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, 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 0-22494
AMERISTAR CASINOS, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada 88-0304799
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 259, Jackpot, Nevada 89825
(Address of principal executive offices)
(702) 755-6011
(Registrant's telephone number, including area code)
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 of Stock Outstanding at May 10, 1996
Common Stock, $.01 par value 20,360,000 shares
AMERISTAR CASINOS, INC.
Form 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
A. Condensed Consolidated Balance Sheets
at March 31, 1996 (unaudited)
and December 31, 1995 3 - 4
B. Condensed Consolidated Statements of
Income (unaudited) for the three months
ended March 31, 1996 and 1995 5
C. Condensed Consolidated Statements of
Cash Flows (unaudited) for the
three months ended March 31, 1996 and 1995 6
D. Notes to Condensed Consolidated
Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 14
Part II. OTHER INFORMATION 15
SIGNATURE 16
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
March 31, December 31,
1996 1995
---------- ----------
(unaudited)
CURRENT ASSETS:
Cash $ 13,565 $ 14,787
Restricted cash 265 256
Restricted security deposit - 11,511
Receivables, net 983 888
Receivables from affiliates 115 115
Income tax refund receivable 467 311
Inventories 1,570 2,273
Prepaid expenses 2,366 2,467
Deferred income taxes 1,199 1,199
---------- ----------
Total current assets 20,530 33,807
PROPERTY AND EQUIPMENT AND LEASEHOLD
INTERESTS, at cost, less accumulated
depreciation and amortization of
$45,891 and $42,716, respectively 173,075 163,217
DEPOSITS AND OTHER ASSETS 2,788 2,055
PREOPENING COSTS 206 3,141
---------- ----------
Total $ 196,599 $ 202,220
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
---------- ----------
(unaudited)
CURRENT LIABILITIES:
Accounts payable $ 4,742 $ 3,767
Construction contracts payable 2,190 7,838
Accrued liabilities 12,148 10,394
Current obligations under
capitalized leases 474 506
Current maturities of notes
payable and long-term debt 6,375 6,895
---------- ----------
Total current liabilities 25,929 29,400
DEFERRED INCOME TAXES 5,904 5,904
OBLIGATIONS UNDER CAPITALIZED LEASES,
net of current maturities 7,316 7,441
NOTES PAYABLE AND LONG-TERM DEBT,
net of current maturities 92,975 94,428
---------- ----------
Total liabilities 132,124 137,173
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized - 30,000,000 shares
Issued - None - -
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Issued and outstanding -
20,360,000 shares 204 204
Additional paid-in capital 43,043 43,043
Retained earnings 21,228 21,800
---------- ----------
Total stockholders' equity 64,275 65,047
---------- ----------
Total $ 196,599 $ 202,220
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months
Ended March 31,
1996 1995
---- ----
REVENUES:
Casino $ 37,379 $ 23,278
Food and beverage 4,731 4,702
Rooms 1,515 1,683
General store 538 589
Other 1,170 1,416
---------- ----------
45,333 31,668
Less-Promotional allowances 2,427 2,587
---------- ----------
Net revenues 42,906 29,081
---------- ----------
OPERATING EXPENSES:
Casino 17,176 10,525
Food and beverage 3,012 3,041
Rooms 528 582
General store 497 532
Other 1,152 1,121
Selling, general and administrative 7,926 4,947
Business development 423 222
Utilities and maintenance 2,321 1,805
Preopening costs 5,856 -
Depreciation and amortization 3,270 2,263
---------- ----------
42,161 25,038
---------- ----------
INCOME FROM OPERATIONS 745 4,043
OTHER INCOME (EXPENSE):
Interest income 193 59
Interest expense (1,908) (1,271)
Net gain on disposition of assets 63 -
---------- ----------
INCOME (LOSS) BEFORE INCOME TAX PROVISION (907) 2,831
Income tax provision (benefit) (335) 996
---------- ----------
NET INCOME (LOSS) $ (572) $ 1,835
========== ==========
EARNINGS (LOSS) PER SHARE $ (0.03) $ 0.09
========== ==========
AVERAGE SHARES OUTSTANDING 20,360,000 20,360,000
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
AMERISTAR CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended March 31,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (572) $ 1,835
------- --------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,270 2,263
Change in deferred income taxes - 399
Net gain on disposition of assets (63) -
(Increase) decrease in other current assets 700 (217)
Decrease in other non-current assets 2,202 65
(Increase) decrease in income tax receivable (156) 646
Increase (decrease) in other current liabilities 2,729 (1,565)
-------- --------
Total adjustments 8,682 1,591
-------- --------
Net cash provided by operating activities 8,110 3,426
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (12,703) (5,803)
Decrease in construction contracts payable (5,648) (210)
Proceeds from sale of assets 63 -
-------- --------
Net cash used in investing activities: (18,288) (6,013)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt - 9,425
Restricted security deposit 11,511 -
Principal payments of long-term debt
and capital leases (2,555) (11,474)
-------- --------
Net cash provided by (used in)
financing activities: 8,956 (2,049)
-------- --------
Net decrease in cash and cash equivalents (1,222) (4,636)
Cash and cash equivalents at beginning of period 14,787 9,169
-------- --------
Cash and cash equivalents at end of period $ 13,565 $ 4,533
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during the period for interest
(net of amount capitalized) $ 1,731 $ 1,100
Assets purchased with long-term debt $ 313 $ 31
Assets purchased with capital leases $ 107 $ -
The accompanying notes are an integral part of these condensed
consolidated financial statements.
1. -- Principles of consolidation and basis of presentation -
Ameristar Casinos, Inc. ("Ameristar" or "ACI"), through its
wholly owned subsidiaries, owns and operates four gaming and
entertainment properties in Nevada, Mississippi and Iowa. The
Cactus Pete's, Inc. ("CPI") subsidiary owns and operates Cactus
Petes Resort Casino ("Cactus Petes") and The Horseshu Hotel and
Casino (collectively, the "Jackpot Properties"), two casino-hotels
located in Jackpot, Nevada at the Idaho border. Ameristar, through
Ameristar Casino Vicksburg, Inc. ("ACVI"), owns and operates a
riverboat-themed dockside casino ("Vicksburg Casino") and related
land-based facilities (collectively, "Ameristar Vicksburg") in
Vicksburg, Mississippi on a site along the bank of the Mississippi
River near the Interstate 20 bridge. The Ameristar Casino Council
Bluffs, Inc. ("ACCBI") subsidiary owns and operates a cruise
riverboat casino (the "Council Bluffs Casino"), which opened on
January 19, 1996. Construction of ACCBI's land-based facilities in
Council Bluffs, Iowa is expected to be completed in the third
quarter of 1996. The Council Bluffs Casino and related land-based
facilities (collectively, "Ameristar Council Bluffs") are located
near the Nebraska Avenue exit of Interstate 29 south across the
Missouri River from Omaha, Nebraska. In addition, Ameristar Casino
Las Vegas, Inc. ("ACLVI") was created on April 30, 1996 to be the
operating entity for the recently announced acquisition of Gem
Gaming Inc., a Henderson, Nevada, based hotel/casino company
building The Reserve Hotel and Casino at the intersection of
Interstate 515 and Lake Mead Drive. Ameristar, together with its
wholly owned subsidiaries, are collectively referred to herein as
"the Company."
