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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K / A
(AMENDMENT NUMBER 1)
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
OR
[ ] 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: 33-51672
CALIFORNIA HOTEL AND CASINO
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEVADA 88-0121743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
2950 SOUTH INDUSTRIAL ROAD, LAS VEGAS NV 89109
(Address of principal executive offices)(Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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 than 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 .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
As of August 31, 1995, none of the voting stock was held by non-affiliates
of the Registrant.
As of August 31, 1995, the registrant had outstanding 1,000 shares of
Common Stock.
<PAGE> 2
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain
Income Statement Data for the Company on a consolidated basis and for its
properties. As used herein, "Boulder Strip Properties" consists of Sam's Town
Las Vegas, the Eldorado Casino and the Jokers Wild Casino; and "Downtown
Properties" consists of the California Hotel and Casino and the Fremont Hotel
and Casino.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------
1995 1994 1993
-------- -------- -------
(In thousands)
<S> <C> <C> <C>
INCOME STATEMENT DATA
NET REVENUES
Stardust . . . . . . . . . . . . . . . . . . . . . . . . . . . $193,563 $195,899 $191,735
Boulder Strip Properties . . . . . . . . . . . . . . . . . . . 168,036 125,087 108,982
Downtown Properties . . . . . . . . . . . . . . . . . . . . . 135,232 137,726 129,961
-------- -------- --------
Total Properties . . . . . . . . . . . . . . . . . . . . . . 496,831 458,712 430,678
OPERATING INCOME
Stardust . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,688 26,713 28,039
Boulder Strip Properties . . . . . . . . . . . . . . . . . . . 15,551 20,686 24,696
Downtown Properties . . . . . . . . . . . . . . . . . . . . . 22,561 23,583 21,810
-------- -------- --------
Total Properties . . . . . . . . . . . . . . . . . . . . . . 68,800 70,982 74,545
</TABLE>
<PAGE> 3
Fiscal 1995 Compared to Fiscal 1994
Consolidated net revenues increased 8.3% for fiscal 1995 compared to
fiscal 1994. The increase in net revenues in fiscal 1995 resulted from the
opening of Sam's Town Las Vegas expansion in July 1994 and the opening of the
California Hotel rooms expansion in December 1994. Net revenues at the Boulder
Strip Properties increased 34% and net revenues at the Stardust and Downtown
Properties declined 1.2% and 1.8%, respectively. Net revenues at the Boulder
Strip Properties were enhanced by the opening in July 1994 of the Sam's Town
Las Vegas expansion and by the acquisition of the Eldorado Casino and Jokers
Wild Casino in October 1993. The Company's revenue growth was achieved in all
major revenue categories with casino revenue increasing 5.6%, room revenue
increasing 31.3%, food and beverage revenue increasing 8.2% and other revenue
increasing 14.9%. Slot revenue, which continues to account for more than
two-thirds of total casino revenue, increased 8.1% in fiscal 1995 compared to
fiscal 1994. The increase in slot revenue is primarily attributable to the
opening of the Sam's town Las Vegas expansion in July 1994. Table games
revenue, the only other significant component of casino revenue, increased 3.6%
also as a result of the opening of the Sam's Town Las Vegas expansion.
Company-wide room revenue increased 31.3% for fiscal 1995 compared to fiscal
1994 primarily as a result of a 16.1% increase in occupied rooms and a 9.7%
increase in average daily room rate. The increase in occupied rooms is
attributable to the openings of the Sam's Town Las Vegas expansion in July 1994
(650 rooms) and the opening of the California Hotel and Casino rooms expansion
(146 rooms opened in December 1994). The Company's hotel rooms posted an
overall occupancy percentage of 96% in fiscal 1995 compared to 98% in fiscal
1994. Occupancy statistics do not include Main Street Station rooms which the
Company uses to augment the rooms base at the California and Fremont.
