UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 No. 1-6697
Mirage Resorts, Incorporated
_______________________________________________________________
(Exact name of Registrant as specified in its charter)
Nevada 88-0058016
_______________________________ ___________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
_____________________________________________________________________________
(Address of principal executive offices - Zip Code)
(702) 791-7111
_____________________________________________________________________________
(Registrant's telephone number, including area code)
_____________________________________________________________________________
(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
____ ____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $0.008 par value, 90,945,189 shares outstanding as
of July 31, 1994.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial information as of
June 30, 1994 and for the three-month and six-month periods then
ended included in this report was reviewed by Arthur Andersen &
Co., independent public accountants, in accordance with the
professional standards and procedures established for such
reviews by the American Institute of Certified Public
Accountants.
<PAGE>
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
_______________________________________________
To the Directors and Stockholders
of Mirage Resorts, Incorporated
Las Vegas, Nevada
We have reviewed the accompanying condensed consolidated balance
sheet of Mirage Resorts, Incorporated and subsidiaries (the
"Company") as of June 30, 1994, and the related condensed
consolidated statements of income for the three-month and six-
month periods ended June 30, 1994 and the related condensed
consolidated statement of cash flows for the six-month period
ended June 30, 1994. These financial statements are the
responsibility of the Company's management. The unaudited
condensed consolidated statements of income for the three-month
and six-month periods ended June 30, 1993 and the condensed
consolidated statement of cash flows for the six-month period
ended June 30, 1993 were reviewed by other auditors whose report
dated August 13, 1993, stated that they were not aware of any
material modifications that should be made to those statements in
order for them to be in conformity with generally accepted
accounting principles. In addition, the consolidated financial
statements of Mirage Resorts, Incorporated as of December 31,
1993, were audited by other auditors whose report dated February
11, 1994, expressed an unqualified opinion on those statements.
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 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 accompanying condensed
consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Las Vegas, Nevada
August 9, 1994
2
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
BALANCE SHEETS
_____________________________________________________________________________________
At June 30, At December 31,
1994 1993
_____________________________________________________________________________________
(In thousands) (Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46,730 $ 57,462
Receivables, net of allowance for doubtful
accounts of $35,906 and $26,876 51,977 58,182
Inventories 26,873 30,374
Deferred income taxes 27,494 26,756
Prepaid expenses and other 18,992 24,656
____________________________________________________________________________________
Total current assets 172,066 197,430
Property and equipment, net 1,411,527 1,421,366
Other assets, net 108,709 86,462
____________________________________________________________________________________
$1,692,302 $1,705,258
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 47,905 $ 76,811
Accrued expenses 83,039 82,922
Current maturities of long-term debt 4,564 31,617
____________________________________________________________________________________
Total current liabilities 135,508 191,350
Long-term debt, net of current maturities 515,813 535,025
Other liabilities, including deferred income taxes
of $69,979 and $60,115 78,599 68,019
____________________________________________________________________________________
Total liabilities 729,920 794,394
____________________________________________________________________________________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 90,945 and 90,607 shares outstanding 940 940
Additional paid-in capital and other 696,219 695,587
Retained earnings 421,629 372,683
Treasury stock, at cost: 26,629 and 26,967 shares (156,406) (158,346)
____________________________________________________________________________________
Total stockholders' equity 962,382 910,864
____________________________________________________________________________________
$1,692,302 $1,705,258
====================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
STATEMENTS OF INCOME (UNAUDITED)
___________________________________________________________________________________________
THREE MONTHS SIX MONTHS
______________________ _____________________
For the periods ended June 30 1994 1993 1994 1993
___________________________________________________________________________________________
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
GROSS REVENUES $333,959 $254,025 $665,033 $491,908
Less-promotional allowances (27,546) (22,919) (58,166) (46,029)
___________________________________________________________________________________________
306,413 231,106 606,867 445,879
___________________________________________________________________________________________
COSTS AND EXPENSES
Casino-hotel operations 181,023 137,325 366,446 272,412
General and administrative 36,728 26,251 72,121 50,474
Depreciation and amortization 23,239 17,547 46,752 34,911
Corporate expense 8,550 8,291 16,408 15,138
___________________________________________________________________________________________
249,540 189,414 501,727 372,935
___________________________________________________________________________________________
OPERATING INCOME 56,873 41,692 105,140 72,944
___________________________________________________________________________________________
OTHER INCOME AND (EXPENSES)
Interest and other income 2,250 1,213 3,728 3,673
Interest cost (13,741) (23,996) (28,040) (47,325)
Interest capitalized 2,175 7,598 3,821 12,582
Other, net (147) 100 (329) 83
___________________________________________________________________________________________
(9,463) (15,085) (20,820) (30,987)
___________________________________________________________________________________________
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 47,410 26,607 84,320 41,957
Provision for income taxes (17,248) (8,626) (30,810) (13,580)
___________________________________________________________________________________________
INCOME BEFORE EXTRAORDINARY ITEM 30,162 17,981 53,510 28,377
Extraordinary item-loss on early
retirements of debt, net of
applicable income tax benefit (4,564) (1,298) (4,564) (2,104)
___________________________________________________________________________________________
NET INCOME $ 25,598 $ 16,683 $ 48,946 $ 26,273
===========================================================================================
INCOME PER SHARE OF COMMON STOCK
Income before extraordinary item $0.32 $0.22 $0.56 $0.36
Extraordinary item-loss on early
retirements of debt, net of
applicable income tax benefit (0.05) (0.01) (0.04) (0.03)
___________________________________________________________________________________________
NET INCOME PER SHARE OF COMMON STOCK $0.27 $0.21 $0.52 $0.33
===========================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
STATEMENTS OF CASH FLOWS (UNAUDITED)
________________________________________________________________________________________
Six months ended June 30 1994 1993
________________________________________________________________________________________
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 48,946 $ 26,273
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for losses on receivables 10,098 8,589
Depreciation and amortization of property
and equipment 48,592 36,069
Amortization of original issue discount and
debt issue costs 6,834 6,783
Other amortization 2,170 2,337
Loss on early retirements of debt 7,022 3,187
Deferred income taxes 9,126 5,266
Changes in assets and liabilities
Net decrease in receivables and other
current assets 5,272 10,662
Net decrease in trade accounts payable and
accrued expenses (26,890) (14,594)
Other, net 1,303 (1,883)
________________________________________________________________________________________
Net cash provided by operating activities 112,473 82,689
________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (41,952) (273,400)
Net decrease in non-current cash equivalents
restricted for construction - 154,447
Joint venture and other equity investments (22,559) -
Other, net (1,884) 7,888
________________________________________________________________________________________
Net cash used for investing activities (66,395) (111,065)
________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Early retirements of debt (58,073) (43,494)
Net proceeds from issuance of senior subordinated notes - 97,500
Borrowings under bank credit facilities 123,000 -
Repayments of borrowings under bank credit facilities (90,000) (45,000)
Other principal payments of debt (29,343) (1,834)
Other, net (2,394) 2,361
________________________________________________________________________________________
Net cash provided by (used for) financing
activities (56,810) 9,533
________________________________________________________________________________________
CASH AND CASH EQUIVALENTS
Decrease for the period (10,732) (18,843)
Balance, beginning of period 57,462 142,983
________________________________________________________________________________________
Balance, end of period $ 46,730 $ 124,140
========================================================================================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid, net of amounts capitalized $ 18,815 $ 27,195
Income taxes paid (refunded), net 9,500 (13,152)
________________________________________________________________________________________
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED Mirage Resorts, Incorporated
FINANCIAL STATEMENTS (UNAUDITED)
_________________________________________________________________
NOTE 1 - BASIS OF PRESENTATION
Mirage Resorts, Incorporated (the "Company" or the "Registrant"),
through wholly owned Nevada subsidiaries, owns and operates some
of the most successful casino-based entertainment resorts in the
world. These facilities include The Mirage and Treasure Island
on the Las Vegas Strip, the Golden Nugget in downtown Las Vegas
and the Golden Nugget-Laughlin in Laughlin, Nevada. In January
1993, the Company purchased the assets of the former Dunes Hotel,
Casino and Country Club on the Las Vegas Strip and is developing
long-term plans for the approximately 164-acre site, which
include construction of extensive new hotel, casino and resort
facilities.
The condensed consolidated financial statements have been
prepared in accordance with the accounting policies described in
the Company's 1993 Annual Report on Form 10-K (as amended) and
should be read in conjunction with the Notes to Consolidated
Financial Statements which appear in that report. The Condensed
Consolidated Balance Sheet at December 31, 1993 was derived from
audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the results for the interim periods have been included. The
interim results reflected in the condensed consolidated financial
statements are not necessarily indicative of expected results for
the full year.
Certain amounts in the 1993 condensed consolidated financial
statements have been reclassified to conform with the 1994
presentation. Such reclassifications had no effect on the
Company's net income.
NOTE 2 - LONG-TERM DEBT
NEW BANK CREDIT FACILITY. On May 25, 1994, the Company obtained
a $525 million five-year reducing revolving credit facility from
a group of commercial banks (the "New Facility"), replacing its
previous $150 million bank credit facility. Borrowings under the
New Facility bear interest at a floating rate equal to, at the
Company's option, the prime rate plus 5/8% or the one-, two-,
three- or six-month London Interbank Offered Rate plus 1 5/8%.
The Company incurs a commitment fee of 0.4375% per annum on
the unused portion of the New Facility.
The Company and most of its significant subsidiaries, excluding
the subsidiaries which own and operate the Golden Nugget and
Golden Nugget-Laughlin and certain related subsidiaries, are
directly liable for or have guaranteed the repayment of
borrowings under the New Facility. Borrowings under the New
Facility are collateralized principally by first deeds of trust
on the Dunes site and the Company's Shadow Creek golf course.
The credit agreement governing the New Facility contains
financial covenants requiring the Company and most of its
subsidiaries, excluding the Golden Nugget subsidiaries, to
maintain a specific tangible net worth and to meet other
financial ratios. The credit agreement also contains covenants
that impose various restrictions (subject to permitted amounts)
on the ability of the Company and most of its subsidiaries,
excluding the Golden Nugget subsidiaries, to, among other things,
incur additional debt, commit funds to capital expenditures or
new business ventures, make investments, merge or sell assets or
pay dividends on or repurchase the Company's capital stock.
EARLY RETIREMENTS OF DEBT. During the second quarter of 1994,
the Company repurchased approximately $55.2 million aggregate
principal amount of the 9 7/8% first mortgage notes associated
with The Mirage and Treasure Island. A substantial portion of
the cost of the repurchases was provided by borrowings under the
bank credit facilities.
