# ** **

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,DC 20549**

 

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## ***FORM 10-Q***

 

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

 

### **For the quarterly periodended June 30, 2004**

### ** **

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

 

### **For the transition periodfrom                to                **

### ** **

#### **Commission file number  333-114339**

#### ** **

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**PREMIERENTERTAINMENT BILOXI, LLC****and****PREMIERFINANCE BILOXI CORP.**

(Exact Name of Registrant as specified in ItsCharter)

 

| **Delaware**                                                    |   | **20-0495680 / 20-0495563**          |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or Other Jurisdiction of  Incorporation or Organization) |   | (I.R.S Employer Identification  No.) |

 

**111 Lameuse Street, Suite 104Biloxi, MS 39530**

(Address, including zip code, of PrincipalExecutive Offices)

 

**(228) 374-7625**

(Registrant’s Telephone Number, IncludingArea Code)

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. YES o   NO ý

 

Indicateby check mark whether the registrant is an accelerated filer (as defined inRule 12b-2 of the Exchange Act).   YES o  NO ý

 

OnJune 30, 2004, the registrant had no shares of common stock outstanding.

 

 

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**PremierEntertainment Biloxi, LLC**

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

**Index**

 
| **Part I.**    | **Financial Information**                                                                                                                                                                                                      |   |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|           |                                                                                                                                                                                                                           |   |
| **Item 1.**    | Financial Statements                                                                                                                                                                                                           |   |
|           | Condensed  Consolidated Balance Sheets as of June 30, 2004 (unaudited) and  December 31, 2003                                                                                                                        |   |
|           | Condensed  Consolidated Statements of Operations for the 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) |   |
|           | 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)            |   |
|           | Notes  to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                              |   |
|           |                                                                                                                                                                                                                           |   |
| **Item 2.**    | Management’s Discussion and  Analysis of Financial Condition and Results of Operations                                                                                                                                    |   |
|           |                                                                                                                                                                                                                           |   |
| **Item 3.**    | Quantitative and Qualitative  Disclosures About Market Risk                                                                                                                                                                    |   |
|           |                                                                                                                                                                                                                           |   |
| **Item 4.**    | Controls and Procedures                                                                                                                                                                                                        |   |
|           |                                                                                                                                                                                                                           |   |
| **Part II.**   | **Other Information**                                                                                                                                                                                                          |   |
|           |                                                                                                                                                                                                                           |   |
| **Item 6.**    | Exhibits                                                                                                                                                                                                                       |   |
|           |                                                                                                                                                                                                                           |
| **Signatures** |                                                                                                                                                                                                                           |
|           |                                                                                                                                                                                                                           |
| **Exhibits**   |                                                                                                                                                                                                                           |

 

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**PART I - FINANCIALINFORMATION**

 

**Item 1.****             FINANCIAL STATEMENTS**

 

**PREMIERENTERTAINMENT BILOXI, LLC**

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

 

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

 
|                                                 |   | **June 30,  2004** |        | **December 31,  2003** |   |
|------------------------------------------------------|--------|-------------------------|-------------|-----------------------------|--------|
|                                                 |   | **(Unaudited)**         |        |                        |   |
| **ASSETS**                                           |   |                    |        |                        |   |
| Current assets:                                      |   |                    |        |                        |   |
| Cash                                                 |   | $                       | 896         |                        | $      | 16,908 |   |
| Restricted cash                                      |   | 127,810,384             |        | —                      |   |
| Government securities - restricted                   |   | 33,126,632              |        | —                      |   |
| Prepaid expenses and other current assets            |   | 74,873                  |        | 274,625                     |   |
| Total current assets                                 |   | 161,012,785             |        | 291,533                     |   |
|                                                 |   |                    |        |                        |   |
| Property, plant and equipment, net                   |   | 59,947,733              |        | 36,151,817                  |   |
|                                                 |   |                    |        |                        |   |
| Other assets, net                                    |   | 8,124,140               |        | 2,088,961                   |   |
|                                                 |   |                    |        |                        |   |
| Total assets                                         |   | $                       | 229,084,658 |                        | $      | 38,532,311 |   |
|                                                 |   |                    |        |                        |   |
| **LIABILITIES AND MEMBERS’ EQUITY  (DEFICIT)**  |   |                    |        |                        |   |
|                                                 |   |                    |        |                        |   |
| Current liabilities:                                 |   |                    |        |                        |   |
| Accounts payable                                     |   | $                       | 2,968,220   |                        | $      | 2,384,758 |   |
| Accrued interest                                     |   | 7,785,567               |        | 2,521,016                   |   |
| Other accrued liabilities                            |   | 27,578                  |        | 90,834                      |   |
| Term loan                                            |   | —                  |        | 34,602,544                  |   |
| Total current liabilities                            |   | 10,781,365              |        | 39,599,152                  |   |
|                                                 |   |                    |        |                        |   |
| Long-term debt                                       |   | 167,967,135             |        | —                      |   |
|                                                 |   |                    |        |                        |   |
| Members’ capital                                |   | 52,775,216              |        | —                      |   |
| Deficit accumulated during development stage         |   | (2,439,058              | )           | (1,066,841                  | )      |
| Total members’ equity (deficit)                 |   | 50,336,158              |        | (1,066,841                  | )      |
|                                                 |   |                    |        |                        |   |
| Total liabilities and members’ equity (deficit) |   | $                       | 229,084,658 |                        | $      | 38,532,311 |   |

