<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 June 30, 1996
--------------------
Commission File Number 333-00214-01
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ROBINSON PROPERTY GROUP
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LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
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<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
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HORSESHOE GAMING, L. L. C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
QUARTER ENDED JUNE 30, 1996
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INDEX PAGE
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PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements:
Robinson Property Group, L.P.:
Condensed Balance Sheets
at June 30, 1996 and December 31, 1995................................................ 3
Condensed Statements of Operations
for the six and three months ended June 30, 1996 and 1995............................. 4
Condensed Statements of Cash Flows
for the six and three months ended June 30, 1996 and 1995............................. 5
Notes to Condensed Financial Statements..................................................... 6
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 7
PART II OTHER INFORMATION
ITEM 6 Exhibits and reports on Form 8-K...................................................... 9
SIGNATURES ............................................................................................ 10
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2
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PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
ROBINSON PROPERTY GROUP, L.P.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
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<CAPTION>
June 30, December 31,
1996 1995
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<S> <C> <C>
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 18,377 $ 32,706
Accounts receivable, net 4,134 3,144
Interest receivable - related party - 305
Inventories 360 418
Prepaid expenses and other 569 166
-------- --------
Total current assets 23,440 36,739
-------- --------
Property and Equipment:
Land 2,755 2,505
Buildings, barge and improvements 50,200 50,171
Furniture, fixtures and equipment 16,315 16,142
Less: accumulated depreciation (8,359) (5,390)
-------- --------
60,911 63,428
Construction in progress 2,100 298
-------- --------
Net property and equipment 63,011 63,726
-------- --------
Other Assets:
Deferred finance charges, net 1,087 2,237
Goodwill, net 20,869 21,299
Other, net 1,764 1,861
-------- --------
$110,171 $125,862
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $ 807 $ 2,671
Due to affiliates 191 4,710
Accrued expenses and other 10,898 8,404
-------- --------
Total current liabilities 11,896 15,785
Long-term debt, less current maturities 38,000 70,000
-------- --------
Total liabilities 49,896 85,785
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Commitments and Contingencies
Partners' Capital 60,275 40,077
-------- --------
$110,171 $125,862
======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
3
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ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
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<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
1996 1995 1996 1995
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Casino $ 37,538 $ 33,680 $ 77,685 $ 50,527
Food and beverage 2,723 2,654 5,568 3,903
Hotel 893 878 1,789 1,290
Other 640 535 1,429 846
--------- --------- -------- --------
41,794 37,747 86,471 56,566
Promotional allowances (2,669) (2,444) (5,561) (3,679)
--------- --------- -------- --------
Net revenues 39,125 35,303 80,910 52,887
--------- --------- -------- --------
Expenses:
Casino 16,944 12,933 33,418 19,354
Food and beverage 2,622 2,450 5,010 3,640
Hotel 370 398 692 632
Other 252 341 541 472
General and administrative 6,977 4,249 13,197 6,680
Depreciation and amortization 1,764 1,586 3,512 2,727
Preopening - - - 7,021
--------- --------- -------- --------
Total 28,929 21,957 56,370 40,526
--------- --------- -------- --------
Operating Income 10,196 13,346 24,540 12,361
Other Income (Expense):
Interest expense (1,835) (2,263) (4,784) (3,674)
Interest and other income 141 51 442 66
--------- --------- -------- --------
Net Income $ 8,502 $ 11,134 $ 20,198 $ 8,753
========= ========= ======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
4
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ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
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<CAPTION>
Six Months Ended
June 30,
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1996 1995
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Cash provided by operating activities $24,460 $20,380
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Cash flows from investing activities:
Purchases of property and equipment (2,270) (20,616)
Increase in construction payable - (2,558)
Increase in other assets - (336)
-------- --------
Net cash used in investing
activities (2,270) (23,510)
-------- --------
Cash flows from financing activities:
Proceeds from debt - 25,121
Payments on debt (32,000) (3,007)
Distributions - (8,094)
Changes in due to/from affiliates (4,519) 2,967
-------- --------
Net cash (used in) provided by
financing activities (36,519) 16,987
-------- --------
Net change in cash and cash equivalents (14,329) 13,857
Cash and cash equivalents, beginning of period 32,706 1,879
-------- --------
Cash and cash equivalents, end of period $ 18,377 $ 15,736
======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
5
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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, 1995 was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. The results for the interim 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:
Long-term debt
The Partnership has issued an unconditional guarantee as to the principal of
and the interest and premium (if any) on the indebtedness of its parent company
under the Senior Secured Credit Facility dated as of October 10, 1995, under
which its parent owed $83,477,000 at June 30, 1996. The Partnership has issued
a separate unconditional guarantee as to the principal of and the interest and
premium (if any) on the indebtedness of it parent under the Senior Notes due
2000, under which its parent owed $150,000,000 at June 30, 1996. Each of these
guarantees is secured by substantially all of the assets of the Partnership.
