| Creative Host Services, Inc. | |||
| Ticker: | CHST | 6335 Ferris Square, Suites G-H | |
| Exchange: | NASDAQ-Small Cap Market | San Diego, CA | |
| Industry: | Retail (SIC Code 5812) | (619) 587-7300 | |
| Type of Shares: | Common Shares | Filing Date: | 4/3/97 | |
| U.S. Shares: | 1,150,000 | Offer Date: | 7/21/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $4.50 - $5.50 | |
| Primary Shares: | 1,150,000 | Offer Price: | $4.50 | |
| Secondary Shares: | 0 | Gross Spread: | $0.45 | |
| Offering Amount: | $5,750,000 | Selling: | $0.22 | |
| Expenses: | - | Reallowance: | ||
| Shares Out After: | 2,760,281 |
| Manager | Tier | Phone |
| Cohig & Associates Inc. | Lead Manager | (303) 694-0295 |
| Issuer's Law Firm: | Luce Forward Hamilton & Scripps |
| Bank's Law Firm: | Neuman & Drennen, LLC |
| Auditor: | Stonefield Josephson |
Dollar amounts in U.S. millions except for per share data | |||||
| 3 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 3/31/97 | 3/31/96 | 3/31/97 | ||
| Revenue: | $5.69 | $2.06 | $1.12 | Assets: | $4.31 |
| Net Income: | $0.12 | -$0.01 | -$0.02 | Curr Assets: | |
| EPS: | $0.10 | -$0.01 | -$0.02 | Liabilities: | $2.96 |
| Prior EPS: | -$0.53 | -$0.15 | $0.08 | Curr Liabilities: | |
| Cash Flow/Oper: | $0.28 | Equity: | $1.35 | ||
| Cash Flow/Fin: | Cash: | ||||
| Cash Flow/Inv: | |||||
| Business Description |
| The company is primarily engaged in the business of acquiring and operating food, beverage and other concessions at airports throughout the United States. The company currently has 20 operating concession facilities at 13 airports, 18 of which are company owned and two of which are franchised, including concessions at Los Angeles International Airport, Denver International Airport, Portland International Airport, and the airports in Aspen, Colorado; Orange County, California; Madison and Appleton, Wisconsin; Columbia South Carolina; Lexington, Kentucky; Allentown, Pennsylvania; Roanoke, Virginia; Cedar Rapids and DesMoines, Iowa. The company has been awarded contracts for two concession facilities which are presently under construction and are expected to open within the next three months, including one additional facility in Allentown, Pennsylvania, and one additional facility at Columbia, South Carolina. In addition, the company has been awarded a contract for one concession facility at John F. Kennedy International Airport in New York City expected to open December 1997 and two additional facilities at Des Moines Airport expected to open February 1998. |
| Competition |
| The concession industry is extremely competitive and there are numerous competitors with greater resources and more experience than the company. The company's major competitors in the airport concession market are Host Marriott Services Corporation and CA One Services, Inc., which have serving the airport concession market for decades. Other formidable competitors in the concession business, especially food and beverage, are Service America Corporation, Anton Food, Concession International, Air Host, Inc., ARA Services, Canteen Corporation, Morrison's Hospitality Group, Gardner Merchant Food Services, Seiler Corporation, Service Master Food Management Services and others. Other competitors such as Fine Host, Inc., Paradies and W.H. Smith compete in the market for providing retail concession services to airports. Dobbs International and Sky Chefs, LSG dominate the inflight catering business. The airport concession market presently appears to be dominated by two companies: Host Marriott Services Corporation and CA One Services, Inc. Host Marriott and CA One Services have established a marketing strategy of offering comprehensive concession services to airport authorities in which they submit a bid on an entire airport or terminal complex, and often provide a well known franchise such as McDonalds or Burger King as part of their package. They generally operate large airport master concessions with annual sales in excess $2.2 million. The company is focusing initially on the smaller airport concessions where competition from large competitors is less intense. The company also differentiates itself in the design and product mix it offers to a particular airport. The company designs its concession bids and facilities around unique themes or concepts that it develops for each location. In this manner, the company seeks to appeal to airport authorities that are seeking individual bidders with interesting and creative food concepts, both to boost the airport's income from percentage rents and to enhance the look and reputation of the airport and the cities it serves. The company also offers a variety of food concepts with an emphasis on fresh foods and high quality, while maintaining a value-oriented price. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for construction of capital improvements at airport facilities in which the company has currently secured a concession; to redeem up to 33% of the company's existing 8% Convertible Preferred Stock; to redeem all of the company's existing 9% Convertible Redeemable Preferred Stock; and working capital and general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| Sayed Ali | 77.90% | 34.00% |
| David H. Sugerman | 15.40% | 7.00% |
| Mark J. Richardson | 9.20% | 4.00% |
| Officer Name | Title | Age |
| Sayed Ali | Chairman of the Board of Directors and President | 50 |
| Fred R. Kaplan | Chief Financial Officer and Director | 38 |
| Tasneem Vakharia | Secretary | 36 |