<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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: 0-26518
FITZGERALDS GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0329170
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
301 FREMONT STREET, LAS VEGAS NV 89101
(Address of principal executive offices) (Zip Code)
(702) 388-2224
(Registrant's telephone number, including area code)
(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 than 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 [ ]
Shares outstanding of each of the registrant's classes of common stock as of
May 10, 1996
Class Outstanding as of May 10, 1996
Common stock, $.01 par value 3,956,816
<PAGE> 2
FITZGERALDS GAMING CORPORATION
FORM 10-Q
INDEX
<TABLE>
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1 CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1996 AND 4
DECEMBER 31, 1995
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE QUARTERS
ENDED MARCH 31, 1996 AND APRIL 2, 1995 6
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE QUARTERS
ENDED MARCH 31, 1996 AND APRIL 2, 1995 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
PART II OTHER INFORMATION 14
SIGNATURES 15
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1
CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
FITZGERALDS GAMING CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1996 DEC. 31, 1995
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 21,015,657 $ 19,843,824
Restricted cash 0 471,569
Accounts and notes receivable 1,865,613 3,006,961
Inventories 1,287,781 1,027,848
Prepaid expenses 3,367,267 3,105,729
----------- -----------
Total current assets 27,536,318 27,455,931
------------ ------------
PROPERTY AND EQUIPMENT, net 105,647,965 103,802,669
------------ ------------
OTHER ASSETS:
Restricted cash-construction 45,084,308 49,100,000
Restricted investment 1,000,000 1,000,000
Long-term accounts and notes receivable
related parties, net of current portion 2,357,177 1,902,396
Advances receivable 0 2,500,000
Investment in 101 Main Street 2,628,428 0
Investment in Fremont Street Experience 2,797,762 2,786,384
Debt offering costs 7,221,073 7,357,754
Other assets 1,391,730 1,308,205
------------ ------------
Total other assets 62,480,478 65,954,739
------------ ------------
TOTAL $195,664,761 $197,213,339
============ ============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
FITZGERALDS GAMING CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY MARCH 31, 1996 DEC. 31, 1995
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 8,736,693 $ 10,498,434
Current portion of notes payable - related parties 761,042 727,671
Accounts payable 4,767,932 5,938,650
Accrued expenses 13,161,623 10,858,990
Deferred tax liability 63,672 63,672
------------ ------------
27,490,962 28,087,417
------------ ------------
LONG-TERM DEBT, NET OF CURRENT PORTION 138,112,703 137,659,479
NOTES PAYABLE-RELATED
PARTIES, net of current portion 1,773,884 1,807,255
DEFERRED TAX LIABILITY 1,420,495 1,420,495
------------ ------------
Total liabilities 168,798,044 168,974,646
------------ ------------
MINORITY INTEREST 309,403 225,097
------------ ------------
COMMITMENTS AND CONTINGENCIES
CUMULATIVE REDEEMABLE PREFERRED STOCK,
Recorded at liquidation preference value, net of
Unamortized offering costs and discounts 12,760,969 11,952,629
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 29,200,000 shares
Authorized 3,956,816 shares issued and outstanding 39,568 39,568
Additional paid-in capital 24,455,591 24,455,175
Accumulated deficit (10,698,814) (8,433,776)
------------ ------------
Total stockholders' equity 13,796,345 16,060,967
------------ ------------
TOTAL $195,664,761 $197,213,339
============ ============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
FITZGERALDS GAMING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 31, 1996 AND APRIL 2, 1995
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------
MARCH 31, 1996 APRIL 2, 1995
<S> <C> <C>
OPERATING REVENUES:
Casino $26,906,261 $28,064,601
Food and beverage 4,686,054 4,725,837
Rooms 3,026,792 3,127,733
Other 1,718,610 1,752,892
----------- -----------
Total 36,337,717 37,671,063
Less promotional allowances 2,972,185 3,145,830
----------- -----------
Net 33,365,532 34,525,233
----------- -----------
OPERATING COSTS AND EXPENSES:
Casino 13,941,335 14,578,788
Food and beverage 3,050,063 3,182,023
Rooms 1,893,976 1,720,882
Other operating 405,366 444,013
Selling, general and administrative 10,030,459 9,838,609
Depreciation and amortization 1,928,953 2,176,613
----------- -----------
Total 31,250,152 31,940,928
----------- -----------
INCOME (LOSS) FROM OPERATIONS 2,115,380 2,584,305
OTHER INCOME (EXPENSE):
Interest income 811,598 100,355
Other income 65,918 0
Interest expense (5,365,556) (3,646,314)
Gain on sale of assets 148,243 101,962
Equity in income of unconsolidated affiliate 128,428 0
Minority interest in (income) loss of subsidiaries (84,306) (112,195)
----------- -----------
INCOME (LOSS) BEFORE TAXES (2,180,295) (971,887)
INCOME TAX (PROVISION) BENEFIT 733,597 (147,540)
----------- -----------
NET LOSS (1,446,698) $(1,119,427)
----------- -----------
PREFERRED STOCK DIVIDENDS (808,340)
