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 April 1, 1999
---------------
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 29, 1999, the registrant had outstanding 45,397,619 shares of
its common stock, $.01 par value.
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets at April 1, 1999 and
December 31, 1998 3
Consolidated Statements of Operations for the quarters
ended April 1, 1999 and April 2, 1998 5
Consolidated Statements of Cash Flows for the quarters
ended April 1, 1999 and April 2, 1998 6
Consolidated Statements of Shareholders' Equity for
the quarters ended April 1, 1999 and April 2, 1998 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 20
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 20
2
<PAGE>
<TABLE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
---------------------------------------
(in thousands, except share data)
<CAPTION>
April 1, December 31,
1999 1998
---------- ----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 40,606 $ 58,600
Accounts receivable, net 28,097 31,496
Inventories 6,718 6,496
Prepaid expenses 10,585 9,234
Deferred income taxes, net 15,957 15,957
---------- ----------
Total current assets 101,963 121,783
Investments in and advances to
unconsolidated partnership 8,222 8,437
Other investments 21,762 21,005
Property and equipment:
Buildings, riverboats and equipment, net 770,287 778,420
Land 99,035 99,035
Construction in progress 4,530 2,153
Leased under capital leases, net 6,890 7,782
---------- ----------
880,742 887,390
Deferred charges and other assets 40,122 39,087
---------- ----------
$1,052,811 $1,077,702
========== ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited) (continued)
---------------------------------------
(in thousands, except share data)
<CAPTION>
April 1, December 31,
1999 1998
---------- ----------
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accruals $ 49,221 $ 52,935
Accrued payroll and employee benefits 23,666 26,208
Accrued interest payable 877 12,608
Income taxes payable 2,248 3,185
Current portion of long-term debt 2,505 2,537
Current portion of other long-term
liabilities 2,918 2,921
---------- ----------
Total current liabilities 81,435 100,394
Long-term debt 478,831 487,543
Other long-term liabilities 22,480 22,882
Deferred income taxes 6,014 5,635
Contingencies and commitments
Series B ESOP convertible preferred stock
(redemption value $7,252 and $7,147) 7,252 7,147
Shareholders' equity:
Common stock, $.01 par value (45,342,745
and 45,337,834 shares outstanding) 492 492
Paid-in capital 412,528 412,528
Retained earnings 60,905 58,207
Less: Treasury stock (17,126) (17,126)
---------- ----------
Total shareholders' equity 456,799 454,101
---------- ----------
$1,052,811 $1,077,702
========== ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the periods ended April 1, 1999 and April 2, 1998
---------------------------------------------------------------
(in thousands, except per share data)
<CAPTION>
First Quarter
------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues
Casino $154,185 $164,291
Rooms 15,565 12,052
Food and beverage 13,239 13,047
Other 7,555 7,435
-------- --------
190,544 196,825
Costs and expenses
Casino 70,038 76,192
Rooms 8,229 7,140
Food and beverage 13,607 13,089
Other 7,171 6,399
Marketing 19,616 21,211
General and administrative 17,959 19,521
Utilities 3,069 2,883
Repairs and maintenance 6,212 5,985
Provision for doubtful accounts 1,824 2,992
Property taxes and insurance 5,909 6,064
Rent 3,996 5,439
Depreciation and amortization 13,244 13,044
-------- --------
170,874 179,959
-------- --------
Operating income 19,670 16,866
Interest income 417 416
Interest expense (14,285) (15,136)
-------- --------
Income before other items and income taxes 5,802 2,146
Equity in unconsolidated partnership's loss (1,008) (1,125)
-------- --------
Income before income taxes 4,794 1,021
Income taxes (1,942) (403)
-------- --------
Net income $ 2,852 $ 618
======== ========
Net income per common share $ .06 $ .01
Net income per common share assuming dilution $ .06 $ .01
Weighted-average common shares applicable to:
Net income per common share 45,340 45,202
Net income per common share assuming dilution 46,467 46,942
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the periods ended April 1, 1999 and April 2, 1998
---------------------------------------------------------------
(in thousands)
<CAPTION>
First Quarter
---------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 2,852 $ 618
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 13,698 13,732
Provision for losses on accounts receivable 1,824 2,992
Loss on reinvestment obligation 19 219
Rent expense (246) (247)
Distribution in excess of equity in income
of partnership 215 231
Deferred income taxes 379 89
Change in assets and liabilities:
(Increase) decrease in accounts receivable 1,940 4,386
(Increase) decrease in inventories and
prepaid expenses (1,613) 782
Increase (decrease) in accounts payable,
accrued expenses and income taxes payable (19,333) (17,102)
Other items, net 86 1,017
--------- ---------
Net cash provided by (used in) operating activities (179) 6,717
--------- ---------
Cash Flows from Investing Activities
Payments received on notes receivable 823 722
Purchases of property and equipment (5,812) (3,862)
Additions to other long-term assets (3,191) (3,090)
--------- ---------
Net cash provided by (used in) investing activities (8,180) (6,230)
--------- ---------
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt 58,700 84,700
Proceeds from issuance of common stock -- 20
Principal payments on long-term debt (67,422) (99,029)
Principal payments on other long-term liabilities (325) (325)
