<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
QUARTERLY REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
--------------
Commission File Number
------------------------
HORSESHOE GAMING, L.L.C.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 7999 88-0343515
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or organization) Classification Code Number)
</TABLE>
ROBINSON PROPERTY GROUP
LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Mississippi 7999 64-0840031
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or organization) Classification Code Number)
</TABLE>
568 Colonial Road
Memphis, Tennessee 38117
(901) 820-2460
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive office)
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
---- -----
<PAGE> 2
HORSESHOE GAMING, L. L. C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
QUARTER ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
INDEX PAGE
- - ----- ----
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements:
Horseshoe Gaming, L. L. C. and Subsidiaries:
Consolidated Condensed Balance Sheets
at March 31, 1996 and December 31, 1995 . . . . . . . . . . . . 3
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1996 and 1995 . . . . . . 4
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1996 and 1995. . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . . . . . . . 6
New Gaming Capital Partnership and Subsidiary:
Consolidated Condensed Balance Sheets
at March 31, 1996 and December 31, 1995 . . . . . . . . . . . . 8
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1996 and 1995 . . . . . . 9
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1996 and 1995 . . . . . . 10
Notes to Consolidated Condensed Financial Statements . . . . . . . . 11
Robinson Property Group, L.P.:
Condensed Balance Sheets
at March 31, 1996 and December 31, 1995 . . . . . . . . . . . . 12
Condensed Statements of Operations
for the three months ended March 31, 1996 and 1995. . . . . . . 13
Condensed Statements of Cash Flows
for the three months ended March 31, 1996 and 1995. . . . . . . 14
Notes to Condensed Financial Statements . . . . . . . . . . . . . . 15
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . 16
PART II OTHER INFORMATION
ITEM 6 Exhibits and reports on Form 8-K
(a) Exhibit No. 27 --- Financial Data Schedule. . . . . . . . . . . 19
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 79,861 $ 65,541
Accounts receivable, net 6,911 5,207
Receivables - related party 870 757
Inventories 1,527 1,481
Prepaid expenses and other 2,874 1,404
-------- --------
Total current assets 92,043 74,390
-------- --------
Property and Equipment:
Land 7,907 6,920
Buildings, boat, barge and improvements 113,065 100,849
Furniture, fixtures and equipment 37,117 35,568
Less: accumulated depreciation (16,470) (13,642)
-------- --------
141,619 129,695
Construction in progress 4,487 9,187
-------- --------
Net property and equipment 146,106 138,882
-------- --------
Escrow funds 26,571 31,316
Goodwill, net 40,239 40,640
Other assets, net 14,444 14,860
-------- --------
$319,403 $300,088
======== ========
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 15,943 $ 10,747
Accounts payable 2,449 3,910
Accrued expenses and other 40,131 28,513
-------- --------
Total current liabilities 58,523 43,170
Long-term debt, less current maturities 181,747 186,856
-------- --------
Total liabilities 240,270 230,026
-------- --------
Minority Interest (625) (1,128)
Commitments and Contingencies
Redeemable Ownership Interests, net 19,852 18,443
Members' Equity 59,906 52,747
-------- --------
$319,403 $300,088
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
3
<PAGE> 4
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Revenues:
Casino $83,672 $49,671
Food and beverage 7,385 5,011
Hotel 1,971 1,215
Other 1,250 733
------- -------
94,278 56,630
Promotional allowances (6,254) (3,564)
------- -------
Net revenues 88,024 53,066
------- -------
Expenses:
Casino 40,737 21,179
Food and beverage 4,745 3,334
Hotel 547 559
Other 479 406
General and administrative 15,156 8,587
Development 883 992
Depreciation and amortization 3,723 2,553
Preopening - 7,021
------- -------
Total expenses 66,270 44,631
------- -------
Operating Income 21,754 8,435
Other Income (Expense):
Interest expense (6,708) (3,950)
Interest and other income 1,222 58
Other (116) -
Minority interest in (income)
loss of subsidiaries (503) (1,327)
------- -------
Net Income $15,649 $ 3,216
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
4
<PAGE> 5
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Cash provided by operating activities: $22,062 $18,968
------- -------
Cash flows from investing activities:
Purchases of property and equipment (10,813) (19,748)
Proceeds from land held for sale 1,400 -
Decrease in escrow funds 4,745 -
Increase in Construction Payable - (2,283)
Increase in other assets (1,232) (3,534)
------- -------
Net cash used in investing
activities (5,900) (25,565)
------- -------
Cash flows from financing activities:
Advances to affiliates - (1,341)
Proceeds from debt and warrants - 28,388
Payments on debt (12) (3,293)
Capital contributions 27 -
Capital distributions (1,857) (1,472)
------- -------
Net cash provided by (used in)
financing activities (1,842) 22,282
------- -------
Net change in cash and cash equivalents 14,320 15,685
Cash and cash equivalents, beginning of period 65,541 13,495
------- -------
Cash and cash equivalents, end of period $79,861 $29,180
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
5
<PAGE> 6
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Introduction:
The accompanying unaudited Consolidated Condensed Financial Statements of
Horseshoe Gaming, L.L.C., a Delaware corporation, have been prepared in
accordance with the instructions to Form 10-Q, and therefore do not include all
information and disclosures necessary for complete financial statements in
conformity with generally accepted accounting principles. The consolidated
condensed balance sheet at December 31, 1995 was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. The results for the periods indicated are unaudited,
but reflect all adjustments (consisting only of normal recurring adjustments)
which management considers necessary for a fair presentation of operating
results. Results of operations for interim periods are not necessarily
indicative of a full year of operations.
