SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8570
CIRCUS CIRCUS ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0121916
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109-1120
(Address of principal executive offices)
(702) 734-0410
(Registrant's telephone number, including area code)
N/A
(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.
Class Outstanding at November 30,1995
Common Stock, $.01-2/3 par value 102,891,003 shares
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
Form 10-Q
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at
October 31, 1995 (Unaudited) and January 31,
1995........................................... 3-4
Condensed Consolidated Statements of Income
(Unaudited) for the Three and Nine Months
Ended October 31, 1995 and 1994................ 5
Condensed Consolidated Statements of Cash
Flows (Unaudited) for the Nine Months Ended
October 31, 1995 and 1994...................... 6-7
Notes to Condensed Consolidated Financial
Statements (Unaudited)......................... 8-17
Item 2. Management's Discussion and Analysis of Fi-
nancial Condition and Results of Operations.... 18-24
Part II. OTHER INFORMATION 25-27
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
October 31, January 31,
1995 1995
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents................ $ 74,705 $ 53,764
Receivables.............................. 14,535 8,931
Inventories.............................. 21,663 22,660
Prepaid expenses......................... 22,066 20,103
Total current assets................ 132,969 105,458
PROPERTY, EQUIPMENT AND LEASEHOLD INTERESTS,
at cost, less accumulated depreciation
and amortization of $470,305 and $412,909
respectively............................. 1,468,036 1,239,062
EXCESS OF PURCHASE PRICE OVER FAIR MARKET
value of net assets acquired, net........ 396,729 9,836
NOTES RECEIVABLE............................ 25,957 68,083
INVESTMENTS IN JOINT VENTURES............... 160,797 74,840
OTHER ASSETS................................ 12,171 9,806
Total Assets......................... $2,196,659 $1,507,085
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
October 31, January 31,
1995 1995
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt................ $ 920 $ 106
Accounts payable - trade ........................ 20,216 12,102
Accounts payable - construction.................. - 1,101
Accrued liabilities ............................. 88,737 68,576
Income tax payable .............................. 2,931 123
Total current liabilities ................ 112,804 82,008
LONG-TERM DEBT ...................................... 740,291 632,652
DEFERRED INCOME TAX ................................. 139,235 105,313
OTHER LONG-TERM LIABILITIES ......................... 904 988
Total liabilities ........................ 993,234 820,961
REDEEMABLE PREFERRED STOCK........................... 18,530 -
STOCKHOLDERS' EQUITY:
Common stock, $.01-2/3 par value
Authorized - 450,000,000 shares
Issued - 112,781,312 and 96,441,357 shares .... 1,880 1,607
Preferred stock, $.01 par value
Authorized - 75,000,000 shares ................ - -
Additional paid-in capital ...................... 521,684 124,960
Retained earnings ............................... 847,997 754,732
Treasury stock (9,902,309 and 10,589,309 shares),
at cost........................................ (186,666) (195,175)
Total stockholders' equity ............... 1,184,895 686,124
Total Liabilities and
Stockholders' Equity .................. $2,196,659 $1,507,085
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
Three Months Nine Months
Ended October 31, Ended October 31,
REVENUES: 1995 1994 1995 1994
Casino ......................... $176,246 $161,616 $498,920 $463,322
Rooms .......................... 74,059 60,688 209,260 173,724
Food and beverage .............. 53,540 49,023 153,159 146,673
Other .......................... 42,246 43,242 122,772 130,398
Earnings of unconsolidated
affiliates.................... 20,760 1,480 27,584 3,439
366,851 316,049 1,011,695 917,556
Less-complimentary allowances .. (12,645) (9,436) (35,690) (26,147)
354,206 306,613 976,005 891,409
COSTS AND EXPENSES:
Casino ......................... 72,318 63,663 202,719 183,334
Rooms .......................... 29,096 24,052 82,576 72,124
Food and beverage .............. 49,941 45,864 141,644 138,233
Other operating expenses ....... 24,856 28,068 70,145 82,548
General and administrative ..... 58,185 48,014 161,656 136,755
Depreciation and amortization .. 24,012 20,345 69,575 61,239
Preopening expense.............. - 3,012 - 3,012
Abandonment loss................ - - 45,148 -
258,408 233,018 773,463 677,245
OPERATING PROFIT BEFORE CORPORATE
EXPENSE ........................ 95,798 73,595 202,542 214,164
CORPORATE EXPENSE ................ 7,399 5,381 18,732 16,695
INCOME FROM OPERATIONS ........... 88,399 68,214 183,810 197,469
OTHER INCOME (EXPENSE):
Interest, dividend and
other income (expense)........ 3,526 28 8,411 (572)
Interest expense ............... (15,738) (10,528) (41,782) (31,193)
(12,212) (10,500) (33,371) (31,765)
INCOME BEFORE PROVISION FOR
INCOME TAX...................... 76,187 57,714 150,439 165,704
Provision for income tax ....... 29,603 21,118 57,174 60,269
NET INCOME ....................... $ 46,584 $ 36,596 $ 93,265 $105,435
EARNINGS PER SHARE................ $ .45 $ .43 $ .98 $ 1.23
Average shares outstanding ...102,824,169 85,705,133 95,292,952 85,827,063
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months
Ended October 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 93,265 $105,435
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 71,239 62,468
Loss on disposition of fixed assets 10,959 800
Increase in other current assets (5,082) (7,349)
Decrease in other non-current assets 647 5,315
Increase in interest payable 8,940 8,557
Increase in income tax payable 2,808 5,018
Increase in other current liabilities 11,134 16,803
Increase in deferred taxes 16,579 12,760
Decrease in other non-current liabilities (49) (49)
Total adjustments 117,175 104,323
Net cash provided by operating activities 210,440 209,758
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (192,378) (141,464)
Increase (decrease) in construction payables (1,101) 3,050
(Increase) decrease in investments in joint ventures 4,607 (67,073)
(Increase) decrease in loans to joint ventures 42,126 (17,298)
Net cash paid for acquisition of Gold Strike Resorts (3,413) -
Proceeds from sale of equipment and other assets 979 400
Net cash used in investing activities (149,180) (222,385)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net effect on cash of issuances and payments
of debt with initial maturities of
three months or less (64,891) 40,886
Issuances of debt with original maturities
in excess of three months 20,652 -
Principal payments of debt with original
maturities in excess of three months (12,423) (125)
Exercise of stock options and warrants 14,695 1,821
Purchases of treasury stock - (15,031)
Sale of stock warrants 2,000 -
Other (352) (31)
Net cash provided by (used in)
financing activities (40,319) 27,520
Net increase in cash and cash equivalents 20,941 14,893
Cash and cash equivalents at beginning of period 53,764 39,110
Cash and cash equivalents at end of period $ 74,705 $ 54,003
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
(continued)
Nine Months
Ended October 31,
1995 1994
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 28,961 $ 21,831
Income tax $ 37,863 $ 42,500
Acquisition of Gold Strike Resorts:
Current assets, other than cash $ (1,487) $ -
Property and equipment (115,708) -
Other assets (484,508) -
Current liabilities 9,627 -
Long-term debt 163,978 -
Other liabilities 17,344 -
Subsidiary preferred stock 18,530 -
Stockholders' equity 388,811 -
Net cash used to acquire Gold Strike Resorts $ (3,413) $ -
The accompanying notes are an integral part of these
condensed consolidated financial statements.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All information for the three and nine months ended October 31,
1995 and 1994 is unaudited.)
