<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 March 31, 1998
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 April 30, 1998
Common Stock, $.01 par value 28,919,100 Shares
Total No. of Pages 20 Exhibit Index on page 19
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
Form 10 - Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at March 31, 1998
(Unaudited) and December 31, 1997..................... 3 - 4
Condensed Consolidated Statements of Income (Unaudited) for
the Three Months Ended March 31, 1998 and 1997......... 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 1998 and 1997..... 6 - 7
Notes to Condensed Consolidated Financial
Statements (Unaudited)................................. 8 - 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 14 - 17
Part II. OTHER INFORMATION 17 - 18
2
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
_________ ___________
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,333 $ 9,973
Accounts and notes receivable 773 988
Income tax refund receivable - 1,664
Inventories 1,397 1,687
Prepaid expenses and other 5,739 6,647
________ ________
Total current assets 15,242 20,959
________ ________
PROPERTY AND EQUIPMENT:
Buildings and improvements 212,808 212,396
Land improvements 95,594 95,364
Furniture, fixtures and equipment 145,166 144,371
________ ________
453,568 452,131
Less: accumulated depreciation
and amortization (152,420) (144,653)
________ ________
301,148 307,478
Land 5,724 5,654
Construction in progress 26,109 19,495
________ ________
332,981 332,627
________ ________
INVESTMENT IN JOINT VENTURE 112,469 104,436
________ _______
NOTES RECEIVABLE, net of current portion 2,150 2,718
________ ________
OTHER ASSETS 11,797 9,955
________ ________
$474,639 $470,695
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
_________ __________
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable-trade $ 5,197 $ 10,265
Accrued expenses 12,570 10,432
Current portion of long-term debt 1,639 1,639
________ ________
Total current liabilities 19,406 22,336
________ ________
LONG-TERM DEBT 220,940 220,765
________ ________
DEFERRED INCOME TAXES PAYABLE 15,979 15,961
________ ________
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;
28,917,600 and 28,858,000 shares
issued and outstanding in 1998
and 1997, respectively 309 309
Additional paid - in capital 129,716 128,817
Retained earnings 123,951 118,169
Less: treasury stock, at cost (35,662) (35,662)
________ ________
218,314 211,633
________ ________
$474,639 $470,695
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands Except Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
____________________________
1998 1997
_________ ___________
(Unaudited)
<S> <C> <C>
REVENUES:
Casino $ 39,738 $ 40,524
Food and beverage 7,333 7,070
Hotel 4,739 5,130
Entertainment 2,777 2,415
Service station 3,950 3,741
Other 1,711 1,586
Operating income from New York-New York 10,203 14,631
________ ________
70,451 75,097
Less: promotional allowances (3,806) (3,601)
________ ________
Net revenues 66,645 71,496
________ ________
COSTS AND EXPENSES:
Casino 12,908 13,028
Food and beverage 6,313 6,192
Hotel 2,395 2,681
Entertainment 1,878 1,474
Service station 3,489 3,466
Other 634 711
Selling, general and administrative 11,672 11,194
Property costs 4,701 4,300
Depreciation and amortization 7,817 7,161
________ ________
51,807 50,207
________ ________
Income from operations 14,838 21,289
INTEREST INCOME (EXPENSE)
Interest expense, net (3,716) (3,074)
Interest expense, net from New York-New York (2,171) (2,465)
________ ________
Income before taxes 8,951 15,750
INCOME TAXES:
Income tax provision 3,169 5,639
________ ________
NET INCOME: $ 5,782 $ 10,111
======== ========
Earnings per share
Basic earnings from net income $0.20 $0.34
Diluted earnings from net income $0.20 $0.34
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE>
PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
____________________________
1998 1997
_________ __________
(Unaudited)
<S>...........................................<C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,782 $ 10,111
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,817 7,161
Amortization of debt issuance costs 36 92
Equity income from New York-New York
in excess of distributions (8,032) (12,166)
Increase in life insurance cash
surrender value (75) (57)
Gain on sale of assets - (78)
Deferred income taxes - 742
Change in current assets and liabilities
due to operating activities:
(Increase) decrease in accounts and
notes receivable 215 (42)
Decrease in income tax refund receivable 1,664 221
Decrease in inventories 290 222
Decrease in prepaid
expenses and other 926 652
