<PAGE>
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 March 31, 1997 Commission File Number 0-20648
BLUE DIAMOND HOTEL & CASINO, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 88-0253124
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Boomtown, Inc.
P.O. Box 399, Verdi, Nevada 89439-0399
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 345-8643
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A) AND
(B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
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
----- -----
On May 13, 1997 the registrant had outstanding 100 shares of its Common Stock,
no par value.
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets, September 30, 1996 and March 31, 1997. . . . . . . 3
Statements of Operations for the Three and Six Months
Ended March 31, 1996 and 1997. . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows for the Six Months
Ended March 31, 1996 and 1997. . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SCHEDULE OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
BLUE DIAMOND HOTEL & CASINO, INC.
BALANCE SHEETS
(in thousands)
(except share data)
September 30, March 31,
1996 1997
------------ ------------
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 2,563 $ 2,811
Accounts receivable, net 301 272
Inventories 336 363
Prepaid expenses 1,367 1,202
Other current assets 189 189
--------- ---------
Total current assets 4,756 4,837
Property and equipment, net 1,040 640
Deferred income taxes 1,803 1,803
Other assets 237 208
--------- ---------
Total assets $ 7,836 $ 7,488
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Current liabilities:
Accounts payable $ 895 $ 781
Accrued compensation 704 771
Other accrued liabilities 1,283 1,489
Note payable - Boomtown, Inc. 33,785 35,264
Accrued interest payable - Boomtown, Inc. 7,372 9,398
Long-term debt due within one year (Note 2) 800 450
--------- ---------
Total current liabilities 44,839 48,153
Stockholder's deficit:
Common stock, no par value, 2,500 shares
authorized, 100 shares issued and
outstanding 1 1
Accumulated deficit (37,004) (40,666)
--------- ---------
Total stockholder's deficit (37,003) (40,665)
--------- ---------
Total liabilities and stockholder's deficit $ 7,836 $ 7,488
--------- ---------
--------- ---------
See accompanying notes.
3
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
STATEMENT OF OPERATIONS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1996 1997 1996 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Gaming $ 8,326 $ 8,018 $ 16,314 $ 16,419
Food and Beverage 2,024 2,133 3,841 4,250
Hotel and recreational vehicle park 1,518 1,577 2,876 3,128
Family entertainment center 54 59 117 121
Mini-mart 38 40 76 80
Other income 131 106 283 205
-------- -------- -------- --------
12,091 11,933 23,507 24,203
COSTS AND EXPENSES:
Gaming 3,233 3,235 6,290 6,543
Gaming equipment leases 666 666 1,332 1,332
Food and beverage 2,497 2,654 5,432 5,347
Hotel and recreational vehicle park 628 665 1,244 1,346
Family entertainment center 23 34 48 65
Mini-mart 21 26 43 45
Marketing 1,483 1,781 2,833 3,678
General and administrative 2,999 2,804 6,026 5,558
Property rent 1,365 1,365 2,728 2,728
Management fee-Boomtown, Inc. (Note 4) 180 180 408 360
Depreciation and amortization 346 247 665 490
-------- -------- -------- --------
13,441 13,657 27,049 27,492
Loss from operations (1,350) (1,724) (3,542) (3,289)
Interest and other expense, net (994) (1,057) (1,771) (2,136)
-------- -------- -------- --------
Loss before income tax benefit (2,344) (2,781) (5,313) (5,425)
Income tax benefit 783 904 1,742 1,763
-------- -------- -------- --------
Net loss ($1,561) ($1,877) ($3,571) ($3,662)
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See accompanying notes.
4
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
(unaudited)
Six Months Ended
March 31,
1996 1997
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($3,571) ($3,662)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 665 490
Changes in operating assets and liabilities, net (323) 2,381
------- -------
Net cash used in operating activities (3,229) (791)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property
and equipment (161) (89)
------- -------
Net cash used in investing activities (161) (89)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Note payable-Boomtown, Inc. 4,322 1,479
Proceeds from long-term debt 163 --
Principal payments on long-term debt (583) (351)
------- -------
Net cash provided by financing activities 3,902 1,128
------- -------
Net increase in cash and cash equivalents 512 248
CASH AND CASH EQUIVALENTS:
Beginning of period 2,630 2,563
------- -------
End of period $3,142 $2,811
------- -------
------- -------
See accompanying notes.
