# ** **

**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, DC 20549**

 

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**FORM10-Q/A**

** **

**Amendment No 1**

 

**ý**** QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended June 30, 2004**

 

**o**** TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thetransition period from          to         **

 

**Commissionfile number  333-114339**

 

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**PREMIERENTERTAINMENT BILOXI LLC**

**and**

**PREMIERFINANCE BILOXI CORP.**

(Exact Name of Registrant as specified in Its Charter)

 
| **Delaware**                                                    | ** ** | **20-0495680 / 20-0495563**          |
|-----------------------------------------------------------------|------------|--------------------------------------|
| (State or Other Jurisdiction of  Incorporation or Organization) |       | (I.R.S Employer Identification  No.) |
|                                                            |       |                                 |
| **111 Lameuse Street, Suite 104  Biloxi, MS 39530**             |
| (Address, including zip code, of Principal Executive Offices)   |
|                                                            |       |                                 |
| **(228) 374-7625**                                              |
| (Registrant’s Telephone Number, Including Area Code)       |

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days  YES ý   NO o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act). YES o   NO  ý

 

On June 30, 2004, the registrant had no shares of common stockoutstanding.

 

 

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**Premier Entertainment Biloxi LLC**

**(*A Development Stage Company*)**

**Index**

 
| **Part I.**    | **Financial Information**                                                                                                                                                                                                                                      |   |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|           |                                                                                                                                                                                                                                                           |   |
| **Item 1.**    | Financial Statements                                                                                                                                                                                                                                           |   |
| ** **     | Condensed  Consolidated Balance Sheets as of March 31, 2004 (unaudited), June 30, 2004  (unaudited) and December 31, 2003                                                                                                                                      | 1      |
| ** **     | Condensed  Consolidated Statements of Operations for the Three Months ended March 31,  2004 (unaudited) Three and Six Months ended June 30, 2004 and 2003 and the  period from commencement of operations on March 27, 2003 through June 30,  2004 (unaudited) | 2      |
|           | Condensed  Consolidated Statement of Cash Flows for the Six Months ended June 30, 2004  and 2003 and the period from commencement of operations on March 27, 2003  through June 30, 2004 (unaudited)                                                           | 3      |
|           | Condensed  Consolidated Statement of Cash Flows for the three months ended March 31,  2004 (unaudited), and the period from commencement of operations on March 27,  2003 through March 31, 2004 (unaudited)                                                   | 4      |
|           | Notes  to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                                                              | 5      |
|           |                                                                                                                                                                                                                                                           |   |
| **Item  2.**   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                    | 9      |
|           |                                                                                                                                                                                                                                                           |   |
| **Item  3.**   | Quantitative  and Qualitative Disclosures About Market Risk                                                                                                                                                                                                    | 11     |
|           |                                                                                                                                                                                                                                                           |   |
| **Item 4.**    | Controls and Procedures                                                                                                                                                                                                                                        | 12     |
|           |                                                                                                                                                                                                                                                           |   |
| **Part II.**   | **Other Information**                                                                                                                                                                                                                                          |   |
|           |                                                                                                                                                                                                                                                           |   |
| **Item 6.**    | Exhibits                                                                                                                                                                                                                                                       | 13     |
|           |                                                                                                                                                                                                                                                           |   |
| **Signatures** | 14                                                                                                                                                                                                                                                             |
|           |                                                                                                                                                                                                                                                           |   |
| **Exhibits**   | 15                                                                                                                                                                                                                                                             |

 

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**EXPLANATORY NOTE**

 

This Amendment No. 1 to ourquarterly report 10-Q for the period ended June 30, 2004 is being filed solely tocorrect an error related to the calculation of capitalized interest. Thiscorrection is for the period ending March 31, 2004 and the period ending June30, 2004. In order to preserve the nature and character of the disclosures asoriginally filed, except to address the error in the calculation of capitalizedinterest, no attempt has been made in this Amendment No. 1 to modify or updatedisclosures as presented in our Quarterly Report on Form 10-Q for the periodended June 30, 2004 for events that occurred subsequent to its original filingon September 3, 2004. Accordingly this Amendment No. 1 should be read inconjunction with our subsequent filings with the Securities and ExchangeCommission. This correction changes our previously reported net loss andbalance sheet as of March 31, 2004 and June 30, 2004.

