UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
------------------------------------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
-----------------------------------------------
Commission File Number: 0-20538
------------------------------------------------------
Casino America, Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 41-1659606
- ------------------------------------------------------------------------------
(State of Incorporation) (IRS Employer Identification No.)
711 Washington Loop, Second Floor, Biloxi, Mississippi 39530
- ----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(601) 436-7000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (a) 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
----- ------
Shares of Common Stock outstanding at September 9, 1996: 23,257,537
----------
CASINO AMERICA, INC.
FORM 10-Q
INDEX
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets,
July 31, 1996 (unaudited) and
April 30, 1996 1-2
Consolidated Statements of
Income for the Three Months
Ended July 31, 1996 and 1995
(unaudited) 3
Consolidated Statements of
Cash Flows for the Three Months
Ended July 31, 1996 and 1995
(unaudited) 4-5
Notes to Unaudited Consolidated
Financial Statements 6-11
SIGNATURES 12
CASINO AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1996 APRIL 30, 1996
------------- --------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 22,279,000 $ 18,585,000
Accounts receivable:
Related parties 1,259,000 3,171,000
Other 3,130,000 1,764,000
Deferred income taxes 1,001,000 1,001,000
Prepaid expenses and other assets 2,591,000 2,858,000
------------ ------------
TOTAL CURRENT ASSETS 30,260,000 27,379,000
------------ ------------
PROPERTY AND EQUIPMENT:
Land and improvements 25,497,000 25,485,000
Leasehold improvements 50,813,000 50,130,000
Buildings and improvements 6,282,000 6,099,000
Riverboats and floating pavilions 66,830,000 33,591,000
Furniture, fixtures and equipment 48,299,000 35,835,000
Construction in progress 33,000 375,000
------------ ------------
197,754,000 151,515,000
Less: Accumulated depreciation 25,435,000 22,209,000
------------ ------------
Property and equipment net 172,319,000 129,306,000
------------ ------------
OTHER ASSETS:
Investment in and advances to joint ventures 51,647,000 34,281,000
Notes receivable - related party 4,700,000 4,700,000
Other investments 2,250,000 2,250,000
Property held for development or sale 15,840,000 15,840,000
Goodwill, net of accumulated amortization of
$36,000 and $-0-, respectively 16,652,000 --
Berthing, concession and leasehold rights, net of
accumulated amortization of $1,288,000 and
$1,209,000 respectively 4,981,000 5,060,000
Deferred financing costs, net of accumulated amortization
of $1,416,000 and $1,229,000, respectively 5,509,000 4,327,000
Prepaid expenses 915,000 743,000
Deposits and other 1,136,000 2,588,000
------------ ------------
103,630,000 69,789,000
------------ ------------
TOTAL ASSETS $306,209,000 $226,474,000
============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
1
CASINO AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1996 APRIL 30, 1996
------------- --------------
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 16,923,000 $ 8,884,000
Accounts payable:
Trade 7,510,000 6,169,000
Related parties 3,013,000 --
Accrued liabilities:
Interest 2,887,000 5,802,000
Payroll and payroll related 6,849,000 6,333,000
Property and other taxes 5,529,000 6,880,000
Progressive jackpots and slot
club awards 1,851,000 1,851,000
Other 2,377,000 2,392,000
------------ ------------
TOTAL CURRENT LIABILITIES 46,939,000 38,311,000
------------ ------------
LONG-TERM DEBT, NET OF CURRENT MATURITIES 155,812,000 130,894,000
------------ ------------
DEFERRED INCOME TAXES 6,999,000 6,999,000
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 2,000,000
shares authorized; none issued -- --
Common stock, $0.01 par value; 45,000,000
shares authorized; shares issued and
outstanding: 22,572,751 and
16,038,882, respectively 226,000 160,000
Class B common stock, $0.01 par value;
3,000,000 shares authorized; none issued -- --
Additional paid-in capital 57,063,000 13,857,000
Retained earnings 39,170,000 36,253,000
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 96,459,000 50,270,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $306,209,000 $226,474,000
============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
2
CASINO AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended July 31
1996 1995
------------- -------------
REVENUE:
Casino $37,474,000 $29,195,000
Rooms 2,183,000 --
Management fee - joint ventures 2,012,000 1,215,000
Pari-mutuel commissions and fees 3,386,000 --
Food, beverage and other 3,062,000 2,008,000
----------- -----------
TOTAL REVENUE 48,117,000 32,418,000
----------- -----------
OPERATING EXPENSES:
Casino 14,466,000 10,428,000
Rooms 858,000 --
Gaming taxes 4,948,000 3,587,000
Pari-mutuel 2,910,000 --
