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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
---------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------------------
Commission file number 33-69716
-----------------------------------------------------
GB PROPERTY FUNDING CORP.
GB HOLDINGS, INC.
GREATE BAY HOTEL AND CASINO, INC.
- --------------------------------------------------------------------------------
(Exact name of each Registrant as specified in its charter)
DELAWARE 75-2502290
DELAWARE 75-2502293
NEW JERSEY 22-2242014
(States or other jurisdictions of (I.R.S. Employer
incorporation or organization) Identification No."s)
c/o Sands Hotel & Casino
Indiana Avenue & Brighton Park
Atlantic City, New Jersey 08401
- ----------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(Registrants' telephone number, including area code): (609) 441-4517
-------------------------
(Not Applicable)
- -------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report.)
Indicate by check mark whether each of the Registrants (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
Registrants were required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer"s classes
of common stock, as of the last practicable date.
Registrant Class Outstanding at May 12, 2003
- ----------------------------------- ------------------------------- ----------------------------
GB Property Funding Corp. Common stock, $1.00 par value 100 shares
GB Holdings, Inc. Common stock, $.01 par value 10,000,000 shares
Greate Bay Hotel and Casino, Inc. Common stock, no par value 100 shares
GB HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31, December 31,
2003 2002
------------- -------------
Current Assets:
Cash and cash equivalents $ 46,611,000 $ 50,645,000
Accounts receivable, net of allowances
of $10,578,000 and $11,301,000, respectively 4,715,000 4,976,000
Inventories 1,831,000 1,857,000
Income tax deposits 1,361,000 1,359,000
Prepaid expenses and other current assets 1,803,000 3,067,000
------------- -------------
Total current assets 56,321,000 61,904,000
------------- -------------
Property and Equipment:
Land 54,344,000 54,344,000
Buildings and improvements 91,661,000 91,657,000
Equipment 46,943,000 46,119,000
Construction in progress 4,672,000 3,597,000
------------- -------------
197,620,000 195,717,000
Less - accumulated depreciation and
amortization (29,351,000) (26,095,000)
------------- -------------
Property and equipment, net 168,269,000 169,622,000
------------- -------------
Other Assets:
Obligatory investments, net of allowances of
$10,233,000 and $10,028,000, respectively 10,314,000 10,069,000
Other assets 2,928,000 3,117,000
------------- -------------
Total other assets 13,242,000 13,186,000
------------- -------------
$ 237,832,000 $ 244,712,000
============= =============
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated financial statements.
2
GB HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Unaudited)
March 31, December 31,
2003 2002
------------- -------------
Current Liabilities
Accounts payable $ 4,469,000 $ 5,598,000
Accrued liabilities -
Salaries and wages 3,978,000 3,717,000
Interest 67,000 3,092,000
Gaming obligations 3,161,000 3,752,000
Insurance 1,875,000 1,805,000
Other 5,818,000 3,955,000
------------- -------------
Total current liabilities 19,368,000 21,919,000
------------- -------------
Long-Term Debt, net of current maturities 110,000,000 110,000,000
------------- -------------
Other Noncurrent Liabilities 3,517,000 3,445,000
------------- -------------
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $.01 par value per share;
20,000,000 shares authorized; 0 shares outstanding -- --
Common Stock, $.01 par value per share;
20,000,000 shares authorized;
10,000,000 shares issued and outstanding 100,000 100,000
Additional paid-in capital 124,900,000 124,900,000
Accumulated deficit (20,053,000) (15,652,000)
------------- -------------
Total shareholders' equity 104,947,000 109,348,000
------------- -------------
$ 237,832,000 $ 244,712,000
============= =============
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated financial statements.
3
GB HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
----------------------------
2003 2002
------------ ------------
Revenues:
Casino $ 43,639,000 $ 55,670,000
Rooms 2,459,000 2,746,000
Food and beverage 4,664,000 6,465,000
Other 883,000 928,000
------------ ------------
51,645,000 65,809,000
Less - promotional allowances (11,844,000) (12,565,000)
------------ ------------
Net revenues 39,801,000 53,244,000
------------ ------------
Expenses:
Casino 31,886,000 36,819,000
Rooms 434,000 1,105,000
Food and beverage 2,056,000 2,489,000
Other 604,000 733,000
General and administrative 2,522,000 2,912,000
Depreciation and amortization 3,731,000 3,243,000
Loss (gain) on disposal of assets 4,000 (15,000)
------------ ------------
Total expenses 41,237,000 47,286,000
------------ ------------
Income/(loss) from operations (1,436,000) 5,958,000
------------ ------------
Non-operating income (expense):
Interest income 189,000 290,000
Interest expense (2,995,000) (2,730,000)
------------ ------------
Total non-operating expense, net (2,806,000) (2,440,000)
------------ ------------
Income(loss) before income taxes (4,242,000) 3,518,000
Income tax provision (159,000) (1,260,000)
------------ ------------
Net income/(loss) $ (4,401,000) $ 2,258,000
============ ============
Basic/diluted income/(loss) per common share $ (0.44) $ 0.23
============ ============
Basic/diluted weighted average common shares outstanding 10,000,000 10,000,000
============ ============
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated financial statements.
