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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-20840
PRESIDENT CASINOS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0341200
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization)
802 North First Street, St. Louis, Missouri 63102
----------------------------------------------------
Address of principal executive offices-Zip Code
314-622-3000
----------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.01 par value,
30,194,700 shares outstanding as of July 1, 1997.
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<PAGE>
PRESIDENT CASINOS, INC.
INDEX TO FORM 10-Q
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
as of May 31 and February 28, 1997................................1
Condensed Consolidated Statements of Operations (Unaudited)
for the Three Months Ended May 31, 1997 and 1996..................2
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Three Months Ended May 31, 1997 and 1996..................3
Notes to Condensed Consolidated Financial Statements (Unaudited)....4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................5
Part II. Other Information
Item 1. Legal Proceedings...........................................12
Item 2. Changes in Securities.......................................12
Item 3. Defaults Upon Senior Securities.............................12
Item 4. Submission of Matters to a Vote of Security Holders.........12
Item 5. Other Information...........................................12
Item 6. Exhibits and Reports on Form 8-K............................12
Signature..............................................................13
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
PRESIDENT CASINOS, INC. (UNAUDITED)
______________________________________________________________________________
<TABLE>
<CAPTION>
(in thousands) May 31, Feb. 28,
1997 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 22,221 $ 25,115
Short-term investments......................... 600 600
Accounts receivable, net of allowance for
doubtful accounts of $401 and $393........... 1,597 982
Other current assets........................... 8,267 8,172
--------- ---------
Total current assets....................... 32,685 34,869
Property and equipment, net of accumulated
depreciation of $49,541 and $45,851............ 114,858 117,163
Other assets..................................... 3,471 3,872
--------- ---------
$151,014 $155,904
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........... $ 1,772 $ 1,772
Other current liabilities...................... 23,278 25,284
--------- ---------
Total current liabilities.................. 25,050 27,056
Long-term debt, net of current maturities........ 104,839 104,862
--------- ---------
Total liabilities.......................... 129,889 131,918
--------- ---------
Minority interest................................ 283 265
Commitments and contingencies.................... -- --
Stockholders' equity:
Preferred Stock, none issued and outstanding... -- --
Common Stock, 30,195 shares issued
and outstanding.............................. 302 302
Additional paid-in capital..................... 101,729 101,729
Accumulated deficit............................ (81,189) (78,310)
--------- ---------
Total stockholders' equity................. 20,842 23,721
--------- ---------
$151,014 $155,904
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS
PRESIDENT CASINOS, INC. OF OPERATIONS (UNAUDITED)
______________________________________________________________________________
<TABLE>
<CAPTION>
(in thousands, except share data) Three Months Ended May 31,
1997 1996
------ ------
<S> <C> <C>
OPERATING REVENUES:
Gaming and gaming cruise....................... $ 42,462 $ 45,161
Food and beverage.............................. 4,899 4,955
Hotel, retail and other........................ 1,930 2,641
Less promotional allowances.................... (3,159) (3,164)
--------- ---------
Net operating revenues....................... 46,132 49,593
--------- ---------
OPERATING COSTS AND EXPENSES:
Gaming and gaming cruise....................... 24,640 25,812
Food and beverage.............................. 3,299 3,052
Hotel, retail and other........................ 554 628
Selling, general and administrative............ 12,463 12,862
Depreciation and amortization.................. 3,754 4,001
Development costs.............................. 870 234
--------- ---------
Total operating costs and expenses........... 45,580 46,589
--------- ---------
OPERATING INCOME ................................ 552 3,004
--------- ---------
OTHER INCOME (EXPENSE):
Interest income................................ 270 198
Interest expense............................... (3,683) (3,750)
--------- ---------
Total other income (expense)................. (3,413) (3,552)
--------- ---------
LOSS BEFORE MINORITY INTEREST.................... (2,861) (548)
Minority interest................................ 18 77
--------- ---------
NET LOSS......................................... $ (2,879) $ (625)
========= =========
Net loss per common and common equivalent share.. $ (0.10) $ (0.02)
========= =========
Weighted average common and common
equivalent shares outstanding.................. 30,195 30,195
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS
PRESIDENT CASINOS, INC. OF CASH FLOWS (UNAUDITED)
______________________________________________________________________________
<TABLE>
<CAPTION>
(in thousands) Three Months Ended May 31,
1997 1996
------ ------
<S> <C> <C>
Net cash provided by (used in) operating
activities...................................... $ (1,161) $ 614
--------- ---------
Cash flows from investing activities:
Expenditures for property and equipment......... (1,637) (2,506)
Proceeds from sales of property and equipment... 4 --
Purchase of lease options....................... -- (500)
Maturity of short-term investments.............. -- 298
--------- ---------
Net cash used in investing activities...... (1,633) (2,708)
--------- ---------
Cash flows from financing activities:
Repayment of notes payable...................... (100) (100)
Payments on capital lease obligations........... -- (400)
--------- ---------
Net cash used in financing activities....... (100) (500)
--------- ---------
Net decrease in cash and cash equivalents......... (2,894) (2,594)
Cash and cash equivalents at beginning of period.. 25,115 19,756
--------- ---------
Cash and cash equivalents at end of period........ $ 22,221 $ 17,162
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest............................ $ 6,656 $ 6,721
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Lease options acquired on contracts which were
accrued but not yet paid ....................... $ -- $ 1,500
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED
PRESIDENT CASINOS, INC. FINANCIAL STATEMENTS (UNAUDITED)
______________________________________________________________________________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed consolidated financial statements include the accounts and
operations of President Casinos, Inc. ("PCI"), its wholly-owned subsidiaries
and a 95% owned limited partnership (collectively, the "Company"). The Company
develops, owns and operates riverboat and/or dockside gaming casinos through
its subsidiaries. The Company conducts gaming operations in Davenport, Iowa,
Biloxi, Mississippi and St. Louis, Missouri. The Davenport operations are
managed by a wholly owned subsidiary which is the general partner of the 95%
Company owned operating partnership ("TCG"). The Company also operates two
non-gaming dinner cruise, excursion and sightseeing vessels on the Mississippi
River in St. Louis, Missouri. In addition, the Company owns and manages
certain hotel and ancillary facilities associated with its gaming operations.
All material intercompany accounts and transactions have been eliminated.
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only of
normal recurring entries unless otherwise disclosed, necessary to present
fairly the Company's financial information for the interim periods presented
and have been prepared in accordance with generally accepted accounting
principles. The interim results reflected in the condensed consolidated
financial statements are not necessarily indicative of results for the full
year or other periods.
The financial statements contained herein should be read in conjunction with
the audited consolidated financial statements and accompanying notes to the
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the period ending February 28, 1997. Accordingly, footnote
disclosure which would substantially duplicate the disclosure in the audited
consolidated financial statements has been omitted.
Certain amounts for fiscal 1997 have been reclassified to conform with
fiscal 1998 financial statement presentation.
2. COMMITMENTS AND CONTINGENT LIABILITIES
On April 11, 1997, an action captioned "American Gaming & Entertainment,
Ltd. v. President Mississippi Charter Corporation and President Riverboat
Casino-Mississippi, Inc." was filed in the Chancery Court of Harrison County,
Mississippi by American Gaming & Entertainment, Ltd. ("AGE"). AGE is the
owner of "The Biloxi Barge" which is utilized in connection with the Company's
Biloxi, Mississippi operations pursuant to a charter agreement between AGE and
President Mississippi Charter Corporation ("Charter Corporation"). The action
4
<PAGE>
filed by AGE alleges that The President Riverboat Casino-Mississippi, Inc.
("President Mississippi") and Charter Corporation have not complied with their
respective obligations under the charter agreement, and requests the Court to
require President Mississippi and Charter Corporation to perform under the
charter agreement and to pay all sums due thereunder with interest and costs.
In the alternative, AGE requests a judgement for the sum of $23,400 with
interest and costs or such other relief as the Court may deem just and proper.
The Company believes that AGE has breached its obligations under the charter
agreement in a number of respects and, in connection therewith, the Company
has withheld a portion of the charter payments due to AGE under the charter
agreement. The Company has continued to accrue the full amount of such
payments due under the charter agreement. An Answer and Counterclaim has been
filed denying liability, alleging numerous legal and equitable defenses and
counterclaiming for breach of warranty concerning the condition of the gaming
barge on charter and litigation pertaining to the gaming barge.