-----------
NET LOSS APPLICABLE TO COMMON STOCK $(2,255,038)
-----------
NET LOSS PER COMMON SHARE $(0.56)
===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,012,855
===========
</TABLE>
See notes to consolidated financial statements
6
<PAGE> 7
FITZGERALDS GAMING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1996 AND APRIL 2, 1995
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------
MARCH 31, 1996 APRIL 2, 1995
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,165,456 $ 289,572
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 177,838 115,768
Repayments from related parties 58,825 48,706
Acquisiton of property and equipment (3,732,300) (960,300)
Increase in advances receivable - (541,650)
Decrease in restricted cash 4,015,692 -
Investment in Fremont Street Experience (315,500) -
----------- -----------
Net cash provided by (used in) investing activities 204,555 (1,337,476)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from related parties - 683,494
Proceeds from issuance of debt 3,200,000 500,000
Repayment of long-term debt (4,851,067) (2,081,207)
Common stock dividends - (914,791)
(Increase) decrease in restricted cash 471,569 (49,800)
Other (18,680) -
----------- -----------
Net cash used in financing activities (1,198,178) (1,862,304)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,171,833 (2,910,208)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 19,843,824 11,886,001
----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $21,015,657 $ 8,975,793
=========== ===========
Cash paid for interest $ 1,395,164 $ 4,827,847
Summary of non-cash investing and financing activities
Property and equipment acquired through the issuance of debt $ 70,420 $ 621,593
Accretion of discount on preferred stock 47,573 -
Accrual of preferred stock dividends 760,767 -
Advances receivable transferred to investment in 101 Main Street 2,500,000 -
</TABLE>
See notes to consolidated financial statements.
7
<PAGE> 8
FITZGERALDS GAMING CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated financial statements of the Company as of March
31, 1996 and for the quarters ended March 31, 1996 and April 2, 1995 have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the interim
consolidated financial statements have been included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
2. Investment in 101 Main Street
On February 16, 1996, the Company received approval from the Colorado Limited
Gaming Commission to purchase a 22% equity interest in 101 Main Street LLC, the
owner of Fitzgeralds Black Hawk Casino. The purchase became effective on
February 26, 1996 and the Company began accounting for this investment using
the equity method on this date. The Company had advanced $2,500,000 to 101
Main Street, which amount was reclassified to an investment account upon the
acquisition of the 22% equity interest.
3. Recently-Issued Accounting Standard Adopted
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," which was adopted by the Company during the first quarter of
1996. SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25,
which recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to
its stock-based compensation awards to employees and will disclose the required
pro-forma effect on net income and earnings per share.
8
<PAGE> 9
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is qualified
in its entirety by, the unaudited Consolidated Financial Statements and the
Notes thereto included in this report. The following discussion contains
certain forward-looking statements. The forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while
considered reasonable, are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond the
control of the Company, and upon assumptions with respect to future business
decisions which are subject to change.
GENERAL
The Statement of Operations includes figures for Harolds Club, which the
Company closed on March 31, 1995 in anticipation of a sale which was completed
on May 31, 1995. The discussion below, as it relates to the 1995 Period (as
defined), excludes figures for Harolds Club. Certain other changes in
operations affecting the period-to-period comparisons below include (a)
commencement of the Company's management of the Fitzgeralds Black Hawk Casino
on May 23, 1995 (under an exclusive ten-year management agreement) for a
monthly management fee payable from that date on; (b) commencement of the
Company's management of the Cliff Castle Casino also on May 23, 1995 (under an
exclusive five-year management contract) for a monthly management fee and other
consideration payable from that date on; and (c) the receipt by the Company of
approval from the Colorado Limited Gaming Commission on February 16, 1996 to
purchase a 22% equity interest in the owner of Fitzgeralds Black Hawk Casino,
which purchase became effective on February 26, 1996.
The Company is in the process of constructing a 507-room hotel and other
amenities at Fitzgeralds Tunica and is also in the process of expanding and
significantly upgrading its Las Vegas property. The Company expects to
complete the Tunica expansion by August 1996 and to complete the Las Vegas
renovation and expansion by December 1996.
