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 April 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 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 May 31, 1996
Common Stock, $.01-2/3 par value 103,870,923 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
April 30, 1996 (Unaudited) and January 31,
1996........................................... 3-4
Condensed Consolidated Statements of Income
(Unaudited) for the Three Months Ended
April 30, 1996 and 1995........................ 5
Condensed Consolidated Statements of Cash
Flows (Unaudited) for the Three Months Ended
April 30, 1996 and 1995........................ 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.... 18-23
Part II. OTHER INFORMATION 24
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
April 30, January 31,
1996 1996
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents................ $ 70,634 $ 62,704
Receivables.............................. 19,325 14,527
Inventories.............................. 19,627 20,459
Prepaid expenses and other............... 25,356 26,690
Total current assets................ 134,942 124,380
PROPERTY, EQUIPMENT AND LEASEHOLD INTERESTS,
at cost, less accumulated depreciation
and amortization of $507,547 and $490,596
respectively............................. 1,495,186 1,474,684
EXCESS OF PURCHASE PRICE OVER FAIR MARKET
value of net assets acquired, net........ 393,240 394,518
NOTES RECEIVABLE............................ 33,777 27,508
INVESTMENTS IN UNCONSOLIDATED AFFILIATES.... 183,309 173,270
OTHER ASSETS................................ 19,863 17,533
Total Assets......................... $2,260,317 $2,211,893
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
April 30, January 31,
1996 1996
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt................ $ 420 $ 863
Accounts payable - trade ........................ 23,306 16,824
Accrued liabilities ............................. 104,000 76,235
Total current liabilities ................ 127,726 93,922
LONG-TERM DEBT ...................................... 673,327 715,214
DEFERRED INCOME TAX ................................. 153,836 148,096
OTHER LONG-TERM LIABILITIES ......................... 9,159 9,319
Total liabilities ........................ 964,048 966,551
REDEEMABLE PREFERRED STOCK........................... 18,530 18,530
STOCKHOLDERS' EQUITY:
Common stock, $.01-2/3 par value
Authorized - 450,000,000 shares
Issued - 112,799,832 and 112,795,332 shares ... 1,880 1,880
Preferred stock, $.01 par value
Authorized - 75,000,000 shares ................ - -
Additional paid-in capital ...................... 530,030 527,205
Retained earnings ............................... 927,103 883,630
Treasury stock (9,450,909 and 9,828,809 shares),
at cost........................................ (181,274) (185,903)
Total stockholders' equity ............... 1,277,739 1,226,812
Total Liabilities and
Stockholders' Equity .................. $2,260,317 $2,211,893
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
Ended April 30,
REVENUES: 1996 1995
Casino ....................................... $175,178 $153,351
Rooms ........................................ 77,690 68,229
Food and beverage ............................ 54,966 47,132
Other ........................................ 39,462 35,655
Earnings of unconsolidated affiliates ........ 19,815 1,565
367,111 305,932
Less-complimentary allowances ................ (14,226) (10,899)
352,885 295,033
COSTS AND EXPENSES:
Casino ....................................... 74,347 63,362
Rooms ........................................ 29,077 25,665
Food and beverage ............................ 50,662 40,168
Other operating expenses ..................... 23,432 19,684
General and administrative ................... 53,845 47,956
Depreciation and amortization ................ 24,496 22,261
Abandonment loss.............................. 8,206 -
264,065 219,096
OPERATING PROFIT BEFORE CORPORATE
EXPENSE ...................................... 88,820 75,937
CORPORATE EXPENSE .............................. 7,523 4,891
INCOME FROM OPERATIONS ......................... 81,297 71,046
OTHER INCOME (EXPENSE):
Interest, dividend and
other income ............................... 1,167 525
Interest income and guarantee
fees from unconsolidated affiliate ......... 1,598 2,310
Interest expense ............................. (12,134) (12,514)
Interest expense from unconsolidated
affiliate .................................. (2,543) -
(11,912) (9,679)
INCOME BEFORE PROVISION FOR
INCOME TAX.................................... 69,385 61,367
Provision for income tax ..................... 25,913 21,967
NET INCOME ..................................... $ 43,472 $ 39,400
EARNINGS PER SHARE.............................. $ .42 $ .46
Average shares outstanding ................... 103,116,564 85,859,152
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)
Three Months
Ended April 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 43,472 $ 39,400
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 26,245 22,697
(Gain) loss on disposition of fixed assets 7,831 (190)
Increase in other current assets (2,632) (2,519)
Increase in other noncurrent assets (2,310) (5,307)
Increase in interest payable 10,857 10,037
Increase in other current liabilities 23,390 25,082
Increase in deferred income tax 5,740 4,060
Decrease in other noncurrent liabilities (16) (16)
Unconsolidated affiliates' earnings in
excess of distributions (2,011) (695)
Total adjustments 67,094 53,149
Net cash provided by operating activities 110,566 92,549
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (51,618) (82,836)
Increase in investments in unconsolidated
affiliates (8,054) (4,670)
Increase in notes receivable (6,269) (58,936)
Proceeds from sale of equipment and other assets 388 271
Other (1,273) (5)
Net cash used in investing activities (66,826) (146,176)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior notes 199,562 -
Net effect on cash of issuances and payments
of debt with initial maturities of
three months or less (225,212) 70,780
Issuances of debt with original maturities
in excess of three months - 5,880
Principal payments of debt with original
maturities in excess of three months (16,699) (45)
Exercise of stock options and warrants 6,684 229
Other (145) -
Net cash provided by (used in)
financing activities (35,810) 76,844
Net increase in cash and cash equivalents 7,930 23,217
Cash and cash equivalents at beginning of period 62,704 53,764
Cash and cash equivalents at end of period $ 70,634 $ 76,981
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
Three Months
Ended April 30,
1996 1995
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest (net of amount capitalized) $ 0 $ 2,193
Income tax $ 40 $ 101
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 months ended April 30, 1996 and 1995
is unaudited.)
