SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999, 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 000-25306
EQUUS GAMING COMPANY L.P.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 52-1846102
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 Munoz Rivera Avenue
Doral Building, 7th Floor
Hato Rey, PR 00918
- - --------------------------------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(787) 753-0676
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), 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. 8,389,824 Class A Units
<PAGE>
EQUUS GAMING COMPANY L.P.
FORM 10 Q
INDEX
PAGE
PART I - FINANCIAL INFORMATION NUMBER
------
Item 1 - Consolidated Financial Statements
Consolidated Statements of Income (Loss) for the
Six Months Ended June 30, 1999 and 1998 (Unaudited) 1
Consolidated Statement of Loss for the Three
Months Ended June 30, 1999 and 1998 (Unaudited) 2
Consolidated Statements of Comprehensive Income
(Loss) for the Six and the Three Months Ended
June 30, 1999 and 1998 (Unaudited) 3
Consolidated Balance Sheets at June 30, 1999
(Unaudited) and December 31, 1998 (Audited) 4
Consolidated Statement of Changes in Partners' Deficit
for the Six Months Ended June 30, 1999 (unaudited) 6
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1999 and 1998 (Unaudited) 7
Notes to Consolidated Financial Statements 9
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Results of Operations 15
Liquidity and Capital Resources 18
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 22
Item 2 - Material Modifications of Rights of
Registrant's Securities 22
Item 3 - Default upon Senior Securities 22
Item 4 - Submission of Matters to a Vote of
Security Holders 22
Item 5 - Other Information 22
Item 6 - Exhibits and Reports on Form 8-K 22
Signatures 23
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
1999 1998
----------- -----------
<S> <C> <C>
REVENUES:
Commissions on wagering $ 33,355,001 $31,173,379
Net revenues from lottery services 265,538 621,956
Other revenues 2,056,264 1,707,904
----------- -----------
35,676,803 33,503,239
----------- -----------
EXPENSES:
Payments to horseowners 16,425,853 15,214,005
Salaries, wages and employee benefits 5,473,900 5,598,469
Operating expenses 3,953,395 4,514,403
General and administrative 1,774,659 1,171,058
Marketing, television and satellite costs 2,212,498 1,933,323
Financial expenses 4,147,602 4,449,590
Depreciation and amortization 1,722,287 1,822,993
----------- -----------
35,710,194 34,703,841
----------- -----------
LOSS BEFORE INCOME TAXES, MINORITY INTEREST
AND EXTRAORDINARY ITEM (33,391) (1,200,602)
PROVISION FOR INCOME TAXES 329,914 -
----------- -----------
LOSS BEFORE MINORITY INTEREST AND
EXTRAORDINARY ITEM (363,305) (1,200,602)
MINORITY INTEREST IN LOSSES (430,705) (8,921)
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 67,400 (1,191,681)
EXTRAORDINARY ITEM - discount on early
redemption of First Mortgage Notes 22,680 -
----------- -----------
NET INCOME (LOSS) $ 90,080 $(1,191,681)
=========== ===========
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 901 $ (11,917)
Limited Partners 89,179 (1,179,764)
----------- -----------
$ 90,080 $(1,191,681)
=========== ===========
BASIC AND DILUTED PER UNIT NET INCOME (LOSS) $ 0.01 $ (0.19)
=========== ===========
WEIGHTED AVERAGE UNITS OUTSTANDING 7,141,891 6,333,617
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED STATEMENTS OF LOSS
FOR THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED)
1999 1998
------------- -------------
<S> <C> <C>
REVENUES:
Commissions on wagering $ 16,045,600 $ 14,796,612
Net revenues from lottery services 123,045 393,389
Other revenues 522,472 876,337
------------- -------------
16,691,117 16,066,338
------------- -------------
OPERATING EXPENSES:
Payments to horse owners 8,032,784 7,235,852
Salaries, wages and employee benefits 2,561,110 2,822,028
Operating expenses 1,789,963 2,309,818
General and administrative 996,186 605,043
Marketing and satellite transmission costs 1,282,458 991,851
Financial expenses 2,073,647 2,244,609
Depreciation and amortization 846,343 907,576
------------- -------------
17,582,491 17,116,777
------------- -------------
LOSS BEFORE INCOME TAXES, MINORITY INTEREST
AND EXTRAORDINARY ITEM (891,374) (1,050,439)
INCOME TAX BENEFIT (8,573) (99,500)
------------- -------------
LOSS BEFORE MINORITY INTEREST AND
EXTRAORDINARY ITEM (882,801) (950,939)
MINORITY INTEREST IN LOSSES (370,243) (9,124)
------------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (512,558) (941,815)
EXTRAORDINARY ITEM - discount on early
redemption of First Mortgage Notes 22,680 -
------------- -------------
$ (489,878) $ (941,815)
NET LOSS ============= =============
ALLOCATION OF NET LOSS:
General Partners $ (4,899) $ (9,418)
Limited Partners (484,979) (932,397)
------------- -------------
$ (489,878) $ (941,815)
============= =============
BASIC AND DILUTED NET LOSS PER UNIT $ (0.06) $ (0.15)
============= =============
WEIGHTED AVERAGE UNITS OUTSTANDING 8,401,143 6,333,617
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE SIX AND THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 1998
------------- -------------
<S> <C> <C>
NET INCOME (LOSS) $ 90,080 $(1,191,681)
OTHER COMPREHENSIVE INCOME (LOSS):
Currency translation adjustments 130,761 (38,661)
------------- -------------
COMPREHENSIVE INCOME (LOSS) $ 220,841 $(1,230,342)
============= =============
FOR THE THREE MONTHS ENDED JUNE 30,
NET LOSS $ (489,878) $ (941,815)
OTHER COMPREHENSIVE INCOME (LOSS):
Currency translation adjustments 65,239 (28,326)
------------- -------------
COMPREHENSIVE LOSS $ (424,639) $ (970,141)
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
1999 1998
-------------- --------------
(Unaudited) (Audited)
<S> <C> <C>
CASH AND CASH EQUIVALENTS:
Unrestricted $ 1,287,585 $ 6,462,992
Restricted 623,639 174,275
-------------- --------------
1,911,224 6,637,267
-------------- --------------
PROPERTY AND EQUIPMENT:
Land 7,924,549 7,128,858
Buildings and improvements 53,460,518 44,615,936
Equipment 12,058,114 10,924,669
-------------- --------------
73,443,181 62,669,463