Consolidated operating income decreased 3.5% for fiscal 1995 compared
to fiscal 1994 and consolidated operating income margins were 11.4% in fiscal
1995 compared to 12.8% in fiscal 1994. The decline in consolidated operating
income and consolidated operating income margin was primarily the result of
declines at the Boulder Strip Properties and to a lesser extent the Downtown
Properties offset by increases at the Stardust
Net revenues at the Stardust declined 1.2% for fiscal 1995 as compared
to the prior fiscal year. Casino and food and beverage revenues declined 3.8%
and 5.1% respectively, while rooms revenue increased 14.4% and showroom revenue
increased 19.9%. Slot revenue declined 1.8% with a 3.5% increase in wagering
offset by lower net winnings. Table games revenue declined 3.8% as a result of
a decline of 2.2% in wagering combined with slightly lower net winnings. Other
casino revenues declined 15.9% for fiscal 1995 with both the sports book and
keno posting declines in wagering, 17.3% and 17.8% respectively, offset by
slightly higher net winnings. The decline in wagering in the sports book was
primarily attributable to the decline in baseball wagering due to the Major
League Baseball strike. Rooms revenue at the Stardust increased 14.4% for
fiscal 1995 compared to fiscal 1994 with a 2.6% decline in occupied rooms
offset by a 15.7% increase in average daily room rate. The Stardust posted an
occupancy rate of 97% in fiscal 1995 versus 99% in the prior fiscal year.
Operating income margins increased 2.3 percentage points to 15.9% for fiscal
1995 versus 13.6% in fiscal 1994. The increase in the operating income margin
was the result of increased operating income in the rooms department and
showroom department combined with slight decreases in payroll and overhead
expenses.
Net revenues for the Boulder Strip Properties increased 34% for fiscal
1995 versus fiscal 1994 primarily as a result of the opening of the Sam's Town
Las Vegas expansion in July 1994 and also as a result of the acquisition of the
Eldorado Casino and Jokers Wild Casino in October 1993. Sam's Town
<PAGE> 4
revenue increased 31% as a result of the expansion with casino revenue
increasing 22%, food and beverage revenue increasing 54% and increased rooms
revenue as a result of having a full year of rooms revenue in fiscal 1995. For
most of fiscal 1994 all 200 hotel rooms at Sam's Town Las Vegas were removed as
part of the expansion project. Net revenues at the Eldorado and Jokers Wild
increased 40% and 56% respectively, primarily as a result of their acquisition
in October 1993. The operating income margin for the Boulder Strip Properties
was 9.3% in fiscal 1995 versus 16.5% in fiscal 1994. The decline in the
operating income margin was attributable to a decline in Sam's Town operating
income margin to 7.3% from 15.6% and a decline in operating income margins at
the Eldorado and Jokers Wild to 14.8% and 19.8%, respectively, from 18.3% and
23.7%, respectively. The decline in operating income margins at Sam's Town was
primarily attributable to the growth in revenue which did not match the growth
in expenses associated with the expanded property and increased competition,
primarily the opening of a new property on the Boulder Strip. The decline in
operating income margins at the Eldorado and Jokers Wild resulted from
increased competition on the Boulder Strip.
Net revenues at the Downtown Properties decreased 1.8% for fiscal 1995
as compared to fiscal 1994. Net revenues at the California increased 2.5% in
fiscal 1995 with casino revenue increasing 1.5%, rooms revenue increasing 15.9%
and food and beverage revenue declining 4.2%. Net revenues at the California
were enhanced by the opening in December 1994 of a 146-room expansion project.
At the Fremont, net revenues declined 6.1% with casino revenue declining 4.5%
and rooms and food and beverage revenue declining 3.8% and 14.3%, respectively.
During the third and fourth fiscal quarters, the Fremont and to a lesser extent
the California were negatively impacted by the construction of the Fremont
Street Experience. The construction of the Fremont Street Experience, as well
as work on several adjacent streets, impeded the free flow of both vehicular
and pedestrian traffic through downtown Las Vegas. The Company expects to be
negatively impacted by this construction until the Fremont Street Experience is
completed which is expected to be December 1995. The Fremont Street
Experience, a cooperative effort between the downtown casino operators and the
City of Las Vegas, is designed to be a nightly high-tech light and sound
extravaganza set against the backdrop of a space frame high above Fremont
Street. Operating income margins at the Downtown Properties were 16.7% in
fiscal 1995 versus 17.1% in fiscal 1994 with operating income margins at the
California of 17.5% in fiscal 1995 versus 18.7% in fiscal 1994 and operating
income margins at the Fremont of 15.7% in fiscal 1995 versus 15.5% in fiscal
1994. The decline in operating income margin at the California is attributable
to increased revenues in lower margin departments and certain inefficiencies
associated with the opening of the new hotel rooms.
Interest expense, net of amounts capitalized, increased $8.1 million
or 26.8% for fiscal 1995 versus the prior year as a result of increased
borrowings, higher interest rates and less capitalized interest related to
projects under development. Depreciation expense for fiscal 1995 increased
10.5% primarily as a result of the openings of the Sam's Town Las Vegas
expansion and the California rooms addition.