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the condensed consolidated financial
statements do not include all of the disclosures required by
generally accepted accounting principles. However, the
accompanying unaudited condensed consolidated financial statements
do contain all adjustments that, in the opinion of management, are
necessary to present fairly the financial position and the results
of operations for the interim periods included therein. The
interim results reflected in the condensed consolidated financial
statements are not necessarily indicative of results to be expected
for the full fiscal year.
The accompanying condensed 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 fiscal year ended December 31, 1995.
2. -- Reducing revolving credit facility -
On July 5, 1995, the Company entered into a new Revolving
Credit Facility with a syndicate of banks totaling a maximum of
$94.5 million (the "Revolving Credit Facility"). As of March 31,
1996, the Company had drawn $80.0 million on the Revolving Credit
Facility. These borrowings have been used to repay prior
borrowings of $44.8 million and to fund the continued development
of Ameristar Council Bluffs. The remainder of the proceeds of the
Revolving Credit Facility will be used to fund additional advances
from the Company to ACCBI for the construction of the Ameristar
Council Bluffs project and, after completion of Ameristar Council
Bluffs, for the working capital needs of the Company and its
subsidiaries.
3. -- Commitments and contingencies -
Development of Ameristar Council Bluffs is expected to cost
approximately $103 million, which includes the cost of land,
building, and riverboat and equipment. As of March 31, 1996, the
Company had invested approximately $78 million in Ameristar Casino
Council Bluffs, including $18 million on vessel construction.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited)
Ameristar Casinos, Inc. ("Ameristar" or "ACI"), through its
wholly owned subsidiaries, owns and operates four gaming and
entertainment properties in Nevada, Mississippi and Iowa. The
Cactus Pete's, Inc. ("CPI") subsidiary owns and operates Cactus
Petes Resort Casino ("Cactus Petes") and The Horseshu Hotel and
Casino (collectively, the "Jackpot Properties"), two casino-hotels
located in Jackpot, Nevada at the Idaho border. Ameristar, through
Ameristar Casino Vicksburg, Inc. ("ACVI"), owns and operates a
riverboat-themed dockside casino ("Vicksburg Casino") and related
land-based facilities (collectively, "Ameristar Vicksburg") in
Vicksburg, Mississippi on a site along the bank of the Mississippi
River near the Interstate 20 bridge. The Ameristar Casino Council
Bluffs, Inc. ("ACCBI") subsidiary owns and operates a cruise
riverboat casino (the "Council Bluffs Casino"), which opened on
January 19, 1996. Construction of ACCBI's land-based facilities in
Council Bluffs, Iowa is expected to be completed in the third
quarter of 1996. The Council Bluffs Casino and related land-based
facilities (collectively, "Ameristar Council Bluffs") are located
near the Nebraska Avenue exit of Interstate 29 south across the
Missouri River from Omaha, Nebraska. In addition, Ameristar Casino
Las Vegas, Inc. ("ACLVI") was created on April 30, 1996 to be the
operating entity for the recently announced acquisition of Gem
Gaming Inc., a Henderson, Nevada, based hotel/casino company
building The Reserve Hotel and Casino at the intersection of
Interstate 515 and Lake Mead Drive. (See Subsequent Events.)
Ameristar, together with its wholly owned subsidiaries, are
collectively referred to herein as "the Company."
The Company's quarterly and annual operating results may be
affected by competitive pressures, the timing of the commencement
of new gaming operations, the amount of preopening costs incurred
by the Company, construction at existing facilities and general
weather conditions. Consequently, the Company's operating results
for any quarter or year may not be indicative of results to be
expected for future periods.
Summary
The improvement in operating results for 1996 over 1995 (net
of preopening expenses) was primarily due to the opening of the
Council Bluffs Casino in January 1996 and improved operating
margins at Ameristar Vicksburg.
Consolidated net revenues for the first quarter of 1996 were
$42.9 million compared with $29.0 million for the same period in
1995, a 47.5% increase. Income from operations was $6.6 million in
the first quarter of 1996 before preopening expenses and $745,000
after preopening expenses of $5.8 million associated with
the opening of Ameristar Council Bluffs, as compared to income from
operations of $4.0 million in the first quarter of 1995.
Total operating expenses before preopening expenses as a
percentage of net revenue decreased to 84.6% in the first quarter
of 1996 from 86.1% in the same period in 1995. Total operating
expenses including Ameristar Council Bluffs preopening expenses of
$5.8 million, were 98.3% of net revenues for the first quarter of
1996.
Net loss for the quarter ended March 31, 1996 was $572,000.
Excluding the after-tax effect of preopening expenses totaling $3.7
million, net income of $3.1 million was generated in the first
quarter of 1996. Earnings (loss) per share for the first quarter
of 1996 were $.15 before preopening expenses and ($.03) after
preopening expenses compared to $.09 in the first quarter of 1995.
Revenue
The Jackpot Properties produced net revenues of $11.7 million
for the first quarter of 1996, a decrease of $1.3 million or 10.3%
from the first quarter of 1995. Management believes this decrease
was due to adverse weather in Jackpot and southern Idaho during
January and February of 1996.
Ameristar Vicksburg continued to be the market leader in
Warren County, Mississippi in the first quarter of 1996 with an
average market share during the first quarter of 32%, due in part
to aggressive promotional strategies. Net revenues for Ameristar
Vicksburg were $16.3 million for the first quarter of 1996 compared
with $16.0 million for the same quarter in 1995.
Ameristar Council Bluffs, which was open for the last 73 days
of the first quarter of 1996, had net revenues of $14.8 million and
operating income (before preopening expenses) of $3.4 million.
Management believes that the completion of the land-based
facilities at Ameristar Council Bluffs, expected in the third
quarter, will result in a material improvement in ACCBI's gaming
revenues and operating income.
On a consolidated basis, casino revenues increased $14.1
million or 60.6% due primarily to the opening of the Council Bluffs
Casino, partially offset by a decrease at the Jackpot Properties.
Food and beverage revenues remained relatively stable, while rooms
revenue decreased $168,000 or 10.0%, primarily due to the adverse
weather conditions affecting the Jackpot Properties. Other
revenues decreased $246,000 or 17.4% in the first quarter of 1996
compared to the first quarter of 1995 primarily due to a
significant reduction in showroom entertainment revenue at
Ameristar Vicksburg. The Company now utilizes the showroom on
a more strategic basis by opening it for weekend and special events
entertainment rather than having the showroom operating on a full-
time basis as in the first quarter of 1995.
Expenses
Casino expenses increased $6.7 million or 63.2% from 1995 to
1996. This was due primarily to the opening of the Council Bluffs
Casino. Food and beverage expenses decreased 1% in the first
quarter of 1996 compared to the first quarter of 1995 due primarily
to cost containment measures implemented at Ameristar Vicksburg.
For the Jackpot Properties, expenses remained relatively constant
between the 1995 and 1996 first quarters.
Selling, general and administrative expenses increased $3.0
million or 60.2%, utilities and maintenance expenses increased
$515,000 or 28.5% from the first quarter of 1995 to the first
quarter of 1996, and depreciation increased $1.0 million or 44.5%.
Preopening expenses of $5.8 million related to the opening of the
Council Bluffs Casino were expensed in the first quarter of 1996.
All of these increases were related to the opening and operations
of Ameristar Council Bluffs.
