UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
-------------
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: 0-21736
-------
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
---------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84 -1158484
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 21
240 Main Street
Black Hawk, Colorado 80422
------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 582-1117
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock 4,132,233 shares
- ------------- ----------------
Class Outstanding as of August 10, 2001
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
Index to Form 10-Q
June 30, 2001
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1. Consolidated Financial Statements:
Unaudited Consolidated Balance Sheets as of June 30,
2001 and December 31, 2000 1
Unaudited Consolidated Statements of Income for the
three and six months ended June 30, 2001 and 2000 2-3
Unaudited Consolidated Statement of Stockholders'
Equity six months ended June 30, 2001 4
Unaudited Consolidated Statements of Cash Flows
for the six months ended June 30, 2001 and 2000 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-26
Item 3. Quantitative and Qualitative Disclosure
About Market Risk 27
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 28
Item 2. Changes in Securities 28
Item 3. Defaults Upon Senior Securities 28
Item 4. Submission of Matters to a Vote of
Security Holders 28
Item 5. Other Information 28
Item 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 AND DECEMBER 31, 2000
- --------------------------------------------------------------------------------
June 30, December 31,
2001 2000
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,557,295 $ 8,518,464
Accounts receivable 239,719 740,804
Inventories 567,357 535,231
Prepaid expenses 1,306,348 671,546
Deferred income tax 618,876 440,470
------------- -------------
Total current assets 12,289,595 10,906,515
LAND 18,799,427 15,239,426
GAMING FACILITIES:
Building and improvements 63,578,090 58,283,231
Equipment 22,029,507 18,487,936
Accumulated depreciation (16,412,965) (14,134,293)
------------- -------------
Total gaming facilities 69,194,632 62,636,874
OTHER ASSETS:
Goodwill, net of accumulated amortization of $2,114,702
and $1,369,615, respectively 20,443,700 5,374,461
Other assets 2,574,135 3,318,973
------------- -------------
TOTAL $ 123,301,489 $ 97,476,249
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,315,103 $ 5,320,255
Accrued payroll 1,364,409 760,297
Gaming taxes payable 1,415,739 2,673,927
Property taxes payable 480,003 526,931
Slot club liability 897,604 940,655
Current portion of long-term debt 374,811 783,587
------------- -------------
Total current liabilities 7,847,669 11,005,652
LONG-TERM DEBT:
Reducing and revolving credit facility 58,800,000 29,900,000
Bonds payable 5,108,355 5,298,624
------------- -------------
Total long-term debt 63,908,355 35,198,624
Interest rate swap liability 594,174
Deferred tax liability 627,445 469,920
------------- -------------
Total liabilities 72,977,643 46,674,196
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COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 7,008,074 8,739,694
STOCKHOLDERS' EQUITY:
Preferred stock; $.001 par value; 10,000,000 shares authorized;
none issued and outstanding
Common stock; $.001 par value; 40,000,000 shares authorized;
4,132,233 and 4,126,757 shares issued and outstanding, respectively 4,133 4,127
Additional paid-in capital 18,611,292 18,569,538
Accumulated other comprehensive loss (251,176)
Retained earnings 24,951,523 23,488,694
------------- -------------
Total stockholders' equity 43,315,772 42,062,359
------------- -------------
TOTAL $ 123,301,489 $ 97,476,249
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1
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
- --------------------------------------------------------------------------------
THREE MONTHS ENDED PERCENTAGE
JUNE 30, DOLLAR INCREASE
2001 2000 DIFFERENCE (DECREASE)
------------ ------------ ------------ ----------
REVENUES:
Casino revenue $ 24,213,491 $ 20,924,449 $ 3,289,042 16 %
Food and beverage revenue 2,899,221 2,286,263 612,958 27 %
Hotel revenue 360,268 280,502 79,766 28 %
Other 169,724 186,031 (16,307) (9)%
------------ ------------ ------------
Total revenues 27,642,704 23,677,245 3,965,459 17 %
Promotional allowances 4,138,560 3,558,277 580,283 16 %
------------ ------------ ------------
Net revenues 23,504,144 20,118,968 3,385,176 17 %
------------ ------------ ------------
COSTS AND EXPENSES:
Casino operations 7,415,576 6,467,708 947,868 15 %
Food and beverage operations 2,606,094 2,053,967 552,127 27 %
Hotel operations 239,294 176,558 62,736 36 %
Marketing, general and administrative 7,946,014 6,176,042 1,769,972 29 %
Privatization and other non-recurring costs 1,114,989 1,114,989
Depreciation and amortization 1,852,128 1,398,046 454,082 32 %
------------ ------------ ------------
Total costs and expenses 21,174,095 16,272,321 4,901,774 30 %
------------ ------------ ------------
OPERATING INCOME 2,330,049 3,846,647 (1,516,598) (39)%
Interest income 39,282 81,575 (42,293) (52)%
Interest expense (1,250,632) (920,860) (329,772) 36 %
------------ ------------ ------------
INCOME BEFORE MINORITY INTEREST AND INCOME TAXES 1,118,699 3,007,362 (1,888,663) (63)%
MINORITY INTEREST 446,122 597,395 (151,273) (25)%
------------ ------------ ------------
INCOME BEFORE INCOME TAXES 672,577 2,409,967 (1,737,390) (72)%
INCOME TAXES 605,822 867,600 (261,778) (30)%
------------ ------------ ------------
NET INCOME $ 66,755 $ 1,542,367 $ (1,475,612) (96)%
============ ============ ============
BASIC EARNINGS PER SHARE $ 0.01 $ 0.37 $ (0.36) (97)%
Dilutive effect of outstanding options
------------ ------------ ------------
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.37 $ (0.36) (97)%
============ ============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 4,131,538 4,111,757
Dilutive effect of outstanding options 212,626 53,487
------------ ------------
DILUTED 4,344,164 4,165,244
============ ============
2
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
- --------------------------------------------------------------------------------
SIX MONTHS ENDED PERCENTAGE
JUNE 30, DOLLAR INCREASE
2001 2000 DIFFERENCE (DECREASE)
------------ ------------ ------------ ----------
REVENUES:
Casino revenue $ 48,449,701 $ 42,196,252 $ 6,253,449 15 %
Food and beverage revenue 5,736,831 4,659,550 1,077,281 23 %
Hotel revenue 670,696 535,066 135,630 25 %
Other 935,265 300,079 635,186 212 %
------------ ------------ ------------
Total revenues 55,792,493 47,690,947 8,101,546 17 %
Promotional allowances 8,201,136 7,303,758 897,378 12 %
------------ ------------ ------------
Net revenues 47,591,357 40,387,189 7,204,168 18 %
------------ ------------ ------------
COSTS AND EXPENSES:
Casino operations 15,144,325 12,853,314 2,291,011 18 %
Food and beverage operations 5,129,781 4,091,916 1,037,865 25 %
Hotel operations 455,519 347,697 107,822 31 %
Marketing, general and administrative 15,539,370 12,064,252 3,475,118 29 %
Privatization and other non-recurring costs 1,114,989 1,114,989
Depreciation and amortization 3,760,652 2,807,794 952,858 34 %
------------ ------------ ------------
Total costs and expenses 41,144,636 32,164,973 8,979,663 28 %
------------ ------------ ------------
OPERATING INCOME 6,446,721 8,222,216 (1,775,495) (22)%
Interest income 114,596 160,537 (45,941) (29)%
Interest expense (2,821,966) (1,907,106) (914,860) 48 %
------------ ------------ ------------
INCOME BEFORE MINORITY INTEREST AND INCOME TAXES 3,739,351 6,475,647 (2,736,296) (42)%
MINORITY INTEREST 885,408 1,252,909 (367,501) (29)%
------------ ------------ ------------
INCOME BEFORE INCOME TAXES 2,853,943 5,222,738 (2,368,795) (45)%
INCOME TAXES 1,391,114 1,880,200 (489,086) (26)%
------------ ------------ ------------
NET INCOME $ 1,462,829 $ 3,342,538 $ (1,879,709) (56)%
============ ============ ============
BASIC EARNINGS PER SHARE $ 0.35 $ 0.81 $ (0.46) (57)%
Dilutive effect of outstanding options (0.01) (0.01)
------------ ------------ ------------
DILUTED EARNINGS PER SHARE $ 0.34 $ 0.81 $ (0.47) (58)%
============ ============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 4,130,229 4,111,482
Dilutive effect of outstanding options 177,708 38,821
------------ ------------
DILUTED 4,307,937 4,150,303
============ ============
3
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001
- --------------------------------------------------------------------------------
Accumulated
Other
Additional Comprehensive
Common Stock Paid-in Retained Income
Shares Amount Capital Earnings (Loss) Total
--------- ------- ------------ ------------ ------------- ------------
BALANCES,
JANUARY 1, 2001 4,126,757 $ 4,127 $ 18,569,538 $ 23,488,694 $ 42,062,359
Stock issued for compensation 3,476 4 25,996 26,000
Options Exercised 2,000 2 15,758 15,760
Comprehensive income:
Transition adjustment as a result of
the adoption of Statement of Financial
Accounting Standards No. 133 367,941 367,941
