SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------------
For the Quarter Ended: February 28, 1997
Commission File Number N/A
Louisiana Casino Cruises, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-1196619
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
organization or incorporation) Number)
1717 River Road North
Baton Rouge, Louisiana 70802
(Address of principal executive offices, including zip code)
(504) 381-7777
(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).
YES X NO
--------------- ---------------
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.
Common Stock, no par value
per share 982,783
- ------------------------------- -----------------------------
Class Outstanding as of April 14, 1997
<PAGE>
LOUISIANA CASINO CRUISES, INC.
------------------------------
INDEX
PAGE NO.
Part I Financial Information
Balance Sheets.......................................................1
Statements of Operations.............................................2
Statement of Changes in Shareholders' Deficit........................3
Statements of Cash Flows.............................................4
Notes to Financial Statements........................................6
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................9
Part II Other Information...................................................12
Signatures...................................................................13
<PAGE>
LOUISIANA CASINO CRUISES, INC.
BALANCE SHEETS
(in thousands)
February 28, November 30,
1997 1996
--------- --------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents ......................... $ 4,913 $ 4,677
Restricted cash ................................... 3,052 3,052
Receivables, less allowance for doubtful accounts
of $261 and $236, respectively ................. 360 424
Prepaid and other current assets .................. 560 797
Inventory ......................................... 464 439
Deferred tax asset - current ...................... 2,092 2,241
-------- --------
Total current assets ......................... 11,441 11,630
Property and equipment, at cost, less accumulated
depreciation of $8,446 and $7,484, respectively ..... 43,097 43,888
Prepaid and other assets .............................. 2,731 2,920
-------- --------
Total assets ................................. $ 57,269 $ 58,438
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable .................................... $ 2,857 $ 2,681
Accrued liabilities ................................. 826 1,601
Accrued interest .................................... 1,290 2,578
First mortgage notes, current portion (Note 2) ...... 2,290 1,526
Notes payable, current portion (Note 2) ............. 1,606 2,223
Other current liabilities ........................... 291 303
Estimated dispute resolution costs .................. 1,700 1,700
-------- --------
Total current liabilities .................... 10,860 12,612
First mortgage notes, net of original issue
discount (Note 2) ................................. 41,899 42,638
Notes payable (Note 2) ................................ - 18
Deferred tax liability ................................ 1,215 981
-------- --------
Total liabilities ............................ 53,974 56,249
-------- --------
Redeemable preferred stock ............................ 1,529 1,496
-------- --------
Redeemable common stock warrants (Note 3) ............. 4,376 4,376
-------- --------
Shareholders' deficit :
Common stock, no par value:
10,000,000 shares authorized: 982,783 issued
and outstanding at February 28, 1997 and
November 30, 1996 ................................. 1 1
Accumulated deficit ................................... (2,611) (3,684)
-------- --------
Total shareholders' deficit ........................... (2,610) (3,683)
-------- --------
Total liabilities and shareholders' deficit ........... $ 57,269 $ 58,438
======== ========
The accompanying notes are an integral
part of these financial statements
1
<PAGE>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF OPERATIONS
(in thousands, except share data)
(unaudited)
Three Months Ended
----------------------------
February 28, February 29,
1997 1996
----------- -----------
Revenues:
Casino ................................... $ 17,333 $ 18,883
Food and beverage ........................ 290 317
Other .................................... 138 210
----------- -----------
Net revenues ............................. 17,761 19,410
----------- -----------
Costs and expenses:
Casino ................................... 8,178 8,292
Food and beverage ........................ 284 311
Selling, general and administrative ...... 5,049 5,384
----------- -----------
Total operating expenses ..................... 13,511 13,987
----------- -----------
Income before depreciation,
amortization and interest ................ 4,250 5,423
Depreciation and amortization ................ 1,044 1,009
----------- -----------
Operating income ......................... 3,206 4,414
Other income (expense):
Interest income .......................... 27 65
Interest expense ......................... (1,400) (1,845)
----------- -----------
Income before income taxes ................... 1,833 2,634
