AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1995.
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RIO HOTEL & CASINO, INC.
(Exact name of registrant as specified in its charter)
NEVADA 7011 95-3671082
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification
Classification Code Number) No.)
3700 WEST FLAMINGO ROAD
LAS VEGAS, NEVADA 89103
(702) 252-7733
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)
RIO PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
(Guarantor of 10 5/8% Senior Subordinated Notes Due 2005)
NEVADA 7011 88-0288115
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
3700 WEST FLAMINGO ROAD
LAS VEGAS, NEVADA 89103
(702) 252-7733
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)
JAMES A. BARRETT, JR.
RIO HOTEL & CASINO, INC.
3700 WEST FLAMINGO ROAD
LAS VEGAS, NEVADA 89103
(702) 252-7733
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
PLEASE SEND COPIES OF ALL CORRESPONDENCE TO:
MICHAEL J. BONNER
SHERWOOD N. COOK
KUMMER KAEMPFER BONNER & RENSHAW
3800 HOWARD HUGHES PARKWAY
SEVENTH FLOOR
LAS VEGAS, NEVADA 89109
(702) 792-7000
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the securities being registered on this Form are
being offered in connection with the formation of a holding
company and there is compliance with General Instruction G,
check the following box.[ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of each class of Amount to Proposed Proposed Maximum Amount of
securities to be be Maximum Aggregate Registration Fee
registered Registered Offering Offering Price
Price per (1)
Note (1)
10 5/8% Senior
Subordinated Notes
Due 2005 $100,000,000 100% $100,000,000 $34,483
Guarantee Evidencing
Additional
Registrant's
Guarantee of
10 5/8% Senior
Subordinated Notes
Due 2005 $100,000,000 2 2 2
(1)Calculated in accordance with Rule 457(f)(2).
(2)No additonal consideration for the Guarantee of the
10 5/8% Senior Subordinated Notes Due 2005 will be
furnished. Pursuant to Rule 457(n), no separate fee is
payable with respect to such Guarantee.
The Registrants hereby amend this Registration
Statement on such date or dates as may be necessary to delay
its effective date until the Registrants shall file a
further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933
or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine. A
Registration Statement relating to these securities has been
filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted
prior to the time the Registration Statement becomes
effective. This Registration Statement shall not constitute
an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities
laws of any such state.
<PAGE>
RIO HOTEL & CASINO, INC.
CROSS-REFERENCE TABLE
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
ITEM FORM S-4 CAPTION PROSPECTUS CAPTION
NO.
Item 1 Forepart of the Registration
Statement and Outside Front Cover Outside Front Cover Page of
Page of Prospectus Prospectus
Item 2 Inside Front and Outside Back Inside Front Cover Pages of
Cover Pages of Prospectus Prospectus
Item 3 Risk Factors, Ratio of Earnings
to Fixed Charges and Other Summary; Risk Factors; Selected
Information Consolidated Financial Data
Item 4 Terms of the Transaction Summary; The Exchange Offer;
Description of New Notes;
Certain U.S. Federal Tax
Consequences
Item 5 Pro Forma Financial Information Not Applicable
Item 6 Material Contacts with the Not Applicable
Company Being Acquired
Item 7 Additional Information Required
for Reoffering by Persons and Not Applicable
Parties Deemed to be Underwriters
Item 8 Interests of Named Experts and Legal Matters; Experts
Counsel
Item 9 Disclosure of Commission Position
on Indemnification for Securities Certain Transactions
Act Liabilities
Item 10 Information with Respect to S-3 Summary; Risk Factors;
Registrants Capitalization; Management's
Discussion and Analysis of
Financial Condition and Results
of Operations; Business
Item 11 Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
Item 12 Information with Respect to S-2 Not Applicable
or S-3 Registrants
Item 13 Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
Item 14 Information with Respect to
Registrants Other than S-3 or S-2 Not Applicable
Registrants
Item 15 Information with Respect to S-3 Not Applicable
Companies
Item 16 Information with Respect to S-2 Not Applicable
or S-3 Companies
Item 17 Information with Respect to
Companies Other than S-3 or S-2 Not Applicable
Companies
Item 18 Information if Proxies, Consents
or Authorizations are to be Not Applicable
Solicited
Item 19 Information if Proxies, Consents
or Authorizations are not to be Management; Incorporation of
Solicited or in an Exchange Offer Certain Documents by Reference
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 28, 1995
RIO HOTEL & CASINO, INC.
OFFER TO EXCHANGE
ALL OUTSTANDING
10 5/8% SENIOR SUBORDINATED NOTES DUE 2005
FOR
10 5/8% SENIOR SUBORDINATED NOTES DUE 2005
_________________________
This exchange offer and withdrawal rights will expire
at 5:00 p.m., New York City time, on _______________, 1995
(as such date may be extended, the "Expiration Date").
Rio Hotel & Casino, Inc. (the "Company") hereby offers
(the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying
letter of transmittal (the "Letter of Transmittal"), to
exchange $1,000 in principal amount of its 10 5/8% Senior
Subordinated Notes due 2005 (the "New Notes") for each
$1,000 in principal amount of its outstanding 10 5/8% Senior
Subordinated Notes due 2005 (the "Old Notes") (the Old Notes
and the New Notes are collectively referred to herein as the
"Notes") of which an aggregate principal amount of
$100,000,000 is outstanding.
The Company will accept for exchange any and all Old
Notes that are validly tendered prior to 5:00 p.m., New York
City time, on the Expiration Date. Tenders of Old Notes may
be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of the Old
Notes being tendered for exchange. However, the Exchange
Offer is subject to the terms and provisions of the
Registration Agreement dated as of July 18, 1995 (the
"Registration Agreement") among the Company; Rio Properties,
Inc., a subsidiary of the Company that has agreed to
guarantee the Notes (the "Guarantor"); and Salomon Brothers
Inc and Montgomery Securities (the "Initial Purchasers").
The Old Notes may be tendered only in multiples of $1,000.
See "The Exchange Offer."
The Old Notes were issued in a transaction (the
"Offering") pursuant to which the Company issued an
aggregate of $100 million principal amount of the Old Notes.
The Old Notes were sold by the Company to the Initial
Purchasers on July 21, 1995 (the "Closing Date") pursuant to
a Purchase Agreement dated July 18, 1995 (the "Purchase
Agreement") among the Company, the Guarantor and the Initial
Purchasers. The Initial Purchasers subsequently resold the
Old Notes in reliance on Rule 144A and certain other
exemptions under the Securities Act of 1933, as amended (the
"Securities Act"). The Company and the Initial Purchasers
also entered into the Registration Agreement, pursuant to
which the Company granted certain registration rights for
the benefit of the holders ("Holders") of the Old Notes.
The Exchange Offer is intended to satisfy certain of the
Company's obligations under the Registration Agreement with
respect to the Old Notes. See "The Exchange Offer - Purpose
and Effect."
The Old Notes were, and the New Notes will be, issued
under the Indenture dated as of July 21, 1995 (the
"Indenture") among the Company, the Guarantor and IBJ
Schroder Bank & Trust Company as Trustee (in such capacity,
the "Trustee"). The form and terms of the New Notes will be
identical in all material respects to the form and terms of
the Old Notes, except that (i) the New Notes have been
registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, (ii) holders
of New Notes will not be entitled to special interest
otherwise payable under the Registration Agreement in
respect of Old Notes held by such holders during any period
in which a registration statement has not been filed and/or
is not effective and (iii) holders of New Notes will not be,
and upon the consummation of the Exchange Offer, holders of
Old Notes will no longer be, entitled to certain rights
under the Registration Agreement intended for the holders of
unregistered securities; provided, however, that purchasers
of the Old Notes shall have the right to require the Company
to file a shelf registration statement pursuant to Rule 415
under the Securities Act solely for the benefit of such
purchasers and will be entitled to receive special interest
if such shelf registration statement is not declared
effective on or prior to the 150th day following the date of
original issuance of the Old Notes. The Exchange Offer
shall be deemed consummated upon the occurrence of the
delivery by the Company to the Registrar under the Indenture
of New Notes in the same aggregate principal amount as the
aggregate principal amount of Old Notes that were tendered
by holders thereof pursuant to the Exchange Offer. See "The
Exchange Offer - Termination of Certain Rights" and "
Procedures for Tendering Old Notes" and "Description of New
Notes." (continued on next page)
SEE "RISK FACTORS" FOR INFORMATION THAT SHOULD BE
CONSIDERED BY HOLDERS IN EVALUATING THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OF OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS _____________, 1995
[The following text appears vertically in the left margin of the page.]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any state in which such offer, solicitation or sale
would be unlawful prior to the registration or qualification under the
securities laws of any such state.
[Text ends]
<PAGE>
NEITHER THE NEVADA GAMING COMMISSION NOR THE NEVADA STATE
GAMING CONTROL BOARD HAS PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE
SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
______________
The New Notes will bear interest at a rate equal to
10 5/8% per annum from and including their date of issuance.
Interest on the New Notes is payable semiannually on each
January 15 and July 15 (each, an "Interest Payment Date").
Holders whose Old Notes are accepted for exchange will have
the right to receive interest accrued thereon from the date
of their original issuance or the last Interest Payment
Date, as applicable to, but not including, the date of
issuance of the New Notes, such interest to be payable with
the first interest payment on the New Notes. Interest on
the Old Notes accepted for exchange will cease to accrue on
the day prior to the issuance of the New Notes. The New
Notes will mature on July 15, 2005. See "Description of New
Notes - General."
The New Notes will not be redeemable, in whole or in
part, prior to July 15, 2000. Thereafter, the New Notes
will be redeemable at the redemption prices set forth
herein, plus accrued and unpaid interest to the redemption
date. Upon the occurrence of a Change of Control (as
defined), each holder of New Notes will have the right to
require the Company to purchase all or a portion of such
holder's New Notes at 101% of the principal amount thereof,
plus accrued and unpaid interest to the repurchase date.
The New Notes will be general unsecured obligations of
the Company and will be unconditionally guaranteed by the
Guarantor (the "Rio Guarantee"). The Rio Guarantee will be
a general unsecured obligation of the Guarantor,
subordinated in right of payment to all present and future
Senior Indebtedness (as defined) and Senior Indebtedness of
Guarantor (as defined), respectively. The New Notes will be
structurally subordinated to all liabilities of the
Company's subsidiaries and the Rio Guarantee will be
structurally subordinated to all liabilities of the
Guarantor's subsidiaries. As of July 31, 1995, there was no
outstanding Senior Indebtedness of Guarantor to which the
Rio Guarantee was subordinated. There are no significant
outstanding liabilities of subsidiaries of the Guarantor.
Based on an interpretation by the staff of the
Securities and Exchange Commission (the "Commission") set
forth in no-action letters issued to third parties, the
Company believes that the New Notes issued pursuant to the
Exchange Offer to a Holder in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by such
Holder (other than (i) a broker-dealer who purchased Old
Notes directly from the Company for resale pursuant to Rule
144A under the Securities Act or any other available
exemption under the Securities Act or (ii) a person who is
an affiliate of the Company within the meaning of Rule 405
of the Securities Act), without compliance with the
registration and prospectus delivery provisions of the
Securities Act, provided that the Holder is acquiring the
New Notes in the ordinary course of business and is not
participating, and has no arrangement or understanding with
any person to participate, in a distribution of the New
Notes. Holders wishing to accept the Exchange Offer must
represent to the Company, as required by the Registration
Agreement, that such conditions have been met. Each broker-
dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired
by such broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes.
See "The Exchange Offer - Resales of the New Notes." This
Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with
resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired by such broker-dealer as
a result of market-making or other trading activities.
The Company will not receive any proceeds from any sale
of New Notes by broker-dealers. New Notes received by any
broker-dealer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New
Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any
such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-
dealers and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by
it for its own account pursuant to the Exchange Offer and
<PAGE>
any broker-dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such
resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be
underwriting compensation under the Securities Act. Each
broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such
New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes
where such New Notes were acquired by such broker-dealer as
a result of market-making activities or other trading
activities. The Company has agreed that, starting on the
Expiration Date and ending on the close of business on the
first anniversary of the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of
Distribution."
As of July 31, 1995, Cede & Co. ("Cede"), as nominee
for The Depository Trust Company, New York, New York
("DTC"), was a registered Holder of the Old Notes, holding
Old Notes for its participants, and 36 other Holders held
Old Notes directly. The Company believes that only one
Holder, Marnell Corrao Associates, Inc., is an affiliate (as
such term is defined in Rule 405 under the Securities Act)
of the Company. There has previously been only a limited
secondary market and no public market for the Old Notes.
The Old Notes are eligible for trading in the Private
Offering, Resales and Trading through Automatic Linkages
("PORTAL") market. In addition, the Initial Purchasers have
advised the Company that they currently intend to make a
market in the New Notes; however, neither is obligated to do
so and any market making activities may be discontinued by
either of the Initial Purchasers at any time. Therefore,
there can be no assurance that an active market for the New
Notes will develop. If such a trading market develops for
the New Notes, future trading prices will depend on many
factors, including, among other things, prevailing interest
rates, the Company's results of operations and the market
for similar securities. Depending on such factors, the New
Notes may trade at a discount from their face value. See
"Risk Factors - Absence of Public Trading Market."
The Company will not receive any proceeds from this
Exchange Offer, but, pursuant to the Registration Agreement,
the Company will bear certain registration expenses. No
underwriter is being utilized in connection with the
Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE
COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD
NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. IN
ADDITION, HOLDERS OF THE NEW NOTES FOLLOWING THE EXCHANGE
OFFER SHALL BE PROHIBITED FROM SELLING THE NEW NOTES TO NON-
INSTITUTIONAL BUYERS IN THE STATES OF ALABAMA, CALIFORNIA
AND WISCONSIN IN THE ABSENCE OF REGISTRATION OF THE NEW
NOTES (OR A VALID EXEMPTION THEREFROM) UNDER THE SECURITIES
LAWS OF SUCH STATES.
The Old Notes were issued originally in both global
form (the "Global Old Note") and in the form of 36 physical
certificates. The Global Old Note was deposited with, or on
behalf of, DTC, as the initial depository with respect to
the Old Notes (in such capacity, the "Depository"). The
Global Old Note is registered in the name of Cede, as
nominee of DTC, and beneficial interests in the Global Old
Note are shown on, and transfers thereof are effected only
through, records maintained by the Depository and its
participants. The use of the Global Old Note to represent
certain of the Old Notes permits the Depository's
participants, and anyone holding a beneficial interest in an
Old Note registered in the name of such a participant, to
transfer interests in the Old Notes electronically in
accordance with the Depository's established procedures
without the need to transfer a physical certificate. Except
as provided below, the New Notes will also be issued
initially as a note in global form (the "Global New Note,"
and together with the Global Old Note, the "Global Notes")
and deposited with, or on behalf of, the Depository.
Notwithstanding the foregoing, holders of Old Notes that
were held, at any time, by a person that is not a qualified
institutional buyer under Rule 144A (a "QIB"), and any
Holder that is not a QIB that exchanges Old Notes in the
Exchange Offer, will receive the New Notes in certificated
form and is not, and will not be, able to trade such
securities through the Depository unless the New Notes are
resold to a QIB. After the initial issuance of the Global
New Note, New Notes in certificated form will be issued in
exchange for a holder's proportionate interest in the Global
New Note only as set forth in the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION 4
PROSPECTUS SUMMARY 6
RISK FACTORS 13
THE EXCHANGE OFFER 18
CAPITALIZATION 25
SELECTED CONSOLIDATED FINANCIAL DATA 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 28
BUSINESS 36
MANAGEMENT 47
CERTAIN TRANSACTIONS 49
PRINCIPAL STOCKHOLDERS 52
DESCRIPTION OF NEW NOTES 54
CERTAIN U.S. FEDERAL TAX CONSEQUENCES 79
PLAN OF DISTRIBUTION 81
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 82
LEGAL MATTERS 82
EXPERTS 82
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1
AVAILABLE INFORMATION
The Company has filed a registration statement on Form
S-4 (together with any amendments thereto, the "Registration
Statement") with the Commission under the Securities Act
with respect to the New Notes. This Prospectus, which
constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement
and reference is made to the Registration Statement and the
exhibits and schedules thereto for further information with
respect to the Company and the New Notes offered hereby.
This Prospectus contains summaries of the material terms and
provisions of certain documents and in each instance
reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such summary is
qualified in its entirety by such reference.
The Company is subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith
files reports, proxy and information statements and other
information with the Commission. In addition, upon
registration of the Rio Guarantee in connection with the
Exchange Offer, Guarantor will also be subject to the
reporting requirements of the Exchange Act so long as the
Rio Guarantee remains outstanding. Upon effectiveness of
the Registration Statement, Guarantor will be subject to the
reporting requirements of the Exchange Act and the
interpretations issued thereunder by the Commission staff.
The Registration Statement (including the exhibits and
schedules thereto) and the periodic reports, proxy and
information statements and other information may be
inspected and copied at the public reference facilities of
the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the
following Regional Offices: 7 World Trade Center, 14th
Floor, New York, New York 10048 and Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can be obtained from the Commission
by mail at prescribed rates. Requests should be directed to
the Commission's Public Reference Section, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
<PAGE>
20549. The Company's Common Stock, $.01 par value per share
(the "Common Stock") is listed on the Nasdaq National Market
and traded under the symbol "RIOH." Material filed by the
Company can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street N.W.,
Washington, D.C. 20006. In addition, for so long as any of
the Notes remains outstanding, the Company has agreed to
make available to any prospective purchaser of the Notes or
beneficial owner of the Notes in connection with any sale
thereof the information required by Rule 144A(d)(4) under
the Securities Act.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE
DOCUMENTS ARE AVAILABLE UPON REQUEST FROM JAMES A. BARRETT,
JR., PRESIDENT, RIO HOTEL & CASINO, INC., 3700 W. FLAMINGO
ROAD, LAS VEGAS, NEVADA 89103. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NO
LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
ALL DOCUMENTS FILED BY THE COMPANY AND THE GUARANTOR
PURSUANT TO SECTION 13(A), 13(C), 14 OR 15(D) OF THE
EXCHANGE ACT SUBSEQUENT TO THE DATE OF THIS PROSPECTUS AND
PRIOR TO THE TERMINATION OF THE EXCHANGE OFFER TO WHICH THIS
PROSPECTUS RELATES SHALL BE DEEMED TO BE INCORPORATED BY
REFERENCE HEREIN AND TO BE A PART HEREOF FROM THE DATE OF
THE FILING OF SUCH REPORTS AND DOCUMENTS. THE COMPANY WILL
PROVIDE A COPY OF ANY AND ALL OF SUCH DOCUMENTS (EXCLUSIVE
OF EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE THEREIN) WITHOUT CHARGE TO EACH
PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST TO JAMES A. BARRETT, JR., PRESIDENT
AND CHIEF OPERATING OFFICER, 3700 W. FLAMINGO ROAD, LAS
VEGAS, NEVADA 89103, (702) 252-7733.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE
INDICATED, OR THE CONTEXT OTHERWISE REQUIRES, THE TERM
"COMPANY" REFERS TO RIO HOTEL & CASINO, INC., A NEVADA
CORPORATION, AND ITS SUBSIDIARIES. SEE "RISK FACTORS" FOR
CERTAIN FACTORS A PROSPECTIVE INVESTOR SHOULD CONSIDER IN
EVALUATING THE COMPANY BEFORE PURCHASING THE NOTES.
THE COMPANY
Rio Hotel & Casino, Inc. owns and operates the
country's only all-suite hotel-casino, the Rio Suite Hotel &
Casino (the "Rio") in Las Vegas, Nevada. The Rio, a 21-story
hotel utilizing a colorful Brazilian Carnival and rain
forest theme, features 1,410 suites, 89,000 square feet of
casino space, eight restaurants, 2,200 slot machines, 65
table games and other related amenities. The Rio is situated
on a 45-acre elevated site near the Las Vegas Strip and
adjacent to a major exit from Interstate 15, the freeway
linking Las Vegas with Southern California. The Company
markets to the middle to upper-middle income segments of
gaming customers, both local residents and Las Vegas
visitors. Rio's unique all-suite concept, diverse high
quality dining and easy access provide an attractive
alternative to the Strip and a fun and comfortable
environment in which to enjoy gaming, dining and
entertainment.
The Rio originally opened in January 1990 with 424
suites and 44,000 square feet of casino space. Within the
past three years the Rio has been expanded to its present
configuration in three major phases in accordance with its
original master plan. The Company is currently in the
process of adding 144 additional suites, expanding its
meeting room facilities, doubling the capacity of its Buzios
Restaurant and adding a new health club and salon facility
("the "Phase IV Expansion"). 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. In addition, the Company announced in May
1995 that its Board of Directors had approved a three-phased
expansion and development plan to be implemented over the
next several years. The plan consists of an expansion of the
Rio (the "Phase V Expansion"), acquisition of approximately
22 acres of land adjacent to the Rio to be master-planned
for the development of another hotel-casino property and the
purchase of approximately 64 acres southeast of Las Vegas
for possible future hotel-casino development.
The approximately $185 million Phase V Expansion is
planned to include 120,000 square feet of public space
containing a casino expansion with 600 slot machines and 27
table games, new retail and entertainment space, and
additional restaurants, as well as an expanded pool and
beach area and additional parking facilities. The Phase V
Expansion will center around a dramatic 40-story hotel tower
containing approximately 1,000 new suites located
immediately southeast of the existing towers. The public
area expansion will be based on a Brazilian Carnival Mardi
Gras theme and will include a variety of owned and leased
retail and restaurant outlets. Construction is scheduled to
commence in September 1995, subject to governmental
approvals and finalization of financing, with opening
expected to occur in the spring of 1997.
The Company's business strategy focuses on attracting
and fostering repeat business from customers in the middle
to upper-middle income segments of the local resident and
tourist markets. To implement its business strategy, the
Company capitalizes on its unique all-suite concept,
strategic location and fun-filled Brazilian Carnival theme.
The Company strives to provide a quality, affordable gaming
and entertainment experience in order to generate high
customer satisfaction and loyalty. The Company's location at
Interstate 15 and Flamingo Road helps to attract both of its
target market segments. The Rio's value-priced suites
provide an attractive alternative to conventional Las Vegas
rooms for visitors who desire to avoid the crowds and
congestion of the Strip. Rio's suites offer approximately
50% more space than other comparably priced Las Vegas hotel
rooms. Management believes that it must offer consistent
quality, a comfortable and fun atmosphere and, most
importantly, friendly service at affordable prices to
provide a high value experience to its customers.
The success of the Company's business strategy is
evidenced by the large number of awards the Rio has
received. In March 1995, the Rio won recognition through 10
"Best of Las Vegas" awards in an annual survey published by
Nevada's largest daily newspaper. Among others, these
distinctions included: "Best Buffet," "Best Italian
<PAGE>
Restaurant," "Best Coffee Shop," "Best Steakhouse,"
"Friendliest Employees" and "Most Efficient Service." In
addition, the Rio received recognition in the 1995 Zagat
Hotel and Restaurant Survey for "Best Rooms," "Best Dining,"
"Best Service" and "Best Overall" in Las Vegas. These awards
exemplify the Company's reputation for quality and value.
ISSUANCE OF THE OLD NOTES
The outstanding 10 5/8% Senior Subordinated Notes Due
2005 (the "Old Notes") were sold by the Company to Salomon
Brothers Inc and Montgomery Securities (the "Initial
Purchasers") on July 21, 1995 (the "Closing Date") pursuant
to the Purchase Agreement dated July 18, 1995 (the "Purchase
Agreement"), among the Company, the Guarantor, and the
Initial Purchasers. The Initial Purchasers subsequently
resold the Old Notes in reliance on Rule 144A under the
Securities Act and other available exemptions under the
Securities Act. The Company and the Initial Purchasers also
entered into the Registration Agreement dated July 18, 1995
(the "Registration Agreement"), among the Company, the
Guarantor, and the Initial Purchasers, pursuant to which the
Company granted certain registration rights for the benefit
of the holders of the Old Notes. The Exchange Offer is
intended to satisfy certain of the Company's obligations
under the Registration Agreement with respect to the Old
Notes. See "The Exchange Offer - Purpose and Effect."
THE EXCHANGE OFFER
The Exchange Offer The Company is offering upon the terms and
subject to the conditions set forth herein
and in the accompanying letter of
transmittal (the "Letter of Transmittal"),
to exchange $1,000 in principal amount of
its 10 5/8% Senior Subordinated Notes Due
2005 (the "New Notes," with the Old Notes
and the New Notes collectively referred to
herein as the "Notes") for each $1,000 in
principal amount of the outstanding Old
Notes (the "Exchange Offer"). As of the
date of this Prospectus, $100 million in
aggregate principal amount of the Old Notes
is outstanding, the maximum amount
authorized by the Indenture for all Notes.
As of July 31, 1995, there were 37
registered Holders of the Old Notes, Cede &
Co. ("Cede"), which held the Old Notes for
its participants, and holders of 36 physical
certificates. See "The Exchange Offer -
Terms of the Exchange Offer."
Expiration Date 5:00 p.m., New York City time, on
_______________, 1995 as the same may be
extended. See "The Exchange Offer -
Expiration Date; Extensions; Amendments."
Termination of Certain Rights Pursuant to the Registration Agreement and
the Old Notes, Holders of Old Notes have
rights to receive special interest upon the
nonoccurrence of certain events. If a
registration statement for the Exchange
Offer is not (i) filed within 45 days after
the date of original issuance of the Old
Notes or (ii) declared effective within 120
days after the date of original issuance of
the Old Notes, special interest will accrue
and be payable semiannually until such time
as a registration statement for the Exchange
Offer is filed or becomes effective, as the
case may be. In addition, if an exchange
offer is not consummated or a resale shelf
registration statement is not declared
effective within 150 days after the date of
original issuance of the Notes, special
interest will accrue and be payable
semiannually until such time as an exchange
offer is consummated or a resale shelf
registration is declared effective, as the
case may be. Holders of New Notes, and,
upon consummation of the Exchange Offer or
declaration of effectiveness of a shelf
<PAGE>
registration statement provided it remains
effective for the requisite period of time,
Holders of Old Notes, will no longer be
entitled to special interest upon
consummation of the Exchange Offer.
Accrued Interest on the Old
Notes The New Notes will bear interest at a rate
equal to 10 5/8% per annum from and
including their date of issuance. Holders
whose Old Notes are accepted for exchange
will have the right to receive interest
accrued thereon from the date of their
original issuance or the last Interest
Payment Date, as applicable, to, but not
including, the date of issuance of the New
Notes, such interest to be payable with the
first interest payment on the New Notes.
Interest on the Old Notes accepted for
exchange, which accrued at the rate of
10 5/8% per annum, will cease to accrue on,
the day prior to the issuance of the New
Notes.
Procedures for Tendering Old
Notes Unless a tender of Old Notes is effected
pursuant to the procedures for book-entry
transfer as provided herein, each Holder
desiring to accept the Exchange Offer must
complete and sign the Letter of Transmittal,
have the signature thereon guaranteed if
received by the Letter of Transmittal, and
mail or deliver the Letter of Transmittal,
together with the Old Notes or a Notice of
Guaranteed Delivery and any other required
documents (such as evidence of authority to
act, if the Letter of Transmittal is signed
by someone acting in a fiduciary or
representative capacity), to the Exchange
Agent (as defined) at the address set forth
on the back cover page of this Prospectus
prior to 5:00 p.m., New York City time, on
the Expiration Date. Any Beneficial Owner
(as defined) of the Old Notes whose Old
Notes are registered in the name of a
nominee, such as a broker, dealer,
commercial bank or trust company and who
wishes to tender Old Notes in the Exchange
Offer, should instruct such entity or person
to promptly tender on such Beneficial
Owner's behalf. See "The Exchange Offer -
Procedures for Tendering Old Notes."
Consequences of Failure to
Tender Old Notes by Expiration
Date Holders who do not tender their Old Notes by
the Expiration Date will be unable to
exchange Old Notes for New Notes pursuant to
the Exchange Offer. Holders who acquired
Old Notes pursuant to the Offering and who
do not participate in the Exchange Offer can
require the Company to file as promptly as
practicable after so requested a shelf
registration statement relating to the Old
Notes and cause such shelf registration
statement to be declared effective by the
150th day following original issuance of the
Old Notes. Old Notes held by Holders who do
not tender their Old Notes pursuant to the
Exchange Offer or who do not request that a
shelf registration statement be filed with
respect to such Old Notes may not be offered
or sold in the United States or to, or for
the account or benefit of, U.S. persons
except in accordance with an applicable
exemption from the registration requirements
thereof.
Guaranteed Delivery Procedures Holders of Old Notes who wish to tender
their Old Notes and (i) whose Old Notes are
not immediately available or (ii) who cannot
deliver their Old Notes or any other
documents required by the Letter of
Transmittal to the Exchange Agent prior to
the Expiration Date (or complete the
procedure for book-entry transfer on a
timely basis), may tender their Old Notes
according to the guaranteed delivery
procedures set forth in the Letter of
Transmittal. See "The Exchange Offer -
<PAGE>
Guaranteed Delivery Procedures."
Acceptance of Old Notes and
Delivery of New Notes Upon satisfaction or waiver of all
conditions of the Exchange Offer, the
Company will accept any and all Old Notes
that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will
be delivered promptly after acceptance of
the Old Notes. See "The Exchange Offer -
Acceptance of Old Notes for Exchange;
Delivery of New Notes."
Withdrawal Rights Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time,
on the Expiration Date. See "The Exchange
Offer - Withdrawal Rights."
The Exchange Agent IBJ Schroder Bank & Trust Company is the
exchange agent (in such capacity, the
"Exchange Agent"). The address and
telephone number of the Exchange Agent are
set forth in "The Exchange Offer - The
Exchange Agent; Assistance."
Fees and Expenses All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration Agreement
will be borne by the Company. The Company
will also pay certain transfer taxes
applicable to the Exchange Offer. See "The
Exchange Offer - Fees and Expenses."
Resales of the New Notes Based on an interpretation by the staff of
the Commission set forth in no-action
letters issued to third parties, the Company
believes that New Notes issued pursuant to
the Exchange Offer to a Holder in exchange
for Old Notes may be offered for resale,
resold and otherwise transferred by such
Holder (other than (i) a broker-dealer who
purchased Old Notes directly from the
Company for resale pursuant to Rule 144A
under the Securities Act or any other
available exemption under the Securities
Act, or (ii) a person that is an affiliate
of the Company (within the meaning of Rule
405 under the Securities Act), without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that the Holder is
acquiring the New Notes in the ordinary
course of business and is not participating,
and has no arrangement or understanding with
any person to participate, in a distribution
of the New Notes. Each broker-dealer that
receives New Notes for its own account in
exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a
result of market-making or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with any
resale of such New Notes. See "The Exchange
Offer-Resales of the New Notes" and "Plan of
Distribution."
DESCRIPTION OF NEW NOTES
The form and terms of the New Notes will be identical
in all material respects to the form and terms of the Old
Notes, except that (i) the New Notes have been registered
under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) holders of
the New Notes will not be entitled to special interest and
(iii) holders of the New Notes will not be, and upon
consummation of the Exchange Offer, Holders of the Old Notes
will no longer be, entitled to certain rights under the
Registration Agreement intended for the holders of
unregistered securities, except in certain limited
circumstances. See "Exchange Offer-Termination of Certain
Rights." The Exchange Offer shall be deemed consummated
<PAGE>
upon the occurrence of the delivery by the Company to the
Registrar under the Indenture (as defined) in the same
aggregate principal amount as the aggregate principal amount
of Old Notes that were tendered by holders thereof pursuant
to the Exchange Offer. See "The Exchange Offer -
Termination of Certain Rights" and "- Procedures for
Tendering Old Notes;" and "Description of New Notes."
New Notes $100 million in aggregate principal
amount of 10 5/8% Senior Subordinated
Notes Due 2005 (the "New Notes").
Maturity Date July 15, 2005.
Interest Payment Dates January 15 and July 15, commencing
January 15, 1996.
Rio Guarantee The New Notes are unconditionally
guaranteed (the "Rio Guarantee") on a
senior subordinated basis by Rio
Properties, Inc. ("Rio Properties" or the
"Guarantor"), the Company's principal
operating subsidiary.
Subordination of Notes The New Notes are subordinated in right
of payment to all existing and future
Senior Indebtedness (as defined) of the
Company and are structurally subordinated
to all existing and future indebtedness
and other liabilities (including trade
payables) of the Company's subsidiaries.
As of July 31, 1995, after giving effect
to the Offering and application of the
net proceeds thereof, there were no
current liabilities of the Company's
subsidiaries outstanding ranking senior
to the Notes. There was outstanding no
indebtedness or other liabilities of the
Company's subsidiaries ranking senior to
the New Notes. The Company has
outstanding no senior subordinated
indebtedness or Senior Indebtedness
(excluding the Company's guarantee of the
Rio Bank Loan). See "Description of New
Notes - Subordination of Notes."
Subordination of Rio Guarantee The Rio Guarantee is subordinated in
right of payment to all existing and
future Senior Indebtedness of Guarantor
(as defined) and is structurally
subordinated to all existing and future
indebtedness and other liabilities
(including trade payables) of the
Guarantor's subsidiaries. As of July 31,
1995, there was outstanding no Senior
Indebtedness of Guarantor to which the
Rio Guarantee would be subordinated.
Assuming the subsequent incurrence by the
Guarantor of the full $175 million of its
available bank borrowings under the Rio
Bank Loan, the Rio Guarantee would be
subordinated to that amount of Senior
Indebtedness of Guarantor. There are no
significant outstanding liabilities of
subsidiaries of the Guarantor. See
"Description of New Notes - Subordination
of Rio Guarantee."
Mandatory Sinking Fund None.
Optional Redemption The New Notes may be redeemed at the
option of the Company, in whole or in
part, at any time on or after July 15,
2000, at the redemption prices set forth
herein, plus accrued and unpaid interest,
if any, through the redemption date. See
"Description of New Notes - Optional
Redemption."
Regulatory Redemption If any holder or beneficial owner of New
Notes is required to be found suitable
and is not found suitable by the Nevada
Gaming Commission (the "Nevada
Commission"), (i) the holder shall, upon
request of the Company, dispose of such
holder's New Notes within 30 days or
<PAGE>
within the time prescribed by the Nevada
Commission, whichever is earlier, or (ii)
the Company may, at its option, redeem
the holder's New Notes at the lesser of
(x) the principal amount thereof, (y) the
Current Market Price (as defined) or (z)
the price at which the New Notes were
acquired by the holder, without, in any
case, accrued and unpaid interest to the
date of the finding of unsuitability by
the Nevada Commission, unless payment of
such interest is permitted by the Nevada
Commission. See "Business - Regulation
and Licensing" and "Description of New
Notes - Mandatory Disposition or
Redemption Pursuant to Gaming Laws."
Change of Control Upon a Change of Control (as defined),
each holder of New Notes will have the
right to require the Company to
repurchase all or part of such holder's
New Notes at a price equal to 101% of the
aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to
the date of repurchase. The Company's
obligation to repurchase the New Notes is
guaranteed on a senior subordinated basis
by the Guarantor. See "Description of New
Notes - Change of Control."
Principal Covenants The indenture pursuant to which the New
Notes will be issued (the "Indenture")
contains certain covenants that, among
other things, limit the ability of the
Company and its Restricted Subsidiaries
(as defined) to incur additional
indebtedness, pay dividends or make other
distributions, make investments,
repurchase subordinated obligations or
capital stock, create certain liens
(except, among others, liens securing
Senior Indebtedness), enter into certain
transactions with affiliates, sell assets
of the Company or its subsidiaries, issue
or sell subsidiary stock, create or
permit to exist restrictions on
distributions from subsidiaries, or enter
into certain mergers and consolidations.
See "Description of New Notes - Certain
Covenants."
Risk Factors See "Risk Factors" for a discussion of
certain factors that should be considered
by Holders of the Old Notes.
Absence of a Public Market
for the New Notes The New Notes are a new issue of
securities with no established market.
Accordingly, there can be no assurance as
to the development or liquidity of any
market for the New Notes. The Initial
Purchasers have advised the Company that
they currently intend to make a market in
the New Notes. However, neither Initial
Purchaser is obligated to do so, and any
market making with respect to the New
Notes may be discontinued at any time
without notice. The Company does not
intend to apply for listing of the New
Notes on a securities exchange or to seek
the admission thereof to trading in the
Nasdaq National Market.
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
THE SUMMARY CONSOLIDATED FINANCIAL DATA SET FORTH BELOW
ARE QUALIFIED IN THEIR ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND THE
CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES THERETO AND
OTHER FINANCIAL AND STATISTICAL INFORMATION INCLUDED
ELSEWHERE IN THIS PROSPECTUS. OPERATING RESULTS FOR THE SIX
MONTHS ENDED JUNE 30, 1995 ARE UNAUDITED AND ARE NOT
NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED
FOR FUTURE PERIODS, INCLUDING FOR THE ENTIRE YEAR ENDED
DECEMBER 31, 1995.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992 1991 1990
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net Revenues $ 91,784 $ 70,217 $146,299 $109,982 $ 82,475 $ 65,784 $ 55,884
Operating profit (loss) 17,738 13,545 25,802 20,232 12,296 4,884 (1,921)
Interest (expense), net (2,783) (846) (1,798) (1,767) (3,643) (5,295) (4,834)
Net income (loss) 9,426 8,759 15,966 10,649 6,308 119 (3,847)
Ratio of earnings to fixed
charges (1) 5.68x 15.34x 10.64x 8.80x 3.19x 1.13x 0.48x
OTHER DATA: (2)
EBITDA (3) $ 24,845 $ 18,789 $ 36,667 $ 27,777 $ 18,110 $ 9,769 $ 2,530
Average daily room
rate (4) $ 73.00 $ 62.20 $ 63.80 $ 62.60 $ 64.09 $ 67.22 $ 73.40
Average daily hotel
occupancy 95.7% 96.3% 95.9% 96.8% 96.5% 93.5% 78.3%
Hotel Rooms 1,410 861 861 861 424 424 424
Casino square footage 89,000 79,000 89,000 79,000 54,000 44,000 44,000
Slot Machines 2,163 1,945 2,200 1,950 1,450 1,043 850
Table games 65 44 53 44 31 31 42
Restaraunt seats 2,440 2,254 2,440 1,843 1,209 955 937
<CAPTION>
JUNE 30, 1995
AS
ACTUAL ADJUSTED(5)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents $20,669 $27,254
Total assets 273,690 283,475
Long-term debt, including current maturities 90,215 100,000 (6)
Stockholders' equity 156,631 156,631
<FN>
(1) The ratio of earnings to fixed charges is determined
by dividing (i) earnings before income taxes and fixed
charges by (ii) fixed charges. Fixed charges consist of
total interest expense.
(2) Other data relating to hotel rooms, casino square
footage, slot machines, table games and restaurant seats
represent amounts as of the end of the period.
(3) For purposes of the financial information contained
in this Prospectus, EBITDA consists of operating profit
(loss) plus depreciation and amortization. EBITDA should
not be construed as an alternative to operating profit
(as determined in accordance with generally accepted
accounting principles) as an indicator of the Company's
operating performance, or as an alternative to cash flow
from operating activities (as determined in accordance
with generally accepted accounting principles) as a
measure of liquidity. This line item enables comparison
of the Company's performance with the performance of
other companies that report EBITDA.
(4) Average daily room rate figures are actual rates
expressed in dollars.
(5) As adjusted amounts give effect to the Offering and
the application of the net proceeds therefrom as if such
transaction had been consummated on June 30, 1995. See
"Capitalization."
(6) In addition, the Company will have $175 million of
borrowing availability under the Rio Bank Loan (as
defined).
</FN>
</TABLE>
<PAGE>
RISK FACTORS
HOLDERS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS
IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS BEFORE MAKING AN INVESTMENT IN THE NEW NOTES
OFFERED HEREBY.
LEVERAGE AND DEBT SERVICE
Upon the closing of the Offering, the Company had
significant interest expense and principal repayment
obligations under the Old Notes and the Company's other
indebtedness. To the extent that borrowings are drawn under
the Company's $175 million revolving credit facility (the
"Rio Bank Loan"), Rio Properties, Inc. ("Rio Properties"),
the Company's principal operating subsidiary, will have
significant interest expense and principal repayment
obligations thereunder, which obligations are guaranteed by
the Company. As of June 30, 1995, after giving effect to
the Offering and the application of the net proceeds
thereof, the Company's consolidated long-term indebtedness
was $100 million, representing the Offering, and
stockholders' equity was $156.6 million. Assuming the
subsequent incurrence by Rio Properties of the full $175
million of its available bank borrowings under the Rio Bank
Loan, the Company's consolidated long-term indebtedness was
$275 million. See "Capitalization." The Company will be
entirely dependent upon distributions from Rio Properties to
meet its interest expense and principal repayment
obligations under the Notes. The Rio Bank Loan includes
covenants significantly restricting the amount of funds
which may be advanced by Rio Properties to the Company and
the amount of principal or interest that may be repaid on
any intercompany loans, and includes a covenant requiring
the Company to maintain a certain consolidated tangible net
worth which effectively limits the amount of funds which may
be distributed by Rio Properties to the Company in the form
of dividends. The Rio Bank Loan also contains numerous
financial and operating covenants, including requirements
that Rio Properties and the Company, on a consolidated
basis, satisfy certain financial ratios and maintain certain
specified levels of net worth, as well as limitations on the
incurrence of additional indebtedness. The Indenture also
contains certain covenants, including a limitation on the
incurrence of additional Indebtedness; however, the
Indenture permits the Company to incur certain financing
indebtedness, up to $175 million under the Rio Bank Loan and
certain other indebtedness without satisfying the coverage
ratio contained in such covenants. See "Management's
Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources" and
"Description of Notes - Certain Covenants."
The ability of the Company to meet its debt service
requirements and the ability of Rio Properties and the
Company to comply with such covenants will be dependent upon
future performance, which is subject to financial, economic,
competitive, regulatory and other factors affecting the
Company and its subsidiaries, many of which are beyond their
control. There can be no assurance that the proposed Phase V
Expansion will be completed or commence operations at all.
While the Company expects that its operating cash flow will
be sufficient to cover its expenses, including interest
costs, there can be no assurance with respect thereto. If
the Company is unable to generate sufficient cash flow, it
could be required to adopt one or more alternatives, such as
reducing or delaying planned expansions or capital
expenditures, selling or leasing assets, restructuring debt
or obtaining additional equity capital. There can be no
assurance that any of these alternatives could be effected
on satisfactory terms, and dependence on alternative sources
of funds could impair the Company's competitive position and
reduce its future cash flow. See "Management's Discussion
and Analysis of Financial Condition and Results of
Operations."
SUBORDINATION
The operations of the Company are conducted through Rio
Properties, and, therefore, the Company is dependent on the
earnings and cash flow of Rio Properties and its
subsidiaries to meet its debt obligations, including its
obligations with respect to the Notes. The assets of Rio
Properties constitute all the operating assets of the
Company. The Rio Guarantee is subordinated to all existing
and future Senior Indebtedness of Guarantor (as defined) and
is structurally subordinated to all existing and future
indebtedness and other liabilities (including trade
payables, if any) of subsidiaries of Rio Properties. As of
July 31, 1995, there was outstanding no Senior Indebtedness
of Guarantor to which the Rio Guarantee would be
subordinated. Assuming the subsequent incurrence by the
Guarantor of the full $175 million of its available bank
borrowings under the Rio Bank Loan, the Rio Guarantee would
be subordinated to that amount of Senior Indebtedness of
Guarantor. There are no significant outstanding liabilities
of subsidiaries of the Guarantor.
<PAGE>
The New Notes will be subordinated to all existing and
future Senior Indebtedness of the Company, including the
Company's guarantee of the Rio Bank Loan. Except for a
limitation on the aggregate amount of consolidated
indebtedness that the Company and its Restricted
Subsidiaries may incur, the Indenture does not limit the
ability of the Company to incur additional Senior
Indebtedness, transfer assets to and among its subsidiaries
or incur or permit its subsidiaries to incur secured
indebtedness. In the event of bankruptcy, liquidation or
reorganization of the Company, the assets of the Company
will be available to make payments on the New Notes only
after all Senior Indebtedness of the Company has been paid
in full, and there may not be sufficient assets remaining to
pay amounts due on the New Notes. The Company's guarantee of
the Rio Bank Loan provides that the Company waives all right
to subrogation and reimbursement from Rio Properties. The
Rio Bank Loan is secured by substantially all of the assets
of Rio Properties, the subsidiary through which the Company
owns and operates the Rio. Under certain circumstances,
holders of Senior Indebtedness of the Company may prohibit
payments on the New Notes. In addition, in the event of any
distribution or payment of assets of the Company in any
foreclosure, dissolution, winding up, liquidation or
reorganization, holders of secured indebtedness will have a
secured prior claim to the assets of the Company which
constitutes their collateral. See "Description of New Notes
- Subordination of Notes."
The Rio Guarantee of the New Notes will be subordinated
to all existing and future Senior Indebtedness of Guarantor,
including the Rio Bank Loan. Except for a limitation on the
aggregate amount of consolidated indebtedness that the
Company and its Restricted Subsidiaries (including Rio
Properties) may incur, the Indenture does not limit the
ability of the Guarantor to incur additional Senior
Indebtedness of Guarantor, transfer assets to and among its
subsidiaries or incur or permit its subsidiaries to incur
secured indebtedness. In the event of bankruptcy,
liquidation or reorganization of the Guarantor, the assets
of the Guarantor will be available to make payments under
the Rio Guarantee only after all Senior Indebtedness of
Guarantor has been paid in full, and there may not be
sufficient assets remaining to pay amounts due under the Rio
Guarantee. The Rio Bank Loan is secured by substantially all
of the assets of Rio Properties. Under certain
circumstances, holders of Senior Indebtedness of Guarantor
may prohibit payments under the Rio Guarantee. In addition,
in the event of any distribution or payment of assets of the
Guarantor in any foreclosure, dissolution, winding up,
liquidation or reorganization, holders of secured
indebtedness will have a secured prior claim to the assets
of the Guarantor which constitute their collateral. See
"Description of New Notes -Subordination of Rio Guarantee."
