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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended April 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
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Isle of Capri Black Hawk L.L.C./Isle of Capri Black Hawk Capital Corp.
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(Exact name of registrant as specified in its charter)
Colorado 84-1422931
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(State of Organization) (IRS Employer Identification No.)
711 Washington Loop, Second Floor, Biloxi, Mississippi 39530
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (228) 436-7000
Securities Registered Pursuant to Section 12(b) Of the Act: None
Securities Registered Pursuant to Section 12(g) Of the Act: None
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 ______
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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. [ ]
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INDEX
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PAGE
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PART I................................................................. 1
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ITEM 1. BUSINESS.................................................... 1
ITEM 2. PROPERTIES.................................................. 8
ITEM 3. LEGAL PROCEEDINGS........................................... 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 8
PART II................................................................ 8
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER'S MATTERS....................................... 8
ITEM 6. SELECTED FINANCIAL DATA..................................... 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS......................... 9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK................................................ 11
ITEM 8. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS................. 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................ 25
PART III.............................................................. 25
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ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS OF THE REGISTRANT......... 25
ITEM 11. EXECUTIVE COMPENSATION.................................... 27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............ 29
PART IV............................................................... 30
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K............................................... 30
SIGNATURES............................................................ 31
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PART I
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ITEM 1. BUSINESS.
General
Isle of Capri Black Hawk L.L.C. ("Isle-Black Hawk") owns a casino in Black
Hawk, Colorado, approximately 40 miles west of Denver, which opened December 30,
1998 and the facility is managed by Isle of Capri Casinos, Inc. pursuant to a
long-term management agreement. We are owned by Casino America of Colorado,
Inc., a wholly-owned subsidiary of Isle of Capri Casinos, Inc. (traded under the
symbol "ISLE") and Blackhawk Gold, Ltd., a wholly-owned subsidiary of Nevada
Gold & Casinos, Inc. (traded under the symbol "UWIN") with Isle of Capri
Casinos, Inc. currently owning a 57% interest and Nevada Gold & Casinos, Inc.
currently owning a 43% interest.
We were organized in Colorado in April 1997, along with Isle of Capri Black
Hawk Capital Corp., our wholly-owned subsidiary that has no operations, as a
vehicle to raise capital for the construction and development of the casino. In
August 1997, we issued $75 million principal amount of First Mortgage Notes due
2004 with Contingent Interest. The proceeds were used to finance the
development of the casino. The casino is situated immediately adjacent to the
southeast corner of Mill and Main streets in Black Hawk, Colorado. The casino
is a 43,000 square-foot facility featuring 1,089 slot machines and 14 table
games.
The casino has a four-level, on-site parking garage, with approximately
1,100 covered parking spaces, directly accessible by elevator to the casino.
The casino offers customers a wide variety of non-gaming amenities, including a
52-seat Farraddays'(TM) restaurant, a 254-seat Calypso's(R) buffet, a 36-seat
Tradewinds(TM) deli, a Banana Cabana souvenir gift shop and a 4,000 square-foot
event center that can be used for meetings and entertainment.
There are less than 200 hotel rooms in the Black Hawk/Central City market.
We commenced construction of an on-site approximately 235-room hotel in July
1999. The hotel is expected to be funded through operating cash flows, loans and
equity contributions from Isle of Capri Casinos, Inc. and Nevada Gold & Casinos,
Inc.
Competition
We believe that the primary competitive factors in the Black Hawk market
(comprised of the cities of Black Hawk and Central City) are location,
availability and convenience of parking, number of slot machines and table
games, types and pricing of amenities, name recognition, customer service and
overall atmosphere. Although we believe that the Black Hawk market is primarily
characterized by numerous small, privately held gaming facilities, we consider
our main competition to be the larger gaming facilities located in Black Hawk
and Central City, and particularly those with considerable on-site parking and
established brand names and reputations in the local market. The largest
casinos in the Black Hawk market in terms of number of gaming positions are
Harvey's Wagon Wheel Casino Hotel, Colorado Central Station, Bullwhackers Black
Hawk, Canyon Casino (formerly operated by Harrah's), Fitzgeralds Black Hawk,
Gilpin Hotel Casino and the Lodge Casino. Each of these casinos offers on-site
parking.
We believe that our primary competition will be from casinos located in
immediate proximity to our casino. Colorado Central Station, a well-established
casino, is located closest to Isle-Black Hawk across the intersection of Mill
Street and Main Street. Colorado Central Station has approximately 700 slot
machines, approximately 20 table games, amenities such as a food court and a bar
and among the most parking spaces of any gaming facility in the city of Black
Hawk with approximately 690 valet parking spaces. In June 1998, the Lodge
opened a facility which has approximately 800 slot machines, 22 table games,
underground parking accommodating approximately 500 vehicles, and 50 hotel
rooms. This facility is located approximately 0.3 miles from our casino.
1
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In addition to the existing competition, two new casinos are currently
under construction in Black Hawk. The Mardi Gras Casino is developing a facility
that is expected to have over 700 slot machines and approximately 500 parking
spaces. It will be located between the Lodge Casino and Colorado Central
Station. Another, Riviera Black Hawk, acquired a 300,000 square-foot site across
the street from the Isle-Black Hawk and is currently constructing a facility
that is planned to have 1,000 slot machines and video poker machines and a 550-
space covered parking garage. Both facilities are scheduled to open in late 1999
or early 2000. Plans for a third new casino have been announced.
The casinos in Cripple Creek (located a driving distance of 110 miles to
the south of the Black Hawk market), and the Native American casinos located in
the southwestern corner of the state, constitute the only other casino gaming
venues in the state of Colorado. We believe that Cripple Creek, located 45 miles
west of Colorado Springs, also provides limited competition to the Black Hawk
market. Isle-Black Hawk also competes with other forms of gaming including
lottery gaming and horse and dog racing, among others, and competes for
entertainment dollars generally with other forms of entertainment. The
information contained in this discussion of competition was derived from
publicly available data, except where stated otherwise. While we regard these
sources as reasonably reliable, no assurances can be made regarding the accuracy
of such information.
Recent Developments
A newly formed division of the Black Hawk Improvement District issued $2.9
million of municipal bonds to pay for approximately $2.4 million of municipal
improvements which we agreed to make for the City of Black Hawk as part of our
development plan. Funds to repay these bonds over a ten-year period will be
obtained by the District through a special assessment to be levied equally
against our property and the property owned by Riviera. As of April 25, 1999 and
July 15, 1999, we have drawn $1.2 million against these funds.
In July 1999, we began construction of a hotel which will contain
approximately 235 rooms and which will be built above our parking garage. The
budget for the hotel is approximately $29.0 million and we estimate that
construction will be completed in approximately 13 months. The construction of
the hotel will be funded through operating cash flows, loans and equity
contributions from Isle of Capri Casinos, Inc. and Nevada Gold & Casinos, Inc.
Employees
As of April 25, 1999, we employed approximately 550 people. None of our
employees are subject to a collective bargaining agreement. We believe that our
relationship with our employees is satisfactory.
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Regulatory Matters
Operating Restrictions. Colorado gaming law permits legalized limited
gaming in the cities of Central City, Black Hawk and Cripple Creek, Colorado.
"Limited gaming" is defined as the use of slot machines and the card games of
blackjack and poker, each with a maximum single bet of five dollars. Gaming is
confined to the commercial districts of Black Hawk, Central City and Cripple
Creek as those commercial districts existed as of certain dates. Gaming is
restricted to structures that conform to the architectural styles and designs
that were common to the areas prior to World War I, as determined by the
municipal governing bodies. No more than 35% of the square footage of any
building and no more than 50% of any one floor of such building may be used for
gaming. Gaming operations are prohibited between the hours of 2:00 a.m. and 8:00
a.m. No limits are imposed on total patron losses and casinos are not allowed to
extend credit to the patrons. Persons under the age of 21 are prohibited from
participating in gaming or lingering in gaming areas of a casino. Colorado law
requires licensees to maintain detailed books and records that accurately
account for all monies and business transactions. Books and records must be
furnished upon demand to the Colorado authorities. Detailed and extensive
playing procedures, standards, requirements and rules of play are established
for poker, blackjack and slot machines. Licensees must, in addition, adopt
comprehensive internal control procedures governing their gaming operations.
Such procedures must be approved in advance by the Colorado authorities and
include the areas of accounting, surveillance, security, cashier operations, key
control and fill and drop procedures, among others. No gaming may be conducted
in Colorado unless all appropriate licenses are approved by and obtained from
the Colorado Limited Gaming Control Commission (the "Colorado Commission").
Violations of Colorado gaming laws or regulations are criminal offenses and the
person or entity violating the same may, in addition, be subject to fines and
have its gaming license suspended or revoked.
License Information Requirements. The Colorado Commission may issue the
following five types of licenses: (i) slot machine manufacturer or distributor;
(ii) operator; (iii) retail gaming; (iv) support; and (v) key employee. The
first three licenses are issued for a one-year period and require annual
renewal. However, support licenses and key employee licenses are issued for
two-year periods and are renewable. The Colorado Commission has broad
discretion to condition, suspend, revoke, limit or restrict a license at any
time and also has the authority to impose fines. A slot machine manufacturer or
distributor license is required for all persons who manufacture, import or
distribute slot machines in Colorado, or who otherwise act as slot machine
manufacturers or distributors. Without providing ten days prior notification to
the gaming regulators, no manufacturer or distributor of slot machines may have
an interest in any casino retailer or operator, allow any of its officers or
persons with a substantial interest in it to have such an interest, employ any
person if such person is employed by a casino retailer or operator, or allow any
casino retailer or operator or person with a substantial interest therein to
have an interest in a manufacturer's or distributor's business. An operator
license is required for all persons who permit slot machines on their premises
or who engage in the business of placing and operating slot machines on the
premises of a retailer. A retail gaming license is required for all persons
permitting or conducting gaming on their premises and such license may be
granted only to a retailer. No person may have an ownership interest in more
than three retail licenses. All natural persons employed in the field of gaming
must hold either a support or key employee license. The Colorado Commission
recently ruled that businesses which provide gaming-related services must obtain
support licenses. Every retail gaming licensee must have a key employee
licensee in charge of all gaming activities available at all times when gaming
is being conducted. The Colorado Commission may determine that any employee of
a licensee is a key employee and, therefore, require that such person apply for
licensing as a key employee.
