<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 25, 1999
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 333-38093
ISLE OF CAPRI BLACK HAWK L.L.C. / ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1422931
--------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
711 Dr. Martin Luther King Jr. Blvd., Biloxi, Mississippi 39530
- --------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (228) 436-7000
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 [_]
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
FORM 10-Q
INDEX
PAGE
----
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS, JULY 25, 1999 (UNAUDITED)
AND APRIL 25, 1999............................................. 1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
MONTHS ENDED JULY 25, 1999 AND JULY 26, 1998 (UNAUDITED)....... 2
CONSOLIDATED STATEMENT OF MEMBER'S EQUITY
(UNAUDITED).................................................... 3
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS JULY 25, 1999 AND JULY 26, 1998 (UNAUDITED)............. 4
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS..................................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................ 8
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................. 10
ITEM 2. CHANGES IN SECURITIES.......................................... 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................ 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS........................................................ 10
ITEM 5. OTHER INFORMATION.............................................. 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................... 10
SIGNATURES................................................................ 11
EXHIBIT LIST.............................................................. 12
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
JULY 25, April 25,
ASSETS 1999 1999
------ ----------- ---------
<S> <C> <C>
(UNAUDITED)
Current assets:
Cash and cash equivalents....................................................... $ 15,549 $10,917
Accounts receivable:
Related parties............................................................... 18 -
Other......................................................................... 313 310
Prepaid expenses and other assets............................................... 726 511
-------- -------
Total current assets........................................................ 16,606 11,738
Property and equipment--net....................................................... 81,765 80,377
Other assets:
Deferred financing costs, net of accumulated amortization of $1,349 and
$1,178, respectively.......................................................... 3,501 3,671
Restricted cash................................................................. 588 2,017
Prepaid deposits and other...................................................... 447 460
-------- -------
Total assets................................................................ $102,907 $98,263
======== =======
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
Current liabilities:
Current maturities of long-term debt............................................ $ 775 $ 754
Accounts payable:
Trade......................................................................... 1,282 2,528
Related parties............................................................... 5,615 5,289
Accrued liabilities:
Interest...................................................................... 4,336 1,707
Construction payable.......................................................... - 24
Payroll and related........................................................... 2,360 1,434
Property and other taxes...................................................... 1,407 1,360
Progressive jackpots and slot club awards..................................... 1,505 1,412
Other......................................................................... 1,133 200
-------- -------
Total current liabilities................................................... 18,413 14,708
Long-term debt, less current maturities........................................... 75,566 75,768
Members' equity:
Casino America of Colorado, Inc................................................. 4,295 3,645
Blackhawk Gold, Ltd............................................................. 4,633 4,142
-------- -------
Total members' equity....................................................... 8,928 7,787
-------- -------
Total liabilities and members' equity....................................... $102,907 $98,263
======== =======
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
July 25, 1999 JULY 26, 1998
------------- -------------
<S> <C> <C>
Revenue:
Casino........................................................ $19,034 $ -
Food, beverage, and other..................................... 1,195 -
------- -------
Total revenue.............................................. 20,229 -
Operating expenses:
Casino........................................................ 2,787 -
Gaming taxes.................................................. 3,811 -
Food and beverage............................................. 871 -
Facilities.................................................... 760 -
Marketing and administrative.................................. 6,876 -
Management fees............................................... 860 -
Depreciation and amortization................................. 508 -
------- -------
Total operating expenses................................... 16,473 -
------- -------
Operating income................................................ 3,756 -
Interest expense, net of capitalized interest of $244 and
$1,161, respectively.......................................... (2,706) (1,254)
Interest income................................................. 91 450
------- -------
Net income (loss)............................................... $ 1,141 $ (804)
======= ========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Casino America of Blackhawk Total
Colorado, Inc. Gold, Ltd. Members' Equity
----------------- ---------- ---------------
<S> <C> <C> <C>
Balance, April 25, 1999....................... $3,645 $4,142 $7,787
Net Income.................................. 650 491 1,141
------ ------ ------
Balance, July 25, 1999........................ $4,295 $4,633 $8,928
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
July 25, July 26,
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).......................................................... $ 1,141 $ (804)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization............................................ 508 -
Amortization of deferred financing costs................................. 171 172
Changes in current assets and liabilities:
Accounts receivable................................................. (21) -
Interest receivable................................................. - (88)
Prepaid expenses and other assets................................... (202) 34
Accounts payable and accrued expenses............................... 3,684 620
------- --------
Net cash provided by (used in) operating activities........................ 5,281 (66)
INVESTING ACTIVITIES:
Purchase of property and equipment......................................... (1,897) (11,689)
Decrease in restricted cash................................................ 1,429 11,866
Deposits and other......................................................... - -
------- --------
Net cash provided by (used in) investing activities........................ (468) 177
FINANCING ACTIVITIES:
Proceeds from borrowings................................................... - -
Principal payments on debt................................................. (181) -
------- --------
Net cash used in financing activities...................................... (181) -
Net increase in cash and cash equivalents.................................. 4,632 111
Cash and cash equivalents at beginning of period........................... 10,917 547
------- --------
Cash and cash equivalents at end of period................................. $15,549 $ 658
======= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for:
Interest................................................................. 40 -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Other:
Construction costs funded through accounts payable....................... - 1,182
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
On April 25, 1997 ("Date of Inception"), Isle of Capri Black Hawk L.L.C.