(1) Principles of consolidation and basis of presentation -
Circus Circus Enterprises, Inc. (the "Company") was
incorporated February 27, 1974. The Company owns and operates
hotel and casino facilities in Las Vegas, Reno, Laughlin, Jean
and Henderson, Nevada and a dockside casino in Tunica County,
Mississippi. It is also an investor in several unconsolidated
affiliates, with operations that include a casino in Windsor,
Canada, a riverboat casino in Elgin, Illinois and a hotel/casino
in Reno, Nevada. The Company is also an investor in a
hotel/casino that will open on the Las Vegas Strip on June 21,
1996. (See Note 7.)
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
period 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 months ended April 30, 1995 to conform
to the financial statement presentation for the three months
ended April 30, 1996. 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, 1996.
(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. 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.
(3) Long-term debt -
Long-term debt consists of the following (in thousands):
April 30, January 31,
1996 1996
(Unaudited)
Amounts due under corporate
debt program at floating
interest rates, weighted
average of 5.6% $ 69,115 $210,188
6.45% Senior Notes due 2006
(net of unamortized discount
of $427) 199,573 -
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 $115 and $119) 149,885 149,881
(3) Long-term debt (continued) -
10-5/8% Senior Subordinated Notes
due 1997 (net of unamortized
discount of $20 and $24) 99,980 99,976
Amounts due under bank credit
agreements at floating interest
rates - 100,000
Other notes 5,194 6,032
673,747 716,077
Less - current portion (420) (863)
$673,327 $715,214
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
program, it must maintain an equivalent amount of credit
available under its bank credit facility discussed more fully
below.
In January 1996, the Company renegotiated its $250 million
unsecured 364-day facility and its $500 million unsecured
reducing revolver, both of which were dated September 30, 1993,
as well as a $145 million reducing revolving credit agreement
assumed by the Company upon its acquisition of Gold Strike
Resorts in June 1995. These agreements were replaced by a new
$1.5 billion unsecured credit facility (reducing to $1.2 billion
on December 31, 1999) which matures on December 31, 2000 (the
"Facility"). The maturity date and reduction date may each be
extended for an unlimited number of one-year periods with the
consent of the bank group. The Facility contains financial
covenants regarding minimum net worth, interest charge coverage,
total debt and new venture capital expenditures and investments.
The Facility is for general corporate purposes. The Company
incurs commitment fees of 22.50 basis points on the unused
portion of the Facility. As of April 30, 1996, the Company had
no borrowings under the Facility. At such date, the Company had
$69.1 million issued under the corporate debt program thus
reducing, by that amount, the credit available under the Facility
for purposes other than repayment of corporate debt. The fair
(3) Long-term debt (continued) -
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.
The Company filed a shelf registration statement, effective
January 11, 1996, with the Securities and Exchange Commission
which will allow the issuance of up to $400 million of various
types of debt securities. In February 1996, the Company issued
$200 million principal amount of 6.45% Senior Notes due February
1, 2006 (the "6.45% Notes"), with interest payable each February
and August. The 6.45% Notes, which were discounted to $199.6
million, are not redeemable prior to maturity and are not subject
to any sinking fund requirements. The net proceeds from this
offering were used primarily to repay borrowings under the
Company's corporate debt program.
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 July and January. 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
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 April 30, 1996, $9.1 million principal amount of the 10-
5/8% Notes was owned by one of the Company's directors.
The Company has a policy aimed at managing interest rate
risk associated with its current and anticipated future
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
(3) Long-term debt (continued) -
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 8.8%) and receives a variable interest rate
(weighted average of approximately 5.3% at April 30, 1996) on
$113.5 million notional amount of "initial" swaps, and pays a
variable interest rate (weighted average of approximately 5.2% at
April 30, 1996) 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, due to an interest rate differential
which, at April 30, 1996, was approximately 1.2% 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 $29 million,
but declines to $22.5 million by its termination date in fiscal
1999. Excluding this swap, the 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 (5.3% at April
30, 1996 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 parties to the interest
rate swap agreements. However, the Company considers the risk of
nonperformance by the counterparties to be minimal because the
parties to the swaps and reverse swaps are predominantly members
of the Company's bank group.
