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 March 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 1-5440
----------------------------------------
AZTAR CORPORATION
- ---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 86-0636534
- ----------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2390 East Camelback Road, Suite 400, Phoenix, Arizona 85016
- --------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 381-4100
----------------
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
----- -----
At April 27, 1995, the registrant had outstanding 38,063,507 its
common stock, $.01 par value.
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Page
----
Consolidated Balance Sheets at March 30, 1995 and
December 29, 1994 3
Consolidated Statements of Operations for the quarters
ended March 30, 1995 and March 31, 1994 5
Consolidated Statements of Cash Flows for the quarters
ended March 30, 1995 and March 31, 1994 6
Consolidated Statements of Shareholders' Equity for the
quarters ended March 30, 1995 and March 31, 1994 8
Notes to Consolidated Financial Statements 9
2
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
---------------------------------------
(in thousands, except share data)
March 30, December 29,
1995 1994
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 39,138 $ 43,861
Short-term investments 8,250 8,250
Accounts receivable, net 18,667 17,391
Refundable income taxes 1,422 723
Inventories 5,643 5,693
Prepaid expenses 8,086 9,992
Deferred income taxes 7,894 7,894
---------- ----------
Total current assets 89,100 93,804
Investments in and advances to
unconsolidated partnership 12,329 12,627
Other investments 23,612 24,928
Property and equipment:
Buildings and equipment, net 630,355 635,678
Land 81,795 81,795
Construction in progress 51,107 37,965
Leased under capital leases, net 816 852
---------- ----------
764,073 756,290
Deferred charges and other assets 29,376 27,710
---------- ----------
$ 918,490 $ 915,359
========== ==========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited) (continued)
---------------------------------------
(in thousands, except share data)
March 30, December 29,
1995 1994
------------- ------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accruals $ 35,662 $ 40,083
Accrued payroll and employee benefits 17,418 15,467
Accrued interest payable 25,588 13,847
Income taxes payable 2,669 2,608
Current portion of long-term debt 641 666
---------- ----------
Total current liabilities 81,978 72,671
Long-term debt 420,183 430,212
Other long-term liabilities 22,014 21,986
Deferred income taxes 24,742 24,411
Contingencies and commitments
Series B ESOP convertible preferred stock
(redemption value $4,923 and $4,900) 4,923 4,711
Shareholders' equity:
Common stock, $.01 par value (38,027,146
and 37,459,228 shares outstanding) 420 414
Paid-in capital 350,813 347,284
Retained earnings 32,357 30,555
Less: Treasury stock (16,885) (16,885)
Unearned compensation (2,055) --
---------- ----------
Total shareholders' equity 364,650 361,368
---------- ----------
$ 918,490 $ 915,359
========== ==========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the periods ended March 30, 1995 and March 31, 1994
-------------------------------------------------------
(in thousands, except per share data)
First Quarter
-------------------
1995 1994
--------- ---------
Revenues
Casino $111,912 $106,972
Rooms 9,701 10,056
Food and beverage 11,127 10,577
Other 2,828 2,961
-------- --------
135,568 130,566
Costs and expenses
Casino 54,714 48,610
Rooms 5,783 5,892
Food and beverage 10,385 9,421
Other 1,807 1,842
Marketing 10,926 11,442
General and administrative 10,976 11,694
Utilities 2,935 3,156
Repairs and maintenance 4,919 4,567
Provision for doubtful accounts 795 1,051
Property taxes and insurance 4,717 4,416
Rent 2,796 2,345
Depreciation and amortization 9,052 9,286
-------- --------
119,805 113,722
-------- --------
Operating income 15,763 16,844
Interest income 828 556
Interest expense (12,219) (11,822)
-------- --------
Income before other items and income taxes 4,372 5,578
Equity in unconsolidated partnership's loss (1,326) (940)
-------- --------
Income before income taxes 3,046 4,638
Income taxes (1,086) (85)
-------- --------
Net income $ 1,960 $ 4,553
======== ========
Net income per common and common equivalent share $ .05 $ .11
Net income per common share assuming full dilution $ .05 $ .11
