UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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
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(Exact name of Registrant as specified in its charter)
Nevada 88-0058016
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
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(Address of principal executive offices - Zip Code)
(702) 791-7111
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(Registrant's telephone number, including area code)
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(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,
$0.004 par value, 183,477,238 shares outstanding as of August 9, 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial information as of
June 30, 1996 and for the three-month and six-month periods ended
June 30, 1996 and 1995 included in this report was reviewed by
Arthur Andersen LLP, 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
We have reviewed the accompanying condensed consolidated balance
sheet of Mirage Resorts, Incorporated (a Nevada corporation) and
subsidiaries (the "Company") as of June 30, 1996, and the related
condensed consolidated statements of income for the three-month and
six-month periods ended June 30, 1996 and 1995 and the related
condensed consolidated statements of cash flows for the six-month
periods ended June 30, 1996 and 1995. These consolidated financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the financial statements referred to above
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Mirage
Resorts, Incorporated and subsidiaries as of December 31, 1995, and
the related consolidated statements of income, stockholders' equity
and cash flows for the year then ended (not presented herein), and,
in our report dated February 9, 1996, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet of Mirage Resorts, Incorporated and
subsidiaries as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
August 7, 1996
-2-
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
BALANCE SHEETS
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AT JUNE 30, At December 31,
1996 1995
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(In thousands) (UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 48,450 $ 48,026
Receivables, net of allowance for doubtful
accounts of $56,169 and $47,161 74,683 76,859
Inventories 25,491 25,601
Deferred income taxes 25,222 42,553
Prepaid expenses and other 19,143 21,777
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Total current assets 192,989 214,816
Property and equipment, net of accumulated
depreciation of $514,332 and $473,801 1,501,615 1,439,517
Other assets, net 146,715 137,380
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$1,841,319 $1,791,713
==========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 67,721 $ 84,831
Accrued expenses 83,321 89,005
Current maturities of long-term debt 401 515
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Total current liabilities 151,443 174,351
Long-term debt, net of current maturities 212,476 248,548
Other liabilities, including deferred income taxes
of $137,386 and $148,615 148,318 159,471
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Total liabilities 512,237 582,370
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Commitments and contingencies
Stockholders' equity
Common stock: 184,627 and 183,342 shares outstanding 940 940
Additional paid-in capital and other 721,733 710,816
Retained earnings 755,356 650,170
Treasury stock, at cost: 50,521 and 51,806 shares (148,947) (152,583)
- ------------------------------------------------------------------------------------------
Total stockholders' equity 1,329,082 1,209,343
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$1,841,319 $1,791,713
==========================================================================================
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-3-
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
STATEMENTS OF INCOME (UNAUDITED)
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Three Months Six Months
---------------------- --------------------
For the periods ended June 30 1996 1995 1996 1995
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(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross revenues $343,183 $326,699 $751,851 $710,112
Less - promotional allowances (30,531) (27,569) (64,991) (58,044)
- ---------------------------------------------------------------------------------------------------------
312,652 299,130 686,860 652,068
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Costs and expenses
Casino-hotel operations 187,548 180,412 395,800 380,511
General and administrative 37,484 37,666 75,474 75,476
Depreciation and amortization 22,223 21,251 44,366 42,292
Corporate expense 6,079 9,484 13,778 17,915
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253,334 248,813 529,418 516,194
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Operating income 59,318 50,317 157,442 135,874
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Other income and (expenses)
Interest and other income 5,231 304 5,693 3,165
Interest cost (6,501) (8,445) (13,221) (18,042)
Interest capitalized 5,905 2,118 9,929 4,477
Other (890) 230 5,725 240
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3,745 (5,793) 8,126 (10,160)
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Income before income taxes and extraordinary item 63,063 44,524 165,568 125,714
Provision for income taxes (22,464) (15,906) (60,382) (45,435)
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Income before extraordinary item 40,599 28,618 105,186 80,279
Extraordinary item - loss on early retirement
of debt, net of applicable income tax benefit - - - (6,785)
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Net income $ 40,599 $ 28,618 $105,186 $ 73,494
=========================================================================================================
Income per share of common stock
Income before extraordinary item $ 0.21 $ 0.15 $ 0.54 $ 0.42
Extraordinary item - loss on early retirement
of debt, net of applicable income tax benefit - - - (0.04)
- ---------------------------------------------------------------------------------------------------------
Net income per share of common stock $ 0.21 $ 0.15 $ 0.54 $ 0.38
=========================================================================================================
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-4-
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
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Six months ended June 30 1996 1995
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(In thousands)
<S> <C> <C>
Cash flows from operating activities
Net income $ 105,186 $ 73,494
Adjustments to reconcile net income to net cash provided by
operating activities
Provision for losses on receivables 9,860 11,371
Depreciation and amortization of property and equipment,
including amounts reported as corporate expense 47,291 44,330
Gain on sale of investment in Casino Iguazu (8,006) -
Gain on sale of other equity investments (4,547) (2,488)
Equity in loss of Monte Carlo 5,168 -
Amortization of debt discount and issuance costs 7,070 6,412
Loss on early retirement of debt - 10,439
Deferred income taxes 6,102 21,019
Changes in assets and liabilities
Increase in receivables and other current assets (4,940) (2,106)
Decrease in trade accounts payable and accrued expenses (31,234) (15,231)
Other (5,402) 298
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Net cash provided by operating activities 126,548 147,538
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Cash flows from investing activities
Capital expenditures (113,607) (60,538)
Joint venture and other equity investments (23,513) (19,167)
Proceeds from sale of investment in Casino Iguazu 12,500 -
Proceeds from sale of other equity investments 18,127 5,518
Other 8,353 (8,856)
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Net cash used for investing activities (98,140) (83,043)
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Cash flows from financing activities
Net increase (decrease) in bank credit facility and
commercial paper borrowings (41,882) 72,700
Early retirement of public debt - (134,180)
Other reductions in debt (141) (15,729)
Exercise of common stock options, including related income tax benefit 14,227 2,034
Other (188) (2,504)
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Net cash used for financing activities (27,984) (77,679)
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Cash and cash equivalents
Increase (decrease) for the period 424 (13,184)
Balance, beginning of period 48,026 47,142
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Balance, end of period $ 48,450 $ 33,958
=====================================================================================================
Supplemental cash flow disclosures
Cash paid during the period for
Interest, net of amounts capitalized $ - $ 10,576
Income taxes 55,000 22,500
Contribution of land in exchange for partnership interest - 23,170
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</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-5-
<PAGE>
NOTES TO CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1 - BASIS OF PRESENTATION
Mirage Resorts, Incorporated (the "Company") owns and operates
some of the most successful casino-based entertainment resorts in
the world. These resorts 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. The Company
is also a 50% partner in a joint venture that owns and operates
the new Monte Carlo Resort & Casino ("Monte Carlo") on the Las
Vegas Strip.
