FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-8570
CIRCUS CIRCUS ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Nevada 88-0121916
(State or other jurisdiction of (I.R.S. Employer incorporation
incorporation or organization) Identification No.)
2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109-1120
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code:(702) 734-0410
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Exchanges on which Registered
Common Stock, $.01-2/3 Par Value New York Stock Exchange and
Pacific Stock Exchange
Common Stock Purchase Rights New York Stock Exchange and
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock of the
Registrant held by persons other than the registrant's directors
and executive officers as of April 25, 1997 (based upon the last
reported sale price on the New York Stock Exchange on such date)
was $1,936,961,369.
The number of shares of Common Stock, $.01-2/3 par
value, outstanding at April 25, 1997: 94,862,033.
DOCUMENTS INCORPORATED BY REFERENCE
PART II - Portions of the Registrant's Annual Report to
Stockholders for the year ended January 31, 1997 are incorporated
by reference into Items 7 and 8, inclusive.
PART III - Portions of the Registrant's definitive
proxy statement in connection with the annual meeting of
stockholders to be held on June 24, 1997, are incorporated by
reference into Items 10 through 13, inclusive.
PART I
ITEM 1. BUSINESS.
General
Circus Circus Enterprises, Inc. (the "Company"), which
was incorporated in 1974, currently owns and operates, through
wholly owned subsidiaries, nine hotel-casino properties in Nevada
with a total of approximately 17,700 guest rooms, reflecting the
December 1, 1996 closing of the 1,169-room Hacienda Hotel and
Casino and the placement in service of a total of approximately
2,950 new rooms at Circus Circus-Las Vegas and Luxor since
December 1996. These properties include (i) three hotel/casinos
in Las Vegas (Circus Circus-Las Vegas, Luxor and Excalibur), (ii)
the Circus Circus Hotel and Casino in Reno, (iii) the Colorado
Belle Hotel and Casino and the Edgewater Hotel and Casino which
are located on the Colorado River in Laughlin, (iv) Gold Strike
Hotel and Gambling Hall and the Nevada Landing Hotel & Casino in
Jean, and (v) Railroad Pass Hotel and Casino in Henderson. 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, is a
50% participant in (i) a joint venture (the Las Vegas Joint
Venture ) which owns and operates Monte Carlo, a hotel-casino on
the Las Vegas Strip which opened in June 1996, (ii) a joint
venture (the "Reno Joint Venture") which owns and operates Silver
Legacy, a hotel-casino located in downtown Reno that opened in
July 1995 and is situated between (and connected by enclosed
climate-controlled skyways to) Circus Circus-Reno and another
hotel-casino owned and operated by an affiliate of the other
participant in the Reno Joint Venture, and (iii) a joint venture
(the "Elgin Joint Venture") which owns and operates The Grand
Victoria, a riverboat casino, and a related land-based
entertainment complex located in Elgin, Illinois. In January
1997, the Company disposed its one-third interest in a company
which operates an interim casino in Windsor, Ontario, Canada.
For additional information concerning the projects with which the
Company is involved through the aforementioned joint ventures,
see "Joint Venture Participations" in this Item 1.
Unless the context otherwise indicates, all references
to the Company are to Circus Circus Enterprises, Inc. and its
subsidiaries.
Significant Recent Developments
Since December 23, 1996, the Company has placed in
service a new 1,000-room hotel tower at Circus Circus-Las Vegas
and approximately 1,950 rooms in two new 22-story hotel towers at
Luxor. The expansion program at Luxor has also involved
substantial changes to the original facility, including the
removal of the Nile River feature to provide for a better
utilization of the space on the ground level of the main casino
and the relocation of the hotel s front desk to provide easier
customer access. This work, which significantly impacted
operations at Luxor during fiscal 1997, was substantially
completed by the end of fiscal 1997. The remainder of the
expansion program will be completed in stages with final
completion currently anticipated to occur in fall of 1997 and
will add additional retail areas, two new restaurants, a multi-
purpose showroom and include a reworking of the attractions
level. For additional information concerning the new facilities,
see Description of the Company's Operating Hotels and Casinos
in this Item 1.
On December 1, 1996, the Company closed the 1,169-room
Hacienda Hotel and Casino, which was imploded on December 31,
1996 to make way for construction of a 42-story, 3,800-room
hotel-casino resort (currently referred to as Project Paradise )
and a 400-room Four Seasons Hotel. Construction of Project
Paradise commenced in the spring of 1997 and is currently
expected to be completed in late 1998 or early 1999. For
additional information concerning Project Paradise and the Four
Seasons Hotel, see Current Expansion Activities in this Item 1.
In late 1996, the Company commenced construction of a
1,200-room hotel tower at its Tunica County, Mississippi casino,
Circus Circus-Tunica, which will be remodeled and rethemed into a
more elegant resort to be operated under the name Gold Strike
Casino Resort. For additional information concerning this
project, see Current Expansion Activities in this Item 1.
In June 1996, the Las Vegas Joint Venture (in which the
Company owns a 50% interest) completed and opened Monte Carlo, a
major destination resort on the Las Vegas Strip with 3,002 hotel
rooms, including 253 suites. For additional information
concerning this property and the Las Vegas Joint Venture, see
Joint Venture Participations in this Item 1.
In January 1997, the Company disposed of its one-third
interest in a company operating an interim casino in Windsor,
Ontario, Canada.
Description of the Company's Operating Hotels and Casinos
Las Vegas, Nevada
Circus Circus-Las Vegas. Circus Circus-Las Vegas, the
Company's original property, is a circus-themed hotel and casino
complex situated on approximately 69 acres on the north end of
the Las Vegas Strip. The property, which has a total of 3,744
hotel rooms (1,000 of which are included in a new tower completed
in December 1996), includes approximately 109,000 square feet of
casino space where, as of January 31, 1997, 2,555 slot machines
and other coin-operated devices and 84 gaming tables (including
blackjack ("21"), craps, pai gow poker, Caribbean stud poker, a
wheel of fortune and roulette) as well as poker, keno and a race
and sports book were available to the casino's patrons. From a
"Big Top" above the casino, Circus Circus-Las Vegas offers its
guests a variety of circus acts performed free of charge from 11
a.m. to midnight daily. A mezzanine area overlooking the casino
has a circus midway with carnival-style games and an arcade that
offers a variety of amusements and electronic games. Four
specialty restaurants, a buffet with a seating capacity of
approximately 1,200, two coffee shops, several fast food snack
bars, four cocktail bars and two cocktail service bars and a
variety of gift shops and specialty shops are also available to
the guests at Circus Circus-Las Vegas. Grand Slam Canyon, an
"adventuredome" covering approximately five acres, offers theme
park entertainment that includes a high-speed, double-loop,
double-corkscrew roller coaster, a coursing river flume ride on
white-water rapids, several rides and attractions designed for
preschool age children, themed carnival-style midway games, a
state-of-the-art arcade, a 65-foot waterfall, fully animated
life-size dinosaurs in their primeval habitat, food kiosks and
souvenir shops, all in a climate-controlled setting under a giant
space-frame dome. On-site parking is available for approximately
4,700 vehicles, including three garages that will accommodate
approximately 3,200 vehicles. Circus Circus-Las Vegas also
offers accommodations for approximately 384 recreational vehicles
at the property's Circusland RV Park.
Luxor. Luxor, which opened in October 1993, is an
Egyptian-themed hotel and casino complex which features a
30-story pyramid and two new 22-story hotel towers which opened a
majority of their 1,950 rooms in December 1996 and the remainder
by February 1997. With the addition of the new towers, Luxor now
contains 4,425 hotel rooms, including 492 suites. The new hotel
towers are part of an expansion program at Luxor which also
included the addition of 20,000 square feet of convention space,
extensive remodeling of the casino level of the pyramid,
relocation of the hotel s front desk, the reworking of the front
entrance, relocating and retheming the buffet and connecting
Luxor to Excalibur by a climate-controlled skyway with moving
walkways. The expansion program will continue into the current
year and will ultimately include a reworked attractions level,
two new restaurants and a new multi-purpose showroom. The
remainder of the expansion will be completed in stages with final
completion currently anticipated to occur in fall of 1997.
Situated at the south end of the Las Vegas Strip on a 64-acre
site adjacent to Excalibur, Luxor features a food and
entertainment area on three different levels beneath a soaring
hotel atrium. The pyramid s hotel rooms can be reached from the
four corners of the building by state-of-the-art "inclinators"
which travel at a 39-degree angle. Luxor includes approximately
120,000 square feet of casino space where, as of January 31,
1997, 2,245 slot machines and other coin-operated devices and 110
gaming tables (including blackjack ("21"), craps, pai gow poker,
Caribbean stud poker, a wheel of fortune and roulette) as well as
poker, keno and a race and sports book were available to the
casino's patrons. Above the pyramid s casino, a series of IMAX
special-format filmed attractions are designed to seemingly
transport visitors to extraordinary places of times past, present
and future. Luxor's other public areas include a buffet with a
seating capacity of approximately 800, five themed restaurants
including two gourmet restaurants, as well as a snack bar, seven
cocktail lounges and a variety of specialty shops. Parking is
available for nearly 3,200 vehicles, including a garage which
contains approximately 1,800 spaces.
Excalibur. Excalibur is a castle-themed hotel and
casino complex situated on the south end of the Las Vegas Strip
on a 53-acre site adjacent to Luxor. Excalibur, which is
connected to Luxor by a new climate-controlled skyway with moving
walkways, has a total of 4,008 hotel rooms and offers its guests
more than 400,000 square feet of public entertainment area,
including approximately 110,000 square feet of casino space
where, as of January 31, 1997, 2,442 slot machines and other
coin-operated devices and 89 gaming tables (including blackjack
("21"), craps, pai gow poker, Caribbean stud poker, a wheel of
fortune and roulette) as well as poker, keno and a race and
sports book were available to the casino's patrons. Excalibur's
other public areas include a Renaissance faire, a medieval
village, an amphitheater with seating capacity of nearly 1,000
where nightly mock jousting tournaments and costume drama are
presented, two dynamic motion theaters, various artisans' booths
and medieval games of skill. In addition, Excalibur has a buffet
with seating capacity of approximately 1,300, six themed
restaurants, as well as four snack bars, several cocktail lounges
and a variety of specialty shops. Parking is available for
approximately 4,000 vehicles, including a garage which contains
approximately 1,400 spaces.
Other Las Vegas Properties. The Silver City Casino and
Slots-A-Fun have 18,200 and 16,700 square feet of casino space,
respectively. Both casinos depend on foot traffic along the Las
Vegas Strip for their business. As of January 31, 1997, the
Silver City Casino had 570 slot machines and other coin-operated
devices and 21 gaming tables, while Slots-A-Fun had 632 such
machines and devices and 25 gaming tables.
Reno, Nevada
Circus Circus-Reno. Circus Circus-Reno is a circus-
themed hotel and casino complex situated in downtown Reno,
Nevada. The property, which has a total of 1,605 hotel rooms
(all of which were refurbished during the fiscal year ended
January 31, 1997), includes approximately 60,000 square feet of
casino space where, as of January 31, 1997, 1,722 slot machines
and other coin-operated devices and 66 gaming tables (including
blackjack ("21"), craps, pai gow poker, Caribbean stud poker, a
wheel of fortune and roulette) as well as poker, keno and a race
and sports book were available to the casino's patrons. From a
"Big Top" above the casino, Circus Circus-Reno also offers its
guests a variety of circus acts performed free of charge from 11
a.m. to midnight daily. A mezzanine area has a circus midway
with carnival-style games and an arcade that offers a variety of
amusements and electronic games. The facilities at Circus
Circus-Reno also include two specialty restaurants, a buffet with
a seating capacity of approximately 450, a coffee shop, a
deli/bakery, a fast food snack bar, five cocktail lounges, a gift
shop and specialty shops. Parking is currently available for
over 3,000 vehicles, including space for approximately 1,850
vehicles in a new parking garage which opened at the end of
fiscal 1997. For information concerning the Company's
participation in a joint venture which owns and operates Silver
Legacy, a casino, hotel and entertainment complex which is
connected to Circus Circus-Reno by an enclosed skywalk, see
"Joint Venture Participations -- Reno Joint Venture" in this
Item 1.
Laughlin, Nevada
Colorado Belle. The Colorado Belle Hotel and Casino is
situated on a 22-acre site on the bank of the Colorado River
(with 1,080 feet of river frontage) in Laughlin, Nevada,
approximately 90 miles south of Las Vegas. The Colorado Belle
features a 600-foot replica of a Mississippi riverboat, 1,226
hotel rooms and a casino with approximately 64,000 square feet of
space where, as of January 31, 1997, 1,362 slot machines and
other coin-operated devices and 40 gaming tables (including
blackjack ("21"), craps, pai gow poker, Caribbean stud poker and
roulette) as well as poker, keno and a sports book were available
to the casino's patrons. The Colorado Belle's facilities also
include a 350-seat buffet, a coffee shop, three specialty
restaurants, two fast food snack bars, five cocktail lounges and
a cocktail service bar as well as a gift shop and other specialty
shops. There is surface parking available for approximately
1,700 vehicles.
Edgewater. The Edgewater Hotel and Casino is situated
on a 16-acre site adjacent to the Colorado Belle in Laughlin,
Nevada with approximately 1,640 feet of frontage on the Colorado
River. The property, which has 1,450 hotel rooms, includes
approximately 44,000 square feet of casino space where, as of
January 31, 1997, 1,346 slot machines and other coin-operated
devices and 42 gaming tables (including blackjack ("21"), craps,
pai gow poker, Caribbean stud poker, a wheel of fortune and
roulette) as well as poker, keno and a race and sports book were
available to the casino's patrons. The Edgewater's facilities
also include a specialty restaurant, a coffee shop, a buffet with
a seating capacity of 735, a snack bar and three cocktail
lounges. There is surface parking available for approximately
1,350 vehicles and a parking garage which can accommodate
approximately 930 additional vehicles.
Jean, Nevada
Gold Strike. Gold Strike Hotel & Gambling Hall, which
opened in December 1987 and was acquired by the Company in June
1995, is an "old west" themed hotel-casino located on
approximately 51 acres of land on the east side of I-15, the
primary thoroughfare between Las Vegas and southern California.
The property includes, among other amenities, approximately
37,000 square feet of casino space, 813 hotel rooms, several
restaurants, a gift shop, a swimming pool and spa, a banquet
center equipped to serve 260 people and parking spaces for
approximately 2,100 cars. As of January 31, 1997, 1,090 slot
machines and other coin-operated devices and 22 gaming tables
(including blackjack ("21"), craps, Caribbean stud poker, and
roulette) as well as poker and keno were available to the
casino's patrons. The casino has a stage bar with regularly
scheduled live entertainment and a casino bar. Gold Strike also
offers a children's arcade in order to accommodate the numerous
families that visit the property.
Nevada Landing. Built in 1989 and acquired by the
Company in June 1995, Nevada Landing Hotel & Casino is a turn-of-
the-century riverboat themed hotel-casino located on
approximately 55 acres of land across I-15 from Gold Strike. The
property includes approximately 36,000 square feet of casino
space, 303 hotel rooms, a 72-seat Chinese restaurant, a full-
service coffee shop, an all-you-can-eat buffet, a snack bar, a
gift shop, a swimming pool and spa, a 300-guest banquet facility
and parking spaces for approximately 1,400 cars. As of January
31, 1997, 1,050 slot machines and other coin-operated devices and
20 gaming tables (including blackjack ("21"), craps, Caribbean
stud poker and roulette) as well as keno and a sports book were
available to the casino's patrons.
Henderson, Nevada
Railroad Pass. Railroad Pass Hotel & Casino, which was
acquired by the Company in June 1995, is situated on
approximately 56 acres along US-93, the direct route between Las
Vegas and Phoenix, Arizona. The property includes, among other
amenities, approximately 21,000 square feet of casino space, 120
hotel rooms, two bars, two full-service restaurants, an all-you-
can-eat buffet, gift shop, swimming pool, a 194-guest banquet
facility and parking spaces for approximately 580 cars. As of
January 31, 1997, Railroad Pass' casino offered 395 slot machines
and 11 gaming tables (including blackjack ( 21 ),craps and
roulette) as well as a keno lounge, a sports book and free bingo
three days per week. In contrast with the Company's other Nevada
properties, Railroad Pass caters to local residents, particularly
from Henderson, who often prefer the informal, friendly
atmosphere and easy access of Railroad Pass over the casinos on
the Las Vegas Strip.
Tunica County, Mississippi
Circus Circus-Tunica. Circus Circus-Tunica, which
opened in August 1994, is a dockside casino situated on a 24-acre
site along the Mississippi River in Tunica County, Mississippi,
approximately three miles west of Mississippi State Highway 61 (a
major north/south highway connecting Memphis, Tennessee with
Tunica County) and approximately 20 miles south of Memphis. The
current facility has a total of approximately 127,000 square feet
of space, including approximately 48,000 square feet of casino
space. As of January 31, 1997, 1,372 slot machines and other
coin-operated devices and 44 gaming tables (including blackjack
("21"), craps, pai gow poker, Caribbean stud poker and roulette)
as well as poker were available to the casino's patrons. The
current facility also includes a specialty restaurant, a 500-seat
buffet, a snack bar, three cocktail lounges and two service bars.
In late 1996, the Company commenced construction of a
hotel tower at Circus Circus-Tunica which will include 1,200
rooms. In addition to the construction of the hotel tower, which
is expected to open in December 1997, the existing facilities at
Circus Circus-Tunica will be remodeled and rethemed into a more
elegant resort which will be operated under the name Gold Strike
Casino Resort. The estimated cost of the hotel tower and related
improvements is $125 million.
The Company's Tunica site is a part of a three-casino
development covering approximately 72 acres. The other two
casinos are owned and operated by unaffiliated third parties.
The Company also has an undivided one-half interest in an
additional 388 acres of land contiguous to or near each of the
three casino sites which may be used for future development.
Marketing
Generally, the Company follows a marketing and
operating philosophy which emphasizes high-volume business by
providing moderately priced hotel rooms, food and beverage and
alternative entertainment in combination with the gaming
activity. The Company also maintains stringent cost controls
which are exemplified by a general policy of offering minimal
credit for gaming customers at the Company's properties.
Management believes that this philosophy sets the Company apart
from its principal competitors.
The Company's current operations at each of its casinos
are conducted 24 hours a day, every day of the year. The Company
does not consider its business to be highly seasonal, although
its operating income is typically somewhat lower in the fourth
quarter. Management emphasizes courteous and prompt service to
its customers and aspires to a high standard of excellence in all
of its operations.
The Company believes it has been able to maintain high
occupancy rates at its hotels, in part, due to the modest prices
charged for its rooms and its advertised policy of assisting any
customer who cannot be accommodated at its properties in finding
similarly priced rooms in nearby hotels and motels. For the
years ended January 31, 1997, 1996 and 1995, the combined
occupancy rate of the Company s hotels (excluding complimentaries
but including nonrefunded prepaid cancellations, and including
each hotel acquired by the Company during such three-year period
only for the portion of such period commencing with such
acquisition) was approximately 93.2%, 93.5% and 95.7%,
respectively.
Circus Circus-Las Vegas and Circus Circus-Reno, which
together contributed 24% of the Company's revenues in the year
ended January 31, 1997 (and 27% and 29%, respectively, in the
years ended January 31, 1996 and 1995), have popular buffets,
attractive because of their variety, quality and low price. From
a "Big Top" above the casino, both properties offer a variety of
circus acts performed free of charge to the public from 11 a.m.
to midnight daily. A mezzanine area overlooking each casino has
a circus midway with carnival-style games and an arcade that
offers a variety of amusements and electronic games. Grand Slam
Canyon, an adventuredome, offers additional theme park
attractions at Circus Circus-Las Vegas.
Excalibur, which contributed 23% of the Company's
revenues in the year ended January 31, 1997 (and 23% and 25%,
respectively, in the years ended January 31, 1996 and 1995),
attracts customers in the same manner as the Company's two
circus-themed Nevada properties by offering quality rooms, food
and entertainment at moderate prices. By way of entertainment,
the medieval castle-themed Excalibur offers a medieval village,
an amphitheater where mock tournaments and costume drama are
presented, dynamic motion theaters, various artisans' booths and
medieval games of skill.
Luxor contributed 17% of the Company's revenues in the
year ended January 31, 1997 (and 20% and 24%, respectively, in
the years ended January 31, 1996 and 1995). This property, which
has been expanded with the addition of 1,950 hotel rooms in two
22-story towers which opened a majority of their rooms in
December 1996 and the remainder by February 1997, offers a level
of entertainment and hotel accommodations which is designed to
attract the higher income segment of the middle-income strata of
gaming customers. Designed with an Egyptian theme, Luxor s 30-
story pyramid offers its guests a tri-level entertainment area
which includes IMAX special-format filmed attractions designed to
seemingly transport visitors to extraordinary places of times
past, present and future. In addition to the new hotel rooms,
the Luxor expansion program includes a new spa, 20,000 square
feet of convention space and ultimately will include a new multi-
purpose showroom.
The Colorado Belle and Edgewater together contributed
12% of the Company's revenues in the year ended January 31, 1997
(and 13% and 16%, respectively, in the years ended January 31,
1996 and 1995). Forming the heart of the Laughlin "Strip", the
Colorado Belle and the Edgewater combine to offer approximately
2,700 rooms and 108,000 square feet of casino space. The
Colorado Belle offers a classic Mississippi riverboat theme,
complete with a 60-foot paddle wheel. The Edgewater's
southwestern motif provides a relaxing atmosphere to enjoy the
property's casino and other facilities. Connected by a scenic
walkway, the two resorts form an inviting shoreline along the
Colorado River.
Gold Strike and Nevada Landing, which were acquired on
June 1, 1995, together contributed 6% and 4% of the Company's
revenues in the years ended January 31, 1997 and 1996,
respectively. The two properties are located on opposite sides
of I-15, the primary thoroughfare between Las Vegas and southern
California, approximately 25 miles south of Las Vegas and 12
miles north of the California/Nevada border. The properties are
conveniently located at the only highway interchange within 12
miles in either direction and are strategically positioned to
attract visitors from the large number of people traveling to and
from Las Vegas.
Circus Circus-Tunica, the Company's first wholly owned
casino outside of Nevada, opened in August 1994 and contributed
4% of the Company's revenues in the year ended January 31, 1997
(and 5% and 3% respectively, in the years ended January 31, 1996
and 1995). The facility, a dockside casino, is part of an
integrated three casino development that provides patrons with
the opportunity to visit any of the three casinos without
driving, a unique experience in the Tunica market. The Company
is constructing a 1,200-room hotel tower at Circus Circus-Tunica
which currently has no hotel facilities. The existing facilities
will also be remodeled and rethemed into a more elegant resort
which will be operated under the name Gold Strike Casino Resort.
The current expansion program is in response to increased
competition in the Tunica market being encountered from three new
competitors, including a new facility which is nearer to Memphis,
Tennessee (Tunica s principal market) and larger than any
previously existing facility in Tunica.
The Company maintains an active media advertising
program through radio, television, billboards and printed
publications primarily in Nevada, California and Arizona for its
Nevada properties and in the Memphis area for Circus Circus-
Tunica. In addition, the Company advertises and allows patrons
to make room reservations using the internet. While the Company
offers complimentary hotel accommodations, meals and drinks to
its customers on an individual basis, no group complimentary
arrangements are offered.
Operations
The primary source of revenues to the Company is its
casinos, although the hotels, restaurants, bars, shops, midway
games and other entertainment attractions and other services are
an important adjunct to the casinos.
The following table sets forth the contribution to net
revenues on a dollar and percentage basis of the Company's major
activities for each of the three most recent fiscal years.
Year Ended January 31,
1997 1996 1995
(Dollars in thousands)
Revenues:(1)
Casino(2) . . . . . $ 655,902 49.2% $664,772 51.2% $612,115 52.3%
Rooms(3). . . . . . 294,241 22.0% 278,807 21.4% 232,346 19.9%
Food and
beverage(3). . . . 210,384 15.8% 201,385 15.5% 189,664 16.2%
Other(3). . . . . . 146,554 11.0% 158,534 12.2% 166,295 14.2%
Earnings of unconsoli-
dated affiliates 86,646 6.5% 45,485 3.5% 5,459 .5%
$1,393,727 104.5% $1,348,983 103.8% $1,205,879 103.1%
Less:
Complimentary
allowances(3) . . 59,477 4.5% 49,387 3.8% 35,697 3.1%
Net revenues. . . . . $1,334,250 100.0% $1,299,596 100.0% $1,170,182 100.0%
(1) Includes operations of Gold Strike, Nevada Landing and Railroad Pass
since June 1, 1995 and Hacienda from September 1, 1995 to December 1,
1996.
(2) Casino revenues are the net difference between the sums received as
winnings and the sums paid as losses.
(3) Food and beverage, Rooms and Other include the retail value of services
which are provided to casino customers and others on a complimentary
basis. Such amounts are then deducted as complimentary allowances to
arrive at net revenue.
In connection with its gaming activities, the Company
follows a policy of stringent controls and cross checks on the
recording of all receipts and disbursements. The audit and cash
controls developed and utilized by the Company include the
following: locked cash boxes, independent counters, checkers and
observers to perform the daily cash and coin counts, floor
observation of the gaming areas, closed-circuit television
observation of certain areas, computer tabulation of receipts and
disbursements for each of the Company's slot machines, tables and
other games, and the rapid analysis and resolution of
discrepancies or deviations from normal performance.
The Company's credit policies are stringent and credit
play historically has accounted for an insignificant portion of
its gaming activities. Because of the Company's policies, its
casino receivables have been significantly less than 1% of its
total assets and its annual casino bad debt expense has been less
than 2/10 of 1% of casino revenues.
Joint Venture Participations
The Company is a 50% participant in three joint
ventures. They include (i) the Las Vegas Joint Venture, which
owns and operates Monte Carlo, a 3,002-room hotel-casino resort
on the Las Vegas Strip which opened in June 1996; (ii) the Elgin
Joint Venture, which owns and operates a riverboat casino and
land-based entertainment complex in Elgin, Illinois; and (iii)
the Reno Joint Venture, which owns and operates a hotel-casino in
Reno, Nevada. In January 1997, the Company disposed of its
one-third interest in a company which operates an interim casino
in Windsor, Ontario, Canada.
Las Vegas Joint Venture (50% Participation)
The Company, through a wholly owned entity (the Circus
Participant ), is a 50% participant with an affiliate of Mirage
Resorts, Incorporated ( Mirage ) in the Las Vegas Joint Venture,
a Nevada general partnership, which owns and operates Monte
Carlo, a hotel-casino resort with 3,002 hotel rooms, including
253 suites, situated on approximately 46 acres with approximately
600 feet of frontage on the Las Vegas Strip. Monte Carlo, which
opened in June 1996, is situated on a portion of the former
"Dunes" golf course between the site where Mirage is constructing
Bellagio, a 3,000-room luxury resort which is scheduled to open
in the summer of 1998 and will be connected to Monte Carlo by a
monorail, and New York-New York, a 2,000-room hotel-casino resort
which opened in January 1997. Monte Carlo features a 90,000
square foot casino with a palatial style reminiscent of the Belle
Epoque, the French Victorian architecture of the late 19th
century. As of January 31, 1997, Monte Carlo s casino had 2,221
slot machines and other coin operated devices and 95 gaming
tables (including blackjack ( 21 ), craps, pai gow poker,
Caribbean stud poker, roulette and baccarat) as well as keno,
bingo and a race and sports book. A recreated Victorian town
square features ornate facades, interactive games, high-tech
arcade rides and other nongaming recreational activities. Other
amenities at Monte Carlo include a 550-seat bingo parlor, three
specialty restaurants, a buffet, a coffee shop, a food court, a
microbrewery featuring live entertainment and approximately
15,000 square feet of meeting and banquet space. A 1,200-seat
replica of a plush vaudeville theater, including a balcony and
proscenium arch, features an elaborately staged show of illusions
with the world-renowned magician, Lance Burton.
As of January 31, 1997, the assets of the Las Vegas
Joint Venture were subject to encumbrances securing the repayment
of indebtedness in the aggregate principal amount of $184.8
million.
Elgin Joint Venture (50% Participation)
The Company, through a wholly owned entity, is a 50%
participant with an affiliate of Hyatt Development Corporation in the
Elgin Joint Venture, an Illinois general partnership which owns and
operates The Grand Victoria. The Grand Victoria, a Victorian themed
riverboat casino and land-based entertainment complex, opened in
October 1994 in Elgin, Illinois, a suburb approximately 40 miles
northwest of downtown Chicago. The Grand Victoria, the largest
cruising gaming vessel in the United States, offers a Las Vegas-style
gaming experience. The two-story vessel is 420 feet in length and 110
feet in width, and provides a maximum 80,000 square feet of gaming
space, approximately 36,000 square feet of which was being used at
January 31, 1997. As of such date, the casino had 977 slot machines
and other coin operated devices and 56 gaming tables (including
blackjack ( 21 ), craps, pai gow poker, Caribbean stud poker and
roulette). The vessel has a capacity of 1,736 persons and operates on
a fixed cruising schedule consisting of eight cruises each Sunday
through Thursday and nine cruises each Friday and Saturday. The
dimensions of the specially designed riverboat allow The Grand
Victoria to maximize the gaming positions permitted under existing
Illinois gaming regulations. This feature also allows The Grand
Victoria to significantly increase the number of on-board gaming
positions and to adapt the vessel to provide for dockside gaming in
the event of liberalized gaming regulations in the State of Illinois.
An adjacent dockside complex on approximately 12 acres of land
overlooking the Fox River contains an approximately 83,000-square-foot
pavilion with two movie theaters, a 240-seat buffet, an 80-seat fine
dining restaurant, a VIP lounge and a gift shop, in addition to
ticketing and registration services for the riverboat. There is
surface parking available for approximately 600 vehicles and a parking
structure which accommodates approximately 1,400 vehicles. The Grand
Victoria is strategically located in Elgin among the residential
suburbs of Chicago, with nearby freeway access and direct train
service from downtown Chicago. The Grand Victoria is located
approximately 20 miles and 40 miles, respectively, from its nearest
competitors in Aurora, Illinois and Joliet, Illinois, and holds one of
only ten riverboat gaming licenses currently granted state-wide.
After the Elgin Joint Venture s recovery of its $112 million
initial investment in The Grand Victoria (which occurred in June
1996), it became obligated to contribute 20% of its after-tax adjusted
net operating income to various local educational, environmental and
economic projects benefitting the City of Elgin and Kane County,
Illinois.
The pavilion and parking lot are located on land leased by
the Elgin Joint Venture from the City of Elgin for an initial period
of ten years, subject to certain renewal and purchase options granted
to the Elgin Joint Venture. Under the lease, the Elgin Joint
Venture's rent will be equal to the greater of the base rent ($110,000
per year) or 3% of its net operating income. The Elgin Joint Venture
may offset certain capital expenditures against this rental
obligation. Further, rent is deductible from after-tax adjusted net
operating income for purposes of calculating the 20% contribution
obligation described above. Until October 1999, the Elgin Joint
Venture is also obligated to make certain payments to the City of
Elgin to help defray law enforcement costs.
Under its agreements with the City of Elgin, the Elgin Joint
Venture also was granted an option to purchase an additional nine
acres of land contiguous to the existing site. For information
concerning certain regulatory requirements applicable to the ownership
and operation of the Elgin Joint Venture's gaming facilities, see
"Regulation and Licensing--Illinois" in this Item 1.
As of January 31, 1997, the assets of the Elgin Joint
Venture were not subject to any encumbrances securing the repayment of
indebtedness.
Reno Joint Venture (50% Participation)
The Company, through a wholly owned subsidiary, is a 50%
participant with Eldorado Limited Liability Company ("Eldorado
Limited") in the Reno Joint Venture, a general partnership which owns
and operates Silver Legacy, a hotel-casino and entertainment complex
situated on two city blocks in downtown Reno, Nevada. The casino and
entertainment complex, which opened in July 1995, is located between
Circus Circus-Reno and Eldorado Hotel & Casino (the "Eldorado"), which
is owned and operated by an affiliate of Eldorado Limited. Silver
Legacy's casino and entertainment complex is connected at the
mezzanine level with Circus Circus-Reno and the Eldorado by enclosed
climate-controlled skyways above the streets between the respective
properties. The property's exterior is themed to evoke images of Reno
during the period from the 1880's through the 1930's. At the main
pedestrian entrances to the casino (located on all four sides of the
complex), patrons enter by passing store fronts reminiscent of turn-
of-the-century Reno.
Silver Legacy, which has 1,711 hotel rooms, includes a total
of approximately 85,000 square feet of gaming space, a portion of
which is on the ground level and the balance of which is on the
property s mezzanine level. As of January 31, 1997, Silver Legacy s
casino had 2,275 slot machines and other coin operated devices and 89
gaming tables (including blackjack ("21"), craps, pai gow poker,
Caribbean stud poker, roulette, mini-baccarat and pai gow). Extending
up into a 180-foot diameter dome structure from the center of the
casino floor is a 120-foot tall mining rig situated over a replica of
a silver mine. A delicatessen, bar and "sidewalk" cafe are located on
the ground floor, and a seafood grill, a buffet and a 24-hour coffee
shop are located on the casino s mezzanine level. The Silver Legacy s
other amenities include a 25,000-square foot special events center,
three custom retail shops, a health spa and an outdoor pool and sun
deck. The hotel complex also includes a ten-level parking structure
with space for approximately 1,800 vehicles.
As of January 31, 1997, the assets of the Reno Joint
Venture, including Silver Legacy, were subject to encumbrances
securing the repayment of indebtedness (including certain indebtedness
to the Company) in the principal amount of $242.5 million.
Current Expansion Activities
Consistent with past practice and the longstanding policy of
making substantial investments in its gaming business at regular
intervals, the Company continues to actively pursue new projects,
either by development or acquisition. New investments may involve the
expansion of existing facilities (such as the recently added
facilities at Luxor and Circus Circus-Las Vegas) or new properties
such as Project Paradise. Projects may be undertaken in Nevada, where
all but one of the Company's wholly owned operating properties are
currently located, or in other jurisdictions within the United States
or abroad where gaming has been legalized. The Company s new
investments may be in properties wholly owned and operated by the
Company, or may be in properties developed, owned and/or operated
through joint ventures involving the Company and one or more other
parties.
The Company believes that its financial resources are
adequate to permit it to successfully meet its commitments with
respect to its current expansion projects and joint venture
participations. However, depending on the timing, size and nature of
the Company's commitments with respect thereto, future expansion
projects or joint venture participations may require the Company to
seek additional debt or equity funding.
As with any major construction project, Project Paradise and
the Company s Tunica County, Mississippi expansion project involve
(and any other major construction project the Company may undertake
will involve) many risks, including potential shortages of materials
and labor, work stoppages, labor disputes, weather interference,
unforeseen engineering, environmental or geological problems and
unanticipated cost increases, any of which could give rise to delays
or cost overruns. Construction, equipment or staffing problems or
difficulties in obtaining any of the requisite licenses, permits,
allocations or authorizations from regulatory authorities could
increase the cost or delay the construction or opening of the
facilities or otherwise affect their design and features. It is
possible that the existing budget and construction plans for either
project may be changed for competitive or other reasons. Accordingly,
there can be no assurance that either of the Company s current
construction projects will be completed within the time periods or
budgets which are currently contemplated.
Project Paradise
In the Spring of 1997, the Company commenced construction of
Project Paradise, a 42-story, hotel-casino resort which will have
approximately 3,800 rooms. The resort, which is expected to be
completed in late 1998 or early 1999, will resemble a fictional
tropical island and feature as its centerpiece a 10-acre tropical
environment that will contain, among other attractions, a surfing
beach with six-foot waves and a swim-up shark exhibit. Inside,
Project Paradise will offer waterfalls, terraced gardens, mythical
statuary and open-air restaurants set amid beautifully crafted
environments, including a swan island. The development will also
eventually be complimented by a 400-room Four Seasons Hotel that will
be connected to the Paradise complex, providing Las Vegas visitors
with a luxury hospitality experience. This hotel, which will be owned
by the Company and managed by Four Seasons Regent Hotels and Resorts,
represents the first step pursuant to the Company s cooperative effort
with Four Seasons to identify strategic opportunities for development
of hotel and casino properties worldwide. The cost of Project
Paradise is currently estimated at approximately $800 million,
excluding the land and the Four Seasons Hotel.
Project Paradise is the latest phase of the Company s
development of over 230 acres of land it owns at the south end of the
Las Vegas Strip which runs from Tropicana Avenue south approximately
one mile to Russell Road. Situated immediately to the south of Luxor
at approximately the mid-point of the Masterplan Mile, Project
Paradise will eventually be connected by an internal road and transit
system with Luxor and Excalibur as well as any other resorts the
Company may develop along its Masterplan Mile.
Tunica Expansion Project
The Company has commenced construction of a hotel tower at
Circus Circus-Tunica which will have 1,200 hotel rooms. The Company
will also remodel and retheme the existing facilities into a more
elegant resort which will be operated under the name Gold Strike
Casino Resort. The estimated cost of the hotel tower and the other
improvements, which are expected to be completed in December 1997, is
$125 million.
Mississippi Gulf Coast
The Company has announced that it plans to develop a hotel-
casino resort on the Mississippi Gulf Coast at the north end of the
Bay of St. Louis, near the DeLisle exit on Interstate 10, provided it
receives all of the requisite approvals. As planned, the resort will
feature 1,500 hotel rooms, and has an estimated cost of $225 million.
As presently contemplated, the Company will own 90% of the resort,
with a partner contributing the land in exchange for the remaining 10%
interest.
Atlantic City
The Company has entered into an agreement with Mirage to
participate in the development of a 150-acre site located in the
Marina District of Atlantic City (the Marina District Site ). The
agreement provides for the Company to obtain from Mirage a sufficient
portion of the Marina District Site for the development of a
destination resort and casino with approximately 2,000 hotel rooms.
Mirage and the City of Atlantic City have entered into a redevelopment
agreement (the Redevelopment Agreement ) providing for the City to
convey the Marina District Site to Mirage in exchange for Mirage s
agreeing to develop a casino-based destination resort on the site and
undertaking certain other obligations, including remediation of
environmental contamination and the relocation of City-owned
facilities currently located on the site. Closing under the
Redevelopment Agreement requires the satisfaction of a number of
conditions, including the receipt by Mirage of all requisite licenses,
permits, allocations and authorizations, resolution of real estate
title issues and the satisfactory conclusion of arrangements among
Mirage, the New Jersey Department of Transportation and South Jersey
Transportation Authority with respect to the construction and joint
funding of certain major road improvements to improve access to the
Marina District Site. Selection of a contractor to design and build
the road improvements will be determined by public bidding, and
construction of the improvements will not proceed unless one or more
bids within the available budget are submitted. Accordingly, there
can be no assurance as to whether or when Mirage will proceed with a
project on the Marina District Site. The Company s participation in
the development of a portion of the Marina District Site is dependent
on Mirage s proceeding with development of the site. If Mirage
proceeds with such development, it will act as master-developer for
the entire Marina District Site, but the Company will acquire and own
the portion of the site on which its resort will be constructed. The
Company s resort will be in an architectural format that conforms to a
masterplan and will be connected to Mirage s resort as well as to a
joint venture resort to be developed on a portion of the Marina
District Site by Boyd Gaming Corporation and Mirage. The Company s
ability to proceed with its development of a resort on the Marina
District Site is subject, in addition to Mirage s proceeding with
development of the site, to the Company s obtaining the requisite
gaming and other approvals and licenses in New Jersey, as well as the
approval of the gaming authorities of various other jurisdictions.
While neither the exact extent of a potential development nor a
starting date for construction can be determined at this time, the
Company is currently contemplating an investment of $600-$700 million
to construct this hotel-casino megaresort.
Competition
Recognizing that middle class vacationers enjoy gaming, but
also vacation with their families, the Company seeks to appeal to this
value-oriented market and satisfy the group's diverse entertainment
demands by offering exciting entertainment opportunities at reasonable
prices. The Company seeks to achieve this objective by offering
gaming combined with dramatic entertainment concepts and reasonably
priced rooms, reasonably priced food and beverage and prompt,
courteous service at its entertainment "megastores", such as the
Circus properties in Las Vegas and Reno, Luxor and Excalibur in Las
Vegas and the Colorado Belle and Edgewater in Laughlin.
The Company's largest concentration of properties is in Las
Vegas where, as of January 31, 1997, the Company was the largest
hotel-casino operator in terms of total square footage of casino space
and number of hotel rooms. The Company s Las Vegas casino and hotel
operations, which are conducted from facilities located along the
Las Vegas Strip, currently compete with approximately 28 major hotel-
casinos and a number of smaller casinos located on or near the
Las Vegas Strip. Such operations also compete with casinos located
in downtown Las Vegas, approximately 11 of which offer hotel, food and
beverage and entertainment facilities, and several major hotel-casinos
located elsewhere in the Las Vegas area. The Company's Las Vegas
properties also compete, to a lesser extent, with casino and hotel
facilities in other parts of Nevada, including Laughlin, Reno and
along I-15 (the principal means of access to Las Vegas from southern
California by car) near the California-Nevada state line.
The casino and hotel capacity continues to increase in the
Las Vegas market. During the fiscal year ended January 31, 1997, two
major hotel-casinos, including the 3,002-room Monte Carlo in which the
Company owns a 50% interest, opened near the south end of the Las
Vegas Strip which, together with a third opening at the north end of
the Strip and the completion of a number of expansion projects,
including the new 1,000-room tower at Circus Circus-Las Vegas and the
1,950-room expansion at Luxor, contributed to a net increase in the
number of hotel rooms in the Las Vegas market in fiscal 1997 of
approximately 11,000, representing an increase of approximately 12%
over the period. The development in Las Vegas in recent years has
shifted the focus of the Strip toward its south end, where the
Company s two newest Las Vegas properties, Luxor and Excalibur, and
the Las Vegas Joint Venture s new property, Monte Carlo, are situated
and where the Company is currently developing Project Paradise.
Operating income for the year ended January 31, 1997 declined at
Circus Circus-Las Vegas, the Company s other large Las Vegas property
located at the north end of the Strip, compared with the property s
results for the prior fiscal year. Due to significant disruption at
Circus Circus-Las Vegas during most of fiscal 1997 caused by the
construction, it is difficult to determine the impact, if any, on
operations at Circus Circus-Las Vegas of the growth of casino and
hotel capacity in Las Vegas or the shift in development toward the
south end of the Strip.
Las Vegas room and casino capacity is expected to continue
to increase significantly during the next several years as a result of
the opening of several new hotel-casinos, including Project Paradise,
and the completion of a number of announced expansion projects at
existing properties. While the impact on the Company of the
completion and opening of additional hotel and casino capacity
currently under construction in Las Vegas, including Project Paradise,
cannot be determined at this time, management believes that the
Company's Las Vegas operations, on a consolidated basis, have
generally benefited from the past growth of hotel and casino capacity
in the Las Vegas market when the Company has been a significant
contributor to the new capacity, as it will be with respect to the
added capacity that will result from the projects currently under
construction.
Excalibur and Luxor, each historically has benefited from
walk-in business attributable to the registered guests and casino
customers at the other property. During the year ended January 31,
1997, an additional 1,950 rooms were added at Luxor and in March 1997
a new climate-controlled skyway connecting Luxor and Excalibur was
placed in service, which should increase the flow of walk-in business
each property derives from the registered guest and casino customers
of the other property.
Circus Circus-Reno competes with approximately 13 major
casinos (the majority of which offer hotel rooms), including Silver
Legacy, a 1,711-room hotel-casino complex which opened in July 1995
and is 50% owned by a wholly owned subsidiary of the Company. Circus
Circus-Reno and Silver Legacy also compete with numerous other smaller
casinos in the greater Reno area and, to a lesser extent, with casino
and hotel facilities in Lake Tahoe and other parts of Nevada. Silver
Legacy, situated between Circus Circus-Reno and the Eldorado, is
connected to each of such properties at the mezzanine level by
enclosed climate-controlled skyways above the streets between the
respective properties, thus facilitating the flow of customers within
the three properties. Since the opening of Silver Legacy, results at
Circus Circus-Reno have been affected as guests staying at Circus
Circus-Reno have chosen to visit Silver Legacy during their stay.
