<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] 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 0-11268
THE CLARIDGE HOTEL AND CASINO CORPORATION
(Exact name of registrant as specified in its charter)
New York 22-2469172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Indiana Avenue and the Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 340-3400
------------------
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
------ --------
The number of shares outstanding of each class of the Registrant's Stock is as
follows:
Number of Shares Outstanding
May 14, 1996
------------------
Class A Stock 5,046,064 (After deducting 16,436 shares of
Treasury Stock)
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Index to Form 10-Q
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introductory Notes to Consolidated
Financial Statements 3
Consolidated Balance Sheets at
March 31, 1996 and 1995 and
December 31, 1995 4
Consolidated Statements of Operations
for the three months ended March 31,
1996 and 1995 5
Consolidated Statements of Cash Flows
for the three months ended March 31,
1996 and 1995 6
Notes to Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 18
1
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introductory Notes to Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared
by The Claridge Hotel and Casino Corporation ("Corporation") without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, these financial statements contain all adjustments
necessary to present fairly the consolidated financial position of The Claridge
Hotel and Casino Corporation and its wholly-owned subsidiaries, The Claridge at
Park Place, Incorporated ("New Claridge") and Claridge Gaming Incorporated
("CGI") at March 31, 1996 and 1995 and December 31, 1995, and the results of its
operations for the three months ended March 31, 1996 and 1995 and its cash flows
for the three months ended March 31, 1996 and 1995. All adjustments made are of
a normal recurring nature.
Although management believes that the disclosures included herein are
adequate to make the information contained herein not misleading, certain
information and footnote disclosure normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. It is suggested that these financial statements be read in conjunction
with the financial statements and the related disclosures contained in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1995
filed with the Securities and Exchange Commission.
The results of operations for the three months ended March 31, 1996 and
1995 are not necessarily indicative of the operating results to be expected for
the full year. Historically, the gaming industry in Atlantic City, New Jersey
has been seasonal in nature with peak demand months occurring during the summer
season.
3
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
--------- ------------ ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 25,215 35,747 30,215
Receivables, net (including $15,943 and
$14,403 at March 31, 1996 and 1995,
respectively and $15,391 at December 31,
1995, due from the Partnership) 17,919 16,808 14,689
Other current assets 2,847 2,987 8,739
--------- --------- ---------
Total current assets 45,981 55,542 53,643
--------- --------- ---------
Property and equipment, net (note 4) 30,491 24,468 17,503
Long-term receivables due from the
Partnership (note 3) 101,015 104,207 111,896
Intangible assets and deferred charges 2,813 2,930 3,330
Other assets 2,120 1,927 1,298
--------- --------- ---------
$ 182,420 189,074 187,670
========= ========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,882 3,880 2,505
Loan from the Partnership (note 5) 3,600 3,600 3,600
Other current liabilities (note 6) 28,896 32,940 29,641
--------- --------- ---------
38,378 40,420 35,746
--------- --------- ---------
Long-term debt (note 7) 85,000 85,000 85,000
Deferred rent due to the Partnership 29,896 30,747 32,417
Deferred income taxes (note 9) 7,406 7,123 8,678
Other noncurrent liabilities (note 8) 19,258 20,229 20,057
Stockholders' equity:
Common stock 5 5 5
Additional paid in capital 5,048 5,048 5,048
Accumulated earnings (deficit) (2,571) 502 719
Treasury stock, 16,436 Class A Shares at cost
at March 31, 1996 and December 31, 1995,
respectively and 8,218 Class A shares at cost
at March 31, 1995 -0- -0- -0-
--------- --------- ---------
Total stockholders' equity 2,482 5,555 5,772
--------- --------- ---------
$ 182,420 189,074 187,670
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended March 31, 1996 and 1995
(in thousands except per share data)
1996 1995
---- ----
Revenues:
Casino $ 39,059 38,590
Hotel 1,751 1,974
Food and beverage 4,599 4,429
Interest from the Partnership 4,101 4,398
Interest, other 316 372
Other 485 507
--------- --------
50,311 50,270
Less promotional allowances (note 2) 4,011 3,523
--------- --------
Net revenues 46,300 46,747
--------- --------
Costs and expenses:
Casino 24,352 21,647
Hotel 707 866
Food and beverage 2,616 2,759
Other 688 703
Rent expense to the Partnership 9,630 9,485
Rent expense, other 366 378
General and administrative 6,894 6,485
Gaming taxes 3,121 3,082
Reinvestment obligation expense 171 523
Provision for uncollectible accounts 46 57
Depreciation and amortization 699 683
Interest expense 2,134 2,605
--------- --------
Total costs and expenses 51,424 49,273
--------- --------
Loss before income taxes (5,124) (2,526)
Income tax benefit (2,051) (835)
--------- --------
Net loss $ (3,073) (1,691)
========= ========
Net loss per share (based on 5,046,064 and
5,054,282 weighted average shares outstanding
for the three months ended March 31, 1996
and 1995, respectively) $ (.61) (.33)
========= =========
See accompanying notes to consolidated financial statements.
5
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,073) (1,691)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 699 683
Deferred rent to the Partnership (851) (716)
Deferred interest receivable and
discount from the Partnership (361) (314)
Reinvestment obligation expenses 171 523
Deferred income taxes 283 793
Change in assets and liabilities:
Receivables, net, excluding current
portion of long-term receivables (446) 53
Other current assets, excluding current portion
of CRDA credit 140 (1,219)
Accounts payable 2,002 (277)
Other current liabilities (4,044) (980)
Other noncurrent liabilities (971) 57
-------- --------
Net cash flows used in operating activities (6,451) (3,088)
-------- --------
Cash flows from investment activities:
(Increase) decrease in intangible assets and deferred charges (13) 1
Additions to property and equipment (6,592) (8,714)
(Increase) decrease in other assets (364) 2,505
Increase in long-term receivables (570) (796)
Receipt of long-term receivables 3,458 3,063
-------- --------
Net cash flows used in investment activities (4,081) (3,941)
-------- --------
Decrease in cash and cash equivalents (10,532) (7,029)
Cash and cash equivalents at beginning of period 35,747 37,244
-------- --------
Cash and cash equivalents at end of period $ 25,215 30,215
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
Notes to Consolidated Financial Statements
1. Basis of Presentation
The consolidated financial statements are prepared in accordance with
generally accepted accounting principles. The consolidated financial
statements include the accounts of the Corporation and its wholly-owned
subsidiaries, New Claridge and CGI. All material intercompany accounts
and transactions have been eliminated in consolidation.
Certain reclassifications have been made to the 1995 consolidated
financial statements to conform to the 1996 presentation.