Business development costs increased $201,000 or 90.5% in the
first quarter of 1996 compared to the first quarter of 1995. The
Company continues to explore potential gaming opportunities in
other jurisdictions.
Interest expense was $1.9 million, net of capitalized interest
of $389,000 in the first quarter of 1996, an increase of $637,000
or 50.1% as compared to the same period in 1995 due primarily to
increases in debt outstanding related to Ameristar Council Bluffs'
construction. The Company's incremental borrowing rate was 8.5% in
1996 compared to 10.0% in 1995.
The Company's effective federal tax rate on income before
extraordinary loss was 37% in both 1996 and 1995 versus the federal
statutory rate of 35%, due to certain non-deductible expenses.
Liquidity and Capital Resources
The Company's cash flow from operations was $8.1 million for
the quarter ended March 31, 1996 as compared to $3.4 million for
the quarter ended March 31, 1995. The Company had cash of
approximately $13.6 million at March 31, 1996. The Company
historically has funded its daily operations through net cash
provided by operating activities and its significant capital
expenditures through bank debt and other debt financing. The
Company's current assets decreased by approximately $13.7 million
from December 31, 1995 to
March 31, 1996 primarily as a result of continued construction
expenditures at ACCBI of approximately $13.0 million.
The Company, as borrower, and its principal operating
subsidiaries, as guarantors, maintain a Revolving Credit Facility
with First Interstate Bank of Nevada, NA ("FIB") and a syndicate of
banks (the "Revolving Credit Facility"). The maximum principal
available at March 31, 1996 was $94.5 million. However, the
Company may not borrow under the Revolving Credit Facility in
excess of 3.5 times its rolling four quarter EBITDA ("Earnings
before Interest, Taxes, Depreciation and Amortization"). As of
March 31, 1996, 3.5 times the Company's rolling four quarter EBITDA
exceeded the maximum funds available under the Revolving Credit
Facility. The maximum available principal reduces semi-annually
commencing July 1, 1997 on a sliding scale (ranging from $4.7
million to $7.1 million in reductions) with a final principal
payment of $42 million due at maturity on December 31, 2001.
Borrowings under the Revolving Credit Facility bear interest at
a rate based either on LIBOR or on FIB's prime rate, at the
election of the Company, and the ratio of the Company's
consolidated total debt to consolidated cash flow, as measured by
an EBITDA formula. As of March 31, 1996, the Company had three
LIBOR draws outstanding totaling $80.0 million with a current
average interest rate of 8.35 percent per annum.
The Revolving Credit Facility is secured by liens on
substantially all of the real and personal property of the Company
and its subsidiaries. The Revolving Credit Facility binds the
Company to a number of affirmative and negative covenants,
including promises to maintain certain financial ratios within
defined parameters. As of March 31, 1996, the Company was in
compliance with these covenants.
See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 for additional information
relating to the Revolving Credit Facility.
As of March 31, 1996, the Company had drawn $80.0 million on the
Revolving Credit Facility. These borrowings have been used to
repay prior borrowings of $44.8 million and to fund the continued
development of Ameristar Council Bluffs. The remainder of the
proceeds of the Revolving Credit Facility will be used to fund
additional advances from the Company to ACCBI for the construction
of the Ameristar Council Bluffs project and, after completion of
Ameristar Council Bluffs, for the working capital needs of the
Company and its subsidiaries.
The Company's subsidiary, ACCBI, has entered into several other
borrowing arrangements with ACI as guarantor. ACCBI entered into a
preferred ship mortgage with General Electric Credit Corp. on
December 28, 1995 for the sum of $11,511,000. Proceeds from an
equipment loan entered into with FIB on December 12, 1995 for
$7,137,400 were used to finance ACCBI's slot machines, surveillance
equipment and property signage. ACCBI also entered into several
additional equipment financing agreements in 1995 totaling
approximately $0.9 million. ACCBI intends to borrow an additional
$3.4 million in 1996 for equipment. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 for
additional information relating to ACCBI's borrowings.
Capital expenditures in the first quarter of 1996 were $12.7
million compared to approximately $5.8 million in the first quarter
of 1995. The majority of expenditures in 1995 were related to the
construction and development of Ameristar Council Bluffs. The
Company funded these capital expenditures from net cash provided by
operating activities and bank debt, including the Revolving Credit
Facility.
The Company anticipates making additional capital expenditures
of approximately $30.0 million in 1996 for its existing properties
and properties under development, $25 million of which is expected
to be used for the completion of Ameristar Council Bluffs. These
capital expenditure requirements are anticipated to be funded out
of operating cash flow, and purchase money financing and additional
draws on the Revolving Credit Facility. Management believes that
these sources will be sufficient to meet the Company's currently
anticipated capital expenditure and working capital requirements
during 1996, including those in connection with the merger
described below under "Subsequent Event." However, if the Company
undertakes any additional expansion projects in 1996, additional
funds may be required and there can be no assurance that sources of
such funding will be available to the Company on acceptable terms.
Subsequent Event
On April 16, 1996, Ameristar Casinos, Inc. entered into a
letter of intent to merge with privately held Gem Gaming Inc. which
is developing the Reserve Hotel & Casino currently under
construction in the Las Vegas suburb of Henderson-Green Valley.
Subject to the negotiation of a final agreement and the approval of
Ameristar's Board of Directors and shareholders and various
regulatory agencies and lenders. The letter of intent contemplates
that Ameristar will exchange 7.5 million shares of common stock for
The Reserve. The Reserve will be operated as a wholly owned
subsidiary of Ameristar Casinos, Inc. Due to the number of
preconditions beyond the control of the Company, no assurance can
be given that the merger will be completed.
The Reserve, with an African game reserve theme, is located on
a 53-acre site at the southeast corner of Interstate 515 and Lake
Mead Drive between Henderson and Green Valley with Phase I
scheduled to open on October 1, 1996. Phase I will include
approximately 1,000 slot machines, 35 table games, a 225-room hotel
and a variety of diverse dining and retail options. With the
merger, the Reserve will begin planning Phase II, which will expand
the development to include a total of approximately 500 hotel
rooms, 50,000 square feet of casino space and a 500-seat buffet.
The master plan for the project includes a total of 1,500 hotel
rooms, 2000 slot machines, 75 table games, additional restaurants,
meeting and convention facilities and other recreational amenities.
The development costs of Phase I of the Reserve are anticipated
to be paid for primarily through borrowings by Gem Gaming, Inc. and
its stockholder's equity. The development costs of Phase II will
be provided by Ameristar, for which various financing alternatives
are under consideration. No assurance can be given that sources of
such funding will be available to the Company on acceptable terms.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
See additional information relating to legal proceedings
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
Items 2., 3., 4. and 5. of Part II are not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
A. The following exhibits are filed as a part of this
report:
10.1 Letter of Intent between Ameristar Casinos,
Inc. and Gem Gaming, Inc. dated April 16,
1996.
27 Financial Data Schedule
B. Reports on Form 8-K
None
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.
AMERISTAR CASINOS, INC.