Operating results for the 1995 period include the operations of the Horseshoe
Casino Center in Tunica County, Mississippi, commencing February 13, 1995.
2. Long-Term Debt:
In January, 1996, the Company filed a registration statement with the
Securities and Exchange Commission ("SEC") to exchange its senior notes for
senior notes with identical terms which have been registered under the
Securities Act of 1933. The registration statement was declared effective by
the SEC on May 13, 1996.
On April 10, 1996, the Company received approximately $48.1 million after fees
and expenses from the exercise of warrants originally issued in connection with
the Company's private placement of $100 million of 12.75% senior notes in
October, 1995. The warrants provided for the purchase of an additional $50
million of senior notes at 98.15% of par value. All of the outstanding
warrants were exercised.
3. Commitments and Contingencies:
Employment Agreements
HE and RPG have entered into employment agreements with certain key employees
that provide certain benefits in the event such employees are terminated. The
employees received ownership interests in the Company that vest over the terms
specified in the various employment agreements, which is generally five years.
The employment agreements include a put/call provision which if exercised by
the employee would require the Company to repurchase the vested ownership
interests in the event of termination at the then fair market value based on an
independent appraisal. Accordingly, these compensation agreements are
accounted for as variable stock purchase plans. Compensation expense is
recorded each period equal to the fair market value of ownership interests
vested pursuant to these agreements. Changes in market value will be reflected
in compensation expense in future periods until the employees' shares are
repurchased.
The total ownership interest in the Company issued to employees pursuant to
such employment agreements was 3.8% as of March 31, 1996, of which 1.5% was
vested. As of March 31, 1996, the Company would also be required to make
severance payments to employees in the event of termination of up to
$3,999,000.
Litigation
The Company and its subsidiaries, during the normal course of operating its
business, become engaged in various litigation and other legal disputes. In
the opinion of the Company's management, the ultimate disposition of such
disputes will not have a material impact on the Company's operations.
6
<PAGE> 7
3. Commitments and Contingencies (Continued):
Political Uncertainties in Louisiana
In the 1996 special session of the Louisiana legislature, Louisiana lawmakers
recently rejected the Governor's efforts to call for a single statewide
referendum that would give voters the opportunity to vote on the continued
legalization of riverboat gaming, the land-based casino, and video poker.
Instead, the Louisiana legislature passed a measure providing for local option
elections in November 1996 which will give voters in communities across the
state the opportunity to decide the fate of certain forms of gaming in their
parishes. In the November 1996 elections, voters in each parish will vote on
video poker, voters in parishes with riverboats will vote on riverboat gaming
as well, and voters in Orleans Parish will also vote on the land-based casino.
There can be no assurance that the voters of the Parish of Bossier, in which
HE operates, will not vote to prohibit riverboat gaming in the November 1996
election. If a vote to prohibit riverboat gaming occurred, HE would be
required to discontinue gaming activity in the parish of Bossier upon
expiration of its current gaming license in 1999. Unless HE would be able to
move its boat to another Louisiana Parish, the discontinuance of gaming
operations in the Parish of Bossier would have a material adverse effect on the
Company, both in terms of the loss of revenues and cash flow generated by
Horseshoe Bossier City and the impairment of the significant investment that
the Company has in its riverboat casino and related facilities.