In connection with these retirements and the write-off of the
unamortized financing costs associated with the previous bank
credit facility, the Company recorded an extraordinary loss of
$4.6 million, net of applicable income tax benefits of $2.4
million.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED
JUNE 30, 1994 AND 1993
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Financial Highlights
% Increase
Three months ended June 30 1994 1993 (Decrease)
_____________________________________________________________________________________
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Gross revenues $333,959 $254,025 31.5%
Promotional allowances (27,546) (22,919) 20.2%
_____________________________________________________________________________________
Net revenues 306,413 231,106 32.6%
_____________________________________________________________________________________
Operating income before depreciation and
amortization and corporate expense 88,662 67,530 31.3%
Operating income 56,873 41,692 36.4%
Income before extraordinary item 30,162 17,981 67.7%
Net income 25,598 16,683 53.4%
_____________________________________________________________________________________
Income per share before extraordinary item $0.32 $0.22 45.5%
Net income per share $0.27 $0.21 28.6%
Average common and dilutive common
equivalent shares (in thousands) 94,396 80,295 17.6%
_____________________________________________________________________________________
Operating margin* 18.6% 18.0% 0.6pts
Company-wide table games win percentage 18.6% 21.6% (3.0)pts
Company-wide occupancy of standard guest rooms 99.1% 98.5% 0.6pts
_____________________________________________________________________________________
</TABLE>
*Operating income/net revenues.
Led by the continued success of Treasure Island, the Company's
1994 second quarter operating results improved significantly over
the prior-year period. Treasure Island contributed gross
revenues and operating income of $89.2 million and $13.9 million,
respectively.
The improvement in operating results was attained despite a
lower-than-historical table games win percentage. The Company-
wide table games win percentage during the quarter was 18.6%,
versus 21.6% in the 1993 second quarter and 19.3% for the full
year 1993. Due to a somewhat different mix of business, Treasure
Island operates, as expected, at a lower table games win
percentage than the Company-wide average. Excluding Treasure
Island, the Company-wide win percentage was 19.3%, versus 21.6%
in the prior-year quarter and 19.4% for the full year 1993.
The Company's standard guest rooms continued to operate at near
full occupancy during the quarter-99.1% versus 98.5% in the
prior-year period. This growth in occupancy was achieved
notwithstanding a 55% increase in the Company's available
standard guest rooms with the addition of Treasure Island.
Management's ongoing efforts to further improve the Company's
balance sheet and reduce its overall cost of capital through
early retirements and refinancing of higher cost debt contributed
significantly to the improvement in net income. Interest cost,
net of amounts capitalized, declined $4.8 million, or 29.5%, from
the 1993 period.
The improvement in earnings per share was realized despite a
17.6% increase in the average number of common and dilutive
common equivalent shares, principally reflecting the November
1993 public offering of 13,750,000 shares of the Company's common
stock.
7
<PAGE>
<TABLE>
<CAPTION>
The Mirage
% Increase
Three months ended June 30 1994 1993 (Decrease)
________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $179,394 $187,147 (4.1)%
Net revenues 163,640 169,760 (3.6)%
EBDIT * 53,563 52,769 1.5%
Operating income 41,575 40,053 3.8%
Operating margin 25.4% 23.6% 1.8pts
________________________________________________________________________
</TABLE>
* Earnings before depreciation, interest and taxes.
The Mirage experienced a lower table games win percentage than in
the prior-year second quarter, causing a 10.5% decline in table
games revenues. Slot revenues were up slightly despite the
increase in competition since the 1993 quarter. Management
attributes the improvement in part to the completion early in the
1994 second quarter of a program to install new upgraded slot
machines at The Mirage.
Non-casino revenues declined 2.2% compared with the same period
last year. This decline is attributable to the absence of the
revenues from Cirque du Soleil. This world renowned performance
troupe performed at The Mirage during 1993 and is now appearing
in an all-new show, "Mystere," at Treasure Island. Excluding the
Cirque du Soleil revenues from the 1993 second quarter, non-
casino revenues rose 1.7%. This increase primarily represents a
$1.4 million, or 4.4%, growth in room revenues principally
reflecting an improvement in the average room rate. The Mirage's
standard guest rooms were 99.6% occupied during the 1994 second
quarter, versus 99.4% in the 1993 period.
Principally reflecting lower payroll, promotional, advertising
and depreciation costs and expenses, the operating margin
improved over the 1993 quarter, resulting in increases in both
operating cash flow (EBDIT) and operating income.
<TABLE>
<CAPTION>
Treasure Island
Three months ended June 30 1994
___________________________________________________________________
(Dollars in thousands)
<S> <C>
Gross revenues $89,225
Net revenues 83,291
EBDIT 20,746
Operating income 13,862
Operating margin 16.6%
___________________________________________________________________
</TABLE>
Treasure Island, in its second full quarter of operation,
produced $20.7 million of operating cash flow on gross revenues
of $89.2 million. Casino revenues and gross non-casino revenues
totaled $36.3 million and $52.9 million, respectively. Occupancy
of standard guest rooms was 99.5%.
Treasure Island's second quarter revenues were slightly above
those of the first quarter, despite a small decline in the table
games win percentage. The improvement principally reflects
increases in room, retail stores and entertainment revenues.
Slot revenues also showed improvement.
8
<PAGE>
<TABLE>
<CAPTION>
Golden Nugget
Three months ended June 30 1994 1993 % (Decrease)
________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $48,481 $50,080 (3.2)%
Net revenues 44,130 46,043 (4.2)%
EBDIT 10,354 10,899 (5.0)%
Operating income 7,813 8,169 (4.4)%
Operating margin 17.7% 17.7% 0.0pts
________________________________________________________________________
</TABLE>
The Golden Nugget incurred a modest decline in operating results
during the quarter. This decline resulted from a $2.0 million,
or 6.5%, decrease in casino revenues principally reflecting a
reduction in both table games activity and the win percentage.
Management believes that trial visits to the new Las Vegas Strip
hotel-casinos is the primary reason for the decline in table
games activity. Slot revenues were up during the quarter,
primarily due to the upgrading of most of the slot machines at
the Golden Nugget during the 1994 second quarter.
Non-casino revenues also showed improvement over the 1993 second
quarter. Occupancy of the Golden Nugget's standard guest rooms
was 98.2%, versus 97.4% in the prior-year period, commensurate
with a small increase in room revenues. The improvement in non-
casino revenues also reflects the additional revenues from the
popular new production show "Country Fever" which opened on June
16 in the showroom at the Golden Nugget.
In order to compete more effectively with the Strip hotel-
casinos, in 1993 the Golden Nugget and a group of other downtown
casinos formed a public/private-sector venture to develop a
project known as "The Fremont Street Experience." This project
will tie together the casinos along Fremont Street in downtown
Las Vegas, creating a pedestrian mall environment. A
computerized light show will feature a choreographed production
of light and sound within the 4 1/2-acre space frame structure.
The streetscape will include retailing kiosks and themed special
event celebrations to bring tourists and local residents to the
downtown area. The Fremont Street Experience will also include a
1,600-vehicle parking garage, which is much needed in downtown
Las Vegas, and approximately 38,000 square feet of additional
retail space.
Preliminary site development for The Fremont Street Experience
commenced in July 1994, and completion of the project is
scheduled for September 1995.
<TABLE>
<CAPTION>
Golden Nugget-Laughlin
Three months ended June 30 1994 1993 % Increase
_______________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $16,859 $16,798 0.4%
Net revenues 15,352 15,303 0.3%
EBDIT 3,999 3,862 3.5%
Operating income 2,173 1,761 23.4%
Operating margin 14.2% 11.5% 2.7pts
_______________________________________________________________________
</TABLE>
Revenues at the Golden Nugget-Laughlin were relatively flat
compared with the prior-year second quarter. The improvement in
the operating margin resulted in a 3.5% and 23.4% increase in
operating cash flow and operating income, respectively.
9
<PAGE>
The Laughlin market has become very competitive in recent months,
as a competitor added substantially to the guest room base in a
period in which there were no significant enhancements to the
city's overall tourism experience. As a result, several Laughlin
casinos have reported sharp declines in their operating results.
Occupancy at the Golden Nugget-Laughlin, however, remained high
at 95.8% during the 1994 second quarter.
Other Factors Affecting Earnings
During the 1994 second quarter, the Company accepted a
substantial sum of money in settlement of a lawsuit. The
settlement, whose terms are required to be kept confidential, was
determined to be in the best interests of the Company's
stockholders. A portion of the proceeds from the settlement was
credited to corporate expense, while the remainder was credited
to interest and other income.
Due to reduced levels of debt and a lower average cost of
borrowings, the Company's interest cost declined by $10.3
million, or 42.7%. Since the construction of Treasure Island was
substantially completed in October 1993, a much smaller portion
of the Company's interest cost is being capitalized in 1994 than
in 1993. Nevertheless, interest cost, net of amounts
capitalized, declined by 29.5%.
The Company's effective income tax rate, including the tax
benefits associated with the extraordinary losses described
below, increased to 36.6%, versus 32.3% in the prior-year period,
due to increases in the statutory rate and decreases in the
deductibility of certain expenses.
In the second quarter of both years, some of the Company's more
expensive debt was retired prior to its maturity. Although these
early retirements were economically beneficial for the Company,
the repurchase premiums paid and the write-off of unamortized
debt issue costs resulted in extraordinary charges in both
periods.
COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1994 AND 1993
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Financial Highlights
% Increase
Six months ended June 30 1994 1993 (Decrease)
____________________________________________________________________________________
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Gross revenues $665,033 $491,908 35.2%
Promotional allowances (58,166) (46,029) 26.4%
____________________________________________________________________________________
Net revenues 606,867 445,879 36.1%
____________________________________________________________________________________
Operating income before depreciation and
amortization and corporate expense 168,300 122,993 36.8%
Operating income 105,140 72,944 44.1%
Income before extraordinary item 53,510 28,377 88.6%
Net income 48,946 26,273 86.3%
____________________________________________________________________________________
Income per share before extraordinary item $0.56 $0.36 55.6%
Net income per share $0.52 $0.33 57.6%
Average common and dilutive common
equivalent shares (in thousands) 94,849 80,004 18.6%
____________________________________________________________________________________
Operating margin 17.3% 16.4% 0.9pts
Company-wide table games win percentage 17.7% 19.1% (1.4)pts
Company-wide occupancy of standard guest rooms 98.6% 97.1% 1.5pts
____________________________________________________________________________________
</TABLE>
Treasure Island contributed gross revenues and operating income
of $177.6 million and $28.5 million, respectively, to the
Company's operating results during the 1994 six-month period.
10
<PAGE>
The Company-wide table games win percentage was 17.7%, versus
19.1% during the comparable 1993 period. As discussed
previously, due to a somewhat different mix of business, Treasure
Island has been operating at a lower table games win percentage
than the Company-wide average. Excluding Treasure Island, the
Company-wide win percentage was 18.1%, down from the 19.1% in the
1993 six-month period. Table games activity, excluding Treasure
Island, was up 3.0% over the prior-year period. However, the
decline in the win percentage more than offset the improvement in
activity.
