UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 1-6697
Mirage Resorts, Incorporated
________________________________________________________________
(Exact name of Registrant as specified in its charter)
Nevada 88-0058016
______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
_________________________________________________________________
(Address of principal executive offices - Zip Code)
(702) 791-7111
_________________________________________________________________
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
_______ _______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $0.008 par value, 90,819,004 shares outstanding as
of April 30, 1994.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial information
as of March 31, 1994 and for the three-month period then
ended included in this report was reviewed by Arthur Andersen &
Co., independent public accountants, in accordance with the
professional standards and procedures established for such
reviews by the American Institute of Certified Public Accountants.
<PAGE>
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
_______________________________________________
To the Directors and Stockholders
of Mirage Resorts, Incorporated
Las Vegas, Nevada
We have reviewed the accompanying condensed consolidated balance
sheet of Mirage Resorts, Incorporated and subsidiaries (the
"Company") as of March 31, 1994, and the related condensed
consolidated statements of income and cash flows for the three-
month period ended March 31, 1994. These financial statements
are the responsibility of the Company's management. The
unaudited condensed consolidated statements of income and cash
flows for the three months ended March 31, 1993 were reviewed
by other auditors whose report dated May 13, 1993, stated that
they were not aware of any material modifications that should
be made to those statements in order for them to be in
conformity with generally accepted accounting principles. In
addition, the consolidated financial statements of Mirage
Resorts, Incorporated as of December 31, 1993, were audited by
other auditors whose report dated February 11, 1994, expressed
an unqualified opinion on those statements.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying condensed
consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Las Vegas, Nevada
May 11, 1994
2
<PAGE>
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AT MARCH 31, At December 31,
1994 1993
________________________________________________________________________________
(In thousands) (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 64,476 $ 57,462
Receivables, net of allowance for doubtful
accounts of $32,782 and $26,876 61,256 58,182
Inventories 28,422 30,374
Deferred income taxes 26,812 26,756
Prepaid expenses and other 20,392 24,656
________________________________________________________________________________
Total current assets 201,358 197,430
Property and equipment, net 1,416,130 1,421,366
Other assets, net 96,912 86,462
________________________________________________________________________________
$1,714,400 $1,705,258
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 50,829 $ 72,483
Construction accounts payable 10,557 4,328
Accrued expenses 98,209 82,922
Current maturities of long-term debt 4,560 31,617
________________________________________________________________________________
Total current liabilities 164,155 191,350
Long-term debt, net of current maturities 539,465 535,025
Other liabilities, including deferred income
taxes of $65,204 and $60,115 73,467 68,019
________________________________________________________________________________
Total liabilities 777,087 794,394
________________________________________________________________________________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock: 90,813 and 90,607 shares
outstanding 940 940
Additional paid-in capital 697,509 695,587
Retained earnings 396,031 372,683
Treasury stock, at cost: 26,761 and 26,967 shares (157,167) (158,346)
________________________________________________________________________________
Total stockholders' equity 937,313 910,864
________________________________________________________________________________
$1,714,400 $1,705,258
================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31 1994 1993
________________________________________________________________________
(In thousands, except per share amounts)
<S> <C> <C>
GROSS REVENUES $331,074 $237,883
Less-promotional allowances (30,620) (23,110)
________________________________________________________________________
300,454 214,773
________________________________________________________________________
COSTS AND EXPENSES
Casino-hotel operations 179,500 130,933
Provision for losses on receivables 5,923 4,154
General and administrative 35,393 24,223
Depreciation and amortization 23,513 17,364
Corporate expense 7,858 6,847
________________________________________________________________________
252,187 183,521
________________________________________________________________________
OPERATING INCOME 48,267 31,252
________________________________________________________________________
OTHER INCOME AND (EXPENSES)
Interest and other income 1,478 2,460
Interest cost (14,299) (23,329)
Interest capitalized 1,646 4,984
Other, net (182) (17)
________________________________________________________________________
(11,357) (15,902)
________________________________________________________________________
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 36,910 15,350
Provision for income taxes (13,562) (4,954)
________________________________________________________________________
INCOME BEFORE EXTRAORDINARY ITEM 23,348 10,396
Extraordinary item-loss on early retirements
of debt, net of applicable income tax benefit - (806)
________________________________________________________________________
NET INCOME $ 23,348 $ 9,590
========================================================================
INCOME PER SHARE OF COMMON STOCK
Income before extraordinary item $ 0.24 $ 0.13
Extraordinary item-loss on early retirements
of debt, net of applicable income tax benefit - (0.01)
________________________________________________________________________
NET INCOME PER SHARE OF COMMON STOCK $ 0.24 $ 0.12
========================================================================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31 1994 1993
______________________________________________________________________________________________
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 23,348 $ 9,590
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for losses on receivables 5,923 4,154
Depreciation and amortization of property
and equipment 24,388 17,894
Other amortization 4,533 4,434
Deferred income taxes 5,033 2,153
Changes in assets and liabilities
Net (increase) decrease in receivables and
other current assets (2,781) 14,026
Net decrease in trade accounts payable and
accrued expenses (6,367) (4,559)
Other, net 986 1,318
______________________________________________________________________________________________
Net cash provided by operating activities 55,063 49,010
______________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (21,123) (163,309)
Net decrease in noncurrent cash equivalents
restricted for construction - 75,938
Other, net (4,344) 12,194
______________________________________________________________________________________________
Net cash used for investing activities (25,467) (75,177)
______________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt - 97,500
Proceeds from borrowings under credit facility 20,000 -
Repayments of borrowings under credit facility
and other debt (45,196) (45,927)
Net increase in cash equivalents restricted
for retirement of debt - (43,828)
Other, net 2,614 6,436
______________________________________________________________________________________________
Net cash provided by (used for) financing activities (22,582) 14,181
______________________________________________________________________________________________
CASH AND CASH EQUIVALENTS
Increase (decrease) for the period 7,014 (11,986)
Balance, beginning of period 57,462 142,983
______________________________________________________________________________________________
Balance, end of period $ 64,476 $ 130,997
==============================================================================================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid, net of amounts capitalized $ 4,100 $ 4,707
Income taxes refunded - 5,038
______________________________________________________________________________________________
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
Mirage Resorts, Incorporated (the "Company" or the "Registrant"),
through wholly owned Nevada subsidiaries, owns and operates some
of the most successful casino-based entertainment resorts in the
world. These facilities include The Mirage and Treasure Island
on the Las Vegas Strip, the Golden Nugget in downtown Las Vegas
and the Golden Nugget-Laughlin in Laughlin, Nevada. In January
1993, the Company purchased the assets of the former Dunes Hotel,
Casino and Country Club on the Las Vegas Strip and is developing
long-term plans for the approximately 164-acre site, which
include construction of extensive new hotel, casino and resort
facilities.
