<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________________to___________________
Commission file number 0-21732
PRIMADONNA RESORTS, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0297563
(State or other jurisdiction of (IRS employer identification
incorporation or organization) number)
P.O. Box 95997 , Las Vegas, Nevada 89193-5997
(address of principal executive offices)
(702) 382 - 1212
(Registrant's telephone number, including area code)
__________________________________________________
(Former name, former address and former fiscal year,
if change since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
Common Stock, $.01 par value 30,436,675 Shares
Total No. of Pages 19 Exhibit Index on page 18
1
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
Form 10 -Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets at June 30, 1996
(Unaudited) and December 31, 1995................... 3 - 4
Consolidated Statements of Income (Unaudited) for the
Three and Six Months Ended June 30, 1996 and 1995... 5 - 6
Consolidated Statements of Cash Flows (Unaudited) for
the Six Months Ended June 30, 1996 and 1995......... 7 - 8
Notes to Consolidated Financial Statements (Unaudited). 9 - 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 12 - 16
Part II. OTHER INFORMATION 16 - 18
2
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
_________ ___________
(Unaudited)
<C> <C>
<S>
CURRENT ASSETS:
Cash and cash equivalents $ 8,843 $ 9,148
Accounts and notes receivable 3,923 3,311
Income tax refund receivable - 994
Inventories 2,531 2,514
Prepaid expenses and other 6,410 6,587
________ ________
Total current assets 21,707 22,554
________ ________
PROPERTY AND EQUIPMENT:
Buildings and improvements 186,122 186,001
Land improvements 66,069 66,032
Furniture, fixtures and equipment 123,067 119,318
________ ________
375,258 371,351
Less: accumulated depreciation
and amortization (102,777) (89,999)
________ ________
272,481 281,352
Land 3,669 3,603
Construction in progress 23,996 8,170
________ ________
300,146 293,125
________ ________
INVESTMENT IN JOINT VENTURE 51,239 49,561
________ _______
NOTES RECEIVABLE, net of current portion 2,173 2,110
________ ________
OTHER ASSETS 6,533 5,869
________ ________
$381,798 $373,219
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
_________ ___________
(Unaudited)
<C> <C>
<S>
CURRENT LIABILITIES:
Current portion of long - term debt $ 1,100 $ -
Accounts payable - trade 6,486 7,118
Accrued expenses 12,031 9,080
________ ________
Total current liabilities 19,617 16,198
________ ________
LONG - TERM DEBT 139,410 145,509
________ ________
DEFERRED INCOME TAXES PAYABLE 15,317 15,466
________ ________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
10,000,000 shares authorized; no
shares issued and outstanding
Common stock, $.01 par value;
100,000,000 shares authorized;
30,436,675 and 30,675,375 shares
issued and outstanding in 1996
and 1995, respectively 308 308
Additional paid - in capital 128,069 127,179
Retained earnings 83,403 68,999
Less: treasury stock, at cost (4,326) (440)
________ ________
207,454 196,046
________ ________
$381,798 $373,219
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
____________________________
1996 1995
_________ ___________
(Unaudited)
<C> <C>
<S>
REVENUES:
Casino $ 44,223 $ 44,831
Food and beverage 7,436 7,151
Hotel 6,294 4,812
Entertainment 2,990 3,166
Service station 4,605 3,341
Other 1,588 1,557
________ ________
67,136 64,858
Less: promotional allowances (3,125) (2,561)
________ ________
Net revenues 64,011 62,297
________ ________
COSTS AND EXPENSES:
Casino 12,487 11,774
Food and beverage 6,813 6,333
Hotel 2,802 2,693
Entertainment 1,336 1,562
Service station 4,214 3,016
Other 739 793
Selling, general and administrative 10,190 10,595
Property costs 4,249 4,561
Depreciation and amortization 6,829 6,931
________ ________
49,659 48,258
________ ________
Income from operations 14,352 14,039
OTHER INCOME (EXPENSE)
Interest income 81 41
Interest expense (1,287) (2,416)
________ ________
Income before taxes 13,146 11,664
INCOME TAXES:
Income tax provision 4,657 4,106
________ ________
NET INCOME: $ 8,489 $ 7,558
======== ========
Earnings per share $0.28 $0.25
======== ========
Weighted average number of shares of
common stock outstanding 30,754,240 30,767,015
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
____________________________
1996 1995
_________ ___________
(Unaudited)
<C> <C>
<S>
REVENUES:
Casino $ 87,346 $ 85,182
Food and beverage 14,808 13,683
Hotel 11,971 8,661
Entertainment 5,499 5,675
Service station 7,793 6,164
Other 3,358 2,849
________ ________
130,775 122,214
Less: promotional allowances (6,920) (4,999)
________ ________
Net revenues 123,855 117,215
________ ________
COSTS AND EXPENSES:
Casino 25,853 23,682
Food and beverage 13,421 12,038
Hotel 5,468 5,100
Entertainment 2,573 3,023
Service station 7,242 5,674
Other 1,432 1,513
Selling, general and administrative 20,733 20,326
Property costs 8,575 8,774
Depreciation and amortization 13,551 13,746
________ ________
98,848 93,876
________ ________
Income from operations 25,007 23,339
OTHER INCOME (EXPENSE)
Interest income 165 48
Interest expense (2,867) (3,852)
________ ________
Income before taxes 22,305 19,535
INCOME TAXES:
Income tax provision 7,898 6,865
________ ________
NET INCOME: $ 14,407 $ 12,670
======== ========
Earnings per share $0.47 $0.41
======== ========
Weighted average number of shares of
common stock outstanding 30,673,960 30,787,224
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
____________________________
1996 1995
_________ ___________
(Unaudited)
<C> <C>
<S>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,407 $ 12,670
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 13,551 13,746
Amortization of debt issuance costs 213 -
Increase in life insurance cash
surrender value (219) -
Gain on sale of assets (247) -
Deferred income taxes (576) 2,275
Change in current asset and liabilities
due to operating activities:
(Increase) decrease in accounts and
notes receivable (612) 148
Decrease in income tax refund 994 2,290
(Increase) in inventories (17) (240)
Decrease in prepaid expenses
and other 604 101
Increase (decrease) in accounts
payable - trade (632) 531
Increase in accrued expenses 2,951 2,045
_______ ________
Total adjustments 16,010 20,896
_______ ________
Net cash provided by operating activities 30,417 33,566
_______ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (20,579) (29,279)
Investment in joint venture (1,678) (42,204)
(Increase) in other assets (788) (691)
Proceeds from disposal of other assets 318 -
Decrease in construction payables - (4,621)
________ ________
Net cash used in investing activities (22,727) (76,795)
________ ________
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
____________________________
1996 1995
_________ ___________
(Unaudited)
<C> <C>
<S>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 890 1,643
Purchase of treasury stock (3,886) -
Proceeds from issuance of long-term debt 2,401 42,400
Principal payments of long-term debt (7,400) -
_______ _______
Net cash provided by (used in)
financing activities (7,995) 44,043
_______ ______
Net increase (decrease) in cash and
cash equivalents (305) 814
Cash and cash equivalents, beginning of year 9,148 5,922
_______ _______
Cash and cash equivalents, end of period $ 8,843 $ 6,736
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organizational Structure and Basis of Presentation
The consolidated financial statements of Primadonna Resorts, Inc., a Nevada
corporation, include the accounts of its wholly-owned subsidiaries, The
Primadonna Corporation, PRMA Land Development Company, and PRMA Las Vegas, Inc.
(collectively the "Company"). The Company owns and operates three hotel
- -resort/casinos; Whiskey Pete's Hotel & Casino ("Whiskey Pete's"), Primadonna
Resort & Casino ("Primadonna"), and Buffalo Bill's Resort & Casino
("Buffalo Bill's").
Information as of December 31, 1995 included in the accompanying consolidated
financial statements and the notes thereto, has been audited. Information with
respect to the three and six month periods ended June 30, 1996 and 1995,
included in these consolidated financial statements and notes thereto is
unaudited. These unaudited consolidated financial statements have been prepared
in accordance with the rules and regulations of the Securities and Exchange
Commission, and do not contain all of the information and disclosures required
by generally accepted accounting principles. However, the accompanying
unaudited consolidated financial statements do contain all adjustments which,
in the opinion of management, are necessary to fairly present the financial
position and results of operations for the three and six month periods
presented. Interim results are not necessarily indicative of results to be
expected for any future interim period or for the entire fiscal year.
