<PAGE>
INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT TO
COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT A FINAL
PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
FILED PURSUANT TO RULE 424(b)(2) UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
REGISTRATION NUMBER 33-65359.
PROSPECTUS SUPPLEMENT (SUBJECT TO COMPLETION, ISSUED JANUARY 26, 1996)
(TO PROSPECTUS DATED JANUARY 11, 1996)
[LOGO] $200,000,000
% NOTES DUE FEBRUARY 1, 2006
-----------------
INTEREST PAYABLE AUGUST 1 AND FEBRUARY 1
-------------------
THE NOTES WILL NOT BE REDEEMABLE PRIOR TO MATURITY. THE NOTES WILL BE
REPRESENTED BY ONE GLOBAL SECURITY REGISTERED IN THE NAME OF A NOMINEE OF THE
DEPOSITORY TRUST COMPANY, AS DEPOSITARY (THE "DEPOSITARY"). BENEFICIAL
INTERESTS IN THE NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE
EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE DEPOSITARY AND ITS
PARTICIPANTS. EXCEPT AS DESCRIBED HEREIN, NOTES IN DEFINITIVE FORM
WILL NOT BE ISSUED. THE NOTES WILL TRADE IN THE DEPOSITARY'S
SAME-DAY FUNDS SETTLEMENT SYSTEM. ALL PAYMENTS OF PRINCIPAL AND
INTEREST ON THE GLOBAL SECURITY WILL BE MADE BY THE COMPANY IN
IMMEDIATELY AVAILABLE FUNDS. SEE "DESCRIPTION OF THE NOTES --
BOOK-ENTRY SYSTEM."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------
NEITHER THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD
NOR ANY OTHER GAMING REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS OR THE INVESTMENT MERITS OF THE SECURITIES OFFERED
HEREBY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-------------------
PRICE % AND ACCRUED INTEREST
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC (1) COMMISSIONS (2) COMPANY (1)(3)
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
PER NOTE.............................. % % %
TOTAL................................. $ $ $
</TABLE>
- ---------
(1) PLUS ACCRUED INTEREST FROM FEBRUARY 1, 1996.
(2) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933.
(3) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT
$ .
------------------------
THE NOTES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS BY SKADDEN,
ARPS, SLATE, MEAGHER & FLOM, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT
DELIVERY OF THE NOTES WILL BE MADE ON OR ABOUT FEBRUARY , 1996 THROUGH THE
BOOK-ENTRY FACILITIES OF THE DEPOSITARY AGAINST PAYMENT THEREFOR IN IMMEDIATELY
AVAILABLE FUNDS.
-------------------
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
SCHRODER WERTHEIM & CO.
BA SECURITIES, INC.
FEBRUARY , 1996
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY NOTES BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
The Company............................................................................................... S-3
Gaming Regulation......................................................................................... S-4
Use of Proceeds........................................................................................... S-6
Capitalization............................................................................................ S-6
Selected Financial Data................................................................................... S-7
Management's Discussion and Analysis of Financial Condition and Results of Operations..................... S-9
Description of Notes...................................................................................... S-13
Underwriters.............................................................................................. S-14
Legal Matters............................................................................................. S-14
PROSPECTUS
Available Information..................................................................................... 2
Incorporation of Certain Information by Reference......................................................... 2
The Company............................................................................................... 3
Ratio of Earnings to Fixed Charges........................................................................ 4
Use of Proceeds........................................................................................... 5
Description of Debt Securities............................................................................ 5
Plan of Distribution...................................................................................... 16
Legal Matters............................................................................................. 17
Experts................................................................................................... 17
</TABLE>
-------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
THE COMPANY
Circus Circus Enterprises, Inc. (the "Company") is one of the largest and
most diversified gaming entertainment companies in the world, with interests in
17 gaming properties located primarily in Nevada, and also in Mississippi,
Illinois and Canada. The Company's marketing and operating strategies emphasize
high volume business by providing reasonably priced hotel rooms, restaurants and
entertainment in conjunction with the Company's gaming activities. The Company
also maintains stringent cost controls which are exemplified by a general policy
of offering virtually no credit for gaming customers.
The Company owns and operates, through wholly owned subsidiaries, 10
hotel-casino properties with approximately 16,000 rooms in the State of Nevada,
including four properties in Las Vegas (Circus Circus-Las Vegas, Luxor,
Excalibur and the Hacienda Hotel and Casino), two properties in Jean (Gold
Strike Hotel and Gambling Hall and Nevada Landing Hotel and Casino), the Circus
Circus Hotel and Casino in Reno, the Railroad Pass Hotel and Casino in
Henderson, and the Colorado Belle Hotel and Casino and the Edgewater Hotel and
Casino which are located on the Colorado River in Laughlin. The Company also
owns and operates a dockside casino situated on a 24-acre site in Tunica County,
Mississippi and operates two smaller casinos on the Las Vegas Strip, Slots-A-Fun
(which the Company also owns) and the Silver City Casino (which the Company
operates under a long-term lease). The Company acquired the Hacienda Hotel and
Casino in September 1995 for approximately $80 million.
The Company, through wholly owned subsidiaries, also owns interests in three
joint ventures which own operating casinos. The Grand Victoria, a riverboat
casino and land-based entertainment complex, is located in Elgin, Illinois and
is operated and managed by the Company. The Company and an affiliate of Hyatt
Development Corporation each have a 50% interest in the venture. The Silver
Legacy Resort and Casino, is located in Reno, Nevada, and is Reno's first Las
Vegas-styled themed resort. This resort, themed as a turn-of-the-century silver
mining town, is owned in equal shares by the Company and an affiliate of
Eldorado Hotel and Casino. The Company and affiliates of ITT Destinations, Inc.
and Hilton Hotels Corporation own in equal shares a joint venture which is
operating both an interim land-based casino and a recently opened dockside
casino in Windsor, Ontario, Canada. The Company and its joint venture partners
are presently in negotiations for the construction of a permanent 300 room
hotel-casino facility in Windsor.
The Company also holds a 50% interest, through a wholly owned subsidiary, in
a joint venture with an affiliate of Mirage Resorts, Incorporated which is
developing the Monte Carlo Resort & Casino, a major destination resort under
construction on the Las Vegas Strip for which it serves as the managing
venturer. This project, which is scheduled to open in the summer of 1996, will
feature approximately 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. The 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. The Company's total equity contribution is anticipated to be approximately
$70 million, of which $35.1 million had been funded as of October 31, 1995.
As part of its growth strategy, the Company currently expects to expand
Luxor, renovate parts of Excalibur and commence construction of a multi-faceted
gaming and entertainment complex initially involving the land upon which the
Hacienda Hotel and Casino is presently located (the "Hacienda Property") and
certain undeveloped land located to the south of such property. It also expects
to expand and renovate Circus Circus Las Vegas and renovate parts of the Circus
Circus Hotel and Casino in Reno. While the Company intends to effect the
preceding expansions, renovations and construction in a manner intended to
minimize the impact such activities may have on the operations and earnings of
the subject properties, no assurances can be given that during the pendency of
such activities the operations and/or earnings of the subject properties will
not be adversely affected.
Construction of the Luxor expansion commenced in January 1996. As currently
contemplated, the expansion will involve an approximately 2,000 room addition
arranged in two high-rise, stepped-
S-3
<PAGE>
pyramid towers between Luxor and Excalibur, raising the total at Luxor to
approximately 4,500 rooms, and will include additional casino space, retail
area, restaurants and a multipurpose showroom, as well as a signature ride. The
additional rooms are expected to be completed by the end of 1996. The estimated
cost of this expansion is expected to be approximately $240 million.
The Excalibur renovations are currently scheduled to commence in early 1996
and are contemplated to include the refurbishment of all of the over 4,000
rooms, the construction of additional retail space, the relocation of certain
restaurants, the construction of a moving walkway between Luxor and Excalibur
and the re-engineering of the pedestrian overpasses over Las Vegas Boulevard and
Tropicana Avenue to provide more direct pedestrian access to Excalibur. The
estimated cost of the Excalibur renovations is anticipated to be approximately
$40-$50 million.
The first step in the Company's effort to create a multi-faceted gaming and
entertainment complex is currently anticipated to commence in 1996 with the
construction of a hotel-casino facility on the Hacienda Property and
approximately 73 acres of undeveloped land south of that parcel at the northwest
corner of Russell Road and the Las Vegas Strip. Ultimately, the Company
contemplates expanding the complex to include portions of the Luxor and
Excalibur parcels.
Construction of the Circus Circus Las Vegas expansion commenced in January
1996. As contemplated, the expansion will involve the construction of an
approximately 1,000 room high-rise tower adjacent to Grand Slam Canyon, the
refurbishment of approximately 1,200 rooms in the Skyrise Tower and the
improvement of the casino and midway. The estimated cost of the foregoing
expansion is expected to be approximately $50-60 million.
The Company also commenced construction of a major renovation at Circus
Circus Hotel and Casino in Reno in January 1996. The renovation is currently
expected to involve the refurbishment of the casino and all of the rooms, as
well as the construction of a parking structure. The estimated cost of the
foregoing renovation is expected to be approximately $35 million.
The Company's executive offices are located at 2880 Las Vegas Boulevard
South, Las Vegas, Nevada 89109, and its telephone number is (702) 734-0410.
Unless the context otherwise indicates, all references herein to the Company are
to Circus Circus Enterprises, Inc. and its subsidiaries.
GAMING REGULATION
The ownership and operation of casino gaming facilities are subject to
extensive state and local regulation. The states of Illinois, Mississippi and
Nevada and the applicable local authorities, and the Province of Ontario, Canada
require various licenses, findings of suitability, registrations, permits and
approvals (individually a "Gaming License" and collectively "Gaming Licenses")
to be held by the Company and its subsidiaries and joint ventures that are
engaged in gaming operations. The Illinois Gaming Board, the Mississippi Gaming
Commission, the Nevada Gaming Commission and the Ontario Gaming Control
Commission (individually, a "Gaming Authority" and collectively the "Gaming
Authorities"), may, among other things, limit, condition, suspend or revoke a
Gaming License or approval to own the stock or joint venture interests of any of
the Company's Illinois, Mississippi, Nevada and Ontario operations,
respectively, for any cause deemed reasonable by such licensing authority.
Substantial fines or forfeiture of assets for violations of gaming laws
regulations may be levied against the Company, such subsidiaries and joint
ventures and the persons involved. The suspension or revocation of any of the
Company's Gaming Licenses or the levy on the Company of substantial fines or
forfeiture of assets could have a material adverse effect on the business of the
Company.
To date, the Company has obtained all Gaming Licenses necessary for the
operation of its gaming activities. However, Gaming Licenses and related
approvals are deemed to be privileges under Illinois, Mississippi, Nevada and
Ontario law, and no assurances can be given that any new Gaming Licenses that
may be required in the future will be granted or that existing Gaming Licenses
will not be revoked or suspended.
