FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-5976
CAESARS WORLD, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0773674
(State or other jurisdiction of (I.R.S.
incorporation or organization) Employer
Identification No.)
1801 Century Park East, Suite 2600
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
(310) 552-2711
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and
(2) has been subject to such filing requirements for
the past 90 days.
Yes x No __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by
Sections 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes __ No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
At December 8, 1994, registrant had outstanding
25,120,463 shares of its $.10 par value common stock.
CAESARS WORLD, INC. AND SUBSIDIARIES
October 31, 1994
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
October 31, 1994 (Unaudited) and July 31, 1994 3
Consolidated Statement of Shareholders' Equity
(Unaudited) - Three months ended October 31, 1994 4
Consolidated Statements of Income (Unaudited) -
Three months ended October 31, 1994 and 1993 5
Condensed Consolidated Statements of Cash
Flows (Unaudited) - Three months ended
October 31, 1994 and 1993 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
PART I. Financial Information
Item 1. Financial Statements
CAESARS WORLD, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
October 31, July 31,
Assets 1994 1994
(Unaudited) (a)
<S> <C> <C>
Current assets
Cash and cash equivalent investments $155,932 $143,499
Receivables, net 69,537 71,341
Deferred income taxes 37,120 37,120
Inventories, prepaid expenses and other 28,359 24,881
Total current assets 290,948 276,841
Property and equipment, net 622,711 626,740
Excess cost of investments over net assets 52,609 52,671
acquired, net
Other assets 56,932 61,769
$1,023,200 $1,018,021
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 27,778 $ 27,778
Accounts payable and accrued expenses 113,307 132,337
Income taxes 32,572 19,186
Total current liabilities 173,657 179,301
Long-term debt, net of current maturities 198,667 212,556
Other liabilities, including deferred
income taxes of $19,158 and $20,015 68,962 69,297
Shareholders' equity
Common stock 2,645 2,620
Additional paid-in capital 138,165 128,028
Common stock in treasury (33,182) (32,695)
Deferred compensation (26,664) (18,852)
Retained earnings 500,950 477,766
Total shareholders' equity 581,914 556,867
$1,023,200 $1,018,021
</TABLE>
(a) The balance sheet at July 31, 1994 has been condensed from the
audited balance sheet at that date.
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity - (Unaudited)
Three months Ended October 31, 1994
(In thousands, except shares outstanding)
<TABLE>
<CAPTION>
Common Stock Additional Common
Shares Paid-in Stock in Deferred Retained
Outstanding Amount Capital Treasury Compensation Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance July 31, 1994 24,872,862 $2,620 $128,028 $(32,695) $(18,852) $477,766 $556,867
Stock options exercised 28,288 3 417 - - - 420
Amortization of deferred
compensation, termination
of restricted stock grants
and other, net (9,754) - - (487) 1,930 - 1,443
Issuance of restricted
stock grants 226,017 22 9,720 - (9,742) - -
Net income - - - - - 23,184 23,184
Balance
October 31, 1994 25,117,413 $2,645 $138,165 $(33,182) $(26,664) $500,950 $581,914
</TABLE>
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Consolidated Statements of Income - (Unaudited)
(In thousands, except net income per share)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1994 1993
<S> <C> <C>
Revenue
Casino $192,329 $208,660
Rooms 18,508 19,934
Food and beverage 21,008 22,313
Earnings of unconsolidated affiliate 1,479 -
Other income 19,187 18,176
252,511 269,083
Costs and expenses
Casino 109,797 105,175
Rooms 4,706 5,938
Food and beverage 15,541 16,461
Other operating expenses 11,130 11,043
Selling, general and administrative 50,596 47,876
Depreciation and amortization 14,031 13,752
Provision for doubtful accounts 5,851 18,236
211,652 218,481
Operating income 40,859 50,602
Interest and dividend income 1,396 928
Interest expense, net (4,861) (5,110)
Income before income taxes 37,394 46,420
Income taxes 14,210 18,572
Net income $23,184 $27,848
Net income per share $ .94 $ 1.14
Average number of common and common
equivalent shares outstanding 24,609 24,513
</TABLE>
See notes to condensed consolidated financial statements.
