UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported): October 9, 1996
AMERISTAR CASINOS, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-22494 88-0304799
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation or Number)
organization)
P.O. Box 92200
Henderson, Nevada 89009
(Address of principal executive offices and Zip Code)
(702) 737-0777
(Registrant's telephone number, including area code)
EXPLANATORY NOTE. On October 9, 1996, Gem Gaming, Inc.
("Gem"), a Nevada corporation, was merged with and
into Ameristar Casino Las Vegas, Inc. ("ACLVI"), a
Nevada corporation and a wholly owned subsidiary of
Ameristar Casinos, Inc. (the "Company"). The merger of Gem
into ACLVI (the "Merger") was consummated pursuant to a
Merger Agreement originally entered into as of May 31, 1996,
among the Company, ACLVI, Gem and Gem's stockholders, and
amended as of July 2, 1996 and on October 2, 1996
effective as of September 27, 1996.
On October 24, 1996, the Company filed with
the Securities and Exchange Commission (the "Commission") a
Report on Form 8-K (the "Initial 8-K Report") with respect
to the Merger and the resulting acquisition of assets,
which include The Reserve Hotel & Casino under development
in Henderson, Nevada. Pursuant to clause (a)(4) of Item 7
of Form 8-K, the Initial 8-K Report did not
include the historical Gem
financial statements and the pro forma financial
information of the Company (the "Financial Information")
and instead contained an undertaking to file the
Financial Information with the Commission in an amendment
to the Initial 8-K Report as soon as practicable, but not
later than December 23, 1996. This amendment is being filed
for the purpose of satisfying the Company's undertaking
to file the Financial Information, and this amendment
should be read in conjunction with the Initial 8-K Report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of the Businesses Acquired.
The balance sheets of Gem as of December 31,
1994 and 1995 and as of October 8, 1996, and the
related statements of operations, stockholders'
equity and cash flows for the period from
Gem's inception (March 9, 1994) to December 31,
1994, for the year ended December 31, 1995 and
for the period from January 1, 1996 to October
8, 1996, and cummulative for the period from
inception to October 8, 1996, together with the
related notes and audit report of Arthur Andersen
LLP, are set forth below.
(b) Pro Forma Financial Information.
Set forth below are the following unaudited
pro forma financial statements:
1. Introduction to Pro Forma Financial Statements.
2. Pro Forma Balance Sheet of the Company as of
September 30, 1996.
3. Pro Forma Statement of Income of the Company
for the Nine Months Ended September 30, 1996.
4. Pro Forma Statement of Income of the Company
for the Year Ended December 31, 1995.
5. Notes to Pro Forma Financial Statements.
(c) Exhibits.
23.1 Consent of Arthur Andersen LLP.
Item 7.(a) Financial Statements of the Businesses Acquired.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Ameristar Casinos, Inc.:
We have audited the accompanying balance sheets of GEM GAMING,
INC. (a Nevada corporation in the development stage, the
"Company") as of December 31, 1994 and 1995 and October 8,
1996; the related statements of operations, stockholders'
equity and cash flows for the period from inception (March 9,
1994) to December 31, 1994, for the year ended December 31,
1995 and for the period from January 1, 1996 to October 8,
1996; and the cumulative statements of operations and cash
flows for the period from inception to October 8, 1996. 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 in accordance with generally accepted
auditing standards. Those standards 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. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Gem Gaming, Inc. as of December 31, 1994 and 1995
and October 8, 1996; the results of its operations and its cash
flows for the period from inception to December 31, 1994, for
the year ended December 31, 1995 and for the period from
January 1, 1996 to October 8, 1996; and the cumulative results
of its operations and its cash flows for the period from
inception to October 8, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
November 15, 1996
GEM GAMING, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
ASSETS
December 31, October 8,
-----------------------
1994 1995 1996
---------- ------------ -----------
CURRENT ASSETS:
Cash and cash equivalents $5,246,000 $ 3,537,000 $ 20,000
Notes receivable 3,200,000 - -
Interest receivable 24,000 - -
Marketable securities available
for sale - 1,803,000 -
Receivable from majority
stockholder - - 126,000
---------- ---------- --------
8,470,000 5,340,000 146,000
---------- ---------- --------
PROPERTY AND EQUIPMENT:
Land - 5,052,000 5,052,000
Construction in progress - 1,185,000 19,526,000
---------- ---------- -----------
- 6,237,000 24,578,000
---------- ---------- -----------
PREOPENING COSTS AND OTHER ASSETS 733,000 278,000 1,873,000
---------- ----------- -----------
$9,203,000 $11,855,000 $26,597,000
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 45,000 $ - $ 12,000
Construction contracts payable - 102,000 2,289,000
Accrued liabilities - - 133,000
Current obligations under
capital lease - - 189,000
---------- ---------- ----------
45,000 102,000 2,623,000
OBLIGATIONS UNDER CAPITAL LEASE,
net of current maturities - - 1,151,000
LONG-TERM DEBT - - 11,400,000
----------- ---------- -----------
45,000 102,000 15,174,000
----------- ---------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - no par or
stated value; Authorized -
10,000 shares; Issued and
outstanding: 100, 5,000
and 4,900 shares,
respectively 1,000 12,249,000 12,249,000
Retained earnings (accumulated
deficit) during the
development stage 9,157,000 862,000 (826,000)
Unrealized holding loss on
marketable securities - (1,358,000) -
---------- ----------- -----------
9,158,000 11,753,000 11,423,000
---------- ----------- -----------
$9,203,000 $11,855,000 $26,597,000
========== =========== ===========
The accompanying notes are an integral part of these statements.
