SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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Commission file number 1- 12783
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WHG RESORTS & CASINOS INC.
--------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3277019
- ----------------------------------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
6063 East Isla Verde Avenue, Carolina, Puerto Rico 00979
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (787) 791-2222
-----------------------------
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by X 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 NO X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 6,050,200 shares of common
stock, $.01 par value, were outstanding at May 15, 1997.
WHG RESORTS & CASINOS INC.
------------
INDEX
PAGE NO
-------
Part I. Financial Information:
- -------
Item 1. Financial Statements:
------- Condensed Consolidated Statements of Operations -
Three and nine months ended March 31, 1997 and 1996................. 2
Condensed Consolidated Balance Sheets -
March 31, 1997 and June 30, 1996.................................... 3-4
Condensed Consolidated Statements of Cash Flows -
Nine months ended March 31, 1997 and 1996........................... 5
Notes to Condensed Consolidated Financial Statements................ 6-9
Item 2. Management's Discussion and Analysis of Financial Condition
------- and Results of Operations........................................... 10-12
Part II. Other Information:
- --------
Item 6.(a) Exhibits............................................................ 13
----------
Signature .................................................................... 14
WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
_____________
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
------------------------ -----------------------
1997 1996 1997 1996
-------- -------- ------- -------
Revenues:
Williams Hospitality management fees from
nonconsolidated affiliates..................................... $ 5,536 $ 4,897 $10,440 $10,177
Condado Plaza hotel/casino:
Casino........................................................ 6,387 6,348 17,196 17,485
Casino promotional allowances................................. (2,319) (1,682) (5,773) (5,655)
Rooms......................................................... 8,311 8,107 19,472 19,614
Food and beverages............................................ 2,846 2,994 8,121 8,469
Other......................................................... 831 786 2,190 2,216
------- ------- ------- -------
16,056 16,553 41,206 42,129
------- ------- ------- -------
Total revenues............................................. 21,592 21,450 51,646 52,306
Costs and expenses:
Williams Hospitality operating expenses (excl. depreciation)..... 1,001 949 2,828 2,903
Condado Plaza operating expenses (excl. depreciation):
Casino........................................................ 3,048 3,293 8,332 9,011
Rooms......................................................... 2,034 2,321 5,708 6,599
Food and beverages............................................ 2,382 2,590 6,760 7,528
Other......................................................... 1,208 1,410 3,638 4,025
------- ------- ------- -------
8,672 9,614 24,438 27,163
Selling and administrative....................................... 2,390 2,295 6,940 7,115
Depreciation and amortization.................................... 1,414 1,344 4,223 4,034
------- ------- ------- -------
Total costs and expenses................................... 13,477 14,202 38,429 41,215
------- ------- ------- -------
Operating income................................................... 8,115 7,248 13,217 11,091
Interest income, primarily from nonconsolidated
affiliates, and other income.................................... 552 530 1,643 1,367
Interest expense................................................... (815) (925) (2,489) (2,815)
Equity in income (loss) of nonconsolidated affiliates.............. 633 (318) (2,395) (3,915)
------- ------- ------- -------
Income before tax provision and minority interests................. 8,485 6,535 9,976 5,728
Provision for income taxes......................................... (2,078) (1,005) (2,302) (710)
Minority interests in income....................................... (1,670) (1,585) (2,932) (2,779)
Dividend on preferred stock of Condado Plaza....................... (82) (126) (246) (422)
------- ------- ------- -------
Net income......................................................... $ 4,655 $ 3,819 $ 4,496 $ 1,817
======= ======= ======= =======
Pro forma information reflecting income taxes on a
separate return basis:
Income before tax provision and minority interests............ $8,485 $ 6,535 $9,976 $ 5,728
Provision for income taxes.................................... (1,612) (1,111) (2,917) (2,076)
Minority interests in income.................................. (1,670) (1,585) (2,932) (2,779)
Dividend on preferred stock of Condado Plaza.................. (82) (126) (246) (422)
------- ------- ------- -------
Net income.................................................... $5,121 $ 3,713 $3,881 $ 451
======= ======= ====== =======
Per share of common stock:
Net income....................................................... $ 0.77 $ 0.63 $ 0.74 $ 0.30
======= ======= ====== =======
Pro forma net income reflecting income taxes
on a separate return basis.................................... $ 0.85 $ 0.61 $ 0.64 $ 0.07
======= ======= ====== =======
Shares used in calculating per share amounts....................... 6,050 6,050 6,050 6,050
======= ======= ====== ======
See notes to condensed consolidated financial statements.
