FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the period ended March 31, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
Commission file number: 1-7244
BALLY MANUFACTURING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2512405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8700 West Bryn Mawr Avenue, Chicago, Illinois 60631
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 399-1300
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:
As of April 29, 1994, 46,896,759 shares of the registrant's Common
Stock, par value $.66-2/3, were outstanding.
<PAGE>
BALLY MANUFACTURING CORPORATION
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Condensed consolidated balance sheet at March 31, 1994
(unaudited) and December 31, 1993 . . . . . . . . . . . 1
Condensed consolidated statement of operations
(unaudited)
Three months ended March 31, 1994 and 1993 . . . . . 2
Condensed consolidated statement of stockholders'
equity (unaudited)
Three months ended March 31, 1994. . . . . . . . . . 3
Condensed consolidated statement of cash flows
(unaudited)
Three months ended March 31, 1994 and 1993 . . . . . 4 - 5
Notes to condensed consolidated financial statements
(unaudited) . . . . . . . . . . . . . . . . . . . . . . 6 -10
Item 2. Management's discussion and analysis of
financial condition and results of operations . . . . . . 11 -19
PART II. OTHER INFORMATION
Item 1. Legal proceedings. . . . . . . . . . . . . . . . . 20
Item 6. Exhibits and reports on Form 8-K . . . . . . . . . 20
SIGNATURE PAGE. . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
<TABLE>
Bally Manufacturing Corporation
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
March 31 December 31
1994 1993
(unaudited)
- - ---------------------------------------------------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents. . . . . . . . . . . . $ 196,403 $ 203,058
Receivables, less allowance for doubtful
accounts ($58,351 and $53,798). . . . . . 197,917 201,719
Other current assets. . . . . . . . . . . . 34,125 33,649
---------- ----------
Total current assets. . . . . . . . . . . 428,445 438,426
Long-term receivables, less allowance for
doubtful accounts ($35,165 and $31,391) . . 160,113 149,966
Property and equipment, at cost less
accumulated depreciation ($665,241 and
$640,075) . . . . . . . . . . . . . . . . . 1,581,531 1,592,138
Other assets. . . . . . . . . . . . . . . . . 114,078 105,167
Intangible assets, at cost less accumulated
amortization ($60,372 and $58,126). . . . . 242,143 253,950
---------- ----------
$2,526,310 $2,539,647
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . $ 48,862 $ 72,156
Income taxes payable. . . . . . . . . . . . 35,753 42,580
Deferred income taxes . . . . . . . . . . . 25,754 10,009
Deferred revenues . . . . . . . . . . . . . 76,522 78,132
Accrued liabilities . . . . . . . . . . . . 176,436 176,551
Current maturities of long-term debt. . . . 16,629 10,288
---------- ----------
Total current liabilities . . . . . . . . 379,956 389,716
Long-term debt, less current maturities . . . 1,567,350 1,484,389
Deferred income taxes . . . . . . . . . . . . 137,008 192,092
Deferred revenues . . . . . . . . . . . . . . 41,044 43,468
Other liabilities . . . . . . . . . . . . . . 22,577 23,457
Minority interests. . . . . . . . . . . . . . 40,197 42,384
Stockholders' equity. . . . . . . . . . . . . 338,178 364,141
---------- ----------
$2,526,310 $2,539,647
========== ==========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Bally Manufacturing Corporation
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<CAPTION>
Three months ended
March 31
-----------------------
1994 1993
- - ---------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C>
Revenues. . . . . . . . . . . . . . . . . . . $ 395,924 $ 334,963
Operating costs and expenses:
Cost of services. . . . . . . . . . . . . . 287,396 229,123
Selling, general and administrative . . . . 59,297 44,375
Provision for doubtful receivables. . . . . 24,373 23,241
---------- ----------
371,066 296,739
---------- ----------
Operating income. . . . . . . . . . . . . . . 24,858 38,224
Interest expense. . . . . . . . . . . . . . . 42,416 30,487
---------- ----------
Income (loss) before income taxes,
minority interests, extraordinary item
and cumulative effect on prior years of
change in accounting for income taxes . . . (17,558) 7,737
Income tax provision (benefit). . . . . . . . (14,100) 3,900
Minority interests. . . . . . . . . . . . . . (1,179)
---------- ----------
Income (loss) before extraordinary item
and cumulative effect on prior years
of change in accounting for income
taxes . . . . . . . . . . . . . . . . . . . (4,637) 3,837
Extraordinary loss on extinguishment
of debt . . . . . . . . . . . . . . . . . . (20,735) (8,090)
Cumulative effect on prior years of
change in accounting for income taxes . . . (28,197)
---------- ----------
Net loss. . . . . . . . . . . . . . . . . . . (25,372) (32,450)
Preferred stock dividend requirement. . . . . 694 694
---------- ----------
Net loss applicable to common stock . . . . . $ (26,066) $ (33,144)
========== ==========
Per common share:
Income (loss) before extraordinary item
and cumulative effect on prior years
of change in accounting for income
taxes . . . . . . . . . . . . . . . . . . $ (.12) $ .07
Extraordinary loss on extinguishment
of debt.. . . . . . . . . . . . . . . . . (.44) (.18)
Cumulative effect on prior years of
change in accounting for income
taxes . . . . . . . . . . . . . . . . . . (.61)
---------- ----------
Net loss. . . . . . . . . . . . . . . . . . $ (.56) $ (.72)
========== ==========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Bally Manufacturing Corporation
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
<CAPTION>
Total
Series D Capital in Common stock-
preferred Common excess of Retained stock in holders'
Dollar amounts stock stock par value earnings treasury equity
- - ---------------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 . . $694 $31,325 $294,413 $39,507 $(1,798) $364,141
Net loss . . . . . . (25,372) (25,372)
Preferred stock
dividend --
$1.00 per share. . (694) (694)
Exercise of stock
options . . . . . . 11 92 103
-------- -------- -------- -------- -------- --------
Balance at
March 31, 1994. . . . $694 $31,336 $294,505 $13,441 $(1,798) $338,178
======== ======== ======== ======== ======== ========
<CAPTION>
Series D Common stock
preferred --------------------------
Share amounts stock Issued Treasury
- - ---------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Balance at December 31, 1993 . . . . . . . . . . . . . 694 46,986 110
Exercise of stock options. . . . . . . . . . . . . . 18
-------- -------- --------
Balance at March 31, 1994. . . . . . . . . . . . . . . 694 47,004 110