GEM GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Inception Cumulative
(March 9, January 1, January 1, From
1994) 1995 1996 Inception
Through Through Through Through
December 31, December 31, October 8, October 8,
1994 1995 1996 1996
INCOME:
Sale of interest in
Mesquite Project $8,933,000 $ $ - $ 8,933,000
Interest income 291,000 221,000 24,000 536,000
Dividend income - 142,000 3,000 145,000
Gain (loss) on sale
of marketable
securities - 490,000 (1,600,000) (1,110,000)
---------- --------- ----------- ----------
9,224,000 853,000 (1,573,000) 8,504,000
---------- --------- ----------- ----------
EXPENSES:
General and
administrative 66,000 256,000 - 322,000
---------- ----------- ----------- ----------
Net income (loss) $9,158,000 $ 597,000 $(1,573,000) $8,182,000
========== =========== =========== ==========
The accompanying notes are an integral part of these statements.
GEM GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY
Retained
Earnings
(Accumulated Unrealized
Deficit) Holding
during the Loss on
Common Stock Development Marketable
Shares Amount Stage Securities Total
------ ------------ ---------- ---------- ----------
Stock issued at
inception for cash
March 9, 1994 100 $ 1,000 $ - $ - $ 1,000
Net income from
inception to
December 31, 1994 - - 9,158,000 - 9,158,000
Distributions - - (1,000) - (1,000)
------ ------------- ------------ ---------- -----------
Balance,
December 31, 1994 100 1,000 9,157,000 - 9,158,000
Stock issued
April 12, 1995
to officers 250 256,000 - - 256,000
Stock issued
April 12, 1995 for
marketable
securities received
July 3, 1995 250 6,940,000 - - 6,940,000
Stock issued
April 12, 1995 for
land received
October 16, 1995 4,400 5,052,000 - - 5,052,000
Net income for
the year ended
December 31, 1995 - - 597,000 - 597,000
Unrealized holding
loss on marketable
securities - - - (1,358,000)(1,358,000)
Distributions - - (8,892,000) - (8,892,000)
------ ------------ ----------- ---------- -----------
Balance,
December 31, 1995 5,000 12,249,000 862,000(1,358,000)11,753,000
Net loss for the
period from
January 1, 1996
to October 8, 1996 - - (1,573,000) - (1,573,000)
Realization of
previously
unrealized
holding loss - - - 1,358,000 1,358,000
Forfeiture of shares
held by officer (100) - - - -
Distributions - - (115,000) - (115,000)
----- -------------- ----------- --------- ---------
Balance,
October 8, 1996 4,900 $ 12,249,000 $ (826,000) $ - $11,423,000
===== ============= =========== ======= ==========
The accompanying notes are an integral part of these statements.