2
WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
-------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
March 31, March 31, June 30,
1997 1997 1996
--------- --------- --------
Pro forma
ASSETS
- ------
Current assets:
Cash and cash equivalents................................................ $ 13,280 $ 10,870 $ 6,616
Receivables, net of allowances of $548 and $475.......................... 5,248 5,248 2,534
Receivables from nonconsolidated affiliates.............................. 702 702 608
Inventories.............................................................. 574 574 651
Other current assets..................................................... 851 851 689
-------- -------- --------
Total current assets.................................................. 20,655 18,245 11,098
Investments in, receivables and advances to nonconsolidated affiliates...... 28,099 28,099 27,126
Property and equipment...................................................... 86,246 85,326 83,302
Less: accumulated depreciation.............................................. (42,173) (42,173) (38,383)
-------- -------- --------
44,073 43,153 44,919
Land held as investment..................................................... 5,095 5,095 5,095
Excess of purchase cost over amount assigned to net assets acquired,
net of accumulated amortization of $3,640 and $3,340..................... 8,809 8,809 9,109
Other assets................................................................ 6,445 6,445 7,387
-------- -------- --------
$113,176 $109,846 $104,734
======== ======== ========
See notes to condensed consolidated financial statements.
3
WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
-----------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
March 31, March 31, June 30,
1997 1997 1996
--------- ---------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY Pro forma
- ------------------------------------
Current liabilities:
Accounts payable.................................................... $ 3,785 $ 3,785 $ 3,297
Accrued compensation and related benefits........................... 2,536 2,536 2,128
Other accrued liabilities........................................... 3,558 3,558 2,721
Dividend payable on preferred stock of Condado Plaza................ - 246 94
Notes Payable....................................................... 1,000 1,000 2,000
Current maturities of long-term debt................................ 3,482 3,482 3,299
-------- -------- --------
Total current liabilities........................................ 14,361 14,607 13,539
Long-term debt, less current maturities................................ 20,310 20,310 23,555
Deferred income taxes.................................................. 2,156 2,156 2,291
Other noncurrent liabilities........................................... 4,926 4,926 4,542
Payable to WMS Industries Inc.......................................... - 161 397
Minority interests..................................................... 18,920 21,590 18,810
Preferred stock of Condado Plaza held by WMS Industries Inc............ - 4,100 4,100
Shareholder's equity:
Preferred stock 2,000,000 share authorized.......................... -
Common stock, Class A, $.01 par value, non voting, 3,000,000
shares authorized................................................ -
Common stock, no par value, 1,000 shares authorized, 100 shares
outstanding, historical, and 12,000,000 shares, $.01 par value,
authorized, 6,050,200 shares outstanding, pro forma............... 61 1 1
Additional paid-in capital.......................................... 14,296 3,849 3,849
Retained earnings................................................... 38,146 38,146 33,650
-------- -------- --------
Total shareholders' equity....................................... 52,503 41,996 37,500
-------- -------- --------
$113,176 $109,846 $104,734
======== ======== ========
See notes to condensed consolidated financial statements.