Even with the additional room inventory, the Company's standard
guest rooms remained nearly 100% occupied throughout the period.
Company-wide occupancy of standard guest rooms was 98.6%, up
from the 97.1% experienced during the first six months of 1993.
Interest cost, net of amounts capitalized, declined $10.5
million, or 30.3%, from the 1993 period, reflecting the effect of
management's ongoing efforts to reduce the Company's overall cost
of capital.
<TABLE>
<CAPTION>
The Mirage
% Increase
Six months ended June 30 1994 1993 (Decrease)
__________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $353,355 $354,541 (0.3)%
Net revenues 319,407 319,954 (0.2)%
EBDIT 95,324 91,499 4.2%
Operating income 71,114 66,143 7.5%
Operating margin 22.3% 20.7% 1.6pts
__________________________________________________________________________
</TABLE>
Revenues at The Mirage were nearly flat compared with the 1993
six-month period. Table games activity was up 5.4%. A decline
in the win percentage, however, substantially offset the
improvement in activity.
Excluding the Cirque du Soleil revenues from the 1993 period,
gross non-casino revenues grew by $7.0 million, or 4.3%, during
the first six months of 1994. This improvement represents
increases in virtually every category. Most notably, room
revenues increased $4.4 million, or 7.3%, reflecting an increase
in both occupancy and the average standard room rate. Occupancy
of The Mirage's standard guest rooms was 98.4%, versus 97.6% in
the 1993 six-month period.
The Mirage's operating cash flow and operating income increased
over the 1993 period. These increases reflect the improvement in
the operating margin primarily resulting from reduced payroll,
advertising and depreciation costs and expenses.
<TABLE>
<CAPTION>
Treasure Island
Six months ended June 30 1994
____________________________________________________________________
(Dollars in thousands)
<S> <C>
Gross revenues $177,616
Net revenues 165,445
EBDIT 42,208
Operating income 28,493
Operating margin 17.2%
____________________________________________________________________
</TABLE>
During the first half of 1994, Treasure Island generated
operating cash flow of $42.2 million on gross revenues of $177.6
million. Casino revenues and gross non-casino revenues totaled
$74.4 million and $103.2 million, respectively. Occupancy of
standard guest rooms was 99.4%.
11
<PAGE>
<TABLE>
<CAPTION>
Golden Nugget
% Increase
Six months ended June 30 1994 1993 (Decrease)
_______________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $99,662 $103,791 (4.0)%
Net revenues 90,764 95,311 (4.8)%
EBDIT 22,345 23,334 (4.2)%
Operating income 17,213 17,933 (4.0)%
Operating margin 19.0% 18.8% 0.2pts
_______________________________________________________________________
</TABLE>
The decline in the Golden Nugget's operating results during the
1994 six-month period principally reflects a $4.3 million, or
6.7%, reduction in casino revenues. Non-casino revenues were
substantially unchanged during the period. Lower table games
revenues caused by a decline in both activity and the win
percentage is the primary reason for the reduction in casino
revenues. Slot activity was up slightly over the prior-year
period.
Room revenues showed a modest improvement during the period,
reflecting an increase in occupancy. The Golden Nugget's
standard guest rooms were 97.8% occupied during the first six
months of 1994, compared with 96.7% in the 1993 period.
<TABLE>
<CAPTION>
Golden Nugget-Laughlin
Six months ended June 30 1994 1993 % Increase
_________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $34,400 $33,576 2.5%
Net revenues 31,251 30,614 2.1%
EBDIT 8,423 8,160 3.2%
Operating income 4,728 4,006 18.0%
Operating margin 15.1% 13.1% 2.0pts
_________________________________________________________________________
</TABLE>
The improvement in the Golden Nugget-Laughlin's operating results
principally represents an increase in casino revenues primarily
reflecting higher activity levels for both table games and slots.
Keno and race and sports book revenues also showed improvement
over the 1993 period.
Occupancy of standard guest rooms was 97.2%, versus 94.5% in the
1993 six-month period.
Other Factors Affecting Earnings
The factors discussed previously with respect to the three-month
periods had a similar effect on corporate expense, interest and
other income, interest cost and interest capitalized when
comparing the six-month periods. Corporate expense also reflects
increases in payroll costs and costs incurred in connection with
the Company's continuing evaluation and pursuit of potential
opportunities in new and emerging gaming jurisdictions.
The Company recorded an extraordinary loss on early retirements
of debt, net of income tax benefits, of $4.6 million in the first
six months of 1994, versus $2.1 million in the 1993 period.
Also due to the factors discussed earlier in comparing the three-
month periods, the Company's effective income tax rate, including
the tax benefits associated with the extraordinary losses,
increased to 36.7%, versus 32.2% in the prior-year period. The
effective tax rate for the full year 1994 is expected to
approximate that of the first six months.
12
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flow
Reflecting Treasure Island's significant contribution to the
Company's operations, net cash flow provided by operating
activities (as shown in the Condensed Consolidated Statements of
Cash Flows) totaled $112.5 million during the first six months of
1994. This represents a 36.0% improvement over the $82.7 million
reported in the 1993 six-month period. This improvement would
have been even larger but for the fact that the 1993 period
benefitted from net federal income tax refunds of $13.2 million,
versus payments of $9.5 million in the first six months of 1994.
Capital Spending
Capital spending during the first six months of 1994 was
considerably less than that of the prior-year period principally
due to the substantial completion of Treasure Island in October
1993. The 1993 six-month period also includes $70.0 million
associated with the acquisition of the Dunes site.
Capital expenditures of $42.0 million during the 1994 period
primarily reflect the completion of certain projects at Treasure
Island and amounts expended to upgrade the Company's slot
machines. The remaining amount principally consists of
maintenance capital spending as well as amounts associated with
the Dunes project. Management believes in maintaining the
Company's facilities in first-class condition. Maintenance
capital spending for its four properties is anticipated to
approximate $30 million per year.
The Company is also planning to refurbish most of the standard
guest rooms at The Mirage. The project is expected to begin in
late 1994, and will be undertaken in a manner designed to
minimize the disruption to guests and employees and any adverse
effect on the Company's operating results during the
refurbishment. The scope of the project is still uncertain, but
it is expected to cost in excess of $25 million.
Future Expansion
On May 10, 1994, the Company signed a letter of intent with the
principals of the Gold Strike, Nevada Landing and Railroad Pass
hotel-casinos in Jean, Henderson and Boulder City, Nevada ("Gold
Strike") to form a joint venture to develop a new themed hotel-
casino resort on the Las Vegas Strip. The resort will be located
on approximately 44 acres at the south end of the Company's Dunes
site, near Tropicana Avenue, and will have more than 400 feet of
frontage on the Strip. The resort will feature approximately
3,000 guest rooms and a 100,000-square foot casino and will be
designed and marketed to appeal to the value-minded Las Vegas
visitor.
The Company and Gold Strike will each own 50% of the joint
venture. Gold Strike will supervise the design and construction
and will manage and operate the resort without fee.
Construction of the project is expected to begin by early 1995
and be completed in mid-1996. Based on preliminary estimates,
the total cost of the project is anticipated to be approximately
$250 million. This amount includes the estimated value of the
land, which the Company will contribute for its equity in the
venture. It is anticipated that up to 70% of the cost of the
project will be provided by first mortgage debt financing which
is non-recourse to the Company. The balance of the cost will be
provided by an equity contribution from Gold Strike of
approximately $40 million. The project is contingent on the
availability of suitable financing and the receipt of requisite
licenses and approvals.
The Company is also developing plans for construction of a new
luxury casino-based entertainment resort on the north end of the
Dunes site at the corner of Flamingo Road and the Strip. The
total cost of the project could be significantly more than $500
million. The planning and design for the project are not yet
complete, so the ultimate project cost and construction schedule
are still uncertain. If the Company proceeds with the project,
the Gold Strike joint venture and the Company will construct a
transportation link between the two facilities.
13
<PAGE>
The Company owns a 50% interest in an $8.0 million joint venture
which was awarded an exclusive concession to operate a casino
near Iguazu Falls, Argentina, one of South America's leading
tourist attractions. The new facility, named "Casino Iguazu,"
opened on July 6, 1994. At opening, the approximately 12,000-
square foot casino offered 19 table games (including blackjack,
roulette, baccarat and oasis stud poker) and approximately 135
slot machines and other coin operated devices. The facility also
offers a restaurant, two bars and parking for approximately 200
vehicles.
The Company continues to evaluate and pursue potential
opportunities in new and emerging gaming jurisdictions. As the
operating partner in two different partnerships, the Company was
selected to develop major casino entertainment centers in
Vancouver, British Columbia and Houston, Texas. It has also
entered into a joint venture to build a luxury hotel-casino
resort in Miami Beach, Florida. Such projects are contingent on
the passage of satisfactory enabling legislation, the receipt of
requisite licenses and approvals and certain other matters.
The Company has substantial local partners in several of these
potential ventures and anticipates that the ventures will have a
significant level of debt that is non-recourse to any partner.
Therefore, the cash outlays and debt incurred by the Company to
fund these projects are likely to be substantially less than the
anticipated total project costs.
There can be no assurance that management will determine to
proceed with any new projects. Conversely, it is also possible
that management will decide to undertake new projects, including
projects not currently contemplated, that could require
significant financing.
Financing and Liquidity
As discussed in Note 2 of Notes to Condensed Consolidated
Financial Statements, on May 25, 1994, the Company obtained a new
$525 million reducing revolving bank credit facility, replacing
its previous $150 million bank credit facility. During the first
six months of 1994, the Company used net borrowings under the
bank facilities, existing cash balances and operating cash flow
to fund the March 15 maturity of the $27.0 million principal
amount of floating rate first mortgage notes and to repurchase
$55.2 million principal amount of the 9 7/8% first mortgage
notes.
On July 20, 1994, the Company's Board of Directors authorized the
repurchase of up to five million shares of the Company's common
stock from time to time in the open market. There is no
certainty that any shares will be repurchased. The timing and
amount of share repurchases, if any, will depend on various
factors, including market conditions, available alternative
investments and the Company's financial position.
At June 30, 1994, the Company had cash and cash equivalents of
$46.7 million, in addition to $475.0 million available under its
new bank facility. Net working capital at June 30, 1994 was
$36.6 million. The Company's debt maturities through December
31, 1997 aggregate approximately $25 million.
Management believes that the Company will be able to finance its
projected capital expenditure needs and meet its future debt
obligations, as well as provide for future expansion
opportunities, through internally generated cash flow, existing
cash reserves and future borrowings (including amounts available
under its bank credit facility).
