UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: 6/30/98
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: 333-17795-01
WATERFORD GAMING FINANCE CORP.
------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 06-1485836
-------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
914 Hartford Turnpike, P.O. Box 715
Waterford, CT 06385
------------------------------------------ -----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (860)442-4559
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 .
WATERFORD GAMING FINANCE CORP.
INDEX TO FORM 10-Q
Page
Number
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Report of Independent Accountants for Waterford Gaming
Finance Corp. 1
Financial Information 2
Condensed Balance Sheets of Waterford Gaming Finance Corp.
as of June 30, 1998 (unaudited) and December 31, 1997 3
Condensed Statements of Operations and Retained Earnings
(Deficit) of Waterford Gaming Finance Corp. for the three
months and six months ended June 30, 1998 (unaudited) and
June 30,1997 (unaudited) 4
Condensed Statements of Cash Flows of Waterford Gaming Finance
Corp. for the six months ended June 30, 1998 (unaudited) and
June 30, 1997 (unaudited) 5
Note to Condensed Financial Statements for Waterford
Gaming Finance Corp. (unaudited) 6
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3 -- Quantitative and Qualitative Disclosures about
Market Risk 8
Part II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings 8
ITEM 2 -- Changes in Securities 8
ITEM 3 -- Defaults upon Senior Securities 8
ITEM 4 -- Submission of Matters to a Vote of Security Holders 8
ITEM 5 -- Other Information 8
ITEM 6 -- Exhibits and Reports on Form 8-K 9
Signatures - Waterford Gaming Finance Corp. 10
Report of Independent Accountants
---------------------------------
To the Stockholder of Waterford Gaming Finance Corp.:
We have reviewed the condensed balance sheet of Waterford Gaming Finance
Corp. (the "Company") as of June 30, 1998, and the related condensed statements
of operations and retained earnings (deficit) for the three months and six
months ended June 30, 1998 and 1997, and the related condensed statements of
cash flows for the six months ended June 30, 1998 and 1997. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 1997, and the related statements
of operations and retained earnings (deficit) and cash flows for the year then
ended (not presented herein); and in our report dated March 6, 1998, we
expressed an unqualified opinion on those financial statements. In our opinion,
the information set forth in the condensed balance sheet as of December 31,
1997, is fairly stated , in all material respects, in relation to the balance
sheet from which it has been derived.
PricewaterhouseCoopers LLP
Hartford, Connecticut
August 3, 1998
1
Part I -- FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
The unaudited condensed financial information as of June 30, 1998, and for
the three months and six months ended June 30, 1998, included in this report was
reviewed by PricewaterhouseCoopers LLP, independent public accountants, in
accordance with the professional standards and procedures established for such
reviews be the American Institute of Certified Public Accountants.
2
WATERFORD GAMING FINANCE CORP.
CONDENSED BALANCE SHEETS
June 30, 1998 (Unaudited) and December 31, 1997
----------
ASSETS
June 30, December 31,
1998 1997
-------- ------------
Cash $ 100 $ 100
====== ======
STOCKHOLDER'S EQUITY
Stockholder's equity:
Common stock, $.01 par value;
1,000 shares authorized, issued
and outstanding $ 10 $ 10
Additional paid-in capital 90 90
Retained earnings -- --
------ ------
Total stockholder's equity $ 100 $ 100
====== ======
The accompanying note is an integral part of the financial statements.
3
<TABLE>
WATERFORD GAMING FINANCE CORP.
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
for the three months and six months ended June 30, 1998 and June 30, 1997
(Unaudited)
----------
For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue:
Bank rebate $ -- $ 74 $ -- $ 74
Expenses:
Bank charges -- -- -- 55
------- ------- ------- -------
Net income (loss) -- 74 -- 19
Retained earnings (deficit),
beginning of period -- (74) -- (19)
------- ------- ------- -------
Retained earnings (deficit),
end of period $ -- $ -- $ -- $ --
======= ======= ======= =======
The accompanying note is an integral part of the financial statements.
4
</TABLE>
WATERFORD GAMING FINANCE CORP.
CONDENSED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1998 and June 30, 1997
(Unaudited)
-----------
For the six For the six
months ended months ended
June 30, 1998 June 30, 1997
------------- -------------
Cash flows from operating activities:
Net income (loss) $ -- $ 19
------- -------
Net cash provided by operating
activities -- 19
------- -------
Net increase in cash -- 19
Cash at beginning of period 100 81
------- -------
Cash at end of period $ 100 $ 100
======= =======
The accompanying note is an integral part of the financial statements.
5
WATERFORD GAMING FINANCE CORP.
