-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtN98N+vl4Q7YsCY/v28J11j9llkr+ldbL+Q4mQgbpZBV6i3Qk7wnuBStU9Y0Pqi SbUTs1kE98bGi2jwVxfb+Q== 0000950144-97-005366.txt : 19970512 0000950144-97-005366.hdr.sgml : 19970512 ACCESSION NUMBER: 0000950144-97-005366 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICO INC CENTRAL INDEX KEY: 0000089121 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 650350241 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11342 FILM NUMBER: 97599380 BUSINESS ADDRESS: STREET 1: 1601 BELVEDERE RD STE 501 S CITY: WEST PALM BEACH STATE: FL ZIP: 33406 BUSINESS PHONE: 4076899970 MAIL ADDRESS: STREET 1: 1601 BELVEDERE ROAD CITY: WEST PALM BEACH STATE: FL ZIP: 33406 10-Q 1 SERVICO, INC. 10-Q 3/31/97 1 UNITED STATES 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 For the Period Ended March 31, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File No. 1-11342 ------- SERVICO, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Florida 65-0350241 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1601 Belvedere Road, West Palm Beach, FL 33406 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (561) 689-9970 -------------- (Former name, former address and former fiscal year, if changed since last report) Not applicable -------------- 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding as of May 7, 1997 - ----- ----------------------------- Common 9,396,405 1 2 SERVICO, INC. AND SUBSIDIARIES INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 3 Condensed Consolidated Statements of Income for the Three Months Ended March 31, 1997 and 1996 4 Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 1997 and for the Year Ended December 31, 1996 5 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 4. Submission of Matters to a Vote of Security Holders 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 SIGNATURES 14
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SERVICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Data)
MARCH 31, DECEMBER 31, 1997 1996 --------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 19,235 $ 19,473 Accounts receivable, net of allowances 10,018 7,742 Other current assets 11,409 10,765 -------- -------- Total current assets 40,662 37,980 Property and equipment, net 370,179 364,922 Investment in unconsolidated entities 902 906 Other assets, net 33,427 35,978 -------- -------- $445,170 $439,786 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,841 $ 6,369 Accrued liabilities 25,203 23,100 Current portion of long-term obligations 23,179 22,719 -------- -------- Total current liabilities 56,223 52,188 Long-term obligations, less current portion 285,237 284,880 Deferred income taxes 8,405 8,353 Commitments and contingencies Minority interests 19,990 19,627 Stockholders' equity: Common Stock, $.01 par value--25,000,000 shares authorized; 9,402,399 and 9,369,605 shares issued and outstanding at March 31, 1997 and December 31, 1996, respectively 94 94 Additional paid-in capital 55,403 55,136 Retained earnings 19,818 19,508 -------- -------- Total stockholders' equity 75,315 74,738 -------- -------- $445,170 $439,786 ======== ========
SEE ACCOMPANYING NOTES. 3 4 SERVICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) (Unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 ---- ---- Revenues: Rooms $ 41,494 $ 35,097 Food and beverage 17,275 14,391 Other 3,878 3,111 -------- -------- 62,647 52,599 Operating expenses: Direct: Rooms 11,150 9,408 Food and beverage 13,603 11,252 General and administrative 2,203 2,560 Depreciation and amortization 5,399 4,026 Other 21,611 18,611 -------- -------- 53,966 45,857 -------- -------- Income from operations 8,681 6,742 Other income (expenses): Other income, net 373 3,820 Interest expense (8,024) (6,001) Minority interests (513) (835) -------- -------- Income before income taxes 517 3,726 Provision for income taxes 207 1,490 -------- -------- Net income $ 310 $ 2,236 ======== ======== Income per common and common equivalent share: $ .03 $ .24 ======== ========
SEE ACCOMPANYING NOTES. 4 5 SERVICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In Thousands, Except Share Data)
COMMON STOCK ADDITIONAL TOTAL ------------------ PAID-IN RETAINED STOCKHOLDERS' SHARES AMOUNT CAPITAL EARNINGS EQUITY ------ ------ ------- ---------- -------------- Balance at December 31, 1995 8,846,269 $88 $51,424 $11,308 $62,820 401(k) Plan contribution 25,536 1 465 -- 466 Exercise of stock options 497,800 5 2,008 -- 2,013 Tax benefit from exercise of stock options -- -- 1,239 -- 1,239 Net income -- -- -- 8,200 8,200 --------- --- ------- ------- ------- Balance at December 31, 1996 9,369,605 94 55,136 19,508 74,738 401 (k) Plan contribution 6,794 -- 120 -- 120 Exercise of stock options 26,000 -- 147 -- 147 Net income -- -- -- 310 310 --------- --- ------- ------- ------- Balance at March 31, 1997 9,402,399 $94 $55,403 $19,818 $75,315 ========= === ======= ======= =======
