Exhibit 99.1
Analyst Contact: Media Contact:
Catherine James Sitrick And Company
Executive Vice President & Sandra Sternberg
Chief Financial Officer Ann Julsen
(203) 532-4320 OR (310) 788-2850
(203) 532-2626
FINE HOST RESTATES RESULTS FOR PRIOR PERIODS; COMPANY SAYS CASH POSITION AND
OPERATIONS REMAIN STRONG
GREENWICH, CONN. -- FEBRUARY 6, 1998 -- Fine Host Corporation (NASDAQ:
FINE) announced today that the Company will restate its financial statements for
fiscal years 1994, 1995 and 1996, and for the nine months ended September 24,
1997. Fine Host previously disclosed that it would have to restate earnings in
announcements on December 12, 1997 and December 15, 1997.
As a result of the restatement, the Company will report pre-tax losses of
approximately $1.6 million for 1994; $4.3 million for 1995; $6.3 million for
1996; and $11.4 million for the nine months ended September 24, 1997. The
Company said that the restatement will include a cumulative negative adjustment
of $2.8 million for years prior to 1994. Interim results for 1997 are
unaudited.
The principal adjustments to net income are the result of improper
capitalization of overhead expenses, improper charges to acquisition reserves
and recognition of certain income in periods prior to earning such income.
At the same time, the Company said that, despite the losses reflected by
the restatement, it continues to be in a strong cash position and that its
operating businesses remain strong. The Company said it had signed contracts
with seven new clients and 12 renewals since the December discovery of certain
errors in its accounting practices and procedures, and that it will fulfill all
contractual commitments it has made to clients. As of January 31, 1998, the
Company had cash and cash equivalents of approximately $100 million.
According to Gerald P. Buccino, whose national management consulting firm
Buccino & Associates, Inc. has been retained to oversee the management of Fine
Host, the Company has been reviewing every aspect of the Company's operations.
"The Company has moved quickly to identify and correct irregularities that
occurred in the past. Our mission now is to refocus our resources on maximizing
the profitability and quality of our operating businesses."
Mr. Buccino noted that there have been no significant changes in the
Company's relationships with its vendors or customers since the Company's
December announcements.
"The Company is meeting with clients, employees and suppliers to reassure
them that we are taking all steps necessary to correct past accounting
irregularities," Mr. Buccino said. "To date, no contracts that have been
terminated or not renewed as a result of this issue."
Randy B. Spector, Fine Host president and chief operating officer, said
that the business continues to operate uninterrupted and unimpaired by the
accounting problems. "New business continues to be written and renewals of
existing contracts continue to be signed."
Mr. Spector said that the Company would announce details of several
contracts signed since December 12 in the next few weeks.
The accounting restatements resulted from the discovery in December of
certain errors in the Company's accounting practices and procedures. The
Company previously disclosed that it had terminated the employment of Richard E.
Kerley, chairman of the board and chief executive officer, and Nelson A. Barber,
senior vice president and treasurer. Mr. Kerley resigned from the Board on
January 21.
The Company said that its representatives appeared on February 5 at a
hearing before a panel authorized by the National Association of Securities
Dealers (NASD) to appeal Nasdaq's decision to delist the Company's common stock.
The Company said that it expects to receive a response from the panel shortly.
Additionally, the Company said that the Securities and Exchange Commission (SEC)
has informed it that it is conducting an informal investigation of the Company.
The Company said that as a result of the delay required by the need to
restate its financial statements, it has been unable to file a Registration
Statement in connection with its October 1997 offering of $175 million, 5%
Convertible Subordinated Notes due 2004, which would have allowed such Notes to
be freely tradable. The Company said it is therefore obligated to pay liquidated
damages on the Notes as of January 25, in the form of increased interest, which
increases every quarter to a maximum increase of approximately 1.3% a year.
Fine Host said that between December 15, 1997 and February 4, 1998, 13
purported class action lawsuits were filed against the Company and certain of
its officers and/or directors in the U.S. District Court for the District of
Connecticut. A suit by three purported holders of the Company's 5% Convertible
Subordinated Notes due 2004 was filed in the Southern District of New York. The
Company said that it is currently reviewing these complaints, and that it is
unable to assess the impact of these suits on its financial condition or results
of operations at this time.
Fine Host Corporation provides food and beverage concession and catering
services to more than 900 facilities, primarily through multi-year contracts in
the following markets: the recreation and leisure market (arenas, stadiums,
amphitheatres, civic centers and other recreational facilities); the convention
center market; the education market (colleges, universities and elementary and
secondary school nutrition programs); the business dining market (corporate
cafeterias, office complexes and manufacturing plants); the health care market
(long-term care facilities and hospitals); and the corrections market (prisons
and jails).
THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS PURSUANT TO THE SAFE
HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THESE STATEMENTS ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES WHICH ARE
DESCRIBED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
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