CAESARS WORLD, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months
Ended
October 31,
1994 1993
<S> <C> <C>
Cash flows from (used for) operating
activities:
Net income $23,184 $27,848
Non-cash charges to income, net 15,689 15,250
Changes in assets and liabilities due to
operating activities:
Accounts payable and accrued expenses (18,520) (1,288)
Income taxes payable 13,386 18,840
Other assets and liabilities, net 4,018 (6,222)
Net cash provided from operating activities 37,757 54,428
Cash flows used for investing activities:
Purchases of property and equipment (9,892) (16,190)
Other investing activities, net (978) (1,035)
Net cash used for investing activities (10,870) (17,225)
Cash flows from (used for) financing
activities:
Reductions in debt and obligations
under capital leases (14,388) (15,752)
Other (67) 300
Net cash used for financing activities (14,455) (15,452)
Net increase in cash and cash equivalent
investments 12,432 21,751
Cash and cash equivalent investments at the
beginning of the period 143,499 108,616
Cash and cash equivalent investments at the
end of the period $155,931 $130,367
Supplemental cash flow information
Cash used for:
Payment of interest $ 8,223 $ 7,955
Payment of Federal and state income taxes, net $ 157 $ 58
</TABLE>
See notes to condensed consolidated financial statements.
Note 1. Condensed Consolidated Financial Statements -- The
Condensed Consolidated Balance Sheet as of October
31, 1994, the Consolidated Statement of
Shareholders' Equity for the three months ended
October 31, 1994, the Consolidated Statements of
Income for the three months ended October 31, 1994
and 1993, and the Condensed Consolidated Statements
of Cash Flows for the three months ended October
31, 1994 and 1993, have been prepared by the
Company and have not been audited. In the opinion
of management, all material adjustments (which
include only normal recurring adjustments)
necessary to present fairly the financial position,
results of operations and cash flows for all
periods presented have been made. All significant
intercompany balances and transactions have been
eliminated.
Certain information and footnote disclosures
normally included in financial statements prepared
in accordance with generally accepted accounting
principles have been condensed or omitted. These
condensed consolidated financial statements should
be read in conjunction with the financial
statements and notes thereto included in the
Company's July 31, 1994 Annual Report to
Shareholders. The results of operations for the
three month period ended October 31, 1994 are not
necessarily indicative of the operating results for
the full year.
The Company's independent public accountants have
made an unaudited interim review of the condensed
consolidated financial statements for the three
months ended October 31, 1994 and 1993, in
accordance with professional standards and
procedures established by the American Institute of
Certified Public Accountants. A report from the
independent public accountants regarding the
unaudited review of the interim financial
statements is included herein in Part II, Item 6
(a), Exhibit 15.
Note 2. Net Income Per Share -- Net income per share is
based upon the weighted average number of common
and common equivalent shares outstanding for each
period presented.
Note 3. Regulatory Environment -- The gaming industry in
which the Company operates is subject to extensive
regulatory supervision and, accordingly, operating
results could be affected by legislative and
regulatory changes or changes in the policies of,
or application of the laws by governmental
entities. See also the discussion under the
caption "Regulatory and Tax Environment" set forth
on page 25 of the Form 10-K of the Company for the
fiscal year ended July 31, 1994.
Note 4. Contingent Receivable -- In 1993, the Company
announced it had entered into a management
operating agreement with one of the bidders for a
casino development in New Orleans. In August 1993,
the bid was awarded to another operator and the
initial bidder's participation in the project ended.
Subsequently, the Company's former principal joined
with others and they were awarded the contract to
operate the New Orleans casino development project.