5
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND NATURE OF BUSINESS - Blue Diamond Hotel and
Casino, Inc. ("Boomtown Las Vegas" or "Blue Diamond" or the "Company"), is a
wholly owned subsidiary of Boomtown, Inc. ("Boomtown") and commenced
operations in May 1994 on a 56-acre site at the interchange of Blue Diamond
Road and Interstate 15, the principal thoroughfare connecting Southern
California to Las Vegas. The property is heavily themed on an old mining
town, as reflected on the outside facade and the interior decor. Boomtown
Las Vegas includes a 30,000-square foot casino with 1,100 slot machines and
25 gaming tables, 300 hotel rooms, a 460-space full service recreational
vehicle park, two restaurants, an entertainment lounge and a replica of an
old mine where customers can pan for real gold. Boomtown Las Vegas currently
employs approximately 900 employees.
INTERIM FINANCIAL INFORMATION - The balance sheet at September 30, 1996
has been taken from the audited financial statements at that date. The
interim financial information is unaudited. In the opinion of management,
all adjustments, consisting only of normal recurring adjustments, which the
Company considers necessary for a fair presentation of its financial position
at March 31, 1997, the results of operations for the three and six months
ended March 31, 1996 and 1997, and cash flows for the six months ended March
31, 1996 and 1997, have been included.
The Company's operations are seasonal and thus operating results for the
three and six months ended March 31, 1997 should not be considered indicative
of the results that may be expected for the fiscal year ending September 30,
1997. The unaudited financial statements should be read in conjunction with
the financial statements and footnotes thereto included in the Company's Form
10-K for the year ended September 30, 1996.
RECLASSIFICATIONS - Certain reclassifications have been made to the
fiscal 1996 financial statements to conform to the fiscal 1997 presentation.
2. LONG-TERM DEBT
Long-term debt consists of the following:
September 30, March 31,
1996 1997
------------ ------------
11.5% note payable $ 442,000 $ 227,000
Capital lease obligation 358,000 223,000
--------- ---------
800,000 450,000
Less amounts due within one year 800,000 450,000
--------- ---------
$ -- $ --
--------- ---------
--------- ---------
The 11.5% note payable is secured by furniture, fixtures and equipment
with a net book value of approximately $783,300 as of March 31, 1997 (prior
to the write down related to the Swap Agreement). This note matures in
September 1997. The Capital lease obligation is secured by equipment with a
net book value of approximately $682,000 as of March 31, 1997 (prior to the
write down related to the Swap Agreement). The capital lease obligation
matures in September 1997.
6
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BLUE DIAMOND HOTEL & CASINO, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
3. CONTINGENCIES
On November 24, 1993, Boomtown completed the private placement of $103.5
million of 11.5% First Mortgage Notes due November 2003 (the "Notes"). The
Notes are secured by, among other things, a limited guarantee by Blue
Diamond, as defined in the Indenture to the Notes.
The Indenture governing the Notes places certain business, financial and
operating restrictions on Boomtown and its subsidiaries including, among
other things, the incurrence of additional indebtedness, issuance of
preferred equity interests and entering into operational leases; limitations
on dividends, repurchase of capital stock of Boomtown and redemption's of
subordinated debt; limitations on transactions with affiliates; limitations
on mergers, consolidations and sales of assets; limitations on amending
existing partnership and facility construction agreements; and limitations on
the use of proceeds from the issuance of the Notes.
In addition, the Company is a guarantor for a ship mortgage with an
outstanding balance of $2.6 million at March 31, 1997, of Louisiana - I
Gaming, L.P., a wholly owned and controlled partnership of Boomtown.
The Company is also a guarantor of a note payable with an outstanding
balance of $164,000 at March 31, 1997, of Mississippi - I Gaming, L.P., a
majority owned and controlled partnership of Boomtown.
