<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, 1998
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
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
4024 Industrial Road
Las Vegas, Nevada 89103
(702) 650-0080
(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, 1998
<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, 1998 and December 31, 1997................................. 3
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1998 and 1997...................... 4
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1998 and 1997...................... 5
Notes to Consolidated Condensed Financial Statements......................... 6
Robinson Property Group, L.P.:
Condensed Balance Sheets
at March 31, 1998 and December 31, 1997................................. 7
Condensed Statements of Operations
for the three months ended March 31, 1998 and 1997...................... 8
Condensed Statements of Cash Flows
for the three months ended March 31, 1998 and 1997...................... 9
Notes to Condensed Financial Statements...................................... 10
New Gaming Capital Partnership and Subsidiary:
Consolidated Condensed Balance Sheets
at March 31, 1998 and December 31, 1997................................. 11
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1998 and 1997...................... 12
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1998 and 1997...................... 13
Notes to Consolidated Condensed Financial Statements......................... 14
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................... 15
PART II OTHER INFORMATION
ITEM 6 Exhibits and reports on Form 8-K........................................ 16
SIGNATURES............................................................................ 17
</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,
1998 1997
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 45,958 $ 48,710
Accounts receivable, net 14,568 13,518
Inventories 3,339 2,958
Prepaid expenses and other 5,823 2,102
--------- ---------
Total current assets 69,688 67,288
--------- ---------
Property and Equipment:
Land 14,033 14,688
Buildings, boat, barge and improvements 322,015 276,936
Furniture, fixtures and equipment 76,665 68,194
Less: accumulated depreciation (38,462) (42,769)
--------- ---------
374,251 317,049
Construction in progress 2,546 67,428
--------- ---------
Net property and equipment 376,797 384,477
--------- ---------
Other Assets:
Goodwill, net 37,375 37,960
Assets not in use 24,974 --
Other 23,559 21,831
--------- ---------
$ 532,393 $ 511,556
========= =========
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 1,175 $ 1,674
Accounts payable 6,847 8,784
Construction payables 8,783 27,984
Accrued expenses and other 39,615 46,601
--------- ---------
Total current liabilities 56,420 85,043
Long-term Debt, less current maturities 355,568 311,601
Minority Interest (1,341) (1,317)
Commitments and Contingencies
Redeemable Ownership Interests, net 52,982 51,634
Members' Equity 68,764 64,595
--------- ---------
$ 532,393 $ 511,556
========= =========
</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,
1998 1997
--------- ---------
<S> <C> <C>
Revenues:
Casino $ 106,840 $ 79,956
Food and beverage 11,082 6,891
Hotel 8,283 1,649
Other 2,091 1,016
--------- ---------
128,296 89,512
Promotional allowances (14,390) (6,452)
--------- ---------
Net revenues 113,906 83,060
--------- ---------
Expenses:
Casino 60,548 41,957
Food and beverage 4,179 2,581
Hotel 2,884 1,598
Other 1,584 255
General and administrative 13,505 10,455
Development 181 228
Preopening 653 --
Depreciation and amortization 7,947 4,299
--------- ---------
Total expenses 91,481 61,373
--------- ---------
Operating Profit Before Corporate Expenses 22,425 21,687
Corporate expenses 3,114 2,441
--------- ---------
Operating Income 19,311 19,246
Other Income (Expense):
Interest expense (9,729) (5,249)
Interest income 477 1,484
Other, net (110) (64)
Minority interest in loss (income)
of subsidiaries 24 (382)
--------- ---------
Net Income $ 9,973 $ 15,035
========= =========
</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,
1998 1997
-------- --------
<S> <C> <C>
Cash provided by operating activities:
Net income $ 9,973 $ 15,035
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest in (loss) income of subsidiary (24) 382
Depreciation and amortization 7,947 4,299
Amortization of debt discount, deferred
finance charges and other 670 674
Provision for doubtful accounts 2,500 1,553
Increase in redeemable ownership interests 1,345 599
Net change in assets and liabilities (16,965) (1,890)
-------- --------
Net cash provided by operating activities 5,446 20,652
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (25,448) (40,220)
Proceeds from sale of property and equipment 194 --
Decrease in escrow funds -- 29,510
Increase (decrease) in construction payables (19,202) 3,108
Increase in other assets (2,684) (593)
-------- --------
Net cash used in investing activities (47,140) (8,195)
-------- --------
Cash flows from financing activities:
Proceeds from debt 45,000 --
Payments on debt (1,675) (5,640)
Capital distributions (4,383) (5,029)
-------- --------
Net cash provided by (used in) financing activities 38,942 (10,669)
-------- --------
Net change in cash and cash equivalents (2,752) 1,788
Cash and cash equivalents, beginning of period 48,710 79,159
-------- --------
Cash and cash equivalents, end of period $ 45,958 $ 80,947
======== ========
</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, 1997 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. Contingencies:
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.