4
WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
-----------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
Nine months ended
March 31,
-----------------
1997 1996
------- ------
Operating activities:
Net income...................................................................... $ 4,496 $ 1,817
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.............................................. 4,223 4,034
Provision for loss on receivables.......................................... 141 970
Undistributed loss of nonconsolidated affiliates........................... 2,395 3,915
Minority interests......................................................... 2,932 2,779
Deferred income taxes...................................................... (135) -
Decrease resulting from changes in operating assets and liabilities, net... (3,852) (2,144)
------- -------
Net cash provided by operating activities....................................... 10,200 11,371
Investing activities:
Purchase of property and equipment............................................. (2,024) (808)
Advances to nonconsolidated affiliates......................................... (186) -
Collections from nonconsolidated affiliates.................................... - 535
Other investing................................................................ 712 -
------- -------
Net cash used by investing activities......................................... (1,498) (273)
Financing activities:
Payment of long-term debt...................................................... (4,062) (3,670)
Net intercompany transactions with WMS Industries Inc.......................... (235) (3,311)
Redemption of preferred stock of Condado Plaza from WMS Industries Inc......... - (2,450)
Dividends paid to minority shareholders of subsidiary.......................... (151) (684)
------- -------
Net cash used by financing activities.......................................... (4,448) (10,115)
Increase in cash and cash equivalents............................................ 4,254 983
Cash and cash equivalents at beginning of period................................. 6,616 3,627
------- -------
Cash and cash equivalents at end of period....................................... $10,870 $ 4,610
======= =======
Set notes to condensed consolidated financial statements.
5
WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
-------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statements
--------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information, 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 accruals)
considered necessary for a fair presentation have been included. Due to
the seasonality of the Company's businesses, operating results for the nine
month period ended March 31, 1997 are not necessarily indicative of the
results that may be expected for the fiscal year ending June 30, 1997. For
further information, refer to the financial statements and footnotes
thereto included in the Company's Registration Statement on Form 10.
2. Basis of Presentation and Company Operations
--------------------------------------------
Basis of Presentation
WHG Resorts & Casinos Inc. ("WHG"), name changed from WMS Hotel
Corporation, was a wholly-owned subsidiary of Williams Hotel Corporation
("WHC") which was a wholly-owned subsidiary of WMS Industries Inc. ("WMS").
See Note 4 regarding spin-off. WMS, between March 31, 1997 and April 21,
1997, merged WHC into WHG at which time the predecessor consolidated
financial statements of WHC appearing herein became the financial
statements of WHG.
The condensed consolidated financial statements of WHG reflect results of
operations, cash flows and financial position and have been prepared using
the historical basis in the assets and liabilities and historical results
of operations of WHG and subsidiaries and affiliates (the "Company").
The pro forma information reflecting income taxes on a separate return
basis, included with the condensed consolidated statements of operations,
reflects the provision for income taxes without the tax benefits allocated
to WHG from WMS for utilization of partnership losses in the WMS
consolidated Federal income tax return. WHG presently does not have income
subject to Federal income tax that can be included in its consolidated
Federal income tax return along with the partnership losses to be able to
realize the tax benefits.
Company Operations
WHG, through its subsidiaries and affiliate owns, operates and manages two
of the leading hotels and casinos located in San Juan, Puerto Rico, and
through a second affiliate, the El Conquistador Hotel & Casino, a
destination resort complex in Las Croabas, Puerto Rico. WHG's holdings at
March 31, 1997 include: a 95% interest in Posadas de Puerto Rico
Associates, Incorporated, the owner of the Condado Plaza Hotel & Casino
("Condado Plaza"); a 50% interest in Posadas de San Juan Associates, a
partnership which owns the El San Juan Hotel & Casino ("El San Juan"); a
23.3% indirect interest in El Conquistador Partnership L.P. which owns the
El Conquistador Hotel and Casino; and a 62% interest in Williams
Hospitality Group Inc. ("Williams Hospitality"), the management company for
the above hotels and casinos.