The Company anticipates that operating results for the thirteen weeks ending
June 30, 1996 (its second fiscal quarter) will be lower than those recorded for
the thirteen weeks ending July 2, 1995, the equivalent year-earlier period, for
basically the same reasons set forth below in analyzing the 1996 Period (as
defined) performance in relation to the 1995 Period performance.
SUMMARY
For the thirteen weeks ended March 31, 1996 (the "1996 Period"), Total Revenues
were $36.3 million, materially unchanged from $36.0 million for the thirteen
weeks ended April 2, 1995 (the "1995 Period"). Total Revenues were positively
impacted by management fees from Cliff Castle and Fitzgeralds Black Hawk, which
were not operating during the 1995 Period, and an increase
9
<PAGE> 10
in total revenues at Fitzgeralds Las Vegas attributable to the opening of the
Fremont Street Experience, partially offset by lower total revenues at
Fitzgeralds Reno and Fitzgeralds Tunica.
Income From Operations for the 1996 Period was $2.1 million, a 46.3% decline
against $3.9 million for the 1995 Period. The decline in Net Income, from a
net income of $0.2 million for the 1995 Period to a net loss of $1.4 million
for the 1996 Period, reflected the decline in Income from Operations partially
offset by a change in income tax position from a $0.3 million provision to over
$0.7 million benefit towards future earnings and an increase in Interest
Expense.
Adjusted EBITDA(1), which the Company uses as a reasonable measure of its
ability to generate cash from operating activities and as a means to compare the
Company's performance with that of its competitors, declined 31.6%, from $5.92
million2 for the 1995 Period to $4.04 million for the 1996 Period.
==============================================================================
Summary of Operating Results
(Dollars in thousands)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Operating Revenues Adjusted EBITDA
1996 Period 1995 Period 1996 Period 1995 Period
<S> <C> <C> <C> <C>
Las Vegas $12,157 $11,263 $1,360 $1,438
Tunica 10,400 11,075 1,107 2,848
Reno 8,351 8,310 852 1,125
Other 2,458 2,359 725 506
Total $33,366 $33,007 $4,044 $5,917(2)
==============================================================================
</TABLE>
In the above table, "Other" includes management fees from the Oneida Contract,
Fitzgeralds Black Hawk and Cliff Castle Casino, as well as results from the
Nevada Club and unallocated costs related to corporate overhead.
REVENUES
The Company recorded Total Revenues of $36.3 million and Net Operating Revenues
of $33.3 million for the 1996 Period, both representing nominal increases over
the 1995 Period's $36.0 million and $33.0 million, respectively. Casino
Revenues, which increased nominally for the 1996 Period, represented
approximately 74% of Total Revenues in both periods. Among non-casino
revenues, Rooms Revenues (at 8.3% and 8.7% of Total Revenues for the 1996 and
1995 Periods, respectively) declined 3.2% from the earlier period, Food and
Beverage revenues (at
__________________________________
(1) Earnings Before Interest, Taxes on Income, Depreciation and Amortization
plus costs relating to development and pre-opening.
(2) EBITDA for the 1995 Period included the one-time receipt of $665,000 from
the Oneida Indian Nation of New York relating to a settlement on fees due on
work performed in 1994.
10
<PAGE> 11
approximately 13% of Total Revenues for both periods) increased 2.4% and Other
Revenues (at approximately 4.8% of Total Revenues for both periods) were
materially unchanged.
Promotional Allowances decreased 1.9% period-to-period, as a result of the
implementation of improved methods to determine which guests should receive
complimentary goods and services.
Casino Revenues, approximately 72% of which are derived from slot machine
revenues, were materially unchanged since an increase at Fitzgeralds Las Vegas
was essentially offset by a decline at Fitzgeralds Tunica. Casino Revenues
increased by 6.5% and 3.8% at Fitzgeralds Las Vegas and Fitzgeralds Reno,
respectively, and declined by 5.8% at Fitzgeralds Tunica. The increase at
Fitzgeralds Las Vegas was the result of increased traffic generated by the
Fremont Street Experience, which opened on November 30, 1995, partially offset
by lower hold percentages, both at the tables and slot machines. The increase
at Fitzgeralds Reno was the result of upgraded slot product which includes bill
validators. The decline at Fitzgeralds Tunica resulted primarily from adverse
weather conditions for most of the first half of the 1996 Period, as well as
the opening of additional casinos and the replacement of weaker competing
properties with stronger ones, on a period-to-period comparison.
Non-casino revenues consist of three categories; (i) Room Revenues at
Fitzgeralds Las Vegas and Fitzgeralds Reno; (ii) Food and Beverage Revenues at
each facility; and (iii) miscellaneous revenues, such as management fees and
retail sales.
