Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 No. 1-4748
Sun International North America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-0763055
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1415 E. Sunrise Blvd., Ft. Lauderdale, FL 33304
(Address of principal executive offices) (Zip Code)
(954) 713-2500
(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 such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
- continued -
Exhibit Index is presented on page 17
Total number of pages 19
<PAGE>
Number of shares outstanding of registrant's common stock as of
September 30, 1997: 100, all of which are owned by one shareholder.
Accordingly there is no current market for any of such shares.
The registrant meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with
the reduced disclosure format permitted by that General Instruction.
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
FORM 10-Q
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at September 30, 1997 and
December 31, 1996 4
Consolidated Statements of
Income for the Quarter
and Three Quarters Ended
September 30, 1997 and 1996 5
Consolidated Statements of
Cash Flows for the Three
Quarters Ended September 30,
1997 and 1996 6
Notes to Consolidated
Financial Statements 7
Item 2. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations 10
Part II. Other Information
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on
Form 8-K 15
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, except par value)
September 30, December 31,
1997 1996
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 55,050 $ 29,267
Restricted cash equivalents 1,661 4,538
Receivables, less allowance for
doubtful accounts of $3,637
and $3,758 9,683 7,468
Inventories 1,430 1,194
Prepaid expenses 2,758 2,055
Total current assets 70,582 44,522
Land held for investment,
development or resale 198,137 185,769
Property and equipment, net of
accumulated depreciation of $8,223
and $-0- 209,969 210,961
Deferred charges and other assets 21,560 12,673
Goodwill, net of amortization 94,011 98,923
$594,259 $552,848
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt $ 446 $ 636
Accounts payable and accrued
liabilities 37,938 51,669
Due to affiliates 3,460
Total current liabilities 41,844 52,305
Long-term debt, including unamortized
premiums (discounts) 311,254 261,543
Deferred income taxes 46,000 46,000
Shareholder's equity:
Common stock - $.01 par value
Capital in excess of par 193,008 193,000
Retained earnings 2,153
Total shareholder's equity 195,161 193,000
$594,259 $552,848
See notes to consolidated financial statements.
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
(Unaudited)
Quarter Ended Three Quarters Ended
September 30, September 30,
1997 1996 1997 1996
(Successor)(Predecessor)(Successor)(Predecessor)
Revenues:
Casino $ 66,607 $72,354 $190,971 $199,601
Rooms 5,458 5,293 12,676 12,307
Food and beverage 7,640 8,126 20,817 20,965
Other casino/hotel 3,786 2,838 8,305 7,087
83,491 88,611 232,769 239,960
Less promotional allowances (9,088) (8,470) (21,633) (19,871)
Net casino and resort
revenues 74,403 80,141 211,136 220,089
Tour operations 3,688 12,113
Real estate related 2,261 2,201 6,724 6,607
Other income 2,609 2,609
82,961 82,342 232,582 226,696
Expenses:
Casino 40,536 44,413 117,681 123,793
Rooms 600 718 2,273 2,710
Food and beverage 4,315 4,750 12,106 12,543
Other casino/hotel 7,835 9,032 24,626 26,384
Tour operations 3,465 11,177
Selling, general and
administrative 7,429 8,315 26,257 27,356
Depreciation and
amortization 3,674 3,102 10,332 9,307
67,854 70,330 204,452 202,093
Operating income 15,107 12,012 28,130 24,603
Other income (expenses):
Interest income 1,024 932 2,659 2,502
Interest expense (6,981) (6,092) (20,504) (18,485)
Accretion of debt
discounts, net and
amortization of issue costs (157) (1,092) (89) (3,175)
Other 314
Earnings before income
taxes and extraordinary item 8,993 5,760 10,510 5,445
Income tax expense (4,345) (5,400)
Earnings before extraordinary
item 4,648 5,760 5,110 5,445
Extraordinary item-loss on
extinguishment of debt (net
of income tax benefit of
$2,043) (2,957)
Net earnings $ 4,648 $ 5,760 $ 2,153 $ 5,445
See notes to consolidated financial statements.
