SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------------
For the Quarter Ended: August 31, 2000
Commission File Number N/A
Louisiana Casino Cruises, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-1196619
- ------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
organization or incorporation)
1717 River Road North
Baton Rouge, Louisiana 70802
(Address of principal executive offices, including zip code)
(225) 709-7777
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, no par value
per share 984,883
- -------------------------- ---------------------------------
Class Outstanding as of October 6, 2000
LOUISIANA CASINO CRUISES, INC.
INDEX
PAGE NO.
Part I Financial Information
Balance Sheets.........................................1
Statements of Operations...............................2
Statement of Changes in Shareholders' Equity...........3
Statements of Cash Flows...............................4
Notes to Financial Statements..........................5
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................9
Quantitative and Qualitative Disclosures About
Market Risk...........................................11
Part II Other Information................................12
Signatures..................................................13
LOUISIANA CASINO CRUISES, INC.
BALANCE SHEETS
(in thousands, except share data)
August 31, November 30,
2000 1999
------- ---------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 19,233 $ 17,697
Receivables, less allowance
for doubtful accounts of $227
and $152, respectively 947 468
Prepaid and other current assets 1,518 1,214
Income tax receivable - 487
Inventories 159 134
Deferred tax asset - current 569 1,474
------- --------
Total current assets 22,426 21,474
Property and equipment, at cost,
less accumulated depreciation
of $23,483 and $21,011, respectively 42,817 42,403
Other assets 1,589 1,887
------- --------
Total assets $ 66,832 $ 65,764
======= ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 2,681 $ 3,285
Accrued liabilities 1,575 2,080
Accrued interest 1,458 2,915
Other current liabilities 251 314
------- --------
Total current liabilities 5,965 8,594
Senior secured notes 53,000 53,000
Deferred tax liability 4,478 4,044
------- --------
Total liabilities 63,443 65,638
------- --------
Shareholders' equity:
Common stock, no par value:
10,000,000 shares authorized;
984,883 shares issued and
outstanding 1 1
Retained earnings 3,388 125
------- --------
Total shareholders' equity 3,389 126
------- --------
Total liabilities and
shareholders' equity $ 66,832 $ 65,764
======= ========
The accompanying notes are an integral
part of these financial statements
1
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Nine Months
Ended Ended
---------------- -----------------
August August August August
31, 31, 31, 31,
2000 1999 2000 1999
------- -------- -------- --------
Net revenues:
Casino $22,139 $21,295 $67,751 $62,001
Food and beverage 1,705 1,637 5,456 4,815
Other 221 291 627 619
------- -------- -------- --------
24,065 23,223 73,834 67,435
Less: promotional allowance 1,449 1,225 4,506 3,611
------- -------- -------- --------
Net revenues 22,616 21,998 69,328 63,824
------- -------- -------- --------
Costs and expenses:
Casino 10,812 9,937 31,603 28,641
Food and beverage 261 537 908 1,361
Selling, general and
administrative 6,486 6,174 19,291 18,077
Depreciation and
amortization 786 1,372 3,685 3,946
------- -------- -------- --------
Total operating expenses 18,345 18,020 55,487 52,025
------- -------- -------- --------
Operating income 4,271 3,978 13,841 11,799
Other income (expense):
Interest income 149 115 413 533
Interest expense (1,523) (1,498) (4,545) (5,234)
------- -------- -------- --------
Income before income taxes and
extraordinary loss 2,897 2,595 9,709 7,098
Provision for income taxes 1,229 1,006 3,885 2,768
------- -------- -------- --------
Income before extraordinary loss 1,668 1,589 5,824 4,330
Extraordinary loss on early
extinguishment of debt, net - - - 1,731
------- -------- -------- --------
Net income $1,668 $1,589 $5,824 $2,599
======= ======== ======== ========
Basic and diluted earnings per share:
Earnings before $1.69 $1.59 $5.91 $4.34
Extraordinary loss per share - - - (1.74)
------- -------- -------- --------
Earnings per share $1.69 $1.59 $5.91 $2.60
======= ======== ======== ========
Weighted average common shares
outstanding 984,883 996,883 984,883 996,883
======= ======== ======== ========
Weighted average common
equivalent shares outstanding 984,883 996,883 984,883 996,883
======= ======== ======== ========
The accompanying notes are an integral
part of these financial statements.
