<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
{X} Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the period ended March 31, 1994.
OR
{ } Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
Commission file number: 1-8540
BALLY'S PARK PLACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3432384
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
Park Place & The Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 340-2000
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
At April 29, 1994, all 100 outstanding shares of the registrant's common
stock were held by Bally's Casino Holdings, Inc.
The registrant meets the conditions set forth in General Instruction H (1)
(a) and (b) of Form 10-Q and, therefore, has presented its information
following the reduced disclosure format.
<PAGE>
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1994
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheet
March 31, 1994 (Unaudited) and December 31, 1993. . . . 1
Consolidated Statement of Operations (Unaudited)
Three Months Ended March 31, 1994 and 1993. . . . . . . 2
Consolidated Statement of Stockholder's Equity (Unaudited)
Three Months Ended March 31, 1994 . . . . . . . . . . . 3
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 1994 and 1993. . . . . . . 4
Notes to Condensed Consolidated Financial
Statements (Unaudited). . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 11
SIGNATURE PAGE. . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<CAPTION>
March 31, December 31,
1994 1993
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents....................... $ 9,162 $ 12,295
Receivables, less allowance for doubtful
accounts of $1,270 and $1,265............ 4,360 5,988
Inventories................................ 1,813 1,834
Deferred income taxes...................... 6,281 6,161
Other current assets....................... 1,258 1,025
-------- --------
Total current assets................... 22,874 27,303
Property and equipment, less accumulated
depreciation of $291,976 and $284,691...... 482,997 486,498
Deferred finance costs, less accumulated
amortization of $68 and $7,388............. 14,490 7,502
Casino Reinvestment Development Authority
investments................................ 11,739 11,314
Other assets ................................ 1,298 1,236
-------- --------
$533,398 $533,853
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable........................... $ 4,790 $ 5,423
Income taxes payable....................... 2,185 5,562
Accrued liabilities........................ 29,001 40,997
Current maturities of long-term debt....... 44 44
-------- --------
Total current liabilities.............. 36,020 52,026
Long-term debt, less current maturities...... 433,715 354,727
Deferred income taxes........................ 20,393 31,760
Pension liability............................ 9,359 9,089
Other long-term liabilities.................. 1,093 1,071
Stockholder's equity......................... 32,818 85,180
-------- --------
$533,398 $533,853
======== ========
<FN>
See accompanying notes.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1994 1993
-------- --------
<S> <C> <C>
Revenues:
Casino................................... $ 65,714 $ 65,379
Rooms.................................... 4,513 4,294
Food and beverage........................ 4,113 4,325
Other.................................... 2,041 2,121
-------- --------
76,381 76,119
Operating costs and expenses:
Casino................................... 29,150 27,020
Rooms.................................... 2,319 1,909
Food and beverage........................ 3,847 4,005
Other operating expenses................. 13,662 12,899
Selling, general and administrative...... 9,780 7,403
Depreciation and amortization............ 7,285 6,610
Allocations from Bally Manufacturing
Corporation............................ 1,101 1,155
-------- --------
67,144 61,001
Operating income........................... 9,237 15,118
Interest expense........................... 10,973 11,508
-------- --------
Income (loss) before income taxes,
extraordinary item and cumulative effect
on prior years of change in accounting
for income taxes......................... (1,736) 3,610
Provision (benefit) for income taxes....... (704) 1,425
-------- --------
Income (loss) before extraordinary item
and cumulative effect on prior years of
change in accounting for income taxes.... (1,032) 2,185
Extraordinary loss on extinguishment of
debt..................................... (20,735) ---
Cumulative effect on prior years of change
in accounting for income taxes........... --- (11,377)
-------- --------
Net loss................................... $(21,767) $ (9,192)
======== ========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(In thousands, except share data)
(Unaudited)
<CAPTION>
Number Additional Total
