UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

                                 AMENDMENT NO. 1
                                       TO


     (Mark One)

      [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the fiscal year ended December 27, 1998

      [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from ___________ to _________________

                         Commission File Number 00028230

                      PLANET HOLLYWOOD INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

             Delaware                                        59-3283783
   (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                       Identification Number)

                              8669 Commodity Circle
                             Orlando, Florida 32819
           (Address of principal executive office, including zip code)

                                 (407) 363-7827
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

        Title of each class            Name of each exchange on which registered
Class A Common Stock, $0.01 par value           New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                                (Title of class)

                                      None


<PAGE>
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

As of February 28, 1999, there were approximately 97,221,632 shares of the
registrant's Class A voting common stock and 11,764,144 shares of the
registrant's Class B non-voting common stock outstanding.

The approximate aggregate market value of the registrant's Class A voting common
stock held by non-affiliates of the registrant, as of the close of business on
February 28, 1999, based on the closing price of $2.375 per share as reported on
the New York Stock Exchange on Friday, February 26, 1999 was $79,848,004. The
approximate aggregate market value of the registrant's non-voting common stock
held by non-affiliates of the registrant, based on the assumption that such
stock on a per share basis should be valued at 80% of the value per share of the
registrant's voting common stock, as of the close of business on February 28,
1999 was $19,059,525. Such assumption is based in part on the convertibility
restrictions imposed upon, and the lack of public trading in, the registrant's
Class B non-voting common stock.

The Registrant's Definitive Proxy Statement to be filed in connection with the
registrant's annual stockholders meeting to be held on May 27, 1999, is
incorporated by reference into Part III hereof.

                              EXPLANATORY STATEMENT

     This Amendment No. 1 to the Annual Report on Form 10-K for Planet Hollywood
International,  Inc. (the "Company") for the fiscal year ended December 27, 1998
is being filed to amend (1) Item - 8 Financial Statements and Supplementary Data
- in order to correct certain  typographical  errors and (2) Item 14 - Exhibits,
Financial  Schedules,  and Reports on Form 8-K - by including an updated consent
of the Company's independent accountants.

     Specifically, the changes to the Company's Annual Report on Form 10-K filed
on March 29, 1999 reflected in this Amendment No. 1 are as follows:

<TABLE>
<CAPTION>

Page    
No.                   Document                                             Change
----           ----------------------                                      ------
<S>              <C>                                                        <C>
33      Consolidated Statement of Cash Flows                                Cash Flows From Investing Activities - Other
                                                                              Fiscal 1998 figure changed from (1,253) to (1,240)

                                                                            Cash Flows From Investing Activities - Net cash used in
                                                                              investing activities Fiscal 1998 figure changed from 
                                                                              (110,105) to (110,079)

43      Note 6 to the Consolidated Financial Statements                     Tables regarding Balance Sheet Data and Operating Data
                                                                              Several 1998 figures changed

48      Note 9 to the Consolidated Financial Statements                     A typographical error was corrected

61      Exhibit list                                                        Added Exhibit 23.2(13) Consent of 
                                                                              PricewaterhouseCoopers LLP

62      Footnotes to Exhibit list                                           Revised footnotes to reflect filing of updated 
                                                                              accountants consent
</TABLE>                                  

     The  Company's  Annual Report to  Stockholders  which will be mailed to all
stockholders in connection with the Company's  proxy  solicitation  will reflect
the corrections made in this Amendment No. 1.


                                                                              

                                       2
<PAGE>

    ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Index to Financial Statements

<TABLE>
<CAPTION>
    FINANCIAL STATEMENTS:                                                       PAGE
    --------------------                                                        ----
<S>                                                                             <C>
    Report of Independent Accountants........................................... 29
    Consolidated Balance Sheets at December 28, 1997 and December 27, 1998...... 30
    Consolidated Statements of Operations for the
    three years ended December 27, 1998......................................... 31
    Consolidated Statements of Changes in Stockholders'
    Equity for the three years ended December 27, 1998.......................... 32

    Consolidated Statements of Cash Flows for the
    three years ended December 27, 1998......................................... 33
    Notes to the Consolidated Financial Statements.............................. 34
</TABLE>

    FINANCIAL STATEMENT SCHEDULES:
    ------------------------------
    For the year ended December 27, 1998
    II - Valuation and Qualifying Accounts

    All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes
thereto.

    Financial statements of two 50% owned companies have been omitted because
the registrant's proportionate share of the income from continuing operations
before income taxes is less than 20% of the respective consolidated amount, and
the investment in and advances to each company is less than 20% of consolidated
total assets.

                                      28
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Planet Hollywood International,
Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Planet
Hollywood International, Inc. and its subsidiaries at December 28, 1997 and
December 27, 1998, and the results of their operations and their cash flows for
each of the three years in the period ended December 27, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered significant losses in fiscal 1998
and the Company's revolving line of credit facility was terminated in December
1998 which raises substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

PRICEWATERHOUSECOOPERS LLP
March 26, 1999
Orlando, Florida

                                       29
<PAGE>

<TABLE>
<CAPTION>

PLANET HOLLYWOOD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(000'S OMITTED)
DECEMBER 27, 1998
                                                                                 DECEMBER 28,   DECEMBER 27,
                                                                                     1997            1998
                                                                                ------------    -----------
<S>                                                                             <C>             <C>      
ASSETS
Current assets:
    Cash and cash equivalents                                                     $   9,089       $  45,426
    Accounts receivable, less allowance of $1,500 and $2,122                         25,084          16,740
    Inventories                                                                      42,612          19,186
    Deferred taxes                                                                   10,427            --
    Income taxes receivable                                                            --            12,308
    Pre-opening cost, net                                                             7,803            --
    Prepaid expenses and other assets                                                 7,082           6,271
                                                                                  ---------       ---------
        Total current assets                                                        102,097          99,931

Restricted cash and cash equivalents                                                   --            16,265
Property and equipment, net                                                         318,456         281,115
Goodwill                                                                             29,922          27,057
Deferred taxes                                                                        6,015            --
Other assets, net                                                                     8,665          16,417
Investment in affiliated entities                                                    40,404          31,842
                                                                                  ---------       ---------
        Total assets                                                              $ 505,559       $ 472,627
                                                                                  =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                              $  54,100          35,111
    Accrued expenses                                                                 15,215          29,672
    Notes payable - current                                                           1,264          25,326
                                                                                  ---------       ---------
        Total current liabilities                                                    70,579          90,109

Deferred rentals                                                                     10,798          11,618
Notes payable                                                                        66,628         254,420
Capital lease obligation                                                              3,863           3,815
Deferred credits                                                                     15,150           6,350
                                                                                  ---------       ---------
        Total liabilities                                                           167,018         366,312
                                                                                  ---------       ---------
Commitments and contingencies (Note 12)

Stockholders' equity:
    Preferred stock, $.01 par value; 25,000,000 shares authorized; none
      issued; preferences, limitations and rights to be established
      by the Board of Directors                                                        --              --
    Common stock - Class A voting, $.01 par value; 250,000,000 shares
      authorized; 97,127,526 and 97,325,796 issued and outstanding, respectively        972             974
    Common stock - Class B non-voting, $.01 par value, 25,000,000
      shares authorized; 11,545,706 issued and outstanding                              118             118
    Capital in excess of par value                                                  279,372         285,667
    Deferred compensation                                                            (4,125)           (225)
    Retained earnings (accumulated deficit)                                          66,644        (177,288)
    Cumulative currency translation adjustments                                      (4,440)         (2,931)
                                                                                  ---------       ---------
        Total stockholders' equity                                                  338,541         106,315
                                                                                  ---------       ---------
             Total liabilities and stockholders' equity                           $ 505,559       $ 472,627
                                                                                  =========       =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       30
<PAGE>

PLANET HOLLYWOOD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(000'S OMITTED)
DECEMBER 27, 1998

<TABLE>
<CAPTION>

                                                              FISCAL        FISCAL        FISCAL
                                                               1996          1997          1998
                                                            ---------     ---------     ---------
<S>                                                         <C>           <C>           <C>
REVENUES:
    Direct                                                  $ 347,436     $ 447,310     $ 367,296
    Royalty                                                     4,528        11,715         8,078
    Franchise                                                  21,400        16,100        11,600
                                                            ---------     ---------     ---------
                                                              373,364       475,125       386,974
                                                            ---------     ---------     ---------
COSTS AND EXPENSES:
    Cost of sales                                              90,816       119,449       110,874
    Operating                                                 156,893       208,484       237,930
    General and administative                                  23,041        54,683        64,548
    Preopening expenses                                        14,257        18,868        10,384
    Depreciation and amortization                              13,038        19,957        25,024
    Restructuring charges                                        --            --           6,925
    Accelerated compensation expense                             --            --           6,191
    Impairment of long lived assets                              --          48,699       125,843
                                                            ---------     ---------     ---------
                                                              298,045       470,140       587,719
                                                            ---------     ---------     ---------
Income (loss) from operations                                  75,319         4,985      (200,745)
                                                            ---------     ---------     ---------
NON-OPERATING (INCOME) EXPENSE
    Interest income                                            (2,121)       (1,327)       (4,847)
    Interest expense                                            4,995          --          25,822
    Equity in (income) loss of unconsolidated affiliates       (4,308)       (6,900)       11,022
                                                            ---------     ---------     ---------
                                                               (1,434)       (8,227)       31,997

Income before minority interests                               76,753        13,212      (232,742)
Minority interests                                              1,037          --            --
                                                            ---------     ---------     ---------
Income before provision for income taxes                       75,716        13,212      (232,742)
Provision for income taxes                                     27,636         4,954         5,206
                                                            ---------     ---------     ---------
Income (loss) before extraordinary item                        48,080         8,258      (237,948)
Extraordinary loss on early extinguishment of debt
    (net of income tax benefit of $5,991)                      10,421          --            --
Cumulative effect of change in accounting for preopening
    costs (net of income taxes of $3,590)                        --            --           5,984
                                                            ---------     ---------     ---------
Net income (loss)                                           $  37,659     $   8,258     $(243,932)
                                                            =========     =========     =========
EARNINGS PER SHARE:

    BASIC:
      Income (loss) before extraordinary item               $     .47     $     .08     $   (2.18)
      Extraordinary items                                        (.10)         --            --
      Cumulative effect of accounting change                     --            --            (.06)
                                                            ---------     ---------     ---------
      Net income (loss)                                     $     .37     $     .08     $   (2.24)
                                                            =========     =========     =========

    DILUTED:
      Income (loss) before extraordinary item               $     .47     $     .08     $   (2.17)
      Extraordinary item                                         (.10)         --            --
      Cumulative effect of accounting change                     --            --            (.06)
                                                            ---------     ---------     ---------
      Net income (loss)                                     $     .37     $     .08     $   (2.23)
                                                            =========     =========     =========
</TABLE>

   The accompaning notes are an integral part of these financial statements.