 

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** **

**PART I -FINANCIAL INFORMATION**

 

**Item 1.    FINANCIAL STATEMENTS**

 

**PREMIER ENTERTAINMENT BILOXI LLC**

**(*A DEVELOPMENT STAGE COMPANY*)**

 

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

** **
| ** **                                       | ** ** | **June 30,  2004**        | ** **  | **March 31,  2004**       | ** ** | **December 31,  2003** | ** ** |
|--------------------------------------------------|------------|---------------------------|-------------|---------------------------|------------|------------------------|------------|
| ** **                                       | ** ** | **Restated  (Unaudited)** | ** **  | **Restated  (Unaudited)** | ** ** | ** **             | ** ** |
| **ASSETS**                                       |       |                      |        |                      |       |                   |       |
| Current assets:                                  |       |                      |        |                      |       |                   |       |
| Cash                                             |       | $                         | 896         |                      | $          | 18,534                 |       | $ | 16,908 |   |
| Restricted cash                                  |       | 127,810,384               |        | 136,937,287               |       | —                 |       |
| Government securities - restricted               |       | 33,126,632                |        | 32,946,442                |       | —                 |       |
| Prepaid expenses and other current assets        |       | 74,873                    |        | 188,498                   |       | 274,625                |       |
| Total current assets                             |       | 161,012,785               |        | 170,090,761               |       | 291,533                |       |
|                                             |       |                      |        |                      |       |                   |       |
| Property, plant and equipment, net               |       | 54,790,509                |        | 44,450,635                |       | 36,151,817             |       |
|                                             |       |                      |        |                      |       |                   |       |
| Other assets, net                                |       | 8,124,140                 |        | 8,308,552                 |       | 2,088,961              |       |
|                                             |       |                      |        |                      |       |                   |       |
| Total assets                                     |       | $                         | 223,927,434 |                      | $          | 222,849,948            |       | $ | 38,532,311 |   |
|                                             |       |                      |        |                      |       |                   |       |
| **LIABILITIES AND MEMBERS' EQUITY (DEFICIT)**    |       |                      |        |                      |       |                   |       |
| Current liabilities:                             |       |                      |        |                      |       |                   |       |
| Accounts payable                                 |       | $                         | 2,968,220   |                      | $          | 2,867,611              |       | $ | 2,384,758 |   |
| Accrued interest                                 |       | 7,785,567                 |        | 3,109,624                 |       | 2,521,016              |       |
| Other accrued liabilities                        |       | 27,578                    |        | 7,376                     |       | 90,834                 |       |
| Term loan                                        |       | —                    |        | —                    |       | 34,602,544             |       |
| Total current liabilities                        |       | 10,781,365                |        | 5,984,611                 |       | 39,599,152             |       |
|                                             |       |                      |        |                      |       |                   |       |
| Long-term debt                                   |       | 167,967,135               |        | 167,920,178               |       | —                 |       |
|                                             |       |                      |        |                      |       |                   |       |
| Members’ capital                            |       | 52,775,216                |        | 52,775,216                |       | —                 |       |
| Deficit accumulated during development  stage    |       | (7,596,282                | )      | (3,830,057                | )     | (1,066,841             | )     |
| Total members’ equity (deficit)             |       | 45,178,934                |        | 48,945,159                |       | (1,066,841             | )     |
|                                             |       |                      |        |                      |       |                   |       |
| Total liabilities and members' equity  (deficit) |       | $                         | 223,927,434 |                      | $          | 222,849,948            |       | $ | 38,532,311 |   |

 

Seethe accompanying notes to the unaudited condensed consolidated financialstatements

 

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**PREMIER ENTERTAINMENT BILOXI LLC**

**(*A DEVELOPMENT STAGE COMPANY*)**

 

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

 
| ** **                   | ** ** | **Quarter  ended June 30,** | ** ** | **Six months  ended June 30,** | ** ** | **Period from  commencement of  operations on March 27,  2003, through June 30,** | ** ** |
|------------------------------|------------|-----------------------------|------------|--------------------------------|------------|-----------------------------------------------------------------------------------|------------|
| ** **                   | ** ** | **2004**                    | ** ** | **2003**                       | ** ** | **2004**                                                                          | ** ** | **2003** | ** ** | **2004** | ** ** |
| ** **                   | ** ** | **Restated**                | ** ** | ** **                     | ** ** | **Restated**                                                                      | ** ** | ** ** | ** ** | **Restated** | ** ** |
| **Operating expenses:**      |       |                        |       |                           |       |                                                                              |       |   |   |   |   |
| Preopening expenses          |       | $                           | 485,333    |                           | $          | 208,081                                                                           |       | $ | 781,832 |   | $ | 208,081 |   | $ | 1,646,280 |   |
|                         |       |                        |       |                           |       |                                                                              |       |   |   |   |   |
| Loss from operations         |       | (485,333                    | )          | (208,081                       | )          | (781,832                                                                          | )          | (208,081 | ) | (1,646,280 | ) |
|                         |       |                        |       |                           |       |                                                                              |       |   |   |   |   |
| **Other income (expense):**  |       |                        |       |                           |       |                                                                              |       |   |   |   |   |
| Interest expense             |       | (3,727,128                  | )          | (37,509                        | )          | (6,414,441                                                                        | )          | (37,509 | ) | (6,617,241 | ) |
| Interest income              |       | 446,236                     |       | 12                             |       | 666,832                                                                           |       | 12 |   | 667,239 |   |
|                         |       |                        |       |                           |       |                                                                              |       |   |   |   |   |
| Total other income (expense) |       | (3,280,892                  | )          | (37,497                        | )          | (5,747,609                                                                        | )          | (37,497 | ) | (5,950,002 | ) |
|                         |       |                        |       |                           |       |                                                                              |       |   |   |   |   |
| **Net loss**                 |       | $                           | (3,766,225 | )                              | $          | (245,578                                                                          | )          | $ | (6,529,441 | ) | $ | (245,578 | ) | $ | (7,596,282 | ) |
|                              |            |                             |            |                                |            |                                                                                   |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **                   | ** ** | **Quarter ended  March 31,** | ** ** | **Period from  commencement of  Operations on March 27,  2003, through March 31,** | ** ** |
|------------------------------|------------|------------------------------|------------|------------------------------------------------------------------------------------|------------|
| ** **                   | ** ** | **2004**                     | ** ** | **2004**                                                                           | ** ** |
|                         |       | **Restated**                 |       | **Restated**                                                                       |       |
| **Operating expenses:**      |       |                         |       |                                                                               |       |
| Preopening expenses          |       | $                            | 296,499    |                                                                               | $          | 1,160,947 |   |
|                         |       |                         |       |                                                                               |       |
| Loss from operations         |       | (296,499                     | )          | (1,160,947                                                                         | )          |
|                         |       |                         |       |                                                                               |       |
| **Other income (expense):**  |       |                         |       |                                                                               |       |
| Interest expense             |       | (2,687,313                   | )          | (2,890,113                                                                         | )          |
| Interest income              |       | 220,596                      |       | 221,003                                                                            |       |
|                         |       |                         |       |                                                                               |       |
| Total other income (expense) |       | (2,466,717                   | )          | (2,669,110                                                                         | )          |
|                         |       |                         |       |                                                                               |       |
| **Net loss**                 |       | $                            | (2,763,216 | )                                                                                  | $          | (3,830,057 | ) |