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the lawsuit described under Item 1
of Part II of the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994. On May 10,
1994, a Complaint alleging substantially identical claims
was filed by another plaintiff in the United States
District Court, Middle District of Florida, against 48
manufacturers, distributors and casino operators of video
poker and electronic slot machines, including the
Registrant and most of the other major hotel-casino
companies. The Complaints allege that the defendants
have engaged in a course of fraudulent and misleading
conduct intended to induce persons to play such games
based on a false belief concerning how the gaming
machines operate, as well as the extent to which there is
an opportunity to win. The two lawsuits have been
consolidated into a single action, and discovery with
respect to jurisdictional issues is currently in
progress. Management believes that the claims are wholly
without merit and does not expect that the lawsuit will
have a material adverse effect on the Registrant's
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's 1994 Annual Meeting of Stockholders
(the "Meeting") was held on May 26, 1994.
(c) At the Meeting, Melvin B. Wolzinger, Daniel B. Wayson
and George J. Mason were elected to serve three-year
terms as members of the Board of Directors. The results
of the voting were as follows: Mr. Wolzinger-72,305,010
shares for and 173,039 shares withheld; Mr.
Wayson-72,311,406 shares for and 166,643 shares withheld;
and Mr. Mason-72,311,032 shares for and 167,017 shares
withheld. Additionally, at the Meeting the stockholders
voted to approve the Registrant's 1994 Cash Bonus Plan by
a vote of 70,148,306 shares in favor, 1,009,093 shares
opposed, 784,448 abstentions and 536,202 broker non-
votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11 Mirage Resorts, Incorporated - Computation of Net Income
Per Share of Common Stock for the three-month and six-
month periods ended June 30, 1994 and 1993.
15 Letter from independent public accountants acknowledging
awareness of the use of their report dated August 9,
1994 in the Registrant's registration statements.
99 Amended and Restated Bylaws of the Registrant.
(b) Reports on Form 8-K.
On May 6, 1994 (subsequently amended on May 23, 1994),
the Registrant filed a Current Report on Form 8-K, dated
April 29, 1994. The Registrant reported under Item 4
that it had changed its independent accountants from
Coopers & Lybrand to Arthur Andersen & Co.
On June 15, 1994, the Registrant filed a Current Report
on Form 8-K, dated May 25, 1994. The Registrant reported
under Item 5 that it had obtained a $525 million five-
year reducing revolving credit facility from a group of
commercial banks. See Note 2 of Notes to Condensed
Consolidated Financial Statements contained in this Form
10-Q for a more detailed description of the bank credit
facility.
15
<PAGE>
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.
Mirage Resorts, Incorporated
August 10, 1994 by: DANIEL R. LEE
_______________ _______________________________
Date Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
16
<TABLE>
<CAPTION>
EXHIBIT 11
MIRAGE RESORTS, INCORPORATED
COMPUTATION OF NET INCOME PER SHARE
OF COMMON STOCK
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
_____________________________ __________________________
1994 1993 1994 1993
____________ ____________ ___________ ___________
<S> <C> <C> <C> <C>
Weighted-average shares outstanding 90,844,460 75,463,373 90,784,838 75,255,948
Assumed exercise of options at
average market price 3,551,411 4,831,372 4,063,975 4,747,975
___________ ___________ ___________ ___________
Weighted-average shares outstanding
and common stock equivalents used
in the computation of primary
earnings per share 94,395,871 80,294,745 94,848,813 80,003,923
Additional shares issuable upon
the assumed exercise of options
at period-end market price - 652,793 - 736,190
___________ ___________ ___________ ___________
Total shares outstanding assuming
full dilution 94,395,871 80,947,538 94,848,813 80,740,113
=========== =========== =========== ===========
Net income $25,598,000 $16,683,000 $48,946,000 $26,273,000
=========== =========== =========== ===========
Primary earnings per share $0.27 $0.21 $0.52 $0.33
===== ===== ===== =====
Fully diluted earnings per share $0.27 $0.21 $0.52 $0.33
===== ===== ===== =====
</TABLE>
EXHIBIT 15
August 9, 1994
To Mirage Resorts, Incorporated:
We are aware that Mirage Resorts, Incorporated has incorporated
by reference in its Registration Statements on Form S-3 (File No.
2-87138), on Form S-3 (File No. 2-92051), on Form S-3 (File No.
2-96534), on Form S-3 (File No. 33-5693), on Form S-8 (File No.
33-16037), on Form S-3 (File No. 33-16572), on Form S-8 (File No.
33-48394), and on Form S-8 (File No. 33-63804), its Form 10-Q for
the quarter ended June 30, 1994, which includes our report dated
August 9, 1994 covering the unaudited interim financial
information contained therein. Pursuant to Regulation C of the
Securities Act of 1933, that report is not considered a part of
these registration statements or a report prepared or certified
by our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN & CO.
AMENDED AND RESTATED BYLAWS
OF
MIRAGE RESORTS, INCORPORATED
(a Nevada Corporation)
ARTICLE I
Offices
Section 1. Principal Executive Office. The principal
executive office of the corporation shall be located at 3400 Las
Vegas Boulevard South, Las Vegas, Clark County, Nevada 89109.
The board of directors is hereby granted full power and authority
to change said principal executive office from one location to
another. Any such change shall be noted on the by-laws by the
secretary, opposite this Section, or this Section may be amended
to state the new location.
Section 2. Other Offices. Other business offices may at
any time be established by the board of directors at such other
places both within and without the State of Nevada as the board
of directors may from time to time determine or the business of
the corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. All annual or other
meetings of stockholders shall be held at the principal executive
office of the corporation, or at any other place within or
without the State of Nevada which may be designated by the board
of directors and stated in the notice of the meeting.
Section 2. Annual Meetings. Annual meetings shall be held
at such date and time as shall be designated from time to time by
the board of directors and stated in the notice of the meeting.
At such meetings, directors shall be elected, reports of the
affairs of the corporation shall be considered and any other
business may be transacted which is within the powers of the
stockholders.
Section 3. Special Meetings. Subject to the rights of the
holders of any series of stock having a preference over the
common stock of the corporation as to dividends or upon
liquidation ("Preferred Stock") with respect to such series of
Preferred Stock, special meetings of the stockholders may be
called only by the chairman of the board, or by the board of
directors pursuant to a resolution adopted by a majority of the
total number of directors which the corporation would have if
there were no vacancies.
EXHIBIT 99
<PAGE>
Section 4. Notice of Meetings of Stockholders and Delivery
of Reports to Stockholders. Written notice of any meeting of
stockholders shall be given to each stockholder entitled to vote
and a copy of each report to the stockholders shall be given to
each stockholder, in each case either personally or by mail or
other means of written communication, charges prepaid, addressed
to such stockholder at his address appearing on the books of the
corporation or given by him to the corporation for the purpose of
notice. If any notice or report addressed to the stockholder at
the address of such stockholder appearing on the books of the
corporation is returned to the corporation by the United States
Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice or report to the
stockholder at such address, all future notices or reports shall
be deemed to have been duly given without further mailing if such
notice or report shall be available for the stockholder upon
written demand of the stockholder at the principal executive
office of the corporation for a period of one year from the date
of the giving of the notice or report to all other stockholders.
If a stockholder gives no address, notice or a report shall be
deemed to have been given to such stockholder if sent by mail or
other means of written communication addressed to the place where
the principal executive office of the corporation is situated, or
if published at least once in a newspaper of general circulation
in the county in which the principal executive office is located.
All such notices of meetings shall be given to each
stockholder entitled thereto not less than 10 days nor more than
60 days before each meeting, and all such reports shall be given
to each stockholder entitled thereto at the times provided in
Section 3 of Article VII of the bylaws or as otherwise provided
by applicable law. Any such notice or report shall be deemed to
have been given at the time when delivered personally or
deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any such notice or
report in accordance with the provisions of this Section,
executed by a responsible employee or any agent of the
corporation, shall be prima facie evidence of the giving of the
notice or report.
Each such notice shall specify:
(a) the place, the date and the hour of the meeting;
(b) in the case of special meetings, the nature of the
business to be transacted (and no other business may be
transacted at such meeting);
(c) in the case of annual meetings, those matters which the
board of directors, at the time of the mailing of the
notice, intends to present for action by the stockholders;
(d) if directors are to be elected, the names of nominees
intended at the time of the notice to be presented by the
board of directors or management for election; and
(e) such other matters, if any, as may be expressly
required by applicable law.
Section 5. Quorum and Adjournment. Except as otherwise
provided by law or by the articles of incorporation, the holders
of a majority of the outstanding shares of the corporation
entitled to vote generally in the election of directors,
represented in person or by proxy, shall constitute a quorum at a
meeting of stockholders, except that when specified business is
to be voted on by a class or series of stock voting as a class,
the holders of a majority of the shares of such class or series
shall constitute a quorum of such class or series for the
transaction of such business. The chairman of the meeting or a
majority of the shares so represented may adjourn the meeting
from time to time, whether or not there is such a quorum. No
notice of the time and place of adjourned meetings need be given
except as required by law. The stockholders present at a duly
called meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
2
<PAGE>
Section 6. Notice of Stockholder Business and Nominations.
(A) Annual Meetings of Stockholders. (a)
Nominations of persons for election to the board of
directors and the proposal of business to be considered by
the stockholders may be made at an annual meeting of
stockholders (i) pursuant to the corporation's notice of
meeting, (ii) by or at the direction of the board of
directors or (iii) by any stockholder who was a stockholder
of record at the time of giving of notice provided for in
this bylaw, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this bylaw.
(b) For nominations or other business to
be properly brought before an annual meeting by a
stockholder pursuant to clause (iii) of paragraph
(A)(a)of this bylaw, the stockholder must have given
timely notice thereof in writing to the secretary of
the corporation and such other business must otherwise
be a proper matter for stockholder action. To be
timely, a stockholder's notice shall be delivered to
the secretary at the principal executive office of the
corporation not later than the close of business on the
60th day nor earlier than the close of business on the
90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting
is more than 30 days before or more than 60 days after
such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the close
of business on the 90th day prior to such annual
meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or
the 10th day following the day on which public
announcement of the date of such meeting is first made
by the corporation. In no event shall the public
announcement of an adjournment of an annual meeting
commence a new time period for the giving of a
stockholder's notice as described above. Such
stockholder's notice shall set forth (i) as to each
person who the stockholder proposes to nominate for
election or reelection as a director, all information
relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended, and
Rule 14a-11 thereunder (including such person's written
consent to being named in the proxy statement as a
nominee and to serving as a director if elected), (ii)
as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and
any material interest in such business of such
stockholder and the beneficial owner, if any, on whose
behalf the proposal is made and (iii) as to the
stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is
made (I) the name and address of such stockholder as
they appear on the corporation's books, and of such
beneficial owner and (II) the class and number of
shares of the corporation which are owned beneficially
and of record by such stockholder and such beneficial
owner.
