SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 14, 1999
CASINO MAGIC OF LOUISIANA, CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Louisiana . . . . . . . . . . 333-14535 64-0878110
(STATE OR OTHER JURISDICTION. (COMMISSION (IRS EMPLOYER
OF INCORPORATION) . . . . . . FILE NUMBER) IDENTIFICATION NO.)
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711 Casino Magic Drive, Bay Saint Louis, Mississippi 39520
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (228) 467-9257
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ITEM 5. OTHER EVENTS.
On May 14, 1999, the Company compiled its financial information for the
first calendar quarter of 1999. Attached as Exhibit 99.1 is certain
financial information relating to the Company, which is incorporated herein by
reference.
ITEM 7. EXHIBITS.
99.1 Financial Statements of Casino Magic of Louisiana, Corp.
together with Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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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 hereunto duly authorized.
CASINO MAGIC OF LOUISIANA, CORP.
Date: May 26, 1999 By: /s/ Bruce Hinckley
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Name: Bruce Hinckley
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Title: Sr. VP and Chief Financial Officer
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Casino Magic of Louisiana, Corp.
Index of Exhibits
Three Months Ended March 31, 1999
Exhibit Description
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99.1 Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
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Casino Magic of Louisiana, Corp.
Index
Three Months Ended March 31, 1999
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Page
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . 1
FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . F-1
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CASINO MAGIC OF LOUISIANA, CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
For the three months ended March 31, 1999 compared to the three months ended
March 31, 1998:
Gaming revenues at Casino Magic-Bossier City increased to $32.4 million for
the first quarter of 1999 compared to $27.1 million in the first quarter of
1998; an increase of $5.3 million or 19.6%. The increase is a result of Casino
Magic's opening of a 188 room luxury hotel and other quality food and beverage
facilities in December 1998, upgrading of product mix in slot machines, and
more effective marketing programs. The Bossier City/Shreveport, Louisiana
gaming market (as measured by taxable gaming receipts) grew $4.4 million over
the comparable quarters or 3%. Casino Magic-Bossier City's taxable gaming
receipts increased 18.2% over the same comparative period, increasing its
market share by approximately 3%. Non gaming revenues (net of
complimentaries) increased $0.4 million over the comparable periods,
principally as a result of the new hotel and food and beverage facilities.
Total costs and expenses during the first quarter of 1999 were $28.2 million
compared to $23.6 million in the first quarter of 1998, a cost increase of
$4.6 million or 19.5%. Casino costs increased $3.4 million or 25.7% over the
comparative quarter. This increase was due generally to increased taxes on
marginal gaming revenues (24.9% tax rate) and increases in the cost of slot
club points which was a function of volume and triple points awarded on
Tuesdays in the months of April and May 1999. Other operating costs and
expenses increased approximately 12.4% over the prior year as a result of
costs associated with the hotel which was not in service in the first quarter
of 1998. Advertising & Marketing expenses decreased by 2.1% over the 1998
quarter. Marketing strategy in the first quarter of 1998 required more
promotional costs to drive business and compensate for lack of competitive
facilities. Other administrative and operating expenses (excluding
depreciation) increased $1.1 million or 23.7% over the comparative quarter as
a result of a increased maintenance and utility costs associated with the new
facilities.
Casino Magic-Bossier City earned operating income of $5.6 million for the
first quarter of 1999 versus $4.5 million in the first quarter of 1998; an
improvement of $1.1 million.
Interest expense increased from $4.4 million in the first quarter of 1998 to
$4.6 million in the first quarter of 1999 due to increased borrowings and
reduced capitalized interest due to the completion of a 188 room hotel in
December 1998.
There was no income tax provision or benefit for the first quarter of 1999 or
1998. The Company is included in a consolidated group subject to a
tax-sharing agreement between itself and affiliated companies. The difference
between the 0% rate and the statutory rate of 35% is due to a net operating
loss carry forward in excess of current taxable income.
Casino Magic-Bossier City registered net income of $1.0 million in the first
quarter of 1999 compared with a net income of $0.1 million during the first
quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES:
At March 31, 1999, the Company had unrestricted cash and cash equivalents of
$10.1 million compared to unrestricted cash and cash equivalents of $8.6
million at December 31, 1998. The Company also had $0.1 million in restricted
marketable securities at December 31, 1998. The 1998 restricted funds were
invested in the completion of the hotel and other amenities in the first
quarter of 1999, consistent with the requirements of the Louisiana First
Mortgage Note Indenture.
For the three months ended March 31, 1999, the Company generated $0.5 million
of cash flow from operating activities and spent $0.6 million for acquisitions
of property and equipment. Casino Magic-Bossier City made principal payments
on third party debt of $1.0 million during the quarter and increased debt to
affiliated companies by $2.5 million for a net increase in long term debt of
$1.5 million.