Less - accumulated depreciation (16,605,218) (15,199,341)
-------------- --------------
56,837,963 47,470,122
-------------- --------------
DEFERRED COSTS, NET:
Financing 2,723,187 3,075,706
Costs of Panama contract 2,035,000 2,090,000
Other 383,635 209,852
-------------- --------------
5,141,822 5,375,558
-------------- --------------
OTHER ASSETS:
Accounts receivable, net 1,826,958 1,160,468
Notes receivable 1,322,169 1,708,211
Investment in Equus Comuneros S.A.("SECSA") - 950,000
Prepayments and other assets 830,325 737,580
-------------- --------------
3,979,452 4,556,259
-------------- --------------
$ 67,870,461 $ 64,039,206
============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED BALANCE SHEETS
(continued)
LIABILITIES AND PARTNERS' DEFICIT
JUNE 30, DECEMBER 31,
1999 1998
-------------- --------------
(Unaudited) (Audited)
<S> <C> <C>
FIRST MORTGAGE NOTES:
Principal, net of note discount of
$975,240 and $1,068,540 $ 53,478,760 $ 56,194,460
Accrued interest 265,963 317,069
-------------- --------------
53,744,723 56,511,529
-------------- --------------
OTHER LIABILITIES:
Accounts payable and accrued liabilities 8,526,089 8,088,343
Outstanding winning tickets and refunds 1,059,947 519,484
Notes payable 2,878,374 2,841,797
Bonds payable 4,000,000 4,000,000
Capital lease obligations 2,547,959 2,249,076
-------------- --------------
19,012,369 17,698,700
-------------- --------------
DEFERRED INCOME TAXES 2,958,453 2,628,539
-------------- --------------
MINORITY INTEREST 3,073,563 1,266,849
-------------- --------------
COMMITMENTS AND CONTINGENCIES, see Note 2
PARTNERS' DEFICIT:
General Partners (743,235) (745,444)
Limited Partners - 10,383,617 units
authorized; 8,389,824 and 5,398,060
units issued and outstanding in 1999
and 1998, respectively (10,175,412) (13,320,967)
-------------- --------------
(10,918,647) (14,066,411)
-------------- --------------
$ 67,870,461 $ 64,039,206
============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 1999
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
------------- -------------- --------------
<S> <C> <C> <C>
BALANCES, December 31, 1998 $ (745,444) $ (13,320,967) $ (14,066,411)
Net income for the period 901 89,179 90,080
Currency translation adjustments 1,308 129,453 130,761
Cash distributions to minority
partner of HDA - (18,106) (18,106)
Issuance of units, net of costs - 2,945,029 2,945,029
------------- -------------- --------------
BALANCES, June 30, 1999 $ (743,235) $ (10,175,412) $ (10,918,647)
============= ============== ==============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss). . . . . . . . . . . . . . . . . $ 90,080 $(1,191,681)
------------ ------------
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities-
Depreciation and amortization. . . . . . . . 2,064,747 2,175,550
Deferred income tax provision. . . . . . . . . 277,772 -
Currency translation adjustments . . . . . . . 66,243 (38,661)
Minority interest. . . . . . . . . . . . . . . (6,961) (8,921)
Extraordinary item . . . . . . . . . . . . . 22,680 -
Decrease (increase) in assets-
Accounts receivable. . . . . . . . . . . . . (403,609) (850,490)
Prepayments and other assets . . . . . . . 478,482 (235,514)
Deferred costs . . . . . . . . . . . . . . . (148,862) 339,937
Increase (decrease) in liabilities-
Accrued interest on first mortgage notes . . (51,106) 16,735
Accounts payable and accrued liabilities. (1,876,911) 923,411
Outstanding winning tickets and refunds. . . 540,463 (2,047)
Other obligations . . . . . . . . . . . . . - (150,000)
------------ ------------
Total adjustments . . . . . . . . . . . . . . 962,938 2,170,000
------------ ------------
Net cash provided by operating activities . . 1,053,018 978,319
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . (6,123,358) (5,804,239)
Decrease (increase) in notes receivable, net . 386,042 (467,473)
Acquisition of ECOC cash accounts upon
termination of lease agreement . . . . . . . . . - 1,061,239
------------ ------------
Net cash used in investing activities. . . . (5,737,316) (5,210,473)
------------ ------------
</TABLE>
(continues)
<PAGE>
<TABLE>
<CAPTION>
EQUUS GAMING COMPANY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
(continued)
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of First Mortgage Notes. . . . . . . $(3,048,320) $ -
Contributions by minority stockholders. . . . . 40,158 33,410
Repayment of loans to affiliates. . . . . . . . (200,000) -
Loans from financial institutions . . . . . . . 1,075,000 5,802,920
Payments on notes payable and capital
lease obligations . . . . . . . . . . . . . . (934,578) (817,091)
Increase in deferred costs. . . . . . . . . . . (7,499) (20,242)
Issuance of units . . . . . . . . . . . . . . . 3,051,600 -
Cash distributions to minority
partners of HDA . . . . . . . . . . . . . . . (18,106) -
------------ ------------
Net cash (used in) provided by
financing activities. . . . . . . . . . (41,745) 4,998,997
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . (4,726,043) 766,843
CASH AND CASH EQUIVALENTS, beginning of year. . . 6,637,267 507,656
------------ ------------
CASH AND CASH EQUIVALENTS, end of period. . . . . $ 1,911,224 $ 1,274,499
============ ============
SUPPLEMENTAL INFORMATION:
Interest paid . . . . . . . . . . . . . . . . . $ 4,057,925 $ 4,043,948
Income taxes paid . . . . . . . . . . . . . . . - 1,240
NONCASH TRANSACTIONS:
Equipment acquired through capital leases . . . 395,038 217,492
Acquisition of ECOC's non cash accounts upon
termination of lease agreement. . . . . . . . - (4,719,572)
Units appreciation rights . . . . . . . . . . . - 48,457
Contribution of Los Comuneros non cash assets,
net of liabilities (see Note 2) . . . . . . . 1,959,842 -
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
EQUUS GAMING COMPANY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:
Equus Gaming Company L.P. (the "Company"), a Virginia limited partnership,
is engaged in thoroughbred racing, wagering and other gaming businesses in
Central America and the Caribbean. Through its subsidiaries, the Company
operates four race tracks and manages its off-track betting systems in different
countries.