(c) Notwithstanding anything in the second
sentence of paragraph (A)(b) of this bylaw to the
contrary, in the event that the number of directors to
be elected to the board of directors is increased and
there is no public announcement by the corporation
naming all of the nominees for director or specifying
the size of the increased board of directors at least
70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required
by this bylaw shall also be considered timely, but only
with respect to nominees for any new positions created
by such increase, if it shall be delivered to the
secretary at the principal executive office of the
corporation not later than the close of business on the
10th day following the day on which such public
announcement is first made by the corporation.
3
<PAGE>
(B) Special Meetings of Stockholders. Only such
business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting
pursuant to the corporation's notice of meeting.
Nominations of persons for election to the board of
directors may be made at a special meeting of stockholders
at which directors are to be elected (i) pursuant to the
corporation's notice of meeting, (ii) by or at the direction
of the board of directors or (iii) provided that the board
of directors has determined that directors shall be elected
at such meeting, by any stockholder of the corporation who
is a stockholder of record at the time of giving of notice
provided for in this bylaw, who shall be entitled to vote at
the meeting and who complies with the notice procedures set
forth in this bylaw. In the event that the corporation
calls a special meeting of stockholders for the purpose of
electing one or more directors to the board of directors,
any such stockholder may nominate a person or persons (as
the case may be) for election to such position(s) as
specified in the corporation's notice of meeting, if the
stockholder's notice required by paragraph (A)(b) of this
bylaw shall be delivered to the secretary at the principal
executive office of the corporation not earlier than the
close of business on the 90th day prior to such special
meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the
10th day following the day on which public announcement is
first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at
such meeting. In no event shall the public announcement of
an adjournment of a special meeting commence a new time
period for the giving of a stockholder's notice as described
above.
Section 7. Voting. Pursuant to Section 1 of Article VI of
the bylaws, the board of directors may fix a record date for the
determination of the stockholders entitled to vote at any meeting
of stockholders.
Unless the articles of incorporation provide for more or
less than one vote per share, each outstanding share, regardless
of class, shall be entitled to one vote on each matter on which
such share is entitled to be voted. Any holder of shares
entitled to vote on any matter may vote part of his shares in
favor of the proposal and refrain from voting the remaining
shares or (except in voting upon election of directors) vote them
against the proposal, but, if the stockholder fails to specify
the number of shares such stockholder is voting affirmatively, it
will be conclusively presumed that the stockholder's approving
vote is with respect to all shares such stockholder is entitled
to vote. Voting by the stockholders may be a voice vote or by
ballot; provided, however, that all elections for directors must
be by ballot upon demand made by a stockholder at the meeting and
before the voting begins.
Except as otherwise provided in the last two sentences of
Section 5 of this Article II:
(a) the affirmative vote of a majority of the shares
actually voted for or against a matter at a duly held meeting at
which a quorum is present (without giving effect to abstentions
and broker non-votes) shall be the act of the stockholders,
unless the vote of a greater number or voting by classes is
required for such act by applicable law, the articles of
incorporation or the bylaws; and
(b) in the election of directors, subject to the rights of
the holders of any series of Preferred Stock to elect directors
under specified circumstances, the candidates receiving the
highest number of affirmative votes of shares entitled to be
voted, up to the number of directors to be elected by such
shares, shall be elected. Votes against a candidate for director
and votes withheld shall have no legal effect.
4
<PAGE>
If the articles of incorporation provide for more or less
than one vote for any share on any matter, the references in
this Section and in Section 5 of this Article II to a
majority or other proportion of shares means, as to such
matter, a majority or other proportion of the votes entitled
to be cast by such shares.
Section 8. Validation of Defectively Called or Noticed
Meetings. The transactions of any meeting of stockholders,
annual or special, however called and noticed and wherever held,
shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum is present pursuant to
Section 5 of this Article II, either in person or by proxy, and
if, either before or after the meeting, each of the following
persons signs a written waiver of notice, a consent to the
holding of such meeting or an approval of the minutes thereof:
(a) any person entitled to vote at the meeting
not present at the meeting in person or by proxy;
(b) any person who, though present, has, at
the beginning of the meeting, properly objected to the
transaction of any business because the meeting was not
lawfully called or convened; or
(c) any person who, though present, during the
meeting has properly objected to the consideration of
particular matters of business required by the Nevada
General Corporation Law or the bylaws or otherwise to be
included in the notice of the meeting, but not so included.
Except as otherwise provided in the articles of
incorporation, neither the business to be transacted at, nor
the purpose of, any annual or special meeting of
stockholders need be specified in any written waiver of
notice, consent to the holding of the meeting or approval of
the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 9. Action Without Meeting.
(a) Subject to the rights of the holders of any
series of Preferred Stock with respect to such series of
Preferred Stock, any action required or permitted to be
taken by the stockholders must be effected at an annual or
special meeting of stockholders of the corporation and may
not be effected by any consent in writing by such
stockholders.
(b) Stockholders may not participate in a
meeting of stockholders by means of a telephone conference
or any similar method of communication by which all
persons participating in the meeting can hear each other.
Participation in a meeting must be in person or by proxy.
Section 10. Proxies.
(a) At any meeting of stockholders, any stock-
holder may designate another person or persons to act as a
proxy or proxies. If any stockholder designates two or more
persons to act as proxies, a majority of those persons
present at the meeting or, if only one is present, then
that one, has and may exercise all of the powers
conferred by the stockholder upon all of the persons so
designated unless the stockholder provides otherwise.
5
<PAGE>
(b) Without limiting the manner in which a
stockholder may authorize another person or persons to
act for him as proxy pursuant to subsection (a), the
following constitute valid means by which a stockholder
may grant such authority:
(i) a stockholder may execute a writing
authorizing another person or persons to act for him
as proxy. Execution may be accomplished by the
signing of the writing by the stockholder or his
authorized officer, director, employee or agent or
by causing the signature of the stockholder to be
affixed to the writing by any reasonable means,
including, but not limited to, a facsimile
signature; or
(ii) a stockholder may authorize another
person or persons to act for him as proxy by trans-
mitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission
to the person who will be the holder of the proxy or
to a firm which solicits proxies or like agent who
is authorized by the person who will be the holder
of the proxy to receive the transmission. Any such
telegram, cablegram or other means of electronic
transmission must either set forth or be submitted
with information from which it can be determined
that the telegram, cablegram or other electronic
transmission was authorized by the stockholder. If
it is determined that the telegram, cablegram or
other electronic transmission is valid, the persons
appointed by the corporation to count the votes of
stockholders and determine the validity of proxies
and ballots or other persons making those
determinations must specify the information upon
which they relied.
(c) Any copy, communication by telecopier or other
reliable reproduction of the writing or transmission created
pursuant to subsection (b) may be substituted for the
original writing or transmission for any purpose for which
the original writing or transmission could be used, if the
copy, communication by telecopier or other reproduction is a
complete reproduction of the entire original writing or
transmission.
(d) No such proxy is valid after the expiration of
six months from the date of its creation, unless it is
coupled with an interest, or unless the stockholder
specifies in it the length of time for which it is to
continue in force, which may not exceed seven years from the
date of its creation. Subject to these restrictions, any
proxy properly created is not revoked and continues in full
force and effect until another instrument or transmission
revoking it or a properly created proxy bearing a later date
is filed with or transmitted to the secretary of the
corporation or another person or persons appointed by the
corporation to count the votes of stockholders and determine
the validity of proxies and ballots.
Section 11. Inspectors of Election. In advance of any
meeting of stockholders, the board of directors may appoint any
persons other than nominees for office as inspectors of election
to act at such meeting or any adjournment thereof. If inspectors
of election are not so appointed, the chairman of any such
meeting may, and on the request of any stockholder or his proxy
shall, make such appointment at the meeting. The number of
inspectors shall be either one or three. If appointed at a
meeting on the request of one or more stockholders or their
respective proxies, the majority of shares entitled to vote
represented in person or by proxy shall determine whether one or
three inspectors are to be appointed. In case any person
appointed as inspector fails to appear or fails or refuses to
act, the vacancy may, and on the request of any stockholder or a
proxy of any stockholder entitled to vote shall, be filled by
appointment by the board of directors in advance of the meeting,
or at the meeting by the chairman of the meeting.
6
<PAGE>
The duties of such inspectors shall include: determining
the number of shares outstanding and the voting power of each;
the shares represented at the meeting; the existence of a quorum;
the authenticity, validity and effect of proxies; receiving
votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with
the right to vote; counting and tabulating all votes or consents;
determining when the polls shall close; determining the result;
and such acts as may be proper to conduct the election or vote
with fairness to all stockholders. In the determination of the
validity and effect of proxies, the dates contained on the forms
of proxy shall presumptively determine the order of execution of
the proxies, regardless of the postmark dates on the envelopes in
which they are mailed.
The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability and as
expeditiously as is practical. If there are three inspectors of
election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of
election is prima facie evidence of the facts stated therein.
Section 12. Presiding Officer; Order of Business; Conduct
of Meeting.
(a) Meetings of the stockholders shall be pre-
sided over by such person as shall be designated by the
board of directors or, if no designation is made, then
by the chairman of the board of directors, or if there is no
chairman of the board of directors, then the president. The
secretary of the corporation, or in his absence, an
assistant secretary, shall act as secretary of the meeting.
(b) Subject to the following, meetings of
stockholders shall generally follow accepted rules of
parliamentary procedure.
(i) The chairman of the meeting shall have
absolute authority over matters of procedure and
there shall be no appeal from the ruling of the
chairman. If the chairman, in his absolute
discretion, deems it advisable to dispense with the
rules of parliamentary procedure as to any one
meeting of stockholders or a part thereof, the
chairman shall so state and shall clearly state the
rules under which the meeting or appropriate part
thereof shall be conducted.
(ii) The chairman may ask or require that
anyone not a bona fide stockholder or proxyholder
leave the meeting.
(iii) A resolution or motion, if not con-
tained in the corporation's notice of meeting, shall
only be considered for a vote if proposed by a
stockholder or duly authorized proxyholder, and
seconded by an individual, who is a stockholder or
duly authorized proxyholder, other than the
individual who proposed the resolution or motion.
ARTICLE III
Directors
Section 1. Powers. Subject to the limitations of the
Nevada General Corporation Law and any limitations in the
articles of incorporation relating to action required to be
authorized or approved by the stockholders, the business and
affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board
7
<PAGE>
of directors. Without prejudice to such general powers, but
subject to the same limitations, it is hereby expressly declared
that the directors shall have the following powers:
First - To select and remove all the officers,
agents and employees of the corporation; prescribe such
powers and duties for them as may not be inconsistent with
applicable law, the articles of incorporation or the bylaws;
fix their compensation and require from them security for
faithful service.