(Decrease) increase in accounts
payable-trade (5,068) 1,176
Increase in accrued expenses 2,138 3,607
________ ________
Total adjustments (89) 1,530
________ ________
Net cash provided by operating activities 5,693 11,641
________ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (8,159) (7,771)
Investment in joint venture - (7,000)
Increase in other assets (1,751) (338)
Proceeds from disposal of other assets 502 160
________ ________
Net cash used in investing activities (9,408) (14,949)
________ ________
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
6
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
____________________________
1998 1997
_________ __________
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock $ 899 $ 140
Purchase of treasury stock - (3,704)
Proceeds from issuance of long-term debt 28,300 33,800
Principal payments of long-term debt (28,124) (27,100)
________ ________
Net cash provided by
financing activities 1,075 3,136
________ ________
Net decrease in cash and
cash equivalents (2,640) (172)
Cash and cash equivalents, beginning of year 9,973 10,027
________ ________
Cash and cash equivalents, end of period $ 7,333 $ 9,855
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
7
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PRIMADONNA RESORTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organizational Structure and Basis of Presentation
Primadonna Resorts, Inc., a Nevada corporation, and subsidiaries("Company"),
owns and operates three hotel-resort/casinos: Buffalo Bill's Resort & Casino,
Primm Valley Resort & Casino, and Whiskey Pete's Hotel & Casino, all located at
the California/Nevada border in Primm, Nevada. The Company also owns and
operates the Primm Valley Golf Club, located approximately four miles south of
Primm, in California. In addition, the Company owns a 50% interest in the joint
venture which owns and operates the New York-New York Hotel & Casino, located
on the "Strip" in Las Vegas, Nevada.
Information as of December 31, 1997 included in the accompanying consolidated
financial statements and the notes thereto, has been audited. Information with
respect to the three month periods ended March 31, 1998 and 1997, 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 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
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
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.
8
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2. Statements of Cash Flows
The following supplemental disclosures are provided as part of the
accompanying consolidated statements of cash flows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
________________________
1998 1997
_____ _____
(In thousands)
<S> <C> <C>
Cash payments made for interest
(net of amounts capitalized) $ 3,181 $ 3,061
======== ========
Cash payments made for income taxes - -
======== ========
</TABLE>
9
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3. EARNINGS PER SHARE
Earnings per share consist of the following:
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
________________ _______________
(In thousands, except per share amounts)
Income Shares Income Shares
_______ ______ ______ ______
<S> <C> <C> <C> <C>
Basic EPS:
Income from continuing
operations $ 5,782 28,881 $10,111 29,947
_______ ______ _______ ______
Net income available to
common shareholders $ 5,782 28,881 $10,111 29,947
======= ====== ======= ======
Per share amounts:
Income from continuing
operations $ 0.20 $ 0.34
Net income available to
common shareholders $ 0.20 $ 0.34
Diluted EPS:
Income from continuing
operations $ 5,782 28,881 $10,111 29,947
Effect of dilutive
stock options 48 - 143
_______ ______ _______ ______
Net income available to
common shareholders $ 5,782 28,929 $10,111 30,090
======= ====== ======= ======
Per share amounts:
Income from continuing
operations $ 0.20 $ 0.34
Net income available to
common shareholders $ 0.20 $ 0.34
</TABLE>
Options to purchase 1,405,000 and 335,000 shares of common stock at March 31,
1998 and 1997, respectively, at prices of $16.75-$31.25 and $19.50-$31.25,
respectively, were outstanding during the period but not included in the
computation of diluted earnings per share because their exercise price was in
excess of the average market price of the common shares for the periods
presented.
4. Investment in Joint Venture
On December 28, 1994 the Company and MGM Grand, Inc.("MGM"), formed a joint
venture to own and operate the New York-New York Hotel & Casino, LLC. The
hotel/casino, which cost $460 million, was completed in December 1996 and
opened January 3, 1997. The Company holds a 50% interest in the joint venture.