Provision for income taxes (Note 7) .......... 727 -
----------- -----------
Net income ................................... 1,106 2,634
Dividend requirement on redeemable
preferred stock .......................... 33 33
Market value warrant adjustment .............. - -
----------- -----------
Net income assigned to common
shareholders ............................. $ 1,073 $ 2,601
=========== ===========
Earnings per common and
common equivalent share (Note 4) ......... $ .94 $ 2.29
=========== ===========
Weighted average common and common
equivalent shares outstanding (Note 4).... 1,135,783 1,135,783
=========== ===========
The accompanying notes are an integral
part of these financial statements
2
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA CASINO CRUISES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
(in thousands, except share data)
(unaudited)
Common Stock Additional
----------------- Paid-In (Accumulated
Shares Amount Capital Deficit) Total
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at November 30, 1996 .. 982,783 $ 1 $ - $(3,684) $(3,683)
Dividend requirements on
redeemable preferred stock - - - (33) (33)
Market value warrant adjustment - - - - -
Net income .................... - - - 1,106 1,106
------- ------- ------- ------- -------
Balance at February 28, 1997 .. 982,783 $ 1 $ - $(2,611) $(2,610)
======= ======= ======= ======= =======
The accompanying notes are an integral
part of these financial statements
3
</TABLE>
<PAGE>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF CASH FLOWS
(page 1 of 2)
(in thousands)
(unaudited)
Three Months Ended
-------------------
February 28, February 29,
1997 1996
------- -------
Net income ......................................... $ 1,106 $ 2,634
Net cash flows from operating activities :
Depreciation and amortization .................... 1,044 1,009
Amortization of deferred costs ................... 125 314
Loss on sale of fixed assets ..................... 47 -
Provision for bad debt ........................... 26 28
Decrease in receivables .......................... 39 69
(Increase) decrease in inventory ................. (25) 2
Decrease (increase) in prepaid and other assets .. 293 (321)
Decrease (increase) in deferred tax asset ........ 148 (350)
Decrease in accrued interest ..................... (1,288) (1,572)
Increase in deferred tax liability ............... 234 -
Decrease in accounts payable and other liabilities (610) (250)
------- -------
Net cash provided by operating activities .... 1,139 1,563
------- -------
Cash flows from investing activities :
Capital expenditures ............................. (289) (150)
Proceeds from sale of fixed assets ............... 22 -
Decrease in restricted cash ...................... - 62
------- -------
Net cash used by investing activities ........ (267) (88)
------- -------
Cash flows from financing activities :
Proceeds from issuance of note payable ........... - 440
Repayment of first mortgage notes ................ - (4,222)
Decrease in restricted cash ...................... - 2,952
Repayments of notes payable ...................... (636) (567)
------- -------
Net cash used by financing activities ........ (636) (1,397)
------- -------
Net increase (decrease) in cash .................... 236 78
Cash at beginning of period ........................ 4,677 5,010
------- -------
Cash at end of period .............................. $ 4,913 $ 5,088
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest ............................. $ 2,607 $ 3,148
======= =======
The accompanying notes are an integral
part of these financial statements
4
<PAGE>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF CASH FLOWS
(page 2 of 2)
(unaudited)
Supplemental disclosure of noncash investing and financing activities:
The accreted value of the redeemable common stock warrant liability was
estimated at $4,376,000 at February 28, 1997 and November 30, 1996 and February
29, 1996. During the three months ended February 28, 1997 and February 29, 1996
the estimated liability was increased by $0 (See Note 3).
Redeemable preferred stock dividends of $33,000 were accrued during each
of the three month periods ended February 28, 1997 and February 29, 1996.
The accompanying notes are an integral
part of these financial statements
5
<PAGE>
LOUISIANA CASINO CRUISES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Louisiana Casino Cruises, Inc. (the "Company"), a Louisiana corporation,
was formed in August 1991 for the purpose of developing and operating gaming
activities in Louisiana. The Company commenced operations of the Casino Rouge, a
riverboat casino located on the Mississippi River in downtown Baton Rouge on
December 28, 1994. The Casino Rouge's principal trading area is the Greater
Baton Rouge metropolitan area. In a private placement offering ("Offering"), the
Company issued $51,000,000 in First Mortgage Notes ("Notes") pursuant to the
Indenture dated as of November 15, 1993 (the "Indenture") between the Company
and the Bank of New York as successor trustee (the "Trustee"). The Notes were
issued with detachable warrants to purchase up to an aggregate amount of 153,000
shares of the Company's common stock at a price of $0.01 per share.