Second - To conduct, manage and control the affairs
and business of the corporation, and to make such rules and
regulations therefor, not inconsistent with applicable law,
the articles of incorporation or the bylaws, as they may
deem appropriate.
Third - To change the principal executive office of
the corporation from one location to another as provided in
Section 1 of Article I of the bylaws; to fix and locate from
time to time one or more subsidiary offices of the
corporation within or without the State of Nevada, as
provided in Section 2 of Article I of the bylaws; to
designate any place within or without the State of Nevada
for the holding of any stockholders' meeting or meetings;
and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock and to alter
the form of such seal and of such certificates from time to
time, as in their judgment they may deem appropriate,
provided such seal and such certificates shall at all times
comply with the provisions of applicable law.
Fourth - To authorize the issue of shares of stock
of the corporation from time to time, upon such terms as may
be lawful.
Fifth - To borrow money and incur indebtedness for
the purposes of the corporation, and to cause to be executed
and delivered therefor, in the corporate name, promissory
notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and
security therefor.
Section 2. Number and Qualification of Directors. The
number of directors of the corporation shall not be less than
three nor more than 11 until changed by amendment of the articles
of incorporation and by a bylaw amending this Section. The exact
number of directors shall be fixed from time to time, within the
limits specified in the articles of incorporation and in this
Section, by a resolution adopted by the board of directors.
Subject to the foregoing provisions for changing the number
of directors, the number of directors of this corporation has
been fixed at eight.
Section 3. Election and Term of Office. The board of
directors shall be divided into three classes, as nearly as equal
in numbers as the then total number of directors constituting the
entire board permits, with the term of office of one class
expiring each year. At the first regular election of directors
following the effectiveness of this Section 3, (i) directors of
the first class shall be elected to hold office until the next
succeeding annual meeting of stockholders, and until their
respective successors have been elected and qualified, (ii)
directors of the second class shall be elected to hold office
until the second succeeding annual meeting of stockholders, and
until their respective successors have been elected and qualified
and (iii) directors of the third class shall be elected to hold
office until the third succeeding annual meeting of stockholders,
and until their respective successors have been elected and
qualified. Directors shall be elected at each annual meeting of
stockholders, but if any such annual meeting is not held or
directors are not elected thereat, directors may be elected at
any special meeting of stockholders held for that purpose. Each
director, including a director elected to fill a vacancy, shall
hold office until the expiration of the term for which such
director was elected, and until a successor has been elected and
qualified, subject to the Nevada General Corporation Law and the
provisions of the bylaws with respect to vacancies on the board
of directors.
8
<PAGE>
Section 4. Vacancies.
(a) A vacancy on the board of directors shall be
deemed to exist in case of the death, resignation or removal
of any director, if the authorized number of directors is
increased or if the stockholders fail, at any annual or
special meeting of stockholders at which any director or
directors are to be elected, to elect the full authorized
number of directors to be voted for at that meeting.
(b) Except as otherwise provided in the articles
of incorporation, any or all of the directors may be removed
with or without cause if such removal is approved by the
affirmative vote of at least two-thirds of the outstanding
shares entitled to vote on the election of directors,
provided that when by the provisions of the articles of
incorporation the holders of the shares of any class or
series, voting as a class or series, are entitled to elect
one or more directors, any director so elected may be
removed only by the applicable vote of the holders of the
shares of that class or series.
No reduction in the authorized number or classes
of directors shall have the effect of removing any director
prior to the expiration of his term of office.
(c) Any director may resign effective upon giving
written notice to the chairman of the board, the president,
the secretary or the board of directors of the corporation,
unless the notice specifies a later time for the
effectiveness of such resignation. If the board of
directors accepts the resignation of a director tendered to
take effect at a future time, the board of directors shall
have power to elect a successor to take office when the
resignation is to become effective.
(d) Vacancies in the board of directors may be
filled (i) by the affirmative vote of a majority of the
directors then in office present at a duly held meeting at
which a quorum is present or the unanimous written consent
of the directors then in office or (ii) if the number of
directors then in office is less than a quorum, by the
unanimous written consent of the directors then in office,
or the affirmative vote of a majority of the directors then
in office at a duly held meeting of such directors or a sole
remaining director; and each director so elected shall hold
office until his successor is elected and qualified. The
stockholders may elect a director or directors at any time
to fill any vacancy or vacancies not filled by the
directors. Any such election by written consent shall
require the consent of holders of a majority of the
outstanding shares entitled to vote for the election of such
directors.
Section 5. Annual Meeting. Immediately following each
annual meeting of stockholders, the board of directors shall hold
a regular meeting at the place of said annual meeting, or at such
other place as shall be fixed by the board of directors, for the
purpose of organization, election of officers and the transaction
of other business. Call and notice of such meetings are hereby
dispensed with.
Section 6. Other Regular Meetings. Other regular meetings
of the board of directors shall be held during each year, at such
times and places as the board of directors may from time to time
provide by resolution, either within or without the State of
Nevada, without other notice than such resolution.
9
<PAGE>
Section 7. Special Meetings. Special meetings of the
board of directors for the purpose of taking any action permitted
by the directors under the Nevada General Corporation Law and the
articles of incorporation may be called at any time by the
chairman of the board, the president, the secretary or any two
directors. Notice of the date, hour and place of special
meetings shall be given to each director (a) personally or by
telephone, telegraph or facsimile transmission, in each case at
least 24 hours prior to the holding of the meeting or (b) by
first class mail, charges prepaid, addressed to him at his
address as it is shown upon the records of the corporation or, if
it is not so shown on such records and is not readily
ascertainable, at the place at which the meetings of the
directors are regularly held, at least two days prior to the
holding of the meeting. Notice by mail shall be deemed to have
been given at the time a written notice is deposited in the
United States mail, postage prepaid. Any other written notice
shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier
for transmission, or actually transmitted by the person giving
the notice by electronic means to the recipient. Oral notice
shall be deemed to have been given at the time it is
communicated, in person or by telephone, to the recipient or to a
person at the office of the recipient who the person giving the
notice has reason to believe will promptly communicate it to the
recipient. Any notice shall state the date, place and hour of
the meeting and may, but shall not be required to, state the
general nature of the business to be transacted.
Section 8. Waiver of Defectively Called or Noticed
Meetings. Notice of a meeting need not be given to a director
who signs a waiver of notice, or a consent to holding the meeting
or an approval of the minutes thereof, whether before or after
the meeting, or who attends the meeting without protesting, prior
to or at the commencement of the meeting, the lack of proper
notice to him. Any such waiver or consent shall state the date,
place and hour of the meeting, but need not specify the purpose
of the meeting. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of
the meeting.
Section 9. Place of Meeting. Regular and special meetings
of the board of directors shall be held at any place within or
without the State of Nevada which has been designated from time
to time by resolution of the board of directors. In the absence
of such designation, regular and special meetings shall be held
at the principal executive office of the corporation.
Section 10. Action at a Meeting: Quorum and Required Vote.
Presence in person of a majority of the authorized number of
directors at a meeting of the board of directors constitutes a
quorum for the transaction of business, except as hereinafter
provided. Members of the board may participate in a meeting
through use of conference telephone or similar communications
equipment, so long as all members participating in such meeting
can hear one another. Participation in a meeting as permitted by
the preceding sentence constitutes presence in person at such
meeting. Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board of directors,
unless a greater number, or the same number after disqualifying
one or more directors from voting, is required by the Nevada
General Corporation Law, the articles of incorporation or the
bylaws. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of a
director, provided that any action taken is approved by at least
a majority of the required quorum for such meeting.
Section 11. Adjournment. A majority of the directors
present at any meeting, whether or not a quorum is present, may
adjourn any meeting of the board of directors to meet again at a
stated date, hour and place. If any meeting is adjourned for
more than 48 hours, notice of any adjournment to another date,
hour or place shall be given prior to the time of the adjourned
meeting to the directors who were not present at the time of
adjournment. Otherwise, notice of the date, hour and place of
holding an adjourned meeting need not be given to absent
directors if the date, hour and place are fixed at the meeting
adjourned.
10
<PAGE>
Section 12. Action Without Meeting. Any action by the board
of directors may be taken without a meeting if all members of the
board of directors shall individually or collectively consent in
writing to such action. Such written consent or consents shall
be filed with the minutes of the proceedings of the board of
directors and shall have the same force and effect as a unanimous
vote of the directors.
Section 13. Committees of the Board. By resolution adopted
by the board of directors, the board of directors may designate
an executive committee, an audit committee and such other
committees as it shall determine, each consisting of at least one
director and which may include one or more other persons who need
not be directors, to serve at the pleasure of the board of
directors, and prescribe the manner in which proceedings of such
committees shall be conducted. The appointment of members or
alternate members of a committee shall be made by a majority vote
of the board of directors. For purposes of the bylaws, the term
"audit committee" shall mean any committee of the board of
directors to which is delegated the function of periodically
reviewing the financial condition, and the results of audit
examinations, of the corporation with the corporation's
independent public accountants. The audit committee, if
appointed, shall not include any officer or employee of the
corporation or its subsidiaries unless the board of directors
shall specifically designate an officer or employee to serve on
such committee. Unless the board of directors shall otherwise
prescribe the manner of proceedings of any such committee,
meetings of such committee may be scheduled in advance, in which
case call and notice of any such meetings are hereby dispensed
with, and may be called at any time by any member thereof;
otherwise, the provisions of the bylaws with respect to notice
and conduct of meetings of the board of directors shall govern.
Any such committee, to the extent provided in a resolution of the
board of directors, may have all of the authority of the board of
directors, except with respect to:
(a) the approval of any action for which the Nevada
General Corporation Law, the articles of incorporation or
the bylaws also requires approval of the stockholders;
(b) the filling of vacancies on the board of
directors or on any committee;
(c) the fixing of compensation of the directors for
serving on the board of directors or on any committee;
(d) the adoption, amendment or repeal of bylaws;
(e) the amendment or repeal of any resolution of
the board of directors which by its express terms is not so
amendable or repealable;
(f) any distribution to the stockholders, except at
a rate or in a periodic amount or within a range determined
by the board of directors; and
(g) the appointment of other committees of the
board of directors or the members thereof.
Section 14. Compensation. Directors, and members of any
committee of the board of directors, shall be entitled to such
compensation for their services as directors and members of any
such committee as shall be fixed from time to time by resolution
of the board of directors and shall also be entitled to
reimbursement for any reasonable expenses incurred in attending
such meetings. Any director receiving compensation under these
provisions shall not be barred from serving the corporation in
any other capacity and receiving compensation for such other
services.
11
<PAGE>
Section 15. Transfer Agents and Registrars. The board of
directors may appoint one or more transfer agents and one or more
registrars, either domestic or foreign, at such times and places
as the requirements of the corporation may necessitate.
