-----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, Lm0EQF6FfUEQCqVdeY7U6lZ5ehNqy5tR62LZvbsLoM4K0NL72Jj5C37LWbUn5kzv pcg0gV0jsM/PTkS94jnOqA== 0000892569-96-002067.txt : 19961018 0000892569-96-002067.hdr.sgml : 19961018 ACCESSION NUMBER: 0000892569-96-002067 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961016 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961017 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOUBLETREE CORP CENTRAL INDEX KEY: 0000923472 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 860762415 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24392 FILM NUMBER: 96644484 BUSINESS ADDRESS: STREET 1: 410 N 44TH ST STREET 2: STE 700 CITY: PHOENIX STATE: AR ZIP: 85008 BUSINESS PHONE: 6022206666 8-K 1 FORM 8-K DATED OCTOBER 16, 1996 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) October 16, 1996 DELAWARE 0-34392 56-0762415 (State or Other (Commission File (I.R.S. Employer jurisdiction of Number) Identification No.) incorporation 410 North 44th Street, Suite 700 Phoenix, Arizona 85009 (Address of principal executive offices) Registrant's telephone number, including area code: (802) 220-6666 ------------------ ================================================================================ 2 ITEM 5. OTHER EVENTS. On October 16, 1996, Doubletree Corporation, a Delaware corporation (the "Company"), issued a press release regarding, among other things, the consolidated financial condition of the Company and its subsidiaries as of September 30, 1996 and the results of operations thereof for the period then ended. A copy of such press release is filed as Exhibit 99.1 and is incorporated herein by reference. As previously announced, the Company has agreed to acquire Red Lion Hotels, Inc., a Delaware corporation ("Red Lion"). On October 16, 1996, Red Lion, issued a press release regarding, among other things, the consolidated financial condition of Red Lion and its subsidiaries as of September 30, 1996, and the results of operations thereof for the period then ended. A copy of such press release is filed as Exhibit 99.2 and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits. 99.1 Press Release of Doubletree Corporation dated October 16, 1996. 99.2 Press Release of Red Lion dated October 16, 1996. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DOUBLETREE CORPORATION /s/ William L. Perocchi ----------------------- William L. Perocchi Executive Vice President, Chief Financial Officer and Treasurer Dated: October 16, 1996 EX-99.1 2 PRESS RELEASE OF DOUBLETREE CORP. DATED 10/16/96 1 EXHIBIT 99.1 DOUBLETREE CORPORATION 410 North 44th Street Suite 700 Phoenix, Arizona 85008 602 220-6666 FOR IMMEDIATE RELEASE Contact: William L. Perocchi Executive VP & CFO Phone: (602) 220-6810 DOUBLETREE ANNOUNCES THIRD QUARTER NET INCOME UP 51 PERCENT PHOENIX, OCTOBER 16, 1996 -- Doubletree Corporation (NASDAQ: TREE), a leading hotel management and franchise company, announced results for the third quarter of 1996. Net income of $8.0 million increased 51 percent over pro forma third quarter 1995 results. Earnings per share were 34 cents compared to 24 cents in the year-ago pro forma period, a gain of 42 percent. Revenues increased 30 percent to $68.6 million. On February 27, 1996, the Company acquired all of the outstanding stock of RFS, Inc. (RFS), a privately-held hotel operator, in exchange for approximately 2.7 million shares of the Company's common stock. The business combination was accounted for as a pooling-of-interests combination and, accordingly, the Company's 1995 financial results have been restated to include the results of RFS. Also, RFS, as a Subchapter S corporation, was generally not liable for income taxes during 1995. A pro forma adjustment to increase RFS's provision for income taxes to the Company's effective tax rate of 35 percent, has been reflected in the pro forma 1995 results. In the third quarter of 1996, the average room rate at the Company's comparable hotels managed under the Doubletree brand increased 10.8 percent from the year-ago period to $96, and occupancy improved one percentage point to 76 percent, resulting in a 12.2 percent increase in revenue per available room (REVPAR) for the quarter. Comparable hotels managed under other franchisors' brands or as independents experienced an 8.8 percent increase in average room rate to $78 for the third quarter of 1996 over the prior year