Debt issuance costs (125) --
Preferred stock dividend (312) (329)
Redemption of preferred stock (151) (121)
--------- ---------
Net cash provided by (used in) financing activities (9,635) (15,084)
--------- ---------
Net increase (decrease) in cash and cash equivalents (17,994) (14,597)
Cash and cash equivalents at beginning of period 58,600 46,129
--------- ---------
Cash and cash equivalents at end of period $ 40,606 $ 31,532
========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)(continued)
For the periods ended April 1, 1999 and April 2, 1998
---------------------------------------------------------------
(in thousands)
<CAPTION>
First Quarter
-------------------
1999 1998
-------- --------
<S> <C> <C>
Supplemental Cash Flow Disclosures
Summary of non-cash investing and financing activities:
Capital lease obligations incurred for property
and equipment $ 16 $ 2,322
Tax benefit from stock options and preferred stock
dividend 7 18
Cash flow during the period for the following:
Interest paid, net of amount capitalized $ 25,523 $ 27,307
Income taxes paid (refunded) 2,493 --
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
<TABLE>
AZTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
For the periods ended April 1, 1999 and April 2, 1998
---------------------------------------------------------------
(in thousands, except number of shares)
<CAPTION>
First Quarter
--------------------
1999 1998
-------- --------
<S> <C> <C>
Common stock:
Beginning and ending balance $ 492 $ 491
-------- --------
Paid-in capital:
Beginning balance 412,528 412,029
Stock options exercised for 3,405 shares in 1998 -- 20
Tax benefit from stock options exercised -- 4
-------- --------
Ending balance 412,528 412,053
-------- --------
Retained earnings:
Beginning balance 58,207 48,654
Preferred stock dividend and losses on redemption,
net of income tax benefit of $7 and $14 (154) (154)
Net income 2,852 618
-------- --------
Ending balance 60,905 49,118
-------- --------
Treasury stock:
Beginning and ending balance (17,126) (17,126)
-------- --------
Unearned compensation:
Beginning balance -- (10)
Amortization -- 9
-------- --------
Ending balance -- (1)
-------- --------
$456,799 $444,535
======== ========
</TABLE>
[FN]
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. There was no interest capitalized during the quarters ended 1999
or 1998. Capitalized costs related to various development projects, included
in deferred charges and other assets, were $4,663,000 and $2,630,000 at April
1, 1999 and December 31, 1998, respectively. For additional information
regarding significant accounting policies, Las Vegas Tropicana redevelopment,
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 31, 1998.
Note 2: Investments in and Advances to Unconsolidated Partnership
- -----------------------------------------------------------------
<TABLE>
Following are summarized operating results for the Company's unconsolidated
partnership, accounted for using the equity method for the periods ended
April 1, 1999 and April 2, 1998 (in thousands):
<CAPTION>
First Quarter
-------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues $ 4,257 $ 4,122
Operating expenses (684) (684)
-------- --------
Operating income 3,573 3,438
Interest expense (1,037) (1,292)
-------- --------
Net income $ 2,536 $ 2,146
======== ========
</TABLE>
<TABLE>
The Company's share of the above operating results, after intercompany
eliminations, is as follows (in thousands):
<CAPTION>
First Quarter
-------------------
1999 1998
-------- --------
<S> <C> <C>
Equity in unconsolidated
partnership's loss $ (1,008) $ (1,125)
</TABLE>
9
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Note 3: Long-term Debt
- -----------------------
<TABLE>
Long-term debt consists of the following (in thousands):
<CAPTION>
April 1, December 31,
1999 1998
---------- ----------
<S> <C> <C>
11% Senior Subordinated Notes Due 2002
("11% Notes") $200,000 $200,000
13 3/4% Senior Subordinated Notes Due 2004
("13 3/4% Notes") 178,293 178,243
Reducing revolving credit note ("Revolver");
floating rate, 6.76% at April 1, 1999;
matures June 30, 2003 45,000 53,100
Term loan ("Term Loan"); floating rate, 7.62%
at April 1, 1999; matures June 30, 2005 50,000 50,000
Other notes payable; 7% to 14.6%; maturities
to 2002 847 868
Obligations under capital leases 7,196 7,869
-------- --------
481,336 490,080
Less current portion (2,505) (2,537)
-------- --------
$478,831 $487,543
======== ========
</TABLE>
Note 4: Other Long-term Liabilities
- -------------------------------------
<TABLE>
Other long-term liabilities consist of the following (in thousands):
<CAPTION>
April 1, December 31,
1999 1998
---------- ----------
<S> <C> <C>
Deferred compensation and retirement plans $ 12,037 $ 11,871
Accrued rent expense 10,181 10,427
Obligation to City of Evansville and
other civic and community organizations 2,738 3,050
Las Vegas Boulevard beautification assessment 442 455
-------- --------
25,398 25,803
Less current portion (2,918) (2,921)
-------- --------
$ 22,480 $ 22,882
======== ========
</TABLE>
Note 5: Income Taxes
- ----------------------
The Company is responsible, with certain exceptions, for the taxes of Ramada
Inc. ("Ramada") through December 20, 1989. The Internal Revenue Service
("IRS") has completed its examinations of the income tax returns for the
years 1988 through 1991 and has settled for all but one issue. The IRS is
examining the income tax returns for the years 1992 through 1996. The
Indiana Department of Revenue is examining the Indiana income tax returns for
the years 1995 through 1997. Management believes that adequate provision for
income taxes and interest has been made in the financial statements.