The Company has contributed $69.5 million in cash and certain rights to the New
York theme from a third party licensor to the joint venture. MGM has
10
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contributed $29.5 million in cash and land upon which the property is located,
valued at $41.2 million, to the joint venture. The joint venture secured
limited recourse bank financing of $285 million, and term loan financing of $20
million, which funded the construction of, and equipment for, the hotel/casino.
The joint venture partners have executed Keep-Well Agreements in conjunction
with the financing which requires the maintenance of certain financial ratios
and stipulates that equity contributions be made by the partners if the
financial ratios are not met.
Summary condensed financial information for the joint venture is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
_______________________
1998 1997
_____ ____
(In thousands)
<S> <C> <C>
Net revenues $ 54,035 $ 67,868
Operating income 20,406 29,261
Interest expense, net 4,342 4,930
Net income 16,064 24,331
Total assets $467,444 $479,202
Long-term debt 268,033 279,535
Member equity 199,411 149,994
</TABLE>
5. Long-Term Debt
On June 5, 1997 the Company entered into a Credit Agreement (" Agreement")
with a sixteen bank consortium led by Well Fargo Bank as agent, for a
$250,000,000 revolving loan. The loan was increased to $300,000,000 on December
19, 1997 and allows, prior to June 5, 1998, upon certain conditions, the
Company to increase the maximum permitted balance to $350,000,000. This loan
replaced the existing Reducing Revolving Bank Credit Agreement.
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 for the prime rate ranges between 0% and 1.125%, while the margin for
LIBOR ranges between 0.5% and 2.375%. The weighted average interest rate at
March 31, 1998 was 6.9%, and at December 31, 1997, 7.0%. The Company incurs
commitment fees of .20% to .50% for the unused portion of the Agreement, also
dependent upon the debt to EBITDA ratio. The obligation is secured by a deed of
trust on all real property, leasehold interests in real property, and personal
property of the Company, excluding the Primm Valley Golf Club. The Agreement
contains certain restrictive covenants relating to the use of proceeds, sale or
transfer of assets, the incurrence of additional debt over a specified level,
capital expenditures, and maintenance of certain minimum financial ratios.
The Reducing Revolving Bank Credit Agreement ("Existing Agreement") entered
into on December 28, 1993, as amended, was terminated on June 5, 1997. The
Existing Agreement provided for a maximum principal balance of $250,000,000,
with scheduled reductions in the maximum permitted beginning August 18, 1997,
11
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and continuing thereafter through maturity on July 18, 2000. The Existing
Agreement provided for EBITDA ratios, interest payments, security interests,
and covenants that were substantially similar to the Agreement which replaced
the Existing 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 December 31, 1997 and 1996, $1,500,000 and $1,100,000,
respectively, due for the theme rights is reflected as a current obligation.
In accordance with the terms of the theme rights agreement, the payment of the
$1,500,000 is being withheld pending the determination of indemnity
obligations.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
________ ________
(In thousands)
<S> <C> <C>
Credit Agreement, $300,000,000, June 5, 1997,
5 year term, LIBOR plus applicable margin $220,800 $220,600
New York-New York theme rights due January
6,1997 and January 7, 1998 1,500 1,500
Other 279 304
________ ________
222,579 222,404
Less: Current portion 1,639 1,639
________ ________
Total long-term debt $220,940 $220,765
======== ========
</TABLE>
6. Commitments and Contingencies
a. Southwest Investment
The Company has advanced a total of $3.8 million to Southwest Casino and Hotel
Corp. ("Southwest"), a developer and manager of Native American gaming
enterprises. Southwest managed a Class II Indian gaming facility in Eagle Pass,
Texas for the Kickapoo Traditional Tribe of Texas until its recent termination.
Southwest also manages a Class II Indian gaming facility just outside Oklahoma
City, Oklahoma for the Cheyenne and Arapaho Tribes.
