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THE FOLLOWING ITEMS WERE THE SUBJECT OF A FORM 12B-25 AND ARE INCLUDED HEREIN:
ITEM 6, SELECTED FINANCIAL DATA; ITEM 7, MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS; ITEM 8, FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA; ITEM 14(A)(2), FINANCIAL STATEMENT SCHEDULES.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-6697
MIRAGE RESORTS, INCORPORATED
(Exact name of Registrant as specified in its charter)
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<TABLE>
<S> <C>
NEVADA 88-0058016
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3400 LAS VEGAS BOULEVARD SOUTH 89109
LAS VEGAS, NEVADA (Zip Code)
(Address of principal executive offices)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 791-7111
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------------------------------------ -----------------------------
<S> <C>
Common Stock ($.008 par value per share) New York Stock Exchange
Pacific Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: X
The aggregate market value of the Registrant's Common Stock held by
non-affiliates (all persons other than executive officers or directors) of the
Registrant on March 1, 1994 (based on the closing price per share on the New
York Stock Exchange on that date) was $2,006,526,525.
The Registrant's Common Stock outstanding at March 1, 1994 was 90,782,611
shares.
Portions of the Registrant's definitive Proxy Statement for its May 26, 1994
Annual Meeting of Stockholders (which has not been filed as of the date of this
filing) are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
Mirage Resorts, Incorporated (the "Registrant" or the "Company") is a Nevada
corporation incorporated in 1949. The Registrant, through wholly owned
subsidiaries, owns and operates (i) The Mirage, a hotel-casino and destination
resort on the Las Vegas Strip, (ii) Treasure Island at The Mirage ("Treasure
Island"), a hotel-casino resort adjacent to The Mirage, (iii) the Golden Nugget,
a hotel-casino in downtown Las Vegas and (iv) the Golden Nugget-Laughlin, a
hotel-casino in Laughlin, Nevada. In January 1993, the Registrant, through a
wholly owned subsidiary, purchased the assets of the former Dunes Hotel, Casino
and Country Club (the "Dunes") on the Las Vegas Strip and is developing
long-term plans for the site, which include construction of extensive new hotel,
casino and resort facilities.
THE MIRAGE
The Registrant's wholly owned subsidiary, THE MIRAGE CASINO-HOTEL ("MCH"),
owns and operates The Mirage, which opened on November 22, 1989.
The Mirage is a luxurious, tropically themed destination resort containing
approximately 2.7 million square feet in a 29-story Y-shaped hotel tower and an
expansive low-rise complex. The Mirage features a 95,500-square foot casino,
3,030 hotel rooms (including 265 suites), 14 villa suites, approximately 82,000
square feet of meeting, convention and banquet space, a parking garage with
space for approximately 2,200 vehicles, a valet parking garage with space for
approximately 1,830 vehicles shared with Treasure Island, surface parking for
approximately 1,650 vehicles, a 1,500-seat showroom featuring top-name
entertainment (showcasing the world-famous illusionists Siegfried & Roy), five
international restaurants, a California-style pizza restaurant, a coffee shop, a
buffet, four bars (two of which feature live entertainment), two snack/ liquor
bars, an ice cream parlor, a health spa and beauty salon, a swimming pool and
cabana area, a white tiger display and extensive retail facilities. The exterior
of the resort is landscaped with palm trees, abundant foliage and more than four
acres of lagoons and other water features, centered around a 40-foot simulated
volcano and waterfall. Each evening, the volcano erupts at 15-minute intervals,
spectacularly illuminating the front of the resort. Inside the front entrance is
an atrium with a tropical garden and additional water features capped by a
150-foot (in diameter) glass dome. The atrium has an advanced environmental
control system and creative lighting and other special effects designed to
replicate the sights, sounds and fragrances of the South Seas. Located at the
rear of the hotel, adjacent to the swimming pool area, is a dolphin habitat with
adjoining food, beverage and retail facilities.
As of March 1, 1994, The Mirage's casino offered 119 table games (including
blackjack, craps, roulette, baccarat, pai gow, pai gow poker, Caribbean stud
poker, red dog and big six), keno, poker, a race and sports book and
approximately 2,250 slot machines and other coin-operated devices.
During the years ended December 31, 1993 and 1992, The Mirage's average
occupancy rates for standard rooms were approximately 98% and 96%, respectively.
These percentages include occupancy on a complimentary basis.
TREASURE ISLAND
The Registrant, through Treasure Island Corp. ("TI Corp."), a wholly owned
subsidiary of MCH, owns and operates Treasure Island, a pirate-themed
hotel-casino resort located on the same 116-acre site as The Mirage with
approximately 550 feet of frontage on the Las Vegas Strip. Construction of
Treasure Island commenced in March 1992, and the facility opened on October 26,
1993.
Treasure Island features a 75,000-square foot casino, 2,900 hotel rooms
(including 212 suites), a steak and seafood restaurant, a contemporary
Continental restaurant, an Italian specialties grill, a coffee shop, a buffet,
three snack bars, an ice cream parlor, four bars (three of which feature live
entertainment), a 1,500-seat showroom featuring an all-new production,
"Mystere," developed by the creators of the world-renowned Cirque du Soleil, and
an 18,000-square foot amusement arcade. Treasure Island also offers extensive
retail facilities, approximately 18,000 square feet of meeting and banquet
space, two wedding
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chapels, a swimming pool with a 230-foot mountain water slide, a parking garage
with space for approximately 2,400 vehicles and the valet parking garage shared
with The Mirage. The facade of Treasure Island, fronting on the Las Vegas Strip,
is an elaborate pirate village in which full-scale replicas of a pirate ship and
a British frigate periodically engage in a pyrotechnic and special effects sea
battle, culminating with the sinking of the frigate. Management believes that
the pirate-themed features of Treasure Island and its proximity to The Mirage
make it a "must see" attraction for Las Vegas visitors and local residents.
As of March 1, 1994, Treasure Island's casino offered 79 table games
(including blackjack, craps, roulette, baccarat, pai gow, pai gow poker,
Caribbean stud poker and big six), keno, poker, a race and sports book and
approximately 2,260 slot machines and other coin-operated devices.
From its opening through December 31, 1993, Treasure Island's average
occupancy rate for standard rooms was approximately 97%. This percentage
includes occupancy on a complimentary basis.
GOLDEN NUGGET
The Registrant's wholly owned subsidiary, GNLV, CORP. ("GNLV"), owns and
operates the Golden Nugget, a hotel-casino which, together with parking
facilities, occupies approximately 2 1/2 square blocks in downtown Las Vegas.
The Golden Nugget features a 38,000-square foot casino, 1,907 hotel rooms
(including 102 suites), two international restaurants, a California-style pizza
restaurant, a coffee shop, a buffet, a snack bar, three bars, an entertainment
lounge, a ballroom/showroom, approximately 23,000 square feet of meeting and
banquet space, two gift and retail shops, two hotel lobbies with guest
registration facilities, a swimming pool and lounge area, a health spa, a beauty
salon and two parking garages with space for approximately 1,050 vehicles.
As of March 1, 1994, the Golden Nugget's casino offered 69 table games
(including blackjack, craps, roulette, baccarat, pai gow, pai gow poker,
Caribbean stud poker, red dog and big six), keno, a race and sports book and
approximately 1,300 slot machines and other coin-operated devices.
During the years ended December 31, 1993 and 1992, the Golden Nugget's
average occupancy rates for standard rooms were approximately 97% and 94%,
respectively. These percentages include occupancy on a complimentary basis.
GOLDEN NUGGET-LAUGHLIN
The Registrant's wholly owned subsidiary, GNL, CORP. ("GNL"), owns and
operates the Golden Nugget-Laughlin, a hotel-casino in Laughlin, Nevada. The
hotel-casino is located on approximately 13 acres with approximately 600 feet of
Colorado River frontage near the center of Laughlin's existing hotel-casino
facilities. The Golden Nugget-Laughlin includes a two-story low-rise featuring a
32,000-square foot casino, three restaurants, three bars, an entertainment
lounge, a snack bar and a gift and retail shop. The hotel is a four-story
structure located adjacent to the low-rise containing 296 standard rooms and
four suites. Other facilities at the Golden Nugget-Laughlin include a swimming
pool, a parking garage with space for approximately 1,585 vehicles adjacent to
the low-rise and approximately four and one-half acres of surface parking for
recreational vehicles. The hotel and a 50% expansion of the casino were
completed in December 1992. GNL also owns and operates a 78-room motel in
Bullhead City, Arizona, across the Colorado River from Laughlin.
As of March 1, 1994, the Golden Nugget-Laughlin's casino offered 20 table
games (including blackjack, craps, roulette, pai gow poker and Caribbean stud
poker), approximately 1,300 slot machines and other coin-operated devices, keno
and a race and sports book.
IGUAZU FALLS, ARGENTINA CASINO VENTURE
The Registrant, through a wholly owned subsidiary, owns a 50% equity
interest in Mirage Universal de Misiones S.A., an Argentine corporation
("MUMSA"). In February 1994, MUMSA was awarded a 15-year concession by the
Province of Misiones, Argentina to develop, own and operate a casino near Iguazu
Falls, Argentina. The Registrant's total investment in the venture of $4 million
was contributed in January 1994. The casino is initially expected to offer
approximately 15 table games, 120 slot machines and food and beverage service.
It is anticipated that the casino will be opened to the public in mid-1994 and
will be managed principally by one of the other stockholders of MUMSA.
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FUTURE EXPANSION
In January 1993, the Registrant, through a wholly owned subsidiary,
completed the purchase for $70 million of the land, buildings and certain other
assets comprising the Dunes. The Dunes site consists of approximately 164 acres
situated on the Las Vegas Strip between Flamingo Road and Tropicana Avenue.
Pursuant to the terms of the purchase agreement, the seller terminated all
operations of the Dunes prior to the closing of the purchase. The Registrant
reopened the Dunes golf course to the public in February 1993 as "The Mirage
Golf Club" and intends to operate it at least until the commencement of major
construction at the site.
The Registrant is developing long-term plans for the Dunes property, which
include construction of extensive new hotel, casino and resort facilities. The
scope and timing of such a project are still uncertain, but management does not
currently anticipate breaking ground on any major construction prior to late
1994 or completing such construction prior to late 1996. In October 1993, the
Registrant imploded the north hotel tower of the Dunes as part of the opening
ceremonies for Treasure Island. The implosion received worldwide news coverage
and was featured in a one-hour fictional television special produced by the
Registrant which aired on network television in January 1994. Assuming
development of the Dunes property as presently contemplated, the cost of such
development is expected to be in excess of, and may significantly exceed, $500
million. There can be no assurance that the Registrant will determine to proceed
with such a project, that financing will be available on terms satisfactory to
the Registrant or that the project, if constructed, will be profitable. In
addition, there can be no assurance that the Registrant will obtain the
requisite approvals, permits, allocations and licenses, including gaming
licenses, or that such approvals, permits, allocations or licenses can be
obtained on a timely basis.
The Registrant regularly evaluates and pursues potential expansion and
acquisition opportunities in both the domestic and international markets. Such
opportunities may include the ownership, management and operation of gaming and
other entertainment facilities in states other than Nevada or outside of the
United States, either alone or with joint venture partners. The Registrant has
presented a large number of formal and informal proposals to develop, own and
operate gaming facilities in new and potential gaming jurisdictions, several of
which proposals are currently outstanding. Development and operation of any
gaming facility in a new jurisdiction is subject to numerous contingencies,
several of which are outside of the Registrant's control and may include the
enactment of appropriate gaming legislation, the issuance of requisite permits,
licenses and approvals and the satisfaction of other conditions. In addition,
some of the expansions being proposed require a substantial capital investment
by the Registrant and may require significant financing. There can be no
assurance that such financing can be obtained on terms acceptable to the
Registrant, that the Registrant will elect or be able to consummate any such
acquisition or expansion opportunity outside of Nevada or that the operations of
any such venture will be profitable.
MARKETING
Operations at the Registrant's hotel-casinos are conducted 24 hours a day,
every day of the year. The Registrant does not consider its Las Vegas business
to be highly seasonal. The Registrant considers its Laughlin business to be
seasonal, with the greatest level of activity occurring during the spring and
fall months and the lowest during December, January and the summer months.
The Registrant's revenues and operating income depend primarily upon the
level of gaming activity at its casinos, although the Registrant also seeks to
maximize revenues from food and beverage, lodging, entertainment and retail
operations. Therefore, the primary goal of the Registrant's marketing efforts is
to attract gaming customers to its casinos.
The principal segments of the Nevada gaming market are tour and travel,
leisure travel, high-level wagerers and conventions (including small meetings
and corporate incentive programs). The Registrant believes that The Mirage's
hotel occupancy and gaming revenues can be maximized through a balanced
marketing approach addressing each market segment. The Registrant's marketing
strategy for Treasure Island and the Golden Nugget is aimed at attracting
middle-to upper-middle-income wagerers primarily from the tour and travel and
leisure travel segments. The Registrant believes that the success of its hotel-
casinos is also affected by the level of walk-in customers and, accordingly, has
designed these facilities to maximize their attraction to these patrons.
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The tour and travel segment consists of gaming customers who take advantage
of travel "packages" produced by wholesale operators. The Registrant has
relationships with wholesalers selected on the basis of market penetration,
reputation and commitment. Tour and travel trade emphasizes mid-week occupancy,
as compared with the regionally based leisure travel segment, which is primarily
weekend-oriented. The Registrant has developed specialized marketing programs
for the tour and travel market. The Registrant has also developed important
relationships with, and programs for, certain of the major air carriers which
have their own wholesale tour and travel operations.
The leisure travel segment is largely composed of individuals traveling to
Las Vegas from the regional market, primarily Southern California and the
Southwest, by automobile and, to a lesser extent, by airplane. This segment
represents a significant portion of the customers for the Registrant's
facilities. As with the tour and travel business, The Mirage aims to attract the
upper-middle and higher-income strata of this segment, while the focus of
Treasure Island and the Golden Nugget is on the middle-to upper-middle-income
strata of the leisure travel segment. To this end, the Registrant has utilized
substantial media advertising (particularly radio and television commercials and
billboards) emphasizing the amenities, the atmosphere of excitement and the
relative value offered by the facilities. The Registrant also participates in
joint advertising and marketing programs with selected air carriers and benefits
from personal referrals and its high public profile.
The Registrant markets to the high-level-wagerer segment primarily through
direct sales, using its 19 marketing offices located in a number of major
domestic and foreign cities. Special entertainment and other events and
programs, including golf privileges at Shadow Creek as discussed below and the
presentation of major professional boxing matches, together with the provision
of complimentary rooms, food and beverage and air transportation and the
extension of gaming credit, are offered to attract high-level wagerers. The
Registrant employs several marketing executives who have extensive customer
relationships in certain areas of Asia, Latin America and Canada, as well as
casino hosts from many of the countries to which international marketing efforts
are directed.
Convention business, like the tour and travel segment, is mid-week oriented,
and is a major target for The Mirage, with its 82,000 square feet of meeting,
convention and banquet space. The Mirage seeks those conventions whose
participants have the best gaming profile. Treasure Island's and a portion of
The Mirage's convention business is derived from small corporate meetings (those
requiring less than 500 rooms per night) and corporate incentive programs
(travel packages produced by independent "incentive houses" for corporations
desiring to motivate their employees and reward them for superior performance).
Since the Golden Nugget's facilities are inadequate to accommodate conventions
requiring more than 200 rooms per night, its focus on this segment has been
limited to smaller groups and "spill-over" business from larger conventions
headquartered at other facilities, including The Mirage.
As discussed under "Future Expansion," the Registrant recently opened The
Mirage Golf Club at the Dunes site. The Registrant makes reduced green fees and
preferential tee times at The Mirage Golf Club available to guests of its
hotels. Management believes that The Mirage Golf Club has been beneficial to the
Registrant's marketing efforts.
Walk-in customers are those who patronize a facility's casino but are not
guests of its hotel. The Mirage and Treasure Island, which are strategically
located on the Las Vegas Strip, have been designed to attract walk-in casino
business.
The Golden Nugget-Laughlin appeals primarily to patrons from the
middle-income strata of the gaming populace. Many of the Golden
Nugget-Laughlin's customers, particularly those who arrive on bus tours, are
older and retired individuals who are attracted by lodging, food and beverage
and entertainment prices that are generally lower than those offered by the
major Las Vegas hotel-casinos. Many are also attracted by lower minimum wagering
limits and higher slot machine paybacks than those prevalent in Las Vegas, and
by their perception that Laughlin offers a more "relaxed" gaming and
recreational atmosphere. The predominant portion of the Golden Nugget-Laughlin's
casino revenues is derived from slot machine play. During 1993, slot revenues
accounted for approximately 87% of its total casino revenues. Convention and
high-level-wagerer patrons do not comprise a significant segment of the Laughlin
gaming market.