Weighted average common shares applicable to:
Net income per common and common equivalent share 38,605 38,261
Net income per common share assuming full dilution 39,782 39,292
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the periods ended March 30, 1995 and March 31, 1994
-------------------------------------------------------
(in thousands)
First Quarter
---------------------
1995 1994
Cash Flows from Operating Activities --------- ---------
Net income $ 1,960 $ 4,553
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 9,676 9,810
Provision for losses on accounts receivable 795 1,051
Loss on reinvestment obligation -- 131
Rent expense (175) 237
Distribution in excess of equity in income
of partnership 298 316
Deferred income taxes 331 (1,011)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (2,071) (1,754)
(Increase) decrease in refundable income taxes (699) 1,053
(Increase) decrease in inventories and
prepaid expenses 1,872 1,417
Increase (decrease) in accounts payable,
accrued expenses and income taxes payable 9,632 (5,010)
Other items, net (630) 212
--------- ---------
Net cash provided by (used in) operating activities 20,989 11,005
--------- ---------
Cash Flows from Investing Activities
Payments received on notes receivable 488 454
Reduction in other investments 3,093 --
Purchases of property and equipment (16,654) (14,140)
Additions to other long-term assets (2,998) (1,307)
--------- ---------
Net cash provided by (used in) investing activities (16,071) (14,993)
--------- ---------
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt -- 10,000
Proceeds from issuance of common stock 1,028 --
Principal payments on long-term debt (10,162) (10,117)
Debt issuance costs (80) --
Preferred stock dividend (380) (389)
Redemption of preferred stock (47) (37)
--------- ---------
Net cash provided by (used in) financing activities (9,641) (543)
--------- ---------
Net increase (decrease) in cash and cash equivalents (4,723) (4,531)
Cash and cash equivalents at beginning of period 43,861 39,551
--------- ---------
Cash and cash equivalents at end of period $ 39,138 $ 35,020
========= =========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)(continued)
For the periods ended March 30, 1995 and March 31, 1994
-------------------------------------------------------
(in thousands)
First Quarter
-------------------
1995 1994
-------- --------
Supplemental Cash Flow Disclosures
Summary of non-cash investing and financing activities:
Capital lease obligations incurred for property
and equipment $ 38 $ --
Tax benefit from stock options and preferred stock
dividend 393 43
Issuance of restricted stock 2,149 --
Cash flow during the period for the following:
Interest paid, net of amount capitalized $ (52) $ 11,542
Income taxes paid/(refunded) 1,000 (11)
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
For the periods ended March 30, 1995 and March 31, 1994
-------------------------------------------------------
(in thousands, except number of shares)
First Quarter
---------------------
1995 1994
---------- ---------
Common stock:
Beginning balance $ 414 $ 414
Stock options exercised for 273,798 shares
in 1995 3 --
Issuance of 286,000 shares of restricted stock
in 1995 3 --
-------- --------
Ending balance 420 414
-------- --------
Paid-in capital:
Beginning balance 347,284 346,965
Stock options exercised 1,025 --
Tax benefit from stock options exercised 358 --
Issuance of restricted stock 2,146 --
-------- --------
Ending balance 350,813 346,965
-------- --------
Retained earnings:
Beginning balance 30,555 16,559
Preferred stock dividend, net of income tax
benefit of $35 and $43 (158) (156)
Net income 1,960 4,553
-------- --------
Ending balance 32,357 20,956
-------- --------
Treasury stock:
Beginning and ending balance (16,885) (16,885)
--------- ---------
Unearned compensation:
Beginning balance -- (65)
Issuance of restricted stock (2,149) --
Amortization 94 18
-------- --------
Ending balance (2,055) (47)
-------- --------
$364,650 $351,403
======== ========
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note 1: General
- ----------------
The consolidated financial statements reflect all adjustments, such adjust-
ments being normal recurring accruals, which are necessary, in the opinion of
management, for the fair presentation of the results of the interim periods;
interim results, however, may not be indicative of the results for the full
year.
