-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ctMWKNYQ5NSNNnAYf0C9D9aawWRHMFE9BysqT9TzB57eH4xoZaDURdITt8UabVsO /svzMJqP8+Gl7FmcgLsEVQ== 0000922423-95-000057.txt : 19950418 0000922423-95-000057.hdr.sgml : 19950418 ACCESSION NUMBER: 0000922423-95-000057 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950329 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19950417 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE GAMING CORP CENTRAL INDEX KEY: 0000002491 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880104066 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-04281 FILM NUMBER: 95529167 BUSINESS ADDRESS: STREET 1: 4380 BOULDER HGWY CITY: LAS VEGAS STATE: NV ZIP: 89121 BUSINESS PHONE: 7024354200 FORMER COMPANY: FORMER CONFORMED NAME: UNITED GAMING INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GAMING & TECHNOLOGY INC DATE OF NAME CHANGE: 19890206 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED PATENT TECHNOLOGY INC DATE OF NAME CHANGE: 19830519 8-K/A 1 ================================================================= SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: March 29, 1995 (Date of earliest event reported) ALLIANCE GAMING CORPORATION a Nevada corporation (Exact name of registrant as specified in its charter) Nevada 0-4281: 88-0104066 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 4380 Boulder Highway Las Vegas, Nevada 89121 (Address of principal executive offices, including zip code) (702) 435-4200 (Registrant's telephone number, including area code) ================================================================= PAGE ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Audited Financial Statements of Rainbow Casino-Vicksburg Partnership, L.P. Balance Sheets as of December 31, 1994 and July 15, 1994 and Statement of Operations, Statement of Partners' Capital (Deficit), and Statement of Cash Flows for the period from February 19, 1993 (inception) through December 31, 1994. Attached are supplemental materials for Item 7(a) to the Form 8-K filed by Alliance Gaming Corporation (the "Company") on April 13, 1995. (b) Unaudited Pro Forma Information Attached are supplemental materials for Item 7(b) to the Form 8-K filed by the Company on April 13, 1995, consisting of certain pro forma information and accompanying notes. PAGE 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. Alliance Gaming Corporation Dated: April 17, 1995 By: /s/ Steve Greathouse Name: Steve Greathouse Title: President and CEO PAGE EXHIBIT INDEX (a) Audited Financial Statements of Rainbow Casino-Vicksburg Partnership, L.P. Balance Sheets as of December 31, 1994 and July 15, 1994 and Statement of Operations, Statement of Partners' Capital (Deficit), and Statement of Cash Flows for the period February 19, 1993 (inception) through December 31, 1994. Attached are supplemental materials for Item 7(a) to the Form 8-K filed by the Company on April 13, 1995. (b) Unaudited Pro Forma Information Attached are supplemental materials for Item 7(b) to the Form 8-K filed by the Company on April 13, 1995, consisting of certain pro forma information and accompanying notes. PAGE Report of Independent Auditors The Partners Rainbow Casino Vicksburg Partnership, L.P. We have audited the accompanying balance sheets of Rainbow Casino Vicksburg Partnership, L.P. as of July 15, 1994 and December 31, 1994 and the related statements of operations, partners' capital (deficit), and cash flows for the period from February 19, 1993 (inception) through December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rainbow Casino Vicksburg Partnership, L.P. at July 15, 1994 and December 31, 1994, and the results of operations and its cash flows for the period from February 19, 1993 (inception) through December 31, 1994 in conformity with generally accepted accounting principles. Ernst & Young LLP March 15, 1995, except for Note 6 as to which the date is March 29, 1995 PAGE Rainbow Casino Vicksburg Partnership, L.P. Balance Sheets December 31 July 15 1994 1994 Assets Current assets: Cash $ 1,220,880 $ 1,031,814 Accounts receivable 30,801 -- Inventories 14,841 28,855 Prepaid expenses 89,667 198,197 Total current assets 1,356,189 1,258,866 Property and equipment: Land 24,500 24,500 Land improvements 4,249,626 3,712,672 Gaming facility and related improvements 4,113,407 4,091,422 Furniture and gaming equipment 6,047,601 5,997,931 Construction in process 159,763 145,659 14,594,897 13,972,184 Less accumulated depreciation and amortization 834,754 4,800 13,760,143 13,967,384 Other assets: Deferred licensing costs, net of accumulated amortization of $71,844 at December 31, 1994 and $0 at July 15, 1994 84,906 156,750 Other assets 426,134 256,125 511,040 412,875 Total assets $15,627,372 $15,639,125 PAGE December 31 July 15 1994 1994 Liabilities and partners' capital (deficit) Current liabilities: Notes payable $ 179,824 $ 258,403 Accounts payable 730,352 3,919,039 