The Nevada Gaming Commission may, in its discretion, require the holder of
any Note issued by the Company to file applications, be investigated and be
found suitable to own such Note. If the
S-4
<PAGE>
Nevada Gaming Commission determines that a person is unsuitable to own such
Note, then pursuant to the Nevada Gaming Control Act, the Company can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Gaming Commission, it: (i) pays to the unsuitable person any
dividend, interest, or any distribution whatsoever; (ii) recognizes any voting
right by such unsuitable person in connection with such securities; (iii) pays
the unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction. The Illinois Gaming Board, the Mississippi
Gaming Commission and the Ontario Gaming Control Commission also have
jurisdiction over the beneficial holders of Notes issued by the Company and may
require their investigation and approval.
In certain jurisdictions, the Company may not make a public offering of its
securities without the prior approval of the applicable Gaming Authorities if
the securities or proceeds therefrom are intended to be used to construct,
acquire or finance gaming facilities in such jurisdictions, or to retire or
extend obligations incurred for such purposes or for similar transactions. On
August 24, 1995 the Nevada Gaming Commission granted the Company prior approval
to make public offerings for a period of one year, subject to certain conditions
("Shelf Approval"). The Shelf Approval also applies to any affiliated company
wholly owned by the Company (a "Gaming Affiliate") which is a publicly traded
corporation or would thereby become a publicly traded corporation pursuant to a
public offering. The Shelf Approval also includes approval for the Company's
licensed Nevada subsidiaries to guarantee any security issued by, or to
hypothecate their assets to secure the payment or performance of any obligations
issued by, the Company or a Gaming Affiliate in a public offering under the
Shelf Registration. However, the Shelf Approval may be rescinded for good cause
without prior notice upon the issuance of an interlocutory stop order by the
Chairman of the Nevada State Gaming Control Board and must be renewed annually.
The Shelf Approval does not constitute a finding, recommendation or approval by
the Nevada Gaming Commission or the Nevada State Gaming Control Board as to the
accuracy or adequacy of this Prospectus Supplement or the accompanying
Prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. The public offering of the Notes
will be made pursuant to the Shelf Approval. Although the approval of the
Mississippi Gaming Commission is not required for the offering of the Notes, the
Company has requested that the Mississippi Gaming Commission grant a similar
shelf approval to the Company for future securities offerings, and expects the
Commission to consider such request on January 31, 1996.
The foregoing is only a summary of the regulatory requirements applicable to
the Company. For a more detailed description of the regulatory requirements
applicable to the Company, see "Regulation and Licensing" in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1995,
incorporated by reference herein.
Consistent with the foregoing, the Notes will be issued under an Indenture
that will provide that each beneficial or record holder thereof, by accepting
any of the Notes, shall be deemed to have agreed that if the Gaming Authority of
any jurisdiction in which the Company or any of its subsidiaries conducts or
proposes to conduct gaming requires that a person who is a beneficial or record
holder must be licensed, qualified or found suitable under applicable Gaming
Laws, such holder shall apply for a license, qualification or a finding of
suitability within the required time period. If such person fails to apply or
become licensed or qualified or is found unsuitable, the Company shall have the
right, at its option, (i) to require such person to dispose of its Notes or
beneficial interest therein within 30 days of receipt of notice of the Company's
election or such earlier date as may be requested or prescribed by such Gaming
Authority or (ii) to redeem such Notes at a redemption price equal to the lesser
of (A) such person's cost and (B) 100% of the principal amount thereof, plus
accrued and unpaid interest to the earlier of the redemption date and the date
of the finding of unsuitability, which may be less than 30 days following the
notice of redemption if so requested or prescribed by the Gaming Authority. The
Company shall notify the trustee under the Indenture in writing of any such
redemption as soon as practicable. The Company shall not be responsible for any
costs or expenses any such holder may incur in connection with its application
for a license, qualification or a finding of suitability.
S-5
<PAGE>
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Notes,
estimated at $ million, will be used to repay outstanding amounts due under
the Company's existing credit agreements or the New Credit Facility (as defined
below) (if in effect at such time) and for other general corporate purposes of
the Company, which may include acquisitions, capital expenditures and working
capital requirements. As of January 26, 1996, the Company had approximately $312
million of outstanding amounts due under its existing credit agreements, bearing
interest at floating rates with a weighted
average of approximately 6.1%. The amounts outstanding under the existing credit
agreements are short-term with varying maturities. Certain of the amounts
outstanding were incurred by the Company during the past year in connection with
the Company's acquisition of the Gold Strike Resorts (as defined below), the
Hacienda Property and the 73 acres of undeveloped land located south of such
property.
CAPITALIZATION
The Company's capitalization at October 31, 1995, and as adjusted as of that
date to give effect to the sale of the Notes offered hereby and the application
of the estimated net proceeds therefrom, is set forth below.
<TABLE>
<CAPTION>
OCTOBER 31, 1995
-----------------------
AS
ACTUAL ADJUSTED
---------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Current portion of long-term debt..................... $ 920 $ 920
---------- ----------
---------- ----------
Long-term debt (1):
Amounts due under corporate debt program at floating
interest rates, weighted average of approximately
6.0%............................................... $ 190,816 $
Amounts due under bank credit agreements at floating
interest rates, weighted average of approximately
6.5%............................................... 145,000
10 5/8% Senior Subordinated Notes due 1997 (net of
unamortized discount of $29)....................... 99,971 99,971
6 3/4% Senior Subordinated Notes due 2003 (net of
unamortized discount of $123)...................... 149,877 149,877
7 5/8% Senior Subordinated Debentures due 2013...... 150,000 150,000
% Notes due 2006 offered hereby.................. --
Other notes......................................... 4,627 4,627
---------- ----------
Total long-term debt.............................. 740,291
---------- ----------
Redeemable Preferred Stock (2)........................ 18,530 18,530
---------- ----------
Stockholders' equity (3):
Common stock, $.01 2/3 par value, 450,000,000 shares
authorized; 112,781,312 shares issued.............. 1,880 1,880
Preferred stock, $.01 par value, 75,000,000 shares
authorized; no shares outstanding.................. -- --
Additional paid-in capital.......................... 521,684 521,684
Retained earnings................................... 847,997 847,997
Treasury stock (9,902,309 shares), at cost.......... (186,666) (186,666)
---------- ----------
Total stockholders' equity........................ 1,184,895 1,184,895
---------- ----------
Total capitalization............................ $1,943,716 $
---------- ----------
---------- ----------
</TABLE>
- ------------------------
(1) See Note 3 of Notes to Condensed Consolidated Statements contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended October 31,
1995.
(2) See Note 5 of Notes to Condensed Consolidated Financial Statements contained
in the Company's Quarterly Report on Form 10-Q for the quarter ended October
31, 1995.
(3) See Notes 4 and 6 of Notes to Condensed Consolidated Financial Statements
contained in the Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1995.
S-6
<PAGE>
SELECTED FINANCIAL DATA
The selected consolidated financial information of the Company presented in
the table below for each of the five years ended January 31, and the balance
sheet data as of the end of each year has been derived from audited consolidated
financial statements included in the documents incorporated by reference into
the accompanying Prospectus. The selected consolidated financial information of
the Company presented in the table below as of and for the nine months ended
October 31, 1994 and 1995 is unaudited; however, in the opinion of management,
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the results for such periods have been included. The
results of operations for the nine months ended October 31, 1995 may not be
indicative of results of operations to be expected for the full year. The table
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 1995 and the Condensed Consolidated Financial
Statements and notes thereto included in the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended October 31, 1995 incorporated by reference
herein.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED JANUARY 31, OCTOBER 31,
------------------------------------------------------ -------------------
1991 (1) 1992 1993 1994 (2) 1995 (3) 1994 1995(4)
-------- -------- -------- ----------- ----------- -------- ---------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues (5).......................... $695,677 $813,564 $850,941 $ 963,470 $1,170,182 $891,409 $976,005
Costs and expenses, excluding
depreciation and amortization........ 485,159 553,082 583,956 687,560 811,293 616,006 703,888
Depreciation and amortization......... 40,998 47,385 46,550 58,105 81,109 61,239 69,575
-------- -------- -------- ----------- ----------- -------- ---------
Operating profit before corporate
expense.............................. 169,520 213,097 220,435 217,805 277,780 214,164 202,542
Corporate expense..................... 11,044 12,706 14,953 16,744 21,773 16,695 18,732
-------- -------- -------- ----------- ----------- -------- ---------
Income from operations................ 158,476 200,391 205,482 201,061 256,007 197,469 183,810
Interest expense, net of interest,
dividends and other income........... 42,618 43,387 22,169 18,453 41,517 31,765 33,371
-------- -------- -------- ----------- ----------- -------- ---------
Income before provision for income tax
and extraordinary loss (6)........... 115,858 157,004 183,313 182,608 214,490 165,704 150,439
Provision for income tax.............. 39,566 53,656 62,330 66,419 78,204 60,269 57,174
-------- -------- -------- ----------- ----------- -------- ---------
Income before extraordinary loss
(6).................................. 76,292 103,348 120,983 116,189 136,286 105,435 93,265
Extraordinary loss (6)................ -- -- (3,661) -- -- -- --
Net income............................ $ 76,292 $103,348 $117,322 $ 116,189 $ 136,286 $105,435 $ 93,265
-------- -------- -------- ----------- ----------- -------- ---------
-------- -------- -------- ----------- ----------- -------- ---------
Ratio of earnings to fixed charges
(7).................................. 3.03 4.40 6.48 5.40 5.38 5.65 3.87(8)
</TABLE>
<TABLE>
<CAPTION>
AT JANUARY 31, AT OCTOBER 31,
---------------------------------------------------- ----------------------
1991 1992 1993 1994 1995 1994 1995
-------- -------- -------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property, equipment and leasehold
interests............................ $717,466 $695,154 $851,463 $1,179,961 $1,239,062 $1,258,028 $1,468,036
Total assets.......................... 792,479 783,071 950,458 1,297,924 1,507,085 1,477,042 2,196,659
Long-term debt and obligations under
capital leases (9)................... 496,803 337,680 308,092 567,345 632,652 608,150 740,291
Total stockholders' equity............ 184,843 326,196 490,009 559,950 686,124 652,174 1,184,895
</TABLE>
- ------------------------
(1) Excalibur Hotel and Casino opened in June 1990. Costs and expenses for
fiscal 1991 include $11,177 of preopening expenses associated with the
opening of Excalibur.
S-7
<PAGE>
(2) Grand Slam Canyon opened in August 1993 and Luxor Hotel and Casino opened in
October 1993. Costs and expenses for fiscal 1994 include $16,506 of
preopening expenses associated with the opening of Grand Slam Canyon and
Luxor.
(3) Circus Circus-Tunica opened in August 1994. Costs and expenses for fiscal
1995 include $3,012 of preopening expenses associated with the opening of
Circus Circus-Tunica.