3. Long-term Debt:
As of March 31, 1998 the Company borrowed an additional $45 million under the
Amended and Restated Credit Facility. The borrowings have enabled the Company to
fund the completion of the expansion of the Bossier City and Tunica properties.
4. Development:
Bossier City, Louisiana
Horseshoe Bossier City has substantially completed the expansion of its entire
casino facility at a total estimated cost of approximately $204 million, of
which approximately $198 million had been incurred and approximately $195
million had been placed in service as of March 31, 1998.
The Horseshoe Bossier City's new riverboat casino facility replaced the existing
riverboat casino facility (the "Queen of the Red"). The Queen of the Red, along
with related gaming equipment, is included in assets not in use in the
Consolidated Condensed Balance Sheets at March 31, 1998. Management intends to
use the Queen of the Red, and the related gaming equipment, in conjunction with
the Company's proposed riverboat gaming facility in Vicksburg, Mississippi.
6
<PAGE> 7
ROBINSON PROPERTY GROUP, L.P.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 17,193 $ 23,159
Accounts receivable, net 11,361 10,718
Inventories 1,670 1,424
Prepaid expenses and other 2,333 505
--------- ---------
Total current assets 32,557 35,806
--------- ---------
Property and Equipment:
Land 3,169 4,110
Buildings, barge and improvements 134,313 131,154
Furniture, fixtures and equipment 34,992 32,670
Less: accumulated depreciation (22,436) (19,066)
--------- ---------
Net property and equipment 150,038 148,868
--------- ---------
Other Assets:
Goodwill, net 19,286 19,670
Other 4,915 4,739
--------- ---------
$ 206,796 $ 209,083
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $ 2,144 $ 4,941
Construction payables 1,198 9,228
Due to affiliates 12,779 10,315
Accrued expenses and other 11,623 9,901
--------- ---------
Total current liabilities 27,744 34,385
--------- ---------
Long-term Debt 85,400 85,400
Commitments and Contingencies
Partners' Capital 93,652 89,298
--------- ---------
$ 206,796 $ 209,083
========= =========
</TABLE>
The accompanying notes are an integral part of
these condensed financial statements.
7
<PAGE> 8
ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues:
Casino $ 53,319 $ 40,497
Food and beverage 5,108 3,172
Hotel 2,977 822
Other 1,136 596
-------- --------
62,540 45,087
Promotional allowances (6,890) (3,424)
-------- --------
Net revenues 55,650 41,663
-------- --------
Expenses:
Casino 28,616 20,162
Food and beverage 1,381 809
Hotel 884 721
Other 1,102 143
General and administrative 5,378 4,516
Depreciation and amortization 3,644 1,808
-------- --------
Total expenses 41,005 28,159
-------- --------
Operating profit Before Corporate Expenses 14,645 13,504
Corporate expenses 1,557 1,240
-------- --------
Operating Income 13,088 12,264
Other Income (Expense):
Interest expense (2,762) (602)
Interest income 141 200
Other, net (4) (4)
-------- --------
Net Income $ 10,463 $ 11,858
======== ========
</TABLE>
The accompanying notes are an integral part of
these condensed financial statements.
8
<PAGE> 9
ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
-------- --------
<S> <C> <C>
Cash provided by operating activities:
Net income $ 10,463 $ 11,858
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,644 1,808
Provision for doubtful accounts 2,081 1,082
Amortization of debt discounts,
deferred finance charges and other 234 128
Net change in assets and liabilities (5,872) (2,769)
-------- --------
Net cash provided by operating activities 10,550 12,107
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (5,480) (12,029)
Decrease in construction payables (8,030) (1,667)
Increase in other assets (442) (34)
-------- --------
Net cash used in investing activities (13,952) (13,730)
-------- --------
Cash flows from financing activities:
Capital distributions (5,000) --
Changes in due to/from affiliates 2,436 (1,168)
-------- --------
Net cash used in financing activities (2,564) (1,168)
-------- --------
Net change in cash and cash equivalents (5,966) (2,791)
Cash and cash equivalents, beginning of period 23,159 22,858
-------- --------
Cash and cash equivalents, end of period $ 17,193 $ 20,067
======== ========
</TABLE>
The accompanying notes are an integral part of
these condensed financial statements.