As of April 30, 1996, under the Company's most restrictive
loan covenants, the Company was restricted as to the payment of
dividends in excess of approximately $162 million, the purchase
of its own capital stock in excess of approximately $462 million
and was restricted from issuing additional debt in excess of
approximately $806 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 April 30, 1996, warrants representing 4.0
million shares had been exercised, including warrants represent-
ing 204,500 shares which were exercised during the three months
ended April 30, 1996.
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 three months
ended April 30, 1996, options for 145,000 shares were granted at
an exercise price of $34.00 per share, while options for 177,900
shares were exercised at prices ranging from $15.29 to $21.25
with a weighted average exercise price of $21.10 per share. As
of April 30, 1996, options for 7.4 million shares remained
exercisable at prices ranging from $8.58 to $39.34 with a
weighted average exercise price of $25.00 per share, while
options covering 2.4 million shares remained available for grant.
The stock options are generally exercisable in one or more
installments beginning not less than six months after the grant
date.
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
generally 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.
(4) Warrants, stock options and stock rights (continued) -
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. In general, 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 unconsolidated affiliates -
The Company has investments in unconsolidated affiliates
that are accounted for under the equity method. Using 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 unconsolidated affiliates consist
of the following (in thousands):
April 30, January 31,
1996 1996
(Unaudited)
Circus and Eldorado Joint Venture (50%)
(Hotel/Casino, Reno, Nevada) $ 53,022 $ 52,917
Windsor Casino Limited (33 1/3%)
(Casino, Windsor, Canada) 13,902 11,799
Elgin Riverboat Resort (50%)
(Riverboat Casino, Elgin, Illinois) 53,987 56,719
Victoria Partners (50%)
(Hotel/Casino, Las Vegas, Nevada) 62,398 51,835
$183,309 $173,270
(9) Abandonment loss -
During the first quarter, the Company wrote-off $8.2 million
of costs associated with the demolition of a people-mover at
Circus Circus-Las Vegas and the planned removal of the Nile River
at Luxor, which will occur in the second quarter. These write-
offs were related to the ongoing construction of new hotel towers
and related remodeling at both properties.
(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 400-room hotel, all located in Windsor's
(10) Commitments and contingent liabilities (continued) -
central business district, immediately across the Detroit River
from Detroit, Michigan. An interim casino, operated by Windsor
Casino Limited, opened in May 1994. In December 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.
In July 1995, Silver Legacy, a 50/50 joint venture with the
Eldorado Hotel/Casino (a privately held company) opened in
downtown Reno, Nevada. As a condition to the joint venture's
$230 million bank credit agreement, which funded a portion of the
cost of the project, Circus 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 April 30, 1996, the Company had
outstanding loans to the joint venture in the principal amount of
$33.8 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 $350 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, $10 million in vendor financing
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 $70 million, of
which $53.1 million had been funded as of April 30, 1996. Monte
Carlo is scheduled to open June 21, 1996.
In January 1996, the Company commenced construction on a
major expansion at Luxor that 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 multipurpose showroom, as
well as a signature dark ride with a working title of "Tutmania,"
a special-effects 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
approximately $250 million and as of April 30, 1996, $26.2
million had been incurred.
(10) Commitments and contingent liabilities (continued) -
Also in January 1996, the Company commenced construction of
a 1,000-room tower addition at Circus Circus-Las Vegas, which is
scheduled for completion by the end of 1996. This addition will
bring the total number of rooms at Circus Circus-Las Vegas to
approximately 3,800. In concert with this expansion, the Company
is also refurbishing all of the existing rooms at Circus Circus-
Las Vegas. The estimated cost of the 1,000-room tower is
approximately $60 million and as of April 30, 1996, $4.7 million
had been incurred.
The Company has funded the above projects from internal cash
flows, project specific financing or its credit facility, and
anticipates that future funding for such projects will be from
these sources, including the $1.5 billion credit facility, of
which approximately $69 million was drawn as of April 30, 1996.
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
For the quarter ended April 30, 1996, the Company reported net
income of $43.5 million, or $.42 per share, versus $39.4 million,
or $.46 per share, in the prior year quarter. Current year
results reflect asset write-offs of $8.2 million related to the
demolition of a people-mover at Circus Circus-Las Vegas and the
planned removal of the Nile River at Luxor (which will occur in
the second quarter). These write-offs relate to the ongoing
construction of new hotel towers and related remodeling at these
properties. On the same basis of operations, excluding the
write-offs, earnings were $.47 per share, a record for any
quarter in the Company's history. An all-time record operating
quarter at Excalibur and continued impressive performance at The
Grand Victoria, the Company's 50% owned riverboat casino in
Elgin, Illinois (acquired as part of the acquisition of Gold
Strike Resorts on June 1, 1995), drove these results.