Pursuant to settlement of a dispute arising with
the initial bidder, the Company is to receive
$5,000,000 for expenses and pre-development
services from the initial bidder. Previously, this
receivable, in part, had been contingent (at least
as to timing) on the operator completing its
financing. The financing was completed in November
1994 and the receivable is due at the end of
December 1994. While the Company has received an
acknowledgement from a representative of the
obligors that these amounts are due and the obligor
is seeking financing, in view of unavailability of
enough information at this time for the Company to
fully evaluate this item and the uncertainity as to
when collection will occur, the Company is
currently planning to record realization only upon
collection of this receivable. The Company will
reflect collections of this item as a reduction of
expenses.
Note 5. Labor Contracts -- In November 1994, the Company
agreed to a new three year contract with the
Culinary Workers Union and Bartenders Union
covering approximately 2,500 employees in Las
Vegas. Another contract covering approximately 20
theatrical stage employees has expired at Caesars
Palace in Las Vegas and a tentative agreement has
been reached but not yet been ratified by these
employees. A work slow-down or stoppage is not
expected in the Las Vegas showroom as a result of
this expired contract.
Note 6. Exercise of Lease Purchase Option -- Two of the
Company's resorts in the Pocono mountains of
Pennsylvania are operated under leases the initial
20-year-lease terms of which expire on January 31,
1995. The leases include purchase options at the
fair market value of the lease properties excluding
personal property, goodwill, certain structures and
other intangibles. In November 1994, the Company
gave notice to the landlord that the Company will
exercise its purchase options to acquire the two
resort properties in fiscal 1995. The fair market
value purchase price will be determined by
independent appraisals. The Company has engaged an
independent appraiser and the lessor has notified
the Company it has engaged a separate independent
appraiser. The Company is uncertain as to the
amount or when the purchase option payments will be
made.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
Cash flow from operations together with available debt
capacity are the primary components providing the Company
financial flexibility to explore expansion opportunities and
provide adequate liquidity. Net cash provided from
operating activities was $37.8 million in the first three
months of fiscal 1995, compared with $54.4 million in the
same period of fiscal 1994. The decrease in fiscal 1995 is
primarily attributable to lower net income and a decrease in
accounts payable and accrued expenses which reduced the cash
generated by operating activities. At October 31, 1994, the
Company's cash and cash equivalent investments were $155.9
million compared with $143.5 million at July 31, 1994.
Cash used for investing activities in the three months ended
October 31, 1994 was primarily for capital expenditure
projects at Caesars Palace in Las Vegas, Caesars Atlantic
City and the Caesars Pocono Resorts in Pennsylvania. Room
and suite remodeling as well as ongoing construction of the
Magical Empire were the major capital expenditures in Las
Vegas. The Magical Empire is expected to combine dining and
intimate magical experiences in a new structure adjacent to
the casino and is scheduled to open in calendar 1995. At
Caesars Atlantic City building modifications are under
construction to lease approximately 22,500 square feet to
"Planet Hollywood" for a restaurant and entertainment
facility scheduled to be opened in the spring of 1995.
Twenty new Roman Tower Suites are nearly completed at
Caesars Pocono Palace in Pennsylvania and are expected to be
opened in stages by January 1, 1995. See Note 6 to
Condensed Consolidated Financial Statements for a discussion
of the payment to be made for the exercise of the lease
purchase option for two of the Pocono resorts.
The Company expects to be able to meet its future debt
obligations, finance operations and capital expenditures, as
well as provide for a substantial expansion of operations
through internally generated cash flow, liquidation of cash
equivalent investments, future borrowings (including amounts
available under the bank credit facilities), capital lease
transactions and/or sales of equity and debt securities.
RESULTS OF OPERATIONS
Comparison of net income for the three month periods ended
October 31, 1994 and October 31, 1993
Contribution to revenue and operating income by location,
interest and income taxes for the periods, were as follows
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1994 1993
<S> <C> <C>
Revenue
Nevada $125,614 $155,224
New Jersey 103,776 94,036
Earnings of unconsolidated affiliate 1,479 -
Casino/hotel operations 230,869 249,260
Pocono Resorts 14,597 14,492
Other (A) 7,045 5,331
Total revenue $252,511 $269,083
Contributions to operating income
Nevada $ 13,376 $ 27,484
New Jersey 24,757 22,642
Earnings of unconsolidated affiliate 1,479 -
Casino/hotel operations 39,612 50,126
Pocono Resorts 4,760 5,077
Other expenses (B) (3,513) (4,601)
Operating income 40,859 50,602
Interest income 1,396 928
Interest expense, net (4,861) (5,110)
Income before income taxes 37,394 46,420
Income taxes 14,210 18,572
Net income $ 23,184 $ 27,848
</TABLE>
(A) Other revenue is primarily from merchandising
operations.