The Company is from time to time a party to litigation, which may or may not
be covered by insurance, arising in the ordinary course of its business. The
Company does not believe that the outcome of any such litigation will have a
material adverse effect on the Company's financial condition or results of
operations, or which would have any material adverse impact upon the gaming
licenses of the Company's subsidiaries.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion should be read in conjunction with the condensed
consolidated financial statements and the notes thereto included elsewhere in
the report.
Overview
The Company's operating results are affected by a variety of factors,
including competitive pressures, changes in regulations governing the
Company's activities, the seasonal nature of the Company's business, the
timing of the commencement of its proposed gaming operations, the amount of
development expenses incurred by the Company and general weather conditions.
Consequently, the Company's operating results may fluctuate from period to
period and the results for any period may not be indicative of results for
future periods.
--Competition
Intensified competition for patrons has significantly impacted the results
of operations in Davenport and St. Louis.
Within a 25-mile radius of the Quad Cities, the Company's Davenport
operation competes with three other casino operations. Expansion and
increased marketing by these competitors continues to escalate and increase
operating costs.
5
<PAGE>
Competition continues to expand in the St. Louis market with the March 1997
opening of two new casinos in Maryland Heights, a suburb twenty miles west of
the Company's St. Louis operations.
--Regulatory Matters
The Company temporarily removed its casino vessel, "The President," from
service in Davenport (from November 12, 1995 to April 3, 1996) for its Coast
Guard mandated five-year hull inspection and to make certain improvements to
the facility. During such period, the Company temporarily replaced "The
President" with a smaller vessel, "The President Casino-Mississippi", thereby
reducing Davenport's gaming square footage from approximately 37,000 square
feet to 21,000 square feet for 34 days during the three-month period ended May
31, 1996.
--Weather Conditions
The Company's operating results are susceptible to the effects of floods and
adverse weather conditions. On various occasions, the Company has temporarily
suspended operations as a result of such adversities. The Davenport casino
operations were temporarily suspended for thirteen days during April 1997, as
a result of flooding on the Mississippi River. Also as a result of flood
conditions along the Mississippi River, the Company temporarily suspended
operations aboard "The Admiral" in St. Louis for three days in May and eight
days in June of 1996. Although the Company was not forced to suspend its St.
Louis operations during the three-month period ended May 31, 1997, high waters
caused reduced parking and a general public perception of diminished access to
the casino which combined to negatively impact revenue during the period.
6
<PAGE>
Results of Operations
Three-Month Period Ended May 31, 1997 Compared to the
Three-Month Period Ended May 31, 1996
The following table highlights the results of operations for the Company's
gaming and non-gaming cruise operating subsidiaries. Certain
reclassifications have been made to fiscal year 1997 to conform to the fiscal
1998 presentation (dollars in millions).
<TABLE>
Three Months Ended May 31,
1997 1996
------ ------
<S> <C> <C>
Biloxi, Mississippi
Operating revenues................... $ 10.9 $ 11.3
Income(loss) from operations......... $ 0.1 $ (0.1)
EBITDA (a)........................... $ 0.9 $ 0.6
EBITDA margin........................ 8.3% 5.3%
Davenport, Iowa
Operating revenues................... $ 16.4 $ 16.9
Income from operations............... $ 1.6 $ 3.2
EBITDA (a)........................... $ 2.6 $ 4.2
EBITDA margin........................ 15.9% 24.9%
St. Louis, Missouri
Operating revenues................... $ 17.7 $ 19.1
Income from operations............... $ 1.3 $ 1.4
EBITDA (a)........................... $ 2.6 $ 2.6
EBITDA margin........................ 14.7% 13.6%
</TABLE>
(a) "EBITDA" consists of earnings from operations before income taxes,
depreciation and amortization for each of the operating subsidiaries.
However, it does not include corporate operating expenses. EBITDA should not
be construed as an alternative to operating income as an indicator of the
Company's operating performance, or as an alternative to cash flows from
operational activities as a measure of liquidity. The Company has presented
EBITDA solely as a supplemental disclosure to facilitate a more complete
analysis of the Company's financial position. The Company believes that this
disclosure enhances the understanding of the financial performance of a
company with substantial depreciation and amortization.
