<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, 1996
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 30, 1996, all 100 outstanding shares of the registrant's common stock
were held by Bally's Casino Holdings, Inc., an indirect wholly owned
subsidiary of Bally Entertainment Corporation.
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, 1996 and December 31, 1995 . . . . . . . . . . 1
Consolidated Statement of Income (Unaudited)
Three Months Ended March 31, 1996 and 1995 . . . . . . . 2
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 1996 and 1995 . . . . . . . 3
Notes to Condensed Consolidated Financial
Statements (Unaudited) . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Results of
Operations. . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 9
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . 10
<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,
1996 1995
--------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents. . . . . . . . . . . . $ 26,917 $ 31,508
Receivables, less allowances
of $1,424 and $1,490. . . . . . . . . . 8,944 6,407
Inventories . . . . . . . . . . . . . . . . 2,014 2,129
Prepaid expenses. . . . . . . . . . . . . . 3,674 1,367
Deferred income taxes . . . . . . . . . . . 8,579 8,655
-------- --------
Total current assets . . . . . . . . . . . 50,128 50,066
Property and equipment, less accumulated
depreciation of $342,646 and $335,787 . . . 465,455 466,887
Deferred finance costs, less accumulated
amortization of $2,970 and $3,021 . . . . . 11,999 11,877
Casino Reinvestment Development Authority
investment obligations. . . . . . . . . . . 12,373 13,108
Other assets. . . . . . . . . . . . . . . . . 8,492 7,836
-------- --------
$548,447 $549,774
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . $ 1,492 $ 3,028
Payable to affiliates . . . . . . . . . . . 1,041 534
Income taxes payable. . . . . . . . . . . . 13,648 5,681
Accrued liabilities . . . . . . . . . . . . 29,117 41,109
Current maturities of long-term debt. . . . 50 49
-------- --------
Total current liabilities. . . . . . . . . 45,348 50,401
Long-term debt, less current maturities . . . 427,540 427,554
Deferred income taxes . . . . . . . . . . . . 38,628 41,912
Other long-term liabilities . . . . . . . . . 9,682 9,671
Stockholder's equity:
Common stock . . . . . . . . . . . . . . . 1 1
Additional paid-in capital. . . . . . . . . 20,235 20,235
Retained earnings . . . . . . . . . . . . . 7,013 ---
-------- --------
Total stockholder's equity . . . . . . . . 27,249 20,236
-------- --------
$548,447 $549,774
======== ========
<FN>
See accompanying notes.
</TABLE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Casino . . . . . . . . . . . . . . . . $ 82,274 $ 80,640
Rooms. . . . . . . . . . . . . . . . . 4,351 4,551
Food and beverage. . . . . . . . . . . 4,319 4,302
Other. . . . . . . . . . . . . . . . . 3,153 2,806
-------- --------
94,097 92,299
Costs and expenses:
Casino . . . . . . . . . . . . . . . . 36,125 33,614
Rooms. . . . . . . . . . . . . . . . . 2,211 2,285
Food and beverage. . . . . . . . . . . 3,883 3,956
Other operating expenses . . . . . . . 14,677 14,091
Selling, general and administrative. . 6,698 7,627
Depreciation and amortization. . . . . 6,897 6,941
Allocations from Bally Entertainment
Corporation. . . . . . . . . . . . . 987 1,485
-------- --------
71,478 69,999
-------- --------
Operating income . . . . . . . . . . . . 22,619 22,300
Interest expense . . . . . . . . . . . . 10,307 10,397
-------- --------
Income before income taxes . . . . . . . 12,312 11,903
Provision for income taxes . . . . . . 5,299 5,000
-------- --------
Net income . . . . . . . . . . . . . . . $ 7,013 $ 6,903
======== ========
<FN>
See accompanying notes./TABLE
<PAGE>
<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,
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Operating:
Net income . . . . . . . . . . . . . . . . $ 7,013 $ 6,903
Adjustments to reconcile to cash provided-
Depreciation and amortization. . . . . . 6,897 6,941
Other amortization included in interest
expense. . . . . . . . . . . . . . . . 378 399
Provision for doubtful receivables . . . 163 214
Deferred income taxes. . . . . . . . . . (3,208) 951
Change in operating assets and
liabilities. . . . . . . . . . . . . . (10,591) (7,396)
-------- --------
Cash provided by operating activities 652 8,012
Investing:
Purchases of property and equipment . . . (5,465) (3,080)
Casino Reinvestment Development Authority
investment obligations, net . . . . . . 735 (506)
-------- --------
Cash used in investing activities. . (4,730) (3,586)
Financing:
Debt transactions -
Repayments of long-term debt . . . . . . (13) (13)
Debt refinancing costs . . . . . . . . . (500) ---
-------- --------
Cash used in debt transactions . . . (513) (13)
Equity transactions -
Dividend paid . . . . . . . . . . . . . --- (2,000)