Other Items
The Company is required to purchase the minority ownership interests in any new
projects developed by Horseshoe Ventures following 36 months of operations.
The purchase price is to be based on earnings during the 36-month period and is
payable in cash or ownership interests in the Company.
In February 1996, HE was awarded the rights to a second casino in Bossier City,
Louisiana by the Louisiana Riverboat Gaming Commission and is in the process of
seeking final licensing approval. The Company has entered into an agreement
for the purchase of a riverboat to be used in Bossier City, Louisiana, as its
second facility. The purchase price for the riverboat is $11,500,000, of which
$1,500,000 was paid on March 28, 1996, upon entering into the purchase
agreement, and the remaining $10,000,000 is payable upon HE receiving final
approval. In the event HE does not receive approval, the purchase agreement
for the riverboat will be terminated and the Company will be refunded the
$1,500,000 down payment.
In February 1996, NGCP entered into an option agreement to purchase an
additional 1% limited partnership interest in HE for $4,000,000, of which
approximately $514,000 was paid at closing, approximately $819,000 is to be
paid within 10 days of HE receiving final approval, discussed above, and the
remaining $2,667,000 is payable in three annual installments of $889,000 plus
accrued interest at 8% beginning one year after closing. If the Company does
not receive final license approval, the total purchase price will be reduced to
$1,541,000.
On May 20, 1996, the Company had applied to the State of Indiana for the only
license available to operate a riverboat casino in Harrison County, Indiana.
The Indiana Gaming Commission awarded the license to another applicant. As a
result, the company will write off assets approximating $1.3 million during the
second quarter of 1996.
7
<PAGE> 8
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 18,671 $ 27,025
Accounts receivable, net 2,448 1,825
Receivables - related party 820 527
Inventories 1,150 1,063
Prepaid expenses and other 2,003 1,225
-------- --------
Total current assets 25,092 31,665
-------- --------
Property and Equipment:
Land 5,201 4,215
Buildings, boat and improvements 62,875 50,678
Furniture, fixtures and equipment 20,635 19,403
Less: accumulated depreciation (9,581) (8,247)
-------- --------
79,130 66,049
Construction in progress 3,814 8,889
-------- --------
Net property and equipment 82,944 74,938
-------- --------
Other Assets:
Deferred finance charges, net 2,384 2,367
Deferred license fee, net 927 937
Goodwill, net 17,078 17,252
Other, net 5,505 6,572
-------- --------
$133,930 $133,731
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Current maturities of long-term debt $ 12,439 $ 7,320
Accounts payable 1,104 1,239
Due to affiliates 9,535 5,596
Accrued expenses and other 15,033 15,598
-------- -------
Total current liabilities 38,111 29,753
Long-term debt, less current maturities 70,761 70,692
-------- -------
Total liabilities 108,872 100,445
-------- -------
Minority Interest (625) (1,128)
Commitments and Contingencies
Partners' Capital 25,683 34,414
-------- --------
$133,930 $133,731
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
8
<PAGE> 9
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Revenues:
Casino $43,525 $32,824
Food and beverage 4,540 3,762
Hotel 1,075 803
Other 461 422
------- -------
49,601 37,811
Promotional allowances (3,362) (2,329)
------- -------
Net revenues 46,239 35,482
------- -------
Expenses:
Casino 24,263 14,758
Food and beverage 2,357 2,144
Hotel 225 325
Other 190 273
General and administrative 8,956 6,148
Depreciation and amortization 1,950 1,412
------- -------
Total 37,941 25,060
------- -------
Operating Income 8,298 10,422
Other Income (Expense):
Interest expense (2,621) (2,532)
Interest income 265 36
Minority interest in (income)
loss of subsidiary (503) (869)
------- -------
Net Income $ 5,439 $ 7,057
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
9
<PAGE> 10
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1996 1995
------- -------
<S> <C> <C>
Cash provided by operating activities 5,926 11,119
------- -------
Cash flows from investing activities:
Purchase of property and equipment (10,085) (2,289)
Proceeds from land held for sale 1,400 -
Increase in other assets (552) 135
------- -------
Net cash used in investing
activities (9,237) (2,154)
------- -------
Cash flows from financing activities:
Proceeds from debt 5,200 3,600
Payments on debt (12) (1,498)
Capital contributions 27 -
Capital distributions (14,197) (1,472)
Increase (decrease) in due to affiliates 3,939 (3,841)
------- -------
Net cash used in financing
activities (5,043) (3,211)
------- -------
Net change in cash and cash equivalents (8,354) 5,754
Cash and cash equivalents, beginning of period 27,025 11,616
------- -------
Cash and cash equivalents, end of period $18,671 $17,370
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
10
<PAGE> 11
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Introduction:
The accompanying unaudited Consolidated Condensed Financial Statements of New
Gaming Capital Partnership and Subsidiary, have been prepared in accordance
with the instructions to Form 10-Q, and therefore do not include all
information and disclosures necessary for complete financial statements in
conformity with generally accepted accounting principles. The consolidated
condensed balance sheet at December 31, 1995 was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles. The results for the periods indicated are unaudited,
but reflect all adjustments (consisting only of normal recurring adjustments)
which management considers necessary for a fair presentation of operating
results. Results of operations for interim periods are not necessarily
indicative of a full year of operations.