(4) Results of operations for the nine months ended October 31, 1995 include the
acquisition of the Gold Strike Resorts on June 1, 1995.
(5) Revenues are net of complimentary allowances.
(6) In the fiscal year ended January 31, 1993, the Company experienced an
extraordinary loss of $3,661, net of income tax benefit of $1,885 on the
early retirement of $100,000 principal amount of the Company's 10 1/8%
Senior Subordinated Notes due April 1997.
(7) The ratio of earnings to fixed charges has been computed by dividing
earnings before income tax and extraordinary loss, plus fixed charges
(excluding capitalized interest) by fixed charges. Fixed charges consist of
interest and other finance expenses, the estimated interest component of
rentals and capitalized interest.
(8) During the second quarter of fiscal 1996, 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 ratio of earning to fixed
charges for the nine months ended October 31, 1995, excluding this
write-off, would be 4.79.
(9) Excludes current portion of both long-term debt and obligations under
capital leases.
S-8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
"SELECTED FINANCIAL DATA" AND THE FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS. THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD ALSO BE
READ IN CONJUNCTION WITH THE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" CONTAINED IN THE COMPANY'S QUARTERLY REPORT
ON FORM 10-Q FOR THE QUARTER ENDED OCTOBER 31, 1995 AND THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED JANUARY 31, 1995, WHICH ARE INCORPORATED
BY REFERENCE IN THE ACCOMPANYING PROSPECTUS.
RESULTS OF OPERATIONS
NINE MONTHS ENDED OCTOBER 31, 1995 COMPARED TO NINE MONTHS ENDED OCTOBER 31,
1994
EARNINGS PER SHARE. For the nine months in 1995, 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 include $3.0 million of preopening
expenses related to the August 29, 1994 opening of Circus Circus-Tunica. Results
for the nine months in 1995 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 related to a discontinued riverboat
project in Chalmette, Louisiana ($31.5 million); the remaining value of a
parking garage and people mover at Circus Circus-Reno ($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).
Results for the nine months in 1995 include five months of combined
performance of the Company and a group of affiliated entities (collectively, the
"Gold Strike Resorts") which own two hotel and casino facilities in Jean,
Nevada, one hotel and casino facility 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. The Company acquired the Gold
Strike Resorts on June 1, 1995 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.
REVENUES. Revenues for the Company increased $84.6 million, or 9%, for the
nine months of 1995, compared to the previous year. The acquisition of Gold
Strike Resorts on June 1, 1995 was the major factor in this increase, as the
hotel/casino operations in Jean and Henderson, Nevada (Gold Strike, Nevada
Landing and Railroad Pass) contributed revenues of $41.9 million for the nine
months ended October 31, 1995. 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 $22.6 million in revenues in the nine months in
1995. 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 nine months in 1995. The
Company's 50% interest in Silver Legacy, a joint venture hotel/casino which
opened July 28, 1995 in Reno, Nevada, added $5.3 million in revenues for the
nine months in 1995. 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 the nine months in 1995
compared with the prior year. Casino revenues at these properties were down
roughly 7%-8% in the nine months in 1995. However, this was
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<PAGE>
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 11% in the nine months in 1995. 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 1995,
and Circus Circus-Tunica preopening expenses of $3.0 million in 1994) increased
$34.7 million, or 17% in the nine months in 1995, versus the same period last
year. The Company's composite operating margin (excluding the above nonrecurring
items) was 23.9% for the nine months, versus 22.5% last year.
The Company's 50% interest in The Grand Victoria riverboat casino (a joint
venture with the Hyatt acquired as part of the Gold Strike Resorts acquisition
on June 1, 1995) was the main factor for the increase, generating $20.5 million
in operating income in the nine months in 1995. The other major properties
acquired as part of the Gold Strike Resorts acquisition (Gold Strike, Nevada
Landing and Railroad Pass) were also solid contributors, producing operating
income of $8.7 million in the nine month period in 1995.
In Reno, the Silver Legacy Resort and Casino (a joint venture with Eldorado
Hotel and Casino) opened on July 28, 1995 and generated approximately $5.3
million of operating income for the nine months in 1995 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 375 rooms
have been recently opened at the Silver Legacy. At Circus Circus-Reno, operating
income declined 2% (excluding asset write-offs) as the novelty effect of the
adjacent Silver Legacy attracted visits from its casino patrons.
At Circus Circus-Tunica, operating income rose $10.4 million for the nine
months in 1995 compared with the prior year, when the property was in operation
for only a partial period.
For the nine months in 1995, operating income at the Las Vegas properties
was relatively flat.
On a combined basis, the Company's Laughlin properties reported a 30%
decline in operating income for the nine months in 1995, with operating margins
also declining. Additional competition in rooms was a principal factor in this
decline, as room rates and occupancy levels decreased compared to the prior year
(contrary to the trend in Las Vegas).
DEPRECIATION AND AMORTIZATION EXPENSE. For the nine months in 1995,
depreciation and amortization expense rose $8.8 million over the prior nine
months to $71.2 million, due primarily to the Company's acquisition of the Gold
Strike Resorts.
INTEREST EXPENSE. Interest expense increased $10.6 million for the nine
months in 1995 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 Resorts acquisition on June 1, 1995, the
purchase of the Hacienda Hotel and Casino for approximately $80 million on
September 1, 1995 and the purchase of 73 acres of adjacent property earlier in
1995 for approximately $73 million. Capitalized interest was $6.1 million for
the nine months ended October 31, 1995, versus $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.
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<PAGE>
INCOME TAX. For the nine months ended October 31, 1995, the Company's
effective tax rate was approximately 38.0% compared with 36.4% in the prior year
period. The higher tax rate in the nine months in 1995 reflects the corporate
statutory rate of 35% plus the effect of various non-deductible expenses,
primarily goodwill amortization associated with the Gold Strike Resorts
acquisition.
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
EARNINGS PER SHARE. Excluding preopening expenses, earnings per share for
the year ended January 31, 1995 were $1.61 against $1.46 on the same basis in
1994. During 1995, the Company wrote off $3.0 million of preopening expenses
related to the August 29, 1994 opening of Circus Circus-Tunica. These preopening
expenses amounted to $.02 per share on an after-tax basis. In 1994, the Company
wrote off preopening expenses associated with Grand Slam Canyon (which opened
August 23, 1993) and Luxor Hotel and Casino (which opened October 15, 1993).
These preopening expenses totalled $16.5 million, amounting to $.12 per share on
an after-tax basis. Including the effect of preopening expenses, earnings per
share for the year ended January 31, 1995 were $1.59 versus $1.34 for the prior
year.
The increase in earnings per share was attributable primarily to the first
full year of operations for Luxor, which was open only 3 1/2 months in fiscal
year 1994. The opening of Circus Circus-Tunica also contributed to this
increase. The Company's first riverboat casino posted operating income in excess
of $13 million in the five months it was open during 1995. Earnings per share
also benefitted from 1.2 million fewer average shares outstanding, stemming from
the repurchase of 0.5 million shares during fiscal 1995 and 1.6 million shares
in fiscal 1994. However, these benefits were partially offset by additional
interest expense due to lower capitalized interest and higher borrowings.
REVENUES. Revenues for the year ended January 31, 1995 increased $206.7
million, or 21%, to $1.2 billion, marking the first time the Company's revenues
have topped $1 billion. The first full year of operations for Luxor and the
opening of Circus Circus-Tunica accounted for the majority of this increase in
revenues.
In fiscal 1995, the Company's combined hotel occupancy rate declined to
95.7% from 97.8% the previous year, due primarily to the impact of additional
competition in the Laughlin market. Despite the decrease in occupancy rates,
room revenues (excluding the impact of Luxor) rose 4% on the strength of
selective price increases at the Las Vegas properties. Including Luxor, hotel
revenues increased 32% in 1995 over the prior year. In general, the Company's
policy of offering moderately priced rooms, multiple entertainment attractions
and low-priced food on an everyday basis attracts a high level of occupancy
along with substantial walk-in traffic.
OPERATING INCOME. Income from operations, excluding the write-off of
preopening expenses, increased $41.5 million, or 19%, for the year ended January
31, 1995. The increase in income from operations was attributable primarily to
Luxor and the opening of Circus Circus-Tunica. In its first full fiscal year of
operations, Luxor posted $64.1 million in operating income and a 23% operating
margin. Meanwhile, Circus Circus-Tunica experienced a strong opening, generating
operating income of $13.2 million and an operating margin over 40% (excluding
preopening expenses) in the five months it was open.
Income from operations for 1995 was essentially flat at the Company's other
Las Vegas properties, Circus Circus-Las Vegas and Excalibur, and margins
remained steady. At Circus Circus-Reno, disruption from the construction of
neighboring Silver Legacy and poor winter weather hampered results throughout
much of the year, causing a 12% decline in operating income at that property.
Results for 1995 at the Company's Laughlin properties, the Colorado Belle
and Edgewater, declined significantly, with combined operating income down 22%
from 1994. The decrease is attributable to a variety of competitive factors.
The three major new theme resorts which opened in Las Vegas in late 1993
(including Luxor), have drawn upon Laughlin's customer base, as have the
recently expanded facilities at Stateline,
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<PAGE>
Nevada, which are closer to Las Vegas and more accessible to visitors from
Southern California. Also in late 1993, a competitor in Laughlin underwent a
major hotel and casino expansion, which further diffused the customer base.
Finally, the emergence of unregulated Indian gaming, particularly in Laughlin's
Arizona feeder markets, has brought additional competitive challenges. While it
is the Company's belief that the Laughlin market is beginning to stabilize, a
new hotel/casino opened in late February 1995 which may further impact results
in the near term. Despite the significant declines in operating income, the
Colorado Belle and Edgewater still posted a combined 23% operating margin for
the year.
The Company's 1995 composite operating margin was 22.1% (prior to the
write-off of preopening expenses), compared to 1994's 22.6%. The decline was
attributable to the reasons discussed above.
DEPRECIATION AND AMORTIZATION EXPENSE. For the year ended January 31, 1995,
depreciation and amortization expense rose $23.8 million, to $82.8 million, due
primarily to a full year of depreciation on Luxor and Grand Slam Canyon, as well
as the addition of Circus Circus-Tunica.
INTEREST EXPENSE. For the year ended January 31, 1995, interest expense was
$42.7 million compared to $17.8 million in the prior year. The increase was due
mostly to lower capitalized interest ($4.2 million in fiscal 1995 versus $18.5
million in fiscal 1994) stemming from the completion of Luxor and Grand Slam
Canyon in the prior fiscal year. Interest expense was also impacted by higher
average debt outstanding (approximately $590 million in fiscal 1995 versus
approximately $555 million in fiscal 1994). Though short-term interest rates
rose during the year, the Company's interest expense was not significantly
impacted due to the effect of certain interest rate swap agreements which
expired during late fiscal 1994 and 1995.