In the event of a Change of Control, each holder of the
New Notes will have the right to require the Company to
repurchase such New Notes at 101% of par, plus accrued and
unpaid interest. Such right is subordinated to the same
extent as the New Notes, as described above. The Company's
obligation to repurchase the New Notes upon a Change of
Control is guaranteed by the Guarantor pursuant to the Rio
Guarantee. Such guarantee is subordinated to the same extent
as the Rio Guarantee generally, also as described above. A
Change of Control constitutes an Event of Default under the
Rio Bank Loan. In order for the Company to repurchase the
New Notes as a result of a Change of Control, it will be
necessary for the Company either to obtain the consent of
the lenders under the Rio Bank Loan or to repay the Rio Bank
Loan in full. These requirements and the subordination of
the New Notes will limit the ability of the Company to
repurchase the New Notes. See "Description of New
Notes-Change of Control."
CONSTRUCTION AND DEVELOPMENT RISKS
Construction projects such as the Phase IV and Phase V
Expansions and any future development projects entail
significant risks, including management's ability to control
and manage such projects effectively, shortages of materials
or skilled labor, unforeseen engineering, environmental or
geological problems, work stoppages, weather interference,
floods and unanticipated cost increases. No assurance can be
given that the budgeted costs of the Company's current and
future projects will not be exceeded or that any such
projects will commence operations within the contemplated
schedules, if at all. In addition, the scope of the
licenses, permits and authorizations required to construct
and open a new facility or expand an existing facility are
extensive, and the failure to obtain such licenses, permits
and authorizations could prevent or delay the completion of
construction or opening of all or part of such facilities,
affect the design of features of the project or increase
completion costs.
Construction on the proposed Phase V Expansion is
expected to begin in September 1995, and the expansion is
expected to open in the spring of 1997. Although designed to
minimize business interruptions, the Phase V Expansion will
require, from time to time, portions of the casino and
parking areas to be temporarily closed and will disrupt
<PAGE>
portions of existing hotel-casino operations to some extent.
Any significant disruption in hotel or casino operations
could have a material adverse effect on the Company's
business and results of operations. Additionally, as the
Phase IV Expansion, the Phase V Expansion and other future
expansion projects are completed, the Company will need to
hire additional qualified employees. Such additional hiring
may become more challenging for the Company due to a
potential shortage of qualified employees caused by newly
opened hotel-casinos in Las Vegas and in other
jurisdictions. If existing funds are insufficient to
complete construction of the Phase V Expansion, the
Company's ability to obtain sufficient funds will depend on
future operating results of the Company and the Company's
ability to obtain funds from other sources. However, the New
Notes will contain significant restrictions on the ability
of the Company to incur additional indebtedness, and the Rio
Bank Loan will contain restrictions on the ability of Rio
Properties to incur additional indebtedness.
Development of new facilities under the Company's
master plan will require the Company to make a substantial
capital investment and, depending on timing, may require
additional debt or equity financing. There can be no
assurance that the cash flow generated by the operations of
the Company or any other new venture will be sufficient to
service any additional debt which may be incurred in
connection therewith. There can be no assurance that
additional financing can be obtained which is acceptable to
the Company. Further, there can be no assurance that any
expansion projects, including the Phase IV and Phase V
Expansions, will add proportionately to the Company's
results of operations. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations -
Liquidity and Capital Resources."
COMPETITION
Intense competition exists in the gaming industry, and
many of the Company's competitors have significantly greater
resources than the Company. The Rio faces competition from
all other casinos and hotels in the Las Vegas area,
including competitors located on the Las Vegas Strip, on the
Boulder Highway and in downtown Las Vegas. Such competition
is primarily targeted toward local residents and repeat
visitors. The Company also faces competition from non-hotel
gaming facilities targeted toward local residents. In recent
months, several of the Company's direct competitors have
opened new hotel-casinos or have commenced or completed
major expansion projects, and other hotel-casinos and
expansions are planned. In addition, four new mega-resorts
on the Strip have been announced and are expected to be
completed within the next two years. Major expansions or
enhancements of existing properties or the construction of
new properties by competitors could have a material adverse
effect on the Company's business.
To a lesser extent, the Rio competes with hotel-casinos
located in the Laughlin and Reno-Lake Tahoe areas of Nevada
and in Atlantic City, New Jersey. The Company also competes
with state-sponsored lotteries, on- and off-track wagering,
card parlors, riverboat and Native American gaming ventures
and other forms of legalized gaming in the United States, as
well as with gaming on cruise ships and international gaming
operations. In addition, certain states have recently
legalized, and several other states are currently
considering legalizing, casino gaming in specific
geographical areas within those states. The development of
casinos, lotteries and other forms of gaming in other
states, particularly areas close to Nevada, such as
California, could adversely affect the Company's operations.
For a more comprehensive discussion of competitive
factors affecting the Company's operations, see "Business -
Competition."
RELIANCE ON CERTAIN MARKETS
The Rio draws a substantial number of customers from
throughout the United States, particularly California.
Adverse economic conditions could have a material adverse
effect on the Company's operating results. In addition, an
increase in fuel costs or transportation prices, a decrease
in airplane seat availability or a deterioration of
relations with tour and travel agents, as they affect travel
to Las Vegas and the Company's facilities, could materially
adversely affect the Company's results.
<PAGE>
In addition, a significant component of the Rio's
customers are Las Vegas residents. Although management
believes that the population and economic strength of Las
Vegas will continue to grow, there can be no assurance with
respect thereto. See "Business."
CONTROL BY EXISTING STOCKHOLDERS, CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Officers and directors of the Company beneficially own
or control approximately 24.9% of the outstanding Common
Stock, including 23.7% owned by Anthony A. Marnell II,
Chairman of the Board of Directors. Two other stockholders
and former members of the Board of Directors control
approximately 11.2% in the aggregate of such Common Stock.
Such individuals, if acting together, would be able to
effectively elect the entire Board of Directors as well as
approve most matters submitted to the stockholders for
approval. See "Principal Stockholders."
Anthony A. Marnell II, Chtd. ("Marnell Chartered"), an
architectural firm, and Marnell Corrao Associates, Inc.
("Marnell Corrao Associates"), a construction company, each
of which is controlled by Mr. Marnell, have provided and
continue to provide all project design and construction
services for the Company. Potential conflicts of interest
between the Company and Marnell Chartered or Marnell Corrao
Associates could arise (for example, if a request for a
change order is presented affecting a construction contract
price). To address such issues, the Company's Board of
Directors utilizes an Audit Committee, consisting of three
non-employee directors that, among other things, reviews and
reports to the full Board of Directors on certain issues
that involve potential conflicts of interest. Pursuant to
the Indenture, any such proposed transaction of $1 million
or more must be approved by the Independent Directors, as
defined in the Indenture. See "Certain Transactions" and
"Description of New Notes - Certain Covenants - Limitations
on Transactions with Affiliates."
Mr. Marnell and James A. Barrett, Jr., President of the
Company, are each officers of Marnell Corrao Associates.
Mr. Marnell is an officer of Marnell Chartered. In these
capacities, Messrs. Marnell and Barrett each devote
substantial time and attention to the affairs of these
enterprises. Messrs. Marnell and Barrett are also involved
in other businesses and investments.
DEPENDENCE ON KEY PERSONNEL
Many executive responsibilities within the Company have
been assigned to a relatively small number of individuals,
most of whom have been employed by the Company for a
substantial period of time. The loss of the services of
certain key individuals could have a material adverse effect
on the Company. See "Management - Directors and Executive
Officers."
NEVADA GAMING REGULATIONS
The Nevada State Gaming Control Board and the Nevada
Commission and other local, county and state regulatory
agencies may, in compliance with certain statutory and
regulatory procedures, limit, condition, suspend or revoke a
license or approval to own the stock of the Company for any
cause deemed reasonable by such licensing agency.
Substantial fines for violations of gaming laws or
regulations may be levied against the Company and persons
involved. In addition, the Company could be subject to fines
for each violation of the gaming laws. Furthermore, a
supervisor could be appointed by a state court at the
request of the Nevada Commission to operate any
nonrestricted gaming establishment operated by the Company
if the licenses held by the Company are revoked, suspended
or otherwise lapse. In such extraordinary circumstances,
earnings generated by gaming operations during a
supervisor's appointment (except for reasonable rental
value) could be forfeited to the State of Nevada. Suspension
or revocation of any of the licenses or the appointment of a
supervisor by the Nevada Commission would have a material
adverse effect on the business of the Company. See "Business
- Regulation and Licensing."
<PAGE>
REGULATORY REDEMPTION
The Nevada Commission may, in its discretion, require
the holder of any security of a corporation registered under
the Nevada Gaming Control Act and the Rules and Regulations
promulgated thereunder (collectively the "Nevada Act"), such
as the New Notes, to file applications, be investigated and
be found suitable to own the security of a registered
corporation. If a beneficial holder of New Notes is required
by the Nevada Commission to be found suitable, the holder
shall apply for a finding of suitability within 30 days
after the Nevada Commission request. The applicant for a
finding of suitability must pay all costs of such
investigation. If the Nevada Commission determines that a
person is unsuitable to own such security, then, pursuant to
the regulations of the Nevada Commission, the registered
corporation can be sanctioned, including by the loss of its
approvals, if, without the prior approval of the Nevada
Commission, it (i) pays to the unsuitable person any
dividend, interest, or any distribution whatsoever, (ii)
recognizes any voting rights by such unsuitable person in
connection with such securities, (iii) pays the unsuitable
person remuneration in any form or (iv) makes any
payment to the unsuitable person by way of principal,
redemption, conversion, exchange, liquidation or similar
transaction. Further, if the holder or beneficial owner is
required to be found suitable and is not found suitable by
the Nevada Commission, (i) the holder shall, upon request of
the Company, dispose of such holder's New Notes within 30
days or within the time prescribed by the Nevada Commission,
whichever is earlier, or (ii) the Company may, at its
option, redeem the holder's New Notes at the lesser of (x)
the principal amount thereof, (y) the Current Market Price
or (z) the price at which the New Notes were acquired by the
holder, without, in any case, accrued and unpaid interest to
the date of the finding of unsuitability by the Nevada
Commission, unless payment of such interest is permitted by
the Nevada Commission. See "Business - Regulation and
Licensing" and "Description of New Notes-Mandatory
Disposition or Redemption Pursuant to Gaming Laws."
ABSENCE OF PUBLIC TRADING MARKET
The New Notes constitute a new issue of securities,
have no established trading market and may not be widely
distributed. The Initial Purchasers have informed the
Company that they currently intend to make a market in the
New Notes as permitted by applicable laws and regulations;
however, the Initial Purchasers are not obligated to do so
and either Initial Purchaser may discontinue market making
at any time without notice. The Company does not intend to
list the New Notes on any national securities exchange or to
seek the admission thereof to trading in the Nasdaq National
Market, and there can be no assurance as to the development
of any market or liquidity of any market that may develop
for the New Notes. If a market does develop, the price of
the New Notes may fluctuate and liquidity may be limited. If
a market for the New Notes does not develop, purchasers may
be unable to resell such securities for an extended period
of time, if at all.
ENVIRONMENTAL RISKS AND REGULATION
As is the case with any owner or operator of real
property, the Company is subject to a variety of federal,
state and local governmental regulations relating to the
use, storage, discharge, emission and disposal of hazardous
materials. Failure to comply with environmental laws could
result in the imposition of severe penalties or restrictions
on operations by government agencies or courts of law which
could adversely affect operations. The Company does not have
environmental liability insurance to cover such events.
The Company has in the past engaged in real estate
development projects and has owned several parcels of real
estate. While the Company is unaware of any significant
environmental hazard on properties it owns or has owned, in
the event of any discovery of such hazard, severe penalties,
including the costs of remediation, could be sought against
the Company.
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company to the Initial
Purchasers on July 18, 1995, pursuant to the Purchase
Agreement. The Initial Purchasers subsequently resold the
Old Notes in reliance on Rule 144A under the Securities Act.
The Company and the Initial Purchasers also entered into the
Registration Agreement, pursuant to which the Company
agreed, with respect to the Old Notes and subject to the
Company's determination that the Exchange Offer is permitted
under applicable law, to (i) cause to be filed, on or prior
to September 4, 1995, a registration statement with the
Commission under the Securities Act concerning the Exchange
Offer, (ii) use all reasonable efforts (a) to cause such
registration statement to be declared effective by the
Commission as soon as practicable and (b) to cause the
Exchange Offer to remain open for a period of not less than
30 days (or longer if required by applicable law). This
Exchange Offer is intended to satisfy the Company's exchange
offer obligations under the Registration Agreement.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject
to the conditions set forth herein and in the accompanying
Letter of Transmittal, to exchange $1,000 in principal
amount of the outstanding Old Notes. The Company will
accept for exchange any and all Old Notes that are validly
tendered on or prior to 5:00 p.m., New York City time.
Tenders of the Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes
being tendered for exchange. However, the Exchange Offer is
subject to certain customary conditions which may be waived
by the Company, and to the terms and provisions of the
Registration Agreement. See "Conditions of the Exchange
Offer."
Old Notes may be tendered only in multiples of $1,000.
Subject to the foregoing, Holders may tender less than the
aggregate principal amount represented by the Old Notes held
by them, provided that they appropriately indicate this fact
on the Letter of Transmittal accompanying the tendered Old
Notes (or so indicate pursuant to the procedures for book-
entry transfer).
As of the date of this Prospectus, $100 million in
aggregate principal amount of the Old Notes were
outstanding, the maximum amount authorized by the Indenture
for all Notes. As of July 31, 1995, there were 37
registered holders of the Old Notes, Cede, which held the
Old Notes for its participants, and holders of 36 physical
certificates. Solely for reasons of administration (and for
no other purpose), the Company has fixed the close of
business on __________, 1995, as the record date (the
"Record Date") for purposes of determining the persons to
whom this Prospectus and the Letter of Transmittal will be
mailed initially. Only a Holder of the Old Notes (or such
Holder's legal representative or attorney-in-fact) may
participate in the Exchange Offer. There will be no fixed
record date for determining Holders of the Old Notes
entitled to participate in the Exchange Offer. The Company
believes that, as of the date of this Prospectus, no such
Holder, other than Marnell Corrao Associates, is an
affiliate (as defined in Rule 405 under the Securities Act)
of the Company.
The Company shall be deemed to have accepted validly
tendered Old Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent. The
Exchange Agent will act as agent for the tendering Holders
of Old Notes and for the purposes of receiving the New Notes
from the Company.
If any tendered Old Notes are not accepted for exchange
because of an invalid tender, the occurrence of certain
other events set forth herein or otherwise, certificates for
any such unaccepted Old Notes will be returned, without
expense, to the tendering Holder thereof as promptly as
practicable after the Expiration Date.
<PAGE>
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be _____________, 1995 at
5:00 p.m. New York City time, unless the Company, in its
sole discretion, extends the Exchange Offer, in which case
the Expiration Date shall be the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will
notify the Exchange Agent of any extension by oral or
written notice and will make a public announcement thereof,
each prior to 10:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion,
(i) to delay accepting any Old Notes, (ii) to extend the
Exchange Offer, and (iii) to amend the terms of the Exchange
Offer in any manner. If the Exchange Offer is amended in a
manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendments
by means of a prospectus supplement that will be distributed
to the registered Holders of the Old Notes.
TERMINATION OF CERTAIN RIGHTS
The Registration Agreement provides for the payment of
special interest to Holders of the Old Notes upon the
nonoccurrence of certain events. If (i) a registration
statement ("Exchange Offer Registration Statement") for the
Exchange Offer is not filed with the Commission on or prior
to the 45th day following the date of original issuance of
the Old Notes, (ii) the Exchange Offer Registration
Statement is not declared effective prior to the 120th day
following the date of original issuance of the Old Notes or
(iii) the Exchange Offer is not consummated or a shelf
registration statement ("Shelf Registration Statement") with
respect to the Notes is not declared effective on or prior
to the 150th day following the date of original issuance of
the Old Notes, interest will accrue (in addition to stated
interest on the Old Notes) from and including the next day
following each of (a) such 45-day period in the case of
clause (i) above, (b) such 120-day period in the case of
clause (ii) above, and (c) such 150-day period in the case
of clause (iii) above. In each case such additional
interest (the "Special Interest") will be payable in cash
semiannually in arrears each January 15, and July 15,
commencing January 15, 1996, at a rate per annum equal to
0.50% of the principal amount of the Old Notes. Upon
(1) the filing of the Exchange Offer Registration Statement
after the 45-day period described in clause (i) above,
(2) the effectiveness of the Exchange Offer Registration
Statement after the 120-day period described in clause (ii)
above or (3) the consummation of the Exchange Offer or the
effectiveness of a Shelf Registration Statement, as the case
may be, after the 150-day period described in clause (iii)
above, the Special Interest payable on the Old Notes from
the date of such filing, effectiveness, or consummation, as
the case may be, will cease to accrue and all accrued and
unpaid Special Interest as of the occurrence of (1), (2) or
(3) shall be paid to the Holders of the Old Notes promptly
thereafter. Holders of New Notes, and, upon consummation of
the Exchange Offer or declaration of effectiveness of a
Shelf Registration Statement provided such Shelf
Registration Statement remains effective for the requisite
period of time, Holders of Old Notes, will not be eligible
to receive Special Interest.
ACCRUED INTEREST ON THE OLD NOTES
The New Notes will bear interest at a rate equal to 10
5/8% per annum from and including their date of issuance.
Holders whose Old Notes are accepted for exchange will have
the right to receive interest accrued thereon from the date
of their original issuance or the last Interest Payment
Date, as applicable, to, but not including, the date of
issuance of the New Notes, such interest to be payable with
the first interest payment on the New Notes. Interest on
the Old Notes accepted for exchange, which interest accrued
at the rate of 10 5/8% per annum, will cease to accrue on
the day prior to the issuance of the New Notes. See
"Description of New Notes-Principal, Maturity and Interest."
PROCEDURES FOR TENDERING OLD NOTES
The tender of a Holder's Old Notes as set forth below
and the acceptance thereof by the Company will constitute a
binding agreement between the tendering Holder and the
Company upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a Holder who wishes
<PAGE>
to tender Old Notes for exchange pursuant to the Exchange
Offer must transmit such Old Notes, together with a properly
completed and duly executed Letter of Transmittal, including
all other documents required by such Letter of Transmittal,
to the Exchange Agent at the address set forth on the back
cover page of this Prospectus prior to 5:00 p.m., New York
City time, on the Expiration Date. THE METHOD OF DELIVERY
OF OLD NOTES , LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF
SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE
USED. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT
THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY.
Any financial institution that is a participant in
DTC's Book-Entry Transfer Facility System may make book-
entry delivery of the Old Notes by causing DTC to transfer
such Old Notes into the Exchange Agent's account in
accordance with DTC's procedures for such transfer. In
connection with a book-entry transfer, a Letter of
Transmittal need not be transmitted to the Exchange Agent,
provided that the book-entry transfer procedure must be
complied with prior to 5:00 p.m., New York City time, on the
Expiration Date.
Each signature on a Letter of Transmittal or a notice
of withdrawal, as the case may be, must be guaranteed unless
the Old Notes surrendered for exchange pursuant hereto are
tendered (i) by a registered holder of the Old Notes who has
not completed either the box entitled "Special Exchange
Instructions" or the box entitled "Special Delivery
Instructions" in the Letter of Transmittal, or (ii) by an
Eligible Institution (as defined). In the event that a
signature on a Letter of Transmittal or a notice of
withdrawal, as the case may be, is required to be
guaranteed, such guarantee must be by a firm which is a
member of a registered national securities exchange or the
National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or
correspondent in the United States or otherwise be an
"eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (collectively, "Eligible
Institutions"). If the Letter of Transmittal is signed by a
person other than the registered Holder of the Old Notes,
the Old Notes surrendered for exchange must either (i) be
endorsed by the registered Holder, with the signature
thereon guaranteed by an Eligible Institution, or (ii) be
accompanied by a bond power, in satisfactory form as
determined by the Company in its sole discretion, duly
executed by the registered holder, with the signature
thereon guaranteed by an Eligible Institution. The term
"registered holder" as used herein with respect to the Old
Notes means any person in whose name the Old Notes are
registered on the books of the Registrar.
All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of
the Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination
shall be final and binding. The Company reserves the
absolute right to reject any and all Old Notes not properly
tendered and to reject any Old Notes the Company's
acceptance of which might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the
absolute right to waive any defects or irregularities or
conditions of the Exchange Offer as to particular Old Notes
either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to
tender Old Notes in the Exchange Offer). The interpretation
of the terms and conditions of the Exchange Offer (including
the Letter of Transmittal and the instructions thereto) by
the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection
with tenders of Old Notes for exchange must be cured within
such period of time as the Company shall determine. The
Company will use reasonable efforts to give notification of
defects or irregularities with respect to tenders of Old
Notes for exchange but shall not incur any liability for
failure to give such notification. Tenders of the Old Notes
will not be deemed to have been made until such
irregularities have been cured or waived.
If any Letter of Transmittal, endorsement, bond power,
power of attorney or any other document required by the
Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when
signing, and, unless waived by the Company, proper evidence
satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
Any beneficial owner of the Old Notes (a "Beneficial
Owner") whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender Old Notes in the Exchange
Offer should contact such registered holder promptly and
instruct such registered holder to tender on such Beneficial
<PAGE>
Owner's behalf. If such Beneficial Owner wishes to tender
directly, such Beneficial Owner must, prior to completing
and executing the Letter of Transmittal and tendering Old
Notes, make appropriate arrangements to register ownership
of the Old Notes in such Beneficial Owner's name.
Beneficial Owners should be aware that the transfer of
registered ownership may take considerable time.
By tendering, each registered holder will represent to
the Company that, among other things (i) the New Notes to be
acquired in connection with the Exchange Offer by the Holder
and each Beneficial Owner of the Old Notes are being
acquired by the Holder and each Beneficial Owner in the
ordinary course of business of the Holder and each
Beneficial Owner, (ii) the Holder and each Beneficial Owner
are not participating, do not intend to participate, and
have no arrangement or understanding with any person to
participate, in the distribution of the New Notes, (iii) the
Holder and each Beneficial Owner acknowledge and agree that
any person participating in the Exchange Offer for the
purpose of distributing the New Notes must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale
transaction of the New Notes acquired by such person and
cannot rely on the position of the staff of the Commission
set forth in no-action letters that are discussed herein
under "Resales of New Notes," (iv) that if the Holder is a
broker-dealer that acquired Old Notes as a result of market-
making or other trading activities, it will deliver a
prospectus in connection with any resale of New Notes
acquired in the Exchange Offer, (v) the Holder and each
Beneficial Owner understand that a secondary resale
transaction described in clause (iii) above should be
covered by an effective registration statement containing
the selling security holder information required by Item 507
of Regulation S-K of the Commission, and (vi) neither the
Holder nor any Beneficial Owner is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company
except as otherwise disclosed to the Company in writing. In
connection with a book-entry transfer, each participant will
confirm that it makes the representations and warranties
contained in the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and
(i) whose Old Notes are not immediately available or
(ii) who cannot deliver their Old Notes or any other
documents required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date (or complete the
procedure for book-entry transfer on a timely basis), may
tender their Old Notes according to the guaranteed delivery
procedures set forth in the Letter of Transmittal. Pursuant
to such procedures: (i) such tender must be made by or
through an Eligible Institution and a Notice of Guaranteed
Delivery (as defined in the Letter of Transmittal) must be
signed by such Holder, (ii) on or prior to the Expiration
Date, the Exchange Agent must have received from the Holder
and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name
and address of the Holder, the certificate number or numbers
of the tendered Old Notes, and the principal amount of
tendered Old Notes, stating that the tender is being made
thereby and guaranteeing that, within five business days
after the date of delivery of the Notice of Guaranteed
Delivery, the tendered Old Notes, a duly executed Letter of
Transmittal and any other required documents will be
deposited by the Eligible Institution with the Exchange
Agent, and (iii) such properly completed and executed
documents required by the Letter of Transmittal and the
tendered Old Notes in proper form for transfer (or
confirmation of a book-entry transfer of such Old Notes into
the Exchange Agent's account at DTC) must be received by the
Exchange Agent within five business days after the
Expiration Date. Any Holder who wishes to tender Old Notes
pursuant to the guaranteed delivery procedures described
above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery and Letter of Transmittal
relating to such Old Notes prior to 5:00 p.m., New York City
time, on the Expiration Date.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all the conditions to
the Exchange Offer, the Company will accept any and all Old
Notes that are properly tendered in the Exchange Offer prior
to 5:00 p.m. New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be
delivered promptly after acceptance of the Old Notes. For
purposes of the Exchange Offer, the Company shall be deemed
to have accepted validly tendered Old Notes, when, as, and
if the Company has given oral or written notice thereof to
the Exchange Agent.
<PAGE>
In all cases, issuances of New Notes for Old Notes that
are accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent
of such Old Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents (or
of confirmation of a book-entry transfer of such Old Notes
into the Exchange Agent's account at DTC); provided,
however, that the Company reserves the absolute right to
waive any defects or irregularities in the tender or
conditions of the Exchange Offer. If any tendered Old Notes
are not accepted for any reason, such unaccepted Old Notes
will be returned without expense to the tendering Holder
thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn by delivery
of a written notice to the Exchange Agent, at its address
set forth on the back cover page of this Prospectus, at any
time prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must
(i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the
Old Notes to be withdrawn (including the certificate number
or numbers and principal amount of such Old Notes, as
applicable), (iii) be signed by the Holder in the same
manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including
any required signature guarantees) or be accompanied by a
bond power in the name of the person withdrawing the tender,
in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered Holder,
with the signature thereon guaranteed by an Eligible
Institution together with the other documents required upon
transfer by the Indenture, and (iv) specify the name in
which such Old Notes are to be re-registered, if different
from the Depositor, pursuant to such documents of transfer.
All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be
determined by the Company, in its sole discretion. The Old
Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer.
Any Old Notes which have been tendered for exchange but
which are withdrawn will be returned to the Holder thereof
without cost to such Holder as soon as practicable after
withdrawal. Properly withdrawn Old Notes may be retendered
by following one of the procedures described under "The
Exchange Offer - Procedures for Tendering Old Notes" at any
time on or prior to the Expiration Date.
CONSEQUENCES OF FAILURE TO TENDER OLD NOTES
Holders who do not tender their Old Notes by the
Expiration Date will be unable to exchange Old Notes for New
Notes pursuant to the Exchange Offer. Holders who acquired
Old Notes pursuant to the Offering and who do not
participate in the Exchange Offer can require the Company to
file as promptly as practicable after so requested a shelf
registration statement relating to the Old Notes and cause
such shelf registration statement to be declared effective
by the 150th day following original issuance of the Old
Notes. Old Notes held by Holders who do not tender their
Old Notes pursuant to the Exchange Offer or who do not
request that a shelf registration statement be filed with
respect to such Old Notes may not be offered or sold in the
United States or to, or for the account or benefit of, U.S.
persons except in accordance with an applicable exemption
from the registration requirements thereof.
THE EXCHANGE AGENT; ASSISTANCE
IBJ Schroder Bank & Trust Company is the Exchange
Agent. All tendered Old Notes, executed Letters of
Transmittal and other related documents should be directed
to the Exchange Agent. Questions and requests for
assistance and requests for additional copies of the
Prospectus, the Letter of Transmittal and other related
documents should be addressed to the Exchange Agent as
follows:
By Hand or Overnight Courier:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Securities Processing Window, SC1
<PAGE>
By Registered or Certified Mail:
IBJ Schroder Bank & Trust Company
Post Office Box 84
Bowling Green Station
New York, NY 10274-0084
Attention: Reorganization Operations
Department
By Facsimile: (212) 858-2611 Raymond Liszewski
Confirm by Telephone: (212) 858-2103
FEES AND EXPENSES
All expenses incident to the Company's consummation of
the Exchange Offer and compliance with the Registration
Agreement will be borne by the Company, including without
limitation: (i) all registration and filing fees and
expenses (including filings made with the National
Association of Securities Dealers, Inc., (including, if
applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel, as may be required
by the rules and regulations of the National Association of
Securities Dealers, Inc.)), (ii) all fees and expenses of
compliance with federal securities or state, or other
jurisdictions, securities laws, (iii) all expenses of
printing (including printing certificates for the New Notes
and prospectuses), messenger and delivery services and
telephone, (iv) all fees and disbursements of counsel for
the Company and the fees of counsel for the Initial
Purchasers with respect to the registration statement and
any shelf registration statement, (v) all application and
filing fees in the event the New Notes are listed on a
national securities exchange or automated quotation system,
and (vi) all fees and disbursements of independent certified
public accountants of the Company (including the expenses of
any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its internal
expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the
fees and expenses of any person, including special experts,
retained by the Company.
The Company has not retained any dealer-manager in
connection with the Exchange Offer and will not make any
payments to brokers, dealers or others soliciting acceptance
of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-
pocket expenses in connection therewith.
The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the
Exchange Offer. If, however, a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to
the Exchange Offer, then the amount of any such transfer
taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption
is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such
tendering holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying
value as the Old Notes, as reflected in the Company's
accounting records on the date of the exchange.
Accordingly, no gain or loss will be recognized by the
Company for accounting purposes. The expenses of the
Exchange Offer will be amortized over the term of the New
Notes.
RESALES OF THE NEW NOTES
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to third
parties, the Company believes that the New Notes issued
pursuant to the Exchange Offer to a Holder in exchange for
Old Notes may be offered for resale, resold and otherwise
transferred by such Holder (other than (i) a broker-dealer
<PAGE>
who purchased Old Notes directly from the Company for resale
pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act, or (ii) a
person that is an affiliate of the Company within the
meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the Holder
is acquiring the New Notes in the ordinary course of
business and is not participating, and has no arrangement or
understanding with any person to participate, in the
distribution of the New Notes. However, if any Holder
acquires New Notes in the Exchange Offer for the purpose of
distributing or participating in a distribution of the New
Notes, such Holder cannot rely on the position of the staff
of the Commission enunciated in Morgan Stanley & Co.,
Incorporated (available June 5, 1991) and Exxon Capital
Holdings Corporation (available April 13, 1989), or
interpreted in the Commission's letter to Shearman and
Sterling (available July 2, 1993), or similar no-action or
interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction, unless an
exemption from registration is otherwise available. Each
broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired
by such broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes.
See "Plan of Distribution."
<PAGE>
CAPITALIZATION
The following table sets forth the cash position and
capitalization of the Company at June 30, 1995 as adjusted
to reflect the Company's issuance of the Old Notes. This
table should be read in conjunction with the more detailed
information and financial statements appearing elsewhere in
this Prospectus.
JUNE 30, 1995
ACTUAL AS ADJUSTED
(IN MILLIONS)
Cash and cash equivalents $20.7 $27.3
Long-term debt:
Rio Bank Loan $90.0 $ - (1)
Other long-term debt 0.2 -
Old Notes (2) - 100.0
Total long-term debt 90.2 100.0
Stockholders' equity 156.6 156.6
Total capitalization $246.8 $256.6
(1) The Company will have $175 million of borrowing
availability under the Rio Bank Loan.
(2) Reflects the effects of the receipt of the proceeds
from the issuance of Old Notes on July 21, 1995.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes certain selected
consolidated financial data, which should be read in
connection with the Company's Consolidated Financial
Statements and the Notes thereto included elsewhere herein
and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The selected
consolidated financial data as of and for the years ended
December 31, 1990 and 1991 and as of December 31, 1992 have
been derived from the Company's audited financial
statements. The selected consolidated financial data as of
and for the years ended December 31, 1993 and 1994 and for
the year ended December 31, 1992 have been derived from the
Company's audited financial statements included elsewhere
herein. The selected consolidated financial data presented
below as of and for the months ended June 30, 1994 and 1995
are derived from unaudited consolidated financial
statements. The unaudited financial statements include all
adjustments (consisting of only normal recurring
adjustments) which the Company considers necessary for a
fair presentation of the Company's financial position and
results of operations for these periods. Operating results
for the six months ended June 30, 1995 are not necessarily
indicative of the results that may be expected for future
periods, including for the entire year ending December 31,
1995.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Year Ended December 31,
1995 1994 1994 1993 1992 1991 1990
(Unaudited) (Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Income
Data:
Net revenues:
Casino $49,968 $ 42,188 $ 87,165 $ 71,296 $ 56,524 $ 43,710 $ 38,246
Non-casino 41,816 28,029 59,134 38,686 25,951 22,074 17,638
91,784 70,217 146,299 109,982 82,475 65,784 55,884
Operating expenses:
Casino 21,934 18,263 38,696 31,178 27,145 24,421 24,168
Non-casino 31,811 23,499 50,386 35,027 23,669 19,237 15,817
Selling, general and
administrative 13,194 9,666 20,550 16,001 13,551 12,356 13,370
Depreciation and
amortization 7,107 5,244 10,864 7,544 5,814 4,886 4,450
Operating profit (loss) 17,738 13,545 25,802 20,232 12,296 4,884 (1,921)
Interest (expense), net (2,679) (803) (1,798) (1,767) (3,643) (5,295) (4,834)
Other income, net -- 967 1,140 -- 100 1,200 1,466
Income tax (provision)
benefit (5,633) (4,950) (9,178) (6,785) (2,996) (408) 452
Income (loss) from
continuing operations 9,426 8,759 15,966 11,680 5,757 381 (4,837)
Minority interest in
consolidated
partnership (income)
loss -- -- -- -- (242) (33) 2,763
Nonrecurring items (1) -- -- -- (1,031) 793 (229) (1,773)
Net income (loss) $ 9,426 $ 8,759 $ 15,966 $ 10,649 $ 6,308 $ 119 $ (3,847)
Ratio of earnings to
fixed charges (2) 5.68x 15.34x 10.64x 8.80x 3.19x 1.13x 0.48x
Other Data (3):
EBITDA (4) $ 24,845 $ 18,789 $ 36,667 $ 27,777 $ 18,110 $ 9,769 $ 2,530
Average daily room rate
(5) $ 73.00 $ 62.20 $ 63.80 $ 62.60 $ 64.09 $ 67.22 $ 73.40
Average daily hotel
occupancy 95.7% 96.3% 95.9% 96.8% 96.5% 93.5% 78.3%
Hotel rooms 1,410 861 861 861 424 424 424
Casino square footage 89,000 79,000 89,000 79,000 54,000 44,000 44,000
Slot machines 2,163 1,945 2,200 1,950 1,450 1,043 850
Table games 65 44 53 44 31 31 42
Restaurant seats 2,440 2,254 2,440 1,843 1,209 955 937
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994 1994 1993 1992 1991 1990
(Unaudited) (Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents $ 20,669 $ 63,938 $ 76,426 $ 55,785 $ 42,623 $ 11,388 $ 6,802
Total assets 273,690 245,083 301,165 218,050 149,518 112,267 135,644
Long-term debt,
including current
maturities 90,215 85,174 125,179 65,184 53,212 57,019 84,165
Minority interest -- -- -- -- -- 1,635 2,649
Stockholders' equity 156,631 140,317 147,839 129,838 86,872 47,731 42,849
<FN>
(1) Nonrecurring items include: income (loss) from
operations of discontinued real estate and development
segment, net of income taxes; extraordinary items; loss
from early extinguishment of debt; and cumulative effects
of accounting changes. See Consolidated Financial
Statements and the Notes thereto.
(2) The ratio of earnings to fixed charges is determined by
dividing (i) earnings before income taxes and fixed
charges by (ii) fixed charges. Fixed charges consist of
total interest expense.
(3) Other data relating to hotel rooms, casino square
footage, slot machines, table games and restaurant seats
represent amounts as of the end of the period.
(4) For purposes of the financial information contained in
this Prospectus, EBITDA consists of operating profit
(loss) plus depreciation and amortization. EBITDA should
not be construed as an alternative to operating profit
(as determined in accordance with generally accepted
accounting principles) as an indicator of the Company's
operating performance, or as an alternative to cash flow
from operating activities (as determined in accordance
with generally accepted accounting principles) as a
measure of liquidity. This line item enables comparison
of the Company's performance with the performance of
other companies that report EBITDA.
(5) Average daily room rate figures are actual rates
expressed in dollars.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Rio's revenues and profits are derived largely from
its gaming activities, although the Company also seeks to
maximize revenues from food and beverage, lodging,
entertainment and retail sales. The Rio generally views its
non-casino related operations as complementary to its core
casino operations. The Rio utilizes entertainment primarily
as a casino marketing tool. The Rio expects to maintain a
food and beverage pricing structure designed to maximize
casino customer foot traffic. Such a structure tends to
result in an operating loss for the food and beverage
department, although specific bars or restaurants may report
operating profits.
The Company's sole business is the operation of the
Rio, which opened in January 1990. The Rio was originally
owned and operated by a limited partnership (the "Rio
Partnership") formed by the Company in 1988. Through a
series of transactions involving an exchange of preferred
stock for partnership interests and later a merger of Rio
Partnership into Rio Properties, the Company increased its
ownership of the Rio from 34.4% in 1988 to 100% in 1992.
Prior to 1990, the Company's operations consisted of real
estate development and management. In December 1991, the
Company sold all real estate assets and operations not used
or held for the operation or expansion of the Rio. In 1995,
as part of the Company's three-phased expansion and
development plan, the Company entered into agreements for
the purchase of approximately 22 acres adjacent to the Rio
and approximately 64 acres southeast of Las Vegas, both of
which may be developed into future hotel-casino projects.
Liquidity and Capital Resources
At June 30, 1995, the Company had working capital of
$12.7 million compared with $50.2 million at December 31,
1994. Cash and cash equivalents were $20.7 million at
June 30, 1995 compared with $76.4 million at December 31,
1994. At June 30, 1995, the Company had $35.0 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 first six months of
1995 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 and the $20 million Phase IV Expansion.
During the first six months of 1995, cash provided by
operating activities was $20.1 million. Investing
activities used $39.9 million of the Company's cash during
the first six months of 1995. Approximately $23.3 million
of such expenditures were related to the Company's Phase III
Expansion and approximately $3.7 million were related to the
Company's Phase IV Expansion. During the first quarter of
1995, the Company acquired an approximate five acre site
adjacent to the Rio site, on which a former commercial
warehouse is located, at a purchase price of $3.2 million
(net of credit for profit participation from the seller to
which the Company was entitled and net of rental proceeds
during the term of the escrow). During the second quarter
of 1995, the Company acquired approximately 64 acres of land
southeast of Las Vegas at a purchase price of $5.7 million
(net of credit for profit participation from the seller to
which the Company was entitled). The 64-acre site and
additional land acquisitions are part of the Company's
recently announced three phase expansion and development
plan discussed below. During the first six months of 1995,
the Company spent approximately $5.2 million toward the
acquisition of certain real property adjacent to the Rio.
The balance of cash used in investing activities 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. No open market
repurchases were made during the second quarter of 1995.
<PAGE>
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 July 1, 1995, the Company's capital commitments
include approximately $5.9 million for the remainder of the
Phase III Expansion, $16.3 million for the Phase IV
Expansion, and $15.1 million under commitments for the
purchase of real estate. 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, the Phase IV Expansion, and the real
estate purchase commitments.
The Rio Bank Loan was originally entered into on
July 15, 1993 in the amount of $65 million with a syndicate
of banks consisting of Bank of America National Trust
Savings and Association, Bank of America Nevada, Societe
Generale, NBD Bank, N.A., First Security Bank of Idaho,
N.A., First Interstate Bank of Nevada, N.A. and U.S. Bank of
Nevada. As a result of certain amendments, in December
1994, the Rio Bank Loan was increased to $125 million and,
in August 1995, it was increased to $175 million. As
amended, the Rio Bank Loan is a secured reducing revolving
credit facility to be used (a) to refinance the existing Rio
Bank Loan, (b) to finance the Phase V Expansion, (c) to
finance acquisition of land adjacent to the Rio for up to
$30 million, and (d) for general corporate purposes.
The Rio Bank Loan will mature on June 30, 2001 and will
bear interest based upon a "LIBOR Spread" of from 1% to 3%,
or a "Base Rate Spread" of from 0% to 2.0% based upon a
schedule determined with reference to Rio Properties'
"Funded Debt to EBIDTA Ratio." The "LIBOR Spread" is the
amount in excess of the applicable London interbank offer
rate ("LIBOR"). The "Base Rate Spread" is the amount in
excess of the applicable base rate, which is the rate per
annum equal to the higher of the reference rate as it is
publicly announced from time to time by Bank of America in
San Francisco or 0.50% per annum above the latest Federal
Funds rate. As amended, the Rio Bank Loan will also provide
for an unused facility fee ranging from 31.25 basis points
to 50.0 basis points depending upon the same Funded Debt to
EBIDTA ratio schedule utilized for the interest rate. The
Rio Bank Loan requires monthly payments of interest and will
require scheduled reductions of the maximum amount available
under the Rio Bank Loan commencing with a $10 million
reduction at December 31, 1997, $30 million reductions at
December 31, 1998 and December 31, 1999, a $40 million
reduction at December 31, 2000, a $32.5 million reduction at
March 31, 2001 and maturity at June 30, 2001.
To reduce the risks from interest rate fluctuations,
the Company has previously entered into interest rate swap
agreements in the amount of $20 million from September 30,
1994 through December 29, 1995 and $15 million from
December 29, 1995 through June 28, 1996. In August 1994,
the Company purchased a $40 million interest rate cap,
effective September 30, 1994, for a three-year term, which
provides for quarterly payments to the Company in the event
that three-month LIBOR exceeds 7% on any quarterly reset
date. The Company is exposed to credit risks in the event
of non-performance by the counterparties. However, the
Company does not anticipate non-performance by the
counterparties.
The Rio Bank Loan is secured by a first deed of trust
on the Rio Suite Hotel & Casino, a security interest in
substantially all of the other real and personal property of
Rio Properties, and a guaranty by Rio Hotel & Casino, Inc.,
including a pledge of the Company's stock in Rio Properties.
The Rio Bank Loan provides that Rio Hotel & Casino, Inc.
will be permitted to accumulate and hold up to $5 million in
assets which are not to be pledged for the benefit of the
Rio Bank Loan lenders.
The Rio Bank Loan contains certain customary financial
covenants to which the Company is subject. Those covenants
include a requirement that Rio Properties maintain a maximum
ratio of Total Debt to EBIDTA ranging from 3.0 to 1 at
December 31, 1995, increasing to 4.25 to 1 for the six month
period ending March 31, 1997 and decreasing to 3.0 to 1 at
December 31, 1997 and thereafter. Rio Properties must meet
a maximum ratio of Senior Debt to EBIDTA from 1.75 to 1
through December 31, 1995 up to 3.0 to 1 for the six months
ended March 31, 1997 and reducing to 1.75 to 1 at
December 31, 1997 and thereafter. Rio Properties must
maintain a maximum Interest Coverage Ratio of 2.0 to 1
through the fiscal quarter ending December 31, 1996,
reducing to 1.5 to 1 for the fiscal quarter ending
September 30, 1997, increasing to 2.0 to 1 for the fiscal
quarter ending March 31, 1998, increasing to 2.5 to 1 for
the fiscal quarter ending September 30, 1998 and increasing
to 3.0 to 1 for the fiscal quarter ending December 31, 1998
<PAGE>
and thereafter. Minimum Consolidated Tangible Net Worth
requirements must be maintained of $125 million, plus 75% of
accumulated net income after December 31, 1994 (not reduced
by any consolidated net losses) plus 100% of the net
proceeds of any equity offering by Rio Properties or the
Company. Maximum annual capital expenditures permitted
under the Rio Bank Loan are $7.5 million annually, plus the
amount available of unused capital expenditures from the
prior fiscal year, but not to exceed $12.5 million annually
in any event. Specific carve-outs of $200 million for the
Phase V Expansion and $30 million for the identified
adjacent Rio land acquisitions are incorporated in the Rio
Bank Loan. The Rio Bank Loan also provides for a basket of
$5 million for the repurchase of equity shares of the
Company through open market purchases over the life of the
Rio Bank Loan.
The Rio Bank Loan provides for an event of default if
Anthony A. Marnell II beneficially owns less than 10% of the
voting stock of the Company, any person holds or controls a
greater amount of the voting stock of the Company, any
person holds or controls a greater amount of voting stock
than the amount held or controlled by Anthony A. Marnell II,
or if either Anthony A. Marnell II or James A. Barrett, Jr.
cease to perform their functions as Chief Executive Officer
and President, respectively, for a period of 30 consecutive
days.
On July 18, 1995, the Company entered into the Purchase
Agreement with Salomon Brothers Inc and Montgomery
Securities (the "Initial Purchasers") for the sale by the
Company of $100 million on principal amount of the Old
Notes. The Old Notes were purchased by the Initial
Purchasers for resale to qualified institutional investors.
The net proceeds from the sale of the Old Notes
(approximately $96.8 million after the deduction of a 2.75%
discount to the Initial Purchasers and estimated offering
expenses of $450,000), borrowings under the Rio Bank Loan,
cash on hand and cash from operations will be used to
finance the Company's approximately $185 million Phase V
Expansion. Pending such use, the net proceeds will be used
to reduce amounts outstanding under the Rio Bank Loan.
The Old Notes were issued and the New Notes will be
issued under the Indenture dated July 21, 1995. The
following summary of certain provisions of the Indenture
does not purport to be complete and is subject to the
provisions of the Indenture and the Notes. Capitalized
terms not otherwise defined have the same meanings assigned
to them in the Indenture.