2. Commitments and Contingencies:
Litigation
The Partnership and its subsidiary, during the normal course of operating its
business, become engaged in various litigation and other legal disputes. In
the opinion of the Partnership's management, the ultimate disposition of such
disputes will not have a material impact on the Partnership's operations.
Political Uncertainties in Louisiana
In the 1996 special session of the Louisiana legislature, Louisiana lawmakers
recently rejected the Governor's efforts to call for a single statewide
referendum that would give voters the opportunity to vote on the continued
legalization of riverboat gaming, the land-based casino, and video poker.
Instead, the Louisiana legislature passed a measure providing for local option
elections in November 1996 which will give voters in communities across the
state the opportunity to decide the fate of certain forms of gaming in their
parishes. In the November 1996 elections, voters in each parish will vote on
video poker, voters in parishes with riverboats will vote on riverboat gaming
as well, and voters in Orleans Parish will also vote on the land-based casino.
There can be no assurance that the voters of HE's parish, the Parish of
Bossier, will not vote to prohibit riverboat gaming in the November 1996
election. If a vote to prohibit riverboat gaming occurred, HE would be
required to discontinue gaming activity in the parish of Bossier upon
expiration of its current gaming license in 1999. Unless HE will be able to
move its boat to another Louisiana Parish, the discontinuance of gaming
operations in the Parish of Bossier would have a material adverse effect on
the Company, both in terms of the loss of revenues and cash flow generated by
Horseshoe Bossier City and the impairment of the significant investment that
the Company has in its riverboat casino and related facilities.
In February 1996, HE was awarded the rights to a second casino in Bossier City,
Louisiana by the Louisiana Riverboat Gaming Commission and is in the process of
seeking licensing approvals. The Company has entered into an agreement for the
purchase of a riverboat to be used in Bossier City, Louisiana, as its second
facility. The purchase price for the riverboat is $11,500,000, of which
$1,500,000 was paid on March 28, 1996, upon executing the purchase agreement
and the remaining $10,000,000 is payable upon HE receiving approval. In the
event HE does not receive approval, the purchase agreement for the riverboat
will be terminated and Gaming will be refunded the $1,500,000 down payment.
In February 1996, the Partnership entered into an option agreement to purchase
an additional 1% limited partnership interest in HE for $4,000,000, of which
approximately $514,000 was paid at closing, approximately $819,000 is to be
paid within 10 days of HE receiving final license approval, discussed above,
and the remaining $2,667,000 is payable in three annual installments of
$889,000 plus accrued interest at 8% beginning one year after closing. If the
Company does not receive final license approval, the total purchase price will
be reduced to $1,541,000.
