Attached files
| file | filename |
|---|---|
| EX-99.4 - UNAUDITED PRO FORMA - PENINSULA GAMING - PENINSULA GAMING CORP. | proforma.htm |
| EX-99.3 - UNAUDITED FINANCIALS OF BELLE OF ORLEANS FOR NINE MONTH PERIOD ENDED SEPT 2008 - PENINSULA GAMING CORP. | thirdqtrfinancials.htm |
| EX-99.1 - AUDITED FINANCIALS OF BELLE OF ORLEANS 2008 - PENINSULA GAMING CORP. | auditedfinancials2008.htm |
| 8-K - PENINSULA GAMING FORM 8-K 1-06-10 - PENINSULA GAMING CORP. | form8k.htm |
EXHIBIT
99.2
Belle of
Orleans, L.L.C.
dba
Amelia Belle Casino
Financial
Statements for the Period from January 1, 2009 through October 22, 2009 and
Independent Auditors’ Report
INDEX TO
FINANCIAL STATEMENTS
Financial
Statements of Belle of Orleans, L.L.C. dba Amelia Belle Casino:
|
Independent
Auditors’ Report
|
1
|
|
Balance
Sheet – October 22, 2009
|
2
|
|
Statement
of Operations – For the Period from January 1, 2009 through October 22,
2009
|
3
|
|
Statement
of Changes in Member’s Equity – For the Period from January 1, 2009
through October 22, 2009
|
4
|
|
Statement
of Cash Flows – For the Period from January 1, 2009 through October 22,
2009
|
5
|
|
Notes
to Financial Statements
|
6
|
|
|
INDEPENDENT
AUDITORS’ REPORT
|
Belle of
Orleans, L.L.C.
dba
Amelia Belle Casino:
We have
audited the accompanying balance sheet of Belle of Orleans, L.L.C. dba Amelia
Belle Casino (the “Company”) as of October 22, 2009, and the related statements
of operations, changes in member’s equity, and cash flows for the period from
January 1, 2009 through October 22, 2009. These financial statements
are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, such financial statements present fairly, in all material respects, the
financial position of the Company as of October 22, 2009, and the results of its
operations and its cash flows for the period from January 1, 2009 through
October 22, 2009, in conformity with accounting principles generally accepted in
the United States of America.
As
discussed in Note 1 to the financial statements, on October 22, 2009 Columbia
Properties New Orleans, LLC sold 100% of the outstanding limited liability
company interest in the Company to AB Casino Acquisition, LLC, a wholly owned
indirect subsidiary of Peninsula Gaming, LLC.
/s/ Deloitte & Touche, LLP
New
Orleans, Louisiana
January
5, 2010
1
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
BALANCE
SHEET
(in
thousands)
|
October
22,
2009
|
|||||
|
Assets
|
|||||
|
Cash
and cash equivalents
|
$
|
4,093
|
|||
|
Accounts
receivable trade and other, net
|
403
|
||||
|
Inventories
|
41
|
||||
|
Prepaid
expenses and other assets
|
1,067
|
||||
|
Current assets
|
5,604
|
||||
|
Property
and equipment, net
|
40,968
|
||||
|
Intangible
assets, net
|
10,626
|
||||
|
Total
Assets
|
$
|
57,198
|
|||
|
Liabilities
and Member's Equity
|
|||||
|
Accounts
payable
|
$
|
1,000
|
|||
|
Accounts
payable to related parties
|
159
|
||||
|
Accrued
expenses and other liabilities
|
2,063
|
||||
|
Current liabilities
|
3,222
|
||||
|
Commitments
and Contingencies (Notes 6 and 9)
|
- | ||||
|
|
|
||||
| Member's Equity | 53,976 | ||||
|
Total
Liabilities and Member's Equity
|
$
|
57,198
|
|||
The
accompanying notes are an integral part of the financial
statements.
