SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF SECURITIES EXCHANGE ACT OF 1943
For the transition period from ______________ to
_____________
Commission file number 0-14897
Players International, Inc.
Nevada 95-4175832
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3900 Paradise Road, Suite 135 Las Vegas, NV 89109
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (702) 691-3300
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check 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___
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the
registrant's classes of common stock was 29,790,579 shares
at August 7, 1995.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1995
and March 31, 1995 1
Condensed Consolidated Statements of Operations for
Three Months Ended June 30, 1995 and June 30, 1994 3
Condensed Consolidated Statements of Cash Flows for
Three Months Ended June 30, 1995 and June 30, 1994 4
Notes to Condensed Consolidated Financial Statements 5
Item 2.Management's Discussion and Analysis of Results of
Operations and Financial Condition 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 9
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
June 30, March 31,
1995 1995
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 33,398 $ 23,886
Marketable securities, net 125,641 26,446
Accounts receivable, net of allowance
for doubtful accounts of $125 at
June 30, 1995 and $130 at March 31, 1995 980 1,351
Notes receivable 3,299 1,279
Inventories 1,921 863
Deferred income tax 2,110 2,345
Prepaid expenses and other current
assets 6,763 5,452
Total current assets 174,112 61,622
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and
amortization of $12,764 at June 30,
1995 and $10,248 at March 31, 1995 148,332 118,105
DEFERRED INCOME TAX - long-term 1,943 1,943
INTANGIBLES, net 38,335 39,130
OTHER ASSETS 8,661 2,990
TOTAL ASSETS $ 371,383 $ 223,790
The accompanying notes are an integral part of these
condensed consolidated statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, March 31,
1995 1995
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt $ 31 $ 3,375
Accounts payable 10,450 8,233
Accrued liabilities 21,670 27,030
Other liabilities 741 669
Total current liabilities 32,892 39,307
OTHER LONG-TERM LIABILITIES 2,779 2,808
LONG-TERM DEBT, net of current
portion 150,000 5,532
STOCKHOLDERS' EQUITY:
Preferred stock, no par value,
Authorized--10,000,000 shares
Issued and outstanding--none
Common stock, $.005 par value,
Authorized -- 90,000,000 shares
Issued and outstanding--
29,763,940 at June 30, 1995
29,672,400 at March 31, 1995 149 148
Additional paid-in capital 122,867 121,712
Unrealized loss on marketable securities (56) (451)
Retained earnings 62,752 54,734
TOTAL STOCKHOLDERS' EQUITY 185,712 176,143
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 371,383 $ 223,790
The accompanying notes are an integral part of these
condensed consolidated statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
For the Three Months
Ended June 30,
1995 1994
REVENUES:
Casino $ 63,110 $ 44,696
Food and beverage 1,668 1,947
Other 834 1,683
65,612 48,326
COSTS AND EXPENSES:
Casino 24,399 15,671
Food and beverage 1,547 2,026
Other gaming related expenses 14,496 10,077
Corporate administrative expenses 1,830 1,520
Pre-opening and gaming development 5,758 1,575
costs
Depreciation and amortization 3,477 1,712
51,507 32,581
Income before other income
(expense) and provision for income taxes 14,105 15,745
OTHER INCOME (EXPENSE):
Interest income 2,123 657
Other income, net 304 300
Interest expense (3,388) (141)
(961) 816
Income before provision for income taxes 13,144 16,561
PROVISION FOR INCOME TAXES 5,126 6,120
NET INCOME $8,018 $ 10,441
EARNINGS PER COMMON AND COMMON
SHARE EQUIVALENT:
Primary $ 0.25 $ 0.34
Fully diluted 0.25 0.34
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES:
Primary 32,473,170 30,846,600
Fully diluted 32,473,501 30,846,600
The accompanying notes are an integral part of these
condensed consolidated statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
For the Three Months
Ended June 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,018 $10,441
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,477 1,712
Other (547) 51
Changes in assets and liabilities:
Accounts and notes receivable (1,631) (104)
Inventories, prepaid expenses (2,153) (726)
and other current assets
Other assets (7,248) (372)
Accounts payable and accrued (4,776) (99)
liabilities
Other liabilities 45 (93)
Income tax payable
(217) 3,317
Net cash (used) provided by
operating activities (5,032) 14,127
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and (29,704) (8,419)
equipment
Purchase of marketable securities (117,277) (1,668)
Proceeds of sale of marketable
securities 19,245 3,500
Net cash used in investing
activities (127,736) (6,587)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term 150,000 --
debt
Payments of long-term debt (8,876) (41)
Proceeds from exercise of stock 1,157 493
options
Other (1) (46)
Net cash provided by financing
activities 142,280 406
NET INCREASE IN CASH AND CASH 9,512 7,946
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 23,886 13,957
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 33,398 $ 21,903
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 187 $ 141
Income taxes paid 5,350 2,800
Debt incurred to purchase land and -- 3,211
equipment
Stock issued to purchase land -- 4,238
Unrealized gain (loss) on 394 (330)
marketable securities, net of tax
The accompanying notes are an integral part of these
condensed consolidated statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures
normally included in annual financial statements prepared in
accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and
regulations. It is suggested that these condensed financial
statements be read in conjunction with the financial
statements and the notes thereto included in the Company's
Form 10-K for the year ended March 31, 1995. In the opinion
of management, all adjustments (which include normal
recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows of
all periods presented have been made.