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Three Quarters Ended
September 30,
1997 1996
(Successor) (Predecessor)
Cash flows from operating activities:
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings $ 2,153 $ 5,445
Extraordinary item 2,957
Depreciation and amortization 10,618 12,482
Decrease in goodwill for tax benefit utilized 5,152
Provision for doubtful receivables 730 501
Provision for discount on CRDA obligations,
net 901 1,150
Gain on sale of fixed assets (314) (65)
Deferred tax benefit (240)
Net change in working capital accounts:
Receivables (1,768) (1,060)
Due from affiliates 4,397
Inventories and prepaids (545) 163
Accounts payable and accrued 1iabilities (10,870) (5,741)
Net cash provided by operating activities 13,411 12,635
Cash flows from investing activities:
Payments for operating capital expenditures (6,183) (8,765)
Acquisition of other fixed assets (19,181) (625)
Proceeds received from the sale of land 7,435 65
CRDA deposits and bond purchases (2,286) (2,170)
Net cash used in investing activities (20,215) (11,495)
Cash flows from financing activities:
Proceeds from issuance of debt 199,084
Payments to secure borrowings (6,460)
Repayment of debt pursuant to Offer (153,712)
Payments of Merger costs (7,465)
SIRI cash and equivalents at date of contribution 1,159
Repayments to affiliates (2,418)
Other debt repayments (478) (435)
Proceeds from exercise of stock options 9
Net cash provided by (used in) financing
activities 29,710 (426)
Net increase in cash and cash equivalents 22,906 714
Cash and cash equivalents at beginning of period 33,805 55,572
Cash and cash equivalents at end of period $ 56,711 $ 56,286
See notes to consolidated financial statements.
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. General:
The accompanying consolidated interim financial statements, which are
unaudited, include the operations of Sun International North America, Inc.
("SINA") and its subsidiaries. SINA was known as Griffin Gaming &
Entertainment, Inc. until February 6, 1997. "SINA" is used herein to refer
to the corporation both before and after its name change. The term "Company"
as used herein includes SINA and its subsidiaries.
On December 16, 1996, SINA became a wholly owned subsidiary of Sun
International Hotels Limited ("SIHL"), a corporation organized under the laws
of the Commonwealth of The Bahamas, through a merger transaction (the
"Merger"). SIHL as used herein includes SIHL and its subsidiaries. As a
result of the Merger, SINA's consolidated assets and liabilities were
adjusted to their estimated fair values as of December 31, 1996. The Merger
and related basis adjustments are discussed in detail in Note 1 of Notes to
Consolidated Financial Statements in SINA's Annual Report on Form 10-K for
the year ended December 31, 1996 (the "SINA 1996 Form 10-K").
Effective January 1, 1997, SIHL contributed the capital stock of Sun
International Resorts, Inc. ("SIRI"), a wholly owned subsidiary of SIHL, to
SINA. SIRI, along with its subsidiaries, is a tour operator and wholesaler
of tour packages and provides reservation services. In addition, SIRI
provides certain support services for SIHL's operations in The Bahamas. As
of January 1, 1997, SIRI's consolidated assets, liabilities and shareholder's
equity amounted to $6,097,000, $5,729,000 and $368,000, respectively. SIRI's
consolidated revenues and net income for the year ended December 31, 1996
totaled $15,009,000 and $617,000, respectively.
Effective July 1, 1997 SIHL contributed the capital stock of Sun Cove
Limited, ("SCL"), a wholly owned subsidiary of SIHL, to SINA. SCL has a 50%
interest in Trading Cove Associates ("TCA"), a Connecticut general
partnership which is party to a management agreement (the "Management
Agreement") with the Mohegan Tribal Gaming Authority relating to the
development and management of a casino resort and entertainment complex (the
"Mohegan Sun Casino") in the town of Uncasville, Connecticut. The Management
Agreement expires in October 2003 (subject to a buy-out option after October
2001) and provides that TCA is entitled to receive between 30% and 40% of the
net profits, as defined, of the Mohegan Sun Casino. TCA is obligated to pay
certain amounts to SIHL, as priority payments from its management fee income
for services provided by SIHL. In addition, TCA is obligated to pay certain
amounts to SCL, as priority payments from its management fee income for
previous capital contributions to TCA. These amounts are paid as TCA
receives sufficient management fees to meet the priority distribution. As of
July 1, 1997 SCL's consolidated assets, liabilities and shareholder's deficit
amounted to $7,921,000, $8,281,000 and $360,000, respectively. SCL's
consolidated revenues and net loss for the six months ended June 30, 1997
were $-0- and $360,000, respectively. SCL had no revenues or expenses prior
to 1997.