The Notes mature on July 15, 2005. Interest payment
dates under the Notes are January 15 and July 15, commencing
January 15, 1996. The Notes are unconditionally guaranteed
(the "Rio Guarantee") on a senior subordinated basis by Rio
Properties, Inc. (the "Guarantor"), the Company's principal
operating subsidiary. The Notes are subordinated in right
of payment to all existing and future Senior Indebtedness of
the Company and are structurally subordinated to all
existing and future indebtedness and other liabilities
(including trade payables) of the Company's subsidiaries.
The Rio Guarantee is subordinated in right of payment to all
existing and future Senior Indebtedness of Guarantor and is
structurally subordinated to all existing and future
indebtedness and other liabilities (including trade
payables) of the Guarantor's subsidiaries.
The Notes may be redeemed at the option of the Company,
in whole or in part, at any time on or after July 15, 2000,
at the redemption prices set forth in the Indenture, plus
accrued and unpaid interest, if any, through the redemption
date. The Notes will be redeemed from any Holder or
beneficial owner of the Notes which is required to be found
suitable and is not found suitable by the Nevada Gaming
Commission.
Upon a Change of Control of the Company (as defined in
the Indenture), each holder of Notes will have the right to
require the Company to repurchase all or part of such
holder's Notes at a price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase. The Company's obligation
to repurchase the Notes is guaranteed on a senior
subordinated basis by the Guarantor. The Indenture contains
certain covenants that, among other things, limit the
ability of the Company and its Restricted Subsidiaries to
incur additional indebtedness, pay dividends or make other
distributions, make investments, repurchase subordinated
obligations or capital stock, create certain liens (except,
among others, liens securing Senior Indebtedness), enter
into certain transactions with affiliates, sell assets of
the Company or its subsidiaries, issue or sell subsidiary
stock, create or permit to exist restrictions on
distributions from subsidiaries, or enter into certain
mergers and consolidations.
Pursuant to the Registration Agreement, the Company
will commence an exchange offer pursuant to an effective
registration statement or cause the Notes to be registered
under the Securities Act pursuant to a resale shelf
<PAGE>
registration statement. See "The Exchange Offer -
Termination of Certain Rights" for a description of
consequences of failing to timely meet the registration
requirements for the Notes.
On May 2, 1995, the Company announced a three-phase
expansion and development plan to grow the Company over the
next several years. The plan includes the Phase V Expansion
on the existing Rio site, acquisition of approximately 22
acres of land adjacent to the Rio site to be master-planned
for another hotel-casino property and the purchase of
approximately 64 acres southeast of Las Vegas for possible
future hotel-casino development.
The approximately $185 million Phase V Expansion is
planned to include 120,000 square feet of public space
containing a casino expansion with 600 slot machines and 27
table games, new retail and entertainment space, and
additional restaurants, as well as an expanded pool and
beach area and additional parking facilities. The Phase V
Expansion will center around a 40-story hotel tower
containing approximately 1,000 new suites located
immediately southeast of the existing towers. The public
area expansion will be based on a Brazilian Carnival Mardi
Gras theme and will include a variety of owned and leased
retail and restaurant outlets. Construction is scheduled to
commence in September 1995, subject to governmental
approvals and finalization of financing, with opening
expected to occur in the spring of 1997.
The $185 million Phase V Expansion will be financed
with the proceeds from the Old Notes, funds available under
the Rio Bank Loan, cash on hand and cash from operations.
For the Phase V Expansion, the Company has obtained a
capital expenditure limitation wavier under the Rio Bank
Loan.
As described above, the Company has acquired
approximately five acres of land adjacent to the Rio and has
entered into agreements to acquire an additional
approximately 17 acres of land adjacent to the Rio site.
The combined cost of the approximately 22 acres is
approximately $20.3 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 the
development of another hotel-casino, the size and timing of
which has not yet been determined.
As the third step in its expansion and development plan
to provide further growth for the Company, the Company
acquired approximately 64 acres (the "Old Vegas Site") of
land southeast of Las Vegas. The cost of the Old Vegas Site
was approximately $5.7 million (net of a credit for profit
participation from the seller to which the Company was
entitled) which the Company funded through cash on hand and
cash available through borrowings under the Rio Bank Loan.
The Old Vegas Site, already zoned for a hotel-casino, is
situated where Boulder Highway enters the Las Vegas valley
from Phoenix and Laughlin along U. S. Highway 93-95. The
timing of the proposed development of the Old Vegas Site has
not yet been determined.
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Operating profit for the Company increased to
$17.7 million in the first six months of 1995 from $13.5
million in the first six months of 1994, an increase of $4.2
million or 31%. Management believes that the improvement in
operating results was due to increased business levels
during the first six months 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 215 slot machines, 21 table
games, and additional restaurant capacity compared to the
first six months of 1994. Management believes that
operating efficiencies also improved from the first six
months of 1994 to the first six months of 1995 in the hotel
department.
Net revenues for the Company increased to $91.8 million
in the first six months of 1995 from $70.2 million in the
first six months of 1994, an increase of $21.6 million or
31%. Casino revenues increased to $50.0 million in the
first six months of 1995 from $42.2 million in the first six
months of 1994, an increase of $7.8 million or 18%. The
increase in casino revenues was due primarily to increases
in both slot machine revenues and table game revenues. Slot
machine revenues increased $4.1 million or 15% to $30.9
million in the first six months of 1995 from $26.8 million
in the first six months of 1994. The increase in slot
machine revenues resulted primarily from the addition of
over 215 slot machines in November 1994. Table game
revenues increased $3.9 million or 32% to $16.0 million in
the first six months of 1995 from $12.1 million in the first
six months of 1994. The increase in table game revenues
resulted primarily from the addition of 9 table games in the
<PAGE>
second half of 1994, the addition of 6 table games in
January 1995, and the addition of 6 tables games in April
1995.
Room revenues increased by $6.8 million or 73% to $16.2
million in the first six months of 1995 from $9.4 million in
the first six months 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 six months of 1995 compared to
the first six months 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 six months of 1994. Demand for the Rio's
suites remained high during the first six months of 1995
with a 96% occupancy, which was identical to the 96%
occupancy attained during the first six months of 1994. The
average number of suites available during the first six
months of 1995 was 1,273 compared to 861 during the first
six months of 1994.
Food and beverage revenues increased to $29.1 million
in the first six months of 1995 from $22.5 million in the
first six months of 1994, an increase of $6.6 million or
29%. 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; the successful
opening in June 1994 of Club Rio, a late-night dance club;
the successful completion in November 1994 of a 50%
expansion of the Carnival World Buffet to 980 seats; and
increased beverage sales as a result of increased gaming
customers all contributed to the increase in food and
beverage revenues.
The Company's operating margins were relatively
consistent during the first six months of 1995 compared to
the first six months of 1994. Operating profit as a
percentage of net revenues was 19% in both the first six
months of 1995 and 1994. Casino operating profit was 56%
during the first six months of 1995 compared to 57% during
the first six months of 1994. Food and beverage operating
profit was 18% during the first six months of 1995 compared
to 19% during the first six months of 1994. Hotel operating
profit was 70% during the first six months of 1995 compared
to 64% during the first six months 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 six
months of 1995 compared to the first six months of 1994.
Depreciation and amortization increased by $1.9 million
or 36% to $7.1 million in the first six months of 1995
compared to $5.2 million in the first six months of 1994.
This increase is attributable to depreciation expense from
various completed expansion projects such as the Company's
Eastside Expansion (as defined) and the Phase III Expansion
(as defined).
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, the Phase III Expansion,
and the Phase IV Expansion. Interest expense in the first
six months of 1995 was reduced by $359,689 because of
interest capitalized on amounts expended on the Phase III
Expansion project and the Phase IV Expansion project.
Interest expense in the first six months of 1994 was reduced
by $102,896 because of interest capitalized on amounts
expended on the Eastside Expansion project and the Phase III
Expansion project. Other income for the first six months of
1994 was a one-time gain of $966,510 from a profit
participation agreement on the sale by an affiliate of
certain real estate previously owned by the Company.
Net income for the first six months of 1995 was $9.4
million or $0.44 per share (fully diluted) compared to
$8.8 million or $0.40 per share (fully diluted) for the
first six months of 1994 as a result of the factors
discussed above.
YEARS ENDED DECEMBER 31, 1994 AND 1993
Operating profit for the Company increased to $25.8
million for 1994 from $20.2 million for 1993, an increase of
$5.6 million or 27.5%. Management believes that the
improvement in operating results was due to increased
business levels in 1994 as a result of having an additional
437 hotel suites for nine months of the year, an addition of
approximately 800 slot machines (approximately 500 slot
machines were added in December 1993 and approximately 300
<PAGE>
slot machines were added in November 1994), an addition of
approximately 13 table games and additional restaurant
capacity compared to 1993.
Net revenues for the Company increased to $146.3
million for 1994 from $110.0 million for 1993, an increase
of $36.3 million or 33.0%. Casino revenues increased to
$87.2 million for 1994 from $71.3 million for 1993, an
increase of $15.9 million or 22.3%. The increase in casino
revenues was due primarily to an increase in slot machine
revenues of $9.3 million or 20.4% to $54.5 million for 1994
from $45.2 million for 1993 and an increase in table games
revenues of $6.0 million or 30.1% to $25.8 million for 1994
from $19.8 million for 1993, resulting from the additional
slot machines and table games discussed above.
Room revenues increased to $19.3 million for 1994 from
$12.3 million for 1993, an increase of $6.9 million or
56.2%. The increase in room revenues resulted primarily from
the addition of 437 suites during the fourth quarter of 1993
(375 new suites were placed in service in September 1993 and
62 suites were placed in service in October 1993), bringing
the Company's total to 861 suites available during 1994.
Demand for the Rio's suites remained high during 1994, at
95.9% occupancy compared to 96.8% occupancy during 1993.
Food and beverage revenues increased to $47.6 million
for 1994 from $32.6 million for 1993, an increase of $15.1
million or 46.3%. The increase was principally due to the
successful opening in February 1994 of a new 430-seat video,
entertainment and restaurant complex, the successful opening
in April 1994 of a new 186-seat world class restaurant, the
successful completion in November 1994 of a 50% expansion of
the Carnival World Buffet to 980 seats, an increase in the
number of patrons served in other Rio restaurants and an
increase in the average food check contributed to the
increase in food and beverage revenues.
Management believes that operating efficiencies in the
food and beverage departments improved during 1994 compared
to 1993. Expenses in food and beverage were 81% of food and
beverage revenues during 1994 compared to 85% during 1993.
Food and beverage expense margins improved as a result of an
increase in volume, price increases and effective cost
control measures. Casino profit margins were flat. Casino
expenses were 44% of casino revenue during both 1994 and
1993. Selling, general and administrative expenses were 14%
of net revenues during 1994, of which $421,367 were expenses
related to gaming development.
Depreciation and amortization increased to $10.9
million for 1994 from $7.5 million for 1993, an increase of
$3.3 million or 44.0%. This increase is attributable to a
full year of depreciation on the Phase II Expansion (as
defined) which was completed in October 1993, depreciation
on the Eastside Expansion which was completed in phases by
April 1994 and depreciation on the Phase III Expansion
projects completed during 1994.
Other income for 1994 was a one-time gain of $1.1
million related to the resale of certain real estate
previously owned by the Company. A one-time gain of $966,510
related to the sale of real estate which was sold by the
Company to a related party in December 1991. In April 1994,
the real estate was resold to a non-related party. Pursuant
to the terms of the sales agreement between the Company and
the related party, the Company was entitled to a portion of
the resale proceeds, which equaled $966,510, net of
expenses. A one-time gain of $173,500 related to the sale of
real estate owned by the Company until May 1991, when it was
sold to a non-related party. Pursuant to the terms of the
sales agreement, the Company was entitled to a portion of
the resale proceeds or refinancing amount, which equaled
$173,500, net of expenses.
Income before extraordinary items and cumulative effect
of a change in accounting principle increased 36.7% to $16.0
million or $0.74 per share (fully diluted) for 1994 from
$11.7 million or $0.60 per share (fully diluted) for 1993.
The results for 1993 were impacted by the cumulative effect
of a change in accounting principle resulting from the
adoption of Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes" ("SFAS 109").
Adoption of SFAS 109 resulted in a one-time, non-cash charge
in the amount of $776,888 or ($0.04) per share (fully
diluted). The results for 1993 were also adversely affected
by the extraordinary loss on early extinguishment of debt,
net of income tax benefit, of $253,711 or ($0.01) per share
(fully diluted).
Net income for 1994 increased 49.9% to $16.0 million or
$0.74 per share (fully diluted) from $10.6 million or $0.55
per share (fully diluted) for 1993 as a result of the
factors discussed above.
<PAGE>
YEARS ENDED DECEMBER 31, 1993 AND 1992
Operating profit for the Company increased to $20.2
million for 1993 from $12.3 million for 1992, an increase of
$7.9 million or 64.5%. Management believes that the
improvement in operating results was primarily the result of
an increase in casino revenues and food and beverage
revenues combined with smaller increases in operating
expenses.
Net revenues for the Company increased to $110.0
million for 1993 from $82.5 million for 1992, an increase of
$27.5 million or 33.4%. Casino revenues increased to $71.3
million for 1993 from $56.5 million for 1992, an increase of
$14.8 million or 26.1%. The increase in casino revenues was
due primarily to an increase in slot machine revenues. Slot
machine revenues increased $11.1 million or 32.4% to $45.2
million for 1993 from $34.2 million for 1992. The increase
in slot machine revenues resulted primarily from the
addition of approximately 385 slot machines (approximately
85 slot machines in April 1992 and approximately 300 slot
machines in December 1992) while at the same time the daily
win per slot machine slightly increased. Table game revenues
increased by $3.2 million or 19.4% to $19.8 million for 1993
from $16.6 million for 1992. The increase in table game
revenues resulted primarily from a 16.6% increase in volume
to $123.9 million for 1993 from $106.3 million for 1992.
Food and beverage revenues increased to $32.6 million for
1993 from $21.2 million for 1992, an increase of $11.4
million or 53.9%. The successful opening in December 1992 of
an expanded buffet and an additional lounge, the successful
opening in May 1993 of a new 92-seat seafood restaurant, as
well as a sizable increase in the number of patrons served,
contributed to the increase in food and beverage revenues.
Demand for the Rio's suites remained high during 1993,
at 96.8% occupancy compared to 96.5% occupancy during 1992.
There were 424 suites available during 1992. In September
1993, 375 new suites were placed into service and 62
additional suites were placed into service in October 1993.
The Company's expense margins improved in 1993 as
compared to 1992. Casino expenses were 44% of casino
revenues during 1993 compared to 48% during 1992. Casino
expense margins improved as a result of increased casino
activity, particularly in slots, which has a lower expense
margin than other casino games. Expenses in food and
beverage were 85% of food and beverage revenues during 1993
compared to 87% during 1992. Food and beverage expense
margins improved as a result of a sizable increase in the
number of patrons served and effective cost controls.
Net interest expense of the Company was reduced
primarily because of reduced average borrowing during the
period. The Company took advantage of the revolving line of
credit feature of its bank loan by applying cash on hand to
reduce borrowing amounts during most of the year. This was
partially offset by a reduction in interest income. Interest
expense was also reduced by $467,798 because of interest
capitalized on amounts expended on the Phase II Expansion
and Eastside Expansion projects.
Income from continuing operations after minority
interests and tax provisions but before extraordinary items
and cumulative effect of a change in accounting principle
increased 111.8% to $11.7 million or $0.60 per share (fully
diluted) for 1993 from $5.5 million or $0.36 per share
(fully diluted) for 1992. The results for 1993 were impacted
by the cumulative effect of a change in accounting principle
resulting from the adoption of SFAS 109 which resulted in a
one-time, non-cash charge in the amount of $776,888 or
($0.04) per share (fully diluted). The results for 1993 were
also adversely affected by the extraordinary loss on early
extinguishment of debt, net of income tax benefit, of
$253,711 or ($0.01) per share (fully diluted). The results
for 1992 were affected by an extraordinary credit of
$793,511 or $0.05 per share (fully diluted), reflecting a
reduction of federal income taxes arising from the
carryforward of prior years' operating losses.
Net income for 1993 increased 68.8% to $10.6 million or
$0.55 per share (fully diluted) from $6.3 million or $0.41
per share (fully diluted) for 1992 as a result of the
factors discussed above.
IMPACT OF INFLATION
Absent changes in competitive and economic conditions
or in specific prices affecting the industry, the Company
believes that the hotel-casino industry may be able to
maintain its real operating profit margins in periods of
general inflation by increasing minimum wagering limits for
its games and increasing the prices of its hotel rooms, food
<PAGE>
and beverage and other items, and by taking actions designed
to increase the number of patrons. The industry may be able
to maintain growth in gaming revenues by the tendency of
customer gaming budgets to increase with inflation. Changes
in specific prices (such as fuel and transportation prices)
relative to the general rate of inflation may have a
material effect on the hotel-casino industry.
<PAGE>
BUSINESS
The Company owns and operates the country's only all-
suite hotel-casino, the Rio Suite Hotel & Casino in Las
Vegas, Nevada. Situated on a 45-acre elevated site adjacent
to a major exit from Interstate 15, the freeway linking Las
Vegas with Southern California, the Rio is strategically
positioned to attract travelers along Interstate 15,
tourists visiting the Las Vegas Strip and local Las Vegas
residents. The Company markets to the middle to upper-middle
income segments of gaming customers, both local residents
and Las Vegas visitors. The Rio's unique all-suite concept,
diverse high quality dining, easy access and ample parking
provide an attractive alternative to the Strip and a fun and
comfortable environment in which to enjoy gaming, dining and
entertainment.
Decorated throughout in a fun-filled Brazilian Carnival
and rain forest theme, the Rio is currently comprised of an
89,000 square foot casino, three 21-story hotel towers
containing 1,410 suites, eight restaurants, seven bars, a
430-seat entertainment complex, meeting and banquet space, a
59,000 square foot outdoor entertainment area featuring a
landscaped sand beach and two swimming pools and parking for
over 3,200 cars. Rio's casino offers approximately 2,200
slot machines, 65 table games, a poker room, keno and a race
and sports book.
The Rio originally opened in 1990 with 424 suites and
44,000 square feet of casino space. Within the past three
years the Rio has been expanded to its present configuration
in three major phases in accordance with its original master
plan. In the fall of 1993, the Company added a second hotel
tower with 437 suites, a new restaurant and meeting rooms
through its $37 million expansion (the "Phase II
Expansion"). In April 1994, the Company completed its $25
million expansion (the "Eastside Expansion") which comprised
a 25,000 square foot addition to the casino, a two-story
parking garage, a new restaurant and the Copacabana
showroom. In April 1995, Rio completed its $75 million
expansion (the "Phase III Expansion") which encompassed a
third hotel tower with 549 suites, 10,000 square feet of
casino space, a new three-level parking garage and a 50%
expansion to its award winning Carnival World Buffet. In
April 1995, the Company commenced construction of its Phase
IV Expansion. The approximately $20 million project will add
144 suites, add approximately 5,400 square feet of meeting
room space, double the size of the existing Buzios seafood
restaurant, 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.
On March 29, 1995, the Company announced that it had
retained Montgomery Securities to assist in evaluating
various strategic alternatives for the Company. In June
1995, the Company announced that it is moving forward with
its three-phased expansion and development plan to be
implemented over the next several years. The Company elected
to pursue this course of action after giving consideration
to the strategic alternatives analysis completed by
Montgomery Securities. While Montgomery Securities will
continue to serve as financial advisor to the Company, the
Company is not presently exploring other strategic
alternatives. The three-phased expansion and development
plan consists of the Phase V Expansion at the Rio,
acquisition of approximately 22 acres of land adjacent to
the Rio to be master-planned for the development of another
hotel-casino and the purchase of approximately 64 acres
southeast of Las Vegas for possible future hotel-casino
development.
The Company was incorporated in California in 1981 and
reincorporated in Nevada in 1988. The Company changed its
name from MarCor Resorts, Inc. to Rio Hotel & Casino, Inc.
in February 1992. Its executive offices are located at 3700
West Flamingo Road, Las Vegas, Nevada 89103, and its
telephone number is (702) 252-7733.
PHASE V EXPANSION
The Phase V Expansion will center around a 40-story
curved tower located immediately southeast of the existing
towers. The Phase V Expansion is planned to include 120,000
square feet of public space containing a casino expansion
with 600 slot machines and 27 table games, new retail and
entertainment space and additional restaurants, including a
medium priced restaurant at the top of the tower overlooking
the Strip, as well as an expanded pool and beach area and
additional parking facilities. The new suites will be
similar in size and decor to the existing suites. In
addition, the Phase V Expansion will add two new night clubs
with different themes to provide a variety of nighttime
entertainment.
<PAGE>
As currently contemplated, the public area expansion
will be based upon a Brazilian Carnival Mardi Gras theme.
The new casino area will provide regular entertainment, as
periodically a themed overhead entertainment attraction will
provide an interactive show with patrons. The attraction
will feature performers dressed in festive attire who will
sing, dance and throw free tokens and beads to patrons. The
attraction may change to celebrate different holidays and
special events.
Management believes the Phase V Expansion will increase
the number of tour and travel customers while enhancing the
amenities available to local patrons. Given the Rio's high
average occupancies and significant room turnaways,
management believes that the additional room inventory will
be successfully absorbed. Construction is scheduled to
commence in September 1995, subject to governmental
approvals and finalization of financing. Opening of the
Phase V Expansion is expected to occur in the spring of
1997.
BUSINESS STRATEGY
The Company's business strategy focuses on attracting
and fostering repeat business from customers in the middle
to upper-middle income segments of the local resident and
tourist markets. To implement its business strategy, the
Company capitalizes on its unique all-suite concept,
strategic location and Brazilian Carnival theme. The Company
strives to provide a quality, affordable gaming and
entertainment experience in order to generate high customer
satisfaction and loyalty. The Rio's value-priced suites
provide an attractive alternative to conventional Las Vegas
rooms for visitors who desire to avoid the crowds and
congestion of the Strip. The Interstate 15 and Flamingo Road
location is also ideal for attracting local residents.
To encourage repeat visits, the Company attempts to
ensure that each customer has an enjoyable, high quality and
high value experience. Management believes that it must
offer consistent quality, a comfortable and fun atmosphere
and, most importantly, friendly service at affordable prices
to provide a high value experience to its customers.
Accordingly, the Rio's suites offer guests approximately 50%
more space than comparably priced Las Vegas hotel rooms.
Similarly, the Company's restaurants have won awards year
after year for their quality dining. All of the Rio's
restaurants offer generous portions of high quality food at
reasonable prices which management believes is a major
factor in attracting the value-conscious local customer.
Management believes that friendly service combined with
a quality facility are integral to generating repeat
business from locals as well as tourists. As a result,
management continually seeks to instill in each employee a
sense of service excellence designed to exceed guest
expectations. To motivate its employees, management also
strives to instill a sense of "Team Rio" in all of the
Company's employees by making the Rio a fun place to work.
Management strongly believes that its employees are one of
the Company's biggest assets.
The Company has created an identifiable and innovative
marketing presence and continues to build on its "signature"
Rio theme. The Rio's Brazilian Carnival and rain forest
theme incorporates bright colors, creative interior designs,
festive employee costumes and other exotic touches to
contribute to its tropical ambiance. The Rio's message of a
fun-filled, colorful atmosphere is constantly emphasized.
The Rio has developed the Rio Rita(TM) character as a
promotional ambassador to the Rio's hotel-casino guests and
as a focal point upon which many promotional activities have
been built, such as Rio Rita's(TM) Paycheck Poker Wheel,
Carnival Dice(TM), the Jackpot Jungle(TM), Rio Rita's(TM) Lotto
Bucks, Carnival Days(TM), Copacabana(TM) Dinner Show, Conga
Mania(TM) and Brazilia Days(TM). The Company advertises
extensively in the Las Vegas area print, television and
radio media, and periodically in Southern California,
Phoenix and other regional markets.
The success of the Company's business strategy is
evidenced by the large number of awards the Rio has
received. In March 1995, the Rio won recognition through 10
"Best of Las Vegas" awards in an annual survey published by
Nevada's largest daily newspaper. Among others, these
distinctions included: "Best Buffet," "Best Italian
Restaurant," "Best Coffee Shop," "Best Steakhouse,"
"Friendliest Employees" and "Most Efficient Service." In
addition, the Rio received recognition in the 1995 Zagat
Hotel and Restaurant Survey for "Best Rooms," "Best Dining,"
"Best Service" and "Best Overall" in Las Vegas. These awards
exemplify the Company's reputation for quality and value.
<PAGE>
MARKETING STRATEGY
The Company's marketing efforts are targeted at both
the local patron and the tourist market. To market to local
patrons, the Rio relies on its convenient location, its
ample parking, its value-priced food and its slot machine
variety. Management believes that its restaurants, in
particular the Carnival World Buffet, are one of the Rio's
greatest attractions for local patrons. The Carnival World
Buffet is one of the most popular buffets in Las Vegas due
to its extensive selections, its high quality food and the
entertainment provided by the live-action cooking stations.
Since February 1995, when the Company initiated its special
buffet promotion, the Carnival World Buffet has served an
average of 8,500 people per day. In addition to its emphasis
on food and beverage, the Rio also has an aggressive
marketing program which encompasses frequent radio,
television and newspaper advertising, a variety of
promotions directed at the local customer and other programs
such as check cashing promotions.
To attract visitors and fill the Rio's hotel rooms, the
Company markets primarily to three segments of the tourist
market: independent travel, wholesale and special casino
customers. The independent travel segment consists of those
travelers not affiliated with groups who make their
reservations directly with the Rio or through independent
travel agents. To attract the independent traveler, the Rio
periodically utilizes print media, radio and direct mail to
advertise in Southern California, Phoenix and other regional
travel markets. In addition, the Company's sales force
frequently attends trade shows in order to establish
relationships with and promote the Rio to travel agents
nationwide. The wholesale segment comprises those patrons
participating in travel packages offered by air tour
operators. To capture this segment of the market, the Rio
has developed specialized marketing programs for, and
cultivated relationships with, these operators. Finally,
special casino customers are those frequent gaming customers
who are in regular communication with Rio casino marketing
personnel. The Rio utilizes a variety of promotions and
special events and other amenities in marketing to this
segment.
RIO LOCATION
The Rio is strategically located to take advantage of
the dynamic residential and commercial growth of the western
portion of metropolitan Las Vegas, while offering proximity
and easy access to the "Old Four Corners" (Flamingo Road and
the Strip) and the "New Four Corners" (Tropicana Avenue and
the Strip) areas of the Las Vegas Strip.
THE RIO
Since 1992, the Company has consistently expanded the
Rio under its master plan. Upon the completion of both the
Phase IV Expansion and Phase V Expansion, the Rio will have
approximately 2,550 suites, 2,800 slot machines and 92 table
games.
<TABLE>
<CAPTION>
Approximate
As of Totals After
As of December 31, (1) June 30, Completion of:
1992 1993 1994 1995(1) Phase IV Phase V
<S> <C> <C> <C> <C> <C> <C>
Casino square footage 54,000 79,000 89,000 89,000 89,000 120,000
Slot machines 1,450 1,950 2,200 2,163 2,200 2,800
Table games 31 44 53 65 65 92
Hotel suites 424 861 861 1,410 1,554 2,550
Average daily hotel occupancy 96.5% 96.8% 95.9% 95.7% -- --
Average daily room rate $ 64.09 $ 62.60 $ 63.80 $ 73.00 -- --
Restaurant seats 1,209 1,843 2,440 2,440 2,530 4,230
<FN>
(1) Figures for December 31, 1992, 1993 and 1994 are for
the year ended as of such dates, and figures for June 30,
1995 are for the six-month period ended as of such date.
</FN>
</TABLE>
GAMING. The Rio has 89,000 square feet of casino
space. The casino currently has approximately 2,200 slot
machines; 65 table games, including "21," craps, roulette,
pai gow poker, Caribbean stud poker and mini-baccarat; other
casino games such as keno and poker; and a race and sports
book.
<PAGE>
Gaming operations at the Rio are continually being
monitored and modified to respond to both changing market
conditions and customer demand in an effort to attract new
customers while retaining its existing customer base. New
and innovative slot and table games have been introduced
based on customer feedback and demand from both local
customers and Las Vegas visitors. Management has introduced
such games as Survival Dice(TM), Rio Rita's(TM) Royals, Rio
Rita's(TM) Bonus Poker, Sneaky Queens(TM), Mambo Bucks(TM) and Rio
Rita's(TM) Paycheck Poker Wheel. Management devotes
substantial time and attention to the type, location and
player activity of all slot machines. The Company believes
that to continue to attract and retain slot customers, it
must expand the number and variety of slot machines on its
casino floor, particularly its higher denomination slot
machines.
HOTEL. The Rio's 21-story hotel towers contain a total
of 1,410 suites, comprised of 1,366 standard Rio suites, 14
"super" suites, 17 "cariocas" suites, six two-story
penthouse suites, and seven executive suites that combine a
conference room and an adjoining suite. The Company has
progressively added new hotel suites since 1993 to meet its
consistently strong demand. Despite such expansion, the Rio
has maintained average occupancy rates of 96.8% and 95.9%
for 1993 and 1994, respectively. During 1993 and 1994,
management believes that approximately two potential room
night bookings were turned away for each room night booking
accepted. The Phase IV Expansion will add an additional 144
suites with completion expected by year-end 1995, and the
Phase V Expansion will add another 1,000 suites in the
spring of 1997.
The standard Rio suite measures approximately 600
square feet, compared to approximately 400 square feet for
the typical Las Vegas hotel room. The Brazilian Carnival and
rain forest theme is carried throughout the guest suites in
wall coverings, art work and other designer accents. Suite
amenities include carved wood finishes, cut glass, polished
granite surfaces, marble tile in the bath areas, room safes
and refrigerators.
RESTARAUNTS. While important to attracting Las Vegas
visitor gaming customers, the high quality, value and
variety of food services are critical to consistently
attracting the local resident gaming customer to the Rio. To
provide such variety, seven bars and eight restaurants are
located in the Rio's main floor area. The Rio currently
serves an average of approximately 14,000 meals per day,
including banquets and room service. The following table
sets forth, for each restaurant, the type of service
provided and the seating capacity:
Type Number of
Seats
All American Bar & Award-winning steaks, ribs, 202
Grille chicken and seafood
Antonio's Award-winning Italian fine- 116
dining
Beach Cafe 24-hour full menu coffee shop 314
featuring American and
Chinese cuisine
Buzios Seafood and oyster bar 92
Carnival World Buffet Award-winning buffet with 980
live action cooking featuring
Brazilian, Chinese, Italian,
Mexican, Japanese, Western
BBQ and traditional buffet
Toscano's Deli & Deli items, pizza and pasta, 120
Market ice cream and gelato, and a
large selection of bakery
products
Copacabana Showroom Copacabana Dinner Show and 430
Club Rio nightclub
Fiore Rotisserie & Fine-dining featuring 186
Grille rotisserie-grilled seafood,
beef and poultry
Total 2,440
ENTERTAINMENT AND OTHER ATTRACTIONS. The Rio's Copacabana
Showroom is a unique, circular 430-seat video, entertainment
and restaurant complex which features two 12-foot by 90-foot
video screens, an exhibition cooking area,
<PAGE>
multiple tiers of dining room seating and a stage. The
Copacabana Showroom features the Copacabana Dinner Show, a
musical review designed around the Rio's theme. After the
dinner show the Copacabana Showroom is converted into Club
Rio, a late-night dance club. The showroom is also used for
casino-hosted events, concerts, viewing of sporting events
on the large video screens, and corporate meetings that
capitalize on the unique audio visual qualities of the room.
The Ipanema Lounge and Mambo's Lounge each offer live
entertainment in separate casino cocktail settings. The Rio
also houses a gift shop, a Rio logo shop, a hair and beauty
salon, and an exercise room, as well as approximately 13,250
square feet of public meeting and banquet room facilities.
The Rio's pool/outdoor entertainment area is
approximately 59,000 square feet and includes a landscaped
sand beach, an 11-foot waterfall, two swimming pools, a
multi-level spa, and a terrace bar and food service
facility. The Company hosts beach parties, volleyball games,
outdoor concerts with name performers and other special
events, including professional sporting events.
EXPANSION STRATEGY
RIO MASTER PLAN. The Rio's conceptual master plan was
originally designed to accommodate multiple expansions
without significantly interrupting normal business
operations. This design included construction of a
reinforced foundation for the hotel tower and a elevator
core to support and facilitate additional room construction.
The Company has also assembled ample acreage to allow future
expansions. Starting from its original 30 acres, the Company
acquired additional acreage in 1989 and 1991, bringing the
current Rio site to 45 acres exclusive of the additional 22
acres currently under acquisition as described elsewhere
herein.
Management believes that a high quality, well-
maintained property offering innovative entertainment is
integral to success in the highly competitive Las Vegas
gaming market. This belief has driven the Company's master
plan development strategy. The Company has added substantial
new facilities at the Rio every year since 1992.
Start
Date Opening
Initial Construction 12/88 1/90
Casino (10,000 sq. ft.)/Buffet 7/92 12/92
Expansion
Phase II Expansion
Buzios Restaurant 1/93 5/93
Meeting Rooms 1/93 8/93
437-Suite Tower 1/93 9/93
Eastside Expansion
Two-Story Parking Garage 7/93 10/93
Casino Space (25,000 sq. ft.) 7/93 12/93
Copacabana Showroom 7/93 2/94
Fiore Restaurant 7/93 4/94
Expanded Pool Area 7/93 4/94
Phase III Expansion
Three-Story Parking Garage 5/94 8/94
Casino Space (10,000 sq. ft.) 5/94 11/94
Buffet Expansion 5/94 11/94
549-Suite Tower 5/94 2/95
To date, the Company has invested a total of
approximately $245 million in the development, expansion and
renovation of the Rio. The Phase IV and Phase V Expansions
will continue the Rio's commitment to continued development
and provide new, innovative entertainment attractions.
<PAGE>
In April 1995, the Company commenced construction of
the approximately $20 million 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.
In May 1995, the Company announced the approximately
$185 million Phase V Expansion. The expansion is planned to
include 120,000 square feet of public space containing a
casino expansion with 600 slot machines and 27 table games,
new retail and entertainment space and additional
restaurants, as well as an expanded pool and beach area and
additional parking facilities. The public area expansion
will be based on a Brazilian Carnival Mardi Gras theme.
Construction is scheduled to commence in September 1995,
subject to governmental approvals and finalization of
financing, with opening expected to occur in the spring of
1997.
ADDITIONAL GAMING OPPORTUNITIES. The Company has also
entered into commitments to acquire approximately 22 acres
of land adjacent to the Rio site, bringing the total Rio
acreage to approximately 67 acres. The entire Rio site is
now being master-planned for the development of 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, the Company purchased
approximately 64 acres southeast of Las Vegas. The Old Vegas
Site, already zoned for a hotel-casino, is situated where
the Boulder Highway enters the Las Vegas valley from Phoenix
and Laughlin along U.S. Highway 93-95. The timing and scale
of the proposed development has not yet been determined.
Moreover, the Company may pursue additional opportunities
that management believes to be in the best interests of the
Company.
COMPETITION
The gaming industry includes land-based casinos,
dockside casinos, riverboat casinos, casinos located on
Native American land and other forms of legalized gaming.
There is intense competition among companies in the gaming
industry, some of which have significantly greater resources
than the Company.
The Rio faces competition from all other casinos and
hotels in the Las Vegas area, including competitors located
on the Las Vegas Strip, on the Boulder Highway and in
downtown Las Vegas. Such competition includes several
hotel/casinos targeted primarily toward local residents, as
well as numerous non-hotel gaming facilities targeted toward
local residents. In recent months, several of the Company's
direct competitors have opened new hotel-casinos or have
commenced or completed major expansion projects, and other
expansions are in progress or are planned. Currently, there
are approximately 27 major gaming properties located on or
near the Las Vegas Strip, 12 located in the downtown area
and several located in other areas of Las Vegas. Several new
properties opened during the fourth quarter of 1993, which
increased the number of hotel and motel rooms in the Las
Vegas market by approximately 11,500 rooms or 15%, to a
total of approximately 86,560 rooms. Four new major resort
projects have been announced and are expected to be
completed within the next two years, adding approximately
10,000 more rooms. Each of these facilities has a theme and
an attraction which are expected to draw significant numbers
of visitors. Any other major expansions or enhancements of
existing properties or the construction of new properties by
competitors, could have a material adverse effect on the
Company's business.
To a lesser extent, the Rio competes with hotel-casinos
located in the Laughlin and Reno-Lake Tahoe areas of Nevada
and in Atlantic City, New Jersey. The Company also competes
with state-sponsored lotteries, on- and off-track wagering,
card parlors, riverboat and Native American gaming ventures
and other forms of legalized gaming in the United States, as
well as with gaming on cruise ships and international gaming
operations. In addition, certain states have recently
legalized, and several other states are currently
considering legalizing, casino gaming in specific geographic
areas within those states. The Company believes that the
recent widespread legalization of gaming is being fueled by
a combination of increasing popularity and acceptability of
gaming activities and the desire and need for states and
local communities to generate revenues without increasing
general taxation. The Company believes that the legalization
of unlimited land-based casino gaming in or near any major
metropolitan area, such as Chicago or Los Angeles, could
<PAGE>
have a material adverse effect on its current hotel-casino
business. The development of casinos, lotteries and other
forms of gaming in other states, particularly in areas close
to Nevada, such as California, could adversely affect the
Company's operations.
REGULATION AND LICENSING
The ownership and operation of casino gaming facilities
in Nevada are subject to: (i) the Nevada Gaming Control Act
and the regulations promulgated thereunder (collectively,
"Nevada Act"); and (ii) various local regulations. The
Company's gaming operations are subject to the licensing and
regulatory control of the Nevada Commission, the Nevada
State Gaming Control Board (the "Nevada Board"), and the
Clark County Liquor and Gaming Licensing Board (the "Clark
County Board"). The Nevada Commission, the Nevada Board, and
the Clark County Board are collectively referred to as the
"Nevada Gaming Authorities."
The laws, regulations and supervisory procedures of the
Nevada Gaming Authorities are based upon declarations of
public policy which are concerned with, among other things:
(i) the prevention of unsavory or unsuitable persons from
having a direct or indirect involvement with gaming at any
time or in any capacity; (ii) the establishment and
maintenance of responsible accounting practices and
procedures; (iii) the maintenance of effective controls over
the financial practices of licensees, including the
establishment of minimum procedures for internal fiscal
affairs and the safeguarding of assets and revenues,
providing reliable record keeping and requiring the filing
of periodic reports with the Nevada Gaming Authorities; (iv)
the prevention of cheating and fraudulent practices; and (v)
to provide a source of state and local revenues through
taxation and licensing fees. Changes in such laws,
regulations and procedures could have an adverse effect on
the Company's gaming operations.
The Company, which operates the casino, is required to
be licensed by the Nevada Gaming Authorities. The gaming
license requires the periodic payment of fees and taxes and
is not transferable. The Company is registered by the Nevada
Commission as a publicly traded corporation ("Registered
Corporation") and as such, it is required periodically to
submit detailed financial and operating reports to the
Nevada Commission and furnish any other information which
the Nevada Commission may require. The Company has obtained
from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in
order to engage in gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any
individual who has a material relationship to, or material
involvement with, the Company in order to determine whether
such individual is suitable or should be licensed as a
business associate of a gaming licensee. Officers, directors
and certain key employees of the Company must file
applications with the Nevada Gaming Authorities and may be
required to be licensed or found suitable by the Nevada
Gaming Authorities. Officers, directors and key employees of
the Company who are actively and directly involved in gaming
activities of the Company may be required to be licensed or
found suitable by the Nevada Gaming Authorities. The Nevada
Gaming Authorities may deny an application for licensing for
any cause which they deem reasonable. A finding of
suitability is comparable to licensing, and both require
submission of detailed personal and financial information
followed by a thorough investigation. The applicant for
licensing or a finding of suitability must pay all the costs
of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities and in addition to
their authority to deny an application for a finding of
suitability or licensure, the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an
officer, director or key employee unsuitable for licensing
or unsuitable to continue having a relationship with the
Company, the Company would have to sever all relationships
with such person. In addition, the Nevada Commission may
require the Company to terminate the employment of any
person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to
licensing are not subject to judicial review in Nevada.
The Company is required to submit detailed financial
and operating reports to the Nevada Commission.
Substantially all material loans, leases, sales of
securities and similar financing transactions by the Company
must be reported to, or approved by, the Nevada Commission.
<PAGE>
If it were determined that the Nevada Act was violated
by the Company, the gaming licenses it holds could be
limited, conditioned, suspended or revoked, subject to
compliance with certain statutory and regulatory procedures.
In addition, the Company and the persons involved could be
subject to substantial fines for each separate violation of
the Nevada Act at the discretion of the Nevada Commission.
Further, a supervisor could be appointed by the Nevada
Commission to operate the Company's gaming properties and,
under certain circumstances, earnings generated during the
supervisor's appointment (except for the reasonable rental
value of the Company's gaming properties) could be forfeited
to the State of Nevada. Limitation, conditioning or
suspension of any gaming license or the appointment of a
supervisor could (and revocation of any gaming license
would) materially adversely affect the Company's gaming
operations.
Any beneficial holder of the Company's voting
securities, regardless of the number of shares owned, may be
required to file an application, be investigated, and have
his suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has
reason to believe that such ownership would otherwise be
inconsistent with the declared policies of the State of
Nevada. The applicant must pay all costs of investigation
incurred by the Nevada Gaming Authorities in conducting any
such investigation.
The Nevada Act requires any person who acquires more
than 5% of the Company's voting securities to report the
acquisition to the Nevada Commission. The Nevada Act
requires that beneficial owners of more than 10% of the
Company's voting securities apply to the Nevada Commission
for a finding of suitability within 30 days after the
Chairman of the Nevada Board mails the written notice
requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act,
which acquires more than 10%, but not more than 15%, of the
Company's voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if
such institutional investor holds the voting securities for
investment purposes only. An institutional investor shall
not be deemed to hold voting securities for investment
purposes unless the voting securities were acquired and are
held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the
board of directors of the Company, any change in the
Company's corporate charter, bylaws, management, policies or
operations of the Company, or any of its gaming affiliates,
or any other action which the Nevada Commission finds to be
inconsistent with holding the Company's voting securities
for investment purposes only. Activities which are not
deemed to be inconsistent with holding voting securities for
investment purposes only include: (i) voting on all matters
voted on by stockholders; (ii) making financial and other
inquiries of management of the type normally made by
securities analysts for informational purposes and not to
cause a change in its management, policies or operations;
and (iii) such other activities as the Nevada Commission may
determine to be consistent with such investment intent. If
the beneficial holder of voting securities who must be found
suitable is a corporation, partnership or trust, it must
submit detailed business and financial information including
a list of beneficial owners. The applicant is required to
pay all costs of investigation.
Any person who fails or refuses to apply for a finding
of suitability or a license within 30 days after being
ordered to do so by the Nevada Commission or the Chairman of
the Nevada Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner,
after request, fails to identify the beneficial owner. Any
stockholder found unsuitable and who holds, directly or
indirectly, any beneficial ownership of the common stock of
a Registered Corporation beyond such period of time as may
be prescribed by the Nevada Commission may be guilty of a
criminal offense. The Company is subject to disciplinary
action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other
relationship with the Company, the Company (i) pays that
person any dividend or interest upon voting securities of
the Company, (ii) allows that person to exercise, directly
or indirectly, any voting right conferred through securities
held by that person, (iii) pays remuneration in any form to
that person for services rendered or otherwise, or (iv)
fails to pursue all lawful efforts to require such
unsuitable person to relinquish his voting securities for
cash at fair market value.
The Nevada Commission may, in its discretion, require
the holder of any debt security of a Registered Corporation
to file applications, be investigated and be found suitable
to own the debt security of a Registered Corporation. If the
Nevada Commission determines that a person is unsuitable to
own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss
of its approvals, if without the prior approval of the
Nevada Commission, it: (i) pays to the unsuitable person any
dividend, interest, or any distribution whatsoever; (ii)
recognizes any voting right by such unsuitable person in
connection with such securities; (iii) pays the unsuitable
<PAGE>
person remuneration in any form; or (iv) makes any payment
to the unsuitable person by way of principal, redemption,
conversion, exchange, liquidation or similar transaction.
The Company is required to maintain a current stock
ledger in Nevada which may be examined by the Nevada Gaming
Authorities at any time. If any securities are held in trust
by an agent or by a nominee, the record holder may be
required to disclose the identity of the beneficial owner to
the Nevada Gaming Authorities. A failure to make such
disclosure may be grounds for finding the record holder
unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial
owner. The Nevada Commission has the power to require the
Company's stock certificates to bear a legend indicating
that the securities are subject to the Nevada Act.
The Company may not make a public offering of its
securities without the prior approval of the Nevada
Commission if the securities or proceeds therefrom are
intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations
incurred for such purposes. On July 27, 1995, the Nevada
Commission granted the Company prior approval to make public
offerings for a period of one year, subject to certain
conditions ("Shelf Approval"). However, the Shelf Approval
may be rescinded for good cause without prior notice upon
the issuance of an interlocutory stop order by the Chairman
of the Nevada Board. Such approval does not constitute a
finding, recommendation or approval by the Nevada Commission
or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities. Any
representation to the contrary is unlawful.
Changes in control of the Company through merger,
consolidation, stock or asset acquisitions, management or
consulting agreements, or any act or conduct by a person
whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to
acquire control of a Registered Corporation must satisfy the
Nevada Board and Nevada Commission in a variety of stringent
standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require
controlling stockholders, officers, directors and other
persons having a material relationship or involvement with
the entity proposing to acquire control, to be investigated
and licensed as part of the approval process relating to the
transaction.
