<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, 1995
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 May 1, 1995, 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 is therefore filing this form with the reduced
disclosure format.
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheet (Unaudited)
March 31, 1995 and December 31, 1994. . . . . . . . . . 1
Consolidated Statement of Operations (Unaudited)
Three Months Ended March 31, 1995 and 1994. . . . . . . 2
Consolidated Statement of Stockholder's Equity (Unaudited)
Three Months Ended March 31, 1995 . . . . . . . . . . . 3
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 1995 and 1994. . . . . . . 4
Notes to Condensed Consolidated Financial
Statements (Unaudited). . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Results of
Operations . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 10
SIGNATURE PAGE. . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
<TABLE> BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents. . . . . . . . . . . . $ 16,362 $ 13,949
Receivables, less allowances
of $1,425 and $1,167. . . . . . . . . . 4,974 5,845
Income taxes receivable . . . . . . . . . . 2,310 5,378
Inventories . . . . . . . . . . . . . . . . 2,158 2,228
Prepaid expenses. . . . . . . . . . . . . . 1,729 1,748
Deferred income taxes . . . . . . . . . . . 7,302 6,972
-------- --------
Total current assets . . . . . . . . . . . 34,835 36,120
Property and equipment, less accumulated
depreciation of $316,208 and $309,672 . . . 479,538 483,369
Deferred finance costs, less accumulated
amortization of $1,669 and $1,270 . . . . . 13,229 13,628
Casino Reinvestment Development Authority
investment obligations. . . . . . . . . . . 12,157 11,681
Other assets. . . . . . . . . . . . . . . . . 1,423 1,516
-------- --------
$541,182 $546,314
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . $ 1,886 $ 2,805
Payable to affiliates. . . . . . . . . . . . 2,372 707
Income taxes payable . . . . . . . . . . . . 1,200 1,159
Accrued liabilities. . . . . . . . . . . . . 27,369 37,951
Current maturities of long-term debt . . . . 47 47
-------- --------
Total current liabilities . . . . . . . . . 32,874 42,669
Long-term debt, less current maturities. . . . 427,628 427,641
Deferred income taxes. . . . . . . . . . . . . 42,587 41,306
Pension liability. . . . . . . . . . . . . . . 8,336 9,866
Other long-term liabilities. . . . . . . . . . 881 859
Stockholder's equity.. . . . . . . . . . . . . 28,876 23,973
-------- --------
$541,182 $546,314
======== ========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE> BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Revenues:
Casino . . . . . . . . . . . . . . . . $ 80,640 $ 65,714
Rooms. . . . . . . . . . . . . . . . . 4,551 4,513
Food and beverage. . . . . . . . . . . 4,302 4,113
Other. . . . . . . . . . . . . . . . . 2,806 2,041
-------- --------
92,299 76,381
Costs and expenses:
Casino . . . . . . . . . . . . . . . . 33,614 29,150
Rooms. . . . . . . . . . . . . . . . . 2,285 2,319
Food and beverage. . . . . . . . . . . 3,956 3,847
Other operating expenses . . . . . . . 14,091 13,662
Selling, general and administrative. . 7,627 9,780
Depreciation and amortization. . . . . 6,941 7,285
Allocations from Bally Entertainment
Corporation. . . . . . . . . . . . . 1,485 1,101
-------- --------
69,999 67,144
-------- --------
Operating income . . . . . . . . . . . . 22,300 9,237
Interest expense . . . . . . . . . . . . 10,397 10,973
-------- --------
Income (loss) before income taxes and
extraordinary item . . . . . . . . . . 11,903 (1,736)
Provision (benefit) for income taxes . . 5,000 (704)
-------- --------
Income (loss) before extraordinary item. 6,903 (1,032)
Extraordinary loss on extinguishment
of debt . . . . . . . . . . . . . . . --- (20,735)
-------- --------
Net income (loss). . . . . . . . . . . . $ 6,903 $(21,767)
======== ========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(In thousands, except share data)
(Unaudited)
<CAPTION>
Number Additional Total
of shares Common paid-in Retained stockholder's
issued stock capital earnings equity
--------- ------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 . . . . . 100 $ 1 $ 23,972 $ --- $ 23,973
Net income . . . . . . . . . . . . --- --- --- 6,903 6,903
Dividend paid. . . . . . . . . . . --- --- --- (2,000) (2,000)
----- ----- -------- -------- --------
Balance at March 31, 1995. . . . . . . 100 $ 1 $ 23,972 $ 4,903 $ 28,876
===== ===== ======== ======== ========
<FN>
See accompanying notes.