In Laughlin, the Colorado Belle and the Edgewater, which
together accounted for approximately 24% of the rooms in Laughlin as
of January 31, 1997, compete with eight other Laughlin casinos. They
also compete with the hotel-casinos in Las Vegas and those situated on
I-15 (the principal highway between Las Vegas and Los Angeles) near
the California-Nevada state line, as well as a growing number of
casinos on Indian reservations in Laughlin's regional market. While
the Colorado Belle and the Edgewater also compete with each other,
both properties have maintained occupancy levels of above 85% at their
hotels and, because the two properties are situated on adjoining
sites, the Company believes that each property benefits from walk-in
business attributable to the registered guests and casino customers at
the other property. The Company believes the expansion of hotel and
casino capacity in Las Vegas over the last several years has had a
negative impact on Laughlin area properties, including the Colorado
Belle and the Edgewater, by drawing visitors from the Laughlin market,
which has resulted in increased competition among Laughlin properties
for a reduced number of visitors thus contributing to generally lower
revenues and profit margins at Laughlin properties, including the
Colorado Belle and the Edgewater.
The Company s Jean, Nevada properties, Gold Strike and
Nevada Landing, are located on I-15, the primary thoroughfare between
Las Vegas and southern California, approximately 25 miles south of
Las Vegas and 12 miles north of the California-Nevada border, and are
dependent for their customers almost entirely on the large number of
people traveling between Las Vegas and southern California. As such,
these properties compete with the large concentration of hotel, casino
and other entertainment options available in Las Vegas as well as
three hotel-casinos clustered at the California-Nevada border which,
according to published reports, offer over 2,000 rooms and over
100,000 square feet of casino space as well as restaurants and
entertainment facilities.
The Company believes that it receives the major portion of
its Las Vegas business from southern California and to a lesser degree
from the remainder of the southwestern United States. The major
portion of its Reno business is derived from northern California and
to a lesser degree from the northwestern United States. Laughlin's
business is derived principally from Arizona and southern California.
Circus Circus-Tunica competes with eight other casinos in
Tunica County, including Grand Casinos new hotel-casino which opened
in June 1996 at Buck Lake, directly north of Tunica, and which is
larger in capacity and situated closer to Memphis than any of the
other facilities currently in operation in Tunica County. In response
to the increased competition in the Tunica market, Circus Circus-
Tunica, which currently has no hotel, is being expanded by the
addition of a 1,200-room hotel tower. The existing facilities are
also being completely rethemed into a more elegant resort under the
name Gold Strike Casino Resort. The completion of the hotel tower
will give the Gold Strike Casino Resort the largest room base in the
Tunica market.
There is no limit on the number of licenses that may be
granted within Mississippi or within any county in Mississippi. The
Company believes that Circus Circus-Tunica's principal market is the
area within 100 miles of Tunica County. This area includes Memphis,
Tennessee, Little Rock, Arkansas and northern Mississippi. Tunica
County is currently the closest legalized gaming jurisdiction to
Memphis. Because Circus Circus-Tunica is heavily dependent upon the
patronage of Memphis residents and upon tourists and other out-of-
state gaming customers coming to Tunica from Memphis, the opening of
gaming casinos at locations closer to Memphis can have a material
adverse effect on Circus Circus-Tunica's operations. In this regard,
management believes the opening of the Grand Casino property at Buck
Lake, approximately one mile north of Circus Circus-Tunica, was a
significant contributor to the decrease in operating results at Circus
Circus-Tunica during the prior fiscal year. De Soto County, the
northwestern most Mississippi county and the nearest to Memphis, by
local referendum in November 1996, voted (as it had in November 1992)
against authorizing gaming activities in the county, but could at any
time after October 2000 again vote on the question of allowing gaming
activities in the county. In addition, the authorization of gaming
activities in Arkansas or Tennessee (which currently has a
constitutional restriction on gaming activities) could have a material
adverse effect on the Company's Tunica County operations.
Gaming has expanded dramatically in the United States in
recent years. This growth has been reflected in various forms
including riverboats, dockside gaming facilities, Native American
gaming ventures, land-based casinos, state-sponsored lotteries, off-
track wagering and card parlors. Since 1990, when there were casinos
in only three states (excluding casinos on Native American lands),
gaming has spread to a number of additional states and still other
states are currently considering the legalization of casino gaming in
specific geographic areas within their jurisdictions. Casino gaming
is currently conducted by numerous Native American tribes throughout
the United States and other Native American tribes are either in the
process of establishing or are considering the establishment of gaming
at additional locations, including sites in California and Arizona.
Other than the aforementioned impact on its Laughlin operations of
native American gaming in Laughlin's regional gaming market, the
Company does not believe that gaming, as presently conducted in other
states, has had a material adverse impact on operations at the
properties where it currently conducts its gaming operations. The
competitive impact on Nevada gaming establishments, in general, and
the Company's operations, in particular, from the continued growth of
gaming in jurisdictions outside of Nevada cannot be determined at this
time. The Company believes that the expansion of casino gaming in
areas close to Nevada, such as California and Arizona, could have an
adverse impact on the Company's operations and, depending on the
nature, location and extent of such operations, such impact could be
material.
Regulation and Licensing
Nevada
The ownership and operation of casino gaming facilities in
Nevada are subject to: (i) the Nevada Gaming Control Act and the
regulations promulgated thereunder (collectively, the "Nevada Act");
and (ii) various local ordinances and regulations. The Company's
gaming operations are subject to the licensing and regulatory control
of the Nevada Gaming Commission (the "Nevada Commission"), the Nevada
State Gaming Control Board (the "Nevada Board"), and various local
licensing and regulatory authorities, including the Clark County
Liquor and Gaming Licensing Board, the City of Reno and the City of
Henderson (collectively, the "Local Authorities"). The Nevada
Commission, the Nevada Board and the Local Authorities are
collectively referred to as the "Nevada Gaming Authorities".
The laws, regulations and supervisory procedures of the
Nevada Gaming Authorities are based upon declarations of public policy
which are concerned with, among other things: (i) the prevention of
unsavory or unsuitable persons from having a direct or indirect
involvement with gaming at any time or in any capacity; (ii) the
establishment and maintenance of responsible accounting practices and
procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of
minimum procedures for internal fiscal affairs and the safeguarding of
assets and revenues, providing reliable record keeping and requiring
the filing of periodic reports with the Nevada Gaming Authorities;
(iv) the prevention of cheating and fraudulent practices; and (v)
providing a source of state and local revenues through taxation and
licensing fees. Changes in such laws, regulations and procedures
could have an adverse effect on the Company's gaming operations.
The Company's direct and indirect subsidiaries that conduct
gaming operations or have an ownership interest in an entity that
conducts gaming operations are required to be licensed by the Nevada
Gaming Authorities. The Company is registered by the Nevada
Commission as a publicly traded corporation (a "Registered
Corporation") and has been found suitable to own the stock of Circus
Circus Casinos, Inc., Slots-A-Fun, Inc., Edgewater Hotel Corporation,
Colorado Belle Corp., New Castle Corp. and Ramparts, Inc., each of
which is a corporate gaming licensee under the terms of the Nevada Act
( individually, a "Corporate Licensee" and collectively with the
additional corporate subsidiaries referenced hereinbelow, the
"Corporate Licensees") that has been licensed to conduct nonrestricted
gaming operations at its respective gaming establishment. The Company
has also been found suitable to own the stock of M.S.E. Investments,
Incorporated ("M.S.E."), Last Chance Investments, Inc. ("LCI"),
Goldstrike Investments, Inc. ("GII"), Diamond Gold, Inc. ("DGI"),
Oasis Development Company, Inc. ("Oasis") and Galleon, Inc.
("Galleon"), each of which is a Corporate Licensee that has been
licensed as a general partner of one or more Nevada general
partnerships that have been licensed to conduct nonrestricted or
restricted gaming operations at their respective gaming
establishments. M.S.E., LCI and GII are each licensed as general
partners of Railroad Pass Investment Group, a Nevada general
partnership ("Railroad Pass"), Jean Development Company, a Nevada
general partnership ("Jean Development"), Jean Development West, a
Nevada general partnership ("Jean West"), Gold Strike Fuel Company, a
Nevada general partnership ("GSFC") and Jean Fuel Company West, a
Nevada general partnership ("Jean Fuel") and Gold Strike L.V., a
Nevada general partnership ("GSLV"); DGI is licensed as a general
partner of GSLV and Jean West; Oasis is licensed as a general partner
of GSFC and Jean Fuel; and Galleon is licensed as a 50% general
partner of Circus and Eldorado Joint Venture, a Nevada general
partnership ("CEJV") which operates the Silver Legacy and GSLV is
licensed as a 50% general partner of Victoria Partners, a Nevada
general partnership ("Victoria Partners") which operates Monte Carlo
(all such general partnerships individually, a "Partnership Licensee"
and collectively, the "Partnership Licensees"). Railroad Pass, Jean
Development, Jean West, CEJV and Victoria Partners have each been
licensed to conduct nonrestricted gaming operations at their
respective gaming establishments and Jean Fuel and GSFC have each been
licensed to conduct restricted gaming operations consisting of 15 or
fewer slot machines at their respective gaming establishments.
The gaming licenses held by the Corporate Licensees and the
Partnership Licensees (each individually, a "Gaming Subsidiary" and
collectively, the "Gaming Subsidiaries") to conduct nonrestricted
gaming operations require the payment of periodic fees and taxes and
are not transferable. As a Registered Corporation, the Company is
required periodically to submit detailed financial and operating
reports to the Nevada Commission and furnish any other information
which the Nevada Commission may require. No person may become a
stockholder or partner of, or receive any percentage of profits from
the Gaming Subsidiaries without first obtaining licenses and approvals
from the Nevada Gaming Authorities. The Company and the Gaming
Subsidiaries have obtained from the Nevada Gaming Authorities the
various registrations, approvals, findings of suitability permits and
licenses required in order to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual
who has a material relationship to, or material involvement with, the
Company or the Gaming Subsidiaries in order to determine whether such
individual is suitable or should be licensed as a business associate
of a gaming licensee. Officers, directors and certain key employees
of the Gaming Subsidiaries must file applications with the Nevada
Gaming Authorities and may be required to be licensed or found
suitable by the Nevada Gaming Authorities. Officers, directors and
key employees of the Company who are actively and directly involved in
gaming activities of the Gaming Subsidiaries may be required to be
licensed or found suitable by the Nevada Gaming Authorities. The
Nevada Gaming Authorities may deny an application for licensing for
any cause which they deem reasonable. A finding of suitability is
comparable to licensing, and both require submission of detailed
personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of
suitability must pay all the costs of the investigation. Changes in
licensed positions must be reported to the Nevada Gaming Authorities
and in addition to their authority to deny an application for a
finding of suitability or licensure, the Nevada Gaming Authorities
have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer,
director or key employee unsuitable for licensing or unsuitable to
continue having a relationship with the Company or a Gaming
Subsidiary, the companies involved would have to sever all
relationships with such person. In addition, the Nevada Commission
may require the Company and the Gaming Subsidiaries to terminate the
employment of any person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to licensing
are not subject to judicial review in Nevada.
The Company and the Gaming Subsidiaries are required to
submit detailed financial and operating reports to the Nevada
Commission. Substantially all material loans, leases, sales of
securities and similar financing transactions by the Gaming
Subsidiaries must be reported to or approved by the Nevada Commission.
If it were determined that the Nevada Act was violated by a
Gaming Subsidiary, the gaming licenses it holds could be limited,
conditioned, suspended or revoked, subject to compliance with certain
statutory and regulatory procedures. In addition, the Gaming
Subsidiaries, the Company and the persons involved could be subject to
substantial fines for each separate violation of the Nevada Act at the
discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate the Company's gaming
properties and, under certain circumstances, earnings generated during
the supervisor's appointment (except for reasonable rental value of
the casino) could be forfeited to the State of Nevada. Limitation,
conditioning or suspension of any gaming license or the appointment of
a supervisor could (and revocation of any gaming license would)
materially adversely affect the Company's gaming operations.
Any beneficial holder of the Company's voting securities,
regardless of the number of shares owned, may be required to file an
application, be investigated, and have his suitability as a beneficial
holder of the Company's voting securities determined if the Nevada
Commission has reason to believe that such ownership would otherwise
be inconsistent with the declared policies of the state of Nevada.
The applicant must pay all costs of investigation incurred by the
Nevada Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than
five percent of a Registered Corporation's voting securities to report
the acquisition to the Nevada Commission. The Nevada Act requires
that beneficial owners of more than 10% of a Registered Corporation's
voting securities apply to the Nevada Commission for a finding of
suitability within thirty days after the Chairman of the Nevada Board
mails the written notice requiring such filing. Under certain
circumstances, an "institutional investor", as defined in the Nevada
Act, which acquires more than 10%, but not more than 15%, of the
Registered Corporation's voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities for investment
purposes only. An institutional investor shall not be deemed to hold
voting securities for investment purposes unless the voting securities
were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of
directors of the Company, any change in the Company's corporate
charter, bylaws, management, policies or operations of the Registered
Corporation, or any of its gaming affiliates, or any other action
which the Nevada Commission finds to be inconsistent with holding the
Registered Corporation's voting securities for investment purposes
only. Activities which are not deemed to be inconsistent with holding
voting securities for investment purposes only include: (i) voting on
all matters voted on by stockholders; (ii) making financial and other
inquiries of management of the type normally made by securities
analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as
the Nevada Commission may determine to be consistent with such
investment intent. If the beneficial holder of voting securities who
must be found suitable is a corporation, partnership or trust, it must
submit detailed business and financial information including a list of
beneficial owners. The applicant is required to pay all costs of
investigation.
Any person who fails or refuses to apply for a finding of
suitability or a license within 30 days after being ordered to do so
by the Nevada Commission or the Chairman of the Nevada Board, may be
found unsuitable. The same restrictions apply to a record owner if
the record owner, after request, fails to identify the beneficial
owner. Any stockholder found unsuitable and who holds, directly or
indirectly, any beneficial ownership of the Company's voting
securities beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The Company is
subject to disciplinary action if, after it receives notice that a
person is unsuitable to be a stockholder or to have any other
relationship with the Company or the Gaming Subsidiaries, the Company:
(i) pays that person any dividend or interest upon voting securities
of the Company; (ii) allows that person to exercise, directly or
indirectly, any voting right conferred through securities held by that
person; (iii) pays remuneration in any form to that person for
services rendered or otherwise; or (iv) fails to pursue all lawful
efforts to require such unsuitable person to relinquish his voting
securities including, if necessary, the immediate purchase of said
voting securities for cash at fair market value. Additionally, the
Clark County Liquor and Gaming Licensing Board has the authority to
approve all persons owning or controlling the stock of any corporation
controlling a gaming licensee.
The Nevada Commission may, in its discretion, require the
holder of any debt security of a Registered Corporation to file
applications, be investigated and be found suitable to own the debt
security of a Registered Corporation if the Nevada Commission has
reason to believe that such holder's acquisition of such debt security
would otherwise be inconsistent with the declared policy of the State
of Nevada. If the Nevada Commission determines that a person is
unsuitable to own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada 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 Company is required to maintain a current stock ledger
in Nevada which may be examined by the Nevada Gaming Authorities at
any time. If any securities are held in trust by an agent or by a
nominee, the record holder may be required to disclose the identity of
the beneficial owner to the Nevada Gaming Authorities. A failure to
make such disclosure may be grounds for finding the record holder
unsuitable. The Company is also required to render maximum assistance
in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Company's stock certificates
to bear a legend indicating that the securities are subject to the
Nevada Act. However, to date, the Nevada Commission has not imposed
such a requirement on the Company.
The Company may not make a public offering of its securities
without the prior approval of the Nevada Commission if the securities
or proceeds therefrom are intended to be used to construct, acquire or
finance gaming facilities in Nevada, or to retire or extend
obligations incurred for such purposes. On June 19, 1996, the Nevada
Commission granted the Company prior approval to make public offerings
for a period of one year, subject to certain conditions (the "Shelf
Approval"). The Shelf Approval also applies to any affiliated company
wholly owned by the Company (an "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 Corporate Licensees 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 an
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 Board and must be renewed annually. The Shelf
Approval does not constitute a finding, recommendation or approval by
the Nevada Commission or the Nevada 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.
Changes in control of the Company through merger,
consolidation, stock or asset acquisitions, management or consulting
agreements, or any act or conduct by a person whereby he obtains
control, may not occur without the prior approval of the Nevada
Commission. Entities seeking to acquire control of a Registered
Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such
Registered Corporation. The Nevada Commission may also require
controlling stockholders, officers, directors and other persons having
a material relationship or involvement with the entity proposing to
acquire control, to be investigated and licensed as part of the
approval process relating to the transaction.
The Nevada legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting securities
and corporate defense tactics affecting Nevada gaming corporate
licensees, and Registered Corporations that are affiliated with those
operations, may be injurious to stable and productive corporate
gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices
upon Nevada's gaming industry and to further Nevada's policy to: (i)
assure the financial stability of corporate gaming operators and their
affiliates; (ii) preserve the beneficial aspects of conducting
business in the corporate form; and (iii) promote a neutral
environment for the orderly governance of corporate affairs. Approvals
are, in certain circumstances, required from the Nevada Commission
before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a
corporate acquisition opposed by management can be consummated. The
Nevada Act also requires prior approval of a plan of recapitalization
proposed by the Company's Board of Directors in response to a tender
offer made directly to the Registered Corporation's stockholders for
the purposes of acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending
on the type of gaming or activity involved, are payable to the State
of Nevada and to the counties and cities in which the Gaming
Subsidiaries' respective operations are conducted. Depending upon the
particular fee or tax involved, these fees and taxes are payable
either monthly, quarterly or annually and are based upon either: (i) a
percentage of the gross revenues received; (ii) the number of gaming
devices operated; or (iii) the number of gaming tables operated. A
casino entertainment tax is also paid by nonrestricted casino
operations where entertainment is furnished in connection with the
selling of food or refreshments and merchandise. Nevada licensees that
hold a license as an operator of a slot route, or a manufacturer's or
distributor's license, also pay certain fees and taxes to the State of
Nevada.
Any person who is licensed, required to be licensed,
registered, required to be registered, or is under common control with
such persons (collectively, the "Licensees"), and who proposes to
become involved in a gaming venture outside of Nevada, is required to
deposit with the Nevada Board, and thereafter maintain, a revolving
fund in the amount of $10,000 to pay the expenses of investigation by
the Nevada Board of their participation in such foreign gaming. The
revolving fund is subject to increase or decrease in the discretion of
the Nevada Commission. Thereafter, Licensees are required to comply
with certain reporting requirements imposed by the Nevada Act.
Licensees are also subject to disciplinary action by the Nevada
Commission if they knowingly violate any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fail to
conduct the foreign gaming operation in accordance with the standards
of honesty and integrity required of Nevada gaming operations, engage
in activities that are harmful to the state of Nevada or its ability
to collect gaming taxes and fees, or employ a person in the foreign
operation who has been denied a license or finding of suitability in
Nevada on the ground of personal unsuitability.
The sale of alcoholic beverages at the gaming establishments
operated by the Gaming Subsidiaries is subject to licensing, control
and regulation by the applicable Local Authorities. All licenses are
revocable and are not transferable. The Local Authorities involved
have full power to limit, condition, suspend or revoke any such
license, and any such disciplinary action could (and revocation would)
have a material adverse affect upon the operations of the licensed
gaming establishments.
Mississippi
The Company conducts its Mississippi gaming operations
through a Mississippi subsidiary, Circus Circus Mississippi, Inc.
("CCMI"). The ownership and operation of casino gaming facilities in
Mississippi are subject to extensive state and local regulation. In
order to open and operate Circus Circus-Tunica, the Company was
required to register under the Mississippi Gaming Control Act (the
"Mississippi Act") and its Mississippi gaming operations are subject
to the licensing and regulatory control of the Mississippi Gaming
Commission (the "Mississippi Commission") and various local and county
regulatory agencies. Effective October 29, 1991, the Mississippi
Commission adopted regulations in furtherance of the Mississippi Act
(the "regulations"). Changes in the Mississippi Act, the regulations
and/or interpretations of the Mississippi Act and the regulations by
the Mississippi Commission could have a material adverse effect on
gaming operations conducted by the Company in Mississippi.
The Company is required to submit detailed financial,
operating and other reports to the Mississippi Commission.
Substantially all loans, leases, sales of securities and similar
financing transactions entered into by CCMI must be reported to or
approved by the Mississippi Commission. CCMI also is required to
periodically submit detailed financial and operating reports to the
Mississippi Commission and the Mississippi State Tax Commission and to
furnish any other information required thereby.
Each of the directors, officers and key employees of the
Company who are actively and directly engaged in the administration or
supervision of gaming in Mississippi, or who have any other
significant direct or indirect involvement with the gaming activities
of the Company in Mississippi, must be found suitable therefor, and
may be required to be licensed, by the Mississippi Commission. The
finding of suitability is comparable to licensing, and both require
submission of detailed personal financial information followed by a
thorough investigation. In addition, any individual who is found to
have a material relationship to, or material involvement with, the
Company may be required to be investigated in order to be found
suitable or to be licensed as a business associate of the Company.
Key employees, controlling persons or others who exercise significant
influence upon the management or affairs of the Company may also be
deemed to have such a relationship or involvement. There can be no
assurance that a person who is subject to a finding of suitability
will be found suitable by the Mississippi Commission. An application
for licensing may be denied for any cause deemed reasonable by the
Mississippi Commission. Changes in licensed positions must be
reported to the Mississippi Commission. In addition to its authority
to deny an application for a license, the Mississippi Commission has
jurisdiction to disapprove a change in corporate position. If the
Mississippi Commission were to find a director, officer or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company, the Company would have to suspend,
dismiss and sever all relationships with such person in order to
continue to have any involvement in gaming in Mississippi. The
Company would have similar obligations with regard to any person who
should refuse to file appropriate applications. Each gaming employee
at a Mississippi gaming facility must obtain from the Mississippi
Commission a work permit which may be revoked upon the occurrence of
certain specified events.
Mississippi statutes and regulations give the Mississippi
Commission the discretion to require a suitability finding with
respect to anyone who acquires any security of the Company, regardless
of the percentage of ownership. The current policy of the Mississippi
Commission is to require anyone acquiring five percent or more of any
voting securities of a public or private company to be found suitable.
If the owner of voting securities who is required to be found suitable
is a corporation, partnership or trust, it must submit detailed
business and financial information including a list of beneficial
owners. The applicant is required to pay all costs of investigation
which the Company may reimburse. The Mississippi Commission has
selected those persons it feels were required to be investigated and
found suitable and has made the findings of suitability. However,
other persons, for the reasons set forth above, may be required to be
found suitable.
Any owner of voting securities found unsuitable and who
holds, directly or indirectly, any beneficial ownership of equity
interests in the Company beyond such period of time as may be
prescribed by the Mississippi Commission may be guilty of a
misdemeanor. Any person who fails or refuses to apply for a finding
of suitability or a license within 30 days after being ordered to do
so by the Mississippi Commission may be found unsuitable. The Company
will be subject to disciplinary action if, after it receives notice
that a person is unsuitable to be an owner of or to have any other
relationship with it, the Company: (i) pays the unsuitable person any
dividends or interest upon any securities of the gaming subsidiary or
any payments or distribution of any kind whatsoever; (ii) recognizes
the exercise, directly or indirectly, of any voting rights in its
securities by the unsuitable person; or (iii) pays the unsuitable
person any remuneration in any form for services rendered or
otherwise, except in certain limited and specific circumstances. In
addition, if the Mississippi Commission finds any owner of voting
securities unsuitable, such owner must immediately surrender all
securities to the Company, and the Company must refund any money or
other thing of value that may have been invested in the Company or
made use of by the Company.
The Company is required to maintain current equity ownership
ledgers in the State of Mississippi which may be examined by the
Mississippi Commission at any time. The Company obtained a waiver of
this ledger requirement from the Mississippi Commission at its
licensing hearing, however, the waiver may be revoked, modified or
suspended at any time by the Mississippi Commission in its discretion.
If any securities are held in trust by an agent or by a nominee, the
record holder may be required to disclose the identity of the
beneficial owner to the Mississippi Commission. A failure to make
such disclosure may be grounds for finding the record holder
unsuitable. The Company also is required to render maximum assistance
in determining the identity of such a beneficial owner.
The Mississippi Act requires that certificates representing
equity securities of the Company bear a legend to the general effect
that the securities are subject to the Mississippi Act and regulations
of the Mississippi Commission. The Company obtained a waiver of this
legend requirement from the Mississippi Commission, however, this
waiver may be revoked, modified or suspended by the Mississippi
Commission in its discretion at any time. The Mississippi Commission,
through the power to regulate licenses, has the power to impose
additional restrictions on the Company and on the holders of the
Company's securities at any time.
The Company may not make a public offering of its securities
without the prior approval of the Mississippi Commission if the
securities or proceeds therefrom are intended to be used to construct,
acquire or finance gaming facilities in Mississippi, or to retire or
extend obligations incurred for such purposes. On January 23, 1997,
the Mississippi Commission granted the Company prior approval to make
public offerings for a period of one year, subject to certain
conditions (the "Shelf Approval"). The Shelf Approval also applies to
any affiliated company wholly owned by the Company (an "Affiliate")
which is a publicly traded corporation or would thereby become a
publicly traded corporation pursuant to a public offering. The Shelf
Approval also included approval for CCMI 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 an 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 Executive Director of
the Mississippi Commission and must be renewed annually. The Shelf
Approval does not constitute a finding, recommendation or approval by
the Mississippi Commission 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 regulations provide that a change in control of the
Company may not occur without the prior approval of the Mississippi
Commission. Mississippi law prohibits the Company from making a
public offering of its securities without the approval of the
Mississippi Commission if any part of the proceeds of the offering is
to be used to finance the construction, acquisition or operation of
gaming facilities in Mississippi, or to retire or extend obligations
incurred for one or more of such purposes.
As long as the Company is licensed to conduct gaming in
Mississippi, the Company may not engage in gaming activities in
Mississippi while also conducting gaming operations outside of
Mississippi without approval of the Mississippi Commission. The
Company has been approved in the following jurisdictions; Nevada,
Indiana, Louisiana, Illinois and Ontario, Canada.
The Company received its Mississippi gaming license on
August 18, 1994 and its renewal on July 18, 1996. The gaming license
is not transferable and must be renewed every two years. The
Mississippi Commission in 1994 enacted an infrastructure development
regulation which requires that a Mississippi casino invest 25% of its
casino costs in infrastructure facilities. Infrastructure facilities
are defined in the regulation to include a hotel with at least 250
rooms, theme park, golf course and other similar facilities. When
completed, the planned expansion will meet the infrastructure
requirements. Each issuing agency may at any time dissolve, suspend,
condition, limit or restrict a license or approval to own equity
interests in the Company for any cause deemed reasonable by such
agency.
Substantial fines for each violation of gaming laws or
regulations may be levied against the Company in Mississippi. A
violation under any gaming license held by the Company may be deemed a
violation of its Mississippi license. Suspension or revocation of any
of the Company's gaming licenses or of the approval of the Company
would have a material adverse effect upon any business conducted by
the Company in Mississippi.
License fees and taxes, computed in various ways depending
on the type of gaming involved, are payable to the State of
Mississippi and to the county and cities in which the Company conducts
operations in Mississippi. Depending upon the particular fee or tax
involved, these fees and taxes are payable either weekly or annually
and are based upon: (i) the gross gaming revenues received by the
casino operation; (ii) the number of slot machines operated by the
casino; and (iii) the number of gaming tables operated by the casino.
The legal age for gaming in Mississippi is 21.
Illinois
The Company is subject to the jurisdiction of the Illinois
gaming authorities as a result of its acquisition of The Grand
Victoria riverboat casino and gaming complex based in Elgin, Illinois.
In 1990, the Riverboat Gambling Act (the "Illinois Act") was
enacted by the State of Illinois. The Illinois Act authorizes the
five-member Illinois Gaming Board (the "Illinois Board") to issue up
to ten owners licenses on navigable streams within or forming a
boundary of the State of Illinois except for Lake Michigan and any
waterway in Cook County, which includes Chicago. The Illinois Act
strictly regulates the facilities, persons, associations and practices
related to gaming operations pursuant to the police powers of the
State of Illinois, including comprehensive law enforcement
supervision. The Illinois Act grants the Illinois Board specific
powers and duties, and all other powers necessary and proper to fully
and effectively execute the Illinois Act for the purpose of
administering, regulating and enforcing the system of riverboat
gaming. The Illinois Board's jurisdiction extends to every person,
association, corporation, partnership and trust involved in riverboat
gaming operations in the State of Illinois.
The Illinois Act requires the owner of a riverboat gaming
operation to hold an owner's license issued by the Illinois Board.
Each owner's license permits the holder to own up to two riverboats,
however, gaming participants are limited to 1,200 for any owner's
license. A licensed owner who holds greater than 10% interest on one
riverboat operation, may hold up to 10% of a second riverboat gaming
operation in Illinois.
The Illinois Act restricts the granting of certain of the
ten owners' licenses by location. Four are for operators docking at
sites on the Mississippi River, one is for an operator docking at a
site on the Illinois River south of Marshall County and one is for an
operator docking at a site on the Des Plaines River in Will County.
The remaining four owner's licenses are not restricted as to location.
In addition to the ten owner's licenses which may be authorized under
the Illinois Act, the Illinois Board may issue special event licenses
allowing persons who are not otherwise licensed to conduct riverboat
gaming to conduct such gaming on a specified date or series of dates.
Riverboat gaming under such a license may take place on a riverboat
not normally used for riverboat gaming.
The gaming license issued to The Grand Victoria riverboat
casino in October 1994, will be valid for an initial period of three
years and must be renewed annually thereafter. An owner's license is
eligible for renewal upon payment of the applicable fee and a
determination by the Illinois Board that the licensee continues to
meet all of the requirements of the Illinois Act and Illinois Board
rules. An ownership interest in an owner's license, or in a business
entity other than a publicly held business entity which holds an
owner's license, may not be (i) transferred or (ii) pledged as
collateral without the approval of the Illinois Board. The Illinois
Board also requires that employees of a gaming operator and vendors of
gaming supplies and equipment be licensed.
The Illinois Act does not limit the maximum bet or per
patron loss. Licensees, however, may set any maximum or minimum
limits on wagering under the Illinois Act. No person under the age of
21 is permitted to wager.
An admission tax is imposed on the owner of a riverboat
operation at a rate of $2 per person admitted. Additionally, a
wagering tax is imposed on the adjusted gross receipts, as defined in
the Illinois Act, of a riverboat operation at the rate of 20%. The
licensee is required to wire the wagering tax payment to the Illinois
Board daily.
Under the Illinois Act, there is a four-hour maximum period
during which gaming may be conducted during a gaming excursion. Gaming
is deemed to commence when the first passenger boards a riverboat for
an excursion and may continue while other passengers are boarding for
a period not to exceed 30 minutes. A gaming excursion is deemed to
have started upon the commencement of gaming. Gaming may continue for
a period not to exceed 30 minutes after the gangplank or its
equivalent is lowered. During this 30-minute period of egress, new
passengers may not board a riverboat. Special event extended cruises
may be authorized by the Illinois Board.
If a riverboat captain reasonably determines that either it
is unsafe to transport passengers on the waterway due to inclement
weather or the riverboat has been rendered temporarily inoperable by
unforeseeable mechanical or structural difficulties or river icing,
the riverboat shall either not leave the dock or immediately return to
it. If a riverboat captain reasonably determines for reasons of
safety that although seaworthy, the riverboat should not leave the
dock or should return immediately thereto, due to either of the above
conditions, a gaming excursion may commence or continue while the
gangplank or its equivalent is raised and remains raised, in which
event the riverboat is not considered docked. If, due to either of
the above conditions, a gaming excursion must commence or continue
with the gangplank or its equivalent raised, and the riverboat does
not leave the dock, ingress is prohibited until the completion of the
excursion.
After consultation with the U.S. Army Corps of Engineers,
the Illinois Board may establish binding emergency orders upon the
concurrence of a majority regarding the navigability of rivers in the
event of extreme weather conditions, acts of God or their extreme
circumstances.
The Illinois Board is authorized to conduct investigations
into the conduct of gaming as it may deem necessary and proper and
into alleged violations of the Illinois Act and the Illinois Board
rules. Employees and agents of the Illinois Gaming Board have access
to and may inspect any facilities relating to the riverboat gaming
operations at all times.
A holder of any license is subject to imposition of fines,
suspension or revocation of such license, or other action for any act
or failure to act by himself or his agents or employees, that is
injurious to the public health, safety, morals, good order and general
welfare of the people of the State of Illinois, or that would
discredit or tend to discredit the Illinois gaming industry or the
State of Illinois. Any riverboat operations not conducted in
compliance with the Illinois Act may constitute an illegal gaming
place and consequently may be subject to criminal penalties, which
penalties include possible seizure, confiscation and destruction of
illegal gaming devices and seizure and sale of riverboats and dock
facilities to pay any unsatisfied judgment that may be recovered and
any unsatisfied fine that may be levied. The Illinois Act also
provides for civil penalties, equal to the amount of gross receipts
derived from wagering on the gaming, whether unauthorized or
authorized, conducted on the day of any violation. The Illinois Board
may revoke or suspend licenses, as the Illinois Board may see fit and
in compliance with applicable laws of the State of Illinois regarding
administrative procedures and may suspend an owner's license, without
notice or hearing, upon a determination that the safety or health of
patrons or employees is jeopardized by continuing a riverboat's
operation. The suspension may remain in effect until the Illinois
Board determines that the cause for suspension has been abated and it
may revoke the owner's license upon a determination that the owner has
not made satisfactory progress toward abating the hazard.
The Illinois Board requires that a "Key Person" of an owner
licensee submit a Personal Disclosure Form and be investigated and
approved by the Illinois Board. For a publicly-held Business Entity a
"Key Person" is any person directly or indirectly holding a legal or
beneficial interest of 5% or more of an applicant or licensee and/or
officers, directors, trustees, partners and managing agents of a
gaming enterprise, and any person identified by the Board as a person
able to control or exercise significant influence over the management
or operating policies of a licensee. Furthermore, each applicant for
an owner's license or owner licensee must disclose the identity of
every person, association, trust or corporation having a greater than
1% direct or indirect pecuniary interest in an owner licensee or in
the riverboat gaming operation with respect to which the license is
sought. The Illinois Board may also require an applicant or owner
licensee to disclose any other principal or investor and require the
investigation and approval of such individuals.
The Illinois Board (unless the investor qualifies as an
Institutional Investor) requires a Personal Disclosure Form from any
person or entity who or which, individually or in association with
others, acquires directly or indirectly, beneficial ownership of more
than 5% of any class of voting securities or nonvoting securities
convertible into voting securities of a publicly traded corporation
which holds an ownership interest in the holder of an owner's license.
If the Illinois Board denies an application for such a transfer and if
no hearing is requested, the applicant for the transfer of ownership
must promptly divest those shares in the publicly traded parent
corporation. The holder of an owner's license would not be able to
distribute profits to a publicly traded parent corporation until such
shares have been divested. If a hearing is requested, the shares need
not be divested and profits may be distributed to a publicly-held
parent corporation pending the issuance of a final order from the
Illinois Gaming Board.
An Institutional Investor that individually or jointly with
others, cumulatively acquires, directly or indirectly, 5% or more of
any class of voting securities of a publicly-traded licensee or a
licensee's publicly-traded parent corporation shall, within no less
than ten days after acquiring such securities, notify the
Administrator of the Board of such ownership and shall provide any
additional information as may be required. If an Institutional
Investor (as specified above) acquires 10% or more of any class of
voting securities of a publicly-traded licensee or a licensee's
publicly-traded parent corporation, it shall file an Institutional
Investor Disclosure Form within 45 days after acquiring such level of
ownership interest.
The Illinois Board may waive any licensing requirement or
procedure provided by rule if it determines that such waiver is in the
best interests of the public and the gaming industry. Also, the
Illinois Board may, from time to time, amend or change Board rules.
Uncertainty exists regarding the Illinois gambling
regulatory environment due to limited experience in interpreting the
Illinois Act.
From time to time, various proposals have been introduced in
the Illinois legislature that, if enacted, would affect the taxation,
regulation, operation or other aspects of the gaming industry or the
Company. Some of this legislation, if enacted, could adversely affect
the gaming industry or the Company. No assurance can be given whether
such or similar legislation will be enacted.
Applicants for and holders of an owner's license are
required to obtain formal approval from the Illinois Board for changes
in the following areas: (i) Key Persons; (ii) type of entity; (iii)
equity and debt capitalization of the entity; (iv) investors and/or
debt holders; (v) source of funds; (vi) applicant's economic
development plan; (vii) riverboat capacity or significant design
change; (viii) gaming positions, (ix) anticipated economic impact; or
(x) agreements, oral or written, relating to the acquisition or
disposition of property (real or personal) of a value greater than $1
million .
A holder of an owner's license is allowed to make
distributions to its stockholders only to the extent that such
distribution would not impair the financial viability of the gaming
operation. Factors to be considered by the licensee will include but
not be limited to the following: (i) cash flow, casino cash and
working capital requirements; (ii) debt service requirements
obligations and covenants associated with financial instruments; (iii)
requirements for repairs and maintenance and capital improvements; and
(iv) employment or economic development requirements of the Act; and
(v) a licensees financial projections.
Other Jurisdictions
As a result of the Company's efforts to expand its
operations into new jurisdictions, the Company is likely to become
subject to comprehensive gaming and other regulations in each such
jurisdiction into which its operations are expanded. Such regulations
may be similar to, and could be more restrictive than, those currently
applicable to the Company, its officers, directors or employees or
persons associated with the Company.
Employees and Labor Relations
At January 31, 1997, the Company employed approximately
20,000 persons. Approximately 39% of the Company's employees at
January 31, 1997 were employed pursuant to the terms of collective
bargaining agreements. The contracts with three unions, including the
largest union, expire in fiscal 1998. The Company does not anticipate
any difficulties in renewing such agreements. Management considers
its labor relations to be satisfactory. A work stoppage has not been
experienced at a Company-owned property since an industry-wide strike
in 1975.
Certain states in which gaming recently has been legalized
have established community commitment and similar laws which require
that a specified percentage of employees of gaming ventures be
residents of the state in which the gaming venture is located. These
laws could affect the ability of the Company to attract and retain
qualified employees for gaming operations conducted by the Company or
joint ventures in which it participates outside Nevada.
Certain Forward Looking Statements
Certain information included in this Report and other
materials filed or to be filed by the Company with the Securities and
Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the
Company) contains or may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements including information relating to current construction
activities, plans for future expansion and other business development
activities as well as other capital spending, financing sources and
the effects of regulation (including gaming and tax regulation) and
competition. Such forward-looking information involves important
risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ from
those expressed in any forward-looking statements made by or on behalf
of the Company. These risks and uncertainties include, but are not
limited to, those relating to development and construction activities,
dependence on existing management, leverage and debt service
(including sensitivity to fluctuation in interest rates), domestic or
global economic conditions, changes in federal or state tax laws or
the administration of such laws, changes in gaming laws or regulations
(including the legalization of gaming in certain jurisdictions) and
applications for licenses and approvals under applicable laws and
regulations (including gaming laws and regulations).
ITEM 2. PROPERTIES.
Circus Circus-Las Vegas. The Company owns approximately 69
acres of land with 375 feet of frontage on the Las Vegas Strip and
Circus Circus-Las Vegas which is situated on the site. For additional
information concerning Circus Circus-Las Vegas, see "Description of
the Company's Operating Hotels and Casinos -- Las Vegas, Nevada
- -- Circus Circus-Las Vegas" in Item 1 of this Report.
Luxor and Excalibur. The Company owns a 117-acre parcel on
the southwest corner of the intersection of the Las Vegas Strip and
Tropicana Avenue, with approximately 2,400 feet of frontage on the Las
Vegas Strip and includes, Excalibur, which is situated on the northern
portion of the parcel at the intersection of the Las Vegas Strip and
Tropicana Avenue, and Luxor, which is situated on such site to the
south of Excalibur. For additional information concerning Luxor and
Excalibur, see "Description of the Company's Operating Hotels and
Casinos -- Las Vegas, Nevada -- Luxor" and -- Excalibur" in Item 1 of
this Report.
Circus Circus-Reno. Circus Circus-Reno is situated on a
three-block area in downtown Reno, of which approximately 90% is owned
by the Company and the remainder is held under three separate leases,
two of which expire in 2032 and 2033, respectively. The Company owns
the remaining interest in the parcel subject to the third lease
pursuant to which the Company is obligated to pay rent for the
lifetime of the landlord. For additional information concerning
Circus Circus-Reno, see "Description of the Company's Operating Hotels
and Casinos -- Reno, Nevada -- Circus Circus-Reno" in Item 1 of this
Report.
Colorado Belle. The Company owns approximately 22 acres on
the bank of the Colorado River in Laughlin, Nevada and the Colorado
Belle, which is situated on the site. For additional information
concerning the Colorado Belle Hotel and Casino, see "Description of
the Company's Operating Hotels and Casinos -- Laughlin, Nevada
- -- Colorado Belle" in Item 1 of this Report.
Edgewater. Adjacent to the site of the Colorado Belle, the
Company owns approximately 16 acres on the bank of the Colorado River
in Laughlin, Nevada, and the Edgewater Hotel and Casino, which is
situated on the site. For additional information concerning the
Edgewater Hotel and Casino, see "Description of the Company's
Operating Hotels and Casinos -- Laughlin, Nevada -- Edgewater" in Item
1 of this Report.
Gold Strike. The Company owns approximately 51 acres and
the Gold Strike Hotel & Gambling Hall, which is situated on the site,
located on the east side of I-15 in Jean, Nevada, approximately 12
miles from the California/Nevada border and 25 miles from Las Vegas.
For additional information concerning Gold Strike, see "Description of
the Company's Operating Hotels and Casinos - Jean, Nevada -- Gold
Strike" in Item 1 of this Report.
Nevada Landing. The Company owns approximately 55 acres and
the Nevada Landing Hotel & Casino, which is situated on the site,
located on the west side of I-15 in Jean, Nevada. For additional
information concerning Nevada Landing, see "Description of the
Company's Operating Hotels and Casinos - Jean, Nevada -- Nevada
Landing" in Item 1 of this Report.
Railroad Pass. The Company owns approximately 56 acres and
the Railroad Pass Hotel & Casino, which is situated on the site,
located on US-93 in Henderson, Nevada. For additional information
concerning Railroad Pass, see "Description of the Company's Operating
Hotels and Casino - Henderson, Nevada -- Railroad Pass" in Item 1 of
this Report.
Circus Circus-Tunica. The Company owns approximately 24
acres in Tunica County, Mississippi and Circus Circus-Tunica, which is
situated on the site. The Company also owns an undivided 50% interest
in an additional 388-acre site adjacent to the Circus Circus-Tunica
site which is owned jointly with another unaffiliated gaming company.
For additional information concerning Circus Circus-Tunica, see
"Description of the Company's Operating Hotels and Casinos -- Tunica
County, Mississippi -- Circus Circus-Tunica" in Item 1 of this Report.
Other Real Property
Slots-A-Fun is situated on a 30,000-square-foot parcel owned
by the Company and has approximately 100 feet of frontage on the Las
Vegas Strip.
The Company operates the Silver City Casino in Las Vegas
under a lease which expires in October 1999. The Company currently
pays a base rent of $129,982 per month. The base rent is subject to
annual increases, calculated by using a specified index with a cap
based on a specified percentage of annual revenues. Under the terms
of the lease, the landlord or the landlord's assignee is entitled to
participate in the profits to the extent of 50% of defined income from
the operation of the Silver City Casino. There was no profit
participation rent due for the years ended January 31, 1995, 1996 or
1997.
The Company owns approximately 47 acres formerly the site of
the Hacienda Hotel and Casino which was imploded on December 31, 1996
to make way for the construction of Project Paradise which is
currently being built on the site. For additional information
concerning Project Paradise, see Current Expansion Activities in
Item 1.
The Company owns approximately 73 acres of unimproved land
located immediately south of the aforementioned 47-acre site and
approximately 15 acres of land on the Las Vegas Strip across from
Luxor which from time to time is utilized as a parking lot for
employees at Luxor and Excalibur.
