SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Q |
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | |
| SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2003 |
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| OR |
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| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | |
| SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ____________ to ____________ |
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COAST CASINOS, INC. |
| 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) | |
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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 November 13, 2003: 1,461,178 Part I — FINANCIAL INFORMATIONItem 1. Financial StatementsCOAST CASINOS, INC. AND SUBSIDIARY
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| September 30, 2003 |
December 31, 2002 | |||||||
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| (unaudited) | ||||||||
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| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 51,604 | $ | 37,523 | ||||
| Accounts receivable, net | 6,058 | 7,442 | ||||||
| Other current assets | 23,581 | 21,093 | ||||||
| TOTAL CURRENT ASSETS | 81,243 | 66,058 | ||||||
| PROPERTY AND EQUIPMENT, net | 742,050 | 712,244 | ||||||
| OTHER ASSETS | 10,565 | 8,087 | ||||||
| $ | 833,858 | $ | 786,389 | |||||
| LIABILITIES AND | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 15,061 | $ | 15,327 | ||||
| Accrued liabilities | 54,603 | 47,332 | ||||||
| Construction accounts payable | 96 | 12,645 | ||||||
| Current portion of long-term debt | 1,017 | 17,162 | ||||||
| TOTAL CURRENT LIABILITIES | 70,777 | 92,466 | ||||||
| LONG-TERM DEBT, less current portion | 484,079 | 448,624 | ||||||
| DEFERRED INCOME TAXES | 33,697 | 29,972 | ||||||
| DEFERRED RENT | 29,434 | 27,096 | ||||||
| TOTAL LIABILITIES | 617,987 | 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 | 123,791 | 96,151 | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 215,871 | 188,231 | ||||||
| $ | 833,858 | $ | 786,389 | |||||
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The accompanying notes are an integral part of these condensed consolidated financial statements. 1 COAST CASINOS, INC. AND SUBSIDIARY
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| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2003 |
2002 |
2003 |
2002 |
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| OPERATING REVENUES: | ||||||||||||||
| Casino | $ | 106,406 | $ | 97,322 | $ | 319,526 | $ | 300,627 | ||||||
| Food and beverage | 28,733 | 27,704 | 85,626 | 83,266 | ||||||||||
| Hotel | 13,126 | 9,797 | 39,249 | 29,840 | ||||||||||
| Other | 12,806 | 9,920 | 34,198 | 29,034 | ||||||||||
| GROSS OPERATING REVENUES | 161,071 | 144,743 | 478,599 | 442,767 | ||||||||||
| Less: promotional allowances | (13,058 | ) | (13,880 | ) | (39,043 | ) | (40,375 | ) | ||||||
| NET OPERATING REVENUES | 148,013 | 130,863 | 439,556 | 402,392 | ||||||||||
| OPERATING EXPENSES: | ||||||||||||||
| Casino | 44,310 | 45,080 | 129,871 | 134,964 | ||||||||||
| Food and beverage | 21,433 | 20,697 | 63,731 | 62,238 | ||||||||||
| Hotel | 5,493 | 4,472 | 15,853 | 12,546 | ||||||||||
| Other | 11,633 | 7,079 | 29,749 | 21,441 | ||||||||||
| General and administrative | 28,399 | 27,375 | 80,541 | 75,917 | ||||||||||
| Land leases | 1,342 | 1,355 | 4,022 | 4,015 | ||||||||||
| Deferred rent | 779 | 794 | 2,338 | 2,433 | ||||||||||
| Depreciation and amortization | 12,611 | 11,490 | 36,174 | 30,933 | ||||||||||
| TOTAL OPERATING EXPENSES | 126,000 | 118,342 | 362,279 | 344,487 | ||||||||||
| OPERATING INCOME | 22,013 | 12,521 | 77,277 | 57,905 | ||||||||||
| OTHER INCOME (EXPENSES): | ||||||||||||||
| Interest expense, net | (9,279 | ) | (8,830 | ) | (27,948 | ) | (23,866 | ) | ||||||
| Interest capitalized | 25 | 923 | 1,244 | 2,368 | ||||||||||
| Other income (expense) | 98 | (68 | ) | (117 | ) | 2,430 | ||||||||
| Loss on early retirement of debt | (419 | ) | -- | (419 | ) | -- | ||||||||
| TOTAL OTHER INCOME (EXPENSES) | (9,575 | ) | (7,975 | ) | (27,240 | ) | (19,068 | ) | ||||||
| INCOME BEFORE INCOME TAXES | 12,438 | 4,546 | 50,037 | 38,837 | ||||||||||