("Isle-Black Hawk"), a Colorado limited liability company, was formed. Isle-
Black Hawk is owned by Casino America of Colorado, Inc., a wholly-owned
subsidiary of Isle of Capri Casinos, Inc., and Blackhawk Gold, Ltd., a wholly-
owned subsidiary of Nevada Gold & Casinos, Inc. The principal purpose of Isle-
Black Hawk has been to develop and operate a casino in Black Hawk, Colorado,
which opened December 30, 1998. Prior to December 30, 1998, Isle-Black Hawk was
a Development Stage Company and had not commenced gaming operations.
On August 20, 1997, Isle-Black Hawk and Isle of Capri Black Hawk Capital
Corp., a wholly-owned subsidiary of the Company that has no operations, issued
$75,000,000 of 13% First Mortgage Notes due 2004 with Contingent Interest in
order to finance the construction and development of Isle-Black Hawk.
The rights and obligations of Casino America of Colorado, Inc. and
Blackhawk Gold, Ltd. are governed in part by the Amended and Restated Operating
Agreement of the Company ("the Agreement") dated as of July 29, 1997. The
Agreement provides that Isle-Black Hawk will continue until December 31, 2096,
or until such date that dissolution may occur. Pursuant to the Agreement,
Casino America of Colorado, Inc. contributed cash, land purchase rights and
development costs to Isle-Black Hawk and Blackhawk Gold, Ltd. contributed land
to Isle-Black Hawk.
On July 29, 1997, Casino America of Colorado, Inc., Isle of Capri Casinos,
Inc., Blackhawk Gold, Ltd., and Nevada Gold & Casinos, Inc. also entered into a
Members Agreement (the "Members Agreement") which addressed the development of
Isle-Black Hawk, management of Isle-Black Hawk, additional capital
contributions, and other matters. Casino America of Colorado, Inc. has an
ownership interest in Isle-Black Hawk of 57% and Blackhawk Gold, Ltd. has an
ownership interest in Isle-Black Hawk of 43%. Profits and losses of Isle-Black
Hawk are allocated in proportion to ownership interests.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with 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 adjustments, for the three-month period ended July 25, 1999
are not necessarily indicative of the results that may be expected for the
fiscal year ending April 30, 2000. 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 April 25, 1999.
The consolidated financial statements of Isle-Black Hawk include the
accounts of Isle of Capri Black Hawk L.L.C. and its subsidiary, Isle of Capri
Black Hawk Capital Corp. All material intercompany balances and transactions
have been eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements as well as revenues and expenses during the reporting period. Actual
amounts when ultimately realized could differ from those estimates.
2. PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost except for land contributed by
Blackhawk Gold, Ltd., which is recorded at its appraised value. Depreciation
began accumulating upon the commencement of gaming operations and is computed
using the straight-line method over the following estimated useful lives:
Years
Slot machines............................. 3
Furniture, fixtures, and equipment........ 5
Buildings and improvements................ 39.5
5
<PAGE>
Effective April 26, 1999, Isle-Black Hawk increased its estimate of the
useful lives of all land-based buildings and improvements from 25 years to 39.5
years to more appropriately reflect the expected useful lives of these assets.
Isle-Black Hawk also reduced its estimate of the useful lives of slot machines
from 5 years to 3 years due to technological changes. These two changes
increased the July 25, 1999 net income by $266,000. Excluding the changes in
useful lives, net income would have been $874,000.
3. OTHER ASSETS
DEFERRED FINANCING COSTS
The costs of issuing long-term debt have been capitalized and are being
amortized using the effective interest method over the term of the related debt.
