SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission file number: 0-14897
PLAYERS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 95-4175832
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 800, 1300 Atlantic Avenue, Atlantic City, New Jersey
(Address of principal executive offices)
08401
(Zip Code)
(609) 449-7777
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.005 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
As of June 21, 1996, the aggregate market value of the registrant's Common
Stock held by non-affiliates of the registrants was not less than $240,000,000.
As of June 21, 1996, there were 29,187,480 shares of the registrant's
Common Stock outstanding.
Documents Incorporated by Reference:
The information required by Part III of this report is incorporated by
reference from the Registrant's Proxy Statement to be filed with the Commission
not later than 120 days after the end of the fiscal year covered by this report.
<PAGE>
PART I
Item 1. Business
General
Players International, Inc. ("the Company") is a multi-jurisdictional
gaming company which owns and operates a riverboat casino in Metropolis,
Illinois, two riverboat casinos in Lake Charles, Louisiana, the Players Lake
Charles Riverboat and the Lake Charles Star Riverboat, and the Players Island
Resort-Casino-Spa ("Players Island Resort") in Mesquite, Nevada. The original
Metropolis Riverboat, which is the only riverboat operating in southern Illinois
and is one of only ten statutorily authorized Illinois licensees, commenced
operations in February 1993 and primarily draws patrons from Illinois, Indiana,
Kentucky, Missouri and Tennessee. The Players Lake Charles Riverboat, which
commenced operations in December 1993, and the Lake Charles Star Riverboat,
which commenced operations in April 1995, primarily serve the Houston gaming
market. The Players Island Resort features a fully-contained island resort
environment and opened in Mesquite, Nevada on June 29, 1995 as the Company's
first land-based casino complex. Players Bluegrass Downs, a thoroughbred
racetrack located in Paducah, Kentucky, was acquired by the Company in November
1993 and holds live racing meets each Fall and offers year round simulcasted
thoroughbred horse racing events.
The Company significantly expanded and enhanced its existing operations
during the twelve month period ended March 31, 1996. The Company invested
additional capital for further amenities and attractions at its Metropolis
operations. In November 1995, the Company replaced the original Metropolis
Riverboat with the original Players Lake Charles Riverboat. This provided the
Company's Metropolis operations with a larger, more spacious riverboat casino
which has permitted the facility to better accommodate peak weekend and holiday
demands. In May 1996, the Company opened a new 200 space surface riverfront
parking facility, which is being further expanded to offer an additional 100
spaces by July 1996. The Company is also evaluating the construction of a
floating entertainment facility. In anticipation of the upgrading of the
Company's Metropolis operations, in November 1995, the Company purchased for
$600,000 a barge with a partially completed building superstructure. These
projects and plans for future development are intended to expand capacity and
strengthen the Company's market position in Metropolis in response to
significantly increased competition in this market.
The Company also completed a multi-phase expansion of its Lake Charles
operation which included (i) the purchase of the Showboat Star Casino riverboat,
which opened in April 1995 as the Lake Charles Star Riverboat, (ii) the purchase
of the Players Hotel, formerly the Downtowner Hotel, and related property, which
was previously under lease, (iii) the replacement, in October 1995, of the
original Players Lake Charles Riverboat with the Players III Riverboat, which is
a larger and more spacious riverboat, (iv) the December 1995 opening of a 540
space, on-site multi-story parking garage, and (iv) the February 1996 opening of
a 60,000 square foot floating entertainment island ("the Island") which offers
three new restaurants, an entertainment sports lounge, and an expanded gift
shop. The Island combines an animatronics show with an island theme. The Lake
Charles expansion was undertaken to put the Company in a position to offer its
customers the equivalent of dockside gaming, expand capacity and strengthen the
Company's market position in response to significantly increased local
competition.
<PAGE>
On June 29, 1995, the Company opened the Players Island Resort, its
first land-based casino entertainment facility, in Mesquite, Nevada. The Players
Island Resort features an island resort theme and is located approximately 75
miles from Las Vegas, Nevada on Interstate 15 between Las Vegas and Salt Lake
City, Utah. The Players Island Resort is being marketed as a destination resort
for the residents of the Las Vegas area and southern Nevada, as well as for
tourists from California and Arizona and residents from nearby Utah. The initial
phase of the Players Island Resort project was developed on 45 acres, at a cost
of $74.2 million, and includes 40,000 square feet of gaming space, a 500-room
hotel with a full service health spa and swimming pool, lighted tennis courts, a
children's arcade, four detached three-bedroom villas, a 50-unit recreational
vehicle facility, three restaurants, a showroom and banquet/meeting rooms.
Players Island Resort has been master-planned to accommodate further expansion
of the casino, hotel and banquet/meeting space. The Company anticipates
completing the development of an 18-hole championship golf course, on leased
land near the Players Island Resort, during the Fall of 1996 at a cost of $11.2
million.
On November 2, 1995, the Company finalized its agreement with Harrah's
Entertainment, Inc. ("Harrah's") to form a joint venture and co-develop a $286
million permanently moored, dockside riverboat casino facility, hotel and
entertainment complex in Maryland Heights, Missouri, a suburb of St. Louis, (the
"Maryland Heights Complex"). The Company's portion of the project budget,
excluding capitalized interest, is expected to be $143 million, of which $42.9
million has been invested through March 31, 1996. The Maryland Heights Complex
is expected to contain a total of 120,000 square feet of gaming space, a 291
room hotel, a 95,000 square foot entertainment facility and extensive covered
parking. The entertainment facility is expected to offer two specialty
restaurants, a buffet, an entertainment lounge, a child care facility and retail
shops. The project is anticipated to open in early 1997, subject to receipt of
all necessary approvals.
In November 1995, the Company relocated its principal executive office
to Suite 800, 1300 Atlantic Avenue, Atlantic City, New Jersey 08401 (Telephone:
609-449-7777).
Marketing
The Company's marketing strategy at its existing facilities focuses on
middle-income customers who live within a 150 mile radius of each of the
Company's facilities. The Company implements this strategy through the use of
database marketing, on-site marketing and bus programs. The Company targets
gaming customers through frequent mailings promoting visits to its casino
facilities. In addition, the Company employs on-site marketing techniques
including the use of player tracking systems, slot clubs and preferred player
hosts to identify and service patrons. To attract additional patronage during
non-peak hours, the Company utilizes bus tours which are organized through the
Company's direct relationship with tour operators.
Metropolis Operations
The Company's Metropolis riverboat casino entertainment complex (the
"Metropolis Complex"), has been operational since February 23, 1993 and is the
only riverboat operating in southern Illinois. The Company has one of a current
maximum of only ten statutorily authorized gaming licenses in Illinois. In
February 1996, the license for the Metropolis facility was extended by the
Illinois Gaming Board for an additional one (1) year term. Under Illinois law
licenses are renewed annually after the first three (3) years of operations.
<PAGE>
During the fiscal year ended March 31, 1996, the Company invested
additional capital for further amenities and attractions at the Metropolis
Complex. On November 15, 1995, the Company replaced the original Metropolis
Riverboat with a larger, more spacious riverboat which had formerly been
operated as a part of the Company's Lake Charles operations. The new Metropolis
Riverboat is a four deck, air conditioned replica of a paddlewheel riverboat.
The fully-equipped Las Vegas style casino features over 27,500 square feet of
gaming space, with 862 slot machines and 51 table games, for a total of
approximately 1,200 gaming positions. The larger, more spacious riverboat casino
has permitted the facility to better accommodate peak weekend and holiday
demands. In May 1996, the Company opened a new 200 space surface riverfront
parking facility, which is being further expanded in July 1996 to offer an
additional 100 spaces. These additional spaces complement the more than 1,000
existing free automobile and bus parking spaces provided by the Company. The
Company is also evaluating the construction of a floating entertainment
facility. In anticipation of the upgrading of the Company's Metropolis
operations, the Company purchased, in November 1995 for $600,000 a barge with a
partially completed building superstructure from Biloxi Casino Belle
Incorporated, at an auction supervised by the United Stated Bankruptcy Court.
These projects and plans for future development are intended to expand capacity
and strengthen the Company's market position in Metropolis in response to
significantly increased competition.
The docking site at the Metropolis Complex, named "Merv Griffin's
Landing," consists of three permanently moored barges and related structures.
One barge, with a total area of approximately 15,000 square feet on three
levels, houses Merv Griffin's Bar and Grill and the Celebrity Buffet restaurant,
as well as meeting rooms. The dining facilities have the capacity to seat 600
people. The second barge is approximately 12,000 square feet in size and
contains the ticketing area, a gift shop, waiting areas, restrooms and a VIP
lounge. A third barge of approximately 15,000 square feet is used as a queuing
area for patrons prior to boarding the riverboat casino, and as a special events
and promotional area. It is serviced by a deli style restaurant and bar.
As part of its plan to offer non-gaming amenities in Metropolis, the
Company holds a 12-1/2% limited partnership interest in a joint venture that
built a 120-room hotel adjacent to its Metropolis dock site. The hotel was
opened in March 1994. The Company is entitled to a discounted rate for hotel
rooms used for casino guests and employees. The Company also leases, under a ten
year agreement, the 350-seat cabaret style Merv Griffin's Theater adjacent to
the hotel, which is not in active daily operation but is available for use for
special events and promotions.
The Company has the right to use Mr. Griffin's name in connection with
Merv Griffin's Landing, Merv Griffin's Bar and Grill and Merv Griffin's Theater
through December 31, 1996. (See Item 2. Properties -- License with Merv Griffin
and The Griffin Group.)
The Metropolis Complex site is approximately three miles from U.S.
Interstate 24, a major highway through Illinois, Kentucky and Tennessee.
Passenger counts are higher during warmer weather (from late spring through
early fall) than during the winter months. The Company anticipates that this
passenger count trend will continue in the future.
Lake Charles Operations
The Company's Lake Charles riverboat casino entertainment complex (the
"Lake Charles Complex") commenced operations in Lake Charles in southwestern
Louisiana on December 8, 1993 with one riverboat casino. The Company in January
1995 initiated a $150 million expansion of the Lake Charles Complex (the "Lake
Charles Complex Expansion").
<PAGE>
The Company began the Lake Charles Complex Expansion by acquiring all
interests in the partnership that owned another fully equipped Las Vegas style
riverboat casino, the Lake Charles Star Riverboat, which previously operated for
one and one-half years on Lake Pontchartrain in New Orleans, Louisiana. In April
1995, the Company opened the Lake Charles Star Riverboat, which has 21,730
square feet of gaming space on three air-conditioned decks with 759 slot
machines and 43 table games for a total of 1,060 gaming positions. In August
1995, the Company acquired the Players Hotel, formerly the Downtowner Hotel, and
related property which was previously under lease. In October 1995, the Company
replaced the original Players Lake Charles Riverboat with the larger, more
spacious Players III Riverboat. The Players III Riverboat, is a fully-equipped
Las Vegas style casino which has approximately 29,200 square feet of gaming
space with 882 slot machines and 69 table games, for a total of approximately
1,365 gaming positions and offers gaming on three air-conditioned decks. In
December 1995 the Company completed the construction of and opened a 540 space,
on-site multi-story parking garage. In February 1996, the Company opened the
60,000 square foot floating Island. The amounts expended for the Lake Charles
Complex Expansion also include public purpose/city infrastructure contributions
and the continued integration of the Company's island resort theme.
Riverboat casino passengers walk through the Island, which is connected
to the Players Hotel by a covered walkway, to board the Players III Riverboat
and Lake Charles Star Riverboat. The Island offers a tropical theme with lush
foliage, water falls and rockscapes. The Island includes a gift shop, two full
service restaurants, the Plantation House Restaurant and Lounge and the Island
Buffet, which can seat 238 and 398 people, respectively, Coconuts Lounge, which
is a 145 seat sports bar, and the Cajun Kitchen, a Cajun themed snack bar, which
seats 50 people. The Island also offers a large queuing area and a
state-of-the-art animatronics show with a pirate theme for guests to view on
their way to board the riverboats. Both the new Players Lake Charles Riverboat
and the Lake Charles Star Riverboat operate three-hour cruises up to 24 hours a
day. With the two Lake Charles riverboats operating on staggered three hour
cruise schedules, the Company offers its patrons the equivalent of dockside
gaming. The Company now holds two of the fifteen statutorily authorized
riverboat gaming licenses in Louisiana. The Company also maintains a permanently
docked barge of approximately 10,000 square feet adjacent to the Island
containing a 3,000 square foot VIP waiting lounge. The barge also provides an
employee breakroom, administrative offices and mechanical rooms.
Prior to the opening of competing gaming facilities in the Lake Charles
market, the Company collected an admission charge of $2.00 per cruise. As a
result of competition, admission now is free, however, the Company continues to
pay a $3.00 per passenger admission tax to the City of Lake Charles. Once
passengers board, they are permitted to game prior to the riverboat's departure,
and are permitted to continue to game until they disembark. Louisiana permits
dockside gaming if the riverboat captain reasonably determines that it is unsafe
to cruise due to dangerous weather or water conditions.
The City of Lake Charles and the surrounding area have a population of
approximately 160,000 within a 25 mile radius. The Lake Charles Complex's
primary market area includes such population centers as Houston, Beaumont,
Galveston, Orange and Port Arthur, Texas and Lafayette and Baton Rouge,
Louisiana. U.S. Interstate 10 connects Houston, Beaumont and Lake Charles and is
adjacent to the Company's docking site. Since opening, the Company estimates
that the Lake Charles Complex has drawn over half of its patrons from Texas,
mainly from the greater Houston area, due in large part to the current absence
of legalized casino gaming in Texas.
<PAGE>
In a Special Session of the Louisiana legislature in March 1996,
legislation was enacted which establishes the Louisiana Gaming Control Board and
provides that such Board is the successor to all such prior gaming regulatory
authorities with regard to the regulation and supervision of gaming in Louisiana
except for the regulation of horse racing and offtrack betting and the
conducting of charitable gaming operations. Effective May 1, 1996, the powers,
duties, functions and responsibilities with respect to riverboat gaming of the
Louisiana Riverboat Gaming Commission ("the Louisiana Commission") and The
Louisiana State Police, Louisiana Enforcement Division, ("the Louisiana
Enforcement Division") were transferred to the Louisiana Gaming Control Board.
In the 1996 Special Session, legislation was also enacted providing for
local option elections in November 1996 on a parish-by-parish basis which will
give voters in communities across the State the opportunity to decide the fate
of certain forms of gaming in their parishes. The referendum will determine
whether video poker, riverboat gaming, and land-based casino gaming operations
will be permitted or prohibited in the following manner: (i) all parishes will
vote on the operation of video poker devices; (ii) each parish in which
riverboat gaming is authorized will vote on riverboat gaming; and (iii) Orleans
Parish will vote on the land-based casino in addition to riverboat gaming and
video poker. If a majority of the voters in a parish elect to prohibit one or
more of the above-described gaming activities in such parish, then no license or
permit shall be issued to conduct such prohibited gaming activity in such
parish. If, however, riverboat gaming was previously permitted in such parish,
the legislation permits the current gaming operator to continue riverboat gaming
in that parish until the expiration of its gaming license. In the case of the
Company, the current license for the Lake Charles Star Riverboat expires on
August 9, 1998, and the current license for the Players Lake Charles Casino
expires on December 6, 1998 (see "Results of Operations -- Lake Charles").
Further, in parishes where riverboat gaming is currently authorized and voters
elect to prohibit riverboat gaming, the legislation provides that the gaming
license shall not be reissued or transferred to any parish other than a parish
in which riverboat gaming has previously been authorized by the voters in a
local option referendum.
In the 1996 Special Session, legislation was also enacted placing a
constitutional amendment on the October 1996 election ballot. If the
constitutional amendment is approved by Louisiana voters in the October 1996
election, local option elections will be required before new forms of gaming can
be brought into a parish. The measure also requires a local option referendum
before a riverboat can move into a parish that has not already authorized
riverboat gaming.
Mesquite Operations
On June 29, 1995, the Company opened the Players Island Resort in
Mesquite, Nevada, its first land-based casino entertainment facility. The
Players Island Resort features an island resort theme and is located
approximately 75 miles from Las Vegas on Interstate 15 between Las Vegas and
Salt Lake City, Utah. The Players Island Resort is being marketed as a
destination resort for the residents of the Las Vegas area and Southern Nevada,
as well as for tourists from California and Arizona and residents from nearby
Utah.
The initial phase of the Players Island Resort project was developed on
45 acres, at a cost of $74.2 million, and includes 40,000 square feet of gaming
space with 850 slot machines and 34 table games for a total of 1,118 gaming
positions. The casino also offers a sports book and keno style wagering. The
Players Island Resort also features a 500-room hotel with a full service health
spa and swimming pool with waterfalls, lighted tennis courts, a children's
arcade, four detached three-bedroom villas, and a 50-unit recreational vehicle
facility. The Players Island Resort also features three restaurants, a 110 seat
gourmet restaurant, 174 seat coffee shop and a 300 seat buffet, a 425 seat
showroom and 10,000 square feet of banquet/meeting rooms.
<PAGE>
The Players Island Resort has been master-planned to accommodate
further expansion of the casino, hotel and banquet/meeting space. The Company
anticipates completing the development of an 18-hole championship golf course,
on leased land near the Players Island Resort, during the Fall of 1996 at a cost
of $11.2 million.
Players Bluegrass Downs Operations
Players Bluegrass Downs, a thoroughbred racetrack located in Paducah,
Kentucky, was acquired by the Company in November 1993 and holds live racing
meets each Fall and offers year round simulcasted thoroughbred horse racing
events. During the year when live race meets are not scheduled, the racetrack
facilities are leased for special events and activities.
Maryland Heights Development Project
On November 2, 1995, the Company finalized its agreement with Harrah's
to form a joint venture and co-develop a $286 million Maryland Heights Complex
in Maryland Heights, Missouri, a suburb of St. Louis. The Company's portion of
the project budget, excluding capitalized interest, is expected to be $143
million, of which $42.9 million has been invested through March 31, 1996.
The Maryland Heights Complex is expected to include a total of 120,000
square feet of gaming space. The Company and Harrah's will each own and operate
their respective permanently moored, dockside casinos of approximately equal
size pursuant to separate gaming licenses, but will share equally in the costs
of the development of an estimated 380,000 square foot hotel, entertainment
facility and parking facilities. Although the casinos are expected to be similar
in exterior theme and decor, each operator will individually manage and market
its own gaming operations with separate staff.
The plans for the Maryland Heights Complex also include a 291 room
hotel with 12 luxury suites, a 95,000 square foot entertainment facility and
extensive covered parking. The entertainment facility is themed as turn of the
century St. Louis and includes two specialty restaurants, each offering
approximately 125 seats, a buffet offering approximately 600 seats, an
entertainment lounge offering approximately 125 seats, a child care facility, a
1,824 space parking garage, 3,231 surface parking spaces and retail shops.
An affiliate of Harrah's owns the property underlying the Maryland
Heights Complex. The Company and Harrah's each has an eighty (80) year lease
with the Harrah's affiliate for the property underlying their respective
casinos. The leases for the Company and Harrah's are substantially identical,
except that the Company pays rent and Harrah's does not. The Company's rent
consists of a percentage rent equal to 2% of the Company's net gaming revenue
for the first $50 million, 3% of net gaming revenue between $50 million and $100
million, and 4% of net gaming revenue in excess of $100 million.
<PAGE>
Pursuant to a separate Management Agreement, a Harrah's affiliate will
manage the Entertainment Facility, which includes the entire Maryland Heights
Complex except for the Company's and Harrah's casinos and the specialty
restaurants. The Management Agreement has a basic term that expires on December
31, 2005, with fourteen five (5) year renewal options. The Management Agreement
provides for the following fees: a Base Management Fee equal to 3% of the Hotel
Revenues; an Incentive Management Fee which is the greater of 1% of the Hotel
Revenues, or 50% of operating cost savings; an Accounting Fee of $130,000 per
year, increased each year by the amount the consumer price index ("CPI")
increases; and a Reservation Fee of $2.50 per guest room reservation at the
hotel made through the telephone reservation system of an affiliate of Harrah's,
which fee is increased each year by the amount the CPI increases, but not more
than the prevailing charge to other participating Harrah's affiliated hotels.
For specific terms of the lease, see "Properties -- Maryland Heights, Missouri."
The Company and Harrah's individually have been endorsed by the City of
Maryland Heights for separate riverboat casino projects and have licensing
applications under consideration by the Missouri Gaming Commission. The project
is anticipated to open in early 1997, subject to receipt of all necessary
approvals.
Situated in close proximity to Interstate 70 in Maryland Heights, the
casino entertainment complex will be strategically located to attract patrons
from a local population base of approximately 2.3 million in the greater St.
Louis metropolitan region. The site will feature easy accessibility, a high
level of drive-by traffic with its close proximity to Interstate 70 and Lambert
International Airport, and will be strategically located near the Riverport
Amphitheater, which currently attracts 500,000 visitors per year.
Although riverboat gaming is currently offered in the metropolitan St.
Louis region, certain patrons of the Metropolis Complex travel approximately
three hours from St. Louis to Metropolis. In recognition of these valued
customers, the Company intends to introduce cross-marketing programs to St.
Louis area residents for the Metropolis Complex and the proposed Maryland
Heights Complex to increase repeat patronage at the Company's casino
entertainment facilities.
Competition
The casino gaming industry includes casinos which are land-based,
dockside casinos, cruising riverboat casinos and land-based casinos on Indian
reservations. The gaming industry is highly competitive and is composed of a
large number of companies, many of which have significantly greater resources
than the Company. Numerous states have legalized gaming and several other states
are considering the legalization of gaming in designated areas. As a result of
the proliferation of gaming in new jurisdictions as well as the proliferation of
Indian gaming on tribal land, the Company's operations have been affected in
instances where such other gaming operations are conducted close to the
Company's facilities.
The Company's Metropolis Complex's closest gaming competitor operates
in Evansville, Indiana, approximately 110 miles northeast of Metropolis. Another
competing riverboat casino operates in Caruthersville, Missouri, which is
approximately 120 miles southwest of Metropolis. The Metropolis Complex may face
further competition as additional riverboats become licensed in southern Indiana
and Missouri. The Metropolis Complex also experiences competition to a much
lesser extent from dockside casinos in Tunica, Mississippi.
<PAGE>
The Company's Lake Charles Complex faces direct competition from the
Isle of Capri Casino (the "Isle of Capri Casino Facility"), which opened on
July 29, 1995 in Westlake, Louisiana approximately one mile from the Company's
facility. The Isle of Capri Casino Facility presently offers one riverboat
casino with approximately 26,000 square feet of gaming space, 860 slot machines
and 40 table games. In May 1996, the Isle of Capri Casino Facility opened a
pavilion which offers a 450 seat buffet, a live entertainment facility and
retail operations. The Louisiana Commission and the Louisiana Enforcement
Division recently granted certain of the approvals necessary for an additional
riverboat casino to operate from the Isle of Capri Facility. Eastbound travelers
from Texas and western Louisiana on Interstate 10 are able to access the Isle of
Capri Casino Facility prior to reaching the Company's Lake Charles Complex. The
Company's Lake Charles Complex also faces direct competition from the land-based
Grand Casino, Inc.'s Coushatta Indian facility in Kinder, Louisiana. The
Coushatta facility, which opened in January of 1995 and expanded in August 1995,
is a Las Vegas style casino that currently offers 71,000 square feet of gaming
space, 2,000 slot machines and approximately 65 table games. Grand Casinos, Inc.
has announced further expansion plans with a late fall 1996 or early 1997
opening date, including a 250 room hotel, three new restaurants and 25,000
additional square feet of gaming space. In addition to the Coushatta facility,
the Company's Lake Charles operations compete to a lesser degree with riverboat
operators in Baton Rouge, approximately 125 miles east of Lake Charles, the New
Orleans area, which is over 200 miles east of Lake Charles, and the
Shreveport/Bossier City area, which is approximately 180 miles north of Lake
Charles. A planned land-based casino in New Orleans may produce additional
competition.
The Players Island Resort in Mesquite, Nevada competes directly with
two existing properties and another property under construction. Both the Oasis
and the Virgin River are located in Mesquite. The larger of the two facilities,
the Oasis, has been in operation for approximately 11 years, and the Virgin
River has been in operation for approximately 3 years. These two facilities draw
a majority of their patronage from travelers on Interstate 15, the local
population base and the residents of nearby border towns between Utah and
Nevada. The property under construction, Rancho Mesquite, is scheduled to open
in the Fall of 1996. This property is a Holiday Inn franchise and will have 220
hotel rooms with 25,000 square feet of casino space. The Company also competes
with the numerous casinos in Las Vegas and surrounding communities.
The Company's planned project in Maryland Heights, Missouri will
compete directly with the President Riverboat in downtown St. Louis, Missouri,
the Alton Belle in Alton, Illinois, the Casino Queen in East St. Louis, Illinois
and the St. Charles Station in St. Charles, Missouri. The Maryland Heights
Complex may compete with proposed riverboat casinos in Kimmswick, Missouri and
St. Charles County, Missouri and, potentially, additional riverboats in the St.
Louis metropolitan area to the extent that additional licenses, if any, are
granted by the Missouri Gaming Commission.
Employees
At March 31, 1996, the Company had approximately 3,951 employees,
including 835 employed at the Metropolis Complex, 2,070 employed at the Lake
Charles Complex, 961 employed at Players Island Resort, 34 employed at Players
Bluegrass Downs and 51 employed in the Company's corporate and administrative
offices. The Company believes its relations with its employees are generally
good.
On June 28, 1995, the United Food and Commercial Workers Union, Local
881 ("Local 881"), filed a petition with National Labor Relations Board (the
"NLRB") seeking union representation of approximately one-half of the employees
at the Metropolis Complex. An election was scheduled to be held on December 8,
1995. However, on December 4, 1995, Local 881 withdrew its petition voluntarily
prior to the scheduled date for the election, and the election was canceled.
<PAGE>
On May 23, 1995, the Seafarers International Union ("SIU") filed a
petition for an election with the NLRB to represent unlicensed marine crew
members of the Players Lake Charles Riverboat and the Lake Charles Star
Riverboat at the Lake Charles Complex. After a decision on the appropriateness
of the union, the NLRB conducted an election on October 24 and 25, 1995. The
outcome of that election, which remains uncertified, resulted in the SIU being
chosen to represent 61 unlicensed marine crew members from among approximately
2,070 employees at the Lake Charles Complex.
Gaming Regulation
The Company is subject to state and Federal laws which regulate
businesses generally and the gaming business specifically. Below is a brief
description of some of the more significant regulations to which the Company is
subject. All laws are subject to change and different interpretations. This is
especially true with respect to current laws regulating the gaming industry,
since in many cases these laws and the regulatory agencies that apply them are
relatively new. Changes in laws or their interpretation may result in the
imposition of more stringent, burdensome, or expensive requirements, or the
outright prohibition of an activity.
Illinois Gaming Regulation
The Riverboat Gambling Act of Illinois (the "Illinois Riverboat Act")
currently authorizes a five-member Illinois Gaming Board to issue up to ten
riverboat gaming licenses. The Illinois Gaming Board issued an owner's license
to a wholly-owned subsidiary of the Company for its Metropolis operations in
February 1993. This license was renewed in February 1996 and, unless revoked, is
subject to renewal annually. Each owner's license granted entitles the licensee
to own and operate up to two riverboats (with a combined maximum of 1,200 gaming
participants) and equipment thereon from a specified dock site. The duration of
the license initially runs for a period of three years. Thereafter, the license
is subject to renewal on an annual basis upon, among other things, a
determination by the Illinois Gaming Board that the licensee continues to meet
all of the requirements of the Illinois Riverboat Act and the Illinois Gaming
Board's Rules. All licensees have a continuing duty to maintain suitability for
licensure.
The Illinois Riverboat Act grants the Illinois Gaming Board extensive
jurisdiction, specific powers and duties for the purposes of administering,
regulating and enforcing the system of riverboat gaming. The Illinois Gaming
Board may revoke or suspend licenses as the Board may see fit and in compliance
with applicable laws of the State of Illinois regarding administrative
procedures and may suspend an owner's license, without notice or hearing, upon a
determination that the safety or health of patrons or employees is jeopardized
by continuing a riverboat's operation. The suspension may remain in effect until
the Illinois Gaming Board determines that the cause for suspension has been
abated and it may revoke the owner's license upon a determination that the owner
has not made satisfactory progress toward abating the hazard.