| Income tax provision | 4,277 | 1,493 | 17,283 | 13,312 | ||||||||||
| NET INCOME | $ | 8,161 | $ | 3,053 | $ | 32,754 | $ | 25,525 | ||||||
| PER SHARE INFORMATION: | ||||||||||||||
| Basic net income per share of | ||||||||||||||
| common stock | $ | 5.59 | $ | 2.09 | $ | 22.42 | $ | 17.47 | ||||||
| Diluted net income per share of | ||||||||||||||
| common stock | $ | 5.49 | $ | 2.06 | $ | 22.03 | $ | 17.19 | ||||||
| Dividends declared per share | $ | 3.50 | $ | -- | $ | 3.50 | $ | -- | ||||||
| Basic weighted-average shares | ||||||||||||||
| outstanding | 1,461,178 | 1,461,178 | 1,461,178 | 1,461,178 | ||||||||||
| Diluted weighted-average shares | ||||||||||||||
| outstanding | 1,487,139 | 1,484,672 | 1,487,139 | 1,484,672 | ||||||||||
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The accompanying notes are an integral part of these condensed consolidated financial statements. 2 COAST CASINOS, INC. AND SUBSIDIARY
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| Nine Months Ended September 30, |
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| 2003 | 2002 | |||||||
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| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 32,754 | $ | 25,525 | ||||
| ADJUSTMENTS TO RECONCILE NET INCOME TO | ||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES: | ||||||||
| Depreciation and amortization | 36,174 | 30,933 | ||||||
| Net amortization of debt offering costs and original issue | 668 | 1,123 | ||||||
| premium | ||||||||
| Loss on early retirement of debt | 419 | -- | ||||||
| Loss on disposals of assets | 117 | 307 | ||||||
| Deferred income taxes | 3,708 | 7,409 | ||||||
| Deferred rent | 2,338 | 2,433 | ||||||
| Changes in assets and liabilities: | ||||||||
| Net increase in accounts receivable and other assets | (1,144 | ) | (1,307 | ) | ||||
| Net increase in accounts payable and accrued liabilities | 7,005 | 13,802 | ||||||
| TOTAL ADJUSTMENTS | 49,285 | 54,700 | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 82,039 | 80,225 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures, net of amounts in construction | ||||||||
| accounts payable | (79,343 | ) | (165,638 | ) | ||||
| Proceeds from sale of assets | 728 | 968 | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (78,615 | ) | (164,670 | ) | ||||
| 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 | (175 | ) | (148 | ) | ||||
| Proceeds from borrowings under bank lines of credit, net | ||||||||
| of issuance costs | 171,626 | 89,000 | ||||||
| Repayments of borrowings under bank lines of credit | (173,500 | ) | (118,500 | ) | ||||
| Dividends paid | (5,114 | ) | -- | |||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 10,657 | 73,543 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 14,081 | (10,902 | ) | |||||
| CASH AND CASH EQUIVALENTS, at beginning of period | 37,523 | 43,350 | ||||||
| CASH AND CASH EQUIVALENTS, at end of period | $ | 51,604 | $ | 32,448 | ||||
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The accompanying notes are an integral part of these condensed consolidated financial statements. 3 COAST CASINOS, INC. AND SUBSIDIARY
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| 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 PresentationThe 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
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| September 30, 2003 |
December 31, 2002 |
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| (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 $3,882 in 2003 and $4,412 in 2002 | $ | 328,882 | $ | 329,412 | ||||
| Senior secured credit facility - $225.0 million revolving line of | ||||||||
| credit due September 2008, collateralized by substantially all of the assets of Coast Hotels and Casinos, Inc. | 63,000 | -- | ||||||
| Senior secured credit facility - $75.0 million term loan due September 2008, collateralized by substantially all of the assets of Coast Hotels and Casinos, Inc. | 75,000 | -- | ||||||
| Senior secured credit facility due September 2004, collateralized by substantially all of the assets of Coast Hotels and Casinos, Inc. | -- | 136,000 | ||||||