Registrant
Date: May 10, 1996 /s/ Thomas Steinbauer
Thomas Steinbauer
Sr. Vice President
Chief Financial Officer
AMERISTAR/GEM
LETTER OF INTENT
April 16, 1996
This letter sets forth the expression of the parties'
interest and intent to arrive at proposed terms of an eventual
definitive agreement (the "MERGER AGREEMENT") pursuant to which
Ameristar Casinos, Inc., a Nevada corporation ("AMERISTAR"), and
Gem Gaming, Inc., a Nevada corporation ("GEM"), would enter the
transactions summarized herein. The terms set forth herein may
or may not become a part of the Merger Agreement, and in
particular, except as set forth in Section I below, it is not
intended to be a binding contract or to impose any obligations
whatsoever on either party other than to bargain in good faith to
obtain a Merger Agreement. The parties do not intend to be bound
by any such Merger Agreement until both agree to and sign the
Merger Agreement. This paragraph supersedes all other
conflicting language herein.
A. TRANSACTION SUMMARY. Subject to satisfaction of the
conditions set forth herein, Ameristar and Gem essentially will
combine their businesses through the following steps: Ameristar
will form a new subsidiary ("NEWGG"); NewGG will merge with a
newly formed subsidiary of Gem which shall include all assets and
liabilities pertaining to the real property and casino
development project presently under construction at Interstate
515 and Lake Mead Drive in Henderson, Nevada (collectively,
including all planned phases, the "THE RESERVE") with NewGG
surviving the merger, excluding however certain assets and
liabilities unrelated to The Reserve to be identified by the
parties prior to execution of the Merger Agreement (the "Excluded
Assets" and the "Excluded Liabilities"); Ameristar and/or NewGG
also shall enter into an arrangement with Gem Air, Inc. (an
affiliate of Gem) to retain the use of Gem Air's jet aircraft and
hanger facility in Las Vegas, Nevada; as consideration in the
merger, NewGG will provide to Gem an amount of Ameristar common
stock specified below, the intent being that the exchange will
qualify as a non-taxable reorganization; certain officers of Gem
will enter into long-term employment agreements with Ameristar,
the board of directors of Ameristar shall be increased by one
position, and Gem shall have the right to appoint one director to
the board of directors of Ameristar; and Ameristar's corporate
headquarters will be relocated to Las Vegas, Nevada. The form of
the transactions may be modified for tax or other regulatory
purposes.
B. AMERISTAR MERGER STOCK.
(1) AMOUNT. At the closing (as defined in the Merger
Agreement), Gem shall receive, and Ameristar shall cause to be
issued, an amount of Ameristar common stock equal to 7,500,000
shares (the "AMERISTAR MERGER STOCK"). Gem represents and
warrants that Gem and each of its shareholders is an "accredited
investor" as defined in Rule 501(a) of the Securities and
Exchange Commission.
(2) REGISTRATION RIGHTS. The Ameristar Merger Stock will
be unregistered, restricted securities, but the holders will have
the following registration rights:
(a) DEMAND REGISTRATION RIGHTS.
(i) At any time after the date which falls 6 months
following the closing, the holders of more than 50% of the
Ameristar Merger Stock may request that Ameristar effect a
registration of such stock. Ameristar thereafter shall notify
all holders of Ameristar Merger Stock of the requested
registration. Holders then shall have 15 days to notify
Ameristar in writing of the number (if any) of shares of
Ameristar Merger Stock which they hold that they would like to be
registered in connection with the demand registration. Ameristar
thereafter shall use its commercially reasonable efforts to cause
the Ameristar Merger Stock that is requested to be registered to
be so registered; provided, however, that Ameristar shall not be
required to cause such a registration if said holders do not
indicate an intention to register stock having a market value of
at least $2,000,000, and provided further that the maximum number
of shares that Ameristar shall be required to register pursuant
to these demand provisions shall be 1,000,000 (if an aggregate
amount greater than this number is requested to be registered and
Ameristar is unwilling to register the additional shares, then
the requested shares shall be proportionally abated as necessary
to fall with in the 1,000,000 maximum). Further, if Ameristar
certifies that a filing of a registration statement would be
materially detrimental to any plan by Ameristar to engage in any
material transaction, filing may be delayed for not more than 90
days. Ameristar shall not be obligated to effect more than one
registration under these demand provisions.
(ii) If any demand registration is an underwritten offering
and, in the opinion of the managing underwriters, the number of
shares of Ameristar Merger Stock requested to be included in such
registration exceeds the number of shares which can be sold in
such registration in an orderly manner within an acceptable price
range, then the number of shares of Ameristar Merger Stock to be
registered shall be proportionally abated to the aggregate number
of shares deemed appropriate for registration by the managing
underwriters.
(b) PIGGYBACK REGISTRATION RIGHTS. The holders of
Ameristar Merger Stock shall have unlimited "piggyback"
registration rights on all appropriate registrations of
Ameristar, subject to the right of Ameristar and its
underwriters, in view of marketing factors, to reduce the number
of shares of Ameristar Merger Stock included in an underwritten
offering of such stock (in which case the number of shares
registered for each holder of Ameristar Merger Stock requesting
inclusion in the registration shall be proportionally abated).
The parties acknowledge that Craig H. Neilsen, individually and
in his capacity as trustee of the Ray Neilsen Testamentary Trust,
has contracts with Ameristar providing that his "piggyback"
registration rights shall have a priority not to be reduced in
the event an underwriter determines a reduction is necessary
because of marketing factors, and that such contracts will have
to be amended to provide for a pro-rata reduction of the shares
held by Craig H. Neilsen with the holders of Ameristar Merger
Stock.
(c) REGISTRATION EXPENSES. The registration expenses
(exclusive of underwriting discounts and commissions, fees of
more than one special counsel to the selling shareholders and
expenses of any demand withdrawn by the selling shareholders) of
any registration permitted pursuant to the above provisions shall
be borne by Ameristar.
(3) BOARD REPRESENTATION. Ameristar's board of directors
shall increase by one and Steve Rebeil shall be nominated to fill
that position, effective as of the closing of the merger
transactions.
(4) REDEMPTION IN THE EVENT OF FAILURE OF HOLDER TO OBTAIN
HOLDER QUALIFICATION. The parties acknowledge that it is
critical to the ongoing and prospective business of Ameristar
that Ameristar and its subsidiaries retain the right to operate
in the gaming industry both in the states where Ameristar or its
subsidiaries currently operate and in any jurisdictions within
which Ameristar or a subsidiary may determine in the future that
it is commercially desirable to operate. Various gaming laws
require holders of equity interests in an entity holding or
seeking a gaming license to "qualify", "register", "be found
suitable" or otherwise obtain the approval of state gaming
authorities (hereinafter referred to as "HOLDER QUALIFICATION")
in order for the license holder or applicant to retain and/or
obtain the desired license (hereinafter referred to as the
"ENTITY LICENSE"). Accordingly, if in order for Ameristar or a
subsidiary to retain or obtain, as applicable, an Entity License,
it is necessary for a holder of Ameristar Merger Stock to achieve
Holder Qualification, such holder shall promptly file all
necessary applications with the applicable regulatory authorities
and will cooperate fully with all investigations by such
authorities. If a holder cannot, for any reason, achieve Holder
Qualification or if a regulatory authority directs Ameristar or a
subsidiary to cease doing business with or associate with a
holder, then
(i) Ameristar shall have the right to deliver a written
notice to the holder requiring the holder to divest, within 120
days, its holdings of Ameristar Merger Stock, to the extent
necessary to permit Ameristar or its subsidiary to obtain the
Entity License;
(ii) Upon request from the holder, Ameristar shall cooperate
with such divestiture by including the amount of Ameristar Merger
Stock required to be sold in a secondary offer to be undertaken
during the 120-day period at the expense of the Holder;
(iii) Notwithstanding clauses (i) and (ii) above, if the
regulatory authorities require divesture sooner than the time
periods contemplated in clauses (i) and (ii) above in order for
Ameristar to obtain or retain the Entity License, then, with
appropriate regulatory approvals, the holder shall provide a
voting trust agreement until the secondary offering can be
completed, If such an arrangement is not approved by such
authorities, then Ameristar shall have the right to redeem the
holder's Ameristar Merger Stock (to the extent reasonably
determined by Ameristar as necessary to achieve the Entity
License) at a price equal to 80% of the then current price of
Ameristar common stock. Said redemption price shall be paid in
cash in full by Ameristar pursuant to a schedule reasonably
determined by Ameristar, with the full cash redemption amount
required to be paid by Ameristar within one year following the
redemption. The foregoing discount has been determined in order
to compensate Ameristar in part for the additional cost, delay
and risk to which Ameristar's business will be exposed as a
consequence of the holder's failure to obtain Holder
Qualification.
