UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to ___________
Commission file number: 0-13760
RIO HOTEL & CASINO, INC.
(Exact name of registrant as specified in its charter)
NEVADA 95-3671082
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
3700 West Flamingo Road, Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip Code)
(702) 252-7733
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
21,279,346 shares of Common Stock, $0.01 par value as of May 4, 1995
This document consists of 18 pages with exhibits, 15 pages without exhibits.
<PAGE>
FORM 10-Q
TABLE OF CONTENTS
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
EXHIBITS 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1995 1994
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $19,006,880 $76,426,258
ACCOUNTS RECEIVABLE, NET 4,163,629 3,204,416
FEDERAL INCOME TAXES RECEIVABLE - - - 139,329
INVENTORIES 1,251,943 1,378,598
PREPAID EXPENSES AND OTHER ASSETS 4,693,415 4,716,701
TOTAL CURRENT ASSETS 29,115,867 85,865,302
PROPERTY AND EQUIPMENT:
LAND AND IMPROVEMENTS 26,879,031 24,666,679
BUILDING AND IMPROVEMENTS 169,756,182 137,005,432
EQUIPMENT, FURNITURE, AND IMPROVEMENTS 52,670,731 43,108,873
LESS: ACCUMULATED DEPRECIATION (36,348,673) (32,826,276)
212,957,271 171,954,708
CONSTRUCTION IN PROGRESS 10,079,851 38,521,773
NET PROPERTY AND EQUIPMENT 223,037,122 210,476,481
OTHER ASSETS:
OTHER, NET 5,440,462 4,823,489
$257,593,451 $301,165,272
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
CURRENT MATURITIES OF LONG-TERM DEBT $18,359 $15,032,534
ACCOUNTS PAYABLE 2,551,407 2,425,645
ACCRUED EXPENSES 7,685,389 7,830,706
FEDERAL INCOME TAXES PAYABLE 2,170,938 - - -
ACCOUNTS PAYABLE-RELATED PARTY 5,636,698 10,026,210
ACCRUED INTEREST 514,752 351,864
TOTAL CURRENT LIABILITIES 18,577,543 35,666,959
NON-CURRENT LIABILITIES:
LONG-TERM DEBT, LESS CURRENT MATURITIES 80,146,869 110,146,869
DEFERRED INCOME TAXES 8,040,926 7,512,277
TOTAL NON-CURRENT LIABILITIES 88,187,795 117,659,146
TOTAL LIABILITIES 106,765,338 153,326,105
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
COMMON STOCK, $0.01 PAR VALUE;
100,000,000 SHARES AUTHORIZED;
21,240,846 (1995) AND 21,371,346 (1994) SHARES
ISSUED AND OUTSTANDING 212,409 213,714
ADDITIONAL PAID-IN CAPITAL 115,693,101 117,214,582
RETAINED EARNINGS 34,922,603 30,410,871
TOTAL STOCKHOLDERS' EQUITY 150,828,113 147,839,167
$257,593,451 $301,165,272
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUES:
CASINO $24,565,850 $21,175,293
ROOM 7,275,008 4,736,272
FOOD AND BEVERAGE 13,831,753 10,272,316
OTHER 2,529,411 1,100,614
CASINO PROMOTIONAL ALLOWANCES (4,373,869) (3,235,573)
43,828,153 34,048,922
EXPENSES:
CASINO 10,698,519 9,274,398
ROOM 2,123,146 1,658,587
FOOD AND BEVERAGE 11,104,366 8,267,820
OTHER 1,508,289 725,337
SELLING, GENERAL AND ADMINISTRATIVE 6,386,723 4,853,306
DEPRECIATION AND AMORTIZATION 3,619,773 2,648,109
35,440,816 27,427,557
OPERATING PROFIT 8,387,337 6,621,365
OTHER INCOME (EXPENSE):
INTEREST INCOME 56,392 25,409
INTEREST EXPENSE, NET (1,152,991) (408,148)
(1,096,599) (382,739)
INCOME BEFORE INCOME TAX PROVISION 7,290,738 6,238,626
INCOME TAX PROVISION (2,779,006) (2,259,896)
NET INCOME $4,511,732 $3,978,730
========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
THREE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
EARNINGS PER COMMON SHARE:
PRIMARY:
NET INCOME $0.21 $0.18
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,612,639 21,743,659
========== ==========
FULLY DILUTED:
NET INCOME $0.21 $0.18
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,696,551 21,744,739
