<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________to___________
Commission File Number 0-11287
THE CLARIDGE HOTEL AND CASINO CORPORATION
(Exact name of registrant as specified in its charter)
New York 22-2469172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Indiana Avenue and the Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 340-3400
------------------
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 ___
The number of shares outstanding of each class of the Registrant's Stock is as
follows:
Number of Shares Outstanding
May 14, 1999
------------
Class A Stock 5,062,500
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Index to Form 10-Q
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introductory Notes to Consolidated
Financial Statements 3
Consolidated Balance Sheets at
March 31, 1999 (unaudited) and
December 31, 1998 4
Consolidated Statements of Operations
for the three months ended March 31,
1999 (unaudited) and 1998 (unaudited) 5
Consolidated Statements of Cash Flows
for the three months ended March 31,
1999 (unaudited) and 1998 (unaudited) 6
Notes to Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13
PART II. OTHER INFORMATION
No information is provided under this
Section as the answers to Items 1 through 6
are either inapplicable or negative.
1
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introductory Notes to Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared by
The Claridge Hotel and Casino Corporation ("Corporation") without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, these financial statements contain all adjustments
necessary to present fairly the consolidated financial position of The Claridge
Hotel and Casino Corporation and its wholly-owned subsidiaries, The Claridge at
Park Place, Incorporated ("New Claridge") and Claridge Gaming Incorporated
("CGI") at March 31, 1999 and December 31, 1998, and the results of its
operations for the three months ended March 31, 1999 and 1998 and its cash flows
for the three months ended March 31, 1999 and 1998. All adjustments made are of
a normal recurring nature.
Although management believes that the disclosures included herein are
adequate to make the information contained herein not misleading, certain
information and footnote disclosure normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. It is suggested that these financial statements be read in conjunction
with the financial statements and the related disclosures contained in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1998
filed with the Securities and Exchange Commission.
The results of operations for the three months ended March 31, 1999 and
1998 are not necessarily indicative of the operating results to be expected for
the full year. Historically, the gaming industry in Atlantic City, New Jersey
has been seasonal in nature with peak demand months occurring during the summer
season.
3
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,373 9,798
Receivables, net (including $3,239 at March 31,
1999 and $3,111 at December 31, 1998,
due from the Partnership) 5,390 5,870
Other current assets 2,639 2,735
-------- -------
Total current assets 19,402 18,403
-------- -------
Property and equipment, net (note 4) 29,038 29,377
Long-term receivables due from the
Partnership (note 3) 79,535 79,593
Intangible assets and deferred charges 1,393 1,510
Other assets 3,218 2,893
-------- -------
$132,586 131,776
======== =======
LIABILITIES & STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current maturities of long-term debt (note 7) $ 365 351
Accounts payable 5,948 3,535
Loan from the Partnership (note 5) 3,600 3,600
Other current liabilities (note 6) 34,059 34,602
-------- -------
43,972 42,088
-------- -------
Long-term debt (note 7) 85,079 85,170
Deferred rent due to the Partnership 6,137 5,827
Deferred income taxes (note 9) 2,579 2,579
Other noncurrent liabilities (note 8) 21,295 21,340
Stockholders' deficiency:
Common stock 5 5
Additional paid in capital 5,048 5,048
Accumulated deficit (31,529) (30,281)
-------- -------
Total stockholders'deficiency (26,476) (25,228)
-------- -------
$132,586 131,776
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended March 31, 1999 and 1998
(in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues:
Casino $36,554 40,994
Hotel 1,994 1,738
Food and beverage 4,252 4,499
Interest from the Partnership 2,961 3,214
Interest, other 87 414
Other 2,875 744
------- ------
48,723 51,603
Less promotional allowances (note 2) 4,870 4,604
------- ------
Net revenues 43,853 46,999
------- ------
Costs and expenses:
Casino 22,840 25,229
Hotel 629 548
Food and beverage 1,186 1,753
Other 622 683
Rent expense to the Partnership 6,264 6,918
Rent expense, other 304 299
General and administrative 6,777 6,410
Gaming taxes 2,909 3,274
Reinvestment obligation expense 150 167
Provision for uncollectible accounts 196 74
Depreciation and amortization 525 657
Interest expense 2,699 2,632
------- ------
Total costs and expenses 45,101 48,644
------- ------
Loss before income taxes (1,248) (1,645)
Income tax benefit -0- -0-
------- ------
Net loss $(1,248) (1,645)
======= ======
Net loss per share - basic and diluted
(based on 5,062,500 and 4,970,730 weighted
average shares outstanding for the three
months ended March 31, 1999 and 1998, respectively) $ (.25) (.33)
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,248) (1,645)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 525 657
Deferred rent to the Partnership 310 (3,663)
Deferred interest receivable and
discount from the Partnership (549) (477)
Reinvestment obligation expenses 150 167
Gain on disposal of assets (40) (29)
Change in assets and liabilities:
Decrease (increase) in receivables, net, excluding
current portion of long-term receivables 696 (528)
Decrease (increase) in other current assets 96 (9)
Increase in accounts payable 2,413 921
Decrease in other current liabilities (543) (1,947)
(Decrease) increase in other noncurrent liabilities (5) 16
------- ------
Net cash provided by (used in) operating activities 1,805 (6,537)
------- ------
Cash flows from investing activities:
Increase in intangible assets and deferred charges (22) (18)
Additions to property and equipment (29) (46)
Increase in other assets (475) (503)
Proceeds from disposal of assets -0- 1,015
Increase in long-term receivables (76) (287)
Receipt of long-term receivables 467 4,448
------- ------
Net cash (used in) provided by investing activities (135) 4,609
------- ------
Cash flows from financing activities:
Payment of long-term debt (95) (10)
------- ------
Net cash used in financing activities (95) (10)
------- ------
Increase (decrease) in cash and cash equivalents 1,575 (1,938)
Cash and cash equivalents at beginning of period 9,798 12,424
------- ------
Cash and cash equivalents at end of period $11,373 10,486
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Notes to Consolidated Financial Statements
1. Basis of Presentation
The consolidated financial statements are prepared in accordance with
generally accepted accounting principles. The consolidated financial
statements include the accounts of the Corporation and its wholly-owned
subsidiaries, New Claridge and CGI. All material intercompany accounts and
transactions have been eliminated in consolidation.