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.
Competitive Uncertainties in Mississippi
A landowner in DeSoto County, the County immediately North of Tunica County,
and the closest county in Mississippi to the greater Memphis area, has published
notice of its intent to have gambling be permitted to be conducted in DeSoto
County. Certain citizens groups located in DeSoto are in the process of
seeking signatures to a petition to cause an election to reject gambling in
DeSoto County on the November, 1996 ballot. If such signature drive is
unsuccessful or the ballot measure is defeated then gambling would be permitted
in DeSoto County would strongly impact the viability of gaming operations in
Tunica County.
Several ballot measures to amend the Arkansas constitution to permit gambling
in the Hot Springs and West Memphis, Arkansas markets have been validated by
the Arkansas Attorney General's office and will appear on the November, 1996
statewide ballot. If any of the measures is approved by the voters, the effect
on gaming operations in Tunica, Mississippi may be negatively impacted.
6
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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
financial condition and results of operations of Robinson Property Group
L.P. (the "Company"). The discussion should be read in conjunction with
the Condensed Financial Statements and notes thereto.
The Horseshoe Casino Center operates in the competitive Tunica County,
Mississippi, market, which currently consists of ten casinos. 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 five 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, mitigating the potential adverse impact on future
operating levels at the Horseshoe Casino Center.
A landowner in DeSoto County, the County immediately North of Tunica
County, and the closest county in Mississippi to the greater Memphis area,
has published notice of its intent to have gambling be permitted to be
conducted in DeSoto County. Certain citizens groups located in DeSoto are
in the process of seeking signatures to a petition to cause an election to
reject gambling in DeSoto County on the November, 1996 ballot. If such
signature drive is unsuccessful or the ballot measure is defeated then
gambling would be permitted in DeSoto County. Competition in DeSoto County
would strongly impact the viability of gaming operations in Tunica County.
Several ballot measures to amend the Arkansas constitution to permit
gambling in the Hot Springs and West Memphis, Arkansas markets have been
validated by the Arkansas Attorney General's office and will appear on the
November, 1996 statewide ballot. If any of the measures is approved by the
voters, the effect on gaming operations in Tunica, Mississippi may be
negatively impacted.
RESULTS OF OPERATIONS
Three months ended June 30, 1996 and 1995
The Horseshoe Casino Center contributed net revenues and operating
income of $39.1 million and $10.2 million, respectively for the three
months ended June 30, 1996 and $35.3 million and $13.3 million,
respectively for the three months ended June 30, 1995. Operating income
decreased by 23.6%, or $3.1 million in the 1996 period as compared to the
1995 period. The decrease in operating income is mainly due to two
factors. The Company began increasing its promotional programs and direct
marketing efforts in 1996 in order to mitigate the impact of additional
casino openings in the Tunica market. The operating results for the second
quarter ended also include bad debt reserves of approximately $1.2 million
compared to the 1995 period of approximately $.2 million. The Horseshoe
Casino Center's 1996 net revenues include casino revenues and non-casino
revenues, respectively, of $37.5 million and $1.6 million for the quarter
ended June 30, 1996 and $33.7 million and $1.6 million for the quarter
ended June 30, 1995. Casino revenue per day increased approximately 11.6%
in 1996 to $413,000 from $370,000 in 1995.
Depreciation and amortization expense increased in the 1996 period
compared to the 1995 period mainly due to amortization of goodwill which
did not exist in the 1995 period and increases in depreciation expense
associated with property improvements completed during the first quarter of
1996.