of shares Common paid in Accumulated stockholder's
issued stock capital deficit equity
--------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 . . . . . 100 $ 1 $ 85,179 $ --- $ 85,180
Net loss . . . . . . . . . . . . . -- -- -- (21,767) (21,767)
Dividends paid . . . . . . . . . . -- -- (30,595) --- (30,595)
----- ----- -------- -------- --------
Balance at March 31, 1994. . . . . . . 100 $ 1 $ 54,584 $(21,767) $ 32,818
===== ===== ======== ======== ========
<FN>
See accompanying notes.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1994 1993
-------- --------
<S> <C> <C>
Operating:
Income (loss) before extraordinary item
and cumulative effect on prior years of
change in accounting for income taxes... $ (1,032) $ 2,185
Adjustments to reconcile to cash used-
Depreciation and amortization........... 7,285 6,610
Deferred income taxes................... (11,464) 1,422
Provision for doubtful receivables...... (43) 62
Changes in operating assets and
liabilities........................... (203) (21,266)
Other, net.............................. 390 428
-------- --------
Cash used in operating activities... (5,067) (10,559)
Investing:
Purchases of property and equipment....... (3,784) (1,625)
Proceeds from disposal of property and
equipment............................... --- 147
Purchase of CRDA investments and credits.. (425) (410)
-------- --------
Cash used in investing activities... (4,209) (1,888)
Financing:
Debt transactions-
Increase in revolving line of credit,
net................................... 4,000 20,000
Repayments to affiliate, net............ --- (8,000)
Proceeds from issuance of long-term
debt.................................. 425,000 ---
Repayment of long-term debt............. (350,012) (1,012)
Premium paid on early retirement of
debt.................................. (27,692) ---
Debt issuance costs..................... (14,558) ---
-------- ---------
Cash provided by debt transactions.. 36,738 10,988
Equity transactions-
Dividends paid to Bally's Casino
Holdings, Inc......................... (30,595) ---
-------- --------
Cash provided by financing
activities........................ 6,143 10,988
-------- --------
Decrease in cash and equivalents............ (3,133) (1,459)
Cash and equivalents, beginning of period... 12,295 12,275
-------- --------
Cash and equivalents, end of period......... $ 9,162 $ 10,816
======== ========
<FN>
(continued)
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1994 1993
-------- --------
<S> <C> <C>
SUPPLEMENTAL CASH FLOWS INFORMATION
Changes in operating assets and
liabilities:
Decrease in receivables.............. $ 1,671 $ 443
Decrease in inventories.............. 21 115
(Increase) decrease in other current
assets and other assets............ (295) 3,184
Decrease in accounts payable and
accrued liabilities................ (12,629) (9,279)
Increase in income taxes payable..... 10,737 3
Increase (decrease) in pension
liability and deferred
compensation....................... 270 (15,758)
Increase in other long-term
liabilities........................ 22 26
-------- --------
$ (203) $(21,266)
======== ========
Operating activities include cash payments
for interest and income taxes as follows:
Interest paid.......................... $ 23,674 $ 21,449
Income taxes paid (net of refunds)..... 23 ---
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
Basis of presentation
The accompanying condensed consolidated financial statements include the
accounts of Bally's Park Place, Inc., a Delaware corporation (the "Company")
and its subsidiaries. The Company was a direct wholly owned subsidiary of
Bally Manufacturing Corporation ("BMC") until June 16, 1993, when BMC
contributed all of the capital stock of the Company to Bally's Casino
Holdings, Inc. ("Casino Holdings"). Casino Holdings was formed as a
subsidiary of BMC in April 1993 to serve as a holding company for the Company
and for acquiring and developing gaming operations, including those in newly
emerging gaming jurisdictions. Unless otherwise specified in the text,
references to the Company include the Company and its subsidiaries. The
accompanying condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1993.
All adjustments have been recorded which are, in the opinion of
management, necessary for a fair presentation of the condensed consolidated
balance sheet of the Company at March 31, 1994, its consolidated statements
of operations and cash flows for the three months ended March 31, 1994 and
1993, and its consolidated statement of stockholder's equity for the three
months ended March 31, 1994. All such adjustments were of a normal recurring
nature, except for those adjustments in 1994 to reflect the refinancing of
indebtedness (see "Long-term debt") and in 1993 to apply the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes" (see "Income taxes").