2. Promotional Allowances
The retail value of complimentary rooms, food and beverages and other
complimentaries furnished to patrons is included in gross revenues and
then deducted as promotional allowances. The estimated cost of providing
such promotional allowances to casino patrons for the three months ended
March 31, 1996 and 1995 has been allocated to casino operating expenses
as follows (in thousands):
1996 1995
-------- --------
Hotel $ 785 561
Food and beverage 2,690 2,226
Other (Entertainment) 217 215
------- -------
Total costs allocated to
casino operating expenses $ 3,692 3,002
======= =======
3. Long-Term Receivables
Long-term receivables consist of the following amounts due from Atlantic
City Boardwalk Associates, L.P. (the "Partnership"):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
--------- ------------ ---------
(in thousands)
<S> <C> <C> <C>
Expandable Wraparound Mortgage 14%,
maturities through September 30, 2000
(net of $9,454,000 discount and
$10,827,000 discount at March 31, 1996
and 1995 respectively, and $9,815,000
discount at December 31, 1995) $ 60,546 63,185 69,673
Deferred Expandable Wraparound
Mortgage interest receivable, due
September 30, 2000 20,000 20,000 20,000
FF&E promissory notes, 14% 16,525 16,527 16,181
Expansion/Construction promissory note, 14% 3,944 4,495 6,042
-------- --------- ---------
$101,015 104,207 111,896
======== ========= =========
</TABLE>
7
<PAGE>
Notes to Consolidated Financial Statements (cont'd.)
4. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
--------- ------------ ---------
(in thousands)
<S> <C> <C> <C>
Gaming equipment $ 19,508 19,186 18,244
Land and land improvements 8,100 8,100 8,100
Construction in progress 14,474 8,204 1,163
Leasehold improvements 745 745 745
Capital lease asset 613 613 967
-------- ------- -------
43,440 36,848 29,219
Less accumulated depreciation and amortization 12,949 12,380 11,716
-------- ------- -------
Net property and equipment $ 30,491 24,468 17,503
======== ======= =======
</TABLE>
Construction in progress includes costs associated with the construction
of New Claridge's self-parking garage facility. Interest costs related
to the construction of the garage facility are being capitalized, and
will be amortized over the estimated useful life of the garage (39
years). Total interest capitalized as of March 31, 1996 was $1,609,000,
and as of December 31, 1995 was $1,138,000; no interest was capitalized
as of March 31, 1995.
5. Loan from the Partnership
In accordance with the terms of the Restructuring Agreement, on June 16,
1989 the Partnership loaned to New Claridge $3.6 million, which
represented substantially all cash and cash equivalents remaining in the
Partnership other than funds needed to pay expenses incurred through the
closing of the restructuring. This loan is evidenced by an unsecured
promissory note and will become payable (i) upon a sale or refinancing
of the Claridge; (ii) upon full or partial satisfaction of the
Expandable Wraparound Mortgage; and (iii) upon full satisfaction of any
first mortgage then in place.
Interest, which accrues at 12% per annum, is payable in full upon
maturity. As of March 31, 1996 such interest, which is included in other
current liabilities, amounted to $2,934,000.
8
<PAGE>
Notes to Consolidated Financial Statements (cont'd.)
6. Other Current Liabilities
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
--------- ------------ ---------
(in thousands)
<S> <C> <C> <C>
Deferred rent, current $ 15,078 15,078 15,078
Accrued payroll and related benefits 8,003 7,279 7,139
Accrued interest, First Mortgage Notes 1,665 4,161 1,665
Accrued interest due to Partnership 2,934 2,826 2,502
Auto and general liability reserves 952 1,037 1,179
Other current liabilities 264 2,559 2,078
-------- --------- ---------
$ 28,896 32,940 29,641
======== ========= =========
</TABLE>
The amount of deferred rent as of March 31, 1996 of $15,078,000
represents the maximum deferral allowed in accordance with the Operating
Lease Agreement and Expansion Operating Lease Agreement, as amended. The
deferred rent will become payable (i) upon a sale or refinancing of the
Claridge; (ii) upon full or partial satisfaction of the Expandable
Wraparound Mortgage; and (iii) upon full satisfaction of any first
mortgage then in place.
7. Long-Term Debt
On January 31, 1994, the Corporation completed an offering of $85
million of Notes due 2002, bearing interest at 11 3/4%. The Notes are
secured by (i) a non-recourse mortgage granted by the Partnership
representing a first lien on the Hotel Assets, (ii) a pledge granted by
the Corporation of all outstanding shares of capital stock of New
Claridge, and (iii) a guarantee by New Claridge. New Claridge's
guarantee of the Notes is secured by a collateral assignment of the
second lien Expandable Wraparound Mortgage, and by a lien on the
Claridge's gaming and other assets, which lien will be subordinated to
liens that may be placed on those gaming and other assets to secure any
future revolving credit line arrangement. Interest on the Notes is
payable semiannually on February 1 and August 1 of each year, commencing
August 1, 1994. A portion of the net proceeds of $82.2 million was used
to repay in full the Corporation's outstanding debt under the Loan
Agreement, including the outstanding balance of the Corporation's
revolving credit line, which was secured by the First Mortgage. In
conjunction with the full satisfaction of the Loan Agreement, the
Corporation's $7.5 million revolving credit line arrangement was
terminated.
8. Other Noncurrent Liabilities
Pursuant to the Restructuring Agreement, Del Webb Corporation ("Webb")
retained an interest, which was assigned to a trustee for the benefit of
the Valley of the Sun United Way on April 2, 1990, equal to $20 million
plus interest at a rate of 15% per annum, compounded quarterly,
commencing December 1, 1988, in any proceeds ultimately recovered from
operations and/or the sale or refinancing of the Claridge facility in
excess of the first mortgage loan and other liabilities ("Contingent
Payment"). Consequently, New Claridge has deferred the recognition of
$20 million of forgiveness income with respect to the Contingent Payment
obligation. Interest on the Contingent Payment has not been recorded
9
<PAGE>
Notes to Consolidated Financial Statements (cont'd.)
8. Other Noncurrent Liabilities (cont'd.)
in the accompanying consolidated financial statements since the
likelihood of paying such amount is not considered probable at this
time. As of March 31, 1996, accrued interest would have amounted to
approximately $38.9 million.
In connection with the restructuring, Webb agreed to grant those
investors in the Corporation and the Partnership ("Releasing
Investors"), from whom Webb had received written releases from all
liabilities, rights ("Contingent Payment Rights") to receive certain
amounts to the extent available for application to the Contingent
Payment. Approximately 84% in interest of the investors provided
releases and became Releasing Investors. Payments to Releasing Investors
are to be made in accordance with a schedule of priorities, as defined
in the Restructuring Agreement.