The notes to the interim consolidated financial statements are presented to
enhance the understanding of the financial statements and do not necessarily
represent complete disclosures required by generally accepted accounting
principles. The interest that was capitalized during the quarters ended 1995
and 1994 was $1,189,000 and $495,000, respectively. Capitalized preopening
costs, included in deferred charges and other assets, were $1,648,000 and
$817,000 at March 30, 1995 and December 29, 1994, respectively. For
additional information regarding significant accounting policies, long-term
debt, lease obligations, and other matters applicable to the Company,
reference should be made to the Company's Annual Report to Shareholders for
the year ended December 29, 1994.
Note 2: Investments in and Advances to Unconsolidated Partnership
- -----------------------------------------------------------------
Following are summarized operating results for the Company's unconsolidated
partnership, accounted for using the equity method for the periods ended
March 30, 1995 and March 31, 1994 (in thousands):
First Quarter
---------------------
1995 1994
-------- --------
Revenues $ 4,389 $ 3,582
Operating expenses (684) (683)
-------- --------
Operating income 3,705 2,899
Interest expense (1,694) (923)
-------- --------
Net income $ 2,011 $ 1,976
======== ========
Note 3: Other Long-term Liabilities
- -------------------------------------
At March 30, 1995 and December 29, 1994, other long-term liabilities
consisted of (in thousands):
1995 1994
-------- --------
Accrued rent expense $ 12,817 $ 13,043
Deferred compensation and retirement plans 9,043 8,789
Deferred income 154 154
-------- --------
$ 22,014 $ 21,986
======== ========
9
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Note 4: Income Taxes
- ----------------------
The Company is responsible, with certain exceptions, for the taxes of Ramada
through December 20, 1989. The Internal Revenue Service has completed its
examination of the years 1986 and 1987. Ramada has signed a partial
agreement for those two years and has filed a petition with the U.S. Tax
Court for two remaining issues. The Internal Revenue Service is examining
the income tax returns for the years 1988 through 1991. The New Jersey
Division of Taxation is examining the income tax returns for the years 1983
through 1989. Management believes that adequate provision for income taxes
and interest has been made in the financial statements.
Gross deferred tax assets are reduced by a valuation allowance. The
December 29, 1994 and December 30, 1993 valuation allowances were reduced
during the 1995 and 1994 first quarters which caused a decrease in income tax
expense of $263,000 and $1,604,000, respectively.
Note 5: Net Income Per Share
- -----------------------------
Net income per common and common equivalent share is computed based on the
weighted average number of common shares outstanding after consideration of
the dilutive effect of restricted stock and stock options. Net income per
common share, assuming full dilution, is computed based on the weighted
average number of common shares outstanding after consideration of the
dilutive effect of restricted stock, stock options and the assumed conversion
of the preferred stock at the stated rate. Net income for both computations
is adjusted for dividends on the preferred stock.
Note 6: Contingencies and Commitments
- --------------------------------------
In connection with the Company's commitment, subject to the granting of a
riverboat gaming license, to make certain payments to the City of Evansville,
Indiana as well as other civic and charitable institutions, the Company
obtained a letter of credit for $13,450,000. The Company's short-term
investments at March 30, 1995 and December 29, 1994, are pledged as
collateral for this letter of credit.
The Company agreed to indemnify Ramada against all monetary judgments in
lawsuits pending against Ramada and its subsidiaries as of the conclusion of
the restructuring of Ramada (the "Restructuring") on December 20, 1989, as
well as all related attorneys' fees and expenses not paid at that time,
except for any judgments, fees or expenses accrued on the hotel business
balance sheet and except for any unaccrued and unreserved aggregate amount up
to $5,000,000 of judgments, fees or expenses related exclusively to the hotel
business. Aztar is entitled to the benefit of any crossclaims or
counterclaims related to such lawsuits and of any insurance proceeds
received. In addition, the Company agreed to indemnify Ramada for various
lease guarantees made by Ramada relating to the restaurant business conducted
through its Marie Callender Pie Shops, Inc. subsidiary. In connection with
these matters, the Company has an accrued liability of $3,960,000 and
$3,963,000 at March 30, 1995 and December 29, 1994, respectively.