RESTRICTED CASH
Restricted cash represents cash proceeds from the sale of the First
Mortgage Notes held in trust by IBJ Whitehall Bank and Trust in New York, as
trustee. These funds are held in three separate accounts (Construction
Disbursement, Completion Reserve and Interest Reserve), with usage restricted by
an indenture between Isle-Black Hawk and the trustee, dated August 20, 1997 in
connection with the issuance of the First Mortgage Notes (the "Indenture").
Amounts in the Construction Disbursement Account contained approximately $0.6
million at July 25, 1999.
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JULY 25, APRIL 25,
1999 1999
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
11% note payable, issued by Isle of Capri Black Hawk, L.L.C., due in
monthly installments of $73,692, including interest, through October 2000; non-
recourse to Isle of Capri Casinos, Inc...................................................... $ 1,341 $ 1,522
13% First Mortgage Notes, issued by Isle of Capri Black Hawk, L.L.C., due August
2004; non-recourse to Isle of Capri Casinos, Inc............................................ 75,000 75,000
------- -------
76,341 76,522
Less: current maturities..................................................................... 775 754
------- -------
Long-term debt............................................................................... $75,566 $75,768
======= =======
</TABLE>
On August 20, 1997, Isle-Black Hawk issued $75 million of 13% First
Mortgage Notes with Contingent Interest, due August 31, 2004 that is non-
recourse debt to Isle of Capri Casinos, Inc. Interest on the First Mortgage
Notes is payable semiannually on February 28 and August 31 of each year,
commencing February 28, 1998. Additionally, contingent interest is payable on
the First Mortgage Notes on each interest payment date, in an aggregate
principal amount of 5% of Isle-Black Hawk's Consolidated Cash Flow (as defined
in the Indenture), provided that no Contingent Interest was payable prior to
commencement of operations and may, under certain circumstances, be deferred.
Isle of Capri Casinos, Inc. previously supplied a completion capital commitment
to Isle-Black Hawk, which lapsed in accordance with its terms.
On August 31, 1999, Isle-Black Hawk deferred its first contingent interest
payment totaling $516,000. This amount was fully accrued as of August 31,
1999. The amount of contingent interest expense recorded for the quarter ended
July 25, 1999 was $218,000.
The First Mortgage Notes are redeemable at the option of Isle-Black Hawk,
in whole or in part, at any time on or after August 1, 2001 at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest to the redemption date, if redeemed during the 12-
month period beginning on August 31 of the years indicated below:
Year Percentage
---- ----------
2001 ................... 106.5%
2002 ................... 103.2%
2003 and thereafter........ 100.0%
Beginning with the first operating year after Isle-Black Hawk begins gaming
operations, Isle-Black Hawk will be required to offer to purchase, at the price
of 101% of the aggregate principal amount thereof, the maximum principal amount
of the Notes that may be purchased with 50% of Isle-Black Hawk's excess cash
flow, as defined.
Isle-Black Hawk obtained a letter of credit, as a requirement to obtain a
building permit from the City of Black Hawk (the "City"). The letter of
credit, totaling $2.1 million, can be drawn upon by the City if for any reason
Isle-Black Hawk fails to complete the hotel project. The letter of credit is
secured by a deposit held in trust of $1.1 million, which was funded by Isle of
Capri Casinos, Inc. and the balance is secured by Isle of Capri Casinos, Inc.'s
open line of credit with the bank.
Substantially all of Isle-Black Hawk's assets are pledged as collateral for
long-term debt. At July 25, 1999, Isle-Black Hawk was in compliance with all
debt covenants.
6
<PAGE>
5. RELATED PARTY TRANSACTIONS
Management Agreement. On April 25, 1997, Isle-Black Hawk entered into a
Management Agreement, which was subsequently amended and restated on July 29,
1997 (the "Management Agreement"), with Isle of Capri Casinos, Inc., which
manages the casino in exchange for a fee. The management fee is equal to two
percent of revenues as defined, plus ten percent of operating income, but not to
exceed four percent of revenues. The management fee became effective upon
commencement of casino operations.
Lease Agreement. On January 2, 1998, Casino America of Colorado, Inc. acquired
approximately 0.7 acres of property contiguous to the property being developed
by Isle-Black Hawk for expansion of the entrance and signage (the "Acquired
Property'). On January 2, 1998, Isle-Black Hawk, as lessee, entered into a
lease agreement with Casino America of Colorado, Inc. for the Acquired Property
and has utilized the Acquired Property in developing Isle-Black Hawk. The lease
payment consists of $102,000 paid upon the inception of the lease and $17,000
per month, commencing July 15, 1998, and continuing until December 31, 2002.