On February 23, 1996, the Corporation acquired an option to purchase, at
a discount from the carrying value, the Contingent Payment. The purchase
price of the option of $1 million was recorded as an offset to the
Contingent Payment liability which is included in other noncurrent
liabilities on the Corporation's consolidated balance sheet. The option
may be exercised any time prior to December 31, 1997. Upon exercise of
the option, the purchase price of the Contingent Payment would be $10
million, plus interest at 10% per annum for the period from January 1,
1997 to the date of payment of the purchase price if the purchase occurs
after December 31, 1996. As a result, if the option is exercised, any
obligation to pay the accrued interest, as discussed above, would be
eliminated, except in respect of the obligation to the Releasing
Investors. The purchase price may also increase in an amount not to
exceed $10 million if future distributions to Releasing Investors exceed
$20 million.
Upon exercise of the option, it is anticipated that the Contingent
Payment will be canceled so that neither the Corporation nor the
Partnership will have any obligation to make any payment in respect of
the Contingent Payment before making a distribution to shareholders or
limited partners. Upon the purchase and cancellation, however, the
Corporation and the Partnership will remain obligated to make payments
to the Releasing Investors, in respect of the Contingent Payment Rights,
before any distribution may be made to shareholders or limited partners.
These payments would be required to be in the same amounts as if the
Contingent Payment had not been purchased and cancelled. As a result, it
is not likely that shareholders or limited partners who are not
Releasing Investors will receive any distribution from the Corporation
or the Partnership. In the aggregate, Releasing Investors are entitled
to receive up to an amount equal to approximately 72% of the Contingent
Payment.
Under the terms of the option, upon purchase of the Contingent Payment,
the Corporation and/or the Partnership are required to make
distributions in excess of $7 million to the Releasing Investors. The
Corporation and the Partnership have agreed to cooperate in the purchase
of the option and the Contingent Payment, with each contributing
one-half of the purchase price of the option and each anticipated to
contribute one-half of the purchase price of the Contingent Payment. A
portion of the Partnership's contribution will be contributed through
additional abatements of basic rent payments due under the Operating
Lease and Expansion Operating Lease.
10
<PAGE>
Notes to Consolidated Financial Statements (cont'd.)
9. Income Taxes
The Corporation recorded an income tax benefit of $2,051,000 for the
three months ended March 31, 1996 which represents the tax benefit of
losses which the Corporation believes will more likely than not be
realized.
During 1995, the Corporation received notice from the Internal Revenue
Service ("IRS") asserting deficiencies in Federal corporate income taxes
for the Corporation's 1990 and 1991 taxable years. Many of the proposed
adjustments to the Corporation's tax returns have been settled with no
adverse impact to the Corporation's consolidated financial statements.
There is a remaining IRS asserted deficiency for the 1990 and 1991
taxable years. The Corporation has filed a petition to appeal the entire
amount of this asserted deficiency. The Corporation believes the
ultimate resolution of the case will not result in a material impact on
the Corporation's consolidated financial statements.
10. Claridge License Renewal
On September 22, 1995, New Claridge was issued a four-year casino
license by the New Jersey Casino Control Commission (the "Commission")
for the period commencing September 30, 1995.
11. Recently Adopted Accounting Pronouncements
During the first quarter of 1996, the Corporation adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS
121") and No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123").
SFAS 121 requires that a review for impairment be performed whenever
events or changes in circumstances indicate that the carrying amount of
long-lived assets may not be recoverable. In performing the review for
recoverability, the company should evaluate the future undiscounted cash
flows expected to result from the use of the asset and its eventual
disposition. The adoption of SFAS 121 on January 1, 1996 did not require
any impairment to be recognized during the first quarter of 1996.
SFAS 123 requires either the application of fair value based method of
accounting or additional proforma disclosures for stock-based
compensation plans. The adoption of SFAS 123 on January 1, 1996 had no
effect on the Corporation's consolidated financial position or results
of operations for the three months ended March 31, 1996.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Three Months Ended March 31, 1996
The Corporation had a net loss of $3,073,000 for the three months ended
March 31, 1996, compared to a net loss of $1,691,000 for the same period of
1995.
For the first quarter of 1996, casino revenue, which is the difference
between amounts wagered by and paid to casino patrons, was $39,059,000, an
increase of 1.2% over casino revenues earned in the first quarter of 1995 of
$38,590,000. Casino revenues earned by all Atlantic City properties as reported
for the three months ended March 31, 1996 increased 3.6% over the same period of
1995. Revenues during the first quarter of 1996 were adversely affected by
several winter storms, most notably the January blizzard, which blanketed the
Northeastern United States with a record amount of snow.
Claridge table games revenue for the three months ended March 31, 1996
was $9,874,000, reflecting a 1.9% decrease from revenues earned in the same
period of 1995. Although Claridge table games drop (the amount of gaming chips
purchased by patrons) for the first quarter of 1996 increased 3.6% over the
first quarter of 1995, the hold percentage (the win to drop percentage)
decreased to 16.3% in 1996 from 17.2% in 1995. Table games revenue earned
citywide as reported for the first quarter of 1996 increased 5.6% over the same
period of 1995.
Slot machine revenue earned by the Claridge in the first three months
of 1996 was $29,185,000, an increase of 2.4% over revenue earned in the first
quarter of 1995. Slot machine revenue earned by all Atlantic City casinos as
reported for the first quarter of 1996 increased 2.7% over the same period of
1995; contributing to this increase in citywide revenues was a 6.9% increase in
the number of slot machines available, as a result of casino expansions at
several properties. The number of slot machines available at the Claridge during
the first quarter of 1996 decreased slightly from the same period of 1995 due to
a reconfiguration of machines in the casino during the second quarter of 1995.
Intense competition for attracting bus passengers continued citywide in
the first quarter of 1996, taking the form of increased coin incentives offered
to passengers, which New Claridge matched in order to maintain its share of the
bus passenger market. The average coin incentive per passenger offered by New
Claridge, which was comparable to the incentives offered by other Atlantic City
casinos, increased to approximately $20 in the first three months of 1996, from
approximately $13 in the same period of 1995. In total, in the first quarter of
1996, New Claridge issued $4,617,000 of coin incentives to 231,000 bus
passengers arriving at the Claridge, compared to $2,406,000 issued to 182,000
bus passengers in the first quarter of 1995. In addition, New Claridge offers
promotional incentives, in the form of coin to play slot machines and gaming
chips to play table games, to its customers through its direct marketing program
based on their casino play, as well as, in 1995, to prospective customers based
on demographic models. During the first quarter of 1996, promotional incentives
issued through this program totaled $2,882,000, compared to $2,799,000 in the
same period of 1995.
During the first quarter of 1996, New Claridge earned hotel revenues of
$1,751,000, a decrease of 11.3% from the same period of 1995. Although hotel
occupancy in the first three months of 1996 increased to 90.3% from 86.4% in the
same period of 1995, the average room rate fell to $43 in 1996, from $53 in
1995, primarily due to a reduction in the complimentary room rate recorded. Food
and beverage revenues earned during the first three months of 1996 totaled
$4,599,000, an increase of 3.8% over the first quarter of 1995, principally due
to an increase in the number of covers (meals served) to 409,500 in 1996 from
358,300 in 1995, combined with an increase in complimentary beverages served on
the casino floor as a result of increased business activity.