The data for the three months ended March 31, 1997, is unaudited. SEE ACCOMPANYING NOTES. 5 6 SERVICO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 ---- ---- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 10,082 $ 6,254 INVESTING ACTIVITIES: Capital expenditures, net (10,656) (3,483) Acquisitions of property and equipment -- (17,241) Net deposits for capital expenditures -- (2,762) Net proceeds from litigation settlement -- 3,915 Decrease in investment in unconsolidated entities 9 448 Notes receivable issued -- (1,200) Notes receivable issued to related parties -- (470) Other 339 107 -------- -------- Net cash used in investing activities (10,308) (20,686) -------- -------- FINANCING ACTIVITIES: Proceeds from issuance of long-term obligations 14,763 30,299 Net proceeds from issuance of common stock 147 1,669 Principal payments on long-term obligations (13,946) (14,253) Payments of deferred loan costs (826) (862) (Distributions to) contributions from minority interests (150) 2,705 -------- -------- Net cash (used in) provided by financing activities (12) 19,558 -------- -------- Net (decrease) increase in cash and cash equivalents (238) 5,126 Cash and cash equivalents at beginning of period 19,473 11,401 -------- -------- Cash and cash equivalents at end of period $ 19,235 $ 16,527 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest, net of amount capitalized $ 6,422 $ 5,417 ======== ======== Income taxes $ 92 $ 363 ======== ========
SEE ACCOMPANYING NOTES. 6 7 SERVICO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. GENERAL The financial statements consolidate the accounts of Servico, Inc. ("Servico"), its wholly-owned subsidiaries (owning 43 hotels) and partnerships (owning 13 hotels) in which Servico exercises control over the partnerships' assets and operations (collectively, the "Company"). An unconsolidated entity (owning one hotel) in which the Company exercises significant influence over operating and financial policies is accounted for using the equity method. The accounts of three hotels which the Company managed for third party owners are not included in the consolidation. However, management fee income received from these hotels is included in other revenues. All significant intercompany accounts and transactions have been eliminated. The accounting policies followed for quarterly financial reporting are the same as those disclosed in Note 1 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting primarily of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 1997, and the results of its operations and its cash flows for the three months then ended. While management believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The accompanying condensed consolidated balance sheet at March 31, 1997 and the condensed consolidated statement of stockholders' equity for the three month period ended March 31, 1997, the condensed consolidated statements of income for the three months ended March 31, 1997 and 1996 and the condensed consolidated statements of cash flows for the three months ended March 31, 1997 and 1996 have been reviewed in accordance with standards established by the American Institute of Certified Public Accountants, by Ernst & Young LLP, Independent Certified Public Accountants, whose review report, with respect thereto, is filed as Exhibit 15.1 in Item 6.(a) of this Form 10-Q. Certain amounts in the prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation. 7 8 2. DEFERRED COSTS Deferred franchise, financing and other deferred costs are stated at cost, net of accumulated amortization of $5.5 million and $4.1 million at March 31, 1997 and December 31, 1996, respectively, which is computed using the straight-line method, over the terms of the related franchise, loan or other agreements. The straight-line method of amortizing deferred financing costs approximates the interest method. 3. COMMITMENTS AND CONTINGENCIES The Company is a party to legal proceedings arising in the ordinary course of its business, the impact of which would not, either individually or in the aggregate, in management's opinion, based upon facts currently known by it and discussions with counsel, have a material adverse effect on the Company's financial condition or results of operations. 4. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE Earnings per share is calculated based on the weighted average number of common shares and dilutive common equivalent shares outstanding during the periods. Earnings per common share include the Company's outstanding stock options, if dilutive, and common stock contributed or to be contributed by the Company to its employee 401(k) Plan. Weighted average shares outstanding used for the computation of earnings per share was 9.9 million and 9.5 million for the 1997 and 1996 three month periods, respectively. Primary and fully diluted shares were the same for both periods. In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share". SFAS 128 requires companies with complex capital structures that have publicly held common stock or common stock equivalents to present both basic and diluted earnings per share ("EPS") on the face of the income statement. The presentation of basic EPS replaces the presentation of primary EPS currently required by Accounting Principles Board Opinion No. 15 ("APB No. 15"), "Earnings Per Share". Basic EPS is calculated as income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted EPS (previously referred to as fully diluted EPS) is calculated using the "if converted" method for convertible securities and the treasury stock method for options and warrants as prescribed by APB No. 15. This statement is effective for financial statements issued for interim and annual periods ending after December 15, 1997. The Company does not believe the adoption of SFAS 128 in fiscal 1997 will have a significant impact on the Company's reported EPS. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Occupancy levels, average daily rate and revenue per available room ("RevPAR") are important hospitality performance measures. These performance measures for the Company's hotels are impacted by a variety of factors including national, regional and local economic conditions, the degree of competition with other hotels in the area and, in the case of occupancy levels, changes in travel patterns. The demand for accommodations is also affected by normally recurring seasonal patterns and most Company hotels experience lower occupancy levels in the fall and winter (September through February) which may result in lower revenues, lower net income and less cash flow during these months. The Company's growth strategy includes the acquisition of under-performing hotels and the implementation of the Company's operational initiatives and repositioning and renovation programs to achieve revenue and margin improvements. Such initiatives typically require between 12 and 36 months before newly acquired hotels are repositioned and stabilized. During this period, the revenues and earnings of newly acquired hotels can be adversely affected and can impact consolidated RevPAR, Average Daily Rate, and occupancy rate performance as well as consolidated earnings. The Company purchased 11 hotels in 1995 (the "1995 Acquisitions") and 13 hotels during 1996 (the "1996 Acquisitions") and accordingly, the impact of such activities is material. In order to better illustrate underlying trends of the Company's core hotel base, the Company tracks the performance of both Stabilized and Reposition Hotels. The Stabilized Hotels include the hotels which were acquired by the Company through 1994 and which, based on management's determination, have achieved normalized operations. Reposition Hotels include the 1995 Acquisitions and the 1996 Acquisitions which are still the subject of management's continuing post-acquisition repositioning and renovating initiatives. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997 (THE "1997 QUARTER") AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1996 (THE "1996 QUARTER") During the 1997 Quarter, the Company owned 56 hotels, managed 3 hotels for third party owners and had a minority investment in 1 hotel, compared with 46 hotels owned, 9 managed and minority investments in 3 hotels during the 1996 Quarter. Occupancy and average daily rate for owned hotels for the 1997 Quarter was 62.7% and $73.45, compared with 65.6% and $70.93 for the 1996 Quarter. RevPAR for the Stabilized Hotels increased 5.1% during the 1997 Quarter to $49.15 from $46.77 during the 1996 Quarter. The occupancy level and average daily rate for the Stabilized Hotels during the 1997 Quarter was 65.3% and $75.21 respectively, compared with 64.9% and $72.08 respectively for the 1996 Quarter. The increase in occupancy and average daily rate for the Stabilized Hotels during the 1997 Quarter is attributable to successful yield management and marketing strategies as well as a general improvement in the hospitality industry. 9 10 Most of the 1995 Acquisitions were in various stages of repositioning and major renovations during the 1997 Quarter and as a result, occupancy for the 1995 Acquisitions during the 1997 Quarter was 69.6% as compared to 71.9% for the 1996 Quarter. The average daily rate for these hotels was $72.76 for the 1997 Quarter as compared to $70.42 for the 1996 Quarter and RevPAR was $50.64 for both the 1997 and 1996 Quarters. RevPAR for the 1996 Acquisitions was $35.04 during the 1997 Quarter. The occupancy level and average daily rate for the 1996 Acquisitions during the 1997 Quarter was 51.4% and $68.17, respectively. These performance measures are not comparable to the 1996 Quarter as most of the 1996 Acquisitions were made subsequent to March 31, 1996. The Company is implementing new marketing strategies and operational improvements at both the 1995 Acquisitions and the 1996 Acquisitions. In addition, the Company is currently negotiating to obtain certain new franchise affiliations and expects to complete significant renovations at many of these hotels during 1997. Revenues for the Company were $62.6 million for the 1997 Quarter, a 19.0% increase over revenues of $52.6 million for the 1996 Quarter. Of this $10 million increase in revenues, approximately $9 million was attributable to the Reposition Hotels, primarily the 1996 Acquisitions. Direct operating expenses for the Company were $24.8 million for the 1997 Quarter and $20.7 million for the 1996 Quarter. This increase was fully attributable to the Reposition Hotels. The direct operating expenses for the Stabilized Hotels were $16.4 million (41.9% of related direct revenues) for the 1997 Quarter as compared to $16.9 million (43.6% of related