9
<PAGE> 10
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 condensed balance sheet at December 31, 1997 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. 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.
10
<PAGE> 11
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 21,686 $ 16,143
Accounts receivable, net 3,197 2,589
Inventories 1,669 1,535
Prepaid expenses and other 3,083 1,329
--------- ---------
Total current assets 29,635 21,596
--------- ---------
Property and Equipment:
Land 10,864 10,579
Buildings, boat and improvements 187,702 145,781
Furniture, fixtures and equipment 41,060 34,914
Less: accumulated depreciation (15,738) (23,452)
--------- ---------
223,888 167,822
Construction in progress 2,546 67,428
--------- ---------
Net property and equipment 226,434 235,250
--------- ---------
Other Assets:
Goodwill, net 18,089 18,290
Assets not in use 24,974 --
Other 14,818 12,137
--------- ---------
$ 313,950 $ 287,273
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Current maturities of long-term debt $ 13,828 $ 15,003
Accounts payable 4,380 3,568
Due to affiliates 17,840 12,796
Construction payables 7,585 18,757
Accrued expenses and other 14,276 9,793
--------- ---------
Total current liabilities 57,909 59,917
Long-term Debt, less current maturities 229,272 199,989
Minority Interest (1,341) (1,317)
Commitments and Contingencies
Partners' Capital 28,110 28,684
--------- ---------
$ 313,950 $ 287,273
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
11
<PAGE> 12
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues:
Casino $ 53,521 $ 39,459
Food and beverage 5,974 3,719
Hotel 5,306 827
Other 955 420
-------- --------
65,756 44,425
Promotional allowances (7,500) (3,028)
-------- --------
Net revenues 58,256 41,397
-------- --------
Expenses:
Casino 31,932 21,795
Food and beverage 2,798 1,772
Hotel 2,000 877
Other 482 112
General and administrative 8,127 5,939
Preopening 653 --
Depreciation and amortization 4,299 2,486
-------- --------
Total expenses 50,291 32,981
-------- --------
Operating Profit Before Corporate Expenses 7,965 8,416
Corporate expenses 1,557 1,201
-------- --------
Operating Income 6,408 7,215
Other Income (Expense):
Interest expense (7,209) (3,099)
Interest income 207 247
Other, net (4) (5)
Minority interest in loss (income)
of subsidiary 24 (382)
-------- --------
Net (Loss) Income $ (574) $ 3,976
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
12
<PAGE> 13
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Cash provided by operating activities:
Net (loss) income $ (574) $ 3,976
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest in (loss) income of subsidiary (24) 382
Depreciation and amortization 4,299 2,486
Provision for doubtful accounts 419 471
Amortization of debt discounts,
deferred finance costs and other 542 245
Net change in assets and liabilities 2,313 (716)
-------- --------
Net cash provided by operating activities 6,975 6,844
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (19,965) (28,167)
Proceeds from sale of property and equipment 194 --
(Decrease) increase in construction payables (11,172) 4,774
(Increase) decrease in other assets (3,614) 194
-------- --------
Net cash used in investing activities (34,557) (23,199)
-------- --------
Cash flows from financing activities:
Proceeds from debt 36,533 30,000
Payments on debt (8,425) (8,310)
Increase (decrease) in due to affiliates 5,017 (121)
-------- --------
Net cash provided by financing activities 33,125 21,569
-------- --------
Net change in cash and cash equivalents 5,543 5,214
Cash and cash equivalents, beginning of period 16,143 14,913
-------- --------
Cash and cash equivalents, end of period $ 21,686 $ 20,127
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
13
<PAGE> 14
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, 1997 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. 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.
3. Development:
Horseshoe Bossier City has substantially completed the expansion of its entire
casino facility at a total estimated cost of approximately $204 million, of
which approximately $198 million had been incurred and approximately $195
million had been placed in service as of March 31, 1998.