A holder of an owner's license is required to obtain all licenses from
the Illinois Gaming Board necessary for the operation of a riverboat, including
a liquor license and a license to prepare and serve food and all other necessary
licenses. All sales, use, occupation and excise taxes which apply to food and
beverages apply to sales aboard riverboats.
<PAGE>
All riverboats must be accessible to disabled persons, must be either a
replica of a 19th century Illinois riverboat or be of a casino cruise ship
design, and must comply with applicable Federal and state laws, including U.S.
Coast Guard regulations.
A person employed at a riverboat gaming operation must hold an
occupation license from the Illinois Gaming Board which permits the holder to
perform only activities included within such holder's level of occupation
license or any lower level of occupation license. The Illinois Gaming Board also
requires that officers, directors and other key persons of a gaming operation be
licensed. In addition, a riverboat licensee can purchase or lease gaming
equipment or supplies only from a supplier who has been issued a supplier's
license by the Illinois Gaming Board.
As a condition to maintaining an owner's license, the licensee must,
among other things, submit detailed financial information and other information
to the Illinois Gaming Board including an annual audit by an independent
certified public accountant, selected by the Administrator of the Illinois
Gaming Board, of the financial transactions and conditions of the total
operations of a holder of an owner's license including the condition of the
licensee and its internal control system. The holder of an owner's license must
prepare and send to the Administrator and the independent certified public
accountant selected by the Administrator a written response to issues raised by
such accountant's reports on (i) the procedures required to be performed by such
accountant on a quarterly basis with respect to certain aspects of the
licensee's operations and (ii) the annual audit referred to in the previous
sentence. Among other continuing obligations, the holder of an owner's license
has a duty to promptly disclose any material changes in the information it
provides to the Illinois Gaming Board. The holder of an owner's license must
report promptly to the Administrator of the Illinois Gaming Board any facts
which the holder has reasonable grounds to believe indicate a violation of law
(other than minor traffic violations) or Illinois Gaming Board Rule or a
holder's internal controls committed by suppliers or licensed employees
including, without limitation the performance of licensed activities different
than those permitted under their license. The duty to disclose to the Illinois
Gaming Board changes in information continues throughout the period of
licensure. A duty exists to promptly disclose the identity of a compensated
agent acting on behalf of the holder of an owner's license with regard to action
by the Illinois Gaming Board.
A holder of an owner's license is subject to the imposition of fines,
suspension or revocation of its license for any act or failure to act on the
part of the licensee or its agents or employees that is injurious to the public
health, safety, morals, good order or general welfare of the people of the State
of Illinois or that would discredit or tend to discredit the Illinois gaming
industry or the State of Illinois, including, without limitation, (i) failing to
comply with or make provision for compliance with applicable legal requirements
including the Illinois Riverboat Act, the rules promulgated thereunder or any
other applicable Federal, state or local law or regulation or order or failure
by the holder of an owner's license to comply with or make provisions for
complying with the holder's internal controls; (ii) failing to comply with any
rule, order or ruling of the Illinois Gaming Board or its agents pertaining to
gaming; (iii) receiving goods or services from a person or business entity which
does not hold any required supplier's license; (iv) being suspended or ruled
ineligible for a gaming license or having a gaming license revoked or suspended
in any state or gaming jurisdiction; (v) associating with, either socially or in
business affairs, or employing persons of notorious or unsavory reputation or
who have extensive police records or who have failed to cooperate with any
officially constituted investigatory or administrative body if public confidence
and trust in gaming would thereby be adversely affected; and (vi) employing in
any Illinois riverboat's gaming operations any person known to have been found
guilty of cheating or using any improper device in connection with any game.
<PAGE>
Minimum and maximum wagers on games are not established by regulation
but are left to the discretion of the licensee; however, wagering may not be
conducted with money or other negotiable currency. Riverboat cruises are limited
to a duration of four hours, and pursuant to the language of the Illinois
Riverboat Act, no gaming may be conducted while the riverboat is docked.
Illinois Gaming Board Rule, Section 3000.500, currently permits gaming during
the 30-minute time periods at the beginning and end of a cruise while the
passengers are embarking and disembarking (total gaming time per cruise is
limited to four hours, however, including the pre- and post-docking periods). In
addition, pursuant to Illinois Gaming Board Rule, Section 3000.510, dockside
gaming is permitted if the captain of the riverboat reasonably determines that
it is unsafe to cruise due to inclement weather, mechanical or structural
problems or river icing. In such event, the riverboat must be cleared at least
once every four hours, at which time a new gaming session may commence; patrons
may leave the vessel at any time but may only board the vessel during the first
30 minutes of the gaming session. Recent pronouncements by the Illinois Gaming
Board indicate that the explanations for failure to cruise pursuant to Illinois
Gaming Board Rule, Section 3000.510 will be scrutinized and that any abuse of
the rule will result in disciplinary actions, which may include, among other
things, any of the following: cancellation of future cruises, penalties, fines
and suspensions or revocation of license. No person under the age of 21 is
permitted to wager, and wagers may only be taken from a person present on a
licensed riverboat. With respect to electronic gaming devices, the payout
percentage may not be less than 80% nor more than 100%.
The Illinois Riverboat Act imposes a 20% wagering tax on adjusted gross
receipts from gaming. The tax imposed is to be paid by the licensed owner to the
Illinois Gaming Board on the day after the gaming day when the wagers were made.
The Illinois legislation also requires that licensees pay a $2.00 admission tax
for each person admitted to a gaming cruise. The Illinois legislature has
considered several proposals to modify the wagering tax, some of which proposals
are presently pending before the Legislature.
An ownership interest in a business entity (other than a publicly
traded corporation) which has an interest in a holder of an owner's license may
only be transferred or pledged as collateral with leave of the Illinois Gaming
Board. Any person or entity who or which, individually or in association with
others, acquires directly or indirectly, beneficial ownership of more than 5% of
any class of voting securities or non-voting securities convertible into voting
securities of a publicly traded corporation which holds an ownership interest or
a beneficial interest in the holder of an owner's license is required to file a
Personal Disclosure Form 1. (The Illinois Gaming Board, however, takes the
position that it can require any individual or entity seeking a transfer of an
ownership interest in an owner's license to file a personal disclosure Form 1.)
The Personal Disclosure Form 1 forms the basis of investigation by the Illinois
Gaming Board to determine suitability of the person or entity seeking transfer
of an ownership interest. If the Illinois Gaming Board denies an application for
such a transfer, commencing as of the date the Illinois Gaming Board issues a
notice that it denies such application, it will be unlawful for such applicant
to receive any dividends or interest on his shares, to exercise, directly or
indirectly, any right conferred by such shares, or to receive any remuneration
from any person or entity holding any license under the Illinois Riverboat Act
for services rendered. If the Illinois Gaming Board denies an application for
such a transfer and if no hearing is requested or if the Illinois Gaming Board
issues a final order of disqualification, the holder of an owner's license shall
purchase all of the disqualified person's or entity's shares at the lesser of
either the market price or the purchase price for such shares.
<PAGE>
A holder of an owner's license can only make distributions to
stockholders to the extent such distributions would not impair the financial
viability of the gaming operation. Factors to be considered should include but
not be limited to the following: (i) working capital requirements, (ii) debt
service requirements, (iii) repairs and maintenance requirements and (iv)
capital expenditure requirements.
Holders of an owner's license must immediately inform the Illinois
Gaming Board and obtain formal approval from the Illinois Gaming Board whenever
a change is proposed in the following areas: key persons; type of entity; equity
and debt capitalization of entity; investors and/or debt holders; sources of
funds; applicant's economic development plan; riverboat capacity or significant
design change; gaming positions; anticipated economic impact; or pro forma
budgets and financial statements.
Louisiana Gaming Regulation
In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
The legislation granted authority to supervise riverboat gaming activities to
the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement
Division of the Louisiana State Police (the "Louisiana Enforcement Division").
The statute authorizes issuance of up to 15 licenses to conduct gaming
activities on a riverboat of new construction in accordance with applicable law.
However, no more than six licenses may be granted to riverboats operating from
any one parish.
In July 1991, Louisiana also authorized operation of video lottery
terminals (VLTs) at various types of facilities in the state, including bars,
truckstops, racetracks and off-track betting parlors.
In issuing a license, the Louisiana Enforcement Division must find that
the applicant is a person of good character, honesty and integrity and a person
whose prior activities, criminal record, if any, reputation, habits, and
associations do not pose a threat to the public interest of the State of
Louisiana or to the effective regulation and control of gaming, or create or
enhance the dangers of unsuitable, unfair or illegal practices, methods and
activities in the conduct of gaming or the carrying on of business and financial
arrangements in connection therewith. The Louisiana Enforcement Division will
not grant a license unless it finds that: (i) the applicant is capable of
conducting gaming operations, which means that the applicant can demonstrate the
capability, either through training, education, business experience, or a
combination of the above, to operate a gaming casino; (ii) the proposed
financing of the riverboat and the gaming operations is adequate for the nature
of the proposed operation and from a source suitable and acceptable to the
Louisiana Enforcement Division; (iii) the applicant demonstrates a proven
ability to operate a vessel of comparable size, capacity and complexity to a
riverboat so as to ensure the safety of its passengers; (iv) the applicant
submits a detailed plan of design of the riverboat in its application for a
license; (v) the applicant designates the docking facilities to be used by the
riverboat; (vi) the applicant shows adequate financial ability to construct and
maintain a riverboat; and (vii) the applicant has a good faith plan to recruit,
train and upgrade minorities in all employment classifications.
Certain persons affiliated with a riverboat gaming licensee, including
directors and officers of the licensee, directors and officers of any holding
company of the licensee involved in gaming operations, persons holding 5% or
greater interests in the licensee, and persons exercising influence over a
licensee ("Affiliated Gaming Persons"), are subject to the application and
suitability requirements of the Louisiana gaming law.
<PAGE>
The Louisiana gaming law specifies certain restrictions and conditions
relating to the operation of riverboat gaming, including the following: (i)
gaming is not permitted while a riverboat is docked, other than the forty-five
minutes between excursions, and during times when dangerous weather or water
conditions exist; (ii) each round-trip riverboat cruise may not be less than
three nor more than eight hours in duration, subject to specified exceptions;
(iii) agents of the Louisiana Enforcement Division are permitted on board at any
time during gaming operations; (iv) gaming devices, equipment and supplies may
only be purchased or leased from permitted suppliers; (v) gaming may only take
place in the designated gaming area while the riverboat is upon a designated
river or waterway; (vi) gaming equipment may not be possessed, maintained or
exhibited by any person on a riverboat except in the specifically designated
gaming area, or a secure area used for inspection, repair or storage of such
equipment; (vii) wagers may be received only from a person present on a licensed
riverboat; (viii) persons under 21 are not permitted in designated gaming areas;
(ix) except for slot machine play, wagers may be made only with tokens, chips or
electronic cards purchased from the licensee aboard a riverboat; (x) licensees
may only use docking facilities and routes for which they are licensed and may
only board and discharge passengers at the riverboat's licensed berth; (xi)
licensees must have adequate protection and indemnity insurance; (xii) licensees
must have all necessary Federal and state licenses, certificates and other
regulatory approvals prior to operating a riverboat; and (xiii) gaming may only
be conducted in accordance with the terms of the license and the rules and
regulations adopted by the Louisiana Enforcement Division.
An initial license to conduct riverboat gaming operations is valid for
a term of five years. The Company was issued an initial operator's license by
the Louisiana Enforcement Division for the Players Lake Charles Riverboat on
December 6, 1993. The Lake Charles Star Riverboat, which was acquired by the
Company in April 1995, was issued an initial operator's license on August 9,
1993. The Louisiana gaming law provides that a renewal application for the
period succeeding the initial five year term of the operator's license must be
made to the Louisiana Enforcement Division. The application for renewal consists
of a statement under oath of any and all changes in information, including
financial information, provided in the previous application.
The transfer of a license or permit or an interest in a license or
permit is prohibited. The sale, purchase, assignment, transfer, pledge or other
hypothecation, lease, disposition or acquisition (a "Transfer") by any person of
securities which represent 5% or more of the total outstanding shares issued by
a corporation that holds a license is subject to Louisiana Enforcement Division
disapproval. A security issued by a corporation that holds a license must
generally disclose these restrictions. Prior Louisiana Enforcement Division
approval is required for the Transfer of any ownership interest of 5% or more in
any non-corporate licensee or for the Transfer of any "economic interest" of 5%
or more in any licensee or Affiliated Gaming Person. An "economic interest" is
defined for purposes of a Transfer as any interest whereby a person receives or
is entitled to receive, by agreement or otherwise, a profit, gain, thing of
value, loan, credit, security interest, ownership interest or other economic
benefit.
A licensee must notify the Louisiana Enforcement Division of any
withdrawals of capital, loans, advances or distributions in excess of 5% of
retained earnings for a corporate licensee, or of capital accounts for a
partnership or limited liability company licensee, upon completion of any such
transaction. No prior approval of any such withdrawal, loan, advance or
distribution is required, but any such transaction is ineffective if disapproved
by the Louisiana Enforcement Division within 120 days after the required
notification. In addition, the Louisiana Enforcement Division may issue an
emergency order for not more than 10 days prohibiting payment of profits, income
or accruals by, or investments in, a licensee.
<PAGE>
Riverboat gaming licensees and their Affiliated Gaming Persons are
required to notify the Louisiana Enforcement Division within thirty days after
the receipt by any such persons of any loans or extensions of credit. The
Louisiana Enforcement Division is required to investigate the reported loan or
extension of credit, and to either approve or disapprove the transaction. If
disapproved, the loan or extension of credit must be rescinded by the licensee
or Affiliated Gaming Person. The Company is an Affiliated Gaming Person of its
Louisiana subsidiary that is the licensee of the Players Lake Charles Riverboat
and the Players Star Riverboat.
Fees for conducting gaming activities on a riverboat include (i)
$50,000 per riverboat for the first year of operation and $100,000 per year per
riverboat thereafter plus (ii) 18-1/2% of net gaming proceeds.
In 1995, Louisiana enacted legislation authorizing the governing
authority of Calcasieu Parish to levy an additional admission fee of fifty cents
per passenger, the proceeds of which will be used primarily to fund education in
the parish. This increase is applicable to the Company's two Lake Charles
riverboats.
In a Special Session of the Louisiana legislature in March 1996,
legislation was enacted which establishes the Louisiana Gaming Control Board and
provides that the Board is the successor to all such prior gaming regulatory
authorities with regard to the regulation and supervision of gaming in Louisiana
except for the regulation of horse racing and offtrack betting and the
conducting of charitable gaming operations. Effective May 1, 1996, the powers,
duties, functions and responsibilities with respect to riverboat gaming of the
Louisiana Riverboat Gaming Commission and the Louisiana Enforcement Division
were transferred to the Louisiana Gaming Control Board.
In the 1996 Special Session, legislation was also enacted providing for
local option elections in November 1996 on a parish-by-parish basis which will
give voters in communities across the state the opportunity to decide the fate
of certain forms of gaming in their parishes. The referendum will determine
whether video poker, riverboat gaming, and land-based casino gaming operations
will be permitted or prohibited in the following manner: (i) all parishes will
vote on the operation of video poker devices; (ii) each parish in which
riverboat gaming is authorized will vote on riverboat gaming; and (iii) Orleans
Parish will vote on the land-based casino in addition to riverboat gaming and
video poker. If a majority of the voters in a parish elect to prohibit one or
more of the above-described gaming activities in such parish, then no license or
permit shall be issued to conduct such prohibited gaming activity in such
parish. If, however, riverboat gaming was previously permitted in such parish,
the legislation permits the current gaming operator to continue riverboat gaming
in that parish until the expiration of its gaming license. Further, in parishes
where riverboat gaming is currently authorized and voters elect to prohibit
riverboat gaming, the legislation provides that the gaming license shall not be
reissued or transferred to any parish other than a parish in which riverboat
gaming has previously been authorized by the voters in a local option
referendum.
In the 1996 Special Session, legislation was also enacted placing a
constitutional amendment on the October 1996 election ballot. If the
constitutional amendment is approved by Louisiana voters in the October 1996
election, local option elections will be required before new forms of gaming can
be brought into a parish. The measure also requires a local option referendum
before a riverboat can move into a parish that has not already authorized
riverboat gaming.
<PAGE>
Nevada Gaming Regulation
The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act"); and (ii) various local ordinances
and regulations. Gaming operations in Nevada are subject to the licensing and
regulatory control of the Nevada Gaming Commission ("Nevada Commission"), the
Nevada State Gaming Control Board ("Nevada Board") and various other county and
city regulatory agencies, including the City of Mesquite, collectively referred
to as the "Nevada Gaming Authorities."
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) providing a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations.
The Company is registered with the Nevada Commission as a publicly
traded corporation (a "Registered Corporation") and has been found suitable to
own the stock of Players Holding, Inc., a registered intermediary company that
has been found suitable to own the stock of Players Nevada, Inc. ("Players
Nevada"), a wholly owned subsidiary of Players Holding, Inc. that owns and
operates Players Island Resort. Players Nevada is licensed by the Nevada Gaming
Authorities to conduct nonrestricted gaming operations at the Players Island
Resort and is a corporate licensee ("Corporate Licensee") under the terms of the
Nevada Act. No person may become a stockholder of, or receive any percentage of
profits from, a Corporate Licensee without first obtaining licenses and
approvals from the Nevada Gaming Authorities.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or Players
Nevada in order to determine whether such individual is suitable or should be
licensed as a business associate of a Corporate Licensee. Officers, directors
and certain key employees of Players Nevada are required to file applications
with the Nevada Gaming Authorities and have been 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 the
activities of the Corporate Licensee 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.
<PAGE>
If the Nevada Gaming Authorities were to find an officer, director or
key employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or Players Nevada, the companies involved would
have to sever all relationships with such person. In addition, the Nevada
Commission may require the Company or Players Nevada to terminate the employment
of any person who refuses to file appropriate applications. Determinations of
suitability or of questions pertaining to licensing are not subject to judicial
review in Nevada.
The Company and Players Nevada are required to submit detailed
financial and operating reports to the Nevada Commission. Substantially all
material loans, leases, sales of securities and similar financing transactions
by Players Nevada will be required to be reported to or approved by the Nevada
Commission.
If Players Nevada violates the Nevada Act 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, Players
Nevada 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
Players Island Resort and, under certain circumstances, earnings generated
during the supervisor's appointment (except for reasonable rental value of the
casino) could be forfeited to the State of Nevada. Limitation, conditioning or
suspension of the licenses of Players Nevada could (and revocation of any
license of Players Nevada would) materially adversely affect the Company.
Any beneficial holder of a Registered Corporation'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 Registered Corporation'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 a
Registered Corporation's voting securities to report the acquisition to the
Nevada Commission. The Nevada Act requires that beneficial owners of more than
10% of a Registered Corporation's voting securities apply to the Nevada
Commission for a finding of suitability within thirty days after the Chairman of
the Nevada Board mails the written notice requiring such filing. Under certain
circumstances, an "institutional investor," as defined in the Nevada Act, which
acquires more than 10%, but not more than 15%, of a Registered Corporation's
voting securities may apply to the Nevada Commission for a waiver of such
finding of suitability if such institutional investor holds the voting
securities for investment purposes only. An institutional investor shall not be
deemed to hold voting securities for investment purposes unless the voting
securities were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of directors
of the Registered Corporation, any change in the Registered Corporation's
corporate charter, bylaws, management, policies or operations of the Registered
Corporation, or any of its gaming affiliates, or any other action which the
Nevada Commission finds to be inconsistent with holding the Registered
Corporation's voting securities for investment purposes only. Activities which
are not deemed to be inconsistent with holding voting securities for investment
purposes only include: (i) voting on all matters voted on by stockholders; (ii)
making financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the
Nevada Commission may determine to be consistent with such investment intent. If
the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
<PAGE>
Any person who fails or refuses to apply for a finding of suitability
or a license within thirty 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 voting securities
of the Company beyond such period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company or Players
Nevada, it (i) pays that person any dividend or interest upon voting securities
of the Company, (ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or otherwise, or
(iv) fails to pursue all lawful efforts to require such unsuitable person to
relinquish his voting securities including, if necessary, the immediate purchase
of said voting securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation, such as the holders of the Notes, 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 the
unsuitable person any dividend, interest, or any distribution whatsoever; (ii)
recognizes any voting right by such unsuitable person in connection with such
securities; (iii) pays the unsuitable person remuneration in any form; or (iv)
makes any payment to the unsuitable person by pay 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 Company is
also required to render maximum assistance to the Nevada Board, upon its
request, to determine the identities of any of its security holders. The Nevada
Commission has the power to require the stock certificates of the Company to
bear a legend indicating that the securities are subject to the Nevada Act.
However, to date, the Nevada Commission has not imposed such a requirement on
the Company.
The Company may not make a public offering of its securities without
the prior approval of the Nevada Commission if the securities or proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Approval of a public offering does not constitute a finding,
recommendation or approval by the Nevada Commission or the Nevada Board as to
the accuracy or adequacy of the Prospectus or the investment merits of the
securities offered. Any representation to the contrary is unlawful.
<PAGE>
Changes in the control of a Registered Corporation 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 corporate 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 licensees 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 Registered Corporation 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 Registered
Corporation's stockholders for the purposes of acquiring control of the
Registered Corporation.
License fees and taxes, computed in various ways depending on the type
of gaming or activity involved, are payable to the state of Nevada and to the
counties and cities in which the Corporate Licensee's 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 up to a maximum of 6.25%; (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.
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 by the Nevada Board of their participation in such
foreign gaming. The revolving fund is subject to increase or decrease in the
discretion of the Nevada Commission. Thereafter, Licensees are required to
comply with certain reporting requirements imposed by the Nevada Act. Licensees
are also subject to disciplinary action by the Nevada Commission if they
knowingly violate any laws of the foreign jurisdiction pertaining to the foreign
gaming operation, fail to conduct the foreign gaming operation in accordance
with the standards of honesty and integrity required of Nevada gaming
operations, engage in activities that are harmful to the state of Nevada or its
ability to collect gaming taxes and fees, or employ a person in the foreign
operation who has been denied a license or finding of suitability in Nevada on
the ground of personal unsuitability.
<PAGE>
Missouri Gaming Regulation
In November 1992, the voters of Missouri approved a referendum
authorizing riverboat gaming in Missouri. In 1993, the Missouri Legislature
enacted legislation which substantially revised the referendum legislation
regarding riverboat gaming and its regulation (the "Missouri Gaming Act"). The
Missouri Gaming Act established the Missouri Gaming Commission, which has broad
jurisdiction over and supervisory powers concerning gaming operations conducted
under the Missouri Gaming Act. Following a challenge to legislation authorizing
riverboat casino gaming, a January 1994 Missouri Supreme Court ruling created
uncertainties regarding the extent to which casino gaming is constitutional in
Missouri. In February 1994, the Missouri legislature passed legislation which
would permit the voters to amend the State Constitution to permit legislation
reauthorizing riverboat casino gaming consistent with the State Constitution.
The vote on the proposed State Constitutional amendment was held in April 1994
to permit games of chance on riverboat casinos. In the April 1994 vote, the
State Constitutional amendment was narrowly defeated. As a result of the
Missouri legislature's actions in February 1994, several municipalities in
Missouri which had previously approved local ordinances permitting gaming,
including the City of Maryland Heights resubmitted the local gaming activities
ordinances to the voters in April 1994 as well. The Maryland Heights ordinance
was approved by municipal voters in the April 1994 vote. Subsequently, at the
statewide general election held November 8, 1994, a second proposal to amend the
Missouri Constitution to permit games of chance on riverboats and floating
facilities on the Missouri and Mississippi Rivers was adopted. As a result
thereof, effective December 8, 1994, reel slot machines and other games of
chance were authorized for use in Missouri casinos.
Under the Missouri Gaming Act, gaming is permitted in Missouri only on
the Missouri and Mississippi Rivers. The Missouri Gaming Act calls for licensure
of owners (Class A license), operators (Class B license), suppliers and
gaming-related occupations. There is no statewide numerical limit to the number
of licenses which may be granted. As a result of the Missouri legislature's May
1994 amendments to the Missouri Gaming Act, prior uncertainty regarding whether
any city or county outside of the two major metropolitan areas of Missouri (St.
Louis/St. Louis County and the Kansas City metropolitan area) may be granted
more than one license has been removed. Under the May 1994 amendments to the
Missouri Gaming Act, any city or county may be granted more than one license if
the "home dock" city or county has authorized more than one excursion gaming
boat. However, within all cities and counties in Missouri, the Missouri Gaming
Commission has the ultimate responsibility for setting the number, location and
type of licensed boats. As noted above, excursion gaming boats also must be
authorized by the local home dock city or county.
On May 12, 1995, the Company's amended application for a gaming license
at the Maryland Heights Project was filed with the Missouri Gaming Commission.
The Missouri Gaming Commission is considering licensing applications for review
in selected groups. On May 24, 1995, the Missouri Gaming Commission selected the
Company's and Harrah's applications for investigation. These investigations are
currently underway.
The Missouri Gaming Act provides a maximum loss limit of $500 per
individual player per gaming excursion. Gaming excursions are required by
regulation to be no less than two hours and no more than four hours in duration.
Excursion gaming boats are required to cruise, unless the Missouri Gaming
Commission determines under applicable criteria to permit gaming at a
continuously docked boat. Such criteria include, among other items, danger to
the boat's passengers because of the location of the dock or excursion cruising
conditions, disruption of interstate commerce, violation of another state's laws
or Federal law, or possible interference with railway or barge transportation.
On September 13, 1995, the Missouri Gaming Commission approved the application
by the Company and Harrah's to permit gaming on their continuously docked boats.
<PAGE>
Licensees must establish financial responsibility sufficient to meet
adequately the requirements of the proposed enterprise. Additionally, the
Missouri Gaming Commission's regulations require that if the Company's
application is granted, the Company's licensed subsidiary would be prohibited
from allowing withdrawals of capital by, or making loans, advances, or
distributions of any type of assets to its owner(s), in excess of 5% of such
entity's accumulated earnings without Missouri Gaming Commission approval.
The Missouri Gaming Act also requires that the excursion gaming boat
resemble historic Missouri riverboats, encourages use of Missouri resources,
goods and services in the operation of the boat, and requires that the boat
provide for nongaming areas, food service and a Missouri theme gift shop. Use of
the space on any vessel and operating criteria are determined in accordance with
rules and regulations of the U.S. Coast Guard. There is no size limit on
Missouri gaming boats and no minimum or maximum space prescribed for gaming
areas. On November 16, 1995 the Missouri Gaming Commission approved the design
of the Company's and Harrah's gaming boats.
The Missouri Gaming Act directly subjects the gaming enterprises to
various Missouri taxes. An admission fee of $2.00 per ticket per excursion must
be paid to the Missouri Gaming Commission. Licensees may charge any admission
fee above the $2.00 amount that they desire. Gaming enterprises in Missouri are
also subject to an "adjusted gross receipts tax" equal to 20 percent of the
gross receipts from licensed gaming games and devices less winnings paid to
wagerers. Owners/operators are subject to all other income taxes, sales taxes,
earnings taxes, use taxes, property taxes or any other tax or fee levied by
local, state or Federal governments.
Transfer of a Class A or Class B gaming license (the type of licenses
applied for in connection with the Maryland Heights application) is not
permitted without approval of the Missouri Gaming Commission, nor may such
interests be pledged as collateral to other than a regulated bank or savings and
loan association without the approval of the Missouri Gaming Commission. No
transfer of an interest of 5% or greater, directly or indirectly, in a publicly
traded company holding a Class A or Class B license shall occur without the
Missouri Gaming Commission's approval. Additionally, the Missouri Gaming
Commission may require a licensee to maintain cash or cash equivalents, in an
amount sufficient to protect patrons against defaults in gaming debts owed by
the licensee.
