<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from _________ to _________
Commission file number 333-4356
COAST HOTELS AND CASINOS, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0345706
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
4500 West Tropicana Avenue, Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip Code)
(702) 365-7000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report.)
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_____
-----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares of Common Stock outstanding as of May 11, 2000: 1,000
================================================================================
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
COAST HOTELS AND CASINOS, INC.
(A Wholly Owned Subsidiary of Coast Resorts, Inc.)
CONDENSED BALANCE SHEETS
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents...................................... $ 39,862 $ 38,616
Accounts receivable, net....................................... 4,736 4,212
Due from Coast Resorts......................................... -- 2,863
Other current assets........................................... 16,463 16,126
-------- --------
TOTAL CURRENT ASSETS........................................... 61,061 61,817
PROPERTY AND EQUIPMENT, net..................................... 367,938 337,704
OTHER ASSETS.................................................... 9,515 8,652
-------- --------
$438,514 $408,173
======== ========
LIABILITIES AND
STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable............................................... $ 9,446 $11,738
Accrued liabilities............................................ 37,939 32,781
Due to Coast Resorts........................................... 2,387 --
Construction accounts payable.................................. 12,669 8,304
Current portion of long-term debt.............................. 2,415 2,473
-------- --------
TOTAL CURRENT LIABILITIES...................................... 64,856 55,296
LONG-TERM DEBT, less current portion............................ 243,554 234,766
DEFERRED INCOME TAXES........................................... 4,674 4,222
DEFERRED RENT................................................... 17,632 16,732
-------- --------
TOTAL LIABILITIES.............................................. 330,716 311,016
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $1.00 par value, 25,000 shares authorized,
1,000 shares issued and outstanding.......................... 1 1
Additional paid-in capital..................................... 86,903 86,903
Retained earnings.............................................. 20,894 10,253
-------- --------
TOTAL STOCKHOLDER'S EQUITY..................................... 107,798 97,157
-------- --------
$438,514 $408,173
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
1
<PAGE>
COAST HOTELS AND CASINOS, INC.
(A Wholly Owned Subsidiary of Coast Resorts, Inc.)
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2000 and 1999
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
2000 1999
---- ----
<S> <C> <C>
OPERATING REVENUES:
Casino................................................. $ 74,024 $66,057
Food and beverage...................................... 19,704 17,775
Hotel.................................................. 8,314 7,877
Other.................................................. 6,921 7,046
------- ------
GROSS OPERATING REVENUES............................. 108,963 98,755
Less: promotional allowances.......................... (9,364) (8,689)
------- ------
NET OPERATING REVENUES............................... 99,599 90,066
------- ------
OPERATING EXPENSES:
Casino................................................. 33,895 32,046
Food and beverage...................................... 13,346 11,776
Hotel.................................................. 3,165 3,041
Other.................................................. 5,592 5,969
General and administrative............................. 16,283 15,425
Pre-opening expenses................................... 268 --
Deferred rent.......................................... 520 964
Depreciation and amortization.......................... 5,774 5,210
------ ------
TOTAL OPERATING EXPENSES............................. 78,843 74,431
------ ------
OPERATING INCOME........................................ 20,756 15,635
------ ------
OTHER INCOME (EXPENSES)
Interest expense, net.................................. (5,475) (6,299)
Interest capitalized................................... 970 --
------- ------
TOTAL OTHER INCOME (EXPENSES)........................... (4,505) (6,299)
------- ------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM...................................... 16,251 9,336
------ ------
Income tax provision.................................... 5,610 3,013
------ -----
INCOME BEFORE EXTRAORDINARY ITEM........................ 10,641 6,323
------ -----
Extraordinary item - loss on early retirement of debt,
net of applicable income tax benefit ($14,543)......... -- (27,007)
------ -------
NET INCOME (LOSS)....................................... $10,641 $(20,684)
====== =======
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
2
<PAGE>
COAST HOTELS AND CASINOS, INC.