Unrealized loss on interest rate swap (540,272) (540,272)
Reclassification adjustment for amortization of
cumulative transition adjustment, included in
net income (78,845) (78,845)
Net income 1,462,829 1,462,829
--------- ------- ------------ ------------ ------------- ------------
Total Comprehensive Income 1,211,653
------------
BALANCES,
JUNE 30, 2001 4,132,233 $ 4,133 $ 18,611,292 $ 24,951,523 $ (251,176) $ 43,315,772
========= ======= ============ ============ ============= ============
4
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
- --------------------------------------------------------------------------------
2001 2000
------------ ------------
OPERATING ACTIVITIES:
Net income $ 1,462,829 $ 3,342,536
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,760,652 2,424,474
Change in fair value of interest rate swap, net 196,621
Gain on sale of equipment 35,225 (23,813)
Minority interest 885,408 1,252,909
Noncash compensation 7,750
Changes in operating assets and liabilities, net of
the effects of acquisition:
Accounts receivable 501,086 22,167
Inventories 34,332 1,770
Prepaid expenses and other assets (817,977) 158,844
Accounts payable and accrued expenses (2,623,699) (2,959,307)
------------ ------------
Net cash provided by operating activities 3,434,477 4,227,330
------------ ------------
INVESTING ACTIVITIES:
Proceeds from sale of equipment 12,789 27,950
Equipment purchases and additions to gaming facilities (1,480,938) (1,122,901)
Acquisition costs related to the Gold Dust West (81,937) (474,143)
Deposit related to the Gold Dust West (500,000)
Acquisition of the Gold Dust West, net of cash acquired (26,000,000)
------------ ------------
Net cash used in investing activities (27,550,086) (2,069,094)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from reducing and revolving credit facility 36,500,000
Payments on bonds (178,136) (175,000)
Payments on long term debt and note payable (8,020,910) (3,195,254)
Payments to amend reducing and revolving credit facility (571,247)
Distributions to minority interest owner (2,617,028) (620,813)
Other 41,761 10,000
------------ ------------
Net cash provided by (used in) financing activities 25,154,440 (3,981,067)
------------ ------------
NET INCREASE / (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 1,038,831 $ (1,822,831)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,518,464 10,239,735
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,557,295 $ 8,416,904
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 2,685,094 $ 1,897,247
Cash paid for income taxes $ 1,168,000 $ 1,875,750
5
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001
1. BUSINESS
Black Hawk Gaming & Development Company, Inc. ("BHWK" or the "Company")
was incorporated on January 10, 1991. The Company is a holding company, which
owns, develops and operates gaming properties. Currently the Company operates
the Gilpin Hotel Casino ("GHC") and The Lodge Casino at Black Hawk ("The
Lodge"), both located in Black Hawk, Colorado, and The Gold Dust West Casino
("GDW") located in Reno, Nevada.
GHC is a 37,000 square foot facility located in the Black Hawk gaming
district and was the Company's first casino project. Originally built in the
1860's, the Gilpin Hotel was one of the oldest in Colorado; however, due to
space limitations, the casino offers no hotel or lodging facilities. The Gilpin
Hotel Casino commenced operations in October 1992, and was expanded through the
acquisition of an adjacent casino in late 1994. Prior to April 24, 1998, the
Company owned a 50% interest in the Gilpin Hotel Venture, which owned GHC. On
April 24, 1998, the Company acquired the other 50% interest in GHC and related
land. It now offers customers approximately 460 slot machines, 4 table games,
two restaurants, four bars and parking for approximately 200 cars.
The Lodge is a $74 million hotel/casino/parking complex and is one of
Colorado's largest casinos. The 250,000 square foot facility which opened on
June 24, 1998, presently offers customers 877 slot machines, 27 table games, 50
hotel rooms, three restaurants, four bars and parking for approximately 600
cars. The Company and its strategic partner, Jacobs Entertainment Ltd.,
developed and co-manage The Lodge, through an LLC, in which the Company owns a
75% interest and affiliates of Jacobs Entertainment Ltd. own 25%.
On January 4, 2001, the Company purchased the assets and operating
business of GDW for $26.5 million. The 24,000 square foot gaming and dining
facility is located on 4.6 acres, a few blocks west of Reno's downtown gaming
district. The casino has been catering to the "locals" market for the past 23
years and currently offers customers 500 slot machines, 106 motel rooms, one
restaurant, four bars and parking for 277 cars.
The Lodge, GHC, and GDW are sometimes referred to as the "Casinos."
2. SIGNIFICANT ACCOUNTING POLICIES
Unaudited Consolidated Financial Statements --- In the opinion of
management, the accompanying unaudited consolidated financial statements reflect
all adjustments, consisting of normal recurring accruals, which are necessary
for the fair presentation of the financial position of the Company at June 30,
2001 and the results of its operations for the three and six months then ended.
The accompanying unaudited consolidated financial statements include the
accounts of BHWK, its wholly owned subsidiaries Gilpin Ventures, Inc. ("GVI")
and GDW, and its 75% owned subsidiary, Black Hawk/Jacobs Entertainment, LLC. All
significant inter-company transactions and balances have been eliminated in
consolidation.
The accompanying unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
contained in the Company's Form 10-K for the year ended December 31, 2000. The
results of interim periods are not necessarily indicative of results to be
expected for the year.
Reclassifications - Certain amounts have been reclassified within the
2000 financial statements to conform to the presentation used in 2001.
6
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001
(Continued)
3. OTHER MATTERS
Recently Issued Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations". SFAS No. 141 improves the transparency of the accounting and
reporting for business combinations by requiring that all business combinations
be accounted for under a single method - the purchase method. This Statement is
effective for all business combinations initiated after June 30, 2001.
Management is currently evaluating the impact that this statement will have on
the Company's financial statements.
In July 2001, FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets". This statement applies to intangibles and goodwill acquired after June
30, 2001, as well as goodwill and intangibles previously acquired. Under this
statement, goodwill as well as other intangibles determined to have an
indefinite life will no longer be amortized; however, these assets will be
reviewed for impairment on a periodic basis. This statement is effective for the
Company for the first quarter in the fiscal year ended December 31, 2002.
Management is currently evaluating the impact that this statement will have on
the Company's financial statements.
In January 2001, FASB announced that the Emerging Issues Task Force
("EITF") had reached a final consensus on EITF 00-22 "Accounting for `Points'
and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers
for Free Products or Services to Be Delivered in the Future." EITF 00-22
requires that certain sales incentives provided by vendors that entitle a
customer to receive a reduction in the price of a product or service based on a
specified cumulative level of transactions be recognized as a reduction in
revenue. This issue is scoped broadly to include all industries that utilize
point or other loyalty programs, including the hospitality industry. Effective
January 1, 2001, the Company adopted this standard resulting in a
reclassification of player point and coupon cash redemption expenses from
marketing, general and administrative expense to promotional allowances in the
amount of $2,177,000 and $1,935,000 for the three months ended June 30, 2001 and
2000, respectively, and $4,240,000 and $3,952,000 for the six months ended June
30, 2001 and 2000, respectively.
4. ACCOUNTING CHANGE
Effective January 1, 2001, BHWK adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. All
derivatives, whether designated in hedging relationships or not, are required to
be recorded on the balance sheet at fair value. If the derivative is designated
as a fair-value hedge, the changes in the fair value of the derivative and of
the hedged item attributable to the hedged risk are recognized in earnings. If
the derivative is designated as a cash-flow hedge, changes in the fair value of
the derivative are recorded in other comprehensive income ("OCI") net of taxes,
and are recognized in the income statement when the hedged item affects
earnings. SFAS No. 133 defines requirements for designation and documentation of
hedging relationships as well as ongoing effectiveness assessments in order to
use hedge accounting.