<PAGE>
As a result of these transactions, SINA is a holding company
through which SIHL owns and operates its properties and investments in
the United States.
While the accompanying interim financial information is unaudited,
management of the Company believes that all adjustments necessary for a
fair presentation of these interim results have been made and all such
adjustments are of a normal recurring nature. The seasonality of the
business is described in Management's Discussion and Analysis of
Financial Condition and Results of Operations in the SINA 1996 Form 10-
K. The results of operations for the three and nine month periods
presented are not necessarily indicative of the results to be expected
for the entire fiscal year ending December 31, 1997.
The notes presented herein are intended to provide supplemental
disclosure of items of significance occurring subsequent to December 31,
1996 and should be read in conjunction with the Notes to Consolidated
Financial Statements contained in pages 45 through 67 of the SINA 1996
Form 10-K.
B. Reverse Repurchase Agreements:
Cash equivalents at September 30, 1997 included $28,409,000 of
reverse repurchase agreements (federal government securities purchased
under agreements to resell those securities) with Prudential Securities,
Inc. under which the Company had not taken delivery of the underlying
securities. These agreements matured during the first week of October
1997.
C. Refinancing:
In February 1997, Resorts International Hotel Financing,
Inc.,("RIHF") a wholly owned subsidiary of SINA, offered (the "Offer")
to purchase its outstanding $125,000,000 principal amount of 11%
Mortgage Notes due 2003 (the "Mortgage Notes") and $35,000,000 principal
amount of 11.375% Junior Mortgage Notes due 2004 (the "Junior Mortgage
Notes"). In connection with the Offer, RIHF sought the consent of the
holders (the "Consents") to amend the relevant indentures to, among
other things, release the collateral for the Mortgage Notes and Junior
Mortgage Notes. Pursuant to the Offer, RIHF acquired $119,645,000
principal amount of Mortgage Notes and $21,001,000 principal amount of
Junior Mortgage Notes, for a total purchase price (including payments
relating to the Consents) of $153,712,000. There remains outstanding
$5,355,000 principal amount of Mortgage Notes and $1,100,000 principal
amount of Junior Mortgage Notes, which, as a result of the amendments to
the indentures, are now unsecured obligations of RIHF. The remaining
Junior Mortgage Notes continue to trade as part of units consisting of
$1,000 principal amount of Junior Mortgage Notes and .1928 of an
ordinary share of SIHL.
In connection with the Offer, SIHL and SINA (the "Issuers") issued
$200,000,000 principal amount of 9% Senior Subordinated Notes due 2007
(the "Senior Notes") which, after costs, resulted in net proceeds to the
Company of approximately $194,000,000. The majority of these proceeds
were used to fund the Offer.
<PAGE>
D. Statements of Cash Flows:
Supplemental disclosures required by Statement of Financial
Accounting Standards No. 95 "Statement of Cash Flows" are presented
below.
Three Quarters Ended
September 30,
(In Thousands of Dollars) 1997 1996
Interest received $ 2,577 $ 2,456
Interest paid, net of $600,000 capitalized 26,061 23,487
in 1996
Income taxes (refunded) paid, net (129) 244
Noncash investing and financing
activities:
Increase in liabilities
for additions to other assets 103 136
Increase due to contributed subsidiaries:
Assets 14,018
Liabilities 14,010
Shareholder's equity 8
E. Reclassifications
Certain reclassifications have been made to the 1996 balances to
conform with the current year presentation.
