UNITED STATES
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, 2004.
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: 333-88829
DIAMOND JO, LLC PENINSULA GAMING, LLC PENINSULA GAMING CORP. THE OLD EVANGELINE
(Exact name of registrants (Exact name of registrants as (formerly known as DOWNS, L.L.C.
as specified in their specified in their charter) The Old Evangeline Downs (Exact name of
charter) Capital Corp.) registrants as specified
(Exact name of in their charter)
registrants as specified
in their charter)
DELAWARE DELAWARE DELAWARE LOUISIANA
(State or other (State or other jurisdiction of (State or other (State or other
jurisdiction of incorporation or organization) jurisdiction of jurisdiction of
incorporation or incorporation or incorporation or
organization) organization) organization)
42-1483875 20-0800583 25-1902805 72-1280511
(I.R.S. Employer (I.R.S. Employer (I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.) Identification No.) Identification No.)
3RD STREET ICE HARBOR, PO BOX 1750
DUBUQUE, IOWA 52001
(563) 583-7005
(Address, including zip code, and telephone number, including area code,
of principal executive offices)
Securities registered pursuant to Section 12 (g) of the Act: NONE
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 last 90 days. Yes [X] No[]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [] No [X]
All of the common equity interests of Peninsula Gaming, LLC (the
"Company") are held by Peninsula Gaming Partners, LLC. All of the common equity
interests of Diamond Jo, LLC, The Old Evangeline Downs, L.L.C. and Peninsula
Gaming Corp. are held by the Company.
PENINSULA GAMING, LLC
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Peninsula Gaming, LLC:
Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2004 and
December 31, 2003...................................................................................3
Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six
Months Ended June 30, 2004 and 2003.................................................................4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six
Months Ended June 30, 2004 and 2003.................................................................5
Notes to Condensed Consolidated Financial Statements (Unaudited).........................................7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................................................15
Item 3 - Quantitative and Qualitative Disclosures About Market Risk.........................................24
Item 4 - Controls and Procedures............................................................................24
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings..................................................................................26
Item 2 - Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities...................26
Item 3 - Defaults Upon Senior Securities....................................................................26
Item 4 - Submission of Matters to a Vote of Security Holders................................................26
Item 5 - Other Information..................................................................................26
Item 6 - Exhibits and Reports on Form 8-K...................................................................26
Signatures.......................................................................................................31
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PENINSULA GAMING, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31,
2004 2003
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27,592,070 $ 21,158,295
Restricted cash - purse settlements 3,079,892 1,589,125
Restricted investments 15,778,883
Accounts receivable, less allowance for doubtful accounts
of $40,605 and $61,922, respectively 1,120,729 482,222
Related party receivable 135,204
Inventory 343,100 403,376
Prepaid expenses 1,845,528 815,009
------------- -------------
Total current assets 34,116,523 40,226,910
------------- -------------
RESTRICTED CASH - RACINO PROJECT 20,013,291
------------- -------------
PROPERTY AND EQUIPMENT, NET 112,462,362 102,477,345
------------- -------------
OTHER ASSETS:
Deferred financing costs, net of amortization
of $474,241 and $5,288,572, respectively 13,552,733 12,702,387
Goodwill 53,083,429 53,083,429
Other intangibles 32,406,952 32,257,963
Deposits and other assets 232,658 757,789
------------- -------------
Total other assets 99,275,772 98,801,568
------------- -------------
TOTAL $245,854,657 $261,519,114
============= =============
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 2,999,543 $ 2,972,608
Construction payable - St. Landry Parish 9,963,138 20,156,591
Purse settlement payable 4,522,666 1,589,125
Accrued payroll and payroll taxes 2,534,382 2,788,224
Accrued interest 4,647,789 9,904,778
Other accrued expenses 5,131,447 4,811,106
Current maturity of long-term debt 4,875,418 4,098,222
------------- -------------
Total current liabilities 34,674,383 46,320,654
------------- -------------
LONG-TERM LIABILITIES:
8 3/4% Senior secured notes, net of discount 229,799,389
12 1/4% Senior secured notes, net of discount 70,616,221
13% Senior secured notes, net of discount 6,789,206 120,923,436
Senior secured credit facilities 14,887,764 15,754,301
Term loan 10,666,667
FF&E credit facility 9,921,557
Notes payable 3,331,790 3,511,654
Other accrued expenses 650,000 1,100,000
Preferred members' interest, redeemable 4,000,000 4,000,000
------------- -------------
Total long-term liabilities 270,124,816 225,827,169
------------- -------------
Total liabilities 304,799,199 272,147,823
COMMITMENTS AND CONTINGENCIES
MEMBERS' DEFICIT (58,944,542) (10,628,709)
------------- ------------
TOTAL $245,854,657 $261,519,114
============= =============
See notes to condensed consolidated financial statements (unaudited).
-3-
PENINSULA GAMING, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2004 JUNE 30, 2003
--------------- --------------- --------------- ---------------
REVENUES:
Casino $ 28,813,123 $ 13,196,976 $ 59,006,472 $ 24,979,954
Racing 6,494,040 5,810,395 10,859,643 9,454,725
Food and beverage 2,957,716 1,157,327 5,775,515 1,996,604
Other 408,084 104,735 609,201 162,713
Less promotional allowances (2,107,294) (710,186) (4,119,767) (1,364,413)
--------------- --------------- --------------- ---------------
Total net revenues 36,565,669 19,559,247 72,131,064 35,229,583
--------------- --------------- --------------- ---------------
EXPENSES:
Casino 14,315,600 5,446,088 29,369,338 10,459,803
Racing 5,426,800 4,921,420 8,931,186 7,768,167
Food and beverage 2,523,221 869,126 4,804,586 1,600,166
Boat operations 545,986 575,000 1,119,047 1,142,348
Other 462,802 47,946 587,797 56,619
Selling, general and administrative 5,686,185 2,993,694 11,214,232 5,501,893
Depreciation and amortization 2,959,151 829,624 5,855,214 1,648,640
Pre-opening expense 50,997 196,045 272,280 204,921
Development expense 37,961 59,231
Management fees 149,577 400,000
--------------- --------------- --------------- ---------------
Total expenses 32,158,280 15,878,943 62,612,911 28,382,557
--------------- --------------- --------------- ---------------
INCOME FROM OPERATIONS 4,407,389 3,680,304 9,518,153 6,847,026
--------------- --------------- --------------- ---------------
OTHER INCOME (EXPENSE):
Interest income 72,518 211,199 129,603 289,590
Interest expense, net of amounts capitalized (6,508,686) (6,797,433) (14,201,413) (11,829,336)
Loss on early retirement of debt (37,566,234) (37,566,234)
Interest expense related to preferred
members' interest, redeemable (90,000) (180,000)
Loss on disposal of assets (192) (17,421) (192) (104,684)
--------------- --------------- --------------- ---------------
Total other expense (44,092,594) (6,603,655) (51,818,236) (11,644,430)
--------------- --------------- --------------- ---------------
NET LOSS BEFORE PREFERRED
MEMBER DISTRIBUTIONS (39,685,205) (2,923,351) (42,300,083) (4,797,404)
LESS PREFERRED MEMBER DISTRIBUTIONS (90,000) (180,544)
--------------- --------------- --------------- ---------------
NET LOSS TO COMMON MEMBERS' INTEREST $ (39,685,205) $ (3,013,351) $ (42,300,083) $ (4,977,948)
=============== =============== =============== ===============
See notes to condensed consolidated financial statements (unaudited).
-4-
PENINSULA GAMING, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (42,300,083) $ (4,977,948)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization 5,855,214 1,648,640
Provision for doubtful accounts 51,231 65,933
Amortization and write-off of deferred financing costs and discount
on notes 15,168,966 1,596,240
Loss on disposal of assets 192 104,684
Changes in operating assets and liabilities:
Restricted cash - purse settlements (1,490,767) 539,829
Receivables (689,737) (2,362,819)
Inventory 60,276 (9,838)
Prepaid expenses and other assets (505,388) (227,934)
Accounts payable 1,982,186 1,980,964
Accrued expenses (5,139,174) 4,529,838
-------------------- --------------------
Net cash flows from operating activities (27,007,084) 2,887,589
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisition and licensing costs (145,135) (1,763,486)
Racino project development costs (24,269,777) (12,160,548)
Proceeds from (deposits to) restricted cash - racino project, net 20,013,291 (53,922,489)
Maturity and sale of restricted investments 15,778,883
Purchase of restricted investments (23,922,971)
Purchase of property and equipment (1,423,414) (1,439,012)
Proceeds from sale of property and equipment 1,800 384,406
-------------------- --------------------
Net cash flows from investing activities 9,955,648 (92,824,100)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred financing costs (13,278,420) (9,939,196)
Principal payments on debt (220,836,032) (20,425,000)
Proceeds from senior credit facilities 15,887,764 2,284,301
Proceeds from term loan 14,666,667
Proceeds from FF&E credit facility 3,467,507
Proceeds from senior secured notes 229,728,680 120,736,000
Member distributions (6,150,955) (464,041)
-------------------- --------------------
Net cash flows from financing activities 23,485,211 92,192,064
-------------------- --------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,433,775 2,255,553
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 21,158,295 10,510,205
-------------------- --------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27,592,070 $ 12,765,758
==================== ====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $19,120,126 $5,532,831
-5-
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property additions acquired on construction payable which were
accrued, but not paid $7,333,246 $6,498,119
Deferred financing costs which were accrued, but not paid $130,636 $ 843,999
See notes to condensed consolidated financial statements (unaudited).
