<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1997
------------------------------------------------
Commission file number 1- 12783
WHG RESORTS & CASINOS INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3277019
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S.Employer Identification No.)
Incorporation or Organization)
6063 East Isla Verde Avenue, Carolina, Puerto Rico 00979
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (787) 791-2222
----------------------------
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by X 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 6,050,200 shares of common
stock, $.01 par value, were outstanding at November 14, 1997.
<PAGE> 2
WHG RESORTS & CASINOS INC.
------------
INDEX
PAGE NO
-------
Part I. Financial Information:
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations -
Three months ended September 30, 1997 and 1996............... 2
Condensed Consolidated Balance Sheets -
September 30, 1997 and June 30, 1997......................... 3-4
Condensed Consolidated Statements of Cash Flows -
Three months ended September 30, 1997 and 1996............... 5
Notes to Condensed Consolidated Financial Statements......... 6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 9-10
Part II. Other Information:
Item 2. Changes in Securities and Use of Proceeds.................... 11
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits................................................ 11
(b) Reports on Form 8-k..................................... 11
Signature ............................................................. 12
<PAGE> 3
WHG RESORTS & CASINOS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Revenues:
WHGI management fees from nonconsolidated affiliates $ 2,256 $ 1,935
Condado Plaza hotel/casino:
Casino 6,172 4,635
Less casino promotional allowances (2,018) (1,432)
Rooms 5,159 4,849
Food and beverages 2,255 2,240
Other 747 652
-----------------------
Total Condado Plaza revenues 12,315 10,944
-----------------------
Total revenues 14,571 12,879
Costs and expenses:
WHGI operating expenses (excl. depreciation) 1,013 870
Condado Plaza operating expenses (excl. depreciation):
Casino 2,917 2,629
Rooms 1,844 1,752
Food and beverages 2,071 2,050
Other 1,112 1,188
-----------------------
7,944 7,619
-----------------------
Selling and administrative 2,528 2,205
Depreciation and amortization 1,514 1,395
-----------------------
Total costs and expenses 12,999 12,089
-----------------------
Operating income 1,572 790
Interest income, primarily from nonconsolidated affiliates 774 547
Interest expense (764) (848)
Equity in loss of nonconsolidated affiliates (1,010) (1,289)
Merger costs to date (1,000) --
-----------------------
Loss before tax provision and minority interests (428) (800)
-----------------------
(Provision) credit for income taxes (163) 89
Minority interests in income (535) (421)
Dividend on preferred stock of Condado Plaza -- (82)
-----------------------
Net loss $ (1,126) $ (1,214)
=======================
Loss per share $ (0.19) $ (0.20)
=======================
Shares used in calculation 6,050 6,050
=======================
Pro forma information reflecting income taxes ona separate return basis:
Loss before tax provision and minority interest $ (800)
Provision for income taxes (372)
Minority interest in income (421)
Dividend on preferred stock of Condao Plaza (82)
--------
Net loss $ (1,675)
========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
WHG RESORTS & CASINOS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,941 $ 17,886
Receivables, net of allowances of $809 and $649 3,454 3,477
Receivables from nonconsolidated affiliates 1,731 1,105
Inventories 575 590
Other current assets 931 791
---------------------
Total current assets 25,632 23,849
Investments in, receivables and advances to nonconsolidated affiliates 29,791 30,603
Property and equipment 88,841 87,375
Less: accumulated depreciation (44,886) (43,514)
---------------------
43,955 43,861
Land held as investment 5,095 5,095
Excess of purchase cost over amount assigned to net assets acquired, net of
accumulated amortization of $ 3,836 and $ 3,739 8,613 8,710
Other assets 5,266 5,355
---------------------
$ 118,352 $ 117,473
=====================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
WHG RESORTS & CASINOS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,952 $ 3,760
Accrued compensation and related benefits 2,342 2,855
Other accrued liabilities 3,960 3,723
Accrued merger costs 950
Notes payable 500 1,000
Current maturities of long-term debt 3,869 3,681
------------------
Total current liabilities 15,573 15,019
Long-term debt, less current maturities 18,494 19,868
Deferred income taxes 2,192 2,638