Application fees are based upon costs of investigation and approval of
licenses. The minimum nonrefundable application fee is $50,000. The initial
owner's Class A license granted and the first subsequent license renewal of an
excursion gaming boat operator is for a period of one year. Thereafter, license
renewal periods are every two years. The annual fee for licensure is $25,000.
Kentucky Gaming Regulation
The Company presently owns and operates Players Bluegrass Downs, a
thoroughbred race track located in Paducah, Kentucky. Pursuant to the Kentucky
statutes governing horse racing, the Kentucky Racing Commission (the "Racing
Commission") has plenary power to promulgate administrative regulations
prescribing conditions under which all legitimate horse racing and wagering
thereon is conducted. The Racing Commission issues race track licenses on an
annual basis and awards racing dates subsequent to an annual application
required to be filed with the Racing Commission. The Racing Commission may
revoke or suspend a license if the Racing Commission has reason to believe that
any provision of the Kentucky statutes, administrative regulations, or
conditions established by the Racing Commission, has not been satisfied.
<PAGE>
Proposed Texas Gaming Legislation
Since the original Players Lake Charles Riverboat began operating on
December 8, 1993, more than half of its patrons have come from Texas, with a
significant portion coming from the metropolitan Houston area. Although casino
gaming is not currently permitted in Texas, and the Attorney General of Texas
has issued an opinion that gaming in Texas would require an amendment to the
State's Constitution, the Texas legislature has considered various proposals to
authorize casino gaming and two bills related to gaming were presented in the
most recent legislative session that concluded on May 29, 1995. See
"Business--Lake Charles Operations." Additional bills may be introduced from
time to time whenever the legislature is in session. Since the Texas legislature
(which meets every two years in odd-numbered years) did not pass legislation to
amend the Texas State Constitution during the 1995 regular session, such
legislation will have to await the next regular session in 1997, or a special
session of the legislature. Special sessions can only be called by the Governor
for matters that were pending in the regular legislative session. Governor
George Bush has taken a public position against legalized casino gaming. A
constitutional amendment requires a two-thirds vote of those present and voting
in each house of the Texas state legislature and approval by the electorate at a
referendum.
U.S. Coast Guard
Each cruising riverboat also is regulated by the U.S. Coast Guard,
whose regulations affect boat design and stipulate on-board facilities,
equipment and personnel (including requirements that each vessel be operated by
a minimum complement of licensed personnel) in addition to restricting the
number of persons who can be aboard the boat at any one time. All vessels
operated by the Company must hold a Certificate of Inspection. Loss of the
Certificate of Inspection of a vessel would preclude its use as an operating
riverboat. The vessel must be dry-docked periodically for inspection of the
hull, which will result in a loss of service that can have an adverse effect on
the Company. For vessels of the Company's type, the inspection cycle is every
five years. Less stringent rules apply to permanently moored vessels such as the
dockside barges used by the Company. The Company believes that these
regulations, and the requirements of operating and managing cruising gaming
vessels generally, make it more difficult to conduct riverboat gaming than to
operate land-based casinos.
All shipboard employees of the Company employed on U.S. Coast Guard
regulated vessels, even those who have nothing to do with the actual operation
of the vessel, such as dealers, cocktail hostesses and security personnel, may
be subject to the Jones Act which, among other things, exempts those employees
from state limits on worker's compensation awards. The Company believes that it
has adequate insurance to cover employee claims.
Shipping Act of 1916
In order for the Company's vessels to have United States flag registry,
the Company must maintain "United States citizenship" as defined in the Shipping
Act of 1916, as amended (the "Shipping Act"), and other applicable statutes. A
corporation operating any vessel in the coastwise trade, such as the Company, is
not considered a United States citizen unless, among other things, United States
citizens own 75% of its outstanding capital stock.
<PAGE>
Company Repurchase Rights with Respect to Company Securities
As noted above, there are various state and Federal regulations on the
ownership of the Company's Common Stock. The Company's Articles of Incorporation
provide that if any governmental commission, regulatory authority, entity,
agency or instrumentality (collectively, an "Authority") having jurisdiction
over the Company or any affiliate of the Company or that has granted a license,
certificate of authority, franchise or similar approval (collectively, a
"License") to the Company or any affiliate of the Company orders or requires any
stockholder to divest any or all of the shares of Common Stock (or options,
convertible securities or warrants to purchase Common Stock, collectively,
together with Common Stock ("Securities")) owned by such stockholder (a
"Divestiture Order") and the stockholder fails to do so by the date required by
the Divestiture Order (unless the Divestiture Order is stayed), the Company will
have the right to acquire the securities from the stockholder that the
stockholder failed to divest as required by such Divestiture Order. If, after
reasonable notice and an opportunity for affected parties to be heard, any
Authority determines that continued ownership of the Company's Securities by any
stockholder shall be grounds for the revocation, cancellation, non-renewal,
restriction or withholding of any License granted to or applied for by the
Company or any affiliate of the Company, or shall be grounds for limiting the
activities of such entity, such stockholder shall divest the Securities that
provide the basis for such determination, and if such stockholder fails to
divest Securities within 10 days after the date the Authority's determination
becomes effective (unless the determination is stayed), the Company shall have
the right to acquire such Securities from the stockholder. If the Company
determines that persons who are not citizens of the United States as determined
under the Shipping Act or other applicable statutes (the "Foreign Citizens") own
more than 25% of the Company's outstanding Common Stock, the Company may require
the Foreign Citizen(s) who most recently acquired the shares that bring total
Foreign Citizen ownership to more than 25% of the outstanding Common Stock (the
"Excess Shares") to divest the Excess Shares to persons who are United States
citizens. If the Foreign Citizen(s) so directed fail to divest the Excess Shares
to United States citizens within 30 days after the date on which the Company
gives a written notice to the Foreign Citizen(s) to divest the Excess Shares,
the Company shall have the right to acquire the shares that the Foreign
Citizen(s) failed to divest as required by the Company's notice.
Whenever the Company has the right to acquire securities from a
stockholder pursuant to the provisions described in the preceding paragraph, the
Company will pay the stockholder $.10 per share or such higher price as may be
required by applicable legal requirements. Some state gaming regulations require
a purchase price equal to the fair market value of the securities under certain
circumstances described above. If there is no other applicable legal
requirement, any amount payable to the stockholder in excess of $.10 per share
will be paid in five equal annual installments with interest at the lower of the
prime rate or the LIBOR rate, as published from time to time in the Wall Street
Journal.
When any Divestiture Order is entered or when the Company tenders the
consideration for which it may acquire shares, as described above, the shares in
question shall no longer be entitled to any voting, dividend or other rights
until such time as they have been appropriately divested. The foregoing
provisions of the Company's Articles of Incorporation relating to required
divestiture are in addition to, and not in replacement of, any applicable legal
requirements.
<PAGE>
The terms of the Company's Senior Notes feature certain analogous
provisions which could give rise to the obligation of the holder to sell such
Senior Notes or the right of the Company to repurchase the Senior Notes at a
price equal to the lower of the holder's cost, the principal amount or the then
current market prices.
Paid Advertising and Marketing
The Federal Communications Commission prohibits broadcasters from
accepting advertising that actively promotes gaming, although the FCC does not
ban all advertising for casinos. Federal regulation also restricts the
circulation of certain materials related to gaming through the United States
mail.
Discouragement of Share Accumulations
Various state limits requiring approvals of shareholdings over certain
thresholds may discourage accumulations over such limits and therefore may
discourage changes in control of the Company,(see "Gaming Regulations.") The
Federal laws referred to above may also discourage ownership by stockholders who
are not citizens of the United States.
Forward-Looking Information
Certain information included in this Annual Report on Form 10-K
contains, and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contain or will contain or include, forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. Such forward-looking
statements address, among other things, the effects of competition, plans for
projects currently under development, plans for future expansion and property
enhancements, business development activities, capital expenditure programs and
requirements, financing sources and the effects of regulation (including gaming
licensure and regulation, state and local regulation and tax regulation). Such
forward-looking information is based upon management's current plans or
expectations and is subject to a number of uncertainties and risks that could
significantly affect current plans, anticipated actions and the Company's future
financial condition and results. As a consequence, current plans, anticipated
actions and future financial condition and results may differ from those
expressed in any forward-looking statements made by or on behalf of the Company.
These uncertainties and risks include, but are not limited to, those relating to
conducting operations in an increasingly competitive environment, conducting
operations at a newly or recently developed site or in a jurisdiction for which
gaming has recently been permitted, changes in gaming, state and local laws and
regulations (including local referenda to terminate the authority to conduct
gaming operations), development and construction activities, leverage and debt
service requirements (including sensitivity to fluctuation in interest rates),
general economic conditions, changes in federal or state tax laws, action taken
under applications for licenses (including renewals) and approvals under
applicable laws and regulations (including gaming laws and regulations) and the
legalization of gaming in certain jurisdictions.
<PAGE>
Item 2. Properties
Metropolis, Illinois: The Company leases its docking facilities in
Metropolis, which cover 1,810 linear feet of riverfront, from the City of
Metropolis pursuant to a 20-year lease with a 20-year renewal option at an
annual rent of approximately $7,000. Under a separate 20 year lease with the
City of Metropolis, the Company leases additional riverfront property
immediately adjacent to its docking facilities for surface parking at an annual
rate of $2,500. The Company also owns several parcels of land in Metropolis,
some with buildings, aggregating approximately eight acres, and leases an
additional two acres. The owned or leased area is used primarily for free
customer parking or as office space. Some of the land is being held for
development, and some of the current parking area may be developed, in which
event the Company believes suitable replacement parking space could be obtained.
The Ohio River occasionally overflows its banks at Metropolis, most
often during late winter and early spring. Such flooding may cover a portion of
the Company's closest parking location, although the Company believes that it
will still have adequate available parking within reasonable walking distance of
its landing during typical flooding periods. If flooding is especially severe,
it may be impractical for passengers to board the riverboat at its normal dock
site. The Company has developed an emergency plan that would permit gaming
activities to continue in such circumstances. Any use of an alternate landing
because of flooding may result in some loss of service.
Lake Charles, Louisiana: On August 16, 1995, the Company entered into
an agreement (the "Beeber Agreement") with The Beeber Corporation ("Beeber") to
purchase Players Hotel and approximately 15 acres of real estate comprising the
landside facility for the Players III Riverboat and the Lake Charles Star
Riverboat (collectively, the "Property"). Under this arrangement, the Company
agreed to pay a total purchase price of $6.7 million for the Property. At
closing, the $6.7 million purchase price was paid by the Company as follows: (i)
by the Company becoming obligated to discharge a promissory note payable in
January 1996 exclusively through delivery of 507,382 shares of Common Stock
(i.e., $6.18 million in Common Stock at $12.17 per share value as set forth in
the Beeber Agreement), (ii) by the Company paying $300,000 in satisfaction of
the outstanding first mortgage on the Property and (iii) by the Company paying
$200,000 into escrow to satisfy any applicable liens, adjustments and charges,
with any remaining amounts payable to Beeber after satisfaction of such escrow
items. On January 15, 1996, Beeber delivered notice to the Company of its desire
to exercise Beeber's Put Right with respect to 200,000 shares of Common Stock
(i.e., $2.44 million in Common Stock at the $12.17 per share value set forth in
the Beeber Agreement). The Company delivered these funds to Beeber on or about
April 10, 1996. In January of 1996, Players and Beeber determined to delay the
payment of the balance of Beeber's Common Stock (i.e., 307,382 shares) pending
the resolution of certain issues. Currently, the parties contemplate the
issuance of the remaining 307,382 shares of Common Stock in January 1997. As
additional consideration, the Company is required to continue making certain
payments to Beeber and a third party, which payments are related to a lease
agreement dated May 19, 1993 between the Company and Beeber, as amended (the
"Lake Charles Lease"). Under this arrangement, the Company and such parties have
entered into an agreement, dated July 27, 1995, whereby the Company is obligated
to pay a total of $2.95 for each passenger who patronizes the Company's Lake
Charles riverboats, subject to certain conditions.
The Company has entered into a long-term lease with the State of
Louisiana in order to obtain whatever rights the State of Louisiana may have in
a strip of lakefront land adjacent to and abutting the Property, which was
previously under water, and may be subject, under certain circumstances, to a
claim of ownership by the State of Louisiana by virtue of certain riparian
claims (the "Lakefront Strip"). The Company has entered into another long-term
lease with the State of Louisiana for certain waterbottoms (i.e., riparian
rights) adjoining the Lakefront Strip and underlying the Island.
<PAGE>
Mesquite, Nevada: The Company owns the 45 acre parcel of real property
that currently constitutes the Players Island Resort. The property was purchased
in June of 1994 from Gem Mesquite, Ltd. ("Gem Mesquite"), at which time the
Company also acquired from Gem Gaming, Inc. ("Gem Gaming") an affiliate of Gem
Mesquite, an option to purchase all or part of an adjacent 90 acre parcel (the
"90 Acre Mesquite Option").
In June 1995, the Company acquired an additional 17 acres of adjoining
property under the terms of the 90 Acre Mesquite Option (the "17 acre Parcel")
at which time (i) the option for the remaining 73 acres of the subject property
(the "73 Acre Parcel") was terminated, (ii) the 73 Acre Parcel was subjected to
a ten (10) year restriction against casino development or use and (iii) rights
were granted to the owner of the 73 Acre Parcel to, under certain circumstances,
(A) participate (for up to a 40% equity interest) in a joint venture with the
Company or its affiliates, in any development of the 17 Acre Parcel by the
Company or its affiliates, (B) acquire the 17 Acre Parcel for an amount equal to
the Company's original purchase price, plus interest on such price at a rate of
8% per annum, if the Company, or its affiliates, fails to commence the
development of such property within five (5) years of the date of purchase (in
which the 17 Acre Parcel would be subject to a five (5) year restriction against
casino-related development or use), and (C) so long as the Company has not yet
commenced development of the 17 Acre Parcel, to require the Company to
contribute the 17 Acre Parcel and participate as a joint venture party in the
development of the entire 90 acre property by the owner of the 73 Acre Parcel,
subject to the Company's reasonable consent, and with percentage interests based
on fair market valuation of the relative contributions to the joint venture.
The Company has also leased additional land adjacent to the Players
Island Resort, together with irrigation water rights for such land, on which the
Company is developing an 18-hole golf course, upon which the landlord has
retained rights to develop a golf community housing development. The lease of
the golf course property and related irrigation rights provides for a term of 99
years at a starting annual rent of $216,000, subject to increase every five
years based on the consumer price index.
Maryland Heights, Missouri: On November 2, 1995, the Company finalized
its agreement with Harrah's to form a joint venture and co-develop the Maryland
Heights Complex on approximately a 215 acre site in Maryland Heights, Missouri.
An affiliate of Harrah's owns the property underlying the Maryland Heights
Complex. Each of the Company and Harrah's have an eighty (80) year lease with
the Harrah's affiliate for the property underlying their respective casinos. The
leases for the Company and Harrah's are substantially identical, except that the
Company pays rent and Harrah's does not. The Company's rent consists of a
percentage rent equal to the following specified percentages multiplied by the
relevant specified incremental levels of annual net gaming revenues earned at
the Company's Maryland Heights Complex: 2% times annual net gaming revenue
between zero and $50 million, 3% times annual net gaming revenue between $50
million and $100 million, and 4% times annual net gaming revenue in excess of
$100 million.
Pursuant to a separate Management Agreement, a Harrah's affiliate will
manage the Entertainment Facility, which includes the entire Maryland Heights
Complex except for the Company's and Harrah's casinos and the specialty
restaurants. The Management Agreement has a basic term that expires on December
31, 2005, with fourteen five (5) year renewal options. The Management Agreement
provides for the following fees: a Base Management Fee equal to 3% of the Hotel
Revenues; an Incentive Management Fee which is the greater of 1% of the Hotel
Revenues, or 50% of operating cost savings; an Accounting Fee of $130,000 per
year, increased each year by the amount the consumer price index ("CPI")
increases; and a Reservation Fee of $2.50 per guest room reservation at the
hotel made through the telephone reservation system of an affiliate of Harrah's,
which fee is increased each year by the amount the CPI increases, but not more
than the prevailing charge to other participating Harrah's affiliated hotels.
<PAGE>
Bluegrass Downs, Kentucky: In November 1993, the Company acquired
Bluegrass Downs racetrack (currently known as Players Bluegrass Downs), located
in Paducah, Kentucky, in anticipation that the Kentucky legislature would enact
legislation to authorize casino-type gaming, such as slot machines and table
games, at licensed racetracks. If any legislation is adopted permitting
additional forms of gaming at racetracks, the Company currently plans to develop
its track into a facility that would offer all permitted forms of gaming. There
can be no assurance that such legislation will be adopted. The racetrack is
approximately ten miles from the Company's Metropolis docking site. The next
closest Kentucky racetrack to Metropolis is Ellis Park, which is approximately
100 miles from each of Paducah and Metropolis. Bluegrass Downs is on a 70 acre
tract that includes a 5/8 mile oval racetrack, an enclosed 17,000 square foot
clubhouse housing dining and wagering facilities, administrative areas, barns
and related buildings that can accommodate 725 horses, and a parking area for
more than 1,400 cars.
License with Merv Griffin and The Griffin Group
The Company is a party to a license (the "Griffin License") with The
Griffin Group, which is a company controlled by Mr. Merv Griffin, a major
stockholder of the Company, under which Mr. Griffin acts as the public
representative for all of the Company's riverboat and dockside casinos. In
addition, Mr. Griffin provides other services, principally of a promotional
nature. This relationship with Mr. Griffin is designed to develop, on the
Company's behalf, a high profile in new markets and access to national media.
The Company features Mr. Griffin in print, radio and television advertisements.
The Company's right to Mr. Griffin's services are exclusive in the riverboat and
dockside casino industry, except that Mr. Griffin has the right to represent
casinos of Griffin Gaming & Entertainment, Inc. a publicly traded company
("GG&E"). GG&E currently has only one land-based casino in Atlantic City, New
Jersey, although GG&E is believed to be examining the possibility of developing
riverboat and other land-based casinos at one or more locations. In
consideration of Mr. Griffin's services under the Griffin License, the Company,
in 1992, issued to The Griffin Group a warrant to purchase 2.1 million shares of
Common Stock an exercise price of $2.67 per share (on a split-adjusted basis).
The warrant currently is outstanding and has not been exercised. In addition,
the Griffin License requires the Company to pay annual fees to The Griffin Group
for each riverboat casino complex equal to the greater of (i) $50,000 or (ii) an
amount based upon a percentage of the respective casino's earnings per fiscal
year before depreciation, interest and taxes ("EBDIT") for the year.
The Griffin License has an initial four-year term expiring December 31,
1996; provided, however, the fee payable under clauses (i) or (ii) is not
payable with respect to the Metropolis Complex and the Company's original
riverboat at the Lake Charles Complex through December 31, 1996. The EBDIT fee
payable to The Griffin Group is payable in the following cumulative amounts: to
the extent that EBDIT per complex is $15 million or less, the payment is
two-thirds of 1% of EBDIT (against which any minimum $50,000 payment for the
particular riverboat will be credited); to the extent that EBDIT per complex is
more than $15 million but not more than $30 million, the additional payment is
1% of EBDIT in excess of $15 million; and to the extent that EBDIT per complex
is more than $30 million, the additional payments will be 1 1/2% of EBDIT in
excess of $30 million. The Griffin Group also is entitled to reimbursement of
certain expenses and indemnification against certain claims. Mr. Griffin will be
entitled to additional compensation, as negotiated in good faith, if he hosts,
produces or performs in any shows at a Company casino.
<PAGE>
Subsequent to the end of fiscal year 1996, the Company and The Griffin
Group entered into an agreement to modify the Griffin License to reflect the
extension of its terms to the Company's second riverboat casino in Lake Charles
and its land-based casino in Mesquite effective as of the opening of each
facility. The EBDIT fees that would have been payable with respect to these two
additional facilities were replaced with one lump-sum payment for Mr. Griffin's
services at these facilities through the period ending December 31, 1996. The
parties will mutually determine prior to that date whether, and if so, on what
terms, the Griffin License will be extended beyond December 31, 1996.
The Company and Griffin Entertainment, Inc., an affiliate of The
Griffin Group, entered into a contract, dated July 18, 1995 for the production
of theater shows at the Players Island Resort. Under the contract which expired
on March 7, 1996, the Company paid an aggregate of $396,000 to Griffin
Entertainment, Inc.
Item 3. Legal Proceedings
Transam, Ltd. d/b/a/ Two Bunch Palms Resort & Spa v. Players International,
Inc., et al.
On or about November 21, 1995, Transam, Ltd., a Delaware Corporation,
d/b/a/ Two Bunch Palms Resort & Spa ("Two Bunch Palms") filed an action in the
United States District Court, Central District of California, against the
Company, a subsidiary of the Company, certain principals of the Company, and
certain other defendants alleging various causes of action arising out of an
agreement for services entered into by the Company with Gerald Greenbach and
Creative Hospitality Management. Mr. Greenbach, at the time the Agreement was
executed by the Company, was an executive of Two Bunch Palms. Mr. Greenbach both
individually and through Creative Hospitality Management agreed to provide the
Company with a variety of consulting services with respect to the operation and
marketing of the Company's spa facilities at Players Island Resort in Mesquite,
Nevada. Two Bunch Palms alleges that the Company and/or Mr. Greenbach and
Creative Hospitality Management engaged in copyright infringement, trade dress
infringement, unfair competition, false advertising, misappropriation of trade
secrets, unfair competition as well as certain related allegations with respect
to the services provided by Mr. Greenbach and Creative Hospitality Management to
the Company. The Company has denied all of these allegations and intends to
continue to defend this matter vigorously.
Poulos and Ahern Litigation
The Company, certain suppliers and distributors of video poker and electronic
slot machines and over forty other casino operators have been named as
defendants in a class action suit filed April 26, 1994 in the United States
District Court, Middle District of Florida, by William Ahern and William H.
Poulos. The plaintiffs allege common law fraud and deceit, mail fraud, wire
fraud and Racketeer Influenced and Corrupt Organizations Act violations in the
marketing and operation of video poker games and electronic slot machines. The
suit seeks unspecified damages and recovery of attorney's fees and costs. On
December 9, 1994, an Order was entered by the District Court in Florida
transferring the consolidated action to the United States District Court for the
District of Nevada. The defendants filed various motions seeking dismissal of
the action. On April 17, 1996, the Court dismissed plaintiffs' Complaint without
prejudice for failure to plead their claims with specificity and dismissed
defendants' remaining substantive motions as moot. The Court permitted
plaintiffs until May 31, 1996 to file an Amended Complaint, within which time an
Amended Complaint was filed. Accordingly, the Company intends to refile its
substantive motions for dismissal of the Amended Complaint. The Company believes
that the claims are wholly without merit and does not expect that the lawsuit
will have a material adverse effect on the Company's financial position or
results of operations.
<PAGE>
Schreier v. Players International, Inc., et al.
On or about October 27, 1995 the Company was served with a purported
class action in the United States District Court for the District of Nevada
which is essentially identical to the Poulos and Ahearn litigation, except for
certain variations in the definition of the purported class. The Company has
filed motions to dismiss the Complaint, which are substantively similar to those
previously filed (LAMBDA) in the Poulos and Ahearn matter.
Hyland v. Players International, Inc., et al.
This purported class action was filed on May 5, 1995 in the United
States District Court, District of New Jersey seeking damages for violation of
the Sherman Anti-Trust Act, the Federal Fair Credit Reporting Act and various
State law causes of action arising out of an alleged conspiracy on the part of
the casino industry to prohibit card counters from playing blackjack. The
Complaint names 88 defendants consisting of virtually every casino operating in
the North American continent. On October 25, 1995, the Company successfully
obtained a voluntary dismissal without prejudice of the plaintiff's Complaint on
the ground that the plaintiff had failed to name the proper corporate entities.
On May 30, 1996, the Court granted defendants' motion to dismiss plaintiff's
Complaint with prejudice. The time in which plaintiff may seek appellate review
has not yet expired.
Item 4. Submission of Matters to a Vote of Stockholders; Directors and
Executive Directors of the Company
During the fourth quarter ended March 31, 1996, no matter was submitted
to a vote of the Company's stockholders. The directors and executive officers of
the Company are as follows:
<TABLE>
<CAPTION>
Director
Name Age Since Present Position With the Company
---- --- -------- ---------------------------------
<S> <C> <C> <C>
Edward Fishman 53 1985 Chairman of the Board of Directors
David Fishman 48 1985 Vice Chairman of the Board of Directors
Howard Goldberg 51 1986 President, Chief Executive Officer and Director
Thomas E. Gallagher 51 1992 Director
Marshall S. Geller 57 1989 Director
Lee Seidler 61 1987 Director
Steven P. Perskie 51 1994 Executive Vice President, General Counsel and Director
Peter J. Aranow 50 -- Executive Vice President, Treasurer and Secretary
Henry M. Applegate 49 -- Senior Vice President and Chief Financial Officer
</TABLE>
<PAGE>
Edward Fishman has served as Chairman of the Board of the Company since
1985. Mr. Edward Fishman served as Chief Executive Officer from 1985 until
December, 1995 and served as President during May 1993. His principal activities
for the Company relate to marketing, long-range development and strategic
planning. He has 18 years of marketing experience in the casino industry and he
has served as a marketing and strategic planning consultant to casinos
throughout the world.
David Fishman has served as the Company's Vice Chairman of the Board
since 1985 and he served as Secretary from 1985 until May 1993. His principal
activities for the Company relate to overall supervision of the design and
development of projects.
Howard Goldberg became President and Chief Operating Officer of the
Company in May 1993, and then became Chief Executive Officer in December 1995.
Mr. Goldberg's duties relate principally to overall supervision of the
day-to-day business and affairs of the Company as well as long range development
and strategic planning. Prior to joining the Company, he was the managing
shareholder practicing law in the Atlantic City, New Jersey law firm of Horn,
Goldberg, Gorny, Daniels, Plackter, Weiss & Casiello ("Horn, Goldberg"), which
is outside general counsel to the Company and has represented the Company since
its inception. Since the advent of casino gaming in Atlantic City, Mr. Goldberg
specialized in representing casinos in New Jersey and other jurisdictions for
development and regulatory matters. Mr. Goldberg's name remains a part of the
firm name of Horn, Goldberg, but he does not currently engage in any
firm-related activities or matters. The amount of any payments due to him from
the firm is not affected by or dependent upon fees paid by the Company to the
firm.
Thomas E. Gallagher has been President and Chief Executive Officer of
The Griffin Group since April 1992. Since November 1, 1993, he has served as a
director, and since May 1995, he has served as President and Chief Executive
Officer of Griffin Gaming & Entertainment, Inc. (formerly Resorts International
Inc.). For the preceding 15 years, he was a partner in the law firm of Gibson,
Dunn & Crutcher.
Marshall S. Geller is the Chairman, Chief Executive Officer and
founding partner of Geller & Friend Capital Partners, Inc. a merchant banking
investment company. He was formerly interim President and Chief Operating
Officer of the Company and now serves as the Chairman of the Compensation
Committee. From 1991 through 1995, Mr. Geller was the Senior Managing Partner
and founder of Golenberg & Geller, Inc., a merchant banking investment company.
Mr. Geller served as Vice Chairman of Gruntal & Co. Inc., an investment banking
firm, from 1988 to 1990. From 1967 until 1988, he was a Senior Managing Director
of Bear Stearns & Co. Inc., an investment banking firm ("Bear Stearns"). He was
formerly the interim Co-Chairman of Hexcel Corporation and is still on the Board
of Directors. Mr. Geller is a director of Value Vision International, Inc. and
serves as Chairman of their Investment Committee. He also serves on the Boards
of Ballantyne of Omaha, Inc., Syles-on-Video, Inc. and Dycam, Inc.
<PAGE>
Lee Seidler is a private investor. He is affiliated with Bear Stearns
as Managing Director Emeritus. From 1981 to 1989, he was a Senior Managing
Director of Bear Stearns. He is a director of Synthetic Industries, Inc., The
Shubert Organization, Inc. and The Shubert Foundation.