Accrued expenses 1,484,378 347,475 Due to general partner 46,501 -- Accrued royalties and management fee due to related party 532,398 785,698 Current portion of long-term debt 2,993,836 2,617,186 Current portion of capital lease obligation 34,265 37,762 Total current liabilities 6,001,554 7,965,563 Long-term debt, less current portion 13,152,691 10,479,613 Capital lease obligation, less current portion 151,549 166,306 Partners' capital (deficit): General partner (2,052,735) (1,664,400) Limited partners (1,625,687) (1,307,957) (3,678,422) (2,972,357) Total liabilities and partners' capital (deficit) $15,627,372 $15,639,125 See accompanying notes. PAGE Rainbow Casino Vicksburg Partnership, L.P. Statement of Operations Period from February 19, 1993 (inception) through December 31, 1994 Revenue: Casino $ 9,797,593 Food and beverage 23,501 Total revenue 9,821,094 Operating expenses: Casino 3,883,914 Food and beverage 10,458 Gaming taxes 1,524,001 General and administrative 794,639 Marketing and promotion 873,402 Management fee - related party 45,832 Depreciation and amortization 906,598 Royalty fees 1,670,120 Other 172,173 Preopening costs 2,802,090 Total operating expenses 12,683,227 Operating loss (2,862,133) Interest expense 750,504 Net loss $(3,612,637) See accompanying notes. PAGE Rainbow Casino Vicksburg Partnership, L.P. Statement of Partners' Capital (Deficit) Period from February 19, 1993 (inception) through December 31, 1994 Total Partners' General Limited Capital Partner Partners (Deficit) Partners' capital at $ - $ - $ - February 19, 1993 Contribution of liabilities in excess of assets (65,785) - (65,785) Net loss for period from inception through July 15, 1994 (1,598,615) (1,307,957) (2,906,572) Partners' capital (deficit) at July 15, 1994 (1,664,400) (1,307,957) (2,972,357) Net loss for period from July 16, 1994 through December 31, 1994 (388,335) (317,730) (706,065) Partners' capital (deficit) at December 31, 1994 $(2,052,735) $(1,625,687) $(3,678,422) See accompanying notes. PAGE Rainbow Casino Vicksburg Partnership, L.P. Statement of Cash Flows Period from February 19, 1993 (inception) through December 31, 1994 Operating activities Net loss $(3,612,637) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 906,598 Preopening costs 2,802,090 Changes in operating assets and liabilities: Accounts receivable (30,801) Inventories 14,014 Prepaid expenses 108,530 Other assets (170,009) Accounts payable 730,352 Accrued expenses 1,233,107 Due to general partner 46,501 Accrued royalties and management fee due to related party (253,300) Net cash provided by operating activities 1,774,445 Investing activities Purchases of property and equipment (70,466) Net cash used in investing activities (70,466) Financing activities Cash contributions - general partner 835,000 Payments of long-term debt and capital lease obligation (1,159,108) Payments of notes payable (158,991) Net cash used in financing activities (483,099) Net increase in cash 1,220,880 Cash at beginning of period - Cash at end of period $ 1,220,880 See accompanying notes. PAGE Rainbow Casino Vicksburg Partnership, L.P. Notes to Financial Statements December 31, 1994 1. Description of Business and Accounting Policies Rainbow Casino Vicksburg Partnership, L.P. (the Partnership) was formed on February 19, 1993 as a Mississippi limited partnership to develop a dockside gaming facility in Vicksburg, Mississippi. The initial partners consisted of Rainbow Casino Corporation as the general partner with a 55% partnership interest and the two individual shareholders of Rainbow Casino Corporation as the limited partners each with 22.5% limited partnership interest. Prior to July 12, 1994, the Partnership was inactive. On July 12, 1994, the general partner made the initial contribution to the Partnership of certain assets and liabilities with a net book value of $(65,785). Also on that date, the Partnership received its gaming license and commenced operations. On July 15, 1994, United Gaming Rainbow, a wholly owned subsidiary of Alliance Gaming Corporation (Alliance), purchased the limited partnership interests of the Partnership from the two limited partners. (See Note 2.) Net income (loss) is allocated to the partners based on their ownership interests. Inventories Inventories, which consist principally of beverage and operating supplies, are stated at the lower of cost or market using the first-in, first-out method. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Land improvements 20 years Gaming facility and related improvements 15 years Furniture and gaming equipment 3 - 7 years Included in property and equipment are capitalized interest costs of approximately $114,000 incurred in connection with the construction of the gaming facility. Revenue and Complimentaries The Partnership recognizes as casino revenue the net win from gaming activities, which is the difference gaming wins and losses. PAGE Rainbow Casino Vicksburg Partnership, L.P. Notes to Financial Statements (continued) 1. Description of Business and Accounting Policies (continued) Revenues exclude the retail value of food and beverage provided to customers on a complimentary basis. The estimated costs of these complimentaries were $119,726 for the period from inception through December 31, 1994. These amounts are included in casino expenses in the accompanying statement of operations. Preopening Costs Preopening costs, consisting primarily of labor, training, and marketing incurred prior to the opening of the gaming facility, were expensed upon commencement of operations of the gaming facility. Deferred Licensing Costs Licensing costs consist primarily of legal fees and payments to the State of Mississippi in connection with obtaining the Partnership's initial gaming license. These costs are amortized using the straight-line method over the first 12 months of operations. Income Taxes Income taxes are the liability of the individual partners and not of the Partnership. Therefore, no provision for income taxes has been made in the accompanying financial statements. 2. Management Agreement On October 28, 1993, the Partnership entered into a perpetual management agreement with Mississippi Ventures, Inc. (Manager), a wholly owned subsidiary of Alliance, to manage the operations of the gaming facility. The management agreement provides for reimbursement of the Manager's expenses of approximately $470,000 incurred prior to opening. Subsequent to opening, the management agreement provides for compensation to the Manager of $100,000 per year, payable in equal monthly installments and, if performance meets certain criteria defined by the management agreement, an additional bonus of 2% to 4% of earnings before interest, taxes, depreciation, amortization and royalties. PAGE Rainbow Casino Vicksburg Partnership, L.P. Notes to Financial Statements (continued) 2. Management Agreement (continued) On the earlier of either the three-year anniversary of the management agreement or the termination of the management agreement, the Partnership is required to pay the Manager $275,000. This amount is included in accrued royalties and management fee due to related parties in the accompanying balance sheets. 3. Long-Term Debt Long-term debt consisted of the following December 31 July 15 1994 1994 7.50% note payable to Hospitality Franchise Systems, Inc. in monthly installments of $153,383 including interest, through August 2001, collateralized by substan- tially all assets, excluding gaming equipment, and a pledge of 51% of the stock of Rainbow Casino Corporation $ 9,539,870 $ 7,141,412 7.50% mandatory redeemable special partnership interest, payable to Alliance in monthly installments of $49,170 including interest, through August 2001 3,250,000 1,918,006 Prime plus 4% (12.5% at December 31, 1994) notes payable to vendor in monthly installments of $104,624 plus interest, through July 1997, collateralized by gaming equipment 3,144,797 3,766,456 Prime plus 2% (10.5% at December 31, 1994) note payable to vendor in monthly installments of $11,770 plus interest, through June 1996, collateralized by certain equipment 211,860 270,925 16,146,527 13,096,799 Less current portion 2,993,836 2,617,186 $13,152,691 $10,479,613 PAGE Rainbow Casino Vicksburg Partnership, L.P. Notes to Financial Statements (continued) 3. Long-Term Debt (continued) The mandatory redeemable special partnership interest is payable to Alliance. This special limited partnership interest has an irrevocable right to mandatory monthly payments on a pro rata basis with payments required by the 7.5% note payable. In connection with this financing, the Partnership agreed to provide the lender a perpetual royalty of 5.2% from the gross revenues of the gaming facility. At December 31, 1994, the Partnership has not made any payments required by the mandatory redeemable special partnership interest and has not paid the required royalties for the months of October, November and December 1994. Royalties under this agreement were approximately $500,000 for the period from inception through December 31, 1994. The aggregate principal payments due on long-term debt over the next five years and thereafter are as follows: 1995 $ 2,993,836 1996 2,973,144 1997 2,408,713 1998 1,912,687 1999 2,061,174 Thereafter 3,796,973 $16,146,527 In connection with obtaining utilities for the gaming facility, the Partnership had an outstanding irrevocable standby letter of credit of $150,000 at December 31, 1994, which was fully collateralized by a certificate of deposit of $150,000. See Note 6 for further information regarding long-term debt. 4. Commitments On March 15, 1994, the Partnership entered into a marketing and services agreement with Hospitality Franchise Systems, Inc. This agreement provides for a permanent and unconditional royalty obligation to Hospitality Franchise Systems, Inc. of 