period and occupancy was essentially flat at 80 percent, resulting in an 8.1 percent increase in REVPAR for the quarter. -more- 2 Doubletree Third Quarter Results Page 2 For the first nine months of 1996, Doubletree reported a 44 percent increase in net income to $20.4 million and a 38 percent increase in earnings per share to 88 cents over the comparable pro forma 1995 period. Nine month revenues increased 29 percent to $186.0 million from $144.2 million in the comparable 1995 period. During the first nine months of 1996, the average room rate at the Company's comparable hotels managed under the Doubletree brand increased 8.6 percent from the year-ago period to $96, and occupancy improved one and one-half percentage points to 75 percent, resulting in a 10.8 percent increase in REVPAR. Comparable hotels managed under other franchisors' brands or as independents experienced a 7.2 percent increase in average room rate to $74 for the first nine months of 1996 over the prior year period and occupancy increased nearly one percentage point to 78 percent, resulting in an 8.3 percent increase in REVPAR. The Company added eight new contracts totaling 1,890 rooms during the third quarter and terminated three contracts totaling 686 rooms, resulting in a net addition of five contracts aggregating 1,204 rooms. For the first nine months of 1996, the Company added 68 contracts totaling 11,821 rooms (net of terminations and including the RFS acquisition of 50 contracts totaling 6,979 rooms). As of September 30, 1996, the Company had a portfolio of 184 properties totaling 42,436 rooms under management contract or franchise agreement. This represents a 41 percent increase in the number of rooms compared to September 30, 1995 and an 18 percent increase excluding the RFS acquisition. In addition, the Company announced on September 12, 1996 that it had entered into a definitive agreement to acquire Red Lion Hotels, Inc. ("Red Lion")(NYSE:RL) in a cash-and-stock merger valued at approximately $1.2 billion including the assumption of approximately $200 million of debt. As of September 30, 1996, Red Lion operated 56 hotels containing approximately 14,900 rooms. Red Lion has -more- 3 Doubletree Third Quarter Results Page 3 called a special meeting of its stockholders to be held on Friday, November 8, 1996 to vote on the proposed merger transaction. Assuming that the proposed merger transaction is approved by Red Lion's stockholders and assuming that all other closing conditions have been satisfied, the Company expects to close the proposed merger transaction as soon as practicable after Red Lion's special stockholders' meeting. Doubletree Corporation is a leading hotel management company and is the exclusive franchisor of Doubletree Hotels, Doubletree Guest Suites and Club Hotels by Doubletree hotel brands. ### 4 DOUBLETREE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Quarter Ended Nine Months Ended September 30, September 30, ----------------------- ------------------------ 1996 1995 1996 1995 Actual Pro Forma(a) Actual Pro Forma(a) ------- ------------ -------- ------------ REVENUES: Management and franchise fees $ 9,739 $ 7,695 $ 28,258 $ 22,231 Owned hotel revenues 1,993 1,892 5,972 5,200 Leased hotel revenues 51,380 38,794 137,701 104,328 Purchasing and service fees 4,215 4,064 11,800 11,542 Other fees and income 1,261 448 2,233 941 ------- ------- -------- -------- Total revenues 68,588 52,893 185,964 144,242 ------- ------- -------- -------- OPERATING COSTS AND EXPENSES: General and administrative 4,170 3,735 12,811 10,841 Owned hotel expenses 1,523 1,467 4,740 4,403 Leased hotel expenses 47,418 36,257 127,153 97,265 Purchasing and service expenses 3,046 3,338 8,694 9,684 Depreciation and amortization 1,477 1,196 4,417 3,252 ------- ------- -------- -------- Total operating costs and expenses 57,634 45,993 157,815 125,445 ------- ------- -------- -------- Operating income 10,954 6,900 28,149 18,797 Interest expense (32) (49) (175) (181) Interest income 1,388 1,236 3,478 3,094 ------- ------- -------- -------- Income before income taxes and minority interest 12,310 8,087 31,452 21,710 Minority interest share of net loss 28 84 6 77 ------- ------- -------- -------- Income before income taxes 12,338 8,171 31,458 21,787 Income tax expense 4,318 2,860 11,011 7,625 ------- ------- -------- -------- Net income $ 8,020 $ 5,311 $ 20,447 $ 14,162 ======= ======= ======== ======== Earnings per share $ 0.34 $ 0.24(a) $ 0.88 $ 0.64(a) ------- ------- -------- -------- Weighted average common and common equivalent shares outstanding 23,879 22,443 23,183 22,137 ======= ======= ======== ========