4
GB HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------------
2003 2002
------------ ------------
OPERATING ACTIVITIES:
Net income (loss) $ (4,401,000) $ 2,258,000
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 3,731,000 3,243,000
Loss (gain) on disposal of assets 4,000 (15,000)
Provision for doubtful accounts 331,000 315,000
Increase in accounts receivable (70,000) (75,000)
Decrease in accounts payable
and accrued liabilities (2,534,000) (3,857,000)
Decrease in other current assets 1,282,000 1,874,000
Decrease in other noncurrent assets and liabilities 92,000 78,000
------------ ------------
Net cash (used in) provided by operating activities (1,565,000) 3,821,000
------------ ------------
INVESTING ACTIVITIES:
Purchase of property and equipment (1,903,000) (1,923,000)
Proceeds from disposition of assets 2,000 15,000
Purchase of obligatory investments (568,000) (670,000)
------------ ------------
Net cash used in investing activities (2,469,000) (2,578,000)
------------ ------------
FINANCING ACTIVITIES:
Repayments of long-term debt -- (4,000)
------------ ------------
Net cash used in financing activities -- (4,000)
------------ ------------
Net increase (decrease) in cash and cash equivalents (4,034,000) 1,239,000
Cash and cash equivalents at beginning of period 50,645,000 57,369,000
------------ ------------
Cash and cash equivalents at end of period $ 46,611,000 $ 58,608,000
============ ============
The accompanying notes to condensed consolidated financial statements
are an integral part of these condensed consolidated financial statements.
5
GB HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Organization, Business and Basis of Presentation
The condensed consolidated financial statements include the accounts of
GB Holdings, Inc. and subsidiaries ("Holdings" or the "Company"). All
significant intercompany transactions and balances have been eliminated in
consolidation. In management's opinion, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the condensed
consolidated financial position as of March 31, 2003 and the condensed
consolidated results of operations for the three months ended March 31, 2003 and
2002 have been made. The results set forth in the condensed consolidated
statement of operations for the three months ended March 31, 2003 are not
necessarily indicative of the results to be expected for the full year.
The condensed consolidated financial statements were prepared following
the requirements of the Securities and Exchange Commission (SEC) for interim
reporting. As permitted under those rules, certain footnotes or other financial
information that are normally required by GAAP (accounting principles generally
accepted in the United States of America) can be condensed or omitted.
The Company is responsible for the unaudited financial statements
included in this document. As these are condensed financial statements, they
should be read in conjunction with the consolidated financial statements and
notes included in the Company's latest Form 10-K.
(2) Income Taxes
The components of the benefit (provision) for income taxes are as
follows:
Three Months Ending March 31,
--------------------------
2003 2002
----------- -----------
Federal income tax benefit (provision):
Current $ -- $(1,260,000)
Deferred -- --
State income tax benefit (provision):
Current (159,000) --
Deferred -- --
----------- -----------
$ (159,000) $(1,260,000)
=========== ===========
Federal and State income tax benefits or provisions are based upon the
results of operations for the current period and the estimated adjustments for
income tax purposes of certain nondeductible expenses.
Due to recurring losses, the Company has not recorded Federal income tax
for the three months ended March 31, 2003.
6
GB HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The State income tax provision of $159,000 for the three months ended
March 31, 2003 is a result of applying the statutory Alternative Minimum
Assessment rate of 0.4% to gross receipts, as defined in the Business Tax Reform
Act.
(3) Transactions with Related Parties
Greate Bay Hotel and Casino, Inc.'s ("GBHC") rights to the trade name
"Sands" (the "Trade Name") were derived from a license agreement between Greate
Bay Casino Corporation and an unaffiliated third party. Amounts payable by GBHC
for these rights were equal to the amounts paid to the unaffiliated third party.