10
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Note 6: Earnings Per Share
- -----------------------------
Net income per common share excludes dilution and is computed by dividing
income applicable to common shareholders by the weighted-average number of
common shares outstanding. Net income per common share, assuming dilution,
is computed based on the weighted-average number of common shares outstanding
after consideration of the dilutive effect of stock options and the assumed
conversion of the preferred stock at the stated rate.
<TABLE>
The computations of net income per common share and net income per common
share, assuming dilution, for the periods ended April 1, 1999 and April 2,
1998, are as follows:
<CAPTION>
First Quarter
------------------
1999 1998
-------- --------
<S> <C> <C>
Net income $ 2,852 $ 618
Less: preferred stock dividends and losses on
redemption (net of income tax benefits of $7
and $14, credited to retained earnings) (154) (154)
-------- --------
Net income applicable to computations $ 2,698 $ 464
======== ========
Weighted-average common shares applicable to net
income per common share 45,340 45,202
Effect of dilutive securities:
Stock option incremental shares 299 861
Assumed conversion of preferred stock 828 879
-------- --------
1,127 1,740
-------- --------
Weighted-average common shares applicable to net
income per common share assuming dilution 46,467 46,942
======== ========
Net income per common share $ .06 $ .01
======== ========
Net income per common share assuming dilution $ .06 $ .01
======== ========
</TABLE>
Note 7: Contingencies and Commitments
- --------------------------------------
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
11
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Note 7: Contingencies and Commitments (continued)
- --------------------------------------------------
lease guarantees made by Ramada relating to the restaurant business. In
connection with these matters, the Company has an accrued liability of
$3,892,000 and $3,894,000 at April 1, 1999 and December 31, 1998,
respectively.
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 Tropicana Las Vegas lease agreement contains a provision that requires
the Company to maintain an additional security deposit with the lessor of
$21,000,000 in cash or a letter of credit if the Tropicana Las Vegas
operation fails to meet certain financial tests. The Company has a 50%
partnership interest in the lessor.
The Company has severance agreements with certain of its senior executives.
Severance benefits range from a lump-sum cash payment equal to three times
the sum of the executive's annual base salary and the average of the
executive's annual bonuses awarded in the preceding three years plus payment
of the value in the executive's outstanding stock options and vesting and
distribution of any restricted stock to a lump-sum cash payment equal to the
executive's annual base salary. In certain agreements, the termination must
be as a result of a change in control of the Company. Based upon current
salary levels and stock options, the aggregate commitment under the severance
agreements should all these executives be terminated was approximately
$11,000,000 at April 1, 1999.
Note 8: Subsequent Events
- --------------------------
On April 7, 1999, the Company redeemed $75,000,000 principal amount of the
11% Notes at 101.571% of the face amount plus accrued interest. The
redemption was paid with proceeds from borrowings under the Revolver.
On May 3, 1999, the Company issued $235,000,000 principal amount of 8 7/8%
Senior Subordinated Notes due May 15, 2007 ("Notes"). Interest is payable on
May 15 and November 15, beginning on November 15, 1999. The net proceeds
from the issuance of the Notes, after payment of the fees and expenses of the
issuance, were approximately $228,700,000. A portion of the net proceeds of
the Notes will be used to redeem the remaining $125,000,000 principal amount
of the 11% Notes at 101.571% of the face amount plus accrued interest. The
balance of the net proceeds of the Notes will be used to repay a portion of
the outstanding borrowings under the Revolver.
In connection with the redemptions of the 11% Notes, the Company expects to
expense the redemption premiums and the remaining unamortized deferred
financing charges associated with the 11% Notes in the 1999 second quarter.
This expense will be reflected as an extraordinary loss and shown net of an
income tax benefit. The net expense is currently estimated to be
approximately $4,100,000.
12
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
Financial Condition
On April 7, 1999, the Company redeemed $75 million principal amount of the
11% Notes at 101.571% of the face amount plus accrued interest. The
redemption was paid with proceeds from borrowings under the Revolver.
On May 3, 1999, the Company issued $235 million principal amount of 8 7/8%
Senior Subordinated Notes due May 15, 2007 ("Notes"). Interest is payable on
May 15 and November 15, beginning on November 15, 1999. The net proceeds
from the issuance of the Notes, after payment of the fees and expenses of the
issuance, were approximately $228.7 million. A portion of the net proceeds
of the Notes will be used to redeem the remaining $125 million principal
amount of the 11% Notes at 101.571% of the face amount plus accrued interest.
The balance of the net proceeds of the Notes will be used to repay a portion
of the outstanding borrowings under the Revolver.
In connection with the redemptions of the 11% Notes, the Company expects to
expense the redemption premiums and the remaining unamortized deferred
financing charges associated with the 11% Notes in the 1999 second quarter.
This expense will be reflected as an extraordinary loss and shown net of an
income tax benefit. The net expense is currently estimated to be
approximately $4.1 million.