The condensed consolidated financial statements have been
prepared in accordance with the accounting policies described in
the Company's 1993 Annual Report on Form 10-K (as amended) and
should be read in conjunction with the Notes to Consolidated
Financial Statements which appear in that report. The
Condensed Consolidated Balance Sheet at December 31, 1993
was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting
principles.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the results for the interim periods have been included. The
interim results reflected in the condensed consolidated financial
statements are not necessarily indicative of expected results for
the full year.
Certain amounts in the 1993 condensed consolidated financial
statements have been reclassified to conform with the 1994
presentation. Such reclassifications had no effect on the
Company's net income.
NOTE 2 - SUBSEQUENT EVENT
In April and early May 1994, the Company repurchased
approximately $47.2 million aggregate principal amount of the
9 7/8% first mortgage notes associated with The Mirage and
Treasure Island. A substantial portion of the cost of the
repurchases was provided by borrowings under the Company's bank
credit facility. The retirements resulted in an extraordinary
loss of approximately $2.2 million, net of applicable income
tax benefits, which will be reflected in the Company's 1994
second quarter results.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS
ENDED MARCH 31, 1994 AND 1993
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Financial Highlights
Three months ended March 31 1994 1993 % Increase
____________________________________________________________________________________
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Gross revenues $331,074 $237,883 39.2%
Promotional allowances (30,620) (23,110) 32.5%
____________________________________________________________________________________
Net revenues 300,454 214,773 39.9%
____________________________________________________________________________________
Operating income before depreciation and
amortization and corporate expense 79,638 55,463 43.6%
Operating income 48,267 31,252 54.4%
Income before extraordinary item 23,348 10,396 124.6%
Net income 23,348 9,590 143.5%
____________________________________________________________________________________
Income per share before extraordinary item $0.24 $0.13 84.6%
Net income per share $0.24 $0.12 100.0%
Average common and dilutive common
equivalent shares (In thousands) 97,733 79,713 22.6%
____________________________________________________________________________________
Operating margin* 16.1% 14.6% 1.5pts
Company-wide table games win percentage 16.9% 16.8% 0.1pts
Company-wide occupancy of standard guest rooms 98.1% 95.7% 2.4pts
____________________________________________________________________________________
</TABLE>
*Operating income/net revenues.
Led by the success of Treasure Island, the Company recorded the
highest quarterly earnings in its 44-year history. Pre-tax
income more than doubled in the quarter to $36.9 million. Net
income was $23.3 million, or $0.24 per share, versus income
before extraordinary item of $10.4 million, or $0.13 per share,
in the prior-year period. This exceeded the earlier record set
in the 1993 fourth quarter, when the Company earned $21.8 million
before non-recurring and extraordinary items. Gross revenues of
$331.1 million also set a new record for the Company.
Treasure Island in its first full quarter of operation
contributed greatly to the results. This new pirate-themed
adventure resort reported gross revenues and operating income of
$88.4 million and $14.6 million, respectively. Management
anticipates that Treasure Island's operating results will
continue to improve as the facility matures.
The Company-wide table games win percentage in the quarter was
16.9%, versus 16.8% in the prior-year period. Treasure Island
has a different mix of table games play than the Company's other
properties and, as expected, has been operating at a lower win
percentage than the historical Company-wide average. Excluding
Treasure Island, the Company's table games win percentage was
17.1%-higher than the 16.8% in last year's first quarter, but
lower than the 19.4% and 19.5% recorded for the full years 1993
and 1992, respectively. Company-wide table games drop, excluding
Treasure Island, was $422.4 million, versus $394.2 million in the
1993 quarter.
Company-wide occupancy of standard guest rooms was 98.1%, versus
95.7% in the 1993 period, despite a 55% increase in the Company's
available standard guest rooms.
The growth in earnings per share was achieved despite a 22.6%
increase in the average number of common and dilutive common
equivalent shares, principally reflecting the November 1993
issuance of 13,750,000 shares of the Company's common stock.
7
<PAGE>
<TABLE>
<CAPTION>
The Mirage
Three months ended March 31 1994 1993 % Increase
________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $173,961 $167,394 3.9%
Net revenues 155,767 150,194 3.7%
EBDIT * 41,761 38,730 7.8%
Operating income 29,539 26,090 13.2%
Operating margin 19.0% 17.4% 1.6pts
________________________________________________________________________
</TABLE>
* Earnings before depreciation, interest and taxes.
The Mirage achieved strong results in the quarter. Its gross
revenues and operating cash flow (EBDIT) rose by 3.9% and 7.8%,
respectively, over the prior-year period, despite competition
from Treasure Island and two other mega-resorts that opened on
the Las Vegas Strip in the 1993 fourth quarter.
The improvement in gross revenues reflects increases of $4.2
million, or 4.9%, in casino revenues and $2.4 million, or 2.9%,
in non-casino revenues. Table games revenues grew by $7.8
million, or 15.5%, reflecting increases in both drop and the win
percentage. This improvement was partially offset by a $3.5
million decline in slot revenues, which management principally
attributes to the additional competition. The Company is in the
process of upgrading the slot machines at The Mirage.
Non-casino revenues improved in nearly every category. Room
revenues grew by $3.0 million, or 10.4%, reflecting an increase
in both occupancy and the average room rate. Occupancy of The
Mirage's standard guest rooms was 97.2%, versus 95.9% in the 1993
first quarter.
Reflecting the absence of Cirque du Soleil, which appeared
temporarily at The Mirage until November 1993, entertainment
revenues declined by $4.0 million, or 26.7%. This world-renowned
performance troupe is now appearing in an entirely new show,
"Mystere," at Treasure Island.