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The Registrant, through a wholly owned subsidiary of MCH, owns approximately
315 acres of real property located approximately 10 miles north of The Mirage
and Treasure Island and five miles north of the Golden Nugget. The Registrant
has developed a world-class 18-hole golf course and related facilities known as
"Shadow Creek" on approximately 80% of such property. In connection with its
marketing activities, the Registrant makes the course and related facilities
available for use, by invitation only, by high-level-wagerer patrons.
CREDIT
Credit play represents a significant portion of the table games volume at
The Mirage. The Registrant's other facilities do not emphasize credit play to
the same extent as The Mirage, although credit is made available.
The Registrant maintains strict controls over the issuance of credit and
aggressively pursues collection of its customer receivables. Such collection
efforts parallel those procedures commonly followed by most large corporations,
including the mailing of statements and delinquency notices, personal and other
contacts, the use of an outside collection agency, civil litigation and criminal
prosecution, if warranted. Nevada gaming debts evidenced by credit instruments
are enforceable under the laws of Nevada. All other states are required to
enforce a judgment on a gaming debt entered in Nevada pursuant to the Full Faith
and Credit Clause of the Unites States Constitution and, although foreign
countries are not so bound, the United States assets of foreign debtors may be
reached to satisfy a judgment entered in the United States.
SUPERVISION OF GAMING ACTIVITIES
In connection with the supervision of gaming activities at its casinos, the
Registrant maintains stringent controls on the recording of all receipts and
disbursements. These audit and cash controls include the following: locked cash
boxes; personnel independent of casino operations to perform the daily cash and
coin counts; floor observation of the gaming area; observation of gaming and
certain other areas through the use of closed-circuit television; computer
tabulation of receipts and disbursements for each of the slot machines and table
games; and timely analysis of discrepancies or deviations from normal
performance.
INSURANCE AND FIRE SAFETY MEASURES
The Registrant maintains extensive property damage, business interruption
and general liability insurance. Safety and protection have been, and continue
to be, of maximum concern in the construction and expansion of the Registrant's
facilities. The Mirage, Treasure Island, the high-rise towers of the Golden
Nugget and the Golden Nugget-Laughlin were constructed pursuant to modern
stringent fire codes, and generally exceed such codes. The Mirage, Treasure
Island and the Golden Nugget is each rated by insurance companies as a "highly
protected risk."
COMPETITION
The Mirage, Treasure Island and the Golden Nugget each compete with a number
of other hotel-casinos in Las Vegas. Currently, there are approximately 27 major
hotel-casinos located on or near the Las Vegas Strip, nine major hotel-casinos
located in the downtown area and several major facilities located elsewhere in
the Las Vegas area. During 1993 (principally during the fourth quarter), Las
Vegas hotel and motel room capacity increased by approximately 10,300 rooms, to
a total of approximately 83,700 rooms. This increase includes the effect of the
opening of Treasure Island and two other major Strip hotel-casinos in the fourth
quarter.
Management believes that the primary competition for The Mirage comes from
other large hotel-casinos located on or near the Strip that offer amenities and
marketing programs that appeal to the upper-middle and higher-income strata of
the gaming populace. The Mirage competes on the basis of the elegance and
excitement offered by the facility, the desirability of its location, the
quality and relative value of its hotel rooms and restaurants, its top-name
entertainment, customer service, its balanced marketing strategy and special
marketing and promotional programs.
Management believes that Treasure Island primarily competes with the other
large hotel-casinos located on or near the Strip that offer amenities and
marketing programs that appeal to the middle-to-
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upper-middle-income strata of the gaming populace. Treasure Island competes on
the basis of the entertainment and excitement offered by the facility, the
desirability of its location (including its proximity to The Mirage), the
affordability of its hotel rooms, the variety, quality and attractive pricing of
its food and beverage outlets, its unique showroom and innovative amusement
area, customer service and its marketing and promotional programs.
In management's opinion, the Golden Nugget primarily competes with the large
hotel-casinos located on or near the Strip, particularly those offering
amenities and marketing programs that appeal primarily to the middle-and
upper-middle-income strata of the gaming populace. The Golden Nugget competes
for gaming customers primarily on the basis of the elegance, intimacy and
excitement offered by the facility, the quality and relative value of its hotel
rooms and restaurants, customer service and its marketing and promotional
programs. In order to compete more effectively with the Strip hotel-casinos, a
coalition of several major downtown Las Vegas hotel-casino owners (including
GNLV), in conjunction with the City of Las Vegas, is developing The Fremont
Street Experience, a major tourist attraction in the downtown area. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in Item 7 of Part II of this Form 10-K.
The Golden Nugget-Laughlin competes with eight nearby hotel-casinos. During
1993, the number of available hotel rooms in Laughlin increased by approximately
1,100 rooms, to a total of approximately 10,300 rooms.
The Registrant's facilities also compete for gaming customers to a lesser
extent with hotel-casino operations located in other areas of Nevada, Atlantic
City, New Jersey and other parts of the world. They also compete with
state-sponsored lotteries, off-track wagering, card parlors, riverboat and
Indian gaming ventures and other forms of legalized gaming in the United States,
as well as with gaming on cruise ships. Certain states have recently legalized,
and several other states are currently considering legalizing, casino gaming.
Management does not believe that such legalization of casino gaming in those
jurisdictions will have a material adverse impact on the Registrant's
operations. However, management believes that the legalization of large-scale
land-based casino gaming in or near certain major metropolitan areas,
particularly in California, could have a material adverse effect on the Las
Vegas market. The competitive impact of Treasure Island on the Registrant's
other hotel-casinos cannot yet be fully determined, but Treasure Island may
attract customers who would otherwise patronize these facilities.
EMPLOYEES AND LABOR RELATIONS
As of March 1, 1994, the Registrant and its subsidiaries had approximately
14,600 full-time and 2,400 part-time employees. At that date, the Registrant had
collective bargaining contracts with unions covering approximately 7,700 of its
Las Vegas employees, which expire in May 1994. The Registrant is in the process
of negotiating with respect to the renewal of such contracts. Although unions
have been active in Las Vegas, management considers its employee relations to be
excellent.
REGULATION AND LICENSING
The ownership and operation of casino gaming facilities in Nevada are
subject to (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act") and (ii) various local ordinances
and regulations. The Registrant's gaming operations are subject to the licensing
and regulatory control of the Nevada Gaming Commission (the "Nevada
Commission"), the Nevada State Gaming Control Board (the "Nevada Board"), the
City of Las Vegas and the Clark County Liquor and Gaming Licensing Board (the
"Clark County Board"). The Nevada Commission, the Nevada Board, the City of Las
Vegas and the Clark County Board are collectively referred to as the "Nevada
Gaming Authorities." To the best knowledge of management, the Registrant and its
subsidiaries are presently in material compliance with all applicable laws,
regulations and supervisory procedures described herein.
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
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procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) providing a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Registrant's gaming operations.
The Registrant's direct and indirect subsidiaries that conduct gaming
operations are required to be licensed by the Nevada Gaming Authorities. The
gaming licenses require the periodic payment of fees and taxes and are not
transferable. MCH is registered as an intermediary company and has been found
suitable to own the stock of TI Corp. MCH has also been licensed to conduct
nonrestricted gaming operations at The Mirage. TI Corp. has been licensed to
conduct nonrestricted gaming operations at Treasure Island. GNLV has been
registered as an intermediary company and has been found suitable to own the
stock of Golden Nugget Manufacturing Corp. ("GNMC"), its inactive subsidiary
which is licensed as a manufacturer and distributor of gaming devices. GNLV has
also been licensed to conduct nonrestricted gaming operations at the Golden
Nugget. GNL has been licensed to conduct nonrestricted gaming operations at the
Golden Nugget-Laughlin. MR Realty, MRI's subsidiary which owns the Dunes site,
has been licensed to conduct restricted gaming operations at The Mirage Golf
Club. The Registrant is registered by the Nevada Commission as a publicly traded
corporation (a "Registered Corporation") and has been found suitable to own the
stock of MCH, GNLV and GNL, each of which, together with TI Corp., MR Realty and
GNMC, is a corporate licensee (individually, a "Gaming Subsidiary" and
collectively, the "Gaming Subsidiaries") under the Nevada Act.
As a Registered Corporation, the Registrant is required periodically to
submit detailed financial and operating reports to the Nevada Commission and
furnish any other information which the Nevada Commission may require. No person
may become a stockholder of, or receive any percentage of profits from, the
Gaming Subsidiaries without first obtaining licenses and approvals from the
Nevada Gaming Authorities. The Registrant and the Gaming Subsidiaries have
obtained from the Nevada Gaming Authorities the various registrations,
approvals, permits and licenses required in order to engage in gaming activities
in Nevada. The Nevada Gaming Authorities may investigate any individual who has
a material relationship to, or material involvement with, the Registrant or the
Gaming Subsidiaries in order to determine whether such individual is suitable or
should be licensed as a business associate of a gaming licensee. Officers,
directors and certain key employees of the Gaming Subsidiaries must file
applications with the Nevada Gaming Authorities and may be required to be
licensed or found suitable by the Nevada Gaming Authorities. Officers, directors
and key employees of the Registrant who are actively and directly involved in
gaming activities of the Gaming Subsidiaries may be required to be licensed or
found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities
may deny an application for licensing for any cause which they deem reasonable.
A finding of suitability is comparable to licensing, and both require submission
of detailed personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of suitability must pay
all the costs of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities, and in addition to their authority to
deny an application for a finding of suitability or licensure, the Nevada Gaming
Authorities have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Registrant or the Gaming Subsidiaries, the companies
involved would have to sever all relationships with such person. In addition,
the Nevada Commission may require the Registrant or the Gaming Subsidiaries to
terminate the employment of any person who refuses to file appropriate
applications. Determinations of suitability or of questions pertaining to
licensing are not subject to judicial review in Nevada.
The Registrant, MCH, GNLV, GNL and TI Corp. are required to submit detailed
financial and operating reports to the Nevada Commission. Substantially all
material loans, leases, sales of securities and similar financing transactions
entered into by MCH, GNLV, GNL or TI Corp. must be reported to or approved by
the Nevada Commission.
7
<PAGE>
If it were determined that the Nevada Act was violated by a Gaming
Subsidiary, the licenses it holds could be limited, conditioned, suspended or
revoked, subject to compliance with certain statutory and regulatory procedures.
In addition, the Registrant, the Gaming Subsidiaries and the persons involved
could be subject to substantial fines for each separate violation of the Nevada
Act at the discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate The Mirage, Treasure Island, the
Golden Nugget and the Golden Nugget-Laughlin and, under certain circumstances,
earnings generated during the supervisor's appointment (except for the
reasonable rental value of the casino) could be forfeited to the State of
Nevada. Limitation, conditioning or suspension of the gaming license of a Gaming
Subsidiary or the appointment of a supervisor could (and revocation of any
gaming license would) materially adversely affect the Registrant's gaming
operations.
Any beneficial holder of the Registrant's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated and have his suitability as a beneficial holder of the Registrant's
voting securities determined if the Nevada Commission has reason to believe that
such ownership would be inconsistent with the declared policies of the State of
Nevada. The applicant must pay all costs of investigation incurred by the Nevada
Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of a Registered
Corporation's voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of more than 10% of a
Registered Corporation's voting securities apply to the Nevada Commission for a
finding of suitability within 30 days after the Chairman of the Nevada Board
mails a written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires more than
10%, but not more than 15%, of a Registered Corporation's voting securities may
apply to the Nevada Commission for a waiver of such finding of suitability
requirement if such institutional investor holds the voting securities for
investment purposes only. An institutional investor shall not be deemed to hold
voting securities for investment purposes unless the voting securities were
acquired and are held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or indirectly, the
election of a majority of the members of the board of directors of the
Registered Corporation, any change in the corporate charter, bylaws, management,
policies or operations of the Registered Corporation or any of its gaming
affiliates or any other action which the Nevada Commission finds to be
inconsistent with holding the Registered Corporation's voting securities for
investment purposes only. Activities which are not deemed to be inconsistent
with holding voting securities for investment purposes only include: (i) voting
on all matters voted on by stockholders; (ii) making financial and other
inquiries of management of the type normally made by securities analysts for
informational purposes and not to cause a change in its management, policies or
operations; and (iii) such other activities as the Nevada Commission may
determine to be consistent with such investment intent. The City of Las Vegas
requires 10% stockholders to be licensed. If the beneficial holder of voting
securities who must be found suitable is a corporation, partnership or trust, it
must submit detailed business and financial information, including a list of
beneficial owners. The applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
the Chairman of the Nevada Board may be found unsuitable. The same restrictions
apply to a record owner if the record owner, after request, fails to identify
the beneficial owner. Any stockholder found unsuitable who holds, directly or
indirectly, any beneficial ownership of the common stock beyond such period of
time as may be prescribed by the Nevada Commission may be guilty of a criminal
offense. The Registrant is subject to disciplinary action if, after it receives
notice that a person is unsuitable to be a stockholder or to have any other
relationship with the Registrant or the Gaming Subsidiaries, the Registrant (i)
pays such person any dividend or interest upon voting securities of the
Registrant, (ii) allows such person to exercise, directly or indirectly, any
voting right conferred through securities held by that person, (iii) pays
remuneration in any form to such person for services rendered or otherwise or
(iv) fails to pursue all lawful efforts to require such person to relinquish his
voting securities including, if necessary, the immediate purchase of the voting
securities for cash at fair market value. Additionally, the Clark County Board
has taken the position that it has the authority to approve all persons owning
or controlling the stock of any corporation controlling a gaming licensee.
8
<PAGE>
The Nevada Commission may, in its discretion, require the holder of any debt
security of a Registered Corporation to file applications, be investigated and
be found suitable to own the debt security. If the Nevada Commission determines
that a person is unsuitable to own such security, then pursuant to the Nevada
Act, the Registered Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada Commission, it: (i) pays
to the unsuitable person any dividend, interest or any distribution whatsoever;
(ii) recognizes any voting right by such unsuitable person in connection with
such securities; (iii) pays the unsuitable person remuneration in any form; or
(iv) makes any payment to the unsuitable person by way of principal, redemption,
conversion, exchange, liquidation or similar transaction.
The Registrant is required to maintain a current stock ledger in Nevada
which may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or nominee, the record holder may be
required to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Registrant is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Registrant's stock certificates to bear
a legend indicating that the securities are subject to the Nevada Act. To date,
the Nevada Commission has not imposed such a requirement on the Registrant.
The Registrant may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada or to retire or extend obligations incurred for such purposes. On May 27,
1993, the Nevada Commission granted the Registrant prior approval to make public
offerings for a period of one year, subject to certain conditions (the "Shelf
Approval"). However, the Shelf Approval may be rescinded for good cause without
prior notice upon the issuance of an interlocutory stop order by the Chairman of
the Nevada Board. The Shelf Approval also applies to any affiliated company
wholly owned by the Registrant (an "Affiliate") which is a publicly traded
corporation or would thereby become a publicly traded corporation pursuant to a
public offering. The Shelf Approval also includes approval for the Gaming
Subsidiaries to guarantee any security issued by, or to hypothecate their assets
to secure the payment or performance of any obligations issued by, the
Registrant or an Affiliate in a public offering under the Shelf Approval. The
Shelf Approval does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. The Registrant has filed an
application for a renewal of the Shelf Approval, which it anticipates will be
considered by the Nevada Board and the Nevada Commission in May 1994.
Changes in control of the Registrant through merger, consolidation, stock or
asset acquisitions, management or consulting agreements or any act or conduct by
a person whereby he obtains control may not occur without the prior approval of
the Nevada Commission. Entities seeking to acquire control of a Registered
Corporation must satisfy the Nevada Board and Nevada Commission with respect to
a variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control to be investigated and
licensed as part of the approval process relating to the transaction.
The Nevada Legislature has declared that some corporate acquisitions opposed
by management, repurchases of voting securities and corporate defensive tactics
affecting Nevada corporate gaming licensees, and Registered Corporations that
are affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming licensees and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of
9
<PAGE>
recapitalization proposed by the Registered Corporation's board of directors in
response to a tender offer made directly to the Registered Corporation's
stockholders for the purpose of acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to Clark
County and the City of Las Vegas, in which the Gaming Subsidiaries' respective
operations are conducted. Depending upon the particular fee or tax involved,
these fees and taxes are payable either monthly, quarterly or annually and are
based upon either: (i) a percentage of the gross revenues received; (ii) the
number of gaming devices operated; or (iii) the number of table games operated.