12% of annual gaming revenues up to $40,000,000; 11% of annual gaming revenues in excess of $40,000,000 up to $50,000,000; and 10% of annual gaming revenues in excess of $50,000,000. Royalties under this agreement were approximately $1,200,000 for the period from inception through December 31, 1994. PAGE Rainbow Casino Vicksburg Partnership, L.P. Notes to Financial Statements (continued) 4. Commitments (continued) On July 11, 1994, the Partnership entered into an agreement with the City of Vicksburg to pay a monthly impact fee, based on the number of gaming positions in service each month, for 60 months. For the period from inception through December 31, 1994, this impact fee totaled approximately $329,000 and is included in gaming taxes in the accompanying statement of operations. Additionally, this agreement with the City of Vicksburg requires the Partnership to complete certain noncasino facilities by June 30, 1995 or immediately pay to the City of Vicksburg 2.5% of all gross revenues (as defined) for the period from January 1, 1995 to June 30, 1995 and 5% of all gross revenues (as defined) thereafter until such noncasino facilities are completed. In the event the certified cost of certain noncasino facilities does not exceed $15,000,000 and certain noncasino facilities are not completed by December 31, 1995, the Partnership will be required to immediately pay the City of Vicksburg the difference between the amount of the certified costs and $15,000,000. The Partnership has entered into agreements with third-party developers to finance, construct, and operate substantially all of these noncasino facilities. Management anticipates that the Partnership will meet these requirements in accordance with the agreement. The Partnership has capital lease arrangements at December 31, 1994 and July 15, 1994. The cost of equipment under capital lease arrangements was $204,000 and accumulated depreciation was $20,400 and $400 at December 31, 1994 and July 15, 1994, respectively. Amortization of leased assets is included in depreciation and amortization expense. Future minimum lease payments for the capital lease consisted of the following at December 31, 1994: 1995 $ 53,832 1996 53,832 1997 53,832 1998 53,832 1999 22,430 Total minimum lease payments 237,758 Less amount representing interest 51,944 Present value of net minimum lease payments (including current portion of $34,265) $ 185,814 PAGE Rainbow Casino Vicksburg Partnership, L.P. Notes to Financial Statements (continued) 5. Supplemental Cash Flow Information Interest paid during the period from inception through December 31, 1994 was $425,000. Notes payable include approximately $80,000 of financed interest expense. During the period from inception through December 31, 1994, the general partner contributed noncash assets and liabilities as follows: Inventory $ 28,855 Prepaid expenses 198,197 Property and equipment, net 14,524,431 Preopening costs 2,802,090 Deferred licensing costs 156,750 Other assets 256,125 Accrued royalties and management fee to related party 785,698 Notes payable 258,403 Long-term debt 17,287,377 Capital lease obligation 204,068 Accrued expenses 331,683 6. Subsequent Event On March 29, 1995, the partners entered into an agreement whereby United Gaming Rainbow became the general partner and Rainbow Casino Corporation became the limited partner. Future earnings of the Partnership will be allocated between the general partner and limited partner on a pro rata basis in accordance with the actual distribution of cash (as defined by the agreement). Additionally, Alliance and the lender of the 7.5% note payable (see Note 3) have agreed to provide cash totaling $5,500,000 to upgrade and complete certain aspects of the development. Further, the agreement provides for the termination of the 5.2% royalty payment to Alliance discussed in Note 3. At December 31, 1994, the Partnership was in violation of a nonfinancial covenant of the 7.5% note payable to Hospitality Franchise Systems, Inc. resulting from the lack of the timely completion of the remaining portions of the Vicksburg project. In connection with the above mentioned agreement, the lender waived this nonfinancial covenant violation through June 30, 1995. Management believes the Partnership will complete the remaining portions of the Vicksburg project prior to June 30, 1995. PAGE Alliance Gaming Corporation Unaudited Pro Forma Consolidated Statement of Operations Six Months ended 12/31/94 (as reported) Pro Forma Pro Forma RCVP AGC Adjustments Consolidated (Dollars in thousands, except share information) Revenue: Gaming 9,798 60,372 (555) 69,615 Food & Beverage 23 1,950 1,973 Equipment Sales 16 16 ______ ______ _______ ________ Total Revenues 9,821 62,338 (555) 71,604 Costs & Expenses: Cost of gaming revenues 5,408 43,867 49,275 Cost of food & beverage 10 1,414 1,424 Cost of equipment sales 9 9 Pre-opening costs 2,802 2,802 General & administrative 1,886 14,296 (321) 15,861 Depreciation & amortizaton 907 4,613 5,520 ______ ______ _______ ________ Total costs & expenses 11,013 64,199 (321) 74,891 Operating (loss) (1,192) (1,861) (234) (3,287) Interest income 1,504 (107) 1,397 Interest expense (751) (3,915) 107 (4,559) Royalty Fees (1,670) 509 (1,161) Miscellaneous, net 119 119 Minority share of income (169) (169) ______ ______ _______ ________ Loss before taxes (3,613) (4,322) 275 (7,660) Equity in income (loss) from affiliate (405) 405 0 Income tax expense (290) (290) ______ ______ _______ ________ Net income (loss) (3,613) (5,017) 680 (7,950) ====== ====== ======= ======== See notes to unaudited Pro Forma Consolidated Financial Statements PAGE Alliance Gaming Corp. Unaudited Pro Forma Consolidated Balance Sheet As of 12/31/94 (as reported) Pro Forma Pro Forma RCVP AGC Adjustments Consolidated (Dollars in thousands, except share information) Current assets: Cash & cash equivalents 1,221 28,189 29,410 Securities available for sale 12,596 12,596 Receivables, net 31 4,060 (257) 3,834 Inventories 15 633 648 Prepaid Expenses 89 2,843 2,932 Other current assets 331 331 Total current assets 1,356 48,652 (257) 49,751 Property & equipment: Land & improvements 4,274 3,229 2,561 10,064 Building and improvements 4,113 4,364 8,477 Furniture, fixtures & equipment 6,048 41,195 47,243 Leasehold improvements 5,373 5,373 Construction In progress 160 125 285 Accumulated depreciation (835) (26,623) (27,458) Property & equipment, net 13,760 27,663 2,561 43,984 Other assets: Receivables, net 8,951 (3,525) 5,426 Excess of costs over net assets of an acquired business, net of accumulated amortization of $433 3,993 3,061 7,054 PAGE Intangible assets, net of accumulated amortization of $4,849 85 13,249 13,334 Investment in minority owned subsidiary 6,550 (4,970) 1,580 Deferred tax assets 1,134 1,134 Other assets 426 5,161 5,587 Total other assets 511 39,038 (5,434) 34,115 Total assets 15,627 115,353 (3,130) 127,850 Current liabilities: Current maturities of long term debt, including amount due to stock- holder of $1,008 3,208 1,257 4,465 Accounts payable, including amount due to related party of $47 1,309 1,762 (532) 2,539 Accrued expenses 1,484 5,546 7,030 Total current liabilities 6,001 8,565 (532) 14,034 Long-term debt, less current maturities, includ- ing amount due to stockholder of $2,797 13,304 88,118 (2,598) 98,824 Deferred tax liabilities 1,298 1,298 Other liabilities 3,041 3,041 Total liabilities 19,305 101,022 (3,130) 117,197 Minority interests 414 414 Stockholders'equity Common stock, $0.10 par value; authorized 175,000,000 shares; issued and outstanding 11,251,350 shares 1,125 1,125 PAGE Special stock, $0.10 par value; authorized 10,000,000 shares; issued and outstanding 1,333,333 shares 133 133 Paid in capital 30,504 30,504 Unrealized loss on securities available for sale (447) (447) Accumulated deficit (3,678)(17,398) (21,057) Total S/H equity (3,678) 13,917 0 10,258 Total liabilities & equity 15,627 115,353 (3,130) 127,850 See notes to unaudited Pro Forma Consolidated Financial Statements PAGE ALLIANCE GAMING CORP. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended December 31, 1994 Operations 1. Royalty Fees Royalty income recognized by the Company and the correlated royalty expense recognized by the Partnership have been eliminated. The royalty was related to financing for the Partnership provided by the Company. 2. Management Fees Management fee income recognized by the Company and the correlated expense recognized by the Partnership have been eliminated. Included in expenses of the Partnership was $275,000 in management fees recognized as income by the Company in Fiscal 1994. 3. Interest Interest income recognized by the Company and the correlated interest expense recognized by the Partnership have been eliminated. The interest is associated with $3,250,000 in financing provided to the Partnership by the Company. 4. Equity in loss from affiliate The Company's equity in losses recognized by the Partnership has been eliminated. Balance Sheet 1. Intercompany receivables and payables Intercompany receivables and payables between the Company and the Partnership have been eliminated. Included in these amounts are unpaid royalty fees, management fees, interest and other miscellaneous items. 2. Intercompany notes receivable and payable The $3,250,000 note for Partnership financing provided by the Company has been eliminated. 3. Investment in subsidiary The Company's investment in the Partnership, which had been accounted for under the equity method, has been reclassified as goodwill or a step up in basis to the assets acquired. PAGE 4. Adjustments for purchase In connection with the Company's purchase of its additional interest in the Partnership, the Company has assumed a portion of the outstanding debt associated with the construction of the project. -----END PRIVACY-ENHANCED MESSAGE-----