INCOME TAX. The Company's effective tax rates for the years ended January
31, 1995 and 1994 were 36.5% and 36.4%, respectively. This reflects the federal
statutory rate of 35.0% plus the effect of various nondeductible expenses.
FINANCIAL POSITION AND CAPITAL RESOURCES
The Company expects to enter into a new loan agreement by the end of January
1996 with a group of banks, including Bank of America National Trust and Savings
Association, as administrative agent and lender ("Bank of America"), providing
for a new $1.5 billion credit facility (the "New Credit Facility"). This
facility will replace the Company's existing $500 million and $250 million
credit facilities.
The Company's Board of Directors has also authorized the repurchase of up to
15% of the Company's common stock, subject to share price. In the past, the
Company 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 flow to meet all of its existing cash
obligations, to fund its commitments on each of the projects discussed under
"The Company" above and to strategically repurchase shares. The Company
anticipates that additional funds could, however, be raised through debt or
equity offerings, if necessary.
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<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Notes will be issued under an Indenture dated as of February 1, 1996
between the Company and First Interstate Bank of Nevada, N.A., as trustee.
Provisions of the Indenture are more fully described under "Description of
Securities" in the attached Prospectus to which reference is hereby made. The
Notes will be limited to $200 million in aggregate principal amount and will be
senior unsecured obligations of the Company.
The Notes will mature on February 1, 2006. The Notes will not be redeemable
prior to maturity and will not be entitled to the benefit of any sinking fund.
Interest on the Notes will accrue from February 1, 1996 and will be payable
semiannually on each August 1 and February 1, beginning August 1, 1996, to the
persons in whose names the Notes are registered at the close of business on the
July 15 or January 15 prior to the payment date at the annual rate set forth on
the cover page of this Prospectus Supplement.
The principal of, and interest on, the Notes are to be payable at the office
or agency of the Company in New York, New York. Interest on the Notes will be
paid on the basis of a 360-day year consisting of twelve 30-day months.
DEFEASANCE
The Notes will be subject to defeasance and covenant defeasance as provided
in the accompanying Prospectus.
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of and be represented by a fully
registered global security (a "Registered Global Security") registered in the
name of the Depositary or its nominee. The Depositary or nominee will credit, on
its book entry registration and transfer system, participant accounts with the
respective principal amounts of Notes that are beneficially owned by such
participants and represented by the Registered Global Security. A description of
the depositary arrangements generally applicable to the Notes is set forth in
the accompanying Prospectus under the caption "Description of Debt Securities -
Registered Global Securities." The Notes will not be issued in definitive form
except in the circumstances described under such caption in the accompanying
Prospectus.
The Depositary has advised the Company as follows: the Depositary is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provision of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary was created to hold securities
of its participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations, including the Underwriters. The
Depositary is owned by a number of participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest in respect of the Notes
in book-entry form will be made by the Company in immediately available funds.
The Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, or until the Notes are issued in certificated form, and secondary
market trading activity in the Notes will therefore be required by the
Depositary to settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
S-13
<PAGE>
UNDERWRITERS
Subject to the terms and conditions contained in an Underwriting Agreement
dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below, severally, and each of the Underwriters has severally
agreed to purchase, the respective principal amount of Notes set forth opposite
their respective names below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME NOTES
- ----------------------------------------------------------------- --------------
<S> <C>
Morgan Stanley & Co. Incorporated................................ $
Salomon Brothers Inc.............................................
Donaldson, Lufkin & Jenrette Securities Corporation..............
Goldman, Sachs & Co..............................................
Schroder Wertheim & Co. Incorporated.............................
BA Securities, Inc...............................................
--------------
Total..................................................... $200,000,000
--------------
--------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are obligated to take and pay for all of the Notes if any are
taken.
The Underwriters initially propose to offer the Notes directly to the public
at the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession not in excess
of % of the principal amount of the Notes. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of % of the principal
amount of the Notes to certain other dealers. After the initial public offering,
the public offering price and other selling terms for the Notes may from time to
time be varied by the Underwriters.
The Company does not intend to apply for listing of the Notes on a national
securities exchange. The Underwriters presently intend to make a market in the
Notes in the secondary trading market. However, the Underwriters are not
obligated to make a market in the Notes and any such market making may be
discontinued at any time at the sole discretion of the Underwriters. No
assurance can be given as to the liquidity of, or the trading markets for, the
Notes.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Certain of the underwriters and their affiliates have from time to time
performed various investment banking and commercial banking services for the
Company and its subsidiaries, for which compensation has been received. BA
Securities, Inc. is an affiliate of Bank of America, which acts as
administrative agent and lender under the Company's existing credit agreements
and will act as such under the New Credit Facility. The Company intends to use
substantially all of the net proceeds from the sale of the Notes to repay
outstanding amounts due under the existing credit agreements or the New Credit
Facility (if in effect at such time). See "Use of Proceeds." As a result, the
offering of the Notes is being made pursuant to the provisions of Paragraph (8)
of Section 44(c) of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Latham &
Watkins, and, as to matters of Nevada law, by Schreck, Jones, Bernhard, Woloson
& Godfrey Chartered. Certain legal matters will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom.
S-14
<PAGE>
PROSPECTUS
$400,000,000
CIRCUS CIRCUS ENTERPRISES, INC.
DEBT SECURITIES
------------------
Circus Circus Enterprises, Inc., a Nevada corporation (the "Company"), may
offer from time to time in one or more series its debt securities consisting of
debentures, notes or other evidence of indebtedness (the "Debt Securities"), in
amounts as may be sold for an aggregate public offering price of up to
$400,000,000, or, if Debt Securities are issued at an original issue discount,
such greater amount as shall result in aggregate proceeds of $400,000,000 to the
Company, on terms to be determined at the time of the offering. At the option of
the Company, the Debt Securities may be issued as senior secured Debt
Securities, as senior unsecured Debt Securities, as senior subordinated Debt
Securities or as subordinated Debt Securities, and in any combination thereof.
The general terms and conditions of the Debt Securities are described under
"Description of Debt Securities" in this Prospectus. Debt Securities may be
offered separately or together, in separate series, in amounts, at prices and on
terms determined by market conditions at the time of sale and to be set forth in
one or more supplements to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Debt Securities for which this Prospectus is being
delivered will be set forth in the applicable Prospectus Supplement which will
include, where applicable, the specific title, aggregate principal amount, form
(which may be certificated or global), authorized denominations, maturity (which
may be fixed or extendible), interest rate or rates (which may be fixed or
variable) (or manner of calculation thereof), if any, the time of payment of
interest, if any, any terms of redemption at the option of the Company or
repayment at the option of the holder, any terms for sinking fund payments,
additional covenants, initial public offering price, purchase price and other
terms with respect to the Debt Securities. The Debt Securities may be issued as
original issue discount securities to be sold at a substantial discount below
their principal amount and, if issued, certain terms thereof will be set forth
in the Prospectus Supplement related thereto. See "Description of Debt
Securities."
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Debt Securities
covered by such Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
NEITHER THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD
NOR ANY OTHER GAMING REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE
SECURITIES OFFERED HEREBY. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
------------------------
The Debt Securities may be offered directly to one or more purchasers,
through agents designated from time to time by the Company or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of the Debt Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Debt Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such Debt Securities.
------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY 11, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C., and at the Commission's regional offices at 7 World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, the Company's Common Stock is
listed on the New York Stock Exchange and the Pacific Stock Exchange and similar
information concerning the Company can be inspected and copied at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005 and at the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California 94104.
------------------------
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's (File No. 1-8570) (i) Annual Report on Form 10-K for the
fiscal year ended January 31, 1995, (ii) Quarterly Report on Form 10-Q for the
fiscal quarter ended April 30, 1995, (iii) Current Report on Form 8-K dated June
1, 1995, (iv) Amendment No. 1 on Form 8-K/A to the Company's Current Report on
Form 8-K dated June 1, 1995, (v) Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1995 and (vi) Quarterly Report on Form 10-Q for the
fiscal quarter ended October 31, 1995, each filed by the Company with the
Commission, are incorporated in this Prospectus by reference.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
hereunder shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of the filing of such reports and documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document, as the case may be, which also is
or is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of the Indentures (as hereinafter defined) or any document incorporated
herein by reference (other than exhibits to such documents). Requests should be
directed to David R. Belding, Secretary, Circus Circus Enterprises, Inc., 2880
Las Vegas Boulevard South, Las Vegas, Nevada 89109, telephone number (702)
734-0410.
------------------------
The Company will furnish each holder of the Debt Securities annual reports
containing audited financial statements, quarterly reports containing unaudited
financial information and such other reports as may be required by applicable
law.
2
<PAGE>
THE COMPANY
Circus Circus Enterprises, Inc. (the "Company"), which was incorporated in
1974, owns and operates, through wholly owned subsidiaries, 10 hotel-casino
properties with approximately 16,000 rooms in the State of Nevada, including
four properties in Las Vegas (Circus Circus-Las Vegas, Luxor, Excalibur and the
Hacienda Hotel and Casino), two properties in Jean (Gold Strike Hotel and
Gambling Hall and Nevada Landing), the Circus Circus Hotel and Casino in Reno,
the Railroad Pass in Henderson, and the Colorado Belle Hotel and Casino and the
Edgewater Hotel and Casino which are located on the Colorado River in Laughlin.
The Company also owns and operates a dockside casino situated on a 24-acre site
in Tunica County, Mississippi and operates two smaller casinos on the Las Vegas
Strip, Slots-A-Fun (which the Company also owns) and the Silver City Casino
(which the Company operates under a long-term lease).
The Company, through wholly owned subsidiaries, also owns interests in three
joint ventures which own operating casinos. The Grand Victoria, a riverboat
casino and land-based entertainment complex, is located in Elgin, Illinois and
is operated and managed by the Company. The Company and an affiliate of Hyatt
Development Corporation each have a 50% interest in the venture. The Silver
Legacy Hotel and Casino, is located in Reno, Nevada, and is Reno's first Las
Vegas-styled themed resort. This resort, themed as a turn-of-the-century silver
mining town, is owned in equal shares by the Company and an affiliate of
Eldorado Hotel and Casino. The Company and affiliates of ITT Destinations, Inc.
and Hilton Hotels Corporation own in equal shares a joint venture which is
operating both an interim land-based casino and a recently opened dockside
casino in Windsor, Ontario, Canada. The Company and its joint venture partners
are presently in negotiations for the construction of a permanent 300 room
hotel-casino facility in Windsor.
The Company also holds a 50% interest, through a wholly owned subsidiary, in
a joint venture with an affiliate of 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 managing venturer. This project, which is
scheduled to open in the summer of 1996, will feature approximately 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. The 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. 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.