The Company's tax rate for fiscal 1995 was 48% as compared to 38% for
fiscal 1994. The increase in the Company's tax rate was primarily as a result
of the increase in certain non-deductible Company provided benefits.
As a result of these factors, net income before the cumulative effect
of a change in accounting principle decreased $8.4 million or 47% for fiscal
1995 as compared to fiscal 1994. Net income decreased $10.4 million or 52%
during fiscal 1995 compared to the prior fiscal year.
<PAGE> 5
Fiscal 1994 Compared to Fiscal 1993
Consolidated net revenues increased 6.4% for fiscal 1994 compared to
fiscal 1993. The Company continued to experience revenue growth in each of its
market areas with net revenues at the Stardust increasing 2.2%, and net
revenues at the Boulder Strip Properties and Downtown Properties increasing
14.8% and 6.0%, respectively. Revenues at the Boulder Strip Properties were
enhanced by the acquisition of the Eldorado Casino and Jokers Wild Casino in
October 1993 in connection with the initial public offering of Boyd Gaming.
Revenues at these properties offset declines at Sam's Town which occurred as a
result of construction disruption related to the expansion project at that
property. The expanded Sam's Town facility opened on July 1. Revenue growth
was achieved in both casino and food and beverage revenue for fiscal 1994
compared to fiscal 1993, with casino revenue increasing 10.0% and food and
beverage increasing 5.3%. Slot revenue, which accounted for more than
two-thirds of total casino revenue in fiscal 1994, increased 11.7%. The
increased slot revenue is primarily attributable to the acquisition of the
Eldorado and Jokers Wild Casinos; and increases at the Stardust and Downtown
Properties. Table games revenue, the only other significant component of
casino revenue, increased 3.1% also as a result of the acquisition of the
Eldorado and Jokers Wild Casinos. The Company's hotel rooms posted an overall
occupancy percentage of 97.9% for fiscal 1994, up 1.5 percentage points from
fiscal 1993, led by the Stardust which posted a 2.2% increase in occupied rooms
over the prior year. Occupancy percentages do not include Main Street Station
rooms which the Company uses to augment the rooms base at the California and
Fremont. Company-wide rooms revenue decreased 4.8% during fiscal 1994 due
primarily to the absence of rooms for the majority of the year at Sam's Town,
resulting from the expansion project at that property, and decreased rooms
revenue at the Stardust as a result of a slightly lower average room rate and
increased promotional allowances.
Consolidated operating income margins were 12.9% for fiscal 1994
versus 14.7% for fiscal 1993. The decline in operating income margins was
primarily due to the effects of construction disruption at Sam's Town Las Vegas
related to the expansion project at that facility.
Net revenues at the Stardust rose 2.2% for fiscal 1994 as compared to
the prior fiscal year as a result of increases in casino revenue (3.0%), food
and beverage revenue (10.8%) and occupied rooms (2.2%). Slot revenue increased
2.1% with a 9.8% increase in slot wagering offset by lower net winnings. Slot
revenue increased in the first half of the fiscal year and decreased in the
second half due to the Company's plan, implemented in the second quarter of the
fiscal year, to offer customers a more competitive slot product. The initial
impact of this plan resulted in increased wagering not offsetting lower net
winnings. Table games revenue decreased 1.3% with a decline in wagering of
3.0% offset by slightly higher net winnings. Other casino revenues increased
26.8%, with keno and sports posting 75.0% and 45.8% increases respectively
based on higher net winnings. The Stardust achieved an occupancy rate of
99.2%, up 2.1 percentage points from the prior fiscal year. Operating income
margins were 13.6% for fiscal 1994 compared to 14.6% in fiscal 1993. The
decline in operating income margin was the result of higher marketing costs
associated with the opening of three new properties on the Las Vegas Strip in
fiscal 1994.
Net revenues for the Boulder Strip Properties increased 14.8% for
fiscal 1994 versus fiscal 1993 as a result of the acquisition of the Eldorado
and Jokers Wild Casinos. Sam's Town revenue decreased 5.6% during fiscal 1994
as a result of construction disruption related to the expansion project which
took place at the property during fiscal 1994. The expanded Sam's Town
facility opened July 1. Decreases in rooms revenue, resulting from the removal
of all 200 hotel rooms as part of the expansion project, decreases in slot
revenue (5.1%), table games revenue (5.0%), and food and beverage revenue
(6.6%) all contributed to the revenue decline at Sam's Town. The operating
income margin at the Boulder Strip
<PAGE> 6
Properties was 16.5% in fiscal 1994 versus 22.7% in fiscal 1993, with Sam's
Town operating income margin declining to 15.6% in fiscal 1994 as compared to
22.7% in the prior fiscal year. Higher operating income margins at the
Eldorado Casino and Jokers Wild Casino during 1994 partially offset the
declines at Sam's Town. The Eldorado and Jokers Wild Casinos had operating
income margins of 18.3% and 23.6%, respectively.