2
LOUISIANA CASINO CRUISES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)
Common Stock
---------------- Retained
Shares Amount Earnings Total
------- ------- --------- ---------
Balance at November 30, 1999 984,883 $ 1 $ 125 $ 126
Dividends paid to common
stockholders - - (2,561) (2,561)
Net income - - 5,824 5,824
------- ------- --------- ---------
Balance at August 31, 2000 984,883 $ 1 $ 3,388 $ 3,389
======= ======= ========= =========
The accompanying notes are an integral
part of these financial statements.
3
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
---------------------
August 31, August 31,
2000 1999
-------- -------
Net income $ 5,824 $ 2,599
Net cash flows from operating activities:
Extraordinary loss on early extinguishment
of debt, net - 1,731
Depreciation and amortization 3,685 3,946
Amortization of deferred costs 124 209
Provision for doubtful accounts 88 74
Increase in receivables (566 ) (143 )
(Increase) decrease in inventories (25 ) 304
Decrease in income taxes receivable 487 -
(Increase) decrease in prepaid and other assets (132 ) 798
(Increase) decrease in deferred tax asset 905 (221 )
Increase (decrease) in accrued interest (1,457 ) 1,357
Increase in deferred tax liability 434 309
Increase (decrease) in accounts payable and
other liabilities (1,172 ) 2,148
-------- -------
Net cash provided by operating activities 8,195 13,111
-------- -------
Cash flows from investing activities :
Capital expenditures (4,130 ) (3,518 )
Proceeds from disposal of fixed assets 32 -
-------- -------
Net cash used by investing activities (4,098 ) (3,518 )
-------- -------
Cash flows from financing activities :
Proceeds from senior secured notes - 55,000
Repayment of increasing rate notes - (50,000)
Purchase of senior secured notes - ( 2,000)
Payment of deferred financing costs - ( 1,158)
Purchase of common stock warrants - ( 3,749)
Dividends paid to common stockholders (2,561 ) ( 2,562)
-------- -------
Net cash used by financing activities (2,561 ) ( 4,469)
-------- -------
Net increase in cash and cash equivalents 1,536 5,124
Cash and cash equivalents, at beginning of period 17,697 13,525
-------- -------
Cash and cash equivalents, at end of period $19,233 $18,649
======== =======
Supplemental disclosure of cash flow information:
Cash paid for interest $ 6,002 $ 3,775
======== =======
Cash paid for income taxes $ 2,926 $ 858
======== =======
The accompanying notes are an integral
part of these financial statements
4
LOUISIANA CASINO CRUISES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Louisiana Casino Cruises, Inc., a Louisiana corporation, (the "Company"),
owns and operates a riverboat gaming facility in Baton Rouge, Louisiana (the
"Casino Rouge"). The Casino Rouge is managed by CRC Holdings, Inc., doing
business as Carnival Resorts and Casinos ("CRC"), an experienced operator of
gaming facilities and owner of approximately 60% of the Company's common stock.
The Louisiana Gaming Control Board (the "Board") has granted the Company a
license to conduct riverboat gaming activities. The Company is in the process of
renewing its gaming license (See Note 4).
A description of the organization and operations of the Company, its
significant accounting policies and its financial condition and results of
operations as of November 30, 1999, are contained in the Company's audited
financial statements included in its annual report filed on Form 10-K. The
accompanying unaudited financial statements for the three and nine month periods
ended August 31, 2000 and 1999, should be read in conjunction with the 1999
audited financial statements and the related notes thereto.
The unaudited financial statements as of August 31, 2000, and for the three
and nine month periods ended August 31, 2000 and 1999, and the notes thereto
have been prepared in accordance with generally accepted accounting principles
for interim financial information and Rule 10-01 of Regulation S-X. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
have been included to present fairly, in all material respects, the financial
position of the Company as of August 31, 2000, and the results of its operations
and cash flows for the three and nine month periods ended August 31, 2000, and
1999. Operating results for the three and nine month periods ended August 31,
2000, and 1999, are not necessarily indicative of the results that may be
expected for a full year.
Certain amounts in the prior periods have been reclassified to conform to
the current period presentation.