                                       31
<PAGE>

PLANET HOLLYWOOD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                          COMMON STOCK              COMMON STOCK 
                                           CLASS A                    CLASS B               CAPITAL IN
                                  ------------------------     ----------------------       EXCESS OF
                                    SHARES        AMOUNT        SHARES        AMOUNT        PAR VALUE  
                                  ----------     ---------     --------      --------      ----------
<S>                                  <C>         <C>           <C>           <C>           <C>      
Balance at December 31, 1995         80,100      $     801     $    --       $    --       $   7,807
Net Income  
Other Comprehensive income:
    Currency translation
      adjustment 
    Comprehensive income
Proceeds from public offering        11,609            116                                   193,020
Shares issued for All-Star
    acquisition                                                   11,547           115 
Shares issued for acquisition
    of minority interests             1,709             17                                    35,167
Conversion of redeemable
    warrants                          2,555             26                                    14,974
Celebrity restricted stock
    options and awards                                                                         1,727
Employee restricted stock
    awards 
                                  ---------      ---------     ---------     ---------     ---------
Balance at December 31, 1996         95,973            960        11,547           115       252,695
Net Income 
Other Comprehensive income:
    Currency translation
      adjustment  
    Comprehensive income 
Celebrity restricted stock
    options and awards                                               218             3         5,959
Proceeds from sale of stock           1,087             11                                    19,555
Exercise of stock options               108              1                                     1,163
Employee restricted stock
    awards 
Retirement of employee
    restricted stock                    (40)
                                  ---------      ---------     ---------     ---------     ---------
Balance at December 31, 1997         97,128            972        11,765           118       279,372
Net Loss 
Other Comprehensive income:
    Currency translation
      adjustment 
    Comprehensive loss 
Stock issuance                          190              2                                     1,198
Celebrity restricted stock
    options and awards                                                                         5,036
Exercise of stock options                 8           --                                          61
Employee restricted stock
    awards
                                  ---------      ---------     ---------     ---------     ---------
Balance at December 31, 1998      $  97,326      $     974     $  11,765     $     118     $ 285,667
                                  ---------      ---------     ---------     ---------     ---------

<CAPTION>

                                                                                ACCUMULATED
                                                                                   OTHER         TOTAL       
                                 COMPREHENSIVE   RETAINED         DEFERRED     COMPREHENSIVE  STOCKHOLDERS'  
                                    INCOME       EARNINGS       COMPENSATION      INCOME        EQUITY
                                 --------------  ---------      ------------   -------------  -------------
<S>                                              <C>            <C>            <C>            <C>      
Balance at December 31, 1995                     $  20,727      $    (770)     $    (420)     $  28,145
Net Income                        $  37,659         37,659                                       37,659
Other Comprehensive income:
    Currency translation
      adjustment                        920                                          920            920
                                  ---------
    Comprehensive income          $  38,579 
                                  =========
Proceeds from public offering                                                                   193,136
Shares issued for All-Star 
    acquisition                                                                                     115
Shares issued for acquisition
    of minority interests                                                                        35,184
Conversion of redeemable
    warrants                                                                                     15,000
Celebrity restricted stock
    options and awards                                                                            1,727
Employee restricted stock
    awards                                                            245                           245
                                                 ---------      ---------      ---------      ---------
Balance at December 31, 1996                        58,386           (525)           500        312,131
Net Income                        $   8,258          8,258                                        8,258
Other Comprehensive income:
    Currency translation
      adjustment                     (4,940)                                      (4,940)        (4,940)
                                  ---------
    Comprehensive income          $   3,318
                                  =========
Celebrity restricted stock
    options and awards                                             (3,800)                        2,162
Proceeds from sale of stock                                                                      19,566
Exercise of stock options                                                                         1,164
Employee restricted stock
    awards                                                            200                           200
Retirement of employee
    restricted stock 
                                                 ---------      ---------      ---------      ---------
Balance at December 31, 1997                        66,644         (4,125)        (4,440)       338,541
Net Loss                          $(243,932)      (243,932)                                    (243,932)
Other Comprehensive income:
    Currency translation
      adjustment                      1,509                                        1,509          1,509 
                                  ---------                                    ---------       --------
    Comprehensive loss            $(242,423)
                                  =========
Stock issuance                                                                                    1,200
Celebrity restricted stock
    options and awards                                              3,700                         8,736
Exercise of stock options                                                                            61
Employee restricted stock
    awards                                                            200                           200
                                                 ---------      ---------      ---------      ---------
Balance at December 31, 1998                     $(177,288)     $    (225)     $  (2,931)     $ 106,315
                                                 ---------      ---------      ---------      ---------
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       32
<PAGE>

PLANET HOLLYWOOD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                            FISCAL        FISCAL      FISCAL
                                                                                             1996          1997        1998
                                                                                           ---------    ---------    ---------
<S>                                                                                        <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                                      $  37,659    $   8,258    $(243,932)
    Adjustments to reconcile net income to net cash 
      provided by (used in) operating activities:
      Depreciation                                                                            11,620       18,173       22,129
      Amortization                                                                            15,676       20,652        2,895
      Extraordinary item                                                                      10,421         --           --
      Impairment of long lived assets                                                           --         48,699      125,843
      Cumulative effect of change in accounting principle                                       --           --          5,984
      Amortization of discount on senior subordinated notes, debt issue
        costs and line of credit costs                                                         1,167         --          3,954
      Amortization of celebrity restricted stock options and awards                            1,268        2,864        8,736
      Minority interests                                                                       1,037         --           --
      Equity in income of unconsolidated affiliates                                           (4,308)      (6,900)      11,022
      Changes in assets and liabilities:
        Accounts receivable                                                                  (15,604)      (4,959)       9,015
        Income taxes receivable                                                                 --           --        (12,308)
        Inventories                                                                           (7,747)     (22,008)      23,426
        Prepaid expenses and other assets                                                     (1,778)      (3,604)         811
        Preopening costs                                                                     (13,916)     (19,869)        --
        Deferred income taxes                                                                  5,711      (10,125)      20,032
        Accounts payable and accrued expenses                                                  3,230        4,780       (3,558)
        Deferred rentals                                                                       3,827          469          820
        Deferred credits                                                                         100       (1,950)      (8,800)
        Other, net                                                                               467       (3,207)      (4,079)
                                                                                           ---------    ---------    ---------
        Net cash provided by (used in) operating activities                                   48,830       31,273      (38,010)
                                                                                           ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property and equipment                                                      (81,675)    (120,033)    (105,819)
    Proceeds from sale of subsidiary interests                                                  --           --          2,250
    Proceeds from sale of transportation equipment                                             7,936         --           --
    Purchase of restaurant from franchisee                                                      --         (8,083)      (2,521)
    Investment in affiliated entities                                                           (131)     (22,721)      (2,749)
    Other                                                                                       --         (1,115)      (1,240)
                                                                                           ---------    ---------    ---------
        Net cash used in investing activities                                                (73,870)    (151,952)    (110,079)
                                                                                           ---------    ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Change in restricted cash and investments                                                    610         --        (16,265)
    Proceeds from issuance of senior subordinated notes                                         --           --        250,000
    Distributions to minority interests                                                         (271)        --           --
    Proceeds from issuance of common stock                                                   196,581       19,137         --
    Proceeds from exercise of options                                                           --            891           61
    Proceeds from issuance of notes payable                                                    3,360       63,028       34,809
    IPO costs and financing costs capitalized                                                 (3,445)        --           --
    Deferred financing costs                                                                    (698)      (1,020)     (11,163)
    Repayment of stockholder notes payable                                                   (70,750)        --           --
    Repayment of notes payable                                                               (65,439)        (883)     (73,003)
                                                                                           ---------    ---------    ---------
        Net cash provided by financing activities                                             59,948       81,153      184,439
                                                                                           ---------    ---------    ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                         --         (1,216)         (13)
                                                                                           ---------    ---------    ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          34,908      (40,742)      36,337
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                              14,923       49,831        9,089
                                                                                           ---------    ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                 $  49,831    $   9,089    $  45,426
                                                                                           ---------    ---------    ---------
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       33
                                       
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


1.      NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        BASIS OF PRESENTATION

        The consolidated financial statements include the accounts of PLANET
        HOLLYWOOD International, Inc. ("PHI") and its wholly and majority owned
        subsidiaries (collectively, the "Company"). All material intercompany
        transactions and accounts have been eliminated in consolidation. The
        Company has interests in various entities which are not majority owned
        or controlled. The Company uses the equity method to account for these
        interests.

        The Company's fiscal year is the 52 or 53 weeks ending the Sunday
        closest to December 31. The fiscal years ended December 29, 1996 ,
        December 28, 1997 and December 27, 1998 are herein referred to as
        "fiscal 1996", "fiscal 1997" and "fiscal 1998", respectively. All years
        presented herein are 52 week years.

        DESCRIPTION OF BUSINESS

        The Company's primary business is to operate distinctive
        entertainment-oriented restaurants along with merchandise shops. The
        Company currently operates under the PLANET HOLLYWOOD, OFFICIAL ALL STAR
        CAFE, SOUND REPUBLIC, and COOL PLANET brands. Direct revenues in the
        accompanying financial statements include sales of food, beverage and
        merchandise.

        CASH AND CASH EQUIVALENTS

        Cash and cash equivalents are defined as highly liquid investments with
        original maturities of three months or less and consist of amounts held
        as bank deposits, certificates of deposit and commercial paper. At
        December 27, 1998, the Company had $9,200 of cash restricted as to use
        as collateral for letters of credit and $7,000 of cash escrowed for the
        construction of Company's New York Hotel project.

        INVENTORIES

        Inventories, consisting primarily of merchandise, are valued at the
        lower of cost (determined by the first-in, first-out method) or market.

        PREOPENING COSTS

        In 1998, the American Institute of Certified Public Accountants issued
        Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-up
        Activities." SOP 98-5 requires expensing as incurred all pre-opening
        costs that are not otherwise capitalizable as long-lived assets. As a
        result of the Company's adoption of SOP 98-5, the Company recognized a
        $6,000 charge for the cumulative effect of the change in accounting
        principle, net of the related income tax effect of $3,600. The Company
        previously capitalized unit pre-opening expenses and amortized such
        amounts over the units' first year of operation.

        PROPERTY AND EQUIPMENT

        Property and equipment are stated at cost, less accumulated
        depreciation. Depreciation is provided

                                       34
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

for by using the straight-line method over the following useful lives:

                                                                 YEARS
                                                                 -----
        Furniture and equipment                                  5-10
        Memorabilia                                                20
        Leasehold improvements                                   5-30

        Expenditures for additions and improvements which extend the life of the
        assets are capitalized. Expenditures for normal repairs and maintenance
        are charged to expense as incurred. Depreciation of memorabilia
        commences when it is placed in service upon its installation at a unit
        location.

        In the event that facts and circumstances indicate that the carrying
        value of a long-lived asset, including associated intangibles, may be
        impaired, an evaluation of recoverability is performed by comparing the
        estimated future undiscounted cash flows associated with the asset to
        the asset's carrying amount to determine if a write-down to market value
        or discounted cash flow is required.

        GOODWILL

        The excess of purchase price over the fair value of assets acquired is
        amortized on a straight-line basis over 20 years. Accumulated
        amortization of goodwill at December 28, 1997 and December 27, 1998 was
        $2,400 and $4,100, respectively.