The Company is currently constructing two additional wholly owned
hotel-casino resorts. The more significant of these is Bellagio,
a major 3,000-guest room luxury resort scheduled to be completed
in the second quarter of 1998 on approximately 120 acres adjacent
to Monte Carlo. In July 1996, the Company began construction of
Beau Rivage, a luxurious 1,800-guest room resort in Biloxi,
Mississippi scheduled to be completed in the first quarter of
1998.
The condensed consolidated financial statements have been
prepared in accordance with the accounting policies described in
the Company's 1995 Annual Report on Form 10-K 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, 1995 contained herein
was derived from audited financial statements, but does not
include all disclosures contained in the Form 10-K and applicable
under 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 1995 condensed consolidated financial
statements have been reclassified to conform with the 1996
presentation. These reclassifications had no effect on the
Company's net income.
-6-
<PAGE>
NOTE 2 - MONTE CARLO
Monte Carlo, a 3,014-guest room mid-priced hotel-casino resort,
opened on June 21, 1996. The Company's joint venture partner,
Circus Circus Enterprises, Inc., supervised the construction of
Monte Carlo and is managing the resort without fee. During its
initial 10 days of operations, Monte Carlo reported gross
revenues of $9.0 million and operating profit before preopening
costs of $1.2 million. After a one-time charge for preopening
costs of $11.2 million, Monte Carlo's operating loss and net loss
for the period were $10.0 million and $10.3 million,
respectively. The Company's $5.2 million share of Monte Carlo's
net loss is included in "Gross revenues" for the three-month and
six-month periods ended June 30, 1996.
NOTE 3 - STOCK SPLIT
On May 23, 1996, the Board of Directors declared a two-for-one
split of the Company's common stock. The additional shares were
distributed on July 1, 1996 to holders of record on June 17,
1996. Except as otherwise noted, all references to share and per
share data herein have been adjusted retroactively to give effect
to the stock split.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS
ENDED JUNE 30, 1996 AND 1995
RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
% Increase
Three months ended June 30 1996 1995 (Decrease)
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(Dollars in thousands, except per share and room rate amounts)
<S> <C> <C> <C>
Gross revenues
The Mirage $178,381 $166,550 7.1%
Treasure Island 100,379 96,666 3.8%
Golden Nugget 54,628 47,416 15.2%
Golden Nugget-Laughlin 14,963 16,067 (6.9)%
- -------------------------------------------------------------------------------------------------
348,351 326,699 6.6%
Equity in loss of Monte Carlo (5,168) - -
- -------------------------------------------------------------------------------------------------
$343,183 $326,699 5.0%
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Net revenues
The Mirage $161,195 $151,304 6.5%
Treasure Island 93,202 89,974 3.6%
Golden Nugget 49,978 43,298 15.4%
Golden Nugget-Laughlin 13,445 14,554 (7.6)%
- -------------------------------------------------------------------------------------------------
317,820 299,130 6.2%
Equity in loss of Monte Carlo (5,168) - -
- -------------------------------------------------------------------------------------------------
$312,652 $299,130 4.5%
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Operating profit
The Mirage $ 35,442 $ 29,119 21.7%
Treasure Island 22,510 21,317 5.6%
Golden Nugget 11,100 7,092 56.5%
Golden Nugget-Laughlin 1,513 2,273 (33.4)%
- -------------------------------------------------------------------------------------------------
70,565 59,801 18.0%
Equity in loss of Monte Carlo (5,168) - -
Corporate expense (6,079) (9,484) (35.9)%
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$ 59,318 $ 50,317 17.9%
- -------------------------------------------------------------------------------------------------
Operating margin (operating profit/net revenues)
The Mirage 22.0% 19.2% 2.8pts
Treasure Island 24.2% 23.7% 0.5pts
Golden Nugget 22.2% 16.4% 5.8pts
Golden Nugget-Laughlin 11.3% 15.6% (4.3)pts
Company-wide (before Monte Carlo and corporate expense) 22.2% 20.0% 2.2pts
- -------------------------------------------------------------------------------------------------
Net income $ 40,599 $ 28,618 41.9%
Net income per share $ 0.21 $ 0.15 40.0%
- -------------------------------------------------------------------------------------------------
Other information (excluding Monte Carlo)
Company-wide table games win percentage 16.0% 17.6% (1.6)pts
Company-wide occupancy of standard guest rooms 99.6% 98.8% 0.8pts
Average standard guest room rate (a) $ 91 $ 80 13.8%
- -------------------------------------------------------------------------------------------------
(a) Cash rate at the Company's Las Vegas hotels.
</TABLE>
-8-
<PAGE>
The 1996 second quarter was the Company's tenth consecutive
quarter of positive year-to-year earnings comparisons. Net
income of $0.21 per share represents a 40% increase over the
$0.15 per share reported in the 1995 second quarter.
Operating profit before Monte Carlo and corporate expense rose
18%, despite the lowest overall quarterly table games win
percentage since The Mirage opened in 1989. The Company-wide
table games win percentage was 16.0%, versus 17.6% in the prior-
year quarter. By comparison, the Company-wide table games win
percentage for the full years 1995 and 1994 was 20.2% and 18.8%,
respectively. Meanwhile, the average standard guest room rate at
the Company's Las Vegas hotels rose 13.8%.
The Mirage achieved a 22% increase in operating income, despite
being particularly impacted by the low table games win
percentage. The increase is primarily attributable to the guest
room enhancement program which caused a large number of out-of-
service guest rooms in the prior-year period. This $50 million
program was completed in August 1995 and substantially upgraded
the quality of The Mirage's standard guest rooms. The
enhancement program resulted in 22% more available room nights
during the current-year quarter and enabled The Mirage to achieve
a significant increase in its average room rate. Even with the
additional room inventory, occupancy of standard guest rooms
remained at near 100%. Taken together, these factors resulted in
a $6.9 million, or 30%, increase in net room revenues. In total,
The Mirage's net non-casino revenues grew by $11.3 million, or
17%, over the prior-year quarter.
The Mirage's casino also benefited from the completion of the
room enhancement program. Slot revenues were up 7% and table
games activity grew by 9%. The increase in table games activity
was offset by the swing in the win percentage.