The Company has a 99% interest in Housing Development Associates S.E.
("HDA"), the owner of El Comandante Race Track ("El Comandante"), the only
licensed thoroughbred racing facility in Puerto Rico. El Comandante is
operated by a wholly-owned subsidiary of HDA, El Comandante Management Company,
LLC ("ECMC").
The Company has a 55% interest in Galapagos, S.A. ("Galapagos"), the
operator since April 1995 of the V Centenario Race Track in the Dominican
Republic ("V Centenario") and a 51% interest in Equus Entertainment de Panama,
S.A. ("Equus-Panama"), the operator since January 1, 1998 of the Presidente
Remon Race Track in the Republic of Panama ("Presidente Remon"). Both race
tracks are government-owned and operated by the Company's subsidiaries under
long-term contracts. The Company also has since early 1999 a controlling 50%
interest in Equus Comuneros S.A. ("SECSA"), the owner and operator of Los
Comuneros Race Track in Medellin, Colombia ("Los Comuneros").
CONSOLIDATION AND PRESENTATION
The consolidated financial statements as of June 30, 1999 and for the six
and the three month periods ended June 30, 1999 and 1998 are unaudited but
include all adjustments (consisting of normal recurring adjustments) which
management considers necessary for a fair presentation of the results of
operations of the interim periods. The operating results for the six months
ended June 30, 1999 are not necessarily indicative of the results that may be
expected for the year. Net income (loss) per Unit is calculated based on
weighted average of Units outstanding. Outstanding warrants to purchase Units
do not have a material dilutive effect on the calculation of earnings per Unit.
The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
These unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
("GAAP") have been condensed or omitted. While Management believes that the
disclosures presented are adequate to make the information not misleading, it is
suggested that these financial statements be read in conjunction with the
financial statements and the notes of the Company included in the Company's
Annual Report filed on Form 10-K for the year ended December 31, 1998.
<PAGE>
The Company consolidates in its financial statements the accounts of
entities in which it has a controlling interest in excess of 50%. The
accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries after eliminating all significant inter-company
transactions. All of the entities included in the consolidated financial
statements are hereinafter referred to collectively, when practicable, as the
"Company".
The Company has minority partners in HDA, Galapagos, Equus-Panama and
SECSA. Therefore, the Company recorded minority interest based on the income
and (losses) of these consolidated subsidiaries that are attributable to the
minority partners, as follows:
<TABLE>
<CAPTION>
For the Six Months For the Three Months
Ended June 30, Ended June 30
-------------------- --------------------
Subsidiary. . . 1999 1998 1999 1998
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
HDA. . . . . $ 22,110 $(8,921) $ 11,760 $(9,124)
Galapagos. . - - - -
Equus-Panama (49,923) - (79,073) -
SECSA. . . . (402,892) - (302,930) -
---------- -------- ---------- --------
$(430,705) $(8,921) $(370,243) $(9,124)
========== ======== ========== ========
</TABLE>
In general, the minority interest is calculated based on the ownership
interest of the minority partners: 1% in HDA, 45% in Galapagos, 49% in
Equus-Panama (effective October 22, 1998 after the issuance of new stock
pursuant to a public offering in Panama) and 50% in SECSA. However, during the
six months ended June 30, 1999 and 1998, the Company did not recognize minority
interest in Galapagos' losses amounting to $181,094 and $53,945, respectively,
because the minority partners have no legal obligation to fund such losses in
excess of their investment.
On May 14, 1999, the Company issued 80,000 units accredited investors
pursuant to the terms of a private offer that commenced in December 1998.
CURRENCIES
The Company consolidates its accounts with Galapagos and SECSA whose
functional currency are the Dominican Republic peso and the Colombian peso,
respectively. The United States dollars ("US$") are also a recording currency
<PAGE>
in these countries. US$ are exchanged into these foreign currencies ("FC$") and
vice versa through commercial banks and/or the central banks. The Company
remeasures the monetary assets and liabilities of the foreign subsidiaries that
were recorded in US$ into the FC$ using the exchange rates in effect at the
balance sheet date (the "current rate") and all other assets and liabilities and
capital accounts, at the historical rates. The Company then translates the
financial statements of the foreign subsidiaries from FC$ into US$ using the
current rates, for all assets and liabilities, and the average exchange rates
prevailing during the year, for revenues and expenses.