The Nevada legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting
securities and corporate defense tactics affecting Nevada
gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable
and productive corporate gaming. The Nevada Commission has
established a regulatory scheme to ameliorate the
potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to:
(i) assure the financial stability of corporate gaming
operators and their affiliates; (ii) preserve the beneficial
aspects of conducting business in the corporate form; and
(iii) promote a neutral environment for the orderly
governance of corporate affairs. Approvals are, in certain
circumstances, required from the Nevada Commission before
the Company can make exceptional repurchases of voting
securities above the current market price thereof and before
a corporate acquisition opposed by management can be
consummated. The Nevada Act also requires prior approval of
a plan of recapitalization proposed by the Company's Board
of Directors in response to a tender offer made directly to
the Registered Corporation's stockholders for the purposes
of acquiring control of the Registered Corporation.
Licensee fees and taxes, computed in various ways
depending on the type of gaming or activity involved, are
payable to the State of Nevada and to the counties and
cities in which the Nevada licensee's respective operations
are conducted. Depending upon the particular fee or tax
involved, these fees and taxes are payable either monthly,
quarterly or annually and are based upon either: (i) a
percentage of the gross revenues received; (ii) the number
of gaming devices operated; or (iii) the number of table
games operated. A casino entertainment tax is also paid by
casino operations where entertainment is furnished in
connection with the selling of food or refreshments. Nevada
licensees that hold a license as an operator of a slot
route, or a manufacturer's or distributor's license, also
pay certain fees and taxes to the State of Nevada.
Any person who is licensed, required to be licensed,
registered, required to be registered, or is under common
control with such persons (collectively, "Licensees"), and
who proposes to become involved in a gaming venture outside
of Nevada is required to deposit with the Nevada Board, and
thereafter maintain, a revolving fund in the amount of
$10,000 to pay the expenses of investigation of the Nevada
Board of their participation in such foreign gaming. The
revolving fund is subject to increase or decrease at the
discretion of the Nevada Commission. Thereafter, Licensees
<PAGE>
are required to comply with certain reporting requirements
imposed by the Nevada Act. Licensees are also subject to
disciplinary action by the Nevada Commission if they
knowingly violate any laws of the foreign jurisdiction
pertaining to the foreign gaming operation, fail to conduct
the foreign gaming operation in accordance with the
standards of honesty and integrity required of Nevada gaming
operations, engage in activities that are harmful to the
State of Nevada or its ability to collect gaming taxes and
fees, or employ a person in the foreign operation who has
been denied a license or finding of suitability in Nevada on
the ground of personal unsuitability.
EMPLOYEES
As of July 31, 1995, the Company employed
approximately 2,900 employees. The Rio occasionally employs
part-time workers. None of the Company's employees is
covered by collective bargaining agreements. The Company
believes that its relationship with its employees is good.
PROPERTIES
The Company owns the 45-acre site in Las Vegas on which
the Rio is located. The Rio site is subject to a deed of
trust securing the Rio Bank Loan, of which $125 million and
$0 were outstanding at December 31, 1994 and July 31, 1995,
respectively. The Company is in the process of accumulating
22 acres of land adjacent to the current Rio site. In March
1995, the Company purchased approximately five of such acres
of improved land (the "Warehouse Site"). The Company also
entered into agreements to acquire the remaining
approximately 17 additional acres of land, bringing the
total Rio acreage to approximately 67 acres. The entire Rio
site, including the Warehouse Site and the additional
property the Company is acquiring, is now being master-
planned for the development of another hotel-casino, the
size and timing of which has not yet been determined. In May
1995, the Company purchased approximately 64 acres of the
Old Vegas Site on Boulder Highway southeast of Las Vegas.
The Company is presently considering various development
options for the property.
LEGAL PROCEEDINGS
On April 26, 1994 and May 10, 1994, complaints
("Complaints") in purported class action lawsuits were filed
in the United States District Court, Middle District of
Florida (the "Florida Federal Court"), against 41
manufacturers, distributors and casino operators of video
poker and electronic slot machines, including the Company.
The Complaints allege that the defendants have engaged in a
course of conduct intended to induce persons to play such
games based on a false belief concerning how the gaming
machines operate, as well as the extent to which there is an
opportunity to win on a given play. One Complaint alleges
violations of the Racketeer Influenced and Corrupt
Organizations Act (the "RICO Act"), as well as claims of
common law fraud, unjust enrichment and negligent
misrepresentation, and seeks damages in excess of $1
billion. The other Complaint alleges violations of the RICO
Act and seeks damages in excess of $1 billion. The
Complaints have been consolidated and have been transferred
to the United States District Court for the District of
Nevada (the "Nevada Federal Court"). The Florida Federal
Court deferred action on the Company's motion requesting
abstention and did not rule on class certification. The
Company expects those motions to be heard by the Nevada
Federal Court. Management believes that the Complaints are
without merit and intends to defend vigorously the
allegations in the Complaints.
The Company has been advised that a purported class
action lawsuit was filed under the name Hyland, et al. v.
Griffin Investigations, et al. on May 5, 1995 in the United
States District Court for the District of New Jersey (Camden
Division). The Company, together with 76 other casino
operators and others, is named as a defendant in the action.
The Company has not been served with a summons and
complaint. The action, purportedly brought on behalf of
"card counters," alleges that the casino operators exclude
"card counters" from play and share information about "card
counters." The action is ostensibly based on purported
violations of federal antitrust law, the Fair Credit
Reporting Act, and various state consumer protection laws.
If served, the Company intends to defend the action
vigorously.
The Company has also been advised that a purported
class action lawsuit was filed under the name Florida
Horsemen's Benevolent and Protective Association v. Hialeah
Park, Inc. et al. in the United States District Court for
<PAGE>
the Southern District of Florida. The Company, together with
76 other casino and race track operators, is named as a
defendant. The action purportedly claims that the defendants
illegally accepted nearly $11.0 million in off-track wagers.
If served, the Company intends to defend the action
vigorously.
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors, executive officers and certain key
management personnel of the Company and Rio Properties and
their ages as of August 14, 1995 are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Anthony A. Marnell II (1) 46 Chairman of the Board and Chief
Executive Officer of the Company
James A. Barrett, Jr. (1) 44 President, Chief Operating Officer
and Director of the Company
John A. Stuart (2) 44 Director of the Company
Thomas Y. Hartley (2)(3)(4) 61 Director of the Company
Peter M. Thomas (2)(3)(4) 45 Director of the Company
Harlan D. Braaten 44 Senior Vice President, Treasurer and
Chief Financial Officer of the
Company
Susan L. Johnson 44 Secretary, Vice President and
General Counsel of the Company
John M. Lipkowitz 34 Senior Vice President and General
Manager of Rio Properties
Cary A. Rehm 42 Vice President of Slot Development
of Rio Properties
<FN>
_______________________
(1) Member of the Directors' Plan Committee of the Board of
Directors.
(2) Member of the Audit Committee of the Board of
Directors.
(3) Member of the Compensation Committee of the Board of
Directors.
(4) Member of the Incentive Plan Committee of the Board of
Directors.
</FN>
</TABLE>
ANTHONY A. MARNELL II has been Chairman of the Board of
the Company and its subsidiaries since 1986, and Chief
Executive Officer since 1990. Since 1982, he has been
controlling stockholder of Marnell Corrao and of Marnell
Corrao's wholly owned subsidiary, Marnell Corrao Associates,
a leading hotel-casino general contractor, and President and
controlling stockholder of Marnell Chartered, an
architectural firm, each of which is based in Las Vegas,
Nevada. Mr. Marnell is a licensed architect.
JAMES A. BARRETT, JR. is President and Chief Operating
Officer of the Company, President of Rio Properties, and a
director of the Company and each of its subsidiaries.
Mr. Barrett has been President and a director of the Company
since July 1986 and Chief Operating Officer since October
1990. Since August 1986, Mr. Barrett has been the Treasurer,
and since August 1989, a director of Marnell Corrao.
Mr. Barrett has been a certified public accountant since
1975.
JOHN A. STUART has been a member of the Board of
Directors of the Company since 1989. Since February 1991, he
has been President of John Stuart & Company, Inc., a firm
specializing in employee benefits, consulting and insurance
brokerage. Prior thereto, he was the President of Insurance
Services Corporation of Nevada, Inc., a full service
insurance brokerage firm also located in Las Vegas.
THOMAS Y. HARTLEY has been a member of the Board of
Directors since 1990. Since April 1991, Mr. Hartley has
served as President and Chief Operating Officer of Colbert
Golf Design and Development, a Las Vegas-based golf course
design and development company. From September 1988 to April
1991, Mr. Hartley served as President and Chief Operating
Officer of Jim Colbert Golf, Inc., a Las Vegas-based golf
course development and management company. Prior to 1988,
Mr. Hartley was area managing partner for the Las Vegas,
Phoenix, Tucson, and Reno offices of Deloitte, Haskins &
Sells, now known as Deloitte & Touche, an international
certified public accounting firm. Mr. Hartley has been a
member of the Boards of Directors of Southwest Gas
Corporation and its subsidiary Primerit Bank, both in Las
Vegas, since March 1991 and of Sierra Health Services, Inc.,
Las Vegas, Nevada, since June 1992.
<PAGE>
PETER M. THOMAS was appointed to the Board of Directors
of the Company on April 27, 1995. Mr. Thomas is Managing
Director of the Thomas and Mack Company, a family owned
commercial real estate management and development company.
From March 1992 until April 1995, Mr. Thomas was President,
Chief Operating Officer and a Director of Bank of America,
Nevada. From 1982 to 1992, Mr. Thomas was President, Chief
Operating Officer and a Director of Valley Bank of Nevada,
prior to its acquisition by BankAmerica Corporation in 1992.
Mr. Thomas received his law degree in 1975 and is currently
a member of the Nevada, Utah and District of Columbia Bar
Associations.
HARLAN D. BRAATEN has been Senior Vice President of the
Company since December 1994, Treasurer of the Company since
September 1993, Chief Financial Officer of the Company since
October 1993 and Chief Financial Officer of Rio Properties
since September 1994. Mr. Braaten was Secretary of the
Company from September 1993 to December 1994 and General
Manager of Rio Properties from March 1993 to December 1994.
He was Assistant General Manager and Chief Financial Officer
of Rio Properties and its predecessor entity from February
1991 to March 1993. From March 1989 to February 1991,
Mr. Braaten was Vice President, Finance of MGM/Marina Hotel
and Casino in Las Vegas, Nevada. Prior thereto, from
November 1983 to March 1989, Mr. Braaten was Property
Controller for Harrah's in Reno, Nevada.
SUSAN L. JOHNSON has been Secretary of the Company
since December 1994, Vice President of the Company since
September 1994 and General Counsel of the Company since July
1994. From 1986 to 1989 Ms. Johnson was Associate General
Counsel of Harrah's Hotels & Casinos. From 1984 to 1986 Ms.
Johnson was Chief Deputy Attorney General for the State of
Nevada. From 1979 to 1984 Ms. Johnson was a Deputy District
Attorney for Clark County, Nevada. Ms. Johnson has been a
licensed attorney in Nevada since 1979 and is currently a
member of the Nevada Bar Association.
JOHN M. LIPKOWITZ has been General Manager of Rio
Properties since August 7, 1995 and Senior Vice President of
Rio Properties since July 1, 1995. He was Vice President of
Strategic Marketing of Rio Properties from December 1994 to
August 1995. Mr. Lipkowitz joined Rio Properties in 1990 and
has since served in a variety of positions including Vice
President of Food and Beverage, Director of Food and
Beverage, and Executive Chef. Mr. Lipkowitz held food
management positions at Harrah's and John Ascuaga's Nugget
in Reno from 1983-1990.
CARY A. REHM has been Vice President of Slot
Development for Rio Properties since January 1995. Mr. Rehm
was Vice President of Slot Operations from October 1983 to
January 1995 and Director of Slot Operations from January
1992 to October 1993. Prior to that, he held the position
of Slot Manager from August 1989 to January 1992. Prior to
joining Rio Properties, Mr. Rehm held positions of
progressively greater responsibility in slot management at
the Castaways and Silver Slipper Casinos, including
Assistant Slot Manager and Assistant Lead Slot Technician.
The Board of Directors has four standing committees:
the Audit Committee, the Compensation Committee, the
Directors' Plan Committee and the Incentive Plan Committee,
formerly known as the NSOP Committee.
The Audit Committee's functions are: to review reports
of certified public accountants to the Company; to review
Company financial practices, internal controls and policies
with officers and key employees; to review such matters with
the Company's auditors to determine scope of compliance with
any deficiencies; to consider selection of independent
public accountants; to review related party transactions;
and to make periodic reports on such matters to the Board of
Directors. The Compensation Committee's function is to
review and make recommendations to the Board of Directors
with respect to the salaries and bonuses of the Company's
executive officers. The Directors' Plan Committee
administers the Directors' Plan. The NSOP Committee was
reconstituted as the Incentive Plan Committee on January 26,
1995 in connection with the Board's adoption of the
Incentive Plan. The Incentive Plan Committee's function is
to administer the Incentive Plan and the NSOP, including
determining such matters as the persons to whom awards shall
be granted, the number of shares to be awarded, when the
awards shall be granted, when the awards shall vest, and the
terms and provisions of the instruments evidencing the
awards under both plans. The Incentive Plan Committee
reports to the Company's Board of Directors regarding all
decisions concerning awards granted to Incentive Plan
participants.
<PAGE>
CERTAIN TRANSACTIONS
GENERAL. Anthony A. Marnell II, Chairman of the
Board, Chief Executive Officer, and largest stockholder of
the Company, is the controlling stockholder and Chief
Executive Officer of Marnell Chartered and Marnell Corrao,
parent corporation of Marnell Corrao Associates. Marnell
Corrao holds a majority ownership interest in MCLP (as
defined), a limited partnership engaged in real estate
development, and Mr. Marnell is sole stockholder of Focus
2000, Inc. ("Focus 2000"). Mr. Barrett, President, Chief
Operating Officer, and a director of the Company, is a
general partner of MCLP and is the Secretary, Treasurer, and
a director of Marnell Corrao and its subsidiaries.
CONSULTING, CONSTRUCTION, AND ARCHITECTURAL SERVICES TO
AND BY AFFILIATES. Marnell Corrao and Marnell Chartered
provided design and construction services for various Rio
expansion projects. The Marnell Corrao construction contract
for the second Rio tower, completed in October 1993, was for
an amount not to exceed $33,327,093, the contract for the
public area expansion completed in November 1994 was for an
amount not to exceed $22,000,000, and the contract for the
third Rio tower completed in April 1995 was for an amount
not to exceed $60,500,000. Construction contracts with
Marnell Corrao for Phase IV and development work associated
with the Company's acquisition of land adjacent to the Rio
Site were for amounts not to exceed $18,117,258 and
$3,923,898, respectively. In the year ended December 31,
1994, and the six months ended June 30, 1995, the Company
paid a total of $48,499,873 and $23,801,075, respectively,
in connection with these contracts. Design contracts with
Marnell Chartered for these same projects were in amounts
not to exceed $1,350,000, $880,000, $2,469,836, $731,000 and
$90,000, respectively. In the year ended December 31, 1994,
and the six months ended June 30, 1995, Marnell Chartered
was paid a total of $1,916,475 and $1,314,346, respectively,
in connection with these projects, and $0 and $212,686,
respectively, in connection with design work for an
expansion opportunity investigated by the Company.
The original 1989 Rio construction loan ("Original
Loan") required that the Company, Marnell Corrao, Marnell
Corrao Associates, MCLP's predecessor, Anthony A. Marnell II
and his personal family trust, James A. Barrett, Jr. and
Maureen M. Barrett and their family trust and Focus 2000
(collectively, the "Loan Guarantors") enter into certain
guarantees ("Guarantees") of payment of all obligations
under the Original Loan.
In February 1989, in consideration of the Guarantees,
the Company agreed to pay the Loan Guarantors (excluding
Focus 2000) $250,000 per year, commencing with the fiscal
year ending December 31, 1990 and continuing through the
fiscal year ending December 31, 1994, for each year in which
the Company's share of net earnings before taxes from the
Rio equals or exceeds $900,000.
The agreement provided for up to a two-year extension
if the Loan Guarantors did not receive the full $1,250,000
by December 31, 1994. No amounts were paid thereunder for
the years ended December 31, 1990 and 1991, and the Loan
Guarantors received payments of $250,000 in December 1992,
December 1993 and December 1994, respectively. The agreement
will be extended through December 31, 1996. In the event
there is a change in control of the Company, or the Company
sells its interest in the Rio, the full remaining unpaid
amount will be immediately due and payable to the Loan
Guarantors. In 1993, the personal guarantees under the
former bank loan were replaced with provisions that will
trigger events of default should Anthony A. Marnell II
voluntarily allow his stockholdings in the Company to fall
below 10% or fall below the stockholdings of another holder,
or if Messrs. Marnell or Barrett cease for a period of 30
consecutive days to hold their respective executive officer
positions. Therefore, the agreement with the Loan Guarantors
was amended to terminate the Loan Guarantor payments in the
event that said events of default are triggered by voluntary
act of the respective Loan Guarantors.
SERVICES PROVIDED BY RELATED PARTIES. Entities in
which John A. Stuart is a principal stockholder and
executive officer earned commissions totaling $124,912 and
$65,000 for the year ended December 31, 1994, and the six
months ended June 30, 1995, respectively, arising out of the
acquisition and administration of various insurance
coverages by the Company.
The Company reimbursed Focus 2000 for certain travel
and other expenses advanced on behalf of or supplied to the
Company during the year ended December 31, 1994 and the six
months ended June 30, 1995 of approximately $142,900 and $0,
respectively.
<PAGE>
CERTAIN REAL ESTATE TRANSACTIONS WITH FOCUS 2000. On
December 30, 1991, the Company sold to Focus 2000 certain
non-Rio real estate assets. Focus 2000 granted a right of
first refusal to the Company to operate gaming on 125 acres
including the Old Vegas Site (collectively, the "125-Acre
Site") which was one of the properties sold to Focus 2000.
Focus 2000 also agreed for a period up to 120 months to
return 100% of sale proceeds from any subsequent sale of the
125-Acre Site in excess of $7,000,000, less Focus 2000's
defined holding costs. Focus 2000 agreed (the "Focus
Participation Agreement") for a period of up to 48 months to
return, on a declining basis, sale proceeds less defined
holding costs on certain of the other assets sold which
included the general partnership interest in MarCor Green
Valley Partnership (as defined) and the Warehouse Site. In
order to preserve the ability to develop a casino on the
125-Acre Site without the requirement of building a hotel,
as required by certain Nevada legislation, Focus 2000
advised the Company in June 1992 that Focus 2000 intended to
proceed with development of the 125-Acre Site. Focus 2000
requested that the Company determine whether it would
exercise its right of first refusal. At the time, the Board
of Directors determined that the Company did not want to
divert its efforts and resources away from the Rio.
Therefore, the Company assigned the right of first refusal
to Messrs. Barrett and Marnell with a reserved right to
assume the assigned interest for reimbursement of expenses
incurred in filing the gaming applications and otherwise in
connection with this project, plus interest equal to two
percent above the prime rate of First Interstate Bank of
Nevada, N.A. Messrs. Barrett and Marnell were directed to
enter into an agreement with Focus 2000 and thereafter filed
gaming applications with the Nevada State Gaming Control
Board and Nevada Commission. On April 1, 1994, Focus 2000,
through a limited partnership ("MarCor Green Valley
Partnership"), sold a parcel of unimproved real property
("Green Valley Site") located in Henderson, Nevada. Pursuant
to the Focus Participation Agreement, the sale of the Green
Valley Site resulted in a $975,936 profit participation paid
to the Company. Various issues involving the events prior to
and during the sale of the Green Valley Site are the subject
of a pending lawsuit between MarCor Green Valley
Partnership, Focus 2000, the Company and the limited
partners of MarCor Green Valley Limited Partnership. A
favorable outcome in that litigation may produce additional
profit participation to the Company pursuant to the Focus
Participation Agreement. Since the Company and one of its
subsidiaries, as well as Messrs. Marnell and Barrett, are
named as parties to the lawsuit, an adverse ruling could
produce a damage cost to the Company; however, the
agreements under which the Company sold the Green Valley
Site to Focus 2000 contain certain indemnities in favor of a
subsidiary of the Company, which may reduce or eliminate
such potential cost.
In March 1995, the Company repurchased the Warehouse
Site from Focus 2000. The $3.2 million purchase price was
based upon an independent appraisal valuation, less credit
for net rental proceeds during the term of the escrow and
profit participation pursuant to the Focus Participation
Agreement.
In May 1995, the Company repurchased the Old Vegas Site
from Focus 2000 which had been part of the 125 Acre-Site.
The $5.7 million purchase price equaled Focus 2000's costs
plus defined holding costs. The purchase price was
significantly below the independent appraisal valuation.
BANKING RELATIONSHIPS. Until April 1995, Peter M.
Thomas was President, Chief Operating Officer and a Director
of Bank of America, Nevada, a subsidiary of BankAmerica
Corporation. Bank of America and Bank of America, Nevada are
participant banks in the Rio Bank Loan and Bank of America,
Nevada provides regular commercial banking services to the
Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section
78.751 of Chapter 78 of the Nevada Revised Statutes, Article
XII of the Company's Articles of Incorporation and Article
XIII of the Company's Bylaws contain provisions for
indemnification of officers, directors, employees and agents
of the Company. The Articles of Incorporation provision
requires the Company to indemnify such persons to the full
extent permitted by Nevada Law. Each person will be
indemnified in any proceeding if he acted in good faith and
in a manner which he reasonably believed to be in, or not
opposed to, the best interest of the Company.
Indemnification would cover expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement.
The Company's Articles of Incorporation also provide
that the Company's Board of Directors may cause the Company
to purchase and maintain insurance on behalf of any present
or past director or officer insuring against any liability
asserted against such person incurred in the capacity of
director or officer or arising out of such status, whether
or not the corporation would have the power to indemnify
such person. The Company presently has directors' and
officers' liability insurance in effect.
<PAGE>
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is therefore
unenforceable.
TRANSACTION REVIEW. The Company believes that the
transactions described above are on terms at least as
favorable as would have been obtainable from non-related
parties. The Company requires that the Audit Committee of
the Board of Directors review related party transactions.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information
regarding beneficial ownership of the Company's common stock
("Common Stock") as of July 31, 1995 (i) by each person (or
a group of affiliated persons) who is known by the Company
to own beneficially more than five percent of the Company's
Common Stock, (ii) by the executive officers named in the
Summary Compensation Table contained in the Company's Proxy
Statement prepared in connection with the 1995 Annual
Meeting of the Company's stockholders and (iii) by all
directors and executive officers as a group.
Shares of Common Percent
Name and Address Stock of Class
of Beneficial Owner Beneficially (2)
Owned (1)(2)
Anthony A. Marnell II 5,045,780(3) 23.7%
4495 S. Polaris Avenue
Las Vegas, Nevada 89103
James A. Barrett, Jr. 1,966,612(4) 9.2%
4495 S. Polaris Avenue
Las Vegas, Nevada 89103
Lud J. Corrao 1,287,728(5) 6.0%
P.O. Box 12907
Reno, Nevada 89510
Dean P. Petersen 1,110,910(6) 5.2%
2900 Las Vegas Blvd. South
Las Vegas, Nevada 89109
Harlan D. Braaten 62,050(7) *
3700 West Flamingo Road
Las Vegas, Nevada 89103
Putnam Investments, Inc. 1,853,725(8) 8.7%
One Post Office Square
Boston, Massachusetts 02109
Gilder, Gagnon, Howe & Co. 1,800,088(9) 8.4%
1775 Broadway
New York, New York 10019
Capital Research & Management 1,155,200(10) 5.4%
#4 Embarcadero Center, Suite 1800
San Francisco, California 94111
All Executive Officers and 5,307,880(11) 24.9%
Directors as a group
(7 persons)
_______________________
*Less than one percent.
(1) Unless otherwise noted, the persons identified in
this table have sole voting and sole investment
power with regard to the shares beneficially owned
by them.
(2) Includes shares issuable upon exercise of options
which are exercisable within 60 days of the stated
date.
(3) Includes options to purchase 196,000 shares
issuable to Mr. Marnell under the Company's Non
Statutory Stock Option Plan (the "NSOP"), which are
not listed below. Mr. Marnell beneficially owns the
following shares which are held of record by the
following entities:
<PAGE>
Common
Stock
A.A. Marnell II Family Revocable Living 68,167
Trust (a)
Certain trusts established for the benefit 900,000
of Mr. Marnell's family (a)
Marnell Corrao, Inc. ("Marnell Corrao") 2,035,051
MarCor Limited Partnership ("MCLP") (b) 1,846,562
Total Shares 4,849,780
_____________________________
(a) Mr. Marnell holds sole voting and investment
power over the shares held by his family trusts.
(b) Mr. Marnell through his family trusts, owns
approximately 83% of MCLP, a limited partnership.
(4) Includes options to purchase 99,000 shares
issuable to Mr. Barrett under the NSOP. Of the
shares currently held by Mr. Barrett, 2,000 shares
are held in his individual retirement account; 3,000
shares are held in certain of his spouse's accounts;
16,000 shares are held by the Barrett Family
Revocable Living Trust through a family corporation,
50 shares are held directly by the trust; and
1,846,562 shares are held by MCLP of which Barrett,
Inc., a family corporation controlled by Mr. Barrett
and his family trust, is the general partner. Not
included are 2,000 shares held in certain trusts for
which Mr. Barrett is sole trustee.
(5) Of the shares currently held by Mr. Corrao, 25,000
are held directly and 1,262,728 are held through the
Lud Corrao Family Trust.
(6) Includes options to purchase 20,000 shares
issuable to Mr. Petersen under the Company's 1991
Directors' Stock Option Plan (the "Directors'
Plan"). Mr. Petersen's shares are held of record by
The Dean and Mary Petersen Living Trust of 1975.
(7) Includes options to purchase 34,000 shares
issuable to Mr. Braaten under the NSOP.
(8) Putnam Investments, Inc. ("Putnam") reported on a
Schedule 13G, dated January 30, 1995, that it has
shared voting power with respect to 92,400 of such
shares and shared dispositive power with respect to
all of such shares. Putnam subsequently reported on
an Amendment to the Schedule 13G, dated June 6,
1995, that it had increased its shared voting power
with respect to 189,700 of such shares and shared
dispositive power with respect to 2,224,725 of such
shares. Putnam reported that such holdings
represented 10.5% of the outstanding Common Stock on
the date of the amendment.
(9) Gilder, Gagnon, Howe & Co. reported on an
Amendment to Schedule 13G, dated February 9, 1995,
that it has shared voting and dispositive power with
respect to 69,650 of such shares and sole
dispositive power with respect to 1,730,438 of such
shares.
(10) Capital Research & Management reported on Form 13F
that at March 31, 1995 it shared investment
discretion with an affiliate with respect to
1,155,200 shares of Common Stock.
(11) Includes options to purchase 344,000 shares under
the NSOP and options to purchase 46,000 shares under
the Directors' Plan.
<PAGE>
DESCRIPTION OF NEW NOTES
The New Notes will be issued under an indenture dated
as of July 21, 1995 (the "Indenture"), among Rio Hotel &
Casino, Inc. (the "Company"), Rio Properties, Inc. (the
"Guarantor") and IBJ Schroder Bank & Trust Company, as
trustee (the "Trustee"). Except as otherwise indicated
below, the following summary applies to both the Old Notes
and the New Notes. As used herein, the term "Notes" shall
mean the Old Notes and the New Notes unless otherwise
stated.
The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 as in effect on the date
of the Indenture (the "Trust Indenture Act"). The Notes are
subject to all such terms, and Noteholders are referred to
the Indenture and the Trust Indenture Act for a statement of
those terms.
The form and terms of the New Notes are substantially
identical to the form and terms of the Old Notes, except
that (i) the New Notes will be registered under the
Securities Act of 1933, as amended, and, therefore, will not
bear legends restricting the transfer thereof, (ii) holders
of the New Notes will not be entitled to Special Interest,
which terminates upon consummation of the Exchange Offer,
and (iii) holders of New Notes will not be entitled to
certain rights under the Registration Agreement intended for
the holders of unregistered securities. The New Notes will
be issued solely in exchange for an equal principal amount
of Old Notes. As of the date hereof, $100 million aggregate
principal amount of Old Notes is outstanding. See "The
Exchange Offer."
The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to
the provisions of the Indenture and the Notes, including the
definitions therein of certain terms used below. A copy of
the Indenture has been filed with the Commission as an
exhibit to the Company's Report on Form 8-K dated July 18,
1995. Capitalized terms used in this section and not
otherwise defined below have the respective meanings
assigned to them in the Indenture.
GENERAL
The Notes are general unsecured obligations of the
Company and will be limited to $100 million aggregate
principal amount. The Notes will be issued in fully
registered form only, without coupons, in denominations of
$1,000 and integral multiples thereof.
The payment of principal and interest on the Notes is
unconditionally guaranteed on a senior subordinated and
unsecured basis by the Guarantor (the "Rio Guarantee").
PAYMENT TERMS
The Notes will mature on July 15, 2005 and will bear
interest at a rate of 10 5/8% per annum until maturity,
payable semiannually on January 15 and July 15 of each year,
commencing January 15, 1996, to the persons who are
registered Noteholders thereof at the close of business on
the January 1 or July 1 immediately preceding such interest
payment date.
The Indenture provides that interest on the Notes will
be computed on the basis of a 360-day year of twelve 30-day
months. Initially, the Trustee will act as Paying Agent and
Registrar. Principal and interest will be payable initially
at the offices of the Trustee but, at the option of the
Company, interest may be paid by check mailed to the persons
who are registered holders of Notes ("Noteholders") at their
registered addresses. The Notes may be presented for
registration of transfer and exchange at the offices of the
Registrar, which initially will be the offices of the
Trustee. The Company or any domestically incorporated Wholly
Owned Subsidiary may act as Paying Agent and Registrar, and
the Company may change the Paying Agent or Registrar without
prior notice to Noteholders.
<PAGE>
SUBORDINATION OF NOTES
The Notes are subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full, in
cash or cash equivalents, of all existing and future Senior
Indebtedness of the Company. The Notes shall in all respects
rank pari passu with all other Senior Subordinated
Indebtedness of the Company and only Indebtedness of the
Company which is Senior Indebtedness shall rank senior to
the Notes. Except with respect to limitations on
consolidated Indebtedness that the Company may incur, the
Indenture does not limit the ability of the Company to incur
additional Senior Indebtedness or restrict the ability of
the Company to transfer assets to and among its
Subsidiaries. As described below, in the event of
bankruptcy, liquidation or reorganization of the Company,
the assets of the Company will be available to make payments
on the Notes only after all Senior Indebtedness has been
paid in full, and there may not be sufficient assets
remaining to pay amounts due on the Notes. Substantially all
of the Senior Indebtedness of the Company (currently
consisting of the Company's Guarantee of the Rio Bank Loan)
is secured by substantially all the assets of the Company.
In the event of any payment or distribution of the assets of
the Company in any foreclosure, dissolution, winding up,
liquidation or reorganization, holders of the secured
indebtedness will have a secured prior claim to the assets
of the Company and its Subsidiaries. The Company has
outstanding no Senior Subordinated Indebtedness, and no
Senior Indebtedness other than its Guarantee of the Rio Bank
Loan.
Under certain circumstances, as described below,
holders of Senior Indebtedness may block payments on the
Notes. Any claims by Noteholders against the assets of
Subsidiaries would be subordinate to all existing and future
obligations (including trade payables and preferred stock,
if any, of such subsidiaries). As of July 31, 1995, there
were no current liabilities of the Company's subsidiaries
outstanding ranking senior to the Notes. Assuming the
subsequent incurrence by Rio Properties of the full $175
million of its available bank borrowings under the Rio Bank
Loan, there would have been outstanding that amount of
indebtedness and other liabilities of the Company's
subsidiaries ranking senior to the Notes.
Upon any payment or distribution of the assets of the
Company to creditors upon a total or partial liquidation or
a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property:
(i) holders of Senior Indebtedness shall be entitled to
receive payment in full of the Senior Indebtedness before
Noteholders shall be entitled to receive any payment of
principal of or interest on the Notes; and (ii) until the
Senior Indebtedness is paid in full, any distribution to
which Noteholders would be entitled but for this provision
shall be made to holders of Senior Indebtedness as their
interests may appear, except that Noteholders may receive
shares of stock and any debt securities that are
subordinated to Senior Indebtedness to at least the same
extent as the Notes.
The Company may not pay the principal of or interest on
the Notes or make any deposit for the purpose of the
discharge of its liabilities under the Indenture and may not
repurchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if (i) any Senior
Indebtedness is not paid when due or (ii) any other default
on Senior Indebtedness occurs and the maturity of such
Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, (a) the default has been
cured or waived and any such acceleration has been rescinded
or (b) such Senior Indebtedness has been paid in full.
During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence)
with respect to any Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to
effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Notes
for a period (a "Payment Blockage Period") commencing upon
the receipt by the Company and the Trustee of written notice
of such default from the Representative of any Designated
Senior Indebtedness specifying an election to effect a
Payment Blockage Period (a "Blockage Notice") and ending 179
days thereafter (or earlier if such Payment Blockage Period
is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full of such Senior
Indebtedness or (iii) because the default giving rise to
such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained
in the next preceding sentence), unless the holders of such
Senior Indebtedness or the Representative of such holders
shall have accelerated the maturity of such Senior
Indebtedness, the Company may resume payments on the Notes
after such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect
to Senior Indebtedness during such period.
<PAGE>
The provisions described in the two preceding
paragraphs shall not prevent or delay (i) the Company from
redeeming any Notes if required by any Gaming Authority as
described under "Mandatory Disposition or Redemption
Pursuant to Gaming Laws" or from otherwise purchasing any
Notes pursuant to any Legal Requirement relating to the
gaming business of the Company and its Subsidiaries or (ii)
the receipt by the Noteholders of payments of principal and
interest on the Notes, as described under "Discharge of
Indenture and Defeasance", from the application of any money
or U.S. Government Obligations held in trust by the Trustee.
In the event of the Company's insolvency, liquidation,
reorganization, dissolution or other proceedings, funds
which would otherwise be payable to Noteholders will be paid
to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full. Moreover,
creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the
Noteholders, and creditors of the Company who are not
holders of Senior Indebtedness or of the Notes may recover
less, ratably, than holders of the Senior Indebtedness and
may recover more, ratably, than the Noteholders.
There is currently no Indebtedness of the Company that
is subordinated to the Notes, and the Company has no current
plans to issue any Indebtedness that would be subordinated
to the Notes.
SUBORDINATION OF RIO GUARANTEE
The Rio Guarantee is subordinated in right of payment,
as set forth in the Indenture, to the prior payment in full,
in cash or cash equivalents, of all existing and future
Senior Indebtedness of Guarantor. As of July 31, 1995, there
was no Senior Indebtedness of Guarantor outstanding to which
the Rio Guarantee would be subordinated. Assuming the
subsequent incurrence by the Guarantor of the full $175
million of its available bank borrowings under the Rio Bank
Loan, the Rio Guarantee would be subordinated to that amount
of Senior Indebtedness of Guarantor. The Rio Guarantee shall
in all respects rank pari passu with all other Senior
Subordinated Indebtedness of Guarantor and only Indebtedness
of the Guarantor which is Senior Indebtedness of Guarantor
shall rank senior to the Rio Guarantee. Except with respect
to limitations on consolidated Indebtedness that the Company
and its Restricted Subsidiaries (including the Guarantor)
may incur, the Indenture does not limit the ability of the
Guarantor to incur additional Senior Indebtedness of
Guarantor or restrict the ability of the Guarantor to
transfer assets to and among its Subsidiaries. As described
below, in the event of bankruptcy, liquidation or
reorganization of the Guarantor, the assets of the Guarantor
will be available to make payments under the Rio Guarantee
only after all Senior Indebtedness of Guarantor has been
paid in full, and there may not be sufficient assets
remaining to pay amounts due on the Rio Guarantee.
Substantially all of the Senior Indebtedness of Guarantor is
secured by substantially all the assets of the Guarantor. In
the event of any payment or distribution of the assets of
the Guarantor in any foreclosure, dissolution, winding up,
liquidation or reorganization, holders of the secured
indebtedness will have a secured prior claim to the assets
of the Guarantor and its Subsidiaries.
Under certain circumstances, as described below,
holders of Senior Indebtedness of Guarantor may block
payments on the Rio Guarantee. Any claims by Noteholders
against the assets of Subsidiaries of the Guarantor would be
subordinate to all existing and future obligations
(including trade payables and preferred stock, if any, of
such Subsidiaries). The Subsidiaries of the Guarantor do not
have any significant liabilities outstanding.
Upon any payment or distribution of the assets of the
Guarantor to creditors upon a total or partial liquidation
or a total or partial dissolution of the Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Guarantor or its
property: (i) holders of Senior Indebtedness of Guarantor
shall be entitled to receive payment in full of the Senior
Indebtedness of Guarantor before Noteholders shall be
entitled to receive any payment under the Rio Guarantee; and
(ii) until the Senior Indebtedness of Guarantor is paid in
full, any distribution to which Noteholders would be
entitled but for this provision shall be made to holders of
Senior Indebtedness of Guarantor as their interests may
appear, except that Noteholders may receive shares of stock
and any debt securities that are subordinated to Senior
Indebtedness of Guarantor to at least the same extent as the
Rio Guarantee.
The Guarantor may not pay the principal of or interest
on the Notes pursuant to the Rio Guarantee or make any
deposit for the purpose of the discharge of its liabilities
under the Indenture and may not repurchase, redeem or
otherwise retire any Notes pursuant to the Rio Guarantee
(collectively, "pay the Notes") if (i) any Senior
<PAGE>
Indebtedness of Guarantor is not paid when due or (ii) any
other default on Senior Indebtedness of Guarantor occurs and
the maturity of such Senior Indebtedness of Guarantor is
accelerated in accordance with its terms unless, in either
case, (a) the default has been cured or waived and any such
acceleration has been rescinded or (b) such Senior
Indebtedness of Guarantor has been paid in full. During the
continuance of any default (other than a default described
in clause (i) or (ii) of the preceding sentence) with
respect to any Senior Indebtedness of Guarantor pursuant to
which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be
required to effect such acceleration) or the expiration of
any applicable grace periods, the Guarantor may not pay the
Notes for a period (a "Payment Blockage Period") commencing
upon the receipt by the Guarantor and the Trustee of written
notice of such default from the Representative of any
Designated Senior Indebtedness of Guarantor specifying an
election to effect a Payment Blockage Period (a "Blockage
Notice") and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Guarantor from the Person or Persons
who gave such Blockage Notice, (ii) by repayment in full of
such Senior Indebtedness of Guarantor or (iii) because the
default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the
provisions contained in the next preceding sentence), unless
the holders of such Senior Indebtedness of Guarantor or the
Representative of such holders shall have accelerated the
maturity of such Senior Indebtedness of Guarantor, the
Guarantor may resume payments under the Rio Guarantee after
such Payment Blockage Period. Not more than one Blockage
Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to
Senior Indebtedness of Guarantor during such period.
In the event of the Guarantor's insolvency,
liquidation, reorganization, dissolution or other
proceedings, funds which would otherwise be payable to
Noteholders will be paid to the holders of Senior
Indebtedness of Guarantor to the extent necessary to pay the
Senior Indebtedness of Guarantor in full. Moreover,
creditors of the Guarantor who are holders of Senior
Indebtedness of Guarantor may recover more, ratably, than
the Noteholders, and creditors of the Guarantor who are not
holders of Senior Indebtedness of Guarantor or of the Notes
may recover less, ratably, than holders of the Senior
Indebtedness of Guarantor and may recover more, ratably,
than the Noteholders.
There is currently no Indebtedness of the Guarantor
that is subordinated to the Rio Guarantee, and the Guarantor
has no current plans to issue any Indebtedness that would be
subordinated to the Rio Guarantee.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the option of the
Company prior to July 15, 2000. On or after that date, the
Notes will be redeemable at the option of the Company, in
whole at any time or in part from time to time, on at least
30 but not more than 60 days' prior notice, mailed by first-
class mail to the Noteholders' registered addresses, at the
redemption prices (expressed in percentages of principal
amount) specified below plus accrued interest to the
redemption date, if redeemed during the 12-month period
beginning July 15 of the years indicated below:
Year Percentage
2000 103.98%
2001 102.66%
2002 101.33%
2003 and thereafter 100.00%
If fewer than all the Notes are to be redeemed,
selection of Notes for redemption will be made by the
Trustee, pro rata or by lot or by any other means the
Trustee determines to be fair and appropriate and which
complies with applicable legal and securities exchange
requirements.
MANDATORY DISPOSITION OR REDEMPTION PURSUANT TO GAMING LAWS
If a Holder or beneficial owner of a Note is required
to be licensed, qualified or found suitable under applicable
Gaming Laws and is not so licensed, qualified or found
suitable, the Holder shall be obliged, at the request of the
Company, to dispose of such Holder's Notes within 30 days
after receipt of notice of failure to be found suitable or
<PAGE>
such earlier date prescribed by any Gaming Authority (in
which event the Company's obligation to pay any interest
after the receipt of such notice shall be limited as
provided in such Gaming Laws), and thereafter, the Company
shall have the right to redeem, on the date fixed by the
Company for the redemption of such Notes, such Holder's
Notes at a redemption price equal to the lower of (i) the
price at which such Holder or beneficial owner acquired the
Notes without accrued interest, if any (unless the payment
of such interest is permitted by the applicable Gaming
Authority), (ii) the Current Market Price of the Notes on
such redemption date and (iii) the principal amount of such
notes without accrued interest, if any (unless the payment
of such interest is permitted by the applicable Gaming
Authority). The Company is not required to pay or reimburse
any Holder or beneficial owner of a Note for the costs of
licensure or investigation for such licensure, qualification
or finding of suitability. Any Holder or beneficial owner of
a Note required to be licensed, qualified or found suitable
under applicable Gaming Laws must pay all investigative fees
and costs of the Gaming Authorities in connection with such
qualification or application therefor.
MANDATORY SINKING FUND
There are no mandatory sinking fund payments for the
Notes.
CHANGE OF CONTROL
Upon a Change of Control, each Holder shall have the
right to require that the Company repurchase such Holder's
Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase, in accordance with the
terms contemplated in the next paragraph. In the event that
at the time of such Change of Control the terms of the Bank
Indebtedness or other Senior Indebtedness restrict or
prohibit the repurchase of Notes pursuant to this provision,
then prior to the mailing of the notice to Holders provided
for in the next paragraph below but in any event within 30
days following any Change of Control, the Company covenants
to (i) repay in full all Bank Indebtedness or such other
Senior Indebtedness or to offer to repay in full all Bank
Indebtedness or such other Senior Indebtedness and to repay
the Bank Indebtedness or such other Senior Indebtedness of
each lender who has accepted such offer or (ii) obtain the
requisite consent under the agreements governing the Bank
Indebtedness or such other Senior Indebtedness to permit the
repurchase of the Notes as provided for in the next
paragraph.
Within 30 days following any Change of Control, the
Company shall send, by first-class mail to each Holder, a
notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such
Holder's Notes at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase;
(2) the circumstances and relevant facts regarding such
Change of Control which the Company in good faith believes
will enable Holders to make an informed decision (which at a
minimum will include information with respect to PRO FORMA
historical income, cash flow and capitalization, each after
giving effect to such Change of Control, events causing such
Change of Control and the date such Change of Control is
deemed to have occurred);
(3) the purchase date (which shall be no earlier than
30 days nor later than 60 days from the date such notice is
mailed); and
(4) the instructions determined by the Company,
consistent with this provision, that a Holder must follow in
order to have its Notes purchased, together with the
information contained in the next paragraph (and including
any related materials).
Holders electing to have a Note purchased will be
required to surrender the Note, with an appropriate form
duly completed, to the Company at the address specified in
the notice at least five Business Days prior to the purchase
date. Holders will be entitled to withdraw their election if
the Trustee or the Company receives not later than three
Business Days prior to the purchase date, a telegram, telex,
facsimile transmission or letter setting forth the name of
<PAGE>
the Holder, the principal amount of the Note which was
delivered for purchase by the Holder and a statement that
such Holder is withdrawing his election to have such Note
purchased.
On the purchase date, all Notes purchased by the
Company under this provision shall be delivered by the
Trustee for cancellation, and the Company shall pay the
purchase price plus accrued and unpaid interest, if any, to
the Holders entitled thereto.
The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act
and any other securities laws or regulations in connection
with the repurchase of Notes pursuant to this provision. To
the extent that the provisions of any securities laws or
regulations conflict with this provision, the Company shall
comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations
under this provision by virtue thereof.
The Company's obligations to repurchase the Notes upon
a Change of Control will be guaranteed on a senior
subordinated basis by the Guarantor pursuant to the Rio
Guarantee. Such Guarantee will be subordinated to Senior
Indebtedness of Guarantor to the same extent described above
under "Subordination of Rio Guarantee."
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined
terms used in the Indenture. Reference is made to the
Indenture for the full definition of all such terms, as well
as any other terms used herein for which no definition is
provided.
"ADDITIONAL ASSETS" means (i) any property or assets
(other than Indebtedness and Capital Stock) in a Related
Business; (ii) Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of the acquisition of such
Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority
interest in any Person that at such time is a Restricted
Subsidiary; provided, however, that, in the case of clauses
(ii) and (iii), such Restricted Subsidiary is primarily
engaged in a Related Business.
"AFFILIATE" of any specified Person means (i) any other
Person, directly or indirectly, controlling or controlled by
or under direct or indirect common control with such
specified Person or (ii) any other Person who is a director
or officer (a) of such specified Person, (b) of any
subsidiary of such specified Person or (c) of any Person
described in clause (i) above. For the purposes of this
definition, "control" when used with respect to any Person
means the power to direct the management and policies of
such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. For purposes of the section
"Limitation on Transactions with Affiliates" only,
"Affiliate" shall also mean any beneficial owner of shares
representing 10% or more of the total voting power of the
Voting Stock (on a fully diluted basis) of the Company or of
rights or warrants to purchase such Voting Stock (whether or
not currently exercisable) and any Person who would be an
Affiliate of any such beneficial owner pursuant to the first
sentence hereof.
