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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 29, 1995
(Date of earliest event reported)
ALLIANCE GAMING CORPORATION
a Nevada corporation
(Exact name of registrant as specified in its charter)
Nevada 0-4281: 88-0104066
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4380 Boulder Highway
Las Vegas, Nevada 89121
(Address of principal executive offices, including zip code)
(702) 435-4200
(Registrant's telephone number, including area code)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Audited Financial Statements of Rainbow Casino-Vicksburg
Partnership, L.P.
Balance Sheets as of December 31, 1994 and July 15, 1994 and
Statement of Operations, Statement of Partners' Capital
(Deficit), and Statement of Cash Flows for the period from
February 19, 1993 (inception) through December 31, 1994.
Attached are supplemental materials for Item 7(a) to
the Form 8-K filed by Alliance Gaming Corporation (the
"Company") on April 13, 1995.
(b) Unaudited Pro Forma Information
Attached are supplemental materials for Item 7(b) to the
Form 8-K filed by the Company on April 13, 1995, consisting
of certain pro forma information and accompanying notes.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Alliance Gaming Corporation
Dated: April 17, 1995 By: /s/ Steve Greathouse
Name: Steve Greathouse
Title: President and CEO
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EXHIBIT INDEX
(a) Audited Financial Statements of Rainbow Casino-Vicksburg
Partnership, L.P.
Balance Sheets as of December 31, 1994 and July 15, 1994 and
Statement of Operations, Statement of Partners' Capital
(Deficit), and Statement of Cash Flows for the period
February 19, 1993 (inception) through December 31, 1994.
Attached are supplemental materials for Item 7(a) to
the Form 8-K filed by the Company on April 13, 1995.
(b) Unaudited Pro Forma Information
Attached are supplemental materials for Item 7(b) to the
Form 8-K filed by the Company on April 13, 1995, consisting
of certain pro forma information and accompanying notes.
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Report of Independent Auditors
The Partners
Rainbow Casino Vicksburg Partnership, L.P.
We have audited the accompanying balance sheets of Rainbow Casino
Vicksburg Partnership, L.P. as of July 15, 1994 and December 31,
1994 and the related statements of operations, partners' capital
(deficit), and cash flows for the period from February 19, 1993
(inception) through December 31, 1994. 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 financial position
of Rainbow Casino Vicksburg Partnership, L.P. at July 15, 1994
and December 31, 1994, and the results of operations and its cash
flows for the period from February 19, 1993 (inception) through
December 31, 1994 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
March 15, 1995, except for Note 6
as to which the date is March 29, 1995
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Rainbow Casino Vicksburg Partnership, L.P.
Balance Sheets
December 31 July 15
1994 1994
Assets
Current assets:
Cash $ 1,220,880 $ 1,031,814
Accounts receivable 30,801 --
Inventories 14,841 28,855
Prepaid expenses 89,667 198,197
Total current assets 1,356,189 1,258,866
Property and equipment:
Land 24,500 24,500
Land improvements 4,249,626 3,712,672
Gaming facility and related
improvements 4,113,407 4,091,422
Furniture and gaming equipment 6,047,601 5,997,931
Construction in process 159,763 145,659
14,594,897 13,972,184
Less accumulated depreciation
and amortization 834,754 4,800
13,760,143 13,967,384
Other assets:
Deferred licensing costs, net of
accumulated amortization of
$71,844 at December 31, 1994
and $0 at July 15, 1994 84,906 156,750
Other assets 426,134 256,125
511,040 412,875
Total assets $15,627,372 $15,639,125
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December 31 July 15
1994 1994
Liabilities and partners'
capital (deficit)
Current liabilities:
Notes payable $ 179,824 $ 258,403
Accounts payable 730,352 3,919,039
Accrued expenses 1,484,378 347,475
Due to general partner 46,501 --
Accrued royalties and management
fee due to related party 532,398 785,698
Current portion of long-term debt 2,993,836 2,617,186
Current portion of capital
lease obligation 34,265 37,762
Total current liabilities 6,001,554 7,965,563
Long-term debt, less
current portion 13,152,691 10,479,613
Capital lease obligation, less
current portion 151,549 166,306
Partners' capital (deficit):
General partner (2,052,735) (1,664,400)
Limited partners (1,625,687) (1,307,957)
(3,678,422) (2,972,357)
Total liabilities and
partners' capital (deficit) $15,627,372 $15,639,125
See accompanying notes.
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Rainbow Casino Vicksburg Partnership, L.P.