Results of Operations
Quarter Ended April 1, 1999 Compared to Quarter Ended April 2, 1998
The Company's consolidated revenues in the 1999 first quarter were $190.5
million compared to $196.8 million in the 1998 first quarter. Consolidated
casino revenue was $10.1 million or 6% lower in the 1999 versus 1998 first
quarter, reflecting decreases at all properties except for Ramada Express,
which had an increase. The declines in casino revenue at Tropicana Atlantic
City and the Company's riverboat properties were due in part to bad winter
weather. Consolidated rooms revenue was $3.5 million or 29% higher in the
1999 versus 1998 first quarter, primarily reflecting increases at the
Company's properties in Nevada. Consolidated operating income was $19.7
million in the 1999 first quarter, a 17% improvement over $16.9 million in
the 1998 first quarter. Consolidated rent expense was $1.4 million or 27%
lower in the 1999 versus 1998 first quarter due to a decreased number of
operating leases at Tropicana Atlantic City as a result of a shift from
operating leases to capital leases or ownership. The consolidated provision
for doubtful accounts was $1.2 million or 39% lower in the 1999 versus 1998
first quarter, reflecting decreases in the allowance for potential
uncollectible markers at Tropicana Atlantic City and Tropicana Las Vegas as a
result of a lower volume of table games play at those properties.
Consolidated interest expense was $0.9 million or 6% lower in the 1999 versus
1998 first quarter primarily as a result of lower levels of debt outstanding.
For a discussion of income taxes, refer to "Note 5: Income Taxes".
13
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
TROPICANA ATLANTIC CITY Total revenues at Tropicana Atlantic City were $97.3
million in the 1999 first quarter, down 3% from $100.1 million in the 1998
first quarter. Casino revenue was 3% lower in the 1999 versus 1998 first
quarter, primarily reflecting an 11% decrease in games revenue, partially
offset by a 2% increase in slot revenue. The decline in games revenue was a
result of a decrease in the volume of play due in large part to bad winter
weather in January.
Tropicana Atlantic City had operating income of $14.7 million in the 1999
first quarter, a 6% improvement over $13.9 million in the 1998 first quarter.
Casino costs were 2% lower in the 1999 versus 1998 first quarter due to the
decrease in casino revenue. The provision for doubtful accounts was $0.7
million lower in the 1999 versus 1998 first quarter, reflecting a decrease as
a result of the lower volume of table games play. Operating income is after
rent and depreciation and amortization expenses. Rent expense decreased to
$0.5 million in the 1999 first quarter from $1.9 million in the 1998 first
quarter due to a decreased number of operating leases as a result of a shift
from operating leases to capital leases or ownership. Depreciation and
amortization was $6.3 million in the first quarter of 1999 compared to $5.5
million in the first quarter of last year.
TROPICANA LAS VEGAS At Tropicana Las Vegas, total revenues were $35.8
million in the 1999 first quarter, a 5% decrease from $37.6 million in the
1998 first quarter. Casino revenue was 21% lower in the 1999 versus 1998
first quarter, primarily due to a 45% decrease in games revenue combined with
a 6% decrease in slot revenue. Almost half of the decrease in games revenue
was attributable to lower baccarat revenue, which decreased as a result of an
89% decline in the volume of play as the Las Vegas Tropicana continued its
program to reduce the increasingly expensive high-end games business. Rooms
revenue was $2.8 million or 41% higher in the 1999 versus 1998 first quarter
as a result of increased occupancy and average daily rate.
Tropicana Las Vegas had an operating loss of $1.9 million in the 1999 first
quarter compared to $3.5 million in the 1998 first quarter. Casino costs
were 25% lower in the 1999 versus 1998 first quarter, primarily due to the
decrease in casino revenues. Consistent with the increase in rooms revenue,
rooms costs were 16% higher in the 1999 versus 1998 first quarter. The
provision for doubtful accounts was $0.5 million lower in the 1999 versus
1998 first quarter as a result of a lower volume of baccarat play. Operating
loss is after rent and depreciation and amortization expenses. Rent expense
was $2.4 million in the 1999 first quarter compared with $2.5 million in the
1998 first quarter. Depreciation and amortization was $2.5 million in both
periods.
RAMADA EXPRESS At Ramada Express, total revenues were $25.2 million in the
1999 first quarter, up 18% from $21.3 million in the 1998 first quarter.
Operating income was $5.3 million in the 1999 first quarter, an 84%
improvement over $2.9 million in the 1998 first quarter. Operating income is
after rent and depreciation and amortization expenses. Rent expense was $0.2
million in the 1999 first quarter compared to $0.1 million in the 1998 first
quarter. Depreciation and amortization was $1.1 million in the 1999 first
quarter compared to $1.7 million in the 1998 first quarter.
14
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
CASINO AZTAR EVANSVILLE Total revenues at Casino Aztar Evansville were $26.4
million in the 1999 first quarter, down 16% from $31.3 million in last year's
first quarter. Casino revenue was down 16% in the 1999 versus 1998 first
quarter. The introduction in November 1998 of a riverboat casino in the
Louisville, Kentucky area, in combination with severe winter weather in
January and March of 1999, negatively impacted results at Casino Aztar
Evansville. Operating income was $5.0 million in the 1999 first quarter, a
37% decrease from $8.0 million in the 1998 first quarter. Operating income
is after rent and depreciation and amortization expenses. Rent expense was
$0.8 million in both periods and depreciation and amortization was $2.4
million in both periods.