Revenues
Revenues for the Company increased $57.9 million, or 20%, versus
the prior year. The acquisition of Gold Strike Resorts in the
second quarter of the prior year (see Note 2 of Notes to
Condensed Consolidated Financial Statements) was a principal
factor in this increase, as these properties (Gold Strike, Nevada
Landing, Railroad Pass and The Grand Victoria) produced $39.0
million in revenues for the first quarter. The Company's 50%
ownership in The Grand Victoria accounted for the most
significant portion of these revenues. (For accounting purposes,
the Company's share of the operating income of joint ventures is
reflected as revenue under earnings of unconsolidated
affiliates.) The acquisition of the Hacienda Hotel and Casino on
September 1, 1995 was also a factor, as this property produced
$15.5 million in revenues for the first quarter. In connection
with the Company's planned construction of a new hotel/casino on
the Hacienda site, the Hacienda will cease operations and be
demolished later this calendar year.
In Las Vegas, revenues at the Company's properties were up
slightly on a combined basis. While revenues were up 8% at
Excalibur, first quarter results at Luxor and Circus Circus-Las
Vegas compared below the prior year. Both properties have
experienced considerable disruption due to the ongoing
construction of 1,000 new rooms at Circus Circus and 2,000 new
rooms at Luxor. These expansion projects are scheduled for
completion by year-end. Despite the disruptions, occupancy rates
at all three properties were 100% for the quarter.
<PAGE>
In Reno, revenues at Circus Circus-Reno were off 10% versus the
prior year, when an extended bowling convention contributed to
business in the city. Results at this property have also been
impacted by the adjacent Silver Legacy (50% owned by
the Company), which opened July 28, 1995. For its part, the
Company's interest in Silver Legacy generated $2.6 million in
revenue for the first quarter.
In Laughlin, the Colorado Belle and the Edgewater reported a
combined 7% increase in revenues, as this market may have begun
to stabilize from the impact of various competitive factors,
including competition from new theme resorts in Las Vegas and
the emergence of unregulated Native American casinos in
Laughlin's Arizona and California feeder markets. However, the
opening this year of several major theme resorts in Las Vegas,
including the opening of Monte Carlo on June 21, 1996, could
again adversely affect the Laughlin market.
Operating Income
For the quarter ended April 30, 1996, income from operations
(excluding the $8.2 million in asset write-offs discussed
previously) rose $18.5 million, or 26%, from last year's first
quarter. The Company's composite operating margin (before the
asset write-offs) was 25.4% versus 24.1% in the prior year
quarter.
The increase in operating income was due primarily to the June 1,
1995 acquisition of Gold Strike Resorts, which contributed $17.8
million in operating income during the first quarter, led by The
Grand Victoria (the 50% owned riverboat casino in Elgin,
Illinois), which produced the highest reported operating cash
flow ever for a cruising gaming vessel in a three-month period.
Additionally, Excalibur had its all-time record operating
quarter, posting a 34% increase in operating income versus the
prior-year first quarter and producing operating cash flow of
$29.3 million, 14% higher than its previous highest quarter.
These results were partially offset by lower comparisons at
Circus Circus-Las Vegas, Luxor and Circus Circus-Reno, for
reasons discussed previously under "Revenues".
Interest Expense
Total interest expense for the quarter rose $2.2 million compared
to the first quarter last year. The increase was due primarily
to the Company recording its 50% share of Silver Legacy's
interest expense. Capitalized interest was $2.9 million for the
quarter ended April 30, 1996 versus $1.5 million in the year-ago
quarter. Long-term debt at April 30, 1996 stood at $673 million
compared to $709 million at April 30, 1995.
Income Tax
The Company's effective tax rate for the three months ended April
30, 1996 was 37.3% compared with 35.8% for the three months ended
April 30, 1995. These rates reflect the corporate statutory rate
of 35% plus the effect of various nondeductible expenses,
including in the current quarter, the amortization of goodwill
associated with the Gold Strike transaction.
Financial Position and Capital Resources
The Company had cash and cash equivalents of $70.6 million at
April 30, 1996, reflecting normal daily operating requirements.
The Company's pretax cash flow from operations, before asset
write-offs, was $115.7 million for the three months ended April
30, 1996 versus $93.7 million in the prior year, an increase of
23%. In this context, pretax cash flow from operations is
defined as the Company's income from operations plus noncash
operating expenses (primarily depreciation and amortization).
For the quarter ended April 30, 1996, capital expenditures were
$51.6 million, of which $21.6 million related to the construction
of the new hotel towers at Luxor, $9.9 million related to the
acquisition of new slot equipment at Excalibur and Circus Circus-
Las Vegas, $5.5 million related to rooms refurbishment at Circus
Circus-Reno, and $3.5 million related to the construction of the
new hotel tower at Circus Circus-Las Vegas.