</TABLE>
<TABLE> BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Operating:
Income (loss) before extraordinary item. . $ 6,903 $ (1,032)
Adjustments to reconcile to cash provided
(used)-
Depreciation and amortization. . . . . . 6,941 7,285
Other amortization included in interest
expense. . . . . . . . . . . . . . . . 399 390
Deferred income taxes. . . . . . . . . . 951 (11,464)
Change in operating assets and
liabilities. . . . . . . . . . . . . . (7,396) (203)
Other, net .. . . . . . . . . . . . . . 214 (43)
-------- --------
Cash provided by (used in)
operating activities . . . . . . . 8,012 (5,067)
Investing:
Purchases of property and equipment. . . . (3,080) (3,784)
Purchases of Casino Reinvestment
Development Authority investment
obligations and credits. . . . . . . . . (506) (425)
-------- --------
Cash used in investing activities. . (3,586) (4,209)
Financing:
Debt transactions -
Net borrowings under revolving
credit agreement . . . . . . . . . . --- 4,000
Proceeds from issuance of long-term
debt . . . . . . . . . . . . . . . . . --- 425,000
Repayments of long-term debt . . . . . . (13) (377,704)
Debt issuance costs. . . . . . . . . . . --- (14,558)
-------- --------
Cash provided by (used in) debt
transactions . . . . . . . . . . . (13) 36,738
Equity transactions -
Dividends paid . . . . . . . . . . . . . (2,000) (30,595)
-------- --------
Cash provided by (used in)
financing activities . . . . . . . (2,013) 6,143
-------- --------
Increase (decrease) in cash and equivalents. 2,413 (3,133)
Cash and equivalents, beginning of period. . 13,949 12,295
-------- --------
Cash and equivalents, end of period. . . . . $ 16,362 $ 9,162
======== ========
<FN>
(Continued)
</TABLE>
4
<TABLE>BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
-------- --------
SUPPLEMENTAL CASH FLOWS INFORMATION
<S> <C> <C>
Changes in operating assets and liabilities:
Decrease in receivables. . . . . . . . . . $ 657 $ 1,671
Decrease in income taxes receivable. . . . 3,068 ---
Decrease in inventories. . . . . . . . . . 70 21
(Increase) decrease in prepaid expenses
and other assets. . . . . . . . . . . . 112 (295)
Decrease in accounts payable, payable
to affiliates and accrued liabilities . (9,836) (12,629)
Increase in income taxes payable . . . . . 41 10,737
Increase (decrease) in pension liability . (1,530) 270
Increase in other long-term liabilities. . 22 22
-------- --------
$ (7,396) $ (203)
======== ========
Operating activities include cash payments
for interest and income taxes:
Interest paid. . . . . . . . . . . . . . . $ 19,813 $ 23,674
Interest capitalized . . . . . . . . . . . (11) (39)
Income taxes paid (net of refunds) . . . . 940 23
Investing activities exclude the following
non-cash activity:
Donation of Casino Reinvestment
Development Authority investment
obligations, net . . . . . . . . . . . . $ --- $ 245
<FN>
See accompanying notes.
</TABLE>
5
Basis of presentation
The accompanying condensed consolidated financial statements include the
accounts of Bally's Park Place, Inc., a Delaware corporation (the "Company"),
which is an indirect wholly owned subsidiary of Bally Entertainment
Corporation ("BEC"), and its subsidiaries. The Company owns and operates the
casino hotel resort in Atlantic City, New Jersey known as "Bally's Park Place
Casino Hotel and Tower." Unless otherwise specified in the text, references
to the Company include the Company and its subsidiaries. These 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, 1994.
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, 1995, its consolidated statements
of operations and cash flows for the three months ended March 31, 1995 and
1994, and its consolidated statement of stockholder's equity for the three
months ended March 31, 1995. All such adjustments were of a normal recurring
nature, except for those adjustments in March 1994 to reflect the refinancing
of indebtedness (see "Long-term debt").