The Company owns 60 acres of land in Jean, Nevada to the
north of Gold Strike and approximately 89 acres of land in Sloan,
Nevada off of I-15. Sloan is located between Jean and Las Vegas.
Reference is made to Current Expansion Activities for a
discussion of the Company s agreement with Mirage Resorts Incorporated
relating to the Company s possible acquisition of unimproved land in
Atlantic City, New Jersey and the development of a hotel and casino on
a portion of such site. The Company also owns or leases, or has
options and/or agreements to purchase or lease, certain other improved
and unimproved properties which are not deemed to be material to the
Company.
As of January 31, 1997, the aforementioned properties owned
by the Company were not subject to any encumbrances securing the
repayment of indebtedness.
Joint Venture Interests. The Company, either directly or
through wholly owned subsidiaries, owns (i) a 50% interest in the Las
Vegas Joint Venture, which owns and operates Monte Carlo, a 3,002-room
hotel-casino complex which opened in June 1996: (ii) a 50% interest in
the Elgin Joint Venture, which owns and operates The Grand Victoria, a
riverboat casino and land-based entertainment complex in Elgin,
Illinois; and (iii) a 50% interest in the Reno Joint Venture, which
owns and operates Silver Legacy, a 1,711-room hotel-casino in Reno,
Nevada. Reference is made to the information appearing under the
caption Joint Venture Participations in Item 1 of this Report
concerning the properties owned and operated by the aforementioned
joint venture entities, which information is hereby incorporated in
this Item 2 by this reference.
ITEM 3. LEGAL PROCEEDINGS.
On April 26, 1994, a lawsuit requesting class certification,
was filed in the United States District Court for the Middle District
of Florida against 41 manufacturers, distributors and casino operators
of video poker and electronic slot machines, including the Company.
On May 10, 1994, a lawsuit requesting class certification alleging
substantially identical claims was filed by another plaintiff in the
same court against 48 defendants, including the Company. The two
lawsuits were consolidated into a single action and transferred to the
United States District Court for the District of Nevada (the Court ).
On September 26, 1995, a lawsuit requesting class certification
alleging substantially identical claims was filed by a third plaintiff
in the Court against 45 defendants, including the Company. On
February 14, 1997, the three plaintiffs filed a consolidated amended
complaint in the Court. The complaints allege that the defendants
have engaged in a course of fraudulent and misleading conduct intended
to induce persons to play video poker and electronic slot machines
based on a false belief concerning how the gaming machines operate, as
well as the extent to which there is an opportunity to win. The
complaint alleges violations of the Racketeer Influenced and Corrupt
Organizations Act, as well as claims of common law fraud, unjust
enrichment and negligent misrepresentation, and seeks unspecified
compensatory and punitive damages. The Company and other defendants
have moved to dismiss the complaint for failure to state a claim. It
is anticipated that there will be no ruling on the Company s motion to
dismiss until the summer of 1997. Management believes that the claims
against the Company are without merit and intends to defend the case
vigorously.
An amended complaint in a purported class action lawsuit was
filed on August 23, 1995 in the United States District Court for the
District of New Jersey, Camden Division, against 79 named defendants,
including the Company and other casino operators. The complaint, filed
on behalf of Thomas Hyland and other persons similarly situated,
alleged that the defendants had engaged in a course of conduct
involving conspiracy among casinos in the United States to refuse to
deal to skilled blackjack players who are capable of winning money at
the casinos blackjack tables in violation of various statutory
provisions including the Sherman Act, the Fair Credit Reporting Act
and various state antitrust and consumer fraud laws. The complaint,
which also asserted causes of action under state tort and contract
laws and sought recovery of compensatory and exemplary damages, was
dismissed and the time permitted to appeal such decision has expired.
The Company is a defendant in various other pending law
suits. In management's opinion, the ultimate outcome of such law
suits will not have a material adverse effect on the results of
operations or the financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of the Company's
security holders during the fourth quarter of the fiscal year
ended January 31, 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Price Range of Common Stock. The Company's Common
Stock is listed on the New York Stock Exchange and on the Pacific
Stock Exchange and traded under the symbol CIR. The following
table sets forth, for the fiscal quarters shown, the low and high
sale prices for the Common Stock on the New York Stock Exchange
Composite Tape.
Fiscal 1997 Low High
First Quarter......................$30.00 $37.88
Second Quarter.....................$29.88 $44.38
Third Quarter......................$30.13 $35.88
Fourth Quarter.....................$32.25 $37.25
Fiscal 1996 Low High
First Quarter......................$24.38 $33.50
Second Quarter.....................$29.25 $36.13
Third Quarter......................$24.75 $33.63
Fourth Quarter.....................$25.25 $31.88
On April 18, 1997 there were 4,180 holders of record of the
Common Stock of the Company.
Dividend Policy. The Company does not currently pay a
cash dividend, nor is one contemplated in the foreseeable future.
The Company believes that currently its stockholders are best
served by a policy of reinvestment in new high-return projects.
The Company has a policy of periodic share repurchase, as cash
flows, borrowing capacity and market conditions warrant.
ITEM 6. SELECTED FINANCIAL DATA.
Year ended January 31,
(amounts in thousands,
except share data) 1997 1996 1995 1994 1993
Operating Results(1):
Revenues(2) $1,334,250 $1,299,596 $1,170,182 $963,470 $850,941
Operating profit
before corporate
expense (3) 307,175 328,422 280,792 234,311 220,435
Pretax income 163,863 205,759 214,490 182,608 183,313
Net income before
nonrecurring
items(3) 135,774 161,645 138,244 126,918 120,983
Net income 100,733 128,898 136,286 116,189 117,322
Earnings per share
before nonrecurring
items (3)(4) $ 1.33 $1.66 $1.61 $1.46 $1.41
Earnings per share(4) $ .99 $1.33 $1.59 $1.34 $1.37
Balance Sheet Data:
Total assets $2,729,111 $2,213,503 $1,512,548 $1,297,924 $950,458
Long-term debt 1,405,897 715,214 632,652 567,345 308,092
Stockholders' equity 971,791 1,226,812 686,124 559,950 490,009
(1) Gold Strike, Nevada Landing and Railroad Pass were acquired on June 1,
1995. The Hacienda was acquired on September 1, 1995 and closed on
December 1, 1996. Circus Circus-Tunica opened in August 1994. Luxor
opened in October 1993.
(2) Revenues are net of complimentary allowances.
(3) These amounts are before extraordinary items and one-time charges in
fiscal year 1997 for the write-off of certain assets of $48,309 and
Monte Carlo preopening expenses of $5,614; in fiscal 1996 for the
write-off of certain assets of $45,148 and Silver Legacy preopening
expenses of $5,232; in fiscal 1995 for Circus Circus-Tunica preopening
expenses of $3,012; and in fiscal 1994 for Luxor and Grand Slam Canyon
preopening expenses of $16,506. In fiscal 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.
(4) Earnings per share are based on shares outstanding adjusted for a
three-for-two stock split effective July 9, 1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Incorporated herein by reference are pages 25 through 37 of
the Company's Annual Report to Stockholders for the fiscal year
ended January 31, 1997 (the "1997 Annual Report"), which pages
are included as part of Exhibit 13 to this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Incorporated herein by reference are pages 38 through 54 of
the 1997 Annual Report which pages are included as part of
Exhibit 13 to this Report.
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Year Ended January 31, 1997
(in thousands, except per share amounts)
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Revenue $352,885 $338,806 $337,990 $304,569 $1,334,250
Income from operations 81,297 24,650 71,185 45,037 222,169
Income before income tax 69,385 12,881 55,659 25,938 163,863
Net income 43,472 7,309 34,813 15,139 100,733
Earnings per share $ .42 $ .07 $ .34 $ .16 $ .99
Year Ended January 31, 1996
(in thousands, except per share amounts)
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Revenue $295,033 $326,766 $354,206 $323,591 $1,299,596
Income from operations 71,046 24,365 88,399 67,563 251,373
Income before income tax 61,367 12,885 76,187 55,320 205,759
Net income 39,400 7,281 46,584 35,633 128,898
Earnings per share $ 0.46 $ 0.08 $ 0.45 $ 0.35 $ 1.33
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information beginning immediately following the caption
"Election of Directors" to, but not including, the caption
"Management Remuneration" in the Company's Proxy Statement, to be
filed with the Securities and Exchange Commission within 120 days
after the close of the Company's fiscal year ended January 31,
1997 and forwarded to stockholders prior to the Company's 1997
Annual Meeting of Stockholders (the "1997 Proxy Statement"), is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information in the 1997 Proxy Statement beginning
immediately following the caption "Management Remuneration" to,
but not including, the caption "Report of the Compensation
Committee on Executive Compensation", is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information in the 1997 Proxy Statement beginning
immediately following the caption "Security Ownership of Certain
Beneficial Owners and Management" to, but not including, the
caption "Election of Directors", is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information in the 1997 Proxy Statement beginning
immediately following the caption "Certain Transactions" to, but
not including, the caption "Approval of Amendments to the
Company's 1989 and 1993 Stock Option Plans and 1991 Stock
Incentive Plan" and the additional information in the 1997 Proxy
Statement beginning immediately following the caption
"Compensation Committee Interlocks and Insider Participation" to,
but not including, the caption "Comparative Stock Price
Performance Graph", is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)(1) Consolidated Financial Statements:
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES Page
Consolidated Balance Sheets as of January 31, 1997 and
1996................................................... *
Consolidated Statements of Income for the three years
ended January 31, 1997................................. *
Consolidated Statements of Cash Flows for the three
years ended January 31, 1997........................... *
Consolidated Statements of Stockholders' Equity for
the three years ended January 31, 1997................. *
Notes to Consolidated Financial Statements............. *
Report of Independent Public Accountants............... *
(a)(2) Supplemental Financial Statement Schedules:
None.
* Refers to page of the Annual Report to Shareholders for the
year ended January 31, 1997, a copy of the incorporated
portions of which are included as Exhibit 13 to this Report.
(a)(3) Exhibits:
The following exhibits are filed as a part of this Report or
incorporated herein by reference:
3(i)(a). Restated Articles of Incorporation of the Company as of
July 15, 1988 and Certificate of Amendment thereto,
dated June 29, 1989. (Incorporated by reference to
Exhibit 3(a) to the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1991.)
3(i)(b). Certificate of Division of Shares into Smaller
Denominations, dated June 20, 1991. (Incorporated by
reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended January
31, 1992.)
3(i)(c). Certificate of Division of Shares into Smaller
Denominations, dated June 22, 1993. (Incorporated by
reference to Exhibit 3(i) to the Company's Current
Report on Form 8-K dated July 21, 1993.)
3(ii). Restated Bylaws of the Company dated November 30, 1996.
4(a). Rights Agreement dated as of July 14, 1994, between the
Company and First Chicago Trust Company of New York.
(Incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated August 15,
1994.)
4(b). Amendment to Rights Agreement effective as of April 16,
1996, between the Company and First Chicago Trust
Company of New York. (Incorporated by reference to
Exhibit 4(a) to the Company s Quarterly Report on
Form 10-Q for the quarterly period ended July 31,
1996.)
4(c). $1.5 Billion Loan Agreement, dated as of January 29,
1996, by and among the Company, the Banks named therein
and Bank of America National Trust and Savings
Association, as administrative agent for the Banks, and
related Subsidiary Guaranty dated as of January 29,
1996, of the Company's subsidiaries named therein.
(Incorporated by reference to Exhibit 4(a) to the
Company's Current Report on Form 8-K dated January 29,
1996.)
4(d). Amendment No. 1 to the $1.5 Billion Loan Agreement, by
and among the Company, the Banks named therein and Bank
of America National Trust and Savings Association, as
administrative agent for the Banks. (Incorporated by
reference to Exhibit 4(c) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
4(e). Amendment No. 2 to the $1.5 Billion Loan Agreement, by
and among the Company, the Banks named therein and Bank
of America National Trust and Savings Association, as
administrative agent for the Banks. (Incorporated by
reference to Exhibit 4(a) to the Company s Quarterly
Report on Form 10-Q for the period ended October 31,
1996.)
4(f). Amendment No. 3 to the $1.5 Billion Loan Agreement, by
and among the Company, the Banks named therein and Bank
of America National Trust and Savings Association, as
administrative agent for the Banks. (Incorporated by
reference to Exhibit 4(b) to the Company s Quarterly
Report on Form 10-Q for the period ended October 31,
1996.)
4(g). Amendment No. 4 to the $1.5 Billion Loan Agreement, by
and among the Company, the Banks named therein and
Wells Fargo Bank, N.A., as administrative agent.
4(h). Rate Swap Master Agreement, dated as of October 24,
1986, and Rate Swap Supplements One through Four.
(Incorporated by reference to Exhibit 4(j) to the
Company's Current Report on Form 8-K dated December 29,
1986.)
4(i). Interest Rate Swap Agreement, dated as of October 20,
1989, by and between the Company and Salomon Brothers
Holding Company Inc. (Incorporated by reference to
Exhibit 4(q) to the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1990.)
4(j). Indenture by and between the Company and First
Interstate Bank of Nevada, N.A., as Trustee with
respect to the Company's 10-5/8% Senior Subordinated
Notes due 1997. (Incorporated by reference to Exhibit
4(a) to the Company's Registration Statement (No. 33-
34439) on Form S-3.)
4(k). Indenture by and between the Company and First
Interstate Bank of Nevada, N.A., as Trustee with
respect to the Company's 6-3/4% Senior Subordinated
Notes due 2003 and its 7-5/8% Senior Subordinated
Debentures due 2013. (Incorporated by reference to
Exhibit 4(a) to the Company's Current Report on Form
8-K dated July 21, 1993.)
4(l). Indenture, dated February 1, 1996, by and between the
Company and First Interstate Bank of Nevada, N.A., as
Trustee. (Incorporated by reference to Exhibit 4(b) to
the Company's Current Report on Form 8-K dated
January 29, 1996.)
4(m). Supplemental Indenture, dated February 1, 1996, by and
between the Company and First Interstate Bank of
Nevada, N.A., as Trustee, with respect to the Company's
6.45% Senior Notes due February 1, 2006. (Incorporated
by reference to Exhibit 4(c) to the Company's Current
Report on Form 8-K dated January 29, 1996.)
4(n). 6.45% Senior Notes due February 1, 2006 in the
principal amount of $200,000,000. (Incorporated by
reference to Exhibit 4(d) to the Company's Current
Report on Form 8-K dated January 29, 1996.)
4(o). Supplemental Indenture, dated as of November 15, 1996,
to an indenture dated February 1, 1996, by and between
the Company and Wells Fargo Bank (Colorado), N.A., as
Trustee, with respect to the Company s 6.70% Senior
Notes due November 15, 2096. (Incorporated by
reference to Exhibit 4(c) to the Company s Quarterly
Report on Form 10-Q for the quarterly period ended
October 31, 1996.)
4(p). 6.70% Senior Notes due February 15, 2096 in the
principal amount of $150,000,000. (Incorporated by
reference to Exhibit 4(d) to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended
October 31, 1996.)
4(q). Indenture, dated November 15, 1996, by and between the
Company and Wells Fargo Bank (Colorado), N.A., as
Trustee. (Incorporated by reference to Exhibit 4(e) to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended October 31, 1996.)
4(r). Supplemental Indenture, dated as of November 15, 1996,
to an indenture dated November 15, 1996, by and between
the Company and Wells Fargo Bank (Colorado), N.A., as
Trustee, with respect to the Company s 7.0% Senior
Notes due November 15, 2036. (Incorporated by
reference to Exhibit 4(f) to the Company s Quarterly
Report on Form 10-Q for the quarterly period ended
October 31, 1996.)
4(s). 7.0% Senior Notes due February 15, 2036, in the
principal amount of $150,000,000. (Incorporated by
reference to Exhibit 4(g) to the Company s Quarterly
Report on Form 10-Q for the quarterly period ended
October 31, 1996.)
10(a).* 1983 Nonqualified Stock Option Plan of the Company.
(Incorporated by reference to Exhibit 10(d) to the
Company's Registration Statement (No. 2-85794) on
Form S-1.)
10(b).* 1983 Incentive Stock Option Plan of the Company.
(Incorporated by reference to Exhibit 10(e) to the
Company's Registration Statement (No. 2-85794) on
Form S-1.)
10(c).* Amendment to Circus Circus Enterprises, Inc. 1983
Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 4(a) to the Company's Registration
Statement (No. 2-91950) on Form S-8.)
10(d).* Amended and Restated 1989 Stock Option Plan of the
Company, dated April 25, 1997.
10(e).* Stock Purchase Warrant Plan. (Incorporated by
reference to Exhibit 4(a) to the Company's Registration
Statement (No. 33-29014) on Form S-8.)
10(f).* Amended and Restated 1991 Stock Incentive Plan of the
Company, dated April 25, 1997.
10(g).* Amended and Restated 1993 Stock Option Plan of the
Company, dated April 25, 1997.
10(h).* 1995 Special Stock Option Plan and Forms of
Nonqualified Stock Option Certificate and Agreement.
(Incorporated by reference to Exhibit 10(gg) to the
Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1995.)
10(i).* Circus Circus Enterprises, Inc. Executive Compensation
Insurance Plan. (Incorporated by reference to Exhibit
10(i) to the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1992.)
10(j). Lease, dated November 1, 1957, by and between Bethel
Palma and others, as lessor, and the Company's
predecessor in interest, as lessee; Amendment of Lease,
dated May 6, 1983. (Incorporated by reference to
Exhibit 10(g) to the Company's Registration Statement
(No. 2-85794) on Form S-1.)
10(k). Grant, Bargain and Sale Deed to the Company pursuant to
the Lease dated November 1, 1957. (Incorporated by
reference to Exhibit 10(h) to the Company's Annual
Report on Form 10-K for the fiscal year ended January
31, 1984.)
10(l). Lease, dated August 3, 1977, by and between B&D
Properties, Inc., as lessor, and the Company, as
lessee; Amendment of Lease, dated May 6, 1983.
(Incorporated by reference to Exhibit 10(h) to the
Company's Registration Statement (No. 2-85794) on Form
S-1.)
10(m). Tenth Amendment and Restatement of the Circus Circus
Employees' Profit Sharing and Investment Plan.
(Incorporated by reference to Exhibit 4(e) to Post
Effective Amendment No. 7 to the Company's Registration
Statement (No. 33-18278) on Form S-8.)
10(n). Fifth Amendment and Restatement to Circus Circus
Employees' Profit Sharing and Investment Trust.
(Incorporated by reference to Exhibit 4(h) to Post
Effective Amendment No. 7 to the Company's Registration
Statement (No. 33-18278) on Form S-8.)
10(o).* Retirement Plan for Outside Directors (Incorporated by
reference to Exhibit 10(ii) to the Company's Annual
Report on Form 10-K for the fiscal year ended January
31, 1995).
10(p). Group Annuity Contract No. GA70867 between Philadelphia
Life (formerly Bankers Life Company) and Trustees of
Circus Circus Employees' Profit Sharing and Investment
Plan. (Incorporated by reference to Exhibit 4(c) to
the Company's Registration Statement (No. 33-1459) on
Form S-8.)
10(q). Lease, dated as of November 1, 1981, between Novus
Property Company, as landlord, and the Company, as
tenant. (Incorporated by reference to Exhibit 4(h) to
the Company's Registration Statement (No. 2-85794) on
Form S-1.)
10(r). First Addendum and First Amendment, each dated as of
June 15, 1983, to Lease dated as of November 1, 1981.
(Incorporated by reference to Exhibit 4(i) to the
Company's Annual Report on Form 10-K for the year ended
January 31, 1984.)
10(s). Second Amendment, dated as of April 1, 1984, to Lease
dated as of November l, 1981. (Incorporated by
reference to Exhibit 10(o) to the Company's
Registration Statement (No. 33-4475) on Form S-1.)
10(t). Lease by and between Robert Lewis Uccelli, guardian, as
lessor, and Nevada Greens, a limited partnership,
William N. Pennington, as trustee, and William G.
Bennett, as trustee, and related Assignment of Lease.
(Incorporated by reference to Exhibit 10(p) to the
Company's Registration Statement (No. 33-4475) on
Form S-1.)
10(u). Agreement of Purchase, dated March 15, 1985, by and
between Denio Brothers Trucking Company, as seller, and
the Company, as buyer, and related lease by and between
Denio Brothers Trucking Co., as lessor, and Nevada
Greens, a limited partnership, William N. Pennington,
as trustee, and William G. Bennett, as trustee, and
related Assignment of Lease. (Incorporated by
reference to Exhibit 10(q) to the Company's
Registration Statement (No. 33-4475) on Form S-1.)
10(v). Agreement of Joint Venture, dated as of March 1, 1994,
by and among Eldorado Limited Liability Company,
Galleon, Inc., and the Company. (Incorporated by
reference to Exhibit 10(y) to the Company's Annual
Report on Form 10-K for the fiscal year ended January
31, 1994.)
10(w). Amended and Restated Credit Agreement, dated as of
September 9, 1996, by and among Circus and Eldorado
Joint Venture, the Banks named therein and Wells Fargo
Bank, N.A., as Arranger and Administrative Agent, and
the related Note, Amended and Restated Make-Well
Agreement, Amended and Restated Deed of Trust and
Subordination and Debt Put Agreement. (Incorporated by
reference to Exhibit 10(b)to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended
July 31, 1996.)
<PAGE>
10(x). Amendment No.1 to the Amended and Restated Credit
Agreement of Circus and Eldorado Joint Venture, dated
April 4, 1997 and related Amendment No. 1 to the
Amended and Restated Deed of Trust.
10(y). Purchase and Sale Agreement, dated January 10, 1995, by
and between Hacienda Hotel, Inc. and William G. Bennett
of the Hacienda Hotel and Casino, and the related
Assignment and Consent to Assignment to the Company,
dated March 5, 1995. (Incorporated by reference to
Exhibit 10(dd) to the Company's Annual Report on Form
10-K for the fiscal year ended January 31, 1995.)
10(z). Agreement and Plan of Merger, dated March 19, 1995, by
and among the Company and M.S.E. Investments,
Incorporated, Last Chance Investments, Incorporated,
Gold Strike Investments, Incorporated, Diamond Gold,
Inc., Gold Strike Aviation, Incorporated, Gold Strike
Finance Company, Inc., Oasis Development Company, Inc.,
Michael S. Ensign, William A. Richardson, David R.
Belding, Peter A. Simon II and Robert J. Verchota.
(Incorporated by reference to Exhibit 10(ee) to the
Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1995.)
10(aa). First Amendment to Agreement and Plan of Merger, dated
May 30, 1995, by and among the Company and M.S.E.
Investments, Incorporated, Last Chance Investments,
Incorporated, Goldstrike Investments, Incorporated,
Diamond Gold, Inc., Gold Strike Aviation, Incorporated,
Goldstrike Finance Company, Inc., Oasis Development
Company, Inc., Michael S. Ensign, William A.
Richardson, David R. Belding, Peter A. Simon II and
Robert J. Verchota. (Incorporated by reference to
Exhibit 99.2 of the Schedule 13D of Michael S. Ensign
relating to the Company's Common Stock, filed on
June 12, 1995.)
10(bb). Exchange Agreement, dated March 19, 1995, by and among
the Company and New Way, Inc., a wholly owned
subsidiary of the Company, Glenn W. Schaeffer, Gregg H.
Solomon, Antonio C. Alamo, Anthony Korfman and William
Ensign. (Incorporated by reference to Exhibit 10(ff) to
the Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1995.)
10(cc). First Amendment to Exchange Agreement, dated May 30,
1995, by and among the Company and New Way, Inc., a
wholly owned subsidiary of the Registrant, Glenn W.
Schaeffer, Gregg H. Solomon, Antonio C. Alamo, Anthony
Korfman and William Ensign. (Incorporated by reference
to Exhibit 10(d) to the Company's Current Report on
Form 8-K dated June 1, 1995.)
10(dd). Registration Rights Agreement, dated as of June 1,
1995, by and among the Company and Michael S. Ensign,
William A. Richardson, David R. Belding, Peter A. Simon
II, Glenn W. Schaeffer, Gregg H. Solomon, Antonio C.
Alamo, Anthony Korfman, William Ensign and Robert J.
Verchota. (Incorporated by reference to Exhibit 99.5
of the Schedule 13D of Michael S. Ensign, relating to
the Company's Common Stock, filed on June 12, 1995.)
10(ee). Standstill Agreement, dated as of June 1, 1995, by and
among the Company and Michael S. Ensign, William A.
Richardson, David R. Belding, Peter A. Simon II and
Glenn W. Schaeffer. (Incorporated by reference to
Exhibit 99.4 of the Schedule 13D of Michael S. Ensign,
relating to the Company's Common Stock, filed on
June 12, 1995.)
10(ff). Amendment No. 1 to Standstill Agreement, effective
April 16, 1996, by and among the Company and Michael S.
Ensign, William A. Richardson, David R. Belding, Peter
A. Simon II and Glenn W. Schaeffer. (Incorporated by
reference to Exhibit 99.7 of Amendment No. 2 to the
Schedule 13D of Michael S. Ensign, relating to the
Company s Common Stock, filed on September 5, 1996.)
10(gg).* Executive Officer Annual Bonus Plan. (Incorporated by
reference to Exhibit 10(hh) to the Company's Annual
Report on Form 10-K for the fiscal year ended January
31, 1995.)
10(hh).* Employment Agreement dated June 1, 1995, by and between
the Company and Clyde Turner. (Incorporated by
reference to Exhibit 10(i) to the Company's Current
Report on Form 8-K dated June 1, 1995.)
10(ii).* Employment Agreement dated June 1, 1995, by and between
the Company and Michael S. Ensign. (Incorporated by
reference to Exhibit 99.3 of the Schedule 13D of
Michael S. Ensign, relating to the Company's Common
Stock, filed on June 12, 1995.)
10(jj).* Employment Agreement dated June 1, 1995, by and between
the Company and Glenn W. Schaeffer. (Incorporated by
reference to Exhibit 10(k) to the Company's Current
Report on Form 8-K dated June 1, 1995.)
10(kk).* Employment Agreement dated June 1, 1995, by and between
the Company and William A. Richardson. (Incorporated
by reference to Exhibit 99.3 of the Schedule 13D of
William R. Richardson, relating to the Company's Common
Stock, filed on June 12, 1995.)
10(ll).* Employment Agreement dated June 1, 1995, by and between
the Company and Mike H. Sloan. (Incorporated by
reference to Exhibit 10(m) to the Company's Current
Report on Form 8-K dated June 1, 1995.)
10(mm).* Employment Agreement dated June 1, 1995, by and between
the Company and Kurt D. Sullivan. (Incorporated by
reference to Exhibit 10(n) to the Company's Current
Report on Form 8-K dated June 1, 1995.)
10(nn).* Employment Agreement dated June 1, 1995, by and between
the Company and Antonio C. Alamo. (Incorporated by
reference to Exhibit 10(oo) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
10(oo).* Employment Agreement dated June 1, 1995, by and between
the Company and Gregg H. Solomon. (Incorporated by
reference to Exhibit 10(pp) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
10(pp).* Employment Agreement dated June 1, 1995, by and between
the Company and Daniel N. Copp. (Incorporated by
reference to Exhibit 10(qq) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
10(qq).* Agreement dated April 15, 1996, by and between the
Company and Daniel N. Copp. (Incorporated by reference
to Exhibit 10(rr) to the Company s Annual Report on
Form 10-K for the fiscal year ended January 31, 1996.)
10(rr). Joint Venture Agreement, dated as of December 18, 1992,
between Nevada Landing Partnership and RBG, L.P.
(Incorporated by reference to Exhibit 10(g) to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended July 31, 1995.)
10(ss). Amendment dated July 15, 1993 to the Joint Venture
Agreement between Nevada Landing Partnership and RBG,
L.P. (Incorporated by reference to Exhibit 10(h) to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended July 31, 1995.)
10(tt). Amendment dated October 6, 1994 to the Joint Venture
Agreement between Nevada Landing Partnership and RBG,
L.P. (Incorporated by reference to Exhibit 10(i) to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended July 31, 1995.)
10(uu). Amendment dated June 1, 1995 to the Joint Venture
Agreement between Nevada Landing Partnership and RBG,
L.P. (Incorporated by reference to Exhibit 10(j) to
the Company's Quarterly Report on Form 10-Q for the
quarterly period ended July 31, 1995.)
10(vv). Amendment dated February 28, 1996 to the Joint Venture
Agreement between Nevada Landing Partnership and RBG,
L.P. (Incorporated by reference to Exhibit 10(ww) to
the Company s Annual Report on Form 10-K for the fiscal
year ended January 31, 1996.)
10(ww). Reducing Revolving Loan Agreement, dated as of
December 21, 1994, among Victoria Partners, each bank
party thereto, The Long-Term Credit Bank of Japan,
Ltd., Los Angeles Agency, and Societe Generale, as Co-
agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (without Schedules
or Exhibits) (the "Victoria Partners Loan Agreement").
(Incorporated by reference to Exhibit 99.2 to Amendment
No. 1 on Form 8-K/A to the Current Report on Form 8-K
dated December 9, 1994 of Mirage Resorts, Incorporated.
Commission File No. 1-6697.) (Incorporated by
reference to Exhibit 10 (ww) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
10(xx). Amendment No. 1 to the Victoria Partners Loan
Agreement, dated as of January 31, 1995. (Incorporated
by reference to Exhibit 10(uu) to the Annual Report on
Form 10-K for the year ended December 31, 1994 of
Mirage Resorts Incorporated. Commission File No. 1-
6697.)
10(yy). Amendment No. 2 to the Victoria Partners Loan
Agreement, dated as of June 30, 1995. (Incorporated by
reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1995
of Mirage Resorts, Incorporated. Commission File No.
1-6697.)
10(zz). Amendment No. 3 to the Victoria Partners Loan
Agreement, dated as of July 28, 1995. (Incorporated by
reference to Exhibit 10.3 to the Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1995
of Mirage Resorts, Incorporated. Commission File No.
1-6697.)
10(aaa). Amendment No. 4 to the Victoria Partners Loan
Agreement, dated as of October 16, 1995. (Incorporated
by reference to Exhibit 10(a) to the Company's
Quarterly Report on Form 10-Q for the quarterly period
ended October 31, 1995.)
10(bbb). Amendment No. 5 to the Victoria Partners Loan Agreement
dated as of August 1, 1996. (Incorporated by reference
to Exhibit 10(a) to the Company s Quarterly Report on
Form 10-Q for the quarterly period ended July 31,
1996.)
10(ccc). Amendment No.6 to the Victoria Partners Loan Agreement,
dated as of April 12, 1997.
10(ddd). Joint Venture Agreement, dated as of December 9, 1994,
between MRGS Corp. and Gold Strike L.V. (without
Exhibit) (the "Victoria Partners Venture Agreement").
(Incorporated by reference to Exhibit 99.1 to the
Current Report on Form 8-K dated December 9, 1994 of
Mirage Resorts, Incorporated. Commission File No.
1-6697.)
10(eee). Amendment No. 1 to the Victoria Partners Venture
Agreement dated as of April 17, 1995. (Incorporated by
reference to Exhibit 10(c) to the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1995
of Mirage Resorts, Incorporated. Commission File No.
1-6697.)
10(fff). Amendment No. 2 to the Victoria Partners Venture
Agreement dated as of September 25, 1995.
(Incorporated by reference to Exhibit 10.4 to the
Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1995 of Mirage Resorts
Incorporated. Commission File No. 1-6697.)
10(ggg). Amendment No. 3 to the Victoria Partners Venture
Agreement dated as of February 28, 1996. (Incorporated
by reference to Exhibit 10(fff) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
10(hhh). Amendment No. 4 to the Victoria Partners Venture
Agreement dated as of May 29, 1996. (Incorporated by
reference to Exhibit 10(b) to the Company s Quarterly
Report on Form 10-Q for the quarterly period ended
April 30, 1996.)
10(iii). Consulting Agreement, dated June 1, 1995, between
Circus Circus Casinos, Inc. (a subsidiary of the
Company) and Lakeview Company. (Incorporated by
reference to Exhibit 10(ggg) to the Company s Annual
Report on Form 10-K for the fiscal year ended
January 31, 1996.)
10(jjj). Agreement, dated May 30, 1996, with Mirage Resorts,
Incorporated regarding the development of certain
property in Atlantic City, New Jersey. (Incorporated by
reference to Exhibit 10(a) to the Company s Quarterly
Report on Form 10-Q for the quarterly period ended
April 30, 1996.)
10(kkk). Stock Transfer Agreement, dated January 23, 1997, by
and between the Company, Windsor Casino Limited,
Windsor Casino Supplies Limited and Windsor Casino
Financial Limited and Caesars World, Inc., Conrad
International Investment Corporation and Hilton Hotels
Corporation.
10(lll).* Description of Consulting Plan adopted June 21, 1996.
13. Portions of the Annual Report to Stockholders for the
Year Ended January 31, 1997 specifically incorporated
by reference as part of this Report.
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP. (See page 57.)
27. Financial Data Schedule for the year ended January 31,
1997 as required under EDGAR.
_____________
* This exhibit is a management contract or compensatory plan
or arrangement required to be filed as an exhibit to this
Report.
Certain instruments with respect to long-term debt have not
been filed hereunder or incorporated by reference herein where
the total amount of such debt thereunder does not exceed 10% of
the consolidated total assets of the Company. Copies of such
instruments will be furnished to the Securities and Exchange
Commission upon request.
(b) During the fourth quarter of the fiscal year ended
January 31, 1997, the Company filed no Current Report on Form
8-K.
(c) The exhibits required by Item 601 of Regulation S-K
filed as part of this Report or incorporated herein by reference
are listed in Item 14(a)(3) above, and the exhibits filed
herewith are listed on the Index to Exhibits which accompanies
this Report.
(d) See Item 14(a)(2) of this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CIRCUS CIRCUS ENTERPRISES, INC.
Dated: April 30, 1997 By: Clyde T. Turner
Clyde T. Turner, Chairman
of the Board
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
Clyde T. Turner Chairman of the Board April 30, 1997
Clyde T. Turner and Chief Executive
Officer (Principal
Executive Officer)
Michael S. Ensign Vice Chairman of the April 30, 1997
Michael S. Ensign Board and Chief Operating
Officer
William A. Richardson Executive Vice President April 30, 1997
William A. Richardson and Director
Glenn Schaeffer President, Chief April 30, 1997
Glenn Schaeffer Financial Officer,
Treasurer and Director
(Principal Financial
Officer)
Les Martin Controller (Principal April 30, 1997
Les Martin Accounting Officer)
Richard P. Banis Director April 30, 1997
Richard P. Banis
Arthur H. Bilger Director April 30, 1997
Arthur H. Bilger
Richard A. Etter Director April 30, 1997
Richard A. Etter
Michael D. McKee Director April 30, 1997
Michael D. McKee
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 26, 1997 included (or
incorporated by reference) in Circus Circus Enterprises, Inc.'s
Annual Report on Form 10-K for the year ended January 31, 1997,
into the Company's previously filed Form S-8 Registration
Statements File Nos. 2-91950, 2-93578, 33-18278, 33-29014, 33-
39215, 33-56420 and 33-53303 and to the Company's previously
filed Form S-3 Registration Statements File Nos. 33-65359 and
333-16327.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
April 29, 1997
INDEX TO EXHIBITS
FORM 10-K
Fiscal Year Ended
January 31, 1997
Exhibit
Number
3(ii). Restated Bylaws of the Company dated November 30, 1996.
4(g). Amendment No. 4 to the $1.5 Billion Loan Agreement, by
and among the Company, the Banks named therein and
Wells Fargo Bank, N.A., as administrative agent.
10(d).* Amended and Restated 1989 Stock Option Plan of the
Company, dated April 25, 1997.
10(f).* Amended and Restated 1991 Stock Incentive Plan of the
Company, dated April 25, 1997.
10(g).* Amended and Restated 1993 Stock Option Plan of the
Company, dated April 25, 1997.
10(x). Amendment No.1 to the Amended and Restated Credit
Agreement of Circus and Eldorado Joint Venture, dated
April 4, 1997 and related Amendment No. 1 to the
Amended and Restated Deed of Trust.
10(ccc). Amendment No.6 to the Victoria Partners Loan Agreement,
dated as of April 12, 1997.
10(kkk). Stock Transfer Agreement, dated January 23, 1997, by
and between the Company, Windsor Casino Limited,
Windsor Casino Supplies Limited and Windsor Casino
Financial Limited and Caesars World, Inc., Conrad
International Investment Corporation and Hilton Hotels
Corporation.
10(lll).* Description of Consulting Plan adopted June 21, 1996.
13. Portions of the Annual Report to Stockholders for
the Year Ended January 31, 1997 specifically
incorporated by reference as part of this Report.
21. Subsidiaries of the Company.
23. Consent of Arthur Andersen LLP.
27. Financial Data Schedule for the year ended January 31,
1997 as required under EDGAR.
EXHIBIT 3(ii)
AMENDED AND RESTATED BY-LAWS OF
CIRCUS CIRCUS ENTERPRISES, INC.
Effective November 30, 1996
(A Nevada Corporation)
ARTICLE I
Offices
SECTION 1.1. Principal Office. The principal office of the
corporation in the State of Nevada is 2880 Las Vegas Boulevard
South, Las Vegas, Clark County, Nevada 89109.
SECTION 1.2. Other Offices. The corporation may also have
offices at such other places both within and without the State of
Nevada as the Board of Directors may from time to time determine or
the business of the corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.1. Place of Meeting. All meetings of stockholders
shall be held at such place, either within or without the State of
Nevada, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
SECTION 2.2. Annual Meetings. The annual meeting of
stockholders shall be held at such date and time as shall be
designated from time to time by the Board of Directors and stated
in the notice of the meeting.
SECTION 2.3. Voting List. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours,
for a period of at least ten days prior to the meeting, either at
a place within the city where the meeting is to be held, which
place shall be specified in the notice, or if not so specified, at
the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 2.4. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the Articles of Incorporation of the
corporation, as amended (the Articles of Incorporation ), may be
called by the Chairman of the Board, the President or by the Board
of Directors or by written order of a majority of the directors and
shall be called by the Chairman of the Board, the President or the
Secretary at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation
issued and outstanding and entitled to vote. Such request shall
state the purposes of the proposed meeting. The officers or
directors shall fix the time and any place, either within or
without the State of Nevada, as the place for holding such meeting.
SECTION 2.5. Notice of Meeting. Written notice of the
annual and each special meeting of stockholders, stating the date,
time, place and purpose or purposes thereof, shall be given to each
stockholder entitled to vote thereat, not less than 10 nor more
than 60 days before the meeting. The President, a Vice President,
the Secretary, an assistant Secretary or any other person
designated by the Board of Directors shall sign and deliver such
written notice. The written certificate of the individual signing
a notice of meeting, setting forth the substance of the notice or
having a copy thereof attached, the date the notice was mailed or
personally delivered to the stockholders and the addresses to which
the notice was mailed, shall be prima facie evidence of the manner
and fact of giving such notice.
SECTION 2.6. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at any
meeting of stockholders for the transaction of business except when
stockholders are required to vote by class, in which event a
majority of the issued and outstanding shares of the appropriate
class shall be present in person or by proxy, and except as
otherwise provided by statute or by the Articles of Incorporation.
Notwithstanding any other provision of the Articles of
Incorporation or these by-laws, the holders of a majority of the
shares of capital stock entitled to vote thereat, present in person
or represented by proxy, whether or not a quorum is present, shall
have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present or represented. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the
meeting. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might
have been transacted at the meeting as originally notified.
SECTION 2.7. Voting. When a quorum is present at any
meeting of the stockholders, the vote of the holders of a majority
of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the
statutes, of the Articles of Incorporation or of these by-laws, a
different vote is required, in which case such express provision
shall govern and control the decision of such question. Every
stockholder having the right to vote shall be entitled to vote in
person, or by proxy appointed by an instrument in writing
subscribed by such stockholder, and filed with the Secretary of the
corporation before, or at the time of, the meeting. Provided,
however, no such proxy shall be valid after the expiration of six
months from the date of its execution, unless coupled with an
interest, or unless the person executing it specifies therein the
length of time for which it is to continue in force, which in no
case shall exceed seven years from the date of its execution. If
such instrument shall designate two or more persons to act as
proxies, unless such instrument shall provide the contrary, a
majority of such persons present at any meeting at which their
powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or
if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on
any particular issue, each proxy so attending shall be entitled to
exercise such powers in respect of the same portion of the shares
as he is of the proxies representing such shares. Unless required
by statute or determined by the Chairman of the meeting to be
advisable, the vote on any question need not be by written ballot.
SECTION 2.8. Consent of Stockholders. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be
taken for or in connection with any corporate action by any
provision of the statutes, the meeting and vote of stockholders may
be dispensed with if all the stockholders who would have been
entitled to vote upon the action if such meeting were held shall
consent in writing to such corporate action being taken; or if the
Articles of Incorporation authorize the action to be taken with the
written consent of the holders of less than all the stock who would
have been entitled to vote upon the action if a meeting were held,
then on the written consent of the stockholders having not less
than such percentage of the number of votes as may be authorized in
the Articles of Incorporation; provided that in no case shall the
written consent be by the holders of stock having less than the
minimum percentage of the vote required by statutes for the
proposed corporate action, and provided that prompt notice must be
given to all stockholders of the taking of corporate action without
a meeting and less than unanimous written consent.
SECTION 2.9. Voting of Stock of Certain Holders. Shares
standing in the name of another corporation, domestic or foreign,
may be voted by such officer, agent or proxy as the by-laws of such
corporation may prescribe, or in the absence of such provision, as
the Board of Directors of such corporation may determine. Shares
standing in the name of a deceased person may be voted by the
executor or administrator of such deceased person, either in person
or by proxy. Shares standing in the name of a guardian,
conservator or trustee may be voted by such fiduciary, either in
person or by proxy, but no such fiduciary shall be entitled to vote
shares held in such fiduciary capacity without a transfer of such
shares into the name of such fiduciary. Shares standing in the
name of a receiver may be voted by such receiver. A stockholder
whose shares are pledged shall be entitled to vote such shares,
unless in the transfer by the pledgor on the books of the
corporation, he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may
represent the stock and vote thereon.
SECTION 2.10. Treasury Stock. The corporation shall not
vote, directly or indirectly, shares of its own stock owned by it;
and such shares shall not be counted in determining the total
number of outstanding shares.
SECTION 2.11. Fixing Record Date. The Board of Directors may
fix in advance a date, not exceeding 60 nor less than 10 days
preceding the date of any meeting of stockholders, or the date for
payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in
connection with obtaining a consent, as a record date for the
determination of the stockholders entitled to notice of, and to
vote at any such meeting and any adjournment thereof, or entitled
to receive payment of any such dividend or distribution, or to
receive any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders
and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of and to vote
at any such meeting and any adjournment thereof, or to receive
payment of such dividend or distribution, or to receive such
allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any
stock on the books of the corporation after any such record date
fixed as aforesaid.
ARTICLE III
Board of Directors
SECTION 3.1. Powers. The business and affairs of the
corporation shall be managed by its Board of Directors, which may
exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute or by the Articles of
Incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
SECTION 3.2. Number, Election and Term. The directors shall
be elected at the annual meeting of stockholders, except as
provided in Section 3.3, and each director elected shall hold
office until his successor shall be elected and shall qualify. The
total number of directors, which shall be established from time to
time by resolution of the Board of Directors, shall not be fewer
than six (6) nor more than eleven (11). Directors need not be
residents of Nevada or stockholders of the corporation. Commencing
with the election of directors at the annual meeting of
stockholders in 1991, the directors shall be classified with
respect to the time for which they shall hold their offices by
dividing them into three classes, to be known as Class I, Class II
and Class III. At the annual meeting of the stockholders in 1991,
directors of Class I shall be elected for terms of one (l) year,
directors of Class II shall be elected for terms of two (2) years,
and directors of Class III shall be elected for terms of three (3)
years. At each annual meeting of stockholders after 1991,
successors to the directors of the Class whose term of office
expires in that year shall be elected to hold office until the
third succeeding annual meeting of stockholders, so that the term
of office of only one Class of directors shall expire in each year.