On January 29, 1996, the Company arranged a $1.5 billion
unsecured credit facility with its bank group (see Note 2 of
Notes to Condensed Consolidated Financial Statements). This
facility replaced facilities with borrowing limits aggregating
$895 million. As of April 30, 1996, Circus had drawn $69.1
million under its current facility.
On February 5, 1996, the Company issued $200 million principal
amount of 6.45% Senior Notes due February 1, 2006. Proceeds from
this offering were used to reduce the Company's outstanding bank
borrowings.
The Company holds a 50% interest in a joint venture (with Mirage
Resorts, Incorporated) which is developing Monte Carlo, a major
destination resort under construction and scheduled to open June
21, 1996 on the Las Vegas Strip, for which it serves as the
venture's manager. Monte Carlo 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 $350 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, $10 million in vendor
financing 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 $70
million, of which $53.1 million had been funded as of April 30,
1996.
In July 1995, Silver Legacy, a 50/50 joint venture with the
Eldorado Hotel/Casino (a privately held company) opened in
downtown Reno, Nevada. As a condition to the joint venture's
$230 million bank credit agreement, which funded a portion of the
cost of the project, Circus 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 April 30, 1996, 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 $33.8 million.
During 1995, the Company purchased the Hacienda Hotel and Casino
(including 47 acres of land) and 73 acres of undeveloped land
south of the Hacienda. By virtue of these purchases, Circus owns
a contiguous mile of frontage on the Las Vegas Strip. This
includes Excalibur and Luxor and runs from Tropicana Avenue to
Russell Road, encompassing the first two freeway exits on
Interstate 15, the main artery from Southern California, and
contains the best access to the Strip from McCarran International
Airport. The Company is developing a masterplan for this area,
including the existing Excalibur and Luxor resorts, that will
involve several stages of development.
In January 1996, the Company commenced construction on a major
expansion at Luxor that 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 multipurpose showroom, as
well as a signature dark ride with a working title of "Tutmania",
a special-effects 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
approximately $250 million and as of April 30, 1996, $26.2
million had been incurred.
Also in January 1996, the Company commenced construction of a
1,000-room tower addition at Circus Circus-Las Vegas, scheduled
for completion by the end of 1996. This addition will bring the
total number of rooms at Circus Circus-Las Vegas to approximately
3,800. In concert with this expansion, the Company is also
refurbishing all of the existing rooms at Circus Circus-Las
<PAGE>
Vegas. The estimated cost of the 1,000-room tower is
approximately $60 million and as of April 30, 1996, $4.7 million
had been incurred.
The Company has also announced that it expects to commence
construction before year-end on an entertainment megastore of
approximately 4,000 rooms on the site of the current Hacienda
Hotel and Casino. This signature resort would be scheduled to
open in the second half of 1997 and the Company expects to
announce the theme, cost and other elements by late summer.
It is the Company's belief that the Las Vegas market can readily
absorb sizeable new capacity, including that contemplated in its
master plan. The direction of development in Las Vegas has
shifted toward the south end of the Strip, where the Company can
essentially create the gateway to Las Vegas.
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 400-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. In December 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. As of April 30, 1996, Circus had a net equity
investment of approximately $13.9 million in this project.
The Company has entered into an agreement with Mirage Resorts,
Incorporated to participate in the development of a 150-acre site
located in the Marina District of Atlantic City. The agreement
provides for the Company to obtain sufficient land for the
development of a destination resort and casino of at least 2,000
rooms, including dramatic public spaces, in an architectural
format that conforms to a "masterplan". While Mirage will act as
master-developer for the new Marina District, Circus will own its
land and its resort project, which will connect to Mirage's
resort as well as to a joint-venture resort to be developed by
Boyd Gaming Corporation and Mirage. Mirage's development of the
site is subject to the satisfaction of a number of conditions.
Accordingly, there can be no assurances as to whether or when
Mirage will proceed with its development of the site. The
Company's participation is subject to Mirage's determination to
proceed with development of the site. The Company's ability to
proceed is also subject to its obtaining the requisite gaming and
other approvals and licenses in New Jersey, as well as the
approval of the gaming authorities of various other
jurisdictions. Assuming receipt of the requisite licenses and
approvals, the Company could begin construction sometime next
year, with an anticipated 24-month construction period. While
the exact extent of a potential development cannot be determined
at this time, the Company is currently contemplating an
investment of approximately $600 million to construct this
hotel/casino megaresort.
The Company believes that it has ample capital resources, through
its existing bank arrangements and its operating cash flows, to
meet all of its existing cash obligations, opportunistically
repurchase shares and fund its commitments on the projects
enumerated above. The Company believes that additional funds
could be raised through debt or equity markets, if necessary.
<PAGE>
PART II. OTHER INFORMATION
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. No report on Form 8-K was filed
during the period covered by this report.