11
<PAGE> 12
ROBINSON PROPERTY GROUP, L.P.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 26,545 $ 32,706
Accounts receivable, net 4,298 3,144
Interest receivable - related party - 305
Inventories 377 418
Prepaid expenses and other 799 166
-------- --------
Total current assets 32,019 36,739
-------- --------
Property and Equipment:
Land 2,505 2,505
Buildings, barge and improvements 50,190 50,171
Furniture, fixtures and equipment 16,261 16,142
Less: accumulated depreciation (6,875) (5,390)
-------- --------
62,081 63,428
Construction in progress 673 298
-------- --------
Net property and equipment 62,754 63,726
-------- --------
Other Assets:
Deferred finance charges, net 1,515 2,237
Goodwill, net 21,084 21,299
Other, net 1,813 1,861
-------- --------
$119,185 $125,862
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $ 1,315 $ 2,671
Due to affiliates 6,302 4,710
Accrued expenses and other 9,795 8,404
------- -------
Total current liabilities 17,412 15,785
------- -------
Long-term debt, less current maturities 50,000 70,000
------- -------
Total liabilities 67,412 85,785
------- -------
Commitments and Contingencies
Partners' Capital 51,773 40,077
-------- --------
$119,185 $125,862
======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
12
<PAGE> 13
ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Revenues:
Casino $40,147 $16,847
Food and beverage 2,845 1,249
Hotel 896 412
Other 789 311
------- -------
44,677 18,819
Promotional allowances (2,892) (1,235)
------- -------
Net revenues 41,785 17,584
------- -------
Expenses:
Casino 16,474 6,421
Food and beverage 2,388 1,190
Hotel 322 234
Other 289 131
General and administrative 6,220 2,431
Depreciation and amortization 1,748 1,141
Preopening - 7,021
------- -------
Total 27,441 18,569
------- -------
Operating Income (Loss) 14,344 (985)
Other Income (Expense):
Interest expense (2,949) (1,411)
Interest and other income 301 15
------- -------
Net Income (Loss) $11,696 $(2,381)
======= =======
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
13
<PAGE> 14
ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Cash provided by operating activities 12,760 8,849
------- -------
Cash flows from investing activities:
Purchases of property and equipment (513) (17,459)
Increase in Construction Payable - (2,283)
Increase in other assets - (3,669)
------- -------
Net cash used in investing
activities (513) (23,411)
------- -------
Cash flows from financing activities:
Proceeds from debt - 24,788
Payments on debt (20,000) (1,795)
Changes in due to/from affiliates 1,592 1,500
------- -------
Net cash (used in) provided by
financing activities (18,408) 24,493
------- -------
Net change in cash and cash equivalents (6,161) 9,931
Cash and cash equivalents, beginning of period 32,706 1,879
------- -------
Cash and cash equivalents, end of period $26,545 $11,810
======= =======
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
14
<PAGE> 15
ROBINSON PROPERTY GROUP, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Introduction:
The accompanying unaudited Condensed Financial Statements of Robinson Property
Group, L.P., have been prepared in accordance with the instructions to Form
10-Q, and therefore do not include all information and disclosures for complete
financial statements in conformity with generally accepted accounting
principles. The consolidated condensed balance sheet at December 31, 1995 was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles The results for the
periods indicated are unaudited, but reflect all adjustments (consisting only
of normal recurring adjustments) which management considers necessary for a
fair presentation of operating results. Results of operations for interim
periods are not necessarily indicative of a full year of operations.
Operating results for the 1995 period include the operations of Robinson
Property Group, L.P. (dba the Horseshoe Casino Center), commencing February 13,
1995.
2. Contingencies:
Litigation
The Partnership, during the normal course of operating its business, becomes
engaged in various litigation and other legal disputes. In the opinion of the
Partnership's management, the ultimate disposition of such disputes will not
have a material impact on the Partnership's operations.
15
<PAGE> 16
PART I FINANCIAL INFOMATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis provides information which Management
believes is relevant to an assessment and understanding of the Company's
consolidated financial condition and results of operations of Horseshoe Gaming
L.L.C. (the "Comany"). The discussion should be read in conjunction with the
Consolidated Condensed Financial Statements and notes thereto.
RESULTS OF OPERATIONS
The significant improvement in the Company's operating results for the three
months ended March 31, 1996, compared with the prior year period ended March
31, is directly related to the timing of the opening of the Horseshoe Casino
Center in Tunica County, Mississippi, on February 13, 1995. Accordingly, 1995
operating results include operations for the Horseshoe Casino Center,
commencing February 13, 1995.
The Horseshoe Bossier City contributed net revenues and operating income,
respectively, of $46.2 million and $8.3 million for the quarter ended March 31,
1996, and $35.4 million and $10.4 million for the quarter ended March 31, 1995.
Operating income decreased by 20.2%, or $2.1 million in the 1996 period as
compared to the 1995 period. The decrease in operating income is due to the
Company commencing promotional programs and direct marketing programs in market
areas outside the general locale of the casino.
The Horseshoe Bossier City's net revenues include casino revenues and
non-casino revenues, respectively, of $43.5 million and $2.7 million for the
quarter ended March 31, 1996 and $32.8 million and $2.7 million for the quarter
ended March 31, 1995. Casino revenue per day increased approximately 31.1% in
1996 to $478,000 from $365,000 in 1995.
