-----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, TMae6/s8JS+9z7zv/kQKw+nRLm1NAXTEBdOzCD1PdJziL/KiJTKIj4NnEnVeNNON e37q19LUgnEAAsQhdzj4nw== 0000950131-01-503181.txt : 20010831 0000950131-01-503181.hdr.sgml : 20010831 ACCESSION NUMBER: 0000950131-01-503181 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACK HAWK GAMING & DEVELOPMENT CO INC CENTRAL INDEX KEY: 0000896495 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 841158484 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21736 FILM NUMBER: 1728445 BUSINESS ADDRESS: STREET 1: 240 MAIN ST PO BOX 21 STREET 2: SUITE 170 CITY: BLACK HAWK STATE: CO ZIP: 80422 BUSINESS PHONE: 3035821117 MAIL ADDRESS: STREET 1: 240 MAIN ST BOX S STREET 2: SUITE 400 CITY: BLACK HAWK STATE: CO ZIP: 80422 10-Q/A 1 d10qa.txt FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A [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 No. 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 Identification No.) incorporation or organization) 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/A Part I -- Financial Information. Item 1. Financial Statements. This amendment to Item 1 of the registrant's report on Form 10-Q for the Quarterly Period Ended June 30, 2001 corrects an error on page 9 of the initial filing. The line item "ADJUSTED EBITDA--Reno, Nevada" should have shown $2,472,039 for the six months ended June 30, 2001 rather than for the three months ended June 30, 2000. The correction is set forth on page 9 hereof. 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 ------------- ------------- 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 ============= =============
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 $ 3,846,547 $ 6,446,721 $ 8,222,216 =========== =========== ============ =========== June 30, June 30, 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 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. Black Hawk Gaming & Development Company, Inc. Registrant Date: August 29, 2001 By: /s/ Stephen R. Roark --------------------- Stephen R. Roark, President and Chief Financial Officer 10 -----END PRIVACY-ENHANCED MESSAGE-----