SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
------------------------------------------------
OR
[ ] 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 33-69716
----------------------------
GB PROPERTY FUNDING CORP.
GB HOLDINGS, INC.
GREATE BAY HOTEL AND CASINO, INC.
- -------------------------------------------------------------------------------
(Exact name of each Registrant as specified in its charter)
DELAWARE 75-2502290
DELAWARE 75-2502293
NEW JERSEY 22-2242014
- --------------------------------- ---------------------------------
(States or other jurisdictions of (I.R.S. Employer
incorporation or organization) Identification No.'s)
TWO GALLERIA TOWER, SUITE 2200
13455 NOEL ROAD, LB48
DALLAS, TEXAS 75240
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
(Registrants' telephone number, including area code): (214) 386-9777
-------------------------
(NOT APPLICABLE)
- -------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report.)
Indicate by check mark whether each of the Registrants (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
Registrants were 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 last practicable date.
REGISTRANT CLASS OUTSTANDING AT AUGUST 12, 1996
- --------------------------------- ----------------------------- ------------------------------
GB Property Funding Corp. Common stock, $1.00 par value 1,000 shares
GB Holdings, Inc. Common stock, $1.00 par value 1,000 shares
Greate Bay Hotel and Casino, Inc. Common stock, no par value 100 shares
Each of the Registrants meets the conditions set forth in General
Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form
with the reduced disclosure format.
1
PART I: FINANCIAL INFORMATION
- ------------------------------
INTRODUCTORY NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------
The registered securities consist of 10 7/8% First Mortgage Notes (the
"10 7/8% First Mortgage Notes") in the principal amount of $185,000,000 due
January 15, 2004 issued by GB Property Funding Corp. ("GB Property Funding") and
listed on the American Stock Exchange. GB Property Funding's obligations are
unconditionally guaranteed by GB Holdings, Inc. ("Holdings"), a Delaware
corporation with principal executive offices at Two Galleria Tower, Suite 2200,
13455 Noel Road, LB48, Dallas, TX 75240 and by Greate Bay Hotel and Casino,
Inc. ("GBHC"), a New Jersey corporation and a wholly owned subsidiary of
Holdings with principal offices at 136 South Kentucky Avenue, Atlantic City, New
Jersey 08401.
GB Property Funding is wholly owned by Holdings. Holdings is a wholly
owned subsidiary of Pratt Casino Corporation ("PCC"), which is an indirect
wholly owned subsidiary of Pratt Hotel Corporation ("PHC"). PHC is an American
Stock Exchange listed company subject to the reporting requirements of the
Securities Act of 1934.
GB Property Funding was organized during September 1993 as a special
purpose subsidiary of Holdings for the purpose of borrowing funds through the
issuance of the 10 7/8% First Mortgage Notes for the benefit of GBHC.
GBHC owns the Sands Hotel and Casino located in Atlantic City, New
Jersey (the "Sands"). Substantially all of Holdings' assets and operations
relate to the Sands. Historically, the Sands' gaming operations have been
highly seasonal in nature, with the peak activity occurring from May to
September. Consequently, the results of operations for the three and six month
periods ended June 30, 1996 are not necessarily indicative of the operating
results to be reported for the full year.
The financial statements of GB Property Funding and the consolidated
financial statements of Holdings as of June 30, 1996 and for the three and six
month periods ended June 30, 1996 and 1995 have been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, their respective financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly their respective financial positions as of June 30, 1996, their
respective results of operations for the three and six month periods ended June
30, 1996 and 1995 and their respective cash flows for the six month periods
ended June 30, 1996 and 1995.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
GB Property Funding, Holdings and GBHC's 1995 Annual Report on Form 10-K.
2
GB PROPERTY FUNDING CORP.
(WHOLLY OWNED BY GB HOLDINGS, INC.)
BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
Current assets:
Cash $ 1,000 $ 1,000
Interest receivable from affiliate 9,277,000 9,277,000
------------ ------------
Total current assets 9,278,000 9,278,000
------------ ------------
Note receivable from affiliate 185,000,000 185,000,000
------------ ------------
$194,278,000 $194,278,000
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accrued interest payable $ 9,277,000 $ 9,277,000
------------ ------------
Long-term debt 185,000,000 185,000,000
------------ ------------
Shareholder's equity (Note 1):
Common stock, $1.00 par value per
share, 1,000 shares authorized
and outstanding 1,000 1,000
------------ ------------
$194,278,000 $194,278,000
============ ============
The accompanying introductory notes and notes to financial statements
are an integral part of these balance sheets.
3
GB PROPERTY FUNDING CORP.
(WHOLLY OWNED BY GB HOLDINGS, INC.)
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
------------ ------------
Revenues:
Interest income $ 5,030,000 $ 5,030,000
Expenses:
Interest expense 5,030,000 5,030,000
------------ ------------
Net income $ - $ -
============ ============
The accompanying introductory notes and notes to financial statements
are an integral part of these financial statements.
4
GB PROPERTY FUNDING CORP.
(WHOLLY OWNED BY GB HOLDINGS, INC.)
STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
------------ ------------
Revenues:
Interest income $10,060,000 $10,060,000
Expenses:
Interest expense 10,060,000 10,060,000
----------- -----------
Net income $ - $ -
=========== ===========
The accompanying introductory notes and notes to financial statements
are an integral part of these financial statements.