The results of operations for the three month period
ended June 30, 1995, are not necessarily indicative of the
operating results for the full year.
Certain reclassifications have been made to the
financial statements as previously presented to conform to
current classifications.
Note 2 - Casino Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses.
Revenues exclude the retail value of complimentary
admissions, food and beverage and other items furnished to
customers, which totaled approximately $3,941,000 and
$1,675,000 for the three months ended June 30, 1995 and
1994, respectively.
The estimated cost of providing such complimentary
services are included in casino costs and expenses through
inter-department allocations from the department granting
the services as follows (dollars in thousands):
For the Three Months
Ended June 30,
1995 1994
Food and beverage $ 2,784 $ 975
Admissions and other 810 587
$ 3,594 $ 1,562
Note 3 - Pre-opening and Gaming Development Costs
All costs in connection with the identification and
development of new gaming jurisdictions and sites are being
expensed except for the cost of property and equipment,
which is capitalized.
Note 4 - Primary and Fully Diluted Shares
Per share amounts have been computed based on the
weighted average number of outstanding shares and common
stock equivalents, if dilutive, during each period. A
summary of the number of shares used in computing primary
earnings per share follows:
For the Three Months
Ended June 30,
1995 1994
Weighted average number
of shares outstanding 29,726,225 26,455,050
Dilutive effect of options
and warrants 2,746,945 4,391,550
Shares used in computing
primary earnings per share 32,473,170 30,846,600
For the three months ended June 30, 1995 and 1994,
primary and fully diluted earnings per share are not
materially different.
Note 5 - Long-Term Debt
On April 17, 1995, the Company issued $150,000,000
aggregate principal amount of 10-7/8% Senior Notes due to
mature on April 15, 2005. Interest is payable in cash semi-
annually on April 15 and October 15 commencing October 15,
1995. The Company intends to use the net proceeds for
future expansion and development.
On June 30, 1995, the Company made aggregate payments
of $8,876,000 to pay off existing debt.
Note 6 - Stockholders' Equity
On April 26, 1995, the Board of Directors declared a 3-
for-2 stock split for stockholders of record at the close of
business on May 8, 1995. All references to share data have
been retroactively restated to reflect this split.
Note 7 - Subsequent Events
The Company entered into an agreement on July 20, 1995
to purchase the President Casino IV Riverboat, subject to
the receipt of regulatory approval by the Louisiana
Riverboat Gaming Commission, the Louisiana State Police and
the U.S. Coast Guard. Preliminary plans call for the
President Casino IV to replace the Company's original Lake
Charles Riverboat, the Players II. The addition of the new
riverboat will increase gaming space by 4,400 square feet
and add 50 gaming positions. Subject to regulatory approval
from the Illinois Gaming Board, Players II will be moved to
the Company's riverboat facility in Metropolis, Illinois
where it will replace the Company's existing Metropolis
riverboat. Assuming receipt of the foregoing approvals, the
Company currently anticipates spending an additional $9
million for the acquisition of the gaming equipment,
refitting and transportation costs and costs associated with
receipt of the required approvals.