4. MANAGEMENT FEE
Boomtown is responsible for managing the operations of the Company and
other of its subsidiaries (collectively the "Subsidiaries"). During the
three and six months ended March 31, 1996 and 1997, Boomtown charged the
Subsidiaries for their pro-rata share of the costs it incurred relative to
this management function (the "Management Fee"). The Management Fee amounted
to approximately $180,000 each at the three months ended March 31, 1996 and
1997 and $360,000 and $480,000 during the six months ended March 31, 1997 and
1996, respectively.
5. COMMON STOCK OUTSTANDING AND NET LOSS PER SHARE
The Company is a wholly-owned and consolidated subsidiary of Boomtown,
Inc. There are 100 shares of Company stock issued and there are no common
stock equivalents outstanding. Therefore, the net loss per share of the
Company has little or no meaning and are not presented herein.
7
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
6. OTHER EVENTS
BOOMTOWN'S PROPOSED MERGER WITH HOLLYWOOD PARK, INC. ("HOLLYWOOD PARK")
- - On April 23, 1996, Boomtown entered into an Agreement and Plan of Merger
with Hollywood Park relating to the strategic combination of Hollywood Park
and Boomtown. Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein, Boomtown would become a wholly-owned subsidiary
of Hollywood Park (the "Merger"). Pursuant to the Merger Agreement, at the
effective date of the Merger each issued and outstanding share of Boomtown
Common Stock will be converted into the right to receive 0.625 (the "Exchange
Ratio"), of a share of Hollywood Park Common Stock. The Merger is intended
to be structured as a tax-free reorganization. The shareholders of Boomtown
and Hollywood Park have approved the Merger. To date, the Merger has also
been approved by the Mississippi and Nevada gaming authorities. The Merger
is still subject to approval by the Louisiana gaming authorities.
Certain additional matters relating to the signing of the Merger
Agreement and a complete description of the Merger Agreement are more fully
described in Boomtown's Form 8-K dated April 23, 1996, including the
Agreement and Plan of Merger file as exhibit 2.1 thereto, and filed with the
Securities and Exchange Commission on May 3, 1996.
7. RELATED PARTY TRANSACTIONS
TERMINATION OF LAS VEGAS PROPERTY LEASE - On August 12, 1996, Boomtown,
Blue Diamond, Hollywood Park, Roski, IVAC and Majestic Realty entered into
the Blue Diamond Swap Agreement (the "Swap Agreement") pursuant to which the
parties agreed that, upon consummation of the Merger, and contingent upon the
closing of the Merger, Boomtown and Blue Diamond (or any transferee thereof
as set forth in the Swap Agreement) would exchange their entire interest in
the Blue Diamond Resort (the "Resort") (including the IVAC Loans), and
effectively transfer all interest in the Resort to Edward P. Roski, Jr.
("Roski") in exchange for a $5.0 million unsecured promissory note (the
"First Note") and an unsecured promissory note (the "Second Note") equal in
amount to the note to be issued by Hollywood Park to Roski for the purchase
of his Boomtown common stock referred to in a following paragraph (valued at
approximately $3.5 million) and assumption by Roski, IVAC or an affiliate, of
certain liabilities (the "Swap"). The First Note has an interest rate equal
to the prime rate plus one and one half percent (1.5%) per annum and provides
for annual principal payments of one million dollars ($1,000,000) plus
accrued interest and maturing on the date that is five years after the
Exchange Date (as such terms are defined in the Swap Agreement). The Second
Note has an interest rate equal to the prime rate plus one-half percent (.5%)
per annum and provides for a payment of all principal plus accrued interest
on the date that is three (3) years after the Exchange Date. Consummation of
the Swap is subject to obtaining the necessary Governmental approvals,
including gaming approval.
In exchange for its interest in the Resort, Boomtown will receive notes
payable with an estimated value totaling $8.5 million, an estimated cash
payment of $2.1 million, release from lease obligations under the Resort
lease, Roski's assumption of certain liabilities and note obligations,
totaling approximately $3.8 million and the ongoing expenses of the Resort.