A description of the organization and operations of the Company, the
significant accounting policies followed and the financial condition and results
of operations as of November 30, 1996, are contained in the audited financial
statements included in the annual report filed on Form 10-K. The accompanying
unaudited financial statements for the three months ended February 28, 1997 and
February 29, 1996 should be read in conjunction with the 1996 audited financial
statements.
The unaudited financial statements as of February 28, 1997 and for the
three months ended February 28, 1997 and February 29, 1996 and the notes thereto
have been prepared in accordance with generally accepted accounting principles
for interim financial information and Rule 10-01 of Regulation S-X. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
have been included to present fairly, in all material respects, the financial
position of the Company at February 28, 1997 and the results of its operations
and its cash flows for the three months ended February 28, 1997 and February 29,
1996.
Certain amounts in the financial statements for the three months ended
February 29, 1996 have been reclassified to conform to the presentation of the
financial statements for the three months ended February 28, 1997.
Casino Revenue and Promotional Allowances
Casino revenue represents the net win from gaming wins and losses. Food
and beverage and other revenues are recorded at amounts collected from guests
and exclude the retail value of food, beverage and other items provided on a
complimentary basis. The retail value of these complimentary items for the three
months ended February 28, 1997 and February 29, 1996 was $1,366,000 and
$1,377,000, respectively. The cost of providing such complimentary items has
been classified as casino costs (promotional expenses) and totaled $789,000 and
$686,000 for the three month periods ended February 28, 1997 and February 29,
1996, respectively.
Restricted Cash
In accordance with the terms of the Indenture, Cumulative Excess Cash Flow
not previously used to repurchase Notes pursuant to an offer by the Company, is
classified as restricted cash.
6
<PAGE>
NOTE 2 - NOTES PAYABLE
On January 2, 1996 the Company obtained an additional loan in the amount
of $440,020 from City National Bank of Baton Rouge. The additional loan amount
is payable in 24 equal principal payments plus interest commencing January 1996.
The loan bears interest at 10.5 % per annum, payable monthly in arrears, on the
outstanding balance of the loan. The loan agreement requires the Company to
maintain a certain cash flow ratio. The loan is secured by gaming and other
equipment and limits the sale or encumbrance of such equipment.
Mandatory Offer to Repurchase Notes
If the Company has Cumulative Excess Cash Flow, as defined in the
Indenture, equal to or greater than $2,000,000 at the end of any semiannual
period, as defined in the Indenture, the Company is required to offer to
repurchase the Notes at par to the extent of such Cumulative Excess Cash Flow.
Cumulative Excess Cash Flow for the semiannual period ended November 30,
1996 amounted to $3,052,000. As required by the Indenture, the Company made an
offer on January 29, 1997 to repurchase the Notes at par to the extent of such
Cumulative Excess Cash Flow. The Company's offer to repurchase Notes expired on
February 27, 1997 with no Notes being tendered. Pursuant to the Indenture, 50%
of such Cumulative Excess Cash Flow must be used for the acquisition of Notes in
the open market or included in the determination of Cumulative Excess Cash Flow
for the semiannual period ending May 31, 1997. Estimated Cumulative Excess Cash
Flow for the three months ended February 27, 1997 is $764,000 and such amount
will also be included in the determination of Cumulative Excess Cash Flow for
the semiannual period ending May 31, 1997. Accordingly, $2,290,000 and
$1,526,000 is classified as a current liability at February 28, 1997 and
November 30, 1996, respectively. The remaining 50% of such Cumulative Excess
Cash Flow for the semiannual period ended November 30, 1996 is considered Cash
Available for Reinvestment, and is available to the Company for use in limited
purposes as defined in the Indenture (see Restricted Cash - Note 1).