6
3. Summarized Statement of Operations Information of Nonconsolidated Affiliates
The equity in income (loss) of nonconsolidated affiliates includes the
Company's 50% interest in Posadas de San Juan Associates ("PSJA") for the
three and nine months ended March 31, 1997 and 1996. The El Conquistador
Hotel & Casino ("El Conquistador") has a March 31 year end, which is three
months earlier than the Company's year end of June 30 and accordingly the
equity in the results of El Conquistador are recorded by the Company with a
three month lag. The equity in income (loss) of nonconsolidated affiliates
also includes for the three months ended March 31, 1997 and 1996, the
Company's 23.3% indirect interest in the results of operations of the El
Conquistador for the three months ended December 31, 1996 and 1995 and the
nine months ended March 31, 1997 and 1996 includes operations of the El
Conquistador for the nine months ended December 31, 1996 and 1995.
The summarized statement of operations information of PSJA, which is 50%
owned by the Company, is as follows (in thousands):
Three months ended Nine months ended
March 31, March 31,
--------------------- --------------------
1997 1996 1997 1996
--------- ---------- --------- ---------
Revenues.............................. $ 17,524 $ 15,792 $ 39,685 $ 38,455
Management fees and interest payable
to Williams Hospitality.............. (2,041) (1,634) (4,140) (3,707)
Other costs and expenses.............. (11,820) (12,544) (33,441) (35,312)
-------- -------- -------- --------
Net income (loss)..................... $ 3,663 $ 1,614 $ 2,104 ($564)
======== ======== ======== ========
The summarized statement of operations information of WKA EL Con
Associates, in which the Company has a 46.5% partnership interest, is as
follows (in thousands):
Three months ended Nine months ended
March 31, March 31,
--------------------- ---------------------
1997 1996 1997 1996
--------- ---------- -------- -----------
Net operating income (expenses)..................... $ 10 ($58) ($ 1) ($155)
Equity in 50% of the El Conquistador net loss for
the three and nine months ended December 31,
1996 and 1995........................................ (2,586) (2,380) (7,405) (7,964)
Equity in net income of Las Casitas................... -- -- -- 313
-------- ------- ------- -------
Net loss.............................................. ($2,576) ($2,438) ($7,406) ($7,806)
======== ======= ======= =======
The summarized statement of operations information of El Conquistador
Partnership L.P., in which WKA EL Con Associates has a 50% partnership
interest, is as follows (in thousands):
Three months ended Nine months ended
December 31, December 31,
-------------------- ----------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
Revenues................................. $ 20,368 $ 18,876 $ 58,169 $ 56,286
Management fees and interest payable to
Williams Hospitality.................. (1,179) (1,109) (3,406) (3,170)
Interest payable to partners............. (637) (620) (1,878) (1,932)
Other costs and expenses................. (21,425) (19,194) (60,840) (59,144)
Depreciation and amortization............ (2,302) (2,711) (6,856) (7,967)
-------- -------- --------- ---------
Net loss................................. ($5,175) ($4,758) ($14,811) ($15,927)
======== ======== ========= =========
7
4. Spin-off and pro forma information
----------------------------------
On March 20, 1997 the Board of Directors of WMS declared the spin-off
distribution of WHG to holders of WMS common stock with the close of
business on March 31, 1997 being the record date. This declaration
resulted in the distribution by WMS on April 21, 1997 of 6,050,200 shares
of WHG common stock to the WMS shareholders (the "Distribution").
Between April 1, 1997 and April 21, 1997 WHG and its subsidiaries and WMS
completed several preliminary transactions as part of the plan of
distribution that affected the consolidated balance sheet of WHG and
included, among other things, the transfer of cash to WHG from WMS, the
purchase of the 5% minority interest in the Condado Plaza, payment of a
dividend by Williams Hospitality, and contribution to the capital of WHG by
WMS.