F. Commitments and Contingencies:
Casino Reinvestment Development Authority ("CRDA")
As previously reported in the SINA 1996 Form 10-K, certain issues
have been raised by the CRDA and the State of New Jersey Department of
the Treasury (the "Treasury") concerning the satisfaction of investment
obligations for the years 1979 through 1983 by Resorts International
Hotels, Inc. ("RIH"), a wholly owned indirect subsidiary of SINA. As of
September 30, 1997, RIH, the CRDA and the Treasury had reached a
settlement on this issue. The settlement calls for RIH to donate land
with an appraised value of $4.8 million to the CRDA, contribute $5.6
million of funds currently on deposit with the CRDA, which were
allocated to purchase Atlantic City Housing Bonds, and establish a $3.0
million mortgage guarantee program for purchases of residential, owner-
occupied property in the City of Atlantic City. Additionally, because
the settlement was previously provided for, this transaction did not
<PAGE>
have any impact on SINA's Consolidated Statement of Operations for the
period ended September 30, 1997.
Litigation
SINA and certain of its subsidiaries are defendants in certain
litigation. In the opinion of management, based upon advice of counsel,
the aggregate liability, if any, arising from such litigation will not
have a material adverse effect on the accompanying consolidated
financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FINANCIAL CONDITION
Liquidity
At September 30, 1997 the Company's working capital amounted to
$28,738,000 including unrestricted cash and equivalents of $55,050,000.
A significant portion of the unrestricted cash and equivalents is
required for day-to-day operations of the Resorts Casino Hotel,
including approximately $10,000,000 of currency and coin on hand which
amount varies by days of the week, holidays and seasons, as well as
additional cash balances necessary to meet current working capital
needs.
Capital Expenditures and Resources
In March 1997, the Company purchased certain of its Mortgage Notes
and Junior Mortgage Notes for a total of $153,712,000, excluding accrued
interest. In connection with the Offer, SIHL and SINA issued
$200,000,000 principal amount of Senior Notes which, after costs,
resulted in net proceeds to the Company of approximately $194,000,000.
The majority of these proceeds were used to fund the Offer. See Note C
of Notes to Consolidated Financial Statements for further discussion of
these transactions.
In September 1997, SIHL announced plans for the renovation of
Resorts Casino Hotel into a highly themed resort. The renovation is
anticipated to include the construction of a new hotel tower with
approximately 600 rooms to replace the 160 existing rooms in the North
Tower along with the remodeling of public areas and the casino. This
renovation is expected to begin in 1998 and cost approximately $150
million. Financing of this project will come from internal cash flows
and an existing credit facility of SIHL. Any such plans will be subject
to regulatory and other approvals.
In August 1997, SINA purchased approximately $12,000,000 of land
adjacent to Resorts Casino Hotel. This land is currently being used for
parking, although the site, along with other land owned by SINA, could
be used for future expansion.
Competition for Atlantic City casino patrons remains intense.
<PAGE>
Adding to the competition for patrons, expansions at two competing
Atlantic City properties opened in mid-1996 which, combined, added
approximately 1,100 hotel rooms and approximately 85,000 square feet of
gaming space. In July 1997 a competitor added approximately 75,000
square feet of casino space which includes approximately 1,766 slot
machines and 58 table games. Several other companies have announced
plans to expand existing or construct new casino/hotels in Atlantic
City. These capacity increases in Atlantic City have negatively impacted
RIH's gaming revenues as described below.
RESULTS OF OPERATIONS - Third Quarter and First Three Quarters 1997
Compared to 1996
Revenues
Casino and Resort Revenues
Third Quarter
Gaming revenues were $66,607,000 for the three months ended
September 30, 1997, a decrease of $5,747,000 or 7.9% from gaming
revenues of $72,354,000 for the comparable period in 1996. This
decrease in gaming revenues consisted of a reduction in both table
games and slot revenues.
Slot revenues were $46,588,000 for the three months ended September
30, 1997, a decrease of $4,134,000 or 8.2% from $50,722,000 for the
comparable period in 1996. This decrease was due to a decrease in slot
handle (dollar amounts wagered) by $45,315,000 or 7.8% to $533,497,000
for the three months ended September 30, 1997 from $578,812,000 for the
comparable period in 1996 and a decrease in cash promotional expenses
(amount of coin coupons and cash back to patrons) of approximately
$973,000 or 10.2% associated with the shifting of marketing programs
that contribute marginal returns and are reflected as revenue.
Management is currently in the process of upgrading its slot product and
in September has completed an upgrade of 35% of its $0.25 denomination
slot product to include more popular machines.