2
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
STATEMENT
OF OPERATIONS
(in
thousands)
|
Period
from
January
1,
2009
through
October
22,
2009
|
|||||
|
Operating
Revenues:
|
|||||
|
Casino
|
$
|
43,044
|
|||
|
Food and beverage
|
3,124
|
||||
|
Other
|
277
|
||||
|
Less promotional allowances
|
(4,968
|
)
|
|
||
|
Net Operating
Revenues
|
41,477
|
||||
|
Operating
Expenses:
|
|||||
|
Casino
|
7,898
|
||||
|
Food and beverage
|
2,777
|
||||
|
Marketing, advertising and casino promotions
|
2,296
|
||||
|
Gaming taxes and licenses
|
9,245
|
||||
|
Administrative and general
|
6,165
|
||||
|
Depreciation and amortization
|
3,867
|
||||
|
Total Operating
Expenses
|
32,248
|
||||
|
Income
from Operations
|
9,229
|
||||
|
|
|||||
|
Interest income
|
3
|
||||
|
Net
Income
|
$
|
9,232
|
|||
The
accompanying notes are an integral part of the financial
statements.
3
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
STATEMENT
OF CHANGES IN MEMBER’S EQUITY
(in
thousands)
| Balance, January 1, 2009 | $ | 67,244 | ||
|
Net
income
|
9,232
|
|||
|
Member
distributions
|
(22,500)
|
|||
|
Balance,
October 22, 2009
|
$
|
53,976
|
||
The
accompanying notes are an integral part of the financial
statements.
4
BELLE OF
ORLEANS, L.L.C.
dba
AMELIA BELLE CASINO
STATEMENT
OF CASH FLOWS
(in
thousands)
|
|
Period
from
January
1,
2009
through
October
22,
2009
|
||||
|
Cash
Flows from Operating Activities:
|
|||||
|
Net income
|
$
|
9,232
|
|||
|
Adjustments to reconcile net income to net cash flows provided by
operating activities:
|
|||||
|
Depreciation and amortization
|
3,867
|
||||
| Write off of property and equipment | 67 | ||||
|
Insurance proceeds for property damage
|
3,706
|
|
|||
| Payment of lease liability | (7,400 | ) | |||
|
Changes in operating assets and liabilities:
|
|||||
|
Accounts receivables trade, net
|
(335
|
) | |||
|
Inventories, prepaid expenses and other assets
|
(150
|
)
|
|||
|
Accounts payable
|
(15
|
)
|
|||
|
Related party receivables and payables, net
|
2,042
|
||||
|
Accrued expenses and other liabilities
|
701
|
|
|||
|
Net cash provided by operating activities
|
11,715
|
||||
|
Cash
Flows from Investing Activities:
|
|||||
|
Additions to property and equipment
|
(160
|
) | |||
|
Net cash used in investing
activities
|
(160
|
) | |||
|
Cash
Flows from Financing Activities:
|
|||||
| Return of capital to member | (22,500 | ) | |||
|
Net cash used in financing activities
|
(22,500
|
)
|
|||
|
Net
Decrease in Cash and Cash Equivalents
|
(10,945
|
) | |||
|
Cash
and Cash Equivalents at Beginning of Period
|
15,038
|
||||
|
Cash
and Cash Equivalnets at End of Period
|
$
|
4,093
|
|||
The
accompanying notes are an integral part of the financial
statements.
5
BELLE OF
ORLEANS, L.L.C. dba AMELIA BELLE CASINO
NOTES TO
FINANCIAL STATEMENTS
1.
Organization and Basis of Presentation
Belle of
Orleans, L.L.C. (the “Company”) was acquired by Columbia Properties New Orleans,
LLC (“CPNO”) on June 8, 2005. CPNO is a wholly owned subsidiary of Wimar Tahoe
Corporation (“WTC”) (fka Tropicana Casinos and Resorts, Inc.). WTC is
CPNO’s sole member. The Company owns and operates the Amelia Belle
Casino, a riverboat casino (fka Belle of Orleans) in Amelia,
Louisiana. The Belle of Orleans was damaged by Hurricane Katrina on
August 28, 2005 and was closed for repairs until May 18, 2007 (see Note
7). The casino was moved to Amelia, Louisiana and reopened as the
Amelia Belle Casino. Columbia Sussex Corporation (“CSC”), a
company controlled by the sole shareholder of WTC, provides various services to
the Company (see Note 5).