-6-
PENINSULA GAMING, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Diamond Jo, LLC, a Delaware limited liability company ("DJL"), owns and operates
the Diamond Jo riverboat casino in Dubuque, Iowa, and, prior to the corporate
restructuring described below, was a wholly owned subsidiary of Peninsula Gaming
Partners, LLC, a Delaware limited liability company ("PGP"). DJL had two direct
wholly owned subsidiaries, (i) Penninsula Gaming Corp., which had no assets or
operations and was formed solely to facilitate the offering of DJL's 12 1/4%
Senior Secured Notes due 2006 (the "DJL Notes"), and (ii) OED Acquisition, LLC,
a Delaware limited liability company ("OEDA"), and the parent company of The Old
Evangeline Downs, L.L.C., a Louisiana limited liability company ("OED"), that
currently owns and operates a horse track in Lafayette, Louisiana and is
constructing a new casino and racetrack facility in St. Landry Parish, Louisiana
(the "racino project"). The Old Evangeline Downs Capital Corp. was a wholly
owned subsidiary of OED which has no assets or operations and was formed solely
to facilitate the offering by OED of its 13% Senior Secured Notes due 2010 with
Contingent Interest (the "OED Notes").
On June 16, 2004, a corporate restructuring occurred, which is reflected in
these consolidated financial statements, pursuant to which Peninsula Gaming,
LLC, a Delaware limited liability company (the "Company"), became a new direct
parent company of DJL, OED and Peninsula Gaming Corp. ("PGC", formerly known as
The Old Evangeline Downs Capital Corp.), a Delaware limited liability company.
The Company is a wholly owned subsidiary of PGP. In connection with the
corporate restructuring, OEDA became a sister company to the Company and a
wholly owned subsidiary of PGP in a corporate spin-off which was recorded as a
distribution on June 16, 2004 of $0.3 million.
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of normal recurring entries
unless otherwise disclosed, necessary to present fairly the financial
information of the Company for the interim periods presented and have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The interim results reflected in the financial
statements are not necessarily indicative of results expected for the full year
or other periods.
The financial statements contained herein should be read in conjunction with the
audited financial statements and accompanying notes to the financial statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2003. Accordingly, footnote disclosure which would substantially duplicate
the disclosure in the audited financial statements have been omitted in the
accompanying unaudited financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RESTRICTED INVESTMENTS--As of December 31, 2003, OED had approximately $15.8
million invested in government securities with original maturities of greater
than 90 days from the date of initial investment. These investments were
classified as held-to-maturity and had contractual maturities of $8.0 million on
both February 15, 2004 and August 15, 2004. Proceeds from the maturity of the
investments on February 15, 2004 were used to help make the payment of fixed
interest on the OED Notes due March 1, 2004 in accordance with the terms of the
Cash Collateral and Disbursement Agreement, dated February 25, 2003, among OED,
U.S. Bank National Association (as trustee and disbursement agent) and an
independent construction consultant (the "Cash Collateral and Disbursement
Agreement"). As a result of the refinancing of the OED Notes on April 16, 2004
(see Note 4), the Cash Collateral and Disbursement Agreement was cancelled and,
therefore, the restricted investments were no longer required. Therefore, during
May 2004, the remaining restricted investments of approximately $7.9 million
were redeemed.
-7-
RESTRICTED CASH--RACINO PROJECT--"Restricted cash--racino project" represented
unused proceeds from the sale of the OED Notes, the use and disbursement of
which were restricted to the design, development, construction, equipping and
opening of the racino in accordance with the Cash Collateral and Disbursement
Agreement. As of December 31, 2003, OED had $14.4 million in cash equivalents
deposited in a construction disbursement account, $0.2 million in cash
equivalents deposited in an interest reserve account that were to be used toward
payment of fixed interest on the OED Notes, $5.0 million in cash equivalents
deposited in a completion reserve account that were to be used to fund potential
cost overruns and contingency amounts with respect to the design, development,
construction, equipping and opening of the racino and $0.4 million in cash in a
local financial institution. The funds deposited in these accounts were invested
in cash or securities that are readily convertible to cash. As a result of the
refinancing of the OED Notes on April 16, 2004 (see Note 4), the Cash Collateral
and Disbursement Agreement was terminated and, therefore, the restricted cash -
Racino Project was no longer required.
DEFERRED FINANCING COSTS - As of June 30, 2004, the Company incurred
approximately $12.1 million of fees and expenses related to the refinancing of
the DJL Notes and the OED Notes and approximately $1.3 million of fees and
expenses related to the refinancing of (i) DJL's senior secured credit facility
with Wells Fargo Foothill, Inc. dated February 23, 2001 (as amended, the "DJL
Credit Facility"), (ii) OED's $15.0 million senior secured credit facility with
Wells Fargo Foothill dated June 24, 2003 (as amended, the "OED Credit
Facility"), and (iii) OED's $16.0 million FF&E credit facility with Wells Fargo
Foothill dated September 22, 2003 (the "OED FF&E Facility"), which refinancings
were consummated in the second quarter (see Note 4 for further discussion on the
refinancings).
GOODWILL AND OTHER INTANGIBLE ASSETS--At June 30, 2004 and December 31, 2003,
"Goodwill" and "Other intangibles" consists of goodwill, licensing costs and the
acquired trade name associated with the purchase of the Diamond Jo and OED. To
the extent the purchase price exceeded the fair value of the net identifiable
assets acquired, such excess has been recorded as goodwill. Statement of
Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible
Assets" provides that goodwill and indefinite lived intangible assets will no
longer be amortized but will be reviewed at least annually for impairment and
written down and charged to income when their recorded value exceeds their
estimated fair value.
During the first quarter of 2004 and 2003, the Company performed its annual
impairment test on goodwill in accordance with SFAS No. 142 and determined that
the estimated fair value of the Diamond Jo exceeded its carrying value as of
that date. Based on that review, management determined that there was no
impairment of goodwill.
As of June 30, 2004 and December 31, 2003, the Company had approximately $32.4
million of "Other intangibles" on its balance sheet summarized as follows (in
millions):
JUNE 30, DECEMBER 31,
2004 2003
--------- -----------
Slot Machine and Electronic Video Game Licenses $ 28.6 $ 28.5
Tradename 2.5 2.5
Horse Racing Licenses 1.3 1.3
--------- ---------
Total $ 32.4 $ 32.3
========== =========
For purposes of the valuations set forth above, each of the identified
intangible assets were treated as having indefinite lives and valued separately.
The methodology employed by an independent valuation specialist to arrive at the
initial valuations required evaluating the fair market value of the existing
horse racing business on a stand-alone basis without taking into account any
right to obtain slot machine and
-8-
electronic video game licenses. Such valuation was based in part upon other
transactions in the industry and OED's historical results of operations. A value
was also derived for the trade name using market based royalty rates. A
significant portion of the purchase price is attributable to the slot machine
and electronic video game license rights, which were valued based upon the
market value paid by other operators and upon projected cash flows from
operations. The valuations were updated by management in the first quarter of
2004 indicating no impairment. These valuations and related intangible assets
are subject to impairment by, among other things, significant changes in the
gaming tax rates in Louisiana, significant new competition which could
substantially reduce profitability, non-renewal of OED's racing or gaming
licenses due to regulatory matters, changes to OED's trade name or the way OED's
trade name is used in connection with its business and regulatory changes that
could adversely affect OED's business by, for example, limiting or reducing the
number of slot machines or video poker machines that they are permitted to
operate.
On June 25, 2002, PGP entered into an agreement with William E. Trotter, II
("Trotter") and William E. Trotter, II Family L.L.C., a Louisiana limited
liability company ("WET2LLC") to acquire (i) all of Trotter's interests in two
promissory notes issued by OED in connection with DJL's acquisition of OED, and
(ii) all of Trotter's membership interests owned by WET2LLC (together, the
"Trotter Purchase"). On August 30, 2002, OEDA consummated the Trotter Purchase
for a purchase price consisting of cash of $15,546,000, plus a contingent fee of
one half of one percent (0.5%) of the net slot revenues generated by OED's
racino located in St. Landry Parish, Louisiana, for a period of ten years
commencing on December 19, 2003, the date the racino's casino opened to the
general public. This contingent fee is payable monthly in arrears and is
recorded as an adjustment to "Other intangibles" on the Condensed Consolidated
Balance Sheet.
USE OF ESTIMATES--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. We periodically evaluate our policies and the estimates
and assumptions related to these policies. We also periodically evaluate the
carrying value of our assets in accordance with generally accepted accounting
principles. We operate in a highly regulated industry and are subject to
regulations that describe and regulate operating and internal control
procedures. The majority of our revenues are in the form of cash, which by its
nature, does not require complex estimates. In addition, we made certain
estimates surrounding our application of purchase accounting related to the
acquisition and the related assignment of costs to goodwill and other intangible
assets.
CONCENTRATIONS OF RISK--The Company maintains deposit accounts at three banks.
At June 30, 2004 and December 31, 2003, and various times during the periods
then ended, the balance at the banks exceeded the maximum amount insured by the
Federal Deposit Insurance Corporation. Credit risk is managed by monitoring the
credit quality of the banks.
The Company's customer base is concentrated in eastern Iowa and southwest
Louisiana.
RECLASSIFICATIONS--Certain prior year amounts have been reclassified to conform
with the current period presentation.