Other noncurrent liabilities 4,532 4,532
Payable to WMS Industries Inc. 102
Minority interest 20,410 19,990
Stockholders' equity:
Preferred stock, 8.01 par value, 2,000,000 shares authorized,
300,000 shares outstanding 3 --
Common stock, class A, $.01 par value, non voting, 3,000,000 shares
authorized -- --
Common stock, $.01 par value, 12,000,000 shares authorized,
6,050,200 shares outstanding 61 61
Additional paid-in capital 17,293 14,296
Retained earnings 39,794 40,967
------------------
Total stockholders' equity 57,151 55,324
------------------
$118,352 $117,473
==================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
WHG RESORTS & CASINOS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net (loss) $ (1,126) $ (1,214)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,514 1,395
Provision for loss on receivables 160 72
Undistributed loss of nonconsolidated affiliates 1,010 1,289
Minority interests 535 421
(Decrease) increase resulting from changes in operating assets and liabilities, net (573) 274
-----------------------
Net cash provided by operating activities 1,520 2,237
Investing activities:
Purchase of property and equipment (1,466) (331)
Advances to nonconsolidated affiliates (198) (186)
-----------------------
Net cash used by investing activities (1,664) (517)
Financing activities:
Payment of long-term debt and notes payable (1,686) (2,285)
Net intercompany transactions with WMS Industries Inc. -- (528)
Issuance of preferred stock 3,000
Dividends paid to minority shareholders of subsidiary (115) (151)
-----------------------
Net cash provided (used) by financing activities 1,199 (2,964)
Increase (decrease) in cash and cash equivalents 1,055 (1,244)
Cash and cash equivalents at beginning of period 17,886 6,616
-----------------------
Cash and cash equivalents at end of period $ 18,941 $ 5,372
=======================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 7
WHG RESORTS & CASINOS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statements
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form
10-Q and 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 the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Due to the seasonality of the Company's businesses, operating
results for the quarter ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the fiscal year
ending June 30, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1997.
2. Basis of Presentation and Company Operations
Basis of Presentation
WHG Resorts & Casinos Inc. ("WHG"), was formerly known as WMS Hotel
Corporation. Prior to April 21, 1997, WHG was a wholly owned subsidiary
of Williams Hotel Corporation ("WHC"), which in turn was a wholly-owned
subsidiary of WMS Industries Inc. ("WMS"). WHC was merged into WHG
just prior to the April 21, 1997 spin-off of WHG to the shareholders of
WMS at which time the predecessor consolidated financial statements of
WHC appearing herein became the financial statements of WHG.
The condensed consolidated financial statements of WHG reflect results
of operations, cash flows and financial position and have been prepared
using the historical basis in the assets and liabilities and historical
results of operations of WHG and its subsidiaries and affiliates (the
"Company").
The pro forma information reflecting income taxes on a separate return
basis (unaudited), included with the condensed consolidated statements
of operations for the quarter ended September 30, 1996, reflects the
provision for income taxes without the tax benefits allocated to WHG
from WMS for utilization of partnership losses in the WMS consolidated
Federal income tax return. WHG during the periods presented does not
have income subject to Federal income tax that can be included in its
consolidated Federal income tax return along with the partnership
losses to be able to realize the tax benefits.
Company Operations
WHG, through a subsidiary and affiliates owns, operates and manages two
of the leading hotels and casinos located in San Juan, Puerto Rico, and
through another subsidiary, the El Conquistador Resort and Country Club
(the "El Conquistador"), a destination resort complex in Las Croabas,
Puerto Rico. WHG's ownership structure in the various entities is as
follows: a 100% interest in Posadas de Puerto Rico Associates,
Incorporated, the owner of the Condado Plaza Hotel & Casino ("Condado
Plaza"); a 50% interest in Posadas de San Juan Associates ("PSJA"), a
partnership which owns the El San Juan Hotel & Casino ("El San Juan");
a 23.3% indirect interest in El Conquistador Partnership L.P. which
owns the El Conquistador; and a 62% interest in Williams Hospitality
Group Inc. ("WHGI"), the management company for the above properties.