The Horseshoe Bossier City is one of three riverboat casinos currently
operating in the Bossier City/Shreveport, Louisiana market. As discussed
below, in February 1996 the Company was awarded a certificate of preliminary
approval to operate a second riverboat casino at its Bossier City site.
Further, the Louisiana Riverboat Gaming Commission awarded an additional
certificate of preliminary approval, the recipient of which is also expected to
operate a riverboat casino in the Bossier City/Shreveport market. As a result
of these awards and subject to formal licensing , a total of five riverboat
casinos are expected to be operating in the Bossier City/Shreveport market, two
of which will be operated by the Company. Management believes that the Bossier
City/Shreveport market is sufficiently large to allow five riverboat casinos to
operate profitably. Although management expects that the addition of its
second riverboat casino in Bossier City will result in an increase in revenues
and cash flows, the impact on operating margins from the overall increase in
supply to this market is uncertain.
The Horseshoe Casino Center opened on February 13, 1995 and contributed net
revenues and operating income of $41.8 million and $14.3 million, respectively
for the three months ended March 31, 1996. The 1995 period consisted of only
one and one-half months of operations and contributed net revenues of $17.6
million. Operating income for the 1995 period was a loss of $1.0 million which
included a $7.0 million charge for preopening expenses. The Horseshoe Casino
Center's 1996 net revenues include $40.1 million of casino revenues and $1.7
million of non-casino revenues. Casino revenue per day increased approximately
20.5% in 1996 to $441,000 from $366,000 in 1995.
The Horseshoe Casino Center operates in the competitive Tunica County,
Mississippi, market, which currently consists of nine casinos. An additional
casino is scheduled to open in that market in the second quarter of 1996 one
mile closer to Memphis, Tennessee, than the Horseshoe Casino Center. Also,
several of the existing Tunica casinos, including the Horseshoe, have announced
expansion plans, including hotel rooms. The Horseshoe Casino Center is
currently one of only four casinos in the Tunica market with a hotel. While
management expects that this new competition will affect the Horseshoe Casino
Center's revenues and operating income, management also believes the projects
will increase the size and scope of the overall Tunica gaming market, somewhat
mitigating the potential adverse impact on future operating levels at the
Horseshoe Casino Center.
16
<PAGE> 17
OTHER FACTORS AFFECTING EARNINGS
The increase in interest expense for the three months ended March 31, 1996,
compared with the prior year period ended March 31, 1995, is due to an increase
in the amount of debt outstanding. This was partially offset by a reduction in
the overall interest rate on the Company's long-term debt, which resulted from
the refinancing of the Company's existing indebtedness as discussed in the
Liquidity and Capital Resources section below.
LIQUIDITY AND CAPITAL RESOURCES
In October 1995, the Company refinanced substantially all of its existing
indebtedness with the net proceeds from an initial draw of $93.2 million on a
$100 million credit facility (the "Credit Facility") and from the sale of $100
million of 12.75% senior notes due September 30, 2000 (the "Senior Notes").
The Senior Notes were sold with warrants to purchase an additional $50 million
of Senior Notes on April 10, 1996, at a price of 98.15% of par value which were
exercised and raised approximately $48 million after fees and expenses. The
Credit Facility bears interest at the greater of 10% or three-month LIBOR plus
2.5% and requires semi-annual principal payments of 5% of the then outstanding
balance with final maturity on September 30, 1999.
The net proceeds from these borrowings were also used to (i) purchase equity
interests in projects under development in new jurisdictions by directly or
indirectly reimbursing Mr. Binion for approximately $6.9 million in costs
expended pursuing such projects, and (ii) provide $5 million of working capital
to the Company. Approximately $31.1 million was placed in an escrow account
(the "Excess Proceeds Escrow Account") to be used to fund the development of
new projects and the repayment of debt.
Development
Bossier City, Louisiana
On February 3, 1996, HE was awarded a certificate of preliminary approval
to operate a second casino in Bossier City by the Louisiana Riverboat
Gaming Commission (the "Commission"), and is in the process of seeking
formal licensing. Upon approval, HE will have been awarded two out of
five total licenses for the Bossier City/Shreveport market. The Company
has committed to the State of Louisiana to open the second casino in a
temporary riverboat within 90 days of receiving final approvals for its
license. To satisfy that commitment, the Company recently entered into a
purchase agreement to buy a second vessel with 30,000 square feet of
gaming area, to be used as a temporary vessel, at a total cost of $11.5
million. If the Company does not receive final approval, then the
Company's purchase commitment will be canceled and all deposits will be
returned to the Company. The Company intends to replace this vessel
within six months with a larger vessel which is currently under
construction.