NOTE 3 - REDEEMABLE COMMON STOCK WARRANTS
On December 1, 1993, the Company issued $51,000,000 in Notes pursuant to
the Offering. The Offering was made in units, each consisting of Notes in the
principal amount of $1,000 and three warrants to purchase one share each of the
Company's no par value common stock at the price of $.01 per share. The original
issue discount on the Notes was $1,300,578, the amount assigned to the value of
the redeemable common stock warrants at December 1, 1993.
The warrantholders have put rights whereby the Company is obligated to
purchase the warrants on December 1, 1998 at the value of the Company's common
stock at that time, as determined by two independent investment banking firms.
The warrants are classified as redeemable equity due to the put right feature
and, at each balance sheet date, are accreted to the amount at which the Company
expects to repurchase these warrants. The estimated accreted value attributed to
the redeemable common stock warrants as of February 28, 1997 and November 30,
1996 is $4,376,000.
NOTE 4 - EARNINGS PER COMMON SHARE
In accordance with Emerging Issues Task Force Issue 88-9, primary earnings
per share is calculated in the manner that is most dilutive using the equity or
debt method giving consideration to the effect of changes to the balance of the
Company's redeemable common stock warrants and distributions paid to
warrantholders during the period. Earnings per share for the three months ended
February 28, 1997 and February 29, 1996 are calculated using the equity method
by dividing net income, reduced by dividend requirements on redeemable preferred
stock, by the weighted average number of common and common equivalent shares
outstanding during the period. The common equivalent shares for the three months
ended February 28, 1997 and February 29, 1996 consist of redeemable common stock
warrants for 153,000 shares.
7
<PAGE>
NOTE 5 - CONTINGENCIES
Legal Matters
At November 30, 1993, the Company was involved in a dispute regarding
consulting services. Although a formal demand had not been made to the Company,
management believed the dispute could lead to litigation and accrued $1,700,000
for the estimated cost of resolution. In July 1994, an action was filed against
the Company with regard to the matter. Management and legal counsel intend to
vigorously defend the Company's position. Because of the inherent uncertainties
of litigation, management is unable to predict the ultimate outcome of this
matter and believes the accrued liability of $1,700,000 an appropriate estimate
at February 28, 1997 and November 30, 1996 for costs associated with eventual
resolution of the matter. Trial for this matter has been set for October 1997.
Accordingly, the accrued estimated costs of resolution has been classified as a
current liability on the balance sheet as of February 28, 1997 and November 30,
1996.
The Company is also involved in other legal proceedings. In the opinion of
management, the resolution of these matters will not have a material effect on
the financial statements or continuing operations of the Company.
NOTE 6 - DIVIDENDS
On March 26, 1997 the Board of Directors declared a dividend of $0.424377
per share of common stock and per common stock warrant. The aggregate dividend
of $482,000 was paid on March 28, 1997 to holders of record on March 26, 1997.
NOTE 7 - INCOME TAXES
The Company has recorded a provision for income taxes of $727,000 and $0,
respectively, for the three months ended February 28, 1997 and February 29,
1996. The current tax provision is $343,000 and $350,000 for the three months
ended February 28, 1997 and February 29, 1996, respectively. The provision for
deferred income tax liability recorded for the three months ended February 28,
1997 and February 29, 1996 is $384,000 and $614,000, respectively.
The deferred tax valuation allowance released during the three months
ended February 29, 1996 was $964,000. The release of the deferred tax valuation
allowance fully offset the current income tax expense of $350,000 and the
deferred tax provision of $614,000 that would have been recorded had there been
no release of such valuation allowance. Since May 31, 1996, the Company has had
no deferred income tax valuation allowance.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
On December 28, 1994 the Company commenced operations of its riverboat
gaming facility in Baton Rouge, Louisiana (the "Casino Rouge"). Prior to that
date, the Company was in the development stage engaged in the development and
construction of the Casino Rouge. From inception in August 1991 through December
27, 1994, the Company devoted substantially all of its efforts to evaluating
gaming opportunities in Louisiana, including seeking a Louisiana gaming license,
the development and construction of the Casino Rouge and the financing thereof.
