-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, APHUqaiu6WGjbqBn0cnPAHcXr4sGUeSeU7JvIHYA1RZubKjfOZDHLDjeWae6q8UW qt73OhKMRNXbBFaaYGItGQ== 0000892569-97-000462.txt : 19970222 0000892569-97-000462.hdr.sgml : 19970222 ACCESSION NUMBER: 0000892569-97-000462 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA HOTEL & CASINO CENTRAL INDEX KEY: 0000824412 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880121743 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-51672-01 FILM NUMBER: 97535965 BUSINESS ADDRESS: STREET 1: 2950 S INDUSTRIAL RD CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027927216 MAIL ADDRESS: STREET 1: 2950 SOUTH INDUSTRIAL ROAD CITY: SAS VEGAS STATE: NV ZIP: 89109 10-Q 1 FORM 10-Q FOR QUARTER ENDED DECEMBER 31, 1996 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 33-51672 CALIFORNIA HOTEL AND CASINO (Exact name of registrant as specified in its charter) NEVADA 88-0121743 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2950 SOUTH INDUSTRIAL ROAD LAS VEGAS, NEVADA 89109 (Address of principal executive offices) (Zip Code) (702) 792-7200 (Registrant's telephone number, including area code) 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 filing requirements for the past 90 days. Yes X No --- --- Shares outstanding of each of the Registrant's classes of common stock as of January 31, 1997 Class Outstanding ----- ----------- Common stock, $.01 par value 1,000 2 CALIFORNIA HOTEL AND CASINO FORM 10-Q QUARTER ENDED DECEMBER 31, 1996 INDEX
Page No. -------- Part I. Financial Information Item 1. Condensed Financial Statements Consolidated Condensed Balance Sheets at December 31, 1996 and June 30, 1996 3 Consolidated Condensed Statements of Income for the three and six months ended December 31, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows for the six months ended December 31, 1996 and 1995 5 Consolidated Condensed Statements of Changes in Stockholder's Equity for the six months ended December 31, 1996 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES (A WHOLLY OWNED SUBSIDIARY OF BOYD GAMING CORPORATION) CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, JUNE 30, (IN THOUSANDS, EXCEPT SHARE DATA) 1996 1996 - ----------------------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 42,406 $ 28,444 Accounts receivable, net 9,366 7,414 Inventories 7,679 5,822 Prepaid expenses 12,023 10,772 Income taxes receivable 2,248 -- -------- -------- Total current assets 73,722 52,452 Property, equipment and leasehold interests, net 510,185 490,675 Other assets and deferred charges 21,745 24,139 Goodwill, net 10,076 10,254 -------- -------- Total assets $615,728 $577,520 ======== ======== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities Current maturities of long-term debt $ 1,509 $ 1,455 Accounts payable 44,320 29,306 Accrued liabilities Payroll and related 20,478 18,728 Interest and other 9,571 8,571 Income taxes payable -- 1,047 -------- -------- Total current liabilities 75,878 59,107 Long-term debt, net of current maturities 384,800 363,915 Due to related party -- 500 Deferred income taxes 24,571 24,148 Commitments Stockholder's equity Preferred stock, $100 par value; 200,000 shares authorized -- -- Common stock, no par value; 2,500 shares authorized; 1,000 shares outstanding 22,328 22,328 Additional paid-in capital 32,856 32,856 Retained earnings 75,295 74,666 -------- -------- Total stockholder's equity 130,479 129,850 -------- -------- Total liabilities and stockholder's equity $615,728 $577,520 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -3- 4 CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES (a wholly owned subsidiary of Boyd Gaming Corporation) CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ---------------------- ------------------------ 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------ Revenues Casino $ 93,981 $ 95,829 $181,742 $183,174 Food and beverage 31,024 28,848 60,182 56,031 Rooms 15,878 15,240 30,923 29,857 Other 10,106 10,542 17,682 17,858 -------- -------- -------- -------- Gross revenues 150,989 150,459 290,529 286,920 Less promotional allowances 16,052 15,044 31,904 28,348 -------- -------- -------- -------- Net revenues 134,937 135,415 258,625 258,572 -------- -------- -------- -------- Costs and expenses Casino 50,196 47,180 98,724 91,356 Food and beverage 22,155 21,397 42,755 43,479 Rooms 5,085 5,177 10,547 10,957 Other 6,974 7,358 12,571 12,430 Selling, general and administrative 17,878 18,087 34,754 34,455 Maintenance and utilities 6,186 5,553 13,076 12,563 Depreciation and amortization 10,550 11,438 20,962 22,748 Corporate expense 1,800 2,608 4,800 5,910 Preopening expense 3,481 -- 3,481 -- -------- -------- -------- -------- Total 124,305 118,798 241,670 233,898 -------- -------- -------- -------- Operating income 10,632 16,617 16,955 24,674 -------- -------- -------- -------- Other income (expense) Interest income 115 -- 115 -- Interest expense, net of amounts capitalized (8,239) (9,229) (16,006) (18,829) -------- -------- -------- -------- Total (8,124) (9,229) (15,891) (18,829) -------- -------- -------- -------- Income before provision for income taxes 2,508 7,388 1,064 5,845 Provision for income taxes 984 2,844 435 2,753 -------- -------- -------- -------- Net