10
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Note 6: Contingencies and Commitments (continued)
- --------------------------------------------------
The Company is a party to various other claims, legal actions and complaints
arising in the ordinary course of business or asserted by way of defense or
counterclaim in actions filed by the Company. Management believes that its
defenses are substantial in each of these matters and that the Company's
legal posture can be successfully defended without material adverse effect on
its consolidated financial statements.
The Company had commitments for the purchase of property and equipment of
approximately $78,000,000 at March 30, 1995.
11
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
Financial Condition
On April 26, 1995, the Missouri Gaming Commission granted Aztar a riverboat
gaming license to operate Casino Aztar Caruthersville, the Company's
riverboat casino development in Caruthersville, Missouri. The casino began
operations on April 28, 1995, using temporary facilities for ticketing and
passenger waiting. The pavilion and other permanent facilities are scheduled
for completion in June.
The Company repaid $10,000,000 under the reducing revolving credit facility,
leaving an outstanding balance of $40,000,000 at March 30, 1995.
At March 30, 1995, the Company had commitments of approximately $78,000,000
for the purchase of property and equipment.
Results of Operations
Quarter Ended March 30, 1995 Compared to Quarter Ended March 31, 1994
The Company's consolidated revenues for the 1995 first quarter were $135.6
million, a 4% increase over $130.6 million for the 1994 first quarter as
higher total revenues at TropWorld more than offset decreases in total
revenues at Tropicana and Ramada Express. Consolidated casino revenue was
$4.9 million higher in the 1995 first quarter versus the 1994 first quarter
primarily because an increase in casino revenue at TropWorld more than offset
a decrease in casino revenue at Tropicana. Consolidated operating income was
$15.8 million for the 1995 first quarter compared to $16.8 million for the
1994 first quarter, a 6% decrease reflecting declines in operating results
from Tropicana and Ramada Express which more than offset improved operating
results from TropWorld.
The Company's equity in unconsolidated partnership's loss was $0.4 million or
41% higher in the 1995 versus 1994 first quarter as a result of higher
interest expense incurred by the partnership. The increase in interest
expense was a result of higher interest rates.
For a discussion of income taxes, refer to "Note 4: Income Taxes".
TROPWORLD Total revenues at TropWorld were $80.0 million in the first quarter
of 1995 compared to $72.1 million in last year's first quarter, an 11%
increase primarily as a result of higher casino revenue. The increase in
casino revenue was caused, in large part, by a strong market growth rate of
16% in the Atlantic City market during the first quarter of 1995. Casino
revenues were reduced in the 1994 first quarter due to severe weather
conditions in the East during January and February. In addition, casino
revenue was higher in the 1995 versus 1994 first quarter as a result of an
increase in coin redemptions and an increase in the use of complimentary food
and beverage and rooms as a means of promoting casino activity.
12
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
TropWorld had operating income of $13.9 million in the 1995 first quarter, up
47% from $9.5 million in the 1994 first quarter. The increase in operating
income reflected the higher casino revenue, partially offset by a $5.7
million or 19% increase in casino costs that was primarily attributable to
the increased coin redemptions and complimentaries. Operating income is
after rent expense of $0.3 million in both periods and depreciation and
amortization expense of $5.5 million in the 1995 first quarter compared to
$5.7 million in the 1994 first quarter.
TROPICANA At Tropicana, total revenues were $34.2 million in the 1995 first
quarter, down 7% from $36.7 million in the 1994 first quarter. Casino
revenue declined by $2.6 million primarily as a result of weak conditions in
the Las Vegas market during this year's first quarter combined with lower
table games revenue in the 1995 versus 1994 first quarter.
Tropicana had an operating loss of $0.1 million for the 1995 first quarter
compared to operating income of $4.1 million for the 1994 first quarter.
Operating income is after rent and depreciation and amortization expenses.
Rent expense was $2.4 million in the 1995 first quarter compared to $1.9
million in the 1994 first quarter, a 25% increase attributable to a higher
interest component of rent payments made to the Company's unconsolidated
partnership. Depreciation and amortization expense was $1.7 million in the
1995 first quarter compared to $1.6 million in the 1994 first quarter.