As part of its growth strategy, the Company currently expects to expand
Luxor, renovate parts of Excalibur and commence construction of a multi-faceted
gaming and entertainment complex initially involving the Hacienda Hotel parcel
and certain undeveloped land to the south. It also expects to expand and
renovate Circus Circus Las Vegas and renovate parts of the Circus Circus Hotel
and Casino in Reno. While the Company intends to effect the preceding
expansions, renovations and construction in a manner intended to minimize the
impact such activities may have on the operations and earnings of the subject
properties, no assurances can be given that during the pendancy of such
activities the operations and/or earnings of the subject properties will not be
adversely affected.
Construction of the Luxor expansion is currently scheduled to commence in
January 1996. As currently contemplated, the expansion will involve an
approximately 2,000 room addition arranged in two high-rise, stepped-pyramid
towers between Luxor and Excalibur, raising the total rooms at Luxor to
approximately 4,500, and will include additional casino space, retail area,
restaurants and a multi-purpose showroom, as well as a signature ride. The
additional rooms are expected to be completed by the end of 1996. The estimated
cost of this expansion is expected to be approximately $240 million.
The Excalibur renovations are currently scheduled to commence in early 1996
and are contemplated to include the refurbishment of all of the over 4,000
rooms, the construction of additional retail space, the relocation of certain
restaurants, the construction of a moving walkway between Luxor and
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Excalibur and the re-engineering of the pedestrian overpasses over Las Vegas
Boulevard and Tropicana Avenue to provide more direct pedestrian access to
Excalibur. The estimated cost of the Excalibur renovations is anticipated to be
approximately $40-50 million.
The first step in the Company's effort to create a multi-faceted gaming and
entertainment complex is currently anticipated to commence in 1996 with the
construction of a hotel-casino facility on the Hacienda Hotel parcel and
approximately 73 acres of undeveloped land south of that parcel at the northwest
corner of Russell Road and the Las Vegas Strip. Ultimately, the Company
contemplates expanding the complex to include portions of the Luxor and
Excalibur parcels.
Construction of the Circus Circus Las Vegas expansion is currently scheduled
to commence in January 1996. As contemplated, the expansion will involve the
construction of an approximately 1,000 room high-rise tower adjacent to Grand
Slam Canyon, the refurbishment of approximately 1,200 rooms in the Skyrise Tower
and the improvement of the casino and midway. The estimated cost of the
foregoing expansion is expected to be approximately $50-60 million.
The Company also intends to commence construction of a major renovation at
Circus Circus Hotel and Casino in Reno in 1996. The renovation is currently
expected to involve the refurbishment of the casino and all of the rooms, as
well as the construction of a parking structure. The estimated cost of the
foregoing renovation is expected to be approximately $35 million.
The Company follows a marketing and operating philosophy which emphasizes
high volume business by providing reasonably priced hotel rooms, food and
alternative entertainment in combination with the Company's gaming activity. The
Company also maintains stringent cost controls which are exemplified by a
general policy of offering virtually no credit for gaming customers. Management
believes that this philosophy distinguishes the Company from its principal
competitors.
The Company's executive offices are located at 2880 Las Vegas Boulevard
South, Las Vegas, Nevada 89109, and its telephone number is (702) 734-0410.
Unless the context otherwise indicates, all references herein to the Company are
to Circus Circus Enterprises, Inc. and its subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
the Company for the nine months ended October 31, 1995 and each of the fiscal
years 1995, 1994, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
NINE MONTHS ENDED -----------------------------------------------------
OCTOBER 31, 1995 1995 1994 1993 1992 1991
- --------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
3.87(1) 5.38 5.40 6.48 4.40 3.03
</TABLE>
For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges (excluding capitalized interest) and minority
interests (relating to subsidiaries whose fixed charges are included in the
computation), excluding equity in undistributed earnings of less than 50% owned
investments. Fixed charges include interest, whether expensed or capitalized,
amortization of debt expense, discount or premium related to indebtedness and
such portion of rental expense deemed by the Company to be representative of
interest.
- ------------------------
(1) During the second quarter of fiscal 1996, 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 ratio of earnings to fixed
charges for the nine months ended October 31, 1995, excluding this
write-off, would be 4.79.
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USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debt
Securities for general corporate purposes, which may include acquisitions,
capital expenditures and working capital requirements; to repay, redeem or
repurchase outstanding indebtedness; or for such other purposes as may be
specified in the Prospectus Supplement. A description of any indebtedness to be
refinanced with the proceeds of the Debt Securities will be set forth in the
applicable Prospectus Supplement.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent to which such general
provisions may apply to the Debt Securities will be described in a Prospectus
Supplement relating to such Debt Securities.
The Debt Securities may constitute either senior secured debt ("Senior
Secured Debt Securities"), senior unsecured debt ("Senior Unsecured Debt
Securities"), senior subordinated debt ("Senior Subordinated Debt Securities")
or subordinated debt ("Subordinated Debt Securities"), or any combination
thereof, of the Company. Each such series of Debt Securities will be issued
under a separate indenture (the "Senior Secured Debt Indenture," the "Senior
Unsecured Debt Indenture," the "Senior Subordinated Debt Indenture," and the
"Subordinated Debt Indenture," respectively), in each case, between the Company,
as obligor, and First Interstate Bank of Nevada, N.A., as Trustee (the
"Trustee"). The Senior Secured Debt Indenture, the Senior Unsecured Debt
Indenture, the Senior Subordinated Debt Indenture and the Subordinated Debt
Indenture are sometimes hereinafter referred to individually as an "Indenture"
and collectively as the "Indentures."
The terms of the Debt Securities include those stated in the applicable
Indenture and those made part of such Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and holders of
the Debt Securities are referred to the Indentures and the Trust Indenture Act
for a statement thereof. A copy of the form of each Indenture is filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summaries of certain provisions of the Debt Securities and the
Indentures, while including a discussion of all material aspects or features
thereof, do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Debt Securities and
the Indentures, including the definitions therein of certain terms which are not
otherwise defined in this Prospectus. Wherever particular provisions or defined
terms of the Indentures are referred to, such provisions or defined terms are
incorporated herein by reference.
GENERAL
The Indentures will not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. Debt Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by the
Company for each series. As of the date of this Prospectus, the Company has
authorized the issuance under the Indentures of up to $400 million aggregate
principal amount of the Debt Securities, or, if Debt Securities are issued at an
original issue discount, such greater amount as shall result in aggregate
proceeds of $400 million to the Company.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities, if
applicable to such Debt Securities: (i) the title of the Debt Securities; (ii)
any limit on the aggregate principal amount of the Debt Securities and whether
they will constitute Senior Secured Debt Securities, Senior Unsecured Debt
Securities, Senior Subordinated Debt Securities or Subordinated Debt Securities;
(iii) the price or prices (expressed as a percentage of the aggregate principal
amount thereof) at which the Debt Securities will be issued; (iv) the date or
dates on which the principal of the Debt Securities is payable or the method of
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<PAGE>
determination thereof; (v) the rate or rates (which may be fixed or variable) at
which the Debt Securities will bear interest (which rate may be zero in the case
of certain Debt Securities issued at an issue price representing a discount from
the principal amount payable at maturity), and the date or dates from which such
interest, if any, will accrue, and the circumstances, if any, in which the
Company may defer interest payments; (vi) the interest payment dates, if any, on
which any interest on the Debt Securities will be payable, and the record date
for any interest payable on any Debt Securities; (vii) the right or obligation,
if any, of the Company to redeem or purchase Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder thereof, or
otherwise, the conditions, if any, giving rise to such right or obligation, and
the period or periods within which, and the price or prices at which and the
terms and conditions upon which Debt Securities shall be redeemed or purchased,
in whole or in part, and any provisions for the marketing of such Debt
Securities; (viii) if the amount of payments of principal of, premium, if any,
and interest, if any, on the Debt Securities is to be determined by reference to
an index, formula or other method, the manner in which such amounts are to be
determined and the calculation agent, if any, with respect thereto; (ix) if
other than the principal amount thereof, the portion of the principal amount of
the Debt Securities which will be payable upon declaration or acceleration of
the stated maturity thereof pursuant to an Event of Default; (x) whether the
Debt Securities will be issued in certificated or book-entry form and, if so,
the identity of the depository for the Debt Securities; (xi) any listing of the
Debt Securities on a securities exchange; (xii) any additional restrictive
covenants included for the benefit of Holders of such Debt Securities; (xiii)
any additional events of default provided with respect to such Debt Securities;
and (xiv) any other material terms of the Debt Securities. Any such Prospectus
Supplement will also describe any special provisions for the payment of
additional amounts with respect to the Debt Securities.
GAMING REGULATION
The ownership and operation of casino gaming facilities are subject to
extensive state and local regulation. The states of Illinois, Mississippi and
Nevada and the applicable local authorities, and the Province of Ontario, Canada
require various licenses, findings of suitability, registrations, permits and
approvals (individually a "Gaming License" and collectively "Gaming Licenses")
to be held by the Company and its subsidiaries and joint ventures that are
engaged in gaming operations. The Illinois Gaming Board, the Mississippi Gaming
Commission, the Nevada Gaming Commission and the Ontario Gaming Control
Commission (collectively the "Gaming Authorities"), may, among other things,
limit, condition, suspend or revoke a Gaming License or approval to own the
stock or joint venture interests of any of the Company's Illinois, Mississippi,
Nevada and Ontario operations, respectively, for any cause deemed reasonable by
such licensing authority. Substantial fines or forfeiture of assets for
violations of gaming laws or regulations may be levied against the Company, such
subsidiaries and joint ventures and the persons involved. The suspension or
revocation of any of the Company's Gaming Licenses or the levy on the Company of
substantial fines or forfeiture of assets could have a material adverse effect
on the business of the Company.
To date, the Company has obtained all Gaming Licenses necessary for the
operation of its gaming activities. However, Gaming Licenses and related
approvals are deemed to be privileges under Illinois, Mississippi, Nevada and
Ontario law, and no assurances can be given that any new Gaming Licenses that
may be required in the future will be granted or that existing Gaming Licenses
will not be revoked or suspended.
The Nevada Gaming Commission may, in its discretion, require the holder of
any Debt Security issued by the Company to file applications, be investigated
and be found suitable to own such Debt Security. If the Nevada Gaming Commission
determines that a person is unsuitable to own such Debt Security, then pursuant
to the Nevada Gaming Control Act, the Company can be sanctioned, including the
loss of its approvals, if without the prior approval of the Nevada Gaming
Commission, it: (i) pays to the unsuitable person any dividend, interest, or any
distribution whatsoever; (ii) recognizes any voting right by such unsuitable
person in connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable person by
way of
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<PAGE>
principal, redemption, conversion, exchange, liquidation, or similar
transaction. The Illinois Gaming Board, the Mississippi Gaming Commission and
the Ontario Gaming Control Commission also have jurisdiction over the beneficial
holders of Debt Securities issued by the Company and may require their
investigation and approval.