income $ 1,524 $ 4,544 $ 629 $ 3,092 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -4- 5 CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES (a wholly owned subsidiary of Boyd Gaming Corporation) CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended December 31, -------------------- 1996 1995 - ------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 629 $ 3,092 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,962 22,748 Deferred income taxes 428 -- Other 116 (17) Changes in assets and liabilities: Increase in accounts receivable, net (1,952) (957) Increase in inventories (1,857) (655) Increase in prepaid expenses (1,251) (1,915) (Increase) decrease in other assets 1,871 (8,195) Increase in income taxes receivable (2,253) -- Increase in other current liabilities 19,575 19,494 Decrease in income taxes payable (1,047) (2,116) -------- -------- Net cash provided by operating activities 35,221 31,479 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, equipment and other assets (41,698) (21,238) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings under credit agreements 21,638 (3,750) Payments on long-term debt (1,199) (13,197) Contributed capital from parent -- 19,250 -------- -------- Net cash provided by financing activities 20,439 2,303 -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 13,962 12,544 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 28,444 21,798 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 42,406 $ 34,342 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized $ 15,693 $ 19,307 ======== ======== Cash paid for income taxes $ 2,175 $ 4,200 ======== ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Property additions acquired on contracts and trade payables which were accrued, but not yet paid $ 1,326 $ 2,114 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -5- 6 CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES (a wholly owned subsidiary of Boyd Gaming Corporation) CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) (In thousands, except share data) - ------------------------------------------------------------------
Additional Total Common Stock Paid-In Retained Stockholder's Shares Amount Capital Earnings Equity --------------------------------------------------------- Balances, July 1, 1996 1,000 $22,328 $32,856 $74,666 $129,850 Net income for the six months ended December 31, 1996 629 629 ----- ------- ------- ------- -------- Balances, December 31, 1996 1,000 $22,328 $32,856 $75,295 $130,479 ===== ======= ======= ======= ========
The accompanying notes are an integral part of these consolidated financial statements. -6- 7 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying Consolidated Condensed Financial Statements include the accounts of California Hotel and Casino and its wholly owned subsidiaries, collectively referred to herein as the "Company". The Company owns and operates seven casino entertainment facilities in Las Vegas. All material intercompany accounts and transactions have been eliminated. The Company is a wholly owned subsidiary of Boyd Gaming Corporation. Basis of Presentation In the opinion of the Company, the accompanying unaudited Consolidated Condensed Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of its operations for the three and six months ended December 31, 1996 and 1995 and its cash flows for the six months ended December 31, 1996 and 1995. It is suggested that this report be read in conjunction with the Company's audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 1996. The operating results for the three and six months ended December 31, 1996 and cash flows for the six months ended December 31, 1996 are not necessarily indicative of the results that will be achieved for the full fiscal year or for future periods. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently Adopted Accounting Standards The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of, in March 1995. This statement was adopted by the Company for the fiscal year beginning July 1, 1996 and requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of SFAS No. 121 did not have an effect on the financial position or results of operations of the Company as of December 31, 1996. Note 2. Long-Term Debt The Company, through its wholly owned subsidiary California Hotel Finance Corporation, has issued $185 million senior subordinated notes at 11%. The notes are unconditionally guaranteed on a senior subordinated and unsecured basis by the Company. The guarantee is subordinated to all existing and future senior debt (as defined in the Indenture related to the notes) of the Company (approximately $171 million at December 31, 1996) and is effectively subordinated to all existing and future -7- 8 indebtedness and other liabilities (including trade payables) of the subsidiaries of the Company (approximately $41.7 million at December 31, 1996). The Company is not in default and there are no payment blockages with respect to the notes. In connection with Boyd Gaming Corporation's issuance of $200,000,000 Senior Notes on October 4, 1996, the Company is a guarantor to those Senior Notes. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS
Three Months Ended Six Months Ended December 31, December 31, -------------------------- ---------------------------- 1996 1995 1996 1995 -------- -------- -------- -------- NET REVENUES Stardust $46,024 $ 48,612 $ 91,290 $ 96,406 Boulder Strip Properties 51,538 50,492 96,758 93,404 Downtown Properties 37,375 36,311 70,577 68,762 -------- -------- -------- -------- TOTAL PROPERTIES $134,937 $135,415 $258,625 $258,572 -------- -------- -------- -------- OPERATING INCOME Stardust $ 4,870 $ 7,114 $ 8,342 $ 12,917 Boulder Strip Properties 7,607 6,673 11,419 9,566 Downtown Properties 3,764 5,995 6,130 8,979 Preopening expense (3,481) -- (3,481) -- -------- -------- -------- -------- TOTAL PROPERTIES $ 12,760 $ 19,782 $ 22,410 $ 31,462 ======== ======== ======== ========
THE ABOVE TABLE SETS FORTH FOR THE PERIODS INDICATED CERTAIN INCOME STATEMENT DATA FOR THE COMPANY'S PROPERTIES. AS USED HEREIN, "BOULDER STRIP PROPERTIES" CONSIST OF SAM'S TOWN LAS VEGAS, THE ELDORADO AND JOKERS WILD; "DOWNTOWN PROPERTIES" CONSIST OF THE CALIFORNIA, THE FREMONT AND MAIN STREET STATION. OPERATING INCOME FROM PROPERTIES AS SHOWN IN THE TABLE EXCLUDES CORPORATE EXPENSE, INCLUDING RELATED DEPRECIATION AND AMORTIZATION, WHICH ITEMS ARE NOT ALLOCATED TO THE PROPERTIES. REVENUES Consolidated net revenues declined slightly (.4%) for the three-month period ended December 31, 1996 compared to the same period in the prior fiscal year. Revenues at the Stardust declined 5.3% while revenues increased 2.1% at the Boulder Strip Properties and revenues increased 2.9% at the Downtown Properties versus the comparable period of the prior year. The increase in revenues at the Downtown Properties was attributable to revenues from Main Street Station which opened in November 1996. Company-wide casino revenue decreased 1.9% during the second fiscal quarter of 1997. Food and beverage revenue increased 8.2% and rooms revenue increased 2.2% for the three months ended December 31, 1996. -8- 9 Consolidated net revenues were unchanged for the six month period ended December 31, 1996 compared to the same period in the prior fiscal year. Revenues at the Stardust declined 5.3% which offset revenue increases of 3.6% for the Boulder Strip Properties and revenue increases of 2.6% at the Downtown Properties versus the comparable period of the prior year. Company-wide casino revenue decreased .8% for the six months ended December 31, 1996 compared to the comparable period in the prior year while food and beverage revenue increased 5.4% and rooms revenue decreased 3.4% compared to the prior year. OPERATING INCOME Consolidated operating income for the second quarter of fiscal 1997 was $10.6 versus $16.6 million for the prior year's second quarter, a decrease of 36%. Consolidated operating income margin declined to 7.9% from 12.3% for the second quarter of fiscal 1997 versus the same period in fiscal 1996. Consolidated operating income for the six months ended December 31, 1996 was $17.0 million versus $24.7 million for the comparable period in the prior fiscal year, a decrease of 31%. Consolidated operating income margins declined to 6.6% from 9.5% for the six months ended December 31, 1996 compared to the prior fiscal year. STARDUST Net revenues at the Stardust decreased 5.3% for the second quarter of fiscal 1997 versus the second quarter in the prior fiscal year. Casino revenue declined 6.6% primarily as a result of lower win percentage in the race and sports books partially offset by a 17% increase in wagering volume. Table games and slots produced comparable wagering and win for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. Rooms revenue for the three months ended December 31, 1996 decreased 5.1% with a 1.2% increase in occupied rooms offset by a .8% decline in average daily room rate. Operating income decreased $2.2 million (32%) for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. Operating income margin for the second quarter of fiscal 1997 declined to 10.6% from 14.6% in the prior year's second fiscal quarter. The decline in operating income and operating income margin is primarily a result of lower revenues leading to decreased operating income and operating income margins in the casino and rooms departments and increased marketing and promotional expenses. For the six months ended December 31, 1996 net revenues at the Stardust decreased 5.3% compared to the comparable period in the prior fiscal year. Casino revenue declined 6.0% as a result of lower win percentages in the casino and race and sports book partially offset by increased wagering volumes. Rooms revenue for the six months ended December 31, 1996 decreased 9.0% with a 1.2% increase in occupied rooms offset by an 1.7% decrease in average daily room rate. Operating income margin for the six months ended December 31, 1996 declined to 9.1% from 13.4% in the prior year's six month period. Operating income declined $4.6 million (35%) for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year. The decline in operating income and operating income margin is primarily a result of lower revenues leading to decreased operating income and operating income margins in the casino and rooms departments and increased marketing and promotional expenses. -9- 10 BOULDER STRIP PROPERTIES Net revenues at the Boulder Strip Properties