========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $4,511,732 $3,978,730
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
COMPENSATION EXPENSE RECOGNIZED FROM
STOCK OPTION GRANT 32,844 38,734
DEPRECIATION AND AMORTIZATION 3,619,773 2,648,109
PROVISION FOR UNCOLLECTIBLE ACCOUNTS 148,210 33,973
DEFERRED INCOME TAXES 528,649 348,011
(INCREASE) DECREASE IN ASSETS:
ACCOUNTS RECEIVABLE (1,107,423) 416,252
INVENTORIES 126,655 (69,661)
PREPAID EXPENSES AND OTHER CURRENT ASSETS 162,615 (176,440)
OTHER, NET (691,069) (836,504)
INCREASE (DECREASE) IN LIABILITIES:
ACCOUNTS PAYABLE 125,762 39,780
ACCRUED FEDERAL INCOME TAX PAYABLE 2,192,883 320,315
ACCRUED EXPENSES (145,318) (241,093)
ACCRUED INTEREST 162,888 42,773
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,668,201 6,542,979
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF EQUIPMENT, FURNITURE, AND
IMPROVEMENTS (18,283,477) (13,350,400)
PURCHASE OF LAND AND IMPROVEMENTS (2,212,352) - - -
NET CASH (USED IN) INVESTING ACTIVITIES (20,495,829) (13,350,400)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET PROCEEDS FROM COMMON STOCK ISSUANCE 33,300 615,650
PAYMENTS ON NOTES AND LOANS PAYABLE (45,014,175) (9,179)
COSTS PAID IN CONNECTION WITH PRIOR COMMON
STOCK OFFERING - - - (109,364)
REPURCHASE OF COMMON STOCK (1,610,875) - - -
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (46,591,750) 497,107
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (57,419,378) (6,310,314)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 76,426,258 55,784,937
CASH AND CASH EQUIVALENTS, END OF PERIOD $19,006,880 $49,474,623
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1995 1994
(Unaudited) (Unaudited)
Cash payments made for interest
(net of amounts capitalized) $1,165,183 $ 389,542
========== ===========
Cash payments made for income $0 $1,175,000
taxes ========== ==========
1995
Purchase of property and equipment financed through payables totaled
$5,613,418.
Additional asset purchases financed through payables totaled $23,280.
Tax benefit arising from the exercise of stock options granted under
the Company's Non-Statutory Stock Option Plan totaled $21,945.
1994
Purchase of property and equipment financed through payables totaled
$3,601,387.
Tax benefit arising from the exercise of stock options granted under
the Company's Non-Statutory Stock Option Plan totaled $408,966.
<PAGE>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - The consolidated financial statements include the accounts
of Rio Hotel & Casino, Inc. and its wholly owned subsidiaries
Rio Properties, Inc. ("Rio Properties," which owns and operates
the Rio Suite Hotel & Casino [the "Rio"] in Las Vegas, Nevada);
MarCor Development Company, Inc.; MarCor Resort Properties,
Inc.; and Rio Properties' wholly owned subsidiary Cinderlane,
Inc. (collectively the "Company").
All significant intercompany balances and transactions have
been eliminated in consolidation.
The consolidated balance sheet as of March 31, 1995 and the
related consolidated statements of income and consolidated
statements of cash flows for the three month periods ended
March 31, 1995 and March 31, 1994 are unaudited but, in the
opinion of mangement, reflect all adjustments necessary for a
fair presentation of results for such periods. The results of
operations for an interim period are not necessarily indicative
of the results for the full year. The consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto contained in the
Company's annual report for the year ended December 31, 1994.
The Company's consolidated balance sheet for the year ended
December 31, 1994 is audited.