======== ======== ========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Bally Manufacturing Corporation
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<CAPTION>
Three months ended
March 31
-----------------------
1994 1993
- - ---------------------------------------------------------------------
(In thousands)
<S> <C> <C>
OPERATING:
Income (loss) before extraordinary
item and cumulative effect on
prior years of change in accounting
for income taxes . . . . . . . . . . . . . $ (4,637) $ 3,837
Adjustments to reconcile to cash used --
Depreciation and amortization. . . . . . . 37,435 26,097
Deferred income taxes. . . . . . . . . . . (28,706) (6,477)
Provision for doubtful receivables . . . . 24,373 23,241
Interest accretion on discount notes . . . 3,644
Change in operating assets and
liabilities.. . . . . . . . . . . . . . . (48,999) (52,726)
Other, net . . . . . . . . . . . . . . . . 1,108 1,608
---------- ----------
Cash used in operating activities . . (15,782) (4,420)
INVESTING:
Purchases of property and equipment. . . . . (27,840) (11,950)
Other, net . . . . . . . . . . . . . . . . . (5,762) (1,772)
---------- ----------
Cash used in investing activities . . (33,602) (13,722)
FINANCING:
Debt transactions --
Proceeds from issuance of long-term
debt . . . . . . . . . . . . . . . . . . 425,000 472,957
Net borrowings (repayments) under
revolving credit agreements. . . . . . . 12,000 (74,500)
Repayments of other long-term debt . . . . (351,212) (334,372)
Premiums paid on early retirement of
debt . . . . . . . . . . . . . . . . . . (27,692) (14,436)
Debt issuance costs. . . . . . . . . . . . (14,750) (20,933)
---------- ----------
Cash provided by debt transactions. . 43,346 28,716
Equity transactions --
Preferred stock dividend . . . . . . . . . (694)
Proceeds from exercise of stock options. . 77 222
---------- ----------
Cash provided by financing
activities. . . . . . . . . . . . . 42,729 28,938
---------- ----------
Increase (decrease) in cash and
equivalents. . . . . . . . . . . . . . . . . (6,655) 10,796
Cash and equivalents, beginning of period . . 203,058 36,609
---------- ----------
Cash and equivalents, end of period . . . . . $ 196,403 $ 47,405
========== ==========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Bally Manufacturing Corporation
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS--(continued)
(unaudited)
<CAPTION>
Three months ended
March 31
-----------------------
1994 1993
- - ---------------------------------------------------------------------
(In thousands)
<S> <C> <C>
SUPPLEMENTAL CASH FLOWS INFORMATION:
Changes in operating assets and
liabilities were as follows--
Increase in receivables . . . . . . . . $ (31,319) $ (30,640)
Increase in other current assets
and other assets. . . . . . . . . . . (1,351) (667)
Decrease in accounts payable
and accrued liabilities . . . . . . . (19,652) (11,513)
Increase in income taxes payable. . . . 7,302 8,668
Decrease in deferred revenues . . . . . (3,993) (1,375)
Increase (decrease) in other
long-term liabilities . . . . . . . . 14 (17,199)
---------- ----------
$ (48,999) $ (52,726)
========== ==========
Cash payments for interest and income
taxes for operations were as follows--
Interest paid . . . . . . . . . . . . . $ 39,763 $ 39,074
Interest capitalized. . . . . . . . . . (193) (200)
Income taxes paid (net of refunds). . . 7,303 1,717
Investing and financing activities exclude
the following non-cash activities--
Reduction of intangible assets
resulting from settlement of
pre-acquisition contingency . . . . . $ 10,331 $
Forfeiture (net of issuance) of
Bally's Grand, Inc. common stock
for incentive plan. . . . . . . . . . 159
Issuance of common stock in
satisfaction of preferred stock
dividends and other obligations . . . 763
<FN>
See accompanying notes.
</TABLE>
<PAGE>
Bally Manufacturing Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in thousands except per share data) (unaudited)
Basis of presentation
The condensed consolidated financial statements include the accounts of
Bally Manufacturing Corporation ("Bally") and the subsidiaries which it
controls (collectively, the "Company"). These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1993.
All adjustments have been recorded which are, in the opinion of
management, necessary for a fair presentation of the condensed
consolidated statement of financial position of the Company at March 31,
1994, its condensed consolidated statements of operations and cash flows
for the three months ended March 31, 1994 and 1993, and its condensed
consolidated statement of stockholders' equity for the three months
ended March 31, 1994. All such adjustments were of a normal recurring
nature, except for those adjustments required to reflect refinancings of
indebtedness of several subsidiaries (see "Long-term debt") and to apply
the provisions of Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes" (see "Income taxes").
Certain reclassifications have been made to prior period financial
statements to conform with the 1994 presentation.
Seasonal factors
The Company's operations are subject to seasonal factors and, therefore,
the results of operations for the three months ended March 31, 1994 and
1993 are not necessarily indicative of the results of operations for the
full year.
Acquisition of Bally's Grand, Inc.
On August 20, 1993 (the "Effective Date"), the Fifth Amended Plan of
Reorganization (the "Chapter 11 Plan") of Bally's Grand, Inc. (a company
originally acquired by Bally in 1986 which owns and operates the casino
resort in Las Vegas, Nevada known as "Bally's Las Vegas") became
effective and Bally's Grand, Inc. emerged from bankruptcy. For almost
two years prior thereto, Bally's Grand, Inc. operated its business and
managed its properties as a debtor-in-possession under chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code"). On the
Effective Date, Bally relinquished all of its equity interest in Bally's
Grand, Inc. and Bally's net intercompany receivable from Bally's Grand,
Inc. was cancelled and extinguished. Bally's investment in and advances
to Bally's Grand, Inc. were written down to zero in 1990. Also, Bally
did not provide any type of guarantee or commitment to Bally's Grand,
Inc. nor did it assume any other obligation of Bally's Grand, Inc. in
connection with the Chapter 11 Plan. Accordingly, the Company did not
reflect any equity in earnings of Bally's Grand, Inc. for the period
from January 1, 1991 through the Effective Date.
During 1993, Bally's Casino Holdings, Inc. ("Casino Holdings") and
another subsidiary of Bally acquired approximately 5.2 million shares
(approximately 51% of the shares presently outstanding) of reorganized
Bally's Grand, Inc. common stock in several transactions in exchange for
$41,714 in cash and 1,752,400 shares of Bally Gaming International, Inc.