increased 2.1% for the three months ended December 31, 1996 compared to the same period in the prior fiscal year primarily as a result of a 3.0% increase in revenues at the Sam's Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 2.2% for the three months ended December 31, 1996. Rooms revenue and food and beverage revenue increased 22.5% and 4.1%, respectively, for the three months ended December 31, 1996 compared to the comparable period in the prior fiscal year. The operating income margin at the Boulder Strip Properties increase to 14.8% from 13.2% for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year due primarily to improved operating margins at Sam's Town Las Vegas in the casino, rooms and food and beverage departments. For the six months ended December 31, 1996 net revenues at the Boulder Strip Properties increased 3.6% compared to the same period in the prior fiscal year primarily as a result of a 5.3% increase in revenues at Sam's Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 4.4% for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year, while rooms revenue and food and beverage revenue increased 9.5% and 2.1%, respectively. The operating income margin in the Boulder Strip Properties increased to 11.8% from 10.2% for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year due primarily to improved operating margins at Sam's Town Las Vegas in the casino, rooms and food and beverage departments. DOWNTOWN PROPERTIES Net revenues at the Downtown Properties increased 2.9% for the three months ended December 31, 1996 compared to the same period in the prior year as a result of the opening of Main Street Station in November 1996. Net revenues at the California decreased 15.7% for the three months ended December 31, 1996 with casino revenue declining 16.8%, rooms revenue declining 24.1 % and food beverage revenue declining 9.1%. Casino revenue at the California declined as a result of lower wagering volumes and a lower win percentage for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. Rooms revenue at the California declined as a result of a 8.1% decrease in occupied rooms for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. At the Fremont, net revenues decreased 2.9% for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year with casino revenue decreasing 7.0% and food and beverage increasing 7.8% while rooms revenue was unchanged. Operating income margins at the Downtown Properties were 10.1% for the three months ended December 31, 1996 versus 16.5% in the comparable period in the prior fiscal year with operating income margins at both the California and Fremont declining. Operating income margins at the California declined in the casino and rooms departments as a result of lower revenues, while operating income margins at the Fremont declined due to decreases in the casino and rooms departments as a result of lower revenues which were partially offset by increased margins in the food and beverage departments. Downtown Properties results for the three months ended December 31, 1996 include Main Street Station which opened in November 1996. Through December 31, 1996, Main Street Station contributed $4.6 million in revenue and produced a small operating loss before preopening -10- 11 expense. Upon commencement of operations a preopening charge of $3.5 million was recorded. Net revenues at the Downtown Properties increased 2.6% for the six months ended December 31, 1996 compared to the same period in the prior fiscal year. Net revenues at the California decreased 11.0% for the first six months of fiscal 1997 with casino revenue declining 11.7%, rooms revenue declining 15.6% and food and beverage revenue declining 6.6%. All revenues were impacted due to a rooms remodel project at the California in the first quarter of fiscal 1997. The California had approximately 15% of its rooms base unavailable in the first fiscal quarter of 1997. At the Fremont, net revenues increased 3.9% for the six month period ended December 31, 1996 versus the comparable period in the prior fiscal year, with casino revenue increasing .7% and rooms and food and beverage increasing .4% and 17.1%, respectively. Operating income margins at the Downtown Properties were 8.7% for the six months ended December 31, 1996 versus 13.1 % in the comparable period in the prior fiscal year with operating income margins at both the California and Fremont declining primarily as a result of lower revenues. Operating income margins at the California declined in the casino and rooms departments while operating income margins at the Fremont declined due to decreases in the casino and rooms departments which were partially offset by increased margins in the food and beverage departments. Revenues for the Downtown Properties were enhanced in all departments by the opening of Main Street Station in November 1996 which contributed $4.6 million in revenues and produced a slight operating loss before preopening expense. Interest expense, net of amounts capitalized was $8.2 million for the second quarter of fiscal 1997 compared to $9.2 million in the second quarter of the prior year as a result of increased capitalized interest compared to the comparable period in the prior year. Depreciation expense