        DEBT ISSUANCE COSTS

        Costs related to the issuance of debt are capitalized and amortized to
        interest expense using the effective interest method over the term of
        the related debt.

        MINORITY INTERESTS

        Minority interests represent third parties' equity in the earnings or
        losses in the entities which are majority owned by the Company.

        FOOD, BEVERAGE AND MERCHANDISE REVENUES

        Food, beverage and merchandise revenues are recognized as the products
        are sold to customers.

        FRANCHISE AND ROYALTY REVENUES

        Revenues from the sale of franchises are deferred until the Company
        fulfills its obligations under the franchise agreement. The franchise
        agreements provide for continuing royalty fees based on a percentage of
        gross receipts.

        ADVERTISING AND PROMOTIONAL COSTS

        All costs associated with advertising and promoting the Company's brands
        are expensed in the period incurred. Advertising expense for fiscal
        1996, 1997 and 1998 totaled $2,800, $6,300 and $7,500, respectively.

                                       35
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        INCOME TAXES

        Deferred taxes are provided for the tax effects of the differences
        between the carrying value of assets and liabilities for tax and
        financial reporting purposes. These differences relate primarily to
        differences in depreciable lives and amortization periods for property
        and equipment and preopening costs, deferred rentals, the timing of
        franchise revenue recognition, net operating losses, certain accrued
        expenses and reserves. Deferred tax assets and liabilities represent the
        future tax consequence of those differences. An assessment is made as to
        whether or not a valuation allowance is required to offset deferred tax
        assets.

        No provision is made for United States income taxes applicable to
        undistributed earnings of foreign subsidiaries or affiliates that are
        indefinitely reinvested in the foreign operations.

        FOREIGN CURRENCY TRANSLATION

        Assets and liabilities of foreign operations are translated into United
        States dollars at the year-end rate of exchange. Revenue and expense
        accounts are translated at the average rate of exchange. Resulting
        translation adjustments are included in the caption "Cumulative currency
        translation adjustment" as a separate component of stockholders' equity.
        Gains and losses from foreign currency transactions which are included
        in the consolidated statements of operations were not material.

        STOCK-BASED COMPENSATION

        The Company accounts for compensation costs related to employee stock
        options and other forms of employee stock-based compensation plans in
        accordance with the requirements of Accounting Principles Board Opinion
        25 ("APB 25"). APB 25 requires compensation costs for stock-based
        compensation plans to be recognized based on the difference, if any,
        between the fair market value of the stock on the date of grant and the
        option exercise price. In October 1995, the Financial Accounting
        Standards Board issued Statement of Financial Accounting Standards No.
        123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("SFAS 123"). SFAS 123
        established a fair value-based method of accounting for compensation
        costs related to stock options and other forms of stock-based
        compensation plans. However, SFAS 123 allows an entity to continue to
        measure compensation costs using the principles of APB 25 if certain pro
        forma disclosures are made. The Company adopted the provisions for pro
        forma disclosure requirements of SFAS 123. Options granted to
        celebrities are recorded at their estimated fair value at the date of
        grant and the expense recognized over the periods benefited, generally 5
        years.

        EARNINGS PER SHARE

        Basic earnings per share is computed by dividing net income by the
        weighted average number of common shares outstanding for the period.
        Diluted earnings per share is computed by dividing net income by the
        weighted average number of common shares outstanding plus common stock
        equivalents related to stock options for each period.

                                       36
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        A reconciliation of weighted average number of common shares to weighted
        average number of common shares plus common stock equivalents is as
        follows:

                                                    1996       1997       1998
                                                   -------    -------    -------
        Weighted average number of
          common shares                            100,741    108,465    109,073

        Stock options and awards                     1,849      1,340        391
                                                   -------    -------    -------

        Weighted average number of common
          shares plus common stock equivalents     102,590    109,805    109,464
                                                   -------    -------    -------

        Options to purchase 3 million and 9 million shares of common stock were
        not included in the computation of diluted earnings per common share in
        fiscal 1997 and 1998 because the option exercise price was greater that
        the average market price of the stock.

        COMPREHENSIVE INCOME

        In 1998, the Company adopted Statement of Financial Accounting Standards
        No. 130 ("SFAS No. 130"), "Reporting Comprehensive Income," which
        established standards for the reporting and displaying of comprehensive
        income and its components. All items required to be recognized as
        components of comprehensive income must be reported in a financial
        statement that is displayed with the same prominence as other financial
        statements. SFAS No. 130 became effective for financial statements with
        fiscal years beginning after December 15, 1997. All prior period
        information presented has been restated to conform to this
        pronouncement. The Company's "Other comprehensive income" consists
        solely of currency translation adjustments.

        LEASES

        The Company has various non-cancelable operating and capital lease
        agreements, primarily unit sites. Unit leases are established using a
        base amount and/or a percentage of sales. Certain of these leases
        provide for escalating lease payments over the terms of the leases. For
        financial statement purposes, the total amount of base rentals over the
        terms of the leases is charged to expense on the straight-line method
        over the lease terms. Rental expense in excess of lease payments is
        recorded as a deferred rental liability.

        FAIR VALUE OF FINANCIAL INSTRUMENTS

        The carrying value of cash, cash equivalents, receivables and accounts
        payable approximate the fair value because of the short maturity of
        these instruments. The carrying value of notes payable approximate fair
        value as interest rates vary with market interest rates. The fair value
        of the $250,000 12% Senior Subordinated Notes approximated $93,000 at
        December 27, 1998, based on recent market trades.

                                       37
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        CONCENTRATION OF CREDIT RISK

        Franchisee receivables subject the Company to credit risk. The Company's
        franchisee receivables are derived primarily from royalties on
        franchisee sales, sales of merchandise to franchisees and the
        reimbursement of various costs incurred on behalf of franchisees.

        USE OF ESTIMATES

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities
        and disclosure of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of revenues and expenses
        during the reporting period. Estimates are used in the determination of
        allowances for doubtful accounts, impairment of long-lived assets,
        depreciation and amortization, and taxes, among others. Actual results
        could differ from those estimates.

        RECLASSIFICATIONS

        Certain reclassifications have been made in the prior years'
        consolidated financial statements to conform with the fiscal 1998
        presentation.

2.      GOING CONCERN

        The Company incurred significant losses in 1998 and the Company's
        revolving credit facility was terminated in December 1998. Further, the
        Company anticipates that it will continue to incur negative cash flows
        from the operation of the OFFICIAL ALL STAR CAFE, SOUND REPUBLIC and
        COOL PLANET units. Although the Company has implemented certain
        strategies in connection with the refocus of its core PLANET HOLLYWOOD
        operations, the Company currently expects continued under-performance
        from its PLANET HOLLYWOOD operations due to an expected continuing
        decline in same unit sales and margins in the near term. Consequently,
        the Company is discussing with bank representatives an extension of the
        $12,500 payment due March 31, 1999 under the Company's bank credit
        facility, and the Company anticipates that it will delay the $15,000
        interest payment required under the Senior Subordinated Notes due on
        April 1, 1999. While the Company expects to offset some of these
        obligations from the proceeds of the planned sale of assets, unless the
        sales can be completed on a timely basis and the Company realizes an
        improvement in its PLANET HOLLYWOOD operations, the Company's ability to
        meet its obligations will be dependant upon an infusion of capital,
        additional financing and/or a restructuring of its existing
        indebtedness. The Company is actively marketing certain assets and
        pursuing a variety of financing alternatives. There can be no assurance,
        however, that the Company would be able to effect any of these
        strategies on satisfactory terms, if at all. The financial statements do
        not include any adjustments that might result from the outcome of this
        uncertainty.

3.      IMPAIRMENT OF LONG LIVED ASSETS AND RESTRUCTURING CHARGES

        In 1998, the Company experienced declines in same unit revenues and
        disappointing operating results at its restaurants. As a result, the
        Company re-evaluated its long term growth strategy. This re-evaluation
        led to the Company's decision to perform the following steps in order to
        refocus its resources on the PLANET HOLLYWOOD brand:

                                       38
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

         o Ceased the development of its SOUND REPUBLIC unit in New York City.
         o Joint venture, franchise, sell or otherwise dispose of its SOUND
           Republic, OFFICIAL ALL STAR CAFE and COOL PLANET locations.
         o Identify franchise opportunities for selected international Company-
           owned PLANET HOLLYWOOD locations.
         o Explore opportunities to raise capital through the sale of certain
           assets.
         o Refocus on its core PLANET HOLLYWOOD operations by introducing a
           new menu, updating the look and appearance of the restaurants,
           launching a new merchandise strategy aimed at providing more
           fashion-oriented merchandise through the introduction of seasonal
           lines, and initiating a new marketing and public relations strategy
           aimed at delivering a fresh, exciting and consistent message to
           consumers.

        In conjunction with these changes, the Company recorded charges totaling
        $139,000 relating to the write-down of long lived assets, restructuring
        and severance costs and accelerated celebrity compensation costs. The
        charge was recorded as follow:

<TABLE>
<CAPTION>
                                                       OFFICIAL
                                         PLANET        ALL STAR        SOUND          COOL
       FISCAL 1998                      HOLLYWOOD        CAFE         REPUBLIC        PLANET        CORPORATE       TOTAL
-------------------------------         ---------      --------       --------       --------       ---------      --------
<S>                                     <C>            <C>            <C>            <C>            <C>            <C>     
Impairment of long lived assets         $ 33,492       $ 47,284       $ 37,133       $  3,748       $  4,186       $125,843

Celebrity stock option
    expense                                 --            4,746          1,445           --             --            6,191
                                        --------       --------       --------       --------       --------       --------
                                        $ 33,492       $ 52,030       $ 38,578       $  3,748       $  4,186       $132,034
                                        ========       ========       ========       ========       ========       ========
Restructuring costs:

    Employee severance                  $   --         $   --         $   --         $   --         $  2,940       $  2,940

Lease termination costs for units
    closed or not be opened                  700            300          2,480           --              505          3,985
                                        --------       --------       --------       --------       --------       --------
Total restructuring costs               $    700       $    300       $  2,480       $   --         $  3,445       $  6,925
                                        ========       ========       ========       ========       ========       ========
Total fiscal 1998 Charges               $ 34,192       $ 52,330       $ 41,058       $  3,748       $  7,631       $138,959
                                        ========       ========       ========       ========       ========       ========
       FISCAL 1997
-------------------------------
Impairment of long lived assets         $ 25,200       $ 21,194       $   --         $   --         $  2,305       $ 48,699
                                        --------       --------       --------       --------       --------       --------
</TABLE>

                                       39
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        As a result of operating losses incurred in fiscal 1998, projected
        future losses for certain of the Company's restaurant units and the
        Company's decision to focus its resources on the PLANET HOLLYWOOD
        concept only, the Company recorded an impairment charge of $125,800
        relating to certain non-performing domestic and foreign PLANET HOLLYWOOD
        units as well as all assets associated with the Company's OFFICIAL ALL
        STAR CAFE, COOL PLANET and SOUND REPUBLIC concepts. The Company
        considers continued and projected operating losses to be its primary
        indicators of potential impairment. An impairment was recognized as the
        future undiscounted cash flows or appraised values were estimated to be
        insufficient to recover the related carrying value of the long-lived
        assets. As a result, the carrying values of these assets were written
        down to their estimated fair values based on these criteria.