direct revenues) for the 1996 Quarter. This decrease was a result of continued cost control measures implemented by management. Other operating expenses for the Company were $21.6 million for the 1997 Quarter and $18.6 million for the 1996 Quarter. This increase was also attributable to the Reposition Hotels. Depreciation and amortization expense for the Company was $5.4 million for the 1997 Quarter and $4 million for the 1996 Quarter. Included in this $1.4 million increase is $1 million associated with the Reposition Hotels and the remaining increase related to equipment purchases and improvements made at the Stabilized Hotels. As a result of the above, income from operations was $8.7 million for the 1997 Quarter as compared to $6.7 million for the 1996 Quarter. Included in the 1996 Quarter was a non-recurring charge of $.8 million relating to the resignation of the Company's former Chief Executive Officer. Interest expense, net of interest income, was $7.7 million for the 1997 Quarter, a $1.9 million increase over the $5.8 million for the 1996 Quarter. Included in this $1.9 million increase was $1 million associated with the amortization of certain non-cash deferred loan costs relating to a $123.2 million refinancing completed in April 1996, with the balance primarily relating to borrowings associated with the 1996 Acquisitions. Included in other income for the 1996 Quarter was a non-recurring $3.6 million net settlement of a lawsuit received by the Company in March 1996. After a provision for income taxes of $.2 million for the 1997 Quarter and $1.5 million for the 1996 Quarter, the Company had net income of $.3 million ($.03 per share) for the 1997 Quarter and $2.2 million ($.24 per share) for the 1996 Quarter. Without consideration of the non-recurring items discussed above, the Company had recurring income of $.3 million for the 1997 Quarter ($.03 per share) and $.6 million for the 1996 Quarter ($.06 per share). 10 11 LIQUIDITY AND CAPITAL RESOURCES The Company's principal sources of liquidity are existing cash balances and cash flow from operations. The Company had earnings before interest, taxes, depreciation and amortization ("EBITDA") for the 1997 Quarter of $14.2 million, a 21.4% increase over the $11.7 million for the 1996 Quarter. EBITDA is a widely regarded industry measure of lodging performance used in the assessment of hotel property values, although EBITDA is not indicative of and should not be used as an alternative to net income or net cash provided by operations as specified by generally accepted accounting principles. Net cash provided by operating activities for the 1997 Quarter was $10 million. At March 31, 1997, the Company had a working capital deficit of $15.6 million as compared to a working capital deficit of $14.2 million at December 31, 1996. Included in the working capital deficit for both periods was $15.3 million of mortgage notes payable which mature within twelve months. The Company expects to refinance these mortgage notes before their due dates. The Company's ratio of current assets to current liabilities was .7:1 at March 31, 1997 and December 31, 1996 (1:1 for both periods without consideration of the mortgages due in 1997). At March 31, 1997, the Company's long-term obligations were $285.2 million compared with $284.9 million at December 31, 1996. Certain of the Company's hotels are operated under license agreements that require the Company to make capital improvements in accordance with a specified time schedule. Further, in connection with the refinancing and acquisition of hotels, the Company has agreed to make certain capital improvements and, as of March 31, 1997, has approximately $11.4 million escrowed for such improvements. The Company estimates its remaining obligations for all of such commitments to be approximately $17.2 million, of which approximately $13.9 million is expected to be spent during the remainder of 1997, and the balance expected to be spent during the 1998-1999 time period. The Company may require additional financing to continue its growth strategy. There is no assurance that such financing will be available in amounts required or on terms satisfactory to the Company and the Company does not currently have any lines of credit. The Company's financial position may, in the future, be strengthened through the generation of revenues, the refinancing of its properties or capital from equity or debt markets. There is no assurance the Company will be successful in these efforts. FORWARD-LOOKING STATEMENTS Statements in this Form 10-Q which express "belief", "anticipation", or "expectation", as well as other statements which are not historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Moreover, there are important factors which include, but are not limited to, general and local economic conditions, risks relating to the operation and acquisition of hotels, government legislation and regulation, changes in interest rates, the impact of rapid growth, the availability of capital to finance growth, the historical cyclicality of the lodging industry and other factors described in other Servico, Inc. filings with the United States Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. Actual results could differ materially from these forward- 11 12 looking statements. In light of the risks and uncertainties, there is no assurance that the forward-looking statements contained in this Form 10-Q will in fact prove correct or occur. The Company does not undertake any obligation to publicly release the results of any revisions to these forward-looking statements to reflect future events or circumstances. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of shareholders of the Company was held on May 6, 1997. At the annual meeting, the Company's shareholders elected two directors and approved a proposal to amend the Company's stock option plan, to increase the number of shares issuable pursuant to the plan from 1,425,000 to 1,675,000. The number of votes cast for, against or withheld for each nominee for director were as follows: Director For Against Withheld -------- --- ------- -------- John W. Adams 7,427,882 - 286,982 Joseph C. Calabro 7,450,104 - 264,760 The votes cast for and against the proposal relating to the Company's stock option plan, as well as the number of abstentions relating to such proposal, were as follows: FOR 6,808,021 AGAINST 710,232 ABSTAIN 196,611 12 13 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11 Statement re: computation of per share earnings. 15.1 Independent Accountants' Review Report. 15.2 Letter from independent certified public accountants relating to unaudited interim financial information. 27 Financial Data Schedule (for SEC use only). (b) Reports on Form 8-K No reports on Form 8-K were filed during the Quarter ended March 31, 1997. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SERVICO, INC. Registrant DATE: May 9, 1997 /s/ David Buddemeyer ----------------------- David Buddemeyer President and Chief Executive Officer DATE: May 9, 1997 /s/ Warren M. Knight ----------------------- Warren M. Knight Vice President-Finance and Chief Financial Officer 14 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (In Thousands, Except Per Share Data)
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 ---- ---- PRIMARY Weighted average common shares outstanding 9,389 9,119 Net effect of dilutive stock options - based on the treasury stock method using average market price 537 407 ------ ------ Total 9,926 9,526 ====== ====== Net income $ 310 $2,236 ====== ====== Per share amount $ .03 $ .24 ====== ====== FULLY DILUTED Weighted average common shares outstanding 9,389 9,119 Net effect of dilutive stock options- based on the treasury stock method using the period-end market price, if higher than average market price 537 407 ------ ------ Total 9,926 9,526 ====== ====== Net income $ 310 $2,236 ====== ====== Per share amount $ .03 $ .24 ====== ======
EX-15.1 3 INDEPENDENT ACCOUNTANTS REVIEW REPORT 1 Exhibit 15.1 ------------ INDEPENDENT ACCOUNTANTS' REVIEW REPORT Board of Directors and Shareholders Servico, Inc. We have reviewed the accompanying condensed consolidated balance sheet of Servico, Inc. and subsidiaries as of March 31, 1997, the related condensed consolidated statements of income for the three-month periods ended March 31, 1997 and 1996, the condensed consolidated statement of stockholders' equity for the three-month period ended March 31, 1997 and the condensed consolidated statement of cash flows for the three-month periods ended March 31, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Servico, Inc. and subsidiaries as of December 31, 1996, and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended not presented herein and in our report dated February 13, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1996 and the condensed consolidated statement of stockholders' equity for the year ended December 31, 1996 is fairly stated, in all material respects, in relation to the consolidated balance sheet and the consolidated statement of stockholders' equity from which they have been derived. /s/ Ernst & Young LLP April 18, 1997 EX-15.2 4 LETTER FROM INDEPENDENT ACCOUNTANTS 1 Exhibit 15.2 ------------ April 18, 1997 Board of Directors and Stockholders Servico, Inc. We are aware of the incorporation by reference in the Registration Statements (Form S-8 No. 33-60088, Form S-8 No. 33-60090, Form S-8 No. 33-81954, Form S-3 No. 33-78566 and Form S-3 No. 33-93658) of Servico, Inc. and subsidiaries for the registration of 1,000,000, 150,000, 250,000, 1,620,100 and 800,000 shares, respectively, of its common stock of our report dated April 18, 1997 relating to the unaudited condensed consolidated interim financial statements of Servico, Inc. and subsidiaries which is included in its Form 10-Q for the quarter ended March 31, 1997. Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part of the registration statements prepared or certified by accountants within the meaning of Section 7 or Section 11 of the Securities Act of 1933. Very truly yours, /s/ Ernst & Young LLP EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDING MARCH 31, 1997. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 19,235 0 10,018 0 0 40,662 370,179 0 445,170 56,223 285,237 0 0 94 75,315 445,170 0 62,647 0 53,966 (140) 0 8,024 517 207 310 0 0 0 310 .03 .03
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