A casino entertainment tax is also paid by casino operations where entertainment
is furnished in connection with the selling of food or refreshments. Nevada
licensees that hold a manufacturer's or distributor's license, such as GNMC,
also pay certain fees to the State of Nevada.
Any person who is licensed, required to be licensed, registered, required to
be registered or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation by
the Nevada Board of its participation in such foreign gaming. The revolving fund
is subject to increase or decrease at the discretion of the Nevada Commission.
Thereafter, Licensees are required to comply with certain reporting requirements
imposed by the Nevada Act. Licensees are also subject to disciplinary action by
the Nevada Commission if they knowingly violate any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fail to conduct the
foreign gaming operation in accordance with the standards of honesty and
integrity required of Nevada gaming operations, engage in activities that are
harmful to the State of Nevada or its ability to collect gaming taxes and fees
or employ a person in the foreign operation who has been denied a license or
finding of suitability in Nevada on the ground of personal unsuitability.
The sale of alcoholic beverages at The Mirage, Treasure Island, the Golden
Nugget-Laughlin and The Mirage Golf Club, and the sale of alcoholic beverages at
the Golden Nugget, are subject to licensing, control and regulation by the Clark
County Board and the City of Las Vegas, respectively. All licenses are revocable
and are not transferable. The agencies involved have full power to limit,
condition, suspend or revoke any such license, and any such disciplinary action
could (and revocation would) have a material adverse effect on the operations of
the Gaming Subsidiaries.
ITEM 2. PROPERTIES
The Mirage and Treasure Island share an approximately 116-acre site owned by
the Registrant on the Las Vegas Strip. At March 15, 1994, both The Mirage and
Treasure Island were subject to aggregate encumbrances approximating $396.0
million, including amounts based upon the accreted value of zero coupon first
mortgage notes.
The Golden Nugget, including parking facilities, occupies approximately
seven and one-half acres in downtown Las Vegas. The improvements and
approximately 90% of the underlying land are owned by the Registrant, with the
remaining land being held under three separate ground leases that expire (after
giving effect to renewal options) on dates ranging from 2025 to 2046.
The Golden Nugget-Laughlin, including adjacent parking facilities, and GNL's
motel in Bullhead City, Arizona, occupy an aggregate of approximately 15 1/2
acres. All of the property is owned by the Registrant. The Golden
Nugget-Laughlin is subject to a blanket encumbrance collateralizing the
Registrant's bank credit facility, $20.0 million of which was drawn at March 15,
1994.
The Dunes site comprises approximately 164 acres of improved property owned
by the Registrant on the Las Vegas Strip. The Mirage Golf Club occupies
approximately 125 acres of such property.
The Registrant owns approximately 315 acres of land in North Las Vegas.
Shadow Creek occupies approximately 80% of such property. Shadow Creek is
subject to the blanket encumbrance collateralizing the Registrant's bank credit
facility.
10
<PAGE>
The Registrant also owns or leases various improved and unimproved property,
and options to purchase or lease property, in Las Vegas, Atlantic City, New
Jersey and other locations in the United States and certain foreign countries.
ITEM 3. LEGAL PROCEEDINGS
The Registrant (including its subsidiaries) is a defendant in various
lawsuits, most of which relate to routine matters incidental to its business.
Management does not believe that the outcome of such pending litigation, in the
aggregate, will have a material adverse effect on the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1993.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's common stock is traded on the New York and Pacific Stock
Exchanges under the symbol MIR. The following table sets forth, for the calendar
quarters indicated, the high and low sale prices of the common stock on the New
York Stock Exchange, as adjusted to reflect a five-for-two split of the
Registrant's common stock effective October 15, 1993.
<TABLE>
<CAPTION>
1993 1992
------------------ ------------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
First quarter........................... 17 3/8 13 1/8 14 7/8 10 1/4
Second quarter.......................... 19 13 1/4 14 1/2 8 3/4
Third quarter........................... 23 7/8 16 1/8 11 1/4 9 1/4
Fourth quarter.......................... 25 20 3/8 14 1/4 9 3/4
</TABLE>
The Registrant paid no dividends in 1993 or 1992. There were approximately
12,300 record holders of the Registrant's common stock as of March 15, 1994.
The Registrant's bank credit agreement contains a covenant restricting the
ability of the Registrant to pay cash dividends on its common stock or make
certain other restricted payments. At December 31, 1993, pursuant to such
covenant, the Registrant was permitted to pay dividends and make restricted
payments totaling approximately $280 million. In addition, certain subsidiaries
of the Registrant are parties to the credit agreement and to indentures which
contain covenants restricting the subsidiaries' ability to pay cash dividends on
their capital stock to the Registrant. Refer to Exhibits 4(a), 4(e), 4(g) and
10(dd) to this Form 10-K, and Note 5 of Notes to Consolidated Financial
Statements referred to in Item 14(a)(1) of this Form 10-K.
11
<PAGE>
ITEM 6.__SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------
1993(A) 1992 1991 1990 1989(A)
------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Gross revenues............................. $ 1,053,413 $ 920,576 $ 901,639 $ 991,512 $ 328,909
Promotional allowances..................... (100,111) (87,552) (78,782) (82,547) (29,060)
Net revenues............................... 953,302 833,024 822,857 908,965 299,849
Operating income before depreciation and
amortization and preopening and related
promotional expense (b)................... 235,668 188,803 223,488 205,360 47,504
Operating income........................... 131,728 125,775 163,488 151,631 1,012
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle (c)............................. 48,069 36,945 44,538 28,708 (21,232)
Net income (loss).......................... 29,232 28,419 46,767 29,737 (21,232)
Income (loss) per share before
extraordinary item and cumulative effect
of change in accounting principle (c)..... $ .58 $ .53 $ .80 $ .61 $ (.51)
Net income (loss) per share................ $ .35 $ .41 $ .84 $ .63 $ (.51)
Pro forma amounts assuming new method of
accounting for preopening costs is applied
retroactively (d).........................
Operating income......................... $ 141,690 $ 5,716
Net income (loss)........................ 23,176 (18,127)
Net income (loss) per share.............. $ .49 $ (.43)
OTHER DATA
Interest expense, net...................... $ 58,166 $ 84,912 $ 94,967 $ 110,649 $ 28,946
Cash provided by (used for) operating
activities................................ 180,825 84,565 154,966 111,694 (11,580)
Capital expenditures....................... 432,388 220,844 66,051 128,532 405,266
Standard room occupancy percentage......... 97% 95% 91% 94% 91%
YEAR-END STATUS
Total assets............................... $ 1,705,258 $ 1,594,921 $ 1,327,015 $ 1,326,970 $ 1,167,151
Long-term debt............................. 535,025 831,179 797,759 1,008,783 899,589
Stockholders' equity (e)................... 910,864 553,611 300,593 122,098 87,742
Shares outstanding......................... 90,607 74,600 54,928 41,728 41,410
Long-term debt as a percentage of total
capital (f)............................... 37% 60% 73% 89% 91%
Available rooms............................ 8,229 5,329 5,029 5,029 5,047
Casino square footage...................... 240,500 165,500 155,500 155,500 155,500
Number of employees........................ 17,100 12,200 11,400 11,300 11,300
<FN>
- ------------------------
(a) Treasure Island opened on October 26, 1993 and The Mirage opened on
November 22, 1989.
(b) Before a one-time charge of $29,793 in 1993 for Treasure Island's
preopening and related promotional expenses. Also before a charge of
$24,585 in 1989 for a portion of the $29,822 total preopening costs
incurred in connection with the development of The Mirage (see note d).
</TABLE>
(NOTES CONTINUED ON NEXT PAGE).
12
<PAGE>
<TABLE>
<S> <C>
(c) Before extraordinary gains and losses on early retirements of debt and a
one-time credit of $3,632 in 1992 for the cumulative effect of a change in
method of accounting for income taxes.
(d) Effective January 1, 1992, the Company changed its method of accounting
for preopening costs associated with developing and opening new
hotel-casinos. As a result of this change, preopening costs, which were
previously charged to expense as incurred, are now capitalized and charged
to expense over a 60-day period following the commencement of operations.
The pro forma amounts shown above for 1990 and 1989 have been adjusted to
give effect to retroactive application of this new accounting method,
including related income taxes, on the preopening costs incurred in
connection with the development of The Mirage.
(e) The Company paid no dividends during the five-year period ended December
31, 1993.
(f) Total capital represents long-term debt plus stockholders' equity.
NOTE: All share and per share data have been adjusted to reflect the
five-for-two stock split effective October 15, 1993.
</TABLE>
ITEM 7.__ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
1993 FINANCIAL OVERVIEW
Assisted by Treasure Island's October 26 opening, the Company's gross
revenues rose 14% in 1993, following a 2% increase in 1992. Operating income
rose 28% in 1993 before preopening and related promotional expense. Excluding
Treasure Island, gross revenues and operating income rose 8% and 22%,
respectively, in 1993.
The Company amortized Treasure Island's preopening costs to expense over
that facility's first 60 days of operations, which is management's estimate of
the period of economic benefit associated with such costs. This resulted in all
such costs being included in the fourth quarter of 1993. These costs, together
with related promotional expenses incurred during the 1993 fourth quarter,
totaled $29.8 million. After deducting such non-recurring expenses, the
Company's operating income was $131.7 million, compared to $125.8 million in
1992.
STOCK SPLIT
On October 15, 1993, the Company effected a five-for-two stock split of its
common stock, distributing three new shares to stockholders for each two shares
held. Fractional shares were settled in cash. All information in this Form 10-K
has been adjusted to give retroactive effect to the stock split.
BUILDING THE FOUNDATION FOR FUTURE GROWTH
As recently as December 31, 1990, the Company had over $1 billion of
long-term debt with an average interest rate of approximately 12%. Retirements
and refinancings had reduced this amount to $831.2 million at the beginning of
1993, with an average interest rate of approximately 10.7%.
In March 1993, the Company issued $100 million principal amount of 9 1/4%
senior subordinated notes due 2003. Despite their subordinated position, these
notes have the lowest interest rate of any fixed-rate notes issued by the
Company in over 10 years.
In August 1993, the Company increased the amount available under its
revolving bank credit facility by 50%, to $150 million. While much of this line
was used during 1993, at December 31 only $17 million of the line was drawn,
with $133 million available for new projects or other corporate purposes.
In November 1993, the Company issued 13,750,000 shares of common stock,
raising $303.6 million in order to build a strong base upon which to fund future
growth.
13
<PAGE>
These three sources of capital, plus cash flow from operations and cash on
hand, were used to retire $356.3 million principal amount of the Company's most
expensive debt:
- $100.0 million of 13 3/4% first mortgage notes
- $110.0 million of 11 1/4% first mortgage notes
- $33.4 million of 12% second mortgage notes
- $112.9 million of 12 3/4% uncollateralized notes
At year-end 1993, the Company had only $535.0 million of long-term debt
outstanding, with an average interest rate of approximately 9.4%.
It was financially advantageous for the Company to retire each of these
issues prior to their maturity. The yield to maturity of these issues, taking
into consideration the call premiums, ranged from approximately 10.1% to 12.0%,
versus the approximately 3% earned on the Company's cash balances and the
approximately 5.4% paid in 1993 under its bank credit facility. Principally due
to the call premiums, these early retirements resulted in an $18.8 million
extraordinary charge (net of income tax benefits) against 1993 earnings. The
Company incurred a similar extraordinary charge of $12.2 million in 1992. In
1991, due primarily to higher interest rates prevailing at that time, the
Company was able to repurchase debt in the open market at less than its carrying
cost, resulting in a $2.2 million extraordinary gain.
Primarily as a result of these financial decisions, the Company's interest
cost fell from $114.4 million in 1991 to $103.4 million in 1992 and $88.5
million in 1993.
THE MIRAGE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------
% INCREASE (DECREASE)
----------------------
1993 VS. 1992 VS.
1993 1992 1991 1992 1991
--------- --------- --------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Gross revenues........................................ $ 721.8 $ 661.6 $ 672.5 9% (2)%
Net revenues.......................................... 649.6 596.9 613.5 9% (3)%
EBDIT (a)............................................. 192.4 166.1 201.7 16% (18)%
Operating income...................................... 142.1 120.6 159.0 18% (24)%
Operating margin (b).................................. 21.9% 20.2% 25.9% 1.7pts (5.7)pts
<FN>
- ------------------------
(a) Earnings before depreciation, interest and taxes.
(b) Operating income/net revenues.
</TABLE>
Despite increased competitive conditions and a continuing recession in its
key Southern California market, The Mirage had a strong 1993. Its gross revenues
rose 9% to $721.8 million, the highest in its four-year history, while operating
cash flow (EBDIT) rose 16%, returning to the approximate levels achieved in 1990
and 1991.
In its first two full years of operation, The Mirage achieved strong
financial results, but with a heavy reliance on the game of baccarat. Baccarat
is the game of choice of many "high rollers," particularly from Asia. In 1990
and 1991, baccarat accounted for 15% and 17%, respectively, of the facility's
gross revenues.
The world-wide recession and other factors, particularly in Japan,
contributed to a sharp drop in The Mirage's baccarat activity in 1992. This was
the primary reason for the 24% decline in the facility's 1992 operating income,
when baccarat accounted for only 9% of gross revenues.
Management began implementing programs in 1992 to build other sources of
revenues at The Mirage, as well as to find other sources of baccarat business.
In particular, the Company introduced a computerized room revenue maximization
program and opened new marketing offices in certain other cities in Asia.
14
<PAGE>
The result of these efforts were realized in 1993. The facility's baccarat
win rebounded, although it remained below the levels of 1990 and 1991. More
importantly, The Mirage's non-casino revenues increased by 14%. Its casino
revenues, excluding baccarat, rose 4%. Non-casino revenues in 1993 were 47% of
the facility's gross revenues, up from 45% in 1992. Baccarat was still
important, but accounted for only 10% of gross revenues.
Room revenues were an important contributor to the overall revenue growth.
Standard guest room occupancy at The Mirage was 98%, versus 96% in 1992 and 91%
in 1991. The average room rate for standard guest rooms rose 7% in 1993,
following a small decrease in 1992. Accolades, such as the selection by the
Zagat Survey as the "Best Hotel in Las Vegas," helped fuel this demand. Revenues
were also assisted by the temporary addition of Cirque du Soleil to The Mirage's
entertainment offerings. This world-renowned performance troupe appeared at The
Mirage from November 1992 until November 1993 and is now appearing in an
entirely new show, "Mystere," at Treasure Island.
The Mirage's operating margin rebounded in 1993 to 21.9%, versus 20.2% in
1992 and 25.9% in 1991. The 1991 margin was higher than normal due to high
baccarat activity and a lower than normal level of bad debt expense.
The Company had approximately $10 million of maintenance capital
expenditures at The Mirage in 1993, versus approximately $12 million in 1992 and
$9 million in 1991. Such capital spending will increase significantly in 1994.
The Company is installing all new slot machines at The Mirage at a net cost of
approximately $6 million. The Company also plans to begin refurbishing most of
the standard guest rooms at The Mirage in late 1994. Although most first-class
hotels refurbish their guest rooms approximately every seven years, management
has decided to accelerate its plans because of the Company's high standards and
the extremely high occupancies experienced at The Mirage since its opening. This
approximately $32.5 million project will be undertaken in a manner designed to
minimize the disruption to guests and employees.
TREASURE ISLAND
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1993
---------------
(DOLLARS IN
MILLIONS)
<S> <C>
Gross revenues............................................................................ $ 63.6
Net revenues.............................................................................. 59.0
EBDIT (a)................................................................................. 13.2
Operating income (b)...................................................................... 8.2
Operating margin (c)...................................................................... 13.9%
<FN>
- ------------------------
(a) Earnings before depreciation, interest and taxes. Also before a one-time
charge of $29.8 million for preopening and related promotional expense.
(b) Before preopening and related promotional expense.
(c) Operating income/net revenues.
</TABLE>
Despite higher than normal staffing levels designed to ensure a smooth
October 26 opening, a lower than expected win percentage, openings during the
same period of two major competing facilities and the fact that its showroom did
not open until December 25, Treasure Island produced $13.2 million of operating
cash flow in the 66-day period, on $63.6 million of gross revenues. Occupancy of
its standard guest rooms was 97%.
