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: 9/30/99
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 September 30, 1999 (unaudited) and December 31, 1998 3
Condensed Statements of Operations of Waterford Gaming Finance
Corp. for the three months and nine months ended September 30, 1999
(unaudited) and September 30, 1998 (unaudited) 4
Condensed Statements of Cash Flows of Waterford Gaming Finance
Corp. for the nine months ended September 30, 1999 (unaudited) and
September 30, 1998 (unaudited) 5
Notes 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 8
Item 3 -- Quantitative and Qualitative Disclosures about
Market Risk 9
PART II -- OTHER INFORMATION
Item 1 -- Legal Proceedings 9
Item 2 -- Changes in Securities 9
Item 3 -- Defaults upon Senior Securities 9
Item 4 -- Submission of Matters to a Vote of Security Holders 9
Item 5 -- Other Information 9
Item 6 -- Exhibits and Reports on Form 8-K 10
Signatures - Waterford Gaming Finance Corp. 12
Report of Independent Accountants
---------------------------------
To the Stockholder of Waterford Gaming Finance Corp.:
We have reviewed the accompanying condensed balance sheet of Waterford
Gaming Finance Corp. ("the Company") as of September 30, 1999, and the
related condensed statements of operations and retained earnings (deficit)
for the three and nine months ended September 30, 1999 and 1998, and the
related condensed statement of cash flows for the nine months ended
September 30, 1999 and 1998. 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 accompanying financial statements 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, 1998, 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
February 24, 1999, 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, 1998, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
PricewaterhouseCoopers, LLP
November 4, 1999
1
PART I -- FINANCIAL INFORMATION
---------------------
Item 1.-- Financial Statements
--------------------
The unaudited condensed financial information as of September 30, 1999 and
1998, and for the three months and nine months ended September 30, 1999 and
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
September 30, 1999 (Unaudited) and December 31, 1998
-----------
September 30, December 31,
1999 1998
------------ -----------
ASSETS
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 (deficit) -- --
------ ------
Total stockholder's equity $ 100 $ 100
====== ======
The accompanying notes are an integral part of these condensed financial
statements.
3
<TABLE>
WATERFORD GAMING FINANCE CORP.
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
for the three months and nine months ended September 30, 1999 and September 30, 1998
(Unaudited)
-----------
For the three For the three For the nine For the nine
months ended months ended months ended months ended
September 30, September 30, September 30, Septeber 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ --
Expenses -- -- -- --
------------- ------------- ------------- -------------
Net income (loss) -- -- -- --
Retained earnings (deficit),
beginning of period -- -- -- --
------------- ------------- ------------- -------------
Retained earnings (deficit),
end of period $ -- $ -- $ -- $ --
============= ============= ============= =============
The accompanying notes are an integral part of these condensed financial statements.
</TABLE>
4
WATERFORD GAMING FINANCE CORP.
CONDENSED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1999 and September 30, 1998
(Unaudited)
----------
For the nine For the nine
months ended months ended
September 30, September 30,
1999 1998
------------- -------------
Cash flows from operating activities:
Net income (loss) $ -- $ --
------- -------
Net cash provided by operating
activities -- --
------- -------
Net increase in cash -- --
Cash at beginning of period 100 100
------- -------
Cash at end of period $ 100 $ 100
======= =======
The accompanying notes are an integral part of these condensed financial
statements.
5
WATERFORD GAMING FINANCE CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
----------
1. Basis of Presentation:
The unaudited condensed interim financial statements have
been prepared in accordance with the policies described in
the Company's 1998 audited financial statements and should be
read in conjunction with the Company's 1998 audited financial
statements within the Company's Annual Report for the fiscal
year ended December 31, 1998 on Form 10-K/A as filed with the
Securities and Exchange Commission (the "Commission") File
No. 333-17795-01 on March 8, 1999. The condensed Balance
Sheet at December 31, 1998, contained herein, was derived
from audited financial statements, but does not include all
disclosures contained in the Form 10-K/A 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 September 30, 1999, and the results
of operations and retained earnings (deficit) for the three
months and nine months ended September 30, 1999 and cash
flows for the nine months ended September 30, 1999. 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 as of May 15, 1997, the Company
functioned as a co-issuer with its parent, Gaming, to issue
$65 Million 12-3/4% senior notes payable (the "$65 Million
Senior Notes"). The $65 Million Senior Notes were redeemed
as part of the Company's and Gaming's $125 Million 9-1/2%
senior notes (the "$125 Million Senior Notes") offering which
was completed on March 17, 1999.
