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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 December 31, 1996 Commission File Number 0-20648
LOUISIANA - I GAMING, L.P.
(Exact Name of Registrant as Specified in its Charter)
Louisiana 72-1238179
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(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
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LOUISIANA - I GAMING, L.P.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets, September 30, 1996 and December 31, 1996 . . . . . . 3
Statements of Operations for the Three Months
Ended December 31, 1995 and 1996 . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows for the Three Months
Ended December 31, 1995 and 1996 . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .11
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . .11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
SCHEDULE OF EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LOUISIANA - I GAMING, L.P.
BALANCE SHEETS
(in thousands)
September 30, December 31,
1996 1996
------------- ------------
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 3,512 $ 3,894
Accounts receivable, net 94 135
Inventories 205 246
Prepaid expenses 1,357 1,046
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Total current assets 5,168 5,321
Property and equipment, at cost, net (Note 2) 55,776 55,671
Goodwill, net -- 4,018
Other assets 161 137
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Total assets $61,105 $65,147
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------- -------
LIABILITIES AND PARTNERS' CAPITAL:
Current liabilities:
Accounts payable $ 704 $ 755
Accrued compensation 843 1,124
Other accrued liabilities 2,907 3,056
Note payable - Boomtown, Inc. 25,695 27,460
Accrued interest payable - Boomtown, Inc. 242 237
Long-term debt due within one year (Note 2) 2,097 2,017
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Total current liabilities 32,488 34,649
Contingencies (Note 3)
Long-term debt due after one year (Note 2) 2,288 1,867
Deferred gain 112 --
Partners' deficit:
General partner 1,301 1,422
Limited partner 24,916 27,209
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Total partners' capital 26,217 28,631
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Total liabilities and partners' capital $61,105 $65,147
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See accompanying notes.
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LOUISIANA - I GAMING, L.P.
STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
Three Months Ended
December 31,
1995 1996
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Revenues:
Gaming $16,460 $16,989
Family entertainment center 198 176
Food and beverage 141 70
Cabaret 203 272
Other income 201 127
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17,203 17,634
Costs and Expenses:
Gaming 6,641 6,998
Gaming equipment leases 433 371
Family entertainment center 151 119
Food and beverage 245 225
Cabaret 149 192
Other operating expenses 15 56
Marketing 1,237 961
Management fee-Boomtown, Inc. 255 240
General and administrative 4,100 4,437
Depreciation and amortization 608 757
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13,834 14,356
Income from operations 3,369 3,278
Interest and other income (expense), net (1,161) (863)
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Net Income $ 2,208 $ 2,415
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------- -------
Net Income allocated to partners:
General partner $ 101 121
Limited partners 2,107 2,294
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$2,208 $2,415
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------- -------
See accompanying notes.
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LOUISIANA - I GAMING, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
Three Months Ended
December 31,
1995 1996
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Cash flows from operating activities:
Net income $ 2,208 $ 2,415
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 608 757
Changes in operating assets and liabilities 511 592
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Net cash provided by operating activities 3,327 3,764
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Cash flows from investing activities:
Increase in construction related payables 9
Payments for purchases of property and equipment (144) (627)
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Net cash used in investing activities (135) (627)
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Cash flows from financing activities:
Note payable-Boomtown, Inc., net (1,458) (2,254)
Principal payments on long-term debt (382) (501)
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Net cash used in financing activities (1,840) (2,755)
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Net increase in cash and cash equivalents 1,352 382
Cash and cash equivalents:
Beginning of year 3,072 3,512
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End of period $ 4,424 $ 3,894
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------- -------
See accompanying notes.