("Gaming") common stock. In addition, during the three months ended
March 31, 1994, Bally's Grand, Inc. repurchased 315,575 shares of its
common stock for $4,019 in cash. The acquisitions of Bally's Grand,
Inc. common stock have been recorded using the purchase method of
accounting, and the excess of the purchase price over the estimated fair
value of net assets acquired of $20,166 is being amortized using the
straight-line method over 20 years. Bally's Grand, Inc. has been
consolidated since December 1993 as a result of Bally's controlling
interest.
The following unaudited pro forma summary consolidated results of
operations of the Company for the three months ended March 31, 1993 was
prepared to give effect to the acquisition of the controlling interest
in reorganized Bally's Grand, Inc. as if the acquisition had occurred as
of January 1, 1993. The pro forma results have been prepared for
comparative purposes only and do not purport to present what the
Company's results of operations would actually have been if the
acquisition had in fact occurred at such date or to project the
Company's results of operations for any future period. In addition, the
pro forma summary consolidated results of operations of the Company
include adjustments to the historical results of operations of Bally's
Grand, Inc. which principally reflect: (i) the elimination of the
reorganization items of Bally's Grand, Inc., (ii) the effects of
transactions related to the reorganization of Bally's Grand, Inc.
pursuant to the Chapter 11 Plan, (iii) the effects of the adoption of
"fresh-start reporting" and (iv) the income tax effects of the pro forma
adjustments. The pro forma summary consolidated results of operations
is based upon available information and upon certain assumptions that
management believes are reasonable.
<TABLE>
<S> <C>
Revenues. . . . . . . . . . . . . . . . . . . . . $ 400,982
Operating income. . . . . . . . . . . . . . . . . 48,141
Income before extraordinary item and cumulative
effect on prior years of change in accounting
for income taxes. . . . . . . . . . . . . . . . 3,694
Net loss. . . . . . . . . . . . . . . . . . . . . (32,593)
Per common share:
Income before extraordinary item and
cumulative effect on prior years of change
in accounting for income taxes. . . . . . . . $ .07
Net loss. . . . . . . . . . . . . . . . . . . . (.72)
</TABLE>
<PAGE>
Long-term debt
The carrying amounts of the Company's long-term debt at March 31, 1994
and December 31, 1993 are as follows:
<TABLE>
<CAPTION>
March 31 December 31
1994 1993
- - ------------------------------------------------------------------
<S> <C> <C>
Bally Manufacturing Corporation:
6% Convertible Subordinated Debentures
due 1998 . . . . . . . . . . . . . . .$ 18,271 $ 18,969
10% Convertible Subordinated
Debentures due 2006. . . . . . . . . . 85,000 85,000
Bally's Casino Holdings, Inc.:
Senior Discount Notes due 1998 . . . . . 143,062 139,418
Bally's Park Place, Inc.:
Revolving credit agreement . . . . . . . 6,000 2,000
9-1/4% First Mortgage Notes due 2004 . . 425,000
11-7/8% First Mortgage Notes
due 1999 . . . . . . . . . . . . . . . 350,000
GNAC, CORP.:
10-5/8% First Mortgage Notes due 2003
(less unamortized discount of $1,923
and $1,873). . . . . . . . . . . . . . 273,077 273,127
Bally's Grand, Inc.:
10-3/8% First Mortgage Notes
due 2003 . . . . . . . . . . . . . . . 315,000 315,000
Bally's Health & Tennis Corporation:
Revolving credit agreement . . . . . . . 88,910 80,910
13% Senior Subordinated Notes
due 2003 . . . . . . . . . . . . . . . 200,000 200,000
Other secured and unsecured
obligations. . . . . . . . . . . . . . . 29,659 30,253
---------- ----------
Total long-term debt. . . . . . . . . . . 1,583,979 1,494,677
Current maturities of long-term debt. . . (16,629) (10,288)
---------- ----------
Long-term debt, less current
maturities . . . . . . . . . . . . . . .$1,567,350 $1,484,389
========== ==========
</TABLE>
In March 1994, a subsidiary of Bally's Park Place, Inc. ("Bally's Park
Place") issued $425,000 principal amount of 9-1/4% First Mortgage Notes
due 2004 (the "9-1/4% Notes"). Bally's Park Place used the net proceeds
from the sale of the 9-1/4% Notes to purchase and retire certain of its
11-7/8% First Mortgage Notes due 1999 (the "11-7/8% Notes"), defease the
remaining 11-7/8% Notes at a price of 104.45% of their principal amount
plus accrued interest through the redemption date, thereby satisfying
all obligations thereunder, and pay a $30,000 dividend to Casino
Holdings. The retirement and defeasance of the 11-7/8% Notes resulted
in an extraordinary loss of $20,735, net of income taxes of $14,137. In
connection with the sale of the 9-1/4% Notes, Bally's Park Place
terminated its former credit facility and entered into an agreement for
a new $50,000 revolving credit facility which expires on December 31,
1996, at which time all amounts outstanding become due. The new credit
facility provides for interest on borrowings payable, at Bally's Park
Place's option, at the agent bank's prime rate or the LIBOR rate plus
2%, each of which increases as the balance outstanding increases.
In March 1993, a subsidiary of GNAC, CORP. (which owns and operates the
casino resort in Atlantic City known as "The Grand") issued $275,000
principal amount of 10-5/8% First Mortgage Notes due 2003 (the "10-5/8%
Notes") at a discount to yield an interest rate of 10-3/4%. GNAC, CORP.
used the net proceeds from the sale of the 10-5/8% Notes, together with
the collection of certain funds on deposit with Bally's Park Place, to
redeem its 13-1/4% Mortgage-Backed Notes due 1995 (the "13-1/4% Notes")
at a price of 102.94% of their principal amount plus accrued interest,
thereby satisfying all obligations thereunder. The redemption of the
13-1/4% Notes resulted in an extraordinary loss of $2,091, net of income
taxes of $1,405.
In January 1993, Bally's Health & Tennis Corporation ("Bally's Health &
Tennis") issued $200,000 principal amount of 13% Senior Subordinated
Notes due 2003 (the "13% Notes"). Bally's Health & Tennis used the net
proceeds from the sale of the 13% Notes to prepay $101,500 of
indebtedness under its revolving credit agreement, redeem $69,505
principal amount of its 13-5/8% Senior Subordinated Debentures due 1997
(the "13-5/8% Debentures") at a price of 105.71% of their principal
amount plus accrued interest, thereby satisfying all obligations
thereunder, and pay a $15,000 dividend to Bally. In connection with the
sale of the 13% Notes, the Bally's Health & Tennis revolving credit
agreement was amended, among other things, to reduce the amount
available under the revolving credit facility and revise the
amortization schedule and extend the term. The redemption of the 13-
5/8% Debentures and the amendment to the Bally's Health & Tennis
revolving credit agreement resulted in an extraordinary loss of $5,999,
net of income taxes of $3,249.
