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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 10-Q
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED June 30, 2002.
 
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 333-87202
 
 
CIRCUS AND ELDORADO JOINT VENTURE
SILVER LEGACY CAPITAL CORP.
(Exact names of registrants as specified in their charters)
 
Nevada
Nevada
(State or other jurisdiction of
incorporation or organization)
  
88-0310787
71-0868362
(I.R.S. Employer
Identification No.)
 
407 North Virginia Street, Reno, Nevada 89501
(Address of principal executive offices, including zip code)
 
(800) 687-7733
(Registrants’ 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 registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes  ¨  No  x
 
Number of shares of common stock of Silver Legacy Capital Corp. outstanding at August 13, 2002: 2,500 shares.
 

 
CIRCUS AND ELDORADO JOINT VENTURE
SILVER LEGACY CAPITAL CORP.
 
FORM 10-Q
 
INDEX
 
           
Page No.
PART I.    FINANCIAL INFORMATION
       
Item 1.
   
Financial Statements:
       
         
3
         
5
         
6
         
7
         
8
Item 2.
        
11
Item 3.
        
16
PART II.    OTHER INFORMATION
       
Item 6.
        
17
    
20
 

2

 
PART I. FINANCIAL INFORMATION
 
Item 1.    Financial Statements.
 
CIRCUS AND ELDORADO JOINT VENTURE
(doing business as Silver Legacy Resort Casino)
 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    
June 30, 2002
   
December 31, 2001
ASSETS
              
CURRENT ASSETS:
              
Cash and cash equivalents
   
$
16,730
   
$
12,256
Accounts receivable, net
   
 
4,508
   
 
4,300
Inventories
   
 
1,639
   
 
1,877
Prepaid expenses and other
   
 
3,262
   
 
3,186
    
  
Total current assets
   
 
26,139
   
 
21,619
PROPERTY AND EQUIPMENT, NET
   
 
276,744
   
 
280,975
OTHER ASSETS, NET
   
 
6,293
   
 
575
    
  
Total Assets
   
$
309,176
   
$
303,169
    
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

3

CIRCUS AND ELDORDO JOINT VENTURE
(doing business as Silver Legacy Resort Casino)
 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    
June 30, 2002
   
December 31, 2001
LIABILITIES AND PARTNERS’ EQUITY
              
CURRENT LIABILITIES:
              
Current portion of long-term debt
   
$
2,000
   
$
10,000
Accounts payable
   
 
4,190
   
 
3,797
Accrued interest
   
 
5,333
   
 
130
Accrued and other liabilities
   
 
9,707
   
 
8,650
Accrued guarantee fees to related party
   
 
—  
   
 
185
    
  
Total current liabilities
   
 
21,230
   
 
22,762
LONG-TERM DEBT, LESS CURRENT PORTION
   
 
177,399
   
 
135,000
    
  
Total liabilities
   
 
198,629
   
 
157,762
PARTNERS’ EQUITY
   
 
110,547
   
 
145,407
    
  
Total Liabilities and Partners’ Equity
   
$
309,176
   
$
303,169
    
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

 
CIRCUS AND ELDORADO JOINT VENTURE
(doing business as Silver Legacy Resort Casino)
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
 
    
Three Months Ended June 30,
     
Six Months Ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
OPERATING REVENUES:
                                    
Casino
   
$
24,578
 
   
$
26,718
 
   
$
46,126
 
   
$
48,974
 
Rooms
   
 
9,235
 
   
 
10,714
 
   
 
17,028
 
   
 
19,208
 
Food and beverage
   
 
8,795
 
   
 
9,473
 
   
 
17,343
 
   
 
17,845
 
Other
   
 
2,484
 
   
 
2,045
 
   
 
4,184
 
   
 
3,486
 
    
  
  
  
    
 
45,092
 
   
 
48,950
 
   
 
84,681
 
   
 
89,513
 
Less: promotional allowances
   
 
(3,755
)
   
 
(4,054
)
   
 
(6,974
)
   
 
(7,327
)
    
  
  
  
Net operating revenues
   
 
41,337
 
   
 