<TABLE>
<CAPTION>
Treasure Island
Three months ended March 31 1994
_________________________________________________________________
(Dollars in thousands)
<S> <C>
Gross revenues $88,391
Net revenues 82,154
EBDIT 21,462
Operating income 14,631
Operating margin 17.8%
_________________________________________________________________
</TABLE>
Treasure Island posted a solid 1994 first quarter, generating
operating cash flow of $21.5 million on gross revenues of $88.4
million. Its standard guest rooms were nearly 100% occupied
during the quarter. These results surpassed the daily averages
achieved during the facility's initial 66 days of operations in
1993, when it produced operating cash flow and gross revenues of
$13.2 million and $63.6 million, respectively, and standard guest
room occupancy was 96.7%.
The operating margin also showed significant improvement, 17.8%
versus 13.9% in the 1993 opening period, principally reflecting
lower staffing levels and other expected improvements in overall
operating efficiencies. As mentioned previously, management
anticipates that these trends will continue as the facility
matures.
8
<PAGE>
<TABLE>
<CAPTION>
Golden Nugget
% Increase
Three months ended March 31 1994 1993 (Decrease)
__________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $51,181 $53,711 (4.7)%
Net revenues 46,634 49,268 (5.3)%
EBDIT 11,991 12,435 (3.6)%
Operating income 9,400 9,764 (3.7)%
Operating margin 20.2% 19.8% 0.4pts
_________________________________________________________________________
</TABLE>
The Golden Nugget in downtown Las Vegas incurred a slight decline
in operating results during the quarter. Most of the decline
resulted from a $2.3 million, or 6.9%, decrease in casino
revenues principally reflecting a reduction in table games drop.
Management believes that increased competitive pressures from Las
Vegas Strip hotel-casinos and difficult comparisons with a strong
prior-year period are the primary reasons for the decline.
Occupancy of standard guest rooms improved over the 1993 quarter,
97.3% versus 96.1%, and accounted for a small improvement in room
revenues.
In order to compete more effectively with the Strip hotel-
casinos, in 1993 the Golden Nugget and a group of other downtown
casinos formed a public/private-sector venture to develop a
project known as "The Fremont Street Experience." This project
will tie together the casinos along Fremont Street in downtown
Las Vegas 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.
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 affect operations at
the casinos.
The Company also recently began the process of upgrading most of
the slot machines at the Golden Nugget.
<TABLE>
<CAPTION>
Golden Nugget-Laughlin
Three months ended March 31 1994 1993 % Increase
__________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C>
Gross revenues $17,541 $16,778 4.5%
Net revenues 15,899 15,311 3.8%
EBDIT 4,424 4,298 2.9%
Operating income 2,555 2,245 13.8%
Operating margin 16.1% 14.7% 1.4pts
_________________________________________________________________________
</TABLE>
The Golden Nugget-Laughlin continued to enjoy favorable operating
results following an exceptional 1993. Gross revenues and
operating cash flow rose by 4.5% and 2.9%, respectively. The
improvement in revenues represents increases in substantially
every category.
9
<PAGE>
Slot revenues, in particular, grew by 4.7%. Occupancy of
standard guest rooms was up during the quarter, 98.6% versus
91.7% in the 1993 period. However, the Laughlin market has
experienced a guest room price war in recent months, following
the opening of a major expansion by a competitor. As a result,
room revenues at the facility were down slightly.
Management has been evaluating the construction of 400 more guest
rooms at the property, as well as a specialty restaurant.
However, given the recent major expansion by a competitor in
Laughlin and the fourth quarter opening of three new large
resorts (including Treasure Island) in Las Vegas, management has
opted to wait several months to analyze the effects of the new
competition before deciding whether to proceed with any of the
planned expansions.
Other Factors Affecting Earnings Per Share
Corporate expense rose by $1.0 million, or 14.8%, principally due
to the Company's continued evaluation and pursuit of
opportunities in new and emerging gaming jurisdictions.
Due to much lower debt levels and the refinancing of debt with
lower-cost borrowings, the Company's interest cost declined
38.7%. With Treasure Island now open, a much smaller portion
of the Company's interest cost is being capitalized in 1994
than in 1993. Nevertheless, interest cost, net of amounts
capitalized, declined by 31.0%.
The Company's effective tax rate increased to 36.7%, versus 32.3%
in the prior-year period, due to increases in the statutory rate
and decreases in the deductibility of certain expenses. The
effective tax rate for the full year 1994 is expected to
approximate that of the first quarter.
In the 1993 first quarter, the Company repurchased $8.5 million
principal amount of the 13 3/4% first mortgage notes associated
with The Mirage and Treasure Island, causing an extraordinary
loss, net of income tax benefits, of $806,000. There were no
similar extraordinary charges in the 1994 period.
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flow
Treasure Island's significant contribution to the Company's
operations was also reflected in its first quarter operating cash
flow. Net cash provided by operating activities (as shown in the
Condensed Consolidated Statements of Cash Flows) totaled $55.1
million, a 12.4% increase over the prior-year period.
This improvement was achieved despite the fact that the 1993
quarter benefitted from a reduction in gross receivables of $9.6
million, versus an increase of $9.0 million in the current-year
period. Operating cash flow in the prior-year period also
included federal income tax refunds of $5.0 million. No federal
income taxes were paid or refunded in the first quarter of 1994.
Capital Spending
Capital expenditures during the 1994 period totaled $21.1
million, a substantial portion of which relates to the completion
of certain projects at Treasure Island. The remaining amount
primarily reflects maintenance capital spending as well as
amounts associated with the Dunes project. Management believes
in maintaining the Company's facilities in first-class condition.
Maintenance capital spending for its four properties is
anticipated to approximate $30 million per year.
10
<PAGE>
As discussed previously, the Company is upgrading the slot
machines at The Mirage and the Golden Nugget. The net cost of
the project is expected to be approximately $10 million. The
Company also plans to begin refurbishing most of the standard
guest rooms at The Mirage in late 1994 at a total cost of
approximately $40 million to $45 million. This project will be
undertaken in a manner designed to minimize the disruption to
guests and employees.