HE has also prepared plans for expansion of the entire facility at a cost
of approximately $130-$140 million, including the addition of the second
riverboat. The expansion plans include a 606-suite 25-story hotel tower,
a 1,000-seat entertainment complex, a health club, three additional
restaurants, meeting room facilities, otheramenitiesand the 1,100-car
parking garage completed in the first quarter of 1996, all connected to an
expanded dockside facility. Once construction has commenced, management
estimates the project will be completed in approximately 12 months.
In addition, on March 28, 1996, HE completed the purchase of the Le
Bossier Hotel, including furnishings and fixtures, for approximately $5.2
million. HE had previously leased this facility under a long-term
operating lease.
Tunica, Mississippi
Management of RPG has plans to further develop its casino site in Tunica,
Mississippi, for a total cost of approximately $60-$70 million.
Development plans include an additional 15,000 square feet of gaming space
for 450 slot machines and 18 to 20 table games, 320 additional hotel
suites, a multi-level 1,000-space parking garage and an entertainment
facility which will accommodate approximately 1,200 to 1,500 customers and
include a health club, two additional restaurants, convention facilities
and other amenities. Construction of the expansion has commenced and is
expected to be completed during the first quarter of 1997.
17
<PAGE> 18
Harrison County, Indiana:
On May 20, 1996, the Company had applied to the State of Indiana for the
only license available to operate a riverboat casino in Harrison County,
Indiana. The Indiana Gaming Commission awarded the license to another
applicant. As a result, the Company will write off assets approximating
$1.3 million in the second quarter of 1996.
Other New Projects
The Company and JBB Gaming Investments, L.L.C., a Delaware limited
liability company owned by Mr. Binion and his family ("JBB"), formed
Horseshoe Ventures L.L.C. to pursue the development of casinos in new
jurisdictions.
The Company is required to purchase, following 36 months of operations,
the direct or indirect interest in any new project developed by Horseshoe
Ventures then held by JBB by using either cash or membership interests in
the Company with the value of such membership interests determined by an
independent appraisal. The value of the purchased interests will be equal
to four times the average annual EBITDA of such new project during the
preceding 36-month period.
OTHER FACTORS AFFECTING LIQUIDITY
In February, 1996 NGCP entered into an option agreement to purchase an
additional 1% minority interest in HE for approximately $4.0 million, subject
to HE receiving final licensing approval. If HE does not receive license
approval, then the purchase price will be adjusted to approximately $1.5
million.
As of March 31, 1996, the Company had cash and cash equivalents of
approximately $106.4 million, including approximately $26.6 million restricted
for the pursuit and development of new projects and the repayment of debt.
Within the next twelve months, the Company expects to spend approximately $130
to $140 million for the expansion of the Bossier City, Louisiana facility, if
final approval is received, and approximately $60 to $70 million for expansion
of the Tunica, Mississippi facility.
Management believes that the Company's cash and cash equivalents on hand and
cash from operations will be adequate to meet the Company's existing
obligations as they become due. Additional financing will be required to fund
the Company's development plans discussed above. There can be no assurance
that the Company will be successful in obtaining additional financing with
terms acceptable to the Company; however, Management has discussed potential
financing with certain lending agencies on terms acceptable to the Company.
The Company does not expect the impact of inflation to have a material adverse
effect on its operations. Absent changes in competitive and economic
conditions or in specific prices affecting the industry, the Company believes
that the hotel-casino industry may be able to maintain its operating profit
margins in periods of general inflation by increasing minimum wagering limits
for its games and increasing the prices of its hotel rooms, food and beverage
and other items, and by taking actions designed to increase the number of
patrons.
The Company has not experienced any significant seasonal trends; however, the
Company has a limited operating history and the Company may determine in the
future that its revenues and income may be seasonal in nature.
In the 1996 special session of the Louisiana legislature, Louisiana lawmakers
recently rejected the Governor's efforts to call for a single statewide
referendum that would give voters the opportunity to vote on the continued
legalization of riverboat gaming, the land-based casino, and video poker.