C. EMPLOYMENT AGREEMENTS. Ameristar or NewGG shall offer long-
term employment contracts to the following senior officers of Gem
on terms mutually agreeable
to Ameristar or NewGG and the individual officers: Steven W.
Rebeil; Dominic J. Magliarditi; Michael V. Villamor; and Gregg P.
Schatzman.
D. OPERATIONS PENDING CLOSING. Pending the closing of the
merger transactions, Ameristar and Gem shall continue to operate
their businesses as presently being conducted and will seek to
preserve all material businesses and assets. In particular, Gem
shall not make any material changes in the design, budget,
contracts, permits, licenses or other rights or obligations of
Gem applicable to The Reserve without obtaining Ameristar's
consent, which shall not be unreasonably withheld. Gem shall
construct Phase I (as hereinafter defined) in accordance with all
plans and specifications (including, without limitation, all
plans of architects, civil engineers, lighting consultants and
interior designers) in effect as of the date hereof or as may
hereafter be approved by Gem and Ameristar. Any items not
currently included on the plans and specifications but necessary
for a total turnkey project shall be furnished to Ameristar for
its approval, which shall not be unreasonably withheld. With
respect to the interior finishes of Phase I, Gem shall consult
with Ameristar and achieve Ameristar's approval of the design and
finishes, which consent shall not be unreasonably withheld. Gem
covenants and agrees that it shall contract for and shall
construct Phase I to a standard equal to or better than that
employed in the Boulder Station Casino in Las Vegas, Nevada.
Further, Ameristar and Gem shall cooperate together in good faith
to obtain, as expeditiously as possible, all approvals required
from any governmental officials (including without limitation any
authorities involved in regulating gaming activities in Nevada,
Mississippi or Iowa) in order to assure that
(1) NewGG will be able to operate The Reserve as a casino,
and (2) the consummation of the merger transactions shall
not interfere with the continued operation by Ameristar (or, as
applicable, its subsidiaries) of the other businesses and assets
which it (or they) may possess as of the closing of the merger
transactions (including the existing businesses of Ameristar and
its subsidiaries). In this regard, Gem shall continue to pursue
issuance of all appropriate licenses for operation of The
Reserve, and Gem shall cooperate with NewGG in attempting to
amend, to the extent possible, Gem's existing gaming application
(scheduled for hearing in August) so as to permit the concurrent
consideration by the Nevada gaming authorities of a request to
approve the proposed merger transactions and permit the issuance
of the license for The Reserve to NewGG. In no event, however,
shall such amendment be made if it causes a delay in the
scheduled hearing of Gem's application with the Nevada gaming
authorities.
E. CLOSING CONDITIONS. The merger shall be subject to
customary closing conditions, including the following:
(1) CERTAIN APPROVALS. Ameristar and Gem shall be
satisfied that the following approvals shall have been received:
(a) The transaction shall have received the requisite
approvals of the board of directors of Ameristar and the
shareholders of Ameristar and Gem. Gem hereby represents to
Ameristar that the transactions contemplated by this letter have
been preliminarily approved by Gem's board of directors and
shareholders.
(b) The transaction shall have received all necessary
approvals from creditors of Ameristar or Gem.
(c) Ameristar and Gem shall have received the governmental
approvals contemplated by Section D above, except that the
approval of the
contemplated transactions by the Mississippi and Iowa
gaming authorities shall not be a condition to closing. If not
obtained by closing, then the parties shall seek to obtain such
approvals as expeditiously as commercially possible following
closing.
(d) Ameristar and Gem shall have complied with the
requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder (including, if appropriate, the filing of a pre-merger
notification report and the expiration of any applicable waiting
period).
(2) ADDITIONAL CONDITIONS FOR THE BENEFIT OF GEM.
(a) Gem shall have received opinions of counsel to its
satisfaction confirming such matters as are customarily addressed
to acquired entities in merger transactions of the type proposed.
(b) Ameristar shall have entered into Registration Rights
Agreements reasonably appropriate to memorialize the registration
rights contemplated in Section B above.
(3) ADDITIONAL CONDITIONS FOR THE BENEFIT OF AMERISTAR.
(a) Ameristar and NewGG shall have received opinions of
counsel to their satisfaction confirming such matters as are
customarily addressed to acquiring entities in merger
transactions of the type proposed.
(b) NewGG shall have received appropriate conveyancing
documents vesting title to the assets being acquired (including
The Reserve), subject only to title exceptions previously
approved by Ameristar.
(c) NewGG and Gem or its affiliates shall have entered into
agreements satisfactory to NewGG permitting NewGG and Ameristar
to use the jet and hanger owned by Gem Air.
(d) The parties acknowledge that Ameristar has not yet had
an opportunity to undertake due diligence investigations with
respect to the assets and liabilities of Gem. Accordingly,
pending the execution of the Merger Agreement, Gem shall make
available to Ameristar all documents and materials from time to
time requested by Ameristar in connection with such diligence,
including without limitation the documents listed on Exhibit A
attached hereto (provided that Gem shall not be required to
provide such documents or materials to Ameristar to the extent
that they pertain solely to the Excluded Assets or the Excluded
Liabilities unrelated to The Reserve). Further, the closing of
the merger transactions shall be subject to Ameristar's
satisfaction with respect to the value, condition and status of
the assets and liabilities being acquired. Such satisfaction
shall include without limitation confirmation that, with respect
to The Reserve:
(i) Gem holds fee title to The Reserve, subject only to a
deed of trust in favor of Bank of America securing $25,000,000
Construction and Reducing Revolving Credit Facility; and other
title exceptions reviewed and not objected to by Ameristar.
(ii) Gem has all permits, licenses and approvals
necessary or appropriate for the current stage of construction,
and there shall be no reason to believe, as of the closing, that
the owner of The Reserve will not be able to obtain any other
permits, licenses or approvals necessary or appropriate to open
and operate The Reserve;
(iii) Gem has construction contracts with an acceptable
contractor (and performance bonds and/or guaranties deemed
appropriate by Ameristar) and contracts with such other parties
that, collectively, provide for completion of Phase I of The
Reserve (consisting of a ten story first-class building with
casino facilities, restaurants, and 225 hotel guest rooms) as a
total turnkey project by October 1, 1996, (of which no more than
$25,000,000 of such costs shall be indebtedness);
(iv) Gem shall have obtained and entered into contracts
pertinent to the operation of The Reserve subsequent to
completion of construction (to the extent commercially
appropriate for the stage of construction as of the closing);
(v) There shall be no defaults under the above financing,
permits, licenses and contracts, and all consents necessary in
connection therewith for the consummation of the merger
transactions shall have been obtained; and
(vi) the construction of The Reserve shall be proceeding in
a lien free and commercially appropriate manner and shall be
likely to be completed by the date and within the budget set
forth in clause (iii) above;
(vii) The Reserve is (and upon completion of construction
will continue to be) free of any liability under state or federal
laws pertaining to health, safety or the environment.