(A Wholly Owned Subsidiary of Coast Resorts, Inc.)
CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................... $10,641 $(20,684)
------ --------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization.................................... 5,774 5,210
Deferred income taxes............................................ 355 (7,927)
Deferred rent.................................................... 900 964
Loss on early retirement of debt................................. -- 41,550
Other non-cash expenses.......................................... -- 124
Changes in assets and liabilities:
Net increase in accounts receivable and other assets........... (2,035) (5,678)
Net increase (decrease) in accounts payable and accrued
liabilities................................................. 2,866 (932)
------- -----
TOTAL ADJUSTMENTS.................................................... 7,860 33,311
------- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES............................ 18,501 12,627
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net of amounts in accounts payable............. (31,235) (6,532)
------- -----
NET CASH USED IN INVESTING ACTIVITIES................................ (31,235) (6,532)
------- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt, net of issuance costs...... -- 168,521
Early retirement of debt............................................. -- (223,017)
Principal payments on long-term debt................................. (270) (2,192)
Proceeds from borrowings under bank line of credit................... 9,000 47,000
Advances (to) from Coast Resorts..................................... 5,250 (2,305)
------- -----
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES......................................................... 13,980 (11,993)
------ ------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.......................................................... 1,246 (5,898)
CASH AND CASH EQUIVALENTS, at beginning of period..................... 38,616 41,595
------ ------
CASH AND CASH EQUIVALENTS, at end of period........................... $39,862 $35,697
====== ======
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
3
<PAGE>
COAST HOTELS AND CASINOS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BACKGROUND INFORMATION AND BASIS OF PRESENTATION
Background Information
Coast Hotels and Casinos, Inc. ("Coast Hotels" or the "Company") is a Nevada
corporation and a wholly owned subsidiary of Coast Resorts, Inc. ("Coast
Resorts"), which is also a Nevada corporation. Coast Hotels owns and operates
three Las Vegas hotel-casinos and is developing a fourth.
. The Orleans Hotel and Casino, opened in December 1996, is located
approximately one and one-half miles west of the Las Vegas Strip on Tropicana
Avenue.
. The Gold Coast Hotel and Casino, opened in December 1986, is located
approximately one mile west of the Las Vegas Strip on Flamingo Road.
. The Barbary Coast Hotel and Casino, opened in March 1979, is located on the
Las Vegas Strip.
. On July 1, 1999, we began construction of the Suncoast Hotel and Casino near
Summerlin in the west end of the Las Vegas valley. The Suncoast, with a
construction budget of $185 million, is expected to open in September 2000.
Basis of Presentation
The accompanying financial statements are unaudited and have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In addition, certain
amounts in the 1999 financial statements have been reclassified to conform to
the 2000 presentation. The unaudited financial statements should be read in
conjunction with the audited financial statements and footnotes included in our
annual report on Form 10-K for the year ended December 31, 1999. In the opinion
of management, all adjustments and normal recurring accruals considered
necessary for a fair presentation of the results for the interim period have
been included. The interim results reflected in the unaudited financial
statements are not necessarily indicative of expected results for the full year.