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LOUISIANA - I GAMING, L.P.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
BASIS OF PRESENTATION AND NATURE OF BUSINESS - Louisiana-I Gaming, L.P.,
(the "Partnership" or "Boomtown New Orleans" or "Boomtown Belle" or the
"Company") a Louisiana limited partnership was majority owned and controlled by
Boomtown, Inc. ("Boomtown") and on November 18, 1996, Boomtown entered into an
agreement with its minority partner whereby his 7.5% minority interest was
purchased by Boomtown (See Note 5). The Partnership commenced operations in
August 1994 on a 50-acre site in Harvey, Louisiana, approximately ten miles from
downtown New Orleans Gaming operations are conducted from a 250-foot replica of
a paddlewheel riverboat offering 912 slot machines and 56 table games (including
blackjack ("21"), craps, poker, roulette, pai gow poker, let it ride and
Caribbean stud) in a 30,000-square foot casino. The land-based facility
adjacent to the riverboat dock is composed of a western-themed, 88,000-square
foot facility. The first floor of the building opened December 1994, and offers
the patrons of the Boomtown Belle a deli-style restaurant, a 20,000-square foot
family entertainment center and a western saloon/dance hall. In addition, the
land-based facility provides for staging of the gaming vessel. This facility is
the only one of its type in the New Orleans area and it attracts both families
and adults by providing entertainment for non-gaming customers while also
providing incentive for gaming customers to increase the frequency and duration
of their visits.
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
Partnership considers necessary for a fair presentation of its financial
position at December 31, 1996, the results of operations and cash flows for the
three months ended December 31, 1995 and 1996, have been included. The
Partnership's operations are seasonal and thus operating results for the three
months ended December 31, 1996 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 Partnership'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, December 31,
1996 1996
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13% note payable $3,227,000 $2,926,000
11.5% note payable 538,000 409,000
10.5% capital lease obligation 620,000 549,000
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4,385,000 3,884,000
Less amounts due in one year 2,097,000 2,017,000
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$2,288,000 $1,867,000
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LOUISIANA - I GAMING, L.P.
NOTES TO FINANCIAL STATEMENTS
2. LONG-TERM DEBT (CONTINUED)
The 13% note is secured by a first preferred mortgage on the boat with a
net book value of $17,106,000 as of December 31, 1996. This note is payable in
48 monthly installments of approximately $134,000 and matures in January 1999.
The 11.5% note payable is secured by various furniture, fixtures and
equipment with a net book value of approximately $843,000 as of December 31,
1996. This note is payable in 36 monthly installments of approximately $48,000
and matures in September 1997.
The 10.5% capital lease obligation is secured by various furniture,
fixtures and equipment with a net book value of $1,000,000 as of December 31,
1996. This note is payable in 30 monthly installments of approximately $26,000
and matures in September 1998.
3. CONTINGENCIES
DEBT GUARANTEES - 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 full and
unconditional guarantee by the Partnership, as defined in the indenture relating
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 operating leases; limitations on
dividends, repurchases of capital stock of Boomtown and redemption 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 Partnership is a guarantor for a promissory note, with an
outstanding principal balance of $336,000 at December 31, 1996 of Blue Diamond
Hotel & Casino, Inc., a majority owned and controlled partnership of Boomtown.
The Company is also a guarantor of a note payable with an outstanding
balance of $243,000 at December 31, 1996, of Mississippi-I Gaming, L.P., a
majority owned and controlled Partnership of Boomtown.
4. MANAGEMENT FEE ALLOCATION
Boomtown is responsible for managing the operations of the Company and
other of its subsidiaries (collectively the "Subsidiaries"). Boomtown charges
the Subsidiaries for their pro-rata share of the costs it incurred relative to
this management function (the "Management Fee"). During the quarter ended
December 31, 1995 and 1996, the Partnership recorded Management Fees in the
amount of $255,000 and $240,000, respectively.
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LOUISIANA - I GAMING, L.P.
