<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1996 Commission File Number 0-20648
BOOMTOWN, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 94-3044204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 399, Verdi, Nevada 89439-0399
(Addressed of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 345-8643
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 (of 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
----- -----
On May 9, 1996, the registrant had outstanding 9,248,340 shares of its common
stock, $.01 par value.
<PAGE>
BOOMTOWN, INC.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets, September 30, 1995
and March 31, 1996............................................... 3
Consolidated Statements of Operations For the Three and Six
Months Ended March 31, 1995 and 1996............................. 4
Consolidated Condensed Statements of Cash Flows For the Six
Months Ended March 31, 1995 and 1996............................. 5
Notes to Consolidated Financial Statements....................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................ 16
Item 2. Changes in Securities............................................ 16
Item 3. Defaults upon Senior Securities.................................. 16
Item 4. Submission of Matters to a Vote of Security Holders.............. 16
Item 5. Other Information................................................ 16
Item 6. Exhibits and Reports on Form 8-K................................. 16
SIGNATURES.................................................................. 17
SCHEDULE OF EXHIBITS........................................................ 18
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
BOOMTOWN, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30, March 31,
1995 1996
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents (including restricted cash
of approximately $2,400,000 at September 30, 1995) $ 20,775,459 $ 21,581,911
Accounts receivable, net 924,135 1,065,212
Income taxes receivable, net 1,507,900 2,136,544
Inventories 2,715,305 2,261,272
Prepaid expenses 7,025,438 5,038,903
Other current assets 765,465 776,737
------------ ------------
Total current assets 33,713,702 32,860,579
Property, plant and equipment, at cost, net 150,955,320 149,184,612
Goodwill, less accumulated amortization 6,643,522 6,455,497
Investment in lease, net 13,077,084 12,804,644
Notes receivable from a related party 27,293,713 27,293,713
Other assets 7,514,789 10,038,972
------------ ------------
Total assets $239,198,130 $238,638,017
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,746,862 $ 3,644,666
Accrued compensation 2,929,761 3,297,162
Other accrued liabilities 9,740,297 9,438,092
Accrued interest payable 4,959,375 5,008,070
Income taxes payable 506,408 279,960
Long-term debt due within one year (Note 2) 2,948,479 3,520,370
------------ ------------
Total current liabilities 24,831,182 25,188,320
Long-term debt due after one year (net of unamoritized
discount of approximately $2,657,000 and $2,555,000 at
September 30, 1995 and March 31, 1996, respectively) 106,547,154 105,394,097
Deferred income taxes 1,621,088 1,771,088
Deferred gain on sale leaseback 212,720 141,813
Minority interest 740,849 1,115,774
Commitments and contingencies (Notes 3 and 6)
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 shares
authorized, 9,233,074 and 9,246,951 issued and
outstanding, at September 30,1995 and March 31,
1996, respectively, net of note receivable from
stockholder of $221,000 103,452,520 103,542,923
Retained earnings 1,792,617 1,484,002
------------ ------------
Total stockholders' equity 105,245,137 105,026,925
------------ ------------
Total liabilities and Stockholders' equity $239,198,130 $238,638,017
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
3
<PAGE>
BOOMTOWN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
Three Months Ended Six Months Ended
March 31, March 31,
1995 1996 1995 1996
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Gaming/hotel operations:
Gaming $46,373,790 $ 46,376,456 $ 91,150,189 $ 91,369,592
Family entertainment center 1,408,331 1,348,797 2,665,283 2,706,429
Food and beverage 3,636,461 4,058,009 7,059,365 7,975,050
Hotel and recreational vehicle park 1,592,322 1,839,790 3,186,674 3,600,236
Truckstop, service station and mini-mart 2,067,095 2,702,308 4,600,961 5,499,015
Other income 512,180 567,384 1,093,285 1,362,380
----------- ------------ ------------ ------------
55,590,179 56,892,744 109,755,757 112,512,702
Costs and expenses:
Gaming/hotel operations:
Gaming 18,277,270 18,393,879 36,210,808 36,380,922
Gaming equipment leases 1,236,248 1,723,874 2,472,497 3,393,118
Family entertainment center 767,686 742,231 1,417,050 1,526,499
Food and beverage 4,108,806 4,482,523 7,978,049 9,333,854
Hotel and recreational vehicle park 758,395 726,873 1,507,782 1,450,348
Truckstop, service station and mini-mart 1,827,528 2,392,389 4,100,236 4,912,125
Marketing 4,625,846 5,378,039 9,708,158 10,778,975
General and administrative 17,589,715 17,851,671 35,185,089 35,487,578
Depreciation and amortization 2,594,811 2,741,555 5,135,391 5,298,147
Discontinued projects 334,117 -- 334,117 --
----------- ------------ ------------ ------------
52,120,422 54,433,034 104,049,177 108,561,566
----------- ------------ ------------ ------------
Income from operations 3,469,757 2,459,710 5,706,580 3,951,136
Interest expense,
net of capitalized interest (3,518,016) (3,492,027) (6,326,503) (6,832,654)
Interest income 960,591 757,147 1,475,918 1,552,435
Gain (loss) on sale of assets (257,366) 101,190 164,313 70,300
----------- ------------ ------------ ------------
Income (loss) before minority interest
in consolidated partnerships and
income taxes 654,966 (173,980) 1,020,308 (1,258,783)
Minority interest in operations
of consolidated partnerships 24,031 240,228 68,944 625,076
----------- ------------ ------------ ------------
Income (loss) before income taxes 678,997 66,248 1,089,252 (633,707)
Provision (benefit) for income taxes 277,683 17,886 452,040 (325,092)
----------- ------------ ------------ ------------
Net income (loss) $ 401,314 $ 48,362 $ 637,212 $ (308,615)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Net income (loss) per share
of Common Stock $ .04 $ .01 $ .07 $ (.03)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Shares used in calculating net income
(loss) per share of Common Stock 9,585,544 9,552,010 9,584,518 9,242,634
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
</TABLE>
See accompanying notes.
4
<PAGE>
BOOMTOWN, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(unaudited)
<TABLE>
Six Months Ended
March 31,
1995 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 637,212 $ (308,615)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Lease expense recorded in exchange
for limited partnership interest 1,000,000 1,000,000
Depreciation and amortization 5,135,391 5,298,147
Accounts receivable 100,202 (141,077)
Prepaid expenses 2,637,460 1,986,535
Accounts payable (5,848,626) (102,196)
Income taxes payable 185,242 226,448
Accrued compensation 142,872 367,401
Accrued interest payable 40,278 48,695
Other adjustments (744,598) (1,779,648)
------------ -----------
Net cash provided by operating activities 3,285,433 6,595,690
------------ -----------
Cash flows from investing activities:
Proceeds from sale of property and equipment 2,651,491 201,121
Payments for purchases of property and equipment (11,236,334) (2,750,762)
Payments for pre-opening and future development costs (998,561) --
Decrease in construction related payables( 950,574) (75,995)
------------ -----------
Net cash used in investing activities (10,533,978) (2,625,636)
------------ -----------
Cash flows from financing activities:
Proceeds from additions to short-term borrowings 5,000,000 --
Pre-payment of property lease -- (2,480,387)
Net proceeds from additions to long-term debt 9,036,044 1,063,850
Principal payments on long-term debt (918,899) (1,747,065)
Distribution to limited partner (75,409) --
------------ -----------
Net cash provided by (used in) financing activities 13,041,736 (3,163,602)
------------ -----------
Net increase in cash and cash equivalents 5,793,191 806,452
Cash and cash equivalents:
Beginning of period 11,390,554 20,775,459
------------ -----------
End of period $ 17,183,745 $21,581,911
------------ -----------
------------ -----------
</TABLE>
See accompanying notes.
5
<PAGE>
BOOMTOWN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
BASIS OF PRESENTATION AND NATURE OF BUSINESS - The accompanying
unaudited consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles and should be read in
connection with the 1995 Annual Report filed with the Securities and Exchange
Commission on the Registrant's Form 10-K for the fiscal year ended September
30, 1995. The accounting polices utilized in the preparation of the
consolidated financial information herein are the same as set forth in such
annual report except as modified for interim accounting policies which are
within the guidelines established in Accounting Principles Board Opinion No.