12
<PAGE>
Total costs and expenses for the first quarter of 1996 of $51,424,000
reflected a 4.4% increase over the same period of 1995, primarily due to an
increase in casino expenses, principally coin incentives issued. In addition,
general and administrative expenses during the first quarter of 1996 of
$6,894,000 increased 6.3% over the same period of 1995 due primarily to
increased advertising expenditures to promote the property. Interest expense for
the first quarter of 1996 was lower than the same period of 1995 due to the
capitalization of interest during the construction of the self-parking garage
facility.
The Corporation recorded income tax benefit of $2,051,000 and $835,000
for the three months ended March 31, 1996 and 1995, respectively, as a result of
the losses incurred in those periods.
Results of Operations for the Three Months Ended March 31, 1995
The Corporation had a net loss of $1,691,000, for the three months
ended March 31, 1995 compared to a net loss of $3,232,000 for the same period in
1994.
Casino revenue for the first quarter of 1995 totaled $38,590,000
(including poker, simulcast, and keno revenue) an increase of 28.2% over casino
revenues earned in the first quarter of 1994. Casino revenues earned by all
Atlantic City properties as reported for the three months ended March 31, 1995
were 16.1% higher than revenues earned during the same period of 1994. The
increase citywide in casino revenues during the first quarter of 1995 was due
primarily to the favorable weather conditions, as compared to the frequent
winter storms experienced in the first quarter of 1994. The greater increase in
revenues experienced by the Claridge as compared to all Atlantic City casinos
was due primarily to the opening, in late June 1994, of New Claridge's expanded
casino facility, which included the addition of approximately 500 slot machines.
Claridge table games revenue for the first quarter of 1995 was
$10,061,000 (including poker and keno revenue), an increase of 17.5% over table
games revenue earned during the first quarter of 1994. Citywide table games
revenue as reported (including poker and keno) for the first quarter of 1995
increased 4.6% over the same period of 1994. The increase in Claridge's table
games revenue resulted from an increase in the hold percentage to 17.2% in the
first quarter of 1995, compared to 14.8% in the same period of 1994.
Additionally, table games drop for the first quarter of 1995 increased 1.6% over
the same period of 1994.
New Claridge earned $28,514,000 of revenues from slot machines in the
first quarter of 1995, a 32.3% increase over the same period of 1994. This
increase was due to the expansion of New Claridge's casino floor space,
including the addition of approximately 500 slot machines and to the favorable
weather experienced during the first quarter of 1995 compared to the same period
of 1994. Slot machine revenues earned by all Atlantic City casinos as reported
for the three months ended March 31, 1995 increased 22.3% over the same period
of 1994; the average number of slot machines available citywide during the first
quarter of 1995 increased 12.8% over the same period of 1994.
During the first quarter of 1995, coin issued through New Claridge's
direct marketing programs totalled $2,799,000, compared to $2,035,000 in the
first quarter of 1994. In addition, during the three months ended March 31,
1995, 182,000 bus patrons arrived at the Claridge and were issued $2,406,000 in
coin incentives, compared to 103,000 bus passengers and $1,018,000 of coin
incentives in the first quarter of 1994. The increased coin incentive per
passenger resulted from efforts to maintain a competitive position with other
Atlantic City casino operators, which, starting in the second quarter of 1994,
increased the incentives offered in order to increase business levels which had
been depressed due to the severe weather experienced during the first quarter of
1994.
13
<PAGE>
Hotel revenues for the first quarter of 1995 of $1,974,000 were 8.6%
lower than hotel revenues for the first quarter of 1994, resulting from a lower
average room rate ($53 in 1995 compared to $59 in 1994) partially offset by an
increase in the number of rooms sold (37,600 in 1995 compared to 36,400 in
1994). Food and beverage revenues for the first quarter of 1995 of $4,429,000
were 17.9% higher than the first quarter of 1994, due to an increase in total
covers to 358,300 in 1995 compared to 315,000 in 1994.
Total costs and expenses for the three months ended March 31, 1995 of
$49,273,000 were 14.1% higher than expenses for the same period of 1994. This
increase primarily resulted from higher coin incentive costs, increased payroll
costs and increased gaming taxes. Interest expense for the first quarter of 1995
was higher than the same period of 1994 due to the completion of the offering of
$85 million of Notes on January 31, 1994.
The Corporation recorded income tax benefit of $835,000 and $2,154,000
for the three months ended March 31, 1995 and 1994, respectively, as a result of
the loss incurred in those periods.
Liquidity and Capital Resources
On January 31, 1994, the Corporation completed an offering of $85
million of Notes, due 2002, bearing interest at 11 3/4%. The Notes are secured
by (i) a non-recourse mortgage granted by the Partnership representing a first
lien on the Hotel Assets, (ii) a pledge granted by the Corporation of all
outstanding shares of capital stock of New Claridge, and (iii) a guarantee by
New Claridge. New Claridge's guarantee of the Notes is secured by a collateral
assignment of the second lien Expandable Wraparound Mortgage, and by a lien on
the Claridge's gaming and other assets, which lien will be subordinated to liens
that may be placed on those gaming and other assets to secure any future
revolving credit line arrangement. Interest on the Notes is payable semiannually
on February 1 and August 1 of each year, commencing August 1, 1994.
A portion of the net proceeds of $82.2 million, after deducting fees
and expenses, was used as follows:
(i) to repay in full the Corporation's outstanding debt under the
Revolving Credit and Term Loan Agreement (the "Loan Agreement"),
including the outstanding balance of the Corporation's revolving
credit line, which was secured by the First Mortgage. In
conjunction with the full satisfaction of the Loan Agreement,
the Corporation's $7.5 million revolving credit line arrangement
was terminated. The Corporation is currently seeking to obtain a
new line of credit arrangement;
(ii) to fund the cost of a 12,000 square foot expansion of New
Claridge's casino capacity, the addition of approximately 500
slot machines, and the relocation of two restaurants and their
related kitchen areas. The total cost of this expansion, which
became fully operational on June 30, 1994, was approximately
$12.7 million; and
(iii) the acquisition of land, at a cost of $7.5 million, adjacent to
New Claridge's existing valet-parking facility, which is being
used for the construction of a self-parking facility.