Steven P. Perskie joined the Company's Board of Directors and became a
Vice President and its General Counsel in May 1994 and became Executive Vice
President in March 1995. His responsibilities include the supervision of the
Company's legal affairs and the development of opportunities for the Company in
new and emerging gaming jurisdictions and strategic planning. From 1990 to May
1994, he served as Chairman of the New Jersey Casino Control Commission (the
"NJCCC"). Prior to joining the NJCCC, he served from January to October 1990 as
Chief of Staff to Governor Jim Florio of the State of New Jersey. For seven
years prior to October 1989, he was a judge of the Superior Court in the State
of New Jersey. He also served from 1971 through 1982 in the New Jersey
Legislature, first as a member of the General Assembly and then as a member of
the Senate. As a state legislator, he was the author and principal sponsor of
the New Jersey Casino Control Act in 1977.
Peter J. Aranow joined the Company as an Executive Vice President in
May 1993, Secretary in May, 1993 and Treasurer in March, 1996. Mr. Aranow served
as Chief Financial Officer from May 1993 until March 1996. From 1977 to May
1993, he was a Senior Managing Director in the investment banking department of
Bear Stearns specializing in the gaming industry.
Henry M. Applegate joined the Company as Senior Vice President and
Chief Financial Officer in March 1996. Mr. Applegate previously served as Senior
Vice President and Controller of Mirage Resorts, Inc. from September 1992 until
January 1996. From January 1990 until August 1992, Mr. Applegate served as
Senior Vice President and Chief Operating Officer of Bally's Casino Resort in
Reno, Nevada.
Edward and David Fishman are brothers. Howard Goldberg and Lee Seidler
are brothers-in-law.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "PLAY". The following table sets forth the high and low closing
sale prices of the Company's Common Stock, as reported by the Nasdaq National
Market, during the periods indicated.
High Low
---- ---
Fiscal 1995
First Quarter 15-1/12 10
Second Quarter 16-1/6 9-7/12
Third Quarter 16-11/12 11-5/6
Fourth Quarter 18-11/12 12-1/6
Fiscal 1996
First Quarter 22-2/3 18-1/4
Second Quarter 22-1/4 13-1/8
Third Quarter 14-3/8 10-3/4
Fourth Quarter 11-1/4 8-13/16
Fiscal 1997
First Quarter
(through June 21, 1996) 12-1/8 9-1/8
The last reported sales price of the Common Stock on the Nasdaq
National Market on June 21, 1996 was 10-1/8 per share. There were approximately
525 holders of record of the Company's Common Stock as of June 21, 1996.
On April 26, 1995, the Company declared a 3-for-2 Common Stock split,
which was paid on May 19, 1995 to stockholders of record as of the close of
business on May 8, 1995. The above information has been adjusted to reflect the
3-for-2 split.
The Company has never declared or paid cash dividends on its Common
Stock. Under the terms of the covenants of its Senior Notes and its Credit Line,
the Company cannot pay cash dividends to the holders of its Common Stock. The
Company presently intends to retain earnings to finance the operation and
expansion of its business.
<PAGE>
Item 6. Selected Consolidated Financial Data
Selected consolidated financial data for the years ended March 31,
1994, 1995 and 1996 is presented below.
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C>
Operations Data:
Total revenues $107,082 $223,695 $291,395
Income before cumulative effect of change in
accounting principle $ 17,452 $ 45,755 $ 22,320
Cumulative effect of change in accounting principle $ 3,500 $ -- $ --
Net income $ 20,952 $ 45,755 $ 22,320
Earnings per Common Share Assuming Full Dilution:
Income before cumulative effect of change in
accounting principle $ .60 $ 1.45 $ .70
Cumulative effect of change in accounting principle $ .12 $ -- $ --
Net income $ .72 $ 1.45 $ .70
Balance Sheet Data:
Cash, cash equivalents and marketable securities, net $ 77,546 $ 50,332 $ 23,247
Total assets $138,565 $223,790 $413,432
Long term debt, including current portion $ 5,865 $ 8,907 $153,000
Total stockholders' equity $115,844 $176,143 $193,627
</TABLE>
Selected Quarterly Financial Information (Unaudited)
Set forth below is selected financial information for the last eight
fiscal quarters. In management's opinion, the results include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the information for the periods presented when read in conjunction with the
historical Consolidated Financial Statements and notes thereto contained
elsewhere herein.
<PAGE>
Results of operations are somewhat seasonal in nature with relatively
greater revenues and net income earned in the second and third quarters of each
fiscal year as compared to the first and fourth quarters of each fiscal year.
Results of operations for any fiscal quarter are not necessarily indicative of
results for any future period.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Fiscal 1995
Net gaming revenues:
Lake Charles, Louisiana $ 27,418 $ 35,262 $ 37,262 $ 36,143 $136,085
Metropolis, Illinois $ 17,279 $ 19,827 $ 18,184 $ 19,567 $ 74,857
Total revenues $ 48,326 $ 58,858 $ 58,665 $ 57,846 $223,695
Adjusted EBITDA (1) $ 17,509 $ 22,829 $ 19,713 $ 20,529 $ 80,580
Income before other income (expenses)
and provision for income taxes $ 15,745 $ 20,907 $ 17,190 $ 16,707 $ 70,549
Net income $ 10,441 $ 13,310 $ 11,575 $ 10,429 $ 45,755
Earnings per common and common
equivalent share $ .34 $ .43 $ .37 $ .33 $ 1.47
Earnings per common share-assuming
full dilution $ .34 $ .42 $ .37 $ .32 $ 1.45
Fiscal 1996
Net gaming revenues:
Lake Charles, Louisiana $ 43,448 $ 44,869 $ 39,946 $ 42,414 $170,677
Metropolis, Illinois $ 19,596 $ 23,367 $ 21,079 $ 18,149 $ 82,191
Mesquite, Nevada $ 66 $ 5,507 $ 5,369 $ 5,928 $ 16,870
Total revenues $ 65,612 $ 80,296 $ 72,726 $ 72,761 $291,395
Adjusted EBITDA (1) $ 17,582 $ 19,461 $ 13,058 $ 11,005 $ 61,106
Income before other income (expenses)
and provision for income taxes $ 14,105 $ 13,681 $ 8,153 $ 7,932 $ 43,871
Net income $ 8,018 $ 7,229 $ 3,312 $ 3,761 $ 22,320
Earnings per common and common
equivalent share $ .25 $ .22 $ .10 $ .13 $ .70
Earnings per common share-assuming
full dilution $ .25 $ .22 $ .10 $ .13 $ .70
</TABLE>
(1) Represents earnings from continuing operations before interest income
(expense), provisions for income taxes, depreciation and amortization,
pre-opening expenses and other income. Adjusted EBITDA is not intended to
represent cash flows for any of the quarterly periods, nor has it been presented
as an alternative to income from continuing operations as an indicator of
operating performance and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles. EBITDA-based information is presented solely as
supplemental disclosure because EBITDA is frequently used to analyze companies
on the basis of operating performance, leverage and liquidity.
<PAGE>
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Overview
The Company, a developer and operator of gaming facilities, owns and
operates a riverboat casino in Metropolis, Illinois ("Metropolis") and two
riverboat casinos in Lake Charles, Louisiana, ("Lake Charles") the Players
Riverboat Casino and the Lake Charles Star Riverboat casino, which opened on
April 27, 1995. Players Island Resort, a land based casino complex, ("Mesquite")
opened on June 29, 1995, in Mesquite, Nevada. The Company, through a joint
venture, is co-developing a riverboat casino entertainment complex in Maryland
Heights, Missouri ("Maryland Heights"), which is targeted to open in early 1997.
The Company also operates a thoroughbred racetrack ("Bluegrass Downs") in
Paducah, Kentucky.
Results of Operations
The following sets forth certain historical information on the
consolidated operations of the Company for the years ended March 31, 1994, 1995
and 1996.
SELECTED OPERATING DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
1994 1995 1996 Increase/(Decrease)
----------- ---------- ---------- -------------------------
95 vs. 94 96 vs. 95
------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 107,082 $ 223,695 $ 291,395 108.9% 30.3%
Income before other income (expense) and
provision for income taxes 26,888 70,549 43,871 162.4% (37.8%)
Income before cumulative change in accounting
principle 17,452 45,755 22,320 162.2% (51.2%)
Net income 20,952 45,755 22,320 118.4% (51.2%)
Earnings per common share, assuming full dilution .72 1.45 .70 101.4% (51.7%)
Operating margin 25.1% 31.5% 15.1% 6.4 pts (16.4) pts
</TABLE>
Revenues in fiscal 1994 were derived from the Company's Metropolis
riverboat casino which opened in February 1993 and its first Lake Charles
riverboat which opened in December 1993. Fiscal 1995 represents a complete year
of operations for the Company's Metropolis riverboat casino and its Players Lake
Charles riverboat casino. The continued growth in revenues for fiscal 1996
reflects the opening of a second riverboat casino in Lake Charles in April 1995
and of the Company's land based casino facility in Mesquite, Nevada in June
1995. Net income, earnings per share and operating margins increased from fiscal
1994 to fiscal 1995 reflecting a full year of operations for the Lake Charles
facility and limited competition in the Metropolis and Lake Charles markets.
Fiscal 1996 saw a decrease in net income, earnings per share and operating
margins as the Company experienced increased competition from other casino
facilities in the Metropolis and Lake Charles markets along with operating
losses at its Mesquite facility due to insufficient growth in gaming revenues in
its initial nine months of operation. Operating results were further impacted by
higher depreciation and amortization expense associated with the Company's
capital expenditures in Mesquite and Lake Charles and increased interest expense
related to the issuance of $150 million of 10-7/8% Senior Notes in April 1995.
<PAGE>
The following tables summarize operating results at each of the
Company's casino facilities. Operating income, as used herein, is defined as
income before pre-opening expenses, other income (expenses) and provision for
income taxes.
Metropolis
(in thousands, except for win data)
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------------------------------------------------
1994 1995 1996 Increase/(Decrease)
----------- ---------- ---------- -------------------------
95 vs. 94 96 vs. 95
------------- -----------
<S> <C> <C> <C> <C> <C>
Casino revenues $65,136 $74,857 $82,191 14.9% 9.8%
Total revenues 71,417 79,102 85,902 10.8% 8.6%
Operating income 25,795 29,260 29,139 13.4% (.4%)
Operating margin 36.1% 37.0% 33.9% .9 pts (3.1) pts
Average daily win/slot machine $ 182 $ 203 $ 206 11.5% 1.5%
Average daily win/table game $ 1,674 $ 1,749 $ 1,588 4.5% (9.2)%
</TABLE>
Casino revenues and total revenues increased in fiscal 1996 as compared
to fiscal 1995 reflecting the continued success of the facility's marketing
programs and replacement of the Players I riverboat with the larger Players II
riverboat, which was moved from Lake Charles in November 1995. The property's
operating margin for fiscal 1996 decreased compared to fiscal 1995 primarily
because of increased expenditures for advertising, marketing and promotions as a
result of programs implemented to offset competition from a riverboat casino
which opened in Evansville, Indiana in December 1995.
Casino revenues and total revenues increased in fiscal 1995 as compared
to fiscal 1994 as a result of the property's marketing programs. For fiscal
1995, the property's higher operating margin resulted from the increase in
casino revenues along with improved food and beverage margins.
As a result of competition from other riverboat casinos, the Company
expects Metropolis gaming revenue for fiscal 1997 to approximate fiscal 1996
gaming revenue.
Lake Charles
(in thousands, except for win data)
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------------------------------------------------
1994 1995 1996 Increase/(Decrease)
----------- ---------- ---------- -------------------------
95 vs. 94 96 vs. 95
------------- -----------
<S> <C> <C> <C> <C> <C>
Casino revenues $ 30,737 $ 136,085 $ 170,678 342.7% 25.4%
Total revenues 34,981 143,039 176,061 308.9% 23.1%
Operating income 13,521 59,395 49,097 339.3% (17.3%)
Operating margin 38.7% 41.5% 27.9% 2.8 pts (13.6) pts
Average daily win/slot machine $ 194 $ 276 $ 200 42.3% (27.5%)
Average daily win/table game $ 2,458 $ 2,475 $ 1,517 .7% (38.7%)
</TABLE>
Casino revenues and total revenues increased in fiscal 1996 as compared
to fiscal 1995 primarily due to the opening of a second riverboat, the Players
Star Casino in April 1995 and the October 1995 replacement of the Players II
riverboat with the larger Players III riverboat. The property's operating margin
declined in fiscal 1996 as compared to fiscal 1995, reflecting a significant
decline in admissions and parking revenues and increased spending for
promotional allowances, advertising and marketing programs implemented to
maintain gaming revenues in the face of a significant increase in competition
created by the opening in July 1995 of a competing riverboat in Lake Charles, a
significant expansion of the Coushatta Indian casino in Kinder, Louisiana, as
well as increased depreciation and amortization expense associated with the
Company's $150 million expansion program (see Capital Expenditures and New
Developments). In addition, effective August 1995, the Lake Charles property was
subject to a $.50 per passenger increase in the tax it pays to local governments
for each passenger on its riverboats.
Lake Charles casino revenues and total revenues increased in fiscal
1995 as compared to fiscal 1994, reflecting a full year of operations in fiscal
1995 as compared to four months of operations in fiscal 1994.
With the competitive environment in the Lake Charles market and the
lack of additional casino openings by the Company in fiscal 1997, casino
revenues are not expected to increase at the same rate as in the previous fiscal
year.
<PAGE>
Mesquite
The Company opened its first land-based casino hotel in Mesquite,
Nevada on June 29, 1995. Casino revenues and total revenues were $16.9 million
and $27.9 million, respectively, for the facility's nine months of operations in
fiscal 1996. Depreciation expense of $2.5 million and lower than anticipated
gaming revenue during the property's initial operating period resulted in an
operating loss of $6.9 million for fiscal 1996.
Bluegrass Downs
The Company acquired the thoroughbred racetrack in November 1993 and
continues to hold live racing meets each Fall and offers year round simulcasted
thoroughbred horse racing events. The operating results of the facility are
immaterial to the Company's overall operations. During fiscal 1996, the Company
recorded a $1,500,000 write-down of goodwill associated with the racetrack .
Other
The following table summarizes non-operating (income)/expenses for the
Company:
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------
1994 1995 1996
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Corporate administrative expenses $ 2,675 $ 7,276 $ 10,387
Pre-opening and gaming development costs 7,026 9,117 13,787
Option and stock option expense 2,868 -- --
Interest income (1,623) (3,340) (5,850)
Other income, net of expenses (83) (275) (1,587)
Interest expense, net of capitalized interest 887 694 14,718
Effective tax rate 37% 38% 39%
Cumulative effective of change in accounting principle 3,500 -- --
</TABLE>
Corporate administrative expenses increased 42.8% in fiscal 1996 from
fiscal 1995 levels reflecting increased staff, travel associated with the
operation of three facilities as compared to two facilities in the prior fiscal
year and expenses associated with moving the Company's executive offices to
Atlantic City, New Jersey. Fiscal 1995 corporate administrative expenses
increased by 172% over fiscal 1994 due to the operation of two facilities in
fiscal 1995 as compared to one facility for the majority of fiscal 1994.
Pre-opening and gaming development costs increased 51.2% for fiscal
1996 as compared to fiscal 1995 levels. The increase in fiscal 1996 related
primarily to pre-opening costs associated with Mesquite, the opening of the Lake
Charles Star Riverboat and the Company's Maryland Heights project. Development
costs for fiscal 1996 amounted to $5.5 million as compared to $6.1 million for
fiscal 1995, reflecting a decrease in development activity in new jurisdictions.
Pre-opening and gaming development costs for fiscal 1995 increased 29.8% over
fiscal 1994. Development costs of $6.1 million in fiscal 1995 as compared to
$2.8 million for fiscal 1994 accounted for the majority of the increase,
reflecting primarily the Company's pursuit of gaming opportunities in
Evansville, Indiana and Maryland Heights, Missouri in fiscal 1995.
The Company anticipates pre-opening and gaming development costs to
decrease significantly in fiscal 1997 as compared to fiscal 1996, reflecting the
opening of only one property and the aforementioned decrease in development
activity in new jurisdictions.
Interest income for fiscal 1996 increased by 75.1% when compared to
fiscal 1995. The increase resulted primarily from the investment of the proceeds
from the $150 million, 10-7/8% Senior Notes issued in April 1995 in investment
grade debt securities. Interest income for fiscal 1995 increased by 105.8% when
compared to fiscal 1994 reflecting higher average investable balances during
fiscal 1995.
<PAGE>
For fiscal 1996, Other income, net of expenses, increased significantly
over the prior fiscal year primarily due to the reversal of a $2 million accrued
liability related to previously discontinued operations.
Interest expense, net of amounts capitalized, increased to $14.7
million in fiscal 1996 as compared to $694,000 for fiscal 1995 due to the
issuance of $150 million, 10-7/8% Senior Notes in April 1995, and imputed
interest of $1.7 million associated with the acquisition of the Players Hotel in
Lake Charles, Louisiana, in August 1995. Interest expense in fiscal 1995 and
1994 was created by borrowings secured by the Company's Players I riverboat in
Metropolis, Illinois and a $3.2 million note that was issued as part of the
consideration for the acquisition of land in Mesquite, Nevada.
The effective tax rates for all fiscal years are higher than the
federal statutory rate due to state income taxes. The increase in the effective
tax rate for fiscal 1996 as compared to fiscal 1995 and fiscal 1995 as compared
to fiscal 1994 primarily reflects a decision to reduce the amount of tax exempt
securities in the marketable securities portfolio and the resulting decline in
tax exempt income during each period.
Operating results for fiscal 1994 reflect a net cumulative increase in
income of $3.5 million resulting from a change in accounting principle as
required by FASB No. 109, Accounting for Income Taxes.
Cash Flow and Capital Resources
Net cash provided by operating activities was $11.9 million in fiscal
1996. This compares to $52.1 million in fiscal 1995 and $23.9 million in fiscal
1994. Net cash provided by operating activities was negatively impacted in
fiscal 1996 by reductions in accrued liabilities and increases in other assets,
primarily due to the costs associated with the issuance of the Senior Notes in
April 1995 and arranging the $120 million bank credit facility, along with the
decline in net income. The Company's balance of cash, cash equivalents and
marketable investment grade debt securities was $23.2 million on March 31, 1996,
as compared to $50.3 million on March 31, 1995.
The Company's cash flow from investing activities resulted in net cash
used of $155.1 million in fiscal 1996. This compares to $50 million in fiscal
1995 and $99.1 million in fiscal 1994. Net cash used in investing activities for
fiscal 1996 reflects primarily the net investment by the Company in Mesquite and
Lake Charles along with the cash investment in the Maryland Heights joint
venture.
The Company's cash flow from financing activities resulted in net cash
provided by financing activities of $138.1 million in fiscal 1996. This compares
to $7.8 million in fiscal 1995 and $80.4 million in fiscal 1994. The net cash
provided by financing activities for fiscal 1996 includes the proceeds from the
issuance of $150 million in Senior Notes offset by the repayment of $8.9 million
in long term debt and the repurchase of $7.3 million of the Company's common
stock in the open market.
Capital Expenditures and New Developments
The Company continues to review opportunities for the development or
acquisition of additional gaming and entertainment facilities which could
require significant amounts of capital. In addition to development or
acquisition projects, the Company is committed to maintaining and enhancing its
existing casino and entertainment facilities. Based on projects currently under
development, the Company estimates that expenditures for completion of
additional facilities or enhancements to current facilities could require up to
$109.7 million over the next twelve months, substantially all of which is
related to Maryland Heights. The Company expects to fund these expenditures with
(i) cash and marketable securities, (ii) cash flow from operations, and (iii)
drawings available under its $120 million bank credit agreement.
Maryland Heights: On November 2, 1995, the Company finalized its agreement with
Harrah's Entertainment, Inc. ("Harrah's") to jointly develop a $286 million
riverboat casino entertainment complex in Maryland Heights, Missouri, a suburb
of St. Louis. The Company's portion of the project budget, excluding capitalized
interest, is expected to be $143 million, of which $42.9 million had been
invested through March 31, 1996. In connection with the formation of the joint
venture, Players contributed certain assets from its original Maryland Heights
project and $35 million in cash. The riverboat casino entertainment complex will
contain a total of 120,000 square feet of gaming space and is anticipated to
open in early 1997, subject to receipt of all regulatory approvals. The Company
and Harrah's will each own and operate two separate 30,000 square foot riverboat
casinos and will share in the development of a 380,000 square foot entertainment
and hotel facility.
<PAGE>
Lake Charles: The Company in January 1995 initiated a $150 million expansion in
Lake Charles, which included expenditures for the acquisition of the Players
Hotel and surrounding property, (see footnote 6 to the Company's financial
statements), the Players III Riverboat, including improvements and gaming
equipment (net of book value for the Players II Riverboat which was moved to
Metropolis in November 1995), an on-site, multi-story parking garage and a
60,000 square foot entertainment barge, which opened in late February 1996. The
addition of the entertainment barge provided three new restaurants, an
entertainment sports lounge, an expanded gift shop and ticketing facilities.
Mesquite: In June 1995, the Company opened its first land-based casino
entertainment facility in Mesquite, Nevada. The project's initial phase, which
includes a 40,000 square foot casino, a 500 room hotel with a health spa and
swimming pool with waterfalls, lighted tennis courts, in addition to the usual
casino/resort amenities, was developed at a cost of $74.2 million, of which $28
million was spent during fiscal 1996. The Company has leased additional land
near the Mesquite facility on which it is developing an 18-hole championship
golf course. It is anticipated that the golf course project will be completed
during the Fall of 1996 at a cost of $11.2 million of which $4.9 million was
spent in fiscal 1996.
The Company's capital expenditures totaled $34 million, $91.3 million
and $173.6 million for the fiscal years 1994, 1995 and 1996, respectively.
Capital expenditures for fiscal 1996 included $32.5 million primarily to
complete construction of Mesquite, $126.5 million for the Lake Charles expansion
and $14.6 million for improvements to other Company facilities.
Long-term Debt
In April 1995, the Company issued $150 million aggregate principal
amount of 10-7/8% Senior Notes due April 15, 2005. Semi-annual interest
payments, commenced on October 15, 1995. Proceeds from the issuance were used to
fund the aforementioned development and expansion projects.
In August 1995, the Company entered into an agreement for a $120
million line of credit with a group of commercial banks, renewable annually, at
the lender's option, for a six year period. As of March 31, 1996, the Company
has $55 million in borrowing capacity with $3 million in borrowings outstanding
under the credit agreement . The Company is in the process of concluding an
amendment to the credit agreement to increase certain covenant ratios to permit
full funding of Maryland Heights construction. There are no required repayments
of principal under the credit agreement during fiscal 1997. The credit agreement
is secured by substantially all of the real and personal property of the Company
and its subsidiaries. Interest on borrowings outstanding under the credit
agreement is payable, at the Company's option, at either the London Inter-Bank
Offering Rate ("LIBOR") or at the prime rate, plus in each case an applicable
margin which varies according to a formula based on the Company's financial
ratios.
The credit agreement contains certain financial covenants requiring the
Company to maintain a specified tangible net worth and to meet certain financial
ratios. The credit agreement also contains covenants that restrict the ability
of the Company to, among other things, incur additional debt, make significant
capital expenditures, commit funds to new business ventures, pay dividends or
repurchase shares.
<PAGE>
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements and supplementary data are as set
forth in the Index to Consolidated Financial Statements on page 37.
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
The Company changed its independent public accountants, from Arthur
Andersen LLP to Ernst & Young LLP after the completion of Arthur Andersen LLP's
audit of the financial statements of the Company for the year ended March 31,
1994. The change in accountant was approved by the Company's Board of Directors.
For the most recent two years in which Arthur Andersen LLP audited the Company's
consolidated financial statements, those financial statements contained no
adverse opinion or disclaimer of opinion, modification, or qualification. There
were no disagreements between the Company and Arthur Andersen LLP in the most
recent two years in which Arthur Andersen LLP audited the Company's consolidated
financial statements. The consolidated financial statements of Players
International, Inc. at March 31, 1995 and 1996 and for the years then ended have
been audited by Ernst & Young LLP.
PART III
Except for the information regarding executive officers called for by Item
401 of Regulation S-K, which is included in Part I, Item 4 hereof, Items 10, 11,
12 and 13 will be incorporated by reference to the Company's definitive proxy
statement for its Annual Meeting of Stockholders or by reference to Form 10-K/A,
which in either case will be filed not later than 120 days after the end of the
Company's fiscal year, in accordance with General Instruction G(3) to Form 10-K.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) and (2) Index to Financial Statements
PAGE
----
REPORTS OF INDEPENDENT AUDITORS 38
CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1995 AND 1996 40
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31, 1996:
CONSOLIDATED STATEMENTS OF OPERATIONS 41
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 42
CONSOLIDATED STATEMENTS OF CASH FLOWS 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 45
All other schedules have been omitted because they are not applicable or not
required or the required information is included in the Consolidated Financial
Statements or Notes thereto.
Exhibit
Number Description
------- -----------
3.1(1) Articles of Incorporation, as amended, of Players
International, Inc. (the "Company").
3.2(2) By-laws of the Company, as amended.
4.1(1) Indenture among certain subsidiaries of the Company and First
Fidelity Bank, National Association, as Trustee, including
form of Note (the "Senior Note Indenture").
4.2(1) Form of First Supplemental Indenture to the Senior Note
Indenture.
4.3(1) Form of Second Supplemental Indenture to the Senior Note
Indenture.
4.4 Form of Third Supplemental Indenture to the Senior Note
Indenture.
10.1(3) The Company's 1985 Incentive Stock Option Plan.
10.2(4) Amendment No. 1 to the Company's 1985 Incentive Stock Option
Plan.
10.3(5) The Company's 1990 Incentive Stock Option and Non-Qualified
Stock Option Plan, as amended.
10.4(2) The Company's 1993 Stock Incentive Plan.
10.5(2) Form of Registration Rights Agreement dated as of June 23, 1992
by and among the Company, Southern Illinois Riverboat/Casino
Cruises, Inc., and the purchasers named therein.
<PAGE>
10.6(2) Agreement dated February 12, 1993 by and between Jebaco, Inc.
and the Company with respect to the assignment of an option
agreement relating to the Downtowner Hotel (now known as the
Players Hotel).
10.7(2) Option Agreement dated December 24, 1991 by and among The
Beeber Corporation and Elisabeth S. Woodward and Jebaco, Inc.
with respect to the Downtowner Hotel (now known as the Players
Hotel).
10.8(2) Amendment to Option Agreement dated March 9, 1993 by and among
The Beeber Corporation and Elisabeth S. Woodward and Players
Lake Charles, Inc., a subsidiary of the Company, with respect
to the Downtowner Hotel (now known as the Players Hotel).
10.9(2) License and Services Agreement dated December 8, 1992 by and
among The Griffin Group, Inc., the Company and Southern
Illinois Riverboat/Casino Cruises, Inc., as amended.
10.10(2) Joint Venture Agreement dated May 1993 between Amerihost and a
subsidiary of the Company with respect to a hotel in
Metropolis, Illinois adjacent to the Company's Metropolis
riverboat.
10.11(6) Lease dated March 19, 1993 by and among the Beeber Corporation
and Players Lake Charles, Inc., a subsidiary of the Company.
10.12(7) Agreement of Purchase and Sale dated June 16, 1994, between
Gem Mesquite, Ltd. and Players Nevada, Inc., a subsidiary of
the Company (including form of letter Agreement from the
Company to Gem Mesquite, Ltd. relating to registration rights).
10.13(7) Transfer of Data Agreement dated June 16, 1994, between Gem
Gaming, Inc. and Players Nevada, Inc. (including form of
Promissory Note).
10.14(7) Development Consulting Agreement dated June 16, 1994, between
Gem Gaming, Inc. and Players Nevada, Inc. (including form of
1994 Series G Warrant).
10.15(7) Option Transfer Agreement dated June 16, 1994, between Gem
Gaming, Inc., Gem Mesquite, Ltd. and Players Nevada, Inc.
10.16(8) The Company's 1994 Directors Stock Incentive Plan, as adopted
April 14, 1994, and as amended July 14, 1994.