2. Promotional Allowances
The retail value of complimentary rooms, food and beverages and other
complimentaries furnished to patrons is included in gross revenues and then
deducted as promotional allowances. The estimated cost of providing such
promotional allowances to casino patrons for the three months ended March
31, 1999 and 1998 has been allocated to casino operating expenses as follows
(in thousands):
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Hotel $1,018 917
Food and beverage 3,257 3,255
Other (Entertainment) 307 219
------ -----
Total costs allocated to
casino operating expenses $4,582 4,391
====== =====
</TABLE>
3. Long-Term Receivables
Long-term receivables consist of the following amounts due from Atlantic
City Boardwalk Associates, L.P. (the "Partnership") (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Expandable Wraparound Mortgage 14%,
maturities through September 30, 2000
(net of $3,977,000 discount at March 31, 1999
and $4,525,000 discount at December 31, 1998) $46,523 45,975
Deferred Expandable Wraparound Mortgage
interest receivable, due September 30,2000 20,000 20,000
FF&E promissory notes, 14% 13,012 13,618
------- ------
$79,535 79,593
======= ======
</TABLE>
7
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Notes to Consolidated Financial Statements (cont'd.)
4. Property and Equipment
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Gaming equipment $ 12,486 12,457
Land and land improvements 7,598 7,598
Building 20,070 20,070
Leasehold improvements 745 745
Capital lease asset 826 808
Other equipment 107 107
-------- ------
41,832 41,785
Less accumulated depreciation
and amortization 12,794 12,408
-------- ------
Net property and equipment $ 29,038 29,377
======== ======
</TABLE>
5. Loan from the Partnership
In accordance with the terms of the Restructuring Agreement, on June 16,
1989 the Partnership loaned to New Claridge $3.6 million, which represented
substantially all cash and cash equivalents remaining in the Partnership
other than funds needed to pay expenses incurred through the closing of the
restructuring. This loan is evidenced by an unsecured promissory note and
will become payable (i) upon a sale or refinancing of the Claridge; (ii)
upon full or partial satisfaction of the Expandable Wraparound Mortgage; and
(iii) upon full satisfaction of any first mortgage then in place.
Interest, which accrues at 12% per annum, is payable in full upon maturity.
As of March 31, 1999 such interest, which is included in other current
liabilities, amounted to $4,230,000.
8
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Notes to Consolidated Financial Statements (cont'd.)
6. Other Current Liabilities
Other current liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
Deferred rent, current $15,078 15,078
Deferred rent 1,425 475
Accrued payroll and related benefits 7,168 6,571
Accrued interest, First Mortgage Notes 1,665 4,161
Accrued interest due to Partnership 4,230 4,122
Auto and general liability reserves 1,464 1,424
Other current liabilities 3,029 2,771
------- ------
$34,059 34,602
======= ======
</TABLE>
Deferred rent of $15,078,000 represents the maximum deferral allowed in
accordance with the Operating Lease Agreement and Expansion Operating Lease
Agreement, as amended in June 1989. The deferred rent will become payable
(i) upon a sale or refinancing of the Claridge; (ii) upon full or partial
satisfaction of the Expandable Wraparound Mortgage; and (iii) upon full
satisfaction of any first mortgage then in place.
The Fifth Amendment to the Operating Lease and the Fourth Amendment to the
Expansion Operating Lease, which were effective on March 1, 1997, provided
for the abatement of $867,953 of basic rent and for the deferral of $1.3
million of basic rent on March 1, 1997, and for additional monthly
abatements of rent beginning April 1, 1997. The $1.3 million of basic rent
deferred on March 1, 1997 is to be paid to the Partnership in monthly
installments of $25,000 for the period April 1, 1997 through December 31,
1997, and monthly installments of $50,000 for the year 1998 and thereafter
until paid in full (subject to acceleration under certain circumstances).
Effective September 30, 1998, the Operating Lease and Expansion Operating
Lease were further amended, pursuant to a Sixth Amendment to the Operating
Lease and Fifth Amendment to the Expansion Operating Lease (the "Sixth
Amendment"). The Sixth Amendment provided for the deferral of $1.1 million
of rent in either February 1999 or March 1999, dependent upon certain
conditions being met. These conditions were met, and the $1.1 million of
rent was deferred in March 1999. The $1.1 million of basic rent deferred is
to be paid to the Partnership in monthly installments of $25,000 commencing
January 1, 2000 until paid in full (subject to acceleration under certain
circumstances).
9
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Notes to Consolidated Financial Statements (cont'd.)
7. Long-Term Debt
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
11 3/4% Notes due 2002 $85,000 85,000
Capital lease obligation 444 521
------- ------
85,444 85,521
Less current installments 365 351
------- ------
$85,079 85,170
======= ======
</TABLE>
On January 31, 1994, the Corporation completed an offering of $85 million of
First Mortgage Notes (the "Notes") due 2002, bearing interest at 11 3/4%.
The Notes are secured by (i) a non-recourse mortgage granted by the
Partnership representing a first lien on the Hotel Assets; (ii) a pledge
granted by the Corporation of all outstanding shares of capital stock of New
Claridge; and (iii) a guarantee by New Claridge. New Claridge's guarantee of
the Notes is secured by a collateral assignment of the second lien
Expandable Wraparound Mortgage, and by a lien on the Claridge's gaming and
other assets, which lien will be subordinated to liens that may be placed on
those gaming and other assets to secure any future revolving credit line
arrangement. On January 28, 1997, New Claridge entered into an agreement to
subject the new self-parking garage to the lien of the mortgage; such lien
will not be subordinated to any lien which may be placed on New Claridge's
gaming and other assets to secure any future revolving credit line
arrangement. Interest on the Notes is payable semiannually on February 1 and
August 1 of each year. A portion of the net proceeds of $82.2 million was
used to repay in full the then outstanding debt under the Revolving Credit
and Term Loan Agreement (the "Loan Agreement"), including the outstanding
balance of the Corporation's revolving credit line, which was secured by a
first mortgage. In conjunction with the full satisfaction of the Loan
Agreement, the Corporation's $7.5 million revolving credit line arrangement
was terminated.