Operating revenues. The Company generated consolidated operating revenues
of $46.1 million during the three-month period ended May 31, 1997 compared to
$49.6 million during the three-month period ended May 31, 1996, a decrease of
$3.5 million or 7.1%. All three gaming properties experienced a decrease in
revenue. Additionally, a non-gaming subsidiary experienced a $1.1 million
decrease in charter revenues as a result of the sale of the "Diamond Jo" and
the "Riverclub", two of the Company's vessels that in the prior year had been
under charter.
7
<PAGE>
Operating revenues from the Company's Davenport operations were adversely
affected by flood conditions which caused the temporary suspension of
operations for thirteen days during April 1997. The negative impact of
flooding was offset, in part, by the Davenport operations increase in market
share (excluding the period that operations were suspended) for the three-
month period ended May 31, 1997 compared to the three month-period ended May
31, 1996. During the three-month period ended May 31, 1996, the Davenport
operations were negatively affected, to a lesser extent, by construction which
adversely affected parking and ingress to the casino (which construction was
substantially completed in fiscal 1997) and by the substitution of a smaller
vessel for one month of the quarter.
The Company's St. Louis operating revenues were adversely affected in both
three-month periods by flood conditions. Although the Company was not forced
to suspend its St. Louis operations during the three-month period ended May
31, 1997, the high water levels occurred over a greater number of days than
the prior year, which adversely affected admissions. Additionally, competition
increased in the St. Louis market with the addition of two new casinos in
March 1997.
The Company's revenues from food and beverage, hotel, retail, charter and
other non-gaming activities (net of promotional allowances) decreased to $3.7
million during the three-month period ended May 31, 1997, from $4.4 million
during the three-month period ended May 31, 1996, a decrease of $0.7 million
or 15.9%. The three-month period ended May 31, 1997 included a $1.1 million
decrease in charter revenues discussed above. This was partially offset by
$0.5 million of business interruption proceeds related to the temporary
suspension of operations in St. Louis during the prior year that was
recognized in the three-month period ended May 31, 1997.
Operating costs and expenses. The Company's consolidated gaming and gaming
cruise operating costs and expenses were $24.6 million during the three-month
period ended May 31, 1997, compared to $25.8 million during the three-month
period ended May 31, 1996, a decrease of $1.2 million or 4.7%. The primary
contributing factors in the decrease included operating efficiencies
implemented at all three properties and a proportional decrease in the gaming
tax as a result of the decline in gaming revenues. These reductions were
offset, in part, by increased promotional expenses at the Davenport operation.
As a percentage of gaming revenues, gaming and gaming cruise costs increased
to 58.0% during the three-month period ended May 31, 1997 from 57.2% during
the three-month period ended May 31, 1996. This increase is primarily
attributed to the fixed gaming costs that continued to be incurred during the
temporary suspension of the Davenport operations.
The Company's consolidated selling, general and administrative expenses were
$12.5 million during the three-month period ended May 31, 1997, compared to
$12.9 million for the three-month period ended May 31, 1996, a decrease of
$0.4 million or 3.1%. The decrease is attributable to operating efficiencies
experienced at all three of the Company's casino operations, a decrease of
expenses related to previously chartered vessels which were sold and a
reduction of corporate overhead. These decreases were partially offset by an
8
<PAGE>
increase in sales and marketing expense at the Company's Davenport operations
as a result of competitive pressures. As a percentage of consolidated
revenues, selling, general and administrative expenses increased to 27.0%
during the three-month period ended May 31, 1997 from 25.9% during the three-
month period ended May 31, 1996. The increase in selling, general and
administrative expenses as a percent of revenue is primarily attributable to
fixed costs at the Davenport operations continuing during the 13-day temporary
suspension of operations.
Depreciation and amortization expenses were $3.8 million during the three-
month period ended May 31, 1997, compared to $4.0 million during the three-
month period ended May 31, 1996, a decrease of $0.2 million. The decrease is
primarily attributable to the sale of two vessels in the prior year, offset,
in part, by assets under construction during the three-month period ended May
31, 1996, which were subsequently placed in service.