5
GB PROPERTY FUNDING CORP.
(WHOLLY OWNED BY GB HOLDINGS, INC.)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
------------ ------------
Net cash provided by operating
activities $ - $ -
------------ ------------
Net change in cash - -
Cash at beginning of period 1,000 1,000
------------ ------------
Cash at end of period $ 1,000 $ 1,000
============ ============
The accompanying introductory notes and notes to financial statements
are an integral part of these financial statements.
6
GB PROPERTY FUNDING CORP.
(WHOLLY OWNED BY GB HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND OPERATIONS
GB Property Funding Corp. ("GB Property Funding"), a Delaware corporation,
was incorporated on September 29, 1993. GB Property Funding is a wholly owned
subsidiary of GB Holdings, Inc. ("Holdings"), a Delaware corporation which is an
indirect, wholly owned subsidiary of Pratt Hotel Corporation ("PHC"). Holdings
was incorporated in September 1993 and, on February 17, 1994, acquired through
capital contributions by its parent, all of the outstanding capital stock of
Greate Bay Hotel and Casino, Inc. ("GBHC"), which owns the Sands Hotel and
Casino in Atlantic City, New Jersey (the "Sands"). GB Property Funding was
formed for the purpose of borrowing $185,000,000 for the benefit of GBHC; such
debt was issued during February 1994 at the rate of 10 7/8% per annum and the
proceeds were loaned to GBHC (see Note 2).
The operation of an Atlantic City casino/hotel is subject to significant
regulatory control. Under provisions of the New Jersey Casino Control Act, GBHC
is required to maintain a nontransferable license to operate a casino in
Atlantic City.
Administrative services for GB Property Funding are provided by other PHC
subsidiaries at no charge. The cost of such services is not significant.
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.
Actual results could differ from those estimates.
The financial statements as of June 30, 1996 and for the three and six month
periods ended June 30, 1996 and 1995 have been prepared by GB Property Funding
without audit. In the opinion of management, these financial statements contain
all adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position of GB Property Funding as of June 30,
1996, the results of its operations for the three and six month periods ended
June 30, 1996 and 1995 and its cash flows for the six month periods ended June
30, 1996 and 1995.
(2) LONG-TERM DEBT
On February 17, 1994, GB Property Funding issued $185,000,000 of non-
recourse first mortgage notes due January 15, 2004 (the "10 7/8% First Mortgage
Notes"). Interest on the notes accrues at the rate of 10 7/8% per annum, payable
semiannually commencing July 15, 1994. Interest only is payable during the first
three years. Commencing on July 15, 1997, semiannual principal payments of
$2,500,000 will become due on each interest payment date.
7
GB PROPERTY FUNDING CORP.
(WHOLLY OWNED BY GB HOLDINGS, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The indenture for the 10 7/8% First Mortgage Notes contains various
provisions which, among other things, restrict the ability of certain
subsidiaries of PHC to pay dividends to PHC, to merge, consolidate or sell
substantially all of their assets or to incur additional indebtedness beyond
certain limitations. In addition, the indenture requires the maintenance of
certain cash balances and, commencing in 1994, requires that a minimum of
$7,000,000 be expended for property and fixture renewals, replacements and
betterments at the Sands, subject to increases of five percent per annum
thereafter. The indenture also contains certain cross-default provisions with
other outstanding debt of affiliates. The proceeds of the 10 7/8% First
Mortgage Notes were loaned to GBHC on the same terms and conditions.
Interest paid and received with respect to the 10 7/8% First Mortgage Notes
and the loan to GBHC was $10,060,000 during each of the six month periods ended
June 30, 1996 and 1995.
(3) INCOME TAXES
GB Property Funding is included in the consolidated federal income tax
return of Hollywood Casino Corporation ("HCC"), PHC's parent. Pursuant to
agreements between Holdings, PHC and HCC, GB Property Funding's provision for
federal income taxes is calculated as if a separate federal return were filed.
For the six month periods ended June 30, 1996 and 1995, no provision or payments
were made under the agreements.
8
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
-------------- --------------
Current Assets:
Cash and cash equivalents $ 14,466,000 $ 21,769,000
Accounts receivable, net of allowances
of $15,756,000 and $16,494,000, respectively 9,971,000 11,350,000
Inventories 3,997,000 4,268,000
Due from affiliate 3,058,000 7,638,000
Refundable deposits and other current assets 4,439,000 4,736,000
------------- -------------
Total current assets 35,931,000 49,761,000
------------- -------------
Property and Equipment:
Land 37,807,000 37,807,000
Buildings and improvements 185,508,000 185,077,000
Operating equipment 88,554,000 87,489,000
Construction in progress 3,288,000 2,310,000
------------- -------------
315,157,000 312,683,000
Less - accumulated depreciation and
amortization (153,324,000) (145,243,000)
------------- -------------
Net property and equipment 161,833,000 167,440,000
------------- -------------
Other Assets:
Obligatory investments 5,565,000 5,521,000
Due from affiliate 16,452,000 13,681,000
Deferred financing costs and other assets 9,767,000 9,155,000
------------- -------------
Total other assets 31,784,000 28,357,000
------------- -------------
$ 229,548,000 $ 245,558,000
============= =============
The accompanying introductory notes and notes to consolidated financial
statements are an integral part of these consolidated balance sheets.