4
<PAGE>
COAST HOTELS AND CASINOS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 2 - LONG-TERM DEBT
Long-term debt consists of the following as of March 31, 2000 and December
31, 1999:
<TABLE>
<CAPTION>
March 31,
2000 December 31,
(unaudited) 1999
----------- ----
(in thousands)
<S> <C> <C>
9.5% senior subordinated notes due April 2009......................... $ 175,000 $ 175,000
$200.0 million reducing revolving credit facility due April 2004,
collateralized by substantially all of the assets of Coast Hotels
and Casinos, Inc................................................... 64,000 55,000
13% first mortgage notes due December 2000, with interest
payable semiannually on June 15 and December 15.................... 1,960 1,960
8.6% note due August 11, 2007, payable in monthly installments of
$26,667 principal plus interest on remaining principal balance,
collateralized by 1980 Hawker aircraft............................. 2,373 2,453
7.5% notes, payable in monthly installments of interest only, with all
principal and any unpaid interest due December 31, 2001. The notes
are uncollateralized and are payable to the former partners of
Barbary Coast and Gold Coast....................................... 1,975 1,975
Other notes payable................................................... 661 851
-------- -------
245,969 237,239
Less: current portion................................................. 2,415 2,473
-------- --------
$243,554 $234,766
======== ========
</TABLE>
5
<PAGE>
COAST HOTELS AND CASINOS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 2 - LONG-TERM DEBT (Continued)
In March 1999, we issued $175.0 million principal amount of 9.5% senior
subordinated notes with interest payable on April 1 and October 1, beginning
October 1, 1999, and entered into a $75.0 million senior secured revolving
credit facility due 2004 to facilitate a refinancing. Availability under the
credit facility was increased to $200.0 million in September 1999. Coast Resorts
is a guarantor of the indebtedness under both of these debt agreements.
Borrowings under the credit facility bear interest, at our option, at a premium
over the one-, two-, three- or six-month London Interbank Offered Rate
("LIBOR"). As of March 31, 2000 the interest rate was 7.86%. We incur a
commitment fee, payable quarterly in arrears, on the unused portion of the
credit facility. This variable fee is currently at the maximum rate of 0.5% per
annum times the average unused portion of the facility.
With the proceeds from the senior subordinated notes and borrowings under the
credit facility, we repurchased substantially all of the $175.0 million
principal amount outstanding of 13% first mortgage notes and all $16.8 million
principal amount outstanding of 10-7/8% first mortgage notes and amended the
indenture under which the 13% first mortgage notes were issued to eliminate
substantially all of its restrictive covenants. Approximately $2.0 million in
principal amount of the 13% first mortgage notes remains outstanding and is
governed by the terms of the amended indenture. We are required by the
indenture for the 9.5% senior subordinated notes to redeem the 13% first
mortgage notes that remain outstanding no later than December 15, 2000 at a
redemption price of 106.5% of the principal amount, plus any accrued and unpaid
interest. Interest on the remaining $2.0 million of the first mortgage notes is
payable semiannually on June 1 and December 1. In connection with the
repurchase of the 13% notes and the 10-7/8% notes, we incurred repurchase
premiums of $31.0 million and $2.1 million, respectively. The repurchase
premiums and the write-offs of unamortized debt issuance costs and original
issue discount resulted in an extraordinary loss of $27.0 million in the three
months ended March 31, 1999, net of applicable income tax benefit of $14.5
million.
The availability under the $200.0 million credit facility will be reduced
quarterly beginning in the fiscal quarter ending September 30, 2001. The initial
advance of $47.0 million under the credit facility was used in connection with
the repurchase of the 13% first mortgage notes and the 10-7/8% first mortgage
notes. Subsequent advances under the credit facility may be used for working
capital, general corporate purposes, construction of the Suncoast and certain
improvements to our existing properties. As of March 31, 2000, we had $64.0
million outstanding under the credit facility.