-9-
3. PROPERTY AND EQUIPMENT
Property and equipment of the Company and its subsidiaries at June 30, 2004 and
December 31, 2003 is summarized as follows:
JUNE 30, DECEMBER 31,
2004 2003
-------------- ---------------
Land and land improvements $ 13,607,423 $ 13,686,570
Buildings and improvements 54,464,061 51,991,698
Riverboats and improvements 8,309,254 8,305,022
Furniture, fixtures and equipment 30,036,359 28,472,602
Computer equipment 5,668,092 5,196,966
Vehicles 176,235 176,235
Construction in progress 17,433,440 6,034,867
--------------- --------------
Subtotal 129,694,864 113,863,960
Accumulated depreciation (17,232,502) (11,386,615)
--------------- --------------
Property and equipment, net $ 112,462,362 $ 102,477,345
=============== ==============
4. DEBT
The debt of the Company and its subsidiaries consists of the following:
JUNE 30, DECEMBER 31,
2004 2003
--------------- --------------
8 3/4% Senior Secured Notes due April 15, 2012, net of
discount of $3,200,611, secured by assets of DJL
and OED. $229,799,389
12 1/4% Senior Secured Notes due July 1, 2006, net of
discount of $383,779, secured by assets of DJL. $ 70,616,221
13% Senior Secured Notes of OED due March 1, 2010
with Contingent Interest, net of discount of
$120,794 and $2,276,564, secured by certain assets
of OED. 6,789,206 120,923,436
$35.0 million revolving line of credit under a Loan
and Security Agreement of DJL and OED with Wells
Fargo Foothill, Inc. dated June 16, 2004, interest
rate at Prime + a margin of .5 - 1% (current rate
of 5.25%), maturing June 16, 2008, secured by
certain assets of DJL and OED. 14,887,764
Term Loan under a Loan and Security Agreement of
DJL and OED with Wells Fargo Foothill, Inc.
dated June 16, 2004, interest rate at Prime + 2.5%
(current rate of 6.75%), due in equal monthly
installments of $333,333 beginning July 1, 2004,
maturing June 16, 2008, secured by certain assets
of OED. 14,666,667
Line of Credit with Wells Fargo Foothill, Inc., interest
rate at greater of LIBOR + 3% or Prime + .75%,
however, at no time shall the interest rate be lower
than 5.5% on outstanding balances of $10.0 million
or less and 8.5% on outstanding balances greater than
$10.0 million, secured by assets of the Diamond Jo. 11,250,000
-10-
$15.0 million Loan and Security Agreement of OED with Wells
Fargo Foothill, Inc., interest rate at Prime + 2.50%,
secured by certain assets of OED. 5,104,301
$16.0 million Loan and Security Agreement of OED
with Wells Fargo Foothill, Inc. ("FF&E Credit
Facility"), interest rate at Prime + 2.50%, due
in 48 equal monthly principal payments beginning
on March 1, 2004, secured by certain assets of OED. 12,532,493
Promissory note payable to third party, interest at
4.75% payable monthly in arrears, annual principal
payments of $550,000 due each October beginning in
2004, secured by mortgage on certain real property
of OED. 3,850,000 3,850,000
Note payable to IGT, interest rate at 9.5%, monthly
payments of principal and interest of $31,250,
with final payment due July 1, 2005, secured by
certain assets of OED. 357,208 548,940
Preferred membership interests-redeemable, interest
at 9%, due October 13, 2006. 4,000,000 4,000,000
-------------- --------------
Total debt 274,350,234 228,825,391
Less current portion (4,875,418) (4,098,222)
-------------- --------------
Total long term debt $269,474,816 $224,727,169
============== ==============
On March 9, 2004, OED commenced a tender offer and consent solicitation to
repurchase all of its outstanding OED Notes and to solicit consents to certain
proposed amendments to the indenture governing the OED Notes as set forth in
OED's Offer to Purchase and Consent Solicitation Statement, dated March 9, 2004.
On March 19, 2004, the expiration date of the consent solicitation, OED received
the requisite consents and tenders from holders of a majority of the aggregate
principal amount of the outstanding OED Notes. The tender offer expired on April
5, 2004, and OED redeemed approximately $116.3 million principal amount of OED
Notes.
On April 16, 2004, DJL and Old Evangeline Downs Capital Corp. completed a Rule
144A private placement of $233 million principal amount of 8 3/4% Senior Secured
Notes due 2012 (the "Peninsula Gaming Notes"). The Peninsula Gaming Notes were
issued at a discount of approximately $3.3 million. Interest on the Peninsula
Gaming Notes is payable semi-annually on April 15 and October 15 of each year,
beginning on October 15, 2004.
The Company used the net proceeds from the sale of the Peninsula Gaming Notes as
follows (all payments based on outstanding balances as of April 16, 2004): (1)
to irrevocably deposit funds into an escrow account to redeem all of the DJL
Notes in an amount (including call premium and accrued interest) of
approximately $79.9 million; (2) to repurchase approximately $116.3 million
principal amount of OED Notes for an aggregate amount (including tender premium,
accrued interest and contingent
-11-
interest) of approximately $134.6 million; (3) to pay accrued distributions on
DJL's outstanding preferred membership interests-redeemable of approximately
$1.1 million; (4) to pay related fees and expenses of approximately $13.4
million; and (5) for general corporate purposes. As a result of the issuance of
the Peninsula Gaming Notes, DJL incurred a loss of approximately $8.7 million
consisting of the write-off of deferred financing fees of approximately $2.0
million, the payment of a call premium on the DJL Notes of approximately $5.7
million, interest on the DJL Notes of approximately $0.7 million and write-off
of bond discount of approximately $0.3 million. In connection therewith, OED
also incurred a loss of approximately $27.9 million consisting of the write-off
of deferred financing fees of approximately $8.4 million, the payment of a
tender premium on the OED Notes of approximately $16.3 million, write-off of
bond discount of approximately $2.1 million and consent fees of approximately
$1.1 million. In addition, OED and DJL wrote off $0.9 million of deferred
financing fees related to the refinancing of the credit facilities discussed
below.
The indenture governing the Peninsula Gaming Notes limits the Company's ability
and the ability of its restricted subsidiaries to, among other things:
o incur more debt;
o pay dividends, redeem stock, or make other distributions;
o issue stock of restricted subsidiaries;
o make investments;
o create liens;
o enter into transactions with affiliates;
o merge or consolidate; and
o transfer or sell assets.
The Peninsula Gaming Notes are full and unconditional obligations of DJL as a
co-issuer. The Company and PGC, also co-issuers, have no independent assets or
operations. The Peninsula Gaming Notes are also guaranteed, subject to the prior
lien of the Company's credit facility discussed below, by OED and OED has
pledged its equity interests as collateral. Neither the Peninsula Gaming Notes
nor the Company's credit facility limit OED's ability to transfer net assets to
the Company; however, any such transfer is subject to regulatory approval.
On June 16, 2004, DJL and OED jointly entered into a Loan and Security Agreement
with Wells Fargo Foothill, Inc. as the Arranger and Agent (the "PGL Credit
Facility"). The PGL Credit Facility consists of a revolving credit facility
which permits DJL and OED to request advances and letters of credit up to the
lesser of the maximum revolver amount of $35 million (less amounts outstanding
under letters of credit) and a specified borrowing base (the "Borrowing Base").
For the purposes of the PGL Credit Facility, the Borrowing Base is the lesser of
the Combined EBITDA (as defined in the PGL Credit Facility) of OED and DJL for
the twelve months immediately preceding the current month end multiplied by 150%
and the Combined EBITDA of OED and DJL for the most recent quarterly period
annualized multiplied by 150%. At June 30, 2004, the maximum revolver amount was
$35.0 million. Immediately upon the closing of the PGL Credit Facility, the
Company borrowed approximately $15.9 million to refinance outstanding
obligations under the DJL Credit Facility and the OED Credit Facility and pay
financing related fees and expenses. Advances under the PGL Credit Facility bear
an interest rate based on the
-12-
borrower's option of LIBOR plus a margin 3% -3.5% or Wells Fargo prime rate plus
a margin of .5% -1% (current rate of 5.25%) however, at no time shall the
interest rate be lower than 4%.
The PGL Credit Facility also contains a Term Loan in the amount of $14,666,667.
The proceeds from the Term Loan were used to repay outstanding obligations under
the FF&E Credit Facility. The Term Loan is secured by certain assets of OED and
requires monthly payments of $333,333 starting July 1, 2004 until the full
balance is paid, with a maturity no later than June 16, 2008. The Term Loan has
an interest rate equal to the Wells Fargo prime rate plus 2.5% (current rate of
6.75%) however, at no time shall the interest rate be lower than 6%. Under the
terms of the PGL Credit Facility, at closing the Company was required to issue a
letter of credit in the amount of $3.2 million in favor of Wells Fargo related
to the Term Loan.
DJL and OED are jointly and severally liable under the PGL Credit Facility,
other than borrowings under the Term Loan for which OED is solely liable.
Borrowings under the PGL Credit Facility, other than borrowings under the Term
Loan, are collateralized by substantially all assets of OED and DJL. Borrowings
under the Term Loan are collateralized by a separate lien on the furniture,
fixtures and equipment of OED financed pursuant to the terms of the OED FF&E
Facility. Borrowings under the PGL Credit Facility are guaranteed by the Company
and PGC.
The PGL Credit Facility contains a number of restrictive covenants and
agreements, including covenants that limit DJL's and OED's ability to, among
other things: (1) incur more debt; (2) create liens; (3) enter into any merger,
consolidation, reorganization, or recapitalization, or reclassify its capital
stock; (4) dispose of certain assets; (5) guarantee debt of others; (6) pay
dividends or make other distributions; (7) make investments; (8) enter into
transactions with affiliates. The PGL Credit Facility also contains financial
covenants including a minimum Combined EBITDA of OED and DJL, limitations to
capital expenditure amounts at OED and DJL and minimum OED EBITDA plus the
premium paid in connection with the April 2004 repurchase of a portion of the
OED Notes.