Food and beverage 2,110,000 1,909,000
Marine and facilities 2,975,000 2,075,000
Marketing and administrative 9,870,000 8,134,000
Preopening expenses 1,984,000 1,290,000
Depreciation and amortization 3,373,000 2,628,000
----------- -----------
TOTAL OPERATING EXPENSES 43,494,000 30,051,000
----------- -----------
OPERATING INCOME 4,623,000 2,367,000
INTEREST EXPENSE (4,684,000) (3,166,000)
INTEREST INCOME:
Related parties 203,000 24,000
Other 119,000 280,000
EQUITY IN INCOME OF UNCONSOLIDATED JOINT VENTURES 4,279,000 4,702,000
----------- -----------
INCOME BEFORE INCOME TAXES 4,540,000 4,207,000
INCOME TAX PROVISION 1,623,000 1,873,000
----------- -----------
NET INCOME $ 2,917,000 $ 2,334,000
=========== ===========
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $0.14 $0.15
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES 20,666,000 15,995,000
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
3
CASINO AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended July 31
1996 1995
--------------------------
Cash flows from operating activities
Net income $ 2,917,000 $ 2,334,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,627,000 3,408,000
Deferred income taxes 383,000
Equity in income of unconsolidated joint ventures (4,279,000) (4,702,000)
Other 67,000 14,000
Changes in current assets and liabilities:
Accounts receivable 546,000 1,535,000
Prepaid expenses and other assets 665,000 (389,000)
Accounts payable 4,354,000 254,000
Accrued liabilities (3,765,000) (3,297,000)
----------- ------------
Net cash provided by (used in) operating activities 4,132,000 (460,000)
----------- ------------
Cash flows from investing activities
Purchases of property and equipment (1,131,000) (19,165,000)
Cash paid for acquisitions (8,192,000) --
Proceeds from disposals of property and equipment -- 60,000
Repayments from joint ventures 2,788,000
Decrease in restricted cash -- 8,364,000
Deposits and other - net 1,443,000 174,000
----------- ------------
Net cash used in investing activities (7,880,000) (7,779,000)
----------- ------------
Cash flows from financing activities
Proceeds from borrowings 1,000,000 2,000,000
Principal payments on borrowings (6,292,000) (1,615,000)
Deferred financing costs (1,369,000) (1,333,000)
Proceeds from sale of stock and exercise of options 14,103,000 190,000
----------- ------------
Net cash provided by (used in) financing activities 7,442,000 (758,000)
----------- ------------
Net increase (decrease) in cash and cash equivalents 3,694,000 (8,997,000)
Cash and cash equivalents at beginning of period 18,585,000 18,997,000
----------- ------------
Cash and cash equivalents at end of period $22,279,000 $ 10,000,000
=========== ============
(CONTINUED)
4
CASINO AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended July 31
1996 1995
-------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest, net of amounts capitalized $ 7,345,000 $5,322,000
Income taxes, net of refunds received 3,185,000 656,000
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Notes payable and debt issued for:
Land -- 1,726,000
Property and equipment 467,000 1,426,000
Insurance premiums 573,000
Acquisitions:
Debt assumed (37,142,000) --
Stock issued (27,852,000) --
Warrants issued (1,250,000) --
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
5
CASINO AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Shares of Additional Total
Common Common Paid-In Retained Stockholders'
Stock Stock Capital Earnings Equity
Balance, April 30, 1996 16,038,882 $ 160,000 $13,857,000 $36,253,000 $50,270,000
Issuance of common
stock 6,495,194 65,000 41,813,000 41,878,000
Issuance of warrants 1,250,000 1,250,000
Exercise of stock
options 30,375 1,000 76,000 77,000
Issuance of common stock
for compensation 8,300 67,000 67,000
Net income 2,917,000 2,917,000
---------- --------- ----------- ----------- -----------
Balance, July 31, 1996 22,572,751 $ 226,000 $57,063,000 $39,170,000 $96,459,000
========== ========= =========== =========== ===========
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
6
CASINO AMERICA, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Basis of Presentation:
Casino America, Inc. (the "Company") was incorporated as a Delaware
corporation on February 14, 1990. The Company, through its
subsidiaries, is engaged in the business of developing, owning, and
operating riverboat and dockside casinos and related facilities. The
Company has licenses to conduct gaming operations in Biloxi and
Vicksburg, Mississippi through its subsidiaries, and in Bossier City
and Lake Charles, Louisiana through unconsolidated joint ventures.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation
have been included. Operating results for the three month period ended
July 31, 1996 are not necessarily indicative of the results that may
be expected for the year ending April 30, 1997. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended April 30, 1996.