 

Seethe accompanying notes to the unaudited condensed consolidated financialstatements

 

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**PREMIERENTERTAINMENT BILOXI LLC**

**(*A DEVELOPMENT STAGE COMPANY*)**

 

**CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
| ** **                                                                | ** ** | **Six months  ended June 30,** | ** ** | **Period from  commencement of  operations on  March 27, 2003  through June 30,** | ** ** |
|---------------------------------------------------------------------------|------------|--------------------------------|------------|-----------------------------------------------------------------------------------|------------|
|                                                                      |       | **2004**                       |       | **2003**                                                                          |       | **2004** |   |
|                                                                      |       | **Restated**                   |       | ** **                                                                        |       | **Restated** |   |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| **Operating Activities**                                                  |       |                           |       |                                                                              |       |   |   |
| Net loss                                                                  |       | $                              | (6,529,441 | )                                                                                 | $          | (245,578 | ) | $ | (7,596,282 | ) |
| Depreciation and amortization                                             |       | 27,355                         |       | —                                                                            |       | 27,355 |   |
| Amortization of deferred financing costs,  discount and repayment premium |       | 719,245                        |       | 36,624                                                                            |       | 902,370 |   |
| Changes in operating assets and liabilities                               |       | 2,418,734                      |       | (53,818                                                                           | )          | 5,508,096 |   |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| Net cash used in operating activities                                     |       | (3,364,107                     | )          | (262,772                                                                          | )          | (1,158,461 | ) |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| **Investing Activities**                                                  |       | (11,569,777                    | )          | (30,988,601                                                                       | )          | (47,050,035 | ) |
| Purchases of property, plant and equipment                                |       | (32,946,442                    | )          | —                                                                            |       | (32,946,442 | ) |
| Purchase of government securities                                         |       |                           |       |                                                                              |       |   |   |
| Acquisition of intangibles                                                |       | (494,404                       | )          | (500,000                                                                          | )          | (1,028,428 | ) |
| Increase in restricted cash                                               |       | (126,620,079                   | )          | —                                                                            |       | (126,620,079 | ) |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| Net cash used in investing activities                                     |       | (171,630,702                   | )          | (31,488,601                                                                       | )          | (207,644,984 | ) |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| **Financing Activities**                                                  |       |                           |       |                                                                              |       |   |   |
| Increase in deferred financing costs                                      |       | (7,122,754                     | )          | (439,500                                                                          | )          | (7,899,754 | ) |
| Proceeds from long-term debt                                              |       | 168,111,046                    |       | 32,195,885                                                                        |       | 202,713,590 |   |
| Capital contribution                                                      |       | 15,180,810                     |       | —                                                                            |       | 15,180,810 |   |
| Increase in restricted cash                                               |       | (1,190,305                     | )          | —                                                                            |       | (1,190,305 | ) |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| Net cash provided by financing activities                                 |       | 174,978,797                    |       | 31,756,385                                                                        |       | 208,804,341 |   |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| Net increase (decrease) in cash                                           |       | (16,012                        | )          | 5,012                                                                             |       | 896 |   |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| Cash at beginning of period                                               |       | 16,908                         |       | —                                                                            |       | — |   |
|                                                                      |       |                           |       |                                                                              |       |   |   |
| Cash at end of period                                                     |       | $                              | 896        |                                                                              | $          | 5,012 |   | $ | 896 |   |
|                                                                           |            |                                |            |                                                                                   |            |  |  |  |  |  |  |  |