(e) Ameristar and NewGG shall have received indemnification
agreements from Gem and Steve Rebeil in form and substance
reasonably satisfactory to Ameristar assuring Ameristar and
NewGG that the materials provided to Ameristar or NewGG by Gem in
connection with their analysis of the proposed transactions is
accurate and complete in all material respects and does not fail
to disclose a material fact relating to Gem or its business,
assets or liabilities, and indemnifying Ameristar or NewGG
against any loss, claim, liability or obligation as a consequence
of the inaccuracy of such assurance. Such indemnification shall
survive the closing for a period of 3 years.
(f) Steve Rebeil shall have entered into an agreement
pursuant to which he shall convey to Ameristar, free and clear of
any claims of any other persons or entities, a number of shares
of Ameristar Merger Stock calculated in accordance with Exhibit B
attached hereto (the "WESTERN MARYLAND RECAPTURE SHARES") in the
event that:
(i) On or before December 31, 1997, the state legislature
for the State of Maryland, adopts legislation legalizing casino
gambling;
(ii) Such legislation shall have become law within
a reasonable time after passage by the legislature (including,
without limitation, such time as may be necessary to override a
veto by the Governor);
(iii) Ameristar, NewGG or another affiliate is awarded a
license to operate a casino in Allegany or any contiguous county
within Maryland (such area referred to herein as "WESTERN
MARYLAND") no later than 30 days after the award of any such a
license to any other unaffiliated party with respect to another
casino in Western Maryland; and
(iv) Ameristar, NewGG or another affiliate commences
gaming operations no later than two years following the award of
a license to operate a casino in Western Maryland; provided,
however, that such period can be extended by force majeure
circumstances.
This obligation shall be secured by a pledge
of 500,000 of the shares of the Ameristar Merger Stock received
by Gem or Steve Rebeil (in the event Gem is dissolved or
distributes the Ameristar Merger Stock to its shareholders) in
connection with the merger transactions. The documentation shall
obligate Gem and/or Steve Rebeil to satisfy the obligation by
conveying the Western Maryland Recapture Shares upon demand
following Ameristar's calculation of the Western Maryland
Recapture Shares in accordance with Exhibit B. In the event that
the obligation of Gem and/or Steve Rebeil to convey Western
Maryland Recapture Shares exceeds the 500,000 pledged hereunder,
Gem or Rebeil may, in lieu of conveying such difference to
Ameristar, pay to Ameristar in cash an amount equal to such
excess times the average of the mean between the high and low
prices on the NASDAQ stock exchange for the ten trading days
before the date the calculation described in Exhibit B is made.
Notwithstanding the foregoing, Gem's and/or Steve Rebeil's
obligation to convey the Western Maryland Recapture Shares or
cash pursuant to said agreement shall expire if Ameristar, NewGG
or another affiliate has not opened a casino in Western Maryland
to the public for business on or before December 31, 2000.
(g) Gem and its officers, directors and shareholders shall
have provided all information required by Ameristar or its
subsidiaries for completion of all proxy statements, registration
statements, licensing applications and similar documents, which
shall be true, correct and complete in all material respects.
(4) REPRESENTATIONS AND WARRANTIES. The Merger Agreement
also shall include standard representations and warranties,
including a representation and warranty by each party that it has
not engaged or employed any broker, finder or other person or
entity or incurred any liability for any brokerage or finder's
fees or commissions in connection with the contemplated
transactions.
F. HEADQUARTERS. Following the consummation of the merger,
Ameristar shall relocate its corporate headquarters to Las Vegas,
Nevada.
F. MERGER AGREEMENT; CLOSING. The parties shall endeavor to
negotiate in good faith and execute, on or before May 15, 1996, a
definitive Merger Agreement to implement this letter of intent.
The Merger Agreement shall contain other customary terms and
conditions for a transaction of the nature proposed and shall
provide for appropriate remedies in the event of a breach
(including
specific performance). The Merger Agreement shall call for the
merger to be effected by September 1, 1996, subject to extension
from time to time as may be agreed by Ameristar and Gem, which
agreement cannot be unreasonably withheld, if the closing
conditions have not been satisfied (provided that no such
extension shall extend beyond March 31, 1997).
H. PRESS RELATIONS. Neither party shall make any press release
or other public disclosure of this letter of intent or the
transactions contemplated hereby except with the prior approval
of the other party. The parties agree to cooperate with each
other and coordinate all such press releases and other
announcements.
I. LETTER OF INTENT. As noted in the introductory paragraph to
this letter, this document is intended as a letter of intent, and
not as a binding agreement. Nonetheless, the parties agree that
during the time period set forth in Section G above, they shall
negotiate in good faith to reach a definitive Merger Agreement
substantially consistent with the terms set forth herein; during
the period of such negotiations, they shall abide by the
covenants set forth in Sections D, E(3)(d), G, H and J of this
letter, and they further shall refrain from entertaining offers
from, negotiating with, or entering into any agreement with any
other persons or entities which would materially interfere with
the transactions contemplated hereby, and if the parties have
not entered into a Merger Agreement by the end of the time period
set forth in Section G, then either party, provided that it has
negotiated in good faith prior thereto, shall have the right to
terminate this letter of intent and the parties' obligations
hereunder.
J. CONFIDENTIALITY. The parties have entered into reciprocal
confidentiality agreements dated as of March 21, 1996, which
shall remain in full force and effect.
K. EXPANSION TO PHASE II. Upon signing of this Letter of
Intent Gem shall immediately begin the architectural drawings for
completion of Phase II of The Reserve. Ameristar shall have the
right to approve all such drawings and designs and the scope of
the work undertaken. The Merger Agreement shall provide that
Ameristar and Gem shall develop a budget for such work, which
budget shall be approved by both parties, and that Ameristar
shall loan to Gem such amounts as reflected on that budget as may
reasonably be needed to pay for such expenses, and that if the
merger transactions described herein do not close for any reason
that such amounts shall be repaid 90 days after the Merger
Agreement is terminated together with interest at the same rate
charged to Ameristar under that certain Credit Agreement between
Ameristar and its lenders, dated as of June 1, 1995.
If the foregoing is acceptable to you, please sign and date
a copy of this letter in the place indicated below and return it
by fax to Ameristar, (208) 733-2580, Attn: Brian Katz by 11:59
p.m. on April 16, 1996. The original should be sent by overnight
courier to arrive at Ameristar Casinos, Inc., 550 Blue Lakes
Blvd. North, Twin Falls, Idaho, by 11:00 a.m. on the following
business day.
Very truly yours,
/s/ Craig H. Neilsen
Craig H. Neilsen, President
On this 16th day of April, 1996 Craig H. Neilsen directed Connie
Wilson, in his presence as well as our own, to sign the foregoing
document as "Craig H. Neilsen". Upon viewing the signature as
signed by Connie Wilson, and in our presence, Craig H. Neilsen
declared to us that he adopted it as his own signature.