The number of directors in Class, which shall be such that at least
one-fourth in number of the directors are elected annually, shall
be established from time to time by resolution of the Board as may
be appropriate whenever the total number of directors is increased
or decreased.
SECTION 3.3. Vacancies, Additional Directors and Removal
from Office. If any vacancy occurs in the Board of Directors
caused by death, resignation, retirement, disqualification or
removal from office of any director, or otherwise, or if any new
directorship is created by an increase in the authorized number of
directors, a majority of the directors then in office, though less
than a quorum, or a sole remaining director, may choose a successor
director or a director to fill the newly created directorship, as
the case may be; and a director so chosen shall hold office until
the next annual meeting of stockholders at which the directors of
the Class in which such director serves are to be elected and until
his successor shall be duly elected and shall qualify, unless such
director is sooner displaced. Any director may be removed either
for or without cause at any special meeting of stockholders duly
called and held for such purpose.
SECTION 3.4. Regular Meetings. A regular meeting of the
Board of Directors shall be held each year, without other notice
than this by-law, at the place of, and immediately following, the
annual meeting of stockholders; and other regular meetings of the
Board of Directors shall be held during each year, at such time and
place as the Board of Directors may from time to time provide by
resolution, either within or without the State of Nevada, without
other notice than such resolution.
SECTION 3.5. Special Meetings. A special meeting of the
Board of Directors may be called by the Chairman of the Board or by
the President and shall be called by the Secretary on the written
request of any two directors. The Chairman of the Board or
President so calling, or the directors so requesting, any such
meeting shall fix the time and any place, either within or without
the State of Nevada, as the place for holding such meeting.
SECTION 3.6. Notice of Special Meetings. Written notice of
special meetings of the Board of Directors shall be given to each
director at least 48 hours prior to the time of such meeting. Any
director may waive notice of any meeting. The attendance of a
director at any meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting solely for the
purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any special meeting of the
Board of Directors need be specified in the notice or waiver of
notice of such meeting, except that notice shall be given of any
proposed amendment to the by-laws if it is to be adopted at any
special meeting or with respect to any other matter where notice is
required by statute.
SECTION 3.7. Quorum. A majority of the Board of Directors
shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Articles of Incorporation
or by these by-laws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
SECTION 3.8. Action Without Meeting. Unless otherwise
restricted by the Articles of Incorporation or these by-laws, any
action required or permitted to be taken at any meeting of the
Board of Directors, or of any committee thereof as provided in
Article IV of these by-laws, may be taken without a meeting, if a
written consent thereto is signed by all members of the Board or of
such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 3.9. Meeting by Telephone. Any action required or
permitted to be taken by the Board of Directors or any committee
thereof may be taken by means of a meeting by conference telephone
network or similar communications method so long as all persons
participating in the meeting can hear each other. Any person
participating in such meeting shall be deemed to be present in
person at such meeting.
SECTION 3.10. Compensation. Except as otherwise provided in
this Section 3.10, directors, as such, shall not be entitled to any
compensation for their services unless voted by the stockholders;
but by resolution of the Board of Directors, there may be allowed
(a) to outside directors, as that term is defined in Section 4.2
of these by-laws, a stated salary and/or a fixed sum for each
regular or special meeting of the Board of Directors or any meeting
of a committee of directors attended, and (b) to all directors,
expenses of attendance, if any, for each regular or special meeting
of the Board of Directors or any meeting of a committee of
directors attended. No provision of these by-laws shall be
construed to preclude any director from serving the corporation in
any other capacity and receiving compensation therefor.
ARTICLE IV
Committees of Directors
SECTION 4.1. Executive Committee. The Executive Committee
of the Board of Directors (the Executive Committee ) shall consist
of not less than two directors to be designated by the Board of
Directors annually at its first regular meeting held pursuant to
Section 3.4 of these by-laws after the annual meeting of
stockholders or as soon thereafter as conveniently possible. None
of the members of the Executive Committee need be officers of the
corporation. The Executive Committee shall have and may exercise
all of the powers of the Board of Directors during the period
between meetings of the Board of Directors except as reserved to
the Board of Directors or as delegated by these by-laws or by the
Board of Directors to another standing or special committee or as
may be prohibited by law and, except further, that the Executive
Committee shall not have the power to elect officers of the
corporation.
SECTION 4.2. Audit Committee. The Audit Committee of the
Board of Directors (the Audit Committee ) shall consist solely of
directors, one or more, each of whom shall be an outside director
of the corporation, to be designated annually by the Board of
Directors at its first regular meeting held pursuant to Section 3.4
of these by-laws after the annual meeting of stockholders or as
soon thereafter as conveniently possible. The term outside
director, as used in this Section 4.2, shall mean a director of the
corporation who is independent of management, not an officer,
employee, consultant, agent or affiliate (except as a director) of
the corporation and who is free of any relationship that, in the
opinion of the Board of Directors, would interfere with the
designated director s exercise of independent judgment as a member
of the Audit Committee. The Audit Committee shall have and may
exercise all of the powers of the Board of Directors during the
period between meetings of the Board of Directors, except as may be
prohibited by law, with respect to (i) the selection and
recommendation for employment by the corporation, subject to
approval by the Board of Directors and the stockholders, of a firm
of certified public accountants whose duty it shall be to audit the
books and accounts of the corporation and its subsidiaries for the
fiscal year in which they are appointed and who shall report to the
Audit Committee, provided, that in selecting and recommending for
employment any firm of certified public accountants, the Audit
Committee shall make a thorough investigation to insure the
independence of such accountants as defined in the applicable
rules and regulations of the Securities and Exchange Commission;
(ii) instructing the certified public accountants to expand the
scope and extent of the annual audits of the corporation into areas
of any concern to the Audit Committee, which may be beyond that
necessary for the certified public accountants to report on the
financial statements of the corporation, and, at its discretion,
directing other special investigations to insure the objectivity of
the financial reporting of the corporation; (iii) reviewing the
reports submitted by the certified public accountants, conferring
with the auditors and reporting thereon to the Board of Directors
with such recommendations as the Audit Committee may deem
appropriate; (iv) meeting with the corporation s principal
accounting and financial officers, the certified public accountants
and auditors, and other officers or department managers of the
corporation as the Audit Committee shall deem necessary in order to
determine the adequacy of the corporation s accounting principles
and financial and operating policies, controls and practices, its
public financial reporting policies and practices, and the results
of the corporation s annual audit; (v) conducting inquiries into
any of the foregoing,.the underlying and related facts, including
such matters as the conduct of the personnel of the corporation,
the integrity of the records of the corporation, the adequacy of
the procedures and the legal and financial consequences of such
facts; and (vi) retaining and deploying such professional
assistance, including outside counsel and auditors and any others,
as the Audit Committee shall deem necessary or appropriate, in
connection with the exercise of its powers on such terms as the
Audit Committee shall deem necessary or appropriate to protect the
interests of the stockholders of the corporation.
SECTION 4.3. Other Committees. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate
one or more additional special or standing committees other than
the Executive Committee and Audit Committee, each such additional
committee to consist of one or more of the directors of the
corporation. Each such committee shall have and may exercise such
of the powers of the Board of Directors in the management of the
business and affairs of the corporation as may be provided in such
resolution, except as delegated by these by-laws or by the Board of
Directors to another standing or special committee or as may be
prohibited by law.
SECTION 4.4. Committee Operations. A majority of a
committee shall constitute a quorum for the transaction of any
committee business. Such committee or committees shall have such
name or names and such limitations of authority as provided in
these by-laws or as may be determined from time to time by
resolution adopted by the Board of Directors. The corporation
shall pay all expenses of committee operations. The Board of
Directors may designate one or more appropriate directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. In the
absence or disqualification of any members of such committee or
committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another appropriate
member of the Board of Directors to act at the meeting in the place
of any absent or disqualified member.
SECTION 4.5. Minutes. Each committee of directors shall
keep regular minutes of its proceedings and report the same to the
Board of Directors when required. The Secretary or any Assistant
Secretary of the corporation shall (i) serve as the Secretary of
the Executive Committee, the Audit Committee and any other special
or standing committee of the Board of Directors of the corporation,
(ii) keep regular minutes of standing or special committee
proceedings, (iii) make available to the Board of Directors, as
required, copies of all resolutions adopted or minutes or reports
of other actions recommended or taken by any such standing or
special committee and (iv) otherwise as requested keep the members
of the Board of Directors apprised of the actions taken by such
standing or special committees.
SECTION 4.6. Compensation. Members of special or standing
committees who are outside directors, as that term is defined
elsewhere in this Article, may be allowed compensation for serving
as a member of any such committee and all members may be
compensated for expenses of attending committee meetings, if the
stockholders or Board of Directors shall so determine in accordance
with Section 3.10.
ARTICLE V
Notice
SECTION 5.1. Methods of Giving Notice. Whenever under the
provisions of the statutes, the Articles of Incorporation or these
by-laws, notice is required to be given to any director, member of
any committee or stockholder, such notice shall be in writing and
delivered personally or mailed, postage prepaid, to such director,
member or stockholder; provided that in the case of a director or
a member of any committee such notice may be given orally, by
telephone, by telegram or by facsimile. If mailed, notice to a
director, member of a committee or stockholder shall be deemed to
be given when deposited in the United States mail, in a sealed
envelope, with first class postage thereon prepaid, addressed, in
the case of a stockholder, to the stockholder at the stockholder s
address as it appears on the records of the corporation or, in the
case of a director or a member of a committee, to such person at
his business address. If sent by telegraph, notice to a director
or member of a committee shall be deemed to be given when the
telegram, so addressed, is delivered to the telegraph company. If
sent by facsimile, notice to a director or member of a committee
shall be deemed to be given when the transmission from the
transmitting facsimile machine has been completed.
SECTION 5.2. Written Waiver. Whenever any notice is
required to be given under the provisions of the statutes, the
Articles of Incorporation or these by-laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE IV
Officers
SECTION 6.1. Officers. The executive officers of the
corporation shall be the Chairman of the Board, President,
Secretary and Treasurer. The Board of Directors shall elect and,
when applicable, appoint all the executive officers of the
corporation. The Board of Directors and the Chairman of the Board
may appoint such other officers and agents, including but not
limited to one or more Vice Presidents (any one or more of which
may be designated Executive Vice President or Senior Vice
President), Assistant Vice Presidents, Assistant Secretaries and
Assistant Treasurers, as they deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform
such duties as prescribed by the Board of Directors or Chairman of
the Board. Any two or more offices may be held by the same person.
No officer shall execute, acknowledge, verify or countersign any
instrument on behalf of the corporation in more than one capacity,
if such instrument is required by law, by these by-laws or by any
act of the corporation to be executed, acknowledged, verified or
countersigned by two or more officers. The Chairman of the Board
shall be elected from among the directors. With the foregoing
exception, none of the other officers need be a director, and none
of the officers need be a stockholder of the corporation.
SECTION 6.2. Election and Term of Office. The executive
officers of the corporation shall be elected annually by the Board
of Directors at its first regular meeting held after the annual
meeting of stockholders or as soon thereafter as conveniently
possible. Each executive officer shall hold office until his
successor shall have been chosen and shall have qualified or until
his death or the effective date of his resignation or removal, or
until he shall cease to be a director in the case of the Chairman
of the Board.
SECTION 6.3. Removal and Resignation. Any executive officer
or other officer or agent appointed by the Board of Directors may
be removed, either with or without cause, by the affirmative vote
of a majority of the Board of Directors whenever, in its judgment,
the best interests of the corporation shall be served thereby, but
such removal shall be without prejudice to the contractual rights,
if any, of the person so removed. Any other officer or agent may
be removed, either with or without cause, in the sole discretion of
the Chairman of the Board. Any executive officer or other officer
or agent may resign at any time by giving written notice to the
corporation. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein,
and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any
executive office of the corporation by death, resignation, removal
or otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
SECTION 6.5. Salaries. The salaries of all executive
officers of the corporation shall be fixed by the Board of
Directors or pursuant to the direction of the Board of Directors;
and no executive officer shall be prevented from receiving such
salary by reason of his also being a director. Compensation of
officers and agents not appointed by the Board of Directors shall
be established by the Chairman of the Board and President, but
subject to review by the Board of Directors.
SECTION 6.6. Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the Board of Directors and
of the stockholders of the corporation. In the Chairman s absence,
such duties shall be attended to by the President. The Chairman of
the Board shall hold the position of chief executive officer of the
corporation and shall perform such duties as usually pertain to the
position of chief executive officer and such duties as may be
prescribed by the Board of Directors or the Executive Committee.
The Chairman of the Board shall formulate and submit to the Board
of Directors or the Executive Committee matters of general policy
for the corporation and shall perform such other duties as usually
appertain to the office or as may be prescribed by the Board of
Directors. He shall have the power to appoint and remove
subordinate officers, agents and employees, except those elected or
appointed by the Board of Directors. He may sign with the
President or any other officer of the corporation thereunto
authorized by the Board of Directors certificates for shares of the
corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors, and any deeds, bonds,
mortgages, contracts, checks, notes, drafts or other instruments
which the Board of Directors or the Executive Committee has
authorized to be executed, except in cases where the signing and
execution thereof has been expressly delegated or reserved by these
by-laws or by the Board of Directors or the Executive Committee to
some other officer or agent of the corporation, or shall be
required by law to be otherwise executed.
SECTION 6.7. President. The President, subject to the
control of the Board of Directors, the Executive Committee, and the
Chairman of the Board, shall in general supervise and control the
business and affairs of the corporation. He shall have the power
to appoint and remove subordinate officers, agents and employees,
except those elected or appointed by the Board of Directors or the
Chairman of the Board. The President shall keep the Board of
Directors, the Executive Committee and the Chairman of the Board
fully informed as they or any of them shall request and shall
consult them concerning the business of the corporation. He may
sign with the Chairman of the Board or any other officer of the
corporation thereunto authorized by the Board of Directors,
certificates for shares of capital stock of the corporation, the
issuance of which shall have been authorized by resolution of the
Board of Directors, and any deeds, bonds, mortgages, contracts,
checks, notes, drafts or other instruments which the Board of
Directors or the Executive Committee has authorized to be executed,
except in cases where the signing and execution thereof has been
expressly delegated by these by-laws or by the Board of Directors
or the Executive Committee to some other officer or agent of the
corporation, or shall be required by law to be otherwise executed.
In general he shall perform all other duties normally incident to
the office of the President, except any duties expressly delegated
to other persons by these by-laws, the Board of Directors, or the
Executive Committee, and such other duties as may be prescribed by
the stockholders, Chairman of the Board, the Board of Directors or
the Executive Committee, from time to time.
SECTION 6.8. Vice Presidents. In the absence of the
President, or in the event of his inability or refusal to act, the
Executive Vice President (or in the event there shall be no Vice
President or more than one Vice President designated Executive Vice
President, any Vice President designated by the Board) shall
perform the duties and exercise the powers of the President. Any
Vice President authorized by resolution of the Board of Directors
to do so, may sign with any other officer of the corporation
thereunto authorized by the Board of Directors, certificates for
shares of capital stock of the corporation, the issuance of which
shall have been authorized by resolution of the Board of Directors.
The Vice Presidents shall perform such other duties as from time to
time may be assigned to them by the Chairman of the Board, the
President, the Board of Directors or the Executive Committee.
SECTION 6.9. Secretary. The Secretary shall (a) keep the
minutes of the meetings of the stockholders, the Board of Directors
and committees of directors; (b) see that all notices are duly
given in accordance with provisions of these by-laws and as
required by law; (c) be custodian of the corporate records and of
the seal of the corporation, and see that the seal of the
corporation or a facsimile thereof is affixed to all certificates
for shares prior to the issuance thereof and to all documents, the
execution of which on behalf of the corporation under its seal is
duly authorized in accordance with the provisions of these by-laws;
(d) keep or cause to be kept a register of the post office address
of each stockholder which shall be furnished by such stockholder;
(e) have general charge of the stock transfer books of the
corporation; and (f) in general, perform all duties normally
incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Chairman of the Board,
the President, the Board of Directors or the Executive Committee.
SECTION 6.10. Treasurer. The Treasurer shall (a) have charge
and custody of and be responsible for all funds and securities of
the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever and deposit
all such moneys in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in accordance
with the provisions of Section 7.3 of these by-laws; (b) prepare,
or cause to be prepared, for submission at each regular meeting of
the Board of Directors, at each annual meeting of stockholders, and
at such other times as may be required by the Board of Directors,
the Chairman of the Board, the President or the Executive
Committee, a statement of financial condition of the corporation in
such detail as may be required; and (c) in general, perform all the
duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the Chairman of the
Board, the President, the Board of Directors or the Executive
Committee. If required by the Board of Directors or the Executive
Committee, the Treasurer shall give a bond for the faithful
discharge of his duties in such sums and with such surety or
sureties as the Board of Directors or the Executive Committee shall
determine.
SECTION 6.11. Assistant Secretary or Treasurer. The
Assistant Secretaries and Assistant Treasurers shall, in general,
perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the Chairman of the Board,
the President, the Board of Directors or the Executive Committee.
The Assistant Secretaries or Assistant Treasurers shall, in the
absence of the Secretary or Treasurer, respectively, perform all
functions and duties which such absent officers may delegate, but
such delegation shall not relieve the absent officer from the
responsibilities and liabilities of his office. The Assistant
Treasurers shall respectively, if required by the Board of
Directors or the Executive Committee, give bonds for the faithful
discharge of their duties in such sums and with such sureties as
the Board of Directors or the Executive Committee shall determine.
ARTICLE VII
Contracts, Checks and Deposits
SECTION 7.1. Contracts. Subject to the provisions of
Section 6.1., the Board of Directors or the Executive Committee may
authorize any officer, officers, agent or agents, to enter into any
contract or execute and deliver an instrument in the name of and on
behalf of the corporation, and such authority may be general or
confined to specific instances.
SECTION 7.2. Checks, etc. All checks, demands, drafts or
other orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation, shall be signed
by such officer or officers or such agent or agents of the
corporation, and in such manner, as shall be determined by the
Board of Directors or the Executive Committee.
SECTION 7.3. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the Chairman of the Board, the President or the
Treasurer may be empowered by the Board of Directors or the
Executive Committee to select or as the Board of Directors or the
Executive Committee may select.
ARTICLE VIII
Certificate of Stock
SECTION 8.1. Issuance. Each stockholder of this corporation
shall be entitled to a certificate or certificates showing the
number of shares of stock registered in his name on the books of
the corporation. The certificates shall be in such form as may be
determined by the Board of Directors or the Executive Committee,
shall be issued in numerical order and shall be entered in the
books of the corporation as they are issued. They shall exhibit
the holder s name and the number of shares and shall be signed by
the Chairman of the Board and the President or such other officers
as may from time to time be authorized by resolution of the Board
of Directors. Any of or all the signatures on the certificate may
be a facsimile. The seal of the corporation shall be impressed, by
original or by facsimile, printed or engraved, on all such
certificates. In case any officer who has signed or whose
facsimile signature has been placed upon any such certificate shall
have ceased to be such officer before such certificate is issued,
such certificate may nevertheless be issued by the corporation with
the same effect as if such officer had not ceased to be such
officer at the date of its issue. If the corporation shall be
authorized to issue more than one class of stock or more than one
series of any class, the designation, preferences and relative,
participating, option or other special rights of each class of
stock or series thereof and the qualifications, limitations or
restrictions of such preferences and rights shall be set forth in
full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class of stock; provided
that except as otherwise provided by statute, in lieu of the
foregoing requirements there may be set forth on the face or back
of the certificate which the corporation shall issue to represent
such class or series of stock, a statement that the corporation
will furnish to each stockholder who so requests the designations,
preferences and relative, participating, option or other special
rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and
rights. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued
until the former certificate for a like number of shares shall have
been surrendered and canceled, except that in the case of a lost,
stolen, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and with such indemnity, if any, to the
corporation as the Board of Directors may prescribe. In addition
to the above, all certificates evidencing shares of the
corporation s stock or other securities issued by the corporation
shall contain such legend or legends as may from time to time be
required by the Nevada Revised Statutes and/or the Nevada Gaming
Commission Regulations then in effect.
SECTION 8.2. Lost Certificates. The Board of Directors may
direct that a new certificate or certificates be issued in place of
any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
corporation with respect to the certificate or certificates alleged
to have been lost, stolen or destroyed, or both.
SECTION 8.3. Transfers. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only
on the books of the corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney and
filed with the Secretary of the corporation or the transfer agent.
SECTION 8.4. Registered Stockholders. The corporation shall
be entitled to treat the holder of record of any share or shares of
stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as
otherwise provided by laws of the State of Nevada.
ARTICLE IX
Dividends
SECTION 9.1. Declaration. Dividends upon the capital stock
of the corporation, subject to the provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property or in shares of capital stock, subject to
the provisions of the Articles of Incorporation.
SECTION 9.2. Reserve. Before payment of any dividend, there
may be set aside out of any funds of the corporation available for
dividends such sum or sums as the Board of Directors from time to
time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for
such other purpose as the Board of Directors shall think conducive
to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was
created.
ARTICLE X
Indemnification
SECTION 10.1. Third Party Actions. The corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
SECTION 10.2. Actions by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses
(including attorneys fees) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless and only to the
extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper.
SECTION 10.3. Successful Defense. To the extent that a
director, officer, employee or agent of the corporation has been
successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in Sections 10.1 and 10.2, or in
defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys fees) actually
and reasonably incurred by him in connection therewith.
SECTION 10.4. Determination of Conduct. Any indemnification
under Section 10.1 or 10.2 (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Sections 10.1 and
10.2. Such determination shall be made (1) by the Board of
Directors or the Executive Committee by a majority vote of a quorum
consisting of directors who were not parties to such action, suit
or proceeding, or (2) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the
stockholders.
SECTION 10.5. Payment of Expenses in Advance. Expenses
incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the corporation as
authorized in this Article X.
SECTION 10.6. Indemnity Not Exclusive. The indemnification
provided hereunder shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under
any other by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 10.7. The Corporation. For purposes of this Article
X, references to the corporation shall include, in addition to
the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand
in the same position under and subject to the provisions of this
Article X (including, without limitation the provisions of Section
10.4) with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its
separate existence had continued.
SECTION 10.8. Insurance Indemnification. The corporation
shall have the power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or
not the corporation would have the power to indemnify him against
such liability under the provisions of this Article X.
ARTICLE XI
Miscellaneous
SECTION 11.1. Seal. The corporate seal shall have inscribed
thereon the name of the corporation, and the words Corporate Seal,
Nevada . The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or otherwise reproduced.
SECTION 11.2. Books. The books of the corporation may be
kept within or without the State of Nevada (subject to any
provisions contained in the statutes) at such place or places as
may be designated from time to time by the Board of Directors or
the Executive Committee.
SECTION 11.3. Fiscal Year. The fiscal year of the
corporation shall be fixed by resolution of the Board of Directors.
ARTICLE XII
Amendment
These by-laws may be altered, amended or repealed at any
regular meeting of the Board of Directors without prior notice, or
at any special meeting of the Board of Directors if notice of such
alteration, amendment or repeal be contained in the notice of such
special meeting.
Exhibit 4(g)
AMENDMENT NO. 4 TO LOAN AGREEMENT
This Amendment No. 4 to Loan Agreement (this
"Amendment") dated as of January 3, 1997 is entered into with
reference to the Loan Agreement dated as of January 29, 1996,
among Circus Circus Enterprises, Inc., a Nevada corporation
( Borrower ), the Banks party thereto, The Long-Term Credit Bank
of Japan, Ltd., Los Angeles Agency, First Interstate Bank of
Nevada, N.A. (to which Wells Fargo Bank, N.A. is successor by
merger), Societe Generale, Credit Lyonnais Los Angeles Branch and
Credit Lyonnais Cayman Island Branch, and Canadian Imperial Bank
of Commerce, as Co-Agents, and Bank of America National Trust and
Savings Association, as Issuing Bank and Administrative Agent (as
amended, the Loan Agreement ). The Loan Agreement referred to
above has been amended by an Amendment No. 1 thereto dated as of
April 15, 1996, an Amendment No. 2 thereto dated as of October
31, 1996 and an Amendment No. 3 thereto dated as of November 22,
1996. Terms defined in the Loan Agreement are used herein with
the same meanings.
Borrower and the Administrative Agent, acting with the
consent of the Requisite Banks in accordance with Section 11.2 of
the Loan Agreement, hereby amend the Loan Agreement as follows:
1. Indebtedness and Contingent Guaranties. Section 6.10 of
the Loan Agreement is hereby amended to read in full as follows
(with the added text underlined and in boldface type herein for
the convenience of the reader):
"6.10 Indebtedness and Contingent Guaranties.
Create, incur, assume or suffer to exist any Indebtedness or
Contingent Guaranty (other than Indebtedness of Restricted
Subsidiaries to Borrower or another Restricted Subsidiary)
if:
(a) a Default or Event of Default then exists or
would result therefrom, or
(b) after giving effect thereto, the aggregate
principal amount (without duplication) of (i) all
Indebtedness (other than the Obligations, Subordinated
Debt, Commercial Paper Debt and the amount, not to
exceed $25,000,000, in the aggregate, of Borrower's net
Indebtedness with respect to Swap Agreements entered
into in the ordinary course of business) of Borrower
and its Restricted Subsidiaries, plus (ii) the amount
of all Contingent Guaranties to the extent that the
same are quantified pursuant to the definition thereof
(excluding Contingent Guaranties in an amount not to
exceed $30,000,000 (Canadian dollars) in respect of
Indebtedness of Windsor Casino Financial Limited) would
exceed $500,000,000."
2. Conditions Precedent. The effectiveness of this
Amendment shall be conditioned upon the receipt by the
Administrative Agent of the following:
(a) Counterparts of this Amendment executed by
Borrower and the Administrative Agent, acting on behalf of
the Banks;
(b) Written consents of each Significant
Subsidiary, as guarantors under the Subsidiary Guaranty, to
the execution, delivery and performance hereof,
substantially in the form of Exhibit A to this Amendment;
and
(c) Written consents to the execution, delivery
and performance hereof from Banks constituting the Requisite
Banks.
Representation and Warranty. Borrower represents and warrants to
the Administrative Agent and the Banks that no Default or Event
of Default has occurred and remains continuing.
3. Confirmation. In all other respects, the terms of the
Loan Agreement and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, Borrower and the Administrative
Agent have executed this Amendment as of the date first written
above by their duly authorized representatives.
CIRCUS CIRCUS ENTERPRISES, INC.
By Clyde T. Turner
Clyde T. Turner, Chairman
[Printed Name and Title]
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By Janice Hammond
Janice Hammond, Vice President
[Printed Name and Title]
Exhibit A to Amendment
CONSENT OF SUBSIDIARY GUARANTORS
This Consent, dated as of January 3, 1997, is
delivered with reference to the Loan Agreement dated as of
January 29, 1996 among Circus Circus Enterprises, Inc., the
Banks party thereto, The Long-Term Credit Bank of Japan, Ltd.,
Los Angeles Agency, First Interstate Bank of Nevada, N.A. (to
which Wells Fargo Bank, N.A. is successor by merger), Societe
Generale, Credit Lyonnais Los Angeles Branch and Credit
Lyonnais Cayman Island Branch and Canadian Imperial Bank of
Commerce, as Co-Agents, and Bank of America National Trust and
Savings Association, as Issuing Bank and Administrative Agent
(as so amended pursuant to an Amendment No. 1 on April 15,
1996, an Amendment No. 2 on October 31, 1996, and an Amendment
No. 3 on November 22, 1996, the "Loan Agreement"). Capitalized
terms used but not defined herein are used with the meanings
set forth for those terms in the Loan Agreement.
Each of the undersigned hereby consents to the
execution, delivery and performance by Borrower, the Banks and
the Administrative Agent of Amendment No. 4 to the Loan
Agreement dated as of January 3, 1997 and to the transactions
contemplated therein.
Each of the undersigned represents and warrants to
the Administrative Agent and the Banks that there is no
defense, counterclaim or offset of any type or nature to the
Subsidiary Guaranty, and that the same remains in full force
and effect.
CIRCUS CIRCUS CASINOS, INC., a Nevada
corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
SLOTS-A-FUN, INC., a Nevada
corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
EDGEWATER HOTEL CORPORATION, a Nevada
corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
COLORADO BELLE CORP., a Nevada
corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
NEW CASTLE CORP., a Nevada corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
RAMPARTS, INC., a Nevada corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
CIRCUS CIRCUS MISSISSIPPI, INC., a
Mississippi corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
PINKLESS, INC., a Nevada corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
NEW WAY, INC., a Nevada corporation
By Glenn Schaeffer
Glenn W. Schaeffer, President
[Printed Name and Title]
CIRCUS CIRCUS DEVELOPMENT CORP., a
Nevada corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
GALLEON, INC., a Nevada corporation
By Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
M.S.E. INVESTMENTS, INCORPORATED, a
Nevada corporation
By Michael S. Ensign
Michael S. Ensign, President
[Printed Name and Title]
LAST CHANCE INVESTMENTS, INCORPORATED,
a Nevada corporation
By William A. Richardson
William A. Richardson, President
[Printed Name and Title]
GOLDSTRIKE INVESTMENTS, INCORPORATED,
a Nevada corporation
By David R. Belding
David R. Belding, President
[Printed Name and Title]
DIAMOND GOLD, INC., a Nevada
corporation
By Peter Simon
Peter Simon, President
[Printed Name and Title]
OASIS DEVELOPMENT COMPANY, INC., a
Nevada corporation
By Peter Simon
Peter Simon, President
[Printed Name and Title]
GOLDSTRIKE FINANCE COMPANY, INC., a
Nevada corporation
By Michael S. Ensign
Michael S. Ensign, President
[Printed Name and Title]
RAILROAD PASS INVESTMENT GROUP, a
Nevada Partnership
By: M.S.E. INVESTMENTS,INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign,President
[Printed Name and Title]
JEAN DEVELOPMENT COMPANY, a Nevada
partnership
By: M.S.E. INVESTMENTS,INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign,President
[Printed Name and Title]
JEAN DEVELOPMENT WEST, a Nevada
partnership
By: M.S.E. INVESTMENTS,INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign, President
[Printed Name and Title]
NEVADA LANDING PARTNERSHIP, an
Illinois partnership
By: M.S.E. INVESTMENTS,INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign, President
[Printed Name and Title]
GOLD STRIKE L.V., a Nevada partnership
By: M.S.E. INVESTMENTS,INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign, President
[Printed Name and Title]
JEAN DEVELOPMENT NORTH, a Nevada
partnership
By: M.S.E INVESTMENTS, INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign,President
[Printed Name and Title]
LAKEVIEW GAMING PARTNERSHIPS JOINT
VENTURE, a Nevada partnership
By: RAILROAD PASS INVESTMENT GROUP
Its: general partner
By: M.S.E. INVESTMENTS,INCORPORATED
Its: general partner
By Michael S. Ensign
Michael S. Ensign, President
[Printed Name and Title]
CONSENT OF BANK
This Consent of Bank is delivered with reference to the
Loan Agreement dated as of January 29, 1996, among Circus Circus
Enterprises, Inc., The Long-Term Credit Bank of Japan, Ltd., Los
Angeles Agency, First Interstate Bank of Nevada, N.A. (now known
as Wells Fargo Bank, N.A.), Societe Generale, Credit Lyonnais Los
Angeles Branch and Credit Lyonnais Cayman Island Branch and
Canadian Imperial Bank of Commerce, as Co-Agents, and Bank of
America National Trust and Savings Association, as Issuing Bank
and Administrative Agent.
The Loan Agreement referred to above has been amended
by an Amendment No. 1 thereto dated as of April 15, 1996, an
Amendment No. 2 thereto dated as of October 31, 1996 and an
Amendment No. 3 thereto dated as of November 22, 1996.
References herein to the Loan Agreement mean the Loan Agreement,
as so amended. Other capitalized terms used but not defined
herein are used with the meanings set forth for those terms in
the Loan Agreement.
The undersigned Bank hereby consents to the execution,
delivery and performance of the proposed Amendment No. 4 to Loan
Agreement by the Administrative Agent on behalf of the Banks,
substantially in the form presented to the undersigned as a
draft.
Bank of America NT&SA
[Typed/Printed Name of Bank]
By: Jon Varnell
John Varnell, Managing Director
[Typed/Printed Name and Title]
Dated January 3, 1997
Exhibit 10(d)
CIRCUS CIRCUS ENTERPRISES, INC.
1989 STOCK OPTION PLAN
(As Amended and Restated April 25, 1997)
1. PURPOSES OF THE PLAN
The purposes of this 1989 Stock Option Plan (the
Plan ) are to enable Circus Circus Enterprises, Inc. (the
Company ) and its Subsidiaries to attract and retain the
services of key employees and persons with managerial, profes-
sional or supervisory responsibilities, including, but not
limited to, members of the Board of Directors, officers of, and
consultants to, the Company, responsible for the past and con-
tinued success of the Company, and to provide them with increased
motivation and incentive to exert their best efforts on behalf of
the Company by enlarging their personal stake in its success.
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) Board of Directors means the Board of Directors
of the Company.
(b) Code means the Internal Revenue Code of 1986,
including any and all amendments thereto.
(c) "Committee means the committee appointed by the
Board of Directors from time to time to administer
the Plan pursuant to Section 2.2 hereof.
(d) Common Stock means the Common Stock, par value
$.01-2/3 per share, of the Company.
(e) Fair Market Value means, with respect to the
date a given Stock Option is granted or exercised,
the closing price on the applicable date (or if
there is no closing price, then the closing bid
price) of the Common Stock as reported on the
New York Stock Exchange Composite Tape, or if not
reported thereon, then such price as reported in
the trading reports of the principal securities
exchange on which the Common Stock is listed, or
if such stock is not listed on a securities
exchange in the United States, the mean between
the dealer closing bid and ask prices on the
over-the-counter market, as reported by the
National Association of Securities Dealers
Automated Quotations Systems (NASDAQ), or NASDAQ s
successor, or if not reported on NASDAQ, on the
basis of such other method as the Committee shall,
in good faith, determine to be reasonable.
(f) Incentive Stock Option means an option granted
under the Plan, which is intended to qualify as an
incentive stock option under Section 422A of the
Code.
(g) Non-Qualified Stock Option means an option
granted under the Plan which is not an Incentive
Stock Option.
(h) Participant means a person to whom a Stock
Option has been granted under the Plan.
(i) Stock Option means an Incentive Stock Option or
Non-Qualified Option granted under the Plan.
(j) Rule 16b-3 means such rule adopted under the
Securities Exchange Act of 1934, as amended, or
any successor rule.
(k) Subsidiary means any corporation (other than the
Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the
granting of the option, each of the corporations
other than the last corporation in the unbroken
chain owns 50% or more of the total voting power
of all classes of stock in one of the other
corporations in such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the Committee
which shall at all times consist of two (2) or
more persons, each of whom shall be a member of
the Board of Directors. To the extent possible,
and to the extent the Board of Directors deems it
necessary or appropriate, each member of the
Committee shall be a Non-Employee Director (as
such term is defined in Rule 16b-3) and an
Outside Director (as such term is defined in
Treasury Regulations Section 1.162-27 promulgated
under the Code). The Board of Directors may from
time to time remove members from, or add members
to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of
Directors. The Committee shall select one of its
members as Chairman, and shall hold meetings at
such times and places as it may determine.
(b) The Committee shall have the full power, subject
to and within the limits of the Plan, to: (i)
interpret and administer the Plan, and Stock
Options granted under it; (ii) make and interpret
rules and regulations for the administration of
the Plan and to make changes in and revoke such
rules and regulations (and, in the exercise of
this power, shall generally determine all
questions of policy and expediency that may arise
and may correct any defect, omission, or
inconsistency in the Plan or any agreement
evidencing the grant of any Stock Option in a
manner and to the extent it shall deem necessary
to make the Plan fully effective); (iii) determine
those persons to whom Stock Options shall be
granted and the number of Stock Options to be
granted to any person; (iv) determine the terms of
Stock Options granted under the Plan, consistent
with the provisions of the Plan; and (v)
generally, exercise such powers and perform such
acts in connection with the Plan as are deemed
necessary or expedient to promote the best
interests of the Company. The interpretation and
construction by the Committee of any provisions of
the Plan or of any Stock Option shall be final and
conclusive.
(c) The Committee may act only by a majority of its
members then in office; however, the Committee may
authorize any one or more of its members or any
officer of the Company to execute and deliver
documents on behalf of the Committee.
(d) No member of the Committee shall be liable for any
action taken or omitted to be taken or for any
determination made by him or her in good faith
relating to the Plan, and the Company shall
indemnify and hold harmless each member of the
Committee against any cost or expense (including
counsel fees) or liability (including any sum paid
in settlement of a claim with the approval of the
Committee) arising out of any act or omission in
connection with the administration or
interpretation of the Plan, unless arising out of
such person s own fraud or bad faith.
2.3 Effective Date
The Plan shall become effective upon its adoption by
the Board of Directors, and Stock Options may be issued
upon such adoption and from time to time thereafter,
subject, however, to approval of the Plan by the
affirmative vote of the holders of a majority of the
shares of the Common Stock present in person or by
proxy and entitled to vote at an annual meeting of the
shareholders of the Company or at a special meeting of
shareholders of the Company expressly called for such
purpose, or any adjournments thereof, within 12 months
after the adoption of the Plan by the Board of
Directors. If the Plan is not approved at such annual
or special meeting or at any adjournments thereof, this
Plan and all Stock Options previously granted there-
under become null and void.
2.4 Duration
If approved by the shareholders of the Company, as
provided in Section 2.3, unless sooner terminated by
the Board of Directors, the Plan shall remain in effect
for a period of ten (10) years following its adoption
by the Board of Directors.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may
be subject to Stock Options granted under the Plan
shall be 1,500,000. The Stock Options shall be subject
to adjustment in accordance with Section 4.1, and
shares to be issued upon exercise of the Stock Options
may be either authorized and unissued shares of Common
Stock or authorized and issued shares of Common Stock
purchased or acquired by the Company for any purpose.
If a Stock Option or portion thereof shall expire or is
terminated, canceled or surrendered for any reason
without being exercised in full, the unpurchased shares
of Common Stock which were subject to such Stock Option
or portion thereof shall be available for future grants
of Stock Options under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in
whole or in part, at any time by the Board of
Directors. The Board of Directors may from time to time
make such amendments to the Plan as it may deem
advisable, including, with respect to Incentive Stock
Options, amendments deemed necessary or desirable to
comply with Section 422A of the Code and any
regulations issued thereunder; provided, however, that,
without the approval of the Company s shareholders, no
amendment shall be made which:
(a) materially increases the maximum number of shares
of Common Stock which may be subject to Stock
Options granted under the Plan (other than as
provided in Section 4.1); or
(b) materially increases the benefits accruing to
Participants under the Plan; or
(c) extends the term of the Plan; or
(d) increases the period during which a Stock Option
may be exercised beyond ten years from the date of
grant; or
(e) materially modifies the requirements as to
eligibility for participation in the Plan; or
(f) will cause options issued under the Plan to fail
to meet the requirements of Rule 16b-3.
Except as otherwise provided herein, termination or
amendment of the Plan shall not, without the consent of the
Participant, affect such Participant s rights under any Stock
Option previously granted to such Participant.
2.7 Participants and Grants
Stock Options may be granted by the Committee to those
persons who the Committee determines have the capacity
to make a substantial contribution to the success of
the Company; provided, however, that, Stock Options may
not be granted to members of the Committee. The
Committee may grant to Participants Stock Options to
purchase such number of shares of Common Stock (subject
to the limitations of Section 2.5) as the Committee
may, in its sole discretion, determine. In granting
Stock Options under the Plan, the Committee, on an
individual basis, may vary the number of Incentive
Stock Options or Non-Qualified Stock Options as between
Participants and may grant Incentive Stock Options
and/or Non-Qualified Options to a Participant in such
amounts as the Committee may determine in its sole
discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be
evidenced by written agreements executed by the Company
and the Participant to whom granted which agreement
shall state the number of shares of Common Stock which
may be purchased upon the exercise thereof and shall
contain such investment representations and other terms
and conditions as the Committee may from time to time
determine, or, in the case of Incentive Stock Options,
as may be required by Section 422A of the Code, or any
other applicable law.
3.2 Price
Subject to the provisions of Section 3.6(d) and Section
4.1, the purchase price per share of Common Stock
subject to a Stock Option shall, in no case, be less
than one-hundred percent (100%) of the Fair Market
Value of a share of Common Stock on the date the Stock
Option is granted.
3.3 Period
The duration or term of each Stock Option granted the
Plan shall be for such period as the Committee shall
determine but in no event more than ten (10) years from
the date of grant thereof.
3.4 Exercise
Subject to Section 4.4, Stock Options may be
exercisable immediately upon granting of the Stock
Option or at such other time or times as the Committee
shall specify when granting the Stock Option. Once
exercisable, a Stock Option shall be exercisable, in
whole or in part, by delivery of a written notice of
exercise to the Secretary of the Company at the prin-
cipal office of the Company specifying the number of
shares of Common Stock as to which the Stock Option is
then being exercised together with payment of the full
purchase price for the shares being purchased upon such
exercise. Until the shares of Common Stock as to which
a Stock Option is exercised are issued, the Participant
shall have none of the rights of a shareholder of the
Company with respect to such shares.
3.5 Payment
The purchase price for shares of Common Stock as to
which a Stock Option has been exercised and any amount
required to be withheld, as contemplated by Section
4.3, may be paid:
(a) In United States dollars in cash, or by check,
bank draft or money order payable in United States
dollars to the order of the Company; or
(b) In the discretion of the Committee, by the
delivery by the Participant to the Company of
shares of Common Stock having an aggregate Fair
Market Value on the date of payment equal to the
aggregate of the purchase price of Common Stock as
to which the Stock Option is then being exercised
or by the withholding of shares of Common Stock
having such Fair Market Value upon the exercise of
such Stock Option; or
(c) In the discretion of the Committee, by a
combination of both (a) and (b) above.
The Committee may, in its discretion, impose limitations,
conditions and prohibitions on the use by a Participant of shares
of Common Stock to pay the purchase price payable by such
Participant upon the exercise of a Stock Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the
following provisions shall apply to Incentive Stock
Options granted under the Plan:
(a) Incentive Stock Options shall only be granted to
Participants who are employees of the Company or
its Subsidiaries.
(b) To the extent that the aggregate Fair Market Value
of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time
by a Participant during any calendar year under
this Plan and any other Plan of the Company or a
Subsidiary exceeds $100,000, such Stock Options
shall be treated as Non-Qualified Stock Options.
(c) Any Participant who disposes of shares of Common
Stock acquired upon the exercise of an Incentive
Stock Option by sale or exchange either within two
(2) years after the date of the grant of the
Incentive Stock Option under which the shares were
acquired or within one (1) year of the acquisition
of such shares, shall promptly notify the
Secretary of the Company at the principal office
of the Company of such disposition, the amount
realized, the purchase price per share paid upon
exercise and the date of disposition.
(d) No Incentive Stock Option shall be granted to a
Participant who, at the time of the grant, owns
stock representing more than ten percent (10%) of
the total combined voting power of all classes of
stock either of the Company or any parent or Sub-
sidiary of the Company, unless the purchase price
of the shares of Common Stock purchasable upon
exercise of such Incentive Stock Option is at
least one-hundred ten percent (110%) of the Fair
Market Value (at the time the Incentive Stock
Option is granted) of the Common Stock and the
Incentive Stock Option is not exercisable more
than five (5) years from the date it is granted.