The term of the lease is through December 31, 2002, and thereafter on a year to
year basis. During the term of the lease, Isle-Black Hawk has the right to
purchase the property for $1,500,000 plus all interest and out-of-pocket costs
that Casino America of Colorado, Inc. incurred in connection with the purchase
and ownership of the land, less any payments made by Isle-Black Hawk, as lessee.
6. SUBSEQUENT EVENTS
Isle of Capri Black Hawk, LLC is currently constructing a hotel containing
approximately 235 rooms at the Isle-Black Hawk for approximately $29.0 million,
including a contract for new construction costs of approximately $20.0 million
which is currently being negotiated, however the construction work has begun is
currently ongoing. Isle of Capri is assisting Isle of Capri Black Hawk, LLC with
the financing of the development of this hotel and plans to loan a total of $5.0
million with interest payable in cash, of which $3.3 million had been funded as
of July 25, 1999, and another $5.0 million with interest payable in kind (with
additional notes). Additionally, Isle of Capri has agreed to contribute up to
$10.0 million in additional equity to supplement funds generated from Isle of
Capri Black Hawk, LLC operations to complete the hotel. Nevada Gold may
participate in making a loan or contributing equity.
7
<PAGE>
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, Isle-Black Hawk's financial statements, including
the notes thereto, and other financial information included elsewhere in this
report.
The following discussion includes "forward-looking statements" within the
meaning of section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. In particular,
statements concerning the effects of increased competition in the Black Hawk
market, the effects of regulatory and legislative matters, Isle-Black Hawk's
plans to make capital investments at its facility, including, without
limitation, the development of its hotel facility, are forward-looking
statements. Although Isle-Black Hawk believes that the expectations are
reasonable, there can be no assurance that such expectations are reasonable or
that they will be correct. Actual results may vary materially from those
expected. Important factors that could cause actual results to differ with
respect to Isle-Black Hawk's planned capital expenditures principally include a
lack of available capital resources, construction and development risks such as
shortages of materials and labor and unforeseen delays resulting from a failure
to obtain necessary approvals, and Isle-Black Hawk's limited experience in
developing hotel operations.
GENERAL
Isle-Black Hawk was organized on April 25, 1997 and from that time, until
the opening of the casino on December 30, 1998, Isle-Black Hawk's activities
were limited to the design, construction and opening of the casino. Isle-Black
Hawk includes a 43,000 square-foot gaming facility on a single floor with 1,089
slot machines, 14 table games, on-site covered parking for 1,100 vehicles and
various other amenities. Isle-Black Hawk's results of operations for the fiscal
year ended April 25, 1999 include four fiscal months of gaming operations.
There is a lack of comparable information between fiscal years 2000, 1999 and
1998 because Isle-Black Hawk was in the development stage during all of fiscal
1998 and did not have any historical operating results other than interest
expense on Isle-Black Hawk's outstanding indebtedness, interest income on Isle-
Black Hawk's restricted cash, the receipt of certain capital contributions and
the capitalization of certain costs until it commenced operations on December
30, 1998, during the third quarter of fiscal 1999. The following discussion
focuses on Isle-Black Hawk's three fiscal months of gaming operations during the
first quarter of fiscal 2000.
Isle of Capri Black Hawk Capital Corp. is a wholly owned subsidiary of
Isle-Black Hawk and was incorporated for the sole purpose of serving as co-
issuer of the First Mortgage Notes. Isle of Capri Black Hawk Capital Corp. has
not and will not have any operations or material assets or revenues.
Isle-Black Hawk believes that its historical results of operations may not
be indicative of its future results of operations because it has only operated
for seven months, and due to the substantial present and expected future
increase in competition for gaming customers in its market, as new casinos open
and existing casinos add to or enhance their facilities.
RESULTS OF OPERATIONS
Three Months Ended July 25, 1999
Total revenue for the quarter ended July 25, 1999 was $20.2 million, which
included $19.0 million of casino revenue and $1.2 million of food, beverage and
other revenue. Revenue does not reflect the retail value of any complimentaries.
Casino operating expenses for the quarter ended July 25, 1999 totaled $2.8
million, or 14.6% of casino revenue. These expenses are primarily comprised of
salaries, wages and benefits and other operating expenses of the casino.