GBHC was assigned by High River Limited Partnership ("High River") the rights
under a certain agreement with the owner of the Trade Name to use the Trade Name
as of September 29, 2000 through May 19, 2086 subject to termination rights for
a fee after a certain minimum term. High River is an entity controlled by Carl
C. Icahn. High River received no payments for its assignment of these rights.
Payment is made directly to the owner of the Trade Name. Such charges amounted
to $59,000 and $68,000, respectively, for the three months ended March 31, 2003
and 2002.
(4) Legal Proceedings
The Company filed tax appeals with the New Jersey Tax Court (the "NJ Tax
Court") challenging the amount of its real property assessment for calendar
years 1996 through 2001, inclusive, and filed an appeal for calendar year 2002
with the Atlantic County Tax Board ("AC Tax Board"). The City of Atlantic City
also appealed the amount of assessments for the years 1996 through 2001,
inclusive, and filed a cross-petition with the Atlantic County Tax Board for
calendar year 2002. The AC Tax Board declined to hear the appeal and therefore
the appeal and cross-petition for calendar year 2002 is now pending before the
NJ Tax Court. The Sands has also filed a tax appeal for calendar year 2003 with
the New Jersey Tax Court.
The Company discovered certain failures relating to currency transaction
reporting and self-reported the situation to the applicable regulatory agencies.
The Company conducted an internal examination of the matter and the New Jersey
Division of Gaming Enforcement conducted a separate review. The Company has
revised internal control processes and taken other measures to address the
situation. The Company may be subjected to regulatory sanctions, which may
include cash penalties. However, the potential cash penalties cannot be
estimated at this time.
The Company is a party in various legal proceedings with respect to the
conduct of casino and hotel operations and has received employment related
claims. Although a possible range of losses cannot be estimated, in the opinion
of management, based upon the advice of counsel, the Company does not expect
settlement or resolution of these proceedings or claims to have a material
adverse impact upon the consolidated financial position or results of operations
of the Company, but the outcome of litigation and the resolution of claims is
subject to uncertainties and no assurances can be given. The accompanying
condensed consolidated financial statements do not include any adjustments that
might result from these uncertainties.
7
On February 26, 2003, the Sands received a letter from counsel for Mr.
Frederick H. Kraus, Executive Vice President, General Counsel and Secretary,
indicating that he had been retained to represent Mr. Kraus "in regards to a
constructive discharge, breach of contract, severance pay" and other claims.
This matter has been referred to legal counsel for evaluation. Management has
not yet determined whether or not the claims made by Mr. Kraus would, if
adversely determined, materially impact the financial position or results of
operations of the Company.
(5) Income (Loss) Per Share
Statement of Financial Accounting Standards No. 128: "Earnings Per
Share", requires, among other things, the disclosure of basic and diluted
earnings per share for public companies. Since the capital structure of the
Company is simple, in that no potentially dilutive securities were outstanding
during the periods presented, basic and diluted income (loss) per share are the
same. Basic income (loss) per share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding.
(6) Supplemental Cash Flow Information
Cash paid for interest and income taxes during the three months ended
March 31, 2003 and 2002 are set forth below:
Three Months Ended
March 31,
---------------------------
2002 2001
---------- ----------
Interest paid $6,050,000 $6,059,000
========== ==========
Interest capitalized $ 91,000 $ 379,000
========== ==========
Income taxes paid $ 31,000 $ --
========== ==========
(7) New Accounting Pronouncement
On January 1, 2003, the Company adopted FAS No. 143, "Asset Retirement
Obligations" ("SFAS No. 143"), which provides the accounting requirements for
retirement obligations associated with tangible long-lived assets. This
statement requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. The adoption of FAS
No. 143 did not have a material impact on the Company's condensed consolidated
financial statements.
8
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements
about the business, financial condition and prospects of the Company. The actual
results could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties. Such risks and
uncertainties are beyond management's ability to control and, in many cases,
cannot be predicted by management. When used in this Quarterly Report on Form
10-Q, the words "believes", "estimates", "anticipates", "expects", "intends" and
similar expressions as they relate to the Company or its management are intended
to identify forward-looking statements (see "Private Securities Litigation
Reform Act" below).
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
At March 31, 2003, the Company had cash and cash equivalents of $46.9
million. The Company used $1.6 million of net cash from operations during the
three months ended March 31, 2003 compared to generating $3.8 million during the
same prior year period. During the three months ended March 31, 2003, the
Company recorded $3.7 million in depreciation and amortization expense.
Amortization of prepaid insurance expense ($780,000) and prepaid slot license
fees ($305,000) also contributed to the decrease in other current assets.