GEM GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
Inception Cumulative
(March 9, January 1, January 1, from
1994) 1995 1996 Inception
Through Through Through Through
December 31, December 31, October 8, October 8,
1994 1995 1996 1996
----------- ---------- ----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $9,158,000 $ 597,000 $(1,573,000) $ 8,182,000
Reconciliation of net
income (loss) to net cash
provided by operating
activities:
Loss (gain) on sale of
marketable securities - (490,000) 1,600,000 1,110,000
Employment services
provided in
consideration for the
issuance of common
stock - 256,000 - 256,000
Warrant received (733,000) - - (733,000)
Change in assets and
liabilities due to
operating activities:
Notes receivable (3,200,000) 3,200,000 - -
Interest receivable (24,000) 24,000 - -
Receivable from
majority stockholder - - (126,000) (126,000)
Accounts payable 45,000 (45,000) 12,000 12,000
Accrued liabilities - - 133,000 133,000
---------- ----------- ----------- ----------
Net cash provided by
operating activities 5,246,000 3,542,000 46,000 8,834,000
---------- ----------- ----------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from the sale of
marketable securities - 4,262,000 1,560,000 5,822,000
Capital expenditures - (1,092,000) (14,886,000) (15,978,000)
Preopening costs - (262,000) (1,522,000) (1,784,000)
Net cash provided by
(used in) investing
activities - 2,908,000 (14,848,000) (11,940,000)
----------- ---------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from the issuance
of stock 1,000 - - 1,000
Proceeds from issuance of
long-term debt - - 11,400,000 11,400,000
Distributions paid (1,000) (8,159,000) (115,000) (8,275,000)
---------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities - (8,159,000) 11,285,000 3,126,000
---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH 5,246,000 (1,709,000) (3,517,000) 20,000
CASH, beginning of period - 5,246,000 3,537,000 -
---------- ----------- ---------- -----------
CASH, end of period $5,246,000 $ 3,537,000 $ 20,000 $ 20,000
========== =========== ========== ===========
GEM GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS (continued)
Inception Cumulative
(March 9, January 1, January 1, from
1994) 1995 1996 Inception
Through Through Through Through
December 31, December 31, October 8, October 8,
1994 1995 1996 1996
------------ ------------ ---------- -----------
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION--
Interest and dividends
received $ 267,000 $ 387,000 $ - $ 654,000
========= ========== ========== ==========
Non-cash investing and
financing activities:
Construction in
progress included in
construction
contracts payable $ - $ 93,000 $2,217,000 $ 2,217,000
========== =========== ========== ===========
Construction in
progress incurred
through a capital
lease $ - $ - $1,340,000 $1,340,000
========== =========== ========== ==========
Capitalized preopening
costs included in
construction
contracts payable $ - $ 9,000 $ 72,000 $ 72,000
========== =========== ========== ==========
Land contributed by
shareholder in
exchange for shares
of common stock $ - $ 5,052,000 $ - $5,052,000
========== =========== ========== ==========
Marketable securities
contributed by
shareholder in
exchange for shares
of common stock $ - $ 6,940,000 $ - $6,940,000
========== =========== ========== ==========
Warrant received in
consideration for
covenant not to
compete $ 733,000 $ - $ - $ -
========= =========== ========== ==========
Distribution of
warrant received in
consideration for
covenant not to
compete $ - $ 733,000 $ - $ -
========= =========== =========== ===========
The accompanying notes are an integral part of these statements.
GEM GAMING, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENT
October 8, 1996
1.ORGANIZATION AND BUSINESS
Gem Gaming, Inc. (the "Company") was incorporated on March
9, 1994, in the State of Nevada for the purpose of pursuing
the development, acquisition or management of gaming
opportunities in existing and emerging gaming jurisdictions.
In March, 1994, the Company became involved in the preliminary
development of a hotel and casino project located in
Mesquite, Nevada (the "Mesquite Project"). Gem Mesquite,
Ltd. ("GML"), an entity in which Steven W. Rebeil, the majority
stockholder of the Company (the "Majority Stockholder") holds
a 90 percent interest, purchased the land underlying the
proposed Mesquite Project from an unrelated party in exchange
for cash and a minority 10 percent interest in GML. In June,
1994, the Company sold its proprietary interests
consisting of proprietary documents, studies, designs,
analyses, drawings, proposals and projections related to
the Mesquite Project (see Note 6), and GML sold the land
in the Mesquite
Project, all to Players International, Inc.
In October, 1995, the Majority Stockholder contributed 23
acres of land located in Henderson, Nevada, near an area
commonly known as Green Valley, to the Company in consideration
for the issuance of common stock (see Note 7). It is on
this site that the Company is developing The Reserve Hotel &
Casino, a safari-themed 225-room hotel and casino. Financing
of the project has been provided in part by a construction
and reducing revolving credit agreement entered into in
January, 1996 (See Note 3).
On October 9, 1996, the Company was merged with and
into Ameristar Casino Las Vegas, Inc. ("ACLVI"), a Nevada
corporation and wholly owned subsidiary of Ameristar Casinos,
Inc., ("ACI") a publicly-traded Nevada corporation.