Future Expansion
On May 10, 1994, the Company signed a letter of intent with the
principals of Gold Strike Resorts ("Gold Strike"), a Nevada-
based gaming partnership, to form a joint venture to develop a
new themed hotel-casino resort on the Las Vegas Strip. The
resort will be located on approximately 43 acres at the south
end of the Company's Dunes site, near Tropicana Avenue, and
will have more than 400 feet of frontage on the Strip. The
resort will feature approximately 3,000 guest rooms and a
100,000-square foot casino and will be designed and marketed
to appeal to the value-minded Las Vegas visitor.
The Company and Gold Strike will each own 50% of the joint
venture. Gold Strike will supervise the design and
construction and will manage and operate the resort without
fee.
Construction of the project is expected to begin by early
1995 and be completed in mid-1996. Based on preliminary
estimates, the total cost of the project is anticipated to be
approximately $250 million. Such amount includes the estimated
value of the land, which the Company will contribute for its
equity in the venture. It is anticipated that up to 70% of the
cost of the project will be provided by first mortgage debt
financing which is non-recourse to the Company and Gold Strike.
The balance of the cost will be provided by an equity
contribution from Gold Strike of not less than $30 million. The
project is contingent on the availability of suitable financing
and the receipt of requisite licenses and approvals.
The Company is also developing plans for construction of a new
luxury casino-based entertainment resort on the north end of the
Dunes site at the corner of Flamingo Road and the Strip. 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. If the Company proceeds with the project, the
Gold Strike joint venture and the Company will construct a
transportation link between the two facilities.
The Company continues to evaluate and pursue potential
opportunities in new and emerging gaming jurisdictions. As the
operating partner in two different partnerships, the Company was
recently selected to develop major casino entertainment centers
in Vancouver, British Columbia and Houston, Texas. It has also
recently entered into a joint venture to build a luxury hotel-
casino resort in Miami Beach, Florida. Such projects are
contingent on the passage of satisfactory enabling legislation,
the receipt of requisite licenses and approvals and certain other
matters.
The Company has substantial local partners in several of these
potential ventures and anticipates that such ventures will have a
significant level of debt that is non-recourse to any partner.
Therefore, the cash outlays and debt incurred by the Company to
fund these projects are likely to be substantially less than the
anticipated total project costs.
There can be no assurance that management will determine to
proceed with any new projects. Conversely, it is also possible
that management will decide to undertake new projects, including
projects not currently contemplated, that could require
significant financing.
Financing and Liquidity
During the 1994 first quarter, the Company used its existing cash
balances and operating cash flow to repay the $17.0 million
balance outstanding under its bank credit facility at year-end.
Operating cash flow and borrowings of $20.0 million under the
bank facility were used to fund the March 15 maturity of the
$27.0 million of floating rate first mortgage notes associated
with The Mirage and Treasure Island.
11
<PAGE>
In April and early May 1994, the Company repurchased
approximately $47.2 million principal amount of the 9 7/8%
first mortgage notes associated with The Mirage and Treasure
Island. A substantial portion of the cost of the retirements
was also provided by borrowings under the bank facility.
The Company recently obtained commitments from a group of
commercial banks for an expansion of its existing bank facility
to provide for borrowings of up to $525 million. The bank
facility currently provides for borrowings of up to $150 million.
The expansion is expected to be finalized in the second quarter
of 1994.
The Company's liquidity is excellent. At March 31, the Company
had $130.0 million available under its bank facility, in addition
to cash and cash equivalents of $64.5 million. Net working
capital at quarter-end was approximately $37.2 million.
With no major projects currently under construction and minimal
debt maturities, management expects the Company to produce
significant free cash flow during the remainder of 1994.
Proposed Spin-Off
Management is considering a spin-off transaction whereby the
stock of the entities that own the two Golden Nugget properties
would be contributed to a new corporation and 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 capitalize on 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 facility and a ruling from the Internal Revenue Service (the
"IRS") or other satisfactory assurances 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.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 26, 1994, a Complaint in a purported class
action lawsuit was filed in the United States District
Court, Middle District of Florida, against 41
manufacturers, distributors and casino operators of
video poker and electronic slot machines, including
the Company. The Complaint alleges that the defendants
have engaged in a course of fraudulent and misleading
conduct intended to induce persons to play such games
based on a false belief concerning how the gaming
machines operate, as well as the extent to which
there is an opportunity to win. The Complaint
alleges violations of the Racketeer Influenced and
Corrupt Organizations Act, as well as claims of
common law fraud, unjust enrichment and negligent
misrepresentation, and seeks damages in excess of $6
billion. Management believes that the claims are
wholly without merit and does not expect that the
lawsuit will have a material adverse effect on the
Company's financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10(a) 1994 Cash Bonus Plan. Incorporated by reference to
Exhibit A to the Registrant's definitive Proxy Statement
for its 1994 Annual Meeting of Stockholders, filed on
April 26, 1994.
10(b) Agreement for the Sale of Gulfstream III Aircraft
Serial Number 311 and Gulfstream III Refurbishment
Agreement, each dated March 24, 1994, between Gulfstream
Aerospace Corp. and Golden Nugget Aviation Corp.
11 Mirage Resorts, Incorporated - Computation of Net Income
Per Share of Common Stock for the three-month periods
ended March 31, 1994 and 1993.
15 Letter from independent public accountants acknowledging
awareness of the use of their report dated May 11, 1994
in the Registrant's registration statements.
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the
three-month period ended March 31, 1994.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Mirage Resorts, Incorporated
May 13, 1994 by: DANIEL R. LEE
____________ _______________________________
Date Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
14
EXHIBIT 10(b)
AGREEMENT FOR THE SALE
OF
GULFSTREAM III AIRCRAFT SERIAL NUMBER 311
THIS AGREEMENT, including all attachments, is made and entered
into this 24 day of March, 1994 by and between GULFSTREAM
AEROSPACE CORP., a Georgia corporation having its principal place
of business at Savannah International Airport and mailing address
at Post Office Box 2206, Savannah, Georgia 31402 2206
(hereinafter "SELLER"), and GOLDEN NUGGET AVIATION CORP., a
Nevada corporation having its principal place of business at 241
East Reno, Las Vegas, Nevada 89119 (hereinafter "BUYER").
W-I-T-N-E-S-S-E-T-H
WHEREAS, SELLER desires to sell and BUYER desires to purchase,
under the terms and conditions of this Agreement, the aircraft
hereinafter described.