New facilities, such as Treasure Island, tend to have a relatively high
level of employee attrition in the first few months of operation. Furthermore,
employees are generally not as efficient at opening as they become with a few
months of experience. Anticipating this, the Company intentionally overstaffs
for opening periods, contributing to lower than normal operating margins.
15
<PAGE>
THE GOLDEN NUGGET
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------
% INCREASE (DECREASE)
----------------------
1993 VS. 1992 VS.
1993 1992 1991 1992 1991
--------- --------- --------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Gross revenues......................................... $ 202.4 $ 208.8 $ 189.1 (3)% 10%
Net revenues........................................... 185.0 190.3 173.5 (3)% 10%
EBDIT (a).............................................. 45.0 39.3 38.0 15% 3%
Operating income....................................... 34.2 28.6 25.9 20% 10%
Operating margin (b)................................... 18.5% 15.0% 15.0% 3.5pts 0%
<FN>
- ------------------------
(a) Earnings before depreciation, interest and taxes.
(b) Operating income/net revenues.
</TABLE>
The Golden Nugget had an excellent 1993, with operating cash flow increasing
15% to $45.0 million. This followed an operating cash flow increase of 3% in
1992.
Many factors contributed to this improvement. For one, the Company
refurbished most of the facility's guest rooms in mid-1992, helping to ensure
the facility's position as a four-star/four-diamond hotel, one of only two in
Southern Nevada.
Second, management determined in late 1992 that the Golden Nugget's "high
roller" business was not as profitable as some of its other business segments
because it did not have the economies of scale of large Strip operations such as
The Mirage. Accordingly, the decision was made to concentrate on the more
profitable business segments. This resulted in the installation of additional
slot machines, the creation of a new facility that operates as a race and sports
book during the day and a show lounge during the evening and the elimination of
the Golden Nugget's showroom entertainment policy.
The focus on more profitable business segments caused a significant increase
in the Golden Nugget's operating margin during 1993. The aforementioned increase
in operating cash flow was achieved despite a 3% decrease in gross revenues.
During 1993, the Golden Nugget and a group of other downtown casinos formed
a public/private-sector development venture known as The Fremont Street
Experience. This project will tie together the casinos along Fremont Street in
downtown Las Vegas with a pedestrian mall topped with a "celestial vault." The
celestial vault will be a porous canopy that shades the street from the desert
sun during the day and acts as a backdrop for special effects light shows in the
evening. Under the canopy will be retailing kiosks and special events designed
to bring tourists 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 retail space.
The Golden Nugget's share of the development cost of The Fremont Street
Experience is $3 million. The other major participating casinos are contributing
similar amounts, bringing the casinos' total contributions to $18 million. The
balance of the $63 million total development cost will be principally provided
by City redevelopment funds and the Las Vegas Convention and Visitors Authority.
Construction of The Fremont Street Experience is scheduled to begin in mid-1994,
with completion scheduled for September 1995. In the interim, its construction
may temporarily impede traffic in the downtown area, which could negatively
effect operations at the casinos.
The Company is also planning to replace some of the Golden Nugget's existing
slot machines during 1994 with new models. The net cost of such conversion is
approximately $4 million.
16
<PAGE>
THE GOLDEN NUGGET-LAUGHLIN
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------
% INCREASE
-----------------------
1993 VS. 1992 VS.
1993 1992 1991 1992 1991
------ ------ ------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Gross revenues.......................... $ 65.6 $ 50.2 $ 40.0 31% 26%
Net revenues............................ 59.7 45.8 35.9 30% 28%
EBDIT (a)............................... 15.1 8.7 4.7 74% 85%
Operating income (loss)................. 7.0 1.9 (0.5) 268% --
Operating margin (b).................... 11.7% 4.2% (1.4)% 7.5pts 5.6pts
<FN>
- ------------------------
(a) Earnings before depreciation, interest and taxes.
(b) Operating income (loss)/net revenues.
</TABLE>
The Golden Nugget-Laughlin had another strong year in 1993, capitalizing on
expansions and refurbishments completed during 1992. The facility's gross
revenues rose 31% and operating cash flow increased 74%. This follows increases
in 1992 of 26% and 85%, respectively.
The 1992 enhancements included the refurbishment of virtually all public
areas, an increase in the size of the casino from 22,000 to 32,000 square feet
and construction of the facility's first 300 guest rooms. In 1993, the Company
added an intricate light trellis to the front of the facility designed to draw
customers from other casinos.
The Golden Nugget-Laughlin operated at 91% occupancy during 1993, with what
management believes are the highest average room rates in the Laughlin market.
The operating margin improved at the facility in 1993 due to higher levels
of activity, a shift in the mix of revenues and the lack of construction
disruptions.
The Company has been evaluating the construction of 400 more guest rooms at
the property, as well as a specialty restaurant. However, over the past few
months, a competitor completed a major addition to its Laughlin facility, while
three new large resorts (including Treasure Island) opened in Las Vegas.
Although recent results from Laughlin, which is now in its peak season, have
been good, the Company has opted to wait several months to analyze the effects
of the new competition before proceeding with the planned expansions.
OTHER FACTORS AFFECTING EARNINGS PER SHARE
Corporate expense increased 21% in 1992 and 19% in 1993, chiefly due to the
Company's evaluation and pursuit of opportunities in new gaming jurisdictions.
Each of these jurisdictions has unique demographic, regulatory, political and
tax characteristics pertinent to any significant investment by the Company.
Frequently, extensive evaluation and submittals are necessary to determine if
there is a potential profit opportunity for the Company. Proposals were made in
several jurisdictions, some of which remain outstanding. The Company also
evaluated and continues to evaluate other potential jurisdictions that have not
yet warranted or required specific proposals. Although management believes that
these efforts have the potential to produce significant future income for the
Company, its policy is to expense as incurred all costs (except for land
acquisition costs) associated with such ventures until such time as the
likelihood of construction is relatively certain.
New jurisdiction expenses in 1993 totaled approximately $9.6 million, versus
approximately $6.5 million in 1992. Prior to 1992, the Company's efforts
regarding new jurisdictions were significantly less extensive.
Despite the March 1992 issuance of debt for the construction of Treasure
Island, interest cost declined by 14% and 10% in 1993 and 1992, respectively.
The reasons include the reduction of overall debt using the Company's operating
cash flow and proceeds from equity offerings, and the refinancing of other debt
using borrowed funds with a lower interest cost.
17
<PAGE>
The Company capitalized $25.1 million of interest in 1993, versus $4.2
million in 1992 and $730,000 in 1991. Such capitalization primarily relates to
the Treasure Island and Dunes projects.
Interest income declined in 1992 and 1993 due to investment of funds into
Treasure Island and the Dunes as well as the Company's revised strategy of
relying on its bank credit facility, rather than surplus cash, for its
opportunistic capital.
Interest and other income in 1991 includes $3.3 million from the settlement
of a lawsuit initiated by the Company associated with its investment portfolio,
which has since been liquidated. In 1992, the "Other, net" caption includes $5.1
million received by the Company upon the settlement of a dispute involving
certain leasehold interests that it once owned in London, England.
The Company's effective tax rate in 1993 and 1991 was almost identical to
the federal statutory rate of 35% and 34%, respectively. In 1992, the Internal
Revenue Service (the "IRS") completed its examination of the Company's tax
returns for the years 1985 through 1990, resulting in a $7.0 million reduction
in the 1992 income tax provision. Except for this, the 1992 effective tax rate
was also nearly identical to the 34% federal statutory rate. There are no state
income taxes in Nevada, where substantially all of the Company's facilities are
located.
The number of shares used in the computation of earnings per share increased
in 1992 and 1993 due to equity offerings and stock option programs.
CAPITAL EXPENDITURES
The Company had capital expenditures of $432.4 million in 1993 and $220.8
million in 1992, principally related to Treasure Island and the acquisition of
the Dunes. These were funded through a combination of borrowings, equity
issuances and operating cash flow.
The Company believes in maintaining its facilities in first-class condition.
Maintenance capital spending for the four properties is anticipated to
approximate $30 million per year, in addition to the planned room refurbishments
at The Mirage and new slot machines mentioned previously. Apart from this,
future capital expenditures will be dependent on the timing, scope and number of
expansion projects undertaken by the Company.
The Company is developing plans for construction on the Dunes site. Such
construction could cost 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.
The Company also has numerous proposals for casino-and entertainment-related
projects in various new gaming jurisdictions. Several are contingent on passage
of acceptable gaming legislation or on the Company being awarded one of a
limited number of licenses. It is possible that conditions would permit the
Company to begin projects in 1994 or 1995 that would require comparatively large
capital expenditures in 1995, 1996 and beyond.
There can be no assurance that management will determine to proceed with any
such project. It is also possible that such projects could require significant
financing.
LIQUIDITY
The Company's liquidity is excellent. At December 31, the Company had $133
million available under its bank credit facility, in addition to approximately
$57.5 million in cash and cash equivalents. Principal maturities of the
Company's debt are relatively minor through 1997. Management funded the March
15, 1994 maturity of $27 million of floating rate first mortgage notes using its
operating cash flow and bank credit facility.
With no major projects currently under construction and with minimal debt
maturities, management expects the Company to produce significant free cash flow
during 1994.
18
<PAGE>
WORKING CAPITAL
In past years, the Company maintained large cash balances in order to be
prepared to move quickly on potential opportunities. Cognizant of the high cost
of the negative spread between its borrowing cost and the returns from investing
in short-term securities backed by the U.S. Government, the Company revised its
strategy and now relies primarily on its bank credit facility for opportunistic
capital. This has resulted in a reduction in the Company's cash balances and
working capital. Nevertheless, the sum of its cash and the amount available
under its bank credit facility at December 31, 1993 was $190.5 million.
Excluding cash equivalents restricted for the construction of Treasure Island,
cash and available credit facilities at December 31, 1992 totaled $178.2
million.
THE PROPOSED SPIN-OFF
Management is considering a spin-off transaction whereby the stock of the
entities which own the two Golden Nugget properties would be contributed to a
new corporation. The shares of this corporation would be distributed to the
Company's stockholders on a pro rata basis. For example, a stockholder owning 1%
of the Company's stock would receive 1% of the shares of the new Golden Nugget
holding company. The two resulting public companies would be independent of each
other, except that they would initially have the same stock ownership (including
the same principal stockholder).
Management believes that the separation of the Company into two entities may
enhance its ability to attract opportunities in new gaming jurisdictions. Some
jurisdictions are better suited for a smaller company with a recognized brand
name, such as "Golden Nugget." Others offer the opportunity to build large, one-
of-a-kind projects, similar to The Mirage and Treasure Island. A few
jurisdictions award only one gaming license to a single company.
Management also believes that the separation would reduce the Company's
overall cost of capital and provide additional incentives and opportunities for
its employees.
Consummation of the spin-off is contingent on a number of factors, including
the receipt of requisite consents from the Nevada Gaming Authorities and the
lenders under the Company's bank credit facility and a ruling from the IRS or
other satisfactory assurance that the spin-off would qualify as a tax-free
distribution to the Company's stockholders. In February 1994, the Company filed
a request with the IRS for such a ruling. There can be no assurance that the
Company will receive the necessary ruling or consents, that management will
determine to proceed with the spin-off or as to the timing or specific effects
of the transaction.
ITEM 8.__FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes to Consolidated Financial
Statements of Mirage Resorts, Incorporated and Subsidiaries, referred to in Item
14(a)(1) of this Form 10-K, are included at pages 26 to 42.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
19
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated by reference the information appearing under the
caption "Directors and Executive Officers" in the Registrant's definitive Proxy
Statement to be filed with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
There is incorporated by reference the information appearing under the
caption "Executive Compensation" in the Registrant's definitive Proxy Statement
to be filed with the Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated by reference the information appearing under the
caption "Stock Ownership of Major Stockholders and Management" in the
Registrant's definitive Proxy Statement to be filed with the Securities and
Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference the information appearing under the
captions "Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions" in the Registrant's definitive Proxy Statement to be
filed with the Securities and Exchange Commission.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1).__FINANCIAL STATEMENTS.
Included in Part II of this Report:
Report of Independent Accountants
Consolidated Balance Sheets -- December 31, 1993 and 1992
Years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a)(2).__FINANCIAL STATEMENT SCHEDULES.
Included in Part IV of this Report:
For the years ended December 31, 1993, 1992 and 1991
Schedule II -- Amounts Receivable from Related
Parties
Schedule V -- Property and Equipment
Schedule VI -- Accumulated Depreciation of Property
and Equipment
Schedule VIII -- Valuation and Qualifying Accounts
Schedule X -- Supplementary Income Statement
Information
Schedules other than those listed above are omitted because they are not
required or are not applicable, or the required information is shown in the
financial statements or notes to the financial statements. Columns omitted from
schedules filed have been omitted because the information is not applicable.
20
<PAGE>
(a)(3). EXHIBITS.
<TABLE>
<C> <S> <C>
3(i)(a) Restated Articles of Incorporation of Registrant. Incorporated by reference
to Exhibit 3(i) to Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1993.
3(i)(b) Amended and Restated Certificate of Division of Shares into Smaller
Denominations Pursuant to N.R.S. Section 78.207 of Registrant. Incorporated
by reference to Exhibit 2.2 to Amendment No. 3 to Registrant's Registration
Statement on Form 8-A dated October 19, 1993 (the "Form 8-A/A").
3(ii) Amended and Restated Bylaws of Registrant. Incorporated by reference to
Exhibit 2.3 to the Form 8-A/A.
4(a) Indenture, dated as of March 15, 1988, with respect to GNS FINANCE CORP.'s
("Finance") Zero Coupon First Mortgage Notes Due March 15, 1998, together
with exhibits (the "Zero Coupon Notes Indenture"). Incorporated by
reference to Exhibit 4(c) to the Registration Statement filed by Finance
and MCH on Form S-1 under the Securities Act of 1933 (No. 33-22369) (the
"MCH Form S-1").
4(b) First Supplemental Indenture, dated as of August 1, 1988, to the Zero
Coupon Notes Indenture. Incorporated by reference to Exhibit 4(f) to
Amendment No. 1 to the MCH Form S-1.
4(c) Second Supplemental Indenture, dated as of January 15, 1990, to the Zero
Coupon Notes Indenture. Incorporated by reference to Exhibit 4(q) to
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1989 (the "1989 Form 10-K").
4(d) Third Supplemental Indenture, dated as of October 15, 1990, to the Zero
Coupon Notes Indenture. Incorporated by reference to Exhibit 4(r) to
Amendment No. 1 to the Annual Report on Form 10-K of Finance for the fiscal
year ended December 31, 1990.
4(e) Indenture, dated as of March 15, 1992, with respect to Treasure Island
Finance Corp.'s 9 7/8% First Mortgage Notes Due October 1, 2000, together
with exhibits. Incorporated by reference to Exhibit 4(u) to the Annual
Report on Form 10-K of Finance for the fiscal year ended December 31, 1991
(the "Finance 1991 Form 10-K").
4(f) Fourth Supplemental Indenture, dated as of June 15, 1992, to the Zero
Coupon Notes Indenture. Incorporated by reference to Exhibit 19.4 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1992 (the "June 1992 Form 10-Q").
4(g) Indenture, dated as of March 31, 1993, with respect to Finance's 9 1/4%
Senior Subordinated Notes Due March 15, 2003, together with exhibits.
Incorporated by reference to Exhibit 4 to Registrant's Current Report on
Form 8-K dated March 31, 1993 (the "March 1993 Form 8-K").
10(a)* Forms of Incentive Stock Option Agreement and Non-Qualified Stock Option
Agreement. Incorporated by reference to Exhibit 10(b) to the 1989 Form
10-K.
10(b) Management Agreement, dated as of January 1, 1988, between Registrant and
MCH. Incorporated by reference to Exhibit 10(i) to the MCH Form S-1.
10(c) Tax Allocation Agreement, dated as of January 1, 1988, between Registrant
and MCH. Incorporated by reference to Exhibit 10(h) to the MCH Form S-1.
10(d) Tax Allocation Agreement, dated as of March 9, 1988, between Registrant and
Finance. Incorporated by reference to Exhibit 10(g) to the MCH Form S-1.
</TABLE>
21
<PAGE>
<TABLE>
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10(e) Agreement of Purchase and Sale and Escrow Instructions, dated as of October
15, 1992, among Minami (Nevada), Incorporated, Minami Musen Denki Kabushiki
Kaisha, MR Realty and Registrant (without exhibits). Incorporated by
reference to Exhibit 2 to Registrant's Current Report on Form 8-K dated
January 26, 1993.
