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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, 2003
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 0-26922

COAST CASINOS, INC.
(Exact name of registrant as specified in its charter)


Nevada
(State or other jurisdiction of
incorporation or organization)

 88-0345704
(I.R.S. employer
identification number)

4500 West Tropicana Avenue, Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip code)


(702) 365-7000
Registrant’s telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report.)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  [X]   No  [   ]

        Indicate by check mark whether the Registrant is an Accelerated Filer (as defined in Exchange Act rule 12b-2) Yes [   ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

        Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

        Shares of Common Stock outstanding as of August 12, 2003: 1,461,178

Part I — FINANCIAL INFORMATION

Item 1.  Financial Statements

COAST CASINOS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)


June 30,
2003		 December 31, 2002
(unaudited)
                                         ASSETS

  
CURRENT ASSETS:            
    Cash and cash equivalents   $ 37,292   $ 37,523  
    Accounts receivable, net    5,936    7,442  
    Other current assets    24,165    21,093  
    TOTAL CURRENT ASSETS    67,393    66,058  
PROPERTY AND EQUIPMENT, net    746,199    712,244  
OTHER ASSETS    7,526    8,087  
    $ 821,118   $ 786,389  
                               LIABILITIES AND    
                       STOCKHOLDER'S EQUITY

    
CURRENT LIABILITIES:  
    Accounts payable   $ 18,693   $ 15,327  
    Accrued liabilities    42,693    47,332  
    Construction accounts payable    2,366    12,645  
    Current portion of long-term debt    40,657    17,162  
    TOTAL CURRENT LIABILITIES    104,409    92,466  
LONG-TERM DEBT, less current portion    442,616    448,624  
DEFERRED INCOME TAXES    32,615    29,972  
DEFERRED RENT    28,654    27,096  
    TOTAL LIABILITIES    608,294    598,158  
COMMITMENTS AND CONTINGENCIES  
STOCKHOLDERS' EQUITY:  
    Preferred stock, $.01 par value, 500,000 shares authorized,  
       none issued and outstanding    --    --  
    Common stock, $.01 par value, 2,000,000 shares authorized,  
       1,494,353 shares issued and 1,461,178 shares outstanding    15    15  
    Treasury stock (33,175 shares)    (3,333 )  (3,333 )
    Additional paid-in capital    95,398    95,398  
    Retained earnings    120,744    96,151  
    TOTAL STOCKHOLDERS' EQUITY    212,824    188,231  
    $ 821,118   $ 786,389  

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

COAST CASINOS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 2003 and 2002
(dollars in thousands, except share and per share data)
(unaudited)


Three Months Ended
June 30,
 Six Months Ended
June 30,
2003
 2002
 2003
 2002
OPERATING REVENUES:                    
    Casino   $ 105,192   $ 102,397   $ 213,120   $ 203,305  
    Food and beverage    28,355    27,588    56,893    55,563  
    Hotel    12,945    9,954    26,123    20,043  
    Other    11,399    9,767    21,392    19,114  
       GROSS OPERATING REVENUES    157,891    149,706    317,528    298,025  
    Less: promotional allowances    (12,795 )  (13,251 )  (25,985 )  (26,495 )
       NET OPERATING REVENUES    145,096    136,455    291,543    271,530  
OPERATING EXPENSES:  
    Casino    42,319    45,563    85,561    89,885  
    Food and beverage    21,267    20,876    42,298    41,541  
    Hotel    5,179    4,089    10,360    8,074  
    Other    10,157    7,447    18,116    14,362  
    General and administrative    26,363    25,052    52,142    48,542  
    Land leases    1,341    1,355    2,680    2,660  
    Deferred rent    780    795    1,559    1,639  
    Depreciation and amortization    12,125    10,164    23,563    19,443  
       TOTAL OPERATING EXPENSES    119,531    115,341    236,279    226,146  
OPERATING INCOME    25,565    21,114    55,264    45,384  
OTHER INCOME (EXPENSES):  
    Interest expense, net    (9,405 )  (7,866 )  (18,669 )  (15,036 )
    Interest capitalized    336    858    1,219    1,446  
    Other income (expense)    130    2,816    (215 )  2,498  
TOTAL OTHER INCOME (EXPENSES)    (8,939 )  (4,192 )  (17,665 )  (11,092 )
INCOME BEFORE INCOME TAXES    16,626    16,922    37,599    34,292  
Income tax provision    5,739    5,833    13,006    11,820  
NET INCOME   $ 10,887   $ 11,089   $ 24,593   $ 22,472  
PER SHARE INFORMATION:  
Basic net income per share of common stock   $ 7.45   $ 7.59   $ 16.83   $ 15.38  
Diluted net income per share of common stock   $ 7.33   $ 7.46   $ 16.55   $ 15.12  
Basic weighted-average shares outstanding    1,461,178    1,461,178    1,461,178    1,461,178  
Diluted weighted-average shares outstanding    1,485,676    1,486,054    1,485,676    1,486,054  