(1) Principles of consolidation and basis of presentation -
Circus Circus Enterprises, Inc. (the "Company") was
incorporated February 27, 1974. The Company operates hotel and
casino facilities in Las Vegas, Reno and Laughlin, Nevada and a
riverboat casino in Tunica County, Mississippi. It is also a
member in several joint ventures, with operations that include a
casino in Windsor, Canada, a riverboat casino in Elgin, Illinois
and a hotel/casino in Reno, Nevada.
The condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries.
Material intercompany accounts and transactions have been
eliminated.
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of
management, all adjustments (which include normal recurring
adjustments) necessary for a fair statement of results for the
interim periods have been made. The results for the three-month
and nine-month periods are not necessarily indicative of results
to be expected for the full fiscal year.
Certain reclassifications have been made to the financial
statements for the three and nine months ended October 31, 1994
to conform to the financial statement presentation for the three
and nine months ended October 31, 1995. These reclassifications
have no effect on net income.
These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended January
31, 1995.
(2) Acquisition of Gold Strike Resorts -
On June 1, 1995, the Company completed its acquisition of a
group of affiliated entities (collectively "Gold Strike Resorts")
in which it acquired two hotel and casino facilities in Jean,
Nevada, one in Henderson, Nevada, a 50% interest in a joint
venture which owns a riverboat casino and land-based
entertainment complex in Elgin, Illinois, and a 50% interest in a
joint venture which is developing a major destination resort on
the Las Vegas Strip. In exchange for the equity interests in
Gold Strike Resorts, the Company issued 16,291,551 shares of its
common stock and preferred stock of a subsidiary which is
convertible into an additional 793,156 shares of the Company's
common stock. In addition, the Company paid approximately $12
million in cash, while assuming approximately $165 million of
debt. The acquisition has been accounted for by the purchase
method of accounting and resulted in a total purchase price of
approximately $430 million. In determining the purchase price of
Gold Strike Resorts, the value of the Company's common stock
issued was discounted by 30% from the price quoted on the New
York Stock Exchange on May 31, 1995, based on estimates provided
by the Company's investment bankers due to restrictions on the
resale of the common stock issued. The purchase price was
allocated to assets and liabilities based on their estimated fair
values on the date of acquisition. The excess of the purchase
price over the fair market value of the net assets acquired was
approximately $390 million and is being amortized on a straight-
line basis over 40 years.
The following unaudited pro forma information combines the
consolidated results of operations of the Company and Gold Strike
Resorts for the nine months ended October 31, 1995 and 1994 as if
the acquisition had occurred on February 1, 1995 and 1994,
respectively, after giving effect to amortization of goodwill and
increased corporate expense primarily due to employment contracts
entered into as a result of the merger. The pro forma informa-
tion is not necessarily indicative of the results of operations
which would have actually been obtained during such periods.
Nine Months
(in thousands, except Ended October 31,
share data) 1995 1994
Revenue $1,029,789 $976,705
Net income $ 100,910 $107,801
Earnings per share $ .98 $ 1.06
(3) Long-term debt -
Long-term debt consists of the following (in thousands):
October 31, January 31,
1995 1995
(Unaudited)
Amounts due under corporate
debt program at floating
interest rates, weighted
average of 6.0% $190,816 $210,828
7-5/8% Senior Subordinated
Debentures due 2013 150,000 150,000
6-3/4% Senior Subordinated Notes
due 2003 (net of unamortized
discount of $123 and $134) 149,877 149,866
10-5/8% Senior Subordinated Notes
due 1997 (net of unamortized
discount of $29 and $42) 99,971 99,958
Amounts due under bank credit
agreements at floating interest
rates, weighted average of 6.5% 145,000 22,000
Other notes 5,547 106
741,211 632,758
Less - current portion (920) (106)
$740,291 $632,652
The Company has established a corporate debt program whereby
it can issue commercial paper or similar forms of short-term
debt. Although the debt instruments issued under this program are
short-term in tenor, they are classified as long-term debt
because (i) they are backed by long-term debt facilities (see
below) and (ii) it is management's intention to continue to
replace such borrowings on a rolling basis as various instruments
come due and to have such borrowings outstanding for longer than
one year. To the extent that the Company incurs debt under this
debt program, it must maintain an equivalent amount of credit
available under its revolving loan agreements with its bank
group.
In September 1993, the Company entered into revolving loan
agreements consisting of a $250 million unsecured 364-day
facility and a $500 million unsecured reducing revolver which
matures in September 1998 (the "Revolvers"). The $250 million
facility has provisions for annual renewal subject to the consent
of the banks and converts to a two-year term loan if not renewed.
(3) Long-term debt (continued)-
The Revolvers contain financial covenants regarding minimum
net worth, interest charge coverage, maximum leverage ratio, new
venture capital expenditures and new venture investments. The
maximum available credit under the $500 million revolver reduces
by $60 million on each of March 31, 1997, September 30, 1997 and
March 31, 1998. The Revolvers are for general corporate
purposes. The Company currently incurs commitment fees of 22.50
basis points on the unused portion of the $250 million facility
and 27.50 basis points on the unused portion of the $500 million
revolver. As of October 31, 1995, the Company had $145.0 million
of borrowings under the Revolvers. At such date, the Company
also had $190.8 million issued under the corporate debt program
thus reducing, by that amount, the credit available under the
Revolvers for purposes other than repayment of the corporate
debt. The fair value of the debt issued under the corporate debt
program approximates the carrying amount of the debt due to the
short-term maturities of the individual components of the debt.
Pursuant to the acquisition of Gold Strike Resorts, the
Company assumed a $155 million Reducing Revolving Credit
Agreement (the "Credit Facility") which matures February 1, 2001.
The maximum available credit under the Credit Facility was
reduced to $145 million on August 1, 1995 and provides for future
scheduled semi-annual reductions of such availability ranging
from $5 million to $9 million. It also includes financial
covenants identical to the Revolvers. As of October 31, 1995,
there were no amounts outstanding under the Credit Facility.
In July 1993, the Company issued $150 million principal
amount of 6-3/4% Senior Subordinated Notes (the "6-3/4% Notes")
due July 2003 and $150 million principal amount of 7-5/8% Senior
Subordinated Debentures (the "7-5/8% Debentures") due July 2013,
with interest payable each January and July. The 6-3/4% Notes,
which were discounted to $149.8 million, and the 7-5/8%
Debentures are not redeemable prior to maturity and are not
subject to any sinking fund requirements. The net proceeds from
these offerings were used primarily to repay borrowings under the
Company's corporate debt program.
In June 1990, the Company issued $100 million principal
amount of 10-5/8% Senior Subordinated Notes (the "10-5/8% Notes")
due June 1997, with interest payable each June and December. The
10-5/8% Notes, which were discounted to $99.9 million are not
redeemable prior to maturity and are not subject to any sinking
fund requirements. Holders of the 10-5/8% Notes may require the
(3) Long-term debt (continued) -
Company to repurchase all or any portion of their notes at par
upon the occurrence of both a Designated Event (as defined in the
indenture) and a Rating Decline (as defined in the indenture). As
of October 31, 1995, $9.1 million principal amount of the 10-5/8%
Notes was owned by one of the Company's outside directors.