The Company uses derivative instruments to manage its exposure to
interest rate risk. The Company's objective for holding derivatives is to
minimize the risks associated with fluctuating interest rates by using the most
effective methods available. Variable-rate debt is subject to interest rate
risk. The Company uses Interest Rate Swaps, as cash flow hedging instruments, to
manage its exposure to interest rate risk on its variable-rate debt.
7
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND MONTHS ENDED JUNE 30, 2001
(Continued)
4. ACCOUNTING CHANGE (Continued)
The adoption of SFAS No. 133 on January 1, 2001, resulted in the
Company recording a $368,000 gain (net of $200,000 in taxes) in accumulated
other comprehensive income/(loss) as a transition adjustment for its derivative
instrument which had been designated as a cash flow hedge prior to adopting
SFAS No. 133.
On February 16, 2001, the Company terminated this interest rate swap
agreement and simultaneously entered into a new interest rate swap agreement and
designated the new swap as a cash flow hedge as defined by SFAS No. 133. From
January 1, 2001 through February 16, 2001, the Company recorded a $318,000
charge to interest expense due to the devaluation of the original interest rate
swap. Although the transition adjustment was reflected in other comprehensive
loss, subsequent changes in the value of the original interest rate swap are
reflected in the income statement because the swap was not designated as a
hedging instrument as defined by SFAS No. 133. In, addition, the Company
reclassified $79,000 (net of $43,000 in taxes) of the transition gain from OCI
to interest expense representing the amortization of the transition gain due to
terminating the interest rate swap during the six months ended June 30, 2001.
The amortization of the transition adjustment will continue through April 16,
2003 (the expiration date of the original interest rate swap agreement).
Derivative losses included in OCI for the six months ended June 30, 2001
amounted to $540,000 net of $304,000 in taxes reflecting the decline in market
value of the interest rate swap entered into on February 16, 2001 through June
30, 2001. No event is expected to result in a reclassification of losses
reported in OCI over the next twelve months due to the interest rate swap's
effectiveness in off setting the variable rate cash flows of the debt.
5. BUYOUT OF COMMON STOCK
On April 27, 2001, BHWK announced the execution of a merger agreement.
Pursuant to the merger agreement, Gameco, Inc., an entity owned and controlled
by Jeffrey P. Jacobs, Chairman of the Board and Chief Executive Officer of BHWK,
has agreed to pay $12.00 per share, in cash, for each share of common stock of
BHWK not currently owned by Mr. Jacobs or his affiliates and BHWK will become a
wholly-owned subsidiary of Gameco. Consummation of the transaction is subject to
various conditions, including, among other things, the approval by BHWK's
stockholders and the obtaining of various regulatory approvals. If the
transaction fails to close because of Mr. Jacobs' inability to obtain financing,
BHWK will be entitled to liquidated damages of $2 million. The transaction is
expected to be consummated in the fourth quarter of 2001 and the merger
agreement provides that the transaction must be completed by December 31, 2001.
6. SEGMENT DISCLOSURE
As of January 4, 2001, BHWK acquired the Gold Dust West Casino in Reno,
Nevada. This acquisition expanded BHWK's operations into another gaming
jurisdiction other than Black Hawk, Colorado. As defined by SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information", the
following segment information is presented after the elimination of
inter-segment transactions. Adjusted EBITDA (earnings before interest, taxes,
depreciation, amortization, minority interest in The Lodge, and privatization
and other non-recurring costs) has been included as a supplemental disclosure to
facilitate a more complete analysis of our casinos' financial performance. We
believe this disclosure enhances the understanding of the financial performance
of a company, such as ours, with substantial interest, taxes, depreciation and
amortization.
7. ACQUISITION OF GOLD DUST WEST
Assuming the Gold Dust West acquisition had occurred on January 1,
2000, for the three and six months ended June 30, 2000, net revenues would have
been $24,875,000 and $49,899,000 respectively, net income would have been
$1,752,000 and $3,760,000 respectively, and earnings per share would have
increased $.05 and $.10 to $.42 and $.91 per share respectively. The pro forma
financial information is not necessarily indicative of either the results of
operations that would have occurred had this agreement been effective on January
1, 2000 or of future operations.
8
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED SEGMENT INFORMATION
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
- --------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
------------- ------------- ------------- -------------
NET REVENUE
Black Hawk, Colorado $ 18,915,119 $ 20,118,968 $ 38,667,574 $ 40,387,189
Reno, Nevada 4,589,025 8,923,783
------------- ------------- ------------- -------------
Total net revenue 23,504,144 20,118,968 47,591,357 40,387,189
============= ============= ============= =============
ADJUSTED EBITDA
Black Hawk, Colorado 4,681,931 5,787,562 10,015,505 12,033,737
Reno, Nevada 1,235,692 2,472,039
Net corporate overhead (620,457) (542,869) (1,165,182) (1,003,727)
------------- ------------- ------------- -------------
ADJUSTED EBITDA 5,297,166 5,244,693 11,322,362 11,030,010
============= ============= ============= =============
ADJUSTED EBITDA
Black Hawk, Colorado 25% 29% 26% 30%
Reno, Nevada 27% 28%
------------- ------------- ------------- -------------
ADJUSTED EBITDA 23% 26% 24% 27%
============= ============= ============= =============
Operating Income
Black Hawk, Colorado 3,255,034 4,391,740 7,166,597 9,229,841
Reno, Nevada 813,523 1,566,420
Net corporate overhead, privatization
and other non-recurring costs (1,738,508) (545,093) (2,286,296) (1,007,625)
------------- ------------- ------------- -------------
Operating Income $ 2,330,049 $ 3,846,647 $ 6,446,721 $ 8,222,216
============= ============= ============= =============
JUNE 30, DECEMBER 31,
2001 2000
------------- -------------
Assets:
Black Hawk, Colorado $ 89,602,616 $ 92,159,769
Reno, Nevada 29,572,622
Corporate 4,126,251 5,316,480
------------- -------------
Total Assets $ 123,301,489 $ 97,476,249
============= =============
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations
-------------
This Report contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and we intend that
such forward-looking statements be subject to the safe harbors created thereby.
These forward-looking statements include our plans and objectives for future
operations, including plans and objectives relating to our gaming operations and
future economic performance, and our plans with respect to the buyout described
in Note 5 above. The forward-looking statements are based on current
expectations that involve a number of risks and uncertainties that might
adversely affect our operating results in the future in a material way:
intensity of competition, particularly the opening of new casinos in our
immediate market area in 2000 and those planned to be opened in 2001 and 2002,
levels of gaming activity in general and in Black Hawk in particular, our
ability to meet debt obligations, regulatory compliance, taxation levels,
effects of national and regional economic and market conditions, labor and
marketing costs, success of our diversification plans, the proposed buyout and
the ultimate outcome of litigation matters.
The following discussion is qualified in its entirety by the unaudited
financial statements and should be read in conjunction with the consolidated
financial statements and notes thereto contained in the Company's Form 10-K for
the year ended December 31, 2000.
Results of Operations
- ---------------------
Introduction
- ------------
BHWK's results of operations for the three and six months ended June
30, 2001 and 2000 reflect the consolidated operations of our subsidiaries (GHC,
GDW and The Lodge) and the net corporate overhead of BHWK.
BHWK owns 100% of GHC and GDW and 75% of The Lodge. The remaining 25%
ownership in The Lodge is held by affiliates of our chief executive officer, and
is reflected as "Minority Interest" in the consolidated financial statements.
The net corporate overhead incurred at BHWK is the result of directing the
overall operations of our Company including the specific efforts related to
being a publicly traded company.
Increased Competition in the Black Hawk Market
On February 4, 2000 a casino opened in Black Hawk with approximately
950 devices and a 550-car valet/self-parking garage. A second casino opened next
door to The Lodge on March 6, 2000 with approximately 750 devices and parking
for 500 cars. A third project recommenced construction with a projected opening
date sometime in late 2001. A fourth project has begun various predevelopment
efforts and submittals to the City of Black Hawk and other agencies. Based upon
the level of development activity in the City of Black Hawk, it is apparent that
increased competition within this market is a certainty.