Accordingly, prior to December 28, 1994 the Company had no earnings.
The Company's activities from inception have been financed from (i)
cash flow from operations, (ii) equity and other capital contributions of the
shareholders, (iii) the Offering of 51,000 units, each unit consisting of $1,000
principal amount of Notes and three warrants to purchase one share each of
Common Stock, and (iv) secured equipment financing pursuant to the terms of a
bank loan agreement dated December 13, 1994 (the "Credit Agreement"), as amended
on December 20, 1995.
Results of Operations
Three months ended February 28, 1997 compared to three months ended
February 29, 1996.
Taxable casino revenues for the two boats in the Baton Rouge riverboat
gaming market for the three months ended February 28, 1997 and 1996 were
$29,312,000 and $31,900,000, respectively. Riverboat casino patron counts in the
Baton Rouge gaming market for the three months ended February 28, 1997 and 1996
were 677,000 and 698,000, respectively. Management believes the principal
factors contributing to the 8.1% decline in taxable casino revenues for the
Baton Rouge market are i) premium player activity at Casino Rouge in 1996 that
did not occur in 1997, ii) extensive advertising in Baton Rouge by a competitor
Indian casino located outside the Baton Rouge market emphasizing a message of
better odds for players on table games and slots and iii) milder weather in 1997
compared to 1996, allowing persons to become more involved in alternative forms
of outdoor leisure activities . The Company's taxable casino revenues declined
9.7% while those of the other Baton Rouge riverboat declined 5.7% in the three
months ended February 28, 1997, compared to the same period in 1996. The
Company's share of the Baton Rouge gaming market for the three months ended
February 28, 1997 and 1996, respectively, was 59.5% and 60.6% of taxable casino
revenues and 56.0% and 59.7% of admissions. Management believes the decrease in
its market share of admissions is attributable to the Company's competition
having made product improvements, consisting of a new parking garage and an
enclosed entertainment/retail shopping area, which opened subsequent to the
first quarter of 1996, and extensive food and cash promotions by such
competitor.
The Company's casino revenues were $17,333,000 for the first quarter of
1997 compared to $18,883,000 for the first quarter of 1996. Table drop and slot
coin-in decreased 3.5% and 4.0%, respectively, while table games and slot hold
percentages decreased 3.1 percentage points (20.4 vs 23.5) and 0.1 percentage
points (6.8 vs 6.9), respectively. The combination of lower gaming volume and
hold percentages resulted in a 16.3% decrease in table game revenues and a 4.9%
decrease in slot revenues for the first quarter of 1997 compared to 1996.
Management believes the decrease in table drop and hold percentage is primarily
due to premium player activity during the first quarter of 1996 which did not
occur in the first quarter of 1997 while the decrease in slot coin-in, primarily
that of dollar and quarter slot customers, is due to a decrease in passenger
counts affecting the entire Baton Rouge marketplace. First quarter win per
passenger increased .5% to $45.60 in 1997 compared to $45.39 in 1996. Revenues
from casino operations were 73.4% from slot machines and 26.6% from table games
for the three months ended February 28, 1997 compared to 70.8% and 29.2%,
respectively, for the same period in 1996. Such mix of slot machine and gaming
table win generally conforms to that experienced by riverboats throughout
Louisiana.
9
<PAGE>
Casino expenses for the three months ended February 28, 1997 and February
29, 1996 were $8,178,000 and $8,292,000, respectively, which represented 47% and
44% of casino revenues. Overall casino expenses declined during the 1997 period
primarily reflecting the decrease in taxes associated with casino revenues.
Casino expenses as a percentage of casino revenues increased in 1997 i) as
result of increases in costs related to casino support departments including
cashiering, surveillance and VIP services and costs associated with selling and
administering the bus programs and ii) the decrease in casino revenues in 1997
compared to 1996.
In the first quarter of 1997, selling, general and administrative
expenses were $5,049,000 compared to $5,384,000 in the first quarter of 1996.
Selling, general and administrative expenses for the three months ended February
29, 1996 included approximately $186,000 of maintenance and repair expenditures
for marine operations that are not expected to be recurring.