28.
INTERIM FINANCIAL INFORMATION - The Consolidated Balance Sheet at
September 30, 1995 has been taken from the audited financial statements at
that date. The interim financial information is unaudited. In the opinion
of management, all adjustments considered necessary for a fair presentation
of its financial position at March 31, 1996, the results of operations for
the three and six months ended March 31, 1996 and 1995 and the cash flows for
the six months ended March 31, 1996 and 1995 have been included. The
Company's operations are seasonal and thus operating results for the three
and six months ended March 31, 1996 should not be considered indicative of
the results that may be expected for the fiscal year ending September 30,
1996.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1995
financial statements to conform to the 1996 presentation.
The accompanying consolidated financial statements include the accounts
of the Company and all of its subsidiary companies. All significant
intercompany accounts and transactions have been eliminated.
2. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
September 30, 1995 March 31, 1996
------------------- --------------
<S> <C> <C>
11.5% First Mortgage Notes (net of unamoritized
discount of $2.7 million and $2.6 million as
of September 30, 1995 and March 31,1996,
respectively) $100,842 $100,945
13% note payable 4,336 3,801
11.5% notes payable 2,431 1,896
Capital lease obligations 1,126 1,663
12.25% note payable 760 609
-------- ---------
109,495 108,914
Less amounts due within one year 2,948 3,520
-------- ---------
$106,547 $105,394
-------- ---------
-------- ---------
</TABLE>
6
<PAGE>
BOOMTOWN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company's 13%, 11.5% and 12.25% notes payable are secured by certain
furniture, fixtures and equipment of the Company's subsidiaries. The notes
mature in January 1999, September 1997 and January 1998, respectively.
The capital lease obligations are secured by equipment with a net book
value of $1,652,000 and $2,898,000 at September 30, 1995 and March 31, 1996,
respectively. The capital lease obligations mature between September 1997
and August 1998.
3. COMMITMENTS AND CONTINGENCIES
On November 24, 1993, Boomtown completed the private placement of $103.5
million of 11.5% First Mortgage Notes due November 2003 (the "Notes") with
detachable warrants to purchase 472,000 shares of the Company's Common Stock
at $21.19 per share. The warrants expire in November 1998. Interest on the
Notes is payable semi-annually. The Notes will be redeemable at the option
of the Company, in whole or in part, on or after November 1, 1998, at a
premium to the face amount ($103.5 million) which decreases on each
subsequent anniversary date, plus accrued interest to the date of redemption.
The Notes are secured by substantially all of the Company's assets.
The Indenture governing the Notes places certain business, financial and
operating restrictions on the Company and its subsidiaries including, among
other things, the incurrence of additional indebtedness, issuance of
preferred equity interests and entering into operating leases; limitations
on dividends, repurchase of capital stock of the Company and redemption's of
subordinated debt; limitations on transactions with affiliates; limitations
on mergers, consolidations and sale of assets; limitations on amending
existing partnership and facility construction agreements; and the use of
proceeds from the issuance of Notes.
In October 1994, the Mississippi Gaming Commission adopted a regulation
which requires, as a condition of license or license renewal, for a gaming
establishment's plan to include various expenditures including parking
facilities and infrastructure facilities amounting to at least 25% of the
casino cost. Although the Company believes they have satisfied this
requirement at the Mississippi property, there can be no assurance the
Mississippi Gaming Commission will not require further development on the
casino site including hotel rooms and additional parking facilities.
Additionally, there can be no assurance that the Company will be successful
in completing such a project or that the Company would be able to obtain a
waiver if the Company decides not to build.
4. COMMON STOCK OUTSTANDING AND NET INCOME (LOSS) PER SHARE
Net income per share of Common Stock is computed based on the weighted
average number of shares of Common Stock and dilutive Common Stock
equivalents outstanding during the period. Net loss per share is computed
using the weighted average number of shares of
7
<PAGE>
BOOMTOWN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
Common Stock outstanding and common equivalent shares from stock options and
warrants are excluded from the computation because their effect is
antidilutive. Fully diluted per share amounts are the same as primary per
share amounts for the periods presented. (Also see Part II, Item 6, Exhibit
11.1 of this document).
5. SUMMARIZED CONSOLIDATING FINANCIAL INFORMATION
In connection with the First Mortgage Notes issued in November, 1993,
the subsidiaries of the Company (guarantor entities) have guaranteed the
Notes. Summarized consolidating financial information is as follows:
SUMMARIZED CONSOLIDATING FINANCIAL INFORMATION
As of and for the six months ended March 31, 1996
(in thousands)
<TABLE>
Guarantor Entities
----------------------------------------------
Blue Diamond Boomtown Non-wholly Elimination's &
Boomtown, Inc. Hotel & Casino Hotel & Casino Owned Reclassifications Boomtown, Inc.
(parent co.) Inc. Inc. Subsidiaries Dr (Cr) (consolidated)
(1) (2) (3) (4)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Current assets $ 10,062 $11,310 $ 4,154 $ 10,851 $ (3,516) $ 32,861
Advances to affiliates 123,185 -- -- -- (123,185) --
Non-current assets 82,546 19,579 60,585 94,834 (51,767) 205,777
----------------------------------------------------------------------------------------------
$215,793 $30,889 $64,739 $105,685 $(178,468) $238,638
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Current liabilities $ 9,025 $ 9,597 $ 4,963 $ 12,976 $ (11,373) $ 25,188
Non-current liabilities 101,166 353 5,862 3,753 (2,711) 108,423
Advances from parent -- 37,319 5,949 72,060 (115,328) --
Equity 105,602 (16,380) 47,965 16,896 (49,056) 105,027
----------------------------------------------------------------------------------------------
$215,793 $30,889 $64,739 $105,685 $(178,468) $238,638
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Revenues $ 1,554 $23,507 $29,167 $ 59,839 $ (1,554) $112,513
Income (loss) from operation $ (513) (3,542) $ (347) $ 8,353 $ -- $ 3,951
Equity in earnings (loss) of
consolidated subsidiaries $ 54 $ -- $ -- $ -- $ (54) $ --
----------------------------------------------------------------------------------------------
Net income (loss) $ (362) $(3,571) $ (682) $ 3,681 $ 625 $ (309)
Net cash provided by (used in)
operating activities $ (156) $(3,229) $ 2,017 $ 7,964 $ -- $ 6,596
Net cash provided by (used in)
investing activities (1,436) (161) (705) (1,758) 1,435 (2,625)
Net cash provided by (used in)
financing activities (79) 3,902 (782) (4,770) (1,435) (3,164)
----------------------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (1,671) 512 530 1,436 -- 807
Cash and cash equivalents:
Beginning of year 10,811 2,630 1,334 6,000 -- 20,775
----------------------------------------------------------------------------------------------
End of period $ 9,140 $ 3,142 $ 1,864 $ 7,436 $ -- $ 21,582
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
5. SUMMARIZED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
(1) Blue Diamond Hotel & Casino, Inc. is a wholly-owned subsidiary that
is consolidated in the accompanying consolidated financial statements.
(2) Boomtown Hotel & Casino, Inc. is a wholly-owned subsidiary that is
consolidated in the accompanying consolidated financial statements. These
amounts do not include the operations of the Company's wholly-owned
subsidiaries which are general partners of the Company's non-wholly-owned
subsidiaries. The operations of such wholly-owned subsidiaries are
insignificant and have been included in the column "Non-wholly Owned
Subsidiaries".
(3) Non-wholly Owned Subsidiaries include Boomtown, Inc.'s subsidiaries
in Mississippi and Louisiana and 100% of the assets, liabilities and equity
of the limited partnerships formed to operate the gaming facilities in those
states.
(4) Eliminations consist of Boomtown, Inc.'s (a) investment in the
guarantor entities, (b) advances to the guarantor and non-guarantor
subsidiaries and (c) equity earnings (loss) of consolidated subsidiaries and
partnerships. The advances are subordinated in right of payment to the
guarantees of the Notes.