State and local gaming taxes paid in Colorado totaled $3.8 million for the
quarter ended July 25, 1999, which is at a rate consistent with Colorado's
gaming tax rate for the applicable fiscal year.
Food, beverage and other expenses totaled $0.9 million for the quarter
ended July 25, 1999. These expenses consist primarily of the cost of goods
sold, salaries, wages and benefits and operating expenses of these departments.
Food and beverage operating expenses as a percentage of food, beverage and other
revenues were 72.9% for the quarter ended July 25, 1999.
Facilities expenses totaled $0.8 million for the quarter ended July 25,
1999. These expenses include salaries, wages and benefits, operating expenses of
insurance, housekeeping and general maintenance of the facilities.
Marketing and administrative expenses totaled $6.9 million, or 34.0% of
total revenue, for the quarter ended July 25, 1999. Marketing expenses include
salaries, wages and benefits of the marketing and sales departments, as well as
promotions, advertising, special events and entertainment. Administrative
expenses include administration and human resource department expenses, rent
(including $0.9 million related to equipment leases), professional fees and
property taxes.
Depreciation and amortization expense was $0.5 million for the quarter
ended July 25, 1999. These expenses relate to property and equipment.
8
<PAGE>
Interest expense was $2.6 million for the quarter ended July 25, 1999, net
of capitalized interest of $0.2 million and interest income of $0.1 million.
Interest expense primarily relates to indebtedness incurred in connection with
the acquisition of property, equipment and leasehold improvements. This compares
to interest expense of $.8 million, net of capitalized interest of $1.2 million
and interest income of $.5 million, for the quarter ended July 26, 1998.
On August 31, 1999, Isle-Black Hawk deferred its first contingent interest
payment totaling $516,000. This amount was fully accrued as of August 31, 1999.
The amount of contingent interest expense recorded for the quarter ended July
25, 1999 was $218,000.
LIQUIDITY AND CAPITAL RESOURCES
At July 25, 1999, Isle-Black Hawk had cash and cash equivalents of $15.5
million, compared to $10.9 million at April 25, 1999. The increase in cash is
primarily a result of cash flow from operating activities. During the quarter
ended July 25, 1999, Isle-Black Hawk's operating activities provided $5.3
million of cash.
Isle-Black Hawk invested $1.9 million in property and equipment in the
quarter ended July 25, 1999, primarily for the completion of the casino facility
and the continued design and development of the hotel.
Isle-Black Hawk anticipates that a significant portion of its principal
near-term capital requirements will relate to the construction of a hotel
containing approximately 235 rooms for approximately $29.0 million, including a
contract for new construction costs of approximately $20.0 million which is
currently being negotiated, however the construction work has begun and is
currently ongoing. Isle of Capri Casinos, Inc. is assisting Isle-Black Hawk by
financing the development of this hotel and plans to loan $5.0 million with
interest payable in cash, of which $3.3 million had been funded as of July 25,
1999, and another $5.0 million with interest payable in kind (by issuance of
additional notes). Isle of Capri Casinos, Inc. and Nevada Gold & Casinos, Inc.
have agreed to contribute up to $10.0 million in additional equity and/or loans
to supplement cash funds generated from Isle-Black Hawk's operations to complete
the hotel. The hotel is scheduled to be completed in late 2000.
Isle-Black Hawk's development plans are subject to obtaining permits,
licenses, and approvals from appropriate regulatory and other agencies. In
addition these plans are preliminary, subject to continuing refinement or
otherwise subject to change.
Isle-Black Hawk anticipates that additional capital improvements
approximating $1.1 million will be made during the remainder of fiscal 2000 to
maintain its existing facility and remain competitive in its market. Isle-Black
Hawk expects that available cash and cash from future operations, as well as
borrowings from Isle of Capri Casinos, Inc. and the contributions from Isle of
Capri Casinos, Inc. and Nevada Gold & Casinos, Inc., will be adequate to fund
future expansion, planned capital expenditures, service debt and meet working
capital requirements. There is no assurance that Isle-Black Hawk will have the
capital resources to make all of the expenditures described above or that
planned capital investments will be sufficient to allow us to remain competitive
in our existing market. In addition, the indenture restricts, among other
things, our ability to borrow money, make capital expenditures, use assets as
security in other transactions, make restricted payments or restricted
investments, incur contingent obligations, sell assets and enter into leases and
transactions with affiliates. In addition, Isle-Black Hawk is required to make
significant interest payments semi-annually on our First Mortgage Notes, which
will include additional contingent interest.