Investing Activities
Capital expenditures at the Sands for the three months ended March 31,
2003 amounted to approximately $1.9 million These expenditures included but were
not limited to renovations to the new Pacific Avenue bus center, the Platinum
Club players lounge and the new bus patron lobby. In order to enhance its
competitive position in the market place, the Sands may determine to incur
additional substantial costs and expenses to maintain, improve and expand its
facilities and operations. The Company may require additional financing in
connection with those activities.
The Sands is required by the Casino Act to make certain quarterly
deposits based on gross revenue with the Casino Reinvestment Development
Authority ("CRDA") in lieu of a certain investment alternative tax. Deposits for
the three months ended March 31, 2003 amounted to $568,000.
Financing Activities
There were no financing activities during the three months ended March
31, 2003. As of March 31, 2003, the only scheduled payment of long-term debt is
the $110 million for New Notes due September 30, 2005.
Summary
Management believes that cash flows to be generated from operations
during 2003, as well as available cash reserves, will be sufficient to meet its
operating plan and provide for scheduled capital expenditures of
9
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
approximately $12 million. However, any significant other capital expenditures
may require additional financing.
Critical Accounting Policies and Estimates
The Company's discussion and analysis of its results of operations and
financial condition are based upon its condensed consolidated financial
statements that have been prepared in accordance with generally accepted
accounting principles in the United States of America ("US GAAP"). The
preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities. Estimates and assumptions are evaluated on an ongoing
basis and are based on historical and other factors believed to be reasonable
under the circumstances. The results of these estimates may form the basis of
the carrying value of certain assets and liabilities and may not be readily
apparent from other sources. Actual results, under conditions and circumstances
different from those assumed, may differ from estimates. The impact and any
associated risks related to estimates, assumptions, and accounting policies are
discussed within Management's Discussion and Analysis of Results of Operations
and Financial Condition, as well as in the Notes to the Condensed Consolidated
Financial Statements, if applicable, where such estimates, assumptions, and
accounting policies affect the Company's reported and expected financial
results.
The Company believes the following accounting policies are critical to
its business operations and the understanding of results of operations and
affect the more significant judgments and estimates used in the preparation of
its condensed consolidated financial statements:
Allowance for Doubtful Accounts - The Company maintains accounts
receivable allowances for estimated losses resulting from the inability of its
customers to make required payments. Additional allowances may be required if
the financial condition of the Company's customers deteriorates.
Commitments and Contingencies - Litigation - On an ongoing basis, the
Company assesses the potential liabilities related to any lawsuits or claims
brought against the Company. While it is typically very difficult to determine
the timing and ultimate outcome of such actions, the Company uses its best
judgment to determine if it is probable that it will incur an expense related to
the settlement or final adjudication of such matters and whether a reasonable
estimation of such probable loss, if any, can be made. In assessing probable
losses, the Company makes estimates of the amount of insurance recoveries, if
any. The Company accrues a liability when it believes a loss is probable and the
amount of loss can be reasonably estimated. Due to the inherent uncertainties
related to the eventual outcome of litigation and potential insurance recovery,
it is possible that certain matters may be resolved for amounts materially
different from any provisions or disclosures that the Company has previously
made.
Impairment of Long-Lived Assets - The Company periodically reviews
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Assumptions and estimates used in the determination of impairment losses, such
as future cash flows and disposition costs, may affect the carrying value of
long-lived assets and possible impairment expense in the Company's condensed
consolidated financial statements.
10
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Self-Insurance - The Company retains the obligation for certain losses
related to customer's claims of personal injuries incurred while on the Company
property. The Company accrues for outstanding reported claims, claims that have
been incurred but not reported and projected claims based upon management's
estimates of the aggregate liability for uninsured claims using historical
experience, an adjusting company's estimates and the estimated trends in claim
values. Although management believes it has the ability to adequately project
and record estimated claim payments, it is possible that actual results could
differ significantly from the recorded liabilities.
Allowance for Obligatory Investments - The Company maintains obligatory
investment allowances for its investments made in satisfaction of its CRDA
obligation. The obligatory investments may ultimately take the form of CRDA
issued bonds, which bear a below market rate of interest, direct investments or
donations. Management bases its reserves on the type of investments the
obligation has taken or is expected to take. CRDA bonds bear interest at
approximately one-third below market rates. Donations of the Sands' quarterly
deposits to the CRDA have historically yielded a 51% future credit or refund of
obligations. Therefore, management has reserved the predominant balance of its
obligatory investments at between 33% and 49%.