 

Seethe accompanying notes to the unaudited condensed consolidated financialstatements

 

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**PREMIER ENTERTAINMENT BILOXI LLC**

**(*A DEVELOPMENT STAGE COMPANY*)**

 

**CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
| ** **                                                                | ** ** | **Three months  ended March 31,** | ** ** | **Period from  commencement of  operations on  March 27, 2003  through March 31,** | ** ** |
|---------------------------------------------------------------------------|------------|-----------------------------------|------------|------------------------------------------------------------------------------------|------------|
| ** **                                                                | ** ** | **2004**                          | ** ** | **2004**                                                                           | ** ** |
|                                                                      |       | **Restated**                      |       | **Restated**                                                                       |       |
|                                                                      |       |                              |       |                                                                               |       |
| **Operating Activities**                                                  |       |                              |       |                                                                               |       |
| Net loss                                                                  |       | $                                 | (2,763,216 | )                                                                                  | $          | (3,830,057 | ) |
| Amortization of deferred financing costs,  discount and repayment premium |       | 447,818                           |       | 630,943                                                                            |       |
| Changes in operating assets and liabilities                               |       | (143,566                          | )          | 133,140                                                                            |       |
|                                                                      |       |                              |       |                                                                               |       |
| Net cash used in operating activities                                     |       | (2,458,964                        | )          | (3,065,974                                                                         | )          |
|                                                                      |       |                              |       |                                                                               |       |
| **Investing Activities**                                                  |       |                              |       |                                                                               |       |
| Purchases of property, plant and equipment                                |       | (3,359,089                        | )          | (36,026,691                                                                        | )          |
| Purchase of government securities                                         |       | (32,946,442                       | )          | (32,946,442                                                                        | )          |
| Acquisition of intangibles                                                |       | (494,404                          | )          | (1,028,428                                                                         | )          |
| Increase in restricted cash                                               |       | (135,750,006                      | )          | (135,750,006                                                                       | )          |
|                                                                      |       |                              |       |                                                                               |       |
| Net cash used in investing activities                                     |       | (172,549,941                      | )          | (205,751,567                                                                       | )          |
|                                                                      |       |                              |       |                                                                               |       |
| **Financing Activities**                                                  |       |                              |       |                                                                               |       |
| Increase in deferred financing costs                                      |       | (7,094,044                        | )          | (7,871,044                                                                         | )          |
| Proceeds from long-term debt                                              |       | 168,111,046                       |       | 202,713,590                                                                        |       |
| Capital contribution                                                      |       | 15,180,810                        |       | 15,180,810                                                                         |       |
| Increase in restricted cash                                               |       | (1,187,281                        | )          | (1,187,281                                                                         | )          |
|                                                                      |       |                              |       |                                                                               |       |
| Net cash provided by financing activities                                 |       | 175,010,531                       |       | 208,836,075                                                                        |       |
|                                                                      |       |                              |       |                                                                               |       |
| Net increase (decrease) in cash                                           |       | 1,626                             |       | 18,534                                                                             |       |
|                                                                      |       |                              |       |                                                                               |       |
| Cash at beginning of period                                               |       | 16,908                            |       | —                                                                             |       |
|                                                                      |       |                              |       |                                                                               |       |
| Cash at end of period                                                     |       | $                                 | 18,534     |                                                                               | $          | 18,534 |   |
|                                                                           |            |                                   |            |                                                                                    |            |  |  |  |

 

Seethe accompanying notes to the unaudited condensed consolidated financialstatements

 

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**Premier EntertainmentBiloxi LLC**

***(A Development Stage Company)***

 

**Notes to CondensedConsolidated Financial Statements**

 

**1.  Basisof Presentation**

 

The accompanying condensedconsolidated financial statements should be read in conjunction with theaudited consolidated financial statements for the period from the commencementof operations on March 27, 2003 through December 31, 2003 included in thePremier Entertainment Biloxi LLC (the Company) Registration Statement on FormS-4 filed effective with the Securities Exchange Commission in July 2004. Inthe opinion of management, all adjustments (consisting of normal recurringaccruals) necessary for a fair presentation have been included.  The results for the three and six monthsended June 30, 2004 and 2003 and the period from the commencement of operationson March 27, 2003 through June 30, 2004 do not necessarily indicate the resultsthat may be expected for the full year or for the period from commencement ofoperations through December 31, 2004.

 

Premier Finance Biloxi Corp. (Premier Finance) wasincorporated in October 2003 as a Delaware corporation and is a wholly-ownedsubsidiary of Premier Entertainment Biloxi LLC. Under Mississippi law, certainexpenditures are exempt from sales tax if purchased with the proceeds fromindustrial development revenue bonds issued by the Mississippi FinanceCorporation.  Premier Finance was formedto fund the capital expenditures that qualify for the tax-exempt status.  At June 30, 2004, Premier Finance had cash of$501,737 including interest income of $1,737 and a payable to the parent,Premier Entertainment Biloxi LLC, of $500,000. As of June 30, 2004, Premier Finance has funded consolidated capitalexpenditures of $1,541,666 to qualify for the tax-exempt status with equitycontributions from the parent.  PremierFinance’s assets and operations are included in the condensed consolidatedbalance sheet and statements of operations and all significant intercompanybalances and transactions have been eliminated.