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An applicant for any type of Colorado license must provide the following
information: (i) personal background information; (ii) financial information;
(iii) participation in legal or illegal activities in Colorado or other
jurisdictions, including foreign countries; (iv) criminal record information;
(v) information concerning all pecuniary and equity interest in the applicant;
and (vi) other information as requested or required. Prior to licensure,
applicants must satisfy the Colorado Commission that they are suitable for
licensing and are of good moral character. The Colorado legislature has defined
unsuitability or unsuitable in relation to a person as the inability to be
licensed by the Colorado Commission because of prior acts, associations or
financial conditions, and, in relation to acts or practices, those which violate
or would violate the statutes or rules or are or would be contrary to the
declared legislative purposes of the Colorado Act. Without limiting the
foregoing, a person cannot be licensed if such person has served a sentence upon
conviction of a felony or fraud-related misdemeanor within ten years or has been
convicted of a gambling-related offense, or is currently under a prosecution or
is associated with organized crime or has refused to cooperate in certain
governmental investigations. Applicants have the burden of proving their
qualifications to the Colorado Commission and must submit to and pay the full
cost of any background investigations as may be ordered by the Colorado
Commission. There is no limit on the cost of such background investigations and
no guarantee that any applicant will receive licensing from the Colorado
Commission.
The current practice of the Colorado authorities is to require the
following persons and entities to complete background investigation forms, and
to provide comprehensive information and to submit to a full background
investigation: (a) persons or entities owning (either directly or on a pass-
through basis) 5% or more of a publicly traded licensee or publicly traded
company affiliated with a licensee, such as Isle-Black Hawk, (other than certain
institutional investors in publicly traded licensees), (b) persons or entities
owning (either directly or on a pass-through basis) any of a privately held
licensee (other than a privately held licensee affiliated with a publicly traded
company described in (a) above), (c) directors and officers of the licensees and
(d) in certain circumstances, directors and officers of entities described
above. But, the Colorado authorities retain the discretion to require any person
or entity with an interest in a licensee (directly or on a pass-through basis)
to submit such information and undergo such investigation. The purpose of the
investigation is to determine each such person's or entity's qualifications and
suitability for licensure. In addition, all persons loaning monies, goods or
real or personal property to a licensee or applicant, or having any interest in
a licensee or applicant, or entering into any agreement with a licensee or
applicant, must provide any information if so requested by the Colorado
authorities, including submission to a full background investigation if ordered
by the Colorado authorities.
Persons found unsuitable by the Colorado Commission may be required
immediately to terminate any interest in, association or agreement with or
relationship to a licensee. A finding of unsuitability with respect to any
officer, director, employee, associate, lender or beneficial owner of a licensee
or applicant also may jeopardize the licensee's license or the applicant's
license application. A license grant may be conditioned upon the termination of
any relationship with unsuitable persons.
Licensees have a continuing duty to report to the Colorado Commission
information concerning persons with a financial or equity interest in the
licensee, or who have the ability to control or exercise a significant influence
over the licensee, or who loan money to the licensee. Therefore, the requisite
information regarding the holders of the First Mortgage Notes will have to be
periodically reported to the Colorado authorities.
4
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As a general rule, under the Colorado law and regulations, it is a criminal
violation for any person to have a legal, beneficial, voting or equitable
interest, or right to receive profits, in more than three retail gaming licenses
in Colorado. The Colorado Commission has ruled that a person does not have an
interest in a licensee for purposes of the multiple-license prohibition if: (i)
such person has less than a 5% interest in an institutional investor which has
an interest in a publicly traded licensee or publicly traded company affiliated
with a licensee (such as the Company); (ii) a person has a 5% or more financial
interest in an institutional investor, but the institutional investor has less
than a 5% interest in a publicly traded licensee or publicly traded company
affiliated with a licensee; (iii) an institutional investor has less than 5%
financial interest in a publicly traded licensee or publicly traded company
affiliated with a licensee; (iv) an institutional investor possesses securities
in a fiduciary capacity for another person, and does not exercise voting control
over 5% or more of the outstanding voting securities of a publicly traded
licensee or of a publicly traded company affiliated with a licensee; (v) a
registered broker or dealer retains possession of securities of a publicly
traded licensee or of a publicly traded company affiliated with a licensee for
its customers in street name or otherwise, and exercises voting rights for less
than 5% of the publicly traded licensee's voting securities or of a publicly
traded company affiliated with licensee; (vi) a registered broker or dealer acts
as a market maker for the stock of a publicly traded licensee or of a publicly
traded company affiliated with a licensee and possesses a voting interest in
less than 5% of the stock of the publicly traded licensee or of a publicly
traded company affiliated with a licensee; (vii) an underwriter is holding
securities of a publicly traded licensee or of a publicly traded company
affiliated with a licensee as part of an underwriting for no more than 90 days
if it exercises voting rights with respect to less than 5% of the outstanding
securities of a publicly traded licensee or a publicly traded company affiliated
with a licensee; (viii) a stock clearinghouse holds voting securities for third
parties, if it exercises voting rights with respect to less than 5% of the
outstanding securities of a publicly traded licensee or of a publicly traded
company affiliated with a licensee; or (ix) a person owns less than 5% of the
voting securities of the publicly traded licensee or publicly traded company
affiliated with a licensee. Hence, the business opportunities of Isle-Black
Hawk and its stockholders in Colorado are limited to such interests that comply
with the statute and Commission's rules.
Conveyance of Licensor. With limited exceptions applicable to licensees
that are publicly traded entities, no person may sell, lease, purchase, convey
or acquire any interest in a retail gaming or operator license or business
without the prior approval of the Colorado Commission. Also, no person may own
gaming equipment without being licensed. Such prohibition could impair the
ability of the holders of the First Mortgage Notes to liquidate the assets of
Isle-Black Hawk upon any foreclosure of the liens securing the First Mortgage
Notes.
There cannot be a change in control of Isle-Black Hawk without the Colorado
Commission's prior approval. Also, there can be no change in the membership
interests of Isle-Black Hawk without the Colorado Commission's prior approval.
All agreements, contracts, lease or arrangements in violation of applicable
Colorado law or regulations are void and unenforceable. The Colorado Commission
or Division Director may require changes in gaming contracts (which are any
agreements with a licensee, such as the First Mortgage Notes) or termination of
a gaming contract.
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Rule 4.5. In addition to the other requirements of the gaming laws, the
Colorado Commission has enacted a special rule, Rule 4.5, which imposes
additional requirements on publicly traded corporations holding gaming licenses
in Colorado and on gaming licensees in Colorado owned directly or indirectly by
publicly traded corporations. The term "publicly traded corporation" is a
specially defined term and may include limited liability companies, trusts,
partnerships and other business organizations, and may even include entities
exempted from the registration requirements of the securities laws under certain
circumstances.
Under Rule 4.5, licensees to whom Rule 4.5 applies must include in their
articles of organization or similar charter documents certain specified
provisions that: restrict the rights of the licensee to issue voting interests
or securities except in accordance with the Colorado gaming laws; limit the
rights of persons to transfer voting interests or securities of a licensee
except in accordance with the Colorado gaming laws; and provide that holders of
voting interests or securities of a licensee found unsuitable by the Colorado
Commission may be required to sell their interests or securities back to the
issuer at the lesser of, in general terms, the holder's investment or the market
price as of the date of the finding of unsuitability. Alternatively, and with
authorization by the Colorado Commission, the holder may in limited
circumstances transfer the voting interest or securities to a suitable person
(as determined by the Colorado Commission). Until the voting interests or
securities are held by suitable persons, the issuer may not pay dividends or
interest on them, the interests or securities may not be voted, or entitled to
any vote, and they may not be included in the voting or securities of the
issuer, and the issuer may not pay any remuneration in any form to the holder of
the securities or interests.
Pursuant to Rule 4.5, persons who acquire direct or indirect beneficial
ownership of (i) 5% or more of any class of voting securities of a publicly
traded corporation involved in gaming in Colorado or (ii) 5% or more of the
beneficial interest of any class of voting securities in a gaming licensee
directly or indirectly through any class of voting securities of any holding
company or intermediary company of a licensee (all such person hereinafter
referred to as "qualifying person"), must notify the Colorado authorities within
10 days after such acquisition, are required to submit all requested information
and are subject to a finding of suitability. Licensees also must notify any
qualifying person of these requirements. A qualifying person whose interests
equal 10% or more must apply to the Colorado Commission for a finding of
suitability within 45 days after acquiring such securities. Licensees must also
notify any qualifying persons of these requirements. Whether or not notified,
qualifying persons are responsible for complying with these requirements.
A qualifying person who is an institutional investor under Rule 4.5 and
whose interests equal 15% or more must apply to the Colorado Commission for a
finding of suitability within 45 days after acquiring such interests. A
qualifying person who is an institutional investor and whose interests are less
than 15%, may not be required to apply for suitability, provided such person
fulfills certain reporting requirements.
Pursuant to Rule 4.5, persons found unsuitable by the Colorado Commission
must be removed from any position as an officer, director, or employee of a
licensee or from a holding or intermediary company thereof. Such unsuitable
persons also are prohibited from any beneficial ownership of the voting
securities of any such entities. Licensees, or affiliated entities of licensees,
are subject to sanctions for paying dividends to persons found unsuitable by the
Colorado Commission, or for recognizing voting rights of, or paying a salary or
any remuneration for services to, unsuitable persons. Licensees or their
affiliated entities also may be sanctioned for failing to pursue efforts to
require unsuitable persons to relinquish their interests. The Colorado
Commission may determine that anyone with a material relationship to a licensee,
or affiliated company, must apply for a finding of suitability.