Certain reclassifications have been made to prior period financial
statements to conform with the 1995 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, 1995 and 1994
are not necessarily indicative of the results of operations for the full year.
Allocations from BEC and transactions with related parties
BEC allocates costs to the Company consisting of the Company's allocable
share of BEC'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
BEC's oversight. BEC's method for allocating costs is designed to apportion
the majority of its operating costs to its subsidiaries and is generally based
upon many subjective factors including various measures of operational size
and extent of BEC's oversight requirements. Management of BEC believes that
the methods used to allocate these costs are reasonable and expects similar
allocations in future years. Because of BEC's controlling relationship with
the Company and the allocation of certain BEC costs, the operating results of
the Company could be significantly different if the Company operated
autonomously. In addition, certain of the Company's insurance coverage is
negotiated by BEC pursuant to corporate-wide programs. In these
circumstances, BEC charges the Company its proportionate share of the
respective insurance premiums.
Certain executive officers of the Company function in a similar capacity
for GNAC, CORP. (a wholly owned subsidiary of BEC which owns and operates the
casino hotel 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 limousine services, legal services and purchasing.
Costs of these operations are allocated to or from the Company either directly
or using various formulas based on estimates of utilization of such services.
On a net basis, allocations to The Grand were $61 and $56 for the three months
ended March 31, 1995 and 1994, 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 month periods ended March 31,
1995 and 1994.
Long-term debt
In March 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 retire and defease its 11 7/8%
First Mortgage Notes due 1999 (the "11 7/8% Notes") and pay dividends of
$30,214. 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.
The indenture for the 9 1/4% Notes and the $50,000 revolving credit
facility (the entire amount was available at March 31, 1995) 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. Also, the New Jersey Casino
Control Commission (the "CCC") requires, among other things, that dividends
paid by the Company 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 dividends that are not paid pursuant to
the net income test to $50,000 in aggregate, of which $25,000 was paid in
1994. At March 31, 1995, $3,510 was available to be paid as dividends
pursuant to the net income test.
Income taxes
Taxable income or loss of the Company is included in the consolidated
federal income tax return of BEC. Under agreements between the Company, BEC
and Bally's Casino Holdings, Inc., 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 BEC for the tax benefit of the Company's net operating losses and
tax credits, if any, that can be utilized in BEC'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 BEC for tax liabilities are due at such time and in such amounts
as payments would be required to be made to the Internal Revenue Service.
Payments from BEC for such tax benefits are due at the time BEC files the
applicable consolidated federal income tax return. Under the tax sharing
agreement, the Company had federal income taxes receivable from BEC of $2,310
and $5,378 at March 31, 1995 and December 31, 1994, respectively, which are
included in income taxes receivable on the accompanying condensed consolidated
balance sheet.
Guarantee
At March 31, 1995, the Company was contingently liable for the guarantee
of payments (up to $21,600) in the event certain affiliates fail to make
required payments pursuant to various contractual obligations.
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1995 and 1994
Revenues of the Company for the three months ended March 31, 1995 were
$92.3 million compared to $76.4 million for the 1994 period, an increase of
$15.9 million (21%). Casino revenues for 1995 were $80.6 million compared to
$65.7 million in 1994, an increase of $14.9 million (23%). Slot revenues
increased $12.1 million (28%) due to a 31% increase in slot handle (volume)
offset, in part, by a decline in the win percentage from 8.9% in 1994 to 8.6%
in 1995. The Company added 124 slot machines (a 6% increase) since March 31,
1994. Slot revenues represented 69% of the Company's casino revenues in 1995
compared to 66% in 1994. Table game revenues, excluding poker, increased $2.0
million (10%) due to a 12% increase in the drop (amount wagered) offset, in
part, by a decrease in the hold percentage from 17.1% in 1994 to 16.7% in
1995. Other casino revenues were $1.9 million for 1995 compared to $1.1
million in 1994, an increase of $.8 million which was primarily due to the
introduction of horse race simulcasting and keno operations in June 1994.
Rooms and food and beverage revenues remained essentially unchanged. Other
revenues increased $.8 million (38%) due to higher dividends from a
multi-casino linked progressive trust, increased entertainment income and
additional interest income.