        PLANET HOLLYWOOD UNITS. An impairment of $33,500 for PLANET HOLLYWOOD
        units was recorded as the future undiscounted cash flows for these units
        were estimated to be insufficient to recover the related carrying values
        of these assets. The units written down are primarily located in
        European or Canadian markets and the Company is exploring various
        opportunities to franchise, or otherwise dispose of these units. Lease
        termination costs totaling $700 were recorded for two locations which
        the Company is closing. Also included in this amount was a charge for
        the Company's PLANET HOLLYWOOD Boston unit for the anticipated loss
        which will be incurred on the sale of the assets currently under
        construction at this site.

        OFFICIAL ALL STAR CAFE UNITS. The OFFICIAL ALL STAR CAFE units were
        deemed impaired due to the future undiscounted cash flows being
        insufficient to recover the related carrying values of these assets. The
        Company has discontinued the expansion of this concept and is exploring
        various opportunities to joint venture, franchise, sell or otherwise
        dispose of these units. Lease termination costs of $300 were recorded
        for a site which will not be developed. As a result of the Company's
        decision to discontinue the expansion of this concept, the Company also
        recorded a $500 charge for the write-down of OFFICIAL ALL STAR CAFE
        trademark costs and a $4,700 charge was recorded to expense options
        granted to celebrities associated with the OFFICIAL ALL STAR CAFE units.
        These options were previously being amortized over the life of the
        celebrity agreements; however, given the Company's plans to discontinue
        expansion of this concept, all remaining amounts were expensed in 1998.

        SOUND REPUBLIC UNITS. The Company opened its first SOUND REPUBLIC in the
        fall of fiscal 1998 in London, England and was constructing a second
        unit in New York City which was scheduled to open in the summer of 1999.
        As part of its decision to focus on the core PLANET HOLLYWOOD concept,
        the Company has stopped the expansion of this concept and is exploring
        opportunities to joint venture, franchise, sell or otherwise dispose of
        the unit in London and the unit under construction in New York City. A
        $27,900 charge was recorded for the impairment of the London unit based
        on continued and projected operating losses for the unit. An impairment
        charge of $9,000 was recorded for the New York SOUND REPUBLIC site based
        on estimated proceeds from the sale of the assets under construction.
        The total carrying value of the New York project is $16,000, of which
        $13,300 was spent at December 27, 1998. The Company has also written off
        the trademark costs of $200 associated with this brand due to
        management's decision to exit the sites associated with this concept and
        $1,400 was recorded to expense options granted to celebrities associated
        with the SOUND REPUBLIC. A reserve of $2,500 was recorded by the Company
        for estimated lease termination costs for certain SOUND REPUBLIC sites
        which will not be developed. The Company is negotiating with landlords
        and potential tenants in an attempt to have these leases terminated or
        assigned.

                                       40
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        COOL PLANET UNITS. During the summer and fall of 1998, the Company
        opened its first three COOL PLANET units in California. These ice cream
        and dessert units feature COOL PLANET ice cream products and a decor
        derived from the PLANET HOLLYWOOD units. The Company plans to joint
        venture, franchise, sell or otherwise dispose of these units. A charge
        of $1,900 was recorded to write-down the assets associated with these
        units. Additionally, the Company recorded an impairment of $1,800 for a
        prepaid celebrity promotional agreement associated with the COOL PLANET
        concept. The agreement was being amortized over a five year period;
        however, due to the Company's plans to no longer operate these units,
        the unamortized amount was written off in the fourth quarter of 1998.

        CORPORATE. In the fourth quarter of 1998, the Company's credit facility
        with SunTrust Bank, Central Florida, N.A. and other lenders was amended.
        The amendment required the Company to commence marketing its
        headquarters property in Orlando, Florida and its New York Hotel
        property. An impairment of $2,800 was recorded on the headquarters
        property for the excess of the carrying value of the property over its
        fair value. The Company is currently in the process of negotiating a
        sale-leaseback on the property and anticipates the sale to be completed
        in the spring of 1999. In conjunction with the Company's decision to
        postpone any further development of its concepts, an impairment of
        $1,400 was recorded for costs incurred for sites that will not be
        developed and for various memorabilia items.

        In November 1999, the Company terminated 60 employees from its corporate
        staff. Total costs paid to terminated employees in 1998 were $1,400.
        Approximately $1,500 was accrued at December 27, 1998 for future
        severance payments and outplacement services to be provided to these
        employees. As a result of the terminations, the Company closed several
        satellite offices. Approximately $500 has been recorded as a reserve for
        lease terminations costs associated with these offices.

        In fiscal 1997, the Company recorded a non-cash impairment charge of
        $48,700 related to a write-down of long lived assets relating to certain
        non-performing domestic and foreign restaurant units. An impairment was
        recognized as the future undiscounted cash flows for these units were
        estimated to be insufficient to recover the related carrying value of
        the long-lived assets relating to the units. As a result, the carrying
        values of these assets were written down to their estimated fair values,
        based on the Company's estimates of future discounted cash flows.

4.      ACQUISITIONS AND DIVESTITURES

        In August 1995, the Company entered into an agreement whereby the
        Company purchased a 57.9% interest in All Star Cafe, Inc. ("All Star")
        for $600 from the Company's President, who is a stockholder of All Star,
        and the All Star Cafe Trust (the "Trust"), a trust established for the
        benefit of the President's children (collectively the "Sellers").

        In February 1996, the Company entered into an agreement to acquire the
        remaining minority interests in All Star. Under the terms of the
        agreement, the Company issued 11,545,706 shares of Class B non-voting
        stock in exchange for all of the minority interests in All Star. Due to
        the high degree of common

                                       41
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        control between the Company and All Star and the lack of an exchange of
        monetary consideration, the acquisition was accounted for as a
        reorganization of entities under common control. Accordingly, the bases
        of All Star's assets and liabilities are carried at historical cost.

        During 1996, the Company acquired the remaining minority interests in PH
        London and the minority interests in the Company's subsidiaries that
        operate PLANET HOLLYWOOD units in Maui, Washington D.C. and New York.
        These acquisitions were accounted for using the purchase method of
        accounting and the purchase price was allocated to the assets purchased
        and the liabilities assumed based on their fair values at the date of
        acquisition. The excess of the purchase price over the fair value of the
        net assets acquired was $23,100 and has been recorded as goodwill which
        is being amortized on a straight line basis over twenty years.

        The results of operations for All Star, PH London and the minority
        interests in Maui, Washington D.C. and New York after their respective
        acquisition dates are included in the fiscal 1996 consolidated statement
        of operations.

        The following unaudited pro forma information has been prepared assuming
        that the acquisitions of the minority interests took place at the
        beginning of fiscal 1996. The unaudited pro forma financial information
        does not purport to be indicative of the results of operations had the
        transaction been effected at the beginning of fiscal 1996, nor to
        project results for any future period:

        Revenues                                                   $373,364
        Income before extraordinary item                             48,500
        Net income                                                   38,079
        Basic earnings per share before extraordinary item              .48
        Basic earnings per share - net income                           .38
        Diluted earnings per share before extraordinary item            .47
        Diluted earnings per share - net income                         .37

        In November 1996, the Company entered into an agreement to purchase the
        net assets of a domestic franchise unit for $8,000. The acquisition was
        completed in January 1997.

5.      PROPERTY AND EQUIPMENT
        The components of property and equipment are as follows:

                                           DECEMBER 28,       DECEMBER 27,
                                              1997               1998
                                              ----               ----
        Leasehold improvements              $211,030           $179,309
        Furniture and equipment               59,990             52,940
        Memorabilia                           33,274             33,062
        Land                                   5,051                 --
        Capital lease                          3,900              3,900
        Construction in progress              42,878              2,426
        Assets held for sale                      --             60,729
                                            --------           --------
                                             356,123            332,366
        Less - accumulated depreciation      (37,667)           (51,251)
                                            --------           --------
                                            $318,456           $281,115
                                            ========           ========

                                       42
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6.      INVESTMENT IN UNCONSOLIDATED AFFILIATES

        The Company's investments in affiliated companies which are not majority
        owned or controlled are accounted for using the equity method. These
        affiliated companies and the percentage interest held by the Company
        consist of PH Asia (50%), ECE (20%), Hotel Pennsylvania (20%) and Planet
        Zurich (50%).

        The Company owns a 50% equity interest in PH Asia, which operates and
        franchises PLANET Hollywood and OFFICIAL ALL STAR CAFE units in the
        Pacific Rim. The remaining interest in PH Asia is owned by an entity
        controlled by a company in which a director of the Company is a major
        shareholder.

        The Company owns a 20% equity interest in ECE, a Mexican company, which
        operates themed restaurant/retail units in Mexico, South America and the
        Caribbean (see Note 10). In January 1997, ECE issued 21,587,145 shares
        of common stock. The Company purchased 4,317,429 shares for $6,100 in
        order to retain its 20% equity interest in ECE. At December 28, 1997,
        the Company's share of the underlying net assets of ECE exceeded the
        investment by $2,400. The excess is being amortized over 20 years.

        In September 1997, the Company entered into a venture to remodel and
        renovate the Hotel Pennsylvania in New York City. During 1997, the
        Company advanced the venture $9,600 and estimates that total funding
        requirements for its 20% equity investment in the venture to be $20,000.
        The renovated hotel will be branded the Official All-Star Hotel, and the
        Company will receive royalties for the use of its "Official All Star
        Hotel" trademark.

        In December 1997, the Company entered into a joint venture to construct
        a 50 story, 550 room movie themed hotel in New York City. The Company
        has funded $5,000 of its anticipated initial investment of $7,000. In
        addition to participation in the hotel's profits through its equity
        interest in the joint venture, the Company will receive a license fee
        for the use of the PLANET HOLLYWOOD name and logo. The Company entered
        into a $35,000 LIBOR-based leveraged operating lease for the
        construction of a restaurant in the hotel (see Note 8).