As of June 30, 2004, the Company had $14.9 million and $14.7 million outstanding
under the revolver portion and Term Loan portion of the PGL Credit Facility,
respectively. In addition, as of June 30, 2004, the Company had outstanding
letters of credit of approximately $3.5 million.
The DJL Credit Facility, the OED Credit Facility and the FF&E Credit Facility
were terminated in connection with the refinancing discussed above.
5. COMMITMENTS AND CONTINGENCIES
Under the Company's and PGP's operating agreements, the Company and PGP have
agreed, subject to few exceptions, to indemnify and hold harmless our members,
PGP and PGP members, as the case may be, from liabilities incurred as a result
of their positions as our sole manager and as members of the Company or PGP, as
the case may be.
As discussed in Note 2, in connection with the Trotter Purchase, OED is
obligated to pay a contingent fee of one half of one percent (0.5%) of the net
slot revenues generated by OED's racino located in St. Landry Parish, Louisiana,
for a period of ten years commencing on December 19, 2003, the date the racino's
casino opened to the general public.
The Company is involved in a lawsuit with a former employee. Management believes
that such lawsuit is without merit and that the ultimate disposition of this
action should not have a material adverse effect on
-13-
the financial condition, results of operations or cash flows of the Company;
however, no assurance can be given as to the ultimate disposition of such
action.
Other than as noted above, we are not a party to, and none of our property is
the subject of, any other pending legal proceedings other than litigation
arising in the normal course of business. We do not believe that adverse
determinations in any or all such other litigation would have a material adverse
effect on our financial condition, results of operations or cash flows.
6. RELATED PARTY TRANSACTIONS
In May 2004, PGP repurchased 147,553 units of its convertible preferred
membership interests from an unrelated third party for approximately $4.5
million. The repurchase was funded by a distribution of cash to PGP from DJL,
one of its wholly-owned subsidiaries.
A board member of PGP was entitled to receive from OEDA board fees of $175,000
per year for services performed in his capacity as a board member. For the three
and six months ended March 31, 2004, OEDA expensed $43,749 and $87,500,
respectively, related to these board fees which have been included in
"Management fees" in the "Condensed Consolidated Statement of Operations".
OED is a party to a consulting agreement with a board member of PGP. Under the
consulting agreement, OED must pay to the board member a fee equal to 2.5% of
OED's earnings before interest, taxes, depreciation, amortization and other
non-recurring charges during the preceding calendar year commencing on January
1, 2004. Under the consulting agreement, the board member is also entitled to
reimbursement of reasonable business expenses as approved by the board of
managers of PGP. During the three and six months ended June 30, 2004, the board
member received $212,625 and $425,250, respectively under his consulting
agreement. Approximately $112,750 of this amount has been included in "Prepaid
expenses" in the "Condensed Consolidated Balance Sheet" as of June 30, 2004 and
$99,875 and $312,500 has been included in "Management fees" in the "Condensed
Consolidated Statement of Operations" for the three and six months ended June
30, 2004, respectively.
7. SEGMENT INFORMATION
Pursuant to the provisions of SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information," the Company has determined that it
currently operates two reportable segments: (1) Iowa operations, which comprise
the Diamond Jo riverboat casino in Iowa; and (2) Louisiana operations, which
comprise the casino, racetrack and off-track betting facilities operated by OED
in Louisiana.
The Company and the gaming industry use "EBITDA" and "Adjusted EBITDA" as means
to evaluate performance. EBITDA and Adjusted EBITDA are not measurements
determined in accordance with accounting principles generally accepted in the
United States of America ("GAAP") and should not be considered as alternative
to, or more meaningful than, the Company's net loss or income from operations,
as indicators of its operating performance, or its cash flows from operating
activities, as a measure of its liquidity or any other measure determined in
accordance with GAAP. The definitions of EBITDA and Adjusted EBITDA may not be
the same as those of similarly named measures used by other companies and are
not the same as the definitions used in the indenture governing the Peninsula
Gaming Notes or any of the Company's or its subsidiaries other debt agreements.
The table below presents information about reported segments as of and for the
periods ended (in thousands):
-14-
NET REVENUES NET REVENUES
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Diamond Jo $ 12,338 $ 13,226 $ 24,516 $ 25,080
Evangeline Downs 24,228 6,333 47,615 10,150
------------ ------------ ------------ ------------
Total $ 36,566 $ 19,559 $ 72,131 $ 35,230
============ ============ ============ ============
ADJUSTED EBITDA ADJUSTED EBITDA
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Diamond Jo $ 3,704 $ 4,306 $ 7,409 $ 7,934
Evangeline Downs 3,901 400 8,696 766
------------ ------------ ------------ ------------
Total Adjusted EBITDA (1) 7,605 4,706 16,105 8,700
Diamond Jo:
Development expense......... (38) (59)
Depreciation and
amortization.............. (588) (751) (1,165) (1,503)
Interest expense, net....... (11,474) (2,722) (14,282) (5,453)
Loss on sale of assets...... (17) (105)
Preferred member
distributions............. (90) (181)
Evangeline Downs:
Depreciation and
amortization.............. (2,372) (79) (4,691) (146)
Pre-opening expense......... (51) (196) (272) (205)
Management fees............. (150) (400)
Interest expense, net....... (32,617) (3,864) (37,536) (6,085)
------------ ------------ ------------ ------------
Net loss to common members'
interest.................. (39,685) (3,013) (42,300) (4,978)
============= ============= ============ ============
(1) Adjusted EBITDA is defined as net loss to common members' interest plus
depreciation and amortization, pre-opening expense, net interest
expense (including loss on early retirement of debt), development
expense, loss on sale of assets, preferred member distributions and
management fees.
-15-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the condensed consolidated financial statements and the related notes
thereto appearing elsewhere in this report. Some statements contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations constitute "forward-looking statements" within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, which involve risks and
uncertainties as well as other risks set forth in our Annual Report on Form 10-K
for the year ended December 31, 2003. Should these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, our future
performance and actual results of operations may differ materially from those
expected or intended. Unless the context requires otherwise, references to the
Company refer to PGL, and references to "our", "us" and "we" refer to PGL, DJL,
PGC and OED.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. We periodically evaluate our policies and the estimates and
assumptions related to such policies. The critical accounting policies used in
preparation of the Company's financial statements are described in Managements
Discussion and Analysis in the Company's Annual Report on Form 10-K for the year
ended December 31, 2003. Actual results in these areas could differ from
management's estimates. There have been no significant changes to the Company's
critical accounting policies during the six months ended June 30, 2004.
RESULTS OF OPERATIONS
DIAMOND JO OED
THREE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenues:
Casino $ 12,249,903 $ 13,196,976 $ 16,563,220
Racing 6,494,040 $ 5,810,395
Food and beverage 709,995 679,899 2,247,721 477,428
Other 104,394 59,831 303,690 44,904
Less promotional
allowances (726,691) (710,186) (1,380,603)
------------- ------------- ------------- -------------
Net revenues 12,337,601 13,226,520 24,228,068 6,332,727
------------- ------------- ------------- -------------
Expenses:
Casino 5,237,675 5,446,088 9,077,925
Racing 5,426,800 4,921,420
Food and beverage 668,102 665,174 1,855,119 203,952
Boat operations 545,986 575,000
Other 119,912 41,189 342,890 6,757
-16-
Selling, general and
administrative 2,061,937 2,193,552 3,624,248 800,142
Depreciation and
amortization 587,632 750,840 2,371,519 78,784
Pre-opening expense 50,997 196,045
Development expense 37,961
Management fees 149,577
------------- ------------- ------------ ------------
Total expenses 9,259,205 9,671,843 22,899,075 6,207,100
------------- ------------- ------------ ------------
Income from operations $ 3,078,396 $ 3,554,677 $ 1,328,993 $ 125,627
============= ============= ============ ============
Three months ended June 30, 2004 Compared to Three months ended June 30, 2003
Net revenues increased 86.9% to $36.6 million for the three months
ended June 30, 2004 from $19.6 million for the three months ended June 30, 2003.
Net revenues at OED increased $17.9 million to $24.2 million for the three
months ended June 30, 2004 from $6.3 million for the three months ended June 30,
2003. Net revenues at OED increased due primarily to casino revenues of $16.6
million derived from OED's new racino which opened on December 19, 2003 and an
increase in racing revenues of $0.7 million due to an increase in video poker
revenues of approximately $0.7 million at OED's renovated OTB in Port Allen,
Louisiana. Net revenues at the Diamond Jo decreased $0.9 million to $12.3
million for the three months ended June 30, 2004 from $13.2 million for the
three months ended June 30, 2003. This decrease in net revenues at the Diamond
Jo is due to a decrease in slot revenue of 4.1%, or $0.4 million, for the three
months ended June 30, 2004 compared to the three months ended June 30, 2003,
primarily due to a decrease in coin-in of 6.4% over the same period. In
addition, table game revenues at the Diamond Jo decreased 27.8%, or $0.5
million, for the three months ended June 30, 2004 compared to the three months
ended June 30, 2003, primarily due to a decrease in hold percentage to 16.8% for
the three months ended June 30, 2004 compared to 21.6% during the three months
ended June 30, 2003. Had our hold percentage remained consistent with the prior
year, table game revenues would have decreased 7.2%, or $0.1 million based on
our actual drop during the three months ended June 30, 2004.