For the six months ended June 30, 1999 and 1998, net exchange losses
resulting from remeasurement of accounts, together with losses from foreign
currency transactions, amounted to $91,126 and $71,936, respectively, which
amounts are included as general and administrative expenses. Accumulated net
losses from changes in exchange rates due to the translation of assets and
liabilities of the foreign subsidiaries are included in partners' deficit and
at June 30, 1999 and December 31, 1998 amounted to $27,406 and $103,350
(including $35,590 from unsettled intercompany transactions), respectively. The
exchange rates in Dominican Republic as of June 30, 1999 and December 31, 1998
were US$1.00 to FC$16.30 and US$1.00 to FC$15.85, respectively. The average
exchange rates in Dominican Republic prevailing during the six months ended June
30, 1999 and 1998, were US$1.00 to FC$16.15 and US$1.00 to FC$15.09,
respectively. The exchange rate in Colombia as of June 30, 1999 and December
31, 1998 was approximately US$1.00 to FC$1,500.
The Company also consolidates its accounts with Equus-Panama whose
functional currencies are the Panama balboas and the US$. Because these
currencies are of equivalent value, there is no effect attributed to foreign
currency transactions of Equus-Panama.
2. COMMITMENTS AND CONTINGENCIES:
LOS COMUNEROS RACETRACK
SECSA is in the process of negotiating certain contracts in connection with
the operation of Los Comuneros, which should be in effect during 1999. In early
1999, SECSA received as a capital contribution from minority stockholders, all
assets and liabilities that were employed by the prior operator of Los
Comuneros. The assets consisted, mainly, of land, buildings and property for
approximately $4.7 million.
The liabilities included, mainly, accounts payable to vendors and
horseowners and certain financial obligations with various maturities through
2004. These obligations, which at June 30, 1999 amounted to approximately
$483,000 are recorded in the accompanying consolidated balance sheet as accounts
payable and accrued liabilities.
3. FIRST MORTGAGE NOTES:
Pursuant to a private offering, El Comandante Capital Corp. ("ECCC"), a
single-purpose wholly owned subsidiary of HDA, issued first mortgage notes in
the aggregate principal amount of $68 million (the "First Mortgage Notes") under
an indenture dated December 15, 1993 (the "Indenture").
<PAGE>
The First Mortgage Notes mature on December 15, 2003 and bear interest at
11.75%, payable semiannually. On January 5, 1999, HDA redeemed First
Mortgage Notes in the principal amount of $3 million (of which $380,000
corresponded to the Notes purchased by ECMC in December 1998) at 110% of par.
In June 1999, the Company purchased in the open market First Mortgage Notes
in the principal amount of $189,000, at a discount. The Company intends to hold
these First Mortgage Notes until maturity in cancellation of required partial
redemptions in future years, as shown below. In connection with this
transaction, the Company recognized as income $22,680 for the discount on the
Notes, which is included in the accompanying consolidated statements of income
(loss) as an extraordinary item.
HDA is required to redeem First Mortgage Notes commencing on December 15,
2000. The stated maturities of the First Mortgage Notes at June 30, 1999,
reduced by prior redemptions, are as follows (in thousands):
YEAR ENDING GROSS PURCHASED IN NET
JUNE 30, AMOUNT OPEN MARKET AMOUNT
---------- --------- ---------- ---------
2000 $ - $ - $ -
2001 563 563 -
2002 10,200 6,746 3,454
2003 10,200 - 10,200
2004 40,800 - 40,800
61,763 7,309 54,454
Less note discount (1,052) (77) (975)
-------- ----------- -----------
$60,711 $ 7,232 $53,479
======== =========== ===========
As of August 12, 1999, HDA has advanced Equus approximately $500,000, which
technically is not in conformity with the terms of the Indenture. HDA expects
to cure this default with the declaration of distributions in the future, based
on income generated by HDA.
4. BONDS AND NOTES PAYABLE AND CAPITAL LEASES:
The Company's outstanding notes payable consist of the following:
<TABLE>
<CAPTION>
The Company's outstanding notes payable consist of the following:
Balance
-----------------------
Maturity Interest June 30, December 31,
Borrower Description Date Rate 1999 1998
- - ------------ ------------------ ------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ECMC Line of Credit(a) 5/21/00 P+1.0% $ 193,270 $ 649,100
ECMC Term Loan (b) 1/05/00 P+0.75% 2,500,000 1,850,000
Equus-Panama Line of Credit(c) 8/25/99 10.5% 13,822 142,697
Equus-Panama Line of credit (c) 5/25/00 10.5% 46,282 -
Equus-Panama Term loan 4/12/00 10.5% 125,000 -
The Company Loan (d) - P+1.0% - 200,000
---------- -----------
$2,878,374 $ 2,841,797
========== ===========
</TABLE>
At June 30, 1999 and December 31, 1998, prime rate (P) was 8% and 7.75%,
respectively.
(a) Maximum outstanding balance is $750,000. Available to finance loans to
Puerto Rico horseowners for the acquisition of horses.
(b) Maximum outstanding balance is $2.5 million. Collateralized by the
First Mortgage Notes purchased in the open market (see Note 3).
(c) Maximum outstanding balance is $250,000. Available to finance loans to
Panama horseowners for the acquisition of horses.
(d) Loan made by IBC in 1998 and repaid in March, 1999.
Pursuant to a public offering, Equus-Panama issued $4 million in unsecured
bonds in October 1998. Interest is payable at 11% rate per annum on a quarterly
basis.