Treasure Island continued its consistent record of year-to-year
quarterly growth. Net revenues at the resort rose 4% and
operating income increased 6%. This improvement reflects a 7%
increase in net non-casino revenues. Most notably, room revenues
grew by 11% due primarily to increases in room rates. Standard
guest room occupancy was near 100% during both the 1996 and 1995
second quarters. Casino revenues were essentially flat, with a
6% decrease in slot revenues offsetting a composite 6% increase
in table games, keno and race and sports book revenues.
Results at the Golden Nugget continued to show strong improvement
following the December 1995 opening of the neighboring Fremont
Street Experience. Net revenues rose 15% and operating income
was up 57% over the 1995 second quarter. Casino revenues
increased $3.8 million, or 14%, mostly due to growth in table
games and slot revenues. Table games activity and slot volume
were up 4% and 7%, respectively. An improvement in the win
percentage complemented the growth in table games drop.
-9-
<PAGE>
The Golden Nugget's non-casino revenues also showed significant
growth. Similar to The Mirage and Treasure Island, room revenues
contributed greatly to the improvement. Increases in both
occupancy and the average room rate led to a $1.7 million, or
21%, increase in net room revenues. Net food and beverage
revenues grew by 20%. In total, the Golden Nugget's net non-
casino revenues increased by $2.8 million, or 18%, over the
prior-year period.
The Company's small Golden Nugget resort in Laughlin continued to
experience difficult market conditions. Room revenues increased
slightly over the 1995 quarter. However, a decline in table
games and slot revenues led to a decrease in casino revenues and
a 4.3 percentage point decline in the facility's operating
margin. Physical changes being made to enhance the property may
have also adversely affected operations during the recent
quarter.
Monte Carlo, the Company's joint venture hotel-casino with Circus
Circus Enterprises, Inc. ("Circus"), opened June 21 on the Las
Vegas Strip. For the 10-day period of operations in the 1996
second quarter, this new mid-priced resort reported $9.0 million
in total revenues and $1.2 million in operating profit before the
write-off of preopening costs. These results were achieved
despite what management believes is a lower than normal table
games win percentage and notwithstanding the inefficiencies
inherent in any new property's first few weeks of operation. Net
of the write-off of all $11.2 million in preopening costs, Monte
Carlo had a $10.3 million net loss for the period. From opening
to July 31, Monte Carlo experienced 97% occupancy of its
available guest rooms at a $66 average room rate.
Because Monte Carlo is a 50% owned venture, its operating results
are not consolidated with the Company's. Instead, the Company's
$5.2 million share of Monte Carlo's net loss for the 10-day
period is included in Gross revenues in the accompanying
Condensed Consolidated Statements of Income.
OTHER FACTORS AFFECTING EARNINGS
Corporate expense declined by 36%, as management concentrated on
developing resorts in existing gaming jurisdictions rather than
pursuing opportunities in potential new jurisdictions. Interest
and other income during the 1996 second quarter includes a $4.5
million gain on the sale of investment securities.
Net interest expense declined sharply from the prior-year
quarter. This decline reflects a continued reduction in debt
levels coupled with an increase in capitalized interest, as
greater amounts are being invested in new projects.
-10-
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
% Increase
Six months ended June 30 1996 1995 (Decrease)
- ---------------------------------------------------------------------------------------------
(Dollars in thousands, except per share and room rate amounts)
<S> <C> <C> <C>
Gross revenues
The Mirage $405,619 $382,105 6.2%
Treasure Island 205,388 194,925 5.4%
Golden Nugget 114,309 100,113 14.2%
Golden Nugget-Laughlin 31,703 32,969 (3.8)%
- ---------------------------------------------------------------------------------------------
757,019 710,112 6.6%
Equity in loss of Monte Carlo (5,168) - -
- ---------------------------------------------------------------------------------------------
$751,851 $710,112 5.9%
- ---------------------------------------------------------------------------------------------
Net revenues
The Mirage $368,682 $349,448 5.5%
Treasure Island 190,161 181,421 4.8%
Golden Nugget 104,646 91,308 14.6%
Golden Nugget-Laughlin 28,539 29,891 (4.5)%
- ---------------------------------------------------------------------------------------------
692,028 652,068 6.1%
Equity in loss of Monte Carlo (5,168) - -
- ---------------------------------------------------------------------------------------------
$686,860 $652,068 5.3%
- ---------------------------------------------------------------------------------------------
Operating profit
The Mirage $ 98,254 $ 87,994 11.7%
Treasure Island 48,394 43,970 10.1%
Golden Nugget 25,561 16,978 50.6%
Golden Nugget-Laughlin 4,179 4,847 (13.8)%
- ---------------------------------------------------------------------------------------------
176,388 153,789 14.7%
Equity in loss of Monte Carlo (5,168) - -
Corporate expense (13,778) (17,915) (23.1)%
- ---------------------------------------------------------------------------------------------
$157,442 $135,874 15.9%
- ---------------------------------------------------------------------------------------------
Operating margin (operating profit/net revenues)
The Mirage 26.7% 25.2% 1.5pts
Treasure Island 25.4% 24.2% 1.2pts
Golden Nugget 24.4% 18.6% 5.8pts
Golden Nugget-Laughlin 14.6% 16.2% (1.6)pts
Company-wide (before Monte Carlo and corporate expense) 25.5% 23.6% 1.9pts
- ---------------------------------------------------------------------------------------------
Income before extraordinary item $105,186 $ 80,279 31.0%
Net income $105,186 $ 73,494 43.1%
- ---------------------------------------------------------------------------------------------
Income per share before extraordinary item $ 0.54 $ 0.42 28.6%
Net income per share $ 0.54 $ 0.38 42.1%
- ---------------------------------------------------------------------------------------------
Other information (excluding Monte Carlo)
Company-wide table games win percentage 19.0% 20.2% (1.2)pts
Company-wide occupancy of standard guest rooms 99.5% 98.6% 0.9pts
Average standard guest room rate (a) $ 92 $ 79 16.5%
- ---------------------------------------------------------------------------------------------
(a) Cash rate at the Company's Las Vegas hotels.
</TABLE>
-11-
<PAGE>
The first half of 1996 set new records for the Company.
Revenues, operating income and income before non-recurring items
were all records for the first six months of any year in the
Company's history, surpassing previous records set in the first
six months of 1995. Operating profit before Monte Carlo and
corporate expense grew by $22.6 million, or 15%, and earnings per
share of $0.54 represents a 29% increase over the $0.42 before
extraordinary item in the 1995 six-month period.