During the three months ended March 31, 1994 and 1993, Bally purchased
$698 and $1,744 principal amount of its debt securities, respectively,
to satisfy a portion of the sinking fund requirements, which resulted in
pre-tax gains of $95 and $348, respectively (included in "Revenues").
Income taxes
Effective January 1, 1993, the Company changed its method of accounting
for income taxes as required by SFAS No. 109. The cumulative effect on
prior years of this change in accounting for income taxes was a charge
of $28,197.
For the three months ended March 31, 1994, the effective rate of the
income tax benefit differed from the U.S. statutory tax rate (35%) due
principally to an $8,000 credit resulting from the settlement of
disputed tax matters. See "Liquidity and Capital Resources" in
Management's Discussion and Analysis of Financial Condition and Results
of Operations of this Form 10-Q for a description of this settlement of
previously disclosed tax claims. For the three months ended March 31,
1993, the effective rate of the income tax provision differed from the
U.S. statutory tax rate (34%) due principally to nondeductible goodwill
amortization and state income taxes.
The decline in net deferred income taxes during the three months ended
March 31, 1994 arose principally from losses during the quarter (the tax
benefits of which were applied against deferred income taxes) and
adjustments related to the aforementioned settlement of tax claims.
Loss per common share
Loss per common share is computed by dividing net loss applicable to
common stock by the weighted average number of shares of common stock
outstanding totalling 46,888,070 and 46,123,457 for the three months
ended March 31, 1994 and 1993, respectively.
<PAGE>
Bally Manufacturing Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues and operating income are as follows (in millions):
<TABLE>
<CAPTION>
Three months ended
March 31
------------------
1994 1993
- - ---------------------------------------------------------------------
<S> <C> <C>
Revenues
Casinos . . . . . . . . . . . . . . . . . . . $ 211.5 $ 131.8
Fitness centers . . . . . . . . . . . . . . . 183.8 199.7
Corporate . . . . . . . . . . . . . . . . . . .7 3.7
Intersegment eliminations
and other . . . . . . . . . . . . . . . . . (.1) (.2)
------- -------
Consolidated revenues . . . . . . . . . . . . $ 395.9 $ 335.0
======= =======
Operating income
Casinos . . . . . . . . . . . . . . . . . . . $ 18.4 $ 20.6
Fitness centers . . . . . . . . . . . . . . . 5.4 16.6
Corporate . . . . . . . . . . . . . . . . . . .5 .7
Intersegment eliminations
and other . . . . . . . . . . . . . . . . . .6 .3
------- -------
Consolidated operating income . . . . . . . . $ 24.9 $ 38.2
======= =======
</TABLE>
Casinos
Revenues of the Company's casinos for the first quarter of 1994 were
$211.5 million compared to $131.8 million for 1993, an increase of $79.7
million (60%) reflecting the expansion of the Company's gaming business
in Las Vegas and Tunica, Mississippi. Operating income for the 1994
quarter was $18.4 million compared to $20.6 million for 1993, a decrease
of $2.2 million (11%).
Atlantic City. Revenues of Bally's Park Place for the first quarter of
1994 were $76.4 million compared to $76.1 million for 1993, an increase
of $.3 million. Casino revenues for the 1994 period were $65.7 million
compared to $65.4 million in 1993, an increase of $.3 million. Slot
revenues decreased $2.3 million (5%) due to a decline in the slot win
percentage from 9.8% in the first quarter of 1993 (which includes the
positive impact from the discontinuation of certain progressive linked
jackpots) to 9.1% in 1994 offset, in part, by a 5% increase in slot
handle (volume). Bally's Park Place added 216 slot machines (an 11%
increase) since March 31, 1993. Slot revenues represented 66% of
Bally's Park Place's casino revenues in the 1994 period compared to 70%
in 1993. Table game revenues, excluding poker, increased $1.5 million
(8%) from the 1993 period primarily due to a 2% increase in the drop
(amount wagered) and an increase in the hold percentage from 16.2% in
the first quarter of 1993 to 17.1% in 1994. Bally's Park Place's poker
operations, which commenced in July 1993, contributed $1.1 million to
its casino revenues for the quarter ended March 31, 1994. Rooms and
food and beverages revenue were essentially unchanged. Operating income
for the first quarter of 1994 was $9.2 million compared to $15.1 million
for 1993, a decrease of $5.9 million (39%) due to increased operating
expenses primarily resulting from increases in salaries, benefits,
advertising and other costs associated with expanded marketing and
promotional efforts. In addition, the 1993 quarter included the
recognition of a benefit related to the settlement of amounts owed to a
former executive who retired in January 1993.
Revenues of The Grand for the first quarter of 1994 were $50.5 million
compared to $56.1 million for 1993, a decrease of $5.6 million (10%).
Casino revenues for the 1994 period were $45.6 million compared to $50.1
million in 1993, a decrease of $4.5 million (9%). Table game revenues
decreased $1.5 million (7%) due to a significant decline in the hold
percentage from 19.2% in the first quarter of 1993 to 14.8% in the 1994
period offset, in part, by a 20% increase in the drop. Slot revenues
decreased $3.0 million (10%). In the 1993 period, slot revenues
included approximately $1.2 million from the discontinuation of a multi-
casino link progressive slot jackpot. Excluding this adjustment, slot
revenues decreased $1.8 million (6%) due to a decline in the slot win
percentage from 9.8% in the 1993 period to 9.1% in 1994. Rooms and food
and beverage revenues decreased $.6 million (16%) from the 1993 period.
Operating loss for the first quarter of 1994 was $2.8 million compared
to operating income of $5.6 million for the 1993 period, a decrease of
$8.4 million due to the aforementioned decrease in revenues and an
increase in operating expenses. Operating expenses for the first
quarter of 1994 increased primarily due to an increase in payroll and
payroll-related expenses and the increased costs of providing
complimentary services in conjunction with increased table games volume
and increased table game marketing efforts associated with the
comprehensive marketing program which The Grand introduced in July 1993
to reposition its competitive position.