The pro forma condensed consolidated balance sheet at March 31, 1997
reflects these preliminary transactions and the historical balances have
been adjusted as follows:
Pro foma adjustments
Balance sheet caption increase (decrease)
- --------------------- --------------------
Cash and cash equivalents:
Receivable collected from WMS $ 4,357,000
Cash capital contribution by WMS 1,643,000
Williams Hospitality dividend paid to minority (2,090,000)
Purchase of 5% of Condado Plaza (1,500,000)
-----------
$ 2,410,000
===========
Property and equipment:
Allocation of purchase price to hotel building from
acquisition of additional 5% of Condado Plaza $ 920,000
===========
Dividend payable on preferred stock of Condado Plaza:
WMS contributed its receivable to the capital of WHG ($246,000)
===========
Payable to WMS Industries:
Receivable collected from WMS $ 4,357,000
WMS contributes gross payable by WHG to WMS to the capital of WHG (4,518,000)
-----------
$(161,000)
===========
Minority interests:
Book value of 5% of Condado Plaza minority interest purchased ($580,000)
Williams Hospitality dividend paid to minority (2,090,000)
-----------
$(2,670,000)
===========
Preferred stock of Condado Plaza held by WMS:
Contributed to capital of WHG by WMS $(4,100,000)
===========
Common stock:
Reflects $.01 par value of the 6,050,200 shares of WHG
common stock distributed $ 60,000
===========
Additional paid-in capital:
Cash contributed by WMS $ 1,643,000
Dividend payable contributed by WMS 246,000
Intercompany payable of WHG contributed by WMS 4,518,000
Preferred stock of Condado Plaza contributed by WMS 4,100,000
Transfer to par value of common stock (60,000)
-----------
$10,447,000
===========
8
As a result of the preliminary transactions and the spin-off, the
consolidated results of operations will in future years include certain
costs of being a public company, changes in income tax provisions and the
elimination of the Condado Plaza preferred stock dividend from the
condensed consolidated statement of operations. A summary of the pro forma
net income or (loss) and per share amounts for the periods presented in the
accompanying condensed consolidated statements of operations adjusted for
the estimates of these changes are as follows (in thousands):
Three months ended Nine months ended
March 31, March 31,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Net income (loss)................................. $4,292 $3,596 $2,773 ($145)
====== ====== ====== =====
Per share of common stock using 6,050,200 shares.. $ .71 $ .59 $ .46 ($.02)
====== ====== ====== =====
9
WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
_______________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains certain forward looking statements that
involve risks and uncertainties including the outcome of refinancing certain
debt and seasonality. The Company's actual results could differ materially from
those anticipated in the forward looking statements.
Financial Condition
- -------------------
Cash flows from consolidated operating, investing and financing activities of
the Company during the nine months ended March 31, 1997 resulted in net cash
provided of $4,254,000 compared with net cash provided of $983,000 during the
nine months ended March 31, 1996.
Cash provided by operating activities before changes in operating assets and
liabilities was $14,052,000 during the nine months ended March 31, 1997 compared
with cash provided of $13,515,000 for the nine months ended March 31, 1996.
This increase was primarily due to an increase in net income from $1,817,000 in
the nine months ended March 31, 1996 to $4,496,000 in the nine months ended
March 31, 1997.
The changes in operating assets and liabilities, as shown in the condensed
consolidated statements of cash flows, resulted in cash outflow of $3,852,000
during the nine months ended March 31, 1997 and $2,144,000 during the nine
months ended March 31, 1996, due in both cases to the increase in net amounts
due from nonconsolidated affiliates.
Cash used by investing activities was $1,498,000 in the nine months ended March
31, 1997 and $273,000 in the nine months ended March 31, 1996. Cash used for
the purchase of property and equipment was $2,024,000 in the nine months ended
March 31, 1997 and $808,000 in the nine months ended March 31, 1996.
Cash used by financing activities during the nine months ended March 31, 1997
was $4,448,000 compared with cash used of $10,115,000 during the nine months
ended March 31, 1996. Payment of long-term debt was $4,062,000 and $3,670,000
in the nine months ended March 31, 1997 and 1996, respectively. Net
intercompany transactions with WMS resulted in cash used of $235,000 in the nine
months ended March 31, 1997 compared to cash used of $3,311,000 in the nine
months ended March 31, 1996. During the nine months ended March 31, 1996
Posadas de Puerto Rico Associates, Incorporated redeemed $2,450,000 of Condado
Plaza preferred stock owned by WMS.