9
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND SHAREHOLDER'S (DEFICIT) EQUITY
JUNE 30, DECEMBER 31,
1996 1995
------------- -------------
Current Liabilities:
Current maturities of long-term debt $ 11,000 $ 11,000
Short-term credit facilities 2,000,000 -
Accounts payable 8,885,000 8,409,000
Accrued liabilities -
Salaries and wages 3,672,000 4,003,000
Interest 9,836,000 9,828,000
Insurance 2,782,000 2,330,000
Other 11,048,000 8,886,000
Due to affiliates 459,000 359,000
Other current liabilities 2,687,000 3,474,000
------------ ------------
Total current liabilities 41,380,000 37,300,000
------------ ------------
Long-Term Debt 195,437,000 195,442,000
------------ ------------
Other Noncurrent Liabilities 1,843,000 2,390,000
------------ ------------
Commitments and Contingencies
Shareholder's (Deficit) Equity:
Common stock, $1.00 par value per share;
1,000 shares authorized and
outstanding 1,000 1,000
Additional paid-in capital 18,438,000 18,438,000
Accumulated deficit (27,551,000) (8,013,000)
------------ ------------
Total shareholder's (deficit) equity (9,112,000) 10,426,000
------------ ------------
$229,548,000 $245,558,000
============ ============
The accompanying introductory notes and notes to consolidated financial
statements are an integral part of these consolidated balance sheets.
10
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
------------ ------------
Revenues:
Casino $ 65,310,000 $ 66,460,000
Rooms 2,254,000 2,451,000
Food and beverage 8,787,000 7,347,000
Other 1,156,000 730,000
------------ ------------
77,507,000 76,988,000
Less - promotional allowances (7,035,000) (6,224,000)
------------ ------------
Net revenues 70,472,000 70,764,000
------------ ------------
Expenses:
Casino 56,868,000 48,503,000
Rooms 498,000 610,000
Food and beverage 2,699,000 2,050,000
Other 865,000 665,000
General and administrative 6,584,000 7,092,000
Depreciation and amortization 5,203,000 5,011,000
------------ ------------
Total expenses 72,717,000 63,931,000
------------ ------------
(Loss) income from operations (2,245,000) 6,833,000
------------ ------------
Non-operating income (expense):
Interest income 393,000 474,000
Interest expense (5,302,000) (5,264,000)
------------ ------------
Total non-operating expense, net (4,909,000) (4,790,000)
------------ ------------
(Loss) income before income taxes (7,154,000) 2,043,000
Income tax provision (6,151,000) (1,116,000)
------------ ------------
Net (loss) income $(13,305,000) $ 927,000
============ ==========
The accompanying introductory notes and notes to consolidated financial
statements are an integral part of these consolidated statements.
11
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
------------ ------------
Revenues:
Casino $122,915,000 $130,336,000
Rooms 4,389,000 4,670,000
Food and beverage 17,311,000 14,594,000
Other 2,710,000 1,354,000
------------ ------------
147,325,000 150,954,000
Less - promotional allowances (14,154,000) (12,354,000)
------------ ------------
Net revenues 133,171,000 138,600,000
------------ ------------
Expenses:
Casino 109,981,000 98,241,000
Rooms 808,000 1,185,000
Food and beverage 5,093,000 4,062,000
Other 1,605,000 1,464,000
General and administrative 12,689,000 14,339,000
Depreciation and amortization 10,310,000 9,972,000
------------ ------------
Total expenses 140,486,000 129,263,000
------------ ------------
(Loss) income from operations (7,315,000) 9,337,000
------------ ------------
Non-operating income (expense):
Interest income 814,000 873,000
Interest expense (10,620,000) (10,527,000)
------------ ------------
Total non-operating expense, net (9,806,000) (9,654,000)
------------ ------------
Loss before income taxes (17,121,000) (317,000)
Income tax provision (2,417,000) (519,000)
------------ ------------
Net loss $(19,538,000) $(836,000)
============ ============
The accompanying introductory notes and notes to consolidated financial
statements are an integral part of these consolidated statements.
12
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1995
------------ ------------
OPERATING ACTIVITIES:
Net loss $(19,538,000) $ (836,000)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 10,310,000 9,972,000
Provision for doubtful accounts 894,000 1,537,000
Deferred income tax provision (benefit) 2,417,000 (1,384,000)
Decrease (increase) in accounts receivable 485,000 (1,436,000)
Increase (decrease) in accounts payable and accrued expenses 2,967,000 (325,000)
Net change in other current assets and liabilities (1,060,000) 1,227,000
Net change in other noncurrent assets and liabilities (681,000) (469,000)
------------ ------------
Net cash (used in) provided by operating activities (4,206,000) 8,286,000
------------ ------------
INVESTING ACTIVITIES:
Net property and equipment additions (3,660,000) (10,109,000)
Obligatory investments (1,432,000) (1,315,000)
------------ ------------
Net cash used in investing activities (5,092,000) (11,424,000)
------------ ------------
FINANCING ACTIVITIES:
Net borrowings on credit facilities 2,000,000 2,000,000
Deferred financing costs - (32,000)
Repayments of long-term debt (5,000) (5,000)
------------ ------------
Net cash provided by financing activities 1,995,000 1,963,000
------------ ------------
Net decrease in cash and cash equivalents (7,303,000) (1,175,000)
Cash and cash equivalents at beginning of period 21,769,000 23,137,000
------------ ------------
Cash and cash equivalents at end of period $ 14,466,000 $ 21,962,000
============ ============
The accompanying introductory notes and notes to consolidated financial
statements are an integral part of these consolidated statements.