RAMADA EXPRESS At Ramada Express, total revenues were $21.4 million in the
first quarter of 1995, down slightly from $21.8 million in last year's first
quarter. Operating income was $4.5 million in the 1995 first quarter
compared to $5.5 million in the 1994 first quarter. Operating income is
after rent and depreciation and amortization expenses. Rent expense was
insignificant in both periods. Depreciation and amortization was $1.8
million in the first quarter of 1995 compared to $1.9 million in the first
quarter of 1994.
13
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In connection with Case No. CV-S-94-1126-LDG(RJJ), as reported under Part
I, Item 3 of the Company's Form 10-K for the year ended December 29,
1994, the plaintiffs have filed a motion asking the Court to hold a case
management and scheduling conference, and to permit discovery to resume.
The Company (and all other defendants) have opposed this motion, and have
suggested to the Court that consideration of the pending motions would be
the more effective means of handling the case, since the granting of the
motion to dismiss would end the case and obviate the need for scheduling
or management of the case. No argument date has been set.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Page No.
----------
11. Statement Regarding Computation of Per Share Earnings. *
27. Financial Data Schedule. *
* See exhibit index at page E-1 of this report for
a listing of exhibits filed with this report.
All other exhibits have been omitted because the
information is either not required or not applicable.
(b) The Company did not file any report on Form 8-K
during the quarter ended March 30, 1995.
14
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
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.
AZTAR CORPORATION
------------------------------
(Registrant)
Date May 1, 1995 By ROBERT M. HADDOCK
-------------------------- ---------------------------
Robert M. Haddock
Executive Vice President and
Chief Financial Officer
15
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Exhibit Index
- -------------
11. Statement Regarding Computation of Per Share Earnings.
27. Financial Data Schedule.
E-1
<PAGE>
Exhibit 11
AZTAR CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
For the periods ended March 30, 1995 and March 31, 1994
---------------------------------------------------------------
(in thousands, except per share data)
First Quarter
-------------------
1995 1994
--------- ---------
Net income $ 1,960 $ 4,553
Deduct: preferred stock dividend
(net of income taxes credited to
retained earnings) (158) (156)
--------- ---------
Net income applicable to computation $ 1,802 $ 4,397
======== ========
Weighted average common shares
assuming no dilution 37,647 37,364
Common equivalent shares
Additional shares applicable to
restricted stock based on the
market close price at the end
of the period 21 --
Additional shares applicable to
stock options based on the
weighted average market price 937 897
-------- --------
Weighted average common shares
applicable to net income per
common and common equivalent share 38,605 38,261
Additional shares applicable to
stock options based on the market
close price at the end of the period 169 --
Conversion of preferred stock at
the stated rate 1,008 1,031
-------- --------
Weighted average common shares
assuming full dilution 39,782 39,292
======== ========
Net income per common and common
equivalent share $ .05 $ .11
Net income per common share assuming
full dilution $ .05 $ .11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at March 30, 1995 and the Consolidated Statement of
Operations for the year-to-date period ended March 30, 1995 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-END> MAR-30-1995
<CASH> 39,138
<SECURITIES> 8,250
<RECEIVABLES> 29,797
<ALLOWANCES> 11,130
<INVENTORY> 5,643
<CURRENT-ASSETS> 89,100
<PP&E> 953,609
<DEPRECIATION> 189,536
<TOTAL-ASSETS> 918,490
<CURRENT-LIABILITIES> 81,978
<BONDS> 420,183
<COMMON> 420
4,923
0
<OTHER-SE> 364,230
<TOTAL-LIABILITY-AND-EQUITY> 918,490
<SALES> 11,127
<TOTAL-REVENUES> 135,568
<CGS> 10,385
<TOTAL-COSTS> 72,689
<OTHER-EXPENSES> 7,854
<LOSS-PROVISION> 795
<INTEREST-EXPENSE> 12,219
<INCOME-PRETAX> 4,372
<INCOME-TAX> 1,086
<INCOME-CONTINUING> 1,960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,960
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