6. OTHER EVENTS
AMENDMENT OF LEASE AGREEMENT - Upon commencement of operations at
Boomtown Biloxi, the Company entered into an agreement with Hospitality
Franchise Systems, Inc. ("HFS") whereby HFS advanced the Company $11 million
in return for ownership of the Biloxi barge and shell building. Also under
this agreement, HFS was to receive 20% of the adjusted earnings before
interest, taxes, depreciation, and amortization ("EBTIDA") as defined in the
related contract. HFS was also to provide marketing services to Boomtown
Biloxi. The assets under this agreement, as well as the related contractual
arrangements, were subsequently transferred to National Gaming Corporation,
Inc. ("NGC"). Boomtown Biloxi leases the assets from NGC under a 25 year
lease with a 25 year renewal option.
In November, 1995, the Company executed an agreement with NGC whereby
$2.4 million was returned to NGC in return for a reduction of the EBITDA
distributions from 20% to 16%. Additionally, for $100,000 the Company
secured an option to buy the barge from NGC as well as to buy out the EBITDA
participation at a cost approximating the original investment made by HFS
less the $2.4 million that was paid. The option terminates on March 31, 1997
but is renewable for an additional two years for $100,000 a year.
PROPOSED MERGER WITH HOLLYWOOD PARK, INC. ("HOLLYWOOD PARK") - On April
23, 1996, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Hollywood Park relating to the strategic combination
of Hollywood Park and the Company. Pursuant to the Merger Agreement and
subject to the terms and conditions set forth therein, the Company would
become a wholly-owned subsidiary of Hollywood Park (the "Merger"). Pursuant
to the Merger Agreement, at the effective date of the Merger (the "Effective
Date"), each issued and outstanding share of Boomtown Common Stock will be
converted into the right to receive 0.625 (the "Exchange Ratio"), of a share
of Hollywood Park Common Stock. The Merger is intended to be structured as a
tax-free reorganization.
9
<PAGE>
6. OTHER EVENTS (CONTINUED)
As of April 23, 1996, the Company had approximately 11,602,432 shares of
Common Stock outstanding and Hollywood Park had approximately 21,093,957
shares of Common Stock outstanding (in each case assuming the exercise of all
outstanding options, warrants, rights or conversion privileges relating to
Common Stock). Upon the consummation of the Merger, it is expected that
former Boomtown stockholders will own approximately 25.6% of the outstanding
shares of Hollywood Park Common Stock (assuming the exercise of all
outstanding options, warrants, rights or conversion privileges relating to
the Company's Common Stock).
At the Effective Date, Hollywood Park's Board of Directors will be
expanded from seven (7) to eleven (11) members and will be comprised of seven
(7) directors selected by Hollywood Park (the "Hollywood Park Directors") and
four (4) directors selected by the Company (the Boomtown Directors").
Hollywood Park will nominate the initial Company Directors (or replacements
elected by a majority of the Boomtown Directors) for re-election at the first
three annual stockholder meetings following the Effective Date. Upon the
Effective Date and for a period of three years thereafter the Executive
Committee of Hollywood Park's Board of Directors will consist of four (4)
Hollywood Park Directors and two (2) Boomtown Directors, including R.D.
Hubbard, Chief Executive Officer of Hollywood Park, Timothy J. Parrott,
Chairman of the Board and Chief Executive Officer of Boomtown, Richard J.
Goeglein, a current member of the Board of Directors of Boomtown and three
designees of Hollywood Park. In addition, Hollywood Park will establish a
three (3) person Office of the Chairman comprised of Hollywood Park's and
Boomtown's Chief Executive Officers and Hollywood Park's President of Sports
and Entertainment.
The closing of the Merger is subject to numerous conditions precedent,
including (i) the approval of the stockholders of the Company and Hollywood
Park, (ii) the approval of requisite governmental authorities, including the
necessary gaming authorities in the jurisdictions in which the parties
conduct business, and the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (iii) the availability of sufficient financing of up to $163.5
million to fund up to $60 million of future gaming projects and to fund the
repurchase of Boomtown's outstanding 11-1/2% First Mortgage Notes (the
"Notes") if put to Boomtown by the holders of the Notes as a consequence of
the Merger and (iv) the consent to the Merger by the holders of a majority of
the outstanding principal amount of the Notes. There can be no assurance
that any or all of these conditions precedent, will be satisfied or that the
proposed merger with Hollywood Park will be consummated.
Certain additional matters relating to the signing of the Merger
Agreement are more fully described in the Company's Form 8-K dated April 23,
1996, including the Agreement and Plan of Merger file as exhibit 2.1 thereto,
and filed with the Securities and Exchange Commission on May 3, 1996.
LOUISIANA DEVELOPMENTS - In a recent development potentially affecting
Boomtown's Harvey, Louisiana riverboat gaming operations, the State of
Louisiana adopted a statute pursuant to which voter referendums on the
continuation of gaming will be held locally (on a parish-by-parish basis)
where gaming operations are conducted. While Boomtown has no reason at this
time to believe that the voters of Jefferson Parish (where Boomtown's
Louisiana riverboat operations are located) will vote against riverboat
gaming, in the event they were to do so, Boomtown would
10
<PAGE>
6. OTHER EVENTS (CONTINUED)
have to discontinue its riverboat gaming operation in that parish upon the
expiration of its license in June 1999.
In April 1996, Boomtown and related entities (the "Boomtown Group")
entered into a termination agreement with SES Gaming, Inc. and related
entities (the "SES Group") terminating that certain Master Agreement by and
between the Boomtown Group and the SES Group dated February 1, 1994 relating
to a proposed gaming project in Lawrenceburg, Indiana (the "Lawrenceburg
Project"). The parties were denied a license for the Lawrenceburg Project in
July 1994. The Termination Agreement provided that, among other things, (i)
the Boomtown Group transferred to the SES Facilities all of the Boomtown
Group's rights, title and interest in and to the Lawrenceburg Project, (ii)
the SES Group waived any rights it might have to Boomtown's potential project
with Hilton Gaming Corporation in Switzerland County, Indiana, (iii) the SES
group agreed not to use the Boomtown name in any way and (iv) the parties
mutually released one another from all claims that might arise out of the
Master Agreement.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company's revenues consist primarily of gaming revenues from slot
and video poker machines ("slot machines"), table games and keno. Non-gaming
revenues are generated from the properties family entertainment centers, food
and beverage sales, hotel room sales and the Company's recreational vehicle
parks. Total gaming revenues for the second quarter ended March 31, 1996
were $46.4 million, virtually unchanged from the prior year second quarter.
Boomtown Reno contributed 19% of the Company's consolidated gaming revenues
for the second quarter of fiscal 1996 while Boomtown Las Vegas, Boomtown
Biloxi and Boomtown New Orleans contributed 18%, 23% and 40%, respectively.
For the second quarter of fiscal 1996 non-gaming revenues were $10.5 million,
14% higher than the prior year commensurate quarter. The increase in
non-gaming revenue resulted primarily from improved product sales at Boomtown
Reno's truckstop and mini-mart.
For the six months ended March 31, 1996, consolidated revenues were
$112.5 million as compared to $109.8 million on the prior year period.
Gaming revenues were $91.4 million and $91.1 million for the first half of
fiscal 1996 and 1995, respectively and non-gaming revenues were $21.1 million
and $18.6 million, respectively. The slight increase in gaming revenues
during the first half or fiscal 1996 was due to improved gaming win from the
Reno and Biloxi casino properties offset by lower win from the Las Vegas and
New Orleans casinos. Boomtown Reno realized higher gaming revenues from
better winter weather conditions, causing fewer road closures on
Interstate-80 where the property receives approximately 80% of its customer
volume. The lower gaming revenues at the New Orleans casino is a direct
result of Louisiana's stricter enforcement of cruising regulations which are
in effect for riverboats in the New Orleans area. Riverboats in Louisiana are
required to cruise for 90 minutes every 3 hours, and beginning in the summer
of 1995 the Louisiana State Police began strict enforcement of this
regulation.
The Company realized the strongest improvement in revenues from Boomtown
Biloxi, its dockside riverboat casino property. For the six months ended
March 31, 1996, total revenues grew 10% to $23.6 million from $21.5 million
in the prior year period. The Company believes the increase is due primarily
to the expansion of gaming in the Gulf Coast area and the Company
successfully maintaining its market share. Additionally, Boomtown Biloxi's
revenue growth is partially attributable to improvements in the quality of
its food and beverage and enhanced marketing efforts promoting the Boomtown
brand.