13
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
GB Holdings, Inc. ("Holdings") is a Delaware corporation and a wholly owned
subsidiary of Pratt Casino Corporation ("PCC"), also a Delaware corporation.
PCC was incorporated during September 1993 and is wholly owned by PPI
Corporation, a New Jersey corporation and a wholly owned subsidiary of Pratt
Hotel Corporation ("PHC"). On February 17, 1994, Holdings acquired Greate Bay
Hotel and Casino, Inc. ("GBHC"), a New Jersey corporation, through a capital
contribution by its parent. GBHC's principal business activity is its ownership
of the Sands Hotel and Casino in Atlantic City, New Jersey (the "Sands"). The
Sands is managed by New Jersey Management, Inc. ("NJMI"), also a wholly owned
subsidiary of PCC. GB Property Funding Corp. ("GB Property Funding"), a
Delaware corporation and a wholly owned subsidiary of Holdings, was incorporated
in September 1993 for the purpose of borrowing funds through the issuance of
$185,000,000 of ten-year, nonrecourse first mortgage notes for the benefit of
GBHC; such debt was issued in February 1994 at the rate of 10 7/8% per annum and
the proceeds were loaned to GBHC (see Note 3). Holdings has no operating
activities and its only significant asset is its investment in GBHC. The
accompanying consolidated financial statements include the accounts and
operations of Holdings, GBHC and GB Property Funding; all significant
intercompany balances and transactions have been eliminated.
GBHC estimates that a significant amount of the Sands' revenues is derived
from patrons living in southeastern Pennsylvania, northern New Jersey and
metropolitan New York City. Competition in the Atlantic City gaming market is
intense and management believes that this competition will continue in the
future.
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. Actual results could differ from those estimates.
GBHC is self insured for a portion of its general liability, certain health
care and other liability exposures. Accrued insurance includes estimates of
such accrued liabilities based on an evaluation of the merits of individual
claims and historical claims experience; accordingly, GBHC's ultimate liability
may differ from the amounts accrued.
During the fourth quarter of 1995, GBHC adopted the provisions of Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets" ("SFAS 121"). SFAS 121 requires, among other things, that an
entity review its long-lived assets and certain related intangibles for
impairment whenever changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable. As a result of its review, GBHC does
not believe that any material impairment currently exists related to its long-
lived assets.
The consolidated financial statements as of June 30, 1996 and for the three
and six month periods ended June 30, 1996 and 1995 have been prepared by
Holdings without audit. In the opinion of management, these
14
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the consolidated
financial position of Holdings as of June 30, 1996, the results of its
operations for the three and six month periods ended June 30, 1996 and 1995 and
its cash flows for the six month periods ended June 30, 1996 and 1995.
(2) SHORT-TERM CREDIT FACILITIES
As of April 30, 1996, GBHC extended $2,000,000 of its bank line of credit
until April 30, 1997. As of June 30, 1996, $2,000,000 was outstanding under the
line of credit; no such borrowings were outstanding under the line of credit at
December 31, 1995. Borrowings under the line of credit accrue interest at the
bank's prime rate plus 3/4% per annum payable monthly and are guaranteed by PCC.
Additionally, PCC has pledged a certificate of deposit in the face amount of
$2,000,000 as collateral for the line of credit.
(3) LONG-TERM DEBT AND PLEDGE OF ASSETS
Substantially all of Holdings' and GBHC's assets are pledged in connection
with their long-term indebtedness.
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
10 7/8% first mortgage
notes, due 2004 (a) $185,000,000 $185,000,000
14 5/8% affiliate loan,
due 2005 (b) 10,000,000 10,000,000
Other 448,000 453,000
------------ ------------
Total indebtedness 195,448,000 195,453,000
Less - current maturities (11,000) (11,000)
------------ ------------
Total long-term debt $195,437,000 $195,442,000
============ ============
- ----------------------------
(a) On February 17, 1994, the Sands obtained $185,000,000 from GB Property
Funding, which issued $185,000,000 of non-recourse first mortgage notes due
January 15, 2004 (the "10 7/8% First Mortgage Notes"). Interest on the
notes accrues at the rate of 10 7/8% per annum, payable semiannually
commencing July 15, 1994. Interest only is payable during the first three
years. Commencing on July 15, 1997, semiannual principal payments of
$2,500,000 will become due on each interest payment date. The 10 7/8%
First Mortgage Notes are redeemable at the option of the issuer, in whole
or in part, on or after January 15, 1999 at stated redemption prices
ranging up to 104.08% of par plus accrued interest.
The indenture for the 10 7/8% First Mortgage Notes contains various
provisions which, among other things, restrict the ability of certain
subsidiaries of PHC to pay dividends to PHC, to merge, consolidate or sell
substantially all of their assets or to incur additional indebtedness
beyond certain limitations. In
15
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
addition, the indenture requires the maintenance of certain cash balances
and, commencing in 1994, requires that a minimum of $7,000,000 be expended
for property and fixture renewals, replacements and betterments at the
Sands, subject to increases of five percent per annum thereafter. The
indenture also contains certain cross-default provisions with other
outstanding debt of affiliates.