 

**2.  Long-Term Debt andLoan and Security Agreement**

 

On January 23, 2004, the Company issued$160,000,000 aggregate principal amount of 103⁄4% First Mortgage Notes (Notes)due February 1, 2012 in a private placement offering.  The debt outstanding at June 30, 2004includes an unamortized discount of $2,040,497, which is being amortized overthe term of the agreement.  The Notes aresenior to all existing and future senior unsecured indebtedness andsubordinated up to $30,000,000 of senior secured indebtedness to be incurred tofinance the acquisition and installation of furniture, fixtures andequipment.  The Notes are secured by apledge 

5

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of the Company’s membership interests andsubstantially all of the existing and future assets, other than furniture,fixtures and equipment purchased with the proceeds of certain otherindebtedness, cash-on-hand and the casino vessels until they have been deliveredand the ship mortgages are recorded.  TheNotes may be redeemed, in whole or in part, at any time on or after February 1,2008 at a premium.  In addition, up to35% of the Notes may be redeemed at a premium on or prior to February 1, 2007with the net cash proceeds of an initial public offering.  The Company incurred $7,109,273 of costs, netof accumulated amortization, in connection with the private placement as ofJune 30, 2004.  These deferred financingcosts are included in other assets and are being amortized over the term of therelated long-term debt.

 

Concurrently with the issuance of the Notes,the Company borrowed $10,000,000 in the form of a junior subordinated note dueAugust 1, 2012 from Rank America, Inc., an affiliate of The Rank Group Plc,which owns Hard Rock Hotel Licensing, Inc. Also, at this time, AA Capital (consisting of AA Capital Equity FundL.P. and AA Capital Biloxi Co-Investment Fund L.P.) converted to equity theunpaid principal outstanding under the loan and security agreement of$34,819,190 plus accrued interest of $2,775,216, and made a cash contributionof $15,180,810 in exchange for 100 Class B common and 100 Class A preferredmembership units, resulting in an additional $52,775,216 of members’ equity.

 

Intereston the junior subordinated note accrues at a rate of 15% per annum and will bepaid semiannually once the Property opens.** **The Company will be required topay a repayment premium of 3% of the principal amount of the juniorsubordinated note when it is repaid.  TheCompany is accruing the repayment premium over the term of the juniorsubordinated note.  In the event of achange of control or if the Hard Rock license agreement is terminated and theProperty becomes owned, operated or licensed by a Hard Rock competitor, theCompany will be required to repay all amounts due under the junior subordinatednote agreement.  In addition, the Companymay be required to make quarterly mandatory prepayments as calculated under theterms of the junior subordinated note once the Property opens.

 

**3.  Restricted Cash**

 

Thenet proceeds from the issuance of the First Mortgage Notes, a portion of theequity investment and the proceeds from the junior subordinated note alltotaling $177,600,000 were deposited into a construction disbursement account,an interest reserve account and a tidelands lease reserve account.  These accounts were pledged to the trustee assecurity for the Company’s obligations under the Notes.  The funds will be disbursed in accordancewith a disbursement agreement (the Disbursement Agreement) under concurrencewith the disbursement agent, the trustee and the independent constructionconsultant.  At June 30, 2004, there was$127,810,384 in the construction disbursement and reserve accounts, which isclassified as restricted cash.

 

6

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**4.  GovernmentSecurities - Restricted**

 

Duringthe six months ended June 30, 2004, the Company invested $32,946,442 in U.S.Treasury securities in accordance with the Disbursement Agreement. Theinvestment is classified as held to maturity, and is recorded as Governmentsecurities at its acquisition cost including accrued interest at June 30,2004.  The investment plus the interestearned will be used to pay the first four interest payments on the Notes asrequired by the Disbursement Agreement.

 

**5.  Related PartyTransactions**

 

Amember of GAR LLC is the President and Chief Executive Officer of the Company’sgeneral contractor.  The Company believesthat the terms of the agreement with the contractor are similar to those thatcould otherwise be received from a third party. Total payments to the general contractor for the period from thecommencement of operations on March 27, 2003 through June 30, 2004 were$11,180,000.

 

**6.  Commitments andContingencies**

 

InJanuary 2004, the Company executed the purchase of a leasehold contract with athird party whereby the Company paid $432,000 to assume such lease. The paymentis classified as an intangible asset in Other assets at June 30, 2004 and is beingamortized over the life of the lease. At the same time, the Company enteredinto a seven year triple net lease with the City of Biloxi, Mississippi.Beginning in February 2004 the Company must pay monthly rent of $1,529. Therent will increase by the Consumer Price Index beginning on the firstanniversary date of execution of the lease and continuing on each yearlyanniversary date.