The Company holds a $1.6 million Convertible Term Promissory Note which is
convertible into preferred stock of Southwest. No payments have been made on
this note, and in 1996, based upon the financial condition of Southwest, the
Company fully reserved the $1.6 million and related interest. The Company also
holds a $2.2 million Demand Promissory Note which was secured by the management
contract on the Kickapoo gaming facility. Southwest has made $100,000 in
sporadic payments on this note. No reserve has been established for this note
due to its collateralization. As a result of a termination settlement of the
Southwest management contract with the Kickapoo Tribe, effective December 31,
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1997, Southwest assigned the Company two notes, aggregating $2.2 million, due
Southwest from the Kickapoo Tribe. The Company has received $475,000 in
payments on these notes through March 1998, and an additional $100,000 was
received in April 1998.
b. 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.
13
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Item 2, Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
SUMMARY OF OPERATIONS
For the three months ended March 31, 1998, net revenues decreased $4.9 million,
while income from operations declined $6.5 million, due primarily to a $4.4
million decrease in operating income from the Company's 50% share of New York-
New York. In addition, operating income at Primm declined approximately $2.0
million while net revenues declined $.4 million. Net income decreased to $5.8
million from $10.1 million in 1997. Earnings per share, on a diluted basis for
the three month periods ended March 31, 1998 and 1997, were $.20 and $.34,
respectively.
January 3, 1997 marked the opening of the New York-New York Hotel & Casino in
Las Vegas. This opening has been considered one of the most successful in Las
Vegas, and resulted in earnings in 1997 that are not expected to be replicated
in 1998.
The increase in available hotel rooms in the Las Vegas market over the last
year, coupled with the declining airline passenger counts, continues to cause
competitive pressures in Southern Nevada. The Company has focused extensively
on its cost structure and operating efficiencies at Primm during the first
quarter, and expects to see measurable results as the year progresses. The
ongoing construction projects at Primm should be completed in the third
quarter, and the expanded and enhanced facilities should begin to contribute
meaningfully to revenues.
REVENUES
Casino revenue declined $.8 million, or 2%, primarily due to decreased business
volume. Slot revenues declined $.5 million and table games declined $.3
million. Food and beverage revenues increased $.3 million due to more
complimentary beverages being provided to patrons. Hotel revenue declined $.4
million due to a 5.6% decline in occupied rooms coupled with a 1.8% decrease in
the average rate.
Entertainment revenue increased $.4 million, or 15.0%. This was due to a $.8
million increase in golf revenues as a result of the course being open for the
full quarter in 1998 compared to a soft opening in February 1997. This increase
was partially offset by declines in amusement and arcade revenues of $.4
million. Service station revenue increased $.2 million due primarily to a 20.3%
increase in volume offset by a 14.7% decrease in prices.
Operating income from New York-New York, which represents the Company's 50%
share of the pre-tax, pre-interest earnings of the joint venture, was $10.2
million, a decline of $4.4 million from the $14.6 million posted in its grand
opening quarter. Net revenues at New York-New York declined to $54.0 million
from $67.9 million in the prior year period. Casino revenues were down $11.2
million, or 27%, primarily due to lower volume. Hotel revenues declined $3.1
million, or 17% due to a 6% decline in occupied rooms, coupled with a 12%
decline in the average daily rate. These revenue decreases were the primary
contributors to an $8.8 million decline in pre-tax, pre-interest earnings.
14
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COSTS AND EXPENSES
Casino costs decreased slightly, primarily due to a reduction in payroll.
Food and beverage costs increased $.1 million primarily due to higher kitchen
payroll costs. Hotel costs decreased $.3 million, or 10.7%, due to lower
payroll costs associated with a 5.6% decrease in occupied rooms.
Entertainment costs increased $.4 million, or 27.4%, primarily due to the
added expenses associated with the golf course, which opened in February 1997.
Service station costs were substantially unchanged from 1997 as product costs
decreased 16.9% and were offset by a volume increase of 20.3%.
Selling, general and administrative expenses increased $.5 million, primarily
due to an increase in the number of bus patrons, which increased subsidy
payments by $.7 million. This was offset by lower development related costs.
Property costs increased $.4 million, or 9%, due primarily to increased costs
for life safety, signage, parking lots, lighting systems, and the property
grounds.
Depreciation increased $.7 million due to completion of the conference center,
the expanded and remodeled casino and public spaces and the parking garage at
Primm Valley, along with the addition of the golf course clubhouse.