Isle-Black Hawk is highly leveraged and may be unable to obtain additional
debt or equity financing on acceptable terms. As a result, limitations on Isle-
Black Hawk's capital resources could delay or cause the abandonment of certain
plans for capital improvements.
YEAR 2000 COMPLIANCE
Isle-Black Hawk has completed the evaluation of its information technology
infrastructure for Year 2000 issues. The evaluation process included a detailed
inventory of all computer hardware and software systems, detailed vendor
communication and the creation of a concise Year 2000 plan. Most of Isle-Black
Hawk's systems infrastructure is currently Year 2000 compliant. Isle-Black Hawk
has received assurances that it believes are reasonable from vendors of material
products used by Isle-Black Hawk, that their products are Year 2000 compliant.
Isle-Black Hawk has not incurred and does not intend to incur any material costs
to modify its information technology infrastructure in order to be Year 2000
compliant. All software needed will be provided by the respective information
technology vendor at no charge to Isle-Black Hawk. Isle-Black Hawk expects to
have all software modifications in place by the end of September 1999.
Isle-Black Hawk and its results of operations and financial condition could
be adversely affected by a failure of one or more of the third parties with
which it does business to satisfactorily address and resolve any Year 2000
issues. In addition, Year 2000 difficulties experienced by public utilities, the
banking system, the postal system or other similar infrastructure enterprises
could adversely affect Isle-Black Hawk. However, Isle-Black Hawk believes that
the impact of such problems on Isle-Black Hawk would be the same as on other
businesses in the same area or areas. Isle-Black Hawk believes these risks range
from slight financial malfunctions to, in a worst case scenario, an extensive
and costly inability to communicate with customers and suppliers. Isle-Black
Hawk believes that it has an effective program in place to resolve all Year 2000
issues. Isle-Black Hawk has no contingency plans in the event it does not
complete all phases of its Year 2000 program, as program completion is currently
on schedule.
9
<PAGE>
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
A list of the exhibits included as part of this Form 10-Q is set forth
in the Exhibit Index that immediately precedes such exhibits, which is
incorporated herein by reference.
(b) Reports on Form 8-K.
During the quarter ended July 25, 1999, the Company filed the following
reports on Form 8-K:
None.
10
<PAGE>
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, thereunto duly authorized.
ISLE OF CAPRI BLACK HAWK L.L.C.
Dated: September 8, 1999 /s/ Rexford A. Yeisley
-------------------------------------------
Rexford A. Yeisley, Chief Financial Officer
(Principal Financial and Accounting Officer)
11
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
10.8A First Amendment to Subdivision Agreement entered
into between City of Black Hawk and Isle of Capri
Black Hawk L.L.C.
10.8B Second Amendment to Subdivision Agreement entered
into between City of Black Hawk and Isle of Capri
Black Hawk L.L.C.
27 Financial Data Schedule
12
<PAGE>
EXHIBIT 10.8A
FIRST AMENDMENT TO SUBDIVISION AGREEMENT
----------------------------------------
THIS FIRST AMENDMENT TO SUBDIVISION AGREEMENT is made this _____ day of
__________1998, by and between the CITY OF BLACK HAWK, COLORADO (the "City") and
ISLE OF CAPRI BLACK HAWK, LLC (the "Developer").
RECITALS:
--------
A. The City and the Developer entered into a Subdivision Agreement on
February 20, 1998 to secure the construction of certain public improvements for
the benefit of Isle of Capri, Black Hawk Subdivision Filing No. 1 (the
"Agreement").
B. The Developer desires that the City issue a temporary certificate of
occupancy prior to the completion of certain public improvements described in
paragraph 3 of the Agreement, specifically the Mill Street Bridge, the traffic
signal at Mill and Main Streets, the traffic signal at Mill Street and State
Highway, Main Street paving, and certain utilities.
C. The City desires to issue a temporary certificate of occupancy subject
to the receipt of an irrevocable letter of credit in an amount and in the form
attached as EXHIBIT A, which is attached hereto and incorporated by this
reference, with an expiration date of February 28, 2000, and completion of the
hotel portion of the Isle of Capri project as indicated herein and subject
further to the terms and conditions of this First Amendment.