On July 31, 2000, the Company announced that CRC and the Company's minority
shareholders had signed definitive agreements for CRC and the Company to be
acquired by Penn National Gaming, Inc. ("Penn") (NASDAQ: PENN). The definitive
agreements provide for the acquisition to be consummated on or before October
31, 2001, although there can be no assurances that the transaction will ever be
consummated. The transaction is subject to regulatory and other approvals,
financing and other customary closing conditions. Penn owns, operates and
conducts wagering at its Penn National Race Course, Pocono Downs Racetrack and
ten off-track wagering (OTW) facilities in Pennsylvania. Penn also owns and
operates Charles Town Races, a live thoroughbred racing facility in Jefferson
County, West Virginia, which also features 1,500 slot machines. Penn's 50%-owned
joint venture, Pennwood Racing, Inc., owns and operates Freehold Raceway and is
under a long-term lease to operate Garden State Park in New Jersey. On August 8,
2000, Penn acquired the Casino Magic hotel, casino, golf resort and marina in
Bay St. Louis, Mississippi and the Boomtown Biloxi casino in Biloxi, Mississippi
from Pinnacle Entertainment, Inc. (NYSE: PNK). Penn serves as the exclusive U.S.
wagering hub operator for the TrackPower direct-to-home pari-mutual digital
satellite service (Dish Network), which also distributes races conducted at Penn
facilities and certain races simulcast through Penn.
PROMOTIONAL ALLOWANCES
The estimated direct costs of providing promotional allowances for food and
beverage and other items have been classified as casino costs and totaled
$838,000 and $2,530,000 for the three and nine months ended August 31, 2000,
respectively, and $717,000 and $2,176,000 for the three and nine months ended
August 31, 1999, respectively.
5
NOTE 2 - SENIOR SECURED NOTES, FIRST MORTGAGE NOTES, AND REDEEMABLE COMMON
STOCK WARRANTS
1999 NOTES
Pursuant to an indenture, dated as of January 27, 1999, between the
Company and U.S. Bank Trust National Association, as Trustee (the "1999
Indenture"), on January 27, 1999, the Company issued $55,000,000 of its 11%
Senior Secured Notes (the "1999 Notes"), due December 1, 2005, in an offering
under Rule 144A under the Securities Act of 1933 ("Rule 144A") with interest due
semi-annually beginning June 1, 1999. In May 1999, the Company commenced a
registered exchange offer for the private 1999 Notes and issued an equal amount
of publicly tradable 1999 Notes in exchange therefor. The registered 1999 Notes
are identical in all material respects to the private 1999 Notes for which they
were exchanged, other than certain provisions relating to registration rights
and related liquidated damages. The Company used the proceeds from the offering
of the 1999 Notes to defease and redeem its 1998 Notes (see below) and for
general corporate purposes. On May 28, 1999, the Company purchased $2,000,000 of
the 1999 Notes at the market price of $2,010,000 plus accrued interest.
The 1999 Notes are collateralized by substantially all of the Company's
assets, other than certain excluded assets. The 1999 Indenture includes certain
covenants which limit the ability of the Company and its identified "restricted
subsidiaries," (as defined in the 1999 Indenture), subject to certain
exceptions, to: (i) incur additional indebtedness; (ii) pay dividends or other
distributions, repurchase capital stock or other equity interest or subordinated
indebtedness; (iii) enter into certain transactions with affiliates; (iv) create
certain liens or sell certain assets; and (v) enter into certain mergers and
consolidations.
Under the terms of the 1999 Indenture, after December 1, 2002, the Company
may, at its option, redeem all or some of the 1999 Notes at a premium that will
decrease over time from 105.5% to 100% of their face amount, plus interest.
Prior to December 1, 2001, if the Company publicly offers certain equity
securities the Company may, at its option, apply certain of the net proceeds
from those transactions to the redemption of up to one-third of the principal
amount of the 1999 Notes at 111% of their face amount, plus interest. If the
Company goes through a change in control, it must give holders of the 1999 Notes
the opportunity to sell their 1999 Notes to the Company at 101% of their face
amount, plus interest. If the proposed transactions involving the Company, CRC
and Penn are consummated, it is anticipated that the Company will implement a
tender offer for its outstanding 1999 Notes.
1998 NOTES
Pursuant to an indenture, dated as of November 15, 1998, between the
Company and U.S. Bank Trust National Association, as Trustee (the "1998
Indenture"), on November 15, 1998, the Company issued in an offering pursuant to
Rule 144A, $50,000,000 of Senior Secured Increasing Rate Notes (the "1998
Notes"), due December 1, 2001. On November 25, 1998, the proceeds from this
offering were placed in escrow with The Bank of New York, as successor Trustee,
to repay upon maturity the aggregate principal amount of $43,827,000 and accrued
interest outstanding on the 1993 Notes (see below).