Development costs during the three-month period ended May 31, 1997 were $0.9
million compared to $0.2 million during the three-month period ended May 31,
1996, an increase of $0.7 million. The increase was primarily related to the
amortization of the Philadelphia lease option.
Operating income. As a result of the foregoing items, the Company had
operating income of $0.6 million during the three-month period ended May 31,
1997, compared to $3.0 million during the three-month period ended May 31,
1996.
Interest expense, net. The Company incurred net interest expense of $3.4
million during the three-month period ended May 31, 1997, compared to $3.6
million during the three-month period ended May 31, 1996, a decrease of $0.2
million.
Net loss. The Company incurred a net loss of $2.9 million during the three-
month period ended May 31, 1997, compared to a net loss of $0.6 million
during the three-month period ended May 31, 1996.
Liquidity and Capital Resources
The Company meets its working capital requirements from a combination of
internally generated sources including cash from operations and the sale or
charter of assets no longer utilized in the Company's operations.
The Company requires approximately $9.0 million of cash in order to fund
daily operations. As of May 31, 1997, the Company had approximately $13.8
million in cash and short-term investments in excess of the required $9.0
million. The Company is heavily dependant on cash generated from operations
to continue to operate as planned in its existing jurisdictions and fund
capital expenditures. The Company anticipates that its existing available
cash and cash equivalents and its anticipated cash generated from operations
will be sufficient to fund all of its ongoing operations. To the extent cash
generated from operations is less than anticipated, the Company may be
9
<PAGE>
required to curtail certain planned fiscal 1998 expenditures or seek other
sources of financing. The Company may be limited in its ability to raise cash
through additional financing.
The Company experienced a net cash decrease from investing activities of
$1.6 million during the three-month period ended May 31, 1997, compared to a
decrease of $2.7 million in the three-month period ended May 31, 1996. The
net cash decrease from investing activities during both periods resulted
primarily from expenditures on property and equipment. In addition, the
Company paid $0.5 million related to options to lease property in
Philadelphia, Pennsylvania, during the three-month period ending May 31, 1996.
During the three-month period ended May 31, 1997, the Company made $0.1
million of principal payments, compared to $0.5 million during the three-month
period ended May 31, 1996.
The indenture governing the Company's Senior Notes due 2001 (the
"Indenture"), restricts the ability of PCI, TCG and PCI's wholly-owned
subsidiaries which are guarantors of the Senior Notes due 2001 (collectively,
the "Guarantors"), among other things, to dispose of or create liens on
certain assets, to make certain investments and to pay dividends. Under the
Indenture, the Guarantors have the ability to seek to borrow additional funds
of $15.0 million. The Indenture also provides that the Guarantors must use
cash proceeds from the sale of certain assets within 180 days to either (i)
permanently reduce certain indebtedness or (ii) contract with an unrelated
third party to make investments or capital expenditures or to acquire long-
term tangible assets, in each case, in gaming and related businesses (provided
any such investment is substantially complete in 270 days). The Company
intends to utilize all such proceeds in accordance with the Indenture. In the
event such proceeds are not so utilized, the Company must make an offer to all
holders of Senior Notes to repurchase at par value an aggregate principal
amount of Senior Notes equal to the amount by which such proceeds exceeds $5.0
million. The Company does not believe that the unutilized proceeds will
exceed $5.0 million. The Indenture does not apply to PCI's consolidated
entities which do not guarantee the Senior Notes due 2001.
During fiscal 1998, the Company intends to make investments in property,
plant and equipment at its current operations approximating $5.0 million, of
which $1.6 million was spent in the first quarter.
On May 13, 1997 the Company announced that it has agreed in principal to
purchase for approximately $40.5 million certain real estate and improvements
located on the Gulf Coast in Biloxi, Mississippi from BH Acquisition
Corporation ("BH"). BH is wholly owned by John E. Connelly, Chairman,
President, Chief Executive Officer and principal stockholder of the Company.
The property comprises approximately 260 acres and includes the Broadwater
Resort and the Broadwater Tower, two hotels with over 500 rooms, the 138-slip
Broadwater Marina and the adjacent 18-hole Sun Golf Course. The Broadwater
Marina is currently the site of the Company's casino operations in Biloxi and
is leased by the Company from BH under a long-term lease agreement. The
10
<PAGE>
purchase is subject to finalization of financing and various other details
related to the transition. The Company anticipates the transaction to close
in the second quarter of fiscal 1998.
