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.
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND LEONARD PARKER COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996
(UNAUDITED)
ASSETS
Pro Forma
HWS LPC Adjustments (A) Pro Forma
==========================================================
CURRENT ASSETS:
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
===========================================================
See accompanying notes to pro forma financial statements.
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND LEONARD PARKER COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
Pro Forma
HWS LPC Adjustments(B) Pro Forma
========================================================================
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
============ ===========
See accompanying notes to pro forma financial statements
HOSPITALITY WORLDWIDE SERVICES, INC. AND SUBSIDIARY
AND LEONARD PARKER COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
Pro Forma
HWS LPC Adjustments(B) Pro Forma
=================-==============================================
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
------------- ------------
See accompanying notes to pro forma financial statements
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
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:
December 31, December 31,
1996 1995
------------ ------------
Adjustments to SG & A:
(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.