Taxes. In addition to any other applicable license fees, up to a maximum
of 40% of the adjusted gross proceeds of gaming operations ("AGP") may be
payable by a licensee for the privilege of conducting gaming. AGP is generally
defined as the total amounts wagered less all payments to players. With respect
to games of poker, AGP means those sums wagered in a hand retained by the
licensee as compensation, which must be consistent with the amounts established
by the Colorado Commission. Effective July 1 of each year, the Colorado
Commission establishes the gaming tax for the following 12 months. Effective
July 1, 1999, the Colorado Commission has set a gaming tax on AGP of .25% on the
first $2 million of AGP; 2% on AGP over $2 million up to $4 million; 4% on AGP
over $4 million up to $5 million; 11% on AGP over $5 million up to $10 million;
16% on AGP over $10 million up to $15 million; and 20% on AGP in excess of $15
million. The gaming tax is paid monthly, with licensees required to file returns
by the 15th of the following month.
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Annual Device Fees. Effective July 1, 1999, the Colorado Commission
eliminated the annual device fee for each slot machine, blackjack table and
poker table. The municipalities of Central City, Black Hawk and Cripple Creek
still assess and collect their own device fees. The current annual device fee
in Black Hawk is $750 per device. There is no statutory limit on city device
fees, which may be increased at the discretion of the city. Local device fees
are currently prorated according to device usage; the city of Black Hawk
prorates device fees such that any device used at any time during a month is
subject to the device fee for such month. In addition, a transportation device
fee of up to $154.08 per device and a business improvement fee of $89.04 per
device also may apply depending upon the location of licensed premises. Isle-
Black Hawk is currently not subject to the business improvement fee of $89.04
per device.
Alcohol. The sale of alcoholic beverages in gaming establishments is
subject to strict licensing, control, and regulation by state and local
authorities. Alcoholic beverage licenses are revocable and non-transferable.
State and local licensing authorities have full power to deny, limit, condition,
suspend or revoke any such licenses. Persons or entities which directly or on a
pass-through basis own 10% or more of a licensee will be required to complete
applications and submit certain personal and financial information, and be
subject to investigation. Violation of the state alcoholic beverage laws may
constitute a criminal offense, and violators may be subject to criminal
prosecution, incarceration and fines.
There are various classes of alcoholic beverage licenses under the Colorado
Liquor Code. On September 13, 1998, we received a retail gaming tavern liquor
license. The license is valid for a period of one year and we have submitted an
application to renew our license that is currently pending. In no event may any
person hold more than or have an interest in more than three retail gaming
tavern liquor licenses. Also, a person may not have an interest in more than
one type of liquor license, so that a person with an interest in Isle-Black Hawk
cannot have an interest in a hotel and restaurant liquor license. An
application for an alcoholic beverage license in Colorado requires notice,
posting and a public hearing before the local liquor licensing authority. The
Department's Liquor Enforcement Division also must approve the application.
Recent Developments. In 1997 the state legislature passed, but the Governor
of Colorado vetoed, a bill that would have permitted video lottery terminals in
dog and horse race tracks under certain terms and conditions. In 1998 and again
in 1999, similar bills were presented, but were not passed by the state
legislature. Video lottery terminals are games of chance, similar to slot
machines, in which the player pushes a button that causes a random set of
numbers or characters to be displayed on a video screen. Depending on the
display, the player may be awarded a ticket, which can be exchanged for cash or
playing credit. There can be no assurance that similar legislation permitting
video lottery terminals in dog and horse race tracks or other venues will not be
considered in the future.
The National Gambling Impact and Policy Commission issued a report on the
impact of gambling on the United States, the individual states and Native
American tribes. Additional federal regulation may occur due to the
Commission's findings. Any new federal or state legislation could have a
material adverse effect on us.
We currently hold gaming and liquor licenses that are subject to annual
renewal. While we believe that we will be able to renew these licenses, no
assurances can be given that such licenses will be renewed, or, if renewed, not
subject to additional material restrictions or subsequently revoked. The
failure or inability to obtain any such licenses in a timely manner, the
imposition of additional material restrictions in connection therewith, or the
subsequent revocation of any such license, would materially and adversely affect
us.
7
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ITEM 2. PROPERTIES.
The property upon which the casino is located consists of approximately 9.4
acres located at the southeast corner of Mill and Main streets in Black Hawk,
Colorado. We own approximately 8.7 acres and approximately 0.7 acres is leased
from a subsidiary of Isle of Capri Casinos, Inc. with an option to purchase.
On January 2, 1998, a subsidiary of Isle of Capri Casinos, Inc. acquired
approximately 0.7 acres of property contiguous to our property in order to
expand the entrance and signage of the casino. On January 2, 1998, we then
entered into a lease agreement with this subsidiary for their property. 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, we have the right to purchase
the property for $1,500,000 plus all interest and out-of-pocket costs incurred
in connection with the purchase and ownership of the land, less any payments
made by us as lessee.
ITEM 3. LEGAL PROCEEDINGS.
We are not party to any material litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER'S
MATTERS.
None
ITEM 6. SELECTED FINANCIAL DATA.
The following selected historical financial information has been derived
from the consolidated financial statements of the Company and should be read in
conjunction with the consolidated financial statements and notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
April 25, 1997
(date of inception)
Fiscal Year Ended through
April 25, 1999 April 26, 1998
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(In thousands)
<S> <C> <C>
Income Statement Data
Revenue.......................................... $22,046 $ -
Operating income................................. 21 -
Net loss......................................... (5,186) (2,032)
Balance Sheet Data
Total assets..................................... $98,263 $95,877
Long-term debt including current portion......... 76,522 75,000
Members' equity.................................. 7,787 12,973
</TABLE>
8
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ITEM 7. 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 for fiscal 1999 and fiscal 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. The following discussion focuses on Isle-Black
Hawk's four fiscal months of gaming operations during fiscal 1999.
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 only operated for
four months in fiscal 1999, 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
Fiscal Year Ended April 25, 1999
Total revenue for the fiscal year ended April 25, 1999 was $22.0 million,
which included $20.7 million of casino revenue and $1.3 million of food,
beverage and other revenue. Revenue does not reflect the retail value of any
complimentaries.
Casino operating expenses for the fiscal year ended April 25, 1999 totaled
$2.9 million, or 14.0% 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 $3.9 million for the
fiscal year ended April 25, 1999, which is at a rate consistent with Colorado's
gaming tax rate for the applicable fiscal year.
9
<PAGE>
Food, beverage and other expenses totaled $1.1 million for the fiscal year
ended April 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 81% for the fiscal year ended April 25, 1999.
Facilities expenses totaled $1.1 million for the fiscal year ended April
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 $8.7 million, or 40% of total
revenue, for the fiscal year ended April 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,
professional fees and property taxes.
Preopening expenses of $3.3 million for the fiscal year ended April 25,
1999 represent salaries, benefits, training, marketing and other
noncapitalizable costs, which were expensed in connection with the opening of
the Isle-Black Hawk.
Depreciation and amortization expense was $1.0 million for the fiscal year
ended April 25, 1999. These expenses relate to property and equipment.
Interest expense was $5.2 million for the fiscal year ended April 25, 1999,
net of capitalized interest of $4.8 million and interest income of $.8 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 $2.0 million, net of capitalized interest of $2.3 million
and interest income of $3.0 million, for the fiscal year ended April 26, 1998.
Liquidity and Capital Resources
At April 25, 1999, Isle-Black Hawk had cash and cash equivalents of $10.9
million, compared to $0.5 million at April 26, 1998. The increase in cash is
primarily a result of cash flow from operating activities and working capital,
and from the proceeds of our August 1997 financing, which was transferred from
restricted cash upon the completion of the casino. During the fiscal year ended
April 25, 1999, Isle-Black Hawk's operating activities provided $2.8 million of
cash.
Isle-Black Hawk invested $40.4 million in property and equipment in the
fiscal year ended April 25, 1999, primarily for the development of the casino,
which was under construction as of the beginning of the fiscal year and
commenced operations on December 30, 1998.
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. 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 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.
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.
10
<PAGE>
Isle-Black Hawk anticipates that additional capital improvements
approximating $1.1 million will be made during 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 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- --------------------------------------------------------------------
Isle-Black Hawk does not have any material exposure to market risk (or the
risk of loss arising from adverse changes in market rates and prices, such as
interest rates, foreign currency exchange rates and commodity prices). As of
April 25, 1999, Isle-Black Hawk did not have any interest rate derivative
instruments.
11
<PAGE>
ITEM 8. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Isle of Capri Black Hawk L.L.C.
Report of Independent Auditors............................................................................... 13
Consolidated Balance Sheets, April 25, 1999 and April 26, 1998............................................... 14
Consolidated Statements of Operations, Fiscal Year ended April 25, 1999 and Period from April 25, 1997
(date of inception) through April 26, 1998.............................................................. 15
Consolidated Statements of Members' Equity, Fiscal Year ended April 25, 1999 and Period from
April 27, 1997 (date of inception) through April 26, 1998............................................... 16
Consolidated Statements of Cash Flows, Fiscal Year ended April 26, 1999 and Period from April 25, 1997
(date of inception) through April 26, 1998.............................................................. 17
Notes to Consolidated Financial Statements................................................................... 18
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Members
Isle of Capri Black Hawk L.L.C.