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: June 14, 1996 By CLYDE T. TURNER
Clyde T. Turner
Chairman of the Board and
Chief Executive Officer
Date: June 14, 1996 By GLENN W. SCHAEFFER
Glenn W. Schaeffer
President, Chief Financial
Officer and Treasurer
INDEX TO EXHIBITS
Exhibit
No. Description
10(a). Agreement, dated May 30, 1996, with Mirage Resorts,
Incorporated regarding the development of certain
property in Atlantic City, New Jersey.
10(b). Amendment No. 4 to the Victoria Partners Joint Venture
Agreement dated May 29, 1996.
27. Financial Data Schedule for the three months ended
April 30, 1996 as required under EDGAR.
Exhibit 10(a)
May 30, 1996
Mr. Michael S. Ensign, Vice Chairman
Circus Circus Enterprises, Inc.
2880 Las Vegas Boulevard South
Las Vegas, Nevada 89109
RE: Huron North Redevelopment Area
Dear Mike:
This letter sets forth our agreement with respect to the
approximately 150-acre parcel of unimproved property located in
the Marina area of Atlantic City, New Jersey, commonly known as
the "Huron North Redevelopment Area" (the "Property"), currently
owned by the City of Atlantic City ("City").
1. As promptly as reasonably practicable following the date on
which Mirage Resorts, Incorporated or its wholly owned New Jersey
subsidiary ("MRI") has commenced the environmental remediation
thereon and obtained title to the Property from the City, MRI
will cause the Property to be subdivided and will transfer and
convey a portion of the Property (the "Circus Parcel") to Circus
Circus Enterprises, Inc. or its designated wholly owned
subsidiary ("Circus") in fee simple, free of all liens,
encumbrances or other restrictions not set forth in the
Development Agreement (as defined in Paragraph 5 of this
Agreement) or the deed to the Property to MRI from the City. The
Circus Parcel shall be suitable for Circus to develop and
construct thereon a hotel-casino containing approximately 2,000
guest rooms (the "Facility"), and , in any case, will not be less
than 30 acres, and, if available in MRI s sole discretion, up to
48 acres. MRI shall have sole responsibility and authority with
respect to the environmental assessment and remediation of the
Property except as hereinafter expressly provided. MRI shall
also have sole responsibility and authority for the design of the
master plan for the Property and the Circus Parcel, including
without limitation all roads, bridges, tunnels, walkways and
other means of transportation within, adjoining or servicing the
Property or the Circus Parcel (the "Master Plan") and the design
of all improvements required by CAFRA and other governmental
agencies in order to construct projects on the Circus Parcel and
the Property ("Governmental Improvements"). If Circus does not
approve of the location and size of the Circus Parcel or the
Master Plan, Circus may terminate this Agreement. Circus shall
approve or disapprove of such items within thirty (30) days of
receipt thereof, and if it does not, it shall be deemed
disapproved and this Agreement shall terminate. Circus shall
pay all costs and expenses of design, development and
construction of all Governmental Improvements and all other
improvements and development specified in the Master Plan which
are entirely within the Circus Parcel. Circus shall also pay its
equitable share of all such costs and expenses for Governmental
Improvements and all other improvements and development specified
in the Master Plan which are not entirely within the Circus
Parcel or entirely within any other portion of the Property on
which a casino-hotel is being developed. Notwithstanding the two
preceding sentences, if a Governmental Improvement or other
improvement or development specified in the Master Plan is
entirely within the Circus Parcel or entirely within any other
portion of the Property on which a casino-hotel is being
developed but is for the mutual benefit of other developer (e.g.,
an electricity substation), all of the projects benefiting
thereby shall equitably share the costs thereof. A party s
equitable share of such costs and expenses shall be deemed to be
the number of developable (i.e., non-wetlands) acres comprising
such party s parcel as a percentage of the total number of
developable acres comprising the Property. The design of the
exterior of the Facility, including landscaping and signage,
shall be subject to the reasonable approval of MRI. The costs
and expenses relating to the Marina Connector (as defined in
Paragraph 5) shall not be chargeable to Circus or any other
developer of a project within the Property as a Governmental
Improvement.
2. Concurrently with the transfer of the Circus Parcel to
Circus, Circus will pay to MRI for the Circus Parcel an amount
equal to all costs and expenses incurred as of such date by MRI
in connection with environmental assessment and remediation of
the Property. Thereafter, Circus shall pay to MRI, subject to
the limitation of $35.5 million specified in this paragraph, all
additional costs and expenses incurred by MRI in connection with
the environmental assessment and remediation of the Property.