NOW, THEREFORE, SELLER and BUYER (hereinafter "Parties")
hereby agree as follows:
ARTICLE I
SUBJECT MATTER OF SALE
A. General
_______
SELLER shall sell and deliver to BUYER, and BUYER shall
purchase from SELLER, one (1) Gulfstream III Model G1159A
aircraft, Serial Number 311 (hereinafter the "Aircraft"), which
is equipped with two (2) Rolls Royce Spey engines bearing
manufacturer's Serial Numbers 11025 and 11026.
B. Equipment
_________
The items listed in Attachment A, "Equipment Items" will be
delivered with the Aircraft at the Delivery Time.
ARTICLE II
DELIVERY
A. Tender of Aircraft for Delivery
_______________________________
SELLER shall tender the Aircraft for delivery to BUYER in
Savannah, Georgia, 1) in good operating condition, 2) with U.S.
Airworthiness Directives, mandatory service bulletins and
mandatory inspections due at Delivery Time complied with, and, 3)
with a standard Airworthiness Certificate in a "AS IS WHERE IS"
condition on or about March 31, 1994 (hereinafter the "Scheduled
Delivery Date").
<PAGE>
B. Inspection and Correction of Discrepancies
__________________________________________
Prior to acceptance by BUYER, the Aircraft shall be subject to
inspection and/or flight test, at BUYER'S expense, of not more
than two (2) hours duration participated in by not more than two
(2) of BUYER'S representatives to confirm that the Aircraft meets
the terms of this Agreement. If the Aircraft does not conform to
the specifications in Article I or does not meet the standards as
set forth in Section A of this Article II, BUYER shall not be
obligated to accept the Aircraft unless SELLER shall, within a
reasonable time after the Scheduled Delivery Date, agree to
correct at its expense any discrepancies disclosed by such
inspection or flight test. If any such discrepancy is judged to
be major by either Party, the correction will be decided upon by
mutual agreement.
C. Failure of SELLER to Correct Discrepancies
__________________________________________
If SELLER elects not to agree to correct the discrepancies
disclosed by BUYER'S inspection to the satisfaction of BUYER,
SELLER will immediately refund any portion of the Purchase Price
paid by BUYER, and neither Party shall have any obligation to the
other or liability resulting from this Agreement.
D. Delivery Time
_____________
When the Aircraft is tendered to BUYER in good operating
condition with a standard Airworthiness Certificate under
Section A of this Article II, or upon correction of any
discrepancies under Section B of this Article II, this shall be
referred to herein as the "Delivery Time".
E. BUYER'S Acceptance
__________________
At the Delivery Time, BUYER shall execute a Memorandum of
Delivery on a form to be provided by SELLER and pay to SELLER the
amount due under Article III, Section D(1). SELLER shall deliver
to BUYER a Bill of Sale for the Aircraft on a form approved by
the Federal Aviation Administration (hereinafter "FAA"). This
exchange of documents and payment of the amount due under
Article III, Section D(1) shall constitute acceptance of the
Aircraft by BUYER. Upon BUYER'S acceptance, title to the
Aircraft shall pass from SELLER to BUYER and such acceptance
shall be conclusive as to the Aircraft's compliance with the
terms of this Agreement.
F. Failure of BUYER to Accept Aircraft at Delivery Time
____________________________________________________
If BUYER does not meet its obligation to accept the Aircraft
at the Delivery Time, any unpaid balance of the Purchase Price
shall become due and payable immediately, and SELLER may impose
reasonable charges for storage of the Aircraft.
G. Failuree of BUYER to Accept Aircraft Subsequent to Delivery Time
________________________________________________________________
If BUYER does not accept the Aircraft at the Delivery Time, as
signified by its failure to pay the balance of the Purchase Price
due under Article III, Section A, SELLER may at its election
terminate this Agreement and sell the Aircraft to another person.
If SELLER sells the Aircraft under this Section G, it shall
retain any amounts received from such sale of right, and SELLER
may retain any amounts received from BUYER under this Agreement
as liquidated damages in full. No part of such amounts shall
constitute a penalty.
2
<PAGE>
ARTICLE III
PURCHASE PRICE AND PAYMENT TERMS
Section A
Basic Purchase Price: SIX MILLION FOUR HUNDRED THOUSAND U.S.
DOLLARS ($6,400,000.00)
Section B
Completion Price: TWO MILLION ONE HUNDRED THOUSAND U.S.
DOLLARS ($2,100,000.00)
Section C
The Total Purchase Price shall be the sum of the Basic
Purchase Price plus the Completion Price.
Section D
The Total Purchase Price shall be paid in accordance with the
following schedule:
(1) a payment of SEVEN MILLION U.S. DOLLARS ($7,000,000.00),
less $100,000.00 previously received, shall be due and payable
after satisfactory prepurchase inspection and functional
flight check (which shall also be the Delivery Time).
(2) a second payment of FIVE HUNDRED THOUSAND U.S. DOLLARS
($500,000.00) shall be due and payable upon tender of the
Aircraft at Long Beach for refurbishment of the interior .
(3) a third payment of FIVE HUNDRED THOUSAND U.S. DOLLARS
($500,000.00) shall be due and payable when BUYER is notified
by SELLER that the Aircraft is 50% through the refurbishment
of the interior.
(4) a final payment of FIVE HUNDRED THOUSAND U.S. DOLLARS
($500,000.00), and the amount due pursuant to all Work Change
Requests, shall be due and payable upon completion of the
refurbishment of the interior.
E. Form of Payment
_______________
The Purchase Price shall be paid at Savannah, Georgia in
United States Dollars in cash by check, or by bank transfer to a
bank specified by SELLER.
Time is of the essence in the payment of all obligations under
this Article III. All payments not received when due shall bear
interest at two (2) percentage points above the prime rate
charged by the Chemical Bank, New York, New York, on the date
due, provided such interest rate shall not exceed the maximum
rate permitted by law.
F. Taxes
_____
BUYER indemnifies and holds SELLER harmless from the payment
or assessment of any tax other than taxes on income, related
penalties and attorney's fees, including all duties, imposts,
tariffs or other similar levies applicable to the sale, or to the
use or transportation of the Aircraft after acceptance by BUYER.