We have audited the accompanying consolidated balance sheets of Isle of
Capri Black Hawk L.L.C. as of April 25, 1999 and April 26, 1998, and the related
consolidated statements of operations, members' equity and cash flows for the
year ended April 25, 1999 and the period from April 25, 1997 (date of inception)
through April 26, 1998. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Isle of Capri
Black Hawk L.L.C. at April 25, 1999 and April 26, 1998, and the consolidated
results of its operations and its cash flows for the year ended April 25, 1999
and the period from April 25, 1997 (date of inception) through April 26, 1998 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New Orleans, Louisiana
June 10, 1999
13
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
April 25, April 26,
1999 1998
-------------------- ----------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $10,917 $ 547
Accounts receivable....................................................... 310 1,031
Prepaid expenses and other assets......................................... 511 34
------- -------
Total current assets..................................................... 11,738 1,612
Property and equipment, net................................................. 80,377 40,942
Other assets:
Deferred financing costs, net of accumulated amortization of
$1,178 and $481, respectively........................................... 3,671 4,375
Restricted cash...................................................... 2,017 48,948
Prepaid deposits and other........................................... 460 -
------- -------
Total assets....................................................... $98,263 $95,877
======= =======
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
Current liabilities:
Current maturities of long-term debt................................. $ 754 $ -
Accounts payable - trade............................................. 2,528 4,602
Accounts payable - related parties........................................ 5,289 -
Accrued liabilities:
Interest................................................................ 1,707 1,688
Construction payable.................................................... 24 1,614
Payroll and related..................................................... 1,434 -
Property and other taxes................................................ 1,360 -
Progressive jackpots and slot club awards............................... 1,412 -
Other................................................................... 200 -
------- -------
Total current liabilities................................................ 14,708 7,904
Long-term debt, less current maturities..................................... 75,768 75,000
Members' equity:
Casino America of Colorado, Inc........................................... 3,645 7,121
Blackhawk Gold, Ltd....................................................... 4,142 5,852
------- -------
Total members' equity.................................................... 7,787 12,973
------- -------
Total liabilities and members' equity.................................... $98,263 $95,877
======= =======
</TABLE>
See notes to consolidated financial statements.
14
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
April 25, 1997
(date of inception)
Fiscal Year Ended through
April 25, 1999 April 26, 1998
-------------- --------------
<S> <C> <C>
Revenue:
Casino......................................................... $20,679 $ -
Food, beverage and other....................................... 1,367 -
------- -------
Total revenue.............................................. 22,046 -
Operating expenses:
Casino....................................................... 2,886 -
Gaming taxes................................................. 3,930 -
Food and beverage............................................ 1,108 -
Facilities................................................... 1,074 -
Marketing and administrative................................. 7,952 -
Management fees.............................................. 770 -
Preopening expenses.......................................... 3,320 -
Depreciation and amortization................................ 985 -
------- -------
Total operating expenses................................... 22,025 -
------- -------
Operating income................................................ 21 -
Interest expense, net of capitalized interest of $4,849 and
$2,320, respectively....................................... (6,057) (5,021)
Interest income................................................. 850 2,989
------- -------
Net loss........................................................ $(5,186) $(2,032)
======= =======
</TABLE>
See notes to consolidated financial statements.
15
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
Consolidated Statements of Members' Equity
(In thousands)
<TABLE>
<CAPTION>
Casino America of Blackhawk Total
Colorado, Inc. Gold, Ltd. Members' Equity
-------------- ---------- ---------------
<S> <C> <C> <C>
Balance, April 25, 1997
(date of inception)............................ $ - $ - $ -
Capital contribution - development costs............. 317 - 317
Capital contribution - cash.......................... 7,084 - 7,084
Capital contribution - land.......................... 100 7,504 7,604
Equity transfer...................................... 833 (833) -
Net loss............................................. (1,213) (819) (2,032)
------- ------- -------
Balance, April 26, 1998.............................. 7,121 5,852 12,973
Equity transfer...................................... (500) 500 -
Net loss............................................. (2,976) (2,210) (5,186)
------- ------- -------
Balance, April 25, 1999.............................. $ 3,645 $ 4,142 $ 7,787
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
16
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
April 25, 1998
(date of inception)
Fiscal Year Ended through
April 25, 1999 April 26, 1998
-------------- --------------
<S> <C> <C>
Operating activities:
Net loss.............................................................. $ (5,186) $ (2,032)
Adjustments to reconcile net loss to net cash provided by
Operating activities:
Depreciation and amortization..................................... 985 -
Amortization of deferred financing costs.......................... 704 481
Accounts receivable............................................... 721 (1,031)
Prepaid expenses and other assets................................. (493) (34)
Accounts payable & accrued expenses............................... 6,026 6,212
-------- --------
Net cash provided by operating activities............................. 2,757 3,596
Investing activities:
Purchase of property and equipment.................................... (40,395) (31,148)
Decrease (increase) in restricted cash................................ 46,931 (48,948)
Deposits and other.................................................... (444) -
-------- --------
Net cash provided by (used in) investing activities................... 6,092 (80,096)
Financing activities:
Proceeds from borrowings.............................................. 1,581 75,000
Principal payment on debt and cash paid for refinancing............... (59) (3,396)
Deferred financing costs.............................................. - (1,641)
Capital contribution received......................................... - 7,084
-------- --------
Net cash provided by financing activities............................. 1,522 77,047
Net increase in cash and cash equivalents............................. 10,371 547
Cash and cash equivalents at beginning of year........................ 547 -
-------- --------
Cash and cash equivalents at end of year.............................. $ 10,918 $ 547
======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest:............................................... $ 9,851 $ 5,172
Supplemental schedule of noncash investing and financing
activities:
Capital Contributions:
Land, net of mortgage of $396....................................... - 7,604
Financing costs..................................................... - 137
Property and equipment.............................................. - 180
Other:
Construction costs funded through accounts payable.................. 24 1,614
</TABLE>
See notes to consolidated financial statements.
17
<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. On August 20, 1997, pursuant to the Members
Agreement, Casino America of Colorado, Inc. purchased from Blackhawk Gold, Ltd.
a 4.2% ownership interest (the "Transferred Interest") in Isle-Black Hawk for
$700,000, and Blackhawk Gold, Ltd. had 180 days within which to reacquire all or
a portion of the Transferred Interest for $700,000, together with interest. In
addition, pursuant to the Members Agreement, Blackhawk Gold, Ltd. had the right
to sell up to an additional 4.8% ownership interest in Isle-Black Hawk to Casino
America of Colorado, Inc. (the "Put"), for up to $800,000, and to repurchase,
within 180 days, any ownership interest sold pursuant to the Put, with the
repurchase price being the price for which such ownership interest was sold,
together with interest. On November 13, 1997, pursuant to the Put, Casino
America of Colorado, Inc. purchased an additional .8% ownership interest from
Blackhawk Gold, Ltd. for $133,333. On February 16, 1998, pursuant to the Put,
Casino America of Colorado, Inc. acquired an additional 4.0% ownership interest
from Blackhawk Gold, Ltd. for $666,000, exhausting Blackhawk Gold, Ltd.'s right
to sell any additional ownership interest pursuant to the Put. Simultaneously,
Blackhawk Gold, Ltd. repurchased from Casino America of Colorado, Inc., a 4.0%
ownership interest out of the Transferred Interest for $714,000, which included
interest. On August 17, 1998 Blackhawk Gold, Ltd. exercised its right to
reacquire from Casino America of Colorado, Inc. 3.0% in Isle-Black Hawk out of
the 4.0% which was conveyed to Casino America of Colorado, Inc. on February 16,
1998, for $500,000 which included interest. As a result, following the
transfers discussed above, 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 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. Certain reclassifications have been made
to the prior-year financial statements to conform to the fiscal 1999
presentation.
18
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Cash equivalents
Isle-Black Hawk considers all highly liquid investments with a maturity at
the time of purchase of three months or less to be cash equivalents. At April
25, 1999, there were no cash equivalents.
Income Taxes
No provision for federal or state income taxes is recorded in the financial
statements, as income taxes are the responsibilities of the individual members.
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:
<TABLE>
<CAPTION>
Years
<S> <C>
Furniture, fixtures, and equipment.......................... 5
Buildings and improvements.................................. 25
</TABLE>
Interest capitalized during the fiscal year ended April 25, 1999, and the
period April 25, 1997 (date of inception) through April 26, 1998 totaled $4.8
million and $2.3 million, respectively. Depreciation expense for the fiscal
year ended April 25, 1999, totaled $1.0 million.
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 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, which contained approximately
$1.2 million at April 25, 1999, will be used for the development, construction
and opening of the casino by Isle-Black Hawk in Black Hawk, Colorado. Amounts in
the Completion Reserve Account, approximately $.8 million at April 25, 1999,
will be used in the event there are insufficient funds in the Construction
Disbursement Account to complete the casino.
19
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue and promotional allowances
Casino revenue is the net win from gaming activities, which is the
difference between gaming wins and losses. Casino revenues are net of accruals
for the anticipated payouts of progressive electronic gaming device jackpots.
Revenue does not include the retail amount of food, beverage, and other
items provided gratuitously to customers, which totaled $1.1 million for the
year ended April 25, 1999. The estimated cost of providing such complimentary
services, which is included in casino expense, was $1.0 million for the year
ended April 25, 1999.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense for the
year ended April 25, 1999 totaled $806,000.
New Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted in years beginning after June 15, 1999. Because Isle-
Black Hawk does not use derivatives, management does not anticipate that the
adoption of the new Statement will have a significant effect on its consolidated
results of operations or financial position.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities". The SOP is effective for years beginning after December 15, 1998,
and requires that start-up costs capitalized prior to adoption be written-off
and any future start-up costs be expensed as incurred. Management does not
anticipate that the adoption of the new Statement will have a significant effect
on its consolidated results of operations or financial position.
2. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
April 25, April 26,
1999 1998
-------------------- --------------------
<S> <C> <C>
Property and equipment: (In thousands)
Land and land improvements................. $14,604 $14,544
Buildings and improvements................. 61,441 -
Furniture, fixtures, and equipment......... 2,518 -
Construction in progress................... 2,799 26,398
------- -------
81,362 40,942
Less: accumulated depreciation............ 985 -
------- -------
$80,377 $40,942
======= =======
</TABLE>
20
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
the value:
Cash equivalents - The carrying amounts approximate fair value because of
the short maturity of these instruments.