The $200.0 million senior secured revolving credit facility agreement
contains covenants that, among other things, limit our ability to pay dividends
or make advances to Coast Resorts, to make certain capital expenditures, to
repay certain existing indebtedness, to incur additional indebtedness or to sell
material assets. Additionally, the loan agreement requires that we maintain
certain financial ratios with respect to leverage and fixed charge coverage. We
are also subject to certain covenants associated with the indenture governing
the $175.0 million principal amount of senior subordinated notes, including, in
part, limitations on certain restricted payments, the incurrence of additional
indebtedness and asset sales. We believe that, at March 31, 2000, we were in
compliance with all covenants and required ratios.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The following table sets forth, for the periods indicated, certain financial
information regarding our results of operations:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------
2000 1999
---- ----
(in thousands)
(unaudited)
<S> <C> <C>
Hotel-casino operations:
Net operating revenues........................... $99,599 $90,066
Operating expenses............................... 77,060 71,774
------- -------
Operating income from hotel-casino operations..... 22,539 18,292
Corporate expenses (1)............................ 1,783 2,657
------- -------
Total operating income............................ $20,756 $15,635
======= =======
EBITDA, hotel-casino operations (2)............... $28,400 $23,739
======= =======
EBITDA, total (including corporate) (2)........... $27,318 $21,809
======= =======
</TABLE>
(1) Corporate expenses include corporate general and administrative expenses,
depreciation and amortization and, prior to July 1, 1999, land lease
expenses, both cash and deferred, on the Suncoast land. Suncoast land lease
expenses subsequent to July 1, 1999, the date we commenced construction of
the Suncoast, are being capitalized during construction.
(2) "EBITDA" means earnings before interest, taxes, depreciation, amortization,
deferred (non-cash) rent expense and certain non-recurring items, including
pre-opening expenses. EBITDA should not be construed as an alternative to
operating income or net income (as determined in accordance with generally
accepted accounting principles) as an indicator of the Company's operating
performance, or as an alternative to cash flows generated by operating,
investing and financing activities (as determined in accordance with
generally accepted accounting principles) as an indicator of cash flows or
a measure of liquidity. EBITDA is presented solely as supplemental
disclosure because management believes that it is a widely used measure of
operating performance in the gaming industry. All companies do not
calculate EBITDA in the same manner. As a result, EBITDA as presented here
may not be comparable to a similarly titled measure presented by other
companies.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Results of Operations (Continued)
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Net revenues in the quarter ended March 31, 2000 were $99.6 million compared
to $90.1 million in the same quarter in 1999, an increase of 10.6%. Revenues
were higher at all three of our hotel-casino properties. First quarter
operating income was $20.8 million compared to 1999 first quarter operating
income of $15.6 million, an increase of 32.8%. Operating margins (operating
income as a percentage of revenues) improved at all three of our hotel-casino
properties. Net income improved to $10.6 million in the first quarter of 2000,
compared to a net loss of $20.7 million in the first quarter of 1999 that
resulted from a one-time charge of $27.0 million (net of income tax benefit)
related to the early retirement of debt in a refinancing. 1999 first quarter
net income before the extraordinary item and related tax benefit was $6.3
million.
Casino. Casino revenues in the quarter ended March 31, 2000 were $74.0
million compared to $66.1 million in 1999, an increase of 12.1%. The increase
was primarily due to the continued improvement in slot revenues at the Orleans,
up 20.3% over the first quarter in 1999 as a result of increased customer
volume. Casino revenues also improved at the Gold Coast, up 7.7% due primarily
to improved table games wagering volume and win percentage. Casino revenues at
the Barbary Coast improved 8.5%, due primarily to improved slot machine
revenues.
Casino expenses in the quarter ended March 31, 2000 increased by 5.8% over
the same quarter in 1999, related to the increased casino revenues. The casino
operating margin improved in the first quarter of 2000 to 54.2% compared to
51.5% in the first quarter of 1999.
Food and Beverage. Food and beverage revenues were $19.7 million in the
first quarter of 2000 compared to $17.8 million in 1999, an increase of 10.9%.
The increase was primarily due to increased customer volume and higher prices at
the Orleans' new larger buffet that opened in May 1999.
Food and beverage expenses were $13.3 million in the first quarter of 2000
compared to $11.8 million in the first quarter of 1999, an increase of 13.3%
primarily due to increased staffing and higher food costs in the Orleans' new
buffet.
Hotel. Hotel room revenues were $8.3 million in the three months ended March
31, 2000, an increase of 5.5% over 1999 revenues of $7.9 million, despite a
decrease in room occupancy percentages that we believe is attributable to
increased competition from three new hotel casinos opened in 1999 on the Las
Vegas Strip. An increase in average daily room rates from $53 in 1999 to $60 in
the first quarter of 2000 contributed to the increased revenues. Hotel operating
margins improved slightly to 61.9% from 61.4% in the first quarter of 1999.