 

See the accompanying notes to the unaudited condensed consolidatedfinancial statements

 

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**PREMIERENTERTAINMENT 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** | ** ** |
|                         |   |                             |     |                                |       |                                                                                         |       |   |   |   |   |
| **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             |   | (550,570                         | )        | (37,509                             | )          | (1,257,217                                                                                   | )          | (37,509 | ) | (1,460,017 | ) |
| Interest income              |   | 446,236                          |     | 12                                  |       | 666,832                                                                                      |       | 12 |   | 667,239 |   |
|                         |   |                             |     |                                |       |                                                                                         |       |   |   |   |   |
| Total other income (expense) |   | (104,334                         | )        | (37,497                             | )          | (590,385                                                                                     | )          | (37,497 | ) | (792,778 | ) |
|                         |   |                             |     |                                |       |                                                                                         |       |   |   |   |   |
| **Net loss**                 |   | $                                | (589,667 | )                                   | $          | (245,578                                                                                     | )          | $ | (1,372,217 | ) | $ | (245,578 | ) | $ | (2,439,058 | ) |

 

Seethe accompanying notes to the unaudited condensed consolidated financialstatements

 

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**PREMIER ENTERTAINMENT BILOXI, LLC**

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

 

**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
|                                                                      |   | **Six months  ended June 30,** |       | **Period  from  commencement of  operations on  March 27, 2003  through June 30,** |   |
|---------------------------------------------------------------------------|--------|-------------------------------------|------------|----------------------------------------------------------------------------------------------|--------|
|                                                                      |   | **2004**                            |       | **2003**                                                                                     |   | **2004** |   |
| **Operating Activities**                                                  |   |                                |       |                                                                                         |   |   |   |
| Net loss                                                                  |   | $                                   | (1,372,217 | )                                                                                            | $      | (245,578 | ) | $ | (2,439,058 | ) |
| 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                               |   | 74,166                              |       | (53,818                                                                                      | )      | 350,872 |   |
|                                                                      |   |                                |       |                                                                                         |   |   |   |
| Net cash used in operating activities                                     |   | (551,451                            | )          | (262,772                                                                                     | )      | (1,158,461 | ) |
|                                                                      |   |                                |       |                                                                                         |   |   |   |
| **Investing Activities**                                                  |   |                                |       |                                                                                         |   |   |   |
| Purchases of property, plant and equipment                                |   | (14,382,433                         | )          | (30,988,601                                                                                  | )      | (47,050,035 | ) |
| Purchase of government securities                                         |   | (32,946,442                         | )          | —                                                                                       |   | (32,946,442 | ) |
| 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                                     |   | (174,443,358                        | )          | (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 |   |

 

See the accompanying notes to the unaudited condensed consolidatedfinancial statements

 

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**Premier Entertainment Biloxi LLC**

***(A Development StageCompany)***

 

**Notes to Condensed Consolidated FinancialStatements (Unaudited)**

 

**1. Basis of Presentation**

 

The accompanying condensed consolidated financial statements should beread in conjunction with the audited consolidated financial statements for theperiod from the commencement of operations on March 27, 2003 throughDecember 31, 2003 included in the Premier Entertainment Biloxi, LLC (theCompany) Registration Statement on Form S-4 filed effective with the SecuritiesExchange Commission in July 2004. In the opinion of management, alladjustments (consisting of normal recurring accruals) necessary for a fairpresentation have been included.  Theresults for the three and six months ended June 30, 2004 and 2003 and theperiod from the commencement of operations on March 27, 2003 throughJune 30, 2004 do not necessarily indicate the results that may be expectedfor the full year or for the period from commencement of operations throughDecember 31, 2004.