Atlantic City city-wide casino revenues for all operators in the first
quarter of 1994, excluding poker and horse race simulcasting, decreased
approximately 4% from 1993, which was primarily attributable to 4%
decreases in slot revenues and table game revenues. While Atlantic
City's first quarter 1994 and 1993 results were both affected by severe
weather conditions in the northeastern United States, management
believes the severity, duration and number of storms in 1994 had a more
dramatic impact on 1994 operating performance and attendance than in
1993. The number of slot machines in Atlantic City increased
approximately 6% since March 31, 1993, while the number of Atlantic City
table games, excluding poker tables, declined approximately 2%. Slot
revenues in the first quarter of 1994 represented 65% of total gaming
revenues in Atlantic City compared to 66% for the same period in 1993.
Management believes that the rate of slot revenue growth has slowed
resulting in intense promotional efforts for slot players as the
Company's Atlantic City casinos and their competitors seek to expand
their share of slot revenues and maximize the utilization of their slot
machine inventory. Further, as a result of the ongoing aggressive
competition for slot patrons, the Atlantic City slot win percentage has
declined. Management believes that the slot win percentage will
continue to be subject to competitive pressure and may further decline.
However, the introduction in the second quarter of 1993 of poker and
horse race simulcasting has improved the Atlantic City gaming climate.
The Company believes its Atlantic City casinos are well-positioned to
compete for their share of casino revenues by continuing to offer
attractive promotional slot and table game programs and special events.
Also, Bally's Park Place plans to continue the expansion of its slot
capacity, principally in the higher denomination machines, and to
introduce horse race simulcasting and keno, if approved by the New
Jersey Casino Control Commission, in mid-1994.
Las Vegas. As described in "Acquisition of Bally's Grand, Inc." note in
Notes to condensed consolidated financial statements, Bally's Grand,
Inc. has been consolidated since December 1993. Revenues of Bally's
Grand, Inc. for the first quarter of 1994 were $68.8 million. Casino
revenues were $33.5 million, which primarily consisted of table game
revenues of $19.1 million and slot revenues of $12.3 million. Table
game drop and slot handle for the first quarter of 1994 were $117.8
million and $192.7 million, respectively, with hold and win percentages
of 16.2% and 6.4%, respectively. Rooms revenues were $15.6 million and
food and beverage revenues were $10.0 million. Other revenues,
primarily from entertainment, were $9.7 million. Operating income for
the first quarter of 1994 was $12.0 million.
Tunica. Revenues of Bally's Saloon and Gambling Hall in Tunica,
Mississippi ("Bally's Tunica") (which commenced operations in December
1993) for the first quarter of 1994 were $15.9 million. Casino revenues
were $15.7 million, which primarily consisted of slot revenues of $10.3
million and table game revenues of $5.2 million. Table game drop and
slot handle for the first quarter of 1994 were $21.2 million and $111.1
million, respectively, with hold and win percentages of 25.7% and 9.2%,
respectively. Operating income for Bally's Tunica, which is net of the
amortization of $3.3 million of pre-opening costs, was $1.1 million.
Fitness Centers
In 1992, the Company implemented programs designed to increase the sale
of financed contracts with monthly payments made by direct bank account
electronic funds transfer ("EFT") and automatic credit card charges by
adjusting sales commission and member incentive levels. While these
changes were intended to reduce the Company's exposure to risks
associated with collection of financed membership contracts, the
emphasis on EFT and credit card payment programs negatively affected the
number of new memberships sold. In April 1993, the Company reduced the
average selling price of membership contracts in an attempt to increase
unit volume. Management determined that the selling price decreases
implemented in April 1993 were greater than required and such price
decreases did not measurably increase the number of new memberships
sold. Beginning in mid-October 1993 and continuing into 1994, the
Company began increasing prices modestly. In addition, starting in
1994, less emphasis was placed on highly discounted cash memberships
previously offered, thereby reducing immediate cash revenues but
strengthening future cash flows. Price increases coupled with the
changes in selling methods and cost reduction programs are intended to
improve the Company's operating results.
Revenues for the first quarter of 1994 were $183.8 million compared to
$199.7 million in 1993, a decrease of $15.9 million (8%) principally due
to a $14.6 million (11%) decrease in new membership sales. New
membership revenues decreased in the 1994 period due principally to a
21% decline in unit volume (primarily cash sales) offset, in part, by an
increase in the average selling price. Management believes that unit
volume was affected in the first quarter of 1994 by the earthquake in
California, which affected 42 clubs for much of the quarter, severe
winter weather in the Midwest and East and the continuing effects of a
weak retail economy, increased competition and prevailing general
economic uncertainties. Revenues for the same fitness centers selling
memberships throughout both periods decreased $19.2 million (10%).
Revenues from new fitness centers opened during 1994 or 1993 increased
$4.0 million. The number of fitness centers selling memberships
increased from 334 at March 31, 1993 to 340 at March 31, 1994. Dues and
renewals were relatively unchanged from the same quarter last year.
Finance charges earned decreased $2.3 million (18%) due principally to
decreased installment contracts receivable caused by lower sales volume
and, to a lesser extent, a lower effective interest rate on installment
contracts receivable.
Operating income for the first quarter of 1994 was $5.4 million compared
to $16.6 million in 1993, a decrease of $11.2 million (67%) reflecting
the aforementioned decrease in revenues partially offset by a decline in
operating expenses. Excluding the provision for doubtful receivables,
operating expenses for the first quarter of 1994 were $155.0 million
compared to $160.0 million in 1993, a decrease of $5.0 million (3%).
The decline in operating expenses was primarily due to reductions in
advertising, payroll and commissions as a result of the continuation of
cost reduction programs and, with respect to commissions, the
aforementioned decline in new membership revenues. The provision for
doubtful receivables for the first quarter of 1994 was $23.4 million
compared to $23.0 million in 1993, an increase of $.4 million (2%). The
provision for doubtful receivables as a percentage of net financed sales
increased from 27% in 1993 to 28% in 1994.
Corporate
Revenues for the first quarter of 1994 were $.7 million compared to $3.7
million in 1993, a decrease of $3.0 million which was due principally to
the 1993 period including income of $1.7 million for the forgiveness of
a tax liability previously owed to Gaming and $.8 million for insurance
recoveries.
