<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11569
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
3700 West Flamingo Road
Las Vegas, Nevada 89103
-----------------------------------------------------------
(Full title of the plan and the address of the plan)
RIO PROPERTIES, INC.
d/b/a RIO SUITE HOTEL & CASINO
3700 West Flamingo Road
Las Vegas, Nevada 89103
-------------------------------------------------
(Name of issuer of the securities held
pursuant to the plan and the address of
its principal executive office)
This document consists of 15 pages. Exhibit Index on page 14.
<PAGE>
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
----
Report of Independent Public Accountants 3
Statements of Net Assets Available for Benefits
as of December 31, 1998 and 1997 4-5
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1998 6
Notes to Financial Statements 7-10
Schedules:
I. Schedule of Assets Held for Investment
Purposes as of December 31, 1998 11
II. Schedule of Reportable Transactions
for the Year Ended December 31, 1998 12
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<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Rio Hotel & Casino, Inc.:
We have audited the accompanying statements of net assets available for benefits
of the Rio Suite Hotel & Casino Employee Retirement Savings Plan (the Plan) as
of December 31, 1998 and 1997, and the related statement of changes in net
assets available for benefits for the year ended December 31, 1998. These
financial statements and the schedules referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules 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 net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1998 and reportable transactions for
the year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The fund information in the statements of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
June 25, 1999
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<PAGE>
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Fidelity Institutional
------------------------------------------------------------------------------
Managed Money Market Intermediate
Magellan Balanced Income Market Index Bond
Fund Fund Portfolio Portfolio Fund Fund
----------- ----------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS, AT MARKET VALUE:
Magellan Fund $ 9,096,399 $ - $ - $ - $ - $ -
Balanced Fund - 3,416,002 - - - -
Managed Income Portfolio - - 1,410,085 - - -
Money Market Portfolio - - - 847,072 - -
Market Index Fund - - - - 2,707,636 -
Intermediate Bond Fund - - - - - 358,211
Rio Common Stock Fund - - - - - -
Loan Account - - - - - -
----------- ----------- ---------- --------- ---------- ---------
Total Investments 9,096,399 3,416,002 1,410,085 847,072 2,707,636 358,211
RECEIVABLES:
Receivables 69,342 35,316 17,622 14,490 43,368 5,033
Loan payments - - - - - -
LIABILITIES
OUTSTANDING TRANSFERS (5,297) (856) 7,356 4,420 (500) 101
----------- ----------- ---------- --------- ---------- ---------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,171,038 $ 3,452,174 $1,420,351 $ 857,142 $2,751,504 $ 363,143
=========== =========== ========== ========= ========== =========
<CAPTION>
Fidelity Financial
--------------------------------------------
Rio Common Money Disburse-
Stock Market ment Loan
Fund Fund Account Account Total
----------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS, AT MARKET VALUE:
Magellan Fund $ - $ - $ - $ - $ 9,096,399
Balanced Fund - - - - 3,416,002
Managed Income Portfolio - - - - 1,410,085
Money Market Portfolio 38,875 18,054 59,866 - 963,867
Market Index Fund - - - - 2,707,636
Intermediate Bond Fund - - - - 358,211
Rio Common Stock Fund 2,915,761 - - - 2,915,761
Loan Account - - - 945,471 945,471
----------- -------- -------- --------- ------------
Total Investments 2,954,636 18,054 59,866 945,471 21,813,432
RECEIVABLES:
Receivables 176 - (1,179) - 184,168
Loan payments - - (8,649) 8,197 (452)
LIABILITIES
OUTSTANDING TRANSFERS 433 - (6,633) 976 -
----------- -------- -------- --------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,954,379 $ 18,054 $ 56,671 $ 952,692 $ 21,997,148
=========== ======== ======== ========= ============
The accompanying notes are an integral part of this financial statement.