11
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS
Gaming Operations
Information contained herein, regarding Atlantic City casinos other than
the Sands, was obtained from reports filed with the Casino Control Commission.
The following table sets forth certain unaudited financial and operating
data relating to the Sands' and all other Atlantic City casinos' capacities,
volumes of play, hold percentages and revenues:
Three Months Ended
March 31,
-------------------
2003 2002
-------- --------
(Dollars in Thousands)
Units: (at end of period)
Table Games - Sands 40 71
- Atlantic City (ex. Sands) 1,163 1,190
Slot Machines - Sands 2,295 2,061
- Atlantic City (ex. Sands) 36,131 35,251
Gross Wagering (1)
Table Games - Sands $ 45,171 $ 95,017
- Atlantic City (ex. Sands) 1,519,996 1,587,589
Slot Machines - Sands 479,250 582,553
- Atlantic City (ex. Sands) 8,715,722 9,032,470
Hold Percentages (2)
Table Games - Sands 14.0% 15.6%
- Atlantic City (ex. Sands) 16.7% 16.3%
Slot Machines - Sands 7.8% 6.9%
- Atlantic City (ex. Sands) 8.0% 8.1%
Revenues (2)
Table Games - Sands $ 6,319 $ 14,853
- Atlantic City (ex. Sands) 253,146 258,046
Slot Machines - Sands 37,162 40,227
- Atlantic City (ex. Sands) 699,039 728,202
Other (3) - Sands 158 590
- Atlantic City (ex. Sands) N/A N/A
- ----------
(1) Gross wagering consists of the total value of chips purchased for table
games (excluding poker) and keno wagering (the "Drop") and coins wagered
in slot machines (the "Handle").
(2) Casino revenues consist of the portion of gross wagering that a casino
retains and, as a percentage of gross wagering, is referred to as the
"hold percentage." The Sands' hold percentages and revenues are
12
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
reflected on an accrual basis. Comparable accrual basis data for the
remainder of the Atlantic City gaming industry as a whole is not
available; consequently, industry hold percentages and revenues are
based on information available from the Commission.
(3) Consists of revenues from poker and simulcast horse racing wagering.
Comparable information for the remainder of the Atlantic City gaming
industry is not available.
Patron Gaming Volume
Information contained herein, regarding Atlantic City casinos other than
the Sands, was obtained from reports filed with the Commission.
Table game drop decreased by $49.8 million (52.5%) during the three
months ended March 31, 2003 compared with the same prior year period. By
comparison, according to Commission reports, table game drop at all other
Atlantic City casinos during the same period decreased 4.3%. The Company's
decrease in table game drop is a direct result of a decrease in the number of
table games from 71 during the 2002 period to 40 during the 2003 period. The
decrease in the number of table games was the result of a change in business
strategy, begun in the second quarter of 2002, to reduce the table game business
and increase the slot machine business. Historically the table game business has
a lower profit margin percentage than the slot machine business. This strategy
also was to focus specifically on the higher profit margin mass slot player
business. This strategy reduced the number of table games from 71 to 26 in the
second quarter of 2002. By late in the third quarter of 2002 it became apparent
that this strategy could not generate an increase in slot revenue sufficient to
overcome the loss in table revenue. Richard Brown was appointed Chief Executive
Officer on October 9, 2002. The Company strategy shifted to, among other things,
increasing the number of table games to 40 by the end of 2002. During the 2003
period, the Company allocated some of its marketing dollars and focus to the
table game business and as such generated an increase in table game drop. In
continuing with its plan to balance the gaming experience between table games
and slot machines, the Company added 10 additional table games to the casino
floor in April 2003. Table game hold percentage decreased 1.5 percentage points
to 14.0% for the three months ended March 31, 2003 compared to the same period
last year. This is directly attributable to one high end patron winning
approximately $1 million in March 2003. Aggregate gaming space at all other
Atlantic City casinos increased by approximately 114,000 square feet (9.8%) at
March 31, 2003 compared to March 31, 2002. The amount of gaming space at the
Sands decreased approximately 1,000 square feet (1.3%) between periods.