Operating results at the Company's Las Vegas resorts were up
strongly over the 1995 period. The Mirage overcame a decline in
the table games win percentage to achieve increases of 6% in net
revenues and 12% in operating income. The room enhancement
program yielded strong returns throughout the first half of 1996.
With 14% more available room nights and a 16% increase in the
average standard room rate, net room revenues grew by $12.2
million, or 26%. Food and beverage, entertainment and retail
revenues also experienced solid increases. In total, net non-
casino revenues were up $20.1 million, or 15%, over the 1995 six-
month period.
Slot revenues at The Mirage increased by 6% and table games
activity grew by 5%. The improvement in table games activity,
however, was offset by the lower win percentage, resulting in a
small decline in total casino revenues.
Treasure Island achieved a 5% increase in net revenues and a 10%
increase in operating income during the first half of 1996.
These increases primarily reflect an $8.1 million, or 8%,
improvement in net non-casino revenues. Casino revenues were
relatively flat compared with the 1995 period. Net non-casino
revenues showed improvement in virtually every category. In
particular, room revenues grew by $5.1 million, or 13%, and
entertainment revenues were up $1.3 million, or 7%. The growth
in room revenues principally reflects an increase in the average
standard room rate. Increases in both occupancy and the average
ticket price for the Mystere show primarily account for the
increase in entertainment revenues.
The Fremont Street Experience had a significant positive impact
on the Golden Nugget's operating results throughout the first
half of 1996. Net revenues grew by 15% and operating income was
up 51%. The growth in revenues reflects increases of $7.7
million, or 13%, in casino revenues and $5.6 million, or 17%, in
net non-casino revenues. Slot revenues were up 12%. Table games
benefited from an increase in activity and a more favorable win
percentage, resulting in a 15% increase in revenues.
Net room revenues at the Golden Nugget grew by $3.7 million, or
22%, attributable to increases in both occupancy and the average
room rate. Occupancy of available standard guest rooms was
98.9%, versus 96.6% in the 1995 six-month period. Food and
beverage revenues increased $1.7 million, or 16%, accounting for
most of the remaining increase in net non-casino revenues.
-12-
<PAGE>
Weak market conditions hampered operating results at the Golden
Nugget-Laughlin during the first half of 1996. A $1.1 million
decrease in slot revenues led to a 5% decline in total net
revenues and a 14% reduction in operating income.
The Company's 50% share of Monte Carlo's initial operating
results discussed previously is also included in Gross revenues
for the 1996 six-month period.
OTHER FACTORS AFFECTING EARNINGS
The factors discussed previously in comparing the three-month
periods had a similar effect on corporate expense, interest and
other income and net interest expense when comparing the six-
month periods. Interest and other income during the 1995 six-
month period also includes a gain from the sale of equity
securities of $2.5 million. At June 30, 1996, there were no
securities remaining in the Company's investment portfolio.
In February 1996, the Company sold its 50% equity interest in a
small casino located near Iguazu Falls, Argentina. The casino
opened in July 1994 with a total investment by the Company of
$4.0 million. Although the casino was quite profitable,
contributing $1.4 million (on a pre-tax basis) to the Company's
1995 annual operating results, management determined that the
facility was not capable of being expanded into a resort of
meaningful size to the Company. Consequently, the Company's
interest was sold for $12.5 million in cash, resulting in a pre-
tax gain of $8.0 million. Such gain is included in the "Other"
caption in the Condensed Consolidated Statement of Income for the
1996 six-month period.
In March 1995, the Company called for redemption the remaining
$126.0 million principal amount of the 9 7/8% first mortgage
notes associated with The Mirage and Treasure Island. Although
this early retirement was financially advantageous to the
Company, the call premium and the write-off of the related
unamortized debt issuance costs resulted in an extraordinary
charge of $6.8 million ($0.04 per share) during the 1995 six-
month period.
CAPITAL RESOURCES, CAPITAL SPENDING AND LIQUIDITY
During the first half of both 1996 and 1995, cash flow from
operations was the Company's principal source of funds for
capital expenditures, investments, debt repayments and other
corporate requirements.
-13-
<PAGE>
Cash provided by operating activities (as shown in the
accompanying Condensed Consolidated Statements of Cash Flows) was
$126.5 million, versus $147.5 million in the 1995 six-month
period. This reflects an additional $16.0 million of the
Company's operating cash flow that was used during the 1996
period to reduce trade accounts payable and accrued expenses.
Additionally, cash payments for income taxes represented a higher
percentage of the Company's tax provision during the first half
of 1996 than in 1995, due to the normal reversal of temporary
book/tax differences relating to the aging of property and
equipment and the exhaustion of the Company's alternative minimum
tax credit.
The Monte Carlo joint venture has a $200 million bank credit
facility, which is non-recourse to both the Company and Circus,
that was used to fund a substantial portion of the resort's
construction costs. At June 30, 1996, a total of $189.8 million
had been drawn and was outstanding under the facility. Because
of its non-recourse nature, the joint venture bank facility is
more expensive and has more onerous amortization requirements
than the Company's bank facility. Hence, for at least the next
few years, management anticipates that most and perhaps all of
Monte Carlo's available cash flow will be used to repay the
joint venture bank facility.
Capital expenditures during the first half of 1996 totaled $113.6
million. Of this amount, $55.2 million, including capitalized
interest of $5.9 million, was associated with the construction of
Bellagio. Capital expenditures also include approximately $13
million for the acquisition of land in the Las Vegas area for
potential future development. The remaining expenditures
primarily represent capital spending for various maintenance and
enhancement projects at the Company's four wholly owned resorts.
These included upgrading the special effects at the volcano
attraction at The Mirage and construction of an exhibit at the
back of the resort that will allow guests to view the beautiful
exotic animals of Siegfried & Roy. The volcano enhancements were
completed in May and the animal exhibit is scheduled to be
completed in the third quarter. Capital expenditures do not
include amounts related to the construction of Monte Carlo, as
the resort was constructed by the 50%-owned unconsolidated joint
venture. Subsequent to the end of the quarter, the Company
expended an additional approximately $6 million for land in the
Las Vegas area and $8 million for land in the Boardwalk area of
Atlantic City, in both cases adjacent to other land owned by the
Company.
The level of capital spending is increasing significantly with
the ongoing construction of Bellagio and Beau Rivage. Bellagio
is currently expected to cost approximately $1.1 billion
(excluding land and capitalized interest) and is scheduled to
open in the second quarter of 1998. At June 30, 1996, the
Company had incurred approximately $68.9 million of such amount.