The following table summarizes future minimum payments on capital leases,
notes payable and bond payable of the Company and its consolidated subsidiaries:
<TABLE>
<CAPTION>
DUE DURING THE YEAR CAPITAL NOTES BONDS
ENDING JUNE 30, LEASES PAYABLE PAYABLE
- - -------------------- ------------ ----------- ----------
<S> <C> <C> <C>
2000 $ 1,177,044 $ 2,878,374 $ -
2001 899,862 - 600,000
2002 459,368 - 1,000,000
2003 278,662 - 1,200,000
- - -------------------- ------------ ----------- ----------
2,967,087 2,878,374 4,000,000
Less-interest (419,128) -
------------ ----------- ----------
2,547,959 $ 2,878,374 $ 4,000,000
============ =========== ==========
</TABLE>
<PAGE>
5. RELATED PARTY TRANSACTIONS:
The following represents a summary of amounts incurred for services
rendered by certain related parties, namely, Equus Management Company ("EMC"),
general partner of the Company, American Community Property Trust ("ACPT") and
Interstate General Company L.P. ("IGC"):
<TABLE>
<CAPTION>
For the Six For the Three
Months Ended Months Ended
Services Rendered June 30, June 30,
---------------- ----------------
To By Concept 1999 1998 1999 1998
- - ------------- ---- ----------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company ACPT Support agreement $16,200 $ 7,500 $ 8,100 $ 4,000
The Company EMC Directors fees 43,500 46,500 20,750 23,750
ECMC IGC Services of James
J. Wilson 67,500 - 33,750 -
EEC ACPT Rent office space 21,000 21,000 10,500 10,500
</TABLE>
6. SEGMENT INFORMATION (UNAUDITED):
The Company has identified four reportable segments, based on geographical
considerations: Puerto Rico, Dominican Republic, Colombia and Panama. The
following present the segment information for the three and the six months ended
June 30, 1999, and 1998 (in thousands):
<TABLE>
<CAPTION>
PUERTO DOMINICAN
RICO REPUBLIC COLOMBIA PANAMA TOTAL
-------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
1999- SIX MONTHS:
Commissions on wagering. . . . $26,285 $ 1,982 $ 662 $ 4,426 $33,355
Total revenues . . . . . . . . 27,549 2,678 875 4,574 35,676
Financial expenses . . . . . . 3,733 28 105 281 4,147
Depreciation and amortization. 1,154 165 126 277 1,722
Income (loss) before income
taxes, minority interest
and extraordinary item. . . 1,268 (402) (797) (102) (33)
Capital improvements . . . . . 4,911 16 866 330 6,123
Total assets . . . . . . . . . 51,243 1,569 6,195 8,864 67,871
1998 - SIX MONTHS:
Commissions on wagering. . . . $25,326 $ 2,139 $ - $ 3,708 $31,173
Total revenues . . . . . . . . 26,436 3,272 - 3,796 33,504
Financial expenses . . . . . . 4,193 62 - 194 4,449
Depreciation and amortization. 1,358 278 - 186 1,822
Loss before income taxes and
minority interest . . . . . (513) (120) - (568) (1,201)
Capital improvements . . . . . 1,349 (26) - 4,481 5,804
Total assets . . . . . . . . . 53,476 2,549 - 8,120 64,145
1999 - QUARTER:
Commissions on wagering. . . . $12,722 $ 903 $ 425 $ 1,996 $16,046
Total revenues . . . . . . . . 13,336 1,127 167 2,061 16,691
Financial expenses . . . . . . 1,875 12 42 144 2,073
Depreciation and amortization. 582 64 60 140 846
Income (loss) before income
taxes, minority interest
and extraordinary item. . . 208 (340) (597) (161) (891)
Capital improvements . . . . . 3,216 6 243 199 3,664
1998 - QUARTER:
Commissions on wagering. . . . $11,926 $ 912 $ - $ 1,958 $14,796
Total revenues . . . . . . . . 12,451 1,621 - 1,995 16,067
Financial expenses . . . . . . 2,063 23 - 158 2,244
Depreciation and amortization. 678 134 - 95 907
Income (loss) before income
taxes and minority interest (632) 83 - (502) (1,051)
Capital improvements . . . . . 829 - - 1,742 2,571
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- - -----------------------
The Company's results of operations are principally attributed to its
interests in thoroughbred horse race tracks in four countries, each of which is
owned and/or operated by a subsidiary: (i) El Comandante in Puerto Rico, owned
by Housing Development Associates S.E.("HDA") and operated since January 1,
1998 by El Comandante Management Company, LLC ("ECMC"), (ii) V Centenario in the
Dominican Republic, operated since April 1995 by Galapagos S.A., (iii)
Presidente Remon in Panama, operated since January 1, 1998 by Equus
Entertainment de Panama, S.A. ("Equus-Panama") and Los Comuneros in Colombia
owned and operated since early 1999 by Equus Comuneros, S.A. ("SECSA").
The following discussion compares the results of operations of the Company
for the six and the three months ended June 30, 1999, with the results of
operations for the six months and the three months ended June 30, 1998.
REVENUES
Revenues increased in the second quarter of 1999 by $625,000 (3.9%)
compared to the second quarter of 1998. During the six months ended June 30,
1999, revenues increased $2,174,000 (6.5%) from the comparative period of 1998.
The increase in revenues during the three and the six month periods was
attributed in part to revenues earned by SECSA of approximately $166,000 and
$875,000, respectively, which commenced operating Los Comuneros in early 1999.
COMMISSIONS ON WAGERING
Commissions on wagering increased $1,249,000 (8.4%) in the second quarter
of 1999 as compared to the second quarter of 1998. During the six months ended
June 30, 1999, commissions on wagering increased by $2,182,000 (7%) from the
<PAGE>
comparative period of 1998. The increase was the net result of increases in
wagering on races held at El Comandante, Presidente Remon and Los Comuneros,
offset by a decrease in wagering at V Centenario.
During the three and the six month periods, commissions on wagering at El
Comandante increased by $796,000 and $959,000, respectively. The increase in
wagering was mainly due to the fact that races are being held on Saturdays
instead of Thursday since November 14, 1998, when races resumed after Hurricane
Georges. Also, the 1998 periods (particularly the second quarter) were affected
by a strike of union workers opposing to the privatization of the Puerto Rico
Telephone Company ("PRTC"), an event that disrupted operations at the telephone
company, due to damage to the telephone lines, causing a reduction of wagering
at the off-track betting ("OTB") agency network.