-------- --------
Cash used in financing activities. . (513) (2,013)
-------- --------
Increase (decrease) in cash and equivalents. (4,591) 2,413
Cash and equivalents, beginning of period. . 31,508 13,949
-------- --------
Cash and equivalents, end of period. . . . . $ 26,917 $ 16,362
======== ========
<FN>
(Continued)
</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,
---------------------------
1996 1995
-------- --------
SUPPLEMENTAL CASH FLOWS INFORMATION
<S> <C> <C>
Changes in operating assets and liabilities:
(Increase) decrease in receivables . . . . $ (2,700) $ 657
Decrease in income taxes receivable
from Bally Entertainment Corporation . . --- 3,068
Decrease in inventories. . . . . . . . . . 115 70
(Increase) decrease in prepaid expenses
and other assets . . . . . . . . . . . . (2,963) 112
Decrease in accounts payable, payable to
affiliates and accrued liabilities . . . (13,021) (9,836)
Increase in income taxes payable . . . . . 7,967 41
Increase (decrease) in other long-term
liabilites . . . . . . . . . . . . . . . 11 (1,508)
-------- --------
$(10,591) $ (7,396)
======== ========
Cash payments for interest and income taxes:
Interest paid. . . . . . . . . . . . . . . $ 19,804 $ 19,813
Interest capitalized . . . . . . . . . . . (98) (11)
Income taxes paid (net of refunds) . . . . 540 940
<FN>
See accompanying notes.
</TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment 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"),
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-Resort." The Company operates in one industry segment and all
significant revenues arise from its casino and supporting hotel operations.
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, 1995.
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, 1996, and its consolidated statements of income
and cash flows for the three months ended March 31, 1996 and 1995. All such
adjustments were of a normal recurring nature.
The accompanying condensed consolidated financial statements have been
prepared in conformity with generally accepted accounting principles which
require the Company's management to make estimates and assumptions that affect
the amounts reported therein. Actual results could vary from such estimates.
In addition, certain reclassifications have been made to prior period
financial statements to conform with the 1996 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, 1996 and 1995 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 headquarter's 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
obtained by BEC pursuant to corporate-wide programs. In these circumstances,
BEC charges the Company its proportionate share of the respective insurance
premiums.
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
Certain executive officers of the Company function in a similar capacity for
certain other BEC subsidiaries and exercise decision-making and operational
authority over these entities. No allocation of cost is made from the Company
to these BEC subsidiaries 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 GNOC, CORP. (a wholly owned
subsidiary of BEC which owns and operates the casino hotel resort in Atlantic
City known as the "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 $108 and $61 for the three months ended March
31, 1996 and 1995, respectively, which management believes were reasonable.
The Company also leases land to The Grand, and rental income was $174 for each
of the three month periods ended March 31, 1996 and 1995.
Long-term debt
The indenture for the 9 1/4% First Mortgage Notes due 2004 (the "Notes") and
the $65,000 revolving credit facility (the entire amount was unused at March
31, 1996) 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 revolving
credit facility is, in certain circumstances, more restrictive than the
indenture for the Notes. Also, the indenture for the Notes and the revolving
credit facility presently limit the payment of dividends by the Company to 50%
of aggregate consolidated net income (as defined) earned since April 1, 1994.
At March 31, 1996, $6,597 was available to be paid as dividends.
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 are required to be made to the Internal Revenue Service. Payments
from BEC for tax benefits are due at the time BEC files the applicable
consolidated federal income tax return.
Guarantee
At March 31, 1996, the Company was contingently liable for the guarantee of
payments (up to $34,200) in the event certain affiliates fail to make required
payments pursuant to various contractual obligations.
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, 1996 and 1995
Revenues of the Company for the three months ended March 31, 1996 were $94.1
million compared to $92.3 million for the 1995 period, an increase of $1.8
million (2%) primarily due to a $1.6 million (2%) increase in casino revenues.