NOTE 2 - LONG-TERM DEBT
Long-term debt consists of the following:
MARCH 31, DECEMBER 31,
1995 1994
(Unaudited)
Bank loan ("Rio Bank Loan"),
originally a $65 million
revolving credit facility,
which was amended to be a
$125 million revolving credit
facility with interest equal to
the Eurodollar Rate or the Base
Rate, plus a margin. The loan
matures on June 30, 2001 and is
collateralized by a first deed
of trust on the Rio's real
property, equipment and
improvements. $80,000,000 $125,000,000
Special Improvement District
assessment bond, payable over
10 years in twenty
substantially equal semi-annual
installments of principal, plus
6.1% interest. The first
installment was due on
May 1, 1994. 165,228 165,228
Other short-term financing of
certain insurance premiums - - - 14,175
80,165,228 125,179,403
Less current maturities (18,359) (15,032,534)
$80,146,869 $110,146,869
=========== ============
<PAGE>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - LONG-TERM DEBT (continued)
The prime interest rates quoted by the Company's primary
lenders at March 31, 1995 and December 31, 1994 were 9.00% and
8.50%, respectively.
At March 31, 1995, the three month Eurodollar Rate was 6.25%.
The margin on the Company's Eurodollar Rate borrowings at March
31, 1995 was 1.50%.
The revolving credit feature of the Rio Bank Loan allows the
Company to pay down and reborrow principal under the line of
credit as the Company deems appropriate. The Company utilized
this ability by reborrowing $69 million on December 30, 1994
and repaying $69 million on January 3, 1995. The Company also
reborrowed $10 million on March 31, 1995 and repaid $10 million
on April 3, 1995 under the terms of the Rio Bank Loan. After
consideration of these borrowings, the Company had $45 million
available under the Rio Bank Loan at March 31, 1995, while the
Company's borrowing capacity under the Rio Bank Loan was fully
utilized at December 31, 1994.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"). The provisions
for income taxes for the three months ended March 31, 1995 and
1994 were $2,779,006 and $2,259,896 respectively, which
represent effective rates of 38.1% and 36.2%, respectively. A
reconciliation between the statutory rates and the effective
rates is as follows:
1995 1994
Statutory Rate 35.0% 35.0%
Depreciation on the premium
allocated in the exchange for
limited partnership units 0.4% 0.5%
Disallowance for tax purposes of
certain meals, travel and
entertainment expenses 1.7% 1.1%
Other 1.0% (0.4%)
Effective Rate 38.1% 36.2%
====== ======
<PAGE>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - INCOME TAXES (continued)
The Company's deferred tax assets (liabilities) at March 31,
1995 consisted of the following:
CURRENT NON-CURRENT
Depreciation and
amortization ($8,142,009)
Deferred employee
benefit $391,927
Bad debt expense 217,960
Other deferred tax
assets, net 34,231 101,083
$644,118 ($8,040,926)
============ ============
The current portion of the Company's net deferred tax assets is
included on the Consolidated Balance Sheets under the heading
"Prepaid Expenses and Other Assets".
The Company has determined that it is probable that the full
amount of the tax benefit from the deferred tax assets will be
realized and, therefore, has not recorded a valuation allowance
to reduce the carrying value of the deferred tax assets.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
MATERIAL CHAGNES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
OPERATING PROFIT
Operating profit for the Company increased to $8.4 million in the
first quarter of 1995 from $6.6 million in the first quarter of
1994, an increase of $1.8 million or 27%. Management believes that
the improvement in operating results was due to increased business
levels during the first quarter of 1995 as a result of having an
additional 365 hotel suites placed into service in February 1995,
184 new hotel suites placed into service in March 1995, and the
addition of over 250 slot machines, 15 table games, and additional
restaurant capacity compared to the first quarter of 1994.
Management believes that operating efficiencies also improved from
the first quarter of 1994 to the first quarter of 1995 in the hotel
department.