10.17(9) Agreement for Sale of Partnership Interests among the Company
and certain of its subsidiaries and Showboat, Inc. and certain
of its subsidiaries.
10.18(1) Asset Purchase Agreement dated August 16, 1995 among the
Company, Players Lake Charles, Inc. and the Beeber Corporation.
<PAGE>
10.19(1) Form of Credit Agreement ("Credit Agreement") among the
Company, First Interstate Bank of Nevada, N.A., Bankers Trust
Company, BT Securities Corporation, and certain other Lenders
party thereto.
10.20(1) Form of Revolving Promissory Notes made by the Company in favor
of the Lenders party to the Credit Agreement.
10.21(1) Form of Swing Line Promissory Note made by the Company in favor
of First Interstate Bank of Nevada, N.A.
10.22(1) Form of Guaranty made by Players Lake Charles, Inc., Players
Nevada, Inc., Southern Illinois Riverboat/Casino Cruises, Inc.,
Players Bluegrass Downs, Inc., Players Riverboat Management,
Inc., Players Riverboat, Inc., Players Mesquite Golf Club,
Inc., Players Indiana, Inc., Players Riverboat, LLC, Players
Mesquite Land, Inc., Players Maryland Heights, Inc., River
Bottom Inc. and Showboat Star Partnership in favor of First
Interstate Bank of Nevada, N.A.
10.23(1) Form of Company Pledge Agreement between the Company and First
Interstate Bank of Nevada, N.A.
10.24(1) Form of Company Pledge Agreement (Nevada) between the Company
and First Interstate Bank of Nevada, N.A.
10.25(1) Form of First Amendment to Company Pledge Agreement (Nevada)
between the Company and First Interstate Bank of Nevada, N.A.
10.26(1) Form of LLC Membership Interest Security Agreement between the
Company and First Interstate Bank of Nevada, N.A.
10.27(1) Form of Company Security Agreement between the Company and
First Interstate Bank of Nevada, N.A.
10.28(1) Form of Subsidiary Security Agreement (Nevada) among Players
Nevada, Inc., Players Mesquite Golf Club, Inc., Players
Mesquite Land, Inc. and First Interstate Bank of Nevada, N.A.
10.29(1) Form of Subsidiary Security Agreement (Louisiana) among Players
Lake Charles, Inc., Showboat Star Partnership, Players
Riverboat LLC and First Interstate Bank of Nevada, N.A.
10.30(1) Form of Subsidiary Security Agreement (Illinois) between
Southern Illinois Riverboat/Casino Cruises, Inc. and First
Interstate Bank of Nevada, N.A.
10.31(1) Form of Partnership Interest Security Agreement between Players
Riverboat Management, Inc. and First Interstate Bank of Nevada,
N.A.
10.32(1) Form of Collateral Account Agreement between the Company and
First Interstate Bank of Nevada, N.A.
<PAGE>
10.33(1) Form of Nevada Deed of Trust, Fixture Filing and Security
Agreement with Assignment of Rents relating to the Credit
Agreement.
10.34(1) Form of Louisiana Act of Mortgage, Fixture Filing and Security
Agreement between Players Lake Charles, Inc. and First
Interstate Bank of Nevada, N.A.
10.35(1) Form of Illinois Mortgage Fixture Filing and Security Agreement
with Assignment of Rents relating to the Credit Agreement.
10.36(1) Form of First Preferred Ship Mortgage made by Showboat Star
Partnership (an entity owned, directly or indirectly, by the
Company and its subsidiaries) to First Interstate Bank of
Nevada, N.A.
10.37(1) Form of Environmental Indemnity made by the Company to First
Interstate Bank of Nevada, N.A.
10.38(1) Form of Master Vessel and Collateral Trust Agreement between
First Interstate Bank of Nevada, N.A. as Administrative Agent
and First Interstate Bank of Nevada, N.A. as Trustee and
acknowledged and accepted by the Company.
10.39(10) Partnership Agreement dated November 2, 1995, by and between
Harrah's Maryland Heights Corporation and Players MH, L.P.
10.40(10) Guaranty of Players International, Inc. dated November 2, 1995.
10.41(10) Management Agreement dated November 2, 1995 by and between
Riverside Joint Venture and Harrah's Maryland Heights Operating
Company.
10.42(10) License Agreement dated November 2, 1995 by and among Players
International, Inc., Riverside Joint Venture and Harrah's
Maryland Heights Operating Company.
10.43(10) Ground Lease dated November 3, 1995 by and between Harrah's
Maryland Heights LLC and Riverside Joint Venture.
10.44(10) Lease Agreement dated as of November 3, 1995 by and between
Riverside Joint Venture and Players MH, L.P.
10.45(10) Parent Guaranty of Players International, Inc. dated November
3, 1995.
10.46(10) Right of First Refusal to Purchase dated November 3, 1995 by
and between Harrah's Maryland Heights LLC and Players MH, L.P.
10.47(10) Option Agreement dated November 3, 1995 by and between
Riverside Joint Venture and Harrah's Maryland Heights, L.L.C.
10.48(10) Development of Agreement (Earth City Expressway Extension) by
and between the City of Maryland Heights and Riverside Joint
Venture.
10.49 Form of Agreement between the Company and Lake Charles
Construction Corporation dated November 15, 1995 for the
Players Island-Entertainment Barge.
<PAGE>
10.50 Agreement between the Company and Lake Charles Construction
Corporation dated February 16, 1996 for the Players
Island-Entertainment Barge.
21 Subsidiaries of Players International, Inc.
27 Financial Data Schedule
- - ------------
(1) Filed as an exhibit to the Company's Registration Statement on Form S-4,
File No. 33-60085, and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Registration Statement on Form S-3,
File No. 33-61026, and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Registration Statement on Form 10
filed on August 13, 1986, File No. 0-14897, as amended on Form 8 filed
October 17, 1987, and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1988 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1991 and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Registration Statement on Form S-3,
as amended by Form S-3, File No. 33-75006, and incorporated herein by
reference.
(7) Filed as an exhibit to the Company's Current Report on Form 8-K filed on
June 24, 1994, and incorporated herein by reference.
(8) Filed as an exhibit to the Company's Registration Statement on Form S-3
filed on July 24, 1994, and incorporated herein by reference.
(9) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995, and incorporated herein by reference.
(10) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995, and incorporated herein by reference.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Players International, Inc.
Date: June 27, 1996 By /s/ Edward Fishman
------------------
Edward Fishman
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below. This annual
report may be signed in multiple identical counterparts all of which, taken
together, shall constitute a single document.
Dated: June 27, 1996 /s/ Edward Fishman
-----------------------------------
Edward Fishman
Chairman of the Board
Dated: June 27, 1996 /s/ David Fishman
-----------------------------------
David Fishman
Director
Dated: June 27, 1996 /s/ Howard Goldberg
-----------------------------------
Howard Goldberg
President and Director
(Principal Executive Officer)
Dated: June 27, 1996 /s/ Henry M. Applegate
-----------------------------------
Henry M. Applegate
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: June 27, 1996 /s/ Steven P. Perskie
-----------------------------------
Steven P. Perskie
Director
Dated: June 27, 1996 /s/ Stephen K. Radusch
-----------------------------------
Stephen K. Radusch
Controller
(Principal Accounting Officer)
Dated: June 27, 1996 /s/ Lee Seidler
-----------------------------------
Lee Seidler
Director
Dated: June 27, 1996 /s/ Marshall S. Geller
-----------------------------------
Marshall S. Geller
Director
Dated: June 27, 1996 /s/ Thomas E. Gallagher
-----------------------------------
Thomas E. Gallagher
Director
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Reports of Independent Auditors 38
Consolidated Balance Sheets as of March 31, 1995 and 1996 40
Consolidated Statements of Operations for the Years Ended
March 31, 1994, 1995 and 1996 41
Consolidated Statements of Stockholders' Equity for the
Years Ended March 31, 1994, 1995 and 1996 42
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1994, 1995 and 1996 43
Notes to Consolidated Financial Statements 45
All other schedules have been omitted because they are not applicable or not
required or the required information is included in the Consolidated Financial
Statements or Notes thereto.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Players International, Inc.
We have audited the accompanying consolidated balance sheets of Players
International, Inc. as of March 31, 1995 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
then ended. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Players
International, Inc. at March 31, 1995 and 1996, and the consolidated results of
its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 23, 1996
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board Of Directors of Players International, Inc.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of PLAYERS INTERNATIONAL, INC. (a Nevada
corporation) and subsidiaries for the year ended March 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of operations and the cash flows
of Players International, Inc. and subsidiaries for the year ended March 31,
1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
May 24, 1994
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value)
<TABLE>
<CAPTION>
ASSETS
March 31,
---------------------
1995 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 23,886 $ 18,786
Marketable securities, net (Note 2) 26,446 4,461
Accounts receivable, net of allowance
for doubtful accounts of $130 at March 31,
1995 and $118 at March 31, 1996 1,351 4,541
Notes receivable 1,279 3,062
Inventories 863 2,719
Deferred income tax (Note 5) 2,345 2,970
Prepaid expenses and other current assets 4,332 5,044
--------- ---------
Total current assets 60,502 41,583
--------- ---------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of $10,248
at March 31, 1995 and $23,078 at
March 31, 1996 (Note 4) 118,105 279,916
--------- ---------
DEFERRED INCOME TAX -- long-term (Note 5) 3,063 4,897
--------- ---------
INTANGIBLES, net of accumulated amortization of
$317 at March 31, 1995 and $1.714
at March 31, 1996 (Note 1) 39,130 37,126
--------- ---------
INVESTMENT IN JOINT VENTURE -- 39,474
--------- ---------
OTHER ASSETS 2,990 10,436
--------- ---------
$ 223,790 $ 413,432
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt (Note 7) $ 3,375 $ --
Accounts payable 8,233 6,736
Accrued liabilities (Note 3) 27,030 32,432
Other liabilities 669 537
--------- ---------
Total current liabilities 39,307 39,705
--------- ---------
OTHER LONG-TERM LIABILITIES (Note 6) 2,808 27,100
--------- ---------
LONG-TERM DEBT, net of current portion (Note 7) 5,532 153,000
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, Authorized --
10,000,000 shares, Issued -- none -- --
Common stock, $.005 par value, Authorized --
90,000,000 shares, Issued -- 29,672,400
shares at March 31, 1995 and 29,859,580
shares at March 31, 1996 148 149
Additional paid-in capital 121,712 123,719
Unrealized loss on marketable securities, net of tax (451) (1)
Treasury stock, at cost; 672,100 shares at March 31, 1996 -- (7,294)
Retained earnings 54,734 77,054
--------- ---------
Total stockholders' equity 176,143 193,627
--------- ---------
$ 223,790 $ 413,432
========= =========
</TABLE>
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year ended March 31,
--------------------
1994 1995 1996
------------ ---------- ----------
<S> <C> <C> <C>
REVENUES:
Casino $ 95,873 $ 210,942 $ 269,739
Food and beverage 5,314 7,406 11,825
Hotel -- -- 4,851
Other 5,895 5,347 4,980
------------ ---------- ----------
107,082 223,695 291,395
------------ ---------- ----------
COSTS AND EXPENSES:
Casino 35,145 74,839 110,959
Food and beverage 5,094 6,799 12,601
Hotel -- -- 2,503
Other gaming related and general costs 23,680 48,050 80,051
Corporate administrative expenses 2,675 7,276 10,387
Pre-opening and gaming development costs 7,026 9,117 13,787
Depreciation and amortization 3,706 7,065 17,236
Option and stock compensation expense 2,868 -- --
------------ ---------- ----------
80,194 153,146 247,524
------------ ---------- ----------
Income before other income (expense) and provision for income taxes 26,888 70,549 43,871
------------ ---------- ----------
OTHER INCOME (EXPENSE):
Interest income 1,623 3,340 5,850
Other income, net 83 275 1,587
Interest expense (887) (694) (14,718)
------------ ---------- ----------
819 2,921 (7,281)
------------ ---------- ----------
Income before provision for income taxes 27,707 73,470 36,590
PROVISION FOR INCOME TAXES 10,255 27,715 14,270
------------ ---------- ----------
Income before cumulative effect of change in accounting principle 17,452 45,755 22,320
------------ ---------- ----------
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 3,500 -- --
------------ ---------- ----------
NET INCOME $ 20,952 $ 45,755 $ 22,320
============ ========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS OUTSTANDING (Note 1) 28,436,600 31,169,600 32,009,700
============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND
COMMON STOCK EQUIVALENTS OUTSTANDING -- ASSUMING FULL
DILUTION (Note 1) 28,987,200 31,636,700 32,015,800
============ ============ ============
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Income before cumulative effect of change in accounting principle $ .61 $ 1.47 $ .70
Cumulative effect of change in accounting principle .12 -- --
------------ ---------- ----------
Net income $ .73 $ 1.47 $ .70
============ ============ ============
EARNINGS PER COMMON SHARE -- ASSUMING FULL DILUTION:
Income before cumulative effect of change in accounting principle $ .60 $ 1.45 $ .70
Cumulative effect of change in accounting principle .12 -- --
Net income $ .72 $ 1.45 $ .70
============ ============ ============
</TABLE>
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED MARCH 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Common Stock Additional Treasury Stock Retained
------------ Paid-In Unrealized -------------- Earnings
Shares Amount Capital Loss Shares Amount (Deficit)
---------- ------- ---------- ------ --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, March 31, 1993 15,991,200 $ 80 $ 11,807 $ -- -- $ -- $ (11,973)
Shares issued under stock option plans 502,800 3 948 -- -- -- --
Shares issued for warrants exercised 245,100 1 912 -- -- -- --
Shares issued in exchange for debentures 2,028,700 10 4,413 -- -- -- --
Shares sold in public offering and
subsequent registration costs 7,499,300 38 85,935 -- -- -- --
Shares issued in connection with
employment contracts 90,000 -- 1,065 -- -- -- --
Compensation in connection with non-
employee director's options -- -- 1,803 -- -- -- --
Unrealized loss on marketable securities,
net of tax -- -- -- (150) -- -- --
Net income -- -- -- -- -- -- 20,952
---------- ------- ---------- ------ --------- -------- --------
BALANCE, March 31, 1994 26,357,100 132 106,883 (150) -- -- 8,979
Shares issued under stock option plans 277,700 1 688 -- -- -- --
Shares issued in exchange for land 381,000 2 4,237 -- -- -- --
Shares issued for warrants exercised 2,656,600 13 7,261 -- -- -- --
Tax benefit from exercise of
nonqualified options -- -- 2,643 -- -- -- --
Change in unrealized loss on
marketable securities, net of tax -- -- -- (301) -- -- --
Net income -- -- -- -- -- -- 45,755
---------- ------- ---------- ------ --------- -------- --------
BALANCE, March 31, 1995 29,672,400 148 121,712 (451) -- -- 54,734
Shares issued under stock option plans 187,180 1 1,296 -- -- -- --
Tax benefit from exercise of
non-qualified options -- -- 713 -- -- -- --
Adjustment for number of shares as the
result of the stock split -- -- (2) -- -- -- --
Purchase of common stock (672,100) -- -- -- 672,100 7,294 --
Change in unrealized loss on
marketable securities, net of tax -- -- -- 450 -- -- --
Net income -- -- -- -- -- -- 22,320
---------- ------- ---------- ------ --------- -------- --------
BALANCE, March 31, 1996 29,187,480 $ 149 $ 123,719 $ (1) $ 672,100 $ 7,294 $ 77,054
========== ======= ========== ====== ========= ======== ========
</TABLE>
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Year ended March 31,
----------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,952 $ 45,755 $ 22,320
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 3,706 7,065 17,236
Amortization of bond premium/(discount) 79 247 (3,861)
Option and stock compensation expense 2,868 -- --
Net benefit realized from deferred tax asset (1,299) -- --
Cumulative effect of change in accounting principle (3,500) -- --
Other 62 32 468
Changes in assets and liabilities:
Accounts and notes receivable (2,292) (450) (4,985)
Inventories (349) (369) (1,856)
Prepaid expenses and other current assets (1,080) (4,037) (1,337)
Other assets (2,741) 780 (12,536)
Accounts payable 1,211 1,934 (1,497)
Accrued liabilities 7,991 1,487 (918)
Other liabilities 1,081 (340) (1,176)
Net effect of discontinued operations (2,822) -- --
------- ------- --------
Net cash provided by operating activities 23,867 52,104 11,858
------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment (33,845) (62,419) (147,119)
Costs in excess of fair value of tangible assets acquired (1,755) (24,090) --
Purchases of marketable securities (63,922) (22,970) (170,806)
Proceeds from sale of marketable securities -- 59,509 196,886
Investment in joint venture -- -- (34,015)
Net effect of discontinued operations 423 -- --
------- ------- --------
Net cash used in investing activities (99,099) (49,970) (155,054)
------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt -- -- 153,000
Repayments of long-term debt (7,133) (169) (8,907)
Purchase of common stock -- -- (7,294)
Issuance of common stock for warrants exercised 263 7,273 --
Proceeds from sale of common stock, net of all issuance
and registration costs 85,973 -- --
Proceeds from exercise of stock options 1,601 691 1,297
Net effect of discontinued operations (306) -- --
------- ------- --------
Net cash provided by financing activities 80,398 7,795 138,096
------- ------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,166 9,929 (5,100)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,791 13,957 23,886
------- ------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,957 $ 23,886 $ 18,786
========= ========= =========
</TABLE>
<PAGE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
SUPPLEMENTAL CASH FLOW INFORMATION:
Year ended March 31,
--------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
CONTINUING OPERATIONS:
Interest paid, including amounts capitalized $ 2,050 $ 694 $ 10,124
Income taxes paid 8,761 30,102 15,201
Debt incurred to purchase property and equipment -- 3,200 --
Common stock issued for purchase of land -- 4,238 --
Accrued liabilities incurred to purchase property and equipment -- 8,005 31,910
Accrued liabilities relating to costs in excess of fair value of tangible
assets acquired -- 13,441 --
Tax benefit related to exercise of non-qualified stock options -- 2,643 713
Debentures exchanged for common stock 4,650 -- --
Debenture loan costs amortized into additional paid-in capital 227 -- --
Land, property and equipment contributed to joint venture 167 -- 5,459
Unrealized loss (gain) on marketable securities, net of tax 150 301 (450)
DISCONTINUED OPERATIONS:
Interest paid 27 -- --
</TABLE>
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
Players International, Inc. ("the Company") through wholly owned
subsidiaries operates three riverboat casinos, a land-based hotel and casino and
a horse racetrack facility. All operations include food and beverage facilities
and a retail gift shop. Two of the facilities include hotel operations.
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Certain reclassifications have been made to the consolidated financial
statements as previously presented to conform to the current classifications.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
<PAGE>
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash and cash
equivalents are carried at cost which approximates market value.
Marketable Securities
Management has determined that the Company's marketable securities
should be classified as available-for-sale. As available-for-sale investments,
these securities are carried at fair value and unrealized gains and losses are
reported in a separate component of stockholders' equity. The amortized cost of
investments is adjusted for amortization of premiums and the accretion of
discounts to maturity. Such amortization is included in interest income.
Realized gains and losses are included in other income. The cost of securities
sold is based on the specific identification method.
Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses. Revenues
exclude the retail value of complimentary admissions, food and beverage, hotel
and other items furnished to customers, which totaled approximately $3,385,000,
$9,916,000, and $21,336,000 for the years ended March 31, 1994, 1995 and 1996,
respectively.
The estimated costs of providing such complimentary services are
included in casino costs and expenses through inter-department allocations from
the department granting the services as follows:
1994 1995 1996
---------- ---------- -----------
(dollars in thousands)
Food and beverage $ 1,398 $ 5,583 $ 15,651
Admissions 1,548 2,848 1,725
Hotel -- -- 565
Other 218 717 1,177
$ 3,164 $ 9,148 $ 19,118
======== ======== =========
<PAGE>
Pre-opening and Gaming Development Costs
The Company is currently pursuing expansion opportunities in new gaming
jurisdictions. All pre-opening and gaming development costs are expensed as they
are incurred except for the cost of property and equipment which is capitalized.
Inventories
Inventories consisting of food, beverage and retail items are stated at
the lower of cost (first-in, first-out) or market.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Improvements and
extraordinary repairs that extend the life of the asset are capitalized.
Maintenance and repairs are expensed as incurred. Interest expense is
capitalized on major construction projects. Capitalized interest amounted to
$3,329,000 in 1996. There was no capitalized interest in 1994 or 1995.
The Company computes depreciation for property and equipment using
primarily the straight-line method over the estimated useful life of the assets.
Amortization of leasehold and land improvements is computed using the
straight-line method over the lesser of the estimated useful life or lease term.
Effective October 1, 1995, the Company revised its estimate of
depreciable useful lives as follows:
Old Life New Life
---------- ----------
Riverboat, barges and improvements 10 years 30 years
Buildings (new) 20 years 40 years
These changes were made to better reflect the estimated periods during
which such assets will remain in service. The result of this change had the
effect of increasing net income by approximately $1,403,000 ($.04 per share) for
the year ended March 31, 1996. The estimated useful life of furniture, fixtures
and equipment remains at five to seven years.
Intangibles
Costs in excess of fair value of tangible assets acquired are recorded
as intangibles on the accompanying consolidated balance sheets and are being
amortized using the straight-line method. Effective October 1, 1995, the Company
revised its estimate of the useful life of intangibles from 15 years to 40
years. This change was made to better reflect the estimated periods during which
such assets will remain in service. The result of this change had the effect of
increasing net income by approximately $466,000 ($.01 per share) for the year
ended March 31, 1996.
The Company periodically evaluates whether the remaining estimated
useful life of intangibles may warrant revision or the remaining balance of
intangibles may not be recoverable, generally based upon expectations of
nondiscounted cash flows and operating income. During the year, the Company
recorded a write-down of goodwill associated with its racetrack facility in the
amount of $1,500,000.
<PAGE>
Unamortized Loan Costs
Loan costs incurred in connection with the issuance of debt are being
amortized using the straight-line method over the term of the loan for which it
applies.
Impairment of Long-Lived Assets
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement 121
in the first quarter of fiscal year 1997 and, based on current circumstances,
does not believe the effect of adoption will be material.
Per Share Amounts
Per share amounts have been computed based on the weighted average
number of outstanding shares and common stock equivalents, if dilutive, during
each period. All per share amounts and shares outstanding reflect the 3-for-2
stock split declared on April 26, 1995 for stockholders of record at the close
of business on May 8, 1995. A summary of the number of shares used in computing
primary earnings per share follows:
<TABLE>
<CAPTION>
Year ended March 31,
-------------------------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average number of shares outstanding 23,669,400 27,233,000 29,765,200
Dilutive effect of stock options and warrants 4,767,200 3,936,600 2,244,500
---------- ---------- ----------
Shares used in computing primary earnings per share 28,436,600 31,169,600 32,009,700
========== ========== ==========
</TABLE>
The number of shares used in computing fully diluted earnings per share
for the year ended March 31, 1994 includes the conversion of convertible
debentures as of April 1, 1993. Also, 1994 net income includes the elimination
of interest expense on the convertible debentures of $116,000, net of tax. Fully
diluted earnings per share reflect additional dilution related to stock options,
due to the use of the market price at the end of the period, when higher than
the average price for the period. As a result, the number of shares used in
computing fully diluted earnings per share is as follows:
<TABLE>
<CAPTION>
Year ended March 31,
-------------------------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average number of shares outstanding 23,669,400 27,233,000 29,765,200
Dilutive effect of exchangeable debentures 550,600 -- --
Dilutive effect of stock options and warrants 4,767,200 4,403,700 2,245,200
Dilutive effect of put options -- -- 5,400
---------- ---------- ----------
Shares used in computing fully diluted earnings per share 28,987,200 31,636,700 32,015,800
========== ========== ==========
</TABLE>
<PAGE>
Note 2 - Marketable Securities
Marketable securities at March 31, 1995 and 1996 are primarily
municipal bonds. The following is a summary of marketable securities as of
March 31, 1995 and 1996:
March 31,
------------------------
(dollars in thousands)
1995 1996
--------- ---------
Cost $ 27,165 $ 4,463
Gross unrealized losses (719) (2)
--------- ---------
Estimated fair value $ 26,446 $ 4,461
========= =========
The gross realized gains and (losses) on marketable securities totaled
$136,000 and ($30,000) for the year ended March 31, 1995 and $270,000 and
($722,000) for the year ended March 31, 1996. There were no realized gains or
(losses) for the year ended March 31, 1994.
As of March 31, 1996, the cost and estimated fair value of contractual
maturities of marketable securities due in one year through five years was
$4,463,000 and $4,461,000, respectively. There were no contractual maturities of
one year or less.
Note 3 - Accrued Liabilities
A summary of the accrued liabilities is as follows:
March 31,
------------------------
(dollars in thousands)
1995 1996
--------- ---------
Medical insurance claims $ 842 $ 1,442
Chip and token liability 322 489
Accrued payroll and related expenses 3,253 4,806
Accrued interest expense -- 7,477
Accrued expenses 7,197 11,898
Current portion of liabilities related to the
purchase of a riverboat and a hotel in 1995
and 1996, respectively 15,416 6,320
--------- ---------
$ 27,030 $ 32,432
========= =========
<PAGE>
Note 4 - Property and Equipment
A summary of property and equipment is as follows:
March 31,
------------------------
(dollars in thousands)
1995 1996
--------- ---------
Land and buildings $ 14,828 $ 121,671
Riverboats and barges 44,607 107,282
Furniture, fixtures and equipment 25,975 54,765
Leasehold and land improvements 12,000 11,241
Construction in progress 30,943 8,035
Less -- accumulated depreciation and
amortization (10,248) (23,078)
--------- ---------
$ 118,105 $ 279,916
========== ==========
Note 5 - Income Taxes
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities are as follows:
March 31,
------------------------
(dollars in thousands)
1995 1996
--------- ---------
Deferred tax assets:
Book over tax intangible basis difference $ -- $ 564
Pre-opening, development and other costs 4,422 7,321
Unrealized loss on marketable securities 268 --
Accrued liabilities and prepaid expenses 1,912 2,698
Deferred revenue 268 122
Accrual of directors' option expense 558 475
--------- ---------
Total deferred tax assets 7,428 11,180
Deferred tax liabilities:
Tax over book depreciation 1,626 2,718
Prepaid expenses 394 507
Other -- 88
--------- ---------
Total deferred tax liabilities 2,020 3,313
--------- ---------
Net deferred tax assets $ 5,408 $ 7,867
========= =========
<PAGE>
Significant components of the provision for income taxes attributable
to continuing operations are as follows:
Year ended March 31,
-----------------------------------------------
(dollars in thousands)
1994 1995 1996
--------- -------- ---------
Current:
Federal $ 9,324 $ 23,263 $ 13,975
State 2,004 4,451 2,745
--------- -------- ---------
Total current 11,328 27,714 16,720
Deferred:
Federal (873) (89) (2,199)
State (200) 90 (251)
--------- -------- ---------
Total deferred (1,073) 1 (2,450)
--------- -------- ---------
Total provision $ 10,255 $ 27,715 $ 14,270
========= ======== =========
The reconciliation of income tax attributable to continuing operations
computed at the Federal statutory rates to income tax expense is:
<TABLE>
<CAPTION>
Year ended March 31,
----------------------------------------------
1994 1995 1996
--------- -------- ---------
<S> <C> <C> <C>
Federal statutory rate 35% 35% 35%
State taxes on income, net of Federal income tax benefit 4% 4% 4%
Tax exempt interest income from municipal bonds (2)% (1)% --
----- ----- -----
Financial statement provision rate 37% 38% 39%
===== ===== =====
</TABLE>
Note 6 - Other Long-Term Liabilities
A summary of other long-term liabilities follows:
<TABLE>
<CAPTION>
March 31,
----------------------
(dollars in thousands)
1995 1996
------ ------
<S> <C> <C>
Long-term portion of liabilities related to purchase of a riverboat $ 2,400 $ 1,600
Net present value of estimated future payments to purchase hotel -- 25,336
Other 408 164
-------- --------
$ 2,808 $ 27,100
======== =========
</TABLE>
In August 1995 the Company acquired a hotel for $6,700,000 plus future
payments based on passenger count over the next 28 years. The estimated future
payments have been discounted and recorded at their net present value.