Other. Other revenues were down 1.8% in the first quarter of 2000, primarily
due to lower showroom revenues at the Orleans as a result of our decision to
book fewer entertainment nights. Other expenses declined 6.3%, primarily due to
a decline in entertainers' fees at the Orleans.
General and Administrative. General and administrative expenses increased
5.6% to $16.3 million in the first quarter of 2000 compared to $15.4 million in
1999. The increase was due, in part, to July 1999 wage increases at our three
hotel-casinos. Additionally, an expansion completed in May 1999 at the Orleans
resulted in higher utility costs and increased staffing in several ancillary
departments. General and administrative expenses include cash rent expense of
$675,000 and $1.1 million for 2000 and 1999, respectively. Cash rent was lower
in the first quarter of 2000 as a result of the capitalizing of rent on the
Suncoast land since July 1999, when construction of that project commenced.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Results of Operations (Continued)
Deferred Rent. Deferred rent decreased from $964,000 in 1999 to $520,000 in
2000 as a result of the capitalizing of rent on the Suncoast land during
construction.
Depreciation and Amortization. Depreciation and amortization expense was
$5.8 million in the first quarter of 2000 compared to $5.2 million in 1999. The
increase was due primarily to the addition of new equipment at each of our
hotel-casino properties.
Liquidity and Capital Resources
Our principal sources of liquidity have consisted of cash provided by
operating activities and debt financing. Cash provided by operating activities
was $18.5 million in the three months ended March 31, 2000 compared to $12.6
million in 1999. The increase was due primarily to the increased operating
income.
Cash used in investing activities in the three months ended March 31, 2000
was $31.2 million and was primarily for capital expenditures, including $28.6
million for the ongoing construction of the Suncoast. Our anticipated capital
expenditures for 2000 are $162.8 million, including $149.9 million for
construction of the Suncoast, $9.7 million for maintenance capital expenditures
at our three existing hotel-casinos and $3.2 million for various projects,
including new restaurants at the Orleans and a remodeling of the bowling center
at the Gold Coast.
Cash provided by financing activities was $14.0 million in the first quarter
of 2000, primarily from borrowings under our $200.0 million line of credit. In
addition, approximately $5.3 million represents amounts owed to Coast Resorts
for the payment of income taxes. In the first quarter of 1999, cash used in
financing activities was $12.0 million, due primarily to a refinancing of our
debt. In March 1999, we issued $175.0 million principal amount of 9.5% senior
subordinated notes with interest payable on April 1 and October 1 beginning
October 1, 1999 and entered into a $75.0 million senior secured revolving credit
facility due 2004 to facilitate a refinancing. Availability under the credit
facility was increased to $200.0 million in September 1999. Borrowings under
the credit facility bear interest, at our option, at a premium over the one-,
two-, three- or six-month London Interbank Offered Rate ("LIBOR"). As of March
31, 2000, the interest rate was 7.86%. We incur a commitment fee, payable
quarterly in arrears, on the unused portion of the credit facility. This
variable fee is currently at the maximum rate of 0.5% per annum times the
average unused portion of the facility.
With the proceeds from the senior subordinated notes and borrowings under the
credit facility, we repurchased substantially all of the $175.0 million
principal amount outstanding of 13% first mortgage notes and all $16.8 million
principal amount of 10-7/8% first mortgage notes and amended the indenture under
which the 13% first mortgage notes were issued to eliminate substantially all of
its restrictive covenants. Approximately $2.0 million in principal amount of
the 13% first mortgage notes remains outstanding and is governed by the terms of
the amended indenture. We are required by the terms of the indenture for the
9.5% senior subordinated notes to redeem the 13% first mortgage notes that
remain outstanding no later than December 15, 2000 at a redemption price of
106.5% of the principal amount, plus any accrued and unpaid interest. In
connection with the repurchase of the 13% notes and the 10-7/8% notes, we
incurred repurchase premiums of $31.0 million and $2.1 million, respectively.