Operating income for the first quarter of 1994 was $.5 million compared
to $.7 million in 1993, a decrease of $.2 million. The aforementioned
decrease in revenues was offset, in part, by a $2.1 million reduction in
general and administrative expenses and a $.7 million increase in the
allocation of corporate overhead costs to subsidiaries compared to the
1993 period. General and administrative expenses in the 1993 period
included a $1.7 million non-cash charge related to the accelerated
vesting of stock options.
Interest Expense
Interest expense, net of capitalized interest, was $42.4 million in the
first quarter of 1994 compared to $30.5 million in 1993, an increase of
$11.9 million (39%). This increase was due principally to higher
average levels of debt as Casino Holdings issued its senior discount
notes in June 1993 and Bally's Grand, Inc. was consolidated effective
December 1993.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Parent Company
Bally is a holding company without operations of its own. Nevertheless,
Bally has certain cash obligations that must be satisfied by obtaining
cash from its subsidiaries or disposing of or leveraging certain assets.
Bally's corporate cash operating costs for the remainder of 1994 are
expected to be substantially recovered by allocations to its
subsidiaries. Bally has debt service and preferred stock dividend cash
requirements of approximately $18 million for the remainder of 1994.
Cash requirements for Bally for the remainder of 1994 also include
income tax payments, which management estimates to be approximately $34
million, net of amounts to be collected from subsidiaries pursuant to
tax sharing agreements.
As disclosed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993, the Internal Revenues Service ("IRS") has
completed an audit of the federal income tax returns of certain of the
Company's fitness center subsidiaries for periods ending on the day
these subsidiaries were acquired. Among other things, the IRS asserted
that these subsidiaries owed additional taxes and interest with respect
to issues arising pursuant to the Company's election in 1983 to treat
the purchases of stock of these subsidiaries as if they were purchases
of assets. In May 1994, the Company and the IRS reached a settlement
(pending approval by the United States Tax Court) with respect to this
matter, which will result in the payment of approximately $4 million in
taxes plus accrued interest, each of which is included in the
aforementioned estimated income tax payments for the remainder of 1994.
Sources of cash available to Bally are generally limited to existing
cash balances ($21.2 million at March 31, 1994), dividends, management
fees or cost allocations to subsidiaries, receipts pursuant to tax
sharing agreements, capital transactions and asset sales. Each of
Bally's principal operating subsidiaries presently have debt covenants
which limit the payment of dividends to Bally and the redemption of
stock owned by Bally. Under the terms of the Casino Holdings Senior
Discount Notes due 1998 (the "Senior Discount Notes"), an amount equal
to dividends paid pursuant to a net income test by Bally's Park Place to
Casino Holdings may be declared as a dividend by Casino Holdings and
paid to Bally. In February 1994, a $.6 million dividend was paid by
Bally's Park Place to Casino Holdings and by Casino Holdings to Bally.
Additional dividends may be available from Casino Holdings and are
generally limited to 50% of its consolidated net income exclusive of
income attributable to Bally's Park Place. GNAC, CORP. and Bally's
Health & Tennis are not expected to be able to pay dividends in 1994.
In addition, a subsidiary of Casino Holdings has an obligation to Bally
of approximately $18.5 million to be paid during the remainder of 1994
for shares of Bally's Grand, Inc. common stock purchased from Bally
during 1993. Bally believes that it will be able to satisfy its cash
needs for 1994, but remains dependent upon the ability of its
subsidiaries to pay dividends and allocations to meet its cash
requirements in the future.
Subsidiaries
Casino Holdings
Casino Holdings. Casino Holdings is a holding company without
operations of its own and relies on obtaining cash from its subsidiaries
to meet its cash obligations. Casino Holdings has no scheduled interest
or principal payments on the Senior Discount Notes until 1998, but
expects to incur substantial costs in the pursuit of new gaming
ventures. To the extent Casino Holdings requires additional funds for
existing ventures or to develop new ventures, Casino Holdings expects
that it will be able to obtain financing for a significant portion of
the total development costs of new gaming ventures from a combination of
third party sources, including banks, suppliers and debt markets.
Sources of cash available to Casino Holdings are generally limited to
existing cash balances ($47.0 million at March 31, 1994) and loan
repayments, dividends and management fees from subsidiaries. Bally's
Park Place and Bally's Grand, Inc. are both limited with respect to
amounts which may be paid as dividends to Casino Holdings under the
terms of their respective public debt indentures. In March 1994,
Bally's Park Place paid a $30 million dividend to Casino Holdings from
a portion of the proceeds of the sale of its 9-1/4% Notes, which is not
available to be paid by Casino Holdings to Bally. As of March 31, 1994,
no dividends were available for payment by Bally's Park Place pursuant
to the net income test. Bally's Grand, Inc. is not expected to pay
dividends or make any other distributions on its common stock to Casino
Holdings in 1994. Bally's Tunica, which commenced operations in
December 1993, is expected to generate a substantial amount of
unrestricted cash flows in 1994 from operations and may generate
additional cash through possible financings of equipment. Although
Casino Holdings believes it will be able to satisfy its cash needs
throughout 1994, Casino Holdings remains dependent upon the ability of
its subsidiaries to generate cash to repay advances and pay dividends in
the future.
Bally's Park Place. Bally's Park Place has no scheduled principal
payments under its public indebtedness until 2004, and its scheduled
principal payments under other indebtedness outstanding at March 31,
1994 are not significant. Management expects to make capital
expenditures of approximately $18 million in 1994 for the completion of
suite rooms in the hotel tower, casino expansion and reconfiguration,
the purchase of data processing equipment, construction of a new players
lounge, restaurant and kitchen renovations, the construction of a poker,
horse race simulcasting and keno area and other public area improvements
necessary to maintain the facility. As of March 31, 1994, Bally's Park
Place had unused lines of credit totalling $44 million. The Company
believes that Bally's Park Place will be able to satisfy its debt
service and capital expenditure requirements in 1994 out of cash flow
from operations.
Bally's Grand, Inc. Bally's Grand, Inc. has no scheduled principal
payments on its indebtedness outstanding at March 31, 1994 until 2003,
however, it expects to make several major capital improvements during
1994 and 1995. Bally's Las Vegas has commenced the construction of
improvements to its frontage area along the Strip (with completion
expected in mid-1994) and has formed a joint venture with a subsidiary
of MGM Grand, Inc. to construct and operate a monorail that will
transport passengers between Bally's Las Vegas and The MGM Grand Hotel
and Theme Park (with completion expected in mid-1995). These capital
improvement projects are expected to cost Bally's Las Vegas
approximately $28 million and are intended to increase traffic into its
casino. Other major capital projects currently anticipated to commence
in 1994 include the renovation of the south tower rooms and corridors,
the retail shopping arcade and other common areas which, with other
capital expenditures required to maintain Bally's Las Vegas, are
estimated to cost approximately $26 million. The Company believes that
Bally's Grand, Inc. will be able to satisfy its debt service and capital
expenditure requirements in 1994 out of existing cash balances ($93.5
million at March 31, 1994) and cash flow from operations.