6
2. $125 Million 9-1/2% Senior Notes
On March 17, 1999, the Company and Gaming, issued $125
Million Senior Notes, which mature March 15, 2010. Payment
of the principal of, and interest on, the $125 Million Senior
Notes is subordinate in right of payment to all their
existing and future secured debts.
Interest is payable semi-annually in arrears on March 15 and
September 15 at a rate of 9-1/2% per annum commencing on
September 15, 1999.
The principal amount of the $125 Million Senior Notes is
payable on March 15, 2010. The Company and Gaming may elect
to redeem the $125 Million Senior Notes at any time after
March 14, 2004 at a redemption price equal to a percentage
(105.182% after March 15, 2004 and declining to 104.318%
after March 15, 2005, 103.455% after March 15, 2006, 102.591%
after March 15, 2007, 101.727% after March 15, 2008, 100.864%
after March 15, 2009 and to 100% after March 15, 2010) of the
principal amount thereof plus accrued interest. The $125
Million Senior Notes provide that upon the occurrence of a
Change of Control (as defined), the holders thereof will have
the option to require the redemption of the $125 Million
Senior Notes at a redemption price equal to 101% of the
principal amount thereof plus accrued interest.
If the Company and Gaming have any excess cash, as defined,
they must redeem the $125 Million Senior Notes (on a semi-
annual basis on March 15 and September 15) equal to a
percentage (109.500% after March 15, 1999 and declining to
108.636% after March 15, 2000, 107.773% after March 15, 2001,
106.909% after March 15, 2002, 106.045% after March 15, 2003,
105.182% after March 15, 2004, 104.318% after March 15, 2005,
103.455% after March 15, 2006, 102.591% after March 15, 2007,
101.727% after March 15, 2008, 100.864% after March 15, 2009
and to 100% after March 15, 2010). On August 1, 1999 the
Company and Gaming had excess cash, as defined, available for
mandatory redemption of the $125 Million Senior Notes
totaling approximately $8,983,000, and accordingly on
September 15, 1999 the Company and Gaming made a mandatory
redemption of $125 Million Senior Notes in the principal
amount of $2,841,000 at the redemption price of 109.50%. In
some circumstances, if either Gaming or its partner in
Trading Cove Associates ("TCA") exercises the option to buy
or sell partnership interests in TCA, the Company and Gaming
must redeem the $125 Million Senior Notes.
The indenture relating to the $125 Million Senior Notes (the
"Indenture") contains certain affirmative and negative
covenants customarily contained in agreements of this type,
including without limitation, covenants that restrict,
subject to specified exceptions the Company's and Gaming's
ability to (i) borrow money, (ii) pay dividends on stock or
make certain other restricted payments, (iii) use assets as
security in other transactions, (iv) make investments, (v)
sell other assets or merge with other companies and (vi)
engage in any business except as currently conducted or
contemplated or amend their relationship with
TCA. The Indenture also provides for customary events of
default and the establishment of a restricted investment fund
with a trustee for interest reserves.
7
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 condensed
financial statements and the notes thereto.
The Company is a wholly-owned subsidiary of Gaming.
Results of Operations
- ---------------------
Discussion of the quarter ended September 30, 1999
- --------------------------------------------------
For the quarter ended September 30, 1999, the Company had no
revenue and expense.
Discussion of the quarter ended September 30, 1998
- --------------------------------------------------
For the quarter ended September 30, 1998, the Company had no
revenue and expense.
Discussion of the nine months ended September 30, 1999
- ------------------------------------------------------
For the nine months ended September 30, 1999, the Company had no
revenue and expense.