Certain reclassifications have been made to prior period financial
statements to conform with the 1994 presentation.
Seasonal factors
The Company's operations are subject to seasonal factors and, therefore,
the results of operations for the three months ended March 31, 1994 and 1993
are not necessarily indicative of the results of operations for the full year.
Allocations from BMC and transactions with related parties
During the three months ended March 31, 1994 and 1993, BMC allocated
costs to the Company consisting of the Company's allocable share of BMC's
corporate overhead including executive salaries and benefits, public company
reporting costs and other corporate headquarters' costs. While the Company
does not obtain a measurable direct benefit from these allocated costs,
management believes that the Company receives an indirect benefit from BMC's
oversight. BMC's method for allocating costs to its subsidiaries is designed
to apportion its costs to its subsidiaries based upon many subjective factors
including size of operations and extent of BMC's oversight requirements.
Management of BMC believes that the methods used to allocate these costs are
reasonable and expects similar allocations in future years. Because of BMC's
controlling relationship with the Company and the allocation of certain BMC
costs, the operating results of the Company could be significantly different
from those that would have been obtained if the Company operated autonomously.
Certain executive officers of the Company function in a similar capacity
for GNAC, CORP. (a wholly owned subsidiary of BMC which owns and operates the
casino resort in Atlantic City known as the "The Grand"), and exercise
decision making and operational authority over both entities. No allocation
of cost is made from the Company to The Grand for these executive officers as
management deems the direct allocable cost to be immaterial. In addition,
certain administrative and support operations of the Company and The Grand are
consolidated, including legal services, purchasing, limousine services and
certain aspects of human resources. Costs of these operations are allocated
to or from the Company either directly or using various formulas based on
utilization estimates of such services. On a net basis, allocations from the
Company were $56 and $696 for the three months ended March 31, 1994 and 1993,
respectively, which management believes were reasonable. The Company also
leases surface area parking lots to The Grand, and rental income was $174 for
each of the three months ended March 31, 1994 and 1993.
The Company and The Grand have a cash management arrangement whereby The
Grand advances excess funds to the Company which the Company uses to reduce
the outstanding balance under its revolving credit agreement. These advances
are payable on demand. The Company pays interest monthly on these advances
(at the prime rate of its agent bank) which totalled $199 for the three months
ended March 31, 1993.
Executive Retirement and Separation Agreement
On January 8, 1993, the Company and BMC entered into a Retirement and
Separation Agreement with a former executive of the Company and BMC. The
Company paid this executive $14,500 on such date in full settlement of the
remaining amounts due under his employment contract and for the liability
under a previous settlement of his supplemental executive retirement plan,
which resulted in a gain of approximately $1,500 for the three months ended
March 31, 1993.
Long-term debt
On March 8, 1994, the Company issued $425,000 principal amount of 9 1/4%
First Mortgage Notes due 2004 (the "9 1/4% Notes"). The Company used the net
proceeds from the sale of the 9 1/4% Notes to purchase and retire certain of
its 11 7/8% First Mortgage Notes due 1999 (the "11 7/8% Notes"), defease the
remaining 11 7/8% Notes at a price of 104.45% of their principal amount plus
accrued interest through the redemption date, thereby satisfying all
obligations thereunder, and pay a $30,000 dividend to Casino Holdings. The
retirement and defeasance of the 11 7/8% Notes resulted in an extraordinary
loss of $20,735, net of an income tax benefit of $14,137. In connection with
the sale of the 9 1/4% Notes, the Company terminated its former credit
facility and entered into an agreement for a new $50,000 revolving credit
facility which expires on December 31, 1996, at which time all amounts
outstanding become due. The new credit facility provides for interest on
borrowings payable, at the Company's option, at the agent bank's prime rate
or the LIBOR rate plus 2%, each of which increases as the balance outstanding
increases. The Company pays a fee of 1/2% on the unused commitment. At March
31, 1994, $44,000 was available under the new credit facility.