Table games revenues were $18,616,000 for the three months ended
September 30, 1997, a decrease of $1,272,000 or 6.4% from $19,888,000
for the comparable period in 1996. This decrease was due to a
combination of a reduction in table games drop (the dollar amount of
chips purchased) by $5,413,000 or 4.0% to $129,054,000 for the three
months ended September 30, 1997 from $134,467,000 for the comparable
period in 1996, and a reduction in hold percentage (ratio of casino win
to total amount of chips purchased) of 0.4 percentage points to 14.4%
for the three months ended September 30, 1997 from 14.8% for the
comparable period in 1996.
Poker, simulcast and keno revenues were $1,403,000 for the three
months ended September 30, 1997, a decrease of $341,000 or 19.6% from
$1,744,000 for the comparable period in 1996.
Other resort revenues were $16,884,000 for the three months ended
<PAGE>
September 30, 1997, an increase of $627,000 or 3.9% from other revenues
of $16,257,000 for the comparable period of 1996. Other resort revenues
include revenues from rooms, food and beverage, and miscellaneous items.
The increase is primarily attributable to a $792,000 or 49.8% increase
in total entertainment headliner revenues to $2,381,000 for the three
months ended September 30, 1997 from $1,589,000 for the comparable
period in 1996. This is partially offset by a $486,000 decrease in food
and beverage revenues due to a 28,085 or 4.7% decrease in food covers
and a $0.07 or 0.6% decrease in the average check from 1996.
First Three Quarters
Gaming revenues were $190,971,000 for the nine months ended
September 30, 1997, a decrease of $8,630,000 or 4.3% from gaming
revenues of $199,601,000 for the comparable period in 1996. This
decrease in gaming revenues consisted of a reduction in both table
games and slot revenues.
Slot revenues were $132,400,000 for the nine months ended September
30, 1997, a decrease of $6,848,000 or 4.9% from $139,248,000 for the
comparable period in 1996. This decrease was due to a decrease in slot
handle (dollar amounts wagered) by $80,317,000 or 5.1% to $1,501,740,000
for the nine months ended September 30, 1997 from $1,582,057,000 for the
comparable period in 1996 and a decrease in cash promotional expenses
(amount of coin coupons and cash back to patrons) of approximately $3.6
million or 12.7% associated with the shifting of marketing programs that
contribute marginal returns and are reflected as revenue. Management is
currently in the process of upgrading its slot product and has just
completed in September an upgrade of 35% of its $0.25 denomination slot
product to include more popular machines.
Table games revenues were $54,249,000 for the nine months ended
September 30, 1997, a decrease of $843,000 or 1.5% from $55,092,000 for
the comparable period in 1996. This decrease was primarily due to a
decrease in table games drop (the dollar amount of chips purchased) by
$2,055,000 or 0.6% to $352,808,000 for the nine months ended September
30, 1997 from $354,863,000 for the comparable period in 1996 and a hold
percentage (ratio of casino win to total amount of chips purchased)
decrease of 0.1 percentage points to 15.4% for the nine months ended
September 30, 1997 from 15.5% for the comparable period in 1996.
Poker, simulcast and keno revenues were $4,322,000 for the nine
months ended September 30, 1997, a decrease of $939,000 or 17.8% from
$5,261,000 for the comparable period in 1996.
Other resort revenues were $41,798,000 for the nine months ended
September 30, 1997, an increase of $1,439,000 or 3.6% from other
revenues of $40,359,000 for the comparable period of 1996. Other resort
revenues include revenues from rooms, food and beverage, and
miscellaneous items. The increase primarily reflects a $1,152,000 or
29.8% increase in total entertainment headliner revenues to $5,018,000
for the nine months ended September 30, 1997 from $3,866,000 for the
comparable period in 1996.
<PAGE>
Tour Operations
These revenues in 1997 are from operations of SIRI and its
subsidiaries, which entities were contributed to SINA by SIHL effective
January 1, 1997. SIRI, through a subsidiary, is a tour operator and
wholesaler of tour packages and provides reservations services,
primarily to SIHL's properties in The Bahamas.