(B) Other expenses include the contribution from
merchandising operations and corporate expenses.
Intercompany transactions have been eliminated.
Nevada Operations
Revenue decreased 19 percent and contribution to operating
income decreased 51 percent at the Nevada properties in the
three months ended October 31, 1994 compared with the same
prior year period. The lower casino revenue and operating
income during the quarter resulted from a significantly
lower table game win percentage compared with the year-
earlier quarter. Casino losses to a small number of high-
wagering table game customers in Las Vegas resulted in a
table game win percentage that was 7.9 percentage points
lower than last year's first-quarter table game win
percentage. This lower win percentage combined with reduced
table game activity more than offset the record quarterly
slot results. The Nevada operations realized all-time
quarterly slot machine records in both volume and win in the
quarter ended October 31, 1994, primarily attributable to
enhanced marketing programs. The provision for doubtful
accounts at the Nevada operations decreased by $12.2 million
due to a 13 percent reduction in credit issued and lower use
of the provision as a marketing tool to high-wagering
customers. There was also a reduction in operating expenses
resulting from the decline in table game win and activity
when comparing the respective fiscal quarters.
Caesars New Jersey
Revenue from Caesars Atlantic City for the first quarter
ended October 31, 1994 increased 10 percent and contribution
to operating income increased 9 percent from the same prior
year quarter. Record results for any previous quarter in
both casino activity and win were realized at Caesars
Atlantic City with record results from slot machines being
the primary contributor to the first quarter improvement.
Another positive impact on the quarterly comparisons came
from Caesars Atlantic City's Simulcast Casino which opened
with horse race betting and poker in October 1993 and
subsequently the introduction of other games. Increased
casino costs and higher marketing expenses, primarily
related to more extensive casino busing programs, partially
offset the casino revenue increase in New Jersey.
Unconsolidated Affiliate
During the fiscal 1995 first quarter, the Company had a
positive contribution to revenue and operating income from
an unconsolidated affiliate in Windsor, Ontario, Canada.
Caesars World has a one-third ownership of the company
operating the casino on behalf of the Ontario government.
The casino in Windsor opened in May 1994.
Other Expenses
The reduction in other expenses of $1.1 million in the first
quarter of fiscal 1995 compared with the year earlier
quarter was primarily attributable to reimbursement of pre-
opening expenses incurred in prior periods for the operation
in Windsor, Canada and improved contribution from the
Company's merchandising operations.
Income Taxes
The higher income tax rate in the first fiscal quarter of
last year was primarily due to the adoption of FASB 109 and
a retroactive tax rate adjustment during the first quarter
of fiscal 1994.
PART II. Other Information
Item 1. Legal Proceedings
See Item 3 of the Form 10-K of the Company for
the fiscal year ended July 31, 1994 which is hereby
incorporated herein.
Item 2. Changes in Securities
On December 8, 1994, the Board of Directors of
the Company approved an amendment (the "Amendment")
to the Rights Agreement, dated as of January 10,
1989, between the Company and Morgan Shareholder
Services Trust Company (the "Rights Agreement"),
which affects the Rights previously issued to
shareholders of the Company pursuant to the Rights
Agreement. The amendment requires the Board of
Directors to determine whether it is in the best
interests of the Company to decide that a person or
entity which would otherwise meet the criteria of
an "Unqualified Gaming Person" (as defined in the
Rights Agreement) should be so deemed by the Board.
No other provisions of the Rights Agreement were
affected.