Room Revenues improved at Fitzgeralds Las Vegas due to a decrease in
tour-and-travel customers with replacement by free independent travelers
typically paying a higher average daily room rate. Occupancy rates were 96.2%
and 97.0%, for the 1996 and 1995 Periods, respectively . The Company
anticipates lower Rooms Revenues for Las Vegas for the next five months as all
651 rooms undergo renovation. The Company has received approval to begin
operating its hotel at Fitzgeralds Las Vegas as a Holiday Inn franchisee on
July 1, 1996. However, since this anticipated start of operations as a
franchisee precedes the completion of renovation of the entire facility, it is
possible that Holiday Inns might require a delay in the start of franchisee
operations. The operations of the hotel at Fitzgeralds Las Vegas as a Holiday
Inn should result in higher average room rates and a maintenance of occupancy
levels in the 95% or higher range. At Fitzgeralds Reno, lower hotel revenues
were the result of both a 5% decline in occupancy levels, to 84%, as well as an
approximately $8, or 17.3%, decline in average daily room rate. These declines
were the result of increased competition in Reno, coupled with the absence of a
four-month-long national bowling tournament which was held in Reno in 1995. A
similar tournament will again be held in 1997, but was not held in 1996.
Food and Beverage Revenues posted gains of 9.3%, and 8.7%, respectively, at
Fitzgeralds Las Vegas and Fitzgeralds Tunica, as result, respectively, of
increased traffic and increased use of food and beverage as promotional items,
and posted a 9.4% decline at Fitzgeralds Reno due to lower overall traffic.
11
<PAGE> 12
Other Revenues did not change materially in the 1996 Period as the management
fees from the Cliff Castle and Fitzgeralds Black Hawk casinos realized in the
1996 Period replaced a one-time fee of approximately $665,000 received in the
1995 Period under another contract.
OPERATING EXPENSES
Total Operating Expenses increased 7.5%, from $29.1 million for the 1995 Period
to $31.3 million for the 1996 Period, primarily due to a 18.4% increase in
General and Administrative Costs, as the Company began developing the corporate
infrastructure necessary to implement its business plans following the
Company's January 1995 Business Combination (described in the Company's most
recent Annual Report on Form 10-K).
Casino expenses were $13.9 million for the 1996 Period, a 4.7% increase over
the 1995 Period as the result of increased personnel and other costs in
response to market conditions. Food and Beverage expenses declined 2.8%, from
$3.14 million for the 1995 Period to $3.05 million for the 1996 Period, again
as the result of cost controls in response to the decline in revenues for this
department. Rooms expenses increased 10.1%, from $1.7 million for the 1995
Period to $1.9 million for the 1996 Period as a result of higher personnel
costs at Fitzgeralds Las Vegas Fitzgeralds Reno.
The three largest cross-departmental operating expense categories of the
Company are: personnel, promotional allowances (discussed above), and
marketing. The Company continues to experience a tightening of the Reno labor
market, with a resulting increase in average payroll cost per employee, and
expects increased competition for qualified personnel in Tunica through the end
of the year. The Company anticipates further increases in personnel cost as
Fitzgeralds Tunica opens its hotel and related facilities and its larger
casino, and as Fitzgeralds Las Vegas opens its expanded casino and related
facilities.
Marketing Expenses, which includes advertising, promotional material, special
events and the operations of the Fitzgeralds Card, have shown a significant
increase from the 1995 Period to the 1996 Period. The increase reflects more
intensive marketing efforts at each property undertaken in response to
increasing competitive activity at each of the markets in which the Company
operates, particularly in Tunica. The Company's strategy is to utilize its
expanded and renovated facilities as additional marketing elements and to
continue to adjust marketing expense levels as needed to respond to the market.
INCOME FROM OPERATIONS
Income from Operations was $2.1 million for the 1996 Period, a decline of 46.3%
from $3.9 million for the 1995 Period (including the one-time fee of $665,000
received on a contract settlement relating to work performed in fiscal 1994) as
a direct result of revenues remaining materially unchanged while expenses in
certain categories increased as discussed above.
12
<PAGE> 13
INTEREST EXPENSE AND INCOME TAX PROVISION OR BENEFIT
Interest Expense for the 1996 Period, net of interest income, was nearly $4.6
million, a 37.2% increase over the $3.3 million recorded for the 1995 Period.
The principal reason for the increase was the issuance of the 13% Senior
Secured Notes due 2002 in December 1995.