3.7 Termination of Employment
(a) In the event that a Participant (i) shall cease to
be employed by the Company or a Subsidiary because
of his discharge for dishonesty, or because he
violated any material provision of any employment
or other agreement between him and the Company or
a Subsidiary, or (ii) shall voluntarily resign or
terminate his employment with the Company or a
Subsidiary under or followed by such circumstances
as would constitute a breach of any material
provision of any employment or other agreement
between him and the Company or a Subsidiary, or
(iii) shall have committed an act of dishonesty
not discovered by the Company or a Subsidiary
prior to the cessation of his employment with the
Company or a Subsidiary, but which would have
resulted in his discharge if discovered prior to
such date, or (iv) shall, either before or after
cessation of his employment with the Company or a
Subsidiary, without the written consent of his
employer, use (except for the benefit of his
employer) or disclose to any other person any
confidential information relating to the
continuation or proposed continuation of his
employer s business or any trade secrets of the
Company or a Subsidiary obtained as a result of or
in connection with such employment, or (v) shall,
either before or after the cessation of his
employment with the Company or a Subsidiary,
without the written consent of his employer,
directly or indirectly, give advice to, or serve
as an employee, director, officer, or trustee of,
or in any similar capacity with, or otherwise
directly or indirectly participate in the
management, operation, or control of, or have any
direct or indirect financial interest in, any
corporation, partnership, or other organization
which directly or indirectly competes in any
respect with the Company or its Subsidiaries, then
forthwith from the happening of any such event,
any Stock Option then held by such Participant
shall terminate and become void to the extent that
it then remains unexercised. In the event that a
Participant shall cease to be employed by the
Company or a Subsidiary for any reason other than
his death or one or more of the reasons set forth
in the immediately preceding sentence, subject to
the condition that no Stock Option shall be
exercisable after the expiration of ten (10) years
from the date it is granted, or, in the case of a
10% Stockholder, five (5) years from the date it
is granted, such Participant shall have the right
to exercise the Stock Option at any time within
three (3) months after such termination of
employment to the extent his right to exercise
such Stock Option had accrued pursuant to this
Plan at the date of such termination and had not
previously been exercised; such three-month limit
shall be increased to one year for any Participant
who ceases to be employed by the Company or a
Subsidiary because he is permanently and totally
disabled (within the meaning of Section 22(e)(3)
of the Code). Whether authorized leave of absence
or absence for military or governmental service
shall constitute termination of employment, for
purposes of the Plan, shall be determined by the
Committee, which determination shall be final and
conclusive.
(b) If a Participant shall die while in the employ of
the Company or a Subsidiary or within a period of
three months (one year in the case of disability)
after the termination of his employment with the
Company and all Subsidiaries and shall not have
fully exercised any Stock Option, the Stock Option
may be exercised subject to the condition that no
Stock Option shall be exercisable after the
expiration of ten (10) years from the date it is
granted, or, in the case of a 10% Stockholder,
five (5) years from the date it is granted, to the
extent that the Participant s right to exercise
such Stock Option had accrued pursuant to this
Plan at the time of his death and had not
previously been exercised, at any time within one
year after the Participant s death, by the
personal representative of the Participant or by
any person or persons who shall have acquired the
Stock Option directly from the Participant by
bequest or inheritance.
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Changes in Capitalization
In the event of changes to the outstanding shares of
Common Stock of the Company through reorganization,
merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, stock
consolidation or otherwise, or in the event of a sale
of all or substantially all of the assets of the
Company, an appropriate and proportionate adjustment
shall be made in the number and kind of shares as to
which Stock Options may be granted. A corresponding
adjustment changing the number or kind of shares and/or
the purchase price per share of unexercised Stock
Options or portions thereof which shall have been
granted prior to any such change, shall likewise be
made. Notwithstanding the foregoing, in the case of a
reorganization, merger or consolidation, or sale of all
or substantially all of the assets of the Company, in
lieu of adjustments as aforesaid, the Committee may in
its discretion accelerate the date after which a Stock
Option may or may not be exercised or the stated
expiration date thereof. Adjustments or changes under
this Section shall be made by the Committee, whose
determination as to what adjustments or changes shall
be made, and the extent thereof, shall be final,
binding and conclusive.
4.2 Non-Transferability
No Stock Option shall be transferable except by will or
the laws of descent and distribution, nor shall any
Stock Option be exercisable during the Participant s
lifetime by any person other than the Participant or
his guardian or legal representative.
4.3 Withholding
The Company s obligation under this Plan shall be
subject to applicable federal, state and local tax
withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the
exercise of any Stock Option may, in the discretion of
the Committee, be paid in shares of Common Stock
already owned by the Participant or through the
withholding of shares otherwise issuable to such
Participant, upon such terms and conditions as the
Committee shall determine. If the Participant shall
fail to pay, or make arrangements satisfactory to the
Committee for the payment, to the Company of all such
federal, state and local taxes required to be withheld
by the Company, then the Company shall, to the extent
permitted by law, have the right to deduct from any
payment of any kind otherwise due to such Participant
an amount equal to any federal, state or local taxes of
any kind required to be withheld by the Company.
4.4 Compliance with Law and Approval of Regulatory Bodies
No Stock Option shall be exercisable and no shares will
be delivered under the Plan except in compliance with
all applicable Federal and state laws and regulations
including, without limitation, compliance with all
Federal and state securities laws and withholding tax
requirements and with the rules of all domestic stock
exchanges on which the Company s shares may be listed.
Any share certificate issued to evidence shares for
which a Stock Option is exercised may bear legends and
statements the Committee shall deem advisable to assure
compliance with Federal and state laws and regulations.
No Stock Option shall be exercisable and no shares will
be delivered under the Plan, until the Company has
obtained consent or approval from regulatory bodies,
Federal or state, having jurisdiction over such matters
as the Committee may deem advisable. In the case of the
exercise of a Stock Option by a person or estate
acquiring the right to exercise the Stock Option as a
result of the death of the Participant, the Committee
may require reasonable evidence as to the ownership of
the Stock Option and may require consents and releases
of taxing authorities that it may deem advisable.
4.5 No Right to Employment
Neither the adoption of the Plan nor its operation, nor
any document describing or referring to the Plan, or
any part thereof, nor the granting of any Stock Options
hereunder, shall confer upon any Participant under the
Plan any right to continue in the employ of the Company
or any Subsidiary, or shall in any way affect the right
and power of the Company or any Subsidiary to terminate
the employment of any Participant under the Plan at any
time with or without assigning a reason therefor, to
the same extent as might have been done if the Plan had
not been adopted.
4.6 Exclusion from Pension Computations
By acceptance of a grant of a Stock Option under the
Plan, the recipient shall be deemed to agree that any
income realized upon the receipt or exercise thereof or
upon the disposition of the shares received upon
exercise will not be taken into account as base
remuneration , wages , salary or compensation in
determining the amount of any contribution to or
payment or any other benefit under any pension,
retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
4.7 Abandonment of Options
A Participant may at any time abandon a Stock Option
prior to its expiration date. The abandonment shall be
evidenced in writing, in such form as the Committee may
from time to time prescribe. A Participant shall have
no further rights with respect to any Stock Options so
abandoned.
4.8 Interpretation of the Plan
Headings are given to the sections of the Plan solely
as a convenience to facilitate reference, such
headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the
construction of the Plan or any provisions thereof. The
use of the masculine gender shall also include within
its meaning the feminine. The use of the singular shall
also include within its meaning the plural and vice
versa.
4.9 Use of Proceeds
Funds received by the Company upon the exercise of
Stock Options granted under the Plan shall be used for
the general corporate purposes of the Company.
4.10 Construction of Plan
The place of administration of the Plan shall be in the
State of Nevada, and the validity, construction,
interpretation, administration and effect of the Plan
and of its rules and regulations, and rights relating
to the Plan, shall be determined solely in accordance
with the laws of the State of Nevada.
Exhibit 10(f)
CIRCUS CIRCUS ENTERPRISES, INC.
AMENDED AND RESTATED 1991 STOCK INCENTIVE PLAN
(As Amended and Restated April 25,1997)
1. Purposes. The purposes of the Circus Circus
Enterprises, Inc. Amended and Restated 1991 Stock Incentive Plan
(the Plan ) are (i) to promote the long term financial interests
and growth of Circus Circus Enterprises, Inc. (the Company ) by
motivating executive personnel by means of growth-related
incentives, providing incentive compensation opportunities that are
competitive with those of other major corporations and furthering
the identity of interests of participants with those of the
stockholders of the Company, and (ii) to strengthen the Company s
ability to attract and retain the services of experienced and
knowledgeable non-employee directors and by encouraging such
directors to acquire an increased proprietary interest in the
Company.
2. Definitions. The following definitions are
applicable to the Plan:
Affiliate means any entity 100 percent owned,
directly or indirectly, by the Company and any other
entity more than 50 percent of which is owned, directly
or indirectly, by the Company and which is so designated
by the Committee.
Code means the Internal Revenue Code of 1986, as
amended, and any successor statute.
Committee means a committee of two or more
directors of the Company as shall be designated by the
Board of Directors of the Company from time to time. To
the extent possible, and to the extent the Board of
Directors deems it necessary or appropriate, each member
of the Committee shall be a Non-Employee Director (as
such term is defined in Rule 16b-3) and an Outside
Director (as such term is defined in Treasury
Regulations Section 1.162-27 promulgated under the Code).
The Board of Directors may from time to time remove
members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be
filled by the Board of Directors. The Committee shall
select one of its members as Chairman, and shall hold
meetings at such times and places as it may determine.
Common Stock means the Common Stock, $.01-2/3 par
value per share, of the Company or such other securities
as may be substituted therefor pursuant to paragraph
7(f).
The fair market value of the Common Stock shall
(except as otherwise provided in paragraph 6(d)) mean the
last reported sale price of the Common Stock on the New
York Stock Exchange Composite Tape on the day fair market
value is to be determined and, in absence of any sale on
such day, fair market value as the Committee shall, in
good faith, determine.
Eligible Director means a member of the Company s
Board of Directors who is not otherwise an employee of
the Company or any subsidiary of the Company.
Employee Participant means any officer or other
key employee of the Company or an Affiliate with
managerial or supervisory responsibilities whom the
Committee determines has contributed significantly to the
Company s past success or is in a position to influence
its continued success who is selected by the Committee
(other than an employee of the Company who at the time
that any share-value incentive is granted under the Plan
owns or, after giving effect to the Common Stock to be
issued or referenced under the share-value incentive and
under all other options, warrants and similar awards with
respect to the Company held by such employee, is deemed
to own 10% or more of the total combined voting power or
value of all classes of stock of the Company).
Formula Award means an Initial Grant (as
defined) made to an Eligible Director pursuant to
paragraph 6(b) or an Annual Grant (as defined) made to
an Eligible Director pursuant to paragraph 6(c).
Rule 16b-3 means such rule adopted under the
Securities Exchange Act of 1934, as amended, or any
successor rule.
3. Administration. The Plan shall be administered by
the Committee. Subject to the limitations of the Plan, the
Committee shall have the sole and complete authority: (i) to select
Employee Participants in the Plan, (ii) to make share-value
incentive grants to Employee Participants in such forms and amounts
as it shall determine, (iii) to impose such limitations,
restrictions and conditions upon such share-value incentive grants
to Employee Participants as it shall deem appropriate, (iv) to
interpret the Plan and to adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan,
(v) to correct any defect or omission or to reconcile any
inconsistency in the Plan or in any share-value incentive granted
hereunder, and (vi) to make all other determinations and to take
all other actions necessary or advisable, in its discretion, for
the implementation and administration of the Plan. The Committee
may provide for the issuance of Common Stock to Employee
Participants as a stock grant for no consideration other than
services rendered or, to the extent permitted by applicable State
law, to be rendered. The Committee s determinations on matters
within its authority shall be conclusive and binding upon the
Company and all other persons. All expenses associated with the
Plan shall be borne by the Company, subject to such allocation to
its Affiliates and operating units as it deems appropriate. The
Committee may amend or modify any share-value incentive grant to an
Employee Participant in any manner to the extent that the Committee
would have had the authority under the Plan to initially make such
share-value incentive grant, but no such amendment or modification
shall impair the rights of any Employee Participant under any
share-value incentive grant without the consent of such Employee
Participant.
4. Limitation on Aggregate Shares. The number of
shares of Common Stock with respect to which share-value incentives
may be granted to Employee Participants and Formula Awards may be
made to Eligible Directors under the Plan and which may be issued
upon the exercise or payment thereof shall not exceed, in the
aggregate, 3,000,000 shares, and the number of such shares which
shall be available for issuance pursuant to Formula Awards made to
Eligible Directors under the Plan shall be 525,000; provided,
however, that to the extent any share-value incentives granted to
Employee Participants or Formula Awards made to Eligible Directors
expire unexercised or unpaid or are canceled, terminated or
forfeited in any manner without the issuance of shares of Common
Stock thereunder, such shares shall again be available under the
Plan. To the extent a restricted stock grant or performance shares
grant to an Employee Participant is exercised for cash, it shall be
treated as an issuance of a number of shares equal to the number of
shares upon which the restricted stock grant or performance shares
grant was based so as to reduce shares otherwise available for the
future issuance under the Plan. The 3,000,000 shares of Common
Stock which may be the subject of awards pursuant to the Plan may
be either authorized and unissued shares, treasury shares, or a
combination thereof, as the Committee shall determine.
5. Share-Value Incentives. The Committee may grant to
Employee Participants, in accordance with this paragraph 5 and
other provisions of the Plan, stock options, restricted stock and
performance shares.
(a) Options.
(i) Options granted to an Employee Participant
under the Plan may be incentive stock options within the
meaning of Section 422 of the Code or any successor
provisions, or in such other form, consistent with the
Plan, as the Committee may determine.
(ii) The option price per share of Common Stock for
an option granted to an Employee Participant shall be
fixed by the Committee at not less than 100% of the fair
market value of a share of Common Stock on the date of
grant.
(iii) Options granted to an Employee Participant
shall be exercisable at such time or times as the
Committee shall determine at or subsequent to grant.
(iv) Options granted to an Employee Participant
shall be exercised in whole or in part by written notice
to the Company (to the attention of the Company s
Corporate Secretary), signed by the Employee Participant
exercising the option, stating the number of shares of
Common Stock with respect to which the option is being
exercised and accompanied by payment in full of the
option price. Payment of the option price for an option
granted to an Employee Participant may be made, at the
discretion of the optionee, and to the extent permitted
by the Committee, (A) in cash (including check, bank
draft, or money order), (B) in Common Stock (valued at
the fair market value thereof on the date of exercise),
(C) by a combination of cash and Common Stock or (D) with
any other consideration deemed acceptable by the
Committee. The date both such notice and payment are
received by the office of the Corporate Secretary of the
Company shall be the date of exercise of the option as to
the number of shares specified.
(b) Restricted Stock.
(i) The Committee may transfer to any Employee
Participant shares of Common Stock, subject to this
paragraph 5(b) and such other terms and conditions
(including, without limitation, performance goals similar
to those described in paragraph 5(c)) as the Committee
may prescribe (such shares being called restricted
stock ). Each certificate for restricted stock shall be
registered in the name of the Employee Participant and
deposited, together with a stock power endorsed in blank,
with the Company.
(ii) There shall be established for each restricted
stock grant to an Employee Participant one or more
restriction periods of such length as shall be determined
by the Committee. No restriction period shall exceed 10
years from the date of the grant. Shares of restricted
stock may not be sold, assigned, transferred, pledged or
otherwise encumbered, except as hereinafter provided,
during the applicable restriction period. Except for such
restrictions on transfer and such other restrictions as
the Committee may impose, the Employee Participant shall
have all the rights of a holder of Common Stock as to
such restricted stock. The Committee, in its sole
discretion, may permit or require the payment of cash
dividends to be deferred and, if the Committee so
determines, reinvested in additional restricted stock or
otherwise invested. At the expiration of each restriction
period, the Company shall redeliver to the Employee
Participant (or the Employee Participant s legal
representative or designated beneficiary) certificates
deposited pursuant to this paragraph representing the
shares with respect to which the applicable restrictions
and conditions have been satisfied.
(iii) Except as provided by the Committee at the
time of grant or otherwise, upon termination of
employment of an Employee Participant for any reason
during a restriction period applicable to restricted
stock of such Employee Participant, all shares still
subject to restriction shall be forfeited by the Employee
Participant.
(c) Performance Shares. Performance shares, measured
in whole or in part by the value of shares of Common Stock, the
performance of the participant, the performance of the Company, its
subsidiaries or any separate business units or properties thereof,
or any combination thereof, may be granted to Employee Participants
under the Plan. Such share-value incentives may be payable in
Common Stock, cash or both, and shall be subject to such
restrictions and conditions, as the Committee shall determine. At
the time of a performance shares grant to an Employee Participant,
the Committee shall determine, in its sole discretion, one or more
performance periods and performance goals to be achieved during the
applicable performance periods. No performance period shall exceed
10 years from the date of the grant. A performance shares grant to
an Employee Participant may be made subject to such later revisions
as the Committee shall deem appropriate to reflect significant
unforeseen events such as changes in laws, regulations or
accounting practices, or unusual or nonrecurring items or
occurrences. The Committee shall determine the extent to which
performance goals have been attained or a degree of achievement
between maximum and minimum levels in order to evaluate the level
of payment to be made, if any.
(d) Time Limit. No share-value incentive granted to an
Employee Participant under the Plan shall be subject to exercise
beyond and no conditions or performance goals shall be susceptible
of satisfaction beyond a period of 10 years after the date of the
grant thereof.
6. Formula Awards to Eligible Directors.
(a) General. Each Formula Award granted under the Plan
shall be evidenced by an agreement (an Agreement ) duly executed
on behalf of the Company and by the Eligible Director to whom such
Formula Award is granted and dated as of the applicable date of
grant. Each Agreement shall be signed on behalf of the Company by
an officer or officers delegated such authority by the Committee
using either manual or facsimile signature. Each Agreement shall
comply with and be subject to the terms and conditions of the Plan.
Any Agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan or this paragraph 6 as
may be determined by the Committee. All Formula Awards granted
under the Plan shall be non-statutory options not intended to
qualify under Section 422 of the Code.
(b) Initial Grants. Subject to the limitation in
paragraph 6(n), an option to purchase 7,500 shares of Common Stock
pursuant to clause (i) of this paragraph 6(b) or 10,000 shares of
Common Stock pursuant to clause (ii) of this paragraph 6(b), as the
case may be (as adjusted in each case pursuant to paragraph 6(1))
(and in the case of each grant pursuant to clause (i) of this
paragraph 6(b), multiplied by the number of consecutive annual
meetings of the Company s stockholders, including the annual
meeting at which stockholders approve an amendment to the Plan
providing for the grant of Formula Awards, at which the Eligible
Director in question was elected to serve as a Director of the
Company and/or after which he continued to be a Director of the
Company) shall be granted to:
(i) each member of the Company s Board of Directors
(a Director ) who is an Eligible Director immediately
following the annual meeting of the Company s
stockholders at which stockholders approve an amendment
to the Plan providing for the grant of Formula Awards,
and
(ii) each other Eligible Director immediately
following the annual meeting of the Company s
stockholders at which such Director is first elected or
immediately following the first annual meeting of the
Company s stockholders after such Eligible Director is
first elected or appointed by the Company s Board of
Directors to be a Director, whichever is applicable
(each, an Initial Grant ); provided, however, that if an
Eligible Director who previously received an Initial
Grant pursuant to this paragraph 6(b) terminates service
as a Director and is subsequently elected or appointed to
the Company s Board of Directors, such Director shall not
be eligible to receive a second Initial Grant pursuant to
this paragraph 6(b), but shall be eligible to receive
only Annual Grants (as defined) pursuant to paragraph
6(c).
(c) Annual Grants. Subject to the limitation in
paragraph 6(n), an option to purchase 10,000 shares of Common Stock
(as adjusted pursuant to paragraph 6(1)) shall be granted
automatically each year, immediately following the annual meeting
of the Company s stockholders, to each Director who is an Eligible
Director at such time and who is not entitled to receive an Initial
Grant pursuant to paragraph 6(b) immediately following such annual
meeting (each, an Annual Grant ).
(d) Formula Award Exercise Price. The exercise price
per share for an Initial Grant or an Annual Grant shall be the
average of the Fair Market Values (as hereinafter defined) for the
fifth (5th) through the ninth (9th) business days (which, for
purposes of this paragraph 6(d) shall mean those days on which the
New York Stock Exchange is open for trading) following the date of
grant. For purposes of the preceding sentence, Fair Market Value
equals the mean of the high and low per share trading prices for
the Common Stock as reported in The Wall Street Journal for New
York Stock Exchange Composite Transactions.
(e) Vesting and Exercisability. Except as otherwise
provided in paragraph 6(h), a Formula Award shall vest and become
non-forfeitable when, and only if, the optionee continues to serve
as a Director until the first annual meeting of the Company s
stockholders held following the year in which the option was
granted. Except as otherwise provided in paragraph 6(h), a Formula
Award shall thereafter become exercisable according to the
following schedule:
Period of Optionee s Continuous Portion of Formula
Service as a Director of the Award that is
Company Exercisable
From the First Annual Meeting of
Stockholders subsequent to the grant to
the second Annual Meeting of Stockholders
subsequent to the grant . . . . . . . . . . 40%
From the second Annual Meeting of Stockholders
subsequent to the grant to the third
Annual Meeting of Stockholders subsequent to
the grant . . . . . . . . . . . . . . . . . 70%
From the third Annual Meeting of Stockholders
subsequent to the grant to the expiration
of the term of the Formula Award. . . . . . 100%
(f) Time and Manner of Exercise. Except as otherwise
provided in this paragraph 6(f), any vested Formula Award, to the
extent the same is exercisable in accordance with paragraph 6(e),
is exercisable in whole or in part at any time or from time to time
until the expiration or termination of its term in accordance with
paragraph 6(h) by giving written notice, signed by the person
exercising the Formula Award, to the Company (to the attention of
the Company s Corporate Secretary) stating the number of shares of
Common Stock with respect to which the Formula Award is being
exercised, accompanied by payment in full of the option exercise
price for the number of shares of Common Stock to be purchased. The
date both such notice and payment are received by the office of the
Secretary of the Company shall be the date of exercise of the
Formula Award as to such number of shares. Notwithstanding any
provision to the contrary, no Formula Award may at any time be
exercised with respect to a fractional share.
(g) Payment of Exercise Price. Payment of the exercise
price for a Formula Award may be in cash or by bank-certified,
cashier s, or personal check or, to the extent permitted by the
Committee, payment may be in whole or in part by
(i) transfer to the Company of shares of the Common
Stock having a Fair Market Value (as defined in paragraph
6(d)) on the date of exercise equal to the exercise
price, or
(ii) delivery of instructions to the Company to
withhold from the shares of Common Stock that would
otherwise be issued on the exercise that number of such
shares having a Fair Market Value (as defined in
paragraph 6(d)) equal to the exercise price.
If the Fair Market Value (as defined in paragraph 6(d))
of the number of whole shares of Common Stock transferred or the
number of whole shares of Common Stock withheld is less than the
total exercise price, the shortfall must be paid in cash.
(h) Term of Formula Awards. Each Formula Award shall
expire ten (10) years from its date of grant, but shall be subject
to earlier termination as follows:
(i) In the event of the termination of a Formula
Award holder s service as a Director, other than by
reason of retirement, total and permanent disability, or
death, the then-outstanding Formula Awards of such holder
(whether or not then vested and whether or not then
exercisable) shall automatically expire on (and may not
be exercised on) the effective date of such termination.
For purposes of this paragraph 6(h), the phrase by
reason of retirement means (a) mandatory retirement
pursuant to Board policy or (b) termination of service at
a time when the holder would be entitled to a retirement
benefit under the Circus Circus Employees Profit Sharing
and Investment Plan, as then in effect, if the holder
were an employee of the Company.
(ii) In the event of the termination of a Formula
Award holder s service as a Director by reason of
retirement or total and permanent disability, the then-
outstanding Formula Awards of such holder that have
vested pursuant to paragraph 6(e) (including, without
limitation, any Formula Awards or portions thereof which
vest in accordance with paragraph 6(e) on the date of
termination) shall become exercisable, to the full extent
of the number of shares of Common Stock remaining covered
by such Formula Awards, regardless of whether such
Formula Awards were previously exercisable, and each such
Formula Award shall expire one year after the date of
such termination or on the stated grant expiration date,
whichever is earlier.
(iii) In the event of the death of a Formula
Award holder while such holder is a Director, the then
outstanding Formula Awards of such holder that have
vested pursuant to paragraph 6(e) (including, without
limitation, any Formula Awards or portions thereof which
vest in accordance with paragraph 6(e) on the date of
death) shall become exercisable, to the full extent of
the number of shares of Common Stock remaining covered by
such Formula Awards, regardless of whether such Formula
Awards were previously exercisable, and each such Formula
Award shall expire one year after the date of death of
such optionee or on the stated grant expiration date,
whichever is earlier.
Exercise of a deceased holder s Formula Awards that are
still exercisable shall be by the estate of such holder or by the
person or persons to whom the holder s rights have passed by will
or the laws of descent and distribution.
(i) Transferability. The right to exercise a Formula
Award granted under the Plan shall, during the lifetime of the
Eligible Director to whom such Formula Award was granted, be
exercisable only by such recipient or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder (a
QDRO ) and shall not be assignable or transferable by such
recipient other than by will or the laws of descent and
distribution or a QDRO. Any purported transfer contrary to this
provision will be null and void and without effect.
(j) Limitation of Rights. Neither the recipient of a
Formula Award under the Plan nor the recipient s successor or
successors in interest shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock subject to
a Formula Award granted to such person until the date of issuance
of a stock certificate for such shares of Common Stock.
(k) Limitation as to Directorship. Neither the Plan,
nor the granting of a Formula Award, nor any other action taken
pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that an Eligible
Director has a right to continue as a Director for any period of
time or at any particular rate of compensation.
(1) Capital Adjustments. The number and class of shares
with respect to which a Formula Award may be granted to an Eligible
Director under the Plan, the number and class of shares subject to
each outstanding Formula Award, and the exercise price per share
specified in each such Formula Award shall be proportionately
adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation
of shares or any like capital adjustment or the payment of any
stock dividend, or other increase or decrease in the number of such
shares effected without receipt of consideration by the Company.
For purposes of the preceding sentence, the Company shall be deemed
to have received consideration for any shares issued pursuant to
this or any other employee benefit plan meeting the requirements of
Rule 16b-3.
(m) Limit on Awards to Eligible Directors.
Notwithstanding any provision of the Plan to the contrary, an
Eligible Director shall not be entitled to receive or participate
in any award under the Plan other than Formula Awards which are
granted to such Eligible Director pursuant to paragraphs 6(b) and
6(c) and meet all of the requirements of paragraph 6 applicable
thereto.
(n) Termination of Formula Awards. Notwithstanding any
provision to the contrary, no Formula Award shall be granted
pursuant to paragraph 6(b) or 6(c) on a date when the number of
shares of Common Stock authorized for issuance pursuant to the Plan
and then available for issuance pursuant to new Formula Awards is
less than the aggregate number of such shares which would be
issuable pursuant to Formula Awards otherwise required to be
granted on such date, assuming the full vesting and exercise of
such Formula Awards. In the event Formula Awards are not granted as
a result of the application of this paragraph 6(n), no Formula
Awards shall thereafter be granted pursuant to the Plan.
(o) Conflicting Provisions. In the event of any conflict
between a provision of this paragraph 6 and a provision in any
other paragraph of the Plan with respect to Formula Awards, such
provision of this paragraph 6 shall be deemed to control.
7. Miscellaneous Provisions.
(a) Effective Date and Term. The Plan is effective as
of the date it is adopted by the holders of at least a majority of
the outstanding shares of the Company s Common Stock present in
person or by proxy and entitled to vote at the Company s 1991
Annual Meeting of Stockholders. Unless extended by the stockholders
of the Company and subject to paragraph 7(k), this Plan shall
expire upon the expiration of a ten-year period commencing on the
effective date of the Plan, however, the Plan shall continue
thereafter to govern all awards granted before that date until the
exercise, expiration or cancellation of such awards.
(b) Rights as Stockholder. An Employee Participant
under the Plan shall have no right as a holder of the Company s
Common Stock with respect to share-value incentives granted
hereunder, and an Eligible Director shall have no right as a holder
of the Company s Common Stock with respect to Formula Awards
granted hereunder, unless and until certificates for shares of the
Company s Common Stock are issued to the Employee Participant or
Eligible Director, as the case may be. Common Stock issued to an
Employee Participant pursuant to a share-value incentive grant
shall nevertheless be subject to such limitations and restrictions
contained in the agreement with respect to the grant.
(c) Funding of the Plan. The Plan shall be unfunded.
The Company shall not be required to establish any special or
separate fund or to make any other segregation of assets to assure
the payment of any share value incentive grant or Formula Award
under the Plan.
(d) Agreements. Each share-value incentive granted to
an Employee Participant under the Plan shall be evidenced by an
agreement in such form and containing such terms and conditions
(not inconsistent with the Plan) as the Committee shall determine
in its sole discretion.
(e) Non-Transferability. No share-value incentive grant
to an Employee Participant under the Plan, and no interest therein,
shall be transferable by the Employee Participant otherwise than by
will or the laws of descent and distribution or pursuant to a QDRO.
All share-value incentive grants to an Employee Participant shall
be exercisable or received during the Employee Participant s
lifetime only by the Employee Participant or pursuant to a QDRO.
Any purported transfer contrary to this provision will be null and
void and without effect.
(f) Adjustments Upon Certain Changes. In the event of
a merger, consolidation, reorganization, recapitalization, spinoff,
stock dividend or stock split, or combination or other increase or
reduction in the number of issued shares of Common Stock, or
extraordinary cash dividend or any other similar event, the Board
of Directors or the Committee may, in order to prevent the dilution
or enlargement of rights under share-value incentive grants or
Formula Awards, make such adjustments in the number and type of
shares authorized by the Plan, the number and type of shares
covered by, or with respect to which payments are measured under,
outstanding share-value incentive grants and the exercise prices
specified therein as may be determined to be appropriate and
equitable.
(g) Tax Withholding. The Committee shall have the power
to withhold, or require an Employee Participant to remit to the
Company, an amount sufficient to satisfy any withholding or other
tax due with respect to any amount payable and/or shares issuable
under the Plan, and the Committee may defer such payment or
issuance unless indemnified to its satisfaction. Subject to the
consent of the Committee, an Employee Participant may make an
irrevocable election to have shares of Common Stock otherwise
issuable under a share-value incentive grant withheld, tender back
to the Company shares of Common Stock received pursuant to a share-
value incentive grant or deliver to the Company previously acquired
shares of Common Stock having a fair market value sufficient to
satisfy all or part of the participant s estimated tax obligations
associated with the transaction. Such election must be made by an
Employee Participant prior to the date on which the relevant tax
obligation arises. The Committee may disapprove of any election and
may limit, suspend or terminate the right of an Employee
Participant to make such elections.
(h) Listing and Legal Compliance. The Committee may
suspend the exercise or payment of any share value incentive grant
or Formula Award so long as it determines that securities exchange
listing, or any registration, approval or other action under any
gaming or securities laws or regulations, is required in connection
therewith and has not been completed on terms acceptable to the
Committee. The Committee shall have the right to condition any such
issuance or transfer upon receipt by the Company of written
undertakings to comply with such restrictions on subsequent
disposition of such shares as the Committee or the Company shall
reasonably deem necessary or advisable as a result of any
applicable law, regulation or official interpretations thereof, and
certificates representing such shares may be legended to reflect
any such restrictions or may be made subject to a stop transfer
restriction with the Company s transfer agent.
(i) Beneficiary Designation. Subject to paragraphs 6(i)
and 7(e), each Employee Participant and Eligible Director may name,
from time to time, beneficiaries (who may be named contingently or
successively) to whom benefits under the Plan are to be paid in the
event of such Employee Participant s or Eligible Director s death
before they receive any or all such benefits. Each designation will
revoke all prior designations by the same Employee Participant or
Eligible Director, shall be in a form prescribed by the Committee,
and will be effective only when filed by the Employee Participant
or Eligible Director in writing with the Committee during the
Employee Participant s or Eligible Director s lifetime. In the
absence of any such designation, vested benefits remaining unpaid
at the Employee Participant s or Eligible Director s death shall be
paid to the Employee Participant s or Eligible Director s estate.
(j) Rights of Participants. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or any
subsidiary to terminate any Employee Participant s employment at
any time, nor confer upon any Employee Participant any right to
continue in the employ of the Company or any subsidiary for any
period of time or to continue his or her present or any other rate
of compensation. No employee shall have a right to be selected as
an Employee Participant, or, having been so selected, to be
selected again as an Employee Participant, except as may be
provided in any written agreement between the Company and such
employee.
(k) Amendment, Suspension and Termination of Plan. The
Board of Directors may amend, terminate or suspend the Plan at any
time, in its sole and absolute discretion; provided, however, that
if required to qualify the Plan under Rule 16b-3, no amendment
shall be made more than once every six (6) months that would change
the amount, price or timing of Formula Awards (or any other
provision of the Plan the amendment of which would cause the Plan
to fail to qualify under Rule 16b-3), other than to comport with
changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act, or the rules and
regulations promulgated thereunder; and provided, further, that no
amendment shall be made without the approval of the Company s
stockholders that would
(i) materially increase the number of shares of
Common Stock that may be issued under the Plan, or
(ii) otherwise materially increase the benefits
accruing to participants under the Plan.
No amendment, suspension or termination of the Plan shall
impair the rights of Employee Participants under outstanding share-
value incentive grants or Eligible Directors under Formula Awards
without the consent of the Employee Participants and/or Eligible
Directors affected thereby or make any change that would disqualify
the Plan, or any other plan of the Company intended to be so
qualified, from the exemption provided by Rule 16b-3.
(1) Misconduct. In the event that an Employee
Participant (i) shall cease to be employed by the Company or a
subsidiary because of his discharge for dishonesty, or because he
violated any material provision of any employment or other
agreement between him and the Company or a subsidiary, or (ii)
shall voluntarily resign or terminate his employment with the
Company or a subsidiary under or followed by such circumstances as
would constitute a breach of any material provision of any
employment or other agreement between him and the Company or a
subsidiary, or (iii) shall have committed an act of dishonesty not
discovered by the Company or a subsidiary prior to the cessation of
his employment with the Company or a subsidiary, but which would
have resulted in his discharge if discovered prior to such date, or
(iv) shall, either before or after cessation of his employment with
the Company or a subsidiary, without the written consent of the
Company or a subsidiary, use (except for the benefit of the Company
or a subsidiary) or disclose to any other person any confidential
information relating to the continuation or proposed continuation
of the business or any trade secrets of the Company or a subsidiary
obtained as a result of or in connection with such employment, or
(v) shall, either before or after the cessation of his employment
with the Company or a subsidiary, without the written consent of
the Company or a subsidiary, directly or indirectly, give advice
to, or serve as an employee, director, officer, or trustee of, or
in any similar capacity with, or otherwise directly or indirectly
participate in the management, operation, or control of, or have
any direct or indirect financial interest in, any corporation,
partnership, or other organization which directly or indirectly
competes in any respect with the Company or its subsidiaries, or
(vi) shall cease to be employed by the Company or a subsidiary
because of his inability to continue as an employee under any law
or governmental regulation, including any Nevada gaming law or
regulation, or (vii) shall voluntarily resign or terminate his
employment with the Company or a subsidiary under or followed by
such circumstances as would have rendered him unable to have
continued as an employee under any law or governmental regulation,
including any Nevada gaming law or regulation, then forthwith from
the happening of any such event, any share-value incentive grant
then held by such Employee Participant shall terminate and become
void to the extent that, in the case of a stock option, it then
remains unexercised and, in the case of any other share-value
incentive grant, any condition or performance goal under it then
has not been met or satisfied. Additional forfeiture provisions may
be included within the terms of any share-value incentive grant to
an Employee Participant as may be determined by the Committee in
its discretion.
(m) Governing Law. The validity and construction of the
Plan, its rules and regulations and any agreements entered into
thereunder shall be governed by the laws of the State of Nevada
(but not including choice of law rules thereof).
Exhibit 10(g)
CIRCUS CIRCUS ENTERPRISES, INC.
1993 STOCK OPTION PLAN
(As Amended and Restated April 25, 1997)
1. PURPOSES OF THE PLAN
The purposes of this 1993 Stock Option Plan (the Plan )
are to enable Circus Circus Enterprises, Inc. (the Company ) and
its Subsidiaries to attract and retain the services of officers and
other key employees with managerial, professional or supervisory
responsibilities, to retain able consultants and advisors and to
motivate such persons to use their best efforts on behalf of the
Company.
2. GENERAL PROVISIONS
2. 1 Definitions
As used in the Plan:
(a) Board of Directors means the board of
Directors of the Company
(b) Code means the Internal Revenue Code of
1986, including any and all amendments
thereto.
(c) Committee means the committee appointed by
the Board of Directors from time to time to
administer the Plan pursuant to Section 2.2.
(d) Common Stock means the Company s Common
Stock, $.01-2/3 par value.
(e) Fair Market Value means, with respect to a
specific date, the last reported sale price of
the Common Stock on the NYSE Composite Tape on
the date such Fair Market Value is being
determined, and, in the absence of any sale on
such day, the Fair Market Value as determined
in good faith by the Committee on the basis of
such quotations and other considerations as
the Committee deems appropriate.
(f) Incentive Stock Option means an option
granted under the Plan which is intended to
qualify as an incentive stock option under
Section 422 of the Code.
(g) NYSE means the New York Stock Exchange.
(h) Non-Qualified Stock Option means an option
granted under the Plan which is not an
Incentive Stock Option.
(i) Participant means a person to whom a Stock
Option has been granted under the Plan.
(j) Rule 16b-3 means Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as
amended, or any successor rule.
(k) Stock Option means an Incentive Stock Option
or a Non-Qualified Stock Option granted under
the Plan.
(l) Subsidiary means any corporation (other than
the Company) in an unbroken chain of
corporations beginning with the Company if, at
the time of the granting of the Stock Option,
each of the corporations other than the last
corporation in the unbroken chain owns 50% or
more of the total voting power of all classes
of stock in one of the other corporations in
such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the
Committee which shall at all times consist of
two (2) or more persons, each of whom shall be
a member of the Board of Directors. To the
extent possible, and to the extent the Board
of Directors deems it necessary or
appropriate, each member of the Committee
shall be a Non-Employee Director (as such
term is defined in Rule 16b-3) and an Outside
Director (as such term is defined in Treasury
Regulations Section 1.162-27 promulgated under
the Code). The Board of Directors may from
time to time remove members from, or add
members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled
by the Board of Directors. The Committee shall
select one of its members as Chairman, and
shall hold meetings at such times and places
as it may determine.
(b) The Committee shall have the full power,
subject to and within the limits of the Plan,
to: (i) interpret and administer the Plan, and
Stock Options granted under it; (ii) make and
interpret rules and regulations for the
administration of the Plan and to make changes
in and revoke such rules and regulations (and
in the exercise of this power, shall generally
determine all questions of policy and
expediency that may arise and may correct any
defect, omission, or inconsistency in the Plan
or any agreement evidencing the grant of any
Stock Option in a manner and to the extent it
shall deem necessary to make the Plan fully
effective); (iii) determine those persons to
whom Stock Options shall be granted and the
number of Stock Options to be granted to any
person; (iv) determine the terms of Stock
Options granted under the Plan, consistent
with the provisions of the Plan; and (v)
generally, exercise such powers and perform
such acts in connection with the Plan as are
deemed necessary or expedient to promote the
best interests of the Company. The
interpretation and construction by the
Committee of any provisions of the Plan or of
any Stock Option shall be final, binding and
conclusive.
(c) The Committee may act only by a majority of
its members then in office; however, the
Committee may authorize any one (1) or more of
its members or any officer of the Company to
execute and deliver documents on behalf of the
Committee.
(d) No member of the Committee shall be liable for
any action taken or omitted to be taken or for
any determination made by him or her in good
faith with respect to the Plan, and the
Company shall indemnify and hold harmless each
member of the Committee against any cost or
expense (including counsel fees) or liability
(including any sum paid in settlement of a
claim with the approval of the Committee)
arising out of any act or omission in
connection with the administration or
interpretation of the Plan, unless arising out
of such person s own fraud or bad faith.
2.3 Effective Date
The Plan shall become effective upon its adoption by the
Board of Directors, and Stock Options may be granted upon
such adoption and from time to time thereafter, subject,
however, to approval of the Plan by the affirmative vote
of the holders of a majority of the shares of the Common
Stock present in person or by proxy and entitled to vote
at an annual meeting of the shareholders of the Company
or at a special meeting of the shareholders of the
Company expressly called for such purposes, or any
adjournments thereof, within 12 months after the adoption
of the Plan by the Board of Directors. If the Plan is not
approved at such annual or special meeting or at any
adjournments thereof, this Plan and all Stock Options
previously granted thereunder shall become null and void.
2.4 Duration
If approved by the shareholders of the Company, as
provided in Section 2.3, unless sooner terminated by the
Board of Directors, the Plan shall remain in effect for
a period of ten (10) years following its adoption by the
Board of Directors.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may be
subject to Stock Options granted under the Plan shall be
3,000,000. The Stock Options shall be subject to
adjustment in accordance with Section 4.1, as
appropriate, and shares to be issued upon exercise of
Stock Options may be either authorized and unissued
shares of Common Stock or authorized and issued shares of
Common Stock purchased or acquired by the Company for any
purpose. If a Stock Option or portion thereof shall
expire or is terminated, canceled or surrendered for any
reason without being exercised in full, the unpurchased
shares of Common Stock which were subject to such Stock
Option or portion thereof shall be available for future
grants of Stock Options under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in
whole or in part, at any time by the Board of Directors.
The Board of Directors may from time to time make such
amendments to the Plan as it may deem advisable,
including, with respect to Incentive Stock Options,
amendments deemed necessary or desirable to comply with
Section 422 of the Code and any regulations issued
thereunder; provided, however, that without the approval
of the Company s shareholders no amendment shall be made
which:
(a) Increases the maximum number of shares of
Common Stock which may be subject to Stock
Options granted under the Plan (other than as
provided in Section 4.1, as appropriate); or
(b) Extends the term of the Plan; or
(c) Increases the period during which a Stock
Option may be exercised beyond ten years from
the date of grant; or
(d) Otherwise materially increases the benefits
accruing to Participants under the Plan; or
(e) Materially modifies the requirements as to
eligibility for participation in the Plan; or
(f) Will cause Stock Options granted under the
Plan to fail to meet the requirements of Rule
16b-3.
Except as otherwise provided herein, termination or
amendment of the Plan shall not, without the consent of
a Participant, affect such Participant s rights under any
Stock Option previously granted to such Participant.
2.7 Participants and Grants
Stock Options may be granted by the Committee to (i)
officers and other full-time salaried employees of the
Company and its Subsidiaries with managerial,
professional or supervisory responsibilities and (ii)
consultants and advisors who render bona fide services to
the Company and its Subsidiaries, in each case, where the
Committee determines that such officer, employee,
consultant or advisor has the capacity to make a
substantial contribution to the success of the Company.
The Committee may grant Stock Options to purchase such
number of shares of Common Stock (subject to the
limitations of Section 2.5) as the Committee may, in its
sole discretion, determine. In granting Stock Options
under the Plan, the Committee, on an individual basis,
may vary the number of Incentive Stock Options or Non-
Qualified Stock Options as between Participants and may
grant Incentive Stock Options and/or Non-Qualified Stock
Options to a Participant in such amounts as the Committee
may determine in its sole discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be
evidenced by written agreements executed by the Company
and the Participant to whom granted, which agreement
shall state the number of shares of Common Stock which
may be purchased upon the exercise thereof and shall
contain such investment representations and other terms
and conditions as the Committee may from time to time
determine, or, in the case of Incentive Stock Options, as
may be required by Section 422 of the Code, or any other
applicable law.
3.2 Price
Subject to the provisions of Sections 3.6(d) and 4.1, the
purchase price per share of Common Stock subject to a
Stock Option shall, in no case, be less than one hundred
percent (100%) of the Fair Market Value of a share of
Common Stock on the date the Stock Option is granted.
3.3 Period
The duration or term of each Stock Option granted under
the Plan shall be for such period as the Committee shall
determine but in no event more than ten (10) years from
the date of grant thereof.
3.4 Exercise
Subject to Section 4.4, Stock Options may be exercisable
immediately upon granting of the Stock Option or at such
other time or times as the Committee shall specify when
granting the Stock Option. Once exercisable, a Stock
Option shall be exercisable, in whole or in part, by
delivery of a written notice of exercise to the Secretary
of the Company at the principal office of the Company
specifying the number of shares of Common Stock as to
which the Stock Option is then being exercised together
with payment of the full purchase price for the shares
being purchased upon such exercise. Until the shares of
Common Stock as to which a Stock Option is exercised are
issued, the Participant shall have none of the rights of
a shareholder of the Company with respect to such shares.