<PAGE> 8
WHG was a wholly owned subsidiary of WMS prior to April 21, 1997. On
April 21, 1997, WMS distributed 100% of the outstanding voting common
stock of WHG to WMS's stockholders, thereby creating a new independent
public corporation.
3. Summarized Statement of Operations Information of Nonconsolidated
Affiliates
The summarized statement of operations information of PSJA, which is
50% owned by the Company, is as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
Revenues..................................... $10,944 $9,600
Management fees and interest payable
to WHGI................................... (955) (836)
Other costs and expenses..................... (10,927) (10,477)
------- --------
Net loss..................................... $ (938) $ (1,708)
======= ========
</TABLE>
The summarized statement of operations information of WKA EL Con
Associates, in which the Company has a 46.5% partnership interest, is
as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
Net operating income (expenses).............. $ 5 ($11)
Equity in 50% of the El Conquistador
net loss for the three months ended
June 30, 1997 and 1996................. (1,168) (922)
------- -----
Net loss..................................... ($1,163) ($933)
======= =======
</TABLE>
The El Conquistador Partnership L.P. has a March 31 year end, which is
three months earlier than the Company's year end of June 30 and
accordingly the equity in the results of El Conquistador are recorded
by the Company with a three month lag. The equity in loss of
nonconsolidated affiliates also includes for the three months ended
September 30, 1997 and 1996, the Company's 23.3% indirect interest in
the results of operations of the El Conquistador for the three months
ended June 30, 1997 and 1996.
The summarized statement of operations information of El Conquistador,
in which WKA EL Con Associates has a 50% partnership interest, is as
follows (in thousands):
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------
1997 1996
---- ----
<S> <C> <C>
Revenues..................................... $24,438 $23,995
Management fees and interest payable to
WHGI..................................... (1,529) (1,503)
Interest payable to partners................. (611) (702)
Other costs and expenses..................... (22,326) (21,358)
Depreciation and amortization................ (2,307) (2,276)
-------- --------
Net loss..................................... ($2,335) ($1,844)
======= ========
</TABLE>
<PAGE> 9
4. Merger Agreement
On September 30, 1997, WHG signed a definitive merger agreement with Patriot
American Hospitality Operating Company ("PAHOC"), Patriot American Hospitality
Operating Company Acquisition Subsidiary and Patriot American Hospitality Inc.
("Patriot"). Under the terms of the merger agreement, each share of WHG common
stock will be converted into the right to receive .784 paired shares of PAHOC
and Patriot common stock subject to certain adjustments described below. The
shares of PAHOC and Patriot are paired and trade as one unit of the New York
Stock Exchange (the "Paired Shares"). The transaction is subject to WHG
stockholder approval and is expected to close in December, 1997.
The exchange ratio of .784 will be adjusted as follows: (i) if the average
closing price of Patriot Paired Shares during a specified period before the WHG
stockholders' meeting (the "Average Closing Price") exceeds $31.25 and the
transaction closes before February, then the exchange ratio will be adjusted
such that the product of the exchange ratio and such Average Closing Price (the
"Exchange Ratio Product") equals $24.50, (ii) if the Average Closing Price is
greater than $31.75 and the transaction closes in February 1998, the exchange
ratio will be adjusted such that the Exchange Ratio Product equals $24.89, (iii)
if the Average Closing Price is greater than $32.25 and the transaction closes
after February 1998, the exchange ratio will be adjusted such that the Exchange
Ratio Product equals $25.28; (iv) if the Average Closing Price is less than or
equal to $25.50, but greater than or equal to $19.50, the exchange ratio will be
adjusted such that the Exchange Ratio Product equals $20.00; and (v) if the
Average Closing Price is less than $19.50, the exchange ratio will equal 1.026
provided, however, in such event WHG will have the right to terminate the merger
agreement. On November 13, 1997, the closing price of the Patriot Paired Shares
was $30.25.