We believe the new casinos have expanded the City of Black Hawk's
gaming market; however, it is extremely difficult, if not impossible, to
accurately predict the extent of the future growth of this market. In any event,
we expect some of our previous and existing market share has been and will be
lost to increased competition. We believe that the competition within this
market will continue to increase and intensify. As a result, our marketing
costs, our personnel costs and other costs at our properties will more than
likely increase while we attempt to maintain our market share.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The following is an analysis of the results of our unaudited
consolidated operations for the three and six months ended June 30, 2001 and
2000. EBITDA is included in the discussion of the unaudited results of
operations. EBITDA should not be considered to be an alternative to operating
income or net income as defined by accounting principles generally accepted in
the United States of America. It also should not be construed to be an indicator
of our operating performance, nor as an alternative to cash flows from
operational activities and hence, a measure of our liquidity. We have presented
EBITDA as a supplemental disclosure to facilitate a more complete analysis of
our casinos' financial performance. We believe this disclosure enhances the
understanding of the financial performance of a company, such as ours, with
substantial interest, taxes, depreciation and amortization.
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
- --------------------------------------------------------------------------------
THREE MONTHS ENDED PERCENTAGE
JUNE 30, JUNE 30, INCREASE
2001 2000 DIFFERENCE (DECREASE)
------------ ------------ ------------ ------------
NET REVENUE
Lodge $ 14,294,649 $ 14,552,558 $ (257,909) (2)%
GHC 4,620,470 5,566,410 (945,940) (17)%
GDW 4,589,025 4,589,025
------------ ------------ ------------
Total net revenue 23,504,144 20,118,968 3,385,176 17 %
COSTS AND EXPENSES
Lodge 10,468,358 10,177,968 290,390 3 %
GHC 3,764,830 4,153,438 (388,608) (9)%
GDW 3,353,333 3,353,333
Corporate 620,457 542,869 77,588 14 %
------------ ------------ ------------
Total costs and expenses 18,206,978 14,874,275 3,332,703 22 %
ADJUSTED EBITDA
Lodge 3,826,291 4,374,590 (548,299) (13)%
GHC 855,640 1,412,972 (557,332) (39)%
GDW 1,235,692 1,235,692
Net corporate overhead (620,457) (542,869) (77,588) 14 %
------------ ------------ ------------
ADJUSTED EBITDA 5,297,166 5,244,693 52,473 1 %
------------ ------------ ------------
Interest income (39,282) (81,575) 42,293 (52)%
Interest expense 1,250,632 920,860 329,772 36 %
Income taxes 605,822 867,600 (261,778) (30)%
Privatization and other non-recurring costs 1,114,989 1,114,989
Depreciation and amortization 1,852,128 1,398,046 454,082 32 %
Minority Interest in The Lodge 446,122 597,395 (151,273) (25)%
------------ ------------ ------------
Net income $ 66,755 $ 1,542,367 $ (1,475,612) (96)%
============ ============ ============
BASIC EARNINGS PER SHARE $ 0.01 $ 0.37 $ (0.36) (97)%
Dilutive effect of outstanding options
------------ ------------ ------------
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.37 $ (0.36) (97)%
============ ============ ============
11
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
- --------------------------------------------------------------------------------
SIX MONTHS ENDED PERCENTAGE
JUNE 30, JUNE 30, INCREASE
2001 2000 DIFFERENCE (DECREASE)
------------ ------------ ------------ ------------
NET REVENUE
Lodge $ 28,634,975 $ 29,246,787 $ (611,812) (2)%
GHC 10,032,599 11,140,402 (1,107,803) (10)%
GDW 8,923,783 8,923,783
------------ ------------ ------------
Total net revenue 47,591,357 40,387,189 7,204,168 18 %
COSTS AND EXPENSES
Lodge 20,826,756 20,231,185 595,571 3 %
GHC 7,825,313 8,122,267 (296,954) (4)%
GDW 6,451,744 6,451,744
Corporate 1,165,182 1,003,727 161,455 16 %
------------ ------------ ------------
Total costs and expenses 36,268,995 29,357,179 6,911,816 24 %
ADJUSTED EBITDA
Lodge 7,808,219 9,015,602 (1,207,383) (13)%
GHC 2,207,286 3,018,135 (810,849) (27)%
GDW 2,472,039 2,472,039
Net corporate overhead (1,165,182) (1,003,727) (161,455) 16 %
------------ ------------ ------------
ADJUSTED EBITDA 11,322,362 11,030,010 292,352 3 %
------------ ------------ ------------
Interest income (114,596) (160,537) 45,941 (29)%
Interest expense 2,821,966 1,907,106 914,860 48 %
Income taxes 1,391,114 1,880,200 (489,086) (26)%
Privatization and other non-recurring costs 1,114,989 1,114,989
Depreciation and amortization 3,760,652 2,807,794 952,858 34 %
Minority Interest in The Lodge 885,408 1,252,909 (367,501) (29)%
------------ ------------ ------------
Net income $ 1,462,829 $ 3,342,538 $ (1,879,709) (56)%
============ ============ ============
BASIC EARNINGS PER SHARE $ 0.35 $ 0.81 $ (0.46) (57)%
Dilutive effect of outstanding options (0.01) (0.01)
------------ ------------ ------------
DILUTED EARNINGS PER SHARE $ 0.34 $ 0.81 $ (0.47) (58)%
============ ============ ============
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
UNAUDITED CONSOLIDATED RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JUNE
30, 2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000.
Net Revenues
We generated net revenues of $23,504,000 during the three months ended
June 30, 2001 compared to $20,119,000 for the same period of 2000. The increase
in net revenues of $3,385,000 or 17% is the result of net revenues generated
from GDW (acquired January 4, 2001) of $4,589,000 offset by decreases in net
revenues at The Lodge and Gilpin casinos of $258,000 and $946,000, respectively.
Generally we believe the primary reason for the decrease in net revenues at our
Colorado properties for the three months ended June 30, 2001 over the same
period of 2000 was due to the intensified level of competition and increased
marketing efforts within the marketplace.
Costs and Expenses
Our total costs and expenses were $18,207,000 for the three months
ended June 30, 2001 compared to $14,874,000 for the same period of 2000. The
overall increase of $3,333,000 or 22% was the result of costs and expenses
associated with GDW of $3,354,000 as well as increases in costs and expenses at
The Lodge, and BHWK of $291,000 and $77,000 respectively. These expenses were
partially offset by a reduction in costs and expenses at GHC of $389,000.
EBITDA and Minority Interest
When our total costs and expenses are subtracted from our net revenues,
the result is EBITDA and Minority Interest of $5,297,000 for the three months
ended June 30, 2001 compared to $5,245,000 for the same period of 2000. The
increase of $52,000 or 1% is primarily the result of the factors discussed
above. Our EBITDA and Minority Interest ratio (EBITDA and Minority Interest
divided by our net revenues) is 23% for the three months ended June 30, 2001
compared to 26% for the same period of 2000.
Interest Income
We had interest income totaling $40,000 during the three months ended
June 30, 2001 compared to $82,000 for the same period of 2000. The decrease of
$42,000 or 51% is due primarily to the reductions in interest rates and invested
cash balances.
Interest Expense
We had interest expense totaling $1,251,000 during the three months
ended June 30, 2001 compared to $921,000 for the same period of 2000. The
increase of $330,000 or 36% is primarily the result of interest on borrowings
associated with the acquisition of GDW of $437,000 and increases in interest
expense at The Lodge of $9,000. The increases were partially offset by
reductions in interest expense incurred at GHC of $116,000.
Privatization and other non-recurring costs
During the current three months ended June 30, 2001, we incurred
privatization and other non-recurring costs of approximately $1,115,000. The
costs associated with the buyout offer (See Item 1 Note 5 above) through June
30, 2001 were $980,000. These costs include fees paid to financial advisors
hired to identify strategic alternatives available to the Company as well as
fees paid to legal counsel and financial advisors hired by the Company and the
Special Committee of the Board of Directors in its analysis of the buyout offer.