The accompanying consolidated financial statements should be read in con-
junction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
All of the Company's existing business activities are conducted by The
Primadonna Corporation. PRMA Land Development Company holds the Company's
development in the golf course in California. PRMA Las Vegas, Inc. holds the
Company's investment in a joint venture with MGM Grand, Inc., to develop and
operate the New York - New York Hotel & Casino in Las Vegas, Nevada.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results may differ from those estimates. Significant intercompany and
interdivision accounts and transactions have been eliminated.
Certain reclassifications, which have no effect on net income, have been made
in the 1995 consolidated financial statements to conform with the current year
presentation.
9
<PAGE>
2. Statements of Cash Flows
The following supplemental disclosures are provided as part of the accom-
panying consolidated statements of cash flows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
_____ _____ _____ _____
(In thousands)
<C> <C> <C> <C>
<S>
Cash payments made for interest
(net of amounts capitalized) $ 955 $2,305 $2,902 $3,741
______ ______ ______ ______
Cash payments made for income taxes $4,000 $2,300 $4,000 $2,300
______ ______ ______ ______
</TABLE>
3. Investment in Joint Venture
On December 28, 1994 the Company and MGM Grand, Inc.("MGM"), formed a joint
venture to develop and operate the New York - New York Hotel and Casino. The
project, which is anticipated to cost $460 million, is scheduled to open in
December 1996. The Company contributed $40 million in cash and certain rights
to the New York theme from a third party licensor to the joint venture. MGM
contributed land (valued at $41.2 million) on which most of the project is
being constructed. The joint venture has secured limited recourse bank
financing of $225 million, and is pursuing an amendment to increase the
facility to $285 million, to fund the hotel/casino. The joint venture parties
have executed Keep-Well and Completion Guaranty Agreements in conjunction with
the financing. As of June 30, 1996, $185.6 million has been drawn on the bank
financing. It is anticipated the joint venture parties will each contribute an
additional $30 to $35 million in subordinated loans or equity to the joint
venture for completion of the project.
4. Long-Term Debt
As of June 30, 1996, the Company had an outstanding balance of $139,000,000,
and at December 31, 1995, $144,000,000, on its Reducing Revolving Bank Credit
Agreement ("Agreement"). The Company incurred a liability in connection with
the acquisition of the New York - New York theme rights of $1,100,000, due
January 6, 1997, and $400,000 due January 7, 1998. At June 30, 1996, the
$1,100,000 due for the theme rights is reflected as a current obligation.
The Agreement entered into on December 28, 1993, was amended and restated on
July 17, 1995, and amended on March 27, 1996. The Agreement provides for a
maximum principal balance of $250,000,000, with scheduled reductions that
reduce the maximum permitted balance to $212,500,000 as of August 18, 1997,
$175,000,000 as of February 18, 1999, $125,000,000 as of February 18, 2000,
with the remaining principal balance due July 18, 2000.
The Agreement provides for interest payments at least quarterly, at the prime
rate or LIBOR, plus a sliding margin, based upon the Company's debt to earnings
before interest, taxes, depreciation and amortization ("EBITDA") ratio. The
margin, effective April 1, 1996, for the prime rate ranges between 0% and 1.0%,
10
<PAGE>
while the margin for LIBOR ranges between 1.0% and 2.0%. The weighted average
interest rate at June 30, 1996 was 7.0%, and at December 31, 1995, 7.5%. The
Company incurs commitment fees of .35% to .5% for the unused portion of the
Agreement, depending upon the debt to EBITDA ratio achieved by the Company.
The obligation is secured by all real property, leasehold interests in real
property, and personal property of the Company.
5. Commitments and Contingencies
a. Southwest Joint Venture
On January 16, 1995, the Company and Southwest Hotel & Casino Corp.
("Southwest") entered into an agreement to fund the development of a casino for
the Kickapoo Traditional Tribe of Texas in Eagle Pass, Texas. The Company has
invested in Southwest in the form of a $1.6 million Convertible Term Promissory
Note and has committed to fund a $2.1 million Demand Promissory Note in
furtherance of this venture. As of June 30, 1996, $1.2 million has been
advanced under the Demand Promissory Note.