Goodwill
Goodwill principally represents the excess purchase price the Company
paid in acquiring the net identifiable assets of Grand Palais
Riverboat, Inc. ("GPRI"). The Company began amortizing these costs
effective July 12, 1996 (commencement of operations) over a twenty-
five-year period using the straight-line method.
Impact of Recently Issued Accounting Standards:
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, which requires impairment losses to be recorded on long-
lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by
those assets are less than the assets carrying amount. Statement 121
also addresses the accounting for long-lived assets that are expected
to be disposed of. The Company adopted Statement 121 in the first
quarter of fiscal 1997, and there was no material effect of adoption.
Note 2. Business Acquisitions
Purchase of GPRI and St. Charles Gaming Company ("SCGC")
7
On May 3, 1996, the Company purchased all of the outstanding shares of
common stock of GPRI in a bankruptcy proceeding (the "GPRI
Acquisition"). Pursuant to the Plan of Reorganization adopted in such
bankruptcy proceeding, the Company purchased 100% of the shares of the
reorganized GPRI, which at the time of closing owned the Grand Palais
Riverboat, gaming equipment, certain other furniture, fixtures and
equipment, all necessary gaming licenses issued by the State of
Louisiana, and other permits and authorizations. Commencing July 12,
1996, the Company began operating the Grand Palais vessel as part of a
two-riverboat operation with SCGC (the "Isle -- Lake Charles"). The
aggregate consideration paid by the Company in connection with the
GPRI Acquisition was approximately $60.8 million, consisting of
approximately $7.5 million in cash, and $37.1 million in promissory
notes and assumed indebtedness. The Company also issued 2,250,000
shares of its common stock, and five-year warrants to purchase an
additional 500,000 shares of common stock at an exercise price of $10
per share, to GPRI's former secured debt holders.
At the time of the GPRI Acquisition, the Company also purchased the
remaining 50% interest in SCGC not already owned by Louisiana
Riverboat Gaming Partnership ("LRGP") (the "SCGC Acquisition"), in
exchange for 1,850,000 shares of the Company's common stock and a
five-year warrant. The warrant allows the seller to convert up to
$5,000,000 of its note payable to LRGP to 416,667 shares of common
stock of the Company. The purchase agreement also provides for the
restructuring of certain indebtedness owed to the seller.
LRGP Acquisition
On August 6, 1996, the Company acquired the remaining 50% interest in
LRGP held by Louisiana River Site Development, Inc. The consideration
for the LRGP Acquisition included (i) $85 million in cash, (ii) five-
year warrants to purchase 500,000 shares of Common Stock at an
exercise price of $10.50 per share and (iii) $1.5 million per year for
seven years, payable monthly beginning on October 1, 1998.
Pompano Park
On June 30, 1995, the Company acquired 100% of Pompano Park
the ("Pompano") acquisition, a harness racing track, for approximately
$8,000,000 (the "Pompano Acquisition"). If casino gaming is legally
permitted in Florida at the Pompano Park site by June 30, 2001, the
Company is required to pay additional consideration to the seller
amounting to $25,000,000 plus 5% of net gaming win, as defined. The
probability of the Company paying such additional consideration is
remote; however, if such payments are made in the future, they would
be accounted for as additional purchase price and allocated to
goodwill. Such goodwill will be amortized over a period to be
determined at date of payment not to exceed 40 years.