(b) On February 17, 1994, GBHC issued a $10,000,000 subordinated promissory
note to an affiliate. The note bears interest at the rate of 14 5/8% per
annum, payable semiannually commencing August 17, 1994, subject to
maintaining average daily cash balances required by the indenture for the
10 7/8% First Mortgage Notes, with the principal due in February 2005.
Scheduled payments of long-term debt as of June 30, 1996 are set forth
below:
1996 (six months) $ 6,000
1997 2,512,000
1998 5,013,000
1999 5,014,000
2000 5,015,000
Thereafter 177,888,000
------------
Total $195,448,000
============
Interest paid amounted to $10,916,000 and $11,561,000, respectively,
during the six month periods ended June 30, 1996 and 1995.
(4) INCOME TAXES
Components of the provision for income taxes consisted of the
following:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
Benefit in lieu of (provision
for) federal income taxes:
Current $(2,643,000) $(1,580,000) $ - $(1,507,000)
Deferred (2,618,000) 715,000 (2,364,000) 1,097,000
State income tax benefit
(provision):
Current (762,000) (417,000) - (396,000)
Deferred (128,000) 166,000 (53,000) 287,000
----------- ----------- ----------- -----------
$(6,151,000) $(1,116,000) $(2,417,000) $ (519,000)
============ =========== =========== ===========
16
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Holdings is included in the consolidated federal income tax return of
Hollywood Casino Corporation ("HCC"), PHC's parent. Pursuant to agreements
between Holdings, PCC, PHC and HCC, Holdings' provision for federal income taxes
is based on the amount of tax which would be provided if a separate federal
income tax return were filed. The payment of taxes in accordance with the tax
allocation agreements is subject to the approval of the New Jersey Casino
Control Commission. Holdings made no federal or state income tax payments
during the six month periods ended June 30, 1996 and 1995.
Federal and state income tax provisions or benefits are based upon
estimates of the results of operations for the current period and reflect the
nondeductibility for income tax purposes of certain items, including certain
amortization, meals and entertainment and other expenses.
Deferred income taxes result primarily from the use of the allowance
method rather than the direct write-off method for doubtful accounts, the use of
accelerated methods of depreciation for federal and state income tax purposes
and differences in the timing of deductions taken between tax and financial
reporting purposes for contributions of and adjustments to the carrying value of
certain investment obligations and for vacation and other accruals.
The components of the deferred tax asset as of June 30, 1996 and
December 31, 1995 are as follows:
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
Deferred tax assets:
Net operating loss carryforwards $ 7,084,000 $ 1,506,000
Allowance for doubtful accounts 6,918,000 6,829,000
Other liabilities and accruals 2,271,000 2,089,000
Other 1,217,000 1,377,000
----------- -----------
Total deferred tax assets 17,490,000 11,801,000
----------- -----------
Deferred tax liabilities:
Depreciation and amortization (8,319,000) (8,679,000)
Other (597,000) (597,000)
----------- -----------
Total deferred tax liabilities (8,916,000) (9,276,000)
----------- -----------
Net deferred tax asset 8,574,000 2,525,000
Valuation allowance (8,574,000) -
----------- -----------
$ - $ 2,525,000
=========== ===========
17
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Holdings and its subsidiaries have net operating loss carryforwards
("NOL's") totaling approximately $15,000,000, none of which expire before the
year 2009 for federal tax purposes and the year 2001 for state tax purposes.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109") requires that the tax benefit of NOL's and deferred tax
assets resulting from temporary differences be recorded as an asset and, to the
extent that management can not assess that the utilization of all or a portion
of such NOL's and deferred tax assets is more likely than not, a valuation
allowance should be recorded. Due to the continued availability of NOL's
originating in 1994 for federal and state tax purposes and the significant book
and tax losses sustained in 1996, management is unable to determine that
realization of such asset was more likely than not and, thus, has provided a
valuation allowance for the entire deferred tax asset at June 30, 1996.
Sales or purchases of Holdings' common stock could cause a "change of
control", as defined in Section 382 of the Internal Revenue Code of 1986, as
amended, which would limit the ability of Holdings to utilize these loss
carryforwards in later tax periods. Should such a change of control occur, the
amount of annual loss carryforwards available for use would most likely be
substantially reduced. Future treasury regulations, administrative rulings or
court decisions may also effect Holdings' future utilization of its loss
carryforwards.
Receivables from and payables to affiliates in connection with the
aforementioned tax allocation agreements are as follows:
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
Due from affiliate - current $2,696,000 $7,365,000
Due from affiliate - non-current 8,207,000 5,903,000
Due to affiliate - current (129,000) (129,000)
(5) TRANSACTIONS WITH RELATED PARTIES
NJMI, under a management agreement with the Sands, is responsible for
the supervision, direction and control of the day-to-day operations of the
Sands. NJMI is entitled to receive annually (i) a basic consulting fee of 1.5%
of "adjusted gross revenues," as defined, and (ii) incentive compensation of
between 5% and 7.5% of gross operating profits in excess of certain stated
amounts should annual "gross operating profits," as defined, exceed $5,000,000.
Such fees amounted to $1,176,000 and $1,744,000 during the three month periods
ended June 30, 1996 and 1995, respectively, and $2,160,000 and $3,030,000 during
the six month periods ended June 30, 1996 and 1995, respectively. These fees
are included in general and administrative expenses in the accompanying
consolidated financial statements. Management fees payable to NJMI at June 30,
1996 and December 31, 1995 amounted to $45,000 and $28,000, respectively.