        Condensed financial information for affiliated companies accounted for
        by the equity method is as follows:

<TABLE>
<CAPTION>
                                                              1997                              1998
                                                 -------------------------------   -------------------------------
        BALANCE SHEET DATA:                       PH ASIA     OTHER       TOTAL     PH ASIA     OTHER      TOTAL
        -------------------                       -------     -----       -----     -------     -----      -----
<S>                                              <C>       <C>         <C>         <C>       <C>        <C>      
           Current assets                        $ 17,370  $ 206,142   $ 223,512   $ 12,387  $  32,114  $  44,501
           Non-current assets                      24,578     89,767     114,345     22,090    125,892    147,982
                                                 --------  ---------   ---------   --------  ---------  ---------
           Total assets                          $ 41,948  $ 295,909   $ 337,857   $ 34,477  $ 158,006  $ 192,483
                                                 ========  =========   =========   ========  =========  =========

           Current liabilities                   $  9,255  $  13,300   $  22,555   $  9,695  $  16,291  $  25,986
           Other liabilities                       25,219    139,804     165,023     25,695     79,544    105,239
           Stockholders' equity                     7,474    142,805     150,279       (913)    62,171     61,258
                                                 --------  ---------   ---------    -------  ---------  ---------
           Total liabilities and stockholders'
               equity                            $ 41,948  $ 295,909   $ 337,857   $ 34,477  $ 158,006  $ 192,483
                                                  =======  =========   =========   ========  =========  =========
</TABLE>
<TABLE>
<CAPTION>

                                               1996                           1997                          1998
                                     -------------------------     --------------------------     ---------------------------
OPERATING DATA:                      PH ASIA   OTHER    TOTAL      PH ASIA    OTHER     TOTAL     PH ASIA   OTHER     TOTAL
---------------                      -------   -----    -----      -------    -----     -----     -------   -----     -----
<S>                                  <C>      <C>      <C>         <C>       <C>      <C>         <C>      <C>       <C>     
Revenue                              $27,993  $55,126  $83,119     $43,332   $72,606  $115,938    $27,025  $127,436  $154,461
Operating income                       3,073   19,194   22,267       7,073    25,893    32,966     (5,970)   27,214    21,244
Net income (loss)                      2,530    6,818    9,348       6,196    15,296    21,492     (7,419)  (19,865)  (27,284)
Company's interest in net income
     (loss)                            1,200    3,108    4,308       3,250     3,650     6,900     (4,875)   (6,147)  (11,022)
</TABLE>

                                       43
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7.      ACCRUED EXPENSES

        Accrued expenses are summarized as follows:

                                            DECEMBER 28,     DECEMBER 27,
                                               1997             1998
                                               ----             ----
        Accrued interest                    $     319        $   7,690
        Accrued rent                            3,318            4,328
        Accrued payroll & related benefits      3,776            3,797
        Accrued restructuring costs                --            5,524
        Accrued insurance                       2,447            4,845
        Accrued taxes                           1,820               --
        Other                                   3,535            3,488
                                            ---------        ---------
                                            $  15,215        $  29,672
                                            =========        =========

8.      NOTES PAYABLE

        Notes payable are summarized as follows:

                                           DECEMBER 28,      DECEMBER 27,
                                              1997              1998
                                              ----              ----
        12% Senior Subordinated
           Notes due 2005                   $     --         $ 250,000
        Lease facility note                       --            25,000
        Revolving line of credit               42,000              --
        Term loan                              20,000              --
        Capital lease payable                   3,872            3,845
        Other notes payable                     5,883            4,907
                                            ---------        ---------
                                               71,755          283,752
        Less current portion                   (1,264)         (25,517)
                                            ---------        ---------
                                            $  70,491        $ 258,235
                                            =========        =========

        In August 1995, the Company issued $60,000 10% Senior Subordinated Notes
        (the "1995 Notes") due in 2000 with warrants to purchase Class A common
        stock (see Note 9). A portion of the proceeds from the 1995 Notes were
        used to repay $21,600 to the principal stockholders or their affiliates
        for amounts previously borrowed. During fiscal 1996, approximately
        $2,200 was charged to interest expense for these loans. In connection
        with the 1996 initial public offering of stock, the Company repaid the
        1995 Notes from a portion of the offering's proceeds. The Company
        incurred a one-time extraordinary charge of $10,400, net of $5,900 in
        taxes, as a result of the early extinguishment of the 1995 Notes.

        In fiscal 1996, notes due to stockholders totaling $70,800 were repaid
        from the proceeds of the initial public offering of stock.

                                       44
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        In September 1997, the Company replaced its existing $50,000 credit
        facility with a $155,000 multi-currency, long-term credit facility with
        a consortium of financial institutions. The facility consisted of a
        $100,000 revolving credit facility and a $20,000 long-term loan
        facility. In March 1998, this was replaced, concurrent with the notes
        offering, with a $65,000 multi-currency revolving credit facility and a
        $35,000 LIBOR-based leveraged lease facility. Interest rates were
        variable, with either prime or LIBOR indexes.

        In March 1998, the Company issued $250,000 12% Senior Subordinated Notes
        due in 2005. Interest on the notes will be payable semi-annually in
        arrears on April 1 and October 1 of each year, commencing October 1998.
        The notes mature on April 1, 2005. The documents governing the notes
        contain certain covenants, which, among other things, restrict the (i)
        issuance of additional debt and preferred stock (ii), payment or
        dividends and (iii) sale of assets.

        In December 1998, the Company amended the existing $65,000
        multi-currency revolving credit facility and $35,000 LIBOR-based
        leveraged lease facility with SunTrust Bank, Central Florida, N.A. and
        other lenders. The revolving credit portion of the old credit facility
        has been terminated and the credit facility now provides for a $35,000
        LIBOR-based leveraged lease facility and up to $2,000 coverage under an
        interest rate swap arrangement, which provides hedging against interest
        rate movements under the leveraged lease facility. Interest rates are
        variable, with either prime or LIBOR indexes. The credit facility
        matures on June 30, 1999. Principal payments under the leveraged lease
        facility were or are required in the amounts of (a) $10,000 by December
        8, 1998, (b) $12,500 by March 31, 1999 and (c) the balance by June 30,
        1999. The Company is also required to commence marketing both the
        headquarters property and the New York movie themed hotel property
        underlying the leveraged lease and, if such properties are sold, the
        proceeds will be applied as principal payments. The obligations under
        the credit facility are guaranteed by each of the material subsidiaries
        and secured by the mortgage of the headquarters property.

        At year-end, the Company's weighted average rate on outstanding
        borrowings under the facility was 8.25% while the term loan facility
        matures in 1999. The credit facility also provides for the Company to
        have up to $10,000 in letters of credit. At December 27, 1998, the
        Company had outstanding letters of credit totaling $9,200 (see Note 1).

        In connection with the lease facility note, the Company entered into an
        interest rate swap agreement. The swap agreement effectively converts
        this note from floating-rate debt to fixed rate debt with interest at
        5.83%. The differential in the rates is accrued as interest rates change
        and is recorded as an adjustment to interest expense. The swap agreement
        matures in November 2000. The estimated fair value of the swap agreement
        was a loss of $400 at December 27, 1998.

        During fiscal 1996, 1997 and 1998, approximately $6,100 and $2,600, and
        $30,000 respectively, was charged to interest expense and approximately
        $1,100, $2,600 and $4,900 in fiscal 1996, 1997 and 1998, respectively,
        of interest was capitalized.

                                       45
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        Aggregate principal amounts maturing in each of the five fiscal years
        subsequent to fiscal 1998 and thereafter are summarized as follows:

               FISCAL
               ------
               1999                       $25,517
               2000                           512
               2001                           555
               2002                           601
               2003                           652
               Thereafter                 255,915

9.      STOCKHOLDERS' EQUITY AND REDEEMABLE WARRANTS

        STOCKHOLDERS' EQUITY

        In April 1996, the Company completed an initial public offering of
        12,406,452 shares of common stock at an offering price of $18.00 per
        share, including 1,618,233 shares from the exercise of the Underwriters'
        over allotment option. The Company received net proceeds of
        approximately $193,100.

        In April 1997, the Company issued 1,087,000 shares of Class A Common
        Stock to an investor in conjunction with the consummation of a franchise
        agreement with the investor. Approximately $19,600 was received for the
        shares issued.

        In January 1997, the Company issued 218,438 shares of restricted Class B
        Common Stock to certain celebrities. The shares were valued at their
        estimated market value totaling $4,000. Deferred compensation expense
        has been reflected as a reduction of stockholders' equity and is being
        amortized over the period benefited. The deferred compensation expense
        was accelerated for certain celebrities associated with the OFFICIAL ALL
        STAR CAFE concept (see Note 3.)

        In April 1998, the Company issued 190,476 unregistered shares of Class A
        Common Stock to consultants retained to assist the Company with
        relations and promotions in the entertainment industry. The shares were
        valued at their estimated discounted market value totaling $1,200 and
        recorded as prepaid promotional services. These prepaid services are
        being amortized over one year.

                                       46
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        REDEEMABLE WARRANTS

        In connection with the issuance of the 1995 Notes (see Note 8), the
        Company issued warrants to purchase up to 5,112,765 shares of common
        stock at an exercise price of $0.01 per share. The proceeds of the
        offering were allocated between the Notes and warrants based upon their
        fair values at the date of issuance. The number of shares which may be
        purchased upon exercise of the warrants were subject to increase or
        decrease by up to 50% based upon the total rate of return to the holders
        upon repayment of the Notes, including the fair value of the warrants at
        the date they become exercisable or are deemed exercised. The warrants
        became exercisable upon the repayment of the Notes. The number of
        warrants which may be exercised were reduced by 50% to 2,556,383 based
        upon the total rate of return to the holders at the date of repayment of
        the Notes. In connection with the initial public offering of stock in
        fiscal 1996, warrants to purchase 788,219 shares were exercised. In
        1996, the Company registered the shares issued upon the exercise of the
        remaining warrants.

        STOCK OPTIONS

        During 1995, the Board of Directors adopted the 1995 Stock Option Award
        and Incentive Plan ("1995 Stock Plan"). The 1995 Stock Plan calls for up
        to 4,000,000 shares of Class A common stock to be available for issuance
        upon the exercise of options and stock appreciation rights. In October
        1996, the 1995 Stock Plan was amended to provide for 5,000,000 shares of
        Class A common stock to be available. In May 1997, the 1998 Stock Plan
        was amended to provide for 6,000,000 shares of Class A common stock to
        be available. In October 1998, the 1995 stock Plan was amended to
        provide for 7,000,000 shares of Class A common stock to be available.
        Under the 1995 Stock Plan, options and/or stock appreciation rights may
        be granted to officers and employees of the Company, and certain of the
        Company's independent contractors, to purchase Class A common stock.
        During 1996, 1997 and 1998, options to purchase 3,051,161, 839,800 and
        8,157,379 shares, respectively, of Class A common stock were granted
        under the 1995 Stock Plan at the estimated fair market value at the date
        of grant. These options vest and are exercisable over a period of four
        years and expire five years from the date of grant. In December 1998,
        the Company canceled options to purchase 5,104,694 shares with an
        average exercise price of $11.80 and granted new options to the same
        individuals with an exercise price of $2.50.

        During 1995, the Board of Directors adopted the 1995 Celebrity Stock
        Option Award and Incentive Plan ("1995 Celebrity Plan"). The 1995
        Celebrity Plan calls for up to 4,000,000 shares of the Class A common
        stock to be available for issuance upon the exercise of options and
        stock appreciation rights. In October 1996, the 1995 Celebrity Plan was
        amended to provide for 6,000,000 shares of Class A Common Stock to be
        available. During fiscal 1996, 1997, and 1998, options to purchase
        3,051,161, 1,895,000 and 951,166 shares, respectively, of Class A common
        stock were granted under the 1995 Celebrity Plan at the estimated fair
        market value at the date of grant. In February 1998, the Company reset
        the exercise price of options to purchase 400,000 shares with an average
        exercise price of $16.14 to $7.50. In December 1998, the company
        cancelled options to purchase 48,333 options with an average exercise
        price of $12.54 and granted new options to the same celebrities with an
        exercise price of $2.50. These options vest and are exercisable over a
        period of four years and expire five years from the date of grant.
        During fiscal 1996, 1997, and 1998, approximately $1,300, $2,100 and
        $3,000 respectively, was charged to expense relating to the grants.