The Company has a policy aimed at managing interest rate
risk associated with its current and future anticipated
borrowings. This policy enables the Company to use any
combination of interest rate swaps, futures, options, caps and
similar arrangements. The Company has entered into various
interest rate swaps, principally with its bank group, to manage
interest expense, which is subject to fluctuation due to the
variable rate nature of the debt under the Company's corporate
debt program. The Company has interest rate swap agreements
under which it pays a fixed interest rate (weighted average of
approximately 8.7%) and receives a variable interest rate
(weighted average of approximately 6.0% at October 31, 1995) on
"initial" swaps with a current notional amount of $116 million,
and pays a variable interest rate (weighted average of
approximately 6.0% at October 31, 1995) and receives a fixed
interest rate (weighted average of approximately 8.2%) on $60
million notional amount of "reversing" swaps. The net effect of
all such swaps resulted in additional interest expense for the
three and nine months, due to an interest rate differential
which, at October 31, 1995, was approximately 1.02% on the total
notional amount of the swaps. One of the initial swaps provides
for quarterly reductions in the notional amount of up to $1
million. This swap has a current notional amount of $31.5
million, but declines to $22.5 million by its termination date in
fiscal 1999. Excluding this swap, the remaining initial swaps
have the following termination dates: $30 million in fiscal 1997,
$29.5 million in fiscal 1999 and $25 million in fiscal 2000. The
reversing swaps expire as follows: $30 million in fiscal 1997 and
$30 million in fiscal 2002. In addition to the aforementioned
swaps, the Company has entered into an interest rate swap with a
notional amount of $100 million in which the Company pays a
floating rate (5.9% at October 31, 1995 and capped at 6.5%) and
receives a fixed interest rate of 4.75%. This swap corresponds in
both notional amount and maturity to the Company's 10-5/8% Notes
due in 1997. The variable interest rates which the Company pays
or receives under the various swaps are based primarily upon the
London Interbank Offering Rate (LIBOR). The Company is exposed
to credit loss in the event of nonperformance by the other
(3) Long-term debt (continued) -
parties to the interest rate swap agreements. However, the
Company considers the risk of nonperformance by the counter-
parties to be minimal because the parties to the swaps and
reverse swaps are predominantly members of the Company's bank
group.
As of October 31, 1995, under the Company's most restrictive
loan covenants, the Company was restricted as to the payment of
dividends or the purchase of its own capital stock in excess of
approximately $89 million and was restricted from issuing
additional debt in excess of approximately $581 million.
(4) Warrants, stock options and stock rights -
In June 1989, the stockholders approved a stock purchase
warrant plan enabling the Company to offer warrants to its
officers and other key employees to purchase up to 4.5 million
shares of the Company's common stock. In accordance with the
provisions of such plan, the 4.5 million warrants were issued in
June 1989 at a price of $.17 per warrant with an exercise price
of $14.33 ($.67 per share over the fair market value on the date
the warrants were authorized). Each warrant has a term of seven
years, with 50% of the warrants becoming exercisable two years
from the date of grant and the remaining 50% three years from the
date of grant. As of October 31, 1995, warrants representing 3.8
million shares had been exercised, including warrants
representing 327,000 shares which were exercised during the nine
months ended October 31, 1995.
The Company also has various stock option plans for
executive, managerial and supervisory personnel as well as the
Company's outside directors and consultants. The plans permit
grants of options, performance shares and restricted stock
relating to the Company's common stock. During the nine months
ended October 31, 1995, options for 3,330,000 shares (including
options for 2,000,000 shares for which the Company received a $2
million option purchase price) were granted at prices ranging
from $25.25 to $35.33 with a weighted average exercise price of
$28.28 per share, while options for 419,654 shares were exercised
at prices ranging from $8.58 to $26.88 with a weighted average
exercise price of $21.24 per share. As of October 31, 1995,
options for 7.2 million shares remained exercisable at prices
ranging from $8.58 to $39.34 with a weighted average exercise
price of $24.58 per share, while options covering 2.9 million
shares remained available for grant. The stock options are
generally exercisable in one or more installments beginning not
less than nine months after the grant date.
(4) Warrants, stock options and stock rights (continued) -
On July 14, 1994, the Company declared a dividend of one
Common Stock Purchase Right (the "Rights") for each share of
common stock outstanding at the close of business on August 15,
1994. Each Right entitles the holder to purchase from the
Company one share of common stock at an exercise price of $125,
subject to certain antidilution adjustments. The Rights become
exercisable ten days after the earlier of an announcement that an
individual or group has acquired 10% or more of the Company's
outstanding common stock or the announcement of commencement of a
tender offer for 10% or more of the Company's common stock.
In the event the Rights become exercisable, each Right
(except the Rights beneficially owned by the acquiring individual
or group, which become void) would entitle the holder to
purchase, for the exercise price, a number of shares of the
Company's common stock having an aggregate current market value
equal to two times the exercise price. The Rights expire August
15, 2004, and may be redeemed by the Company at a price of $.01
per Right any time prior to their expiration or the acquisition
of 10% or more of the Company's common stock. The Rights should
not interfere with any merger or other business combination
approved by the Company's Board of Directors and are intended to
cause substantial dilution to a person or group that attempts to
acquire control of the Company on terms not approved by the Board
of Directors.
(5) Redeemable preferred stock -
In connection with the acquisition of Gold Strike Resorts,
New Way, Inc., a wholly-owned subsidiary of the Company, issued
1,069,926 shares of $10.00 Cumulative Preferred Stock. Dividends
are payable when, as and if declared by the Board of Directors.
Each share of preferred stock is exchangeable for approximately
3.9 shares of the Company's common stock, however no dividends
are payable in the event of exchange. The preferred stock is
exchangeable by the holder thereof after two years from the date
of issuance, and by the company on the occurrence of certain
events, including a merger of New Way, Inc. into another
subsidiary of the Company. The exchange rate is subject to
adjustment in the event of certain dilutive events. The
preferred stock is subject to mandatory redemption on the
fifteenth anniversary of the date of original issuance at a price
equal to the liquidation preference ($100) plus all unpaid
dividends. Of the preferred shares issued, 866,640 were issued
to another wholly-owned subsidiary of the company.
(6) Preferred stock -
The Company is authorized to issue up to 75 million shares
of $.01 par value preferred stock in one or more series having
such respective terms, rights and preferences as are designated
by the Board of Directors. No such preferred stock has yet been
issued.
(7) Earnings per share -
Earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the
period. Outstanding stock options and warrants and exchangeable
preferred stock are not included in earnings per share
computations since their assumed exercise or conversion would not
have a material dilutive effect.
(8) Investments in joint ventures -
The Company has investments in joint ventures that are
accounted for on the equity method. Under the equity method,
original investments are recorded at cost and adjusted by the
Company's share of earnings or losses of these companies. The
investment balance also includes interest capitalized during
construction. Investments in joint ventures consist of the
following (in thousands):
October 31, January 31,
1995 1995
(Unaudited)
Circus and Eldorado Joint Venture (50%)
(Hotel/Casino, Reno, Nevada) $ 53,047 $ 55,256
Windsor Casino Limited (33 1/3%)
(Hotel/Casino, Windsor, Canada) 10,026 5,413
American Entertainment, L.L.C. (50%)
(Riverboat Casino, Chalmette, Louisiana) - 14,171
Elgin Riverboat Resort (50%)
(Riverboat Casino, Elgin, Illinois) 58,448 -
Victoria Partners (50%)
(Hotel/Casino, Las Vegas, Nevada) 39,276 -
$160,797 $ 74,840
In June 1995, the Company purchased the remaining 50%
interest in American Entertainment, L.L.C. from the other joint
venturer and in July 1995, the Company sold the unfinished
riverboat project (see Note 9 for additional details). The
Company's 50% interests in each of Elgin Riverboat Resort and
Victoria Partners were acquired as part of the merger with Gold
Strike Resorts.