Non-gaming revenue for the first six months of fiscal 1996 improved 14%
to $21.1 million from $18.6 million. This increase is primarily a result of
higher product revenues at Boomtown Reno's truck stop and mini-mart as well
as improved food and beverage sales at all four of the Company's properties.
The Company's gaming margin for the quarter and six months ended March
31, 1996 was $26.2 million and $51.6 million, respectively, 56.5% of gaming
revenue for both periods. This compares to consolidated gaming margin of
57.9% and 56.6% in the prior year periods. The slight decline in the gaming
margin resulted from additional gaming equipment leases in fiscal 1996 as
well as the reclassification of current year gaming taxes in Louisiana from
general and
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
administrative expenses to gaming expenses. The Company leases the majority
of its gaming machines under three year operating leases. The consolidated
non-gaming margin for the quarter and six months ended March 31, 1996, was
$2.2 million and $3.9 million, respectively compared to $1.8 million and $3.6
million, respectively for the prior year.
Marketing expense for the second quarter of fiscal 1996 was $5.4
million, 16% higher than the prior year of $4.6 million. Marketing expenses
consist of costs associated with printed advertising, outdoor signs, media
advertising, promotional events, the Company's bus and funflight programs and
additional administrative expenses. Marketing expenses increased 11% to
$10.8 million for the first six months of fiscal 1996, compared to $9.7
million a year ago. The increase in marketing costs resulted from additional
advertising in Biloxi and Las Vegas in order to promote the Boomtown brand,
added promotional events at all four of the casino properties in efforts to
increase patronage and increased players club redemption costs.
General and administrative expenses were $17.8 million for the three
months ended March 31, 1996, slightly higher than the $17.6 million recorded
for the same prior year period. Fiscal year-to-date expenses totaled $35.5
million, an increase of 1% from $35.2 million in the same prior year period.
Higher expenses were recorded at the Company's Reno, Las Vegas and Biloxi
properties offset by lower expenses at its New Orleans casino. The Company's
consolidated increase in general and administrative expenses related
primarily to higher lease costs on land and assets at the Mississippi casino
property.
During the quarter and six months ended March 31, 1996, the Company
generated earnings before interest, taxes, depreciation and amortization
("EBITDA") of $5.2 million and $9.4 million, respectively. This compares to
EBITDA of $6.4 million and $11.2 million in the prior year periods. EBITDA
as a percentage of revenues was 9.1% and 8.2% for the quarter and six month
period, respectively.
Depreciation and amortization expense rose 6% and 3% for the quarter and
six month periods ended March 31, 1996, respectively to $2.7 million and $5.3
million, respectively. The Company is in the process of redefining the
capital depreciation policy and determining useful lives of all assets for
depreciation purposes. During the first six months of fiscal 1996 the
Company recorded additional depreciation based on the new useful lives
assigned.
Interest expense for the quarter ended March 31, 1996, was $3.5 million
compared to $3.5 million net of capitalized interest in the prior year
quarter. For the first six months of fiscal 1996, interest expense was $6.8
million, $506,000 higher than in the prior year partially as a result of
capitalization of interest in the prior year related to the construction at
the Boomtown New Orleans land-based facility. Interest income for the second
quarter and first six months of fiscal 1996 was $757,000 and $1.6 million,
respectively. Interest income is primarily generated on the notes receivable
from the lessor of the Boomtown Las Vegas land and property to whom the
Company loaned $27.3 million to construct the property.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity at March 31, 1996 was cash
and cash equivalents of approximately $21.6 million, an increase of
approximately $800,000 from September 30, 1995. For the first six months of
fiscal 1996, the Company generated cash from operating activities of $6.6
million as compared to $3.3 million a year ago. This higher operating cash
flow resulted primarily from the pay down of accounts payable during the
prior year period. The net cash provided from operating activities during
the first six months of the current fiscal year were derived from a net loss
of $309,000, net increases in accounts payable, accrued liabilities and
accrued compensation of $540,000, a decrease in prepaid expenses of $2.0
million, depreciation expense of $5.2 million and other uses of $835,000.
The Company used net cash of $2.6 million, in investing activities
during the first six months of fiscal 1996, primarily related to the
purchases of property and equipment, offset by proceeds of $201,000 from the
sale of equipment.
Net cash used in financing activities for the six months ended March 31,
1996 were $3.2 million, primarily related to the payment to $2.5 million to
the lessor of the Boomtown Biloxi barge. Under the agreement, the Company
returned the $2.4 million to NGC in return for a reduction of the EBITDA
distributions from 20% to 16%. Additionally, for $100,000, the Company
secured an option to buy the barge back from NCG as well as to buy out the
EBITDA participation at a cost approximating the original investment made by
HFS less the $2.4 million that was paid back. The option terminates on March
31, 1997 but is renewable for an additional two years for $100,000 a year.
At March 31, 1996, the Company's debt was comprised principally of the
$103.5 million principal amount of 11.5% First Mortgage Notes due 2003.
Interest on the notes is payable semiannually in arrears each May 1 and
November 1. The Company has five notes payable in the aggregate amount of
$6.3 million. Three of the notes totaling $1.9 million are secured by
equipment, furniture and fixtures, bears interest at 11.5% and mature in
September 1997. The fourth note, with a balance of $3.8 million at March 31,
1996, is secured by the gaming vessel in Harvey, Louisiana, bears interest at
13% and matures in January 1999. The fifth note, with a balance of $609,000
at March 31, 1996, is secured by gaming equipment, bears interest at 12.25%
and matures in December 1997. The Company also has four capital lease
obligations for equipment with a balance of $1.7 million at March 31, 1996.
During March 1996, the Company converted an operating lease on certain
furniture, fixtures and equipment to a note obligation whereby the residual
balance on the operating lease was funded and the remaining outstanding
balance was converted to a capital lease. As of March 31, 1996 the
outstanding balance on the lease was $756,000 and matures in August 1998.
The Company believes that its current available cash and cash
equivalents and anticipated cash flow from operations will be sufficient to
fund the Company's working capital and normal recurring capital expenditures
through the end of fiscal 1996. The Company does not believe such sources of
liquidity will be sufficient to fund any of its proposed expansion projects
at its current gaming facilities or in any new gaming jurisdiction. The
Company believes that such expansion of its existing facilities is important
for continued growth. If any of the Company's current proposed
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
expansion projects were to proceed, the Company anticipates that such
financing, subject to certain restrictions set forth in the First Mortgage
Notes, would come from one or more of a number of sources, including cash
flow from operations, bank financing, vendor financing or debt, joint
ventures, equity financing or other long-term debt. Alternatively, in the
event the Hollywood Park merger were to be consummated, the Company believes
that additional sources of financing will become available. However, there
can be no assurance that such financing will be available, or available on
terms acceptable to the Company or that any proposed expansion projects by
the Company will ever be completed. Further, given the rapidly changing
national competitive and legal environments related to gaming, the Company's
future operating results are highly conditional and could fluctuate
significantly. Should cash flow from the Company's operations in all
locations be below expectations, the Company may have difficulty in
satisfying capital requirements.
In a recent development potentially affecting Boomtown's Harvey,
Louisiana riverboat gaming operations, the State of Louisiana adopted a
statute pursuant to which voter referendums on the continuation of gaming
will be held locally (on a parish-by-parish basis) where gaming operations
are conducted. While Boomtown has no reason at this time to believe that the
voters of Jefferson Parish (where Boomtown's Louisiana riverboat operations
are located) will vote against riverboat gaming, in the event they were to do
so, Boomtown would have to discontinue its riverboat gaming operation in that
parish upon the expiration of its license in mid-1999 and this occurrence
would cause a material adverse effect on the Company's operations.