/s/ Brian E. Katz
Witness
/s/ Thomas Steinbauer
Witness
STATE OF IDAHO )
: ss.
COUNTY OF TWIN FALLS )
I, J. Diane Sparks, Notary Public in and for said county and
state, do hereby certify that Craig H. Neilsen personally
appeared before me and is known or identified to me to be the
President of Ameristar Casinos, Inc., the corporation that
executed the within instrument or the person who executed the
instrument on behalf of said corporation. Craig H. Neilsen, who
being unable due to physical incapacity to sign his name or offer
his mark, did direct Connie Wilson, in his presence, as well as
my own, to sign his name to the foregoing document. Craig H.
Neilsen, after viewing his name as signed by Connie Wilson,
thereupon adopted it as his own by acknowledging to me his
intention to so adopt as if he had personally executed the same
on behalf of said corporation, and further acknowledged to me
that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal this 16 day of April, 1996.
/s/ J. Diane Sparks
Notary Public
Residing at:Twin Falls, Idaho
My Commission Expires: 5/15/99
Reviewed and approved.
Date: April 16, 1996 Gem Gaming, Inc.
By:/s/ Steven W. Rebeil
Steven W. Rebeil, Chairman and CEO
REQUIRED INITIAL DILIGENCE MATERIALS
1 Corporate Records:
1.1 The charter documents of Gem and of all direct or
indirect subsidiary(ies) of Gem, if any ("Subsidiary(ies)").
1.2 The bylaws of Gem and any Subsidiary(ies), each as
currently in effect, and any and all amendments thereto since
each such company's inception.
1.3 Minutes of all meetings and all actions by unanimous
written consent of the Board of Directors, any committees of the
Board of Directors, and shareholders of Gem or any
Subsidiary(ies) since each such company's inception, and any
shareholders' agreements, option agreements, warrant agreements,
or other agreements affecting the ownership of stock.
1.4 All quarterly and annual reports and any other
communications to shareholders of Gem or any Subsidiary(ies)
since each such company's inception.
1.5 All press releases issued by Gem or any Subsidiary(ies)
since each such company's inception.
1.6 Stock books of Gem and any Subsidiary(ies).
1.7 A list of all states where Gem is qualified to do
business or is doing business.
2 Governmental Regulations and Filings:
2.1 All correspondence with, reports of or to, filings
with, or other material information with respect to any
regulatory body(ies) which regulate a material portion of the
business of Gem or any Subsidiary(ies) since each such company's
inception (including without limitation tax returns).
2.2 Any private placement memoranda prepared and used by
Gem or any Subsidiary(ies) since each such company's inception.
2.3 All material governmental permits, licenses, etc. of
Gem and any Subsidiary(ies).
3 Financial Statements.
3.1 Balance sheets prepared in conformity with generally
accepted accounting principles consistently applied and in
compliance with Regulation S-X as of March 31, 1996 and as of the
last day of each of the three preceding calendar years for each
of Gem and the Subsidiary(ies), listing all of the material
assets and liabilities of such companies as of such days.
3.2 Statements of Profit and Loss prepared in conformity
with generally accepted accounting principles consistently
applied for the quarter ended March 31, 1996 and for each of the
three preceding calendar years for each of Gem and the
Subsidiary(ies).
3.3 Statements of Changes in Financial Position prepared in
conformity with generally accepted accounting principles
consistently applied for the quarter ended March 31, 1996 and for
each of the three preceding calendar years for each of Gem and
the Subsidiary(ies).
4 Financings:
4.1 All documents and agreements evidencing borrowings or
available borrowings in excess of $100,000, whether secured or
unsecured, by Gem or any Subsidiary(ies), including loan and
credit agreements, promissory notes and other evidence of
indebtedness and guarantees.
4.2 All documents and agreements evidencing other material
financing arrangements, including sale and lease-back
arrangements, installment purchases, etc., of Gem or any
Subsidiary(ies).
4.3 All correspondence with lenders for the past three
years, including all compliance reports submitted by Gem any
Subsidiary(ies) or any of such companies' independent public
accountants.
5 Other Material Agreements:
5.1 All joint venture and partnership agreements to which
Gem or any Subsidiary(ies) is a party.
5.2 All material agreements encumbering real or personal
property owned by Gem or any Subsidiary(ies), including
mortgages, deeds of trust and security agreements.
5.3 All significant leases of real property and all leases
of any substantial amount of personal property to which Gem or
any Subsidiary(ies) is a party, either as lessor or lessee.
5.4 Forms of all material rental, warranty and service
agreements of Gem or any Subsidiary(ies).
5.5 All material licensing agreements, franchises and
conditional sales contracts to which Gem or any Subsidiary(ies)
is a party.
5.6 All material supply or requirements contracts to which
Gem or any Subsidiary(ies) is a party.
5.7 Any title insurance policies for material properties
owned or leased by Gem or any Subsidiary(ies).
5.8 All material collective bargaining agreements,
employment agreements and material consulting agreements to which
Gem or any Subsidiary(ies) is a party.
5.9 All significant documents relating to any major
acquisitions or dispositions by Gem or any Subsidiary(ies).
5.10 All contracts or agreements with or pertaining to Gem
or any Subsidiary(ies) and to which directors, officers or
shareholders of Gem or any Subsidiary(ies) are parties.
5.11 Any documents relating to any other transactions
between Gem or any Subsidiary(ies) and any director, officer or
shareholder of Gem or any Subsidiary(ies).
5.12 All documents pertaining to any receivables from or
payables to directors, officers or shareholders of Gem or any
Subsidiary(ies).
5.13 A schedule of all material patents, patent
applications, trademarks, service marks, trade names, brands and
copyrights which relate to the operations or names of Gem or any
Subsidiary(ies), whether or not held by Gem or any
Subsidiary(ies).
6 Real Property Documents: To the extent not covered by the
above,
6.1 All deeds, options, easements, leases and other
agreements or instruments providing Gem or Subsidiary(ies) with
interests in The Reserve.
6.2 All construction, architectural, engineering and
surveyor contracts concerning The Reserve and all material
correspondence and reports related to The Reserve, and all
correspondence and reports related to The Reserve and all
biological, soils, water and other environmental reports
pertaining to The Reserve or (to the extent in the possession of
Gem or any Subsidiary(ies), or known by Gem or Subsidiary(ies) to
be material to The Reserve) any nearby property.
6.3 All preliminary architectural and building plans for
all new buildings, parking lots and other improvements to be
located on any properties of Gem or any subsidiaries.
6.4 All preliminary engineer grading plans, irrigation
system plans, and all utility installation plans showing the
water, gas, electric, irrigation, sewer and telephone service
grid throughout The Reserve or any other properties of Gem or any
Subsidiaries.
6.5 All agreements with any governmental agency regarding
the design, construction, operation or use of any improvements
located on or to be located on The Reserve or any other
properties of Gem or any Subsidiaries.
6.6 All documents relating to land use permits,
entitlements or variances obtained from any governmental agency
including any major or minor use permits, conditional use
permits, zoning variances or any other conditions of approval for
the design, construction or operation of improvements located on
or to be located on The Reserve or any other properties of Gem or
any Subsidiaries.