In July, the Company commenced construction of Beau Rivage, a
luxurious 1,800-room resort hotel-casino in Biloxi, Mississippi.
Beau Rivage is scheduled to open in the first quarter of 1998 at
a total cost, excluding land and capitalized interest, of
approximately $440 million. Including land and capitalized
interest, Bellagio is expected to cost between $1.2 billion and
$1.3 billion and Beau Rivage is expected to cost approximately
$500 million.
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<PAGE>
Capital spending will increase further should the Company proceed
with the development of one or more resort hotel-casinos in
Atlantic City, New Jersey. No such resort has yet been designed,
but management estimates that if it builds a large wholly owned
resort on a site in the Marina area as envisioned, it will cost
between $700 million and $900 million and require 24 to 30 months
to complete. Development of the project, however, is subject to
the satisfaction of a number of conditions. One such condition
is the construction of new roadway improvements designed to
improve access to the Marina area. In early July, the New Jersey
Department of Transportation proposed a preliminary plan for the
roadway improvements. The Company and the Department of
Transportation are currently negotiating the terms of a
memorandum of understanding with respect to the financing of the
roadway improvements and related issues that may allow this
project to proceed.
The Company has entered into a joint venture agreement with Boyd
Gaming Corporation ("Boyd") for the development of an additional
hotel-casino on the Marina site to be owned equally by the
Company and Boyd. It has also entered into a separate agreement
with Circus pursuant to which the Company would sell to Circus a
portion of the Marina site on which Circus would develop its own
resort. Construction of both the joint venture resort and the
Circus resort are also subject to construction of the roadway
improvements and the satisfaction of various other conditions.
The Company filed a "shelf" registration statement with the
Securities and Exchange Commission that was declared effective on
July 12, 1996. The registration statement allows the Company to
issue up to $500 million of debt or equity securities or any
combination thereof.
At June 30, 1996, the Company had net working capital of $41.5
million and there were no bank credit facility or commercial
paper borrowings outstanding. Subsequent to that date, the
Company has repurchased approximately three million shares of its
common stock at a total purchase price of approximately $64
million pursuant to the Company's existing 10 million share
repurchase program. Such repurchases were funded by borrowings
under the Company's $1 billion bank credit facility. Management
believes that operating cash flow and remaining amounts
available under the bank credit facility will provide the Company
with sufficient resources to meet its existing debt obligations
and capital expenditure requirements. Should the Company proceed
with the projects contemplated in New Jersey or undertake
significant additional share repurchases, additional financing
would likely be required. It is anticipated that such financing
would be available through an increase in the borrowing capacity
under the bank credit facility or the issuance of securities
under the shelf registration statement.
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<PAGE>
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. Certain
information included in this Form 10-Q and other materials filed
or to be filed by the Company with the Securities and Exchange
Commission (as well as information included in oral statements or
other written statements made or to be made by the Company)
contains statements that are forward-looking, such as statements
relating to plans for future expansion and other business
development activities as well as other capital spending,
financing sources and the effects of regulation (including gaming
and tax regulation) and competition. Such forward-looking
information involves important risks and uncertainties that could
significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company.
These risks and uncertainties include, but are not limited to,
those relating to development and construction activities,
dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates),
domestic or global economic conditions, changes in federal or
state tax laws or the administration of such laws and changes in
gaming laws or regulations (including the legalization of gaming
in certain jurisdictions).
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the purported class action lawsuit
which was pending in the United States District Court for
the District of New Jersey, discussed in the second
paragraph under "Legal Proceedings" in Item 3 of Part I
of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995. In May 1996, the
court granted the Company's motion to dismiss the
complaint for failure to state a claim upon which relief
can be granted.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's 1996 Annual Meeting of Stockholders
(the "Meeting") was held on May 23, 1996.
(c) At the Meeting, Elaine P. Wynn and Richard D. Bronson
were re-elected to serve three-year terms as members of
the Board of Directors. The results of the voting
(before adjustment for the June 17, 1996 stock split)
were as follows: Mrs. Wynn - 80,283,353 shares for and
1,611,189 shares withheld; Mr. Bronson - 80,269,667
shares for and 1,624,875 shares withheld. Additionally,
at the Meeting the stockholders voted to approve an
amendment to the Registrant's 1992 Non-Employee Director
Stock Option Plan by a vote of 59,897,929 shares in
favor and 21,570,526 shares opposed, with 426,087
shares abstaining.
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<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3(i) Certificate of Division of Shares into Smaller
Denominations Pursuant to N.R.S. Section 78.207 of the
Registrant, filed June 5, 1996. Incorporated by
reference to Exhibit 1 to Amendment No. 4 to the
Registrant's Registration Statement on Form 8-A, dated
June 18, 1996.
10.1 Joint Venture Agreement of Stardust A.C., dated as of May
29, 1996, between MAC, CORP. and Grand K, Inc. (without
exhibit). Incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K of Boyd (Commission File
No. 1-12168) dated June 7, 1996.
10.2 Letter agreement, dated May 30, 1996, between the
Registrant and Circus. Incorporated by reference to
Exhibit 10(a) to the Quarterly Report on Form 10-Q of
Circus (Commission File No. 1-8570) for the fiscal
quarter ended April 30, 1996 (the "Circus Form 10-Q").
10.3 Amendment No. 4 to Joint Venture Agreement of Victoria
Partners, dated as of May 29, 1996, between MRGS Corp.
and Gold Strike L.V. Incorporated by reference to
Exhibit 10(b) to the Circus Form 10-Q.
10.4 Amended and Restated 1992 Non-Employee Director Stock
Option Plan of the Registrant.
10.5 Amendment No. 7, dated as of June 14, 1996, to Reducing
Revolving Loan Agreement, dated as of May 25, 1994, among
the Registrant, THE MIRAGE CASINO-HOTEL, Treasure Island
Corp., MR Realty, MH, INC., each bank party thereto, Bank
of America National Trust and Savings Association,
Bankers Trust Company, The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings
Association, as Administrative Co-Agent (without
exhibits).
11 Mirage Resorts, Incorporated - Computation of Net Income
Per Share of Common Stock for the three-month and six-
month periods ended June 30, 1996 and 1995.
15 Letter from independent public accountants acknowledging
awareness of the use of their report dated August 7, 1996
in the Registrant's registration statements.
27 Financial Data Schedule.
-17-
<PAGE>
(b) Reports on Form 8-K.