Restricted cash - The carrying amounts approximate fair value because of
the short maturity of these instruments.
Long-term debt - The fair value of Isle-Black Hawk's long-term debt is
estimated based on whether the quoted market price of the underlying debt
issue or on the discounted cash flow of future payments utilizing current
rates available to Isle-Black Hawk for debt of similar remaining
maturities. Debt obligations with a short remaining maturity are valued at
the carrying amount.
The estimated carrying amounts and fair values of Isle-Black Hawk's financial
instruments are as follows:
<TABLE>
<CAPTION>
April 25, 1999 April 26, 1998
--------------------------- ------------------------------
Carrying Carrying
------------ --------------
Amount Fair Value Amount Fair Value
------------ ------------- --------------- -------------
(In thousands)
------------
<S> <C> <C> <C> <C>
Financial assets:
Cash equivalents $10,917 $10,917 $ 547 $ 547
Restricted cash 2,017 2,017 48,948 48,948
Financial liabilities:
First mortgage notes $75,000 $81,375 $75,000 $76,125
Other long-term debt 1,522 1,522 - -
</TABLE>
4. Long-term debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
April 25, 1997
(date of inception)
through
April 25, April 26,
1999 1998
------------------ -------------------
(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....................................... $ 1,522 $ -
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
------- -------
76,522 75,000
Less: current maturities.......................................................... 754 -
------- -------
Long-term debt.................................................................... $75,768 $75,000
======= =======
</TABLE>
21
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001...................................... 106.5%
2002...................................... 103.2%
2003 and thereafter....................... 100.0%
</TABLE>
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 construction project. The letter of
credit is secured by a deposit held in trust of $1.1 million, which was funded
by Isle of Capri Casinos, Inc. and the balance is secured by Isle of Capri
Casinos, Inc.'s open line of credit with the bank.
Substantially all of Isle-Black Hawk's assets are pledged as collateral for
long-term debt. At April 25, 1999, Isle-Black Hawk was in compliance with all
debt covenants.
The aggregate principal payments due on total long-term debt over the next
five fiscal years and thereafter are as follows:
<TABLE>
For the Fiscal Year Ending
(In thousands)
<S> <C>
2000.......................................$ 754
2001....................................... 768
2002....................................... -
2003....................................... -
2004....................................... -
Thereafter................................. 75,000
-------
$76,522
=======
</TABLE>
22
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Lease Commitments
Minimum rental obligations under all non-cancelable operating leases with
terms of one year or more as of April 25, 1999, are as follows:
<TABLE>
Fiscal Year Ending
(In thousands)
<S> <C>
2000.............................. $3,588
2001.............................. 3,588
2002.............................. 3,009
2003.............................. 1,235
</TABLE>
Rent expense for operating leases was approximately $1.8 million for the
year ended April 25, 1999.
6. Related Party Transactions
Completion Capital Commitment. Isle of Capri Casinos, Inc. had provided a
Completion Capital Commitment pursuant to which it had committed to contribute
to Isle-Black Hawk up to $5.0 million in the event that such amounts are
necessary to cause Isle-Black Hawk to commence operations on or before April 1,
1999, or if Isle-Black Hawk has not begun operating by such date. The
Commitment expired on December 30, 1998, upon the commencement of Isle-Black
Hawk's operations. No amounts were funded under this commitment.
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 will
manage the casino in exchange for a fee. The management fee will be 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 will utilize 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.
7. Preopening Expenses
Preopening expenses of $3.3 million in fiscal 1999 represent salaries,
benefits, training, marketing and other non-capitalizable costs necessary to
open the casino. These costs were initially capitalized and then expensed when
the related business commenced operations on December 30, 1998. From inception
through the date operations commenced, Isle-Black Hawk's sole business activity
was developing the casino.
23
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plan
Isle-Black Hawk has a defined-contribution, profit-sharing plan, including
401(k) plan provisions, covering substantially all of its employees. Isle-Black
Hawk's contribution expense related to this plan was approximately $3,277 for
the year ended April 25, 1999. Isle-Black Hawk's contribution is based on a
percentage of employee contributions and may include an additional discretionary
amount.
9. Selected Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
Fiscal Quarters Ended
1999
(In thousands)
July 26 October 25 January 24 April 25
<S> <C> <C> <C> <C>
Revenue.................................................. $ - $ - $ 4,667 $17,379
Operating income (loss).................................. - - (2,882) 2,903
Net loss................................................. (804) (470) (3,883) (29)
Fiscal Quarters Ended
1998
(In Thousands)
July 27 October 26 January 25 April 26
Revenue.................................................. $ - $ - $ - $ -
Operating income (loss).................................. - - - -
Net loss................................................. - (788) (1,243) (1)
</TABLE>
The third quarter of fiscal 1999 includes preopening expenses, a non-
recurring item, related to the opening of Isle-Black Hawk in December 1998
totaling $3.3 million.
24
<PAGE>
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
Our Managers and the Executive Officers of the Isle of Capri Black Hawk
L.L.C. and the directors and executive officers of Isle of Capri Black Hawk
Capital Corp. are set forth below:
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
Bernard Goldstein....................... 70 Chief Executive Officer of Isle of Capri
Black Hawk L.L.C. and of Isle of Capri Black
Hawk Capital Corp.
John M. Gallaway........................ 60 President and Chief Operating Officer of
Isle of Capri Black Hawk L.L.C. and of Isle
of Capri Black Hawk Capital Corp.; Manager
of Isle of Capri Black Hawk L.L.C.; Director
of Isle of Capri Black Hawk Capital Corp.
Allan B. Solomon........................ 63 Executive Vice President, General Counsel
and Secretary of Isle of Capri Black Hawk
L.L.C. and of Isle of Capri Black Hawk
Capital Corp.; Manager of Isle of Capri
Black Hawk L.L.C.; Director of Isle of Capri
Black Hawk Capital Corp.
Thomas Winn............................. 59 Vice President of Isle of Capri Black Hawk
L.L.C. and of Isle of Capri Black Hawk
Capital Corp.; Manager of Isle of Capri
Black Hawk L.L.C.; Director of Isle of Capri
Black Hawk Capital Corp.
Rexford A. Yeisley...................... 52 Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary of Isle of
Capri Black Hawk L.L.C. and of Isle of Capri
Black Hawk Capital Corp.
Timothy M. Hinkley...................... 43 Senior Vice President of Operations of Isle
of Capri Black Hawk L.L.C. and of Isle of
Capri Black Hawk Capital Corp.
Robert Fiore............................ 58 Vice President and General Manager of Isle
of Capri Black Hawk L.L.C. and of Isle of
Capri Black Hawk Capital Corp.
</TABLE>
Bernard Goldstein. Mr. Goldstein has been Chairman of the Board of Isle of
Capri Casinos, Inc. since June 1992 and Chief Executive Officer of Isle of Capri
Casinos, Inc. since September 1995. From June 1992 until February 1993 and from
September 1995 until December 1995, Mr. Goldstein was also President and Chief
Executive Officer of Isle of Capri Casinos, Inc. Mr. Goldstein has been active
in the development of the riverboat gaming industry in a number of states and
was Chairman of the Board of Steamboat Development Corporation and Steamboat
Southeast, Inc., both of which were involved in the first legalized riverboat
gaming ventures in the United States. In addition to his involvement in the
riverboat gaming industry, Mr. Goldstein has been involved in scrap metal
recycling since 1951 and barge-line transportation since 1960.
25
<PAGE>
John M. Gallaway. Mr. Gallaway has been President of Isle of Capri Casinos,
Inc. since December 1995 and Chief Operating Officer of Isle of Capri Casinos,
Inc. since July 1996. From July 1995 to November 1995, Mr. Gallaway was a
professor at the University of Houston. Mr. Gallaway was Deputy Managing
Director, Gaming, of Sun International, a company engaged in owning and
operating casinos and resorts, from September 1992 to August 1994. Prior to
that, from 1984 to 1992, Mr. Gallaway was President and General Manager of
TropWorld Casino and Entertainment Resort in Atlantic City and, from 1981 to
1984, he was President and General Manager of the Tropicana Hotel in Las Vegas.
Allan B. Solomon. Mr. Solomon has been Secretary and a director of Isle of
Capri Casinos, Inc. since June 1992, served as the Chief Financial Officer and
Treasurer of Isle of Capri Casinos, Inc. from June 1992 to October 1993, and
was Chairman of its Executive Committee from January 1993 to April 1995. Mr.
Solomon became General Counsel of Isle of Capri Casinos, Inc. in May 1994 and
became Executive Vice President in April 1995. Mr. Solomon was a partner in the
Florida law firm of Broad and Cassel from 1986 to May 1994.
H. Thomas Winn. Mr. Winn has been the Chairman, and CEO, and President of
Nevada Gold & Casinos, Inc. since January 1994. He has also been a Director of
Nevada Gold & Casinos, Inc. since 1994. Mr. Winn is also Chairman of Aaminex
Capital Corporation. Aaminex Capital Corporation is a financial consulting and
venture capital firm, involved in real estate, mining and environmental
activities. Mr. Winn has formed numerous investment-limited partnerships and
capital formation ventures.
Rexford A. Yeisley. Mr. Yeisley has been Chief Financial Officer of Isle of
Capri Casinos, Inc. since December 1995. Mr. Yeisley was Senior Vice President
and Chief Financial Officer of Six Flags Theme Parks, Inc. from 1991 to 1995,
and from 1987 to 1991, Mr. Yeisley was Vice President and Chief Financial
Officer of that company.
Timothy M. Hinkley. Mr. Hinkley has been Senior Vice President of Operations
for Isle of Capri Casinos, Inc. since April 1997. Mr. Hinkley was General
Manager and Vice President of the Isle of Capri Casino Crowne Plaza Resort in
Biloxi, Mississippi from May 1992 to April 1997. Prior to that, from 1990 to
1992, Mr. Hinkley was Vice President of Food and Beverage and Entertainment of
Steamboat Development Corporation, a riverboat gaming company in Iowa.