6.7 All documents relating to actual or alleged
inconsistencies between current activities or plans concerning
The Reserve or any other properties of Gem or any Subsidiaries
and any applicable governmental growth management plans.
6.8 All correspondence with any governmental agency
concerning the use and development of The Reserve or any other
properties of Gem or any Subsidiaries and any applicable
governmental growth management plans.
6.9 All connection and service agreements with companies
providing utilities, including gas, electric, sewer, water and
telephone to The Reserve or any other properties of Gem or any
Subsidiaries and any applicable governmental growth management
plans.
6.10 All correspondence with local water and sanitation
districts concerning The Reserve or any other properties of Gem
or any Subsidiaries and any applicable governmental growth
management plans or any subdivision thereof.
6.11 All documents relating to compliance with or violation
of state and federal environmental laws and laws governing the
generation, storage or use of hazardous substances, and all
environmental analyses or reports prepared with respect to The
Reserve or any other properties of Gem or any Subsidiaries.
6.12 Any notices of condemnation or other documents relating
to the exercise of the power of eminent domain pertaining in any
way to The Reserve or any other properties of Gem or any
Subsidiaries.
6.13 Any special assessments for road, sewers or water mains
and like items pertaining in any way to The Reserve or any other
properties of Gem or any Subsidiaries.
6.14 All real property tax statements and use/occupancy tax
statements and all supplemental assessments for the past five
years pertaining in any way to The Reserve or any other
properties of Gem or any Subsidiaries.
6.15 All unrecorded licenses, easements or other use
agreements related to The Reserve or any other properties of Gem
or any Subsidiaries.
7 Miscellaneous:
7.1 Documents representing any material bonus, retirement,
profit sharing, incentive compensation, pension and other
employee benefit plans or agreements of Gem or any
Subsidiary(ies).
7.2 A schedule of all suits, actions, litigations,
administrative proceedings or other governmental investigations
or inquiries, pending or threatened, affecting businesses or
operations of Gem or any Subsidiary(ies), excluding non-
governmental claims involving a claim for monetary damages only
that do not exceed $10,000 individually or $50,000 in the
aggregate.
7.3 All letters from attorneys of Gem or any
Subsidiary(ies) to such companies' respective independent public
accountants in the past three years.
7.4 All letters from Gem or any Subsidiary(ies) to such
companies' respective independent public accountants in the past
three years regarding certain representations requested by such
independent public accountants in connection with their audit of
Gem or any Subsidiary(ies).
7.5 All reports from the auditors of Gem or any
Subsidiary(ies) to Gem or any Subsidiary(ies), respectively, for
the past three years.
7.6 All consent decrees, judgments, other decrees or
orders, settlement agreements and other agreements to which Gem
or any Subsidiary(ies) is a party or is bound, requiring or
prohibiting any future activities.
7.7 Recent analyses of Gem or any Subsidiary(ies) prepared
by investment bankers, engineers, management consultants,
accountants or others, including marketing studies, credit
reports and other types of reports, financial or otherwise.
7.8 A copy of all insurance policies insuring the property
or assets of Gem or any Subsidiary(ies) or insuring Gem or any
Subsidiary(ies) against claims for liability.
7.9 A schedule of all employees of Gem and their
compensation levels.
7.10 A complete description of the airplane owned by Gem Air
and a copy of all licenses, permits, and inspection reports
pertaining to such airplane and such other documents as Ameristar
may request.
7.11 Any other documents or information which, in your
judgment, are significant with respect to any portion of the
business of Gem or any Subsidiary(ies) or which should be
considered and reviewed in making disclosures regarding the
business and financial condition of Gem or any Subsidiary(ies) to
prospective investors.
Exhibit B
Ameristar shall calculate the "Western Maryland Recapture Shares"
as follows:
(1) First, Ameristar shall calculate
(a) the "ADJUSTED AMERISTAR MERGER SHARES" by adjusting the
initial 7,500,000 shares of Ameristar Merger Stock as appropriate
to reflect stock splits, reverse stock splits and the like from
time to time; and
(b) The "ADJUSTED WESTERN MARYLAND RECAPTURE CAP" by
adjusting 1,000,000 shares as appropriate to reflect stock
splits, reverse stock splits and the like from time to time.
(2) Next, Ameristar shall calculate the amount of its
consolidated net income attributable to Western Maryland
operations (the "WESTERN MARYLAND NET INCOME") for the first full
12-month period, ending at the end of a calendar quarter (i.e.,
end of March, June, September or December), that follows the
opening to the public of a permanent casino facility in Western
Maryland by Ameristar or an affiliate in Maryland (the "WESTERN
MARYLAND MEASUREMENT PERIOD"). For purposes of this calculation,
expenses of Ameristar and its affiliates that are not reasonably
attributable to a particular geographic location (i.e., corporate
overhead) shall be allocated to particular geographic locations
based upon the proportionate revenues generated during the
Western Maryland Measurement Period by the various locations.
(3) Next, Ameristar:
(a) shall divide Ameristar's total consolidated net income
during the Western Maryland Measurement Period by the total
outstanding shares of common stock of the Company as of the end
of the Western Maryland Measurement Period. This figure shall be
referred to as the "AMERISTAR EARNINGS/SHARE"); and
(b) shall divide the Western Maryland Net Income by the
total outstanding shares of common stock of the Company as of the
end of the Western Maryland Measurement Period. This figure
shall be referred to as the "WESTERN MARYLAND EARNINGS/SHARE").
(4) Next, Ameristar shall determine the "AMERISTAR
EARNINGS/SHARE MULTIPLE"by dividing the average closing price of
Ameristar common stock during the last 10 trading days within the
Western Maryland Measurement Period by the Ameristar
Earnings/Share.
(5) Next, Ameristar shall calculate the "WESTERN MARYLAND
VALUE CONTRIBUTION/SHARE" by multiplying the Western Maryland
Earnings/Share times the Ameristar Earnings/Share Multiple.
(6) Next, Ameristar shall calculate the "GEM WESTERN
MARYLAND ENRICHMENT" by multiplying the Western Maryland Value
Contribution/Share times the number of shares of Adjusted
Ameristar Merger Shares.
(7) The Western Maryland Recapture Shares shall equal one-
half of the Gem Western Maryland Enrichment divided by the
Adjusted Ameristar Merger
Shares; provided, however, that the Western Maryland
Recapture Shares shall not exceed the Adjusted Western Maryland
Recapture Cap.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This data should be reviewed in conjunction with the financial statements
included in this report.
</LEGEND>
<CIK> 0000912145
<NAME> AMERISTAR CASINOS, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 13,830
<SECURITIES> 0
<RECEIVABLES> 1,565
<ALLOWANCES> 0
<INVENTORY> 1,570
<CURRENT-ASSETS> 20,530
<PP&E> 218,966
<DEPRECIATION> 45,891
<TOTAL-ASSETS> 196,599
<CURRENT-LIABILITIES> 25,929
<BONDS> 0
0
0
<COMMON> 204
<OTHER-SE> 64,271
<TOTAL-LIABILITY-AND-EQUITY> 196,599
<SALES> 42,906
<TOTAL-REVENUES> 42,906
<CGS> 0
<TOTAL-COSTS> 42,161
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,908
<INCOME-PRETAX> (907)
<INCOME-TAX> (335)
<INCOME-CONTINUING> (572)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (572)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