Overall casino revenues increased $15.6 million to $28.8 million for
the three months ended June 30, 2004 from $13.2 million for the three months
ended June 30, 2003. Casino revenues of $16.6 million at OED consisted solely of
revenues from slot machines at OED's recently opened racino. Casino win per
gaming position per day at OED was $112 for the three months ended June 30,
2004. Casino revenues at the Diamond Jo decreased 7.2% to $12.2 million for the
three months ended June 30, 2004 from $13.2 million for the three months ended
June 30, 2003. This decrease was due to a 4.1% decrease in slot revenues and a
27.8% decrease in table game revenues as discussed above. Casino revenues at the
Diamond Jo were derived 89.8% from slot machines and 10.2% from table games for
the three months ended June 30, 2004 compared to 86.9% from slot machines and
13.1% from table games for the three months ended June 30, 2003. Our slot win
per unit per day at the Diamond Jo decreased 9.3% to $153 for the three months
ended June 30, 2004 from $169 for the three months ended June 30, 2003. Our
admissions at the Diamond Jo for the three months ended June 30, 2004 increased
0.8% to 255,000 from 253,000 for the three months ended June 30, 2003. For the
three months ended June 30, 2004 our casino win per admission at the Diamond Jo
decreased 7.9% to $48 from $52 for the three months ended June 30, 2003.
-17-
Racing revenues at OED increased $0.7 million to $6.5 million for the
three months ended June 30, 2004 from $5.8 million for the three months ended
June 30, 2003. The increase in racing revenues is due to an increase in video
poker revenues of $0.7 million resulting from OED's Port Allen OTB facility
renovation and the installation of 100 video poker machines during the second
quarter of 2003.
Net food and beverage revenues, other revenues and promotional
allowances increased $0.7 million during the three months ended June 30, 2004
compared to the three months ended June 30, 2003 due primarily to food and
beverage revenues generated from OED's new racino.
Overall casino expenses increased $8.9 million to $14.3 million for the
three months ended June 30, 2004 from $5.4 million for the three months ended
June 30, 2003. Casino expenses of $9.1 million at OED primarily related to purse
supplements and gaming taxes, which are based on net casino revenues, and casino
related payroll. Casino operating expenses at the Diamond Jo decreased 4.0%, or
$0.2 million, to $5.2 million for the three months ended June 30, 2004 from $5.4
million for the three months ended June 30, 2003 due primarily to a decrease in
gaming taxes at the Diamond Jo of approximately $0.2 million associated with our
decrease in casino revenues.
Racing expenses increased 10.3% to $5.4 million for the three months
ended June 30, 2004 from $4.9 million for the three months ended June 30, 2003
due primarily to an increase in franchise fees, purse supplements and operating
expenses of $0.5 million related to OED's video gaming devices at its renovated
OTB in Port Allen, Louisiana.
Food and beverage expenses increased $1.6 million to $2.5 million for
the three months ended June 30, 2004 from $0.9 million for the three months
ended June 30, 2003 due primarily to an increase in food and beverage expenses
at OED of $1.7 million related to the opening of OED's new racino. Boat
operation expenses at the Diamond Jo were substantially unchanged at $0.6
million for the three months ended June 30, 2004 and 2003. Other expenses
increased $0.4 million due primarily to costs associated with OED's new outdoor
entertainment venue.
Selling, general and administrative expenses increased $2.7 million to
$5.7 million for the three months ended June 30, 2004 from $3.0 million for the
three months ended June 30, 2003. This increase was due primarily to an increase
in general and administrative expenses at OED of $2.8 million due primarily to
payroll, marketing and other general and administrative expenses associated with
the new racino.
Depreciation and amortization expenses increased $2.1 million to $2.9
million for the three months ended June 30, 2004 from $0.8 million for the three
months ended June 30, 2003 due to depreciation of property and equipment at
OED's racino of approximately $2.1 million during the three months ended June
30, 2004.
Pre-opening expenses of $0.1 million and $0.2 million for the three
months ended June 30, 2004 and 2003, respectively, relate to expenses incurred
by OED with respect to start-up activities surrounding the racino project,
including pre-opening costs associated with the continued construction of the
racetrack portion of the project. Management fees of $0.1 million during the
three months ended June 30, 2004 relate to management fees and board of director
fees paid to related parties.
Net interest expense, including loss on early retirement of debt and
interest expense related to DJL's redeemable preferred member interests,
increased $37.5 million to $44.1 million for the three months ended June 30,
2004 from $6.6 million for the three months ended June 30, 2003. This increase
is primarily due to the loss on early retirement of debt of $37.6 million
related to our debt refinancing activities discussed below under Liquidity and
Capital Resources. Interest expense of approximately $0.3 million and $0.4
million was capitalized as part of our construction of the racino during the
three
-18-
months ended June 30, 2004 and 2003, respectively.
DIAMOND JO OED
SIX MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
Revenues:
Casino $ 24,344,147 $ 24,979,954 $ 34,662,325
Racing 10,859,643 $ 9,454,725
Food and beverage 1,397,404 1,366,735 4,378,111 629,869
Other 163,262 97,246 445,939 65,467
Less promotional
allowances (1,389,213) (1,364,413) (2,730,554)
------------- ------------- ------------- -------------
Net revenues 24,515,600 25,079,522 47,615,464 10,150,061
------------- ------------- ------------- -------------
Expenses:
Casino 10,496,314 10,459,803 18,873,024
Racing 8,931,186 7,768,167
Food and beverage 1,298,973 1,320,659 3,505,613 279,507
Boat operations 1,119,047 1,142,348
Other 143,073 44,363 444,724 12,256
Selling, general and
administrative 4,049,261 4,178,070 7,164,971 1,323,823
Depreciation and
amortization 1,164,666 1,502,745 4,690,548 145,895
Pre-opening expense 272,280 204,921
Development expense 59,231
Management fees 400,000
------------- ------------- ------------- -------------
Total expenses 18,330,565 18,647,988 44,282,346 9,734,569
------------- ------------- ------------- -------------
Income from operations $ 6,185,035 $ 6,431,534 $ 3,333,118 $ 415,492
============= ============= ============= =============
Six months ended June 30, 2004 Compared to Six months ended June 30, 2003
Net revenues increased 104.7% to $72.1 million for the six months ended
June 30, 2004 from $35.2 million for the six months ended June 30, 2003. Net
revenues at OED increased $37.5 million to $47.6 million for the six months
ended June 30, 2004 from $10.1 million for the six months ended June 30, 2003.
Net revenues at OED increased due primarily to casino revenues of $34.7 million
derived from OED's new racino which opened on December 19, 2003 and an increase
in racing revenues of $1.4 million due to an increase in video poker revenues of
approximately $1.4 million at OED's renovated OTB in Port Allen, Louisiana. Net
revenues at the Diamond Jo decreased $0.6 million to $24.5 million for the six
months ended June 30, 2004 from $25.1 million for the six months ended June 30,
2003. This decrease in net revenues at the Diamond Jo is due to a decrease in
slot revenue of 0.7%, or
-19-
$0.1 million, for the six months ended June 30, 2004 compared to the six months
ended June 30, 2003, primarily due to a decrease in coin-in of 2.1% over the
same period. In addition, table game revenues at the Diamond Jo decreased 15.2%,
or $0.5 million, for the six months ended June 30, 2004 compared to the six
months ended June 30, 2003, primarily due to a decrease in hold percentage to
19.1% for the six months ended June 30, 2004 compared to 21.2% during the six
months ended June 30, 2003. Had our hold percentage remained consistent with the
prior year, table game revenues would have decreased 5.9%, or $0.2 million based
on our actual drop during the six months ended June 30, 2004.
Overall casino revenues increased $34.0 million to $59.0 million for
the six months ended June 30, 2004 from $25.0 million for the six months ended
June 30, 2003. Casino revenues of $34.7 million at OED consisted solely of
revenues from slot machines at OED's recently opened racino. Casino win per
gaming position per day at OED was $121 for the six months ended June 30, 2004.
Casino revenues at the Diamond Jo decreased 2.5% to $24.3 million for the six
months ended June 30, 2004 from $25.0 million for the six months ended June 30,
2003. This decrease was due to a 0.7% decrease in slot revenues and a 15.2%
decrease in table game revenues as discussed above. Casino revenues at the
Diamond Jo were derived 88.7% from slot machines and 11.3% from table games for
the six months ended June 30, 2004 compared to 87.1% from slot machines and
12.9% from table games for the six months ended June 30, 2003. Our slot win per
unit per day at the Diamond Jo decreased 5.6% to $152 for the six months ended
June 30, 2004 from $161 for the six months ended June 30, 2003. Our admissions
at the Diamond Jo for the six months ended June 30, 2004 increased 1.0% to
488,000 from 483,000 for the six months ended June 30, 2003. For the six months
ended June 30, 2004 our casino win per admission at the Diamond Jo decreased
3.8% to $50 from $52 for the six months ended June 30, 2003.
Racing revenues at OED increased $1.4 million to $10.9 million for the
six months ended June 30, 2004 from $9.5 million for the six months ended June
30, 2003. The increase in racing revenues is due to an increase in video poker
revenues of $1.4 million resulting from OED's Port Allen OTB facility renovation
and the installation of 100 video poker machines during the second quarter of
2003.
Net food and beverage revenues, other revenues and promotional
allowances increased $1.5 million during the six months ended June 30, 2004
compared to the six months ended June 30, 2003 due primarily to food and
beverage revenues generated from OED's new racino.
Overall casino expenses increased $18.9 million to $29.4 million for
the six months ended June 30, 2004 from $10.5 million for the six months ended
June 30, 2003. Casino expenses of $18.9 million at OED primarily related to
purse supplements and gaming taxes, which are based on net casino revenues, and
casino related payroll.