Due principally to a lengthy licensing process of Southwest as the manager of
the Kickapoo gaming facility, which has caused a delay in the opening of the
facility, the Company has agreed to postpone payment of amounts due, and cer-
tain other obligations, under both the Convertible Term Promissory Note and the
Demand Promissory Note. Southwest is required to post a standby letter of
credit for $800,000 in favor of the Kickapoo Tribe. The Company will guarantee
the letter of credit. The facility is expected to open in the third quarter of
1996, at which time payment of amounts outstanding will begin.
b. Biloxi Acquisition
In July 1996, the Company signed a letter of intent to purchase certain assets
of BH Acquisition Corporation that include the Broadwater Resort, the
Broadwater Tower, and the Broadwater Marina, as well as the adjacent 18-hole
Sun golf course, in Biloxi, Mississippi, for $41.5 million in cash. BH
Acquisition Corporation will retain the option of operating a substantial
portion of the assets for a minimum of six (6) months. The seller, BH
Acquisition Corporation, is 100% owned by John E. Connelly of Pittsburgh,
Pennsylvania.
In a separate transaction, the Company signed a letter of intent with
Presidents Casinos, Inc., of which John E. Connelly is the chairman and chief
executive officer, to purchase for $15 million, Presidents Casinos' leasehold
rights under its lease with BH Acquisition Corporation for the Broadwater
Marina. Pursuant to the purchase, President Casinos, Inc. will enter into a new
lease which provides President Casinos, Inc. the exclusive right to operate a
riverboat casino at the Broadwater Marina for a one-year term, rent free.
c. Litigation
Currently, there are lawsuits pending against the Company arising in the normal
course of business. In management's opinion, the ultimate outcome of these
matters will not have a material adverse effect on the results of operations or
the financial position of the Company.
11
<PAGE>
Item 2, Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
SUMMARY OF OPERATIONS
For the three months ended June 30, 1996 net income was up 12.3% to $8.5
million. This improvement was primarily due to a 2.8% increase in net revenues
coupled with lower interest expense. Operating expenses increased to $49.7
million from $48.3 million, or 2.9%. This increase was primarily due to
increases in promotional allowances, and the increased cost of gasoline and
diesel.
Income from operations improved to $14.4 million, an increase of $300,000, or
2.2%, over 1995. EBITDA (earnings before interest, taxes, depreciation and
amortization) rose 1.0% to $21.2 million from $21.0 million in the prior year.
Earnings per share increased to $.28 from $.25 in the prior year quarter.
Net income for the six months ended June 30, 1996 was up 13.7% to $14.4 million
due primarily to a 5.7% increase in net revenues and lower interest expense.
The added room capacity at Buffalo Bill's, targeted marketing programs, in-
creased bus customers, and improved highway traffic contributed to the revenue
gains. Operating expenses increased to $98.9 million from $93.9 million, or
5.3%. This increase is primarily due to increases in promotional allowances,
cost of gasoline and diesel, advertising, and increased business volume. EBITDA
rose 4.0% to $38.6 million from $37.1 million in the prior year. Earnings per
share increased to $.47 from $.41 in 1995.
REVENUES
Net revenues for the second quarter increased by $1.7 million, or 2.8%. This
increase was due to additional occupied rooms and higher gasoline and diesel
sales. For the six months ended June 30, 1996, net revenues rose 5.7% to $123.9
million. Additional occupied rooms, coupled with an increase in bus customers,
and a continuing marketing campaign, contributed to the increased revenues.
Of the $1.7 million increase in net revenues, service station revenues
accounted for $1.3 million of the increase, and resulted from a 22% increase
in gallons sold, coupled with a 13% increase in prices. Hotel revenue, net of
promotional allowances, increased $830,000 as a result of 12,000 additional
occupied rooms and a 22% increase in the average daily rate. Casino volumes
were relatively equal to the prior year, but a slight decline in win percent-
ages resulted in a 1% decrease.
For the six months ended June 30, 1996, an increase in occupied rooms, coupled
with increased bus customers and highway traffic, generated a net revenue in-
crease of $6.6 million. Casino revenues accounted for $2.2 million of the in-
crease, while additional revenues from hotel and food and beverage, added $1.7
million and $746,000, respectively, net of promotional allowances. The service
station contributed $1.6 million of additional revenue for the six months.
12
<PAGE>
The increase in casino revenues was derived from slots, and was fueled by the
increased visitor volume. Higher promotional allowances contributed to the
additional 40,000 occupied rooms, and coupled with a 26% increase in the
average daily rate, resulted in the overall hotel revenue increase. Food and
beverage revenue increases were primarily due to increased volume, and to a
lesser extent, an increase in promotional allowances, and a slight price
increase on selected items. The increase in service station revenues was due to
a 17% increase in volume coupled with an 8% increase in prices.