The Horseshoe Bossier City's new riverboat casino facility replaced the existing
riverboat casino facility (the "Queen of the Red"). The Queen of the Red, along
with related gaming equipment, is included in assets not in use in the
Consolidated Condensed Balance Sheets at March 31, 1998. Management intends to
use the Queen of the Red, and the related gaming equipment, in conjunction with
the Company's proposed riverboat gaming facility in the Vicksburg, Mississippi.
14
<PAGE> 15
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 "Company"). The discussion should be
read in conjunction with the Consolidated Condensed Financial Statements
and notes thereto.
RESULTS OF OPERATIONS
Net revenues for the quarter ended March 31, 1998 were $113.9 million as
compared to $83.1 million for the comparable period in 1997. The
increase in net revenues of $30.8 million, or 37%, resulted primarily
from an increase in gaming capacity at both the Horseshoe Casino Center
and Horseshoe Bossier City and the completion of the significant
expansions that occurred at each property.
The Horseshoe Casino Center
The Horseshoe Casino Center contributed net revenues and operating
profit before corporate expenses of $55.7 million and $14.6 million,
respectively, for the quarter ended March 31, 1998 and $41.7 million and
$13.5 million, respectively, for the quarter ended March 31, 1997.
The Horseshoe Casino Center's net revenues include casino revenues and
non-casino revenues of $53.3 million and $2.4 million, respectively, for
the quarter ended March 31, 1998 and $40.5 million and $1.2 million,
respectively, for the quarter ended March 31, 1997. The increase in net
revenues for the quarter ended March 31, 1998 compared to the prior year
period is due essentially to an increase in total revenue and primarily
gaming revenue, resulting from the recently completed expansion at such
property. Casino revenue per day increased approximately 31.6% in 1998
to $592,000 from $450,000 in 1997.
The Horseshoe Casino Center's margin for operating profit before
corporate expenses for the quarter ended March 31, 1998 was 26.3%,
compared with 32.4% for the quarter ended March 31, 1997. The margin
reduction of 6.1 percentage points was primarily caused by three
factors: (1) an increase in bad debt expenses, (2) an increase in
depreciation and amortization expense due to the expansion of the casino
facility, and (3) operating expenses also remained somewhat elevated
following the opening of the new casino facility on January 21, 1998.
The Horseshoe Bossier City
The Horseshoe Bossier City contributed net revenues and operating profit
before corporate expenses and preopening expenses of $58.3 million and
$8.6 million, respectively, for the quarter ended March 31, 1998 and
$41.4 million and $8.4 million, respectively, for the quarter ended
March 31, 1997.
The Horseshoe Bossier City's net revenues include casino revenues and
non-casino revenues of $53.5 million and $4.8 million, respectively, for
the quarter ended March 31, 1998 and $39.5 million and $1.9 million,
respectively, for the quarter ended March 31, 1997. Casino revenue per
day increased approximately 35.8% in 1998 to $595,000 from $438,000 in
1997.
The Horseshoe Bossier City's margin for operating profit before
corporate expenses and preopening expenses for the quarter ended March
31, 1998 was 14.8%, compared with 20.3% for the quarter ended March 31,
1997. The margin reduction of 5.5 percentage points was primarily caused
by an increase in depreciation and amortization expense due to the
expansion of the casino facility, as well as an increase in the amount
of complimentary services provided to guests. The first quarter 1998
operating expenses also remained somewhat elevated following the opening
of the new casino facility on January 28, 1998.
15
<PAGE> 16
Other Factors Affecting Earnings
Corporate expenses increased approximately $.7 million during 1998
primarily due to a non-cash charge to compensation expense to reflect
the increased value of redeemable ownership interests in the Company.
Certain of the Company's employees have ownership interests that are
subject to provisions which require the Company to repurchase these
ownership interests in the event of their termination at a price equal
to the then fair market value of the Company based on an independent
appraisal.
The increase in net interest expense of $5.5 million for the three
months ended March 31, 1998, compared with the prior year period ended
March 31, 1997, is mainly due to the increase in the total amount of
debt outstanding. Total debt outstanding increased to $356.7 million as
of March 31, 1998 from $227.2 million as of March 31, 1997. The
increased borrowings were necessary to fund a major portion of the
Company's recently completed expansion projects at Horseshoe Casino
Center and Horseshoe Bossier City. Net interest expenses for the 1997
period was reduced by approximately $2.0 million from the capitalization
of interest related to the expansion of both the Horseshoe Bossier City
and Horseshoe Casino Center. Interest capitalized for the three months
ended March 31, 1998 totaled $.1 million.