Item 5. Other Information
With reference to the Company's 25 percent
participation in the limited partnership selected
as the preferred bidder to negotiate a lease to
operate a gaming facility in downtown St. Louis,
Missouri, a referendum was approved by the voters
in November 1994 to allow slot machines and other
games of chance. Negotiations are currently in
process with respect to this lease opportunity,
however, the ultimate composition and size of the
project is now under discussion and the outcome of
these negotiations and the obtaining of the
ultimate approvals are uncertain.
See the "Expansion and Growth Opportunities"
section of Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of
Operations in the Form 10-K for the fiscal year
ended July 31, 1994 for a further discussion of
this and other expansion activities.
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits filed herewith (the * denotes
documents included in this filing):
*10(a)Amendment No. 1 dated December 9, 1994 to
Rights Agreement dated January 10, 1989 between
Caesars World, Inc. and First Chicago Trust Company
of New York.
*10(b)First Amendment dated August 1, 1992 to
Empliyment Agreement of Henry Gluck dated August 1,
1991.
*10(c)First Amendment dated August 1, 1992 to
Employment Agreement of J. Terrence Lanni dated
August 1, 1991.
*10(d)Second Amendment dated October 4, 1994 to
Employment Agreement of Henry Gluck dated August 1,
1991.
*10(e)Second Amendment dated October 4, 1994 to
Employment Agreement of J. Terrence Lanni dated
August 1, 1991.
*15 Review Report of Independent Public
Accountants
*27 Financial Data Schedule
(b) During the quarter ended October 31, 1994
a Form 8-K dated August 25, 1994 was filed and
included the Company's press release of the
same date announcing the earnings for the
fiscal year ended July 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CAESARS WORLD, INC.
(Registrant)
Principal Financial Officer:
Date: December 12, 1994 /s/ Roger Lee
Roger Lee
Senior Vice President-
Finance and Administration
Principal Accounting
Officer:
Date: December 12, 1994 /s/ Bruce C. Hinckley
Bruce C. Hinckley
Vice President and
Corporate Controller
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1, dated as of December 9, 1994, to the
Rights Agreement dated as of January 10, 1989 (the "Rights
Agreement"), between Caesars World, Inc., a Florida
corporation (the "Company"), and Morgan Shareholder
Services Trust Company, a New York corporation, as Rights
Agent.
WHEREAS, First Chicago Trust Company of New York, a
New York corporation, is the successor corporation to
Morgan Shareholder Services Trust Company and is now the
Rights Agent under the above-described Rights Agreement
(the "Rights Agent");
WHEREAS, the Company and the Rights Agent entered into
the Rights Agreement specifying the terms of the Rights (as
defined therein);
WHEREAS, the Company and the Rights Agent desire to
amend the Rights Agreement in accordance with Section 26 of
the Rights Agreement;
NOW, THEREFORE, in consideration of the premises and
mutual agreements set forth in the Rights Agreement and
this Amendment, the parties hereby agree as follows:
1. Section 11(a)(ii)(C) of the Rights Agreement is
amended in its entirety, as follows:
"(C) any Person, alone or together with its
Affiliates and Associates, shall, at any time
after the date of this Agreement and at a time
when the Company or a Subsidiary of the Company
holds one or more licenses from the Nevada Gaming
Commission, becomes the Beneficial Owner of (i)
10% or more of the shares of Common Stock then
outstanding without being found suitable by the
Nevada Gaming Commission and without being found
qualified by the New Jersey Casino Control
Commission or (ii) 10% or more of the shares of
Common Stock then outstanding (or such higher
percentage as the Nevada Gaming Commission shall
have previously determined that such Person may
beneficially own without such beneficial
ownership constituting, or being presumed to
constitute, control of the Company), unless such
Person has received prior approval to acquire
control of the Company by final order of the
Commission, and, in the case of both clauses (i)
and (ii), the Board of Directors has determined
(with the concurrence of a majority of the
members of the Board who are not employees of the
Company), after reasonable inquiry and
investigation, including consultation with such
persons as such directors shall deem appropriate,
that such Beneficial Ownership is not in the best
interests of the Company (any such Person
referred to in clauses (i) or (ii) and with
respect to which the determination of the Board
of Directors specified in this paragraph (C) has
been rendered, an "Unqualified Gaming Person")."