See condensed consolidated statements of cash flows on page 5 for further
details on cash flow items.
The three hotels and casinos and Williams Hospitality provide for their off-
season cash needs through their own cash and from individual short-term note
arrangements. Annual capital expenditures are provided for each year as part of
the annual budgeting process. Capital expenditures are approved taking into
account available cash and available financing, if necessary.
10
The Condado Plaza has a $2,000,000 bank line of credit available on which
$1,000,000 was borrowed at March 31, 1997. The El San Juan has a $1,000,000
bank line of credit available of which $700,000 was borrowed at March 31, 1997.
El San Juan and El Conquistador long-term debt agreements provide that advances
and other payments to the owners are to be based on defined levels of cash flow
from the respective hotels and casinos which based on historical results limits
and prohibits, respectively, such transactions. The long-term debt agreements
and other agreements permit the payment to Williams Hospitality of certain
management fees and intercompany charges from the three hotels and casinos.
There are no agreements restricting Williams Hospitality from paying dividends
or otherwise making advances and the Company expects to receive dividends from
Williams Hospitality cash flow to provide for its operating expenses.
Management believes that cash flow from the operations of Condado Plaza and El
San Juan will be adequate to pay or refinance its long-term debt as it becomes
due and provide for its normal planned capital additions for the next twelve
months.
El Conquistador will have $120,000,000 of indebtness due on February 1, 1998,
unless extended, and is secured by substantially all of the assets of the El
Conquistador. The Company has retained an investment banking firm to assist in
structuring the refinancing of the El Conquistador debt. Based on operating
history of the El Conquistador, the Company believes such refinancing will be
achieved, but there can be no assurance thereof. If such financing is not
renewed or replaced and as a consequence thereof the existing lenders foreclose
on the El Conquistador, the Company would probably incur a loss on its
investment in and receivables from El Conquistador which would be significant to
the financial position of the Company.
Results of Operations
- ---------------------
The following summarizes the unaudited condensed consolidated statements of
operations for the periods shown in the format presented as segment information
in the notes to the year-end consolidated financial statements included in the
Company's Registration Statement on Form 10 (thousands of dollars):
Three months ended Nine months ended
March 31, March 31,
------------------ ------------------
1997 1996 1997 1996
-------- -------- ------- --------
Revenues:
Condado Plaza................................................. $16,056 $16,553 $41,206 $42,129
Williams Hospitality.......................................... 6,864 6,108 13,575 12,944
Intersegment revenue elimination - Williams Hospitality fees
charged to Condado Plaza..................................... (1,328) (1,211) (3,135) (2,767)
------- ------- ------- -------
Total revenues............................................. $21,592 $21,450 $51,646 $52,306
======= ======= ======= =======
Segment operating income:
Condado Plaza................................................. $ 3,015 $ 2,692 $ 4,624 $ 2,800
Williams Hospitality.......................................... 5,251 4,606 9,003 8,371
General corporate administrative expenses..................... (151) (50) (410) (80)
------- ------- ------- -------
Total operating income...................................... $ 8,115 $ 7,248 $13,217 $11,091
======= ======= ======= =======
Three Months Ended March 31, 1997 Compared With
Three Months Ended March 31, 1996
Consolidated revenues increased by $142,000 or 0.7% in the quarter ended March
31, 1997 to $21,592,000 from $21,450,000 in the quarter ended March 31, 1996.
Increased Williams Hospitality revenues were partially offset by lower Condado
Plaza revenues.
Operating income in the Condado Plaza segment increased by $323,000 to
$3,015,000 in the quarter ended March 31, 1997 from $2,692,000 in the quarter
ended March 31, 1996. The increase was primarily due to reductions in costs and
expenses in all departments resulting from cost reduction efforts of management
and reduced provision for doubtful accounts receivable.
Operating income in the Williams Hospitality segment increased due to increased
management fees from the El San Juan and Condado Plaza because of their improved
operations.