Under the terms of the
merger agreement, the Company's stockholders have the right
to receive the net proceeds from the sale of 7.5 million
shares of ACI's common stock that may be sold in an
underwritten offering, subject to certain reducing adjustments
aggregating $4.0 million. If an offering of at least 7.5
million shares is not completed by June 1, 1997, ACI instead
will issue promissory notes to the Company's stockholders in
an aggregate principal amount equal to 7.5 million
multiplied by the 10-day-average closing price of ACI's
stock for the 10 trading days preceding June 1, 1997,
subject to certain reduction adjustments aggregating
$4.0
million. Any promissory notes issued as merger
consideration will bear interest at an annual rate of 8.0
percent, payable monthly, and will mature on June 1, 2000.
ACI will be able to prepay the notes at any time.
As of October 8, 1996, planned principal operations have
not commenced. Accordingly, the Company has presented its
financial statements as those of a development stage
enterprise, in accordance with Statement of Financial
Accounting Standards No. 7 -
"Accounting and Reporting by Development Stage Enterprises".
Due to the extent of design changes being made to The
Reserve Hotel & Casino, neither the Company nor ACI is
currently in a position to provide information concerning
the opening date or development budget for the project.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a.Cash and cash equivalents
The Company considers all highly liquid investments with
an original maturity of three months or less to
be cash
equivalents. Such investments are carried at cost which
approximates market value.
b.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
disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
c.Construction in progress, capitalized interest
and
preopening costs
In conjunction with the development of The Reserve Hotel
& Casino, the Company has incurred $19,526,000 of
construction costs as of October 8, 1996. Costs incurred
to date pertain primarily to the design and construction
of the hotel tower and related facilities. As assets are
completed and placed in service, the costs will be
reclassified to the appropriate property and equipment
category and depreciated over their estimated useful lives.
The Company capitalizes construction period interest until
the asset is substantially complete. No interest was
capitalized prior to 1995. Capitalized interest totaled
$25,000 in 1995 and $961,000 for the period from January 1
to October 8, 1996.
Preopening costs consist primarily of salaries and
related benefits and other operating costs incurred in
connection with the development of The Reserve Hotel &
Casino. Such costs will be expensed upon commencement of
operations.
d.Marketable securities
Marketable securities held as of December 31, 1995 have
been classified as "available for sale" as defined in
Statement of Financial
Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity
Securities." Accordingly, unrealized holding gains and
losses are recorded as a separate component of equity, and
not recognized in the statement of
operations until the underlying marketable
securities are sold. All of the marketable securities
were sold in 1996, resulting in a realized loss of
$1,600,000.
e.Federal income taxes
The Company has elected under the Internal Revenue Code to
be taxed as an S corporation. In lieu of corporate income
taxes, the stockholders of the Company are taxed
on their proportionate share of the Company's
taxable income. Therefore, no provision or liability for
federal income taxes has been included in the
accompanying financial statements. Management believes
that the impact of the loss of S corporation status
resulting from the
merger described in Note 1 will not
have a material impact on the Company's financial position.
3. LONG-TERM DEBT
On January 31, 1996, the Company entered into a Construction
and Reducing Revolving Credit Agreement (the "Agreement")
with a syndicated group of lenders.
Under the terms of the Agreement, funding up to a maximum
amount
of $25,000,000 will be available to the Company for the
exclusive use in the development, design and construction of
The Reserve Hotel & Casino. Funding will be provided as
construction progresses, with interest payable monthly at the
"base rate", defined as the rate of interest in effect
for such day as publicly announced from time to time by
Bank of America in San Francisco, California, plus 1.50
percentage points, prior to the first twelve months of full
operations, thereafter changed to reflect the base rate
plus 1.375 percentage points. Quarterly reductions in the
maximum outstanding balance will commence December 31, 1996,
in the amount of $781,500 and continue on the last day of
each quarter thereafter with the unpaid balance due November
30, 2000. Amounts due under the Agreement
are
collateralized by a first deed of trust on
the
real property and a security interest in any furnishings
and fixtures, including all gaming related equipment.
The Agreement imposes various restrictions on the
Company, including limitations on its ability to incur
additional debt, commit funds for capital expenditures
and shareholder distributions, and any reorganization or
sale of assets.
In
addition, the Agreement contains certain financial
tests, including a minimum net worth and a minimum debt service
coverage and leverage ratio.