Bally's Tunica. The total cost to construct and equip Bally's Tunica
was approximately $39 million, which was advanced by Casino Holdings in
1993 and is currently being repaid in 1994 out of available cash flow.
Bally's Tunica may seek third party financing to replace part or all of
Casino Holdings' capital investment in Bally's Tunica. However, there
can be no assurance that third party financing will be available on
terms favorable to Bally's Tunica. Bally's Tunica expects capital
expenditures during 1994 to be insignificant.
Other. A subsidiary of Casino Holdings owns an equity interest of
approximately 50% in Belle of Orleans, L.L.C. ("Belle"). In August
1993, the Casino Holdings subsidiary entered into a formal operating
agreement for the capitalization and development of Belle.
Simultaneously, Casino Holdings and Belle entered into a management
agreement with a term of five years and an option for a second five-year
term granting responsibility for the development and management of Belle
to Casino Holdings. In March 1994, the Louisiana Riverboat Gaming
Commission awarded Belle a permanent operating license. Casino Holdings
will receive management fees based on a percentage of the earnings of
Belle. Construction of the riverboat commenced in January 1994 and
operations are expected to begin in March 1995. Management estimates
that as much as $75 million will be needed to develop Belle, and
anticipates the cost will be funded either through third party financing
(there can be no assurance that third party financing will be available
on terms favorable to Belle) or by Casino Holdings, though not required
to be.
Another subsidiary of Casino Holdings has entered into an option
agreement to acquire a 31-acre site along the Delaware River in
Philadelphia for the purpose of developing a dockside gaming facility
(the "Philadelphia Venture") if gaming were to be legalized in
Pennsylvania. The site includes a 550 foot pier and is easily accessed
from a major highway nearby. Pursuant to the terms of the agreement,
Casino Holdings has agreed to pay $10 million, consisting of an initial
cash payment of $5 million (paid in 1993) and $5 million payable over
the next three years. These payments are due whether or not gaming is
legalized in Pennsylvania. Additionally, in the event Casino Holdings
elects to take title to the property, it will be required to deliver at
the closing of the transaction the balance of the purchase price in the
form of a pre-payable, non-recourse note for approximately $55 million
(including interest), which is payable in various installments over the
five-year period subsequent to the closing of the transaction. Assuming
legalization, the closing of the transaction is scheduled for January
1997, unless accelerated by Casino Holdings. Certain of Casino
Holdings' obligations under the agreement are guaranteed by Bally.
The Grand
The Grand has no scheduled principal payments on its indebtedness
outstanding at March 31, 1994 until 2003. Management expects to make
capital expenditures of approximately $15 million in 1994 for the
refurbishment of hotel suites, a casino slot reconfiguration and
equipment upgrade, and certain other public area improvements. As of
March 31, 1994, The Grand had unused lines of credit totalling $20
million. The Company believes The Grand will be able to satisfy its
debt service and capital expenditure requirements in 1994 out of cash
flow from operations.
Bally's Health & Tennis
Bally's Health & Tennis has no scheduled principal payments of public
indebtedness until 2003, however, the Bally's Health & Tennis revolving
credit agreement has scheduled reductions of availability totalling $15
million during the remainder of 1994. Management expects to make
capital expenditures of not more than $30 million in 1994 which will be
used primarily for maintaining and refurbishing its present fitness
centers, leasehold improvements for approximately 10 planned new fitness
centers and acquisition of new fitness equipment. As of March 31, 1994,
Bally's Health & Tennis had unused lines of credit totalling $13.6
million. The Company believes that Bally's Health & Tennis will be able
to satisfy its debt service requirements in 1994 out of cash flow from
operations and, together with alternative financing sources, will be
able to meet planned levels of capital expenditures.
The Bally's Health & Tennis revolving credit agreement requires
maintenance by Bally's Health & Tennis of certain financial ratios.
Certain provisions of the revolving credit agreement applicable to those
financial ratios were amended as of March 31, 1994. There can be no
assurance that it will not be necessary in the future to amend the
financial ratio requirements and, if necessary, that such amendments
will be obtained.
<PAGE>
Bally Manufacturing Corporation
PART II. OTHER INFORMATION
Item 1. Legal proceedings
See "Liquidity and Capital Resources" in Management's Discussion
and Analysis of Financial Condition and Results of Operations of
this Form 10-Q for a description of the settlement of previously
disclosed tax claims.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
10-3 Third Amendment dated as of April 6, 1994 to the
Amended and Restated Credit Agreement dated as of
January 25, 1993 among Bally's Health & Tennis
Corporation and a group of banks with Chemical Bank,
as agent.
(b) Reports on Form 8-K:
Date Item Financial statements
---------------- ---------- --------------------
January 19, 1994 #5 and #7 None
<PAGE>
SIGNATURE PAGE
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.
BALLY MANUFACTURING CORPORATION
---------------------------------
Registrant
/s/ John W. Dwyer
------------------------------
John W. Dwyer
Vice President
and Corporate Controller
(Chief Accounting Officer)
Dated: May 16, 1994
EXHIBIT 10-3
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDMENT, dated as of April 6, 1994 (this
"Amendment"), to the Amended and Restated Credit Agreement,
dated as of January 25, 1993 (as amended, supplemented or
otherwise modified prior to the date hereof, the "Credit
Agreement"), among BALLY'S HEALTH & TENNIS CORPORATION, a
Delaware corporation (the "Borrower"), the several banks and
other financial institutions (the "Banks") parties thereto and
CHEMICAL BANK, a New York banking corporation, as agent (in
such capacity the "Agent") for the Banks.
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Agent and the
Banks to agree to amend certain provisions of the Credit
Agreement as set forth in this Amendment; and
WHEREAS, the Agent and the Banks are willing to agree
to such amendments, but only on the terms and subject to the
conditions set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. Definitions. Unless otherwise defined herein,
terms defined in the Credit Agreement are used herein as
therein defined.