REVENUES
Net revenues for the Company increased to $43.8 million in the first
quarter of 1995 from $34.0 million in the first quarter of 1994, an
increase of $9.8 million or 29%. Casino revenues increased to $24.6
million in the first quarter of 1995 from $21.2 million in the first
quarter of 1994, an increase of $3.4 million or 16%. The increase
in casino revenues was due primarily to increases in both slot
machine revenues and table game revenues. Slot machine revenues
increased $1.9 million or 14% to $14.9 million in the first quarter
of 1995 from $13.0 million in the first quarter of 1994. The
increase in slot machine revenues resulted primarily from the
addition of over 250 slot machines in November 1994. Table game
revenues increased $1.4 million or 22% to $7.9 million in the first
quarter of 1995 from $6.5 million in the first quarter of 1994. The
increase in table game revenues resulted primarily from the addition
of 9 table games in the second half of 1994 and the addition of 6
table games in January 1995.
Room revenues increased by $2.5 million or 54% to $7.3 million in
the first quarter of 1995 from $4.8 million in the first quarter of
1994. The increase in room revenue resulted primarily from the
addition of 365 new hotel suites placed into service in February
1995 and 184 new hotel suites placed into service in March 1995, as
well as an increase in the average room rate of more than $10.00 per
room night during the first quarter of 1995 compared to the first
quarter of 1994. The additional 549 suites placed into service in
February and March 1995 increased the Rio's total to 1,410 suites
compared to 861 suites for the entire first quarter of 1994. Demand
for the Rio's suites remained high during the first quarter of 1995
with a 96% occupancy, which was identical to the 96% occupancy
attained during the first quarter of 1994. The average number of
suites available during the first quarter of 1995 was 1,142 compared
to 861 during the first quarter of 1994.
Food and beverage revenues increased to $13.8 million in the first
quarter of 1995 from $10.3 million in the first quarter of 1994, an
increase of $3.5 million or 35%. The successful opening in February
1994 of the Copacabana Showroom, a 430-seat video, entertainment and
restaurant complex, the successful opening in April 1994 of Fiore, a
186-seat world class restaurant and the successful completion in
November 1994 of a 50% expansion of the Carnival World Buffet to 980
seats, as well as an increase in the average food check, contributed
to the increase in food and beverage revenues.
OPERATING MARGINS
The Company's operating margins were relatively consistent during
the first quarter of 1995 compared to the first quarter of 1994.
Operating profit as a percentage of net revenues was 19% in both the
first quarter of 1995 and 1994. Casino operating profit was 56%
during both the first quarter of 1995 and 1994. Food and beverage
operating profit was 20% during both the first quarter of 1995 and
1994. Hotel operating profit was 71% during the first quarter of
1995 compared to 65% during the first quarter of 1994. Management
believes that this improvement is due to efficiencies resulting from
increased customer volume, effective cost controls and a higher
average room rate during the first quarter of 1995 compared to the
first quarter of 1994.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
MATERIAL CHANGES IN RESULTS OF OPERATIONS (continued)
THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (continued)
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased by $1.0 million or 37% to
$3.6 million in the first quarter of 1995 compared to $2.6 million
in the first quarter of 1994. This increase is attributable to
depreciation expense from various completed expansion projects such
as the Company's $25 million expansion project (the "Eastside
Expansion") which included the opening in February 1994 of the
Copacabana Showroom, the opening in April 1994 of Fiore, and the
completion in April 1994 of a 36,000 square foot expansion of the
Rio's beach pool area with a second swimming pool and additional
recreation areas; and the Company's $75 million expansion project
(the "Phase III Expansion") which included the opening in August
1994 of a 527-space, three-level parking garage, the opening in
November 1994 of approximately 10,000 square feet of casino area
that accommodated approximately 300 additional slot machines, the
completion in November 1994 of a 50% expansion of the Carnival World
Buffet to 980 seats, the placing into service of 365 new hotel
suites in February 1995 and 184 new hotel suites in March 1995, as
well as a variety of back-of-the-house enhancements.
OTHER EXPENSES
Other expenses of the Company increased primarily because of higher
interest expense from increased borrowing levels during the period
along with higher prevailing interest rates. Borrowing levels
increased due to funding costs of the Eastside Expansion and the
Phase III Expansion. Interest expense in the first quarter of 1995
was reduced by $320,705 because of interest capitalized on amounts
expended on the Phase III Expansion project. Interest expense in
the first quarter of 1994 was reduced by $72,308 because of interest
capitalized on amounts expended on the Eastside Expansion project.