During the three and the six month periods, commissions on wagering at
Presidente Remon increased by $37,000 and $718,000, respectively. The increase
in wagering was directly related to more OTB agencies on line, and more race
days during the 1999 periods (live racing commenced on February 14, 1998 with
two race days per week, increasing to three days in April 1998).
The decline in wagering at V Centenario continues to be attributable in
part to the competition posed by the government-licensed electronic lottery and
to the difficulties in arranging for live broadcasting of races by commercial
television with broad island-wide penetration.
During the three and the six month periods ended June 30, 1999, commissions
on wagering at Los Comuneros amounted to $425,000 and $662,000, respectively.
Live racing at Los Comuneros has been conducted only one day per week while the
OTB betting operation is upgraded and the race track improved.
NET REVENUES FROM LOTTERY SERVICES
Net revenues from lottery services by Galapagos in Dominican Republic
during the three and the six months ended June 30, 1999 decreased by $270,000
and $356,000, respectively, from the comparative periods of 1998. The decrease
in revenues was principally due to a reduction in the amount billed to the
lottery operator as reimbursement for the telephone line costs, as a result of
an amendment to the contract effective in late 1998.
OTHER REVENUES
Other revenues decreased $354,000 in the second quarter of 1999, as
compared to the second quarter of 1998. This decrease was principally
attributed to a correction to the revenues recognized by SECSCA during the first
quarter. During the six months ended June 30, 1999, other revenues increased by
$348,000 from the comparative period of 1998. Excluding revenues of SECSA of
$213,000, the increase was $135,000, principally attributed to more revenues of
the Panama operation, where the race track was reopened in February 14, 1998,
and additional income for El Comandante from the leasing of an unused area of
the parking lot at the race track since February 1999.
<PAGE>
EXPENSES
Expenses increased in the second quarter of 1999 by $465,000 (2.7%)
compared to the second quarter of 1998. During the six months ended June 30,
1999, expenses increased $1,006,000 from the comparative period of 1998. The
increase in each of the three and the six month periods was attributable to
approximately $763,000 and $1,674,000, respectively, in expenses of SECSA, net
of decreases in various categories of expenses of the other race tracks.
PAYMENTS TO HORSEOWNERS
Payments to horseowners increased $797,000 in the second quarter of 1999,
as compared to the second quarter of 1998. During the six months ended June 30,
1999 these payments increased by $1,212,000 from the comparative period of 1998.
Excluding payments to horseowners of Los Comuneros, there was an increase during
the three and the six months periods of $548,000 and $773,000, respectively,
which was principally related to the net increases in wagering.
El Comandante contract expired in April 1998. However, the Puerto Rico
Racing Board has extended the contract as an interim measure until the Company
and the horseowners reach a new agreement. The Company is presently under
negotiations with horseowners.
FINANCIAL EXPENSES
Financial expenses during the three and the six months periods ended June
30, 1999 decreased $171,000 and $302,000, respectively, from the comparative
periods of 1998. Excluding financial expenses of SECSA, there was a decrease
during the three and the six months periods of $213,000 and $407,000,
respectively. The decrease is primarily attributable to a reduction in
financing costs of the First Mortgage Notes, due to the purchase in December
1998 by ECMC of $7.5 million in principal amount of Notes (treated in the
consolidated financial statements of the Company as a redemption) and the
redemption in January 5, 1999 of $3 million in principal amount of Notes. The
decrease was offset in part by an increase due to interest on the $4 million in
unsecured bonds issued by Equus-Panama in October 1998.
DEPRECIATION AND AMORTIZATION
Depreciation decreased $61,000 in the second quarter of 1999 as compared to
the second quarter of 1998. During the six months ended June 30, 1999,
depreciation decreased $101,000 from the comparative period of 1998. Excluding
depreciation and amortization of SECSA, there was a decrease during the three
and the six month periods of $120,000 and $227,000, respectively. The decrease
was principally attributed to a reduction in depreciation of assets of El
Comandante due to the write-off of the book value of property damaged by
Hurricane Georges in late 1998.
OTHER EXPENSES
Other expenses decreased $100,000 to $6,629,000 in the second quarter of
1999 from $6,729,000 in the second quarter of 1998. During the six months ended
June 30, 1999, other expenses increased $197,000 to $13,414,000 from $13,217,000
in the comparative period of 1998. Excluding the expenses of SECSA during the
<PAGE>
three and the six month ended June 30, 1999 of $413,000 and $1,004,000,
respectively, there was a decrease in other expenses for these periods of
$513,000 and $807,000, respectively. The net decrease was attributable to a
combination of factors: (i) a full period of operations of Equus-Panama during
1999 (live racing operations at Presidente Remon commenced in February 14,
1998), (ii) decrease in salaries and payroll costs of El Comandante due to
reduction of personnel in various departments due to partial closing of several
areas at the race track (such as mutuels department and print shop), (iii)
reduction in satellite costs incurred for the simulcast of El Comandante races
to Dominican Republic due to change to a digital signal in mid-1998, (iv)
reduction in repair and maintenance work at El Comandante, as there are
currently major renovations and improvements underway for damage caused by
Hurricane Georges in September 1998, (v) increase in marketing costs due to a
strong advertising and promotion campaign in Puerto Rico, (vi) increase in
insurance premiums after heavy damage caused by Hurricane Georges and (vii)
increase in legal fees due to current negotiations by El Comandante of the
contract with horseowners, which expired in April, 1998.
PROVISION FOR INCOME TAXES
The provision for income tax is primarily related to Puerto Rico income
taxes on the Company's income from Puerto Rico sources related to its interest
in El Comandante, without taking into account results of operations of
Galapagos, Equus-Panama or SECSA. Due to accumulated losses, none of these
foreign subsidiaries requires a provision for income taxes.