ARTICLE IV
Officers
Section 1. Officers. The officers of the corporation
shall be a president, a secretary and a treasurer. The
corporation may also have, at the discretion of the board of
directors, a chairman of the board, a chief financial officer,
one or more vice presidents, one or more assistant secretaries,
one or more assistant treasurers and such other officers as may
be appointed in accordance with the provisions of Section 3 of
this Article IV. One person may hold any two or more offices.
Section 2. Election. The officers of the corporation,
except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article IV, shall be
chosen annually by the board of directors; provided, however,
that each officer of the corporation shall hold his office at the
pleasure of the board of directors, or until he shall resign or
shall become disqualified to serve, or until his successor shall
be elected and qualified, subject, in each case, to the rights,
if any, of the corporation and any such officer under any
contract of employment between the corporation and the officer.
Section 3. Subordinate Officers, Etc. The board of
directors may appoint, and may empower the chairman of the board,
the president or any vice president to appoint, such other
officers as the business of the corporation may require, each of
whom shall hold office for such period, have such authority and
perform such duties as provided in the bylaws or as the board of
directors may from time to time determine.
Section 4. Removal and Resignation.
(a) Any officer may be removed, either with or
without cause, by the board of directors, at any regular or
special meeting thereof, or, except in case of an officer
chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of
directors, subject, in each case, to the rights, if any, of
an officer under any contract of employment with the
corporation.
(b) Any officer may resign at any time by giving
written notice to the board of directors, the president or
the secretary of the corporation, without prejudice,
however, to the rights, if any, of the corporation under any
contract to which such officer is a party. Any such
resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office as a result
of any cause shall be filled in the manner prescribed in the
bylaws for regular appointments to such office.
Section 6. Chairman of the Board. The chairman of the
board, if there shall be such an officer, shall be elected from
among the directors and shall, if present, preside at all
meetings of the board of directors and exercise and perform such
other powers and duties as may be from time to time assigned to
him by the board of directors or prescribed by the bylaws.
12
<PAGE>
Section 7. President. Subject to such supervisory powers,
if any, as may be given by the board of directors to the chairman
of the board, if there be such an officer, the president shall be
the chief executive officer of the corporation and shall, subject
to the control of the board of directors, have general
supervision, direction and control of the business and officers
of the corporation. He shall preside at all meetings of the
stockholders and, in the absence of the chairman of the board, or
if there be none, at all meetings of the board of directors. He
shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the
board of directors or the bylaws.
Section 8. Vice President(s). In the absence or
disability of the president, the vice presidents in order of
their rank as fixed by the board of directors or, if not ranked,
the vice president designated by the board of directors, shall
perform all the duties of the president, and when so acting shall
have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other
powers and perform such other duties as are incident to the
office of corporate vice president and as from time to time may
be prescribed for them respectively by the board of directors or
the bylaws.
Section 9. Secretary. The secretary shall record or cause
to be recorded, and shall keep or cause to be kept, at the
principal executive office and such other place or places as the
board of directors may order, a book of minutes of actions taken
at all meetings of, and by all written consents of, directors and
stockholders, together with, in the case of meetings, the time
and place of holding, whether regular or special and, if special,
how authorized, the notice thereof given, the names of those
present at meetings of the board of directors, the number of
shares present or represented at meetings of stockholders and the
proceedings thereof. The secretary shall keep, or cause to be
kept, at the principal executive office or at the office of the
corporation's transfer agent or registrar, a stock ledger, or a
duplicate stock ledger, showing the names of the stockholders,
alphabetically arranged, and their addresses, the number and
classes of shares held by each, the number and date of
certificates issued for such shares and the number and date of
cancellation of every certificate surrendered for cancellation.
If the stock ledger or duplicate stock ledger is kept at the
office of the corporation's transfer agent or registrar, a
statement containing the name and address of the custodian of the
stock ledger or duplicate stock ledger shall be kept at the
corporation's principal executive office. The secretary shall
give, or cause to be given, notice of all the meetings of the
stockholders and of the board of directors required by the bylaws
or by law to be given, and shall keep the seal of the corporation
in safe custody, and shall have such other powers and perform
such other duties as are incident to the office of corporate
secretary and as may be prescribed by the board of directors or
the bylaws.
Section 10. Treasurer. The treasurer shall keep and
maintain, or cause to be kept and maintained, adequate and
correct accounts of the properties and business transactions of
the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and
shares. The books of account shall at all reasonable times be
open to inspection by any director. The treasurer shall deposit
all moneys and other valuables in the name and to the credit of
the corporation with such depositories as may be designated by
the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall
render to the president and the board of directors, whenever they
request it, an account of all of his transactions as treasurer
and of the financial condition of the corporation and shall have
such other powers and perform such other duties as are incident
to the office of corporate treasurer and as may be prescribed by
the board of directors or the bylaws.
Section 11. Compensation. The salaries and other
compensation for the principal officers of the corporation shall
be fixed, from time to time, by the board of directors. No
officer shall be disqualified from receiving a salary or such
other compensation by reason of his also being a director of the
corporation.
13
<PAGE>
ARTICLE V
Indemnification of Corporate Agents;
Purchase of Liability Insurance
Section 1. Indemnification of Agents of the Corporation;
Purchase of Liability Insurance.
(a) The corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid
in settlement, actually and reasonably incurred by him in
connection with the action, suit or proceeding, if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent does not,
of itself, create a presumption that the person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action
or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
(b) The corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses,
including amounts paid in settlement and attorneys' fees,
actually and reasonably incurred by him in connection with
the defense or settlement of the action or suit, if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation. However, indemnification shall not be made for
any claim, issue or matter as to which such a person has
been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of
competent jurisdiction determines upon application that in
view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
(c) To the extent that a director, officer,
employee or agent of the corporation has been successful on
the merits or otherwise in defense of any action, suit or
proceeding referred to in subsection (a) or (b), or in
defense of any claim, issue or matter therein, he shall be
indemnified by the corporation against expenses, including
attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
(d) Any indemnification under subsection (a) or
(b), unless ordered by a court or advanced pursuant to
subsection (e), shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent
is proper in the circumstances. The determination shall be
made: (i) by the stockholders; (ii) by the board of
directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit or
proceeding; (iii) if a majority vote of a quorum consisting
of directors who were not parties to the action, suit or
proceeding so orders, by independent legal counsel in a
written opinion; or (iv) if a quorum consisting of directors
who were not parties to the action, suit or proceeding
cannot be obtained, by independent legal counsel in a
written opinion.
14
<PAGE>
(e) The expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding
shall be paid by the corporation as they are incurred and
in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the
corporation. The provisions of this subsection (e) do not
affect any rights to advancement of expenses to which
corporate personnel other than directors or officers may be
entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to this Article
V (i) does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under the articles of incorporation, the bylaws or
any agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a
court pursuant to subsection (b) or for the advancement of
expenses made pursuant to subsection (e), shall not be made
to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the
law and were material to the cause of action and (ii)
continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
(g) The corporation may purchase and maintain
insurance or make other financial arrangements on behalf of
any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, for any liability asserted
against him and liability and expenses incurred by him in
his capacity as a director, officer, employee or agent, or
arising out of his status as such, whether or not the
corporation has the authority to indemnify him against such
liability and expenses. The other financial arrangements
made by the corporation may include any now or hereafter
permitted by applicable law.
(h) In the event that the Nevada General
Corporation Law shall hereafter permit or authorize
indemnification by the corporation of the directors,
officers, employees or agents of the corporation for any
reason or purpose or in any manner not otherwise provided
for in this Article V, then such directors, officers,
employees and agents shall be entitled to such
indemnification by making written demand therefor upon the
corporation, it being the intention of this Article V at all
times to provide the most comprehensive indemnification
coverage to the corporation's directors, officers, employees
and agents as may now or hereafter be permitted by the
Nevada General Corporation Law.
(i) The foregoing indemnification provisions shall
inure to the benefit of all present and future directors,
officers, employees and agents of the corporation and all
persons now or hereafter serving at the request of the
corporation as directors, officers, employees or agents of
another corporation, partnership, joint venture, trust or
other enterprise and their heirs, executors and
administrators, and shall be applicable to all acts or
omissions to act of any such persons, whether such acts or
omissions to act are alleged to have or actually occurred
prior to or subsequent to the adoption of this Article V.
Section 2. Vested Rights. Neither the amendment nor
repeal of this Article V, nor the adoption of any provision of
the articles of incorporation or the bylaws or of any statute
inconsistent with this Article V, shall adversely affect any
right or protection of a director, officer, employee or agent of
the corporation existing at the time of such amendment, repeal or
adoption of such inconsistent provision.
15
<PAGE>
ARTICLE VI
Shares and Share Certificates
Section 1. Record Date.
(a) The board of directors may fix a time in the
future as a record date for the determination of the
stockholders entitled to notice of and to vote at any
meeting of stockholders or entitled to give consent to
corporate action in writing without a meeting, to receive
any report, to receive any dividend or distribution or any
allotment of rights or to exercise any rights in respect of
any other lawful action. The record date so fixed shall be
not more than 60 days nor less than 10 days prior to the
date of any meeting, nor more than 60 days prior to any
other event for the purposes of which it is fixed.
(b) A determination of stockholders of record
entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for
the adjourned meeting, but the board of directors shall fix
a new record date if the meeting is adjourned for more than
30 days from the date set for the original meeting.
(c) When a record date is fixed, only stockholders
of record on the close of business on that date are entitled
to notice of and to vote at any such meeting, to give
consent without a meeting, to receive any report, to receive
a dividend, distribution or allotment of rights or to
exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the
articles of incorporation, by agreement, by the Nevada
General Corporation Law or in Section 4 of this Article VI.
Section 2. Certificate for Shares. Every holder of shares
in the corporation shall be entitled to have a certificate signed
in the name of the corporation by the chairman of the board or
the president or a vice president and by the treasurer or an
assistant treasurer or the secretary or an assistant secretary,
certifying the number of shares and the class or series of shares
owned by the stockholder. Any of the signatures on the
certificate may be by facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect
as if such person were an officer, transfer agent or registrar at
the date of issue.
Any certificate for shares shall contain such legend or
other statement as may be required by the Nevada General
Corporation Law, applicable federal or state securities laws,
other applicable law or regulation or any agreement between the
corporation and the issuee thereof.
16
<PAGE>
Certificates for shares may be issued prior to full payment
under such restrictions and for such purposes as the board of
directors or the bylaws may provide; provided, however, that any
such certificate so issued prior to full payment shall state on
the face thereof the amount theretofore paid, the amount
remaining unpaid and the terms of payment thereof.