8. Other Noncurrent Liabilities
Other noncurrent liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
Contingent Payment $19,000 19,000
License agreement 1,350 1,369
Other 945 971
------- ------
$21,295 21,340
======= ======
</TABLE>
Pursuant to the Restructuring Agreement, Del Webb Corporation ("Webb")
retained an interest, which was assigned to a trustee for the benefit of the
Valley of the Sun United Way on April 2, 1990, equal
10
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Notes to Consolidated Financial Statements (cont'd.)
8. Other Noncurrent Liabilities (cont'd.)
to $20 million plus interest at a rate of 15% per annum, compounded
quarterly, commencing December 1, 1988, in any proceeds ultimately recovered
from operations and/or the sale or refinancing of the Claridge facility in
excess of the first mortgage loan and other liabilities ("Contingent
Payment"). Consequently, New Claridge has deferred the recognition of $20
million of forgiveness income with respect to the Contingent Payment
obligation. Interest on the Contingent Payment has not been recorded in the
accompanying consolidated financial statements since the likelihood of
paying such amount is not considered probable at this time. As of March 31,
1999, accrued interest would have amounted to approximately $71.6 million.
In connection with the restructuring, Webb agreed to grant those investors
in the Corporation and the Partnership ("Releasing Investors"), from whom
Webb had received written releases from all liabilities, rights ("Contingent
Payment Rights") to receive certain amounts to the extent available for
application to the Contingent Payment. Approximately 84% in interest of the
investors provided releases and became Releasing Investors. Payments to
Releasing Investors are to be made in accordance with a schedule of
priorities, as defined in the Restructuring Agreement.
On February 23, 1996, the Corporation acquired an option to purchase, at a
discount from the carrying value, the Contingent Payment. The purchase price
of the option of $1 million was recorded as an offset to the Contingent
Payment liability which is included in other noncurrent liabilities on the
Corporation's consolidated balance sheet. The option could have been
exercised any time prior to December 31, 1997. Given its operating results,
the Corporation was not able to exercise this Contingent Payment option, and
it expired in accordance with its terms on December 31, 1997.
On February 28, 1997, New Claridge entered into an agreement with Thermal
Energy Limited Partnership I ("Atlantic Thermal"), pursuant to which
Atlantic Thermal was granted an exclusive license for a period of twenty
years to use, operate, and maintain certain steam and chilled water
production facilities at the Claridge. In consideration for this license
agreement, Atlantic Thermal paid New Claridge $1.5 million. This amount will
be recognized as income over the term of the agreement, commencing April
1997.
9. Income Taxes
The Corporation recorded an income tax benefit of $495,000, and a
corresponding increase in the valuation allowance, resulting in no income
tax provision or benefit for the three months ended March 31, 1999.
During 1995, the Corporation received notice from the Internal Revenue
Service ("IRS") asserting deficiencies in Federal corporate income taxes for
the Corporation's 1990 and 1991 taxable years. Many of the proposed
adjustments to the Corporation's tax returns have been settled with no
adverse impact to the Corporation's consolidated financial statements. There
was a remaining IRS asserted deficiency for the 1990 and 1991 taxable years.
In January 1999, the Corporation reached a settlement agreement with the IRS
District Counsel, which was confirmed by the United States Tax Court on
11
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Notes to Consolidated Financial Statements (cont'd.)
9. Income Taxes (cont'd.)
March 4, 1999. This settlement agreement did not have a material impact on
the Corporation's consolidated financial statements.
10. Claridge License Renewal
On September 22, 1995, New Claridge was issued a four-year casino license by
the New Jersey Casino Control Commission (the "Commission") for the period
commencing September 30, 1995.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations for the Three Months Ended March 31, 1999
The Corporation had a net loss of $1,248,000 for the three months ended
March 31, 1999, compared to a net loss of $1,645,000 for the same period of
1998.
Total Claridge casino revenues during the first quarter of 1999 were
$36,554,000, reflecting a 10.8% decrease from the first quarter of 1998 casino
revenues of $40,994,000. This decrease was due primarily to a reduction in slot
revenues resulting from a redirection of New Claridge's bus program, as further
discussed below. Citywide, total casino revenue for the first three months of
1999, as reported, decreased 1.1% from the same period of 1998.
New Claridge's table games revenue was $9,990,000 for the first quarter
of 1999, a decrease of 8.4% from first quarter of 1998 table games revenue of
$10,903,000. Table games drop (the amount of gaming chips purchased by patrons)
decreased 13.1% in the first three months of 1999 as compared to the same period
of 1998. However, the "hold" percentage (the percentage of win to drop)
increased to 14.1% in the first quarter of 1999, compared to 13.4% in the first
quarter of 1998. Contributing to the decreases in table games during the first
three months of 1999 as compared to the same period of last year was the
aggressive efforts in 1998 to increase table games business, which contributed
to the 26.2% increase in drop over the first quarter of 1997. Citywide, table
games drop and revenue during the first quarter of 1999, as reported, declined
5.9% and 2.8%, respectively, from the first quarter of 1998 levels.
During the first quarter of 1999, New Claridge's slot machine revenues
were $26,564,000, a decline of 11.7% from slot machine revenues during the same
period of 1998, primarily due to the reductions in bus program activity, as
further discussed below. Citywide slot machine revenues, as reported, increased
4.4% during the first quarter of 1999 over the same period of the prior year.
Citywide win per slot machine per day, however, decreased 3.3% from the first
quarter of 1998, as a result of a 3.2% increase in the number of slot machines
available, primarily due to a casino expansion at Caesars Atlantic City Casino
in the second quarter of 1998.
