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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 1, 1998
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
---------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 0-12736 84-1158484
- ------------------------------- ------------------------ -------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
17301 West Colfax Avenue, Suite 170
Golden, Colorado 80401
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-216-0908
------------
None
--------------------------------
Former name or former address if
Changed since date of last filing
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) (b) The financial statements for the business acquired and the pro
forma financial statements required under item 7 are being filed herewith, as
referred to in the Company's Form 8-K filing as of April 24, 1998.
The following condensed unaudited pro forma financial statements give
effect to the acquisition of the remaining 50% interest in the Gilpin Hotel
Venture (GHV) which the Company acquired on April 24, 1998. The condensed
unaudited pro forma balance sheet as of March 31, 1998 is presented as if the
acquisition, and the related debt, had occurred on that date. The condensed
unaudited pro forma statements of income for the year ended December 31, 1997,
and for the three months ended March 31, 1998, assume that the acquisition
occurred on January 1, 1997 and January 1, 1998, respectively.
The condensed unaudited pro forma financial statements should be read in
conjunction with the historical financial statements of the Company and Gilpin
Hotel Venture and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in the Company's Annual Report on Form 10-K,
for the year ended December 31, 1997 and incorporated by reference herein and in
the Company's Quarterly Report on Form 10-Q, for the three month period ended
March 31, 1998. The condensed unaudited pro forma statements of income are not
necessarily indicative of the financial results that would have occurred had the
acquisition been consummated on the indicated dates, nor are they necessarily
indicative of future financial results.
Forward looking information --- Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout this Report
and will be further discussed from time to time in the Company's periodic
reports filed with the United States Securities and Exchange Commission. The
forward-looking statements included in this report speak only as of the date of
filing. Such can be identified by the use of forward-looking terminology such as
"believes," "expects," " may," "will," "should" or "anticipates" or the negative
thereof or other variations thereon or comparable terminology, or by discussion
of strategy. See, "Management's Discussion and Analysis of Financial Condition
and Results of Operations." In particular, no assurance can be given that the
anticipated results covered by the forward-looking statements concerning GHV or
The Lodge will be achieved and that construction of the Lodge will proceed on
schedule or within budget. These risks are specifically described in Items 1 and
2 of the Company's Annual Report on Form 10-K for the year ended December 31,
1997.
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION (CONTINUED)
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
BLACK HAWK GAMING GILPIN HOTEL CASINO ADJUSTMENTS COMBINED
----------------- ------------------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,081,775 $ 4,003,963 $ 13,794,768 (1) $ 5,085,738
(350,000)(1)
(5,200,000)(2)
(4,750,000)(2)
(3,494,768)(3)
Other current assets 236,934 386,649 (129,445) 494,138