Additionally, Roski will assume all operating leases including any residual
balances due under such leases. The Swap Agreement requires approvals from
applicable gaming authorities and Boomtown intends to seek the consent of the
holders of a majority of the outstanding principal amount on the Notes (see
Note 3). The Swap would be effective immediately following the Merger which
is expected to be completed during the second quarter of calendar 1997.
8
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
7. RELATED PARTY TRANSACTIONS (continued)
In accordance with the terms of the Swap Agreement, with certain
exceptions set forth in the Swap Agreement, the Company will continue to
operate the property until consummation of the Merger. Boomtown and Blue
Diamond will be responsible for the liabilities of the Resort prior to the
Swap and Roski will be responsible for the liabilities of the Resort
subsequent to the Swap. In addition, Roski will resign from Boomtown's Board
of Directors, effective as of the Exchange Date. Subject to certain
conditions set forth in the Swap Agreement, the Swap may be effectuated
through any structure agreed upon by Boomtown and Hollywood Park. If the
Swap were not consummated for any reason, Boomtown would continue to operate
the property through the expiration of the lease term in July 1999, and the
IVAC Notes would be required to be repaid to Boomtown at such time.
On August 12, 1996, Hollywood Park and Roski further entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which
Hollywood Park will, concurrently with the Swap, purchase the stock in
Boomtown held by Roski ("Roski Stock") for its market price on the date of
the Swap (estimated to be $3.5 million). The purchase will be paid through
the issuance of an unsecured promissory note having an interest rate equal to
the prime rate plus one percent (1%) per annum and providing for four equal
annual principal payments plus accrued interest and maturing on the date that
is four years after the Exchange Date. The Stock Purchase Agreement may also
be terminated by Hollywood Park in the event that Boomtown and Hollywood
Park, in accordance with the provisions set forth in the Swap Agreement,
elect to utilize a structure to effect the Swap which would require Roski to
retain the Roski Stock.
For a full discussion of the terms of the above described relationships
and transactions, see Boomtown's 1994 Registration Statement of Form S-4, and
Hollywood Park, Inc.'s Form S-4 dated September 18, 1996 as filed with the
SEC, respectively.
9
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain items from the Company's
statements of operations as a percentage of total revenues for the three and
six months ended March 31, 1996 and 1997 (unaudited):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1996 1997 1996 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES:
Gaming 68.9 % 67.2 % 69.4% 67.8%
Non-gaming 31.1 32.8 30.6 32.2
------ ------ ------ ------
100.0 100.0 100.0 100.0
OPERATING EXPENSES:
Gaming 32.2 32.7 32.4 32.5
Non-gaming 26.2 28.3 28.8 28.1
Marketing, general & administrative 37.1 38.4 37.7 38.2
Property rent 11.3 11.4 11.6 11.3
Management fee - Boomtown, Inc. 1.5 1.5 1.8 1.5
Depreciation and amortization 2.9 2.1 2.8 2.0
------ ------ ------ ------
111.2 114.4 115.1 113.6
Loss from operations (11.2) (14.4) (15.1) (13.6)
Interest and other expense, net (8.2) (8.9) (7.5) (8.8)
------ ------ ------ ------
Loss before income tax benefit (19.4) (23.3) (22.6) (22.4)
Income tax benefit 6.5 7.6 7.4 7.3
------ ------ ------ ------
Net loss (12.9)% (15.7)% (15.2)% (15.1)%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
Total revenues for the quarter and six months ended March 31, 1997 were
$11.9 million and $24.2 million, respectively, a decline of 1% for the
quarter from $12.1 million and an increase of 3% from $23.5 million for the
corresponding periods of the prior year. Gaming revenues, which made up
approximately 67% of total revenues, were $8.0 million for the quarter just
ended as compared to $8.3 million during the prior year quarter. For the six
month periods ended March 31, 1997 and 1996 gaming revenues were $16.4
million and $16.3 million, respectively, an increase of 1% over the prior
year period. During the most recent quarter, the Company's gaming revenue was
weakened due to strong competition from local casino operators and the
opening of new casinos in the western Las Vegas market including the Orleans
casino on December 18, 1996 and the New York, New York hotel and casino on
January 2, 1997. In an effort to retain casino patronage during the opening
of competitor casinos the Company implemented slot and video poker promotions
which produced lower hold percentages. During the three month period ended
March 31, 1997, the slot hold percentage was 27.65% as compared to 29.19%
during the prior year commensurate period.