Circus and MRI contemplate that Circus may have a portion of the
environmental remediation on the Circus Parcel relating to
pilings and the foundations for the Facility performed by Circus
contractors. In any such event, Circus shall be entitled to a
credit against the $35.5 million payable by Circus hereunder for
any amounts paid by Circus for such environmental remediation
directly to its contractors. The maximum amount payable by
Circus pursuant to the preceding sentence shall be 35.5 million
dollars. Except as provided in the following sentence, MRI shall
be entitled to receive and retain any credits or other financial
assistance which may be made available by any governmental entity
as a result of expenditures for environmental assessment and
remediation of the Property. MRI shall, within thirty (30) days
following its receipt of any such credits of other financial
assistance, pay Circus such amount, if any, as shall result in
Circus having paid 17 million dollars more than MRI, net of all
such credits and financial assistance, for: (1) the relocation of
the City Facilities (to be paid for by MRI) pursuant to Section 6
of the Development Agreement (as defined in Paragraph 5 hereof);
(2) the amount paid to the City under the sharing formula (to be
paid by MRI) set forth in Section 4.3.1.1 of such Development
Agreement; and (3) the costs and expenses incurred in connection
with environmental assessment and remediation of the Property.
Circus will pay or reimburse MRI for all out-of-pocket costs and
expenses relating to the subdivision of the Property and the
transfer of the Circus Parcel to Circus, including without
limitation legal fees and expenses, title insurance premiums,
surveying fees and expenses and real property transfer taxes.
3. Not later than one year following the later of (i) the date
on which MRI commences physical construction of a hotel-casino on
the Property or (ii) the date of transfer of the Circus Parcel to
Circus, Circus will commence physical construction of the
Facility on the Circus Parcel. Circus will complete construction
of and open the Facility not later than three years following the
later of (i) the date on which MRI commences physical
construction of a hotel-casino on the Property or (ii) the date
of transfer of the Circus Parcel to Circus. If Circus fails to
commence construction within such one-year period, or complete
construction of and open the Facility within such three-year
period, as either of such dates may be extended by delays caused
by (1) acts of God or other force majeure events beyond the
control of Circus, or (2) temporary inability to satisfy the
contingencies set out in Paragraph 5 hereof, title to the Circus
Parcel and any improvements located thereon shall automatically
revert to MRI and MRI shall be entitled to retain all amounts
previously paid by Circus as liquidated damages. If MRI does
not commence construction of a project on the Property and, as a
result Circus chooses not to commence construction of the
Facility, then MRI shall refund to Circus any amounts paid by
Circus hereunder and Circus shall thereafter have no interest in
the Circus Parcel or the Property. If either MRI or Circus
commences but thereafter ceases construction of a project on the
Property and such project remains uncompleted after two (2) years
following such cessation, then the other party may buy the
uncompleted project at cost.
4. Prior to the public opening of the Facility, Michael S.
Ensign, William A. Richardson or Glenn W. Schaeffer will remain
in charge of the construction and opening of the Facility. For a
period of five (5) years after public opening of the Facility,
MRI shall have a right to first refusal with respect to any
proposed sale or other transfer of the Facility, except for a
sale or transfer of the Facility in connection with a sale or
transfer of substantially all of the assets of Circus. If MRI
does not elect to purchase the Facility on the terms set forth in
the proposed offer or equivalent economic terms if the terms set
forth in the proposed offer involve stock or securities of
another company, within thirty (30) days of receipt of the terms
of the proposed sale or transfer, Circus shall be free to
complete the proposed sale or transfer on the terms set forth in
the proposed offer.
5. The obligations of MRI and Circus set forth herein are
contingent upon (i) closing under the Agreement between MRI and
the City, dated May 3, 1996 (the "Development Agreement"), having
occurred, (ii) the unconditional and irrevocable approval of
funding by the State of New Jersey of infrastructure improvements
relating to the Property (including without limitation the
construction of a roadway and tunnel from the convention center
and expressway areas (the "Marina Connector") acceptable to MRI,
and (iii) the receipt by MRI and Circus of all federal, state and
local licenses, permits and approvals necessary for the
development and operation of hotel-casinos by MRI and Circus on
the Property and the transfer of the Circus Parcel to Circus.
Each party agrees to use its best efforts to satisfy such
conditions as promptly as reasonably practicable. If MRI does
not proceed to close under the Development Agreement but Circus
desires to construct the Facility and agrees to, and does (as a
condition subsequent in the assignment document) complete the
Facility, at Circus request, delivered to MRI within thirty (30)
days following notice by MRI to Circus that it had determined not
to proceed under the Development Agreement, Circus shall
reimburse to MRI the amounts expended by MRI under, or as a
result of, or with respect to, evaluating whether to close under,
the Development Agreement and MRI shall assign its rights, if
any, under the Development Agreement and other agreements
relating to the Property (except the agreement with Boyd Gaming
Corporation) to Circus, without warranty of any kind. Circus
acknowledges that MRI is not required to close under the
Development Agreement if the costs of the environmental
remediation of the Property are, in its sole discretion,
unreasonable. In any event, MRI may terminate this agreement if
MRI s unreimbursable portion of the environmental remediation
exceeds 25 million dollars and Circus is unwilling to pay the
excess. If this Agreement is terminated under the preceding
sentence, Circus shall have a right of first refusal with respect
to any proposed sale or transfer of the Circus Parcel or any
portion thereof or interest therein within six (6) months of
termination of this Agreement.