The balance of the net proceeds from the offering of the Notes are
expected to be used as follows:
(i) the construction of the self-parking facility, which commenced
in the second quarter of 1995. The total cost of the
self-parking facility is estimated to be approximately $20
million, in addition to the cost of the land;
14
<PAGE>
(ii) the possible purchase of the Contingent Payment (see Note 8,
Other Noncurrent Liabilities) granted in 1989 and now held in a
trust for the benefit of the Valley of the Sun United Way. On
February 23, 1996, the Corporation acquired an option to
purchase, at a discount from the carrying value, the Contingent
Payment. The purchase price of the option was $1 million, and
the option may be exercised any time prior to December 31, 1997.
Upon exercise of the option, the purchase price of the
Contingent Payment would be $10 million, plus interest at 10%
per annum for the period January 1, 1997 to the date of the
payment of the purchase price, if the purchase occurs after
December 31, 1996. The purchase price may also increase if
future distributions to Releasing Investors exceed certain
amounts; and
(iii) the potential expansion of the Corporation's activities into
emerging gaming markets. On March 16, 1994, Claridge Gaming
Incorporated was formed as a wholly-owned subsidiary of the
Corporation for the purpose of developing gaming opportunities
in other jurisdictions.
At March 31, 1996, the Corporation had working capital of $7,603,000 as
compared to working capital of $15,122,000 at December 31, 1995. This decrease
in working capital is principally attributable to a decrease in cash and cash
equivalents of $10,532,000 (primarily due to payments for the construction of
the self-parking garage and interest due on the First Mortgage Notes) and an
increase in accounts payable of $2,002,000 (primarily due to accruals related to
the construction of the self-parking garage), partially offset by a decrease in
other current liabilities of $4,044,000 (primarily interest payable on the First
Mortgage Notes), and an increase in accounts receivable of $1,111,000. Working
capital at March 31, 1995 was $17,897,000. Current liabilities at March 31, 1996
and December 31, 1995 included deferred rental payments of $15,078,000, and a
$3.6 million loan from the Partnership plus accrued interest thereon of
$2,934,000 at March 31, 1996 and $2,826,000 at December 31, 1995. These amounts
will only be payable upon (i) a sale or refinancing of the Claridge; (ii) full
or partial satisfaction of the Expandable Wraparound Mortgage; and (iii) full
satisfaction of any first mortgage then in place. If these amounts were not
included in current liabilities, the Corporation's working capital at March 31,
1996 and December 31, 1995 would have been $29,215,000 and $36,626,000,
respectively.
For the three months ended March 31, 1996, cash flows used in operating
activities were $6,451,000, compared to $3,088,000 for the three months ended
March 31, 1995; the increase in cash uses was principally due to a decrease in
operating results. Cash flows used in investment activities for the three months
ended March 31, 1996 and 1995 were $4,081,000 and $3,941,000, respectively. Cash
flows used in investment activities in the first quarter of 1996 for additions
to property and equipment include expenditures for the construction of the
self-parking garage facility; in the first quarter of 1995, additions to
property and equipment included the cost of the acquisition of the land on which
the garage facility is being constructed.
For the three months ended March 31, 1996, the Corporation's "Adjusted
EBITDA" was $126,000, compared to $3,315,000 for the same period of 1995.
"EBITDA" represents earnings before interest expense, income taxes,
depreciation, amortization, and other non-cash items. "Adjusted EBITDA" is equal
to "EBITDA" plus rent expense to the Partnership, less interest income from the
Partnership, less "Net Partnership Payments", which represent the Corporation's
net cash outflow to the Partnership. Adjusted EBITDA is used by the Corporation
to evaluate its financial performance in comparison to other gaming companies
with more traditional financial structures. Adjusted EBITDA may be used as one
measure of the Corporation's historical ability to service its debt, but should
not be considered as an alternative to operating income (as determined in
accordance with generally accepted accounting principles) as an indicator of
operating performance, or to cash flows from operating activities (as determined
in accordance with generally accepted accounting principles) as a measure of
liquidity, or to other consolidated income or cash flow statement data, as are
determined in accordance with generally accepted accounting principles.
15
<PAGE>
The Hotel Assets are owned by the Partnership and leased by the
Partnership to New Claridge under the terms of the Operating Lease originally
entered into on October 31, 1983, and the Expansion Operating Lease, which
covered the expansion improvements made to the Claridge in 1986. The initial
terms of both leases are scheduled to expire on September 30, 1998 and each
lease provides for three 10-year renewal options at the election of New
Claridge. The Operating Lease requires basic rental payments to be made in equal
monthly installments escalating annually up to $41,775,000 in 1997, and
$32,531,000 for the remainder of the initial lease term. Prior to the
Corporation's 1989 restructuring, basic rent expense (recognized on a leveled
basis in accordance with Statement of Financial Accounting Standards No. 13),
was $31,902,000 per year. Therefore, in the early years of the lease term,
required cash payments under the Operating Lease (not including the Expansion
Operating Lease) were significantly lower than the related expense recognized
for financial reporting purposes. Rental payments under the Expansion Operating
Lease are adjusted annually based on a Consumer Price Index with any increase
not to exceed two percent per year. Pursuant to the Restructuring Agreement, the
Operating Lease and the Expansion Operating Lease were amended to provide for
the abatement of $38.8 million of basic rent payable through 1998 and the
deferral of $15.1 million of rental payments, thereby reducing the Partnership's
cash flow to an amount estimated to be necessary only to meet the Partnership's
cash requirements. Effective on completion of the 1989 restructuring, lease
expense recognized on a level basis was reduced prospectively, based on a
revised schedule of rent leveling based on the agreed rental abatements. At
March 31, 1996 the Corporation had accrued the maximum amount of $15.1 million
of deferred rent liability under the lease arrangements. The deferred rent
liability will become payable (i) upon a sale or refinancing of the Claridge;
(ii) upon full or partial satisfaction of the Expandable Wraparound Mortgage;
and (iii) upon full satisfaction of any first mortgage then in place. Also as of
March 31, 1996, $30.8 million of basic rent had been abated. The remaining $8
million of available abatement is expected to be fully utilized by the first
quarter of 1997. Because the initial term of the Operating Lease continues
through September 30, 1998, rental payments after the $38.8 million abatement is
fully utilized will increase substantially to approximately $39.5 million in
1997, as compared to $31.7 million (net of projected abatement) in 1996.
Additional abatements of rent totaling $500,000 are available as a result of the
acquisition of the option to purchase the Contingent Payment, and further
abatements could become available upon exercising the Contingent Payment option
(see Note 8, Other Noncurrent Liabilities).
If New Claridge exercises its option to extend the term of the
Operating Lease, basic rent during the renewal term will be calculated pursuant
to a formula with annual basic rent not to be more than $29.5 million or less
than $24 million for the twelve months commencing October 1, 1998, and
subsequently, not to be greater than 10% more than the basic rent for the
immediately preceding lease year in each lease year thereafter. If New Claridge
exercises its option to extend the term of the Expansion Operating Lease, basic
rent also will be calculated pursuant to a formula with annual basic rent not to
be more than $3 million or less than $2.5 million for the twelve months
commencing October 1, 1998, and subsequently, not to be greater than 10% more
than the basic rent for the immediately preceding lease year in each lease year
thereafter. If the term of both leases is extended under their renewal options,
the aggregate basic rent payable during the initial years of renewal term will
be significantly below the 1997 level.