Note 7 - Long-Term Debt
<PAGE>
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
March 31,
------------------------
(dollars in thousands)
1995 1996
-------- ----------
<S> <C> <C>
First Ships Mortgage, secured by a riverboat, interest at prime plus 2 percent
(8 percent at March 31, 1995) adjusted every 60 months, payable in monthly
installments of $49, due 2013 (carrying amount approximates fair value) $ 5,669 $ --
Note payable to Gem Gaming, Inc., unsecured, interest at 9% per year, principal
due the earlier of the opening of the Mesquite facility or December 31, 1995
(carrying amount approximates fair value) 3,200 --
Senior Notes, interest at 10-7/8% payable in cash semi-annually on April 15 and
October 15, due 2005 (fair value based on quoted market price is approximately $150,750) -- 150,000
Note payable under $120,000 reducing revolving credit agreement (carrying amount
approximates fair value) -- 3,000
Other 38 --
8,907 153,000
Less -- current portion (3,375) --
-------- --------
$ 5,532 $153,000
========= ========
</TABLE>
The aggregate annual maturities of long-term debt at March 31,
1996 are zero from 1997 through 2001 and $153,000,000 thereafter.
On August 25, 1995, the Company entered into a reducing revolving
credit agreement (the "Credit Line") with a consortium of banks. Under the
Credit Line, the Company can borrow up to $120,000,000. As of March 31, 1996,
the Company has $55,000,000 in borrowing capacity with $3,000,000 outstanding
under the credit agreement.
Borrowings under the Credit Line bear interest at a margin above the
bank's prime rate or LIBOR as selected by the Company. The margin above such
rates, and the fee on the unfunded portions of the credit line, will vary
quarterly based on the borrower's combined ratio of funded debt to earnings
before interest, taxes and depreciation and amortization.
The Credit Line matures on September 30, 2001, and will reduce in eight
equal semi-annual installments of $15,000,000 each, effective on June 30 and
December 31 of each year commencing on December 31, 1997. The semi-annual
maximum principal balances are as follows:
December 31, 1997 $105,000,000
June 30, 1998 90,000,000
December 31, 1998 75,000,000
June 30, 1999 60,000,000
December 31, 1999 45,000,000
June 30, 2000 30,000,000
December 31, 2000 15,000,000
The Credit Line is collateralized by all the Company's property and
equipment, contract rights, leases, intangibles and other security interest
related to primarily the Company's operating properties. The Credit Line
<PAGE>
agreement contains certain financial covenants requiring the Company to maintain
a specified tangible net worth and to meet certain financial ratios. The Credit
Line agreement also contains covenants that restrict the ability of the Company
to, among other things, incur additional debt, make significant capital
contributions, commit funds to new business ventures, pay dividends or
repurchase shares.
Note 8 - Stockholders' Equity
In July 1993, the Company issued 7,499,250 shares of its $.005 par
value common stock in a public offering. The price to the public was $12.50 per
share. Net proceeds of the offering, after deducting all associated costs, were
$86,238,400, or $11.50 per newly issued share.
During 1996, the Company repurchased a total of 672,100 shares of its
common stock for a total cost of $7,294,000.
Note 9 - Common Stock Options and Warrants
The Company has four stock option plans, the 1985 Incentive Stock
Option Plan ("1985 Plan") for employees covering 600,000 shares of common stock,
the 1990 Incentive Stock Option and Non-Qualified Option Plan covering 1,200,000
shares of common stock ("1990 Plan"), the 1993 Incentive Stock Option and
Non-Qualified Option Plan covering 3,000,000 shares of common stock ("1993
Plan"), and the 1994 Directors Stock Incentive Plan ("1994 Plan") covering
900,000 shares of common stock. As of March 31, 1996, the Company had 71,725
shares under the 1990 Plan, 286,500 shares under the 1993 Plan and 772,500
shares under the 1994 Plan available for issuance in connection with future
stock options that may be granted. The 1985 Plan expired on April 22, 1995,
therefore, no additional grants may be made, although outstanding awards may be
exercised. Options granted are generally exercisable between three and ten years
from date of grant. The following is a summary of the 1985, 1990, 1993, and 1994
Plans:
<TABLE>
<CAPTION>
1985 1990 1993 1994
Plan Plan Plan Plan Sub-total
--------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Outstanding March 31, 1993 262,500 204,375 -- -- 466,875
Granted -- 262,500 628,500 -- 891,000
Exercised (207,170) (48,225) -- -- (255,395)
Expired or canceled (9,701) (2,250) -- -- (11,951)
--------- -------- --------- -------- -----------
Outstanding March 31, 1994 45,629 416,400 628,500 -- 1,090,529
Granted -- 267,000 1,995,000 60,000 2,322,000
Exercised (9,652) (12,737) -- -- (22,389)
Expired or canceled (7,500) (42,750) -- -- (50,250)
--------- -------- --------- -------- -----------
Outstanding March 31, 1995 28,477 627,913 2,623,500 60,000 3,339,890
Granted -- 460,750 -- 67,500 528,250
Exercised (2,076) (93,089) (2,000) -- (97,165)
Expired or canceled -- (33,350) -- -- (33,350)
--------- -------- --------- -------- -----------
Outstanding at March 31, 1996 26,401 962,224 2,621,500 127,500 3,737,625
--------- -------- --------- -------- -----------
Exercisable at March 31, 1996 20,326 254,302 993,500 60,000 1,328,128
========= ======== ========= ======== ===========
</TABLE>
In addition to the foregoing plans, other option and warrant activity is
listed below including the total for all plans and the exercise price range per
share:
<PAGE>
<TABLE>
<CAPTION>
Non-employee Other Exercise Price
Directors Options Warrants Total Range per share
------------ ------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Outstanding March 31, 1993 -- 616,954 5,085,383 6,169,212 $0.33 - $6.92
Granted 332,877 -- -- 1,223,877 $6.25 - $17.83
Exercised -- (247,355) (245,088) (747,838) $0.33 - $4.13
Expired or canceled -- (8,982) -- (20,933) $0.83 - $11.17
--------- --------- ----------- -----------
Outstanding March 31, 1994 332,877 360,617 4,840,295 6,624,318 $0.33 - $17.83
Granted -- -- 150,000 2,472,000 $11.50 - $16.58
Exercised (112,500) (142,857) (2,740,295) (3,018,041) $0.33 - $11.17
Expired or canceled -- (260) -- (50,510) $0.83 - $17.83
--------- --------- ----------- -----------
Outstanding March 31, 1995 220,377 217,500 2,250,000 6,027,767 $0.67 - $17.83
Granted -- -- -- 528,250 $9.25 - $19.75
Exercised -- (90,000) -- (187,165) $0.67 - $16.08
Expired or canceled -- -- -- (33,350) $11.17 - $19.42
--------- --------- ----------- -----------
Outstanding at March 31, 1996 220,377 127,500 2,250,000 6,335,502 $2.17 - $19.75
========= ========= =========== ===========
Exercisable at March 31, 1996 220,377 127,500 2,175,000 3,851,005
========= ========= =========== ===========
</TABLE>
On June 23, 1992, a subsidiary of the Company sold to accredited
investors 15 percent series A&B exchangeable debentures with a face value of
$5,815,000, due April 14, 1997. In addition, 4,750,650 warrants to purchase
common stock of the Company were issued. The debentures were exchangeable for
common stock of the Company at the rate of 417 shares of common stock per $1,000
face value of debt. The Company called all outstanding debentures for redemption
on June 28, 1993. These debentures were exchanged for 2,028,750 shares of the
Company's common stock. The warrants were fully exercised prior to their
expiration on February 23, 1995.
Under a contract with a spokesperson for the riverboats through
December 31, 1996, the Company issued 2,100,000 warrants to purchase common
stock of the Company. The warrants, which vest at 25% per year beginning January
1, 1993, are exercisable at $2.67 per warrant.
Note 10 - Employee Benefit Plans
The Company has a defined contribution plan that provides retirement
benefits for eligible employees. Eligible employees may elect to participate by
contributing a percentage of their pre-tax earnings to the plan. Employee
contributions to the plan, up to certain limits, are matched at 25% by the
Company. The Company's contribution expense for the plan was $224,000 and
$321,000 for the fiscal year ended March 31, 1995 and 1996, respectively. There
was no Company contribution in the year ended March 31, 1994.
Note 11 - Commitments and Contingencies
The Company leases office space, land and equipment under operating
leases expiring at various dates through December 2011.
The minimum annual payments under noncancelable lease agreements at
March 31, 1996 are as follows:
Year ending March 31 (dollars in thousands):
1997 $ 965
1998 625
1999 415
2000 253
Thereafter 90
----------
$ 2,348
==========
<PAGE>
A lease agreement through August 18, 1995, for one of the Company's
subsidiaries provided for contingent payments based on either the greater of the
annual minimum rent or the calculated rent based on adjusted passenger
admission. Rent expense for all operating leases was as follows:
Year ended March 31,
------------------------------------------
(dollars in thousands)
1994 1995 1996
------- ------- ------
Minimum rentals $ 869 $ 2,213 $ 4,227
Contingent payments 662 3,236 2,590
--------- --------- ---------
$ 1,531 $ 5,449 $ 6,817
======= ======== ========
For the fiscal years ended March 31, 1995 and 1996, $101,000 and
$232,000, respectively, of rent expense is included in pre-opening and gaming
development costs in the accompanying consolidated statements of operations.
In 1996, Louisiana enacted legislation providing for local
(parish-wide) option elections in November 1996 which will give the voters the
opportunity to decide whether to continue gaming in their parishes. If a
majority of the voters elect to prohibit riverboat gaming activities in
Calcasieu Parish, the Company would be allowed to continue gaming at its
Louisiana facilities until the expiration of its gaming licenses in August and
December of 1998. At March 31, 1996, the Company had approximately $208,100,000
invested in Louisiana and generated approximately $171,000,000 in net gaming
revenues during fiscal 1996.
In November, 1995, the Company finalized its agreement to form a joint
venture and co-develop a $286,000,000 riverboat casino complex in Maryland
Heights, Missouri. The Company's portion of the project budget is $143,000,000,
excluding capitalized interest, of which approximately $42,900,000 has been
invested through March 31, 1996. The investment will be accounted for using the
equity method of accounting. The project is scheduled to open in early 1997,
subject to the receipt of all necessary gaming approvals.
During fiscal year 1996, the Company sold put options on 100,000 shares
of its common stock. The put options give the holders the right at maturity to
require the Company to repurchase shares of its common stock at specified
prices. The put options expire in June, 1996 at strike prices ranging from
$11.00 to $11.50 per share. In the event the options are exercised, the Company
may elect to pay the holder in cash the difference between the strike price and
the market price of the Company's shares, in lieu of repurchasing the stock.
Note 12 - Transactions with Related Parties
A law firm performed legal services for the Company during the fiscal
years ended March 31, 1994, 1995 and 1996 for which it was paid fees in the
aggregate amount of $955,000, $1,293,000 and $1,908,000, respectively. The
President of the Company was a partner of the law firm through May 1993. He
remains associated with the firm but does not currently engage in any
firm-related activities other than on an occasional basis. The amount of the
payments due to him from the firm is not affected by fees paid by the Company to
the firm.
Two members of the board of directors were paid $70,000 and $50,000
during the years ending March 31, 1995 and 1996, respectively, in
consideration for consulting services rendered.
The Company purchases promotional items from a company owned by certain
directors and officers of the Company. During the years ended March 31, 1994,
1995 and 1996, the Company paid $79,000, $306,000 and $1,052,000 respectively,
for such items.
The Company and an affiliate of a major stockholder of the Company
entered into a contract dated July 18, 1995 for the production of theater shows
at its Mesquite property. Under the contract, which expired on March 7, 1996,
the Company paid an aggregate of $396,000 to the affiliate.
Subsequent to March 31, 1996, the Company entered into an agreement
with a company controlled by a major stockholder of the Company to modify its
license agreement, under which this individual acts as the public representative
for all of the Company's riverboat and dockside casinos, to reflect the
extension of its terms to the Company's second riverboat casino in Lake Charles
<PAGE>
and its land-based casino in Mesquite effective as of the opening of each
facility. The fees that would have been payable with respect to these two
additional facilities were replaced with one lump-sum payment of approximately
$300,000 for services at these facilities through the period ending December 31,
1996. The parties will mutually determine prior to that date whether, and if so,
on what terms, the license agreement will be extended beyond December 31, 1996.
Note 13 - Discontinued Operations
The net loss from discontinued operations for the year ended March 31,
1994, had been previously provided for and reflected on the March 31, 1993
financial statements as a net liability for discontinued operations. There was
no operating or cash flow activity resulting from the discontinued operations
for the years ended March 31, 1995 and 1996. Summary operating results of the
discontinued operations for the year ended March 31, 1994 are as follows
(dollars in thousands):
Revenues $ 3,360
Costs and expenses 4,376
--------
Net loss $ (1,016)
========
The significant components of the net effect of discontinued operations
on cash flows from operating activities for the year ended March 31, 1994 are as
follows (dollars in thousands):
Net loss $ (1,016)
Other 163
Changes in net liability of discontinued operations (1,969)
---------
$ (2,822)
=========
There were no significant components of the net effect of discontinued
operations on cash flows from investing and financing activities.
- - -------------------------------------------------------------------------------
PLAYERS INTERNATIONAL, INC.,
Issuer
and
THE GUARANTORS NAMED HEREIN
and
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
Trustee
----------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of October 17, 1995
to Indenture dated as of April 10, 1995
----------------
$150,000,000
10 7/8% Senior Notes Due 2005, Series B
- - -------------------------------------------------------------------------------
<PAGE>
THIRD SUPPLEMENTAL INDENTURE
This Third Supplemental Indenture (the "Third Supplemental
Indenture") dated as of October 17, 1995, is by and among Players International,
Inc., a Nevada corporation (the "Company"), the Guarantors whose names are set
forth on the signature pages below, and First Fidelity Bank, National
Association, as Trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Company, certain of the Guarantors and the
Trustee have entered into an Indenture dated as of April 10, 1995 (the "Original
Indenture"), as supplemented by a First Supplemental Indenture dated as of April
25, 1995 and a Second Supplemental Indenture dated as of September 19, 1995, in
connection with the Company's issuance of its 10-7/8% Senior Notes due 2005 (the
"Original Senior Notes");
WHEREAS, the Original Indenture provides for the issuance of
Exchange Senior Notes upon the surrender and cancellation of Original Senior
Notes of like aggregate principal amount in accordance with the Registration
Rights Agreement;
WHEREAS, the Original Indenture contemplates the execution and
delivery of a supplemental indenture for the purpose of setting out the form of
the Exchange Senior Notes and to set forth such other matters as may be
necessary or desirable in connection with the Exchange Offer;
WHEREAS, all acts and things necessary to constitute this
Third Supplemental Indenture a valid indenture and agreement according to its
terms have been done and performed and the parties hereto have duly authorized
the execution and delivery of this Third Supplemental Indenture and are jointly
and severally obligated hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto hereby covenant and agree as follows:
1. Definitions. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Original Indenture.
2. Form and Dating. The Exchange Senior Notes and the
Trustee's certificate of authentication in respect thereof shall be
substantially in the form of the Exchange Senior Note and Trustee's certificate
contained in Exhibit A hereto, which Exhibit is a part of this Third
Supplemental Indenture. The Exchange Senior Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Exchange Senior Notes and any notation, legend or
endorsement on them. Any such notations, legends or endorsements not contained
in the form of Exchange Senior Note attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Exchange Senior Note shall be dated
the date of its authentication.
2
<PAGE>
The terms and provisions contained in the form of Exchange
Senior Note shall constitute, and are hereby expressly made, a part of the
Indenture and, to the extent applicable, the Company and the Trustee by their
execution and delivery of this Third Supplemental Indenture, hereby agree to
such terms and provisions and to be bound thereby.
3. Execution and Authentication. The Exchange Senior Notes
shall be executed and authenticated in accordance with the provisions of
Section 2.2 of the Original Indenture.
4. Execution and Delivery of Indenture and Guarantee. By
execution and delivery of this Third Supplemental Indenture, each Guarantor
confirms its execution, and the binding effect on such Guarantor, of the
Original Indenture, the supplemental indentures and its Guarantee of the
Exchange Senior Notes as provided in Article XIII of the Original Indenture.
Each Guarantor executing this Third Supplemental Indenture agrees that a
notation of such Guarantee in substantially the form attached hereto as
contained in Exhibit A shall be endorsed on each Exchange Senior Note
authenticated and delivered by the Trustee, and such Guarantee shall be executed
on behalf of such Guarantor by manual or facsimile signature of an Officer of
such Guarantor or, if applicable, of its member or general partner, as provided
in the form of Guarantee set forth in Exhibit A. The method of execution by the
Guarantors set forth in this paragraph supersedes the execution requirements set
forth in Section 13.2 of the Original Indenture.
5. Confirmation of Indenture. Except as amended and
supplemented by this Third Supplemental Indenture, the Original Indenture as
heretofore supplemented by the First Supplemental Indenture and the Second
Supplemental Indenture is ratified and confirmed in all respects.
6. Governing Law. This Third Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York.
7. Execution in Counterparts. This Third Supplemental
Indenture may be executed in several counterparts, each of which shall be an
original and all of which shall constitute one instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed as of the date first written above.
PLAYERS INTERNATIONAL, INC.
By:________________________________
Name: Peter J. Aranow
Title: Executive Vice President,
Chief Financial Officer
and Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Trustee
By:________________________________
Name:
Title:
PLAYERS LAKE CHARLES, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT MANAGEMENT, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS RIVERBOAT, LLC
By: Players Riverboat
Management, Inc.,
member
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
4
<PAGE>
SHOWBOAT STAR PARTNERSHIP
By: Players Riverboat, LLC,
general partner
By: Players Riverboat Management,
Inc., member
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
By: Players Riverboat Management, Inc.,
general partner
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS NEVADA, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE GOLF CLUB, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MESQUITE LAND, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS INDIANA, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
5
<PAGE>
PLAYERS MICHIGAN CITY, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MICHIGAN CITY
MANAGEMENT, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS BLUEGRASS DOWNS, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
RIVER BOTTOM, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
SOUTHERN ILLINOIS RIVERBOAT/
CASINO CRUISES, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
6
<PAGE>
PLAYERS RIVER CITY, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHREVEPORT, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS SHUTTLE, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
PLAYERS MARYLAND HEIGHTS NEVADA, INC.
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
7
<PAGE>
Exhibit A
FORM OF EXCHANGE SENIOR NOTE
PLAYERS INTERNATIONAL, INC.
10 7/8% SENIOR NOTE
DUE 2005, SERIES B
No. $
Players International, Inc., a Nevada corporation (hereinafter
called the "Company," which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to _______, or registered assigns, the principal sum of _________ Dollars, on
April 15, 2005.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Reference is made to the further provisions of this Senior
Note on the reverse side, which will, for all purposes, have the same effect as
if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be duly executed under its corporate seal.
(seal) PLAYERS INTERNATIONAL, INC.
By: _________________________
Title: ______________________
Attest:
- - ------------------------
Secretary
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Senior Notes described in the
within-mentioned Indenture.
Dated: ________________
First Fidelity Bank, National
Association, as Trustee
By: ____________________________
Authorized Signatory
8
<PAGE>
[REVERSE SIDE OF NOTE]
PLAYERS INTERNATIONAL, INC.
10 7/8% Senior Note
due 2005, Series B
1. Interest.
Players International, Inc., a Nevada corporation (hereinafter called
the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 10 7/8% per annum. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of 10 7/8% per annum compounded semi-annually.
The Company will pay interest semi-annually on April 15 and October 15
of each year (each, an "Interest Payment Date"), commencing October 15, 1995.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid on the Securities, from
April 17, 1995. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, First Fidelity Bank, National Association (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
9
<PAGE>
4. Indenture.
The Company issued the Securities under an Indenture, dated as of April
10, 1995, as supplemented by a First Supplemental Indenture dated as of April
25, 1995, a Second Supplemental Indenture dated as of September 19, 1995 and a
Third Supplemental Indenture dated as of October 17, 1995 (the "Indenture"),
among the Company, the Guarantors named therein and the Trustee. Capitalized
terms herein have the meanings ascribed to such terms in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement thereof. The Securities are senior
unsecured obligations of the Company limited in aggregate principal amount to
$150,000,000 and are unconditionally guaranteed by certain of the Company's
present, and all of the Company's future, Subsidiaries.
5. Redemption.
The Securities may be redeemed in whole or, from time to time, in part,
at any time on or after April 15, 2000, at the option of the Company, at the
Redemption Price (expressed as a percentage of principal amount) set forth
below, if redeemed during the 12-month period commencing April 15 of each of the
years indicated below, in each case, plus any accrued but unpaid interest to the
Redemption Date. Except as otherwise provided in the next paragraph, the
Securities may not otherwise be redeemed.
Year Redemption Price
---- ----------------
2000 104.078%
2001 102.719%
2002 101.359%
2003 and thereafter 100.000%
The Securities may also be redeemed at any time if the ownership of any
of the Securities by any person or entity will preclude, interfere with,
threaten or delay the issuance, maintenance, existence or reinstatement of any
gaming or liquor license, permit or approval, or result in the imposition of
burdensome terms or conditions on such license, permit or approval, as
determined by any Governmental Authority or the Board of Directors of the
Company (including, without limitation, such Holder failing to qualify or to be
found suitable under applicable Gaming Laws).
Any redemption of the Securities will comply with Article III of the
Indenture.
10
<PAGE>
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, postage prepaid,
at least thirty (30) days but not more than sixty (60) days prior to the
Redemption Date to each Holder whose Securities are to be redeemed (unless a
shorter notice shall be required by any Governmental Authority) at such Holder's
last address as then shown upon the Company's registry books. Securities may be
redeemed in part in multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on or before such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, plus any accrued and unpaid interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange of (a) any Definitive Security selected for redemption in whole
or in part pursuant to Article III of the Indenture, except the unredeemed
portion of any Definitive Security being redeemed in part, or (b) any Security
for a period beginning fifteen (15) Business Days before the mailing of a notice
of an offer to repurchase pursuant to Article XII or Section 5.14 of the
Indenture or a notice of the Company's intent to redeem Senior Notes pursuant to
Article III of the Indenture and ending at the close of business on the day of
such mailing.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of the
Security for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
11
<PAGE>
10. Discharge Prior to Redemption or Maturity.
If the Company irrevocably deposits with the Trustee, in trust, for the
benefit of the Holders, U.S. Legal Tender or U.S. Government Obligations or a
combination thereof, in such amounts as will be sufficient in the opinion of a
nationally recognized firm of independent public accountants selected by the
Trustee, to pay the principal of, premium, if any, and interest on the
Securities to redemption or maturity and complies with the other provisions of
the Indenture relating thereto, the Company and the Guarantors will be
discharged from certain provisions of the Indenture and the Securities
(including the financial covenants, but excluding their obligation to pay the
principal of, premium, if any, and interest on the Securities). Upon
satisfaction of certain additional conditions set forth in the Indenture, the
Company may elect to have its and the Guarantors' obligations discharged with
respect to outstanding Securities by defeasing the Securities, as more fully
described in Article IX of the Indenture.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holder or Holders of not
less than a majority in aggregate principal amount of the Securities then
outstanding. Subject to Section 7.8 of the Indenture, the Holder or Holders of a
majority in principal amount of then outstanding Securities may waive compliance
by the Company or any Guarantor with any provision of the Indenture or the
Securities. Notwithstanding the foregoing, and subject to the provisions of
Section 10.2 of the Indenture, without the consent of the Holders of at least
sixty-six and two-thirds percent (66-2/3%) of the aggregate principal amount of
then outstanding Securities, no such amendment, supplemental indenture or waiver
shall change any provision of Article VII or Article XIII of the Indenture or
extend any Maturity Date of any Senior Note. Without notice to or consent of any
Holder, the parties thereto may under certain circumstances amend or supplement
the Indenture or the Securities to, among other things, cure any ambiguity,
defect or inconsistency, or make any other change that does not adversely affect
the rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and the Guarantors to, among other things, incur additional Indebtedness and
Disqualified Capital Stock, pay dividends or make certain other restricted
payments, enter into certain transactions with Affiliates, incur Liens, sell
assets, merge or consolidate with any other Person or transfer (by lease,
assignment or otherwise) substantially all of the properties and assets of the
Company. The limitations are subject to a number of important qualifications and
exceptions. The Company must periodically report to the Trustee on compliance
with such limitations.
12
<PAGE>
13. Ranking.
Payment of principal of, premium, if any, and interest on the
Securities ranks Pari Passu in right of payment with all present and future
senior Indebtedness of the Company and senior to all future subordinated
Indebtedness of the Company. The payment of the principal of, premium, if any,
and interest on the Securities is unconditionally guaranteed on a senior
unsecured basis by certain of the present and all future Subsidiaries of the
Company, as more fully set forth in the Indenture. The Guarantees will rank Pari
Passu with all existing and future senior Indebtedness of the Guarantors and
senior to all future subordinated Indebtedness of the Guarantors.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Payment Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Payment Date.
Holders of Securities will receive a Change of Control Offer from the Company
prior to any related Change of Control Payment Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of the
Company or any of its Subsidiaries to sell assets or to incur an Event of Loss.
In the event the Net Cash Proceeds from an Asset Sale or Event of Loss exceed
certain amounts, as specified in the Indenture, the Company will be required
either to reinvest the proceeds of such Asset Sale or Event of Loss in its
business or to make an offer to purchase each Holder's Securities at 100% of the
principal amount thereof, plus accrued interest, if any, to the purchase date.
15. Gaming Laws.
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the Gaming Laws and the
jurisdiction and requirements of the Gaming Authorities and the further
limitations and requirements set forth in the Indenture.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization),
then in every such case, unless the principal of all of the Securities shall
have already become due and payable, either the Trustee or the Holders of not
less than 25% in aggregate principal amount of Securities then outstanding may
declare all principal and interest thereon to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before the
Trustee enforces the Indenture or the Securities. Subject to certain
limitations, Holders of not less than a majority in aggregate principal amount
of the Securities then outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of Securities notice of
any continuing Default or Event of Default (except a Default in payment of
principal or interest), if it determines that withholding notice is in their
interest.
13
<PAGE>
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. Successors.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
19. No Recourse Against Others.
No direct or indirect stockholder, incorporator, employee, officer or
director, as such, past, present or future of the Company, the Guarantors or any
successor entity shall have any personal liability in respect of the Obligations
of the Company or the Guarantors under this Indenture or the Senior Notes by
reason of his, her or its status as such stockholder, incorporator, employee,
officer or director. Each Holder by accepting a Senior Note waives and releases
all such liability. Such waiver and release are part of the consideration for
the issuance of the Senior Notes.
20. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
14
<PAGE>
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
15
<PAGE>
FORM OF GUARANTEE
For value received, Players Lake Charles, Inc., a Louisiana
corporation; Players Riverboat Management, Inc., a Nevada corporation; Players
Riverboat, Inc., a Nevada corporation; Players Mesquite Golf Club, Inc., a
Nevada corporation; Players Indiana, Inc., an Indiana corporation; Players
Michigan City, Inc., an Indiana corporation; Players Riverboat, LLC, a Louisiana
limited liability company; Players Nevada, Inc., a Nevada corporation; Players
Bluegrass Downs, Inc., a Kentucky corporation; Players Mesquite Land, Inc., a
Nevada corporation; Players Michigan City Management, Inc., an Indiana
corporation; Players Maryland Heights, Inc., a Missouri corporation; River
Bottom, Inc., a Missouri corporation; Showboat Star Partnership, a Louisiana
general partnership; Southern Illinois Riverboat/Casino Cruises, Inc., an
Illinois corporation; Players River City, Inc., a Nevada corporation; Players
Shreveport, Inc., a Nevada corporation; Players Shuttle, Inc.; a Louisiana
corporation; and Players Maryland Heights Nevada, a Nevada corporation, hereby
unconditionally guarantee to the Holder of the Senior Note upon which this
Guarantee is endorsed the due and punctual payment, as set forth in the
Indenture pursuant to which such Senior Note and this Guarantee were issued, of
the principal of, premium (if any) and interest on such Senior Note when and as
the same shall become due and payable for any reason according to the terms of
such Senior Note and Article XIII of the Indenture. The Guarantee of the Senior
Note upon which this Guarantee is endorsed will not become effective until the
Trustee signs the certificate of authentication on such Senior Note.