                                       47
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                      EMPLOYEE PLAN                    CELEBRITY PLAN
                                                --------------------------       ---------------------------
                                                 NUMBER      WEIGHTED AVG.        NUMBER       WEIGHTED AVG.
                                                OF SHARES    OPTION PRICE        OF SHARES     OPTION PRICE 
                                                ---------    ------------        ---------     -------------
<S>                                           <C>               <C>             <C>               <C>    
Outstanding at December 29, 1996              $ 3,741,315       $ 16.34         $ 4,095,000       $ 12.40
Exercisable at December 29, 1996                     --                                --
Available for grant at December 29, 1996        1,258,685                         1,905,000
Granted during 1997                               839,800         18.11             180,000         16.28
Cancelled                                        (649,343)        17.00            (796,334)        17.64
Exercised                                         (77,297)         8.40             (30,666)         7.88
                                              -----------                       -----------
Outstanding at December 28, 1997                3,854,475         16.76           3,448,000         10.55
Exercisable at December 28, 1997                  237,801                         1,082,655
Granted during 1998                             8,157,379          5.33             951,166          8.62
Cancelled                                      (7,255,076)        11.00             (48,999)        12.54
Exercised                                          (7,794)         7.86               -- 
                                              -----------                       -----------
Outstanding at December 27, 1998                4,748,984          5.73           4,350,167          9.35
Exercisable at December 27, 1998                  216,689                         2,227,992
Available for grant at December 27, 1998        1,725,346                         1,619,167
</TABLE>

        The following tables summarize the stock options outstanding at December
27, 1998:

<TABLE>
<CAPTION>

                                                                             WEIGHTED
            EMPLOYEES                NUMBER           WEIGHTED-AVERAGE        AVERAGE
        RANGE OF EXERCISE        OUTSTANDING AT           REMAINING          EXERCISE
             PRICES             DECEMBER 27, 1998     CONTRACTUAL LIFE         PRICE 
       ------------------       -----------------     ----------------      ---------
<S>               <C>              <C>                     <C>               <C>   
                  $ 2.50           3,140,920               4.96              $ 2.50
        $ 7.50      7.94             939,509               3.15                7.62
         14.00     15.00              68,555               2.28               14.73
                   17.00             160,000               3.20               17.00
         19.00     21.63             440,000               1.19               19.25

<CAPTION>

                                                                             WEIGHTED
           CELEBRITIES               NUMBER           WEIGHTED-AVERAGE        AVERAGE
        RANGE OF EXERCISE        OUTSTANDING AT           REMAINING          EXERCISE
             PRICES             DECEMBER 27, 1998     CONTRACTUAL LIFE         PRICE 
       ------------------       -----------------     ----------------      ---------
<S>               <C>                <C>                  <C>                <C>   
                  $ 2.50             48,333               4.96               $ 2.50
        $ 7.50      7.88          2,891,334               2.11                 7.79
                    9.00            502,500               4.13                 9.00
         14.00     15.00            838,000               2.24                14.23
         19.00     24.00             70,000               3.24                22.57
</TABLE>

        The Company has adopted the disclosure-only provisions of SFAS 123.
        Accordingly, no compensation expense has been recognized for the 1995
        Stock Plan. Had compensation cost for options granted under the 1995
        Stock Plan been determined based on the fair value at the date of grant
        for awards consistent with the provisions of SFAS 123, the Company's net
        income (loss) and earnings (loss) per share would approximate the
        following pro forma amounts:

<TABLE>
<CAPTION>
                                                        FISCAL      FISCAL      FISCAL
                                                         1996        1997        1998
                                                        -------     ------    ----------
<S>                                                     <C>         <C>        <C>   
        Net income (loss) - as reported                 $37,659     $8,258    $(243,932)
        Net income (loss) - pro forma                    36,987      4,852     (247,667)
        Basic earnings (loss) per share - as reported       .37        .08        (2.24)
        Basic earnings (loss) per share - pro forma         .37        .04        (2.27)
        Diluted earnings (loss) per share - as reported     .37        .08        (2.23)
        Diluted earnings (loss) per share - pro forma       .36        .04        (2.26)
</TABLE>


                                       48
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        The fair value of each options is estimated on the date of grant using
        the Black Scholes option pricing model with the following weighted
        average assumptions: no dividend yield, expected volatility of 35% of
        fiscal 1996 and fiscal 1997 and 60% in fiscal 1998; risk free interest
        rates of 5.95%, 5.70% and 5.06% in fiscal 1996, fiscal 1997 and fiscal
        1998, respectively; and expected lives of 4 years for fiscal 1996 and
        fiscal 1997 and 5 years for fiscal 1998. The weighted-average fair value
        of options granted during the year were $6.83 for fiscal 1996, $6.32 for
        fiscal 1997 and $1.73 for fiscal 1998.

10.     FRANCHISE REVENUES

        The Company has an agreement with PH Asia, whereby PH Asia was granted
        the right to license the PLANET HOLLYWOOD name and rights within a
        number of countries, primarily in the Pacific Rim. The agreement
        provided that PH Asia would pay continuing royalty fees and, for certain
        territories, PH Asia and the Company would share initial franchise fees.
        In 1996, PH Asia opened four franchise units, and the Company received
        the initial franchise fee revenue for three of the units opened. In
        1997, PH Asia opened eight units and the Company received the initial
        franchise fee revenue for five of the units opened. No units were opened
        by PH Asia in 1998.

        During 1995, the Company entered into a franchise agreement with ECE, an
        affiliated company, which allows ECE to develop and operate up to five
        PLANET HOLLYWOOD units and up to ten OFFICIAL ALL STAR CAFE units in
        Mexico. Upon Company approval, ECE may open an additional five PLANET
        HOLLYWOOD units. In 1996, ECE opened 5 franchise restaurant units. No
        restaurant units were opened in 1997 or 1998. ECE pays continuing
        royalty fees as defined in the agreement.

        In December 1995, the Company terminated a site franchise agreement of
        an existing franchisee and purchased the franchise rights to four
        undeveloped locations. The Company assumed certain liabilities and lease
        obligations relating to the four undeveloped locations. In consideration
        for the franchise rights, the Company will pay the seller an amount
        equal to a multiple of each unit's first year profits less the costs to
        develop and open the site, as defined. The franchisee forfeited the
        nonrefundable initial franchise fees of $2,000 each for the four sites.
        During 1997, the Company recognized non-refundable franchise fees for
        two of the sites as no consideration was required to be paid to the
        seller under the terms of the purchase agreement. The remaining unearned
        franchise fees are included in deferred credits and any consideration
        paid for the sites will be offset against each site's related unearned
        franchise fee.

        In March 1997, the Company entered into a franchise agreement which
        provides for the development of up to 34 PLANET HOLLYWOOD
        restaurant-merchandise units in 23 countries throughout the Middle East
        and Europe. The franchise agreement provided for and the investor made a
        payment to the Company of $8,000 for six sites. Additional franchise
        fees may be payable to the Company under the terms of the franchise
        agreement for the additional sites. In connection with the agreement,
        the investor purchased 1% of the Company's total common stock
        outstanding directly from the Company for approximately $19,600.

        The number of franchised units opened in fiscal 1996, 1997 and 1998 were
        21, 34, and 38 respectively.

                                       49
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11.     INCOME TAXES

        The sources of income (loss) before income taxes are presented as
follows:

                                          FISCAL         FISCAL         FISCAL
                                           1996           1997           1998
                                        ---------      ---------      --------
United States                           $  47,370      $  15,529      $(157,929)
Foreign                                    28,346         (2,317)       (74,813)
                                        ---------      ---------      ---------
Income (loss) before taxes              $  75,716      $  13,212      $(232,742)
                                        =========      =========      =========

        The income tax provision (benefit) consists of the following:

                                          FISCAL         FISCAL         FISCAL
                                           1996           1997           1998
Current:                                ---------      ---------      ---------
       Federal                          $  12,616      $   9,927      $ (16,153)
       State and local                      1,472          1,777           (432)
       Foreign                              3,168          3,375          1,759
                                        ---------      ---------      ---------
                                           17,256         15,079        (14,826)
                                        ---------      ---------      ---------
Deferred:
       Federal                              2,941         (7,499)        14,026
       State and local                      1,448           (337)           127
       Foreign                               --           (2,289)         2,289
                                        ---------      ---------      ---------
                                            4,389        (10,125)        16,442
                                        ---------      ---------      ---------

                                        $  21,645      $   4,954      $   1,616
                                        =========      =========      =========

        In 1997 and 1998, the Company recognized $800 and $200, respectively, of
        benefits for deductions from the exercise of employee stock options and
        the vesting of certain celebrity restricted stock awards. The

                                       50
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        benefits were recorded directly to capital in excess of par value and
        are not reflected in the provision for income taxes.

        Income tax expense included in the financial statements is as follows:

                                            FISCAL        FISCAL        FISCAL
                                             1996          1997          1998
                                           --------      --------      --------
Continuing operations                      $ 27,636      $  4,954      $  5,206
Extraordinary item                           (5,991)         --            --
Change in accounting principle                 --            --          (3,590)
                                           --------      --------      --------
                                           $ 21,645      $  4,954      $  1,616
                                           ========      ========      ========

        Deferred income taxes were recorded to reflect the tax effects of
        temporary differences between the carrying amount of assets and
        liabilities for financial reporting purposes and the amounts for income
        tax purposes for December 29, 1996, December 28, 1997 and December 27,
        1998.

        Temporary differences and carryforwards which give rise to deferred tax
        assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                            DECEMBER 28,    DECEMBER 27,
                                                                1997           1998
                                                            ------------    -----------
<S>                                                         <C>             <C>
        Deferred tax assets:
               Preopening costs                             $   4,712       $ 10,752
               Fixed assets                                     --            33,889
               Deferred credits                                 6,104          3,186
               Accrued expenses & reserves                      5,177          6,514
               Inventory                                        --             3,500
               Deferred rental expense                          4,157          4,419
               Deferred compensation                            --             3,088
               Net operating loss carryforwards                 4,884         11,375
               Tax credits carryforwards                        1,047         11,190
               Other                                              809            125
                                                            ---------       --------
                                                               26,890         88,038
               Valuation Allowance                             (1,925)       (88,038)
                                                            ---------       --------
                                                               24,965          --   
                                                            ---------       --------
        Deferred tax liabilities:
               Fixed assets                                    (8,473)         --   
               Other                                              (50)         --   
                                                            ---------       --------
                                                               (8,523)         --   
                                                            ---------       --------
               Net deferred tax asset                       $  16,442       $  --   
                                                            =========       ========
</TABLE>

        A valuation allowance of $88,000 was established in fiscal 1998 for all
        deferred tax assets due to the uncertainty of sufficient taxable income
        in the future to utilize the deductible temporary differences and
        carryforwards. A valuation allowance of $1,900 was established during
        fiscal 1997 for the deferred tax asset relating to foreign operations.
        SFAS No. 109 requires that deferred tax assets be reduced by a valuation
        allowance if it is more likely than not that some portion or all of the
        deferred tax asset will not be realized.