Statement of Operations
Period from February 19, 1993 (inception)
through December 31, 1994
Revenue:
Casino $ 9,797,593
Food and beverage 23,501
Total revenue 9,821,094
Operating expenses:
Casino 3,883,914
Food and beverage 10,458
Gaming taxes 1,524,001
General and administrative 794,639
Marketing and promotion 873,402
Management fee - related party 45,832
Depreciation and amortization 906,598
Royalty fees 1,670,120
Other 172,173
Preopening costs 2,802,090
Total operating expenses 12,683,227
Operating loss (2,862,133)
Interest expense 750,504
Net loss $(3,612,637)
See accompanying notes.
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Rainbow Casino Vicksburg Partnership, L.P.
Statement of Partners' Capital (Deficit)
Period from February 19, 1993 (inception)
through December 31, 1994
Total
Partners'
General Limited Capital
Partner Partners (Deficit)
Partners' capital at $ - $ - $ -
February 19, 1993
Contribution of liabilities
in excess of assets (65,785) - (65,785)
Net loss for period from
inception through
July 15, 1994 (1,598,615) (1,307,957) (2,906,572)
Partners' capital
(deficit) at July 15,
1994 (1,664,400) (1,307,957) (2,972,357)
Net loss for period from
July 16, 1994 through
December 31, 1994 (388,335) (317,730) (706,065)
Partners' capital
(deficit) at December
31, 1994 $(2,052,735) $(1,625,687) $(3,678,422)
See accompanying notes.
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Rainbow Casino Vicksburg Partnership, L.P.
Statement of Cash Flows
Period from February 19, 1993 (inception)
through December 31, 1994
Operating activities
Net loss $(3,612,637)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 906,598
Preopening costs 2,802,090
Changes in operating assets and liabilities:
Accounts receivable (30,801)
Inventories 14,014
Prepaid expenses 108,530
Other assets (170,009)
Accounts payable 730,352
Accrued expenses 1,233,107
Due to general partner 46,501
Accrued royalties and management fee due
to related party (253,300)
Net cash provided by operating activities 1,774,445
Investing activities
Purchases of property and equipment (70,466)
Net cash used in investing activities (70,466)
Financing activities
Cash contributions - general partner 835,000
Payments of long-term debt and capital lease
obligation (1,159,108)
Payments of notes payable (158,991)
Net cash used in financing activities (483,099)
Net increase in cash 1,220,880
Cash at beginning of period -
Cash at end of period $ 1,220,880
See accompanying notes.
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Rainbow Casino Vicksburg Partnership, L.P.
Notes to Financial Statements
December 31, 1994
1. Description of Business and Accounting Policies
Rainbow Casino Vicksburg Partnership, L.P. (the Partnership) was
formed on February 19, 1993 as a Mississippi limited partnership
to develop a dockside gaming facility in Vicksburg, Mississippi.
The initial partners consisted of Rainbow Casino Corporation as
the general partner with a 55% partnership interest and the two
individual shareholders of Rainbow Casino Corporation as the
limited partners each with 22.5% limited partnership interest.
Prior to July 12, 1994, the Partnership was inactive. On July
12, 1994, the general partner made the initial contribution to
the Partnership of certain assets and liabilities with a net book
value of $(65,785). Also on that date, the Partnership received
its gaming license and commenced operations. On July 15, 1994,
United Gaming Rainbow, a wholly owned subsidiary of Alliance
Gaming Corporation (Alliance), purchased the limited partnership
interests of the Partnership from the two limited partners. (See
Note 2.)
Net income (loss) is allocated to the partners based on their
ownership interests.
Inventories
Inventories, which consist principally of beverage and operating
supplies, are stated at the lower of cost or market using the
first-in, first-out method.
Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the
following estimated useful lives:
Land improvements 20 years
Gaming facility and related improvements 15 years
Furniture and gaming equipment 3 - 7 years
Included in property and equipment are capitalized interest costs
of approximately $114,000 incurred in connection with the
construction of the gaming facility.
Revenue and Complimentaries
The Partnership recognizes as casino revenue the net win from
gaming activities, which is the difference gaming wins and
losses.
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Rainbow Casino Vicksburg Partnership, L.P.
Notes to Financial Statements (continued)
1. Description of Business and Accounting Policies (continued)
Revenues exclude the retail value of food and beverage provided
to customers on a complimentary basis. The estimated costs of
these complimentaries were $119,726 for the period from inception
through December 31, 1994. These amounts are included in casino
expenses in the accompanying statement of operations.
Preopening Costs
Preopening costs, consisting primarily of labor, training, and
marketing incurred prior to the opening of the gaming facility,
were expensed upon commencement of operations of the gaming
facility.