Proforma Information
The SCGC Acquisition, the LRGP Acquisition, the GPRI Acquisition and
the Pompano Acquisition have been accounted for by the Company using
the purchase method of accounting, and the Company's proportionate
share of the results of operations for each of the acquired companies
has been included in the Company's results of operations from the
respective dates of acquisition.
The following unaudited pro forma condensed consolidated financial
information for the three months ended July 31, 1996 gives effect to
the SCGC Acquisition, the LRGP Acquisition and the GPRI Acquisition,
as if such transactions had occurred on May 1, 1996. The unaudited
pro forma condensed consolidated financial information for the three
months ended July 31, 1995 gives effect to LRGP's purchase of a 50%
interest in SCGC on
8
June 9, 1995, the SCGC Acquisition, the LRGP Acquisition and the GPRI
Acquisition, as if such transactions had occurred on May 1, 1995.
Three Months Ended July 31,
1996 1995
---------------------------
Total revenue $110,732,000 $72,351,000
Operating income $ 14,919,000 $ 7,887,000
Net income (loss) $ 2,313,000 ($960,000)
Net income (loss) per common and
common equivalent share $0.11 ($0.05)
The pro forma financial information presented above does not purport
to be indicative of the results of operations that actually would have
been achieved if the operations were combined during the periods
presented nor is it intended to be a projection of results or trends.
Because the Company will consolidate LRGP and SCGC for reporting
periods subsequent to the date of the LRGP Acquisition, the pro forma
financial information has been presented on a consolidated basis. The
pro forma operating results presented above do not give effect to the
acquisition of Pompano because the pro forma effect of this
acquisition would not be material to the operating results of the
Company.
The pre-bankruptcy business of GPRI consisted entirely of developing
and operating the Grand Palais riverboat casino in New Orleans,
Louisiana. The Grand Palais began gaming operations in New Orleans on
March 29, 1995 and, due to poor operating results, ceased operations
on June 6, 1995. GPRI was forced into involuntary bankruptcy on July
26, 1995 and was completely non-operational between June 6, 1995 and
the subsequent reopening of the Grand Palais at the Isle-Lake Charles
on July 12, 1996. Other than amortization of the related goodwill and
interest on debt incurred to effect the GPRI Acquisition, adjustments
related to the pre-bankruptcy operations of GPRI have not been
included in the pro forma results of operations for the three months
ended July 31, 1995 because the pre-bankruptcy operations of GPRI were
very limited and substantially different than the post-acquisition
operations.
Note 3. Operating Expenses
The Isle of Capri Casino in Biloxi, Mississippi (the "Isle-Biloxi"),
which originally opened on August 1, 1992, underwent a substantial
reconfiguration of its existing casino complex and opened a new hotel
and pavilion on August 1, 1995. The Company incurred $1,290,000 of
preopening expenses in connection with the opening of this expanded
facility during the three month period ended July 31, 1995.
On July 12, 1996, GPRI commenced operations as part of a two-boat
operation and recently expanded pavilion at the Isle-Lake Charles. The
Company incurred $1,984,000 of preopening expenses in connection with
the opening of GPRI during the three month period ended July 31, 1996.
Note 4. Operating Results of Unconsolidated Joint Ventures
9
The following are combined summarized operating results for the LRGP
"Isle-Bossier City" and LRG Hotels, L.L.C. for the three month periods
ended:
July 31, 1996 July 31, 1995
-------------- --------------
Total Revenue $40,357,000 $40,253,000
Operating Income $ 8,048,000 $10,970,000
Net Income $ 7,938,000 $ 9,404,000
The following are summarized operating results for the Isle-Lake
Charles for the three month periods ended:
July 31, 1996 July 31, 1995
-------------- --------------
Total Revenue $24,270,000 $ 537,000
Operating Income (loss) $ 3,915,000 ($4,287,000)
Net Income (loss) $ 268,000 ($1,880,000)
Results for the quarter ended July 31, 1996, reflect income of
$1,249,000 allocated to the Isle-Lake Charles under a Joint Operating
Agreement between SCGC and GPRI. Under the May 3, 1996 agreement,
income of the joint operation is allocated at 52.5% to GPRI and 47.5%
to SCGC. Results for the quarter ended July 31, 1995 include
preopening expenses of $4,196,000.