------------ ------------ ------------ ------------
Total current assets 1,318,709 4,390,612 (129,445) 5,579,876
INVESTMENT IN AND ADVANCES TO
GILPIN HOTEL VENTURE 4,739,912 (4,739,912)(4)
LAND AND GAMING FACILITY
Land 11,871,844 4,750,000 (2) 16,621,844
Building and improvements 7,329,552 1,380,000 (2) 8,709,552
Equipment 5,370,733 1,000,000 (2) 6,370,733
Accumulated depreciation (4,310,444) (4,310,444)
------------ ------------ ------------ ------------
Total land and gaming facility 11,871,844 8,389,841 7,130,000 27,391,685
PROJECT DEVELOPMENT COSTS 41,000,259 41,000,259
GOODWILL AND OTHER ASSETS 266,321 1,244,622 350,000 (1) 3,086,087
(50,000)(2)
1,275,144 (2)
DEFERRED TAX ASSET 58,345 58,345
------------ ------------ ------------ ------------
TOTAL $ 59,255,390 $ 14,025,075 $ 3,835,787 $ 77,116,252
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 3,404,593 $ 2,346,226 $ 424,134 (5) $ 6,045,508
(129,445)(5)
Income taxes payable 301,020 301,020
Current portion of long-term debt 300,438 827,781 (495,465)(3) 632,754
------------ ------------ ------------ ------------
Total current liabilities 4,006,051 3,174,007 (200,776) 6,979,282
NONCURRENT LIABILITIES
Long term debt 21,593,752 4,092,166 13,794,768 (1) 36,481,383
(2,999,303)(3)
------------ ------------ ------------ ------------
Total liabilities 25,599,803 7,266,173 10,594,689 43,460,665
------------ ------------ ------------ ------------
MINORITY INTEREST 6,658,020 6,658,020
VENTURER'S INVESTMENTS AND ADVANCES 6,758,902 (1,594,856)(5)
(4,739,912)(4)
STOCKHOLDERS' EQUITY (424,134)(5)
Preferred stock; $.001 par value;
10,000,000 shares
authorized; none issued and
outstanding Common stock; $.001
par value; 40,000,000 shares
authorized; 3,947,821
issued and outstanding 3,947 3,947
Additional paid-in capital 17,195,347 17,195,347
Retained earnings 9,798,273 9,798,273
------------ ------------
Total stockholders' equity 26,997,567 26,997,567
------------ ------------ ------------ ------------
TOTAL $ 59,255,390 $ 14,025,075 $ 3,835,787 $ 77,116,252
============ ============ ============ ============
</TABLE>
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION (CONTINUED)
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
BLACK HAWK GAMING GILPIN HOTEL VENTURE ADJUSTMENTS COMBINED
----------------- -------------------- ----------- --------
<S> <C> <C> <C> <C>
REVENUES:
GAMING
Gilpin $ $ 7,766,106 $ $ 7,766,106
Black Hawk Gaming 281,419 (281,419)(6)
FOOD, BEVERAGE AND OTHER
Gilpin 918,163 918,163
Black Hawk Gaming 10,798 10,798
Other
------------- ----------- ------------- -----------
TOTAL GROSS REVENUE 292,217 8,684,269 (281,419) 8,695,067
LESS PROMOTIONS 667,757 667,757
------------- ----------- ------------- -----------
NET REVENUES 292,217 8,016,512 (281,419) 8,027,310
------------- ----------- ------------- -----------
COSTS AND EXPENSES:
Compensation and related costs 189,655 189,655
Casino operations 3,524,533 3,524,533
Food and beverage operations 704,566 704,566
Marketing, general and administrative 199,880 1,436,714 1,636,594
Preopening Costs 136,673 136,673
Rent - Black Hawk Gaming 249,331 (249,331)(6)
Rent - Gilpin Gold 249,331 (249,331)(6)
Parking fees paid to Black Hawk Gaming 87,973 (87,973)(6)
Management fees - Black Hawk Gaming 225,535 (225,535)(6)
Management fees - Golden Gamble 18,137 (18,137)(6)
Depreciation and amortization 292,762 112,740 (7) 405,502
Interest (Less Debt Retired and Capitalized) 117,102 (117,102)(7)
------------- ----------- ------------- -----------
TOTAL COST AND EXPENSES 526,208 6,905,984 (834,669) 6,597,523
------------- ----------- ------------- -----------
EQUITY IN EARNINGS OF
JOINT VENTURE 836,683 (836,683)(8)
MINORITY INTEREST IN THE LODGE CASINO 46,668 46,668
------------- ----------- ------------- -----------
INCOME BEFORE INCOME TAXES 649,360 1,110,528 (283,433) 1,476,455
INCOME TAXES 244,000 308,507 (9) 552,507
------------- ----------- ------------- -----------
NET INCOME $ 405,360 $ 1,110,528 $ (591,939) $ 923,949
============= =========== ============= ===========
EARNINGS PER COMMON SHARE:
BASIC $ 0.10 $ 0.23
============= ===========
DILUTED $ 0.10 $ 0.22
============= ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
BASIC: 3,947,695 3,947,695
============= ===========
DILUTED: 4,140,604 4,140,604
============= ===========
</TABLE>
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION (CONTINUED)
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
BLACK HAWK GAMING GILPIN HOTEL VENTURE ADJUSTMENTS COMBINED
----------------- -------------------- ----------- --------
<S> <C> <C> <C> <C>
REVENUES:
GAMING
Gilpin $ $ 28,321,824 $ $ 28,321,824
Black Hawk Gaming 1,135,855 (1,135,855)(6)
FOOD, BEVERAGE AND OTHER
Gilpin 3,232,223 3,232,223
Black Hawk Gaming 124,436 124,436
Other
------------ ------------ ------------ ------------
TOTAL GROSS REVENUE 1,260,291 31,554,047 (1,135,855) 31,678,483
LESS PROMOTIONS 2,226,161 2,226,161
------------ ------------ ------------ ------------
NET REVENUES 1,260,291 29,327,886 (1,135,855) 29,452,322
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Compensation and related costs 943,665 943,665
Casino operations 12,407,245 12,407,245
Food and beverage operations 2,591,603 2,591,603
Marketing, general and administrative 438,390 5,879,162 6,317,552
Rent - Black Hawk Gaming 928,410 (928,410)(6)
Rent - Gilpin Gold 928,410 (928,410)(6)
Parking fees paid to Black Hawk Gaming 600,000 (600,000)(6)
Management fees - Black Hawk Gaming 743,300 (743,300)(6)
Management fees - Golden Gamble 59,157 (59,157)(6)
Depreciation and amortization 1,315,897 479,237 (7) 1,795,134
Interest (Less Debt Retired and Capitalized) 520,696 (487,474)(7) 251,243
Interest (Wells Fargo) 218,021 (10)
------------ ------------ ------------ ------------
TOTAL COST AND EXPENSES 1,382,055 25,973,880 (3,049,492) 24,306,443
------------ ------------ ------------ ------------
EQUITY IN EARNINGS OF
JOINT VENTURE 2,812,858 (2,812,858)(8)
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 2,691,094 3,354,006 (899,221) 5,145,879
INCOME TAXES 1,070,544 915,635 (9) 1,986,179
------------ ------------ ------------ ------------
INCOME BEFORE EXTRAORDINARY ITEM 1,620,550 3,159,700
------------ ------------
EXTRAORDINARY ITEM - EARLY RETIREMENT
OF DEBT, NET OF $51,025 IN INCOME TAXES 85,771 85,771
------------ ------------ ------------ ------------
NET INCOME $ 1,706,321 $ 3,354,006 $ (1,814,856) $ 3,245,471
============ ============ ============ ============
EARNINGS PER COMMON SHARE:
BASIC:
INCOME BEFORE EXTRAORDINARY ITEM $ 0.61 $ 1.19
EXTRAORDINARY ITEM 0.03 0.03
------------ ------------
TOTAL BASIC EARNINGS PER SHARE $ 0.64 $ 1.22
============ ============
DILUTED:
INCOME BEFORE EXTRAORDINARY ITEM $ 0.46 $ 0.89
EXTRAORDINARY ITEM 0.02 0.02
------------ ------------
TOTAL DILUTED EARNINGS PER SHARE $ 0.48 $ 0.92
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
BASIC 2,664,403 2,664,403
============ ============
DILUTED 3,536,723 3,536,723
============ ============
</TABLE>
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BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONDENSED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
BALANCE SHEET ADJUSTMENTS
1. To record the proceeds from a bank line of credit and payment of the
estimated financing, loan fees and professional fees which will be
amortized over the life of the loan.