3
<PAGE>
ARTICLE IV
WARRANTIES - GENERAL
A. Title, Liens and Encumbrances
_____________________________
SELLER warrants that it has good title to the Aircraft, the
right to sell the Aircraft, and that the Aircraft is free and
clear of all liens, charges and encumbrances.
B. Condition of Aircraft
_____________________
SELLER has inspected the Aircraft and warrants that it is in
an airworthy condition. SELLER has no knowledge of defects in
the Aircraft.
ARTICLE V
DISCLAIMER OF OTHER WARRANTIES
ALL OTHER WARRANTIES WHETHER EXPRESS, IMPLIED, OR STATUTORY,
SUCH AS WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE ARE HEREBY EXCLUDED AND DISCLAIMED TO THE EXTENT THAT
THEY EXCEED THE WARRANTIES PROVIDED UNDER ARTICLE IV OF THIS
AGREEMENT, WHICH WARRANTIES COMPRISE SELLER'S ENTIRE
RESPONSIBILITY WITH RESPECT TO ANY FAILURE OR DEFECT IN THE
AIRCRAFT TO THE EXCLUSION OF ALL OTHER LIABILITY IN TORT (WHETHER
FOR SELLER'S OWN NEGLIGENCE OR OTHERWISE, INCLUDING CLAIMS OF
SELLER'S NEGLIGENCE IN INSPECTION OR REPAIR OF THE AIRCRAFT AT
ANY TIME PRIOR TO THE DELIVERY TIME AS DEFINED HEREIN) OR IN
CONTRACT, INCLUDING ANY LIABILITY OF SELLER WITH RESPECT TO
INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF USE.
BUYER FURTHER ACKNOWLEDGES THAT THIS AIRCRAFT IS BEING ACCEPTED
"AS IS" WITHOUT ANY WARRANTIES EXCEPT FOR THOSE WARRANTIES IN
ARTICLE IV.
ARTICLE VI
INDEMNIFICATIONS WITH RESPECT TO CASUALTY LOSSES
A. Damage to or Loss of Aircraft
_____________________________
(1) SELLER shall bear all risk of damage to or loss of the
Aircraft prior to the Delivery Time.
(2) BUYER shall bear all risk of damage to or loss of the
Aircraft after the Delivery Time whether BUYER accepts
the Aircraft or does not meet its obligation to accept
the Aircraft under Section E of Article II.
B. Return to SELLER'S Custody
__________________________
If after acceptance of the Aircraft, the Aircraft remains in,
or is returned to SELLER'S care, custody, or control for any
purpose, BUYER shall defend, indemnify, and save SELLER harmless
from any loss, damage or liability for damage to or loss of the
Aircraft while in flight arising out of or by reason of any such
care, custody, or control.
4
<PAGE>
ARTICLE VII
SELLER SUPPLIED SERVICES, MATERIALS, AND DATA
A. Aviation Fuel
_____________
SELLER will provide the aviation fuel and oil required to
conduct such delivery, test flights and training flights as are
necessary. BUYER will pay for such aviation fuel and oil at
current prices.
ARTICLE VIII
MISCELLANEOUS
A. Notice
______
Any notice given under this Agreement shall be sent by
registered mail, certified mail or telecopy to the recipient
Party at the address shown above. A notice shall be deemed given
when received.
B. Scope of Agreement
__________________
The terms and conditions contained in this Agreement
constitute the entire Agreement between the Parties with respect
to the purchase and sale of the Aircraft and shall supersede all
communications, representations, or agreements, either oral or
written between the Parties.
C. Modification of Agreement
_________________________
This Agreement may not be changed or modified except by an
instrument in writing executed subsequent to the date hereof by
authorized representatives of both Parties.
D. Section Headings
________________
Section headings used herein are merely descriptive and used
for convenience only. No amplification or limitation of language
contained in a particular section shall be implied from the
section heading thereof.
E. Assignment
__________
This Agreement shall inure to the benefit of and be binding
upon the Parties and their respective successors and assigns, but
this Agreement may not be voluntarily assigned in whole or in
part by BUYER without the prior written consent of SELLER, which
consent shall not be unreasonably withheld.
F. Governing Law and Forum
_______________________
This Agreement shall be construed and interpreted in
accordance with the laws and in the courts of the State of
Georgia.
G. Arbitration
___________
Any controversy or claim between the parties arising out of or
relating to this Agreement, or the breach thereof, shall be
settled by arbitration in Savannah, Georgia by three (3)
arbitrators under the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") and administered by the
AAA. Each party shall appoint one (1) arbitrator. The two (2)
arbitrators thus appointed shall choose the third arbitrator, who
shall act as chairman. If within thirty (30) days after the
receipt of a party's notification of the appointment of its
arbitrator the other party has not notified the first party of
the arbitrator he has appointed, the first party may request the
AAA to appoint the second arbitrator. If within thirty (30) days
after the appointment of the second arbitrator the two
arbitrators have not agreed on the choice of the third
arbitrator, either party may request the AAA to appoint the third
arbitrator from the panel of the AAA pursuant to the Rule 15 of
the Commercial Arbitration Rules of the AAA. Any award issued
under this Section shall be entitled to enforcement in any court
having jurisdiction.
5
<PAGE>
H. Refurbishment
_____________
The Total Purchase Price of this aircraft includes a new
manufactured interior for Serial Number 311 to be completed by
our Gulfstream Long Beach facility. Refurbishment on this
aircraft will begin after title passage on or about March 31,
1994. The refurbishment will be done in accordance with the
attached Gulfstream III Refurbishment Agreement Specification #
LB0149 and BUYER will be entitled to the inspection rights and
warranty provisions (with respect to the refurbishment) as and
only as set forth in the attachment.
I. Gross Weight Increase
_____________________
After transfer of title, ASC 70 (Gross Weight Increase) shall
be accomplished on this aircraft during the interior
refurbishment at our Gulfstream, Long Beach facility.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be signed by their duly authorized representatives as of the date
first written above.
GULFSTREAM AEROSPACE CORPORATION GOLDEN NUGGET AVIATION CORP.