(9) Abandonment loss -
During the second quarter, the Company wrote-off $45.1
million of costs associated with various assets which were
disposed of or whose values had otherwise become impaired. The
Company sold its partially completed riverboat gaming facility in
Chalmette, Louisiana for $4 million. The Company had a net
investment (including a loan to the other joint venturer) of
$35.5 million in this project and thus recognized a loss of $31.5
million on this sale. After reevaluating the New Orleans market,
the Company determined that this project could no longer promise
a sufficiently high rate of return to meet Company objectives.
The Company wrote off $6.2 million representing the
remaining value of the parking garage and people mover at Circus
Circus-Reno which will be demolished for an expansion of that
property. The Company also wrote-off $3.7 million for the
recently dismantled monorail system between Luxor and Excalibur,
$2.1 million for an inactive gondola system at Circus Circus-Las
Vegas which will be removed in the near future, and $1.6 million
for miscellaneous other assets.
(10) Commitments and contingent liabilities -
In December 1993, Windsor Casino Limited, a corporation
owned equally by Circus Circus Enterprises, Inc., Caesars World,
Inc. and Hilton Hotels Corporation or their subsidiaries, was
selected to exclusively negotiate an agreement to design, build
and operate a casino complex in Windsor, Ontario, Canada. The
planned complex will include casino, showroom and meeting
facilities as well as a 300-room hotel, all located in Windsor's
central business district, immediately across the Detroit River
from Detroit, Michigan. An interim casino, operated by Windsor
Casino Limited, opened in May 1994. On December 12, 1995, the
interim facility was expanded to include a dockside casino,
bringing the total casino space to approximately 75,000 square
feet. The corporation is currently negotiating the agreement for
a permanent facility, which is expected to be completed in 1997.
On July 28, 1995, Silver Legacy, a 50/50 joint venture with
the Eldorado Hotel/Casino (a privately held company) opened in
downtown Reno, Nevada. Silver Legacy is themed as a turn-of-the-
century silver mining town and is located on a site between
Circus Circus-Reno and the Eldorado, connected to both properties
by enclosed skyways. The cost of the initial phase of Silver
Legacy was approximately $350 million (excluding capitalized
interest and preopening expenses), of which the venturers
contributed $103.8 million in equity. On May 31, 1995, the joint
venture completed a $230 million bank credit agreement with its
(10) Commitments and contingent liabilities (continued) -
bank group. Part of the proceeds of this loan were used to repay
amounts previously lent to the joint venture by the Company. As
a condition to the credit agreement, Circus guaranteed completion
of Silver Legacy and, in addition, entered into a make-well
agreement whereby it is obligated to make additional
contributions to the joint venture as may be necessary to
maintain a minimum coverage ratio (as defined). As of October
31, 1995, the Company had a net equity investment of
approximately $53.0 million in the project and had outstanding
loans to the joint venture in the principal amount of $26.0
million.
The Company owns a 50% interest in a joint venture (with
Mirage Resorts, Incorporated) which is developing Monte Carlo, a
major destination resort under construction on the Las Vegas
Strip for which the Company serves as the venture's manager.
Monte Carlo has an estimated cost of $344 million (including
land, capitalized interest and preopening expenses), and the
Company is obligated to fund any portion of such cost in excess
of certain equity contributions and the funding provided by a
$200 million construction loan. As a condition to the
construction loan, the Company has guaranteed the completion of
Monte Carlo. The Company's total equity contribution is
anticipated to be approximately $63 million, of which $35.1
million had been funded as of October 31, 1995. Monte Carlo is
scheduled to open in the summer of 1996.
On September 1, 1995, the Company completed the previously
announced acquisition of the Hacienda Hotel and Casino in Las
Vegas for approximately $80 million. The Hacienda is located on
47 acres of land adjacent to Luxor, and contains approximately
1,100 rooms and 35,000 square feet of casino space.
The Company has funded the above projects from internal cash
flows, project specific financing or its revolving lines of
credit, and anticipates that future funding for such projects
will be from these sources, including the revolving lines of
credit, currently at $895 million, of which approximately $559
million was not drawn as of October 31, 1995.
The Company is a defendant in various pending litigation. In
management's opinion, the ultimate outcome of such litigation
will not have a material effect on the results of operations or
the financial position of the Company.
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited)
RESULTS OF OPERATIONS
Earnings per Share
The Company reported net income of $46.6 million, or $.45 per
share for the third quarter ended October 31, 1995, versus $36.6
million, or $.43 per share for the same quarter last year. For
the nine months, net income was $93.3 million, or $.98 per share,
against $105.4 million, or $1.23 per share in the prior year.
Results for the prior year third quarter include $3.0 million of
preopening expenses related to the August 29, 1994 opening of
Circus Circus-Tunica. Results for the nine months in the current
year include one-time asset write-offs totaling $45.1 million and
$6.2 million of preopening expenses related to the July 28, 1995
opening of Silver Legacy, a joint venture hotel/casino in Reno,
Nevada.
The $45.1 million in asset write-offs (which the Company
recognized in the second quarter) related to the discontinued
riverboat project in Chalmette, Louisiana ($31.5 million); the
remaining value of a parking garage and people mover at Circus
Circus-Reno which will be demolished for an expansion of that
property ($6.2 million); the recently dismantled monorail between
Luxor and Excalibur ($3.7 million); an inactive gondola system at
Circus Circus-Las Vegas ($2.1 million); and miscellaneous other
assets ($1.6 million).
Year-to-date results include five months of combined performance
of Circus and Gold Strike Resorts, which the Company acquired on
June 1 in exchange for 16,291,551 shares of its common stock and
preferred stock of a subsidiary which is convertible into an
additional 793,156 shares of the Company's common stock, plus the
payment of $12 million in cash and the assumption of
approximately $165 million in debt. The increase in earnings for
the third quarter derived primarily from a continued strong
performance at The Grand Victoria, the Company's riverboat casino
in Elgin, Illinois acquired as part of the Gold Strike
transaction.
Revenues
Revenues for the Company increased $47.6 million, or 16%, for the
three months and $84.6 million, or 9%, for the nine months,
compared to the previous year. The acquisition of Gold Strike
Resorts on June 1, 1995 was the major factor in these increases,
as the hotel/casino operations in Jean and Henderson, Nevada
(Gold Strike, Nevada Landing and Railroad Pass) contributed
revenues of $25.5 and $41.9 million for the three and nine months
ended October 31, 1995, respectively. Furthermore, the Company's
50% interest in The Grand Victoria, a joint venture riverboat
casino in Elgin, Illinois and formerly a Gold Strike property,
produced $14.0 million in revenues in the quarter and $22.6
million in the nine months. This represents the Company's
interest in the operating income of the joint venture, which is
included in revenue.
The Hacienda Hotel and Casino, which was acquired by the Company
on September 1, 1995 for approximately $80 million, also
contributed to the increase in revenues, producing $8.5 million
in the quarter and nine months. The Company's 50% interest in
Silver Legacy, a joint venture hotel/casino which opened July 28,
1995 in Reno, Nevada, added $4.6 million in revenues in its first
full quarter of operations. This represents the Company's
interest in the operating income of the joint venture, which is
included in revenue.