Citywide competition for attracting customers who arrive in Atlantic
City by bus, which had begun to accelerate during the second half of 1998 and
resulted in increased coin incentives paid to bus customers, continued into the
first quarter of 1999. In the fourth quarter of 1998, New Claridge redirected
its bus program to reduce the number of customers who arrive by bus, and, as a
result, reduce the related costs. During the first quarter of 1999, 121,000
patrons arrived at the Claridge by bus, a reduction of 44% from the number of
bus passengers arriving at the Claridge during the same period of 1998. Coin
incentives issued to bus passengers during the first three months of 1999
totalled $2,245,000 (an average of $19 per passenger), a decrease of 34% from
coin incentives issued to bus passengers during the same period of 1998 of
$3,410,000 (an average of $16 per passenger). New Claridge's marketing efforts
have been redirected toward the mid-level slot customer through the use of
direct promotions and advertising. New Claridge offers promotional incentives to
its customers in the form of coin to play slot machines and gaming chips to play
table games, through its direct marketing programs, based on their level of
gaming activity. Promotional incentives issued through these programs during the
first quarter of 1999 totalled $2,324,000, compared to $2,944,000 in the first
quarter of 1998.
Hotel revenues during the first quarter of 1999 were $1,994,000, an
increase of 14.7% over the first quarter of 1998 hotel revenues. Hotel occupancy
in the first quarter of 1999 was 85.0%, with an average
13
<PAGE>
room rate of $51, compared to 84.9% occupancy and an average room rate of $47
during the same period of 1998. Food and beverage revenues declined 5.5% during
the first quarter of 1999 as compared to the same period of 1998, due in part to
the permanent closing of New Claridge's buffet in late 1998 as part of the
refocusing of marketing efforts away from the bus program. The number of covers
(meals served) during the first quarter of 1999 was 210,000, with an average
price per cover of $13.29, compared to 270,000 covers served during the same
period of 1998, with an average price per cover of $10.62. Other income for the
first quarter of 1999 includes the $2.3 million received by New Claridge in
February 1999 as a result of the settlement of the self-parking garage
arbitration proceedings.
Total costs and expenses for the first quarter of 1999 were $45,101,000,
reflecting a reduction of 7.3% from the first quarter of 1998. The reduction in
casino operating expenses was due primarily to decreased coin incentives, as
previously discussed. The reduction in food and beverage expenses was primarily
due to the permanent closing of New Claridge's buffet in late 1998. The increase
in general and administrative expenses was due to increased advertising expenses
resulting from refocusing marketing efforts, as well as increased legal fees
related to the self-parking garage arbitration proceedings.
For the first quarters of 1999 and 1998, the Corporation recorded income
tax benefits of $495,000 and $552,000, respectively, offset by corresponding
increases in the valuation allowances for each respective year.
Results of Operations for the Three Months Ended March 31, 1998
The Corporation had a net loss of $1,645,000 for the three months ended
March 31, 1998, compared to a net loss of $4,815,000 for the same period of
1997.
During the first quarter of 1998, New Claridge's total casino revenue
was $40,994,000, reflecting a 2.8% increase over the first quarter of 1997,
which was slightly better than the 2.5% increase reported in citywide casino
revenues for the same period. Citywide casino results include the effects of the
Bally's Wild Wild West casino, which opened in July 1997, including a 6.6%
increase in the average number of slot machines available, and a 6.5% increase
in the average casino square footage available.
New Claridge's table games drop for the first quarter of 1998 increased
26.2% over the same period of 1997. This increase resulted from several programs
to increase the table games segment of the business, including a marketing
initiative aimed at Asian players, increased junket activity, and increased
player development activity. However, the table games hold percentage during the
first quarter of 1998 decreased to 13.4% from 15.7% during the same period of
1997. As a result, table games revenue for the first three months of 1998
increased 8.1%, to $10,903,000, over the same period of 1997. Citywide table
games drop in the first quarter of 1998, as reported, decreased 1.1% from the
same period of 1997, while citywide table games revenue decreased 2.4% from the
first quarter of 1997.
New Claridge's slot machine revenue for the first quarter of 1998 was
$30,091,000, reflecting a 1.0% increase over the first quarter of 1997 slot
revenue. Citywide slot machine revenue for the first three months of 1998, as
reported, increased 4.8% over the same period of 1997. As previously discussed,
the average number of slot machines available citywide during the first quarter
of 1998 increased 6.6% over the first quarter of 1997 as a result of the opening
of Bally's Wild Wild West casino in July 1997, while the average number of slot
machines available at the Claridge decreased slightly during that period as a
result of a reconfiguration of the casino floor in early 1997.
14
<PAGE>
During the first quarter of 1998, competition for attracting bus
customers continued to ease somewhat, as evidenced by lower average coin
packages offered to patrons in comparison to the same period of 1997. During the
three months ended March 31, 1998, 216,000 casino patrons arrived at the
Claridge by bus, and were issued $3,410,000 in coin incentives, for an average
coin incentive per passenger of $16. This compares to 224,000 bus passengers
arriving at the Claridge in the first quarter of 1997, at an average coin
incentive per passenger of $18, for a total of $3,958,000 in coin incentives
issued through the bus program. In addition, promotional incentives issued
through New Claridge's direct marketing programs during the first quarter of
1998 totalled $2,944,000, compared to $2,850,000 in the first quarter of 1997.
Hotel revenues for the first quarter of 1998 were $1,738,000, slightly
lower than the same period of 1998. Hotel occupancy during the first three
months of 1998 was 84.9%, with an average room rate of $47, compared to 87.8%
occupancy and an average room rate of $45 in the first quarter of 1997. Food and
beverage revenues during the first quarter of 1998 of $4,499,000 were 2.6% lower
than the same period of 1997, primarily due to the closing of the buffet during
a portion of the quarter for completion of kitchen repairs. As a result of the
closing of this outlet, the number of covers (meals served) decreased to
approximately 270,000 in the first quarter of 1998, from approximately 322,300
in the same period of 1997, while the average price per cover increased to
approximately $10.62 in the first quarter of 1998 from approximately $9.32 in
the same period of 1997. Promotional allowances, increased 3.2% in the first
quarter of 1998 over the same period of 1997 primarily due to increased player
development activities.
