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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
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 (IRS 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
------------
(Title of Class)
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The registrant meets the conditions set forth in General Instruction J(1) (a)
and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced
disclosure format.
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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: Not Applicable.
WATERFORD GAMING FINANCE CORP.
INDEX TO FORM 10-K
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PART I. PAGE
<S> <C>
Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a Vote of Security Holders 1
PART II.
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 1
Item 6. Selected Financial Data 2
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 2
Item 8. Financial Statements and Supplementary Data 3
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 3
PART III.
Item 10. Directors and Executive Officers of the Registrant 3
Item 11. Executive Compensation 3
Item 12. Security Ownership of Certain Beneficial Owners and
Management 3
Item 13. Certain Relationships and Related Transactions 4
PART IV.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 4-6
</TABLE>
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PART I
ITEM 1. BUSINESS
A. GENERAL
Waterford Gaming Finance Corp., (the "Company"), a Delaware corporation, was
formed on October 22, 1996 as a wholly owned subsidiary of Waterford Gaming,
L.L.C. ("Gaming"). The Company functions as a co-issuer with Gaming to issue
12-3/4% Senior Notes payable November 15, 2003 (the "Senior Notes").
On February 24, 1999, the Company and Waterford Gaming, L.L.C. launched a tender
offer for all of the outstanding Senior Notes and are soliciting consents from
the registered holders of the Senior Notes to effect certain amendments to the
indenture.
The purchase price to be paid by the Company and Waterford Gaming, L.L.C. for
Senior Notes validly tendered and accepted for purchase will be an amount that
is the greater of $1,124.67 and the price that will be determined in accordance
with a pricing formula that is based on a fixed spread of 50 basis points over
the yield of the 5.875% U.S. Treasury Note due November 15, 1999 as of 2:00
p.m., New York City time, on March 3, 1999, as well as accrued and unpaid
interest up to, but not including, the payment date.
Holders who provide consents to the proposed amendments will receive a consent
payment of $30 per $1,000 principal amount of Senior Notes tendered and accepted
for purchase pursuant to the offer if they provide their consents on or prior to
5:00 p.m., New York City time, on March 3, 1999, unless such date is extended.
The Company's and Gaming's obligation to accept for purchase and to pay for
Senior Notes in the tender offer is conditioned on, among other things, consents
by holders of the requisite principal amount to effect the desired indenture
modifications.
ITEM 2. PROPERTIES
The Company does not have an ownership interest in real property.
ITEM 3. LEGAL PROCEEDINGS
On December 24, 1998, Leisure Resort Technology, Inc. wrote a letter to Trading
Cove Associates ("TCA") asserting that TCA and/or certain of TCA's partners
breached various fiduciary duties to Leisure Resort Technology, Inc. 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS
Not Applicable.
1
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ITEM 6. SELECTED FINANCIAL DATA
Omitted.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussions should be read in conjunction with, and is qualified
in its entirety by, the Company's financial statements and the notes thereto
included elsewhere herein.
Discussion of the year ended December 31, 1998
- ----------------------------------------------
For the year ended December 31, 1998 the Company had no revenue and expense.
Discussion of the year ended December 31, 1997
- ----------------------------------------------
Revenue for the year ended December 31, 1997 was $74.
Expenses for the year ended December 31, 1997 were $55.
As a result of the foregoing factors, the Company's net income for the twelve
months ended December 31, 1997 was $19.
Discussion of the period from November 6, 1996 (commencement of operations)
- ---------------------------------------------------------------------------
to December 31, 1996
- --------------------
Revenue for the period ended December 31, 1996 was $0.
Expenses for the period ended December 31, 1996 were $19.
As a result of the foregoing factors, the Company's net loss for the period
ended December 31, 1996 was $19.
The Company is not expected to have significant operating activity. Funding
for future operations will come from the financial support of its parent
company.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements on Page 5.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to persons who
are members of the Board of Directors of the Company or who are executive
officers of the Company.
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Name Age Position
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Len Wolman.......... 44 President, Chief Executive Officer,
Member of the Board of Directors
Del J. Lauria....... 50 Secretary, Treasurer, Member of the Board
of Directors
</TABLE>
ITEM 11. EXECUTIVE COMPENSATION
Omitted.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company is a wholly-owned subsidiary of Gaming.
3
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits
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<CAPTION>
Exhibit No. Description
<S> <C> <C>
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 Annual Report, for the year ended December
31, 1998, on Form 10-K of Waterford Gaming,
LLC dated March 2, 1999, incorporated by
reference to Waterford Gaming, LLC's
electronic filing of such report on Form 10-K
Securities and Exchange Commission (the
"Commission") file reference no. 333-17795.
</TABLE>
(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.
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(b) Financial Statement Schedules
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants........................ F-1
Financial Statements:
Balance Sheets of as of December 31, 1998 and 1997....... F-2
Statements of Operations and Retained Earnings (Deficit)
for the years ended December 31, 1998 and 1997 and for
the period from November 6, 1996 (commencement of
operations) to December 31, 1996....................... F-3
Statements of Cash Flows for the years ended December 31,
1998 and 1997 and for the period from November 6, 1996
(commencement of operations) to December 31, 1996...... F-4
Notes to Financial Statements............................ F-5
5
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of
Waterford Gaming Finance Corp.
In our opinion, the accompanying balance sheets and the related statements
of operations, retained earnings (deficit) and of cash flows present fairly, in
all material respects, the financial position of Waterford Gaming Finance Corp.
(the "Company") at December 31, 1998 and 1997, and the results of its operations
and their cash flows for each of the two years in the period ended December 31,
1998 and the two month period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
FEBRUARY 24, 1999
F-1
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<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
10
<COMMON> 90
<OTHER-SE> 100
<TOTAL-LIABILITY-AND-EQUITY> 100
<SALES> 0
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<CGS> 0
<TOTAL-COSTS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