If the Partnership should fail to make any payment due under the
Expandable Wraparound Mortgage, New Claridge may exercise a right of offset
against rent or other payments due under the Operating Lease and Expansion
Operating Lease to the extent of any such deficiency.
New Claridge is obligated under its Operating Lease with the
Partnership to lend the Partnership, at an annual interest rate of 14%, any
amounts necessary to fund the cost of furniture, fixtures and equipment
replacements. The Expandable Wraparound Mortgage, granted by the Partnership to
New Claridge, by its terms may secure up to $25 million of additional loans to
16
<PAGE>
the Partnership from New Claridge to finance the replacements of furniture,
fixtures and equipment and facility maintenance and engineering shortfalls. The
advances to the Partnership are in the form of FF&E Loans and are secured by the
Hotel Assets. One half of the FF&E Loan principal is due in the 48th month
following the advance, with the remaining balance due in the 60th month
following the date of issuance. In connection with the offering of $85 million
of the Notes on January 31, 1994, the Corporation agreed to use not less than $8
million from the net proceeds of the offering to finance internal improvements
to the Claridge, which were funded through additional FF&E Loans. In connection
therewith, the Expandable Wraparound Mortgage Loan agreement as well as the
Operating Lease, and the Expansion Operating Lease were amended to provide that
the principal on these additional FF&E Loans will be payable at final maturity
of the Expandable Wraparound Mortgage. New Claridge is obligated to pay as
additional rent to the Partnership the debt service on the FF&E Loans.
The Expandable Wraparound Mortgage requires monthly principal payments
to be made by the Partnership to New Claridge, commencing in the year 1988 and
continuing through the year 1998, in escalating amounts totaling $80 million.
The Expandable Wraparound Mortgage, which will mature on September 30, 2000,
bears interest at an annual rate equal to 14% with the deferral until maturity
of $20 million of certain interest payments which accrued between 1983 and 1988.
In addition, in 1986 the principal amount secured by the Expandable Wraparound
Mortgage was increased to provide the Partnership with funding for the
construction of an expansion improvement, which resulted in approximately 10,000
square feet of additional casino space and a 3,600 square foot lounge. Effective
August 28, 1986, the Partnership commenced making level monthly payments of
principal and interest calculated to provide for the repayment in full of the
principal balance of this increase in the Expandable Wraparound Mortgage by
September 30, 1998. Under the terms of the Expandable Wraparound Mortgage, New
Claridge is not permitted to foreclose on the Expandable Wraparound Mortgage and
take ownership of the Hotel Assets so long as a senior mortgage is outstanding.
The face amount outstanding of the Expandable Wraparound Mortgage at March 31,
1996 (including the outstanding FF&E Loans and the $20 million of deferred
interest) was $125 million.
17
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits filed as part of the report.
10(bi) Copy of Employment Agreement between Jean I. Abbott and
The Claridge at Park Place, Incorporated dated
January 1, 1996.
(b) The Corporation filed no reports on Form 8-K during the quarter
ended March 31, 1996.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Claridge Hotel and Casino Corporation
- -----------------------------------------
(Registrant)
By: /s/ Raymond A. Spera
------------------------------------------
Raymond A. Spera
Executive Vice President of Finance/
Chief Financial Officer
(Authorized Officer and
Principal Financial Officer)
Dated: May 15, 1996
19
<PAGE>
INDEX TO EXHIBITS
Exhibit
EX10(bi) Copy of Employment Agreement between Jean I. Abbott and
The Claridge at Park Place, Incorporated dated January 1,
1996.
<PAGE>
EXHIBIT 10(bi)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 1st day of January, 1996, between The Claridge
at Park Place, Incorporated, a New Jersey corporation having its principal place
of business at Indiana Avenue and the Boardwalk, Atlantic City, New Jersey,
08401 (hereinafter referred to as the "Company"), and Jean I. Abbott, an
individual residing at 48 English Lane, Egg Harbor Township, New Jersey, 08234
(hereinafter referred to as the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive and the Executive
has agreed to accept such employment, on the terms and conditions provided in
this Agreement;
WHEREAS, the Executive acknowledges employment consistent with this
Agreement as consideration for this Employment Agreement.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as its
Executive Vice President of Marketing and Casino Operations. In such capacity,
she shall perform such executive duties as are commonly attendant upon these
offices including but not limited to those specified in the Company's internal
controls, and such further executive duties as may be specified from time to
time by the Chairman of the Board and the Chief Executive Officer. In addition,
the Executive may be asked to serve as a member of the Company's Board of
Directors but shall not be paid any additional compensation for these services.
2. TERM. This Agreement shall commence on January 1, 1996 and continue
for three (3) years subject to the occurrence of any of the events set forth in
paragraphs 5 or 7. Thereafter, this Agreement is for one (1) year or until
renewed by the Board and may be renewed and extended for consecutive one (1)
year renewal terms upon specific action by the Board.
3. COMPENSATION. (a) As of October 23, 1995, the Company began paying
the Executive a base annual salary of ONE HUNDRED FIFTY FIVE THOUSAND DOLLARS
($155,000), payable in weekly installments in accordance with the Company's
regular payroll practice. The Board of Directors may, from time to time, in
their sole discretion, increase the base annual salary.
(b) Until termination of this Agreement, the Executive shall continue
to receive full compensation and be entitled to all the benefits of this
Agreement. Upon termination, the Executive shall not be entitled to receive any
compensation or benefits except as may be set forth herein or otherwise agreed
between the parties.
(c) The Executive shall be entitled to vacation time in accordance with
the Company's vacation plan, and shall be entitled to participate in any bonus
plan, incentive compensation plan, qualified pension plan, qualified
profit-sharing plan, medical and/or dental reimbursement plan, group term life
insurance plan, and any other employee benefit plan that may be established by
the Company or its operating subsidiaries, such participation to be in
accordance with the terms of any such plan, and such participation shall be
available only upon the Company or its operating subsidiaries having or
establishing such a plan.
<PAGE>
4. CASINO CONTROL COMMISSION. The Executive represents to the Company
that she possesses the casino key employee license required by the New Jersey
Casino Control Commission in connection with her employment. The Executive will
maintain this license in good standing during her employment with the Company,
provided that the Company shall pay all attorneys' fees and other costs that the
Executive may incur in connection with any investigation or proceeding against
her or in which she may be involved (other than with respect to any act defined
as "cause" for termination (see subparagraph 5(a)(ii) below) or relating to any
criminal charges filed against her), by the Division of Gaming Enforcement of
the Office of the New Jersey Attorney General or by the New Jersey Casino
Control Commission.