Subsequent to October 8, 1996, in connection with the
merger
described in Note 1, the
outstanding balance under the Agreement was repaid by ACI.
4.LEASES
The Company has entered into a capital lease for the primary
sign for the property. While the Company has taken
possession of certain components of the sign, it is not
currently completed and has, accordingly, been included in
construction in progress.
The lease term required a non-refundable deposit of
$360,000 payable $120,000 at inception and 3 equal payments
of $80,000 each commencing February 1, 1996. As of October
8, 1996, the last installment of $80,000 has not been paid
and is included in construction contracts payable. The
remaining amount due under the lease is $1,340,000 payable
in 120 monthly installments of $17,340 which includes
principal and interest at a rate of 9.5 percent. The
Company is also responsible for property taxes, maintenance
and insurance totaling $15,343 per month.
Future minimum lease payments required under this
capitalized lease for the five years subsequent to October 8,
1996 are as follows:
1997 $ 208,100
1998 208,100
1999 208,100
2000 208,100
2001 208,100
Thereafter 1,040,500
----------
2,081,000
Less amount representing interest (741,000)
----------
Present value of net minimum
lease payments $1,340,000
==========
5.COMMITMENTS AND CONTINGENCIES
In conjunction with the development of The Reserve Hotel
& Casino, the Company has executed certain construction and
design contracts aggregating, as of October 8, 1996,
$20,829,000. The terms of these contracts provide for
payments corresponding to the stage of completion of
the various
contracts. As of October 8, 1996, a total of $13,435,000
has been paid pursuant to these agreements.
The Company has executed long-term employment contracts with
two of its senior executives. Included within these contracts
is a provision that provides for severance pay at the rate
of three and a half times the base salary of each of the
executives in the event the executive is terminated without
cause (as defined) within 24 months immediately following a
change in control (as defined in the Nevada Gaming Control
Act) or the initial public offering of the Company's stock.
The Company has been named in an action filed by the
former owners of the land underlying the Mesquite, Nevada
hotel and casino project described in Note 1 (the "Mesquite
Lawsuit"). In
connection with the merger described in Note 1, the
stockholders of the Company have provided certain
indemnifications to ACLVI and ACI, inclusive of any
liabilities related to legal actions (as
defined)
asserted on or prior to October 9, 1996. Management believes
the ultimate outcome of the Mesquite Lawsuit and other
litigation pending against the Company in the normal course of
business will not have a material adverse impact on the
financial position or results of operations of the Company.
6.SALE OF INTEREST IN THE MESQUITE PROJECT
In conjunction with the sale to Players International, Inc.
of certain proprietary interests related to the development of
the Mesquite Project (see Note 1), the Company received $5
million in cash and an unsecured note for $3.2 million in
June, 1994. The
note receivable, which provided for the payment of
interest monthly at the rate of 9%, was paid in full in 1995,
consistent with the terms of the note. The Company also
received a warrant to purchase 100,000 (150,000 after a
subsequent stock split) shares of
Players International, Inc. common stock as
consideration for a covenant not to compete and certain
other commitments. The warrant provides for an exercise
price as determined by a multiple of 120% of the closing
market price of the stock on the date of the sale of the
proprietary interests. The warrant becomes exercisable in
increments of 37,500 (postsplit) shares beginning June, 1994
and continuing on each June thereafter through June, 1997.
The warrant expires in June, 1999, if not previously
exercised. The
estimated value of the warrant received in
consideration for the covenant not to compete is recorded in
"Preopening costs and other assets" in the accompanying
balance sheets.
Substantially all of the net proceeds from the sale of
the Company's proprietary interests in the Mesquite Project as
well as the warrant to purchase shares of Players
International, Inc. common stock were distributed to the
Company's stockholders in 1995.
7.RELATED PARTY TRANSACTIONS
On April 12, 1995, an officer of the Company was issued
150 shares of nonrestricted common stock in consideration for
past and future employment services. The issuance of
shares was recorded as a capital contribution with a
corresponding charge to general and administrative expenses
of $256,000. This amount approximates the book value of
the shares at the date of issuance, which management of
the Company believes represents their fair value.
On April 12, 1995, another officer of the Company was issued
100 shares of restricted common stock. Under the terms
of the restricted share agreement, the shares would become
vested and nonforfeitable only upon the occurrence of certain
future events. As of December 31, 1995, the specified events
had not occurred; accordingly, no compensation has been
recorded for these shares. In 1996, the shares were
forfeited in connection with the termination of the
officer's employment.