NOTES TO FINANCIAL STATEMENTS
5. OTHER EVENTS
MINORITY PURCHASE AGREEMENT - On November 18, 1996 the Company entered into
an agreement with Eric Skrmetta in which Boomtown agreed to pay $5,673,000 in
return for Skrmetta's 7 .5% interest in the Partnership in addition to releasing
the Company from any and all claims, liabilities and causes of action of any
kind arising from or related to the Partnership agreement. The terms set forth
thereto require Boomtown to pay a down payment of $500,000 on or before December
5, 1996 and the remaining $5,173,000 to be paid not later than August 10, 1997.
Additionally, the $5,173,000 shall be reduced by a discount for the time that
the amount or any portion thereof is paid in full prior to August 10, 1997.
For a full discussion of the terms of the minority purchase agreement as
described above see exhibit number 10.3(4) of the Partnership's Form 10-K for
the year ended September 30, 1996.
BOOMTOWN'S PROPOSED MERGER WITH HOLLYWOOD PARK, INC. ("HOLLYWOOD PARK") -
On April 23, 1996, Boomtown entered into an Agreement and Plan of Merger (the
"Merger Agreement") 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 (the "Effective Date"), 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 only been approved by Mississippi gaming
authorities. The Merger is also subject to the approval of gaming jurisdictions
in Louisiana and Nevada.
Certain additional matters relating to the signing of the Merger Agreement
and a complete description of the Merger Agreement are more fully described in
the Company's Form 8-K dated April 23, 1996, including the Agreement and Plan of
Merger filed as exhibit 2.1 thereto, and filed with the Securities and Exchange
Commission on May 3, 1996.
8
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LOUISIANA - I GAMING, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OFOPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain items from the Partnership's
statements of operations as a percentage of total revenues for the three months
ended December 31, 1995 and 1996 (unaudited):
Three Months Ended
December 31,
1995 1996
---- ----
Revenues:
Gaming 95.7% 96.3%
Non-gaming 4.3 3.7
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100.0 100.0
Operating expenses:
Gaming 41.1 41.8
Non-gaming 3.3 3.3
Marketing, general & administrative 31.0 30.6
Management fee - Boomtown, Inc. 1.5 1.4
Depreciation and amortization 3.5 4.3
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80.4 81.4
Income from operations 19.6 18.6
Interest and other income (expense), net (6.7) (4.9)
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Net income 12.9% 13.7%
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Total revenues for the quarters ended December 31, 1996 and 1995 were $17.6
million and $17.2 million, respectively, an increase of 2.5% from the prior year
quarter. Total gaming revenues were $17.0 million, a 3.2% increase from $16.5
million recorded during the first quarter of fiscal 1996. Slot machines
contributed 72.5% of gaming revenues during the first fiscal quarter of 1997 as
compared to 74.7% during the same period of fiscal 1996. The increase in slot
revenues can be attributed to more attractive, higher appeal slot machines which
received higher play. During the first fiscal quarter of 1997 the gaming vessel
received 371,000 gaming passengers, down 1% from the same prior year period.
Although the number of passengers decreased, the property experienced an
increase in average win per passenger from $44.06 to $46.40 in the first quarter
of fiscal 1997. This is attributable to better marketing efforts and additional
incentives provided to gaming patrons.
Non-gaming revenues were $645,000 during the current year quarter
consisting primarily of revenues from the property's family entertainment center
and showroom. This compares to revenues of $743,000 during the same prior year
quarter. The decline in non-gaming revenues resulted primarily from lower
patronage at the property's family entertainment center and lower food and
beverage sales due primarily to limited access to the family entertainment
center and deli while construction was being performed on the Company's new
buffet. Additionally, during the
9
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LOUISIANA - I GAMING, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
quarter the property began operations of its general store and generated
revenues of $47,000 in its first full quarter of operations.
The gaming margin for the quarters ended December 31, 1996 and 1995 were
$9.6 million or 56.6%, and $9.4 million or 57.0%, respectively. The slight
decline in gaming margin resulted from higher gaming taxes during the current
year quarter due to a change in calculating the tax during the first quarter of
fiscal 1996. The margin percentage decline was offset by lower payroll expenses
in the table games and slot departments.