 

InApril 2004, the Company entered into an agreement with a third party to leaseoffice space. The term of the lease is for a period of two years and theCompany must pay monthly rent of $2,926. The rent may increase on a semi-annualbasis to reflect the increased cost to the lessor based upon the previous sixmonth period variable expenses. Variable expenses are defined as electricity,gas, water and sewer, taxes, insurance and common area janitorial services.

 

**7****.  Subsequent Events**

 

In August 2004, the Company and Kojis andSons Signs, Inc. (Kojis) entered into an agreement whereby Kojis agreed tomanufacture, install and maintain for one year a one hundred twenty foot (120’)high marquee guitar sign for $540,000.

 

In August 2004, the Company entered into apurchasing consulting agreement whereby the consultant is to provide servicesrelated to the purchasing and installation of certain owner supplied furniture,fixtures and equipment for a fee of $174,000 and reasonable reimbursableexpenses. The services and payment for such services are to coincide and bothshall conclude in October 2005.

 

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**8****.  Correction of Error**

 

Property, plant, and equipment, deficitaccumulated during development stage, interest expense, and net loss have beenrestated for the three months ended March 31, 2004, six months ended June 30,2004 and for the period from commencement of operations on March 27, 2003,through June 30, 2004 for an error in the Company’s capitalized interestcalculation.  This had the effect ofdecreasing property, plant and equipment and increasing the deficit accumulatedduring the development stage by $1,980,666 and $5,157,224 for the three and sixmonths ended March 31, 2004 and June 30, 2004, respectively.

 

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**Item 2.*  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations***

 

# **Overview**

 

We were formed on October 18, 2002 andcommenced operations on March 27, 2003. There were no assets, liabilities oroperations from inception through the commencement of operations. Since ourformation, we have been in the development stage. Our activities includedapplying for certain necessary permits, licenses and regulatory approvals toenable us to construct and manage the operations of the Hard Rock Hotel &Casino Biloxi, and development activities in connection with the Hard RockHotel & Casino Biloxi. We have also purchased approximately 8.5 acres ofland on the Mississippi Gulf Coast in Biloxi, Mississippi to build the HardRock Hotel & Casino Biloxi. In addition, we have entered into a 20-yearlicensing agreement with Hard Rock Hotel Licensing, Inc. under which we weregranted the right to use and develop the Hard Rock brand name for our hotel andcasino resort. We began construction in January 2004.

 

We anticipate the Hard Rock Hotel & Casino Biloxi will be approximately388,000 square-foot in size featuring a casino (with approximately 1,500 slotmachines and 50 table games), a 306-room hotel, a Hard Rock Cafe, a Hard RockLive! entertainment venue, a Hard Rock retail store, a tropical-themed HardRock beach pool, restaurants, a full service fitness spa, a top floor lounge,and a parking garage with approximately 1,600 spaces, and various otheramenities. We expect to open the Hard Rock Hotel & Casino Biloxi in thethird quarter of 2005.

 

Premier Finance Biloxi Corp. is serving as the co-issuer of the$160,000,000 10 3⁄4% First Mortgage Notes due February 1, 2012 (Notes) and willnot have any material assets or operations, other than in connection with theMississippi Business Finance Corporation financing. See “–Liquidity and CapitalResources.”

 

**Results of Operations**

 

We are in the development stage and do not have any historicaloperating results other than costs incurred in designing and developing theHard Rock Hotel & Casino Biloxi. For the period from commencement ofoperations on March 27, 2003 through June 30, 2004, we incurred a total of $7.6million of net interest expense and non-capitalized design, development andpre-opening expenses in connection with the Hard Rock Hotel & CasinoBiloxi. For the same time period interest expense was $6.6 million. These costsprimarily relate to licensing expenses, transaction fees, legal fees, interestexpense and organizational costs to prepare us for becoming a gamingenterprise. We expect these losses to continue and to increase until operationscommence with the planned opening of the Hard Rock Hotel and Casino Biloxi inthe third quarter of 2005. Our historical operating results will not beindicative of future operating results because activities previously undertakenhave been development stage in nature and planned future activities include theoperation of a new gaming facility.

 

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**Liquidityand Capital Resources**

 

As of June 30, 2004, we spent approximately $31.0 million to acquirethe land and $9.1 million to fund operations and loan costs and expended $17.1million to finance the initial design and development costs of the Hard RockHotel & Casino Biloxi, which have been capitalized.  As of June 30, 2004 capitalized interest was$4.8 million. We will continue to use the gross proceeds we obtained on January23, 2004 from the offering of the Notes in conjunction with an equityinvestment from AA Capital of $15.1 million, a junior subordinated note of$10.0 million from Rank America, Inc., an affiliate of The Rank Group Plc and$17.1 million in furniture, fixtures and equipment financing to fund the costsassociated with the Hard Rock Hotel & Casino Biloxi. The $17.1 million infurniture, fixtures and equipment financing will be obtained from vendors orother third party lenders. The net proceeds of the offering of the Notes, anequity investment from AA Capital and the proceeds of the junior subordinatednote have been deposited as follows: (1) approximately $143.5 million wasdeposited into a construction disbursement account and is being periodicallydrawn upon to finance the design, development, construction, equipping andopening of the Hard Rock Hotel & Casino Biloxi (2) approximately $33.1million was deposited in an interest reserve account and was used to purchasegovernment securities of $32.9 million representing sufficient funds to pay thefirst four interest payments on the Notes and (3) approximately $1.0 millionwas deposited into a tidelands lease account and will be used to fund rentpayments to the State of Mississippi on a tidelands lease through the firstyear of operations.