On July 3, 1995, the Majority Stockholder contributed to
the Company certain marketable securities, representing the
common shares of a single, unrelated corporation, as
consideration for 250 shares of the Company's common
stock. The marketable securities were recorded by the
Company at the fair market value of $6,940,000 as of the date
of the contribution. As of October 8, 1996, all such
securities have been sold by the Company.
On October 16, 1995, the Majority Stockholder transferred
clear title and ownership in 23 acres of land on which The
Reserve Hotel & Casino is being developed, as consideration
for 4,400 shares of the Company's common stock, issued on
April 12, 1995. The Company has recorded the land at the
cost basis to the Majority Stockholder of $5,037,000 plus
certain nominal costs incurred by the Company to properly
transfer title.
The Majority Stockholder and one of the other officers of
the Company received their compensation in 1994 and 1995
from an affiliated company for whom they also provided
substantial employment services. This affiliated company,
which is whollyowned by the Majority Shareholder, also
provided, at no cost to the Company, certain office space,
office equipment and supplies in 1994, 1995 and 1996.
Beginning in June 1996, the Company provided office space to
an affiliate at no charge to the affiliate. Also in 1996,
the Company paid certain personal costs incurred by the
Majority Stockholder totaling $126,000, which is
reflected as a "receivable from majority stockholder"
in the accompanying balance sheet as of October 8, 1996.
Item 7.(b) Pro Forma Financial Information
AMERISTAR CASINOS, INC.
PRO FORMA FINANCIAL STATEMENTS
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS
The accompanying pro forma financial statements present
pro forma financial information for Ameristar Casinos, Inc.
("ACI") on a consolidated basis giving effect to the October
9, 1996 merger of Gem Gaming, Inc. ("Gem") with and into a
wholly owned subsidiary of ACI. Under the terms of the merger
agreement, ACI agreed to pay to the stockholders of Gem the
net proceeds of a future stock offering by ACI, subject to
certain adjustments, or, if such an offering is not completed
by June 1, 1997, to issue to the Gem stockholders three-year
promissory notes in an amount to be determined by an agreed-
upon formula based on the 10-day average trading price of
ACI common stock as of June 1, 1997. Such notes would
bear interest at 8.0% per annum, payable monthly.
The actual amount of merger consideration to the
Gem stockholders is currently indeterminate and may differ
materially
from the amount assumed in the accompanying pro forma
financial statements. The terms of the merger agreement
pursuant to which the amount of the merger consideration
will be determined are described in ACI's Report on Form 8-K
filed with the Securities and Exchange Commission on October
24, 1996.
The accompanying pro forma balance sheet as of September
30, 1996 has been presented on the assumption that the
merger occurred on September 30, 1996, and on the further
assumption that ACI had issued promissory notes to the Gem
stockholders on September 30, 1996 in the principal amount of
$35,375,000. The
accompanying pro forma income statements for the year
ended December 31, 1995 and the nine months ended September
30, 1996 have been presented on the assumption that the merger
occurred on January 1, 1995, and on the further assumption
that ACI had issued promissory notes to the Gem stockholders
on January 1, 1995 in the principal amount of $35,375,000.
In both cases, the principal amount of the promissory notes
has been determined using an assumed per share value for
ACI common stock of $5.25 multiplied by 7.5 million and an
assumed formula reduction adjustment aggregating $4.0
million. In the case of the pro forma income statements
only, it has been assumed that interest began accruing on
the promissory notes to the Gem stockholders commencing August
1, 1995.
The merger will be accounted for as a purchase of
Gem's assets and assumption of Gem's liabilities by ACI.
The pro forma balance sheet at September 30, 1996
reflects data from the audited Gem balance sheet at October 8,
1996, and the pro forma statement of income for the nine
months ended September 30, 1996 reflects data from the
audited Gem statement of operations for the period from
January 1, 1996 through October 8, 1996. Management of ACI
does not believe that the use of the actual Gem financial
data at September 30, 1996 and the nine months then ended
would result in any material changes to the following pro
forma financial statements.
These pro forma financial statements are not
necessarily indicative of the results that will be
achieved for future periods as a result of the combination
of ACI and Gem, in part because the amount
of the merger consideration remains
indeterminate. These pro forma financial statements and
the related notes thereto should be read in conjunction
with the historical financial statements of ACI and Gem.
AMERISTAR CASINOS, INC.
