<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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)
NEVADA 88-0121743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA
89109
(Address of principal executive offices)
(Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
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
filing requirements for the past 90 days.
Yes X No
--- ---
Shares outstanding of each of the Registrant's classes of common stock as of
January 31, 1997
Class Outstanding
----- -----------
Common stock, $.01 par value 1,000
<PAGE> 2
CALIFORNIA HOTEL AND CASINO
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1996
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Item 1. Condensed Financial Statements
Consolidated Condensed Balance Sheets at December 31, 1996
and June 30, 1996 3
Consolidated Condensed Statements of Income for the three and
six months ended December 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows for the six
months ended December 31, 1996 and 1995 5
Consolidated Condensed Statements of Changes in Stockholder's
Equity for the six months ended December 31, 1996 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF BOYD GAMING CORPORATION)
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
(IN THOUSANDS, EXCEPT SHARE DATA) 1996 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 42,406 $ 28,444
Accounts receivable, net 9,366 7,414
Inventories 7,679 5,822
Prepaid expenses 12,023 10,772
Income taxes receivable 2,248 --
-------- --------
Total current assets 73,722 52,452
Property, equipment and leasehold interests, net 510,185 490,675
Other assets and deferred charges 21,745 24,139
Goodwill, net 10,076 10,254
-------- --------
Total assets $615,728 $577,520
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Current maturities of long-term debt $ 1,509 $ 1,455
Accounts payable 44,320 29,306
Accrued liabilities
Payroll and related 20,478 18,728
Interest and other 9,571 8,571
Income taxes payable -- 1,047
-------- --------
Total current liabilities 75,878 59,107
Long-term debt, net of current maturities 384,800 363,915
Due to related party -- 500
Deferred income taxes 24,571 24,148
Commitments
Stockholder's equity
Preferred stock, $100 par value; 200,000 shares authorized -- --
Common stock, no par value; 2,500 shares authorized;
1,000 shares outstanding 22,328 22,328
Additional paid-in capital 32,856 32,856
Retained earnings 75,295 74,666
-------- --------
Total stockholder's equity 130,479 129,850
-------- --------
Total liabilities and stockholder's equity $615,728 $577,520
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 4
CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES
(a wholly owned subsidiary of Boyd Gaming Corporation)
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------- ------------------------
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Casino $ 93,981 $ 95,829 $181,742 $183,174
Food and beverage 31,024 28,848 60,182 56,031
Rooms 15,878 15,240 30,923 29,857
Other 10,106 10,542 17,682 17,858
-------- -------- -------- --------
Gross revenues 150,989 150,459 290,529 286,920
Less promotional allowances 16,052 15,044 31,904 28,348
-------- -------- -------- --------
Net revenues 134,937 135,415 258,625 258,572
-------- -------- -------- --------
Costs and expenses
Casino 50,196 47,180 98,724 91,356
Food and beverage 22,155 21,397 42,755 43,479
Rooms 5,085 5,177 10,547 10,957
Other 6,974 7,358 12,571 12,430
Selling, general and administrative 17,878 18,087 34,754 34,455
Maintenance and utilities 6,186 5,553 13,076 12,563
Depreciation and amortization 10,550 11,438 20,962 22,748
Corporate expense 1,800 2,608 4,800 5,910
Preopening expense 3,481 -- 3,481 --
-------- -------- -------- --------
Total 124,305 118,798 241,670 233,898
-------- -------- -------- --------
Operating income 10,632 16,617 16,955 24,674
-------- -------- -------- --------
Other income (expense)
Interest income 115 -- 115 --
Interest expense, net of amounts
capitalized (8,239) (9,229) (16,006) (18,829)
-------- -------- -------- --------
Total (8,124) (9,229) (15,891) (18,829)
-------- -------- -------- --------
Income before provision for income taxes 2,508 7,388 1,064 5,845
Provision for income taxes 984 2,844 435 2,753
-------- -------- -------- --------
Net income $ 1,524 $ 4,544 $ 629 $ 3,092
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
<PAGE> 5
CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES
(a wholly owned subsidiary of Boyd Gaming Corporation)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 629 $ 3,092
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,962 22,748
Deferred income taxes 428 --
Other 116 (17)
Changes in assets and liabilities:
Increase in accounts receivable, net (1,952) (957)
Increase in inventories (1,857) (655)
Increase in prepaid expenses (1,251) (1,915)
(Increase) decrease in other assets 1,871 (8,195)
Increase in income taxes receivable (2,253) --
Increase in other current liabilities 19,575 19,494
Decrease in income taxes payable (1,047) (2,116)
-------- --------
Net cash provided by operating activities 35,221 31,479
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets (41,698) (21,238)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under credit agreements 21,638 (3,750)