1
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The Company completed construction of an 188-room hotel and related amenities,
including restaurants and beverage service in December 1998. The construction
of the hotel and amenities of approximately $21 million was funded primarily
by $11.7 million in proceeds received from the sale of the Crescent City
Queen, cash flow of Casino Magic-Bossier City, and loans from affiliated
companies. The final progress billing on the new hotel is expected to be
approximately $1.0 million and will be paid in the second quarter of 1999. The
addition of the new hotel and facilities has substantially increased income
from operations. The Company still has significant need for cash, including
debt service. However, management believes that cash at March 31, 1999 and
cash flows from operations will be sufficient to service its operating needs
and debt service through, at least, the next twelve months, although no
assurances can be given.
Jefferson Corp. and Louisiana Corp. have certain restrictions relative to
additional borrowings and cash flow under the terms of the Indenture
associated with the Louisiana First Mortgage Notes.
2
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INDEX TO FINANCIAL STATEMENTS
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CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGES
Financial Statements
Condensed Statement of Operations for the three months ended March 31, 1999 and 1998 F-1
Condensed Balance Sheets as of March 31, 1999 and December 31, 1998. . . . . . . . . F-2
Condensed Statement of Cash Flows for the three months ended March 31, 1999 and 1998 F-3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
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CASINO MAGIC OF LOUISIANA, CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
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1999 1998
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REVENUES:
Casino. . . . . . . . . . . . . . . . . . . . . $ 32,398,121 $27,055,761
Other .. . . . . . . . 1,453,341 1,054,913
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Total revenues. . . . . . . . . . . . . . . . 33,851,462 28,110,674
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COSTS AND EXPENSES:
Casino. . . . . . . . . . . . . . . . . . . . . 16,513,161 13,137,604
Other operating costs and expenses. . . . . . . 2,114,010 1,880,665
Advertising and marketing . . . . . . . . . . . 3,545,698 3,622,938
General and administrative. . . . . . . . . . . 2,153,002 1,613,339
Property operation, maintenance and energy cost 1,309,427 1,100,981
Rents, property taxes and insurance . . . . . . 686,341 637,623
Depreciation and amortization . . . . . . . . . 1,888,737 1,597,202
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Total costs and expenses. . . . . . . . . . . 28,210,376 23,590,352
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INCOME FROM OPERATIONS . . . . . . . . . . . . . 5,641,086 4,520,322
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INTEREST EXPENSE . . . . . . . . . . . . . . . . 4,588,279 4,433,838
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INCOME BEFORE INCOME TAXES . . . . . . . . . . . 1,052,807 86,484
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INCOME TAX EXPENSE . . . . . . . . . . . . . . . -- --
NET INCOME . . . . . . . . . . . . . . . . . . . $ 1,052,807 $ 86,484
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SEE NOTES TO FINANCIAL STATEMENTS.
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F-1
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CASINO MAGIC OF LOUISIANA, CORP.
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
MARCH 31, DECEMBER 31,
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1999 1998(*)
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CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . . . . . $ 10,061,707 $ 8,622,824
Restricted marketable securities . . . . . . . . . . . . -- 108,484
Other current assets . . . . . . . . . . . . . . . . . . 1,419,622 1,260,094
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Total current assets . . . . . . . . . . . . . . . . . 11,481,329 9,991,402
PROPERTY AND EQUIPMENT, NET . . . . . . . . . . . . . . . 91,565,726 92,218,176
OTHER LONG-TERM ASSETS
Deferred gaming license cost, net. . . . . . . . . . . . 36,045,312 36,445,935
Debt issuance costs, net . . . . . . . . . . . . . . . . 3,610,102 3,890,239
Other long-term assets . . . . . . . . . . . . . . . . . 133,701 131,838
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Total other long-term assets . . . . . . . . . . . . . 39,789,115 40,468,012
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$142,836,170 $ 142,677,590
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LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . $ 5,504,732 $ 4,925,136
Accrued expenses . . . . . . . . . . . . . . . . . . . . 2,175,593 1,800,200
Accrued interest . . . . . . . . . . . . . . . . . . . . 4,368,670 7,679,149
Accrued payroll and related benefits . . . . . . . . . . 2,810,985 2,426,360
Accrued progressive gaming liabilities . . . . . . . . . 1,810,882 1,669,583
Notes and contracts payable. . . . . . . . . . . . . . . 305,695 1,698,871
Current maturities of long-term debt . . . . . . . . . . 6,230,434 5,213,608
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Total current liabilities. . . . . . . . . . . . . . . 23,206,991 25,412,907
Other long-term liabilities . . . . . . . . . . . . . . . 4,698,284 3,852,963
Long-term debt, net of current maturities . . . . . . . . 118,815,615 118,349,249
SHAREHOLDER'S EQUITY (ACCUMULATED DEFICIT)
Common stock, $0.01 par value, 10,000 shares authorized,
100 shares issued and outstanding at March 31, 1999
and December 31, 1998 1 1
Additional paid-in capital 22,353,295 22,353,295
Accumulated deficit . . . . . . . . . . . . . . . . . . . (26,238,016) (27,290,825)
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Total shareholder's equity (accumulated deficit) . . . . (3,884,720) (4,937,529)
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$142,836,170 $ 142,677,590
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SEE NOTES TO FINANCIAL STATEMENTS.