PRO FORMA BALANCE SHEET AS OF SEPTEMBER 30, 1996
(IN THOUSANDS)
Historical Amounts Pro Forma Adjusted
ACI Gem Total Adjustments(1) Total
Current assets:
Cash and cash
equivalents $ 11,008 $ 20 $ 11,028 $ 11,028
Other current assets 9,444 126 9,570 9,570
-------- ------ -------- --------
Total current
assets 20,452 146 20,598 20,598
Land 14,989 5,052 20,041 1,948 (1) 21,989
Property, equipment and
leasehold interests,
net 175,401 19,526 194,927 194,927
Preopening costs 1,341 1,873 3,214 3,214
Other assets 2,027 - 2,027 2,027
Excess of purchase
price over fair market
value of net assets
acquired - - - 22,686(1),(5) 22,686
--------- ------- -------- -------- ---------
Total Assets $ 214,210 $26,597 $240,807 $ 24,634 $ 265,441
========= ======= ======== ======== =========
Current liabilities:
Current maturities of
long-term debt and
obligations under
capital leases $ 7,240 $ 189 $ 7,429 $ 7,429
Other current
liabilities 24,083 2,434 26,517 (1,100)(2) 25,417
--------- ------- ------- ------ -------
Total current
liabilities 31,323 2,623 33,946 (1,100) 32,846
Deferred income taxes 5,904 - 5,904 682 (1) 6,586
ACI Revolving Credit
Facility 86,500 - 86,500 12,500 (2) 99,000
Obligations to Gem
stockholders - - - 35,375 (1) 35,375
Other long-term debt
and obligations under
capital leases 19,865 12,551 32,416 (11,400)(2) 21,016
-------- ------- ------- ------- --------
Total liabilities 143,592 15,174 158,766 36,057 194,823
-------- ------- ------- ------- --------
Stockholders' equity:
Preferred stock - - - -
Common stock 204 12,249 12,453 (12,249)(3) 204
Additional paid-in
capital 43,043 - 43,043 43,043
-------- ------ ------- ------- -------
Retained earnings 27,371 (826) 26,545 826 (3) 27,371
Total
stockholders'
equity 70,618 11,423 82,041 (11,423) 70,618
-------- ------ ------- ------- -------
Total Liabilities
and Stockholders'
Equity $214,210 $ 26,597 $ 240,807 $ 24,634 $ 265,441
======== ======== ========= ======== =========
The accompanying notes should be read in conjunction with
these pro forma financial statements.
AMERISTAR CASINOS, INC. PRO
FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Amounts Pro Forma Adjusted
ACI Gem Total Adjustments (1) Total
Operating revenues $142,170 $ - $142,170 $ 142,170
-------- ------- -------- ---------
Operating costs and
expenses:
Departmental expenses 75,790 - 75,790 75,790
Selling, general and
administrative 27,631 - 27,631 158 (4) 27,789
Depreciation and
amortization 10,575 - 10,575 (5) 10,575
Preopening costs 6,147 - 6,147 6,147
Other 8,030 - 8,030 8,030
-------- ------- -------- ------ ---------
Total operating
costs and
expenses 128,173 - 128,173 158 128,331
-------- ------- -------- ------- --------
Income from
operations 13,997 - 13,997 (158) 13,839
Other income (expense):
Interest and dividend
income 311 27 338 338
Interest expense (5,602) - (5,602) (1,563)(6&7) (7,165)
Other 63 (1,600) (1,537) (1,537)
-------- ------- ------- ------ ------
Income (loss) before
income taxes 8,769 (1,573) 7,196 (1,721) 5,475
Income tax provision
(benefit) 3,198 - 3,198 (1,153) (8) 2,045
-------- ------- ------ ------- -------
Net income (loss) $ 5,571 $(1,573) $3,998 $ (568) $ 3,430
======== ======= ====== ======= =======
Earnings per share $ 0.27 $ 0.17
======== =======
Weighted average
shares outstanding 20,360 20,360
======== =======
The accompanying notes should be read in conjunction with
these pro forma financial statements.
AMERISTAR CASINOS, INC.