"ASSET DISPOSITION" means any direct or indirect sale
including a Sale/Leaseback Transaction, lease, transfer,
conveyance or other disposition (or series of related sales,
Sale/Leaseback Transactions, leases, transfers, conveyances
or dispositions) of shares of Capital Stock of a Restricted
Subsidiary (other than directors' qualifying shares),
property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any
of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to
a Wholly Owned Subsidiary, (ii) a disposition of property or
assets at Fair Market Value in the ordinary course of
business and consistent with past practices of the Company
or any of its Restricted Subsidiaries, as applicable, (iii)
a disposition with a Fair Market Value and a sale price of
less than $10 million, and (iv) for purposes of the
provisions of "Limitation on Sales of Assets and Subsidiary
Stock" only, a disposition subject to the limitations set
forth under "Limitation on Restricted Payments".
<PAGE>
"ATTRIBUTABLE INDEBTEDNESS" means Indebtedness deemed
to be incurred in respect of a Sale/Leaseback Transaction
and shall be, at the date of determination, the greater of
(i) the fair market value of the property subject to such
Sale/Leaseback Transaction (as determined in good faith by
the Board of Directors) or (ii) the present value
(discounted at the actual rate of interest implicit in such
transaction, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term
of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been
extended).
"AVERAGE LIFE" means, as of the date of determination,
with respect to any Indebtedness or Preferred Stock, the
quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect
to such Preferred Stock multiplied by the amount of such
payment by (ii) the sum of all such payments.
"BANK INDEBTEDNESS" means any and all amounts payable
under or in respect of the Credit Agreement, as amended (or
refinanced or replaced) from time to time, including
principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or
the Guarantor whether or not a claim for post-filing
interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all
other amounts payable thereunder or in respect thereof.
"BANKS" has the meaning specified in the Credit
Agreement.
"BOARD OF DIRECTORS" means the Board of Directors of
the Company or any committee thereof duly authorized to act
on behalf of such Board.
"BOARD RESOLUTION" means a duly adopted resolution of
the Board of Directors in full force and effect at the time
of determination and certified as such by the Secretary or
an Assistant Secretary of the Company.
"CAPITALIZED LEASE OBLIGATIONS" means an obligation
that is required to be classified and accounted for as a
capitalized lease for financial reporting purposes in
accordance with GAAP; and the amount of Indebtedness
represented by such obligation shall be the capitalized
amount of such obligation determined in accordance with
GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"CAPITAL STOCK" of any Person means any and all shares,
interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in
(however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities
convertible or exchangeable into such equity.
"CASINO" means any gaming establishment and other
property or assets directly ancillary thereto or used in
connection therewith, including any building, restaurant,
hotel, theater, parking facilities, retail shops, land, golf
courses and other recreation and entertainment facilities,
vessel, barge, ship and equipment.
"CHANGE OF CONTROL" means the occurrence of any of the
following events: (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than
one or more Permitted Holders or an underwriter engaged in a
firm commitment underwriting in connection with a public
offering of the Voting Stock of the Company, is or becomes
the "beneficial owner" (as that term is used in Rules 13d-3
and 13d-5 under the Exchange Act, except that a person shall
be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of the total
voting power of the Voting Stock of the Company; (ii) during
any period of 12 consecutive months after the date of the
Indenture, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together
with any new directors whose election by such Board of
Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a
majority of the directors of the Company then still in
office who were either directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or (iii)
the Company consolidates or merges with or into, or,
directly or indirectly, sells all or substantially all of
its assets to any person, other than a Wholly Owned
Subsidiary or a Permitted Holder.
<PAGE>
"CODE" means the Internal Revenue Code of 1986, as
amended.
"CONSOLIDATED COVERAGE RATIO" as of any date of
determination means the ratio of (i) the aggregate amount of
EBITDA for the period of the most recent four consecutive
fiscal quarters ending at least 45 days (or at least 30 days
if the Company's Report on Form 10-Q or 10-K for the most
recent fiscal quarter or year, as the case may be, has been
filed with the SEC) prior to the date of such determination
to (ii) Consolidated Interest Expense for such four fiscal
quarters; PROVIDED, HOWEVER, that (a) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since
the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, Consolidated Interest Expense for
such period shall be calculated after giving effect on a PRO
FORMA basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the
first day of such period, (b) if since the beginning of such
period the Company or any Restricted Subsidiary shall have
made any Asset Disposition or if the transaction giving rise
to the need to calculate the Consolidated Coverage Ratio is
an Asset Disposition, or both, the EBITDA for such period
shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period, or
increased by an amount equal to the EBITDA (if negative),
directly attributable thereto for such period as if such
Asset Disposition had occurred on the first day of such
period and Consolidated Interest Expense for such period
shall be reduced by an amount equal to the Consolidated
Interest Expense directly attributable to any Indebtedness
of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Restricted Subsidiaries in
connection with such Asset Dispositions for such period as
if such Asset Disposition had occurred on the first day of
such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for
such period as if such Asset Disposition had occurred on the
first day of such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale), (c) if
since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have
made an Investment in any Restricted Subsidiary (or any
Person which becomes a Restricted Subsidiary) or an
acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be
calculated after giving PRO FORMA effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (d)
if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged
with or into the Company or any Restricted Subsidiary since
the beginning of such period) shall have made any Asset
Disposition or any Investment that would have required an
adjustment pursuant to clause (b) or (c) above if made by
the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving PRO FORMA effect thereto as
if such Asset Disposition or Investment occurred on the
first day of such period. For purposes of this definition,
whenever PRO FORMA effect is to be given to an acquisition
of assets, the amount of income or earnings relating thereto
and the amount of Consolidated Interest Expense associated
with any Indebtedness Incurred in connection therewith, the
PRO FORMA calculations shall be determined in good faith by
a responsible financial or accounting Officer of the Company
and as further contemplated by the definition of PRO FORMA.
If any Indebtedness bears a floating rate of interest and is
being given PRO FORMA effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate
Protection Agreement applicable to such Indebtedness if such
Interest Rate Protection Agreement has a remaining term in
excess of 12 months).
"CONSOLIDATED INTEREST EXPENSE" means, for any period,
the total interest expense of the Company and its
consolidated Subsidiaries, plus, to the extent not included
in such interest expense, (i) interest expense attributable
to capital leases, (ii) amortization of debt discount and
debt issuance cost, (iii) capitalized interest, (iv) non-
cash interest expense, (v) accrued interest, (vi)
commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance
financing, (vii) interest actually paid by the Company or
any such Subsidiary under any Guarantee of Indebtedness or
other obligation of any other Person, (viii) net costs
associated with Interest Rate Protection Agreements
(including amortization of fees), (ix) the interest portion
of any deferred obligation, (x) Preferred Stock dividends in
respect of all Preferred Stock of Subsidiaries and
Redeemable Stock of the Company held by Persons other than
the Company or a Wholly Owned Subsidiary, (xi) fees payable
in connection with financings to the extent not included in
(ii) above, including commitment, availability and similar
fees and (xii) the cash contributions to any employee stock
<PAGE>
ownership plan or similar trust to the extent such
contributions are used by such plan or trust to pay interest
or fees to any Person (other than the Company) in connection
with Indebtedness Incurred by such plan or trust; PROVIDED,
HOWEVER, that there shall be excluded therefrom any such
interest expense of any Unrestricted Subsidiary to the
extent the related Indebtedness is not Guaranteed or paid by
the Company or any Restricted Subsidiary.
"CONSOLIDATED NET INCOME" means, for any period, the
net income (loss) of the Company and its Subsidiaries;
PROVIDED, HOWEVER, that there shall not be included in such
Consolidated Net Income (i) any net income (loss) of any
Person if such Person is not a Restricted Subsidiary, except
that (a) subject to the limitations contained in (iv) below,
the Company's equity in the net income of any such Person
for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations
contained in clause (iii) below) and (b) the Company's
equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included
in determining such Consolidated Net Income, (ii) any net
income (loss) of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition, (iii) any net
income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (a) subject to the
limitations contained in (iv) below, the Company's equity in
the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up
to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period
to the Company or another Restricted Subsidiary as a
dividend (subject, in the case of a dividend to another
Restricted Subsidiary, to the limitation contained in this
clause) and (b) the Company's equity in a net loss of any
such Restricted Subsidiary for such period shall be included
in determining such Consolidated Net Income, (iv) any gain
(but not loss) realized upon the sale or other disposition
of any property, plant or equipment of the Company or its
consolidated Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise
disposed of in the ordinary course of business and any gain
(but not loss) realized upon the sale or other disposition
of any Capital Stock of any Person, (v) any extraordinary
gain or loss and (vi) the cumulative effect of a change in
accounting principles.
"CONSOLIDATED NET WORTH" means the total of the amounts
shown on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company ending at least 45 days
(or at least 30 days if the Company's Report on Form 10-Q or
10-K for the most recent fiscal quarter or year, as the case
may be, has been filed with the SEC) prior to the taking of
any action for the purpose of which the determination is
being made, as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid-in
capital or capital surplus relating to such Capital Stock
plus (iii) any retained earnings or earned surplus less (a)
any accumulated deficit and (b) any amounts attributable to
Disqualified Stock.
"CREDIT AGREEMENT" means the $175 million revolving
credit facility, as amended, between the Company and a
syndicate of banks, and any extensions, revisions,
refinancings or replacements thereof by a bank or a
syndicate of banks.
"CURRENT MARKET PRICE" on any date means the arithmetic
mean of the Quoted Price of the Notes for 20 consecutive
trading days commencing 30 days before such date.
"DEFAULT" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) the
Company's Guarantee of the Bank Indebtedness and (ii) any
other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding
of, or under which, at the date of determination, the
holders thereof, are committed to lend up to, at least $25
million and is specifically designated by the Company in the
instrument evidencing or governing such Senior Indebtedness
as "Designated Senior Indebtedness" for purposes of the
Indenture and has been designated as "Designated Senior
Indebtedness" for purposes of the Indenture in an Officers'
Certificate received by the Trustee.
"DESIGNATED SENIOR INDEBTEDNESS OF GUARANTOR" means (i)
the Bank Indebtedness and (ii) any other Senior Indebtedness
of Guarantor which, at the date of determination, has an
aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are
committed to lend up to, at least $25 million and is
<PAGE>
specifically designated by the Guarantor in the instrument
evidencing or governing such Senior Indebtedness of
Guarantor as "Designated Senior Indebtedness of Guarantor"
for purposes of the Indenture and has been designated as
"Designated Senior Indebtedness of Guarantor" for purposes
of the Indenture in an Officers' Certificate received by the
Trustee.
"DISQUALIFIED STOCK" of a Person means Redeemable Stock
of such Person as to which the maturity, mandatory
redemption, conversion or exchange or redemption at the
option of the holder thereof occurs, or may occur, on or
prior to the first anniversary of the Stated Maturity of the
Notes.
"EBITDA" for any period means the Consolidated Net
Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income: (i)
income tax expense, (ii) Consolidated Interest Expense,
(iii) depreciation expense and (iv) amortization expense, in
each case for such period.
"EVENT OF LOSS" means, with respect to any property or
asset, any (i) loss, destruction or damage of such property
or asset; or (ii) any condemnation, seizure or taking, by
exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of
the use of such property or asset.
"FAIR MARKET VALUE" means, with respect to any asset or
property, the price which could be negotiated in an arms'-
length free market transaction, for cash, between a willing
seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.
"GAAP" means generally accepted accounting principles
in the United States of America as in effect as of the date
of the Indenture, including those set forth in the opinions
and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as approved by a significant segment of the
accounting profession. All ratios and computations based on
GAAP contained in the Indenture shall be computed in
conformity with GAAP consistently applied.
"GAMING AUTHORITY" means the Nevada Gaming Commission,
the Nevada State Gaming Control Board or any agency which
has, or may at any time after the date of the Indenture
have, jurisdiction over the gaming activities of the Company
or any of its Subsidiaries or any successor to such
authority.
"GAMING LAWS" means the gaming laws of a jurisdiction
or jurisdictions to which the Company or any of its
Subsidiaries is, or may at any time after the date of the
Indenture be, subject.
"GAMING LICENSE" means any license, permit, franchise
or other authorization from any Governmental Authority
required on the date of the Indenture or at any time
thereafter to own, lease, operate or otherwise conduct the
gaming business of the Company and its Subsidiaries,
including all licenses granted under Gaming Laws and other
Legal Requirements.
"GUARANTEE" means any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing
any Indebtedness or other obligation of any other Person and
any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or
other obligation of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-
well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions
or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in
part); PROVIDED, HOWEVER, that the term "Guarantee" shall
not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"GUARANTOR" means Rio Properties, Inc.
"HOLDER" or "NOTEHOLDER" means the Person in whose name
a Note is registered on the Registrar's books.
<PAGE>
"INCUR" means issue, assume, Guarantee, incur or
otherwise become liable for; PROVIDED, HOWEVER, that any
Indebtedness or Capital Stock of a Person existing at the
time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Subsidiary at the time it becomes a
Subsidiary. The terms "Incurred", "Incurrence" and
"Incurring" shall each have a correlative meaning.
"INDEBTEDNESS" means, with respect to any Person on any
date of determination (without duplication),
(i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(iii) all Capitalized Lease Obligations and Attributable
Indebtedness of such Person;
(iv) all obligations of such Person to pay the deferred
and unpaid purchase price of property or services (except
Trade Payables), which purchase price is due more that six
months after the date of placing such property in service or
taking delivery and title thereto or the completion of such
services;
(v) all obligations of such Person in respect of
letters of credit, banker's acceptances or other similar
instruments or credit transactions (including reimbursement
obligations with respect thereto), other than obligations
with respect to letters of credit securing obligations
(other than obligations described in (i) through (iv) above)
entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn
upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement
following payment on the letter of credit;
(vi) the amount of all obligations of such Person with
respect to the redemption, repayment or other repurchase of
any Disqualified Stock or, with respect to any Subsidiary,
any Preferred Stock (but excluding, in each case, any
accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien
on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; PROVIDED, HOWEVER,
that the amount of such Indebtedness shall be the lesser of
(a) the fair market value of such asset at such date of
determination and (b) the amount of such Indebtedness of
such other Persons;
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(ix) to the extent not otherwise included in this
definition, obligations in respect of Interest Rate
Protection Agreements.
The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability,
upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"INDEPENDENT DIRECTOR" means a director of the Company
other than a director who is a party, or who is a director,
officer, employee or Affiliate (or is related by blood or
marriage to any such person) of a party, to the transaction
in question, and who is, in fact, independent in respect of
such transaction.
"INTEREST RATE PROTECTION AGREEMENT" means, in respect
of a Person, any interest rate swap agreement, interest rate
option agreement, interest rate cap agreement, interest rate
collar agreement, interest rate floor agreement or other
similar agreement or arrangement.
"INVESTMENT" in any Person means any direct or indirect
advance, loan (other than advances to customers in the
ordinary course of business that are recorded as accounts
receivable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or
similar arrangement) or capital contribution to (by means of
<PAGE>
any transfer of cash or other property to others or any
payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such
Person. For purposes of the definition of "Unrestricted
Subsidiary" and the limitations set forth in "Limitation on
Restricted Payments", (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in
such Subsidiary) of the Fair Market Value of the net assets
of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary;
PROVIDED, HOWEVER, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be
deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the
time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such
Subsidiary) of the Fair Market Value of the net assets of
such Subsidiary at the time that such Subsidiary is so re-
designated a Restricted Subsidiary; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such
transfer. In determining the amount of any Investment in
respect of any property or assets other than cash, such
property or asset shall be valued at its fair market value
at the time of such Investment (unless otherwise specified
in this definition), as determined in good faith by the
Board of Directors, whose determination shall be evidenced
by a Board Resolution.
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease
in the nature thereof) or any Sale/Leaseback Transaction.
"NET AVAILABLE CASH" from an Asset Disposition or Event
of Loss means cash payments received (including any cash
payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other
consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations
relating to such properties or assets or received in any
other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such
Asset Disposition or Event of Loss, (ii) all payments made
on any Indebtedness which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of
any Lien upon such assets, or which must by its terms, or in
order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (iii) all
distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures
as a result of such Asset Disposition or Event of Loss and
(iv) the deduction of appropriate amounts to be provided by
the seller as a reserve, in accordance with GAAP, against
any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition.
"NET CASH PROCEEDS", with respect to any issuance or
sale of Capital Stock, means the cash proceeds of such
issuance or sale net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale
and net of taxes paid or payable as a result thereof.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness of a
Person to the extent that under the terms thereof or
pursuant to applicable law (i) no personal recourse shall be
had against such Person for the payment of the principal of
or interest or premium, if any, on such Indebtedness, and
(ii) enforcement of obligations on such Indebtedness is
limited only to recourse against interests in Property and
assets purchased with the proceeds of the Incurrence of such
Indebtedness and as to which neither the Company nor any of
its Restricted Subsidiaries provides any credit support or
is liable.
"OFFICER" means the Chairman of the Board, the
President, the Treasurer or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by
two Officers at least one of whom shall be the principal
executive officer, principal accounting officer or principal
financial officer of the Company.
"OPINION OF COUNSEL" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be
an employee of or counsel to the Company or the Trustee.
"PARI PASSU", as applied to the ranking of any
Indebtedness of a Person in relation to other Indebtedness
of such Person, means that each such Indebtedness either (i)
is not subordinate in right of payment to any Indebtedness
<PAGE>
or (ii) is subordinate in right of payment to the same
Indebtedness as is the other, and is so subordinate to the
same extent, and is not subordinate in right of payment to
each other or to any Indebtedness as to which the other is
not so subordinate.
"PERMITTED FF&E FINANCING" means Indebtedness which is
Non-Recourse Indebtedness to the Company or any of its
Restricted Subsidiaries or any of their properties that is
Incurred to finance the acquisition or lease after the date
of the Indenture of newly acquired or leased furniture,
fixtures or equipment ("FF&E") used directly in the
operation of any casino hotel owned or leased by the Company
or its Restricted Subsidiaries and secured by a Lien on such
FF&E (which Lien, subject to certain limitations, shall be
the only Permitted Lien with respect to such FF&E).
"PERMITTED HOLDERS" means Anthony A. Marnell II, James
A. Barrett, Jr., their estates, spouses, ancestors, and
lineal descendants, the legal representatives of any of the
foregoing and the trustee of any bona fide trust of which
the foregoing are the sole beneficiaries or the grantors, or
any Person of which the foregoing "beneficially owns" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act)
voting securities representing at least 66 2/3% of the
total voting power of all classes of Capital Stock of such
Person (exclusive of any matters as to which class voting
rights exist).
"PERMITTED INVESTMENT" means an Investment by the
Company or any Restricted Subsidiary in (i) a Restricted
Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary; PROVIDED,
HOWEVER, that the primary business of such Restricted
Subsidiary is a Related Business; (ii) another Person if as
a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted
Subsidiary; PROVIDED, HOWEVER, that such Person's primary
business is a Related Business; (iii) Temporary Cash
Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in
accordance with customary trade terms; PROVIDED, HOWEVER,
that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and
similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made
in the ordinary course of business consistent with past
practices of the Company or such Restricted Subsidiary, as
the case may be; and (vii) stock, obligations or securities
received in settlement of debts created in the ordinary
course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments.
"PERMITTED LIENS" means, with respect to any Person,
(a) pledges or deposits by such Person under workmen's
compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds
to secure surety or appeal bonds to which such Person is a
party, or deposits as security for contested taxes or import
duties or for the payment of rent, in each case Incurred in
the ordinary course of business; (b) Liens imposed by law,
such as carriers', warehousemen's and mechanics' Liens, in
each case for sums not yet due or being contested in good
faith by appropriate proceedings, or other Liens arising out
of judgments or awards against such Person with respect to
which such Person shall then be prosecuting an appeal or
other proceedings for review; (c) Liens for property taxes
not yet due or payable or subject to penalties for non-
payment and which are being contested in good faith by
appropriate proceedings; (d) Liens in favor of issuers of
surety bonds or letters of credit issued pursuant to the
request of and for the account of such Person in the
ordinary course of its business; (e) minor survey
exceptions, minor encumbrances, easements or reservations
of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and
other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the
conduct of the business of such Person or to the ownership
of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially
impair their use in the operation of the business of such
Person; (f) Liens existing on the date of the Indenture; (g)
Liens on property or shares of stock of a Person at the time
such Person becomes a Subsidiary; PROVIDED, HOWEVER, that
any such Lien may not extend to any other property owned by
the Company or any Restricted Subsidiary; (h) Liens on
property at the time the Company or a Subsidiary acquired
the property, including any acquisition by means of a merger
or consolidation with or into the Company or any Restricted
Subsidiary; PROVIDED, HOWEVER, that any such Lien may not
extend to any other property owned by the Company or any
Restricted Subsidiary; (i) Liens securing an Interest Rate
Protection Agreement so long as the related Indebtedness is
permitted to be incurred under the Indenture, (j) Liens to
secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings,
extensions, renewals or replacements) as a whole, or in
<PAGE>
part, of any Indebtedness secured by any Lien referred to in
the foregoing clauses (f), (g), (h) and (k); PROVIDED,
HOWEVER, that (x) such new Lien shall be limited to all or
part of the same property that secured the original Lien
(plus improvements on such property) and (y) the
Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed
amount of the Indebtedness described under clauses (f), (g),
(h) or (k) at the time the original Lien became a Permitted
Lien under the Indenture and (B) an amount necessary to pay
any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement
and (k) Liens securing Permitted FF&E Financings.
"PERSON" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other
entity.
"PREFERRED STOCK", as applied to the Capital Stock of
any corporation, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class
of such corporation.
"PRINCIPAL" of a Note means the principal of the Note
plus the premium, if any, payable on the Note which is due
or overdue or is to become due at the relevant time.
"PRO FORMA" means, with respect to any calculation made
or required to be made pursuant to the terms hereof, a
calculation in accordance with Article 11 of Regulation S-X
promulgated under the Securities Act (to the extent
applicable), as interpreted in good faith by the Board of
Directors after consultation with the independent certified
public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors
after consultation with the independent certified public
accountants of the Company, as the case may be.
"QUOTED PRICE" means for any day the last reported sale
price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked
prices regular way for such day, in either case on the
principal national securities exchange on which the Notes
are listed or admitted to trading, or if the Notes are not
so listed or admitted to trading, but are traded in the over
the counter market, the closing sale price of the Notes or,
in case no sale is publicly reported, the average of the
closing bid and asked prices, as furnished by two members of
the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose.
"REDEEMABLE STOCK" means, with respect to any Person,
any Capital Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable
for Indebtedness (other than Preferred Stock) or
Disqualified Stock or (iii) is redeemable at the option of
the holder thereof, in whole or in part.
"REFINANCING INDEBTEDNESS" means Indebtedness that
refunds, refinances, replaces, renews, repays or extends
(including pursuant to any defeasance or discharge
mechanism) (collectively, "refinances," and "refinanced"
shall have a correlative meaning) any Indebtedness existing
on the date of the Indenture or Incurred in compliance with
the Indenture (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness;
PROVIDED, HOWEVER, that (i) the Refinancing Indebtedness has
a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being
refinanced, (iii) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original
issue discount, an aggregate issue price) that is equal to
or less than the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being refinanced and
(iv) if the Indebtedness of the Company or a Restricted
Subsidiary being refinanced is subordinated to other
Indebtedness of the Company or a Restricted Subsidiary in
any respect, such Refinancing Indebtedness is subordinated
at least to the same extent; PROVIDED FURTHER, HOWEVER, that
Refinancing Indebtedness shall not include (a) Indebtedness
of a Subsidiary that refinances Indebtedness of the Company
or (b) Indebtedness of the Company or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
<PAGE>
"RELATED BUSINESS" means the gaming business conducted
(or proposed to be conducted) by the Company and its
Subsidiaries as of the date of the Indenture and any and all
reasonably related businesses necessary for, in support or
anticipation of and ancillary to or in preparation for, the
gaming business including, without limitation, the
development, expansion or operation of any Casino (including
any land-based, dockside, riverboat or other type of
Casino), owned, or to be owned, by the Company or one of its
Subsidiaries.
"RESTRICTED SUBSIDIARY" means (i) Rio Properties, Inc.
and (ii) any other Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"REPRESENTATIVE" means the trustee, agent or
representative (if any) for an issue of Senior Indebtedness.
"SALE/LEASEBACK TRANSACTION" means an arrangement
relating to property now owned or hereafter acquired whereby
the Company or a Restricted Subsidiary transfers such
property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"SENIOR INDEBTEDNESS" means (i) the Company's Guarantee
of the Bank Indebtedness and (ii) all other Indebtedness of
the Company including interest thereon, whether outstanding
on the date of the Indenture or thereafter issued, unless in
the instrument creating or evidencing the same or pursuant
to which the same is outstanding it is provided that such
obligations are not superior in right of payment to the
Notes; PROVIDED, HOWEVER, that Senior Indebtedness shall not
include (a) any obligation of the Company to any Subsidiary,
(b) any liability for Federal, state, local or other taxes
owed or owing by the Company, (c) any accounts payable or
other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or
instruments evidencing such liabilities), (d) any
Indebtedness, Guarantee or obligation of the Company which
is subordinate or junior in any respect to any other
Indebtedness, Guarantee or obligation of the Company,
including any Senior Subordinated Indebtedness and any
Subordinated Obligations, (e) any obligations with respect
to any Capital Stock or (f) any Indebtedness Incurred in
violation of the Indenture.
"SENIOR INDEBTEDNESS OF GUARANTOR" means (i) the Bank
Indebtedness and (ii) all other Indebtedness of the
Guarantor including interest thereon, whether outstanding on
the date of the Indenture or thereafter issued, unless in
the instrument creating or evidencing the same or pursuant
to which the same is outstanding it is provided that such
Indebtedness shall not include (a) any obligation of the
Guarantor to any Subsidiary, (b) any liability for Federal,
state, local or other taxes owed or owing by the Guarantor,
(c) any accounts payable or other liability to trade
creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such
liabilities), (d) any Indebtedness, Guarantee or obligation
of the Guarantor which is subordinate or junior in any
respect to any other Indebtedness, Guarantee or obligation
of the Guarantor, including Senior Subordinated Indebtedness
of Guarantor and any Subordinated Obligations, (e) any
obligations with respect to any Capital Stock or (f) any
Indebtedness Incurred in violation of the Indenture.
"SENIOR SUBORDINATED INDEBTEDNESS" means the Notes and
any other Indebtedness of the Company that specifically
provides that such Indebtedness is to rank PARI PASSU with
the Notes and is not subordinated by its terms to any
Indebtedness or other obligation of the Company which is not
Senior Indebtedness.
"SENIOR SUBORDINATED INDEBTEDNESS OF GUARANTOR" means
the Rio Guarantee and any other Indebtedness of the
Guarantor that specifically provides that such Indebtedness
is to rank PARI PASSU with the Rio Guarantee and is not
subordinated by its terms to any Indebtedness or other
obligation of the Guarantor which is not Senior Indebtedness
of Guarantor.
"STATED MATURITY" means, with respect to any security,
the date specified in such security as the fixed date on
which the payment of principal of such security is due and
payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the
repurchase of such security at the option of the holder
thereof upon the happening of any contingency beyond the
control of the issuer unless such contingency has occurred).
<PAGE>
"SUBORDINATED OBLIGATION" means (i) any Indebtedness of
the Company (whether outstanding on the date of the
Indenture or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes or (ii) any
Indebtedness of the Guarantor (whether outstanding on the
date of the Indenture or thereafter Incurred) which is
subordinate or junior in right of payment to the Rio
Guarantee.
"SUBSIDIARY" of any Person means any corporation,
association, partnership or other business entity of which
more than 50% of the total voting power of shares of Capital
Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person
and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"TEMPORARY CASH INVESTMENTS" means any of the
following: (i) investments in U.S. Government Obligations
maturing within 90 days of the date of acquisition thereof,
(ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 90 days of
the date of acquisition or any state thereof having capital,
surplus and undivided profits aggregating in excess of
$500,000,000 and whose long-term debt is rated "A-3" or "A-"
or higher according to Moody's Investors Service, Inc. or
Standard and Poor's Corporation (or such similar equivalent
rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the
Securities Act)), (iii) repurchase obligations with a term
of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above,
and (iv) investments in commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United
States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Corporation.
"TRADE PAYABLES" means, with respect to any Person, any
accounts payable or any indebtedness or monetary obligation
to trade creditors created, assumed or Guaranteed by such
Person arising in the ordinary course of business of such
Person in connection with the acquisition of goods or
services.
"TRUSTEE" means the party named as such in the
Indenture until a successor replaces it in accordance with
the provisions of the Indenture and, thereafter, means the
successor.
"UNIFORM COMMERCIAL CODE" means the New York Uniform
Commercial Code as in effect from time to time.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of
the Company that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary of
the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock or Indebtedness of, or
owns or holds any Lien on any property of, the Company or
any other Subsidiary of the Company that is not a Subsidiary
of the Subsidiary to be so designated; PROVIDED, HOWEVER,
that either (a) the Subsidiary to be so designated has total
assets of $1,000 or less or (b) if such Subsidiary has
assets greater than $1,000, then such designation would be
permitted under "Limitation on Restricted Payments" as a
"Restricted Payment". The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED, HOWEVER, that immediately after giving PRO FORMA
effect to such designation (1) the Company could incur $1.00
of additional Indebtedness if it complies with the
Consolidated Coverage Ratio limitations in "Limitation on
Indebtedness" and (2) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying
that such designation complies with the foregoing
provisions.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations
(or certificates representing an ownership interest in such
obligations) of the United States of America (including any
agency or instrumentality thereof) for the payment of which
the full faith and credit of the United States of America is
pledged and which are not callable or redeemable at the
issuer's option.
<PAGE>
"VOTING STOCK" of a corporation means all classes of
Capital Stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
"WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary
of the Company all the Capital Stock of which (other than
directors' qualifying shares) is owned by the Company or
another Wholly Owned Subsidiary.
CERTAIN COVENANTS
The Indenture contains covenants including, among
others, the following:
LIMITATION ON INDEBTEDNESS. The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness; PROVIDED, HOWEVER, that the Company or any
Restricted Subsidiary may Incur Indebtedness if on the date
thereof the Consolidated Coverage Ratio would be greater
than 2.00:1.00.
Notwithstanding the foregoing limitation, the Company
and its Restricted Subsidiaries may Incur the following
Indebtedness: (i) Indebtedness under the Credit Agreement in
an aggregate amount outstanding at any time not to exceed
$175 million (less the amount of any permanent reductions in
the amount of available borrowings); (ii) Indebtedness
outstanding under Permitted FF&E Financings in an amount not
to exceed 100% of the lower of cost or fair market value of
the FF&E so purchased or leased; (iii) Indebtedness (other
than Indebtedness permitted by the immediately preceding
paragraph or elsewhere in this paragraph) in an aggregate
principal amount outstanding at any time not to exceed $40
million; (iv) Indebtedness of the Company owing to and held
by any Wholly Owned Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by the Company or
any Wholly Owned Subsidiary; PROVIDED, HOWEVER, that any
subsequent issuance or transfer of any Capital Stock which
results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of any
such Indebtedness (except to the Company or a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof; (v)
Indebtedness represented by the Notes and the Rio Guarantee
and any Indebtedness (other than the Indebtedness described
in clauses (i) or (iv) above) outstanding on the date of the
Indenture; (vi) Indebtedness under Interest Rate Protection
Agreements; PROVIDED, HOWEVER, such Interest Rate Protection
Agreements do not increase the Indebtedness of the Company
outstanding at any time other than as a result of
fluctuations in the exchange rates or interest rates or by
reason of customary fees, indemnities and compensation
payable thereunder; (vii) Indebtedness in connection with
one or more standby letters of credit issued in the ordinary
course of business or pursuant to self-insurance
obligations; (viii) Indebtedness Incurred solely in respect
of performance bonds or completion guarantees, to the extent
that such Incurrence does not result in the Incurrence by
the Company or any Restricted Subsidiary of any obligation
for the payment of borrowed money to others; and (ix)
Refinancing Indebtedness Incurred in respect of Indebtedness
Incurred pursuant to the provisions of the immediately
preceding paragraph or clauses (ii) and (v) above.
For purposes of determining the outstanding principal
amount of any particular Indebtedness Incurred pursuant to
this section "Limitation on Indebtedness", (i) Indebtedness
permitted by this section need not be permitted solely by
reference to one provision permitting such Indebtedness but
may be permitted in part by one such provision and in part
by one or more other provisions of this provision permitting
such Indebtedness and (ii) in the event that Indebtedness or
any portion thereof meets the criteria of more than one of
the types of Indebtedness described in this section, the
Company, in its sole discretion, shall classify such
Indebtedness and only be required to include the amount of
such Indebtedness in one of such clauses.
LIMITATION ON RESTRICTED PAYMENTS. The Company shall
not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or
make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or
consolidation involving the Company) except dividends or
distributions payable solely in its Capital Stock (other
than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock and except dividends
or distributions payable to the Company or a Restricted
Subsidiary (and, if such Restricted Subsidiary is not wholly
owned, to its other shareholders on a pro rata basis), (ii)
purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company or any Restricted Subsidiary
held by Persons other than the Company or a Restricted
Subsidiary, (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund
<PAGE>
payment any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of
acquisition) or (iv) make any Investment (other than a
Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein
referred to as a "Restricted Payment") if at the time the
Company or such Restricted Subsidiary makes such Restricted
Payment: (a) a Default shall have occurred and be continuing
(or would result therefrom); (b) the Company could not Incur
at least $1.00 of additional Indebtedness under the
Consolidated Coverage Ratio limitation set forth in
"Limitation on Indebtedness" above; or (c) the aggregate
amount of such Restricted Payment and all other Restricted
Payments (the amount so expended, if other than in cash, to
be determined in good faith by the Board of Directors, whose
determination shall be evidenced by a Board Resolution)
declared or made since June 30, 1995, would exceed, without
duplication, the sum of: (1) 50% of the Consolidated Net
Income accrued during the period (treated as one accounting
period) from June 30, 1995, to the end of the most recent
fiscal quarter ending at least 45 days (or at least 30 days
if the Company's Report on Form 10-Q or 10-K for the most
recent fiscal quarter or year, as the case may be, has been
filed with the SEC) prior to the date of such Restricted
Payment (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit) and minus 100% of the
amount of any write-downs, write-offs, other negative
revaluations and other negative extraordinary charges not
otherwise reflected in Consolidated Net Income during such
period; (2) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Capital Stock (other
than Disqualified Stock) subsequent to June 30, 1995 (other
than an issuance or sale to a Subsidiary of the Company or
an employee stock ownership plan or other trust established
by the Company or any of its Subsidiaries); (3) the amount
by which Indebtedness of the Company or its Restricted
Subsidiaries is reduced on the Company's balance sheet upon
the conversion or exchange (other than by a Subsidiary)
subsequent to June 30, 1995, of any Indebtedness of the
Company or its Restricted Subsidiaries convertible or
exchangeable for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash or other
property distributed by the Company or any Restricted
Subsidiary upon such conversion or exchange); (4) the amount
equal to the net reduction in Investments resulting from (A)
payments of dividends, repayments of loans or advances or
other transfers of assets to the Company or any Restricted
Subsidiary or (B) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case
as provided in the definition of "Investment") not to exceed
the amount of Investments previously made by the Company or
any Restricted Subsidiary, which amount was treated as a
Restricted Payment, in each case to the extent not included
in Consolidated Net Income; and (5) $20 million.
The provisions of this section shall not prohibit: (i)
any purchase or redemption of Capital Stock of the Company
or Subordinated Obligations made by exchange for, or out of
the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary
or an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries);
PROVIDED, HOWEVER, that (a) such purchase or redemption
shall be excluded in the calculation of the amount of
Restricted Payments and (b) the Net Cash Proceeds from such
sale shall be excluded from clause (c)(2) of the preceding
paragraph; (ii) any purchase or redemption of Subordinated
Obligations made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Refinancing
Indebtedness; PROVIDED, HOWEVER, that such purchase or
redemption shall be excluded in the calculation of the
amount of Restricted Payments; (iii) the Company or the
Guarantor from redeeming or repurchasing Capital Stock of
the Company or any Subordinated Obligation in the event that
the holder of such Capital Stock or Subordinated Obligation
has failed to qualify or to be found suitable or otherwise
eligible under a Gaming Law to remain a holder of such
Capital Stock or Subordinated Obligation; PROVIDED, HOWEVER,
that the amount of such redemption or repurchase shall be
included in the calculation of the amount of Restricted
Payments; (iv) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such
dividend would have complied with the preceding paragraph;
PROVIDED, HOWEVER, that at the time of payment of such
dividend, no other Default shall have occurred and be
continuing (or result therefrom); PROVIDED FURTHER, HOWEVER,
that such dividend shall be included in the calculation of
the amount of Restricted Payments or (v) the Company from
making Investments (other than Investments in the Capital
Stock of the Company) the cost to the Company of which do
not exceed $30 million in the aggregate at any one time
outstanding for all such Investments made in reliance upon
this clause (v), PROVIDED FURTHER, HOWEVER, that such
Investments shall be included in the calculation of the
amount of Restricted Payments.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
SUBSIDIARIES. The Company shall not, and shall not permit
any Restricted Subsidiary to, create or otherwise cause or
permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other
<PAGE>
distributions on its Capital Stock or pay any Indebtedness
owed to the Company, (ii) make any loans or advances to the
Company or (iii) transfer any of its property or assets to
the Company, except: (a) any encumbrance or restriction
pursuant to an agreement in effect at or entered into on the
date of the Indenture; (b) any encumbrance or restriction
with respect to a Restricted Subsidiary pursuant to an
agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred as consideration in, or to
provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the
Company) and outstanding on such date; (c) any encumbrance
or restriction pursuant to an agreement effecting a
refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (a) or (b) of this provision
or contained in any amendment to an agreement referred to in
clause (a) or (b) of this provision; PROVIDED, HOWEVER, that
the encumbrances and restrictions contained in any such
refinancing agreement or amendment are no less favorable to
the Noteholders than encumbrances and restrictions contained
in such agreements; (d) in the case of clause (iii), any
encumbrance or restriction (1) that restricts in a customary
manner the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or
contract or similar property or asset, (2) arising by virtue
of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise
prohibited by the Indenture, or (3) arising or agreed to in
the ordinary course of business and that does not,
individually or in the aggregate, detract from the value of
property or assets of the Company or any Restricted
Subsidiary in any manner material to the Company or such
Restricted Subsidiary; (e) any encumbrance or restriction
pursuant to an agreement relating to an acquisition of
property, so long as such encumbrance or restriction relate
solely to the property so acquired; (f) any encumbrances or
restrictions pursuant to the Credit Agreement and any
extensions or revisions thereof; and (g) any encumbrance or
restriction imposed by any Gaming Authority.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless (i) the
Company or such Restricted Subsidiary receives consideration
at the time of such Asset Disposition at least equal to the
Fair Market Value, as determined in good faith by the Board
of Directors, the determination of which shall be evidenced
by a Board Resolution (including as to the value of all non-
cash consideration), of the shares and assets subject to
such Asset Disposition; (ii) at least 85% of the
consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash
equivalents; (iii) the Company delivers an Officers'
Certificate to the Trustee certifying that such Asset
Disposition complies with clauses (i) and (ii); and (iv) an
amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such
Restricted Subsidiary, as the case may be) (a) FIRST, to the
extent the Company elects (or is required by the terms of
any Senior Indebtedness), to prepay, repay or purchase
Senior Indebtedness or Indebtedness (other than any
Preferred Stock) of a Wholly Owned Subsidiary (in each case
other than Indebtedness owed to the Company or an Affiliate
of the Company) within 270 days from the later of the date
of such Asset Disposition or the receipt of such Net
Available Cash; (b) SECOND, to the extent of the balance of
Net Available Cash after application in accordance with
clause (a), to the extent the Company or such Restricted
Subsidiary elects, to reinvest in Additional Assets
(including by means of an Investment in Additional Assets by
a Restricted Subsidiary with Net Available Cash received by
the Company or another Restricted Subsidiary) within 270
days from the later of such Asset Disposition or the receipt
of such Net Available Cash; (c) THIRD, to the extent of the
balance of such Net Available Cash after application in
accordance with clauses (a) and (b), to make an Offer to
purchase Notes pursuant to and subject to the conditions of
the following paragraph; PROVIDED, HOWEVER that in
connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (a) or (c) above, the
Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this provision,
the Company and its Restricted Subsidiaries shall not be
required to apply any Net Available Cash in accordance with
this provision except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not
applied in accordance with this provision exceed $15
million. Pending application of Net Available Cash pursuant
to this provision, such Net Available Cash shall be invested
in Temporary Cash Investments.
Upon an Event of Loss incurred by the Company or any of
its Restricted Subsidiaries, the Net Available Cash received
from such Event of Loss shall be applied in the same manner
as proceeds from Asset Dispositions described above and
pursuant to the procedures set forth below.
In the event of an Asset Disposition or Event of Loss
that requires the purchase of Notes pursuant to clause
(iii)(c) of the preceding paragraph, the Company will be
required to purchase Notes tendered pursuant to an offer by
<PAGE>
the Company for the Notes (the "Offer") at a purchase price
of 100% of their principal amount plus accrued interest to
the Purchase Date in accordance with the procedures
(including prorationing in the event of over subscription)
set forth in the next paragraph. If the aggregate purchase
price of Notes tendered pursuant to the Offer is less than
the Net Available Cash allotted to the purchase of the
Notes, the Company may use the remaining Net Available Cash
in its general operations. The Company shall not be required
to make an Offer for Notes pursuant to this provision if the
Net Available Cash available therefor (after application of
the proceeds as provided in clauses (a) and (b) of clause
(iii) of the preceding paragraph) are less than $15 million
for any particular Asset Disposition or Event of Loss (which
lesser amounts shall be carried forward for purposes of
determining whether an Offer is required with respect to the
Net Available Cash from any subsequent Asset Disposition or
Event of Loss).
Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company
shall be obligated to deliver to the Trustee and send, by
first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Notes purchased by the
Company either in whole or in part (subject to prorationing
as hereinafter described in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than
60 days after the date of such notice (the "Purchase Date")
and shall contain information concerning the business of the
Company which the Company in good faith believes will enable
such Holders to make an informed decision (which at a
minimum will include (i) the most recently filed Annual
Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any
Current Report on Form 8-K of the Company filed subsequent
to such Quarterly Report, other than Current Reports
describing Asset Dispositions or Events of Loss otherwise
described in the offering materials (or corresponding
successor reports) (collectively, the "Reports"), (ii) a
description of material developments in the Company's
business subsequent to the date of the latest of the
Reports, and (iii) if material, appropriate PRO FORMA
financial information) and all instructions and materials
necessary to tender Notes pursuant to the Offer, together
with the information contained in the next following
paragraph.
Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the
Company shall deliver to the Trustee an Officers'
Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from
the Asset Dispositions or Event of Loss pursuant to which
such Offer is being made and (iii) the compliance of such
allocation with the provisions of the next preceding
paragraph. On such date, the Company shall also irrevocably
deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and
hold in trust) in Temporary Cash Investments an amount equal
to the Offer Amount to be held for payment in accordance
with the provisions of this provision. Upon the expiration
of the period for which the Offer remains open (the "Offer
Period"), the Company shall deliver to the Trustee the Notes
or portions thereof which have been properly tendered to and
are to be accepted by the Company. The Trustee shall, on the
Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event
that the aggregate purchase price of the Notes delivered by
the Company to the Trustee is less than the Offer Amount,
the Trustee shall deliver the excess to the Company
immediately after the expiration of the Offer Period.
Holders electing to have a Note purchased will be
required to surrender the Note, with an appropriate form
duly completed, to the Company at the address specified in
the notice at least five Business Days prior to the Purchase
Date. Holders will be entitled to withdraw their election if
the Trustee or the Company receives not later than three
Business Days prior to the Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note which was
delivered for purchase by the Holder and a statement that
such Holder is withdrawing his election to have such Note
purchased. If at the expiration of the Offer Period the
aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes
to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased). Holders whose Notes are
purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes
surrendered.
At the time the Company delivers Notes to the Trustee
which are to be accepted for purchase, the Company will also
deliver an Officers' Certificate stating that such Notes are
to be accepted by the Company pursuant to and in accordance
with the terms of this provision. A Note shall be deemed to
have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
<PAGE>
The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act
and any other securities laws or regulations in connection
with the repurchase of Notes pursuant to this provision. To
the extent that the provisions of any securities laws or
regulations conflict with this provision, the Company shall
comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations
under this provision by virtue thereof.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The
Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, conduct any business,
enter into or permit to exist any transaction (including the
purchase, conveyance, disposition, sale, lease or exchange
of any property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless
the terms of such Affiliate Transaction are (i) set forth in
writing, (ii) in the best interest of the Company or such
Restricted Subsidiary, as the case may be, (iii) as
favorable to the Company or such Restricted Subsidiary, as
the case may be, as those that could be obtained at the time
of such transaction for a similar transaction in arm's-
length dealings with a Person who is not such an Affiliate,
and (iv) with respect to an Affiliate Transaction involving
aggregate payments or value of $1 million or greater, the
Independent Directors have determined in good faith that the
criteria set forth in clauses (ii) and (iii) are satisfied
and have approved the relevant Affiliate Transaction, such
approval to be evidenced by a Board Resolution. The
determinations pursuant to clauses (ii) and (iii) above
shall not require the Board of Directors or the Independent
Directors to obtain independent expert opinions unless, in
the sole judgment of the Board of Directors or the
Independent Directors, the Board of Directors or the
Independent Directors decide to obtain such an opinion.