The statements set forth above regarding the Company's estimates of its
liquidity and capital expenditure requirements and the sufficiency of its
resources are "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, and are subject to the safe harbors created
thereby. Future operating results of the Company may be adversely affected
as a result of a number of factors, including without limitation, seasonality
(historically, the Company's operating results have been strongest in the
summer months, and weakest in the winter months), weather conditions (severe
winter storms have in the past had a significant adverse effect on the
Company's operating results), the general level of demand for casino gaming
and entertainment facilities, competition in the gaming industry and
uncertainties in general economic, regulatory and political conditions
affecting the gaming industry, difficulties in integrating the businesses of
the Company and Hollywood Park following the proposed merger and lack of
financing following the proposed merger with Hollywood Park. Any of the
above factors, among others, could cause the Company's operating results to
be weaker than expected, and could cause the Company's cash requirements to
differ materially from the Company's current estimates.
15
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Boomtown is named defendant in a class action suit in the United States
District Court in New Jersey in which the plaintiffs have alleged that
numerous companies operating casinos in the United States have conspired to
exclude card counters from their establishments. (HYLAND V. GRIFFIN
INVESTIGATIONS, ET.AL.) A class has not yet been certified in the action.
Motions to dismiss are in the process of being filed by the Company and
other defendants.
A demand for arbitration has been filed by Eric Skrmetta with the American
Arbitration Association, alleging that Boomtown breached Louisiana
Partnership Agreement and its fiduciary duty to limited partners resulting
in a substantial tax liability to Mr. Skrmetta. Boomtown disputes this
claim and intends to contest it vigorously.
ITEM 2. CHANGES IN SECURITIES.
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In addition to the election of directors, the following matters were
submitted to stockholder vote at the Company's Annual Meeting of
Stockholders held March 1, 1996:
The appointment of Ernst & Young, LLP as the Company's independent auditors
was ratified.
Votes For: 7,982,247
Votes Against: 52,216
Votes Abstaining: 16,113
Broker Non-Votes: 0
ITEM 5. OTHER INFORMATION.
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits enclosed herein are detailed on the Schedule of Exhibits on
page 18.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
Boomtown, Inc.
Registrant
Date: May 14, 1996 /s/ Phil Bryan
-------------------------------------------------
Phil Bryan, President; Chief Operating Officer
Date: May 14, 1996 /s/ Jon Whipple
-------------------------------------------------
Jon Whipple, Corporate Controller; Principal
Accounting and Financial Officer
17
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
3.1(5) Amended and Restated Certificate of Incorporation of Registrant.
3.2 Amended and Restated Bylaws of Registrant.
3.3(10) Amended and Restated Articles of Incorporation of Boomtown Hotel &
Casino, Inc.
3.4(10) Revised and Restated Bylaws of Boomtown Hotel & Casino, Inc.
3.5(10) Articles of Incorporation of Blue Diamond Hotel & Casino, Inc.
3.6(10) Bylaws of Blue Diamond Hotel & Casino, Inc.
3.7(10) Articles of Incorporation of Louisiana Gaming Enterprises, Inc.
3.8(10) Articles of Incorporation of Bayview Yacht Club, Inc.
3.9(10) Bylaws of Bayview Yacht Club, Inc.
3.10 Articles of Organization of Boomtown Iowa, L.C.
3.11 Articles of Incorporation of Boomtown Council Bluffs, Inc.
3.12 Bylaws of Boomtown Council Bluffs, Inc.
3.13 Articles of Incorporation of Boomtown Indiana, Inc.
3.14 Bylaws of Boomtown Indiana, Inc.
3.15 Articles of Incorporation of Boomtown Riverboat, Inc.
3.16 Articles of Incorporation of Boomtown Missouri, Inc.
3.17 Bylaws of Boomtown Missouri, Inc.
4.1(1) Form of Warrant issued to the lead Underwriters of Boomtown, Inc.'s
initial public offering.
4.2(7) Form of Private Placement Note.
4.3(7) Form of Exchange Note.
18
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
4.4(7) Form of Subsidiary Guaranty.
4.5(7) Form of Addendum to Subsidiary Guaranty.
4.6(9) Registration Rights Agreement dated November 10, 1993, by and among
the Company and the Initial Purchases named herein.
4.7(7) Warrant Agreement dated as of November 10, 1993 between Boomtown,
Inc. and First Trust National Association, including Form of
Warrant Certificate.
10.1 Amended and Restated 1990 Stock Option Plan.
10.2 1992 Director's Stock Option Plan.
10.3(5) 1993 Stock Bonus Plan.
10.4(1) Standard Form of Indemnification Agreement between Boomtown, Inc.
and its officers and directors.
10.5(1) Exercise of Option of Purchase and Agreement of Sale of Real
Property dated October 29, 1986 between Boomtown, Inc. and S.
Ross Mortensen and Irene Mortensen (the "Option Exercise
Agreements").
10.6(1) Note dated October 29, 1986 payable to Boomtown, Inc. to S. Ross
Mortensen and Irene Mortensen in the principal amount of $823,000
and accompanying Deed of Trust, issued pursuant to the Option
Exercise Agreement.
10.7(1) Agreement of Sale and Purchase and accompanying Agreement, each
dated November 1, 1982 ( the "Purchase Agreement"), between
Boomtown, Inc. and Chris Garson, Ruth R. Garson, George Garson,
George Garson as Guardian of the Person and Estate of Agnes M.
Garson, and Beatrice Garson (collectively the "Garsons").
10.8(1) Registration Agreement dated May 6, 1988 between Boomtown, Inc.,
MLIF, Kenneth Rainin and Timothy J. Parrott.
10.9 Promissory Note dated September 10, 1992, payable by Timothy J.
Parrott to Boomtown, Inc. in the principal amount of $221,000.
10.10(1) Agreement dated January 1, 1989 between Boomtown, Inc., Nevada Fun
Flight Tours and Val Ruggerio.
10.11(1) Memorandum of Understanding dated February 13, 1992 between
Boomtown, Inc. and the Internal Revenue Service.
19
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.12(1) Termination Agreement and Mutual Release dated April 24,1992 between
Registrant, Boomtown, Inc., Frank Gianopolus and Delores
Gianopolus.
10.13(3) Letter of Intent dated as of March 26, 1993 among Boomtown, Inc.,
The Skrmetta Group, Inc. and Skrmetta Machinery Corporation,
relating to the property in Harvey, Louisiana.
10.14(3) Letter of Intent dated as of March 26,1993 among Boomtown, Inc. and
Raphael Skrmetta, relating to the property in Biloxi, Mississippi.
10.15 Amended and Restated Agreement to Lease Real Property in Biloxi,
Mississippi dated September 12,1993 by and between Boomtown, Inc.
and Raphael Skrmetta.
10.16(4) Agreement to Lease Real Property in Harvey, Louisiana by and between
Boomtown, Inc., The Skrmetta Group, Inc. and Skrmetta Machinery
Corporation.
10.17(4) Letter Agreement dated April 16, 1993 among Boomtown, Inc., Raphael
Skrmetta, The Skrmetta Group, Inc., and Skrmetta Machinery
Corporation.
10.18(4) Loan Agreement dated April 23, 1993 by and between Boomtown, Inc.,
First Interstate Bank of Nevada, N.A., First Interstate Bank of
Arizona, N.A. and the Diawa Bank, Limited.
10.19(2) Memorandum of Understanding dated March 15, 1993 among Boomtown,
Inc., Industry Hills Visitor Accommodations Center, Blue Diamond
Hotel & Casino, Inc. ("Blue Diamond"), Majestic Realty Co.
("Majestic"), and Edward P. Roski, Jr. ("Roski").
10.20(5) Stockholders and Affiliates Agreement dated as of June 30, 1993 by
and among Blue Diamond, Edward P. Roski, Sr., Roski, Boomtown,
Inc., IVAC, a California general partnership formerly known as
Industry Hills Visitor Accommodations Center, a California
general partnership ("IVAC") and Majestic.
10.21 First Amendment to and Clarification of Stockholders and Affiliates
Agreement dated as of November 10, 1993 between Blue Diamond,
Edward P. Roski, the Roski Community Property Trust, the Roski
Senior Revocable Trust, the Registrant, IVAC and Majestic.
10.22(5) Lease dated as of June 30, 1993 between IVAC and Blue Diamond.
20
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.23 Lease Amendment to Lease dated as of November 10, 1993 between IVAC
and Blue Diamond.
10.24(5) Purchase Option Agreement dated as of June 30, 1993 by and among
IVAC, Boomtown, Inc., and Blue Diamond.