44,896
 
   
 
77,707
 
   
 
82,186
 
    
  
  
  
OPERATING EXPENSES:
                                    
Casino
   
 
10,962
 
   
 
12,068
 
   
 
21,204
 
   
 
22,724
 
Rooms
   
 
2,934
 
   
 
3,251
 
   
 
5,810
 
   
 
6,295
 
Food and beverage
   
 
6,052
 
   
 
6,506
 
   
 
11,911
 
   
 
12,412
 
Other
   
 
1,915
 
   
 
1,655
 
   
 
3,176
 
   
 
2,706
 
Selling, general and administrative
   
 
7,393
 
   
 
7,282
 
   
 
14,338
 
   
 
14,502
 
Depreciation
   
 
3,032
 
   
 
3,023
 
   
 
6,039
 
   
 
6,026
 
Loss on sale of assets
   
 
—  
 
   
 
4
 
   
 
—  
 
   
 
4
 
    
  
  
  
Total operating expenses
   
 
32,288
 
   
 
33,789
 
   
 
62,478
 
   
 
64,669
 
    
  
  
  
OPERATING INCOME
   
 
9,049
 
   
 
11,107
 
   
 
15,229
 
   
 
17,517
 
    
  
  
  
OTHER (INCOME) EXPENSE:
                                    
Insurance settlement proceeds
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(225
)
Interest income
   
 
(13
)
   
 
(43
)
   
 
(23
)
   
 
(74
)
Interest expense, net
   
 
4,509
 
   
 
3,779
 
   
 
7,153
 
   
 
7,792
 
Loss on early redemption of debt
   
 
—  
 
   
 
—  
 
   
 
134
 
   
 
—  
 
Interest rate swap (income) expense
   
 
(163
)
   
 
31
 
   
 
(163
)
   
 
834
 
    
  
  
  
Total other (income) expense
   
 
4,333
 
   
 
3,767
 
   
 
7,101
 
   
 
8,327
 
    
  
  
  
Income before cumulative effect of change in accounting principle
   
 
4,716
 
   
 
7,340
 
   
 
8,128
 
   
 
9,190
 
    
  
  
  
Cumulative effect of change in accounting principle
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(327
)
    
  
  
  
NET INCOME
   
$
4,716
 
   
$
7,340
 
   
$
8,128
 
   
$
8,863
 
    
  
  
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

5

 
CIRCUS AND ELDORADO JOINT VENTURE
(doing business as Silver Legacy Resort Casino)
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY
(In thousands)
    
Galleon, Inc.
       
Eldorado Resorts, LLC
     
Total
  
BALANCE, December 31, 2001
   
$
73,755
 
     
$
71,652
 
   
$
145,407
 
Net income
   
 
4,064
 
     
 
4,064
 
   
 
8,128
 
Partners’ distributions
   
 
(27,545
)
     
 
(15,443
)
   
 
(42,988
)
    
    
  
BALANCE, June 30, 2002
   
$
50,274
 
     
$
60,273
 
   
$
110,547
 
    
    
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

6

 
CIRCUS AND ELDORADO JOINT VENTURE
(doing business as Silver Legacy Resort Casino)
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
    
Six Months Ended
June 30,
  
    
 
2002
 
   
 
2001
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Net Income
   
$
8,128
 
   
$
8,863
 
Adjustments to reconcile net income to net cash provided by operating operating activities:
                  
Depreciation and amortization
   
 
6,270
 
   
 
6,026
 
Loss on sale of assets
   
 
—  
 
   
 
4
 
Loss on early redemption of debt
   
 
134
 
   
 
—  
 
Insurance settlement proceeds
   
 
—  
 
   
 
(225
)
Interest rate swap (receivable) payable
   
 
(163
)
   
 
1,161
 
Changes in current assets and current liabilities:
                  
(Increase) decrease in accounts receivable, net of allowance
   
 
(45
)
   
 
844
 
Decrease in inventories
   
 
238
 
   
 
274
 
(Increase) decrease in prepaid expenses
   
 
(76
)