INTEREST EXPENSE
Interest expense, net, increased $.6 million. The higher interest expense was
primarily due to an increase in the amounts outstanding under the credit
facility, used to fund capital expenditures.
Interest expense, net from New York-New York decreased $.3 million due to a
decrease in the amounts outstanding under its credit facility.
INCOME TAXES
Income taxes decreased to $3.2 million compared to $5.6 million in 1997. The
decrease in taxes is due to lower earning before taxes. Tax rates were
substantially unchanged.
LIQUIDITY AND CAPITAL RESOURCES
The Company held cash and cash equivalents of $7.3 million as of March 31,
1998. Net cash provided by operations during the three months ended March 31,
1998 was $5.7 million as compared to $11.6 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 a portion of its equity investment in New York-New York, which can not
be fully funded out of operating cash flows.
The Company has a $300 million Credit Agreement. ("Agreement", see Note 5 of
the notes to the Condensed Consolidated Financial Statements). At March 31,
1998, the amount outstanding under the Agreement was $220,800,000 at an
average all-in rate of 6.9%. The Company has initiated the process of
increasing this facility to the full $350 million availability, pursuant to
the initial terms.
15
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The Company is a 50% joint venture partner with MGM Grand, Inc. ("MGM") in the
New York-New York Hotel & Casino, LLC. The joint venture secured a $285
million Construction/Revolving loan from Bank of America as agent for a
sixteen bank consortium. At March 31, 1998, $228 million was outstanding.
Additionally, term loan financing was obtained in January 1997, with a balance
at March 31, 1998 of approximately $18 million. The Company and MGM executed
Keep-Well Agreements in conjunction with the bank loan. The Keep-Well
provisions require the maintaining of certain financial ratios, and stipulate
that equity contributions be made by the partners if these ratios are not met.
To date, the operating performance has far exceeded the required ratios.
The Board of Directors has approved a stock repurchase program authorizing the
Company to acquire up to $50 million worth of its outstanding shares. The
Company had acquired 2,014,500 shares for $35.7 million at March 31, 1998.
The first phase of the 525,000 square foot Fashion Outlet of Las Vegas is
scheduled to open in July 1998. The facility is being built and financed by the
developers. The Company expects to benefit from the increased visitors caused
by the mall and, particularly, the draw from the Las Vegas market. In addition,
the Company will be able to place slot machines in the facility's transition
area from the Primm Valley Resort & Casino. For its part, the Company expects
to incur approximately $1.5 million for infrastructure costs to accommodate
this planned development, of which $.9 million had been expended through March
31, 1998. The Company has no other financial interest in the mall project.
The Company is expanding the Primm Valley property by the addition of 34,000
square feet of casino, restaurant and retail space that is to be connected to
the mall. This expansion is also expected to be completed in July.
Additionally, the current coffee shop has been renovated and a new piano bar
has been added in the casino area.
Capital expenditures for the three months ended March 31, 1998 were $8.2
million, as compared to $14.8 million for the three months ended March 31,
1997. Of the $8.2 million, $1.9 million was for the second golf course, $3.2
million for the Primm Valley expansion and upgrade, $1.9 million for an
expanded and upgraded monorail and infrastructure costs, and $1.2 million for
the maintenance of existing facilities. Capital requirements for the balance of
the year are expected to include $29.8 million for the Primm Valley expansion
and infrastructure, $.4 million for an upgraded and expanded monorail system,
and $6.8 million for maintenance of existing facilities.
The Company expects some continuing difficult year-ago comparisons for New York
- -New York, due to its extremely successful opening in 1997, and continuing
competitive pressures in the Las Vegas market. Additionally, performance at
Primm will continue to be impacted during the second quarter of 1998 by the
ongoing construction projects.
The Company believes that its current cash flow, coupled with its bank
facility, provides both the resources and flexibility to meet existing
obligations and to fund its commitments on the projects discussed above. The
Company continues to pursue other gaming opportunities and, if successful in
securing another location, depending upon the amount of funding required,
may need to obtain additional bank or vendor financing, or issue
public or private debt or equity, or a combination thereof.