10.25 Amendment to Purchase Option Agreement; Consent to Assignment dated
as of November 10, 1993 between IVAC, the Registrant and Blue
Diamond.
10.26(5) Development and Pre-Opening Services Agreement dated as of June 30,
1993 between Boomtown, Inc., Blue Diamond and IVAC.
10.27(5) Management Agreement dated as of June 30, 1993 between Boomtown,
Inc. and Blue Diamond.
10.28(5) Affiliate Loan Agreement dated as of June 30, 1993 by and among
IVAC, Majestic and Boomtown, Inc.
10.29(5) Bridge Loan Agreement dated as of June 30, 1993 by and between IVAC
and Boomtown, Inc.
10.30 Amendment No. 1 to Bridge Loan Agreement dated as of November 10,
1993 between IVAC and the Registrant.
10.31(5) Trademark License Agreement dated as of June 30, 1993 by and between
Boomtown, Inc. and Blue Diamond.
10.32(5) Boomtown Stockholders Agreement dated as of June 30, 1993 by and
among Boomtown, Inc., IVAC and Roski.
10.33(5) Standard Form Agreement Between Owner and Designer/Builder, Part 1
Agreement Preliminary Design and Budgeting, dated as of May 10,
1993 between IVAC and Commerce Construction Co., Inc. and Standard
Form Agreement Between Owner and Designer/Builder, Part 2 Agreement
- Final Design and Construction dated as of May 17, 1993 between
IVAC and Commerce Construction Co., Inc. and related documents.
10.34 Subordination Agreement dated as of November 10, 1993 between
Majestic, IVAC and the Registrant.
21
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.35 Omnibus Consent Agreement dated as of November 10, 1993 between Blue
Diamond, Edward P. Roski, Sr., Roski, the Roski Community Property
Trust, the Roski Senior Revocable Trust, the Registrant, IVAC and
Majestic.
10.36(6) Indenture dated as of November 1, 1993 by and among the Registrant,
Boomtown Casino, Blue Diamond, Louisiana - I Gaming, a Louisiana
Partnership in Commendam (the "Louisiana Partnership"), Louisiana
Gaming Enterprises, Inc. ("LGE"), Mississippi - I Gaming, L.P. (the
Mississippi Partnership"), Bayview Yacht Club, Inc. ("Bayview") and
First Trust National Association.
10.37(7) Purchase Agreement dated as of November 3, 1993 among Boomtown,
Inc., Boomtown Casino, Blue Diamond, the Louisiana Partnership,
LGE, the Mississippi Partnership, Bayview, Oppenheimer & Co., Inc.
and Sutro & Co. Incorporated.
10.38(8) Master Agreement dated as of February 1, 1994 by and between
Boomtown Indiana, Inc., Boomtown Riverboat, Inc., Boomtown, Inc., SES
Indiana, L.L.C., First SES Indiana, Inc., SES Facilities, Inc., SES
Gaming, Inc. and Sheldon E. Stunkel.
10.39(8) Agreement of Limited Partnership of Boomtown Landing, L.P., and
Indiana Partnership.
10.40(8) Agreement of Limited Partnership of SES Boat, L.P., an Indiana
limited partnership.
10.41(8) Development and Pre-Opening Services Agreement between Boomtown
Indiana, Inc., and SES Boat, L.P.
10.42(8) Management Agreement between Boomtown Indiana, Inc. and SES Boat,
L.P.
10.43(8) Agreement of Limited Partnership of Boomtown Belle II, L.P., and
Indiana limited partnership.
10.44(8) Agreement of Limited Partnership of Single Riverboat, L.P., and
Indiana limited partnership.
10.45(9) Asset Purchase Sale Agreement dated as of April 27, 1994 by and
between HFS Gaming Corp. and Mississippi - I Gaming, L.P.
10.47(9) Marketing Services Agreement dated as of April 27, 1994 by and among
Boomtown, Inc. and HFS Gaming Corp.
22
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.48(10) Stock Acquisition Agreement and Plan of Reorganization dated June
30, 1994 by and between Boomtown, Inc. and Roski.
10.49(11) Master Agreement dated as of September 19, 1994, as amended
September 19, 1994, by and between Boomtown Council Bluffs, Inc.
("BCB"), the Registrant and Iowa Gaming Associates, Inc. ("IGA").
10.50(11) Operating Agreement dated September 19, 1994 between BCB and IGA.
10.51(11) Management Agreement dated September 19, 1994 between BCB and IGA.
10.52(11) Development and Pre-Opening Services Agreement dated September 19,
1994 between BCB and Boomtown Iowa, L.C.
10.53(12) Agreement and Plan of Merger and Reorganization dated January 17,
1995, by and among Boomtown, Inc., Tweety Sub., Inc. and National
Gaming Corp.
10.54(12) Guarantee letter dated January 17, 1995 between Hospitality
Franchise Services, Inc., National Gaming Corp. and Boomtown,
Inc.
10.55(13) Letter agreement dated March 31, 1995 between Boomtown, Inc., Tweety
Sub., Inc., National Gaming Corp., Hospitality Franchise Systems.,
Inc. and HFS Gaming Corp.
10.56(14) Promissory Note dated December 1, 1994 by and between Boomtown, Inc.
and First National Bank of Commerce.
10.57(14) Promissory Note dated December 30, 1994 by and between the Louisiana
Partnership and PDS Financial.
10.58(15) Lease Agreement dated as of March 29, 1995 by and between Marquis
Leasing Company , a Louisiana Corporation and Louisiana-I Gaming,
L.P.
10.59(16) Option Agreement dated as of November 6, 1995 by and between
National Gaming Mississippi, Inc. and Mississippi - I Gaming, L.P.
10.60(16) Marketing Services Agreement Amendment dated as of November 6, 1995
to Marketing Services Agreement dated as of April 27, 1994 by
and among Boomtown, Inc. and HFS Gaming Corporation.
10.61(16) Lease Amendment dated November 6, 1995 to the Lease Agreement dated
as of April 27, 1994 by and among National Gaming Mississippi,
Inc. and Mississippi - I Gaming, L.P.
23
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.62(16) Articles of Organization Indiana Ventures, LLC
10.63(16) Operations Agreement Indiana Ventures, LLC.
10.64(16) Stock Purchase Agreement for all shares of Pinnacle Gaming
Development Corp. between Switzerland County Development Corp.
(Buyer) and Century Casinos Management, Inc. and Cimarrron
Investment Properties Corp. (Sellers).
10.65(16) Option Agreement to lease real property (Parcel I) in Switzerland
County, Indiana, between Daniel Webster, et al (Landlord) and
Indiana Ventures,LLC (Tenant).
10.66(16) Option Agreement to lease real property (Expansion Parcel) in
Switzerland County, Indiana, between Daniel Webster, et al
(Landlord) and Indiana Ventures, LLC (Tenant).
10.67(17) Agreement and Plan of Merger dated as of April 23, 1996, among
Hollywood Park, Inc., HP Acquisition, Inc. and Boomtown, Inc.
10.68(17) Voting Agreement dated as of April 23, 1996, by and between
Hollywood Park, Inc., a Delaware corporation, and Timothy J.
Parrott, in his capacity as a stockholder of Boomtown, Inc.
10.69(17) Voting Agreement dated as of April 23, 1996, by and between
Boomtown, Inc., a Delaware corporation, and R.D. Hubbard, in his
capacity as a stockholder of Hollywood Park, Inc.
10.70(17) Joint Press Release issued on April 24, 1996 by Hollywood Park, Inc.
and Boomtown, Inc.
10.71 Agreement between Boomtown and related entities ("Boomtown Group")
and SES Gaming, Inc. and related entities ("SES Group")
terminating the Master Agreement by and between the Boomtown Group
and the SES Group dated February 1, 1994 relating to the proposed
gaming project in Lawrenceburg, Indiana.
11.1 Computation of per share earnings.
- - --------------------
(1) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (File No. 33-51968),
effective October 22, 1992.
24
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
(2) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on March 18, 1993.
(3) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on April 1, 1993.
(4) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (File No. 33-61198),
effective May 24, 1993.
(5) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on July 28, 1993.
(6) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on December 23, 1993.