</TABLE>
-4-
<PAGE>
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Fidelity Institutional
--------------------------------------------------------------------------------
Managed Money Market Intermediate
Magellan Balanced Income Market Index Bond
Fund Fund Portfolio Portfolio Fund Fund
----------- ----------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS, AT MARKET VALUE:
Magellan Fund $ 5,715,010 $ - $ - $ - $ - $ -
Balanced Fund - 2,444,272 - - - -
Managed Income Portfolio - - 1,150,088 - - -
Money Market Portfolio - - - 547,333 - -
Market Index Fund - - - - 1,012,012 -
Intermediate Bond Fund - - - - - 226,286
Rio Common Stock Fund - - - - - -
Loan Account - - - - - -
----------- ----------- ---------- --------- ---------- ---------
Total Investments 5,715,010 2,444,272 1,150,088 547,333 1,012,012 226,286
RECEIVABLES:
Receivables 66,961 29,452 12,239 9,354 27,746 5,376
Loan payments - - - - - -
LIABILITIES
OUTSTANDING TRANSFERS 3,757 106 (525) 56 1,074 -
----------- ----------- ---------- --------- ---------- ---------
NET ASSETS AVAILABLE FOR BENEFITS $ 5,778,214 $ 2,473,618 $1,162,852 $ 556,631 $1,038,684 $ 231,662
=========== =========== ========== ========= ========== =========
<CAPTION>
Fidelity Financial
---------------------------------
Rio Common Money Disburse-
Stock Market ment Loan
Fund Fund Account Account Total
----------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS, AT MARKET VALUE:
Magellan Fund $ - $ - $ - $ - $ 5,715,010
Balanced Fund - - - - 2,444,272
Managed Income Portfolio - - - - 1,150,088
Money Market Portfolio 228 20,417 52,291 - 620,269
Market Index Fund - - - - 1,012,012
Intermediate Bond Fund - - - - 226,286
Rio Common Stock Fund 2,955,918 - - - 2,955,918
Loan Account - - - 472,407 472,407
----------- -------- -------- --------- ------------
Total Investments 2,956,146 20,417 52,291 472,407 14,596,262
RECEIVABLES:
Receivables 40,352 - (23,067) - 168,413
Loan payments - - - 10,790 10,790
LIABILITIES
OUTSTANDING TRANSFERS (589) - (3,879) - -
----------- -------- -------- --------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,997,087 $ 20,417 $ 33,103 $ 483,197 $ 14,775,465
=========== ======== ======== ========= ============
The accompanying notes are an integral part of this financial statement.
</TABLE>
-5-
<PAGE>
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Fidelity Institutional
--------------------------------------------------------------------------------
Managed Money Market Intermediate
Magellan Balanced Income Market Index Bond
Fund Fund Portfolio Portfolio Fund Fund
----------- ----------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Employer $ 271,514 $ 115,938 $ 53,211 $ 40,124 $ 132,173 $ 23,892
Employee 1,838,968 736,794 314,883 243,519 885,775 151,930
Rollover contributions 349,635 62,015 14,708 59,356 267,658 10,956
----------- ----------- ---------- --------- ---------- ---------
Total contributions 2,460,117 914,747 382,802 342,999 1,285,606 186,778
INVESTMENT INCOME:
Realized gain (loss) 103,842 32,681 - - 19,784 328
Unrealized gain (loss) 1,627,084 208,302 - - 379,022 2,229
Interest and dividends 398,486 305,069 66,236 34,023 38,465 17,858
----------- ----------- ---------- --------- ---------- ---------
Total net investment income 2,129,412 546,052 66,236 34,023 437,271 20,415
BENEFIT DISTRIBUTIONS (894,987) (347,725) (125,311) (76,714) (165,772) (38,076)
ADMINISTRATIVE EXPENSES (15,319) (6,239) (2,830) (1,391) (3,608) (632)
TRANSFERS:
Interfund transfers (286,399) (128,279) (63,398) 1,594 159,323 (37,004)
----------- ----------- ---------- --------- ---------- ---------
NET INCREASE (DECREASE) 3,392,824 978,556 257,499 300,511 1,712,820 131,481
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 5,778,214 2,473,618 1,162,852 556,631 1,038,684 231,662