 

Premier Finance BiloxiCorp. (Premier Finance) was incorporated in October 2003 as a Delawarecorporation and is a wholly-owned subsidiary of Premier Entertainment BiloxiLLC. Under Mississippi law, certain expenditures are exempt from sales tax ifpurchased with the proceeds from industrial development revenue bonds issued bythe Mississippi Finance Corporation.  PremierFinance was formed to fund the capital expenditures that qualify for thetax-exempt status.  At June 30,2004, Premier Finance had cash of $501,737 including interest income of $1,737and a payable to the parent, Premier Entertainment Biloxi LLC, of$500,000.  As of June 30, 2004,Premier Finance has funded consolidated capital expenditures of $1,541,666 toqualify for the tax-exempt status with equity contributions from theparent.  Premier Finance’s assets andoperations are included in the condensed consolidated balance sheet and statementsof operations and all significant intercompany balances and transactions havebeen eliminated.

 

**2.  Long-Term Debt and Loan and SecurityAgreement**

 

On January 23, 2004, the Company issued $160,000,000 aggregateprincipal amount of 103⁄4% First Mortgage Notes (Notes) due February 1, 2012in a private placement offering.  Thedebt outstanding at June 30, 2004 includes an unamortized discount of$2,040,497, which is being amortized over the term of the agreement.  The Notes are senior to all existing and futuresenior unsecured indebtedness and subordinated up to $30,000,000 of seniorsecured indebtedness to be incurred to finance the acquisition and installationof furniture, fixtures and equipment. The Notes are secured by a pledge 

 

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of the Company’s membership interests and substantially all of theexisting and future assets, other than furniture, fixtures and equipmentpurchased with the proceeds of certain other indebtedness, cash-on-hand and thecasino vessels until they have been delivered and the ship mortgages arerecorded.  The Notes may be redeemed, inwhole or in part, at any time on or after February 1, 2008 at a premium.  In addition, up to 35% of the Notes may beredeemed at a premium on or prior to February 1, 2007 with the net cashproceeds of an initial public offering. The Company incurred $7,109,273 of costs, net of accumulatedamortization, in connection with the private placement as of June 30,2004.  These deferred financing costsare 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 due August 1, 2012from Rank America, Inc., an affiliate of The Rank Group Plc, which owns HardRock Hotel Licensing, Inc.  Also,at this time, AA Capital (consisting of AA Capital Equity Fund L.P. and AACapital Biloxi Co-Investment Fund L.P.) converted to equity the unpaidprincipal outstanding under the loan and security agreement of $34,819,190 plusaccrued interest of $2,775,216, and made a cash contribution of $15,180,810 inexchange for 100 Class B common and 100 Class A preferred membership units,resulting in an additional $52,775,216 of members’ equity.

 

Interest on thejunior subordinated note accrues at a rate of 15% per annum and will be paidsemiannually once the Property opens.** **The Company will be required topay a repayment premium of 3% of the principal amount of the junior subordinatednote when it is repaid.  The Company isaccruing the repayment premium over the term of the junior subordinatednote.  In the event of a change ofcontrol or if the Hard Rock license agreement is terminated and the Propertybecomes owned, operated or licensed by a Hard Rock competitor, the Company willbe required to repay all amounts due under the junior subordinated noteagreement.  In addition, the Company maybe required to make quarterly mandatory prepayments as calculated under theterms of the junior subordinated note once the Property opens.

 

**3.  Restricted Cash**

 

The net proceedsfrom the issuance of the First Mortgage Notes, a portion of the equityinvestment and the proceeds from the junior subordinated note all totaling$177,600,000 were deposited into a construction disbursement account, aninterest reserve account and a tidelands lease reserve account.  These accounts were pledged to the trusteeas security 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 is classified as restricted cash.