10(f)* 1983 Stock Option and Stock Appreciation Rights Plan, as amended.
Incorporated by reference to Exhibit 4.3 to the Registration Statement
filed by Registrant on Form S-8 under the Securities Act of 1933 (No.
33-16037) (the "Form S-8").
10(g)* 1984 Stock Option and Stock Appreciation Rights Plan, as amended.
Incorporated by reference to Exhibit 4.2 to the Form S-8.
10(h) Management Agreement, dated as of January 1, 1985, between Registrant and
GNLV. Incorporated by reference to Exhibit 10(g) to Amendment No. 2 to the
Registration Statement filed by GNLV FINANCE CORP. ("GNLV Finance") and
GNLV on Form S-1 under the Securities Act of 1933 (No. 33-5694) (the "GNLV
Form S-1").
10(i) Tax Allocation Agreement, dated as of January 1, 1985, between Registrant
and GNLV. Incorporated by reference to Exhibit 10(h) to the GNLV Form S-1.
10(j) Tax Allocation Agreement, dated as of May 13, 1986, between Registrant and
GNLV Finance. Incorporated by reference to Exhibit 10(f) to Amendment No. 2
to the GNLV Form S-1.
10(k)* 1986 Stock Option and Stock Appreciation Rights Plan, as amended.
Incorporated by reference to Exhibit 4.1 to the Form S-8.
10(l)* 1992 Stock Option and Stock Appreciation Rights Plan. Incorporated by
reference to Exhibit 10(n) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991 (the "1991 Form 10-K").
10(m)* 1993 Stock Option and Stock Appreciation Rights Plan. Incorporated by
reference to Exhibit 10(m) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992 (the "1992 Form 10-K").
10(n)* Executive Retirement Plan Agreement, dated as of December 1, 1986, between
Registrant and Kenneth R. Wynn. Incorporated by reference to Exhibit 10(hh)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1986 (the "1986 Form 10-K").
10(o)* Executive Retirement Plan Agreement, dated as of December 1, 1986, between
Registrant and James E. Pettis. Incorporated by reference to Exhibit 10(mm)
to the 1986 Form 10-K.
10(p)* 1992 Non-Employee Director Stock Option Plan. Incorporated by reference to
Exhibit 10(t) to the 1991 Form 10-K.
10(q) Management Agreement, dated as of January 1, 1992, between Registrant and
TI Corp. Incorporated by reference to Exhibit 10(oo) to Amendment No. 2 to
the Registration Statement filed by Treasure Island Finance Corp., TI Corp.
and MCH on Form S-1 under the Securities Act of 1933 (No. 33-45415) (the
"TI Corp. Form S-1").
10(r) Deed of Trust, Assignment of Rents and Security Agreement, dated as of
March 23, 1988, from MCH in favor of First Interstate Bank of Nevada, N.A.
("FIBN"), as trustee. Incorporated by reference to Exhibit 10(xx) to
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1987.
10(s) Tax Allocation Agreement, dated as of January 1, 1992, between Registrant
and Treasure Island Finance Corp. Incorporated by reference to Exhibit
10(qq) to Amendment No. 2 to the TI Corp. Form S-1.
</TABLE>
22
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<TABLE>
<C> <S> <C>
10(t) Tax Allocation Agreement, dated as of January 1, 1992, between Registrant
and TI Corp. Incorporated by reference to Exhibit 10(pp) to Amendment No. 2
to the TI Corp. Form S-1.
10(u) Management Agreement, dated as of September 30, 1988, between Registrant
and GNL. Incorporated by reference to Exhibit 10(yy) to the 1989 Form 10-K.
10(v) Tax Allocation Agreement, dated as of September 30, 1988, between
Registrant and GNL. Incorporated by reference to Exhibit 10(zz) to the 1989
Form 10-K.
10(w) Ground Lease, dated as of March 1, 1992, between MCH and TI Corp.
Incorporated by reference to Exhibit 10(nn) to Amendment No. 2 to the TI
Corp. Form S-1.
10(x) Pledge Agreements, each dated as of March 25, 1992, between TI Corp. and
each of Security Pacific National Bank ("SPNB"), FIBN, First Trust National
Association ("FTNA"), United States Trust Company of New York ("USTC") and
Valley Bank of Nevada ("VBN"), as trustees. Incorporated by reference to
Exhibit 10(ee) to the Finance 1991 Form 10-K.
10(y) Completion Guaranty, dated as of March 25, 1992, from Registrant in favor
of VBN, as trustee. Incorporated by reference to Exhibit 10(kk) to
Amendment No. 2 to the TI Corp. Form S-1.
10(z) Amendment Agreement, dated as of October 4, 1990, between MCH, as trustor,
and FIBN, as beneficiary. Incorporated by reference to Exhibit 4.12 to
Registrant's Current Report on Form 8-K dated October 4, 1990.
10(aa) Easement, dated December 28, 1990, from MH, INC. ("MH") in favor of Stephen
A. Wynn. Incorporated by reference to Exhibit 10(ll) to Amendment No. 1 to
the Registration Statement filed by Finance and MCH on Form S-1 under the
Securities Act of 1933 (No. 33-38496).
10(bb) Deed of Trust, Assignment of Rents and Security Agreement, dated as of
March 25, 1992, from MCH in favor of VBN, as trustee. Incorporated by
reference to Exhibit 10(dd) to the Finance 1991 Form 10-K.
10(cc) Leasehold Deeds of Trust, Assignments of Rents and Security Agreements,
each dated as of March 25, 1992, from TI Corp. in favor of each of SPNB,
FIBN, FTNA, USTC and VBN, as trustees. Incorporated by reference to Exhibit
10(cc) to the Finance 1991 Form 10-K.
10(dd) Credit Agreement, dated as of October 23, 1992, among Registrant, MCH, the
financial institutions party thereto, as lenders, The Long-Term Credit Bank
of Japan, Ltd., Los Angeles Agency, as Lead Agent, and Societe Generale, as
Co-Agent, Collateral Agent and Funding Agent, together with schedules
(without exhibits). Incorporated by reference to Exhibit 19.1 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1992 (the "September 1992 Form 10-Q").
10(ee) Loan and Aircraft Chattel Mortgage Agreement (G-IV), dated as of October
22, 1992, between Golden Nugget Aviation Corp. ("GNAV") and The CIT
Group/Equipment Financing, Inc. ("CIT"), together with exhibits.
Incorporated by reference to Exhibit 19.2 to the September 1992 Form 10-Q.
10(ff) Loan and Aircraft Chattel Mortgage Agreement (G-II), dated as of October
22, 1992, between GNAV and CIT, together with exhibits. Incorporated by
reference to Exhibit 19.3 to the September 1992 Form 10-Q.
10(gg)* Employment Agreement, dated as of August 18, 1992, between Registrant and
Frank Visconti. Incorporated by reference to Exhibit 19.4 to the September
1992 Form 10-Q.
10(hh)* Employment Agreement, dated October 20, 1992, between Registrant and James
E. Pettis. Incorporated by reference to Exhibit 19.5 to the September 1992
Form 10-Q.
</TABLE>
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<TABLE>
<C> <S> <C>
10(ii) Escrow Instructions and Agreement for Sale of Real Estate, dated September
18, 1992, between MCH and TI Corp. and West Park, Inc., Tien Fu Hsu,
WestPark Company I and Lucky-Land Company Enterprises. Incorporated by
reference to Exhibit 19.6 to the September 1992 Form 10-Q.
10(jj) Promissory Note and Deed of Trust with Assignment of Rents, each dated
October 16, 1992, from Frank Visconti and Becky Visconti in favor of
Registrant. Incorporated by reference to Exhibit 19.7 to the September 1992
Form 10-Q.
10(kk)* Employment Agreement, dated December 16, 1992, between Registrant and
Stephen A. Wynn. Incorporated by reference to Exhibit 10(zz) to the 1992
Form 10-K.
10(ll) Promissory Note, dated April 24, 1992, from Stephen A. Wynn in favor of
Registrant. Incorporated by reference to Exhibit 19.1 to the June 1992 Form
10-Q.
10(mm) Agreement, dated as of May 4, 1992, between Atlandia Design and
Furnishings, Inc. and Marnell Corrao Associates, Inc. Incorporated by
reference to Exhibit 19.2 to the June 1992 Form 10-Q.
10(nn) Amendment Agreement, dated as of November 24, 1992, between MCH, as
trustor, and Bank of America National Trust & Savings Association, as
beneficiary. Incorporated by reference to Exhibit 10(ccc) to the 1992 Form
10-K.
10(oo) Amendment Agreement, dated as of November 24, 1992, between MCH, as
trustor, and FIBN, as beneficiary. Incorporated by reference to Exhibit
10(ddd) to the 1992 Form 10-K.
10(pp) Amendment Agreement, dated as of November 24, 1992, between MCH, as
trustor, and USTC, as beneficiary. Incorporated by reference to Exhibit
10(eee) to the 1992 Form 10-K.
10(qq) Amendment Agreement, dated as of November 24, 1992, between MCH, as
trustor, and FTNA, as beneficiary. Incorporated by reference to Exhibit
10(fff) to the 1992 Form 10-K.
10(rr) First Amendment to Ground Lease, dated as of March 1, 1993, between MCH and
TI Corp. Incorporated by reference to Exhibit 10(ggg) to the 1992 Form
10-K.
10(ss) Second Amendment to Deed of Trust, dated as of February 21, 1992, between
MCH, as trustor, and FIBN, as beneficiary. Incorporated by reference to
Exhibit 10(z) to the Finance 1991 Form 10-K.
10(tt) Lease, dated September 4, 1962, and Agreement, dated March 25, 1975,
between the Trustees of the Fraternal Order of Eagles and Registrant.
Incorporated by reference to Exhibit 10(c) to the GNLV Form S-1.
10(uu) Lease, dated July 1, 1973, and Amendment to Lease, dated February 27, 1979,
between First National Bank of Nevada, Trustee, and Registrant.
Incorporated by reference to Exhibit 10(d) to the GNLV Form S-1.
10(vv) Lease, dated April 30, 1976, between Elizabeth Zahn, Trustee, and
Registrant. Incorporated by reference to Exhibit 10(e) to the GNLV Form
S-1.
10(ww) Amendment No. 1 to Credit Agreement, dated as of March 23, 1993, among
Registrant, MCH and the financial institutions party thereto. Incorporated
by reference to Exhibit 10(kk) to the Registration Statement filed by
Finance and MCH on Form S-4 under the Securities Act of 1933 (No. 33-62514)
(the "Form S-4").
10(xx) Amendment No. 2 to Credit Agreement, dated as of March 30, 1993, among
Registrant, MCH and the financial institutions party thereto. Incorporated
by reference to Exhibit 10(ll) to the Form S-4.
</TABLE>
24
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10(yy) Amendment No. 3 to Credit Agreement, dated as of April 16, 1993, among
Registrant, MCH and the financial institutions party thereto, together with
exhibit. Incorporated by reference to Exhibit 10(mm) to the Form S-4.
10(zz) Amendment No. 4 to Credit Agreement, dated as of August 20, 1993, among
Registrant, MCH and the financial institutions party thereto. Incorporated
by reference to Exhibit 10 to Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1993.
10(aaa) Land Sales Contract, dated March 26, 1993, between MH and Stephen A. Wynn,
together with exhibits. Incorporated by reference to Exhibit 10(yy) to the
Form S-4.
10(bbb) Second Amendment to Ground Lease, dated as of October 26, 1993, between MCH
and TI Corp.
10(ccc)* First Amendment to Executive Retirement Plan Agreement, dated as of
December 1, 1993, between Registrant and Kenneth R. Wynn.
10(ddd) Purchase Agreement, dated March 23, 1993, among Finance, MCH, Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") and Salomon Brothers Inc
("SBI"). Incorporated by reference to Exhibit 28.1 to the March 1993 Form
8-K.
10(eee) Registration Rights Agreement, dated as of March 31, 1993, among Finance,
MCH, DLJ and SBI. Incorporated by reference to Exhibit 28.2 to the March
1993 Form 8-K.
10(fff) Stockholders' Agreement, dated as of January 4, 1994, among MUMSA, Mirage
Argentina, Inc., Universal Casino Consultants (HK) Ltd. and Berjaya
Universal Casino Management (HK) Ltd.
11 Computation of net income per share of common stock.
21 List of subsidiaries of Registrant.
23 Consent of Coopers & Lybrand
<FN>
- ------------------------
*Constitutes an executive compensation plan or agreement.
</TABLE>
(b). REPORTS ON FORM 8-K.
The Registrant filed no reports on Form 8-K during the three-month
period ended December 31, 1993.