Revenues at the Company's major Las Vegas properties (Circus
Circus-Las Vegas, Luxor and Excalibur) were down slightly in both
the three and nine months compared with the prior year. Casino
revenues at these properties were down roughly 7%-8% in the
quarter and nine months. However, this was partially offset by
higher room revenues stemming from higher average room rates.
Occupancy rates remained strong at nearly 100% for each of these
properties. It is the Company's belief that despite increased
visitor counts and strong hotel occupancy rates in the market,
customers are spending relatively less on gaming and more in the
other areas of the mega-resorts.
The Company's Laughlin properties reported a combined decrease of
approximately 10% in revenues in the third quarter and 11% year-
to-date. In February 1995, a new Indian casino opened over 300
rooms and another competitor in Laughlin opened more than 700
additional rooms. Laughlin has also felt the effect of
competition from the new mega-resorts in Las Vegas, as well as
the effect of unregulated Indian gaming in its prime Arizona
feeder markets.
Operating Income
Income from operations (excluding the $45.1 million abandonment
loss and $6.2 million of Silver Legacy preopening expenses in the
second quarter this year, and Circus Circus-Tunica preopening
expenses of $3.0 million in the third quarter last year)
increased $17.2 million, or 24%, in the third quarter and $34.7
million, or 17%, in the nine months, versus the same periods last
year. The Company's composite operating margin (excluding the
above nonrecurring items) was 25.0% and 23.9% for the three and
nine months, versus 23.2% and 22.5% last year.
The Company's 50% interest in The Grand Victoria casino riverboat
(a joint venture with the Hyatt acquired as part of the Gold
Strike acquisition on June 1, 1995) was the main factor for the
increase, generating $12.8 million in operating income in the
third quarter and $20.5 million year-to-date. The Grand Victoria
led all riverboats in the country in casino revenues and
operating income in the quarter. The other major properties
acquired as part of the Gold Strike acquisition (Gold Strike,
Nevada Landing and Railroad Pass) were also solid contributors,
producing operating income of $5.6 million and $8.7 million in
the three and nine month periods, respectively.
In Reno, Silver Legacy (a joint venture with Eldorado Hotel and
Casino) completed its first full quarter of operations,
generating approximately $4.6 million as the Company's 50% share
of operating income. This property posted an operating cash flow
margin of 33% and an occupancy rate of 98% on its 1,284 rooms (an
additional 400 rooms will open by fiscal year end). At Circus
Circus-Reno, operating income declined $1.5 million in the
quarter, as the novelty effect of the adjacent Silver Legacy
attracted visits from its casino patrons, while on a year-to-date
basis, operating income was down 2% (excluding asset write-offs).
At Circus Circus-Tunica, operating income for the third quarter
was down approximately $1 million compared against the prior
year, when the property opened August 29, 1994. Additionally, a
new competitor opened adjacent to the property earlier in the
year. For the nine months, operating income rose $10.4 million
compared with the prior year, when the property was in operation
for only a partial period.
In Las Vegas, the Company's major properties (Luxor, Excalibur
and Circus Circus) posted a 5% increase in operating income in
the third quarter, led by Excalibur whose operating income rose
16%, in part due to a reduction in depreciation expense. For the
nine months, operating income at the Las Vegas properties was
relatively flat.
On a combined basis, the Company's Laughlin properties reported a
40% decline in operating income in the third quarter and 30% on a
year-to-date basis, with operating margins also declining.
Additional competition in rooms was a principal factor in these
declines, as room rates and occupancy levels decreased compared
to the prior year (contrary to the trend in Las Vegas).
Interest Expense
Interest expense increased $5.2 million and $10.6 million for the
three and nine months versus the prior year. This increase
stemmed from higher borrowings due principally to the assumption
of approximately $165 million in debt in connection with the Gold
Strike acquisition on June 1, the purchase of the Hacienda Hotel
and Casino for approximately $80 million on September 1 and the
purchase of 73 acres of adjacent property earlier in the year for
approximately $73 million. Capitalized interest was $2.8 million
and $6.1 million for the three months and nine months ended
October 31, 1995, versus $1.5 million and $2.9 million a year
ago. At October 31, 1995, long-term debt stood at $740 million
compared to $608 million at October 31, 1994.
Income Tax
For the three and nine months ended October 31, 1995, the
Company's effective tax rate was approximately 38.9% and 38.0%,
compared with 36.6% and 36.4% in the prior year periods. The
higher tax rates in the current periods reflect the corporate
statutory rate of 35% plus the effect of various non-deductible
expenses, primarily goodwill amortization associated with the
Gold Strike merger.
Financial Position and Capital Resources
The Company had cash and cash equivalents of $74.7 million at
October 31, 1995. Circus' pre-tax cash flow from operations was
$113.1 million and $306.4 million for the three and nine months
ended October 31, 1995 versus $92.0 million and $262.9 million in
the prior year--increases of 23% and 17%, respectively. In this
context, pre-tax cash flow from operations is defined as the
Company's income from operations before asset write-offs and
preopening expenses, plus non-cash operating expenses (primarily
depreciation and amortization).
Capital expenditures for the three and nine months ended October
31, 1995 were $95.2 million and $192.4 million. Capital
expenditures for the quarter related primarily to the acquisition
of the Hacienda Hotel and Casino on September 1, 1995 for
approximately $80 million. For the nine month period, $73
million related to the acquisition of 73 acres of undeveloped
land south of Luxor (see additional discussion below).
On June 1, 1995, the Company completed the acquisition of Gold
Strike Resorts pursuant to an agreement entered into as of March
19, 1995. As a result of the acquisition, the Company now owns
and operates three additional gaming properties in Nevada (Gold
Strike Hotel and Gambling Hall and Nevada Landing in Jean, and
Railroad Pass in Henderson). It also holds a 50% interest in and
operates The Grand Victoria riverboat in Elgin, Illinois (which
opened in October 1994), and holds a 50% interest in a joint
venture (with Mirage Resorts, Incorporated) which is developing
Monte Carlo, a major destination resort under construction on the
Las Vegas Strip for which it serves as the venture's manager. In
exchange for the equity interests in these properties, the
Company issued 16,291,551 shares of its common stock and
preferred stock of a subsidiary which is convertible into an
additional 793,156 shares of the Company's common stock and paid
approximately $12 million in cash, while assuming approximately
$165 million in debt. The Company does not anticipate that the
transaction will have a materially dilutive impact on earnings
per share.
Monte Carlo, the joint venture project with Mirage, will feature
over 3,000 rooms and a 90,000 square foot casino, with a palatial
style reminiscent of the Belle Epoque, the French Victorian
architecture of the late 19th century. This project has an
estimated cost of $344 million (including land, capitalized
interest and preopening expenses), and the Company is obligated
to fund any portion of such cost in excess of certain equity
contributions and the funding provided by a $200 million
construction loan. The Company's total equity contribution is
anticipated to be approximately $63 million, of which $35.1
million had been funded as of October 31, 1995. Monte Carlo is
scheduled to open in the summer of 1996.
During the second quarter, the Company sold its partially
completed riverboat gaming facility in Chalmette, Louisiana for
$4 million. The Company had owned a 50% interest in the joint
venture engaged in the development of this project, which was to
be located approximately 20 minutes from downtown New Orleans.
After re-evaluating the changing circumstances in the New Orleans
market, the Company determined that the project could no longer
promise a sufficiently high rate of return to meet its
objectives. The Company had a net investment in or commitments
for this project of approximately $25.5 million and a loan to the
other joint venturer of $10 million, resulting in a net write-off
of $31.5 million in connection with the disposition.