Robert S. Fiore. Mr. Fiore has been Vice President and General Manager of
Isle of Capri Black Hawk L.L.C. since August 1998. Mr. Fiore was General
Manager at the Belle of Baton Rouge Casino in Baton Rouge, LA for Argosy Gaming
from September 1997 to August 1998. Prior to that, from 1995 to 1997, Mr. Fiore
was President and General Manger of the Tropicana Resort and Casino in Las Vegas
for Aztar Corporation, and from 1989 to 1997, Mr. Fiore was President and
General Manager of the Ramada Express Hotel and Casino in Laughlin, NV for Aztar
Corporation.
26
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth a summary of the annual, long-term and other
compensation for services rendered to Isle of Capri Black Hawk L.L.C. by the
General Manager during fiscal 1999. None of our Executive Officers other than
Mr. Fiore has received compensation from Isle of Capri Casinos, Inc. for
services rendered to Isle of Capri Black Hawk L.L.C.
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Fiscal Year Securities Long Term All Other
Ended Underlying Compensation Compensation
Name and Principal Position April 25, Salary Bonus Options (#)(1) Awards (2)
--------------------------- -------- ------ ----- ------------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Robert S. Fiore..................
Vice President and General 1999 $114,159 $49,515 25,000 $12,379 $6,479
Manager
</TABLE>
_______________
(1) Mr. Fiore was granted options to purchase 25,000 shares of common stock of
Isle of Capri Casinos, Inc.
(2) Includes relocation expenses reimbursed to Mr. Fiore of $6,288 and life
insurance paid by the Company for Mr. Fiore of $191.
Option Grants for Last Fiscal Year
The following table sets forth information concerning options granted by Isle
of Capri Casinos, Inc. during fiscal 1999 to Mr. Fiore.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Potential Realizable
Number of % of Total Value of Assumed
Securities Options Exercise Annual Rates of Stock
Underlying Granted to or Base Price Appreciation
Options Employees in Price Expiration from Option Term (1)
Name Granted (#) Fiscal Year $/Share Date 5%($) 10%($)
---- ----------- ----------- ------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Fiore............. 25,000 1.9% $3.03 9/25/2008 $3,000 $6,750
</TABLE>
_________________
(1) The potential realizable dollar value of a grant is the product of: (a) the
difference between (i) the product of the per-share market price at the time of
the grant and the sum of 1 plus the stock appreciation rate compounded annually
over the term of the option (here, 5% and 10%) and (ii) the per-share exercise
price of the option and (b) the number of securities underlying the grant at
fiscal year-end.
Employment Contracts
In January 1999, Isle of Capri Casinos, Inc. entered into an employment
agreement with Robert S. Fiore, Vice President and General Manager of Isle of
Capri Black Hawk L.L.C. Pursuant to the employment agreement, Mr. Fiore
received an initial annual base salary of $155,000, subject to increases
determined by Isle of Capri Casinos, Inc.'s Board of Directors from time to
time. The employment agreement is for an initial term of two years, and is
automatically renewable for successive one-year periods thereafter, unless 90
days' written notice is given by either party. If Isle of Capri Casinos, Inc.
terminates the employment of the respective party to the employment agreement
without "cause" (as defined in the employment agreement), either during the
initial term or any renewal term or by written notice of nonrenewal, Mr. Fiore
would be entitled, upon releasing Isle of Capri Casinos, Inc. and its affiliates
from any and all claims, to receive his salary and employee benefits for one
year.
27
<PAGE>
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Isle of Capri Casinos, Inc. and Nevada Gold & Casinos, Inc. beneficially
own a 57% and 43% interest, respectively, in the Isle of Capri Black Hawk L.L.C.
The following table sets forth information as of July 15, 1999, with respect to
the beneficial ownership of Isle of Capri Casinos, Inc., and the stock by (i)
each manager of Isle of Capri Black Hawk L.L.C. (ii) each executive officer of
Isle of Capri Black Hawk L.L.C.; and (iii) all executive officers and managers
of Isle of Capri Black Hawk L.L.C. as a group.
<TABLE>
<CAPTION>
Number of
Shares of Isle
of Capri
Casinos, Inc. Percentage of
Common Isle of Capri
Stock Casinos, Inc.
Beneficially Common Stock
Name of Beneficial Owner Owned Outstanding
- ------------------------ ----- -----------
<S> <C> <C>
Bernard Goldstein.................................................... 3,737,952(1) 15.9%
John M. Gallaway..................................................... 162,500(2) *
Allan B. Solomon..................................................... 483,920(3) 2.0%
H. Thomas Winn....................................................... -- *
Rexford A. Yeisley................................................... 59,800(4) *
Timothy M. Hinkley................................................... 81,750(5) *
Robert S. Fiore...................................................... -- *
All current executive officers and Managers as a group (five persons)
4,525,922 17.9%
</TABLE>
Isle of Capri Black Hawk L.L.C. is the sole shareholder of Isle of Capri
Black Hawk Capital Corp.
* Less than one percent.
(1) Includes 116,500 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(2) Includes 141,500 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(3) Includes 201,500 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(4) Includes 57,500 shares that are issuable upon the exercise of stock options
that are exercisable within 60 days.
(5) Consists of 81,750 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
28
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We entered into an amended and restated management agreement with Isle of
Capri Casinos, Inc. dated as of July 29, 1997. The term of the Management
Agreement expires on December 31, 2096, unless terminated earlier in accordance
with the terms. In consideration of the services provided under the management
agreement, we have agreed to pay Isle of Capri Casinos, Inc., as manager, a fee
equal to 2% of capitalized revenues (as defined in the Management Agreement),
plus ten percent of Operating Income (as defined in the Management Agreement) up
to a maximum of 4% of revenues.
We entered into a License Agreement with Isle of Capri Casinos, Inc. dated
July 29, 1997 which will become effective on the Closing Date and pursuant to
which we have been granted a license to use the trademarks Isle of Capri(R),
Island Gold(R), Calypso's(R), Farraddays'(TM) and Isle Style(TM), the trademark
Isle of Capri parrot logo and future trademarks utilized by Isle of Capri
Casinos, Inc. at its other gaming facilities. No license fee is payable. The
license terminates upon the occurrence of certain events, such as termination of
the Management Agreement.
On January 2, 1998, a subsidiary of Isle of Capri Casinos, Inc. acquired
approximately 0.7 acres of property contiguous to our property in order to
expand the entrance and signage of the casino. On January 2, 1998, we entered
into a lease agreement for property. 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, we have the right to purchase the property for $1,500,000 plus all
interest and out-of-pocket costs incurred in connection with the purchase and
ownership of the land, less any payments made by us, as Lessee.
29
<PAGE>
PART IV
- -------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents Filed as Part of this Report.
--------------------------------------
1. Financial Statements.
--------------------
The following financial statements of Isle of Capri Black Hawk
L.L.C. and Isle of Capri Black Hawk Capital Corp. and reports of
independent auditors are included on pages 13 to 24 of this Form
10-K:
Isle of Capri Black Hawk L.L.C./Isle of Capri Black Hawk
Capital Corp.
Report of Independent Auditors
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Members' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Financial Statements Schedules.
------------------------------
None required or applicable.
3. Exhibits.
--------
A list of the exhibits included as part of this Form 10-K is set
forth in the Exhibit Index that immediately precedes such
exhibits, which is incorporated herein by reference.
(b) Reports on Form 8-K.
-------------------
None.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: July 22, 1999 By: /s/ John M. Gallaway
---------------------------------------------
John M. Gallaway, President, Chief Operating
Officer and Manager
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Dated: July 22, 1999 /s/ John M. Gallaway
---------------------------------------------
John M. Gallaway, President, Chief Operating
Officer and Manager
Dated: July 22, 1999 /s/ Rexford A. Yeisley
---------------------------------------------
Rexford A. Yeisley, Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: July 22, 1999 /s/ Allan B. Solomon
---------------------------------------------
Allan B. Solomon, Executive Vice President,
Secretary, General Counsel and Manager
Dated: July 22, 1999 /s/ H. Thomas Winn
---------------------------------------------
H. Thomas Winn, Vice President, Manager
31
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
* 1 Purchase Agreement among Isle of Capri Black
Hawk Capital Corp. and Jefferies & Company, Inc.
* 3.1 Articles of Organization of Isle of Capri Black
Hawk L.L.C.
* 3.2 Articles of Incorporation of Isle of Capri Black
Hawk Capital Corp.
* 3.3 Bylaws of Isle of Capri Black Hawk Capital Corp.
* 4.1 Indenture among Isle of Capri Black Hawk L.L.C.,
Isle of Capri Black Hawk Capital Corp. and IBJ
Whitehall Bank & Trust Company, as Trustee.
* 4.2 Form of 13% Series A First Mortgage Note due 2004
with Contingent Interest.
* 4.3 Cash Collateral and Disbursement Agreement among
IBJ Whitehall Bank & Trust Company, as the
Disbursement Agent, IBJ Whitehall Bank & Trust
Company, as the Trustee, CRSS Constructors, Inc.,
as the Independent Construction Consultant, Isle of
Capri Black Hawk L.L.C., as the Company and an
Issuer and Isle of Capri Black Hawk Capital Corp.,
as Co-Issuer.
* 4.4 Registration Rights Agreement among Isle of Capri
Black Hawk L.L.C., Isle of Capri Black Hawk Capital
Corp., and Jefferies & Company, Inc.
* 4.5 Deed of Trust to Public Trustee, Security
Agreement, Fixture Filing and Assignment of Rents,
Leases and Leasehold Interests, by Isle of Capri
Black Hawk L.L.C. and Isle of Capri Black Hawk
Capital Corp. to the Public Trustee of Gilpin
County, Colorado for the benefit of IBJ Whitehall
Bank & Trust Company.