________________________________ ____________________________
(SELLER) (BUYER)
BY: C. RICHARD BEINE BY: ROBERT HECHT
_______________________ _____________________________
TITLE: Regional Vice President TITLE: Director of Flight Operations
6
<PAGE>
ATTACHMENT A
____________
GULFSTREAM III, S/N 311
_______________________
STATUS AS OF JANUARY 11, 1994
_____________________________
Total Time on Aircraft 4718 Hours
Total Cycles 1881 Landings
Year of Manufacture 1980
ENGINES LEFT RIGHT 7000 Hr. TBO
_______ ____ _____
Serial Number 11025 11026
Time Since New 4601 Hours 4602 Hours
Time Since Midlife 409 Hours 317 Hours
Time to Overhaul 2499 Hours 2498 Hours
10 Year Inspection Due Oct 2000 Oct 2000
APU PART NUMBER - GTC-36-100
APU SERIAL NUMBER - P-105
Time Since New - 4821 Hours
Time Since Overhaul - 2756 Hours
Time Since Hot Section - 1373 Hours
72 Month Inspection Due September 1998
Wing & Vertical Tail Inspections Complete
EXTERIOR
________
Painted January 1991
White with Light Blue and Gold Stripe
7
<PAGE>
GIII, S/N 311
AVIONICS
________
Dual Honeywell FZ-500 Flight Director
Dual Collins 618-M VHF COMM
Dual Collins 51RV VHF NAV
Dual Collins 51Y7A ADF
Dual Collins 860-E DME
Dual Collins 621A Transponder
Dual Collins 718-U HF COMM
Collins 860-F Radio Altimeter
Collins 54W-1C Comparator
Collins VHF-20B Emergency Comm
Dual Litton LTN 72RL INS
Motorola NA-135 Selcal
Bendix RDR-1200 Color Radar
Bendix IU-2023B Check List
MISCELLANEOUS
_____________
Sundstrand GPWS Mark II Fairchild Cockpit Voice Recorder
Fairchild Cockpit Data Recorder D.T.I. Security System
Jet 823 Power Supply Dorne & Margolin ELT-6
Dual Rad-Bar Altimeters
8
<PAGE>
GULFSTREAM AEROSPACE CORPORATION
4150 Donald Douglas Drive
Long Beach, California 90808
Telephone (310) 420-1818 Telex: 656483
GULFSTREAM III REFURBISHMENT AGREEMENT
THIS AGREEMENT, made and entered into this 24 day of March,
1994, by and between GULFSTREAM AEROSPACE CORP., a California
corporation, having its principal place of business at Long Beach
Municipal Airport, Long Beach, California, and its mailing
address at 4150 Donald Douglas Drive, Long Beach, California
90808 (hereinafter "SELLER") and GOLDEN NUGGET AVIATION CORP.,
located at 241 E. Reno, Las Vegas, Nevada 89119.
WITNESSETH:
__________
WHEREAS, SELLER desires to undertake the refurbishment
(hereinafter the "Refurbishment") of BUYER'S Gulfstream III
Aircraft Serial Number 311 (hereinafter the "Aircraft"), and
BUYER desires to purchase, under the terms and conditions of this
agreement, (hereinafter the "Agreement") the Refurbishment
hereinafter described.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
SUBJECT MATTER OF SALE
SELLER will undertake to complete the Aircraft in accordance
with the attached document titled "Gulfstream Aerospace
Corporation Interior Refurbishment Specification for GOLDEN
NUGGET AVIATION CORP. GULFSTREAM III, SERIAL NUMBER 311, dated 25
February 1994", attached as Appendix A hereto.
To accomplish the Refurbishment in accordance with Appendix A
hereto, and meet the delivery Schedule as specified in Section
2.1 herein, the SELLER requires the following documents executed
by BUYER and SELLER no later than March 31, 1994.
(a) Refurbishment Specification (Appendix A);
(b) Interior Materials and Color Specification and Styling
drawings
(c) Galley Layout Drawings
The work specified in this Agreement may be changed by mutual
agreement of BUYER and SELLER. Such an agreement shall be in the
form of a Work Change Request attached and referred to herein as
Appendix B and will be signed by BUYER and SELLER prior to
initiating any work required by such change and shall include any
adjustment in price, weight and refurbishment inspection time, as
hereinafter defined, required by the change.
ARTICLE II
DELIVERY AND ACCEPTANCE
Section 2.1 Tender of Aircraft for Inspection
___________
SELLER shall tender the refurbished aircraft to BUYER for
inspection at a mutually agreed to location, twenty-two (22)
weeks after the Aircraft is inducted into the Gulfstream
Aerospace Completion Center, which will not be later than March
31, 1994.
<PAGE>
Section 2.2 Inspection and Correction of Discrepancies
___________
BUYER shall have the opportunity to inspect and/or flight test
the Aircraft. Upon correction of all discrepancies which may be
found, SELLER shall tender the Aircraft to BUYER at SELLER'S
plant at Long Beach Municipal Airport in Long Beach, California;
this shall be known as the "Refurbishment Acceptance Time".
At the Refurbishment Acceptance Time, BUYER shall remit the
balance of the Refurbishment Price, and all risk of loss for the
completed Aircraft shall pass to BUYER.
Section 2.3 Aviation Fuel
___________
SELLER will provide the aviation fuel and oil required to
complete the work specified herein and to conduct such ferry and
test flights as are necessary. BUYER will pay for such fuel and
oil at current prices as an additional item.
Section 2.4 Flight Crews
___________
At the request of BUYER, SELLER will furnish flight crews for
ferry/test flights. BUYER will pay SELLER'S reasonable charges
for such services including the crew's expenses and
transportation.
ARTICLE III
TECHNICAL DATA
Section 3.1
___________
The work hereunder will be performed in accordance with the
following documents:
(a) Refurbishment Specification (Appendix A)
(b) Work Change Requests (Appendix B)
(c) Applicable Interior, Furnishings, and Styling Drawings
(d) Interior Materials and Color Specifications
Section 3.2 Drawings and Other Data
___________
Upon completion of the work specified herein, SELLER will
supply BUYER with a complete set of electrical and radio diagrams
covering additions made by SELLER and a corrected copy of the
existing weight and balance report.