NET INCOME
Net income for the first quarter of 1995 was $4.5 million or $0.21
per share (fully diluted) compared to $4.0 million or $0.18 per
share (fully diluted) for the first quarter of 1994 as a result of
the factors discussed above.
MATERIAL CHANGES IN FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had working capital of $10.5 million
compared with $50.2 million at December 31, 1994. Cash and cash
equivalents were $19.0 million at March 31, 1995 compared with
$76.4 million at December 31, 1994. At March 31, 1995, the Company
had $45.0 million available under its bank facility while the bank
facility was fully utilized at December 31, 1994. The decrease in
both working capital and cash is primarily due to the use of cash
and cash equivalents during the quarter to repay principal under the
bank facility and the decision of the Company not to draw down the
full amount of the available Rio Bank Loan at the end of the
quarter, as well as the use of cash and cash equivalents to make
capital expenditures for the Company's $75 million Phase III
Expansion.
During the first three months of 1995, cash provided by operating
activities was $9.7 million. Investing activities used $20.5
million of the Company's cash during the first three months of 1995.
Approximately $16.2 million of such expenditures were related to the
Company's Phase III Expansion. On March 22, 1995, the Company
acquired an approximately 5 acre site adjacent to the Rio site, on
which a former commercial warehouse is located, at a purchase price
of $3.2 million. The balance was expended on other capital
projects.
During the fourth quarter of 1994, the Board of Directors authorized
the Company to make discretionary repurchases of up to 2 million
shares of its Common Stock from time to time in the open market or
otherwise. During the first quarter of 1995, the Company
repurchased 138,500 shares of its Common Stock at a total cost of
$1.6 million. These shares of Common Stock were retired.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
In April 1995, the Company commenced construction of an
approximately $20 million expansion (the "Phase IV Expansion"). The
project will add 144 suites to the existing 1,410 suites, add
approximately 5,400 square feet of meeting room space, double the
size of the existing Buzios seafood restaurant to
approximately 180 seats, add a new health club and salon facility
and include a variety of back-of-the-house improvements. Completion
of the Phase IV Expansion is expected to occur in stages through the
end of 1995 and will bring the Rio's total number of hotel suites to
1,554 suites.
The Company is subject to annual capital expenditure limits of $7.5
million under the Rio Bank Loan. However, the Company received a
written waiver to allow the Company to construct the Phase III
Expansion and the Phase IV Expansion. Because of the annual
restrictions on capital expenditures by the Company contained in the
Rio Bank Loan, any other significant new capital improvements to the
Rio will also require the consent of the lenders.
As of April 1, 1995 the Company's capital commitments include
approximately $13.0 million for the remainder of the Phase III
Expansion and $20.0 million for the Phase IV Expansion. Based upon
cash on hand, cash available through borrowings under the Rio Bank
Loan and cash from operations, the Company believes that it has
adequate cash available to fund the remaining cost of the Phase III
Expansion and the Phase IV Expansion.
On May 2, 1995, the Company announced a three-phased strategic plan
to grow the Company over the next several years. The plan consists
of a 1,000 suite expansion with additional amenities on the existing
Rio site, acquisition of land adjacent to the Rio site for the
master-planning of another hotel-casino property and the purchase of
60 acres southeast of Las Vegas for possible future hotel-casino
development.
The 1,000 suite addition, which will include approximately 120,000
square feet of public area, will bring the property to 2,554 suites.
The approximately $175 million project is planned to include
approximately 500 slot machines, 27 table games, 60,000 square feet
of retail and entertainment space, expanded pool and beach area,
parking garages and additional restaurants. The public area will
include a variety of owned and leased retail and restaurant outlets.
The project is expected to begin in August 1995, subject to
governmental approvals and finalization of financing, with
completion by the first quarter of 1997. The Company's existing
sources of cash will not be adequate to fund this expansion project.
The Company has commenced discussions with its existing lenders in
order to obtain a capital expenditure limitation waiver as well as
an increase in the amount available to be borrowed. Should the
Company be unable to obtain the waiver and an increase in the
borrowing capacity, alternative arrangements would be required in
order for the Company to proceed with this project.