* 4.6 Assignment of Rents, Leases and Leasehold Interests
by Isle of Capri Black Hawk L.L.C. and Isle of
Capri Black Hawk Capital Corp. for the benefit of
IBJ Whitehall Bank & Trust Company.
* 4.7 Security Agreement by Isle of Capri Black Hawk
L.L.C. and Isle of Capri Black Hawk Capital Corp.
for the benefit of IBJ Whitehall Bank & Trust
Company.
32
<PAGE>
* 4.8 Issuer Pledge Agreement by Isle of Capri Black
Hawk L.L.C. in favor of IBJ Whitehall Bank & Trust
Company.
* 4.9 Collateral Assignment by Isle of Capri Black Hawk
L.L.C. and Isle of Capri Black Hawk Capital Corp.
in favor of IBJ Whitehall Bank & Trust Company.
* 4.10 Pledge and Assignment by Isle of Capri Black Hawk
L.L.C. and Isle of Capri Black Hawk Capital Corp.
in favor of IBJ Whitehall Bank & Trust Company .
* 4.11 Consent to Assignment of Construction Agreement by
Haselden Construction, Inc. in favor of IBJ
Whitehall Bank & Trust Company.
* 4.12 Consent to Assignment of Management Agreement by
Isle of Capri Casinos, Inc. in favor of IBJ
Whitehall Bank & Trust Company.
* 4.13 Consent to Assignment of License Agreement by Isle
of Capri Casinos, Inc. in favor of IBJ Whitehall
Bank & Trust Company.
* 4.14 Manager Subordination Agreement by Isle of Capri
Casinos, Inc. in favor of IBJ Whitehall Bank &
Trust Company.
* 4.15 Environmental Indemnity by Isle of Capri Black
Hawk L.L.C. in favor of IBJ Whitehall Bank & Trust
Company.
* 4.16 Assignment of Trademark by Isle of Capri Black
Hawk L.L.C. and Isle of Capri Black Hawk Capital
Corp. in favor of IBJ Whitehall Bank & Trust
Company.
* 4.17 Assignment of Copyright by Isle of Capri Black
Hawk L.L.C. and Isle of Capri Black Hawk Capital
Corp. in favor of IBJ Whitehall Bank & Trust
Company.
* 4.18 Assignment of Patent by Isle of Capri Black Hawk,
L.L.C. and Isle of Capri Black Hawk Capital Corp.
in favor of IBJ Whitehall Bank & Trust Company.
* 10.1 Operating Agreement among Isle of Capri
Black Hawk L.L.C., Casino America of Colorado,
Inc. and Blackhawk Gold, Ltd.
* 10.2 Members Agreement between Casino America of
Colorado, Inc. and Blackhawk Gold, Ltd.
33
<PAGE>
* 10.3 Management Agreement between Isle of Capri
Casinos, Inc. and Isle of Capri Black Hawk L.L.C.
* 10.4 License Agreement between Isle of Capri
Casinos, Inc. and Isle of Capri Black Hawk L.L.C.
* 10.5 Land Purchase Contract between Roman Entertainment
Corporation of Colorado and Isle of Capri Casinos,
Inc.
* 10.6 Exchange Commitment Letter between City of Black
Hawk and Blackhawk Gold, Ltd.
* 10.7 Design/Build Agreement between Haselden
Construction, Inc. and Isle of Capri Black Hawk
L.L.C.
* 10.8 Subdivision Agreement to be entered into between
the City of Black Hawk and Isle of Capri Black
Hawk L.L.C.
* 10.9 Lease Agreement dated January 2, 1998 by and
between Casino America of Colorado, Inc. and Isle
of Capri Black Hawk L.L.C.
10.10 Employment Agreement dated January 6, 1999 between
Isle of Capri Casinos, Inc. and Robert S. Fiore.
10.11 Promissory Note dated May 26, 1999 by and between
Isle of Capri Black Hawk L.L.C. and Isle of Capri
Casinos, Inc.
27 Financial Data Schedule
______________________
* Filed as an exhibit to Isle of Capri Black Hawk L.L.C.'s and Isle of Capri
Black Hawk Capital Corp.'s Registration Statement on Form S-4 (registration
number 333-38093), and incorporated into Isle of Capri Black Hawk L.L.C.'s
and Isle of Capri Black Hawk Capital Corp.'s Form 10-K for the year ended
April 26, 1998, by reference.
34
<PAGE>
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 6th
---
day of January, 1999 between Isle of Capri Casinos, Inc., a Delaware corporation
---------
(the "Company") and Robert S. Fiore ("Employee").
---------------
In consideration of the mutual promises of this Agreement, the Company and
Employee agree as follows:
1. Effective Date. This Agreement shall be effective as of the date
--------------
hereof.
2. Employment.
----------
(a) Term. The Company hereby employs Employee, and Employee accepts
----
such employment and agrees to perform services for the Company and/or its
subsidiaries, for an initial period of two (2) years from and after the
---
Effective Date of this Agreement (the "Initial Term") and, unless either party
gives written notice to the other party at least ninety (90) days before the end
of the Initial Term or of any Renewal Term, for successive one-year periods (the
"Renewal Terms"), unless terminated at an earlier date in accordance with
Section 5 of this Agreement (the Initial Term and the Renewal Terms together
referred to as the "Term of Employment").
(b) Service with Company. During the Term of Employment, Employee
--------------------
agrees to perform reasonable employment duties as the Board of Directors of the
Company and/or its subsidiaries shall assign to him from time to time. Employee
also agrees to serve, for any period for which he is elected as an officer of
the Company and/or its subsidiaries; provided, however, that Employee shall not
be entitled to any additional compensation for serving as an officer of the
Company and/or its subsidiaries. From and after the Effective Date, Employee
shall continue to be an executive officer of the Company with the title of Vice
----
President and General Manager.
- ------------------------------
(c) Performance of Duties. Employee agrees to serve the Company
---------------------
and/or its subsidiaries faithfully and to the best of his ability and to devote
substantially all of his time, attention and efforts to the business and affairs
of the Company and/or its subsidiaries during the Term of Employment.
(d) Compensation. During the Term of Employment, the Company and/or
------------
its subsidiaries shall pay to Employee as compensation for services to be
rendered hereunder an aggregate base salary of $155,000 per year, payable in
-------
equal monthly, or more frequent payments, subject to increases, if any, as may
be determined by the Company's Board of Directors. Employee shall also be
eligible to participate in any stock option plans of the Company and/or its
subsidiaries. In addition to the base salary, any bonuses, and participation in
stock option plans, Employee shall be eligible to participate
1
<PAGE>
in an employee benefit plans or programs of the Company and/or its subsidiaries
as are or may be made generally available to employees of the Company or of its
subsidiaries. The Company and/or its subsidiaries will pay or reimburse Employee
for all reasonable and necessary out-of-pocket expense incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's and/or its subsidiaries
policies for expense verification.
3. Confidentiality and Non-competition.
-----------------------------------
(a) Ownership. Employee agrees that all inventions, copyrightable
---------
material, business and/or technical information, marketing plans, customer lists
and trade secrets which arise out of the performance of this Agreement are the
property of the Company and/or its subsidiaries.
(b) Non-competition. Employee agrees to the following covenant not
---------------
to compete beginning on the effective date of this Agreement and continuing
until one year after termination of his employment relationship with the
Company:
Employee agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee,
consultant, independent contractor, or more than 5% equity
holder of any entity) with the Company or any of its
subsidiaries in any way concerning the ownership,
development or management of any gaming operation or
facility within a 75-mile radius of any gaming operation or
facility with respect to which the Company or any of its
subsidiaries owns, renders or proposes to render consulting
or management services.
(c) Confidentiality. Except as is consistent with Employee's duties
---------------
and responsibilities within the scope of his employment with the Company and/or
the subsidiaries, Employee agrees to keep confidential indefinitely, and not to
use or disclose to any unauthorized person, information which is not generally
known and which is proprietary to the Company or any subsidiary, including all
information that the Company or any subsidiary treats as confidential,
("Confidential Information"). Upon termination of Employee's employment,
Employee will promptly turn over to the Company all software, records, manuals,
books, forms, documents, notes, letters, memoranda, reports, data, tables,
compositions, articles, devices, apparatus, marketing plans, customer lists and
other items that disclose, describe or embody Confidential Information including
all copies of the Confidential Information in his possession, regardless of who
prepared them.
4. Remedies. Employee understands that if he fails to fulfill his
--------
obligations under this Agreement, the damages to the Company and/or its
subsidiaries would be very
2
<PAGE>
difficult to determine. Therefore, in addition to any other rights or remedies
available to the Company at law, in equity, or by statute, Employee hereby
consents to the specific enforcement of this Agreement by the Company through an
injunction or restraining order issued by the appropriate court.
5. Termination or Change of Control.
--------------------------------
(a) Grounds for Termination. The Term of Employment set forth in
-----------------------
Section 2(a) shall terminate prior to its expiration in the event that at any
time during such term:
(i) The Board of Directors of the Company delivers notice of
termination for "cause" to Employee. For purposes of this
section, "cause" shall mean any dishonesty, disloyalty,
material breach of corporate policies, gross misconduct on
the part of Employee in the performance of Employee's
duties hereunder or a violation of the non-competition or
confidentiality provision of this agreement. If Employee
is terminated for cause, there shall be no severance paid
to Employee.
(ii) Employee shall die or become disabled as determined in
good faith by the Board of Directors of the Company.
(iii) The Company for any reason terminates the Term of
Employment.