CASINO AZTAR CARUTHERSVILLE Total revenues at Casino Aztar Caruthersville
were $5.8 million in the 1999 first quarter, a 10% decrease from $6.5 million
in the 1998 first quarter due in large part to unfavorable weather. Casino
Aztar Caruthersville had an operating loss of $41,000 in the first quarter of
1999 compared to $0.3 million in the first quarter of 1998. Operating loss
is after depreciation and amortization of $0.8 million in both periods.
Year 2000
Background
In the past, many computer software programs were written using two digits
rather than four to define the applicable year. As a result, date-sensitive
computer software may recognize a date using "00" as the year 1900 rather
than the year 2000. This is generally referred to as the Year 2000 issue.
If this situation occurs, the potential exists for computer system failures
or miscalculations by computer programs, which could disrupt operations.
The Company utilizes computer systems in virtually all aspects of its
business. In particular, Year 2000 problems in the hotel or casino systems
at the Company's properties could disrupt operations at the affected
properties and have a material adverse impact upon the Company's operating
results. The Company is also exposed to the risk that one or more of its
suppliers could experience Year 2000 problems that impact the ability of such
suppliers to provide goods and services. Though this is not considered as
significant a risk with respect to the suppliers of goods, due to the
availability of alternative suppliers, the disruption of certain services,
such as utilities, could, depending upon the extent of the disruption, have a
material adverse impact on the Company's operations.
Approach
The Company has established a coordinated effort between its corporate level
and responsible parties at each of its properties to address Year 2000
issues. The Company requires each property to submit a monthly status report
to the corporate office, which is then reviewed with each property. The
audit committee of Aztar's board of directors discusses the status of each
property's Year 2000 readiness at least quarterly. The Company's Year 2000
readiness program consists of four phases:
15
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Phase 1 Compile an inventory of information technology (IT) and non-
IT systems that may be sensitive to the Year 2000 problem.
Phase 2 Identify and prioritize the critical systems from the
inventory of systems compiled in Phase 1 and inquire of third
parties with whom the Company does significant business, such
as vendors and suppliers, as to the state of their Year 2000
readiness.
Phase 3 Analyse the critical systems to determine which systems are
not Year 2000 compliant and evaluate the costs to repair or
replace those systems.
Phase 4 Repair or replace noncompliant systems and test those systems
for which representation as to Year 2000 compliance has not
been received or for which representation was received but
has not been confirmed.
Status
IT Systems
The Company utilizes software purchased from vendors in
virtually all critical technology systems at its properties.
In certain instances, such vendor-supplied software is
modified through the use of internal programming to enhance
these systems. In many cases, the solution to the Year 2000
issue is simply to install a vendor-tested software upgrade
("Upgrade") and further test the Upgrade through internally
generated test data. In other cases, the Company is
purchasing and installing new vendor software ("Conversion")
that is Year 2000 compliant. The cost and effort to install
and test new software systems is more extensive than the
aforementioned Upgrade and therefore these Conversions
contain a greater risk to the Company.
The Company is currently in Phase 4 on all critical IT systems at
all properties. The following chart shows for each critical IT
system at each of its properties whether an Upgrade or Conversion
is underway and the date when installation and testing of such
systems is expected to be completed. In addition, the chart
identifies those IT systems where internal programming is required
and the extent of such programming requirements. The more
programming required, the greater the risk to the Company's Year
2000 readiness.
16
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
TROPICANA
ATLANTIC TROPICANA RAMADA CASINO AZTAR CASINO AZTAR
SYSTEM CITY LAS VEGAS EXPRESS EVANSVILLE CARUTHERSVILLE
- --------- ---------- --------- ----------- ------------ --------------
Casino Conversion Upgrade Upgrade Upgrade Upgrade
* **
6/99 Done 7/99 7/99 7/99
Slots Upgrade Upgrade Conversion Upgrade Upgrade
** *
Done Done 9/99 6/99 Done
Hotel Conversion Upgrade Conversion Upgrade N/A
**
Done Done Done Done
Financial Conversion Upgrade Upgrade Upgrade Upgrade
Done Done 6/99 6/99 6/99
Point of
Sale/ Upgrade Upgrade Conversion Upgrade Upgrade
Inventory Done 7/99 6/99 Done 5/99
* Indicates more significant internal programming also required
** Indicates minor internal programming also required
Non-IT Systems
The Company utilizes embedded technology such as microcontrollers
or date-sensitive computer chips in its facilities, including fire
safety and security systems, elevators, heating and cooling
monitoring systems and surveillance systems ("Non-IT Systems").
The Company is in Phase 3 and 4 in the process of ensuring Year
2000 readiness in these Non-IT Systems. Procedures being utilized
include: sending letters to vendors of critical Non-IT Systems
asking for the Year 2000 status for each embedded chip or
technology; meetings with vendors who provide maintenance for these
Non-IT Systems to assess Year 2000 readiness; and testing of such
systems using test data wherever possible. The Company expects to
substantially complete Year 2000 compliance on critical Non-IT
Systems by June 1999.
Costs
The total cost to the Company of making its systems Year 2000 compliant is
estimated to be approximately $7.9 million. Approximately $7.5 million of
this amount relates to the acquisition of new computer hardware and software
systems as follows: new hardware and software at Tropicana Atlantic City
($5.7 million); new software at Ramada Express ($1.2 million) and personal
computer upgrades and other systems company-wide ($0.6 million). These costs
will be capitalized and depreciated over their expected useful lives.