3.5 Payment
The purchase price for shares of Common Stock as to which
a Stock Option has been exercised and any amount required
to be withheld, as contemplated by Section 4.3, may be
paid:
(a) In United States dollars in cash, or by check,
bank draft or money order payable in United
States dollars to the order of the Company; or
(b) By the delivery by the Participant to the
Company of whole shares of Common Stock having
an aggregate Fair Market Value on the date of
payment equal to the aggregate of the purchase
price of Common Stock as to which the Stock
Option is then being exercised or by the
withholding of whole shares of Common Stock
having such Fair Market Value upon the
exercise of such Stock Option; or
(c) In the discretion of the Committee, by a
combination of both (a) and (b) above.
The Committee may, in its discretion, impose limitations,
conditions and prohibitions on the use by a Participant of shares
of Common Stock to pay the purchase price payable by such
Participant upon the exercise of a Stock Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the
following provisions shall apply to Incentive Stock
Options granted under the Plan:
(a) Incentive Stock Options shall only be granted
to Participants who are employees of the
Company or its Subsidiaries.
(b) To the extent that the aggregate Fair Market
Value of Common Stock with respect to which
Incentive Stock Options are exercisable for
the first time by a Participant during any
calendar year under this Plan and any other
Plan of the Company or a Subsidiary exceeds
$100,000, such Stock Options shall be treated
as Non-Qualified Stock Options.
(c) Any Participant who disposes of shares of
Common Stock acquired upon the exercise of an
Incentive Stock Option by sale or exchange
either within two (2) years after the date of
the grant of the Incentive Stock Option under
which the shares were acquired or within one
(1) year of the acquisition of such shares,
shall promptly notify the Secretary of the
Company at the principal office of the Company
of such disposition, the amount realized, the
purchase price per share paid upon exercise
and the date of disposition.
(d) No Incentive Stock Option shall be granted to
a Participant who, at the time of the grant,
owns stock representing more than ten percent
(10%) of the total combined voting power of
all classes of stock either of the Company or
any parent or Subsidiary of the Company,
unless the purchase price of the shares of
Common Stock purchasable upon exercise of such
Incentive Stock Option is at least one hundred
ten percent (110%) of the Fair Market Value
(at the time the Incentive Stock Option is
granted) of the Common Stock and the Incentive
Stock Option is not exercisable more than five
(5) years from the date it is granted.
3.7 Termination of Employment
(a) In the event a Participant s employment by, or
relationship with, the Company shall terminate
for any reason other than those reasons
specified in Sections 3.7(b), (c), (d) or (e)
hereof while such Participant holds Stock
Options granted under the Plan, then all
rights of any kind under any outstanding
Option held by such Participant which shall
not have previously lapsed or terminated shall
expire immediately.
(b) If a Participant s employment by, or
relationship with, the Company or its
Subsidiaries shall terminate as a result of
such Participant s total disability, each
Stock Option held by such Participant (which
has not previously lapsed or terminated) shall
immediately become fully exercisable as to the
total number of shares of Common Stock subject
thereto (whether or not exercisable to that
extent at the time of such termination) and
shall remain so exercisable by such
Participant for a period of six months after
termination unless such Stock Option expires
earlier by its terms. For purposes of the
foregoing sentence, total disability shall
mean permanent mental or physical disability
as determined by the Committee.
(c) In the event of the death of a Participant,
each Stock Option held by such Participant
(which has not previously lapsed or
terminated) shall immediately become fully
exercisable as to the total number of shares
of Common Stock subject thereto (whether or
not exercisable to that extent at the time of
death) by the executor or administrator of the
Participant s estate or by the person or
persons to whom the deceased Participant s
rights thereunder shall have passed by will or
by the laws of descent or distribution, and
shall remain so exercisable for a period of
six months after such Participant s death
unless such Stock Option expires earlier by
its terms.
(d) If a Participant s employment by the Company
shall terminate by reason of such
Participant s retirement in accordance with
Company policies, each Stock Option held by
such Participant at the date of termination
(which has not previously lapsed or
terminated) shall immediately become fully
exercisable as to the total number of shares
of Common Stock subject hereto (whether or not
exercisable to that extent at the time of such
termination) and shall remain so exercisable
by such Participant for a period of three
months after termination, unless the Stock
Option expires earlier by its terms.
(e) In the event the Company terminates the
employment of a Participant who at the time of
such termination was an officer of the Company
and had been continuously employed by the
Company during the five year period
immediately preceding such termination, for
any reason except good cause (hereafter
defined) and except upon such Participant s
death, total disability or retirement in
accordance with Company policies, each Stock
Option held by such Participant (which has not
previously lapsed or terminated and which has
been held by such Participant for more than
six months prior to such termination) shall
immediately become fully exercisable as to the
total number of shares of Common Stock subject
thereto (whether or not exercisable to that
extent at the time of such termination) and
shall remain so exercisable for a period of
three (3) months after such termination unless
such Stock Option expires earlier by its
terms. A termination for good cause shall be
deemed to have occurred only if the
Participant in question (i) is terminated by
written notice for dishonesty, because of his
conviction of a felony, or because of his
violation of any material provision of any
employment or other agreement with the Company
or any of its Subsidiaries, or (ii) shall
voluntarily resign or terminate his employment
with the Company or any of its Subsidiaries
under or followed by such circumstances as
would constitute a breach of any material
provision of any employment or other agreement
between him and the Company or any of its
Subsidiaries, or (iii) shall have committed an
act of dishonesty not discovered by the
Company or any of its Subsidiaries prior to
the cessation of his employment with the
Company or any of its Subsidiaries, but which
would have resulted in his discharge if
discovered prior to such date, or (iv) shall,
either before or after cessation of his
employment with the Company or any of its
Subsidiaries, without the written consent of
the Company or any of its Subsidiaries, use
(except for the benefit of the Company or any
of its Subsidiaries) or disclose to any other
person any confidential information relating
to the continuation or proposed continuation
of the business or any trade secrets of the
Company or any of its Subsidiaries obtained as
a result of or in connection with such
employment, or (v) shall, either before or
after the cessation of his employment with the
Company or any of its Subsidiaries, without
the written consent of the Company or any of
its Subsidiaries, directly or indirectly, give
advice to, or serve as an employee, director,
officer, or trustee of, or in any similar
capacity with, or otherwise directly or
indirectly participate in the management,
operation, or control of, or have any direct
or indirect financial interest in, any
corporation, partnership, or other
organization which directly or indirectly
competes in any respect with the Company or
any of its Subsidiaries, or (vi) shall cease
to be employed by the Company or any of its
Subsidiaries because of his inability to
continue as an employee under any law or
governmental regulation, including any Nevada
gaming law or regulation, or (vii) shall
voluntarily resign or terminate his employment
with the Company or any of its Subsidiaries
under or followed by such circumstances as
would have rendered him unable to have
continued as an employee under any law or
governmental regulation, including any Nevada
gaming law or regulation.
3.8 Effect of Leaves of Absence
It shall not be considered a termination of employment
when a Participant is on military or sick leave or such
other type of leave of absence which is considered a
continuing intact the employment relationship of the
Participant with the Company or any of its Subsidiaries.
In case of such leave of absence, the employment
relationship shall be deemed to have continued until the
later of (i) the date when such leave shall have lasted
ninety days in duration, or (ii) the date as of which the
Participant s right to reemployment shall have no longer
been guaranteed either by statute or contract.
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Changes in Capitalization
In the event of changes to the outstanding shares of
Common Stock of the Company through reorganization,
merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, stock
consolidation or otherwise, or in the event of a sale of
all or substantially all of the assets of the Company, an
appropriate and proportionate adjustment shall be made in
the number and kind of shares as to which Stock Options
may be granted. A corresponding adjustment changing the
number or kind of shares and/or the purchase price per
share of unexercised Stock Options or portions thereof
which shall have been granted prior to any such change
shall likewise be made. Notwithstanding the foregoing, in
the case of a reorganization, merger or consolidation, or
sale of all or substantially all of the assets of the
Company, in lieu of adjustments as aforesaid, the
Committee may in is discretion accelerate the date after
which a Stock Option may or may not be exercised or the
stated expiration date thereof. Adjustments or changes
under this Section shall be made by the Committee, whose
determination as to what adjustments or changes shall be
made, and the extent thereof, shall be final, binding and
conclusive.
4.2 Non-Transferability
No Stock Option shall be transferable except by will or
the laws of descent and distribution, nor shall any Stock
Option be exercisable during the Participant s lifetime
by any person other than the Participant or his guardian
or legal representative.
4.3 Withholding
The Company s obligations under this Plan shall be
subject to applicable federal, state and local tax
withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the
exercise of any Stock Option may, in the discretion of
the Committee, be paid in shares of Common Stock already
owned by the Participant or through the withholding of
shares otherwise issuable to such Participant, upon such
terms and conditions as the Committee shall determine. If
the Participant shall fail to pay, or make arrangements
satisfactory to the Committee for the payment, to the
Company of all such federal, state and local taxes
required to be withheld by the Company, then the Company
shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to such
Participant an amount equal to any federal, state or
local taxes of any kind required to be withheld by the
Company.
4.4 Compliance with Law and Approval of Regulatory
Bodies
No Stock Option shall be exercisable and no shares will
be delivered under the Plan except in compliance with all
applicable federal and state laws and regulations
including, without limitation, compliance with all
federal and state securities laws and withholding tax
requirements and with the rules of NYSE and of all other
domestic stock exchanges on which the Common Stock may be
listed. Any share certificate issued to evidence shares
for which a Stock Option is exercised may bear legends
and statements the Committee shall deem advisable to
assure compliance with federal and state laws and
regulations. No Stock Option shall be exercisable and no
shares will be delivered under the Plan, until the
Company has obtained consent or approval from regulatory
bodies, federal or state, having jurisdiction over such
matters as the Committee may deem advisable. In the case
of the exercise of a Stock Option by a person or estate
acquiring the right to exercise the Stock Option as a
result of the death of the Participant, the Committee may
require reasonable evidence as to the ownership of the
Stock Option and may require consents and releases of
taxing authorities that it may deem advisable.
4.5 No Right to Employment
Neither the adoption of the Plan nor its operation, nor
any document describing or referring to the Plan, or any
part thereof, nor the granting of any Stock Options
hereunder, shall confer upon any Participant under the
Plan any right to continue in the employ of the Company
or any Subsidiary, or shall in any way affect the right
and power of the Company or any Subsidiary to terminate
the employment of any Participant at any time with or
without assigning a reason therefor, to the same extent
as might have been done if the Plan had not been adopted.
4.6 Exclusions from Pension Computations
By acceptance of a grant of a Stock Option under the
Plan, the recipient shall be deemed to agree that any
income realized upon the receipt or exercise thereof or
upon the disposition of the shares received upon exercise
will not be taken into account as base remuneration ,
wages , salary or compensation in determining the
amount of any contribution to or payment or any other
benefit under any pension, retirement, incentive, profit-
sharing or deferred compensation plan of the Company or
any Subsidiary.
4.7 Abandonment of Options
A Participant may at any time abandon a Stock Option
prior to its expiration date. The abandonment shall be
evidenced in writing, in such form as the Committee may
from time to time prescribe. A Participant shall have no
further rights with respect to any Stock Option so
abandoned.
4.8 Severability
If any of the terms or provisions of the Plan conflict
with the requirements of Rule 16b-3, then such terms or
provisions shall be deemed inoperative to the extent they
so conflict with the requirements of Rule 16b-3.
4.9 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as
a convenience to facilitate reference, such headings,
numbering and paragraphing shall not in any case be
deemed in any way material or relevant to the
construction of the Plan or any provision hereof. The use
of the masculine gender shall also include within its
meaning the feminine. The use of the singular shall also
include within its meaning the plural and vice versa.
4.10 Use of Proceeds
Funds received by the Company upon the exercise of Stock
Options shall be used for the general corporate purposes
of the Company.
4.11 Construction of Plan
The place of administration of the Plan shall be in the
State of Nevada, and the validity, construction,
interpretation, administration and effect of the Plan and
of its rules and regulations, and rights relating to the
Plan, shall be determined solely in accordance with the
laws of the State of Nevada.
Exhibit 10(x)
AMENDMENT NO. 1 TO AMENDED AND
RESTATED CREDIT AGREEMENT
This Amendment No. 1 to the Amended and Restated Credit
Agreement (this "Amendment") dated as of April 4, 1997 is entered
into with reference to the Amended and Restated Credit Agreement
dated as of September 9, 1996, among Circus and Eldorado Joint
Venture, a Nevada general partnership ( Partnership ), the
Lenders referred to therein ( Lenders ), The Long-Term Credit
Bank of Japan. Ltd., Los Angeles Agency and Societe Generale, as
Managing Agents, CIBC Inc. and Credit Lyonnais, Los Angeles
Branch, as Co-Agents, and Wells Fargo Bank, N.A. in its capacity
as Arranger and Administrative Agent for Lenders ( Agent ) (as
amended, the Credit Agreement ). Terms defined in the Credit
Agreement are used herein with the same meanings. Borrower and
the Agent, acting with the consent of the Lenders in accordance
with Section 10.6 of the Credit Agreement, hereby amend the
Credit Agreement as follows:
1. New Section 9.7 - Agent to Hold Liens for Benefit of
Lenders as Parties to Interest Rate Agreements. The Credit
Agreement is hereby amended to add a new Section 9.7 thereto, to
read in full as follows:
"Arrangements with respect to Interest Rate Agreements.
(a) Partnership hereby agrees that each of the liens
and security interests granted to the Agent for the benefit
of the Lenders under this Agreement and the other Loan
Documents shall be deemed to also secure the obligations of
Partnership to Lenders under Interest Rate Agreements
entered into with respect to the Obligations and
Indebtedness evidenced by this Agreement and the other Loan
Documents. Each Interest Rate Agreement entered into by
Partnership with any Lender shall be conclusively presumed
to relate to the obligations and Indebtedness evidenced by
this Agreement unless it otherwise specifies.
(b) Each Lender hereby irrevocably appoints the Agent
to act as collateral agent for that Lender with respect to
the liens and security interests created by the Loan
Documents for the benefit of that Lender as a creditor under
Interest Rate Agreements of the type described in clause (a)
of this Section; in such capacity the Agent shall be
entitled to the indemnity provided by Section 9.4 of the
Credit Agreement and to the other indemnities and
protections afforded to the Agent by this Agreement and the
other Loan Documents, mutatis mutandis.
(c) Each Lender agrees that the claims of the Lenders
under this Agreement and the claims of each Lender under any
Interest Rate Agreement shall rank pari passu, provided that
the right of each Lender with respect to the Collateral by
reason of its claims under such Interest Rate Agreements
shall be limited to the right to receive a share of the
proceeds of the Collateral and that the Lenders (in their
capacity as Lenders under this Agreement) shall have the
exclusive right to make all determinations with respect to
the exercise of remedies with respect to the Collateral
until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all
Letters of Credit. No person other than the Lenders shall be
deemed to have any rights under this clause (c).
(d) Notwithstanding any other provision of this
Agreement to the contrary, no Interest Rate Agreement shall
have the benefit of the Make-Well Agreement."
Clause (c) of the foregoing new Section shall be deemed to
satisfy the requirements of Section 7.2A(vii) of the Credit
Agreement that Lenders entering into secured Interest Rate
Agreements enter into intercreditor agreements with the Agent and
the other Lenders.
2. Authorization to Execute Amendments to Collateral
Documents. The Agent and Partnership are hereby authorized and
directed to enter into amendments to the Deed of Trust, the
Assignment of Rents and Revenues and the Security Agreement
substantially in the forms attached hereto as Exhibits A, B and
C.
3. Conditions Precedent. The effectiveness of this
Amendment shall be conditioned upon the receipt by the Agent of
the written consent to the execution, delivery and performance
hereof from all of the Lenders and from Circus Circus
Enterprises, Inc.
4. Representation and Warranty. Borrower represents and
warrants to the Agent and the Lenders that no Default or Event
of Default has occurred and remains continuing.
5. Governing Law. This Amendment will be governed by, and
construed and enforced in accordance with, the internal laws of
the State of Nevada.
6. Confirmation. In all other respects, the terms of the
Credit Agreement and other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, Borrower and Agent have executed
this Amendment as of the date first written above by their duly
authorized representatives.
CIRCUS AND ELDORADO JOINT VENTURE, a
Nevada general partnership
By: GALLEON, INC.
Its: Managing Partner
By: Clyde T. Turner
Title: President
By: ELDORADO LIMITED LIABILITY COMPANY
Its: General Partner
By: ELDORADO RESORTS LLC
Its: Manager
By: Don Carano
Title: President
By: EXECUTIVE COMMITTEE
By: Gary Carano
Title: General Manager
By: Bruce Sexton
Director of Finance
Title: and Administration
WELLS FARGO BANK, N.A., as
Administrative Agent
By: Brad Peterson
Title: Vice President
CONSENT OF LENDER
This Consent of Lender is delivered with reference to
the Amended and Restated Credit Agreement dated as of September
9, 1996, among Circus and Eldorado Joint Venture, a Nevada
general partnership, the Managing Agents and Co-Agents referred
to therein, the Lenders referred to therein ( Lenders ), and
Wells Fargo Bank, N.A., in its capacity as Arranger and
Administrative Agent for Lenders ( Agent ). Capitalized terms
used but not defined herein are used with the meanings set forth
for those terms in the Credit Agreement.
The undersigned Lender hereby consents to the
execution, delivery and performance of the proposed Amendment No.
1 to the Credit Agreement by the Agent on behalf of the Lenders,
substantially in the form presented to the undersigned as a
draft.
By: Brad Peterson
Brad Peterson, Vice President
[Typed/Printed Name and Title]
Dated April 4, 1997
CONSENT OF CIRCUS CIRCUS ENTERPRISES, INC.
This Consent is delivered with reference to the Amended
and Restated Credit Agreement dated as of September 9, 1996,
among Circus and Eldorado Joint Venture, a Nevada general
partnership, the Managing Agents and Co-Agents referred to
therein, the Lenders referred to therein ( Lenders ), and Wells
Fargo Bank, N.A., in its capacity as Arranger and Administrative
Agent for Lenders ( Agent ). Capitalized terms used but not
defined herein are used with the meanings set forth for those
terms in the Credit Agreement.
The undersigned hereby consents to the execution,
delivery and performance of the proposed Amendment No. 1 to the
Credit Agreement by the Agent on behalf of the Lenders,
substantially in the form presented to the undersigned as a
draft, provided that it is understood and agreed that the
Interest Rate Agreements referred to in Amendment No. 1 to Credit
Agreement shall not have the benefit of the Make-Well Agreement.
By: Clyde T. Turner
Clyde T. Turner, President
[Typed/Printed Name and Title]
Dated April 4 , 1997
AMENDMENT NO. 1 TO DEED OF TRUST
This AMENDMENT NO. 1 TO DEED OF TRUST ("Amendment") is
made and entered into as of April 4, 1997 by and between WELLS
FARGO BANK, N.A., in its capacity as Arranger and Administrative
Agent for the Lenders as defined in and pursuant to the Credit
Agreement described below (herein, the "Beneficiary") and CIRCUS
AND ELDORADO JOINT VENTURE, a Nevada general partnership
(referred to herein as Trustor ), with reference to the
following facts:
Trustor, the Lenders referred to therein (the "Lenders"), the
Managing Agents and Co-Agents referred to therein, and the
Beneficiary have entered into an Amended and Restated Credit
Agreement dated as of September 9, 1996 (the Credit Agreement )
pursuant to which the Lenders have extended credit facilities to
Trustor in the principal amount of $220,000,000.
6.1 To secure its obligations to the Beneficiary and
the Lenders under the Credit Agreement, Trustor executed an
Amended and Restated Construction Deed of Trust, Fixture Filing
and Security Agreement with Assignment of Rents in favor of First
American Title Insurance Company of Nevada, as Trustee (the
"Trustee"), and the Beneficiary, encumbering the real property
described on Exhibit A hereto (the "Deed of Trust"). The Deed of
Trust was recorded on May 31, 1995 in Book 4312, Page 814, as
Document No. 1897110 of the Official Records of Washoe County,
Nevada.
C. The parties to the Deed of Trust desire to amend
the Deed of Trust so that the Deed of Trust shall hereafter
secure all obligations of Trustor to the Beneficiary and the
Lenders under interest rate swap agreements, currency swap
agreements, and similar hedging arrangements, interest rate
swaps, caps and/or collar agreements.
NOW, THEREFORE, Trustor and Beneficiary hereby agree to
amend the Deed of Trust as follows:
6.1.1 After the paragraph entitled Fifth on
page eleven of the Deed of Trust, the following paragraph is
hereby by added and the Agreement amended to read as follows:
Sixth: Payment and performance by Trustor of
each and every obligation of Trustor with
respect to interest rate swap agreements,
currency swap agreements, and similar hedging
arrangements, interest rate swaps, caps
and/or collar agreements entered into with
any Lender which is party to the Credit
Agreement, (each such agreement being
referred to herein as an "Interest Rate
Agreement"), each covenant, promise and
agreement contained in any Interest Rate
Agreement, and the costs and expenses of
enforcement against Trustor of any Interest
Rate Agreements.
This Amendment shall be governed by, and construed
and enforced in accordance with, the laws of the State of
Nevada.
IN WITNESS WHEREOF, Trustor and Beneficiary have
executed this instrument as of the day and year first above
written.
TRUSTOR:
CIRCUS AND ELDORADO JOINT VENTURE, a
Nevada general partnership
By: GALLEON, INC., managing partner
By: Clyde T. Turner
Clyde T. Turner, President
[Printed Name and Title]
By: ELDORADO LIMITED LIABILITY
COMPANY, general partner
By: ELDORADO RESORTS LLC, manager
By: Don Carano
Don Carano, President
[Printed Name and Title]
By: EXECUTIVE COMMITTEE
By: Gary Carano
Title: General Manager
By: Bruce Sexton
Director of Finance
Title: and Administration
BENEFICIARY:
WELLS FARGO BANK, N.A., in its
capacity as arranger and
Administrative Agent for the Lenders
By: Brad Peterson
Brad Peterson, Vice President
[Printed Name and Title]
Exhibit 10(ccc)
AMENDMENT NO. 6 TO REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 6 to Reducing Revolving Loan
Agreement (this Amendment ) dated as of April 2, 1997 is entered
into with reference to the Reducing Revolving Loan Agreement
dated as of December 21, 1994 among Victoria Partners, a Nevada
general partnership ( Borrower ), the Banks referred to therein,
The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency and
Societe Generale, as Co-Agents, and Bank of America National
Trust and Savings Association, as Administrative Agent, as
amended by Amendment No. 1 to Reducing Revolving Loan Agreement
dated as of January 31, 1995, Amendment No. 2 to Reducing
Revolving Loan Agreement dated as of June 30, 1995, Amendment No.
3 to Reducing Revolving Loan Agreement dated as of July 28, 1995,
Amendment No. 4 to Reducing Revolving Loan Agreement dated as of
October 16, 1995 and Amendment No. 5 to Reducing Revolving Loan
Agreement dated as of August 1, 1996 (the Loan Agreement ).
Capitalized terms used but not defined herein are used with the
meanings set forth for those terms in the Loan Agreement.
Borrower, the Administrative Agent and the Banks agree
as follows:
1. Amendments to Section 1.1 - Amended Definitions.
The definitions of "Applicable Alternate Base Rate Margin,"
"Applicable Commitment Fee Rate," "Applicable Eurodollar Rate
Margin," "Applicable Pricing Level," Commitment, Maturity
Date and Swing Line Bank set forth in Section 1.1 of the Loan
Agreement are amended to read in full as follows:
"Applicable Alternate Base Rate Margin means ,
for each Pricing Period, the interest rate margin set forth
below (expressed in basis points) opposite the Applicable
Pricing Level for that Pricing Period:
Applicable
Pricing Level Margin
I 0
II 0
III 0
IV 0
V 25.00
VI 50.00
"Applicable Commitment Fee Rate means, for each
Pricing Period, the rate set forth below (expressed in basis
points) opposite the Applicable Pricing Level for that
Pricing Period:
Applicable
Pricing Level Commitment Fee
I 25.00
II 25.00
III 30.00
IV 37.50
V 37.50
VI 50.00
"Applicable Eurodollar Rate Margin means, for
each Pricing Period, the interest rate margin set forth
below (expressed in basis points) opposite the Applicable
Pricing Level for that Pricing Period:
Applicable
Pricing Level Margin
I 62.50
II 75.00
III 100.00
IV 125.00
V 150.00
VI 175.00
"Applicable Pricing Level" means, for each Pricing
Period, the pricing level set forth below opposite the
pricing criteria achieved by Borrower as of the first day of
that Pricing Period:
Applicable Annualized Funded
Pricing Level Debt Ratio
I Less than 1.25 to 1.00
II Equal to or greater than 1.25 to
1.00 but less than 1.50 to 1.00
III Equal to or greater than 1.50 to
1.00 but less than 1.75 to 1.00
IV Equal to or greater than 1.75 to
1.00 but less than 2.00 to 1.00
V Equal to or greater than 2.00 to
1.00 but less than 2.25 to 1.00
VI Equal to or greater than 2.25 to
1.00
Commitment means $200,000,000, minus the amount
of any reductions thereto made pursuant to Sections 2.4 and
2.5, provided, that the amount of the Commitment may be
increased in the manner contemplated by Section 2.10. The
respective Pro Rata Shares of the Banks as of the effective
date of Amendment No. 6 to this Agreement are set forth in
Schedule 1.1.
Maturity Date means the date that is five years
after the effective date of Amendment No. 6 to this
Agreement, but not later than June 30, 2002, or such later
anniversary thereof as may be established pursuant to
Section 2.11.
Swing Line Bank means Bank of America National
Trust and Savings Association, acting through its Nevada
Corporate Banking Division.
The definition of the term Disposition contained in Section 1.1
of the Loan Agreement is hereby amended further by deleting the
word "and" appearing immediately prior to clause (d), by
inserting the word "and" at the end of clause (d), and by adding
a new clause (e) therein as follows:
"(e) the exchange pursuant to the Loan Documents of
certain real property within the Project Site consisting of
surface parking lots for other property contiguous with the
Project Site suitable for use as parking for the Project."
2. Amendment to Schedule 1.1. Schedule 1.1 of the
Loan Agreement is hereby amended to read in full as set forth on
Attachment "A" to this Amendment.
3. Section 2.5 - Scheduled Reductions of the
Commitment. Section 2.5 of the Loan Agreement is amended to read
in full as follows:
2.5 Scheduled Mandatory Reductions of Commitment. The
Commitment shall automatically and permanently reduce on
September 30, 1997, and on the last day of each subsequent
Fiscal Quarter through the Maturity Date (each such date a
"Reduction Date") by the "Reduction Amount (as defined
below). The Reduction Amount shall be determined on
September 30, 1997, to be the amount, rounded upwards to
the nearest integral multiple of $100,000, which is equal to
(a) the difference between the then effective Commitment
minus $100,000,000, divided by (b) the then remaining number
of Reduction Dates. As of the date of any increase in the
Commitment pursuant to Section 2.10 or any extension to the
Maturity Date pursuant to Section 2.11, the Reduction Amount
for each subsequent Reduction Date will be adjusted to
reflect such increase or extension in accordance with the
same formula.
4. Deletion of Provision for Other Mandatory
Reductions of Commitment. Section 2.6 of the Loan Agreement
(which formerly required automatic and permanent reductions of
the Commitment by the amount of quarterly Available Cash Flow
and, until the Cut-Off Date, required reductions concurrently
with the making of, and in the amount of, each Permitted Profit
Distribution) is hereby deleted.
5. Addition of Increase of Commitment Provision. The
Loan Agreement is hereby amended by adding a new Section 2.10 to
read in full as follows:
"2.10. Optional Increase of Commitment.
(a) Borrower may, by written notice to the
Administrative Agent and the Banks, request one or more
increases in the principal amount of the then effective
Commitment to finance expansions to or enhancements of the
Project, provided that the aggregate amount of such
increases shall not exceed $50,000,000. Any such request
shall be submitted to the Banks in writing through the
Administrative Agent not later than 60 days prior to the
proposed effective date thereof, shall specify the proposed
increase and effective date, and shall be accompanied by a
description of the proposed expansion or enhancement of the
Project and a Certificate of a Responsible Official, signed
by a Senior Officer of Borrower, to the effect that each of
the representations and warranties set forth in Article 4
(other than those which expressly relate to a prior date)
are true and correct as of the date of the Certificate and
that no Default or Event of Default has then occurred and
remains continuing.
(b) Provided that no Default or Event of Default
exists, no Bank shall have any right to object to any such
increase in the Commitment, provided that no Bank shall be
required to increase the amount of its Pro Rata Share
without its express written consent (which may be granted or
withheld in its sole and absolute discretion). Each Bank
shall notify the Administrative Agent within 30 days of its
receipt of Borrower s request whether it desires to increase
its Pro Rata Share, ratably with the other participating
Banks, to effect such increase. Any Bank not responding
within this period will be deemed to have refused to
increase its Pro Rata Share. If one or more Banks
determine that they will not increase their Pro Rata Share,
such Banks will not be released from their existing Pro Rata
Shares and the remaining principal amount requested by
Borrower may be assumed by one or more willing Banks or
Eligible Assignees.
(c) The Administrative Agent may (and upon the request
of the Requisite Banks shall) condition the effectiveness of
any increase in the amount of the Commitment upon (i) the
execution by each Eligible Assignee of an agreement of
joinder to this Agreement in form and substance satisfactory
to the Administrative Agent, (ii) the execution by all other
parties to the Loan Documents of such amendments to the Loan
Documents as the Administrative Agent may require, and (iii)
provision by Borrower of such other assurances as the
Administrative Agent may reasonably require, including
endorsements to title insurance policies, legal opinions and
the like.
(d) Promptly following the effective date of any
increase, the Administrative Agent shall prepare and
circulate to Borrower and the Banks a revised Schedule 1.1
reflecting such increased Commitment and the revised Pro
Rata Shares of the Banks.
(e) Notwithstanding the provisions of Section
11.2, any increase of the Commitment contemplated by
this Section shall not require the unanimous consent of
the Banks."
6. Option To Extend Maturity Date. The Loan
Agreement is hereby amended by adding a new Section 2.11 as
follows:
"2.11 Extension of Maturity Date.
(a) At any time after the first anniversary of the
effective date of Amendment No. 6 to this Agreement, and
provided that no Default or Event of Default then exists,
Borrower may, by written request delivered to the
Administrative Agent, on one or more occasions request one
year extensions of the Maturity Date. Each such request
shall be accompanied by a Certificate of a Responsible
Official, signed by a Senior Officer of Borrower to the
effect that each of the representations and warranties set
forth in Article 4 (other than those which expressly relate
to a prior date) are true and correct as of the date of the
Certificate and that no Default or Event of Default has then
occurred and remains continuing.
(b) The Administrative Agent shall promptly forward
each request for extension, and any accompanying materials,
to the Banks. Each Bank, in its sole and absolute
discretion, shall determine whether to grant the request for
extension. Borrower at its option may offer to pay an
extension fee to each Bank which consents to such extension,
but if such a fee is offered, it shall be a fee offered
ratably to each consenting Bank in accordance with the
Bank's Pro Rata Share. The Banks agree to use their best
efforts to respond to each request for extension within
thirty Banking Days after receipt of such request for
extension; failure to respond shall in no event be deemed to
be a consent to the extension.
(c) If, and only if, all of the Banks notify the
Administrative Agent in writing that they consent to the
requested extension, the Maturity Date shall (subject to
payment of any agreed-upon extension fee) automatically be
extended for one year. The Administrative Agent shall
notify Borrower and the Banks in writing of each such
extension."
7. Section 6.5 - Distributions. Section 6.5 of the
Loan Agreement is amended to read in full as follows:
6.5 Distributions. Make any Distribution, whether
from capital, income or otherwise, and whether in Cash or
other Property, except:
(a) Distributions by any Subsidiary of Borrower
to Borrower or another Subsidiary of Borrower; and
(b) when no Default or Event of Default exists or
would result therefrom, Permitted Tax Distributions;
and
(c) when no Default or Event of Default exists or
would result therefrom, Permitted Profit Distributions,
provided that the aggregate amount of Permitted Profit
Distributions shall not, as of the date of any payment
thereof, exceed 100% of Available Cash Flow for the
four (4) most recent fiscal quarters, excluding any
fiscal quarters ended on or prior to December 31, 1996,
for which Borrower has delivered financial statements
to the Administrative Agent in accordance with Section
7.1(b).
provided, however, that this Section shall not apply to
prohibit a Distribution to the extent necessary to prevent a
License Revocation if (i) no Default or Event of Default
then exists which is not curable by such Distribution and
(ii) Borrower has notified the Administrative Agent in
writing of the necessity to invoke this proviso at least ten
Banking Days (or such shorter period as may be necessary in
order to comply with a regulation or order of the relevant
Gaming Board) in advance.
Section 6.13 - Capital Expenditures. Section 6.13 of
the Loan Agreement is amended to read in full as follows:
6.13 Capital Expenditures. Make, or become legally
obligated to make, any Capital Expenditure:
(a) which improves Property other than the Real
Property or the Project at any time; or
(b) without the prior approval of Requisite
Banks, if such Capital Expenditure involves, or may
reasonably be expected to involve, an amount in excess
of $25,000,000.
8. The Completion Guaranty. The Banks acknowledge
and agree that the Project has been completed, that all
obligations of the Completion Guarantor under the Completion
Guaranty have been satisfied, and that the Completion Guaranty is
terminated.
9. Parking Lot Exchange. The Banks hereby consent
in advance to the proposed exchange of certain real property
within the Project Site consisting of not more than 12 acres of
surface parking lots for other property of equal or greater
acreage contiguous with the Project Site upon satisfaction of the
following conditions:
(i) the boundaries of the real property transferred
and the real property received by Borrower shall be roughly
congruent to the properties described as such on Exhibit A
hereto;
(ii) concurrently with the exchange, a Senior Officer
of Borrower shall certify to the Administrative Agent that
(i) to the best of Borrower's knowledge, the value of the
real property received is equal to or greater than the value
of the real property transferred, and (ii) no event or
circumstance has occurred since the date of the Phase I/II
environmental report delivered to the Banks on the Closing
Date pursuant to Section 8.1(a)(11) of the Loan Agreement)
which would cause that report to be inaccurate in any
respect that is materially adverse to the interests of the
Banks;
(iii) Borrower shall have executed and delivered to the
Administrative Agent an amendment to the Deed of Trust which
results in the Deed of Trust being a first priority Lien on
such Property, subject only to such Permitted Encumbrances,
Rights of Others and other matters as are acceptable to the
Administrative Agent (who shall provide a written summary of
the same to the Banks prior to the effectiveness of any such
exchange);
(iv) Borrower shall have obtained endorsements to the
lenders title insurance policy relating to the Deed of Trust
assuring the Banks that Borrower is the owner of such
Property, that the Lien of the Deed of Trust is of first
priority (subject only to the matters described in clause
(iii), above), and providing such other assurances as the
Administrative Agent may request;
(v) The Administrative Agent shall have provided
copies of the certificate referred to above, the proposed
amendment to the Deed of Trust, and title insurance
arrangements to the Banks, and the Majority Banks shall not
have objected to the same;
(vi) Borrower shall have paid all costs associated
with such transaction; and
(vii) All other matters relating to such exchange shall
be reasonably acceptable to the Administrative Agent and its
counsel.
Upon the satisfaction of the foregoing, the
Administrative Agent may deliver a partial release of the Deed of
Trust releasing the Property to be transferred by Borrower,
notwithstanding Section 11.2.
10. Deliveries. Concurrently with its execution of
this Amendment, Borrower shall provide the Administrative Agent
with the following, each of which shall be in form and substance
acceptable to the Administrative Agent, at Borrower s sole cost
and expense:
(a) Counterparts of this Amendment executed by
all parties hereto;
(b) An amendment to the Deed of Trust in a form
suitable for recordation in the official records of Clark
County, Nevada, memorializing the amendments to the Loan
Agreement contained herein and in previous amendments to the
Loan Agreement;
(c) Such assurances as the Administrative Agent
may require concerning the authority of Borrower and its
officers to enter into this Amendment;
(d) Such other assurances, certificates,
documents, consents or opinions as the Administrative Agent
reasonably may require; and
(e) Payment of the reasonable costs and expenses
of the Administrative Agent in connection with the
preparation of this Amendment which are invoiced to Borrower
prior to the date hereof.
11. Conditions Precedent. This Amendment shall be
effective on the date that the Administrative Agent notifies the
Banks that all of the following conditions precedent have been
satisfied:
(a) Each of the items referred to in Section 10
hereof shall have been delivered to the Administrative
Agent;
(b) The Administrative Agent shall have received
an endorsement to the policy of title insurance held by the
Administrative Agent with respect to the Deed of Trust which
is reasonably acceptable to the Administrative Agent, and at
Borrower s sole expense;
(c) The Administrative Agent shall have received
evidence that Borrower s EBITDA for a three consecutive
calendar month period during 1997 was not less than
$18,000,000, which evidence shall consist of (i) certified
copies of Borrower s financial statements for the first two
months of that period, and (ii) the month-end managerial
statement for the third month of that period executed by a
Senior Officer of Borrower;
(d) The representations and warranties of
Borrower contained in Article 4 of the Loan Agreement (other
than those which expressly relate to a prior date) shall be
true and correct;
(e) Borrower and any other Parties shall be in
compliance with all the terms and provisions of the Loan
Documents and no Default or Event of Default shall have
occurred and be continuing;
(f) Borrower shall have paid the Administrative
Agent, for the ratable accounts of the Banks pro rata
according to their Pro Rata Share of the Commitment, an
amendment fee in an amount equal to the product of (i) 12.50
basis points and (ii) the then applicable Commitment. This
fee shall not be refundable under any circumstances; and
(g) Borrower shall have delivered such other
assurances with respect to the foregoing as the
Administrative Agent may reasonably request.
12. Representation and Warranty. Borrower represents
and warrants to the Administrative Agent and the Banks that no
Default or Event of Default has occurred and remains continuing,
and that Borrower continues to be in compliance with Section 5.10
of the Loan Agreement (concerning Hazardous Materials Law).
13. Confirmation. In all other respects, the terms of
the Loan Agreement and the other Loan Documents are hereby
confirmed.
IN WITNESS WHEREOF, Borrower, the Administrative Agent
and the Banks have executed this Amendment as of the date first
written above by their duly authorized representatives.
Borrower
VICTORIA PARTNERS, a Nevada general
partnership
By: Gold Strike L.V., managing
general partner
By: Last Chance Investment
Incorporated, general partner
By:
William A. Richardson
President
By: MRGS Corp., a Nevada corporation,
general partner
By: Daniel R. Lee
Daniel R. Lee, Chief Financial
Officer and Treasurer
Administrative Agent
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By: Patrick Carroll
Patrick Carroll, Vice President
By: Jancie Hammond
Janice Hammond, Vice President
Banks
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank and as
Swing Line Bank
By: Jon Varnell
Jon Varnell, Managing Director
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as Co-Agent
and a Bank
By: Koh Takemoto
Title: Joint General Manager
SOCIETE GENERALE, as Co-Agent and a
Bank
By: Donald L. Schubert
Title: Vice President
FIRST SECURITY BANK, N.A., as a Bank
By: David P. Williams
Title: Vice President
BANK OF SCOTLAND, as a Bank
By: Annie Chin Tat
Title: Assistant Vice President
PNC BANK, NATIONAL ASSOCIATION
(successor by merger to MIDLANTIC
BANK, N.A.), as a Bank
By: Denise D. Killen
Title: Vice President
U.S. BANK OF OREGON, as a Bank
By: Dale Parshell
Title: Assistant Vice President
CREDIT LYONNAIS LOS ANGELES BRANCH,
as a Bank
By: Thierry Vincent
Title: Vice President/Manager
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
as a Bank
By:
Title:
BANKERS TRUST COMPANY, as a Bank
By: Patricia Hogan
Title: Vice President
CIBC INC., as a Bank
By: Paul J. Chakmak
Title: Managing Director
CIBC Wood Gundy Securities
Corp., AS AGENT
Exhibit 10(kkk)
STOCK TRANSFER AGREEMENT
THIS AGREEMENT ( Agreement ) is made and entered into as of
the 23rd day of January, 1997, by and between Circus Circus
Enterprises, Inc., a Nevada corporation ( Circus ), Windsor Casino
Limited ( WCL ), Windsor Casino Supplies Limited ( Supplies ) and
Windsor Casino Financial Limited ( WCFL ) (collectively, the
Corporations ), each an Ontario corporation incorporated pursuant
to the laws of the Province of Ontario, Caesars World, Inc., a
Florida corporation and successor by operation of law to Caesars
World Resorts, Inc. ( Caesars ), Conrad International Investment
Corporation, a Nevada corporation ( Conrad ) and Hilton Hotels
Corporation, a Delaware corporation ( Conrad Parent ) with regard
to the following:
A. Circus owns one (1) share each of WCL, WCFL and Supplies,
which represents one-third ( ) of the shares of each Corporation
(the Circus Shares ).
B. The Corporations were formed and organized for the
purpose of operating an interim casino in Windsor, Ontario, Canada,
and negotiating for the development and operation of a permanent
casino facility in Windsor (the Project ).
C. In furtherance of such purposes, (i) Circus and others
entered into an Interim Casino Operating Agreement dated as of May
14, 1994 (the Interim Agreement ), a Heads of Agreement dated May
14, 1994 (as amended, the Heads of Agreement ), and an Interim
Shareholders Agreement dated October 26, 1994 (the Interim
Shareholders Agreement ), and (ii) WCFL entered into that certain
Credit Agreement made as of July 10, 1996, between WCFL as
Borrower, and the financial institutions named as Lenders in the
signature pages thereto (the Credit Agreement ) and in connection
therewith, Circus executed a Guarantee dated as of July 10, 1996
(the Guarantee ).
D. Each of the Corporations wishes to redeem from Circus the
Circus Shares in their respective Corporations, thereby resulting
in ownership of each of the Corporations one-half (1/2) each by
Caesars and Conrad.
NOW, THEREFORE, in consideration of the mutual promises,
covenants and representations hereinafter contained, and subject to
the conditions hereinafter set forth, it is agreed as follows:
1. Sale and Transfer of Circus Shares. Circus hereby
transfers and conveys the Circus Shares in each of the Corporations
to the respective Corporations and each of the respective
Corporations acquires the Circus Shares in each Corporation from
Circus.
2. Purchase Price. The purchase price payable by WCL for
the transfer of the Circus Shares of WCL shall be CDN$14,804,142
representing one-third (1/3) of the retained earnings of WCL as of
January 21, 1997. The purchase price payable by WCFL for the
Circus Shares of WCFL shall be CDN$1.00. The purchase price
payable by Supplies for the Circus Shares of Supplies shall be
CDN$1.00 (each a Purchase Price ).
(a) WCL, on behalf of the Corporations as an
administrative convenience, shall remit to Circus in cash or other
immediately available federal funds an amount equal to 66 % of the
Purchase Price for each of the respective Corporations less
Canadian withholding tax at the rate of five percent (5%) on
CDN$14,804,142. WCL will remit the amount of such withholding tax
to Revenue Canada Customs Excise and Taxation in the manner and
within the time required by the Income Tax Act (Canada) and such
remittance shall constitute full payment and satisfaction of such
portion of the Purchase Price. WCL shall withhold an amount equal
to 33 % of the Purchase Price (the Withheld Amount ) and shall
deal with it in accordance with Section 5 of this Agreement.
(b) each of Caesars and Conrad Parent shall, and hereby
each does, assume one-half (1/2) of the liability and indebtedness of
Circus pursuant to Circus Guarantee in accordance with Section
10(e)(i) of the Circus Guarantee and each of Caesars and Conrad
Parent hereby indemnifies Circus against any claims arising from
and after the date of this Agreement and made against Circus under
the Circus Guarantee.