                                       51
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        Reconciliation of the income tax provision to the tax provision computed
        by applying the federal statutory rate is as follows:

<TABLE>
<CAPTION>
                                                   FISCAL         FISCAL       FISCAL
                                                    1996           1997         1998
                                                    ----           ----         ----
<S>                                                <C>           <C>          <C>      
        Federal statutory tax                      $26,501       $ 4,624      $(81,460)
        Nondeductible expenses                         481           252           225
        Tax (benefit) of foreign operations         (1,336)         (772)        3,808
        State and local income taxes, net of
             federal tax benefit                     2,410           936          (198)
        Valuation allowance                             --            --        82,831
        Tax credits                                   (964)         (857)           --
        Other                                          544           771            -- 
                                                   -------       -------      --------
        Total tax expense                          $27,636       $ 4,954      $  5,206
                                                   =======       =======      ========
</TABLE>

        The amount of domestic net operating loss carryforwards at December 27,
        1998 was $5,500. Of this amount, $4,300 was generated by certain
        subsidiaries prior to their acquisition and have expiration dates
        through the fiscal year 2011. The use of pre-acquisition operating loss
        carryforwards is subject to limitations imposed by the Internal Revenue
        Code. The remaining net operating loss of $1,200 will expire in 2018.

        The amount of foreign tax credit carryforwards at December 27, 1998
        total $4,800 which expire between 2001 and 2003. General business tax
        credit carryforwards total $4,400 and expire between 2010 and 2018.
        Alternative minimum tax credit carryforwards total $1,900 and carry
        forward indefinitely.

        The amount of foreign net operating loss carryforwards at December 27,
        1998 was $24,700, of which $20,500 have no expiration date and $4,200
        expire between 2002 and 2008.

        Provision has not been made for United States or foreign taxes on the
        undistributed earnings of foreign affiliates, as those earnings are
        considered to be permanently invested. It is not practicable to estimate
        the amount of the tax on such earnings. Such earnings would become
        taxable upon the sale or liquidation of the investment in these foreign
        affiliates or upon the remittance of dividends. Upon remittance, certain
        foreign countries impose withholding taxes that are then available,
        subject to certain limitations, for use as credits against the Company's
        United States tax liability.

                                       52
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

12.     COMMITMENTS AND CONTINGENCIES

        LEASES

        Future minimum lease payments under the terms of operating and capital
        lease agreements at December 27, 1998 are as follows:

<TABLE>
<CAPTION>
                                                                  OPERATING       CAPITAL
                                                                  ---------       -------
               <S>                                                <C>             <C>   
               1999                                               $  41,015       $  400
               2000                                                  41,634          400
               2001                                                  41,867          400
               2002                                                  41,821          400
               2003                                                  41,672          400
               Thereafter                                           671,985        9,000
               Less: amount representing interest                                 (7,149)
                                                                                  ------
               Present value of net minimum lease payments                        $3,851
                                                                                  ======
</TABLE>

        Rent expense approximated $34,500, $44,600 and $49,200 for fiscal 1996,
        1997 and 1998, respectively. Included in fiscal 1996, 1997 and 1998 rent
        expense is approximately $8,600, $8,600 and $7,300, respectively, of
        contingent rental payments.

        OTHER

        In connection with the construction and development of future
        restaurants, the Company has entered into various construction
        contracts. As of December 27, 1998, these outstanding contract
        commitments totaled approximately $13,400.

        In July 1997, the Company entered into a venture with AMC Entertainment,
        Inc. ("AMC") to develop, own and operate "Planet Movies By AMC", an
        integrated moviegoing dining and retail concept worldwide. The Company
        anticipates funding $10 million to the joint venture in fiscal 1999 for
        the purposes of developing and operating a "Planet Movies By AMC"
        complex in Columbus, Ohio.

        The Company and MTV entered into a memorandum of understanding whereby
        MTV would assist the Company in the promotion and development the SOUND
        REPUBLIC concept. Under the terms of the memorandum, it was anticipated
        that the Company would pay MTV a royalty, based on the gross revenues of
        SOUND REPUBLIC, for ten years, with a minimum annual guarantee of $1,000
        per year. As a result of the Company's decision to cease development of
        SOUND REPUBLIC and exit its London unit, the Company is negotiating the
        termination of its relationship with MTV.

        In February 1998, the Company entered into a five year agreement with
        consultants retained to assist the Company with relations and promotions
        in the entertainment industry. The Company is required to annually issue
        the consultants shares of Class A Common Stock with an aggregate value
        of $1,500 over the term of the agreement in return for such services
        (see Note 9).

                                       53
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        LITIGATION

        The Company is a defendant in certain lawsuits for which counsel has
        been retained. In the opinion of management, the ultimate outcome of
        these matters will not have a material adverse effect upon the financial
        condition, results of operations, or cash flows of the Company.

13.     RELATED PARTY TRANSACTIONS

        During 1995, a company that is controlled by a director and stockholder
        of the Company bought the franchise rights to develop one PLANET
        HOLLYWOOD unit in the Philippines for $2,000. This site opened in 1997
        and the franchise fee was recognized by the Company.

        In fiscal 1997, the Company paid approximately $1,000 in investment
        banking fees for services rendered by a firm in which a director of the
        Company is also a member of that firm's board of directors.

        During fiscal 1998, the Company entered into three arrangements with a
        franchisee and Company shareholder relating to the formation and
        operation of three corporations to be owned equally by the Company and
        franchisee/shareholder. The corporations will own and operate Planet
        Hollywood units in Tokyo and Zurich and an Official All Star Cafe unit
        in London. The Company received $4,300 in cash and a note receivable for
        $1,000 from the sale of the Company's 50% interests in the corporations.
        The Company may have difficulty in meeting its obligations with respect
        to the development of the restaurants in Tokyo and London.

        CELEBRITY NOTES RECEIVABLE

        The Company has notes receivable from certain celebrity stockholders in
        the aggregate gross amount of $5,900. The Company had previously
        guaranteed $4,900 of loans made by a bank to certain of the Company's
        celebrity stockholders. The Company assumed these generally non-recourse
        loans, which are secured by pledges of the celebrities stock in the
        Company and certain other assets, from the bank upon maturity. Due to
        declines in the market price of Company shares, the collateral
        underlying these notes was insufficient and the Company provided $2,000
        to mark the loans to their fair market value.

14.     OTHER FINANCIAL DATA

        GEOGRAPHIC SEGMENT DATA

        Condensed financial information, summarized by geographic area, is as
follows:

<TABLE>
<CAPTION>
                                                    UNITED                     OTHER
                                                    STATES          EUROPE     AREAS(1)  CORPORATE(2)    TOTAL
                                                   --------       ---------   ---------  ------------ ---------
<S>                                     <C>        <C>            <C>         <C>        <C>          <C>      
        Revenues                        1998       $280,325       $  92,459   $14,190    $   --       $ 386,974
                                        1997        355,641         103,083    16,401        --         475,125
                                        1996        305,221          67,824       319        --         373,364


                                       54
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        Operating Income (Loss)         1998       (150,551)        (44,110)   (6,084)       --        (200,745)
                                        1997         11,272          (6,834)      547        --           4,985
                                        1996         71,282           3,972        65        --          75,319

        Identifiable Assets             1998        340,606          92,344     7,835      31,842       472,627
                                        1997        363,682          90,851    10,622      40,404       505,559
                                        1996        335,061          53,212     2,974      10,013       401,260
<FN>
    (1) Includes Mexico and Canada
    (2) Corporate assets include investments in unconsolidated affiliates. 
</FN>
</TABLE>

        DIRECT REVENUES AND COST OF SALES

        Direct revenues and cost of sales are summarized as follows:

                                 FISCAL          FISCAL        FISCAL
                                  1996            1997          1998   
                                  ----            ----          ----
        Direct revenues:
           Food and beverage     $222,481       $273,345      $259,644
           Merchandise            124,955        173,965       107,652
                                 --------       --------      --------
                                 $347,436       $447,310      $367,296
                                 ========       ========      ========

        Cost of sales:
           Food and beverage     $ 50,190       $ 61,930      $ 61,474
           Merchandise             40,626         57,519        49,400
                                 --------      ---------      --------
                                 $ 90,816       $119,449      $110,874
                                 ========       ========      ========

15.     SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>

                                                          FISCAL      FISCAL       FISCAL
                                                           1996        1997         1998
                                                           ----        ----         ----
<S>                                                       <C>          <C>          <C>
        SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING
        AND INVESTING ACTIVITIES:

           Issuance of common stock for the purchase
           of minority interests                           $35,185       --         --

           Additions to property and equipment,
           construction in process and other assets
           included in accounts payable and accrued
           expenses                                         12,538      9,459      1,314

           Capital lease                                     3,900       --         --

           Purchase of franchise for assumption of
           franchisee liabilities                            3,181       --         --

           Receivable exchanged for stock in an affiliate     --          770        329
</TABLE>

                                       55
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        SUPPLEMENTAL DISCLOSURE OF CASH FLOW
        INFORMATION:
<TABLE>
<CAPTION>

<S>                                                         <C>        <C>        <C>
           Cash paid for interest,
           net of amount capitalized                        10,132       --       18,464

           Cash paid for income taxes                       13,398     14,848      1,903
</TABLE>


16.     QUARTERLY DATA (UNAUDITED)

        Summarized quarterly data for 1997 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                   FISCAL 1997 - QUARTERS ENDED 
                                         ------------------------------------------------------
                                         MAR. 30     JUNE 29     SEP. 28    DEC. 28      TOTAL
                                         -------     -------     -------    -------      -----
<S>                                     <C>         <C>         <C>        <C>         <C>     
        Revenues                        $101,647    $121,892    $149,598   $101,988    $475,125
        Income (loss) from operations     13,296      23,150      39,111    (70,572)      4,985
        Income (loss) before provision
           for income taxes               16,858      26,059      40,167    (69,872)     13,212
        Net income (loss)                 10,536      16,287      25,245    (43,810)      8,258
        Basic EPS - net income (loss)   $   0.10    $   0.15    $   0.23   $  (0.40)   $   0.08
        Diluted EPS - net income (loss) $   0.10    $   0.15    $   0.23   $  (0.40)   $   0.08
</TABLE>

        In the fourth quarter of fiscal 1997, the Company recorded a pre-tax
        charge of $71.2 million ($44,500 after tax). The charge was primarily
        related to the writedown of impaired assets ($48,700); the writeoff of
        accounts receivable, due to the Company's change in business strategy
        and financial difficulties of a franchisee ($13,500); and other costs
        associated with the Company's change in business strategy.