Item 2.Management's Discussion and Analysis of Results of
Operations and Financial Condition
General
The Company is currently a developer and operator of
gaming and entertainment facilities. The Company owns and
operates one riverboat casino in Metropolis, Illinois, which
commenced operations on February 23, 1993, two riverboat
casinos in Lake Charles, Louisiana, the Players Riverboat
Casino, which commenced operations on December 8, 1993, and
the Lake Charles Star Riverboat, which commenced operations
on April 27, 1995, and the Players Island Resort, a land
based casino complex which opened on June 29, 1995 in
Mesquite, Nevada. The Company also operates a horse
racetrack in Paducah, Kentucky. The Company is presently
engaged in the application and/or development process for a
number of potential gaming and entertainment facilities in
jurisdictions where gaming has been legalized or may soon be
legalized.
Liquidity and Capital Resources
As of June 30, 1995, the Company had $159 million in
cash and cash equivalents and marketable investment grade
debt securities as compared to $50.3 million at March 31,
1995, reflecting primarily the Company's issuance of $150
million of 10-7/8% Senior Notes on April 17, 1995.
During the three month period ended June 30, 1995, the
Company used $5 million in its operating activities as
compared to the comparable period of the prior year when $14
million was provided by operating activities. The Company
invested $29.7 million in property and equipment, primarily
relating to the completion of its property in Mesquite,
Nevada, during the three months ended June 30, 1995. Cash
used in investing activities of $127.7 million for the
quarter also reflects the purchase of $117 million in
marketable securities. Cash provided by financing
activities of $142.3 million for the three months ended June
30, 1995 reflects $150 million in proceeds from the issuance
of Senior Notes offset by the repayment of $8.9 million in
long term debt.
The Company is pursuing the development or acquisition
of additional gaming and entertainment facilities which will
require extensive amounts of capital. Based on projects
currently under development, the Company estimates that
expenditures on the development of additional facilities
could total up to $250 million over the next twelve months.
The Company expects to fund these expenditures with (i) cash
on hand, (ii) net proceeds from the April 17, 1995 issuance
of Senior Notes, (iii) cash flow from operations, and if
needed, (iv) drawings available under a bank credit
agreement which currently being finalized.
On July 20, 1995, the Company entered into an agreement
to purchase the President Casino IV Riverboat for
approximately $18 million, subject to the receipt of
regulatory approval by the Louisiana Riverboat Gaming
Commission, the Louisiana State Police and the U.S. Coast
Guard. Assuming receipt of the foregoing approvals, the
Company anticipates spending an additional $9 million for
the acquisition of gaming equipment, refitting and
transportation costs associated with receipt of required
approvals.
Results of Operations
Total revenues increased by 36% to $65.6 million for
the quarter ended June 30, 1995 when compared to total
revenues of $48.3 million for the comparable quarter of the
prior year. This increase was due primarily to the opening
of the Lake Charles Star Riverboat on April 27, 1995 and its
operation for the remainder of the quarter. The Company's
Lake Charles operations, including both riverboat casinos,
generated $43.4 million in casino revenues for the three
months ended June 30, 1995 as compared to $27.4 million for
comparable period of the previous year. Casino revenues for
the Metropolis riverboat increased to $19.6 million for the
June 30, 1995 quarter as compared to $17.3 million for the
quarter ended June 30, 1994. The 13% period over period
increase in casino revenues can be attributed to the
maturation of the marketing programs in Metropolis which has
resulted in an increased customer base for the facility.
For the quarter ended June 30, 1995, total operating
costs increased 58% to $51.5 million as compared to $32.6
million for the prior year quarter. Again, the increase in
total operating expenses primarily reflected the opening of
the Lake Charles Star Riverboat in April 1995. In addition,
operations in Lake Charles and Metropolis incurred
additional advertising and marketing costs during the June
30, 1995 quarter as compared to the prior year in
anticipation of increased competition from other casino
facilities.
Corporate administrative costs were $1.8 million and
$1.5 million for the three months ended June 30, 1995 and
1994, respectively. The increase reflects primarily staff
expansion and additional administrative activities
associated with the operations of three facilities as
compared to two facilities for the prior period.
Pre-opening and gaming development costs were $5.8
million for the three months ended June 30, 1995 as compared
to $1.6 million for the three months ended June 30, 1994.
Pre-opening expenses for the June 30, 1995 quarter were $4.8
million, of which $4.5 million related to the opening of
Players Island Resort and the Lake Charles Star Riverboat.
In comparison, the Company incurred pre-opening expenses of
$52,000 for the quarter ended June 30, 1994. Development
costs amounted to $1 million for the quarter ended June 30,
1995 as compared to $1.5 million for the comparable period
of the prior year. The decrease is primarily the result of
reduced legislative activity in emerging jurisdictions.