decreased $.9 primarily as a result of lower depreciation on older properties. Interest expense, net of amounts capitalized was $16.0 million for the first six months of fiscal 1997 compared to $18.8 million in the prior year's first six months. Depreciation expense decreased $1.8 due to lower depreciation on older properties. As a result of these factors, the Company reported net income of $1.5 million in the second fiscal quarter of fiscal 1997 versus net income of $4.5 million in the prior year's second fiscal quarter. For the six months ended December 31, 1996 the Company reported net income of $.6 million versus net income of $3.1 in the comparable period in the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES For the six months ended December 31, 1996 the Company's net cash provided by operating activities was $35.2 million versus $31.4 million in last year's first six months ended December 31, 1996. As of December 31, 1996 the Company had balances of cash and cash equivalents of approximately $42 million and had approximately $114 million of credit available under its bank credit -11- 12 facility. The Company's principal uses of funds for the six months ended December 31, 1996 and 1995 were cash used in investing activities, mainly for capital expenditures and for the six months ended December 31, 1996 cash used in financing activities related to the reduction of long-term debt. Capital expenditures for the six months ended December 31, 1996 totaled $41.7 million. Of this amount approximately $33 million was related to the renovation and expansion of Main Street Station which was completed and opened in November 1996. The Bank Credit Facility contains certain financial and other covenants, including, without limitation, various financial covenants (i) requiring the maintenance of a minimum Tangible Net Worth, (ii) requiring the maintenance of a minimum Fixed Charge Coverage Ratio, (iii) establishing a maximum permitted Funded Debt to EBITDA, (iv) imposing limitations on the incurrence of additional indebtedness and the creation of liens, (v) imposing limits on the maximum permitted Maintenance Capital Expenditures, restrictions on Investments, the purchase or redemption of subordinated debt prior to its stated maturity, dividends and other distributions and the redemption or purchase of capital stock of the Company. As of December 31, 1996, the Company is in compliance with all of its covenants under its bank credit facility; however, to provide for continued compliance with its financial covenants in future periods and to provide the Company with greater flexibility, the Company is currently in discussions with its banks to amend a number of those covenants. The source of funds required to meet the Company's working capital needs (including maintenance capital expenditures) and those required to complete the above mentioned project is expected to be cash on hand, cash flow from operations, availability under its bank credit facility, new borrowings to the extent permitted under existing debt agreements and vendor and other financing. No assurance can be given that required financing strategies can be effected on satisfactory terms. PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements. Certain information included in this Form 10-Q and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contains statements that are forward looking, such as statements relating to plans for future expansion and other business development activities as well as other capital spending, financing sources, and the effects of regulation ( including gaming and tax regulation) and competition. Such forward looking statements involve important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, actual results may differ materially form those expressed in any forward looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those related to construction and development activities, economic conditions, changes in tax laws, changes in laws or regulations affecting gaming licenses, changes in competition, and factors affecting leverage and debt service including sensitivity to fluctuation in interest rates, and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended June 30, 1996. Any forward looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. By written consent dated November 22, 1996, the Company's sole shareholder elected the persons listed below as directors. There were no votes withheld or broker non-votes.
NAMES VOTE FOR - ----- --------- William S. Boyd 1,000 Charles L. Ruthe 1,000 Robert L. Boughner 1,000
-12- 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a). Exhibits. 27. Financial Data Schedule (b). Reports on form 8-K. None. -13- 14 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. CALIFORNIA HOTEL AND CASINO (Registrant) Date: February 14, 1997 By /s/ Keith Smith ------------------------------------- Keith Smith Senior Vice President and Controller (Chief Accounting Officer) -14- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS JUN-30-1997 DEC-31-1996 1,000 42,406 0 9,366 0 7,679 73,722 837,273 327,088 615,728 75,878 0 0 0 22,328 108,151 615,728 258,625 258,625 0 241,670 0 0 16,006 1,064 435 629 0 0 0 629 0 0
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