Real Estate Related
Real estate related revenues consist of lease receipts under a 99-
year net lease of approximately 10 acres of Boardwalk property in
Atlantic City (the "Showboat Lease"). Lease receipts under the Showboat
Lease are passed-through (subject to certain adjustments) as interest to
holders of SINA's First Mortgage Non-Recourse Pass-Through Notes due
June 30, 2000 (the "Showboat Notes"). Thus, the casino/hotel operations
do not fund the interest on the Showboat Notes.
Other Income
These revenues in 1997 are from operations of SCL which was
contributed to SINA by SIHL effective July 1, 1997 and represent
priority payments from TCA to repay previous capital contributions (see
Note A).
Expenses
Casino and Resort Expenses
Third Quarter
Casino costs and expenses were $40,536,000 for the three months
ended September 30, 1997, a decrease of $3,877,000 or 8.7% from expenses
of $44,413,000 for the comparable period in 1996. This represents costs
and expenses associated with table games, slot operations, win
contribution expense, and promotional items and services provided to
patrons. The decrease is primarily due to management's implementation of
various cost containment efforts.
First Three Quarters
Casino costs and expenses were $117,681,000 for the nine months
ended September 30, 1997, a decrease of $6,112,000 or 4.9% from expenses
of $123,793,000 for the comparable period in 1996. This represents costs
and expenses associated with table games, slot operations, win
contribution expense, and promotional items and services provided to
patrons. The decrease is primarily due to management's implementation of
various cost containment efforts during 1997.
Tour Operations
These expenses in 1997 are from operations of SIRI and its
subsidiaries, which entities were contributed to SINA by SIHL effective
January 1, 1997.
<PAGE>
Selling General and Administrative
Third Quarter
Selling, general and administrative costs were $7,429,000 for the
three months ended September 30, 1997, a decrease of $886,000 or 10.7%
from expenses of $8,315,000 for the comparable period in 1996. The
decrease is primarily due to management's implementation of various cost
containment efforts.
First Three Quarters
Selling, general and administrative costs were $26,257,000 for the
nine months ended September 30, 1997, a decrease of $1,099,000 or 4.0%
from expenses of $27,356,000 for the comparable period in 1996. The
decrease is primarily due to management's implementation of various cost
containment efforts.
Interest expense
Interest expense for the quarter and three quarters increased
compared to the comparable period last year as the reduction which
resulted from the Offer was more than offset by interest expense on the
Senior Notes.
Forward Looking Statements
The statements contained herein include forward looking statements
based on management's current expectations of SINA's future performance.
Predictions relating to future performance are inherently uncertain and
subject to a number of risks. Consequently, SINA's actual results could
differ materially from the expectations expressed in the preceding
paragraphs. Factors that could cause SINA's actual results to differ
materially from the expected results include, among other things: the
intensely competitive nature of the casino gaming industry; increases in
the number of competitors in the market in which SINA operates; the
seasonality of the industry in the market in which SINA operates; the
susceptibility of SINA's operating results to adverse weather conditions
and natural disasters; the risk that certain governmental approvals may
not be obtained; changes in governmental regulations governing SINA's
activities and other risks detailed in SINA's filings with the
Securities and Exchange Commission.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
The following is an update of the status of certain litigation
which was previously described in "Item 3. Legal Proceedings" of the
SINA 1996 Form 10-K.
<PAGE>
U.S. Bankruptcy Court Action - Rogers
The Motion for Summary Judgement dismissing the Rogers complaint
was granted by the U.S. Bankruptcy Court (the "NJ Bankruptcy Court") on
September 16, 1997. Rogers has filed a Request for Reconsideration with
the NJ Bankruptcy Court and a Notice of Appeal with the United States
District Court of New Jersey appealing the NJ Bankruptcy Court decision,
which matters are pending.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The following Part I exhibits are filed herewith:
Exhibit
Number Exhibit
(10) Amended and Restated Partnership Agreement of Trading
Cove Associates dated as of August 29, 1995, among Sun
Cove Limited, RJH Development Corp., Leisure Resort
Technology, Inc., Slavik Suites, Inc. and LMW
Investments, Inc. (Incorporated by reference to Exhibit
10.7 of Registration Statement No. 33-80477 of the
Registrant on Form F-3).
(27)(a) Financial data schedule as of September 30, 1997.
(27)(b) Restated financial data schedule as of September 30,
1996.