Marketing expenses declined 22% during the current year quarter to $961,000
as compared to $1.2 million during the first quarter of fiscal 1996. The
decline in advertising and promotional expenses resulted from the discontinuance
of the Company's bus tour program, the reduction of direct mail advertising to
customers, merchandise costs associated with the Company's player club and less
outdoor and media advertising.
General and administrative expenses totaled $4.4 million during the first
quarter of fiscal 1997 as compared to $4.1 million during the same prior year
period. The 8.2% increase resulted from higher worker's compensation insurance
premiums in addition to other health and medical expenses, higher maintenance
and security payroll costs in order to comply with new gaming requirements,
costs associated with the Company's campaigning efforts during the recent gaming
referendum presented in Louisiana and other administrative fees.
Depreciation and amortization expense increased $149,000 or 24.5% during
the Company's first fiscal quarter of 1997 resulting from an increase in
depreciable assets and amortization of goodwill related to the recent
transaction in which the Company purchased its minority partners interest.
Additionally, during the quarter ended December 31, 1996 interest expense
declined $293,000 or 25.2% from the prior year quarter primarily as a result of
principle pay down on the Company's outstanding note obligation to Boomtown,
Inc.
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 the Partnership. See the Indenture, which is hereby incorporated by
reference, attached as Exhibit 12.36 to Boomtown, Inc.'s Annual Report on Form
10-K for the year ended September 30, 1994.
10
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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
13.
11
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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.
Louisiana - I Gaming, L.P.
Registrant
Date: February 14, 1997 /s/ Phil E. Bryan
-------------------------------------------------
Phil E. Bryan, President; Chief Operating Officer
Date: February 14, 1997 /s/ Jon L. Whipple
-------------------------------------------------
Jon L. Whipple, Vice President of Finance;
Principal Accounting and Financial Officer
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SCHEDULE OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
10.1(1) Letter of Intent dated as of March 26, 1993 among Boomtown, Inc., The
Skrmetta Group, Inc. and Skrmetta Machinery Corporation, relating to
the property in Harvey, Louisiana.
10.2(2) Letter Agreement dated April 16, 1993 among Boomtown, Inc., Raphael
Skrmetta, The Skrmetta Group and Skrmetta Machinery Corporation.
10.3(3) Purchase Agreement dated as of November 3, 1993 among Boomtown, Inc.,
Boomtown Hotel & Casino, Inc., Blue Diamond Hotel & Casino, Inc.,
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.
10.3(4) Minority Purchase Agreement dated November 18, 1996 among Louisiana-I
Gaming, Inc., Boomtown, Inc. and Eric Skrmetta.
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(1) Incorporated by reference to the exhibit filed with Boomtown's Current
Report on Form 8-K filed with the SEC on April 1, 1993.
(2) Incorporated by reference to the exhibit filed with Boomtown's Registration
Statement on Form S-1 (File No. 33-61198), effective May 24, 1993.
(3) Incorporated by reference to the exhibit filed with Boomtown's Form 10-K
for the fiscal year ended September 30, 1993.
(4) Incorporated by reference to the exhibit filed with Boomtown's Form 10-K
for the fiscal year ended September 30, 1996.
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LOUISIANA-I
GAMING, L.P. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,894
<SECURITIES> 0
<RECEIVABLES> 135
<ALLOWANCES> 0
<INVENTORY> 246
<CURRENT-ASSETS> 5,321
<PP&E> 61,368
<DEPRECIATION> 5,697
<TOTAL-ASSETS> 65,147
<CURRENT-LIABILITIES> 34,649
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,631
<TOTAL-LIABILITY-AND-EQUITY> 65,147
<SALES> 0
<TOTAL-REVENUES> 17,634
<CGS> 0
<TOTAL-COSTS> 7,961
<OTHER-EXPENSES> 6,395
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 863
<INCOME-PRETAX> 2,415
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> 2,415
<EPS-PRIMARY> 0
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