16
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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
"believes", "intend", "may", "expect", "will", or "continue," or the negative
thereof, or other variations thereon, or comparable terminology. As with any
construction projects, the Primm Valley expansion and upgrade and the outlet
mall, involve many risks and uncertainties, including but not limited to
material and labor shortages, work stoppages, design changes, and weather.
Further, engineering, environmental, or geological problems and governmental
regulations and approvals could give rise to delays or cost overruns. For
additional factors which could cause forward looking statements to be
materially different than actual results, see "Business Risks" section of
Annual Report Form 10-K at December 31, 1997.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On March 19, 1998 the plaintiffs filed a motion for class certification of the
April 26,1994, May 10, 1995 and September 26,1995 purported class action
lawsuit ("Poulos/Ahern/Schreier"), as discussed in the Annual Report Form 10 -K
Legal Proceedings. On March 19, 1998 the Magistrate Judge granted defendants
(including the Company) motion seeking to bifurcate discovery into "class" and
"merits" discovery pending a decision on plaintiff's motion for class
certification. The Magistrates order gave the defendants until May 22, 1998 to
complete discovery from the class representatives, and until June 12, 1998, to
file their opposition to the motion for class certification. Plaintiffs' reply
memorandum is due on June 30, 1998.
On July 15, 1997, Yolanda Manuel, the non-custodial parent of Sherrice Iverson,
filed suit in the State of Nevada, in Case No. A375879, identifying herself as
the child's "personal representative". During the early morning hours of May
25,1997, Sherrice Iverson, a seven year-old female, was assaulted and killed in
the women's arcade restroom at Primm Valley Resort & Casino. An eighteen year-
old male has been charged with her murder. The complaint alleges negligence on
the part of the Company and seeks compensatory and punitive damages.
On October 15, 1997, the Company moved to dismiss the complaint and asked, in
the alternative, for partial summary judgment. While the motion was pending,
Manuel filed for letters testamentary regarding Sherrice Iverson on November
12, 1997 in Los Angles, receiving "special Powers" to settle the lawsuit. On
November 25, 1997, other heirs, Leroy Iverson (father) and Harold Jordan
(brother), filed a lawsuit in Department I of the District Court, Clark County,
Nevada. This second compliant was served on March 31, 1998, but has not been
responded to, due to the fact that the plaintiffs have not posted out-of-state
security bonds. On December 3, 1997 Ms. Manuel and the Company entered into a
stipulation that would allow for the withdrawal of the Company's motion to
dismiss in exchange for dismissal of the second claim for relief, pertaining
to "Negligence Per Se", and for the substitution of the correct name of the
Company. An answer to the Manuel complaint was filed on February 3, 1998 with
a cross-claim against the male charged and his companion.
17
<PAGE>
Items 2 through 5. Are not applicable.
Item 6. Exhibits and Reports on Form 8 - K.
(a) Exhibits.
27. Financial Data Schedule as of March 31, 1998.
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: May 8, 1998 By /s/Michael P. Shaunnessy
__________________________
Michael P. Shaunnessy
Chief Accounting Officer
18
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
No. Description Numbered
Pages
_______ ___________________________________________ ____________
27 Financial Data Schedule as of March 31, 1998 20
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Quarterly Form 10-Q as of March 31, 1998, and Annual Report Form 10-K as
of December 31, 1997, Consolidated Financial Statements, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 7333
<SECURITIES> 0
<RECEIVABLES> 773
<ALLOWANCES> 0
<INVENTORY> 1397
<CURRENT-ASSETS> 5739
<PP&E> 485401
<DEPRECIATION> 152420
<TOTAL-ASSETS> 474639
<CURRENT-LIABILITIES> 19406
<BONDS> 220940
0
0
<COMMON> 309
<OTHER-SE> 218005
<TOTAL-LIABILITY-AND-EQUITY> 474639
<SALES> 70451
<TOTAL-REVENUES> 66645
<CGS> 27617
<TOTAL-COSTS> 51807
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5887
<INCOME-PRETAX> 8951
<INCOME-TAX> 3169
<INCOME-CONTINUING> 5782
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5782
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
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