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by SINA covering an event
during the third quarter of 1997. No amendments to previously filed
Forms 8-K were filed during the third quarter of 1997.
<PAGE>
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.
SUN INTERNATIONAL NORTH AMERICA, INC.
(Registrant)
/s/ John Allison
John Allison
Executive Vice President - Finance
(Authorized Officer of Registrant
and Chief Financial Officer)
Date: November 14, 1997
<PAGE>
SUN INTERNATIONAL NORTH AMERICA, INC.
Form 10-Q for the quarterly period
ended September 30, 1997
EXHIBIT INDEX
Exhibit
Number Exhibit Page Number in Form 10-Q
(10) Amended and Restated Incorporated by
Partnership Agreement of reference to Exhibit
Trading Cove Associates 10.7 of Registration
dated as of August 29, 1995, Statement No. 33-80477 of
among Sun Cove Limited, RJH of the Registrant on
Development Corp., Leisure Form F-3.
Resort Technology, Inc.,
Slavik Suites, Inc. and LMW
Investments, Inc.
(27)(a) Financial data schedule Page 18
as of September 30, 1997.
(27)(b) Restated financial data Page 19
schedule as of September
30, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN
INTERNATIONAL NORTH AMERICA, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
THERETO INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> $56,711<F1>
<SECURITIES> 0
<RECEIVABLES> $8,637
<ALLOWANCES> $3,637
<INVENTORY> $1,430
<CURRENT-ASSETS> $70,582
<PP&E> $218,192
<DEPRECIATION> $8,223
<TOTAL-ASSETS> $594,259
<CURRENT-LIABILITIES> $41,844
<BONDS> $311,254<F2>
<COMMON> $0
0
0
<OTHER-SE> $195,161
<TOTAL-LIABILITY-AND-EQUITY> $594,259
<SALES> 0
<TOTAL-REVENUES> $232,582
<CGS> 0
<TOTAL-COSTS> $156,686
<OTHER-EXPENSES> $10,332<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $20,593
<INCOME-PRETAX> $10,510
<INCOME-TAX> $(5,400)
<INCOME-CONTINUING> $5,110
<DISCONTINUED> 0
<EXTRAORDINARY> $(2,957)
<CHANGES> 0
<NET-INCOME> $2,153
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $44,135 AND RESTRICTED CASH
EQUIVALENTS OF $1,661.
<F2>NET OF UNAMORTIZED (DISCOUNTS) PREMIUMS.
<F3>INCLUDES DEPRECIATION EXPENSE OF $8,403 AND AMORTIZATION OF $1,929.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN
INTERNATIONAL NORTH AMERICA, INC.'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
THERETO INCLUDED IN THE FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996,
EXCEPT AS NOTED BELOW IN FOOTNOTE 3, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1996
<CASH> $56,286<F1>
<SECURITIES> 0
<RECEIVABLES> $8,936
<ALLOWANCES> $3,319
<INVENTORY> $2,064
<CURRENT-ASSETS> $72,015
<PP&E> $228,458
<DEPRECIATION> $70,025
<TOTAL-ASSETS> $340,800
<CURRENT-LIABILITIES> $36,230
<BONDS> $220,059<F2>
<COMMON> $79
0
0
<OTHER-SE> $31,322
<TOTAL-LIABILITY-AND-EQUITY> $340,800
<SALES> 0
<TOTAL-REVENUES> $226,696<F3>
<CGS> 0
<TOTAL-COSTS> $165,430<F3>
<OTHER-EXPENSES> $9,307<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $21,660
<INCOME-PRETAX> $5,445
<INCOME-TAX> 0
<INCOME-CONTINUING> $5,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $5,445
<EPS-PRIMARY> $.62
<EPS-DILUTED> $.61
<FN>
<F1>INCLUDES NON-RESTRICTED CASH EQUIVALENTS OF $40,939 AND RESTRICTED CASH
EQUIVALENTS OF $2,275.
<F2>NET OF UNAMORTIZED DISCOUNTS.
<F3>CERTAIN RECLASSIFICATIONS HAVE BEEN MADE TO THE 1996 BALANCES TO CONFORM
WITH CURRENT YEAR PRESENTATION
<F4>DEPRECIATION EXPENSE.
</FN>
</TABLE>