10
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
For the most recent six month period, the increase in gaming revenues
resulted from a 7.5% improvement during the Company's first fiscal quarter
ended December 31, 1996 related to higher slot machine volume from the
success of major marketing promotions. The slot machine promotion was very
popular in increasing local patronage at the Boomtown property, and although
the promotions have provided higher volume and slot machine play, the
increase in revenues has been offset by a lower hold percentage retained
during the promotions.
For the quarter and six months ended March 31, 1997, the Company
reported a gaming margin of 51.3% and 52.0%, respectively, compared to 53.2%
and 53.3%, respectively, reported during the prior year same periods. Gaming
expenses consist of costs associated with operating the casino gaming at the
property including employee salaries and other employee related expenses,
gaming taxes and licenses, gaming equipment leases, costs associated with
providing complementaries to casino patrons and other miscellaneous and
administrative costs.
Non-gaming revenues were $3.9 million and $3.8 million for the quarters
ended March 31, 1997 and 1996, respectively. Non-gaming revenues consist of
revenue from food and beverage outlets, a 300 room hotel, a 460 space full
service recreational vehicle park and other entertainment and service
amenities. For the six months ended March 31, 1997 non-gaming revenues
increased 8.2% to $7.8 million from the $7.2 million reported during the
prior year period. The increase in non-gaming revenues primarily resulted
from higher food and beverage sales, as the Company expanded its efforts to
improve the food quality and increase the pricing structure on most food
items. Additionally, sales from the Company's hotel and recreational vehicle
park grew from higher pricing and improved occupancy as Boomtown becomes more
established and well known in the Las Vegas market.
The non-gaming margin for the quarter ended March 31, 1997 was 13.7%, or
$536,000 compared to 15.8% or $596,000 reported during the prior year period.
The decline in non-gaming margin primarily resulted from a lower margin from
food and beverage sales as the property has implemented efforts to enhance
the quality of its food product in efforts to provide additional casino
patronage. As a general rule, the Company generates a negative margin from
its food and beverage sales in efforts to support its gaming operations. For
the six month period ended March 31, 1997 non-gaming margin was 12.6% or
$981,000 compared to 5.9% or $426,000 in 1996. The improvement in the
non-gaming margin during the first half of fiscal 1997 primarily resulted
from poor margins during the prior year first quarter due to the expansion of
restaurant facilities and food promotions. Subsequent to the first fiscal
quarter of 1996 the Company recognized strong improvements in the margin due
to its enhanced food product and enhanced pricing structure.
Marketing expenses for the second quarter of fiscal 1997 were $1.8
million, compared to $1.5 million reported during the prior year commensurate
period. The increase in marketing expenses resulted directly from additional
outdoor billboard advertising, costs associated with its "Wake the Dragon"
promotion and higher cash redemption fees from the Company's players club and
other cash promotions. During the six month period just ended, marketing
expenses totaled $3.7 million compared to $2.8 million in the prior year
period. The increase also resulted primarily from a $750,000 increase in
costs associated with its "Wake the Dragon" promotion and additional cash
prize drawings.
11
<PAGE>
BLUE DIAMOND HOTEL & CASINO, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
General and administrative expenses ("G&A") consist primarily of costs
from the Company's human resources, security, surveillance, credit,
purchasing, facilities and accounting departments. Total G&A expenses for
the quarter and six months ended March 31, 1997 were $2.8 million and $5.6
million, respectively, compared to $3.0 million and $6.0 million,
respectively, reported during the same prior year periods. The lower G&A
expenses resulted primarily from a $250,000 and $460,000 improvement in
payroll costs, respectively, as the Company continues its efforts to
implement overhead reduction measures. During the three and six month
periods just ended the Company incurred rent expenses of $1.4 million and
$2.7 million, respectively, related to leasing the land and building
facilities of the casino property.