(7) Incorporated by reference to the exhibit filed with the Company's Form
10-K for the fiscal year ended September 30, 1993.
(8) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended December 31, 1993.
(9) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-4 (File No. 33-70350),
effective May 6, 1994.
(10) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended June 30, 1994.
(11) Incorporated by reference to the exhibit filed with the Company's Form
10-K for the fiscal year September 30, 1994.
(12) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on January 25, 1995.
(13) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on April 14, 1995.
(14) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended March 31, 1995.
(15) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter June 30, 1995.
(16) Incorporated by reference to the exhibit filed with the Company's Form
10-K for the fiscal year September 30, 1995.
25
<PAGE>
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
(17) Incorporated by reference to the exhibit filed with the Company's Current
Report on Form 8-K, filed with the SEC on May 3, 1995.
26
<PAGE>
EXHIBIT 10.71
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (the "Termination Agreement") is entered into as
of April 30, 1996, by and among Boomtown Indiana, Inc., an Indiana corporation
("Boomtown Indiana"), Boomtown, Inc., a Delaware corporation ("Boomtown
Parent"), Boomtown Riverboat, Inc., a Nevada corporation ("BRI"), SES Indiana,
L.L.C., and Indiana limited liability company ("SES Indiana"), SES Facilities,
Inc., and Indiana corporation ("SES Facilities"), First SES Indiana, Inc., and
Indiana corporation ("SES GP"), SES Gaming, Inc., a Nevada corporation ("SES
Gaming") and Sheldon E. Stunkel, an individual ("Stunkel") Boomtown Indiana, BRI
and Boomtown Parent are collectively referred to as the "Boomtown Group", and
SES Indiana, SES Facilities, SES Gaming, SES GP and Stunkel are collectively
referred to as the "SES Group".
BACKGROUND
A. The Boomtown Group and the SES Group entered into that certain Master
Agreement dated as of February 1, 1994, as amended (the "Master Agreement"),
concerning a gaming project in Lawrenceburg, Indiana (the "Lawrenceburg
Project"), and other potential projects in certain areas of Ohio, Kentucky and
Indiana.
B. The parties have failed to obtain a gaming license in conjunction with
the Lawrenceburg Project.
C. The Boomtown Group is now undertaking a potential project in
Switzerland County, Indiana in conjunction with Hilton Gaming Corporation (the
"Switzerland Project").
D. The Boomtown Group and the SES Group have disagreements over the
respective parties' rights in the Indiana projects and wish to resolve amicably
the disagreements as described below.
NOW, THEREFORE, in consideration of the mutual representations and
covenants made herein, the parties hereby agree as follows:
1. TERMINATION OF MASTER AGREEMENT To the extent not previously
terminated, the Master Agreement, including without limitation Sections 6.2 and
6.3 of the Master agreement and all rights and obligations of the parties under
the Master Agreement, is hereby terminated, and is of no further force and
effect.
2. WAIVER OF ANY RIGHTS IN SWITZERLAND PROJECTS The SES Group waives any
and all rights that it may have had under the Master Agreement or otherwise to
participate in the Switzerland Project, including without limitation any rights
to any income therefrom.
27
<PAGE>
EXHIBIT 10.71 (CONTINUED)
3. TRANSFER OF INTEREST IN LAWRENCEBURG PROJECT
(a) For good and valuable consideration, the Boomtown Group hereby
transfers to SES Facilities all of the Boomtown Group's right, title and
interest in and to the Lawrenceburg Project. Such transfer includes without
limitation (I) the transfer by the Boomtown Group of all of its outstanding
stock in BRI and Boomtown Indiana to SES Facilities, such that the SES Group, as
holder of 100% of the outstanding stock of BRI and Boomtown Indiana, will hold
all general and limited partnership interests in Boomtown Landing, L.P., SES
Boat, L.P. and Boomtown Belle, L.P. , (collectively, the "Partnerships"), and
(ii) delivery to the SES Group of all documents, rights, files, plans, tapes and
the like relating to the Lawrenceburg Project (provided that duplicate copies of
such material may be retained by the Boomtown Group and provided further that
the Boomtown Group and its affiliates shall have the right to use concepts,
ideas, drawings and the like contained in such transferred material). The SES
Group acknowledges and agrees that the Boomtown Group has not further
obligations under the Agreements of Limited Partnership of the Partnerships and
under the Development and Pre-Opening Services Agreement, dated as of February
1, 1994 (the "Pre-Opening Agreement"). The parties further agree that the Pre-
Opening Agreement is terminated.
(b) In connection with the transfer of the stock of BRI and Boomtown
Indiana, Boomtown Parent hereby represents and warrants to SES Facilities as of
the date of this Termination Agreement that (I) each of the BRI and Boomtown
Indiana has no liabilities in excess of $300 resulting from the actions of
inaction's of the Boomtown Group, and no assets other than its interest in the
Partnerships and the Lawrenceburg Project, including without limitation the
gaming application relating thereto currently on file with the Indiana Gaming
Commission (the "Gaming Application"), (ii) each of BRI and Boomtown, Indiana
are in good standing in the State of Indiana, and with respect to BRI , the
State of Nevada, (iii) no consents are required pursuant to written agreements
to which the Boomtown Group is a party in connection with the transfer of the
rights and interests of the Boomtown Group contemplated hereby and (iv) to the
Boomtown Group's knowledge, the Gaming Application is still in force and effect
as of the date of this Termination Agreement. However, the Boomtown Group makes
no representation regarding the status of the Gaming Application, or the effect
of this Termination Agreement on the status of the Gaming Application. The
Boomtown Group and the SES Group agree to take all reasonable actions and
execute all appropriate documents that may be necessary or advisable in
effecting the transfer described herein, including without limitation any
reasonable actions that may be required by the Indian Gaming Commission in
connection with the transfer described herein.
4. NO RIGHT TO BOOMTOWN NAME The SES Group acknowledges and agrees that
it does not have the right to use the Boomtown name in any way, including
without limitation in connection with the Lawrenceburg Project. The SES Group
further agrees to take all actions and execute all documents necessary or
advisable (as the Boomtown Group may reasonably determine) to change the names
of Boomtown Indiana, BRI, Boomtown Landing, L.P. and Boomtown Belle, L.P. to
eliminate the "Boomtown" from the entity names, including without limitation any
filings with the Indiana Gaming Commissions and other governmental entities
necessary to notify of the name change and transfer contemplated hereunder,
which actions and filings shall be accomplished not later than 30 days after the
date of this Termination Agreement.
28
<PAGE>
EXHIBIT 10.71 (CONTINUED)
5. REIMBURSEMENT OF EXPENSES Simultaneous with the execution of this
Termination Agreement, the Boomtown Group shall reimburse Stunkel for (I)
$32,509 for his expenses incurred prior to July 1995 in connection with the
transactions contemplated by the Master Agreement and (ii) $18,000 for the
expenses of Mr. John House incurred prior to July 1995 in connection with the
transactions contemplated by the Master Agreement (provided, however, that it is
contemplated that Mr. House shall promptly reimburse the Boomtown Group for any
amount reimbursed to Mr. House not incurred in connection with the transactions
contemplated by the Master Agreement prior to July 1995.) The SBS Group
acknowledges and agrees that such amounts represent the full and entire amounts
due to them under the Master Agreement, and that no further amounts shall be due
and owing to the SES Group (or any of its representatives or agents) under the
Master Agreement and related documents. Mr. House shall deliver a similar
acknowledgment and agreement as a condition to his receipt of the $18,000
referred to above.
6. GENERAL RELEASE
(a) The Boomtown Group (and each member thereof) and the SES Group
(and each member thereof) each forever releases and discharges each other, their
respective officers, directors, employees, investors, stockholders,
administrators, successors and assigns, from any and all claims, rights,
demands, actions, obligations, liabilities, and causes of action of any kind and
nature, known and unknown, suspected or unsuspected, that it now has or has ever
had against the other, arising on or prior to the date of this Termination
Agreement, including without limitation arising out of or in any way connected
with the negotiation, execution, partial performance and termination of the
Master Agreement (including without limitation all exhibits thereto), and
including without limitation any and all claims for breach of contract (both
express and implied), breach of a covenant of good faith and fair dealing (both
express and implied), negligent or intentional misrepresentation and negligent
or intentional interference with contract or prospective economic advantage.