5. TERMINATION. (a) Notwithstanding anything contained herein to the
contrary, the Executive's employment may be terminated upon the occurrence of
any of the following events:
(i) Upon revocation, suspension, or termination of the
Executive's casino key employee license or failure
to comply, within a reasonable time, with any
conditions imposed upon the casino key employee
license;
(ii) Upon an act committed by the Executive constituting
"cause", which is defined to mean an act by the
Executive constituting a breach of any of the
provisions of this Agreement; the indictment and/or
conviction of any criminal offense; the deliberate
refusal by the Executive (except by reason of
disability) to perform her duties hereunder; or if
the Executive:
(1) Files a petition in bankruptcy court or
is adjudicated a bankrupt;
(2) Institutes or suffers to be instituted
any procedure in bankruptcy court for
reorganization or rearrangement of her
financial affairs;
(3) Has a receiver of her assets or property
appointed because of insolvency; or
(4) Makes a general assignment for the
benefit of creditors;
(iii) Upon the death or permanent disability of the
Executive;
(iv) Upon written notice by the Company terminating the
Executive's employment without cause;
(v) Upon the voluntary resignation by the Executive;
(vi) If not already a resident of New Jersey, upon the
Executive failing to establish residency in New
Jersey within six (6) months after a Board
Resolution directing her to do so; provided that no
such resolution shall be adopted so long as: (i) a
sale of the Claridge is an option being considered
by the Board of Directors; or (ii) the Company's
audited financial statements are expected to
contain a "going concern" qualification in the
Independent Auditors Report.
(b) If the Executive's employment should be terminated under
subparagraphs 5(a)(iv) above, 5(f) below, paragraph 7, or if the Company elects
not to renew this Agreement pursuant to paragraph 2 above, then the Company
shall make a lump sum payment to the Executive equal to one hundred and twenty
five percent (125%) of her base annual salary determined pursuant to paragraph
3. Upon the making of such payment, the Company shall have no further liability
or obligation to the Executive under this Agreement.
<PAGE>
(c) If the Executive's employment should be terminated under
subparagraph 5(a)(v) above, and the Executive shall give notice of termination
at least twelve (12) weeks prior to terminating her employment, then the Company
shall continue to pay the Executive his weekly compensation for a period of
twelve (12) weeks after the date of termination. If notice to the Company is
given less than twelve weeks prior to termination, the Company shall have no
obligation to pay the Executive beyond the date of termination. Upon expiration
of the additional twelve (12) week period, the Company shall have no further
liability or obligation to the Executive under this Agreement.
(d) Upon termination of this Agreement under subparagraph 5(a)(iv), if
the Company has a then existing stock option plan, the Executive shall receive
stock options in the Company, if any, in an amount equal to those that could be
exercised within one (1) year from the date of termination; provided, however,
that such stock options must be exercised by the Executive within 90 days after
termination, or such options shall expire.
(e) If the Executive's employment should be terminated under
subparagraphs 5(a)(i), (a)(ii) or (a)(iii) above, the Company shall have no
further liability or obligation to continue salary payments to the Executive, or
her estate (as the case may be), after the date upon which the Executive is no
longer employed by the Company.
(f) If the Executive's title, responsibilities, duties or status within
the Company should be materially diminished, the Executive may resign and
terminate this Agreement. The Executive shall be entitled to a lump sum payment
in accordance with subparagraph 5(b) and her resignation shall not be deemed or
considered a "voluntary resignation" under subparagraph 5(a)(v).
6. NON-COMPETITION AND NON-DISCLOSURE. (a) During the term of this
Agreement, the Executive shall not, without the written consent of the Company,
alone or with others, directly or indirectly, participate, engage or become
interested in (as owner, stockholder, partner, lender or other investor,
director, officer, employee, consultant or otherwise) any business activity that
is in competition with the Company's business then being carried on.
(b) Notwithstanding any other provision herein, nothing in this
Agreement shall prohibit the Executive from acquiring or owning without
disclosure to the Company less than one (1%) percent of the outstanding
securities of any class of any corporation listed on a national securities
exchange or traded in the over-the-counter market.
(c) During the term of this Agreement, and following termination of
this Agreement, the Executive covenants and agrees that she shall keep strictly
confidential all information which she may obtain during the course of her
employment hereunder with respect to the business practices, finances,
developments, customers, affairs, and trade secrets of the Company not generally
known to the public, and shall not disclose the same to any other person, firm
or corporation, except solely in the course of business on behalf of the Company
pursuant to this Agreement. The Executive further agrees that upon the
termination of employment (irrespective of the time, manner or cause of
termination), the Executive will surrender and deliver to the Company all lists,
books, written records and data of every kind relating to or in connection with
the Company's customers and business.
(d) (i) Subject to the provisions of subparagraph 6(d)(ii)
below, if the Agreement is terminated pursuant to
subparagraph 5(a)(v) above, the Executive covenants and
agrees that for a period of one (1) year thereafter she
shall not compete with the Company, or engage in the
casino business in Atlantic City, New Jersey, as an
officer, director, stockholder, employee, representative,
agent, or consultant.
<PAGE>
(ii) In the event the Company, its shareholders, or persons
having voting control enter into an agreement to sell,
acquire, merge or consolidate the assets or stock of the
Company with the anticipated result that a change of
control of the Company or the Company's business as
presently constituted would occur upon the closing of such
agreement, the Executive may terminate this Agreement
pursuant to subparagraph 5(a)(v) above and shall not be
precluded from immediately competing with the Company, or
engaging in the casino business in Atlantic City, New
Jersey, as an officer, director, stockholder, employee,
representative, agent or consultant. In addition, the
Executive shall be entitled to the benefits provided for
in subparagraph 5(c) above provided proper notice of
termination is given to the Company.
(e) From and after the termination of this Agreement and for a period
of one (1) year thereafter, the Executive shall not, alone or with others,
directly or indirectly:
(i) solicit for the Executive's benefit or the benefit or any
person or organization other than the Company, the
employment or other services of any employee or consultant
of the Company or its subsidiaries and companies
affiliated or associated with the Company; or
(ii) solicit for the Executive's benefit or the benefit of any
person or organization other Company, the employment of
any employee of any customer of the Company.