 

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**4. Government Securities - Restricted**

 

During the sixmonths 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 Party Transactions**

 

A member of GARLLC is the President and Chief Executive Officer of the Company’s generalcontractor.  The Company believes thatthe terms of the agreement with the contractor are similar to those that couldotherwise 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, 2004were $11,180,000.

 

**6.  Commitments and Contingencies**

 

InJanuary 2004, the Company executed the purchase of a leasehold contractwith a third party whereby the Company paid $432,000 to assume such lease. Thepayment is classified as an intangible asset in Other assets at June 30,2004 and is being amortized over the life of the lease. At the same time, theCompany entered into a seven year triple net lease with the City of Biloxi,Mississippi. Beginning in February 2004 the Company must pay monthly rentof $1,529. The rent will increase by the Consumer Price Index beginning on thefirst anniversary date of execution of the lease and continuing on each yearlyanniversary date.

 

InApril 2004, the Company entered into an agreement with a third party tolease office 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 and Sons Signs, Inc. (Kojis)entered into an agreement whereby Kojis agreed to manufacture, install andmaintain for one year a one hundred twenty foot (120’) high marquee guitar signfor $540,000.

 

In August 2004, the Company entered into a purchasing consultingagreement whereby the consultant is to provide services related to thepurchasing and installation of certain owner supplied furniture, fixtures andequipment for a fee of $174,000 and reasonable reimbursable expenses. Theservices and payment for such services are to coincide and both shall concludein October 2005.

 

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**Item 2.*****  Management’sDiscussion and Analysis of Financial Condition and Results of Operations***

 

# **Overview**

# ** **

We were formed on October 18, 2002 and commenced operations onMarch 27, 2003. There were no assets, liabilities or operations frominception through the commencement of operations. Since our formation, we havebeen in the development stage. Our activities included applying for certainnecessary permits, licenses and regulatory approvals to enable us to constructand manage the operations of the Hard Rock Hotel & Casino Biloxi, anddevelopment activities in connection with the Hard Rock Hotel & CasinoBiloxi. We have also purchased approximately 8.5 acres of land on theMississippi Gulf Coast in Biloxi, Mississippi to build the Hard Rock Hotel& Casino Biloxi. In addition, we have entered into a 20-year licensingagreement with Hard Rock Hotel Licensing, Inc. under which we were granted theright to use and develop the Hard Rock brand name for our hotel and casinoresort. We began construction in January 2004.

 

We anticipate the Hard Rock Hotel & Casino Biloxi will beapproximately 388,000 square-foot in size featuring a casino (withapproximately 1,500 slot machines and 50 table games), a 306-room hotel, a HardRock Cafe, a Hard Rock Live! entertainment venue, a Hard Rock retail store, atropical-themed Hard Rock beach pool, restaurants, a full service fitness spa,a top floor lounge, and a parking garage with approximately 1,600 spaces, andvarious other amenities. We expect to open the Hard Rock Hotel & CasinoBiloxi in the third 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) andwill not have any material assets or operations, other than in connection withthe Mississippi Business Finance Corporation financing. See “—Liquidity andCapital Resources.”

 

**Results ofOperations**

** **

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 atotal of $2.4 million of net interest expense and non-capitalized design,development and pre-opening expenses in connection with the Hard Rock Hotel& Casino Biloxi. These costs primarily relate to licensing expenses,transaction fees, legal fees, interest expense and organizational costs toprepare us for becoming a gaming enterprise. We expect these losses to continueand to increase until operations commence with the planned opening of the HardRock Hotel and Casino Biloxi in the third quarter of 2005. Our historicaloperating results will not be indicative of future operating results becauseactivities previously undertaken have been development stage in nature andplanned future activities include the operation of a new gaming facility.