Players Lake Charles, Inc., Players Michigan City, Inc.,
a Louisiana corporation an Indiana corporation
By:________________________________ By:__________________________________
Its:_______________________________ Its:_________________________________
Players Riverboat Management, Inc., Players Riverboat, LLC
a Nevada corporation a Louisiana limited liability
company
By:________________________________ Players Riverboat
Its:_______________________________ Management, Inc., member
By:___________________________________
Its:__________________________________
Players Riverboat, Inc., Players Nevada, Inc.,
a Nevada corporation a Nevada corporation
By:________________________________ By:__________________________________
Its:_______________________________ Its:_________________________________
Players Mesquite Golf Club, Inc., Players Bluegrass Downs, Inc.,
a Nevada corporation a Kentucky corporation
16
<PAGE>
By:________________________________ By:__________________________________
Its:_______________________________ Its:_________________________________
Players Indiana, Inc., an Indiana Players Mesquite Land, Inc.,
corporation a Nevada corporation
By:________________________________ By:__________________________________
Its:_______________________________ Its:_________________________________
Players Michigan City Management, Players Maryland Heights, Inc.,
Inc., an Indiana corporation a Missouri corporation
By:__________________________________
By:________________________________ Its:_________________________________
Its:_______________________________
River Bottom, Inc., Showboat Star Partnership,
a Missouri corporation a Louisiana general partnership
By: Players Riverboat, LLC,
By:________________________________ general partner
Its:_______________________________ By: Players Riverboat
Management, Inc.,
member
Southern Illinois By:___________________________________
Riverboat/Casino Cruises, Inc., Its:__________________________________
an Illinois corporation
By: Players Riverboat
By:________________________________ Management, Inc.,
Its:_______________________________ general partner
By:___________________________________
Players River City, Inc. Its:__________________________________
By:________________________________
Name: Peter J. Aranow Players Shreveport, Inc.
Title: Treasurer.
By:___________________________________
Players Shuttle, Inc. Name: Peter J. Aranow
Title: Treasurer
By:________________________________
Name: Peter J. Aranow
Title: Treasurer
Players Maryland Heights
Nevada, Inc.
By:___________________________________
Name: Peter J. Aranow
Title: Treasurer
17
<PAGE>
FORM OF ASSIGNMENT
I or we assign this Security to
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
[Print or type name, address and zip code of assignee]
Please insert Social Security or other identifying number of assignee
_______________________________________________________and irrevocably appoint
___________________ agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
Dated: _______________________________ Signed:_______________________________
_______________________________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
18
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to any of the following provisions of the Indenture, check the
appropriate box:
/ / Section 5.14 / / Article XII
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 5.14 or Article XII of the
Indenture, as the case may be, state the principal amount you want to be
purchased: $__________
Date:____________________________ Signature:______________________________
(Sign exactly as your name
appears on the other side of
this Security)
19
- - -------------------------------------------------------------------------------
FORM OF AGREEMENT
BETWEEN OWNER AND CONTRACTOR
where the basis of payment is the
COST OF THE WORK PLUS A FEE
with or without a Guaranteed Maximum Price
This Form of Agreement is based upon American Institute of
Architects Form A111 (1987 Edition).
- - -------------------------------------------------------------------------------
AGREEMENT made as of the Fifteenth (15th) day of November in the year of
Nineteen Hundred and Ninety-five,
BETWEEN the Owner: PLAYERS LAKE CHARLES,
INC., its permitted
successors or assigns
(Name and address) as hereafter provided
800 Bilbo Street
Lake Charles, Louisiana 70601.
and the Contractor: LAKE CHARLES
CONSTRUCTION
CORPORATION
(Name and address) 6102 Common Street
Lake Charles, Louisiana 70605.
The Project is: PLAYERS ISLAND -
ENTERTAINMENT BARGE
(Name and address) 507 N. Lakeshore Drive
Lake Charles, Louisiana 70601.
The Architect is: Robert Kleinschmidt
Associates
(Name and address) 3599 L. Ogea Road
Lake Charles, Louisiana 70605.
The Program Manager is: Labov/Ward Joint Venture
(Name and address) 6754 W. Washington Avenue
P.O. Box 1574
Pleasantville, New Jersey
08232.
The Owner and contractor agree as set forth below:
<PAGE>
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the Contract
(General, Supplementary and other Conditions), Drawings, Specifications, other
documents listed in this Agreement, Change Orders issued after execution of this
Agreement; these form the Contract, and are as fully a part of the Contract as
if attached to this Agreement or repeated herein. The Contract represents the
entire and integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents, other than Modifications, appears in
Article 16. If anything in the other Contract Documents is inconsistent with
this Agreement, this Agreement shall govern.
1.2 Any reference in this Agreement, or in any attachment hereto, to "AIA
Document A201", or to the "General Conditions" shall be deemed to refer to the
General Conditions of the Contract for Construction attached hereto, which is
based upon the 1987 Edition of AIA Document A201.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, including, without limitation, provision by
the Contractor of all labor, equipment, subcontracts, building and other
construction permits, materials, subcontracts as required for the complete
construction (including site work) of and mooring requirements for an
Entertainment Barge and related facilities, including a Certificate of Occupancy
for same, all as shown and specified on the Contract Documents attached hereto
or described herein, or other Contract Documents to be developed after the date
hereof, and including such additional Work as may reasonably be inferred
therefrom, all in strict accordance with local and state construction codes with
no exceptions.
2.2 The Work as described in Section 2.1 hereof shall include any "waterside"
construction related to the Entertainment Barge, including relocation of
existing barges, bridges, ramps, barge spuds, canopies, marina and utility
services where they terminate at land. Notwithstanding the foregoing, the Work
shall not include any Owner-supplied labor, material, equipment, systems or
components unless specifically otherwise agreed herein.
-2-
<PAGE>
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Architect
and Program Manager and utilize the Contractor's best skill, efforts and
judgment in furthering the interests of the Owner; to furnish efficient business
administration and supervision; to make best efforts to furnish at all times an
adequate supply of workers and materials; and to perform the Work in the best
way and most expeditious and economical manner consistent with the interests of
the Owner. The Owner agrees to exercise best efforts to enable the Contractor to
perform the Work in the best way and most expeditious manner by furnishing and
approving in a timely way information required by the Contractor and making
payments to the Contractor in accordance with requirements of the Contract
Documents. Without limiting any other requirement of this Agreement,
Contractor's services hereunder shall comply with the standards of its
profession, and all applicable laws.
3.2 Labov/Ward Joint Venture is and shall be the Owner's representative for
purposes of this Contract, and shall constitute Owner's Program Manager as
described herein, unless and until Owner designates another party as Program
Manager by written notice to Contractor. The parties hereby acknowledge and
agree that Program Manager shall have the right, and is hereby authorized, to
exercise on Owner's behalf all of the rights and remedies of Owner hereunder.
The Program Manager shall also have the right, but not the obligation, to
perform any of Owner's obligations hereunder. The parties agree further that the
Contract shall be administered by Program Manager. Any provisions of the
Contract Documents which provide or contemplate that the Architect will
administer the Contract shall be deemed to refer to the Program Manager, rather
than the Architect (except to the extent Architect's certification(s) may be
required by law); provided that the Program Manager shall have no design
responsibility with respect to the Work.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured; it shall be the date the Work first commenced,
which the parties hereby agree is June 1, 1995.
-3-
<PAGE>
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed).
4.2 The Target Date for Substantial Completion of the Work shall be January 21,
1996. Contractor and Owner shall cooperate and shall each use their best efforts
to accomplish Substantial Completion of the Work by this Target Date, subject to
adjustments thereof as provided in the Contract Documents. The parties
acknowledge that this Target Date does not constitute a deadline for purposes of
delay damages hereunder; provided that the Work must in all cases be
Substantially Completed within a reasonable time after such Target Date.
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee as provided in this Article 5.
Contractor's Fee shall consist of three (3) separate fees: a Profit Fee, an
Overhead Fee, and a Small Tools/Consumables Fee, determined as follows:
5.1.1 Contractor shall receive an Overhead Fee, to compensate Contractor for its
overhead and general expenses (whether or not directly related to the Work).
This Overhead Fee shall be an amount equal to ten percent (10%) of the Cost of
the Work as defined in Article 7.
5.1.2 Contractor shall receive a Small Tools/Consumables Fee, to compensate
Contractor for its expenses with respect to materials, supplies, facilities,
machinery, equipment and hand tools, and other items consumed in the performance
of the Work, for which Contractor is not reimbursed directly under the
provisions of Section 7.1.4.1 hereof. The Small Tools/Consumables Fee shall be
an amount equal to two percent (2%) of Contractor's own base labor costs (i.e.,
excluding benefits and related costs) as defined in Section 7.1.1.1, below.
5.1.3 Contractor shall receive a Profit Fee, as Contractor's profit on this
Contract. The Profit Fee shall be an amount equal to six and one-half percent
(6.5%) of: (i) the Cost of the Work as defined in Article 7; plus (ii) the
Overhead Fee on the Cost of the Work as provided in Section 5.1.1, above; plus
(iii) the Small Tools/Consumables Fee on Contractor's base labor costs as
provided in Section 5.1.2, above.
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5.1.4 Notwithstanding any other provision of this Article 5 to the contrary, the
parties hereby agree that, with respect to: Custom Kitchen Equipment Co., Inc.
Living Waters Jack's Landscaping The Larson Company Preserved Treescapes
International Creative Presentations, Inc. and any other contracts or
subcontracts for specialty Work or materials entered into or arranged by Owner,
and for which Contractor assumes a supervisory/administrative role (the
"Designated Subcontract(s)"), the Contractor's Fee shall be as follows:
5.1.4.1 Overhead Fee: An amount equal to two percent (2%) of payment(s) made
under the Designated Subcontract(s).
5.1.4.2 Profit Fee: An amount equal to two percent (2%) of: (i) payment(s)
made under the Designated Subcontract(s); plus (ii) the Overhead Fee
payable under Section 5.1.4.1, above.
(State a lump sum, percentage of Cost of the Work or other provision for
determining the Contractor's Fee, and explain how the Contractor's Fee is to be
adjusted for changes in the Work.)
5.2 ADJUSTABLE GUARANTEED MAXIMUM PRICE
5.2. The sum of the Cost of the Work and the Contractor's Fee, based on the
attached Schedule of Values and the Allowances set forth therein, shall not
exceed Nineteen Million Dollars ($19,000,000), subject to additions and
deductions by Change Order as provided in the Contract Documents. Such maximum
sum is referred to in the Contract Documents as the Adjustable Guaranteed
Maximum Price. The Adjustable Guaranteed Maximum Price is based upon $12,500,000
for Work above deck, and $6,500,000 for Work at or below deck; but such amounts
shall not constitute sublimits hereunder. Costs which would cause the Adjustable
Guaranteed Maximum Price to be exceeded shall be paid by the Contractor without
reimbursement by the Owner, or additional Contractor's Fee.
(Insert specific provisions if the Contractor is to participate in any savings.)
5.2.2 As the Work progresses, Contractor will monitor the Project Costs, and
keep Program Manager reasonably advised as to whether any of the Allowances set
forth in the Schedule of Values is likely to be exceeded. Allowances in the
Schedule of Values may be changed by Change Order only. Without any obligation
of Program Manager to monitor Project Costs, if Program Manager becomes aware,
based on the information provided by Contractor to Program Manager, that any of
the Allowances is likely to be exceeded, Program Manager shall so advise
Contractor.
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5.2.3 In addition to the Contractor's Fee described in Section 5.1 hereof, Owner
shall pay the Contractor, if applicable, a Savings Incentive Fee as provided in
this Section 5.2.3. The Savings Incentive Fee shall be an amount equal to fifty
percent (50%) of the amount by which Contract Sum, computed through final
payment hereunder, is less than $18,000,000. The $18,000,000 base amount for the
Savings Incentive Fee is not subject to adjustment hereunder. The Savings
Incentive Fee shall be payable only if, January 21, 1996 at 12:00 midnight: (i)
the Work is Substantially Complete; (ii) a Certificate of Occupancy for the
Project has been received; and (iii) the Project is open to the public, allowing
access to both of Owner's Riverboat Casinos. Such deadline shall be extended
only for the actual amount of time (on an hour-for-hour basis) the Project was
in Owner's possession prior to such deadline, for purposes of relocating the
Project to Owner's business location in Lake Charles, Calcasieu Parish,
Louisiana, and for no other reason.
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A ADJUSTABLE GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Adjustable Guaranteed Maximum Price on account of
changes in the Work may be determined by Change Order only. The Work itself may
be changed by any of the methods listed in Sub-paragraph 7.3.3 of the General
Conditions.
6.1.2 In calculating adjustments to subcontracts (except those awarded with the
Owner's prior consent on the basis of cost plus a fee), the terms "cost" and
"fee" as used in Clause 7.3.3.3 of the General Conditions and the terms "costs"
and "a reasonable allowance for overhead and profit" as used in Subparagraph
7.3.6 of the General Conditions shall have the meanings assigned to them in the
General Conditions and shall not be modified by Articles 5, 7 and 8 of this
Agreement. Adjustments to subcontracts awarded with the Owner's prior consent on
the basis of cost plus a fee shall be calculated in accordance with the terms of
those subcontracts.
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
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ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean actual and reasonable costs necessarily
incurred by the Contractor in the proper performance of the Work. Such costs
shall be at rates not higher than the standard paid at the place of the Project
except with prior consent of the Owner. The Cost of the Work shall include only
the items set forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers (including no more than four working
foremen) directly employed by the Contractor to perform the construction of the
Work at the site or, with the Owner's agreement, at off-site workshops.
7.1.1.2 Intentionally deleted.
7.1.1.3 Intentionally deleted.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays, vacations and
pensions, provided such costs are based on wages and salaries included in the
Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of approved subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction, with the approval of
Program Manager.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be handed over to
the Owner at the completion of the Work or, at the Owner's option, shall be sold
by the Contractor; amounts realized, if any, from such sales shall be credited
to the Owner as a deduction from the Cost of the Work.
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7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
RELATED ITEMS
7.1.4.1 Costs of Diesel Fuel for on-site equipment, Welding Rods, Acetylene and
Oxygen and hand tools having a unit cost of greater than $225.00, which are
provided by the Contractor at the site and not customarily owned by the
construction workers, and cost less salvage value on such items if not fully
consumed, whether sold to others or retained by the Contractor. Cost for items
previously used by the Contractor shall mean fair market value.
7.1.4.2 Rental charges for cranes and other lifting equipment having a capacity
of 20 tons or greater, two forklifts for the Project and welding machines for
the Project, which are provided by the Contractor at the site, whether rented
from the Contractor or others, and costs of transportation, installation, minor
repairs and replacements, dismantling and removal thereof. Rates and quantities
of equipment rented shall be subject to the Owner's prior approval; plus an
additional $30,000 for other rental costs paid prior to the date hereof.
7.1.4.3 Intentionally deleted.
7.1.4.4 Intentionally deleted.
7.1.4.5 Intentionally deleted.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds for the Work, to the extent such coverage exceeds the limits
typically carried by the Contractor.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Intentionally deleted.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
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7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such costs of
legal defenses, judgment and settlements shall not be included in the
calculation of the Contractor's Fee or of a Adjustable Guaranteed Maximum Price,
if any, and provided that such royalties, fees and costs are not excluded by the
last sentence of Subparagraph 3.17.1 of the General Conditions or other
provisions of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.5.7 Any costs directly allocable to the Program Manager, even if not of a
type which would otherwise be reimbursable to Contractor under the provisions of
this Article 7.
7.1.5.8 Amounts paid to Duralde Consultants prior to the date of this Agreement
with respect to the Work, in an amount not to exceed $38,500.00.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the extent
approved in advance in writing by the Owner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR
NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 Intentionally Deleted. In taking action to prevent threatened damage,
injury or loss in case of an emergency affecting the safety of persons and
property, as provided in Paragraph 10.3 of the General Conditions.
7.2.2 Intentionally Deleted.
7.2.3 In repairing damaged Work provided such damage did not result from the
fault or negligence of the Contractor or the Contractor's personnel, and only to
the extent that the cost of such repairs is not recoverable by the Contractor
from others and the Contractor is not compensated therefor by insurance or
otherwise.
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7.2.4 In correcting defective or nonconforming Work performed or supplied by a
Subcontractor or material supplier and not corrected by them, provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or material supplier, after completion of
diligent efforts by Contractor.
7.3 SPECIAL REIMBURSABLE COSTS
7.3.1 Actual, reasonable and necessary costs for the following items shall be
reimbursed by Owner to Contractor, and will be included in the calculation of
the Adjustable Guaranteed Maximum Price(s) hereunder. However, costs for such
items shall not be included in the Cost of the Work for purposes of Contractor's
Fee, or any portion thereof, and Contractor shall be entitled to no markup or
fee with respect to such items. Owner may, at its option, elect to pay any of
the following items directly to the appropriate payee; but such election shall
not be deemed or construed to be an assumption by Owner of any direct liability
or obligation of Contractor to such payee.
7.3.1.1 Fees and assessments for the building permit for the Work.
7.3.1.2 Rent paid pursuant to Contractor's lease for the site of the Work,
commencing the effective date thereof.
7.3.1.3 Costs for security at and of the Project.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed at
the Contractor's principal office or offices other than the site office, except
as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be provided in
Article 14.
8.1.2 Expenses of the Contractor's principal office and other offices.
8.1.3 Overhead and general expenses, except as may be expressly included
in Article 7.
8.1.4 The Contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
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8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.3 through 7.2.4 and Paragraph 13.5
of this Agreement, costs due to the fault or negligence of the Contractor,
Subcontractors, anyone directly or indirectly employed by any of them, or for
whose acts any of them may be liable, including but not limited to costs for the
correction of damaged, defective or nonconforming Work, disposal and replacement
of materials and equipment incorrectly ordered or supplied, and making good
damage to property not forming part of the Work.
8.1.7 Wages and salaries of the Contractor's supervisory or administrative
personnel (i.e., above working foreman) engaged, at factories, workshops or on
the road, in expediting the production or transportation of materials or
equipment required for the Work and costs related thereto.
8.1.8 Costs, including transportation, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
consumed in the performance of the Work, except as specifically reimbursable
under Section 7.1.4.1, above.
8.1.9 Costs of removal of debris from the site.
8.1.10 Travel and subsistence expenses of the Contractor's personnel, whether or
not incurred while traveling in discharge of duties connected with the Work.
8.1.11 Reproduction costs, and costs of telegrams, local and long-distance
telephone calls, postage and parcel and express delivery charges, telephone
service, and petty cash expenses of the site office or any other location,
except for those directly allocable to Program Manager as provided in Section
7.1.5.7 hereof.
8.1.12 Wages or salaries of the Contractor's supervisory and administrative
personnel (i.e., above working foreman), and wages or salaries of working
foremen other than those specified in Section 7.1.1.1, when stationed at the
site or elsewhere, and costs related thereto.
8.1.13 Contractor's data processing costs, whether or not related to the Work.
8.1.14 Legal, mediation or arbitration costs, fees and expenses.
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8.1.15 Fees and expenses of Contractor's accounting, design and other
consultants or professionals, except to the extent specifically provided in
Section 7.1.5.8, above.
8.1.16 Rental charges for temporary facilities, machinery, equipment, and hand
tools, whether rented from the Contractor or others, and costs of
transportation, installation, minor repairs and replacements, dismantling and
removal thereof, except as specifically provided in Section 7.1.4.2.
8.1.17 Costs for temporary offices and services housing the Contractor's staff
on the Construction Site, communication equipment costs, office furniture and
equipment costs, and administrative and office service costs or support, except
for those costs directly allocable to Program Manager as specified in Section
7.1.5.7.
8.1.18 In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions.
8.1.19 Any cost not specifically and expressly described in Article 7.
8.1.20 Costs which would cause the Adjustable Guaranteed Maximum Price, if any,
to be exceeded.
THE PARTIES ACKNOWLEDGE AND AGREE THAT THE TERMS HEREOF SHALL BE EFFECTIVE FROM
THE DATE SET FORTH IN SECTION 4.1 (EXCEPT AS SPECIFICALLY PROVIDED IN SECTION
7.3.1.2), AND ALL COSTS AND INVOICES UNDER THIS CONTRACT SHALL BE SUBJECT TO
AUDIT AND APPROPRIATE ADJUSTMENT BETWEEN THE PARTIES IN ACCORDANCE WITH THE
TERMS HEREOF.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall accrue to
the Owner if (1) before making the payment, the Contractor included them in an
Application for Payment and received payment therefor from the Owner, or (2) the
Owner has deposited funds with the Contractor with which to make payments;
otherwise, cash discounts shall accrue to the Contractor. Contractor shall
promptly notify Program Manager of any and all available discounts. Trade
discounts, rebates, refunds and amounts received from sales of surplus materials
and equipment shall accrue to the Owner, and the Contractor shall make
provisions so that they can be secured.
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9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of the
Work.
ARTICLE 10
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily perform
with the Contractor's own personnel shall be performed under subcontracts or by
other appropriate agreements with the Contractor. The Contractor shall obtain
bids from Subcontractors and from suppliers of materials or equipment fabricated
especially for the Work and shall deliver such bids to the Program Manager. The
Owner will then determine, with the advice of the Contractor and subject to the
reasonable objection of the Program Manager, which bids will be accepted. The
Owner may designate specific persons or entities from whom the Contractor shall
obtain bids; however, if a Adjustable Guaranteed Maximum Price has been
established, the Owner may not prohibit the Contractor from obtaining bids from
others. The Contractor shall not be required to contract with anyone to whom the
Contractor has reasonable objection.
10.2 If a Adjustable Guaranteed Maximum Price has been established and a
specific bidder among those whose bids are delivered by the Contractor to the
Program Manager (1) is recommended to the Owner by the Contractor; (2) is
qualified to perform that portion of the Work; and (3) has submitted a bid which
conforms to the requirements of the Contract Documents without reservations or
exceptions, but the Owner requires that another bid be accepted; then the
Contractor may require that a Change Order be issued to adjust the Adjustable
Guaranteed Maximum Price by the difference between the bid of the person or
entity recommended to the Owner by the Contractor and the amount of the
subcontract or other agreement actually signed with the person or entity
designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment provisions of
Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus a
fee without the prior consent of the Owner.
10.4 All subcontracts or purchase orders are subject to the prior review and
approval of Owner and Program Manager.
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ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner, Program Manager and the Owner's accountants shall be afforded access
to the Contractor's records, books, correspondence, instructions, drawings,
receipts, subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Contract, and the Contractor shall preserve these for a period
of three years after final payment, or for such longer period as may be required
by law.
11.2 Contractor's obligations under Section 11.1 hereof shall include, without
limitation, maintenance and retention of records, books, correspondence,
instructions, drawings, receipts, subcontracts, purchase orders, vouchers,
memoranda and other data in sufficient detail and with sufficient back-up to
permit: (i) separate accounting for the Cost of the Work for Part I of the Work
and the Cost of the Work for Part II of the Work; and (ii) separate accounting
for costs directly allocable to the Program Manager, as contemplated under
Section 7.1.5.7 hereof.
11.3 Owner, Program Manager and Owner's accountants shall have the ongoing right
to review and audit the records, documents and information described in Section
11.1, above, in order to assure that only items and amounts properly includable
in the Cost of the Work as defined in Article 7 are paid by Owner. Contractor
shall provide to Owner or Owner's accountants all appropriate documentation,
detail and back-up necessary for the review and/or audit described herein. The
parties agree that costs improperly included in, or excluded from, the Cost of
the Work shall be subject to adjustment between the parties.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Program Manager by the
Contractor and Certificates for Payment issued by the Program Manager, the Owner
shall make progress payments on account of the Contract Sum to the Contractor as
provided below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be two (2) week
periods ending on November 9, 1995, and on every other Thursday thereafter until
completion of the Work or termination of this Agreement (each, a "Due Date").
12.3 Provided an Application for Payment is received by the Program Manager not
later than a Due Date hereunder, the Owner shall make payment to the Contractor
not later than the next following Due Date. If an Application for Payment is
received by the Program Manager after any Due Date fixed above, payment shall be
made by the Owner not later than the second Due Date after the Program Manager
receives the Application for Payment.
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12.4 With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices with check vouchers
attached, and any other evidence required by the Owner or Program Manager to
demonstrate that cash disbursements already made by the Contractor on account of
the Cost of the Work equal or exceed (1) progress payments already received by
the Contractor; less (2) that portion of those payments attributable to the
Contractor's Fee; plus (3) payrolls for the period covered by the present
Application for Payment; plus (4) retainage provided in Subparagraph 12.5.4, if
any, applicable to prior progress payments.
12.5 CONTRACTS WITH A ADJUSTABLE GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent schedule
of values submitted by the Contractor in accordance with the Contract Documents.
The schedule of values shall allocate the entire Adjustable Guaranteed Maximum
Price among the various portions of the Work, except that the Contractor's Fee
shall be shown as a single separate item. The schedule of values shall be
prepared in such form and supported by such data to substantiate its accuracy as
the Program Manager may require. This schedule, unless objected to by the
Program Manager, shall be used as a basis for reviewing the Contractor's
Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the lesser of (1) the percentage of
that portion of the Work which has actually been completed or (2) the percentage
obtained by dividing (a) the expense which has actually been incurred by the
Contractor on account of that portion of the Work for which the Contractor has
made or intends to make actual payment prior to the next Application for Payment
by (b) the share of the Adjustable Guaranteed Maximum Price allocated to that
portion of the Work in the schedule of values.
12.5.3 Subject to other provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Adjustable Guaranteed Maximum Price properly
allocable to completed Work as determined by multiplying the percentage
completion of each portion of the Work by the share of the Adjustable Guaranteed
Maximum Price allocated to that portion of the Work in the schedule of values.
Pending final determination of cost to the Owner of changes in the Work, amounts
not in dispute may be included as provided in Subparagraph 7.3.7 of the General
Conditions, even though the Adjustable Guaranteed Maximum Price has not yet been
adjusted by Change Order.
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12.5.3.2 Add that portion of the Adjustable Guaranteed Maximum Price properly
allocable to materials and equipment delivered and suitably stored at the site
for subsequent incorporation in the Work or, if approved in advance by the
Owner, suitably stored off the site at a location agreed upon in writing.
12.5.3.3 Add the Contractor's Fee, less retainage of five percent (5%) on
materials and equipment only. The Contractor's Fee shall be computed upon the
Cost of the Work described in the two preceding Clauses at the rate stated in
Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed sum in that
Paragraph, shall be an amount which bears the same ratio to that fixed-sum Fee
as the Cost of the Work in the two preceding clauses bears to a reasonable
estimate of the probable Cost of the Work upon its completion.
12.5.3.4 Subtract the aggregate of previous payments made by the owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Program Manager has withheld or
nullified a Certificate for Payment as provided in Paragraph 9.5 of the General
Conditions,
12.5.4 Additional retainage, if any, shall be as follows: NOT APPLICABLE (If it
is intended to retain additional amounts from progress payments to the
Contractor beyond (1) the retainage from the Contractor's Fee provided in Clause
12.5.3.3(2) the retainage from Subcontractors provided in Paragraph 12.7 below,
and (3) the retainage, if any, provided by other provisions of the Contract,
insert provisions for such additional retainage here. Such provision, if made,
should also describe any arrangement for limiting or reducing the amount
retained after the Work reaches a certain state of completion.)
12.7 Except with the Owner's prior approval, payments to Subcontractors included
in the Contractor's Applications for Payment shall not exceed an amount for each
Subcontractor calculated as follows:
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12.7.1 Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage of five
percent (5%). Pending final determination of amounts to be paid to the
Subcontractor for changes in the Work, amounts not in dispute may be included as
provided in Subparagraph 7.3.7 of the General Conditions even though the
Subcontract Sum has not yet been adjusted by Change Order. Notwithstanding the
foregoing, the parties agree that any Subcontracts approved by Owner on a "Cost
of Work plus Fee" basis shall be subject to five percent (5%) retainage on
materials and equipment only, as provided in Section 12.7.2, below, and that the
Southern Structures, Inc. Subcontract shall not be subject to retainage.