Payments on long-term debt (1,199) (13,197)
Contributed capital from parent -- 19,250
-------- --------
Net cash provided by financing activities 20,439 2,303
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,962 12,544
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 28,444 21,798
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 42,406 $ 34,342
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 15,693 $ 19,307
======== ========
Cash paid for income taxes $ 2,175 $ 4,200
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Property additions acquired on contracts and trade
payables which were accrued, but not yet paid $ 1,326 $ 2,114
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 6
CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES
(a wholly owned subsidiary of Boyd Gaming Corporation)
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
(In thousands, except share data)
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-In Retained Stockholder's
Shares Amount Capital Earnings Equity
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, July 1, 1996 1,000 $22,328 $32,856 $74,666 $129,850
Net income for the six months
ended December 31, 1996 629 629
----- ------- ------- ------- --------
Balances, December 31, 1996 1,000 $22,328 $32,856 $75,295 $130,479
===== ======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-6-
<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying Consolidated Condensed Financial Statements include the
accounts of California Hotel and Casino and its wholly owned subsidiaries,
collectively referred to herein as the "Company". The Company owns and operates
seven casino entertainment facilities in Las Vegas. All material intercompany
accounts and transactions have been eliminated. The Company is a wholly owned
subsidiary of Boyd Gaming Corporation.
Basis of Presentation
In the opinion of the Company, the accompanying unaudited Consolidated Condensed
Financial Statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the results of its operations
for the three and six months ended December 31, 1996 and 1995 and its cash flows
for the six months ended December 31, 1996 and 1995. It is suggested that this
report be read in conjunction with the Company's audited financial statements
included in the Annual Report on Form 10-K for the fiscal year ended June 30,
1996. The operating results for the three and six months ended December 31,
1996 and cash flows for the six months ended December 31, 1996 are not
necessarily indicative of the results that will be achieved for the full fiscal
year or for future periods.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Recently Adopted Accounting Standards
The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of, in March 1995. This statement was adopted by the
Company for the fiscal year beginning July 1, 1996 and requires that long-lived
assets and certain identifiable intangibles to be held and used by an entity be
reviewed whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The adoption of SFAS No. 121 did
not have an effect on the financial position or results of operations of the
Company as of December 31, 1996.
Note 2. Long-Term Debt
The Company, through its wholly owned subsidiary California Hotel Finance
Corporation, has issued $185 million senior subordinated notes at 11%. The
notes are unconditionally guaranteed on a senior subordinated and unsecured
basis by the Company. The guarantee is subordinated to all existing and future
senior debt (as defined in the Indenture related to the notes) of the Company
(approximately $171 million at December 31, 1996) and is effectively
subordinated to all existing and future
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<PAGE> 8
indebtedness and other liabilities (including trade payables) of the
subsidiaries of the Company (approximately $41.7 million at December 31, 1996).
The Company is not in default and there are no payment blockages with respect
to the notes. In connection with Boyd Gaming Corporation's issuance of
$200,000,000 Senior Notes on October 4, 1996, the Company is a guarantor to
those Senior Notes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------- ----------------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUES
Stardust $46,024 $ 48,612 $ 91,290 $ 96,406
Boulder Strip Properties 51,538 50,492 96,758 93,404
Downtown Properties 37,375 36,311 70,577 68,762
-------- -------- -------- --------
TOTAL PROPERTIES $134,937 $135,415 $258,625 $258,572
-------- -------- -------- --------
OPERATING INCOME
Stardust $ 4,870 $ 7,114 $ 8,342 $ 12,917
Boulder Strip Properties 7,607 6,673 11,419 9,566
Downtown Properties 3,764 5,995 6,130 8,979
Preopening expense (3,481) -- (3,481) --
-------- -------- -------- --------
TOTAL PROPERTIES $ 12,760 $ 19,782 $ 22,410 $ 31,462
======== ======== ======== ========
</TABLE>
THE ABOVE TABLE SETS FORTH FOR THE PERIODS INDICATED CERTAIN INCOME STATEMENT
DATA FOR THE COMPANY'S PROPERTIES. AS USED HEREIN, "BOULDER STRIP PROPERTIES"
CONSIST OF SAM'S TOWN LAS VEGAS, THE ELDORADO AND JOKERS WILD; "DOWNTOWN
PROPERTIES" CONSIST OF THE CALIFORNIA, THE FREMONT AND MAIN STREET STATION.