Slot machine handle decreased $103.3 million (17.7%) during the three
months ended March 31, 2003, compared with the same period of 2002. By
comparison, the percentage decrease in slot machine handle for all other
Atlantic City casinos in the first three months of 2003 vs. the same period in
2002 was 3.5%. The Company's 2003 decrease in handle is attributed to (i) severe
winter weather during February 2003 inclusive of a major snowstorm for
President's Day weekend, (ii) the lingering effects on the previously described
business strategy of mid 2002 focusing on mass slot play to the exclusion of
higher end slot play, (iii) reduced hotel room occupancy from the tour and
travel groups during mid-week, which also is related to the previously described
business strategy of mid 2002 focusing on mass slot play to the exclusion of the
mid-level tour and travel groups. In late 2002, the company strategy shifted
13
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
back to focus on the mid to high level slot player, and while multiple tactics
were in place during the first quarter of 2003 they were not fully matured
during this period in order to produce at the level of 2002. This decrease in
slot machine handle is offset slightly by an increase in hold percentage to 8.0%
from 7.1% in the 2003 period compared to the 2002 period. The number of slot
machines increased 11.4% at the Sands to 2,295 at March 31, 2003 compared to
March 31, 2002. On an industry-wide basis, the number of slot machines increased
3.9% in the first quarter of 2003 compared to the first quarter of 2002. (iv)
The Company's increase in the number of slot machines is over weighted to lower
denomination units. The Company is reevaluating the denomination mix to improve
overall slot performance.
The following table sets forth the changes in operating revenues and
expenses (unaudited) for the three month period ended March 31, 2003 and 2002:
Increase (Decrease)
2003 2002 $ %
-------- -------- -------- ------
(Dollars In Thousands)
Revenues:
Casino $ 43,639 $ 55,670 $(12,031) (21.61)
Rooms 2,459 2,746 (287) (10.45)
Food and Beverage 4,664 6,465 (1,801) (27.86)
Other 883 928 (45) (4.85)
Promotional Allowances 11,844 12,565 (721) (5.74)
Expenses:
Casino 31,886 36,819 (4,933) (13.40)
Rooms 434 1,105 (671) (60.72)
Food and Beverage 2,056 2,489 (433) (17.40)
Other 604 733 (129) (17.60)
General and Administrative 2,522 2,912 (390) (13.39)
Depreciation and Amortization 3,731 3,243 488 15.05
Loss (gain) on disposal of assets 4 (15) (19) 126.67
Income/(loss) from Operations (1,436) 5,958 (7,394) (124.10)
Non-operating expense, net 2,806 2,440 366 15.00
Income Tax Provision (159) (1,260) (1,101) 87.38
Revenues
Overall casino revenues decreased $12.0 million for the three months
ended March 31, 2003 compared to the same prior year period. The decrease in
casino revenue is directly attributable to reasons detailed in the reductions in
table game drop and slot machine handle.
14
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Room's revenue decreased $287,000 for the three months ended March 31,
2003 compared to the same prior year period as a result of decreased occupancy.
The decrease in occupancy was attributable to the lingering affects of the
previously mentioned mid 2002 strategy to exclude the cash and tour and travel
room sales and focus on lower end data base occupied rooms. As this strategy
changed in late 2002, its tactics were not fully mature in the 2003 period to
meet the performance of the 2002 period.
Food and beverage revenues decreased $1.8 million for the three months
ended March 31, 2003 compared to the same prior year period, which is inclusive
of a decrease of approximately 1 million in complimentary revenue, due to a
decrease in overall casino patron volume as previously described in table game
drop and slot handle results.
Other revenues decreased $45,000 for the three months ended March 31,
2003 compared to the same prior year period as a result of a decrease in overall
patron volume throughout the casino complex.
Promotional Allowances
Promotional allowances are comprised of (i) the estimated retail value
of goods and services provided free of charge to casino customers under various
marketing programs, (ii) the cash value of redeemable points earned under a
customer loyalty program based on the amount of slot play and (iii) coin and
cash coupons and discounts. As a percentage of casino revenues, promotional
allowances increased to 27.1% during the three months ended March 31, 2003 from
22.6% during the same period of 2002. The increase in this ratio is directly
attributable to, (i) the Company's focus on recapture of lost market share due
to the previously described mid 2002 business strategy, (ii) severe winter
weather in February 2003, and (iii) the table game win of approximately $1
million of one high end patron in March 2003.
Departmental Expenses
Casino expenses at the Sands decreased by $4.9 million for the three
months ended March 1, 2003 compared to the same prior year period. The decrease
in casino expenses is primarily due to the reduction of payroll expenses ($1.8
million) due to the reduction in table games. Also, the lower complimentary
costs associated with food and beverage provided free of charge contributed to
the favorable variance ($1.3 million). Gaming revenue tax was reduced $954,000
as a result of lower casino revenues. Direct mail and radio advertising
increased $352,000 due to a new marketing campaign in the first quarter. Special
events costs increased $254,000 as a result of an increase in the number of
events.