(f) As additional consideration for the covenant contained in
subparagraphs 6(d), the Executive shall be entitled to a lump sum payment equal
to twenty-five percent (25%) of the sum of her then base annual salary as
determined pursuant to paragraph 3. The Executive shall make such demand within
ten (10) days following termination of her employment by giving notice to the
Company in accordance with paragraph 11. Within ten (10) days following receipt
of this notice, the Company shall send the Executive either (i) the lump sum
payment described in this subparagraph (f), or (ii) a notice that the Company
has waived the Executive's obligations under subparagraph 6(d), in which event
the Executive shall be released from her obligations under subparagraph 6(d) and
the Company shall be released from its obligation to pay the Executive any
additional consideration under this subparagraph (f). Notwithstanding anything
contained in this subparagraph (f), all payments made pursuant to this
subparagraph (f) shall be in addition to, and not in lieu of, any payments to
which the Executive may be entitled under paragraph 5.
7. SALE OF THE COMPANY. The Company shall make its best efforts to have
any successor corporation or business entity assume the obligations under this
Agreement. If this Agreement is not assumed by a successor corporation or
business entity, the obligations of the Company to the Executive hereunder shall
continue in full force and effect, subject to the right of the Company, in its
sole discretion, to terminate the Executive pursuant to paragraph 5. If during
the term of this Agreement, the Company, its shareholders, or persons having
voting control sell stock or assets or merge with another entity and as a result
of which there occurs a change in control of the Company or the Company's
business as presently constituted or, if by any other transaction this Agreement
is assigned to an entity not controlled by the Board of Directors of the Company
as presently constituted, then the Executive, in the Executive's sole
discretion, may, within six months after such a change of control occurs or this
Agreement is assigned, terminate this Agreement and be entitled to receive the
severance benefits provided for in subparagraph 5(b) of this Agreement and shall
not be precluded from immediately competing with the Company or any assignee of
this Agreement, or engaging in the casino business in Atlantic City, New Jersey,
as an officer, director, stockholder, employee, representative, agent or
consultant.
<PAGE>
8. PARTICIPATION. The Executive shall devote all of her working time,
attention and best efforts to the business of the Company, and shall not during
the term of this Agreement be engaged directly or indirectly in any other
business activity whether or not such business activity is pursued for gain,
profit or other pecuniary advantage; but this shall not be construed as
preventing the Executive from investing her assets in such form and manner which
will not require any services on the part of the Executive in the operation of
the affairs of the companies in which such investments are made or involvement
in any civic or charitable organizations whether or not requested by the Company
or affiliated with the Company.
9. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or breach thereof, shall be settled by Arbitration in New Jersey
pursuant to New Jersey law in accordance with the rules of the American
Arbitration Association, and judgment upon an award rendered pursuant to such
arbitration may be entered in any court within the State of New Jersey having
jurisdiction thereof. In the event of conflict between the rules of the American
Arbitration Association and any statute of the State of New Jersey, the parties
agree to be bound by the laws of New Jersey.
10. INJUNCTIVE RELIEF. The parties acknowledge that in the event of a
breach or a threatened breach by the Executive of any of her obligations under
this Agreement, the Company will not have an adequate remedy at law.
Accordingly, in the event of any breach or threatened breach by the Executive,
the Company shall be entitled to such equitable and injunctive relief as may be
available to restrain the Executive and any business, firm, partnership,
individual, corporation or entity participating in the breach or threatened
breach from the violation of the provisions of the Agreement. Nothing in this
Agreement shall be construed as prohibiting the Company from pursuing any other
remedies available at law or in equity for such breach or threatened breach,
including the recovery of damages and the immediate termination of the
employment of the Executive under this Agreement.
11. NOTICES. All notices shall be in writing and shall be delivered by
certified or registered mail, return receipt requested, to the parties as
follows:
If to the Company: c/o Claridge Casino Hotel Indiana Avenue and The
Boardwalk Atlantic City, New Jersey 08401 Attn:Chair of Human ResourcesCommittee
If to the Executive: Jean I. Abbott
PO BOX 227-B, English Lane
Mays Landing, New Jersey, 08330
Either party may change the address to which notices are to be
transmitted by notice given in accordance with this paragraph.
12. MISCELLANEOUS. (a)The Executive represents to the Company that
there are no restrictions or agreements to which she is a party which would be
violated by her execution of this Agreement and her employment hereunder.
(b) This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
(c) No amendment or waiver or any provision of this Agreement shall be
effective unless in writing signed by both parties.
<PAGE>
(d) If any provision of this Agreement is held to be invalid or
unenforceable, such provision shall be deemed limited or modified to the extent
necessary to make it valid and enforceable, and in no event shall this Agreement
or any of the provisions of this Agreement be rendered void or unenforceable.
(e) The headings to the paragraphs of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or enforcement of this Agreement.
(f) No waiver by the Company of any breach by the Executive of any
provision or condition of this Agreement by the Executive to be performed shall
be deemed a waiver of similar or dissimilar provisions or conditions at the same
or any prior or subsequent time.
(g) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, but no interest in this Agreement
shall be transferable in any manner by the Executive.
13. ENTIRE AGREEMENT. This instrument contains the entire Agreement of
the parties. It may not be changed orally but only by an Agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge in sought.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its officer thereunto duly authorized, and the
Executive has hereunto set her hand as of the date first above written.
ATTEST:
/S/ FRANK BELLIS BY: /S/ JEAN I. ABBOTT
- ----------------------------- ------------------------------
JEAN I. ABBOTT
EXECUTIVE VICE PRESIDENT
OF MARKETING AND CASINO
OPERATIONS
ATTEST: THE CLARIDGE AT PARK PLACE,
INCORPORATED
/S/ FRANK BELLIS BY: /S/ ROBERT M. RENNEISEN
- ----------------------------- ------------------------------
ROBERT M. RENNEISEN
VICE CHAIRMAN/CHIEF
EXECUTIVE OFFICER
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial informantion estracted from the
Claridge Hotel and Casino Corporation's Form 10-K for the Quarter ended March
31, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000730409
<NAME> CLARIDGE HOTEL AND CASINO CORPORATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 25,215,000
<SECURITIES> 0
<RECEIVABLES> 18,922,000
<ALLOWANCES> 1,003,000
<INVENTORY> 277,000
<CURRENT-ASSETS> 45,981,000
<PP&E> 43,440,000
<DEPRECIATION> 12,949,000
<TOTAL-ASSETS> 182,420,000
<CURRENT-LIABILITIES> 38,378,000
<BONDS> 85,000,000
0
0
<COMMON> 5,000
<OTHER-SE> 2,477,000
<TOTAL-LIABILITY-AND-EQUITY> 182,420,000
<SALES> 0
<TOTAL-REVENUES> 46,300,000
<CGS> 0
<TOTAL-COSTS> 28,363,000
<OTHER-EXPENSES> 20,881,000
<LOSS-PROVISION> 46,000
<INTEREST-EXPENSE> 2,134,000
<INCOME-PRETAX> (5,124,000)
<INCOME-TAX> (2,051,000)
<INCOME-CONTINUING> (3,073,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,073,000)
<EPS-PRIMARY> (.61)
<EPS-DILUTED> 0
</TABLE>
