-----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, Obib7JPO5R/nLz1trWO3GppBhCR9OeqI7HauoeK19vs9aBlKrbpPrzWDvncm4efV uce6hxiltee9waD4Src0tQ== 0001016843-99-000523.txt : 19990511 0001016843-99-000523.hdr.sgml : 19990511 ACCESSION NUMBER: 0001016843-99-000523 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990503 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRAVEL SERVICES INTERNATIONAL INC CENTRAL INDEX KEY: 0001039064 STANDARD INDUSTRIAL CLASSIFICATION: TRANSPORTATION SERVICES [4700] IRS NUMBER: 650871073 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13155 FILM NUMBER: 99615558 BUSINESS ADDRESS: STREET 1: 220 CONGRESS PARK DRIVE CITY: DELRAY BEACH STATE: FL ZIP: 33445 BUSINESS PHONE: 5612260860 MAIL ADDRESS: STREET 1: 220 CONGRESS PARK DRIVE CITY: DELRAY BEACH STATE: FL ZIP: 33445 8-K 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) MAY 3, 1999 ------------------------------ TRAVEL SERVICES INTERNATIONAL, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) FLORIDA - ------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 000-29298 52-2030324 ---------------------- -------------------------------- (Commission File Number) (IRS Employer Identification No.) ---------------------------------------------------------------------- 220 CONGRESS PARK DRIVE DELRAY BEACH, FLORIDA 33445 - ------------------------------------------------------------------------------- (Address of principal executive offices, including Zip Code) Registrant's telephone number, including area code (561) 266-0860 ---------------------------- N/A - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. Travel Services, International, Inc., d/b/a/ The Travel Company (the "COMPANY") announced in a press release dated May 3, 1999, the appointment of John Balson as President and Chief Operating Officer of the Company, and the resignations of the Chief Information Officer and the Chief Marketing Officer of the Company. The Company also announced in a press release dated May 6, 1999, the results of the first quarter of 1999 and commented on the outlook for the year. The above descriptions are elaborated more extensively, and are qualified in their entireties by reference to the Company's Press Releases attached as Exhibit 99.1 and Exhibit 99.2 hereto, which Exhibits are incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits EXHIBIT NUMBER DESCRIPTION - -------------------------------------------------------------------------------- 99.1 Press release, dated May 3, 1999, announcing the appointment of John Balson as President and Chief Operating Officer of the Company, and the resignations of the Chief Information Officer and the Chief Marketing Officer of the Company. 99.2 Press release, dated May 6, 1999, announcing the results of the first quarter of 1999 and commenting on the outlook for the year. - -------------------------------------------------------------------------------- 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 thereunto duly authorized. TRAVEL SERVICES INTERNATIONAL, INC. Dated: May 10, 1999 By: /s/ JILL M. VALES ----------------------- Jill M. Vales Senior Vice President and Chief Financial Officer EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 99.1 Press release, dated May 3, 1999, announcing the appointment of John Balson as President and Chief Operating Officer of the Company, and the resignations of the Chief Information Officer and the Chief Marketing Officer of the Company. 99.2 Press release, dated May 6, 1999, announcing the results of the first quarter of 1999 and commenting on the outlook for the year. EX-99.1 2 EXHIBIT 99.1 AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD - ------------------ --------------------------------- JOSEPH V. VITTORIA NICOLE INNARELLA MARTIN GITLIN CHAIRMAN & CEO (ANALYST INFO.) (MEDIA INFO.) (561) 266-0860 (212) 661-8030 (212) 661-8030 THE TRAVEL COMPANY APPOINTS PRESIDENT AND CHIEF OPERATING OFFICER AND ANNOUNCES MANAGEMENT CHANGES DELRAY BEACH, FL -- (May 3, 1999) -- Travel Services International, Inc., dba The Travel Company (Nasdaq: TRVL), today announced that John Balson has been appointed to the position of President and Chief Operating Officer of Travel Services International, Inc. He will be based at the Company's corporate headquarters in Delray Beach, Florida, reporting to Joseph V. Vittoria, Chairman and Chief Executive Officer. Mr. Balson has also been appointed to the Company's Board of Directors. Mr. Balson has held senior executive positions in major marketing services, technology and consumer products companies. He was formerly President and Chief Operating Officer of two large worldwide advertising agencies, Kenyon & Eckhardt and D'Arcy, McManus and Masius. Mr. Balson has also served as President of the Forshner Group, Cantel and Lears, Inc. Most recently, Mr. Balson was the Chief Marketing and Development Officer of Data Broadcasting, Inc. He received his Bachelor of Science from Cornell University and his Masters Degree from the Harvard School of Business Administration. Commenting on the appointment, Mr. Vittoria said, "John brings to the Company a great deal of experience leading companies involved in consumer marketing, direct response operations, and technology. He has been successful in structuring various companies and building long-term relationships with high