In certain jurisdictions, the Company may not make a public offering of its
securities without the prior approval of the applicable Gaming Authorities if
the securities or proceeds therefrom are intended to be used to construct,
acquire or finance gaming facilities in such jurisdictions, or to retire or
extend obligations incurred for such purposes or for similar transactions. On
August 24, 1995 the Nevada Gaming Commission granted the Company prior approval
to make public offerings for a period of one year, subject to certain conditions
("Shelf Approval"). The Shelf Approval also applies to any affiliated company
wholly owned by the Company (a "Gaming Affiliate") which is a publicly traded
corporation or would thereby become a publicly traded corporation pursuant to a
public offering. The Shelf Approval also includes approval for the Company's
licensed Nevada subsidiaries to guarantee any security issued by, or to
hypothecate their assets to secure the payment or performance of any obligations
issued by, the Company or a Gaming Affiliate in a public offering under the
Shelf Registration. However, the Shelf Approval may be rescinded for good cause
without prior notice upon the issuance of an interlocutory stop order by the
Chairman of the Nevada State Gaming Control Board and must be renewed annually.
The Shelf Approval does not constitute a finding, recommendation or approval by
the Nevada Gaming Commission or the Nevada State Gaming Control Board as to the
accuracy or adequacy of the prospectus or the investment merits of the
securities offered. Any representation to the contrary is unlawful. The public
offering of the Debt Securities will be made pursuant to the Shelf Approval.
The foregoing is only a summary of the regulatory requirements applicable to
the Company. For a more detailed description of the regulatory requirements
applicable to the Company, see "Regulation and Licensing" in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1995,
incorporated by reference herein.
MANDATORY DISPOSITION PURSUANT TO GAMING LAWS
The Indentures will provide that each Holder, by accepting any of the Debt
Securities, shall be deemed to have agreed that if the Gaming Authority of any
jurisdiction in which the Company or any of its subsidiaries conducts or
proposes to conduct gaming requires that a person who is a Holder must be
licensed, qualified or found suitable under applicable Gaming Laws, such Holder
shall apply for a license, qualification or a finding of suitability within the
required time period. If such person fails to apply or become licensed or
qualified or is found unsuitable, the Company shall have the right, at its
option, (i) to require such person to dispose of its Securities or beneficial
interest therein within 30 days of receipt of notice of the Company's election
or such earlier date as may be requested or prescribed by such Gaming Authority
or (ii) to redeem such Securities at a redemption price equal to the lesser of
(A) such person's cost and (B) 100% of the principal amount thereof, plus
accrued and unpaid interest to the earlier of the redemption date and the date
of the finding of unsuitability, which may be less than 30 days following the
notice of redemption if so requested or prescribed by the Gaming Authority. The
Company shall notify the Trustee in writing of any such redemption as soon as
practicable. The Company shall not be responsible for any costs or expenses any
such Holder may incur in connection with its application for a license,
qualification or a finding of suitability.
SUBORDINATION OF SECURITIES
The indebtedness evidenced by the Senior Subordinated Debt Securities and
Subordinated Debt Securities (collectively, the "Subordinated Securities") will
be subordinated to the prior payment when due of the principal of, premium, if
any, and interest on all current and future Senior Indebtedness (as defined
below). Upon maturity of any Senior Indebtedness by lapse of time, acceleration
or otherwise, payment in full must be made on such Senior Indebtedness before
any payment is made on or in respect of the Subordinated Securities. During the
continuance of any event of default with respect to Senior Indebtedness
entitling the holders thereof to accelerate the maturity thereof, or if
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<PAGE>
such event of default would be caused by any payment upon or in respect of the
Subordinated Securities, no payment may be made by the Company upon or in
respect of the Subordinated Securities; PROVIDED, HOWEVER, that if such event of
default is other than a default in payment of any amount due in connection with
such Senior Indebtedness, the Company shall be permitted to continue to make
payments of interest on the Subordinated Securities. Upon any distribution of
assets of the Company pursuant to any dissolution, winding up, liquidation or
reorganization of the Company, payment of the principal of and interest on the
Subordinated Securities will be subordinated, to the extent and in the manner
set forth in the applicable Indentures, to the prior payment in full of all
Senior Indebtedness. Such subordination will not prevent the occurrence of any
Event of Default.
"Senior Indebtedness" is defined in the Senior Subordinated Debt Indenture
as the principal of and interest on and other amounts due on or in connection
with (a) Indebtedness of the Company (other than the Subordinated Securities),
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed in any manner by the Company or in effect
guaranteed by the Company through an agreement to purchase or otherwise, and (b)
renewals, extensions, refunding or refinancing of Indebtedness of the kind
described in the preceding clause (a), unless, in the case of any particular
Indebtedness, renewal, extension, refunding, or refinancing, the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness, renewal, extension, refunding, or refinancing
does not constitute Senior Indebtedness. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness shall include (i) all
Indebtedness, liabilities and obligations of the Company owed to banks and other
financial institutions and (ii) the Senior Secured Debt Securities and the
Senior Unsecured Debt Securities, but shall not include (w) any Indebtedness
hereafter incurred that is subordinate or junior in right of payment to any
Senior Indebtedness, (x) Indebtedness of the Company to a subsidiary or
affiliate of the Company for money borrowed or advances from such subsidiary or
affiliate, (y) the 10 5/8% Senior Subordinated Notes of the Company Due 1997,
the 6 3/4% Senior Subordinated Notes of the Company Due 2003, and the 7 5/8%
Senior Subordinated Debentures of the Company Due 2013, with respect to which
the Senior Subordinated Debt Securities will rank PARI PASSU in right of
payment, or (z) any Indebtedness specified in an indenture supplemental to the
Senior Subordinated Debt Indenture or an Officers' Certificate as being excepted
from the definition of Senior Indebtedness; PROVIDED, that any guaranty by the
Company of Indebtedness of a subsidiary of the Company to third parties shall
constitute Senior Indebtedness unless, in the case of any particular guaranty,
the instrument creating or evidencing the same provides that such guaranty does
not constitute Senior Indebtedness; PROVIDED FURTHER, that in the event a
subsidiary of the Company advances to the Company the proceeds attributable to
Indebtedness incurred by such subsidiary to a third party which Indebtedness has
been guaranteed by the Company, then such obligation of the Company to repay
such advance to the subsidiary shall constitute Senior Indebtedness, unless the
Company provides in writing that such advance does not constitute Senior
Indebtedness.
"Senior Indebtedness" is defined in the Subordinated Debt Indenture as the
principal of and interest on and other amounts due on or in connection with (a)
Indebtedness of the Company (other than the Subordinated Debt Securities),
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed in any manner by the Company or in effect
guaranteed by the Company through an agreement to purchase or otherwise, and (b)
renewals, extensions, refunding or refinancing of Indebtedness of the kind
described in the preceding clause (a), unless, in the case of any particular
Indebtedness, renewal, extension, refunding, or refinancing, the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness, renewal, extension, refunding, or refinancing
does not constitute Senior Indebtedness. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness shall include (i) all
Indebtedness, liabilities and obligations of the Company owed to banks and other
financial institutions and (ii) the Senior Secured Debt Securities, the Senior
Unsecured Debt Securities, the Senior Subordinated Debt Securities, the 10 5/8%
Senior Subordinated Notes of the Company Due 1997, the 6 3/4% Senior
Subordinated Notes of the Company Due 2003, and the 7 5/8% Senior Subordinated
Debentures of the Company Due 2013, but shall not include (x) any Indebtedness
hereafter incurred
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that is subordinate or junior in right of payment to any Senior Indebtedness
(other than Senior Subordinated Debt and any other Indebtedness ranking PARI
PASSU with such Indebtedness), (y) Indebtedness of the Company to a subsidiary
or affiliate of the Company for money borrowed or advances from such subsidiary
or affiliate or (z) any Indebtedness specified in an indenture supplemental to
the Subordinated Debt Indenture or an Officers' Certificate as being excepted
from the definition of Senior Indebtedness; PROVIDED, that any guaranty by the
Company of Indebtedness of a subsidiary of the Company to third parties shall
constitute Senior Indebtedness unless, in the case of any particular guaranty,
the instrument creating or evidencing the same provides that such guaranty does
not constitute Senior Indebtedness; PROVIDED FURTHER, that in the event a
subsidiary of the Company advances to the Company the proceeds attributable to
Indebtedness incurred by such subsidiary to a third party which Indebtedness has
been guaranteed by the Company, then such obligation of the Company to repay
such advance to the subsidiary shall constitute Senior Indebtedness, unless the
Company provides in writing that such advance does not constitute Senior
Indebtedness.
The claims of third parties to the assets of the Company's subsidiaries
incurring such obligations will be superior to those of the Company as a
stockholder and, therefore, the Debt Securities may be deemed to be effectively
subordinated to the claims of such third parties. Substantially all of the
Company's business operations are conducted through such subsidiaries, and the
Debt Securities are effectively subordinated to the repayment of the liabilities
arising from those operations. The Indentures will not limit the amount of
additional Indebtedness, including Senior Indebtedness, which the Company or any
subsidiary may create, incur, assume or guarantee. As a result of the
subordination provisions contained in the Indentures, in the event of
insolvency, holders of the Subordinated Securities may recover less, ratably,
than other creditors of the Company or its subsidiaries.
REGISTERED GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more Registered Global Securities that will be deposited with and registered
in the name of a depositary (a "Depositary") or its nominee identified in the
applicable Prospectus Supplement. In such case, one or more Registered Global
Securities will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal amount of outstanding registered Debt
Securities of the series to be represented by such Registered Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive registered form, a Registered Global Security may not
be transferred except as a whole by the Depositary for such Registered Global
Security to a nominee of such Depositary, or by such a nominee to such
Depositary or to another nominee of such Depositary, or by such Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global Security
will be described in the applicable Prospectus Supplement. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons holding interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of such ownership
interests will be effected only through, records maintained by the Depositary
for such Registered Global Security (with respect to interests of participants)
and on the records of participants (with respect to interests of persons holding
through
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<PAGE>
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, transfer or pledge
beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the Indentures. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the Debt
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such Debt
Securities in definitive form and will not be considered the owners or holders
thereof under the Indentures. Accordingly, each person owning a beneficial
interest in a Registered Global Security must rely on the procedures of the
Depositary for such Registered Global Security and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interests, to exercise any rights of a holder under the Indentures. The
Company understands that under existing industry practices, if the Company
requests any action of holders or if an owner of a beneficial interest in a
Registered Global Security desires to give or take any action which a holder is
entitled to give or take under the applicable Indenture, the Depositary for such
Registered Global Security would authorize the participants holding the relevant
beneficial interests to give or take such action, and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
holding through them.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
the Company, the Trustee or any other agent of the Company or agent of the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
such Registered Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest in respect of such Registered Global Security, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in such Registered Global Security as
shown on the records of such Depositary. The Company also expects that payments
by participants to owners of beneficial interests in such Registered Global
Security held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary or ceases
to be a clearing agency registered under the Exchange Act, and a successor
Depositary registered as a clearing agency under the Exchange Act is not
appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such Registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for all of the Registered Global
Security or Securities representing such Debt Securities. Any Debt Securities
issued in definitive form in exchange for a Registered Global Security will be
registered in such name or names as the Depositary shall instruct the Trustee.