11
The equity in income of nonconsolidated affiliates was $633,000 for the quarter
ended March 31, 1997 compared with a loss of ($318,000) for the quarter ended
March 31, 1996. The 50% equity in income of the El San Juan was $1,832,000 in
the quarter ended March 31, 1997 compared with $807,000 in the quarter ended
March 31, 1996. The improved results at the El San Juan were due primarily to
higher casino revenues resulting from a higher win percentage and lower costs
and expenses resulting from cost reduction efforts by management and reduced
provision for doubtful accounts receivable. The 23.3% equity in loss of the El
Conquistador was ($1,199,000) in the quarter ended March 31, 1997 compared with
($1,125,000) in the quarter ended March 31, 1996.
The income tax provision results primarily from Puerto Rico and Federal income
tax provisions for Williams Hospitality and Federal taxes or credit allocated
from WMS on the equity in the income or loss of nonconsolidated affiliates.
Net income in the quarter ended March 31, 1997 was $4,655,000 compared with net
income of $3,819,000 in the quarter ended March 31, 1996. The net income
increased by approximately 22% due primarily to higher casino revenues at the El
San Juan and cost reductions and reduced provision for doubtful accounts
receivable at all the hotels and casinos in which the Company owns interests
notwithstanding the higher income taxes.
Nine Months Ended March 31, 1997 Compared With
Nine Months Ended March 31, 1996
Consolidated revenues decreased by $660,000 or 1.3% in the nine months ended
March 31, 1997 to $51,646,000 from $52,306,000 in the nine months ended March
31, 1996. The decrease was primarily attributable to the Condado Plaza.
Operating income in the Condado Plaza segment increased by $1,824,000 to
$4,624,000 in the nine months ended March 31, 1997 from $2,800,000 in the nine
months ended March 31, 1996. The increase was primarily due to reductions in
costs and expenses in all departments resulting from cost reduction efforts of
management and reduced provision for doubtful accounts receivable.
Operating income in the Williams Hospitality segment increased by $632,000 to
$9,003,000 in the nine months ended March 31, 1997 from $8,371,000 in the nine
months ended March 31, 1996 primarily due to increased El San Juan and Condado
Plaza management fees.
The equity in loss of nonconsolidated affiliates was ($2,395,000) for the nine
months ended March 31, 1997 compared with ($3,915,000) for the nine months ended
March 31, 1996. The decrease in the loss was from the El San Juan primarily due
to higher casino revenues resulting from a higher win percentage and lower costs
and expenses resulting from cost reduction efforts by management and reduced
provision for doubtful accounts receivable. The 50% equity in income of the EL
San Juan was $1,052,000 in the nine months ended March 31, 1997 compared with
equity in loss of ($282,000) in the nine months ended March 31, 1996. The 23.3%
equity in loss of the El Conquistador was ($3,447,000) in the nine months ended
March 31, 1997 compared with ($3,633,000) in the nine months ended March 31,
1996.
The income tax provision of $2,302,000 in the nine months ended March 31, 1997
and the income tax provision of $710,000 in the nine months ended March 31, 1996
results from Puerto Rico and Federal income tax provisions for Williams
Hospitality exceeding the tax benefit allocated from WMS on the equity in the
loss of nonconsolidated affiliates.
Net income in the nine months ended March 31, 1997 was $4,496,000 compared with
$1,817,000 in the nine months March 31, 1996. The net income increased by
approximately 147% due primarily to higher casino revenues at the El San Juan
and cost reductions and reduced provision for doubtful accounts receivable at
all the hotels and casinos in which the Company owns interests notwithstanding
the higher income taxes.
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PART II
OTHER INFORMATION
Item 6.(a) Exhibits
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Exhibit 27 - Financial Data Schedule
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WHG RESORTS & CASINOS INC.
(formerly Williams Hotel Corporation)
_______________
Signature
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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 duly authorized.
WHG Resorts & Casinos Inc.
--------------------------
(Registrant)
Dated: May 19, 1997 By: /S/ Richard F. Johnson
---------------------------
Richard F. Johnson
Chief Financial Officer
and Treasurer
14