On
October 22, 2009, CPNO sold 100% of the outstanding limited liability company
interest in the Company to AB Casino Acquisition, LLC, a wholly owned indirect
subsidiary of Peninsula Gaming, LLC (“PGL”) for $104 million, subject to certain
adjustments. These financial statements are for the interim period
from January 1, 2009 through October 22, 2009 (“Interim Period”) and have been
prepared on the predecessor’s basis of accounting.
2. Summary of Significant Accounting
Policies
The
following is a summary of significant accounting policies followed in the
preparation of the financial statements. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires the use of management’s estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses and disclosures of contingent assets and liabilities. Actual
results could differ from these estimates.
Cash and Cash
Equivalents - The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents.
Inventories
– Inventories, which consist primarily of food, beverage, and operating
supplies, are stated at the lower of cost or market. Cost is
determined by the first-in first-out method.
Property and
Equipment - Property and equipment are stated at
cost. Depreciation and amortization are computed over the estimated
useful lives of the property and equipment on the straight-line
method. Useful lives range from 10 to 40 years for the riverboat and
related equipment, 5 to 10 years for gaming and other equipment and 10 to 40
years for land improvements.
Routine
maintenance and repairs are charged to expense as incurred. The cost
and related accumulated depreciation of property and equipment retired or sold
are removed from the accounts, and the resulting gain or loss is included in
operations.
Management
reviews property and equipment for impairment whenever events or changes in
circumstances indicate the carrying amounts of the assets may not be
recoverable. Recoverability is determined by comparing the forecasted
undiscounted cash flows of the operation to which the assets relate, plus the
assets’ residual value to the carrying amount of the assets. If the
operation is determined to be unable to recover the carrying amount of its
assets, then the property and equipment are written down to fair
value. Fair value is determined based on discounted cash flows or
through comparable asset sales.
Intangible
Assets – Pursuant to the Intangibles – Goodwill and Other topic of the
Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC"), the Company's non-amortizing indefinite-lived intangible asset,
consisting solely of a gaming license with the state of Louisiana, is subject to
testing for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired. When testing for
impairment, the Company uses the income approach, which includes an analysis of
the market, cash flows, and risks associated with achieving such cash
flows.
In
accordance with Intangibles - Goodwill and Other topic of the FASB ASC, an
intangible asset with a definite life is amortized over its useful life which is
defined as the period over which the asset is expected to contribute directly or
indirectly to future cash flows. Amortization is computed on a
straight-line basis for intangible assets with definite lives over an estimated
useful life of five years. Management periodically assesses the
amortization period of intangible assets with definite lives based upon an
estimate of future cash flows from related operations.
6
Revenue
Recognition - Casino revenue is (a) the winnings from gaming activities,
which is the difference between the gaming wins and losses, less sales
incentives and other adjustments and (b) revenue from gaming related activities
such as poker and tournaments. Jackpots, other than the incremental
amount of progressive jackpots, are recognized at the time they are won by
customers. The Company accrues the incremental amount of progressive jackpots as
the progressive machine is played and the progressive jackpot amount increases,
with a corresponding reduction of gaming revenue. The retail value of food and
beverage and other services furnished to casino guests without charge is
included in gross revenue and then deducted as promotional
allowances.
Casino
Promotional Allowances - Casino promotional allowances consist of the
retail value of complimentary food and beverages and entertainment provided to
casino patrons. Also included is the value of the coupons redeemed for cash at
the property. The estimated cost of providing such complimentary services
(substantially all of which is classified as casino expenses) was $2.8 million
for the Interim Period. Promotional allowances also include "cash
back" awards (cash coupons, rebates or refunds) which was $2.2 million for the
Interim Period.
Advertising
Costs – Advertising costs are expensed as incurred and was $0.5
million for the Interim Period, and are included in marketing, advertising
and casino promotions expense in the accompanying statements of
operations.
Retirement
Plans -The Company participates in a defined contribution plan sponsored
by CSC which operates under the provisions of Internal Revenue Code Section
401(k). All employees who meet plan eligibility requirements are eligible to
participate in the plan. Participating employees receive employer
matching contributions based on their level of employee contributions to the
plan. These employer matching contributions are funded at the same
time that employee contributions are made. The Company’s matching contributions
to the 401(k) Plan for the Interim Period was less than $0.1
million.