On June 26, 1996, the Registrant filed a Current Report
on Form 8-K, dated May 23, 1996. The Registrant reported
under Item 5 (i) the two-for-one split of its common
stock discussed in Note 3 of Notes to Condensed
Consolidated Financial Statements, (ii) the formation of
a 50% joint venture with a subsidiary of Boyd to
develop a hotel-casino resort on a portion of the
150-acre "Huron North Redevelopment Area" property in the
Marina area of Atlantic City, New Jersey (the "Huron
North Property") and (iii) the execution of an
agreement with Circus providing for the transfer of a
portion of the Huron North Property to Circus suitable
for Circus to develop a hotel-casino resort facility
thereon.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Mirage Resorts, Incorporated
August 14, 1996 By: DANIEL R. LEE
- --------------- -----------------------------------
Date Daniel R. Lee
Senior Vice President - Finance and
Development, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
-19-
MIRAGE RESORTS, INCORPORATED
AMENDED AND RESTATED
1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose.
This Amended and Restated 1992 Non-Employee Director Stock Option
Plan (the "Plan") is established by Mirage Resorts, Incorporated (the
"Company"). The purpose of the Plan is to advance the interests of the
Company and its stockholders by encouraging and enabling members of its
Board of Directors who are not officers or employees of the Company or
any of its subsidiaries, upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its
business, to acquire and retain a proprietary interest in the Company
by ownership of its stock through the exercise of stock options.
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Company's common stock, $.004 par
value.
(d) "Company" means Mirage Resorts, Incorporated.
(e) "Date of Grant" means the date on which an Option is
granted under the Plan.
(f) "Effective Date" means the Effective Date of the Plan as
specified in Paragraph 10.
(g) "Fair Market Value" of the Common Stock on any day shall be
(i) if the Common Stock is traded on a national securities exchange,
the closing price (or, if no reported sale takes place on such day, the
mean of the reported bid and asked prices) of the Common Stock on such
day on the principal such exchange, or, if the stock is included on the
composite tape, the composite tape, or (ii) if the Common Stock is
traded in the over-the-counter market and not on any national
securities exchange, the mean between the closing bid and asked prices
(or, if no closing prices are reported, the mean between the high bid
and low asked prices) on such day as reported by the National
Association of Securities Dealers Automated Quotation System, or, if
not so reported, by a generally accepted reporting service. In each
case, the Board's determination of Fair Market Value shall be
conclusive.
Exhibit 10.4
<PAGE>
(h) "Initial Grant" has the meaning set forth in Paragraph 6(a).
(i) "Non-Employee Director" means a member of the Board who is
not an officer or employee of the Company or any of its subsidiaries.
(j) "Option" means any stock option granted under the Plan.
(k) "Optionee" means a person to whom an Option which has not
expired or terminated has been granted under the Plan.
(l) "Option Price" means the exercise price of an Option.
(m) "Permanent Disability" means that the Optionee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The Board may require
such proof of Permanent Disability as it, in its sole judgment, deems
necessary or appropriate.
(n) "Plan" means the Amended and Restated 1992 Non-Employee
Director Stock Option Plan.
(o) "Reorganization" means any statutory merger, statutory
consolidation, sale of all or substantially all of the assets of the
Company or a sale of the Common Stock pursuant to which the Company is
or becomes a subsidiary or division of another company after the
effective date of the Reorganization.
(p) "Reorganization Agreement" means a plan or agreement
respecting a Reorganization.
(q) "Successor" means the legal representative of the estate of
a deceased Non-Employee Director or the person or persons who acquire
the right to exercise an Option by bequest or inheritance or by reason
of the death of the Non-Employee Director.
(r) "Year of Service" means a period of 12 consecutive calendar
months of service as a Non-Employee Director.
3. Common Stock Subject to Options.
The aggregate number of shares of Common Stock subject to Options
which may be granted under the Plan shall not exceed 500,000. The
shares of Common Stock to be issued upon the exercise of Options may be
authorized but unissued shares or shares which have been issued and
reacquired by the Company. In the event any Option shall, for any
reason, expire or terminate without having been exercised in full,
the shares of Common Stock subject to such Option shall again be
available for the grant of Options under the Plan. At no time will the
number of shares issued under the Plan plus the number of shares covered
by outstanding Options under the Plan exceed the number of shares
authorized under the Plan.
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<PAGE>
4. Participants.
Non-Employee Directors with at least three Years of Service shall
receive Options under the Plan.
5. Administration.
The Plan shall be administered by the Board. The Board shall
have authority to interpret the Plan, to adopt, amend and rescind
administrative regulations to further the purposes of the Plan, and to
take any other action necessary to the proper operation of the Plan.
All decisions and acts of the Board shall be final and binding upon all
participants in the Plan.
6. Grant of Options.
(a) Initial Grant. On the Effective Date, each person who is a
Non-Employee Director on such date and has at least three Years of
Service shall be granted an Option to purchase 25,000 shares of Common
Stock at an Option Price equal to the Fair Market Value of the Common
Stock on the fourth Wednesday of January, 1992. Each Non-Employee
Director who was not granted an Option on the Effective Date shall be
granted an Option to purchase 25,000 shares of Common Stock on the
fourth Wednesday of January immediately following his or her completion
of three Years of Service, at an Option Price equal to the Fair Market
Value of the Common Stock on such date, provided that such person is a
Non-Employee Director on such date. The grant of Options pursuant to
this Paragraph 6(a) is hereafter referred to as the "Initial Grant."
(b) Subsequent Annual Grants. On the fourth Wednesday of January
of each year following the year of the Initial Grant to a Non-Employee
Director, such Non-Employee Director shall be granted an Option to
purchase 10,000 shares of Common Stock at an Option Price equal to the
Fair Market Value of the Common Stock on such date, provided that such
person is a Non-Employee Director on such date.
(c) Term of Option. The term of each Option expires on the tenth
anniversary of its Date of Grant, except as otherwise provided in
Paragraph 6(e).
(d) Exercisability of Option. No Option shall be exercisable
before the third anniversary of the Date of Grant of such Option. Each
Option shall be exercisable, in whole or in part, during the period
beginning on the third anniversary of the Date of Grant of such Option
and ending upon the expiration or earlier termination of such Option.