2. Amendments to Section 1.01. Section 1.01 of the
Credit Agreement is hereby amended by inserting therein in
appropriate alphabetical order the following new definition:
"Credit Card Program Agreement" means the Credit Card
Program Agreement dated January 27, 1994 between BGR, Inc.
and First Deposit National Bank, including the attachments
thereto.
3. Amendment to Section 6.13. Section 6.13 of the
Credit Agreement is hereby amended by inserting at the end
thereof the following new proviso:
"; and provided, further, however, that solely for
purposes of determining Adjusted Cash from Operations used
in such ratio for any period of four preceding fiscal
quarters of the Borrower ended at the end of any of the
fiscal quarters set forth below in order to determine
compliance with this Section 6.13 (but not for any other
purpose, including without limitation the calculation of
the interest rate on Advances pursuant to Section 2.04),
Cash from Revenues for such period used in calculating
such Adjusted Cash from Operations shall be deemed to be
increased by the excess of the amount set forth below
opposite such fiscal quarter over the cumulative amount of
proceeds received on account of business interruption
insurance by the Borrower and its Subsidiaries during the
period commencing January 1, 1994 and ending at the end of
such fiscal quarter set forth below:
<TABLE>
<CAPTION>
Four Fiscal Quarters
Ended Amount
-------------------- ------
<S> <C>
1994, First Quarter $ 15,000,000
1994, Second Quarter 15,000,000
1994, Third Quarter 15,000,000
1994, Fourth Quarter 15,000,000"
</TABLE>
4. Amendment to Section 7.08. The proviso to
Section 7.08 of the Credit Agreement is hereby amended by
deleting the work "and" immediately prior to clause (d)
thereof, and by inserting the following new clause (e) at the
end thereof:
"; and (e) Capital Expenditures shall not include a
portion, not to exceed $1,500,000, of the actual
expenditures made by the Borrower and its Subsidiaries in
respect of fixed or capital assets during the 1994 fiscal
year directly related to the January 17, 1994 earthquake
in California, which is equal to the excess of (x) the
amount of such actual expenditures over (y) the amount of
such expenditures which do not constitute Capital
Expenditures pursuant to clause (b) of the proviso to the
definition of "Capital Expenditures."
5. Amendment to Section 7.10. Section 7.10 is
hereby amended by deleting the period at the end of the clause
(b) of the proviso thereto and inserting in lieu thereof
"; and", and by inserting at the end of said proviso the
following new clause (c):
"(c) to the extent the Borrower or any Subsidiary may
at any time be a party to the Credit Card Program
Agreement, licensing arrangements contemplated by the
Credit Card Program Agreement shall not be prohibited
hereunder."
6. Amendment to Section 7.15. Section 7.15 of the
Credit Agreement is hereby amended by inserting at the end
thereof the following new proviso:
"; provided, however, that solely for purposes of
determining Cash EBITDA used in such ratio for any period
of four preceding fiscal quarters of the Borrower ended at
the end of any of the fiscal quarters set forth below,
Cash from Revenues for such period used in calculating
such Cash EBITDA shall be deemed to be increased by the
excess of the amount set forth below opposite such fiscal
quarter over the cumulative amount of proceeds received on
account of business interruption insurance by the Borrower
and its Subsidiaries during the period commencing
January 1, 1994 and ending at the end of such fiscal
quarter set forth below:
<TABLE>
<CAPTION>
Four Fiscal Quarters
Ended Amount
-------------------- ------
<S> <C>
1994, First Quarter $ 15,000,000
1994, Second Quarter 15,000,000
1994, Third Quarter 15,000,000
1994, Fourth Quarter 15,000,000"
</TABLE>
7. Representations and Warranties. The Borrower
hereby confirms that, after giving effect to the amendments and
waivers provided for herein, (i) the representations and
warranties contained in Article V of the Credit Agreement are
true and correct in all material respects on and as of the date
hereof and no Default or Event of Default has occurred and is
continuing, and (ii) the Borrower has all necessary power and
has taken all corporate action necessary to approve and
authorize this Amendment.
8. No Other Amendments or Waivers. Except as
expressly amended hereby, the Credit Agreement shall continue
to be, and shall remain, in full force and effect in accordance
with its terms.
9. Counterparts. This Amendment may be executed by
the parties hereto in any number of separate counterparts and
all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
10. Conditions of Effectiveness. This Amendment
shall become effective on the date on which all of the
following conditions have been met:
(a) The Borrower and the Majority Banks shall have
executed a counterpart of this Amendment and the Agent shall
have received confirmation of such execution.
(b) The Guarantors' Consent in the form of Exhibit A
attached hereto shall have been executed on behalf of each
Guarantor, and Agent shall have received confirmation of such
execution.
(c) The Agent shall have received evidence, in form
and substance satisfactory to it, of Borrower's corporate
action authorizing the execution and delivery of this
Amendment.
(d) The Agent shall have received, for the account
of each Bank, an amendment fee in an amount equal to one-eighth
of one percent (1/8%) of the sum of (i) such Bank's Revolving
Credit Commitment and (ii) such Bank's L/C Commitment.
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ILLINOIS.
12. Costs and Expenses. Borrower agrees to pay on
demand:
(a) to Agent all reasonable costs, expenses and
attorneys' fees (including allocated costs for in-house legal
services) incurred in connection with the preparation and
administration of this Amendment and any instrument or
agreement required hereunder;
(b) to Agent and to each Bank all reasonable costs,
expenses and attorney's fees (including allocated costs for in-
house legal services) incurred by Agent and each such Bank in
connection with the enforcement of this Amendment or any
instrument or agreement required hereunder; and
(c) to Agent and to each Bank all stamp,
registration and other duties and imposts to which this
Amendment and any instrument or agreement required hereunder
may be subject. Borrower shall indemnify Agent and each Bank
against any and all liabilities and penalties resulting from
any delay in paying, or failure to pay, any such duties and
imposts.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered by their
proper and duly authorized officers as of the date set forth
above.
BALLY'S HEALTH & TENNIS CORPORATION
By:________________________________________
Title:
CHEMICAL BANK, as Agent
By:________________________________________
Title:
CHEMICAL BANK, Individually
By:________________________________________
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:________________________________________
Title:
FIRST FIDELITY BANK, N.A., NEW JERSEY
By:________________________________________
Title:
CONTINENTAL BANK N.A.
By:________________________________________
Title:
THE BANK OF NEW YORK
By:________________________________________
Title:
