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 June 30, 2004
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)
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 August 2, 2004, was 168,280,304.
INDEX
| Page | ||||
| PART I—FINANCIAL INFORMATION | ||||
| Item 1. |
3 | |||
| Wyndham International, Inc.: |
||||
| Condensed Consolidated Balance Sheets as of June 30, 2004 (unaudited) and December 31, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to Condensed Consolidated Financial Statements as of June 30, 2004 (unaudited) |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
25 | ||
| Item 3. |
38 | |||
| Item 4. |
40 | |||
| PART II—OTHER INFORMATION | ||||
| Item 1. |
41 | |||
| Item 2. |
42 | |||
| Item 3. |
43 | |||
| Item 4. |
43 | |||
| Item 5. |
44 | |||
| Item 6. |
44 | |||
| 44 | ||||
| 44 | ||||
| 45 | ||||
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
| June 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 75,797 | $ | 62,441 | ||||
| Restricted cash |
108,499 | 130,457 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $4,709 in 2004 and $4,489 in 2003 |
104,941 | 71,077 | ||||||
| Inventories |
13,339 | 13,680 | ||||||
| Prepaid expenses and other assets |
11,028 | 10,564 | ||||||
| Assets held for sale, net of accumulated depreciation of $134,562 in 2004 and $119,868 in 2003 |
341,906 | 238,330 | ||||||
| Total current assets |
655,510 | 526,549 | ||||||
| Investment in real estate and related improvements, net of accumulated depreciation of $910,731 in 2004 and $901,779 in 2003 |
2,520,449 | 2,938,808 | ||||||
| Investment in unconsolidated subsidiaries |
49,410 | 48,252 | ||||||
| Notes and other receivables |
23,960 | 43,320 | ||||||
| Management contract costs, net of accumulated amortization $7,988 in 2004 and $20,204 in 2003 |
5,555 | 79,014 | ||||||
| Leasehold costs, net of accumulated amortization of $37 in 2004 and $32 in 2003 |
186 | 572 | ||||||
| Trade names, net of accumulated amortization of $39,523 in 2004 and $37,123 in 2003 |
81,880 | 86,743 | ||||||
| Deferred acquisition costs |
3,014 | 4,459 | ||||||
| Deferred expenses, net of accumulated amortization of $88,777 in 2004 and $73,758 in 2003 |
34,283 | 49,267 | ||||||
| Other assets |
5,903 | 6,143 | ||||||
| Total assets |
$ | 3,380,150 | $ | 3,783,127 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Trade accounts payable |
$ | 19,116 | $ | 28,609 | ||||
| Accrued payroll costs |
46,061 | 45,866 | ||||||
| Dividends payable |
87,712 | 73,100 | ||||||
| Accrued insurance and property taxes |
48,029 | 40,559 | ||||||
| Other accrued expenses |
68,850 | 61,875 | ||||||
| Advance deposits |
30,221 | 33,006 | ||||||
| Borrowings associated with assets held for sale |
16,814 | 118,133 | ||||||
| Current portion of borrowings under credit facility, term loans, mortgage notes and capital lease obligations |
432,807 | 292,661 | ||||||
| Total current liabilities |
749,610 | 693,809 | ||||||
| Borrowings under credit facility, term loans, mortgage notes and capital lease obligations |
2,217,308 | 2,271,165 | ||||||
| Derivative financial instruments |
30,782 | 56,760 | ||||||
| Deferred income taxes |
39,643 | 39,999 | ||||||
| Deferred income |
9,841 | 10,051 | ||||||
| Minority interest in the Operating Partnerships |
20,565 | 21,289 | ||||||
| Minority interest in other consolidated subsidiaries |
54,617 | 39,981 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.01 par value; authorized: 150,000,000 shares; shares issued and outstanding: 15,101,160 in 2004 and 14,423,151 in 2003 |
151 | 144 | ||||||
| Common stock, $0.01 par value; authorized: 750,000,000 shares; shares issued and outstanding: 169,280,304 in 2004 and 168,238,102 in 2003 |
1,693 | 1,682 | ||||||
| Additional paid in capital |
4,228,339 | 4,166,227 | ||||||
| Receivables from shareholders and affiliates |
(9,377 | ) | (18,121 | ) | ||||
| Accumulated other comprehensive income |
(6,974 | ) | (8,918 | ) | ||||
| Accumulated deficit |
(3,956,048 | ) | (3,490,941 | ) | ||||
| Total shareholders’ equity |
257,784 | 650,073 | ||||||
| Total liabilities and shareholders’ equity |
$ | 3,380,150 | $ | 3,783,127 | ||||
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 June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Room revenues |
$ | 176,391 | $ | 153,226 | $ | 362,219 | $ | 319,099 | ||||||||
| Food and beverage revenues |
106,598 | 91,065 | 217,240 | 181,761 | ||||||||||||
| Other hotel revenues |
39,700 | 37,792 | 86,456 | 84,651 | ||||||||||||
| Total hotel revenues |
322,689 | 282,083 | 665,915 | 585,511 | ||||||||||||
| Management fee and service fee income |
4,088 | 4,430 | 8,805 | 8,850 | ||||||||||||
| Total revenues |
326,777 | 286,513 | 674,720 | 594,361 | ||||||||||||
| Expenses: |
||||||||||||||||
| Room expenses |
43,642 | 39,075 | 87,473 | 78,348 | ||||||||||||
| Food and beverage expenses |
70,801 | 61,151 | 142,914 | 123,085 | ||||||||||||
| Other hotel expenses |
125,615 | 113,932 | 256,018 | 230,254 | ||||||||||||
| Total hotel expenses |
240,058 | 214,158 | 486,405 | 431,687 | ||||||||||||
| General and administrative |
16,080 | 16,143 | 30,653 | 34,360 | ||||||||||||
| Depreciation and amortization |
41,836 | 44,830 | 85,419 | 90,732 | ||||||||||||
| Total operating expenses |
297,974 | 275,131 | 602,477 | 556,779 | ||||||||||||
| Operating income |
28,803 | 11,382 | 72,243 | 37,582 | ||||||||||||
| Other income (expenses): |
||||||||||||||||
| Interest and other income |
528 | 929 | 1,045 | 2,184 | ||||||||||||
| Interest expense |
(50,408 | ) | (45,801 | ) | (103,558 | ) | (88,930 | ) | ||||||||
| Loss on sale of assets |
— | — | — | (4,937 | ) | |||||||||||
| Impairment loss |
(298,378 | ) | (2,040 | ) | (298,378 | ) | (6,133 | ) | ||||||||
| Gain (loss) on derivative instruments |
2,402 | (7,425 | ) | (1,934 | ) | (19,093 | ) | |||||||||
| Total other expenses |
(345,856 | ) | (54,337 | ) | (402,825 | ) | (116,909 | ) | ||||||||
| Operating loss from continuing operations |
(317,053 | ) | (42,955 | ) | (330,582 | ) | (79,327 | ) | ||||||||
| Equity in earnings of unconsolidated subsidiaries |
575 | 1,275 | 1,366 | 701 | ||||||||||||
| Loss from continuing operations before income taxes and minority interest |
(316,478 | ) | (41,680 | ) | (329,216 | ) | (78,626 | ) | ||||||||
| Income tax benefit (provision) |
2,121 | 15,588 | (2,615 | ) | 31,985 | |||||||||||
| Loss from continuing operations before minority interest |
(314,357 | ) | (26,092 | ) | (331,831 | ) | (46,641 | ) | ||||||||
| Minority interest in consolidated subsidiaries |
(1,920 | ) | (291 | ) | (9,528 | ) | (342 | ) | ||||||||
| Loss from continuing operations |
(316,277 | ) | (26,383 | ) | (341,359 | ) | (46,983 | ) | ||||||||
| Discontinued operations: |
||||||||||||||||
| Income (loss) from operations of discontinued hotels |
2,701 | (3,987 | ) | 1,912 | (16,105 | ) | ||||||||||
| Impairment loss |
(41,880 | ) | (62,172 | ) | (43,844 | ) | (90,449 | ) | ||||||||
| Leasehold termination |
(188 | ) | (47,102 | ) | (197 | ) | (151,394 | ) | ||||||||
| Gain on sale of assets |
||||||||||||||||