While the Company recorded slightly over $0.3 million in income tax provision
for the 1995 Period, it recorded over $0.7 million in income tax benefit for
the 1996 Period, resulting in a net loss figure less than loss before taxes.
NET INCOME
Net Income declined from a net income of $0.2 million for the 1995 Period to a
net loss of $1.4 million for the 1996 Period for the various reasons discussed
above.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company had unrestricted cash of $21.0 million,
compared with $19.8 million at December 31, 1995, and nearly $8.8 million at
April 2, 1995. The unrestricted cash balance at March 31, 1996 included
approximately $6.5 million in bankroll, $1.0 million in cash earmarked for
capital improvements at Fitzgeralds Reno and $4.0 million earmarked as
contingency reserves for the capital improvement projects at Fitzgeralds Las
Vegas and Fitzgeralds Tunica. As of March 31, 1996, the Company had over $45.0
million in cash held by a trustee for the completion of construction
improvements at Fitzgeralds Tunica and Fitzgeralds Las Vegas. The Company
believes that the cash held by the trustee, together with the aforementioned
construction reserves held by the Company, will be adequate to complete the
planned construction improvements at its Tunica and Las Vegas properties. The
Company's $1.0 million credit line at a local bank was not in use at March 31,
1996.
Cash generated from operating activities was $2.2 million for the 1996 Period,
which compares with under $1.0 million for the 1995 Period. The primary reason
for increased cash generation (despite the decrease in Income from Operations)
was a decrease in accounts receivable coupled with an increase in accrued
expenses. Investing activities provided a nominal $0.2 million in cash flows
for the 1996 Period, compared with over $1.4 million in cash flow uses for the
1995 Period. With respect to financing activities, the Company recorded net
cash uses of $1.2 million for the 1996 Period, compared with net cash uses of
$1.4 million for the 1995 Period.
The Company has substantial fixed costs, including debt service on the 13%
Senior Secured Notes due 2002, as well as a continuing need for funds to
finance on-going capital requirements at each of its facilities. The Company
believes that its cash flow from operations, together with its cash reserves,
will be sufficient to support normal operating and capital needs and its debt
service requirements. However, during the 1996 Period, the Company has
experienced certain adverse trends described above which appear to be
continuing. Certain other events are anticipated, including competitive
pressures in the Tunica market associated with the scheduled late June/early
July 1996 opening of a new facility by Grand Casinos, and what may be
anticipated as
13
<PAGE> 14
the responses, in the form of increased marketing costs, from current
competitors; disruption at Fitzgeralds Las Vegas, including the temporary loss
of casino space and a portion of its hotel rooms, during the Las Vegas
renovation and expansion (the principal effects of which the Company intends to
confine to a three-month period) and increasing competition as a result of the
completion or major renovation of additional Las Vegas casino-hotels; and
competitive pressures associated with the current excess room capacity in the
Reno market, exacerbated by the absence during 1996 of a major bowling
tournament at the National Bowling Stadium. If such adverse trends continue,
reductions in revenues or increases in expenses associated with the foregoing
or other factors not currently anticipated would reduce the Company's
unrestricted cash resources and could affect the Company's ability to meet debt
service and other obligations as they become due.
On May 31, 1995 the Company sold the closed Harolds Club Casino in Reno to an
unrelated party who subsequently sold the same casino to a company which has
since filed for protection from creditors under the Bankruptcy Act. Under the
terms of certain agreements, Fitzgeralds Reno Inc., a wholly-owned subsidiary
of the Company, is obligated for certain lease payment in the amount of
approximately $650,000 annually, if not paid for by the current owners of
Harolds Club.
14
<PAGE> 15
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable
ITEM 2. CHANGES IN SECURITIES.
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
Not Applicable
ITEM 5. OTHER INFORMATION.
On February 16, 1996 the Company received approval from the Colorado Limited
Gaming Commission to purchase a 22% equity interest in 101 Main Street LLC, the
owner of Fitzgeralds Black Hawk Casino. The purchase, which was effected
through the cancellation of advances in the amount of $2,500,000 made by the
Company, became effective on February 26, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 14, 1996
FITZGERALDS GAMING CORPORATION
/s/ Fernando Bensuaski
Fernando Bensuaski
Executive Vice President and
Chief Financial Officer
(Duly Authorizd Officer, Principal
Financial Officer and Principal
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS DATED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH REPORT ON FORM 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 21,015,657
<SECURITIES> 0
<RECEIVABLES> 1,865,613
<ALLOWANCES> 0
<INVENTORY> 1,287,781
<CURRENT-ASSETS> 27,536,318
<PP&E> 151,197,620
<DEPRECIATION> (45,549,655)
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12,760,969
0
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</TABLE>