5. Sale of Preferred Stock
The Board of Directors exercised the put under a Put Option and Call Option
Agreement that was established on April 21, 1997 between the Company and Louis
J. Nicastro, Chairman of the Board which resulted in the Chairman of the Board
purchasing on July 31, 1997, 300,000 shares of Series B Preferred Stock for
$3,000,000 in cash. The proceeds are intended to be used for general corporate
purposes. Each share of Series B Preferred Stock has 5 votes per share voting
collectively with the common stockholders and a liquidation preference of $10.00
per share plus accrued dividends, has a quarterly dividend equal to the prime
rate plus one half percent calculated on the liquidation preference and the
holder has redemption rights after three years or earlier in the event of two
unpaid quarterly dividends. The Series B Preferred Stock can be converted into
shares of common stock at a conversion price of $9.00, which is the lower of the
closing price of the voting common stock on its first day of official trading
($9.00) and the closing price in the New York Stock Exchange at the close of
business on the business day immediately prior to the date of issuance of the
Preferred Stock ($12.50). A dividend of $45,000 was accrued at September, 30,
1997 and paid October 1, 1997.
6. Proposed Acquisition
On September, 17, 1997, the Company executed an asset purchase agreement to
acquire an existing 127 room hotel and related land next to the Condado Plaza
Hotel for $9,600,000, subject to certain terms and conditions, including
satisfactory due diligence. If the agreement is finalized (on or about November
17, 1997), the Company intends to finance the purchase price through long term
financing and the use of cash currently available.
7. El Conquistador Letter of Credit Extension
As of September 30, 1997, the El Conquistador has $120,000,000 of first mortgage
indebtness due on February 1, 1998. On November 5, 1997, the El Conquistador
entered into the Supplement to Letter of Credit and Reimbursement Agreement with
The Bank of Tokyo-Mitsubishi, Ltd. in order to extend the term of the letter of
credit securing the above first mortgage on the El Conquistador Resort & Country
Club for an additional three months until June 9, 1998. The extension of the
letter of credit effectively extended the term of the first mortgage on the El
Conquistador for an additional three months from February 1, 1998 until May 1,
1998. The Government Development Bank has similarly extended the term of the El
Conquistador's $6,000,000 revolving credit facility.
8. Earnings Per Share
Earnings per share amounts are based on weighted average common shares
outstanding. Common stock equivalent shares resulting from stock options and the
convertible preferred shares are not included in the earnings per share
calculation since their inclusion would be antidilutive. The preferred stock
dividend of $45,000 has been reflected in the earnings per share calculation for
the quarter ended September 30, 1997.
<PAGE> 10
WHG RESORTS & CASINOS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains certain forward looking statements that
involve risks and uncertainties including the outcome of refinancing certain
debt and seasonality. The Company's actual results could differ materially from
those anticipated in the forward looking statements.
Financial Condition
Cash flows from consolidated operating, investing and financing activities of
the Company during the three months ended September 30, 1997 resulted in net
cash provided of $1,055,000 compared with net cash (required) of $(1,244,000)
during the three months ended September 30, 1996.
Cash provided by operating activities was $1,520,000 during the three months
ended September 30, 1997 compared with cash provided of $2,237,000 for the three
months ended September 30, 1996. This decrease of $717,000 was due to an
increase in accrued management fees owed by the El San Juan at September 30,
1997.
Cash used by investing activities was $1,664,000 in the three months ended
September 30, 1997 as compared to $517,000 in the three months ended September
30, 1996. This was primarily due to cash used for the purchase of property and
equipment of $1,466,000 in the three months ended September 30, 1997 as compared
to $331,000 in the three months ended September 30, 1996.
Cash provided by financing activities during the three months ended September
30, 1997 was $1,199,000 compared with cash used of $2,964,000 during the three
months ended September 30, 1996. Payment of long-term debt and notes payable was
$1,686,000 and $2,285,000 in the three months ended September 30, 1997 and 1996,
respectively. The issuance of the Company's Series B Convertible Preferred Stock
on July 31, 1997 provided $3,000,000 in cash for the three month period ended
September 30, 1997 (see footnote 5 to condensed consolidated financial
statements). Net intercompany transactions with WMS resulted in cash used of
$528,000 in the three months ended September 30, 1996.
See condensed consolidated statements of cash flows on page 5 for further
details on cash flow items.
The three hotels and casinos and WHGI each provide for their off-season cash
needs through their own cash and from individual short-term note arrangements.
Annual capital expenditures are provided for each year as part of the annual
budgeting process. Capital expenditures are initiated taking into account
available cash and available financing, if necessary.
The Condado Plaza has a $2,000,000 bank line of credit available on which
$500,000 was borrowed at September 30, 1997. The El San Juan has a $1,000,000
bank line of credit available of which there were no borrowings at September 30,
1997. El San Juan and El Conquistador long-term debt agreements provide that
advances and other payments to the owners are to be based on defined levels of
cash flow from the respective hotels and casinos which based on historical
results limits and prohibits, respectively, such transactions. The long-term
debt agreements and other agreements permit the payment to WHGI of certain
management fees and intercompany charges from the three hotels and casinos.
There are no agreements restricting WHGI from paying dividends or otherwise
making advances and the Company expects to receive dividends from WHGI cash flow
to provide for its operating expenses. Management believes that cash flow from
the operations of the Condado Plaza and the El San Juan will be adequate to pay
or
<PAGE> 11
refinance its long-term debt as it becomes due and provide for its normal
planned capital additions for the next twelve months.
El Conquistador has $120,000,000 of indebtness due orginally on February 1,
1998, which is secured by substantially all of the assets of the El
Conquistador. In November, 1997, an extension of the letter of credit securing
the indebtedness was granted for three additional months thereby extending the
effective due date of such indebtedness to May 1, 1998 (see footnote 7 to
condensed consolidated financial statements contained herein). The Company has
retained an investment banking firm to assist in structuring the refinancing of
the El Conquistador debt. Based on operating history of the El Conquistador, the
Company believes such refinancing will be achieved, but there can be no
assurance thereof. If such financing is not renewed or replaced and as a
consequence thereof the existing lenders foreclose on the El Conquistador, the
Company would probably incur a loss on its investment in and receivables from
the El Conquistador which would be significant to the financial position of the
Company.
Results of Operations
The following summarizes the unaudited condensed consolidated statements of
operations for the periods shown in the format presented as segment information
in the notes to the year-end consolidated financial statements included in the
Company's Registration Statement on Form 10K (thousands of dollars):
<TABLE>
<CAPTION>
Three months ended
September 30,
---------------------
1997 1996
-------- --------
<S> <C> <C>
Revenues:
Condado Plaza ...................................... $ 12,315 $ 10,944
WHGI ............................................... 3,198 2,622
Intersegment revenue elimination - WHGI fees
charged to Condado Plaza ...................... (942) (687)
-------- --------
Total revenues .......................... $ 14,571 $ 12,879
======== ========
Segment operating income (loss):
Condado Plaza ...................................... $ 549 $ (329)
WHGI ............................................... 1,533 1,212
General corporate administrative expenses .......... (510) (93)
-------- --------
Total operating income .................. $ 1,572 $ 790
======== ========
</TABLE>
Three Months Ended September 30, 1997 Compared With
Three Months Ended September 30, 1996
Consolidated revenues increased by $1,692,000 or 13.1% in the quarter ended
September 30, 1997 to $14,571,000 from $12,879,000 in the quarter ended
September 30, 1996. The increase was due to increased casino chip sales and
favorable win percentage at the Condado Plaza and increased management fees
earned by WHGI at the Condado Plaza and the El San Juan.
Operating income in the Condado Plaza segment was $549,000 for the quarter ended
September 30, 1997 compared to a loss of $(329,000) for the quarter ended
September 30, 1996, a favorable variance of $878,000. The improved results were
primarily due to increased casino win due to higher chip sales and win
percentages compared to the prior year quarter. In addition, the hotel had
slightly higher occupancy and average daily room rates.
Operating income in the WHGI segment increased by $321,000 due to increased
management fees from the Condado Plaza and El San Juan hotels of $357,000 due to
increased casino and hotel revenues.
General corporate expenses increased to $510,000 for the quarter ended September
30, 1997 compared to $93,000 for the quarter ended September 30, 1996 due to
incremental costs incurred as a result of WHG
<PAGE> 12
Resorts & Casinos, Inc. becoming an independent public company on April 21,
1997. In the prior year, the Company was a wholly owned subsidiary of WMS
Industries Inc.
The equity in loss of nonconsolidated affiliates was $(1,010,000) for the
quarter ended September 30, 1997 compared with a loss of $(1,289,000) for the
quarter ended September 30, 1996. The 50% equity in loss of the El San Juan was
$(469,000) in the quarter ended September 30, 1997 compared with $(854,000) in
the quarter ended March 31, 1996. The improved results at the El San Juan were
due primarily to higher casino revenues resulting from higher chip sales and
partially offset by increased casino expenses due to higher volume in the
casino. The 23.3% equity in loss of the El Conquistador was $(541,000) in the
quarter ended June 30, 1997 compared with ($430,000) in the quarter ended June
30, 1996. The increased loss was due to increased operating expenses in the
current quarter.
The income tax provision for the quarter ended September 30, 1997 results
primarily from Puerto Rico and Federal income tax provisions for WHGI. The
income tax provision for the quarter ended September 30, 1996 results from
Federal taxes or credit allocated from WMS on the equity in the income or loss
of nonconsolidated affiliates.
Net (loss) in the quarter ended September 30, 1997 was $(1,126,000) compared
with a net loss of $(1,214,000) in the quarter ended September 30, 1996.
Improved operating results at the Condado Plaza and WHGI were offset by
$1,000,000 in merger costs incurred to date in connection with the Merger
Agreement entered into with Patriot (as referred to in note 4 to condensed
consolidated financial statements).
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On July 31, 1997, 300,000 shares of the Company's Series B Convertible Preferred
Stock, par value $.01 per share ("WHG Preferred Stock") were sold directly by
the Company to Louis J. Nicastro, Chairman of the Board of WHG, for $3,000,000
cash pursuant to the exercise of a "put" by the Company under a certain Put and
Call Agreement dated April 21, 1997 between the Company and Mr. Nicastro. The
proceeds from such sale are intended to be used by the Company for general
corporate purposes. No underwriting discounts or commissions were paid. The WHG
Preferred Shares were sold in a private placement and were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933 as amended.
The WHG Preferred Shares are convertible into 333,333 shares of WHG Common Stock
at a price of $9.00 per share.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K dated October 12, 1997, was filed with the Securities and
Exchange Commission reporting the execution on September 30, 1997 of a
definitive merger agreement with Patriot American Hospitality Operating Company,
Patriot American Hospitality Operating Company Acquisition Subsidiary and
Patriot American Hospitality, Inc.
<PAGE> 13
WHG RESORTS & CASINOS INC.
Signature
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 duly authorized.
Dated: November 14, 1997 WHG Resorts & Casinos Inc.
--------------------------
(Registrant)
By: /s/ Richard F. Johnson
--------------------------
Richard F. Johnson
Chief Financial Officer
and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,941,000
<SECURITIES> 0
<RECEIVABLES> 4,263,000
<ALLOWANCES> 809,000
<INVENTORY> 575,000
<CURRENT-ASSETS> 25,632,000
<PP&E> 88,841,000
<DEPRECIATION> 44,886,000
<TOTAL-ASSETS> 118,352,000
<CURRENT-LIABILITIES> 15,573,000
<BONDS> 18,494,000
0
3,000
<COMMON> 61,000
<OTHER-SE> 57,087,000
<TOTAL-LIABILITY-AND-EQUITY> 118,352,000
<SALES> 0
<TOTAL-REVENUES> 14,571,000
<CGS> 0
<TOTAL-COSTS> 12,999,000
<OTHER-EXPENSES> 1,000,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 764,000
<INCOME-PRETAX> (428,000)
<INCOME-TAX> (163,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,126,000)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> 0
</TABLE>