2. To (a) record payment of the purchase price for all of the outstanding
common stock of Gilpin Ventures, Inc., the Company's joint venture partner
in GHV and for the purchase of the related land; (b) adjust the building,
improvements and equipment to fair value of the assets acquired; and (c)
reflect the goodwill resulting from the acquisition of the joint venture
interest. The costs of the acquisition will be allocated to the assets
acquired and the liabilities assumed based on their fair values at the date
of acquisition as determined by management with the assistance of an
independent valuation consultant. The allocation of the costs of the
acquisition is preliminary until the Company obtains final information
regarding the fair values of all assets acquired; however management
believes that any adjustment to the amounts allocated will not have a
material effect on the Company's financial position or results of
operations.
3. To record the payment of debt previously encumbering the assets of GHV.
4. To eliminate the Investment In and Advances to Gilpin Hotel Venture
account, which has historically been recorded using the equity method.
5. To (a) accrue the joint venture partner's share of undistributed net income
as of March 31, 1998; (b) eliminate inter-company payable and receivable;
and (c) eliminate the joint venture partner's share of the Investment In
and Advances to Gilpin Hotel Venture account.
INCOME STATEMENT ADJUSTMENTS
6. To eliminate revenues of the Company and (a) related costs and expenses of
GHV for management fees, rental expense and parking lot operations paid to
the Company ($2,271,710 for the year ended December 31, 1997, and $562,839
for the quarter ended March 31, 1998); and (b) expenses and costs of GHV
related to management fees and rent paid to an affiliate of the joint
venture partner ($987,567 for the year ended December 31, 1997, and
$267,468 for the quarter ended March 31, 1998). Revenue as reflected in the
Company's statement of income has been adjusted for elimination of the
Company's 50% interest in fees and rentals it receives from GHV.
7. To reflect (a) additional interest expense (resulting from replacing
interest on pre-existing debt with interest expense on the Wells Fargo
revolving line of credit - net of amounts capitalized) and (b) the
additional depreciation and amortization of the assets acquired. The
depreciation related to the acquired 50% interest in the building and
improvements is based upon a remaining life of 28 years. The amortization
related to the acquired goodwill and equipment is based upon 15 and 5
years, respectively.
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BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
UNAUDITED CONDENSED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
8. To eliminate the Company's equity in earnings of GHV. Equity in earnings of
GHV as previously reflected in the Company's statements of income has been
adjusted for elimination of the Company's 50% interest in fees and rentals
it receives from GHV.
9. GHV has operated as a joint venture and the income of the joint venture was
included in the tax returns of the individual joint venture partners.
Accordingly, no recognition was given to income taxes on the joint venture
operations. The Company, as a corporation, is a taxable entity. The
accompanying unaudited condensed pro forma statements of income include a
pro forma provision for income taxes for the combined operations and is
based on the applicable corporate federal and state statutory rates. The
increase in taxes for the year ended December 31, 1997, is $915,635 and
$308,506 for the quarter ended March 31, 1998.
10. Generally Accepted Accounting Principles require the capitalization of
interest during periods of construction. During the year ended December 31,
1997 and the quarter ended March 31, 1998, the Company was required to
capitalize all interest cost because of construction activities at The
Lodge Casino at Black Hawk. The accompanying unaudited condensed pro forma
financial statements assume that pro forma interest incurred on the
revolving line of credit used to finance the acquisition of GHV and
interest on unretired debt of GHV has been capitalized based on a debt to
construction in progress ratio. Interest capitalized for the year ended
December 31, 1997 and for the three months ended March 31, 1998 totaled
$1,258,956 and $370,717, respectively. If pro forma interest had been
expensed instead of being capitalized, pro forma net income (net of related
taxes) would have been $2,456,000 or $.92 earnings per basic share and $.69
earnings per diluted share for the year ended December 31, 1998 and
$691,000 or $.18 earnings per basic share and $.17 earnings per diluted
share for the three months ended March 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLACK HAWK GAMING & DEVELOPMENT
COMPANY, INC.
By: /s/ Stephen R. Roark
-----------------------------------
Stephen R. Roark, President
Date: June 1, 1998
7