----------- ----------- ---------- --------- ---------- ---------
End of year $ 9,171,038 $ 3,452,174 $1,420,351 $ 857,142 $2,751,504 $ 363,143
=========== =========== ========== ========= ========== =========
<CAPTION>
Fidelity Financial
----------------------------------
Rio Common Money Disburse-
Stock Market ment Loan
Fund Fund Account Account Total
----------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Employer $ 148,156 $ - $(34,338) $ - $ 750,670
Employee 973,864 - - - 5,145,733
Rollover contributions 129,401 - - - 893,729
----------- -------- -------- --------- ------------
Total contributions 1,251,421 - (34,338) - 6,790,132
INVESTMENT INCOME:
Realized gain (loss) (55,538) - - - 101,097
Unrealized gain (759,164) - - - 1,457,473
Interest and dividends 165 928 - 66,533 927,763
----------- -------- -------- --------- ------------
Total net investment income (814,537) 928 - 66,533 2,486,333
BENEFIT DISTRIBUTIONS (289,967) (2,390) - (76,900) (2,017,842)
ADMINISTRATIVE EXPENSES (6,877) (44) - - (36,940)
TRANSFERS:
Interfund transfers (182,748) (857) 57,906 479,862 -
----------- -------- -------- --------- ------------
NET INCREASE (DECREASE) (42,708) (2,363) 23,568 469,495 7,221,683
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 2,997,087 20,417 33,103 483,197 14,775,465
----------- -------- -------- --------- ------------
End of year $ 2,954,379 $ 18,054 $ 56,671 $ 952,692 $ 21,997,148
=========== ======== ======== ========= ============
The accompanying notes are an integral part of this financial statement.
</TABLE>
-6-
<PAGE>
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. DESCRIPTION OF THE PLAN
The following description of the Rio Suite Hotel & Casino Employee
Retirement Savings Plan (the Plan) provides only general information.
Participants should refer to the Summary Plan Description for a more
complete description of the Plan's provisions.
GENERAL INFORMATION
The Plan is a voluntary, qualified, defined contribution plan covering
substantially all employees of the Rio Suite Hotel & Casino (the
Company) who have completed six months of service and have attained the
age of twenty-one. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). All
investments are managed by Fidelity Institutional Retirement Services
Company. As of December 31, 1998, Plan trustees were James A. Barrett,
Jr. and Ronald J. Radcliffe.
ADMINISTRATION
The Plan is sponsored by the Company. Lebenson Actuarial Services, Inc.
provides recordkeeping for the Plan.
PARTICIPANTS' ACCOUNTS
Each participant's account is credited with the participant's
contributions, allocation of the Company's contributions and the
proportionate allocation of the Plan's earnings or losses. Forfeitures
of terminated participants' nonvested benefits are applied to reduce
the Company's contributions to the Plan. The benefit to which a
participant is entitled is equal to the balance in the participant's
account less any non-vested matching employer contributions.
CONTRIBUTIONS
The Company makes matching contributions of 25% of employee
contributions, up to 6% of a participant's compensation.
Participant contributions are limited to 1% to 15% of compensation.
Participant contributions are taken from before-tax compensation and,
along with investment earnings, are not part of a participant's annual
taxable income until withdrawn from the Plan.
-7-
<PAGE>
VESTING
Participants are immediately 100% vested in their voluntary
contributions plus actual earnings thereon. A participant vests in the
remaining balance at 40% after two full years of service and in
additional 20% increments until the participant is 100% vested after
five full years of credited service. Upon death, a participant is
automatically 100% vested.