Casino operating expenses for the three months ended March 31, 1998 of
$25,229,000 increased 8.3% over the same period of 1997, primarily due to
increased table games activity, including higher payroll costs resulting from
the increased level of business, as well as the increased marketing initiatives
to attract that business, as previously discussed. Food and beverage expenses
for the first quarter of 1998 were lower than the same period of 1997 due to an
increase in the allocation of these costs to casino expenses for the cost of
providing promotional allowances to casino patrons. General and administrative
expenses for the first quarter of 1998 of $6,410,000 were lower than those
expenses during the first quarter of 1997 as a result of the increased
professional and legal fees incurred in 1997 related to the Corporation's
attempted reorganization last year.
Rent expense to the Partnership in the first quarter of 1998 was
$6,918,000, reflecting a decrease from rent expense during the first quarter of
1997 of $9,767,000 due to the abatement of rent pursuant to the March 1, 1997
amendments to the Operating Lease and Expansion Operating Lease (see "Liquidity
and Capital Resources"). Prior to these amendments, lease expense (including the
effect of the $38.8 million of rent abatements provided in accordance with the
1989 Restructuring Agreement) was recognized on a leveled basis over the initial
lease term ending September 30, 1998. Since the amount of abatements permitted
in accordance with the March 1, 1997 amendments will vary depending on the
Partnership's cash flow, the actual amount abated on a monthly basis is recorded
as a reduction to lease expense. For the three months ended March 31, 1998, the
reduction to lease expense resulting from the abatement of rent was
approximately $2.5 million; no reduction to lease expense was recorded in the
first quarter of 1997 as a result of the abatement of rent.
For the first quarters of 1998 and 1997, the Corporation recorded
income tax benefits of $552,000 and $1,801,000, respectively, offset by
increases in the valuation allowance of $552,000 and $1,801,000, respectively.
15
<PAGE>
Liquidity and Capital Resources
On January 31, 1994, the Corporation completed an offering of $85
million of First Mortgage Notes (the "Notes"), due 2002, bearing interest at 11
3/4%. The Notes are secured by (i) a non-recourse mortgage granted by the
Partnership representing a first lien on the Hotel Assets; (ii) a pledge granted
by the Corporation of all outstanding shares of capital stock of New Claridge;
and (iii) a guarantee by New Claridge. New Claridge's guarantee of the Notes is
secured by a collateral assignment of the second lien Expandable Wraparound
Mortgage, and by a lien on New Claridge's gaming and other assets, which lien
will be subordinated to liens that may be placed on those gaming and other
assets to secure any future revolving credit line arrangement. On January 28,
1997, New Claridge entered into an agreement to subject the new self-parking
garage to the lien of the mortgage; such lien will not be subordinated to any
liens which may be placed on New Claridge's gaming and other assets to secure
any future revolving credit line arrangement. Interest on the Notes is payable
semiannually on February 1 and August 1 of each year.
The net proceeds of the Notes, totaling $82.2 million, were used as
follows (i) to repay the then outstanding debt of the Corporation under the
Revolving Credit and Term Loan Agreement of approximately $35 million, including
the outstanding balance of the Corporation's revolving credit line, which was
secured by a first mortgage; (ii) to expand the casino capacity of the Claridge
by 12,000 square feet in 1994, including the addition of approximately 500 slot
machines and the relocation of two restaurants and their related kitchens, at a
cost of approximately $12.7 million; (iii) to purchase property in 1995 and
construct on that property a self-parking garage, which opened in 1996, at a
cost (excluding capitalized interest of approximately $2.2 million) of
approximately $28 million (of which approximately $7.5 million represents the
cost of acquiring the land and approximately $20.5 million represents the costs
attributable to building the garage facility); and (iv) to acquire the
Contingent Payment Option (see Note 8, "Other Noncurrent Liabilities") at a cost
of $1 million. With the completion of the construction of the self-parking
garage, the proceeds of the offering of the Notes had largely been expended.
At March 31, 1999, the Corporation had a working capital deficiency of
$24,570,000 as compared to a working capital deficiency of $23,685,000 at
December 31, 1998. The increase in the working capital deficiency is principally
attributable to an increase in accounts payable of $2,413,000, offset partially
by an increase in cash and cash equivalents of $1,575,000. Current liabilities
at March 31, 1999 and December 31, 1998 included deferred rental payments of
$15,078,000, and a $3.6 million loan from the Partnership plus accrued interest
thereon of $4,230,000 at March 31, 1999 and $4,122,000 at December 31, 1998.
These amounts will only be payable upon (i) a sale or refinancing of the
Claridge; (ii) full or partial satisfaction of the Expandable Wraparound
Mortgage; and (iii) full satisfaction of any first mortgage then in place. If
these amounts were not included in current liabilities, the Corporation's
working capital deficiency at March 31, 1999 and December 31, 1998 would have
been $1,662,000 and $885,000, respectively.
For the three months ended March 31, 1999, cash provided by operating
activities was $1,805,000, compared to cash used in operating activities of
$6,537,000 for the three months ended March 31, 1998. Cash provided by operating
activities in 1999 was improved by the deferral, on March 1, 1999, of $1.1
million of basic rent payable to the Partnership under the Operating Lease and
Expansion Operating Lease, as well as the $2.3 million received as a result of
the settlement of the garage arbitration proceedings. In addition, rental
payments made to the Partnership in the first quarter of 1999 were approximately
$4 million lower than during the first quarter of 1998, due to the decreased
cash requirements of the Partnership for servicing the debt under the Expandable
Wraparound Mortgage. Cash used in investing activities for the three months
ended March 31, 1999 was $135,000, compared to cash provided by investing
activities for the three months ended March 31, 1998 of $4,609,000. Cash
provided by investing activities in the first quarter of
16
<PAGE>
1998 was from the receipt of Expandable Wraparound Mortgage principal payments
of $4,448,000, in addition to the approximately $1 million in proceeds received
from PDS Financial Corporation ("PDS") for the sale of certain slot machines
under a sale lease-back arrangement (see further discussion below). For the
three months ended March 31, 1999, cash provided by investing activities was
primarily from the receipt of Expandable Wraparound Mortgage principal payments
of $467,000, offset by increases in other assets and long-term receivables. Cash
used in financing activities in 1999 and 1998 represents payments of capital
lease obligations for certain gaming equipment.