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

COAST CASINOS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2003 and 2002
(dollars in thousands)
(unaudited)


Six Months Ended
June 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:            
    Net income   $ 24,593   $ 22,472  
    ADJUSTMENTS TO RECONCILE NET INCOME TO  
       NET CASH PROVIDED BY OPERATING ACTIVITIES:  
       Depreciation and amortization    23,563    19,443  
       Net amortization of debt offering costs and original issue premium    449    732  
       Loss on disposals of assets    215    311  
       Deferred income taxes    2,548    3,190  
       Deferred rent    1,559    1,639  
       Changes in assets and liabilities:  
         Net increase in accounts receivable and other assets    (1,555 )  (3,992 )
         Net (decrease) increase in accounts payable and accrued liabilities    (1,273 )  6,727  
    TOTAL ADJUSTMENTS    25,506    28,050  
    NET CASH PROVIDED BY OPERATING ACTIVITIES    50,099    50,522  
CASH FLOWS FROM INVESTING ACTIVITIES:  
    Capital expenditures, net of amounts in construction accounts payable    (68,467 )  (117,513 )
    Proceeds from sale of assets    477    958  
    NET CASH USED IN INVESTING ACTIVITIES    (67,990 )  (116,555 )
CASH FLOWS FROM FINANCING ACTIVITIES:  
    Proceeds from issuance of long-term debt, including original issue  
       premium, net of financing costs    17,820    103,191  
    Principal payments on long-term debt    (160 )  (148 )
    Proceeds from borrowings under bank line of credit    35,500    56,500  
    Repayments of borrowings under bank line of credit    (35,500 )  (107,500 )
    NET CASH PROVIDED BY FINANCING ACTIVITIES    17,660    52,043  
NET DECREASE IN CASH AND CASH EQUIVALENTS    (231 )  (13,990 )
CASH AND CASH EQUIVALENTS, at beginning of period    37,523    43,350  
CASH AND CASH EQUIVALENTS, at end of period   $ 37,292   $ 29,360  

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — GENERAL

Background Information

        Coast Casinos, Inc. (“Coast Casinos” or the “Company”) is a Nevada corporation with no independent assets or operations and serves only as a holding company for Coast Hotels and Casinos, Inc. (“Coast Hotels”), which is also a Nevada corporation. Coast Casinos changed its name from Coast Resorts, Inc. on July 2, 2002. Through its wholly owned subsidiary, Coast Hotels, the Company owns and operates four Las Vegas hotel-casinos:


  o The Orleans Hotel and Casino opened in 1996 and is located approximately one mile west of the Las Vegas Strip on Tropicana Avenue.

  o Gold Coast Hotel and Casino opened in 1986 and is located approximately one mile west of the Las Vegas Strip on Flamingo Road.

  o The Suncoast Hotel and Casino opened in 2000 and is located in the west end of the Las Vegas valley.

  o Barbary Coast Hotel and Casino opened in 1979 and is located on the Las Vegas Strip.

Basis of Presentation

        The accompanying condensed consolidated interim financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, 2002. In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair statement of the results for the interim periods have been included. The interim results reflected in the unaudited consolidated financial statements are not necessarily indicative of expected results for the full year.