PAYMENT OF BENEFITS
Upon termination of service, retirement, death or disability, a
participant may elect to receive the value of all vested benefits in
the form of a joint and survivor annuity, or, if not married, a life
annuity, a lump-sum amount, or monthly, quarterly, semi-annual or
annual cash installments over a specified period. If the value of a
terminated participant vested benefit does not exceed $3,500, the
entire vested benefit will be paid in a single lump sum.
EXCESS CONTRIBUTIONS
Included in net assets available for benefits at December 31, 1998 and
1997 are excess contributions of $16,434 and $0, respectively, which
were refunded to participants before March 15, 1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF PRESENTATION
The books and records of the Plan are maintained on an accrual basis.
b. INVESTMENTS
Investments are stated at their current market value measured by quoted
market prices in active markets. Investment income is recorded as
earned on a daily basis.
c. PLAN EXPENSES
Legal, trust management, administrative and accounting expenses are
paid by the trust fund to the extent not paid by the Company.
3. INVESTMENTS
Participant contributions are invested in the following funds at the
participants' elections:
a. FIDELITY MAGELLAN FUND
The Magellan Fund seeks long-term capital appreciation by
investing in common stocks and convertible securities of both
foreign and domestic companies.
b. FIDELITY BALANCED FUND
This fund seeks as much income as possible, consistent with
preservation of capital. Investments include common and
preferred stocks and bonds.
-8-
<PAGE>
c. FIDELITY MANAGED INCOME PORTFOLIO
This portfolio seeks preservation of capital and a competitive
level of income over time. This portfolio purchases short and
long-term investment contracts that meet the high credit
quality standards of Fidelity Management Trust Company. In
addition, investments are made in money market instruments.
d. FIDELITY MONEY MARKET PORTFOLIO
This portfolio seeks as high a level of current income as is
consistent with the preservation of capital and liquidity. The
yield will fluctuate with changes in market conditions.
Investments include short-term corporate obligations, U.S.
government obligations and certificates of deposit.
e. RIO COMMON STOCK FUND
This fund is invested by Fidelity Financial Group, Inc.
(Fidelity) in Rio Hotel and Casino, Inc. common stock.
Fidelity has discretion as to the timing and manner of
purchasing shares of common stock. Cash dividends or interest,
if any, are reinvested in this fund.
f. FIDELITY INTERMEDIATE BOND
This fund seeks high current income by investing mainly in
investment-grade debt securities while maintaining maturities
of three to ten years. To achieve this investment strategy,
shareholders' investments are pooled and invested towards a
specific goal.
g. FIDELITY MARKET INDEX
This fund seeks a total return which corresponds to that of
the Standard & Poor's Composite Index of 500 Stocks. To
achieve this investment strategy, investments are made in the
stocks which comprise the S&P Market Index.
4. PARTICIPANT LOANS
The Plan provides that participants are able to request loans for
amounts equal to as much as 50% of their account balances, subject to
certain rules and limitations specified in the Plan. Interest rates on
participant loans outstanding at December 31, 1998 vary from 8% to 11%.
5. PLAN TERMINATION
Although the Company expects to continue the Plan indefinitely, it
reserves the right to amend or terminate the Plan at any time. Upon
termination, all amounts credited to each participant's account will
become fully vested.
-9-
<PAGE>
6. TAX STATUS
The Plan obtained its last determination letter from the Internal
Revenue Service on January 26, 1995. At that time, the Plan was deemed
to be designed to satisfy the qualification requirements, and
consequently the related trust appeared to satisfy the tax exempt
requirement of the Internal Revenue Code. The Plan has been amended
subsequently. The Plan administration and tax counsel believe that the
Plan is currently designed and being operated in compliance with the
qualification requirements of the Internal Revenue Code, and the
related trust was tax exempt as of the financial statement date.