Racing expenses increased 15.0% to $8.9 million for the six months
ended June 30, 2004 from $7.8 million for the six months ended June 30, 2003 due
primarily to (i) an increase in franchise fees, purse supplements and operating
expenses of $0.9 million related to OED's video gaming devices at its renovated
OTB in Port Allen, Louisiana and (ii) admission fees related to the OTB located
at the racino of approximately $0.1 million (under current Louisiana law, OED
must pay $0.25 to the Louisiana State Racing Commission per patron entering a
building in which OED has an OTB, including the new racino).
Food and beverage expenses increased $3.2 million to $4.8 million for
the six months ended June 30, 2004 from $1.6 million for the six months ended
June 30, 2003 due primarily to an increase in food and beverage expenses at OED
of $3.2 million related to the opening of OED's new racino. Boat operation
expenses at the Diamond Jo were substantially unchanged at $1.1 million for the
six months ended June 30, 2004 and 2003. Other expenses increased $0.5 million
due primarily to costs associated with OED's new outdoor entertainment venue.
-20-
Selling, general and administrative expenses increased $5.7 million to
$11.2 million for the six months ended June 30, 2004 from $5.5 million for the
six months ended June 30, 2003. This increase was due primarily to an increase
in general and administrative expenses at OED of $5.8 million due primarily to
payroll, marketing and other general and administrative expenses associated with
the new racino.
Depreciation and amortization expenses increased $4.2 million to $5.9
million for the six months ended June 30, 2004 from $1.7 million for the six
months ended June 30, 2003 due to depreciation of property and equipment at
OED's racino of approximately $4.2 million during the six months ended June 30,
2004. During the first quarter of 2004, we performed our annual impairment test
on goodwill and indefinite life intangible assets in accordance with SFAS No.
142. Based on that review, management determined that there was no impairment of
goodwill and indefinite life intangible assets.
Pre-opening expenses of $0.3 million and $0.2 million for the six
months ended June 30, 2004 and 2003, respectively, relate to expenses incurred
by OED with respect to start-up activities surrounding the racino project,
including pre-opening costs associated with the continued construction of the
racetrack portion of the project. Management fees of $0.4 million during the six
months ended June 30, 2004 relate to management fees and board of director fees
paid to related parties.
Net interest expense, including loss on early retirement of debt and
interest expense related to DJL's redeemable preferred member interests,
increased $40.3 million to $51.8 million for the six months ended June 30, 2004
from $11.5 million for the six months ended June 30, 2003. This increase is
primarily due to the loss on early retirement of debt of $37.6 million related
to our debt refinancing activities discussed below under Liquidity and Capital
Resources. The remaining difference is primarily related to the timing of the
offering of the OED Notes, which occurred on February 25, 2003. Interest expense
of approximately $0.5 million and $0.5 million was capitalized as part of our
construction of the racino during the six months ended June 30, 2004 and 2003,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating, Investing and Financing Activities
Our cash balance increased $6.4 million during the six months ended
June 30, 2004 to $27.6 million from $21.2 million at December 31, 2003.
Cash flows from operating activities declined by $29.9 million to a use
of $27.0 million for the six months ended June 30, 2004 compared to a positive
$2.9 million for the six months ended June 30, 2003. The decline is primarily
due to tender and call premiums paid on early retirement of debt of $22.0
million, increased payments of accrued expenses of $9.6 million primarily due to
payments of accrued interest and increased payments to our restricted cash
account for purse settlements due to OED's new racino operations of $2.0
million, partially offset by higher non-cash depreciation and amortization
expense of $4.2 million due to depreciation of property and equipment at OED.
Cash flows from investing activities for the six months ended June 30,
2004 was $10.0 million consisting of cash inflows of (i) draws from restricted
cash accounts held by the trustee of the OED Notes of approximately $20.0
million and (ii) cash proceeds from the maturity of restricted investments of
$15.8 million. These cash inflows were offset by (i) payments of approximately
$24.3 million for construction, architecture fees and other development costs
associated with the racino project and (ii) cash outflows of approximately $1.4
million used for capital expenditures mainly related to the purchase of new slot
machines at DJL and conversions of slot machines at OED to incorporate
ticket-in, ticket-out technology, which we believe enhances customer service,
produces operating efficiencies and eliminates hopper fills and the down time
associated with them. We expect additional capital expenditures at DJL
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and OED (other than the capital expenditures related to the racino project) to
be approximately $2.1 million and $0.9 million, respectively, for the year ended
December 31, 2004. We expect to meet our regulatory requirements for the racino
project for fiscal 2004 with related additional capital expenditures of
approximately $6.0 million. Consistent with our regulatory requirements, we also
expect to continue construction on our turf track during fiscal 2005.
Cash flows from financing activities for the six months ended June 30,
2004 of $23.5 million reflects (i) net proceeds from the offering of the
Peninsula Gaming Notes of approximately $229.7 million, (ii) proceeds from
advances under the revolver portion of the PGL Credit Facility of approximately
$15.9 million, (iii) proceeds from the initial draw under the Term Loan portion
of the PGL Credit Facility of approximately $14.7 million and (iv) proceeds from
OED's draws under the OED FF&E Facility of $3.5 million. These proceeds were
offset by (i) redemption of $71.0 million aggregate principal amount of DJL
Notes, (ii) redemption of $116.3 million aggregate principal amount of OED
Notes, (iii) aggregate principal payments on borrowings under the OED FF&E
Facility of $16.0 million, (iv) aggregate principal payments on borrowings under
the DJL Credit Facility of $11.3 million, (v) aggregate principal payments on
borrowings under the OED Credit Facility of $5.1 million, (vi) aggregate
principal payments on borrowings under the revolver portion of the PGL Credit
Facility of $1.0 million, (vii) aggregate principal payments on notes payable of
$0.2 million, (viii) payment of fees and expenses associated with the offering
of the Peninsula Gaming Notes and the consummation of the PGL Credit Facility of
approximately $13.3 million and (ix) member distributions of approximately $6.1
million.
As of June 30, 2004, the Company had $14.9 million and $14.7 million
outstanding under the revolver portion and Term Loan portion of the PGL Credit
Facility, respectively. In addition, as of June 30, 2004, the Company had
outstanding letters of credit of approximately $3.5 million.
Financing Activities
On March 9, 2004, OED commenced a tender offer and consent solicitation
to repurchase all of its outstanding OED Notes and to solicit consents to
certain proposed amendments to the indenture governing the OED Notes as set
forth in OED's Offer to Purchase and Consent Solicitation Statement, dated March
9, 2004. On March 19, 2004, the expiration date of the consent solicitation, OED
received the requisite consents and tenders from holders of a majority of the
aggregate principal amount of the outstanding OED Notes. The tender offer
expired on April 5, 2004, and OED redeemed approximately $116.3 million
principal amount of OED Notes.
On April 16, 2004, DJL and Old Evangeline Downs Capital Corp. completed
a Rule 144A private placement of $233 million principal amount of 8 3/4% Senior
Secured Notes due 2012 (the "Peninsula Gaming Notes"). The Peninsula Gaming
Notes were issued at a discount of approximately $3.3 million. Interest on the
Peninsula Gaming Notes is payable semi-annually on April 15 and October 15 of
each year, beginning on October 15, 2004.
We used the net proceeds from the sale of the Peninsula Gaming Notes as
follows (all payments based on outstanding balances as of April 16, 2004): (1)
to irrevocably deposit funds into an escrow account to redeem all of the DJL
Notes in an amount (including call premium and accrued interest) of
approximately $79.9 million; (2) to repurchase approximately $116.3 million
principal amount of OED Notes for an aggregate amount (including tender premium,
accrued interest and contingent interest) of approximately $134.6 million; (3)
to pay accrued distributions on DJL's outstanding preferred membership
interests-redeemable of approximately $1.1 million; (4) to pay related fees and
expenses of approximately $13.4 million; and (5) for general corporate purposes.
As a result of the issuance of the Peninsula Gaming Notes, DJL incurred a loss
of approximately $8.7 million consisting of the write-off of deferred financing
fees of approximately $2.0 million, the payment of a call premium on the DJL
Notes of approximately $5.7 million, interest on the DJL Notes of approximately
$0.7 million and write-off of
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bond discount of approximately $0.3 million. In connection therewith, OED also
incurred a loss of approximately $27.9 million consisting of the write-off of
deferred financing fees of approximately $8.4 million, the payment of a tender
premium on the OED Notes of approximately $16.3 million, write-off of bond
discount of approximately $2.1 million and consent fees of approximately $1.1
million. In addition, the Company wrote off $0.9 million of deferred financing
fees related to the credit facilities discussed below.
On June 16, 2004, DJL and OED jointly entered into a Loan and Security
Agreement with Wells Fargo Foothill, Inc. as the Arranger and Agent (the "PGL
Credit Facility"). The PGL Credit Facility consists of a revolving credit
facility which permits DJL and OED to request advances and letters of credit up
to the lesser of the maximum revolver amount of $35 million (less amounts
outstanding under letters of credit) and a specified borrowing base (the
"Borrowing Base"). For the purposes of the PGL Credit Facility, the Borrowing
Base is the lesser of the Combined EBITDA (as defined in the PGL Credit
Facility) of OED and DJL for the twelve months immediately preceding the current
month end multiplied by 150% and the Combined EBITDA of OED and DJL for the most
recent quarterly period annualized multiplied by 150%. At June 30, 2004, the
maximum revolver amount was $35.0 million. Immediately upon the closing of the
PGL Credit Facility, the Company borrowed approximately $15.9 million to
refinance outstanding obligations under the DJL Credit Facility and the OED
Credit Facility and pay financing related fees and expenses. Advances under the
PGL Credit Facility bear an interest rate based on the borrower's option of
LIBOR plus a margin 3% -3.5% or Wells Fargo prime rate plus a margin of .5% -1%
(current rate of 5.25%) however, at no time shall the interest rate be lower
than 4%.