COSTS AND EXPENSES
Expenses for the three months ended June 30, 1996 were up $1.4 million, or
2.7%. Casino expense increased $713,000 primarily due to increased promotional
allowances, which are all charged to casino expense. Food and beverage costs
increased $480,000 due to the increased volume and increased payroll to enhance
customer service. Service station costs increased $1.2 million due to increased
product cost coupled with increased volume. Selling, general and administrative
expenses declined $405,000 primarily due to reduced professional fees and
development costs.
For the six month period ended June 30, 1996, expenses increased $5.0 million
to $98.8 million. Casino expenses increased $2.2 million primarily due to
higher promotional allowances and increased costs commensurate with the
increased business volume. Food and beverage costs increased $1.4 million
primarily due to increased volume and slightly higher payroll costs associated
with enhanced customer service. Hotel costs increased $368,000 primarily as a
result of 40,000 additional occupied rooms. Service station costs increased
$1.6 million due to increased in product cost coupled with increased volume.
Entertainment costs decreased $450,000 due to lower entertainer and show
production costs. Selling, general, and administrative expenses increased
$407,000. This increase is primarily the result of expanded advertising and bus
program costs offset by lower professional fees and development costs.
INTEREST EXPENSE
Interest expense was $1.3 million compared to $2.4 million for the three months
ended June 30, 1996 and 1995, respectively. The Company incurred $2.7 million
of interest during the second quarter of 1996, of which $1.4 million was
capitalized as part of the New York - New York Joint Venture investment and the
golf course development. In the second quarter of 1995, the Company incurred
$3.3 million of interest, of which $933,000 was capitalized. The decline in
interest incurred was primarily due to lower rates.
Interest expense for the six months ended June 30, 1996 was $2.9 million as
compared to $3.9 million in the prior year. The Company incurred $5.6 million
of interest through June 30, 1996, of which $2.7 million was capitalized as
part of the New York - New York Venture investment and the golf course develop-
ment. As of June 30, 1995, the Company incurred $6.2 million of interest of
which $2.4 million was capitalized. Again, the decline in interest incurred was
primarily due to lower rates.
13
<PAGE>
INCOME TAXES
Income taxes increased to $4.7 million from $4.1 million for the three months
ended June 30, 1996, primarily as a result of an increase in earnings before
taxes. For the six months ended June 30, 1996, income taxes increased to $7.9
million from $6.9 million in the prior year. Again, the increase is due to the
increase in earnings before taxes. The Company's effective tax rate was
approximately 35.4%.
LIQUIDITY AND CAPITAL RESOURCES
The Company held cash and cash equivalents of $8.8 million as of June 30, 1996.
Net cash provided from operations during the six months ended June 30, 1996 was
$30.4 million as compared to $33.6 million in the prior year.
The Company funds its daily operations through cash flow from operations. The
Company borrows funds for significant capital expenditures and investments,
such as the golf course development and the New York - New York investment,
which can not be fully funded out of operating cash flows.
The Company has a $250 million Reducing Revolving Credit Facility, amended and
restated July 1995, and amended March 1996 ("Agreement" see Note 4)
The Company is a 50% joint venture partner with MGM Grand, Inc. ("MGM") in the
development and operation of the New York - New York Hotel & Casino, a $460
million project, including construction costs, pre-opening costs, and
capitalized interest. In conjunction with the development, the joint venture
secured a $225 million Construction/ Revolving loan from Bank of America as
agent for a sixteen bank consortium, and is pursing an amendment to increase
the commitment to $285 million. The Company and MGM have executed a Completion
Guaranty and Keep-Well Agreements in conjunction with the financing. As of
June 30, 1996, $185.6 million had been drawn on the bank loan. The joint
venture partners anticipate the need to contribute $30 million to $35 million
each, in subordinated loans or additional equity for project completion.
In September 1995, the Board of Directors approved a stock repurchase program
authorizing the Company to acquire up to $15.0 million worth of its outstanding
shares. In the first quarter, the Company acquired 280,000 shares at an average
price of $13.88 per share, for a total to date of 310,000 shares at a cost of
$4.3 million.