GBHC licenses the trade name "Sands" from PHC, which licenses the name
from an unaffiliated third party. Amounts payable by GBHC under this agreement
are equal to the amounts paid to the unaffiliated
18
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
third party. Such charges amounted to $70,000 and $74,000 for the three month
periods ended June 30, 1996 and 1995, respectively, and $131,000 and $140,000
for the six month periods ended June 30, 1996 and 1995, respectively.
GBHC has, from time to time, advanced monies to PCC or certain of its
subsidiaries and PHC or certain of its subsidiaries have advanced monies to GBHC
primarily for working capital purposes. GBHC has also periodically entered into
short-term borrowing arrangements with affiliated companies in connection with
various construction projects. An advance to a PHC subsidiary in the amount of
$5,672,000 was outstanding as of June 30, 1996 and December 31, 1995 and accrues
interest at the rate of 16.5% per annum. Interest income (expense) incurred
with respect to affiliate advances and borrowings is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Advance $ 234,000 $ 234,000 $ 468,000 $ 468,000
Affiliate loan (Note 3) (366,000) (366,000) (731,000) (731,000)
Interest receivable on affiliate advances, included in non-current due
from affiliates in the accompanying consolidated balance sheets at June 30, 1996
and December 31, 1995 was $2,574,000 and $2,106,000, respectively. Interest
accrued on the affiliate loan in the amount of $544,000 is included in interest
payable in the accompanying consolidated balance sheets at both June 30, 1996
and December 31, 1995.
During July and August 1996, GBHC borrowed a total of $6,500,000 from
PHC for working capital purposes. Such borrowings accrue interest at the rate
of 13 3/4% per annum payable semiannually.
From time to time, GBHC performs certain services for HCC and its
subsidiaries and invoices those companies for the Sands' cost of providing those
services. Similarly, GBHC is charged for certain legal, accounting and other
expenses incurred by HCC and its subsidiaries that relate to the Sands'
business. Such affiliate transactions are summarized below:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Billings to affiliates $ 357,000 $ 269,000 $ 783,000 $ 469,000
Charges from affiliates (204,000) (176,000) (500,000) (340,000)
19
GB HOLDINGS, INC. AND SUBSIDIARIES
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
(6) LITIGATION
GBHC is a party in various legal proceedings with respect to the
conduct of casino and hotel operations. Although a possible range of loss can
not be estimated, in the opinion of management, based upon the advice of
counsel, settlement or resolution of these proceedings should not have a
material adverse impact upon the consolidated financial position or results of
operations of Holdings and GBHC. The accompanying consolidated financial
statements do not include any adjustments that might result from the outcome of
the uncertainties described above.
(7) RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 consolidated
financial statements to conform to the 1996 consolidated financial statement
presentation.
20
GB HOLDINGS, INC.
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
The Sands sustained losses from operations of $2.2 million and $7.3
million, respectively, for the three and six month periods ended June 30, 1996
compared to income from operations of $6.8 million and $9.3 million for the same
periods of 1995. Operating results were adversely affected by the advent of
unprecedented and highly aggressive marketing programs instituted by certain
other Atlantic City casinos seeking to increase their market share together with
record winter snowstorms in January and weekend snowstorms in February. These
factors, as well as declines in both the table games and slot hold percentages,
resulted in three and six month declines in net revenues of .4% and 3.9%,
respectively (to $70.5 and $133.2 million in 1996 from $70.8 million and $138.6
million in 1995). In addition, marketing and advertising costs increased by $7.3
million and $9.5 million (52.8% and 32.2%), respectively, during the second
quarter and first six months of 1996 compared to the same periods of 1995 in
response to competitive pressures.
GAMING OPERATIONS
The following table sets forth certain unaudited financial and operating
data relating to the Sands' operations:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ---------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
REVENUES:
Table games $ 20,405 $ 24,582 $ 40,580 $ 47,543
Slot machines 43,830 40,841 80,271 80,578
Other (1) 1,075 1,037 2,064 2,215
-------- -------- -------- --------
Total $ 65,310 $ 66,460 $122,915 $130,336
======== ======== ======== ========
TABLE GAMES:
Gross Wagering
(Drop) (2) $148,995 $150,722 $283,383 $293,310
======== ======== ======== ========
Hold Percentages: (3)
Sands 13.7% 16.3% 14.3% 16.2%
Atlantic City Casino
Gaming Industry 15.2% 15.9% 15.8% 15.9%
SLOT MACHINES:
Gross Wagering
(Handle) (2) $536,139 $468,469 $975,519 $938,286
======== ======== ======== ========
Hold Percentage:(3)
Sands (4) 8.2% 8.7% 8.2% 8.6%
21
GB HOLDINGS, INC.
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
____________________________
(1) Consists of revenues from poker and simulcast horse racing wagering.
(2) Gross wagering consists of the total value of chips purchased for table
games (excluding poker) and keno wagering (collectively, the "drop") and
coins wagered in slot machines ("handle").
(3) Casino revenues consist of the portion of gross wagering that a casino
retains and, as a percentage of gross wagering, is referred to as the "hold
percentage".
(4) The Sands' hold percentage with respect to slot machines is reflected on an
accrual basis. Comparable data for the Atlantic City gaming industry is
not available.