Net interest expense was $1,373,000 and $1,780,000 for the three months
ended February 28, 1997 and February 29, 1996, respectively. The reduction in
interest expense is due to a decline in outstanding debt due to the 1996
mandatory Note repurchases and the continuing amortization of principal
outstanding under the Credit Agreement.
The provision for federal and state income taxes net of the valuation
allowance release was $727,000 and $0 for the three months ended February 28,
1997 and February 29, 1996, respectively. The valuation allowance released for
the three months ended February 28, 1997 and February 29, 1996 was $0 and
$964,000, respectively.
Liquidity and Capital Resources
During the three months ended February 28, 1997 the Company generated
$1,096,000 in cash flows from operations as compared to $1,563,000 for the three
months ended February 29, 1996. The decrease in cash flows from operations was
primarily due to a decrease in net income.
Cash flows used for investing activities were $267,000 and $88,000,
respectively, for the three months ended February 28, 1997 and February 29,
1996. The use of funds for each of the three month periods were for capital
expenditures for continuing operations.
Financing activities for the three months ended February 28, 1997 and
February 29, 1996 used cash of $636,000 and $1,397,000, respectively. The use of
funds in 1997 were related to regularly scheduled principal amounts due under
the Credit Agreement, as amended. The primary uses of funds in 1996 were i) the
February 28, 1996 repurchase of Notes in the principal amount of $4,222,000 as
required by the Indenture, and ii) $567,000 for the repayment of regularly
scheduled principal amounts due under the Credit Agreement, as amended. The
primary sources of cash in 1996 were i) reduction in restricted cash that
represented Cumulative Excess Cash Flow for the semiannual period ended November
30, 1995, and ii) additional borrowing of $440,000 under the Credit Agreement,
as amended.
As of February 28, 1997 liquidity and capital resources of the Company
included cash and cash equivalents, and restricted cash of approximately
$7,965,000, which the Company deems sufficient for continuing operations,
including the maintenance of an appropriate casino bankroll. Current anticipated
obligations of the Company over the next year include, in material part:
i. Debt service, including periodic payment of interest on the Notes and
principal and interest payments required by the Credit Agreement.
ii. Mandatory offers to repurchase Notes as required by the Indenture should
the Company, in any semiannual period, exceed $2,000,000 in Cumulative
Excess Cash Flow as set forth in the Indenture. As of February 28, 1997,
the Company has reclassified to a current liability $2,290,000; which
includes $1,526,000, representing 50% of the Cumulative Excess Cash Flow
generated during the semiannual period ended November 30, 1996, and an
estimate of Cumulative Excess Cash Flow for the three months ended February
28, 1997 in the amount of $764,000. Based on actual and estimated
Cumulative Excess Cash Flow and an expectation of continuing profitable
operations, the Company expects to generate Cumulative Excess Cash Flow for
the semiannual periods ending May 31, 1997 and November 30, 1997. The
Company anticipates that Cumulative Excess Cash Flow for the semiannual
period ending May 31, 1997 will exceed $2,000,000, requiring it to make an
offer to repurchase Notes pursuant to the Indenture. The Company cannot
currently predict the amount of any such offer or whether any Notes would
be tendered by noteholders pursuant to such offer. The Company cannot
currently predict the amount of Cumulative Excess Cash Flow for the
semiannual period ending November 30, 1997 or if it will be sufficient to
cause the Company to make an offer to repurchase Notes. Should any of these
mandatory offers to repurchase Notes be required, the Company believes
existing cash balances and cash generated from continuing operations will
be sufficient to meet such cash requirements.
10
<PAGE>
iii. Payment of Federal and Louisiana state income taxes as may be required from
time to time.
iv. Cash dividends to the holders of the Company's common stock and cash
distributions to the holders of the Company's common stock warrants as may
be declared from time to time. The Company intends to declare and pay
dividends to the extent permitted based on future earnings, the Indenture,
legal limitations and available cash balances.
In the opinion of management, the Company will continue to generate
sufficient cash flows to meet operating needs and debt service requirements,
including those listed above, for the next twelve months.