OPERATING INCOME FROM PROPERTIES AS SHOWN IN THE TABLE EXCLUDES CORPORATE
EXPENSE, INCLUDING RELATED DEPRECIATION AND AMORTIZATION, WHICH ITEMS ARE NOT
ALLOCATED TO THE PROPERTIES.
REVENUES
Consolidated net revenues declined slightly (.4%) for the three-month
period ended December 31, 1996 compared to the same period in the prior fiscal
year. Revenues at the Stardust declined 5.3% while revenues increased 2.1% at
the Boulder Strip Properties and revenues increased 2.9% at the Downtown
Properties versus the comparable period of the prior year. The increase in
revenues at the Downtown Properties was attributable to revenues from Main
Street Station which opened in November 1996. Company-wide casino revenue
decreased 1.9% during the second fiscal quarter of 1997. Food and beverage
revenue increased 8.2% and rooms revenue increased 2.2% for the three months
ended December 31, 1996.
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<PAGE> 9
Consolidated net revenues were unchanged for the six month period ended
December 31, 1996 compared to the same period in the prior fiscal year. Revenues
at the Stardust declined 5.3% which offset revenue increases of 3.6% for the
Boulder Strip Properties and revenue increases of 2.6% at the Downtown
Properties versus the comparable period of the prior year. Company-wide casino
revenue decreased .8% for the six months ended December 31, 1996 compared to the
comparable period in the prior year while food and beverage revenue increased
5.4% and rooms revenue decreased 3.4% compared to the prior year.
OPERATING INCOME
Consolidated operating income for the second quarter of fiscal 1997 was
$10.6 versus $16.6 million for the prior year's second quarter, a decrease of
36%. Consolidated operating income margin declined to 7.9% from 12.3% for the
second quarter of fiscal 1997 versus the same period in fiscal 1996.
Consolidated operating income for the six months ended December 31, 1996
was $17.0 million versus $24.7 million for the comparable period in the prior
fiscal year, a decrease of 31%. Consolidated operating income margins declined
to 6.6% from 9.5% for the six months ended December 31, 1996 compared to the
prior fiscal year.
STARDUST
Net revenues at the Stardust decreased 5.3% for the second quarter of
fiscal 1997 versus the second quarter in the prior fiscal year. Casino revenue
declined 6.6% primarily as a result of lower win percentage in the race and
sports books partially offset by a 17% increase in wagering volume. Table games
and slots produced comparable wagering and win for the three months ended
December 31, 1996 versus the comparable period in the prior fiscal year. Rooms
revenue for the three months ended December 31, 1996 decreased 5.1% with a 1.2%
increase in occupied rooms offset by a .8% decline in average daily room rate.
Operating income decreased $2.2 million (32%) for the three months ended
December 31, 1996 versus the comparable period in the prior fiscal year.
Operating income margin for the second quarter of fiscal 1997 declined to 10.6%
from 14.6% in the prior year's second fiscal quarter. The decline in operating
income and operating income margin is primarily a result of lower revenues
leading to decreased operating income and operating income margins in the casino
and rooms departments and increased marketing and promotional expenses.
For the six months ended December 31, 1996 net revenues at the Stardust
decreased 5.3% compared to the comparable period in the prior fiscal year.
Casino revenue declined 6.0% as a result of lower win percentages in the casino
and race and sports book partially offset by increased wagering volumes. Rooms
revenue for the six months ended December 31, 1996 decreased 9.0% with a 1.2%
increase in occupied rooms offset by an 1.7% decrease in average daily room
rate. Operating income margin for the six months ended December 31, 1996
declined to 9.1% from 13.4% in the prior year's six month period. Operating
income declined $4.6 million (35%) for the six months ended December 31, 1996
versus the comparable period in the prior fiscal year. The decline in operating
income and operating income margin is primarily a result of lower revenues
leading to decreased operating income and operating income margins in the casino
and rooms departments and increased marketing and promotional expenses.
-9-
<PAGE> 10
BOULDER STRIP PROPERTIES
Net revenues at the Boulder Strip Properties increased 2.1% for the
three months ended December 31, 1996 compared to the same period in the prior
fiscal year primarily as a result of a 3.0% increase in revenues at the Sam's
Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 2.2%
for the three months ended December 31, 1996. Rooms revenue and food and
beverage revenue increased 22.5% and 4.1%, respectively, for the three months
ended December 31, 1996 compared to the comparable period in the prior fiscal
year. The operating income margin at the Boulder Strip Properties increase to
14.8% from 13.2% for the three months ended December 31, 1996 versus the
comparable period in the prior fiscal year due primarily to improved operating
margins at Sam's Town Las Vegas in the casino, rooms and food and beverage
departments.