ARTICLE IV
WARRANTIES
Section 4.1 Warranty - General
___________
SELLER warrants that, with respect to the refurbishment, the
work performed under this agreement shall conform to the final
specifications, drawings, photos, and other descriptions agreed
to in writing and such work shall be free from defects in
material and workmanship. This warranty shall not extend to any
unit, instrument, component, accessory or part manufactured by a
person other than SELLER. SELLER shall endeavor to obtain the
best possible warranties from such persons in favor of BUYER.
This warranty shall remain in effect for a period of time ending
twelve (12) months after the Refurbishment Acceptance Time.
2
<PAGE>
ARTICLE V
EXCUSABLE DELAYS
SELLER will use its best efforts to complete the work by the
date promised in this Agreement. SELLER shall not be in default
hereunder or held liable for a delay in the completion of the
work due to any cause not reasonably within its control. Such
causes include, but are not limited to, acts of God, force
majeure; any act of government; delay in transportation; strikes
or labor trouble causing cessation, slow-down, or interruption of
work; or the inability after due and timely diligence of SELLER
to procure materials, accessories, equipment or parts necessary
to the completion of the work under this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Representation
___________
BUYER'S representatives shall have reasonable access to
SELLER'S facilities and the Aircraft while the work is being
performed. SELLER'S regulations concerning employees and
facilities will be observed by such representatives. SELLER will
designate a person for establishing liaison between BUYER'S
representatives and the Gulfstream Completion Center Vice
President and General Manager's Staff in matters pertaining to
the work to be performed under this Agreement.
Section 6.2 Work Performance Standards
___________
The work on the Aircraft as outlined in this Agreement and as
performed by SELLER will be in accordance with applicable
standards established by the Federal Aviation Administration
(hereinafter "FAA"). Proof of compliance will be submitted to
the FAA by SELLER as required. SELLER will transmit all
necessary FAA forms properly completed and approved to BUYER.
Further, the work will also be in accordance with standards
developed by SELLER'S Engineering Department. The general
design, the systems design, and the choice of construction,
fabrication and installation techniques are the sole
responsibility of SELLER.
Section 6.3 Labor and Material
___________
SELLER will perform all labor and furnish all material
necessary for the Refurbishment of the work specified herein
except as otherwise provided.
Section 6.4 Taxes
___________
California sales taxes are not considered to be applicable to
this sale and will not be invoiced to the BUYER for the following
reasons:
(a) Delivery to the BUYER, of the articles sold and/or
works performed hereunder, will be made to a location
to be determined at a later date.
(b) BUYER hereby certifies that the articles sold and/or
works performed in accomplishing the refurbishment
specified herein are purchased for use outside the
State of California.
3
<PAGE>
BUYER indemnifies and holds Gulfstream Aerospace Corporation
harmless from the payment or imposition of any tax imposed for
any articles sold or used hereunder and for any work performed
hereunder under the provisions of the California Sales and Use
Tax Act, or any other similar tax at the place of delivery, plus
any penalties or interest or attorney's fees connected with the
imposition of any such sales or use tax in connection with the
articles sold or used for the work performed hereunder.
Section 6.5 Federal Government Taxes
___________
BUYER indemnifies and holds SELLER harmless from the payment
or assessment of any Federal Government tax, related penalties
and attorney's fees, including all duties, imposed tariffs, or
other similar levies applicable to the sale, use, or
transportation of the articles sold or any work performed under
this Agreement, not including taxes on income.
Section 6.6 Collection of Taxes
___________
If SELLER is required to collect any tax under the
Refurbishment Agreement, and BUYER has not furnished appropriate
evidence of exemption, the amount thereof shall be added to the
price agreed upon for the work to be performed under this
Agreement.
Section 6.7 Transfer of Rights
__________
This Agreement shall inure to the benefit of and be binding
upon both SELLER, BUYER and their respective successors and
assigns including, specifically any person who acquires the
Aircraft from BUYER by purchase. BUYER will promptly give SELLER
notice of the identity of any successor or assign.
Section 6.8 Governing Law and Forum
___________
This Agreement shall be construed and interpreted in
accordance with the laws and in the courts of the State of New
York.
ARTICLE VIII
EXECUTION
NOW, THEREFORE, the parties hereto have caused this Agreement
to be executed by their duly authorized representative.
GULFSTREAM AEROSPACE CORPORATION GOLDEN NUGGET AVIATION CORP.
________________________________ ____________________________
(SELLER) (BUYER)
BY: C. RICHARD BEINE BY: ROBERT A. HECHT
_______________________ _____________________________
ITS: Regional Vice President ITS: Director of Flight Operations
DATE: 24 March 1994 DATE: March 24, 1994
_______________________ _____________________________
4
EXHIBIT 11
MIRAGE RESORTS, INCORPORATED
COMPUTATION OF NET INCOME PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
FOR THE THREE-MONTH
PERIOD ENDED
MARCH 31,
___________________________
1994 1993
___________________________
<S> <C> <C>
Weighted-average shares outstanding 90,725,215 75,048,523
Assumed exercise of options at
average market price 7,008,087 4,664,577
__________ __________
Weighted-average shares outstanding
and common stock equivalents
used in the computation of
primary earnings per share 97,733,302 79,713,100
Additional shares issuable upon
the assumed exercise of options
at period-end market price - 4,948
__________ _________
Total shares outstanding assuming
full dilution 97,733,302 79,718,048
========== ==========
Net income $23,348,000 $9,590,000
=========== ==========
Primary earnings per share $0.24 $0.12
===== =====
Fully diluted earnings per share $0.24 $0.12
===== =====
</TABLE>
EXHIBIT 15
May 11, 1994
To Mirage Resorts, Incorporated:
We are aware that Mirage Resorts, Incorporated has
incorporated by reference in its Registration Statements on
Form S-3 (File No. 2-87138), on Form S-3 (File No. 2-92051), on
Form S-3 (File No. 2-96534), on Form S-3 (File No. 33-5693), on
Form S-8 (File No. 33-16037), on Form S-3 (File No. 33-16572),
on Form S-8 (File No. 33-48394), on Form S-8 (File
No. 33-63804), and on Form S-3 (File No. 33-50559) its Form
10-Q for the quarter ended March 31, 1994, which includes our
report dated May 11, 1994 covering the unaudited interim
financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is
not considered a part of these registration statements or a
report prepared or certified by our firm within the meaning
of Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN & CO.