Certain covenants in the Indenture limit the ability of the Company to,
among other things, incur indebtedness, grant liens, sell assets, amend the
Management Agreement with CSMC, enter into sale-leaseback transactions and
engage in transactions with affiliates. In the event of a Change of Control (as
defined in the Indenture), the Company is required to offer to purchase all
outstanding Notes at a redemption price of 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the redemption date.
All amounts borrowed under the Credit Agreement, as amended, were used
to finance furniture, fixtures and equipment for the Casino Rouge. All items
financed by the Credit Agreement, as amended, are pledged as security for
amounts due thereunder. All of the remaining assets of the Company, including
the riverboat and land-based facilities, are pledged as security for repayment
of the Notes.
On April 2, 1997 the Company announced that CSMC Management Services,
Inc. ("CSMC"), a wholly owned subsidiary of CHC International, Inc. ("CHC"), and
the holder of 59.8% of the outstanding common stock of the Company, had executed
a stock purchase agreement with the holders of approximately 40% of the
outstanding common stock of the Company to acquire the common stock and all of
the outstanding preferred stock of the Company held by such holders. In
connection with the financing of the stock purchase agreement CHC intends to
seek additional financing in an amount sufficient to permit the redemption of
the Company's outstanding Notes. However there can be no assurance that CHC will
be successful in raising the necessary and desired financing and that even if
adequate financing is obtained, that any Notes will be redeemed.
11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
Current Reports on Form 8-K, dated January 29, 1997, February 21, 1997
and April 4, 1997, were filed by the Company with the Securities and Exchange
Commission. Under Item 5, the January 29, 1997 Form 8-K reported the
commencement of the Company's offer to purchase for cash up to $3,052,000
aggregate principal amount of Notes for 100% of their principal amount plus
accrued interest to, but not including, the payment date of February 28, 1997.
The Offer was made pursuant to the terms of the Indenture and expired at 5:00
p.m. New York City time on February 28, 1997.
Under Item 5, the February 21, 1997 Form 8-K announced that a non-binding
letter of intent had been executed by holders of 40% of the Company's common
stock and all of its preferred stock (the "Individual Holders") providing for
the purchase of all such interests by CSMC, a wholly owned subsidiary of CHC.
CSMC presently holds 59.8% of the outstanding common stock of the Company. Under
Item 5, the April 4, 1997 Form 8-K announced that a definitive stock purchase
agreement had been executed with the Individual Holders.
In connection with the financing of the stock purchase agreement, CHC
intends to seek additional financing in an amount sufficient to permit the
redemption of the Notes. However, there can be no assurance that adequate
financing will be obtained or that, even if obtained, any Notes will be
redeemed.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
LOUISIANA CASINO CRUISES, INC.
Dated: April 14, 1997
By: /s/ W. Peter Temling
-------------------------
W. Peter Temling, Acting
Chief Financial Officer
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Financial Data Schedule
contains summary information
extracted from the unaudited
balance sheet of Louisiana Casino
Cruises, Inc. as of February
28,1997 and the related statement
of operation for the three month
period ended February 28, 1997 and
is qualified in its entirety by
reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> FEB-28-1997
<CASH> 7,965
<SECURITIES> 0
<RECEIVABLES> 621
<ALLOWANCES> 261
<INVENTORY> 464
<CURRENT-ASSETS> 11,441
<PP&E> 51,543
<DEPRECIATION> 8,446
<TOTAL-ASSETS> 57,269
<CURRENT-LIABILITIES> 10,860
<BONDS> 41,899
1,529
0
<COMMON> 1
<OTHER-SE> (2,611)
<TOTAL-LIABILITY-AND-EQUITY> 57,269
<SALES> 0
<TOTAL-REVENUES> 17,761
<CGS> 0
<TOTAL-COSTS> 14,555
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 25
<INTEREST-EXPENSE> 1,400
<INCOME-PRETAX> 1,833
<INCOME-TAX> 727
<INCOME-CONTINUING> 1,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,103
<EPS-PRIMARY> .94
<EPS-DILUTED> .94
</TABLE>