No new certificate for shares shall be issued in lieu of an
old certificate unless the latter is surrendered and cancelled at
the same time; provided, however, that a new certificate shall be
issued without the surrender and cancellation of the old
certificate if: (i) the old certificate is lost, apparently
destroyed or wrongfully taken; (ii) the request for the issuance
of the new certificate is made within a reasonable time after the
owner of the old certificate has notice of its loss, destruction
or theft; (iii) the request for the issuance of a new certificate
is made prior to the receipt of notice by the corporation that
the old certificate has been acquired by a bona fide purchaser;
(iv) if required by the corporation, the owner of the old
certificate furnishes sufficient indemnity to or provides other
adequate security to the corporation; and (v) the owner of the
old certificate satisfies any other reasonable requirements
imposed by the corporation. In the event of the issuance of a
new certificate, the rights and liabilities of the corporation,
and of the holders of the old and new certificates, shall be
governed by the provisions of the Nevada Uniform Commercial Code.
When the articles of incorporation are amended in any way
affecting the statements contained in the certificates for
outstanding shares, or it becomes desirable for any reason, in
the discretion of the board of directors, to cancel any
outstanding certificate for shares and issue a new certificate
therefor conforming to the rights of the holder, the board of
directors may order any holders of outstanding certificates for
shares to surrender and exchange them for new certificates within
a reasonable time to be fixed by the board of directors. The
order may provide that a holder of any certificates so ordered to
be surrendered is not entitled to vote or to receive dividends or
exercise any of the other rights of stockholders until the holder
has complied with the order, but such order operates to suspend
such rights only after notice and until compliance. The duty of
surrender of any outstanding certificates may also be enforced by
civil action.
Section 3. Transfer of Shares. Upon surrender to the
secretary or transfer agent or registrar of the corporation of a
certificate for shares fully endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and
record the transaction upon its books, unless under applicable
federal or state securities laws or otherwise such transfer would
be adverse to the best interests of the corporation or unless the
corporation has notice of an adverse claim, which may be an
adverse claim of the corporation, to the certificate.
Section 4. Stockholders of Record. Voting by stockholders
shall in all cases be subject to the following provisions:
(a) Subject to subsection (h) of this Section 4,
shares held by an administrator, executor, guardian,
conservator or custodian may be voted by such holder either
in person or by proxy, without a transfer of such shares
into the holder's name, and shares standing in the name of a
trustee may be voted by the trustee, either in person or by
proxy, but no trustee shall be entitled to vote shares held
by such trustee without a transfer of such shares into the
trustee's name.
17
<PAGE>
(b) Shares standing in the name of a receiver may
be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without
the transfer thereof into the receiver's name if authority
to do so is contained in the order of the court by which
such receiver was appointed.
(c) Except where otherwise agreed in writing
between the parties, a stockholder whose shares are pledged
shall be entitled to vote such shares until the shares have
been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares
so transferred.
(d) Shares standing in the name of a minor may be
voted and the corporation may treat all rights incident
thereto as exercisable by the minor, in person or by proxy,
whether or not the corporation has notice, actual or
constructive, of the nonage, unless a guardian of the
minor's property has been appointed and written notice of
such appointment given to the corporation.
(e) If authorized to vote the shares by the power
of attorney by which the attorney-in-fact was appointed,
shares held by or under control of an attorney-in-fact may
be voted and the corporation may treat all rights incident
thereto as exercisable by the attorney-in-fact, in person or
by proxy, without transfer of the shares into the name of
the attorney-in-fact.
(f) Shares standing in the name of another
corporation, domestic or foreign, may be voted by such
officer, agent or proxyholder as the articles of
incorporation or the bylaws of such other corporation may
prescribe or, in the absence of such provision, as the board
of directors of such other corporation may determine or, in
the absence of such determination, by the chairman of the
board, president or any vice president of such other
corporation, or by any other person authorized to do so by
the board of directors, president or any vice president of
such other corporation. Shares which are purported to be
voted or any proxy purported to be executed in the name of a
corporation (whether or not any title of the person signing
is indicated) shall be presumed to be voted or the proxy
executed in accordance with the provisions of this
subsection, unless the contrary is shown.
(g) Subject to subsection (h) below, shares of the
corporation owned by the corporation or any subsidiary shall
not be entitled to vote on any matter and shall not be
counted in determining the total number of outstanding
shares. Solely for purposes of this subsection and
subsection (h) below, a "subsidiary" of the corporation
shall mean a corporation, shares of which possessing a
majority of the power to vote for the election of directors
at the time determination of such voting power is made, are
owned directly, or indirectly through one or more
subsidiaries, by the corporation.
(h) Shares held by the corporation in a fiduciary
capacity, and shares of the corporation held in a fiduciary
capacity by any subsidiary, shall not be entitled to vote on
any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or
to give the corporation binding instructions as to how to
vote such shares.
18
<PAGE>
(i) If shares stand of record in the names of two
or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants in common, husband and
wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a stockholder
voting agreement or otherwise, or if two or more persons
(including proxyholders) have the same fiduciary
relationship respecting the same shares, unless the
secretary of the corporation is given written notice to the
contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall
have the following effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the
majority so voting binds all; and
(iii) If more than one vote, but the vote is
evenly split on any particular matter, each fraction
may vote the securities in question proportionately.
If the instrument so filed or the registration
of the shares shows that any such tenancy is held in
unequal interests, a majority or even split for the
purpose of this Section shall mean a majority or even
split in interest.
ARTICLE VII
Records and Reports
Section 1. Maintenance of Books and Records. The
corporation shall keep adequate and correct books and records of
account and shall keep minutes of the proceedings of its
stockholders, board of directors and committees of the board of
directors and shall keep at its principal executive office, or at
the office of its transfer agent or registrar, a record of its
stockholders, giving the names and addresses of all stockholders
and the number and class of shares held by each stockholder.
Such minutes shall be kept in written form. Such other books and
records may be kept either in written form or in any other form
capable of being converted into written form within a reasonable
time. The corporation shall keep at its principal executive
office, or if its principal executive office is not in Nevada,
then at its principal business office, if any, in Nevada, a copy
of the articles of incorporation, as amended to date, certified
by the Secretary of State, and the original or a copy of the
bylaws, as amended to date, certified by an officer of the
corporation.
Section 2. Inspection of Corporate Records. Every
director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind
and to inspect the physical properties of the corporation and its
subsidiaries. Such inspection by a director may be made in
person or by agent or attorney and the right of inspection
includes the right to copy and make extracts.
Section 3. Annual Reports.
(a) So long as the corporation is subject to the
Securities Exchange Act of 1934, as amended, the board of
directors shall cause an annual report to be sent to the
stockholders not later than 120 days after the close of the
fiscal year; provided that such report shall be sent to the
stockholders at least 10 days prior to the annual meeting of
stockholders. Such report shall contain all matters
required by the Securities Exchange Act of 1934, as amended
and other applicable laws.
(b) Any report required by this Section shall be
given in the manner and shall be deemed to have been given
by the corporation as provided in Section 4 of Article I of
the bylaws.
19
<PAGE>
Section 4. Annual Statement of Information. The
corporation shall file annually with the Secretary of State of
the State of Nevada, on the prescribed form, a statement in
compliance with Section 78.150 of the Nevada General Corporation
Law.
ARTICLE VIII
Miscellaneous
Section 1. Checks, Drafts, Etc. All checks, drafts or
other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
determined by resolution of the board of directors.
Section 2. Contracts, Etc., How Executed. The board of
directors, except as otherwise provided in the bylaws, may
authorize any officer or officers, agent or agents, to enter into
any contract or execute any instrument in the name of and on
behalf of the corporation, and such authority may be general or
confined to specific instances; and, unless so authorized by the
board of directors, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or
engagement or to pledge its credit or to render it liable for any
purpose or for any amount. Subject to the provisions of
applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance or other document or
instrument in writing and any assignment or endorsements thereof
executed or entered into between the corporation and any other
person, when signed by the chairman of the board, the president,
any vice president, the chief financial officer, the treasurer or
any assistant treasurer of the corporation shall be valid and
binding on the corporation in the absence of actual knowledge on
the part of the other person that the signing officers had no
authority to execute the same.
Section 3. Representation of Shares of Other Corporations.
Any officer of the corporation is authorized to vote, represent
and exercise on behalf of the corporation all rights incident to
any and all shares of any other corporation or corporations
standing in the name of the corporation. The authority herein
granted to such officers to vote or represent on behalf of the
corporation any and all shares held by the corporation in any
other corporation or corporations may be exercised either by such
officers in person or by any other person authorized so to do by
proxy or power of attorney duly executed by such officers.
Section 4. Seal. The corporation shall adopt and may, but
shall not be required to, use a corporate seal consisting of a
circle setting forth on its circumference the name of the
corporation and showing the state and date of incorporation.
Section 5. Fiscal Year. Unless changed by resolution of
the board of directors, the fiscal year of the corporation shall
end on the last day of December.
Section 6. Loans. No loans shall be contracted on behalf
of the corporation and no evidences of indebtedness shall be
issued in its name unless authorized by a resolution of the board
of directors, which authority may be general or confined to
specific instances.
Section 7. Deposits. The board of directors shall select
banks, trust companies or other depositories in which all funds
of the corporation not otherwise employed shall, from time to
time, be deposited to the credit of the corporation.
20
<PAGE>
Section 8. Construction and Definitions. Unless the
context otherwise requires, the general provisions, rules of
construction and definitions contained in the Nevada General
Corporation Law shall govern the construction of the bylaws.
Without limiting the generality of the foregoing, the masculine
gender includes the feminine and neuter, the singular number
includes the plural and the plural number includes the singular
and the term "person" includes a corporation or other entity as
well as a natural person.
ARTICLE IX
Amendments
Section 1. Power of Stockholders. New bylaws may be
adopted or the bylaws may be amended or repealed by the
affirmative vote or written consent of a majority of the
outstanding shares entitled to vote, except as otherwise
expressly provided by applicable law, the articles of
incorporation or elsewhere in the bylaws.
Section 2. Power of Directors. Subject to the right of
the stockholders as provided in Section 1 of this Article IX to
adopt, amend or repeal bylaws, bylaws may be adopted, amended or
repealed by the board of directors.
21
<PAGE>
CERTIFICATE OF SECRETARY
The undersigned hereby certifies:
1. That the undersigned is the duly elected and acting
secretary of Mirage Resorts, Incorporated, a Nevada corporation;
and
2. That the foregoing Amended and Restated Bylaws,
comprising 25 pages, constitute the bylaws of said corporation as
duly adopted by action of the board of directors of the
corporation duly taken on July 20, 1994.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed
his name and affixed the seal of the corporation this 29th day of
July, 1994.
KENNETH R. WYNN
__________________________
KENNETH R. WYNN, Secretary
22