LIQUIDITY AND CAPITAL RESOURCES
DEVELOPMENT
Tunica, Mississippi
Horseshoe Casino Center has substantially completed the expansion of its
entire casino facility at a cost of approximately $109 million, of which
approximately $105 million had been incurred and placed in service as of
March 31, 1998. The newly expanded casino complex, which was officially
completed on January 21, 1998, includes an additional 15,000 square feet
of gaming space (the entire gaming facility features 1,500 slot
machines, 60 table games and 12 poker tables), 312 hotel suites (to add
to its existing 195 room hotel facility), a multi-level, 1,100 space
parking garage and Bluesville, an entertainment facility which will
accommodate approximately 1,000 customers. Additional facilities include
a health club, one additional restaurant, a new, relocated and expanded
buffet, a remodeled steak house, meeting room facilities and other
amenities.
Bossier City, Louisiana
Horseshoe Bossier City has substantially completed the expansion of its
entire casino facility at a cost of approximately $204 million, of which
approximately $198 million had been incurred and approximately $195
million had been placed in service as of March 31, 1998. The newly
expanded casino facility, which was officially completed on January 28,
1998, features a new expanded riverboat casino facility (with
approximately 40% more gaming positions and featuring a total of 1,343
slot machines, 58 table games and 11 poker tables), a 25 story hotel
tower with 606 suites, meeting room facilities, a health club, the
renovation and expansion of existing dockside facilities, the addition
of two specialty restaurants, the complete renovation and expansion of
the existing buffet, as well as the recently completed 1,100 space
parking garage, administration building and remodeled existing steak
house restaurant.
The Horseshoe Bossier City's new riverboat casino facility replaced the
existing riverboat casino facility (the "Queen of the Red"). The Queen
of the Red, along with related gaming equipment, is included in assets
not in use in the Consolidated Condensed Balance Sheets at March 31,
1998. Management intends to use the Queen of the Red, and the related
gaming equipment, in conjunction with the Company's proposed riverboat
gaming facility in the Vicksburg, Mississippi.
16
<PAGE> 17
OTHER ITEMS
Cash and cash equivalents totaled $45,958,000 as of March 31, 1998.
Included in accrued expenses at March 31, 1998 is a tax distribution
payable to the owners of the Company amounting to $4,383,000, which was
paid in April, 1998. Management believes that the Company's cash and
cash equivalents on hand, cash from operations and additional borrowings
under its Amended and Restated Credit Facility will be adequate to meet
the Company's existing obligations when they become due.
As of March 31, 1998 the Company borrowed an additional $45 million
under the Amended and Restated Credit Facility. The borrowings have
enabled the Company to fund the completion of the expansion of the
Bossier City and Tunica properties.
During the first quarter of 1998, the Company adopted SFAS No. 130,
Reporting Comprehensive Income. There was no impact of such adoption on
the Company's consolidated financial statements, as total comprehensive
income is the same as net income for all periods presented.
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
17
<PAGE> 18
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: May 12, 1998 By: /s/ Walter J. Haybert
------------------------------------
Treasurer and Chief Financial Officer
of Horseshoe Gaming, Inc.
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
27.1 Financial Data Schedule-Horseshoe Gaming L.L.C. and Subsidiaries
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1998
<CASH> 24,554
<SECURITIES> 24,554
<RECEIVABLES> 14,568<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 3,339
<CURRENT-ASSETS> 69,688
<PP&E> 415,259
<DEPRECIATION> 38,462
<TOTAL-ASSETS> 532,393
<CURRENT-LIABILITIES> 56,420
<BONDS> 356,743
0
0
<COMMON> 0
<OTHER-SE> 68,764
<TOTAL-LIABILITY-AND-EQUITY> 532,393
<SALES> 3,691<F2>
<TOTAL-REVENUES> 113,906
<CGS> 4,702
<TOTAL-COSTS> 69,195
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,729
<INCOME-PRETAX> 9,973
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,973
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,973
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Notes and accounts receivable-trade are reported net of allowances for doubtful
accounts in the Statement of Financial Positon.
<F2>Net sales are reported net of promotional allowances applicable to tangible
items.
</FN>
</TABLE>