25
<PAGE>
MIRAGE RESORTS, INCORPORATED
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholders
of Mirage Resorts, Incorporated
Las Vegas, Nevada
We have audited the consolidated financial statements and financial
statement schedules of Mirage Resorts, Incorporated and subsidiaries as listed
in Item 14(a) of this Form 10-K. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Mirage Resorts,
Incorporated and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
COOPERS & LYBRAND
Los Angeles, California
February 11, 1994
26
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------------
1993 1992
------------ ------------
<S> <C> <C>
(IN THOUSANDS,
EXCEPT SHARE DATA)
CURRENT ASSETS
Cash and cash equivalents (including $27,250 restricted for construction at
December 31, 1992)................................................................ $ 57,462 $ 142,983
Receivables, net................................................................... 58,182 68,566
Inventories........................................................................ 30,374 18,674
Refundable income taxes............................................................ 6,303 14,989
Deferred income taxes.............................................................. 26,756 15,110
Prepaid expenses and other......................................................... 18,353 14,335
------------ ------------
Total current assets........................................................... 197,430 274,657
Property and equipment, net........................................................ 1,421,366 1,067,461
Cash equivalents restricted for construction....................................... -- 157,196
Other assets, net.................................................................. 86,462 95,607
------------ ------------
$ 1,705,258 $ 1,594,921
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable............................................................. $ 72,483 $ 50,780
Construction accounts payable...................................................... 4,328 24,371
Accrued expenses................................................................... 82,922 77,137
Current maturities of long-term debt............................................... 31,617 3,346
------------ ------------
Total current liabilities...................................................... 191,350 155,634
Long-term debt, net of current maturities.......................................... 535,025 831,179
Other liabilities, including deferred income taxes of $60,115 and $46,132.......... 68,019 54,497
------------ ------------
Total liabilities.............................................................. 794,394 1,041,310
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $0.008: authorized 562,500,000 shares; issued 117,573,825
shares; outstanding 90,606,608 and 74,599,645 shares.............................. 940 940
Additional paid-in capital......................................................... 695,587 453,666
Retained earnings.................................................................. 372,683 343,451
Treasury stock, at cost: 26,967,217 and 42,974,180 shares.......................... (158,346) (244,446)
------------ ------------
Total stockholders' equity..................................................... 910,864 553,611
------------ ------------
$ 1,705,258 $ 1,594,921
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------
1993 1992 1991
------------ ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
REVENUES
Casino.................................................................... $ 586,403 $ 533,580 $ 536,798
Rooms..................................................................... 180,936 147,151 138,990
Food and beverage......................................................... 158,889 137,407 131,400
Other..................................................................... 127,185 102,438 94,451
------------ ----------- -----------
1,053,413 920,576 901,639
Less -- promotional allowances............................................ (100,111) (87,552) (78,782)
------------ ----------- -----------
953,302 833,024 822,857
------------ ----------- -----------
COSTS AND EXPENSES
Casino.................................................................... 300,377 278,111 261,204
Rooms..................................................................... 55,586 46,663 45,743
Food and beverage......................................................... 103,541 87,777 84,993
Other..................................................................... 93,355 81,807 70,702
Bad debts................................................................. 19,819 20,246 12,325
General and administrative................................................ 114,957 104,314 103,470
Depreciation and amortization............................................. 74,147 63,028 60,000
Corporate expense......................................................... 29,999 25,303 20,932
Preopening and related promotional expense................................ 29,793 -- --
------------ ----------- -----------
821,574 707,249 659,369
------------ ----------- -----------
OPERATING INCOME.......................................................... 131,728 125,775 163,488
------------ ----------- -----------
OTHER INCOME AND (EXPENSES)
Interest and other income................................................. 5,299 14,334 18,745
Interest cost............................................................. (88,545) (103,404) (114,442)
Interest capitalized...................................................... 25,080 4,158 730
Other, net................................................................ (1,259) 4,720 (951)
------------ ----------- -----------
(59,425) (80,192) (95,918)
------------ ----------- -----------
INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE........................................... 72,303 45,583 67,570
Provision for income taxes................................................ 24,234 8,638 23,032
------------ ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE..................................................... 48,069 36,945 44,538
Extraordinary item -- gain (loss) on early retirements of debt, net of
applicable income tax (benefit).......................................... (18,837) (12,158) 2,229
Cumulative effect (to January 1, 1992) of reduction of deferred tax
liability due to change in accounting principle.......................... -- 3,632 --
------------ ----------- -----------
NET INCOME................................................................ $ 29,232 $ 28,419 $ 46,767
------------ ----------- -----------
------------ ----------- -----------
INCOME PER SHARE OF COMMON STOCK
Income before extraordinary item and cumulative effect of change in
accounting principle..................................................... $ .58 $ .53 $ .80
Extraordinary item -- gain (loss) on early retirements of debt, net of
applicable income tax (benefit).......................................... (.23) (.17) .04
Cumulative effect (to January 1, 1992) of reduction of deferred tax
liability due to change in accounting principle.......................... -- .05 --
------------ ----------- -----------
NET INCOME PER SHARE OF COMMON STOCK...................................... $ .35 $ .41 $ .84
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------------------ ADDITIONAL
SHARES PAID-IN RETAINED
OUTSTANDING AMOUNT CAPITAL EARNINGS
------------ ------- -------------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1991......................... 41,728,045 $ 940 $ 247,706 $ 268,265
Issuance of common stock.......................... 12,500,000 -- 75,894 --
Exercise of common stock options.................. 493,750 -- 886 --
Tax benefit from stock option exercises........... -- -- 1,054 --
Issuance of restricted common stock in
satisfaction of deferred compensation
obligations...................................... 239,948 -- (203) --
Purchase of common stock.......................... (44,168) -- -- --
Recognition of the vesting of restricted common
stock and nonqualified stock options............. -- -- 2,388 --
Gift of common stock to employees................. 10,800 -- 56 --
Other............................................. -- -- (17) --
Net income for the year........................... -- -- -- 46,767
------------ ------- -------------- -----------
BALANCES, DECEMBER 31, 1991....................... 54,928,375 940 327,764 315,032
Issuance of common stock.......................... 12,500,000 -- 110,762 --
Exercise of common stock options.................. 7,192,582 -- (9,016) --
Tax benefit from stock option exercises........... -- -- 21,782 --
Purchase of common stock.......................... (21,137) -- -- --
Recognition of the vesting of restricted common
stock and nonqualified stock options............. -- -- 2,375 --
Other............................................. (175) -- (1) --
Net income for the year........................... -- -- -- 28,419
------------ ------- -------------- -----------
BALANCES, DECEMBER 31, 1992....................... 74,599,645 940 453,666 343,451
Issuance of common stock.......................... 13,750,000 -- 229,575 --
Exercise of common stock options.................. 2,098,208 -- 2,082 --
Tax benefit from stock option exercises........... -- -- 9,147 --
Issuance of restricted common stock in
satisfaction of deferred compensation
obligations...................................... 182,191 -- 695 --
Purchase of common stock.......................... (23,436) -- -- --
Recognition of the vesting of restricted common
stock and nonqualified stock options............. -- -- 422 --
Net income for the year........................... -- -- -- 29,232
------------ ------- -------------- -----------
BALANCES, DECEMBER 31, 1993....................... 90,606,608 $ 940 $ 695,587 $ 372,683
------------ ------- -------------- -----------
------------ ------- -------------- -----------
<CAPTION>
TREASURY STOCK
--------------------------
SHARES AMOUNT TOTAL
------------ ---------- ----------
<S> <C> <C> <C>
BALANCES, JANUARY 1, 1991......................... 75,845,780 $ (394,813) $ 122,098
Issuance of common stock.......................... (12,500,000) 49,606 125,500
Exercise of common stock options.................. (493,750) 1,389 2,275
Tax benefit from stock option exercises........... -- -- 1,054
Issuance of restricted common stock in
satisfaction of deferred compensation
obligations...................................... (239,948) 1,071 868
Purchase of common stock.......................... 44,168 (444) (444)
Recognition of the vesting of restricted common
stock and nonqualified stock options............. -- -- 2,388
Gift of common stock to employees................. (10,800) 48 104
Other............................................. -- -- (17)
Net income for the year........................... -- -- 46,767
------------ ---------- ----------
BALANCES, DECEMBER 31, 1991....................... 62,645,450 (343,143) 300,593
Issuance of common stock.......................... (12,500,000) 60,875 171,637
Exercise of common stock options.................. (7,192,582) 38,088 29,072
Tax benefit from stock option exercises........... -- -- 21,782
Purchase of common stock.......................... 21,137 (266) (266)
Recognition of the vesting of restricted common
stock and nonqualified stock options............. -- -- 2,375
Other............................................. 175 -- (1)
Net income for the year........................... -- -- 28,419
------------ ---------- ----------
BALANCES, DECEMBER 31, 1992....................... 42,974,180 (244,446) 553,611
Issuance of common stock.......................... (13,750,000) 74,020 303,595
Exercise of common stock options.................. (2,098,208) 11,470 13,552
Tax benefit from stock option exercises........... -- -- 9,147
Issuance of restricted common stock in
satisfaction of deferred compensation
obligations...................................... (182,191) 1,052 1,747
Purchase of common stock.......................... 23,436 (442) (442)
Recognition of the vesting of restricted common
stock and nonqualified stock options............. -- -- 422
Net income for the year........................... -- -- 29,232
------------ ---------- ----------
BALANCES, DECEMBER 31, 1993....................... 26,967,217 $ (158,346) $ 910,864
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1993 1992 1991
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................................... $ 29,232 $ 28,419 $ 46,767
Adjustments to reconcile net income to net cash provided by operating
activities
Provision for losses on receivables.................................... 19,819 20,246 12,325
Depreciation and amortization of property and equipment................ 76,965 64,816 61,815
Other amortization..................................................... 17,779 18,055 18,641
Loss from disposals of property and equipment.......................... 347 2,003 3,064
(Gain) loss on early retirements of debt............................... 28,980 18,421 (3,377)
Deferred income taxes, including cumulative effect of change in
accounting principle in 1992.......................................... 2,337 (20,432) 7,185
Changes in assets and liabilities
(Increase) decrease in receivables, net of write-offs................ (9,435) (34,273) 11,608
(Increase) decrease in refundable income taxes....................... 8,686 (14,989) 2,678
Increase in inventories and other current assets..................... (15,718) (3,812) (413)
Increase in trade accounts payable................................... 21,703 11,756 1,317
Increase (decrease) in accrued expenses.............................. 5,785 (7,845) (1,873)
Other, net............................................................. (5,655) 2,200 (4,771)
----------- ----------- -----------
Net cash provided by operating activities.......................... 180,825 84,565 154,966
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investments....................................... -- 5,925 27,270
Proceeds from disposals of property and equipment........................ 1,171 15,143 5,390
Capital expenditures..................................................... (432,388) (220,844) (66,051)
Net (increase) decrease in noncurrent cash equivalents restricted for
construction............................................................ 157,196 (135,494) 13,301
Increase (decrease) in construction accounts payable..................... (20,043) 16,771 1,258
Other, net............................................................... 6,125 (12,014) (2,962)
----------- ----------- -----------
Net cash used for investing activities............................. (287,939) (330,513) (21,794)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt................................. 97,500 291,922 --
Proceeds from borrowings under credit facilities......................... 133,150 104,360 --
Early retirements of debt................................................ (377,698) (340,840) (188,457)
Repayments of borrowings under credit facilities and other debt.......... (157,096) (83,136) (931)
Proceeds from issuance of common stock................................... 303,595 171,637 125,500
Exercise of stock options, including related income tax benefit.......... 22,699 50,854 3,329
Other, net............................................................... (557) (266) (613)
----------- ----------- -----------
Net cash provided by (used for) financing activities............... 21,593 194,531 (61,172)
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the year......................................... (85,521) (51,417) 72,000
Balance, beginning of year............................................... 142,983 194,400 122,400
----------- ----------- -----------
Balance, end of year..................................................... $ 57,462 $ 142,983 $ 194,400
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid, net of amounts capitalized................................ $ 60,923 $ 91,837 $ 109,226
Income taxes paid (refunded), net........................................ (6,080) 19,143 9,209
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
30
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION.__Mirage Resorts, Incorporated (the "Company"),
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.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.
CASINO REVENUES AND PROMOTIONAL ALLOWANCES. The Company recognizes as
casino revenues the net win from gaming activities, which is the difference
between gaming wins and losses. Revenues include the retail value of rooms,
food, beverage and other goods and services provided to customers without
charge. Such amounts are then deducted as promotional allowances. The estimated
cost of providing these promotional allowances is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Rooms........................................................ $ 17,215 $ 15,318 $ 13,199
Food and beverage............................................ 47,536 42,076 39,040
Other........................................................ 4,698 4,783 4,719
--------- --------- ---------
$ 69,449 $ 62,177 $ 56,958
--------- --------- ---------
--------- --------- ---------
</TABLE>
The cost of promotional allowances has been allocated to costs and expenses
as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Casino....................................................... $ 63,504 $ 56,457 $ 51,923
Other costs and expenses..................................... 5,945 5,720 5,035
--------- --------- ---------
$ 69,449 $ 62,177 $ 56,958
--------- --------- ---------
--------- --------- ---------
</TABLE>
CASH AND CASH EQUIVALENTS. The Company classifies all highly liquid debt
instruments purchased with an original maturity of three months or less as cash
equivalents. Cash equivalents are carried at cost which approximates fair value.
CONCENTRATIONS OF CREDIT RISK. Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
short-term investments and receivables.
The Company's short-term investments are typically comprised of U.S.
Government-backed repurchase agreements with maturities of 30 days or less. Such
investments are made with financial institutions having a high credit quality
and the Company limits the amount of its credit exposure to any one financial
institution. Due to the short-term nature of the instruments, the Company does
not take possession of the securities which are instead held in a custodial
account.
The Company extends credit to a limited number of casino patrons, but only
following background checks and investigations of creditworthiness. At December
31, 1993, a substantial portion of the receivables was due from foreign
customers. The collectibility of these receivables could be affected by future
business
31
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
or economic trends or other significant events in the countries in which such
customers reside. At December 31, 1993, no individual customer accounted for
more than five percent of the Company's total receivables.
The Company maintains an allowance for doubtful accounts to reduce its
receivables to their carrying amount, which approximates fair value. Management
believes that as of December 31, 1993, no significant concentrations of credit
risk exist for which an allowance has not already been determined and recorded.
INVENTORIES. Inventories are stated at the lower of cost or market value.
Cost is determined by the first-in, first-out and specific identification
methods.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost and
include interest capitalized during the construction period. Depreciation is
computed using the straight-line method for financial reporting purposes and
accelerated methods for income tax purposes.
Significant replacements and improvements are capitalized; other maintenance
and repairs are expensed. The cost and accumulated depreciation of assets
retired or otherwise disposed of are eliminated from the accounts and any
resulting gain or loss is credited or charged to income, as appropriate.
GOODWILL AND INTANGIBLE ASSETS. Goodwill of $5,645,000 and various
intangible assets are included in "Other assets, net" in the Consolidated
Balance Sheets. Goodwill represents the excess of cost over the value of net
tangible assets of the business in 1950 when it was acquired by the Company.
Such amount is not being amortized because, in the opinion of management, there
has been no diminution of its value. Certain intangible assets were acquired
during 1988 in connection with the purchase of the Golden Nugget-Laughlin and
are being amortized over a five-to seven-year period using the straight-line
method.
ORIGINAL ISSUE DISCOUNT AND DEBT ISSUE COSTS. Original issue discount is
amortized over the life of the related indebtedness using the effective interest
method.
Costs associated with the issuance of debt are deferred and amortized over
the life of the related indebtedness using the straight-line method giving pro
rata effect, where appropriate, to debt retirement schedules specified in the
debt indentures. This approximates the effective interest method.
CORPORATE EXPENSE. Corporate expense represents unallocated general and
administrative expenses including payroll costs, professional fees, costs
associated with operating and maintaining the Company's jet aircraft and various
other expenses not directly related to operating the Company's hotel-casinos.
PREOPENING AND RELATED PROMOTIONAL EXPENSE. Costs associated with the
opening of new hotel-casinos, including personnel, training, advertising and
other costs, are capitalized and charged to expense over management's estimate
of the period of economic benefit associated with such costs. Management
believes that such period with respect to major hotel-casinos is approximately
60 days. As a result, capitalized preopening costs associated with the
development of Treasure Island were fully amortized during 1993 following the
October 26 commencement of operations. Such costs, together with related
promotional expenses incurred during the 1993 fourth quarter, totaled
approximately $29.8 million.
NET INCOME PER SHARE OF COMMON STOCK. Net income per share of common stock
is computed based on the weighted average number of shares of common stock and
dilutive common stock equivalents outstanding during the period. Common stock
equivalents included in the computation consist of those shares issuable upon
the assumed exercise of certain dilutive common stock options as determined
under the treasury stock method. The number of shares used in the computation of
net income per share of common stock was 83,409,411 in 1993, 69,949,015 in 1992
and 55,420,923 in 1991.
Fully diluted per share amounts are substantially the same as primary per
share amounts for the periods presented.
32
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS. Certain amounts in the 1992 and 1991 consolidated
financial statements have been reclassified to conform with the 1993
presentation. Such reclassifications had no effect on the Company's net income.
NOTE 2 -- RECEIVABLES
Receivables consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
----------------------
1993 1992
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Casino............................................................. $ 74,237 $ 94,704
Hotel.............................................................. 10,821 8,777
---------- ----------
85,058 103,481
Less allowance for doubtful accounts............................... (26,876) (34,915)
---------- ----------
$ 58,182 $ 68,566
---------- ----------
---------- ----------
</TABLE>
NOTE 3 -- PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------------
1993 1992
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................... $ 191,176 $ 135,142
Land improvements.............................................. 117,348 100,604
Buildings...................................................... 866,921 571,876
Furniture, fixtures and equipment.............................. 553,006 384,209
Construction in progress....................................... 24,661 136,135
------------ ------------
1,753,112 1,327,966
Less accumulated depreciation.................................. (331,746) (260,505)
------------ ------------
$ 1,421,366 $ 1,067,461
------------ ------------
------------ ------------
</TABLE>
NOTE 4 -- ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------
1993 1992
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Payroll.............................................................. $ 30,518 $ 22,373
Interest............................................................. 10,409 21,611
Entertainers' fees................................................... 9,899 8,149
Gaming taxes......................................................... 6,136 5,774
Other................................................................ 25,960 19,230
--------- ---------
$ 82,922 $ 77,137
--------- ---------
--------- ---------
</TABLE>
33
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
PRINCIPAL OUTSTANDING
AT DECEMBER 31,
EFFECTIVE ------------------------
RATE MATURITY 1993 1992
---------- --------------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DEBT ASSOCIATED WITH THE MIRAGE AND TREASURE
ISLAND
PARI PASSU first mortgage indebtedness
9 7/8% first mortgage notes..................... 9.875% October 2000 $ 300,000 $ 300,000
13 3/4% first mortgage notes.................... 13.750% Redeemed in -- 100,000
September 1993
Zero coupon first mortgage notes................ 11.000% March 1998 93,781 84,139
Floating rate first mortgage notes.............. 4.813%* Matured in 27,000 27,000
March 1994
12% second mortgage notes......................... 13.048% Redeemed in -- 32,267
April 1993
9 1/4% senior subordinated notes.................. 9.250% March 2003 100,000 --
Floating rate bank credit facility................ 5.430%* June 1997 17,000 45,000
--------- ---------
537,781 588,406
--------- ---------
DEBT ASSOCIATED WITH THE GOLDEN NUGGET-LAS VEGAS
11 1/4% first mortgage notes...................... 11.400% Redeemed in -- 109,221
November 1993
12 3/4% uncollateralized notes.................... 12.750% Redeemed in -- 112,941
November 1993
--------- ---------
-- 222,162
--------- ---------
OTHER DEBT
Floating rate aircraft credit facility............ 5.588%* December 1996 25,951 20,000
Other notes....................................... 4.275%* Various dates 2,910 3,957
to through
12.000% September 2007
--------- ---------
28,861 23,957
--------- ---------
Total debt........................................ 566,642 834,525
Less current maturities........................... (31,617) (3,346)
--------- ---------
$ 535,025 $ 831,179
--------- ---------
--------- ---------
<FN>
- ------------------------
*At December 31, 1993.