Atlantic City casino revenues (excluding poker, horse race simulcasting
and keno) for all operators for the three months ended March 31, 1995
increased approximately 16% from 1994 due to a 22% increase in slot revenues
and a 4% increase in table game revenues. Revenues for the first quarter of
1994 were negatively affected by severe weather in the northeastern United
States. Since March 31, 1994, the number of slot machines in Atlantic City
increased approximately 13% and the number of table games, excluding poker
tables, increased approximately 1%. Slot revenues represented 68% and 65% of
total casino revenues in Atlantic City for 1995 and 1994, respectively.
Management believes that the expanded number of slot machines in Atlantic City
has caused and will continue to cause intense promotional efforts to attract
slot players as both the Company and its competitors continue to seek to
expand their share of slot revenues and maximize the utilization of their slot
machines. Further, as a result of the 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 Company believes
it is well-positioned to compete for additional casino revenues by continuing
to offer attractive promotional slot and table game programs and special
events and by enhancing the appearance and comfort of its gaming space. In
1994, the Company expanded its casino floor space from 68,100 to 71,400 square
feet and added another 8,700 square feet of gaming space to offer horse race
simulcasting and keno, and to relocate and expand its poker operations.
Further, during the first quarter of 1995, the Company completed a slot
machine upgrade, replacing the majority of its slot machines with
state-of-the-art machines with embedded bill acceptors and reconfigured its
slot machine layout, adding additional slot stools and aisle space.
Operating income of the Company for the three months ended March 31, 1995
was $22.3 million compared to $9.2 million for the 1994 period, an increase
of $13.1 million as the aforementioned revenue increase was offset, in part,
by a $2.8 million increase in operating expenses. The operating margin
(before depreciation and amortization) increased from 22% in the 1994 quarter
to 32% in 1995. Casino expenses increased $4.5 million (15%) due to expanded
marketing and promotional efforts, increased gaming taxes associated with
higher gaming revenues and an increase in salaries, benefits and other costs
associated with the operation of horse race simulcasting and keno in 1995.
Rooms, food and beverage and other operating expenses remained essentially
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
unchanged. Selling, general and administrative expenses decreased $2.2
million (22%) primarily due to a reevaluation of the cost associated with
certain employee benefit plans. Depreciation and amortization expense
decreased $.3 million (5%). Operating costs and expenses include allocations
from BEC of its overhead (including executive salaries and benefits, public
company reporting costs and other corporate headquarters' costs) of $1.5
million and $1.1 million for the quarters ended March 31, 1995 and 1994,
respectively. Management of BEC believes that the methods used to allocate
these costs are reasonable and expects similar allocations (subject to changes
in circumstances which may warrant modification) in future years.
Interest expense was $10.4 million for the three months ended March 31,
1995 compared to $11.0 million for the 1994 period. The decrease of $.6
million (5%) reflects the March 1994 refinancing of the Company's long-term
debt at a more favorable rate.
For the three months ended March 31, 1995 and 1994, the effective rates
of the income tax provision (benefit) varied from the U.S. statutory tax rate
(35%) due principally to state income taxes.
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 27 Financial Data Schedule. (Filed electronically only.)
(b) Reports on Form 8-K.
None.
<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 12, 1995
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995, AND THE CONSOLIDATED
STATEMENT OF OPERATIONS AND THE CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 16,362
<SECURITIES> 0
<RECEIVABLES> 4,032
<ALLOWANCES> 1,425
<INVENTORY> 2,158
<CURRENT-ASSETS> 34,835
<PP&E> 795,746
<DEPRECIATION> 316,208
<TOTAL-ASSETS> 541,182
<CURRENT-LIABILITIES> 32,874
<BONDS> 427,628
<COMMON> 1
0
0
<OTHER-SE> 28,875
<TOTAL-LIABILITY-AND-EQUITY> 541,182
<SALES> 0
<TOTAL-REVENUES> 92,299
<CGS> 0
<TOTAL-COSTS> 39,641
<OTHER-EXPENSES> 14,091
<LOSS-PROVISION> 214<F1>
<INTEREST-EXPENSE> 10,397
<INCOME-PRETAX> 11,903
<INCOME-TAX> 5,000
<INCOME-CONTINUING> 6,903
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,903
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>
THE PROVISION FOR DOUBTFUL ACCOUNTS IS INCLUDED IN CASINO COSTS AND EXPENSES
IN THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 1995.
</FN>
</TABLE>