* DERIVED FROM AUDITED FINANCIAL STATEMENTS.
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F-2
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CASINO MAGIC OF LOUISIANA, CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
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1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 1,052,807 $ 86,484
Adjustments for non-cash charges 2,246,937 1,773,194
Changes in assets and liabilities. . . . . . . . . . . (2,882,167) (4,006,226)
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NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES 417,577 (2,146,548)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment . . . . . . . . (574,829) (454,890)
Other, net 112,942 170,060
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NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . (461,887) (284,830)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 2,500,000 --
Principal payments on notes payable and long-term debt (1,016,807) (663,073)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES . . 1,483,193 (663,073)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,438,883 (3,094,451)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,622,824 10,675,429
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,061,707 $ 7,580,978
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SUPPLEMENTAL CASH FLOW INFORMATION
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CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized) $7,618,617 $7,837,807
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment and other asset acquisitions
included in accounts and construction payable and accrued
expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 558,616 $ 81,894
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SEE NOTES TO FINANCIAL STATEMENTS.
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CASINO MAGIC OF LOUISIANA, CORP.
NOTES TO FINANCIAL STATEMENTS
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION:
On May 13, 1996 ("Inception"), Jefferson Casino Corporation ("Jefferson
Corp."), a Louisiana corporation and a wholly owned subsidiary of Casino Magic
Corp. ("Casino Magic"), commenced development stage activities by acquiring
all of the outstanding capital stock of Crescent City Capital Development
Corporation, a Louisiana corporation. Effective October 15, 1998, Casino
Magic Corp. became a wholly owned subsidiary of Hollywood Park, Inc.
Immediately following the acquisition of Crescent City Capital Development
Corporation ("Crescent City") by Jefferson Corp., the name of Crescent City
Capital Development Corporation was changed to Casino Magic of Louisiana,
Corp. ("Louisiana Corp." or the "Company"). Louisiana Corp. has developed a
dockside riverboat casino and entertainment complex in Bossier City, Louisiana
("Casino Magic-Bossier City"). Casino Magic-Bossier City opened on October 4,
1996, using a temporary facility, thereby completing its development stage
activities, and opened the permanent facility on December 31, 1996. Prior to
October 4, 1996, the Company had no material revenues or expenses other than
interest income and expense.
Prior to Inception, Jefferson Corp. had no business activities and Crescent
City was a wholly owned subsidiary of Capital Gaming International, Inc. with
which Jefferson Corp. had no affiliation. Crescent City obtained a gaming
license from the State of Louisiana and on April 4, 1995, began operations on
a riverboat casino, the Crescent City Queen (the "Crescent City Riverboat"),
docked on the Mississippi River at New Orleans, Louisiana. On June 9, 1995
Crescent City ceased gaming operations and subsequently converted an
involuntary bankruptcy proceeding to a voluntary petition under Chapter 11 of
the U.S. Bankruptcy Code in the United States Bankruptcy Court. A plan of
reorganization was developed, and was confirmed by the U.S. Bankruptcy Court
on April 29, 1996 (the "Plan of Reorganization"). Pursuant to the Plan of
Reorganization, Crescent City was discharged from substantially all of its
liabilities prior to the acquisition. The purchase of the outstanding capital
stock of Crescent City by Jefferson Corp. was effected as part of the Plan of
Reorganization. Although the substance of the transaction was an acquisition
of certain assets, the acquisition was structured as a stock purchase to
satisfy Louisiana gaming license requirements. Crescent City had discontinued
all gaming activities after only 65 days of operations in the New Orleans
market and its only significant assets consisted of the Crescent City
Riverboat, a Louisiana gaming license, and the furniture, fixtures and gaming
equipment located on the Crescent City Riverboat.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying unaudited
condensed financial statements contain all adjustments which are, in the
opinion of management, necessary for a fair statement of the results of the
interim periods. The results of operations for the interim periods are not
indicative of results of operations for an entire year. It is suggested that
these financial statements be read in conjunction with the audited
consolidated financial statements and the notes thereto included in the
Company's Form 8-K for the year ended December 31, 1998 filed on form 8-K
dated April 15, 1999. Certain reclassifications have been made to 1998 amounts
to conform with the March 31, 1999, presentation.
F-4
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2. LONG-TERM DEBT:
Long-term debt consists of the following:
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MARCH 31, DECEMBER 31,
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1999 1998
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Notes payable, bank $ 1,119,597 $ 1,705,249
Equipment contracts 1,272,389 1,700,218
Other 35,358 38,684
Notes to affiliates 9,743,705 7,243,705
Louisiana First Mortgage Notes 112,875,000 112,875,000
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125,046,049 123,562,856
Less current maturities (6,230,434) (5,213,608)
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$118,815,615 $118,349,248
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Additions to long-term debt between December 31, 1998 and March 31, 1999
consist of one promissory note to Casino Magic Management Services in the
principal amount of $2.5 million. The note was incurred in February 1999 and
is being repaid over thirty six months bearing interest at an annual rate of
8.25%.
F-5