The PGL Credit Facility also contains a Term Loan in the amount of
$14,666,667. The proceeds from the Term Loan were used to repay outstanding
obligations under the FF&E Credit Facility. The Term Loan is secured by certain
assets of OED and requires monthly payments of $333,333 starting July 1, 2004
until the full balance is paid, with a maturity no later than June 15, 2008. The
Term Loan has an interest rate equal to the Wells Fargo prime rate plus 2.5%
(current rate of 6.75%) however, at no time shall the interest rate be lower
than 6%. Under the terms of the PGL Credit Facility, at closing OED was required
to issue a letter of credit in the amount of $3.2 million in favor of Wells
Fargo related to the Term Loan.
We currently have the following sources of funds for our business: (i)
cash flows from OED's existing racetrack operations and casino operations, (ii)
cash flows from DJL's existing casino operations, and (iii) available borrowings
under the PGL Credit Facility.
Our level of indebtedness will have several important effects on our
future operations including, but not limited to, the following: (i) a
significant portion of our cash flow from operations will be required to pay
interest on our indebtedness and the indebtedness of our subsidiaries; (ii) the
financial covenants contained in certain of the agreements governing such
indebtedness will require us and/or our subsidiaries to meet certain financial
tests and may limit our respective abilities to borrow additional funds or to
dispose of assets; (iii) our ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions or general
corporate purposes may be impaired; and (iv) our ability to adapt to changes in
the gaming industry which affect the markets in which we operate could be
limited.
Subject to the foregoing, we believe that cash and cash equivalents,
cash generated from operations and available borrowings under our existing
credit facility will be sufficient to satisfy our working capital and capital
expenditure requirements, and satisfy our other current debt service
requirements, including interest payments on the Peninsula Gaming Notes and the
OED Notes, for the next twelve months. If cash and cash equivalents on-hand or
cash we are able to generate or borrow are insufficient to meet our obligations,
we may have to refinance our debt or sell some or all of our assets to meet our
obligations.
-23-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks which are inherent in our
financial instruments which arise from transactions entered into in the normal
course of business. Market risk is the risk of loss from adverse changes in
market prices and interest rates. We do not currently utilize derivative
financial instruments to hedge market risk. We also do not hold or issue
derivative financial instruments for trading purposes.
We are exposed to interest rate risk due to changes in interest rates
with respect to our long-term variable interest rate debt borrowing under the
PGL Credit Facility. As of June 30, 2004, the Company had $29.6 million in
borrowings under the PGL Credit Facility, including borrowings under the Term
Loan, that have variable interest rates. We have estimated our market risk
exposure using sensitivity analysis. We have defined our market risk exposure as
the potential loss in future earnings and cash flow with respect to interest
rate exposure of our market risk sensitive instruments assuming a hypothetical
increase in market rates of interest of one percentage point. Assuming the
Company borrows the maximum amount allowed under the PGL Credit Facility
(currently an aggregate amount of $49.7 million), if market rates of interest on
our variable rate debt increased by one percentage point, the estimated
additional annual interest expense would be approximately $0.5 million.
We are also exposed to fair value risk due to changes in interest rates
with respect to our long-term fixed interest rate debt borrowings. Our fixed
rate debt instruments are not generally affected by a change in the market rates
of interest, and therefore, such instruments generally do not have an impact on
future earnings. However, future earnings and cash flows may be impacted by
changes in interest rates related to indebtedness incurred to fund repayments as
such fixed rate debt matures. The following table contains information relating
to our fixed rate debt borrowings as of June 30, 2004 (dollars in millions):
FIXED
INTEREST CARRYING
DESCRIPTION MATURITY RATE VALUE FAIR VALUE
-------- -------- -------- ----------
8 3/4% Senior Secured Notes of PGL April 15, 2012 8 3/4% $ 229.8 $ 219.0*
13% Senior Secured Notes with
Contingent Interest of OED March 1, 2010 13% $ 6.8 $ 6.9
Note Payable October 1, 2010 4 3/4% 3.9 3.9
Note Payable July 1, 2005 9 1/2% 0.4 0.4
Preferred Membership Interests - Redeemable October 13, 2006 9% 4.0 4.0
_________
* Represents fair value as of June 30, 2004 based on information provided by
an independentinvestment banking firm.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. The Company's
Chief Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of the design and operation of the Company's disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15) as of June 30, 2004,
have concluded that as of such date the Company's disclosure controls and
procedures were adequate and effective and designed to ensure that material
information relating to the Company and its subsidiaries would be made known to
such officers on a timely basis.
-24-
(b) Changes in internal controls. There have been no significant
changes (including corrective actions with regard to significant deficiencies or
material weaknesses) in our internal controls or other factors that could
significantly affect these controls subsequent to the date of the evaluation
referenced in paragraph (a) above.
-25-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither we nor our subsidiaries are a party to, and none of our nor our
subsidiaries' property is the subject of, any pending legal proceedings other
than litigation arising in the normal course of business. We do not believe that
adverse determinations in any or all such other litigation would have a material
adverse effect on our financial condition, results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS FOR A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------
2.1 Certificate of Dissolution of Peninsula Gaming Corporation, dated June
17, 2004 - incorporated herein by reference to Exhibit 2.1 of the
Company's Form S-4 filed July 30, 2004.
3.1A Certificate of Formation of Peninsula Gaming Company, LLC -
incorporated herein by reference to Exhibit 3.1A of Peninsula Gaming
Company, LLC's Form S-4 filed October 12, 1999. (With regard to
applicable cross-references in this registration statement, Peninsula
Gaming Company, LLC's Form S-4, Current, Quarterly and Annual Reports
were filed with the SEC under File No. 333-88829).
3.1B Amendment to Certificate of Formation of Peninsula Gaming Company, LLC
-- incorporated herein by reference to Exhibit 3.1B of Peninsula
Gaming Company, LLC's Form S-4 filed October 12, 1999.
3.1C Certificate of Amendment to the Certificate of Formation of Peninsula
Gaming Company, LLC, dated March 10, 2004 -- incorporated herein by
reference to Peninsula Gaming Company, LLC's Quarterly Report on Form
10-Q filed May 14, 2004.
3.2 Amended and Restated Operating Agreement of Peninsula Gaming Company,
LLC - incorporated herein by reference to Exhibit 3.2 of Peninsula
Gaming Company, LLC's Form S-4 filed on October 12, 1999.
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EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------
3.3A Certificate of Formation of Peninsula Casinos, LLC, dated February 27,
2004 -- incorporated herein by reference to Exhibit 3.3A of the
Company's Form S-4 filed July 30, 2004.
3.3B Certificate of Amendment to the Certificate of Formation of Peninsula
Casinos, LLC, dated March 10, 2004 -- incorporated herein by reference
to Exhibit 3.3B of the Company's Form S-4 filed July 30, 2004.
3.4 Operating Agreement of Peninsula Gaming, LLC (formerly known as
Peninsula Casinos, LLC), dated June 14, 2004 -- incorporated herein by
reference to Exhibit 3.4 of the Company's Form S-4 filed July 30,
2004.
3.5A Certificate of Incorporation of The Old Evangeline Downs Capital
Corp., dated January 20, 2003- incorporated herein by reference to
Exhibit 3.4 of The Old Evangeline Downs Capital Corp.'s Form S-4 filed
May 28, 2003. (With regard to applicable cross-references in this
registration statement, The Old Evangeline Downs Capital Corp.'s Form
S-4, Current, Quarterly and Annual Reports were filed with the SEC
under File No. 333-105587).
3.5B Certificate of Amendment to the Certificate of Incorporation of The
Old Evangeline Downs Capital Corp., dated June 17, 2004- incorporated
herein by reference to Exhibit 3.5B of the Company's Form S-4 filed
July 30, 2004.
3.6 By-laws of The Old Evangeline Downs Capital Corp. - incorporated
herein by reference to Exhibit 3.5 of The Old Evangeline Downs Capital
Corp.'s Form S-4 filed May 28, 2003.
3.7 Amended and Restated Articles of Organization of The Old Evangeline
Downs, L.L.C. (formerly The Old Evangeline Downs, L.C.), dated
February 19, 2003- incorporated herein by reference to Exhibit 3.1 of
The Old Evangeline Downs, L.L.C.'s Form S-4 filed May 28, 2003. (With
regard to applicable cross-references in this registration statement,
The Old Evangeline Downs, L.L.C.'s Form S-4 was filed with the SEC
under File No. 333-105587).
3.8A Amended and Restated Operating Agreement of The Old Evangeline Downs,
L.L.C., dated as of January 30, 2003- incorporated herein by reference
to Exhibit 3.2 of The Old Evangeline Downs, L.L.C.'s Form S-4 filed
May 28, 2003.
3.8B First Amendment to Amended and Restated Operating Agreement of The Old
Evangeline Downs, L.L.C., dated as of May 21, 2003- incorporated
herein by reference to Exhibit 3.3 of The Old Evangeline Downs,
L.L.C.'s Form S-4 filed May 28, 2003.
4.1 Specimen Certificate of Common Stock of Peninsula Gaming Corp.
(formerly known as The Old Evangeline Downs Capital Corp.) --
incorporated herein by reference to Exhibit 4.1 of the Company's Form
S-4 filed July 30, 2004.