On July 28, 1995, Silver Legacy, a 50/50 joint venture with the
Eldorado Hotel/Casino (a privately held company) opened in
downtown Reno, Nevada. The Silver Legacy is themed as a turn-of-
the-century silver-mining town and is located on a site between
Circus Circus-Reno and the Eldorado, connected to both properties
by enclosed skyways. The cost of the initial phase of Silver
Legacy was approximately $350 million (excluding capitalized
interest and preopening expenses), of which the venturers
contributed $103.8 million in equity. On May 31, 1995, the joint
venture completed a $230 million bank credit agreement with its
bank group. Part of the proceeds of this loan were used to repay
amounts previously lent to the joint venture by the Company. As
a condition to the credit agreement, Circus guaranteed completion
of Silver Legacy and, in addition, entered into a make-well
agreement whereby it is obligated to make additional
contributions to the joint venture as may be necessary to
maintain a minimum coverage ratio (as defined). As of October
31, 1995, the Company had a net equity investment of
approximately $53.0 million in the project and had outstanding
loans to the joint venture in the principal amount of $26.0
million.
On September 1, 1995, the Company completed the previously
announced acquisition of the Hacienda Hotel and Casino in Las
Vegas for approximately $80 million. The Hacienda is located on
47 acres of land adjacent to Luxor, and contains approximately
1,100 rooms and 35,000 square feet of casino space. Previously,
in March 1995, the Company purchased approximately 73 acres of
undeveloped land at the northwest corner of Russell Road and the
Las Vegas Strip, just south of the Hacienda, at a cost of
approximately $73 million. Both of these acquisitions were
financed under the Company's bank lines of credit. The Company
is developing a master plan for these sites as well as expansion
and improvements of Luxor and Excalibur.
The Company has announced that it expects to commence
construction on a major expansion at Luxor by the end of the
current fiscal year. The expansion will include approximately
2,000 additional rooms, situated in two identical 22-story towers
designed in a stepped-pyramid style, located between Luxor and
Excalibur. The expansion will also include additional casino
space, retail area, restaurants, and a multi-purpose showroom, as
well as a signature "dark" ride with a working title of
"Tutmania", an adventure through the fabled and enchanted tombs
of ancient Egypt. The rooms should open by the end of calendar
1996. The estimated cost for this expansion is expected to be
between $225 and $250 million. It is the Company's belief that
the Las Vegas market can readily absorb significant new capacity,
including that contemplated in its master plan. The development
focus in Las Vegas has shifted toward the south end of the Las
Vegas Strip, where the Company will be building out its master
plan, essentially creating the gateway to Las Vegas.
The Company has also announced that it intends to begin
construction in March 1996 of a 1,000-room tower addition at
Circus Circus-Las Vegas, which is scheduled for completion by the
end of 1996. This addition would bring the total number of rooms
at Circus Circus-Las Vegas to approximately 3,800.
In December 1993, Windsor Casino Limited, a corporation owned
equally by Circus Circus Enterprises, Inc., Caesars World, Inc.
and Hilton Hotels Corporation or their subsidiaries, was selected
to exclusively negotiate an agreement to design, build and
operate a casino complex in Windsor, Ontario, Canada. The
planned complex will include casino, showroom and meeting
facilities as well as a 300-room hotel, all located in Windsor's
central business district, directly across the Detroit River from
Detroit, Michigan. An interim casino, operated by Windsor Casino
Limited, opened in May 1994. On December 12, 1995, the interim
facility was expanded to include a dockside casino, bringing the
total casino space to approximately 75,000 square feet. The
corporation is currently negotiating an agreement for a permanent
facility, expected to be completed in 1997. As of October 31,
1995, Circus had a net equity investment of approximately $10.0
million in this project.
The company is presently in the process of negotiating a new $1.5
billion revolving credit facility with its bank group. This
facility would replace its existing $500 million and $250 million
revolvers. Commitments to subscribe this facility have been
received from more than 20 banks and the new revolver is expected
to be in place by fiscal year-end.
The Company's Board of Directors has authorized the repurchase of
up to 15% of the Company's common stock, subject to share price.
In the past, Circus has been a periodic repurchaser of its shares
at the same time that it has increased its operating capacity.
The Company believes that it has sufficient capital resources
through its bank facilities and its operating cash flows to meet
all of its existing cash obligations, fund its commitments on
each of the above discussed projects and strategically repurchase
shares. The Company anticipates that additional funds could,
however, be raised through debt or equity if necessary.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Item 1 of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended July 31, 1995.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits filed as part of this report are listed on
the Index to Exhibits accompanying this report.
(b) Reports on Form 8-K. During the fiscal quarter ended
July 31, 1995, the Company made a filing on Form 8-K dated June
1, 1995, which included information in response to items 2 and 7
of Form 8-K. The financial statements required in item 7 were
(in accordance with paragraph (a)(4) of item 7) filed by an
amendment on Form 8-K/A dated August 11, 1995. Such financial
statements, which relate to the Company's acquisition described
in item 2 of such Form 8-K, consist of the following:
(1) The audited combined financial statements of Gold
Strike Resorts for the years ended December 31, 1994
and 1993.
(2) The audited financial statements of Elgin Riverboat
Resort - Riverboat Casino for the years ended December
31, 1994 and 1993.
(3) Combined pro forma balance sheets of the Company as of
April 30, 1995 and Gold Strike Resorts as of May 31,
1995.
(4) Combined pro forma income statements of the Company for
the twelve months ended January 31, 1995 and Gold
Strike Resorts for the twelve months ended December 31,
1994.
(5) Combined pro forma income statements of the Company for
the three months ended April 30, 1995 and Gold Strike
Resorts for the three months ended May 31, 1995.
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.
CIRCUS CIRCUS ENTERPRISES, INC.
(Registrant)
Date: December 14, 1995 By CLYDE T. TURNER
Clyde T. Turner
Chairman of the Board and
Chief Executive Officer
Date: December 14, 1995 By GLENN W. SCHAEFFER
Glenn W. Schaeffer
President and Chief Financial
Officer
INDEX TO EXHIBITS
Exhibit
No. Description
10(a). Amendment No. 4, dated as of October 16, 1995, to the
Reducing Revolving Loan Agreement, dated as of December
21, 1994, among Victoria Partners, each bank party
thereto, The Long-Term Credit Bank of Japan, Ltd., Los
Angeles Agency, and Societe Generale, as Co-agents, and
Bank of America National Trust and Saving Association,
as Administrative Agent.
27. Financial Data Schedule for the nine months ended
October 31, 1995.
AMENDMENT NO. 4 TO REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 4 to Reducing Revolving Loan
Agreement (this "Amendment") dated as of October 16, 1995 is
entered into with reference to the Reducing Revolving Loan
Agreement dated as of December 21, 1994 among Victoria
Partners, a Nevada general partnership (as "Borrower"), the
Banks listed on the signature pages of this Amendment, 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 Agent, as
amended by the Amendment No. 1 to Reducing Revolving Loan
Agreement dated as of January 31, 1995, Amendment No. 2 to
Reducing Revolving Loan Agreement dated as of June 30, 1995 and
Amendment No. 3 to Reducing Revolving Loan Agreement dated as
of July 28, 1995 (the "Loan Agreement").
RECITALS
A. Borrower has requested that the Banks increase the
amount of the Commitment under the Loan Agreement
referred to above from $175,000,000 to $200,000,000.