value customers. John's experience and leadership are exactly what the Company needs as we move forward into our next stages of development. We welcome his knowledge in building strong brands using several forms of customer communications, including the Internet." -more- Page Two Mr. Balson has assumed the duties of his new position and is actively involved in addressing issues that need immediate attention. All of the various operating companies and corporate marketing, operations, technology and Internet organizations will report to him. Mr. Vittoria, through Mr. Balson, will continue his involvement in these areas, but will also devote more of his time to strategic initiatives, supplier relationships and investor relations. The Travel Company also announced today two additional changes in the executive management team. Maryann Bastnagel, who served the Company as its Chief Information Officer since the time of its initial public offering, has resigned her position with the Company. During her tenure with the Company, Ms. Bastnagel focused her efforts on the creation of a unique software development program that will provide The Travel Company with a leading edge technology to dramatically improve the effectiveness of the marketing programs and sales efforts in its call centers and Internet sites. With the Company's technology strategy and development now in advanced stages, Ms. Bastnagel has decided to return to her home in Maryland. Mr. Vittoria commented, "We thank Maryann for her dedication over the past two years and wish her continued success in future endeavors. As we carry out the implementation of our systems, we expect that her contributions to the Company will continue to be recognized." Separately, Spencer Frazier has resigned his position as Chief Marketing Officer of the Company. Mr. Vittoria remarked, "We also thank Spencer for his efforts on behalf of the Company and wish him well in the future." The Travel Company is a leading specialized distributor of travel products including cruise vacations, vacation packages, domestic and international airline tickets and European auto rentals, and is a leading provider of travel services, such as electronic hotel reservation services, specialized hotel programs and services and incentive travel programs. The Company provides its services to both travel agents and travelers, offering a unique combination of specialized expertise, the ability to compare options from multiple travel providers and competitive prices. # # # EX-99.2 3 EXHIBIT 99.2 AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD - ----------------------- ---------------------------------------------------- Jill M. Vales Doug DeLeito Christina Howard Martin Gitlin Chief Financial Officer General Info. Analyst Info. Media Info. (561) 266-0860 (212) 661-8030 FOR IMMEDIATE RELEASE May 6, 1999 THE TRAVEL COMPANY REPORTS 1999 FIRST QUARTER RESULTS AND COMMENTS ON OUTLOOK FOR THE YEAR Delray Beach, FL., May 6, 1999-- Travel Services International, Inc., dba The Travel Company (Nasdaq: TRVL), a leading specialized distributor of leisure travel services, today reported a 58% increase in net revenues for the quarter ended March 31, 1999 as compared to the same period in 1998. Net income, however, decreased 55% for the first quarter of 1999 compared to 1998. Net revenues in the 1999 first quarter totaled $41.4 million, an increase of $15.1 million over net revenues for the first quarter of 1998. Net income was $992,000, or $0.07 diluted earnings per share, for the 1999 first quarter, as compared to $2.2 million, or $0.20 diluted earnings per share, for the corresponding prior year period. Results are in line with estimates indicated in the Company's first quarter 1999 preliminary earnings release distributed on April 15, 1999. Net revenues increased as compared to the first quarter of 1998 as a result of acquisitions and increases in transaction volumes and net revenue per transaction. Within the cruise reporting segment, net revenues in the quarter increased 26%, of which 10% was from internal growth (which excludes the impact of acquisitions made subsequent to January 1, 1998 accounted for using the purchase method of accounting.) Within the outbound reporting segment, net revenues in the quarter increased 33%, of which 18% was from internal growth. Within the lodging reporting segment, net revenues of $4.9 million in the 1999 first quarter were generated by the two companies acquired in June and July of 1998. Within the other reporting segment, net revenues in the quarter increased 133%, of which 87% was from internal growth. The Company's gross profit margin decreased compared to the prior year's first quarter primarily as a result of increased marketing, compensation and other operating costs within the cruise reporting segment. The Company, based in part on the significant internal growth experienced in the cruise reporting segment in 1998, substantially increased marketing expenditures and the number of sales personnel at its cruise call centers. Despite this, cruise transaction volumes during the first quarter of 1999 were moderate and significantly lower than expected. The Company believes the slowed growth rate in the cruise reporting segment resulted from a combination of lower than expected consumer acceptance of new Company marketing programs