Net revenues at the California and the Fremont (Downtown Properties)
increased 6.0.% for fiscal 1994 versus fiscal 1993. Slot revenues rose 6.3%
during fiscal 1994 on an increase of 4.6% in slot wagering and slightly higher
net winnings. Table games revenue also rose, increasing 3.9% in fiscal 1994 on
slightly higher wagering and net winnings. The Downtown Properties also posted
significant increases in rooms revenue as a result of the use of additional
rooms at the Main Street Station, located across the street from the California
Hotel and Casino, for the entire year. Operating income at the Downtown
Properties increased 8.1% over the prior year as a result of the increased
revenues and higher operating margins overall. The Downtown Properties achieved
an operating margin of 17.1% overall for fiscal 1994 versus 16.8% for the prior
year.
Interest income declined substantially for fiscal 1994 versus fiscal
1993 due to excess proceeds from the Company's November 1992 senior
subordinated note offering being used to pay down the Company's revolving
credit facility. Interest expense, net of amounts capitalized, decreased 9.8%
during fiscal 1994 versus fiscal 1993 due to lower net borrowings and interest
capitalized during fiscal 1994 related to major expansions which totaled $2.3
million.
During the prior fiscal year the Company recorded a gain on the sale
of an investment of $1.1 million. Also during the prior fiscal year, the
Company recorded an extraordinary loss (net of tax) of $7.4 million resulting
from the redemption at 106% of the Company's $135 million 12 3/4% senior
subordinated note issue due in 1996 and the write-off of certain associated
expenses.
The Company adopted Statement of Financial Accounting Standard (SFAS)
No. 109, Accounting for Income Taxes, effective July 1, 1993. As a result, the
Company recorded a cumulative effect of a change in an accounting principle of
$2.0 million.
As a result of these factors, income before the cumulative effect of a
change in accounting principles and extraordinary item decreased $2.8 million
during fiscal 1994 versus fiscal 1993. Net income increased $6.6 million
during fiscal 1994 versus fiscal 1993.
Liquidity and Capital Resources
The Company's principal sources of funds for the year ending June 30,
1995 consisted of cash flows from operating activities of $39.6 million and
borrowings under its amended senior credit agreement. In September 1993, the
Company amended its senior credit agreement with its banks to increase the
credit availability by $40 million and extend the maturity for three years
until June 1998. As of June 30, 1995, $12.0 million was available under the
amended agreement. For the two fiscal years ended June 30, 1993, the Company's
principal sources of funds consisted of cash flows from operating activities of
$69.6 million and $56.4 million, respectively, and for the year ended June 30,
1993 cash flows from financing activities.
The Company's principal uses of funds for the three years ended June
30, 1994 consisted of cash used in investing activities, primarily for the
acquisition of property and equipment, and cash used in financing activities,
primarily cash paid to reduce long-term debt. For the year ended June 30,
1995,
<PAGE> 7
cash used in investing activities was $37.6 million primarily related to the
completion of the Sam's Town Las Vegas expansion (approximately $15 million)
and the acquisition of property and equipment (approximately $22.6 million).
For the year ended June 30, 1994, cash used in investing activities was
primarily related to the $105 million expansion project at Sam's Town. For the
year ended June 30, 1993, cash used in investing activities was $21.6 million,
primarily for the acquisition of property and equipment.
The Company expects that regular maintenance capital expenditures
(which are included in cash used for investing activities) for its existing
properties will be approximately $22 million, including expenditures for new
slot machines and other gaming equipment. The Company anticipates that cash
used in investing activities for maintenance capital expenditures will be
funded primarily through cash flows from operations.
The Company's principal sources of funds in the foreseeable future
will be cash flow from operating activities, borrowings by the Company under
its amended credit agreement, existing cash balances and vendor and other
financing.
The Company's ability to service its debt will be dependent on its
future performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond the
Company's control.
<PAGE> 8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on June 7,
1996.
CALIFORNIA HOTEL AND CASINO
By: /s/ Keith E. Smith
-----------------------------
Keith E. Smith
Vice President and Controller
(Chief Accounting Officer)