In addition, included in these costs is a total of $135,000 in fines ($75,000 on
behalf of GHC and $60,000 on behalf of The Lodge) assessed by the Colorado
Division of Gaming pursuant to the issuance of a stipulation and agreement for
each property alleging certain violations of Internal Control Minimum
Procedures.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
UNAUDITED CONSOLIDATED RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JUNE
30, 2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000 (continued)
Depreciation and Amortization
We had depreciation and amortization of $1,852,000 for the three months
ended June 30, 2001 compared to $1,398,000 for the same period of 2000. The
increase of $454,000 or 32% is primarily due to the depreciation and
amortization incurred by the GDW of $422,000 and an increase in depreciation and
amortization expense at The Lodge and GHC and Corporate of $14,000, $17,000, and
$1,000 respectively. Depreciation and amortization primarily relates to
buildings, equipment, and intangible assets.
Minority Interest
Minority interest for the three months ended June 30, 2001 totaled
$446,000 compared to $598,000 for the same period of the prior year. Minority
interest represents the 25% share of The Lodge's income (before eliminating
inter-company transactions), that is owned by affiliates of our chief executive
officer.
Income Taxes
Our effective income tax rate for the three months ended June 30, 2001
and 2000 resulted in income tax expense of $606,000 and $867,000. The unique tax
characteristics of the individual components of our income before income taxes
are what determine our overall effective tax rate. Due to the significant costs
incurred in association with the buyout offer (see privatization and other
non-recurring costs above) and the non-deductible nature of a substantial
portion of those costs, the Company's effective income tax rate for the three
months ended increased to 90% as compared to 36% for the comparable quarter of
the prior year. With the exception of costs associated with the buyout offer and
assuming continued profitability at our current levels (and no change in the
current tax law), we expect our effective income tax rate to return to the 36%
range next year.
Net Income
As a result of the factors discussed above, we reported net income of
$67,000 for the three months ended June 30, 2001 compared to $1,543,000 for the
same period of 2000, a decrease in net income of $1,476,000 or 96%.
Earnings Per Share
We reported basic earnings per share for the three months ended June
30, 2001 and 2000 of $.01 and $.37, respectively and diluted earnings per share
for the same time periods of $.01 and $.37, respectively. The decrease in basic
and diluted earnings per share of $.36 or 97% respectively, are the result of
significant privatization costs as well as reduced profitability.
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
THE LODGE UNAUDITED RESULTS OF OPERATIONS -- FOR THE THREE MONTHS ENDED JUNE 30,
2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000
Net Revenues
The Lodge generated net revenues of $14,295,000 during the three months
ended June 30, 2001 compared to $14,553,000 for the same period of 2000. The
decrease in our net revenues at The Lodge of $258,000 or 2% is primarily due to
a decrease in casino revenue (net of cash redemption) of $167,000 or 1% and a
net decrease in other combined net revenue of $91,000. As previously discussed,
we believe the primary reason for the decrease in net revenue is due to
increased competition and marketing efforts in the City of Black Hawk.
Costs and Expenses
The Lodge's costs and expenses (after eliminating inter-company
transactions) totaled $10,469,000 during the three months ended June 30, 2001
compared to $10,178,000 for the same period of 2000. The overall increase of
$291,000 or 3% is due to increases in labor costs of $223,000, marketing and
media costs of $113,000, utilities of $31,000, local device fees of $33,000, and
other net expenses of $12,000. These increases were offset by a decrease in slot
participation costs of $121,000.
EBITDA
When The Lodge's costs and expenses are subtracted from net revenues,
the result is EBITDA and Minority Interest of $3,826,000 for the three months
ended June 30, 2001 compared to $4,375,000 for the same period of 2000. The
decrease in EBITDA of $548,000 or 13% is primarily the result of a more
competitive market and increased marketing efforts in the City of Black Hawk.
Interest Expense
Interest expense at The Lodge was $714,000 for the three months ended
June 30, 2001 compared to $705,000 for the same period of 2000. The increase of
$9,000 or 1% is primarily due to increases in interest expense of $58,000 on our
increased average debt outstanding. This was partially offset by a $49,000
credit to interest expense in connection with our interest rate swap activity
during the three months ended June 30, 2001 (see Item 1 Note 4 above).
Depreciation and Amortization
Depreciation and amortization of The Lodge totaled $980,000 for the
three months ended June 30, 2001 compared to $966,000 for the same period of
2000. The increase of $14,000 or 1% is generally due to an increase in
depreciable assets.
Income before income taxes
As a result of the factors discussed above, The Lodge generated income
before income taxes (after eliminating inter-company transactions and before
minority interest) of $2,157,000 for the three months ended June 30, 2001
compared to $2,762,000 for the same period of 2000, a decrease of $605,000 or
22%.
We continually review the overall operational aspects of The Lodge and
attempt to modify our operations, when and if necessary, in an attempt to remain
competitive and to maintain our market share. Generally, our market strategy is
to focus on our existing customer base at The Lodge while we develop marketing
programs that increase new customer visits. Our goal for 2001 is to continue to
enhance the overall product we offer at The Lodge in order to be responsive to
the new and increased competition within the marketplace.
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
THE GILPIN HOTEL CASINO UNAUDITED RESULTS OF OPERATIONS -- FOR THE THREE MONTHS
ENDED JUNE 30, 2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000
Net Revenues
GHC generated net revenues of $4,620,000 during the three months ended
June 30, 2001 compared to $5,566,000 for the same period of 2000. The decrease
in our net revenues at GHC of $946,000 or 17% is primarily due to a decrease in
casino revenue of $907,000 and a net decrease in other combined net revenue of
$39,000. While we attribute approximately $485,000 of the reduction in our
casino revenues to abnormally low hold percentages during the quarter, the
primary reason for the decrease in our overall casino revenue at GHC is a result
of the opening of larger and newer gaming facilities in the City of Black Hawk,
including The Lodge.
Costs and Expenses
GHC's costs and expenses totaled $3,764,000 during the three months
ended June 30, 2001 compared to $4,153,000 for the same period of 2000. The
overall decrease of $389,000 or 9% is due to decreases in gaming taxes of
$197,000, bus program costs of $40,000, labor costs of $65,000, slot
participation costs of $64,000 and other net costs and expenses of $59,000.
These reductions were offset by an increase in marketing related costs of
$36,000.
EBITDA
When GHC's costs and expenses are subtracted from net revenues, the
result is EBITDA of $856,000 for the three months ended June 30, 2001 compared
to $1,413,000 for the same period of 2000. The decrease in EBITDA of $557,000 or
39% is primarily the result of increased competition and the opening of larger
and newer gaming facilities in the City of Black Hawk, including The Lodge.
Interest Expense
Interest expense at GHC was $100,000 for the three months ended June
30, 2001 compared to $216,000 for the same period of 2000. The decrease of
$116,000 or 54% is primarily due to paying down our debt levels at various times
since June 30, 2000 as well as a $12,000 credit to interest expense in
connection with our interest rate swap activity during the three months ended
June 30, 2001 (see Item 1 Note 4 above).
Depreciation and Amortization
The depreciation and amortization of GHC totaled $447,000 for the three
months ended June 30, 2001 compared to $430,000 for the same period of 2000. The
increase of $17,000 or 4% is generally due to an increase in depreciated assets.
Income before income taxes
As a result of the factors discussed above, GHC generated income before
income taxes of $316,000 for the three months ended June 30, 2001 compared to
$788,000 for the same period of 2000, a decrease of $472,000 or 60%.
GHC's operations have been impacted due to the additional competition
in Black Hawk, which also includes The Lodge. As with The Lodge, we continually
review the overall operational aspects at GHC and add or eliminate areas and/or
amenities in order to enhance GHC's operations. Our market strategy is similar
to that at The Lodge, whereby we focus on GHC's existing customer base, and try
to develop marketing programs that increase new customer visits. Our goal for
2001 is to continue to build on the product we offer at GHC and to attempt to
remain competitive with the new and increased competition in the City. We are
currently investigating possible expansion opportunities for the Gilpin in order
to provide a more competitive single floor casino environment.
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
GOLD DUST WEST UNAUDITED RESULTS OF OPERATIONS -- FOR THE THREE MONTHS ENDED
JUNE 30, 2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000
On January 4, 2001, BHWK purchased the assets and operating business of
the Gold Dust West Casino with operations beginning January 5, 2001. Therefore,
there are no comparisons to the prior periods presented. See BHWK's 8-K filing
dated March 19, 2001 for pro-forma results.