17
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
The estimated costs related to internal programming modifications and the
Company's administration of its Year 2000 project are approximately $0.4
million, and such costs are being expensed as incurred. Approximately
$40,000 of these costs were expensed in the quarter ended April 1, 1999 and
approximately $0.2 million were expensed in 1998.
As of April 1, 1999, approximately $6.5 million has been spent on Year 2000
issues. The Year 2000 issue has not caused other Company IT system projects
to be deferred; in fact, it has accelerated the spending on IT systems
overall.
Risk Assessment
The greatest risk to the Company is if one or more of its properties'
critical IT systems, such as casino or hotel, or Non-IT Systems, such as
cooling or heating, experience problems due to Year 2000 issues which cause
business interruptions or customer service problems. The Company is also
exposed to the risk of possible failure of systems external to the Company's
operations ("External Risk Factors"). These External Risk Factors arise from
the fact that the Company's operations, like most businesses, are dependent
upon numerous other private, pubic and governmental entities. While these
External Risk Factors are not the responsibility of the Company and the
remediation of these factors is beyond the Company's control, we are
attempting to monitor these risks and form contingency plans as warranted.
As a result of these External Risk Factors, the Company may be adversely
impacted even if its own IT systems and Non-IT Systems are Year 2000
compliant. External Risk Factors being monitored include utility service to
the Company's properties; banking networks which may affect properties' or
customers' access to cash and travel service disruptions to the Company's
properties. The Company believes that any Year 2000 problems, should they
arise, would be short-term in nature and not affect the Company's liquidity
or financial condition. However, because New Year's week is a very busy
period for the Company's properties, Year 2000 problems at a given property
could negatively impact first-quarter 2000 results.
Contingency Plans
Contingency plans are being developed, by property, considering risk levels
of non-compliance as the Year 2000 implementation and testing process
continues. On an on-going basis, each property maintains certain emergency
manual procedures and back-up plans and such plans are being enhanced to deal
with potential Year 2000 problems should they arise.
18
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Other Matters
In June 1998, the Financial Accounting Standards Board ("FASB") adopted
Statement of Financial Accounting Standards No. 133 entitled "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), which
establishes accounting and reporting standards for derivative instruments and
for hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge of certain financial
exposures. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and, if it is used in hedging
activities, it depends on its effectiveness as a hedge. SFAS 133 is
effective for all fiscal quarters of fiscal years beginning after June 15,
1999. SFAS 133 should not be applied retroactively to financial statements
of prior periods. The Company will adopt SFAS 133 when required. Because of
the Company's minimal use of derivatives, the Company does not anticipate
that the adoption of SFAS 133 will have a significant effect on its earnings
or its financial position.
Private Securities Litigation Reform Act
Certain information included in Aztar's 1998 Form 10-K, this Form 10-Q and
other materials filed or to be filed by the Company with the Securities and
Exchange Commission ("SEC")(as well as information included in oral
statements or other written statements made or to be made by the Company
including those made in Aztar's 1998 annual report) contains statements that
are forward-looking. These include forward-looking statements relating to
the following activities, among others: operation and expansion of existing
properties, including future performance; redevelopment of the Las Vegas
Tropicana and financing and/or concluding an arrangement with a partner for
such redevelopment; other business development activities; refinancing of the
Company's indebtedness; use of derivates; and the Year 2000 issue. These
activities involve important factors that could cause actual results to
differ materially from those expressed in any forward-looking statements made
by or on behalf of the Company. These include, but are not limited to, the
following factors as well as other factors described from time to time in the
Company's reports filed with the SEC: construction and development factors,
including zoning issues, environmental restrictions, soil conditions, weather
and other hazards, site access matters and building permit issues; factors
affecting leverage and debt service, including sensitivity to fluctuation in
interest rates; access to available and feasible financing; regulatory and
licensing approvals; third-party consents, approvals and representations, and
relations with partners, owners, suppliers and other third parties; reliance
on key personnel; business and economic conditions; litigation, judicial
actions and political uncertainties, including gaming legislation and
taxation; and the effects of competition, including locations of competitors
and operating and marketing competition. 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.
19
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a discussion of information that affects information incorporated by
reference in Item 7A of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, see "Note 8: Subsequent Events" of
the Notes to Consolidated Financial Statements included in this Form
10-Q under Item 1.
PART - II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Page No.
----------
10.1 Amendment No. 2, dated March 5, 1999, to
Amended and Restated Reducing Revolving Loan
Agreement, dated as of May 28, 1998, among
Aztar Corporation and the lenders therein
named; Bankers Trust Company and Societe
Generale, as documentation agents; Bank of
Scotland, Credit Lyonnais Los Angeles Branch
and PNC Bank, National Association, as co-
agents; and Bank of America National Trust and
Savings Association, as administrative agent. *
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) Reports on Form 8-K
On April 19, 1999, the Company filed a report on Form 8-K under Item
5. Other Events to file, as Exhibit 99.1, a news release issued by
the Registrant on April 19, 1999, reporting an anticipated offering
by the Company of $200,000,000 in aggregate principal amount of
Senior Subordinated Notes due 2007 in a private placement pursuant to
Rule 144A under the Securities Act of 1933.