Table games drop at the Sands declined $1.7 million (1.1%) and $9.9 million
(3.4%), respectively, during the three and six month periods ended June 30, 1996
compared with the same periods of 1995. The Sands' decreases compare with
increases of 7.4% and 5.6% in table drop for all other Atlantic City casinos
during the same periods. As a result, the Sands' table game market share
(expressed as a percentage of the Atlantic City industry aggregate table game
drop) decreased to 7.9% and 8% during the three and six month periods ended June
30, 1996 from 8.5% and 8.7% during the same periods of 1995. Table game drop
throughout the six month period was adversely impacted by the increase in
competitive pressures in the rated table market segment, of which a significant
portion was in the "high end" and mid-market segments.
Slot machine handle increased $67.7 million (14.4%) and $37.2 million (4%)
during the three and six month periods ended June 30, 1996 compared with the
same periods of 1995. The Sands' increases compare with 7.2% and 7.4%
increases in slot machine handle for all other Atlantic City casinos. As a
result, the Sands' market share increased to 6.5% from 6.1% during the second
quarter of 1996 compared to the same period in 1995; however, its market share
decreased to 6.3% from 6.5% during the six months ended June 1996 compared to
the same period in 1995. The increases in slot machine handle are largely
attributable to increases in marketing programs, such as coin incentive
programs, which have resulted in significant increases in the number of bus and
drive-in patrons for the six months ended June 30, 1996 compared to 1995. The
Sands' average number of slot machines increased 1.4% during the first six
months of 1996 compared to an increase of 8.3% for all other Atlantic City
casinos. The greater percentage increase in the number of slot machines for
other Atlantic City casinos reflects, in part, expansions of certain facilities
during 1996 which resulted in an overall increase of approximately 107,000
square feet of casino space and further contributed to the Sands' decline in
market share.
REVENUES
Casino revenues at the Sands, including poker and simulcast horse racing
wagering revenues, decreased by $1.2 million (1.7%) and $7.4 million (5.7%),
respectively, for the three and six month periods ended June 30, 1996 compared
with the same periods of 1995. Casino revenues were negatively impacted by the
22
GB HOLDINGS, INC.
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
decline in table game wagering as discussed previously and by decreases in both
the table games and slot machine hold percentages at the Sands during the 1996
periods compared to the 1995 periods.
Rooms revenue decreased $197,000 (8%) and $281,000 (6%), respectively,
during the three and six month periods ended June 30, 1996 compared with 1995
due to a decline in the average rate earned per room as a result of marketing
activities. In addition, occupancy rates were lower in the first quarter of 1996
as a result of severe weather. Food and beverage revenues increased $1.4 million
(19.6%) and $2.7 million (18.6%), respectively, for the three and six month
periods ended June 30, 1996 compared with the prior year periods primarily as a
result of the opening of the Epic Buffet during the third quarter of 1995. Other
revenues increased $426,000 (58.4%) and $1.4 million (100.1%) during the three
and six month periods ended June 30, 1996 compared to the 1995 periods as a
result of an increase in theater entertainment revenue.
Promotional allowances represent the estimated value of goods and services
provided free of charge to casino customers under various marketing programs.
As a percentage of rooms, food and beverage and other revenues at the Sands,
these allowances decreased to 57.7% and 58%, respectively, during the three and
six month periods ended June 30, 1996 from 59.1% and 59.9% during the second
quarter and first six months of 1995. Such decreases are primarily attributable
to increases in other types of marketing programs in lieu of promotional
allowances.
DEPARTMENTAL EXPENSES
Casino expenses at the Sands increased $8.4 million (17.2%) and $11.7
million (12%), respectively, during the three and six month periods ended June
30, 1996 compared with 1995. These increases are primarily due to the expansion
of various marketing programs, particularly coin incentive programs, in response
to competitive pressures. The additional costs of such programs result in
greater allocation of rooms, food and beverage and other expenses to casino
expense.
Rooms expense decreased $112,000 (18.4%) and $377,000 (31.8%) during the
second quarter and first six months of 1996 as compared to the same periods of
1995 primarily due to increased allocation of rooms expense to casino expense as
a result of increases in casino marketing activities relating to rooms.
Decreased payroll expenses resulting from an overall decline in occupancy
particularly during the first quarter of 1996 as compared to 1995 also
contributed to the reduction in rooms expense. Food and beverage expense
increased by $649,000 (31.7%) and $1 million (25.4%) during the three and six
month periods ended June 30, 1996 compared to the same periods in 1995.
Increased costs associated with the Epic Buffet were partially offset by
increases in food and beverage marketing programs, the costs of which are
allocated to the casino department. Other expenses increased $200,000 (30.1%)
and $141,000 (9.6%) during the three and six month periods ended June 30, 1996
compared with the same periods of 1995 as increases in costs related to theater
entertainment were offset by increased allocations to the casino department,
particularly during the first quarter of 1996.
23
GB HOLDINGS, INC.
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
GENERAL AND ADMINISTRATIVE
General and administrative expenses decreased $508,000 (7.2%) and $1.7
million (11.5%) during the three and six month periods ended June 30, 1996 as
compared to the same periods of 1995 primarily due to decreases in management
fees and legal expenses.
INCOME TAX BENEFIT (PROVISION)
Holdings is included in HCC's consolidated federal income tax return.