The indenture for the 9 1/4% Notes and the new credit facility impose
restrictions on the Company's ability to incur debt and issue preferred stock,
make acquisitions and certain restricted payments, create liens, sell assets
or enter into transactions with affiliates. The new credit facility is, in
certain circumstances, more restrictive than the indenture for the 9 1/4%
Notes. In connection with the sale of the 9 1/4% Notes, the Casino Control
Commission (the "CCC") requires, among other things, that dividends paid by
the Company to Casino Holdings which are not paid pursuant to a net income
test (generally limited to 50% of aggregate consolidated net income, as
defined, earned since April 1, 1994) receive prior approval from the CCC. The
indenture for the 9 1/4% Notes limits these dividends to $50,000 in aggregate.
In February 1994, a dividend $595 was paid, which was the amount
available at December 31, 1993 under the indenture for the 11 7/8% Notes. At
March 31, 1994, no amounts were available under the net income test of the
indenture for the 9 1/4% Notes and the credit line to pay dividends.
Income taxes
Taxable income or loss of the Company is included in the consolidated
federal income tax return of BMC. Under agreements between the Company, BMC
and Casino Holdings, income taxes are allocated to the Company based on
amounts the Company would pay or receive if it filed a separate consolidated
federal income tax return, except that the Company receives credit from BMC
for the tax benefit of the Company's net operating losses and tax credits, if
any, that can be utilized in BMC's consolidated federal income tax return,
regardless of whether these losses or credits could be utilized by the Company
on a separate consolidated federal income tax return basis. Payments to BMC
are due at such time and in such amounts as payments are required to be made
for income tax purposes. Payments by BMC for such tax benefits are due at the
time BMC files the applicable consolidated federal income tax return. Under
the tax sharing agreement, the Company had income taxes payable to BMC of $605
at March 31, 1994 and $5,013 at December 31, 1993, which are classified as
income taxes payable on the accompanying condensed consolidated balance sheet.
Effective January 1, 1993, the Company changed its method of accounting
for income taxes as required by SFAS No. 109. The cumulative effect on prior
years of this change in accounting for income taxes was a charge of $11,377.
For the three months ended March 31, 1994 and 1993, the effective rate
of the income tax provision (benefit) differed from the U.S. statutory tax
rate (35% and 34%, respectively) due principally to state income taxes.<PAGE>
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Three Months Ended March 31, 1994 vs. Three Months Ended March 31, 1993
Revenues of the Company for the 1994 quarter were $76.4 million compared
to $76.1 million for the 1993 quarter, an increase of $.3 million. Casino
revenues for the 1994 quarter were $65.7 million compared to $65.4 million in
the 1993 quarter, an increase of $.3 million (1%). Slot revenues decreased
$2.3 million (5%) due to a decline in the slot win percentage from 9.8% in
1993 (which includes the positive impact from the discontinuation of certain
progressive linked jackpots) to 9.1% in 1994 offset, in part, by a 5% increase
in slot handle (volume). The Company added 216 slot machines (an 11%
increase) since March 31, 1993. Slot revenue represented 66% of the Company's
casino revenues in 1994 compared to 70% in 1993. Table game revenues,
excluding poker, increased $1.5 million (8%) from 1993 primarily due to a 2%
increase in the drop (amount wagered) and an increase in the hold percentage
from 16.2% in 1993 to 17.1% in 1994. The Company's poker operations, which
commenced in July 1993, contributed $1.1 million to its casino revenues for
the quarter ended March 31, 1994.
Rooms revenue increased $.2 million (5%) due to an increase in rooms
occupied in 1994 compared to 1993 offset, in part, by a reduction in the
average room rate. Food and beverage revenue decreased $.2 million (5%)
primarily reflecting a reduction in beverage sales associated with the
temporary closing of a theater.