MINORITY INTEREST
The Company's minority interest is attributed to the income and losses
allocable to the minority partners of Galapagos, Equus-Panama (effective
October, 1998) and SECSA (effective January, 1999). Because accumulated losses
of Galapagos allocable to minority partners had exceeded their investment, the
Company did not recognize minority interest of $181,094 and $53,945, in losses
of Galapagos for the six months ended June 30, 1999 and 1998.
EXTRAORDINARY ITEM
The extraordinary item recorded during the second quarter of 1999
represents the discount on the purchase in the open market in June, 1999 of
$189,000 of First Mortgage Notes.
LIQUIDITY AND CAPITAL RESOURCES
- - ----------------------------------
OVERVIEW
The principal source of cash of Equus Gaming Company L.P. (the "Company"
or, when referred to the individual entity, "Equus") has been distributions
related to its ownership interest in HDA, the owner and operator (through its
wholly owned subsidiary, ECMC) of El Comandante race track in Puerto Rico. Due
to certain restrictions under HDA's indenture for the issuance of its 11.75%
First Mortgage Notes due 2003 (the "Indenture"), cash held by HDA and/or ECMC is
<PAGE>
not readily available to Equus. Therefore, capital resources and liquidity of
Equus are discussed separately, excluding the cash flows and operations of HDA
(including ECMC) and its other foreign subsidiaries, which funds are not readily
available to the Company. A separate discussion of the capital resources and
liquidity of HDA (including ECMC) is also presented.
Because the liquidity and capital resources discussion is not presented on
a consolidated basis, some of the discussion relates to transactions that are
eliminated in the Company's consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES OF EQUUS
Cash and cash equivalents of Equus increased by $6,000 during the six
months ended June 30, 1999. Equus's liquidity mainly depends on (i) advances
and cash distributions from HDA and (ii) cash flow from operations, attributable
to agreements that Equus has (through its wholly-owned subsidiary, EEC) to
provide management services and technical assistance in the operation of the
race tracks in Puerto Rico, Dominican Republic, Panama, and, Colombia.
During 1999 the Company issued 2,991,764 units pursuant to the terms of a
private offering for $3,051,600 to accredited investors, principally The Wilson
Family Limited Partnership, a major unitholder of Equus. Proceeds from the
private offering were used by Equus to (i) purchase HDA's 37.5% interest in
Equus-Panama (including receivable) and HDA's 55% interest in Galapagos
(including receivable) for $1.85 million, (ii) repay a $200,000 short-term loan
from an affiliate, and (iii) invest approximately $1 million in Los Comuneros.
For the balance of the year, Equus expects to make an additional investment
of approximately $650,000 in Los Comuneros, mainly for the expansion of the
off-track betting agency system throughout Colombia. Equus made arrangements to
purchase certain equipment necessary to carry races via satellite in simulcast
operations for a fee. These investments, and any additional funding required by
the Dominican Republic operation, will be funded from a credit facility to be
requested by Equus and from cash distributions from HDA.
LIQUIDITY AND CAPITAL RESOURCES OF HDA AND ECMC
Cash and cash equivalents of HDA and ECMC, decreased by $4.6 million during
the six months ended June 30, 1999 to $1.5 million. HDA's principal uses of
cash for financing and investing activities during the period, were as follows:
(i) Capital improvements to El Comandante race track of $4.2 million,
principally incurred as a result of damage caused by Hurricane Georges in
September 1998.
(ii) Payments on capital leases for equipment used in El Comandante
operations.
(iii) Redemption on January 5, 1999 of First Mortgage Notes in the
principal amount of $3 million at 110% of par, reduced by the portion
corresponding to the notes purchased by ECMC in December 1998. Also, the
<PAGE>
purchase in June 1999 in the open market of First Mortgage Notes in the
principal amount of $189,000 for $166,000. The net effect of these transactions
was $3,048,320.
(iv) Cash distributions to Equus of $960,000, based on income generated by
HDA, on a consolidated basis, through June 30, 1999. HDA's distributions to
partners, including Equus, are based on a percentage of HDA's consolidated book
income (calculated on a cumulative basis since January 1, 1994).
In addition to cash available at the beginning of the year and cash flows
provided by operations, HDA and ECMC obtained funds for its financing and
investing transactions principally from $650,000 in advances drawn under its
$2.5 million line of credit and the sale to Equus of HDA's interest in
Equus-Panama (including a receivable) and Galapagos (including a receivable) for
$1.85 million.
For the remaining part of the year the projected principal uses of cash for
financing and investing activities of HDA and ECMC, are: (i) capital
improvements to continue the reconstruction of El Comandante race track from
damage caused by Hurricane Georges of approximately $3.7 million, (ii) principal
payments on capital leases for El Comandante operations, and (iii) advances and
cash distributions to partners, including Equus.
As of August 12, 1999, HDA has advanced to Equus approximately $500,000,
which technically is not in conformity with the terms of the Indenture. HDA
expects to cure this default with the declaration of distributions in the
future, based on income generated by HDA.
LONG-TERM COMMITMENTS. In addition to capital leases, long-term cash
commitments of HDA and ECMC are certain charitable contributions and repayment
of First Mortgage Notes.
In connection with the termination of the lease agreement of El Comandante
effective January 1, 1998, HDA assumed commitments to make contributions to
certain charitable and educational institutions. Amounts due under these
commitments are: $150,000 in 2000 and $200,000 in 2001. Management expects to
satisfy these obligations.