The increase in net interest expense for the three months ended June 30,
1996, compared with the prior year period ended June 30, 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.
Six months ended June 30, 1996 and 1995
The significant improvement in the Company's net revenues for the six
months ended June 30, 1996, compared with the prior year period ended June
30, 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 Casino Center opened on February 13, 1995 and contributed
net revenues and operating income of $80.9 million and $24.5 million,
respectively for the six months ended June 30, 1996. The 1995 period
consisted of four and one-half months of operations and contributed net
revenues of $52.9 million. Operating income for the 1995 period was $12.4
million which included a $7.0 million charge for preopening expenses. The
Horseshoe Casino Center's 1996 net revenues include $77.7 million of casino
revenues and $3.2 million of non-casino revenues. Casino revenue per day
increased approximately 14.4% in 1996 to $445,000 from $389,000 in 1995.
7
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The increase in interest expense for the six months ended June 30, 1996,
compared with the prior year period ended June 30, 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 $70 million in proceeds of an Intercompany Senior Secured
Note (the "Intercompany Note") issued to its parent company, Horseshoe Gaming,
L.L.C. ("Gaming"). The Intercompany Note matures on September 30, 2000 and
requires mandatory principal redemption with available cash flow as defined in
the agreement. The Intercompany Note requires quarterly interest payments at
13.31% per annum. During the first six months of 1996, the Company paid $32
million in principal payments to Gaming.
The Partnership has issued an unconditional guarantee as to the principal of
and the interest and premium (if any) on the indebtedness of its parent company
under the Senior Secured Credit Facility dated as of October 10, 1995, under
which Gaming owed $83,477,000 at March 31, 1996. The Partnership has issued a
separate unconditional guarantee as to the principal of and the interest and
premium (if any) on the indebtedness of Gaming under the Senior Notes due 2000,
under which its parent owed $150,000,000 at June 30, 1996. Each of these
guarantees is secured by substantially all of the assets of the Partnership.
Development
Management of the Company has plans to further develop its casino site in
Tunica, Mississippi, at 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, 309 additional hotel
suites, a multi-level 1,100-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 second quarter of 1997. If gambling
is legalized in DeSoto County, then the Company will scale back its
development plans. The nature of any reduction in scope has not yet been
determined.
OTHER FACTORS AFFECTING LIQUIDITY
As of June 30, 1996, the Company had cash and cash equivalents of approximately
$18.4 million. Within the next twelve months, the Company expects to spend
approximately $60 to $70 million for expansion of its existing 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 may be required to fund
the Company's development plans discussed above through additional borrowings
from Gaming under its existing Intercompany Note.
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.
8
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PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
27 Financial Data Schedule-Robinson Property Group, L.P.(for SEC use
only).
9
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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: August 13, 1996 By: /s/ Walter J. Haybert
------------------------------------
Treasurer and Chief Financial Officer
of Horseshoe GP, Inc.
10
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EXHIBIT
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<CAPTION>
Exhibit
Number Description
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27 Financial Data Schedule-Robinson Property Group, L.P.
(for SEC use only)
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP AND FOR SUBSIDIARIES
FOR THE PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATMENTS.<F3>
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 64,513
<SECURITIES> 76,436
<RECEIVABLES> 5,824<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 1,657
<CURRENT-ASSETS> 75,936
<PP&E> 168,539
<DEPRECIATION> 19,732
<TOTAL-ASSETS> 356,770
<CURRENT-LIABILITIES> 43,759
<BONDS> 235,554
0
0
<COMMON> 0
<OTHER-SE> 66,872
<TOTAL-LIABILITY-AND-EQUITY> 356,770
<SALES> 7,070<F2>
<TOTAL-REVENUES> 172,512
<CGS> 10,500
<TOTAL-COSTS> 91,364
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,254
<INCOME-PRETAX> 25,744
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,744
<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 POSITION.
<F2>NET SALES ARE REPORTED NET OF PROMOTIONAL ALLOWANCES APPLICABLE TO TANGIBLE
ITEMS.
<F3>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.
</FN>
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