Note 5. Long-term Debt
On August 6, 1996, the Company issued $315,000,000 of 12 1/2% Senior
Secured Notes due 2003 (the "Senior Secured Notes"). Interest on the
Senior Secured Notes is payable semiannually on each February 1, and
August 1, commencing February 1, 1997, through maturity.
The Senior Secured Notes are redeemable at the option of the Company,
in whole or in part, on or after August 1, 2000, at the redemption
prices set forth in the indenture pursuant to which the Senior Secured
Notes were issued (the "Indenture"), plus accrued interest.
In the event of an adverse vote on the continuation of gaming in
Bossier Parish or Calcasieu Parish, the Isle-Bossier City Cash Flow
(as defined in the Indenture) and the Isle-Lake Charles Cash Flow (as
defined in the Indenture), respectively, will be deposited into a
collateral account pursuant to the Cash Sweep (as defined in the
Indenture). At each such time as the Excess Louisiana Cash (as
defined in the Indenture) in the collateral account equals $10
million, the Company will be obligated to make an offer to purchase,
at 100% of the principal amount of the Senior Secured Notes, plus
accrued and unpaid interest, if any, to the date of repurchase, an
amount of Senior Secured Notes equal to the Excess Louisiana Cash less
the accrued and unpaid interest on such Senior Secured Notes.
10
The Company's obligations under the Senior Secured Notes and the
Indenture are jointly, severally and unconditionally guaranteed (the
"Subsidiary Guarantees") on a senior secured basis by all existing and
future Significant Restricted Subsidiaries (as defined in the
Indenture) of the Company, subject to the receipt of the required
approval of any applicable Gaming Authority. The obligations of the
Restricted Subsidiaries under the Subsidiary Guarantees are guaranteed
by the Company
The Notes are secured by a first priority Lien on substantially all of
the assets of the Company, and the Subsidiary Guarantees are secured
by a first priority Lien on substantially all of the assets of the
Subsidiary Guarantors, other than (i) the Isle-Biloxi Hotel, the Grand
Palais and Pompano Park, as to which junior priority liens have been
granted, and (ii) excluded assets (as defined in the Indenture).
The Indenture contains certain covenants with respect to, among
others, the following matters: (i) limitation on indebtedness, (ii)
limitation on liens, (iii) limitation on restricted payments, (iv)
limitation on dividends and other payment restrictions affecting
affiliates, (v) limitation on asset sales and events of loss, (vi)
limitation on disposition of stock of Restricted Subsidiaries, (vii)
limitation on transactions with affiliates and (viii) restrictions on
consolidations, mergers and transfers of assets.
Part of the proceeds from the Senior Secured Notes were used to retire
or defease $180,285,000 in long-term debt, including $105,000,000 of
11 1/2% First Mortgage Notes due 2001, and accrued interest and other
costs of $16,396,000, as well as to consummate the LRGP Acquisition.
Note 6. Common Stock
The Company's Board of Directors authorized the offering, on a pro-
rata basis, of rights (the "Rights Offering") to purchase shares of
the Company's common stock at a price of $5.875 per share at a ratio
of approximately one share for every four shares owned to certain of
its shareholders of record on March 15, 1996. At July 31, 1996,
proceeds from the issuance of 2,395,194 shares of common stock from
the Rights Offering totaled approximately $14,026,000, net of issuance
costs of approximately $46,000.
Employees exercised options to purchase 30,375 shares of the Company's
common stock at prices between $0.89 and $5.33, for an aggregate
amount of $77,000.
On August 6, 1996 Crown Casino Corporation exercised rights to
purchase 684,786 shares of the Company's common stock, for aggregate
proceeds of approximately $4,023,000.
11
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.
CASINO AMERICA, INC.
Dated: October 1, 1996 By: /s/ Rexford A. Yeisley
-------------------------------------
Rexford A. Yeisley
Chief Financial Officer &
(Duly Authorized Officer and
Principal Financial Officer and
Accounting Officer)
12