2. The foregoing amendment shall be effective as of
the date hereof and, except as set forth herein, the Rights
Agreement shall remain in full force and effect and shall
be otherwise unaffected hereby.
3. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original,
but all of which together shall constitute on and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and their respective
corporate seals to be hereunto affixed, all as of the day
and year first above written.
CAESARS WORLD, INC.
(SEAL)
By: /s/Philip L. Ball
Name: Philip L. Ball
Title: Senior Vice President
FIRST CHICAGO TRUST COMPANY OF NEW
YORK, as Rights Agent
(SEAL)
By: /s/Ralph Persico
Name: Ralph Persico
Title: Customer Service Officer
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
OF HENRY GLUCK DATED AUGUST 1, 1991
This Agreement, made as of this 1st day of August, 1992 by
and between Caesars World, inc. (the "Company"), a Florida
corporation and Henry Gluck (the "Employee").
FACT RECITAL
The Audit and Compensation Committee of the Company has
approved a modification with respect to the salary in the
Employment Agreement between Employee and the Company dated
August 1, 1991 (the "Employment Agreement") and Employee is
willing to agree to such amendments.
AGREEMENT
NOW THEREFORE, the Company and Employee agree that the
Employment Agreement is hereby amended as follows:
1. Paragraph 6.a. (i) is amended by adding the following
at the end thereof: "As of August 1, 1992, the annual rate of
Employee's salary shall be $848,000."
2. Paragraph 6.a. (ii) is amended by changing the wording
in the first line thereof "...beginning August 1, 1992...." to
"...beginning August 1, 1993...."
3. Except as modified above, the Employment Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed as of
August 1, 1992.
CAESARS WORLD, INC.
By: /s/Roger Lee
EMPLOYEE
/s/ Henry Gluck
HENRY GLUCK
10 (b)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
OF J. TERRENCE LANNI DATED AUGUST 1, 1991
This Agreement, made as of this 1st day of August, 1992 by
and between Caesars World, inc. (the "Company"), a Florida
corporation and J. Terrence Lanni (the "Employee").
FACT RECITAL
The Audit and Compensation Committee of the Company has
approved a modification with respect to the salary in the
Employment Agreement between Employee and the Company dated
August 1, 1991 (the "Employment Agreement") and Employee is
willing to agree to such amendments.
AGREEMENT
NOW THEREFORE, the Company and Employee agree that the
Employment Agreement is hereby amended as follows:
1. Paragraph 6.a. (i) is amended by adding the following
at the end thereof: "As of August 1, 1992, the annual rate of
Employee's salary shall be $636,000."
2. Paragraph 6.a. (ii) is amended by changing the wording
in the first line thereof "...beginning August 1, 1992...." to
"...beginning August 1, 1993...."
3. Except as modified above, the Employment Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed as of
August 1, 1992.
CAESARS WORLD, INC.
By: /s/Roger Lee
EMPLOYEE
/s/ J. Terrence Lanni
J. TERRENCE LANNI
10 (c)
SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
This Amendment is made as of this 4th day of October,
1994, to the Employment Agreement by and between Caesars
World, Inc. (the "Company") and Henry Gluck (the
"Employee"), made as of August 1, 1991 (the "Agreement").
The Employee and the Company hereby agree that,
effective August 1, 1997, Paragraph 6.b. of the Agreement
shall be deleted in its entirety. With respect to the
Company's fiscal years beginning on or after August 1,
1997, references in other provisions of the Agreement to
"Incentive Compensation" or "amounts payable pursuant to
Paragraph 6.b." for a given fiscal year (or variants of
such references) shall be deemed to refer to the annual
incentive compensation (if any) which may become payable or
have been paid to the Employee pursuant to the Company's
Senior Corporate Officers Combined Incentive Plan (or any
successor or substitute plan thereto) for such fiscal year
and discretionary bonuses (if any) which are payable or
have been paid for such fiscal year.