(b) The parties understand and agree that the release set forth in
Section 6(a) is a full and final release of any and all claims described above,
and the parties agree that it shall apply to all unknown, unanticipated, and
undisclosed claims, demands, liabilities, actions, or causes of action, as well
as those which are now known, anticipated, suspected, or disclosed. Each of the
Boomtown Group (and each member thereof) and the SES Group (and each member
thereof) expressly waives all rights under any law of any state or territory in
the United States of American or any other jurisdiction that reads substantially
as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN THE
CREDITOR'S FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY THE CREDITOR MUST HAVE MATERIALLY
AFFECTED THE CREDITOR'S SETTLEMENT WITH THE DEBTOR.
(c) The parties represent and warrant that they are fully entitled to
give this complete release and discharge and that there are no liens, claims of
lien, or assignments, at law or in equity or otherwise, with respect to any
existing or potential claims or causes of action arising out of or in any way
connected with their relationship.
29
<PAGE>
EXHIBIT 10.71 (CONTINUED)
7. CONFIDENTIALITY During the term of the Master Agreement, each party
may have had access to or become acquainted with various trade secrets and
confidential information or the other parties, including financial information,
management guidelines and procedures, operating manuals, and similar
compilations and documents regularly used in the operation of its business. No
party (the "Disclosing Party") shall disclose to any third person or make copies
of any of the other parties' trade secrets or confidential information, directly
or indirectly, during or subsequent to the term of this Termination Agreement
without that party's prior written consent, except (i) where such disclosure is
required by law or court order (and solely to the extent required) and (ii)
where such information is or becomes public knowledge through no fault of the
Disclosing Party. All recipes, files, records, documents, compilations,
manuals, and similar items (including all copies or facsimiles thereof) shall
remain the exclusive property of the party providing such information.
8. MISCELLANEOUS
(a) EXPENSES Each party shall bear its own costs, attorneys' fees
and other fees incurred in connection with the negotiation and preparation of
this Termination Agreement.
(b) ENTIRE AGREEMENT This Termination Agreement represents the
entire understanding and agreement between the parties regarding the subject
matter hereof and supersedes and replaces any and all prior understandings and
agreements, written or oral, relating to the subject matter hereof, including
without limitation that certain letter agreement dated as of March 21, 1996.
(c) AMENDMENTS This termination Agreement may only be amended in a
writing signed by a duly authorized representative from both the Boomtown Group
and the SES Group.
(d) BINDING ON SUCCESSORS AND ASSIGNS This Termination Agreement
shall bind the personal representatives, successors and assigns of the parties,
and inure to the benefits of the parties, and their respective directors,
officers, stockholders, partners, employees, representatives, successors and
assign.
(e) GOVERNING LAW This Termination Agreement shall be governed by
the laws of the State of Indiana. If either part commences an action against any
other party arising out of or in connection with this Termination Agreement, the
prevailing party shall be entitled to have an recover from the losing party the
reasonable fees for attorneys and expert witnesses and its court costs.
(f) SEVERABILITY In the event that any provision of this Termination
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, such provision shall be revised so as to
maintain as much of the parties' originally stated intent as is lawful of, if
incapable of such revision, shall be deleted herefrom, while all of the other
terms and conditions of this Terminating Agreement shall be unaffected and
remain in full force and effect and continue to bind the parties.
30
<PAGE>
EXHIBIT 10.71 (CONTINUED)
(g) COUNTERPARTS. This Termination Agreement may be executed in
counterparts, and each counterpart shall have the same force and effect as an
original and shall constitute an effective binding agreement on the part of each
of the undersigned.
(h) NO ADMISSION OF LIABILITY. The parties understand and
acknowledge that the release set forth in Section 6 above and the other
covenants and provisions set forth in this Termination Agreement constitute a
settlement and compromise of all disputed claims of the parties. No action
taken by the parties either previously or in connection with the Termination
Agreement, shall be deemed or construed to be an admission of the truth or
falsity or any claims previously mad or an acknowledgment or admission by either
party of any fault or liability whatsoever to the other party.
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Termination Agreement as
of the date first set forth above
SES INDIANA, L.L.C. BOOMTOWN INDIANA, INC.
AN INDIANA LIMITED LIABILITY COMPANY AN INDIANA CORPORATION
SIGNATURE /S/ SHELDON E. STUNKEL SIGNATURE /S/ ROBERT F. LIST
-------------------------- ---------------------------
NAME SHELDON E. STUNKEL NAME ROBERT F. LIST
-------------------------- ---------------------------
TITLE CHAIRMAN TITLE SR. VICE PRESIDENT
-------------------------- ---------------------------
SES GAMING, INC. BOOMTOWN RIVERBOAT, INC.
A NEVADA CORPORATION A NEVADA CORPORATION
SIGNATURE /S/ SHELDON E. STUNKEL SIGNATURE /S/ ROBERT F. LIST
-------------------------- ---------------------------
NAME SHELDON E. STUNKEL NAME ROBERT F. LIST
-------------------------- ---------------------------
TITLE CHAIRMAN TITLE SR. VICE PRESIDENT
-------------------------- ---------------------------
FIRST SES INDIANA, INC. BOOMTOWN, INC.
AN INDIANA CORPORATION A DELAWARE CORPORATION
SIGNATURE /S/ SHELDON E. STUNKEL SIGNATURE /S/ ROBERT F. LIST
-------------------------- ---------------------------
NAME SHELDON E. STUNKEL NAME ROBERT F. LIST
-------------------------- ---------------------------
TITLE PRESIDENT TITLE SR. VP/CORPORATE COUNSEL
-------------------------- ---------------------------
SES FACILITIES, INC. SHELDON E. STUNKEL.
AN INDIANA CORPORATION AN INDIVIDUAL
SIGNATURE /S/ SHELDON E. STUNKEL SIGNATURE /S/ SHELDON E. STUNKEL
-------------------------- ---------------------------
NAME SHELDON E. STUNKEL
--------------------------
TITLE PRESIDENT
--------------------------
32
<PAGE>
BOOMTOWN, INC.
EXHIBIT 11.1 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (LOSS) OF THE
COMPANY
<TABLE>
Three Months Ended Six Months Ended
March 31, March 31,
1995 1996 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) applicable to Common Stock $ 401,314 $ 48,362 $ 637,212 $ (308,615)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares outstanding 9,226,627 9,242,634 9,225,601 9,237,854
Net effect of dilutive stock options based
on the treasury stock method using
the average market price 358,917 311,048 358,917 --
---------- ---------- ---------- ----------
Total weighted average shares outstanding 9,585,544 9,552,010 9,584,518 9,242,634
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per share of Common Stock $ 0.04 $ 0.01 $ 0.07 $ (0.03)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
33
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Consolidated Statements of Operations found on
pages 3 and 4 of the Company's Form 10-Q for the six months ended March 31,
1996 and is qualified in its entirety by reference to such financial statements
and accompanying footnotes.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 21,581,911
<SECURITIES> 0
<RECEIVABLES> 3,201,756<F1>
<ALLOWANCES> 0
<INVENTORY> 2,261,272
<CURRENT-ASSETS> 32,860,579
<PP&E> 181,091,339
<DEPRECIATION> 31,906,727
<TOTAL-ASSETS> 238,638,017
<CURRENT-LIABILITIES> 25,188,320
<BONDS> 105,394,097<F2>
0
0
<COMMON> 103,542,923
<OTHER-SE> 1,484,002
<TOTAL-LIABILITY-AND-EQUITY> 238,638,017
<SALES> 111,150,322
<TOTAL-REVENUES> 112,512,702
<CGS> 0
<TOTAL-COSTS> 56,996,866
<OTHER-EXPENSES> 51,564,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,832,654
<INCOME-PRETAX> (633,707)
<INCOME-TAX> 325,092
<INCOME-CONTINUING> (308,615)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (308,615)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
<FN>
<F1>RECEIVABLES ARE PRESENTED NET OF ALLOWANCES.
<F2>LONG TERM DEBT DUE AFTER ONE YEAR; NET OF UNAMORTIZED DISCOUNT.
</FN>
</TABLE>