The 1998 Notes were collateralized by substantially all assets of the
Company, bore interest at an increasing rate (initially 12.25%), were defeased
on January 27, 1999, and redeemed on February 24, 1999, from the proceeds of the
offering of the 1999 Notes. The Company incurred an extraordinary loss from
early extinguishment of the 1998 Notes of $1,731,000, net of a tax benefit of
$1,106,000.
1993 NOTES AND REDEEMABLE COMMON STOCK WARRANTS
Pursuant to an indenture, dated as of December 1, 1993, between the
Company and The Bank of New York, as successor trustee, the Company issued
$51,000,000 of first mortgage notes (the "1993 Notes") in a private placement
6
on December 1, 1993. The 1993 Notes were issued with 153,000 detachable warrants
to purchase one share of the Company's common stock, no par value, at a price of
$0.01 per share. Pursuant to the terms of the warrants the warrantholders had
the right to require the Company to redeem the warrants at a price per warrant
equal to the value of the Company's common stock as of December 1, 1998, as
determined by two independent investment banking firms. On December 1, 1998, the
holders of 138,900 warrants elected to have the Company redeem the warrants. On
March 1, 1999, the Company received valuations from the two investment banking
firms. Based upon the average of the values determined by the investment banking
firms, on March 8, 1999, the Company paid $3,749,000 to the holders of 138,900
warrants who exercised their put rights.
On December 1, 1998, the holders of the remaining 14,100 warrants elected
to exercise their rights to purchase an equal number of shares of the Company's
common stock at a price of $0.01 per share. On September 21, 1999, at a previous
warrantholder's request, the Company purchased 12,000 shares of the Company's
common stock for $324,000, the same price originally offered for the warrants.
NOTE 3 - EARNINGS PER COMMON SHARE
For the three and nine month periods ended August 31, 2000 and 1999, basic
and diluted earnings per share earnings per share is calculated, in accordance
with Statement of Financial Accounting Standard No. 128, "Earnings Per Share",
by dividing net income assigned to common shareholders by the
weighted average common shares outstanding.
NOTE 4 - CONTINGENCIES
Riverboat gaming licenses in Louisiana are issued for an initial five-year
term with annual renewals thereafter. The Company's original five-year gaming
license was up for renewal in July 1999. On June 15, 1999, the Company received
a conditional license approval from the Board until the completion of their
renewal investigation. As part of the Board's renewal investigation, the Company
and each of its officers, directors, managers, principal shareholders and their
officers and directors and key gaming employees are subject to strict scrutiny
and full suitability and approval. The factors that the Board has stated it is
considering, among others, in order to renew the Company's license, include the
Company's compliance with all the requirements of the Louisiana Riverboat
Economic Development and Gaming Control Act, the approval of various systems and
procedures, the demonstration of good character (including an examination of
criminal and civil records) and methods of business practice. The Board may also
seek to impose, as a condition of the license renewal, certain Louisiana,
minority and female employment and procurement goals. The Company believes it
will be successful in receiving a renewal of its license from the Board, but no
assurance can be given as to whether or when the license will be extended, or
the extent of any restrictions that may be imposed as a condition to the
issuance thereof. The loss, suspension or failure to obtain a renewal of such
license would have a material adverse effect on the Company.
The Company is also involved in various legal proceedings; however, in
the opinion of management, the resolution of these matters will not have a
material effect on the financial statements or the results of operations of the
Company.