PRO FORMA STATEMENT OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Amounts Pro Forma Adjusted
ACI Gem Total Adjustments (1) Total
Operating revenues $123,867 $ - $ 123,867 $ 123,867
-------- ----- --------- ---------
Operating costs and
expenses:
Departmental expenses 66,865 - 66,865 66,865
Selling, general and
administrative 20,237 256 20,493 210 (4) 20,703
Depreciation and
amortization 9,721 - 9,721 (5) 9,721
Other 8,960 - 8,960 8,960
-------- ----- -------- ----- --------
Total operating
costs and
expenses 105,783 256 106,039 210 106,249
-------- ----- -------- ----- ---------
Income (loss) from
operations 18,084 (256) 17,828 (210) 17,618
Other income (expense):
Interest and dividend
income 205 363 568 568
Interest expense (3,958) - (3,958) (1,089)(6&7) 5,047)
Other - 490 490 490
-------- ----- -------- ------ ---------
Income before income
taxes 14,331 597 14,928 (1,299) 13,629
Income tax provision 5,236 - 5,236 (246)(8) 4,990
-------- ----- -------- ------ --------
Income before
extraordinary loss 9,095 597 9,692 (1,053) 8,639
Extraordinary loss on
early retirement of
debt, net of income
tax benefit of $354 (657) - (657) - (657)
------- ----- ------- ------- -------
Net income $ 8,438 $ 597 $ 9,035 $(1,053) $ 7,982
======= ===== ======= ======= =======
Earnings per share:
Income before
extraordinary loss $0.45 $ 0.42
Extraordinary loss (0.03) (0.03)
----- ------
Net income $0.41 $ 0.39
===== ======
Weighted average
shares outstanding 20,360 20,360
====== ======
The accompanying notes should be read in conjunction with
these pro forma financial statements.
AMERISTAR CASINOS, INC.
Notes to Pro Forma Financial Statements
1. Reflects the merger of Gem Gaming, Inc. with and into
a
wholly owned subsidiary of ACI, assuming this
transaction occurred on September 30, 1996 and further
reflects the issuance of $35,375,000 in promissory
notes with interest commencing as of June 1, 1997 as
consideration for Gem and retirement of the
outstanding shares of Gem. The application of
purchase accounting results in the write-up of land
owned by Gem by $1,948,000 to reflect its estimated market
value on October 9, 1996, and an associated deferred tax
liability of $682,000. The amount of $22,686,000 is
recorded as excess of purchase price over fair market
value of net assets acquired. The pro forma income
statements for the year ended December 31, 1995 and the
nine months ended September 30, 1996, have been prepared
on the assumption the merger occurred on January 1, 1995
and the issuance of the promissory notes also occurred on
January 1, 1995.
2. In connection with the Gem merger, ACI drew the
remaining
$12,500,000 on its Revolving Credit Facility. The
proceeds were used to retire the $11,400,000 of Gem debt
and to pay approximately $1,100,000 in construction
contracts payable relating to the development of
Ameristar Council Bluffs.
3. Eliminates the historical equity of Gem.
4. Adjustment reflects additional compensation expense to
a
certain executive of Gem, who upon consummation of
the acquisition, has assumed corporate-level
responsibilities with ACI. Compensation for this
executive paid by Gem in 1996 was capitalized as a
preopening cost. Compensation to this individual was
paid to him by an affiliate of Gem in 1995.
5. No depreciation expense is reflected as The Reserve Hotel
&
Casino has not commenced operations. Amortization
related to the "excess of purchase price over fair market
value of net assets acquired" will be recorded over the
estimated 40 year depreciable life of the building.
6. Reflects interest expense assuming notes are issued to
Gem's
stockholders with interest payable monthly at 8% per
annum, net of capitalized interest (see Note 7). For
the year ended December 31, 1995, interest expense of
$1,179,000 is reflected for five months, as the merger
agreement defers the commencement of interest for
approximately seven months. Interest expense of
$2,123,000 is accrued for the entire nine-month period
ended September 30, 1996.
7. Reflects additional capitalized interest of $90,000 for
the
year ended December 31, 1995 and $560,000 for the
nine months ended September 30, 1996 that would
have been recorded by ACI if the merger had occurred
January 1, 1995, due to construction of The Reserve Hotel
& Casino.
8. Adjustment reflects a provision (benefit) for federal
income
taxes, at the federal statutory corporate rate of
35 percent, as if Gem had been a tax paying entity for
the periods presented. In addition, the provision for
income taxes has been adjusted for the impact of other
pro forma adjustments, using the federal statutory rate.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the undersigned registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMERISTAR CASINOS, INC.
(Registrant)
Date: December 23, 1996
By: /s/ Thomas Steinbauer
Thomas Steinbauer,
Senior Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit Method of Filing
- ----------------------------------- --------------------------------
23.1 Consent of Arthur Andersen LLP. Filed herewith electronically.