The Company has entered into commitments to acquire approximately 14
acres of land adjacent to the Rio site for approximately $13 million
which the Company will fund through cash on hand, cash available
through borrowings under the Rio Bank Loan and cash from operations.
The entire Rio site is now being master-planned for another hotel-
casino, the size and timing of which has not yet been determined.
As the third step in its strategic plan to provide further growth
for the Company beyond the Rio site, the Board of Directors
authorized the acquisition of 60 acres of land southeast of Las
Vegas. The cost of the 60 acres is approximately $5.5 million which
the company will fund through cash on hand, cash available through
borrowings under the Rio Bank Loan and cash from operations. The
property, already zoned for a hotel-casino, is situated where the
Boulder Highway commences its entrance into the Las Vegas valley
from Phoenix and Laughlin along Highway 93-95. The timing of the
proposed development has not yet been determined.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
NONE
Item 2. CHANGES IN SECURITIES
During the first quarter of 1995, certain options granted pursuant
to the Company's Non-Statutory Stock Option Plan were exercised,
resulting in the issuance of 8,000 shares of the Company's Common
Stock. Also during the first quarter of 1995, the Company
repurchased 138,500 shares of its Common Stock.
Item 3. DEFAULTS UPON SENIOR SECURITIES
NONE
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
Item 5. OTHER INFORMATION
On March 29, 1995, the Company announced that it has retained
Montgomery Securities as its financial advisor to assist in
evaluating various strategic alternatives for the Company.
On April 27, 1995, Peter Thomas was appointed to the Company's
Board of Directors. Director Dean Petersen will retire from the
Board after the annual meeting of stockholders on May 16, 1995.
On May 2, 1995, the Company announced that it had terminated
negotiations for a possible casino development in the Summerlin
area of Las Vegas.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
11.01 Computation of Earnings Per Common Share
27.01 Financial Data Schedule
(b) REPORT ON FORM 8-K
NONE
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Rio Hotel & Casino, Inc.
(Registrant)
May 11, 1995 By /s/ Harlan D. Braaten
(Date) HARLAN D. BRAATEN
Treasurer and Chief
Financial Officer
(Duly Authorized Officer
and Principal Financial
Officer)
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Description Page
Number
11.01 Computation of Earnings per
Common Share 17
27.01 Financial Data Schedule 18
EXHIBIT 11.01
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. and SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
PRIMARY:
EARNINGS:
NET INCOME $ 4,511,732 $ 3,978,730
================= =================
SHARES:
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND EQUIVALENTS OUTSTANDING 21,297,196 21,166,634
STOCK OPTIONS 315,443 577,025
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, AS ADJUSTED 21,612,639 21,743,659
================= =================
EARNINGS PER COMMON SHARE:
NET INCOME PER COMMON SHARE $ 0.21 $ 0.18
================= ==================
FULLY DILUTED:
EARNINGS:
NET INCOME $ 4,511,732 $ 3,978,730
================= ==================
SHARES:
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND EQUIVALENTS OUTSTANDING 21,297,196 21,166,634
STOCK OPTIONS 399,355 578,105
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING, AS ADJUSTED 21,696,551 21,744,739
================= ==================
EARNINGS PER COMMON SHARE:
NET INCOME PER COMMON SHARE $ 0.21 $ 0.18
================= ==================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 19,007
<SECURITIES> 0
<RECEIVABLES> 4,786
<ALLOWANCES> 623
<INVENTORY> 1,252
<CURRENT-ASSETS> 29,116
<PP&E> 259,386
<DEPRECIATION> 36,349
<TOTAL-ASSETS> 257,593
<CURRENT-LIABILITIES> 18,578
<BONDS> 80,147
<COMMON> 212
0
0
<OTHER-SE> 150,616
<TOTAL-LIABILITY-AND-EQUITY> 257,593
<SALES> 43,885
<TOTAL-REVENUES> 43,885
<CGS> 0
<TOTAL-COSTS> 35,441
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,153
<INCOME-PRETAX> 7,291
<INCOME-TAX> 2,779
<INCOME-CONTINUING> 4,512
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,512
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