and unexpected softness in the cruise industry, particularly for Alaskan and European destinations. General and administrative expenses increased $5.2 million in the first quarter of 1999 compared to 1998, primarily as a result of acquisitions, increased facilities and personnel in the cruise reporting segment, and the operation of a larger corporate headquarters. The Company is continuing to assess the impact of these and other matters on expected operating results for the remainder of 1999. With the recent addition of a new President and Chief Operating Officer and the departure of other executives, the Company is evaluating its organizational structure, particularly within the cruise reporting segment, reviewing opportunities to reduce expenses, identifying new strategic and tactical marketing and Internet initiatives, and exploring opportunities to leverage the Company's investment in technology. Over the near term, the Company will be aggressively evaluating how it will leverage its technology and call center infrastructure to become a significant presence on the Internet. In this regard, the Company will be examining strategic partnerships and alliances as well as other alternatives for marketing and selling its services on the Internet. With the primary booking season for cruises now over, the Company expects only modest revenue growth in the cruise reporting segment for the remainder of the year. In addition, incremental marketing and Internet related expenses will be incurred. Accordingly, the Company believes net revenues and earnings for the remainder of 1999 will be less than current reported analysts' expectations. Selected reporting segment information for the three months ended March 31, 1999 and 1998 is provided in an attached schedule. (The Company no longer presents pro forma information which was presented in previous periods because of the significant acquisition activity of the Company.) Joseph Vittoria, the Company's Chairman and Chief Executive Officer, commented: "While we are naturally disappointed with the results in our cruise segment thus far in 1999, we are pleased to report that operating results for three of our four reporting segments were in line with or exceeded our expectations for the quarter. Demand to Europe has been strong and the war in Kosovo has thus far not been a significant factor for our outbound segment. Our lodging segment continues to grow by adding new hotel customers. The rollout of our airline reservation system, Flight Attendant, was completed in April at our San Diego and Portland locations. Within the other reporting segment, 1-800-Fly-Cheap has had record increases in volume and has recently experienced improvement in net revenue per transaction, in part as a result of the revenue management capabilities of Flight Attendant. We are aggressively addressing the core marketing and organizational issues which contributed to the poor results in the cruise segment. While the Company's overall business remains sound and we expect it to grow and operate profitably, we believe results for the Company in 1999 will be less than we previously expected. We view 1999 as a year of investment and transition to position the Company for 2000 and beyond. We believe we will have an advantage on the Internet because of our unique and innovative technology for booking both air and cruise vacations, a combination of technology we believe no other Internet player has today." The Travel Company is a leading specialized distributor of leisure travel products including cruise vacations, vacation packages, domestic and international airline tickets and European auto rentals, and is a leading provider of travel services such as electronic hotel reservations, specialized hotel programs and services and incentive travel programs. The Company provides travel agents and travelers a unique combination of specialized expertise, the ability to compare options from multiple travel providers and competitive prices. ##### STATEMENTS CONTAINED IN THIS PRESS RELEASE REGARDING FUTURE FINANCIAL AND OPERATING PERFORMANCE AND RESULTS, SALES, REVENUE, INDIVIDUAL REPORTING SEGMENTS, MARKETING PLANS AND INITIATIVES, THE INTERNET, ACQUISITIONS, OPERATIONAL INITIATIVES, TECHNOLOGY, THE ECONOMY AND OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS ARE FORWARD LOOKING STATEMENTS. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS, AND ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM ANY RESULTS ANTICIPATED IN ANY FORWARD LOOKING STATEMENT. THE FORWARD LOOKING STATEMENTS ARE SUBJECT TO NUMEROUS RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO RISKS AND UNCERTAINTIES ASSOCIATED WITH: SUCCESSFUL DEPLOYMENT AND INTEGRATION OF SYSTEMS, FACTORS AFFECTING INTERNAL GROWTH AND MANAGEMENT OF GROWTH, THE COMPANY'S ACQUISITION STRATEGY AND AVAILABILITY OF ADEQUATE FINANCING ON ACCEPTABLE TERMS, THE COMPANY'S ABILITY TO IMPLEMENT ITS STRATEGIC TECHNOLOGY, MARKETING, INTERNET AND OPERATIONAL INITIATIVES, THE TRAVEL INDUSTRY, THE ABILITY TO RECRUIT AND RETAIN APPROPRIATE PERSONNEL, THE COST AND AVAILABILITY OF ADVERTISING, SEASONALITY, QUARTERLY FLUCTUATIONS AND GENERAL ECONOMIC CONDITIONS, DEPENDENCE ON PERSONNEL, TECHNOLOGY AND TRAVEL PROVIDERS, AND OTHER FACTORS, INCLUDING THOSE DISCUSSED IN THE COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998.