<TABLE>
<CAPTION>

                                                            FISCAL 1998 - QUARTERS ENDED 
                                             ---------------------------------------------------------
                                             MAR. 29     JUNE 28     SEP. 27      DEC. 27     TOTAL
                                             -------     -------     -------      -------     -----
<S>                                          <C>        <C>         <C>         <C>          <C>     
        Revenues                             $96,532    $105,112    $110,261    $  75,069    $386,974
        Income (loss) from operations          2,390       3,478     (10,422)    (196,191)   (200,745)
        Income (loss) before provision
           for income taxes                    2,608      (1,978)    (16,152)    (217,220)   (232,742)
        Income (loss) before
           cumulative effect                   1,630      (1,236)    (10,095)    (228,247)   (237,948)
        Net (loss)                            (4,354)     (1,236)    (10,095)    (228,247)   (243,932)
        Basic EPS - net income (loss)
           before cumulative effect          $  0.02     $ (0.01)   $  (0.09)      ($2.09)     ($2.18)
        Diluted EPS - net income (loss)
           before cumulative effect          $  0.02     $ (0.01)   $  (0.09)      ($2.09)     ($2.17)
        Basic EPS-net income (loss)          $ (0.04)    $ (0.01)   $  (0.09)      ($2.09)     ($2.24)
        Diluted EPS-net income (loss)        $ (0.04)    $ (0.01)   $  (0.09)      ($2.09)     ($2.23)
</TABLE>

        In the fourth quarter of fiscal 1998, the Company recorded charges
        totaling $139,000 for asset impairments, restructuring and severance
        costs, and accelerated celebrity options expense (see Note 3). In
        addition to these charges, the Company recorded a $3,800 reserve for
        franchisee receivables due to

                                       56
<PAGE>

Planet Hollywood International, Inc. and Subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

        continued financial difficulties of certain of the Company's
        franchisees. The Company also recorded a $6,000 reserve for discontinued
        and obsolete inventory items as a result of the Company's launch of a
        new merchandising strategy. The Company also recorded losses of $8,600
        from its equity investment in unconsolidated affiliates in the fourth
        quarter of fiscal 1998 as a result of asset impairments and operating
        losses recorded by these entities in the fourth quarter.

                                       57
<PAGE>

                                            Planet Hollywood International, Inc.
            Financial Statement Schedule II -- Valuation and qualifying accounts

<TABLE>
<CAPTION>
                                                        ADDITIONS
                                         BALANCE        CHARGED TO           CHARGED TO                              BALANCE
       DESCRIPTION                       12/28/97    COSTS AND EXPENSES     OTHER ACCOUNTS      DEDUCTIONS           12/27/98
<S>                                     <C>             <C>                   <C>              <C>                 <C> 
Allowance for uncollectible
  accounts receivable                   $1,500,000      $ 3,756,000            $ --            $ 3,134,000 (1)     $ 2,122,000
------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Represents the writeoff of specific accounts receivable in 1998.
</FN>
</TABLE>


                                       58
<PAGE>

PART IV
-------

ITEM 14. EXHIBITS, FINANCIAL SCHEDULES, AND REPORTS ON FORM 8-K

        The following documents are filed as part of this report:

(A)     1.  FINANCIAL STATEMENTS

        Report of Independent Accountants
        Consolidated Balance Sheets at December 28, 1997 and December 27, 1998
        Consolidated Statements of Operations for the three years ended December
        27, 1998
        Consolidated Statements of Changes in Stockholders' Equity for the three
        years ended December 27, 1998
        Consolidated Statements of Cash Flows for the three years ended December
        27, 1998

        Notes to the Consolidated Financial Statements

        2.  FINANCIAL STATEMENT SCHEDULES

            For the year ended December 27, 1998 II - Valuation and Qualifying
            Accounts

        All other schedules are omitted because they are not applicable or the
        required information is shown in the consolidated financial statements
        or notes thereto.

        Financial statements of two 50% owned companies have been omitted
        because the registrant's proportionate share of the income from
        continuing operations before income taxes is less than 20% of the
        respective consolidated amount, and the investment in and advances to
        each company is less than 20% of consolidated total assets.

        3.  EXHIBITS

        EXHIBIT
        NUMBER        DESCRIPTION
        --------      -----------

        3.1(1)         Restated Certificate of Incorporation of the Registrant
        3.2(2)         Third Amended and Restated Bylaws of the Registrant
        4.1(2)         First Amendment to Amended and Restated Revolving Credit
                       Agreement, dated as of December 8, 1998, among the
                       Registrant, SunTrust Bank and certain other banks
        4.5(3)         Amended and Restated Credit Agreement, dated as of March
                       25, 1998, among the Registrant, SunTrust Bank and certain
                       other banks
        4.6(3)         Indenture dated as of March 25, 1998, between the Company
                       and United States Trust Company of New York, as Trustee,
                       relating to the Company's 12% Senior Subordinated Notes
                       due 2005
        4.7(3)         Initial Global Notes, dated March 25, 1998
        10.1(1)        Form of Master Franchise Agreement
        10.2(1)        Form of Memorabilia Lease
        10.3(1)        Form of License Agreement


                                       60
<PAGE>

        10.5(1)        Ground Lease Agreement between Lake Buena Vista
                       Communications, Inc. And Planet Hollywood (Orlando), Inc.
        10.6(1)        License Agreement dated as of December 4, 1992, by and
                       between the Registrant and Planet Hollywood (Asia) Pte.
                       Ltd.
        10.7(1)        First Amendment to the License Agreement dated as of July
                       1, 1995, by and between the Registrant and Planet
                       Hollywood (Asia) Pte. Ltd.
        10.7A(3)       Second Amendment to the License Agreement, dated as of
                       October 1, 1995, by and between the Registrant and Planet
                       Hollywood (Asia) Pte. Ltd.
        10.7B(3)       Third Amendment to the License Agreement, dated as of
                       November 6, 1997, by and between the Registrant and
                       Planet Hollywood (Asia) Pte. Ltd.
        10.8(1)        Form of Master Franchise Agreement for All Star Cafe,
                       Inc.
        10.12(4)       First Amended and Restated 1995 Celebrity Stock Award and
                       Incentive Plan
        10.13(5)       First Amended and Restated 1995 Stock Award and Incentive
                       Plan
        10.14(1)       Form of Stock Option Award Agreement for options granted
                       under the 1995 Celebrity Stock Award and Incentive Plan
        10.15(1)       Form of Stock Option Award Agreement for options granted
                       under the 1995 Stock Award and Incentive Plan
        10.16(1)       Employment Agreement dated August 8, 1995, between the
                       Registrant and Robert Earl 
        10.17(6)       Employment Agreement dated June 26, 1998, between the 
                       Registrant and William H. Baumhauer
        10.19(7)       Limited Partnership Agreement of Planet Movies Company,
                       L.P., dated October 17, 1997
        10.20(7)       Master Agreement, dated as of December 2, 1997, relating
                       to the Planet Hollywood Hotel joint venture between
                       Planet Hospitality Holdings, Inc., Times Square Partners
                       LLC and others
        10.21(8)       Registration Rights Agreement dated as of October 30,
                       1998, by and between the Registrant, Leisure Ventures
                       Pte. Ltd. and Kingdom Planet Hollywood, Ltd.
        10.22(9)       Letter Agreement, including annexes thereto (which
                       include the form of the Registration Rights Agreement),
                       between the Registrant and Keith Barish, regarding Mr.
                       Barish's resignation as Chairman of the Board of
                       Directors, as amended on December 14, 1998
        10.23(10)      Amendments to the Letter Agreement between the Registrant
                       and Mr. Barish, dated as of January 19, 1999
        10.24(11)      Amendment to the Registration Rights Agreement dated
                       November 6, 1998, as amended January 19, 1999 and
                       February 23, 1999 between the Registrant and Mr. Barish
        10.25(12)      Amendment to the Lock-up Letter dated November 6, 1998,
                       as amended December 14, 1998, January 19, 1999 and
                       February 23, 1999 between the Registrant and Mr. Barish
        21.1(6)        Subsidiaries
        23.1(6)        Consent of PricewaterhouseCoopers LLP
        23.2(13)       Consent of PricewaterhouseCoopers LLP
        24.1(6)        Powers of Attorney (included in signature page)
        27.1(6)        Financial Data Schedule

----------
        (1)  Incorporated by reference to the exhibits with the corresponding
             exhibit numbers in the Registration Statement on Form S-1, as
             amended, previously filed by the Registrant (file no. 333-01490)

                                       61
<PAGE>

        (2)  Incorporated by reference to the exhibits with the corresponding
             exhibit numbers in the Registration Statement on Form S-3, as
             amended, previously filed by the Registrant (file no. 333-67101)
        (3)  Incorporated by reference to the exhibits with the corresponding
             exhibit numbers in the Registration Statement on Form S-4, as
             amended, previously filed by the Registrant (file no. 333-51655)
        (4)  Incorporated by reference to Exhibit 99.1 in the Registration
             Statement on Form S-8, as amended, previously filed by the
             Registrant (file no. 333-31683)
        (5)  Incorporated by reference to Exhibit 99.1 in the Registration
             Statement on Form S-8, as amended, previously filed by the
             Registrant (file no. 333-66659)
        (6)  Previously filed as part of the Registrant's initial Annual Report 
             on Form 10-K filed with the Commission on March 29, 1999.
        (7)  Incorporated by reference to the exhibits with the corresponding
             exhibit numbers in the Annual Report on Form 10-K for the year
             ended December 28, 1997, as amended, previously filed by the
             Registrant
        (8)  Incorporated by reference to Exhibit 10.2 in the Registration
             Statement on Form S-3, as amended, previously filed by the
             Registrant (file no. 333-67101)
        (9)  Incorporated by reference to Exhibit 10.1 in the Registration
             Statement on Form S-3, as amended, previously filed by the
             Registrant (file no. 333-67467)
        (10) Incorporated by reference to Exhibit 10.2 in the Registration
             Statement on Form S-3, as amended, previously filed by the
             Registrant (file no. 333-67467)
        (11) Incorporated by reference to Exhibit 99.1 in the Current Report on
             Form 8-K dated February 23, 1999, previously filed by the
             Registrant on February 23, 1999
        (12) Incorporated by reference to Exhibit 99.2 in the Current Report on
             Form 8-K dated February 23, 1999, previously filed by the
             Registrant on February 23, 1999
        (13) Filed herewith


(B)     REPORTS ON FORM 8-K.

               During the last quarter of the period covered by this Form 10-K,
               the Company filed one report on Form 8-K. On November 12, 1998,
               the Company filed a Current Report on Form 8-K (dated November
               10, 1998) relating to the resignation of Keith Barish as the
               Company's Chairman of the Board of Directors. Said report cited
               the appointment of William H. Baumhauer to the positions of
               President and Chief Operating Officer as reasons for Mr. Barish's
               resignation. The report included, as exhibits, (i) a letter
               agreement between the Company and Mr. Barish outlining the terms
               of Mr. Barish's resignation, which include certain registration
               rights with respect to a portion of Mr. Barish's shares of the
               Company's common stock and (ii) the press release issued by the
               Company on November 10, 1998 announcing the resignation of Mr.
               Barish and the election of Robert Earl as Chairman of the Board
               of Directors.


                                       62
<PAGE>

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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 on the 8th day of
April, 1999.

                                    By: /s/ THOMAS AVALLONE
                                       -----------------------------------------
                                    Thomas Avallone
                                    Executive Vice President, Chief Financial
                                    Officer and Chief Accounting Officer