It is expected that such instructions will be based upon directions received by
the Depositary from participants with respect to ownership of beneficial
interests in such Registered Global Security.
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CERTAIN COVENANTS
LIMITATION ON LIENS. Unless otherwise indicated in the applicable
Prospectus Supplement, the Senior Unsecured Debt Indenture and the Senior
Subordinated Debt Indenture will provide that neither the Company nor any of its
subsidiaries may issue, assume or guarantee any Indebtedness secured by a Lien
upon any Consolidated Property without effectively providing that the Debt
Securities shall be secured equally and ratably with (or prior to) such
Indebtedness so long as such Indebtedness shall be so secured, except that this
restriction will not apply to: (a) Liens existing on the date of original
issuance of the Debt Securities; (b) Liens affecting property of a corporation
or other entity existing at the time it becomes a subsidiary of the Company or
at the time it is merged into or consolidated with the Company or a subsidiary
of the Company; (c) Liens on property existing at the time of acquisition
thereof or incurred to secure payment of all or a part of the purchase price
thereof or to secure Indebtedness incurred prior to, at the time of, or within
24 months after the acquisition for the purpose of financing all or part of the
purchase price thereof; (d) Liens on any property to secure all or part of the
cost of improvements or construction thereon or Indebtedness incurred to provide
funds for such purpose in a principal amount not exceeding the cost of such
improvements or construction; (e) Liens which secure Indebtedness owing by a
subsidiary of the Company to the Company or to a subsidiary of the Company; (f)
Liens securing Indebtedness of the Company the proceeds of which are used
substantially simultaneously with the incurrence of such Indebtedness to retire
Funded Debt; (g) purchase money security Liens on personal property; (h) Liens
securing Indebtedness of the Company the proceeds of which are used within 24
months of the incurrence of such Indebtedness for the cost of the construction
and development or improvement of a Resort Property; (i) Liens on the stock,
partnership or other equity interest of the Company or any subsidiary in any
Joint Venture (as hereinafter defined) or any subsidiary which owns an equity
interest in such Joint Venture to secure Indebtedness, PROVIDED the amount of
such Indebtedness is contributed and/ or advanced solely to such Joint Venture;
(j) Liens securing any Senior Indebtedness (as defined in the Senior
Subordinated Debt Indenture), including without limitation, the Senior Secured
Debt Securities; (k) certain Liens to government entities, including pollution
control or industrial revenue bond financing; (l) Liens required by any contract
or statute in order to permit the Company or a subsidiary of the Company to
perform any contract or subcontract made by it with or at the request of a
governmental entity; (m) mechanic's, materialman's, carrier's or other like
Liens, arising in the ordinary course of business; (n) certain Liens for taxes
or assessments and similar charges; (o) zoning restrictions, easements,
licenses, covenants, reservations, restrictions on the use of real property and
certain other minor irregularities of title; and (p) any extension, renewal,
replacement or refinancing of any Lien referred to in the foregoing, clauses (a)
through (j). Notwithstanding the foregoing, the Company and any one or more of
its subsidiaries may, without securing the Debt Securities, issue, assume or
guarantee Indebtedness which would otherwise be subject to the foregoing
restrictions in an aggregate principal amount which, together with all other
such Indebtedness of the Company and its subsidiaries which would otherwise be
subject to the foregoing restrictions (not including Indebtedness permitted to
be secured under clauses (a) through (j) inclusive above) and the aggregate
Value of Sale and Lease-Back Transactions (other than those in connection with
which the Company has voluntarily retired Funded Debt) does not at any one time
exceed 15% of Consolidated Net Tangible Assets of the Company and its
consolidated subsidiaries.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. Unless otherwise indicated
in the applicable Prospectus Supplement, the Senior Unsecured Debt Indenture and
the Senior Subordinated Debt Indenture will provide that neither the Company nor
any of its subsidiaries will enter into any Sale and Lease-Back Transaction
unless either (a) the Company or such subsidiary would be entitled, pursuant to
the above provisions, to incur Indebtedness in a principal amount equal to or
exceeding the Value of such Sale and Lease-Back Transaction, secured by a Lien
on the property to be leased, without equally and ratably securing the
Securities or (b) the Company within 120 days after the effective date of such
Sale and Lease-Back Transaction applies to the voluntary retirement of its
Funded Debt an amount equal to the Value of the Sale and Lease-Back Transaction
(subject to credits for certain voluntary retirements of Funded Debt).
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ADDITIONAL COVENANTS. Any additional covenants of the Company with respect
to any series of Debt Securities will be set forth in the Prospectus Supplement
relating thereto.
CERTAIN DEFINITIONS
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities (excluding any thereof which are by their
terms extendible or renewable at the option of the obligor thereon to a time
more than 12 months after the time as of which the amount thereof is being
computed) and (ii) all goodwill, trade names, trademarks, patents, purchased
technology, unamortized debt discount and other like intangible assets, all as
set forth on the most recent quarterly balance sheet of the Company and its
consolidated subsidiaries and computed in accordance with generally accepted
accounting principles.
"CONSOLIDATED PROPERTY" means any property of the Company or any subsidiary
of the Company.
"EXISTING COMPLETION GUARANTEES AND MAKE-WELL AGREEMENTS" means (i) that
certain Make-Well Agreement by the Company in favor of First Interstate Bank of
Nevada, N.A. dated as of May 30, 1995 relating to the Circus and Eldorado Joint
Venture, a Nevada general partnership, (ii) that certain Circus Completion
Guaranty by the Company in favor of First Interstate Bank of Nevada, N.A. dated
as of May 30, 1995 relating to the Circus and Eldorado Joint Venture, a Nevada
general partnership, and (iii) that certain Guaranty by the Company in favor of
Bank of America National Trust and Savings Association dated as of July 12, 1995
relating to Victoria Partners, a Nevada general partnership.
"FUNDED DEBT" means all Indebtedness of the Company which (i) matures by its
terms, or is renewable at the option of any obligor thereon to a date, more than
one year after the date of original issuance of such Indebtedness and (ii) ranks
at least PARI PASSU with the Securities.
"INDEBTEDNESS" of any person means (a) any indebtedness of such person,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit, or representing the balance deferred and
unpaid of the purchase price of any property, including any such indebtedness
incurred in connection with the acquisition by such person or any of its
subsidiaries of any other business or entity, if and to the extent such
indebtedness would appear as a liability upon a balance sheet of such person
prepared in accordance with generally accepted accounting principles, including
for such purpose obligations under capitalized leases, and (b) any guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), discount with recourse, agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire or to supply or advance funds with
respect to, or to become liable with respect to (directly or indirectly) any
indebtedness, obligation, liability or dividend of any person, but shall not
include indebtedness or amounts owed (except to banks or other financial
institutions) for compensation to employees, or for goods or materials
purchased, or services utilized, in the ordinary course of business of such
person. Notwithstanding anything to the contrary in the foregoing,
"Indebtedness" shall not include (i) any contracts providing for the completion
of construction or other payment or performance with respect to the
construction, maintenance or improvement of property or equipment of the Company
or its Affiliates or (ii) any contracts providing for the obligation to advance
funds, property or services on behalf of an Affiliate of the Company in order to
maintain the financial condition of such Affiliate, in each case, including
Existing Completion Guarantees and Make-Well Agreements. For purposes hereof, a
"capitalized lease" shall be deemed to mean a lease of real or personal property
which, in accordance with generally accepted accounting principles, is required
be capitalized.
"JOINT VENTURE" means (i) with respect to properties located in the United
States, any partnership, corporation or other entity, in which up to and
including 50% of the partnership interests, outstanding voting stock or other
equity interests is owned, directly or indirectly, by the Company and/or one or
more subsidiaries, and (ii) with respect to properties located outside the
United States,
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any partnership, corporation or other entity, in which up to and including 60%
of the partnership interests, outstanding voting stock or other equity interests
is owned, directly or indirectly, by the Company and/or one or more
subsidiaries.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, security interest, lien (statutory or other), or
preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"RESORT PROPERTY" means any property owned or to be owned by the Company or
any of its subsidiaries that is, or will be upon completion, a casino (including
a riverboat casino), casino-hotel, destination resort or a theme park.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with any person
(other than the Company or a subsidiary of the Company), or to which any such
person is a party, providing for the leasing to the Company or a subsidiary of
the Company for a period of more than three years of any Consolidated Property
which has been or is to be sold or transferred by the Company or such subsidiary
to such person or to any other person (other than the Company or a subsidiary of
the Company), to which funds have been or are to be advanced by such person on
the security of the leased property.
"subsidiary" of any person means (i) any corporation of which at least a
majority in interest of the outstanding stock having by the terms thereof voting
power under ordinary circumstances to elect a majority of the directors of such
corporation, irrespective of whether or not at the time stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency, is at the time, directly or indirectly,
owned or controlled by such person, or by one or more other corporations a
majority in interest of such stock of which is similarly owned or controlled, or
by such person and one or more other corporations a majority in interest of such
stock of which is similarly owned or controlled and (ii) any other person (other
than a corporation, or a partnership, corporation or other entity described in
clause (ii) of the definition of Joint Venture) in which such person or any
subsidiary, directly or indirectly, has greater than a 50% ownership interest.
"VALUE" means, with respect to a Sale and Lease-Back Transaction, as of any
particular time, the amount equal to the greater of (i) the net proceeds of the
sale or transfer of property leased pursuant to such Sale and Lease-Back
Transaction or (ii) the fair value, in the opinion of the Company's Board of
Directors as evidenced by a board resolution, of such property at the time of
entering into such Sale and Lease-Back Transaction.
SUCCESSOR CORPORATION AND ASSIGNMENT
The Indentures provide that the Company may not consolidate with, merge into
or transfer all or substantially all of its assets to, another person unless (i)
the successor, if other than the Company, is a corporation organized under the
laws of the United States or any state thereof or the District of Columbia, (ii)
it assumes all obligations of the Company under the Debt Securities and the
Indentures, and (iii) immediately after such transaction no Default or Event of
Default exists. Thereafter, all such obligations of the Company will terminate.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise indicated in the applicable Prospectus Supplement, the term
"Event of Default," when used in an Indenture with respect to any series of Debt
Securities, will mean any one of the following: (i) failure of the Company to
pay (whether or not prohibited by the subordination provisions (if any))
interest for 30 days on, or the principal when due of, such series of Debt
Securities; (ii) failure to perform any other covenant contained in such
Indenture for 30 days after notice; (iii) the occurrence of an event of default
under any instrument evidencing Indebtedness of the Company or its subsidiaries
entitling the holder or holders thereof to accelerate the payment of an
aggregate principal amount of $10,000,000 or more of such Indebtedness, which
event of default is not cured or
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waived in accordance with the provisions of such instrument, or such
Indebtedness is not discharged within 30 days after the receipt by the Company
of notice from the Trustee or the holders of 25% in principal amount of such
series of Debt Securities then outstanding of such event of default; and (iv)
certain events of bankruptcy, insolvency or reorganization.