(b) Severance. If Employee dies or becomes disabled, or if the
----------
Company terminates the Term of Employment (by either terminating Employee's
employment or by giving the notice described in Section 2(a) to prevent a
Renewal Term) without "cause" (as defined above), then, providing that Employee
signs a General Release in a form acceptable to the Company that releases the
Company and its affiliated entities from any and all claims that Employee may
have against them, Employee shall be entitled to continue to receive his salary
and, to the extent legally permissible, employee benefits for a period of 12
months from and after such termination or until new employment begins, which
ever occurs first. In lieu of monthly payments, a lump sum award may be
authorized by the Board of Directors. If Employee dies or becomes disabled,
Employee shall also be entitled to a lump sum payment equal to the average of
the last 3 years bonus payment inclusive of deferred amounts. In the event of
termination of employment without "cause", any payment of an amount based upon
prior bonus payments shall be subject to the discretion of the Board of
Directors. Except as provided above, Employee shall not be entitled to any
compensation beyond the date of the termination of the Term of Employment.
Health and welfare benefits shall continue for
3
<PAGE>
Employee (with employee contribution) ending with the later of salary
continuation payments or the end of the original Term of Employment.
Employee shall be provided out-placement service with a mutually
agreed out-placement firm or service at the reasonable expense of the Company.
Vesting of stock options and any/all deferred bonuses due shall occur in the
event of death or disability and in the event of other termination such vesting
shall be determined by the Board in its sole discretion.
(c) Change In Control. A change in control of the Company defined as
-----------------
its sale, acquisition, merger or buyout to an unaffiliated person that has
significant effect or a reduction in the responsibilities, position or
compensation of Employee or if Employee is required to move the location of his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the change of control will entitle Employee to the
following severance:
(i) 12 month's salary paid as salary continuation plus a lump
sum payment equal to the average of the previous 3 years
bonus payment inclusive of deferred amounts. Salary
continuation shall terminate if and when Employee begins
new employment during the period of salary continuation.
(ii) Health and welfare benefits shall be fully paid by the
Company and run concurrently with salary continuation.
(iii) Vesting of stock options shall become fully accelerated
and exercisable by the Employee at the time of change of
control. Unexercised options will be cancelled on the
ninety-first calendar day following the end of salary
continuation.
(iv) All deferred bonuses will be paid upon a change of
control.
(v) Employee shall be provided out-placement services with a
mutually agreed upon out-placement firm or service at the
reasonable expense of the Company.
6. Miscellaneous.
-------------
(a) Successors and Assigns. This Agreement is binding on and inures
----------------------
to the benefit of the Company's successors and assigns. The Company may assign
this Agreement in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business. This Agreement
may not be assigned by Employee.
4
<PAGE>
(b) Modification, Waivers. This Agreement may be modified or amended
---------------------
only by a writing signed by the Company and Employee. The Company's failure, or
delay in exercising any right, or partial exercise of any right, will not waive
any provision of this Agreement or preclude the Company from otherwise or
further exercising any rights or remedies hereunder, or any other rights or
remedies granted by any law or any related document.
(c) Governing Law and Jurisdiction. The laws of Mississippi will
------------------------------
govern the validity, construction, and performance of this Agreement. Any legal
proceeding related to this Agreement will be brought in a Mississippi court.
Both the Company and Employee hereby consent to the exclusive jurisdiction of
that court for this purpose.
(d) Captions. The headings in this Agreement are for convenience
--------
only and do not affect the interpretation of this Agreement.
(e) Severability. To the extent any provision of this Agreement
------------
shall be invalid or enforceable with respect to Employee, it shall be considered
deleted here from with respect to Employee and the remainder of such provision
and this Agreement shall be unaffected and shall continue in full force and
effect. In furtherance to and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law with respect to Employee, then such provision shall be
construed to cover only that duration, extent or activities which are validly
and enforceably covered with respect to Employee. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its expressed terms) possible
under applicable laws.
(f) Entire Agreement. This Agreement supersedes all previous and
----------------
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters herein or therein, including without
limitation, any policy of personnel manuals of the Company.
(g) Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and sent by registered first-
class mail, postage prepaid, and shall be deemed delivered upon hand delivery or
upon mailing (postage prepaid and by registered or certified mail) to the
following address:
If to the Company, to:
Isle of Capri Casinos, Inc.
711 Washington Loop
5
<PAGE>
Biloxi MS 39530
If to the Employee, to:
768 Ridgeside Drive
Golden CO 80401
These addresses may be changed at any time by like notice.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed in
a manner appropriate for such party as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By:_____________________________________________
"EMPLOYEE"
________________________________________________
6
<PAGE>
EXHIBIT 10.11
PROMISSORY NOTE
---------------
$5,000,000 May 26, 1999
Biloxi, Mississippi
FOR VALUE RECEIVED, Isle of Capri Black Hawk, L.L.C., a Colorado limited
liability company, ("Maker"), promises to pay to the order of Isle of Capri
Casinos, Inc., a Delaware corporation ("Lender"), in lawful money of the United
States of America, in immediately available funds, at such place as the holder
hereof may from time to time designate, or in the absence of such designation,
at the office of the Lender, 711 Washington Loop, Biloxi, Mississippi 39530, the
principal sum of FIVE MILLION DOLLARS ($5,000,000.00), or the aggregate unpaid
principal amount of all advances made to Maker pursuant to this Note, whichever
is less, plus interest thereon from the date of such advances, in like money, in
accordance with the following terms and provisions:
1. Lender hereby agrees to loan to Maker up to $5,000,000.00 to be loaned
in more than one advances (each, an "Advance") as entered on the Schedule of
Advances attached hereto as Schedule A (such borrowing, in the aggregate, the
"Loan"). Each Advance shall bear interest at the Interest Rate from and
including the date the proceeds of such Advance are advanced (such date the
"Funding Date" of such Advance) through the date of payment.
2. Maker shall repay the Loan on demand. In the event Maker refinances
the 13% First Mortgage Notes due 2004 with Contingent Interest, then Maker shall
prepay all amounts due under this Note at the time of any such refinancing.
3. The Interest Rate means, as to each Advance, an interest rate of 11
1/4% per annum. Interest at the foregoing rate shall accrue and be paid in cash
quarterly on the first day of each calendar quarter.
4. Maker hereby authorizes Lender to endorse on the Schedule of Advances
annexed to this Note all Advances made to the Maker and all payments of
principal amounts in respect of such Advances, which endorsements shall, in the
absence of manifest error, be conclusive as to the outstanding principal amount
of all Advances; provided, however, that the failure to make such notation with
respect to any Advances or payment shall not limit or otherwise affect the
obligations of Maker.
5. This Note is unsecured.
<PAGE>
6. If any default occurs in the payment of any principal, interest or any
other sums when due hereunder, and such default continues for a period of twenty
(20) days after written notice thereof to Maker, then the outstanding principal
amount of the Loan, any interest accrued thereon from time to time, and any
other sums then remaining unpaid hereunder, at the option of the holder hereof
and without notice, shall become immediately due and payable. Failure to
exercise any such option shall not constitute a waiver of the right to exercise
the same at a later time or in the event of any subsequent default.
7. Maker and all endorsers, guarantors, hereby waive to the fullest
extent permitted by law presentment, demand, protest, notice of protest, notice
of dishonor and notice of any other kind in connection with this Note.
8. Maker agrees to pay all costs and out-of-pocket expenses (including,
but not limited to, reasonable attorneys' fees and expenses) incurred by Lender
in connection with the collection or enforcement of this Note.
9. This Note shall be construed in accordance with and governed by the
internal laws and decisions of Mississippi, without giving effect to Mississippi
choice of law principles.
10. The parties hereto intend and believe that each provision of this Note
complies with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of any
provision or provisions of this Note is found by a court of law to be in
violation of any applicable local, state or federal ordinance, statute law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Note to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that it or they are legal, valid and
enforceable, that the remainder of this Note shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained herein, and that the rights, obligations and
interest of Maker and holder hereof under the remainder of this Note shall
continue in full force and effect.
11. No modification, waiver, amendment, discharge or change of this Note
shall be valid unless the same is in writing and signed by the party against
which the enforcement of such modification, waiver, amendment, discharge or
change is sought.
12. Time is hereby declared to be of the essence of this Note and of every
part hereof.
2
<PAGE>
13. This Note shall inure to the benefit of and shall be binding on the
parties hereto and their respective successors and assigns. Any reference to the
Lender shall be deemed to include and apply to every subsequent holder of this
Note.
IN WITNESS WHEREOF, Maker has caused this Note to be executed and delivered
as of the date first above written.
MAKER:
ISLE OF CAPRI BLACK HAWK, L.L.C.
By:_____________________________
Name: Allan B. Solomon
Title: Authorized Officer
Address for Notice:
Isle of Capri Black Hawk
401 Main Street
Black Hawk, CO 80422
3
<PAGE>
SCHEDULE A
----------
Schedule of Advances
--------------------
<TABLE>
<CAPTION>
Total
Date Amount Amount Loaned
- ---- ------ -------------
<S> <C> <C>
As of May 26, 1999 $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
__________________ $_________ $____________
</TABLE>
4
<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 NOTES TO SAID
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-25-1999 APR-26-1998
<PERIOD-START> APR-27-1998 APR-25-1997
<PERIOD-END> APR-25-1999 APR-26-1998
<CASH> 10,917 547
<SECURITIES> 0 0
<RECEIVABLES> 310 1,031
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 11,738 1,612
<PP&E> 80,377 40,942
<DEPRECIATION> 985 0
<TOTAL-ASSETS> 98,263 95,877
<CURRENT-LIABILITIES> 14,708 7,904
<BONDS> 75,768 75,000
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 7,787 12,973
<TOTAL-LIABILITY-AND-EQUITY> 98,263 95,877
<SALES> 0 0
<TOTAL-REVENUES> 22,046 0
<CGS> 0 0
<TOTAL-COSTS> 7,924 0
<OTHER-EXPENSES> 14,101 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (6,057) (5,021)
<INCOME-PRETAX> (5,186) (2,032)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,186) (2,032)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,186) (2,032)
<EPS-BASIC> 0.00 0.00
<EPS-DILUTED> 0.00 0.00<F1>
<FN>
<F1>INCLUDES BONDS PAYABLE OF $75 MILLION PLUS OTHER LONG-TERM DEBT
</FN>
</TABLE>