3. Representations by Circus. Circus represents and
warrants that Circus is the owner of the Circus Shares, free and
clear of all liens or encumbrances and that Circus has the power
and authority to transfer the Circus Shares to the Corporations as
provided herein.
4. Delivery to the Corporations. Circus hereby delivers (a)
to WCL the Circus Shares in WCL, as represented by WCL Stock
Certificate No. C-1, to WCFL the Circus Shares in WCFL, as
represented by WCFL Stock Certificate No. C-1 and to Supplies the
Circus Shares in Supplies, as represented by Supplies Stock
Certificate Nos. C-3 and (b) to each of the Corporations the stock
powers in the form attached hereto as Exhibits A , B , and C .
5. Escrow. The Withheld Amount shall be deposited by WCL in
an interest bearing account at Canadian Imperial Bank of Commerce.
The Withheld Amount shall be remitted to the Receiver General of
Canada on the day that the Withheld Amount is required to be so
remitted pursuant to subsection 116(5) of the Income Tax Act
(Canada) (the Remittance Date ). All interest received on the
Withheld Amount shall be for the account of Circus and the full
amount of such interest less any applicable taxes of any nature
whatsoever applicable to such interest shall be paid to Circus on
the Remittance Date. Notwithstanding the foregoing, if Circus
delivers a certificate issued by the Minister of National Revenue
of Canada pursuant to subsection 116(2) of the Income Tax Act
(Canada) (a Section 116 Certificate ) to WCL at any time prior to
the Remittance Date with respect to the Circus Shares in WCL, WCFL
and Supplies in form and substance satisfactory to WCL, acting
reasonably, WCL shall pay to Circus on account of the Purchase
Price, an amount equal to the amount, if any by which
(1) the aggregate of
(i) the Withheld Amount
and
(ii) the amount, if any, by which
(A) the amount of interest received by Circus on
the Withheld Amount
exceeds
(B) the amount of any Canadian withholding tax at
the rate of ten percent (10%) in respect of
any interest on the Withheld Amount which WCL
is required or entitled to withhold or deduct
in respect of such interest
exceeds
(2) 33 % of the amount, if any, by which
(i) the aggregate Purchase Price
exceeds
(ii) the certificate limit specified in the Section 116
Certificate.
In any case where WCL withholds any amount pursuant to this
paragraph, WCL shall be deemed to have paid such amount to Circus
on account of the Purchase Price. WCL shall pay the amount of
Canadian withholding taxes required to be deducted and withheld
from any payment made to Circus under this Section 5.
6. Reimbursement of Expenses. Caesars and Conrad
acknowledge that Circus regularly advances certain expenses to the
Corporations for salaries, benefits and other items and agrees to
cause the Corporations to reimburse Circus for such expenses,
including an outstanding invoice in the amount of US$161,692 and
for expenses not yet invoiced, provided that such expenses not yet
invoiced will not exceed US$300,000 and are supported by proper documentation.
7. Indemnification. Circus will at all times indemnify and
hold harmless Caesars, Conrad and Conrad Parent, their subsidiaries
and affiliates and their officers, directors, employees and agents,
from and against any and all claims, damages, liabilities, costs
and expenses, including reasonable counsel fees, for any injury,
loss or damage to any person(s), entity(ies) or property arising
out of or based on (a) any acts or omissions of Circus, or (b) any
breach by Circus of the Interim Agreement, Heads of Agreement,
Interim Shareholders Agreement, Credit Agreement, or Guarantee,
occurring prior to the transfer of the Circus Shares.
8. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties
hereto.
9. Governing Law. The laws of the Province of Ontario
applicable to contracts made in that Province, without giving
effect to its conflict of law rules, shall govern the validity,
construction and performance and effect of this Agreement.
10. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, and supersedes all previous agreements, negotiations,
memoranda and understandings, whether written or oral.
11. Amendment. This Agreement may not be modified or amended
except in writing, signed by the parties hereto.
12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute one
and the same document.
13. Additional Documents. Each party covenants and agrees to
execute and deliver to the other such further additional documents
or instruments as may be required to fully effectuate and manifest
the intent of the parties and the transactions contemplated hereby.
14. Bylaws, Articles or Shareholder Agreements. In the event
of any conflict between the provisions of this Agreement and the
provisions of the bylaws or the Articles of any of the
Corporations, or any Shareholder Agreements respecting the
Corporations, the provisions of this Agreement shall prevail.
15. Public Representations. No party to this Agreement shall
make or suffer to be made any statement, comment or analysis
concerning the subject matter of this Agreement without the express
prior written consent of Conrad, Circus and Caesars.
[Signature page to follow]
CIRCUS CIRCUS ENTERPRISES, INC., CAESARS WORLD, INC.,
a Nevada corporation a Florida corporation
By: Clyde T. Turner By: Peter G. Boynton
President & Chief
Its: Chairman Its: Executive Officer
Circus Caesars
CONRAD INTERNATIONAL HILTON HOTELS CORPORATION,
INVESTMENT CORPORATION, a Delaware corporation
a Nevada corporation
By: Scott A. LaPorta By: Scott A. LaPorta
Its: Vice President & Treasurer Its: Vice President & Treasurer
Conrad Conrad Parent
WINDSOR CASINO LIMITED, WINDSOR CASINO SUPPLIES LIMITED,
an Ontario corporation an Ontario corporation
By: Clyde T. Turner By: Clyde T. Turner
Its: Chairman Its: Chairman
WCL Supplies
WINDSOR CASINO FINANCIAL
LIMITED, an Ontario corporation
By: Clyde T. Turner
Its: Chairman
WCFL
Exhibit 10(lll)
DESCRIPTION OF CONSULTING PLAN
On June 21, 1996 the Board of Directors adopted a consulting
plan not set forth in a formal document (the "Plan"). The Plan
provided for the compensation of individuals retiring from
service on the Company's Board of Directors in consideration for
consulting services to be rendered to the Company following their
retirement from the Board. The Plan, which was applicable only
to directors retiring from the Board after June 21, 1996,
provided for the payment to an eligible director of a consulting
fee for his services at the annual rate of $20,000 for a period
of up to five years commencing on the date of his retirement from
the Board (the "Consulting Term"). Under the Plan, a retiring
director was entitled to receive the fee during the Consulting
Term only so long as he continued to be available to provide
consulting service to the Company. No compensation was payable
to, or for the account of, a retired director subsequent to his
becoming unavailable to consult with the Company, on account of
his death or otherwise. The Plan was terminated by the Board of
Directors effective April 25, 1997. As a result of such
termination no director retiring from the Board after April 25,
1997 is entitled to any benefit under the Plan. See Item 11 of
the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1997 for information concerning the Company's
settlement of its obligations to three retired directors pursuant
to the Plan.
Exhibit 13
Management's Discussion and Analysis
OVERVIEW
Gaming in the U.S. today is an industry of three major markets -
Las Vegas, Atlantic City and Mississippi - with a host of smaller
markets generally consisting of riverboat casinos. Las Vegas,
for its part, remains the epicenter of the industry, a position
it should continue to hold into the foreseeable future.
The numbers for Las Vegas are compelling:
-Almost 30 million visitors in 1996, more than 30% of whom
were first-time visitors.
-A rooms base of almost 100,000 rooms (over half again as
many as Orlando or New York City).
-Gaming revenues of $5.3 billion in 1996, up 136% since
1986.
Graph
Description: Depicts growth in rooms, visitors and gaming
revenue in the Las Vegas market from 1986 to 1996.
Rooms Visitors Gaming Revenue
(in thousands) (in millions) (in billions)
1986 56.5 15.2 $2.2
1987 58.5 16.2 $2.5
1988 61.4 17.2 $2.8
1989 67.4 18.1 $3.1
1990 73.7 20.9 $3.7
1991 76.9 21.3 $3.7
1992 76.5 21.9 $3.9
1993 86.1 23.5 $4.2
1994 88.6 28.2 $4.9
1995 90.0 29.0 $5.2
1996 99.1 29.6 $5.3
Text Below: The Las Vegas market has proven strong and
durable.
Las Vegas has clearly become a destination of choice for the
traveling entertainment consumer - arguably the world leader.
McCarran International Airport has seen its daily number of
flights grow 35% since 1990, while the total number of passengers
has soared 60%. This volume has necessitated a further airport
expansion that will increase the total number of gates from 65
currently to 92 by mid-1998.
Circus has been at the fore of Las Vegas' success, as we
currently control roughly 15,000 rooms and more than 400,000
square feet of casino space (including 3,002 rooms and 90,000
square feet of casino space at the Monte Carlo). Circus has
accounted for more than 35% of the new rooms added to Las Vegas
since 1990 and controls the most new rooms (less than 5 years
old) in a market where approximately one-half of the rooms are
more than 15 years old. With the completion of Project Paradise
and the eventual buildout of the Masterplan Mile, Circus will
further enhance its positioning in this core market, eventually
controlling by far the most new units (rooms and casino games) in
the city. Historically in the gaming industry, growth in both
cash flow and earnings has been a direct function of unit
expansion--either at already successful properties or by the
construction of new ones.
-25-
Luxor underwent a major expansion and renovation during fiscal
1997. The property added 1,950 rooms in twin towers and
extensively remodeled the casino level--relocating and upgrading
the front desk, reworking the front entrance and revamping most
of the interior theming. The result is a property with a more
elegant and upscale presentation and 4,400 rooms that stunningly
fulfills its original promise. The disruption from the expansion
and remodeling was significant, however, as cash flows at Luxor
declined 26% to $64.4 million (excluding asset write-offs of
$29.8 million). Additional renovation is continuing in the
current year, as the attractions level is reworked and a new
showroom is constructed on the southwest corner of the property.
This construction is expected to be somewhat disruptive, though
not on the scale experienced in the previous year. Luxor will
produce its record quarterly cash flow from operations in the
first quarter of our current fiscal year .
Map
Description: Depicts footprint of the recently expanded and
remodeled Luxor, showing location of main sections of the
property, specifically, the new hotel towers.
Text below: Footprint for Luxor II, with 1,950 new rooms and
extensive new public areas.
At Circus Circus-Las Vegas recently added a 1,000-room hotel
tower, relocated the front desk and expanded its retail and
restaurant facilities. Not only did these new facilities
increase operating capacity, they also lifted the look and feel
of the property, which now offers more than 3,700 rooms, 110,000
square feet of casino space and seven restaurants. During fiscal
1997, the property produced $45.2 million in operating cash flow
(excluding asset write-offs of $5.1 million), down from the prior
year due primarily to the construction disruption. Results in
the first quarter of fiscal 1998 indicate that Circus Circus-Las
Vegas should substantially increase its cash flow this year.
Map
Description: Depicts footprint of the recently expanded
Circus Circus-Las Vegas, showing location of main sections
of the property, specifically, the new hotel tower.
Text below:
Footprint for Circus Circus-Las Vegas - a new 1,000-room
tower and much more.
Excalibur posted its record year in operating results in fiscal
1997. Boasting more than 4,000 rooms and 110,000 square feet of
casino space, Excalibur also represents one of the top
investments in the history of the Las Vegas Strip. After
recouping its initial investment of approximately $300 million in
only 39 months, Excalibur has maintained the rate of its initial
success, recovering its investment twofold in
-26-
just over six years of operation. Operating cash flow for
Excalibur was $101.6 million (excluding asset write-offs of $10.4
million).
At Circus Circus-Reno, competition from the adjacent Silver
Legacy (50% owned by Circus), as well as winter storms and
flooding wrought difficult comparisons. Operating cash flow was
$18.1 million for the year, down from the prior year. Circus
Circus-Reno likewise underwent construction this year, as all of
the rooms at the property were remodeled and a new parking garage
added. Our 1,605 remodeled rooms now offer superior value and,
with the return of the women's bowling convention, we expect a
solid comeback in fiscal 1998.
In Laughlin, the Colorado Belle and the Edgewater face
challenging obstacles, as the overall market continues to
decline. More competition from Native American casinos in
Laughlin's prime Arizona and California markets, as well as from
the new resorts in Las Vegas, has caused the market to contract
during the past few years. Our Laughlin properties have seen
their profitability eroded, but nonetheless generated a combined
$33.5 million in operating cash flow in fiscal 1997. Since their
openings, we have seen our initial investment of approximately
$200 million returned threefold.
In Mississippi, Circus Circus-Tunica also faced additional
competition, with three new properties coming on line last year.
Operating cash flow of $13.5 million for the year (excluding
asset write-offs of $3.0 million) was down significantly from the
previous year. Meanwhile, the Company has commenced construction
of a 1,200-room hotel tower, scheduled to open in December 1997,
and is also remodeling and retheming the property into a more
elegant resort under the name Gold Strike Casino Resort. This
expansion will give us the largest rooms base in a market
currently totaling only 2,500 rooms and generating approximately
$700 million in casino revenues. Through our expansion, we
expect to become one of the leading profit producers in this
market next year.
Rendering
Description: Artist's rendering of the new hotel and casino
in Tunica - rechristened Gold Strike Casino Resort.
Text below: Artist's rendering of Gold Strike Casino Resort
in Tunica, Mississippi featuring 1,200 new rooms and a
classy new look.
The Company's other properties (Gold Strike, Nevada Landing,
Railroad Pass, Slots-A-Fun and Silver City) contributed $26.3
million in operating cash flow for the year ended January 31,
1997.
The Company has highly profitable investments in several joint
ventures, most notably The Grand Victoria riverboat casino in
Elgin, Illinois. Despite contributing 20% of operating profit to
public entities in the city and county (beginning in June 1996),
this property produced $44 million as Circus' 50% share of its
operating income for fiscal 1997. Keep in mind, this property,
in total, cost only $112 million to build. Monte Carlo, the
Company's newest property, opened June 21 on the Las Vegas Strip
and has enjoyed instant success, generating $14.6 million as the
Company's 50% share of its operating income (excluding preopening
expenses) for the seven months it was open in fiscal 1997. The
Silver Legacy in Reno, Nevada has also shown promise, as our 50%
share of operating income in its first full fiscal year was $12.0
million.
-27-
FINANCIAL POLICY
Circus' financial policy is grounded in two simple and related
concepts--cash flow and return on investment. Free cash flow is
our focus, given that we believe it represents true economic
profit. Free cash flow is the cash remaining after all expenses,
including ordinary or maintenance reinvestment in the business.
Strong free cash flow permits financial flexibility and offers a
range of positive options to the owners of the company: sizeable
reinvestment in the business, accelerated repayment of
indebtedness or cash distributions to shareholders, such as share
repurchase. It also means that we have ready access to capital
markets at comparatively low rates (Circus has the lowest blended
fixed-coupon debt in the industry, along with the longest average
maturity). Circus has always been an extraordinary cash
generator, producing over $1 billion in free cash flow over the
past five years. And even in the past year of significant
construction disruption, our free cash flow on a per share basis
was $2.29, over 70% higher than our earnings per share (prior to
write-offs).
FREE CASH FLOW ANALYSIS
Year ended January 31,
(in thousands) 1997 1996 1995 1994 1993
Income from operations* $276,092 $301,753 $259,019 $217,567 $205,482
Add noncash expenses
Depreciation and
amortization 103,717 98,380 82,753 58,965 48,182
Other (65) (65) (65) (65) (65)
Cash generated from
operations before income tax 379,744 400,068 341,707 276,467 253,599
Cash income taxes (48,043) (55,995) (52,500) (47,000) (41,500)
Interest, dividends and
other income (loss) 11,941 11,539 1,217 (683) 820
Proceeds from disposal of assets 3,056 1,353 415 685 4,510
Cash available for repayment
of debt and reinvestment 346,698 356,965 290,839 229,469 217,429
Scheduled principal and
interest payments (63,356) (58,018) (45,935) (35,207) (35,039)
Ordinary capital expenditures (50,117) (31,936) (29,856) (33,182) (24,085)
Free cash flow $233,225 $267,011 $215,048 $161,080 $158,305
* Before asset write-offs and preopening expenses.
-28-
Graph
Description: Depicts free cash flow as % of operating cash flow
over past five years.
Operating
Cash Flow ($) 379,744 400,068 341,707 276,467 253,599
Free Cash Flow ($) 233,225 267,011 215,048 161,080 158,305
Percentage 61% 67% 63% 58% 62%
Text below: On average, more than 60% of Circus' operating
cash flow becomes to free cash flow, or true economic
profit.
We strive to invest our free cash flow, as well as borrowed
capital, in projects which promise a return on invested capital
(ROIC) in excess of 15%. To the extent that we are successful in
providing returns which exceed our weighted cost of capital
(which includes debt and equity), we generate higher free cash
flow which translates into increased value for the shareholder.
Graph
Description: Depicts Circus' five-year average ROIC of
16.5% compared to our target of 15% and also compared to our
weighted cost of capital of 12%.
Text below: To the extent that Circus earns a return on
invested capital in excess of its cost of capital, the
Company creates value for its shareholders.
FISCAL 1997 COMPARED WITH FISCAL 1996
RESULTS OF OPERATIONS
For the year ended January 31, 1997, the Company reported net
income of $100.7 million, or $.99 per share, compared to $128.9
million, or $1.33 per share in the previous year. During the
year, the Company took one-time asset write-offs totalling $48.3
million and recognized $5.6 million in preopening expenses
(reflected in Earnings of Unconsolidated Affiliates) related to
the June 21, 1996 opening of Monte Carlo, a 50/50 joint venture
hotel/casino on the Las Vegas Strip. In the prior year, the
Company took one-time asset write-offs totalling $45.1 million
and recognized $5.2 million of preopening expenses related to the
July 28, 1995 opening of Silver Legacy, a 50/50 joint venture
hotel/casino in Reno, Nevada. Excluding the effect of these
nonrecurring items, earnings per share for the year ended January
31, 1997 were $1.33 against $1.66 in the prior year.
The asset write-offs of $48.3 million in the current year were
necessitated by construction and remodeling at Luxor and Circus
Circus-Las Vegas, as well as planned construction and remodeling
at the Company's other properties. These write-offs included the
special-effects films at Luxor ($12.0 million) which were
replaced by IMAX special-format filmed attractions, structural
elements demolished as part of Luxor's remodeling ($12.1
million), the removal of the Nile River at Luxor ($5.7 million),
furnishings and fixtures at Excalibur related to the future
refurbishment of all the property's rooms ($10.4 million),
fixtures and equipment at Circus Circus-Tunica related to the
retheming and expansion of that property ($3.0 million),
furnishings and fixtures related to the rooms refurbishment at
Circus Circus-Las Vegas ($2.6 million) and the demolition of a
people mover at Circus Circus-Las Vegas ($2.5 million).
-29-
Write-offs in the prior year totalled $45.1 million, the majority
of which related to a discontinued riverboat project in
Chalmette, Louisiana.
The decline in results for the year ended January 31, 1997 was
due, in large part, to significant construction disruption at
Luxor and Circus Circus-Las Vegas. Luxor added 1,950 new rooms
in two towers, the majority of which were placed in service by
year-end, and remodeled (or added) extensive portions of the
interior. Meanwhile, Circus Circus-Las Vegas added a new 1,000-
room hotel tower which opened December 23, 1996. On the positive
side, the Company achieved record results at Excalibur, and Monte
Carlo achieved strong results in its initial seven months of
operation. Moreover, the Company benefitted from a full year of
operations at Silver Legacy, a 50/50 joint venture which opened
July 28, 1995, and The Grand Victoria, a 50/50 joint venture
which was acquired as part of the Gold Strike transaction on June
1, 1995.
REVENUES
Revenues for the year ended January 31, 1997 increased $34.7
million, or 3% compared to the prior year. This increase was due
primarily to the first full year of operations following the Gold
Strike acquisition on June 1, 1995. These properties (Gold
Strike, Nevada Landing, Railroad Pass and The Grand Victoria)
generated $143.4 million in revenues during the current year
compared to $100.2 million in the prior year when they were owned
for only eight months. The Company's 50% ownership in The Grand
Victoria accounted for the most significant portion of these
revenues. (For accounting purposes, the Company's share of the
operating income of joint ventures is reflected as revenue under
Earnings of Unconsolidated Affiliates.)
Also contributing to the increase was the Hacienda Hotel and
Casino, which produced $41.6 million in revenues this year versus
$20.7 million the prior year (when it was acquired on September
1, 1995). In connection with the Company's construction of a new
hotel/casino on the Hacienda site, the Hacienda ceased operations
on December 1, 1996 and was imploded on December 31, 1996. Also,
the opening of Monte Carlo on June 21, 1996 produced $16.6
million as our share of revenue for the year, with the first full
year of operations at Silver Legacy also serving as a
contributing factor. These increases were partially offset by
lower results at Circus Circus-Las Vegas and Luxor, where
disruption from construction and remodeling projects
significantly affected their patronage.
Casino revenues declined slightly during fiscal 1997 versus the
prior year due mostly to the aforementioned construction
disruption at Luxor and Circus Circus-Las Vegas. Typically, the
Company's three fully owned casino resorts on the Strip (Luxor,
Excalibur, Circus Circus-Las Vegas) produce the majority of
Circus' total casino revenues. Meanwhile, hotel revenues rose
$15.4 million, due to ten months of operations of Hacienda in the
current year versus five months in the prior year, as well as the
opening of new rooms at Luxor and Circus Circus-Las Vegas in late
December. The Company's combined hotel occupancy remained
relatively constant at 94%. Revenues in the Company's other
principal revenue centers (food, beverage, amusements and retail)
were essentially flat against the prior year.
INCOME FROM OPERATIONS (excluding asset write-offs and preopening
expenses)
For the year ended January 31, 1997, income from operations
decreased $25.7 million, or 9%, versus the prior year. The
Company's composite operating margin was 20.6%, compared with
23.1% in fiscal 1996. The decreases in operating income and
margin were due principally to construction disruptions at Luxor
and Circus Circus-Las Vegas.
-30-
Las Vegas
In Las Vegas, overall results from our properties reflected a
decrease, stemming principally from construction disruptions at
Luxor and Circus Circus in connection with the addition of 1,950
rooms and substantial remodeling at Luxor, and the addition of
1,000 rooms and expanded retail and restaurant facilities at
Circus Circus. Luxor and Circus Circus-Las Vegas together
experienced a 38% decline in operating income. Meanwhile,
Excalibur enjoyed its record year, generating $89.4 million in
operating income and producing the highest margin among the
Company's wholly owned properties. Furthermore, the Company's
latest entry in the Las Vegas market, Monte Carlo, opened June 21
and exceeded expectations. This property, a joint venture with
Mirage Resorts, produced $14.6 million (excluding preopening
expenses of $5.6 million) as the Company's 50% share of its
operating income for fiscal 1997.
Reno
In Reno, the Company benefitted from a full year's operations at
Silver Legacy, a 50/50 joint venture, which generated an
additional $5.2 million as Circus' share of operating income
versus the prior year when Silver Legacy was open only six
months. At Circus Circus-Reno, however, operating income
declined $13.6 million due to competition from the adjacent
Silver Legacy, as well as winter storms and flooding which struck
the market in the fourth quarter.
Laughlin
The Company's two properties in Laughlin (Colorado Belle and
Edgewater) saw operating income decrease a combined 17% in fiscal
1997 versus the prior year. While this decrease was less severe
than in recent years, Laughlin as a market suffers from several
competitive challenges. Foremost appears to be the growth of
unregulated Native American casinos (numbering approximately 37
casinos currently) in Laughlin's central Arizona and southern
California feeder markets . Too, competition from Las Vegas in
the form of major new theme resorts (including the Company's 50%
owned Monte Carlo) has eroded Laughlin's customer base, as have
expanded facilities at Primm, Nevada, which are closer to Las
Vegas and more accessible to visitors from southern California.
Other Markets
In Tunica County, Mississippi, operating income at Circus Circus
declined by more than 50% in fiscal 1997 compared to the prior
year. The presence of three new competitors within the market
combined with the property's lack of a rooms base contributed to
the decline. In response, the Company is underway with a $125
million expansion which will include a 1,200-room hotel tower
(scheduled to open in December 1997) and a complete retheming of
the property into a more elegant resort under the name Gold
Strike Casino Resort. The Company's other properties compared
relatively flat against the prior year.
While the new rooms and related improvements at Luxor and Circus
Circus-Las Vegas were substantially completed and placed in
service in late fiscal 1997, certain elements of the remodeling
at Luxor will carry into fiscal 1998, including retail areas,
restaurants, the showroom and the reworking of the attractions
level. The Company anticipates that this last phase of
remodeling may be somewhat disruptive to operations in the coming
year, though not on the scale experienced in the prior year.
Moreover, the construction and remodeling in Tunica are also
expected to disrupt operations there.
-31-
DEPRECIATION AND AMORTIZATION EXPENSE
For the year ended January 31, 1997, depreciation and
amortization expense rose $5.3 million, to $103.7 million. This
increase stemmed primarily from a full year's amortization of
goodwill and additional depreciation expense related to the Gold
Strike acquisition in June 1995. In the current fiscal year,
Circus estimates that its depreciation expense will be
approximately $130 million.
Depreciation Expense by Property (in millions):
FYE 1997 FYE 1996
Luxor $ 26.8 $28.2
Circus Circus-Las Vegas 17.9 17.8
Excalibur 12.2 14.6
Circus Circus-Reno 6.6 6.1
Colorado Belle 3.8 3.8
Edgewater 4.3 5.4
Circus Circus-Tunica 5.1 5.2
Other 27.0 17.3
$103.7 $98.4
INTEREST EXPENSE
For the year ended January 31, 1997, interest expense (excluding
joint venture interest expense) rose $3.1 million to $54.7
million. This increase was due primarily to higher average debt
outstanding (approximately $865 million in fiscal 1997 versus
approximately $715 million in fiscal 1996) related to various
construction projects (primarily the new rooms and related
improvements at Luxor and Circus Circus-Las Vegas). The Company
also repurchased 10.1 million shares of its common stock. The
increase in fiscal 1997 was largely offset by higher capitalized
interest ($16.0 million in fiscal 1997 against $8.6 million in
fiscal 1996) related to those same construction projects.
The Company also recorded interest expense related to joint
venture projects of $15.6 million in fiscal 1997 compared to $5.6
million in the previous year. This represents the Company's 50%
share of a full year of Silver Legacy's and seven months of Monte
Carlo's interest expense.
TAXES
The Company's effective tax rate for the years ended January 31,
1997 and 1996 was 38.5% and 37.4%, reflecting the federal
statutory rate of 35% plus the effect of various nondeductible
expenses, primarily the amortization of goodwill associated with
the Gold Strike acquisition. In the current year, Circus
estimates that its tax rate will be approximately 36%-37%.
FISCAL 1996 COMPARED WITH FISCAL 1995
RESULTS OF OPERATIONS
Excluding one-time asset write-offs and preopening expenses,
earnings per share for fiscal 1996 were $1.66 per share compared
to $1.61 per share in fiscal 1995. During fiscal 1995, the
Company wrote off $3.0 million of preopening expenses related to
the opening of Circus Circus-Tunica. Results for the year ended
January 31, 1996 include eight months of combined performance of
Circus and Gold Strike Resorts, which the Company acquired on
June 1, 1995. The increase in earnings for fiscal 1996
(excluding nonrecurring items) derived primarily from the
Company's 50% interest in The Grand Victoria, a riverboat casino
in Elgin, Illinois acquired as part of the Gold Strike
transaction, as well as the acquisition of the Hacienda Hotel and
Casino on September 1, 1995.
REVENUES
Revenues for fiscal 1996 increased $129.4 million, or 11%, to
$1.3 billion compared to fiscal 1995. The acquisition of Gold
Strike Resorts in June 1995 was the principal factor in this
increase, with the Company's 50% interest in The Grand Victoria
riverboat casino in Elgin, Illinois providing the biggest
contribution. Circus Circus-Tunica was also a significant
contributor, as it completed its first full year of operations.
-32-
INCOME FROM OPERATIONS
Income from operations rose $42.7 million, or 16%, in the year
ended January 31, 1996 versus the prior year (excluding the
abandonment loss of $45.1 million and Silver Legacy preopening
expenses of $5.2 million in fiscal 1996, and Circus Circus-Tunica
preopening expenses of $3.0 million in fiscal 1995). The
acquisition of Gold Strike Resorts on June 1, 1995 was the main
driver for the increase in operating income, with the Company's
50% interest in The Grand Victoria riverboat casino standing out
as the principal factor, generating $32.6 million in operating
income for the eight months of the year the Company was an owner.
Also contributing to the increase in operating income was Circus
Circus-Tunica, which completed its first full year of operations
producing an additional $7.1 million in operating income versus
the prior year when it was open only five months. In Reno,
Silver Legacy (a joint venture with Eldorado Hotel/Casino) opened
July 28, 1995 and the Company's 50% interest generated
approximately $6.8 million in operating income (excluding the
recognition of $5.2 million in preopening expenses). The above
increases were partially offset by substantial decreases at the
Company's Laughlin properties.
DEPRECIATION AND AMORTIZATION EXPENSE
In fiscal 1996, depreciation and amortization expense rose $15.6
million, to $98.4 million. This increase came principally from
amortization of goodwill related to the acquisition of Gold
Strike Resorts, plus the additional depreciation related to the
entities acquired as part of the Gold Strike transaction (Gold
Strike, Nevada Landing and Railroad Pass). Also, there was a
full year's depreciation on Circus Circus-Tunica, which was open
only five months in the prior fiscal year.
INTEREST EXPENSE
For the year ended January 31, 1996, interest expense (excluding
joint venture interest expense) was $51.5 million versus $42.7
million in fiscal 1995. The increase was due mostly to higher
average debt outstanding (approximately $715 million in fiscal
1996 versus approximately $590 million in fiscal 1995), related
in large part to the assumption of $165 million of debt in
connection with the acquisition of Gold Strike Resorts. This
increase was partially offset by higher capitalized interest
($8.6 million in fiscal 1996 versus $4.2 million in fiscal 1995).
CAPITALIZATION, CAPITAL SPENDING AND LIQUIDITY
The Company had cash and cash equivalents of $69.5 million at
January 31, 1997, reflecting levels consistent with normal daily
operating requirements. The Company's pretax cash flow from
operations (before asset write-offs and preopening expenses) was
$379.7 million in fiscal 1997 compared to $400.1 million in
fiscal 1996 and $341.7 million in fiscal 1995. The decrease in
cash flow in fiscal 1997 was caused primarily by the construction
disruption at Luxor and Circus Circus-Las Vegas, as previously
discussed. In this context, pretax cash flow from operations is
defined as the Company's income from operations plus noncash
operating expenses (primarily depreciation and amortization).
During fiscal 1997, the Company used its cash flow (in
combination with its credit facility) to fund the construction of
the new hotel rooms and related improvements at Luxor and Circus
Circus-Las Vegas, various remodeling at the Company's other
properties and the repurchase of approximately 10.1 million
shares of its common stock. During fiscal 1996, the Company used
its cash flow mainly to fund the acquisition of the Hacienda
Hotel and Casino, the acquisition of 73 acres of undeveloped land
adjacent to the Hacienda, the acquisition of Gold Strike Resorts
and equity investments in various joint venture properties.
-33-
Capital Spending
Capital expenditures for the year ended January 31, 1997 were
$585.8 million, compared to $221.7 million in fiscal 1996 and
$142.7 million in fiscal 1995. The majority of capital
expenditures in fiscal 1997 related to the construction of the
new hotel towers and other remodeling at Luxor ($323.3 million
total, including casino, hotel lobby, meeting space and luxury
spa), construction of the new hotel tower and other remodeling at
Circus Circus-Las Vegas ($126.7 million total, including rooms
refurbishment at the Skyrise), various remodeling at Excalibur
($20.5 million), refurbishment of rooms at Circus Circus-Reno
($13.5 million), construction of a new parking garage at Circus
Circus-Reno ($14.1 million), construction of the new hotel tower
at Circus Circus-Tunica ($6.4 million) and the acquisition of
additional land near Circus Circus-Reno ($5.1 million).
Graph
Description: Depicts Circus' capital spending year by year
over the past five years.
Capital Spending
(in millions)
1993 $208.6
1994 $378.8
1995 $142.7
1996 $221.7
1997 $585.8
Text below: In the past five years, Circus has invested more
than $1.5 billion in new projects.
The majority of capital expenditures for fiscal 1996 were for the
acquisition of the Hacienda on September 1, 1995 ($80 million)
and the acquisition earlier in the year of 73 acres of
undeveloped land adjacent to the Hacienda ($73 million).
For fiscal 1998, the Company estimates its capital expenditures
will range between $450-$550 million. These expenditures will
include primarily the completion of the hotel tower and
remodeling at Circus Circus-Tunica and the initial phase of
construction of Project Paradise on the former Hacienda site.
Share Repurchase
During the year ended January 31, 1997, the Company repurchased
10.1 million shares of its common stock at a total cost of $341.8
million, pursuant to its share repurchase program. These
repurchases took place in the third and fourth quarters. The
Company anticipates that it will repurchase shares on an
opportunistic basis, as market conditions warrant.
Debt Facilities
In January 1996, the Company arranged a $1.5 billion unsecured
credit facility with its bank group (see Note 4 of Notes to
Consolidated Financial Statements). This facility replaced
credit lines with borrowing limits aggregating $895 million. As
of January 31, 1997, Circus had no borrowings under its facility
but did have $501 million of borrowings under its commercial
paper program, which reduces availability under the facility.
The Company has obtained a commitment from its bank group to
amend this facility, increasing the size of the facility to at
least $1.75 billion, while lowering its pricing and extending its
term. The terms of the commitment also permit Circus to
repurchase up to $500 million of its shares.
On February 5, 1996, the Company issued $200 million principal
amount of 6.45% Senior Notes due February 1, 2006. Proceeds from
this offering were used to reduce the Company's then outstanding
bank borrowings.
-34-
On November 26, 1996, the Company issued $150 million principal
amount of 6.70% Senior Unsecured Debentures due November 15,
2096, which may be redeemed at the option of the holder in
November 2003. Simultaneously, the Company issued $150 million
principal amount of 7.0% Senior Unsecured Debentures due November
15, 2036, which may be redeemed at the option of the holder in
November 2008. The proceeds from these offerings were used to
repay amounts due under the Company's commercial paper program.
Joint Ventures
The Company holds a 50% interest in and manages a joint venture
(with Mirage Resorts, Incorporated) which developed and operates
Monte Carlo, a major destination resort that opened June 21, 1996
on the Las Vegas Strip. Monte Carlo features 3,002 rooms and a
90,000-square-foot casino, with a palatial style reminiscent of
the Belle Epoque, the French architecture of the late 19th
century. This project had a total cost of approximately $350
million, including land and capitalized interest. The Company's
equity contribution was $85.8 million, all of which had been
funded as of January 31, 1997.
In July 1995, Silver Legacy, a 50/50 joint venture with the
Eldorado Hotel/Casino, opened in downtown Reno, Nevada. As a
condition to the joint venture's $220 million bank credit
agreement (which amended and restated the joint venture's
previous $230 million credit agreement), Circus is obligated
under a make-well agreement to make additional contributions to
the joint venture as may be necessary to maintain a minimum
coverage ratio (as defined). As of January 31, 1997, the Company
also had outstanding loans to the joint venture in the principal
amount of $35.1 million.
In December 1993, Windsor Casino Limited (WCL), a corporation
owned equally by Circus Circus Enterprises, Inc., Caesars World,
Inc. and Hilton Hotels Corporation or their subsidiaries, was
selected to exclusively negotiate an agreement to design, build
and operate a casino complex in Windsor, Ontario, Canada. Since
May 1994, WCL has operated an interim casino in Windsor's central
business district, immediately across the Detroit River from
Detroit, Michigan. On January 23, 1997, Circus transferred its
one-third interest in WCL to Caesars and Hilton.
New Projects
During 1995, the Company purchased the Hacienda Hotel and Casino
(which was imploded on December 31, 1996) and 73 acres of
undeveloped land south of the Hacienda. By virtue of these
purchases, Circus owns a contiguous mile of frontage on the Las
Vegas Strip. This "Masterplan Mile" runs from Tropicana Avenue
to Russell Road, encompassing the first two freeway exits on
Interstate 15, the main artery from southern California, and
benefits from the most immediate access to the Strip from
McCarran International Airport. The Company is developing
Masterplan Mile which will involve linking multiple destination
gaming resorts, including Excalibur, Luxor and Project Paradise.
It is the Company's view that the Las Vegas market can absorb
sizeable new capacity, including that contemplated in its
aforementioned masterplan. The direction of development in Las
Vegas has shifted toward the south end of the Strip, where the
Company can essentially create the gateway to Las Vegas.
At Luxor, the Company has completed construction of two new hotel
towers, designed in ziggurat shapes, which added 1,950 rooms to
the property, bringing the total rooms base to approximately
4,400. The majority of the rooms opened December 24, 1996, with
the remainder (including suites) in operation by the end of
February 1997. This project also involved substantial remodeling
of the property's interior spaces especially the casino and hotel
lobby. The original scope of the remodeling and expansion of
Luxor was broadened to include new convention space, a redesigned
attractions level, a microbrewery , a luxury health spa, a
showroom, and additional restaurants and retail areas. While
most of
-35-
the casino remodel was completed by year-end, the expansion
related to retail areas, restaurants, the microbrewery, the
showroom and the reworking of the attractions level will continue
into this fiscal year. The estimated cost for this expansion is
approximately $350-$400 million and as of January 31, 1997,
$327.9 million had been incurred.
The Company has commenced construction on an entertainment
megastore of approximately 3,800 rooms on the former site of the
Hacienda Hotel and Casino. The new resort, whose working title
is Project Paradise, is slated to open late 1998 or early 1999.
Project Paradise will feature, as its centerpiece, a 10-acre
tropical environment that will contain, among other attractions,
a surfing beach with six-foot waves and a swim-up shark exhibit.
Inside, Project Paradise will offer waterfalls, terraced gardens,
mythical statuary and open-air restaurants set amid beautifully
crafted environments, including a swan island. As a follow on to
Paradise, the Company will build a 400-room Four Seasons Hotel
that will connect to the Paradise complex, providing Las Vegas
visitors with a luxury "five-star" hospitality experience. This
hotel, which will be owned by Circus and managed by Four Seasons
Regent Hotels and Resorts, represents the first step pursuant to
the Company's cooperative effort with Four Seasons to identify
strategic opportunities for development of hotel and casino
properties worldwide. The cost of Project Paradise itself is
currently estimated at approximately $800 million (excluding the
cost of the Four Seasons Hotel).
In December 1996, the Company completed construction of a 1,000-
room tower addition at Circus Circus-Las Vegas which brought the
total number of rooms at Circus Circus-Las Vegas to approximately
3,700. The total cost of the 1,000-room tower, including the new
porte cochere, new lobby space, a retail concourse and two new
restaurants, plus the refurbishment of all 1,188 rooms in the
Skyrise Tower was approximately $128 million. The Company plans
to refurbish the balance of the tower rooms at this property, in
phases, over the coming year.
In Reno, the Company refurbished all of the rooms at Circus
Circus at a cost of approximately $17.6 million. Additionally,
construction has been completed on a new parking garage which
opened in December and is located immediately north of the
property, between Circus Circus-Reno and Interstate 80. This
project had a total cost of $14.7 million.
In Tunica County, Mississippi, the Company has commenced
construction of a 1,200-room tower addition to its casino which
will include remodeling and retheming the property into a more
elegant resort under the name Gold Strike Casino Resort. The
estimated cost of this expansion is $125 million, with a
projected completion in December 1997. Through January 31, 1997,
the Company has incurred $6.4 million for this project.
Also in Mississippi, the Company has announced that it plans to
develop a hotel/casino resort on the Mississippi Gulf Coast at
the north end of the Bay of St. Louis, near the DeLisle exit on
Interstate 10. The planned resort will feature 1,500 rooms and
has an estimated cost of $225 million. The Company anticipates
construction to begin after receipt of all customary approvals.
As presently contem-
Map
Description: Depicts the location of Circus' proposed new
project on the Mississippi Gulf Coast on the Bay of St.
Louis near Interstate 10.
Text below:
Circus' proposed project on the Mississippi Gulf Coast is
well-positioned, with ready access to Interstate 10 - the
main thoroughfare along the Gulf Coast.
-36-
plated, Circus will own 90% of the project, with a partner
contributing land (up to 500 acres) in exchange for the remaining
10%.
The Company has entered into an agreement with Mirage Resorts,
Incorporated to participate in the development of a 150-acre site
located in the Marina District of Atlantic City. The agreement
provides for the Company to obtain sufficient land for the
development of a destination resort and casino of at least 2,000
rooms, including dramatic public spaces, in an architectural
format that conforms to a "masterplan". While Mirage will act as
master-developer for the new Marina District, Circus will own its
land and its resort project, which will connect to Mirage's
resort as well as to a joint venture resort to be developed by
Boyd Gaming Corporation and Mirage. Mirage's development of the
site is subject to the satisfaction of a number of conditions.
Accordingly, there can be no assurances as to whether or when
Mirage will proceed with its development of the site. The
Company's participation, among other conditions, is subject to
Mirage's determination to proceed with development of the site.
The Company's ability to proceed is also subject to its obtaining
the requisite gaming and other approvals and licenses in New
Jersey, as well as the approval of the gaming authorities in
various other jurisdictions. While neither the exact extent of a
potential development nor a starting date for construction can be
determined at this time, the Company is currently contemplating
an investment of approximately $600-$700 million to construct
this hotel/casino megaresort.
The Company believes that it has ample capital resources, through
its existing bank arrangements and its operating cash flows, to
meet all of its existing cash obligations, opportunistically
repurchase shares and fund its commitments on the projects
enumerated above. The Company believes that additional funds
could be raised through debt or equity markets, if necessary.
-37-
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, (in thousands, except share data) 1997 1996
ASSETS
Current assets
Cash and cash equivalents $ 69,516 $ 62,704
Receivables 34,434 16,137
Inventories 19,371 20,459
Prepaid expenses 19,951 19,418
Deferred income tax 8,577 7,272
Total current assets 151,849 125,990
Property, equipment and leasehold interests,
at cost, net 1,920,032 1,474,684
Other assets
Excess of purchase price over fair
market value of net assets acquired, net 385,583 394,518
Notes receivable 36,443 27,508
Investments in unconsolidated affiliates 214,123 173,270
Deferred charges and other assets 21,081 17,533
Total other assets 657,230 612,829
Total assets $2,729,111 $2,213,503
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 379 $ 863
Accounts and contracts payable
Trade 22,658 16,824
Construction 21,144 -
Accrued liabilities
Salaries, wages and vacations 31,847 30,866
Progressive jackpots 6,799 8,151
Advance room deposits 7,383 7,517
Interest payable 9,004 3,169
Other 30,554 28,142
Total current liabilities 129,768 95,532
Long-term debt 1,405,897 715,214
Other liabilities
Deferred income tax 152,635 148,096
Other long-term liabilities 6,439 9,319
Total other liabilities 159,074 157,415
Total liabilities 1,694,739 968,161
Redeemable preferred stock 17,631 18,530
Temporary equity 44,950 -
Commitments and contingent liabilities
Stockholders' equity
Common stock $.01-2/3 par value
Authorized -- 450,000,000 shares
Issued -- 112,808,337 and 112,795,332 shares 1,880 1,880
Preferred stock $.01 par value
Authorized -- 75,000,000 shares - -
Additional paid-in capital 498,893 527,205
Retained earnings 984,363 883,630
Treasury stock (18,749,209 and 9,828,809 shares),
at cost (513,345) (185,903)
Total stockholders' equity 971,791 1,226,812
Total liabilities and stockholders' equity $2,729,111 $2,213,503
The accompanying notes are an integral part of these consolidated
financial statements.