Instead, the Louisiana legislature passed a measure providing for local option
elections in November 1996 which will give voters in communities across the
state the opportunity to decide the fate of certain forms of gaming in their
parishes. In the November 1996 elections, voters in each parish will vote on
video poker, voters in parishes with riverboats will vote on riverboat gaming
as well, and voters in Orleans Parish will also vote on the land-based casino.
There can be no assurance that the voters of HE's parish, the Parish of
Bossier, will approve riverboat gaming in the November 1996 election. If a
vote to prohibit riverboat gaming occurs, HE would be required to discontinue
gaming activity in the parish of Bossier upon expiration of its current gaming
license in 1999. Under these circumstances, unless HE is able to move its boat
to another Louisiana Parish, the discontinuance of gaming operations in the
Parish of Bossier coupled with an inability of HE to move its riverboat casino
to another Louisiana parish would have a material adverse effect on the
Company, both in terms of the loss of revenues and cash flow generated by
Horseshoe Bossier City and the impairment of the significant investment that
the Company has in its riverboat casino and related facilities.
18
<PAGE> 19
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. 27.1 Financial Data Schedule -- Horseshoe Gaming
L.L.C. and Subsidiaries (for SEC use only)
(b) Exhibit No. 27.2 Financial Data Schedule -- Robinson Property
Group, L.P. (for SEC use only)
19
<PAGE> 20
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.
HORSESHOE GAMING, L.L.C.
a Delaware limited liability company
By: Horseshoe Gaming, Inc.,
a Nevada corporation
Its: Manager
Date: June 14, 1996 By: /s/ Walter J. Haybert
-------------------------------------
Treasurer and Chief Financial Officer
of Horseshoe Gaming, Inc.
20
<PAGE> 21
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.
Robinson Property Group Limited Partnership
a Mississippi limited partnership
By: Horseshoe GP, Inc.,
a Nevada corporation
Its: Manager
Date: June 14, 1996 By: /s/ Walter J. Haybert
-------------------------------------
Treasurer and Chief Financial Officer
of Horseshoe GP, Inc.
21
<PAGE> 22
EXHIBIT INDEX
Exhibit
Number Description
27.1 Financial Data Schedule -- Horseshoe Gaming L.L.C. and
Subsidiaries (for SEC use only)
27.2 Financial Data Schedule -- Robinson Property Group, L.P.
(for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001005732
<NAME> HORSESHOE GAMING, L.L.C.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 79,861
<SECURITIES> 26,571
<RECEIVABLES> 7,781<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 1,527
<CURRENT-ASSETS> 92,043
<PP&E> 162,576
<DEPRECIATION> 16,470
<TOTAL-ASSETS> 319,403
<CURRENT-LIABILITIES> 58,523
<BONDS> 197,690
0
0
<COMMON> 0
<OTHER-SE> 59,906
<TOTAL-LIABILITY-AND-EQUITY> 319,403
<SALES> 3,571<F2>
<TOTAL-REVENUES> 88,024
<CGS> 5,224
<TOTAL-COSTS> 46,508
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,708
<INCOME-PRETAX> 15,649
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,649
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
Amounts inapplicable or not disclosed as a separate line item on the Statement
of Financial Position or Results of Operations are reported as 0 herein.
<F1>Notes and accounts receivable-trade are reported net of allowances for doubtful
accounts in the Statement of Financial Position.
<F2>Net sales are reported net of promotional allowances applicable to tangible
items.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001005748
<NAME> ROBINSON PROPERTY GROUP LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,117
<SECURITIES> 14,428
<RECEIVABLES> 4,298<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 377
<CURRENT-ASSETS> 32,019
<PP&E> 69,629
<DEPRECIATION> 6,875
<TOTAL-ASSETS> 119,185
<CURRENT-LIABILITIES> 17,412
<BONDS> 50,000
0
0
<COMMON> 0
<OTHER-SE> 51,773
<TOTAL-LIABILITY-AND-EQUITY> 119,185
<SALES> 1,189<F2>
<TOTAL-REVENUES> 41,785
<CGS> 2,677
<TOTAL-COSTS> 19,473
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,949
<INCOME-PRETAX> 11,696
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,696
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,696
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
Amounts inapplicable or not disclosed as a separate line item on the Statement
of Financial Position or Results of Operations are reported as 0 herein.
<F1>Notes and accounts receivable-trade are reported net of allowances for doubtful
accounts in the Statement of Financial Position.
<F2>Net sales are reported net of promotional allowances applicable to tangible
items.
</FN>
</TABLE>