6. MRI shall have the responsibility and authority to
negotiate a Project Agreement with the Atlantic City Building
Trades Council on behalf of all developers within the Property.
Such negotiation shall be conducted by a Committee chaired by a
representative of Atlandia Design and Furnishings, Inc., on which
Circus shall also be represented by its most senior construction
officer.
7. Circus will at all times comply with all legal and
contractual obligations and requirements applicable to the
acquisition, development or operation of the Property or the
Facility, including without limitation those relating to the
employment of minority and economically disadvantaged persons,
contained in the Development Agreement, and with all applicable
federal, state and local statutes, ordinances and regulations.
MRI shall cause all other developers of projects within the
Property to be similarly bound.
8. The parties will at all times cooperate with each other in
good faith in order to consummate the transactions contemplated
by this letter and will take all such further actions, including
the negotiation, execution and delivery of any further documents
or instruments, as may be reasonably necessary or appropriate in
connection therewith.
9. This letter shall be governed by and construed in accordance
with the laws of the State of Nevada.
10. This letter constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes any and
all prior negotiations, understandings or agreements, whether
oral or written.
11. This letter shall be binding upon and inure to the benefit
of each party and its successors and permitted assigns.
12. All references in this letter to "the date of this letter"
shall be deemed to refer to the date this letter is executed by
Circus as indicated below.
13. Each party represents to the other that it has not incurred
any obligation to any broker, agent or finder with respect to the
subject matter of this letter, and shall indemnify and hold
harmless the other from and against any and all losses, claims,
damages, liabilities or expenses arising out of a breach of this
representation.
14. Circus shall, within sixty (60) days of the satisfaction of
the contingency set forth in Paragraph 5(ii), apply for, and
thereafter diligently pursue, a casino license from the New
Jersey Casino Control commission (the "Commission"). MRI shall
cooperate with Circus, to the extent reasonably necessary, in
connection with any review of this letter by the Commission. MRI
and Circus shall execute and deliver any further documents or
instruments, including amendments to this letter, as the
Commission may reasonably require and which do not alter the
economic terms of this letter in a manner unfavorable to either
of the parties in its sole discretion.
15. Except to the extent required by applicable laws or
regulatory authorities, neither party shall disclose the contents
of this Agreement without the consent of the other party. Any
public release or announcements concerning the terms of this
Agreement shall be subject to the mutual approval of both
parties.
16. Time is of the essence of this letter.
[Signature page to follow]
If this letter correctly sets forth our mutual understanding,
please sign and date the duplicate copy of this letter below and
return a signed copy to me, whereupon this letter will constitute
a binding agreement between Circus and MRI.
Very truly yours,
BRUCE A. LEVIN
Vice President and General Counsel
AGREED TO AND ACCEPTED:
CIRCUS CIRCUS ENTERPRISES, INC.
Date:___________________________
By:____________________________________
Exhibit 10(b)
AMENDMENT NO. 4 TO
JOINT VENTURE AGREEMENT OF
VICTORIA PARTNERS
This Amendment No. 4 to Joint Venture Agreement of Victoria
Partners (the "Amendment"), dated as of May 29, 1996, is entered
into with reference to the Joint Venture Agreement of Victoria
Partners, dated as of December 9, 1994, as amended by Amendment
No. 1 thereto dated as of April 17, 1995, Amendment No. 2 thereto
dated as of September 25, 1995, and Amendment No. 3 thereto dated
as of February 28, 1996 (as so amended, the "Joint Venture
Agreement"), by and between MRGS Corp., a Nevada corporation ("MR
Sub"), and Gold Strike L.V., a Nevada general partnership ("Gold
Strike"). Capitalized terms used but not defined in this
Amendment are used with the meanings set forth for such terms in
the Joint Venture Agreement.
PREAMBLE
WHEREAS, MR Sub and Gold Strike desire to amend certain
terms and provisions of the Joint Venture Agreement as provided
herein, and in all other respects to confirm the terms and
provisions of the Joint Venture Agreement.
NOW, THEREFORE, MR Sub and Gold Strike agree as follows:
1. Amendment to Section 3.3(c). The second sentence of
Section 3.3(c) of the Joint Venture Agreement is amended to read
in its entirety as follows:
"In no event shall MR Sub be required to make
additional cash capital contributions
pursuant to this Section 3.3(c) aggregating
in excess of $18,500,000."
2. Confirmation. In all other respects, the terms and
provisions of the Joint Venture Agreement are hereby confirmed
and shall remain unchanged and in full force and effect.
[Signature page to follow]
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written.
MRGS CORP., a Nevada corporation
By:_____________________________
Daniel R. Lee
Chief Financial Officer
GOLD STRIKE L.V., a Nevada
general partnership
By: Last Chance Investments,
Incorporated, a Nevada
corporation
Its: General Partner
By:_____________________________
William A. Richardson,
President
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18,530
0
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</TABLE>