For the three months ended March 31, 1999, the Corporation's "Adjusted
EBITDA" was $2,354,000, compared to $2,119,000 for the same period of 1998.
"EBITDA" represents earnings before interest expense, income taxes,
depreciation, amortization, and other non-cash items. "Adjusted EBITDA" is equal
to "EBITDA" plus rent expense to the Partnership, less interest income from the
Partnership, less "Net Partnership Payments", which represent the Corporation's
net cash outflow to the Partnership. Adjusted EBITDA is used by the Corporation
to evaluate its financial performance in comparison to other gaming companies
with more traditional financial structures. Adjusted EBITDA may be used as one
measure of the Corporation's historical ability to service its debt, but should
not be considered as an alternative to operating income (as determined in
accordance with generally accepted accounting principles) as an indicator of
operating performance, or to cash flows from operating activities (as determined
in accordance with generally accepted accounting principles) as a measure of
liquidity, or to other consolidated income or cash flow statement data, as are
determined in accordance with generally accepted accounting principles.
The Corporation has experienced recurring losses and deterioration in
its cash flow since 1996. Since the Corporation does not have substantial cash
reserves or access to a line of credit, the Corporation needed to experience a
significant improvement in operating results in 1997 over 1996 levels in order
to meet its on-going obligations, including the interest due on the Notes.
Although operating results in 1997 did improve over 1996 levels, due primarily
to the positive impact of the availability of the self-parking garage, lower bus
package pricing, and other cost containment initiatives, operating results in
1998 fell below 1997 levels due to increased citywide competition for casino
customers. In 1998, the Corporation experienced a net loss of $9.4 million,
compared to a net loss of $6.0 million in 1997. In the fall of 1998, New
Claridge redirected its bus program to reduce the number of customers who arrive
by bus, and, as a result, reduce the related costs. Total coin issued to bus
passengers in 1998 was $13.5 million, compared to $15.0 million of coin issued
to bus passengers in 1997. Marketing efforts are being directed toward the
mid-level slot customer through the use of promotions, direct mail and
advertising. Additionally, management continues to conserve cash through various
cost containment measures. Management is also considering various refinancing
alternatives, including a sale of the Corporation, or a restructuring of its
financial obligations.
In view of the operating results of New Claridge in 1998, and in order
to meet its obligations, management of the Corporation took several steps to
enhance its cash position, through both operational changes, including the
previously mentioned redirection of the bus program, and certain transactions
with PDS and the Casino Reinvestment Development Authority ("CRDA"), as further
discussed below.
In December 1997, New Claridge obtained a commitment from PDS for a sale
lease-back facility (the "Facility"). Under the terms of the Facility, New
Claridge could sell certain of its slot machines to PDS under a sale lease-back
arrangement, for a specified amount per slot machine. In February 1998, New
Claridge sold 370 slot machines to PDS for approximately $1 million under this
Facility. The machines were then leased back to New Claridge under an operating
lease arrangement for two years. After two years, New Claridge has an option to
either purchase the machines, renew the lease arrangement for twelve months, or
return the equipment to PDS. In December 1998, New Claridge completed the sale
of an additional 379 slot
17
<PAGE>
machines to PDS for approximately $776,000, under terms similar to those
described above. No additional financing is available under this Facility.
In October 1998, the CRDA approved the direct investment of New Claridge
funds, already on deposit with the CRDA, and the completion of certain donations
of New Claridge funds also already on deposit. These transactions resulted in
the receipt by New Claridge of approximately $930,000 from the CRDA in December
1998.
In addition, in February 1999, the Corporation and New Claridge agreed
to a settlement of approximately $2.3 million in the arbitration proceedings
concerning the accident which took place in New Claridge's self-parking garage
in July 1996. The settlement proceeds were received by New Claridge in late
February 1999.
As a result of these transactions, on March 2, 1999, New Claridge was
able to pay the interest that was due on the Notes on February 1, 1999, under
the 30-day grace period allowed in accordance with the terms of the Indenture.
New Claridge is obligated under its Operating Lease with the Partnership
to lend the Partnership, at an annual interest rate of 14%, any amounts
necessary to fund the cost of furniture, fixtures and equipment replacements.
The Expandable Wraparound Mortgage, granted by the Partnership to New Claridge,
by its terms may secure up to $25 million of additional loans to the Partnership
from New Claridge to finance the replacements of furniture, fixtures and
equipment and facility maintenance and engineering shortfalls. The advances to
the Partnership are in the form of FF&E Loans and are secured by the Hotel
Assets. One half of the FF&E Loan principal is due in the 48th month following
the advance, with the remaining balance due in the 60th month following the date
of issuance. In connection with the offering of $85 million of the Notes on
January 31, 1994, the Corporation agreed to use not less than $8 million from
the net proceeds of the offering to finance internal improvements to the
Claridge, which were funded through additional FF&E Loans. In connection
therewith, the Expandable Wraparound Mortgage Loan agreement as well as the
Operating Lease, and the Expansion Operating Lease were amended to provide that
the principal on these additional FF&E Loans will be payable at final maturity
of the Expandable Wraparound Mortgage. New Claridge is obligated to pay as
additional rent to the Partnership the debt service on the FF&E Loans.
The Expandable Wraparound Mortgage required monthly principal payments
to be made by the Partnership to New Claridge, commencing in the year 1988 and
continuing through the year 1998, in escalating amounts totaling $80 million.
