UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
For the transition period from to
Commission File Number 1-9320
WYNDHAM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
94-2878485 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207
(Address of principal executive offices) (Zip Code)
(214) 863-1000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of the registrant’s class A common stock, par value $.01 per share, as of the close of business on May 12, 2003, was 168,082,892.
WYNDHAM INTERNATIONAL, INC.
PART I—FINANCIAL INFORMATION
| Page | ||||
| Item 1. |
3 | |||
| Wyndham International, Inc.: |
||||
|
Condensed Consolidated Balance Sheets as of March 31, 2003 (unaudited) and |
3 | |||
| 4 | ||||
| 5 | ||||
|
Notes to Condensed Consolidated Financial Statements as of March 31, 2003 |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 | ||
| Item 3. |
30 | |||
| Item 4. |
30 | |||
| PART II—OTHER INFORMATION |
||||
| Item 1. |
31 | |||
| Item 2. |
32 | |||
| Item 3. |
32 | |||
| Item 4. |
33 | |||
| Item 5. |
33 | |||
| Item 6. |
33 | |||
| 33 | ||||
| 33 | ||||
| 34 | ||||
| 35 | ||||
2
PART I: FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
76,872 |
|
$ |
37,239 |
| ||
| Restricted cash |
|
146,229 |
|
|
143,839 |
| ||
| Accounts receivable |
|
99,062 |
|
|
100,529 |
| ||
| Inventories |
|
14,795 |
|
|
15,488 |
| ||
| Prepaid expenses and other assets |
|
11,551 |
|
|
10,008 |
| ||
| Assets held for sale, net of accumulated depreciation of $47,651 in 2003 and $28,526 in 2002 |
|
113,674 |
|
|
77,256 |
| ||
| Total current assets |
|
462,183 |
|
|
384,359 |
| ||
| Investment in real estate and related improvements, net of accumulated depreciation of $1,019,265 in 2003 and $978,953 in 2002 |
|
3,454,910 |
|
|
3,611,456 |
| ||
| Investment in unconsolidated subsidiaries |
|
44,808 |
|
|
61,631 |
| ||
| Notes and other receivables |
|
39,754 |
|
|
41,240 |
| ||
| Management contract costs, net of accumulated amortization $19,446 in 2003 and $20,082 in 2002 |
|
82,594 |
|
|
83,983 |
| ||
| Leasehold costs, net of accumulated amortization of $10,858 in 2003 and $38,764 in 2002 |
|
23,358 |
|
|
102,250 |
| ||
| Trade names and franchise costs, net of accumulated amortization of $32,023 in 2003 and $30,396 in 2002 |
|
91,842 |
|
|
93,499 |
| ||
| Deferred acquisition costs |
|
3,580 |
|
|
3,111 |
| ||
| Goodwill, net of accumulated amortization of $54 in 2003 and $54 in 2002 |
|
391 |
|
|
391 |
| ||
| Deferred expenses, net of accumulated amortization of $71,039 in 2003 and $64,441 in 2002 |
|
49,136 |
|
|
52,008 |
| ||
| Other assets |
|
39,152 |
|
|
39,530 |
| ||
| Total assets |
$ |
4,291,708 |
|
$ |
4,473,458 |
| ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ |
240,584 |
|
$ |
235,446 |
| ||
| Deposits |
|
33,033 |
|
|
31,252 |
| ||
| Borrowings associated with assets held for sale |
|
60,812 |
|
|
45,835 |
| ||
| Current portion of borrowings under credit facility, term loans, mortgage notes and capital lease obligations |
|
394,662 |
|
|
385,786 |
| ||
| Total current liabilities |
|
729,091 |
|
|
698,319 |
| ||
| Borrowings under credit facility, term loans, mortgage notes and capital lease obligations |
|
2,373,057 |
|
|
2,394,922 |
| ||
| Derivative financial instruments |
|
89,379 |
|
|
92,814 |
| ||
| Deferred income taxes |
|
80,429 |
|
|
156,070 |
| ||
| Deferred income |
|
9,766 |
|
|
9,068 |
| ||
| Minority interest in the Operating Partnerships |
|
21,368 |
|
|
21,368 |
| ||
| Minority interest in other consolidated subsidiaries |
|
38,571 |
|
|
38,518 |
| ||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.01 par value; authorized: 150,000,000 shares; shares issued and outstanding: |
||||||||
| 13,475,489 in 2003 and 13,170,620 in 2002 |
|
135 |
|
|
132 |
| ||
| Common stock, $0.01 par value; authorized: 750,000,000 shares; shares issued and outstanding: |
||||||||
| 168,034,901 in 2003 and 167,999,126 in 2002 |
|
1,680 |
|
|
1,680 |
| ||
| Additional paid in capital |
|
4,070,223 |
|
|
4,039,656 |
| ||
| Receivables from shareholders and affiliates |
|
(18,121 |
) |
|
(18,121 |
) | ||
| Accumulated other comprehensive income |
|
(12,912 |
) |
|
(15,221 |
) | ||
| Accumulated deficit |
|
(3,090,958 |
) |
|
(2,945,747 |
) | ||
| Total shareholders’ equity |
|
950,047 |
|
|
1,062,379 |
| ||
| Total liabilities and shareholders’ equity |
$ |
4,291,708 |
|
$ |
4,473,458 |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenue: |
||||||||
| Hotel revenue |
$ |
413,763 |
|
$ |
435,463 |
| ||
| Management fee and service fee income |
|
4,420 |
|
|
4,470 |
| ||
| Interest and other income |
|
1,256 |
|
|
2,105 |
| ||
| Total revenue |
|
419,439 |
|
|
442,038 |
| ||
| Expenses: |
||||||||
| Hotel expenses |
|
321,391 |
|
|
324,905 |
| ||
| General and administrative |
|
15,004 |
|
|
18,903 |
| ||
| Interest expense |
|
44,989 |
|
|
60,205 |
| ||
| Depreciation and amortization |
|
61,557 |
|
|
62,917 |
| ||
| Loss on sale of assets |
|
4,937 |
|
|
4,770 |
| ||
| Impairment loss |
|
108,385 |
|
|
162 |
| ||
| Loss (gain) on derivative instruments |
|
11,668 |
|
|
(1,334 |
) | ||
| Total expenses |
|
567,931 |
|
|
470,528 |
| ||
| Operating loss from continued operations |
|
(148,492 |
) |
|
(28,490 |
) | ||
| Equity in (loss) earnings of unconsolidated subsidiaries |
|
(574 |
) |
|
844 |
| ||
| Loss from continued operations before income taxes and minority interest |
|
(149,066 |
) |
|
(27,646 |
) | ||
| Income tax benefit |
|
61,340 |
|
|
10,442 |
| ||
| Loss from continued operations before minority interest |
|
(87,726 |
) |
|
(17,204 |
) | ||
| Minority interest in consolidated subsidiaries |
|
(289 |
) |
|
(627 |
) | ||
| Loss from continued operations |
|
(88,015 |
) |
|
(17,831 |
) | ||
| Discontinued operations: |
||||||||
| Loss from discontinued operations |
|
(2,432 |
) |
|
(1,244 |
) | ||
| Impairment loss |
|
(16,966 |
) |
|
— |
| ||
| Loss from discontinued operations, net of taxes and minority interest |
|
(19,398 |
) |
|
(1,244 |
) | ||
| Loss before accounting change |
|
(107,413 |
) |
|
(19,075 |
) | ||
| Cumulative effect of change in accounting principle, net of taxes |
|
— |
|
|
(324,102 |
) | ||