</TABLE>
GNS FINANCE CORP. and Treasure Island Finance Corp. issued the notes
associated with The Mirage and Treasure Island. GNLV FINANCE CORP. issued the
notes that were associated with the Golden Nugget-Las Vegas. Although all of
these entities are wholly owned Nevada subsidiaries of the Company, the notes
associated with The Mirage and Treasure Island are not guaranteed by the Golden
Nugget entities or by the parent company.
34
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- LONG-TERM DEBT (CONTINUED)
The following notes are collateralized on a PARI PASSU basis by first liens
on The Mirage and Treasure Island and guaranteed by the associated operating
subsidiaries:
- The 9 7/8% first mortgage notes issued in March 1992. The indenture
governing the notes limited the use of the net proceeds from the issuance
of the notes to fund a portion of the cost of the development and
construction of Treasure Island. The indenture requires a sinking fund
payment to retire $150 million principal amount of the notes on October 1,
1999. The notes are redeemable on or after April 1, 1995 at prices set
forth in the indenture.
- The $148 million face amount of zero coupon first mortgage notes issued in
March 1988. The notes are shown in the above table at their accreted value
rather than their face amount, as the holders of the notes are not
entitled to the face amount upon default or other accelerated maturity,
but only to an amount which approximates the gross proceeds plus the
amortized original issue discount. The unamortized original issue discount
was $54,219,000 and $63,861,000 at December 31, 1993 and 1992,
respectively.
- The floating rate first mortgage notes issued in March 1988. The notes
bear interest at an annual rate equal to the applicable three-month London
Interbank Offered Rate ("LIBOR") in effect on the first business day of
the quarter plus 1 1/2%. The notes were repaid upon maturity in March
1994.
The 9 1/4% senior subordinated notes were issued in March 1993. The notes
are guaranteed by the Company's Mirage operating subsidiary and are redeemable
on or after March 15, 1998 at prices set forth in the indenture.
CREDIT FACILITIES. The floating rate bank credit facility (the "Bank
Facility") is a revolving bank line of credit entered into in October 1992 by
the Company's Mirage operating subsidiary. The Bank Facility, which originally
provided for borrowings of up to $100 million, was increased to $150 million in
August 1993. The Bank Facility is subject to scheduled permanent annual
principal reductions commencing with a $30 million reduction in September 1994.
Borrowings under the Bank Facility bear interest at a floating rate equal to, at
the Company's option, the prime rate plus 1% or the one, three or six-month
LIBOR plus 2%. The Company incurs a commitment fee of 0.5% on the unused portion
of the Bank Facility.
Borrowings under the Bank Facility are guaranteed by the Company and most of
its significant subsidiaries other than the Golden Nugget-Las Vegas operating
subsidiary and are collateralized principally by first deeds of trust on the
Golden Nugget-Laughlin and the Company's Shadow Creek golf course.
The floating rate aircraft credit facility was also entered into in October
1992 and provided for borrowings of up to $29 million. During 1992 and 1993, the
Company borrowed the entire $29 million and no additional amounts are available
under the facility. The facility is guaranteed by the Company and collateralized
by first liens on the Company's jet aircraft. The facility bears interest, at
the Company's option, at a fixed rate equal to the three-year Treasury rate plus
3.05% or at a floating rate equal to the one-month LIBOR plus 2.4%. The facility
generally requires equal monthly principal payments, plus interest, calculated
to ratably retire $14.5 million through the December 1996 maturity date.
The credit agreement governing the Bank Facility (the "Credit Agreement")
imposes various restrictions on the Company and its subsidiaries, including
limitations on their ability to incur additional debt, commit funds to capital
expenditures or new business ventures, merge or sell assets. The Credit
Agreement also limits dividends on and repurchases of the Company's common stock
to $25 million plus the sum of (i) 25% of the Company's cumulative net income
since July 1, 1992 and (ii) 80% of the difference between the net cash proceeds
received from the issuance of the Company's common stock and the amount expended
for common stock repurchases after April 30, 1992. In addition, the Credit
Agreement contains certain financial tests, including maximum debt to net worth
and debt to operating cash flow ratios, and minimum
35
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- LONG-TERM DEBT (CONTINUED)
interest coverage ratios, net worth, operating cash flow and cash and cash
equivalents requirements. The Credit Agreement prohibits additional investments
by the Company in its Golden Nugget-Las Vegas operating or finance subsidiaries,
except as intercompany loans not to exceed an aggregate of $10 million.
The indentures governing the notes associated with The Mirage and Treasure
Island generally limit payments to the Company by GNS FINANCE CORP., Treasure
Island Finance Corp. and the related operating companies, in the form of
dividends, repurchases of their capital stock and management fees.
During the three years ended December 31, 1993, the Company repurchased or
called for redemption certain of the publicly held debt securities issued by its
wholly owned subsidiaries. The debt securities and respective principal amounts
retired, and the resulting aggregate extraordinary gain or loss, were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1993 1992 1991
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
NOTES ASSOCIATED WITH THE MIRAGE AND TREASURE ISLAND
13 3/4% first mortgage notes....................................... $ 100,000 $ -- $ --
11% first mortgage notes........................................... -- 92,500 29,500
Floating rate first mortgage notes................................. -- -- 1,000
12% second mortgage notes.......................................... 33,350 107,125 59,525
13 3/4% uncollateralized notes..................................... -- 118,900 6,100
NOTES ASSOCIATED WITH THE GOLDEN NUGGET-LAS VEGAS
11 1/4% first mortgage notes....................................... 110,050 7,700 42,750
12 3/4% uncollateralized notes..................................... 112,941 1,064 35,595
OTHER
8 3/8% uncollateralized notes...................................... -- -- 21,200
---------- ---------- ----------
Total principal amount............................................. $ 356,341 $ 327,289 $ 195,670
---------- ---------- ----------
---------- ---------- ----------
EXTRAORDINARY GAIN (LOSS)
Gross extraordinary gain (loss).................................... $ (28,980) $ (18,421) $ 3,377
Income tax (benefit)............................................... (10,143) (6,263) 1,148
---------- ---------- ----------
Net extraordinary gain (loss)...................................... $ (18,837) $ (12,158) $ 2,229
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The 1993 retirements of the 13 3/4% first mortgage notes include the
September call for redemption and defeasance of the remaining $76,625,000
outstanding principal amount of the notes at a redemption price of 108% of the
principal amount. The notes were originally scheduled to mature in October 2000.
The retirements in 1993 of the 12% second mortgage notes reflect the redemption
in April of the remaining outstanding principal amount of the notes. The 12%
notes (originally scheduled to mature in March 1997) were redeemed at 102% of
the principal amount. The 1993 retirements of the 11 1/4% first mortgage notes
and the 12 3/4% uncollateralized notes include the November call for redemption
and defeasance of the remaining $101,050,000 and $112,241,000 outstanding
principal amount of the notes, respectively. The 11 1/4% notes (originally
scheduled to mature in July 1996) were redeemed at 102.5% and the 12 3/4% notes
(originally scheduled to mature in April 1999) were redeemed at 106.38% of the
principal amount.
The 1992 retirements of the 11% first mortgage notes and the 13 3/4%
uncollateralized notes reflect the redemption in May of the remaining
outstanding principal amount of these notes. The 11% notes (originally scheduled
to mature in March 1994) were redeemed at par and the 13 3/4% notes (originally
scheduled to mature in August 1998) were redeemed at a redemption price of
107.857% of the principal amount. The retirements in 1992 of the 12% second
mortgage notes include the October redemption of $72,975,000 principal amount of
the notes at 104%.
36
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- LONG-TERM DEBT (CONTINUED)
Maturities of the Company's remaining long-term debt during the next five
years are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 (IN THOUSANDS)
- ----------------------------------------------------------------------
<S> <C>
1994.................................................................. $ 31,617
1995.................................................................. 4,585
1996.................................................................. 18,425
1997.................................................................. 17,114
1998.................................................................. 148,120
</TABLE>
The estimated fair value of the Company's long-term debt at December 31,
1993 was approximately $610 million, versus its book value of approximately $567
million. At December 31, 1992, the estimated fair value of the Company's
long-term debt was approximately $851 million, versus its book value of
approximately $835 million. The fair value amounts were based on quoted market
prices at or near December 31, 1993 and 1992 for the Company's debt securities
that are traded. For the debt securities that are not traded, their fair value
was estimated based on the quoted market prices for similar issues or on the
current rates offered to the Company for debt having the same remaining
maturities.
NOTE 6 -- INCOME TAXES
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109. The cumulative effect on prior years of this
change in accounting principle increased the Company's 1992 net income by
$3,632,000 ($.05 per share), and is reported separately in the 1992 Consolidated
Statement of Income.
The components of total income taxes for financial reporting purposes were
as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------
1993 1992 1991
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
PROVISION FOR INCOME TAXES
Income from continuing operations.......................... $ 24,234 $ 8,638 $ 23,032
Extraordinary item......................................... (10,143) (6,263) 1,148
---------- ---------- ---------
$ 14,091 $ 2,375 $ 24,180
---------- ---------- ---------
---------- ---------- ---------
STOCKHOLDERS' EQUITY
Tax benefit from stock option exercises.................... $ (9,147) $ (21,782) $ (1,054)
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
The provision for income taxes attributable to income from continuing
operations consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1993 1992 1991
--------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CURRENT
Federal..................................................... $ 17,054 $ 22,665 $ 15,080
State....................................................... 1 177 88
--------- ---------- ---------
17,055 22,842 15,168
DEFERRED
Federal..................................................... 7,179 (14,204) 7,864
--------- ---------- ---------
$ 24,234 $ 8,638 $ 23,032
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
37
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- INCOME TAXES (CONTINUED)
The provision for income taxes attributable to income from continuing
operations differs from the amount computed at the federal income tax statutory
rate as a result of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Federal income tax statutory rate............................ 35% 34% 34%
--------- --------- ---------
(IN THOUSANDS)
Amount at statutory rate..................................... $ 25,306 $ 15,498 $ 22,974
Settlement of examinations................................... (1,336) (7,000) --
Change in statutory rate..................................... 1,386 -- --
Other, net................................................... (1,122) 140 58
--------- --------- ---------
$ 24,234 $ 8,638 $ 23,032
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Internal Revenue Service (the "IRS") has completed examinations of the
Company's federal income tax returns through 1990, and all issues relating to
the examinations have been resolved. The IRS recently commenced its examination
of the years 1991 and 1992. In the opinion of management, any tax liability
arising from the current examination will not have a material adverse effect on
the Company's financial position or results of operations.
The Company increased its 1993 income tax provision and deferred tax
liability as a result of legislation enacted on August 10, 1993 which increased
the federal income tax statutory rate from 34% to 35% effective January 1, 1993.
The components of the deferred tax liability consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
----------------------
1993 1992
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX LIABILITIES
Depreciation and capitalized interest.............................. $ 82,204 $ 72,212
Property development costs......................................... 21,527 16,378
Other.............................................................. 12,688 12,498
---------- ----------
Gross deferred tax liabilities................................. 116,419 101,088
---------- ----------
DEFERRED TAX ASSETS
Alternative minimum tax credit..................................... 29,309 25,412
Net operating loss carryforward.................................... 19,179 19,537
Preopening and related promotional expense, net of amortization.... 10,826 3,297
Bad debt expense................................................... 9,407 11,871
Deferred compensation.............................................. 3,861 3,138
Other.............................................................. 10,478 6,811
---------- ----------
Gross deferred tax assets...................................... 83,060 70,066
---------- ----------
$ 33,359 $ 31,022
---------- ----------
---------- ----------
</TABLE>
The excess of the alternative minimum tax over the regular federal income
tax is a tax credit which can be carried forward indefinitely to reduce future
regular federal income tax liabilities. At December 31, 1993, the Company had a
net operating loss carryforward for regular federal income tax purposes of
approximately $54.8 million, which expires in 2007. The Company has not recorded
a valuation allowance to reduce the
38
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- INCOME TAXES (CONTINUED)
carrying value of the deferred tax assets since these assets arose principally
from temporary differences which will reverse within the prescribed carryforward
period or will be recognized in periods corresponding to the reversal of certain
of the deferred tax liabilities.
NOTE 7 -- EMPLOYEE BENEFIT PLANS
Employees of the Company who are members of various unions are covered by
union-sponsored, collectively bargained, multi-employer health and welfare and
defined benefit pension plans. The Company recorded an expense of $18,388,000 in
1993, $14,771,000 in 1992 and $13,293,000 in 1991 under such plans. Sufficient
information is not available from the plans' sponsors to permit the Company to
determine its share of unfunded vested benefits, if any.
The Company has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering its non-union employees. The plan allows
employees of the Company and its subsidiaries to defer up to the lesser of the
Internal Revenue Code-prescribed maximum amount ($8,994 for 1993) or 15% of
their income on a pre-tax basis through contributions to the plan. The Company
matches 50% of eligible employees' contributions up to a maximum of 4% of their
individual earnings. The Company recorded charges for matching contributions of
$2,458,000 in 1993, $2,060,000 in 1992 and $1,776,000 in 1991.
The Company also has a deferred compensation plan for the benefit of certain
of its key executives. Under the terms of the plan, each executive will be
entitled to a retirement benefit payable in 120 equal monthly installments
commencing in the month following the vesting date. Vesting is based upon age
and years of service. The amount of the annual benefit payable to each executive
will be equal to his annual salary on the date he joined the plan increased by
8% per year from the later of such date or the date the executive has completed
10 years of full-time service to the date payment commences. Benefits payable
under the plan represent unfunded and unsecured liabilities of the Company, and
the present value of such benefits is being charged ratably to expense over the
respective vesting period of each executive.
The Company has entered into amendments to the original plan agreements with
certain of the executives. Pursuant to the amendments, the executives received
restricted shares of the Company's common stock in lieu of future monthly cash
payments. During the vesting period, the shares may not be transferred or
encumbered, except in limited circumstances, and are subject to risk of
forfeiture. The number of shares issued to each executive was based upon the
estimated value of the executive's interest in the plan and the value of the
shares on the date of amendment, taking into account the transferability and
forfeiture restrictions on the shares. The Company issued 182,191 and 239,948
restricted shares of common stock in 1993 and 1991, respectively, pursuant to
the amendments. Deferred compensation expense based upon the difference between
the market price of the common stock on the date of amendment and the amount
previously accrued for the executive's original retirement benefit is being
recorded on a straight-line basis over the respective vesting period of each
executive.
The total expense for the plan was $1,830,000 in 1993, $3,355,000 in 1992
and $4,284,000 in 1991.
NOTE 8 -- COMMITMENTS AND CONTINGENCIES
LEASES. The Company leases real estate and various equipment under
operating lease arrangements. Certain real estate leases provide for escalation
of rent based upon a specified price index.
39
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum lease commitments in effect at December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31 (IN THOUSANDS)
- --------------------------------------------------------------------
<S> <C>
1994................................................................ $ 2,376
1995................................................................ 1,565
1996................................................................ 1,049
1997................................................................ 967
1998................................................................ 957
Thereafter.......................................................... 17,323
-------
$ 24,237
-------
-------
</TABLE>
Aggregate rent expense was $3,207,000 in 1993, $3,164,000 in 1992 and
$2,371,000 in 1991.
ENTERTAINMENT SERVICES. The Company has entered into two agreements for
major productions appearing in the showrooms at The Mirage and Treasure Island
which expire in 1995 and 1999, respectively. Under the terms of the agreements,
the Company is required to pay the producers of the shows a total of $27.1
million per year and a percentage of show revenues in excess of a specified
amount or a percentage of show profits. The producers are responsible for paying
the talent and most other costs of presenting the shows. While future minimum
payments remaining under the agreements at December 31, 1993 total approximately
$104 million, such payments are contingent upon the actual performance of shows
and, under certain conditions, the Company may terminate the agreements without
material financial obligation. The Company made payments pursuant to the
agreements and a previous agreement totaling approximately $31.6 million in
1993, $21.4 million in 1992 and $16.3 million in 1991. The agreements can be
extended at the Company's option until 2001 for the production at The Mirage and
until 2004 for the production at Treasure Island.
LITIGATION. The Company is a party to various legal proceedings, most of
which relate to routine matters incidental to its business. Management does not
believe that the outcome of such proceedings will have a material adverse effect
on the Company's financial position or results of operations.
NOTE 9 -- STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
STOCK OPTION AND STOCK APPRECIATION RIGHTS PLANS. At December 31, 1993, the
Company had in effect four stock option and stock appreciation rights plans.