On April 28, 1999, the Company filed a report on Form 8-K under Item
5. Other Events to file, as Exhibit 99.1, a news release issued by
the Registrant on April 27, 1999, reporting an anticipated offering
by the Company of $235,000,000 in aggregate principal amount of
Senior Subordinated Notes due May 15, 2007 in a private placement
pursuant to Rule 144A under the Securities Act of 1933.
20
<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 13, 1999 By ROBERT M. HADDOCK
-------------------------- ---------------------------
Robert M. Haddock
Executive Vice President and
Chief Financial Officer
21
<PAGE>
AZTAR CORPORATION AND SUBSIDIARIES
Exhibit Index
- -------------
10.1 Amendment No. 2, dated March 5, 1999, to Amended and Restated
Reducing Revolving Loan Agreement, dated as of May 28, 1998,
among Aztar Corporation and the lenders therein named; Bankers
Trust Company and Societe Generale, as documentation agents;
Bank of Scotland, Credit Lyonnais Los Angeles Branch and PNC
Bank, National Association, as co-agents; and Bank of America
National Trust and Savings Association, as administrative
agent.
27. Financial Data Schedule.
E-1
AMENDMENT NO. 2 TO AMENDED AND RESTATED
REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 2 to Amended and Restated Reducing
Revolving Loan Agreement (this "Amendment") dated as of March 5,
1999 is entered into with reference to the Amended and Restated
Reducing Revolving Loan Agreement dated as of May 28, 1998 among
Aztar Corporation ("Borrower"), the Banks party thereto, Bankers
Trust Company and Societe Generale, as Documentation Agents, Bank
of Scotland, Credit Lyonnais Los Angeles Branch and PNC Bank,
National Association, as Co-Agents, and Bank of America National
Trust and Savings Association, as Administrative Agent (the "Loan
Agreement"). Capitalized terms used but not defined herein are
used with the meanings set forth for those terms in the Loan
Agreement.
Borrower and the Administrative Agent, acting with the
consent of the Requisite Banks pursuant to Section 11.2 of the
Loan Agreement, agree as follows:
1. Section 1.1. Section 1.1 of the Loan Agreement is
amended by adding the following new defined terms:
"Aggregate Basket" means, as of any date
of determination, (a) $430,000,000, plus
(b) the principal amount of any New
Subordinated Debt issued subsequent to
the Closing Date minus (c) the aggregate
purchase prices and/or redemption prices
paid by Borrower to repurchase
Subordinated Obligations subsequent to
the Closing Date and through that date.
"Sub Debt Basket" means, as of any date
of determination, (a) $205,000,000 plus
(b) the principal amount of any New
Subordinated Debt issued subsequent to
the Closing Date minus (c) the aggregate
purchase prices and/or redemption prices
paid by Borrower to repurchase or redeem
Subordinated Obligations subsequent to
the Closing Date and through that date.
2. Section 6.1. Section 6.1 of the Loan Agreement is
amended by striking clause (ii) thereof and substituting in its
place:
(ii) for payments that do not exceed
either (A) the Sub Debt Basket or
(B) when aggregated with all other Basket
Expenditures made since the Closing Date,
the Aggregate Basket; provided that no
Default or Event of Default then exists
or results therefrom;
3. Section 6.5. Section 6.5 of the Loan Agreement is
amended by striking the figures "$300,000,000" in clause (ii) of
Subsection (d) and substituting in their place the words "the
Aggregate Basket."
4. Section 6.15. Section 6.15 of the Loan Agreement is
amended by striking the figures "$300,000,000" in clause (ii) of
Subsection (c), clause (ii) of Subsection (d) and clause (ii) of
Subsection (e), and substituting in their respective places the
words "the Aggregate Basket."
5. Section 6.16. Section 6.16 of the Loan Agreement is
amended by striking the figures $300,000,000" in clause (ii) of
Subsection (l) and clause (ii) of Subsection (m), and
substituting in their respective places the words "the Aggregate
Basket."
6. Conditions Precedent. The effectiveness of this
Amendment shall be conditioned upon the receipt by the
Administrative Agent of all of the following, each properly
executed by a Responsible Official of each party thereto and
dated as of the date hereof:
(a) Counterparts of this Amendment executed by
all parties hereto;
(b) Written consent of each of the Significant
Subsidiaries to the execution, delivery and performance
hereof, substantially in the form of Exhibit A to this
Amendment; and
(c) Written consent of the Requisite Banks as
required under Section 11.2 of the Loan Agreement in the
form of Exhibit B to this Amendment.
7. Representation and Warranty. Borrower represents and
warrants to the Administrative Agent and the Banks that no
Default or Event of Default has occurred and remains continuing.
8. Confirmation. In all other respects, the terms of
the Loan Agreement and the other Loan Documents are hereby
confirmed.
IN WITNESS WHEREOF, Borrower and the Administrative Agent
have executed this Amendment as of the date first written above
by their duly authorized representatives.
AZTAR CORPORATION
By: NEIL A. CIARFALIA
Neil A. Ciarfalia, Treasurer
[Printed Name and Title]
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent
By: JANICE HAMMOND
Janice Hammond
Vice President
<PAGE>
Exhibit A to Amendment
CONSENT OF SUBSIDIARY GUARANTORS
Reference is hereby made to that certain Amended and
Restated Reducing Revolving Loan Agreement dated as of May 28,
1998 among Aztar Corporation ("Borrower"), the Banks party
thereto, Bankers Trust Company and Societe Generale, as
Documentation Agents, Bank of Scotland, Credit Lyonnais
Los Angeles Branch and PNC Bank, National Association, as Co-
Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (as amended, the "Loan
Agreement").