(b) The provisions of the preceding paragraph shall not
prohibit (i) any Restricted Payment permitted to be paid
pursuant to "- Limitation on Restricted Payments" above,
(ii) any issuance of securities, or other payments, awards
or grants in cash, securities or otherwise pursuant to, or
the funding of, employment arrangements, stock options and
stock ownership plans approved by the Board of Directors,
(iii) loans or advances to employees in the ordinary course
of business in accordance with past practices of the
Company, (iv) the payment of reasonable fees to directors of
the Company and its Restricted Subsidiaries who are not
employees of the Company or its Restricted Subsidiaries or
(v) any transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
LIMITATION ON LAYERED INDEBTEDNESS. The Company will
not, and will not permit the Guarantor to, directly or
indirectly, Incur any Indebtedness that is subordinate in
right of payment to any other Indebtedness of the Company or
the Guarantor, as the case may be, unless such Indebtedness
is subordinate in right of payment to, or ranks PARI PASSU
with, the Notes in the case of the Company or the Rio
Guarantee in the case of the Guarantor.
The Guarantor will not, directly or indirectly,
Guarantee any Indebtedness of the Company that is
subordinated in right of payment to any other Indebtedness
of the Company unless such Guarantee is subordinate in right
of payment to, or ranks PARI PASSU with, the Rio Guarantee.
LIMITATION ON LIENS. The Company shall not, and shall
not permit the Guarantor to, directly or indirectly, create
or permit to exist any Lien (other than Permitted Liens and
Liens securing Senior Indebtedness or Senior Indebtedness of
Guarantor, including Attributable Indebtedness that is
Senior Indebtedness or Senior Indebtedness of Guarantor) on
any of its property or assets (including Capital Stock),
whether owned on the date of the Indenture or thereafter
acquired, or any income or profits therefrom securing any
obligation unless contemporaneously therewith effective
provision is made to secure the Notes equally and ratably
with (or prior to) such obligation for so long as such
obligation is so secured.
LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company will not permit any
Restricted Subsidiary to, directly or indirectly, issue any
Capital Stock other than to the Company or a Restricted
Subsidiary, that shall entitle the holder of such Capital
Stock to a preference in right of payment in the event of
the liquidation, dissolution or winding-up of such
Restricted Subsidiary or with respect to dividends of such
Restricted Subsidiary.
OWNERSHIP OF RIO PROPERTIES, INC. The Company will
maintain its 100% ownership of the Capital Stock of the
Guarantor.
<PAGE>
SUCCESSOR COMPANY
Neither the Company nor the Guarantor shall consolidate
with or merge with or into, or convey, transfer or lease all
or substantially all its assets to, any Person, unless: (i)
the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and
existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor
Company (if not the Company or the Guarantor) shall
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory
to the Trustee, all the obligations of the Company under the
Notes and the Indenture or the Guarantor under the Rio
Guarantee and the Indenture, as the case may be; (ii)
immediately after giving effect to such transaction on a PRO
FORMA basis (and treating any Indebtedness which becomes an
obligation of the Successor Company or any Restricted
Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default
shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a PRO FORMA basis
(and treating any Indebtedness which becomes an obligation
of the Successor Company or any Restricted Subsidiary as a
result of such transaction as having been Incurred by the
Successor Company or such Restricted Subsidiary at the time
of such transaction), the Successor Company would be able to
incur an additional $1.00 of Indebtedness in compliance with
the Consolidated Coverage Ratio limitations set forth in
"Limitation on Indebtedness"; (iv) immediately after giving
effect to such transaction on a PRO FORMA basis (and
treating any Indebtedness which becomes an obligation of the
Successor Company or any Restricted Subsidiary as a result
of such transaction as having been Incurred by the Successor
Company or such Restricted Subsidiary at the time of such
transaction), the Successor Company shall have Consolidated
Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company immediately prior to
such transaction; and (v) the Company shall have delivered
to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply
with the Indenture.
The Successor Company shall succeed to, and be
substituted for, and may exercise every right and power of,
the Company or the Guarantor, as the case may be, under the
Indenture, but the predecessor Company in the case of a
lease shall not be released from the obligation to pay the
principal of and interest on the Notes.
Notwithstanding the foregoing clauses (ii), (iii) and
(iv), any Restricted Subsidiary may consolidate with, merge
into or transfer all or part of its properties and assets to
the Company.
EVENTS OF DEFAULT
An "Event of Default" occurs if: (i) the Company and
the Guarantor default in any payment of interest on any Note
when the same becomes due and payable, and such default
continues for a period of 30 days; (ii) the Company and the
Guarantor (a) default in the payment of the principal of any
Note when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise, or
(b) fail to redeem or purchase Notes when required pursuant
to the Indenture or the Notes; (iii) the Company or the
Guarantor fails to comply with the provisions of "Successor
Corporation" above; (iv) the Company or the Guarantor, as
the case may be, fails to comply with "Change of Control"
above, "Reports to Holders of Notes" below, and subsections
"- Limitation on Indebtedness," "- Limitation on Restricted
Payments," "- Limitation on Restrictions on Distributions
from Subsidiaries," "- Limitation on Sales of Assets and
Subsidiary Stock," "- Limitation on Liens," "- Limitation on
Layered Indebtedness," "- Limitation on Transactions with
Affiliates", and "Ownership of Rio Properties, Inc." in
"Certain Covenants" (other than a failure to purchase Notes
when required under "Change of Control" or "Certain
Covenants - Limitation on Sale of Assets and Subsidiary
Stock") of the Indenture and such failure continues for 30
days after the notice specified below or the Company fails
to give the notice specified below; (v) the Company or the
Guarantor fails to comply with any of its agreements in the
Notes or the Indenture (other than those referred to in (i),
(ii), (iii) or (iv) above) and such failure continues for 60
days after the notice specified below or the Company fails
to give the notice specified below; (vi) the principal, any
premium or accrued and unpaid interest of Indebtedness of
the Company or any Restricted Subsidiary is not paid within
any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default, the
total amount of such Indebtedness unpaid or accelerated
exceeds $10 million at the time and such default continues
for 10 days; (vii) the Company or any Restricted Subsidiary
pursuant to or within the meaning of any Bankruptcy Law: (a)
commences a voluntary case; (b) consents to the entry of an
order for relief against it in an involuntary case; (c)
<PAGE>
consents to the appointment of a Custodian of it or for any
substantial part of its property; or (d) makes a general
assignment for the benefit of its creditors; or takes any
comparable action under any foreign laws relating to
insolvency; (viii) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that: (a) is for
relief against the Company or any Restricted Subsidiary in
an involuntary case; (b) appoints a Custodian of the Company
or any Restricted Subsidiary or for any substantial part of
its property; or (c) orders the winding up or liquidation of
the Company or any Restricted Subsidiary; or any similar
relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days; (ix) any
judgment or decree for the payment of money in excess of $10
million at the time is entered against the Company or any
Restricted Subsidiary and is not discharged and either (a)
an enforcement proceeding has been commenced by any creditor
upon such judgment or decree or (b) there is a period of 60
days following the entry of such judgment or decree during
which such judgment or decree is not discharged, waived or
the execution thereof stayed and, in the case of (a) or (b),
such default continues for 10 days; or (x) any Gaming
License of the Company or any of its Restricted Subsidiaries
is revoked, terminated or suspended or otherwise ceases to
be effective, resulting in the cessation or suspension of
operation for a period of more than 90 days of the casino
business of any casino hotel owned, leased or operated
directly or indirectly by the Company or any of its
Restricted Subsidiaries (other than any voluntary
relinquishment of a Gaming License if such relinquishment
is, in the reasonable, good faith judgment of the Board of
Directors of the Company evidenced by a Board Resolution,
both desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole, and not
disadvantageous in any material respect to the Holders).
The foregoing will constitute Events of Default
whatever the reason for any such Event of Default and
whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any
administrative or governmental body.
The term "Bankruptcy Law" means Title 11, UNITED STATES
CODE, or any similar Federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee,
assignee, liquidator, custodian or similar official under
any Bankruptcy Law.
A Default under clause (iv) or (v) is not an Event of
Default until the Trustee or the Holders of at least 25% in
principal amount of the Notes notify the Company of the
Default and the Company does not cure such Default within
the time specified after receipt of such notice. Such notice
must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30
days after the occurrence thereof, written notice in the
form of an Officers' Certificate of any event which with the
giving of notice and the lapse of time would become an Event
of Default under clause (iv), (v), (vi) or (ix), its status
and what action the Company is taking or proposes to take
with respect thereto.
ACCELERATION
If an Event of Default (other than an Event of Default
specified in clauses (vii) or (viii) in "Events of Default"
above with respect to the Company) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the Notes by notice to the
Company and the Trustee, may declare the principal of and
accrued interest on all the Notes to be due and payable.
Upon such a declaration, such principal and interest shall
be due and payable immediately. If an Event of Default
specified in clause (vii) or (viii) above with respect to
the Company occurs, the principal of and interest on all the
Notes shall IPSO FACTO become and be immediately due and
payable without any declaration or other act on the part of
the Trustee or any Noteholders. The Holders of a majority in
principal amount of the Notes by notice to the Trustee may
rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has
become due solely because of acceleration. No such
rescission shall affect any subsequent Default or impair any
right consequent thereto.
<PAGE>
LIMITATION ON SUITS
A Noteholder may not pursue any remedy with respect to
the Indenture or the Notes unless: (i) the Holder gives to
the Trustee written notice stating that an Event of Default
is continuing; (ii) the Holders of at least 25% in principal
amount of the Notes make a written request to the Trustee to
pursue the remedy; (iii) such Holder or Holders offer to
the Trustee reasonable security or indemnity against any
loss, liability or expense; (iv) the Trustee does not comply
with the request within 60 days after receipt of the request
and the offer of security or indemnity; and (v) the Holders
of a majority in principal amount of the Notes do not give
the Trustee a direction inconsistent with the request during
such 60-day period.
A Noteholder may not use the Indenture to prejudice the
rights of another Noteholder or to obtain a preference or
priority over another Noteholder.
RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of the Indenture,
the right of any Holder to receive payment of principal of
and interest on the Notes held by such Holder, on or after
the respective due dates expressed in the Notes, or to bring
suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected
without the consent of such Holder.
DISCHARGE OF INDENTURE AND DEFEASANCE
When (i) the Company delivers to the Trustee all
outstanding Notes (other than Notes replaced because of
mutilation, loss, destruction or wrongful taking) for
cancellation or (ii) all outstanding Notes have become due
and payable, whether at maturity or as a result of the
mailing of a notice of redemption as described above and the
Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all
outstanding Notes, including interest thereon, and if in
either case the Company pays all other sums payable
hereunder by the Company, then the Indenture shall, subject
to certain surviving provisions, cease to be of further
effect. The Trustee shall acknowledge satisfaction and
discharge of the Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of
Counsel and at the cost and expense of the Company.
Subject to conditions to defeasance described below and
the survival of certain provisions, the Company at any time
may terminate (i) all its obligations under the Notes and
the Indenture ("legal defeasance option") or (ii) its
obligations under certain restrictive covenants and the
related Events of Default ("covenant defeasance option").
The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an
Event of Default. If the Company exercises its covenant
defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in
clause (ii) of the immediately preceding paragraph.
The Company may exercise its legal defeasance option or
its covenant defeasance option only if:
(a)the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Notes to maturity or
redemption, as the case may be; and
(b)certain other conditions, including delivery of
certain opinions of counsel, are met.
REPORTS TO HOLDERS OF THE NOTES
The Company shall file with the Trustee and provide
Noteholders, within 15 days after it files them with the
SEC, copies of its annual report and the information,
documents and other reports which the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be
<PAGE>
required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall
continue to file with the SEC and provide the Trustee and
Noteholders with the annual reports and the information,
documents and other reports which are specified in Sections
13 and 15(d) of the Exchange Act. The Company also shall
comply with the other provisions of TIA SECTION 314(a).
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance
with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and
transfer documents, and the Company may require a Holder to
pay any taxes and fees required by law or permitted by the
Indenture. The Registrar is not required to transfer or
exchange any Note selected for redemption, or any Note for a
period of 15 days before a selection of Notes to be
redeemed, or any Note for a period of 15 days before an
interest payment date.
The registered holder of a Note may be treated as the
owner of it for all purposes.
AMENDMENT AND SUPPLEMENT
Subject to certain exceptions, the Indenture, the Notes
or the Rio Guarantee may be amended or supplemented by the
Company or the Guarantor and the Trustee with the consent of
the Holders of at least a majority in principal amount of
such then outstanding Notes. Without notice to or the
consent of any Noteholder, the Company, the Guarantor and
the Trustee may amend the Indenture or the Notes, among
other things, to cure any ambiguity, defect or
inconsistency; to provide for the assumption of the
Company's or the Guarantor's obligations to Noteholders by a
Successor Corporation; to provide for uncertificated Notes
in addition to or in place of certificated Notes; or to make
any change that does not adversely affect the rights of any
Noteholder. Without the consent of each Noteholder affected,
the Company may not reduce the principal amount of Notes the
Holders of which must consent to an amendment of the
Indenture; reduce the rate or extend the time for payment of
interest on any Note; reduce the principal of or extend the
fixed maturity of any Note; reduce the premium payable upon
the redemption of any Note or change the time at which any
Note may or shall be redeemed; reduce the premium payable
upon the repurchase of any Note upon a Change of Control;
make any Note payable in money other than that stated in the
Note; make any change in the provisions concerning waiver of
Defaults or Events of Default by Holders of the Notes or
rights of Holders to receive payment of principal or
interest; make any change in the subordination provisions in
the Indenture that affects the right of any Holder; or
release the Company or the Guarantor from its obligations
under the Notes or the Rio Guarantee (except pursuant to the
provisions described above in "Limitation on Merger or Sale
of Assets") or make any change in the Notes that would
adversely affect the rights of any Holder.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS
No director, officer, employee or stockholder, as such,
of the Company shall have any personal liability in respect
of the obligations of the Company under the Notes or the
Indenture by reason of his or its status as such.
THE TRUSTEE
IBJ Schroder Bank & Trust Company is the Trustee under
the Indenture.
The Indenture provides that, except during the
continuance of an Event of Default, the Trustee will perform
only such duties as are specifically set forth in the
Indenture. During the existence of an Event of Default, the
Trustee will exercise such of the rights and powers vested
in it under the Indenture and use the same degree of care
and skill in its exercise as a prudent Person would exercise
under the circumstances in the conduct of such Person's own
affairs.
<PAGE>
CERTAIN U.S. FEDERAL TAX CONSEQUENCES
BACKUP WITHHOLDING
Under federal income tax law, a holder of Notes may,
under certain circumstances, be subject to "backup
withholding" unless such holder (i) is a corporation, or is
otherwise exempt and, when required, demonstrates this fact,
or (ii) provides a taxpayer identification number, certifies
as to no loss of exemption from backup withholding and
otherwise complies with applicable requirements of the
backup withholding rules. The withholding rate is 31% of
"reportable payments," which include interest and, under
certain circumstances, principal payments.
PAYMENTS TO UNITED STATES ALIENS
Under current United States federal income and estate
tax law, (i) payments of principal and interest on a Note by
the Company or any paying agent to a Noteholder that is a
foreign corporation, a nonresident alien individual, a
nonresident alien fiduciary of a foreign estate or trust, or
a foreign partnership one or more of the members of which
is, for United States federal income tax purposes, a foreign
corporation, a nonresident alien individual, or a
nonresident alien fiduciary of a foreign estate or trust (a
"United States Alien") will not be subject to withholding of
United States federal income tax, provided that, with
respect to payments of interest, the Noteholder (1) does not
actually or constructively own ten percent or more of the
combined voting power of all classes of stock of the
Company, (2) is not a controlled foreign corporation related
to the Company through stock ownership and (3) provides a
statement, under penalties of perjury (such as Form W-8), to
the Company that the holder is a United States Alien and
provides its name and address; (ii) a Noteholder that is a
United States Alien will not be subject to United States
federal income tax on gain realized on the sale, exchange or
redemption of such Note, provided that such Noteholder (or a
fiduciary, settlor or beneficiary of, or a person holding
power over, such Noteholder, if such Noteholder is an estate
or trust, or a member or shareholder of each Noteholder, if
such Noteholder is a partnership or corporation) does not
have a present or former connection with or status with
respect to the United States including, without limitation,
such Noteholder's (or such fiduciary, settlor, beneficiary,
person holding a power, member or shareholder) (1) being or
having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or
having or having had a permanent establishment therein or
(2) past or present status as a personal holding company,
foreign person holding company or private foundation or
other tax-exempt organization with respect to the United
States or as a corporation that accumulates earnings to
avoid United States federal income tax; and (iii) a Note
will not be subject to United States federal estate tax as a
result of the death of a Noteholder who is not a citizen or
resident of the United States at the time of death, provided
that such Noteholder did not at the time of death actually
or constructively own ten percent or more of the combined
voting power of all classes of stock of the Company and, at
the time of such Noteholder's death, payments of interest on
such New Note would not have been effectively connected with
the conduct by such Noteholder of a trade or business in the
United States.
United States information reporting requirements and
backup withholding tax will not apply to payments on a Note
made outside the United States by the Company or any paying
agent (acting in its capacity as such) to a Noteholder that
is a United States Alien provided that a statement described
in (i)(3) above has been received by the payor and the payor
does not have actual knowledge that the payee is not a
United States Alien.
Information reporting requirements and backup
withholding tax will not apply to any payment of the
proceeds of the sale of a Note effected outside the United
States by a foreign office of a "broker" (as defined in
applicable Treasury regulations), provided that such broker
(1) is a United States Alien, (2) derives less than 50% of
its gross income for certain periods from the conduct of a
trade or business in the United States and (3) is not a
controlled foreign corporation as to the United States (a
person described in (1), (2) and (3) being hereinafter
referred to as a "foreign controlled person"). Payment of
the proceeds of the sale of a Note effected outside the
United States by a foreign office of any broker that is not
a foreign controlled person will not be subject to backup
withholding tax, but will be subject to information
reporting requirements unless such broker has documentary
evidence in its records that the beneficial owner is a
United States Alien and certain other conditions are met, or
the beneficial owner otherwise establishes an exemption.
<PAGE>
OTHER TAX CONSIDERATIONS
There may be other federal, state, local or foreign tax
considerations applicable to the circumstances of a
particular prospective purchaser of Notes as to which it
should consult its tax adviser. ACCORDINGLY, EACH INVESTOR
SHOULD CONSULT ITS OWN TAX ADVISER AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF
THE NEW NOTES.
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own
account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale
of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-
dealer in connection with any resale of New Notes received
in exchange for Old Notes where such Old Notes were acquired
as a result of market-making activities or other trading
activities. The Company has agreed, starting on the
Expiration Date and ending on the close of business on the
first anniversary of the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale
of New Notes by broker-dealers. New Notes received by any
broker-dealer for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New
Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any
such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by
it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such
resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The
Letter of Transmittal states that by acknowledging that it
will deliver, and by delivering, a prospectus, a broker-
dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date,
the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay
all expenses incident to the Exchange Offer (including the
expenses of counsel for the Initial Purchasers and the
Trustee) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Old
Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference, the
following documents filed with the Commission under the
Exchange Act:
(a)The Company's Annual Report on Form 10-K for the
year ended December 31, 1994; the Company's Reports
on Form 10-Q for the periods ended March 31, 1995
and June 30, 1995; and the Company's Report on Form
8-K dated July 18, 1995; and
(b)All documents and reports subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this
Prospectus and prior to termination of the Exchange
Offer, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof
from the date of filing of such documents or
reports.
Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified
or superseded, except as so modified or superseded, shall
not be deemed to constitute a part of this Prospectus.
The Company will provide without charge to each person
to whom a copy of this Prospectus has been delivered, on the
written or oral request of such person, a copy of any or all
of the documents incorporated herein by reference, other
than exhibits to such documents unless they are specifically
incorporated by reference into such documents. Requests for
such copies should be directed to: James A. Barrett, Jr.,
President and Chief Operating Officer, Rio Hotel & Casino,
Inc., 3700 West Flamingo Road, Las Vegas, Nevada 89103,
(702) 252-7733.
LEGAL MATTERS
Certain legal matters with regard to the validity of
the New Notes will be passed upon for the Company by Kummer
Kaempfer Bonner & Renshaw, Las Vegas, Nevada.
EXPERTS
The consolidated financial statements and schedule
included elsewhere in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm
as experts in giving said report.
<PAGE>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Public Accountants F-2
Consolidated Balance Sheets as of December 31, 1994 F-3
and 1993 and June 30, 1995 (Unaudited)
Consolidated Statements of Income for the Years Ended F-4
December 31, 1994, 1993 and 1992, and for the
Six Months Ended June 30, 1995 and 1994 (Unaudited)
Consolidated Statements of Cash Flows for the Years F-6
Ended December 31, 1994, 1993 and 1992, and for
the Six Months Ended June 30, 1995 and 1994
(Unaudited)
Consolidated Statements of Stockholders' Equity for F-8
the Years Ended December 31, 1994, 1993 and 1992
and for the Six Months Ended June 30, 1995
(Unaudited)
Notes to Consolidated Financial Statements F-9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Rio Hotel & Casino, Inc.:
We have audited the accompanying consolidated balance
sheets of Rio Hotel & Casino, Inc. (a Nevada corporation)
and subsidiaries as of December 31, 1994 and 1993 and the
related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the
period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Rio Hotel & Casino, Inc. and
subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in Note 7 to the consolidated financial
statements, effective January 1, 1993, the Company changed
its method of accounting for income taxes.
Arthur Andersen LLP
Las Vegas, Nevada
January 25, 1995
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
1995 1994 1993
(Unaudited)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 20,669,015 $ 76,426,258 $ 55,784,937
Accounts receivable, net 3,716,239 3,204,416 2,926,738
Federal income taxes receivable -- 139,329 --
Inventories 1,519,597 1,378,598 868,367
Prepaid expenses and other
assets 4,827,767 4,716,701 4,028,554
Total current assets 30,732,618 85,865,302 63,608,596
Property and Equipment:
Land and improvements 33,237,430 24,666,679 24,666,679
Building and improvements 176,165,730 137,005,432 105,058,208
Equipment, furniture and
improvements 59,750,145 43,108,873 37,271,711
Less: accumulated depreciation (39,759,072) (32,826,276) (22,240,358)
229,394,233 171,954,708 144,756,240
Construction in progress 8,566,920 38,521,773 7,465,875
Net property and equipment 237,961,153 210,476,481 152,222,115
Other Assets:
Other, net 4,996,280 4,823,489 2,219,665
$ 273,690,051 $ 301,165,272 $ 218,050,376
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current Liabilities:
Current maturities of
long-term debt $ 25,252 $ 15,032,534 $ 8,307,833
Accounts payable 3,071,515 2,425,645 2,948,088
Accrued expenses 9,434,519 7,830,706 6,524,620
Federal income taxes payable 403,327 -- 339,989
Accounts payable-related party 4,578,228 10,026,210 7,342,468
Accrued interest 524,509 351,864 53,968
Total current liabilities 18,037,350 35,666,959 25,516,966
Non-Current Liabilities:
Long-term debt, less current
maturities 90,189,391 110,146,869 56,875,753
Deferred income taxes 8,832,073 7,512,277 5,819,176
Total non-current
liabilities 99,021,464 117,659,146 62,694,929
Total liabilities 117,058,814 153,326,105 88,211,895
Commitments and Contingencies
Stockholders' Equity:
Common Stock, $0.01 par value;
50,000,000
shares authorized (1993);
100,000,000 shares
authorized (1994 and 1995);
21,147,796 (1993);
21,371,346 (1994); and
21,341,546 (1995)
shares issued and outstanding 213,416 213,714 211,478
Additional paid-in capital 116,580,953 117,214,582 115,182,541
Retained earnings 39,836,868 30,410,871 14,444,462
Total stockholders' equity 156,631,237 147,839,167 129,838,481
$ 273,690,051 $301,165,272 $218,050,376
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended June 30, For the Year Ended December 31,
1995 1994 1994 1993 1992
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Casino $49,967,529 42,188,116 $87,164,738 $71,295,870 $56,524,184
Room 16,160,634 9,349,214 19,261,477 12,334,207 9,611,985
Food and beverage 29,049,257 22,456,570 47,648,778 32,573,861 21,171,970
Other 5,590,750 2,968,737 7,111,105 4,172,272 2,913,199
Casino promotional
allowances (8,983,715) (6,745,493) (14,886,794) (10,394,625) (7,746,174)
91,784,455 70,217,144 146,299,304 109,981,585 82,475,164
Expenses:
Casino 21,933,708 18,262,770 38,696,281 31,177,642 27,145,337
Room 4,816,534 3,362,746 6,631,787 4,441,851 3,424,475
Food and beverage 23,806,945 18,236,796 38,795,127 27,799,449 18,365,657
Other 3,187,635 1,899,631 4,959,250 2,784,746 1,879,232
Selling, general and
administrative 13,194,268 9,666,127 20,550,142 16,001,309 13,550,940
Depreciation and
amortization 7,107,416 5,243,814 10,863,844 7,544,326 5,813,762
74,046,506 56,671,884 120,496,431 89,749,323 70,179,403
Operating Profit 17,737,949 13,545,260 25,802,873 20,232,262 12,295,761
Other Income (Expense):
Interest income 103,595 43,302 124,786 71,747 157,990
Interest expense, net (2,782,732) (846,150) (1,923,237) (1,838,713) (3,801,495)
Other income, net -- 966,510 1,140,010 -- 100,000
(2,679,137) 163,662 (658,441) (1,766,966) (3,543,505)
Income before income tax
provision and
minority interest 15,058,812 13,708,922 25,144,432 18,465,296 8,752,256
Income tax provision (5,632,815) (4,949,632) (9,178,023) (6,785,305) (2,995,628)
Income before minority
interest 9,425,997 8,759,290 15,966,409 11,679,991 5,756,628
Minority interest in
consolidated
partnership income -- -- -- -- (242,240)
Income before
extraordinary items 9,425,997 8,759,280 15,966,409 11,679,991 5,514,388
Extraordinary items:
Reduction of federal
income taxes
arising from
carryforward of prior
years' operating loss -- -- -- -- 793,511
Loss on early
extinguishment of
debt, net of income
tax benefit -- -- -- (253,711) --
Cumulative effect of a
change in
accounting principle:
Adoption of SFAS No.
109 -- -- -- (776,888) --
Net income $ 9,425,997 $ 8,759,290 $15,966,409 $10,649,392 $ 6,307,899
</TABLE>
See Acompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
Six Months Ended June 30, For the Year Ended December 31,
1995 1994 1994 1993 1992
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Earnings per Common
Share:
Primary:
Income applicable to
common shares $ 0.44 $ 0.40 $ 0.74 $ 0.60 $ 0.37
Extraordinary items:
Reduction of federal
income taxes
arising from
carryforward of prior
years' operating loss -- -- -- -- 0.05
Loss on early
extinguishment of
debt, net of income
tax benefit -- -- -- (0.01) --
Cumulative effect of a
change in
accounting principle:
Adoption of SFAS No. 109 -- -- -- (0.04) --
Net income $ 0.44 $ 0.40 $ 0.74 $ 0.55 $ 0.42
Weighted average number of
common shares
outstanding 21,644,821 21,747,284 21,720,121 19,504,466 15,131,332
Fully diluted:
Income applicable to
common shares $ 0.44 $ 0.40 $ 0.74 $ 0.60 $ 0.36
Extraordinary items:
Reduction of federal
income taxes
arising from
carryforward of prior
years' operating loss -- -- -- -- 0.05
Loss on early
extinguishment of
debt, net of income
tax benefit -- -- -- (0.01) --
Cumulative effect of a
change in
accounting principle:
Adoption of SFAS No. 109 -- -- -- (0.04) --
Net income $ 0.44 $ 0.40 $ 0.74 $ 0.55 $ 0.41
Weighted average number
of common shares
outstanding 21,663,449 21,747,807 21,720,381 19,537,515 15,318,828
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Six Months Ended June 30, For the Year Ended December 31,
1995 1994 1994 1993 1992
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income $ 9,425,997 $ 8,759,290 $15,966,409 $10,649,392 $6,307,899
Adjustments to reconcile
net income
to net cash provided
by (used in)
operating activities:
Loss on early
extinguishment of
debt, net of income
tax benefit -- -- -- 253,711 --
Compensation expense
recognized
from stock option
grant 59,900 73,267 141,975 54,133 --
Minority interest in net
income of
consolidated
partnerships -- -- -- -- 242,240
Depreciation and
amortization 7,107,416 5,243,814 10,863,844 7,544,326 5,813,762
Provision for
uncollectible
accounts 161,833 28,757 99,772 116,131 93,747
Net loss on sale of
assets -- -- -- 10,885 150,000
Cumulative effect of
change in
accounting principle
- Adoption
of SFAS No. 109 -- -- -- 776,888 --
Deferred income taxes 1,319,796 721,308 1,693,101 2,265,571 550,373
(Increase) decrease
in assets:
Accounts receivable (673,656) (369,975) (377,450) (1,484,079) (127,984)
Inventories (140,999) (169,086) (510,231) (223,051) (89,849)
Prepaid expenses and
other current assets 28,263 32,578 (827,476) (856,554) (643,369)
Other, net (347,411) (1,698,250) (2,881,750) (662,965) 57,308
Increase (decrease) in
liabilities:
Accounts payable 645,870 (1,579,399) (522,443) 304,585 1,384
Accrued federal income
tax payable 761,924 570,313 546,142 91,401 1,318,058
Accrued expenses 1,603,812 (433,011) 1,306,086 1,628,387 955,194
Accrued interest 172,645 59,012 297,896 (92,009) (267,862)
Net cash provided by
operating
activities 20,125,390 11,238,618 25,795,875 20,376,752 14,360,901
Cash flows from investing
activities:
Proceeds from sale of
equipment,
furniture and
improvements -- -- -- -- 230,978
Purchase of equipment,
furniture and
improvements (31,294,698) (23,857,872) (66,053,542) (49,967,458) (9,255,776)
Purchase of land and
improvements (8,570,751) -- -- 22,499 (88,810)
Net cash (used in)
investing
activities (39,865,449) (23,857,872) (66,053,542) (49,944,959) (9,113,608)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (CONTINUED)
SIX MONTHS ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from
financing activities:
Proceeds from borrowings $ -- $ 20,000,000 $ 60,014,175 $ 65,000,000 $ 8,000,000
Net proceeds from common
stock issuance 556,650 901,400 1,022,700 32,506,200 30,252,138
Costs paid in connection
with prior common
stock offering and
stock exchange rights 1,801 (119,529) (119,529) (456,821) (457,160)
Loan acquisition costs -- -- -- (1,107,647) --
Payments on notes and
loans payable (34,964,760) (9,179) (18,358) (53,212,000) (11,807,241)
Change in restricted cash -- (20,000,000) -- -- --
Repurchase of common
stock (1,610,875) -- -- -- --
Net cash provided by
(used in)
financing activities (36,017,184) 722,692 60,898,988 42,729,732 25,987,737
Net increase (decrease)
in cash
and cash equivalents (55,757,243) (11,846,562) 20,641,321 13,161,525 31,235,030
Cash and cash
equivalents, beginning
of period 76,426,258 55,784,937 55,784,937 42,623,412 11,388,382
Cash and cash
equivalents, end of
period $20,669,015 $43,938,375 $76,426,258 $55,784,937 $42,623,412
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK
STOCK NUMBER ADDITIONAL RETAINED TOTAL
EXCHANGE OF PAID-IN EARNINGS STOCKHOLDERS'
RIGHTS SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1991 $ 3,773,938 13,615,696 $ 136,158 $ 46,334,180 $(2,512,829) $47,731,447
Conversion of stock
exchange
rights (3,773,938) 728,461 7,285 3,766,653 -- --
Issuance of common
stock -- 4,256,639 42,565 33,339,150 -- 33,381,715
Common stock offering
costs -- -- -- (548,910) -- (548,910)
Net income for the
year -- -- -- -- 6,307,899 6,307,899
Balance, December 31,
1992 -- 18,600,796 186,008 82,891,073 3,795,070 86,872,151
Tax benefit of stock
options
exercised -- -- -- 1,120,823 -- 1,120,823
Issuance of common
stock -- 2,547,000 25,470 32,480,730 -- 32,506,200
Common stock offering
costs -- -- -- (541,066) -- (541,066)
Net income for the
year -- -- -- -- 10,649,392 10,649,392
Implementation of SFAS
No. 109 -- -- -- (823,152) -- (823,152)
Compensation expense
for stock options
granted -- -- -- 54,133 -- 54,133
Balance, December 31,
1993 -- 21,147,796 211,478 115,182,541 14,444,462 129,838,481
Tax benefit of stock
options granted -- -- -- 886,132 -- 886,132
Exercise of common
stock options -- 223,550 2,236 1,003,934 -- 1,006,170
Net income for the
year -- -- -- -- 15,966,409 15,966,409
Compensation expense
for stock options
granted in 1993 -- -- -- 141,975 -- 141,975
Balance, December 31,
1994 -- 21,371,346 213,714 117,214,582 30,410,871 147,839,167
Tax benefit of stock
options granted* -- -- -- 358,597 -- 358,597
Repurchase of common
stock* -- (138,500) (1,385) (1,609,490) -- (1,610,875)
Exercise of common
stock options* -- 108,700 1,087 555,563 -- 556,650
Net income for the six
months* -- -- -- -- 9,425,997 9,425,997
1993 Common Stock
Offering costs
reimbursement* -- -- -- 1,801 -- 1,801
Compensation expense
for stock options
granted in 1993* -- -- -- 59,900 -- 59,900
Balance, June 30,
1995* $ -- 21,341,546 $213,416 $116,580,953 $39,836,868 $156,631,237
*Unaudited
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
RIO HOTEL & CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
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); Rio Development Company, Inc.
(formerly MarCor Development Company, Inc.); Rio Resort
Properties, Inc. (formerly MarCor Resort Properties, Inc.)
("MRPI"); MarCor Rio Holding Corp. ("MRHC") (until its
dissolution as of December 29, 1992), a subsidiary of MRPI
and second-tier subsidiary of the Company; Rio Properties'
wholly owned subsidiary Cinderlane, Inc.; and one limited
partnership, MarCor Resorts, L.P. V (the "Rio Partnership"),
until its merger with Rio Properties on August 15, 1992
(collectively the "Company"). The Rio Partnership is
included in the accounts of the Company as a result of the
Company retaining more than a 50% ownership interest or a
"controlling" interest as defined by Statement of Financial
Accounting Standards No. 94, "Consolidation of All Majority
Owned Subsidiaries".
The Consolidated Financial Statements for the six
months ended June 30, 1995 and 1994 and related amounts in
the Notes to Consolidated Financial Statements are
unaudited, but in the opinion of management reflect all
normal and recurring adjustments necessary for fair
presentation of the results of those periods.
All significant intercompany balances and transactions
have been eliminated in consolidation.
RECLASSIFICATIONS
The financial statements for prior periods reflect
certain reclassifications, which have no effect on net
income, to conform with classifications adopted in the
current year.
CAPITALIZATION OF INTEREST
The Company capitalizes interest on funds disbursed
during the active construction phases of real estate
development and other major projects. Interest capitalized
for the six months ended June 30, 1995 and 1994, and during
the years ended December 31, 1994, 1993, and 1992, was
$359,689, $102,896, $619,887, $467,798, and $59,732,
respectively.
PROPERTY AND EQUIPMENT
Land and improvements, building and improvements, and
equipment, furniture and improvements are stated at cost.
Depreciation and amortization of property and equipment
is computed using the straight-line method predominantly
over the following estimated useful lives:
Building and improvements 7 to 45 years
Equipment, furniture and
improvements 3 to 15 years
INVENTORIES
Inventories are stated at the lower of cost or market.
Cost is determined by using the first-in, first-out method.
<PAGE>
REVENUE AND PROMOTIONAL ALLOWANCES
Casino revenues represent the net win from gaming wins
and losses. The retail value of rooms, food, beverage and
other services provided to customers without charge is
included in gross revenue and deducted as promotional
allowances. The estimated departmental costs of providing
such promotional allowances are included in casino costs and
expenses as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Room $ 875,973 $ 469,629 $1,273,154 $ 889,448 $ 752,935
Food and Beverage 4,439,931 3,701,048 7,823,819 5,969,683 4,279,365
Other operating
expenses 46,902 12,144 44,888 36,940 28,202
$ 5,362,806 $ 4,182,821 $9,141,861 $ 6,896,071 $ 5,060,502
</TABLE>
EARNINGS PER SHARE
Earnings per common share are computed on the basis of
the weighted average number of common shares and common
stock equivalents outstanding during the period.
HEDGING TRANSACTION
The Company is a party to an interest rate swap
agreement and has purchased an interest rate cap (Note 6).
Any net payments made or received by the Company in
connection with this interest rate swap agreement or
interest rate cap, or any other hedging transaction that the
Company may enter into, will be classified as cash flows
from operating activities.
INCOME TAXES
Effective January 1, 1993, the Company implemented the
provisions of SFAS 109. SFAS 109 utilizes the liability
method and deferred taxes are determined based on the
estimated future tax effects of differences between the
financial statement and tax bases of assets and liabilities
given the provisions of the enacted tax laws. Prior to the
implementation of SFAS 109, the Company accounted for income
taxes using Accounting Principles Board Opinion No. 11.
2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at June 30, 1995,
December 31, 1994 and 1993 include $12.1 million, $68
million and $48 million, respectively, in overnight
repurchase agreements with a bank. These items are recorded
at cost which approximates market value and are considered
cash equivalents for purposes of the Consolidated Statements
of Cash Flows.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS
The following supplemental disclosures are provided as
part of the Consolidated Statements of Cash Flows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash payments made
for interest
(net of amounts
capitalized) $2,679,190 $ 793,742 $1,919,556 $1,728,693 $3,974,045
Cash payments made
for income taxes $3,500,000 $ 2,800,000 $6,240,000 $4,428,335 $ 198,627
</TABLE>
<PAGE>
Non-cash financing and investing activities:
JUNE 30, 1995
Purchase of property and equipment financed
through payables totaled $4,578,228.
Tax benefit arising from the exercise of stock
options granted under the Company's Non-Statutory
Stock Option Plan ("NSOP") totaled $358,597.
DECEMBER 31, 1994
Purchase of property and equipment financed
through payables totaled $10,026,210.
Tax benefit arising from the exercise of stock
options granted under the NSOP totaled $886,132.
JUNE 30, 1994
Purchase of property and equipment financed
through payables totaled $5,318,639.
Tax benefit arising from the exercise of stock
options granted under the NSOP totaled $761,309.
DECEMBER 31, 1993
Purchase of property and equipment financed
through payables totaled $8,442,660.
Purchase of property and equipment financed
through long-term debt totaled $183,586.
Additional costs of issuing Common Stock totaled
$12,194.
Costs of issuing Common Stock financed through
payables totaled $163,801.
Tax benefit arising from the exercise of stock
options granted under the NSOP totaled $1,120,823.
Reduction in paid-in capital as a result of the
implementation of SFAS 109 totaled $823,152. This
amount was charged directly against equity because
it reflects the tax effect of SFAS 109 as it
related to the gain on sale of assets to
affiliates of the Company's largest stockholder in
December 1991, which was also recorded directly to
equity.
DECEMBER 31, 1992
During 1992, the Company exchanged 728,461 stock
exchange rights for 728,461 shares of the
Company's Common Stock. The transactions resulted
in the following changes:
Common Stock $ 7,285
Additional paid in capital 3,766,653
Stock exchange rights (3,773,938)
$ --
On August 14, 1992, the Company, through Rio
Properties, acquired an additional 3.25% of the
Rio Partnership in exchange for 354,549 shares of
the Company's Common Stock. On August 15, 1992,
the Rio Partnership was merged into Rio
Properties, with an additional 109,092 shares of
Common Stock issued for the remaining 1% interests
in the Rio Partnership. The summarized results of
these transactions are as follows: (1) Rio
Properties now owns 100% of the assets and
liabilities formerly held by the Rio Partnership;
<PAGE>
(2) the Rio Partnership, as a result of its merger
with Rio Properties, no longer exists; (3) Rio
Properties is wholly owned by the Company; (4) the
Company issued 463,641 shares of Common Stock to
the former minority partners in the Rio
Partnership; (5) MRPI and MRHC, which had
previously held 27.90% and 67.85% ownership
interests in the Rio Partnership, respectively, no
longer hold such interests.
The transaction resulted in the following:
Value of stock issued (463,641
shares @ $6.75/share) $ 3,129,577
Minority interests (1,877,067)
Premium paid $ 1,252,510
This premium was allocated based on fair market values
among land, building, and equipment, furniture and
improvements.
The Company reclassified $248,951 of Rio assets
previously in equipment, furniture and improvements into
other assets during the year ended December 31, 1992.
The Company reclassified $160,443 of Rio assets
previously in other assets into construction in progress
during the year ended December 31, 1992.
Construction in progress financed through payables
totaled $74,369. Additional asset purchases financed
through payables totaled $829,242. Costs of issuing
Common Stock, financed through payables, totaled $91,750.
4. ACCOUNTS RECEIVABLE
Components of receivables are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C>
Casino $ 2,266,631 $ 2,082,871 $ 1,669,419
Hotel 2,028,466 1,534,107 1,543,646
Other 62,110 66,573 93,036
4,357,207 3,683,551 3,306,101
Less allowance for doubtful
accounts (640,968) (479,135) (379,363)
$ 3,716,239 $ 3,204,416 $ 2,926,738
</TABLE>
5. ACCRUED EXPENSES
Components of accrued expenses are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C>
Accrued salaries, wages
and related benefits $ 6,222,250 $ 4,004,080 $ 3,300,004
Progressive slot machines
and other gaming
accruals 1,104,379 2,033,406 1,971,251
Accrued gaming taxes 1,340,684 1,123,036 952,775
Other accrued liabilities 767,206 670,184 300,590
$ 9,434,519 $ 7,830,706 $ 6,524,620
</TABLE>
<PAGE>
6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C>
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,
equipmentand improvements $90,000,000 $125,000,000 $65,000,000
Special Improvement
District assessment bonds,
payable over 10 years in
twenty substantially equal
semi-annual installments
of principal, plus 6.1%
interest. 214,643 165,228 183,586
Other short-term financing
of certain insurance
premiums -- 14,175 --
90,214,643 125,179,403 65,183,586
Less current maturities (25,252) (15,032,534) (8,307,833)
$90,189,391 $110,146,869 $56,875,753
</TABLE>
The prime interest rates quoted by the Company's
primary lenders at June 30, 1995 and December 31, 1994 were
9.00% and 8.50%, respectively.
At June 30, 1995, the six month Eurodollar Rate was
6.0625%. The margin on the Company's Eurodollar Rate
borrowings at June 30, 1995 was 1.75%.
On July 15, 1993, Rio Properties entered into the $65
million Rio Bank Loan with a consortium of banks. The Rio
Bank Loan was increased to an $85 million loan in April 1994
and increased to a $125 million loan in December 1994. The
Rio Bank Loan is a revolving credit facility to be used for
construction and working capital purposes.
The Rio Bank Loan matures on June 30, 2001, and bears
interest on the outstanding principal amount at a rate per
annum equal to the Eurodollar Rate or the Base Rate (as
defined in the Rio Bank Loan) at the election of Rio
Properties, plus a predetermined margin over the Eurodollar
Rate or the Base Rate, as applicable. The Eurodollar Rate
means an interest rate per annum determined pursuant to the
following formula:
Eurodollar Rate = LIBOR
-----------------
1.00 - Eurodollar
Reserve Percentage
The Base Rate means a rate per annum equal to the
higher of the reference rate as it is publicly announced
from time to time by Bank of America in San Francisco, or
0.50% per annum above the latest Federal Funds Rate. The Rio
Bank Loan requires monthly payments of interest only and
principal reductions of $15 million on December 31, 1995, $5
million on March 31, 1996 and $5 million every quarter
thereafter until maturity. To reduce the risk from rate
fluctuations, the Company has entered into an interest rate
swap agreement in the amount of $20 million from
September 30, 1994 through December 29, 1995 and $15 million
from December 29, 1995 through June 28, 1996. In addition,
in August 1994 the Company purchased a $40 million interest
rate cap. The cap is effective on September 30, 1994, has a
three year term, and provides for quarterly payments to the
Company in the event that three-month LIBOR exceeds 7.00% on
any quarterly reset date. The Company is exposed to credit
risk in the event of non-performance by the counterparties.
However, the Company does not anticipate non-performance by
the counterparties. The Rio Bank Loan is secured by a first
priority mortgage lien on the Rio and certain other real and
personal property of Rio Properties and the Company. The
Company is a guarantor of the Rio Bank Loan.
<PAGE>
The Rio Bank Loan contains certain customary financial
covenants to which the Company is subject. Because of annual
restrictions on capital expenditures by the Company
contained in the Rio Bank Loan, any new significant capital
improvements to the Rio will require the consent of the
lenders.
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 $10 million on
June 30, 1995 and repaying $10 million on July 3, 1995. The
Company also reborrowed $69 million on December 30, 1994 and
repaid $69 million on January 3, 1995 under the terms of the
Rio Bank Loan.
As of December 31, 1994, annual maturities of total
notes and loans payable are as follows:
YEAR ENDING
December 31, 1995 $15,032,534
December 31, 1996 20,018,359
December 31, 1997 20,018,359
December 31, 1998 20,018,359
December 31, 1999 20,018,359
Thereafter 30,073,433
$125,179,403
Based upon the present operations of the Rio, internal
projections of revenues and expenses, and other anticipated
cash requirements of Rio Properties during 1995, the Company
anticipates meeting required principal and interest payments
under the Rio Bank Loan during 1995.