For the six months ended December 31, 1996 net revenues at the Boulder
Strip Properties increased 3.6% compared to the same period in the prior fiscal
year primarily as a result of a 5.3% increase in revenues at Sam's Town Las
Vegas. Casino revenues at the Boulder Strip Properties increased 4.4% for the
six months ended December 31, 1996 versus the comparable period in the prior
fiscal year, while rooms revenue and food and beverage revenue increased 9.5%
and 2.1%, respectively. The operating income margin in the Boulder Strip
Properties increased to 11.8% from 10.2% for the six months ended December 31,
1996 versus the comparable period in the prior fiscal year due primarily to
improved operating margins at Sam's Town Las Vegas in the casino, rooms and food
and beverage departments.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 2.9% for the three
months ended December 31, 1996 compared to the same period in the prior year as
a result of the opening of Main Street Station in November 1996. Net revenues
at the California decreased 15.7% for the three months ended December 31, 1996
with casino revenue declining 16.8%, rooms revenue declining 24.1 % and food
beverage revenue declining 9.1%. Casino revenue at the California declined as a
result of lower wagering volumes and a lower win percentage for the three months
ended December 31, 1996 versus the comparable period in the prior fiscal year.
Rooms revenue at the California declined as a result of a 8.1% decrease in
occupied rooms for the three months ended December 31, 1996 versus the
comparable period in the prior fiscal year. At the Fremont, net revenues
decreased 2.9% for the three months ended December 31, 1996 versus the
comparable period in the prior fiscal year with casino revenue decreasing 7.0%
and food and beverage increasing 7.8% while rooms revenue was unchanged.
Operating income margins at the Downtown Properties were 10.1% for the three
months ended December 31, 1996 versus 16.5% in the comparable period in the
prior fiscal year with operating income margins at both the California and
Fremont declining. Operating income margins at the California declined in the
casino and rooms departments as a result of lower revenues, while operating
income margins at the Fremont declined due to decreases in the casino and rooms
departments as a result of lower revenues which were partially offset by
increased margins in the food and beverage departments. Downtown Properties
results for the three months ended December 31, 1996 include Main Street Station
which opened in November 1996. Through December 31, 1996, Main Street Station
contributed $4.6 million in revenue and produced a small operating loss before
preopening
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<PAGE> 11
expense. Upon commencement of operations a preopening charge of $3.5 million
was recorded.
Net revenues at the Downtown Properties increased 2.6% for the six
months ended December 31, 1996 compared to the same period in the prior fiscal
year. Net revenues at the California decreased 11.0% for the first six months
of fiscal 1997 with casino revenue declining 11.7%, rooms revenue declining
15.6% and food and beverage revenue declining 6.6%. All revenues were impacted
due to a rooms remodel project at the California in the first quarter of fiscal
1997. The California had approximately 15% of its rooms base unavailable in the
first fiscal quarter of 1997. At the Fremont, net revenues increased 3.9% for
the six month period ended December 31, 1996 versus the comparable period in the
prior fiscal year, with casino revenue increasing .7% and rooms and food and
beverage increasing .4% and 17.1%, respectively. Operating income margins at
the Downtown Properties were 8.7% for the six months ended December 31, 1996
versus 13.1 % in the comparable period in the prior fiscal year with operating
income margins at both the California and Fremont declining primarily as a
result of lower revenues. Operating income margins at the California declined
in the casino and rooms departments while operating income margins at the
Fremont declined due to decreases in the casino and rooms departments which were
partially offset by increased margins in the food and beverage departments.
Revenues for the Downtown Properties were enhanced in all departments by the
opening of Main Street Station in November 1996 which contributed $4.6 million
in revenues and produced a slight operating loss before preopening expense.
Interest expense, net of amounts capitalized was $8.2 million for the
second quarter of fiscal 1997 compared to $9.2 million in the second quarter of
the prior year as a result of increased capitalized interest compared to the
comparable period in the prior year. Depreciation expense decreased $.9
primarily as a result of lower depreciation on older properties.
Interest expense, net of amounts capitalized was $16.0 million for the
first six months of fiscal 1997 compared to $18.8 million in the prior year's
first six months. Depreciation expense decreased $1.8 due to lower depreciation
on older properties.