Depreciation expense for the quarter ended March 31, 1997 was $247,000
compared to $346,000 the same prior year period. For the first half of
fiscal 1997, the Company realized a 26% improvement in depreciation expenses
resulting from the write-down of fixed assets during the third quarter of
fiscal 1996 in accordance with the Company's agreement to exchange its
interest in the Company to the owner and lessor of the Boomtown Las Vegas
property. In June, 1996 the Company wrote-down its fixed assets from
approximately $6.1 million to $1.0 million related to the revaluation of
property assets in accordance with the pending divestiture.
The Company incurred net interest expense of $1.1 million during the
second quarter of fiscal 1997 compared to $994,000 during the same prior year
period. On a year-to-date basis the Company reported net interest expense of
$2.1 million compare to $1.8 million during the prior year same period. The
majority of the interest expense is charged by Boomtown, Inc. on the
outstanding note payable, the additional interest expense resulted from a
higher outstanding note balance.
GUARANTEE OF BOOMTOWN NOTES BY THE PARTNERSHIP
In November 1993, Boomtown closed the issuance and sale of an aggregate
of $103.5 million principal amount of 11.5% First Mortgage Notes due November
1, 2003 (the "Notes") and warrants to purchase 472,000 shares of Boomtown's
Common Stock. Payment of the principal, interest and any other amounts owing
under the Notes has been unconditionally guaranteed by certain subsidiaries
of Boomtown, including Blue Diamond. See the Indenture, which is hereby
incorporated by reference, attached as Exhibit 10.36 to Boomtown, Inc.'s
Annual Report on Form 10-K for the year ended September 30, 1994.
Some statements set forth above include "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and are
subject to the safe harbors created thereby.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits enclosed herein are detailed on the Schedule of Exhibits on
page 15.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
Blue Diamond Hotel & Casino, Inc.
Registrant
/s/ PHIL E. BRYAN
Date: May 14, 1997 ------------------------------------------------
Phil E. Bryan, President; Chief Operating Officer
/s/ JON L. WHIPPLE
Date: May 14, 1997 ------------------------------------------------
Jon L. Whipple, Vice President of Finance;
Principal Accounting and Financial Officer
14
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
10.1(1) Memorandum of Understanding dated March 15, 1993 among Boomtown,
Inc., Industry Hills Visitor Accommodations Center, Blue Diamond
Hotel & Casino, Inc. ("Blue Diamond"), Majestic Realty Co.
("Majestic"), and Edward P. Roski, Jr. ("Roski").
10.2(2) Stockholders and Affiliates Agreement dated as of June 30, 1993 by and
among Blue Diamond, Edward P. Roski, Sr., Roski, Boomtown, Inc., IVAC,
a California general partnership formerly known as Industry Hills
Visitor Accommodations Center, a California general partnership
("IVAC") and Majestic.
10.3(5) First Amendment to and Clarification of Stockholders and Affiliates
Agreement dated as of November 10, 1993 between Blue Diamond, Edward
P. Roski, Sr., Roski, the Roski Community Property Trust, the Roski
Senior Revocable Trust, Boomtown, Inc., IVAC and Majestic.
10.4(2) Lease dated as of June 30, 1993 between IVAC and Blue Diamond.
10.5(5) First Amendment to lease dated as of November 10, 1993 between IVAC
and Blue Diamond.
10.6(2) Purchase Option Agreement dated as of June 30, 1993 by and among
IVAC, Boomtown, Inc. and Blue Diamond.
10.7(5) Amendment to Purchase Option Agreement; Consent to Assignment dated
as of November 10, 1993 between IVAC, Boomtown, Inc. and Blue Diamond.
10.8(2) Development and Pre-Opening Services Agreement dated as of June 30,
1993 between Boomtown, Inc., Blue Diamond and IVAC.
10.9(2) Management Agreement dated as of June 30, 1993 between Boomtown, Inc.,
and Blue Diamond.
10.10(2) Affiliate Loan Agreement dated as of June 30, 1993 by and among IVAC,
Majestic and Boomtown, Inc.