AGREEMENT:
---------
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, the sufficiency of which is mutually acknowledged,
the parties hereto agree as follows:
Section 1. Paragraph 8 of the Agreement is amended to provide as follows:
8. Completion of Public Improvements. The obligations of the
Developer provided for in paragraphs 3 and 6 of this Agreement, including
the inspections thereof, shall be performed on or before December 31, 1999
and proper
<PAGE>
application for acceptance of the Public Improvements shall be made on or
before such date. Upon completion of construction by the Developer of such
Public Improvements and certification by the Developer's site engineer that
the Public Improvements have been completed according to the plans approved
by the City, the City's Director of Public Works or his designee shall
inspect the improvements and certify with specificity their conformity or
lack thereof to the City's specifications. The Developer shall make all
corrections necessary to bring the improvements into conformity with the
City's specifications. Once approved by the City's Director of Public
Works, the City shall accept said improvements upon conveyance pursuant to
paragraph 10; provided, however, the City shall not be obligated to accept
the Public Improvements until the actual costs described in paragraph 2 of
this Agreement are paid in full by the Developer.
Section 2. Upon the execution of the First Amendment, the Developer shall
present to the City an irrevocable letter of credit in the amount and in the
form attached as Exhibit A, with an expiration date of February 28, 2000, from a
financial institution acceptable to the City. In the event the hotel rooms are
not completed on February 28, 2000, the Developer shall extend the term of the
letter of credit to coincide with the opening the hotel rooms. The City may
draw on the irrevocable letter of credit for the reasons specified in the
Agreement and for the failure of the Developer to satisfy the terms and
conditions of this First Amendment.
Section 3. As additional consideration to support this First Amendment,
the Developer shall commence construction of the hotel portion of the Isle of
Capri project, which includes the construction of one hundred (100) hotel rooms
on the property on or before June 15, 1999, and the Developer shall complete the
construction of such hotel rooms within twenty-two (22) months of the
commencement of construction.
Section 4. Except as specifically amended and modified herein, all other
provisions of the Subdivision Agreement shall remain in full force and effect.
WHEREFORE, the parties hereto have executed this First Amendment to
Subdivision Agreement on the day and year first above-written.
<PAGE>
CITY OF BLACK HAWK, COLORADO
By: _______________________________
Kathryn E. Eccker, Mayor
ATTEST:
___________________________________
Deborah S. Yancy, City Clerk
APPROVED AS TO FORM:
___________________________________
James S. Maloney, City Attorney
ISLE OF CAPRI BLACK HAWK, LLC
By: ______________________________
STATE OF COLORADO )
) ss.
COUNTY OF _________________ )
The foregoing instrument was subscribed, sworn to, and acknowledged before
me this _____ day of _________1998, by ______________________ as the
_________________ of Isle of Capri Black Hawk, LLC.
My commission expires: __________________________
(S E A L)
______________________________
Notary Public
<PAGE>
EXHIBIT 10.8B
SECOND AMENDMENT TO SUBDIVISION AGREEMENT
-----------------------------------------
THIS SECOND AMENDMENT TO SUBDIVISION AGREEMENT is made this _____ day of
______________, 1999, by and between the CITY OF BLACK HAWK, COLORADO (the
"City") and ISLE OF CAPRI BLACK HAWK, LLC (the "Developer").
RECITALS:
--------
A. The City and the Developer entered into a Subdivision Agreement on
February 20, 1998 to secure the construction of certain public improvements for
the benefit of Isle of Capri, Black Hawk Subdivision Filing No. 1 (the
"Agreement").
B. The City and the Developer entered a First Amendment to the Agreement
on November 18, 1998, to allow the Developer to receive a temporary certificate
of occupancy prior to the completion of certain public improvements described in
paragraph 3 of the Agreement, specifically the Mill Street Bridge, the traffic
signal at Mill and Main Streets, the traffic signal at Mill Street and State
Highway, Main Street paving, and certain utilities (the "First Amendment"),
subject to the Developer's compliance with the terms and conditions contained in
the First Amendment.
C. The City and the Developer have determined that the design issues
necessary to address the impacts of the gaming, hotel and other commercial uses
of the Property to the Mill Street Bridge, Main Street and State Highway 119,
cannot be fully addressed before the opening of the hotel use on the Property,
and the City and Developer desire to enter into this Second Amendment to
described the Developer's obligation to address these impacts in the future.
D. The City and the Developer also desire to describe the additional public
improvements and related dedication that must be made prior to the issuance of a
temporary certificate of occupancy for the hotel portion of the Property.