As a result of these factors, the Company reported net income of $1.5
million in the second fiscal quarter of fiscal 1997 versus net income of $4.5
million in the prior year's second fiscal quarter.
For the six months ended December 31, 1996 the Company reported net
income of $.6 million versus net income of $3.1 in the comparable period in the
prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended December 31, 1996 the Company's net cash
provided by operating activities was $35.2 million versus $31.4 million in last
year's first six months ended December 31, 1996. As of December 31, 1996 the
Company had balances of cash and cash equivalents of approximately $42
million and had approximately $114 million of credit available under its bank
credit
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<PAGE> 12
facility.
The Company's principal uses of funds for the six months ended December
31, 1996 and 1995 were cash used in investing activities, mainly for capital
expenditures and for the six months ended December 31, 1996 cash used in
financing activities related to the reduction of long-term debt. Capital
expenditures for the six months ended December 31, 1996 totaled $41.7 million.
Of this amount approximately $33 million was related to the renovation and
expansion of Main Street Station which was completed and opened in November
1996.
The Bank Credit Facility contains certain financial and other covenants,
including, without limitation, various financial covenants (i) requiring the
maintenance of a minimum Tangible Net Worth, (ii) requiring the maintenance of a
minimum Fixed Charge Coverage Ratio, (iii) establishing a maximum permitted
Funded Debt to EBITDA, (iv) imposing limitations on the incurrence of additional
indebtedness and the creation of liens, (v) imposing limits on the maximum
permitted Maintenance Capital Expenditures, restrictions on Investments, the
purchase or redemption of subordinated debt prior to its stated maturity,
dividends and other distributions and the redemption or purchase of capital
stock of the Company. As of December 31, 1996, the Company is in compliance
with all of its covenants under its bank credit facility; however, to provide
for continued compliance with its financial covenants in future periods and to
provide the Company with greater flexibility, the Company is currently in
discussions with its banks to amend a number of those covenants.
The source of funds required to meet the Company's working capital needs
(including maintenance capital expenditures) and those required to complete the
above mentioned project is expected to be cash on hand, cash flow from
operations, availability under its bank credit facility, new borrowings to the
extent permitted under existing debt agreements and vendor and other financing.
No assurance can be given that required financing strategies can be effected on
satisfactory terms.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward looking, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources, and the effects of regulation (
including gaming and tax regulation) and competition. Such forward looking
statements involve important risks and uncertainties that could significantly
affect anticipated results in the future, and accordingly, actual results may
differ materially form those expressed in any forward looking statements made by
or on behalf of the Company. These risks and uncertainties include, but are not
limited to, those related to construction and development activities, economic
conditions, changes in tax laws, changes in laws or regulations affecting gaming
licenses, changes in competition, and factors affecting leverage and debt
service including sensitivity to fluctuation in interest rates, and other
factors described from time to time in the Company's reports filed with the
Securities and Exchange Commission, including the Company's Form 10-K for the
year ended June 30, 1996. Any forward looking statements are made pursuant to
the Private Securities Litigation Reform Act of 1995 and, as such, speak only as
of the date made.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
By written consent dated November 22, 1996, the Company's sole
shareholder elected the persons listed below as directors. There were no votes
withheld or broker non-votes.
<TABLE>
<CAPTION>
NAMES VOTE FOR
- ----- ---------
<S> <C>
William S. Boyd 1,000
Charles L. Ruthe 1,000
Robert L. Boughner 1,000
</TABLE>
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<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a). Exhibits.
27. Financial Data Schedule
(b). Reports on form 8-K.
None.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CALIFORNIA HOTEL AND CASINO
(Registrant)
Date: February 14, 1997 By /s/ Keith Smith
-------------------------------------
Keith Smith
Senior Vice President and
Controller (Chief Accounting Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1,000
<CASH> 42,406
<SECURITIES> 0
<RECEIVABLES> 9,366
<ALLOWANCES> 0
<INVENTORY> 7,679
<CURRENT-ASSETS> 73,722
<PP&E> 837,273
<DEPRECIATION> 327,088
<TOTAL-ASSETS> 615,728
<CURRENT-LIABILITIES> 75,878
<BONDS> 0
0
0
<COMMON> 22,328
<OTHER-SE> 108,151
<TOTAL-LIABILITY-AND-EQUITY> 615,728
<SALES> 258,625
<TOTAL-REVENUES> 258,625
<CGS> 0
<TOTAL-COSTS> 241,670
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,006
<INCOME-PRETAX> 1,064
<INCOME-TAX> 435
<INCOME-CONTINUING> 629
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 629
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