Deferred Licensing Costs
Licensing costs consist primarily of legal fees and payments to
the State of Mississippi in connection with obtaining the
Partnership's initial gaming license. These costs are amortized
using the straight-line method over the first 12 months of
operations.
Income Taxes
Income taxes are the liability of the individual partners and not
of the Partnership. Therefore, no provision for income taxes has
been made in the accompanying financial statements.
2. Management Agreement
On October 28, 1993, the Partnership entered into a perpetual
management agreement with Mississippi Ventures, Inc. (Manager), a
wholly owned subsidiary of Alliance, to manage the operations of
the gaming facility. The management agreement provides for
reimbursement of the Manager's expenses of approximately $470,000
incurred prior to opening. Subsequent to opening, the management
agreement provides for compensation to the Manager of $100,000
per year, payable in equal monthly installments and, if
performance meets certain criteria defined by the management
agreement, an additional bonus of 2% to 4% of earnings before
interest, taxes, depreciation, amortization and royalties.
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Rainbow Casino Vicksburg Partnership, L.P.
Notes to Financial Statements (continued)
2. Management Agreement (continued)
On the earlier of either the three-year anniversary of the
management agreement or the termination of the management
agreement, the Partnership is required to pay the Manager
$275,000. This amount is included in accrued royalties and
management fee due to related parties in the accompanying balance
sheets.
3. Long-Term Debt
Long-term debt consisted of the following
December 31 July 15
1994 1994
7.50% note payable to Hospitality
Franchise Systems, Inc. in
monthly installments of $153,383
including interest, through August
2001, collateralized by substan-
tially all assets, excluding
gaming equipment, and a pledge
of 51% of the stock of Rainbow
Casino Corporation $ 9,539,870 $ 7,141,412
7.50% mandatory redeemable
special partnership interest,
payable to Alliance in monthly
installments of $49,170 including
interest, through August 2001 3,250,000 1,918,006
Prime plus 4% (12.5% at December
31, 1994) notes payable to vendor
in monthly installments of
$104,624 plus interest, through
July 1997, collateralized by
gaming equipment 3,144,797 3,766,456
Prime plus 2% (10.5% at December
31, 1994) note payable to vendor
in monthly installments of
$11,770 plus interest, through
June 1996, collateralized by
certain equipment 211,860 270,925
16,146,527 13,096,799
Less current portion 2,993,836 2,617,186
$13,152,691 $10,479,613
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Rainbow Casino Vicksburg Partnership, L.P.
Notes to Financial Statements (continued)
3. Long-Term Debt (continued)
The mandatory redeemable special partnership interest is payable
to Alliance. This special limited partnership interest has an
irrevocable right to mandatory monthly payments on a pro rata
basis with payments required by the 7.5% note payable. In
connection with this financing, the Partnership agreed to provide
the lender a perpetual royalty of 5.2% from the gross revenues of
the gaming facility. At December 31, 1994, the Partnership has
not made any payments required by the mandatory redeemable
special partnership interest and has not paid the required
royalties for the months of October, November and December 1994.
Royalties under this agreement were approximately $500,000 for
the period from inception through December 31, 1994.
The aggregate principal payments due on long-term debt over the
next five years and thereafter are as follows:
1995 $ 2,993,836
1996 2,973,144
1997 2,408,713
1998 1,912,687
1999 2,061,174
Thereafter 3,796,973
$16,146,527
In connection with obtaining utilities for the gaming facility,
the Partnership had an outstanding irrevocable standby letter of
credit of $150,000 at December 31, 1994, which was fully
collateralized by a certificate of deposit of $150,000.
See Note 6 for further information regarding long-term debt.
4. Commitments
On March 15, 1994, the Partnership entered into a marketing and
services agreement with Hospitality Franchise Systems, Inc. This
agreement provides for a permanent and unconditional royalty
obligation to Hospitality Franchise Systems, Inc. of 12% of
annual gaming revenues up to $40,000,000; 11% of annual gaming
revenues in excess of $40,000,000 up to $50,000,000; and 10% of
annual gaming revenues in excess of $50,000,000. Royalties under
this agreement were approximately $1,200,000 for the period from
inception through December 31, 1994.
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Rainbow Casino Vicksburg Partnership, L.P.
Notes to Financial Statements (continued)
4. Commitments (continued)
On July 11, 1994, the Partnership entered into an agreement with
the City of Vicksburg to pay a monthly impact fee, based on the
number of gaming positions in service each month, for 60 months.
For the period from inception through December 31, 1994, this
impact fee totaled approximately $329,000 and is included in
gaming taxes in the accompanying statement of operations.