Notwithstanding the foregoing, if Proposal 3 in the
Company's proxy statement for the December 8, 1994 meeting
is approved by the shareholders, the immediately preceding
paragraph of this Second Amendment shall not become
effective, however, whether or not <PAGE>
Proposal 3 is so approved, Paragraph
6.b.(vii) of the Agreement shall be deleted in its entirety, effective as of
the date of this Second Amendment.
IN WITNESS WHEREOF, this Second Amendment the
Agreement has been executed at Los Angeles, California.
EMPLOYEE CAESARS WORLD, INC.
/s/Henry Gluck By /s/Philip L. Ball
Henry Gluck Title Senior Vice President
SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
This Amendment is made as of this 4th day of October,
1994, to the Employment Agreement by and between Caesars
World, Inc. (the "Company") and J. Terrence Lanni (the
"Employee"), made as of August 1, 1991 (the "Agreement").
The Employee and the Company hereby agree that,
effective August 1, 1995, Paragraph 6.b. of the Agreement
shall be deleted in its entirety. With respect to the
Company's fiscal years beginning on or after August 1,
1995, references in other provisions of the Agreement to
"Incentive Compensation" or "amounts payable pursuant to
Paragraph 6.b." for a given fiscal year (or variants of
such references) shall be deemed to refer to the annual
incentive compensation (if any) which may become payable or
have been paid to the Employee pursuant to the Company's
Senior Corporate Officers Combined Incentive Plan (or any
successor or substitute plan thereto) for such fiscal year
and discretionary bonuses (if any) which are payable or
have been paid for such fiscal year.
Notwithstanding the foregoing, if Proposal 3 in the
Company's proxy statement for the December 8, 1994 meeting
is approved by the shareholders, the immediately preceding
paragraph of this Second Amendment shall not become
effective, however, whether or not <PAGE>
Proposal 3 is so approved, Paragraph
6.b.(vii) of the Agreement shall be deleted in its entirety, effective as of
the date of this Second Amendment.
IN WITNESS WHEREOF, this Second Amendment to the
Agreement has been executed at Los Angeles, California.
EMPLOYEE CAESARS WORLD, INC.
/s/J. Terrence Lanni By /s/Philip L. Ball
J. Terrence Lanni Title Senior Vice President
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Directors of Caesars World, Inc.:
We have reviewed the accompanying condensed consolidated balance
sheet of Caesars World, Inc. (a Florida corporation) and
subsidiaries as of October 31, 1994, and the related consolidated
statements of income for the three-month periods ended October
31, 1994 and 1993, the consolidated statement of shareholders'
equity for the three-month period ended October 31, 1994, and the
condensed consolidated statements of cash flows for the three-
month periods ended October 31, 1994 and 1993. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical review procedures to financial data and
making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Caesars
World, Inc. and subsidiaries as of July 31, 1994 (not presented
herein), and, in our report dated August 23, 1994, we expressed
an unqualified opinion on that statement. In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of July 31, 1994, is fairly stated in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 5, 1994
EXHIBIT 15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> OCT-31-1994
<CASH> 43647
<SECURITIES> 112285
<RECEIVABLES> 107546
<ALLOWANCES> 38009
<INVENTORY> 12893
<CURRENT-ASSETS> 290948
<PP&E> 1058340
<DEPRECIATION> 435629
<TOTAL-ASSETS> 1023200
<CURRENT-LIABILITIES> 173657
<BONDS> 208085
<COMMON> 2645
0
0
<OTHER-SE> 579269
<TOTAL-LIABILITY-AND-EQUITY> 1023200
<SALES> 28049
<TOTAL-REVENUES> 252511
<CGS> 18060
<TOTAL-COSTS> 130044
<OTHER-EXPENSES> 11130
<LOSS-PROVISION> 5851
<INTEREST-EXPENSE> 4861
<INCOME-PRETAX> 37394
<INCOME-TAX> 14210
<INCOME-CONTINUING> 23184
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23184
<EPS-PRIMARY> .94
<EPS-DILUTED> .94
</TABLE>