 

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# **Liquidityand Capital Resources**

# ** **

As of June 30, 2004, we spent approximately $31.0 million toacquire the land and $9.1 million to fund operations and loan costs andexpended $17.1 million to finance the initial design and development costs ofthe Hard Rock Hotel & Casino Biloxi, which have been capitalized. We willcontinue to use the gross proceeds we obtained on January 23, 2004 fromthe offering of the Notes in conjunction with an equity investment from AACapital of $15.1 million, a junior subordinated note of $10.0 million from RankAmerica, Inc., an affiliate of The Rank Group Plc and $17.1 million infurniture, fixtures and equipment financing to fund the costs associated withthe Hard Rock Hotel & Casino Biloxi. The $17.1 million in furniture,fixtures and equipment financing will be obtained from vendors or other thirdparty lenders. The net proceeds of the offering of the Notes, an equityinvestment from AA Capital and the proceeds of the junior subordinated notehave been deposited as follows: (1) approximately $143.5 million was depositedinto a construction disbursement account and is being periodically drawn uponto finance the design, development, construction, equipping and opening of theHard Rock Hotel & Casino Biloxi (2) approximately $33.1 million was depositedin an interest reserve account and was used to purchase government securitiesof $32.9 million representing sufficient funds to pay the first four interestpayments on the Notes and (3) approximately $1.0 million was deposited into atidelands lease account and will be used to fund rent payments to the State ofMississippi on a tidelands lease through the first year 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. fundedconsolidated capital expenditures of $1.5 million to qualify for the tax-exemptstatus.  We expect to save up to $2.0million in sales tax that we would have otherwise been required to pay inconnection with purchasing materials to be used in the construction of theland-based portion of the Hard Rock Hotel & Casino Biloxi. Any such salestax savings that we are able to realize will reduce the construction costs forthe project and will increase 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 anticipate that activity at the HardRock Hotel & Casino Biloxi may be modestly seasonal, with stronger resultsexpected during the second and third quarters due to the relatively higherlevels of tourism to the Mississippi Gulf Coast during this time of the year.Results are expected to be lower during the fourth quarter. In addition, ouroperations may be impacted by adverse weather conditions and fluctuations inthe tourism business. Accordingly, our results of operations may fluctuate fromquarter to quarter and the results for any one quarter may not be indicative ofresults for future quarters.

 

**Item 3****. *Quantitative andQualitative 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 RISKFACTORS**

 

Except for the historical information contained herein, the mattersaddressed in this Quarterly Report on Form 10-Q may constitute “forward-lookingstatements” within the meaning of Section 27 A of the Securities Act of1933, as amended, and Section 2IE of the Securities and Exchange Act of1934, as amended. Words such as, but not limited to, “believes”, “expects”,“anticipates”, “estimates”, “intends”, “plans”, “could”, “may”, “should” andsimilar expressions are intended to identify forward-looking statements. Suchforward-looking statements, which may include, without limitation, statementsregarding expansion plans, cash needs, cash reserves, liquidity, operating andcapital expenses, financing options, expense reductions, operating results andpending regulatory matters, are subject to a variety of risks and uncertaintiesthat could cause actual results to differ materially from those anticipated bythe Company. From time to time, oral or written forward looking statements arealso included in the Company’s other periodic reports on Forms l0-K, l0-Q and8-K, press releases and other materials released to the public.

 

Actual results may differ materially from those that might beanticipated from forward-looking statements. This can occur as a result ofinaccurate assumptions or as a consequence of known or unknown risks anduncertainties. 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 forwardlooking statements. All forward-looking statements made in this QuarterlyReport on Form 10-Q are made pursuant to the Act. For more information on thepotential factors that could affect the Company’s operating results andfinancial condition, review the Company’s other filings with the Securities andExchange Commission.

 

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

 

The Company’s management, with the participation of the Company’s ChiefFinancial Officer, evaluated the effectiveness of the Company’s disclosurecontrols and procedures as of June 30, 2004. Based on this evaluation, theCFO concluded that the Company’s disclosure controls and procedures wereeffective 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 herewith

 

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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,thereunto duly authorized.

 
|                         | PREMIER ENTERTAINMENT  BILOXI, LLC                                          |
|------------------------------|-----------------------------------------------------------------------------|
|                         | (Registrant)                                                                |
|                         |                                                                        |
| Date: September 1, 2004 |                                                                        |
|                         |                                                                        |
|                         |                                                                        |
|                         | /s/         Gregory  J Bosarge |
|                         |                                                                        |
|                         | Gregory J Bosarge                                                           |
|                         | Vice President and Chief Financial Officer                                  |

 

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