NOTE TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
-----------
1. Basis of Presentation:
The unaudited condensed interim financial statements have been prepared in
accordance with the policies and should be read in conjunction with the
Company's 1997 audited financial statements within the Company's Annual Report
for the fiscal year ended December 31, 1997 on Form 10-K as filed with the
Securities and Exchange Commission (the "Commission") File No. 333-17795-01 on
March 30, 1998. The condensed Balance Sheet at December 31, 1997, contained
herein was derived from audited financial statements, but does not include all
disclosures contained in the Form 10-K and required by generally accepted
accounting principles.
The unaudited condensed interim financial statements include normal and
recurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of June 30, 1998, and, the
results of operations and retained earnings (deficit) for the three months and
six months ended June 30, 1998, and cash flows for the six months ended June 30,
1998. Results of operations for the period are not necessarily indicative of
the results to be expected for the full year.
The Company is a wholly-owned subsidiary of Waterford Gaming, L.L.C. ("Gaming").
Effective May 15, 1997 the Company functioned as co-issuer with its parent,
Gaming, to issue 12-3/4% senior notes payable (the "Senior Notes").
6
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
The following discussion should be read in conjunction with, and is qualified
in its entirety by, the Company's financial statements and the note thereto.
The Company is a wholly-owned subsidiary of Gaming.
Results of Operations
- ---------------------
Discussion of the quarter ended June 30, 1998
- ---------------------------------------------
For the quarter ended June 30, 1998 the Company had no revenue and expense.
Discussion of the quarter ended June 30, 1997
- ---------------------------------------------
Revenue for the quarter ended June 30, 1997 was $74 of rebated bank charges.
Expenses for the quarter ended June 30, 1997 were $0.
As a result of the foregoing factors, the Company experienced net income of $74
for the three months ended June 30, 1997.
Discussion of the six months ended June 30, 1998
- ------------------------------------------------
For the six months ended June 30, 1998 the Company had no revenue and expense.
Discussion of the six months ended June 30, 1997
- ------------------------------------------------
Revenue for the six months ended June 30, 1997 was $74 of rebated bank charges.
Bank charges for the six months ended June 30, 1997 were $55.
As a result of the foregoing factors, the Company experienced net income of $19
for the six months ended June 30, 1997.
The Company is not expected to have significant operating activity. Funding for
future operations will come from the financial support of its parent company.
7
Item 3. Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
NOT APPLICABLE.
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
8
Item 6 -- Exhibits and Reports on Form 8-K:
---------------------------------
(a) Exhibits
--------
Exhibit No. Description
3.1 Certificate of Incorporation of Waterford
Gaming Finance Corp. (i)
3.2 Bylaws of Waterford Gaming Finance Corp. (i)
4.1 Indenture, dated as of November 8, 1996,
between Waterford Gaming, L.L.C. and
Waterford Gaming Finance Corp., the issuers,
and Fleet National Bank, as trustee, relating
to $65,000,000 12-3/4% Senior Notes
due 2003. (i)
4.2 Registration Rights Agreement, dated as of
November 8, 1996, among, Waterford Gaming,
L.L.C., Waterford Gaming Finance Corp., Bear,
Stearns & Co., Inc., and Merrill Lynch,
Pierce, Fenner & Smith Incorporated. (i)
4.3 Specimen Form of 12-3/4% Senior Notes due
2003 (the "Private Notes") (included in
Exhibit 4.1). (i)
4.4 Specimen Form of 12-3/4% Senior Notes due
2003 (the "Exchange Notes") (included in
Exhibit 4.1). (i)
10.1 Purchase Agreement, dated as of November 5,
1996, among Waterford Gaming, L.L.C.,
Waterford Gaming Finance Corp., Bear, Stearns
& Co., Inc. and Merrill Lynch, Pierce, Fenner
and Smith Incorporated. (i)
10.2 Waiver and Acknowledgment of Noteholder. (ii)
21.1 Subsidiaries of Waterford Gaming Finance
Corp. (i)
27 Financial Data Schedule - included in Edgar
filing only.
99.1 Quarterly Report for the quarter ended June
30, 1998 on Form 10-Q of Waterford Gaming,
L.L.C., dated August 13, 1998, incorporated
by reference to Waterford Gaming, L.L.C.'s
electronic filing of such report on
Form 10-Q Commission file reference
no. 333-17795.
(i) Incorporated by reference to the Registrant's Registration
Statement on Form S-4, Commission File No. 333-17795-01,
declared effective on May 15, 1997.
(ii) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the period ended March 31, 1998,
Commission File No. 333-17795-01, as accepted by the
Commission on May 14, 1998.
(b) No form 8-K filings.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 13, 1998 By: /s/Len Wolman
Len Wolman, Chief Executive Officer
Date: August 13, 1998 By: /s/Del Lauria
Del Lauria, Treasurer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Waterford Gaming Finance Corp.
All amounts are unaudited.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 100
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 90
<TOTAL-LIABILITY-AND-EQUITY> 100
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