Insurance
Program - The Company’s insurance program for medical, general liability,
workers compensation and property is provided through CSC and
WTC. CSC allocates to the Company the cost of third party insurance
coverage and WTC allocates an estimated cost of the self-insured portion of the
coverage (up to $1,000,000 of general liability and workers compensation
claims). The rates used for the self-insured portion are actuarially
determined based on historical experience of paid claims for all of CSC’s
operations. The Company was charged $1.3 million by CSC during the
Interim Period and $0.1 million by WTC during the Interim
Period for the above insurance costs.
Income
Taxes - The Company is a pass-through entity for federal and state income
tax purposes, and therefore, its tax attributes flow through to its
owner. As a result, the accompanying statements of operations show no
income tax expense.
Gaming
Taxes - The Company must remit gaming taxes to the State of Louisiana
based on a rate of 21.5% of adjusted gross receipts, as defined in the state’s
regulations. Such taxes are included in gaming taxes and licenses expenses in
the accompanying statements of operations.
Contingencies
- The Company is subject to various litigation claims and assessments that arise
in the ordinary course of its business. Based upon information presently
available, management believes that resolution of such matters will not likely
have a material adverse effect on the financial position, results of operations
or cash flows of the Company.
Recently Issued
Accounting Standards— In August 2009, the FASB issued a standard on
measuring fair value of liabilities. The standard became effective
for the Company at the beginning of its 2009 fourth quarter. The
standard provides clarification that in circumstances in which a quoted price in
an active market for the identical liability is not available, a reporting
entity is required to measure fair value using one or more of the following
methods: (i) a valuation technique that uses a) the quoted price of the
identical liability when traded as an asset; or b) quoted prices for similar
liabilities or similar liabilities when traded as assets; and/or (ii) a
valuation technique that is consistent with the principles of an income or
market approach. The standard clarifies that when estimating the fair
value of a liability, a reporting entity is not required to include inputs
relating to the existence of transfer restrictions on that
liability. The adoption of this standard did not have a significant
effect on the Company’s financial statements.
In June
2009, the FASB issued the Codification and the Hierarchy of Generally Accepted
Accounting Principles (“GAAP”) (“Codification”). The purpose of the
Codification is to provide a single source of authoritative U.S.
GAAP. The Codification was effective for the Company in the third
quarter of 2009. As the Codification was not intended to change or
alter existing GAAP, the adoption of the Codification did not have a material
effect on the Company’s financial statements.
7
In May
2009, the FASB issued a new standard related to subsequent events which
establishes the accounting for and disclosure of events that occur after the
balance sheet date but before the financial statements are issued or available
to be issued. The new standard was adopted in the second quarter of
2009. The adoption of the new standard did not have a material effect
on the Company’s financial statements.
In April
2009, the FASB issued three standards intended to provide additional application
guidance and enhanced disclosures regarding fair value measurements and
impairments of securities. The Company adopted these standards
effective June 30, 2009. The adoption of these standards did not have
a material effect on the Company’s financial statements.
In April
2008, the FASB issued a new standard that requires entities to disclose
information for recognized intangible assets that enables users of the financial
statements to understand the extent to which expected future cash flows
associated with the intangible assets are affected by the entity’s intent or
ability to renew or extend the arrangement associated with the intangible
asset. The standard also amends the factors an entity should consider
in developing the renewal or extension assumptions used in determining the
useful life of recognized intangible assets. The standard applies
prospectively to all intangible assets recognized as of, and after, the
standard’s effective date. The standard was effective for fiscal
years beginning after December 15, 2008, with early adoption
prohibited. The Company adopted the new standard on January 1, 2009
and the adoption did not have a material effect on the Company’s financial
statements.
In
February 2008, the FASB issued a new standard that delayed for one year the fair
value measurement requirements for non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis. Therefore, beginning
on January 1, 2009 this standard applies prospectively to fair value
measurements of non-financial assets and non-financial
liabilities. The Company adopted the new standard on January 1, 2009
and the adoption did not have a material effect on the Company’s financial
statements.