7. VOLUNTARY COMPLIANCE RESOLUTION PROGRAM
During 1995, the Company discovered that there had been a discrepancy
between employee requested deferral amounts and actual deferrals for
certain types of non-regular payrolls relating to the 3 years ended
December 31, 1994. The Company engaged a firm with benefit plan
expertise to determine the amount of the under-withholding and
submitted a plan for rectifying the discrepancy under the Voluntary
Compliance Resolution Program with the Internal Revenue Service. In
April 1997, the Company made an additional contribution to the Plan of
$106,830 in accordance with an agreement made under the Voluntary
Compliance Resolution Program with the Internal Revenue Service. The
balance of $18,054 in the VCR fund at December 31, 1998 represents the
amount due to participants who terminated from the plan and have not
been located to disburse the funds. When the terminated participants
are located, they will be paid out of this fund.
8. SUBSEQUENT EVENT
In conjunction with the merger between Rio Hotel and Casino, Inc.,
Harrah's Entertainment Inc. and HEI Acquisition Corp. III effective
January 1, 1999, the Plan was amended to conform with the eligibility
requirements and Company contribution percentages provided by the
Harrah's 401 (k) Plan. The stock in the Rio Hotel & Casino, Inc. fund
was converted on January 1, 1999, to the common stock of Harrah's
Entertainment, Inc.
-10-
<PAGE>
Schedule I
----------
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
Item 27a - SCHEDULE OF ASSETS HELD
FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
(EIN: 88-0288115)
<TABLE>
<CAPTION>
DESCRIPTION OF MARKET
IDENTITY OF ISSUER INVESTMENT COST VALUE
<S> <C> <C> <C>
Fidelity Management Trust Co.* 75,289 units of Fidelity
Magellan Fund $5,307,765 $9,096,369
Fidelity Management Trust Co.* 208,802 units of Fidelity
Balanced Fund 2,256,958 3,416,002
Fidelity Management Trust Co.* 1,410,085 units of Fidelity
Managed Income Portfolio 1,410,085 1,410,085
Fidelity Management Trust Co.* 847,072 units of Fidelity
Money Market Portfolio 847,072 847,072
Rio Hotel & Casino, Inc. 183,670 shares of Rio Hotel &
Casino, Inc. Common Stock 2,860,026 2,954,341
Fidelity Management Trust Co.* 61,593 units of Fidelity
Market Index Fund 2,154,388 2,707,636
Fidelity Management Trust Co.* 34,879 units of Fidelity
Intermediate Bond Fund 320,939 358,211
Prudential 78,215 units of Prudential
Money Mart Assets Fund 78,215 78,215
Participant Loans 8% - 11% 945,471 945,471
Total $16,180,919 $21,813,432
=========== ===========
</TABLE>
*Party-in-interest
-11-
<PAGE>
Schedule II
-----------
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
Item 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(EIN: 88-0288115)
<TABLE>
<CAPTION>
PURCHASES: SALES:
---------------------------------- -------------------------------------------------------------
NUMBER OF NUMBER OF ORIGINAL
DESCRIPTION TRANSACTIONS COST TRANSACTIONS PROCEEDS COST GAIN
- ------------------- --------------- ---------------- ------------------ --------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Magellan Fund* 50 $2,513,156 25 1,312,403 913,917 398,486
Spartan U.S. Equity Index Fund* 50 $1,577,449 - - - -
Balanced Fund* 50 $1,009,034 - - - -
Rio Common Stock Fund* 68 $1,310,548 - - - -
</TABLE>
*Party-in-interest
-12-
<PAGE>
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
RIO SUITE HOTEL & CASINO
EMPLOYEE RETIREMENT SAVINGS PLAN
June 28, 1999
By: /s/ James A. Barrett, Jr.
-------------------------------
James A. Barrett, Jr., Trustee
By: /s/ Ronald J. Radcliffe
-------------------------------
Ronald J. Radcliffe, Trustee
-13-
<PAGE>
EXHIBIT INDEX
-------------
Description Sequentially Numbered Page
- ----------- --------------------------
Consent of Independent Public Accountants 15
-14-
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report included in this Form 11-K, into the Plan's previously
filed Registration Statement File No. 33-56860.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
June 25, 1999