 

The funds provided by the sources described above are expected to besufficient to design, develop, construct, equip and commence operations of theHard Rock Hotel & Casino Biloxi, provided there are no unexpected delaycosts or construction cost overruns.

 

Following the opening of the Hard Rock Hotel & Casino Biloxi, weexpect to fund our business from operating cash flows.

 

*Mississippi Bond Financing*.    Mississippi law provides that certainexpenditures for materials made in connection with certain economic developmentprojects in the State of Mississippi, including the land-based portion of theHard Rock Hotel & Casino Biloxi (which includes the hotel tower, theparking garage, the low-rise pavilion and the pool area), are exempt fromMississippi’s sales tax if such expenditures are paid for with proceeds fromapproved industrial development revenue bonds issued by the MississippiBusiness Finance Corporation, (MBFC). Up to $60.0 million of our expected costsfor the Hard Rock Hotel & Casino Biloxi could be eligible for this program.We have submitted an application to the MBFC and have received approval of ourapplication.

 

In connection with the issuance of the industrial development revenuebonds, the following actions were taken:

 

•                  The disbursementagent distributed amounts to us from the construction disbursement account inaccordance with the procedures set forth in the disbursement agreement to availourselves of this program.

•                  We used thesefunds distributed to us from the construction disbursement account to make anequity contribution to Premier Finance Biloxi Corp.

•                  Premier FinanceBiloxi Corp. used the proceeds of this equity contribution to purchaseindustrial development revenue bonds issued by the MBFC.

 

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•                  The MBFC loanedthe proceeds from the sale and issuance of the industrial development revenuebonds to us.

 

•                  We will useamounts loaned to us by the MBFC to finance the purchase of certain permittedcomponent materials required to construct and install the improvements to theland-based portion of the Hard Rock Hotel & Casino Biloxi.

 

•                  Premier FinanceBiloxi Corp. pledged its interest in the industrial development revenue bondsthat it purchased from the MBFC to the trustee under the indenture governingthe Notes for the benefit of the holders of the Notes.

 

At June 30, 2004, Premier Finance Biloxi, Corp. funded consolidatedcapital expenditures of $1.5 million to qualify for the tax-exempt status.  We expect to save up to $2.0 million in salestax that we would have otherwise been required to pay in connection withpurchasing materials to be used in the construction of the land-based portionof the Hard Rock Hotel & Casino Biloxi. Any such sales tax savings that weare able to realize will reduce the construction costs for the project and willincrease our excess liquidity.

 

The sale and issuance of the industrial development revenue bonds toPremier Finance Biloxi Corp. and the subsequent loan by the MBFC of theproceeds thereof to us did not result in any additional net indebtedness forus. However, there can be no assurances that any purchases of materials made byor on behalf of us with the proceeds of industrial development revenue bondswill be exempt from Mississippi sales tax.

 

# **Seasonality**

 

We have no operating history. We anticipatethat activity at the Hard Rock Hotel & Casino Biloxi may be modestly seasonal,with stronger results expected during the second and third quarters due to therelatively higher levels of tourism to the Mississippi Gulf Coast during thistime of the year. Results are expected to be lower during the fourth quarter.In addition, our operations may be impacted by adverse weather conditions andfluctuations in the tourism business. Accordingly, our results of operationsmay fluctuate from quarter to quarter and the results for any one quarter maynot be indicative of results for future quarters.

 

**Item 3. *Quantitativeand Qualitative Disclosures About Market Risk***

 

Market risk is the risk of loss arising from adverse changes in marketrates and prices, such as interest rates, foreign currency exchange rates andcommodity prices. The borrowings in connection with the offering of the Notesand the junior subordinated note from Rank America, Inc. are fixed-rateindebtedness. Through June 30, 2004, we had not invested in derivative orforeign currency-based financial instruments. 