The Company is presently developing a golf course complex in California
approximately 4 miles south of the Nevada/California border. The first phase of
this project includes, among other things, a Tom Fazio designed 18-hole
championship course. This course is expected to cost $27.0 million, and is to
open in the fourth quarter of 1996.
In September 1995, the Company, together with Sheldon Gordon and Randy Brant,
developers of the Forum shops at Caesar's Palace, announced the intent to de-
velop a one million square foot themed shopping facility on 100 acres of land
owned by Primm South Real Estate Company, that is adjacent to the Primadonna
Resort & Casino. The Company may incur certain infrastructure costs to accom-
modate this planned development. The facility is to be built and financed by
the developers, who are currently negotiating their financing. The first phase
of construction is expected to commence in 1997, contingent upon the financing,
with completion approximately twelve months thereafter.
14
<PAGE>
In conjunction with development opportunities, the Company has granted two
loans to the Southwest Casino and Hotel Corp. ("Southwest"). A Convertible Term
Note, for $1.6 million, bears interest at 8%, and is convertible into 16,000
shares of Series B Convertible Preferred Stock. The Company has provided $1.2
million, and has agreed to provide and additional $900,000, pursuant to a
Demand Promissory Note; the proceeds are being used for the construction of the
Kickapoo gaming facility at Eagle Pass, Texas. The Demand Promissory Note bears
interest at 12% for the first six months, 15% for the next six months, and 18%
thereafter. The Demand Promissory Note requires the borrower to use its best
efforts to obtain take-out financing in an amount equal to at least 75% of the
principal amount of the note.
Before opening the facility, Southwest is required to post a standby letter of
credit for $800,000 in favor of the Kickapoo Tribe. The Company will guarantee
that letter of credit.
Due principally to a lengthy licensing process of Southwest as the manager of
the Kickapoo gaming facility, a delay in the opening of the facility has
occurred. The Company has agreed to postpone payment of amounts currently due
under both the Convertible Term Promissory Note and the Demand Promissory Note,
until such time as the facility has opened. The opening is expected to occur in
the third quarter of 1996.
In July 1996, the Company signed a letter of intent to purchase certain assets
of BH Acquisition Corporation that include the Broadwater Resort, the
Broadwater Tower, and the Broadwater Marina, as well as the adjacent 18-hole
Sun golf course, in Biloxi, Mississippi, for $41.5 million in cash. BH
Acquisition Corporation will retain the option of operating a substantial
portion of the assets for a minimum of six (6) months. The seller, BH
Acquisition Corporation, is 100% owned by John E. Connelly of Pittsburgh,
Pennsylvania.
In a separate transaction, the Company signed a letter of intent with
Presidents Casinos, Inc., of which John E. Connelly is the chairman and chief
executive officer, to purchase for $15 million, Presidents Casinos' leasehold
rights under its lease with BH Acquisition Corporation for the Broadwater
Marina. Pursuant to the purchase, President Casinos, Inc. will enter into a new
lease which provides President Casinos, Inc. the exclusive right to operate a
riverboat casino at the Broadwater Marina for a one-year term, rent free.
The transactions are subject to a number of conditions, including satisfactory
completion of due diligence, negotiation of definitive agreements, and
obtaining necessary regulatory approvals. The targeted closing date of the
transactions is tentatively scheduled for October 1996.
The 236 acre site stretches nearly 875 feet along the beachfront, across from
a 17.5 acre marina, which is the current site of a barge casino operated by
President Casinos, Inc. It has the only contiguous golf course of any casino
resort in Biloxi, and is situated next to the historic Beauvoir mansion, the
last home of Jefferson Davis. The Company is developing a master plan to
maximize the unique beachfront location, and create a first-class, destination
casino resort.
15
<PAGE>
Capital expenditures for the six months ended June 30, 1996 were $20.6 million,
as compared to $29.3 million for the six months ended June 30, 1995. Of the
$20.6 million, $14.1 million was for the golf course, $.8 million for
Southwest, $3.5 million to purchase slot machines and the related player
tracking systems, and $2.2 million for the maintenance of existing facilities.
For the balance of the year, capital requirements are expected to include $3.0
million for the Primadonna conference center, $5.9 million for the golf course,
$30.0 million to $35.0 million for the New York - New York venture, $1.0
million to fund the Southwest commitment, $58.0 million to close the Biloxi,
MS. transactions, and $9.3 million for maintenance of existing facilities.