NOTE 5 - DIVIDENDS
The Company paid the following dividends on its common stock:
Payment Dividend Aggregate
Date Per Share Payment
------------- ---------- -------------
January 14, 2000 $0.54 $ 532,000
March 24, 2000 $0.98 $ 965,000
June 19, 2000 $1.08 $1,064,000
September 15, 2000 $0.85 $ 837,000
7
NOTE 6 - INCOME TAXES
The components of the provision for income taxes were as follows:
Three Months Ended Nine Months Ended
--------------------- -----------------------
August 31, August 31, August 31, August 31,
2000 1999 2000 1999
---------- ---------- ----------- -----------
Tax provision:
Current tax provision $ 676,000 $ 788,000 $ 2,546,000 $ 1,673,000
Deferred tax provision 553,000 218,000 1,339,000 1,095,000
---------- ---------- ----------- -----------
Total provision for
income tax $1,229,000 $1,006,000 $ 3,885,000 $ 2,768,000
========== ========== =========== ===========
For the three and nine months ended August 31, 1999, the provision
components discussed above exclude the tax benefit of $1,106,000 derived from
the early extinguishment of 1998 Notes discussed in Note 2.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
Except for historical information contained herein, the matters discussed
herein are forward looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements involve risks and uncertainties, many of which are beyond the
Company's control, including but not limited to risks relating to local and
regional economic and business conditions, changes or developments in laws,
regulations or taxes, actions taken or to be taken by third parties,
competition, the loss of any licenses or permits or the Company's failure to
obtain an unconditional renewal of its gaming license on a timely basis, the
failure of the Company's transaction with CRC and Penn to be consummated, or
other factors discussed elsewhere in this report and the documents filed by the
Company with the Securities and Exchange Commission. These factors may cause the
Company's results to differ materially from the statements made in this report
or otherwise made by or on behalf of the Company.
General
The Casino Rouge is one of two riverboat gaming facilities in Baton Rouge.
Current Louisiana legislation authorizes 15 riverboat casinos statewide and one
land-based casino in New Orleans. In addition, three casinos operate in
Louisiana on Native American land under compact agreements with the state. The
Casino Rouge opened on December 28, 1994. The Casino Rouge is managed by CRC, an
experienced operator of gaming facilities and owner of approximately 60% of the
Company's common stock.
On July 31, 2000, the Company announced that CRC and the Company's
minority shareholders had signed definitive agreements for CRC and the Company
to be acquired by Penn National Gaming, Inc. ("Penn") (NASDAQ: PENN). The
definitive agreements provide for the acquisition to be consummated on or before
October 31, 2001, although there can be no assurances that the transaction will
ever be consummated. The transaction is subject to regulatory and other
approvals, financing and other customary closing conditions. Penn owns, operates
and conducts wagering at its Penn National Race Course, Pocono Downs Racetrack
and ten off-track wagering (OTW) facilities in Pennsylvania. Penn also owns and
operates Charles Town Races, a live thoroughbred racing facility in Jefferson
County, West Virginia, which also features 1,500 slot machines. Penn's 50%-owned
joint venture, Pennwood Racing, Inc., owns and operates Freehold Raceway and is
under a long-term lease to operate Garden State Park in New Jersey. On August 8,
2000, Penn acquired the Casino Magic hotel, casino, golf resort and marina in
Bay St. Louis, Mississippi and the Boomtown Biloxi casino in Biloxi, Mississippi
from Pinnacle Entertainment, Inc. (NYSE: PNK). Penn serves as the exclusive U.S.
wagering hub operator for the TrackPower direct-to-home pari-mutual digital
satellite service (Dish Network), which also distributes races conducted at Penn
facilities and certain races simulcast through Penn.
Results of Operations
Three months ended August 31, 2000, compared to three months ended August
31, 1999
The Company's taxable casino revenues increased 1.6% and customer counts
decreased 0.1% for the three months ended August 31, 2000, compared to the three
months ended August 31, 1999. According to public reports filed with the Board,
the Company's competitor's riverboat taxable casino revenues and customer counts
increased 29.2% and 18.5%, respectively, for the three months ended August 31,
2000, compared to the three months ended August 31, 1999. Those public reports
also state that the Company's overall share of the Baton Rouge gaming market for
the three months ended August 31, 2000, and 1999, was 54.8% and 60.7% of taxable
casino revenues and 55.4% and 59.6% of admissions, respectively.
9
The Company's casino revenues were $22,139,000 and $21,295,000 for the
three month periods ended August 31, 2000, and 1999, respectively. The increase
in casino revenue was due to an increase in the win per passenger for the three
months ended August 31, 2000, of $2.16 to $54.70 compared to $52.54 for the
three months ended August 31, 1999.
Casino expenses for the three months ended August 31, 2000, and 1999, were
$10,812,000 and $9,937,000, respectively, which represented 48.8% and 46.7%
respectively, of casino revenues. Overall casino expenses increased during the
2000 period primarily due to the market's increased gaming activity resulting in
increased gaming taxes and customer giveaways.
Selling, general and administrative expenses for the three months ended
August 31, 2000, were $6,486,000 compared to $6,174,000 for the three months
ended August 31, 1999. The increase in selling, general and administrative
expenses was mainly due to increased marketing expenses.