-38-
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year ended January 31, (in thousands, except share data)
1997 1996 1995
Revenues
Casino $655,902 $664,772 $612,115
Rooms 294,241 278,807 232,346
Food and beverage 210,384 201,385 189,664
Other 146,554 158,534 166,295
Earnings of unconsolidated affiliates 86,646 45,485 5,459
1,393,727 1,348,983 1,205,879
Less-complimentary allowances (59,477) (49,387) (35,697)
1,334,250 1,299,596 1,170,182
Costs and expenses
Casino 302,096 275,680 246,416
Rooms 116,508 110,362 94,257
Food and beverage 200,722 188,712 177,136
Other operating expenses 90,601 92,631 107,297
General and administrative 227,348 215,083 183,175
Depreciation and amortization 95,414 93,938 81,109
Preopening expense - - 3,012
Abandonment losses 48,309 45,148 -
1,080,998 1,021,554 892,402
Operating profit before
corporate expense 253,252 278,042 277,780
Corporate expense 31,083 26,669 21,773
Income from operations 222,169 251,373 256,007
Other income (expense)
Interest, dividends and
other income 5,077 4,022 225
Interest income and guarantee fees
from unconsolidated affiliate 6,865 7,517 992
Interest expense (54,681) (51,537) (42,734)
Interest expense from unconsolidated
affiliates (15,567) (5,616) -
(58,306) (45,614) (41,517)
Income before provision for income tax 163,863 205,759 214,490
Provision for income tax 63,130 76,861 78,204
Net income $100,733 $128,898 $136,286
Earnings per share $0.99 $1.33 $1.59
The accompanying notes are an integral part of these consolidated
financial statements.
-39-
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended January 31, 1997 1996 1995
Increase (decrease) in cash
and cash equivalents (in thousands)
Cash flows from operating activities
Net income $100,733 $128,898 $136,286
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 103,717 98,380 82,753
Increase in deferred income tax 3,234 18,430 28,160
Increase in interest payable 5,835 839 53
Loss on sale of fixed assets 47,301 10,481 768
Increase in other current assets (17,742) (2,821) (2,902)
Increase in other current liabilities 7,741 4,818 2,700
(Increase) decrease in other non-
current assets (3,406) (4,706) 6,880
Decrease in other noncurrent
liabilities (65) (65) (65)
Unconsolidated affiliates' earnings
in excess of distributions (21,984) (9,722) (5,459)
Total adjustments 124,631 115,634 112,888
Net cash provided by operating
activities 225,364 244,532 249,174
Cash flows from investing activities
Capital expenditures (585,835) (221,684)(142,667)
Increase (decrease) in construction
payables 21,144 (1,101) (12,743)
(Increase) decrease in investments
in unconsolidated affiliates (19,204) 1,806 (66,178)
(Increase) decrease in notes receivable (8,934) 40,575 (68,083)
Net cash paid for acquisition of Gold
Strike Resorts - (3,929) -
Proceeds from sale of equipment and other
assets 3,056 1,353 415
Other (1,270) - -
Net cash used in investing activities (591,043) (182,980)(289,256)
Cash flows from financing activities
Proceeds from issuance of senior notes
and debentures 499,066 - -
Net effect on cash of issuances and
payments of debt with initial maturities
of three months or less 43,850 (101,536) 65,378
Issuance of debt with initial maturities
in excess of three months 292,533 32,583 -
Principal payments of debt with initial
maturities in excess of three months (145,392) (12,852) (169)
Exercise of stock options and warrants 28,400 19,114 4,919
Sale of stock warrants - 2,000 -
Purchase of subsidiary preferred stock (1,346) - -
Purchases of treasury stock (341,837) - (15,031)
Other (2,783) 8,079 (361)
Net cash provided by (used in) financing
activities 372,491 (52,612) 54,736
Net increase in cash and cash equivalents 6,812 8,940 14,654
Cash and cash equivalents at beginning
of year 62,704 53,764 39,110
Cash and cash equivalents at end of year $69,516 $62,704 $53,764
Supplemental cash flow disclosures
Cash paid during the year for
Interest (net of amount capitalized) $46,498 $49,330 $41,613
Income tax $48,043 $55,995 $52,500
The accompanying notes are an integral part of these consolidated
financial statements.
-40-
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Issued Additional Total
Paid-in Retained Treasury Stockholders'
(in thousands) Shares Amount Capital Earnings Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1994 96,169 $1,603 $120,135 $618,446 $(180,234) $ 559,950
Net income - - - 136,286 - 136,286
Exercise of stock options and warrants 272 4 4,825 - 90 4,919
Treasury stock acquired (535 shares),
at cost - - - - (15,031) (15,031)
Balance, January 31, 1995 96,441 1,607 124,960 754,732 (195,175) 686,124
Net income - - - 128,898 - 128,898
Exercise of stock options and warrants 62 1 9,841 - 9,272 19,114
Issuance of shares in Gold Strike
acquisition 16,292 272 388,539 - - 388,811
Sale of warrants - - 2,000 - - 2,000
Amortization of deferred compensation - - 1,865 - - 1,865
Balance, January 31, 1996 112,795 1,880 527,205 883,630 (185,903) 1,226,812
Net income - - - 100,733 - 100,733
Exercise of stock options and warrants 13 - 14,005 - 14,395 28,400
Treasury stock acquired (10,096 shares),
at cost - - - - (341,837) (341,837)
Purchase of subsidiary preferred stock - - (447) - - (447)
Sale/purchase of puts and calls - - (44,950) - - (44,950)
Amortization of deferred compensation - - 3,080 - - 3,080
Balance, January 31, 1997 112,808 $1,880 $498,893 $984,363 $(513,345) $ 971,791
</TABLE)
The accompanying notes are an integral part of these consolidated financial
statements.
-41-
CIRCUS CIRCUS ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
Circus Circus Enterprises, Inc. (the "Company") was incorporated
February 27, 1974. The Company owns and operates hotel and casino
facilities in Las Vegas, Reno, Laughlin, Jean and Henderson,
Nevada and a dockside casino in Tunica County, Mississippi. It is
also an investor in several unconsolidated affiliates, with
operations that include a riverboat casino in Elgin, Illinois, a
hotel/casino in Reno, Nevada and a hotel/casino on the Las Vegas
Strip which opened June 21, 1996. (See Note 14 - Investments in
Unconsolidated Affiliates.)
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. Material
intercompany accounts and transactions have been eliminated.
Investments in 50% or less owned affiliated companies are accounted
for under the equity method.
On November l, 1979, the Company purchased the Slots-A-Fun
Casino in Las Vegas and on February 1, 1983, the Company purchased
the Edgewater Hotel and Casino in Laughlin, Nevada. The excess of
the purchase price over the fair market value of the net assets
acquired amounted to $4.2 million for the purchase of Slots-A-Fun
and $9.7 million for the purchase of the Edgewater, and each is
being amortized over a period of 40 years. (See also Note 2 -
Acquisition of Gold Strike Resorts.)
CAPITALIZED INTEREST
The Company capitalizes interest costs associated with debt
incurred in connection with major construction projects. When no
debt is specifically identified as being incurred in connection
with a construction project, the Company capitalizes interest on
amounts expended on the project at the Company's average cost of
borrowed money. The amounts capitalized during the years ended
January 31, 1997, 1996 and 1995, were $16.0 million, $8.6 million
and $4.2 million, respectively.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out and the average cost
methods.
CASH EQUIVALENTS
At January 31, 1997 and 1996, cash equivalents (consisting
principally of money market funds and instruments with initial
maturities of three months or less) had a cost approximately equal
to market value.
INTEREST RATE SWAPS
The Company, from time to time, uses interest rate swaps and
similar financial instruments to assist in managing interest
incurred on its long-term debt. The difference between amounts
received and amounts paid under such agreements, as well as any
costs or fees, is recorded as a reduction of, or addition to,
interest expense as incurred over the life of the swap or similar
financial instrument.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization of property, equipment and leasehold
interests are provided using the straight-line method over the
following estimated useful lives:
Buildings and improvements 15-45 years
Equipment, furniture and fixtures 3-15 years
Leasehold interests and improvements 5-16 years
Accumulated amortization of the excess of the purchase price
over the fair market value of the net assets of businesses acquired
was $20.9 million and $10.7 million, as of January 31, 1997 and
1996, respectively.
-42-
REVENUES AND EXPENSES
Revenues include the retail value of rooms, food and beverage
furnished gratuitously to customers. Such amounts are then
deducted as complimentary allowances. The costs of such rooms,
food and beverage were included as casino expenses as follows:
$37.9 million, $34.5 million and $30.6 million for the fiscal years
ended January 31, 1997, 1996 and 1995, respectively. For the three
years, approximately 90% of such costs were for food and beverage
with the balance for rooms. Casino revenues are the net difference
between the sums received as winnings and the sums paid as losses.
RECLASSIFICATIONS
The financial statements for prior years reflect certain
reclassifications, which have no effect on net income, to conform
with classifications adopted in the current year.
PREOPENING EXPENSES
Preopening expenses consist principally of direct incremental
personnel costs and advertising and marketing expenses. These
costs are capitalized prior to the opening of the specific project
and are charged to expense at the commencement of operations. For
the year ended January 31, 1995, preopening expenses amounted to
$3.0 million related to the August 29, 1994 opening of Circus
Circus-Tunica.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and affect the disclosure of contingent
assets and liabilities at the date of the financial statements.
These estimates and assumptions also affect the reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
Note 2. Acquisition of Gold Strike Resorts
On June 1, 1995, the Company completed its acquisition of a group
of affiliated entities (collectively "Gold Strike Resorts") in
which it acquired two hotel and casino facilities in Jean, Nevada,
one in Henderson, Nevada, a 50% interest in a joint venture which
owns a riverboat casino and land-based entertainment complex in
Elgin, Illinois, and a 50% interest in a joint venture which owns
a major destination resort on the Las Vegas Strip. In exchange for
the equity interests in Gold Strike Resorts, the Company issued
16,291,551 shares of its common stock and preferred stock of a
subsidiary which was convertible into an additional 793,156 shares
of the Company's common stock. (See Note 11 regarding the February
26, 1997 conversion of the preferred stock to common stock.) In
addition, the Company paid approximately $12 million in cash, while
assuming approximately $165 million of debt. The acquisition has
been accounted for by the purchase method of accounting and
resulted in a total purchase price of approximately $430 million.
In determining the purchase price of Gold Strike Resorts, the value
of the Company's common stock issued was discounted by 30% (due to
restrictions on the resale of the common stock issued) from the
price quoted on the New York Stock Exchange on May 31, 1995, based
on estimates provided by the Company's investment bankers. The
purchase price was allocated to assets and liabilities based on
their estimated fair values on the date of acquisition. The excess
of the purchase price over the fair market value of the net assets
acquired was approximately $390 million and is being amortized on
a straight-line basis over 40 years. The following supplemental
cash flow disclosure summarizes the effect on cash of the
acquisition of Gold Strike Resorts:
-43-
Increase (decrease) in cash and cash equivalents (in thousands)
January 31, 1997 1996 1995
Acquisition of Gold Strike Resorts
Current assets, other than cash - $ (1,487) $ -
Property and equipment - (115,708) -
Other assets - (484,761) -
Current liabilities - 9,627 -
Long-term debt - 163,978 -
Other liabilities - 17,081 -
Subsidiary preferred stock - 18,530 -
Stockholders' equity - 388,811 -
$ - $ (3,929) $ -
Note 3. Property, Equipment and Leasehold Interests
Property, equipment and leasehold interests consist of the
following:
January 31, (in thousands) 1997 1996
Land and land leases $ 341,826 $ 333,142
Buildings and improvements 1,436,299 1,107,557
Equipment, furniture and fixtures 554,194 494,091
Leasehold interests and improvements 10,803 10,831
2,343,122 1,945,621
Less - accumulated depreciation
and amortization (526,902) (490,596)
1,816,220 1,455,025
Construction in progress 103,812 19,659
$1,920,032 $1,474,684
Note 4. Long-term Debt
Long-term debt consists of the following:
January 31, (in thousands) 1997 1996
Amounts due under corporate debt
program at floating interest rates,
weighted average of 5.6% and 5.9% $501,191 $210,188
6.45% Senior Notes due 2006 (net of
unamortized discount of $396) 199,604 -
7-5/8% Senior Subordinated Debentures
due 2013 150,000 150,000
6-3/4% Senior Subordinated Notes
due 2003 (net of unamortized
discount of $103 and $119) 149,897 149,881
7.0% Debentures due 2036 (net of
unamortized discount of $160) 149,840 -
6.70% Debentures due 2096 (net of
unamortized discount of $327) 149,673 -
10-5/8% Senior Subordinated Notes
due 1997 (net of unamortized
discount of $7 and $24) 99,993 99,976
Amounts due under bank credit agree-
ments at floating interest rates,
weighted average of 6.3% - 100,000
Other notes 6,078 6,032
1,406,276 716,077
Less - current portion (379) (863)
$1,405,897 $715,214
-44-
The Company has established a corporate debt program whereby
it can issue commercial paper or similar forms of short-term debt.
Although the debt instruments issued under this program are short
term in tenor, they are classified as long-term debt because (i)
they are backed by long-term debt facilities (see below) and (ii)
it is management's intention to continue to replace such borrowings
on a rolling basis as various instruments come due and to have such
borrowings outstanding for longer than one year. To the extent
that the Company incurs debt under this program, it maintains an
equivalent amount of credit available under its bank credit
facility, discussed more fully below.
In January 1996, the Company renegotiated its $250 million
unsecured 364-day facility and its $500 million unsecured reducing
revolver, both of which were dated September 30, 1993, as well as
a $145 million reducing revolving credit agreement assumed by the
Company upon its acquisition of Gold Strike Resorts in June 1995.
These agreements were replaced by a new $1.5 billion unsecured
credit facility (reducing to $1.2 billion on December 31, 1999)
which matures on December 31, 2000 (the "Facility"). The maturity
date and reduction date may each be extended for an unlimited
number of one-year periods with the consent of the bank group. The
Facility contains financial covenants regarding minimum net worth,
interest charge coverage, total debt and new venture capital
expenditures and investments. The Facility is for general
corporate purposes. The Company incurs commitment fees of 25 basis
points on the unused portion of the Facility. As of January 31,
1997, the Company had no borrowings under the Facility. At such
date, the Company had also $501.2 million issued under the
corporate debt program thus reducing, by that amount, the credit
available under the Facility for purposes other than repayment of
such indebtedness. The fair value of the debt issued under the
corporate debt program approximates the carrying amount of the debt
due to the short-term maturities of the individual components of
the debt.
In November 1996, the Company issued $150 million principal
amount of 7.0% Debentures due November 2036 (the "7.0%
Debentures"). The 7.0% Debentures may be redeemed at the option of
the holder in November 2008. Also, in November 1996, the Company
issued $150 million principal amount of 6.70% Debentures due
November 2096 (the "6.70% Debentures"). The 6.70% Debentures may
be redeemed at the option of the holder in November 2003. Both the
7.0% Debentures, which were discounted to $149.8 million, and the
6.70% Debentures, which were discounted to $149.7 million, have
interest payable each May and November, are not redeemable by the
Company prior to maturity and are not subject to any sinking fund
requirements. The net proceeds from these offerings were used
primarily to repay borrowings under the Company's corporate debt
program. As of January 31, 1997, the estimated fair value of the
7.0% Debentures was $147.6 million and the estimated fair value of
the 6.70% Debentures was $146.8 million, based on their trading
prices.
In February 1996, the Company issued $200 million principal
amount of 6.45% Senior Notes due February 1, 2006 (the "6.45%
Notes"), with interest payable each February and August. The 6.45%
Notes, which were discounted to $199.6 million, are not redeemable
prior to maturity and are not subject to any sinking fund
requirements. The net proceeds from this offering were used
primarily to repay borrowings under the Company's corporate debt
program. As of January 31, 1997, the estimated fair value of the
6.45% Notes was $189.4 million, based on their trading price.
In July 1993, the Company issued $150 million principal amount
of 6-3/4% Senior Subordinated Notes (the "6-3/4% Notes") due July
2003 and $150 million principal amount of 7-5/8% Senior
Subordinated Debentures (the "7-5/8% Debentures") due July 2013,
with interest payable each July and January. The 6-3/4% Notes,
which were discounted to $149.8 million, and the 7-5/8% Debentures
are not redeemable prior to maturity and are not subject to any
sinking fund requirements. The net proceeds from these offerings
were used primarily to repay borrowings under the Company's
corporate debt program. As of January 31, 1997, the estimated fair
value of the 6-3/4% Notes was $146.0 million and the estimated fair
value of the 7-5/8% Debentures was $144.8 million, based on their
trading prices.
In June 1990, the Company issued $100 million principal amount
of 10-5/8% Senior Subordinated Notes (the "10-5/8% Notes") due June
1997, with interest payable each June and December. The 10-5/8%
Notes, which were discounted to $99.9 million, are not redeemable
prior to maturity and are not subject to any sinking fund
requirements. Holders of the 10-5/8% Notes may require the Company
to repurchase all or any portion of their notes at par upon the
occurrence of both a Designated Event (as defined in the indenture)
and a Rating Decline (as defined in the indenture). As of January
31, 1997, the estimated fair value of the 10-5/8% Notes was $101.7
-45-
million, based on their trading price. Although the 10-5/8% Notes
are due June 1997, they have been classified as long-term debt
because it is the Company's intention to replace the 10-5/8% Notes,
when they become due, with borrowings under its corporate debt
program.
The Company has a policy aimed at managing interest rate risk
associated with its current and anticipated future borrowings.
This policy enables the Company to use any combination of interest
rate swaps, futures, options, caps and similar arrangements. The
Company has entered into various interest rate swaps, principally
with its bank group, to manage interest expense, which is subject
to fluctuation due to the variable rate nature of the debt under
the Company's corporate debt program. The Company has interest rate
swap agreements under which it pays a fixed interest rate (weighted
average of approximately 8.6%) and receives a variable interest
rate (weighted average of approximately 5.5% at January 31, 1997)
on $81 million notional amount of "initial" swaps, and pays a
variable interest rate of approximately 5.5% at January 31, 1997,
and receives a fixed interest rate of approximately 8.2% on $30
million notional amount of a "reversing" swap. The net effect of
all such swaps resulted in additional interest expense due to an
interest rate differential which, at January 31, 1997, was
approximately 1.5% on the total notional amount of the swaps. One
of the initial swaps provides for quarterly reductions in the
notional amount of up to $1 million. This swap has a current
notional amount of $26.5 million, but declines to $22.5 million by
its termination date in fiscal 1999. Excluding this swap, the
initial swaps have the following termination dates: $29.5 million
in fiscal 1999 and $25 million in fiscal 2000. The reversing swap
expires in fiscal 2002.
In addition to the aforementioned swaps, the Company has
entered into an interest rate swap with a notional amount of $100
million in which the Company pays a floating rate (5.4% at January
31, 1997 and capped at 6.5%) and receives a fixed interest rate of
4.75%. This swap corresponds in both notional amount and maturity
to the Company's 10-5/8% Notes due in 1997. The variable interest
rates which the Company pays or receives under the various swaps
are based primarily upon the London Interbank Offering Rate
(LIBOR). The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap
agreements. However, the Company considers the risk of
nonperformance by the counterparties to be minimal because the
parties to the swaps and the reverse swap are predominantly members
of the Company's bank group. If the Company had terminated all
swaps as of January 31, 1997, it would have had to pay a net amount
of approximately $0.8 million based on quoted market values from
the various financial institutions holding the swaps.
As of January 31, 1997, under the Company's most restrictive
loan covenants, the Company was restricted as to the payment of
dividends or the purchase of its own capital stock in excess of
approximately $53 million.
Required annual principal payments as of January 31, 1997 are
as follows:
Year ending January 31, (in thousands)
1998 $ 379
1999 356
2000 687
2001 601,435
2002 262
Thereafter 803,157
$1,406,276
Note 5. Leasing Arrangements
Effective November 1, 1981, the Company entered into an 18-year
lease for the premises on which the Silver City Casino in Las Vegas
operates. This lease is accounted for as an operating lease. The
current monthly base rent of $129,982 is subject to annual
increases, calculated using a specified index with a cap based on
a specified percentage of annual revenues. The lease also provides
for profit participation. The profit participation is the amount
by which 50% of defined net income exceeds the adjusted base rent.
There was no profit participation rent due for the three years
ended January 31, 1997.
-46-
The Company also leases various storage facilities and
equipment and has various air space under operating leases expiring
individually through 2032. A portion of the Circus Circus facility
in Reno is built on leased land with various operating leases
expiring through 2033. The following is a schedule by year of
future minimum rental payments required as of January 31, 1997
under these operating leases that have noncancelable lease terms in
excess of one year:
Year ending January 31, (in thousands)
1998 $ 3,337
1999 2,814
2000 1,942
2001 644
2002 611
Thereafter 7,272
$16,620
Rent expense for all leases accounted for as operating leases was
as follows:
Year ended January 31,
(in thousands) 1997 1996 1995
Operating rent expense $3,869 $3,414 $3,452
Note 6. Income Tax
The components of the provision for income taxes are as follows:
Year ended January 31,
(in thousands) 1997 1996 1995
Current
Federal $52,695 $57,409 $56,745
State 670 810 130
53,365 58,219 56,875
Deferred
Federal 5,838 15,588 19,254
Foreign 3,927 3,054 2,075
9,765 18,642 21,329
Total $63,130 $76,861 $78,204
The Company has recognized a tax benefit of $8.0 million, $4.2
million and $1.2 million related to the exercise of stock options
and warrants for the fiscal years ended January 31, 1997, 1996 and
1995, respectively. Such amounts reduce the current portion that
is actually payable.
-47-
The cumulative balance of the deferred tax liability is due
predominantly to temporary book/tax depreciation differences. The
components of deferred income tax expense are as follows:
Year ended January 31,
(in thousands) 1997 1996 1995
Additional depreciation
resulting from the use of
accelerated methods for tax
purposes and the straight-line
method for financial state-
ment purposes $ 7,493 $11,418 $18,598
Effect of writing off preopening
expenses for financial state-
ment purposes and amortizing
over five years for tax purposes 1,253 1,514 861
Difference between book and tax
basis of assets written off (8,341) (2,370) -
Difference between book and tax
basis of investments in uncon-
solidated affiliates 4,028 3,469 -
Foreign tax credits 5,075 193 -
Amortization of goodwill 1,463 82 -
Foreign income (1,695) 3,054 2,075
Other, net 489 1,282 (205)
$ 9,765 $18,642 $21,329
The reconciliation of the difference between the federal
statutory tax rate and the Company's effective tax rate is as
follows:
Year ended January 31, 1997 1996 1995
Federal statutory tax rate 35.0% 35.0% 35.0%
Nondeductible goodwill 2.2 1.1 -
State and foreign income and
franchise taxes, net of federal
tax benefits .7 .6 -
Nondeductible employee meals .2 .1 .9
Other, net .4 .6 .6
Effective tax rate 38.5% 37.4% 36.5%
The income tax effects of temporary differences between financial
and income tax reporting that gave rise to deferred income tax assets
and liabilities at January 31, 1997 and 1996, under the provisions of
Statement of Financial Accounting Standards No. 109, are as follows:
Year ended January 31,
(in thousands) 1997 1996
Deferred tax liabilities
Property and equipment $134,053 $136,929
Investments in unconsolidated
affiliates 11,444 8,793
Other 12,983 8,739
Gross deferred tax liabilities 158,480 154,461
Deferred tax assets
Accrued vacation 4,490 3,989
Preopening expense, net of amortization 2,338 3,532
Other 7,594 6,116
Gross deferred tax assets 14,422 13,637
Net deferred tax liabilities $144,058 $140,824
-48-
Note 7. Employee Retirement Plans
Approximately 39% of the Company's employees are covered by
union-sponsored, collectively bargained, multi-employer, defined benefit
pension plans. The Company contributed $9.3 million, $8.4 million and
$8.1 million during the years ended January 31, 1997, 1996 and 1995,
respectively, for such plans. These contributions are determined in
accordance with the provisions of negotiated labor contracts and
generally are based on the number of hours worked.
The Company also has a profit sharing and investment plan covering
primarily nonunion employees who are at least 21 years of age and have
at least one year of service. The plan is a voluntary defined
contribution plan and is subject to the provisions of the Employee
Retirement Income Security Act of 1974. The plan allows for investments
in the Company's common stock as one of the investment alternatives.
The Company's contributions to this plan are determined based on
employees' years of service and matching of employees' contributions,
and were approximately $4.0 million, $3.6 million and $3.3 million in
the years ended January 31, 1997, 1996 and 1995. Contributions may be
funded with the Company's stock or cash. The fiscal 1997, 1996 and 1995
contributions were funded in cash.
Note 8. Warrants and Stock Options
WARRANTS
In June 1989, the stockholders approved a stock purchase warrant plan
enabling the Company to offer warrants to its officers and other key
employees to purchase up to 4.5 million shares of the Company's common
stock. In accordance with the provisions of such plan, the 4.5 million
warrants were subsequently issued in June 1989 at a price of $.17 per
warrant, with an exercise price of $14.33 ($.67 per share over the fair
market value on the date the warrants were authorized). Each warrant
had a term of seven years, with 50% of the warrants becoming exercisable
two years from the date of grant and the remaining 50% three years from
the date of grant. As of January 31, 1997, all of the warrants had been
exercised, including 683,500 shares which were exercised during the year
ended January 31, 1997.
STOCK OPTIONS
The Company also has various stock option plans for executive,
managerial and supervisory personnel as well as the Company's outside
directors and consultants. The plans permit grants of options,
performance shares and restricted stock relating to the Company's common
stock. The stock options are generally exercisable in one or more
installments beginning not less than six months after the grant date.
Summarized information for stock option and warrant plans is as follows:
Year ended January 31,
1997 1996 1995
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding at be-
ginning of year.... 8,129,015 $23.88 5,617,954 $20.44 3,796,547 $24.60
Granted.............. 360,000 33.46 3,782,500 27.99 6,167,500 23.28
Exercised............(1,188,105) 17.24 (822,924) 18.20 (281,093) 13.02
Cancelled............ (150,850) 27.95 (448,515) 25.88 (4,065,000) 29.15
Outstanding at end
of year............ 7,150,060 $25.38 8,129,015 $23.88 5,617,954 $20.44
Options and warrants
exercisable at end
of year............ 3,459,067 $23.52 2,947,550 $19.86 1,401,164 $16.96
Options available for
grant at end of
year............... 2,361,350 2,570,500 2,630,000
-49-
The following table summarizes information about stock options outstanding at
January 31, 1997:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (yrs) Price Exercisable Price
$ 8.58 to $15.29 74,010 2.3 $12.68 57,000 $12.96
21.25 to 21.25 2,886,800 6.4 21.25 2,248,050 21.25
23.08 to 27.57 1,418,250 8.0 25.58 365,350 25.95
28.88 to 28.88 2,000,000 5.1 28.88 666,667 28.88
30.30 to 39.76 771,000 8.6 32.61 122,000 33.85
7,150,060 6.6 $25.38 3,459,067 $23.52
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 - Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 is effective for fiscal years beginning
after December 15, 1995 and provides, among other things, that companies may
elect to account for employee stock options using a fair value-based method
or continue to apply the intrinsic value-based method prescribed by
Accounting Principles Board Opinion No. 25 ("APB 25").
Under SFAS 123, all employee stock option grants are considered compensatory.
Compensation cost is measured at the date of grant based on the estimated
fair value of the options determined using an option pricing model. The
model takes into account the stock price at the grant date, the exercise
price, the expected life of the option, the volatility of the stock, expected
dividends on the stock and the risk-free interest rate over the expected life
of the option. Under APB 25, generally only stock options that have
intrinsic value at the date of grant are considered compensatory. Intrinsic
value represents the excess, if any, of the market price of the stock at the
grant date over the exercise price of the options. Under both methods,
compensation cost is charged to earnings over the period the options become
exercisable.
The Company has elected to continue to account for employee stock options
under APB 25. Accordingly, no compensation cost has been recognized.
The following table discloses the Company's pro forma net income and net
income per share assuming compensation cost for employee stock options had
been determined consistent with SFAS 123. The table also discloses the
weighted average assumptions used in estimating the fair value of each option
grant on the date of grant using the Black-Scholes option pricing model, and
the estimated weighted average fair value of the options granted. The model
assumes no expected future dividend payments on the Company's common stock
for the options granted in both 1997 and 1996.
Year ended January 31,
(dollars in thousands, except share data) 1997 1996
Net income
As reported............................. $100,733 $128,898
Pro forma............................... 89,911 120,695
Net income per share
As reported............................. $ 0.99 $ 1.33
Pro forma............................... 0.88 1.24
Weighted average assumptions
Expected stock price volatility......... 42.0% 34.6%
Risk-free interest rate................. 6.4% 6.2%
Expected option lives................... 3.0 years 3.0 years
Estimated fair value of options granted. $ 12.14 $ 11.96
-50-
Because the accounting method prescribed by SFAS 123 has not been applied to
options granted prior to January 1, 1995, the compensation cost reflected in
the pro forma amounts shown above may not be representative of that to be
expected in future years.
Note 9. Stock Rights
On July 14, 1994, the Company declared a dividend of one Common Stock
Purchase Right (the "Rights") for each share of common stock outstanding at
the close of business on August 15, 1994. Each Right entitles the holder to
purchase from the Company one share of common stock at an exercise price of
$125, subject to certain antidilution adjustments. The Rights become
exercisable ten days after the earlier of an announcement that an individual
or group has acquired 15% or more of the Company's outstanding common stock
or the announcement of commencement of a tender offer for 15% or more of the
Company's common stock. Effective April 16, 1996, the Rights Agreement was
amended to raise the trigger level from 10% to 15%.
In the event the Rights become exercisable, each Right (except the
Rights beneficially owned by the acquiring individual or group, which become
void) would entitle the holder to purchase, for the exercise price, a number
of shares of the Company's common stock having an aggregate current market
value equal to two times the exercise price. The Rights expire August 15,
2004, and may be redeemed by the Company at a price of $.01 per Right any
time prior to their expiration or the acquisition of 15% or more of the
Company's common stock. The Rights should not interfere with any merger or
other business combination approved by the Company's Board of Directors and
are intended to cause substantial dilution to a person or group that attempts
to acquire control of the Company on terms not approved by the Board of
Directors.
Note 10. Share Repurchases
During the year ended January 31, 1997, the Company repurchased 10.1 million
shares of its common stock at a cost of $341.8 million. In fiscal 1995, the
Company repurchased 0.5 million shares of its common stock at a cost of $15
million.
The Company has sold put options on 1.4 million shares of its common
stock, exercisable on specific dates in fiscal 1998, giving another party the
right to sell shares of the Company's common stock at contractually specified
prices. The balance in the temporary equity account includes the amount the
Company would be obligated to pay if all the put options were exercised. The
proceeds from the issuance of the put options were accounted for as
additional paid-in capital.
The Company has also purchased call options on 600,000 shares of its
common stock, exercisable at a specific date in fiscal 1998, giving the
Company the right to purchase shares of its common stock at a contractually
specified price. The cost of the call options was accounted for as an offset
to additional paid-in capital.
Note 11. Redeemable Preferred Stock
In connection with the acquisition of Gold Strike Resorts, New Way, Inc., a
wholly owned subsidiary of the Company, issued 1,069,926 shares of $10.00
Cumulative Preferred Stock. Dividends are payable when, as and if declared
by the Board of Directors. Each share of preferred stock is exchangeable for
approximately 3.9 shares of the Company's common stock, however, no dividends
are payable in the event of exchange. In general, the preferred stock is
exchangeable by the holder thereof and by the Company on the occurrence of
certain events, including a merger of New Way, Inc. into another subsidiary
of the Company. The exchange rate is subject to adjustment in the event of
certain dilutive events. The preferred stock is subject to mandatory
redemption on the fifteenth anniversary of the date of original issuance at
a price equal to the liquidation preference ($100) plus all unpaid dividends.
Of the preferred shares issued, 866,640 were issued to another wholly owned
subsidiary of the Company.
During the year ended January 31, 1997, the Company purchased 9,864
shares of the preferred stock for $1.3 million. The price paid by the
Company was based on the trading price of the Company's common stock prior to
the transaction. On February 26, 1997, New Way, Inc. merged into another
subsidiary of the Company and, therefore, the remaining preferred stock was
converted into common stock at the above-mentioned exchange rate.
-51-
Note 12. Preferred Stock
The Company is authorized to issue up to 75 million shares of $.01 par value
preferred stock in one or more series having such respective terms, rights
and preferences as are designated by the Board of Directors. No preferred
stock has yet been issued.
Note 13. Earnings Per Share
Earnings per share is computed by dividing net income by the weighted average
number of common shares outstanding during the period. Earnings per share
assuming full dilution is not presented because the exercise of stock options
and the conversion of exchangeable preferred stock would not have a material
dilutive effect on the per share amounts. The weighted average number of
shares outstanding for the years ended January 31, 1997, 1996 and 1995 were
101.9 million, 97.2 million and 85.8 million, respectively.
Note 14. Investments in Unconsolidated Affiliates
The Company has investments in unconsolidated affiliates that are accounted
for under the equity method. Under the equity method, original investments
are recorded at cost and adjusted by the Company's share of earnings, losses
and distributions of these companies. The investment balance also includes
interest capitalized during construction. Investments in unconsolidated
affiliates consist of the following:
January 31, (in thousands) 1997 1996
Circus and Eldorado Joint Venture (50%)
(Silver Legacy, Reno, Nevada) $ 54,269 $52,917
Windsor Casino Limited (33-1/3%)
(Casino Windsor, Canada) - 11,799
Elgin Riverboat Resort (50%)
(The Grand Victoria, Elgin, Illinois) 51,174 56,719
Victoria Partners (50%)
(Monte Carlo, Las Vegas, Nevada) 108,680 51,835
$214,123 $173,270
In January 1997, the Company transferred its one-third interest in
Windsor Casino Limited to the two remaining shareholders for its book value.
In addition, the remaining shareholders assumed the Company's portion of a
guarantee of a revolving credit facility established to fund a portion of a
permanent hotel/casino.
The Company's unconsolidated affiliates operate primarily with fiscal
years ending on December 31. Summarized balance sheet information of the
unconsolidated affiliates as of December 31, 1996 and 1995 is as follows:
(in thousands) 1996 1995
Current assets $123,965 $ 58,402
Property and other assets, net $793,260 $650,764
Current liabilities $ 99,785 $ 72,416
Long-term debt and other liabilities $404,047 $324,538
Equity $413,394 $312,212
Summarized results of operations of the unconsolidated affiliates for
the years ended December 31, 1996 and 1995 are as follows:
(in thousands) 1996 1995
Revenues $560,066 $305,257
Expenses $383,431 $177,108
Operating income $176,635 $128,149
Net income $136,355 $119,487
-52-
Note 15. Abandonment Losses
During fiscal 1997, the Company wrote off $48.3 million of various assets.
These write-offs included the special-effects films at Luxor ($12.0 million)
which were replaced by IMAX special-format filmed attractions, structural
elements being demolished as part of Luxor's remodeling ($12.1 million), and
fixtures and equipment at Circus Circus-Las Vegas, Excalibur and Circus
Circus-Tunica being replaced in the course of upgrading and expanding those
properties ($16.0 million). The Company also wrote off $8.2 million of costs
associated with the demolition of a people mover at Circus Circus-Las Vegas
and the removal of the Nile River at Luxor.
During 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 Company sold its partially completed
riverboat gaming facility in Chalmette, Louisiana for $4 million. The
Company had a net investment (including a loan to the other joint venturer)
of $35.5 million in this project and thus recognized a loss of $31.5 million
on this sale. After reevaluating the New Orleans market, the Company
determined that this project could no longer promise a sufficiently high rate
of return to meet Company objectives. The Company also wrote off $6.2
million representing the remaining value of the parking garage and people
mover at Circus Circus-Reno, $3.7 million for a dismantled monorail system
between Luxor and Excalibur, $2.1 million for a dismantled gondola system at
Circus Circus-Las Vegas and $1.6 million for miscellaneous other assets.
Note 16. Commitments and Contingent Liabilities
In July 1995, Silver Legacy, a 50/50 joint venture with the Eldorado
Hotel/Casino, opened in downtown Reno, Nevada. As a condition to the joint
venture's $220 million bank credit agreement (which amended and restated the
joint venture's previous $230 million credit agreement), Circus is obligated
under a make-well agreement to make additional contributions to the joint
venture as may be necessary to maintain a minimum coverage ratio (as
defined). As of January 31, 1997, the Company had an outstanding loan to the
joint venture in the principal amount of $35.1 million at an interest rate of
10%.
In Tunica County, Mississippi, the Company has commenced construction of
a 1,200-room tower addition to its casino which will include remodeling and
retheming the property into a more elegant resort under the name Gold Strike
Casino Resort. The estimated cost of this expansion is $125 million, with a
projected completion date in December 1997.
The Company has commenced construction on an entertainment megastore of
approximately 3,800 rooms on the site of the Hacienda Hotel and Casino, which
ceased operations on December 1 and was imploded on December 31, 1996. The
new resort, whose working title is Project Paradise, is slated to open in
late 1998 or early 1999. Project Paradise will feature a centerpiece 10-acre
tropical environment that will contain, among other attractions, a surfing
beach with six-foot waves and a swim-up shark exhibit. Inside, Project
Paradise will offer waterfalls, terraced gardens, mythical statuary and open-
air restaurants set amid beautifully crafted environments, including a swan
island. In addition to the 3,800 rooms, there are plans for a stand-alone,
400-room Four Seasons Hotel that will connect to the new megastore, providing
Las Vegas visitors with a luxury "five-star" hospitality experience. This
hotel, which will be owned by Circus and managed by Four Seasons Regent
Hotels and Resorts, represents the first step pursuant to a cooperative
effort with Four Seasons to identify strategic opportunities for development
of hotel and casino properties worldwide. The total cost of this project is
currently estimated at $800 million (excluding the cost of the Four Seasons
Hotel).
The Company has funded the above projects from internal cash flows,
project-specific financing or its credit facility, and anticipates that
future funding for such projects will be from these sources, including the
$1.5 billion credit facility, of which approximately $998.8 million was not
drawn as of January 31, 1997.
The Company is a defendant in various pending litigation. In
management's opinion, the ultimate outcome of such litigation will not have
a material effect on the results of operations or the financial position of
the Company.
-53-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Circus Circus Enterprises,
Inc.:
We have audited the accompanying consolidated balance sheets of Circus Circus
Enterprises, Inc. (a Nevada corporation) and subsidiaries as of January 31,
1997 and 1996 and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended January 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Circus Circus Enterprises,
Inc. and subsidiaries as of January 31, 1997 and 1996 and the results of
their operations and their cash flows for each of the three years in the
period ended January 31, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
February 26, 1997
Management's Report on Financial Statements
The Company is responsible for preparing the consolidated financial
statements and related information appearing in this report. Management
believes that the financial statements present fairly its financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. In preparing its financial statements, the Company is
required to include amounts based on estimates and judgments which management
believes are reasonable under the circumstances.
The Company maintains accounting and other control systems designed to
provide reasonable assurance that financial records are reliable for purposes
of preparing financial statements and that assets are properly accounted for
and safeguarded. Compliance with these systems and controls is reviewed
through a program of audits by an internal audit staff.
The Board of Directors fulfills its responsibility for the Company's
financial statements through its audit committee, which is composed solely of
directors who are not Company officers or employees. The audit committee
meets from time to time with the independent public accountants, management
and the internal auditors. The independent public accountants have direct
access to the audit committee, with or without the presence of management
representatives.
-54-
</TABLE>
Exhibit 21
Subsidiaries of the Company
Set forth below is information concerning the Company's (CCEI) subsidiaries
and their respective ownership.
Jurisdiction Percentage
Name and Form of Ownership
Circus Circus Casinos, Inc.(1) Nevada corporation 100% CCEI
Slots-A-Fun, Inc.(2) Nevada corporation 100% CCEI
Edgewater Hotel Corporation(3) Nevada corporation 100% CCEI
Colorado Belle Corp.(4) Nevada corporation 100% CCEI
New Castle Corp.(5) Nevada corporation 100% CCEI
Ramparts, Inc.(6) Nevada corporation 100% CCEI
Circus Circus Mississippi, Inc.(7) Mississippi corporation 100% CCEI
Pinkless, Inc. Nevada corporation 100% CCEI
Circus Circus Development Corp. Nevada corporation 100% CCEI
Galleon, Inc.("GI") Nevada corporation 100% CCEI
M.S.E. Investments,
Incorporated ("MSE") Nevada corporation 100% CCEI
Last Chance Investments,
Incorporated ("LCI") Nevada corporation 100% CCEI
Goldstrike Investments,
Incorporated ("GSI") Nevada corporation 100% CCEI
Diamond Gold, Inc. ("DGI") Nevada corporation 100% CCEI
Oasis Development Company,
Inc. ("ODC") Nevada corporation 100% CCEI
Goldstrike Finance Company, Inc. Nevada corporation 100% CCEI
Railroad Pass Investment Group
("RPIG")(9) Nevada partnership 70% MSE
20% LCI
10% GSI
Jean Development Company
("JDC")(10) Nevada partnership 40% MSE
40% LCI
20% GSI
Jean Development West ("JDW")(11) Nevada partnership 40% MSE
40% LCI
12% GSI
8% DGI
Nevada Landing Partnership ("NLP") Illinois partnership 40% MSE
40% LSI
5% GSI
15% DGI
Gold Strike L.V. ("GSLV") Nevada partnership 52% MSE
39% LCI
6.5% GSI
2.5% DGI
Jean Development North ("JDN") Nevada partnership 47.5% MSE
38.5% LCI
5% GSI
9% DGI
Lakeview Gaming Partnerships
Joint Venture Nevada partnership 25% RPIG
25% JDC
25% JDN
25% JDW
Gold Strike Resorts, Inc. Nevada corporation 100% CCEI
Gold Strike Fuel Company Nevada partnership 16 % MSE
16 % LCI
16 % GSI
50% ODC
Jean Fuel Company West Nevada partnership 40% MSE
40% LCI
12% GSI
8% ODC
Goldstrike Aviation, Incorporated Nevada corporation 100% CCEI
Circus Circus Missouri, Inc. Missouri corporation 100% CCEI
Circus Circus Louisiana, Inc.
("CCLI") Louisiana corporation 100% CCEI
Circus Circus Louisiana II,
Inc. ("CCLII") Louisiana corporation 100% CCEI
Circus Australia Casino, Inc. Nevada corporation 100% CCEI
Circus Circus Indiana, Inc. Indiana corporation 100% CCEI
Pine Hills Development Mississippi partnership 90% PHDII
Pine Hills Development II ("PHDII") Mississippi partnership 58% MSE
32% LCI
7.5% GSI
2.5% DGI
Gold Strike Resorts, L.L.C. Indiana limited
liability company 52% MSE
36% LCI
10% GSI
2% DGI
Scentsational, Inc. Nevada corporation 100% CCEI
Racing Boats, Inc. Nevada corporation 100% CCEI
Other Interests:
Darling Casino Limited Australian public
company limited
by shares 50% CCEI
Meshell Operating Corp. Nevada corporation 100% CCEI
Circus and Eldorado Joint Venture Nevada partnership 50% GI
Victoria Partners Nevada partnership 50% GSLV
Elgin Riverboat Resort Illinois partnership 50% NLP
(1) Doing business as Circus Circus Hotel & Casino - Las Vegas, Circus
Circus Hotel & Casino - Reno and Silver City Casino.
(2) Doing business as Slots-A-Fun Casino.
(3) Doing business as Edgewater Hotel & Casino.
(4) Doing business as Colorado Belle Hotel & Casino.
(5) Doing business as Excalibur Hotel & Casino.
(6) Doing business as Luxor Hotel & Casino.
(7) Doing business as Circus Circus - Tunica.
(8) Doing business as Railroad Pass Hotel & Casino.
(9) Doing business as Goldstrike Hotel and Gambling Hall.
(10) Doing business as Nevada Landing Hotel & Casino.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 69,516
<SECURITIES> 0
<RECEIVABLES> 34,434
<ALLOWANCES> 0
<INVENTORY> 19,371
<CURRENT-ASSETS> 151,849
<PP&E> 2,446,934
<DEPRECIATION> 526,902
<TOTAL-ASSETS> 2,729,111
<CURRENT-LIABILITIES> 129,768
<BONDS> 1,405,897
17,631
0
<COMMON> 1,880
<OTHER-SE> 969,911
<TOTAL-LIABILITY-AND-EQUITY> 2,729,111
<SALES> 1,334,250
<TOTAL-REVENUES> 1,334,250
<CGS> 0
<TOTAL-COSTS> 1,080,998
<OTHER-EXPENSES> 31,083
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,306
<INCOME-PRETAX> 163,863
<INCOME-TAX> 63,130
<INCOME-CONTINUING> 100,733
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,733
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