The Company believes that its current cash flow, coupled with its reducing
revolving credit facility, provide the resources and flexibility to meet
existing obligations and to fund its commitments on the projects discussed
above. As the Company develops its plans for the Biloxi site it will need to
obtain additional bank or vendor financing, or issue public or private debt,
or equity, or a combination thereof.
FORWARD LOOKING INFORMATION
Information contained in this Form 10-Q contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
which can be identified by the use of forward-looking terminology such as
"may," "will," "should," "expect," "anticipate," "estimate," or "continue," or
the negative thereof, or other variations thereon, or comparable terminology.
These statements are subject to a number of risks and uncertainties, including
but not limited to, the following: (a) growth or decline in the gaming industry
in southern Nevada; (b) the general Southern California economy; (c) possible
addition of legalized gaming in Southern California; (d) traffic interruptions
on Interstate 15; (e)cost overruns and delays associated with construction
projects (including material and labor shortages, work stoppages, design
changes, weather, and unanticipated cost increases), such as New York -
New York and the golf course. Further, costs or delays associated with
engineering, environmental or geological matters could create problems with the
golf course project.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On April 17, 1996, the federal court in Las Vegas, Nevada, dismissed the
purported class action suits filed April 26, 1994 and May 10, 1994, as
discussed in the Annual Report Form 10-K, Legal Proceedings, and gave the
claimants had until May 31, 1996 to file amended complaints. On May 31, 1996
the plaintiffs filed an amended complaint, and also filed a motion to
substitute Brenda McElmore for Mr. Ahern as one of the class representatives.
The motion has not been opposed by the Company. No hearing date has been set.
On May 30, 1996, the United States District Court for New Jersey granted the
defendants' motion for dismissal, in entirety, of the compliant filed on
August 23, 1996, as discussed in the Annual Report Form 10-K, Legal
Proceedings.
16
<PAGE>
Items 2 through 3. None.
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of security holders
during the Company's Annual meeting of Stockholders held May 21, 1996:
No. of votes Withheld
Description of Matter Cast for Authority
_____________________ ____________ _________
1. Election of directors
Gary E. Primm 26,962,809 39,077
Madison B. Graves II 26,953,776 48,110
No. of votes cast No. of
_________________ ___________
For Against Abstentions
__________ _______ ___________
2. Ratification of
appointment of
independent auditors 26,981,444 10,406 10,036
Item 5. None
Item 6. Exhibits and Reports on Form 8 - K.
(a) Exhibits.
Exhibit 27. Financial Data Schedule as of June 30, 1996.
See exhibit index on page 19 for exhibits filed with this report.
(b) Reports on Form 8 - K. No report of Form 8 - K was filed during the
quarter for which this report is filed.
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 under-
signed thereunto duly authorized.
PRIMADONNA RESORTS, INC.
________________________
(Registrant)
Date: August 13, 1996 By /s/ Michael P. Shaunnessy
__________________________
Michael P. Shaunnessy
Chief Accounting Officer
17
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
No. Description Numbered
Pages
_______ ___________________________________________ ____________
27 Financial Data Schedule as of June 30, 1996 19
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY
FORM 10-Q AS OF JUNE 30, 1996, AND ANNUAL REPORT FORM 10-K AS OF DECEMBER 31,
1995, CONSOLIDATED FINANCIAL STATEMENTS, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 8843 8843
<SECURITIES> 0 0
<RECEIVABLES> 3923 3923
<ALLOWANCES> 0 0
<INVENTORY> 2531 2531
<CURRENT-ASSETS> 21707 21707
<PP&E> 402923 402923
<DEPRECIATION> 102777 102777
<TOTAL-ASSETS> 381798 381798
<CURRENT-LIABILITIES> 19617 19617
<BONDS> 139410 139410
0 0
0 0
<COMMON> 308 308
<OTHER-SE> 211472 211472
<TOTAL-LIABILITY-AND-EQUITY> 381798 381798
<SALES> 67136 130775
<TOTAL-REVENUES> 64011 123855
<CGS> 28391 55989
<TOTAL-COSTS> 49659 98848
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1206 2702
<INCOME-PRETAX> 13146 22305
<INCOME-TAX> 4657 7898
<INCOME-CONTINUING> 8489 14407
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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<NET-INCOME> 8489 14407
<EPS-PRIMARY> .28 .47
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