12.7.2 Add that portion of the Subcontract Sum properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing, less retainage of five
percent (5%).
12.7.3 Subtract the aggregate of previous payments made by the Contractor to
the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Program Manager has withheld or
nullified a Certificate for Payment by the Owner to the Contractor for reasons
which are the fault of the Subcontractor.
12.7.5 The Subcontract Sum is the total amount stipulated in the subcontract to
be paid by the Contractor to the Subcontractor for the Subcontractor's
performance of the subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
12.9 In taking action on the Contractor's Applications for Payment, the Program
Manager shall be entitled to rely on the accuracy and completeness of the
information furnished by the Contractor and shall not be deemed to represent
that the Program Manager has made a detailed examination, audit or arithmetic
verification of the documentation submitted in accordance with Paragraph 12.4 or
other supporting data; that the Program Manager has made exhaustive or
continuous on-site inspections or that the Program Manager has made examinations
to ascertain how or for what purposes the Contractor has used amounts previously
paid on account of the Contract. Such examinations, audits and verifications, if
required by the Owner, will be performed by the Owner's accountants acting in
the sole interest of the Owner, and payment of all or any part of an Application
for Payment (including final payment as hereafter provided) shall not impair
Owner's audit, verification and adjustment rights or claims hereunder with
respect to such Application for payment.
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ARTICLE 13
FINAL PAYMENT
13.1 Final payment, constituting the entire unpaid balance of the Contract Sum
less any holdback for nonconforming work, shall be made by the Owner to the
Contractor when (1) the Contract has been fully performed by the Contractor
(including, without limitation, Owner's receipt of all written guarantees and
lien waivers required under the Contract Documents), except for the Contractor's
responsibility to correct nonconforming Work as provided in Subparagraph 12.2.2
of the General Conditions and to satisfy other requirements, if any, which
necessarily survive final payment; and (2) a final Certificate for Payment has
been issued by the Program Manager; such final payment shall be made by the
Owner not more than 30 days after the issuance of the Program Manager's final
Certificate for Payment.
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee; but not more than the Adjustable
Guaranteed Maximum Price, if any.
13.2.2 Subtract amounts, if any, for which the Program Manager withholds, in
whole or in part, a final Certificate for Payment as provided in Subparagraph
9.5.1 of the General Conditions or other provisions of the Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount due
the Contractor, the Contractor shall reimburse the difference to the owner.
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Program Manager by the Contractor, based upon such Cost of the
Work as the Owner's accountants report to be substantiated by the Contractor's
final accounting, and provided the other conditions of Paragraph 13.1 have been
met, the Program Manager will, within seven days after receipt of the written
report of the Owner's accountants, either issue to the Owner a final Certificate
for Payment with a copy to the Contractor, or notify the Contractor and Owner in
writing of the Program Manager's reasons for withholding a certificate as
provided in Subparagraph 9.5.1 of the General Conditions. The time periods
stated in this Paragraph 13.3 supersede those stated in Subparagraph 9.4.1 of
the General Conditions.
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13.4 If the Owner's accountants report the Cost of the Work as substantiated by
the Contractor's final accounting to be less than claimed by the Contractor, the
Contractor shall be entitled to dispute such determination without a further
decision of the Program Manager, which claim shall first be the subject of
non-binding mediation as provided elsewhere in the Contract Documents.
Contractor's claim for the disputed amount must be submitted to Owner and
Program Manager within 30 days after the Contractor's receipt of a copy of the
Program Manager's final Certificate for Payment; failure to arbitration do so
within this 30-day period shall result in the substantiated amount reported by
the Owner's accountants becoming binding on the Contractor. Pending a final
resolution by mediation or litigation, the Owner shall pay the Contractor the
amount certified in the Program Manager's final Certificate for Payment.
13.5 If, subsequent to final payment and at the Owner's request, the Contractor
incurs costs described in Article 7 and not excluded by Article 8 to correct
defective or nonconforming Work, the Owner shall reimburse the Contractor such
costs and the Contractor's Fee applicable thereto on the same basis as if such
costs had been incurred prior to final payment, but not in excess of the
Adjustable Guaranteed Maximum Price, if any. If the Contractor has participated
in savings as provided in Paragraph 5.2, the amount of such savings shall be
recalculated and appropriate credit given to the Owner in determining the net
amount to be paid by the Owner to the Contractor.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the General
Conditions or other Contract Document, the reference refers to that provision as
amended or supplemented as shown on the General Conditions or other Contract
Documents attached hereto, or by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof, at the
legal rate for interest on judgments in Louisiana prevailing from time to time,
not to exceed 9%.
(Insert rate of interest agreed upon, if any.)
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(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
14.3 Subordination. Contractor shall execute and deliver to Program Manager, and
shall cause every subcontractor, sub-subcontractor, supplier, material man, or
other person (as to its own Work or materials) involved in any work to execute
and deliver to Program Manager, together with any Application for Payment being
submitted to Owner or Program Manager, in each case respect to all Work or
materials covered by such Application for Payment, a waiver of any lien rights
of such Contractor, subcontractor, sub-subcontractor, supplier, material man, or
other person or entity, all in form and substance satisfactory to Program
Manager as required under Section 9.3.1.2. of the General Conditions. Contractor
acknowledges that the foregoing is a material obligation under this Agreement.
14.4 Payments. Contractor acknowledges and agrees that Owner may at its option,
in order to ensure payment of all of Contractor's subcontractors and suppliers
with respect to the Project, make the payments required under Articles 5 and 6
of the Agreement as provided herein. Specifically, Owner shall pay that portion
of any such payment which represents amounts owed by Contractor to any of its
subcontractors and/or suppliers, by Owner's joint check, payable to the order of
both Contractor and the applicable subcontractor(s) and/or supplier(s). The
portion of any such payment which does not represent amounts owed to
Contractor's subcontractor(s) and/or supplier(s) shall be paid by Owner's check,
payable to the order of Contractor only. Owner shall not be required to provide
any payment hereunder, unless and until all requirements under the Contract
Documents for such payment have been satisfied, including, without limitation,
receipt of appropriate written lien waivers from each payee.
14.5 Owner-furnished Items. The Owner and the Contractor acknowledge and agree
that certain items will be provided by Owner separately, and will therefore not
constitute part of the Work.
14.6 Affirmative Action and Equal Opportunity.
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14.6.1 Contractor agrees that it will not discriminate against any employees or
applicants based on race, color, religion, sex or national origin and that it
will take affirmative action to ensure that applicants are employed, and that
employees are treated during employment, without regard to their race, color,
religion, sex or national origin, and Contractor will comply with all laws and
regulations applicable thereto. All solicitations or advertisements for
employees shall state that all qualified applicants will receive consideration
for employment without regard to race, color, religion, sex or national origin.
14.6.2 Contractor shall comply with all requirements of the Affirmative Action
and Equal Employment Opportunity laws, relations and programs applicable to the
Project and the Work to be performed under this Agreement.
14.6.3 All Subcontracts and Sub-subcontracts shall contain the requirements set
forth in clauses (a) and (b) above, and Contractor shall enforce such
requirements against all Subcontractors, and shall require all Subcontractors to
enforce such requirements against all of their respective Sub-subcontractors.
14.7 Representations, Warranties and Covenants. Contractor hereby represents,
warrants and covenants to Owner that:
(a) Contractor is a corporation duly formed and validly existing and licensed
under the laws of the State of Louisiana, with full power and authority to
observe and perform the terms, covenants, conditions and other provisions on its
part to be observed and performed under this Contract.
(b) Contractor is financially solvent.
(c) Contractor is experienced and skilled in the construction and work of the
type described in or required by the Contract Documents.
(d) All equipment and materials incorporated into the Work shall be new (except
if otherwise required by the Specifications) and of good quality, and the
equipment, the materials and the Work shall be free from faults and defects and
shall strictly conform to the Contract Documents.
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(e) Contractor has by careful examination satisfied itself as to: (i) the
nature, location and character of the property on which the Work is to be
moored, installed, and/or constructed (the "Property"), including, without
limitation, the surface conditions of the land and all structures and
obstructions thereon, both natural and man-made, surface water conditions of the
Property and the surrounding area and, to the extent pertinent to the Work, all
other conditions; (ii) the nature, location and character of the general area in
which the Property is located, including, without limitation, its climatic
conditions, the availability and cost of labor and the availability and cost of
materials, supplies, tools, equipment, labor and professional services necessary
to complete the Work in the manner required by the Contract Documents; (iii) the
nature and extent of the Contract Documents completed through the date hereof
and the Work reflected therein; and (iv) all other matters or things which could
in any manner affect the cost, progress or performance of the Work which
Contractor is or should be aware of, including, without limitation, the physical
and operational restrictions on the carrying on of construction work in or about
the Project.
(f) Contractor shall make itself generally familiar with all federal, state and
local laws, ordinances, rules and regulations relating to the Work.
(g) Contractor has carefully studied all reports of investigations and tests of
physical conditions at the Property or otherwise affecting cost, progress or
performance of the Work which have previously been submitted to and acknowledged
by Contractor and has correlated the results of all such observations,
examinations, investigations tests, reports and data with the terms and
conditions of the Contract Documents.
(h) Contractor has examined those reports and related data specifically referred
to in Paragraph 3.2.2 of the General Conditions and in clause (g) of this
Paragraph 14.7 in connection with Contractor's determination of its performance
of the Work at the Contract Sum within the Contract Time and in accordance with
the other terms and conditions of the Contract Documents.
(i) Intentionally Deleted.
(j) Contractor has given and shall give Program Manager and Owner written notice
of all conflicts, errors or discrepancies that it has discovered or discovers in
the Contract Documents.
(k) Contractor will deliver to Owner a Project which shall be constructed in
accordance with commonly accepted construction methods and practices and which
when completed, will meet the requirements of all applicable codes. Contractor
is not responsible for the Architect's design.
14.8 Assignment of Warranties. Contractor hereby assigns and shall, prior to
final payment, assign to Owner all merchandise, product and performance
warranties, whether express or implied in law, obtained or obtainable by it in
conjunction with the labor and materials incorporated into the Work as completed
in accordance with the Contract Documents.
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14.9 Interpretation of "Approval". No references in this Agreement to the term
'approval' of or by Owner or Program Manager, wherever any such references
occur, shall constitute final acceptance of any Work, or constitute a waiver of
any of Owner's rights or remedies hereunder, or in any way relieve Contractor or
any Subcontractor of their respective obligations to comply with the terms of
the Contract Documents, and the respective Contracts, together with all
applicable laws, statutes, ordinances, rulings, regulations, codes, decrees,
orders, judgments, conditions, restrictions and requirements of any federal,
state or local governmental authority, and any political subdivision thereof,
any agency, department, court, commission, board, bureau or instrumentality of
any of them which exercises jurisdiction over the Work.
14.10 Restriction Against Use of Name. Neither Contractor nor any of
Contractor's Agents shall use the name of "Players", or "Players Island" (either
alone or in conjunction with or as a part of any other name) or any trade name,
trademark or service mark of Owner or any of its related, affiliated or
subsidiary companies of any advertising, publicity or promotion without the
prior written consent of Owner.
14.11 No Third Party Beneficiaries. Nothing contained in any of the Contract
Documents shall be deemed to confer any rights or benefits upon any person not a
party to this Contract, other than Program Manager, and any successor or assign
of Owner.
14.12 Confidentiality of Project Documents. Contractor agrees not to furnish,
use or disclose to any individual or entity any information or materials
relating to Owner's methods of doing business, systems of operations, know-how
or any other proprietary information or any information or materials relating to
the Work, except as required by law or as may be necessary to perform its
obligations under the Contract Documents; all of which Contractor acknowledges
is proprietary information and constitutes the work product and trade secrets of
Owner. The covenants set forth in this Paragraph 14.12 shall survive the
expiration or sooner termination of the Contract.
14.13 Assignment. This Contract shall be binding upon and inure to the benefit
of Owner and Contractor, and their respective successors and permitted assigns.
Contractor may not assign this Agreement, or any of its rights or interests
hereunder, without the prior written consent of the Owner. Any attempted
assignment by Contractor without Owner's consent as aforesaid shall be of no
force of effect, nor shall it relieve Contractor of any liability or obligation
hereunder. Owner may assign this Contract in connection with any transfer of
ownership of the Work.
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14.14 Regulatory Matters.
(i) Several of the affiliates of Owner are licensed by and
otherwise subject to the authority of various casino and gaming regulatory
agencies including, but without limitation, gaming regulators in Illinois,
Indiana, Kentucky, Louisiana, Missouri, Nevada and New Jersey ("Gaming
Regulators"). Players International, Inc. ("PII"), the parent corporation of
Owner, has adopted a regulatory compliance policy, and Contractor agrees to
provide PII with such documentation, information and assurances regarding
itself, any owners, principal employees, brokers, agents or others where
applicable as may be necessary in order for Owner to comply with PII's
regulatory compliance policy and with the request of any Gaming Regulators. The
foregoing shall be a material obligation of Contractor hereunder.
(ii) Notwithstanding anything to the contrary in this
Agreement, Owner shall have the sole and exclusive right and option to terminate
Owner's obligations under this Agreement by written notice to Contractor, and
thereupon this Agreement shall terminate and become void and there shall be no
liability on the part of either party, upon the occurrence of any of the
following events:
(A) Contractor's failure to apply for and obtain
and/or to maintain thereafter any and all licenses, permits and approvals
from any Gaming Regulator necessary for Contractor to receive payments hereunder
or comply with applicable laws;
(B) an order or recommendation by any Gaming
Regulator requiring or recommending the termination of this Agreement;
(C) the commission of any act or anything that
is or shall be an offense by Contractor, its principals, agents or
employees involving moral turpitude under federal, state or local laws, or which
brings Contractor into public disrepute, contempt, scandal or ridicule, or which
insults or offends the community, or
(D) disapproval of this Agreement by any Gaming
Regulator having jurisdiction over such matters, which disapproval shall
be final and unappealable to any administrative body or court of law (provided
that all payments hereunder shall be suspended without interest pending such
appeal).
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14
of the General Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount
the Contractor would be entitled to receive under Paragraph 15.3 below, except
that the Contractor's Fee shall be calculated as if the Work had been fully
completed by the Contractor, including a reasonable estimate of the Cost of the
Work for Work not actually completed.
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15.2 If a Adjustable Guaranteed Maximum Price is established in Article 5, the
Contract may be terminated by the Owner for cause as provided in Article 14 of
the General Conditions; however, the amount, if any, to be paid to the
Contractor under Subparagraph 14.2.4 of the General Conditions shall not cause
the Adjustable Guaranteed Maximum Price to be exceeded, nor shall it exceed the
amount the Contractor would be entitled to receive under Paragraph 15.3 below.
15.3 If no Adjustable Guaranteed Maximum Price is established in Article 5, the
Contract may be terminated by the Owner for cause as provided in Article 14 of
the General Conditions; however, the Owner shall then pay the Contractor an
amount calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the Work to the date
of termination at the rate stated in Paragraph 5.1 or, if the Contractor's Fee
is stated as a fixed sum in that Paragraph, an amount which bears the same ratio
to that fixed-sum Fee as the Cost of the Work at the time of termination bears
to a reasonable estimate of the probable Cost of the Work upon its completion.
15.3.3 Subtract the aggregate of previous payments made by the Owner. The Owner
shall also pay the Contractor fair compensation, either by purchase or rental at
the election of the Owner, for any equipment owned by the Contractor which the
Owner elects to retain and which is not otherwise included in the Cost of the
Work under Subparagraph 1.5.3.1. To the extent that the Owner elects to take
legal assignment of subcontracts and purchase orders (including rental
agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 15, execute and deliver all such papers and take all
such steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the purpose
of fully vesting in the Owner the rights and benefits of the Contractor under
such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions; in such case, the Adjustable Guaranteed Maximum Price, if
any, shall be increased as provided in Subparagraph 14.3.2 of the General
Conditions except that the term "cost of performance of the Contract" in that
Subparagraph shall be understood to mean the Cost of the Work and the term
"profit" shall be understood to mean the Contractor's Fee as described in
Paragraphs 5.1 and 6.3 of this Agreement.
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ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed document, based on the Standard Form of
Agreement between Owner and Contractor, AIA Document A111, 1987 Edition, as
marked hereon and as the same may be expressly amended, modified, supplemented
or superseded by any of the other Contract Documents.
16.1.2 The General Conditions are the attached General Conditions, based on the
General Conditions of the Contract for Construction, AIA Document A201, 1987
Edition, as the same may be expressly amended, modified, supplemented or
superseded by any of the other Contract Documents.
16.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated _________________________________ , and
are as follows:
Document Title Pages
[TO BE PROVIDED]
16.1.4 The Specifications are those contained in the Project Manual dated as
in Paragraph 16.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
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Section Title Pages
[TO BE PROVIDED]
16.1.5 The Drawings are as follows, and are dated _______________ unless a
different date is shown below:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
Number Title Date
[TO BE PROVIDED]
16.1.6 The Addenda, if any, are as follows:
Number Date Pages
[TO BE PROVIDED]
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
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16.1.7 Other Documents, if any, forming part of the Contract Documents are
as follows:
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the Contract Documents.)
Schedule of Values attached hereto, and by this reference made a part hereof.
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Program Manager for use in the administration of the
Contract, and the remainder to the Owner.
0WNER CONTRACTOR
PLAYERS LAKE LAKE CHARLES CONSTRUCTION
CHARLES, INC. CORPORATION
BY:/s/Steven Labov, Agent By: /s/Kenneth Hagan, President
(Signature) (Signature)
Steven Labov, Agent Kenneth Hagan
(Printed name and title) (Printed name and title)
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TABLE OF CONTENTS
Article 1 The Contract Documents
Article 2 The Work of this Contract
Article 3 Relationship of the Parties
Article 4 Date of Commencement and Substantial Completion
Article 5 Contract Sum
Article 6 Changes in the Work
Article 7 Costs to be Reimbursed
Article 8 Costs Not to be Reimbursed
Article 9 Discounts, Rebates and Refunds
Article 10 Subcontracts and Other Agreements
Article 11 Accounting Records
Article 12 Progress Payments
Article 13 Final Payment
Article 14 Miscellaneous Provisions
Article 15 Termination or Suspension
Article 16 Enumeration of Contract Documents
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AGREEMENT
Whereas disputes have arisen between Players Lake Charles, Inc.
(hereinafter "Owner") and Lake Charles Construction Corporation (hereinafter
"Contractor") in connection with the execution of the Work, invoices submitted
and payments demanded pursuant to the Form of Agreement Between Owner and
Contractor dated November 15, 1995, as amended (hereinafter, including all
Contract Documents referred to therein, the "Contract");
Whereas, in order to compromise, settle and resolve such disputes,
Owner and Contractor herein agree as follows:
(1) Any terms not specifically defined in this Agreement will have the meaning
given them in the Contract, unless the context clearly requires otherwise.
(2) The amount of $32,503,623, plus any amount due under paragraph 6, shall be
due Contractor by Owner as the Cost of the Work incurred by Contractor for the
entire Work.
(3) The amount of $2,319,790 shall be due Contractor by Owner for reimbursement
of amounts actually paid by Contractor to Specialty Subcontractors upon
providing Owner with satisfactory proof of payment by Contractor to Specialty
Subcontractors and receipt by Owner of lien waivers acceptable to Owner.
Contractor is not due any fee, markup, overhead, or profit on this amount.
(4) Owner will pay any additional amounts due to any Specialty Subcontractors
not included in paragraph (3) above through Contractor at actual cost only, with
no additional fees, markup, overhead for profit due Contractor, by joint checks
to Contractor and Specialty Subcontractors upon receipt by Owner of lien waivers
acceptable to Owner.
(5) The total of $3,600,000 shall be due Contractor by Owner for overhead,
profit, markup, and fees due for the entire Work. No other or additional
overhead, profit, markup or fees are due to Contractor, Lake Charles Heating and
Cooling, and Lake Charles Sheet Metal pursuant to the Contract.
(6) Contractor shall be reimbursed by Owner for actual Costs only of labor and
materials, including Subcontractors and Suppliers, necessary to complete the
remaining portion of the Work for the period beginning at 5:01 PM Monday,
February 12, 1996 up to the maximum amount of $4,200,000.00. Said amount does
not include any written Change Orders issued after February 12, 1996 and
approved by the Owner. Contractor is not due any fee, markup, overhead or profit
on any amount due under this paragraph.
<PAGE>
(7) Contractor shall be reimbursed by Owner for the cost of the chillers
installed at the Players' garage in the total amount of $478,240.00 by February
16, 1996. No additional amounts, overhead, profit or markup is due to Contractor
on this amount.
(8) Correction of any and all Punch List items (as set forth below) are the
sole responsibility of Contractor.
(9) Contractor shall use its best efforts to achieve Substantial Completion of
the Work, on or before Tuesday, February 20, 1996, but in no event later than
Wednesday, February 21, 1996.
(10) Immediately subsequent to Substantial Completion of the Work, a Punch List
shall be prepared and submitted to Contractor by Program Manager during an
inspection of the work at the construction site with the input of Contractor and
any affected Subcontractor, as necessary in the opinion of Contractor.
Contractor shall thereafter correct all Punch List items at its own cost and
expense without any fees, markup, overhead, or profit.
(11) The amount of $5,904,519.68 billed by Contractor in invoice #7773 is
included in amounts due to Contractor by Owner referenced in paragraphs 2, 3 and
5 of this Agreement and shall be paid by Owner, less 10% as retainage of amounts
due Subcontractors in such invoice upon the signing of this Agreement. Payment
of this invoice shall be by joint checks to Contractor and Subcontractors.
Contractor shall not pay any Subcontractor or Supplier without first obtaining a
lien waiver, in a form acceptable to Owner, for all work performed and materials
provided through February 1, 1996, or, in the case a payment represents the
final payment due a Subcontractor or Supplier, said lien waiver shall be full
and final payment for work performed and materials provided for the Work.
(12) The amount of $3,879,186.45 billed by the Contractor in invoice #7776 is
included in amounts due Contractor by Owner referenced in paragraphs 2,3 and 5
of this Agreement and all retainage withheld by Owner, under paragraph 11 of
this Agreement, shall be paid by Owner one (1) day after acceptance of
Substantial Completion, less and except 1.5 times the value of any Punch List
items as determined by the Architect in consultation with the Program Manager
during the aforesaid punch list inspection, and less and except the amount of
any outstanding lien waivers. Payments to Subcontractors shall be made by joint
checks. Contractor shall not pay any Subcontractor or Supplier without first
obtaining a lien waiver, in a form acceptable to Owner, for all work performed
and materials provided through the date of Substantial Completion, or, in the
case a payment represents the final payment due a Subcontractor or Supplier,
said lien waiver shall be for full and final payment for work performed and
materials provided for the Work.
<PAGE>
(13) Any additional payments due Contractor for Specialty Subcontractors as
referenced in paragraph (4) above shall be paid to Contractor at the same time
as Contractor is required to make payments to the Specialty Subcontractors
pursuant to the terms of the respective contracts between Contractor and each of
the Specialty Subcontractors. Payments to Specialty Subcontractors shall be made
by joint checks. Contractor shall not pay any Specialty Subcontractor without
first obtaining a lien waiver, in a form acceptable to Owner, for all work
performed and materials provided through the date of Substantial Completion, or,
in the case a payment represents the final payment due a Specialty
Subcontractor, said lien waiver shall be for full and final payment for work
performed and materials provided for the Work.
(14) Any payment due Contractor for actual costs of Subcontractors and Suppliers
necessary to finally complete the entire Work as referenced in paragraph (6)
above shall be submitted and paid as Final Payment within thirty (30) days of
Substantial Completion, provided that Owner (i) has received final lien waivers,
in a form acceptable to Owner, or the Owner is otherwise relieved by applicable
law form any and all outstanding lien liability and (ii) all Punch List items
have been completed.
(15) The balance due of any amounts owed to Contractor as referenced in
paragraphs (2), (3), (5) and (6) above shall be paid as Final Payment within
thirty (30) days of Substantial Completion, provided that Owner (i) has received
final lien waivers, in a form acceptable to Owner, or the Owner is otherwise
relieved by applicable law from any and all outstanding lien liability and (ii)
all Punch List items have been completed.
(16) Except as stated in this Agreement, no other amounts of any kind or nature
are or shall be owed by Owner to Contractor or any Subcontractor or Supplier
under the Contract.
(17) Owner specifically reserves its right to perform an audit in order to
investigate items and amounts related to any potential or alleged fraud
perpetuated in the course of the Work or Project. Contractor remains responsible
for reimbursement to Owner of any and all amounts discovered sue to fraud
perpetuated in the course of the Work or Project. Owner hereby waives any audit
rights not related to potential or alleged fraud.
(18) This agreement is executed and effective on the 16th day of February, 1996.
LAKE CHARLES CONSTRUCTION CORPORATION
BY: /s/ Kenneth Hagan, President
--------------------------------------
PLAYERS LAKE CHARLES, INC.
BY: /s/ Howard A. Goldberg
-------------------------------------
EXHIBIT 21
PLAYERS INTERNATIONAL, INC.
SUBSIDIARIES OF THE COMPANY
State of Incorporation
Subsidiary or Organization
---------- ----------------------
Metropolis, IL 1292 Limited Partnership Illinois
PCI, Inc. Nevada
Players Aviation, Inc. Nevada
Players Bluegrass Downs, Inc. Kentucky
Players Development, Inc. Nevada
Players Entertainment, Inc. Nevada
Players Harrison County, L.L.C. Indiana
Players Harrison County, Inc. Indiana
Players Harrison County Management, Inc. Indiana
Players Holding, Inc. Nevada
Players Hyatt Acquisition, L.L.C. Louisiana
Players International, Inc. Nevada
Players Lake Charles, LLC Louisiana
Players Lake Charles Riverboat, Inc. Louisiana
Players LC, Inc. Nevada
Players Maryland Heights, Inc. Missouri
Players MH, L.P. Missouri
Players Maryland Heights Nevada, Inc. Nevada
Players Mesquite Golf Club, Inc. Nevada
Players Mesquite Land, Inc. Nevada
Players Nevada, Inc. Nevada
Players Realty, Inc. New Jersey
Players Resources, Inc. Nevada
Players River City, Inc. Nevada
Players Riverboat, LLC Louisiana
Players Riverboat, Inc. Nevada
Players Riverboat Management, Inc. Nevada
Players Services, Inc. New Jersey
River Bottom, Inc. Missouri
Riverfront Realty Corporation Illinois
Riverside Joint Venture Missouri
Showboat Star Partnership Louisiana
Southern Illinois Riverboat/Casino Cruises, Inc. Illinois
Vacation Bonus, Inc. California
WCB Travel, Inc. Nevada
WCBJ Enterprises, Inc. California
Players Indiana, Inc. Indiana
Players Michigan City, Inc. Indiana
Players Michigan City Management, Inc. Indiana
Players Mississippi Management, Inc. Illinois
Players Northern, Inc. Ontario, Canada
Players Shreveport, Inc. Nevada
Players Shuttle, Inc. Louisiana
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 18,786
<SECURITIES> 4,461
<RECEIVABLES> 7,721
<ALLOWANCES> 118
<INVENTORY> 2,719
<CURRENT-ASSETS> 41,583
<PP&E> 302,994
<DEPRECIATION> 23,078
<TOTAL-ASSETS> 413,432
<CURRENT-LIABILITIES> 39,705
<BONDS> 153,000
0
0
<COMMON> 149
<OTHER-SE> 193,478
<TOTAL-LIABILITY-AND-EQUITY> 413,432
<SALES> 0
<TOTAL-REVENUES> 291,395
<CGS> 0
<TOTAL-COSTS> 126,063
<OTHER-EXPENSES> 121,461
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,718
<INCOME-PRETAX> 36,590
<INCOME-TAX> 14,270
<INCOME-CONTINUING> 22,320
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,320
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