Pursuant to agreements between Holdings, PHC and HCC, Holdings' provision for
federal income taxes is based on the amount of tax which would have been
provided if a separate return were filed.
Holdings and its subsidiaries have net operating loss carryforwards
("NOL's") totaling approximately $15 million, none of which expire before the
year 2007. Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109") requires that the tax benefit of NOL's and deferred
tax assets resulting from temporary differences be recorded as an asset and, to
the extent that management can not assess that the utilization of all or a
portion of such NOL's and deferred tax assets is more likely than not, a
valuation allowance should be recorded. Due to the continued availability of
losses originating in 1994 for federal and state tax purposes and the
significant book and tax losses sustained in 1996, management is unable to
determine that the realization of such asset was more likely than not and, thus,
has provided a valuation allowance for the entire deferred tax asset at June 30,
1996.
INFLATION
Management believes that in the near term, modest inflation, together with
increasing competition within the gaming industry for qualified and experienced
personnel, will continue to cause increases in operating expenses, particularly
labor and employee benefits costs.
SEASONALITY
Historically, the Sands' operations have been highly seasonal in nature,
with the peak activity occurring from May to September. Consequently, the
results of Holdings' operations for the first and fourth quarters are
traditionally less profitable than the other quarters of the fiscal year. In
addition, the Sands' operations may fluctuate significantly due to a number of
factors, including chance. Such seasonality and fluctuations may materially
affect Holdings' casino revenues and profitability.
LIQUIDITY AND CAPITAL RESOURCES
Holdings' only operations and resulting sources of liquidity and capital
resources are those of its wholly owned subsidiary, GBHC, whose only operations
are those of the Sands. GBHC's earnings before depreciation, interest,
amortization, taxes and intercompany management fees have been sufficient to
meet its
24
GB HOLDINGS, INC.
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
debt service obligations (other than certain maturities of principal that have
been refinanced) and to fund a substantial portion of its capital expenditures.
GBHC has also used short-term borrowings to fund seasonal cash needs and has
used long-term borrowings for certain capital projects.
OPERATING ACTIVITIES
At June 30, 1996, GBHC had cash and cash equivalents of $14.5 million.
During the six month period ended June 30, 1996, net cash used in operating
activities was $4.2 million compared with net cash provided by operating
activities of $8.3 million during the 1995 period. GBHC utilized its existing
cash and short-term borrowings during the first six months of 1996 to meet its
operating needs, to fund capital additions totaling $3.7 million and to make
obligatory investments of $1.4 million.
FINANCING ACTIVITIES
During February 1994, GBHC refinanced virtually all of its outstanding debt
as part of an overall restructuring by PHC (the "PHC Recapitalization"). The
refinancing was completed through a public offering of $270 million of debt
securities consisting of $185 million of 10 7/8% First Mortgage Notes due
January 15, 2004 and $85 million of 11 5/8% Senior Notes due April 15, 2004.
Proceeds from the debt offerings were used, in part, to refinance the Sands'
first mortgage and other indebtedness scheduled to mature in 1994 and to provide
partial funding for an expansion of gaming space at the Sands. As part of the
PHC Recapitalization, a subsidiary of PHC also issued $15 million of 14 5/8%
junior subordinated notes due in 2005 to HCC, the parent of PHC; the subsidiary
loaned $10 million of such proceeds to GBHC on the same terms. Interest on this
subordinated affiliate debt is payable semiannually commencing August 17, 1994,
with payment subject to meeting certain tests required by the indenture for the
10 7/8% First Mortgage Notes.
As of April 30, 1996, GBHC extended $2 million of its bank line of credit
until April 30, 1997. As of June 30, 1996, $2 million was outstanding under the
line of credit.
During July and August 1996, GBHC borrowed $6.5 million from PHC for
working capital purposes with interest payable semiannually at the rate of 13
3/4% per annum.
Scheduled maturities of long-term debt during the remainder of 1996 are
$6,000.
During the third quarter of 1996, PHC engaged a major Wall Street
investment banking firm as its financial advisor to explore strategic
transactions regarding the Sands including, among other things, the potential
consummation of strategic alliances including joint ventures for the possible
expansion of the Sands.
25
GB HOLDINGS, INC.
(WHOLLY OWNED BY PRATT CASINO CORPORATION)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CAPITAL EXPENDITURES AND OBLIGATORY INVESTMENTS
Capital expenditures at the Sands during the six month period ended June
30, 1996 amounted to approximately $3.7 million and management anticipates
capital expenditures during the remainder of 1996 will be approximately $2.8
million. Projects currently planned during 1996 include substantial upgrades and
improvements to all rooms at the Sands, including its higher-end suite product.
The Sands is required by the New Jersey Casino Control Act to make certain
investments with the Casino Reinvestment Development Authority, a governmental
agency which administers the statutorily mandated investments made by casino
licensees. Deposit requirements for the first six months of 1996 totaled $1.4
million and are anticipated to be approximately $1.8 million during the
remainder of 1996.
26
PART II: OTHER INFORMATION
- ---------------------------
The Registrants did not file any reports on Form 8-K during the quarter
ended June 30, 1996.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, each
of the Registrants has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GB HOLDINGS, INC.
GB PROPERTY FUNDING CORP.
-------------------------------
Registrants
Date: August 12, 1996 By:/s/ John C. Hull
--------------- ----------------------------
John C. Hull
Principal Accounting Officer
27