4.2A Indenture, dated July 15, 1999, by and among Peninsula Gaming Company,
LLC, Peninsula Gaming Corporation and Firstar Bank of Minnesota, N.A.,
as trustee - incorporated herein by reference to Exhibit 4.2 of
Peninsula Gaming Company, LLC's Form S-4 filed October 12, 1999.
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EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------
4.2B First Supplemental Indenture, dated January 14, 2002, by and among
Peninsula Gaming Company, LLC and Peninsula Gaming Corporation, as
Issuers, the Subsidiary Guarantors referred to therein and U.S. Bank
National Association, as trustee - incorporated herein by reference to
Exhibit 4.3 of Peninsula Gaming Company, LLC's Form S-4 filed October
21, 1999.
4.3A Indenture, dated February 25, 2003, by and among The Old Evangeline
Downs, L.L.C., The Old Evangeline Downs Capital Corp. and U.S. Bank
National Association- incorporated herein by reference to Exhibit 4.1
of The Old Evangeline Downs, L.L.C.'s Form S-4 filed May 28, 2003.
4.3B Supplemental Indenture, dated as of March 25, 2004, by and among The
Old Evangeline Downs, L.L.C., The Old Evangeline Downs Capital Corp.
and U.S. Bank National Association --incorporated herein by reference
to Exhibit 4.3B of the Company's Form S-4 filed July 30, 2004.
4.4A Indenture, dated as of April 16, 2004, by and among Diamond Jo, LLC
(formerly known as Peninsula Gaming Company, LLC), The Old Evangeline
Downs Capital Corp., the Subsidiary Guarantors named therein and U.S.
Bank National Association -- incorporated herein by reference to
Exhibit 4.4A of the Company's Form S-4 filed July 30, 2004.
4.4B Supplemental Indenture among Peninsula Gaming, LLC, Diamond Jo, LLC
(formerly known as Peninsula Gaming Company, LLC), The Old Evangeline
Downs Capital Corp. and U.S. Bank National Association, dated as of
June 16, 2004 -- incorporated herein by reference to Exhibit 4.4B of
the Company's Form S-4 filed July 30, 2004.
4.5A Registration Rights Agreement, dated April 16, 2004, by and among
Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC), The
Old Evangeline Downs Capital Corp., the Guarantors named therein and
Jefferies & Company, Inc. -- incorporated herein by reference to
Exhibit 4.5A of the Company's Form S-4 filed July 30, 2004.
4.5B Joinder of Peninsula Gaming, LLC, dated June 16, 2004, to the
Registration Rights Agreement, dated April 16, 2004, by and among
Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC), The
Old Evangeline Downs Capital Corp., the Guarantors named therein and
Jefferies & Company, Inc. -- incorporated herein by reference to
Exhibit 4.5B of the Company's Form S-4 filed July 30, 2004.
4.6A Pledge and Security Agreement, dated as of April 16, 2004, among
Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC), The
Old Evangeline Downs Capital Corp., OED Acquisition, LLC, Peninsula
Gaming Corporation, The Old Evangeline Downs, L.L.C. and U.S. Bank
National Association -- incorporated herein by reference to Exhibit
4.6A of the Company's Form S-4 filed July 30, 2004.
4.6B Supplement to Security Agreement by Peninsula Gaming, LLC, dated June
16, 2004 -- incorporated herein by reference to Exhibit 4.6B of the
Company's Form S-4 filed July 30, 2004.
4.7 Trademark Security Agreement, dated April 16, 2004, by Diamond Jo, LLC
in favor of U.S. Bank National Association -- incorporated herein by
reference to Exhibit 4.7 of the Company's Form S-4 filed July 30,
2004.
4.8 Form of 8 3/4% Senior Secured Notes due 2012 -- incorporated herein by
reference to Exhibit 4.8 of the Company's Form S-4 filed July 30,
2004.
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EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------
4.9A Intercreditor Agreement between U.S. Bank National Association and
Wells Fargo Foothill, Inc., dated April 16, 2004 -- incorporated
herein by reference to Exhibit 4.9A of the Company's Form S-4 filed
July 30, 2004.
4.9B Acknowledgement of Peninsula Gaming, LLC, dated June 16, 2004, to the
Intercreditor Agreement between U.S. Bank National Association and
Wells Fargo Foothill, Inc., dated April 16, 2004 -- incorporated
herein by reference to Exhibit 4.9B of the Company's Form S-4 filed
July 30, 2004.
10.1A Employment Agreement, dated July 29, 2004 by and among Natalie Schramm
and Peninsula Gaming, LLC - incorporated herein by reference to
Exhibit 10.1 of the Company's Form S-4 filed July 30, 2004.
10.1B Employment Agreement, dated July 14, 2004, by and among Jonathan Swain
and Peninsula Gaming, LLC - incorporated herein by reference to
Exhibit 10.1A of the Company's Form S-4 filed July 30, 2004.
10.19 Loan and Security Agreement, dated as of June 16, 2004, by and among
Diamond Jo, LLC (formerly known as Peninsula Gaming Company, LLC), The
Old Evangeline Downs, L.L.C. and Wells Fargo Foothill, Inc. -
incorporated herein by reference to Exhibit 10.19 of the Company's
Form S-4 filed July 30, 2004.
10.20 Guarantor Security Agreement, dated as of June 16, 2004, by and among
Peninsula Gaming, LLC, The Old Evangeline Downs Capital Corp. and
Wells Fargo Foothill, Inc. - incorporated herein by reference to
Exhibit 10.20 of the Company's Form S-4 filed July 30, 2004.
10.21 Intercompany Subordination Agreement, dated as of June 16, 2004, by
and among The Old Evangeline Downs, L.L.C., Diamond Jo, LLC (formerly
known as Peninsula Gaming Company, LLC), The Old Evangeline Downs
Capital Corp., Peninsula Gaming, LLC and Wells Fargo Foothill, Inc. -
incorporated herein by reference to Exhibit 10.21 of the Company's
Form S-4 filed July 30, 2004.
10.22 Management Fees Subordination Agreement, dated as of June 16, 2004, by
and among The Old Evangeline Downs, L.L.C., The Old Evangeline Downs
Capital Corp., Diamond Jo, LLC (formerly known as Peninsula Gaming
Company, LLC), OED Acquisition, LLC and Wells Fargo Foothill, Inc. -
incorporated herein by reference to Exhibit 10.22 of the Company's
Form S-4 filed July 30, 2004.
10.23 Post Closing Letter, dated June 16, 2004, from Wells Fargo Foothill,
Inc. to The Old Evangeline Downs, L.L.C. and Diamond Jo, LLC (formerly
known as Peninsula Gaming Company, LLC) - incorporated herein by
reference to Exhibit 10.23 of the Company's Form S-4 filed July 30,
2004.
10.25 Guaranty by The Old Evangeline Downs Capital Corp. in favor of Wells
Fargo Foothill, Inc., dated June 16, 2004 - incorporated herein by
reference to Exhibit 10.25 of the Company's Form S-4 filed July 30,
2004.
31.1 Certification of M. Brent Stevens, Chief Executive Officer, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 15d-l4 of
the Securities Exchange Act, as amended.
31.2 Certification of Natalie A. Schramm, Chief Financial Officer, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 15d-14 of
the Securities Exchange Act, as amended.
-29-
(b) Reports on Form 8-K
(1) Form 8-K, filed by Diamond Jo, LLC and Peninsula Gaming Corp.,
April 19, 2004.
Item 7(c). Exhibits. Item 9.Regulation FD Disclosure. Press
release, dated April 16, 2004, announcing.(i) the issuance by
Diamond Jo, LLC's $233 million aggregate principal amount of 8
3/4% Senior Secured Notes due 2012, (ii) Diamond Jo, LLC's
election to redeem all of its 12 1/4% Senior Secured Notes due
2006, and (iii) the purchase by The Old Evangeline Downs, LLC
("OED") for cash of $116,290,000 aggregate principal amount of its
13% Senior Secured Notes due 2010 tendered in its tender offer
commenced on March 9, 2004.
(2) Form 8-K, filed by Diamond Jo, LLC and Peninsula Gaming Corp.
(formerly known as The Old Evangeline Downs Capital Corp.), May 13
2004.
Item 7. Financial Statements and Exhibits. Item 9. Regulation FD
Disclosure. Press release, dated May 13, 2004, announcing the
financial results of Diamond Jo, LLC for the quarter ended March
31, 2004.
-30-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dubuque, State of Iowa on
August 16, 2004.
PENINSULA GAMING, LLC
By: /s/ M. Brent Stevens
-------------------------
M. Brent Stevens
Chief Executive Officer
By: /s/ Jonathan Swain
-------------------------
Jonathan Swain
Chief Operating Officer
By: /s/ Natalie A. Schramm
-------------------------
Natalie A. Schramm
Chief Financial Officer
PENINSULA GAMING CORP.
By: /s/ M. Brent Stevens
-------------------------
M. Brent Stevens
Chief Executive Officer
By: /s/ Natalie A. Schramm
--------------------------
Natalie A. Schramm
Chief Financial Officer
DIAMOND JO, LLC
By: /s/ M. Brent Stevens
--------------------------
M. Brent Stevens
Chief Executive Officer
By: /s/ Jonathan Swain
--------------------------
Jonathan Swain
Chief Operating Officer
By: /s/ Natalie A. Schramm
--------------------------
Natalie A. Schramm
Chief Financial Officer
THE OLD EVANGELINE DOWNS, L.L.C.
By: /s/ M. Brent Stevens
--------------------------
M. Brent Stevens
Chief Executive Officer
-31-
By: /s/ Jonathan Swain
--------------------------
Jonathan Swain
Chief Operating Officer
By: /s/ Natalie A. Schramm
--------------------------
Natalie A. Schramm
Chief Financial Officer
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