 

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**FORWARD-LOOKING STATEMENTS AND RISK FACTORS**

 

Except for the historical information containedherein, the matters addressed in this Quarterly Report on Form 10-Q mayconstitute “forward-looking statements” within the meaning of Section 27 A ofthe Securities Act of 1933, as amended, and Section 2IE of the Securities andExchange Act of 1934, as amended. Words such as, but not limited to, “believes”,“expects”, “anticipates”, “estimates”, “intends”, “plans”, “could”, “may”, “should”and similar expressions are intended to identify forward-looking statements.Such forward-looking statements, which may include, without limitation,statements regarding expansion plans, cash needs, cash reserves, liquidity,operating and capital expenses, financing options, expense reductions,operating results and pending regulatory matters, are subject to a variety ofrisks and uncertainties that could cause actual results to differ materiallyfrom those anticipated by the Company. From time to time, oral or writtenforward ­looking statements are also included in the Company’s other periodicreports on Forms l0-K, l0-Q and 8-K, press releases and other materialsreleased to the public.

 

Actual results may differ materially from those thatmight be anticipated from forward-looking statements. This can occur as aresult of inaccurate assumptions or as a consequence of known or unknown risksand uncertainties. The Company undertakes no obligation to publicly update anyforward-looking statements, whether as a result of new information, futureevents or otherwise. Factors that may cause actual performance of the Companyto differ materially from that contemplated by such forward-looking statementsinclude, among others: (1) the gaming industry is very competitive andincreased competition from the legalization or expansion of gaming inMississippi or Alabama and the development or expansion of Native Americancasinos in or near the Company’s markets could adversely affect the Company’sprofitability, (2) general construction risks and other factors, some of whichare beyond the Company’s control, could prevent the Company from completing itsconstruction and development projects as planned, (3) changes in gaming laws orregulations, (4) changes in federal or state tax laws, (5) changes in theeconomy, and (6) the additional furniture, fixture, and equipment financing tocomplete the project. Additional factors that could cause actual performance ofthe Company to differ materially from that contemplated by such forward-lookingstatements are detailed in the Company’s Registration Statement on Form S-4filed effective with the Securities Exchange Commission in July 2004.

 

The Private Securities Litigation Reform Actof 1995 (the “Act”) provides certain “safe harbor” provisions for forward ­lookingstatements. All forward-looking statements made in this Quarterly Report onForm 10-Q are made pursuant to the Act. For more information on the potentialfactors that could affect the Company’s operating results and financialcondition, review the Company’s other filings with the Securities and ExchangeCommission.

** **

**Item 4. *Controls and Procedures***

 

The Company’s management, with the participation ofthe Company’s Chief Financial Officer, evaluated the effectiveness of theCompany’s disclosure controls and procedures as of June 30, 2004. Based on thisevaluation, the CFO concluded that the Company’s disclosure controls andprocedures were effective as of June 30, 2004.

 

Such officers also confirm that there was nochange in the Company’s internal controls over financial reporting during thequarter ended June 30, 2004 that has materially affected, or is reasonablylikely to material affect, the Company’s internal control over financialreporting.

 

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**PART II**

 

**Item 6*****. Exhibits***

**EXHIBITINDEX**

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                                                                                                           |
|---------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |       |                                                                                                                                                                                                 |
| 10.1*               |       | Lease  Assignment (Lancon ), dated as of February 30, 2004, between Premier  Entertainment Biloxi LLC, as assignee, and Joe Lancon and Charmaine Lancon,  as assignor,                               |
|                |       |                                                                                                                                                                                                 |
| 10.2*               |       | Lease  Agreement (Office ), dated as of April 15, 2004, between Premier  Entertainment Biloxi LLC, as lessee, and Charles T Harrison Realty Agency, as  agent for Medical Plaza, Limited, as lessor. |
|                |       |                                                                                                                                                                                                 |
| 10.3*               |       | Consulting  Agreement (Purchasing ), dated August 10, 2004 between Premier Entertainment  Biloxi LLC and C P Procurement Services, Inc.                                                              |
|                |       |                                                                                                                                                                                                 |
| 10.4*               |       | Purchase  Agreement (Marquee ), dated as of August 19, 2004, between Premier  Entertainment Biloxi LLC and Kojis and Sons Signs, Inc.                                                                |
|                |       |                                                                                                                                                                                                 |
| 31.1                |       | Chief  Operating Officer Certification Pursuant to Section 13a-14 of the Securities  Exchange Act.                                                                                                   |
|                |       |                                                                                                                                                                                                 |
| 31.2                |       | Chief  Financial Officer Certification Pursuant to Section 13a-14 of the Securities  Exchange Act.                                                                                                   |
|                |       |                                                                                                                                                                                                 |
| 32                  |       | Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 — Chief Operating Officer and Chief Financial  Officer.                |

 

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*              Filed with the Company’s quarterly report onForm 10-Q for the quarter ended June 30, 2004 filed on September 3, 2004.

 

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**SIGNATURE**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 
|                    | PREMIER ENTERTAINMENT  BILOXI LLC           |
|-------------------------|---------------------------------------------|
|                    | (Registrant)                                |
| Date: November 10, 2004 |                                        |
|                    |                                        |
|                    |                                        |
|                    |                                        |   | /s/            Gregory  J Bosarge |   |
|                    |                                        |   |   |   |
|                    | Gregory  J Bosarge                          |   |
|                    | Vice  President and Chief Financial Officer |   |
|                         |                                             |  |  |  |  |

 

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