Depreciation and amortization amounted to $3.5 million
and $1.7 million for the three months ended June 30, 1995
and 1994, respectively. The increase is primarily due to
the amortization of goodwill and increased depreciation
expense associated with the acquisition of the Lake Charles
Star Riverboat in April 1995.
For the quarter ended June 30, 1995, the Company
recorded other expenses of $961,000 as compared to other
income of $816,000 during the comparable period of the prior
year. Increased interest expense for the quarter ended June
30, 1995 of $3.4 million as compared to $141,000 for the
same period of the prior year was partially offset by an
increase in interest income to $2.1 million for the June 30,
1995 quarter as compared to $657,000 for the prior year
period. The increase in interest expense is the result of
the Company issuing $150 million in 10-7/8% Senior Notes in
April 1995. The increase in interest income was directly
related to the investment of the proceeds from the issuance
of the Senior Notes in investment grade debt securities.
The Company's effective net tax rate covering both
state and Federal taxes was 39% for the quarter ended June
30, 1995 as compared to 37% for the comparable period of the
prior year. The increase reflects less tax exempt income on
investments, $52,000 versus $558,000, during the quarter
ended June 30, 1995 as compared to the June 1994 quarter.
Consolidated net income was $8.0 million, or $.25 per
share, as compared to $10.4 million, or $.34 per share, for
the three months ended June 30, 1995 and 1994, respectively.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Jebaco Litigation
On May 12, 1995, Jebaco, Inc. (`Jebaco') filed suit in
Louisiana State Court for, among other things: injunctive
relief to prevent the Company's purchase of the Players
Hotel and approximately 15 acres of real estate comprising
the landside facility adjacent to the Company's Lake Charles
riverboats (the `Property') from The Beeber Corporation
(`Beeber'); judicial dissolution of the Company's original
acquisition (from Jebaco) of the Company's option to enter
into the Lake Charles lease arrangement; a judicial
determination of the amount, manner of computation and
manner of payment of the continuing lease payments under
such lease; an accounting; and monetary damages. Although
a temporary restraining order was originally issued against
the Company's purchase of the Property, the Louisiana State
Court on May 24, 1995 dissolved the temporary restraining
order and refused to issue a preliminary injunction, thereby
permitting the purchase of the Property, which is expected
to close during the second quarter of fiscal 1996. The
Company believes that this litigation represents a dispute
primarily between Jebaco and Beeber. The Company, Beeber
and Jebaco have entered into a settlement agreement to
resolve all issues raised in such litigation. Pursuant to
this agreement, a stipulation of dismissal of all claims
will be filed in Louisiana State Court. The settlement
agreement provides that the Company will make payments to
Jebaco and Beeber based upon a revised computation related
to the number of passengers who patronize the Company's Lake
Charles riverboats. This revised computation provides for
an aggregate Company payment of $2.95 per passenger, based
upon passenger counts reported to the U.S. Coast Guard.
Settlement of Missouri Litigation
The Company, Land Property Associates, Inc. (`LPA') and
Roy W. Fischer, Jr. (`Fischer') entered into a Settlement
Agreement and Release dated as of June 30, 1995 (the
`Settlement Agreement'). Pursuant to the Settlement
Agreement (i) Players paid Fischer and LPA $30,000, (ii)
three lawsuits between the parties, as well as two
additional lawsuits by Fischer against the Missouri Gaming
Commission were dismissed with prejudice, (iii) Fischer and
LPA released all claims against Players, The Promus
Companies, Incorporated (`Promus') and related persons
(including Harrah's), (iv) Players and Promus released all
claims against Fischer, LPA and related persons, (v) all
agreements between the parties (with the exception of one
lease which expired on July 2, 1995) were terminated by
mutual agreement, (vi) Fischer agreed that he would not take
any `public' action during the next five years that would
interfere with either the Maryland Heights Project or any
other Players gaming project in the State of Missouri, and
(vii) Fischer agreed that he would not be involved during
the next five years with any other gaming facility located
in the City of Maryland Heights, Missouri.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K
The Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 26, 1995
concerning the purchase of the partnership that owns the
Lake Charles Star Riverboat and the sale of 10-7/8% Senior
Notes due 2005.
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.
PLAYERS INTERNATIONAL, INC.
Date: August 11, 1995 By /s/ Peter J. Aranow
Peter J. Aranow, Executive
Vice President
Chief Financial Officer
Date: August 11, 1995 By /s/ Stephen K. Radusch
Stephen K. Radusch, Controller
Principal Accounting Officer
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