Slot revenues increased $2.1 million (4%) due to a 6% increase in slot handle
(volume) offset, in part, by a decline in the win percentage from 8.6% in 1995
to 8.4% in 1996. On average, the Company had 89 (4%) more slot machines for
the three months ended March 31, 1996 compared to the same period in 1995.
Slot revenues approximated 70% of the Company's casino revenues in 1996
compared to 69% in 1995. Table game revenues, excluding poker, decreased $.4
million (2%) due to a reduction in the hold percentage from 16.7% in 1995 to
16.3% in 1996 offset, in part, by a 1% increase in the drop (amount wagered).
Other casino revenues decreased $.1 million (5%).
Atlantic City casino revenues (excluding poker, horse race simulcasting and
keno) for the three months ended March 31, 1996 increased approximately 4%
from 1995 due to a 7% increase in table game revenues and a 3% increase in
slot revenues. The revenue increase during the first quarter of 1996 occurred
despite severe weather in the northeastern United States. Since March 31,
1995, the number of slot machines in Atlantic City increased approximately 7%
and the number of table games, excluding poker tables, increased approximately
5%. Slot revenues approximated 68% of total casino revenues in Atlantic City
for 1996 and 1995. Management believes that the expansion of several casino
hotel facilities in Atlantic City, which includes additional hotel rooms and
slot machines, 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 decline further. In addition,
proposals for several new casino hotel resorts were recently announced for the
marina district in Atlantic City and, if and when such resorts are opened,
capacity and competition will further increase. However, management believes
Bally's Park Place Casino-Resort is well-positioned to compete for additional
casino revenues in the Atlantic City market through the attractive promotional
gaming programs and special events it offers, and because of the appearance
and comfort of its gaming space and hotel accomodations. 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 slot stools
and increasing aisle space. In addition, the Company broke ground in April
1996 for construction of a western-themed casino complex on approximately 4
acres of Boardwalk property it owns adjacent to Bally's Park Place Casino-
Resort. The complex is presently planned to include approximately 75,000
square feet of casino space and cost between $80 and $100 million, with
completion anticipated in mid-1997. The planned expansion is subject to
various governmental approvals and delays inherent with construction projects.
Operating income of the Company for the three months ended March 31, 1996 was
$22.6 million compared to $22.3 million for the 1995 period, an increase of
$.3 million (1%) as the aforementioned revenue increase was offset, in part,
by a 2% increase in operating expenses. Casino expenses increased $2.5 million
(7%) due primarily to expanded promotional efforts. Selling, general and
administrative expenses decreased $.9 million (12%) primarily due to an
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Entertainment Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
increase in the estimated realizable value of certain funds on deposit with
the Casino Reinvestment Development Authority in the first quarter of 1996
resulting from the completion of additional hotel rooms in years prior to
1996. Operating costs and expenses include allocations from BEC of its
overhead (including executive salaries and benefits, public company reporting
costs and other corporate headquarter's costs) of $1.0 million and $1.5
million for the three months ended March 31, 1996 and 1995, 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.
For the three months ended March 31, 1996 and 1995, the effective rates of the
income tax provision 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, 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 15, 1996
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996, AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996, 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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 26,917
<SECURITIES> 0
<RECEIVABLES> 10,368
<ALLOWANCES> 1,424
<INVENTORY> 2,014
<CURRENT-ASSETS> 50,128
<PP&E> 808,101
<DEPRECIATION> 342,646
<TOTAL-ASSETS> 548,447
<CURRENT-LIABILITIES> 45,348
<BONDS> 427,540
0
0
<COMMON> 1
<OTHER-SE> 27,248
<TOTAL-LIABILITY-AND-EQUITY> 548,447
<SALES> 0
<TOTAL-REVENUES> 94,097
<CGS> 0
<TOTAL-COSTS> 56,733
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 163<F1>
<INTEREST-EXPENSE> 10,307
<INCOME-PRETAX> 12,312
<INCOME-TAX> 5,299
<INCOME-CONTINUING> 7,013
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,013
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>
THE PROVISION FOR DOUBTFUL RECEIVABLES IS INCLUDED IN CASINO AND ROOMS
OPERATING COSTS AND EXPENSES IN THE CONSOLIDATED STATEMENT OF INCOME FOR THE
THREE MONTHS ENDED MARCH 31, 1996.
</FN>
</TABLE>