TRAVEL SERVICES INTERNATIONAL, INC. HISTORICAL STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED MARCH 31 ----------------------------- 1998 1999 ------------ ------------ Net revenues $ 26,223 $ 41,352 Operating expenses 14,573 26,331 ------------ ------------ Gross profit 11,650 15,021 General and administrative expenses 7,414 12,595 Goodwill amortization 407 1,003 ------------ ------------ Income from operations 3,829 1,423 Interest expense and other, net 29 (230) ------------ ------------ Income before income taxes 3,800 1,653 Provision for income taxes 1,596 661 ------------ ------------ Net income $ 2,204 $ 992 ============ ============ Diluted earnings per share $ 0.20 $ 0.07 ============ ============ Shares used in computing diluted earnings per share 10,849,532 14,019,160 ============ ============
TRAVEL SERVICES INTERNATIONAL, INC. BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) DECEMBER 31, MARCH 31, 1998 1999 ----------- --------- ASSETS Current Assets: Cash and cash equivalents $ 26,084 $ 36,373 Accounts receivable, net 15,460 20,271 Receivables from affiliates and employees 250 312 Prepaid expenses 3,380 12,704 Prepaid income taxes 2,920 3,239 Deferred income taxes 827 1,031 Other current assets 1,476 1,739 -------- -------- Total current assets 50,397 75,669 Property and equipment, net 22,504 26,806 Goodwill, net 105,773 142,864 Notes receivables from employees 410 325 Other assets 1,045 1,372 -------- -------- Total assets $180,129 $247,036 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt 257 274 Trade payables and accrued expenses 27,412 60,738 -------- -------- Total current liabilities 27,669 61,012 Borrowings under line of credit -- 24,000 Long-term debt, net of current portion 2,888 2,817 Deferred income taxes 3,774 4,273 Other long-term liabilities 501 431 -------- -------- Total liabilities 34,832 92,533 -------- -------- Commitments and contingencies Stockholders' Equity: Preferred stock, $0.01 par value; 1,000,000 shares authorized; none outstanding Common stock, $0.01 par value; 50,000,000 shares authorized; 13,376,969 and 13,795,658 shares outstanding, respectively 134 138 Additional paid-in capital 129,623 137,830 Retained earnings 15,540 16,535 -------- -------- Total stockholders' equity 145,297 154,503 -------- -------- Total liabilities and stockholders' equity $180,129 $247,036 ======== ========
TRAVEL SERVICES INTERNATIONAL, INC. SELECTED REPORTING SEGMENT FINANCIAL DATA (IN THOUSANDS) (UNAUDITED) HISTORICAL --------------------------- THREE MONTHS ENDED MARCH 31, --------------------------- 1998 1999 ------- ------- CRUISE Net revenues $12,347 $15,500 Gross profit 6,647 5,119 Income before income taxes (1) 3,566 674 OUTBOUND Net revenues 11,265 14,928 Gross profit 3,945 5,698 Income before income taxes (1) 2,566 3,900 LODGING Net revenues -- 4,853 Gross profit -- 1,962 Income before income taxes (1) -- 760 OTHER Net revenues 2,611 6,071 Gross profit 1,058 2,242 Income before income taxes (1) 496 1,391 TOTAL Net revenues 26,223 41,352 Gross profit $11,650 $15,021 (1) Excludes goodwill amortization, software amortization and support expenses, expenses of corporate headquarters, interest expense and certain other expenses recorded at corporate headquarters -----END PRIVACY-ENHANCED MESSAGE-----