3.
Property and Equipment
Property
and equipment at October 22, 2009 is summarized as follows (in
thousands):
|
October
22,
2009
|
|||||
|
Riverboat,
barge and ramps
|
$
|
33,092
|
|||
|
Gaming
equipment
|
11,944
|
||||
|
Furniture
and equipment
|
3,709
|
||||
|
Land
improvements
|
1,240
|
||||
|
Other
|
50
|
||||
|
50,035
|
|||||
|
Less
accumulated depreciation
|
(11,187
|
)
|
|
||
|
38,848
|
|||||
|
Land
|
2,120
|
||||
|
Property
and equipment, net
|
$
|
40,968
|
|||
Depreciation
and amortization expense during the Interim Period was $3.8
million.
8
4.
Intangible Assets
Intangible
assets at October 22, 2009 consist of the following (in thousands):
|
October
22,
2009
|
|||||
|
Gaming
License – Non-Amortizing
|
$
|
10,613
|
|||
|
Gaming
License – Amortizing
|
112
|
||||
|
Accumulated
amortization
|
(99
|
)
|
|
||
|
Intangible
assets, net
|
$
|
10,626
|
|||
5. Related Party
Transactions
CSC has
guaranteed the Company’s performance under surety bonds amounting to $0.4
million at October 22, 2009.
CSC
provides various administrative and accounting services to the Company under
administrative service agreements. CSC charged the Company $0.1
million for these services for the Interim Period.
The
Company has various dealings with CSC and its subsidiaries, including shared
payroll and benefit services, insurance and payments to common
vendors. The amounts allocated to the Company related to these
transactions and services are based on actual amounts attributable to the
Company’s operations. As of October 22, 2009, the Company owed CSC
and its subsidiaries $0.1 million.
At
October 22, 2009, the Company owed WTC, the Company’s ultimate parent, $0.1
million for advances for start-up, operational and other costs, and
construction costs that were made to the Company. See Note 8 for a further
description of related party activity with the sister company, Tropicana
Entertainment, LLC.
6.
Lease Commitments
In 2007,
the Company entered into an agreement with the Parish of St. Mary to permit the
berthing of its riverboat casino in Amelia, Louisiana. The agreement
expires in May 2017. The agreement provides for percentage fees based
on the level of net gaming revenue as follows - first $60 million - 2.5%; $60 to
$96 million - 3.5%; greater than $96 million - 5.0%.
The
annual minimum fee due under the agreement is $1.5 million, which was due on the
opening date of the casino and on the first day of June of each year
thereafter. The Company paid the minimum rent in the Interim
Period as revenues were below the threshold for incurring additional
fees.
The
Company has other operating leases for equipment and space. Rent
expense for these leases was $0.1 million for the Interim Period.
9
Future
minimum rental payments required under operating leases and the minimum fee of
$1.5 million under the berthing agreement described above that have initial or
remaining non-cancelable lease terms in excess of one year are as follows (in
thousands):
|
2010
|
$
|
1,577
|
||
|
2011
|
1,551
|
|||
|
2012
|
1,540
|
|||
|
2013
|
1,540
|
|||
|
2014
|
1,540
|
|||
|
Thereafter
|
3,665
|
|||
|
Total
|
$
|
11,413
|
7.
Casualty Loss – Hurricane
On August
28, 2005, Hurricane Katrina struck the Gulf Coast and damaged the Belle of
Orleans casino riverboat. The riverboat sustained substantial damage
and as a result had to be substantially rebuilt. The riverboat was
out of service from August 28, 2005 until May 18, 2007, when it reopened in
Amelia, Louisiana as the Amelia Belle Casino.
In
addition, the Company leased land and docking facilities for its riverboat
casino when it was berthed in New Orleans, Louisiana prior to Hurricane
Katrina. The lease provided for quarterly rent of $0.4 million plus
monthly rental of 5% of gross revenue subject to a minimum of $0.1
million. The lease was to expire in 2013. The Company, on
the advice of counsel, suspended the rent payments due to the impairment of the
leased facility damaged by Hurricane Katrina. The landlord filed suit
against the Company for unpaid rent, future rent and damages caused to the
leased facilities by the Company’s riverboat. The Company filed
claims with its insurance carriers for the physical damage and expenses related
to the riverboat. The claims were settled in 2008.