Net Revenues
GDW generated net revenues of $4,589,000 during the three months ended
June 30, 2001. The revenues by operating department included casino revenue of
$4,122,000 or 90%, food and beverage revenue of $332,000 (net of $318,000 in
promotional allowances) or 7%, hotel revenue of $85,000 (net of $9,000 in
promotional allowances) or 2% and other revenues of $12,000.
Costs and Expenses
GDW's costs and expenses totaled $3,353,000 during the three months
ended June 30, 2001. The costs and expenses by operating departments included
casino operations of $1,209,000 or 36%, food and beverage operations of $576,000
or 17%, hotel operations of $65,000 or 2%, marketing, general, and
administrative of $1,503,000 or 45%.
EBITDA
When GDW's costs and expenses are subtracted from net revenues, the
result is EBITDA of $1,236,000 for the three months ended June 30, 2001.
Interest Expense
Interest expense at GDW was $437,000 for the three months ended June
30, 2001 resulting from borrowings associated with its acquisition by BHWK.
Depreciation and Amortization
Depreciation and amortization at GDW totaled $422,000 for the three
months ended June 30, 2001. Depreciation and amortization primarily relates to
buildings, equipment, and intangible assets.
Income before income taxes
As a result of the factors discussed above, GDW generated income before
income taxes of $382,000 for the three months ended June 30, 2001
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
CORPORATE UNAUDITED RESULTS OF OPERATIONS -- FOR THE THREE MONTHS ENDED JUNE 30,
2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2000
Generally, our corporate operations are not a profit center, but rather
a managerial entity, which directs the overall operations of the Company,
including the specific efforts related to being a publicly traded company.
Net Revenue
No net revenue is generated at our corporate level after elimination of
inter-company transactions.
Costs and Expenses
Our costs and expenses totaled $620,000 for the three months ended June
30, 2001 compared to $543,000 for the same period of 2000. The increase of
$77,000 or 14% is due to increases in consulting costs of $38,000, travel and
entertainment of $21,000, director's fees of $18,000 and legal of $10,000,
offset by a reduction in other net general and administrative expenses of
$10,000.
Net Corporate Overhead
As no revenues are generated at the corporate level, net corporate
overhead is equal to costs and expenses. The increase in our net corporate
overhead of $77,000 or 14% decreases our consolidated EBITDA.
Depreciation and Amortization
Depreciation and amortization at the corporate level was $3,000 and
$2,000 for the three months ended June 30, 2001 and 2000 respectively.
Privatization and other non-recurring costs
During the current three months ended June 30, 2001, we incurred
privatization and other non-recurring costs of approximately $1,115,000. The
costs associated with the buyout offer (See Item 1 Note 5 above) through June
30, 2001 were $980,000. These costs include fees paid to financial advisors
hired to identify strategic alternatives available to the Company as well as
fees paid to legal counsel and financial advisors hired by the Company and the
Special Committee of the Board of Directors in its analysis of the buyout offer.
In addition, included in these costs is a total of $135,000 in fines assessed by
the Colorado Division of Gaming as discussed above.
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
UNAUDITED CONSOLIDATED RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30,
2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000.
Net Revenues
We generated net revenues of $47,591,000 during the six months ended
June 30, 2001 compared to $40,387,000 for the same period of 2000. The increase
in net revenues of $7,204,000 or 18% is the result of net revenues generated
from GDW (acquired January 4, 2001) of $8,924,000 offset by decreases in net
revenues at The Lodge and Gilpin casinos of $612,000 and $1,108,000,
respectively.
Generally, we believe the primary reason for the decrease in net
revenues at our Colorado properties for the six months ended June 30, 2001 over
the same period of 2000 was due to the intensified level of competition and
increased marketing efforts within the marketplace. During February and March of
2000, devices in the City of Black Hawk increased approximately 1,700 units or
24% with the opening of two new casinos.
Costs and Expenses
Our total costs and expenses were $36,269,000 for the six months ended
June 30, 2001 compared to $29,357,000 for the same period of 2000. The overall
increase of $6,912,000 or 24% was the result of costs and expenses associated
with GDW of $6,452,000 as well as increases in costs and expenses at The Lodge,
and BHWK of $596,000 and $161,000 respectively. These expenses were partially
offset by a reduction at GHC of $297,000.
EBITDA and Minority Interest
When our total costs and expenses are subtracted from our net revenues,
the result is EBITDA and Minority Interest of $11,322,000 for the six months
ended June 30, 2001 compared to $11,030,000 for the same period of 2000. The
increase of $292,000 or 3% is primarily the result of the factors discussed
above. Our EBITDA and Minority Interest ratio (EBITDA and Minority Interest
divided by our net revenues) is 24% for the six months ended June 30, 2001
compared to 27% for the same period of 2000.
Interest Income
We had interest income totaling $115,000 during the six months ended
June 30, 2001 compared to $161,000 for the same period of 2000. The decrease of
$46,000 or 29% is due primarily to the reductions in interest rates and invested
cash balances.
Interest Expense
We had interest expense totaling $2,822,000 during the six months ended
June 30, 2001 compared to $1,907,000 for the same period of 2000. The increase
of $915,000 or 48% is primarily the result of interest on borrowings associated
with the acquisition of GDW of $921,000 and increases in interest expense at The
Lodge of $177,000. The increases were partially offset by reductions in interest
expense incurred at GHC of $183,000.
Privatization and other non-recurring costs
See the discussion under unaudited consolidated results of operations
for the three months ended June 30,2001 compared to the three months ended June
30, 2000 above.
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
UNAUDITED CONSOLIDATED RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30,
2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000 (continued)
Depreciation and Amortization
We had depreciation and amortization of $3,761,000 for the six months
ended June 30, 2001 compared to $2,808,000 for the same period of 2000. The
increase of $953,000 or 34% is primarily due to the depreciation and
amortization incurred by the GDW of $906,000 and an increase in depreciation and
amortization expense at The Lodge and GHC and Corporate of $38,000, $7,000, and
$2,000 respectively. Depreciation and amortization primarily relates to
buildings, equipment, and intangible assets.
Minority Interest
Minority interest for the six months ended June 30, 2001 totaled
$885,000 compared to $1,253,000 for the same period of the prior year. Minority
interest represents the 25% share of The Lodge's income (before eliminating
inter-company transactions), which is owned by affiliates of our chief executive
officer.
Income Taxes
Our effective income tax rate for the six months ended June 30, 2001
and 2000 resulted in income tax expense of $1,391,000 and $1,880,000. The unique
tax characteristics of the individual components of our income before income
taxes are what determine our overall effective tax rate. Due to the significant
costs incurred in association with the buyout offer (see privatization and other
non-recurring costs above) and the non-deductible nature of a substantial
portion of those costs, the Company's effective income tax rate for the six
months ended increased to 49% as compared to 36% for the comparable period of
the prior year. With the exception of costs associated with the buyout offer and
assuming continued profitability at our current levels (and no change in current
tax law), we expect that our effective income tax rate to return to the 36%
range next year.
Net Income
As a result of the factors discussed above, we reported net income of
$1,463,000 for the six months ended June 30, 2001 compared to $3,343,000 for the
same period of 2000, a decrease in net income of $1,880,000 or 56%.
Earnings Per Share
We reported basic earnings per share for the six months ended June 30,
2001 and 2000 of $.35 and $.81, respectively and diluted earnings per share for
the same time periods of $.34 and $.81, respectively. The decrease in basic and
diluted earnings per share of $.46 or 57% and $.47 or 58% respectively, are the
result of significant privatization costs as well as reduced profitability.
20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
THE LODGE UNAUDITED RESULTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE 30,
2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000
Net Revenues
The Lodge generated net revenues of $28,635,000 during the six months
ended June 30, 2001 compared to $29,247,000 for the same period of 2000. The
decrease in our net revenues at The Lodge of $612,000 or 2% is primarily due to
decrease in casino revenue (net of cash redemption) of $769,000 or 3% and a net
decrease in other combined net revenue of $147,000, offset by sales tax and
workers compensation premium refunds of $247,000 and $57,000 respectively. As
previously discussed, we believe the primary reason for the decrease in net
revenue is due to increased competition and marketing efforts in the City of
Black Hawk.
Costs and Expenses
The Lodge's costs and expenses (after eliminating inter-company
transactions) totaled $20,827,000 during the six months ended June 30, 2001
compared to $20,231,000 for the same period of 2000. The overall increase of
$596,000 or 3% is due to increases in labor costs of $388,000, marketing and
media costs of $296,000 and other net costs and expenses of $55,000. These
increases were offset by a reduction in gaming taxes of $143,000.