The Expandable Wraparound Mortgage bears interest at an annual rate equal to 14%
with the deferral until maturity of $20 million of certain interest payments
which accrued between 1983 and 1988. In addition, in 1986 the principal amount
secured by the Expandable Wraparound Mortgage was increased to provide the
Partnership with funding for the construction of an expansion improvement, which
resulted in approximately 10,000 square feet of additional casino space and a
3,600 square foot lounge. Effective August 28, 1986, the Partnership commenced
making level monthly payments of principal and interest calculated to provide
for the repayment in full of the principal balance of this increase in the
Expandable Wraparound Mortgage by September 30, 1998. Under the terms of the
Expandable Wraparound Mortgage, New Claridge is not permitted to foreclose on
the Expandable Wraparound Mortgage and take ownership of the Hotel Assets so
long as a senior mortgage is outstanding. The face amount outstanding of the
Expandable Wraparound Mortgage at March 31, 1999 (including the outstanding FF&E
Loans and the $20 million of deferred interest) was $85.8 million.
18
<PAGE>
Effective March 1, 1997, the Corporation, New Claridge and the
Partnership entered into a restructuring agreement, pursuant to which New
Claridge agreed to use its best efforts to cause a modification of the
Expandable Wraparound Mortgage (the "Wraparound Modification") that is permitted
by, or is in compliance with, the terms of the indenture governing the Notes
(the "Indenture"). The Wraparound Modification, if so permitted, will provide
for an extension of the maturity date of the Expandable Wraparound Mortgage from
September 30, 2000 to January 1, 2004. If the Wraparound Modification is not
permitted by or in compliance with the terms of the Indenture, New Claridge has
agreed to effect the Wraparound Modification at such time as the Notes are no
longer outstanding. In addition to the modification to the Expandable Wraparound
Mortgage, the Corporation, New Claridge, and the Partnership agreed to modify
certain terms of the Operating Lease and Expansion Operating Lease agreements,
as discussed below.
Effective September 30, 1998, the Corporation, New Claridge, and the
Partnership agreed to amend the March 1997 restructuring agreement to provide
for an extension of the maturity date of the Expandable Wraparound Mortgage to
January 1, 2005. In addition, the Expandable Wraparound Mortgage Agreement and
Note were amended to defer the principal payments which were payable during the
fourth quarter of 1998 (totalling $3.5 million) to the earlier of (i) the
maturity date of the Expandable Wraparound Mortgage Agreement and Note; (ii)
such earlier date, if any, as the entire principal amount of the Expandable
Wraparound Mortgage becomes due and payable; or (iii) the date on which any
merger, consolidation or similar transaction to which the Corporation or New
Claridge is a party, or any sale of all or substantially all of the assets of
the Corporation or New Claridge is consummated, or any change of control of the
Corporation or New Claridge, occurs.
The Hotel Assets are owned by the Partnership and leased by the
Partnership to New Claridge under the terms of the Operating Lease originally
entered into on October 31, 1983, and the Expansion Operating Lease, which
covered the expansion improvements made to the Claridge in 1986. The initial
terms of both leases expired on September 30, 1998 and each lease provided for
three ten-year renewal options at the election of New Claridge. In connection
with the March 1997 restructuring agreement, New Claridge agreed to exercise the
first of the ten-year renewal options, extending the term of the Operating Lease
and Expansion Operating Lease through September 30, 2008.
Basic rent during the renewal term of each lease is calculated pursuant
to a defined formula, with such rent for the lease year commencing October 1,
1998 through September 30, 1999 not to be more than $29.5 million nor less than
$24 million for the Operating Lease, and not to be more than $3 million nor less
than $2.5 million for the Expansion Operating Lease. In addition, in each
subsequent lease year, rent will be calculated pursuant to a defined formula,
but may not exceed 10% more than the basic rent for the immediately preceding
lease year. Basic rent, as calculated pursuant to the defined formula for the
lease year commencing October 1, 1998 is $24 million for the Operating Lease and
$2.5 million for the Expansion Operating Lease.
New Claridge is also required to pay, as additional rent, certain
amounts including certain taxes, insurance, and other charges related to the
occupancy of the land and Hotel Assets, certain expenses and debt service
related to furniture, fixture and equipment replacements and building
improvements, and the general and administrative costs of the Partnership.
Effective with the consummation of the restructuring in June 1989, the
Operating Lease Agreement and Expansion Operating Lease Agreement were amended
to provide for the deferral of $15.1 million of rental payments due during the
period July 1, 1988 through the beginning of 1992, and to provide for the
abatement of $38.8 million of basic rent payable through 1998, thereby reducing
the Partnership's cash flow to an amount estimated to be necessary to meet the
Partnership's cash requirements. Lease expense (which had
19
<PAGE>
been recognized on leveled basis in accordance with Statement of Financial
Accounting Standards No. 13) was reduced prospectively as a result of the
abatements provided for in connection with the June 1989 restructuring. During
the third quarter of 1991, the maximum deferral of rent was reached. On August
1, 1991, the Operating Lease and Expansion Operating Lease were amended further
to revise the abatement provisions so that, commencing January 1, 1991, for each
calendar year through 1998, the lease abatements could not exceed $10 million in
any one calendar year, and $38.8 million in the aggregate. All of the $38.8
million of available rent abatements were fully utilized by the end of March
1997.
The Fifth Amendment to the Operating Lease and the Fourth Amendment to
the Expansion Operating Lease, which were effective on March 1, 1997, provided
for the abatement of $867,953 of basic rent and for the deferral of $1.3 million
of basic rent on March 1, 1997, and provide for additional abatements of basic
rent, commencing on April 1, 1997, as necessary to reduce the Partnership's cash
flow to an amount necessary only to meet the Partnership's cash requirements
through December 31, 1998. The $1.3 million of basic rent deferred on March 1,
1997 is to be paid to the Partnership in monthly installments of $25,000 for the
period April 1, 1997 through December 31, 1997, and monthly installments of
$50,000 for the year 1998 and thereafter until paid in full (subject to
acceleration under certain circumstances).