Atlantic City city-wide casino revenues for all operators for the
quarter ended March 31, 1994, excluding poker and horse race simulcasting,
decreased approximately 4% from 1993, which was primarily attributable to 4%
decreases in slot revenues and table game revenues. While Atlantic City's
first quarter 1994 and 1993 results were both affected by severe weather
conditions in the northeastern United States, management believes the
severity, duration and number of storms in 1994 had a more dramatic impact on
1994 operating performance and attendance than in 1993. The number of slot
machines in Atlantic City increased approximately 6% since March 31, 1993,
while the number of Atlantic City table games, excluding poker tables,
declined approximately 2%. Slot revenues for the quarter ended March 31, 1994
represented 65% of total gaming revenues in Atlantic City compared to 66% for
the same period in 1993. Management believes that the rate of slot revenue
growth has slowed resulting in intense promotional efforts for slot players
as the Company and its competitors seek to expand their share of slot revenues
and maximize the utilization of their slot machine inventory. Further, as a
result of the ongoing aggressive competition for slot patrons, the Atlantic
City slot win percentage has declined. Management believes that the slot win
percentage will continue to be subject to competitive pressure and may further
decline. However, the introduction in the second quarter of 1993 of poker and
horse race simulcasting has improved the Atlantic City gaming climate. The
Company believes it is well-positioned to compete for its share of casino
revenues by continuing to offer attractive promotional slot and table game
programs and special events. Also, the Company plans to continue the
expansion of its slot capacity, principally in the higher denomination
machines, and to introduce horse race simulcasting and keno, if approved by
the Casino Control Commission, in mid-1994.
Operating income of the Company for the quarter ended March 31, 1994 was
$9.2 million compared to $15.1 million for the same period in 1993, a decrease
of $5.9 million (39%) primarily due to a $6.1 million (10%) increase in
operating expenses. Casino expenses increased $2.1 million (8%) due to an
increase in salaries, benefits and other costs associated with the
introduction of poker and expanded marketing and promotional efforts. Rooms
expense increased $.4 million (21%) mainly due to increased operating costs
related to the higher room occupancy. Food and beverage expenses remained
essentially unchanged. Other operating expenses increased $.8 million (6%)
due to an overall increase in the cost of providing general services.
Selling, general and administrative expenses increased $2.4 million (32%)
primarily due to an increase in marketing costs associated with expanded
advertising and promotional efforts and to a benefit realized in the first
quarter of 1993 pursuant to the terms of a Retirement and Separation Agreement
with a former executive. Depreciation and amortization expense increased $.7
million (10%) due to the accelerated depreciation associated with the planned
1994 replacement of certain casino equipment. In addition, operating costs
and expenses include charges for BMC's corporate overhead (including executive
salaries and benefits, public company reporting costs and other corporate
headquarters' costs) allocated to the Company of $1.1 million and $1.2 million
for the quarters ended March 31, 1994 and 1993, respectively. Allocations for
these periods were, and management expects allocations in subsequent periods
will be, based upon similar cost categories and allocation methods subject to
changes in circumstances which may warrant modifications. Management of BMC
has advised the Company that no significant changes are presently
contemplated.
Interest expense was $11.0 million for the quarter ended March 31, 1994
compared to $11.5 million for the same period in 1993. The decrease of $.5
million (5%) reflects the March 1994 refinancing of the Company's long-term
debt at a more favorable rate, as well as lower average line of credit and
intercompany borrowings.
<PAGE>
<PAGE>
Item 6. Exhibits and Reports of Form 8-K
(a) 1. Index to Exhibits.
No exhibits are required with this filing.
(b) Reports on Form 8-K.
None.
<PAGE>
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Bally's Park Place, Inc.
Registrant
/s/ Joseph A. D'Amato
--------------------------
Joseph A. D'Amato
Vice President of Finance
and Administration
(Principal Financial Officer)
Dated: May 16, 1994