EBITDA
When The Lodge's costs and expenses are subtracted from net revenues,
the result is EBITDA and Minority Interest of $7,808,000 for the six months
ended June 30, 2001 compared to $9,016,000 for the same period of 2000. The
decrease in EBITDA of $1,207,000 or 13% is primarily the result of a more
competitive market and increased marketing efforts within the City of Black
Hawk.
Interest Expense
Interest expense at The Lodge was $1,631,000 for the six months ended
June 30, 2001 compared to $1,454,000 for the same period of 2000. The increase
of $177,000 or 12% is primarily due to a $159,000 charge to interest expense in
connection with our interest rate swap activity during the six months ended June
30, 2001 (see Item 1 Note 4 above). An additional $18,000 in interest expense
was incurred due to a slight increase in average debt levels held during the
current year as compared to the prior year.
Depreciation and Amortization
Depreciation and amortization of The Lodge totaled $1,953,000 for the
six months ended June 30, 2001 compared to $1,915,000 for the same period of
2000. The increase of $38,000 or 2% is generally due to an increase in
depreciable assets.
Income before income taxes
As a result of the factors discussed above, The Lodge generated income
before income tax (after eliminating inter-company transactions and before
minority interest) of $4,282,000 for the six months ended June 30, 2001 compared
to $5,762,000 for the same period of 2000, a decrease of $1,480,000 or 26%.
We continually review the overall operational aspects of The Lodge and
we attempt to modify our operations, when and if necessary, in an attempt to
remain competitive and to maintain our market share. Generally, our market
strategy is to focus on our existing customer base at The Lodge while we develop
marketing programs that increase new customer visits. Our goal for 2001 is to
continue to enhance the overall product we offer at The Lodge in order to be
responsive to the new and increased competition within the market place.
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
THE GILPIN HOTEL CASINO UNAUDITED RESULTS OF OPERATIONS -- FOR THE SIX MONTHS
ENDED JUNE 30, 2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000
Net Revenues
GHC generated net revenues of $10,032,000 during the six months ended
June 30, 2001 compared to $11,140,000 for the same period of 2000. The decrease
in our net revenues at GHC of $1,108,000 or 10% is primarily due to a decrease
in casino revenue (net of cash redemption) of $1,374,000 and a net decrease in
other combined net revenue of $42,000. Sales tax and workers compensation
refunds of $287,000 and $21,000 respectively partially offset the reductions in
revenue. While we attribute approximately $485,000 of the reduction in our
casino revenue to abnormally low hold percentages during the second quarter, the
primary reason for the decrease in our casino revenue at GHC is a result of the
opening of larger and newer gaming facilities in the City of Black Hawk,
including The Lodge.
Costs and Expenses
GHC's costs and expenses totaled $7,825,000 during the six months ended
June 30, 2001 compared to $8,122,000 for the same period of 2000. The overall
decrease of $297,000 or 4% is due to decreases in gaming taxes of $310,000, bus
program costs of $98,000, and labor costs of $39,000, and other net costs and
expenses of $21,000. These reductions were offset by an increase in marketing
costs of $171,000.
EBITDA
When GHC's costs and expenses are subtracted from net revenues, the
result is EBITDA of $2,207,000 for the six months ended June 30, 2001 compared
to $3,018,000 for the same period of 2000. The decrease in EBITDA of $811,000 or
27% is primarily the result of increased competition and the opening of larger
and newer gaming facilities in the City of Black Hawk, including The Lodge.
Interest Expense
Interest expense at GHC was $270,000 for the six months ended June 30,
2001 compared to $453,000 for the same period of 2000. The decrease of $183,000
or 40% is primarily due to paying down our debt levels at various times since
June 30, 2000 offset by a $38,000 charge to interest expense in connection with
interest rate swap activity during the six months ended June 30, 2001 (see Item
1 Note 4 above).
Depreciation and Amortization
The depreciation and amortization of GHC totaled $896,000 for the six
months ended June 30, 2001 compared to $889,000 for the same period of 2000. The
increase of $7,000 or 1% is generally due to an increase in depreciated assets.
Income before income taxes
As a result of the factors discussed above, GHC generated income before
income taxes of $1,064,000 for the six months ended June 30, 2001 compared to
$1,712,000 for the same period of 2000, a decrease of $648,000 or 38%.
GHC's operations have been impacted due to the additional competition
in Black Hawk, which also includes The Lodge. As with The Lodge, we continually
review the overall operational aspects at GHC and add or eliminate areas and/or
amenities in order to enhance GHC's operations. Our market strategy is similar
to that at The Lodge, whereby we focus on GHC's existing customer base, and try
to develop marketing programs that increase new customer visits. Our goal for
2001 is to continue to build on the product we offer at GHC and to attempt to
remain competitive with the new and increased competition in the City. We are
currently investigating possible expansion opportunities for the Gilpin in order
to provide a more competitive single floor casino environment.
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
GOLD DUST WEST UNAUDITED RESULTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE
30, 2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000
On January 4, 2001, BHWK purchased the assets and operating business of
the Gold Dust West Casino with operations beginning January 5, 2001. Therefore,
there are no comparisons to the prior periods presented. See BHWK's 8-K filing
dated March 19, 2001 for pro-forma results.
Net Revenues
GDW generated net revenues of $8,924,000 during the six months ended
June 30, 2001. The revenues by operating department included casino revenue of
$8,111,000 or 91%, food and beverage revenue of $581,000 (net of $614,000 in
promotional allowances) or 7%, hotel revenue of $201,000 (net of $21,000 in
promotional allowances) or 2% and other revenues of $31,000.
Costs and Expenses
GDW's costs and expenses totaled $6,452,000 during the six months ended
June 30, 2001. The costs and expenses by operating departments included casino
operations of $2,430,000 or 37%, food and beverage operations of $1,081,000 or
17%, hotel operations of $115,000 or 2%, marketing, general, and administrative
of $2,825,000 or 44%.
EBITDA
When GDW's costs and expenses are subtracted from net revenues, the
result is EBITDA of $2,472,000 for the six months ended June 30, 2001.
Interest Expense
Interest expense at GDW was $921,000 for the six months ended June 30,
2001 resulting from borrowings associated with its acquisition by BHWK.
Depreciation and Amortization
Depreciation and amortization at GDW totaled $906,000 for the six
months ended June 30, 2001. Depreciation and amortization primarily relates to
buildings, equipment, and intangible assets.
Income before income taxes
As a result of the factors discussed above, GDW generated income before
income taxes of $660,000 for the six months ended June 30, 2001
23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
CORPORATE UNAUDITED RESULTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED JUNE 30,
2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000
Generally, our corporate operations are not a profit center, but rather
a managerial entity, which directs the overall operations of the Company,
including the specific efforts related to being a publicly traded company.
Net Revenue
No net revenue is generated at our corporate level after elimination of
inter-company transactions.
Costs and Expenses
Our costs and expenses totaled $1,165,000 for the six months ended June
30, 2001 compared to $1,004,000 for the same period of 2000. The increase of
$161,000 or 16% is due to increases in compensation related costs of $57,000,
consulting costs of $29,000, travel and entertainment of $37,000, director's
fees of $27,000 and other net general and administrative expenses of $11,000.
Net Corporate Overhead
As no revenues are generated at the corporate level, net corporate
overhead is equal to costs and expenses. The increase in our net corporate
overhead of $161,000 or 16% decreases our consolidated EBITDA.
Depreciation and Amortization
Depreciation and amortization at the corporate level was $6,000 and
$4,000 for the six months ended June 30, 2001 and 2000 respectively.
Privatization and other non-recurring costs
See the discussion under corporate unaudited results of operations for
the three months ended June, 30, 2001 compared to the three months ended June
30, 2000 above.
24
Liquidity and Capital Resources
- -------------------------------
The net cash provided by operating activities was $3,406,000 during the
first six months ended June 30, 2001 compared to net cash provided by operating
activities of $4,227,000 for the same period of 2000.