The carrying values of assets included in the
consolidated financial statements, which collateralize bank
loans payable, are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994 1993
(UNAUDITED)
<S> <C> <C> <C>
Building and
improvements $176,165,730 $137,005,432 $105,058,208
Equipment, furniture and
improvements 59,750,145 43,108,873 37,271,711
Land and improvements 33,237,430 24,666,679 24,666,679
Construction in progress 8,566,920 38,521,773 7,465,875
$277,720,225 $243,302,757 $174,462,473
</TABLE>
On July 18, 1995, the Company issued $100,000,000 10
5/8% Senior Subordinated Notes Due 2005 (the "Subordinated
Notes"). The net proceeds from the sale of the Subordinated
Notes of approximately $96.8 million were used to reduce
amounts outstanding under the Rio Bank Loan. (See Note 12).
The Subordinated Notes mature July 15, 2005. The
Subordinated Notes are unconditionally guaranteed on a
senior subordinated basis by Rio Properties, Inc. The
indenture governing the Subordinated Notes contains
covenants that, among other things, limit the ability of the
Company and its Restricted Subsidiaries to incur additional
indebtedness, pay dividends or make other distributions,
make investments, repurchase subordinated obligations or
capital stock, create certain liens (except, among others,
liens securing Senior Indebtedness), enter into certain
transactions with affiliates, sell assets of the Company or
its subsidiaries, issue or sell subsidiary stock, create or
permit to exist restrictions on distributions from
subsidiaries, or enter into certain mergers and
consolidations.
<PAGE>
7. INCOME TAXES
In February 1992, the Financial Accounting Standards
Board issued SFAS 109 which supersedes previous
pronouncements on accounting for income taxes and is
effective for fiscal years commencing after December 15,
1992. The Company adopted SFAS 109 in the first quarter of
1993 by reporting the effect of SFAS 109 as a cumulative
effect of a change in accounting principle and not restating
prior periods. The effect of SFAS 109 recorded in January
1993 decreased net income as a non-cash, non-recurring
cumulative effect of a change in accounting principle by an
amount totaling $776,888. It also reduced paid-in capital by
an amount totaling $823,152. This amount was charged
directly against equity because it reflects the tax effect
of SFAS 109 as it related to the gain on sale of assets to
affiliates of the Company's largest stockholder in December
1991, which was also recorded directly to equity.
The federal income tax provisions for the years ended
December 31, 1994 and 1993 consist of the following:
1994 1993
Provision before tax rate change and
extraordinary items $9,178,023 $6,671,872
Additional provision due to tax rate
change (see below) __ 113,433
Provision before extraordinary item 9,178,023 6,785,305
Income tax benefit from extraordinary
loss on early retirement of debt __ (130,700)
Total Income Tax Provision $9,178,023 $6,654,605
The federal income tax provisions for the six months
ended June 30, 1995 and 1994 were $5,632,815 and $4,949,632,
respectively.
The Revenue Reconciliation Act of 1993 raised the
Corporate Income Tax Rate from 34% to 35%, retroactively to
January 1, 1993. In accordance with the requirements of SFAS
109, the deferred income tax assets and liabilities were
adjusted accordingly, resulting in a charge against income
in the amount of $113,433.
The following schedule reconciles the Company's
effective tax rate to the statutory rate for the year ended
December 31:
1994 1993 1992
Statutory rate 35.0 % 35.0% 34.0%
Depreciation on premium allocated
in Rio Partnership exchange 0.5 % 0.7% 1.2%
Disallowance for tax purposes of
certain meals, travel and
entertainment expenses 1.2 % 0.4% --
Other ( 0.2)% -- --
Effective Rate 36.5 % 36.1% 35.2%
For the six months ended June 30, a reconciliation
between the statutory rate and effective rate is as follows:
1995 1994
(Unaudited)
Statutory rate 35.0% 35.0%
Depreciation on premium allocated
in Rio Partnership exchange 0.4% 0.4%
<PAGE>
Disallowance for tax purposes of
certain meals, travel and
entertainment expenses 1.7% 1.1%
Other 0.3% (0.4)%
Effective Rate 37.4% 36.1%
During 1994, the Company utilized all remaining
alternative minimum tax credit carryforwards.
The Company's deferred tax assets (liabilities) at
June 30, 1995 consisted of the following:
CURRENT NON-CURRENT
(Unaudited)
Depreciation and
amortization -- $(8,933,156)
Deferred employee benefit $391,927 --
Bad debt expense 224,339 --
Other deferred tax assets,
net 34,231 101,083
$650,497 $(8,832,073)
The Company's deferred tax assets (liabilities) at
December 31, 1994 consisted of the following:
CURRENT NON-CURRENT
Depreciation and
amortization -- $(7,613,359)
Deferred employee benefit $391,927 --
Bad debt expense 136,105 --
Other deferred tax assets,
net 34,231 101,082
$562,263 $(7,512,277)
The Company's deferred tax assets (liabilities) at
December 31, 1993 consisted of the following:
CURRENT NON-CURRENT
Depreciation and amortization -- $(6,231,735)
Alternative Minimum Tax ("AMT")
credit carryforwards $ 868,160 --
Partnership syndication fees -- 234,779
Deferred employee benefit 373,273 --
Bad debt expense 132,777 --
Other deferred tax assets, net 28,982 177,780
$1,403,192 $(5,819,176)
The current portion of the Company's net deferred tax
assets is included on the Consolidated Balance Sheet under
the heading "Prepaid Expenses and Other Current 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.
Prior to 1993, the Company accounted for income taxes
in accordance with APB 11. The provision for income taxes
for the year ended December 31, 1992 is as follows:
1992
Provision before extraordinary item $(2,995,628)
Extraordinary credit carryforward of
prior years' loss 793,511
<PAGE>
Net provision $(2,202,117)
8. COMMITMENTS AND CONTINGENCIES
In connection with the bank loan agreements, the
Company has entered into agreements with certain key
stockholders, directors and executive officers to facilitate
borrowings by the Company. These individuals personally
guaranteed the previous bank loan made to Rio Properties in
exchange for compensation of $1,250,000 upon the
satisfaction of certain terms and conditions. The first
potential payment obligation of the Company of $250,000
commenced with the fiscal year ended December 31, 1990 and
continued to December 31, 1994, with a two-year extension
provision. No amounts were due or paid arising out of the
years ended December 31, 1990 or 1991. The Company made
$250,000 payments in each of the three years ended
December 31, 1994, 1993, and 1992. The Company has not made
any payments during the six months ended June 30, 1995 but
has accrued $125,000 at June 30, 1995 and anticipates paying
the entire balance on or before December 31, 1996. Because
the personal guaranties under the former bank loan have been
replaced under the Rio Bank Loan with provisions that
trigger events of default should the Company's Chief
Executive Officer voluntarily allow his stockholdings in the
Company to fall below 10% or that of another holder or if
the Company's Chief Executive Officer or Chief Operating
Officer cease for a period of 30 consecutive days to hold
their respective executive officer positions, the agreement
with the guarantors has been amended to terminate the
guarantor payments in the event that said events of default
are triggered by voluntary act of the respective guarantors.
Effective January 1, 1991, Rio Properties maintains an
employee profit sharing plan for all employees who have
accredited service. Contributions to the plan are
discretionary and cannot exceed amounts permitted under the
Internal Revenue Code. Contributions of $110,999, $101,429,
$215,039, $109,701, and $69,113 have been authorized and
charged to income for the six months ended June 30, 1995 and
1994 and for the years ended December 31, 1994, 1993, and
1992, respectively.
In the normal course of business, the Company is
involved with various negotiations and legal matters. In
addition, Rio Properties is a potential defendant in various
personal injury allegations. Management is of the opinion
that the effect of these matters is not material to the
consolidated financial statements.
9. STOCKHOLDERS' EQUITY
COMMON STOCK
During the six months ended June 30, 1995, the Company
issued 108,700 shares of Common Stock at exercise prices
ranging from $3.00 per share to $14.25 per share pursuant to
options previously granted under the Company's NSOP (see
below).
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 six months ended June 30, 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.
During 1994, the Company issued 223,550 shares of
Common Stock at exercise prices ranging from $3.00 per share
to $15.625 per share pursuant to options previously granted
under the Company's NSOP (see below).
On November 24, 1993, the Company sold in a public
offering 2,300,000 shares of Common Stock at a net price per
share of $13.60. The proceeds from the sale were received in
November 1993.
During 1993, the Company issued 247,000 shares of
Common Stock at exercise prices ranging from $3.00 per share
to $6.00 per share pursuant to options previously granted
under the Company's NSOP (see below).
<PAGE>
On November 24, 1992, the Company sold in a public
offering 3,737,500 shares of Common Stock at a net price per
share of $7.98. The proceeds from the sale were received in
December 1992.
On August 15, 1992, the Company issued 463,641 shares
of Common Stock to the partners in the Rio Partnership in
exchange for 4.25% of the Rio Partnership (Note 3).
During 1992, the Company issued 55,400 shares of Common
Stock at exercise prices ranging from $3.00 per share to
$5.00 per share pursuant to options previously granted under
the Company's NSOP (see below).
STOCK OPTIONS
Key officers and employees are eligible to participate
in the Company's NSOP. As of June 30, 1995, 2,637,500 shares
were available for issuance pursuant to options granted
under the NSOP and 2,588,500 options had been granted at
exercise prices ranging from $3.00 to $15.625 per share. As
of June 30, 1995, 614,650 options had been exercised and
247,300 options had been forfeited, resulting in 1,726,550
options outstanding.
The NSOP will terminate July 8, 1997, subject to the
right of the Board of Directors to terminate the NSOP prior
thereto.
On May 16, 1995, the Company's stockholders amended the
1991 Directors' Stock Option Plan under which options to
purchase up to 200,000 shares of Common Stock may be granted
to non-employee directors. The option exercise price is 100%
of the fair market value of the Common Stock on the date of
grant. As of June 30, 1995, 108,000 options had been granted
at exercise prices ranging from $3.00 per share to $16.625
per share. As of June 30, 1995, 20,000 options had been
exercised and 2,000 options had been forfeited, resulting in
86,000 options outstanding.
STOCK EXCHANGE RIGHTS
On September 28, 1990, MRHC issued 6,638,214 shares of
preferred stock (the "Stock Exchange Rights") in exchange
for 60.85 Rio Partnership Units. These Stock Exchange Rights
permitted the exchange for the Company Common Stock on a
one-for-one basis after March 28, 1991, and the Company
could have required exchange any time on or after
December 31, 1999. In connection with this transaction, the
Company paid $13,681,286 of costs in excess of recorded
minority interests for the Rio Partnership Units. All costs
were allocated to assets based on fair market values;
however, the costs in excess of recorded minority interests
paid to related parties were not recorded. As of
December 31, 1992, all 6,638,214 Stock Exchange Rights had
been exchanged for the Company's Common Stock. The Company
has reflected the cost of the issuance of the Stock Exchange
Rights in its stockholders' equity.
10. RELATED PARTY TRANSACTIONS
The Company has contracted with two affiliates of the
Company's largest stockholder for the design and
construction of an addition of 144 suites (the "Phase IV
Expansion") for a total of $18,848,258. As of June 30,
1995, the Company had capitalized $3,257,580 in connection
with these contracts. As of June 30, 1995, $3,410,631 had
been accrued in connection with these construction and
design contracts.
The Company has contracted with two affiliates of the
Company's largest stockholder for the design and
construction of a 21-story hotel tower containing 549 suites
(the "Phase III Expansion") for a total of $64,166,368. As
of June 30, 1995, the Company had capitalized $56,484,126 in
connection with these contracts. As of June 30, 1995,
$642,071 had been accrued in connection with these
construction and design contracts.
In 1993, the Company contracted with two affiliates of
the Company's largest stockholder for the design and
construction of a 21-story hotel tower containing 437 suites
(the "Phase II Expansion") and an expansion of the Rio's
public area (the "Eastside Expansion"). The two contracts
were in amounts not to exceed $57,557,093. Amounts
capitalized in connection with these contracts totaled
$50,193,919. As of December 31, 1993, $7,189,042 had been
<PAGE>
accrued in connection with these construction and design
contracts. As of December 31, 1994, all amounts due in
connection with these contracts had been capitalized and
paid.
On July 1, 1992, the Company entered into contracts
with two affiliates of the Company's largest stockholder in
an amount not to exceed $6,107,571 for the design and
construction of an addition to the Rio's buffet restaurant,
as well as expansion of casino space and addition of a
lounge. As of December 31, 1992, $5,605,540 had been
capitalized in connection with these contracts. As of
December 31, 1992, $984,195 had been accrued in connection
with these contracts. As of December 31, 1993, all amounts
due in connection with these contracts had been capitalized
and paid.
In December 1991, the Company sold non-Rio real estate
to an affiliate of the Company's largest stockholder. In
April 1994, the affiliated entity sold the real estate to a
non-related party. Pursuant to the terms of the sales
agreement, the Company was entitled to a portion of the
sales proceeds which equaled $966,510, net of expenses.
The Company entered into consulting contracts with an
affiliated entity to provide real estate, financial and
supervisory services through April 30, 1992. The contract
was terminated three months early, on January 31, 1992, by
mutual agreement of the parties. Revenues earned thereunder
during the first six months of 1995 and 1994 and the years
ended December 31, 1994, 1993, and 1992 were $0, $0, $0, $0,
and $100,000, respectively.
The Company reimbursed an affiliate of the Company's
largest stockholder for certain expenses advanced on behalf
of or supplied to the Company during the years ended
December 31, 1993 and December 31, 1992 of approximately
$162,425 and $121,000, respectively. Nominal amounts were
paid by the Company to the affiliate for similar purposes
during 1994 and the first six months of 1995. Such amounts
were generally billed to the Company at the affiliate's
cost.
Two director/officers of the Company are associated
with affiliated entities which render various architectural
and construction services for the Company. The Company paid
these entities, in the aggregate, approximately $25,339,356,
$17,205,720, $50,416,348, $44,567,088 and $5,669,743 during
the first six months of 1995 and 1994 and the years ended
December 31, 1994, 1993, and 1992, respectively, for their
services.
Entities in which a director of the Company is the
principal stockholder and the executive officer received
commissions from the Company totaling approximately $65,000,
$60,000, $124,912, $90,325 and $79,000 for the first six
months of 1995 and 1994 and the years ended December 31,
1994, 1993, and 1992, respectively, arising out of the
acquisition of various insurance coverage by the Company.
The Company believes that the transactions described
above are on terms at least as favorable as would have been
obtained from non-related parties.
11. MARCOR RESORTS, L.P. V (THE RIO PARTNERSHIP)
During the year ended February 28, 1989, a limited
partnership (known as MarCor Resorts, L.P. V, a Nevada
limited partnership) was formed. Until its merger into Rio
Properties on August 15, 1992, the Rio Partnership was
included in the consolidated financial statements of the
Company. The Company obtained a 34.4% general partnership
interest in the Rio Partnership in exchange for land, cash
and certain other assets with a collective value of
$13,760,000. The exchange resulted in a deferred gain to the
Company of $1,608,274. Subsequently, the Company acquired an
additional 0.5% limited partnership interest.
On September 28, 1990, MarCor Rio Holding Corp. issued
6,638,214 stock exchange rights in exchange for 60.85 Rio
Partnership Units, increasing the Company's total investment
in the Rio Partnership to 95.75%. As a result of this
transaction, certain related party rules came into effect,
thereby requiring the reversal of the deferred gain of
$1,608,274 recorded upon initial capitalization of the
partnership.
On August 15, 1992, the Rio Partnership merged with Rio
Properties (Note 3), resulting in the Company owning 100% of
the net assets formerly held by the Rio Partnership. As a
result of the merger, the Rio Partnership ceased to exist.
<PAGE>
12. DEBT GUARANTEE
Summarized financial information is provided below for
Rio Properties, Inc. (the "Guarantor"), the Company's
principal operating subsidiary, as sole guarantor to the
Company's $100,000,000 10 5/8% Senior Subordinated Notes Due
2005. The Senior Subordinated Notes are unconditionally
guaranteed by the Guarantor and are subordinated to all
existing and future indebtedness and other liabilities
(including trade payables) of the Company's subsidiaries.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current Assets $ 30,004,746 $ 72,311,313 $ 85,120,465 $ 62,303,414 $ 46,360,823
Non-Current Assets 227,410,835 156,687,156 199,788,372 138,644,090 87,337,089
Current Liabilities 27,462,973 20,891,194 44,662,313 29,292,301 10,660,847
Non-Current Liabilities 90,189,391 85,165,228 110,146,869 56,875,753 50,906,000
Revenues 91,784,455 70,217,144 146,299,304 109,981,585 82,475,164
Operating Profit 17,753,071 13,566,308 25,726,349 20,265,334 13,008,251
Income before income
taxes 15,073,420 12,761,362 23,925,361 18,107,197 9,394,460
Net Income 9,601,860 8,085,105 15,174,014 10,745,469 8,940,543
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of Chapter 78 of the Nevada Revised
Statutes and Article XII of the Company's Articles of
Incorporation contain provisions for indemnification of
officers, directors, employees and agents of the Company.
The Articles of Incorporation require the Company to
indemnify such persons to the full extent permitted by
Nevada law. Each person will be indemnified in any
proceeding if he acted in good faith and in a manner which
he reasonably believed to be in, or not opposed to, the best
interest of the Company. Indemnification would cover
expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement.
The Company's Articles of Incorporation and Bylaws also
provide that the Company's Board of Directors may cause the
Company to purchase and maintain insurance on behalf of any
present or part director or officer insuring against any
liability asserted against such person incurred in the
capacity of director or officer or arising out of such
status, whether or not the Company would have the power to
indemnify such person. The Company presently has directors'
and officers' liability insurance in effect.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
Exhibit
NUMBER DESCRIPTION
1.01 Purchase Agreement dated July 18, 1995 by Rio Hotel &
Casino, Inc. and confirmed and accepted by Salomon
Brothers Inc. for itself and on behalf of Montgomery
Securities is incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 8-K dated
July 18, 1995, Item 7, Exhibit 4.1.
4.01 Amended and Restated Articles of Incorporation of Rio
Hotel & Casino, Inc. filed July 19, 1994, are
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Report on Form 10-Q for the Quarter
Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.01.
4.02 Amended and Restated Bylaws of Rio Hotel & Casino, Inc.,
certified March 3, 1993, are incorporated herein by
reference from the Company's (SEC File No. 0-13760)
Report on Form 10-K for the Year Ended December 31, 1992,
Part IV, Item 14, Exhibit 4.02.
4.03 Specimen common stock certificate for the common stock of
Rio Hotel & Casino, Inc. is incorporated herein by
reference from the Company's Registration Statement on
Form S-3 filed on August 24, 1992, File No. 33-51092,
Part II, Item 16, Exhibit 4.01.
4.04 Agreement and Plan of Exchange by and between Rio Hotel &
Casino, Inc., a Nevada corporation, and Rio Properties,
Inc., a Nevada corporation, dated August 14, 1992, is
incorporated herein by reference from the Company's
Registration Statement on Form S-3 filed on August 24,
1992, File No. 33-51092, Part II, Item 16, Exhibit 2.01.
4.05 Form of Subscription and Exchange Agreement between Rio
Properties, Inc., MarCor Resorts, Inc., and subscriber is
incorporated herein by reference from the Company's
Registration Statement on Form S-3 filed on August 24,
1992, File No. 33-51092, Part II, Item 16, Exhibit 2.02.
<PAGE>
4.06 Rio Hotel & Casino, Inc. Non-Statutory Stock Option Plan,
as amended September 5, 1991, as amended February 28,
1992 (to reflect change in Company name) and as amended
June 22, 1993, is incorporated herein by reference from
the Company's Registration Statement on Form S-8 filed on
October 5, 1993, File No. 33-38752 , Part II, Item 8,
Exhibit 4.04.
4.07 Rio Hotel & Casino, Inc. Directors' Stock Option Plan As
Amended February 28, 1992 (to reflect change in Company
name only) is incorporated herein by reference from the
Company's (SEC File No. 2- 88147) Report on Form 10-K for
the Year Ended December 31, 1991, Part IV, Item 14(c),
Exhibit 4.07.
4.08 Rio Suite Hotel & Casino Employee Retirement Savings Plan
Trust Agreement dated February 11, 1991; First Amendment
to the Rio Suite Hotel & Casino Employee Retirement
Savings Plan dated March 20, 1992, effective April 1,
1992; Second Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated March 20, 1992,
effective April 1, 1992; Third Amendment to the Rio Suite
Hotel & Casino Employee Retirement Savings Plan dated
December 14, 1992, effective August 15, 1992, and Rio
Suite Hotel & Casino Employee Retirement Savings Plan,
Participant Loan Program dated March 19, 1992 are
incorporated herein by reference from the Company's
Registration Statement on Form S-8, filed January 8,
1993, File No. 33-56860, Part II, Item 8, Exhibit 4.11;
Rio Suite Hotel & Casino Employment Retirement Savings
Plan dated February 21, 1991 is incorporated herein by
reference from the Company's Registration Statement on
Form S-8, Amendment No. 1, filed February 3, 1993, File
No. 33-56860, Part II, Item 8, Exhibit 4.11; Fourth
Amendment to the Rio Suite Hotel & Casino Employee
Retirement Savings Plan dated April 30, 1993, effective
July 1, 1993; Fifth Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated August 17,
1993, effective July 1, 1993; Sixth Amendment to the Rio
Suite Hotel & Casino Employee Retirement Savings Plan
dated October 27, 1993, effective October 25, 1993;
Seventh Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan Trust Agreement dated
and effective December 16, 1993; and Eighth Amendment to
the Rio Suite Hotel & Casino Employee Retirement Savings
Plan dated May 3, 1994, effective May 1, 1994 are
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Report on Form 10-Q for the Quarter
Ended June 30, 1994, Part II, Item 6(a), Exhibit 4.03;
Ninth Amendment to the Rio Suite Hotel & Casino Employee
Retirement Savings Plan dated August 26, 1994, effective
August 25, 1994; Tenth Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated and
effective January 1, 1995; and Eleventh Amendment to the
Rio Suite Hotel & Casino Employee Retirement Savings Plan
dated and effective January 12, 1995 are incorporated
herein by reference from the Company's (SEC File No. 0-
13760) Report on Form 10-K for the Year Ended December
31, 1994, Part IV, Item 14(c), Exhibit 4.08.
4.09 Rio Hotel & Casino, Inc. 1995 Long-Term Incentive Plan,
as adopted January 16, 1995 is incorporated herein by
reference from the Company's (SEC File No. 0-13760)
Report on Form 10-K for the Year Ended December 31, 1994,
Part IV, Item 14(c), Exhibit 4.09.
4.10 Credit Agreement among Bank of America National Trust and
Savings Association, as agent for itself and other
financial institutions, as Lenders, and Rio Properties,
Inc., as Borrower, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in favor
of Bank of America National Trust and Savings
Association, in the amount of $9,692,307.70 dated July
15, 1993; Line A Note executed by Rio Properties, Inc.,
as Borrower, in favor of Bank of America Nevada, in the
amount of $3,230,769.23, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in favor
of Societe Generale, in the amount of $6,461,538.46,
dated July 15, 1993; Line A Note executed by Rio
Properties, Inc., as Borrower, in favor of NBD Bank,
N.A., in the amount of $6,461,538.46, dated July 15,
1993; Line A Note executed by Rio Properties, Inc., as
Borrower, in favor of First Security Bank of Idaho, N.A.,
in the amount of $6,461,538.46, dated July 15, 1993; Line
A Note executed by Rio Properties, Inc., as Borrower, in
favor of First Interstate Bank of Nevada, N.A., in the
amount of $6,461,538.46, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in favor
of U.S. Bank of Nevada, in the amount of $3,230,769.23,
dated July 15, 1993; Line B Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank of
America National Trust and Savings Association, in the
amount of $5,307,692.30 dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in favor
of Bank of America Nevada, in the amount of
$1,769,230.77, dated July 15, 1993; Line B Note executed
by Rio Properties, Inc., as Borrower, in favor of First
<PAGE>
Interstate Bank of Nevada, N.A., in the amount of
$3,538,461.54, dated July 15, 1993; Line B Note executed
by Rio Properties, Inc., as Borrower, in favor of First
Security Bank of Idaho, N.A., in the amount of
$3,538,461.54, dated July 15, 1993; Line B Note executed
by Rio Properties, Inc., as Borrower, in favor of NBD
Bank, N.A., in the amount of $3,538,461.54, dated July
15, 1993; Line B Note executed by Rio Properties, Inc.,
as Borrower, in favor of Societe Generale, in the amount
of $3,538,461.54, dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in favor
of U.S. Bank of Nevada, in the amount of $1,769,230.77,
dated July 15, 1993; Revolving Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank of
America National Trust and Savings Association, in the
amount of $15,000,000, dated July 15, 1993; Revolving
Note executed by Rio Properties, Inc., as Borrower, in
favor of Bank of America Nevada, in the amount of
$5,000,000, dated July 15, 1993; Revolving Note executed
by Rio Properties, Inc., as Borrower, in favor of First
Interstate Bank of Nevada, N.A., in the amount of
$10,000,000, dated July 15, 1993; Revolving Note executed
by Rio Properties, Inc., as Borrower, in favor of First
Interstate Bank of Idaho, N.A., in the amount of
$10,000,000, dated July 15, 1993; Revolving Note executed
by Rio Properties, Inc., as Borrower, in favor of NBD
Bank, N.A., in the amount of $10,000,000, dated July 15,
1993; Revolving Note executed by Rio Properties, Inc., as
Borrower, in favor of Societe Generale, in the amount of
$10,000,000, dated July 15, 1993; Revolving Note executed
by Rio Properties, Inc., as Borrower, in favor of U.S.
Bank of Nevada, in the amount of $5,000,000, dated July
15, 1993; Security Agreement executed by Rio Properties,
Inc., as Debtor, in favor of Bank of America National
Trust and Savings Association, as agent for itself and
other financial institutions, as Secured Party, dated
July 15, 1993; Construction Deed of Trust With Assignment
of Rents and Fixture Filing among Rio Properties, Inc.,
as Trustor, Equitable Deed Company, as Trustee, and Bank
of America National Trust and Savings Association, as
agent for itself and the other financial institutions, as
Beneficiary, dated July 15, 1993; Unsecured Indemnity
Agreement executed by Rio Properties, Inc., as
Indemnitor, in favor of Bank of America National Trust
and Savings Association, as agent for itself and other
financial institutions, dated July 15, 1993; Guaranty
executed by Rio Hotel & Casino, Inc., as Guarantor, in
favor of Bank of America National Trust and Savings
Association, as agent for itself and other financial
institutions, as Guaranteed Parties, dated July 15, 1993;
and, Parent Guarantor Security Agreement by Rio Hotel &
Casino, Inc., as Debtor, in favor of Bank of America
National Trust and Savings Association, as agent for
itself and other financial institutions, as Secured
Party, dated July 15, 1993 are incorporated by reference
from the Company's (SEC File No. 2-88147) Report on Form
8-K dated July 15, 1993, Item 7(c), Exhibit 28.01; First
Amendment to Credit Agreement dated as of October 25,
1993 and Second Amendment and Waiver to Credit Agreement
dated as of November 8, 1993 among Rio Properties, Inc.,
Bank of America National Trust and Savings Association,
Bank of America Nevada, First Interstate Bank of Nevada,
First Security Bank of Idaho, N.A., NBD Bank, N.A.,
Societe Generale, and U.S. Bank of Nevada are
incorporated by reference from the Company's (SEC File
No. 0-13760) Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit 4.09.
4.11 Third Amendment to Credit Agreement dated as of April 15,
1994 among Rio Properties, Inc., Bank of America National
Trust and Savings Association, as Agent and as a Bank,
Bank of America, Nevada, First Interstate Bank of Nevada,
First Security Bank of Idaho, N.A, NBD Bank, N.A.,
Societe Generale, and U.S. Bank of Nevada; Memorandum of
Amendments to Credit Agreement and Amendment to
Construction Deed of Trust with Assignment of Rents and
Fixture Filing dated as of May 9, 1994 by Rio Properties,
Inc. and Bank of America National Trust and Savings
Association are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form 10-Q for
the Quarter Ended June 30, 1994, Part II, Item 6(a),
Exhibit No. 4.02; and Fourth Amendment to Credit
Agreement among Rio Properties, Inc., as Borrower, and
Bank of America National Trust and Savings Association,
First Interstate Bank of Nevada, First Security Bank of
Idaho, N.A., NBD Bank, N.A., Societe Generale, Bank of
America, Nevada, U.S. Bank of Nevada, Bank of Scotland
and Midlantic Bank, N.A., as Lenders; and Second
Memorandum of Amendment to Credit Agreement and Amendment
to Construction Deed of Trust with Assignment of Rents
and Fixture Filing between Borrower and Bank of America
National Trust and Savings Association, as agent for
Lenders, dated December 16, 1994 are incorporated herein
by reference from the Company's (SEC File No. 0-13760)
Report on Form 8-K dated December 16, 1994, Item 7(c),
Exhibit 10.01; Fifth Amendment to Credit Agreement dated
as of March 20, 1995, among Rio Properties, Inc., Bank of
America National Trust and Savings Association, as Agent
and as a Bank, First Interstate Bank of Nevada, First
<PAGE>
Security Bank of Idaho, N.A., NBD Bank, N.A., Societe
Generale, Bank of America Nevada, U.S. Bank of Nevada,
Bank of Scotland and Midlantic Bank, N.A., as Banks, is
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Report on Form 10-K for the Year Ended
December 31, 1994, Part IV, Item 14(c), Exhibit 10.09;
Sixth Amendment to Credit Agreement dated as of July 31,
1995 among Rio Properties, Inc., Bank of America National
Trust and Savings Association, as Agent and as a Bank,
and First Interstate Bank of Nevada, First Security Bank
of Idaho, N.A., NBD Bank, Societe Generale, Bank of
America Nevada, U.S. Bank of Nevada, Bank of Scotland,
Midlantic Bank, N.A., and Bank of Hawaii, as Banks, to be
filed by amendment.
4.12 Indenture dated as of July 21, 1995, among Rio Hotel &
Casino, Inc., Rio Properties, Inc. and IBJ Schroder Bank
& Trust Company for the Company's 10 5/8% Senior
Subordinated Notes Due 2005 is incorporated herein by
reference in the Company's (SEC File No. 0-13760) Report
on Form 8-K dated July 18, 1995, Item 7, Exhibit 4.3.
4.13 Registration Agreement dated July 18, 1995 by Rio Hotel &
Casino, Inc. and accepted July 18, 1995 by Salomon
Brothers Inc. and Montgomery Securities is incorporated
herein by reference from the Company's (SEC File No. 0-
13760) Report on Form 8-K dated July 18, 1995, Item 7,
Exhibit 4.2.
4.14 Form of Letter of Transmittal to IBJ Schroder Bank &
Trust Company as Exchange Agent for exchange of 10 5/8%
Senior Subordinated Notes Due 2005.
5.01 Opinion and Consent of Kummer Kaempfer Bonner & Renshaw
as to the legality of securities being registered, to be
filed by amendment.
10.01 Agreement by and among MarCor Resorts Inc., Marnell
Corrao, Inc., Marnell Corrao Associates, Inc., MarCor
Partnership, The Anthony A. Marnell II Revocable Living
Trust dated June 16, 1982, Anthony A. Marnell II, Sandra
J. Marnell, Barrett Family Revocable Living Trust dated
December 18, 1981, James A. Barrett, Jr. and Maureen M.
Barrett dated February 22, 1989, is incorporated herein
by reference from the Company's (SEC File No. 0-13760)
Annual Report on Form 10-K for the Year Ended December
31, 1994, Part IV, Item 14(c), Exhibit 10.01; First
Amendment to Agreement dated October 25, 1993 by and
among Rio Hotel & Casino, Inc., and Marnell Corrao, Inc.,
Marnell Corrao Associates, Inc., MarCor Partnership,
Anthony A. Marnell II, Barrett Family Revocable Living
Trust dated December 18, 1981, James A. Barrett, Jr. and
Maureen M. Barrett incorporated herein by reference from
the Company's (SEC File No. 0-13760) Report on Form 10-K
for the Year Ended December 31, 1993, Part IV, Item
14(c), Exhibit 10.01
10.02 Agreement of Purchase and Sale by and among MarCor
Resorts, Inc., MarCor Resort Properties, Inc., MarCor
Development Company, Inc., MarCor Resorts, L.P.V and
Focus 2000, Inc., entered into December 30, 1991;
Agreement to Assume and Hold Harmless Note entered into
by and among MarCor Development Company, Inc. and Focus
2000, Inc. on December 30, 1991; are incorporated herein
by reference from the Company's (SEC File No. 2-88147)
Report on Form 8-K dated December 30, 1991, Item 7(c),
Exhibit 2.01.
10.03 Completion Guaranty dated November 20, 1992, by and among
Rio Properties, Inc. and Marnell Corrao, Inc., Marnell
Corrao Associates, Inc., MarCor Partnership, Focus 2000,
Inc., The Anthony A. Marnell II Revocable Living Trust
dated June 16, 1982, Anthony A. Marnell II, Barrett
Family Revocable Living Trust dated December 18, 1981,
and James A. Barrett, Jr. and Maureen M. Barrett, husband
and wife, collectively as Guarantors is incorporated
herein by reference from the Company's Registration
Statement on Form S-2, Pre-Effective Amendment No. 2,
filed November 23, 1992, File No. 33-53758, Part II, Item
16, Exhibit 10.13.
10.04 Memorandum of Understanding dated as of June 30, 1992, by
and among MarCor Resorts, L.P. V, Focus 2000, Inc., and
Anthony A. Marnell II and James A. Barrett, Jr. is
incorporated herein by reference from the Company's
Registration Statement on Form S-2, Pre-Effective
Amendment No. 2, filed November 23, 1992, File No. 33-
53758, Part II, Item 16, Exhibit 10.14.
<PAGE>
10.05 Interest Rate and Currency Exchange Agreement dated as of
July 28, 1993 between Rio Properties, Inc. and Bank of
America National Trust and Savings Association is
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit 10.11.
10.06 Architectural Agreement entered into as of February 25,
1994 between Rio Hotel & Casino, Inc., as Owner, and
Anthony A. Marnell II, Chartered, as Architect, is
incorporated herein by reference from the Company's (SEC
File No. 0-13760), Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit 10.12.
10.07 Building Contract entered into as of February 25, 1994
between Marnell Corrao Associates, Inc., as General
Contractor, and Rio Properties, Inc., as Owner, is
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit 10.13.
10.08 Architectural Agreement entered into as of February 9,
1995 between Rio Hotel & Casino, Inc., as Owner, and
Anthony A. Marnell, Chartered, as Architect, is
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Annual Report on Form 10-K for the Year
Ended December 31, 1994, Part IV, Item 14(c), Exhibit
10.08.
10.09 Building Contract entered into as of February 27, 1995
between Marnell Corrao Associates, Inc., as General
Contractor, and Rio Properties, Inc., as Owner, is
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Annual Report on Form 10-K for the Year
Ended December 31, 1994, Part IV, Item 14(c), Exhibit
10.09.
10.10 Real Estate Purchase and Sale Agreement entered into as
of January 25, 1995 between Focus 2000, Inc., as Seller,
and Rio Properties, Inc., as Buyer, is incorporated
herein by reference from the Company's (SEC File No. 0-
13760) Annual Report on Form 10-K for the Year Ended
December 31, 1994, Part IV, Item 14(c), Exhibit 10.10.
10.11 Exchange Agreement entered into as of January 6, 1995
between Allied Building Materials, Cinderlane, Inc., and
Rio Hotel & Casino, Inc. is incorporated herein by
reference from the Company's (SEC File No. 0-13760)
Annual Report on Form 10-K for the Year Ended December
31, 1994, Part IV, Item 14(c), Exhibit 10.11.
10.12 Letter Agreement regarding Rate Cap Transaction dated
August 11, 1994 between Bank of America National Trust
and Savings Association and Rio Properties, Inc. is
incorporated herein by reference from the Company's (SEC
File No. 0-13760) Annual Report on Form 10-K for the Year
Ended December 31, 1994, Part IV, Item 14(c), Exhibit
10.12.
12.01 Computation of Ratios of Earnings to Fixed Charges.
21.01 List of the Company's subsidiaries.
23.01 Consent of Kummer Kaempfer Bonner & Renshaw is contained
in Exhibit 5.01
23.02 Consent of Arthur Andersen LLP.
24.01 Power of Attorney concerning Rio Hotel & Casino, Inc. is
included on p. II-8.
24.02 Power of Attorney concerning Rio Properties, Inc. is
included on p. II -9.
25.01 Statement of Eligibility of Trustee on Form T-1.
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULES
Included in Part II of this Registration
Statement:
Schedule III - Condensed Financial Information of
Registrant
Other Schedules are omitted because of the absence
of conditions under which they are required or
because the required information is given in the
financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
Insofar as indemnification for liability arising under
the Securities Act of 1993 may be permitted to directors,
officers and controlling persons of the registrants pursuant
to the foregoing provisions, or otherwise, the registrants
have been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrants of expenses incurred or paid by a
director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person
in connection with the securities being registered, the
registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted
from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the
registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to
the securities offered therein, and the offering of
such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned registrants hereby undertake that, for
purposes of determining any liability under the Securities
Act of 1933, each filing of the registrants' annual report
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned registrants hereby undertake to respond
to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b),
11, or 13 of this Form, within one business day of receipt
of such request, and to send the incorporated documents by
first class mail or other equally prompt means. This
includes information contained in documents filed subsequent
to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrants hereby undertake to deliver
or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference
in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3
of Regulation S-X are not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the
<PAGE>
prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Las Vegas, State of Nevada, on August
24, 1995.
RIO HOTEL & CASINO, INC.
/s/ James A. Barrett, Jr.
James A. Barrett, Jr.
President, Chief Operating Officer
and Director
The undersigned Directors and Officers of Rio Hotel & Casino,
Inc. hereby appoint James A. Barrett, Jr. or Harlan D. Braaten as
attorney-in-fact for the undersigned, with full power of
substitution, for and in the name, place and stead of the
undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933 any and all
amendments (including post-effective amendments) and exhibits to
this Registration Statement and any and all applications and
other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities
covered hereby, with full power and authority to do and perform
any and all acts and things whatsoever requisite and necessary or
desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Anthony A. Marnell II Chairman of the August 8, 1995
Anthony A. Marnell II Board of
Directors and
Chief Executive
Officer
(Principal
Executive
Officer)
/s/ James A. Barrett, Jr. President, Chief August 24, 1995
James A. Barrett, Jr. Operating Officer
and Director
/s/ Harlan D. Braaten Senior Vice August 24, 1995
Harlan D. Braaten President,
Treasurer and
Chief Financial
Officer
(Principal
Financial and
Accounting
Officer)
/s/ John A. Stuart Director August 24, 1995
John A. Stuart
/s/ Thomas Y. Hartley Director August 24, 1995
Thomas Y. Hartley
/s/ Peter M. Thomas Director August 24, 1995
Peter M. Thomas
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Las Vegas, State of Nevada, on August
24, 1995.
RIO PROPERTIES, INC.
/s/ James A. Barrett, Jr.
James A. Barrett, Jr.
President, Chief Operating Officer
and Director
The undersigned Directors and Officers of Rio Properties, Inc.
hereby appoint James A. Barrett, Jr. or Harlan D. Braaten as
attorney-in-fact for the undersigned, with full power of
substitution, for and in the name, place and stead of the
undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933 any and all
amendments (including post-effective amendments) and exhibits to
this Registration Statement and any and all applications and
other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities
covered hereby, with full power and authority to do and perform
any and all acts and things whatsoever requisite and necessary or
desirable, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Anthony A. Marnell II Chairman of the August 24, 1995
Anthony A. Marnell II Board of Directors
and (Principal
Executive Officer)
/s/ James A. Barrett, Jr. President and August 24, 1995
James A. Barrett, Jr. Director
/s/ Harlan D. Braaten Senior Vice August 15, 1995
Harlan D. Braaten President,
Treasurer and Chief
Financial Officer
(Principal
Financial and
Accounting Officer)
/s/ John A. Stuart Director August 24, 1995
John A. Stuart
/s/ Thomas Y. Hartley Director August 24, 1995
Thomas Y. Hartley
/s/ Peter M. Thomas Director August 24, 1995
Peter M. Thomas
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Board of Directors of Rio Hotel & Casino, Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of Rio Hotel &
Casino, Inc., included elsewhere in this Registration Statement
and have issued our report thereon dated January 25, 1995. Our
report on the consolidated financial statements includes an
explanatory paragraph with respect to the change in the method of
accounting for income taxes discussed in Note 7 to the
consolidated financial statements. Our audit was made for the
purpose of forming an opinion on the basic financial statements
taken as a whole. The financial statement schedule listed in
Item 21b is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
January 25, 1995
<PAGE>
SCHEDULE III
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. - BALANCE SHEETS
DECEMBER 31
1994 1993
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 35,635 $ 229,442
Accounts receivable from affiliates 3,214,304 1,151,300
Total current assets 3,249,939 1,380,742
Other assets:
Investments in subsidiaries 153,227,263 137,834,206
Other, net 1,938,022 1,051,890
155,165,285 138,886,096
$158,415,224 $140,266,838
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ -- $ 25,000
Total current liabilities -- 25,000
Non-current liabilities due to subsidiaries 10,576,057 10,403,357
Stockholders' equity
Common Stock, $0.01 par value; 100,000,000
shares authorized
(1994); 50,000,000 shares authorized
(1993); 21,371,346 (1994) and
21,147,796 (1993) shares
issued and outstanding 213,714 211,478
Additional paid-in capital 117,214,582 115,182,541
Retained earnings 30,410,871 14,444,462
Total stockholders' equity 147,839,167 129,838,481
$158,415,224 $140,266,838
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RIO HOTEL & CASINO, INC. - STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Revenues:
Management and service fees $ -- $ -- $ 100,000
Interest income 2,537 6,724 1,269,379
Other revenues 966,510 393,537 943,601
Subsidiary earnings 15,267,612 10,592,688 5,012,681
16,236,659 10,992,949 7,325,661
Costs and Expenses
General and administrative 270,250 343,557 915,913
Depreciation and
amortization -- -- 5,952
Interest expense -- -- 4,281
Other income and expenses -- -- 91,616
270,250 343,557 1,017,762
Net income $15,966,409 $10,649,392 $6,307,899
<CAPTION>
RIO HOTEL & CASINO, INC. - STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating
activities:
Net Income $ 15,966,409 $ 10,649,392 $ 6,307,899
Adjustments to reconcile net
income to net cash
provided by (used in)
operating activities:
Earnings from subsidiary
investments (15,267,612) (10,592,688) (5,012,681)
Depreciation and
amortization -- -- 5,952
Gain on sale of equipment,
furniture and
improvements -- -- (4,784)
(Increase) decrease in
assets:
Receivables 64,113 (79,821) 314,297
Prepaid expenses and other
current assets -- 13,811 11,726
Due to subsidiaries (1,820,498) (1,077,493) (1,565,760)
Other, net -- 3,719 (3,578)
Decrease in liabilities:
Accounts payable-trade (25,000) (164,770) (207,291)
Accrued interest -- -- (553)
Net cash (used in) operating
activities (1,082,588) (1,247,850) (154,773)
Cash flows from investing
activities:
Proceeds from sale of
equipment, furniture and
improvements -- -- 90,975
Investments in subsidiaries (14,390) (30,730,375) (29,485,305)
Net cash used in investing
activities (14,390) (30,730,375) (29,394,330)
Cash flows from financing
activities:
Net proceeds from common
stock issuance 1,022,700 32,506,200 30,252,138
Common stock offerings cost (119,629) (456,821) (457,160)
Payments on notes and loans
payable -- -- (62,107)
Net cash provided by
financing activities 903,171 32,049,379 29,732,871
<PAGE>
Net increase (decrease) in
cash and cash
equivalents (193,807) 71,154 183,768
Cash and cash equivalents,
beginning of period 229,442 158,288 (25,480)
Cash and cash equivalents,
end of period $ 35,635 $ 229,442 $ 158,288
<PAGE>
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Cash payments made for
interest (net of amounts
capitalized) $ -- $ -- $ 4,834
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
DECEMBER 31, 1994
Tax benefit arising from the exercise of stock options granted
under the NSOP totaled $886,132.
DECEMBER 31, 1993
Additional costs of issuing Common Stock financed through
payables totaled $12,194.
Costs of issuing Common Stock financed through payables
totaled $163,801.
Tax benefit arising from the exercise of stock options granted
under the Company's NSOP totaled $1,120,823.
Reduction of paid-in capital as a result of the implementation of
SFAS 109 totaled $823,152. This amount was charged directly
against equity because it reflects the tax effect of SFAS 109 as
it related to the gain on sale of assets to affiliates of the
Company's largest stockholder in December 1991, which was also
recorded directly to equity (Note 10).
DECEMBER 31, 1992
During 1992, the Company exchanged 728,461 stock exchange rights
for 728,461 shares of the Company's Common Stock. The
transactions resulted in the following changes:
Common Stock $ (7,285)
Notes Receivable 4,732,892
Due from Subsidiaries 113,319
Investments in Subsidiaries (4,732,892)
Additional Paid-In Capital (3,766,653)
Stock exchange rights 3,660,619
$ --
On August 14, 1992, the Company, through a subsidiary, acquired
an additional 3.25% of the Rio Partnership in exchange for
354,549 shares of the Company's Common Stock. On August 15, 1992,
the Rio Partnership was merged into a subsidiary of the Company,
with an additional 109,092 shares of Common Stock of the Company
issued for the remaining 1% interests in the Rio Partnership. The
transactions resulted in the following changes:
Common Stock $ (4,636)
Additional Paid-In Capital (3,124,941)
Due from Subsidiaries (42,554,852)
Investments in Subsidiaries 45,684,429
$ --
Costs of issuing Common Stock, financed through payables,
totaled $91,750.