Rooms expenses decreased $671,000 for the three months ended March 31,
2003 compared to the same prior year period. The decreases were due to a larger
share of costs allocated to casino expenses ($269,000) as a result of increased
room complimentaries generated by casino operations. Total complimentary room
nights increased by 9,961 or 39.2% over the same prior year period. Rooms
payroll and benefits decreased $266,000 year to year due to a reorganization of
management. Also contributing to the favorable variance were reduced costs for
linen usage ($47,000) and outside laundry expense ($46,000).
15
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Food and beverage expenses decreased $433,000 for the three months
ended March 31, 2003 compared to the same prior year period. The decreases were
due to reductions in payroll and benefits ($1.5 million) and food and beverage
cost of sales ($445,000), which were a result of a reorganization of management,
a reduction in unproductive operating hours in certain outlets and closing the
employee cafeteria production kitchen. Food and beverage costs allocated to
Casino expense declined ($1.4 million) compared to 2002 as a result of a
combination of lower complimentary food and beverage activity and lower food and
beverage production costs.
Other expenses decreased $129,000 for the three months ended March 31,
2003, compared to the same prior year period as a result of an increase in the
allocation of entertainment complimentaries by casino operations ($190,000).
General and Administrative Expenses
General and administrative expenses decreased $390,000 for the three
months ended March 31, 2003, compared to the same period last year. The
decreases were due to lower payroll and benefits as a result of a reduction in
workforce at the beginning of 2003 ($859,000). These were offset by increases in
insurance ($318,000), property taxes ($223,000) and utilities ($122,000). The
utilities increase was primarily due to more severe winter weather in 2003 than
2002.
Depreciation and Amortization
Depreciation and amortization expense increased $488,000 for the three
month period ended March 31, 2003, compared to the same prior year period due to
an increase in depreciation expense ($615,000) as a result of the continued
investment in infrastructure and equipment during the current and preceding
year. These were offset by lower amortization of CRDA losses ($41,000) as a
result of reduced casino revenues.
Interest Income and Expense
Interest income decreased by $101,000 during the three month period
ended March 31, 2003, compared to the same prior year period. The decrease was
due to smaller earnings on decreased cash reserves and lower interest rates.
Interest expense increased $265,000 during the three month period ended
March 31, 2003, compared to the same period in 2002. The increase is due to a
larger accrual of capitalized interest in 2002 ($379,000) compared to 2003
($91,000). It is the Company's policy to capitalize interest on construction
projects in excess of $250,000.
Income Tax Benefit (Provision)
Federal and State income tax benefits or provisions are based upon the
results of operations for the current period and the estimated adjustments for
income tax purposes of certain nondeductible expenses.
16
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Due to recurring losses, the Company has not recorded Federal income tax
for the three months ended March 31, 2003.
The State income tax provision of $159,000 for the three months ended
March 31, 2003 is a result of applying the statutory Alternative Minimum
Assessment rate of 0.4% to gross receipts, as defined in the Business Tax Reform
Act.
Inflation
Management believes that, in the near term, modest inflation and
increased competition within the gaming industry for qualified and experienced
personnel will continue to cause increases in operating expenses, particularly
labor and employee benefits costs.
Seasonality
Historically, the Sands' operations have been highly seasonal in nature,
with the peak activity occurring from May to September. Consequently, the
results of operations for the first and fourth quarters are traditionally less
profitable than the other quarters of the fiscal year. In addition, the Sands'
operations may fluctuate significantly due to a number of factors, including
chance. Such seasonality and fluctuations may materially affect casino revenues
and profitability.
Private Securities Litigation Reform Act
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by Holdings, GB Property
Funding or GBHC with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made by such
companies) contains statements that are forward-looking, such as statements
relating to future expansion plans, future construction costs and other business
development activities including other capital spending, economic conditions,
financing sources, competition and the effects of tax regulation and state
regulations applicable to the gaming industry in general or Holdings, GB
Property Funding and GBHC in particular. Such forward-looking information
involves important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results may differ from
those expressed in any forward-looking statements made by or on behalf of
Holdings, GB Property Funding or GBHC. These risks and uncertainties include,
but are not limited to, those relating to development and construction
activities, dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates), domestic or global
economic conditions, activities of competitors and the presence of new or
additional competition, fluctuations and changes in customer preference and
attitudes, changes in federal or state tax laws or the administration of such
laws and changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions).
17
GB HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from changes in market rates and
prices, such as interest rates and foreign currency exchange rates. The Company
does not have securities subject to interest rate fluctuations and has not
invested in derivative-based financial instruments.