The Indentures will provide that the Trustee will, within 90 days after the
occurrence of a default with respect to any series of Debt Securities, give the
holders of such series of Debt Securities, notice of all uncured defaults known
to it (the term "default" to include the events specified above without grace or
notice), PROVIDED, that, except in the case of default in the payment of
principal of or interest on such series of Debt Securities, the Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the holders of such series of
Debt Securities.
In case an Event of Default occurs and is continuing with respect to any
series of Debt Securities, the Trustee or the holders of not less than 25% in
principal amount of such series of Debt Securities, by notice in writing to the
Company (and to the Trustee if given by the holders of such series of Debt
Securities), may declare the principal of and all accrued interest on all such
series of Debt Securities (but in no event more than the maximum amount of
principal and interest thereon allowed by law) to be due and payable
immediately. Such declaration may be rescinded by holders of a majority in
principal amount of such series of Debt Securities then outstanding if, among
other conditions, all existing Events of Default relating to such series of Debt
Securities have been cured or waived and if the rescission would not conflict
with any judgment or decree.
Defaults with respect to any series of Debt Securities (except, unless
theretofore cured, a default in payment of principal of or interest on such
series of Debt Securities or default with respect to a provision which cannot be
modified under the terms of the applicable Indenture without the consent of each
holder of the Debt Securities affected) may be waived by the holders of a
majority in principal amount of such series of Debt Securities then outstanding
upon the conditions provided in such Indenture.
The Indentures will include a covenant that the Company will file annually
with the Trustee a statement regarding compliance by the Company with the terms
thereof and specifying any defaults of which the signers may have knowledge.
MODIFICATION OF THE INDENTURES
Under the Indentures, the rights and obligations of the Company and the
rights of the holders of the Debt Securities may be modified by the Company and
the Trustee only with the consent of the holders of not less than a majority in
principal amount of the class of Debt Securities then outstanding affected by
such modification; but no reduction in the principal, or extension of the
maturity, of any Debt Securities in a manner adverse to the holders of the Debt
Securities, or reduction of the interest rate or extension of the time of
payment of interest on the Debt Securities in a manner adverse to the holders of
the Debt Securities, or any modification of the subordination provisions (if
any) in a manner adverse to the holders of the Debt Securities, or reduction of
the percentage required for modification, will be effective against any holder
of the Debt Securities without such holder's consent. Under certain
circumstances, however, the Company may amend or supplement the Indentures
without notice to or the consent of any holders of the Debt Securities.
SATISFACTION AND DISCHARGE OF INDENTURES
Unless otherwise indicated in the applicable Prospectus Supplement, each
Indenture with respect to any series of Debt Securities will be discharged upon
payment in full of such series of Debt Securities outstanding thereunder, or
upon the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will, without consideration of any
reinvestment of such interest, provide money in an amount sufficient to pay and
discharge the principal of and each installment of interest on such series of
Debt Securities on the maturity or redemption date, as the case may be, of
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such payments in accordance with the terms of the applicable Indenture and such
series of Debt Securities issued thereunder. The Company will be entitled to
make such a deposit if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel, reasonably satisfactory to the Trustee, to the
effect that (i) the holders of such series of Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance of the applicable Indenture and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred and (ii) the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
COVENANT DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement, each
Indenture will provide that the Company may be released from its obligations
with respect to any series of Debt Securities relating to the Company's
obligations with respect to the payment of taxes and other claims, maintenance
of properties, limitations on liens, limitations on sale and lease-back
transactions, and limitations on when the Company may merge, and that such
release will not be deemed to be an Event of Default under such Indenture with
respect to any series of Debt Securities ("covenant defeasance"), upon the
deposit with the Trustee (or other qualifying trustee), in trust, of money
and/or U.S. Government Obligations which through the payment of interest and
principal in accordance with their terms will provide money in an amount
sufficient to pay and discharge the principal of and each installment of
interest on such series of Debt Securities on the maturity of such payments in
accordance with the terms of the applicable Indenture and such series of Debt
Securities issued thereunder. The Company will be entitled to make such a
deposit if, among other things, the Company has delivered to the Trustee an
Opinion of Counsel, reasonably satisfactory to the Trustee, to the effect that
(i) the holders of such series of Debt Securities will not recognize income,
gain or loss for federal income tax purposes as a result of such covenant
defeasance of certain obligations and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred and (ii) the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally.
CONCERNING THE TRUSTEE
First Interstate Bank of Nevada, N.A. will be the Trustee under each of the
Indentures. All payments of principal of, and interest on, and all registration,
transfer, exchange, authentication, and delivery (including authentication and
delivery on original issuance of the Debt Securities) of, the Debt Securities
will be effected by the Trustee in Las Vegas, Nevada, or at an office designated
by the Trustee in New York, New York.
Each Indenture will contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict or resign.
The Trustee also serves as a trustee with respect to the 10 5/8% Senior
Subordinated Notes of the Company Due 1997, the 6 3/4% Senior Subordinated Notes
of the Company Due 2003, and the 7 5/8% Senior Subordinated Debentures of the
Company Due 2013. In case of any conflicting interest relating to the Trustee's
duties with respect to the foregoing securities or the Debt Securities, the
Trustee shall either eliminate such conflicting interest or, except as otherwise
provided in the Trust Indenture Act, resign.
The holders of a majority in principal amount of any series of Debt
Securities then outstanding will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee with respect to such series of Debt Securities, PROVIDED that such
direction would not conflict with any rule of law or with the applicable
Indenture, would not be unduly
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prejudicial to the rights of another holder of the Debt Securities, and would
not involve the Trustee in personal liability. The Indentures will provide that
in case an Event of Default shall occur and be known to the Trustee (and not be
cured), the Trustee will be required to use the degree of care of a prudent man
in the conduct of his own affairs in the exercise of its power. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indentures at the request of any of the holders of
the Debt Securities, unless they shall have offered to the Trustee security and
indemnity satisfactory to it.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, STOCKHOLDERS OR INCORPORATORS
The Indentures will provide that no past, present or future director,
officer, employee, stockholder or incorporator of the Company or any successor
corporation shall have any liability for any obligations of the Company under
the Debt Securities or the Indentures or for any claim based on, in respect of,
or by reason of such obligations or their creation, by reason of such person's
or entities status as such director, officer, stockholder or incorporator.
PLAN OF DISTRIBUTION
The Company may offer the Debt Securities directly to purchasers or to or
through underwriters, dealers or agents. Any such underwriter(s), dealer(s) or
agent(s) involved in the offer and sale of the Debt Securities in respect of
which this Prospectus is delivered will be named in the applicable Prospectus
Supplement. The applicable Prospectus Supplement with respect to such Debt
Securities will also set forth the terms of the offering of such Debt
Securities, including the purchase price of such Debt Securities and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such Debt Securities may be listed.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The applicable Prospectus
Supplement will describe the method of distribution of the Debt Securities.
If underwriters are used in an offering of Debt Securities, the name of each
managing underwriter, if any, and any other underwriters and terms of the
transaction, including any underwriting discounts and other items constituting
compensation of the underwriters and dealers, if any, will be set forth in the
applicable Prospectus Supplement relating to such offering and the Debt
Securities will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time. It is anticipated that any underwriting agreement pertaining to any Debt
Securities will (1) entitle the underwriters to indemnification by the Company
against certain civil liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters may be required to make in
respect thereof, (2) provide that the obligations of the underwriters will be
subject to certain conditions precedent and (3) provide that the underwriters
will be obligated to purchase all Debt Securities offered in a particular
offering if any such Debt Securities are purchased.
If a dealer is used in an offering of Debt Securities, the Company will sell
such Debt Securities to the dealer, as principal. The dealer may then resell
such Debt Securities to the public at varying prices to be determined by such
dealer at the time of resale. The name of the dealer and the terms of the
transaction will be set forth in the applicable Prospectus Supplement relating
thereto.
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If an agent is used in an offering of Debt Securities, the agent will be
named, and the terms of the agency will be set forth, in the applicable
Prospectus Supplement relating thereto. Unless otherwise indicated in such
applicable Prospectus Supplement, an agent will act on a best efforts basis for
the period of its appointment.
Dealers and agents named in an applicable Prospectus Supplement may be
deemed to be underwriters (within the meaning of the Securities Act) of the Debt
Securities described therein and, under agreements which may be entered into
with the Company, may be entitled to indemnification by the Company against
certain civil liabilities under the Securities Act. Underwriters, dealers and
agents may be customers of, engage in transactions with, or perform services
for, the Company in the ordinary course of business.
Offers to purchase Debt Securities may be solicited, and sales thereof may
be made, by the Company directly to institutional investors or others, who may
be deemed to be underwriters within the meaning of the Securities Act with
respect to any resales thereof. The terms of any such offer will be set forth in
the applicable Prospectus Supplement relating thereto.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other agents of the Company to solicit offers by
certain institutional investors to purchase Debt Securities from the Company
pursuant to contracts providing for payment and delivery at a future date.
Institutional investors with which such contracts may be made include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
purchasers must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (1)
the purchase of the Debt Securities shall not at the time of delivery be
prohibited under the laws of any jurisdiction to which such purchaser is subject
and (2) if the Debt Securities are also being sold to underwriters, the Company
shall have sold to such underwriters the Debt Securities not subject to delayed
delivery. Underwriters and other agents will not have any responsibility in
respect of the validity or performance of such contracts.
The anticipated date of delivery of Debt Securities will be set forth in the
applicable Prospectus Supplement relating to each offering.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Latham &
Watkins, and, as to matters of Nevada law, by Schreck, Jones, Bernhard, Woloson
& Godfrey Chartered.
EXPERTS
The consolidated financial statements incorporated by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1995,
and the combined financial statements of Gold Strike Resorts for the years ended
December 31, 1994 and 1993 incorporated by reference in Amendment No. 1 on Form
8-K/A to the Company's Current Report on Form 8-K dated June 1, 1995
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement to the extent and for the periods indicated in their reports have been
audited by Arthur Andersen, LLP, independent public accountants and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in giving said reports.
The financial statements of Elgin Riverboat Resort-Riverboat Casino for the
years ended December 31, 1994 and 1993 incorporated by reference in Amendment
No. 1 on Form 8-K/A to the Company's Current Report on Form 8-K dated June 1,
1995 incorporated by reference in this Prospectus and elsewhere in the
Registration Statement to the extent and for the periods indicated in their
reports, have been audited by Coopers & Lybrand LLP, independent public
accountants, and are incorporated herein by reference in reliance upon the
authority of that firm as experts in giving said report.
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