(e) Termination of Option. If an Optionee's service as a Non-
Employee Director terminates for any reason other than due to death or
Permanent Disability or because the Optionee becomes employed by the
Company or any of its subsidiaries, or if an Optionee becomes employed
by the Company or any of its subsidiaries and such employment
subsequently terminates for any reason other than due to death or
Permanent Disability, the Optionee's Options shall terminate three
months after the date of such termination (or upon the Option's
-3-
<PAGE>
expiration, if earlier). If an Optionee's service as a Non-Employee
Director terminates as a result of death or Permanent Disability, or if
an Optionee becomes employed by the Company or any of its subsidiaries
and such employment subsequently terminates as a result of death or
Permanent Disability, the Optionee's Options shall terminate one year
after the date of such termination (or upon the Option's expiration, if
earlier). An Optionee's Options shall be exercisable following his or
her termination of service as a Non-Employee Director or following his
or her termination of subsequent employment only to the extent they were
exercisable immediately prior to such termination of service or
employment, as the case may be.
(f) No Rights as Stockholder. Neither an Optionee nor his or her
Successor shall have any of the rights of a stockholder of the Company
until the certificates evidencing the shares purchased are properly
delivered to such Optionee or Successor.
(g) Payment of Option Price. Payment of the Option Price of an
Option may be made in any combination of cash and Common Stock,
including the automatic application of shares of Common Stock received
upon exercise of an Option to satisfy the exercise price for additional
Options. Where payment is made in Common Stock, such stock shall be
valued at the Fair Market Value of the Common Stock on the date of
exercise.
(h) Non-Transferability of Options. No Option shall be trans-
ferable or assignable by an Optionee, other than by will or the laws of
descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by him or her. No Option shall be pledged
or hypothecated in any way nor shall it be subject to execution,
attachment or similar process.
(i) Nature of Options. Options granted under the Plan shall not
be "incentive stock options" within the meaning of Section 422 of the
Code.
7. Capital Adjustments.
(a) In the event that the outstanding shares of Common Stock are
hereafter increased or decreased, or changed into or exchanged for a
different number or kind of shares or other securities of the Company,
by reason of a recapitalization, reclassification, stock split-up,
combination of shares, dividend or any other distribution payable in
capital stock, the Board shall make an appropriate adjustment in the
number and kind of Options that may be granted under the Plan. In
addition, the Board shall make appropriate adjustment in the number and
kind of outstanding Options to the end that the proportionate interest
of the holders of the Options shall be maintained as before the
occurrence of such event. Such adjustment shall be made without change
in the total Option Price applicable to the unexercised portion of
outstanding Options and with a corresponding adjustment in the Option
Price per share with respect to the Options.
-4-
<PAGE>
(b) In the event of the dissolution or liquidation of the Company,
any Option granted under the Plan shall terminate as of a date to be
fixed by the Board, provided that not less than 30 days' written notice
of the date so fixed shall be given to each Optionee and each such
Optionee shall have the right during such period (unless such Option
shall have previously expired) to exercise any Option, including any
Option that would not otherwise be exercisable by reason of an
insufficient lapse of time.
(c) In the event of a Reorganization is which the Company is not
the surviving or acquiring company, or in which the Company is or
becomes a subsidiary or division of another company after the effective
date of the Reorganization, then:
(i) if there is no Reorganization Agreement or if the
Reorganization Agreement does not specifically provide for the
change, conversion or exchange of the outstanding Options for
options of another corporation, then exercise and termination
provisions equivalent to those set forth in Paragraph 7(b) shall
apply; or
(ii) if there is a Reorganization Agreement that specifically
provides for the change, conversion or exchange of the outstanding
Options for options of another corporation, then the Board shall
adjust the outstanding unexercised Options (and shall adjust the
number of shares of Common Stock remaining under the Plan which
have not yet been granted, if the Reorganization Agreement makes
specific provisions for such an adjustment) in a manner consistent
with the applicable provisions of the Reorganization Agreement.
(d) Adjustments and determinations under this Paragraph 7 shall
be made by the Board, whose decisions as to such adjustments or deter-
minations shall be final, binding and conclusive.
8. Restrictions on Issuing Shares.
The exercise of each Option shall be subject to the condition that
if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or the
listing, registration or qualification of any shares otherwise
deliverable upon such exercise upon any securities exchange or under any
state or federal law, or the consent or approval of any regulatory body,
is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares, then such exercise shall
not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any condition not acceptable to the Company.
9. Use of Proceeds.
The proceeds received by the Company from the sale of its Common
Stock pursuant to the exercise of Options granted under the Plan, if in
the form of cash, shall be added to the Company's general funds and used
for general corporate purposes.
-5-
<PAGE>
10. Effective Date of the Plan.
The Effective Date of the Plan shall be the date of its approval
by the stockholders of the Company representing a majority of the voting
power at the annual stockholders' meeting on May 28, 1992 or any sub-
sequent meeting. Options may be granted under the Plan from and after
the Effective Date.
11. Term; Amendment of Plan.
The Plan shall be of unlimited duration. The Board of Directors
may suspend or terminate the Plan at any time and may amend the Plan
from time to time in its sole discretion; provided, however, that
Paragraph 6 hereof shall not be amended more frequently than once every
six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act or the rules thereunder; and provided
further that, without approval by the stockholders of the Company
representing a majority of the voting power of the Company, no such
amendment shall (a) except as specified in Paragraph 7, increase the
maximum number of shares of Common Stock subject to Options which may be
granted under the Plan, (b) change the provisions of the Plan relating
to the establishment of the Option Price, (c) change the provisions of
the Plan relating to the expiration date of each Option, (d) materially
increase the benefits accruing to participants under the Plan or (e)
change the class of eligible participants. No Option may be granted
during any suspension or after the termination of the Plan. No
amendment, suspension or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations
under any Option previously granted to such Optionee under the Plan.
12. No Guarantee of Directorship.
Nothing in this Plan shall be deemed to create any obligation on
the part of the Board to nominate any director for re-election by the
Company's stockholders.
-6-
AMENDMENT NO. 7 TO REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 7 to Reducing Revolving Loan Agreement (this
"Amendment") dated as of June 14, 1996 is entered into with reference
to the Reducing Revolving Loan Agreement dated as of May 25, 1994,
among Mirage Resorts, Incorporated, a Nevada corporation ("Parent"),
THE MIRAGE CASINO-HOTEL, a Nevada corporation ("Company"), Treasure
Island Corp., a Nevada corporation ("TI"), Bellagio, a Nevada
corporation formerly known as MR Realty ("MRR"), MH, INC., a Nevada
corporation ("MHI" and collectively with Parent, Company, TI and MRR,
the "Borrowers"), the Banks party thereto, Bank of America National
Trust and Savings Association, Bankers Trust Company, The Long-Term
Credit Bank of Japan, Ltd., Los Angeles Agency and Societe Generale,
as Co-Agents, and Bank of America National Trust and Savings
Association, as Administrative Co-Agent.