(a) On February 27, 1996, the Company acquired the outstanding common stock of RFS, Inc. (RFS), a privately-held hotel operator, in exchange for approximately 2.7 million shares of the Company's common stock. The business combination was accounted for as a pooling-of-interests combination and, accordingly, the Company's 1995 financial results have been restated to include the results of RFS. Also, RFS, as a Subchapter S corporation, was generally not liable for income taxes during 1995. A pro forma adjustment to increase the provision for income taxes by $297,000 and $833,000 to the Company's effective tax rate of 35%, has been reflected in the 1995 pro forma results for the quarter and nine months ended September 30, 1995, respectively. EX-99.2 3 PRESS RELEASE OF RED LIONS DATED 10/16/96 1 EXHIBIT 99.2 TUESDAY OCTOBER 15 6:56 PM EDT RED LION HOTELS, INC. REPORTS 24 PERCENT INCREASE IN THIRD QUARTER EARNINGS VANCOUVER, Wash., Oct. 15 /PRNewswire/ -- Red Lion Hotels, Inc. today reported its net income increased 24 percent to $15.1 million, or $.48 per share, in the third quarter of 1996. In the comparable quarter of 1995, Red Lion earned pro forma net income of $12.1 million, or $.39 per share. For the nine months ended September 30, 1996, Red Lion's net income increased 28 percent to $33.9 million, or $1.08 per share. Red Lion earned pro forma net income of $26.5 million, or $.85 per share, for the first nine months of 1995. Increasing revenues and operating margins combined with lower net interest costs contributed most of the earnings improvement in both periods. "I am pleased to report another strong quarter for Red Lion," said David J. Johnson, Red Lion's chairman and chief executive officer. "Our ongoing record of operating and financial success continues to reflect Red Lion's commitment to customer service, strong market position and a culture of high individual performance." Revenues for the third quarter of 1996 increased 9.5 percent to $141.8 million, compared to pro forma revenues of $129.5 million for the third quarter of 1995. Revenue per available room (REVPAR) increased 5.2 percent to $65.32. Red Lion's average daily rate rose 7.1 percent to $82.39 in the third quarter of 1996, while occupancy decreased 1.4 percentage points to 79.3 percent. Gross operating profit margin improved to 40.1 percent in the third quarter of 1996, compared to 39.7 percent in the comparable period of 1995. Operating income for the third quarter of 1996 increased to $29.4 million, compared to pro forma operating income of $10.4 million in the third quarter of 1995. Expenses resulting from Red Lion's formation and offering(1) reduced the 1995 operating income, but had no material impact on net income due to a related deferred tax benefit which substantially offset those expenses. During the third quarter of 1996, Red Lion completed the previously announced acquisitions of hotels in Houston, Texas and Modesto, California. These acquisitions did not materially affect Red Lion's third 2 quarter results. For the first nine months of 1996, revenues increased 8.0 percent to $399.8 million, compared to pro forma revenues of $370.3 million for the comparable period of 1995. REVPAR for the first nine months of 1996 increased 4.9 percent to $59.59. Red Lion's average daily rate for the first nine months increased 6.7 percent to $80.72, and occupancy declined 1.3 percentage points to 73.8 percent. Gross operating profit margin for the first nine months of 1996 increased to 37.3 percent, compared to 36.3 percent in the comparable period of 1995. Operating income increased to $68.1 million for the first nine months of 1996, compared to pro forma operating income of $42.8 million in the comparable period of 1995. Headquartered in Vancouver, Washington, Red Lion Hotels, Inc. is a leading full service hospitality company operating 56 hotels containing 14,859 rooms in the western United States. In September 1996, Red Lion agreed to be acquired by Doubletree Corporation in a cash-and-stock merger valued at approximately $1.2 billion. The transaction is expected to close prior to year-end 1996. Note: Statements in this press release which are not strictly historical are "forward-looking" and are subject to risks and uncertainties which affect the Company's business. Those uncertainties would include such factors as general business conditions and growth in the hospitality industry, the balance between supply and demand for hotel rooms, competition for hotel acquisitions, continued access to financial markets and other factors as described in the Company's filings with the Securities and Exchange Commission. CONTACT: Randall Oliver, Investor Relations (360) 750-4347 RED LION HOTELS, INC. Consolidated Statements of Income (in thousands, except share data) (unaudited)