The repurchase premiums and the write-offs of unamortized debt issuance costs
and original issue discount resulted in an extraordinary loss of $27.0 million,
net of applicable income tax benefit of $14.5 million.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Liquidity and Capital Resources (Continued)
The availability under the $200.0 million credit facility will be reduced in
quarterly amounts beginning in the fiscal quarter ending September 30, 2001.
The initial advance of $47.0 million under the credit facility was used in
connection with the repurchase of the 13% first mortgage notes and the 10-7/8%
first mortgage notes. Subsequent advances under the credit facility may be used
for working capital, general corporate purposes, construction of the Suncoast,
and certain improvements to our existing properties. As of March 31, 2000, we
had $64.0 million outstanding under the $200.0 million credit facility.
We believe that existing cash balances, operating cash flow and available
borrowings under the $200.0 million credit facility will provide sufficient
resources to meet our debt and lease payment obligations, foreseeable capital
expenditure requirements at our existing properties and construction,
development and opening costs of the Suncoast.
Forward-Looking Statements
Certain statements in this section and elsewhere in this Quarterly Report on
Form 10-Q (as well as information included in oral statements or other
statements made or to be made by us) constitute "forward-looking statements".
Such forward-looking statements include the discussions of our business
strategies and expectations concerning future operations, margins,
profitability, liquidity and capital resources. In addition, in certain
portions of this 10-Q, the words: "anticipates", "believes", "estimates",
"seeks", "expects", "plans", "intends" and similar expressions, as they relate
to Coast Hotels or our management, are intended to identify forward-looking
statements. Although we believe that such forward-looking statements are
reasonable, we can give no assurance that any forward-looking statements will
prove to be correct. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual results,
performance or achievements of Coast Hotels to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the risks
associated with entering into a new venture and new construction, competition
and other planned construction in Las Vegas, government regulation related to
the casino industry (including the regulation of gaming in certain
jurisdictions, such as Native American reservations in the State of California),
leverage and debt service (including sensitivity to fluctuations in interest
rates), occupancy rates and average daily room rates in Las Vegas, the
completion of infrastructure projects in Las Vegas and general economic and
business conditions which may impact levels of disposable income of consumers
and pricing of hotel rooms.
10
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the risk of loss arising from adverse changes in market rates
and prices, such as interest rates, foreign currency exchange rates and
commodity prices. Our primary exposure to market risk is interest rate risk
associated with our long-term debt. To date, we have not invested in
derivative- or foreign currency-based financial instruments. We attempt to
limit our exposure to interest rate risk by managing the mix of our long-term
fixed-rate borrowings and short-term borrowings under our revolving bank credit
facility.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: May 15, 2000 COAST HOTELS AND CASINOS, INC., a Nevada
corporation
By: /s/ Gage Parrish
----------------------------------
Gage Parrish
Vice President and Chief Financial
Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 39,862
<SECURITIES> 0
<RECEIVABLES> 5,439
<ALLOWANCES> 703
<INVENTORY> 4,612
<CURRENT-ASSETS> 61,061
<PP&E> 491,474
<DEPRECIATION> 123,536
<TOTAL-ASSETS> 438,514
<CURRENT-LIABILITIES> 64,856
<BONDS> 243,554
0
0
<COMMON> 1
<OTHER-SE> 107,797
<TOTAL-LIABILITY-AND-EQUITY> 438,514
<SALES> 0
<TOTAL-REVENUES> 99,599
<CGS> 0
<TOTAL-COSTS> 78,843
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,505
<INCOME-PRETAX> 16,251
<INCOME-TAX> 5,610
<INCOME-CONTINUING> 10,641
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,641
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