Discussion of the nine months ended September 30, 1998
- ------------------------------------------------------
For the nine months ended September 30, 1998, the Company had no
revenue and expense.
The Company is not expected to have significant operating
activity. Funding for future operations will come from the
financial support of its parent company.
8
Item 3. -- Quantitative and Qualitative Disclosures about Market
-----------------------------------------------------
Risk
----
Not Applicable
PART II -- OTHER INFORMATION:
------------------
Item 1 -- Legal Proceedings:
------------------
On December 24, 1998, Leisure Resort Technology, Inc. ("Leisure")
wrote a letter to TCA asserting that TCA and/or certain of TCA's
partners breached various fiduciary duties to Leisure and that
TCA's conduct in negotiating the prior settlement constituted a
violation of the anti-fraud provisions of both federal and
Connecticut securities laws, as well as violations of other laws.
Gaming believes that if such claims are pursued, it has
meritorious defenses; however, no litigation has been filed to
date and no assurance can be given that any ultimate claim will
be decided in Gaming's favor. Gaming has a 50% partnership
interest in TCA.
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
9
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)
4.1.1 First Supplemental Indenture, dated as
of March 4, 1999, among Waterford
Gaming, L.L.C. and Waterford Gaming
Finance Corp., as issuers, and State
Street Bank and Trust Company, as
trustee, relating to $65,000,000 12-
3/4% Senior Notes due 2003. (iii)
4.2 Indenture, dated as of March 17, 1999,
among Waterford Gaming, L.L.C. and
Waterford Gaming Finance Corp., as
issuers, and State Street Bank and
Trust Company, as trustee, relating to
$125,000,000 9-1/2% Senior Notes due
2010. (iii)
4.3 Security and Control Agreement, dated
as of March 17, 1999, among Waterford
Gaming, L.L.C. and Waterford Gaming
Finance Corp., as pledgors and State
Street Bank and Trust Company, as
securities intermediary. (iii)
4.4 Specimen Form of 9-1/2% Senior Notes
due 2010 (included in
Exhibit 4.2). (iii)
10.1 Purchase Agreement, dated as of March
10, 1999, among Waterford Gaming,
L.L.C., Waterford Gaming Finance
Corp., Bear, Stearns & Co., Inc.,
Merrill Lynch, Pierce, Fenner and
Smith Inc. and Salomon
Smith Barney Inc. (iii)
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 September 30, 1999 on Form 10-Q
of Waterford Gaming, L.L.C., dated
November 12, 1999, incorporated by
reference to Waterford Gaming, L.L.C.'s
electronic filing of such report on
Form 10-Q Securities and Exchange
Commission (the "Commission") file
reference no. 333-17795.
10
(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.
(iii) Incorporated by reference to the
Registrant's Quarterly Report on Form 10-Q
for the period ended March 31, 1999,
Commission File No. 333-17795-01, as
accepted by the Commission on May 17, 1999.
(b) Form 8-K filed on August 16, 1999
Item 5.
The Mohegan Tribal Gaming Authority (the "Authority") has
filed its quarterly report on Form 10-Q for the quarter ended
June 30, 1999, a copy of which has been filed as an exhibit to
this report and is incorporated by reference to the Authority's
electronic filing of such report on Form 10-Q, Securities and
Exchange Commission file reference no. 033-80655.
Date of Report: August 12, 1999
Form 8-K filed on September 1, 1999
Item 5.
The Mohegan Tribal Gaming Authority (the "Authority") has
filed its quarterly report on Form 10-Q/A-1 for the quarter ended
June 30, 1999, a copy of which has been filed as an exhibit to
this report and is incorporated by reference to the Authority's
electronic filing of such report on Form 10-Q/A-1, Securities and
Exchange Commission file reference no. 033-80655.
Date of Report: August 31, 1999
11
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: November 12, 1999 By: /s/Len Wolman
Len Wolman, Chief Executive Officer
Date: November 12, 1999 By: /s/Del Lauria
Del Lauria, Treasurer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Waterford Gaming Finance Corp.
All amounts are unaudited.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<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-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