The Loan Agreement referred to above has been amended by an
Amendment No. 1 thereto dated as of April 6, 1995, pursuant to which
GNLV, CORP., a Nevada corporation, became a party to the Loan
Agreement as an additional Borrower, as well as by Amendments No. 2
through 6 thereto dated August 30, 1995, August 30, 1995, September
5, 1995, October 16, 1995 and November 30, 1995, respectively.
References herein to the Loan Agreement mean the Loan Agreement as so
amended. Other capitalized terms used but not defined herein are
used with the meanings set forth for those terms in the Loan
Agreement.
Borrowers and the Administrative Co-Agent, acting with the
consent of the Requisite Banks in accordance with Section 11.2 of the
Loan Agreement, hereby amend the Loan Agreement as follows:
1. AMENDMENT TO SECTION 6.16(b). Section 6.16(b) of the Loan
Agreement is amended to read in full as follows:
"(b) Make, or enter into any legally binding commitment
to make, any New Venture Capital Expenditure if the aggregate
New Venture Capital Expenditures and New Venture Investments
(other than for the Dunes Project) incurred or made with respect
to the related New Venture (or, in the case of an addition to or
improvement of a Developed Property, with respect to such
addition or improvement) exceed $150,000,000 without first
obtaining the written consent of the Majority Banks;"
2. AMENDMENT TO SECTION 6.17(b). Section 6.17(b) of the Loan
Agreement is amended to read in full as follows:
"(b) Make, or enter into any legally binding commitment
to make, any New Venture Investment (other than for the Dunes
Project) if the aggregate New Venture Capital Expenditures and
New Venture Investments incurred or made with respect to the
related New Venture (or, in the case of an addition to or
improvement of a Developed Property, with respect to such
addition or improvement) exceed $150,000,000 without first
obtaining the written consent of the Majority Banks;"
EXHIBIT 10.5
<PAGE>
3. CONDITIONS PRECEDENT. The effectiveness of this Amendment
shall be conditioned upon the receipt by the Administrative
Co-Agent of the following:
a. Counterparts of this Amendment executed by all
parties hereto;
b. Written consents of each of the Subsidiary
Guarantors to the execution, delivery and performance hereof,
substantially in the form of Exhibit A to this Amendment; and
c. Written consents to the execution, delivery and
performance hereof from Banks constituting the Requisite Banks.
4. REPRESENTATION AND WARRANTY. Borrowers represent and
warrant to the Administrative Co-Agent and the Banks that no Default
or Event of Default has occurred and remains continuing.
5. CONFIRMATION. In all other respects, the terms of the
Loan Agreement and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, Borrowers and the Administrative
Co-Agent have executed this Amendment as of the date first written
above by their duly authorized representatives.
MIRAGE RESORTS, INCORPORATED
By: DANIEL R. LEE
--------------------------
Daniel R. Lee
Chief Financial Officer
THE MIRAGE CASINO-HOTEL
By: DANIEL R. LEE
--------------------------
Daniel R. Lee
Assistant Treasurer
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<PAGE>
(Signatures continue)
TREASURE ISLAND CORP.
BELLAGIO (formerly, MR Realty)
MH, INC.
GNLV, CORP.
By: DANIEL R. LEE
--------------------------
Daniel R. Lee
Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Co-Agent
By: L. CHENEVERT, JR.
--------------------------
L. Chenevert, Jr.
Vice President
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<TABLE>
<CAPTION>
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE MIRAGE RESORTS, INCORPORATED
OF COMMON STOCK
- --------------------------------------------------------------------------------------------------------------------------
Three Months Six Months
---------------------------- ----------------------------
For the periods ended June 30 1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-average shares outstanding 184,414,321 182,285,174 184,109,909 182,224,036
Common stock equivalents 13,019,616 10,007,714 12,453,962 9,202,524
- --------------------------------------------------------------------------------------------------------------------------
Weighted-average shares outstanding and common stock
equivalents used in the computation of primary earnings
per share 197,433,937 192,292,888 196,563,871 191,426,560
Additional common stock equivalents for fully diluted
calculation 1,937,663 223,356 2,503,317 1,028,546
- --------------------------------------------------------------------------------------------------------------------------
Total shares outstanding assuming full dilution 199,371,600 192,516,244 199,067,188 192,455,106
==========================================================================================================================
Net income $40,599,000 $28,618,000 $105,186,000 $73,494,000
Primary earnings per share $0.21 $0.15 $0.54 $0.38
Fully diluted earnings per share $0.20 $0.15 $0.53 $0.38
- --------------------------------------------------------------------------------------------------------------------------
The above share and common stock equivalent data has been adjusted retroactively to give effect to a two-for-one split of
the Registrant's common stock effective June 17, 1996.
</TABLE>
EXHIBIT 15
August 7, 1996
To Mirage Resorts, Incorporated:
We are aware that Mirage Resorts, Incorporated has incorporated
by reference in its Registration Statements on Form S-8 (File No.
33-16037), on Form S-8 (File No. 33-48394), on Form S-8 (File No.
33-63804), on Form S-8 (File No. 33-60183), on Form S-3 (File No.
33-65317) and on Form S-3 (File No. 333-7261) its Form 10-Q for
the quarter ended June 30, 1996, which includes our report dated
August 7, 1996 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 LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE
RELATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 48,450
<SECURITIES> 0
<RECEIVABLES> 130,852
<ALLOWANCES> 56,169
<INVENTORY> 25,491
<CURRENT-ASSETS> 192,989
<PP&E> 2,015,947
<DEPRECIATION> 514,332
<TOTAL-ASSETS> 1,841,319
<CURRENT-LIABILITIES> 151,443
<BONDS> 212,476
0
0
<COMMON> 940
<OTHER-SE> 1,328,142
<TOTAL-LIABILITY-AND-EQUITY> 1,841,319
<SALES> 0
<TOTAL-REVENUES> 686,860
<CGS> 0
<TOTAL-COSTS> 385,940
<OTHER-EXPENSES> 44,366
<LOSS-PROVISION> 9,860
<INTEREST-EXPENSE> 3,292
<INCOME-PRETAX> 165,568
<INCOME-TAX> 60,382
<INCOME-CONTINUING> 105,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 105,186
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0
</TABLE>