Each of the undersigned hereby consents to the
execution, delivery and performance by Borrower and the
Administrative Agent of Amendment No. 2 to the Loan Agreement.
Each of the undersigned represents and warrants to
the Administrative Agent and the Banks that there is no
defense, counterclaim or offset of any type or nature to the
Subsidiary Guaranty, and that the same remains in full force
and effect.
Dated: March __, 1999
HOTEL RAMADA OF NEVADA
By: ROBERT M. HADDOCK
Robert M. Haddock
Title: Vice President & Treasurer
AZTAR DEVELOPMENT CORPORATION
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer <PAGE>
AZTAR INDIANA GAMING CORPORATION
By: ROBERT M. HADDOCK
Robert M. Haddock
Title: Vice President & Treasurer
AZTAR MISSOURI GAMING CORPORATION
By: ROBERT M. HADDOCK
Robert M. Haddock
Title: Vice President & Treasurer
RAMADA NEW JERSEY, INC.
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer
ATLANTIC-DEAUVILLE INC.
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer
ADAMAR GARAGE CORPORATION
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer
<PAGE>
RAMADA NEW JERSEY HOLDINGS CORPORATION
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer
MANCHESTER MALL, INC.
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer
RAMADA EXPRESS, INC.
By: ROBERT M. HADDOCK
Robert M. Haddock
Title: Vice President & Treasurer
ADMAR OF NEW JERSEY, INC.
By: NEIL A. CIARFALIA
Neil A. Ciarfalia
Title: Treasurer
<PAGE>
Exhibit B to Amendment
CONSENT OF BANK
Reference is hereby made to that certain Amended and
Restated Reducing Revolving Loan Agreement dated as of May 28,
1998 among Aztar Corporation ("Borrower"), the Banks party
thereto, Bankers Trust Company and Societe Generale, as
Documentation Agents, Bank of Scotland, Credit Lyonnais
Los Angeles Branch and PNC Bank, National Association, as Co-
Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (as amended, the "Loan
Agreement").
The undersigned Bank hereby consents to the execution
and delivery of Amendment No. 2 to the Loan Agreement by the
Administrative Agent on its behalf, substantially in the form
of the most recent draft thereof presented to the undersigned
Bank.
Date: March 5, 1999
BANK OF AMERICA
[Name of Institution]
By MATTHEW J. KOENIG
Matthew J. Koenig
Vice President
[Printed Name and Title]
Date: March 5, 1999
ABN AMBRO BANK N.V
By M. TOLENTINO
Michael M. Tolentino
Vice President
By TAMIRA TREFFERS-HARRERA
Tamira Treffers-Harrera
Vice President & Director
Date: March 1, 1999
BANK OF SCOTTLAND
By: ANNIE CHIN TAT
Annie Chin Tat
Senior Vice President
Date: March 9, 1999
BANKERS TRUST COMPANY
By: DAVID J. BELL
David J. Bell
Principal
Date: March 5, 1999
CREDIT LYONNAIS LOS ANGELES BRANCH
By: DIANNE M. SCOTT
Diane Scott
First Vice President & Manager
Date: March 5, 1999
IMPERIAL BANK
By: STEVEN K. JOHNSON
Steven K. Johnson
Senior Vice President
Date: March 3, 1999
KEYBANK NATIONAL ASSOCIATION
By: MARY K. YOUNG
Mary K. Young
Assistant Vice President
Date: March 5, 1999
MITSUBISHI TRUST AND BANKING CORP.
By: YASUSHI SATOMI
Yasushi Satomi
Senior Vice President & Chief Manager
Date: March 1, 1999
NATIONS BANK, N.A.
By: ED HAMILTON
Ed Hamilton
SVP
Date: March 5, 1999
PNC BANK NATIONAL ASSOCIATION
By: G.W. WESSELS
Gary W. Wessels
Vice President
Date: March , 1999
SOCIETE GENERALE
By: ALEX Y. KIM
Alex Y. Kim
Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at April 1, 1999 and the Consolidated Statement of
Operations for the year-to-date period ended April 1, 1999 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-30-1999
<PERIOD-END> APR-1-1999
<CASH> 40,606
<SECURITIES> 0
<RECEIVABLES> 52,223
<ALLOWANCES> 24,126
<INVENTORY> 6,718
<CURRENT-ASSETS> 101,963
<PP&E> 1,210,845
<DEPRECIATION> 330,103
<TOTAL-ASSETS> 1,052,811
<CURRENT-LIABILITIES> 81,435
<BONDS> 478,831
7,252
0
<COMMON> 492
<OTHER-SE> 456,307
<TOTAL-LIABILITY-AND-EQUITY> 1,052,811
<SALES> 13,239
<TOTAL-REVENUES> 190,544
<CGS> 13,607
<TOTAL-COSTS> 99,045
<OTHER-EXPENSES> 9,281
<LOSS-PROVISION> 1,824
<INTEREST-EXPENSE> 14,285
<INCOME-PRETAX> 5,802
<INCOME-TAX> 1,942
<INCOME-CONTINUING> 2,852
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,852
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