Item 4. CONTROLS AND PROCEDURES
Within the 90 days prior to the filing of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule 13a-15 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.
18
PART II: OTHER INFORMATION
Item 6.(a) Exhibits
Item 6.(b) Reports on Form 8-K
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Atlantic City, State of New Jersey on May 12, 2003.
GB HOLDINGS, INC.
GB PROPERTY FUNDING CORP.
GREATE BAY HOTEL AND CASINO, INC.
--------------------------------
Registrants
Date: May 12, 2003 By: /s/ Timothy A. Ebling
---------------------- -----------------------------------------
Timothy A. Ebling
Chief Financial Officer
19
CERTIFICATIONS
- --------------
Certification of Chief Executive Officer
Pursuant to 13a-14
of the Securities Exchange Act of 1934, as amended (the "Act")
I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:
(1) I have reviewed the Registrant's Quarterly Report on Form 10-Q for
the period ended March 31, 2003 of the Registrant (the "Report");
(2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in the Report.
(4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:
(i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;
(ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and
(iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
(5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):
(i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and
(ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and
(6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ Richard P. Brown
- -----------------------------------
Name: Richard P. Brown
Date: May 12, 2003
------------
20
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB
Property Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Quarterly Report on Form 10-Q for the period ended March 31, 2003 of the
Registrant (the "Report"):
(1) The Report fully complies with the requirements of Section 13 (a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Registrant.
/s/ Richard P. Brown
- ------------------------------------
Name: Richard P. Brown
Date: May 12, 2003
------------------
21
Certification of Chief Financial Officer
Pursuant to 13a-14
of the Securities Exchange Act of 1934, as amended (the "Act")
I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:
(1) I have reviewed the Registrant's Quarterly Report on Form 10-Q for
the period ended March 31, 2003 of the Registrant (the "Report");
(2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in the Report.
(4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:
(i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;
(ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and
(iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
(5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):
(iii) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and
(iv) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and
(6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ Timothy A. Ebling
- --------------------------------
Name: Timothy A. Ebling
Date: May 12, 2003
-----------------
22
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Quarterly Report on Form 10-Q for the period ended March 31, 2003 of the
Registrant (the "Report"):
(1) The Report fully complies with the requirements of Section 13
(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Registrant.
/s/ Timothy A. Ebling
- -------------------------------------------
Name: Timothy A. Ebling
Date: May 12, 2003
------------
23
Item 6.(a) Exhibits
Item 6.(b) Reports on Form 8-K
SIGNATURES
-----------
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Atlantic City, State of New Jersey on May 12, 2003.
GB HOLDINGS, INC.
GB PROPERTY FUNDING CORP.
GREATE BAY HOTEL AND CASINO, INC.
---------------------------------
Registrants
Date: May 12, 2003 By:
------------------- --------------------------------
Timothy A. Ebling
Chief Financial Officer
24
CERTIFICATIONS
Certification of Chief Executive Officer
Pursuant to 13a-14
of the Securities Exchange Act of 1934, as amended (the "Act")
I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:
(1) I have reviewed the Registrant's Quarterly Report on Form 10-Q for
the period ended March 31, 2003 of the Registrant (the "Report");
(2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in the Report.
(4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:
(i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;
(ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and
(iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
(5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):
(v) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and
(vi) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and
(6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
- ---------------------------------------------
Name: Richard P. Brown
Date: May 12, 2003
--------------
25
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB
Property Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Quarterly Report on Form 10-Q for the period ended March 31, 2003 of the
Registrant (the "Report"):
(1) The Report fully complies with the requirements of Section 13
(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Registrant.
- --------------------------------------
Name: Richard P. Brown
Date: May 12, 2003
---------------
26
Certification of Chief Financial Officer
Pursuant to 13a-14
of the Securities Exchange Act of 1934, as amended (the "Act")
I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:
(1) I have reviewed the Registrant's Quarterly Report on Form 10-Q for
the period ended March 31, 2003 of the Registrant (the "Report");
(2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in the Report.
(4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:
(i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;
(ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and
(iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
(5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):
(vii) all significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and
(viii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and
(6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
- ---------------------------------
Name: Timothy A. Ebling
Date: May 12, 2003
------------
27
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Quarterly Report on Form 10-Q for the period ended March 31, 2003 of the
Registrant (the "Report"):
(1) The Report fully complies with the requirements of Section 13
(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Registrant.
- ---------------------------------------------
Name: Timothy A. Ebling
Date: May 12, 2003
------------
28