4

COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — LONG-TERM DEBT

        Long-term debt consists of the following as of June 30, 2003 and December 31, 2002:


June 30,
2003		 December 31,
2002
(in thousands)
9.5% senior subordinated notes due April 2009, with interest payable            
    semi-annually on April 1 and October 1, including unamortized  
    original issue premium of $4,059 in 2003 and $4,412 in 2002   $ 329,059   $ 329,412  
Senior secured credit facility due September 2004, collateralized  
    by substantially all of the assets of Coast Hotels and Casinos, Inc.    136,000    136,000  
Variable-rate note due March 2009, collateralized by 1996 Canadair  
    Challenger aircraft    18,000    --  
Other notes payable    214    374  
     483,273    465,786  
Less: current portion    40,657    17,162  
    $ 442,616   $ 448,624  

        In March 1999, Coast Hotels issued $175.0 million principal amount of 9.5% senior subordinated notes with interest payable on April 1 and October 1 beginning October 1, 1999 and entered into a $75.0 million senior secured credit facility due in September 2004 to facilitate a refinancing. Availability under the credit facility was increased to $200.0 million in September 1999. Coast Casinos is a full and unconditional guarantor of the indebtedness under both of these debt agreements. Borrowings under the credit facility bear interest, at Coast Hotel’s option, selected monthly, at a premium over the one-, two-, three- or six-month London Interbank Offered Rate (“LIBOR”). The premium varies depending on a certain financial ratio and can vary between 125 and 250 basis points. As of June 30, 2003, the premium over LIBOR was 2.25% (225 basis points) and the interest rate was 3.39%. For the six months ended June 30, 2003, the weighted average interest rate for the senior secured credit facility was 3.49%. Coast Hotels incurs a commitment fee, payable quarterly in arrears, on the unused portion of the credit facility. This variable fee is currently at the maximum rate of 0.5% per annum times the average unused portion of the facility.

        In accordance with the terms of the senior secured credit facility, the availability under the facility has been reduced quarterly since September 30, 2001. Through June 30, 2003, total availability has been reduced to $142.0 million with additional quarterly reductions in availability of $11.5 million on each of September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004. Advances under the facility may be used for working capital, general corporate purposes, and certain improvements to our existing properties. As of June 30, 2003, there was $136.0 million outstanding under the senior secured credit facility with $5.3 million of availability remaining (net of letters of credit of approximately $700,000).

5

COAST CASINOS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — LONG-TERM DEBT (continued)

        On February 2, 2001, Coast Hotels issued $50.0 million additional principal amount of senior subordinated notes. The net proceeds of approximately $49.1 million were used to reduce borrowings under its senior secured credit facility. On March 19, 2002, Coast Hotels issued $100.0 million additional principal amount of senior subordinated notes. The notes were issued at a $5.0 million premium to par value and the net proceeds of approximately $103.2 million were used to reduce borrowings under its senior secured credit facility. The notes that were issued in 2001 and 2002 were issued under the same indenture and have the same terms, interest rate and maturity date as the $175.0 million principal amount of senior subordinated notes issued in 1999.

        The loan agreement governing the senior secured credit facility contains covenants that, among other things, limit the ability of Coast Hotels to pay dividends or make advances to Coast Casinos, to make certain capital expenditures, to repay certain existing indebtedness, to incur additional indebtedness or to sell material assets of Coast Hotels. Additionally, the loan agreement requires that Coast Hotels maintain certain financial ratios with respect to its leverage and fixed charge coverage. The agreement was amended in December 2001, March 2002, January 2003, February 2003 and June 2003 to increase the limitations of Coast Hotels to make certain capital expenditures and to allow for additional indebtedness. Coast Hotels is also subject to certain covenants associated with the indenture governing the senior subordinated notes, including, in part, limitations on certain restricted payments, the incurrence of additional indebtedness and asset sales. As of June 30, 2003, the net assets of Coast Hotels amounted to $217.0