Additionally, this agreement with the City of Vicksburg requires
the Partnership to complete certain noncasino facilities by June
30, 1995 or immediately pay to the City of Vicksburg 2.5% of all
gross revenues (as defined) for the period from January 1, 1995
to June 30, 1995 and 5% of all gross revenues (as defined)
thereafter until such noncasino facilities are completed. In the
event the certified cost of certain noncasino facilities does not
exceed $15,000,000 and certain noncasino facilities are not
completed by December 31, 1995, the Partnership will be required
to immediately pay the City of Vicksburg the difference between
the amount of the certified costs and $15,000,000. The
Partnership has entered into agreements with third-party
developers to finance, construct, and operate substantially all
of these noncasino facilities. Management anticipates that the
Partnership will meet these requirements in accordance with the
agreement.
The Partnership has capital lease arrangements at December 31,
1994 and July 15, 1994. The cost of equipment under capital
lease arrangements was $204,000 and accumulated depreciation was
$20,400 and $400 at December 31, 1994 and July 15, 1994,
respectively. Amortization of leased assets is included in
depreciation and amortization expense.
Future minimum lease payments for the capital lease consisted of
the following at December 31, 1994:
1995 $ 53,832
1996 53,832
1997 53,832
1998 53,832
1999 22,430
Total minimum lease payments 237,758
Less amount representing interest 51,944
Present value of net minimum lease
payments (including current portion
of $34,265) $ 185,814
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Rainbow Casino Vicksburg Partnership, L.P.
Notes to Financial Statements (continued)
5. Supplemental Cash Flow Information
Interest paid during the period from inception through December
31, 1994 was $425,000.
Notes payable include approximately $80,000 of financed interest
expense.
During the period from inception through December 31, 1994, the
general partner contributed noncash assets and liabilities as
follows:
Inventory $ 28,855
Prepaid expenses 198,197
Property and equipment, net 14,524,431
Preopening costs 2,802,090
Deferred licensing costs 156,750
Other assets 256,125
Accrued royalties and management fee
to related party 785,698
Notes payable 258,403
Long-term debt 17,287,377
Capital lease obligation 204,068
Accrued expenses 331,683
6. Subsequent Event
On March 29, 1995, the partners entered into an agreement whereby
United Gaming Rainbow became the general partner and Rainbow
Casino Corporation became the limited partner. Future earnings
of the Partnership will be allocated between the general partner
and limited partner on a pro rata basis in accordance with the
actual distribution of cash (as defined by the agreement).
Additionally, Alliance and the lender of the 7.5% note payable
(see Note 3) have agreed to provide cash totaling $5,500,000 to
upgrade and complete certain aspects of the development.
Further, the agreement provides for the termination of the 5.2%
royalty payment to Alliance discussed in Note 3.
At December 31, 1994, the Partnership was in violation of a
nonfinancial covenant of the 7.5% note payable to Hospitality
Franchise Systems, Inc. resulting from the lack of the timely
completion of the remaining portions of the Vicksburg project.
In connection with the above mentioned agreement, the lender
waived this nonfinancial covenant violation through June 30,
1995. Management believes the Partnership will complete the
remaining portions of the Vicksburg project prior to June 30,
1995.
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Alliance Gaming Corporation
Unaudited Pro Forma Consolidated Statement of Operations
Six Months ended 12/31/94
(as reported)
Pro Forma Pro Forma
RCVP AGC Adjustments Consolidated
(Dollars in thousands, except share information)
Revenue:
Gaming 9,798 60,372 (555) 69,615
Food & Beverage 23 1,950 1,973
Equipment Sales 16 16
______ ______ _______ ________
Total Revenues 9,821 62,338 (555) 71,604
Costs & Expenses:
Cost of gaming
revenues 5,408 43,867 49,275
Cost of food
& beverage 10 1,414 1,424
Cost of equipment
sales 9 9
Pre-opening costs 2,802 2,802
General &
administrative 1,886 14,296 (321) 15,861
Depreciation &
amortizaton 907 4,613 5,520
______ ______ _______ ________
Total costs
& expenses 11,013 64,199 (321) 74,891
Operating
(loss) (1,192) (1,861) (234) (3,287)
Interest income 1,504 (107) 1,397
Interest expense (751) (3,915) 107 (4,559)
Royalty Fees (1,670) 509 (1,161)
Miscellaneous, net 119 119
Minority share
of income (169) (169)
______ ______ _______ ________
Loss before
taxes (3,613) (4,322) 275 (7,660)
Equity in income
(loss) from
affiliate (405) 405 0
Income tax expense (290) (290)
______ ______ _______ ________
Net income (loss) (3,613) (5,017) 680 (7,950)
====== ====== ======= ========
See notes to unaudited Pro Forma Consolidated Financial
Statements
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Alliance Gaming Corp.