Under the terms of the plans, an aggregate of 25,000,000 (6,250,000 under each
plan) stock options and stock appreciation rights ("SARs") may be granted to
officers, directors, employees, agents or independent contractors of the
Company. Options granted under the plans may be either nonqualified or incentive
stock options. Nonqualified options and SARs may be granted at not less than 50%
of the market value of the Company's common stock on the date of grant.
Incentive stock options may be granted at not less than 100% of market value on
the date of grant for employees owning 10% or less of the Company's stock, and
at not less than 110% for employees owning more than 10% of the Company's stock.
Stock options may be exercised using cash or the Company's stock. SARs may be
exercised for cash or the Company's stock. The terms governing the exercise of
options and SARs granted under the plans are determined by the Company's Board
of Directors or its designated committee.
1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. At December 31, 1993, the
Company also had in effect a non-employee director stock option plan providing
for the grant of 12,500 stock options to each non-employee director of the
Company upon completion of 36 consecutive calendar months of service with the
Company and an additional 2,500 stock options in each succeeding year. Stock
options are granted under the
40
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- STOCK OPTIONS AND STOCK APPRECIATION RIGHTS (CONTINUED)
plan with an exercise price equal to the market value of the Company's common
stock on the date of grant, and become exercisable three years thereafter. An
aggregate of 250,000 stock options may be granted under the plan.
Summarized information for the stock option plans is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Options outstanding, beginning of year.............. 13,743,043 14,483,125 11,201,875
Granted........................................... 1,446,000 6,740,000 4,287,500
Exercised......................................... (2,098,208) (7,192,582) (493,750)
Cancelled......................................... (77,500) (287,500) (512,500)
------------ ------------ ------------
Options outstanding, end of year.................... 13,013,335 13,743,043 14,483,125
------------ ------------ ------------
------------ ------------ ------------
Options and SARs available for grant at end of
year............................................... 5,059,707 6,437,583 862,583
Options exercisable at end of year.................. 6,817,331 8,032,208 10,620,625
Average exercise price of options exercised during
the year........................................... $6.46 $4.00 $4.61
Average exercise price of options outstanding at end
of year............................................ $11.20 $9.89 $6.11
</TABLE>
NOTE 10 -- CAPITAL STOCK
In May 1991 and April 1992, the Company completed underwritten public
offerings of 12,500,000 shares of its common stock at $10.40 per share and
$14.20 per share, respectively. Net proceeds from the offerings were
approximately $125.5 million in 1991 and $171.6 million in 1992.
In September 1993, the Board of Directors declared a five-for-two split of
the Company's common stock which was distributed on October 29, 1993 to holders
of record on October 15, 1993. All references to share and per share data herein
have been adjusted retroactively to give effect to the stock split.
In November 1993, the Company completed an underwritten public offering of
13,750,000 shares of its common stock at $22.80 per share, generating net
proceeds of approximately $303.6 million.
The Company's articles of incorporation authorize 5,000,000 shares of
preferred stock, none of which has been issued.
NOTE 11 -- OTHER INCOME AND EXPENSES
"Interest and other income" in the Consolidated Statements of Income
includes a net realized gain of $400,000 in 1992 and a net realized loss and an
unrealized gain of $726,000 and $2,986,000, respectively, in 1991 associated
with the liquidation of the Company's marketable securities and noncurrent
investment portfolios. In 1991, the Company settled a claim associated with a
security held in its noncurrent investment portfolio and recorded interest
income of $1,917,000 and a gain on the resulting sale of the security of
$1,427,000. Such amounts are also included in "Interest and other income" in
1991.
In April 1992, the Company received $5,125,000 in connection with the
settlement of a dispute involving certain leasehold interests that it once owned
in London, England. Such amount is included in "Other, net" in the 1992
Consolidated Statement of Income.
41
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- SUPPLEMENTARY INCOME PER SHARE INFORMATION
A substantial portion of the net proceeds from the November 1993 common
stock offering discussed in Note 10 was used to retire debt securities
associated with the Golden Nugget-Las Vegas. The following supplementary income
per share information assumes that the debt retirements and issuance of related
shares occurred on January 1, 1993.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1993
---------------
<S> <C>
Income before extraordinary item................................................ $ .69
Extraordinary item -- loss on early retirements of debt, net of applicable
income tax benefit............................................................. (.20)
-----
Net income per share of common stock............................................ $ .49
-----
-----
</TABLE>
NOTE 13 -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1993
Gross revenues....................................... $ 237,883 $ 254,025 $ 252,424 $ 309,081 $ 1,053,413
Promotional allowances............................... (23,110) (22,919) (24,292) (29,790) (100,111)
Net revenues......................................... 214,773 231,106 228,132 279,291 953,302
Operating income..................................... 31,252 41,692 40,988 17,796 131,728
Other expenses, net.................................. (15,902) (15,085) (14,329) (14,109) (59,425)
Income before extraordinary item..................... 10,396 17,981 17,289 2,403 48,069
Extraordinary loss on early retirements of debt...... (806) (1,298) (6,915) (9,818) (18,837)
Net income (loss).................................... 9,590 16,683 10,374 (7,415) 29,232
Income per share before extraordinary item........... .13 .22 .21 .03 .58
Extraordinary loss per share......................... (.01) (.01) (.08) (.11) (.23)
Net income (loss) per share.......................... .12 .21 .13 (.08) .35
1992
Gross revenues....................................... $ 238,253 $ 213,425 $ 223,559 $ 245,339 $ 920,576
Promotional allowances............................... (22,077) (20,619) (22,273) (22,583) (87,552)
Net revenues......................................... 216,176 192,806 201,286 222,756 833,024
Operating income..................................... 38,600 22,685 28,344 36,146 125,775
Other expenses, net.................................. (17,321) (23,049) (20,259) (19,563) (80,192)
Income (loss) before extraordinary item and
cumulative effect of change in accounting
principle........................................... 14,020 (347) 12,333 10,939 36,945
Extraordinary loss on early retirements of debt...... (365) (9,133) -- (2,660) (12,158)
Cumulative effect (to January 1, 1992) of change in
method of accounting for income taxes............... 3,632 -- -- -- 3,632
Net income (loss).................................... 17,287 (9,480) 12,333 8,279 28,419
Income per share before extraordinary item and
cumulative effect of change in accounting
principle........................................... .22 .00 .17 .14 .53
Extraordinary loss per share......................... .00 (.14) -- (.03) (.17)
Cumulative effect of change in accounting principle
per share........................................... .06 -- -- -- .05
Net income (loss) per share.......................... .28 (.14) .17 .11 .41
</TABLE>
Because income (loss) per share amounts are calculated using the weighted
average number of common and dilutive common equivalent shares outstanding
during each quarter, the sum of the per share amounts for the four quarters may
not equal the total income (loss) per share amounts for the year.
42
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
MIRAGE RESORTS, INCORPORATED
By: DANIEL R. LEE
--------------------------------------
Daniel R. Lee, SENIOR VICE
PRESIDENT --
FINANCE AND DEVELOPMENT, CHIEF
FINANCIAL OFFICER AND TREASURER
Dated: April 1, 1994
43
<PAGE>
SCHEDULE II
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
DEDUCTIONS BALANCE AT
BALANCE AT -------------------------- END OF YEAR
BEGINNING AMOUNTS AMOUNTS ------------------------
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF CURRENT NOT CURRENT
- ----------------------------------------------- ----------- ----------- ----------- ------------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Philip Y.L. Wang............................. $ 200 $ -- $ 100 $ -- $ 100 $ --
Year Ended December 31, 1992
Stephen A. Wynn.............................. $ 2,604 $ -- $ 2,604 $ -- $ -- $ --
Philip Y.L. Wang............................. 300 -- 100 -- 100 100
Year Ended December 31, 1991
Stephen A. Wynn.............................. $ 2,604 $ -- $ -- $ -- $ -- $ 2,604
Philip Y.L. Wang............................. 400 -- 100 -- 100 200
<FN>
- ------------------------
Stephen A. Wynn is the Chairman of the Board, President and Chief Executive
Officer of the Registrant. On April 24, 1992, Mr. Wynn's unsecured promissory
note dated June 23, 1989, bearing interest, payable semi-annually, at 9.13% (the
applicable federal mid-term rate on the date of the note) was canceled and
replaced by a new note. The April 24, 1992 unsecured promissory note, bearing
interest, payable semi-annually, at 5.07% (the applicable federal mid-term rate
on the date of the note) was due on or before June 22, 1994. Mr. Wynn repaid the
outstanding principal balance of the note in December 1992.
Philip Y.L. Wang is the Executive Vice President and Director of Marketing
for Hong Kong and Thailand for GOLDEN NUGGET (ASIA) LTD., a wholly owned
subsidiary of the Registrant. The amount receivable represented a January 5,
1989 unsecured promissory note bearing interest, payable quarterly, at a
floating rate equal to the applicable federal mid-term rate. The principal
amount of the note was payable in five equal annual installments of $100,000.
Mr. Wang repaid the outstanding principal balance of the note in February 1994.
</TABLE>
S-1
<PAGE>
SCHEDULE V
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
TRANSFER OF
CONSTRUCTION IN
BALANCE AT PROGRESS AND
BEGINNING OF OTHER BALANCE AT
DESCRIPTION YEAR ADDITIONS* RETIREMENTS RECLASSIFICATIONS END OF YEAR
- ------------------------------------------- ------------ ---------- ----------- --------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Land..................................... $ 135,142 $ 56,093 $ 36 $ (23) $ 191,176
Land improvements........................ 100,604 4,352 383 12,775 117,348
Buildings................................ 571,876 11,258 33 283,820 866,921
Furniture, fixtures and equipment........ 384,209 39,705 6,661 135,753 553,006
Construction in progress................. 136,135 320,980 129 (432,325) 24,661
------------ ---------- ----------- --------------- ------------
$ 1,327,966 $ 432,388 $ 7,242 $ -- $ 1,753,112
------------ ---------- ----------- --------------- ------------
------------ ---------- ----------- --------------- ------------
Year Ended December 31, 1992
Land..................................... $ 115,736 $ 19,406 $ -- $ -- $ 135,142
Land improvements........................ 99,825 559 192 412 100,604
Buildings................................ 532,888 1,553 895 38,330 571,876
Furniture, fixtures and equipment........ 342,960 14,881 22,156 48,524 384,209
Construction in progress................. 40,619 184,445 1,663 (87,266) 136,135
------------ ---------- ----------- --------------- ------------
$ 1,132,028 $ 220,844 $ 24,906 $ -- $ 1,327,966
------------ ---------- ----------- --------------- ------------
------------ ---------- ----------- --------------- ------------
Year Ended December 31, 1991
Land..................................... $ 113,637 $ -- $ -- $ 2,099 $ 115,736
Land improvements........................ 93,600 824 1,337 6,738 99,825
Buildings................................ 522,622 1,007 1,052 10,311 532,888
Furniture, fixtures and equipment........ 341,295 7,543 15,815 9,937 342,960
Construction in progress................. 14,227 56,677 1,200 (29,085) 40,619
------------ ---------- ----------- --------------- ------------
$ 1,085,381 $ 66,051 $ 19,404 $ -- $ 1,132,028
------------ ---------- ----------- --------------- ------------
------------ ---------- ----------- --------------- ------------
<FN>
- ------------------------
*Includes expenditures for refurbishments and expansions of hotel-casino
properties, and for 1992 and 1993, expenditures for construction of Treasure
Island. Additions in 1993 also include the acquisition of the assets of the
former Dunes Hotel, Casino and Country Club.
</TABLE>
S-2
<PAGE>
SCHEDULE VI
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING BALANCE AT
DESCRIPTION OF YEAR ADDITIONS RETIREMENTS OTHER END OF YEAR
- -------------------------------------------------------- ---------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993
Land improvements..................................... $ 13,324 $ 5,209 $ 113 $ -- $ 18,420
Buildings............................................. 77,161 17,438 18 -- 94,581
Furniture, fixtures and equipment..................... 170,020 54,318 5,593 -- 218,745
---------- ----------- ----------- ----- -----------
$ 260,505 $ 76,965 $ 5,724 $ -- $ 331,746
---------- ----------- ----------- ----- -----------
---------- ----------- ----------- ----- -----------
Year Ended December 31, 1992
Land improvements..................................... $ 8,860 $ 4,917 $ 457 $ 4 $ 13,324
Buildings............................................. 62,142 15,093 74 -- 77,161
Furniture, fixtures and equipment..................... 132,447 44,806 7,229 (4) 170,020
---------- ----------- ----------- ----- -----------
$ 203,449 $ 64,816 $ 7,760 $ -- $ 260,505
---------- ----------- ----------- ----- -----------
---------- ----------- ----------- ----- -----------
Year Ended December 31, 1991
Land improvements..................................... $ 4,046 $ 4,944 $ 113 $ (17) $ 8,860
Buildings............................................. 47,563 14,602 39 16 62,142
Furniture, fixtures and equipment..................... 100,975 42,269 10,798 1 132,447
---------- ----------- ----------- ----- -----------
$ 152,584 $ 61,815 $ 10,950 $ -- $ 203,449
---------- ----------- ----------- ----- -----------
---------- ----------- ----------- ----- -----------
</TABLE>
S-3
<PAGE>
SCHEDULE VIII
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
ADDITIONS
--------------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER BALANCE AT
DESCRIPTION OF YEAR EXPENSES ACCOUNTS(A) DEDUCTIONS(B) END OF YEAR
- ---------------------------------------------- ----------- ----------- ------------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
Year Ended December 31, 1993................ $ 34,915 $ 19,819 $ 1,327 $ 29,185 $ 26,876
Year Ended December 31, 1992................ $ 26,906 $ 20,246 $ 1,708 $ 13,945 $ 34,915
Year Ended December 31, 1991................ $ 23,085 $ 12,325 $ 6,577 $ 15,081 $ 26,906
<FN>
- ------------------------
(A) Recoveries of accounts previously charged off.
(B) Accounts charged off.
</TABLE>
S-4
<PAGE>
SCHEDULE X
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
ITEM 1993 1992 1991
- --------------------------------------------------------------------------------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
The following amounts were charged to costs and expenses
Maintenance and repairs........................................................ $ 27,456 $ 24,888 $ 24,424
--------- --------- ---------
--------- --------- ---------
Taxes other than payroll and income taxes
Gaming taxes and licenses.................................................... $ 41,304 $ 37,466 $ 35,312
Property taxes............................................................... 8,626 8,712 7,760
Other........................................................................ 3,157 2,670 2,372
--------- --------- ---------
$ 53,087 $ 48,848 $ 45,444
--------- --------- ---------
--------- --------- ---------
</TABLE>
S-5
<PAGE>
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1993 1992 1991
------------ ----------- -------------
<S> <C> <C> <C>
Weighted-average shares outstanding 77,790,406 65,341,820 49,969,193
Common stock equivalents (a) 5,619,005 4,607,195 5,451,730
---------- ---------- ----------
Weighted-average shares outstanding and common stock
equivalents used in the computation of primary earnings
per share 83,409,411 69,949,015 55,420,923
Additional shares for fully diluted calculation (b) 1,544,679 2,069,145 874,785
---------- ---------- ----------
Total shares outstanding assuming full dilution 84,954,090 72,018,160 56,295,708
---------- ---------- ----------
---------- ---------- ----------
Net income $29,232,000 $28,419,000 $46,767,000
---------- ---------- ----------
---------- ---------- ----------
Primary earnings per share $ 0.35 $ 0.41 $ 0.84
---------- ---------- ----------
---------- ---------- ----------
Fully diluted earnings per share $ 0.34 $ 0.39 $ 0.83
---------- ---------- ----------
---------- ---------- ----------
<FN>
(a) Shares issuable upon the assumed exercise of dilutive stock options, less
the number of treasury shares assumed to be purchased, at average market
price, from the proceeds of such exercises.
(b) Increase in net shares assumed to be issued upon the exercise of dilutive
stock options, based on the use of period-end market price in the
calculation of treasury shares assumed to be purchased.
</TABLE>
Note: The above share and option data has been adjusted retroactively to give
effect to the five-for-two split of the Registrant's common stock
effective October 15, 1993.
EXHIBIT 11
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Mirage Resorts, Incorporated 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), on Form S-8 (File No. 33-63804) and on Form S-3 (File
No. 33-50559) of our report dated February 11, 1994 on our audits of the
consolidated financial statements and financial statement schedules of Mirage
Resorts, Incorporated as of December 31, 1993 and 1992, and for each of the
three years in the period ended December 31, 1993, which report is included in
this Form 10-K.
COOPERS & LYBRAND
Los Angeles, California
March 31, 1994
EXHIBIT 23