Net cash used in investing activities for the six months ended June 30,
2001 was $27,522,000. The uses of funds included payments for equipment
additions to our casinos of $1,481,000 and payments to acquire the Gold Dust
West of $26,054,000. These uses of funds were partially offset by the proceeds
from the sale of equipment of $13,000. Net cash used in investing activities for
the six months ended June 30, 2000 was $2,069,000. The primary uses of funds
included payments for equipment purchases and additions to our casinos totaling
$1,123,000 and payments related to the acquisition of the Gold Dust West of
$974,000 (including a $500,000 earnest money deposit). These uses of funds were
partially offset by the proceeds from the sale of equipment totaling $28,000.
The net cash provided by financing activities during the six months
ended June 30, 2001 totaled $25,154,000. These sources of funds included
proceeds from the reducing and revolving line of credit of $36,500,000 and other
financing activities of $42,000. These sources were reduced by payments on bonds
of $178,000, payments on long-term debt of $8,021,000, payments to amend the
reducing and revolving credit facility of $571,000, and distributions to the 25%
minority interest owners of The Lodge of $2,617,000 representing the portion of
earnings of The Lodge which are applicable to the minority interest owners. The
net cash used in financing activities during the six months ended June 30, 2000
totaled $3,981,000. These uses of funds included payments on bonds totaling
$175,000, payments on long-term debt of $3,195,000 and distributions to the
minority interest owner of The Lodge totaling $621,000. These uses of funds were
partially offset by other financing activities of $10,000.
As of June 30, 2001 the Company had working capital of approximately
$3,848,000 compared to a negative working capital of approximately $99,000 at
December 31, 2000.
We believe our current working capital position, earnings from our
existing operations and the remaining availability from our revolving credit
facility are sufficient to meet our short-term cash requirements, which are
generally operating expenses and interest payments on indebtedness. However, any
significant development of other projects by us may require additional
financing, other joint venture partners, or both.
Buyout of common stock
On April 27, 2001, BHWK executed a merger agreement (see Item 1 Note 5
above). In connection with the merger agreement, BHWK has incurred approximately
$1,000,000 in privatization costs consisting principally of investment banking,
legal, accounting and other fees. Total privatization costs are expected to be
approximately $2,000,000 exclusive of the underwriter's discount. Pursuant to
accounting principles generally accepted in the United States of America
("GAAP") these costs as well as future privatization costs will be expensed as
incurred. Furthermore, a majority of these costs are not deductible for income
tax purposes. The Company anticipates closing of the transaction late in the
fourth quarter of 2001.
Gold Dust West Acquisition
On January 7, 2000 we entered into an agreement to purchase the assets
and operating business of a gaming casino and motel located in Reno, Nevada
known as the Gold Dust West. On December 22, 2000 we obtained the appropriate
Nevada gaming approvals and licensing, and closed on the purchase transaction
January 4, 2001 for $27,277,000 including $777,000 in transaction costs.
Approximately $26,000,000 of the acquisition cost was funded from the amended
reducing and revolving credit facility described below.
Reducing and Revolving Credit Facility
On December 21, 2000, we entered into the first amendment to our
existing reducing and revolving credit facility with an effective date of
January 4, 2001 (the acquisition date of the assets and operating business of
the Gold Dust West Casino). The first amendment to our credit agreement
increased the aggregate reducing and revolving credit facility to $75,000,000
from $65,000,000. Some of the more important terms of the amended credit
agreement are: (i) the facility is a four year reducing commitment in
25
Liquidity and Capital Resources (continued)
- -------------------------------------------
the aggregate amount of $75,000,000; (ii) the available balance of the facility
may be used for working capital and/or to finance other possible growth
opportunities; (iii) the facility bears interest which is based on either the
prime rate as published by Wells Fargo or the London Interbank Offering Rate
("LIBOR") each of which is added to an applicable margin based on our financial
ratios. The reduction schedule of the credit facility was amended as follows;
two quarterly reductions in availability will commence January 1, 2002 at
$1,875,000 each, the next four quarterly reductions in availability are
$2,812,500 each, with the following four quarterly reductions in availability of
$3,750,000 each until April 16, 2004 when the balance of the facility is due.
The credit agreement contains a number of affirmative and negative covenants
which, among other things, require us to maintain certain financial ratios and
refrain from certain actions without the syndicate group's concurrence; and (vi)
substantially all of our assets, and those of the Gilpin Hotel Venture, GVI, The
Lodge Casino, and Gold Dust West Casino are pledged as security for repayment of
the credit facility. The credit agreement also contains customary events of
default provisions.
We are a party to an Interest Rate Swap Agreement. This derivative
financial instrument is used in the normal course of business to manage exposure
to fluctuations in interest rates and involves market risk, as the instrument is
subject to interest rate fluctuations and potential credit risk. This derivative
transaction is used to partially hedge interest rate risk in our variable rate
debt. Prior to February 16, 2001, the interest Rate Swap Agreement provided
that, on a quarterly basis, the Company pay a fixed rate of 5.18% on the
notional amount of $35,000,000 and receives a payment based on LIBOR applied to
the notional amount. Gains or losses on the interest rate exchange are included
in interest expense as realized or incurred.
On February 16, 2001, we terminated the interest rate swap agreement
and concurrently entered into a new interest rate swap agreement, with the same
counterparty, with an initial notional amount of $50,000,000 including scheduled
reductions of $10,000,000 each at December 31, 2002 and December 31, 2003 until
final maturity on April 16, 2004. The new interest rate swap agreement provides
that, on a quarterly basis, we pay a fixed rate of 5.46% on the notional amount
of $50,000,000 and receives a payment based on LIBOR applied to the notional
amount. The fair value of the $35,000,000 interest rate swap upon termination of
approximately $250,000 was used to pay down the fixed interest rate on the new
$50,000,000 interest rate swap. The new interest rate swap agreement has been
designated and documented as a cash-flow hedge, and therefore, the change in the
fair value of the hedge is recorded in accumulated other comprehensive income
(loss) net of taxes to the extent effectiveness (as defined by SFAS No. 133) has
been determined. All income or expense associated with the interest rate swap
affecting earnings is recognized in the income statement.
In March 1999, The Lodge closed bond financing with the Black Hawk
Business Improvement District, which is a quasi-municipal corporation and
political subdivision of the State of Colorado, organized for the purpose, among
others, of providing financing for public improvements and services primarily
benefiting the commercial properties within the District. The Bonds were issued
in two series with an aggregate principal amount of $6,000,000. The purpose of
the bonds was to finance the Company's costs of various infrastructure
improvements made for the benefit of the City of Black Hawk and The Lodge The
proceeds from the sale of the bonds were used to pay down existing debt at The
Lodge. The bonds carry an interest rate varying between 6.25% and 6.50% and
mature at various times up to and including December of 2011.
26
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
- ------- ----------------------------------------------------------
Our primary exposure to market risks relates to our reducing and
revolving credit facility, which is variable rate debt. We are exposed to
interest rate risk on this debt, which totaled $59 million and $36 million at
June 30, 2001 and 2000 respectively. If market interest rates increase, our cash
requirements for interest would also increase. Conversely, if market interest
rates decrease, our cash requirements for interest would also decrease.
In an effort to minimize our exposure to interest rate risk on our
credit facility, at June 30, 2001 and 2000 we had partially hedged our exposure
to interest rate risk by participating in interest rate swaps. Under the terms
of the swap agreements, we receive a variable rate interest payment and pay a
fixed rate interest payment on a notional amount of $50 million and $35 million
at June 30, 2001 and 2000 respectively. This has reduced our exposure to
interest rate risk to $9 million and $1 million of debt not hedged with the
interest rate swaps at June 30, 2001 and 2000 respectively.
The annual increase or decrease in cash requirements for interest,
after considering the impact of the interest rate swap agreement, should market
rates increase or decrease by 10% compared to the interest rate levels at June
30, 2001 would be approximately $56,000.
27
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
( a ) Exhibits:
None
( b ) Reports on Form 8-K
Date Item No's. Reported
---- -------------------
4/16/2001 5
4/30/2001 5
5/04/2001 5, 7
6/04/2001 5
28
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.
Black Hawk Gaming & Development Company, Inc.
Registrant
Date: August 10, 2001 By: /s/ Jeffrey P. Jacobs
---------------------
Jeffrey P. Jacobs, Chairman of the Board
of Directors and Chief Executive Officer
/s/ Stephen R. Roark
--------------------
Stephen R. Roark, President and
Chief Financial Officer
29