<PAGE>
EXHIBIT INDEX
NUMBER EXHIBIT DESCRIPTION
1.01 Purchase Agreement dated July 18, 1995 by Rio
Hotel & Casino, Inc. and confirmed and accepted
by Salomon Brothers Inc. for itself and on behalf
of Montgomery Securities is incorporated herein
by reference from the Company's (SEC File No. 0-
13760) Report on Form 8-K dated July 18, 1995,
Item 7, Exhibit 4.1.
4.01 Amended and Restated Articles of Incorporation of
Rio Hotel & Casino, Inc. filed July 19, 1994, are
incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form
10-Q for the Quarter Ended June 30, 1994, Part
II, Item 6(a), Exhibit 4.01.
4.02 Amended and Restated Bylaws of Rio Hotel &
Casino, Inc., certified March 3, 1993, are
incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on
Form 10-K for the Year Ended December 31, 1992,
Part IV, Item 14, Exhibit 4.02.
4.03 Specimen common stock certificate for the common
stock of Rio Hotel & Casino, Inc. is incorporated
herein by reference from the Company's
Registration Statement on Form S-3 filed on
August 24, 1992, File No. 33-51092, Part II,
Item 16, Exhibit 4.01.
4.04 Agreement and Plan of Exchange by and between Rio
Hotel & Casino, Inc., a Nevada corporation, and
Rio Properties, Inc., a Nevada corporation, dated
August 14, 1992, is incorporated herein by
reference from the Company's Registration
Statement on Form S-3 filed on August 24, 1992,
File No. 33-51092, Part II, Item 16,
Exhibit 2.01.
4.05 Form of Subscription and Exchange Agreement
between Rio Properties, Inc., MarCor Resorts,
Inc., and subscriber is incorporated herein by
reference from the Company's Registration
Statement on Form S-3 filed on August 24, 1992,
File No. 33-51092, Part II, Item 16,
Exhibit 2.02.
4.06 Rio Hotel & Casino, Inc. Non-Statutory Stock
Option Plan, as amended September 5, 1991, as
amended February 28, 1992 (to reflect change in
Company name) and as amended June 22, 1993, is
incorporated herein by reference from the
Company's Registration Statement on Form S-8
filed on October 5, 1993, File No. 33-38752 ,
Part II, Item 8, Exhibit 4.04.
4.07 Rio Hotel & Casino, Inc. Directors' Stock Option
Plan As Amended February 28, 1992 (to reflect
change in Company name only) is incorporated
herein by reference from the Company's (SEC File
No. 2- 88147) Report on Form 10-K for the Year
Ended December 31, 1991, Part IV, Item 14(c),
Exhibit 4.07.
4.08 Rio Suite Hotel & Casino Employee Retirement
Savings Plan Trust Agreement dated February 11,
1991; First Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated
March 20, 1992, effective April 1, 1992; Second
Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated March 20,
1992, effective April 1, 1992; Third Amendment to
the Rio Suite Hotel & Casino Employee Retirement
Savings Plan dated December 14, 1992, effective
August 15, 1992, and Rio Suite Hotel & Casino
Employee Retirement Savings Plan, Participant
Loan Program dated March 19, 1992 are
incorporated herein by reference from the
Company's Registration Statement on Form S-8,
filed January 8, 1993, File No. 33-56860, Part
II, Item 8, Exhibit 4.11; Rio Suite Hotel &
Casino Employment Retirement Savings Plan dated
February 21, 1991 is incorporated herein by
reference from the Company's Registration
Statement on Form S-8, Amendment No. 1, filed
February 3, 1993, File No. 33-56860, Part II,
Item 8, Exhibit 4.11; Fourth Amendment to the Rio
<PAGE>
Suite Hotel & Casino Employee Retirement Savings
Plan dated April 30, 1993, effective July 1,
1993; Fifth Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated
August 17, 1993, effective July 1, 1993; Sixth
Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated October
27, 1993, effective October 25, 1993; Seventh
Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan Trust Agreement
dated and effective December 16, 1993; and Eighth
Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated May 3,
1994, effective May 1, 1994 are incorporated
herein by reference from the Company's (SEC File
No. 0-13760) Report on Form 10-Q for the Quarter
Ended June 30, 1994, Part II, Item 6(a), Exhibit
4.03; Ninth Amendment to the Rio Suite Hotel &
Casino Employee Retirement Savings Plan dated
August 26, 1994, effective August 25, 1994; Tenth
Amendment to the Rio Suite Hotel & Casino
Employee Retirement Savings Plan dated and
effective January 1, 1995; and Eleventh Amendment
to the Rio Suite Hotel & Casino Employee
Retirement Savings Plan dated and effective
January 12, 1995 are incorporated herein by
reference from the Company's (SEC File No. 0-
13760) Report on Form 10-K for the Year Ended
December 31, 1994, Part IV, Item 14(c), Exhibit
4.08.
4.09 Rio Hotel & Casino, Inc. 1995 Long-Term Incentive
Plan, as adopted January 16, 1995 is incorporated
herein by reference from the Company's (SEC File
No. 0-13760) Report on Form 10-K for the Year
Ended December 31, 1994, Part IV, Item 14(c),
Exhibit 4.09.
4.10 Credit Agreement among Bank of America National
Trust and Savings Association, as agent for
itself and other financial institutions, as
Lenders, and Rio Properties, Inc., as Borrower,
dated July 15, 1993; Line A Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank
of America National Trust and Savings
Association, in the amount of $9,692,307.70 dated
July 15, 1993; Line A Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank
of America Nevada, in the amount of
$3,230,769.23, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in
favor of Societe Generale, in the amount of
$6,461,538.46, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in
favor of NBD Bank, N.A., in the amount of
$6,461,538.46, dated July 15, 1993; Line A Note
executed by Rio Properties, Inc., as Borrower, in
favor of First Security Bank of Idaho, N.A., in
the amount of $6,461,538.46, dated July 15, 1993;
Line A Note executed by Rio Properties, Inc., as
Borrower, in favor of First Interstate Bank of
Nevada, N.A., in the amount of $6,461,538.46,
dated July 15, 1993; Line A Note executed by Rio
Properties, Inc., as Borrower, in favor of U.S.
Bank of Nevada, in the amount of $3,230,769.23,
dated July 15, 1993; Line B Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank
of America National Trust and Savings
Association, in the amount of $5,307,692.30 dated
July 15, 1993; Line B Note executed by Rio
Properties, Inc., as Borrower, in favor of Bank
of America Nevada, in the amount of
$1,769,230.77, dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in
favor of First Interstate Bank of Nevada, N.A.,
in the amount of $3,538,461.54, dated July 15,
1993; Line B Note executed by Rio Properties,
Inc., as Borrower, in favor of First Security
Bank of Idaho, N.A., in the amount of
$3,538,461.54, dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in
favor of NBD Bank, N.A., in the amount of
$3,538,461.54, dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in
favor of Societe Generale, in the amount of
$3,538,461.54, dated July 15, 1993; Line B Note
executed by Rio Properties, Inc., as Borrower, in
favor of U.S. Bank of Nevada, in the amount of
$1,769,230.77, dated July 15, 1993; Revolving
Note executed by Rio Properties, Inc., as
Borrower, in favor of Bank of America National
Trust and Savings Association, in the amount of
$15,000,000, dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in
favor of Bank of America Nevada, in the amount of
$5,000,000, dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in
favor of First Interstate Bank of Nevada, N.A.,
in the amount of $10,000,000, dated July 15,
1993; Revolving Note executed by Rio Properties,
Inc., as Borrower, in favor of First Interstate
Bank of Idaho, N.A., in the amount of
<PAGE>
$10,000,000, dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in
favor of NBD Bank, N.A., in the amount of
$10,000,000, dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in
favor of Societe Generale, in the amount of
$10,000,000, dated July 15, 1993; Revolving Note
executed by Rio Properties, Inc., as Borrower, in
favor of U.S. Bank of Nevada, in the amount of
$5,000,000, dated July 15, 1993; Security
Agreement executed by Rio Properties, Inc., as
Debtor, in favor of Bank of America National
Trust and Savings Association, as agent for
itself and other financial institutions, as
Secured Party, dated July 15, 1993; Construction
Deed of Trust With Assignment of Rents and
Fixture Filing among Rio Properties, Inc., as
Trustor, Equitable Deed Company, as Trustee, and
Bank of America National Trust and Savings
Association, as agent for itself and the other
financial institutions, as Beneficiary, dated
July 15, 1993; Unsecured Indemnity Agreement
executed by Rio Properties, Inc., as Indemnitor,
in favor of Bank of America National Trust and
Savings Association, as agent for itself and
other financial institutions, dated July 15,
1993; Guaranty executed by Rio Hotel & Casino,
Inc., as Guarantor, in favor of Bank of America
National Trust and Savings Association, as agent
for itself and other financial institutions, as
Guaranteed Parties, dated July 15, 1993; and,
Parent Guarantor Security Agreement by Rio Hotel
& Casino, Inc., as Debtor, in favor of Bank of
America National Trust and Savings Association,
as agent for itself and other financial
institutions, as Secured Party, dated July 15,
Party, dated July 15, 1993 are incorporated by
reference from the Company's (SEC File No.
2-88147) Report on Form 8-K dated July 15, 1993,
Item 7(c), Exhibit 28.01; First Amendment to
Credit Agreement dated as of October 25, 1993
and Second Amendment and Waiver to Credit
Agreement dated as of November 8, 1993 among Rio
Properties, Inc., Bank of America National Trust
and Savings Association, Bank of America Nevada,
First Interstate Bank of Nevada, First Security
Bank of Idaho, N.A., NBD Bank, N.A., Societe
Generale, and U.S. Bank of Nevada are
incorporated by reference from the Company's (SEC
File No. 0-13760) Report on Form 10-K for the
Year Ended December 31, 1993, Part IV, Item
14(c), Exhibit 4.09.
4.11 Third Amendment to Credit Agreement dated as of
April 15, 1994 among Rio Properties, Inc., Bank
of America National Trust and Savings
Association, as Agent and as a Bank, Bank of
America, Nevada, First Interstate Bank of Nevada,
First Security Bank of Idaho, N.A, NBD Bank,
N.A., Societe Generale, and U.S. Bank of Nevada;
Memorandum of Amendments to Credit Agreement and
Amendment to Construction Deed of Trust with
Assignment of Rents and Fixture Filing dated as
of May 9, 1994 by Rio Properties, Inc. and Bank
of America National Trust and Savings Association
are incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form
10-Q for the Quarter Ended June 30, 1994, Part
II, Item 6(a), Exhibit No. 4.02; and Fourth
Amendment to Credit Agreement among Rio
Properties, Inc., as Borrower, and Bank of
America National Trust and Savings Association,
First Interstate Bank of Nevada, First Security
Bank of Idaho, N.A., NBD Bank, N.A., Societe
Generale, Bank of America, Nevada, U.S. Bank of
Nevada, Bank of Scotland and Midlantic Bank,
N.A., as Lenders; and Second Memorandum of
Amendment to Credit Agreement and Amendment to
Construction Deed of Trust with Assignment of
Rents and Fixture Filing between Borrower and
Bank of America National Trust and Savings
Association, as agent for Lenders, dated December
16, 1994 are incorporated herein by reference
from the Company's (SEC File No. 0-13760) Report
on Form 8-K dated December 16, 1994, Item 7(c),
Exhibit 10.01; Fifth Amendment to Credit
Agreement dated as of March 20, 1995, among Rio
Properties, Inc., Bank of America National Trust
and Savings Association, as Agent and as a Bank,
First Interstate Bank of Nevada, First Security
Bank of Idaho, N.A., NBD Bank, N.A., Societe
Generale, Bank of America Nevada, U.S. Bank of
Nevada, Bank of Scotland and Midlantic Bank,
N.A., as Banks, is incorporated herein by
reference from the Company's (SEC File No. 0-
13760) Report on Form 10-K for the Year Ended
December 31, 1994, Part IV, Item 14(c), Exhibit
10.09; Sixth Amendment to Credit Agreement dated
as of July 31, 1995 among Rio Properties, Inc.,
Bank of America National Trust and Savings
Association, as Agent and as a Bank, and First
Interstate Bank of Nevada, First Security Bank of
<PAGE>
Idaho, N.A., NBD Bank, Societe Generale, Bank of
America Nevada, U.S. Bank of Nevada, Bank of
Scotland, Midlantic Bank, N.A., and Bank of
Hawaii, as Banks, to be filed by amendment.
4.12 Indenture dated as of July 21, 1995, among Rio
Hotel & Casino, Inc., Rio Properties, Inc. and
IBJ Schroder Bank & Trust Company for the
Company's 10 5/8% Senior Subordinated Notes Due
2005 is incorporated herein by reference in the
Company's (SEC File No. 0-13760) Report on Form
8-K dated July 18, 1995, Item 7, Exhibit 4.3.
4.13 Registration Agreement dated July 18, 1995 by Rio
Hotel & Casino, Inc. and accepted July 18, 1995
by Salomon Brothers Inc. and Montgomery
Securities is incorporated herein by reference
from the Company's (SEC File No. 0-13760) Report
on Form 8-K dated July 18, 1995, Item 7, Exhibit
4.2.
4.14 Form of Letter of Transmittal to IBJ Schroder 122
Bank & Trust Company as Exchange Agent for
exchange of 10 5/8% Senior Subordinated Notes Due
2005.
5.01 Opinion and Consent of Kummer Kaempfer Bonner &
Renshaw as to the legality of securities being
registered, to be filed by amendment.
10.01 Agreement by and among MarCor Resorts Inc.,
Marnell Corrao, Inc., Marnell Corrao Associates,
Inc., MarCor Partnership, The Anthony A. Marnell
II Revocable Living Trust dated June 16, 1982,
Anthony A. Marnell II, Sandra J. Marnell, Barrett
Family Revocable Living Trust dated December 18,
1981, James A. Barrett, Jr. and Maureen M.
Barrett dated February 22, 1989, is incorporated
herein by reference from the Company's (SEC File
No. 0-13760) Annual Report on Form 10-K for the
Year Ended December 31, 1994, Part IV, Item
14(c), Exhibit 10.01; First Amendment to
Agreement dated October 25, 1993 by and among Rio
Hotel & Casino, Inc., and Marnell Corrao, Inc.,
Marnell Corrao Associates, Inc., MarCor
Partnership, Anthony A. Marnell II, Barrett
Family Revocable Living Trust dated December 18,
1981, James A. Barrett, Jr. and Maureen M.
Barrett incorporated herein by reference from the
Company's (SEC File No. 0-13760) Report on Form
10-K for the Year Ended December 31, 1993, Part
IV, Item 14(c), Exhibit 10.01
10.02 Agreement of Purchase and Sale by and among
MarCor Resorts, Inc., MarCor Resort Properties,
Inc., MarCor Development Company, Inc., MarCor
Resorts, L.P.V and Focus 2000, Inc., entered into
December 30, 1991; Agreement to Assume and Hold
Harmless Note entered into by and among MarCor
Development Company, Inc. and Focus 2000, Inc. on
December 30, 1991; are incorporated herein by
reference from the Company's (SEC File No. 2-
88147) Report on Form 8-K dated December 30,
1991, Item 7(c), Exhibit 2.01.
10.03 Completion Guaranty dated November 20, 1992, by
and among Rio Properties, Inc. and Marnell
Corrao, Inc., Marnell Corrao Associates, Inc.,
MarCor Partnership, Focus 2000, Inc., The Anthony
A. Marnell II Revocable Living Trust dated June
16, 1982, Anthony A. Marnell II, Barrett Family
Revocable Living Trust dated December 18, 1981,
and James A. Barrett, Jr. and Maureen M. Barrett,
husband and wife, collectively as Guarantors is
incorporated herein by reference from the
Company's Registration Statement on Form S-2,
Pre-Effective Amendment No. 2, filed November 23,
1992, File No. 33-53758, Part II, Item 16,
Exhibit 10.13.
10.04 Memorandum of Understanding dated as of June 30,
1992, by and among MarCor Resorts, L.P. V, Focus
2000, Inc., and Anthony A. Marnell II and James
A. Barrett, Jr. is incorporated herein by
reference from the Company's Registration
Statement on Form S-2, Pre-Effective Amendment
No. 2, filed November 23, 1992, File No. 33-
53758, Part II, Item 16, Exhibit 10.14.
<PAGE>
10.05 Interest Rate and Currency Exchange Agreement
dated as of July 28, 1993 between Rio Properties,
Inc. and Bank of America National Trust and
Savings Association is incorporated herein by
reference from the Company's (SEC File No. 0-
13760) Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit
10.11.
10.06 Architectural Agreement entered into as of
February 25, 1994 between Rio Hotel & Casino,
Inc., as Owner, and Anthony A. Marnell II,
Chartered, as Architect, is incorporated herein
by reference from the Company's (SEC File No. 0-
13760), Report on Form 10-K for the Year Ended
December 31, 1993, Part IV, Item 14(c), Exhibit
10.12.
10.07 Building Contract entered into as of February 25,
1994 between Marnell Corrao Associates, Inc., as
General Contractor, and Rio Properties, Inc., as
Owner, is incorporated herein by reference from
the Company's (SEC File No. 0-13760) Report on
Form 10-K for the Year Ended December 31, 1993,
Part IV, Item 14(c), Exhibit 10.13.
10.08 Architectural Agreement entered into as of
February 9, 1995 between Rio Hotel & Casino,
Inc., as Owner, and Anthony A. Marnell,
Chartered, as Architect, is incorporated herein
by reference from the Company's (SEC File No. 0-
13760) Annual Report on Form 10-K for the Year
Ended December 31, 1994, Part IV, Item 14(c),
Exhibit 10.08.
10.09 Building Contract entered into as of February 27,
1995 between Marnell Corrao Associates, Inc., as
General Contractor, and Rio Properties, Inc., as
Owner, is incorporated herein by reference from
the Company's (SEC File No. 0-13760) Annual
Report on Form 10-K for the Year Ended December
31, 1994, Part IV, Item 14(c), Exhibit 10.09.
10.10 Real Estate Purchase and Sale Agreement entered
into as of January 25, 1995 between Focus 2000,
Inc., as Seller, and Rio Properties, Inc., as
Buyer, is incorporated herein by reference from
the Company's (SEC File No. 0-13760) Annual
Report on Form 10-K for the Year Ended December
31, 1994, Part IV, Item 14(c), Exhibit 10.10.
10.11 Exchange Agreement entered into as of January 6,
1995 between Allied Building Materials,
Cinderlane, Inc., and Rio Hotel & Casino, Inc. is
incorporated herein by reference from the
Company's (SEC File No. 0-13760) Annual Report on
Form 10-K for the Year Ended December 31, 1994,
Part IV, Item 14(c), Exhibit 10.11.
10.12 Letter Agreement regarding Rate Cap Transaction
dated August 11, 1994 between Bank of America
National Trust and Savings Association and Rio
Properties, Inc. is incorporated herein by
reference from the Company's (SEC File No. 0-
13760) Annual Report on Form 10-K for the Year
Ended December 31, 1994, Part IV, Item 14(c),
Exhibit 10.12.
12.01 Computation of Ratios of Earnings to Fixed 133
Charges.
21.01 List of the Company's subsidiaries. 135
23.01 Consent of Kummer Kaempfer Bonner & Renshaw is
contained in Exhibit 5.01
23.02 Consent of Arthur Andersen LLP. 137
24.01 Power of Attorney concerning Rio Hotel & Casino,
Inc. is included on p. II-8.
24.02 Power of Attorney concerning Rio Properties, Inc.
is included on p. II-9.
25.01 Statement of Eligibility of Trustee on Form T-1. 139
LETTER OF TRANSMITTAL
RIO HOTEL & CASINO, INC.
Offer for all Outstanding
10 5/8% Senior Subordinated Notes Due 2005
in Exchange for
10 5/8% Senior Subordinated Notes Due 2005
Pursuant to the Prospectus dated ________, 1995
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME
ON ________, 1995, UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
TO: IBJ SCHRODER BANK & TRUST COMPANY, EXCHANGE AGENT
BY HAND OR OVERNIGHT COURIER: BY REGISTERED OR CERTIFIED MAIL:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
One State Street Post Office Box 84
New York, New York 10004 Bowling Green Station
Attention: Securities Processing New York, New York 10274-0084
Window, Subcellar One (SC-1) Attention: Reorganization Operations
Department
BY FACSIMILE:
(212) 858-2611
Raymond Liszewski
CONFIRM BY TELEPHONE:
(212) 858-2103
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and
reviewed a prospectus dated _______, 1995 (the "Prospectus"), of
Rio Hotel & Casino, Inc., a Nevada corporation (the "Company"),
and this Letter of Transmittal (this "Letter"), which together
constitute the Company's offer (the "Exchange Offer") to exchange
an aggregate principal amount at maturity of up to $100,000,000
of 10 5/8% Senior Subordinated Notes Due 2005 (the "New Notes")
of the Company for a like principal amount at maturity of the
issued and outstanding 10 5/8% Senior Subordinated Notes Due 2005
(the "Old Notes" and together with the New Notes, the "Notes") of
the Company from the holders thereof. Capitalized terms used but
not defined herein have the meanings given to them in the
Prospectus.
For each Old Note accepted for exchange and not validly
withdrawn, the holder of such Old Note will receive a New Note
having a principal amount at maturity equal to that of the
surrendered Old Note. If the Exchange Offer is not consummated
by _________, 1995, interest will accrue (in addition to stated
interest on the Old Notes) from and including __________, 1995.
Such additional interest (the "Special Interest") will be payable
in cash semiannually in arrears each January 15 and July 15,
commencing January 15, 1996 at a rate per annum equal to 0.50% of
the principal amount of the Old Notes. The aggregate amount of
Special Interest payable pursuant to the above provisions will in
no event exceed 1.50% per annum of the principal amount of the
Old Notes. Upon the consummation of the Exchange Offer after
________, 1995, the Special Interest payable on the Old Notes
from the date of such consummation will cease to accrue and all
accrued and unpaid Special Interest as of the consummation of the
Exchange Offer shall be paid promptly thereafter to the holders
of record of the Old Notes immediately prior to the time of such
occurrence. Following the consummation of the Exchange Offer the
interest terms shall revert to the original terms set forth in
the Notes. Holders of Old Notes accepted for exchange will be
deemed to have waived the right to receive any other payments or
accrued interest on the Old Notes. The Company reserves the
right, at any time or from time to time, to extend the Exchange
Offer at its discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange
Offer is extended. The Company shall notify the holders of the
Old Notes of any extension by means of a press release or other
public announcement prior to 9:00 A.M., New York City time, on
the next business day after the previously scheduled Expiration
Date.
This Letter is to be completed by a holder of Old Notes
either if certificates are to be forwarded herewith or if a
tender of certificates for Old Notes, if available, is to be made
by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in the Prospectus
under "The Exchange Offer - Book-Entry Transfer." Holders of Old
Notes whose certificates are not immediately available, or who
are unable to deliver their certificates or confirmation of the
book-entry tender of their Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must
tender their Old Notes according to the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer
- Guaranteed Delivery Procedures." See Instruction 1. Delivery
of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
List below the Old Notes to which this Letter relates. If
the space provided below is inadequate, the certificate numbers
and principal amount at maturity of Old Notes should be listed on
a separate signed schedule affixed hereto.
DESCRIPTION OF OLD NOTES
1 2 3
Aggregate
Principal Amount Principal Amount
Name(s) and Address(es) of Certificate at Maturity of at Maturity
Registered Holder(s) Number(s)* Old Notes Tendered**
(Please fill in, if blank)
Total
*Need not be completed if Old Notes are being tendered by book-entry
transfer.
**Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the Old Notes indicated in column
2. See Instruction 2. Old Notes tendered hereby must be in denominations of
principal amount at maturity of $1,000 and any integral multiple thereof. See
Instruction 1.
__ CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-
ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering
Institution
Account Transaction
Number Code Number
__ CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which guaranteed delivery
IF DELIVERY BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number Transaction Code Number
__ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Company the
aggregate principal amount at maturity of Old Notes indicated
above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to such Old Notes as
are being tendered hereby.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign
and transfer the Old Notes tendered hereby and that the Company
will acquire good and unencumbered title thereto, free and clear
of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim when the same are accepted by the
Company. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent its agent and attorney-in-fact with
full power of substitution, for purposes of delivering this
Letter and the Old Notes to the Company. The Power of Attorney
granted in this paragraph shall be deemed irrevocable from and
after the Expiration Date and coupled with an interest. The
undersigned hereby further represents that any New Notes acquired
in exchange for Old Notes tendered hereby will have been acquired
in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the undersigned, that
neither the holder of such Old Notes nor any such other person is
engaged in, or intends to engage in, or has an arrangement or
understanding with any person to participate in, the distribution
(within the meaning of the Securities Act of 1933, as amended
(the "Securities Act")) of such New Notes and that neither the
holder of such Old Notes nor any such person is an "affiliate" of
the Company within the meaning in Rule 405 ("Rule 405") under the
Securities Act.
The undersigned also acknowledges that this Exchange Offer
is being made by the Company in reliance on an interpretation by
the staff of the Securities and Exchange Commission (the "SEC"),
as set forth in no-action letters issued to third parties, that
the New Notes issued in exchange for the Old Notes pursuant to
the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such
holder that is an "affiliate" of the Company within the meaning
of Rule 405), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any
person to participate in the distribution (within the meaning of
the Securities Act) of such New Notes. If the undersigned is not
a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution (within the meaning of the Securities Act) of New
Notes. If the undersigned is a broker-dealer that will receive
New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading
activities, it represents that the Old Notes to be exchanged for
New Notes were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it
will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. The
undersigned acknowledges that in reliance on an interpretation by
the staff of the SEC, a broker-dealer may fulfill his prospectus
delivery requirements with respect to the New Notes (other than a
resale of an unsold allotment from the original sale of the Old
Notes) with the Prospectus which constitutes part of this
Exchange Offer.
The undersigned will, upon request, execute and deliver any
additional documents reasonably deemed by the Company to be
necessary or desirable to complete the sale, assignment and
transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned and
shall not be affected by, and shall survive, the death or
incapacity of the undersigned. The tender may be withdrawn only
in accordance with the procedures set forth in "The Exchange
Offer - Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, please deliver the New
Notes (and, if applicable, substitute certificates representing
Old Notes for any Old Notes not exchanged) in the name of the
undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained as
the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions"
below, please send the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the
box entitled "Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED
"DESCRIPTION OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE
DEEMED TO HAVE TENDERED THE OLD NOTES AS SET FORTH IN SUCH BOX
ABOVE.
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if To be completed ONLY if
certificates for Old Notes not certificates for Old Notes not
exchanged and/or New Notes are to be exchanged and/or New Notes are to
issued in the name of and sent to be sent to someone other than the
someone other than the person or person or persons whose
persons whose signature(s) appear(s) signature(s) appear(s) on this
on this Letter below, or if Old Notes Letter below or to such person or
delivered by book-entry transfer persons at an address other than
which are not accepted for exchange shown in the box entitled
are to be returned by credit to an "Description of Old Notes" on this
account maintained at the Book-Entry Letter above.
Transfer Facility other than the
account indicated above.
Mail: New Notes and/or Old Notes
Issue: New Notes and/or Old Notes
Name(s): Name(s):
(Please Type or Print) (Please Type or Print)
(Please Type or Print) (Please Type or Print)
Address: Address:
(Zip Code) (Zip Code)
(Complete Substitute Form W-9)
_ Credit unexchanged Old Notes
delivered by book-entry transfer to
the Book-Entry Transfer Facility
account set forth below.
(Book-Entry Transfer Facility
Account Number, if applicable)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH
THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND
ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9)
Dated: , 1995
X , 1995
X , 1995
Signature(s) Date
of Owner(s)
Area Code and Telephone Number
If a holder is tendering any Old Notes, this Letter
must be signed by the registered holder(s) as the
name(s) appear(s) on the certificate(s) for the Old
Notes or by any person(s) authorized to become
registered holder(s) by endorsements and documents
transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other
person acting in a fiduciary or representative
capacity, please set forth full title. See
Instruction 3.
Name(s):
(Please Type or Print)
Capacity:
Address:
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s)
Guaranteed by
an Eligible
Institution:
(Authorized Signature)
(Title)
(Name and Firm)
Dated:
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
FOR THE
10 5/8% SENIOR SUBORDINATED NOTES DUE 2005 IN EXCHANGE FOR THE
10 5/8% SENIOR SUBORDINATED NOTES DUE 2005 OF RIO HOTEL & CASINO,
INC.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY
PROCEDURES.
This Letter is to be completed by holders (which term, for
purposes of the Exchange Offer, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder if such Old Notes) either
if certificates are to be forwarded herewith or if tenders are to
be made pursuant to the procedures for delivery by book-entry
transfer set forth in the Prospectus under "The Exchange Offer -
Book-Entry Transfer." Certificates for all physically tendered
Old Notes, or Book-Entry Confirmation, as the case may be, as
well as this properly completed and duly executed Letter (or
manually signed facsimile hereof) and any other documents
required by this Letter, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby
must be in denominations of principal amount at maturity of
$1,000 and any integral multiple thereof.
Holders of Old Notes whose certificates for Old Notes are
not immediately available or who do not deliver their
certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date, or who cannot complete
the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer
- Guaranteed Delivery Procedures." Pursuant to such procedures,
(i) such tender must be made through an Eligible Institution;
(ii) prior to the Expiration Date, the Exchange Agent must
receive from such Eligible Institution this properly completed
and duly executed Letter (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the
Company (by telegram, telex, facsimile transmission, mail or hand
delivery), setting forth the name and address of the holder of
Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within five
business days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered
Old Notes, or a Book-Entry Confirmation, and any other documents
required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) the certificates
for all physically tendered Old Notes, in the proper form for
transfer, or Book-Entry Confirmation, as the case may be, and all
other documents required by this Letter, are received by the
Exchange Agent within five NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all
other required documents is at the election and risk of the
tendering holders, but the delivery will be deemed made only when
actually received or confirmed by the Exchange Agent. If Old
Notes are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery
to the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date.
See the Prospectus under "The Exchange Offer."
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-
ENTRY TRANSFER).
If less than all of the Old Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should
fill in the aggregate principal amount at maturity of Old Notes
to be tendered in the box above entitled "Description of Old
Notes - Principal Amount at Maturity Tendered." A reissued
certificate representing the balance of nontendered Old Notes
will be sent to such tendering holder, unless otherwise provided
in the appropriate box on this Letter, promptly after the
Expiration Date. All of the Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise
indicated.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter is signed by the registered holder of the Old
Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates without any
change whatsoever.
If any tendered Old Notes are owned of record by two or more
joint owners, all such owners must sign this Letter.
If any tendered Old Notes are registered in different names
on several certificates, it will be necessary to complete, sign
and submit as many separate copies of this Letter as there are
different registrations of certificates.
When this Letter is signed by the registered holder or
holders of the Old Notes specified herein and tendered hereby, no
endorsements of certificates or separate bond powers are
required. If, however, the New Notes are to be issued, or any
untendered Old Notes are to be reissued, to a person other than
the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required.
Signatures on such certificate(s) or bond powers must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-
fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when
signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON
BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY
A FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL SECURITIES
EXCHANGE OR A MEMBER OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY HAVING AN
OFFICE OR CORRESPONDENT IN THE UNITED STATES AND WHICH IS A
PARTICIPANT IN THE SECURITY TRANSFER AGENT MEDALLION PROGRAM
(COLLECTIVELY, "ELIGIBLE INSTITUTIONS"). IN ALL OTHER CASES, ALL
SIGNATURES ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION.
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY
A REGISTERED HOLDER OF OLD NOTES WHO HAS NOT COMPLETED THE BOX
ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY
INSTRUCTIONS" ON THIS LETTER; OR (II) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the
applicable box the name and address to which New Notes issued
pursuant to the Exchange Offer and/or substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if
different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the
employer identification or social security number of the person
named must also be indicated. Holders tendering Old Notes by
book-entry transfer may request that Old Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer
Facility as such holder may designate hereon. If no such
instructions are given, such Old Notes not exchanged will be
returned to the name or address of the person signing this
Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tender
holder whose Old Notes are accepted for exchange must provide the
Company (as payor) with such holder's correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9 below, which
in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with
the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, delivery to such
tendering holder of New Notes may be subject to backup
withholding in an amount equal to 31% of all reportable payments
made after the exchange. If withholding results in an
overpayment for taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. See the
enclosed Guidelines of Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old
Notes must provide its correct TIN by completing the "Substitute
Form W-9" set forth below, certifying that the TIN provided is
correct (or that such holder is awaiting a TIN) and that (i) the
holder is exempt from backup withholding; (ii) the holder has not
been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to
report all interest or dividends; or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer
subject to backup withholding. If the tendering holder of Old
Notes is a nonresident alien or foreign entity not subject to
backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be
obtained from the Exchange Agent. If the Old Notes are in more
than one name or are not in the name of the actual owner, such
holder should consult the W-9 Guidelines for information on which
TIN to report. If such holder does not have a TIN, such holder
should consult the W-9 Guidelines for instructions on applying
for a TIN, check the box in Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN. Note: Checking this box
and writing "applied for" on the form means that such holder has
already applied for a TIN or that such holder intends to apply
for one in the near future. If such holder does not provide its
TIN to the Company within 60 days, backup withholding will begin
and continue until such holder furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable
to the transfer of Old Notes to it or its order pursuant to the
Exchange Offer. If, however, New Notes and/or substitute Old
Notes not exchanged are to be delivered to, or are to be
registered or issued in the name of, any person other than the
registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other
than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the
registered holder or any other person) will be payable by the
tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such
tendering holder.
Expect as provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the Old Notes
specified in this Letter.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the
Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice
of the acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person
is obligated to give notice of any defect or irregularity with
respect to any tender of Old Notes, nor shall any of them, incur
any liability for failure to give any such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen
or destroyed should contact the Exchange Agent at the address
indicated above for further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well
as requests for additional copies of the Prospectus and this
Letter, may be directed to the Exchange Agent, at the address and
telephone number indicated above.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: RIO HOTEL & CASINO, INC.
PART 1 - PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND CERTIFY TIN:
BY SIGNING AND DATING BELOW. (Social Security
Number or
Employer
SUBSTITUTE Identification
Number)
Form W-9 PART 2 - TIN APPLIED FOR __
Department of the CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY
Treasury THAT
Internal Revenue
Services (1) the number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for a
number to be issued to me),
PAYOR'S REQUEST FOR (2) I am not subject to backup withholding either
TAXPAYER because: (a) I am exempt from backup withholding, or
IDENTIFICATION (b) I have not been notified by the Internal Revenue
NUMBER ("TIN") AND Service (the "IRS") that I am subject to backup
CERTIFICATION withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding, and
(3) any other information provided on this form is true
and correct.
SIGNATURE DATE
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to backup withholding.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have made or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office; or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by
the time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
Signature Date
RIO HOTEL & CASINO, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months
Ended
Fiscal Years Ended December 31, June 30,
1994 1993 1992 1991 1990 1995
<S> <C> <C> <C> <C> <C> <C>
(1) Fixed Charges
Interest expense including
amortization of
debt expense $1,923 $1,839 $3,801 $5,639 $5,239 $2,783
Capitalized interest 620 468 60 -- 419 359
$2,543 $2,307 $3,861 $5,639 $5,658 $3,142
(2) Earnings
Income before income tax
provision $25,144 $18,465 $8,510 $756 $(2,526) $15,059
Fixed charges less interest
capitalized 1,923 1,839 3,801 5,639 5,239 2,783
Total earnings $27,067 $20,304 $12,311 $6,395 $2,713 $17,842
(3) Ratio of earnings to fixed
charges 10.64 8.80 3.19 1.13 0.48 5.68
</TABLE>
EXHIBIT 21.01
SUBSIDIARIES OF THE REGISTRANT
CORPORATIONS
NAME STATE OF PARENT COMPANY
INCORPORATION
Rio Development Company, Inc. Nevada Rio Hotel & Casino, Inc.
Rio Resort Properties, Inc. Nevada Rio Hotel & Casino, Inc.
Rio Properties, Inc. Nevada Rio Hotel & Casino, Inc.
Cinderlane, Inc. Nevada Rio Properties, Inc.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use
of our reports and to all references to our Firm included in or
made a part of this Registration Statement.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
August 24, 1995
___________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305 (b) (2)_
___________
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(State of Incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
Max Volmar, Vice President
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
(212) 858-2000
(Name, Address and Telephone Number of Agent for Service)
RIO HOTEL & CASINO, INC.
(Exact name of obligor as specified in its charter)
Nevada 95-3671082
(State or jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3700 West Flamingo Road
Las Vegas, Nevada 89103
(Address of principal executive office) (Zip code)
___________
10 5/8% SENIOR SUBORDINATED NOTES DUE 2005
(Title of Indenture Securities)
_____________________________
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York Second District
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate
trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
The obligor is not an affiliate of the trustee.
Item 3. Voting securities of the trustee.
Furnish the following information as to each class of
voting securities of the trustee:
As of August 21, 1995
Col. A Col. B
Title of class Amount Outstanding
Not Applicable
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture
under which any other securities, or certificates of
interest or participation in any other securities, of
the obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each
such other indenture
Not Applicable
(b) A brief statement of the facts relied upon as a
basis for the claim that no conflicting interest
within the meaning of Section 310 (b) (1) of the
Act arises as a result of the trusteeship under
any such other indenture, including a statement as
to how the indenture securities will rank as
compared with the securities issued under such
other indenture.
Not Applicable
Item 5. Interlocking directorates and similar relationships
with the obligor or underwriters.
If the trustee or any of the directors or executive
officers of the trustee is a director, officer,
partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify
each such person having any such connection and state
the nature of each such connection.
Not Applicable
Item 6. Voting securities of the trustee owned by the obligor
or its officials.
Furnish the following information as to the voting
securities of the trustee owned beneficially by the
obligor and each director, partner, and executive
officer of the obligor:
As of August 21, 1995
Col A Col. B Col. C Col. D
Name of Title of Amount owned Percent of voting
Owner class beneficially securities
represented by
amount given in
Col. C
Not Applicable
Item 7. Voting securities of the trustee owned by underwriters
or their officials.
Furnish the following information as to the voting
securities of the trustee owned beneficially by each
underwriter for the obligor and each director, partner
and executive officer of each such underwriter:
As of August 21, 1995
Col A Col. B Col. C Col. D
Name of Title of Amount owned Percent of voting
Owner class beneficially securities
represented by
amount given in
Col. C
Not Applicable
Item 8. Securities of the obligor owned or held by the trustee
Furnish the following information as to securities of
the obligor owned beneficially or held as collateral security for
obligations in default by the trustee:
As of August 21, 1995
Col A Col. B Col. C Col. D
Name of Title of Amount owned Percent of voting
Owner class beneficially or securities
held as represented by
collateral amount given in
security for Col. C
obligations in
default
Not Applicable
Item 9. Securities of underwriters owned or held by the
trustee.
If the trustee owns beneficially or holds as collateral
security for obligations in default any securities of an
underwriter for the obligor, furnish the following information as
to each class of securities of such underwriter any of which are
so owned or held by the trustee:
As of August 21, 1995
Col A Col. B Col. C Col. D
Name of Title of Amount owned Percent of voting
Owner class beneficially or securities
held as represented by
collateral amount given in
security for Col. C
obligations in
default
Not Applicable
Item 10. Ownership or holdings by the trustee of voting
securities of certain affiliates or securityholders of
the obligor.
If the trustee owns beneficially or holds as collateral
security for obligations in default voting securities
of a person who, to the knowledge of the trustee (1)
owns 10 percent or more of the voting securities of the
obligor or (2) is an affiliate, other than a
subsidiary, of the obligor, furnish the following
information as to the voting securities of such person:
As of August 21, 1995
Col A Col. B Col. C Col. D
Name of Title of Amount owned Percent of voting
Owner class beneficially or securities
held as represented by
collateral amount given in
security for Col. C
obligations in
default
Not Applicable
Item 11. Ownership or holdings by the trustee of any securities
of a person owning 50 percent or more of the voting
securities of the obligor.
If the trustee owns beneficially or holds as collateral
security security for obligations in default any
securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting
securities of the obligor, furnish the following
information as to each class of securities of such any
of which are so owned or held by the trustee:
As of August 21, 1995
Col. A Col. B Col. C
Nature of Amount Date
Indebtedness Outstanding Due
Not Applicable
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is
indebted to the trustee, furnish the following
information:
As of August 21, 1995
Col A Col. B Col. C Col. D
Name of Title of Amount owned Percent of voting
Owner class beneficially or securities
held as represented by
collateral amount given in
security for Col. C
obligations in
default
Not Applicable
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with
respect to the securities under this indenture.
Explain the nature of any such default.
Not Applicable
(b) If the trustee is a trustee under another
indenture under which any other securities, or
certificates of interest or participation in any
other securities, of the obligor are outstanding,
or is trustee for more than one outstanding series
of securities under the indenture, state whether
there has been a default under any such indenture
or series, identify the indenture or series
affected, and explain the nature of any such
default.
Not Applicable
Item 14. Affiliations with the Underwriters
If any underwriter is an affiliate of the trustee,
describe each such affiliation.
Not Applicable
Item 15. Foreign Trustees.
Identify the order or rule pursuant to which the
foreign trustee is authorized to act as sole trustee
under indentures qualified or to be qualified under the
Act.
Not Applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement
of eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust
Company as amended to date. (See Exhibit 1A to
Form T-1, Securities and Exchange Commission File
No. 22-18460).
*2. A copy of the Certificate of Authority of the
Trustee to Commence Business (Included in Exhibit
I above).
*3. A copy of the Authorization of the Trustee, as
amended to date (See Exhibit 4 to Form T-1,
Securities and Exchange Commission File No. 22-
19146).
*4. A copy of the existing By-Laws of the Trustee, as
amended to date (See Exhibit 4 to Form T-1,
Securities and Exchange Commission File No. 22-
19146).
5. A copy of each Indenture referred to in Item 4, if
the Obligor is in default. Not Applicable.
6. The consent of the United States institutional
trustee required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
* The Exhibits thus designated are incorporated herein
by reference as exhibits hereto. Following the description of
such Exhibits is a reference to the copy of the Exhibit
heretofore filed with the Securites and Exchange Commission
to which there have been no amendments or changes.
NOTE
In answering any item in this Statement of Eligibility which
relates to matters peculiarly within the knowledge of the
obligor and its directors or officers, the trustee has
relied upon information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the
ascertainment by the trustee of all facts on which to base
responsive answers to Item 2, the answer to said Item are
based on incomplete information.
Item 2, may, however, be considered as correct unless
amended by an amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded
to Items 1, 2 and 16 of this form since to the best
knowledge of the trustee as indicated in Item 13, the
obligor is not in default under any indenture under which
the applicant is trustee.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act
of 1939, as amended, the trustee, IBJ Schroder Bank &
Trust Company, a corporation organized and existing under
the laws of the State of New York, has duly caused this
statement of eligibility & qualification to be signed on
its behalf by the undersigned, thereunto duly authorized,
all in the City of New York, and State of New York, on
the 21st day of August, 1995.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/MAX VOLMAR
Max Volmar
Vice President
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b)
of the Trust Indenture Act of 1939, as amended, in
connection with the issue by RIO HOTEL & CASINO, INC. of
its 10 5/8% Senior Subordinated Notes due 2005 , we
hereby consent that reports of examinations by Federal,
State, Territorial, or District authorities may be
furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/MAX VOLMAR
Max Volmar
Vice President
Dated: August 21, 1995
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF JUNE 30, 1995
DOLLAR AMOUNTS
IN THOUSANDS
ASSETS
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin $ 21,627
Interest-bearing balances $ 327,123
Securities: Held to Maturity $ 169,818
Available-for-sale $ 32,291
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold $ 10,642
Securities purchased under agreements to resell $ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income $2,288,181
LESS: Allowance for loan and lease losses $ 52,831
LESS: Allocated transfer risk reserve $ -0-
Loans and leases, net of unearned income,
allowance, and reserve $ 2,235,350
Assets held in trading accounts $ 82
Premises and fixed assets $ 7,503
Other real estate owned $ 397
Investments in unconsolidated subsidiaries and associated
companies $ -0-
Customers' liability to this bank on acceptances outstanding $ 838
Intangible assets $ -0-
Other assets $ 67,176
TOTAL ASSETS $ 2,872,847
LIABILITIES
Deposits:
In domestic offices $ 557,376
Noninterest-bearing $139,729
Interest-bearing $417,647
In foreign offices, Edge and Agreement subsidiaries,
and IBFs $ 658,201
Noninterest-bearing $ 13,065
Interest-bearing $645,136
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased $ 802,700
Securities sold under agreements to repurchase $ -0-
Demand notes issued to the U.S. Treasury $ 50,000
Trading Liabilities $ 75
Other borrowed money:
a) With original maturity of one year or less $ 535,023
b) With original maturity of more than one year $ 5,000
Mortgage indebtedness and obligations under capitalized leases $ -0-
Bank's liability on acceptances executed and outstanding $ 838
Subordinated notes and debentures $ -0-
Other liabilities $ 62,226
TOTAL LIABILITIES $ 2,671,439
Limited life preferred stock and related surplus $ -0-
EQUITY CAPITAL
Perpetual preferred stock $ -0-
Common Stock $ 29,649
Surplus $ 217,008
Undivided profits and capital reserves $ (45,233)
Plus: Net unrealized gains (losses) on marketable equity
securities $ (16)
Cumulative foreign currency translation adjustments $ -0-
TOTAL EQUITY CAPITAL $ 201,408
TOTAL LIABILITIES AND EQUITY CAPITAL $ 2,872,847