Under the terms of the Operating Lease, as amended effective March 1,
1997, New Claridge had an option to purchase (the "Purchase Option"), on
September 30, 1998, the Hotel Assets and the underlying land. To exercise the
Purchase Option, New Claridge was required to give notice to the Partnership, at
least nine months prior to the option date, of its election to do so. Based on
its financial situation, New Claridge did not give such notice to the
Partnership in respect of the September 30, 1998 option date. However, New
Claridge may also exercise an option, on September 30, 2003, to purchase the
Hotel Assets and the underlying land, on January 1, 2004, for their fair market
value at the time the option is exercised.
Effective September 30, 1998, the Operating Lease and Expansion
Operating Lease were further amended, to allow for the deferral of $1.1 million
of rent in either February 1999 or March 1999, dependent upon certain conditions
being met. These conditions, which must have occurred prior to March 2, 1999,
included (i) New Claridge having received the proceeds in connection with its
settlement of the parking garage litigation; and (ii) the Corporation or New
Claridge having paid the interest that was due on the Notes on February 1, 1999.
New Claridge received the proceeds from the settlement of the parking garage
litigation in February 1999, and paid the interest due on the Notes on March 2,
1999, within the 30-day grace period allowed in accordance with the terms of the
Indenture. The $1.1 million of basic rent deferred in 1999 is to be paid to the
Partnership in monthly installments of $25,000 commencing January 1, 2000 until
paid in full (subject to acceleration under certain circumstances). This
amendment also provides for additional abatements of rent, through December 31,
2004, as necessary to reduce the Partnership's cash flow to an amount necessary
only to meet the Partnership's cash requirements; these abatements, however, are
to be reduced by specified amounts for each period commencing January 1, 2000
and ending December 31, 2004 ($83,333 per month in 2000, $130,000 per month in
2001, $180,000 per month in 2002 and 2003, and $130,000 per month in 2004).
In addition to the deferral and abatements of rent provided for in the
Sixth Amendment, the amendment provides for the payment of $3.5 million of
additional basic rent on the earlier of (i) the maturity date of the Expandable
Wraparound Mortgage Note; (ii) such earlier date, if any, as the entire
principal amount of the Expandable Wraparound Mortgage becomes due and payable;
or (iii) the date on which any merger, consolidation, or similar transaction to
which the Corporation or New Claridge is a party, or any sale of all or
substantially all of the assets of the Corporation or New Claridge is
consummated, or any change in control of the Corporation or New Claridge occurs.
20
<PAGE>
If the Partnership should fail to make any payment due under the
Expandable Wraparound Mortgage, New Claridge may exercise a right of offset
against rent or other payments due under the Operating Lease and Expansion
Operating Lease to the extent of any such deficiency.
Management of the Corporation is aware of the issues associated with the
programming code in existing computer systems as the year 2000 approaches. The
"year 2000" problem is the result of computer programs which were written using
two digits rather than four to define the applicable year, which could cause
certain systems to recognize the year 2000 as the year 1900. The Corporation has
assessed its hardware, software, and other non-Information Technology ("IT")
systems, and believes it has a plan in place to address year 2000 issues on a
timely basis. The Corporation's management anticipates using primarily internal
staff to identify, correct, and test the systems for year 2000 compliance,
which, therefore, will not likely result in incremental costs, but rather will
represent a redeployment of existing IT resources. While non-essential, non-year
2000 IT projects may be delayed, adequate resources are available to address
essential non-year 2000 projects, such as regulatory requirements and marketing
programs. The total cost of addressing year 2000 issues is estimated to be
approximately $2.3 million. Approximately 70% of the total cost relates to labor
while the remaining 30% relates to the cost of supplies, equipment, software and
hardware. Through March 31, 1999, the Corporation has spent approximately $1.1
million or 48% of the anticipated total year 2000 project cost. The Corporation
does not expect the amounts required to be expensed related to correcting the
year 2000 problem to have a material effect on its financial position or results
of operations. Although management of the Corporation anticipates completion of
this project by the end of 1999, there can be no assurances of this. If the
modifications are not completed timely, the year 2000 problem could have a
material impact on the Corporation's ability to conduct its business.
In addition to addressing its internal systems, the Corporation is
contacting its significant vendors concerning their year 2000 readiness, and is
formulating contingency plans, which are expected to be in place by June 30,
1999, in the event that certain vendors are not able to fulfill their
obligations to the Corporation.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Claridge Hotel and Casino Corporation
- -----------------------------------------
(Registrant)
By:/s/ Jean I. Abbott
----------------------------------------------------
Jean I. Abbott
Executive Vice President of Finance/
Chief Financial Officer
(Authorized Officer, Principal Financial Officer
and Principal Accounting Officer)
Dated: May 14, 1999
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CLARIDGE
HOTEL AND CASINO CORPORATION'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000730409
<NAME> CLARIDGE HOTEL AND CASINO CORPORATION
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 11,373,000
<SECURITIES> 0
<RECEIVABLES> 6,749,000
<ALLOWANCES> 1,359,000
<INVENTORY> 260,000
<CURRENT-ASSETS> 19,402,000
<PP&E> 41,832,000
<DEPRECIATION> 12,794,000
<TOTAL-ASSETS> 132,586,000
<CURRENT-LIABILITIES> 43,972,000
<BONDS> 85,079,000
0
0
<COMMON> 5,000
<OTHER-SE> (26,481,000)
<TOTAL-LIABILITY-AND-EQUITY> 132,586,000
<SALES> 0
<TOTAL-REVENUES> 43,853,000
<CGS> 0
<TOTAL-COSTS> 25,277,000
<OTHER-EXPENSES> 16,929,000
<LOSS-PROVISION> 196,000
<INTEREST-EXPENSE> 2,699,000
<INCOME-PRETAX> (1,248,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,248,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,248,000)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> 0
</TABLE>