AGREEMENT:
---------
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, the sufficiency of which is mutually acknowledged,
the parties hereto agree as follows:
Section 1. Paragraph 3a. of the Agreement is amended to provide as
follows:
a. The Developer shall participate in the cost of the public
improvements that are necessary to address the impacts
created by the Property to Main Street which includes, but
is not limited to the extension of Main Street to State
Highway 119 ("Main Street"), and State Highway 119, as
determined by the City and the
<PAGE>
Colorado Department of Highways ("CDOT"). The scope of these
public improvements as well as the costs attributable to the
Developer for its proportionate share of these public
improvements shall be determined by the City and CDOT (the
"Costs"). The Costs that are attributable to the Developer
shall be determined based on an equitable apportionment of
the entire cost of these public improvement to all benefited
properties in the manner reasonably determined by the City.
The Developer shall pay such Costs to the City or other
public entity as determined by the City within ninety (90)
days of written request by the City; or in the alternative,
the Developer may participate in a financing district that
is acceptable to the City and the Developer pursuant to a
separate agreement between the City and the Developer. Upon
payment of such Costs, the City shall issue the Developer
the final certificate of occupancy for those uses of the
Property that have received a temporary certificate of
occupancy. In the event the Developer fails to pay the City
or other public entity designated by the City the cost of
the public improvements described herein or participate in a
financing district acceptable to the City and the Developer
as provided herein, the Developer acknowledges and agrees
that the City may certify such Costs as a tax or charge
pursuant to C.R.S. (S) 31-20-105, as amended, to be
collected and paid over to the City by Gilpin County
Treasurer in the same manner as property taxes.
Section 2. Paragraph 3 of the Agreement is amended by the addition of a
new subsection e. to provide as follows:
e. As part of the consideration of the Development Incentive
Agreement between the City and the Developer that was
entered into contemporaneously with this Second Amendment,
the Developer shall, prior to the issuance of a temporary
certificate of occupancy for the hotel portion of the
Property, convey to the City the real property described in
EXHIBIT E, which is attached hereto and incorporated by this
reference, by special warranty deed, free and clear of all
liens and encumbrances, except permitted exceptions as
reasonably determined by the parties hereto. Additionally,
prior to the issuance of such temporary certificate of
occupancy, the Developer shall complete the public
improvements that are described in EXHIBIT F, which is
attached hereto and incorporated by this reference.
<PAGE>
Section 3. Paragraphs 6 and 11 of the Agreement are hereby amended by
replacing Exhibit C as it appears in the Agreement, with EXHIBIT C-1, which is
attached hereto and incorporated by this reference.
Section 4. Except as specifically amended and modified herein, all other
provisions of the Subdivision Agreement and the First Amendment hereto shall
remain in full force and effect.
WHEREFORE, the parties hereto have executed this Second Amendment to
Subdivision Agreement on the day and year first above-written.
CITY OF BLACK HAWK, COLORADO
By: _______________________________
Kathryn E. Eccker, Mayor
ATTEST:
___________________________________
Deborah S. Yancy, City Clerk
APPROVED AS TO FORM:
___________________________________
James S. Maloney, City Attorney
<PAGE>
ISLE OF CAPRI BLACK HAWK, LLC
By: ______________________________
STATE OF _____________________
) ss.
COUNTY OF _________________ )
The foregoing instrument was subscribed, sworn to, and acknowledged before
me this _____ day of _______________, 1999, by _______________________ as the
________________ of Isle of Capri Black Hawk, LLC.
My commission expires: __________________________
(S E A L)
______________________________
Notary Public
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ISLE OF
CAPRI BLACK HAWK LLC'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND RELATED TO SAID FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> APR-26-1999
<PERIOD-END> JUL-25-1999
<CASH> 15,549
<SECURITIES> 0
<RECEIVABLES> 331
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,606
<PP&E> 81,765
<DEPRECIATION> 1,493
<TOTAL-ASSETS> 102,907
<CURRENT-LIABILITIES> 18,413
<BONDS> 75,566
0
0
<COMMON> 0
<OTHER-SE> 8,928
<TOTAL-LIABILITY-AND-EQUITY> 102,907
<SALES> 0
<TOTAL-REVENUES> 20,229
<CGS> 0
<TOTAL-COSTS> 7,469
<OTHER-EXPENSES> 9,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,706
<INCOME-PRETAX> 1,141
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,141
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00<F1>
<FN>
<F1>Includes bonds payable of $75 million plus other long-term depreciation.
</FN>
</TABLE>
