <C>
Net revenues $ 4,980,291 $43,862,635 $ - $48,842,926
Service fee income 1,280,844 1,280,844
------------------------------------------------------------------------
4,980,291 45,143,479 0 50,123,770
------------------------------------------------------------------------
Cost of revenues 3,823,779 40,785,288 - 44,609,067
Selling, general and administrative
expenses 1,619,189 4,488,527 400,000(1) 6,407,716
(100,000)(2)
------------------------------------------------------------------------
5,442,968 45,273,815 300,000 51,016,783
------------------------------------------------------------------------
Loss from operations (462,677) (130,336) (300,000) (893,013)
Other income (expense):
Interest income 120,257 145,425 265,682
Interest expense (13,007) (24,601) (37,608)
------------------------------------------------------------------------
Loss before provision for income taxes (355,427) (9,512) (300,000) (664,939)
Provision for income taxes 25,000 2,281 - 27,281
------------------------------------------------------------------------
Loss from continuing operations (380,427) (11,793) (300,000) (692,220)
Dividends on preferred shares 300,000(3) 300,000
------------------------------------------------------------------------
Loss applicable to common shares $ (380,427) $ (11,793) $(600,000) $ (992,220)
========================================================================
Loss per share:
Continuing operations (0.07) (0.14)
============ ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 5,653,052 6,903,052
============ ===========
</TABLE>
See accompanying notes to pro forma financial statements
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND LEONARD PARKER COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
HWS LPC Adjustments(B) Pro Forma
=================-==============================================
<S> <C> <C> <C>
Net revenues $ 24,312,112 $ 56,890,803 $ $81,202,915
Service fee income 1,809,809 1,809,809
----------------------------------------------------------------
24,312,112 58,700,612 0 83,012,724
----------------------------------------------------------------
Cost of revenues 18,289,924 51,881,883 70,171,807
Selling, general and administrative
expenses 3,237,461 8,566,005 400,000 (1) 9,453,466
(2,750,000)(2)
----------------------------------------------------------------
21,527,385 60,447,888 (2,350,000) 79,625,273
----------------------------------------------------------------
Income (loss) from operations 2,784,727 (1,747,276) 2,350,000 3,387,451
Other income (expense):
Interest income 1,141 259,251 260,392
Interest expense (26,101) (18,572) (44,673)
Income (loss) before provision for income
----------------------------------------------------------------
taxes 2,759,767 (1,506,597) 2,350,000 3,603,170
Provision for income taxes 908,725 45,571 464,000 (4) 1,418,296
----------------------------------------------------------------
Income (loss) from continuing operations 1,851,042 (1,522,168) 1,886,000 2,184,874
Dividends on preferred shares 300,000 (3) 300,000
----------------------------------------------------------------
Income (loss) applicable to common shares $ 1,851,042 $ (1,552,168) $ 1,586,000 $ 1,884,874
================================================================
Income per share:
Continuing operations 0.26 0.23
------------- ------------
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 7,048,284 8,298,284
------------- ------------
</TABLE>
See accompanying notes to pro forma financial statements
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND
LEONARD PARKER COMPANY
NOTE A
(1) The components of the purchase price of the net assets of LPC are as
follows:
Components of Purchase Price:
Preferred Stock Issued $5,000,000
Common Stock Issued 6,953,190
Accrual for acquisition costs 395,000
Tangible net worth acquired (348,190)
----------
$12,000,00
<PAGE>
HOSPITALITY WORLDWIDE SERVICES, INC. AND
LEONARD PARKER COMPANY
NOTE B
The pro forma adjustments to the unaudited pro forma condensed consolidated
statements of income are as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
Adjustments to SG & A:
<S> <C> <C>
(1) Amortization of goodwill over an estimated $ 400,000 $ 400,000
useful life of 30 years
(2) Adjust historical compensation per employment $2,750,000 $ 100,000
agreements entered into at date of acquisition
Adjustment to Net income (loss):
(3) To record dividends of 6% on preferred stock $ 300,000 $ 100,000
Adjustment to income taxes:
(4) To provide for additional income taxes on LPC's $ 464,000
pro forma income.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 8K/A dated March 28, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 970,000
<SECURITIES> 0
<RECEIVABLES> 6,464,047
<ALLOWANCES> (336,000)
<INVENTORY> 0
<CURRENT-ASSETS> 7,758,608
<PP&E> 1,745,896
<DEPRECIATION> (759,421)
<TOTAL-ASSETS> 8,745,083
<CURRENT-LIABILITIES> 8,288,032
<BONDS> 0
0
0
<COMMON> 72,382
<OTHER-SE> 275,808
<TOTAL-LIABILITY-AND-EQUITY> 8,745,083
<SALES> 56,890,803
<TOTAL-REVENUES> 58,700,612
<CGS> 51,881,883
<TOTAL-COSTS> 51,881,883
<OTHER-EXPENSES> 8,566,005
<LOSS-PROVISION> 307,000
<INTEREST-EXPENSE> 18,572
<INCOME-PRETAX> (1,506,594)
<INCOME-TAX> 45,574
<INCOME-CONTINUING> (1,552,168)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,552,168)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