B. Subject to the terms hereof, Credit Lyonnais Cayman
Island Branch, Credit Lyonnais Los Angeles Branch and
Bankers Trust Company (collectively, the "New Banks")
have agreed to become parties to the Loan Agreement
as Banks and to assume the increase to the Commitment
described above, with each such New Bank to have a
Pro Rata Share as set forth herein.
NOW, THEREFORE, Borrower, the Administrative Agent
and the undersigned Banks (representing all of the Banks now
party to the Loan Agreement and the New Banks), agree as
follows:
1. Amendment to Section 1.1 - Amended Definitions.
The definition of "Commitment" set forth in Section 1.1 of the
Loan Agreement is amended to read in full as follows:
"Commitment" means (a) at all times prior to the
Construction Termination Date, $200,000,000 and (b) at all
times after the Construction Termination Date, the sum,
not to exceed $200,000,000 of (i) the outstanding
principal Indebtedness evidenced by the Notes on the
Construction Termination Date, plus (ii) $2,000,000, plus
the amount of Construction Costs accrued with respect to
the Project which then remain unpaid, in each case minus
the amount of any reductions thereto made pursuant to
Sections 2.4, 2.5 and 2.6. The respective Pro Rata Shares
of the Banks with respect to the Commitment are set forth
in Schedule 1.1."
2. Section 2.6 - Scheduled Reductions of the
Commitment. Section 2.6 of the Loan Agreement is amended to
read in full as follows:
"2.6 Scheduled Mandatory Reductions of Commitment.
The Commitment shall automatically and permanently reduce
(a) on the last day of the fourth Post-Construction Fiscal
Quarter, to an amount which is not greater than
$170,000,000, (b) on the last day of the fifth Post-
Construction Fiscal Quarter and each of the next seven
Post-Construction Fiscal Quarters, by $7,250,000, and (c)
on the last day of each subsequent Post-Construction
Fiscal Quarter, by $14,000,000."
3. Section 6.9(d) - Secured Swap Agreements.
Section 6.9(d) of the Loan Agreement is amended to read in full
as follows:
"(d) Indebtedness consisting of one or more Swap
Agreements; provided, that the aggregate notional amount
of Indebtedness covered by all Secured Swap Agreements
shall not exceed $125,000,000; and"
4. Amendment to Exhibit J - Request for Loan.
Exhibit J to the Loan Agreement is hereby replaced with the new
Exhibit J attached hereto.
5. Joinder of the New Banks.
(a) Each of the New Banks hereby joins and becomes a
party to the Loan Agreement as a Bank. Each New Bank
shall have all of the obligations under the Loan Documents
of, and shall be deemed to have made all of the covenants
and agreements contained in the Loan Documents made by, a
Bank having a Pro Rata Share as reflected on the revised
Schedule 1.1 attached hereto. Each New Bank acknowledges
and agrees that the agreement set forth in this Para-
graph 4 is expressly made for the benefit of the Borrower,
the Administrative Agent and the other Banks and their
respective successors and permitted assigns. From and
after the effective date of this Amendment, each New Bank
shall be a party to the Loan Agreement and, to the extent
provided herein, shall have the rights and obligations of
a Bank under the Loan Agreement and the other Loan
Documents.
(b) Each New Bank represents and warrants that it
has become a party hereto solely in reliance upon its own
independent investigation of the financial and other
circumstances surrounding Borrower, the collateral, and
all aspects of the transactions evidenced by or referenced
in the Loan Documents, or has otherwise satisfied itself
with respect thereto, and that it is not relying upon any
representation, warranty or statement (except any such
representation, warranty or statement expressly set forth
in this Amendment) of the Administrative Agent or any Bank
in connection with its decision to enter into the Loan
Documents. Each New Bank further acknowledges that it
will, independently and without reliance upon the Adminis-
trative Agent or any other Bank and based upon such New
Bank's review of such documents and information as it
deems appropriate at the time, continue to make its own
credit decisions in connection with the Loan Documents.
(c) Each New Bank represents and warrants that it
has experience and expertise in the extension of credits
of the type contemplated by the Loan Documents; that it
has acquired its Pro Rata Share for its own account and
not with any present intention of selling all or any
portion of such interest; and that it has received,
reviewed and approved copies of all Loan Documents.
(d) The Administrative Agent and the other Banks
shall not be responsible to the New Banks for the execu-
tion, effectiveness, accuracy, completeness, legal effect,
genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents (other than their
own due execution of the Loan Documents) or for any repre-
sentations, warranties, recitals or statements made
therein or in any written or oral statement or in any
financial or other statements, instruments, reports,
certificates or any other documents made or furnished or
made available by them to the New Banks (other than
representations, warranties, recitals or statements made
by them therein) or by or on behalf of the Borrower to the
New Banks in connection with the Loan Documents and the
transactions contemplated thereby or for the financial
condition or business affairs of the Borrower or any other
Person liable for the payment of any of the Obligations,
the value of the Collateral or any other matter. The
Administrative Agent and the other Banks shall not be
required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Advances
or other extensions of credit under the Loan Agreement or
as to the existence or possible existence of any Default
or Event of Default.
6. Conditions Precedent. The effectiveness of this
Amendment shall be conditioned upon the fulfillment of each of
the following conditions precedent:
(a) The Administrative Agent shall have
received all of the following, each of which shall be
originals unless otherwise specified, each properly
executed by a Responsible Official of each party thereto,
each dated as of the date hereof and each in form and
substance satisfactory to the Administrative Agent and its
legal counsel (unless otherwise specified or, in the case
of the date of any of the following, unless the
Administrative Agent otherwise agrees or directs):
(1) Counterparts of this Amendment
executed by all parties hereto;
(2) Notes executed by Borrower in favor of
each New Bank in a principal amount equal to that New
Bank's Pro Rata Share of the Commitment;
(3) an Amendment to the Deed of Trust
increasing, as a matter of record, the amount of the
obligations secured thereby to $200,000,000, together
with related endorsements to the policies of title
insurance issued in connection with the Deed of Trust
and reinsurance arrangements with respect to the
increased amount of the Commitment which are
acceptable to the Administrative Agent;
(4) Certified copies of partnership
resolutions authorizing the transactions contemplated
hereby of the managing general partner of Borrower,
in form and substance acceptable to the
Administrative Agent; and
(5) Such other assurances, certificates,
documents, consents or opinions as the Administrative
Agent reasonably may require.
(c) Borrower shall have paid a non-refundable
up-front fee to each New Bank in an amount set forth in a
letter agreement between Borrower and that New Bank.
(d) The New Banks shall have received a
reliance letter acceptable to them with respect to the
legal opinion issued by Borrower's counsel, Schreck,
Jones, Bernhard, Woloson & Godfrey, Chartered, on the
Contribution Date.
(e) The reasonable costs and expenses of the
Administrative Agent in connection with the preparation of
this Amendment and invoiced to Borrower prior to the date
hereof shall have been paid.
(f) The representations and warranties of
Borrower contained in Article 4 of the Loan Agreement
shall be true and correct.
(g) Borrower and any other Parties shall be in
compliance with all the terms and provisions of the Loan
Documents and no Default or Event of Default shall have
occurred and be continuing.
(h) All legal matters relating to the Loan
Documents shall be satisfactory to Sheppard, Mullin,
Richter & Hampton, special counsel to the Administrative
Agent.