The Company anticipates investing $5.0 million (in addition to the $5.0
million investment in property and equipment discussed above) in President
Broadwater Hotel, LLC, which would own the Broadwater properties. This entity
would finance the purchase with $30.0 million of outside financing and $10.0
million of purchase money preferred equity from BH. Such financing would be
non-recourse to the Company.
In the event the Company identifies a potential growth opportunity, project
financing will be required. Capital investments may include all or some of
the following: acquisition and development of land; acquisition of vessels and
lease options on land and other facilities; and construction of vessels and
other facilities in anticipation of the approval of gaming operations in
potential new jurisdictions. In connection with development activities
relating to potential jurisdictions, the Company also makes expenditures for
professional services which are expensed as incurred. The Company's financing
requirements would depend upon actual development costs, the amounts and
timing of such expenditures, the amount of available cash flow from operations
and the availability of other financing arrangements.
In such case, the Company could pursue a number of alternatives to avail
itself of additional capital, including borrowing additional funds either
directly or on a stand-alone project basis, financing through lease
agreements, selling equity securities and selling assets which are not
currently generating revenues. The Company may also consider strategic
combinations or alliances. Although there can be no assurance that the
Company can effectuate any of the financing strategies discussed above, the
Company believes that if it determines to seek any additional licenses to
operate gaming in other potential jurisdictions it will be able to raise
sufficient capital to pursue its strategic plan.
The Company has a $4.1 million outstanding term note payable that is
collateralized by a boat and various equipment with a net book value of $8.6
million. Currently the note contains a covenant whereby the Company must
maintain a minimum net worth of $20.0 million during fiscal 1998. Management
believes that during fiscal 1998 the Company's net worth will fall below $20.0
million and that the loan will be subject to call. However, the fair market
value of the vessel is in excess of the outstanding note balance and
management believes that the Company will be able to renegotiate the terms,
buy down a portion of the note or refinance the loan.
Forward Looking Statements
The statements contained herein include forward-looking statements based on
management's current expectations of the Company's future performance.
Predictions relating to future performance are inherently uncertain and
subject to a number of risks. Consequently, the Company's actual results
could differ materially from the expectations expressed in the preceding
11
<PAGE>
paragraphs. Factors that could cause the Company's actual results to differ
materially from the expected results include, among other things: the
intensely competitive nature of the riverboat and dockside casino gaming
industry; increases in the number of competitors in the markets in which the
Company operates; the seasonality of the riverboat and dockside casino gaming
industry in certain markets in which the Company operates; the susceptibility
of the Company's operating results to floods, adverse weather conditions and
natural disasters; the risk that jurisdictions in which the Company proposes
to operate do not enact legislation permitting riverboat or dockside casino
gaming or do not enact such legislation in a timely manner; changes in
governmental regulations governing the Company's activities and other risks
detailed in the Company's filings with the Securities and Exchange Commission.
Part II. Other Information
Item 1. Legal Proceedings
Information with respect to legal proceedings to which the Company is a
party is disclosed in Note 2 of Notes to Condensed Consolidated Financial
Statements included in Part I of this report and is incorporated herein by
reference.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits filed as part of this report are listed on Index to
Exhibits accompanying this report.
(b) Reports on Form 8-K
Not applicable.
12
<PAGE>
SIGNATURE
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.
President Casinos, Inc.
-----------------------------
(Registrant)
Date: July 1, 1997 /s/ James A. Zweifel
-----------------------------
James A. Zweifel
Duly Authorized Officer and
Principal Financial Officer
13
<PAGE>
INDEX TO EXHIBITS
-----------------
EXHIBIT NO.
27 Financial Data Schedule for the three months ended May 31, 1997,
as required under EDGAR.
<TABLE> <S> <C>
<S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENT
OF INCOME OF PRESIDENT CASINOS INC. FILED AS A PART OF THE QUARTERLY REPORT ON
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY
REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> MAY-31-1997
<CASH> 22221
<SECURITIES> 0
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