HDA's First Mortgage Notes bear interest at 11.75%, payable semiannually on
June 15 and December 15, and are secured by El Comandante assets. The First
Mortgage Notes are redeemable, at the option of HDA, at redemption prices
(expressed as percentages of principal amount): if redeemed during the 12-month
period beginning December 15 of years 1998 at 104.125%, 1999 at 102.75%, 2000 at
101.5%, and 2001 and thereafter at 100% of principal amount, in each case
together with accrued and unpaid interest. The stated maturity dates of First
Mortgage Notes, as reduced by prior redemptions made by HDA and by the Notes
purchased by ECMC in December 1998 in the open market, are as follows:
YEAR ENDING NET AMOUNT
JUNE 30, (FACE VALUE)
----------- ------------
2002 $ 3,454
2003 10,200
2004 40,800
------------
$ 54,454
============
<PAGE>
To the extent First Mortgage Notes are not previously acquired, Management
expects to refinance this obligation not later than December 2002.
GOVERNMENT MATTERS. El Comandante's horse racing and pari-mutuel wagering
operations are subject to substantial government regulation. Pursuant to the
Puerto Rico Horse Racing Industry and Sport Act (the "Racing Act"), the Racing
Board and the Puerto Rico Racing Administrator (the "Racing Administrator")
exercises regulatory control over ECOC's racing and wagering operations. For
example, the Racing Administrator determines the monthly racing program for El
Comandante and approves the number of annual race days in excess of the
statutory minimum of 180. The Racing Act also apportions payments of monies
wagered that would be available as commissions to ECMC. The Racing Board
consists of six persons appointed to four-year terms by the Governor of Puerto
Rico. The Racing Administrator is also appointed by the Governor for a
four-year term.
YEAR 2000 COMPUTER ISSUE
WHAT IS YEAR 2000. The Year 2000 ("Y2K") issue is the result of many
computer systems and applications and other electronically controlled systems
and equipment using two-digit fields rather than four to designate a year. As
the century date occurs, date sensitive systems with this deficiency may
recognize the year 2000 as year 1900 or not at all. This inability to recognize
or properly treat the year 2000 can cause the system to process critical
financial information and operations information incorrectly, disrupting the
normal business activities of companies.
The Company has assessed and continues to assess the impact of the Y2K
issue on its reporting systems and operations. The Company plans to complete
the Y2K project approximately by September 30, 1999.
STATE OF READINESS. The systems and applications that can affect the
Company's operations due to Y2K issue are its financial reporting systems and
the wagering system. The administrative applications (word processing,
spreadsheet) and software financial applications utilized by the Company have
been certified by the various publishers to be Y2K compliant.
The hardware component of the Company's financial systems consists of
industry standard PC operating systems, servers, desktop computers and
networking hardware. The systems have been evaluated and the Company has
determined that some of its subsidiaries will be required to modify or replace
significant portions of its hardware and software so that its computer systems
will properly utilize dates beyond December 31, 1999.
THIRD PARTY IMPACT ON OPERATIONS. The Company utilizes software and
related computer technologies essential to the wagering operations and the
off-tack betting system of its race tracks, which is provided by an outside
firm. This firm has confirmed that its equipment and software are Y2K
<PAGE>
compatible. The Company also utilized certain telecommunication systems for the
transmission of data between the race tracks and its off-track betting agencies.
The Company has initiated formal communications with all of its significant
suppliers to determine the extent to which the Company is vulnerable to those
third parties failure to remediate their own Y2K issue.
COSTS TO ACHIEVE Y2K COMPLIANCE. The Company has estimated total remaining
cost of the Y2K project in less than $100,000 for acquisition of equipment and
systems upgrades. These costs are being funded through operating cash flows at
each race track, mostly attributable to the acquisition of equipment, which will
be capitalized. The costs of the project and the date on which the Company plans
to complete the Year 2000 modifications are based on management's best
estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors.
RISKS OF Y2K ISSUE. The failure of the Company's financial systems and
accounting operations will affect the Company's reporting functions. However,
these functions are not considered detrimental to the Company's operations. The
failure of the wagering computer system and software, provided by an outside
firm, will not allow the race tracks to process wagering or take bets through
its off-track betting system, resulting in the lost of revenues. This risk
would seriously affect the financial condition of the Company.
CONTINGENCY PLANS. The Company is evaluating various alternative scenarios
in order to complete a contingent operational work plan to continue business
operations beyond 1999. Said plan will attempt to achieve, mainly, the
continuance of the wagering operations of the race tracks. The contingent plan
is expected to be completed by September 30, 1999.
FORWARD-LOOKING STATEMENT
Certain matters discussed and statements made within this Form 10-K are
forward-looking statements within the meaning of the Private Litigation Reform
Act of 1995 and as such may involve known and unknown risks, uncertainties, and
other factors that may cause the actual results, performance or achievements of
the Company to be different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Although the Company
believes the expectations reflected in such forward-looking statements are based
on reasonable assumptions, it can give no assurance that its expectations will
be attained. These risks are detailed from time to time in the Company's filing
within the Securities and Exchange Commission or other public statements.
PART II - OTHER INFORMATION
Items 1-6 None
<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.
Equus Gaming Company L.P.
-----------------------------------
(Registrant)
By: Equus Management Company
Managing General Partner
August 16, 1999 /s/ Thomas B. Wilson
- - ----------------- ------------------------
Date Thomas B. Wilson
President & Chief Executive Officer
August 16, 1999 /s/ Gretchen Gronau
- - ----------------- -----------------------------
Date Gretchen Gronau
Vice President and
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1911
<SECURITIES> 0
<RECEIVABLES> 3148
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 73443
<DEPRECIATION> (16605)
<TOTAL-ASSETS> 67870
<CURRENT-LIABILITIES> 0
<BONDS> 53744
<COMMON> 0
0
0
<OTHER-SE> (10918)
<TOTAL-LIABILITY-AND-EQUITY> 67870
<SALES> 0
<TOTAL-REVENUES> 35676
<CGS> 0
<TOTAL-COSTS> 35710
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33)
<INCOME-TAX> 329
<INCOME-CONTINUING> (363)
<DISCONTINUED> 0
<EXTRAORDINARY> 23
<CHANGES> 0
<NET-INCOME> 90
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