Depreciation and amortization for the three months ended August 31, 2000,
were $786,000 compared to $1,372,000 for the three months ended August 31, 1999.
The decrease in depreciation and amortization expenses was mainly due to
equipment becoming fully depreciated.
Nine months ended August 31, 2000, compared to nine months ended August
31, 1999
The Company's taxable casino revenues and customer counts increased 8.3%
and 2.1%, respectively, for the nine months ended August 31, 2000, compared to
the nine months ended August 31, 1999. According to public reports filed with
the Board, the Company's competitor's riverboat taxable casino revenues and
customer counts increased 37.7% and 14.3%, respectively, for the nine months
ended August 31, 2000, compared to the nine months ended August 31, 1999. Those
public reports also state that the Company's overall share of the Baton Rouge
gaming market for the nine months ended August 31, 2000, and 1999, was 56.2% and
62.0% of taxable casino revenues and 56.3% and 59.0% of admissions,
respectively.
The Company's casino revenues were $67,751,000 and $62,001,000 for the
nine month periods ended August 31, 2000, and 1999, respectively. The increase
in casino revenue was due to an increase in customer counts and increase in win
per passenger for the nine months ended August 31, 2000, of $3.72 to $56.29
compared to $52.57 for the nine months ended August 31, 1999.
Casino expenses for the nine months ended August 31, 2000, and 1999, were
$31,603,000 and $28,641,000, respectively, which represented 46.6% and 46.2%,
respectively, of casino revenues. Overall casino expenses increased during the
2000 period primarily due to the market's increased gaming activity and the
Company's increase in patrons, resulting in increased gaming and patron taxes.
Selling, general and administrative expenses for the nine months ended
August 31, 2000, were $19,291,000 compared to $18,077,000 for the nine months
ended August 31, 1999. The increase in selling, general and administrative
expenses was mainly due to an increase in revenue-based rent, management fees
and marketing expenses.
Depreciation and amortization for the nine months ended August 31, 2000,
were $3,685,000 compared to $3,946,000 for the nine months ended August 31,
1999. The decrease in depreciation and amortization expenses was mainly due to
equipment becoming fully depreciated.
Net interest expense was $4,132,000 and $4,701,000 for the nine months
ended August 31, 2000, and 1999, respectively. The decrease in interest expense
is related to the early extinguishment of the 1998 Notes during the 1999 period.
10
Liquidity and Capital Resources
During the nine months ended August 31, 2000, the Company generated
$8,195,000 of cash flows from operations as compared to $13,111,000 for the nine
months ended August 31, 1999. The decrease in cash flows from operations was
primarily due to an increase in accrued interest for the nine months ended
August 31, 1999, as a result of interest due on the 1998 Notes being paid in
November 1998, offset by an increase in net income during the nine months ended
August 31, 2000.
Cash flows used by investing activities were $4,098,000 and $3,518,000,
respectively, for the nine months ended August 31, 2000 and August 31, 1999. The
increase in the use of funds was primarily due to expenditures related to
renovation of Casino Rouge and expansion of the Company's parking lot.
Financing activities for the nine months ended August 31, 2000, used
$2,561,000 of cash flow to pay dividends on the Company's common stock.
Financing activities for the nine months ended August 31, 1999, used cash flows
for dividend payments to shareholders of $2,562,000, the purchase of common
stock warrants for $3,749,000 and the purchase of $2,000,000 of the outstanding
1999 Notes offset by the net proceeds from the issuance of the 1999 Notes.
The Company believes that cash on hand and operating cash flows will be
sufficient to fund its current operations, capital expenditures and debt service
obligations. As a result of debt restrictions, the ability of the Company to
incur additional indebtedness to fund operations or to make capital expenditures
is limited. To the extent that cash flow from operations is insufficient to
cover cash requirements, the Company would be required to curtail or defer
certain capital expenditures under these circumstances, which could have an
adverse effect on the Company's operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 27 Financial Data Schedule as of August 31, 2000
and for the nine months then ended
(b) Reports on Form 8-K
On August 2, 2000, the Company filed a report dated July 31, 2000,
under Item 5, of Form 8-K reporting that CRC and the Company's minority
shareholders had entered into definitive agreements to be acquired by
Penn.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOUISIANA CASINO CRUISES, INC.
Dated: October 6, 2000 By: /s/ W. Peter Temling
W. Peter Temling,
Chief Financial Officer
13