7. Representation and Warranty. Borrower
represents and warrants to the Administrative Agent and the
Banks that no Default or Event of Default has occurred and
remains continuing.
8. Confirmation. In all other respects, the terms
of the Loan Agreement and the other Loan Documents are hereby
confirmed.
IN WITNESS WHEREOF, Borrower, the Administrative
Agent and the Banks have executed this Amendment as of the date
first written above by their duly authorized representatives.
"Borrower"
VICTORIA PARTNERS, a Nevada general
partnership
By: Gold Strike L.V., managing
general partner
By: Last Chance Investments,
Incorporated,
general partner
By:_____________________________
Title:__________________________
By: MRGS Corp., a Nevada corporation,
general partner
By:_____________________________
Daniel R. Lee, Chief Financial
Officer and Treasurer
"Administrative Agent"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By:__________________________________
Peggy A. Fujimoto, Vice President
"Existing Banks"
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: __________________________________
Jon Varnell, Managing Director
BANK OF AMERICA NEVADA, as a Bank and
as Swing Line Bank
By: __________________________________
Alan F. Gordon, Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as Co-Agent
and a Bank
By: __________________________________
Motokazu Uematsu,
Deputy General Manager
SOCIETE GENERALE, as Co-Agent and a
Bank
By: __________________________________
Donald L. Schubert, Vice President
FIRST SECURITY BANK OF IDAHO, N.A., as
a Bank
By:__________________________________
Victor W. Gillett, Vice President
FIRST SECURITY BANK OF UTAH, N.A., as
a Bank
By: __________________________________
David P. Williams, Vice President
BANK OF SCOTLAND, as a Bank
By: __________________________________
Catherine M. Oniffrey,
Vice President
MIDLANTIC BANK, N.A., as a Bank
By: __________________________________
Denise D. Killen, Vice President
U.S. BANK OF NEVADA, as a Bank
By:___________________________________
Amy Ethridge, Vice President
"New Banks"
CREDIT LYONNAIS LOS ANGELES BRANCH
By: __________________________________
Title: _______________________________
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: __________________________________
Title:________________________________
Address:
Credit Lyonnais
515 South Flower St., Suite 2200
Los Angeles, CA 90071
Attn: David Miller
Vice President
Telecopier: (213) 623-3437
Telephone: (213) 362-5900
BANKERS TRUST COMPANY
By: __________________________________
Title: _______________________________
Address:
Bankers Trust Company
1 Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attn: __________________________
Telecopier: ____________________
Telephone: _____________________
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Fl.
Los Angeles, California 90071
Attn: Karen Reed, Vice President
Telecopier: (213) ______________
Telephone: (213) ______________
The undersigned agrees and consents
to the foregoing:
CIRCUS CIRCUS ENTERPRISES, INC.,
as Construction Guarantor
By:_________________________
Title:______________________
Schedule 1.1
Pro Rata
Bank Share Amount
Bank of America National
Trust and Savings Association 17.5% $ 35,000,000
Bank of America Nevada 7.5% $ 15,000,000
Long-Term Credit Bank of Japan 15.0% $ 30,000,000
Societe Generale 15.0% $ 30,000,000
First Security Bank of Idaho 5.0% $ 10,000,000
First Security Bank of Utah 5.0% $ 10,000,000
Bank of Scotland 7.5% $ 15,000,000
Midlantic Bank, N.A. 7.5% $ 15,000,000
Bankers Trust Company 7.5% $ 15,000,000
U.S. Bank of Nevada 7.5% $ 15,000,000
Credit Lyonnais Cayman 5.0% $ 10,000,000
Island Branch
and
Credit Lyonnais Los Angeles
Branch
_______________________________________________________________
Total 100% $200,000,000
EXHIBIT J
REQUEST FOR LOAN
1. This REQUEST FOR LOAN is executed and delivered
by Victoria Partners, a Nevada general partnership
("Borrower"), to Bank of America National Trust and Savings
Association, as Administrative Agent, pursuant to that certain
Reducing Revolving Loan Agreement (as amended, modified or
extended, the "Agreement") dated as of December 21, 1994, among
Borrower, the Banks that are parties thereto, 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 Agent. Any terms used
herein and not defined herein shall have the meanings set forth
for such terms in the Agreement.
2. Borrower hereby requests that the Banks make a
Loan pursuant to the Agreement as follows:
(a) AMOUNT OF REQUESTED LOAN: $______________
(b) DATE OF REQUESTED LOAN: _________________
(c) TYPE OF REQUESTED LOAN (Check one box only):
ALTERNATE BASE RATE
EURODOLLAR RATE FOR AN INTEREST PERIOD OF
________ MONTHS
3. In connection with the request, Borrower certifies
that:
(a) If this Request for Loan is for a Loan which
will increase the principal amount outstanding under the
Notes, now and as of the date of the requested Loan,
except (i) for representations and warranties which
expressly speak as of a particular date or which are no
longer true and correct as a result of a change permitted
by the Agreement or (ii) as disclosed by Borrower and
approved in writing by the Administrative Agent or the
Requisite Banks as required by the Agreement, each repre-
sentation and warranty made by Borrower in Article 4 of
the Agreement (other than Sections 4.5 (first sentence),
4.10 and 4.17) will be true and correct, both immediately
before and after giving effect to such Loan, as though
such representations and warranties were made on and as of
that date;
(b) If this Request for Loan is for a Loan
which will increase the principal amount outstanding under
the Notes, other than matters described in Schedule 4.18
to the Agreement or not required as of the Closing Date to
be described therein, there is not any action, suit,
proceeding or investigation pending as to which Borrower
has been served or received notice or, to the best
knowledge of Borrower, threatened against or affecting
Borrower or any of its Property before any Governmental
Agency that constitutes a Material Adverse Effect; and
(c) If this Request for Loan is for a
Eurodollar Rate Loan or for any Loan which will result in
an increase in the principal amount outstanding under the
Notes, no Default or Event of Default presently exists or
will have occurred and be continuing as a result of the
Loan.
(d) The Funded Debt to Project Costs Ratio effective
as of the date hereof is __________:1.00, calculated as
follows:
Funded Debt (A) minus (B) plus (without duplication) (C)
below, is $___________________.
(A) Principal Indebtedness of Borrower and its
Subsidiaries for borrowed money (including debt
securities issued by Borrower or any of its
Subsidiaries)
$_____________________
minus (B) Principal amount of the Partner
Subordinated Notes
[$____________________]
plus (C) Aggregate amount of all Capital Lease
Obligations of Borrower and its Subsidiaries
$______________________
Project Costs equals the sum of (D) and (E)
(D) Cumulative Construction Costs paid or incurred by
Borrower with respect to the Project (as set forth in
the Construction Progress Report submitted
__________, 19___.
$______________________
plus (E) the Attributed Land Value.
$______________________
4. This Request for Loan is executed on __________,
19___, by a Responsible Official of Borrower. The undersigned,
in such capacity, hereby certifies each and every matter
contained herein to be true and correct.
VICTORIA PARTNERS,
a Nevada general partnership
By:___________________________
General Partner
By:_______________________
Title:____________________
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<PERIOD-END> OCT-31-1995
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<RECEIVABLES> 14,535
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18,530
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<OTHER-SE> 1,183,015
<TOTAL-LIABILITY-AND-EQUITY> 2,196,659
<SALES> 976,005
<TOTAL-REVENUES> 976,005
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<INCOME-PRETAX> 150,439
<INCOME-TAX> 57,174
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