10.11(2) Bridge Loan Agreement dated as of June 30, 1993 by and among IVAC and
Boomtown, Inc.
10.12(5) Amendment No. 1 to Bridge Loan Agreement dated as of November 10, 1993
between IVAC and Boomtown, Inc.
15
<PAGE>
SCHEDULE OF EXHIBITS (continued)
EXHIBIT
NUMBER DESCRIPTION
10.13(2) Trademark License Agreement dated as of June 30, 1993 by and between
Boomtown, Inc. and Blue Diamond.
10.14(2) Boomtown Stockholders Agreement dated as of June 30, 1993 by and among
Boomtown, IVAC and Roski.
10.15(2) Standard Form Agreement Between Owner and Designer/Builder, Part I
Agreement - Preliminary Design and Budgeting, dated as of May 10, 1993
between IVAC and Commerce Construction Co., Inc., and the Standard
Form of Agreement Between Owner and Designer/Builder, Part 2 Agreement
- Final Design and Construction dated as of May 17, 1993 between
Commerce Construction Co., Inc. and related documents.
10.16(5) Subordination Agreement dated as of November 10, 1993 between
Majestic, IVAC and Boomtown, Inc.
10.17(5) Omnibus Consent Agreement dated as of November 10, 1993 between Blue
Diamond, Edward P. Roski, Sr., Roski, the Roski Community Property
Trust, the Roski Senior Revocable Trust, Boomtown, Inc., IVAC and
Majestic.
10.18(3) Purchase Agreement dated as of November 3, 1993 among Boomtown, Inc.,
Boomtown Hotel & Casino, Inc., Blue Diamond, Louisiana-I Gaming, L.P.,
Louisiana Gaming Enterprises, Inc., Mississippi-I Gaming, L.P.,
Bayview Yacht Club, Inc., Oppenheimer & Co., Inc. and Sutro & Co.
Incorporated.
10.19(4) Stock Acquisition Agreement and Plan of Reorganization dated June 30,
1994 by and between Boomtown, Inc. and Roski.
10.20(6) Agreement between Boomtown, Hollywood Park and Edward P. Roski, Jr.
("Swap Agreement") effectively terminating the lease of the Blue
Diamond Property and selling virtually all assets and liabilities
effective with the close of Boomtown's merger with Hollywood Park.
- --------------------
(1) Incorporated by reference to the exhibit filed with Boomtown Inc.'s Current
Report on Form 8-K filed with the SEC on March 18, 1993.
(2) Incorporated by reference to the exhibit filed with Boomtown Inc.'s Current
Report on Form 8-K filed with the SEC on July 28, 1993.
(3) Incorporated by reference to the exhibit filed with Boomtown Inc.'s Form
10-K for the fiscal year ended September 30, 1993.
16
<PAGE>
SCHEDULE OF EXHIBITS (continued)
EXHIBIT
NUMBER DESCRIPTION
(4) Incorporated by reference to the exhibit filed with the Company's Form 10-Q
for the quarter ended June 30, 1994.
(5) Incorporated by reference to the exhibit filed with Boomtown Inc.'s Form
10-K for the fiscal year ended September 30, 1994.
(6) Incorporated by reference to the exhibit filed with Boomtown Inc.'s Form
10-Q for the quarter ended June 30, 1996.
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BLUE DIAMOND
HOTEL & CASINO INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,811
<SECURITIES> 0
<RECEIVABLES> 272
<ALLOWANCES> 0
<INVENTORY> 363
<CURRENT-ASSETS> 4,837
<PP&E> 2,679
<DEPRECIATION> 2,039
<TOTAL-ASSETS> 7,488
<CURRENT-LIABILITIES> 48,153
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (40,666)
<TOTAL-LIABILITY-AND-EQUITY> 7,488
<SALES> 0
<TOTAL-REVENUES> 24,203
<CGS> 0
<TOTAL-COSTS> 14,678
<OTHER-EXPENSES> 12,814
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,136
<INCOME-PRETAX> (5,425)
<INCOME-TAX> (1,763)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,662)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