Three Months Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Actual Pro Forma(1) Actual Pro Forma(1) REVENUES Rooms $ 88,572 $ 79,248 $236,017 $215,166 Food and beverage 38,889 38,128 120,278 118,921 Other 14,377 12,094 43,510 36,208 Total revenues 141,838 129,470 399,805 370,295 OPERATING COSTS AND EXPENSES Departmental direct expenses Rooms 20,428 17,941 57,419 51,475 Food and beverage 30,715 29,587 94,349 93,060 Other 4,920 4,578 14,999 13,738 Property indirect expenses 28,841 26,023 84,004 77,583 Other costs 8,303 8,882 26,331 25,836 Depreciation and amortization 5,470 4,646 14,637 14,530 Payments due to owners of managed hotels 13,805 12,733 39,983 36,591 Expenses resulting from Formation and Offering -- 14,662 -- 14,662 OPERATING INCOME 29,356 10,418 68,083 42,820 EQUITY (LOSS) IN EARNINGS OF UNCONSOLIDATED JOINT VENTURES (146) 196 1,277 1,885
3 INTEREST EXPENSE, NET (3,987) (4,572) (11,766) (14,613) INCOME BEFORE JOINT VENTURERS' INTEREST 25,223 6,042 57,594 30,092 INCOME ATTRIBUTABLE TO JOINT VENTURERS' INTERESTS (376) (304) (1,354) (463) INCOME BEFORE INCOME TAXES 24,847 5,738 56,240 29,629 INCOME TAX BENEFIT (EXPENSE) (9,739) 6,409 (22,296) (3,147) NET INCOME $15,108 $12,147 $ 33,944 $ 26,482 EARNINGS PER COMMON SHARE $ 0.48 $ 0.39 $ 1.08 $ 0.85 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 31,312,600 31,312,500 31,312,500 31,312,500
At September 30, 1996 1995 SUMMARY OPERATING DATA Number of Hotels: (2) Owned Hotels 24 21 Management Contracts 15 15 Leased Hotels 17 17 Total 56 53 Number of Rooms: (2) Owned Hotels 5,983 5,117 Management Contracts 4,887 4,777 Leased Hotels 3,989 3,989 Total 14,859 13,883
Nine Months Ended September 30, 1996 1995 Actual Pro Forma(1) EBITDA (3) $85,627 $59,872
(1) On August 1, 1995, Red Lion, a California Limited Partnership (the "Partnership") operating 53 hotels, contributed substantially all of its assets (excluding 17 hotels, the "Leased Hotels," and certain other assets) and certain liabilities to Red Lion Hotels, Inc. (the "Formation"). Also effective August 1, 1995, Red Lion Hotels, Inc. entered into a long-term master lease with the Partnership for the Leased Hotels. Pro forma results reported above represent the actual results of Red Lion Hotels, Inc. since March 1, 1995, plus the Partnership's historical results for the first quarter of 1995, which have been adjusted to give effect to the Formation, the leasing of the Leased Hotels and the repayment and refinancing of substantially all debt with borrowings under a new credit facility and the net proceeds of the public offering (the "Offering"), assuming that such events were completed on January 1, 1995. Income taxes have been provided on a pro forma basis assuming an effective tax rate of 40%. Common shares outstanding is based on the number of shares of common stock outstanding after the Offering (including 1,312,500 shares issued to cover over allotments) plus 350,000 shares issued in connection with the termination of an incentive unit plan. (2) The information reflects the 17 Red Lion Leased Hotels, which were owned prior to August 1, 1995, as if the hotels were leased on each date presented. (3) EBITDA represents earnings before interest expense, income taxes, income (loss) attributable to joint venturers' interest, depreciation and amortization and certain other non-cash charges. EBITDA is not intended to represent cash flow operations as defined by GAAP, and such information should not be considered as an alternative to net income, cash flow from operations or any other measure of performance prescribed by GAAP. EBITDA is included herein because management believes that certain investors find it to be a useful tool for measuring the ability to service debt. SOURCE Red Lion Hotels, Inc. -----END PRIVACY-ENHANCED MESSAGE-----