During
2008, the Company received insurance proceeds of approximately $9.9 million for
physical damage and for rent claims and at December 31, 2008 had an insurance
receivable of $3.7 million related to insurance claim settlements for rent
claims. In March 2009, the Company reached a settlement with the former landlord
mentioned above, which resulted in the Company recognizing a lease liability of
$7.4 million as of December 31, 2008. In March 2009, the insurance
receivable of $3.7 million was received and the lease liability of $7.4 million
was paid by the Company. There were no hurricane related amounts
recognized in operations during the Interim Period.
8.
Related Party Bankruptcy Filing
Tropicana
Entertainment, LLC ("TE") and its subsidiaries, a significant subsidiary of WTC,
the Company’s parent, filed for bankruptcy protection on May 5, 2008 which cases
are currently pending in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”) in the jointly administered cases titled in re
Tropicana Entertainment, LLC et al, Case No. 08-10856 (KJC) (the “Tropicana
Cases”). As of the date of the bankruptcy filing, TE and its
subsidiaries owed the Company $2.7 million primarily related to slot machines
and other gaming equipment that was transferred to these other casinos following
Hurricane Katrina. During 2008, the Company fully reserved these
related party receivables due to the uncertainty of collection from the entities
operating in bankruptcy. By orders dated March 6, 2009, the
Bankruptcy Court in the Tropicana Cases approved the Debtors’ Disclosure
Statement for the First Amended Joint Plan of Reorganization of Tropicana
Entertainment, LLC and Certain of Its Debtor Affiliates under Chapter 11 of the
Bankruptcy Court (the “Plan”). The Court set April 17, 2009 as the
voting deadline and on May 5, 2009 the Plan was confirmed by the
Bankruptcy Court. The Plan indicates that no payments will be made to
the Company for these related party receivables. The Company received
certain casino management services from WTC employees who were transferred to TE
during 2008. The Company and WTC have made other arrangements for
these services and the Company does not currently rely on TE or any of its
subsidiaries for any casino or administrative services.
10
The Plan
contemplates the establishment of a litigation trust (the “Litigation Trust”) to
pursue possible causes of action against certain entities including WTC and
certain of its affiliates, which may include claims for breach of fiduciary
duty, gross negligence and breach of contract. WTC denies that there
has been any breach of fiduciary duty, gross negligence, breach of contract or
other grounds on which the Debtors or the Litigation Trust would have a legal
claim against it and intends to vigorously defend against any such claims and
causes of action.
In
addition, WTC remains obligated for substantial amounts owed under a lawsuit
settlement with Park Cattle Company reached in April 2008. This
lawsuit related to certain leases between Park Cattle Company as Lessor, and WTC
and certain subsidiaries of TE, as Lessees. Although the Company was
not a party to this litigation and is not subject to the settlement agreement,
WTC as the Company’s parent, authorized distributions from the
Company to partially fund obligations under the settlement agreement which
total $75.0 million for the period ended October 22, 2009. In
the Interim Period, the Company transferred $22.5 million to WTC which was used
to partially fund a payment totaling $50.0 million due on April 1, 2009, under
this settlement agreement.
Other
than as described above, the Company is not affected by the bankruptcy of TE and
its subsidiaries or by the settlement with Park Cattle Company.
9. Contingencies
On
November 5, 2009 the Louisiana Gaming Enforcement Section issued a Significant
Action/Violation Report (“SAR”) alleging that the internal controls of the
Company were violated. Based upon the nature and the number of
alleged violations noted in the SAR, management believes the Company could be
liable for up to $0.8 million for regulatory fines and
assessments. The Company intends to vigorously contest the alleged
violations. Management believes, based in part on advice of legal
counsel and historical experience with past enforcement actions, that the
ultimate resolution of this matter will not have a material effect on the
financial statements.
10. Subsequent
Events
The
Company has evaluated the impact of subsequent events from October 23, 2009
through January 5, 2010, the date the financial statements herein were
issued.
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