Unaudited Pro Forma Consolidated Balance Sheet
As of 12/31/94
(as reported)
Pro Forma Pro Forma
RCVP AGC Adjustments Consolidated
(Dollars in thousands, except share information)
Current assets:
Cash & cash
equivalents 1,221 28,189 29,410
Securities
available
for sale 12,596 12,596
Receivables, net 31 4,060 (257) 3,834
Inventories 15 633 648
Prepaid Expenses 89 2,843 2,932
Other current
assets 331 331
Total current
assets 1,356 48,652 (257) 49,751
Property & equipment:
Land &
improvements 4,274 3,229 2,561 10,064
Building and
improvements 4,113 4,364 8,477
Furniture,
fixtures
& equipment 6,048 41,195 47,243
Leasehold
improvements 5,373 5,373
Construction In
progress 160 125 285
Accumulated
depreciation (835) (26,623) (27,458)
Property &
equipment,
net 13,760 27,663 2,561 43,984
Other assets:
Receivables,
net 8,951 (3,525) 5,426
Excess of costs
over net assets
of an acquired
business, net of
accumulated
amortization
of $433 3,993 3,061 7,054
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Intangible assets,
net of accumulated
amortization of
$4,849 85 13,249 13,334
Investment in
minority owned
subsidiary 6,550 (4,970) 1,580
Deferred tax assets 1,134 1,134
Other assets 426 5,161 5,587
Total other
assets 511 39,038 (5,434) 34,115
Total assets 15,627 115,353 (3,130) 127,850
Current liabilities:
Current maturities
of long term debt,
including amount
due to stock-
holder of $1,008 3,208 1,257 4,465
Accounts payable,
including amount
due to related
party of $47 1,309 1,762 (532) 2,539
Accrued expenses 1,484 5,546 7,030
Total current
liabilities 6,001 8,565 (532) 14,034
Long-term debt,
less current
maturities, includ-
ing amount due to
stockholder of
$2,797 13,304 88,118 (2,598) 98,824
Deferred tax
liabilities 1,298 1,298
Other liabilities 3,041 3,041
Total
liabilities 19,305 101,022 (3,130) 117,197
Minority interests 414 414
Stockholders'equity
Common stock,
$0.10 par value;
authorized
175,000,000
shares; issued and
outstanding
11,251,350
shares 1,125 1,125
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Special stock,
$0.10 par value;
authorized
10,000,000 shares;
issued and
outstanding
1,333,333 shares 133 133
Paid in capital 30,504 30,504
Unrealized loss on
securities available
for sale (447) (447)
Accumulated
deficit (3,678)(17,398) (21,057)
Total S/H
equity (3,678) 13,917 0 10,258
Total
liabilities
& equity 15,627 115,353 (3,130) 127,850
See notes to unaudited Pro Forma Consolidated Financial
Statements
PAGE
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ALLIANCE GAMING CORP.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended December 31, 1994
Operations
1. Royalty Fees
Royalty income recognized by the Company and the correlated
royalty expense recognized by the Partnership have been
eliminated. The royalty was related to financing for the
Partnership provided by the Company.
2. Management Fees
Management fee income recognized by the Company and the
correlated expense recognized by the Partnership have been
eliminated. Included in expenses of the Partnership was
$275,000 in management fees recognized as income by the
Company in Fiscal 1994.
3. Interest
Interest income recognized by the Company and the correlated
interest expense recognized by the Partnership have been
eliminated. The interest is associated with $3,250,000 in
financing provided to the Partnership by the Company.
4. Equity in loss from affiliate
The Company's equity in losses recognized by the Partnership
has been eliminated.
Balance Sheet
1. Intercompany receivables and payables
Intercompany receivables and payables between the Company
and the Partnership have been eliminated. Included in these
amounts are unpaid royalty fees, management fees, interest
and other miscellaneous items.
2. Intercompany notes receivable and payable
The $3,250,000 note for Partnership financing provided by
the Company has been eliminated.
3. Investment in subsidiary
The Company's investment in the Partnership, which had been
accounted for under the equity method, has been reclassified
as goodwill or a step up in basis to the assets acquired.
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4. Adjustments for purchase
In connection with the Company's purchase of its additional
interest in the Partnership, the Company has assumed a
portion of the outstanding debt associated with the
construction of the project.
